Piraeus Finl Hldgs Sa

Ladies and gentlemen, thank you for standing by. I'm Poppy, your course call operator. Welcome and thank you for joining the Piraeus Financial Holdings conference call and live webcast to present and discuss Piraeus First Quarter 2023 financial results. All participants will be in a 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 Piraeus Financial Holdings CEO, Mr. Christos Megalou. Mr. Megalou, you may now proceed.

Good afternoon, ladies and gentlemen, and welcome to today's conference call on our first quarter 2023 financial results. This is Christos Megalou, Chief Executive Officer, and I'm joined today by our CFO, Theo Gnardelis, and by Chris Berbati and Xenophon Damalas. 2023 started on a strong foot for Paireus Bank. The strength of our commercial franchise is releasing the bank's potential and the successful management of our balance sheet is delivering solid results. In the first quarter, we continued to build sustainable and growing profitability. Our consistent progress across all operational KPIs is displayed on slide 5. Profitability, efficiency, asset quality, capital adequacy all showed improvement in the first quarter of the year. On slide six, we report the highlights of our quarter one performance. We generated normalized earnings per share of 15 euro cents. We produced return on average tangible book of 13%. Both EPS and return on tangible book run ahead of full year 2023 guidance provided in late January. We delivered 24% net revenue growth annually. On the back of a 56% net interest income increase, and a 15% net fee income growth. We recorded best in class cost to core income ratio of 36%. We lowered our NPE ratio to 6.6%. We increased our NPE coverage to 55%. and we further strengthened our capital position by 60 basis points in the quarter, reaching a CET1 ratio of 12.2% and a total capital of 17%. I am pleased that as of the first quarter of accrue for a 10% distribution in our capital figures. This paves the way for our aspiration to distribute to our shareholders out of 2023 profits, subject of course to the accomplishment of our targets and supervisory consent. In the following slides, we present the progress recorded in fundamentals. Slides 8 to 10. Download all the information regarding net interest income intrinsics. Our loan pass-throughs are trending at 70% to 75%. while our deposit beta is among the lowest in the European space at 10% at the end of March. Net interest margin stood at 2.4%. Furthermore, our cost containment efforts continue unabated despite the inflationary challenges. we are extracting any remaining inefficiencies from our organization while investing in transforming and strengthening our bank for the future. The strength of our operational efficiency is shown in the best-in-class 36% cost-to-income ratio as shown on slide 12. Slide 13 provides a summary of our asset quality indicators. This is the seventh consecutive quarter of negative NPE formation and the sixth quarter of below 100 basis points organic cost of risk. Our MPE ratio dropped to 6.6% from 13% a year ago, and our MPE coverage is now at 55% above the European average of 50%. Paireus possesses strong liquidity profile. Our deposit base is granular, stable and of high quality. Our liquidity ratios are all solid, as evidenced by the 220% liquidity coverage ratio and the 62% loan-to-deposit ratio, both at the top percentile in the European space. These are presented on slides 14 and 15. On slide 16, we present the quarterly movement of performing loans and deposits. Setting aside early year seasonality, the group's performing loan portfolio grew 8% annually And there is a strong pipeline of business projects for this year, including RRF-sponsored plans, where Paireus has already undertaken the fourth branch, leveraging Euros 1 billion financing. On top, we have had a very strong kickstart in the newly launched program, My Home, co-sponsored by the Greek state and the Greek banks, for which Paereus Bank has currently received more than 40% or 10,000 out of total market applications. Similarly, Our deposits have grown by 4% or more than 2 billion euros annually. The first quarter of the year, we experienced both seasonality as well as a very strong asset management products performance. I'm closing are performance analysis with a capital base on slide 17. Organic capital buildup picked up pace with 60 basis points increase in quarter one, all organic. At end March, Paereus was at 17% total capital ratio comfortably above requirements and supervisory guidance. Our solid financial performance and the supportive macro environment positions us to outperform our 2023 targets. We therefore upgrade our 2023 guidance and we also provide updated 2025 financial ambitions along with key underlying assumptions. All the relevant details can be found on slides 20 to 22. For 2023, we now target a 12% return on tangible book versus 10% previously, or 55 euro cents earnings per share versus 45 previously. Net interest margin is expected to be above 2.2% this year. we also upgrade our NPE ratio target for the year to approximately 5% from below 6% previously. For 2025, we target above 65 Eurocent earnings per share, 12% return, 3% NPE ratio, and 14.5 CET1 ratio post distribution to shareholders. Finally, we are proud to be the only Greek company to be included for the third consecutive year in the Financial Times list of Europe's climate leaders in 2023. Our energy transition business lines will be further expanded, and I will be in a position to discuss more on this front in the following months. And with that, let's open the floor to take any questions you may have.

Ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Those participating via the webcast, please review related information in the Q&A live session tab should you wish to ask a question. For those participating in the question and answer session, please use your handset when asking your question for better quality. Anyone who has a question may press star and 1 at this time. One moment for the first question, please. The first question comes from the line of Iqbal Nida with Morgan Stanley. Please go ahead.