National Bank of Greece S.A

Ladies and gentlemen, thank you for standing by. I am Yota, your chorus call operator. Welcome and thank you for joining the National Bank of Greece conference call to present and discuss the full year 2020 financial results. 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 United States. Welcome to our full year 2020. Financial Results Call. I'm joined by Christos Christodoulou, Group CFO, and Greg Papagrigoris, Head of IR. After my introductory remarks, Christos will go into more detail on our financial performance, and then we will turn to Q&A. So let's begin. A few words on the economic backdrop. There's clearly a sense of optimism due to the knowledge that vaccines will soon permit a return to normalcy. albeit a new normalcy. The imminent receipt of funds from next-generation EU of the order of 3% of GDP in 2021 and 2.5% of GDP in 2022 reinforces this optimism, as does the better-than-expected performance of the Greek labor market, with total compensation in 2020 remaining broadly unchanged compared to 2019 and unemployment actually declining. This positive development is a direct result of the large and targeted fiscal support, which amounted to 9.5 percentage points of GDP in 2020. Clearly, there's frustration in society due to the successive waves of the pandemic and the resulting lockdowns, and impatience with the rollout of the vaccination programs. But there's light at the end of the tunnel, and in my view, it is quite strong, especially in the case of Greece. let me explain why first there's a continued fiscal response which will provide additional fiscal stimulus to the economy in 2021 of about six percentage points of GDP over and above the aforementioned nine and a half percentage points in 2020 second latent household and corporate demand should be unleashed in 2021 household savings reached a 10-year high in 2020 also reflected in the record high 10 billion increase in household bank deposits. The release of these savings should provide a strong boost to consumption as confidence returns. On the corporate side, the loans provided for liquidity support in 2020, including those with government guarantee, should recirculate in the economy as fixed investment spending. Note that corporate deposits have also increased by about 10 billion in 2020. Third, Tourism will certainly increase from 2020 levels. The question is, by how much? Even if tourism receipts only reach 50% of 2019 levels versus 23% in 2020, the contribution to GDP will be two percentage points. And the potential for an upset scenario, in my view, is high with the contribution to GDP potentially reaching four percentage points as vaccination programs pick up in Greece as well as as in its main tourism source markets. Early bookings appear to confirm a more optimistic scenario. All in all, in-house projections for GDP growth are for nearly 5% in 2021, averaging 10% year-on-year in the final three-quarters of the year. That was a longer-than-usual description of the macro, but at this turning point in the economy, I believe it was useful. So, let's turn to MBG now. 2020 has been a year of challenges, but also a year of opportunities. We remained at the forefront of support extended towards our household and corporate clients, implementing targeted payment moratorium schemes and interest payment subsidies, mostly to SME and SB loans for a total of more than 85,000 clients. Furthermore, aided by state support schemes, we dispersed $4.7 billion of new credits an increase of about 40% versus disbursements in pre-COVID-19. Our top priority throughout the pandemic remained the health and safety of our employees and customers. We ensured that our employees could work remotely, efficiently, and cybersecurity. A silver lining benefit from this disruption is that it will form the foundation of our new work from home model. At the same time, we accelerated the migration of customers to digital channels enhancing digital functionalities in order to better serve them remotely. Just two examples, both first for the Greek market. One, the introduction of digital onboarding for individuals, and two, instant consumer credit from your mobile in a few minutes for up to 2K. The digital transformation has been impressive, with digital monthly active users reaching 1.7 million in 2020, up by an impressive 50% year-on-year. This shift in behavior will form the basis of our new branch service model. Despite COVID headwinds, we made significant progress towards completing two key strategic transactions, the sale of our insurance subsidiary and the frontier securitization. As regards to the key, I'm pleased to announce that today we agreed to sell a 90% stake to CVC Capital. The transaction includes a 15-year bank assurance agreement which will be mutually beneficial and result in strong fee growth going forward. The transaction is meaningfully capital accretive and fulfills an important commitment from our restructuring plan. As regards Frontier, in view of the progress made on the transaction, the rating of the senior tranche, the application for the guarantee of the senior bond from the United Republic, and the entry into the final stage of the process, we have classified the portfolio perimeter as held for sale and importantly took the implied $400 million of provisions for the transaction in Q4, a year ahead of schedule. The transaction will be capital neutral upon completion when the RWA reduction of about $3 billion occurs. Frontier, combined with negative organic NPE formation, led to an NPE ratio of 13.6% at the end of 2020, just about $4 billion in terms of gross NPEs. The asset quality of these remaining NPs has improved compared with the previous stock. Specifically, nearly one-half comprise restructured loans which are performing or less than 30 days past due with a good chance to cure. Moreover, the LTV of the mortgages in this remaining NP portfolio, comprising about half of the $4 billion, is now close to 100% post-frontier. Our final point is that the provision coverage of the remaining NPs increased to over 63% at end year 2020, implying net NPs of just 1.6 billion. As important as a significant NP reduction is the fact that it did not absorb capital. Group set one capital ratio at end year 20 stands at 15.7%, and it will increase by an additional 170 base points, of which 110 base points are due to Frontier RWA deconsolidation following the completion of the Frontier and Ethniki transactions during the next few months. On a pro forma basis, Set 1 capital is above 17% and total capital above 18%. Turning to the full year financial performance, our results have been strong. Despite a COVID-induced background in which GDP declined by 8%, group core operating profit, i.e., recurring profitability, excluding trading gains and once-off provisions for COVID and frontier, increased by 41%, reaching $328 million. This performance reflects the following. First, The resilience in our core income, despite the strong headwinds to NII from the $5 billion reduction in NPs in 2019. This was achieved through the expansion of performing loans, funding cost improvements, and the strong growth in retail fee generation. Second, the aggressive cost cuts, which yielded an 8% year-on-year reduction in personnel costs and a 12% year-on-year reduction in GNAs, The good 2020 OPEX results follow on from those in 2019. Indeed, cost savings has amounted to $150 million in fiscal year 2020 compared with fiscal year 2018 and comprised inter alia a reduction of about 2,000 FTEs and about 100 branches. Looking at the bottom line, full year PAT from continued operations reached $591 million as trading gains of $1.1 billion fully absorbed provisions of more than $800 million related to COVID-19 and Frontier. Most of this part was used for once-off restructuring costs, most importantly the DES, Voluntary Exit Scheme, as well as for the additional impairments for Ethnic Key Insurance. With the momentum achieved in 2020 and the expected strong economic recovery, I feel confident we will continue to deliver on the three key goals of our strategy in 2021 and 2022. Complete the asset quality cleanup, enhance the current high level of capital, and achieve high returns for our shareholders. Starting with NPE developments going forward, and you can follow on page 14 of the presentation. The key question concerns the impact from the pandemic on asset quality. We have already said that this would comprise mostly a subset of the loans that received moratoria, 3 billion performing loans in the case of MBG, all of which expired at end December 2020. The good news is that approximately 50% in value terms have not asked for further support and have returned to normal pre-COVID installment levels. The remainder received step-up solutions or government support schemes, the so-called Yefira or bridge schemes. Importantly, very few of these 3 billion have shown early signs of payment difficulties. Specifically, less than 4% are over 30 days past due, nearly three months after the expiration of the moratorium. This is much better than expected, and even though it's too early to claim victory, we cannot see more than 15% to 20% of the 3 billion initially in moratorium defaulting. Outside this moratorium perimeter, NPE formation will be more than offset by curing. Finally, on the inorganic front, we envisage one additional transaction of 1 to 1.5 billion, as well as several individual loan sales of bulkier and more complex corporates. Overall, we expect NPEs in 2022 to reach 1.8 billion, equivalent to an NPE ratio of about 6%. Moving on to capital. slide 15. From a solid starting point of a set one ratio of 15.7% at end 2020, increased by about 170 base points of capital upon completion of the frontier and insurance transactions, as I mentioned previously, tributary profits are expected to generate another 250 base points of capital during the two years to end 2022. These two positive factors will fully absorb 200 base points of IFRS 9 transitional adjustments, Remember that there will be no further adjustments from 2023 onwards. 80 base points of DTC amortization and the RWA impact from our anticipated credit expansion. Thus, Set 1 will be increased by about 50 base points to 16.2% at the end of 2022. This is a very solid 15.2% on a fully loaded basis. This strong capital position will provide NBG with significant strategic flexibility and permit us to think seriously of finally distributing capital to shareholders. Moving on to profitability on slide 16. We lay out the path to a core ROE of 9% in 2022. Starting from a core operating profit of 328 million in fiscal year 20, the three main drivers are the following. Core income will be negatively affected from the hit to NII of about $125 million from the NPE cleanup, which is expected to be almost fully offset by NII from new loan expansion as well as double-digit compounded annual growth rates and fees. Second, cost to core income is envisaged to improve by about 400 base points despite slightly lower core income over the period. This mainly arises from annual cost savings of $70 million on the back of further FTE reduction and branch network rationalization following the switch of transactional banking to digital channels, stripped G&A demand management, and the leveraging of the work from home model. Third, our cost of risk is expected to improve by another 40 base points compared with the underlying level of full year 20 and reach 60 base points in 2022. This reduction reflects high coverage levels, already above 63%, which are expected to increase further as we clean up the balance sheet. Factoring all the above, our core operating profit is projected to reach nearly 500 million in 2022, translating into the core ROE of 9%. A positive trend in profitability will continue in 2023 and onwards. A large part of our achievements, past and future, are due to our successful transformation program, currently in its third year. It has helped focus and prioritize a rapid and effective change of our operating model, including the two key constituents, our IT systems, core, peripheral, and digital, and HR management. Leaving our legacy problems behind us, our focus will henceforth be on our core banking business. will remain committed to position NBG as a bank of first choice in Greece, providing added value to our clients and shareholders and supporting sustainable, environmentally friendly economic growth. With that, I would like to pass the floor to our group CFO Christos, who will provide additional insights to our financial performance before we turn to Q&A. Thank you, Pablo.

Starting with the P&N highlights on slide 18, Profit after tax from continuing operations in 2020 increased by 26% year-on-year to $591 million, utilizing our trading gains to absorb loan impairments of $1.1 billion or 403 basis points over net loans, following our strategy of incurring COVID and frontier-related provisions of $0.8 billion in the course of the year, implying an underlying cost of risk of 106 basis points in line with our criteria. At the same time, our core operating profit before non-recurring provisions registered a sharp improvement of 41%, reaching 328 million, reflecting the resilience in core revenues despite COVID headwinds, as well as a significant reduction in domestic personnel and GNAs. The bank retained its very strong capital position post the absorption of frontier and COVID charges. As illustrated on slide 20, Our year-end Z1 ratio reached 15.7%, with the total capital ratio at 16.7%, nearly 6 percentage points above minimum regulatory levels. The positive impact on our capital ratios upon the deconsolidation of the risk-weighted assets related to frontier completion is estimated at 110 basis points and is expected to be realized mid-year 2021, fully offsetting the negative capital impact booked in Q4, thus rendering the transaction capital neutral. Upon completion of both frontier and SMEG insurance transactions, capital in 2021 would be boosted by approximately 170 basis points compared to ERN20 levels. Going into the profitability drivers, detailed on slides 21 to 27, domestic NII continue to recover in Q420, rising by 2% quarter-on-quarter to $296 million, driven by the expansion of lending NII and funding cost reduction that more than offset the normalization of lending yields which remain at healthy levels despite the ongoing low interest rate environment. Following a sharp rebound in the second half of the year by 12% half-and-half, full-year 20 NII ended marginally lower year-on-year despite the rapid NP cleanup over the last two years. Excluding the impact of NP NII, core pre-provision income settled 25% higher year-on-year. The resilience in our NII in 2020 reflects funding cost savings stemming from our increased TRO exposure and the sustained repricing of time deposits as well as the expansion of our performing loan book following the strong pickup in new loan disbursements. 2020 domestic loan disbursements, including repayments of working capital facilities over the period, increased by 40% year-on-year to $4.7 billion, aided by the extension of state support funds. Performing corporate balances were up by $1.8 billion, or 14% over the same period, offsetting mortgage leverage. The expansion of our performing book would provide longer-term support to the net interest income, partially offsetting the negative NII impact arising from the balance sheet risk in the next two years. Despite headwinds from restrictive measures due to COVID, domestic fees kept recovering in Q420, a plus 5% quarter on quarter, driving the full year 20 levels slightly higher year on year on the back of solid retail fees, especially due to strong growth in the card business and intermediation fees. Fees from our digital business remained broadly flat, negatively affected by the sharp reduction in fees from international card holders, as a result of COVID-induced travel restrictions during the year. Adjusting for this impact, fees from digital channels were up by 25% year on year, reflecting our efforts to engage clients in our digital offerings. COVID restrictions inevitably accelerated the bank's digital transformation, with digital becoming the preferable channel for transactions. As shown on slide 27, The total number of transactions is nearing peak COVID levels, with e-banking transactions up by nearly 50% in Q420, replacing branch transactions that have been gradually reduced by two-thirds versus peak COVID levels over the same period. The ongoing migration of our customers to digital channels facilitates a more cost-efficient and flexible operating model, as we are steadily transforming into a more dynamic and agile bank. Our cost-cutting efforts have yet again produced impressive results, with domestic personnel and GNAs registering solid reductions of 8% and 12% year-on-year, respectively. Cost containment reflects the reduction in the number of employees, the rationalization of our branch networks supported by the swift migration to lower-cost digital channels, as well as the optimization of spend through our demand management framework. The V.S. program launched last November with participation exceeding 550 FTs by end of year, complemented by the ongoing branch network optimization and other cost-cutting measures, will produce additional cost savings going forward. Moving on to asset quality on slides 29 to 31, following the transfer of frontier portfolio under assets here for sale, there is significant improvement in our asset quality position. frontier, combined with negative organic NP formation of 0.7 billion during the year, pushed our year-end group NP ratio down to 15.6% from 31.3% at year-end 19, with cash coverage of 63% compared to 54% a year ago. It's worth highlighting that despite COVID provisions and avoiding going through a high town, we have managed to fully accommodate in the bank's full year 20 P&L 0.4 billion incremental provisions required for the frontal portfolio, outperforming our earlier guidance as regards frontal provisions spilling over into 2021. Domestic NPs reached 4.3 billion in Q4 20, or only 1.6 billion net of provisions. As shown on slide 29, our FNPs below 30 days past due comprised of circa 40% or 1.7 billion of residual NPEs, demonstrating the quality there. Adding to this, post-frontier DLTV for mortgage NPEs drops significantly to 108% compared to over 120% pre-transaction. Organic flows remain negative, with accounting write-offs at near zero in the quarter. New defaults remain low, has been cushioned by the fiscal support while curings have remained fairly stable to the average of the past few quarters. Out of the 3 billion performing loans under moratoria for MBG, all have expired at the end of 2020. More than half have returned to normal payments while at the same time we are actively providing step-up solutions to customers that continue to experience temporary financial difficulties due to COVID. These measures are complemented by the state subsidy programs. As the CEO said, although still early days, states are nearly three months post-moratoria expiry are very encouraging with accounts in early areas currently below 4%. Turning to liquidity on slides 33 and 34, domestic deposits increased by 4.7 billion year-on-year, mostly through private deposit inflows reflecting the fiscal support from the government due to the pandemic. The same time, the repricing of time deposits has provided support to the net interest income and net interest margin. Time deposit yields edged lower by 41 basis points year-on-year to 23 basis points in 2020, with current production coming in even lower at 16 basis points. Eurosystem funding remained at 10.5 billion, an exposure that will keep providing NII cushioning in 2021 when the full impact will be realized. The TLTRO subsidy, coupled with the deposit repricing, has led the bank's blended funding cost to the level of 7 basis points in Q420, compared to 41 basis points in Q419. 2020, despite the pandemic, has been a year of many achievements and success for our bank. Against COVID headwinds, we reported a solid operating performance, with core operating profitability up by 41% year-on-year. on the back of resilient core income and rigorous cost-cutting. The strong credit line more than offset both COVID and frontier one of provisions, yielding a path from continuing operations of nearly 600 million. At the same time, driven by frontier securitization, our NP ratio went down to 15.6% from over 30% a year ago, while impressively and despite the aggressive NP deleverage, the state one ratio was maintained at 15.7% proposed the absorption of the $0.8 billion of non-negating provisions. As already mentioned, further capital enhancement upon completion of transactions with increased capital adequacy by an additional 170 basis points. 2020 is now behind us, and we look forward to the challenges ahead of us in 2021.

And on this note, I would like to open the floor to questions. Thank you.

The first question comes from the line of Loriani Jonas with Axia Ventures. Please go ahead.

Good evening, Tim. Thanks for the call. My first question is on slide 15 on capital. I was just wondering, given your comments during the call, what will be the trigger of the dividend discussion? I mean, are you going to wait for the full Everest 9 phasing to be in, or is it more linked to an asset quality level, let's say below 10% or so, and linked to this capital position Is there any level of trading unrealized trading gains you have at the moment to share with us? My second question is on is on NPS and on your new NP plan on slide 14. I was just wondering how we can think about the the sales securitization split between 2021 and 2022. I mean, are you still willing to do something this year or it's more like a 2022 Subject. And then finally, a question on lending going forward. It would be interesting to hear from you. What is your view on your capacity and new disbursements from 2021 onwards? And also in relation to the mix of the the new disbursements and also an outlook on rates. You know, I take the fact that recently a lot of the recent disbursements have been channeled to corporates. And as you show in a slide, the corporate rates are coming down. So I'm just wondering how this will how shall we think about this mix and the rate outlook going forward?

Okay, I'll take some and leave the rest for Christos. Very good question on the dividend trigger. Clearly, it's something we need to discuss with the regulator. It will clearly involve making a lot of progress on the IFRS 9 phase-in. Two, definitely NPEs will have to be near the 5% level. and at that point I think a meaningful discussion can be undertaken with the regulator so we're looking at on the outer edge of the period that we have here on the slide now on the securitization will try to do it as early as possible, given that we also have frontier. I think it's on the night edge between 2021 and 2022. Lending, I think that we're going to see a very strong pickup in lending as the economy goes forward. The economic growth will be strong. We're going to have the EU recovery funds coming in. There hasn't been investment for a few years. So I think all combined, there will be strong loan demand, mostly in the corporate. I think the savings from the households will be adapting on loan growth for them initially. But down the road, retail and household borrowings will pick up from the extremely low levels that we're seeing them now. If you look at mortgage, consumer, and small business lending as a percentage of GDP, they're extremely, extremely low. As is all loans in terms of financial intermediation in Greece. It's far below what it should be. rates. On rates, yes, there will be a continuing narrowing of corporate rates. Somewhere, the 2020 new rates are biased by the government programs, which had government guarantees. But if you try to correct for that, you're going to see something like a 10-15 base points reduction in corporate rates in in 2021 compared to 2020. On the retail, I think, if anything, you probably see an improvement in rates. Did I miss anything? No, I think you covered everything. On the trading gains, just... Oh, sorry, go ahead.

To take up that question. So, as of the year end, with regard to the AFS portfolio, we have an unrealized reserve in the area of... 350 million more or less what I can say is that in the early days of the year in January we completed the swap with the state that resulted in 230 million of profits this is public information already and obviously we do have the largest chunk of our exposure in debt securities under the portfolio of here to collect amortized cost So there is some unrealized gains there, but I wouldn't want to share at this point the level of the unrealized gains in the portfolio.

Got it. Just a follow up, Mr. Myronos, on the lending volume. Would it be fair to assume that your new disbursement should be, I don't know, between three and a half to four and a half billion, or is it a bit on the high side? Because I think that the 2020 figure that you show of 4.7 billion is also a bit skewed by the dynamics with the COVID situation, right? So I suspect that this should normalize at lower levels if it's fair to assume.

I'd say somewhere around three and a half, excluding any new programs that the state would introduce. That's clear. Thank you.

As a reminder, if you would like to ask a question, please press star and 1 on your telephone. The next question comes from the line of Boulouris Alexandros with Wooden Co. Please go ahead.

Yes, hello. Many thanks for the presentation. A quick question on your costs and the reduction in OPEX of 70 million over the next two years. Could you share how much is driven by a reduction of personnel costs and if the cost for the VRS plans has already been taken or should we assume another VRS plan, let's say, later in 2021 in order to achieve this 70 million target? That would be my first question. And my second question would be regarding cost of risk, which we assume 60 bps in 2022. In 2021, what should we be looking at? I mean, I assume that this run rate that you are at the moment, close to 100 bps, is the rate that we should assume also for 2021. Thank you.

Thank you for the question, Alexander. So with regards to the first question on costs, yes, the biggest chunk of the 70 million saving will be resulting from the reduction in FTEs. We have provided for the VAs that has taken place and we expect to use some more provision that we have in the year end for exit tests in 2021. Just to give you an idea of the numbers, the VAs exit that was completed at the end of the year will bear about 35 to 40 million of upside savings in 2021. Any other reduction in staff going forward will be targeted, so there won't be something major in terms of VAs as we had in the last two years. With regards to the cost of risk, yes, our outlook for 2022 is at 60 basis points based on the explanation that we issued in the opening remarks. Now, you should expect that the cost of risk for MBG in 2021 will be more or less at the same levels as in 2020, so around $100 billion.

And this includes also potential, this $1 billion transaction?

No, no. This is underlying, excluding any lost budget for transactions.

Okay, thank you.

The next question comes from a line of Sevim Mehmet with JP Morgan. Please go ahead.

Good evening and thanks very much for the presentation and congrats on the results. I'll have just a few questions please and firstly on dividends if I may. Thank you for your comments earlier. My question would be given the very strong capital position that you'll reach hopefully in a few years on a fully loaded basis even. Do you have any views on whether the DTCs in the capital stack could potentially play a role in the longer term potential and the discussions that you will have with the regulator? And secondly, on the loan growth that we saw in the fourth quarter, I think it's quite interesting that you saw that pick up in corporate loan growth. Was this mainly due to the government support programs in the fourth quarter, or are you seeing actually the first green shoots of recovery in lending? And just one technical question on the effective tax rate, if I may. How should we think about it in the coming years, given the amount of unused tax losses that you had on your balance sheet? Is there any more left? And how should we think about it going forward beyond that? And S.A. S.A.

Okay, we're debating dividends, which, as I said, are a 2023 issue, but it's fine. I do think PTC is an issue, and it will be an issue for the regulator. Clearly, dividends would have to be a fraction of the profits and cannot at all go into the capital. So as long as it's part of the profitability, then I think the regulator would not have an issue. But clearly it would be an adapter. Let me take that question and let me also take the question of Frontier and the quality of the mortgages. I think we've always been proud of the quality of our mortgages in terms of the value of the collateral. And I also think that one needs to put into the equation of the value we received due to our very good restructuring record with the split and freeze product, which has been extremely successful in leading to curings. So I think that track record as well has played a very important role in the outcome. And then Christos has the loan growth and the taxes correct.

So in terms of the loan growth in Q4, actually, we did indeed have part of it was due to the state currency scheme disbursements. But I would say that more than half were purely corporate loan disbursements outside the perimeter of the state currency schemes. With regards to tax, well, it's related to the DTC as well. As long we have the DTC and amortize this credit going forward, There will be no payment of taxes going forward, so the two issues, I guess, are interrelated.

Okay, that's all very helpful. Thanks very much.

The next question comes from the line of Mimisoglos Manx, Abrogia Capital. Please go ahead.

Hello, just going back during the presentation, you mentioned of the 1.5 billion sale and securitizations, I couldn't hear it clearly. Was it 1 billion for securitization? And then do you provide any guidance for the potential capital impact of these transactions? That's my first question. And then regarding the MP reduction, you mentioned 126 million impact on NIA for two years. I was wondering what kind of impact we should expect for 2021. Thank you.

Okay, let me take the question. So with regards to the portfolio under the securitization perimeter and the sales, what do we see out of the 1.5 million that we sell? that we say we will deliver it is more or less a billion of corporates and SMEs and SBAs and the remaining will be retailers with mostly mortgages. So at this point in time we are still defining the perimeter but we would expect that the loss budget for the perimeter would be in the up to 30 basis points.

30, 3-0.

The sales and the securitization are planned to take place over a period of two years. We are not sure yet as to whether something will materialize in 2021. Now, and obviously we will be considering the new apps program, Hercules 2, to optimize in going through that channel for the transactions. The second question,

can you remind me please sure the NPI reduction you kindly share with us for two years 21 and 22 I believe is 126 million what kind of figure for 21 I mean I guess it's only frontier impact right the impact in interest from frontier within the area of 75 million

for the full year's effect. So in 2021, even though we expect the transaction to close sometime end of June, early July, you should expect around $38 million of impact in NII.

Got it.

Thank you.

The next question comes from the line of David Daniel with Autonomous. Please go ahead.

Hi, thanks for taking my questions. Just two quick ones. I know in the presentation you flagged Tier 2 and 81 headroom. Is this being considered? Should we think potential Tier 2 is coming in the coming years? And then secondly, just relating to that, could you just maybe talk a bit about your MREL targets? Have they been set and what dates they become binding? And also whether we should expect you to continue to print in senior markets? Thanks.

Okay, so with regards to the EMRAR targets, the formal dialogue with SRP is being concluded in the coming weeks, but the binding target that we have to meet by 1st of January 2022 has already been met. Now, going forward, our plan is to have about half a billion of issuances up until the end of the program, so yes, We do have some issuances planned for the next couple of years, but at this point in time, we are trying to consider whether we will proceed with them or not. AT1 is in the table, as well as 1TR2 issuance and some other senior or bond issuance. Thank you.

The next question comes from the line of Manolopoulos Konstantinos with Optima Bank. Please go ahead.

Yes, hello. Congratulations on the results. Thanks for taking my question. I have a very quick one on capital, please. You guided for 170 bps positive impact following the conclusion of the frontier securitization plus another 60 bps from the sale of Ethniki. And my question is on that. Actually, how should we look at the numerator and the denominator? Is it mostly of an impact of lower RWAs from the sale? a small increase on capital as well. Can you guide us through, please?

This number, the 170 basis points, is based on the ERM-20 risk-weighted assets, and obviously it has to do with the deconsolidation of the risk-weighted assets related to the loans in the frontier perimeter and the risk-weighted assets from insurance.

So there is no significant impact on the numerator, on capital, that is after the sale of insurance?

No, no. The hit on capital has been taken already in the P&L of 2020. Okay, perfect. Thank you.

The next question comes from the line of Negro Alberto with Mediobanca. Please go ahead.

Yes, thank you for taking my question. We're done for the results. Just one clarification. can you share with us if the CT1 ratio evolution until 2022 you are taking into consideration also any potential loss coming from the future and my second question is on NIA if you expect to achieve the benchmark to receive the 50 basis point TLTRO bonus also in the second half of the year thank you okay on your first question with regards to sorry the first question was with regards to what I was thinking to answer the second part of the question no sorry the first one is on the slide 20 where you show the capital work if you if that includes also the losses the potential losses so in the plan we do have a potential loss of up to 30 basis points for the portfolios under the sale perimeters

And with regards to the TRO, yes, in this bid, we do have the extra 50 basis points following the extension of the TIL TRO programs. Thank you so much.

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

On March 30th, we will celebrate our 180th anniversary. We're very proud of our history, following closely in the footsteps of the nation, which itself celebrated 200 years on March 25th, yesterday. I believe today's results are a nice birthday present from NBG to its shareholders. Thank you.