Piraeus Financial Holdings(BPIRY) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported earnings of €1.1 billion for 2024, a 36% increase year-on-year, surpassing the initial budget of €900 million [5] - Earnings per share were reported at €0.81, leading to a proposed cash dividend of €0.30 per share, up from €0.06 last year [4][10] - The normalized return on average tangible book value was 17.5% for 2024 and 18.1% for Q4, aligning with best-in-class in the region [6] - The CET1 ratio increased by 135 basis points year-on-year to 14.7%, with a total capital ratio of 19.9% [9] Business Line Data and Key Metrics Changes - The performance loan book expanded by €3.6 billion or 12% year-on-year to €33.7 billion, exceeding the initial target for 2024 [6][14] - Net revenue grew by 7% year-on-year, with fees growing at four times the annual rate of net interest income [7] - The company achieved a cost to core income ratio of 30%, among the best in the European banking market [8] Market Data and Key Metrics Changes - The company increased its assets under management by 23% to €11.4 billion, primarily driven by mutual funds [7] - The NPE (Non-Performing Exposure) ratio improved to 2.6%, indicating solid asset quality dynamics [8][13] Company Strategy and Development Direction - The company aims to transition to a modern retail bank model and enhance energy efficiency and carbon footprint awareness [16] - The strategic plan for 2025-2028 includes projected net profit growth to approximately €1.1 billion annually, reaching €1.3 billion by 2028, with loans expected to expand by €12 billion [21][22] - The company plans to maintain a capital distribution target of around 40% of profits to shareholders starting from 2025 [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a favorable macro environment driving lending growth and market opportunities, with Greek GDP expected to grow by approximately 2% annually [20] - The company anticipates a stable cost of risk at low levels, guiding for 50 basis points in the next two years [41] Other Important Information - The company has a strong liquidity profile, with a liquidity coverage ratio of 219% and a historic high balance of deposits at €63 billion [15] - The digital bank Snappi is expected to launch by mid-2025, with anticipated cumulative losses of around €50 million in the first two years [23][75] Q&A Session Summary Question: Capital growth and tangible book value - Management clarified that the capital growth in 2025 is influenced by Basel IV impacts and the increase in distribution payout from 35% to 50% [28][29] Question: Cost base and inflation - Management indicated that recurring costs are expected to grow in line with inflation, maintaining a stable cost base [30] Question: Dividend payout risks - Management confirmed that distribution aspirations will not be compromised for M&A activities, emphasizing a commitment to shareholder returns [43] Question: Foreclosed assets and provisioning - Management discussed the reduction of foreclosed assets from €1.9 billion to around €1.5 billion, with expectations of further organic sales [51][54] Question: Loan growth guidance - Management projected an 8% growth in loans for 2025, with a focus on retail lending returning to growth after years of contraction [57][59] Question: Snappi's financial outlook - Management expects Snappi to incur cumulative losses of around €50 million in the first two years, breakeven by 2027, and profitability by 2028 [75] Question: Fee income trajectory - Management anticipates sustained growth in fee income, particularly in bancassurance, despite government measures impacting some areas [82][94]