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 2024 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 morning, everyone. Welcome to our fourth quarter 2024 financial results call. I'm joined by Christos Christodoulou, Group CFO, Greg Papagrigoris, Group Head of IR. After my introductory remarks, Christos will go into more detail on our financial performance, and then we'll turn to Q&A. So let's begin. Before I turn to our full year 2024 financial results, I will begin with a brief overview of Greece's economic environment, the positive backdrop to our robust financial performance. It is important to understand that one, strong fundamentals and two, improved competitors build up over many years of reforms are the main reasons why economic activity in Greece remains remarkably resilient to external headwinds from a stagnant Europe. There are not many countries in Europe that possess these strong comparative advantages. Households and corporates have both been key drivers for GDP growth of nearly 2.5% in 2024. Turning to households, labor market conditions remain strong with a steadily declining unemployment rate currently near 9% and at a 15-year low. Moreover, combined with positive wage adjustments of 4% so far in 2024, higher real disposable income is providing additional confidence to households. Looking forward, further increases in household income combined with strong wealth effects arising from the housing and stock market should sustain private consumption as well as demand for housing. As regards corporate, activity remains solid with business investment at an all-time high. The drivers behind this performance comprise high capacity utilization rates and strong corporate profitability. Indeed, gross fixed capital formation is currently at a 16-year high which led the impressive pickup in corporate credit expansion in 2024, about 14% year-on-year. Surging M&A activity and a rebound in inward foreign direct investment to the second highest level on record, an amount of $6 billion in 2024, highlight the dynamism of the corporate sector. An additional boost comes from the increasing absorption of RRF funds, about 50% from a total of $36 billion, with accelerating disbursements to the real economy in the second half of 2024, about $8 billion. More than $25 billion of RF-related financial spending is expected in the next two years, 2025 and 2026. The external sector has also supported growth. Indeed, tourism had another strong year, and towards the end of the past year, the end of 2024, goods exports showed signs of strengthening, which is very encouraging. last point on the economy household as well as corporate loan demand should receive a positive boost from the significant ongoing relaxation of monetary conditions now let me turn to our financial results our full year 2024 performance showed a remarkable strength across all business lines leveraging on a positive economic environment as just described our inherent comparative advantages reflected a well-capitalized and liquid balance sheet, and our successful operational transformation, including our early and significant investment in technology and digital. Indeed, even following positive revisions to our guidance in August, we exceeded these revised full-year 2024 targets across all metrics. Specifically, our full-year 2024 core PATS reached 1.3 billion, up 10% year-on-year, delivering a core return on tangible equity of 17.5%, well above our full-year guidance of over 16%. While this return increases to nearly 22%, adjusted for our capital buffers. From an earnings-per-share perspective, we have produced an earnings-per-share of Euros 1.4, again significantly higher than guidance, and up from an EPS of 1.2 euros in 2023 and half a euro in 2022. The key contributor to the 2024 performance has been the resilience of our NII in NIM to normalizing rates. This was mostly due to the impressive net expansion of our performing loan book up 3.1 billion, 10% year-on-year, double the positively revised guidance of August 2024. Even though this result was driven by sharp pickup in corporate disbursements,

Ladies and gentlemen, apologies for the short interruption. The management is back with us.

Okay. Sorry and apologies for that. I'll pick up again when I was speaking about our fees in 2024. Our fee business recorded a double-digit growth, with the most notable contributor being the cross-sell of investment products to our large deposit base. Indeed, these fees increased by nearly 50%, increasing our market share significantly in this segment as well. These results bode well for fee business going forward. On the cost side, OPEX was kept tightly managed despite an ambitious IT and digital transformation plan. On tech, the IT makeover is near fruition and will provide NBG a significant competitive advantage in terms of speed and efficiency. Another positive, credit risk charges are dropping faster than expected, reflecting the quality of our loan book and the strong economy. Our capital position has been further strengthened in 2024, comfortably absorbing first a payout accrual that has been increased to 50% from 30% the past year, and two, capital needs from our robust credit expansion that I just described. As a result, our set one ratio stands at more than 400 base points above our internal target of 14%, providing significant strategic flexibility, including with regards to further increasing shareholder remuneration.

More on that later.

One last point on 2024. Following the second placement, which increased our free flow to 92%, the highest in the Greek market, has led to a substantial increase in our liquidity, with turnover more than doubling compared with 2023. Now, as promised to the investor community previously, along with the full year results, we would also present new guidance arising from our 2025-27 business plan. The most important takeaway is that even though market rates are on a steadily downward path and conservatively expected to reach a 2% level as soon as June, as per our business plan, we will deliver a 2027 return on tangible equity of over 14%, or over 18% adjusted for excess capital. Moreover, our earnings per share will exceed the level of Euro 1.5. Regarding phasing, the P&L shows resilience in 2025 to the substantial cumulative rate reduction and then expands from 2026 onwards as NII benefits from robust credit growth of over 8% per year. While fees continue to grow strongly in high single digits, reflecting increased volumes and cross-sell. OPEX growth will remain contained, with investments in IT and digital infrastructure peaking in 2025, but also higher wages arising from the new collective agreement. Cost of risk will normalize to below 40 base points on benign asset quality trends. An important point in the business plan is the higher payouts to shareholders. We aim to increase payouts further to about 60% out of 2025 earnings, thus increasing the dividend per share, absorbing fully the hit from lower rates. Similarly sized payout ratios are planned for the outer years of the business plan and they will be on a higher profit base. Going forward, the split between cash dividends and share buybacks will depend on price per share and valuation developments. As regards our capital position, our high profitability provides room for, first, the above-mentioned higher payouts throughout the business plan horizon, two, an accelerated DTC depreciation, and three, strong credit growth, leaving our set-one ratio consistently above 18% throughout the period. This buffer is sufficient for both incremental organic and accretive growth opportunities. To close, I would like to emphasize once again the key objectives for 2025 to 2027. First, increase the top line by continuing to experience strong loan expansion, leveraging not only the buoyant economy, but also an improved customer experience and product offerings. And cross-selling, to our large client base, especially by increasing penetration in wealth management and embedded finance to gain market shares across business lines. Second, complete the investment in technology in 2025, which provides NBG with a strong comparative advantage not only among Greek peers but also most European ones. Recall that this journey started five years ago with heavy costs and high transition risk but is now nearly completed. S.A. and utilizing our substantial excess capital of over 2 billion post our stated shareholder remuneration policies to explore value-creating opportunities domestically and abroad in core and adjacent markets. 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. Christos.

Thank you, Pablo. Now, starting with the profitability on slide 22, In 2024, we reported a solid corporate after-tax of 1.3 billion, up by 10% year-on-year, translating into a core return on tangible equity of 17.5% before adjusting for excess capital well above our guidance of over 16%. From an earnings per share perspective, we have produced an EPS of 1.4 euros, significantly higher than the guidance of 1.2 euros and higher from an EPS of 1.2 euros in 2023. As shown on slides 27 to 29, a key contributor to this performance has been our resilience of NII and NIM to normalizing rates, aided by the sharp pickup in loan disbursements. In fact, our net loan expansion in 2024 was 3.1 billion relative to a guidance of about half that level, complemented by the resilience in our lending spreads, dropping by less than 10 basis points year on year. As a result of the strong loan expansion, the increase in our fixed income securities portfolio, and the structural hedges in place, NIEM far exceeded our guidance, reaching 319 basis points for the full year and 310 basis points in Q4. Furthermore, our fee income recorded a strong pickup of 7% quarter on quarter, and 12% year-on-year, again well ahead of guidance, with our fees-over-assets ratio increasing to 0.6% from 0.5% a year ago. This performance was driven by retail fees increasing by 15% year-on-year, as shown on slide 32, led by accelerating activity and cross-sell, especially in investment products. As regards the latter, our success in shifting time deposits towards fee-generating mutual funds led us to achieve market share gains of circa 6 percentage points in mutual funds in 2024, recording the best performance in the domestic market. As a result, our fees from investment products increased by nearly 50% year-on-year, becoming the number one contributor of our fee income growth. Moving to costs, on slide 33, the increase in OPEX was contained at circa 5% year-on-year, On higher wage costs, including variable pay, the significant investments in IT and digital infrastructure. Cost discipline, combined with higher core income, kept our 2024 cost to core income ratio below 32%, well inside our target of 33%. At the same time, the high quality of our loan book kept our cost of risk on a steady normalizing path, closing the year at 53 basis points against our guidance of circa 60 basis points. A strong profitability enhanced our capital buffers year on year, comfortably absorbing the sharp increase of credit risk-weighted assets from the impressive credit growth, especially in Q4, as well as from increasing our payout ratio accrual to 50% in Q4 from the 40% accrued in the first three quarters of last year. As shown on slide 24, Our Z1 and total capital ratios reached 18.3 and 21.1% respectively, while our umbrella ratio of 28% already fulfilled the final target of 26.8%. Now let me walk you through the highlights of our well-capitalized, highly liquid, and high-quality balance sheet summarized on slide 23. As noted earlier, we expanded our performing loan book by a record 3.1 billion year-on-year and a solid 2 billion in Q4, led by 8 billion corporate disbursements, up by 32% year-on-year, and solid growth across sectors as shown on slide 29. Importantly, retail lending balances stabilized in 2024 following more than 14 years of deleveraging on the back of accelerating disbursements that reached 1.5 billion up by 30% year-on-year, with market share gains across all retail lending categories, as mentioned already by Pavlos and illustrated on slide 29. Deposits remained on an upward trend in 2024, up by 0.5 billion year-on-year, supported by inflows from savings deposits, absorbing the notable time deposit switch to mutual funds and the reduction in corporate deposits due to working capital usage as shown on slide 30. Our improving deposit mix with core deposits currently comprising 80% of the total stock and the lowering hedging costs absorb deposits per compression due to lowering benchmark rates. As regards our superior liquidity and funding profile illustrated on slide 31, our net cash position exceeded 6 billion Funding the strong loan expansion as well as our fixed income securities incremental exposure which provides an excellent natural hedge against lowering rates. Our liquidity coverage ratio of 261% is one of the highest in the euro area providing ample flexibility while our loan to deposit ratio remains close to the 60% mark. Finally, our total funding cost stood at 72 basis points with deposits comprising circa 93% over total funding. Turning to asset quality on slides 34 to 36, Group NP stock dropped below the 1 billion mark in Q4, translating into a sector-leading NP ratio of 2.6%, with NP coverage at nearly 100%. We also maintain a sector-leading Stage 2 ratio at just 6.5%, and sector-leading provision coverage across all three stages which also stand at the high end of the European banks spectrum. Supported by favorable asset quality trends, net NP flows came at near zero levels in 2024, well inside expectations, allowing for a sustained cost of risk normalization to 53 basis points for 2024 from 64 basis points a year ago. The strong fundamentals of the bank and the momentum we have built in 2024 provides confidence for the execution of our business plan targets over the next three years. With a proven track record of delivering strong results and creating value for our shareholders, we remain focused towards leveraging market dynamics for continued credit expansion, market share gains across business lines, and improving client experience through our products and service offerings. Our new business plan also focuses on the acceleration of our cross-sell efforts capitalizing our big client base and our partnerships, especially as regards wealth management and embedded finance, also leveraging on our improving IT infrastructure. Let's now look into the key drivers and targets of our business plan as presented on slides 10 to 20. As already stated by Pavlos, we aspire to attain a sustainable return on tangible equity in the mid-teens post-rate normalization, which implies a return on tangible equity of over 18% calculated on a Z1 level of 14%. Post-2025, earnings per share growth resumes, allowing us to target an EPS of 1.5 euros, a level higher than the EPS we delivered at the peak of the interest rate cycle. This performance hinges on positive P&L dynamics as regards core income growth, cost containment, and cost of risk normalization, as well as the favorable impact of share buybacks which forms part of our capital allocation strategy in the new three-year business plan. Moving to our core income dynamics, NII is seen on a continuous recovery trend post-2025, exceeding $2.3 billion by 2027 from circa $2.1 billion in 2025, with our NIMS sustained above 280 basis points throughout the business plan. The NII trajectory is driven by solid credit growth coming in at a CAGR of circa 8% in the three years, supported by structural changes we made in our balance sheet as referred to earlier. Credit expansion will be driven by corporates, anticipated to grow by a CAGR of more than 9% over the three years, led by large corporates, project finance, SMEs and shipping, as shown on slide 17. While retail is expanding throughout the three-year period, contributing positively to loan growth and spreads in contrast with previous years as illustrated on slide 18. Fees are expected to increase at a KGAR of over 8% in the three years, exceeding 70 basis points over assets by 2027. Besides strong loan origination, key drivers will be retail non-credit related fees from cross-selling of investment products and increased wealth management penetration also supported by new products and further improvements in our service offering. Below the top line, operating expenses will be contained at the mid-single-digit growth, absorbing investment in human capital and hires, the new union-agreed wage raises and depreciation charges arising from the rollout of our class-leading IT investment plan with a cost-to-income ratio maintained at the level of circa 35% across the period. Our cost of risk will continue normalizing dropping below 40 basis points by 2027, reflecting a strong asset quality. At these levels of recurring profitability, organic capital generation remains strong, comfortably absorbing solid credit expansion and increasing payouts to shareholders, while accelerated DTC amortization delivers a DTC over Z1 ratio below 25% by 2027. As our CEO stated, our intention is to raise total payout levels, including share buybacks, to circa 60% already from this year's profit, offering a double-digit payout yield by 2027, while our Z1 ratio remains above 18% throughout the business plan horizon. Our capital buffers denote capacity for sizable distributions and provides strategic flexibility allowing us to be positive on the prospect of exploring opportunities domestically and outside Greece, regarding both our core as well as adjacent markets. As always, our actions and execution strategy have as primary objective value creation for our shareholders. And with that, I would like to open the floor to questions.

The first question comes from the line of Ismailo Eleni with Axia Ventures. Please go ahead.

Good morning and congratulations for this strong set of results. I have three questions from my side. So the first one is that you're making an assumption for 60% payout throughout the period of your business plan. Can you talk about the upside and downside risks to that? And how are you thinking of the split between buyback and cash dividend in the outer years? My second question is about your strategy against the dropping rates. If it changes at all for the outlook, for the near-term outlook, and if you could confirm the rate sensitivity assumed in your business plan for 25-bit cut for 2025 at least. And my last question is on excess capital use. As you continue to generate high levels of organic capital and as you're guiding for a payout of 60% out of the next year's profits, What other capital deployment strategies are you considering? Will the focus be more organic or inorganic growth? And on that note, any comments you can make on this morning's headline noise around NBG acquiring a stake in Bank of Cyprus? Thank you.

Okay.

Upside and downside risk for the 60, approximately 6% pair ratios. Clearly, it's the upside and downside risk to the business plan. So there, I think that for the moment, we're looking at more upside risks and downside risks in terms that perhaps rates will not fall as rapidly as we have conservatively included in our business plan. Two, it seems that long growth is faster than expected so far. So that's another upside risk. so but clearly if the geopolitical situation worsens and there's a recession in Europe there could be some downside so I would link the 60 percent payout mainly to the macro environment but clearly the regulator has to approve that we also have the capital buffer in case there's some small deviation in profitability to make up, but our key point is to keep the payout ratio sustainable.

Christos, do you want to take the dropping rate strategy and the sensitivity?

Yep.

So in our business plan at least, we anticipate that the average arrival will go down to 2.2% in 2025, so that's a solid 130 basis points lower from where the average was for 2024. Our sensitivity remains the same. So for 25 basis points, we expect a reduction in NII all in all by about 35 million. Effectively, that kind of suggests that we expect, given the dynamics that we have assumed in the business planning, about 180 to 200 million of NII reduction. Now, having said that, as Pablo said, there are already upside risks in our planning. in our business plan we assume that the rate will be down to 2% by June so we'll see how things unfold and obviously sensitivities are also affected by the dynamic changes in our balance sheet but so far our guidance remains so it's $35 million for every 25 basis points.

Okay and thanks for the last question it gives me the opportunity to explain again how we envision to deploy our capital our goal is to increase sustainable payouts to shareholders and clearly increasing revenue either organically or inorganically is key now turning to the inorganic we look at transactions which are value accretive and or transformational and when I mean transformational I mean either in size in terms of tech benefits, or they're in adjacent markets, which can increase our customer base and our type of business. You know we have the firepower. We're keeping our powder dry so far, and we have the discipline to await for the appropriate opportunity. So I hope that answers that.

Thank you, gentlemen, for your answers. This is most insightful, and again, congratulations for the results.

The next question comes from the line of Memisoglu, Osman with Abrozia Capital. Please go ahead.

Hi, many thanks for your time and the presentation. Just if you could elaborate a bit on the one-offs in Q4, particularly on the VES side, as OPEX was a bit higher, QNQ, I'm guessing part of it is seasonality, but On the VASR and any other one-offs that you would like to highlight would be helpful. Thank you.

Hi, Osman. Yes, indeed, Q4, as always, has some seasonality, so our OBEX were a bit higher than the previous quarters, but nothing spectacular there. With regards to WANOS, it was a quarter of higher WANOS. I will name a few for clarity. So as you very well noted, we had a VES. It was a very successful one. And the one, of course, that we had to recognize was in the area of 90 million. Now, over and above that, we had about 30 million of costs relating to the market placement that took place in October. And also, we recognized in Q4 the donations for the schools that was initiated by the government announcements. So that also contributed to 25 million of additional UNOs. But I think more or less that was it. And going forward, we don't expect UNOs to be at this high level.

Perfect. Thank you very much.

Hello, can you hear me? Yes, we can. I have one follow-up question regarding OPEX. You had an increase in OPEX due to the change in the Union Agreed Wage in 2024.

and now you assume 5% growth in your OPEX in the following years, per year. Does this growth in OPEX include any other change in the Union-agreed wage?

Okay, let me clarify that. The previous Union-agreed wage increase was done three years ago and it was a cumulative increase that took place every year. So the increases that you've seen in the past wage cost had to do with what we had agreed in the past. Just to be more transparent, there was about 2.5% increase in the costs of last year. Now, what we anticipate is that there might be a new increase given the negotiations that we have now for the next three years with the unions this discussion will materialize in the next few weeks. So that's what we try to capture as part of our future, let's say, evolution of OBEX in the business plan. That's it.

Okay, very clear. Understood. Thank you very much.

We have another question from the line of Butkov Mikhail with Goldman Sachs. Please go ahead.

Good day. Thank you very much for the presentation. I just wanted to ask to remind on the cost of risk composition between the underlying cost of risk and the servicing costs in particular as far as I remember correct me if I'm wrong you have some a bit different composition there compared to other Greek banks just if you could remind on that and maybe there will be some follow up actually we have none you know other

elements in our cost of risk with regards to, for example, synthetics or services cost. The cost of risk that we have on our presentation and our numbers is pure underlying cost of risk. So it's how we build our coverages going forward. Okay, nothing there to clarify further.

I would just add that we are clearly relatively conservative on our cost of risk, which will allow us to to a faster normalization going forward.

And just to clarify, why you do not have the component of servicing FISBOS because you have in-house?

Yes, exactly. When we did our big securitization a few years ago, we opted back then not to spin off our servicer, so we retained our servicers in-house.

and we are the only bank actually in Greece that have done that so we have our services in-house and yeah so if I may ask connected to that so do you see this in-house servicing as an advantage going forward and basically well when comparing your cost of risk guidance with what other banks already disclosed the headline cost of risk seems to be within a range of the guided ranges, but is it an advantage that you have in-house services, meaning that structurally you could afford maybe even lower cost of risk in the medium term, or it does not add in advantages?

Thanks for the question. I think the most important advantage of having the team in-house is not related to the cost of risk. It's related to the potential from the re-performing loan market. I've said it before, there are a lot of loans in the servicers. They will go off the servicers. The natural habitat is the banks. It may take some time to agree with the regulator how this will be done, and there are ongoing discussions with that. But we have the people that can underwrite these re-performing loans and We can thus take better advantage of this opportunity. So I think that's the most important advantage of having kept the team in-house. Now, on the normal cost of risk, we will be giving guidance that will be below 40 base points by the end of the business plan. So therefore, I think we agree with you that there's room for further normalization.

maybe just one more follow up as you mentioned the re-performing loans and also looking at your guidance on growth like 8% through the business plan it looks to be a bit higher than what some other banks guided do you include any volumes from the re-performing loans in your business plan already thank you for the question no we do not that is pure upside there is nothing included from re-performing in the business plan ok

Okay, thank you. Very helpful. Thank you.

The next question comes from the line of Podgitter, Stefan with UBS. Please go ahead.

Good morning. Thanks very much for the opportunity. Just a quick clarification, if I may, on your business plan. The EPS target of 1.5 euros by 2027, is that on a new basis or is it still on the core path basis? I think there's a footnote there saying... It is on path before one-offs, just to clarify that.

Yeah, that is correct. It's on path before one-offs. And of course, it's also subject to our buyback scheme also going forward. And you may assume, as I said also on the question on one-offs, that we expect our one-offs to be lower going forward compared at least to what we had recognized this year.

Just to clarify, so previously you had this core path metric which excluded trading revenue, whereas most of the banks actually included the normal trading revenue in their adjusted earnings number. Would you include, therefore, going forward, some of the trading revenue?

I think we would. The reason for exclusion in the past is because we've recognized very big amounts of of one of trading results, and we thought it was fairer to exclude it from our recurring profitability metrics. Now, assuming going forward that trading line is going to contribute something in the area of 60 million per annum, which is not something extraordinary like we had in the past, yes, you could assume that we'll be including that in our recurring profitability.

Thanks. That's clear, and I think that's sensible as well to align with other banks.

The next question comes from the line of Sevim Mehmet with J.P. Morgan. Please go ahead.

Good morning, and thanks very much for the opportunity. If I may, I'll just have one clarification on your NII guidance. And specifically, you've already highlighted the upside risk that may come from the rate trajectory. But even if you assume that the average arrival comes down to 2.2%, I think we would have the following picture. First, in the fourth quarter, the run rate, that gives us about 2.3 billion NII in 2025. And then your rate sensitivity of 35 million, simplistically assuming that this applies, that would give us about 150 million decline. So we would be at 2.1 billion NII in 2025, which is basically your guidance, but that would not have any balance sheet growth in it. And I would also assume there would be some benefit from the very strong fourth quarter balance sheet growth that we saw. So can I ask if I'm missing something here or how would you would basically respond to this if you have any views on that? And secondly, maybe just on the buyback, may I clarify the timing of it? So when would you expect it to be approved and when you would expect it to be launched and finished? Thanks very much.

The question on the NII, I think what you are missing, if you are using as a point of reference the Q4 of 24 NII run rate, is the fact that there is some time lag in the repricing of the loan book. So that's on the high end, and that's why if you apply that for the four quarters of 25 you end up with a high number that's why we we said that is best if you use as a point of reference the sensitivity that we are sharing with you are guiding for so it's 35 million for every 25 basis points so if we do the maths with that point of reference we end up with a 180 to 200 million reduction that I mentioned and with regards to the buybacks Obviously, this is still subject to regulatory and AGM approval. Our AGM is scheduled for the end of May, and we would like to start with the buyback program immediately after our AGM. That's the baseline plan.

Okay, thanks very much.

We have a follow-up question from the line of Memesoglu Osman with Abrozia Capital. Please go ahead.

Could you confirm, does that 1.5 include impact from buyback? And if so, is the buyback similar proportion to this 3515 that you did for 2024? Thank you.

Yes, Ousmane, I can confirm that the 1.5 is including the buybacks that we aspire to perform. And that's, I mean, you could have as a rough point of reference, as we discussed also in the past, like two-thirds is cash and one-third is buybacks, more or less. But that will be subject to the developments of the valuation of the bank, of the share of the bank. So to be seen.

Sure. Thank you.

The next question comes from the line of Boulogouris Alexandros with Euroc Securities. Please go ahead.

Yes, good morning. Just a clarification on my end regarding OPEX as well on the three-year growth of 5%. Should we assume that in our models in a linear way or should we expect that in 2025 cost growth should be slower given the benefits from the cost savings from the VRS plan? The big VRS plan that you mentioned, the $90 million cost in Q4. Thank you.

Alex, you should consider our guidance to be linear. Our VES, as communicated, was a rejuvenation voluntary exit scheme. So we do want to invest more in human capital. We want to have new people in and reward our people through variable remunerations as well. So you should not expect a big, let's say, upside in the wages next year just because we have the V.S. It's part of the overall strategy of retaining a solid path of our aerobics going forward.

Thank you, Yes. And a follow-up on fees as well, is it the same? Should we consider the linear or given the government measures that were announced in January, maybe slower a bit into 2025 and then a pickup later on?

The base case is the latter, yes. We start the year obviously incorporating the measures that were announced by the government in our three-year business plan, a slower start in 2025 compared to the other two years. That's the base case.

Okay, thank you.

The next question comes from the line of Skarkiladja Salom with Bloomberg Intelligence. Please go ahead.

Hello, thank you for the call and for this opportunity. I have two questions to clarify the first one on the cost side. Does your digitalization and AI strategy and related cost saving, does your business plan incorporate these savings? or what could be upside potential out of that, including the potential headcounts or other kinds of spending? This is the one question. And another one, assuming the higher than expected loan grows, would you revise your deposit structure and are we expected to see a higher share of time deposits going forward?

Okay, I'll take the first question and Christos will take the second. On AI, it's included, an ambitious AI plan is included in the business plan. It's mostly in the CAPEX rather than the OPEX. We already have a lot of uses for predictive AI, and we're starting to play around with Gen AI. The costs are not the largest part of our capex, so to speak. It's more of an operational challenge rather than an expense challenge. So, yes, it's in there. Clearly, what's going to happen with AI is unknown, but we are putting resources and having people in RT hiring a whole unit on AI, and we'll see how fast we expand on that side.

And just to add to that, obviously, since we cannot measure it credibly, we don't have any savings incorporated in the business plan. If it comes and when we can measure it credibly, we could apply to the business plan. But in the base case, we do not. Now, moving to your question about deposits, as you very well know, we enjoy a very strong deposit base. We have about 57 billion of deposits. Eighty percent of them is core and 20 times. Our liquidity coverage ratio is over 260% amongst the highest in Europe, and our loan-to-deposit ratio is 60%, so we can very comfortably manage any asset growth without needing to do anything hectic with regards to changing our strategy on deposits. Now, having said that, we obviously want to be always taking a fair share in the market growth of deposits, but nothing out of the ordinary in that respect.

Thank you very much.

The next question comes from the line of Gladys Panagiotis with Alpha Finance. Please go ahead.

Hello, thank you very much. Two questions from my side. One on the loan growth. Again, should we expect something linear there or you have a different pattern in your mind? And also, if you can elaborate on the key drivers, especially on the retail front. And second, on the buybacks, is there a level, evaluation level that, you know, above this level you think that it does not make sense to proceed with buybacks?

Thank you very much. Okay.

I'll start on the loan growth. So we have... communicated a CAGR over the three years of around 8%. The driver is corporate, which contributes mostly to this growth, over 9% in the three-year period. And then retail, as we said, unlike the previous years, will contribute something in the area of 3%. Why am I making reference to that? Given that corporate is the key driver, and we've witnessed in the recent years that corporate is mostly Large ticket so far. It's hard to say if we're going to achieve it linearly or with a growing trend going forward. What I can say is that in our business plan, we've assumed a linear approach in the business plan. It's more skewed towards the outer years, but not by a big margin. It's tough to say depending on the tickets. What I can also give you as clarity and guidance, we do expect an over 2 billion of credit expansion in 2025. With regards to buybacks, you know, I will answer theoretically. A good point of reference for the way that we will unfold our strategy on buybacks is evaluation of the company, our price to book. So definitely up to the point where our price to book is below one. This is something that we would be considering. Even more than that, our cost of capital is also a relevant metric as to how we'll approach this strategy. But it's too early to commit or say anything yet.

Okay, thank you very much.

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

Yes, thanks for taking my questions. The first one is on the potential acquisition of re-performing loans. I was wondering what kind of discussion you are having with the regulator and what are the main concern or requests from the regulator on this topic. And the second one is on ethnic insurance. if your current position is mainly due to devaluation of the assets or these or there are also strategic considerations that you have done it on ethnic insurance thank you okay on re-performing the discussion with the regulator is ongoing you can understand his

hesitancy, the regulator wants to make sure that anything we put back on our balance sheets is of very high quality, and we need to make sure that what the services are going to offer are of that high quality. So it requires a three-part sort of negotiation, the regulator, ourselves, as well as the services providing well-cured loans. So I am optimistic that we'll have more progress this year than we had last year. And on the last question, you clearly can understand why I can make no comment.

Thank you.

The next question is from the line of Demir Khan with Wooden Co. Please go ahead.

Yes, good morning. Thanks for taking my question. just a question on your M&A plans you just said you don't want to comment on Ethniki but I was just wondering I mean you know this company very well you used to own it three years ago and they are probably well plugged into your IT systems and things like that so I'm just wondering why it didn't strike you as a compelling opportunity or maybe you're not interested in the insurance sector specifically. I just wondered why you didn't look so close to it. Thank you.

I'm going to disappoint you and say no comment again.

Thank you.

We have a question from the line of Churtis Petros with Optima Bank.

Please go ahead.

Hello, everybody. One question, if I may. Can you give us more color on the potential in organic actions? I mean, are you looking for opportunities in banking, in asset management, IT? Which are the most favorable sectors are you looking for?

Thank you. I think I made a comment at the beginning of the call, which you may have missed. but I'll repeat it. How we envision to deploy capital. Our goal is one, increasing payouts to shareholders and clearly one way to do that is by increasing revenue either organically or inorganically. Inorganically, we need to look at transactions that create value and or transformational. Transformational means big size, some tech benefits, Adjacent markets. Things like that. We have the firepower. We're waiting for the right opportunity. We have the discipline to wait. So that's where we are.

Thank you very 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.

Thank you all for participating in our full-year results call and the Q4 results. Apologies for the early morning hour, but I'm sure we'll have opportunities to go in more detail on everything that we presented today. And we'll be traveling to various conferences, but you can reach out to our team, to myself, to Christos, to Greg. So any questions you have, we're available. So thank you very much once again.