Piraeus Bank CEO Christos Megalou may be watching the bank heading for another year of strong profitability, which will unexpectedly be confirmed on Friday, when the financial figures for the nine-month period are published, but it is clear that there are two areas of concern.
Reduced interest income
The first concern has to do with the net interest income (NII). The “golden times” of high interest rates belong to the past, with the ECB having already launched successive reductions. This will, certainly, lead to a gradual reduction of NIIs, which have underpinned the profitability surge of the last years.
For example, Goldman Sachs expects interest income to decline from 2.1 billion euros in 2024 to 1.87 billion in 2025 and 1.88 billion in 2026. And this will reasonably affect total profitability (from 0.94 euros/share to 0.82 and 0.80 euros/share, respectively).
Οn the other hand, the management of the bank highlights the steady expansion of the loan portfolio, through which the normal decline from reduced interest rates can be offset.
Based on the data of the first half, the performing loans amount to 31.3 billion euros (30.1 billion euros at the end of 2023), with the 2024 target adjusted to 31.7 billion euros.
The bank is aiming to reach around 40 billion euros by 2027.
The discount on the stock
The second area of concern lies in the stock, which has fallen at the lowest level of the last three months (3.6 euros).
On his part, however, Christos Megalou hopes that the figures of the nine-month period will be the “X” factor that will give the stock the required impetus, in order to cover the lost ground, taking advantage of the attractive valuations.
Moreover, the CEO has expressed his vision to the Reuters news agency to double the value of the bank (to 8 euros/share) until he leaves the management.
