National Bank of Greece S.A

Ladies and gentlemen, thank you for standing by. I am Yota Yokoro's call operator. Welcome and thank you for joining the National Bank of Greece conference call to present and discuss the full year 2023 financial results. All participants will be in a 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, they 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 morning, everyone. Welcome to our fourth quarter 23 financial results call. I'm joined by Christos Christodoulou, Group CFO, Greg Papagioris, Group Head of IR. After my introductory remarks, Christos will go into more detail on our financial performance, and then we will turn to I will begin with a brief overview of Greece's positive economic environment which has set the backdrop to a robust financial performance. Then I will turn to our financial results. So let's begin. Economic growth in Greece remained on a healthy trend in 2023 despite an unfavorable external environment with a broadly stagnant euro area, Greece's main trading partner, highly restrictive monetary conditions, and a tighter fiscal policy. In fact, GDP growth in Greece stood at 2% in 2023, despite the negative impact from natural disasters, especially in Q4, and continued to outperform the year area by a significant margin. I would like to point out a few notable economic developments. First, labor market trends remained strong, with employment up 1.5% for the full year 2023, reducing the unemployment rate to a 14-year low. while real wages were up about 2% year-on-year as well. The resulting increase in real disposable income supported private consumption and this in turn supported consumer lending. Higher disposable income and increased consumer confidence also led to demand for housing which due to the current demand-supply gap has pushed up residential real estate prices significantly as well as nascent mortgage demand. Second, On the corporate side, business profitability is at a 13-year high. The impressive improvements in Greek corporate competitiveness have driven exports to a level near 50% of GDP, with tourism experiencing a record year and goods exports continuing to gain market share in their key markets. Greek corporates see this economic conjuncture as an opportunity and are planning significant expansion projects leading to the observed strong corporate loan demand. Indeed, so do foreign investors, resulting in record inflows of FDI. Third, Greece recorded a large and expected primary budget surplus due to buoyant tax revenue, including successful efforts to curb tax evasion. While the current account deficit was reduced by more than one-third, with little need for external funding after accounting for FDI inflows and EU funds. In sum, The Greek economy is reaping the rewards for hard-won gains in competitiveness gained over a multi-year restructuring effort and ambitious reform agenda, as well as policy credibility. These developments, combined with a significant reduction in the debt-to-GDP ratio, unsurprisingly led to the upgrade of the Greek economy to investment grade in the second half of last year, which has made the economy even more attractive to foreign investors, and this can be observed in much higher liquidity in the stock market. Going forward, leading indicators confirm that 2022 trends are continuing in 2024. Thus, full-year 2024 GDP is projected to accelerate to about 2.5%, despite a still weak outlook for the year area and monetary policy remaining tight for most of the year. An additional boost to the economy will come from the delayed positive impact from the absorption of substantial RRI funds, which are just now beginning to hit the real economy. Now, let me turn to the full year results of the bank. In this positive economic environment, combined with the impressive accomplishments from our ambitious and still ongoing four-year transformation, as well as our inherent comparative advantages, the bank's performance has excelled. In fact, our full year 2023 financial results have outperformed, by a wide margin, our guidance which we had already revised up back in August 2023. In terms of profitability, we have delivered a full year 2023 core PAT of $1.2 billion, translating into a core return on tangible equity of over 18%, even before adjusting for significant capital buffers. This outcome is far above our guidance for a core return on tangible equity of over 15% for the full year 23. From an earnings per share perspective, we have produced an earnings per share of over 1.2 euros per share for full year 23, again significantly higher than the guidance. The drivers behind these strong results reside in all the key lines of our P&L. The strong performance of NII resulted from the stable positioning of our balance sheet to a rising rate environment, but also the excellent job in the disbursements by our first line, especially for corporate. Net credit growth was $1.3 billion for the year and occurred mainly in the second half of the year. The increase in activity, combined with an exceptional cross-selling effort to our customer base, led to an impressive income growth of 17% year-on-year on a like-for-like basis, with encouraging progress on wealth management. Operating expense discipline continued despite higher depreciation charges reflecting our ambitious IT and digital transformation, including the replacement of our core banking system. Indeed, our IT strategy has already started to deliver dividends in the form of improvements in efficiency, competitiveness, and customer service. It comprises a distinct competitive advantage for NBG. due for operating expenses that reflect the usual seasonality, which was accentuated by a bonus accrual that was approved late in the year. Cost of risk came in well inside our guidance of 80 base points as a result of low NPE formation trends, circa half the budget level for the year, and already high coverage levels on all three loan stages. Our strong possibility enhanced our capital buffers further in 2023 by a sizable 220 base points to 17.8%, following a provision for a dividend payout ratio of 30%, taken mostly in Q4. Our set one ratio is currently approximately 400 base points above our internal target of 14%. providing significant strategic flexibility, including with regards to shareholder remuneration. Going forward, we intend to keep leveraging the support of macro trends and a buoyant banking environment, as well as our inherent comparative advantages, including our transformation program, which is bringing rapid and efficient change to the bank. And here I'd like to note that on the domestic front, The numbers speak for our customer satisfaction and loyalty. We are the domestic champion by a wide margin. Based on our 2023 results and our new 2024-26 business plan, we will now provide new guidance to markets. You will find it on page 17 of the presentation. The main takeaway is that we expect to be able to enhance the high levels of profitability achieved in 2022 in 2023 despite the normalization of interest rates during the business plan horizon. We will thus continue to accumulate capital despite steadily improving dividend payout ratios toward European levels and thus have room to complement shareholders' returns with buybacks from the market. Turning to the specific targets. As regards profitability, we're targeting a core return on tangible equity adjusting for excess capital of over 18% for 2026. This solid return derives from a 2026 core PATH, profit after tax, of over 1.2 billion, which implies an earnings per share of more than 1.3 euros per share. Net interest income sustainability reflects a relatively resilient NIMH arising from our increased exposure to fixed rate assets. and substantial deposit hedges already in place, as well as strong net credit expansion of 7% per year on average. A successful strategy on fees is expected to deliver a high single-digit growth in every year over the next three years. Cost containment will continue to be a major pillar of our strategy, with OPEX growing annually in the low single digits despite the investments in technology and the rapid increase in activity. Finally, cost of risk will normalize to levels below 50 base points in 2026, as we expect NP formation in 2024 to remain at similarly low levels experienced in 2023 and normalize to even lower levels in 2025 and 2026. Thus, we expect our NP ratio to be below 3% in 2036. As a result, we anticipate organic capital generation for the three-year period to 2026 pre-dividend payments to well exceed 500 base points, providing us further optionality on strategic possibilities and shareholder remuneration. To close, I would like to emphasize once again that our strategy derives from one, our investment in technology, so as to rapidly distinguish ourselves for our agile and expeditious operations and superior customer experience, and two, our people, will continue to earn the trust of our clients by providing service excellence, thus being acknowledged as the bank of first choice. In this manner, NBG will remain a key driver for the economy's continued strong growth. And with that, I would like to pass the floor to our group CFO, Christos, who will provide additional insight to our financial performance before we turn to Q&A.

Thank you, Pablo. Let's move to the highlights of our profitability on slide 23. In Q4 of 2023, we generated a core profit after tax of $345 million at group level, leveraging on accelerated core income growth, contributing towards delivering a full year core path of $1.2 billion, two and a half times higher year on year. This translates into a core return on tangible equity of 18.3%, well above our full year target of over 15%. Main contributor to this competing performance was our strong NIII momentum, up by 65% year-on-year, driven by higher base rates, healthy loan expansion of $1.3 billion year-on-year, as well as an increased contribution from securities income, all pushing net interest margin higher to 303 basis points for the full year in line with our guidance. In Q4, the positive NIII momentum was sustained as shown on slide 28, up by 6% quarter-on-quarter. Higher average base rates, complemented by solid credit expansion of $0.9 billion in Q4, comfortably absorb the pick-up in deposit and wholesale funding costs. Loan pass-through rate reached 73%, underpinning a healthy lending spread normalization, while blended deposit data remain low at 11%, reflecting our strong and relatively stable core deposit base, comprising nearly 80% of our deposit stock. Time deposit costs in Euro terms stood at approximately 180 basis points in Q4, applying a beta of circa 48%. Complementary to NII, fees also picked up sharply in 2023, increasing by 10% year-on-year on a reported basis, post the measure acquiring consolidation impact. or 17% on a like-for-like basis as shown on slide 33. Key drivers to this performance were lending fees from both corporate and retail businesses, as well as card and trade finance-related fees. A big growth was complemented by increasing cross-selling of investment and insurance products, with the relevant fees increasing by more than 25% year-on-year. At the quarterly level, domestic fees increased by 15% quarter-on-quarter. a period of transformation continued unabated, producing impressive results, with e-banking transactions up by 17% year-on-year, driving total transactions 9% higher year-on-year. As regards OPEX, cost-disability continued, as you may see on slide 34, with transformation, especially digital, driving FT optimization. Personnel and G&A growth was kept well below inflation, allowing a full year 23 cost-to-core income ratio to settle at 31.6%. Personnel expenses increased by less than 3% year-on-year, reflecting the sectoral wage increases in variable pay, while the growth in GNAs settled at just 1% year-on-year. The increase in depreciation charges reflects the role of our strategic IT plan, spearheaded by the replacement of our core banking system, which is now only two years away from completion. Our ongoing IT and digital transformation enhances our operational efficiency, automates our processes, and significantly improves our commercial offerings. Now turning to the highlights of our balance sheet on slide 24, disbursements accelerated to $2.6 billion in 2023, dragging performing loans up by $1.3 billion year-on-year to $30.5 billion in line with our guidance. Corporate loan growth was driven mostly by SMEs, project finance, and shipping. While retail loans exhibited a stabilizing trend, our slightly leveraging in mortgages was partly upset by growth in S.B. and consumer loans. It is worth mentioning that in mortgages, we dispersed circa 0.4 billion in 2023, of which approximately 85% was in fixed-rate products. Along the same lines, our exposure in fixed-rate sovereign bonds has increased by about a billion and a half in Q4-23, adding to the structural cash position of the bank insulating us against the anticipated ECB rate reductions. On slide 26, the distinct strength of our balance sheet underpinned by our superior liquidity profile, our robust capital profits, along with our investments in IT infrastructure, comprise unique comparative advantages. With regards to liquidity, we are mostly funded by retail deposits, with deposits comprising 96% of our net funding. Domestic deposit growth continues strong, as shown in slides 31 and 32, up by $1.7 billion in 2023, reflecting written customer dynamics as corporate deposit flowdowns affected both liquidity and net loan expansion during the year. Importantly, our deposit mix allows for the lowest funding cost in the sector, with time deposits still comprising just 20% of our domestic stock. A strong liquidity profile is also manifested by our net cash position of $8 billion, a loan-to-deposit ratio of 58% and a liquidity coverage ratio of 262%. On asset quality on slides 35 and 36, our NPE stock declined by $0.5 billion year-on-year to $1.3 billion, or just $0.2 billion net of provisions, driven by inorganic actions and supported by net organic NPE flows of circa $0.2 billion, around half the levels we were expecting for the year. This allows our NP ratio to drop to 3.7%, with cash coverage at 88%. Our full-year cost of risk settled at 64 basis points, well inside our 80 basis points guidance, reflecting the favorable formation trends, and at the same time maintaining class-leading coverages across all states. Moving to capital on slide 25, our SED1 ratio increased by an impressive 220 basis points year-on-year, to 17.8% in 2023, with the total capital ratio settling at 20.2%. It should be highlighted that our capital ratios also include a dividend provision of 90 basis points, reflecting a 30% payout out of 2023 earnings. Moreover, including emerald resources and pro forma for our January senior preferred issuance of 600 million, our emerald ratio stands at 25.4%, already ahead of the January 2025 requirement of 25.3%, as shown on slide 32. On slides 39 to 43, we provide an update on ESG. In line with our strategy, we have committed to a set of ambitious 2030 targets for finite emissions, substantiating our net zero vision. These targets, together with the bank's own emissions reduction goal, are underpinned by business value creation initiatives for the climate and the environment, as well as by the enhancement of responsible internal practices. At the same time, we have strengthened our ESG governance across hierarchy levels and lines of defense. Our performance is recognized as reflected in our improving ESG ratings. 2023 has been an exceptional year for MBG, spearheaded by record core profitability and our performance over guidance by a wide margin. This performance comprises a strong foundation on which to build on towards delivering our ambitious financial targets for the next few years, attaining an impressive mid-teen steady state core eternal tangible equity. Leveraging Greece's growth momentum, our distinct comparative advantages, and leading strategic investments in IT infrastructure, we aspire to improve our full year 23 record high profitability to a core profit after tax above 1.2 billion in 2026, implying an EPS of over 1.3 euros per share, fully absorbing the anticipated benchmark rate normalization of approximately 175 basis points over the next two years. At that profitability rate, organic capital generation will continue strong. Adjusting for our internal Z1 target of 14%, we anticipate our core return on tangible equity to continue to exceed 18% in 2026. The key profitability contributor will remain our core income. with cost control and core normalization, keeping evolving in our setting map. As regards our core income dynamics, NII, the most important driver of our record high 2023 profitability, is expected to be maintained at nearly the 2023 levels, despite the gradual yet considerable benchmark rate reduction over the next three years, with NIM dropping to around 270 basis points by 2026, as we show on slide 17. The resilience in our NII is underpinned by healthy credit expansion of a 7% CAGR over 2024 to 2026, structural hedges, as well as investments in fixed rate assets, mitigating the rate normalization impact, as well as additional funding costs deriving from remaining M relationships. Credit expansion will be mostly driven by corporates, as shown on slide 19, anticipated to grow at a high single-digit CAGR over 2024 to 2026, with retail supporting growth from 2025 onwards on the part of continued high-economic growth and corporate profitability affecting positively household economics over time. On FIEN Commission's income, growth is expected in the high single-digit area every year until 2026 as we continue to capitalize new originations, trade finance dynamics, investment products, and bank assurances. Our large deposit client base can continuously improve in product and service offerings you can tell you what results already in 2023 indicated that there is ample growth potential in this space. Higher core income coupled with continued cost discipline aided by abating inflation accorded the increased depreciation charges arising from the rollout of our IT plan. Combining these elements, our cost to core income ratio is anticipated to remain at a steady state level of around 35%. As regards our cost of risk, it will continue normalizing reflecting controlled NP formation in 24, similar to 2023 levels, and material formation in 25 and 26, as the CEO already mentioned. In that light, and given the gradual workout of our residual NP exposure over the next three years, we anticipate the NP ratio to drop below the 3% by 2026. This will allow our cost of risk to drop below 50 basis points, providing further support to our profitability. Our solid organic capital generation will be driven by a strong co-profitability, comfortably accommodating the MVCH credit expansion. As shown more elaborately on slide 20, we anticipate our organic capital generation to exceed 500 basis points in the next three years, driving our set one ratio pre-dividends to over 23% in 2026, while dividend payouts, which could start off at 30% this year, are expected to gradually grow, converging to European average. These levels of capital, when compared to our internal target Z1 level of 14%, suggest more than 900 basis points of excess capital, providing solid flexibility as well as optionality in remunerating our shareholders to dividends, as well as complementary share buybacks. Summing up, following our robust financial performance throughout the year, underpinned by record high copropriability, high double-digit returns, and class-leading capital buffers, We are confident we can stay the course, sustaining the impressive track record, generating value and tangible returns for our shareholders within and beyond the horizon of the current business plan. And with that, let's now open the floor for questions.

Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. Please use your handset when asking your question for better quality. Anyone who has a question may press start at this time. One moment for the first question, please. The first question comes from the line of Ismailo Eleni with Axia Ventures. Please go ahead.

Good morning and congratulations for this very strong set of results. I've got a few questions for my side. So the first one would be, as we look at sustainable profitability, how you're planning to protect NIA in the medium term. You've mentioned about the structural hedges. So could you comment on your strategy there in more detail about how should we think of it in the other quarters and years? And what are the biggest upside and downside risks to this outlook? And any notable costs associated with the derivatives there? That would be the first question. and the second one would be, given your excess capital, would an accelerated DTC depreciation be an option to deploy some capital or would potential M&A be a factor? Thank you.

Thanks for the question. So I'll start with the NII dynamics in our business plan horizon. So there are many items, some of them in opposing directions that will affect our NII going forward. So to start with 2024, first of all, we do still see some trade expansion and some fixed rate assets adding to our balance sheet in 2024, which will help the NII generation. And also, we have some repricing phasing in on the highest average basis that we have in 2023 as well. On the other hand, we do see some pressure from the deposit bid that's going through to 2024. We have some additional cost as well. And of course, as you mentioned, we have the structural case, which at least for 2024, it will be a burden for our profitability. So all in all, in terms of NII, we expect that it would be marginally lower to the levels that we achieved in 2023. Now, going forward to the outer years of the business plan, 25 and 26, the dynamics have changed. So we still expect to generate healthy NII from credit expansion. The deposit bid has, although not to the extent that we saw them affecting our cost while the rates were going up, will also benefit a bit our NII. The structural figures will start giving back NII and the smoothing will start working in our advantage. But we still also have the effect of the NIM relationships and, of course, as we said, the pressure from the lowering rates going forward. But all in all, we expect our NII in the outer years of the balance sheet to plateau following the decrease that we expect to see in 2024 and thus support the overall profitability as we have described it in our remarks. Of course, other lines of our profitability will be supportive as well. We've said that on the dynamics that we see on our fee base, we expect every year for fees to grow on a high single digit across the three years. We expect to continue big discipline in regards to OPEX and only expect a low single digit increase. And of course, our cost of risk, given the asset quality profile of the fund, will also contribute to our profitability after delivering the over $1.2 billion profitability for 2026. Now, on the second question that you asked about DTC, indeed, our organic capital, as we said, gives us lots of strategic optionalities, and a primary one being the remuneration of the shareholders. With regards to DTC, as you very well know, we follow a linear amortization approach for the DTC. The level of profitability in the past years has made us very comfortable with regard to this approach. Just to give you some color on the share of PPC with regard to asset one, it's currently just below 55%, and in the business bank horizon, this is anticipated to go below 35%. So at this point in time, we believe that this is the best way to go about it, and we'll continue down this road.

thank you very much and one more question if I may going back to the PNL as attention shifts to net free and commission income can you give us some more color on your what if management strategy and how you're planning to let's say keep increasing the units AUM in your reach and could you help us quantify the benefits of the IT and digital transformation to this line of the PNL in the outer years thank you on the wealth management strategy it's

easy to explain harder to execute we have in our premium especially customer base there are low percentage of mutual funds and other assets mostly time deposits so the objective is to shift these customers to to more beneficial products for themselves in asset management. We had a very good start in 2023, obviously helped by the higher interest rate environment and the increasing demand for bond and mutual funds. And we will continue to push in that direction in the out the years. We expect over the business horizon to more than double the the assets under management to these clients. Clearly this needs to be supported by training of RMs in terms of how to sell these products, convincing customers of their benefits. They will need better interfaces on both the mobile phones as well as as seeing the interaction and seeing people seeing their portfolios, etc. So it's a multifaceted strategy and will also include an IT component. Now, on IT in general, there are two main objectives. One is clearly making the back office more efficient, getting rid of the old legacy systems. and the second is the customer experience, making sure that people have the look and feel and the comfort that they have when they do other types of business. I think we have made very large gains on this front over the past few years. We have mobile apps per segment. we have internet banking per segment and this has led to a huge shift of transactions the simpler transactions to alternative channels and outside the branch which has been a significant shift in cost savings for us so it is multifaceted in terms of the benefits both back office and front but it is essential. I think in banking in the next few years the banks that invest in IT will be the ones that do better than others.

Thank you very much for your answers and again congratulations for the results.

The next question comes from the line of Sevim Mehmet with JPMorgan. Please go ahead.

Good morning. Thanks very much for your time. I have three questions, please. First of all, can I ask if you have any buyback baked into this guidance, just looking at the dynamic between core PAT and EPS, particularly from 24 into 26? It looks like EPS is growing a bit faster. Can I therefore confirm if you have any specific number baked into this guidance? And if yes, what would be the timing? And secondly, maybe just quickly on loan growth, your guidance of 7% is a bit higher than what we heard from the peers so far. So if you could tell us what would drive that faster growth at MBG and any additional color to that would be very helpful also. And finally, can I just ask what the one-offs were in the fourth quarter? If you could give us a list of those, that would be very helpful. Thanks very much.

Let me take the first two. The first one is very simple. No is the answer. There's no bad aspect to the business plan. In terms of long growth, our view is that the loans to GDP in Greece is quite low. It's around 55%. It needs to grow. And our belief is normal GDP will be at least 4%, 2% real growth. loss in our to pursue inflation I'll put it together I think we're going to either get see solid a long go for the market and given what we've been the doing over the past a few years which is increasing our market share a bit that's how you get the the seven percent I'll Christmas you know that the last one yeah it there are just a couple of one was in the in the last quarter of the year I try to

The first one is the VES that we executed in the last quarter of the year. So there is a provision there of about $40 million for the process we ran in November. And the other one is the fees that we have paid for the placement, as you can see, of the consulting fees. So that's another $30 million, including VAT. That's the two major components of the VES.

That's great. Thank you. Just on the buyback thing, can I follow up and ask what your latest views would be on that, given obviously looking at the capital ratio, it's extraordinarily strong, at least the trajectory from here. So have you had any conversations? What would be your latest views on the potential timing of it? And obviously with the recent changes at the SSM, do you think there is a different approach there, et cetera? Maybe any color that you may share would be very helpful. Thank you.

I think the first point to make is that we look at buybacks quite positively. We think it would be an extremely efficient use of the excess capital. That being said, we have not been giving any remuneration to shareholders to date. We hope this year will be the first. We're starting with a request for a dividend of between 25% and 30%. And we'll take it from there. We need to see what happens with the remaining shareholdings of the HFSF as well, which also plays into the decision on the buybacks. So these are things which need to be settled. And once those hurdles are crossed, I think we will be far more free to discuss the size of the buybacks. But this answer also gives you a bit of color on the timing. Great, that's very clear.

Thanks very much.

The next question comes from the line of Bulguris Alexandros with Europe Securities. Please go ahead.

Yes, good morning. Congratulations on the numbers and thanks for the presentation. Quick question on your assumptions in the targets. Could you clarify a bit more on what you assume in terms of spread, especially in the task corporate space, given that we see a bit more competition there? And a second question again regarding the assumptions. I'm not sure if you mentioned it in your presentation regarding your assumptions on time deposit shift and deposit beta in general for 24 and 26. Thank you.

Hi, Alex. So with regards to your first question, let me just firstly say our expectations on the movement of the of the ACB rate, so in our plan we assume that the rate will go down to around 3% towards the end of 2024, and thereafter to 2.25% by end of 2025. So that's the base assumption. Having that in mind, we expect that, and given where we see the loan passes now, we expect something in the area of 20 basis points in terms of spread compression going forward, as you rightly said, mostly in the larger tickets, and then we expect to normalize for the outer years of the business plan. With regards to time deposit dynamics, as we said, our deposit data for the fourth quarter of the year is around 48%. We expect the pressure to continue at least in 2024, and we expect the data to go just over 50%. That's still going up. why or when did it back when going down we expect our people to be back on the time to put this to be somewhere between 40 and 45 percent I now the deposit meek's we are currently as you've seen to 79 quote 21 time deposit we expect that to continue although we haven't seen much pressure as you very well know in the last six to nine months to maybe around 75 to 25 percent And that's about it. We don't expect anything else on that front.

Okay, many thanks.

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

Good morning all. Congratulations on your results. I have two questions. The first one's on MREL. Can you confirm your end-state MREL requirement, but also What buffer we should be thinking about that you'll build towards, so is it 100 bits above the requirement, and therefore how much issuance you plan over the next couple of years would be helpful.

And then the second one, I guess, is kind of related just on capital.

I'm sure you'll have seen developments in Italy, potentially a 100-bit systemic risk buffer. Do you think that's possible in Greece? Is that something, again, we should be watching out for to increase capital and ML requirements? Thanks.

well open I found the second one I mean we don't we don't see that to be honest I at least at this point in time happening in Greece so nothing to comment on that one with regards to our MRL position as you as you have seen our presentation the year end mark was at 24.2 percent so comes up the above the target of 22.7 percent we have for January 24th performer for our senior issuance in January uh... these uh... these that it goes up to twenty five point four percent so that's already uh... marching and exceeding actually our target for january twenty five now we've got terminal target at around seventeen and a half percent we have let's say the refinances to do about one or two additional issuances in general our uh... our climbing horizon with regards to emirates sees us Operating with about, let's say, 5,200 basis points buffer above the final target that we have.

Thanks. And can you just confirm that final target?

The target that we have for end of 2025 is 27.5%. Thank you.

Once again, to register for a question, please press star and one on your telephone. Ladies and gentlemen, we have another question from the line of Memisoglosman with Abrogia Capital. Please go ahead.

Hi, many thanks for your time and presentation. Most of my questions have been asked, so maybe if you could give us a bit of color on the strategic optionalities that you mentioned. The last

few calls I think the focus was more on portfolio potential portfolio acquisitions and so on just wondering what the latest thinking is on that front thank you the latest thinking hasn't changed it is the same as before we are looking at dividend dividends and buybacks as one large source of the of the excess capital. We're looking at loan growth in Greece and the reforming market. We are looking at conservatively at the syndicated loan market in Europe. And then if there's an M&A, if there's something that looks interesting and attractive and creates synergies and is accretive, then there could be something, but it is not... it's not obvious on that front we're looking at partnerships with fintechs for the most part who can help us in areas that we do not have cannot have the expertise but that's usually not a capital consuming issue so

so again I think the the view on the XS is unchanged great thank you the next question comes from the line of Negro Alberto with Mediobanca please go ahead yes thanks for taking my question just one clarification on the NIEI and in particular on the structural edges if you can

give us more detail on the size of this structural edge and also the duration and then one clarification on your assumption on rates on DCB rates by the end of this year and next year and on the deposit beta overall deposit beta evolution thank you okay let me start with the last one I think I've answered it a bit

we expect rates to go down to 3% at the end of 2024 and down to 2.25% at the end of 2025. That's the logic we follow for the business plan purposes. Deposit betas starting from 48% are now at the fourth quarter of the year. We expect it in 2024 to go up to around 50, just over 50%. And then when the rates go down, we expect the deposit pillars to be in the area between 40 and 45%. Deposit mix, which is now around 2080, we expect that also conservatively maybe to go down to 75, 25, but we don't see too much pressure on that front. The first question that you had with regard to hedges, the fact that it is on the cold it's we've uh... we've got money to place about five p you know that's what the quote is by the year and and we think he thought uh... to what the beginning of this year uh... by another uh... another i can you know actually be so around uh... five years and ask you very well-heared numerous times we call the dynamic approach about the way we keep these people to take it depending on the opportunities uh... from the from the from the interest that are coming to us. Now, the cost of those hedges are around, I would say, $4 million per month. That's the current, at least, run rate. But as we go along, we'll keep updating you about our position with regard to structural gifts.

Thank you so much.

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

Thank you all for joining us for this conference call. We'll be in London tomorrow for the bank meeting. I'm sure that we'll see you on the road in the next few months. If not, you can always reach us for any questions. all three of us are available for any further questions that he can he may have so thank you very much for joining us and have a good morning ladies and gentlemen the conference is now concluded and you may disconnect your telephone thank you for calling and have a pleasant evening