Release Date: November 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Piraeus Financial Holdings SA (BPIRF, Financial) reported a record nine-month net profit of EUR932 million, with a strong third-quarter contribution of EUR320 million.
- The company achieved a 9% year-on-year net revenue growth, driven by strong client balance growth and a threefold increase in fee growth over net interest income.
- The CET1 ratio increased by 150 basis points year-to-date, reaching 14.7%, with a total capital ratio of 20% and an MREL ratio of 29%, the highest in Greece.
- Piraeus Financial Holdings SA (BPIRF) upgraded its full-year targets, including a normalized return of more than 17% and an EPS of over EUR0.90.
- The company maintained a low cost of risk at 23 basis points for the nine-month period, excluding NPE servicer fees and synthetic securitization costs.
Negative Points
- Despite strong overall performance, the mortgage market in Greece remains challenging, with a 1% decline in mortgage loans over the year.
- The company's cost of risk guidance for 2024 appears conservative, implying a higher cost in the fourth quarter.
- There is a potential for spread compression in new loan production, which could impact net interest margins.
- The accelerated DTC amortization plan, while positive for long-term balance sheet health, may require careful capital management.
- The launch of Snappi, a new venture, is expected to incur higher costs in 2025, impacting overall expenses.
Q & A Highlights
Q: Can you provide details on the assumptions for term deposit share and loan growth that drive the revised NII upside for 2025? Also, does the upside to 2025 NII flow through to net income guidance for 2025?
A: The term deposit volume is expected to remain static, with slight growth in site and current deposit levels. The major change is higher loan volumes from 2024's outperformance. The NIM sensitivity reduction is due to swap monetization and a stable term deposit cost pass-through. We are not commenting on 2026 yet, and the 2025 budget is underway, so no major changes to other lines are assumed at this time.
Q: Regarding the DTC amortization acceleration, are there any further regulatory approvals required? How does this impact the potential for higher dividend payouts?
A: No further regulatory approvals are needed. The acceleration of DTC amortization paves the way for higher dividend payouts, as it addresses balance sheet health concerns and supports our distribution policy.
Q: Can you elaborate on the potential for higher payouts in 2026 and the possibility of a buyback component in the payout next year?
A: While we are confident in a 50% payout for 2025, we aim to deploy extra capital for growth rather than increasing payouts beyond 50%. There will be a substantial buyback element in the 2024 distribution, depending on share prices.
Q: What are the expectations for loan growth, particularly in the mortgage market, given the current dynamics?
A: The mortgage market has been challenging, but state programs like "My Home" are helping. We expect mortgage growth to be flat next year, with some growth in small business and consumer loans. Overall, we anticipate a positive growth of EUR300 million from retail in 2025.
Q: How are conditions on spreads evolving over Euribor, and what are the assumptions for 2025? Is there any benefit from reperforming loans being purchased back?
A: New production is coming in lower than the stock, and we expect a slight erosion in stock spread. We have not baked in any significant impact from reperforming loans for 2025, and the expansion does not yet reflect 2024's outperformance.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
