Eurobank’s performance in the first quarter of the current fiscal year was particularly positive.
In particular, the interest margin increased by 55.6% compared to 1Q 2022 and amounted to 503 million euros due to the increase in interest rates, new loans, interest income from bonds and derivative products and activities in the foreign. The net interest margin increased 81 basis points in the corresponding period and reached 2.53%.
Net fee income increased 9.5% year-on-year to €129 million, mainly due to loan income, corresponding to 65 basis points of total assets in the first quarter of 2023.
As a consequence of the above, organic revenues increased by 43.2% compared to Q1 last year to €632M, however, total revenues fell to €620M in Q1 2023, from €681M the previous year, due to non-recurring financial income from derivatives in 2022.
Operating expenses increased by 7.4% to €222 million, mainly due to activities outside of Greece, inflationary pressures and investments in technology and information systems. Organic cost-to-income ratio decreased to 35.1% in the first quarter of 2023, from 46.7% in the corresponding quarter of 2022, and cost-to-income ratio remained significantly below 40% at 35.7% .
Organic profit before provisions rose 74.6% to €410 million, while total profit before provisions fell 16.1% to €398 million.
Loan-loss provisions increased by 27.1% compared to the first quarter of 2022 to €75 million and corresponded to 75 basis points over average loans.
As a result of the above, organic operating profit before tax increased from €176 million to €335 million in the first quarter of 2023.
Adjusted earnings before tax was €328 million and adjusted net income was €255 million in the first quarter of 2023. Earnings per share was €0.06 and return on tangible capital5 was 15, 8% in the first quarter of 2023. Total net profit was €237 million, compared to €270 million in the first quarter of 2022 and includes a loss of €15 million from operations in Serbia in the first quarter. quarter of 2023, which have been presented as discontinuous.
Foreign operations were profitable with adjusted net profit increasing from €44 million in the first quarter of 2022 to €79 million. Organic profit before provisions increased 70.7% to €106 million and organic operating profit before tax increased 73.3% to €95 million in Q1 2023. 51% of adjusted net profit came from operations in Cyprus (€40 million adjusted profit) and 42% of them in Bulgaria (€34 million adjusted profit).
The NPE ratio fell to 5.1% in the first quarter of 2023, from 6.7% in the first quarter of 2022 and 5.2% at the end of last year. New NPE formation was marginally positive by €7 million in the January-March 2023 period. Total NPEs decreased by €500 million. on an annual basis and amounted to 2,100 million euros. or 500 million euros after the predictions. NPE coverage of accumulated provisions strengthened significantly, from 71.9% in the first quarter of 2022 to 76.0% in the corresponding first quarter of this year.
As of the end of March 2023, the total capital adequacy (CAD) ratio stood at 18.4%6 and the FL CET1 ratio at 15.5%6, increasing 190 basis points compared to the first quarter of 2022.
Tangible equity per share stands at €1.78 and grows 22.8% year-on-year.
Total assets increased to €81.9 billion at the end of the first quarter of 2023.
Current loans organically increased by €0.3 billion in the first quarter of 2023. Total loan balances (before provisions) stood at €41.7 billion at the end of March, including high- and medium-rated bonds by value of 4.7 billion euros. , housing loans at 10,000 million euros and consumer loans at 2,800 million euros.
Customer deposits decreased by 500 million euros in the first quarter of 2023 to 55.1 billion euros. The loan to deposit ratio stood at 72.9% and the liquidity coverage ratio at 167.5% at the end of the first quarter of 2023. High-quality liquid assets amounted to €16.2. billion in the previous period. Eurosystem funding decreased by €3.3 billion compared to the first quarter of 2022 to €8.3 billion at the end of March 2023.
Commenting on the bank’s first quarter results, Chief Executive Officer Mr. Fokion Karavias said: “Within a positive macroeconomic environment both in Greece and our other core markets, Eurobank posted another quarter of strong financial results. The tangible value Book value) per share increased 23% yoy to €1.78 Net interest income and fee growth exceeded initial estimates A third of total revenue came from international operations, with strong performance in Cyprus and Bulgaria Although extraordinary income was significantly lower than last year, earnings per share was 6 cents, beating our estimate Our performance has led to a strong solvency ratio of 18.4%, taking into account the strategic actions we We have announced the repurchase of 1.4% of the share capital of Banco Comparte.
The outlook in our main markets remains positive. In Greece, GDP growth is expected to exceed 2.5%, significantly higher than the eurozone average. European funds and FDI will continue to support a path of growth based on investment and exports. Greece is one step away from investment grade and is expected to improve in the coming months.
In general, the results for the first quarter of 2023 highlight the advantages of our business model based on the diversification of revenue sources. In Greece, new loan disbursements amounted to €2.9 billion and we expect this trend to continue with demand coming mainly from large, small and medium-sized companies. However, with further increases in euro interest rates expected, we are also focusing on asset quality. We encourage our eligible clients to take full advantage of the Vulnerable Borrower Support Program. At the same time, acting proactively, we have made the decision to freeze the base rate of current mortgages for 12 months.
We have received official approval from the SSM to submit a request to repurchase 1.4% of Eurobank shares and we are moving forward with the next steps. This move is the first of our shareholder rewards program, which we have announced and is a strategic priority for us.”
See the Eurobank results in the right column “Related files”.