Piraeus Finl Hldgs Sa

Ladies and gentlemen, thank you for standing by. I'm Konstantinos, your course call operator. Welcome and thank you for joining the Piraeus Financial Holdings conference call and live webcast to present and discuss the Piraeus First Quarter 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 stick with 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 2024 financial results. This is Christos Megalou, Chief Executive Officer, and I am joined today by our CFO, Theog Nardelis, Chris Berbati and Xenophon Damalas. The first quarter 2024 has been a milestone quarter for Pireus. as it marked the bank's return to full privatized status with a successful offering of 27% of our share capital held by the HFSF. The total size of the transaction amounted to EUR 1.35 billion, the largest bank privatization transaction in recent years in Greece, with total demand at approximately EUR 11 billion, far beyond any expectations. I would like to personally thank all the investors that participated in the offering process for the vote of confidence they casted on Pireus and the management of HFSF for its ongoing support to Pireus during the period of its restructuring and transformation. Diving now into our Q1 2024 results. The year started strongly for Paireus Bank, confirming good progress towards achieving or even exceeding our full year targets. In the first quarter, Paireus delivered another solid set of financial results, with resilient top line while our focus on cost containment and operating excellence remains slide 5 points out a summary of our q1 performance highlights in q1 we generated normalized earnings of 21 cents per share in line with full year guidance of 80 cents. We achieved a return on average tangible book of 16.5% against full year target of 14%. We delivered 10% recurring net revenue on year, accompanied by satisfactory customer margins, low deposit beta, and new record high in net fees. Operating expenses were reduced by 5% year on year at recurring level. with cost-to-core income ratio at best-in-class 29% on the back of our cost-efficiency efforts that offset inflationary headwinds. Q1 recorded our lowest-ever operating cost at €193 million, Importantly, cost of risk dropped to the historic low level of 17 basis points. Excluding NPE servicer fees and synthetic securitization costs, an outcome of the successful management of NPE inflows. Overall, asset quality dynamics remain solid with NPE ratio maintained at 3.5% and NPE coverage at 60%. We generated organic capital of circa 80 basis points in the quarter and reached a CET1 ratio of 13.7% and a total capital of 18.5%. As of Q1, we are stepping up the accrual of quarterly profits for 2024 plant shareholder distribution to 25%. Finally, in Q1, we increased our assets under management by 8% to €10 billion, already meeting our end 2024 target. Slide 6 summarizes all the financial KPIs that summarize our performance, indicating that in all lines we continue the solid 2023 trends. This delivery paves the way for increasing distribution out of 2024 profits, subject of course to supervisory approval. Slide 7 covers our earnings results in further detail. As you can see, improved profitability resulted in tangible book value per share reaching EUR 5.27, up 13% annually, enhancing further the value proposition to our shareholders. Slide 8. depicts the trajectory of the core P&L line so far, showcasing a number of records, namely the best quarterly performance for net fee income, operating expenses, and cost of risk for the quarter. slides 9 to 11 present the detailed information regarding net interest income intrinsics with net interest margin at 2.7%, loan pass-through stable at the level of 80%, and deposit beta setting at 14% in March 2024, against a guidance of 20% average deposit beta for the year, offering upside to our targets. which increased by 19% year-on-year and reached EUR 145 million in Q1. The group has been consistently increasing its net fee income over assets, now reaching the market-leading level of 76 basis points. Piraeus' widening out performance in this metric versus its Greek peers is the result of our focused strategy on expanding and diversifying our revenue sources and our footprint. Our pursuit of further operating efficiency bears fruit despite the inflationary headwinds. We have managed to reduce our operating expenses by 5% year on year in the first quarter, as shown on slide 14. The strong improvement in our operational efficiency kept cost-to-core income ratio at best-in-class 29%. Slide 15 provides a summary of our asset quality indicators. Our MPE ratio was maintained at 3.5% in the first quarter, with break-even new MPE formations. Meanwhile, Q1 organic cost of risk dropped to historical low 17 basis points, excluding NPE servicer fees and synthetic securitization costs. At the same time, NPE coverage remained at a prudent level of 60%. On slides 16 and 17, we present the dynamics of our performing loan book. Setting aside early year seasonality, the group's performing loan portfolio grew 6% annually, and there is a strong pipeline ahead. Our disbursements utilizing RRF and MyHome program, which combined, are at approximately EUR 500 million. Paereus has a superior liquidity profile, presented on slides 18 and 19. Our deposit base is granular, stable, and of high quality, enable the low deposit betas. Our liquidity ratios are all solid, as evidenced by the 241% liquidity coverage ratio and the 62% loan-to-deposit ratio, both at the top range of the European spectrum. Turning to our capital base on slide 20. A strong capital buildup of roughly 80 basis points in the first quarter drove CET1 ratio to 13.7% and total capital ratio to 18.5% in March 2024, while accounting for a 25% dividend payout. On slide 21, you can see how our new wealth and asset management strategy continues to produce strong results, with assets under management reaching €10 billion at the end of March 24, recording an 8% increase in Q1. Finally, on slide 22, there is a summary of our KPIs demonstrating that we are in line or outperforming in some areas our 2024 financial targets. Our strong Q1 results position Pireus well among the broader group of regional peers. To give you some context, on slides 25 to 35, we present the key metrics for Pireus versus domestic and regional peers. We benchmark ourselves in terms of return on average tangible book value. Credit expansion. Net interest margin. Net fee margin. cost to core income ratio, NPE ratio, cost of risk, and capital ratio. In all KPIs, we are now either at par or best in class While we are growing our already sound capital buffers at an accelerated pace, we expect to generate significant value for our shareholders. I'm very happy to announce that 2024 is expected to be the first year after 16 years that Paereus will pay a cash dividend to its shareholders amounting to about EUR 80 million for 2023 results. The relevant application for approval has been submitted to the ECB in mid-April, ahead of our General Shareholder Meeting in June. At the same time, our quarterly capital generation capacity allowed us to step up the accrual for 2024 planned shareholder distribution to 25% as of Q1. Closing, we are proud to be the only Greek company to be included for the fourth consecutive year in the Financial Times list of Europe's climate leaders in 2024, due to the 74% five-year reduction of our own carbon emissions. And with that, let's now open the floor to your questions.

Ladies and gentlemen, at this time we'll 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 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 has a question? We're starting one at this time. One moment for the first question, please. The first question comes from the line of the material Alex with Jefferies. Please go ahead.