Piraeus Finl Hldgs Sa

Ladies and gentlemen, thank you for standing by. I am Mina, your chorus call operator. Welcome and thank you for joining the Paris Financial Holdings Conference call and live webcast to present and discuss Paris' first half 2024 financial results. At this time, I would like to turn the conference over to Paris Financial Holdings CEO, Mr. Christos Megalou. Mr. Megalou, you may now proceed.

Good afternoon, ladies and gentlemen, and good morning to those joining us from the US. This is Christos Megalou, Chief Executive Officer, and I'm joined today by our CFO, Theo Gnardelis, Chris Berbati and Xenophon Damalas of our IR team. Paereus has delivered the best quarterly and semi-annual performance ever. with euros 333 million normalized net profit in the second quarter, adding to euros 612 million for the first half of the year. Our strong operating performance in the first half 2024 demonstrates our progress towards achieving or exceeding our full year targets. 2024 is turning into a milestone year for Pyreus. Following the return to full privatization status, the group paid a cash dividend to its shareholders in the second quarter amounting to euros 72 million for the first time after 16 years, while recently the bank has regained the investment grade rating after 14 years. On top, Paereus has become the first Greek bank to meet the final MRL requirement a year and a half ahead of target. Furthermore, the successful acquisition of the pan-European license for the neobanks NAPI marks a significant step in our development and a new era in our journey to become part of the new banking landscape in Europe. Finally, we are proud that Paireus' turnaround story and its leading role in the Greek market have been recognized by the prestigious international magazine Euromoney awarding Paereus the titles of the Global Best Bank Transformation, Best Bank in Greece, and Best Bank in Greece for Corporate Responsibility. Let's dive now into our second quarter and first half 2024 results. In the second quarter, Paireus delivered a solid set of financial results with substantially enhanced top line, while our focus on cost containment and operating excellence remains. I am proud of our results and thank all of our people for their hard work. Now, let's turn to slide 5 for the key achievements of our second quarter and first half performance. We generated record normalized earnings of €26 per share in the quarter, up 42% year-on-year and €47 per share in the first half, compared to full year guidance of 85 euro cents. We achieved return on average tangible book value of 19% in the second quarter, which brings the first half figure at 18%, running ahead of the full year target of 15%. We delivered 10% recurring net revenue growth year on year in the first half benefiting from strong growth of client balances. Operating expenses in the first half were reduced by 3% year on year at recurring level with cost to core income ratio at 29% best in class in Greece and among the best in Europe on the back of our cost-discipline efforts that offset inflation and investments. Importantly, cost of risk was maintained at low levels, standing at 19 basis points in the first half, excluding MPE servicer fees and synthetic securitization costs, and an outcome of the successful management of MPE inflows. Overall, asset quality dynamics remain solid, with MPE ratio further down to 3.3%. We expanded our performing low book by euros 1.2 billion in the first half with solid growth in the business book and the third break-even quarter in the retail book. A CET1 ratio increased by 50 basis points in the quarter to 14.2 and the total capital ratio stands at 19%, both already meeting our 2024 targets. Our MREL ratio reached 28.3%, following the successful issuance of a new Green Senior Preferred Bond in July, Finally, in the first half of the year, we increased our assets under management to euros 10.4 billion, already surpassing our end of 2024 target. Slide six depicts the financial KPIs that summarize our performance. We have sustained high performance on all KPIs over multiple quarters, a strong signal of the consistent profitability path we are on. Slide 7 covers our earnings results in further detail. As you can see, a significant increase in earnings per share resulted in tangible book value per share reaching EUR 5.42, up 15% annually, enhancing further the value proposition to our shareholders. Slide 8 presents the trajectory of the core P&L lines, showcasing solid net interest income and net fee income dynamics, cost discipline and resilient asset quality with cost of risk at historic low levels for the second consecutive 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 settling at 15% in June 2024, in line with our guidance of 16% average deposit beta for the year. Slide 12 outlines the impressive evolution of our net fee income, which has been supported by loan expansion, cards business, fund transfers, and asset management. Net fee income over assets climb to new record high at the market leading level of 93 basis points over assets in the second quarter. Paireus' widening outperformance 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 operating efficiency bears fruit Despite the inflationary headwinds, we have managed to maintain cost discipline and keep our operating expenses stable year on year in the second quarter, as shown on slide 13. The strong improvement in our operational efficiency led the cost-to-core income ratio at best in class 28% in Q2. Slide 14 provides a summary of our asset quality indicators. Our NPE ratio dropped to 3.3% with breakeven new NPE formation. Meanwhile, second quarter organic cost of risk dropped to historic low 46 basis points or 21 basis points, excluding the NPE servicer fees and synthetic securitization costs. NPE coverage remained at a prudent level of 59%. On slides 15 to 17, we present the dynamics of our performing loan book. Credit expansion was very strong in Q2, with performing loans rising by euros 1.3 billion, supported by all business lending segments, and as a result, our full year target for euros 1.6 billion credit expansion is expected to be exceeded. Out of the euros 3.2 billion disbursements in the second quarter, euros 1.5 billion went to small, medium enterprises and individuals, and 1.7 billion to corporate and shipping. Recovery and resilience fund related disbursements amounted to 120 billion and there is a strong pipeline ahead. It is a good sign that the contraction of the mortgage book is decelerating. While retail balances overall in the first half were break-even, helped by my home mortgage program . Paireus has a superior liquidity profile, presented in slides 18 and 19. Our deposit base is granular and of high quality, while our deposit mix has remained stable for the past 12 months. The liquidity Our liquidity ratios remain solid post-TLTRO repayment as evidenced by the 215% LCR, liquidity coverage ratio, and the 63% loan-to-deposit ratio, both in the top range of the European spectrum. Turning to our capital base on slide 20, our CET1 ratio rose to 14.2% in June 2024. While accounting for a 30% dividend payout, already meeting the end 2024 target, slide 21 presents our strong emerald positions. On slide 22, you can see how our new wealth and asset management strategy continues to produce strong results with assets under management reaching 10.4 billion at the end of June 2024, recording a 27% increase year on year. On slide 23, We present the latest developments for Snappy, including the European full banking license that was received in June 2024, the first Greek neobank with a relevant license. Snappy's commercial launch is expected in the next six to nine months. Its ambition calls for more than $200 million of revenues and presence in three to four countries in the next five years. Our slides 24 and 25, you can see analytically the transformation projects that we delivered in the first half of 2024, including our successful rebranding that signals a new era for Pyreus, as well as our 2024-2026 transformation strategic initiatives. The improvement of customer experience and customer journeys with Pyreus is a top priority of our strategy. Finally, on slide 26, There is a summary of our KPIs demonstrating that we are performing in certain areas of our 2024 financial targets. Our strong results mean that we can increase guidance for this year's return to 16% from 15% previously. and 14% in the original budget. Our strong results position Pireus well among the broader group of regional peers. To give you some context, on slides 28 to 38, 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.