Eurobank plans to acquire HFSF's 1.4% stake and distribute a dividend in 2023
Eurobank plans to acquire HFSF's 1.4% stake and distribute a dividend in 2023
  Investments  |  Listed  |  Economy  |  Greece

Eurobank plans to acquire HFSF's 1.4% stake and distribute a dividend in 2023

RE+D magazine
10.03.2023

Eurobank's 2022 performance was particularly strong as it exceeded initial expectations in terms of profitability, asset quality and capital adequacy.

The operating performance of Eurobank in 2022 was robust and exceeded the initial guidance7 in terms of profitability, asset quality and capital strength. Core pre-provision income increased to €1.2bn in 2022, from €900m in 2021, EPS rose to €0.18 8 , from €0.119 in 2021 and the return on tangible book valuegrew to 11.4%8 in 2022, from 8.2%9 in 2021. 

In more detail: 

  • Net interest income rose by 17.4% y-o-y in 2022 to €1.6bn, against €1.3bn in 2021, driven by bond income, lending and international business. 
  • Net fee and commission income expanded by 19.1% y-o-y to €543m, mainly due to fees from lending activities, Network operations and cards business. Fee and commission income accounted for 68 basis points of total assets in 2022.
  • As a result of the above, core income grew by 17.8% y-o-y to €2.1bn in 2022. Other income reached €717m, from €128m in 2021, mainly due to trading gains from hedging instruments. Thus, total operating income increased by 47.6% y-o-y to €2.8bn in 2022.
  • Operating expenses increased by 4.7% y-o-y to €917m, mainly due to SEE operations, with Greece being up by 0.3% y-o-y. The cost to core income ratio improved to 43.8% in 2022, from 49.3% a year ago, while the cost to income ratio substantially declined to 32.6%, due to high trading gains.
  • Core pre-provision income was up by 30.6% y-o-y to €1.2bn and exceeded expectations due to higher interest and fees & commissions income. Pre-provision income reached €1.9bn, from €1.0bn in 2021.
  • Loan loss provisions declined from €418m in 2021 to €291m in 2022 and corresponded to 72 basis points of the average net loans.
  • As a result of the above, core operating profit before tax increased by 83.5% y-o-y to €885m.
  • Adjusted profit before tax amounted to €1.5bn and adjusted net profit totaled €1.2bn in 2022. Reported net profit stood at €1.3bn, compared to €328m in 2021 and included €231m gains from the completion of the spinoff of the merchant acquiring business (project “Triangle”).
  • SEE operations were profitable, as the adjusted net profit reached €224m in 2022, from €148m in 2021. Core pre-provision income increased by 25.5% y-o-y and amounted to €325m, with core operating profit before tax risingby 57.2% y-o-y to €293min 2022. 47% of the adjusted net profit came from the operations in Cyprus (adjusted profit €105m) and 43%from those in Bulgaria (adjusted profit €96m).
  • The quality of the loan portfolio improved further during 2022, despite the challenging global environment. The NPE ratio fell to 5.2%in 2022, from 6.8% in 2021 and was lower than expected by 60 basis points due to low NPE formation (€46m in 2022). The stock of NPEs decreased by €0.5bn against 2021 to €2.3bn or €0.6bn after provisions. Provisions over NPEs improved substantially from 69.2% in 2021 to 74.6% in 2022. 
  • Eurobank capital position strengthened notably in 2022, exceeding initial guidance10 . CET1 rose by 230bps y-o-y to 16.0%11andtotal CAD increased by 290 bps y-o-y to 19.0%. 11The fully-loaded Basel III CET1 (FLB3 CET1) ratio grew by 250bps y-o-y to 15.2%. 
  • Tangible book value per share increased by 19.7% over 2021 to €1.70. 
  • At the end of 2022, Risk weighted assets amounted to €41.9bn and total assets stood at €81.5bn 
  • Performing loans grew organically by €3.3bn in 2022, against initial guidance12 of €2.3bn. 66% of the expansion came from Greece and 34% from SEE business. Total gross loans amounted to €43.5bn at the end of December, including senior& mezzanine notes of €4.9bn. Corporate loans stood at €25.0bn, mortgages at €10.2bn and consumer loans at €3.4bn. 
  • Customer deposits grew by €4.1bn in 2022 to €57.2bn. The loans to deposits ratio was 73.1% and the liquidity coverage ratio 172.9% in 2022.

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