Piraeus Finl Hldgs Sa

Gentlemen, thank you for standing by. I am Geli, your course call operator. Welcome and thank you for joining the Pireos Financial Holdings conference call and live webcast to present and discuss Pireos First Half 2023 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. It's time I would like to turn the conference over to Pireos 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 half 2023 financial results. This is Christos Megalou, Chief Executive Officer, and I'm joined today by CFO Theo Gnardelis, Chrysanthi Berbati and Xenophon Damalas. Paris Bank's strong operating performance in the first half of 2023 demonstrates how well we are progressing towards our vision to become a best-in-class European bank. We have delivered our seventh consecutive quarter of profitable growth and our best quarterly performance ever, with euros 238 million net profit, excluding one-offs. As a result, I would like to thank all the employees of Paireus Bank that continue to deliver, as well as our clients, for their continued support. We are proud that the performance of Paireus Group and the bank's leading role in the Greek market have been recognized by the prestigious international magazine Euromani, awarding Paireus the title of the best bank in Greece for 2023. Slide 4 shows our leading position across several market segments. Before elaborating on the bank's performance, I would like to comment on the macroeconomic environment. In 2023, the Greek economy remains on a growth trajectory with first quarter real GDP increasing by 2.1% year on year. Despite the uncertain global sentiment, the Greek economy remains on a path of economic expansion for 2023 and beyond, reflecting the different phase that it finds itself in the current cycle. Our estimate for Greek GDP is for 3.4% growth this year, with inflation decreasing and unemployment being significantly reduced. At the same time, real estate prices are showing a solid trend with residential prices increasing by 14.5% in the first quarter of 2023 annually. Let's start our presentation with slide five. which displays a remarkable performance in the first half of the year. Profitability, efficiency, asset quality, capital adequacy, all presented improvement, almost reaching the yearly targets we have communicated. The business model we are pursuing is characterized by sustainable and diversified revenue pools, cost efficiencies, and a solid balance sheet. Slide 6 illustrates the highlights of our Q2 performance. We generated normalized earnings per share of 18 euro cents running ahead of full year 2023 guidance provided in May. We produced a return on average tangible book of 15%. We delivered 15% net revenue growth the previous quarter on the back of a 9% net interest increase and a 16% net fee income growth. Our net fees for Q2 have been the highest ever for Piraeus Bank. We recorded best-in-class cost-to-income ratio of 32% from 36% in Q1, despite the inflationary environment. We lowered further our MPE ratio to 5.5%, front-loading our cleanup plan with two transactions in a quarter. We increased our MPE coverage to 57%. we achieved a Euros 800 million net credit expansion. Our CET1 ratio stands at a solid 12.3%, 80 basis points higher compared to the end of 2022. we increased our assets under management by 9% in a quarter. Slide seven sets out our earnings results in detail. Our solid financial performance and the supportive macro environment position us to outperform our 2023 targets. Thus, today, we are upgrading our 2023 normalized earnings per share guidance to more than 65 cents from more than 55 cents previously estimated in May, and our 2023 normalized return over tangible book value guidance to approximately 14% from approximately 12% previously. I will return to this in a while. Slides 8 to 10. present all the updated information driving our strong net interest income performance. Slide 8, net interest margin expanded further in Q2 to 2.6%. Slide 9, loan pass-throughs were stable at 77%. while slide 10, our deposit beta, stood at 12% at the end of June. Slide 11 presents the quarterly evolution of our net fee income. We achieved a record high of 141 million fees in Q2 corresponding to 75 basis points over asset, almost at par with European average. Furthermore, our cost containment efforts continue unabated, despite the inflationary headwinds. The strength of our operational efficiency is shown in the best-in-class 32% cost-to-income ratio as shown on slide 12. Our G&A costs recorded a 6% quarterly drop in Q2 to 78 million euros, also a record low for our bank. Slide 13 provides a summary of our asset quality indicators. Our NPE ratio dropped to 5.5%, already meeting our year-end NPE target. NPE coverage is now at 57%, up 110 basis points versus the previous quarter. NPEs dropped by 400 million versus the previous quarter as our cleanup plan was accelerated with two transactions in Q2 presented on slide 14 and 15. One transaction was concluded in late June, comprising retail loans, project Sena, while a second one, project Delta, has been classified as held for sale. The two NPE transactions minimize the legacy retail portfolio of Pareus Bank, offloading more than euros 350 million retail and small business NPEs. The remaining NPE portfolio of euros 2 billion, as shown on slide 16, has a clear path to almost half in the next 18 months under a combination of organic strategies. On slide 17, we present the movement of our performing loans. Q2 was a strong quarter with euros 800 million net credit expansion, helped by development programs and the recovery and resilience fund, as well as the pipeline of our corporate lending. For the second half of the year, we reconfirm our target for an additional 1 billion net credit expansion. Paereus has a strong liquidity profile presented on slides 18 and 19. Our deposit base is granular, stable, and of high quality. Our liquidity ratios are all solid, as evidenced by the 233% liquidity coverage ratio and the 61% loan-to-deposit ratio. Both are the top percentile of the European space. Turning to our capital base on slides 20 and 21, Q2 capital position is on track to full year 2023 target, absorbing the NPE cleanup costs, accruals for 10% dividend payout, and the accelerated DTC amortization. At the end of June, Paereus Bank had a 17.1% total capital ratio, comfortably above requirements and supervisory guidance. Lastly, on slide 22, on wealth and asset management, our new strategy continues to bring results, with assets under management reaching euros 8.2 billion at the end of June, recording a 9% increase in Q2. Moving now to our new forecasts for the year. We are pleased to provide you with a new set of estimates upgrading our targeted KPIs for the second time as shown on slide 23. For 2023, we now target a 14% return on tangible book versus 12% previously, or more than 65 euro cents earnings per share versus 55 previously. Net interest margin. is expected to be at approximately 2.5% this year, while we target a cost to core income ratio below 38%. We are also confident that our MPE ratio for the year will end up below 5%. Furthermore, we expect to achieve a CET1 ratio of 13% at the end of 2023. It is noted that our new set of targets are based on an assumed 4% deposit facility rate for the end of the year. Slide 24. presents the expected evolution of our CET1 ratio during the second half of the year. For 2024 and 2025, we remain committed to our previous targets as per our March 2023 business plan. Especially for 2024, we expect a 14% return over average tangible book value, assuming a 2.5% deposit facility rate. The results of the 2023 supervisory stress test are presented on slide 26. The result evidence Paereus Bank improvement of fundamentals, placing the bank at the 13th position among 70 EBA banks participating in the exercise. Paereus' consistent and strong operating results in the previous quarters have supported our group's investment case, while the increasing trends in our performance continue to create significant shareholder value. Slide 28 summarizes the competitive advantages of Paireus Bank across all areas. The commercial positioning and the financial strength of the bank indicate why its valuation remains attractive compared with its local and European peers. From slide 29 to slide 37, we present the drivers behind this performance and where we stand against our domestic and European peers. On slide 29, we demonstrate the sustainability of our return profile, which ranks in line with peers. Same goes for net interest margin, as presented on slide 30. Our net fee margin is consistently above peer average, as presented on slide 31, while we also outperform in terms of cost to income, as illustrated on slide 32. Slide 33 displays the radical reduction of our NPE ratio after many years of dealing with the legacy stock. The massive cleanup we have undertaken has brought us to lowest versus peer average NPE ratio. Slide 34 and 35 present our capital position. which is now at par with our domestic peers. While our strong operating results have grown and are expected to continue to grow, our capital buffers further. Slide 36 illustrates the PE multiples for Pireus versus peer average based on expected earnings as per public guidance. while slide 37 presents our current price to tangible book versus profitable EU banking comparisons multiple as expected, as estimated for year end 2023. Finally, before opening the floor to questions, a few words on the recent wildfires in Greece. Although our customers haven't experienced significant damages, we are in close contact with the local communities to identify the truly impactful ways through which Pareus Bank can support businesses and households. 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 questions and answer session, please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question is from the line of Levizakos Alevisos with Axia Ventures. Please go ahead.

Hi. Thank you very much for the presentation and congratulations on the set of results. I've got a couple of questions, if I may. First one is, I can see you're letting expansion.

Mr. Alevi-Zakos, I'm sorry to interrupt you. This is the operator. Can you please speak a little closer to the microphone so management can hear you?

Yep. Apologies. I hope now it's better. So congratulations on the set of results, and thank you very much for the presentation. My first question is on the lending expansion. Looking at the numbers coming from the Bank of Greece, your figure looks outstanding. So I was wondering what causes you to outperform so much of the industry. Was there a single transaction that may have skewed the numbers towards that direction? And then second part of that question is I can still see the pass-through rates on lending continue to be very high. Do you expect this to continue or you assume some kind of spread contraction in the upcoming months. And the second part is I can see now that the target for the ROT has gone up to the 14%, which clearly buds accordingly to the DFR going to the 4%. So is this more coming from the asset side, i.e. you expect that you will be able to reprice more the loans, or do you assume now a lower deposit beta? Thank you very much.

Thank you, Alevizos, and thanks very much for the questions. Let me take the first one and then pass it on to our CFO, Theodor Gnadellis, for the rest of your questions. So, a great expansion for the first half, anchored on our efforts on Q2. was not related to one specific transaction. There are a number of granular transactions that have taken place and gave us this result. The most important one was through the Hellenic Development Bank, which has increased our balances by euros 210 million, and that's mostly small businesses and SMEs. which for that particular action gave us a 42% market share. And that explains also the metrics that you had in mind. At the same time, we had another 130 million coming through the RRF, which again was a significant market share as of June, another 40%. And the rest is mostly corporate exposures mainly on energy transition and other corporate transactions that increased our balances. So with this 800 million credit expansion we are in line to achieve the promised credit expansion for the year which requires an additional 1 billion which comes and will come through a very healthy pipeline that mostly our corporate book enjoys.

And your question about pass-throughs, I mean, we are currently enjoying a higher than expected pass-through on the loans of 77% as we disclose. We are budgeting some spread contraction going forward to close at a 70% pass-through. So it's not a steady as it goes guidance when it comes to the asset side. It is going to be lower than today, but higher than previously budgeted. So there is a bit of an uplift from the half one performance. There is some carryover effect for the full year. So that obviously helps. But it's not the main point of the NII. The main point is clearly the deposit beta. We are going much lower in terms of the beta increase. We closed June at 12%. Even if we reach the 19% of December, the full year average is going to be at 13%. So much lower than originally expected and guided for. And let's remember also cost of risk. We always had a prudent guidance baked into the forecast for 120 basis points. We are now adjusting that to 100 basis points. And a lot of other small things, including a better fee performance, a better admin cost performance, all of that bakes in guides for a steady normalized 14% return. All right. Thank you both, and congratulations again.

The next question is from the line of Savim Mehmet with J.P. Morgan. Please go ahead.

Good afternoon. Thank you very much, and congratulations also from my side on the results. If I may follow up on the growth question, how do you see the trends in the second half, particularly taking also into account the higher ECB rates now? So how do you see both corporate demand, but also maybe can you talk about the retail demand? I heard there is now obviously a support program by the government for mortgages, et cetera. So putting everything together, if you could please tell us about your expectations for growth in the second half of the year, that would be very helpful. And then maybe just on the 2024 and 2025 guidance, if I look at your NII over-assets guidance, which is now 2.2% for 2025, I see that's come up from 2% previously, although the underlying DFR assumption is the same. So, could you tell us what's changed there? Is it simply your expectations for still lower deposit betas through the cycle, or is there anything else that has moved there? Thank you.

Hi, Mehmed, and thank you for the question. On the growth, on the remaining two quarters towards the end of the year, what we are experiencing is a granular dialogue with the market across industries, mostly supported from the RRF, and we expect also to be further supported by the further programs of the Hellenic Development Bank in SME and SB exposures. These are the driving forces, especially the RRF trend for growth for corporate balances for the remaining of the year. There are some specific big trades as well. For example, the Attica Ring Road will be awarded and further exposures may come out of that transaction. But overall, it's pretty much a corporate book case for the rest of 2023. On the retail, we are a big player and a big participant in the My Home program that you have referred to, which indeed is a very successful one. The first 500 million have been allocated and there is a second 500 million that are coming through. However, the actual impact on retail on disbursements for the next two quarters, we don't expect to be significant, so that will change the trend on retail mortgages. Retail mortgage demand remains weak, And we expect this to continue in the next two quarters. And we have to wait until first, second quarter of 2024 to possibly see some reversal in that trend. So mostly and primarily corporate coming out of large corporate, infrastructure financing, SME, NSB, supported by Recovery and Resilience Fund, and in the cases of SME and small business, by the Hellenic Development Bank Products.

Your question on the 24-25 guidance, Mehmet, now we're introducing a new 2023 revised guidance. The 24 is an extra column we're bringing in just for clarity for everybody and simply to demonstrate the sustainability of the 14% return between 23 and 24, because naturally the question that most of you guys have is okay about 23, but what about 24? focus on what our current business plan prescribes for 24. Nothing changes for 25. The return is still 12% as it was. The capital increase is still 12%. So just assume that the guidance stays the same.

Okay. Thanks very much.

The next question comes from the line of Budkov. Michael from Goldman Sachs. Please go ahead.

Good day. Thank you very much for the presentation and congratulations. My first question is on net interest income. We could see some improvement, good improvement in the second quarter, which is what's surprising to some extent is that it is even bigger than in the first quarter on a quarter-by-quarter basis. So what contributed to the stronger quarterly performance and when do you expect NII to peak this year or maybe next year already then. The second question is on the fee income. We can see some also solid improvement in the second quarter, what has supported that. And finally, on the NPs, it is said that one, big corporate case translated into more than half of NTE buildup in the second quarter. So the question is, are there any other big single corporate cases which are, let's say, on watch or on the radar and which can be potentially at risk of adding up to the NTE's balances? Thank you very much.

Okay, thanks, Mikael. Indeed, the NII of Q2 was spectacularly high. We can see on page 8 the drivers that contributed to this result. I have to say it was a much smaller hike of the deposit beta than we expected and a slightly higher pass-through on the loans. That, together with higher DFR, that helped the cash part. Remember that even after TLTRO, the bank remains strongly cash positive with more than $5 billion residual cash, so that creates a tailwind on the NII as well. That created this result. The speed by which the deposit beta will continue to hike will determine when we reach the peak. We expect that this peak on a quarterly basis will happen this year, probably in Q3, given our current forecast. But the performance every quarter surprises, so we just remain focused operationally to provide alternative opportunities to our customers and not to contaminate the deposit base with higher betas. The fees, it was a record quarter for the bank. for a total of 141. Definitely the loan part and the strong expansion that the bank showed with some India secrecies in there when it comes to the agri part and some other fees that we collected, RRF-related, et cetera. That created kind of a perfect positive storm for fees on the loan side. But I got to say, all the free lines kind of contributed. So we had a very strong card quarter, fans transfer. So overall, a very... good performance that also helps us increase the guidance on a fees per asset basis. Look, on the MPEs, indeed, we had this one case. Of course, we can't say names, but it was a big part of our influence, the majority. Are there any more such cases? No. I would say right now there is no big watch list that we expect, and we are kind of on the fence as to whether we're going to trigger a Stage 3 reclassification. No such case exists. But there's no room for complacency here. We understand... where the interest rates have gone. We are seeing very high pass-throughs, so that causes extra caution for diligence and attention to the clients. The most important thing for us is to make sure we support clients rather than an effort stage classification. Whatever comes our way, we will deal with it.

Okay, thank you very much.

The next question is from the line of Mamisoglu Osman with Ambrosia Capital. Please go ahead.

Hello, many thanks for the presentation. Just a few things that are left, I guess. One on the securities income. It looks like your volumes were up a bit, but the income is lower Q&Q. So just wondering if there are anyone outside of this quarter, last quarter, and any color guidance on outlook. That's the first one. And then the second one, you touched upon a bit on asset quality, but just wondering if you can elaborate on the rationale for accelerating the MPE reduction process. And just to confirm, the remaining $2 billion you plan to work that through organically. Did I hear that correctly? Thank you.

Thank you, Osman. So, overall, the securities book has actually increased in returns. I guess you're looking only at the securities part of the line. If you include the money that the bank makes from derivatives that are used to hedge those positions, it's actually an increase. from 93 million in Q1 to 107, that's on page 8. So all in all, it's a position that's continuing to enhance the NII of the bank. The increase happened primarily through risk-free T-bills, so that's also why you would not see a bigger hike than what you would expect. It was really a deployment of cash onto some rather risk-free paper. On the MPEs, listen, I mean, the bank is making some very, very solid money right now. And as we've said last time, our plan is to deploy the extra capital that we're making above expectations to accelerate the cleanup of the bank and reach our asset quality target sooner. We knew that we were on a very strong trend for organic profitability. We decided to invest the money and accelerate the plan, bring those two transactions forward by about six to 12 months, and therefore create a clear path to European average NP ratio now. From now on, the plan is focused purely on organic reduction. We do have a stock left of about $2 billion. A billion of that we expect to treat over the next 12 to 18 months in an organic basis, which would allow for the current inflow rate to get us to where we want to be in terms of NP ratio and bank all the organic profit to enhance capital buffers of the bank. That's the plan definitely for the next six months.

And maybe just following up on that, the cost of risk outlook, I mean, is that a conservative assumption per se, given what you're seeing on the ground now for 24?

Well, it is in line with what we actually had in half one. We are continuing at that rate. We had said 120 basis points. We're now adjusting that to 100 basis points, which is aligned to the actual half-one result, also given the charges that we had to take on the inflows of the first semester. Is it conservative? It's definitely not aggressive. I would say it's based on what we're seeing right now. Sorry, I meant for 24, the 80 BIPs. is that Well, I mean, reaching our MP ratio target for 2023, yes, I would say there is some room there. But, guys, for 2024 and 2025, we'll come back with a renewed guidance after we examine all the elements, most possibly with the Q3 results. Right now, there's a lot of elements in the 2024 and 2025 guidance that need to be reeducated, starting with net interest margin. The only point of the 24 guidance that I've had before is to illustrate that the bank is right now a 14% returning bank. Whether now that can become 15 or 15 and a half, it's, I think, beside the point. Thank you.

The next question is from the line of Nelly Simon with Citibank. Please go ahead.

Oh, hi. Thanks for the opportunity. One technical question, which is, can you tell us how much cash you have in minimum reserve requirements sitting at the ECB? That would be my first question. And second, could you just refresh us on the lost budgets in terms of restructuring charges? I think you had only $5 million in the first half of What's the likely one-off cost that you expect for the full year? And then just the same in terms of the lost budget for inorganic NPEs after the large activity in the second quarter. Those would be my questions. Thank you.

Hi, Simon. Yeah, I guess after the latest ECB announcement, it's a fair question. The minimum reserve is $600 million. So the next question is the impact on the NII on an annualized basis. That's around $20 million versus previous plan. That's yet to be updated along with everything else for the 24 guidance. For 2023, we've measured the impact to be $6 million. That's baked into the revised guidance. Just for the avoidance of doubt. For the cleanup, look, it's a higher cleanup charge than we had in the budget for the year, primarily because we basically front-loaded the 2024 transaction into 2023. We don't have major cleanup charges left. The cleanup process has completed. The bank is at a 5.5% MP ratio, and we're headed to a lower than 5% ratio from organic flows.

Got it. And in terms of the one-off costs?

Well, we've got some restructuring costs, a very low number booked. into Q1 and Q2. For the full year guidance for the capital, we are including a $60 million charge. We will see how that gets deployed between 2023 and 2024. We haven't announced any programs yet, but the guidance does budget for a substantial FD reduction between late 2023 and early 2024. Understood. Thank you. Thank you very much.

The next question is from the line of Garrido Lewis with Bank of America Merrill Lynch. Please go ahead.

Yes, hello, and thank you for taking my questions. I have two, please. The first one on the NPE flows this quarter, that single corporate which drove the majority of the increase, can you tell us which industry it was from, and can you give us an indication of the share of the top 20 corporate exposures in your books just as a proportion of total corporate loans. And then the second question from me just on the issuance guidance, if you could give us an update on where you stand for the rest of the year. Thank you.

Well, I think we're basically now fishing for a name here. No, I mean, let's stick to what we've said. It was a substantial corporate exposure. It is rather public. It has affected the entire sector to some extent. And the reason why there's no point mentioning industries here is not to avoid the question, is really that the case is so idiosyncratic and has some history behind it that it's not really a predictor of any industry performance per se. So that's why let's stick to where we're at. You had the second part of your question. Sorry, can you repeat?

Yes, if you could give us some indication of, if you look at, let's say, your top 20 corporate exposures, what's the proportion of the total corporate book that they represent?

Sorry, we're looking that up. It's not the majority, I would say, so there's not of the total lending book, so there's no particular concentration risk right now. We are constrained also by EVA rules in terms of CT1 concentration as well, but we can come back to that with some disclosure later on. Okay, thank you. And then on the issuance updates? Yeah, we're currently at, for MREL you're saying, right, for bonds? Yes. We're currently at 21.6 MREL ratio for a 21.8% target. We're basically there in terms of this year's requirement, and we don't plan to issue anything more. The capital accrual for the year is another 70 basis points. as per guidance, so that in itself will take us above 22%, so comfortably meeting the guided target for the year.

Okay, great. Thank you very much.

The next question is from the line of Duat Sharad with Amundi. Please go ahead.

Hi, good afternoon. Just a question on the one item of guidance which is still revised but on the cost to income ratio. You've obviously done much better than the guided level in the first half at 34% and you're staying below 38% for the full year. Is there any reason that you can tell us why we should expect costs to increase significantly in the second half from that run rate?

Not particularly, Sarath. Right now, we did peak in MPU. We had a very good performance in admin costs. We're simply looking at the full year budget right now. We're saying less on 38 because... Let's just say that our model and our forecast have a significantly lower number. We're working for the best result possible, but we thought it's right to upgrade our guidance versus the previous number. We're headed for a very good cost-income performance for the year.

Thank you very much.

The next question is from the line of Golub Luliana with Goldman Sachs. Please go ahead.

Hello, good afternoon. Congratulations on the results and thank you for the opportunity. I want to ask, I can see your revised outlook on residential real estate prices for 2023 quite materially up and I think more than two percentage points for 2024. I was just wondering if you could please comment on what you are seeing on the ground in terms of real estate and also in light of your comments on the call of weaker mortgage demand on retail. And the second question, Would you be able to give us a flavor of the conversations you are having with the rating agencies? You are obviously on positive outlook from both Fitch and S&P, and we already saw two rounds of upgrades from S&P and Moody's. So I was just wondering if you can comment on any discussions you're having also in light of a possible upgrade of the sovereign later this year. Thank you.

Thank you. Thank you, Luliana. Let me take your retail real estate question. And, you know, we have on page 73, you know, our projections for the next, for 23 and the next few years. years 24 and 25. Well, what we are experiencing in the Greek market, especially for residential real estate, is an uptick in prices, which is even higher than run rate of our estimates. That having said that, these are mostly transactions that are taking place with own funds, and it doesn't seem to be requiring any mortgage financing. This explains the odd result of having real estate funds prices going up, but not an increase in volume of mortgages. The main reason is that there is a lot of demand from outside of Greece. We see a lot of demand coming from the Middle East, from Egypt, from from, you know, other jurisdictions. And these have been allocated mostly on the Athens Riviera, but generally in Athens. Some of them taking advantage of the expiry of the golden... the golden visa rule or the upgrade which is about to come on 500,000 per real estate. So there's an acceleration of demand from this particular source that we expect to continue. So a lot of cash transactions which explains why Despite the uptick in prices, there is no mortgage demand as we are experiencing.

And on the rating discussion, Liana. Look, I think the Republic is on a safe path to an investment grade status. Some raters are obviously easier than others. But we assess from the discussions that we've had that this is a second semester of 2023 question. Some radios do expect to see some KPIs being met. They do expect to see the growth of the year, also projections for 24. Some others are more comfortable with the desustainability and are on a clearer path. For banks, the investment-grade status will take some time. When it comes to Preos Bank, we know the idiosyncratic KPIs that have to do with asset quality, with capital quality. Overall, I would say balance sheet health and sustainable profitability that the raters are looking for. The MV ratio is clearly a major metric in their assessment. Our acceleration of MP cleanup was also driven by raters at this stage.

Very comprehensive.

Thank you. The next question is from the line of Get Gunstone Maximilian with Jefferies. Please go ahead.

Hi, yes, good afternoon. One from me on your impairments on other assets. I believe they came in a little bit higher than the usual run rate this quarter again. So I was just wondering if you could give a little bit of color what those relate to, are those real estate related? And perhaps if you could give us an idea what we should be expecting there in terms of a run rate going forward. Thank you.

Thanks, Max. It's actually a technical effect from the consolidation of MIG. It's an environment of its goodwill. You will see that countered by an abnormally high number in the trading. another income that's basically coming from the fair valuation of the MIG investment. So it's actually within the operating profit, it's actually countered, and there's nothing budgeted for the second semester, and it was not real estate related.

Okay, thank you.

Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Megalou for any closing comments. Thank you.

Thank you all for participating in our first half 2023 results conference call. We look forward to discussing with you all physically or virtually during our investor outreach program commencing as of early September. In the meantime, please have all of you have a relaxing summer break.

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for calling and have a good afternoon.