Piraeus Finl Hldgs Sa

Ladies and gentlemen, thank you for standing by. I am Mina, your course call operator. Welcome and thank you for joining the Perios Financial Holdings Conference Call-in-Live webcast to present and discuss Perios' nine-month 2025 financial results. All participants will be listed in their mode and the conference 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 Perios 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. This is Christos Megalou, Chief Executive Officer, and I'm joined today by our CFO, Theog Nardelis, Chrysanthi Berbati, and Xenophon Damalas, to present and discuss Paireus' third quarter and nine-month 2025 results. Today, I'll take you through the two first sections of the presentation covering the main financial and business achievements for the nine-month period and demonstrating Paireus' standing in the European banking landscape. This will be followed by a Q&A session. As always, detailed analysis of all the key performance drivers of Paereus is incorporated in the latter sections of the presentation. The slides are also accompanied by a comprehensive Excel worksheet with historical financial and business figures. In addition, along with our IR materials, we publish today our new sustainability blueprint. covering the full spectrum of questions from stakeholders. All the materials can be found on our corporate website. And let's begin our presentation with slide four. Paereus is the leading bank in Greece, ranking first across all major business lines. We serve four and a half million clients, with a workforce of 7.4 thousand employees. Our total assets stand at 83 billion, with 37 billion in client loans and 64 billion in client deposits, representing 28% market share in deposits. We operate an omnichannel distribution platform with 3,370 branches, 1,300 ATMs, and 3 million digital clients. Our mobile app is top-ranked, reflecting our commitment to digital excellence and customer satisfaction. Financially, we demonstrate robust strength with return on tangible equity at 15%, cost-to-income ratio at 34%, loan growth of over 3 billion year-to-date, up 9% since December 24, total capital ratio at 20.6%, and liquidity coverage ratio at 217%. We are a leader in sustainable banking with Euros 4.3 billion in sustainable financing, 1.65 billion in green bonds, outstanding, and a strong focus on supporting small businesses and farmers. Our leading market position, sustainable long-term business model, and strong recurring earnings are reflected in our recent upgrade to investment grade rating by Fitch. By Reus is now rated investment grade by three of the four main major credit rating agencies. All these outstanding results have been delivered thanks to our people and our clients. The macro environment is favorable, as you can see on slide five. The gap to pre-crisis GDP, investment and financing, suggest multi-year expansion ahead. Real GDP growth remains above the EU average, strongly supported by investments. Unemployment has declined markedly and continues to trend downwards, further strengthening our operating environment. Let's move now to slide six for the key highlights of our nine-month 2025 performance. We generated normalized net profit of 854 million euros corresponding to return on average tangible book value of 15%. This leads us to upgrade our 2025 target to approximately 15% from 14% previously. Our earnings for the nine months are 62 cents per share. We expect to exceed our guidance of 80 euro cents per share for 2025. On the bank of our strong year-to-date performance, we have commenced an interim distribution to our shareholders out of 2025 profits in the form of a 100 million share buyback that will be completed in November. In total, we are on track to exceed a 500 million distribution out of the 2025 profit or approximately 40 cents per share, which corresponds to a 6% yield based on our closing price on 30th of September. We have expanded our loan book by 3.1 billion during the nine-month period to 36.8 billion in total. Today, we are raising our full-year target for net credit expansion to over 3.5 billion from 3 billion previously. We delivered Euro 648 million net revenues in the third quarter with net interest income stabilizing at the same level as the second quarter and fees increasing by 5% year on year. Our revenue diversifying efforts are reflected in our net fees over net revenues of 25% and fees over assets of 0.8%, 80 basis points. Both metrics are best in class in Greece and close to the or above average in Europe. Net fee income reached 489 million in the nine months, consistent with our upgraded target of 650 million for 2025. Our cost-to-core income ratio stood at 34% among the best in the European banking market, reflecting our strong cost discipline. Our asset quality dynamics remain solid with the NPE ratio of 2.5%, while cost of risk shaped at 49 basis points, in line of our target of approximately 50 basis points for 2025. Our assets under management increased to 14.3 billion during the nine-month period, up 30% year-on-year, exceeding the upgraded 2025 target of above 13.5 billion. Furthermore, Client deposits rose by 5% annually and are now at 64 billion. Our total capital reached 20.6%, absorbing the 50% distribution accrual, strong loan growth, and DTC amortization. we maintain a buffer of 460 basis points above Pillar 2 guidance, or 310 basis points, including the Ethniki insurance acquisition, which is expected to close in the fourth quarter. Slide seven presents the details of our third quarter and nine months operating results. We sustainably grew our tangible book value per share, now at 6.09 euros per share, which is net of the 30 cents per share cash dividend paid in June 2025. On slide 8, we present are strong loan origination dynamics. Performing loans increased by 3.1 billion in the nine months, driven not only by all business lending segments, but also by an increase in household lending. Importantly, Q3 marked a new cycle record of 190 million for mortgage disbursements. The strong performance leads us to revise upward our 2025 net credit expansion target to 3.5 billion from 3 billion previously. On slide nine, we present a detailed sector breakdown of our CIB net credit expansion of 3.2 billion in the nine-month period. As you can see, our corporate platform outreach is very granular, reaching all sectors of the Greek economy. Among other initiatives, we are increasing our presence in syndicated deals and we are offering greenhouse technology financing solutions. We are also very happy to be the bank of choice for SME clients in Greece, as shown by the top performance in disbursements. Slide 10 demonstrates that we have achieved our loan growth outperformance while maintaining pricing discipline. which is testament to the commercially rigorous approach of all our teams. We have been able to compete and win business while pricing at par with the market average and keeping risk-adjusted return at the core of our business credit underwriting. Turning to slide 11, the key milestone to note is that mortgage loan growth net of repayments has turned positive by 45 million in the third quarter and overall marginally positive in the nine months. This follows net consumer loan growth, which already turned positive in 2024. Mortgages and consumer disbursements have been growing since 2021 mortgages by 20% annually and consumer by 10%, but this growth was previously outweighed by heavy repayments. We now have reached an inflection point that bodes well for future expansion of our loan book and revenue streams. CLI 12 outlines the impressive evolution of our net fee income, which is being supported by asset management, bank assurance, and loan originations. Our diversified model brings outstanding results, and these do not yet include the anticipated incorporation of ethnic insurance in our group. which will elevate net fee income with expansion across all segments of the market, namely life and health protection and P&C protection. The group will take advantage of the synergies between our nationwide network of strong relationship management from mass retail to corporate, on the one hand, and the insurance factories expertise and franchise on the other. Line 13 demonstrates the growing trends of assets under management that reached 43 billion in September, backed by strong net inflows of 1.3 billion. We have upscaled our investment solutions offering to private banking and retail clients, incorporating robo-advisors, while our open architecture strategy combining Pireus asset management expertise with a wide suite of best-of-breed third-party products is paying off. Slide 14 presents detailed information regarding net interest income intrinsics. In a nutshell, our growing loan book partly offset the material drop in base rates of circa 35 basis points in Q3. Time deposit downward repricing is driving Funding costs lower. As a result, NII decline decelerated considerably, standing at just minus half a percent in the third quarter. Growth in NII is expected from Q4 onwards. Turning to slide 15, our cost control efforts kept operating expenses in the third quarter stable versus the previous quarter, despite the snappy launch and the insurance transaction-related costs. Overall, we remain very cost-conscious and on track to meet our annual target. Slide 16 provides a summary of our asset quality indicators. Our NPE ratio stands at an all-time low of 2.5%, while the organic cost of risk shaped at 49 basis points in the third quarter, in line with our annual target. We note the ongoing reduction of NPE servicing fees down five basis points year on year. On stage one, stage two, and stage three coverage ratio, we are increasing them and we are now higher than the EU average. Paireus enjoys a superior liquidity profile presented on slide 17. our liquidity ratios remain solid, as evidenced by the high balance of deposits at 64 billion and the 217 liquidity coverage ratio. Moreover, we are the Greek bank with the highest green bond issuance, totaling 1.65 billion. Turning now to our capital base on slide 18, our CET1 ratio stood at 14.6% at the end of September, absorbing best-in-class loan growth, 50% distribution accrual, and accelerated DTC amortization. Paereus has a 460 basis points CET1 buffer at the end of Q3. Slide 19 outlines the significance of digital banking and technology for FIREOS. Digital transformation continues to drive efficiency with 99% of transactions now digital and 3 million digital active users. GenAI virtual assistant and automation initiatives have delivered significant productivity gains. On slide 20, we present an update on Snappy, our neobank, with its own portable pan-European banking license. Snappy launched commercially in September and is already gaining significant traction with its fully digital, app-based, branchless, low-capex model. Snappy has 30,000 app users after less than a month of operations. We will update you on Snappy's progress and plans for expansion with our Q4 results. On slide 21, we present our 2025 revised targets. Based on our nine-month performance, we are upgrading our guidance on net credit expansion to more than 3.5 billion for the year and our return to tangible book value guidance to 15% from 14% previously. We remain confident in our future trajectory because of our proven ability to deliver sustainable, profitable growth and create value for our shareholders. Let's turn now to the second section of our presentation for our positioning within the competitive landscape. Paireus is in a leading position in Greece in terms of performing loans, deposits, equities brokerage and network, as highlighted on slide 23. In addition, Paireus ranks at par or above average on all major KPIs in the European banking space. Slides 24 to 30, we present the key metrics for Paireus versus European bank averages. On slide 24, Paireus delivers best-in-class loan growth in Europe, outpacing EU peers by a wide margin. On slide 25, our net interest margin is far above the European average, reflecting our pricing power and effective balance sheet management. On slide 26, net fee and commission income over assets is well above the European average and the best in Greece. On slide 27, our cost to core income ratio is best in class in Europe, demonstrating our ongoing focus on operational efficiency and cost discipline. On slide 28, Paereus return on tangible book value is well above the EU average. highlighting our ability to generate superior returns for our shareholders. On slide 29, Paireus' implied cost of equity remains high given the relatively tight sovereign risk premium, suggesting further re-rating potential. And finally, concluding with slide 30, despite our strong fundamentals in absolute and relative terms in relation to our European peers, Paereus trades below EU banks with similar earnings, implying significant upside for our shareholder. 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 before asking your quality. Anyone who has a question, may press start on one at this time. One moment for the first question, please. The first question is from the line of Bouligouris Alex with Eurox. Please go ahead.

Yes, good afternoon. Many thanks for the presentation. Three questions on my end, if I may. The first is regarding the improvement we have seen in the mortgage disbursements. Could you clarify if this is related to the My Home 2 program, or should we see it as more change of trends going forward, given that is my first question? The second is regarding time deposit costs. We have seen a good decline, about 20 bps Q&Q. How should we see that going forward, assuming rates stabilize at about 2%, what should be the normalized run rate in terms of time deposit costs? And a third question regarding asset management fees. We've seen a very strong growth of 38% in the nine-month period. Would it be possible to give us a guidance or a split of how much of that derives from net new business and how much is from the market effect approximately? Thank you.

Hi, Alex. Thank you. Thank you for the question. Just to focus on your first question on mortgage growth, it is actually, we believe, a change in the way things are developing in the market in Greece. It is a reflection of more interest that we see across the board on mortgages, which is resulting in new disbursements. Our very successful program in terms of applications and balances has not materialized in disbursements yet. So we expect that this will take effect mostly towards the end of this quarter, but most importantly in the new year. So we are projecting net credit growth in mortgages. And of course, we'll come up with the guidance for 26, where we do expect further net credit growth in that particular segment of our business. I pass on to Theo for your second question.

Yes, Alex. So regarding the time depot cost, I mean, obviously we're on a downward trend with the reduction of the URI bore. I think the 160 has further room. We're currently at around 155. I mean, I wouldn't say that the beta is substantial for us to expect further substantial growth going forward. I think we've kind of landed where we expect it to be, but we still have some room, maybe 5, 10 base points down on the overall TD costs.

And Alex, on your third question on the asset management, we have on page 13, you know, the way we lay out the way the book is growing. There is a part of it that is the market effect. But, you know, and also 1.3 billion is the net inflows. So... Given the way we account for the market effect, the large part of the fees that you see is relating to the net inflows. And then we see how this will develop towards the end of the year. But given what we see in terms of market intrinsics, we do believe that we will be ending up the year with 100 million plus fees for... for 2025.

Okay, many thanks. But I assume that this 38%, as a proxy, we could see from the split between net inflows and the market effect that you mentioned on page 33 to see the differences of how much comes from net inflows and how much is the market effect.

Actually, Alex, not exactly pro-rata. The market effect is on year about 9 million. Currently, what you're seeing is 5 million is the market rate effect on this particular quarter. So, actually, it's not 50-50 as you see on the AUM, yes? Okay, clear cut. Thank you.

The next question is from the land of Kemeny Gabor with Autonomous Research. Please go ahead.

Thank you. Yeah, my first question would be on your spreads and growth, long growth relations. I believe your corporate lending spread declined a little bit in Q3. Do you see this as being in line with the market? And is this kind of five, six basis point contraction what you would expect going forward in the next few quarters? And a related question to that would be, shall we expect your NIM to stabilize? Or when you guys for sequential NII growth, does this assume any more NIM contraction from the Q3 level? And then finally on Ethniki, when do you believe you would be in a position to to elaborate in more detail on your strategic initiatives and financial targets from this business. Thank you.

Hi, Gabor. So first question, spreads. Slight erosion, about seven basis points, seems to be in line with the market. We've got also the spread... evolution, how it has happened on the business loans and portfolio in page 10. We're following also market status. Things seem to be in line. This light spread erosion is countered right now, over-countered by volumes. So overall, on page 14, we're showing the NII breakdown. the performing exposure gross interest income dropped by 11 million. Within that, there is a volume stroke spread net effect of almost positive 10 million. So, really, the reduction that's going on in the performing exposure is primarily driven by the base rate drop of almost more than 30 basis points that we have had on the accruing base. So overall, this slight spread erosion is over-countered by volume growth, creating a positive NII situation on the performing exposures given the trajectory of the risk-free. So if one believes that the risk-free has reached the floor, and it seems that it has, We are currently accruing at 206%. There's maybe five, six base points to go to the current spot you're eyeballing. Then we're looking at a turnaround on the NII and potentially even a slight increase in Q4 going forward, which answers, I think, your second question that we're looking at a NIM stabilization right now. I think the erosion has stopped. Always with a footnote on the risk-free as to what's going to happen in the future. On Ethniki, exciting work going on and has been happening over the last two months in quite a lot of detail. A lot of levers to be pulled. The business plan is being detailed so we can elaborate as you're very rightfully asking in the Q4 results. This is when we will come out and talk about the upside and the story going forward. We can tell you two things right now, that the guidance that we have spoken about on 26-27 holds, 28, which is what we call are the transition years, 28, we're looking at upside versus the guidance that we've spoken about until now, and this is simply by pulling the levers of bank assurance integration, eventual integration of the Ethniki franchise onto the Prius network. And with many, and it's kind of like a first cut with many more levers to pull going forward, focusing primarily on stepping up protection insurance, which even in the current back insurance franchises, including our own, still has a long way to go.

Thank you, Theo. Just one small follow-up. When you say 26-27 intact, do you mean the 90 million PBC contribution by 27? Is this the main assumption?

Yes, yes, Gabor. So the guidance that we have spoken about, which is currently on page 40, assumes kind of 60 to 70 million in 26 and 90 million in 27 pibits. That still holds. As a base assumption, there's no change to that. That's why we keep reposting that page for you guys. But I can just preview you in view of the business plan that, as I said, will be discussed in Q4, that 28 we're going to be looking and 29 we're going to be looking at different numbers.

Encouraging. Thanks very much.

The next question is with JP Morgan. Please go ahead.

Yes, good afternoon. Thank you. Thanks for the presentation and taking my questions. So I have two. The first one, if I look at the capital bridge in slide 18, there was no negative effect from other items this quarter, while I think it was negative by 30 basis points in the second quarter. So if you can please comment on what were the positive items which offset the negative impact of DTC and AT1s. And then maybe a small follow-up on this, if you can please remind us what capital benefit you expect to see in the fourth quarter from SRTs. And then the second question of income, I mean, in light of the trends that you've seen so far this year, I was wondering if you could please give us an update on what level of organic growth you would see in fees beyond 2025 if you exclude the impact of ethnically. Thank you.

Thanks, Filippo. On the page 18 bridge on the other part, This really includes mostly the DTC effect. It's really prudential stuff that are going on. The DTC effect, the extra amortization that we're doing, mostly mitigated by other DTA that gets recognized by the nominal increase of the CD1, and that kind of is a zero-sum game. Then sometimes on this particular block, we might have the 81 coupon on a particular quarter, or we might have other prudential deductions that have to do with calendar effects and so on. We just didn't have such this quarter, and as a result, this coming to be a zero-sum game this particular quarter. On the SRTs, yes, we've got a deal in play. The RWA economy of that, I would say, is targeted between 500 and 200. probably about a billion of RWA mitigation. It's quite a large deal that's going on right now. We've talked about SRTs in the past. We're the first bank to introduce them. The cost over CD1 has dropped below 9%. The eventual CD1 economization, if you calculate it, on given the capital status of the bank. Right now, the cost ratio is below 9%, substantially below the cost of equity, so it's a good thing to do. So that will continue being a capital management tool for us going forward. And your third question? On fees going forward, well, I guess you're talking about what's going to be happening in the coming years. Let's hold off for the business plan in Q4 to talk about the organic expectations. Obviously, ethnicity is a step change. The accounting also will change. So a lot of things will change as of 26. I would say let's pause for that for now.

Okay. Thank you very much.

The next question is from the line of Putko Mikhail with Goldman Sachs. Please go ahead.

Good day. Thank you very much for the presentation. I have a few questions on NP service and fees, which have been reduced sequentially. So what further trajectory do you see there and how Maybe the pricing works on this line for us to understand where do you see it on the normalized or medium-term basis. And then also on ethnic insurance, when do you expect to obtain the FICO status? And also, can you comment what criteria, is there some specific criteria on the asset size or other metrics to qualify for this status or for the Danish compromise and where you will be post the completion of transaction there. Thank you very much.

Mikhail. Yeah, I think well spotted. Within that line in page 16, where we talk about servicing and protection fees, there is an obvious drop. This is all due to servicing fees, the servicing element of that. Servicing fees have almost been halved. that has been a result of a successful negotiation that we've done on the contract. So I would say that what you're looking at right now is kind of the end game, those 15 basis points between servicing and protection. On Ethnic Key, I mean, it's a journey, right? Article 49, which is what we all used to be calling Danish Compromise, has a lot of requirements. The most important thing and the reason why that article exists is because one needs to understand, properly measure, monitor, and stress insurance and actuarial risks that one is taking when they're a substantial part of the balance sheet. And that is definitely, I would say, a two-year journey until we can establish ourselves in supervisory submissions and dialogues and also internal governance evolution that need to happen. The FICO status has some nominal thresholds as the... directive of 2002 prescribes, but I would say that these are secondary for us right now. We care about delivering the return without Danish compromise application on the capital, making sure that this is a return accretive story and we can guide for a successful story in the coming plan. And I would say that the FICO status and Danish compromise a treatment will come as i would say on the cherry as a cherry on the nominal capital uh uh when it happens but it's definitely nothing in the short term period and uh it's not a we don't want to let it be a distraction in us meeting the uh the profitability targets of a thinking okay okay very clear uh thank you very much

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

Oh, hi. Thanks for the opportunity. Just two somewhat technical ones from me. I see the difference between the pro forma and CET1 and the reported is around 20 basis points, so not that big. But just curious when you think the pro forma and reported numbers will harmonize. And then the second one is on other impairments. So it was 35 million in the quarter. I think 25 is because of the school building charitable donation. I'm just wondering what the other 10 million is related to. Thank you.

Hi, Simon. The pro forma element of the 20 base points has to do with upcoming derecognitions on deals that have been held for sale. Baking in, I would say, RWA recognition that's going to be happening upon completion of these deals. On your other impairment question, well spotted. I mean, the $25 million is indeed because of that. You know, the other $10 million has multiple things in it. Rationalization of... some equity positions that we've done. So really we're talking about stories of, you know, one, two, three million each summed up to the 10. There's nothing major for us to be projecting going forward or using that number as an extrapolation mechanism.

Okay. And just in terms of the RWA reduction, I mean, how long do you think it'll take before these projects are completed?

So it's really a matter of quarters right now. We're managing most of these deals have been signed. So within 2026, we should be able to see reported match. You know, with nothing else in play, we should be able to see reported match the performer number. That's good. Thank you.

The next question is from the line of both Guido Steffen with UBS. Please go ahead. Hello, Mr. Brigitte, you have the floor. As a reminder, if you would like to ask a question, please press star and one on your telephone. The next question is from with Abrogia Capital. Please go ahead.

Hello, thank you very much. Two from my side. One more topical with the rotation increase that you're guiding now. I know it's early in the work and plans and all that, but any color on if we should take this increase as as a boost to your guidance, what would be the factors supporting this, or what am I missing if we should still wait for the official figures from you? And then the second one is just a technical one. On the income from associates, I see a big jump quarter on quarter, just wondering what of that. Thank you.

Hi, Osman. Indeed, the ROTBV upgrade was a result of some P&L items that happened better. We've been monitoring them over the past quarters. Trading was a substantial part of it, also fees to some extent. So, you know, given the reality, given what we know right now, so close to the end of the year, this was something that should be upgraded. No comment on the 2026. Again, guys, I mean, it's not the time right now. Lots of things are changing. We want to be able to give you a detailed view on that. I know you're all eager, but you just have to be patient until the Q4 results. On the income from associates, again, it's one of those lines, you know, similar to the question of Simon before on the other end. One of those lines has multiple things. This particular situation, we can, again, multiple things. moved, but we did have one associate investment in an asset management-like firm that we had done that substantially upsized in value, and we recorded it in the Q3 P&L. Perfect.

Thank you.

The next question is from the line of podcators, Stefan, with UBS. Please go ahead.

Good afternoon. Hopefully you can hear me now. Just a quick question on the cost of risks. I think you calculate 49 basis points. Just to understand that, I think that's the underlying organic cost of risks. That's 68 million euros. I get closer to 60 basis points. What am I missing there?

Stefan, it has to do with the annualization mechanism that you're using. The calculation is for 49 right now. The guidance takes for 50. So I think that it's very important not to lose track that to estimate the full year number is what matters so that people don't get confused. But we will have, and you can take it offline with us to explain through the analyst spreadsheet as to how the calculation works. Okay, thanks.

As a final reminder, to register for a question, please press star 1 on your telephone. Ladies and gentlemen, there are no further questions at this time. I will now turn over the conference to Mr. for any closing comments. Thank you.

Thank you all for participating in our nine-month 2025 results conference call. We will be in the States as of next week and in London in November and December. We look forward to discussing with you all. In the meantime, we are focusing on delivering a strong finish to year 2025. and preparing our brand new business plan to be presented to the market along with our full year 2025 results in early March 2026. Thank you very much.

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