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Annual General Meeting

“Real convergence of our economy with the economies in the Eurozone calls for a new and contemporary model for economic operations, a model counting on private entrepreneurship as the economy’s driving force. For it is only the private sector that has proven to be in a position to provide the economy with flexibility, extroversion, innovation and a competitive profile, necessary for our country to manage the challenge of global competition. Certainly, parallel to that, structural reform efforts should keep on, or possibly intensify, including efforts to liberalise closed markets and professions, modernise institutions and rationalise the role of the State in the economic field. A consistent implementation of reform policies constitutes a fundamental and weighing option vis- a- vis the short-term political toll, which is to be expected”, as Mr. Nicholas Nanopoulos, CEO, EFG Eurobank Ergasias pointed out in his speech at the Regular Annual EFG Eurobank Ergasias Shareholders’ Meeting held today (Monday April 3rd, 2006).

N. Nanopoulos added that “the state ought to actively and strongly persist on its path to improve a proper framework for the market to function, enhance supervision, monitor norms and institutions and encourage entrepreneurship, setting the right preconditions which ought to provide equal opportunities and an equitable scope for growth for all. The very notions of equality before the law and non- distortion for the market are highly important in the framework of a liberal economy well-founded on private entrepreneurship and intense competition. With regards to the working environment, its shaping should take into account the major challenges globalization and international competition pose, challenges that are by now present in almost every aspect of economic life, which can at the same time still, given the right conditions, act as a powerful lever to promote effectiveness and productivity for the benefit of the Greek consumers, the citizens of Greece.”

At this point, EFG Eurobank Ergasias CEO underlined that the Bank props up dialogue and collective bargaining at the level of enterprises, i.e. those parties that, on the one hand, have direct knowledge of issues at hand while, on the other hand, are willing to look for the golden mean to tackle those problems to the advantage of all. He went on to add that in practice “not only do agreements not eliminate the need for dialogue but they instead rather rely on discussions, which is why they promote employee interests in an effective manner while at the same time capitalizing on the specificities and advantages every business organization has to offer”. He actually mentioned that “Eurobank, despite difficulties due to mergers, has established a working environment that allows the most competent to excel, promotes meritocracy, rewards efforts made and partaking in success and generates thousands of new jobs.”

Touching on economic prospects, EFG Eurobank Ergasias CEO described expectations for the current year as positive, for they are based partly on preserving domestic dynamics for growth along with a positive ambiance concerning the world economy. Given this environment, the Greek banking system, he said, has a creative role to play. Greek banking institutions are a field that par excellence attracts, directly or indirectly, important capital from abroad. N. Nanopoulos added: “Investment by foreign institutional investment portfolios in the top five Greek banks reaches approximately € 14 billion, which stands for 33% of their capitalisation overall. It is moreover estimated that more than 1 million Greeks are small shareholders having invested in banks.”

The Chairman of the bank, Mr. Xenofon Nikitas stressed, while discussing the course of the economy, that “despite problems linked directly or indirectly to the State Budget significant steps have been taken, which so far might not have helped enough to bridge the gap that divides us from our E. U. partners. Our economy was and is still faced with a high deficit in terms of competitiveness, a deficit reflected in many indicators, be they relevant to unemployment or the balance of current accounts, and which impact on both the economic and social ambience. So much has happened and perhaps more needs to be done. But what is mostly called for is a change in mentality. Making decisions does not suffice if society cannot accept or understand them, either because the community has not been properly informed or because it cannot realize what a critical situation this is and what the dimensions of the problem may be; as a result, society may object to reforms that are nevertheless a one-way street.” He also added that “it is high time individual roles and responsibilities became perfectly clear and that private initiatives act and grow under terms of competitiveness, transparency and strict control averting potential abuse of dominant position to the advantage of the social partners, to the advantage of the economy itself, to the advantage of the country eventually. In this environment, the financial sector is called upon to play a vital and determining role. And as for me, I am certain that it does indeed possess the know-how, the power and the will to play that role.”

EFG Eurobank Ergasias CEO Mr. N. Nanopoulos next elaborated on the role Greek banks are playing in the wider South East European region (New Europe) and even beyond that, underscoring the strong presence thereof and emphasising that “today Greek banks are characterised by a great sense of extroversion and dynamism, both reflected on our state economy as well. Moreover, banks act as a gear to support and strengthen domestic entrepreneurship.”

As concerns Eurobank EFG in particular, Mr Nanopoulos noted that the Group’s presence kept growing further at fast rates, both in Greece and in the wider region. Thus, the Group is expected to own 870 branches by the end of the year 2006, through recent acquisitions and the Group’s own organic growth. In the last five years there have been more than 2,500 new employees and the Group has currently more than 16,000 people on its payroll, 7,000 of whom work for New Europe. In the so-called New European countries, Eurobank EFG should have a network of about 500 branches by the end of 2006. Poland, the biggest new EU market with a population of 38 million, is of particular interest as it offers great scope for banking growth, especially in retail banking. Already 15 branches are in operation, the target being for 50 branch offices throughout Poland by the end of this year. Eurobank EFG presence is similarly strong in Serbia following the full buy-out of Nacionalna Stedionica Banka, a bank with a network of 70 branches. The same applies in the cases of Bulgaria and Romania while the Bank intends to capitalise on its presence in Turkey, where the securities firm it bought in 2005 has markedly increased its turnover and market share. By the end of 2009 Group subsidiaries beyond Greek territory are expected to contribute 30% of Group total revenue and 20% of net profit.

On Eurobank EFG activities in 2005, N. Nanopoulos, the Bank’s CEO, said that “the bank has increased its total assets by 34.6% to € 44.5 billion, mainly due to an increase in loan balances by 22.5%, which amounts to a consolidated € 27.4 billion.  In the Greek market, Eurobank EFG has sustained its high growth rates while constantly enhancing its presence. It is typical that the year 2005 marked an increase by 23.4% in loans while the banking sector grew by 18.7%. The spearhead for the Bank’s strong credit growth lies with loans to households as they rose by about 30%, which allowed Eurobank EFG to increase its share in loans by 0.5% within the year, i.e. 15.5%. This dynamic growth translates into significant market shares in most of the attractive sectors from the point of view of both profitability and prospects. Indicatively, Eurobank EFG consumer credit market share stands at 28.2%, mortgages 13.2%, leasing 19% and stock exchange services at 17.6%.

Despite its dynamic growth, portfolio quality stays high thanks to an effective and modern risk management system coupled with a strict provisions policy. Actually in 2005 the rate of non-performing loans was at 3.02% for the Group, one of the lowest within the Greek banking system. Accrued provisions and reserves for bad debt cover 92% of such debts, thus protecting the Bank against future credit risks. In the field of asset management Eurobank EFG plays a leading role with total AUM amounting to 37 billion € increased by 22.6% compared to 2004. In mutual funds, market share is at 35.9% (excluding money market funds). In the field of insurance, with a market share of 19% in terms of life insurance premiums generated, it ranked first for the first time. In private banking, there was a 26% increase in AUM and the bank won for the second year in a row the title of ‘Best Bank in Private Banking in Greece’ by the internationally acclaimed “Euromoney” magazine. In the field of capital markets, the public offering for Eurobank Properties came to a successful close as it attracted a total of € 114 million in new capital and 36,500 new shareholders while issue was oversubscribed by 8.5 times. Eurobank EFG’s highly successful course in 2005 exceeded by far the Bank’s initial targets and resulted in consolidated net profits of € 501 million, increased by 47.4% compared to 2004. Typically, in the last three years the annual average profitability increase for the Group again stood at almost 37%. It is also worth pointing out that the overwhelming share of its profits (approximately 90%) came from organic sources, i.e. retainable and recurring sources, and not from rather risky ones, related to securities’ trading and sale of real estate property. Moreover, ROE increased considerably to 21.1% from 16.8% in 2004. Total Group revenue reached 1.9 billion compared to 1.5% last year, increased by 25%. This rate is quite higher than the objective initially set for total revenue increase by 15%. It is also worth mentioning that revenues from activities in New Europe amounted to € 210 million, an increase of 44.4%, contributing 11.3% of consolidated revenue for the Group. In terms of cost restraint, performance was equally important as the cost to income ratio was 42.7% for Greece and 47.9% for the group, overall being one of the lowest amongst European banks. Shareholders’ Equity for the Group amounted to € 2.5 billion. The capital structure of the bank remains strong with its total capital adequacy ratio at 13.5% and Tier I capital ratio at 10.9% at the end of 2005”.

The General Meeting approved total dividend payments of € 286 million, i.e. € 0.90 per share (including an interim dividend of € 0.36 per share). The dividend corresponds to a dividend yield of 3.4% based on the end of 2005 stock price, further increased by 25% over the 2004 dividend, more than covering thus the goal set by management for a 15% increase. As of Wednesday April 5th, 2006 those shares traded in the ASE shall bear no right to dividend, due for payment as of April 13th. The regular Annual Meeting approved the free issue of two new shares for every 10 old as well. It is expected that relevant approvals as required by law will be granted on time so that the right to new shares should take effect as of May 10th and new shares will then start trading in the Athens Stock Exchange on May 17th, 2006.

Regarding Eurobank share, it is noted that for the period between December 31st, 2001 and to date it had the best performance against the ASE general, the banking sector index and Eurostoxx Banks Index. Furthermore, the participation of foreign institutional investors in Eurobank EFG share capital has increased, reaching 26%. This demonstrates that the Bank’s share is placed by now among the most attractive investment options for even global investment portfolios.

On a final note, EFG Eurobank Ergasias CEO N. Nanopoulos underlined that “our high expectations in all fields along with the continuous strengthening of our presence in Greece and the wider region once again corroborate the correctness of our strategy, the effectiveness of our business model and the consistency with which we are carrying this through. So far, we manage each consecutive year to exceed the ambitious targets we set. It is the achievement of these targets that got us to announce our new financial targets for the years 2006-2008.

In particular, we aim at:

- at least 20% net profit CAGR for 2006-2008

- at least 615 million in net profits for 2006, which stands for a rise by 23%

-25% ROE by 2008

-cost /income  ratio at 45% by 2008