Optima: Τι εκτιμούν οι αναλυτές της για το β’τρίμηνο της ΕΤΕ που ανακοινώνεται σήμερα

National Bank of Greece || U/R | CP EUR 1.190 | TP EUR U/R

2Q/1H20 Results out today post market close 

Facts: NBG is set to release its 2Q/1H20 results today, post-market close. A conference call will follow at 18:00. We see net profits of EUR 40m in the quarter vs. EUR 46m profits expected from consensus. Given the EUR 305m profits in 1Q20, we see 1H20 profits shaping at EUR 345m, from EUR 269m profits in 1H19.

Comment: The unprecedented regulatory support should very much contain the impact of the pandemic, despite the fact that 2Q20 GDP should have been very weak, given that most of the economy was shut during that time. We, therefore, expect 2Q results to follow the same pattern vs. 1Q.

In more details, NII is seen flattish QoQ, supported from flattish loans and better liability side spreads. On a yearly basis, however, NII is seen 11% lower on lower bond and loan yields and lower overall balances, despite the better liability side costs. Similarly, due to the major slowdown in the economy, fees are also seen lower in 2Q. We see fees at EUR 58m, down 12% QoQ, or -5% YoY.

Given the very strong trading gains in 1Q, we expect the line to normalize, having factored in EUR 10m in trading gains, which will be eroded from negative other income. Recall that the ‘other income/expense’ line includes certain taxes and duties and the deposit insurance contribution paid by the bank. Given the above, we see 2Q20 total revenues at EUR 331m, down from the EUR 421m reported a year ago.

On the cost front, we see total opex at EUR 203m, down 2% QoQ. We understand that cost-cutting efforts will accelerate in the coming quarters. As a result, PPI is expected at EUR 128m in the quarter, negatively affected from weaker (non-core) revenues. Finally, provisions are seen dropping to EUR 75m, which implies a CoR of c. 100bps, in line with management’s guidance. In the absence of one-offs, we see net profits at EUR 40m, including a EUR 10m cost form the auxiliary fund (LEPETE).

 (EUR m)

Consensus*      2Q20

QoQ

YoY

Optima 2Q20e

Optima vs. Consensus

1Q20

Optima 1H20e

NII

275

-1%

-11%

275

0%

277

552

Fees

57

-14%

-7%

58

2%

66

124

Non-Core

3

n.m.

n.m.

-2

n.m.

775

773

Total Revenues

335

-70%

-20%

331

-1%

1,119

1,450

OPEX

203

-2%

-1%

203

0%

207

410

PPI

132

-86%

-39%

128

-3%

912

1,040

Loan impairm.

82

-83%

-16%

75

-9%

486

561

PAT stated

46

-85%

-76%

40

-12%

305

345

Source: NBG, * Infront Data, Optima Bank Research

 

 

 

On the balance sheet front, NBG should follow the trends evident in the market, with flattish loans and some small pressures on deposits, primarily due to State deposits, given the drop experienced in the latter in 2Q. NPEs should also be better (ie lower) on new write-offs and decent organic trends.

  • Finally, capital should be enhanced from ECB’s CRR modifications, gains on the FVOCI portfolio, and the quarterly net profit. During the call, we will be focusing on management’s comments over NPEs and moratoria implemented, planned securitizations, and other NPE portfolio sales along with any comment on the pandemic. We have placed our rating and forecast under review.