Piraeus Financial Holdings(BPIRY) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Piraeus Bank reported normalized earnings per share of EUR0.15 and a return on average tangible book of 13%, both exceeding the full-year 2023 guidance provided earlier [4] - The bank achieved a 24% annual growth in net revenue, driven by a 56% increase in net interest income and a 15% growth in net fee income [4] - The cost-to-core income ratio improved to 36%, and the non-performing exposure (NPE) ratio decreased to 6.6% from 13% a year ago [4][7] - The CET1 ratio strengthened by 60 basis points to 12.2%, with total capital reaching 17% [4][10] Business Line Data and Key Metrics Changes - The performing loan portfolio grew by 8% annually, with a strong pipeline of business projects, including RRF sponsored plans [8] - Deposits increased by 4%, amounting to over EUR2 billion annually, supported by strong asset management product performance [9] Market Data and Key Metrics Changes - The bank's liquidity ratios are robust, with a liquidity coverage ratio of 220% and a loan-to-deposit ratio of 62%, both ranking in the top percentile in Europe [7] Company Strategy and Development Direction - Piraeus Bank aims to distribute 10% of its 2023 profits to shareholders, subject to achieving targets and supervisory consent [5] - The bank is focused on expanding its energy transition business lines and has been recognized as a climate leader in Europe [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in outperforming 2023 targets due to solid financial performance and a supportive macro environment [10] - The bank upgraded its 2023 guidance, targeting a 12% return on tangible book and EUR0.55 earnings per share [11] Other Important Information - The bank's proactive measures include monitoring asset quality and implementing strategies to mitigate risks associated with rising interest rates [17] - The bank plans to maintain a stable loan-to-deposit ratio of around 65% in the medium term [22] Q&A Session Summary Question: Expectations for deposit betas and loan pass-through - Management indicated a low deposit beta of around 9% and expects a pass-through of about 50% on time table, with current pass-through at 75% [14][16] Question: Risks to asset quality with rising interest rates - Management is monitoring the book for risks and has proactive measures in place, with no immediate concerns noted [17] Question: Optimal loan-to-deposit ratio and liquidity strategy - The bank aims for a stable loan-to-deposit ratio of 65% and plans to deploy excess liquidity into expanding the credit pool [22] Question: Dividend payout expectations for 2023 and beyond - The bank has established a distribution policy targeting a 10% payout for 2023, with aspirations to increase it in subsequent years [24] Question: Capital build-up and MREL transactions - Management expects organic capital build-up to continue, with a planned transaction of up to EUR500 million for MREL within the year [39] Question: Impact of mortgage rate caps on NII - The cap on mortgage rates is projected to impact NII by around EUR15 million, which is included in the bank's guidance [42]