Financial Data and Key Metrics Changes - Piraeus Bank reported normalized earnings of €0.21 per share, exceeding the full year 2023 guidance provided earlier [7] - The return on average tangible book was 17.6% [7] - Net interest income grew by 9% quarter-over-quarter, supported by net interest margin expansion and deposit cost containment [7] - Operating expenses decreased by 8% year-on-year, resulting in a cost-to-income ratio of 29%, down from 32% in Q2 [7] - The CET1 ratio improved to 12.9%, up 54 basis points quarter-on-quarter [8] Business Line Data and Key Metrics Changes - Net credit expansion was €240 million in Q3 and €830 million for the nine months of 2023, driven by strong demand from Greek businesses [9] - Assets under management in the wealth and asset management division reached €8.5 billion, reflecting a 4% increase in Q3 [12] Market Data and Key Metrics Changes - The Greek economy's real GDP grew by 2.4% annually in the first half of 2023, outperforming the Eurozone average of 0.9% [5] - Piraeus Bank has captured over 40% market share in the RRF, having dispersed nearly €270 million to approximately 50 credit Greek businesses, primarily SMEs [9] Company Strategy and Development Direction - The company is focused on maintaining net revenue growth and operational excellence, with a strong emphasis on wealth and asset management as a strategic priority [4][20] - Piraeus Bank aims to continue improving its capital position and has already met its MREL target of 21.8% ahead of schedule [8][11] - The bank's competitive advantages and financial strength position it favorably against local and European peers [14][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting or exceeding 2023 financial targets, citing a strong track record of financial transformation [13] - The management noted that the recent upgrade of Greece's sovereign rating could provide some relief on risk-weighted assets, particularly in corporate exposures [19] - The outlook for asset quality remains positive, with expectations of a drop in the NPE ratio below 5% [35] Other Important Information - The liquidity coverage ratio stands at 242%, and the loan-to-deposit ratio is at 62%, indicating a strong liquidity profile [10] - The bank's capital generation was robust, with a 130 basis point increase in the CET1 ratio over the nine months of 2023 [11] Q&A Session Summary Question: Net interest margin outlook and hedging strategy - Management expects net interest margin to remain stable around 2.5% in 2024, with a strategic focus on structural hedging to mitigate potential NII erosion [18][19] Question: Implications of S&P's upgrade of Greece's sovereign grade - Rating upgrades are expected to provide some RWA relief, particularly on corporate exposures, though the impact is still being quantified [19] Question: Growth in assets under management - The increase in assets under management is attributed to improved penetration of asset management products and market share gains [20] Question: Evolution of credit spreads and lending expansion - Management anticipates a slight erosion of credit spreads but expects net interest margin to remain above 2% [23] Question: Asset quality outlook - The NPE ratio is expected to continue declining, with management not foreseeing major concerns regarding asset quality [24] Question: Capital generation and guidance for Q4 - Q4 is expected to be a strong growth quarter, with no significant changes to the capital target anticipated [38] Question: Digital euro impact - The bank is assessing the potential risks and opportunities associated with the digital euro, with plans to incorporate findings into the new business plan [38]
Piraeus Financial Holdings(BPIRY) - 2023 Q3 - Earnings Call Transcript