National Bank of Greece S.A.

Good afternoon, everyone. And good morning to those of you joining from the U.S.

Welcome to our fiscal year 2021 financial results call. I'm joined by Christos Christodoulou, Group CFO and Greg 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 Q&A. I will begin with a brief overview of Greece’s economy in view of the high uncertainty in the current global conjuncture and the relevance for the future performance of NBG.

Let me begin by saying that Greece's economy performed much better than expected in 2021, especially in the second half of the year, recovering strongly from the COVID-19 impact of 2020 in the first half of 2021. Indeed, the economy has already exceeded pre-COVID levels in Q4 2021, led by exports and fixed investment.

And this despite tourism receipts in 2021 at 60% of their record 2019 level. Job creation was strong with unemployment declining to 12.8%, the lowest level since over a decade ago.

Private sector firms have strong balance sheets and profitability, reflecting years of crisis hardened restructuring, and their concomitant improved competitiveness. These developments are reflected in a fiscal outcome that is expected to be about one and a half to two percentage points of GDP, better than budgeted.

And a debt-to-GDP ratio that is estimated to decline by about 14% of GDP in just one year, albeit remaining at high levels. The strong momentum of the economy and its solid fundamentals will prove very useful in the new challenge to absorb the commodity induced spike inflation, combining COVID-related supply chain disruptions with the Russia's invasion of the Ukraine.

The main transmission mechanism of the shock to the economy is a reduction in household disposable income and the rise in firms’ input costs. As a result of the supply shock, GDP growth in 2022 should be negatively affected, but soon recover with cumulative growth over the next two years, not expected to deviate significantly from previous forecasts.

Indeed, the ECB’s new macro forecast suggest only a 0.2 percentage point reduction in annual average GDP growth over the three year period 2022, 2024. Greece’s exposure to Russian energy supply is moderate with only 15% of domestic energy consumption per Russia sourced.

Specifically only one-third of imported natural gas from Russia, the rest is sourced from Azerbaijan and through LNG contracts, mainly with the USA in Algeria. Furthermore, only 150 crude oil importer sourced from Russia.

And recall that over 30% of Greece’s electric consumption comes from domestic renewable sources. Including all the above internally, we also project small deviations in activity increase for the three year period 2022, 2024 versus the pre-crisis one.

Admittedly, these projections keep bouncing around in view of the high absurdity toward events. Thus in view of the economy is expected ability to broadly absorb the energy price shock.

The likelihood of a new cycle of NPEs is low, especially the recently announced government support programs for the most vulnerable households and firms estimated to be around 2% to 2.5% of GDP in total for 2022. Direct NBG’s exposure to Russia and Ukraine, let me say that is immaterial, practically nonexistent.

The sanctions nor the war should have any meaningful direct impact on our business. And with this relatively longer than usual, but I believe necessary foray into the economic backdrop to our operations, which are almost uniquely group based that has turned to banking and NBG.

And in 2021, NBG achieved decisive results arising from a multiyear transformation effort. Capitalizing on Greece strong economic recovery, we have delivered one, strong organic profitability; two, an ambitious NPE cleanup and three, a growing and well capitalized balance sheet.

Underpinned by the rapid change towards a more flexible and efficient operating market. I’ll start from the balance sheet and specifically asset quality.

In 2021, we reduced NPEs below the psychologically important 10% mark, specifically to 7% of the group and 6.9% domestically. This was achieved with a conclusion of Frontier – of the Frontier transaction as well as continuous and solid negative organic formation despite the end of the military and the government support programs.

In nominal terms, the level of NPE stand at $2.1 billion and only $0.5 billion net of cash and cash provisions. The Frontier transaction in the held-for-sale portfolio is expected to complete before summer.

Today, we are far cry from the 22 billion NPEs of 2015, 12 billion net provisions. And this workout was achieved without the necessity to raise equity capital in any way or form.

Turning to the other key components of the balance sheet capital. NBG will soon be looking at a CET1 capital ratio that is above 18% and a total capital ratio nearly 19%.

Specifically at year-end 2021, the CET1 ratio stood at 16.9% and will be boosted by the closing of the ethnic key insurance transaction in the next few weeks, as significant progress has been made on regulatory approvals. The critical DG comp approval was granted on February 25 and without the need for any remedies.

Additionally, the closure of the JV transaction with EVO Payments expected in Q4 would provide a further 70 basis point impetus to capital. That being said, the 51/49 joint venture with EVO is not about raising capital.

It is the first step in a strategy to form strategic partnerships with mostly digital and sales tax clearance and thus to leverage on the concomitant synergies and advance our product and service offerings to match the increasingly exacting demands of our clients. As I believe doubts have been dispelled regarding the completion of NPE cleanup and the adequacy of our capital, attention turns to the ability to accelerate the generation of sustainable organic profitability.

In this area as well NBG achieved significant progress in 2021. In fact, our core operating profit rose to $450 million, up 40% year-on-year, equivalent to circa 8% of tangible equity, delivering 70 basis points of organic capital creation in 2021 after accounting for 50 basis points from the concomitant RWA expansion arising from the growth of our performing loan book.

Notable improvements occurred across all core P&L clients comprising core profitability. First NII remained resilient despite competition reduce spread compression and the loss of $30 billion of NPE interest.

This was achieved to loan expansion in the performing book of $1.4 billion. Once again, the highest in domestic market, emanating from the $5 billion loan disbursements.

And currently the corporate market, which has been buoyant for the past several years is now also joined by reviving retail market. Fees have had a remarkable strong year, up 10% with cross-selling efforts and digital banking, reinforcing fees from increased loan penetration.

This P&L line has significant room to continue to grow based on international benchmarks, especially investment products, bank insurance, and investment banking service. The hard work on OpEx continued, led by double-digit decline in personnel costs.

Due to the emphasis we have placed not only on revamping but also turning our IT and digital systems into a competitive advantage, depreciation charges have picked up. But I firmly believe that these investors will prove present in the years to come.

In fact, they have already made NBG the bank with the best digital offering in Greece as acknowledged by independent experts, but more importantly, by our clients. The numbers speak for themselves, less than 5% of transactions are currently undertaken in branches.

Our market share in mobile banking is climbed to 32% with more than 2 million monthly active users. And the market share in internet banking is 25%.

Moreover digital usage as measured by transactions per second, TPS are 60% above our nearest competitors. Last but not least, the good work on the NPE front is leading to a steady and sustainable reduction in the cost of risk to already below 100 basis points in Q4, 68 basis points to be exact.

Looking ahead into 2022 and beyond, as I mentioned earlier, the prospects of the Greek economy are very positive. Despite the inflation related headwinds, the fundamentals of the economy are strong.

And even with the current global environment, Greece should experience respectable positive ARPU growth in 2022, higher than the year area as a whole and much better outcomes in 2023 and 2024. Thus NBG’s performance targets remain ambitious, get achievable.

Specifically, we aspire to one quickly close the remaining distance to a circa 3% European level NPE ratio by 2024. Two, continue to improve the pace of organic capital generation both through further core income growth as well as additional operating cost efficiencies and cost of risk normalization.

The medium-term target is to achieve double-digit ROEs expected to start from 2024, a few words in the key drivers per P&L line. Capitalizing on greases growth cycle loan expansion of €1.5 billion to €2 billion per annum is expected.

And this will gradually fully offset NII headwinds from the NPE, the residual NPE cleanup, TLTRO withdrawal and emotions. Fee income is expected to grow at about 10% per annum arising from higher economic activity, increased cross-sell and penetration across products and segments, especially investment products, bank assurance, and capital markets.

Success in this area will be based on leveraging improved data analytics. Cost reduction will continue with a target cost to core income of less than 47%.

Despite continued strong IT spend including the introduction of a new core banking system with cloud capabilities. This will occur through further operating efficiencies including the shift to digital.

Clearly, the motivation of our people through the continued revamping of our HR management is critical to achieving all our goals. A final cleanup of NPEs will allow the cost of risk to normalize to less than 60 basis points.

A combination of the continuing improvement of our recurring profitability and our strong capital buffers a fully loaded CET1 ratio above 18% in 2024 provides the flexibility to commence and sustain a policy of prudent dividend distribution in the near-term even in 2023 subject to regulatory approval. Meeting these ambitious objectives require significant further effort in a world experiencing rapid technological change and more exacting customer expectations.

Our transformation program will continue to provide NBG with a competitive balance in driving this necessary change. Our investment in technology and people are the critical components to successfully achieving our targets and be the bank of first choice in Greece.

The results so far and especially in 2021 affirm our capacity and dedication to deliver these goals. With that, I would like to pass the floor to Group CFO, Christos who will provide us with additional insights on our financial performance before we turn to Q&A.

Christos?

Thank you, Pavlos. So let’s go into the financial performance in a bit more detail.

Starting with the profitability highlights on Slide 13, continued strength across all core P&L lines drove 2021 core cooperating profit 40% higher year-on-year to €450 million constituting a decisive step towards achieving our group core operating profit target of circa €490 million for 2022. Our strong performance reflects a 4% year-on-year growth in core income.

The reduction in our operating expenses by 6% and sustained cost of risk normalization throughout the year allowing the full year 2021 cost of risk to talk below the 100 basis points mark. Factoring in trading gains arising mostly from our GGBs portfolio, profit after tax from containing operations amounted to €853 million, up 41% year-on-year.

Looking into asset quality and liquidity highlights as depicted on Slide 14, domestic NPE organic flows remain negative in Q4 2021, bringing the organic reduction for the year to €0.7 billion on the back of strong tools. Sustained organic NPE reduction throughout the year coupled with the solid progress on Frontier 2 securitization, which was transferred to health for sailing Q4 2021 through our domestic NPE exposure down to €2.1 billion or just €0.5 billion net provisions.

NPE ratio increased through up to 6.9% down 7 percentage points year-on-year, bringing us just a launch about the 6% full year 2022 target one year ahead of post schedule. Notably, our domestic cash coverage is posted to 78% from 70% in Q3 2021 and 63% in Q4 2020, despite the gradual cost of risk normalization reflecting favorable organic NPE information trends.

At the same time, domestic performing loan additions in 2021 are maintained at sector high levels of plus €1.4 billion driven by long disbursements of nearly €5 billion over the same period. Finally, domestic deposit gathering remains strong as we experience influence of €4.6 billion in 2021, mostly from the private sector despite negative real rates spread by the strong economic report.

Our best-in-class capital position keeps improving on the back of strong profitability with our CET1 ratio increasing by 120 basis points in 2021 reaching 16.9% while total capital stands at 17.5%. The completion of Ethniki Insurance sale and the mention acquiring JV will further boost our capital buffers rendering CET1 and total capital ratios of circa 18% and 19% respectively well above guidance for year-end 2022 capital levels.

Now let’s go through the key drivers of our profitability on Slide 15 to 21. Domestic NII increased by 3% year-on-year supported by the solid net additions to our loan book, as well as lower funding costs.

Encouragingly interest income from performing loans remained resilient driven by rising balances while lending yield normalization is bottoming out. Most importantly, the unprovided non-cash NPE interest portion remains very low at only 4% of our total NII increase highlighting the quality of our lending interest income while predisposing for manageable NII headwinds ahead of realizing the last leg of our NPE cleanup journey.

Going into domestic loan evolution in more detail on Slide 17 corporate disbursements picked up sharply in Q4 2021 to €1.9 billion driving annual loan disbursements to €5 billion. As a result our performing loan book expansion accelerated to €1.4 billion year-on-year with corporate performing exposures rising by €1.3 billion or 9% and the performing retail book exhibiting stabilizing trends following more than a decade of sustained leveraging.

The growth momentum of our performing book provides sustainable and long-term support to our NII gradually offsetting the impact from the balance sheet risk. Moving on fee income on Slide 20 domestic fees increased by 10% year-on-year, reflecting a sharp pickup in loan origination and economic activity migrated in cart, intermediation and digital fees.

The last reflects our successful digital transformation strategy facilitating the bank transition into a more flexible and cost efficient operating model. Indeed, customers are increasingly shifting to digital functionalities with e-banking transactions searching by nearly 30% year-on-year replacing branch transactions that have declined by 56% year-on-year are shown in the lower left hand side chart.

Let me now turn to operating costs on Slide 21. Personnel expense optimization continues with start costs down by 12% year-on-year, absorbing the increase depreciation charges driven by our far reaching IT strategy.

As a result, operating expenses decreased by a further 6% in 2021 with our cost to core income ratio improving by nearly 6 percentage points year-on-year to 52%. Remaining cost rationalization effort is anticipated to offset inflation headwinds and increased depreciation, allowing us to maintain a negative sign in operating expenses evolution going forward.

Moving onto asset quality on Slide 22 to 26, negative organic flows of €0.7 billion in 2021, combined within organic actions reduced domestic NPEs by half down to €2.1 billion, nearly 40% of these residual stock are FNPEs below 30 days past due with a good probability to cure up in the next quarters. Domestic NPE ratio came 5 percentage points lower quarter-on-quarter at 6.9% while coverage increased further to almost 80%.

Notably, organic reduction in 2021 was better than expected reflecting both the contained inflow of new defaults as well as strong cures. Moreover, despite the gradual conclusion of supporting fiscal measures and programs, the payment performance of exploratory our clients remains far better than expected with less than 4% of the moratoria perimeter being in default as of February 2022, as shown on Slide 26.

In addition, with regards to our clients on Gefyra programs, the majority of which have exited the programs as of December 2021, payment for four months, the reassuring with just 2% of them in delayed payment stuffs. This is a clear indication of much lower than initially anticipated COVID-19 impact in the credit quality of our loan portfolios.

Turning to liquidity on Slides 27 to 29. Domestic deposit increased by 10% or €4.6 billion year-on-year accompanied by sustained time-to-core deposit substitution effect on the pack of strong influence into savings accounts.

Time deposit yields have it lowered by 15 basis points year-on-year to just 8 basis points. Euro system funding through TLTRO stands at €11.6 billion, while the bank fulfilled its interim binding target of 18% without additional conditions.

Summing up, 2021 has been another year of key achievements and strong financial results for NBG. On the profitability front, we have managed to grow our core operating profit, reaching €450 million, just a not away from our 2022 profitability tax.

With regards to asset quality, our remaining stock of NPEs translating into a ratio of 6.9% bodes well are performing our year end 2022 NPE ratio target of 6%. Last but not lease, we have kept enhancing our superior capital buffers through our strong carrying profitability and capital accretive transactions, creating additional value for our shareholders.

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

Good evening guys. Thanks for the presentation and well done on the progress that you have in 2021.

I have a few questions on capital. So now that your capital position is – it looking very strong, even if you look at the pro forma numbers strengthened even more.

I’m just wondering if you have any guidance similar to peers in terms of possible payout ratios going forward. And also linked to that the figure that you give for fully loaded capital level of 15% plus in 2024.

Does that account for the distribution that number? And then the other question is on your assumption for the normalized equity level in 2024 as well.

And then finally, it’s a question on disbursements, I see a very strong figure in the fourth part of 2021. Just wondering what kind of disbursements those were.

if they were more like short-term working capital or you saw some demand for long-term investment kind of loans. Thanks.

Okay. Let me take a stab at them and Christos will add.

Payout, the dividend depends, first of all, on regulatory approval. So far we have a ban and it’s been a ban that’s been around for 10 years.

So we need to walk before we run. So we’ll start with a request for a relatively small payout of the order of 20, and then we’ll go from there.

So let’s be careful and not ask the regulator and be too ambitious. On the 15%, yes, it does include in 2024.

The end 2021, disbursements were corporate and included project finance long-term. I don’t think it had significant short term working capital investment, did I miss…

Yeah, the assumption for normalize acting 2024, do we have that to share?

The equity that we assume to the approximation of the CET1 capitals in the areabetween $6.5 billion and $7 billion.

Excellent. Thanks very much.

Good afternoon. Thanks very much for the presentation.

Just one follow-up on capital return, please. I appreciate you aim ordinary dividend payments from 2022 onwards.

But this will obviously come from the ordinary earnings generation. And given that you are clearly operating on visible access, and I do appreciate, you will speak with the regulators, et cetera.

But where would you see your optimal capital levels? Given also you’re quite conservative in your approach and how are you thinking about excess capital distribution, if at all, let’s say come 2022 in form of a buyback or would you like to deploy your capital somewhere else?

If you had any color on that, that would be helpful.

Again, we have been a high NPE bank and therefore the regular has been quite strict with capital. I presume – but I cannot speak to the regulator that the capital requirements on the ship will come down.

But I cannot tell what the regulator will do. So again, just similar to dividend let us walk before we run.

Let’s get out some dividends before we start thinking of far two ambitious things and get it ahead of ourselves.

Okay. And if you don’t assume any change, let’s say, in your capital requirements today, then would the 15%, 16% fully loaded set one your comfortable level or do you think there is room for that to come down a bit.

Based on our high NPEs of two years ago and our capital charges have not been changed by the regulator. And you add a buffer of a 100 base points, then yes, they’re comfortable.

That’s what we don’t have that much excess capital. Now, that should come down.

Yeah. Okay.

I understand. Thanks very much.

And then maybe for this year’s guidance, I mean, thanks very much for providing 2024 figures. But is it fair to assume that you may achieve some of these targets prior to 2024, given the run rate and momentum is quite strong and maybe looking at 2022, how are you thinking about your €490 million cooperating target for this year given, again, 2021, where is very strong, but also there are some ongoing uncertainty.

So any color near term would be very helpful.

Right, we all appreciate near-term. The uncertainty is quite high.

We’ve had some good news today. Let’s see if it’s sticks.

So there are uncertainty about 2022 GDP. So I think we safe to say we should stick with our 2022 guidance.

Looking forward, I think that there’s certain factors that could have bring upside risks. And the main one being is the path of interest rates what has happened in the past months first with supply chain impact on inflation.

And then with the Russian invasion, we’ve had higher inflation and it looks like we’ll have tighter monetary calls. So that yet to be played out, again, but tighter monitor deposit and previous expected would help all banks, including NBG with its large share of core deposits and bring some get us off that zero bond constraint that we’ve been on for the past half decade at least.

Great. Thanks very much.

Hello, many thanks for the presentation and your time. Just on the asset quality, you are keeping your 6% NPE ratio, €300 million or €0.3 billion or so decline.

Given your recent trends, is this cautious or is the geopolitics making this may be less cautious. You’ve done a phenomenal job, so I’m wondering if there’s downsides to your NPE ratio that’s the first one.

And then on loan growth, you do mention €1.5 billion to €2 billion, is it safe to assume given the volatility in the world €1.5 billion or maybe below any color how after another very impressive quarter. How is your long growth trending so far?

Any color there. And then final one, if you could give us any info on your issuance plans, particularly for an Emerald angle.

Thank you.

Okay. Let me start in the first order.

Emerald, it’ll be one or two issues depending on market conditions. We had originally planned for two, but it looks like we only have half a year or less two, two issues, so probably one.

But again, depends on market conditions. Loan growth I think it could go the other way higher inflation, higher number GDP, higher demand for working capital to cover higher input costs.

You’re going to see much less bond issuance by the corporates that crowded out the bank lending in 2021, a lot of lending in 2021. So I think the factors there that could go in either direction.

NPE ambition, again, due to the uncertainty, it will stick with the target for now and we’ll be glad to outperform it if possible.

And any color on cost of risk for this year. You have a very high coverage outlook.

So as for our previous guidance, we ended up the year where we expected to around 96 basis points on a full year basis and the expectations to go down starting from Q1 for 2022. So we see ourselves with the cost of risk in the area of 60 basis points to 70 basis points.

And moving on to years 2023 and onwards, we expect that to normalize even more. In terms of coverage, provision coverage also is affected by the actual level of NPE.

So we don’t see it going down in the immediate term.

Got it. And one final thing on the merchant acquiring carve out timing.

I’m not sure if I heard this correctly, is it Q4 2022, the expected completion time?

That’s correct. And that’s due to the regulatory approvals.

Perfect. Thank you.

Hi. Good afternoon.

Congratulations for the good results. My question is about the sensitivity to rates.

You do have a lot of – finding a lot of deposits, so normally your security should be pretty high. But we are from other banks that there could be some initial softing of sensitivity due to the floor on loss for the first 50 bps.

So I don’t know if you can elaborate how much more would you get for the initial rise over 50 bps in rate and any subsequent rise. Thank you.

More or less the same story applies to us. I think we are in a good position because of the high level of our core deposits.

A majority of our loan portfolio off loads as well. So the figures we have assuming a past rate of just over 20% on core deposits is a sensitivity of addition of €70 million of profits for the first 50 basis points.

And if we assume that there is an increase in the rates in the area of 200 basis points that figure will go up even higher than €350 million. So that’s more or less our sensitivity based on today’s fact.

I think with similar to the other banks for the first 50 basis points, as you pointed out due to the large share of relatively insensitive core deposits after that we’ll be having more of an upside.

Thanks, everyone. Thank you.

Hi. Good afternoon and thanks for the call and taking my questions.

So I just have a follow up on issuance and noting your comments on the number of trips to market. Should we take that that you wouldn’t look to capital markets if you’re focused on Emerald?

So I guess I’m asking, could you put Emerald and capital instrument this year? And then secondly, just on your government bond portfolio, just wondering if you can provide some details on the amount of GDPs held the amount that’s held at amortized cost?

And then any guidance you can give for what you’re seeing in terms of the impact early this year would be good. Thanks.

So David, our view on Emerald as Pavlos said, is that we are looking to one or two transactions this year, subject to market conditions. So we’ll wait and see.

As you know, we’ve met our Emerald targets for 2021, there’s nothing binding for the end of 2022. So we’ll see how things evolve.

In terms of our debt securities portfolio, the vast majority of our securities are classified as here to collect amortized cost. So we don’t have any volatility in our equity on that front.

With regards to the head to collect and sell actually up to today, we don’t see much volatility. The level of holding is just about €1 billion, most of them being built.

So we feel very confident with regards to the volatility that we would face. And to add to that our highly hit in terms of the positions that we have in the head to collect and sell portfolio.

The level of GDPs in our head to collect the portfolio is in the area of 7 bps.

Thanks. And maybe if I could just follow up just on capital issuance.

Just given the conversations on restarting dividends, is 81 in your capital stack part of the long-term planning with regard to kind of where you see CT1 and capital more generally to allow dividend payments.

Well, it’s something that we do consider, it’s not something that we make decisions obviously. In the overall Emerald issuance plan that we have up until the end of 2025 it forms part of our planning, but until that time comes, we’ll see what’s the opt-in strategy on what kind of issuances we will make.

Understood. Thanks a lot.

Good day. Thank you much for the presentation.

I have a couple of questions. First on the NPE coverage ratios.

Indeed there is a strong buildup on this figure. I would like to ask what maybe management target do you have there, and at which point you may consider to start a lesion, maybe some of the reserves and provisions for NPEs?

Another question is maybe you could disclose some sensitivity of your GDPs portfolio to the recent buildup of bond yields. And also the question on operating expenses.

I think you had some guidance for the cost reduction shared previously. Are there any changes to these targets in the light of somewhat acceleration in inflation?

Thank you much.

Okay. On NPE coverage, you need to separate out S3 coverage from total provisions.

Now with such a low level of NPEs, most provisions are S1 and S2. So if you add all provisions, the coverage looks high, but if you look at S3 provisions, Stage 3 provisions, it is a more logical number.

Okay and I put that way. So that’s I think often a confusion on total provisions over NPEs and Stage 3 provisions over NPEs.

I think on the bond yields was answered the held to at sell. We have zero impact on capital to date and then operating costs, target note, the guidance still remains the same.

All right. Thank very much.

Yes. Thank you very much for the call, I have two questions please.

The first on the quality. Can you give us some indication of which industries you see may be more affected by the geopolitical stress or the second order impacts, like inflation?

What are you seeing on the ground? Are you worried about an increase in defaults in some Greek industries from your computations with your clients?

Just the framework for us to understand where the tensions might be. And then secondly, on Emerald, what do you think the direction of travel is for the Greek banking sector as a whole?

Do you think we’re heading in the next few years to more constraining regime where you have subordinated Emerald requirements or do you think recent developments might lead the regulator to relax these in fact, and maybe push back the final Emerald deadline? Thank you very much.

Okay. On the impact of the energy and agriculture commodity price inflation, I think as I tried to say in my introduction, there is going to be an impact on disposable income of households and on input costs of especially agricultural and certain energy consuming industries.

Now, the government is announcing a relatively generous plan to cover the more vulnerable households about 2% of GDP in 2022. GDP in general is still expected to be north of 3%.

So despite the shock lower than original projections, but still not a GDP growth rate that creates NPEs. Now certain energy producing firms they will be passing on some of their costs, which will be covered by the government.

So all in all, I’m starting to feel more and more comfortable that we will not see any significant increase in NPEs in 2022 coming out of this. And then on the Emerald, look, we have a plan up until 2025.

We meet with our – with SRP on an annual basis, to the extent that is required. We fine tune the plan.

So we cannot preempt at this point in time, if anything will change and how with SRP approach the situation. So we stick to the course of the plan.

Thank you.

Hello. A quick question on the NII, if you could walk us through a bit on 2022 on what should we expect regarding the NII from NPEs, it was 194 I think in 2021.

So this figure, I assume, will go down drastically in 2022 with Frontier and the impact from the TILTRO how much was the positive impact in 2021. And what should we expect in 2022?

Is that the negative factors? Of course, there are some positive factors as well, but I guess we should assume my high single decline.

Is that something reasonable? That’s my first question.

I may say consorted because it not cuts what you said earlier from a question for my colleague regarding the NII sensitivity on interest rate that you said 70 million on the first 50 bps and 150 million on the 100 bps. Sorry, if you could repeat this.

Thank you.

Okay. So let’s start from the second one.

Indeed what you said on the first 50 basis points was a 70 million upside. And then if we had 200 basis points of increase as then that translates into 350 million of increase in income.

With regard to the guidance from the NII for 2022, I think you picked up the biggest – the two biggest headwinds that we would face. First of all, in terms of NPE interest, indeed, the NPE interest for 2021 was in the area 190 million.

If we assume that Frontier accounts for about a 100 million of that, and we’ll not have it in 2022 plus some other actions that we have, you should assume that NII interest from NPEs will be going down in the area of 80 million to 90 million But having said that you should be aware that the normalization of cost of risk on the other side will not have the same effect on bottom line profitability. On TILTRO the annual upside that we had this year because of the program was in the area of 90 million.

And we expect to keep half of it for 2022. Other upsize that we have a little in 2022 is increased interest from our performing exposure loan book and some additional, but not that immediate and repricing in our term deposits.

So all in all, the number that you quoted is quite right, you should expect a high single digital detection in our NII for the year.

I’m sorry, thank you for this. And one follow-up regarding fees.

You mentioned in your plan a growth of around 10% per annum, wouldn’t 2022 be affected by the sale of the merchant acquiring business. So would you have a similar growth in 2022?

Yes. The figure that we’ve shared accounts for that so the – if you expect is 10% or slightly higher to be incorporating the forgone fee income from this JV, but it is a JV.

So we retain the fair share of this income.

Great. And on this merchant acquiring business the gain that we should expect is something similar we have seen with your peers, I would imagine.

We have announced it.

I am sorry.

So it’s just north of 300 million for the 100%. So we’re disposing of 51%.

So half of it is the gain that we have recognized because of the same.

Thank you.

Yes. Thanks for taking my question.

The first one is on asset quality. If I remember, well, the Frontier II project should have a neutral impact to capital, but can you give us an idea of the impact to provisions for 2022?

The second one is on capital. If you can go through the quarter-on-quarter increase in fully loaded CET1 ratio.

And the last one is on cost if you expect any restructuring cost to be booked to reach the 2024 target. Thank you.

Okay. So on Frontier, the transaction was actually capital accredit over 100 basis points actually.

If we combine the provision reversal and this is what asset recognition. We were in the area 150 basis points.

With regard to [indiscernible] this would have on cost of risk in 2022, as we said, we see our cost of risk normalizing down from 100 basis points in 2021 to around 60 to 70 basis points in 2022, I didn’t catch the other questions that you made. Can you repeat the questions?

Yes, sorry. Also on the first one, I was referring to the NPEs that you put at available for save this quarter, if the additional 1 billion security station you are planning to do will have an impact provisions.

And the second one was on capital. If you go – if you can go through the quarter-on-quarter increase it’s – I think 90 basis points from risk reversals are free if you can complete that.

And the third one is on cost, if you expect any restructuring cost to reach in 2024 target.

Okay. So the question on the increase of the capital range of the fully loaded or the transition is the same from Q3 to Q4 is down to the recognition of the risk weighted assets from plan to one.

The other question you had was…

The cost of Frontier II.

The cost of Frontier II, as we said, also from the previous call there’s not going to have any to any lowest budget or any material effect on capital. We think that we fair value did correctly.

And going forward on restructuring costs, well, we have a strategy of optimizing further our course basis, but cost down the road would not be as material as the ones that we have recognized so far. And to the extent that we need it we’ll see how it cost depending on the actual front.

Thank you,

Thank you all for joining us for the full year results call. We’ll be available to answer questions.

We hope to be able to see you in person soon. And we hope that we have soon peace in the region.

So thank you very much.