NBG Group 2Q2021 Financial Results

Παρασκευή, 06 Αυγούστου 2021 14:31
NBG Group 2Q2021 Financial Results

o Group PAT from continuing operations reaches €622m in 1H21, up 34% yoy

o 1H21 NII increased by 7% yoy to €591m, driven by sustained time deposit repricing and ECB’s TLTRO III facility

o Fee recovery accelerated in 2Q21 (+4% qoq) in the absence of restrictive measures, driving 1H21 fees up by 10% yoy to €136m

o The sharp reduction in personnel expenses in Greece (-15% yoy) pushes costs down by a solid 8% in 1H21; domestic C:CI improves by 9ppts yoy to 51.0% in 1H21

o Trading and other income of €449m in 1H21 benefited from sizable gains related to debt securities transactions (mostly GGBs)

o Loan impairments amounted to €70m in 2Q21, bringing 1H21 impairments at €147m, equal to 109bps over net loans

o Core operating profit1 surged by 58% yoy to €208m, reflecting core income recovery and further cost optimization

Domestic NPE stock reaches the €4.0b mark

o Domestic NPEs down to €4.0b in 2Q21, or €1.4b net of provisions, of which c35% or €1.4b are FNPEs <30dpd

o NPE formation remained negative in 2Q21, adding up to a total organic NPE reduction of €0.2b in 1H21 in line with our 2021-2022 guidance for a reduction of c€0.8b

o NPE ratio of 12.8% in Greece (-c50bps qoq) and at 12.7%3 at the Group level; domestic NPE coverage at 66.4%, up c360bps ytd (66.8% at the Group level)

o Post moratoria performance remains far better than expected, with only c3% of performing moratoria beneficiaries in default as of July 2021; clients in early arrears (>30dpd) form just 1% of the ex-moratoria PE pool

o c60% of performing moratoria clients remain low risk and have not received any follow up payment assistance post moratoria expiry

CET1 ratio at 16.0%; total capital ratio at 17.0%

o CET1 at 16.0%4 , up c30bps ytd; CET1 FL at 13.8%4 (+c100bps ytd)

o Total capital ratio of 17.0%4 exceeds minimum regulatory levels by c600bps

o Upon completion, Frontier and Ethniki Insurance transactions will boost total capital ratio by c170bps to c18.8%

o NBG successfully completed the 2021 SSM stress test, with the 2023 CET1 FL ratio settling at 15.5% under the Baseline scenario (+c270bps over 2021-23), while under the Adverse scenario capital depletion stood at 6.4ppts. Pro forma for the 1H21 PAT and post the completion of the Frontier and Ethniki Insurance transactions, NBG’s Total Capital ratio ends up higher by nearly 300bps

Domestic loan disbursements at €2.0b in 1H21, up 9% yoy, driven by corporates

o Domestic PE loan portfolio momentum is maintained (+€1.2b yoy), largely driven by corporate PEs (+€1.5b yoy), while retail PEs deleveraging slows down

o Domestic deposits reach €49.6b in 1H21, up by €6.3b or 14.5% yoy, reflecting strong inflows from core deposits that now account for more than 80% of domestic deposits

o Eurosystem funding (TLTRO III) stands at €11.6b, providing support to NII and NIM

Active support towards our customers through the recovery

o On State subsidy programs (Gefyra I & II), NBG mortgage holders correspond to c€1.4b in loan balances (nearly 40% previously under moratoria until 31.12.2020), while SMEs & SBs clients onboarded correspond to c€1.3b in loan balances (c30% undertaken by ex-moratoria clients until 31.12.2020)

o Total loans onboarded to NBG step-up facilities amount to €0.3b, with 2/3rds being corporate clients

Our successful Transformation Program has been a driver of rapid and successful change

o NBG continues to leverage on its successful Transformation Program, completing its 3rd year, facilitating the shift towards a more cost-efficient and flexible operating model

o In the aftermath of Covid-19, bank transactions edge substantially higher (+17% yoy) and are mainly conducted via digital channels; 2Q21 e-banking transactions surged by 34% yoy, replacing branch transactions that have been reduced by 52% yoy

o NBG has registered a continuous improvement in its ESG ratings, governance and practices, setting clear priorities and delivering solid achievements across all ESG areas

"The tug-of-war between the delta variant and the vaccination programme is ongoing, with expectations that the latter will pull definitively ahead in autumn, as the vaccination rate reaches the critical 70% milestone. The economy understands that better days are coming and confidence is at high levels leading activity to accelerate by double digit growth rates in the final three quarters of the year.

In the first half of the year, and despite Covid-19 mobility restrictions in place for a good part of it, NBG managed to produce a strong PAT from continued operations of €622m, reflecting recovery across all our core P&L lines, as well as a strong trading result. Notably, the cost-to-core income ratio dropped to 51% in 2Q21 and fees increased by 10% yoy. More importantly, excluding trading gains and after provisions, 1H21 Group Core Operating Profit surged by 58% yoy to €208m, bringing us considerably closer to achieving recurring annual profitability of c€0.5b, equal to a cRoE of c9% next year.

On the asset quality front, our domestic NPE exposure dropped further to €4.0b, or 12.8%, with our cash coverage increasing further to 66.4%. NPE formation remained negative, adding up to a total organic NPE decline of €0.2b in 1H21, despite the expiry of all moratoria at end-2020. Indeed, payment performance of loans previously under moratoria remains very good, with just 3% of these accounts above 90dpd. Of equal importance is that just an additional 1% of the ex-moratoria clients are currently in early arrears (>30dpd), a far better outcome than even we expected. As a result, we have well founded expectations that we will manage to outperform our CoR guidance.

Regarding our capital adequacy, we have further enhanced our strong capital position since the beginning of the year, with CET1 and total capital ratios standing at 16.0% and 17.0%. Our capital position will improve further by c170bps upon completion of the Frontier and Ethniki insurance transactions.

Looking ahead, RRF funds combined with further structural reforms in the country will lead to an investment boom. Capitalizing on our much improved service and operating model arising from the successful Transformation Program, which has just completed its third year, NBG is very well positioned to support our clients in this environment of high and sustainable growth, thus achieving the goal of being the Bank of first choice. In this positive environment, we remain focused on delivering our ambitious targets for high profitability, NPE reduction, and capital adequacy, and providing added value to our clients and shareholders."

Pavlos Mylonas Chief Executive Officer, NBG

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