Egnatia sees Hellenic 1Q07 profit at EUR 20 mln

Egnatia Financial Services have issued a report expecting Hellenic Bank to post CYP 11.6 mln or EUR 19.8 mln in net profit during the first quarter of 2007 for a 69% YoY increase, with the results propelled by strong Net Interest Income (NII), commission income and lower provisions.

Hellenic Bank reports its 1Q 07 results on Monday.

NII is expected to increase by 25.9% yoy to CYP 26.7m driven by increased volumes in both Cyprus and Greece and an improved local NIM. Despite some spread compression in Greece particularly in the mortgage segment, increased volumes will sustain an overall high NIM. We anticipate net commission income to remain strong and grow by some 29% yoy to CYP 7.6m, primarily as a result of strong volumes

and favourable market conditions.

At the cost side, Egnatia anticipate that operating expenses would mark an increase of 6.5% yoy to CYP 23.2m, significantly lower than the increase in volumes. Thus the improved productivity leads to an improved cost to income ratio of 56.0% (-800bps yoy). Reflecting the improvement in the quality of the loan portfolio, provisions are expected to improve further to CYP 4.9m (-4.3% yoy).

Egnatia are maintaining their buy recommendation on HB stock with a price target of EUR 4.10 per share compared to current level of EUR 3.48.