Eurobank: Adjusted net profit in 2021 at 424 million – NPE index at 6.8%

Eurobank’s financial results for the whole of 2021 were better than the initial expectations, in terms of profitability, asset quality and capital adequacy.

In particular, the organic profit before provisions amounted to € 900 million and the adjusted net profit amounted to € 424 million in 2021, with the return on tangible equity amounting to 8.2%. The NPEs index decreased from 14.0% in 2020 to 6.8% in 2021, making Eurobank the first Greek bank with a single-digit index. Capital ratios also strengthened more than expected, as a result of higher profitability and more positive effects from the “Mexico”, “Wave” and “Triangle” trades. As a result, the overall capital adequacy ratio rose to 16.8% 7 and the CET1 ratio with the full implementation of the Basel III terms increased to 13.6% 7, compared to a forecast of 12.8%.

Net interest income decreased by 2.1% in 2021 to € 1,321 million, mainly due to the de-consolidation of NPEs portfolios. The net interest margin fell to 1.84% in 2021, from 2.03% in 2020.

Net fee and commission income increased by 18.7% year-on-year to € 456 million, mainly due to revenues from the Network’s operations, lending and asset management. Fee and commission income was 64 basis points on total assets in 2021, up from 58 basis points in 2020.

The increase in commission income exceeded the decrease in interest income, with the result that organic income increased by 2.5% to € 1,776 million in 2021. Other income fell to € 128 million in 2021, from € 439 million in 2020, mainly due to lower bond earnings. As a result, total revenues decreased by 12.3% to € 1,904 million in 2021.

Operating expenses increased by 0.8% to € 876 million with the cost-income ratio remaining consistently below 50% at 46.0%.

Organic earnings before provisions increased by 4.1% in 2021 to € 900 million.

Total earnings before provisions decreased by 21.1% in 2021 to € 1,028 million, due to lower other income.

The provisions for doubtful receivables amounted to € 418 million in 2021 and corresponded to 111 basis points on average loans, as the formation of new NPEs was significantly lower than expected.

As a result of the above, organic operating profits increased by 64.9% compared to 2020 to € 482 million.

Adjusted earnings before tax amounted to € 585 million and adjusted net income to € 424 million in 2021.

Overseas operations were profitable with adjusted net profits reaching € 148 million in 2021. Organic earnings before forecast increased by 7.5% to € 259 million and organic operating profits increased by 28.0% to € 186 million in 2021.

The NPEs index decreased by 7.2 percentage points compared to 2020 and stood at 6.8% at the end of 2021, making Eurobank the first bank in Greece with a single-digit index. Total NPEs fell by € 2.9 billion in 2021 to € 2.8 billion. Coverage of NPEs by cumulative forecasts increased by 7.4 percentage points on an annual basis and amounted to 69.2%.

The CET1 and Total Capital Adequacy Ratios (CAD) stood at 14.5% and 16.8% at the end of 2021, up 60 and 50 basis points respectively from 2020. These ratios are significantly higher than the respective minimum regulatory thresholds for in 2022 (TSCR) 6.2% and 11.0%. The CET1 index with the full implementation of Basel III increased by 160 basis points in 2021 and reached 13.6% 8, as a result of the higher-than-expected profitability and the more positive effects from the “Mexico”, “Triangle” and “Wave” transactions “. The binding agreement with Worldline BV for the sale of 80% of the card acceptance and settlement services (Project “Triangle”) contributes positively 80 basis points to the capital ratio and the synthetic securitization of a portfolio of € 1.7 billion (Project) Wave “) contributes 40 base units. The significant reduction in NPEs in 2021 combined with the strengthening of regulatory capital led to the improvement of the Texas index from 63% in 2020 to 36% in 2021.

Weighted assets stood at € 39.9 billion at the end of 2021.

New loan disbursements in Greece amounted to € 7.8 billion in 2021. Current loans at Group level were strengthened organically on an annual basis by € 1.5 billion. Total loan balances (before provisions) amounted to € 40.8 billion at the end of 2021, including high-end bonds amounting to € 5.1 billion. Business loans amounted to € 22.4 billion, mortgages to € 10.1 billion and consumer loans to € 3.2 billion.

Customer deposits increased by € 5.9 billion in 2021. Savings and cash deposits amounted to € 40.6 billion and time and other deposits to € 12.6 billion. The loan-to-deposit ratio improved further to 73.2 %, from 79.1% in 2020. The liquidity coverage ratio also improved to 152.4% in 2021, from 123.7% in 2020.

Karavias: A milestone year in 2021 – Eurobank in position to take advantage of the virtuous growth cycle

Commenting on the results of the year 2021, the CEO of Fokion Karavias bank stated:

“2021 was a milestone year for Eurobank. Successfully completing the plan to consolidate the balance sheet, we became the first systemic bank with a single-digit index of NPEs at 6.8%, which is a turning point for the Greek banking system after 10 and At the same time, we have continued to achieve positive performance in all sectors, with an increase in our turnover, which includes new loan disbursements of € 7.8 billion and an increase in deposits of € 5.9 billion compared to 2020, led organic earnings before forecasts higher by 4% in 2021. As a result of strong profitability and positive capital transactions, our capital base strengthened further to 16.8%.

The world economy and international trade are entering uncharted waters after the Russian invasion of Ukraine and its long-term consequences. As the events are in full swing, any assessment of their consequences is premature. However, for Greece, this is the third wave of an unfavorable situation, after the long economic crisis and the pandemic. It is too early to assess the impact on the Greek economy, for which a year of impressive recovery laid the foundation for the beginning of a cycle of strong and sustainable growth. In any case, the fundamental factors for the prevalence of the positive scenario still apply: the existence of an investment-friendly business environment, a stable roadmap based on the National Recovery and Sustainability Plan Greece 2.0 and adequate funding sources, including NextGenEU and other effects from the EU. The effects of geopolitical turmoil are likely to be mitigated by coordinated measures at European level, as was the case with the pandemic.

Banks have an important role to play in an investment-based economic recovery, as Greece emerges from a decade of leverage. We believe that Eurobank is in a position of power to take advantage of the virtuous growth cycle. Our profitability will be based on the increase of loans, in the sectors that generate commission income, where we are a leader, in cost restraint, with our business model shifting from management, “run the bank”, to growth, “grow the bank” with a focus on investments in people and technologies. At the same time, we remain committed to promoting a model of sustainable development for all that can ensure long-term prosperity in the countries and societies we serve. ”

Strategic planning 2022-2024

Having achieved all the goals set for 2021, Eurobank, without ignoring the effects of the current geopolitical crisis, is now in a position of power, ready to take advantage of the opportunities presented by the recovery of the economies in which it has a presence. A strong comparative advantage is both the diversified business model, which includes a presence in Greece, in SE European countries and operations in the field of Investment Property (Investment Property) as well as the strongest balance sheet between Greek banks. Our strategy for the period 2022-2024 can be summarized as follows:

– In the financing of the new development cycle.

– Maintaining a leading position in the sectors that generate revenue from supplies.

– In the utilization of digital technology and data.

– Achieving sustainable returns for shareholders and a return to dividend distribution.

– ESG: In support of the green transition and inclusive funding.

More specifically, the financial objectives are as follows:

– Average increase in earnings per share9 about 13% per year.

Achieve a sustainable return on tangible equity9 10% per annum.

– Creating at least 100 capital units per year from profitability to finance development, dividend distribution and strengthening the capital position.

– Dividend distribution from the year 2022 at a rate of approximately 20%, subject to obtaining the required approvals from the supervisory authorities.

– Reduction of the NPEs index from 6.8% in 2021 to 4.8% in 2024.

* See the financial figures of Eurobank for 2021 in the right column “Related Archives”.