Profits are up and prospects are bright in banking sector
Acquisitions, organic growth and increased efficiency are filling the coffers of the banks as loans and deposits increase at home and they widen and deepen their presence abroad

Greek banks continue to ring up big profits as they benefit from the economy’s impressive rate of growth and expand their activities in Southeastern Europe and the eastern Mediterranean. While banks in other parts of the world have become nervous about the fallout from the collapse of the US subprime market, their Hellenic counterparts have been posting new records in profitability.

Greek banks have had very little exposure to the subprime crisis and, according to Nikos Garganas, Governor of the Bank of Greece (BoG), Greek banks will suffer only a limited and indirect effect. Meanwhile, most can be well satisfied with the gains registered in their most recent declared results as they surge ahead of businesses in all other sectors of the economy.

Dimitris Miliakos Governor of ATEbank

In the first nine months of 2007, total profits posted by all listed banks increased by 62 per cent to 4.5 billion euros. The top four – National Bank of Greece, EFG Eurobank, Alpha Bank and Piraeus Bank – achieved total profits of 3 billion euros on the back of acquisitions, organic growth and improved efficiency. Assets, loans and deposits show steady growth as the economy carries on expanding at a rapid pace. Piraeus Bank Group, for example, expects to almost double its total assets to close to 80 billion euros by the end of 2010, compared to 40 billion euros today.

The successful penetration of neighbouring markets by the major banks is encouraging others to seek profits outside Greece. ATEbank, the fifth largest bank in the Greek market, has acquired Romanian Mindbank – renamed ATEbank Romania – and intends to develop it rapidly; its business plan foresees 50 to 60 branches by the end of 2009 and a more than doubling of market share. There are also plans to enter the insurance and the bancassurance markets in Romania. In Serbia, ATEbank is active through AIK Bank, in which it has a 20 per cent stake, and through its Hellenic Sugar Company affiliate, which owns two refineries in the country.
Dimitris Miliakos, Governor of ATEbank, says: “Overall, we aim to broaden our international presence and enter other promising markets in the Balkans and in the wider Mediterranean area by acquiring other institutions in banking, insurance and other financial services in Albania, the Ukraine and Egypt. Expansion in the region is seen as an important part of our growth strategy.”

ATEbank was established in 1929 as a non-profit organisation providing credit to the agricultural sector and enhancing rural development. Today, it is a multi-purpose bank offering a wide range of banking and financial services.

	Profits posted by the four major banks for the first nine months of 2007 totalled 3 billion euros

The bank produced a “very satisfying and sustainable” performance during the first nine months of 2007. Consolidated profits after tax and minority interest increased by 94 per cent to reach 219 million euros, compared with 113 million in the corresponding period of 2006. Customer loans and customer deposits increased by 16 per cent and 9.5 per cent respectively, reflecting the bank’s determination to expand its activities and increase its market share in the retail market. “I feel very positive that we will continue our organic growth and achieve even better results,” states Mr Miliakos.

He highlights positive results from the bank’s efforts to penetrate the small and medium-sized enterprises (SMEs) sector. “There is a lot of potential there. When I became the governor we had only 40 branches that were able to sell SME banking products. Now 90 of them can do that. We are doing much better now, and I expect our market share to increase starting from next year.”

The government has a 77 per cent holding in ATEbank but plans to reduce it through privatisation – although it is committed not to go below 51 per cent. Mr Miliakos says: “Personally, I believe that it would be preferable for the state’s share to fall below 50 per cent, something that would make a partnership with a strategic investor more feasible. Until then, we are doing our best to restructure and modernise the bank to make it more attractive, more productive and more efficient. Over the last three-and-a half years we have managed to create a solid capital base and the conditions for sustainable profitability for the whole ATE Bank Group.”

He says that Greece and Greek banks still present excellent investment opportunities not only due to the growth of the economy “but also because Greece is the gateway to the Southeast European and Mediterranean area.”