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 the Paris 9-month 2024 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 Paris Financial Holdings CEO, Mr. Christos Megalou. Mr. Megalou, you may now proceed.

Good afternoon, ladies and gentlemen, and good morning to all of you joining us from the U.S. This is Christos Megalou, Chief Executive Officer, and I'm joined today by our CFO, Theo Gnardelis, Chrysanthi Berbati, and Xenophon Damalas. Paireus has delivered a quarter of superior results with the best nine-month performance ever. We generated 320 million normalized net profit in the third quarter, adding to 932 million euros for the nine-month period. Our strong operating performance in the nine month 2024 paved the way for the upgrade of our full year targets. I'm proud of our results and thankful to our people for their hard work. Let's start our presentation with slide four for the key achievements of our performance. we achieved nii growth in the quarter driven by increase in volumes that outpaced the june 24 rate cut we generated normalized earnings of 25 euro cents per share in the quarter up 16 year on year and 72 euro cents per share in the nine months, which leads us to update the target for 24 to over 90 euro cents. We achieved return on average tangible book of 18% in the third quarter, which brings the nine-month figure at 18%, driving us to update the target for 2024 to higher than 17%. We delivered 9% net revenue growth year on year in the nine-month period, benefiting from strong growth of client balances with fees growing at three times the annual rate over NII. In the nine-month period, we increased our assets under management to 11 billion euros, driven by the number one position in net mutual fund sales. Operating expenses remain stable year on year with cost to core income ratio at 29%, a best in class figure in Greece and among the best in Europe. Importantly, cost of risk was maintained at low levels, standing at 23 basis points in the nine month period excluding NPE servicer fees and synthetic securitization costs, an outcome of the successful management of NPE inflows. Overall, our asset quality dynamics remain solid, with NPE ratio further down to 3.2%. Our updated target is for an NPE ratio of below 3% by year end. We expanded our performing loan book by 2 billion in the nine month period with solid growth in the business book. The target for December 24 is now upgraded to euros 33 billion, an impressive 10% year-on-year growth. Our CET1 ratio increased by 150 basis points year-to-date and reached 14.7%. The total capital ratio stands at 20%, and our MRL ratio is the highest in Greece at 29%. On the back of our solid financial performance, we upgraded our distribution accrual to 35% for 2024, while our recently updated provides for a 50% payout ratio in 2025. Slide 5 depicts the financial KPIs that summarize our results. We have sustained high performance on all KPIs over multiple quarters, which leads to a strong finish for 2024 as well as for 2025. Slide 6 covers our earnings results in further detail. As you can see, the record earnings performance in the nine-month period resulted in tangible book value per share reaching EUR 5.69, up 15% annually, enhancing further the value proposition to our shareholders. Slide 7. presents the trajectory of the core P&L lines, showcasing solid net interest income and net fee income dynamics supported by growth, cost discipline, and resilient asset quality. Cost of risk remains stable to cycle low levels. Slides 8 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 16%. On slide nine, we discuss net interest income dynamics for 2025. We now expect euros 50 to 100 million upside to the current guidance of euros 1.8 billion, driven by higher loan volumes, lower time deposit mix, and earlier bond IRS monetization that should more than offset the effects of lower interest rates. Slide 12 outlines the impressive evolution of our net fee income, which has been supported by loan expansion, the cards business, funds transfer, and asset management. Net fee income over assets stood at the best in class level of 83 basis points in the nine months. On slide 13, you can see how our new wealth and asset management strategy continues to produce strong results. with assets under management reaching euros 11 billion at the end of September 2024, recording a 29% increase year on year. Our pursuit of operating efficiency bears fruit despite the inflationary headwind. We have managed to maintain discipline in cost efficiency in the third quarter as shown on slide 14. Cost to core income ratio saved at a best in class 30% in Q3. Slide 15 provides a summary of our asset quality indicators. our NPE ratio dropped to 3.2%, with zero net NPE formation. Meanwhile, third quarter organic cost of risk was maintained at historic low levels, shaping at 54 basis points, or 33 basis points excluding NPE servicer fees and synthetic securitization costs. NPE coverage remained at a prudent level of 61%. On slides 16 to 18, we present the dynamics of our performing loan book. Credit expansion was strong in Q3, with performing loans rising by €700 million, supported by all business lending segments, and to €1.9 billion credit expansion in the nine months exceeding our full-year target. On slide 19, we present our growth expectations for retail credit next year. We anticipate the youth supporting state schemes and the retrofitting programs, our diversified sectorial model. and nationwide branch network as well as our e-loans and auto loans to drive growth in mortgages, small business and consumer loans. Paireus has a superior liquidity profile presented on slide 20. Our liquidity ratios remain solid post TLTRO repayments as evidenced by 244 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 21, our CET1 ratio rose to 14.7% in September 2024. while accounting for increased distribution payout of 35%, already meeting the end-24 target. Also, important to note that we are working to bring our 2025 AGM sooner in early Q2 to pave the way for earlier dividend payment and share back program initiation. On slide 22, we present details of our plan to accelerate DTC amortization, aiming at zero DTC by 2034 versus the 2041 schedule before. Our DTC over CET1 ratio is now planned to fall to 30% by 2027. On slide 23, we illustrate the strong capital accretion capacity of Pireus under the context of our profitability, growth, and distribution assumptions, including the new treatment for DTC. On slide 24, we present our strong MREL position. On slide 25, we present the latest developments for Snappy, including the European banking license that was received in June 24, being the first Greek neobank with a relevant license. Snappy's commercial launch is expected in the second quarter of 2025, which ambition calls for more than 200 million revenues and presence in three to four countries in the next five years, reaching a client base of 2.5 million. Based on our 2024 performance to date, we upgrade our full year guidance as depicted on slide 26. The key elements comprise normalized return of more than 17%, EPS of more than 90 euro cents, further growth of CET1 ratio to 15%, expansion of performing loans to 33 billion, and non-performing exposures ratio of less than 3%. Also, we now aim at a payout ratio of 35% out of our 2024 profits. On slides 27 to 31, you can see analytically the digital journeys and transformational projects that we delivered in the third quarter of 24. Namely, we are proud of our successful rebranding that signals a new era for Paireus, our plan on the transition to a modern retail bank model, as well as the strategic actions towards building energy efficiency and sustainability in the agri-food sector. Finally, on slide 32, we summarize the elements that make us the leading bank in Greece. Our strong results position Pireus well among the broader group of regional peers. To give you some context, on slide 34 to 42, we present the key metrics for Pireus versus domestic and regional peers. We benchmark ourselves in terms of Return on numbered tangible book values. Credit expansion. Net interest margin. Deposit beta. Net fee margin. Cost to core income ratio. NPE ratio, cost of risk, and capital ratio. In all KPIs, we are either at par or best in class while we are growing at an accelerated pace. We expect to generate significant value for our shareholders. And with that, let's now open the floor to your questions.

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.