Return of up to 30% of profits to shareholders and credit extension

Its powerful results are impressive National Bank whose earnings per share (EPS) at 1.25 euros already crush the nine-month, 2023-2025 targets for EPS of more than 1.10 euros with a simultaneous reduction of bad loans to 3.6% in Greece and the surplus liquidity to exceed 7.4 billion euros.

The National Bank as the CEO of the Group said Pavlos Mylonas during an analyst briefing, it aims to use these funds for organic growth in Greece and for returns to shareholders that will reach 20%-30% of this year’s earnings through dividends and share purchases.

The National has created both strong sizes, which as management pointed out to analysts, it no longer makes sense to trade red loans to reduce them further after the last transaction, since this goal will be achieved at no additional cost through organic growth. NGE has the capital to increase its organic profitability.

Evidence for this is the increased net credit expansion 5% from last year in the nine months against a cumulative target of 7% for the period 2023-2025 with NPLs in Greece increasing by €600m on a quarterly basis and totaling €28bn in the portfolio after disbursements reaching €1.9bn .euro in the third quarter.

According to Mr. Mylonas, no slowdown in growth through new loans is foreseen and even the estimate for the peak of net interest income is now shifting between the fourth quarter of this year and the first quarter of 2024. But this too seems to be conditional, as the ECB interest rates that were raised positively impacting the third quarter with increased disbursements, will remain high for longer.

At least for the foreseeable future, NBG management sees more disbursements of new loans with even strong demand for large corporate loans on hold for the end of the year.

In the third trimester new loan disbursements increased by 40% with loans mainly from SMEs, shipping and project finance and this picture continues in the fourth quarter.

NBG’s figures and results paint a very strong picture as they are very strong across the board with organic profit after tax of €855m and a return on equity of almost 18% in the nine months and with the NPL ratio down to 3.6% in the Greece that are fully covered at 94% of their value.

The net interest income (NII) up 73% YoY and 6% QoQ, net interest margin (NIM) remained on an upward trajectory, rising to 322bps in Q3 2023

The cost of credit risk plunged to 66 basis points in the nine months, against a target of around 80 basis points.

But where NGE impresses is certainly in return on equity (RoTE) reaching 17.8% in the nine months against a target of over 15% this year (20.8% in the quarter without adjusting for excess liquidity).

Also the equity capital are very high with the CET1 ratio at 17.9%, and with the Total Capital Adequacy Ratio standing at 20.3%.

THE CET15 index up about 60 basis points on strong organic profitability. Of course with the EIB having almost two percentage points of increased MREL funds above the 2024 target after the successful issuance of €500m of subordinated (Tier II) bonds nothing is planned for this year and it is comfortable for next year with no priorities for issuing bonds and especially for AT1 bond, not even a thought.