Eurobank: The financial results of 2023 and the Business Plan 2024-2026

In 2023 it was particularly strong , which significantly exceeded their initial expectations in terms of profitability, asset quality and capital adequacy. More detailed in Eurobank’s performance, net interest income increased by 46.9% over 2022 and was set at 2,174 million euros, mainly due to revenue from loans, bonds, derivatives and activities abroad. The net interest rate margin was increased annually by 84 basis points and reached 2.75%. Net earnings and commissions were increased by 4.2% in 2023 and amounted to EUR 544 million, mainly due to the revenue from the loans, accounting for 69 basis points on the total assets. As a result, organic revenue increased by 35.8% annually to 2,717 million euros. Total revenue was increased by 3.2% to 2,803m euros in 2023. Operating expenditure increased by 5.2% compared with 2022 to 902 million euros, mainly due to activities outside Greece, inflationary pressures and investments in technology and information systems. The cost – organic revenue index was improved to 33.2% in 2023, from 42.8% in 2022, with the cost – revenue index becoming 32.2%. Organic pre-foreseeing gains increased by 58.6% on an annual basis to 1,816m euros, while total pre-foreseeing gains were increased by 2.3% compared with 2022 to 1,902m euros. The risk claims forecasts increased by 24.7% compared to 2022 to 345 million euros and corresponded to 85 basis points on the instruments. As a result of the above, organic operating profits before tax increased by 69.4% in 2023 to 1,471 million euros. Adapted pre-tax profits were set at 1.550m euros and adjusted net profits increased by 6.6% in 2023 to 1,256m euros. Profit per share was set at 0.31 euros and the return on equity instruments amounted to 18.1% in 2023. The total net profits were EUR 1,140 million, compared to EUR 1,347 million in 2022. Activities abroad were profitable with the adjusted net profits being boosted to 468m euros in 2023, from 211m euros in 2022 and contributing 37.3% to the Group’s overall profitability. Organic pre-foreseeing profits increased by 77.8% on an annual basis and amounted to 522m euros and organic pre-tax profits increased by 68.6% in 2023 to 465m euros. Operating performance in both Cyprus and Bulgaria was greatly enhanced in 2023, with the adjusted net profits being set at 258m euros and 189m euros respectively. The quality performance of the lending portfolio was better than expected. The index of unperforming exposures (NPEs) was reduced to 3.5% in 2023, from 5.2% in 2022. The formation of new NPEs was positive by 138 million euros in 2023, but significantly lower than initial expectations. At the end of 2023 the total NPEs fell by EUR 644 million compared to 2022 and were set at EUR 1.5 billion or EUR 0.2 billion after forecasts. The coverage of NPEs from cumulative forecasts was reinforced from 75.5% in 2022 to 86.4% in 2023. Capital adequacy was maintained at strong levels in 2023, with the overall adequacy index (CAD) being 20.2% and the CET1 Common Equity Index being set at 17.0%, against a minimum supervisory indicator of CET1 12.2% for 2024. The equity instruments per share were set at 2.07 euros at the end of 2023 and were increased by 21.1% over 2022. The total assets were set at EUR 79.8 billion and the weighted assets at EUR 43.2 billion. The current loans were organically reinforced by EUR 1.8 billion in 2023. The total outstanding loans (pre-forecasts) amounted to EUR 42.8 billion, including high and average bonds of EUR 4.5 billion. Business loans amounted to 25.0 billion euros, housing at 9.9 billion euros and consumer loans at 3.4 billion euros. Customer deposits increased by 1.8 billion euros in 2023 to 57.4 billion euros. Savings and sight deposits account for about 65% of total and foregone 35%. The loan-to-deposit ratio was set at 72.3% and the liquidity coverage index was 178.6% at the end of 2023. Eurosystem funding was reduced by EUR 5.0 billion annually to EUR 3.8 billion at the end of 2023. Fokion Karavias, CEO of Eurobank AE Bank, noted: “In 2023 there was an excellent year for Eurobank. The combination of higher interest rates and favourable environments in the countries where we are active contributed to overcoming all our objectives and to implementing important strategic actions, which will enable us to further strengthen our presence in the wider region.” The CEO went on to say: “The macroeconomic environment remains favourable in Greece, Cyprus and Bulgaria, with a growth rate significantly higher than the Eurozone average. Growth in Greece is mainly based on investments and financing projects of the Recovery and Durability Fund, which can further boost credit expansion. Eurobank is ready to take advantage of the favourable market conditions and support the high growth rates of the Greek economy. Our annual results were strong in all areas. The main operating profits increased significantly, with the return on equity at 18%, further strengthening our capital base to over 20%, far above supervisory limits.” Finally, Mr Karavias stressed that: “The fourth quarter was particularly strong, which led to an annual increase of 1.8 billion euros in our loan balances, with 20% of disbursements relating to ‘Green’ Loans. Organic development in Greece and strengthening our regional presence are key pillars of our strategic planning. In this context, we proceeded to acquire a majority share package of the Greek Bank and to acquire BNP Personal Finance in Bulgaria. Our performance, business model and strategic design give the certainty that Eurobank will continue to produce strong results. For 2024 we aim at a return on capital 15%. The 2023 performance and prospects of the next three years create the conditions for the distribution of dividends, starting with a rate of at least 25% of the profits for this year, which will gradually increase in subsequent years.” Business Plan 2024-2026 In a lower interest rate environment, Eurobank aims to create high returns for shareholders, which will be further strengthened by the full integration of the Greek Bank of Cyprus, based on its strong position in the Greek banking system, organic development and strategic initiatives in Cyprus and Bulgaria. Capital return is expected to be 18% in 2024 and about 15% in the following years, while the profit distribution rate is estimated to increase gradually and reach 50% of profits in 2026. Eurobank aims to increase profits in a lower interest rate environment, where work outside Greece will contribute about 50% to the Group’s Organic Operating Profits.