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Operator: Ladies and gentlemen, thank you for standing by. I am Mina, your Chorus Call operator. Welcome, and thank you for joining the Piraeus Financial Holdings Conference Call and Live Webcast to present and discuss the Piraeus first half 2025 financial results. [Operator Instructions] And the conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Piraeus Financial Holdings CEO, Mr. Christos Megalou. Mr. Megalou, you may now proceed.
Christos Loannis Megalou: Good afternoon, ladies and gentlemen, and good morning to those joining us from the U.S. Today, we will cover our first half 2025 financial results. This is Christos Megalou, Chief Executive Officer, and I'm joined today by our CFO, Theodoros Gnardellis; Chryssanthi Berbati; and Xenofon Damalas. Piraeus achieved solid performance in the first half of 2025, demonstrating significant progress against our full year targets. Based on our strong first half results, we upgrade today our loans and client assets guidance for the year. On top, we announced that we intend to introduce an interim dividend in Q4. Let's dive now into our first half results. Piraeus delivered a solid set of financial results with top line exhibiting resilience on the back of stellar client assets growth, stabilized margins and best-in-class operating efficiency. Let's move on with Slide 4 for the key highlights of our first half performance. We generated net profit of EUR 559 million, corresponding to earnings per share of EUR 0.43, in line to meet or exceed our guidance for earnings per share of EUR 0.80 for 2025. On the back of our performance, Piraeus intends to proceed with an interim distribution to our shareholders out of the 2025 profit amounting to EUR 100 million in the form of share buyback to be executed during the fourth quarter 2025, subject to EGM green light and supervisory approval. In total, we are on track for more than EUR 500 million distribution out of 2025 profit. This is approximately EUR 0.40, which corresponds to a 7% yield on our end June market capitalization of EUR 7.4 billion, now higher by EUR 1 billion. We achieved a return on average tangible book value of 15%, above the 2025 target of approximately 14% despite the dropping interest rates. We have expanded our loan book by 15% year-on-year to EUR 36 billion. During the first half, our loan book grew by EUR 2.2 billion, already surpassing our end 2025 target. Today, we are raising our full year guidance for loans to more than EUR 36.5 billion. We delivered 6% net revenue growth in the second quarter, while the decline in net interest income decelerated materially to minus 1.5% compared to minus 6% in the first quarter. Our revenue diversifying efforts are reflected on our fees over revenue ratio of 24%. This metric is best-in-class in Greece. Net fee income reached EUR 325 million in the first half, at par with the upgraded 2025 target of EUR 650 million for the year. Our cost-to-core income ratio stood at 34%, among the best in the European banking market, confirming our cost-disciplined approach. Asset quality dynamics remain solid with NPE ratio at 2.6% and NPE coverage at 68%, while cost of risk shaped at 51 basis points, in line with our target of approximately 50 basis points for 2025. We increased our assets under management to EUR 13.2 billion during first half, up 27% year-on-year, exceeding the 2025 target of above EUR 12 billion. As a result, we upgrade our target to above EUR 13.5 billion for end of 2025. Furthermore, deposits rose by 5% annually, now standing at EUR 63 billion. Our total capital ratio reached 20.4%, absorbing the 50% distribution accrual, robust loan growth and DTC amortization. We retain solid buffer of approximately 440 basis points above P2G or approximately 290 basis points if we include Ethniki Insurance. Slide 5 presents the details of our first half operating results. We sustainably grow our tangible book value per share, which now stands at EUR 5.9 per share. On Slides 6 to 8, we present the dynamics of our performing loan book. Credit expansion has been strong with performing loans rising by EUR 2.2 billion in the first half, supported by all business lending segments, while household lending improved. Importantly, loan origination dynamics remain positive and reached all sectors of the economy. The strong performance lead us to revise upwards our 2025 net loan growth target to above EUR 3 billion from EUR 2.5 billion previously. On Slide 8, we present a detailed sector breakdown of our CIB net credit expansion of EUR 2.3 billion in the first half. As you can see, our corporate platform outreach is very granular, reaching all sectors of the Greek economy. We are very happy that we are the bank of choice for SME clients in Greece, as shown by our NPS score in this space. Before going into more detail on the group's performance, I would like to comment briefly on selected Piraeus retail initiatives, which we have summarized on Slide 9. In the second quarter of 2025, Piraeus introduced several products and services that target to enhance the mortgage lending experience, address the housing and investing needs of younger population and support Greece's agricultural sector. Slide 10 outlines the evolution of our net fee income, which has been supported by asset management, bancassurance, loan origination and rental income. Slide 11 demonstrates the growing trend of assets under management that reached EUR 13.2 billion in June, surpassing the 2025 target. As a result, we now upgrade the full year target to more than EUR 13.5 billion. Slides 12 to 14 present detailed information regarding net interest income intrinsics, which makes us confident about the 2026 trends. In a nutshell, our growing loan and bond books mitigated the material drop in base rates. Moreover, time deposits downward repricing is driving funding costs lower. Overall, the NII intrinsics in the first half lead us to reconfirm our 2025 guidance of EUR 1.9 billion NII with 2026 guidance of EUR 1.9 billion, presenting upside. Turning on Slide 15. Our cost management is trending as per the budget. Overall, we remain very cost conscious and on track with our annual target. Slide 16 provides a summary of our asset quality indicators. Our NPE ratio stands at 2.6% with NPE coverage at the level of 67.5%. The organic cost of risk shaped at 50 basis points in the second quarter, in line with our annual target. Piraeus enjoys superior liquidity profile presented on Slide 17. Our liquidity ratios remain solid as evidenced by the high balance of deposits at EUR 63 billion and the 2006 liquidity coverage ratio. Moreover, we are the Greek bank with the highest green bond issuance totaling EUR 1.65 billion. Turning to our capital base on Slide 18. Our CET1 ratio stood at 14.4% at the end of June, absorbing best-in-class loan growth, 50% distribution accrual and accelerated DTC amortization. On Slide 19, our MREL position now stands at 30.4% with approximately 300 basis points buffer to the requirement. On Slide 20, we depict the key financial KPIs that will be impacted from Piraeus' acquisition of Ethniki Insurance. To remind for those that are new to the Piraeus developments that in March 2025, we entered into a share purchase agreement to acquire a 90% stake in Ethniki Insurance from CVC. The consideration for the transaction is EUR 600 million in cash on a 100% basis. The Ethniki Insurance acquisition will further diversify our revenue sources and enhance value for our shareholders while it is estimated to be earnings per share and return on tangible equity accretive by more than 5% and 1%, respectively, without any synergies included yet. Post the transaction, Piraeus CET1 ratio is expected to land at the level of 13% and subsequently move higher. The transaction is subject to approvals of the competent regulatory authorities, and we are working diligently to conclude all required steps by the end of 2025. On Slide 21, we present an update on Snappi's progress. The platform is already in use while its commercial launch is expected in the third quarter of 2025. On Slide 22, there is a summary of our KPIs demonstrated that we are in line or outperforming in some areas, our 2025 financial targets. Our strong results position Piraeus well among the broader group of regional peers. To give you some context on Slide 25 to 33, we present the key metrics for Piraeus versus domestic and regional peers. We benchmark ourselves in terms of return on average tangible book value, credit expansion, net interest margin, net fee margin, fees over revenues, cost-to-core income ratio, NPE ratio, cost of risk and capital ratio. In all KPIs, we are either at par or best-in-class, while we are growing at an accelerated pace. We expect to generate significant value for our shareholders. And with that, let's now open the floor to your questions.
Operator: The first question is from the line of Eleni Ismailou with Axia Ventures.
Eleni Ismailou: Congratulations for this set of results. So given the strong loan growth year-to-date and a robust pipeline, particularly in corporates and the resilient spreads, how should we interpret the decision not to upgrade your full year '25 NII guidance at this stage? You've already flagged the FX drag and the expected rate path. So is it a case of conservatism? Or are there any other offsetting factors that we should be mindful of going into the second half of the year?
Theodoros Ch. Gnardellis: Eleni, the NII is actually trending. Well, we have seen a drop of about EUR 7 million, something under 2% between quarter 1 and quarter 2. Indeed, the extra volumes are mitigating the rates drops to a large extent. The guidance of EUR 1.9 billion for this year, I would say, stands given the fact that we had accelerated rate cuts on the risk-free area versus what was originally anticipated. But what we like is that we have now reached, I would say, the low point area. So we're looking at a stable, resilient NII that if one annualize and extrapolates can calculate the EUR 1.9 billion. We're excited about the extra volumes, what that means for the balance sheet and overall for the intrinsic economy and what that would do to 2026. So given the situation, we do expect upside in 2026, given the fact that we will enter at the terminal rate that we're originally budgeting, so it looks, but with increased volumes. So overall, 2025 on guidance with a rather stabilizing profile. And in a few months' time, once we know more and we have done the work on 2026, we'll come back and tell you what that means for the coming years.
Operator: The next question is from the line of Sevim Mehmet with JPMorgan.
Mehmet Sevim: Maybe just following up on the first question on the 2026 NII. [ Theo ], you guys are now guiding for or signaling some upside to the EUR 1.9 billion guidance. If you could please share a bit more on the underlying assumptions here and also, if you can, the magnitude of this upside, that would be very helpful. And my second question is on the buyback. Obviously, a pleasant surprise. I just wanted to see if there's any particular reason for bringing forward the timing of it, considering obviously the Ethniki Insurance deal also is expected to close around that time. And just to confirm that this is clearly as part of the EUR 500 million plus distribution plan for this -- out of 2025 earnings, right? So it will not be on top of the planned distribution that we would see next year.
Theodoros Ch. Gnardellis: I mean, so the upside, if we believe that the terminal rate will be in the area of 1.75% to 2% as we have budgeted, then you basically need to make an assumption as to what the volumes will be like. EUR 1 billion of extra credit on a run rate basis means EUR 20 million to EUR 25 million extra NII given the spread. With the assumption on deposits, bonds, et cetera, and assuming a steady rate, we're looking at EUR 50 million to EUR 70 million upside on the NII for 2026, given what we've discussed. Now whether that rounds to 2.0 or 1.9 plus, I mean we're going to talk about it in the coming months.
Christos Loannis Megalou: And Mehmet, on the buyback Look, I mean, in 2025, we are already running with a distribution of EUR 500 million, which is about EUR 0.40 per share. We decided to give to our shareholders the opportunity through the buyback to do this EUR 100 million as part of -- which is part of the EUR 500 million, given your question rather than wait for the cash payment, which could have been in June of 2026. Also, we believe it will have a positive effect because it will help with the EPS of next year. So an early dividend repayment, which compensates our shareholders for being with us.
Operator: The next question is from the line of Kemeny Gabor with Autonomous Research.
Gabor Zoltan Kemeny: Just a follow-up on the buyback point, please. How do you think about the split of your distributions going forward from '26 between cash buybacks and dividends? And also if you could comment on any upside to the 50% total payout from here. The other question I had was on Ethniki Insurance, please. If you could comment on what are your latest thoughts on the contribution of the new insurance business to your results. I mean I saw the 2024 statements of Ethniki and I think they were relatively close to breakeven. So it would be just helpful if you could walk us through again on how you think about their contribution from next year.
Christos Loannis Megalou: Gabor, on the buyback, this is a decision that we would like to be in a position to take on an annual basis, depending on where our share price stands at tangible book value and taking into account cash distribution level. So it is going to be assessed annually and decisions will be made. And at this stage, we cannot say anything more than just stick to the 50% distribution line that we have been maintaining and for which we are actually taking into account in our numbers. And Gab, on your question on Ethniki P&L and prospects. In Page 20, we have incorporated what the current business plan of Ethniki prescribes which, of course, has various commercial assumptions that will be, kind of, reviewed in the future. But that said, they're still on plan. So what they've done in 2024 has to do with the transformation and overall reserve management, we believe that they're on track for the 2025 target. And going forward, the expectation for a EUR 90 million EBIT contribution for 2027, as far as we understand, stands. Of course, as we've said, everything will be reviewed and redone given their combination with the franchise of the Piraeus Bank after the transaction is completed.
Operator: The next question is from the line of Skhirtladze Salome with Bloomberg Intelligence.
Salome Skhirtladze:
Bloomberg Intelligence: I have actually 2 questions. Number one, on the loans. Could you break down the growth drivers and so far which part and what part of the loan growth comes from the RRF? And the second question is on the NII. If you could explain how the portfolio -- securities portfolio hedging works? Is it like 100% interest rate hedged over the full year? Or shall we expect some income -- net interest income pressure from the portfolios in the second half of the year?
Christos Loannis Megalou: Salome, just on Page 8, we have a pretty granular description of where this credit expansion comes from. And as you see, I mean, it's divided by sector and by number of customers. We have a pretty good SME credit expansion number. And overall, pretty granular across sectors, let's say, growth. Now the RRF number out of this is about EUR 100 million per quarter. That's what we are expecting also to be for the future.
Theodoros Ch. Gnardellis: And Salome, your question on NII, if we look at Page 12, I think we can -- and we look at the bond line, we'll see that despite the rate drops that we've had in quarter 2 and quarter 1, the bond book contribution to the overall NII is quite resilient, actually increasing. That is basically because the hedge ratio on the bond book has been reduced substantially in terms of protecting the NII against rate drops, and that's why it's increasing. On the contrary, we have the opposite. We have nonmaturity deposit hedges that are actually contributing positively to the NII. So quarter 2, we had an EUR 11 million contribution versus what was EUR 1 million in quarter 1. That's a few lines further down. So overall, we still have a floating and NII-sensitive balance sheet to rate cuts, but much more contained given the fact that we have reduced hedges on bonds and instead early introduced nonmaturity deposit hedges on liability.
Operator: The next question is from the line of Butkov Mikhail with Goldman Sachs.
Mikhail Butkov: My first question is on volumes. So if we look at your guidance -- updated guidance for the full year, it would imply that for the second half of the year, you expect to deliver more than EUR 600 million volumes compared to 2.2 billion in the first half of the year. It looks like that usually Greek banks comment that the second half of the year is seasonally strong. So to this end, I would like to ask, do you expect this -- is this slowdown which you expect in the second half is driven by some underlying assumptions or maybe the front-loading of some volumes from the second half to the first half? Or it's rather a conservative approach and the number could be possibly higher if it's a conservative approach? And then also on NII, just alluding to what you mentioned about EUR 50 million to EUR 70 million potential upside next year and also your sensitivity, which you disclosed of EUR 30 million to 25 basis point cut. Would it be fair to say that even at the level of rates of 1.5%, you would expect your NII guidance to stay at 1.9% at least for 2026? So these 2 questions.
Christos Loannis Megalou: Mikhail, on your first question on the volumes, it's fair to say it is a conservative approach. We actually indicated above EUR 3 billion. Obviously, if you look at the run rate, it's much higher than that. But we want to be conservative in our approach, and we are talking above EUR 3 billion with a lot of risk to the upside.
Theodoros Ch. Gnardellis: And Mikhail, yes, I mean, a very fair point and actually well calculated indeed, even at 1.5%, the EUR 1.9 billion NII for 2026 looks quite a confident estimate. We will see what happens to the terminal rates, and that's why we refrain from coming out with 2026 guidance this time around.
Mikhail Butkov: Good. And just one last simple question on buybacks. So do you cancel all of the shares? What's your strategy there?
Theodoros Ch. Gnardellis: Yes. The shares all will be bought and canceled within Q4 and before the completion of the reverse write-down.
Operator: The next question is from the line of Demetriou Alex with Jefferies.
Alexander Demetriou: Two questions, please. So firstly, on the FICO status. Can you just -- have you started the process to obtain this yet? And just any comments on the timing of when you could have this approved? Secondly, so there have been some press reports commenting that the regulator may require banks to reclassify mortgages with step-up arrangements. Could you just comment on your exposure here and how this could potentially impact your NPE ratio?
Theodoros Ch. Gnardellis: Nothing to comment on FICO status. It's not actually a process that banks trigger. It is an assessment that it happens on a stand- alone basis by supervisory authorities. What we care about is intensifying our risk management profile and framework so that we can command and control the additional risk that come with owning a large insurance company like I think is what is the case. So we're mostly focused on the integration and the upgrading of our internal governance and risk management skills rather than supervisory classifications that are not up to us anyway. On your question on step-ups, yes, we do have exposures of increasing payment requirements in the future. These are well-performing exposures and have been since the restructuring during the years of crisis and COVID. We will be proactively attempting to reprofile those mortgages. And in that effort, we will have additional costs that will come with it. That's why we took a EUR 45 million post model adjustment on cost of risk and keeping it at 50 basis points this time around. We expect potentially an equivalent amount to be taken in half 2 within the cost of risk guidance of 50 basis points. That amount has been estimated to be enough to counter any additional impairment requirement from such exposures, including Swiss franc mortgages that, as I'm sure all of you have read, the government is now regulating an opt-in solution for borrowers to take.
Operator: [Operator Instructions] The next question is from the line of Memisoglu Osman with Ambrosia Capital.
Osman Memisoglu: Just a quick one on your Slide 23 on the new guidance. I see your CET1 guidance has come down slightly. Just wanted to check what's driving that? Any color there would be helpful.
Theodoros Ch. Gnardellis: Osman, yes, I think you're talking about CET1 being approximately 14.5% guidance versus higher than 14.5%. It's really driven by the higher volumes that we're taking and the higher growth on loans. So we're burning extra capital. We're taking in -- we're burning extra capital on the additional loan growth that we've been experiencing, and we believe we will continue to experience in half 2.
Operator: The next question comes from the line of Nellis Simon with Citibank.
Simon Nellis: Just a follow-up on the Swiss franc mortgage issue. Have they decided what discount that is going to be applied? Or is that still yet to be decided? And how conservative are you -- I mean, how confident are you that the post model adjustment times 2 is enough for the full year?
Christos Loannis Megalou: The final regulation has still to come out. What we understand is that the discount will range between -- on an average basis between 10% and 15%. What we've assumed is a 60% take-up on a CHF 500 million book. So approximately CHF 300 million of Swiss franc loans, we'll opt in for that with an expected cost of EUR 40 million to EUR 45 million. So hence, the first PMA adjustment over- covers for that. And then the second one that we will potentially do in half 2 will cover other reprofiling that we will do on euro- denominated mortgages.
Operator: [Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Megalou for any closing comments.
Christos Loannis Megalou: Thank you all for participating in our first half 2025 results conference call. We look forward to discussing with all of you physically and virtually during our investor outreach program commencing as of early September. In the meantime, please enjoy some time off. Thank you.
Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.