Eurobank: Outbound growth strategy, presence in five countries and subsidiaries profile

Once the still pending supervisory approvals come through, Eurobank anticipates its participation in Hellenic Bank’s shares will increase to 55.3% within the second quarter of this year.

Eurobank's move to strengthen its presence on the island, where it has already been active since 2007 through Eurobank Cyprus, is part of the group's broader extroverted and developmental vision to fortify its degree of internationalisation, with the success of its expansion beyond Greece indicated in its latest financial results.

Indicative in this regard, is the fact that based on the financial results of 2023, 37% of net profits came from international activities, with a distinct contribution from the subsidiaries in Cyprus and Bulgaria.

Maintaining a strong international character that allows it, from a competitive position, to take advantage of opportunities and the development perspective, the group's strategy is to further strengthen its presence in the main markets in which it maintains a strategic interest, namely in Bulgaria and Cyprus, with Cyprus expected to play a central role as a European gateway for businesses originating from the Middle East and India.

It is pointed out that Eurobank was the only systemic Greek bank that, in the midst of the multi-year economic/banking crisis that also hit Greece, managed to maintain a significant international presence. Thus, it is now setting as a goal - as a bank with a strong presence in the wider region and diversified sources of income - the growth of profits in an environment of lower interest rates, where operations outside Greece will contribute approximately 50% to the organic operating profits of the group.

It is worth noting that in addition to increasing its stake in Hellenic Bank, where it currently stands at 29.2%, Eurobank proceeded about a year ago to strengthen its subsidiary in Bulgaria, Postbank, with the acquisition of BNP Paribas Personal Finance Bulgaria. This move is also indicative of the group's extroverted development orientation.

The group, Eurobank S.A. and its subsidiaries

The Eurobank group consists of Eurobank S.A. and its subsidiaries, and operates in five countries.

Stepping on solid ground, fundamental characteristics of Eurobank's presence outside Greece are:

First: Customer-centric orientation with a targeted approach per activity sector and management based on trusting relationships with customers.

Second: Investments in IT infrastructure and digital transformation, so that it responds to evolving technological developments and continuously improves its business and operational model.

Third: The growth perspective and dynamics of increasing organic profitability.

Eurobank Cyprus

Eurobank Cyprus Ltd started its operations in 2007. With healthy profitability and a strong capital base and liquidity, it currently operates a network of eight banking centers in all the main cities of Cyprus.

Its business model

Its business model differentiates it from its competitors, as it offers specialised solutions based on the needs of its customers. The bank operates mainly in Wholesale Banking and more specifically in the following five main pillars:

▪ Corporate Banking

▪ Wealth Management

▪ International Business Banking

▪ Global Markets

▪ Affluent banking

Financial results 2023:

▪ Net Profits after taxes €199.4m, +90% compared to 2022.

▪ Strong capital adequacy with total capital adequacy ratio (CAD) and common equity ratio (CET1) at 34.1%.

▪ Significant excess liquidity, with the loan-to-deposit ratio at 38%.

▪ Very good loan portfolio quality with the NPEs ratio at 2.5%.

▪ Effective management of operating costs with a cost-to-income ratio of 18.3%.

The strategy…

▪ Digital transformation : In April 2023, the first phase of the installation of the new banking system was completed, leading to the strengthening of functionality, the improvement of efficiency and the overall upgrade of the customer experience in the new digital world.

▪ Expansion into new markets (India, Israel, Middle East), aiming to expand its reach, increase its customer base and cross-selling opportunities, enhance its profitability and organic growth in a highly competitive world .

▪ Wealth Management & Capital Markets: Already occupying a dominant position in the local market, Best International Private Bank 2023 in the Private Banking category (Euromoney Magazine), the bank looks ahead and adapts quickly, investing in innovation and expanding already established relationships of trust, through a full range of investment services and products, while facilitating transactions in global markets in the new digital reality.

▪ Corporate Banking : The bank continues to grow by taking advantage of opportunities and new industries, while looking for new and more efficient customer service channels.

▪ International Business Banking (IBB) and Affluent Banking: The bank invests in personalized and high-standard service combined with its ever-evolving digital offering.

• Bulgaria-Eurobank Bulgaria AD (Postbank)

Postbank offers banking services to individuals and businesses, and is the only bank with Greek interests currently operating in the country.

It holds a leading position in the Bulgarian banking market, the fourth largest bank in Bulgaria, based on its assets, with a strong domestic brand name. In addition to organic growth, Postbank has further strengthened its position in recent years through successful acquisitions:

▪ In March 2016, the acquisition of all the activities of the Bulgaria branch of Alpha Bank was completed.

▪ In November 2019, the legal and operational merger with Piraeus Bank Bulgaria AD was completed, thus significantly improving its position in the local banking market.

▪ In May 2023, the acquisition of BNP Paribas Personal Finance Bulgaria was completed, further strengthening its position in Bulgarian retail banking, while at the same time creating significant cross-selling opportunities, given BNP Paribas Personal Finance Bulgaria's customer base (300 thousand customers).

Financial results 2023

▪ Net Profits after taxes €189m, >+97.4% compared to 2022.

▪ Total capital adequacy ratio (CAD) at 19.0%.

▪ Very good loan portfolio quality with the NPEs ratio at 2.5%.

▪ Cost-to-income ratio at 40.9%.

The strategy…

▪ Protection of market shares with innovative products, effective investments and promotions and well-developed sales channels.

▪ Continuous digital transformation of the bank's operations as well as its products and services with the aim of efficiency and optimal customer experience.

▪ Strategic cooperation with guarantee funds and programs (EIF, BDB, FoF, etc.).

▪ Investments in digital channels (ebanking and mobile banking).

• Eurobank Private Bank Luxembourg

Eurobank Private Bank Luxembourg SA was founded in Luxembourg in 1986, and has a branch in London and Athens. The bank offers Private Banking, Investment Fund Services and selected corporate banking services.

Through a wide range of innovative products and services and with highly qualified and experienced staff, the bank follows a targeted business model.

Financial results 2023:

▪ Net Profits after taxes €25.1m.

▪ Total capital adequacy ratio (CAD) at 24.3%.

▪ Significant excess liquidity, with the loan-to-deposit ratio at 35.0%.

▪ Excellent loan portfolio quality with zero non-performing loans.

▪ Cost-to-income ratio at 46.9.

The strategy…

▪ Digital transformation: It will be technologically supported by the capabilities of the new digital wealth management platform, which is already operating in Cyprus and is expected to soon be operational in Luxembourg as well.

The digital transformation will significantly strengthen the bank's strategic position in terms of operational efficiency and digital channels and services, with the ultimate goal of optimal service and overall customer experience.

▪ Penetration in all the markets in which the Eurobank group operates, as well as opening to new markets.

▪ The bank's activities in Luxembourg, the United Kingdom, but also in Greece, combined with the "New Generation" Private Banking model, constitute an important point of differentiation with enormous prospects for dynamic growth.

▪ Its presence in the United Kingdom is an important advantage for the expansion of the clientele.

▪ The holistic philosophy of managing the client's portfolio, which characterizes the "New Generation" Private Banking model, offers innovative personalized solutions for the optimal management of the client's assets regardless of the country where the investment funds are kept.

(Source: InBusinessNews)