National Bank: 4Q2023 Results Review | 4Q23 Strong, proposed DPS of EUR 0.36, BP targets feasible, reiterate BUY    

National Bank Rating: Buy | CP EUR 7.00 | TP EUR 9.20

4Q2023 Results Review | 4Q23 Strong, proposed DPS of EUR 0.36, BP targets feasible, reiterate BUY    

Optima View | NBG reported a strong set of 4Q23 results that beat both Optima and consensus estimates on hjgher NII, fee income and better than expected cost control.

• Management proposed the distribution of a dividend of EUR 0.36 per share (Div.payout: 30%, DY: 5.3%), subject to regulatory approval and above our estimate of EUR 0.29. Moreover, the BP targets set are feasible and higher than our estimates.

The stock is trading 0.85x P/TBV24e, at 26% discount to EU peers, which is unjustified in our view, given its high RoTE profile (RoaTBV of 14.7% vs. 13.3% of EU banks). 

2023 results | Net profit came in at EUR 1,106m in 2023 (-1% y-o-y), 3.1% above Optima estimate of EUR 1,073m and at EUR 315m in 4Q23 (+21% q-o-q), 11.7% above Optima estimate of EUR 282m and 14.3% above consensus estimate of EUR 276m.

NII reached EUR 2,263m in 2023 (+65% y-o-y) and EUR 623m in 4Q23 (+6% q-o-q), beating Optima and consensus estimate of EUR 595m. NIM widened by 15bps q-o-q to 3.37% and by 135bps y-o-y to 3.03%.

• Fee income came in at EUR 382m (+10% y-o-y) and at EUR 109m in 4Q23 (+14% q-o-q), beating Optima and consensus estimates. Core income reached EUR ca2.65 (+54% y-o-y) and EUR 732m (+7% q-o-q).

Revenues shaped at EUR 2.74bn (+33% y-o-y) and at EUR 762m (+10% q-o-q) in 4Q, beating Optima and consensus estimates. Opex landed at EUR 835m (+4% y-o-y) and EUR 234m (+16% q-o-q), lower than our estimate of EUR 242m.

• Hence, pre-provision profit came in at EUR 1,903m (+52% y-o-y) in 2023 and at EUR 529m (+8% q-o-q), beating Optima estimate of EUR 481m and consensus estimate of EUR 474m.

LLPs and other impairments stood at EUR 241m in 2023 (-14% y-o-y) and at EUR 66m in 4Q23 (+22% q-o-q). Group NPEs increased by EUR 35m q-o-q to EUR 1,285m, the NPE ratio was flattish q-o-q at 3.7% and the NPE cash coverage squeezed to 87.5% vs. 93.1% in 9M23.

• Capital | Tangible equity rose by EUR 339m q-o-q to EUR 7,102m and TBVPS increased to EUR 7.76 vs. EUR 7.39 in 3Q23. RoaTBV stood at 16.9%. FL CET1 shaped at 17.8% from 17.9% in 3Q23. 

Balance sheet | Domestic performing loans expanded by EUR 900m q-o-q at EUR 30.5bn. Deposits also increased by EUR 834m q-o-q to EUR 57.1bn. Time deposits accounted for 19.0% of the Greek deposit base vs. 18.7% in 3Q23. LDR improved further to 59.9%. Finally, investment securities increased by EUR 1,489m q-o-q to EUR 17.2bn (23% of assets).

Business plan targets | NBG targets core PAT to reach EUR 1.2bn in 2024e and to exceed 1.2bn in 2026e from EUR 1.2bn in 2023, above our estimates. Mgt aims PE loan growth of 7% CAGR over 23-26 and the NPE ratio to squeeze below 3.0% in 2026e vs. 3.7% in 2023.

• Mgt also expects NIM to fall below 2.90% in 2024e and below 2.70% in 2026e from 3.03% in 2023, assuming an interest rate cut of 175bps over 2024e-2025e, time deposits to account for 25% and time deposit beta to >50% in 2024e and to narrow to 40%-45% in 2025e-2026e. Finally, mgt goals div. payout to increase steadily to European levels and to be complemented by buybacks.

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