Citigroup has raised its earnings per share target on National Bank of Greece (NBG) by 3% and 2008-09 forecasts by 1%, while at the same time it reiterates its EUR 55 per share target price and Buy (1M) rating.
The National Bank of Greece, the country’s largest lender by assets, said that its nine-month net profit rose 66 percent on strong loan growth and the consolidation of its recent Turkish acquisition.
The numbers also reflected the bank’s sale in April of a minority stake in AGET Heracles Cement to majority shareholder Lafarge Group, and included a €20 million donation to the relief fund for victims of last summer’s massive forest fires in Greece.
For the nine months to Sept. 30, the company said net profit was EUR1.31 billion compared with EUR791.4 million in the same period a year earlier. Greek banks have been expanding in the Balkans and Turkey to secure new areas of growth before the boom in retail lending at home slows.
National Bank, present in Bulgaria, Serbia, Romania and Albania, acquired Turkey’s Finansbank last year as part of its expansion strategy in southeast Europe. Finansbank contributed EUR349 million or 26.6 percent of group nine-month profit.
“A substantial proportion of the group’s income derives from subsidiaries in southeast Europe and Turkey, where the fastest growth in business was posted, vindicating our strategy to broaden and diversify the group’s sources of income,” said NBG’s Chief Executive Takis Arapoglou in a statement.
He said the Turkish market still offered large margins for growth, with Finansbank set to almost double its branch network by year end compared with its size when the deal with NBG was signed.
The group’s net interest income rose 53% to EUR2.22 billion, with net interest margin (NIM) improving by 81 basis points year-on-year to 4.24%. Total income rose to EUR3.28 billion from EUR2.12 billion.
Like other Greek lenders, NBG has been riding a consumer lending boom in Greece thanks to low real interest rates, a buoyant property market and the easing of consumer credit restrictions.
In mid-August last year, NBG completed its acquisition of a 46 percent stake in Turkey’s Finansbank and has since raised its holding to 89.44 percent.
NBG shares closed Thursday up at EUR43.50. The Greek lender’s shares have risen 21 percent this year, nearly double the 11 percent rise of the Athens Stock Exchange general index. Based on Citi’s target price of EUR 55.00 per share and including the expected dividend yield of 3.7%, the total anticipated return from current levels is 30%.
Citi has forecast NBG profit at EUR 1.7 bln for 2007, rising to EUR 2.05 bln in 2008 and EUR 2.5 bln in 2009.
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