National Bank of Greece S.A

Ladies and gentlemen, thank you for standing by. I am Yotaya Koros, call operator. Welcome and thank you for joining the National Bank of Greece conference call to present and discuss the first quarter 2026 financial results. At this time, I would like to turn the conference over to Mr. Pavlos Mylonas, CEO of National Bank of Greece. Mr. Mylonas, you may now proceed.

Good morning, everyone. Welcome to our first quarter 2026 financial results call. I'm joined by Christos Christodoulou, Group CFO, Gregory Papagrigoris, Group Head of IR. After my introductory remarks, Christos will go into more detail on our financial performance and then we will turn to questions and answers. I will begin with a description of the macroeconomic backdrop of the Greek economy in view of the recent unrest in global energy markets and their potential repercussions. To start, the Greek economy entered 2026 on a strong footing, bolstered by significant carryover effects from 2025, approximately 1 percentage point of GDP, and solid underlying fundamentals. Moreover, Greece continues to benefit from a set of structural and cyclical buffers which should offset most headwinds, if the current shock eases by mid-2026, as markets expect. Specifically, private sector balance sheets keep getting stronger, underpinned by sustained corporate profitability and a robust labor market. In fact, leading indicators of business activity remained resilient through April 2026, while the response of forward-looking survey data has been markedly milder compared with the initial phase of the war in Ukraine. Following a temporary slowdown in April, Tourism activity is expected to gain traction in the core months of the tourism season, with flight scheduling and early booking data indicating high signal digital growth in arrivals, though there is a question mark surrounding pricing, which may be soft. The main growth driver in 2026 will be investment, reflecting high capacity utilization rates across the business sector and a robust pipeline of projects scheduled for completion over 2026-2028. This momentum is further reinforced by the additional impulse from the historically high inward foreign direct investment and M&A activity recorded in 2025, 12 billion and 24 billion, respectively. Moreover, around 15 billion of RRF resources, both public and private sector use, are scheduled to be injected into the real economy over the next few quarters. An additional important buffer to the current external developments is provided by the high primary surplus of 4.9% of GDP recorded in 2025, the highest in the EU. Indeed, new fiscal measures of 2.5 billion euros have already been activated for 2026. That's approximately one percentage point of GDP. At the same time, structural improvements in the energy mix, including higher renewable usage and a broader fossil fuel supplier base, alongside the geographical diversification of tourism in a widening expert base to further enhance the economy's resilience and security. Overall, these supportive factors are expected to sustain the economy's positive growth trajectory in fiscal year 2026 with a robust recovery forecast following a crisis-induced slowdown anticipated in the second quarter. In fact, the Greek economy should remain firmly on track for another year of robust growth albeit slightly slower than 2025, but with a continued strong outperformance relative to the Euro area. In this environment, loan demand from both corporates and households should remain strong in the high single digits in total. The European macro developments may have countervailing impacts on the bank's results as a slightly higher Euro interest rates due to inflationary pressures would boost NII while a sharper GDP slowdown would slow external demand and thus activity. On that note, let me turn to our financial results. Our first quarter of 2026 financial performance has remained solid, underscoring the resilience of the Greek economy as well as the strength of our balance sheet. Based on market expectations for the duration of the geopolitical uncertainty, we expect to achieve our fiscal year 2026 Our full year 2026 guidance. Our first quarter 2026 profit after tax amounted to $344 million, up 23% relative to the fourth quarter of 2025, on the back of an accelerating NII recovery, continued strength in fee and non-interest income generation, and lower operating costs. As a result, our return on tangible equity stood at 15.3%, Normalized for high trading, or 16.3% on a reported basis, supporting the achievement of our full-year expectations. Adjusted for excess capital, but also the high first quarter of 2026 trading income, our return on tangible equity stood at an impressive 20%. Turning to the main drivers of our results. First quarter NIAI. Up a solid 2% quarter-on-quarter reflected recent healthy asset growth, especially in Q4, despite seasonality in Q1 and a notable drag from the lower calendar days. Importantly, net interest margin NIM is stabilizing as both spread reduction and the effect of lower benchmark rates are both fading. Upside risks are materializing, moreover, from the market's projected path for euro area interest rates. As regards credit expansion, both corporate and retail disbursements accelerated significantly relative to the first quarter of 2025, leading to a double-digit growth rate in loans of 12% year-on-year and a performing exposure expansion of $700 million. Corporate credit continued driving its performance, up 16% year-on-year, with credit demand diversified across a broad range of sectors, energy, shipping, accommodation. Regarding the retail segments, growth across all segments, consumer, mortgages, and small business exceeded that of the market, resulting in market share gains. In the second quarter, we have not observed an impact from uncertainty on credit demand. In fact, we see a mild acceleration in the corporate segment, partly linked to RRF deadlines brought forward, while the pace of retail application remains unchanged. Combined with our sizable pipeline of approved, not yet dispersed loans of about €2 billion, we can reconfirm our full-year target for net expansion of over €3 billion. Turning to commissions, our fee income growth continues to be in the highest of all digits, up 8% year-on-year, with investment fees remaining the most notable contributor, up 60% year-on-year, reflecting sustained and significant gains in mutual fund market shares, About 7 percentage points since the beginning of 2024 and nearly 1 percentage point in just the first quarter of 2026. The evolution of our costs results in a cost to income ratio of 34% or 35.7% normalized for the first quarter of 2026 trading income. We balance our cost discipline with our commitment to invest in our people. through the onboarding of new talent, leveraging the cost savings from our recent V.S., about 280 departures, as well as some higher wages, partly emanating from the collective agreements and from variable pay linked to productivity improvements. In the same direction, our multi-year investments in technology and digital infrastructure provide us with comparative advantages as regards commercial effectiveness, digital offerings, and cybersecurity. Special mention, the completion in the next few weeks of the bank's final step to the new cloud-based core banking system. A major achievement on time and on budget, which opens the door to a plethora of new functionalities and opportunities for the bank, just to name a few, virtual accounts, open-up accounts, more efficient equity management. As regards our capital, organic generation before distributions continues to be strong, in the first quarter, adding 40 base points of capital. Post-payout accruals set one edge slightly lower to 18.4% and to 17.4% per former for the 300 million special dividend, special payout. As in 2025, the final payout level for 2026 will be determined at the end of the year. This extensive capital position, one of the key comparative advantages provide security during these uncertain times while allowing for superior shareholder returns and significant strategic opportunity. In line with the strategic direction, we have taken a significant step toward enhancing our fee-generating capabilities, signing a memorandum of understanding, MOU, with leading global insurer Allianz that sets out our intention to enter into a long-term bank insurance partnership. The rationale of the agreement is to strengthen our ability to deliver enhanced customer-centric insurance solutions while maintaining a capital-like model, thus contributing to sustainable earning growth and long-term value creation for our shareholders. Specifically, the agreement would establish a 10-year exclusive collaboration expected to commence in the first quarter of 2027 with the potential for an extension, and is complemented by the signing of a memorandum of understanding that sets out the intention for NVG to acquire a 30% minority stake in Allianz European Reliance, subject of course to regulatory approvals. This strategic partnership is expected to lead to a meaningful uplift in our fee income, up four times for insurance fee income. The key drivers will be access to a comprehensive market-leading product suite, leveraging Allianz's expertise in products and sales. Moreover, Allianz's advanced digital capabilities will facilitate a quick transition to the new operating model, but also support the rapid introduction of new product and service offerings. From a financial perspective, the partnership is set to deliver EPS and return on tangible equity accretion of 4% and more than 50 base points respectively already by 2028. To close, it is important to highlight that the current environment defined by heightened geopolitical uncertainty, our strategic priority remains firm. To increase shareholder value by increasing our revenue base on a sustainable basis and in the event of inorganic growth to create tangible value through synergies. And with that I conclude and I'd like to pass the floor to our group CFO Christos who will provide additional insight to our financial performance and then we turn to Q&A. Christos.

Thank you Pablo. So let me walk you through the key highlights of our profitability starting with slide 15. Despite geopolitical uncertainty and Q1 seasonality, we delivered a strong start to the year with key performance indicators supporting our full year guidance. Profit after tax reached 344 million at 23% quarter on quarter, translating into an earnings per share of 1.52 euros or 1.43 euros normalizing for the trading income in the quarter. Our profit after tax in Q1 delivers a return on tangible equity of 16.3% on a reported basis before adjusting for excess capital or 15.3% normalizing for trading income. placing us comfortably on track to meet our full-year guidance. Importantly, adjusting for excess capital, return on tangible equity rises to 20%, highlighting the potential it enravers as we utilize our excess capital, as well as the significant earnings capacity embedded in our franchise. Our strong financial performance reflects increasing momentum in net interest income recovery, complemented by continued strength in fee and non-interest income generation. Going into more detail on slide 19, our NII continued to build momentum in Q1, increasing by 2% quarter on quarter, despite the negative calendar days effect, as well as some residual repricing of our interest-bearing assets, reflecting last year's lowering market rates. Growth was primarily driven by healthy net credit expansion of 0.5 billion on a seasonally low quarter, alongside increased exposure in our fixed income securities providing additional support to our NII. Notably, our net interest margin has broadly stabilized as spread reduction is easing off. Sustained balance sheet expansion supports a favorable NII trajectory in the coming quarters, reinforcing our confidence in delivering our full year guidance while higher base rates provide upside potential if maintained. Our fee income remained on a strong trajectory, increasing by 8% year-on-year, driven by retail fees, which are up 20% year-on-year as shown on slide 25. Growth in the retail segments reflects continued momentum in investment product fees, increasing by nearly 60% year-on-year, evidencing the effectiveness of our cross-selling strategy and increasing customer engagement. We continue to see a structural switch of time depositors to fee-generating neutral funds, supporting neutral fund market share gains of nearly 1 percentage point in the first quarter and 3 percentage points year-on-year. As shown on slide 26, our retail funds under management reached 9.6 billion, 26% higher year-on-year. This performance is testament to the growing client confidence in our wealth management capabilities and our cross-selling capacity. Building on this strong momentum in fee generation, we announced yesterday the signing of an MOU with the leading global insurer Allianz, setting out the intention to enter a long-term exclusive bank-assurance partnership as well as the acquisition of a 30% minority stake in Allianz European Reliance as outlined on slides 12 and 13 of our presentation. This strategic move, expected to commence in the first quarter of 2027, We bring together MBG's leading distribution platform with Allianz's global expertise, technological strength, and innovative products, enabling us to offer a comprehensive, market-leading suite of insurance solutions supported by enhanced digital capabilities and superior client experience across channels. The partnership will accelerate our fee growth, with our insurance-related income expected four times higher compared to the 2026 numbers. will add 6 percentage points of incremental fee growth over and above our guidance for a high single-digit growth on total fees for 2027 and 2028, delivering a return on tangible equity and DPS accretion of over 50 basis points and 4% respectively. Overall, this transaction represents a key step in scaling up our fee income and reinforces our strategy to diversify revenues and create sustainable long-term value for shareholders. Below our top line operating expenses were up by 8% year-on-year as disclosed on slide 27. Personnel costs reflect increasing remuneration in line with the sectoral union agreements and the continued investment in our people including variable pay to incentivize performance and productivity as well as the onboarding of new talent. leveraging voluntary exit schemes to rejuvenate our workforce. Higher GNAs are mainly driven by spending that enhances our customer experience, while depreciation charges reflect our leading investments in technology and digital infrastructure. These investments, including the replacement of our core banking system which reaches completion this month, are translating into tangible gains in our competitiveness, productivity, commercial effectiveness, and, as the CEO mentioned, cyber risk security. Alongside these strategic investments, through which we aim to offer innovative products and high-end services to our clients, our cost discipline remains sharply in focus, with our cost-to-income ratio kept at sector-low levels of 34.3% or 35.7% normalizing for Q1 trading income, comfortably within our full-year guidance. As regards credit risk charges, We have seen no pick-up information trends, while sector-leading coverage levels provide additional security during uncertain times. Our cost of risk remains below 40 basis points, holding well with our full-year guidance. Moving to slide 17, our capital position allows for superior shareholder returns, also evident in the €1 billion capital distribution recently approved by our annual general meeting. Organic capital generation amounted to 40 basis points quarter on quarter, absorbing risk-weighted asset growth, driving our core equity TR1 ratio to 18.9% in Q1. Factoring in a provisional payout accrual, our Z1 ratio stood at 18.4%. As already mentioned by Pavlos, the level of the 2026 payout will be determined at year-end 2026. Finally, pro forma For the special buyback of 300 million that will commence in June, our said one ratio stands at 17.4%. Our total capital ratio stands at 21.1%, with the emerald ratio at 28.8%, including our inaugural 81 issuance in February, standing well above our requirement of 26.7%. As our CEO mentioned, our strong capital buffers provide resilience in an uncertain geopolitical environment as well as significant strategic optionality. Now let me walk you through the highlights of our balance sheet summarized on slide 16. As referred to earlier, credit expansion had a good start to the year despite seasonality and affected by geopolitical uncertainty driving our performing loan book 0.7 billion higher year-to-date as also shown on slide 21. This reflects loan disbursements of $2.5 billion, up by nearly 50% year-on-year, highlighting sustained credit demand and our success in capturing high-quality lending opportunities. Corporate lending was a key growth engine, with disbursements up by 55% year-on-year, focused on dynamic sectors that continue to benefit from structural growth trends and investment flows, namely energy and renewables, shipping and tourism. Adding to this, the retail segment also delivered a solid performance, with disbursements rising by nearly 30% year-on-year, supported by market share gains across small business, consumer lending, and mortgages on the back of improving customer penetration and product service offerings. Encouragingly, momentum has hurried into April, and disbursements remaining strong, providing comfort towards fulfilling our full-year guidance. On the liability side, Deposits remained resilient, up by 2 billion year-on-year as shown on slide 22, driven by continued inflows of low-cost side and saving accounts, comprising more than 80% of our deposit stock. At the same time, the migration of time deposits to mutual funds continued, benefiting our free generation as well as our funding mix and cost. With deposits comprising almost 90% of our total funding, and term deposit yields 3 basis points lower quarter on quarter, 240 basis points. Our deposit and total funding cost remain below 30 and 65 basis points respectively, the lowest in the domestic market as depicted on slide 24. Evidencing a superior liquidity profile, our liquidity coverage ratio stands at 237% amongst the healthiest in the euro area with a low to deposit ratio settling at 69%. Now a few words on asset quality, illustrated on slides 28 and 29. Our NP ratio at 2.4% and our NP coverage of over 100% are supported by benign asset quality trends, as net NP flows came at near zero levels in the first quarter. At the same time, our leading coverage across stages by European standards comprises another strength of MBG's balance sheet, provide inclusion against potential downside risks, reinforcing our resilience. To conclude, despite uncertainty, we delivered a strong start to the year, confirming the strength and resilience of our operating model and our capacity to create value for our shareholders. Performance across key metrics supports our full-year guidance. Core revenues in an upward trajectory, efficiency kept at best-in-class levels, Despite significant investments in technology and innovation, solid asset quality and the balance sheet that continues to act as a lever for growth. Our strong capital position balances superior shareholder returns with strong capital buffers, providing resilience during uncertain times, as well as strategic optionality, allowing us to navigate the current environment with confidence. And with that, I would like to open the floor for questions.

The first question comes from the line of Ben Cave and Robert with Goldman Sachs. Please go ahead.

Good morning. Thank you very much for the presentation and for taking the questions. Two from me please. First on the lending pipeline, could you just elaborate a little more on the interplay you're seeing between your lending pipeline and the current situation in the Middle East, how that's impacting, for instance, shipping and tourism lending, which I know you mentioned as contributing to the Q1 disbursements, and then where you see upside and downside risks compared with a few months back. And then secondly, just a technical point on Q1, trading clearly a high income level, as you mentioned in the slides, Anything you would highlight there in particular? Thank you very much.

Okay, thanks for the questions. It's a bit early. I think the disbursement pipeline is still based on approvals that have already occurred. So between time to money, from yes to money, it takes... It takes almost two months, a month and a half, so you're still seeing approvals of projects which are pretty mature. The key question is on appetite for new projects, and it's still, I would say, a bit early to make a decision. I think most people are still moving forward with their projects. Certainly on retail, which is more granular, we're not seeing a slowdown in applications. Quite the contrary, they're quite steady at the levels pre-end February. So, I think the question is, let's see how long the crisis lasts. Clearly, if there's higher uncertainty, I would guess there'd be some delays in investments, but I think that this would have to be a much longer period of uncertainty than what is now sort of being bandied about by markets and by investors sort of, you know, till the mid-year. So I guess a quick answer to the question is if uncertainty lasts past the mid-year then we would probably see a slowdown in large investment partners. On trading, It was an opportunity in volatility for trading, let me put it that way.

Okay, thank you very much.

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

Yes, good morning. Thanks very much for your time. I have three questions, please. One on NII, which is very strong this quarter, came well above expectations. I was wondering how you're thinking about the coming quarters now, considering the strong pipeline as well as the recent moves in short-term rates, given your sensitivity. And my second question is on the Allianz deal, the six percentage point incremental VK that you're guiding. Is this a plug-and-play assumption from day one, or do you expect any synergies over the period? And I'm assuming this is a combination of the bank insurance fields as well as associate income from your state, so could you please confirm if I'm thinking in the right way? And finally, on the VES, the 60 million charge, could you please disclose how many FPEs are exiting and what's the expected annual cost savings and over what time period this will come? Thanks so much.

Good morning. Now, indeed, our NII came in nicely in the first quarter, despite the seasonal effect of the calendar days. Obviously, this is benefiting from the strong pipeline of disbursements that we had in Q4, and also the fading, let's say, repricing of our packbook, given the lowering market rates that we had to endure last year. Now, going forward, The key lever for growth is what we have discussed also during our annual results and the guidance. Growth of our loan book especially is going to be the driver for growth in our NII. And as we disclosed also on our NII slide, the market rate will also play an effect. So our guidance stands as of now for a low single-digit growth in NII for the year. Given the sensitivity for every 25 basis points of 40 million on an annual basis for an NII, if the current, let's say, view on market rate sustains, there is upside risk for NII going forward. Having said that, we want to wait until the second quarter of the year until things settle down. before we update on our guidance. And another point on our net interest margin, given the dynamics we see, we believe that this quarter is probably the trap quarter for our NIM. So from this point onwards, it's going to be an improvement also on NIM. On the second question with regards to our prospective partnership with Allianz, the six percentage points upside on the guidance that we've given on FIS-KEGAD is not assuming any synergies from costs. It's pure income generation based on the strategic partnership. So it's pretty straightforward. And with regards to our VES, I think the CEO mentioned that this VES was more or less in the area of 280 people. The annual saving would be in the area of 15 million. and in 2026 we will assume about half of that depending on the timing of the exits of our people.

Okay, thanks Christos.

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

Hello, thank you. Further questions on Alliant. Can you give us a sense how this guy did 4% EPS accretion compared with Allianz's recent performance, like what they actually delivered in the last year or two? And just to confirm the numbers, do you mean here about 45-50 million of profit contribution? So that's firstly on Allianz and then I have another question.

Let me start on the first question. So the key driver of the growth in our fish is mostly deriving from the strategic bank assurance agreement. So the performance of the company in Greece so far is not the key driver for growth and you have to put into the equation that given our partnership, The profits of the company are expected to grow and not be very relative to what they've been doing so far. But I don't want to comment on the profits of Allianz yet. So that's our view.

Okay, I mean, you guys for 40-50 million of earnings accretion, as I understand, that's one of the basis points of EG1 consumption, maybe implies 80-90 million of capital consumption. Am I missing anything there?

Well, that's part of the equation. You need to take into account regulatory filters and any goodwill which would contribute to that 0.2% capital consumption that you see. But even where we are at the moment, I think you should be okay with a 0.2.

Thank you. And Justin, do you see yourself being a minority shareholder in the longer term in this surely very capital effective way of owning the stake or do you see a chance of raising your stake

No, I think we are happy with the 30%. I think you've heard our views on insurance. We prefer to partner with a large European world, in this case a partner who has an expertise, and they provide the expertise on the factory, we provide the expertise on the distribution, and the combination is a win-win.

Very clear. Thank you.

The next question is from the line of Robert Broza with PKO BP Securities. Please go ahead.

Hello everyone and thanks for the presentation. I have two quick questions. Some of my questions actually have been answered so far. What are your thoughts on the potential increase in the macro overlay given the current situation in the Gulf? That's number one. Number two, on the Allianz acquisition, I'm just wondering if you could provide any Specific examples where you think a new bank insurance offering could add value? Would it be more in the retail lending offering or corporate lending? And in which specific areas of the bank activities you might offer something new for your clients? Thank you.

Okay, I'll take the first question. So if I understood the question correctly, you were asking whether we have taken into account The macro effect of the volatility in geopolitics in our asset quality and provisioning models? The answer is yes. So what we have come out with takes into account this situation, the current situation. And on the second, Pavlos will take it.

Clearly the bulk of the Bank of Greece agreement comes from selling to retail. So this is a retail model. The next question is from the line of Alex Dimitri with Jefferies. Please go ahead.

Hiya, two questions please. Firstly on the NIM, could you just unpack how you expect it to grow from here over the coming quarters to reach full-year guidance? And just second question, another one on Allianz, sorry. Just on the fee side, is this purely on the bank assurance line or are you also seeing some kind of uptick from investment products as well? Thank you.

Okay, on the NIM, so as you've seen, we've landed the NIM of 272 basis points for Q1. With all the, let's say, the negatives that we had in Q1, I'm repeating the calendar days and the fact that we still had some delayed repricing in our backbook from lowering market rates in 2025. So going forward, given the benefit that we expect from our growing assets, Adding to that the fact that we see the spread compression slowing down and going forward as we guided at the year end the results we expect not more than 15 basis points of overall spread compression in the year. And also taking into account current market rates, I think we are very well set. to meet, if not exceed, our full-year guidance of over 275 basis points of NIEM for this year. And going forward, I think we are very well set again to exceed 290 basis points, which was our target for 2028. Your second question on asset management, yes. I think what we have pointed out as upside potential from... The partnership, the long-term strategic partnership with Allianz is clearly on bank insurance and insurance, but having said that, partnering with a global player like Allianz, we do see upsides in other streams as well, and to be very frank, that could be another lever for growth for us in the future.

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

Okay, thank you all for joining us for the first quarter results, despite an exciting day in the markets, once again. We're available for further follow-up questions, as always, and we hope to see you in forthcoming road shows. Have a good one.