Piraeus Financial Holdings has announced its strongest quarterly and semiannual results to date, with a net profit of €333 million for the second quarter and €612 million for the first half of 2024. These results have enabled the company to distribute a cash dividend of €72 million to its shareholders. The firm has also regained its investment-grade rating and achieved significant milestones, such as meeting the final Minimum Requirement for own funds and Eligible Liabilities (MREL) 1.5 years ahead of schedule and acquiring a pan-European license for its digital platform, Neo Bank Snappi.
Key Takeaways
- Piraeus Financial Holdings achieved a net profit of €333 million in Q2 and €612 million for the first half of 2024.
- Shareholders received a cash dividend of €72 million.
- The company regained its investment-grade rating and met MREL requirements early.
- Piraeus Bank acquired a pan-European license for Neo Bank Snappi.
- The bank reported a record €0.26 earnings per share in Q2 and a 19% return on average tangible book value.
- Recurring net revenue grew by 10% in the first half, with operating expenses down by 3% YoY.
- The bank's CET1 ratio reached 14.2%, and the total capital ratio stands at 19%.
Company Outlook
- Piraeus Bank has increased its guidance for return to 16%.
- The bank is positioned well among its regional peers.
- Basel IV regulations will start impacting the bank in 2025.
- Snappi, the bank's digital platform, is expected to launch in Q1 2025.
Bearish Highlights
- The bank expects some compression in yields due to future Euribor cuts and spread erosion.
- There is potential for deterioration in the second half of the year.
- Basel IV impact includes a higher risk-weighted asset of €1.4 billion on day one.
Bullish Highlights
- Positive trends in mortgage business with an increase in balances quarter-on-quarter.
- Loan yields have remained resilient due to delayed impact of Euribor cuts.
- The bank's CET1 ratio has reached its target level of 14%.
- Profitability of the franchise outpaced the growth in capital.
Misses
- The bank remains cautious and has allowed for potential deterioration in the second half.
- An increase in RWAs this quarter was a technical adjustment.
Q&A Highlights
- Substantial reversals in provisions and curing in the hospitality sector in the first half.
- Stable growth in asset management products with customers migrating from time deposits.
- The bank expects government initiatives to drive mortgage lending growth.
- Future issuances of senior bonds are planned.
Piraeus Financial Holdings, with its ticker symbol not provided, has demonstrated a robust financial performance that reflects its strategic initiatives and operational efficiency. The company's expansion of its performing loan book by €1.2 billion and the increase in assets under management to €10.4 billion underscore its growth trajectory. With the upcoming launch of Snappi and a keen eye on regulatory impacts and market trends, Piraeus Financial Holdings is poised to continue its positive momentum in the financial sector.
InvestingPro Insights
Piraeus Financial Holdings, known by its ticker BPIRY, has shown remarkable financial strength in its recent earnings report. To provide a broader perspective on the company's performance and stock potential, we turn to insights from InvestingPro. According to InvestingPro Tips, analysts have recently revised their earnings upwards for the upcoming period, which may signal confidence in the company's future performance. Additionally, BPIRY is currently trading at a low earnings multiple, suggesting that the stock could be undervalued relative to its earnings potential.
From a data standpoint, InvestingPro provides key metrics that further illuminate the company's financial status. BPIRY boasts a market capitalization of $5.21 billion, underlining its significant presence in the market. The company's price-to-earnings (P/E) ratio stands at an attractive 4.55, which is adjusted to 4.35 for the last twelve months as of Q2 2024. This low P/E ratio corroborates the InvestingPro Tip regarding the stock's potential undervaluation. Moreover, the revenue growth for the last twelve months as of Q2 2024 was a healthy 9.34%, indicating the company's ability to increase its sales effectively.
For investors seeking more in-depth analysis, InvestingPro offers additional tips on BPIRY, which can be accessed for further guidance on the company's stock. These insights, combined with the robust earnings and strategic milestones achieved by Piraeus Financial Holdings, paint a comprehensive picture for those considering investment opportunities in the banking sector.
Full transcript - Piraeus Bank SA (OTC:BPIRY) Q2 2024:
Operator: Ladies and gentlemen, thank you for standing by. I am Meena, your Chorus Call operator. Welcome, and thank you for joining Piraeus Financial Holdings Conference Call and Live Webcast to present and discuss Piraeus's First Half 2024 Financial Results. 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 Megalou: Good afternoon, ladies and gentlemen and good morning to those joining us from the US. This is Christos Megalou, Chief Executive Officer and I'm joined today by our CFO, Theo Gnardellis; Chryss Berbati; and Xenofon Damalas of our IR team. Piraeus has delivered the best quarterly and semiannual performance ever with €333 million normalized net profit in the second quarter adding to €612 million for the first half of the year. Our strong operating performance in the first half of 2024 demonstrates our progress towards achieving or exceeding our full year targets. 2024 is turning into a milestone year for Piraeus. Following the return to full privatization status, the group paid a cash dividend to its shareholders in the second quarter amounting to €72 million for the first time after 16 years, while recently the bank has regained the investment grade rating after 14 years. On top Piraeus has become the first Greek bank to meet the final MREL requirement 1.5 years ahead of target. Furthermore, the successful acquisition of the pan-European license for the Neo Banks Snappi marks a significant step in our development and a new era in our journey to become part of the new banking landscape in Europe. Finally, we are proud that Piraeus turnaround story and its leading role in the Greek market have been recognized by the prestigious International Magazine Euromoney awarding Piraeus the titles of, The Global Best Bank Transformation, Best Bank in Greece and Best Bank in Greece for Corporate Responsibility. Let's dive now into our second quarter and first half 2024 results. In the second quarter, Piraeus delivered a solid set of financial results with substantially enhanced top-line while our focus on cost containment and operating excellence remains. I am proud of our results and thank all of our people for their hard work. Now let's turn to slide 5 for the key achievements of our second quarter and first half performance. We generated a record normalized earnings of €0.26 per share in the quarter up 42% year-on-year and €0.47 per share in the first half compared to full year guidance of €0.85. We achieved a return on average tangible book value of 19% in the second quarter which brings the first half figure at 18% running ahead of the full year target of 15%. We delivered 10% recurring net revenue growth year-on-year in the first half benefiting from strong growth of client balances. Operating expenses in the first half were reduced by 3% year-on-year at recurring level with cost to core income ratio at 29%, best-in-class in Greece, and among the best in Europe on the back of our cost discipline efforts that offset inflation and investments. Importantly, cost of risk was maintained at low levels standing at 19 basis points in the first half excluding NPE service fees and synthetic securitization costs and outcome of the successful management of NPE inflows. Overall, asset quality dynamics remain solid with NPE ratio further down to 3.3%. We expanded our performing loan book by €1.2 billion in the first half with solid growth in the business book and the third breakeven quarter in the retail book. Our CET1 ratio increased by 50 basis points in the quarter to 14.2% and the total capital ratio stands at 19%, both already meeting our 2024 targets. Our MREL ratio reached 28.3%, following the successful issuance of a new green senior preferred bond in July. Finally, in the first half of the year we increased our assets under management to €10.4 billion already surpassing our end of 2024 target. Slide 6 depicts the financial KPIs that summarize our performance. We have sustained high performance on all KPIs over multiple quarters, a strong signal of the consistent profitability path we are on. Slide 7 covers our earnings results in further detail. As you can see a significant increase in earnings per share resulted in tangible book value per share reaching €5.42 million, up 15% annually enhancing further the value proposition to our shareholders. Slide 9 presents the trajectory of the core P&L lines showcasing solid net interest income and net fee income dynamics, cost discipline, and resilient asset quality with cost of risk at historic low levels for the second consecutive quarter. Slides 9 to 11 present the detailed information regarding net interest income intrinsics with net interest margin at 2.7%. Loan pass-through is stable at the level of 80% and deposit beta settling, up 15% in June 2024 in line with our guidance of 16% average deposit beta for the year. Slide 12, outlines the impressive evolution of our net fee income, which has been supported by loan expansion, cards business, fund transfers and asset management. Net fee income of our assets climbed to a new record high at the market leading level of 93 basis points of their assets in the second quarter. Piraeus's widening outperformance in this metric versus its Greek peers, is the result of our focused strategy on expanding and diversifying our revenue sources and our footprint. Our pursuit of operating efficiency bears fruit, despite the inflationary headwinds, we have managed to maintain cost discipline and keep our operating expenses stable year-on-year in the second quarter, as shown on Slide 13. The strong improvement in our operational efficiency led the cost-to-core income ratio at best-in-class 28% in Q2. Slide 14, provides a summary of our asset quality indicators. Our NPE ratio dropped to 3.3%, with breakeven new NPE formation. Meanwhile, second quarter organic cost of risk dropped to historic below 46 basis points or 21 basis points excluding the NPE servicer fees and synthetic securitization costs. NPE coverage remained at a prudent level of 59%. On Slide 15 to 17, we present the dynamics of our performing loan book. Credit expansion was very strong in Q2, with performing loans rising by €1.3 billion supported by all business lending segments. And as a result, our full year target for €1.6 billion credit expansion is expected to be exceeded. Out of the €3.2 billion, disbursements in the second quarter €1.5 billion went to small, medium enterprises and individuals and €1.7 billion to corporate and shipping. Recovery and resilience fund-related disbursements amounted to €120 billion and there is a strong pipeline ahead. It is a good sign, that the contraction of the mortgage book is accelerating, while retail balances overall in the first half were breakeven helped by My Home, mortgage program. Piraeus has a superior liquidity profile presented in Slide 18 and 19. Our deposit base is granular and of high quality while our deposit mix has remained stable for the past 12 months. Our liquidity ratios remain solid, post the LTRO repayment as evidenced by the 215% LCR, liquidity coverage ratio and the 63% loan-to-deposit ratio, both in the top range of the European spectrum. Turning to our capital base on Slide 20. Our CET1 ratio rose to 14.2% in June 2024. The while accounting for a 30% dividend payout already meeting the end 2024 target. Slide 21, presents our strong MREL position. On Slide 22, you can see how our new wealth and asset management strategy continues to produce strong results with assets under management reaching €10.4 billion at the end of June 2024, recording a 27% increase year-on-year. On Slide 23, we present the latest developments for Snappi, including the European full banking license that was received in June 2024, the first Greek Neo Bank with a relevant license. Snappi's commercial launch is expected in the next six to nine months. Its ambition calls for more than €200 million of revenues and presence in three to four countries in the next five years. Our Slide 24 and 25, you can see analytically the transformation projects that we delivered in the first half of 2024, including our successful rebranding that signals a new era for Piraeus as well as our 2024-2026 transformation strategic initiatives. The improvement of customer experience and customer journeys with Piraeus is a top priority of our strategy. Finally, on Slide 26, there is a summary of our KPIs demonstrating that we are performing in certain areas of our 2024 financial targets. Our strong results mean that we can increase guidance for this year's return to 16% from 15% previously and 14% in the original budget. Our strong results positioned Piraeus well among the broader group of regional peers. To give you some context on Slides 28 to 38, we present the key metrics for Piraeus versus domestic and regional peers. We benchmarked ourselves in terms of return on an average tangible book value, credit expansion, net interest margin, net fee margin, cost-to-core income ratio, NPE ratio, cost of risk and capital ratio. In all KPIs, we are now either at par, or best-in-class, while we are growing our already sound capital buffers 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 comes from the line of Demetriou Alex with Jefferies. Please go ahead.
Demetriou Alex: Hi. Good afternoon and thanks for taking my questions. Just two for me, please. Firstly, so this quarter was very strong for fees especially in the card segment. So is this a new run rate level we should expect going forward? Or are there some temporary benefits here that we saw in 2Q? And secondly, just on mortgages, could you please give us some more color on the demand you're seeing going forward as well as the portion of fixed rate mortgages you are currently writing. Thank you.
Theo Gnardellis: Hi Alex. So this quarter was a particularly strong quarter on cards. This is a it's not a one-off, but it's not the run rate either. But the initiatives that the bank has taken have definitely increased the fee productivity of cards. I would say the truth is somewhere between for a run rate basis between Q1 and Q2. We're looking at the productivity profile of I would say more than €70 million per annum right now from cards.
Christos Megalou: And hi, Alex, just on mortgages. First of all we are quite happy that on average for the first six months. We have managed to reverse the negative trend that we have been seeing consecutive quarters. And we are breaking even in new production over repayments. And this is quite an important trend. This has also been helped by Tospitimou which is My Home where we performed extremely well. And overall we see a trend where individuals, balances are increasing significantly quarter-on-quarter and actually counter the repayments of the historic big vintages that are coming through the mortgage book. So it's a better trend than what we were seeing in the last few years I would say and quarter-over-quarter. And we hope that this will continue.
Demetriou Alex: Okay. Thank you very much and congratulation on a strong result.
Operator: The next question comes from the line of Iqbal Nida with Morgan Stanley (NYSE:MS). Please go ahead.
Iqbal Nida: Hi. Congratulations on the excellent set of results. My first question is on margins, and the resilience that we've seen this quarter. Your loan yields continue to move up this quarter despite lower rates and the Euribor levels. So perhaps if you can just talk about what have been the drivers behind this? And how should we think about the second half of 2024? And in addition with the trends that you're seeing and the upgrade to guidance in June, do you believe there's upside to your 2025-2026 NII guidance? So that's the first question on margins. And then the second question, just wanted a bit of a follow-up on loan growth and the upside that's driving the return on equity upgrade. What are the drivers here versus your previous expectations that have caused the upside surprise? Thank you.
Theo Gnardellis: Hi, Nida. So yeah, I mean it was spotted on margins and overall loans. The yields are quite resilient, even growing, especially when you look at the business side of things which drives as we know the overall book. One thing is first of all the first Euribor, cut is not fully baked in, right? Because it takes time for it to the first one for you to evolve into the book, we haven't seen yet. We do have some spread pressure of about 30-40 basis points on the new production, yet that has not come in. So we're kind of looking at a kind of perfect situation here. Also the mix of the new production is towards higher-yielding products. So that overall is creating this very resilient picture. I would say going forward the Euribor cuts and eventually the spread erosion will compress slightly, I would say the yields. But what we particularly like is that the revenue pools look like well defendable, given the accelerated expansion. So the expansion will be covering in the future to a large extent the margin erosion that will at some point start happening. Now for 2025-2026, I mean, we'll come back to you in future communications. But obviously you're leaving 2024 on a higher run rate than you thought. It depends a lot on the evolution of course of the risk-free. But if you bake all of that in, yes, things are looking good. But let's quantify it later in the year.
Christos Megalou: On -- Nida, hi, thanks for the question. On loan growth essentially we've seen and we continue to see a really granular, let's call it activity, which gives us quite a lot of confidence that we are looking to surpass the current level of net credit growth, as we are indicating in our results. And this gives us confidence, at least between now, and the end of the year. We see that, this will be transformed into the bottom line. And therefore, we came up with a normalized return of tangible book value as we say of higher than 16%. So this basically comes from activity and in a number of areas and sectors. And it's manufacturing, it's trade, it's transportation and that gives us, let's say the confidence to look at the end of the year with, this increased guidance that we put forward. Also RRF is playing a role here, with some pipeline and a number of disbursed already, but also contracted and pipeline RRF numbers that gives us confidence that over the next few quarters things will be materializing most likely above the €1.6 billion net credit expansion that we had at the beginning of the year.
Iqbal Nida: Thank you very much.
Operator: The next question comes from the line of Sevim Mehmet with JPMorgan (NYSE:JPM). Please go ahead.
SevimMehmet: Good afternoon. Thanks very much for your time. I have just a few follow-up questions please. Maybe on loan growth. Clearly, this quarter is very encouraging with the growth that we've seen. When I looked at the sector data and that was I have to say, I haven't seen the June numbers just yet, but the growth at the sector level wasn't that positive. And in fact, there was still a bit of a decline in the corporate book, if I remember correctly. So, if I can ask, how you see the trends at Piraeus right now versus what's going on in the overall sector, and how you would basically compare for example your pricing dynamics your appetite to lend et cetera to the Broad sector trends, if I may. And secondly, on your CET1 ratio clearly this is a big quarter. You've reached your target level now. It seems to be a comfort level of 14% now. And this was as you said also the full year guidance. But now looking at the trends in the second half, can I ask please where you would see it now considering any potential one-off impacts as well as Basel IV for next year that would be very helpful. And one final question that will be on Snappi. Thank you for the update, and congratulations, there on the license. I've seen you're targeting 2.5 million customers there. If I may ask how many of these 2.5 million customers are already in the bank? And if the revenue pool that, you're targeting there is fully incremental, or whether some of these customers are already generating some revenues within the bank. I just wanted to understand, the cannibalization risk there possible? And are you also consolidating this given the JV structure? Or will this be at the subsidiaries line? Thank you.
Theodore Gnardellis: Okay. Well, Mehmet that's three questions in one. Great. Okay. So loan growth the sector has done well in June. So if you check the June numbers, we're pretty much at par with share. We haven't seen the detail yet. Of course, we don't have this luxury coming out first, but it looks like June was also a strong month overall for the sector. So, nothing to write home about there. On the CET1 ratio, look, we said, above 14% for a reason, right? We will be substantially above 14% at year-end. What we do with this extra capital is to be discussed but that's why we're sticking to the guidance of 2025-2026. Basel IV is kicking in 1st of January so there won't be any impact on the December print. Going forward, going into 2025 is when especially in Q1 is where we will start feeling it. So again, the capital is now becoming more of a 2025, 2026 question and then of course a distribution question, which is not to be answered in today's call. Now Snappi, the business model of Snappi is to onboard customers that are not of -- we're addressing the entire Greek market. It is not a Piraeus Bank cannibalization. It is a stand-alone franchise with a stand-alone proposition that addresses particular segments. There might be and according to shares Piraeus Bank customers might move there, but there's no automatic migration that creates an automatic revenue cannibalization. We think given the profile of the customers that this will be marginally extensively incremental to the current P&L from a revenue perspective. And yes, given the 55% share that the group owns, this is consolidated it is a subsidiary. So you will be seeing it in the core lines of the P&L of the group going forward.
Christos Megalou: And just to add on Snappi, we are estimating that the full commercial launch is going to be in Q1 of 2025. And of course, ahead of that, we will be coming with detailed numbers and what we are aiming for. So that's a wait to hear more on this but I can concur, no cannibalization the way we are strategically looking to grow this segment for Piraeus Group.
Sevim Mehmet: That’s super helpful. Thanks very much, Christos. Thank you, Theo.
Operator: The next question comes from the line of Ismailou Eleni with Axia Ventures. Please go ahead.
Eleni Ismailou: Hello, everyone, and congratulations from my side for this very strong set of results, and thanks for taking my question. My first question is a follow-up on the spread of mortgages specifically. As we see a sequential increase of circa 45 bps. Could you help us understand a little bit the drivers behind the movement? So that would be question number one. The second one is on cost of risk. As your guidance or 70 bps for the full year, and in the first half you're well below this guidance. That said, it should be like a one way straight down. So in order to get to the 70 bps you're guiding we need to see a marked deterioration in the underlying cost of risk. So can you speak to the trends that you've seen in the first half of the year and what do you expect would be different in the second half. And the third question, if you could elaborate on the drivers behind the increase in the RWAs for this quarter? And how what course would help you going forward manage your capital level. Thank you.
Theo Gnardellis: Hi, Eleni. So yes, from 509, I think you're looking at Page 45 from 509 to 554. This is really a technical adjustment on the system. It's something that we amended. We looked again at the cash flows the system. It's an IT thing that we kind of fix. There's no kind of commercial change that was done. Going forward, it's a 5.5% yielding book and that's how you should be looking at it going forward. Cost of risk, yes, I mean we're currently running at 50 basis points with a 20 basis points underlying. It's really within the pure cycles or kind of margin of error. There are some cases that will need potential extra cost of risk to be treated in the second half. We did benefit a lot also in the first half from some substantial reversals that we had on provisions and curing that came in especially from the hospitality sector. So yes, I mean I'm not going to say that it's impossible that we come back in Q3 again with 50 basis points. But let's just say, we get some buffer there in the guidance just to make sure that we treat the book if we have an opportunity to improve the asset quality even further. Now on the RWA, yes, I mean the expansion this quarter was, of course, substantial. There's an RWA delta of about €1 billion. Most of that has to do with credit risk. If you look also at the delta outperforming exposures, this is a marginal density of about 75%. I would say going forward when you see the delta, you should add between I would say 60% and 70% to the RWA. This as we saw this quarter is an example of the strength of the profitability of the franchise that with 30% distribution built into it with such a big expansion quarter, we're still largely capital accretive meeting our capital targets. So even with this growth, the profitability outpaces the growth in terms of capital with the current distribution profile and that sets us up very well for the future.
Eleni Ismailou: That’s very clear. Thank you very much for the answer. Thank you and again congratulations for the result.
Operator: Our next question comes from the line of Butkov Mikhail with Goldman Sachs (NYSE:GS). Please go ahead.
Butkov Mikhail: Good day. Thank you very much for the presentation. My question is actually on your assets under management and deposits. So basically your AUMs grew quite quickly over the past 12 months. Do you see any kind of migration from your deposit base into that? And is this migration factors captured in your outlook and guidance on time deposits. And more broadly, how do you look at time deposit developments so far? And are there any changes to your outlook into the next year with regards to time deposits? Yes, Thank you very much to time deposits?
Christos Megalou: Hi, Mikhail, thanks for the question. Look, just to start from the end of your question. We see the mix stable actually and between time deposits and total deposits. And that was let's call it contrary to our original thinking that obviously the time deposits would have been growing faster. It looks like that they have stabilized at the current levels. And that is what we also see towards the end of the year and for the next year looks like. Now on migration, we have been offering a pretty efficient asset management product across the spectrum of risk and also on target maturities, which we're giving to our customer base a lot of alternatives in actually investing on these products instead of time deposits. So we have been able to channel a large part of demand for target maturity and returns to our asset management product and also to our equity product. And the way we see the future going forward, we see this trend obviously to continue. So we were able to come up with the target earlier in the year. Subject to market movements and of course final performance of portfolios. We expect this trend to continue. And of course we're recalibrating our targets towards the end of the year for the 2025 and 2026 going forward. We are pretty happy also with the way these portfolios are yielding for our fees of their assets, which are almost in par with European averages. So that's also another good development in now our asset management book.
Butkov Mikhail: Great. Thank you. Thank you very much for the answers and congratulations on the results.
Operator: The next question comes from the line of Boulougouris Alexandros with Euroxx Securities. Please go ahead.
Alexandros Boulougouris: Yes, hello. Congratulations on my end as well. Most of my questions have been answered. A quick one on mortgage lending which we have seen flattish trends in the quarter. As you mentioned earlier as well, could this imply that we could see also growth reverting to some growth in 2025 given also the government schemes that are in place? Or is that too early to assume? And one more question technical, in your initial guidance you were assuming one-offs for the year of about €100 million if I remember correctly. But in the first half, I think it's very limited the amount, should we expect this to pick up in the second half of BRS or other impairments? Thank you.
Christos Megalou: Hi, Alex. Thanks for the question. Just to say on mortgage lending, the government initiatives are very important. And actually, we take a bigger share of that than our peers in at least the performance up to now in the first round of My Home Tospitimou. We expect that this could be a driver for growth for the rest of the year provided the scheme comes out in the market early enough to be able to account for the year. We hope that this will happen and that's going to be a big help for mortgage lending going forward. Other than that, we expect the same neutral trend to continue until the end of 2024 and hopefully positive look into 2025, but we have to wait until we reach there before we can tell you more about 2025.
Theo Gnardellis: And on your question on one-offs, basically the delta between reported profit and normalized. It's still expected to land at €100 million at year-end all in. So yeah, I would just say between any normalized calculation and reported just share of €100 million.
Alexandros Boulougouris: Got it. Thank you very much.
Operator: The next question comes from the line of Kemeny Gabor with Autonomous Research. Please go ahead.
Gabor Kemeny: Hi. Gabor here. A few follow-up questions from me please. The first one on Snappi. You've flagged the expansion of this Neo Bank going forward. Can you comment on which services do you think would be straightforward to export, and which other eurozone markets seem attractive to you from an expansion perspective? My other question would be on the funding cost. I think you flagged around the 60-basis points difference between the pricing of new term deposits and your back book. Can you give us a flavor over what time frame could this difference narrow? And the final question will be on capital build. You've flagged that in the 20-basis point or so upside from ratings and perhaps from an external ratings review as I understand. Is this at all related to the investment grade upgrade? And do you see any further tailwinds from being rated IG? Thank you.
Christos Megalou: Hi, Gabor. Thank you for the question. Now on Snappi as we said, I mean, we'll come up with more detailed guidance and views as we're closer to launch. However, I just wanted to say that the MVP and the way we will be launching ourselves in the Greek market is equally exportable outside of Greece and that's our aim over time to be able to grow this franchise in Europe. We cannot disclose countries where we are looking to grow, but this is not just a Greek project, but also a European project. Once we see solid numbers in the Greek market which we expect that could possibly be positively surprised in 2025. But it's pretty much of an exportable MVP that we would like to see in other European countries in the Eurozone. Now Theo will cover the time deposit and the other question.
Theo Gnardellis: So I mean, Gabor the overall cost of deposit we don't expect a major shift, right? I mean even the 2.8% will happen at possibly part of the book. It will also take time. There's mix effects. The beta will increase but that's a calculated manner on a depot in Europe. Overall the cost of depot, we think it has pretty much reached a terminal situation and it's probably going to stay there until we see much lower interest rates. On the 20-basis point kick of the accelerating as you said yes, nothing related to the investment grade. It is a one-off. The certification of a particular rating agency has helped mitigate RWA of borrowers that have received good ratings from that particular company. So -- and we don't expect anything to come our way as a tailwind on this either. What we like is what I said before that even without those 20 basis points in this situation with such a big expansion this is a capital accretive profitability post distribution accrual. I hope this covers the question.
Gabor Kemeny: Yes, perfect. Excellent. Thank you very much.
Operator: The next question comes from the line of Memisoglu Osman with Ambrosia Capital. Please go ahead.
Osman Memisoglu: Hello. Many thanks for your time and the presentation. Just coming back to your guidance on slide 26, you have more than 16% for RoTE. Apologies if I missed it. I'm just trying to understand what's driving that. Is it as usual the NII or you highlight there's upside on the NFI fee side loan growth? And also more specifically you mentioned in one of the slides the deposit beta at 16% versus 19% previously. Is that for the 15% RoTE target? Or is that for the 16% RoTE guidance that 16% deposit beta? And finally just model in detail the other impairments and associate income is negative €27 million. Just trying to get some color on what the outlook will be in the next couple of quarters. Thank you.
Theo Gnardellis: Hi, Osman. Yes I think it was somewhat covered before. It's mostly fees and I would say NII coming from better yields and accelerate expansion. And as we've said it's above 16%. We will see exactly where it lands. It could also be a little bit higher. On your question on other impairments I mean really between other assets between the kind of reals and equities, there's always adjustments that we do on the book. We're basically, looking at this slide together, with the loan impairment as kind of one line driving profitability. I would say, we stick to what we're seeing overall on average so far for a particular line. You had a third question, I think.
Osman Memisoglu: On the deposit beta is that 16%?
Theo Gnardellis: That's a 15% implied number.
Osman Memisoglu: Okay. And one thing I forgot, in your cost of risk I saw on a quarterly evolution, the cost for service fees and synthetic securitization really coming down. Is that a trend starting? Or is it just a quarterly blip? Or how should we think for that part of the customers.
Theo Gnardellis: Yes, there was a one-off in Q1 on the servicing fee that drove it up. What you saw in Q2 is really sort of a recurring cost. But remember servicing fee costs are widely affected also by outflows by treatment of cases. So, it depends very much on the outflow performance of a particular quarter as to what the actual number will be. But just remember, that Q1 had a one-off. So, you're probably safer with the Q2 number.
Osman Memisoglu: Perfect. Thank you.
Operator: The next question comes from the line of Nigro Alberto with Mediobanca (OTC:MDIBY). Please go ahead.
Q – Nigro Alberto: Yes. Thanks for taking my question. The first one is on the MREL. Now that you have reached the final target, are you planning to continue to improve the mix of the ratio by issuing more senior bonds and free up capital? And if you have in mind, the precise amount per year of senior bond issuances. And the second one is, on Basel IV. If you can confirm the €1.4 billion higher risk-weighted assets day one, and €1.6 billion fully loaded. You mentioned in the previous call. And the last one, if these Basel IV impact includes also the FRTB impact. Thank you.
Theo Gnardellis: Alberto, yes I mean, with this recent trade the € 650 million green bond plus the CET1 accretion, we've met MREL target. So any acceleration question and issues for banks going forward. Reduction of the transition period, et cetera, is not our concern anymore. That said, there will be issuance from us going forward in the coming years for various reasons. One of which is, what you said. The other one is, to manage buffers and manage growth. So, hopefully that covers that. On Basel IV, yes, the number that you had was without the adjustment and the delay that was recently decided for 2025 moving to 2026. So now, actually we're expecting the burden of 2025 million to be somewhere over €1 billion rather than €1.4 million change of course on the fully loaded number.
Q – Nigro Alberto: Thank you.
Operator: 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. Thank you.
Christos Megalou: Thank you all for participating in our first half 2024 results conference call. We look forward to discussing with you all, physically or virtually during our investor outreach program. We will be commencing of early September. In the meantime, please have a relaxing summer break. Thank you very much.
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