Piraeus Finl Hldgs Sa

Ladies and gentlemen, thank you for standing by. I am Maria, your chorus call operator. Welcome and thank you for joining the PDL's bank conference call and live webcast to present and discuss PDL's first half 2026 financial results. At this time, I would like to turn the conference over to PDL's bank 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 of Paeus. I'm joined today by our CFO, Theodore Gnardellis, and our Head of Investor Relations, Xenophon Damalas. Thank you all for joining us for our first half 2026 results. The message today is simple. Paireus is delivering sustainable, profitable growth. We are generating strong returns, expanding customer activity, building a more diversified financial services group, and investing in technology and AI-powered productivity while maintaining capital strength Balanced resilience and a low-risk profile. These achievements are interconnected elements of a strategy that is transforming the quality of our earnings and strengthening the long-term value creation potential of the group. The first half of 2026 provides further evidence that this strategy is working, and based on our strong results, we update today our guidance. Before discussing our performance, let me briefly frame the environment in which we are operating. As you can see on slide 4, The Greek economy continues to outperform the Eurozone. Growth remains supported by a credible fiscal framework, continued reform implementation and sustained investment mobilization. At the same time, Greece continues to benefit from substantial European funding flows Declining debt ratios and ongoing improvement and economic fundamentals. Nevertheless, uncertainty remains elevated globally. The ongoing conflict in the Middle East, geopolitical developments and energy market volatility continue to influence the outlook for Europe and the global economy. Against this backdrop, strong balance sheets, diversified revenue streams, and disciplined risk management become even more important. This is where Paireus has positioned itself. Following the recent upgrade by S&P, Paireus is now recognized as investment grade by all major international rating agencies. This is an external validation of the transformation we have achieved and of the strength of our financial profile today. Turning now to our performance, on slide 5, we delivered record net profit of euros 617 million in the first half, corresponding to 47 euro cents earnings per share, placing us firmly on track to achieve our full year target of approximately 9 euro cents earnings per share. We achieved return on average tangible book value of 16% in the first half compared to 2026 target of approximately 15%. Importantly, this level of profitability is achieved with improving revenue mix and strong efficiency and asset quality metrics. We continue to deliver leading growth in Europe. Our loan book is up 9% year on year, reaching €39 billion. During the first half, credit expansion reached €1.8 billion, maintaining the strong momentum. Revenues from services grew 42% year on year, reaching 462 million euros in the first half, shaping at 100 basis points over assets, above the target of approximately 90 basis points over assets for 26. Importantly, 90% of those Cs are coming from investment, insurance and financing. We are converging to the best in class in Europe in the revenues from services metric. Net interest income rose to 990 million euros with net interest margin shaping at 2.2%, exceeding the 26th target of approximately 2.1%. Net interest income in the second quarter rose by 6% quarter on quarter to 509 million euros, Thank you for watching this video. Under management increased to 16.3 billion euros in the first half, up 24% year on year, with euros 1 billion net inflows already meeting our full year target. Furthermore, deposits rose by 9% annually and now stand at 68 billion euros, with the total cost at 38 basis points. Our cost-to-income ratio stands at 34%, confirming top-tier efficiency and on track to meet the 2026 target of below 35%. Asset quality dynamics remain solid with NPE ratio at 2.2%, organic cost of risk at 45 basis points, and NPE coverage at 67%.

Our capital position is strengthening.

CET1 ratio increased by 20 basis points quarter on quarter, are 12.8% driven by strong organic results. Slide 6 presents the details of our first half and second quarter operating results. We achieved historic high earnings per share of spot 26 In the second quarter, while we sustainably grow our tangible book value per share, now at 6.3 euros per share, up 7% year on year. On slide 7, we present the first pillar of our performance, which is customer loans growth. The euro's 1.8 billion net credit expansion during the first half is placing us firmly on track to exceed our aspiration of more than 3 billion euros for the full year. Importantly, growth remains broad-based. We continue to support investment across all sectors of the Greek economy, like energy, hospitality, infrastructure and shipping. At the same time, we are also witnessing and encouraging recovery in household lending. Mortgage lending continues to improve, with Mortgage balances increasing by approximately 100 million euros in the first half, while new mortgage production increased by approximately 65% year on year. Slide 8 demonstrates our pricing discipline. We compete for business, we support economic growth, but we maintain risk-adjusted return at the core of all our underwriting decisions. Slide 9 outlines the second major theme of the first half, which is revenue diversification. This is an area where I believe the group has made significant strategic progress and Ethniki Insurance is an important driver of this. Fee growth is increasingly supported also by solid financing activity, asset management and bank assurance. Based on first half performance, we now upgrade the revenue from services target for 2026. to approximately euros 850 million.

Slide 10 depicts Ethniki Insurance highlights in the first half.

The business performs ahead of expectations. Gross written premium reached 424 million, 7% higher year on year, and with minimal contribution from its Banca channel. The transition of the Bank Assurance model is now in full implementation mode with 16 prioritized products currently under development for launch in January 2027. Slide 11 Demonstrates the momentum in wealth and asset management. Assets under management reached 16.3 billion euros, increasing by 24% year on year. Net inflows amounted to 1 billion euros during the first half, already meeting our full year target. Turning to Net Interest Income on slide 12, the key message here is that our NII performance is increasingly supported by volume growth. As the rate environment evolves, our growing balance sheet and customer franchise continue to provide substantial support to income generation. Based on the first half performance and current market dynamics, we are upgrading our full-year NII ambition from €1.9 billion to €2 billion. Let me now turn to what is perhaps the most important element of our story. Growth with discipline. Turning to slide 13, our cost to income ratio stands at 34%, maintaining one of the strongest efficiency positions in Europe. Importantly, we achieve this while continuing to invest in technology, AI, customer experience, and growth initiatives. Slide 14 provides a summary of our asset quality indicators. The key message here is that asset quality remains strong and as we continue to expand the loan book, we are maintaining a prudent approach to risk management. Aireus enjoys a robust liquidity profile presented on slide 15. Our strong deposit franchise, combined with superior liquidity coverage ratio, supports profitable growth with ample funding capacity. Turning to capital on slides 16 and 17. Capital generation remains strong and supports three priorities. The performance in the first half and the dynamics of the second half of the year gives us confidence in the outperformance of the full year CET target of 13%. Moving on Slides 19 and 20 are about our technology and AI journey. Through Neura, our dedicated AI hub established with Accenture, we are accelerating deployment of artificial intelligence across the group. Our objective is to enhance customer experience Employee effectiveness, operating productivity, and long-term profitable growth. AEI is now being deployed across customer service, analytics, software development, relationship management, and internal productivity. At the same time, we continue to develop New growth engines beyond traditional banking. These initiatives are presented on slide 21 and they extend our reach into new ecosystems, strengthen customer engagement, and create opportunities for future growth. And Snappy, on slide 23, continues to gain momentum surpassing 210,000 app users and is scaling as a capitalized digital growth platform. On slide 24, the strong execution delivered in the first half gives us increased confidence in our outlook. As a result, We are upgrading several of our full-year ambitions. We now target net interest margin of approximately 2.2%, revenues from services above 90 basis points over assets, CET ratio above 13%. These upgrades reflect the momentum we continue to see across the franchise and our confidence in the sustainability of current trends. We also update our cost of risk expectation to approximately 60 basis points for 2026 in order to further fortify our balance sheet and lay foundations for the achievement of even higher targets in the years ahead. Turning to the second section of our presentation for our positioning within a competitive landscape. Paireus is in a leading position in Greece in terms of performing loans, deposits, Equities Brokerage and Network as highlighted on slide 26. In addition, we ranked at par or above average on all major KPIs in the European banking space. In slides 27 to 32, We present the key metrics for Paireus versus the European bank averages. In slide 27, we continue to deliver best-in-class loan growth in Europe, outpacing EU peers by a wide margin. Slide 28. Our net interest margin is far above the European average, reflecting our pricing power and effective balance sheet management. Slide 29 Revenues from services over assets is well above the European average and the best in Greece. Slide 30 Our cost-to-income ratio is best in class in Europe, demonstrating our ongoing focus on operational efficiency and cost discipline.

Slide 31.

Paereus return on tangible book value is well above the European average, Highlighting our ability to generate superior returns for shareholders. Concluding with slide 32, despite our strong fundamentals in absolute and relative terms in relation to our European peers, Paereus trades below EU banks with similar earnings yet Lower Growth Dynamics. And with that, let's now open the floor to your questions.

The first question is from the line of Andreas Vleros with Eurobank Equities. Please go ahead.

Hello, congratulations for your results and thank you for the presentation. I have two questions on my side. The first question is regarding your updated guidelines. It seems that the guidance for NII and FIS implies a lower quarterly run rate in the second half, especially versus the second quarter. Is this simply a reflection of prudent guidance or are you anticipating a specific revenue headwinds in the second half? And on earnings per share, given the stronger revenue outlook, are there other half-week headwinds beyond the cost of risk? or also the untrained 90 cent target for Enic Preserve is simply a conservative way to see. My second question is regarding ethnic insurance. I see that in the second quarter contributed around 46 million. So should we consider that run rate as sustainable or this include the seasonality of some non-recurring items?

and should normalize in the second half. Thank you.

Andrea, thank you for your question. Let me first cover the first question on the guidance. The guidance we are giving forward is a reflection of let's say our conservatives in view of You know, the geopolitical developments and we are centering things around the broader environment rather than company specific or Greek specific. So, you know, we feel comfortable in providing this guidance forward and remain cautious to see how the numbers will be developing in the third quarter before we You know, come up with further forward-looking statements. But overall, the way we have been looking at the guidance was from a stance of trying to be prudent and trying to be conservative in our outlook going forward. and also we will be upgrading and driven by data as we move in the third quarter. Now, on Ethniki Insurance, we had a very good first six months. We estimate that this is on a run rate of what we expect to see towards the end of the year. Obviously, you know, we are very close to the case and to the management and, you know, we monitor the numbers extremely well, but we can just say that we are pleased with performance so far, both in terms of the gross return premium, where We are on track to achieve the numbers that we had, as well as Deborah Stability, who in the first quarter was also the result of lower costs that are coming in the health book portfolio.

So, one follow-up number to clarify it better for me. So, the run rate will be the first half, not the second quarter. Is that correct?

That is correct. The first half.

Yes.

Okay. Thank you very much.

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

Okay, a few questions for me please. Firstly on NII which was indeed very impressive. Are there any one-offs, any non-recurring items you would like to highlight to us? The second one I believe we just passed recently is the deadline for the RRF applications and we are pretty close to the deadline for signing the credit agreement so in light of that Are you able to comment on your long lending pipeline for the coming quarters, please? And then, coming back to the guidance for a second and maybe asking this question with a bit more numbers, I believe that your NII guidance upgrade implies an additional about 100 million of PDT. You are also assuming more fees, while the provision maybe up to 15 million more. So, if you could provide a bit more context on why the EPSR ethic of 90 cents has not changed, please. Thank you.

Gabor, thank you for the questions. Let me cover the RRF question, your second question, and then Theo Gnardellis will cover the other two. So, now, on the RRF, The total number of RRF which has been contracted in our bank, in our book, is 2 billion. So there is one more billion to be disbursed. One billion has been disbursed already. And this we expect to come over the next two quarters. and also this will also take into account also a few quarters in 2027, depending on deployment. But as you see from the numbers, and this was always, you know, happening in every quarter in our numbers, the growth is... is granular and organic and does not actually depend only on the RRF. It was a good kick start when it started post-COVID. It continues to support with this 1 billion to be dispersed over the next few quarters the net trade expansion but is not the main driver. Organic growth across sectors and and Segmentz is the main driver for growth. And I pass on to Theo for your other two questions.

So, on NII RABOR, this is the run rate. This is truly organic, there are no vanos. This is the effect of volume growth, both on the lending side and on the bond side. Defense on spreads and of course risk-free Euribor adjustments that we have experienced in the past quarters. So, indeed, this is organic. The question of guidance and the calculation is correct. There are, of course, in the second half, some charges that will come from social responsibility initiatives of about 30 million, but other than that, There is of course an upside on the EPS pending to be printed. That is true and is calculating about to meet single digit. But we are not ready to print it out yet as guidance. There are two more quarters to evolve as we have just discussed. We are being a bit prudent and conservative here and keeping the guidance on profitability and EPS intact, but we'll come back on the coming quarters.

That's very helpful, thank you.

The next question is from the line of Benjamin Keith and Robert with Goldman Sachs International. Please go ahead.

Afternoon, thanks very much for the presentation and taking the questions. Two from me please. First on distribution, shall we expect the next capital return announcement is with full year results early next year or would an interim distribution later in the year be considered and if so when? And then secondly just on cost of risk, could you please run through the moving parts behind the increase to the cost of risk guidance for 2026? I remember in your CMD you targeted about 40 basis points by 2028. Does this change to the 2026 outlook alter how you think about progressing to the 2028 run rate as well? Thank you.

Hi Ben. So indeed we are well on track and we are accruing in the capital for the distribution out of profits of 2026. The accrual already in the first half has exceeded 650 million, so well on track for the distribution promise of 26 of 650 million. We are working right now to see how and with what timing we will do this. Most likely there will be an interim distribution in the upcoming quarters before The full payment that will happen pretty much at the same time as this year is happening now. On cost of risk, the slight move from 50 to 60 base points is a reflection of also what we experienced in Q2 with Casselli Law, with macro adjustments. That is there, so I would say we're rather Thank you very much.

Thank you.

The next question is from the line of Noemi Peruch with Morgan Stanley. Please go ahead.

Hello, and thank you for taking my question. You showed strong deposit growth in Q2. Thank you very much. I was wondering if you're comfortable in upgrading also the 2022 number and not what are your major concerns apart from the changes in the bank insurance fees that we know.

Thank you. Thank you, Nemi, for the questions. Now, on the deposits, there were some... There was some equity capital market activity, corporate activity that obviously then resulted in liquidity in the market and we were a good recipient of this activity and also on our deposit side. One broad metric is about 50% was because of this corporate activity and the other Thank you very much. Thank you very much.

The next question is from the line of Mehmet Sabin with JP Morgan. Please go ahead.

Hi, good afternoon.

Thanks very much for your time. I have just two remaining questions, please. Could you please comment on the slight uptick in the cost of risk this quarter, as well as the MPI ratio? You've upgraded your cost of risk. You do highlight that this is because of a better revenue performance, but you could maybe just give a little bit of details on that. I would really appreciate it. And then the second question was on the ethnic insurance and the solvency ratio. It seems like it's decreased a little bit to 162%. I saw a footnote of an AT1. Was that the reason behind it, or is it just business as usual? And I was wondering if you were to replenish that, would the 10 basis points perform a capital upstream to the group grow? So would we get a better contribution if you actually upstream the dividends above the 150% zone fill ratio? Thanks very much.

Really, this uptake on cost of risk is, as we said, for Q2 about 20 million that we took a full charge for the cathelular modifications plus macro scenario adjustments that we've done. and as a result the cost of risk increased for the first half to 45 basis points. That delta I would say is what we extrapolated to the full year original guidance of 50, for it being 60 now that we are making some extra money. It's the time to also, I would say, keep some money aside to defend the profitability of the future, and we'll see how we deploy that, increase performing coverage, or some other way. But that's basically the driver, nothing more there. On ethnicity, indeed, the reduction was about 17 percentile points, The plan is for this to be reissued in the market in Q3 and that will reinstate this percentile points and more. Just to tell you that in the quarter alone of Q2, the ethnic profitability added almost 10% points in the solvency. So it's a technical, temporary delta of reduction on the back of repayment of N81. The organic profitability is increasing the solvency every quarter. With the current run rate, the solvency will probably reach almost 200%. by the end of the year. The 10 basis points that we're talking about are given the 162. So if we were today to upstream the capital, the extra capital above 150% of solvency of Ethniki, which is the target solvency ratio for the company, that would add today 10 basis points on the CT1. So when we look at the CT1 of the group, We always need to look with a side vision to the solvency ratio of Ethniki because that extra capital is something that at any point in time we could upstream.

That's very helpful. Thank you, Theo. Let me just ask a follow-up. So it seems like there is some good upside if you were to upstream that at some point in the future. Would there be a timeline or is there a regulatory process or is there at all any willingness for the timing to do that?

Depending on the performance of the insurance company this is most likely an annual exercise. We will look at the company closer at the at year end and we will make some upstreaming For sure, I would say the size of it is what matters. The guidance for capital year-end is saying it should be above 13 and have an element of above 0.2. How much above that 0.2 depends on the size of that distribution. So indeed, this ethnicity already in its first year of consolidation will add significantly to the overall group.

That's wonderful. Thanks very much.

The next question is from the line of Agapi Mavrojani with Beta Securities. Please go ahead. Hello.

Congratulations on the result and thank you for taking my questions. I have two. The first one is on corporate asset quality. Business and business stepped up to 89 million this quarter versus 47 in the previous one and 25 a year ago. Could you give us some color on what growth is? Does it refer to single names or is it growth-based? And my second question is on loan growth. Corporate net credit expansion came in at 347 million, with large corporate contributing 65 million versus 975 million the first quarter, which takes the first half to around 1 billion against 1.7 last year. Is that primarily a timing effect from distortments or is something shifting in the competitive environment? Thank you.

Ravi, thank you for the question. I'll take the second one on loan growth. It's seasonality and timing differences rather than anything else. You know, we remain focused in achieving the 3 billion net credit expansion, the above 3 billion net credit expansions that are We came forward, the run rate already is on the higher side, but we remain with our above 3 billion projection and we see how it will be spread between the next two quarters. We are very happy with the SME growth and we are very happy with the net credit growth on the mortgage portfolio, also is something that we strategically wanted to achieve and we have been working on and now it looks like we are achieving. So, seasonality and timing rather than anything else.

And Theo, on the corporate asset quality, the MPU flow on the corporate side of Q2, indeed Agape is a single main case, We consider it business as usual, it's something that happens. We will be managing this case as the entire book over the coming quarters to contain and potentially return some of the incorrect provisions already. So I would say nothing exceptional, nothing macro-driven, a single case classification.

Thank you very much.

The next question is from the line of Alex Dimitrios with Jefferies. Please go ahead.

Hiya, two questions from me, please. If we could go back to capital, so going forward, is there a way that we should think about it? Anything above the 150% solvency ratio for ethnicity will be redistributed or kind of repatriated up to the group? And just like a rough estimate, so should we think about it basically 20% of the solvency ratio equals about 10 BPM? And then just my second question on the NIM, could you kind of break down the trajectory we should expect for the rest of the year? We think about, you know, the loan yields, we haven't really seen the repricing yet, with kind of loan yields flat Q&Q, you know, going forward we should see some of that repricing coming through, as well as the deposits, maybe a little bit of a tick up there. We should expect, you know, quite a strong expansion into the second half, so I'm just wondering if there's anything I'm missing here, because we're already at the You know, for your target of 2.2%, so I'm just trying to understand, you know, the second half-inch is actually from here. Thank you.

So, Alex, it's on ethnicity and the solvency. I think it's a solid assumption to be making the calculation of above 150% upstream. But just to say that this is not automatic. I mean, on any given year, we can solve to 170 or 165. Generally, we like to think of group capital in that way. But we will be approximating, I would say, that exercise, printing it in one quarter of the year, depending also on regulatory approvals, as I think was also pointed out. So I would say overall, yes. but let's not make it a mathematical obligation. In terms of what corresponds to what, it's a little bit less, so I would say about 12 to 15 points of solvency right now are about 10 basis points. Overall, on CET1, so that's why this 12 percentile points on solid, as we said, calculates to 10 bps of CET1. On your question on NIM and overall yields, the repricing is happening, we have seen the The increase overall in the portfolio yields. I mean, we have some steady erosion that is counted by Euribor increase. A lot will depend on what happens with the Euribor in the future, I have to say, with whether we have the PFR band pay in September and whether Euribor will follow. But I would say right now, given the macro situation, it is volume that is driving the growth of NII, while spread erosion I would say is semi or almost countered by risk-free rates. In this quarter, for example, we had Thank you very much. The next question is from the line of Simon Ellis with Citibank Peace. Go ahead. Hi, thanks very much Fred. Just a few quick ones from me.

Three, actually. Firstly, on staff costs, they went up a bit. I think it's driven by variable costs. Is it fair to assume that as one's revenues continue to be quite robust, that staff costs will remain elevated? Second, I was hoping you could unpack the 27 million negative other impairments and associates lost. Just what the drivers were, I think 6 million is one-off, and what the nature of that one-off is, and what's the outlook for the second half. I think you said 30 million is further one-off, which I guess would go in that line item, but interested in knowing what the underlying number would be as well. And then last, just on the Capselli issue, can you tell us how much you actually booked in risk cost in the second quarter, and if you expect further charges going forward? Thank you.

Hi Simon, so indeed the staff cost uptake in Q2 was because of variable compensation actual payment when share-based compensation gets paid, then it is in that quarter that we're booking the P&L, there is no way to actually accrue for that throughout the year, so always Q2 whenever If a variable conversation happens, there is this uptick. So it is not to be analyzed what you saw in Q2. The overall guidance for costs we have given for something under a billion for 26, nothing else is changing right now for the coming years. As we've said, I think, twice already in this call, we will come back with the full year results in Q4 to tell you of any updated trajectory. The one-off that we've pointed out in the associate and other impairment line is a social responsibility charge of 6 million and similar ones are coming in half, too. And you will see those also, indeed, In those lines, there is also a 15 million loss of a legacy asset sale that we did. And again, as we continue to clean up the balance of any remaining legacy assets, this is where we would be seeing such charges. On the Castelli law, in the cost of risk line, we wrote around 10 million. There is also some charges that have been incorporated in the trading line, depending on the accounting treatment. for rehabilitation of the interest accruing profile after the court decision. There's nothing more to be charged on this book. The adjustment has been made, so we're kind of completely done with it.

Thank you. Very clear.

The next question is from the line of Alberto Nigro with Mediobanca. Please go ahead.

Yes, good morning all.

Thank you for taking my question.

Just one clarification. Insurance fees are still growing nicely. Can you just tell us when we will see the drop in this line due to the previous insurance JVs?

Thank you.

Hi Alberto. Indeed, the franchise is still selling third-party products, so we have full upfront booking of the fees. The way you should look at this growth is that the actual GWP is growing and the productivity of the network is growing. The accounting adjustment and the growth will happen in 27. There will be an equal adjustment as we have discussed also on the cost line, but it will coincide with the introduction of Ethniki as a product factory into our network that is scheduled for January 27.

Thank you.

We have a follow-up question from Nora Miperucci with Morgan Stanley. Please go ahead.

Thank you. I have a follow-up question on SNAPI, which is offering a pretty punchy deposit rate. So, I was wondering how shall we rate it in the context of the group strategy and the deposit competition in Greece? Thank you.

Yeah, if you look, Nomi, thank you for the question. This is a kind of in line with the competitive environment that is developing the digital bank front. There are other players in the market that are offering similar, let's say, levels of deposit, let's say, returns. And Snappy being a digital attacker is actually playing... It's a competitive rate that we think will be attracting some of the people that are actually today are kind of focusing on other digital players. The strategy is evolving and It will be developed as we move on. So, for the time being, we think it's the right return for attracting new customers into the franchise.

Ms. Peroutro, are you done with your questions? Yes, thank you.

Thank you.

Ladies and gentlemen, there are no further questions at this time. I'll now turn the conference over to Mr. Megalou for any closing comments. Thank you.

Ladies and gentlemen, thank you all for participating in our first half 2026 result conference call. We look forward to discussing with you physically or virtually during our investor outreach program which will commence as of early September. In the meantime, enjoy Some time off in the summer. Thank you all very much.