Eurobank Ergasias Svcs

Ladies and gentlemen, thank you for standing by. I'm Constantino, your chorus call operator. Welcome and thank you for joining the Eurobac Holdings Conference Call to present and discuss the first quarter 2024 financial results. All participants will be in listening 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 Mr. Spokion Karavias, CEO. Mr. Karavias, you may now proceed.

Thank you. Ladies and gentlemen, good afternoon, and welcome to the EuroBank first quarter 2024 result presentation. Together with me is our CFO, and the investor relations team. We are starting with key recent developments, and then we will present our results and answer your questions. The macroeconomic background remains supportive in Greece, and in our two other core markets, Bulgaria and Cyprus. In Greece, this is evidenced by the recent S&P rating outlook change to positive, the fiscal outperformance with primary surplus above expectations, and the highest improvement in the debt to GDP ratio among EU countries in 2023. Investments following a slower than expected 2023 are catching up this year. As such, credit growth in 2024 will be higher, something already reflected in our first quarter results. Restoring a level of investments in line with the rest of the Eurozone remains essential to secure the resilience of the Greek economy. Globally, The expectations for a fast pace of interest rate cuts have recently softened, and our assumption for three rate cuts by the ECB 2024 is in line with current market views. Now let's see our financial results for the first quarter of the year, as highlighted on slides five to nine. Eurobank recorded strong figures across the board in the first quarter, with our adjusted net profit reaching €383 million and return on tangible book value at 20%. The tangible book value per share increased by 20% and 3% year-on-year and quarter-on-quarter, respectively, to €2.14. After accounting for the full 2024 voluntary exit scheme cost, in the first quarter financial results. In more detail, core operating profit reached a new record of €407 million. This figure does not include the Hellenic Bank quarterly contribution of €41 million, which in this and the next quarter is reflected in income from associates. Net interest income was up 14% year-on-year and broadly flat compared to the previous quarter. Fees and commissions were up by 5% year-on-year while operating expenses were stable on a like-for-like basis. As a result, corporate provision income was up by 17% year-on-year. On asset quality now, asset quality improved further. The NPE ratio dropped another 50 basis points to 3%. Cost of risk decreased to 68 basis points, while coverage reached a new high of 93%. Our regional operations continued their strong performance, with net profits of 145 million euros increased by 21% year-on-year. Cyprus net profits including our 29% share in Hellenic Bank, reached €92 million and Bulgaria's €48 million. In the first quarter, the fully loaded Set 1 increased to 17.2%, while the total capital ratio stood at 20.2%. Overall, our first quarter performance is a great start for the year and makes us confident that our 2024 plan will be delivered with return on tangible book value of at least 15%. In addition to the strong operating performance, it is important to highlight that all our strategic initiatives are on track. For Hellenic Bank, we expect the final regulatory approvals over the next few weeks. And then we will proceed with closing the outstanding transactions and the mandatory tender offer. It is noted that Hellenic Bank agreement to acquire CNP Cyprus is an initiative that enhances further its franchise and should make it a leader in the local insurance market. Last but not least, on shareholder reward. We have submitted the application for dividend distribution out of 2023 profits to DSSM. The payout ratio proposed is 30%, which corresponds to a cash dividend amount higher than $0.09 per share. The supervisory clearance is expected in June. Dividend distributions will take place right after the AGM approval in late July. At this point, I would like to ask our CFO, Mr. Halis Mokologiannis, to present our first quarter results in detail before opening the Q&A session.

Halis Mokologiannis Thank you, Fakir. Let's now provide more insight into the first quarter results, starting on page 18 on lending growth. Performing loans increased organically in the quarter by €400 million, in line with our expectations. Growth was mainly driven by the corporate portfolio in Greece and by the retailing Bulgaria. Group deposits on page 19 decreased slightly by €100 million as a seasonal decline of corporate deposits in Greece was offset by increases in the other countries. Net loan to deposit and LCR ratios remained stable at 72 and 179% respectively, as shown at the left of page 20. As regards managed funds on page 22, in the first quarter, the wealth sector continued its strong performance. Quarter on quarter, managed funds increased by 600 million euro, and year on year are higher by 74%. Private banking assets and liabilities reached €11.7 billion, increased by 19% year-on-year. Moving to profitability on page 26, net interest income was almost stable quarter-on-quarter at €571 million, which is better than budget. NII has been boosted by the last two quarters' loan and bond growth. On the other hand, it has been affected by the deposit and the cost, as well as by the days effect. On a year-on-year basis, NIE is higher by 13.7 percent, and net interest margin in the first quarter reached 287 basis points. On page 27, commission income is higher year-on-year by 4.9 percent at 136 million euro. This performance is driven by better transaction and asset management fees and is in line with our budget trajectory. On page 28, operating costs are lower year-on-year in Greece by 2.1%. Specifically, lower administration costs and the discontinuance of resolution contributions offset the increase of staff costs related to variable compensation accruals and the higher IT expenses. On a group basis, costs are stable quarter-on-quarter, but also year-on-year, taking into account the impact of BNP-Bulgaria consolidation in the middle of 2023. Finally, in this page, cost-to-income ratio for the first quarter reached 32.4%. At this point, let me note that a VES increase was recently completed with circa 650 FTEs. The cost, which has been included in Q1 results as below the line item, amounted to 96 million euro after tax. The annual savings corresponding to the participated FTEs amount to circa 30 million euro. On page 30, we summarize operating performance for the first quarter. Core PPI is higher year-on-year by 17% at €478 million, mainly driven by the board effect and higher loan and bond volumes. These offset higher deposit and emergency costs and lower lending spreads. Low-loss provisions for the period amounted to €71 million, or 68 basis points. As a result, Co-operating profit is higher year-on-year by 21%, reaching a new record level of €407 million. On top of that, there is a €41 million additional income, which corresponds to the 29% stake of Hellenic Bank's quarterly performance, and is currently recorded as income from associates. Upon reception of regulatory approvals for the additional 26%, the lending bank results will be consolidated line by line. This will happen as of the second half of the year. Moving on to asset quality on page 32. NPI ratio decreased further this quarter by another 50 basis points to 3%. As a result, of topping up the perimeter of Leon's portfolio by another €240 million, reaching in total €640 million. Furthermore, NP coverage increased to 93%. Moving on capital and on page 37, quarterly organic profitability boosted our fully-loaded GWAT-G2R ratio by circa 90 basis points. more than offset the impact of asset growth, the full VES cost, and the synthetic securitization amortization in the context of its dynamic management. As a result, CTR ratio reached 17.2% at the end of March. Finally, on capital, and on page 38, our total cut ratio stands at 20.2%. The overall first quarter performance preaffirms our full year 2024 financial targets in terms of profitability, asset quality, capital, and ultimately return on transfer book value, which is expected to be at least 15%. This completes my presentation. We may now open the floor for your questions.