Piraeus Bank Group: 9M 2017 Financial Results
Key Highlights for the nine months ended 30 September 2017
Improving operating profitability & strengthened financial profile
- Core banking income, comprising NII and fees, at €558mn in Q3,+5% yoy
- Operating costs at €288mn in Q3, -4% yoy
- Cost to income ratio at 49% in Q3 from 55% a year ago
- Pre provision income at €294mn in Q3, +22% yoy
- Robust capital position maintained, phased-in CET-1 at 17.0% and fully-loaded at 16.6%
NPEs, NPLs down for 8 th consecutive quarter, best-in-class performance
- NPE operational target attained seamlessly for 5 quarters
- NPE stock down to €33.8bn, -€4bn from peak
- NPE formation at -€0.3bn, NPL formation at -€0.5bn, both pre-write offs
- NPL stock down to €22.1bn, -€6bn from peak
Increased deposit inflows, decreased eurosystem reliance
- Deposits in Greece +€0.9bn in Q3
- Loans to deposits ratio at 109%; 2nd best domestic market level
- ELA below €6bn in late November; 2nd best domestic market level
- Successful issue of 5Y €0.5bn covered bond in Oct.17
Significant progress towards successful implementation of “agenda 2020”
- Piraeus Core Bank €311mn net profit in 9Μ, RoA 1.1%, NIM at 309bps
- Marginally negative bottom-line on a Group level driven by continuous, intense clean-up
- New loan generation slightly up for SMEs, aiming at >€1bn new loans in 2018
“Following a period of uncertainty in the beginning of the year, the Greek economy is now back on track. The main indicators in key sectors of the economy are returning to positive territory and sentiment is improving. These developments are gradually feeding into the banking market.
In-line with our commitment to meet the NPEs targets agreed with our supervisory authorities, we outperformed market trends in both NPEs and NPLs reduction. In Q3 NPEs decreased by €0.7bn qoq and by €3.9bn from their peak in Sep.15. Pre write-off NPE formation was negative by -€0.3bn in Q3, the best quarterly performance for Piraeus to-date. NPLs decreased by €0.9bn qoq, down €5.8bn from the Sep.15 peak, reducing drastically the domestic NPL ratio from 40% to 36%. Pre write-off Q3.17 NPL formation was also negative by approximately -€0.5bn in Q3.
The positive trend in domestic customer deposits accelerated in Q3.17, with a quarterly increase of €0.9bn. ELA reliance decreased by €2.5bn in Q3.17 to €7.8bn, reduced further to below €6bn in late November, driven by additional deposit inflows and a more active interbank repo market. Piraeus’ ELA over assets and net loan-to-deposit ratios in Greece are both second best in the market.
Piraeus’ pre-provision income rose by 16% yoy in 9M.17 landing at €844mn, driven by a balanced 5% annual income growth and 5% cost reduction. The core sources of banking revenues, net interest and fee income, recorded a strong increase in Q3 of 5% versus the same period of last year. Our accelerated cost efficiency actions have driven cost-to-income ratio in Greece for 9M.17 to 48% from 54% in 9M.16. As we intensified our efforts to deal with legacy issues, provisions remained elevated, resulting in a marginal 9M.17 bottom-line loss for continuing operations of -€19mn. At the end of Sep.17, the Group’s phased-in and fully-loaded CET-1 capital ratios, both increased qoq, for the 2nd consecutive quarter, to 17.0% and 16.6%, respectively.
The Bank’s transformation journey is progressing with speed and we are focused on the disciplined execution of our strategic plan, “Agenda 2020”, aiming at aggressive balance sheet de-risking and rapid normalisation. Piraeus Core Bank recorded a net profit of €311mn in 9M.17, and a return on assets of 1.1%, highlighting the strength and profitability potential of our business once the Group’s transformation is completed. Piraeus Core Bank delivered a solid set of metrics in 9M.17, including NIM of 309bps and fees over assets of 87bps. “Piraeus Legacy Unit” (“PLU”) continued to contract RWAs by €0.6bn qoq. In the past few months, we have accelerated the pace of our non-core assets disposal program and we are actively contemplating inorganic balance sheet normalisation initiatives, in-line with our de-risking strategy.
The Bank’s reinvigorated management team, including our new Head of PLU, George Georgakopoulos, is working relentlessly towards the implementation of our plan, delivering on commitments and operational targets, while accelerating the clean-up of our balance sheet. We have already started the process for two NPE disposal transactions, one for business and one for consumer loans, of a total NPE on balance sheet amount of c. €2bn. For the full year 2017, we are committed to the accomplishment of our NPE goals, and are targeting a positive bottom-line result.”
Christos Megalou, Chief Executive Officer
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+30 210 3288830
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