NBG revenues lower in 3Q

National Bank of Greece announced that 9M13 net profits reached EUR 262 mln or EUR 319 mln excluding one-off write-downs, slightly lower against IBG’s EUR 353.5 mln estimate, but above the consensus EUR 293.5 mln.
“Despite the overall improvements in the domestic business, due to a loss making trading line and weaknesses in Turkey (magnified by the depreciation of the TL against the euro), 3Q revenues were lower against our and consensus estimates,” explained Konstantinos Manolopoulos, analyst at the Investment Bank of Greece.
“Still, due to better cost control and lower provisions (both lines were better than expected) core profits were above consensus while the miss against our estimates was lower. Overall results were reassuring with improvements on asset quality dynamics and the cost of funding,” Manolopoulos added.
The bank’s management said that as regards the second diagnostic review by BlackRock, it is confident that no further capital needs will arise for the group.
NBG’s capital enhancing plans include the sale of a 66% stake in Pangea REIT, the sale of the Astir Hotel and EUR 300 mln worth of international corporate loans, a minority stake sale of Finansbank (when market conditions allow) and other smaller transactions, each adding 20-40bps to the Core Tier I ratio.
All in all, the bank aims to bring its CTI ratio in excess of 10% by 1H14 from the current 9.4%.
Group new NPL flows were down 60% y-o-y and down 15% q-o-q at EUR 476 mln (from 563 mln in 2Q13 and 1.16 bln in 2Q12). The Group’s NPL ratio rose to 21.9% while the home market NPL ratio rose 120bps q-o-q to 27.1% compared to +260bps in 3Q12. The forthcoming legislative changes (partial lifting of the current foreclosure ban) are expected to help with asset quality and the peak of the NPL ratio should be expected in late FY14 or early FY15.
“Despite missing our estimates on core revenue lines, cost and loan impairment evolution seems better than expected, while the lower NPL flows and the continued cost cutting efforts allow us to reduce our estimates for both lines. On top of that, our estimates partially included the write-backs of NBG’s other sovereign exposures, but did not include the incremental write-down on the Eurobank holding (EUR 89m incremental writedown in 3Q13). Hence, there is upside risk on our current year estimates (to the tune of EUR40-50 mln) at the bottom line level,” Manolopoulos said.
“For the coming years, we see upside risk given the better outlook for time deposit costs, better cost evolution and lower provisions on the back of lower NPL flows.”