Addiko Bank (ADKO) H1 2024 earnings summary

Executive summary

• Net profit for 1H24 rose 31% year-over-year to €25.5m, with EPS at €1.32 and ROATE at 6.6%, despite €2.9m in one-off takeover-related costs.

• Operating result increased 9% YoY to €54.0m, or 15% YoY to €56.9m excluding one-off takeover costs.

• Consumer segment outperformed with 31% growth in new business and 12% loan book growth; SME growth slowed due to muted demand and market factors.

• Two competing takeover offers (Agri Europe Cyprus and NLB, improved to €22/share) are ongoing, with management recommending the NLB offer; acceptance period ends 16 August 2024.

• Dividend of €1.26/share paid in May 2024; share buyback program completed in March 2024.

Financial highlights

• Net interest income up 11.5% YoY to €120.6m; net fee and commission income up 8.4% YoY to €35.3m.

• General administrative expenses rose 11.6% YoY to €97.0m, mainly due to inflation and €2.9m in takeover-related costs.

• Cost of risk at 0.44% (€15.5m), NPE ratio stable at 2.8% with coverage at 80.7%.

• Cost/income ratio at 62.2% (60.4% adjusted for one-offs); NIM at 3.95% YTD, almost 4% in Q2.

• CET1 and total capital ratio at 20.4%; loan-to-deposit ratio at 70.5%; LCR at 355.5%.

Outlook and guidance

• 2024 cost target revised to below €195m due to takeover-related costs; ROATE guidance lowered to ~6.0% (from 6.5%).

• Loan growth guidance maintained at >6% CAGR through 2026, though SME demand remains muted.

• Dividend per share for 2024 expected to exceed €1.2; mid-term guidance targets ROATE >10% and DPS >€2 by 2026.

• NIM expected >3.8%, NPE ratio to remain <3%, TCR >18.35%.

• Macroeconomic outlook for CSEE region remains positive, with inflation expected to decline and further ECB rate cuts anticipated.