Piraeus Financial S A : Q1 2024 - Financial Results Press Release ()

PRESS RELEASE

First Quarter 2024

Financial Results

30 April 2024

Q1.24: delivering on our strategy and guidance, paving the way for increasing distribution

Robust profitabilityOperating efficiency

16.5%	€0.21	29%	-5%
normalized return	normalized	cost-to-core	normalized OpEx
over tangible book	earnings	income	YoY
value	per share

-12%

G&A costs

YoY

	Organic capital generation			Solid asset quality

+0.8%

QoQ

18.5%	3.5%
total capital ratio	NPE ratio

17bps

underlying cost-of-risk

	Performing book expansion			Client assets under management

+€1.6bn

YoY

+6%	€10.0bn
performing loans	Mar.24
YoY

+33%

YoY

Financial Results | First Quarter 2024

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Q1 2024 highlights

• Q1 marks a quarter of quality profitability, with normalized EPS of €0.21 and RoaTBV 16.5%, against full year 2024 targets of c.€0.80 and c.14% respectively
• Net interest income amounted to €518mn, up 16% yoy, with resilient customer margins; time deposits cost stood at 2.1%
• Net fee income amounted to €145mn, up by 19% yoy and 1% qoq, driven mainly by asset management, bancassurance and investment banking fees
• Recurring operating expenses reached new record-low quarterly level of €193mn, -5% yoy, on the back of our continued cost optimization efforts
• Historic low organic cost of risk of 51bps. Excluding NPE servicing fees and synthetic securitization costs, underlying cost of risk landed at the lowest ever 17bps
• Solid asset quality, with NPE ratio at 3.5% and prudent NPE coverage at 60%, up 5 percentage points yoy
• Good start in loan disbursements at +€2.1bn up 6% yoy, offset by high repayments (-€2.3bn) as per expected Q1 seasonality; performing loans up by €1.6bn yoy to €30.0bn, with strong pipeline ahead
• Organic capital generation of 0.8% before one-offs and distribution accrual; CET1 ratio at 13.6% and total capital ratio at 18.4% in Mar.24, including 25% distribution accrual; pro forma for the RWA relief from the NPE sales to be completed in the forthcoming period, CET1 ratio stood at 13.7% and total capital ratio at 18.5%. The respective pro forma MREL ratio reached 26.0% in Mar.24, already meeting the Jan.25 requirement of 24.9%
• Client assets under management increased further 8% qoq and 33% yoy, to €10.0bn, driven by mutual fund and private banking inflows
• Superior liquidity profile, with liquidity coverage ratio at 241%, and loan-to-deposit ratio at 62%

Financial Results | First Quarter 2024

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CEO Statement

"2024 started strongly for Piraeus, with the first quarter confirming good progress towards achieving our full year targets. In Q1 we delivered another solid set of financial results, generating €0.21 normalized earnings per share and 16.5% RoaTBV. Piraeus has achieved sustainable risk- adjusted profitability and capital accumulation, through diversified revenue sources and cost discipline, while maintaining prudent credit risk management.

Our top line exhibited resiliency, with net interest income remaining at a high level, while our strategy to boost fees continues to be market leading, as we increased net fee income over assets to 76bps in Q1. Our efforts towards operational efficiency kept our cost-to-core income at 29%, which is best-in-class in the European banking market, for yet another quarter.

The highlight of this set of results was the cost of risk, which dropped to the historically low level of 17bps, or 51bps including NPE servicer fees and synthetic securitization costs, an outcome of the successful management of NPE inflows. Our NPE ratio was maintained at 3.5% and NPE coverage at 60%.

Our performing loan portfolio grew 6% year on year, with strong pipeline ahead. Our leading position is confirmed by our disbursements utilizing EU's RRF and "My Home" program, which combined are at c.€0.5bn. Client assets under management increased to €10bn in Q1, on the back of our extensive expertise in this field.

Q1 has been a milestone quarter, as Piraeus returned to full privatization status with the successful offering of 27% of our share capital held by the HFSF. The total size of the transaction amounted to €1.35bn, the largest bank privatization transaction in recent years in Greece, with total demand at c.€11bn, far beyond any expectation.

Finally, I am very happy to announce that 2024 is expected to be the first year after 16 years that Piraeus will pay a cash dividend to its shareholders amounting to c.€80mn for 2023 results. The relevant application for approval has been submitted to the ECB in mid-April, ahead of our AGM in June. At the same time, our quarterly capital generation has driven the CET1 ratio to 13.7%, while stepping up the accrual for 2024 planned shareholder distribution to 25%.

We continue to raise our aspirations and focus on creating value for our shareholders, ensuring Piraeus' ongoing support to its customers and the broader Greek economy."

Financial Results | First Quarter 2024

Christos Megalou

Chief Executive Officer

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Financial Highlights

SELECTED P&L FIGURES1 | GROUP (€mn)	Q1.2023	Q4.2023	Q1.2024
Net Interest Income	447	537	518
Net Fee Income2	122	144	145
Net Trading Result3	10	32	(4)
Other Οperating Result4 (incl. dividend)	(1)	10	(23)
Total Operating Expenses	(203)	(196)	(193)
Pre Provision Income Normalised	374	526	442
Organic Cost of Risk	(75)	(53)	(46)
Impairment on Other Assets (incl. Associates Income)	(21)	(47)	(6)
Profit / (Loss) Before Income Tax Normalized	278	426	390
Profit / (Loss) After Tax Normalized5	204	326	279
One-off Items and Tax Normalization Adjustment6	(24)	(115)	(46)
Reported Net Profit Attributable to Shareholders	180	211	233

BALANCE SHEET & CUSTOMER FUNDS | GROUP (€mn)	31.3.23	31.12.23	31.3.24
Total assets adjusted	74,680	75,500	77,250
Gross Loans7	36,824	38,398	37,198
Performing Exposures (PEs)7	28,348	30,134	29,993
HAPS Senior Tranches	6,034	5,984	5,903
Non Performing Exposures (NPEs)7	2,442	1,329	1,303
Net Loans (excl. OPEKEPE Agri Loan)	35,464	36,629	36,414
Customer Deposits	57,174	59,567	58,591
Tangible Book Value (TBV)	5,825	6,351	6,589
TBV per share (€)	4.66	5.08	5.27
Total Equity	6,765	7,353	7,591
Assets Under Management8	7,554	9,311	10,037

FINANCIAL KPIs | GROUP	Q1.2023	Q4.2023	Q1.2024
EPS (€) Νormalized (adjusted for AT1 coupon payment)	0.15	0.25	0.21
Net Interest Margin	2.4%	2.8%	2.7%
Net Fee Income / Assets	0.7%	0.7%	0.8%
Cost-to-Income Ratio (Core)	36%	29%	29%
Organic Cost of Risk	0.8%	0.6%	0.5%
o/w underlying CoR	0.4%	0.3%	0.2%
NPE Ratio	6.6%	3.5%	3.5%
NPE Coverage	56%	62%	60%
RoaTBV Normalized (adjusted for AT1 coupon payment)	13.3%	20.0%	16.5%
CET1 Ratio9 (pro forma)	12.2%	13.3%	13.7%
Total Capital Ratio9 (pro forma)	17.0%	18.2%	18.5%

COMMERCIAL KPIs | GROUP	31.3.23	31.12.23	31.3.24
Branches	403	394	391
Employees	8,742	8,053	7,884
# Clients (mn)	5.7	6.2	6.3
Winbank online transactions, # Clients, avg. (ths)10	776	863	860

1 P&L figures are presented on a normalized basis.

2 Net fee income includes rental income and income from non-banking activities.

3 Q1.2024 net trading result includes a loss of € 8mn relating with the repurchase of €294mn of the 2019 Tier 2 at 102%, following a tender offer in Jan.24.

4 Q1.2024 other operating result and impairment on other assets incorporate charges related with the increase in lease liabilities concerning the Group's subsidiary Picar.

5 Normalized profits are calculated under an assumption of normalized tax rate for 2023 (an effective corporate tax rate of 26% is used, based on Piraeus' BP assumptions for 2023). For Q1.2024, normalized profit incorporates also tax rate of 29% on the one-off items (analysis in the respective APM).

6 One-off items and tax normalization adjustments are analyzed in the APMs section.

7 Gross loans, performing exposures, NPEs and net loans include loans and advances to customers measured at FVTPL. Gross loans and NPEs Include also the HAPS senior tranche. For 31.12.2023, gross loans also include the OPEKEPE seasonal agri loan.

8 Assets under management include MFMC assets, PB assets, Brokerage and Custody.

9 Capital ratios pro forma for the RWA relief from the NPE securitizations and sales to be completed in the forthcoming period, mainly projects Solar, Monza and Delta.

10 Refers to average number of clients conducting online transactions via winbank on a per week basis.

Financial Results | First Quarter 2024

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P&L Highlights

NII up 16% yoy, underpinned by loan rates and the bond portfolio

				537	518
	447	488	531	541	539
NII excl. NMD
NMD cost
				(4)	(21)
	Q1.23	Q2.23	Q3.23	Q4.23	Q1.24

• Non maturing deposit hedging cost corresponds to €10bn IRSs executed during Dec.23 and fully phased in Q1.24

Net interest income (NII) in Q1.24 stood at €518mn, down 4% qoq and up 16% yoy, driven by resilient customer margins and low deposit beta, despite the impact from the full phasing of the group's deposit hedging strategy (€21mn cost in Q1.24, compared to €4mn in Q4.23). Time deposits cost were flattish in Q1.24, at 2.1%, while currently new time deposits are priced at above 2.5%. Overall, NIM over assets remained at high level, standing at 2.71%, compared to 2.77% in the previous quarter and 2.42% a year ago.

Net fee income over assets at 0.76%

141 140 144 145

122

Q1.23

Q2.23

Q3.23

Q4.23

Q1.24

• Net fee income includes rental income and income from non-banking activities

Net fee income exhibited a solid performance, amounting to €145mn in Q1.24, up 1% qoq and 19% yoy. Growth in the quarter was driven by asset management, bancassurance and investment banking fees, while rental income also improved. NFI over assets stood at the level of 0.76%, up 2bps vs. the previous quarter and up 9bps compared to Q1.23.

Financial Results | First Quarter 2024

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P&L Highlights (cont'd)

Recurring operating expenses down 5% yoy, reaching all-time quarterly low

		203	199	194	196	193
		109	105	100	91	102
Non-HR costs
	94	94	94	105	91
HR costs
		Q1.23	Q2.23	Q3.23	Q4.23	Q1.24

• Operating expenses depicted on a recurring basis

Operating expenses reached €202mn in Q1.24, down 2% yoy, although burdened by one-off costs related to staff voluntary redundance costs. Excluding this, recurring operating expenses reached the all-time low level of €193mn, down 5% yoy, on the back of ongoing cost cutting initiatives and resources optimization. Recurring staff costs were down 2% yoy at €91mn, with the Group's headcount totaling 7,884 employees as at 31 March 2024, of which 7,501 were employed in Greece. Headcount in Greece was reduced by more than 700 employees, mainly through the utilization of voluntary exit schemes. Furthermore, G&A costs declined by 12% yoy to €73mn, driven by cost efficiency efforts that offset inflationary headwinds, plus zeroed deposit guarantee costs. Depreciation expenses increased 9% yoy as expected, driven by ongoing digitization efforts. As a result, cost-to-core income ratio on a recurring basis remained at 29% for a third consecutive quarter, vs 36% a year ago.

Cost of risk dropped to historic low levels

		84bps	114bps	84bps
					58bps		51bps
				37
		44			32
	Fees
				77			31	34
	Underlying	40			52
				27
						17
		Q1.23	Q2.23	Q3.23		Q4.23		Q1.24
*Q2.23 underlying cost of risk impacted by a corporate default case

The Q1.24 underlying loan impairment charges, excluding impairment loan charges related with NPE sales, NPE servicer fees and synthetic securitization costs, decreased to the lowest-ever level of €15mn, vs. €25mn in the previous quarter and €36mn a year ago, on the back of solid organic NPE management and breakeven new NPE formation. Impairment losses of €12mn in the quarter were associated with the Solar HAPS transaction. Organic cost of risk over net loans (including servicing fees) stood at 51bps, vs 58bps in the previous quarter and 84bps a year ago.

Financial Results | First Quarter 2024

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Balance Sheet Highlights

Accelerated new loan origination and increased repayments in Q1

Net PE movement +€1.6bn

28.3	30.1	+2.1		+0.1	30.0
		-2.3
		+6% yoy	€0.8bn seasonal
			prepayments
Mar.23	Dec.23	Disbursements	Repayments	Other	Mar.24

Piraeus' performing loan portfolio increased by 6% yoy in Q1.24, reaching €30.0bn, although it decreased marginally compared to the previous quarter. The latter is mainly attributed to seasonality, as increased repayments offset the good start of the year in loan disbursements. The vast majority of disbursements were channeled to businesses, with trade, transportation, manufacturing and energy accounting for the largest share. It is noted that the gross loan figure as at Mar.24 includes €5.9bn of senior notes associated with the NPE securitizations concluded until now, namely Phoenix, Vega, Sunrise 1, Sunrise 2 and Sunrise 3.

Customer deposits maintained at solid levels

Customer deposit movement (€bn)

58.4		+1.2	+0.3	+0.9	59.6		58.6
	-1.2					-1.0
Dec.22	Δ Q1.23	Δ Q2.23	Δ Q3.23	Δ Q4.23	Dec.23	Δ Q1.24	Mar.24

Customer deposits remained at a solid level, amounting to €58.6bn at the end of Mar.24, up 2% yoy and down 2% qoq, impacted by early year seasonality. Overall, the Group's diversified and stable deposit structure is a key strength, with mass retail client segment consisting 51% of the total deposit base.

Financial Results | First Quarter 2024

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Balance Sheet Highlights (cont'd)

NPE ratio remains at the low level of 3.5%

NPE coverage (%)	56.8%	57.3%	61.6%	60.2%
55.7%
NPE (%)
6.6%	5.5%	5.5%	3.5%	3.5%
2.4	2.0	2.0	1.3	1.3

NPE (€bn)
Q1.23	Q2.23	Q3.23	Q4.23	Q1.24

The Group's NPEs stood at €1.3bn at the end of March 2024, compared to €2.4bn a year ago. The yoy reduction was driven by frontloading and accelerating NPE clean-up transactions, as well as positive results from the organic effort. The NPE ratio remained at 3.5% compared to 6.6% a year ago.

Strong liquidity and funding profile

LCR (%)

TLTRO (€bn)

201%	220%	241%	241%

5.5	5.5	3.5	3.5
Dec.22	Mar.23	Dec.23	Mar.24

at c.200%, adjusted for €3.5bn TLTRO repayments

€2.5bn mature in Jun.24 €1.0bn matures in

Dec.24

LDR (%)

62%

62%

61%

62%

Piraeus Group Liquidity Coverage Ratio (LCR) stood at the very satisfactory level of 241% as at end Mar.24. The strong liquidity profile is also reflected on the Group's net loan-to-deposit ratio, standing at 62% at the end of March 2024. The Group's TLTRO outstanding amount remains at €3.5bn, of which €2.5bn mature in June 2024 and €1.0bn in December 2024.

Financial Results | First Quarter 2024

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Capital position

Organic profitability drives the capital base growth

Capital trajectory (%)

CET FL

11.6%	13.3%	0.9%		13.7%
(0.1%)		(0.2%)
	(0.2%)
		+0.8% run rate		25% accrual

Dec.22	Dec.23 Normalized Other	One-offs Distribution Mar.24
	PnL

• CET1 capital ratios as of Dec.23 and Mar.24 displayed on a pro forma level, for the RWA relief arising from the NPE portfolio sales to be completed in the forthcoming period; "other" includes delta of reserves and prudential deductions (such as NPE calendar provision shortfall). Mar.24 CET1 capital incorporates €70mn cumulative deduction for NPE calendar shortfall related with Greek State Guaranteed exposures of €0.7bn net book value (Note 29 of the
  Q1.24 Interim Financial Statements)

The Common Equity Tier 1 (CET1) of the Group increased to 13.6% at the end March 2024, vs. 13.2% at the previous quarter and 12.2% in March 2023, mainly driven by organic capital generation. The total capital ratio stood at 18.4%, comfortably above capital requirements, as well as supervisory guidance. Proforma for the RWA relief from the NPE sales to be completed in the forthcoming period, CET1 ratio stood at 13.7% and total capital ratio at 18.5%.

Further information on the financials & KPIs of Piraeus Group can be found on the Q1.2024 Financial Results presentationand the First Quarter 2024 Interim Financial Statements that is expected to be available on the company's websiteon 30 April 2024.

Financial Results | First Quarter 2024

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