Financial Data and Key Metrics Changes - The company reported a strong set of financial results for Q4 and full year 2023, with normalized earnings of €0.80 per share, a record high, and a return on average tangible book of 16.6% [43][28] - Profitability increased significantly, with net revenue growth of 37% year-on-year, and operating expenses reduced by 4% despite inflationary pressures [43][34] - The NPE (Non-Performing Exposure) ratio halved to 3.5% in 2023, with NPE coverage increasing to 62%, up 7 percentage points from the previous year [31][47] Business Line Data and Key Metrics Changes - The company achieved €1.6 billion in net credit expansion in 2023, aligning with targets and supported by strong take-up of the RRF (Recovery and Resilience Facility) [35][31] - Assets under management reached €9.3 billion at the end of 2023, marking a 34% increase year-on-year [44][36] - Net fee income increased by 14% year-on-year, reaching €144 million in Q4, with a consistent increase in net fee income as a percentage of assets [46][43] Market Data and Key Metrics Changes - The Greek economy grew by approximately 2.5% in 2023, with the sovereign upgraded to investment-grade status for the first time in over a decade, positively impacting the banking sector [29][28] - The company’s liquidity ratios are solid, with a liquidity coverage ratio of 241% and a loan-to-deposit ratio of 61%, both among the top range in Europe [48][31] Company Strategy and Development Direction - The company aims to return around 50% of profits to shareholders starting from 2025, with a focus on sustainable profitability of €1 billion annually for the next three years [37][39] - A new wealth and asset management strategy is in place, contributing to strong results and positioning the company favorably among regional peers [36][31] - The company plans to launch a digital bank, Snappi, by mid-2024 as part of its transformation program [52] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining strong performance and capital generation, citing a robust macroeconomic environment and strategic initiatives [39][28] - The company anticipates a stable net interest margin above 2% in the mid- to long-term, with guidance of 2.3% for 2026 [95][39] - Management acknowledged the challenges posed by potential changes in customer behavior and macroeconomic conditions but remains optimistic about achieving targets [40][42] Other Important Information - The company is focused on sustainability, with €2.7 billion in sustainable financing, primarily in renewables and sustainability-linked loans [88][89] - A strong capital build-up was noted, with a pro forma CET1 ratio of 13.3%, which is 170 basis points higher than the previous year [31][36] Q&A Session Summary Question: What makes the company comfortable sustaining a 50% dividend payout? - Management expressed confidence in maintaining dividend payouts due to consistent delivery on plans and expected excess profitability [54] Question: What are the assumptions behind the DFR (Deposit Funding Rate) for 2024? - Management stated that the DFR assumption is for a 25 basis points drop, based on current macro data, which has not shown a deterministic scenario for a change [55] Question: What is the outlook for new loan generation figures? - Management acknowledged a potential decline in new loans but emphasized that net credit expansion remains stable, with a focus on mortgages and business lending growth [57][71] Question: What are the expectations for one-off provisions in 2024? - Management indicated that there would be a small one-off of about €60 million to €70 million in restructuring costs as part of the final phase of staff reprofiling [63] Question: How does the company compare with Euro peers in terms of sustainability financing? - Management noted that the sustainable financing volumes are low compared to European averages but emphasized the importance of this area for future growth [88][89]
Piraeus Financial Holdings(BPIRY) - 2023 Q4 - Earnings Call Transcript