Piraeus Financial Holdings:
TPEIR: Piraeus increases its net profit in Q3 by 15% yoy, to €320mn
Robust profitability | Best-in-class operating efficiency | |||
| 18% return over tangible book value | 30% cost-to-core income | |||
| €0.25 normalized earnings per share | 2.7% NIM stable NII QoQ | +11% net fee income YoY | ||
Capital generation | Solid asset quality | |||
| +1.3% QoQ | 20% total capital ratio | 3.2% NPE ratio | 0.5% | |
Performing book expansion | Client assets under management | |||
| +€2bn YtD | €32bn Sep.24 | €11bn Sep.24 | +€1bn net mutual fund sales YtD | |
Q3 9M 2024 highlights
- Record 9M normalized net profit of €932mn, corresponding to €0.72 EPS, leading to updated target of >€0.90 for 2024. Q3 net profit reached €320mn, or €0.25 EPS, +15% yoy
- 18% RoaTBV in 9M, leading to updated target of >17% for 2024; tangible book value per share increased to €5.69 in Sep.24, up 15% yoy
- Q3 net interest income increased qoq to €530mn from €528mn in Q2, despite Jun.24 rate cut, benefitting from strong growth of client balances
- 9M net interest income reached €1,575mn, +7% yoy, with net interest margin standing at 2.7%
- Best-in-class net fee income at 0.8% over assets in 9M, amounting to €480mn, mainly driven by financing fees, cards issuance, funds transfers and asset management. Net fee income amounted to €156mn in Q3, +11% yoy
- Client assets under management increased by 29% yoy, to €11bn in Sep.24, driven by the #1 position in mutual fund net sales in 9M, as well as institutional mandates and private banking inflows
- Best-in-class operating efficiency, with 30% cost-core-income ratio in Q3 and recurring operating expenses reaching €206mn, up 6% yoy, incorporating increased talent retention remuneration and IT investments. 9M recurring expenses amounted to €598mn, flat yoy, maintaining cost discipline
- Organic cost of risk remained stable at low levels for third consecutive quarter, standing at 54bps in Q3 and 49bps in 9M. Excluding NPE servicing fees and synthetic securitization costs, underlying cost of risk landed at 33bps in Q3 and 23bps in 9M
- Solid asset quality, with NPE ratio at 3.2%, vs. 5.5% a year ago, and prudent NPE coverage at 61%, up 4 percentage points yoy. 2024 target updated to <3.0% NPE ratio, on the back of best-in-class organic management and a small NPE sale under preparation
- +€1.9bn performing loan book growth achieved in 9M, reaching €32bn, leading to updated target of €33bn for end-2024, which corresponds to 10% growth; out of €2.8bn disbursements in Q3, c.€1.3bn were to small, medium enterprises and individuals and c.€1.3bn to corporates; €1.5bn Piraeus loan pipeline related with RRF, on top of €0.5bn disbursed
- 14.7% CET1 ratio already meets 2024 target; 2024 distribution accrual increases to 35%, while we have updated our distribution policy to provide for a 50% payout ratio for next year. Total capital ratio stood at 19.9%, exceeding by c.410bps the 2024 P2G supervisory guidance; MREL ratio reached 29.1% in Sep.24. Piraeus has already met the terminal MREL requirement, more than a year ahead of target
- Superior liquidity profile, with liquidity coverage ratio at 244%, and loan-to-deposit ratio at 63%
9M.24 outperformance drives FY.24 targets higher and paves the way for a strong 2025
New guidance points to >€0.35bn payout out of 2024 profits, corresponding to >8% dividend yield at current market cap
Financial KPIs | FY.23 actual | 9M.24 actual | FY.24 Target (14 Feb) | FY.24 Target (01 Nov) | |||||
| EPS normalized (€) | €0.80 | €0.72 | ~€0.80 | >€0.90 | |||||
RoaTBV normalized (%) | 16.6% | 17.7% | ~14% | >17% | |||||
NII assets (%) | 2.7% | 2.7% | ~2.6% | ~2.7% | |||||
NFI assets (%) | 0.7% | 0.8% | ~0.7% | ~0.8% | |||||
Cost-to-core income (%) | 31% | 29% | <35% | ~30% | |||||
Organic cost of risk (%) | 0.8% | 0.5% | ~0.8% | ~0.6% | |||||
NPE (%) | 3.5% | 3.2% | <3.5% | <3.0% | |||||
NPE coverage (%) | 62% | 61% | ~65% | ~60-65% | |||||
PE balance (€bn) | €30.1 | €32.0 | ~€31.5 | ~€33 | |||||
CET1 (%) | 13.2% | post distribution accrual 10% | 14.7% | post distribution accrual 35% | >14.0% | post distribution accrual 25% | ~15% | post distribution accrual 35% | |
Total capital (%) | 17.8% | post distribution accrual 10% | 19.9% | post distribution accrual 35% | >19.0% | post distribution accrual 25% | ~20% | post distribution accrual 35% | |
DFR assumption (end of period, %) | 4.00% | 3.50% | 3.75% | 3.00% | |||||
Note: distribution is subject to necessary conditions being met and supervisory approval; PnL items and ratios are displayed on normalized basis (definitions in the APM section of the press release); normalized EPS and RoaTBV are adjusted for AT1 coupon | |||||||||
Management Statement
Christos Megalou
Chief Executive Officer
"Piraeus nine-month 2024 performance is a clear statement that we continue to exceed our targets across the board. In the nine-month 2024 period, we delivered our best results to date, generating €0.72 earnings per share, up 31% yoy, and 18% RoaTBV, from 15% in the nine-month 2023. Piraeus has achieved sustainable profitability and capital accumulation, through diversified revenue sources and cost discipline, while maintaining prudent credit risk management.
Our top line increased considerably on the back of growing business. Net interest margin stood at 2.7% for the nine-month period, while net fee margin reached 0.8%, best-in-class in Greece. Net interest income was higher in Q3, as strong loan growth offset the Jun.24 rate cut, while our net fee income grew by 3x the rate of net interest income in the nine-month period, reflecting our revenue diversifying efforts. Our performing loan portfolio increased 9% yoy and by €2bn in the nine-month period, to €32bn, already exceeding the full year target of €31.5bn. Out of the €2.8bn loan disbursements in Q3, €1.3bn were to SME/SB and individuals. Client assets under management increased to €11bn as of Sep.24, driven by strong net mutual fund sales, where Piraeus holds the leading position in Greece for the nine-month period.
Our focus on operating efficiency kept our cost-to-core income ratio at 29% in the nine-month period. This remains among the best in the European banking market. Our cost of risk has stabilized at low levels, 23bps, or 49bps including NPE servicer fees and synthetic securitization costs, an outcome of the successful management of NPE inflows. Our NPE ratio improved further to 3.2% and NPE coverage exceeded 60%.
Our CET1 ratio has increased to 14.7%, up by 1.5 percentage points year-to-date, surpassing the end-2024 target. Following the successful pricing of a new Subordinated Tier 2 Bond in September 2024, the MREL ratio reached 29.1%, with Piraeus meeting the terminal binding MREL requirement, more than a year ahead of target.
Based on its 2024 performance and trends so far, Piraeus is upgrading its 2024 guidance today. The key elements comprise enhanced profitability with normalized RoaTBV expected at more than 17%, normalized EPS of more than €0.90, further growth of CET1 ratio to approximately 15%, expansion of performing loans to €33bn, and non performing exposures ratio of less than 3%. Also, we are now aiming for a payout ratio of 35% out of 2024 profits, subject to the necessary conditions being met, while we have updated our distribution policy to provide for a 50% payout ratio for next year.
We continue to raise our aspirations and focus on creating value for our shareholders, ensuring Piraeus' ongoing support to our customers and the broader Greek economy."
View source version on businesswire.com: https://www.businesswire.com/news/home/20241112320495/en/
Contacts:
Group Investor Relations
4 Amerikis St., 105 64 Athens
Tel.: (+30 210 3335818
Bloomberg: TPEIR GA Reuters: BOPr.AT
ISIN: GRS014003032
investor_relations@piraeusholdings.gr
www.piraeusholdings.gr
