By Leonidas Stergiou
An increase in revenues, reduction of expenses and red loans, as well as strengthening of supervisory funds was achieved in 2021 by Piraeus Bank, in the framework of the Sunrise plan presented last March. In addition to three ongoing transactions that will further reduce red loans and strengthen the bank, Piraeus Bank has completed the objectives of the Sunrise plan and on April 6 will present the new strategic plan with detailed objectives for the period 2022- 2025, as published by Capital.gr on February 10, 2022.
As a foretaste of the goals, answering questions from analysts during the presentation of the results of 2021, the CEO of Piraeus Bank, Mr. Christos Megalou, stated that the net credit expansion for 2022 has been set at 1.3 billion euros from 1.1 billion in 2021. Already, as he said, the new disbursements in the first 2 months amounted to 1 billion euros.
Regarding the effects of geopolitical developments, inflation, energy price increases and the risk of rising interest rates, Mr. Megalou replied that it is still too early to calculate the consequences accurately. However, he estimated that there will be an impact from inflation in Greece, where it is expected to move between 6-7% in 2022 and from growth, which is estimated at 3-4%, lower than the initial forecasts, but greater than Eurozone.
With regard to the sectors, no significant effects of the Ukrainian crisis on tourism and the agricultural sector can be identified, while a more specific analysis and greater observation of developments on the effects on sectors such as energy, manufacturing and trade is required.
Asked about the effects on the Bank of ECB interest rate hikes, calculations show that raising interest rates from -0.5% to 0% will have a positive impact on interest income by € 60 million and from 0% to 0%. , 5% additional 100 million. That is, an increase in interest rates from -0.5% to 0.5% means an increase in revenue of 160 million euros.
Also, the new business plan will set in detail the targets for capital support moves, such as the issuance of bonds amounting to 1 billion euros in 2022, however the time and manner will depend on market conditions.
In red loans, in 2021 there was an organic decrease of 0.2 billion euros, compared to a forecast for deterioration of 0.2 billion euros. For the remaining stock of red loans, the securitization of Sunrise 3 (600 million euros) and two other transactions are underway (sale of a shipping portfolio of 0.4 million euros and sale of the card system). In fact, the completion of the sale of the card system will strengthen the bank’s funds by 0.3 billion euros.
Thus, the CET1 capital adequacy ratio will reach 9.8% and the overall index at 14.6%. In general, the bank’s strategy is moving in the direction of a CET1 index close to 10% and an overall index around 16%.
The reduction in red loans, combined with the increase in interest income margins and asset management and bank insurance commissions, support the goal of increasing profitability (ROE) by more than 10% in the next period. Effective cost reduction also contributes to this, increasing the efficiency of the network, human resources and digitization.
Read also:
Piraeus Bank: At € 665 million pre-tax profits on a recurring basis
The new business plan of Piraeus Bank
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
