NBG Group 1Q22 Financial Results

Δευτέρα, 30 Μαΐου 2022 13:55
NBG Group 1Q22 Financial  Results

1Q22 COP up by 32% yoy, reflecting impressive fee income recovery, cost containment and normalizing CoR

o Following Frontier deconsolidation, lower NPE NII accruals partly offset by the sustained expansion of the PE book (+€1.5b yoy). Overall, NII just 3% lower yoy

o Reflecting our successful transformation initiatives, fee income surged by 25% yoy, supported by increasing retail and corporate loan origination, with card and intermediation fees driving the sharp upswing

o Operating expenses were further contained on the back of sustained personnel cost reduction (-3% yoy), absorbing accelerating inflationary pressures and the depreciation charges from the roll out of our strategic IT investment plan; C:CI improves further by 160bps yoy to 51.5% in 1Q22

o CoR remains on a gradual normalizing path, reaching 73bps in 1Q22, down by c40bps yoy

o Αttributable net profit reached €360m, including trading gains of €139m

Domestic NPE stock declined further to €2.0b or €0.4b net of provisions; domestic NPE ratio at 6.5%

o NPE reduction continues (-€127m qoq), with organic NPE flows remaining negative

o NPE ratio of 6.5% in Greece (6.7% at the Group level), down by c40bps qoq and c670bps yoy

o Domestic NPE coverage keeps rising, reaching 81.8% in 1Q22 (+c430bps qoq), despite CoR normalization

o Despite uncertainty and inflationary pressures, the payment performance of clients receiving State and Bank sponsored programs remains reassuring, with default rate in low single digits. Additionally, there is no sign of delinquencies from the recent surge in inflation

Domestic PE loan book expansion at €1.5b yoy

o Despite uncertainty, loan disbursements1 increased by c50% yoy on strong retail (+41% yoy) and corporate credit extension (+52% yoy), pushing domestic PEs higher yoy by €1.5b

o €0.8b of disbursements1 in 2Q22 to mid-May

CET1 FL and total capital ratio FL reach 15.1%2 and 16.2%2 respectively

o CET1 FL and total capital ratio FL increase by +c20bps and +c70bps qoq, supported by organic profitability and the closure of the Ethniki Insurance transaction, and stand at sector-high levels of 15,1%2 and 16,2%2 , respectively

o The closing of the agreement with EVO Payments, expected in 4Q22, will add c65bps to capital ratios

The successful Transformation Program creates strong momentum for change

o The Transformation Program continues to provide NBG with a competitive edge, as our mechanism to drive and sustain change; we are moving decisively towards a more agile business model, leveraging new technologies, data analytics and partnerships to enhance client experience

o The digital transformation continues to demonstrate impressive results, with digital subscribers reaching 3.5m (+11% yoy) and active users reaching 2.5m (+16% yoy); only 3% of transactions remain in branches, allowing us to capture efficiencies in our operating model

o On ESG we are implementing initiatives to lead the market in terms of sustainable energy financing and materially support the green transition of businesses and households; at the same time, we continue to invest in environmentally responsible practices at NBG and across Greece.

(1)Loan disbursements for the period/year, not considering rollover of working capital repaid and increase of unused credit limits / Including period PAT

“Against persistent geopolitical uncertainty fanning global inflationary pressures, Greece’s strong recovery prospects have moderated, but remain relatively benign, while NBG’s strong balance sheet, with a robust capital position and improving profitability provide reassurance regarding the Bank’s prospects. First quarter results confirm this positive outlook.

On the profitability front, we managed to increase Group core operating profit by 32% yoy to €125m, in line with FY22 core operating profit target of €490m, on the back of sustained improvement across core operating lines. Core income grew by 2% yoy, on the back of a strong recovery in fee income, up by 25% yoy, despite moderate NII headwinds (-3% yoy) due to the Frontier deconsolidation. PE interest income expands for a third consecutive quarter, supporting NII. Operating costs edged lower by 1% yoy, despite high inflation and increased depreciation charges due to the roll out of our strategic IT plan, which centers around the ongoing replacement of our core banking system. Including trading and other non recurring items, our Group attributable PAT reached €360m.

On the asset quality front, our stock of NPEs continued on a declining trend, reaching just €0.4b net of provisions, or €2.0b on a gross NPE basis, translating into a ratio of 6.5% in Greece, 40bps lower vs the previous quarter. Despite CoR continuing to normalize, to c70bps from c100bps in the previous year, coverage rose significantly, reaching 82%, up by c4ppts qoq. This development reflects continued prudence, despite negative underlying NPE formation trends, with no sign of a pick up in defaults from our clients previously under State or Bank sponsored support programs or early delinquencies due to higher inflation.

Our capital levels on a fully loaded basis increased further qoq, to 15.1% CET1 and 16.2% total capital, both organically, as well as due to the closing of the Ethniki Insurance transaction. The completion of the merchant acquiring JV will further boost them by c65bps, ahead of FY22 guidance.

Looking forward, the RRF induced investment growth, a very strong start for the tourism season combined with fiscal support measures especially in energy cost relief will support Greece’s recovery. In this environment, our successful transformation effort puts us in a position of strength towards supporting and advising our clients in achieving their future plans, with NBG as their partner: the bank of first choice.”

Pavlos Mylonas Chief Executive Officer, NBG

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