National Bank of Greece S.A

Ladies and gentlemen, thank you for standing by. I am Gail, your course call operator. Welcome and thank you for joining the National Bank of Greece conference call to present and discuss the first quarter 2020 financial results. All participants will be in 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 Mr. Pavlos Milonas, CEO of National Bank of Greece. Mr. Milonas, you may now proceed.

Good afternoon, everyone, and good morning to those of you joining from the U.S. Welcome to our first quarter financial results call. I'm joined by Christos Christodoulou, the group CFO, and Grigoris Paparigoris, head of I.R. After my introductory remarks, the CFO will go into more detail on our financial performance and then we will turn to Q&A. So let's begin. Capitalizing on a very successful management of the health slash lockdown phase of the crisis, Greece is gradually lifting restrictions of movement with most remaining ones to be lifted within the next few weeks. Thus, Greece moves with optimism to the next phase of the crisis with the goal of successfully restoring the economy. Uncertainty will need to come down further, initially helped by the large swath of government support measures. Specifically, these will exceed 15 billion, equivalent to 8% of GDP, with about one-third coming from European-sourced funds. To these figures, one will need to add the approximately 33 billion support, including 22 billion in the form of grants provided over the next three to four years, arising from the recently announced 75 billion European recovery fund, named the next generation EU. Of course, the Commission's proposal needs to be approved and hopefully without much delay. Albeit early days, additional positive news is that there exist nascent signs that confidence is beginning to return to the economy, as evidenced by various leading indicators, such as individual mobility data, as well as bank transaction data. Though admittedly premature, projections on the decline in economic activity and the prospective recovery by 2021 may need to be revised for the better. NBG's initial response to the COVID crisis was to ensure the health and safety of our employees and clients, adopting strict measures at HUD offices and branches. We successfully transitioned into a remote work-from-home operating model with appropriate controls in place, allowing approximately 70% of our staff to work remotely at its peak, cyber-securely and productively. At the same time, we accelerated our digital customer onboarding and engagement. The results have been impressive. Digit channel transactions have increased 60% year-on-year, more than 130% 1,000 customers have been digitally onboarded year-to-date. Active users of digital channels are up by more than 50% year-on-year. In this second phase, NBG is committed to supporting all its clients weather the crisis by providing the necessary liquidity support. To this end, we have also focused on the rapid implementation of payment moratoria covering the period for most of 2020 to both our corporate and retail clients. So far, NBG has received approximately 60,000 applications corresponding to $4 billion of loan balances, mostly mortgages and corporates. NBG is also actively participating in all the government support schemes involving state guarantees, co-financing, and interest rate subsidies. I believe that the rapid and successful shift in our operating model to work from home and the new service model, i.e., the new products I just mentioned, reveals the success of our transformation program in making NBG more agile and, of course, more digital. NBG's balance sheet strengths and strategic flexibility are important comparative advantages and will provide significant strengths during this crisis. The first quarter results without a doubt support this assertion. We addressed the issue of COVID-19 related provisions decisively, front-loading approximately half a billion of loan provisions in the first quarter. Within this amount, the COVID-related provisions amount to more than $400 million, standing at 150 base points over net domestic loans. That's on a non-annualized rate. Based on current economic projections, and given the unprecedented level of uncertainty, we believe these provisions cover the total amount needed for COVID-19. To this amount, 100 base points of underlying recurring quarterly credit risk charges are added, on an annualized rate this time. And as a result, our coverage ratio has been increased by nearly 300 base points quarter on quarter. Despite the very sizable cost of risk charge, group path exceeded 400 million. This result, along with the future PPI capacity, provides substantial room to absorb incremental provisions for NP-related inorganic actions going forward. As regards our core operating performance, core PPI has remained broadly unchanged quarter and quarter at 137 million. This is a result of lower core income, which has been offset by lower costs. As Christos will elaborate on each of these drivers in detail, I just want to highlight the reduction in our domestic personnel and G&A expenses, with the former reduced by 8% year-on-year, only partly reflecting the 1,100 FTEs reduction from the past year's successful VES. On a full-year basis, the operational cost savings from this will amount to $40 million. Turning to our capital position, our SET1 and total capital ratios stand at 15.5% and 16.4% respectively, absorbing the total anticipated COVID-19 charge-offs as well as the annual IFRS 9 transitional charge. Our capital position is circa 500 base points above the COVID adjusted OCR capital threshold of 11.5%. Clearly, visibility in this environment is extremely limited. However, there are some points that appear clear. First, the migration to digital banking is accelerating beyond expectations. and NBG has made impressive steps in this area over the past two years. Second, a new radically different and more efficient operating model for banks is emerging which will occupy management for the years to come. And third, this new operating environment driven by huge upcoming structural changes in the economy opportunities will be captured by the ones most flexible and adept. In closing, I would like to say that our success in changing the bank over the past two years as well as our timely and effective response to pandemic crisis are testament to NBG's change momentum and established transformational capacity. Coupled with our balance sheet strengths and strategic flexibilities, these elements will make the difference as we continue to rise to the oncoming challenges and support the national effort in this difficult period. With that, I would like to pass the floor to our CFO, Christos, who will provide additional insights to our financial performance before we turn to Q&A.

Thank you, Pablo. So starting with the P&L highlights on slide six, the key takeaway is the resilience of our co-operating profit, complemented by trading gains that support our pre-provision income, which as a result grew nearly four times on a year-on-year basis. This allowed the absorption of the total anticipated COVID loan impairments, also leaving substantial room for commodity identity-related inorganic actions going forward. Core income remained broadly stable year-on-year, aided by strong growth in fees at 12%, while NII declined by 4% reflecting the aggressive NP cleanup of 2019, the lower interest income from securities due to portfolio sales and the GGB swap in January, plus the cost from the tier 2 issuance in July 2019. Cost optimization efforts continue to produce impressive results. Domestic personnel expenses declined by over 8% year-on-year, reflecting the benefit of the 2019 VES that expired in February 2020. The last leg of approximately 300 employees leaving the bank during Q1 2020 has not been fully factored in. Moreover, a provisional VES charge of $90 million has been booked this quarter, providing flexibility for further cost rationalization while our tight management of general and admin expenses is set to provide further savings. The realization of last one of items, namely the 515 million gain from the GGB swap in January and the gains of 264 million from the sale of health to collect and sell securities in February allowed us to address the issue of the incremental provisions for the COVID crisis decisively Transloading the Total Anticipated Charge. Of course, we need to underline that this is subject to the information currently available and with the caveat of the unprecedented levels of uncertainty, especially with the macroeconomic focus. Having said that, COVID-related provisions came in at $416 million, which corresponds to a non-annualized cost of risk of 143 basis points. On top of that, The underlying Q1-20 cost of risk is 70 million euros or an additional 96 basis points. The high cost of risk level in Q1-20 is attributed to the bank's standpoint regarding the macro outlook in the context of COVID, with key macroeconomic variables projected to record a sizable contraction, being only partially offset by post-modal prospectality adjustments in line with accounting and regulatory guidance. Baseline GDP envisages a recessionary environment in 2020 with the annual charge reaching minus 7.5%, where the recovery is envisaged for 2021 with the average GDP growth rate at plus 5% year-on-year. Despite the high provision charges, group attributable profit after tax amounted to $304 million, in Q1-20 compared to 41 million a year ago, even after absorbing sizeable one-offs, including the 90 million provisional BES charge. As Pablo said, such profitability levels provide further flexibility in our NPE strategy, allowing us to be ready to launch NPE-related inorganic actions in a timely manner. Turning to slide 7, on asset quality, PANG NPEs dropped by 0.2 billion this quarter to 10.4 billion, reflecting efforts across organic channels. The improvement in flows in the first two months of the year was offset in March due to the COVID uncertainty and before the crystallization of the impact from the introduction of payment holiday measures. The domestic NP ratio now stands at 31.8%, down 40 basis points quarter-on-quarter, and 7.3 percentage points year-on-year. Cash coverage climbed to 56%, up by nearly 3% quarter-on-quarter. On the liquidity front, domestic deposits expanded by 1.7 billion this quarter, driven by state deposits, while domestic private deposits maintain a positive momentum. LCR and NSFR ratios remain at levels well above regulatory thresholds. Our exposure to the ECB's TLTRO facilities have been gradually increasing, and this will allow us to provide credit to corporates and households at a negative funding cost of minus 100 pesos. In terms of capital, Z1 and total capital ratios in Q1 stand at 15.5% and 16.4% respectively, comfortably absorbing the total anticipated provisions related to COVID-19, the full year IFRS 9 transitional adjustments, and still standing almost 500 basis points above the COVID-adjusted regulatory threshold of 11.5%. Going into further detail on profitability on slide 9, Group operating profits reached 426 million in Q1-20 compared to 16 million in Q4-19, reflecting our resilient corporate provision income and the large trading gains. Excluding non-core income and the COVID-related provisions, group operating margin expanded to 92 basis points in Q1 compared to 22 basis points the previous quarter, driven by lower operating costs and lower underlying provisions. Turning to slide 10, domestic NII amounted to $262 million in Q1-20 from $271 million in Q4-19, mostly due to lower NP interest income driven by the size of our portfolio sales in 2019 and lower NII from securities. Performing NII remained at similar levels, reflecting the healthy production of new loans in Q1-20 as well as curings. Indeed, domestic loan disbursements were up by $1.1 billion, a 53% increase year-on-year. Excluding COVID-related provisions, risk-adjusted NII remains at healthy levels of 192 million in Q1-20 versus 164 million the previous quarter. Moving on to slide 11, domestic deposits amounted to $44 billion, expanding by $1.7 billion this quarter. Low interest rate-bearing deposits increased their share to 72% of total deposits, best to 70% a year ago, allowing our blended deposit yield to reach lower to 29 basis points. Time deposit yield dropped further by 12 basis points this quarter to 52 basis points, with new time deposit production coming at 30 basis points. The repricing of time deposit benefited NII by 4 million this quarter and will continue to support this year's top line as the ongoing repricing becomes fully factored in. On slide 13, following a seasonally strong Q4, domestic fee income amounted to 63 million, up 13% year-on-year on the part of the stroke recovery in retail fees, which exhibit a 25% growth year-on-year, mostly driven by the increase in cut related fees, intermediation fees, and digital channels. Corporate fees remain weak across the sector due to competition. Moving on to OPEX on slide 14, As already mentioned, domestic personnel expenses dropped by 8.2% year-on-year, reflecting part of the benefit of the 2019 VEA, with the full-year impact for 2020 estimated at over 40 million euros. Domestic, general, and admin expenses were marginally lower year-on-year, while higher depreciation charges reflect the first-time adoption of 516 and the pro-daily consolidation in mid-19. Excluding depreciation charges, Domestic staff costs and general unemployment expenses as a percentage of core income dropped by 270 basis points to 49.4% in Q1-20 from 52.1% in Q1-19. A bit more detail on asset quality on slides 16 to 20. NP reduction continued driven by mortgages benefiting from restructurings involving the debt forgiveness to our innovative product student sector. As already mentioned, the improvement in MPE flows in the first two months of the year was offset in March due to COVID uncertainty as the implementation of relief measures is not yet reflected in March flows. As the CEO mentioned, with regards to payment holiday measures, until mid-May, MBG received about 60,000 applications corresponding for an amount of approximately $4 billion. In terms of risk concentration on slide 20, MBG has a well-diversified loan portfolio with less than 20% of our corporate clientele estimated to be relatively more affected by COVID. Sectors such as accommodation, services related to air transport, retail trade, media, machinery and equipment should see a fairly large share of their turnover affected by the ongoing economic crisis, and their recovery is likely to be more delayed versus that of less affected sectors. During difficult and uncertain times, the bank produced solid profitability and fortified further its balance sheet. This was complemented by our operational efficiency and our transformational capacity leading to a strong reaction to the challenges and opportunities posed by the crisis. We will continue to closely monitor the impact of COVID and review our financial performance and business plan accordingly. On this note, I would like to open the floor to questions. Thank you.

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. Please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from the line of Floriano Jonas with Axia Ventures. Please go ahead.

Hey, hi guys. Good afternoon. A few questions from my side. Thanks for the presentation. The first one is just wondering what is the latest from your side on the NP reduction plan? I remember that there were talks of of a sizable scrutization before the outbreak. So just wondering how you're thinking about that now in terms of size and timing, given that you're already incorporating some of the losses through the P&L. Then second, could you please give us an update on unrealized trading gains as of Q1 and maybe as of May as well? That would be great. And then on new disbursements for the year, I've seen the figure for Q1, which, you know, it has been quite strong and I think for obvious reasons that this is happening. But then how that links to your expectation for the full year? I mean, is this like, let's say, an early uptick in disbursements and then we're going to see a bit less? Is this going to match your previous expectation for new disbursements in 2020?

Okay, I'll take the first and the third, and Christos will take the second. NP reduction plans have been thrown into disarray because of COVID, okay?

Clearly.

We were expecting to do a securitization in Q3 2020, and that is certainly going to go back. That does not mean we still don't plan to do that securitization. The question is the timing and the question there will be the market conditions. We are ready and when the market conditions allow, we will do that. Similar securitization that we've described. Project Pioneer. Now, NP creation by COVID. We need to see What happens after the end of the payment holiday? Most of 2020 NP creation formation will be distorted by the payment holiday. These will come to an end in the fourth quarter of 2020, and in 2021 we will see what arises from that. The visibility on that is not high. you can take a guess at what we think it is from the provisions we have taken so that is the NP strategy as it's being formulated now so some uncertainty we will do the securitization when markets open how much NPs will be created we think we've taken the provisions now and we can do the reduction one way or another organically we'll see but this will be further formulated as developments occur now on the disbursements it's going to be a strange year because disbursements are not as critical as they used to be because what happens is there will be no repayments due to the holidays so any disbursements will create a net expansion in the book so with this very few repayments and the government sponsored programs and any normal spurs that they do will probably ironically if you want in 2020 to a higher net loan book expansion than in 2019 Christos thank you Pavlos so if I put your question right

what we have realized in the first quarter in terms of the get to collect and sell portfolio is a loss to our OCI of approximately 120 million euros and since then we have seen no significant volatility in our portfolio now in terms of a trading book that's fair values in the PNL we have an unrealized upset of about 15 million euros And that's the numbers.

Thank you.

The next question comes from the line with Autonomous Research. Please go ahead.

Hello. Thanks for taking my questions. I think in the beginning of the presentation, you mentioned the macro assumptions that underpin your COVID-19 provisions that you have booked this quarter. Would you mind repeating those, please, in terms of the GDP reduction you expect for 2020 and the, I imagine, increase or reshape recovery that you expect in 2021? If you could give us some color on that, that would be helpful. Then on the additional 90 million VES charged, Could you indicate what savings we should be expecting from this? I suspect that the savings will be incremental to the 40 million. Could you please confirm that and provide us with an amount? And with regards to TLTRO, I can see that the Euro system funding has increased for you in May to 5 billion. What is the maximum capacity that you can draw under TLTRO? And could you please give us an indication of the benefit that you expect to have from this on your net interest income? And last question on the disbursement. I hear you that loan growth is going to be higher this year because of all the moving parts due to the coronavirus. what is the interest rate that you charge on the entrepreneurship fund loans and also on the guaranteed loan scheme are those comparable to the back book or are those lower because obviously they are partly subsidized by the government and so the cost of risk on those should theoretically be lower are you passing this lower cost of risk and RWA relief to the customer to a lower rate thank you very much

Okay, on the macros, the GDP macro assumption that was used in the current IFRS 9, it was 5.7, 7.5% for 2020 and the recovery of plus 5.1% for 2021.

That's the benchmark that we use for the calculation of provisions.

On the DES, it's a rule of thumb of around two times. So the savings will be half the 90. And then on the TLTRO, I think you can do the math, but the calculation is that we can do around 10. The maximum we can do is 10 billion, which is about, and we're around 5 now. on the rates. It depends on the program. There are various programs here. Clearly, the amount that is subsidy from the state, whether it's in the form of co-financing, interest rate subsidy, guarantee will be passed on in one form or another to the to the client, but that benefit is not always an industry reduction. It's also in terms of other terms such as collaterals, etc. So yes, the benefit will be passed on, but it's not always industry.

Thank you. If I may just follow up on the TLTRO, on the maximum 10 billion that you can do, do you expect to get a yield of negative 50 bits on this, or are you going to go for the negative 100 bits, which I understand is conditional on loan growth? That's my first follow-up.

As you remember, the rules have changed, and all you need to do is not have a reduction in your loan balances. So given what we've described about disbursements, I think it is going to be relatively easy to get the maximum minus 100 base points.

Thank you. That's clear. And on the higher loan balances, I guess from your answer, I guess we shouldn't really expect a similar impact, a pickup in NII, significant pickup in NII this year on the back of the loan growth, because this loan growth comes mainly from these subsidized or guaranteed government programs. Is that fair?

The conclusion is fair. There are lots of moving parts, though. Clearly, there will be more NII from PE disbursements, okay? However, you will have on the back book less curings than we expected and some corporates renegotiating down their rates. So PE loan, there'll be some factors on PE loan interest. Then you're going to have the MPE interest, loan interest, which will go down both because of inorganic and, of course, the high level of provisioning. Security rates are going down. deposit rates, though, on the other hand, are going down as well. We have the full year impact of the Tier 2. So there are a lot of moving parts there where if you add them all together, you get to your conclusion that NII will probably be flat and very slightly down. Thank you very much.

The next question comes from the line of Savim Mehmet with JP Morgan. Please go ahead.

Good afternoon, and thank you very much for the presentation. Just to follow up on provisions on your securitization plan, please. If you wanted to use your strong profitability this year to prevent a high down, can we assume that you could still potentially front load potential securitization costs, some of them at least irrespective of the timing of its launch in the coming quarters? That's my first question, please.

Do you want to give both or shall we respond to the first?

Yeah, and the second one is just a technical one on the state guarantee scheme. What are the risk ratings applied to the loans under this scheme?

All right. Christos will take the first. So the answer is absolutely. We want to capitalize on the profitability barriers that we have in 2020 to build up coverage for any inorganic actions that you have. There's nothing more to say than that.

Okay, and the loans will benefit to the extent of the guarantee for the zero debt risk rating.

Very clear. Thanks very much.

As a reminder, if you would like to ask a question, please press star and one on your telephone. The next question is from the line of Bulguris Alexandros with Wooden Co. Please go ahead.

Yes, hello. Regarding the cost of risk question, if I may, following the front-loading of the COVID charges from the second quarter, should we expect 100 bps more or less cost of risk in the following quarters, excluding any inorganic for the transaction? That's my first question. My second question is on fees. What would be the impact of COVID and the closure of the country in part of Q1, Q2 mostly? So what we should expect for fees on a full year basis? Thank you.

Thank you for the question. So with regards to the cost of risk, your assessment is correct. You should be expecting only the underlying cost of risk from this quarter onwards, the 100 basis points that we set. Of course, other things being equal. The disclaimer we made was clear and loud that we took provisions based on what we know today and given the uncertainty around. Now, with regards to fees... From what we expect during the year, given also the uncertainty, we are predicting to be about 10% to 15% down compared to the fee mark that we had for 2019. We are strong with retail. We are lacking pace with corporate, and that will bring us to the mark that I mentioned.

Okay, thanks. And just as a follow-up, should all this imply that core PPI should be more or less stable this year, I mean, given all the trends that also Mr. Milonas said before on NII and the course?

Well, I would say yes. It could be a bit up, a bit down, but we anticipate that the gap that will pick up on fees will be covered by the savings in OPEX, and we don't expect... any significant deviation from last week.

Thank you.

The next question comes from the line of Nigro Alberto with Mediabanco. Please go ahead.

Thank you for taking my question. Just can you tell us how much do you expect in terms of capital relief from the new CRR proposal? i.e. intangibles deduction in the CT1 SME supporting factor. And then just one follow-up, a clarification on the cost savings, 40 million cost savings this year. Are these including also the cost savings coming from the restructuring cost book this quarter? Thank you.

if the Basel IV delays the question yes that's anyway down the road in 2022 I think it was going to be implemented and the any pushback is not affecting the current year next year but in 2022 it will give us the savings of around 100 base points if I remember correctly now the second question was on can you repeat the second question because I'm not sure on the cost savings coming this year the 40 million if this includes also the savings coming from the restructuring cost the 40 million I referred to is only due to the VES that has already occurred there will be more savings from other actions, especially on GNA, and therefore total reduction in OPEX will be more than that. Okay. Thank you so much.

The next question comes from the line of Buzalov Roman with Prince Street Capital Management. Please go ahead.

Hi guys, thank you very much for the call. I just had a question about lending yields. I'm looking at page 13 of the presentation on the lower left-hand side, your lending yield by segment, and it looks like new production is at higher levels than the back book, but it looks like the overall yield actually moved down in Q1, which I'm surprised by. Is this to say that the yields on new production have moved up only recently? I would have thought that if this was the case, you would have seen overall blended yields and Q1 actually move up instead of down.

That's a very good observation and a question I asked earlier. The answer is twofold. One is that new production is relatively small, so it's not affecting the total. And the second is, and I mentioned it in one of my answers to one of my previous questions, Was that there's been some hits to the back book in terms of curings and in terms of corporates seeking lower rates. So there's some moving parts in the back book.

Is the back book entirely fixed or is there a floating component to it?

it is entirely floating but you have renegotiations by clients which is driving the one part of the corporates and especially pre-COVID where there was they had a bit more bargaining power and then it's the cures that are going into the back book because this is the performing back book that are with lower yields than the rest so there's a mixed effect do you expect as

Total new production starts to go up over the course of the rest of the year. If it does, will the yield on new production come down as a result of that? Meaning, do we only see these higher numbers now because new production is as low as it is?

The new production will be somewhere in between the back book and the front book because, as you know, most of the new production will have government-guaranteed elements, and therefore the benefit of the government scheme will be in part of those yields. Okay, I see.

Thank you, guys.

The next question comes from the line of Bakshi Ashwinder with Bearings. Please go ahead.

Thank you so much. I have three quick questions. First question, what is the expectation around drawdown from court rates and what is the size of sort of undrawn lines that you have outstanding if you're seeing further drawdowns that are happening? That's the first question. Second question, on your existing portfolio, performing portfolio, what proportion of that are you seeing clients come up to you for asking for renegotiation? And the third question is... I understand government has announced a lot of plans to sort of support troubled customers. When you look at your book and when you look at the government plans, are you quite comfortable that most of the government plans to support troubled industries would cover your troubled customers or are there proportion of your or any segments of your loan book which actually wouldn't be covered by the government plans and therefore you'll have to provide for them separately? Thank you.

I will pick up the first question with regards to the credit lines and the drawdowns. So we've seen about between 200 and 300 million drawdowns during March. Since then, the activity was low. And currently we have about half a billion of committed and drawn credit facilities. So that's the numbers.

Okay. On the renegotiations, I see the answer to my previous question got me in trouble. No, I'm joking. It's the large guys that have the renegotiating power. So it's our largest corporate customers that have asked for lower rates. Remember pre-COVID they were able to access the bond market, the mini bond market as we call it, and therefore they were saying either you lower rates or we'll go to the bond market. So they had some some my power to bring down rates but it was only just the largest group and the last question was on the government programs I think that even without the announcement yesterday of the big 750 billion European plan The amount of money, the $15 billion that I mentioned in my introductory remarks, seems to cover most of the cash gap of the corporate sector in Greece. So now, does every customer get what they should? Is what our role is to get that money from the government program and provide it to our customers? And I have no doubt that we will do that. But on a macro level, consistent with our macro projections, the cash gap of the corporate sector seems to be in line with the public support programs. And if more comes, then the GDP will decline even less than what we mentioned earlier in the call.

All right. Thank you.

We have a follow-up question from the line of Floriani Jonas with Axia Ventures. Please go ahead.

Yes, hi guys. Just a follow up on fees, maybe more on the strategic part of it. I remember that when you guys released the strategic plan and the business plan last year, a big part of your increase in fees was relying upon pricing and cross-selling. So I take that, you know, given the circumstances today, the volume component of fees, you know, it's likely to be, you know, uh... severely affected but I'm just wondering you know since you released the business plan what has been the progress on uh... on your developments there I remember there was also a component of cross selling uh... ratio increasing uh... if there's any update you could give us until the the outbreak I think would be would be helpful and also how do we think beyond uh... the crisis I mean how are you thinking about uh... these dynamics going forward once this is uh... kind of back to normal. Are there any adjustments you'd be willing to do?

Okay. On the retail side, we've been spot on. We had a very ambitious budget for fees and we've exceeded it by a little. So on the retail side, everything was moving very well S.A. S.A. S.A. S.A. some sort of M&A in the private sector. And then the cross-sell clearly is and the disbursement fees are behind schedule on the corporate side. So there we have created a new department which is called Transaction Services which are responsible for the cross-sell that is being rolled out now. So once they can get more into the contact with the clients that will improve so I think the simple summary is very good on retail very satisfied corporate due to COVID we need to do more work and the transaction services shift is one and the new rollout of the corporate internet banking platform where we can link them up more to their system is going to produce more fees.

All right. Got it. Yep. Thanks. Thanks a lot.

The next question is from the line of Memusoglu Osman with Ambrosia Capital. Please go ahead.

Hello, many thanks for your presentation. Just following up on the lending rates discussion you just talked about recently, about the state guarantees, it sounded like, please correct me if I'm wrong, they're lowering the rates, but in the post-COVID environment, you have more leverage with the corporates. Overall, are you seeing overall rates moving higher? Or what kind of mix should we assume? What percentage of the disbursements are state guaranteed versus not? And also, is the pace picking up or slowing down, let's say, versus April? Any color would be helpful. Thank you.

Okay. The difficulty answering your question is that the guaranteed program hasn't started yet. Okay, it's going to start, hopefully, if the messages from the government are still on track, it's going to be next week. We put in our bids, all four banks, for part of the funds. Remember, it's about a billion, going up to two billion, and the four banks had to pitch for their share. We've done that. The numbers will be announced, I think, tomorrow. And then we sign the contracts and start contacting our clients and see what happens. So this is a competitive process. We have sent many joint clients to the banks, so the rates, we'll see where they come out. So yes, there will be competition to bring them down because they're for banks but you're right that they're also they're looking for the cash so we'll see how that plays out over the next few months so a bit good question but it's just a bit too early for it so it's not safe to say because of COVID lending rates are overall headline would move higher that's No, I think that would not be right.

Okay. Thank you.

Once again, to register for a question, please press star and one on your telephone. As a final reminder, to register for a question, please press star and one on your telephone. We have a follow-up question with Baraktaria Gelicki with Autonomous Research. Please go ahead.

Hi, just a follow-up question on actually repeating a question of one of my colleagues, which I think was not answered previously. What do you expect the impact to be from the elimination of the deduction of software intangibles and also from the SME supporting factor, which are going to be included in the CRD5 package currently under preparation in the European Commission?

We don't expect to have much of savings. There are just a few basis points based on our assessment at the time.

Thank you.

Once again, to register for a question, please press jar and 1 on your telephone. The next question is from the line of Gladys Panagiotis with Eurobank Equities. Please go ahead.

Hello, gentlemen. Just a quick question on the sale of national insurance. Apparently, this was not a successful outcome, so where we stand right now? Thank you.

We are discussing with DigiComp our options, and when we have something to say more on that, we'll let you know.

Okay, great. Thank you.

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

Thank you all for taking the time to join us being the second bank in a row today. We are open for questions. Myself, Christos, Greg, and S.A. S.A.