Ladies and gentlemen, thank you for standing by. I am Nina, your call operator. Welcome. Thank you for joining the Piraeus Financial Holdings conference call to present and discuss Piraeus Group's guidance for its 2023 financial KPIs. All participants will be in a listen-only mode. The conference is being recorded. The presentation will be followed by a question and answer session. Should anyone need assistance during the conference call, you may signal an operator by pressing star and zero on your telephone. At this time, I would like to turn the conference over to Piraeus Financial Holdings CEO, Mr. Christos Megalou. Mr. Megalou, you may now proceed. Good afternoon, ladies and gentlemen, and welcome to today's conference call on our 2023 financial estimates. This is Christos Megalou, Chief Executive Officer, and I'm joined today by Theo Gnardellis, Chief Financial Officer, and Chryssanthi Berbati, Head of Business Planning and IR. As promised in our Q3 2022 results disclosure, we are holding today's call to provide information on our financial estimates for 2023, having completed our 2023 budget and incorporating monetary and market trends. We will try to explain our thoughts and strategies on the various moving parts that are expected to drive this year's profitability. Our full year 2022 financial results will be announced on 24th of February, the earliest ever for Piraeus Bank. All of our 2023 financial disclosure dates have been published, and the full 2023 financial calendar can be found at the end of this presentation on page 14. Before we begin, let's touch briefly on the economic performance and prospects of Greece. Economic growth in Greece remained solid in 2022, with GDP rising 6% year-on-year in nine-month 2022, a level of growth that is expected to be also achieved for the full year 2022. Growth is underpinned by the significant structural reforms that have taken place during the past years, and a strong inflow of foreign direct investment in 2022, with a number of world-leading companies coming to Greece. Greek debt to GDP in 2022 is projected to have one of the largest drops worldwide, while similar trend is expected to continue in 2023. On the back of these developments, on Friday evening, Fitch Ratings became the third rating agency to upgrade the Greek sovereign rating to BB+, one notch away from investment grade level, which we expect Greece to achieve within 2023. The country remains on a path of economic expansion into 2023, reflecting the different phase that it finds itself in the current economic cycle, assisted by its improved resilience and competitiveness. Our house view is that Greek GDP will grow approximately 3% this year, driven by tourism, consumer spending and investments. The deployment of the recovery and resilience funds in the Greek economy is a major catalyst. The total RRF resources that have been disbursed or approved amounts to EUR 11 billion, ranking Greece among the top of the list in the EU. Turning now to Piraeus Bank. 2023 is expected to be a milestone year. The ambition for the group is to further enhance shareholder returns with more than EUR 0.45 of normalized earnings per share. To attain a minimum sustainable 10% return on tangible equity. To boost CET1 capital ratio by approximately 100 basis points. To further de-risk our balance sheet to a below 6% NPE ratio with above 60% NPE coverage. We expect net interest margin to peak at above 2% in 2023, supported by higher interest rate on a healthy growing balance sheet. All key financial indicators of 2023 are presented on slide 9 of this presentation, and further analysis is provided on slides 10 and 13. With that, let's open the floor to take any questions you may have. Ladies and gentlemen, at this time, we'll begin the question-and-answer session. Anyone who wishes to ask a question may press Star followed by one on their telephone. If you wish to remove yourself from the question queue, you may press Star and two. For those participating in the questions and answer session, please use your handset when asking your questions for better quality. Anyone who has a question may press Star and one at this time. One moment for the first question, please. The first question is from the line of Mehmet Sevim with JP Morgan. Please go ahead. Good afternoon. Thanks very much for the opportunity. I'd like to press you on NII guidance, if I may, and specifically on your underlying assumptions for this year and also for beyond so 2024, based on where the rates will go. Firstly, on your 2023 guidance, I see that you're assuming a deposit facility rate of just 2.5%, which I believe could be slightly conservative compared to market expectations. Can I ask why you decided to use 2.5%? Also what would the assumptions be if you were to assume higher rates for by the ECB this year, particularly in terms of the deposits mix shift within the year, but also in terms of deposit beta, which I understand is about 50% based on the DFR of 2.5%. Hi, Mehmet, thanks for the question. Well, the DFR was assumed back in December when we actually closed the budget. It was based on the monetary conditions at the time. I gotta say here that this budget was driven on making sure that assumptions there are resilient and that returns can be delivered, not dependent on extraordinary macro monitor circumstances. Across the P&L, the double-digit return that we are promising there is based generally on something that we think is, you know, rather certain or definitely feasible. Obviously a DFR above that, which I agree with you, the consensus is that it will be higher, might create and will probably create marginal beneficial NII. We would expect, of course, the pass-through on both loans to be reduced and deposits to be increased. We've run some scenarios. I would say that there is a marginal NII benefit up to the level of 3.5%. We're not budgeting for that. Also to answer your question about beyond 2023. Obviously, we don't have assumptions, but we're not sure how much that delta would be sustainable going forward. Our assumption is that the current assumed NIM levels should be defended in a sustainable manner beyond that beyond this year. We are actually reaching and budgeting for a sustainable return 2023 onwards rather than a one-off story for 2023. On the mix, I would say that we are already quite, I would say, I don't know if I'd call it conservative, but definitely, in alignment with the past history, where we are doubling the mix of TD expected within 2023. Contrary, I have to say, to what we've seen in other jurisdictions as well as what we're seeing on the ground right now. There is already a substantial shift towards the time deposit. If you wanna do a back of the envelope sensitivity, a 10% shift on the mix, we're budgeting now for 35%. If it were 25%, that creates an annualized uplift of the NII of about EUR 50 million. I said in the beginning, all of the assumptions are plugged as per our December reality, so that we can demonstrate sustainable, ongoing returns for 2023 and beyond. That's very clear. Thanks so much, Theo. Can I clarify, you mentioned if DFR were to be higher, so I think 3.25%, NIM would be at 2.5% rather than the 2% that you're guiding now. Is that correct? No, actually what I said is that there will be marginal NII benefits. Just to give you a figure, it would be a low single digit NII growth versus 2022. Currently the NIM that you are looking at above 2% is an NII nominal growth of in the high teens area, right? I would say between 15% and 20%, depending also on how the year closes. Extra DFR could provide a 2023 bump of 1% to 3% level. That's very clear. Thank you. Just maybe on 2024 again, if I may. If you assume DFR reaching, let's say, you know, 3.25 at some point this year, and then it starts coming down, and normalizes at 2.5%, 2% levels in 2024, maybe 2025, would you expect that NII would peak in 2023 or early 2024, and then, if things start normalizing, would come down again? How would you think about the dynamics beyond that? I would say that I think you are right. We do expect that given also the lag time of the pass-through, 2023 would be a peak NII situation on a nominal basis, potentially also early 2024, depending on the speed of the accumulation of interest rates. That being said, for us, the anchor metric is net interest margin to make sure that, you know, even if we are some basis points above 2% in 2023, we stay in that area in a sustainable manner past 2023. That's all very helpful. Thank you very much, Theo. The next question comes from the line of Konstantinos Alivizatos with AXIA Ventures. Please go ahead. Hi. Thank you very much for the presentation. I've got a couple of questions. One question is on capital. You say that there's gonna be an organic capital generation of 100 basis points. However, that includes 30 basis points reduction of other adjustments. I was wondering on the same number, the 100 basis points, does it include any assumption on any dividend payment for the year? The second thing is on the cost and the 2% reduction year-over-year on an underlying basis. How does it compare with your previous number? I.e., do you see any inflation in your cost base? Thank you very much. Okay. On the capital question, the projection for 2023 is until year end of 23, it does not include any assumption for dividend. Any such move would obviously happen on the back of the 23 results. It would not happen within the financial year of 23. The 2% reduction on admin costs and overall on the cost base, you know, recurring basis, of course includes inflationary assumptions. We have had that phenomenon as well also in 2022, as we will discuss on the 24th of February. I would say there is a missing digital inflationary effect assumed in the budget of 23. The cost-cutting initiatives that we have launched, and are continuing to launch are countering that and delivering a nominal drop of 2% throughout the year. Thank you. I didn't get the answer for the 30 bips of other adjustments. Can you give some color on what are those? All right. It's mostly cost restructuring. Voluntary exit scheme costs for the continued rightsizing of the organization, plus some, I would say immaterial kind of marginal NPE cleanup from marginal sales and tail costs from transactions that we have under completion. The majority of it has to do though with cost restructuring. All right. Thank you very much. The next question is from the line of Benjamin Caven-Roberts with Goldman Sachs. Please go ahead. Good day. Thank you very much for the presentation. My first question is on return on tangible equity guidance. You have revised it upwards from the previous outlook for 2023. Is this mostly driven by higher benefits from the higher rates and net interest margin? Or you bake in some additional improvements on, let's say, cost-to-income ratio there relative to previous guidance or on the fee incomes? The second question relates to asset quality. In the last quarter, did you see there any deviation relative to the first 3? Namely, did you see any, like, deterioration or surprises, there are no changes, regardless of higher rates? Finally, may I also follow up on the question related to dividends? Do you reiterate your guidance for the dividend payment, the first dividend payment from the profits of 2023 and 2024? Just wanted to reconfirm that. Thank you. Hi, Michael. Indeed, the return is a much higher guided than what we had announced, I think, even last April, during the business plan presentation. Of course, it is a very different world that we live in now in terms of monetary evolution. I have to say that the delta is even bigger given the fact that this number now includes all capital elements, including AT1 coupon payment. And the delta is indeed primarily NII. It's a different interest rate environment with active management on loan and deposit pass-throughs that deliver the higher NIMs, as a result, the higher return. While still, I would say, though, being in a cost reduction mode. We are not surrendering to inflation. We are continuing the cost reduction, so therefore even further improvement on the cost to income. The de-risking is clear, and the cost of risk remains, I would say on the low side, although we have prudently, I would say, assumed 30 to 40 basis points higher cost of risk for 2023. All of that baked in delivers a better result. On asset quality, as said, so that we can defend what I said also before, a double-digit return under the circumstances that one could budget for or predict for, it is assumed to be higher. That being said, this is not evidenced right now. The inflationary effects though are still kicking in, I would say. It is a very liquid economy. Cost of risk is an upside, given what we are seeing on the ground right now, but you see our assumption on in terms of our returns. Michael, on the dividend question, on the basis of our estimates as we present them also here today, by the end of 2023, we expect that we will be substantially above supervisory guidance. The decision on dividend, as we all understand, will be based on a number of factors, and this includes the capital trajectory at the time, underlying risks, what the economy will be doing going forward. As a result, you know, we will be assessing the situation as we come closer to those dates. We estimate that we will be, as I said, well above the supervisory guidance that is, we will be observing for ourselves for Piraeus Financial Holdings. Okay. Thank you very much. Very clear. The next question is from the line of Keamogetse Konopi with Citi. Please go ahead. Hello, can you hear us, Mr. Konopi? Yes. Yes, I can. Yes, thank you very much for the call. I think that the cost question has already been unpacked, I just had a question there. Were there any non-recurring items to note in the improved cost-to-income ratio? Has the cost outlook actually changed since the Q3 results? Thank you very much. The cost income that we're does not have any non-recurring item. It's actually a recurring normalized metric that we are monitoring. In 2023, the only major non-recurring item is a cost restructuring elements for voluntary exits. I would say nothing has changed in terms of our trajectory to be reducing costs on a nominal basis, accounting the inflationary effects. Okay. Thank you. That's clear. The next question is from the line of Osman Memisoglu with Ambrosia Capital. Please go ahead. Hello. Many thanks for your time and the presentation. Just following up back on the deposit a bit. How do you envision deposits behaving after 2023? Just some color, if you could. Particularly this 35%, does it end there or, I agree it's conservative, but just wanted to hear your thoughts. Does it continue to go up? Also in your budget, is that a linear assumption? I think it's around 20, so it gradually gets to 35, if you could confirm that. Finally on deposits, in the past in 2019, site deposits were closer to time. From my understanding, you're not expecting that. You're expecting them to behave more like savings. Do I have that correct? Just wanted to clarify that. What's happening currently, in the results call, I remember management had expressed that you would not be aggressive and kind of stay behind and observe competition. If you could give us some color on the current behavior of competitors in the deposit market. Thank you. Hi, Osman. Let's start with the mix. The 35% TD mix that is budgeted for the end of 2023, I would say is a terminal mix effect with the deposit, with the interest rate situation that we are seeing. Currently, we haven't seen anything. We haven't seen a mix shift. I think across Europe, we've not seen major mix shifts. We were at 17%, we remain at that area, more or less 18, if I remember correctly. There's no shift as of now. We think that that is the terminal number. As said, the mix effect could also be an upside for the 2023 nominal result. If it's not reached in December, then it will be reached sometimes later in 2024. That is our view of things. In terms of how it converges, in terms of timing, imagine that we have assumed the pass-through to happen two to three months after any DFR move. That is yet to be confirmed, I will say, with the DFR moves that have already happened. That is how we have calculated the above EUR 250 million of deposit cost for 2023. The delays that happened because of market situation, of course, create a tailwind again on the result of 2023. We are mostly focused on the sustainable result going forward and not on temporary peaks of a particular year. In terms of cycle saving, yes, I would say for different reasons, cycles have been the same as TDs. They are not budgeted to increase. There is no commercial driver for the cycle cost to actually increase. It's the first demand deposits that are expected to stay at the levels where they are today. The sensitivity happens on the terminal rate and the mix of time deposits. Okay. if I could follow up on linked up with the NIM, and comments that you just mentioned, beyond 23. Do I understand correctly, although in the presentation you mentioned a peak, you're pretty confident that you're gonna stay at the peak beyond 2023? maybe if you could give us some color, is that gonna be a result of maybe spread adjustment by the sector? It's not a lot of players maybe, you know, that's how we should think about it. How do we think about the NIM beyond 23? Well, the guidance for 2023 is above 2%, let's just say that. When we speak about 2% area, probably 2023 is slightly higher than 2%, and potentially 2024 is around 2% or a little bit lower than 2%. Staying at the 2% area is what the commercial goal. I said before, the pass-through and the speed through which we have pass-throughs in the loan book and the deposit book is what will affect the actual nominal NIM print. Theo, can we assume the loan growth will be higher in 2024? For this year, for 2023, we are budgeting for a flat situation similar to 2022. When I say flat, I mean the same growth. Between 2023 and 2022, similar situation. The trends of the economy are such that loan growth will continue. Respectively also deposit growth and first demand growth will continue, as we have seen for the market also in 2022. Beyond 2024, it's really a macro question. The house view of the Piraeus Bank is we're looking at a sustainably GDP growth of low single digits throughout the coming years. Perfect. Final thing on asset quality, what kind of cost of risk is your making in these numbers? Also, I saw the inflows, shall I assume outflows are similar, so we're looking at flat to show organic formation? Thank you. The cost of risk, we are budgeting, I said, for 120 basis points organic cost of risk for 2023. 30 to 40 basis points higher than the run rate of 2022 on the back of higher inflows but also different inflow mix, more towards unsecured exposures that we expect would be the first ones to kind of default under inflationary pressure. The formation actually of NPEs, we budget to continue to be negative. On the back of that, we are dropping the nominal NPE number in 2023. As to achieve mixing in digit levels of NP ratio. This is happening, I have to say, on the back of organic treatments of the portfolio, both in terms of cash collection and curings. We have retained the post major cleanup of the robust bank. We have retained the NPE book, that is to be dealt with, in an organic manner. Having a much more contained book, I have to say, makes it also a much more focused effort to continue reducing it. Negative formation for 2023 as well. Perfect. I'll stop here. I I have one more, but I'll stop here. Thank you. The next question is from the line of Panagiotis Kladis with Alpha Finance. Please go ahead. Hi, guys, and thanks for taking my question. I have two questions on credit expansion. First, what are your assumptions between for retail and business loans? Second, if you see any pressure on spreads, either from competition or from the clients asking for lower spreads. The second one is on cost of risk. You discuss about the organic cost of risk. Should we expect something on top of that for 2023? Thank you. Panayiotis, on credit expansion, on your first question, we see and we believe we'll continue to see net credit expansion in the corporate SME book, and somewhat a small contraction in the retail book. This is going to be what we expect will happen in 2023. As far as 2024 is concerned, we expect similar trends. As far as the retail, we need to see how the metrics will behave also in 2023 before we reach a conclusion. Having said that, credit expansion in the area of EUR 1.7 billion net for both retail and corporate is a reasonable assumption to assume both for 23 and 24. In terms of the question around loan spreads, as said, the loan pass-through is budgeted too stay at the 60% to 70% area. Therefore, some spread contraction is budgeted. We are expecting 130 basis points yield increase on the back of almost double usable increase during the year. Spread contraction is budgeted for. Is it happening now? I would say there is also a healthy, I would say, market phenomenon, but rather contained at this time, and definitely within our budget estimates. In terms of cost of risk, whether we should expect any kind of inorganic or clean up charges. As I said, marginal, I would say. I would even call them immaterial charges. Yes, as the cleanup continues. Definitely nothing like what we have seen in the past years, when the major cleanup effort was happening or even what is done in 2022. Yes, but nothing to really budget for. Great. Thank you very much. The next question is from the line of Alexandros Boulougouris with Wood & Co. Please go ahead. Hi, good afternoon. A quick clarification on the NII that you mentioned earlier, and I missed it. Did you mention that on an actual basis, we should expect a high teens growth in NII? That's my first question, if I understood correctly. What assumption should we put now on TLTRO should be assumed full repayment by the end of 2022? Also regarding senior preferred issues, what do you assume in the budget for 2023? That's my questions. Thank you. Hi, Alex. Yes, indeed. NII growth is budgeted for high teens for 2023 versus what we expect for 2022. There was also a discussion that it might, depending on the DFR evolution, there could be a few percentile points higher than that for the year 2023. For TLTRO, in December, Piraeus Bank has repaid most of its exposure. We have EUR 5.5 billion of TLTRO left. It's a very liquid balance sheet with very high LCRs, not affected by this repayment. We actually went ahead, given the fact that after November 22nd, it's a PNL neutral facility. It continues in its maturity profile, and it will be repaid as per that until the first half of 2024. Oh, thank you. The MREL issues? Well, on MREL, the guidance of the SRB is given for the coming years and for 2023. There will be one issuance that will this year of 2023 to continue meeting that guidance year- on- year as we converge towards the final target. The timing of that issuance, depending also on market conditions, we will be deciding throughout the year. Great. Many thanks. As a reminder, if you would like to ask a question, please press star and one on your telephone. We have a follow-up question from Osman Memisoglu with Ambrosia Capital. Please go ahead. Hi. Thanks. Just 2 quick clarifications. For that net credit expansion, what kind of PE book expansion you're thinking? Also on capital generation, the 100 basis points, Are the synthetic securitizations included at all in that number? Thanks. The net credit expansion, Osman, is all PE. It's on the performing book. As I said, it comes mainly corporate and SME. You then have a negative formation, I think, on the... The retail? On the retail, yes. It's going to be depending of course on the repayments, which are pretty steady as they are over the last few years. As for the next year, as also is happening in 2022, the retail consumer and mortgages, it is negative. The expansion comes for large corporate, SME, mostly. Okay. In terms of synthetic securitizations, we have a, I would say, a small activity budgeted for 2023, Osman. Again, nothing that substantially moves the needle here. The synthetic securitizations are a strategic tool of constant assessment. They're not a capital play. It has to do with the pricing, with how they help us improve our the portfolio RAROC and the eventual returns and how we deploy the extra capital. Nothing to budget for. It's not a capital element of the evolution of 2023. We will be seeing how the book evolves and what opportunities are out there. Great. Thank you. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Megalou for any closing comments. Thank you. Ladies and gentlemen, thank you all for participating in our investor update conference call. As we said, the next milestone is on the 24th of February, where we announce our full year results. We look forward in the meantime to discuss all of you and definitely reach you after the 24th into our investor outreach program, which will start after the publication of our year-end results. Thank you all for participating in this conference call. Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.