F. Karavias (Eurobank): These are the effects of the crisis

By Leonidas Stergiou

All the forecasts for the profitability of 600 million euros for 2022 and the three-year business plan are based on the assumption that there will be no interest rate increase by the ECB, until the end of the year, or if there will be such by the end of the year that will not affect the plans of the Bank, stressed the CEO of Eurobank, Mr. Fokion Karavias, answering questions from analysts.

Analysts, however, focused on the effects of geopolitical developments, rising energy prices, the risk of rising interest rates and the slowdown. Mr. Karavias replied that the Bank has run all the scenarios, which result in the following findings:

–Direct effects of the Ukrainian crisis. The impact of loans related to Russia and Ukraine amounts to 80 million euros, an amount which is fully covered by collateral, cash and real estate. Another part of the impact is related to the business activity (import-export) from and to Russia and Ukraine, with an impact of less than 50 million euros which are also secured.

Indirect effects come from energy prices, inflation, tourism and the general macroeconomic environment and interest rates.

Particularly:

–The impact of tourism in Greece is not expected to be large, as tourism revenue is projected to increase in 2022 over 80% in 2019, compared to 61% in 2021. Russian tourists are a significant but not as large as a percentage of revenue.

–The impact on Cyprus it also comes mainly from tourism. The impact has been estimated there to reach up to 10% of the profits of the Cypriot subsidiary, ie around 4-7 million euros.

-From the interbank interest rates and especially from the euribor, Eurobank analysis shows that if it moves from -0.5% to 0%, then there is a positive impact on profits by 60 million euros. If it moves up to 0.5%, then there is an additional benefit of 30 million euros from the interest margin, while for an increase of more than 0.5%, the additional profits are below 30%, as deposit interest rates will increase.

-From inflation and growth, adopted the forecasts of the Minister of Finance Mr. Chr. Staikoura, according to which any 10% increase in energy prices (they have already increased 100% in recent days) premiums inflation by 0.2 of the unit and gnaws at growth (mainly through the trade balance) by 0.3 of the unit.

During the teleconference presentation of the results of 2021, Mr. Karavias referred to the targets for 2022 and the next three years, which include planning for dividend payment from 2023, capital support mainly through reducing the risk of reducing red loans. and efficiency, increasing profitability per share by 13% per year, but also investment in real estate, technology, wealth management and international activities.

In fact, international activities contribute 35% to the group’s profits, real estate is the third pillar of revenue where an additional 150 million euros will be invested and the development of private banking the fourth pillar.