Marfin Popular Bank (CPB.CY) has cut its 2008 profit outlook to 500-600 million euros, down from 600 million previously, its Vice Chairman Andreas Vgenopoulos told shareholders on Thursday.
"With the assessment we have today, we believe the profitability of the bank will move in a broad range that will be between 500-600 million (euros)," Vgenopoulos said.
“If you believe that 80% of the credit crisis is behind us, then that may be a very optimistic assessment. We want to be on the safe side and at Board level, after reviewing the first quarter results and the situation until today, we decided to be honest about the situation and lower our profitability target,” Vgenopoulos said.
Three commitments
Vgenopoulos said he can give three major commitments to Marfin Popular Bank shareholders. The first is that the Bank’s profits are real and the dividend payout policy will be maintained and even improved depending on market conditions.
“So if you are a long term investor and even if the share price is lower, as long as you don’t sell, then you are not realizing a loss. All that you should care about is the return on your money, which comes in the form of dividend. This I can tell you will be maintained,” said Vgenopoulos.
The second commitment is that MPB has a healthy and strong capital base and it will not take undue risk to push profits higher in order to impress analysts or others.
The third commitment is that in times of crisis, and although the share prices has declined, but opportunities are created, and according to Vgenopoulos, “Marfin Popular Bank is ready to seize the opportunities and come out of the crisis much stronger.”
Shareholders approved the Board’s proposal for the payment of a final and total dividend of 35 euro cents per share.
Under fire
Vgenopoulos came under fire from a shareholder for his decision to sell his substantial personal stake in the Bank to Dubai at EUR 12 per share, and the way the share price advanced in the run-up to the deal and after which, the share price nose-dived to c. EUR 6/share.
The shareholder suggested if the share sale may have been connected with the deterioration in the profitability forecast that was now being conveyed to the rest of shareholders.
“I did the transaction in October 2007 and you can rest assured that I had no knowledge of how things would go. We did not even know how 2007 would end, which mind you was a fantastic year, let alone that in May 2008, we would be obliged to issue a profit warning on the 2008 year-end forecast,” said Vgenopoulos.
He added that, “I would have sold my shares to Dubai even if the share price was EUR 9 or EUR 2 per share for personal reasons.”
Immediately after the Vgenopoulos transaction with Dubai, other senior executives of MPB Group, its insurance divisions Cyprialife and Laiki Insurance as well as the Staff Provident Fund proceeded with substantial sales of the Bank’s shares. Only recently one senior executive purchased a tiny amount of shares.
