Piraeus Financial Holdings S.A. (TICKER: PIRAEUS) showcased its strong performance in 2023 and outlined its business strategy for 2024-2026 during a recent earnings call. The company reported significant net revenue growth of 37% for the last quarter and the full year, alongside a solid return on average tangible book of 16.6%.
With the Greek economy growing by an estimated 2.5% GDP, Piraeus Financial Holdings capitalized on the positive economic environment, achieving a reduction in operating expenses by 4% and improving its asset quality, as evidenced by a non-performing exposure (NPE) ratio of 3.5% and an NPE coverage of 62%. The company remains committed to a 50% dividend payout over the long term and has ambitious financial targets for the upcoming years, including a net profit goal of approximately €1 billion annually.
Key Takeaways
- Piraeus Financial Holdings experienced a 37% net revenue growth in 2023 and a notable return on average tangible book of 16.6%.
- The company reduced operating expenses by 4% year-on-year and reported an NPE ratio of 3.5% with 62% coverage.
- Aiming for a long-term dividend payout of 50%, the company plans to introduce its digital bank, Snappi, by mid-2024.
- Financial targets for 2024-2026 include achieving a net profit of around €1 billion per year and expanding loans by over 5% annually.
- The company anticipates an NPE ratio of approximately 2.5% and a CET1 ratio of around 15% by 2026.
Company Outlook
- Piraeus Financial Holdings is set to launch Snappi, its digital bank, by mid-2024.
- The company's financial targets for the next three years are ambitious, with a focus on increasing profitability and maintaining strong capital ratios.
Bearish Highlights
- The company is cautious about increasing real estate values on the balance sheet despite a rising market in Greece.
- Hedging costs are expected to be around €100 million, with a negative carry of €4 million booked for Q4.
Bullish Highlights
- Sustainable financing volumes stand at €2.7 billion, emphasizing the bank's commitment to renewables and sustainability-linked loans.
- The bank's CET1 profile has been viewed positively by rating agencies, with an ambition to bring the DTA proportion of CET1 to 50% by the end of 2025.
Misses
- There are no major additional one-off provisions expected.
- The impact of Basel IV on risk-weighted assets will be phased in, with strategies to mitigate the impact in future periods.
Q&A Highlights
- The company will focus on sustaining its liquidity profile through accelerated loan expansion.
- Admin costs are targeted to normalize at €300 million, with benefits from deposit insurance expected in 2023 and beyond.
- Various rating agencies have different perspectives on DTC, but the improvement in CET1 profile is generally seen as positive.
- The CEO concluded the call with an invitation for further discussions during their investor outreach program.
InvestingPro Insights
Piraeus Financial Holdings S.A. has demonstrated robust performance and strategic initiatives that align with its growth trajectory. In light of this, let's delve into some key metrics and insights from InvestingPro that could provide additional context for investors evaluating the company's prospects:
- Market Capitalization: The company's adjusted market cap stands at $5.25 billion, reflecting its significant presence in the financial sector.
- Earnings Picture: With an adjusted P/E ratio of 4.63 for the last twelve months as of Q3 2023, Piraeus Financial Holdings is trading at a low earnings multiple, which could suggest that the stock is undervalued compared to its earnings potential.
- Profitability and Returns: The company has been profitable over the last twelve months, and with a return on assets of 0.92% for the same period, it shows a capacity to generate earnings from its asset base.
InvestingPro Tips that are particularly relevant to Piraeus Financial Holdings include the company's strong return over the last year, and its recent trading near a 52-week high, which reflects investor confidence and could be a positive sign for momentum investors. Additionally, analysts predict the company will be profitable this year, aligning with the company's own financial targets.
For investors looking for more detailed analysis and tips, InvestingPro offers a comprehensive list of insights, including 12 additional InvestingPro Tips for Piraeus Financial Holdings. To explore these further, visit https://www.investing.com/pro/BPIRY and remember to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Full transcript - Piraeus Bank SA (OTC:BPIRY) Q4 2023:
Operator: Ladies and gentlemen, thank you for standing by. I'm Poppy, your Chorus Call operator. Welcome, and thank you for joining the Piraeus Financial Holdings conference call and live webcast to present and discuss Piraeus' Full Year 2023 Financial Results and business plan 2024-2026. All participants will be on a listen-only mode 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 Megalou: Good afternoon, ladies and gentlemen, and welcome to today's conference call. Today, we will cover our full year 2023 financial results as well as the revised 3-year guidance vis-a-vis our financial outlook. This is Christos Megalou, Chief Executive Officer, and I'm joined today by our group CFO, Theo Gnardellis; Chryssanthi Berbati; and Xenofon Damalas. In Q4 and full year 2023, Piraeus delivered the strongest set of financial results it has delivered to date. We maintained our focus on net revenue growth, cost containment and operating excellence with an outcome we are all very proud of. Before going into more detail on the group's performance, I would like to comment briefly on the current Greek macroeconomic environment. In 2023, the Greek economy sustained its growth momentum with an estimated GDP increase of approximately 2.5%, significantly exceeding the [ Euro ] on average. In the second half of 2023, the Greek sovereign was upgraded to the investment-grade status for the first time in more than a decade, signifying a major milestone for the country and the banking sector, while the potential upgrade of Greece to develop market status by MSCI will be another catalyst towards a more holistic convergence to our European Union counterparts. Let's start our presentation with Slide 5, which depicts our performance in the fourth quarter and full year 2023. The group's profitability increased strongly, continuing the positive trends of previous quarters, supported by top line outperformance, improved efficiency and normalization of loan loss provisions. Slide 6 points out the highlights of our 2023 performance. We generated normalized earnings of €0.80 per share, which are record high for Piraeus while we run ahead of the full year 2023 guidance. We reported a return on average tangible book of 16.6%, again, exceeding our target. We delivered 37% of net revenue growth versus the previous year, accompanied by solid loan pass-through, low deposit beta and further growth in net fees. Operating expenses were reduced by 4% year-on-year despite the inflationary environment with G&A costs down 11% year-on-year on the back of our prudent approach of non-staff expenses. Our asset quality dynamics improved further with an NPE ratio halving to 3.5% in 2023 and NPE coverage standing at 62%, up 7 percentage points versus the previous year. We achieved €1.6 billion net credit expansion in 2023, in line with targets building on the strengths of our franchise and front office human capital across the country. Our pro forma CET1 ratio stands at a solid 13.3%, a 170 basis points higher versus a year ago, while MREL sits at 24.1%, surpassing the '24 target of 21.9%. Finally, in 2023, we increased our assets under management by 34% to €9.3 billion. As you can see from Slide 7, we have outperformed most of our 2023 financial targets. Slide 8 covers our earnings results in further detail. As you can see, improved profitability resulted in tangible book value per share reaching €5.08, up 13% year-on-year, enhancing further our capital distribution capacity for the years to come. Slides 9 to 11 present all the key drivers of our accelerated net interest income growth with net interest margin expanding to 2.77% in Q4 2023, loan pass-through reaching 78% and deposit beta standing at 13% in December 2023. Slide 12 and 13 outlined the evolution of our net fee income which increased by 14% year-on-year and reached €144 million in Q4. The group has been consistently increasing its net fee income of our assets, now reaching 74 basis points, fueled by well-diversified sources. Piraeus' widening outperformance in this metric versus its Greek peers is a result of our focused strategy on expanding and diversifying our revenue sources and our market-leading footprint. Our pursuit of further operating efficiency bears fruit despite the inflationary headwinds. We have managed to reduce our operating expenses by 7% year-on-year in the fourth quarter, as shown on Slide 14 while our G&A costs recorded a 25% drop year-on-year to €64 million, a record low for our group. The strong improvement of our operational efficiency resulted in best-in-class cost-to-core income ratio of 29% in the fourth quarter of 2023. Slide 15 provides a summary of our asset quality indicators. Our NPE ratio halved to 3.5% in 2023, exceeding our expectations, driven both by NPE [ clean ] up initiatives and positive results from the organic effort. Meanwhile, Q4 organic cost of risk dropped to approximately 60 basis points. At the same time, NPE coverage increased to a prudent level of 62%. On Slides 16 and 17, we present the dynamics of our performing loan book. Strong Q4 led to a solid net credit expansion of €1.6 billion in 2023, in line with our targets. The expansion has been supported by Piraeus' strong take-up of the RRF with €250 million of own financing disbursed in the year. Piraeus has a superior liquidity profile presented on Slide 18 and 19. Our deposit base is granular, stable and of high quality. Our liquidity ratios are all solid as evidenced by the 241% liquidity coverage ratio and the 61% loan-to-deposit ratio, both in the top range of the European spectrum. Turning to our capital base on Slide 20. A strong capital build up of roughly 40 basis points in the fourth quarter drove the CET ratio to 13.3% and the total capital ratio to 18.2% in December '23 while accounting for a 10% dividend payout, which, as we have mentioned previously, is only the very first step of our distribution plan. On Slide 21, you can see how our new wealth and asset management strategy continues to produce strong results with assets under management reaching €9.3 billion at the end of 2023, recording a 9% increase in Q4. Our strong 2023 results position the group well among the broader group of regional peers. To give you some context, on Slides 23 to 32, we present the key metrics for Piraeus versus domestic and regional peers. In all KPIs, we outperformed most of our comparables. As outlined on Slide 23, our return on tangible -- on average tangible book remains among the strongest in the region. Capitalizing on our strong 2023 performance, today, we announced our new financial targets for the '24-'26 period. Slide 35 summarizes our macro and market assumptions while Slides 36 to 38 display the business plan highlights and the financial KPIs for the next 3 years. Slide 36 presents the core KPIs of our business plan. We expect net profit of approximately €1 billion per year with loans expanding at over 5% per annum. Our NPE ratio is expected to fully convert towards European average levels, landing at approximately 2.5% at the end of 2026. CET1 ratio is anticipated to increase to circa 15% in 2026. Return to industry level capital distribution is an important part of our strategy and we are now aiming at returning around 50% of our profits to our shareholders out of the 2025 profits and onwards. All in, we opt for tangible book value of approximately €8 billion by 2026, and we target to a sustainable normalized return on tangible book value of around 12% or 14% based on a CET1 ratio of 13%. Slides 39 to 46 present in detail the drivers and assumptions behind our 2024-2026 targets. Slide 47 provides plan regarding our digital bank, Snappi, that is expected to be launched by mid-2024. Slides 48 to 52 depict our transformation program pillars and aspirations while Slide 53 summarizes our sustainability KPIs. The core of our strategy is to leverage Piraeus' position as a leading, driving source of growth and innovation for the Greek economy. We aim at continuing to support our customers and people as well as generating value for our shareholders. And with that, let's open the floor to your questions.
Operator: [Operator Instructions] The first question comes from the line of Ismailou Eleni with Axia Ventures.
Eleni Ismailou: Congratulations to a great set of results. Just a couple of questions from my side. So attention seems to be shifting from -- on sustainability of earnings rather than the balance sheet strength. So on the outlook for the capital distribution, we see that you're listing your dividend payout of 50%. And I was wondering what makes you comfortable that this can be sustained over the longer term? So that's question number one. And number 2 is on your [indiscernible] DFR assumptions between full year '23 and full year '24. Do you believe that the current macro data supports just a 25 bps drop while consensus points to something slightly higher between something like 50 to 75 bps. Could you give us a little bit more color on your assumption there?
Christos Megalou: Good afternoon, Eli. Thank you for your questions. Let me answer the first one. We have been consistently delivering on our plan and over the years. And this is what makes us extremely confident that we will be in a position to maintain the same level of delivery as we move on in the year '24 to '26, where we believe that we will be in a position to create excess profitability and capital that we will be supporting a very strong performance also in dividend payout. We see the next few years as years of growth, both in terms of top line. We have a strategy -- hedging strategy that will be protecting the NII and finally, the bottom line and sustainable profitability of €1 billion a year for the next 3 years that we believe will give us the ability to generate this excess capital that we need to be deployed. As far as the second part of your question, it is indeed true that we have been looking at the current plan with a 25 basis points drop towards the end of the second -- of the fourth -- towards the fourth quarter. But the whole plan is actually designed in such a way that there are a lot of levers that they will be in a position to maintain the level of profitability that we have included in our plan. And I wanted to ask CFO to give us 2 more details in that.
Theo Gnardellis: So indeed, the DFR assumption is for a 25 basis points drop. Now that was the base scenario back when we were doing our plan. And the decision was to keep that assumption primarily because as you rightly pointed out, maybe that's not the most popular opinion right now, but this opinion keeps changing every week. So we have not found any deterministic macro scenario right now that supports us to make a change. That said, the NII profile of 2024 is not dependent on that. A faster rate drop would create some headwinds and equally some tailwinds. So the [NMDs] would probably kick in -- would not have the negative carry that they would. Most likely, TD (TSX:TD) migration will not be happening at the speed that the plan assumes. So I would say either way, the 2024 NII is a very credible aspiration. And as to what will actually happen with the DFR, I think nobody knows. What we know is that under both scenario right now, that 1.9% NII that we're guiding for '24 seems like a very credible target.
Eleni Ismailou: This is all very clear. And again, congratulations for the set of results.
Operator: The next question comes from the line of Sevim Mehmet with JPMorgan (NYSE:JPM).
Mehmet Sevim: I'll have three questions, please. Firstly, the performing loan targets. Clearly, they're expected to grow nicely. But if you look at the new loan generation figures that you outlined on Slide 41, they don't look as optimistic. Can you please tell us your thought process here, particularly for 2024 as you expect some decline in new loans? And secondly -- and following up on the previous comments on NII. If I look at the underlying assumptions, your deposit beta assumptions look quite conservative. And the main driver there seems to be the continued mix shift to term deposits, which is still quite a big jump that you expect for this year. But again, the mix shift so far seems to have stopped. And in fact, we've seen some decline even in term deposits this quarter. So is this just a really conservative assumption in your mind? Or do you actually see any signals for potential change in the behavior of your customers? And finally, if I may, on the capital guidance, the CET1 trajectory obviously looks much better, but still it's a bit conservative, taking into account the earnings targets as well as baking in the guidance for dividends, particularly for 2025, that is. So maybe if you could talk about the underlying assumptions there, including the RWA trajectory, that would be very helpful.
Christos Megalou: So Theo Gnardellis will be addressing your three points, Theo?
Theo Gnardellis: Right. So well, I mean, on the new loan generation, what we should really be focusing on is, I would say, the net credit expansion, right? It's a situation of, I would say, marginal change between '23 and '24. It's a very kind of a similar view of things. One thing that one could point out is a faster drop of mortgages on the back of what we have budgeted to be accelerated repayments and sustained, I would say, and a bit accelerated business lending growth on the back of our -- so overall, this plan does assume kind of a static evolution and on the loan growth at the 5% rate, nothing major there. But definitely, on mortgages, something to work on and think about how to open up this market and I would say, target this accelerated repayment that we're expecting on the back of sustained high Euribor and [indiscernible] evolution. On your deposit beta mix, indeed, you're right. The TV book has been stable since June at €13.5 billion. The mix has been at that 23%, 24% area for 2 quarters now. The assumption is that this will evolve to 34% by year-end, again, on the back of sustained high interest rates. Yes, there is [indiscernible] the number, as we said before, especially if we have, I would say, accelerated rate drops throughout the year. On CET1 trajectory, again, was spotted. This is a Basel IV incorporation. The first phase of kind of RWA burden, the number that has been assumed there is a €1.6 billion burden on RWAs, which kind of contains the CET1 accretion between '24 and '25.
Operator: The next question comes from the line of Demetriou Alex with Jefferies.
Alex Demetriou: So in 2026, you're expecting a CET1 of about 15%, which is 200 basis points above your CET1 target. So have you guys had any thoughts around inorganic loan opportunities where you purchased some of the loans that were previously classified as NPEs from services as the use of your excess capital, similar to what some of your smaller peers have done? And then just secondly, on the cost guidance on Slide 44. So the staff expenses outlined there would be the underlying expenses. Should we expect any more restructuring or any one-offs going forward that's not including in this guidance? Just looking at the KPIs on Slide 38, it looks like 2026 has about €60 million of one-offs. So any kind of guidance or help there would be greatly appreciated.
Christos Megalou: Alex, thanks for the questions. Let me address the first point on the inorganic actions that may result because of the excess capital that we will be creating. It is indeed what we think that this bank in the current environment that operates in an investment-grade Greece. And with the current macro assumption of GDP growth, we will be in a position to be best capitalized with CET1 capital ratio, call it 13% or around 18%. So hence, our strategy for enhanced returns over '25 and onwards, and also of the growth that we see in the book which is where the excess on [indiscernible] terms will be directed. It is also true that over time, we will be creating excess capital even above those distributions. And therefore, we are going to be looking at inorganic opportunities, sticking to our investment criteria and making sure that we are quite disciplined in all the investment decisions that we take. As to your questions about the potential look into reperforming loans, the truth of the matter is that we will have to be wait a little bit so that those transactions are able to be actually executed given the definition of stage 1, stage 2 loans and given the fact that we would not like to enter into transactions that we will be increasing our NPE ratios. So we will be looking possibly at inorganic transactions but not necessarily at this early stage of the evolution of the reperforming loans in the area of reperforming loans.
Theo Gnardellis: And Alex, your question about the cost one-offs, we've got it on Page 38. 2024 is the year where we expect a small kind of one-off of about €60 million to €70 million of extra restructuring costs. It is the last wave of reprofiling of staff numbers of the bank to achieve our cost targets.
Operator: The next question comes from the line of Butkov Mikhail with Goldman Sachs (NYSE:GS).
Mikhail Butkov: Good day. Thank you very much for the presentation, and congratulations to solid results. I have three questions. Firstly, on net interest margin, yes, you upgraded the guidance for the medium term. Is it entirely driven by the higher DFR assumptions? Or there are some other components such as hedges or something else, which contributes to this upgrade? That's the first question. The second question is on fee income outlook. If you were to compare the new guidance and the one which you outlined last year. Last year, I think your outlook suggested for stable 0.8% net fee income as a percentage of assets, while now you -- for your guidance implies a gradual increase from 0.7% in 2024 to 0.9%. So I mean, what has changed where you're more bullish in assumptions in the long term? And the third question is, so the -- it looks like that the real estate prices in Greece have been increasing over the past year. Did you make the assessment of that -- of the value of the property on the balance sheet? And can that be an additional source of upside potentially if this were to be carried?
Theo Gnardellis: So indeed, the NIM sustainability is the core part of the strategy of this plan. It is definitely based on non-maturity deposit hedges that we've deployed. We're currently running a position of about €10 billion, which is contributing to the sustainability of the NII, especially on a positive carry transaction in 2026 as we see on Page 40. It is not the only element. Growing the fixed income book and overall focusing on fixed asset returns is another part of it. So overall, our objective is, as we've said many times, is to sustain NIM above 2% in the mid- to longer term. And hence, the guidance of 2.3% for '26. On fees, indeed, it's a more detailed, I would say, look into what this balance sheet and this franchise can deliver. There's upside, I would say, across investing on real estate tied to the third part of your question is 1 element. Stepping up rental income, transaction fees, especially on the back of card transactions is another one and definitely asset management and the growth of this year in AUM has given us, I would say, bigger confidence as to what we can deliver for the future out of the franchise. Real estate prices, yes, a great overall macro story. It's one of the reasons why we're investing and trying to increase and have been increasing rental income out of it. But I would say we're quite constrained in remarking box even within the allowances of IFRS. We would much prefer to actually materializing that either with profitable sales or with higher rental yields.
Mikhail Butkov: Okay. And on the hedges, what is the average length of the hedges which you have on the balance sheet currently?
Theo Gnardellis: The average duration is three years. We're running a dynamic approach where we split in durations between years one and five, and that continues to average three-year position.
Operator: The next question comes from the line of Memisoglu Osman with Ambrosia Capital.
Osman Memisoglu: A couple on my side, please. First, just coming back to the time deposits. If you could share with us where is the mix these days? Is it materially different than the 23% -- we're seeing at the end of 2023? Then on Slide 39, you've kindly provided sensitivities. If you could confirm, I'm guessing these are with the impact of the hedges. And maybe if you could give us where the Euribor sensitivity would be without the hedges, that would be helpful. And finally, on dividends, could you give us any color on the timing, essentially when they would be paid? And also, any more color on -- you mentioned necessary conditions to increase payout to 50% by 2025. I'm wondering if you could give us some color on these necessary conditions.
Theo Gnardellis: So indeed, that TD mix is static. It's around the 23% area, and nothing has been moving. The [NMDs] have been increasing and they increased in Q4. In the time deposit book, nominally has actually dropped a little bit in Q4. So the mix, I would say, is pretty much what you're seeing now. Again, confirming a potential upside on the overall cost. Now this is still -- yes, the -- I assume you're asking for the risk free [indiscernible] the €25 million to €30 million. Yes, that indeed is including NMDs. I mean NMDs stabilize the whole story about €10 million to €15 million. So without that, the number would probably be around 40.
Osman Memisoglu: And on dividends?
Christos Megalou: On dividends. As we said, it's evident for the plan -- from the plan that the bank is creating excess capital, and this is going to be growing over time. We know that there are a number of conditions that need to be met so that this is going to be actually materializing. The necessary capital buffers is one, sustainable profitability over time is the other and the overall balance sheet health is the third one. And we are working on all those, let's say, conditions so that we will be in a position to fulfill when the right time comes in order to be able to deliver on our promise.
Operator: [Operator Instructions] The next question comes from the line of [indiscernible] with Lazard (NYSE:LAZ) Asset Management.
Unidentified Analyst: Hello. Can you guys hear me?
Christos Megalou: Yes.
Unidentified Analyst: On the -- just two minor points. By the way, congratulations to great results. I'm looking at your Excel file, the [NI] tab. Is it correct to read that you're non-maturing deposits has been caused only was like €4 million in Q4 to deploy €10 billion book -- hedging book?
Theo Gnardellis: Yes, indeed, that's correct. The positions were booked in December, and they actually -- they had a negative carry of €4 million for Q4.
Unidentified Analyst: Right. Okay. And you expect about the €100 million of hedging costs in [indiscernible].
Theo Gnardellis: Going forward, the cost of NMDs, first of all, we increased the position for what was at €7 billion, which is now in the beginning of Q1, we took it up to ER 10 billion and given the fixed rate that we booked, the negative carry is actually about €5 million to €6 million a month.
Unidentified Analyst: Yes. Very good. And just I think somebody may have asked it already, but do you assume like 34% deposit -- the term deposit mix even in like 2026? Is that your underlying assumption?
Theo Gnardellis: Yes, it is a migration from 23% to 34% at the year -- at '24 end and then a sustained 34% mix throughout the rest of the plan, '25 and '26.
Operator: The next question is a follow-up from Ismailou Eleni with Axia Ventures.
Eleni Ismailou: I have one on [indiscernible] on your sustainability KPIs. So that would be on Slide 53. We see that your sustainable financing volumes stand at roughly [ €2.7 billion ] once the [indiscernible] or the turnover is a circa [indiscernible]. Could you give us some color on why this [indiscernible] so low? And how do you think of progressing as a guidance is set as [TBP] going forward? And how would you say, you compare with your Euro peers?
Christos Megalou: Thank you, Eleni. Thanks for the question. Chryssanthi Berbati, Head of ESG is going to address it.
Chryssanthi Berbati: Okay. Thank you, Eleni. Thank you for pointing out actually. Yes, you are right. Our sustainability financing is €2.7 billion at this point. This is overall the climate friendly, let's say, part of our business. So it's mainly comprised renewables and sustainability-linked loans as well as some home retrofit products, et cetera. Now from this €2.7 billion, which is practically 10% of our performing loans, we will report in a few days in our financial statements the EU taxonomy aligned portfolio. This is the so-called green asset ratio. As you've seen, we have pointed out that this will be low single digit. We've seen that Europe overall is at low single digits at this point. The reason is that this is the first year of the reporting and the reporting refers to big corporates with more than 500 people and listed companies. So it's a smaller sample versus total. What's more, it's quite stringent and strict context for exposures to be included in the green asset ratio. So for us, in terms of the business strategy, the sustainable financing is very important to note that our long-term incentive plan has this KPI is 1 of 4 important KPIs for variable compensation. So this is what we intend to [indiscernible] measure. Taxonomy, we will monitor, of course, but this will run in parallel. Sustainable financing is pretty important for us to book good business on our balance sheet and, of course, for climate to adapt to the new reality.
Operator: The next question comes from the line of Nigro Alberto with Mediobanca (OTC:MDIBY).
Alberto Nigro: Yes. The first one is on deposit evolution. I can see that you are expecting €2 billion increase in deposits in 2026 versus €500 million and €1 billion in 2024, '25. I was wondering which are the main drivers of this acceleration through the plan? And the second one is a clarification, if you are expecting any additional one-off provisions in on top of the 80 basis point cost of risk. And finally, if the €1.6 billion higher risk-weighted assets from Basel IV is the fully loaded impact or we should expect further impact the next year.
Theo Gnardellis: Alberto, the deposit evolution is one of the main targets of the plan to sustain the liquidity profile. It is basically based also on accelerated loan expansion. We have seen that there is correlation in that. We also saw it this year. So I would look at them actually together. So that's, I would say, the base of that, together with the overall liquidity and growth of the economy. On provisions, nothing major. Maybe there are small amounts here and there, part of the -- of the overall P&L guidance on -- to complete the outstanding transactions, but nothing really to write home about. On RWA, the impact that we talked about, the €1.6 billion. That's actually the phased impact, but I got to say what we're putting out there today, we have not taking any, I would say, mitigating strategies of that of Basel IV. So that will be more in play and will take, I would say, a closer look as to how we can mitigate Basel IV impact over time, I would say, in the coming periods.
Operator: The next question is a follow-up from Memisoglu Osman with Ambrosia Capital.
Osman Memisoglu: Yes. Just on the cost side, you're -- I'm wondering if you're incorporating any deposit insurance benefits in '24? Or have you already used them up in '23? Any color in OpEx dynamics would be helpful.
Theo Gnardellis: Yes, indeed. Even in '23, we saw a big benefit and that benefit is expected to continue. Overall, the cost -- the admin cost is targeted to normalize at €300 million. And so I guess inflation, we're running initiatives to contain the numbers to those levels.
Operator: Our final question comes from the line of [indiscernible] with Goldman Sachs.
Unidentified Analyst: Congratulations on the strong results. One question, please, on the amortization of DTAs. I was wondering if your ambition to bring the DTA proportion of CET1 to 50% by year-end 2025 unchanged? And any comments you can make regarding the conversations you're having with rating agencies on this topic, please.
Theo Gnardellis: This is the drop that you see there, the below 50% PH for '26 is simply based on lean amortization of DTC as per the tax plan of the bank. And of course, on CET1 accretion, denominated growth and also the numeral drops. This is basically the containment of the DTC driver. Raters. Different raters have different views in DTC. Overall, the evolution is by the ones that care more is obviously viewed very positively. So I would say the CET1 profile of the bank improvement overall makes everybody much more positive and friendly to the story.
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 full year 2023 results conference call, and thank you for the questions. We look forward to discussions with you all either physically or virtually during our investor outreach program, which is commencing next week. And I'd like to wish you all Happy Valentine's Day. Thank you very much.
Operator: Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.
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