PIRAEUS BANK H1.2020 FINANCIAL RESULTS 04 August 2020
H1.2020 FINANCIAL RESULTS 01 Executive Summary 02 Financial Performance 03 Appendix
H1.2020 FINANCIAL RESULTS 01 Executive Summary
01 GREEK ECONOMY POST LOCKDOWN: CAUTIOUSLY OPTIMISTIC Economic sentiment evolution 120 110 100 Jul.20 90 90.8 • The economy has restarted as of early May post lockdown 80 Jul.20 • Unprecedented policy response to address Covid-19 82.3 70 impact 60 May-12 Dec-12 Jul-13 Feb-14 Sep-14 Apr-15 Nov-15 Jun-16 Jan-17 Aug-17 Mar-18 Oct-18 May-19 Dec-19 Jul.20 • Economic sentiment index points to a milder vs Euroarea ESI - Greece ESI- Ε uroarea impact for the Greek economy Travel revenues’ distribution across quarters • The tourism revenue evolution during the summer period € mn will be a catalyst for Greece’s 2020 GDP. Q2.20 was weak, 5,000 25% of total 59% of 12% of March-May.20 (average total total yet improvement is expected in Aug.20 - €2.3 bn yoy 4,000 ‘17 -19) 75% reduction • Available funds of € 80bn for the period 2021-2027 will in passenger 3,000 arrivals to Greek support recovery, boosting jobs and growth 2,000 airports in H1.20 1,000 0 January May July August September October December February March April June November 2019 2020 Source: Bank of Greece, European Commission DG-ECFIN, Piraeus Bank Research Executive Summary
02 GREEK ECONOMY: OUTLOOK POST COVID-19 Real GDP Unemployment % of labor force % annual change 7.0 22 2.6 2.5 1.9 • Baseline scenario for a total -1% contraction 17 17 in the period 2020-2021 15 14 • Q1.20 released data for real GDP, -8.0 unemployment and residential real estate 2019 2020 2021 2019 2020 2021 Previous estimates show a mild recession effect for the quarter Revised estimates • Short term economic indicators point to Residential Real Estate Commercial Real Estate % annual change % annual change recessionary Q2 and Q3.20 10.0 10.0 7.3 4.2 • New estimates impact has been 5.1 4.1 5.0 5.0 incorporated in the ECL of Piraeus Bank 0.0 0.0 0.8 during H1.20 -5.0 -5.0 -3.9 2020- 2020- -10.0 -10.0 2021 2021 outlook outlook -15.0 -15.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (f) 2021 (f) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (f) 2021 (f) Source: Bank of Greece, Piraeus Bank Research; 2019-2020 outlook: Piraeus Bank Research Executive Summary
03 FUNDING WORTH ~40% OF GREEK GDP AVAILABLE IN THE NEXT 7 YEARS Next National Strategic Common National amounts in € bn TOTAL Generation EU Reference Agricultural Policy Development (N GEU) Framework (ESPA) 2021-2027 Programme Competitive economy & digital transition 29 24 4 - 1 Direct payments 14 - - 14 - Environment, energy 10 4 5 - 1 Infrastructure & transportation 9 3 3 - 3 Employment, education & social protection 9 1 6 - 1 Rural development 4 - - 4 - Regional programmes 2 - - - 2 Spatial interventions & urban development 2 - 1 - 1 Reserve 1 - - - 1 Market measures 1 - - 1 - Total 80 32 20 19 10 Source: Ministry of Development, Ministry of Rural Development & Food, Piraeus Bank Research • The EU Recovery Fund will allow Greece, to cover the ground lost due to the Covid-19 pandemic, and also to lift its long-term growth trend, as well to proceed structural reforms, through a specific plan required by EC, and targeted productivity enhancing investments • The support can be up to 17%-18% of GDP, approximately € 32bn . As this initiates, it will mean that starting from Q4 this year and spread over the next 4 years, the Greek economy’s public investment resources may expand by more than 4% of GDP per annum • Impact to GDP growth for the forthcoming years expected to be 1.5%-2.5% per annum Executive Summary
04 RESPONSIVENESS TO SUPPORT CLIENTS AND EMPLOYEES €3. 5bn €4.0bn € 1.5bn 524 (100%) • new loans to clients • allocation to client • branches fully • implemented debt financing programs year-to-date operational throughout moratoria for PEs sponsored by the State Q2.20 lockdown 5.5mn 94% digital 86 TRI*M 81% pulse transactions index survey • employee satisfaction • active customers, with • client satisfaction • 500k customers with Bank’s ranking in the top 10% transacting online per +52k additions in H1.20 responsiveness to of European banking week, +26% yoy Covid-19 crisis benchmark *data as of late July 2020; TRI*M index measures the strength of the relationship between the customer and the Bank Executive Summary EXECUTIVE SUMMARY
05 NOTABLE PROGRESS IN PERFORMANCE Total Capital Ratio Performing Exposures New Loan Production NII & NFI Group, € bn Group, € bn Phased-in, % Group-recurring, € mn 878 865 25.0 844 14.9 24.7 2.6 24.4 16.1% 151 % 146 NFI 2.1 139 13.6% 1.4 727 719 NII 706 H1.18 H1.19 H1.20 H1.18 H1.19 H1.20 H1.18 H1.19 H1.20 H1.18 H1.19 H1.20 NPEs Deposits (private sector) Operating Expenses Employees Group, € bn Group, € bn Group-recurring, € mn Greece, # 45.6 29.4 43.5 12.4k 12.0k 41.1 10.9k 26.1 517 23.3 476 428 H1.18 H1.19 H1.20 H1.18 H1.19 H1.20 H1.18 H1.19 H1.20 H1.18 H1.19 H1.20 * capital ratio on a pro-forma basis; H1.20 OpEx excludes fixed fee paid to NPE servicer; employee number for continued operations Executive Summary
06 Η1 .2020 FINANCIAL TAKEAWAYS Business Cost Covid-19 Capital & Performance Efficiency Impact Liquidity • LCR 169% , LDR 83% • NIM of 2.3% • OpEx decrease 10% yoy • Covid-19 impairments of • New loan production at • Improved C:I at 49% € 341mn • Capital ratio 16.1% • Reflection of the revised • Tight control of Covid-19 3.8% yield • Increase of capital ratio • Funding costs macroeconomic related expenses by 0.9% qoq ; 0.5% from estimates to IFRS substantially improved • Additional cost savings to organic generation and impairment assessment • NFI over assets at 0.5% be implemented during 0.4% from amendments during H1.20 • 95% of revenues from 2020-2022 period to the capital regime as NII & NFI introduced by EC * OpEx decrease on a like-for-like basis; capital ratio pro-forma; both metrics defined in the APMs section Executive Summary
RETURN TO PROFITABILITY IN Q2.20 07 DRIVEN BY IMPROVEMENT ACROSS THE BOARD Q1.20 Result | € mn Q2.20 Result | € mn 510 412 285 NII 367 Covid-19 185 -17 NII 360 -225 Other 125 -143 -227 NFI 80 NFI 71 Covid-19 Other 63 -160 -324 -19 Other Other* -202 -525 -340 Net Operating PPI Impairments Pre Tax Net Operating PPI Impairments Pre Tax Revenues Costs Result Revenues Costs Result * includes associates’ result Executive Summary
H1.20 EXHIBITS SOLID OPERATING TRENDS, 08 WHILE IT REFLECTS REVISED MACRO ESTIMATES IN IMPAIRMENT Group ( € mn) H1.19 H1.20 yoy Net Interest Income 719 727 1% • Ν et interest income at € 727mn , +1% yoy, mainly on the back of improving funding costs Net Fee Income 146 151 3% Core Banking Income 865 878 2% • Net fee income at € 151mn , +3% yoy , on the back of loan generation, asset management and investment banking fees Trading & Other Income 28 43 53% • Total Net Revenues 893 922 3% Operating costs continued their downward trend as per the Bank’s strategy ( -10% yoy like-for-like) Total Operating Costs (492) (452) -8% • Total Operating Costs (like-for-like) (476) (428) -10% 162bps of underlying cost of risk in H1.20 Pre Provision Income 402 470 17% • 73bps Covid-19 loan impairment (non-annualised), Pre Provision Income (like-for-like) 417 493 18% incorporates the impact of the revised macroeconomic assumptions Impairments (334) (670) >100% • o/w related with CVD-19 - (341) - Excluding Covid-19 impact of € 341mn , pre tax profit amounted to € 126mn in H1.20, while incorporating this, it Associates Income (11) (16) 45% stood at a loss of € 215mn Pre-Tax Result 57 (215) - Pre-Tax Result excl. CVD-19 impact 57 126 >100% Note: like-for-like items are displayed in the APM section of the presentation Executive Summary FINANCIAL PERFORMANCE
09 CONTAINED NPE INFLOWS LED TO € 0.4BN NEGATIVE FORMATION IN Q2.20 Group NPE development | € bn Bank NPE movement | € bn NPE 25.9 25.2 23.7 23.0 - € 14.4bn €130mn peak inflows 37.7 36.5 35.8 Re-defaults 0.3 32.9 0.2 0.2 0.1 Defaults 0.3 0.2 0.2 0.1 27.3 24.5 24.1 Q1.20 Q1.19 Q2.19 Q2.20 96% 23.3 Curings, 11.8 collateral (0.5) (0.5) Collections, (0.7) (0.7) Liquidations (0.3) (0.3) 10.5 provisions (0.3) (0.4) Write-offs Sep.15 Dec.15 Dec.16 Dec.17 Dec.18 Dec.19 Mar.20 Jun.20 Coverage • curings on track • lower liquidations Executive Summary
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