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Piraeus Bank's third-quarter profit grew 12.5 percent year-on-year, above forecasts, with the bank's chairman expecting loan growth to slow in the fourth quarter because of adverse market conditions.
Kicking off the reporting season for Greek banks, Piraeus posted a net profit of 157.3 mln euros in the third quarter versus an average forecast of 138 mln by analysts recently polled by Reuters. The bank had net profit of 145.3 mln in the second quarter.
Slower credit expansion as a result of the credit crunch and a weaker economy compared with the retail lending boom of recent years are expected to affect Greek banks' earnings growth down the road.
"I must add that market conditions have led to a deceleration in loan growth in the fourth quarter at our group, especially abroad," Piraeus Chairman Michael Sallas said in a statement.
Piraeus said the annual pace of loan growth slowed to 38 percent from 42 percent in June and 48 percent in March 2008. It said retail lending — mortgages and consumer credit — grew by 22 and 33 percent respectively in the year to Sept.
Although primarily reliant on stable deposit funding, Greek lenders' strong expansion in southeast Europe has led to increased use of market funding.
Foreign operations in Bulgaria, Romania, Serbia, Egypt, Ukraine, Cyprus, U.S., contributed 25.6 percent or 113 mln to group net profit in the nine-month period.
Piraeus shares, down 61 percent since the start of the year, were down 1.87 percent to 9.44 euros after results were announced.
The shares trade about 6 times estimated 2008 earnings, versus a P/E ratio of about 8 for European peers, according to Reuters Estimates.
Adverse conditions in capital markets as a result of the financial crisis are a challenge for Greek banks' wholesale financing needs and could hamper growth plans, according to ratings agencies.
Meanwhile Piraeus Bank said it will offer to buy all of Proton Bank's shares at the same share-swap ratio offered to Proton's main shareholders. Piraeus agreed with Proton's main shareholders to buy a 26.98 percent stake in the small lender in a share swap, offering one of its own shares for every 5.5 shares in Proton.
Proton has deposits of 1.3 bln euros and loans of 1.25 bln and runs a network of 31 branches. Piraeus has said the deal would strengthen its capital base by at least 200 million euros and boost its earnings per share, taking synergies into account.
