Piraeus Financial Holdings S.A.

Good afternoon, ladies and gentlemen, and good morning to those joining us from the U.S. Today, we will cover our first quarter 2025 financial results.

This is Christos Megalou, Chief Executive Officer, and I'm joined today by our CFO, Theo Gnardellis, Chryssanthi Berbati and Xenofon Damalas. Piraeus started the year strongly, delivering a solid set of financial results in the first quarter, confirming its good progress towards achieving or surpassing its full-year targets.

I am proud of our results and thankful to our people for their hard work. Before going into more detail on the group's performance, I'd like to comment briefly on the current macroeconomic environment.

As you can see in Slide 4, the Greek economy is well-positioned to navigate the uncertainty of the global macro landscape. In 2024, the Greek economy sustained its growth momentum with GDP increasing by 2.3% and significantly exceeding the Eurozone average of 0.9%, with one of the highest primary surpluses in the EU at 4.8% of GDP.

GDP growth is expected to be maintained at similar levels in 2025 and driven by investments and the next-generation EU funds. The lower reliance of Greek exports to the U.S.

implies a manageable impact from tariffs. Importantly, the Greek sovereign has regained the investment-grade rating by all major credit rating agencies with further upgrades taking place inside the investment-grade status.

Let's now move on with Slide 5 for the key achievements of the first quarter of 2025. We generated net profit of EUR 284 million, up 22% year-on-year, corresponding to earnings per share of EUR 0.22.

With our strong first quarter performance, we are in line to meet or exceed our guidance for earnings per share of approximately EUR 0.80 for 2025. On the back of our solid financial performance, Piraeus' Annual General Meeting of Shareholders in April has approved a cash dividend amounting to EUR 373 million for 2024 results, which will be paid on the 10th of June 2025.

This is almost EUR 0.30 per share, up from EUR 0.06 last year. In the first quarter of 2025, we accrued for a 50% distribution out of the quarterly profits.

This is an annualized run rate of EUR 0.44 per share or 9% distribution yield. We have expanded our loan book by EUR 5 billion in 5 quarters, 16% year-on-year to EUR 35 billion.

During the first quarter, our loan book grew by EUR 1.1 billion, continuing the strong momentum of 2024. We achieved a return on average tangible book value of 14.7% and above the 2025 target of approximately 4%.

We delivered 10% net revenue growth in the first quarter, supported by the strong performance of net fee income. Fees increased by 10% year-on-year while net interest income retreated by 7% annually, reflecting the material drop of interest rates.

Our revenue diversifying efforts are reflected on our net fees over net revenue at 25% and while fees over assets reached 80 basis points and both metrics are best-in-class in Greece. Following this, we are confident to upgrade our net fee income target for 2025 to approximately EUR 650 million from EUR 600 million previously.

Our cost-to-core income ratio stood at 35% among the best in the European banking market, confirming our cost-disciplined approach. Asset quality dynamics remain solid with NPE ratio at 2.6%.

Importantly, cost of risk landed at the historic low level of 35 basis points below our target of approximately 50 basis points for 2025. We increased our assets under management to EUR 12.5 billion during the first quarter, 25% year-over-year, already exceeding the 2025 target of above EUR 12 billion.

The strong performance was mainly driven by mutual funds, which grew by 39% year-on-year. Furthermore, deposits rose by 5% annually and are now at EUR 61.4 billion.

Our CET1 ratio reached 14.4%, and on the back of solid organic capital generation, while at the same target time, absorbing the 50% distribution accrual, approximately EUR 90 million BTC amortization, the EUR 1 billion loan growth and the transitional impact from Basel IV that kicked in, in January 2025. Slide 6 presents the details of our first quarter operating results, a clean performance without one-offs.

We sustainably grow our tangible book value per share now at EUR 6 per share. On Slide 7 to 9, we present the dynamics of our performing loan book.

Credit expansion has been strong with performing loans rising by EUR 1.1 billion in the first quarter, supported by all business lending segments. Importantly, loan origination dynamics remain positive, and our total financing of RRF projects has reached EUR 2.2 billion, fueling EUR 7 billion investments.

Slide 10 outlines the impressive evolution of our net fee income, which has been supported by loan origination, bancassurance, asset management and rental income. Our diversified model brings results with net fee income accounting for 25% of our net revenues in the first quarter.

Slide 11 demonstrates the growing trend of assets under management that reached EUR 12.5 billion in the first quarter, already surpassing the 2025 target on the back of market-leading net sales of approximately EUR 600 million. On Slide 12, we depict the key financial KPIs that will be impacted from Piraeus acquisition of Ethniki Insurance.

To remind for those that are new to the Piraeus developments that on March 2025, we entered into a share purchase agreement to acquire 90% stake in Ethniki Insurance from CVC. The consideration for the transaction is EUR 600 million in cash on a 100% basis.

The Ethniki Insurance acquisition will further diversify our revenue sources and enhance value for our shareholders, while it is estimated to be earnings per share and return on tangible equity accretive by approximately 5% and 1%, respectively, without any synergies included yet. Post the transaction, Piraeus CET1 ratio is expected to sustain a level of 13% and higher and total capital will be above 18.5%.

The transaction is subject to the approval of the competent regulatory authorities and we are working diligently to conclude all required steps by the end of 2025. Slides 13 to 16 present detailed information regarding net interest income intrinsics.

In a nutshell, our growing loan book and bond books mitigated the material drop in base rates, loan spread evolution has been in line with our expectations as the average 3-month Euribor has dropped by 140 basis points from the peak of Q4 2023. And compared to minus 113 basis points for loan yields.

Moreover, lower time deposit pricing is expected to drive funding costs lower. Overall, the NII intrinsics in the first quarter lead us to reconfirm our 2025 guidance of approximately EUR 1.9 billion NII.

Turning on Slide 17. Our cost management is trending as per the budget.

We have front-loaded some expenses in the first quarter, mainly related to property charges. Overall, we remain very cost-conscious using CapEx investments to ensure long-term productivity gains.

Slide 18 provides a summary of our asset quality indicators. Our NPE ratio stands at 2.6%, while the underlying cost of risk fell to new historic low levels, saving at 35 basis points or 14 basis points, excluding servicing fees.

NPE coverage stood at a prudent level of 64%. Piraeus enjoys a superior liquidity profile presented on Slide 19.

Our liquidity ratios remain solid, as evidenced by the 201 liquidity coverage ratio and the high balance of deposits at EUR 61 billion. Turning to our capital base on Slide 20, our CET1 ratio stood at 14.4%, comfortably above the management target of 13%.

We also retain a comfortable MDA buffer of more than 400 basis points. On Slide 22, we will present an update on Snappi's progress towards its expected loans in the second quarter of 2025.

On Slide 23, there is a summary of our KPIs, demonstrating that we are in line or outperforming our 2025 financial targets. Our strong results position Piraeus well among the broader group of regional peers.

To give you some context on Slide 26 to 34, we present the key metrics for Piraeus versus domestic and regional peers. We benchmark ourselves in terms of return on average tangible book value.

Credit expansion, net interest margin, net fee margin, fees over revenues, cost-to-core income ratio, NPE ratio, cost of risk and capital ratio. In all KPIs were either at par or best-in-class while we are growing at an accelerated pace.

We expect to generate significant value for our shareholders. And with that, let's now open the floor to your questions.

Good afternoon. And thank you for taking my question.

Got a few from my side. So in this quarter, we continue to see a healthy increase in the securities book, but it seems that none of the increase in this quarter was booked in the amortized cost.

So, what is the rationale behind that choice? And are you considering counteracting the potential capital volatility from dispositions?

So that would be my first question. And then moving to capital, am I right to say that the 14.4% pro forma or the 14.2% reported CET1 is an untraditional basis?

Could you let us know what the fully loaded ratios would be and how quickly or slowly you expect the two to converge? And also -- and I mean, just for my better understanding, is the regulator focusing on transitional ratios?

Or do they also look at fully loaded interest and the ICAP report you submit? And a follow-up on capital and the last one, if I may.

Could you tell us if the capital impact from the acquisition of SME Ethniki Insurance has changed at all in light of the CRR3? And what is it as of today?

Eleni, lots of diverse questions. Let's start with your question on bonds.

Yes, that was primarily OCI booking. Hedges are there.

So we don't expect any volatility from the trading book. But given what -- I mean, our strategy in terms of expanding, we took the NII, but the decision was to put the new additions under the OCI book with corresponding hedging instruments.

On the capital, the 14.2% to 14.4%, not relevant to Basel IV. These are really pro forma calculations for some help of sale transactions that are still under play for the relevant RWA relief.

The NPE deal and the repossessed asset deal that were held for sale late last year. The mitigation of RWA is really the difference, which we expect to happen within the year.

I guess your question as fully loaded is mostly related to the kind of Basel IV hit over the coming years. The effect on capital that you've seen has the primarily the credit side, the impact as per everybody of about EUR 1.1 billion additional RWAs.

We're expecting, of course, the decision on FRTB as to whether it's going to hit next year or not. If it does, that is EUR 400 million additional RWAs for us next year.

And then everything else regarding fully loaded is primarily for us, revolving around our equities book, which on balance sheet is around EUR 1.2 billion. Calculating right now fully loaded ratios for the course of the next, whatever, 8 years, not so relevant and it's not in the discussion.

For stress test, because you asked, it is there, but it's primarily on information purposes. The discussion is very much still on transition.

And the primary reason is that there's lots that one can do over the course of the coming years to mitigate any effect that is finally decided. I think your last question was on the capital impact of the Ethniki Insurance deal.

It's pretty much what we had discussed last time between 150 and 160 basis points. This is what at completion, we should expect on a reported basis to hit the capital notwithstanding any potential opportunity of applying Article 49 of CRR3, what is commonly known as the Danish compromise, which is still not in play and not and not in any, I would say, plan A calculations.

Hi. Just credit expansion was quite strong this quarter.

So how should we think about the historic seasonality now that across the year? And then just secondly, a follow-up on that.

Are you able to provide any color on the current lending pipeline you are seeing or any change in customer behavior recently?

Alex, look, I mean, the first quarter was particularly strong. We had a couple of big transactions about 15% of total disbursements.

So our disbursements for the quarter were around EUR 3 billion and the transactions were closer to EUR 500 million. So these are setting the tone for the year.

The rest was pretty granular and across the board on sectors or manufacturing, hospitality, energy, construction, real estate was all part of the mix. We are currently evaluating the next few quarters, looking at the second quarter.

And at this stage, we are not going to be upgrading our full year guidance, but we remain vigilant and we'll be updating U.S., things are developing. What is quite interesting is that first quarter and the second quarter, as it stands, is pretty good activity across the board, which sets the tone for we believe a good year for '25.

And maybe just a quick follow-up. Any kind of comments on the outlook you're seeing in the retail or mortgage market?

Retail consumer is already positive. The mortgage market for us was kind of balanced for the first quarter.

We expect moderate growth for the end of the year as we have been guiding the market. So there, there are some initiatives that are taken by players, we are still waiting to see some progress, especially in relation to Spiti Mutu.

It has been slower than what the market was anticipating, but there is still some room for further growth. So it remains to be seen.

But overall, on mortgages, we are expecting a slight positive year.

Good afternoon. Thanks very much for the presentation.

Just on NII sensitivity, if I may ask, the rates go below a certain level, let's say 150 or 175. How would the business outlook look?

Do you think you can defend the guidance until a certain level of rates? And then what happens below that rate?

And maybe connected to these, it seems the reported NII sensitivity has increased just slightly this quarter. I think previously, you were saying 25% and now it's 30%.

I know it's just a small difference, but -- if you could please help me understand the drivers behind it. And finally, just to clarify maybe, should rates go below 150 bps, let's say, just as a sensitivity, how would this number look this EUR 30 million, where would it go?

Thanks a lot for the question. We've got Pages 13 and 14, where we're discussing this very important topic.

First of all, let's start with the increased sensitivity. It's very straightforward.

It's really the unfreezing of mortgages, primarily, that broke through the freeze level of about 2.9% on the Euribor 1 month broke through that level last December. So as a result, now mortgages have been added, I would say, to the floating pool of loans that are now sensitive.

The majority of mortgages are now sensitive to rate cuts as well and hence, the increase. Any sensitivity move would primarily from now on, would primarily have to do with a potential switch on the assumed pass-through of the rate cuts into the time deposit cost where we're assuming 60%.

We're currently at 52% and increasing apparently because in April, we had a further reduction of the time deposit cost. So it looks like we're on the spot as to where -- what the benefit is going to be the deposit cost versus the rate cuts.

And this is what supports, I would say, right now, the EUR 30 million, any move, we don't expect to be spectacular or affecting, I would say, overall the guidance. In terms of where we see the thing landing, I mean, on Page 14, I think it's kind of pretty clear that the lag effect that we're expecting from the reduction of base rates, together with all the effect that we've got carrying with us, i.e.

as the book transcends into the act in Europe because there is a lag effect there. Together with the growth, that kind of confirms the EUR 1.9 billion for this year.

And honestly, is not -- I wouldn't say it's sensitive at all to an extra cut 25 bps here, 25 bps there in half 2 of '25. The major question, of course, is about '26.

Where right now, simply by, I would say, extrapolating the current situation into '26. You can see that '26 is most likely going to land at the same levels.

The book will have accrued throughout the year at 2.4%. The exit run rate right now assumed is EUR 1.9 billion.

That's 50 basis points and at the current sensitivity, EUR 50 million, EUR 60 million drop mitigated by a corresponding growth, which is what we're seeing this year. So overall, EUR 1.9 billion holds, an extra cut would mean another EUR 30 million down, but then you bake in next year's growth, and then you come pretty much at the same level.

So right now, we're mostly focused on working the book, capturing the expansion that is on healthy spreads, as we've discussed, continuing to excel on our fees and our cost of risk lines, which are defending the bottom line and eventually the value to shareholders.

Hi. Just a couple of follow-up questions from me, please.

One is on the rate sensitivity and the NII outlook. Thank you for your thoughts on the impact from lower rates.

Now just given all the repricing effects and the potential legs on the asset and liability side, how should we think about the NII outlook for the coming quarters, so just for Q2. Do you think your NII would start to stabilize here?

Or should we assume a further step down due to the lower Euribor effect? That's the first one.

And the second one, I heard you mentioning a strong pipeline for corporate lending, but can you elaborate a little bit on that? And how you see the loan growth shaping up over the rest of the year after this very strong Q1 reading?

So Gabor, again, in Page 14, we're showing that the rolling 3-month Euribor, a sample, I would say, Euribor vs. multiple base rates that has been used for accrual of interest throughout the quarter was 3.3%, right?

When the average -- the actual average durable for the period was 2.6%. So the book, I would say, is still normalizing to the new rates.

And that's why simply annualized in Q1, you would still have EUR 105 million of reduction in this annualization from converging the 3.3% that was the rolling average of Q1 into what we expect to be 2.4% for the entire year. So simply that effect means that the coming quarters, we'll see a further drop.

That further drop is not going to be one-for-one on sensitivity because growth is also kicking in and it's mitigating part of the drop. I would say for every EUR 2, we drop on rates, EUR 1 we're increasing on growth.

So yes, this is not the floor of NII, the coming quarters, we'll have a further, I would say, mild reduction. But what we care about is overall confirming the EUR 1.9 billion for the year and giving you guys how the mechanics will work for the coming years, which I understand is and everyone's interests.

And Gabor, on your growth -- loan growth question. First of all, as I said, we are reconfirming our guidance of EUR 2.6 billion.

Obviously, given the very strong quarter, the risks are to the upside of this number. There is a strong dialogue on -- across the board on a number of mostly large corporate transactions and situations on manufacturing on energy, on hospitality, on construction and real estate.

It's pretty granular. There is no real kind of really big ticket.

And we expect that this will basically work out in Q2, Q3 until we see how things are developing for Q4. We'll provide more clarity with the Q2 results.

But right now, we are reconfirming our guidance for EUR 2.6 billion net credit growth for the year.

Hello. And congratulations for your presentation.

Most of my questions have been already covered. So I have a couple left.

The first one is regarding Snappi. Can you please clarify the magnitude of the letting expenses in the first quarter?

And the second one is regarding the servicing fee. Is the first quarter level a good proxy for the running or should we expect some fluctuation in the coming quarters?

That's my question.

Andreas, Snappi, as you know and we have discussed many times, is preparing for launch. So we have started to scale up cost in that preparation.

Q1 includes EUR 5 million. So the OpEx of the Q1 base in 2024 is EUR 5 million for Snappi, and that is expected to continue over the coming quarters.

And the NPE fees on service and overall, we expect a mild reduction, I would say, not some spectacular. I think we have pretty much normalized those levels, but we have made some moves that we should see a mild reduction over the coming quarters normalize from now on, nothing major in the fluctuation.

Hello. Many thanks for your time and the presentation.

It sounds like you're quite confident on the disbursement front for loan growth. I'm just curious if you're seeing any also upsides from repayments.

They were slightly lower year-over-year, with rates potentially coming lower even from these levels. Do you think that could be an upside for the loan book?

No, I think -- I mean, if you compare it to the last year's first quarter, repayments were actually moderate month. So they were in line with what we have been budgeting, projecting and predicting.

So we expect that this is going to be the trend over the next few quarters as well.

Hello. One question on your NII expectations that you're on Page 14.

So from the bridge, we can see the effects from the lower base rates and the asset growth, However, in one of your previous presentations, I believe the one from Q3, you are also talking about earlier bond IRS monetization the effect that you showed was between EUR 25 million and EUR 50 million. And I just want to ask whether that's still relevant.

And one other question on NII. If we go up to Slide 13.

We can see that from the NII that you get the cash from the central banks, EUR 17 million was due to Q1 seasonality. So first, can you explain what that seasonality because if I'm looking at your cash in the last quarters, I haven't noticed any particular seasonality in Q1?

And second, if this EUR 17 million is due to seasonality, if that didn't happen, your NII drop quarter-on-quarter would be 2x lower. So are you expected to get the EUR 17 million back in the next quarter?

Yes, the monetization of the swaps that we've done basically helped with the steady state, I would say, yield of the bonds, right? So now the -- those accumulated values are amortizing over the lifetime of their respective bonds.

So therefore, the yield has increased. And overall, the average is what it is today.

So that effect is within the annualization of Q1. So Q1 has that benefit in it.

And when we start with annualization, you've seen that in the 196. On the cash thing, I mean, that's well spotted.

Indeed, the cash balance dropped, that's a 1:1 and you can actually see that on Page 63, where you can see kind of the cash balances reducing between December and March. Of course, multiple angles there with the expansion of the credit book and other elements.

But we also had the seasonal drop of deposits, if you look a few lines down. That happens for the entire market.

It happened in Q1 last year as well. So indeed, the reduction of the liquidity affected the NII of the quarter.

In our projections, in our discussions for the future, we're not bringing that back, right? So of course, if that came back as it did the previous year, that would help with the nominal NII, but we're not counting on that per se.

Let's say that we are taking what is a proven seasonal thing, and we are kind of assuming it to be more steady. It's an upside, together with other things that might help the NII in the future.

Thank you all for participating in our first quarter 2025 results conference call. We look forward to discussing with you physically or virtually during our investor outreach program.

Thank you very much for participating.