PIRAEUS BANK INVESTOR UPDATE London, 15 July 2019 TODAYS AGENDA - PowerPoint PPT Presentation

PIRAEUS BANK INVESTOR UPDATE London, 15 July 2019

TODAY’S AGENDA 10:00 Welcome 10:00-10:30 Christos Megalou Chief Executive Officer 10:30-10:50 Elias Lekkos Chief Economist 10.50-11:20 Theodore Gnardellis | George Christopoulos Piraeus Legacy Unit Strategy | Asset Sales 11:20-12:00 Q&A 12:00-12:10 Break 12:10-12:30 Eleni Vrettou Corporate & Investment Banking 12:30-12:50 George Georgakopoulos Piraeus Legacy Unit | NPE Servicer 12:50-13:20 Q&A 13:20-13:30 Christos Megalou Chief Executive Officer 13:30 Closing Additional participants in Q&A: Tom Arvanitis (Piraeus Financial Markets), Chryssanthi Berbati (Investor Relations)

Discussion Items 01 STRATEGIC OVERVIEW 02 GREEK ECONOMY & OUTLOOK 03 NPE STRATEGY & EXECUTION 04 CIB PERFORMANCE & TRENDS 05 NPE SERVICING AGREEMENT

01 STRATEGIC OVERVIEW

01 1.1 OUR DEVELOPMENTS | AT A GLANCE A 2018 Capital Strengthening Plan Completion B Enhancement of Capital Buffers by Recent Tier 2 Issue C Strategic Partnership with Intrum on NPE Servicing D New Roadmap “Agenda 2023” 2015 Restructuring Plan Completion E F NPE Strategy Execution on Track G New Business Picking-Up & Positive Jaws 5 | STRATEGIC OVERVIEW

01 1.2 OUR DEVELOPMENTS | CAPITAL A 2018 Capital Strengthening Plan Completion • The internal capital actions of 2018 have been concluded €0.5 bn • A 10NC5 Tier 2 was issued on 26 June 2019 € 0.4bn • Additional initiatives are executed (eg NPE servicing agreement) € 0.4bn € 1.3bn 6 | STRATEGIC OVERVIEW

01 1.3 OUR DEVELOPMENTS | TIER 2 B Enhancement of Capital Buffers by Recent Tier 2 Issue Allocation by Investor Type Allocation by Geography 7 | STRATEGIC OVERVIEW

01 1.4 OUR DEVELOPMENTS | NPE SERVICING C Strategic Partnership with Intrum on NPE Servicing • New servicer company for the management of NPEs & REOs • Market-leading independent NPE servicer • 80% of the new servicer company will be held by Intrum & 20% by Piraeus Bank • Expectation for a material boost to the execution of Piraeus’ de-risking strategy 8 | STRATEGIC OVERVIEW

01 1.5 OUR DEVELOPMENTS | STRATEGY D New Roadmap “Agenda 2023” • Piraeus Bank introduced its new strategic roadmap with the following targets:  Cost-to-Income ratio at low 40s  Non Performing Exposures at single-digit ratio  Return on Tangible Equity at high single-digit  Regulatory Capital ratio at ~200bps above requirement 9 | STRATEGIC OVERVIEW

01 1.6 OUR DEVELOPMENTS | RESTRUCTURING PLAN E 2015 Restructuring Plan Completion • Greek operations commitments completed (eg headcount, branches, costs, LDR) • International divestments concluded (eg Serbia, Romania, Albania, Bulgaria) 10 | STRATEGIC OVERVIEW

01 1.7 OUR DEVELOPMENTS | NPE REDUCTION F NPE Strategy Execution on Track • 6M.19 NPE reduction as per target • NPE sales of € 2.3bn GBV completed in one year , € 0.7bn NPE sale at BO phase • More than € 2bn RRE-based securitization in preparation , planned for early 2020 11 | STRATEGIC OVERVIEW

01 1.8 OUR DEVELOPMENTS | PROFITABILITY G New Business Picking-Up & Positive Jaws • Healthy business demand emerging in sectors geared to growth and exports • Target for € 4bn new loans in 2019 vs € 3bn in 2018; € 1.9bn in H1.19 • Credit decisions based on the Bank’s Adjusted Returns Tool (“ART”) • Earnings capacity supported by both top line and OpEx improvement 12 | STRATEGIC OVERVIEW

01 1.9 2018 CAPITAL ENHANCEMENT PLAN The € 3.6bn RWA Relief is Equivalent to € 0.5bn Capital Enhancement for the Bank RWA Actions Announcement Status Relief >> Avis [operating leasing company] Q1.18 ~ € 0.2bn >> Serbia [banking subsidiary] Q2.18 ~ € 0.3bn >> Romania [banking subsidiary] Q2.18 ~ € 0.6bn >> Amoeba [secured NPL portfolio] Q2.18 ~ € 0.4bn >> Arctos [unsecured NPL portfolio] Q2.18 ~ € 0.1bn >> Albania [banking subsidiary] Q3.18 ~ € 0.4bn >> Bulgaria [banking subsidiary] Q4.18 ~ € 0.7bn >> Other de-risking actions [non-core assets de-risking] Q4.18 ~ € 0.6bn >> Nemo [secured NPL portfolio] Q2.19 ~ € 0.3bn Total ~ € 3.6bn 13 | STRATEGIC OVERVIEW

01 1.10 2019 CAPITAL ENHANCEMENT PLAN Capital Position Strengthening through a Number of Additional Initiatives Targeted Capital Management Actions Improvement Issued A. Tier 2 debt issuance ~85bps 26 Jun.19 NPE servicing B. Sale of operations, non-core subs & participations ~80bps agreement C. Review of high capital-consuming businesses D. Enhanced organic revenue generation E. Accelerated cost efficiency actions F. Balance sheet optimization | RWA management 160-200 bps total initial guidance 14 | STRATEGIC OVERVIEW

01 1.11 CAPITAL TRAJECTORY POST RECENT TRANSACTIONS Recent Transactions, Coupled with Return to Profitability, Strengthen Capital Position Total Regulatory Capital (%, phased-in) Total Regulatory Capital (%, fully loaded) 15 | STRATEGIC OVERVIEW

01 1.12 PROJECTED CAPITAL EVOLUTION Organic Capital Generation Supports Capital Development Going Forward Total Regulatory Capital (%) +0.4% +0.8% +0.9% 14.0% to 14.5% OCR e: estimate; f: forecast 16 | STRATEGIC OVERVIEW

01 1.13 GREEK MARKET NPE TRAJECTORY The 3-year NPE Targeted Reduction Equals ~30% of GDP; Ambitious yet Feasible NPE ratio 48% 48% 47% 45% <20% NPE a: actual; f: forecast GDP €18 5bn €184 bn €18 7bn €1 91bn € 202bn 58% 57% 51% 43% 13% NPE/GDP 17 | STRATEGIC OVERVIEW

01 1.14 REAL ESTATE MARKET TREND Upside Potential to Collateral Valuations from Acceleration of Real Estate Price Recovery Outlook for Real Estate Prices Embedded in Existing Plan 2017a 2018a 2019e 2020f 2021f Non-residential real estate price change 1.6% 5.0% 4.0% 3.6% 3.6% Residential real estate price change -1.0% 1.5% 2.6% 3.2% 3.6% a: actual, e: estimate, f: forecast Source: Piraeus Economic Research, baseline scenario • Current Run-Rate of Non-Residential RE prices at +6% and Residential at +4% yoy • Piraeus Bank has € 23bn of real estate assets as underlying collateral for loans and €3 bn ο f own assets. Almost €11 bn relates to NPE portfolio • For every 100bps incremental shift in Real Estate prices , estimated value improvement is approximately at € 50-100mn 18 | STRATEGIC OVERVIEW

01 1.15 IMPROVED LIQUIDITY PROFILE Satisfactory Liquidity on the back of Deposit Restoration and Macroeconomic Stabilization Domestic Deposits | € bn Liquidity Coverage Ratio (%) LDR c.85% > 95 % 19 | STRATEGIC OVERVIEW

01 1.16 LOAN BALANCES Loan Evolution Incorporates the Parallel Dynamics of De-risking and Healthy Loan Growth Gross Loans ( € bn) New Loans ( € bn, %) ~6 53 ~5 48 ~4 -15 NPE 3.1 +10 PE  Non performing exposures to be reduced as per plan  Business lending is the driver of loan growth  Performing exposures: € 15bn new loans and € 2bn net curings to be offset by € 7bn amortization and other e: estimate; f: forecast 20 | STRATEGIC OVERVIEW

01 1.17 ADJUSTED RETURNS TOOL Adjusted Returns Tool Developed for Risk- Based Pricing, Fully Adopted by the Bank’s Business Units Cost of Cost ARoC Credit Risk Spread Cost of Capital Profit Final Yield Cost of Hurdle / Spread Liquidity Margin Rate Operating Expenses* The overall methodology aims at:  optimizing capital allocation Ancillary  establishing a hurdle rate for every loan decision Revenues**  capturing term profitability , focusing on return maximization and credit loss mitigation  enhancing the risk culture across the Bank * Operating expenses soon to be introduced into the methodology ** Ancillary revenues have a positive contribution, thus reducing the Hurdle rate 21 | STRATEGIC OVERVIEW

01 1.18 REVENUES & OPEX| POSITIVE JAWS Positive Jaws Supported by Frontloaded Cost Cuts and Revenue Increase post 2020 Operating Jaws ( € bn) Xxx • Xxx • 1.2 Xxx • a: actual; e: estimate; f: forecast 22 | STRATEGIC OVERVIEW

01 1.19 NET INTEREST INCOME Resilient NII Going Forward as Improvement on the Asset Side Offsets Debt Issuance Costs ( € mn) 2018a 2019e Current NII run rate at mid single digit increase ● Interest Income 1,874 1,830 Loans & Bonds 1,770 1,715 NII going forward growing at low single digit pace per ● annum: yield from new assets will outpace increasing Other 105 115 debt securities issuance costs Interest Expense 465 430 Deposits 199 180 Loan income to move into positive trajectory in line ● Interbank Funding 50 15 with new healthy disbursements Debt Securities 6 25 Other 210 210 Net Interest Income 1,410 1,400 a: actual; e: estimate 23 | STRATEGIC OVERVIEW