Piraeus Financial Holdings(BPIRY) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Piraeus Bank reported a return on tangible equity of 6% for Q1 2022, aligning with its full-year commitment [7] - Core operating profitability reached €93 million, with net interest income excluding NPE accruals increasing by 11% year-on-year [8][9] - The fully loaded CET1 ratio was restored to 10%, incorporating over two-thirds of the 2022 NPE clean-up costs [8][16] Business Line Data and Key Metrics Changes - Loan disbursements amounted to €1.7 billion in Q1 2022, resulting in a net credit expansion of €300 million [8][35] - Net fees, including rental income, increased by 37% year-on-year, while operating costs decreased by 6% [9] - The underlying cost of risk was reported at €44 million, reflecting a positive trend from the previous year [13] Market Data and Key Metrics Changes - The Greek economy showed strong GDP growth in 2021, setting a foundation for sustainable recovery, although the Russia-Ukraine war has introduced economic uncertainty [5][6] - The bank aims for a 9% NPE ratio by the end of 2022, supported by ongoing NPE securitizations [10][15] Company Strategy and Development Direction - The company is focused on executing its new business plan, emphasizing core business strengthening and credit expansion across priority sectors [4][17] - A strategic partnership with Natech is underway, aiming for a platform launch in the first half of 2022 [20][21] - Piraeus Bank is committed to becoming the most sustainable bank in Greece, with clear targets for net-zero emissions [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in addressing current economic challenges, highlighting the effectiveness of policy support measures against inflation [6] - The management reiterated guidance for a total credit growth of €1.2 billion for the year, despite initial repayment levels [26][27] - The bank is monitoring payment behaviors closely, with no significant pressures observed so far [30] Other Important Information - The bank's asset quality trends remained favorable, with historical low NPE inflows and a negative net NPE formation of €100 million in Q1 2022 [15] - The company has been recognized as one of Europe's climate leaders for the second consecutive year [21] Q&A Session Summary Question: Loan disbursements and repayments dynamics - Management confirmed that despite higher repayments in early Q1, disbursements improved in March and April, maintaining guidance for €1.2 billion growth [26][27] Question: Asset quality and NPE ratio target - Management reiterated the target of a 9% NPE ratio, with ongoing monitoring of borrower payment behaviors and potential additional NPEs under stress scenarios [29][30] Question: Impact of inflation on operating expenses - Management acknowledged inflationary effects on administrative costs but aims to maintain a nominal G&A cost base over €250 million for the year [31] Question: Clarification on loan growth and asset quality trends - Management confirmed €1.7 billion in new disbursements and reiterated the €1.2 billion net credit expansion target for the year [35] Question: Capital movements and MREL ratio - Management explained the increase in the fully loaded CET1 ratio and discussed the MREL trajectory, indicating plans for gradual increases [43][46] Question: TLTRO contributions - Management confirmed €36 million from TLTRO in Q1, with expectations for similar contributions in Q2 and a decrease in subsequent quarters [47]