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Eurobank: Credit Quality Improving Fast But Curve Tighter Already

FINANCIALS

Eurobank (EUROB GA) 4Q23 results are a beat on operational metrics with credit quality improving quickly. CET1 is a small miss but, on balance, these look credit positive but against a curve that’s tighter over the last month.


  • Key credit metrics: credit losses are 88bp (similar to consensus, 89bp at 3Q23) and non-performers are better (3.54% of loans, from 4.86% at Sep-23). CET1 is 16.9% (from 16.8% at Sep-23) below the 17.4% that was in consensus, so a mixed picture.
  • Revenues are up 3% y/y and 7% ahead of consensus and, with most other elements inline, pre-tax is 5.6% ahead of expectations and net income 18% ahead.
  • Outlook: the new 2024-2026 business plan looks unremarkable, other than looking for a dividend restart (at 25% payout in FY24). Targets are core pre-tax of >EUR1.5bn in FY24 and c.EUR1.6bn in FY26 (both similar to consensus), RoTE gliding towards 13% in FY26 (from 18.1% in FY23) and a CET1 ratio above 17%.
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