Marfin Popular Bank looks to organic growth outside Cyprus rather than acquisitions in ’08

Marfin Popular Bank is ready to overtake any challenges from the credit crisis and is set to expand its operations through organic growth rather than acquisitions this year, said newly appointed Group Deputy CEO Thimios Bouloutas.

Speaking at a press briefing in Nicosia, Bouloutas said the emphasis will be on streamlining operations by introducing uniform methods and procedures (IT system, internal credit scoring) in all countries wherever the Group is active.

“We see more prospects for growth through the addition of new branches in Ukraine, Russia, Romania and Serbia, rather than aim for new acquisitions,” he said, adding, however, that there will be a new opening in Bulgaria.

 

No funding need

 

Tier 1 capital at Marfin Popular Bank Group is more than adequate, according to Bouloutas, who said the Group does not need capital to finance its operations and its expansion.

“The two major Cypriot banks (BOC and MPB) and Ethniki are adequately capitalized and in our case, we have the best ratio since the ratio of loans to deposits at MPB is 85% with total loans at EUR 18 bln compared to EUR 21 bln in deposits,” said Bouloutas.

In the case of other banks, the ratio sometimes reaches 130%, with is banks shifting to the interbank market for funding, which has all but dried up or is very expensive.

 

Demand is strong

 

Demand for new loans is strong, according to Bouloutas, who said that in Greece, which will register higher growth due to the Jacques Santer programme, loan penetration is still low compared to other developed markets and will catch up, which is why MPB is strengthening its presence there.

Bouloutas is also counting on higher spreads to fuel additional profit growth, claiming that in recent years, tight competition had affected margins, which are now improving in favour of the banks.

Christos Stylianides, Deputy CEO Group International Operations, said that in new markets such as the Ukraine, the growth potential is far bigger since the ratio of loans to deposits is only 25% and loan growth in general is in excess of 20% a year.

 

Conservative target

 

Bouloutas said MPB’s business plan forecasts EUR 617 mln in profit for 2008, which is only 10% more than the reported EUR 563.4 mln for 2007. By 2010, the bank sees net profits climbing to EUR 1 bln.

“We are every conservative with our targets,” he said.

The forecast, however, does not include about EUR 18 mln that MPB is likely to make for selling its 6.45% stake in Marfin Investment Group (MIG) to Dubai at EUR 7 per share, which by some estimates is seen resulting in a gain of EUR 18 mln to be included in the first quarter results.

Citigroup forecasts MPB’s 2008 profits at EUR 627 mln, while Deutsche Bank set a profit target of EUR 640 mln.

According to the Marfin Popular Group’s 3-year Strategic Plan, by 2010 about 35% of all operations will be generated from Cyprus, 35% from Greece and 25-30% from other countries.

Referring to the competition from Greek banks, he said it will be difficult for the likes of Eurobank or Piraeus to grab significant market share, while Stylianides said that without resorting to acquisitions, no foreign bank has ever managed to gain a significant market share here.