Piraeus Financial Holdings(BPIRY) - 2021 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Piraeus Group achieved a return on tangible equity of 7% in 2021, with a target of over 5% for 2022 [5][20] - The NPE (Non-Performing Exposure) ratio decreased significantly to 12.5% from 22.5 billion euros in December 2020 to 4.9 billion euros in December 2021 [6][11] - Cost-to-income ratio improved to 46%, with a cost of risk landing at 74 basis points over net loans in 2021, reaching an all-time low of 53 basis points in Q4 2021 [7][11] Business Line Data and Key Metrics Changes - New loan generation reached 6.5 billion euros in 2021, surpassing the target of 5.7 billion euros, with Q4 disbursements exceeding 2 billion euros [9] - Net fees increased by 25% year-on-year, reaching almost 400 million euros, marking a record high for Piraeus Bank [9] - Client assets under management rose by approximately 7 billion euros to a historic high of 59 billion euros [9] Market Data and Key Metrics Changes - The Greek economy showed strong recovery in 2021, with real GDP returning to pre-COVID levels and positive employment trends [3] - The company has minimal exposure to Ukraine, with net asset value related to Ukraine operations at approximately 22 million euros [4] Company Strategy and Development Direction - Piraeus Group is focused on achieving a single-digit NPE ratio by 2022 and has made significant progress in its NPE cleanup plan [10][11] - The company aims to strengthen its core business, particularly in sectors like energy, manufacturing, and hospitality [15] - A new business plan for 2025 is in preparation, with a focus on maintaining a capital ratio around 16% [17][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in addressing current challenges, including inflation and geopolitical tensions, while maintaining growth projections for 2022 [5][25] - The company anticipates a net credit growth of approximately 1.3 billion euros for 2022, with strong disbursement momentum [32][38] Other Important Information - The company has completed over 95% of its cleanup and capital enhancement actions as part of its business plan [10] - The NPE securitization and sales efforts resulted in a significant reduction of NPEs within a year [11] Q&A Session Summary Question: Potential headwinds for the business plan - Management acknowledged the early assessment of inflation impacts and projected a growth estimate of 3% to 4% for Greece in 2022 [25] Question: NPE reduction and write-offs - The NPE reduction in Q4 was a catch-up effect, with write-offs aligning with planned projections [27] Question: Loan growth and seasonality - Q4 loan disbursements were strong and aligned with the plan, with expectations for net credit growth of 1.3 billion euros in 2022 [32] Question: Future asset quality trends - No significant warning signs were observed in asset quality, with a clean path for further derisking [39] Question: Tax expense and one-off in OpEx - The tax charge was affected by a DTA impairment, while operational expenses were managed effectively [40][41] Question: Capital and issuance plans - The CET1 ratio is expected to remain above 10% by year-end, with plans for a 1 billion euro issuance in the second half of the year [48][50]