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 Parios Financial Holdings Conference call and live webcast to present and discuss Parios full year 2024 financial results and business plan 2025 to 2028. 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 those joining us from the U.S., Today, we will cover our full year 2024 financial results, as well as the revised four-year guidance vis-à-vis our financial outlook. This is Christos Megalou, Chief Executive Officer, and I'm joined today by our CFO, Theo Nardelis, Chrysanthi Berbati, and Xenophon Damalas. Paereus, has delivered superior results in 2024, our best performance ever. We generated 81 euro cents reported earnings per share, driven by strong results in all core income statement lines. This performance paves the way for distribution of 30 euro cents cash dividend per share. I am 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 2024. We generated reported earnings of 1.1 billion euros, up 36% year on year, surpassing our initial budget of 900 million. This came despite absorbing 200 million one-offs for transformation and cleanup. We expanded our performance logbook by 3.6 billion, or 12% year on year, to 33.7 billion, beating the initial target for 2024. Importantly, retail lending was at break-even level after more than a decade. We achieved normalized return on average tangible book of 17.5% in 2024 and 18.1% in Q4, at par with best in class in the region. We delivered 7% net revenue growth year on year, benefiting from strong growth of client balances with fees growing at four times the annual rate of net interest income. Our revenue diversifying efforts are reflected on our fees over net revenues of 23%, best in class in Greece, while fees over assets reached 80 basis points beating the initial target of 70 basis points. We increased our assets under management by 23% to 11.4 billion, mainly driven by mutual funds. Our cost-to-core income ratio stood at 30% among the best in the European banking market despite inflation and our investments. Asset quality dynamics remain solid with MPE ratio further down to 2.6%. Cost of risk has stabilized at low levels standing at 21 basis points excluding the servicing fees an outcome of the successful management of MPE inflows. Our CET1 ratio increased by 135 basis points year-on-year and reached 14.7%, with the MDA buffer at the level of 460 basis points. The total capital ratio stands at 19.9%, with a buffer over supervisory guidance at 410 basis points, and our MREL ratio stands at 29.2%. Following our solid financial performance, we will give back 35% of 2024 profit to our shareholders. This corresponds to 6% yield for 2024 based on today's market cap. As a result, a proposal of Euro 373 million cash dividend will be submitted for approval to our annual general meeting of shareholders on 14th April 2025. This is 30 cents per share up from 6 cents per share last year. Slides 8 to 10 present detailed information regarding our net interest income intrinsics. Net interest income performance was driven by the growing loan book, along with bonds and hedging, with net interest margin at 2.7% in 2024, loan pass-through at the level of 83%, and deposit beta settling at 20%. Slide 11 outlines the impressive evolution of our net fee income, which has been supported by loan expansion, bank assurance, asset management, and rental income. Net fee income over assets stood at the best in class level of 82 basis points in 2024. Our pursuit of operating efficiency bears fruit, despite the inflationary headwinds. We have managed to maintain discipline in cost efficiency, as shown on slide 12, while at the same time proceeding with targeted investments, such as NAPI, and increasing the variable pay to our employees. Slide 13 provides a summary of our asset quality indicators. Our MPE ratio dropped to best-in-class 2.6%. while the underlying cost of risk fell to historic low levels, shaping at 46 basis points or 21 basis points excluding servicing fees. NPE coverage stood at the prudent level of 65%. On slides 14 to 16, we present the dynamics of our performing loan book. Credit expansion was strong, with performing loans rising by 3.6 billion, supported by all business lending segments, while retail is at break-even. Loan growth more than doubled versus 2023, and 24 initial budget. Our total financing to RRF projects reached 1.3 billion, fueling 3.6 billion investments. Paereus has a superior liquidity profile presented on slide 17. Our liquidity ratios remain solid post-full TLTRO repayment, as evidenced by the 219 percent liquidity coverage ratio and the historic high balance of deposits at 63 billion. Turning to our capital base on slide 18, our CET1 ratio remained at 14 0.7% on the back of strong loan growth while also accounting for distribution payout of 35%. On slides 20 to 24, you can see analytically the digital journeys and transformation projects that we delivered in 2024. 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 carbon footprint awareness. Our strong results position Pireus well among the broader group of regional peers. To give you some context, on slides 27 to 36, 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. Deposit beta. Net fee margin. Fees over revenues. 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. Capitalizing on our strong 2024 performance, today we announce our updated financial targets for the 2025-2028 period. Slide 40. summarizes our macro and market assumptions. We project a favorable macro environment that will drive lending growth and market opportunities. The ECB deposit facility rate is projected to land at 2% from end of 2025 onwards, and Greek GDP is expected to grow by approximately 2% annually. Slides 41 to 42 display the business plan highlights and the financial KPIs for the next four years. Slide 41 presents the core KPIs of our business plan. We expect reported net profit of approximately 1.1 billion per year before reaching 1.3 billion in 2028, with loans expanding 12 billion by 1228. Our MPE ratio is expected to retreat even further, falling below 2% by the end of 2027. Total capital ratio is anticipated to increase to circa 21% in 2027 with comfortable buffer. Capital distribution is an important part of our strategy, and we stick to our target at returning around 40% of our profits to our shareholders out of the 2025 profit onwards. Slides 43 to 50 present in detail the drivers and assumptions behind our 2025 2028 targets. Slides 51 to 53 provide a picture on our digital footprint and AI strategy. Slides 54 to 56 present our plan regarding our digital bank, Snappy, that is expected to launch by mid 2025. Our vision for 2028 is to be the number one financial services group in Greece with meeting returns while maintaining solid capital position, supporting our customers and people, as well as generating 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 webcast, please review related information in the Q&A live session should you wish to ask a question. For those participating in the question and answer session, please use your handset when asking your questions 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 is from the line of Ismailo Eleni with Axia Ventures. Please go ahead.