Alpha Bank Sa

Ladies and gentlemen, thank you for standing by. I am Gail, your chorus call operator. Welcome and thank you for joining the Alpha Services and Holdings conference call to present and discuss the first half 2024 financial results. All participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Alpha Services and Holdings Management. Gentlemen, you may now proceed.

Good morning, everyone. Thank you for joining us. I am Iasson Kipapsoglou, Alpha Bank's Head of IR, and I have with me today our CEO, Vassilis Psaltis, our newly appointed Deputy CEO, Lazaros Papagarifalou, and a fresh addition to the team, our new CFO, Vassilis Kosmasis. Slightly different format this time. Vasilis Psaltis will lead the call, summarizing our progress and giving you a few updates on the outlook. Lazaros Papagarifalou will then go through a more thorough update on the guidance for the year. And then lastly, Vasilis Kosmas will give you more details on the quarter. As ever, we will take you and end the end, and we aim to finish within the hour. Vasilis, over to you.

Thank you, Eson. Good morning, everyone, and thank you for joining. I would like to also use this forum to welcome Vasilis to the team. We've been working closely with him over the last few years. He's well known to us. His skillset and his mindset complement greatly the rest of the executive bench, and we're very glad to have him on board. The delegation of the CFO responsibility to Vasilis Kosmas will also support Lazaros in delivering on the wider, more complex agenda that he oversees. His appointment as deputy CEO will ensure that we can enhance the value that we create and deliver as an organization. And with that, let's move to today's agenda on the second quarter results, starting with slide four, please. In the first half of the year, we're proud to have delivered recurring earnings of $437 million, which translated to a 13.6% return on tangible equity and 18 cents of earnings per share for our shareholders. Our top line is resilient, with net interest income remaining strong. And as we continue to make good progress in fee income generation, supporting our solid management of operating leverage and ensuring an improvement in provisions. We continue to grow our loan and AUM balances and to position the business to maximize the recurring value we can create for our stakeholders in a sustainable way. Our capital buffers continue to grow steadily with 118 basis points of organic capital generation reaching a reported level of 14.8% in the second quarter or 16.6% when accounting for the completion of pending transactions. These numbers are net over 35% accrual for dividends out of 2024 profits up from the 20% accrual of 2023. As a reminder, the distribution out of the 2020 fee profits has been equally split between a cash dividend that was actually paid yesterday and a buyback that has now been approved by the AGM and will commence shortly. Supervisory approval for the reestablishment of distributions to shareholders is one of the major milestones reached this quarter. The other is the achievement of investment-grade status after 14 long years. our external validations of our full return to normality. The journey has been long, but we can now look forward to a future of higher recurring profitability, expanding capital buffers, and increasing shareholder remuneration. Moving on to slide five, let's see an update of the progress we are making on two pillars of our strategic plan, on wholesale business and on asset management. There's a lot of work happening on the operational side. We're dedicated in the enrichment of our business digital offering, as we promised in our investor day, integrating new automations and innovative solutions focused on trade finance and payments. We have already achieved nearly half of the commitment, but most importantly, we are delivering solid digital solutions. We continue to earn top roles across major investment-related transactions, and we have delivered promptly numerous funding programs designed for SMEs, leading our bank consistently in top positions. We continue working in a serious and methodological way, and we are confident we will reap the benefits of these changes in the coming quarters and years. But allow me here at this stage to stress a few respective financial points as well. Loan growth in wholesale is running at 6% year-on-year. This is clearly a healthy level, and we expect it to accelerate on the back of a very strong pipeline that is well above $5 billion and more than $2 billion already contracted. This quarter, we have grown less than the market, and we are obviously aware of that. At the margin, this has been the case vis-à-vis some of our peers over a number of quarters. This quarter is a very good example to showcase the underlying trends behind this process. Our net credit expansion this quarter has been impacted by a significant level of one-offs, mostly in the form of loan syndications. These are loans that we originated and we are remunerated for the advisor-related work that we did for our clients. Syndication allows us to redeploy capital in a more accretive manner, whilst this process has not been always reciprocal in the market. At the same time, we are seeing some stress pressure in the market. Yet, our ability to generate fees and to optimize capital usage has meant that the returns we generate on an allocated capital basis have improved. We have said this before, and allow me to say it again. We prioritize profitability over volume growth, as we need to ensure that our commercial policies are accretive to shareholder value. Let's now turn to slide six, moving to our asset management business to take stock of the improvement we have been seeing there. This subsegment is booming at the sector level and growth is coming on the back of structural trends that we have discussed with you before. We have seen our mutual funds go up by 50% in the last year and tripling since the onset of the growth trajectory at the end of 2020, resulting in a significant uplift in revenues and profits from this business. Our franchise positioning and product innovation has allowed us not only to keep our number one position, but to expand our market share, reaching 25%. On the next slide, There we can look at the year-to-date trends in net sales, and there you can see that we have captured one-third of the market. This demonstrates the quality of our product factory, the client access of our relationship managers, and the receptiveness of our affluent clientele to investment themes. But I think we should also highlight that we are making good progress on the institutional front as well. Bear in mind that this is a segment that, beyond the state, is really at its infancy and has only broken ground recently on the back of legislative changes. Our leading offering puts us at pole position to continue to capture a good portion of this growing pie as well. On to slide eight, a brief update on our partnership with Unicredit. As you will recall, last year we announced the outlines of a commercial agreement with Unicredit. The teams have worked swiftly on the operationalization of the agreement. Eight months after the original terms were announced, the documentation for the merger of the remaining subsidiaries has been signed, while the framework for the offering of the Unicredit OneMarket's mutual fund in the quick markets has been finalized, and the prudence are currently available to our customers throughout our network. On the wider commercial agreement, we continue to expand our relationship on trade finance guarantees and letters of credit. We have launched two structured note issues for our private banking clients and are working more closely on clearing, trading and treasury, factoring, as well as brokerage. As a reminder, we expect the transaction to be EPS neutral before taking into account any upset from the commercial agreement. The transaction also adds more than 100 basis points to capital and bears testament to our focus on improving the capital allocation across the business. Our partnership with Unicredit affords giving us the opportunity to drive innovation in the Greek market, to be exposed to international competition, and to put ourselves at the forefront of European banking developments as a member of an extensive pan-European network. This is an opportunity that we will leverage to enhance the value that we create for the benefit of all of our shareholders. And turning to slide nine, this is on guidance, and Lazarus will share with you further details, but allow me to give you an overview of the three underlying driving forces. First, reality has proven to be better than we expected. This is true for the outlook of interest rates, as well as also for the pace of migration towards time deposits for retail customers. These exogenous factors make our top line more resilient than previously thought. Secondly, there are specific areas where we have outperformed our internal targets, most notably in the AUM growth, where we have extended our lead and delivered this year's target in just six months. but also in the handling of the non-performing exposures, where management actions have delivered a stronger pipeline of clearance. Finally, we have been able to de-risk our NPE plan. Our target for the plan was to get our 6% NPE ratio down to 4% in three years, and we have delivered more than half of that reduction in just six months. This has come at a modest cost. But as you can see from our unchanged guidance for book value and regulatory capital, we have been able to absorb that within our own resources. The result is that we expect to deliver better recurring earnings and a higher level of sustainable profitability, getting us closer to where we aim to be sooner. Lazare, the floor is yours.