National Bank of Greece swings to profit in 2013


This just in: National Bank of Greece (NBG +2.1%) reports a profit for 2013 - €809M vs. a loss of €2.14B in 2012. For Q4, the bank earned €547M vs. €14.8M a year ago.

Group operating expenses were higher by 1% Y/Y as cost cuts in Greece were offset by higher expenses in the growing Turkish market (93 new branches opened in 2013).

New delinquencies declined 57% Y/Y to €1.5B, and provisions were cut all the way to €1.627B from €2.532B. Liquidity is improved with the loan-to-deposit ratio falling to 97% from 108%.

Comments (19)
  • DeepValueLover
    , contributor
    Comments (10925) | Send Message
     
    (NBG) could double by Christmas.
    20 Mar 2014, 03:24 PM Reply Like
  • Jaswinder
    , contributor
    Comments (79) | Send Message
     
    NBG could give out serious dividends in three years - Double by Christmas? Yes Indeed!
    20 Mar 2014, 05:14 PM Reply Like
  • salvatort
    , contributor
    Comments (404) | Send Message
     
    Seriously? Nobody noticed that the decline in provisions was more than NBG's net income? It would have reported a $100 mln loss otherwise. And new delinquencies were down, NPLs still are more than 30% of total loans. So why reduce the provisions?
    21 Mar 2014, 12:59 PM Reply Like
  • tytyty
    , contributor
    Comments (22) | Send Message
     
    Jaswinder HI
    When you say it could double by Christmas ; you should also explain why?
    I could say too tha Bank of America willl triple by Chrismas;but it 's not serious if i don;t give any explications and comment to confirm what i say.....
    Esther
    21 Mar 2014, 04:19 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (10925) | Send Message
     
    NBG:

     

    Price to Book Value: 0.14

     

    Price to Earnings Ratio: 3.4

     

    Shareholder's Equity: $9.19 billion

     

    Net Income: $755 million

     

    Earnings Yield: 29.43%
    ----------------------...
    Look...anything can happen to (NBG) this year but given the current recovery in European financials (especially Greece) and the bank's operations OUTSIDE of Greece I think a double by Christmas could, COULD be conservative.
    22 Mar 2014, 01:29 PM Reply Like
  • salvatort
    , contributor
    Comments (404) | Send Message
     
    I assume you have not taken into account the new dilution from the upcoming capital raise. Also given their market value of $12 billion, how is price to boo 0.14 and earnings yield 29.43? your numbers don't make sense.
    23 Mar 2014, 09:23 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (10925) | Send Message
     
    salvatort:

     

    Feel free to post your analysis complete with "numbers" to refute what I've written.

     

    No need to heckle from the audience...come up on stage and present your side.
    23 Mar 2014, 04:22 PM Reply Like
  • salvatort
    , contributor
    Comments (404) | Send Message
     
    Do I have to do simple math? According to Bloomberg, NBG's market cap is EUR 9.2 billion. Divided by the EUR 0.8 billion profit for 2013, that is a P/E of more than 11, or 9% earnings yield..
    According to capital.gr, NBG's book value as of June 2013 was EUR 7.6 billion. Even if it increased to EUR 8.1 billion, to reflect the recent profits, the company still trades at a 14% premium to book value.
    I seriously don't know what capitalization you use to arrive on these estimates, but NBG has a $12 billion-EUR 9.2 billion market capitalization.

     

    Also, you need to examine the quality of the earnings. Approximately $900 million released from provisions, means that without that, NBG would have a $100 million loss...
    25 Mar 2014, 09:27 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (10925) | Send Message
     
    "...without that..."

     

    But they DID have a release from provisions so you can't act as if that isn't a factor on the balance sheet.

     

    One can't ignore the upside of losses that never materialized.

     

    Are you short NBG?
    25 Mar 2014, 10:02 PM Reply Like
  • salvatort
    , contributor
    Comments (404) | Send Message
     
    Including such release of provisions to net income is like including the fair value gains a real estate company records to its bottom line. Its correct, according to IFRS, but it does not change what we would call normalized income. If they have the same results next year (in revenues etc), then they will record a loss. Unless a company can produce a sustainable, normalized positive net income, then I am not a fan.

     

    But on top of that, the stock is not cheap. People make the same mistake as with Citi. C is trading a $5 (pre-reverse split). Will it ever return to $30? No, because of the dilution. It already has a market capitalization close to its peak. Same for NBG. In 2007, the peak market cap was slightly over EUR 20 billion. Now its $9 billion. So for the stock to double, the company should return to its old glory days.. As a Greek, I can tell you that will not happen. Even more, the company is looking to raise EUR 2.2 billion. If its only equity (could be hybrid) NBG will have a market cap of EUR 11 billion, ceteris paribus, so even closer to its pre-crisis peak, but your EPS will be even lower..

     

    Now, I also think the Greek economy is still a mess. Nothing has changed. The only thing they did all these years was impose new taxes and supposedly make some reforms. That was a joke, and these reforms were never implemented. For example, just yesterday they started discussing again about the issue of taxi-cabs, and who can become a driver etc. Supposedly they liberalized the market three years ago. Never implemented the law. And the primary surplus is fake too. They include as income the interest payments that EU countries return to us from the GGPs they own. While this is a cash inflow, indeed, it should not be in the primary account: If we had 0 debt (pretty much the assumption for the primary account calculation) then we would receive 0 revenues from these countries. As simple as that.

     

    My short thesis is bases on the following: The stock has run ahead of itself, and the company is already valued at almost half its peak market capilization. That's too expensive. And on simple metrics, P/E, P/B, I demonstrated how expensive it is too. Also, I believe the Greek economy will collapse in the first shock (Russia perhaps?) because the did not change a thing, and have not fired a single person employed in the pubic sector (yes, all of the 1 million new unemployed people come from the private sector-that is more than a third of the total private employment..)

     

    I am not short the stock. Only reason is such position does not fit well within my portfolio. Otherwise I would.

     

    If you want to buy Greek banks, buy Alpha, nothing else.
    26 Mar 2014, 09:53 AM Reply Like
  • Justin Grant
    , contributor
    Comments (150) | Send Message
     
    Your numbers are completely incorrect. Where did you get those numbers?
    13 Apr 2014, 10:55 AM Reply Like
  • Justin Grant
    , contributor
    Comments (150) | Send Message
     
    Oh boy, here come the "short conspiracies" that seem to always follow whenever anyone attempts to take part in a discussion objectively with some inconvenient truths.

     

    salvatort is absolutely correct. He's also willing to take part in a discussion with you who presumably are 'long'. Does being 'long' cast aspersions upon you and reduce the value of your statements? If not, then please don't float the presumption that it does for anyone else whether they are short, long, or have no position at all.
    13 Apr 2014, 11:00 AM Reply Like
  • Justin Grant
    , contributor
    Comments (150) | Send Message
     
    I like Alpha too, but its market cap is just shy of the level it had reached in January 2008 according to this page: http://bit.ly/1fUvSds

     

    According to the Berenberg report it appears they have nearly doubled market share however, with acquisition of Emporiki, so this should imply further upside, but it can't be too significant I should think.

     

    http://bit.ly/1kkNbee
    (Page 2, Figure 2)

     

    I also don't particularly like what appears to be pump n dumps being run on the ticker ALBKY. It's diverged significantly from the mother share in Athens recently. On April 2nd, 2 minutes before market close an order worth $1660 went through, paying 10% more than the ask. That tagged the stock with a high closing price and percentage increase for the day. This high percentage increase sent the ticker to make the rounds of all the 'daily stock winners' and 'blazing penny stocks' lists. Next day stock shot up to $0.40 at one point. Athens share based on parity is only approx $0.285 meanwhile. Although then again, perhaps this is a reason to hold the stock, the opportunity to get pump n dumped, and take profits during the pump.
    13 Apr 2014, 11:09 AM Reply Like
  • salvatort
    , contributor
    Comments (404) | Send Message
     
    Not sure if I would invest in any Greek bank now, but if I did, Alpha would be the one. It has always been the best managed bank and had the lowest dilution by fiancnial stability mechanism. That partly explains why it is so close to its original valuation. Still, not a fan of Greece's prospects (and I'm Greek).

     

    Many foreign investors seem to rely on wrong data or assumptions. Besides numbers that are factually wrong (such as the ones stated in these comments by others), they seem to rely on what politicians say, which is really weird. I mean, what do you want the prime minister to say, that we're in deep shit?

     

    Case in point:
    They focus on the primary suplus, ignoring the fact that it includes a lot of new taxes implemented retroactively. They will result in less revenues next year. On the other hand, they totally ignore that the government has made almost zero reforms and no single employee in the public sector has lost his job and the the budget still runs a huge deficit (officially 12%+ for 2013, although a large portion is the bank bailout). And of course, that Greece has at some point to repay the over EUR 300 billion in principal of the loans it was granted. Instead of doing that with this years primary suprlus, it is giving EUR 500 per person for certain employees, such as policemen. Same old, same old...

     

    Today's capital raise by NBG is another proof. Seeking Alpha said in the news item that investors were caught by surprise because the bank had announced it would seek to bridge the equity gap by cost cutting and profits. EUR 2.5 gap with profits? NBG has at the bubble year of 2007 EUR 1 billion in net income, and normally it would generate EUR 500-800 million. It's like JP Morgan trying to bridge a $50-60 billion gap with future profits...

     

    Lastly, Emporiki is the crappiest bank. I would not be happy to own it. The acquisition would be something like BAC acquiring Countrywide, minus the lawsuits..
    14 Apr 2014, 09:58 AM Reply Like
  • Justin Grant
    , contributor
    Comments (150) | Send Message
     
    If people had done the minimum of research they shouldn't have been surprised by todays result. bankingnews.gr has been speaking about this for months now, as being the most likely scenario. I agree with the rest of what you have said, the 'recovery' rhetoric was always just that, rhetoric and creative accounting. As to Emporiki, it seemed like Alpha got a good deal at the time, some commentators called it one of the best deals in banking history (hyperbole), given they received it for 1 euro, fully recapitalized, with some other nice perks. Agreed that it was in very bad shape and has been a bit of a drag upon Alpha, but the synergistic potential should more than offset that I would think. I'm not in Greece however, so I could be completely off base in these comments.
    14 Apr 2014, 12:02 PM Reply Like
  • salvatort
    , contributor
    Comments (404) | Send Message
     
    Perhaps. Most of the cost at Emporiki were incurred by Credit Agricole, which inexplicably kept injecting hundreds of millions of euros year after year during the past decade. However, Emporiki still suffers from a bad portfolio (were the recap is supposedly addressing that) and a bad culture stemming from its past (even during the sale to Credit Agricole it operated like a state-owned bank). On the other hand, synergies exist. If you go to Greece, you will see the same bank having a few branches in every block, as a result of the consolidation from almost ten to four banks. The question is, will they be allowed to shut them down, lowering opex, and reduce their headcount? Otherwise, the benefits of consolidation will not be realized.
    14 Apr 2014, 12:14 PM Reply Like
  • DeepValueLover
    , contributor
    Comments (10925) | Send Message
     
    I'm not sure why someone with no connection to a stock would be so passionate against the stock but to each his own I guess.

     

    But I am very leery of people who claim to know exactly what WON'T happen.

     

    Citi was a poor example because they are a growing, global banking group.
    26 Mar 2014, 10:45 AM Reply Like
  • realitician
    , contributor
    Comments (24) | Send Message
     
    IMO NBG's expansion into Turkey provides diversification against it simply being a play on Greece. So, whether or not Greece has hit bottom and is a bargain now isn't the whole story. While NBG's share price has essentially been flat since October, TUR has been trending back up recently. Moreover, the EU has shown it's willing to bail Greece out no matter what. So NBG might be a good play right now. I opened a small position today essentially as a marker.
    3 Apr 2014, 02:37 PM Reply Like
  • Justin Grant
    , contributor
    Comments (150) | Send Message
     
    You've summed up a short thesis that requires no math, only common sense.

     

    What you've perceived to be a 'risk free investment', has also been perceived by every other person in the market place. After the global financial crash there was real fear and real hate of banks, people investing in BAC or IRE back then made big gains because they bought during the height of fear. These days everyone and his brother thinks investing in the recovery of bank stocks is a fantastic idea. All the blood has been washed out of the streets. The current price reflects this. The days of big gains from speculating in the recovery of banks are over.
    13 Apr 2014, 11:19 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs