Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome, thank you for joining the National Bank of Greece conference call to present and discuss the full year 2025 financial results. All participants will be in 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 zero on your telephone. At this time, I would like to turn the conference over to Mr. Pavlos Mylonas, CEO of National Bank of Greece. Mr. Mylonas, you may now proceed.
Good morning, everyone. Welcome to our fourth quarter 2025 financial results call. I'm joined by Christos Christodoulou, the Group CFO, and Greg Papagrigoris, Group Head of IR. After my introductory remarks, Christos will go into more detail on our financial performance, we will turn to questions and answers. As usual, I will refer to Greece's macroeconomic developments first, turn to our fourth quarter results, and I will conclude with our guidance for the next three years, 2026, 2028. Let's begin. The Greek economy remains on a steady upward trajectory, notwithstanding persistent global volatility amid intensifying geopolitical tensions, with the EU appearing particularly exposed to ongoing structural shifts. Within this challenging environment, Greece has delivered not only a resilient performance but also a more balanced and higher- quality growth mix.
Indeed, the recovery has become more broad-based, with manufacturing, high-value-added services, and construction increasingly complementing tourism. The economy remains attractive to investment, as gross fixed capital formation is projected to rise to 18% of GDP in 2025, the highest level since the onset of the Greek crisis, while foreign direct investment inflows also reached a record high EUR 12 billion in full year 2025. Moreover, the economy remains highly competitive. Exports of goods, excluding fuels, have withstood global tariff uncertainty, increasing in real terms by almost 5% in the 12 months, while tourism reached a new record high in the full year 2025. Both gained market shares. Looking forward, economic growth and bank activity will maintain their positive momentum, driven by, one, private sector balance sheets that keep getting stronger, underpinned by sustained profitability and a robust labor market.
Two, a more supportive policy mix, particularly on the fiscal side. The substantial fiscal overperformance, with a primary surplus significantly above 4% of GDP in 2025, sets the stage for a stronger fiscal stimulus in 2026 and 2027, mainly in the form of tax reductions. Three, approximately EUR 12 billion of RRF funds is scheduled to be injected into the real economy over the next few quarters, while up to another EUR 12 billion can be accessed from the remaining RRF funds. This influx is expected to boost public investment to record levels. Four, ongoing revaluations and collateral values, with real estate prices currently 5% above their pre-crisis peak in normal terms, support private sector spending as well as investment.
It is important to note that despite the large increase in real estate values, they are still 15% off their pre-crisis peak in real terms, in contrast to European developments. All the above catalysts are expected to enable the Greek economy to stay in solid growth, even in an inherently volatile international landscape, growth that will be, for the most part, bank-financed. Let me turn to our financial results. Our full year 2025 financial performance has showed significant strengths, having exhibited impressive resilience to sharply lower benchmark interest rates, which came down by almost 200 basis points from their peak. This performance has been the result of the confluence of a positive macroeconomic environment, our robust balance sheet, characterized by superior capital and liquidity, as well as our multi-year transformation with strong investment in human capital, technology, and digital services.
Despite positive revisions to our guidance in July, especially in the area of credit growth and fee income generation, we outperformed the revised targets. Specifically, our full year 2025 profit after tax before one-offs was EUR 1.3 billion, resulting in a return on tangible equity of 15.5%. Before adjusting for excess capital buffers, return on tangible equity would be 20% on a normalized capital base of 14%. Turning to the main drivers of our results, net interest income resilience was reflected in the net interest margin remaining above 280 basis points, down by less than 40 basis points from its peak, benefiting from solid liability management and robust lending. It is important to note that net interest income troughed in the third quarter and is now on a steady upward trend.
As regards credit expansion, our performing exposures grew by a noteworthy EUR 3.5 billion, recording a double-digit growth rate on a year-on-year basis, far exceeding the upgraded guidance of greater than EUR 2.5 billion. Corporate credit continues to be the main driver of loan growth, up by 13% year-on-year. Moreover, corporate credit demand was diversified across a broad range of sectors, predominantly energy, transportation, shipping, accommodation, and light manufacturing. A final point on the composition of credit: encouragingly, the retail segment also offered support with solid growth recorded in small business lending, up 16% year-on-year, and consumer lending up 7%, resulting in noteworthy market share gains in both segments.
Mortgage credit closed the year with a positive result on a net basis for the first time in 15 years, following a strong pickup in disbursements, where we hold a 28% market share. Turning to commissions, our fee business recorded double-digit growth despite the impact of government measures. The most notable contributor was a cross-sell of investment products to our large depositor base, resulting in strong mutual fund market share gains of circa 6 percentage points over the past two years, and impressive investment fee growth of 70% year-on-year. It is noteworthy that despite these flows, household deposits maintain their high market share. On the cost side, we have kept a balanced approach, weighing efficiency as evidenced by a cost-income ratio of 34%, with judicious sector lending investments in technology and people, which will provide relative advantages going forward.
The completion of the bank's full migration to the new cloud-based Core Banking System marks a defining milestone in our multi-year transformation and growth journey, providing a modern technological backbone that enhances our agility and productivity, elevating our customers' experience. Despite impressive credit growth and the highest payout accruals in the sector, our capital position strengthened further throughout 2025, up by 50 basis points to 18.8% at end year. The 60% payout equates to an ordinary distribution of EUR 0.7 billion, implying a total payout per share of EUR 0.77. On top of the EUR 700 million ordinary distribution, we intend to propose an additional capital distribution of EUR 300 million in 2026, which adds up to a total capital distribution of EUR 1 billion.
The above proposals, subject to 2026 AGM and regulatory approvals, reaffirm our commitment to deliver superior returns to our shareholders. Turning to the business plan. We constructed our 2026-2028 business plan, factoring in the favorable economic conditions, our inherent competitive advantages, and our strong track record in transformation implementation. The resulting guidance is to attain a return on tangible equity of 17% in 2028 and enhance our earnings per share from the current EUR 1.38 to over EUR 1.70 in 2028. These achievements are based on a solid recovery in our profitability as we put benchmark rate normalization behind us, permitting credit and fee generation dynamics to lead top-line expansion.
Specifically, we anticipate robust and healthy credit net expansion of over EUR 10 billion over the next three years, complemented by a sustained high single-digit fee growth based on our improving cross-sell dynamics across investment, treasury, and bancassurance products. The fee targets do not factor in any imminent developments in our bancassurance business. To preempt your questions, I would like to ask you to have a bit more patience on what is happening on bancassurance. We're in the process of choosing a new partner and should have tangible news in a few weeks time. Turning to operating costs, they will benefit from CapEx having peaked and FTE rejuvenation through the implementation of voluntary exit schemes. In fact, we are announcing a new VES in the next few days. As a result, the cost-income ratio will be 36% in 2028.
The final point, the cost of risk will continue to converge to European levels during the three-year period as the outlook for asset quality remains benign. The 2026-2028 business plan also contains accelerated capital utilization while maintaining satisfactory capital buffers. During the three-year period, capital generation from increasing profitability and existing capital buffers will comfortably support accelerated organic growth, as well as higher shareholder returns. To that end, our capital plan targets a CET1 ratio of below 16% in 2028. These targets clearly indicate that our capital plan contains sizable distributions going forward while preserving our strategic optionality. To close, I strongly believe that 2026 is a year of great opportunity for NBG. The successful execution of our strategy during the past several years has been the main reason for our outperformance.
To describe all the achievements of the past years, even in summary, would take too long. I urge you to look at the relevant pages of the presentation on our transformation. However, it is very important to understand that significant necessary conditions have now been met, which permit us to focus on reaping the advantages provided by these accomplishments. Indeed, significant costs, a commitment, a concomitant management focus and operational risk are behind us. To this end, our goal has always been to increase shareholder value, which in the long run requires increasing our revenue base, and in the event of inorganic growth, the creation of value through synergies. We have shown tight discipline in the use of our excess capital during the past several years, and always search for the optimal choice to increase shareholder value, which includes increasing our distributions to shareholders. With that, I would like to pass the floor to our Group CFO, Christos, who will provide additional insight to our financial performance before we turn to questions and answers. Christos?
Thank you, Pavlos. Starting with the key highlights of our profitability on slide 22. In 2025, we delivered another strong set of results, comfortably meeting or even exceeding our upgraded financial targets. Our profit after tax, before one-offs, reached EUR 1.3 billion, translating into an earnings per share of EUR 1.38, absorbing nearly 200 basis points of benchmark rate normalization from peak levels. As a result, we delivered a solid return on tangible equity of 15.5% or over 20%, adjusting for excess capital, outperforming our full year guidance target. Key contributors to this performance have been the resilience of our income, supported by solid credit expansion and efficient liability management, as well as double-digit growth in fees, while strong trading income and steadily normalizing cost of risk also contributed positively.
Going into more detail, our net interest income declined by 9% year-on-year, in line with our expectations and planning. Strong credit dynamics and our effective liability management initiatives, including deposit hedges and MREL instruments refinancing, absorbed most of the negative impact of base rates on our NII, sustaining a class leading net interest margin above 280 basis points, in line with our guidance. Most importantly, the last quarter of the year marked a turning point in our NII, which edged higher quarter-on-quarter, as shown on slide 26, aided by the accelerated loan disbursements, which led to an impressive loan expansion of EUR 3.5 billion for the year, far exceeding our upgraded guidance of over EUR 2.5 billion.
The completion of our NII's normalization cycle paves the way for lending dynamics to become the key net interest income driver going forward. Our fee income remained on a solid growth path, increasing by 10% year-on-year. This performance was driven by the corporate segment fees, up by 16% year-on-year, as shown on slide 32, supported by strong loan origination. Retail fees absorbed the negative impact of state measures on payments, as successful cross-selling yielded an impressive 70% year-on-year increase in investment product fees, becoming the key contributor to our fee income growth.
As shown on slide 33, our market share in mutual funds increased by 3 percentage points year-on-year, and 6 percentage points over the past two years as we continued cross-selling fee-generating mutual funds, driving our retail funds under management up by EUR 2.3 billion, 35% higher year-on-year to EUR 9.3 billion. Below our top line, operating expenses were 7% up year-on-year, as disclosed on slide 34, balancing high efficiency with strategic investments in technology and in our people, as our priority is to offer innovative products and high-end services to our clients. The increase in personnel expenses is driven by increased wages, variable remuneration to incentivize performance and productivity, as well as the onboarding of new talent and skills, rejuvenating our human capital.
Our depreciation charges derive from our strategic capital expenditure in class leading IT and digital infrastructure, spearheaded by our new cloud-based Core Banking System, already delivering results in our productivity, commercial effectiveness, digital offering, and cyber risk security. Our G&A, affected by seasonality in Q4, are primarily driven by spending that goes to improve our customer journeys and experience. Factoring all that in, our cost-income ratio settled at 34%, well within our annual target, also absorbing interest rate normalization. As regards credit risk charges, benign asset quality conditions throughout the year, complemented by sector leading coverage levels across stages, allowed our cost of risk to continue lower in Q4, settling at 40 basis points for the year, well inside our guidance, reaffirming our expectation for further normalization.
Our robust capital position, as shown on slide 24, was supported by strong earnings generation and forms a key comparative strength for NBG. Our Core Equity Tier 1 ratio increased by 50 basis points year-on-year to 18.8%, comfortably absorbing the increase in credit risk weighted assets, as well as our class leading payout accrual of 60%, which implies an ordinary distribution of EUR 0.7 billion out of 2025 earnings, equating to a payout of EUR 0.77 per share. Our total capital ratio stood at 21.5% or 22.7% pro forma for our AT1 issuance in early February 2026, while our MREL ratio stands well above our MREL target of 26.7%.
reflecting our capital strength and our confidence in the bank's outlook, on top of accruing the highest ordinary payout in the sector, we intend to propose an additional capital distribution of EUR 0.3 billion in 2026, subject to regulatory approval in the April 2026 AGM. This decision reaffirms our commitment to keep delivering class-leading shareholder returns, while maintaining strategic optionality for future growth opportunities. Let me walk you through the highlights of our balance sheet, summarized on slide 23. As referred to earlier, we grew our performing loan book by EUR 3.5 billion year-on-year, on the back of approximately EUR 8 billion corporate disbursements, allocated across multiple sectors, with a strategic emphasis on energy and renewables, tourism, shipping, manufacturing, and construction, as shown on slide 28.
Adding to this, retail lending continued to gain momentum throughout 2025, increasing by 3% or EUR 0.3 billion year-on-year. We experienced solid growth in small business and consumer lending at 16% and 7% respectively, with both segments consistently gaining market share, while mortgages are also showing encouraging signs of growth. On the liability side, deposits remained on an upward trend in 2025, as shown on slide 29, increasing by EUR 2 billion year-on-year on sustained inflows of low cost retail core deposits, while time deposit migration to mutual funds continued, benefiting our funding mix and cost.
Improving deposit mix, with core deposits comprising 81% of the total stock, and the drop in term deposit yields by 10 basis points quarter on quarter to 144 basis points in Q4, drove our overall deposit cost below 30 basis points, the lowest in the domestic market. As regards our superior liquidity and funding profile, illustrated on slide 31, our net cash position comfortably facilitates our balance sheet expansion and supports our NII and NIM. Our liquidity coverage ratio, at nearly 240%, stands amongst the healthiest in the Euro area, with our loan-to-deposit ratio settling at 66% at the end of the year. Moreover, we retain the lowest funding cost increase at around 60 basis points, with deposits comprising more than 90% of our total funding.
A few words on asset quality on slides 35 and 36. Our group NP stock of EUR 0.9 billion, translating to an improving NP ratio of 2.4%, with NP coverage exceeding 100%. At the same time, our leading coverage across stages by European standards, comprises another strength of our balance sheet, providing a cushion during uncertain times. Supported by favorable asset quality trends, net NP flows came at zero levels in 2025, driving cost of risk gradually lower. Capitalizing a strong performance in 2025 and a proven track record, our 2026, 2028 three-year business plan sets out a clear and disciplined strategy to accelerate growth, enhance profitability, and increase shareholder returns with our key business plan targets disclosed in slides 10 to 20.
As already stated by Pavlos, we aspire to attain a sustainable return on tangible equity of 17% in 2028, driven by higher profitability and increased capital utilization, targeting an EPS of over EUR 1.7 per share in 2028 versus EUR 1.38 in 2025. This performance hinges on strong NII dynamics, anticipated higher by 7% on a three-year CAGR basis, as well as fees growing in the high single digits, even before factoring the positive impact from the prospective new bancassurance agreement, which we'll communicate in a few weeks. Specifically, as regards NII, it is expected to start recovering this year, even though the average Euribor is expected at circa 25 basis points lower year-on-year.
With the full rate normalization impact behind us in 2027, credit growth should accelerate NII recovery, driving it over the EUR 2.5 billion mark in 2028, with NIM settling over 290 basis points. Credit expansion is expected to exceed EUR 10 billion in the next three years, driven by corporates anticipated to grow by a high single digit CAGR in the three years, led by large corporates, SMEs and shipping, as shown on slide 15, complemented by international syndicated lending and structured finance transactions, diversifying further our loan portfolio. Retail loan expansion is seen picking up further through to 2028, contributing positively to credit growth and spreads, fueled by stronger market dynamics in mortgages as supply side issues are gradually addressed, alongside further market share gains in consumer and small business lending.
Fee income is expected to maintain the strong momentum, increasing at high single digit rate throughout the period, supported by the cross-selling of products and services. In the corporate segment, loan origination fees will be topped by non-lending fee growth on the back of enhanced product offerings, supported by our digital channels, delivering incremental product penetration. Retail fee growth will be supported by our strategy in investment products, in line with wealth initiatives, as well as continuous growth in card fees. As mentioned earlier, our bancassurance strategy, which will further support our fee growth, is not yet implemented in the business plan numbers.
Operating expenses are expected to grow by circa 6% on a CAGR basis in the next three years, balancing cost discipline with investments in technology and human capital, with our cost-income ratio settling at 36% in 2028, comparing favorably with most EU peers, which have a large technology investment gap to cover versus NBG. Given higher profitability levels, capital generation will remain strong, supporting accelerating organic growth and superior shareholder returns. As Pavlos stated, our intention is to utilize capital created from increased profitability, as well as part of our existing capital buffers, to consistently increase cash payouts using share buybacks as an additional shareholder remuneration tool. Our capital plan targets a CET1 ratio of below 16% in 2028, also preserving our strategic flexibility.
Leveraging this solid performance and the strength and resilience of our business model, we intend to deliver a disciplined and value-enhancing capital deployment path, balancing superior shareholder distributions with maintaining the capacity to capture growth opportunities, positioning the bank for sustainable growth, greater innovation, and long-term value creation. With that, I would like to open the floor to questions.
Are we ready to take our questions?
Yes, we are.
Thank you. Ladies and gentlemen, at this time, we will 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. Please use your handset when asking your question 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 Caven-Roberts Benjamin with Goldman Sachs International. Please go ahead.
Morning. Thank you very much for the presentation. just a few questions from me. Firstly, on loan growth, could you just comment if there are any particular areas where you're seeing, more upside risks and then also any downside risks? Secondly, on capital, a very clear message around the below 16% CET1, which gives strategic optionality. Could you just recap where you're currently seeing your internal CET1 target against which you're measuring that excess capital, and then what your order of priority is within your capital allocation framework between any extra M&A and further payout increase? Thank you.
Okay, on upsides in loan growth, I think it's the big infrastructure projects in Greece that are the upside risk. If they move faster, and given the size of their tickets, I think that's on the upside. I really don't see any sector with downside risk in view of the economic developments that we observe in Greece right now. Probably more upside risk than downside risk. On your second question, on the internal our internal CET1, it's 14%. If we utilize the full AT1 capacity we have, that could go down. Now, between M&A and payouts, clearly it's a bit of, t hat's a good question because it's the question is the quality of the M&A. If you have a high quality M&A, which creates value, clearly that would be the preferred way to go. If that doesn't appear, it's the higher payouts. Okay?
Understood. Thank you.
The next question is from the line of Sevim Mehmet with JPMorgan. Please go ahead.
Hi. Good morning. Thanks very much for the presentation. I have just a couple, questions from my side. One, on the NIM outlook. You're assuming a notable increase in NIMs through 2028, and I see that you're using, also an assumption of a higher Euribor, about 40 basis points average. I just wanted to check why that's the case. Secondly, how would this outlook change if Euribor were to stay flat and basically no changes in the outlook there? Would you expect NIM to decline, or would you expect it to remain stable? My second question is on the payout. Obviously, it is higher than expected initially, and that you've guided previously with the EUR 300 million special distribution, at the same time, you have now issued an AT1 of EUR 500 million.
If I look at it seems like you haven't really decreased your total capital position. You've just replaced the one with the other, at least partially. Can I ask what your thinking is when it comes to this? Now, I understand you're 16% or below CET1 guidance, are you still quite conservative for the time being? What's the rationale otherwise, behind the AT1 issuance that you've done earlier this year? Maybe finally, the AT1 issuance as of the first quarter, will it bring down your target CET1 from 14% to 13%, given now that you've done it? Thanks very much.
Okay, let me start from the NIM question. Just to clarify on the Euribor outlook, you use, I think, the graph on slide 20, which has one decimal. Actually, our outlook for Euribor from 2026 onwards is up in the area of 30 basis points. A point to make there. Clearly, the dynamics for NIM and NII going forward, starting with 2026, firstly have to do with the average Euribor expected to go down by about 25 basis points. The tailwinds that we have from credit expansion, a slight increase in our debt securities, and to a lesser effect, the improvement, the further improvement of our deposit mix and deposit costs will support NIM, which is expected to marginally go down in 2026.
Given the full effect of the rate normalization, ending in 2026, with the average Euribor then picking up, we expect NIM to go up to over 290 basis points in 2028. With regards to our NII sensitivity, our sensitivity is at EUR 35 million for every 25 basis points on an annualized basis. That's the dynamics. With regards to the payout, yes, you are right that we've issued an AT1 at the beginning of February. Clearly, AT1 was an instrument that we haven't utilized so far. The decision to issue an AT1 was in line of us optimizing our capital structure, especially at times of favorable spreads and base rate conditions.
That was one of the drivers, and the other was to strengthen our position in rating agency assessments, especially in the context of Moody's CMDI application as well. With regards to our internal Core Tier 1 target, yes, we are conservative, or, as Pavlos said, to the extent that we have started to utilize this instrument and to the extent that we will go to the full effect of our budget, absolutely, that 14% will go below 13.5%.
Okay. Thank you, Christos.
The next question is from the line of Kemeny Gábor with Autonomous Research. Please go ahead.
Morning. My first question would be on your capital deployment plans, please. You're below 16% CET1. Can you please clarify what payout assumption is that? Is it the ordinary or do you include anything above that? That's the first one. The EUR 300 million, would you have a preference here between cash dividends or buybacks? That's the other one. I would like to follow up finally on the NII outlook, which I believe is pretty backloaded, so low single digits in 2026, 7% CAGR. Altogether, this implies more like 9% CAGR, I believe more than 9% for 2027 and 2028.
Just based on the rate sensitivity you mentioned, Christos, I'm not sure I would get to that sort of delta. Maybe you could elaborate a bit further. I believe you mentioned the securities income and some other drivers, which you expect to influence your NIM, please.
Let me take the buyback question on the for the EUR 300 extraordinary. It will be solely buyback, okay? It will be part of the, it'll be integrated into the normal buyback program that we have. Now, the other two, I'll let Christos.
With regards to capital deployment, I think we have a slide 18, where we suggest that we expect to generate profitability of around 10 percentage points over the three years. We are going to use that through, for growth in the area of 350 basis points. Our intention, including the EUR 0.3 billion that we are expecting to use through share buybacks in 2026, to go down to less than 16%, which implies a use of capital for distributions north of 9%. That's how we view our capital deployment going forward. With regards to interest rates, I think I've implied that yes, the growth in our NII in 2026 will be more modest compared to the outer years.
That is solely affected by the fact that we expect Euribor, the average Euribor, to go down in 2026. Our guidance is for low single-digit growth of NII in 2026, and then, of course, it will accelerate so that we deliver the 7% CAGR that we are guiding in our in our pages.
Just to add what on what Christos said about the capital deployment, you need to not to forget that there is an agreement for the regulatory overlay on the DTC of about 30% of the payout. We think that as NBG, we have the capital depth to be able to handle the payouts that we're describing.
thank you. Just a small follow-up, please, on the capital deployment point. You have the EUR 300 million in there, obviously, but no more special distributions for the next two years. Is that correct?
We don't define that in our waterfall. Any decisions for one-offs will be taken on an ad hoc basis every year when we update our business and capital plan.
Understood. Thank you.
The next question is from the line of Brzoza Robert with PKO BP Securities. Please go ahead.
Good morning, everyone, thank you for taking my question. Just a couple of them, but really quickly. The EPS guidance for 2028, does it incorporate the potential impact of buybacks on the share count? That's number one. Number two, the Katseli loan related verdict, if you treat it, say, retrospectively, do you see any impact from that? Going next, the NPL Stage 2 size, it did bump up a bit quarter-on-quarter. Should we observe it? What are the trends here? Finally, your OpEx guidance of, if I'm not mistaken, 6% CAGR. Of course, you are starting from a very low base, low cost to income, I'm just curious, what's driving this? Is it more wages or still administrative in general spending?
Thank you.
Okay, I have four questions noted. The first one is pretty straightforward, that yes, our EPS of over 1.7% obviously takes into account the buybacks that will execute. Your second question on the Katseli Law, I think, will not differentiate from what you heard yesterday from the other two banks. While we still wait for the script of the law to become available, given that we've disposed nearly all our exposure to this perimeter, even if the law has a retrospective effect, we don't expect this to be of any issue to our bank. With regards to the question on the Stage 2, you should not expect anything there.
I think what we had this quarter, we had one account that was flagged as a significant increased credit risk, but there is no forbearance, any delays there, so we expect it to go back to Stage 1. No trend there to be concerned of. Your question on OpEx, I think we've tried to explain that in our remarks. Where we are spending money is investing in two things. In our technology, we've been doing that for the past five years, and as a result, you see the effect of that in our depreciation. While our capital expenditure and technology has peaked, we are still seeing the effects of that in our depreciation.
That's one line that is affecting, let's say, the growth in OpEx in the next three years. The other one, as we repeated quarter after quarter, is our people. We are investing in people, not just on wages, but also trying to increase productivity through schemes of variable remuneration, and also we're trying to bring new talent to, let's say, fill in the gaps, given that it's a changing world, especially with regards to areas like technology and digital. Don't underestimate also things like cloud licenses, which are also affecting our OpEx through G&As. I have to reassure you that, especially with regards to the line of admin expenses, we are very disciplined, and we don't overspend in that line.
It's just staff cost and depreciation. We believe that the 6% is a fair growth rate, given the growth that we envisage to achieve, as well as the spending in technology that we've been doing for the past five years.
All clear. Many thanks.
The next question is from the line of Novosselsky Ilija with Bank of America. Please go ahead.
Hi. Thank you for taking my question. I have one question on your NII assumptions with four components. Can you take me, what do you bake in your estimates for, number one, the hedges? Do you expect that your hedges will be lower in the future? Do you expect that your NII sensitivity might increase as your other increases? Number two, do you expect that there is going to be any NPs that have become re-performing, entering your balance sheet? Number three, I can see in your NII breakdown that deposit costs have picked up a bit by EUR 1 million in Q4. Do you expect that your deposit costs in the future, in the next three years, are going to be stable or down or up? Number four, can you tell me what do you expect for MRO expenses?
Do you think that your MRO expenses should be higher in 2028 compared to 2025 or lower? Thank you.
Okay, let me start with the hedges. You know, clearly it's a dynamic exercise. We've been repeating that every quarter. The way that we envisage rates to evolve in the future, the base assumption is that NMD hedges will go down gradually in the future. With regards to your question on our sensitivity on NII, whether it will increase or go down, I would say that that's mainly a subject of our balance sheet size.... Other than that, we are always trying to optimize and reduce our sensitivity as we go along. With regards to RPLs, the answer is no. We have not implemented in our business plan anything with regards to re-performing loans, either on our loan book or on our NII.
We will only do that once we have a tangible transaction ahead of us. With regards to your question on the NII deposit cost pickup in Q4, that was, you know, I think EUR 1 million surrounding, but it's solely volume driven, nothing else. You've seen that our deposits picked up in Q4, and I think that's the reason for that. With regards to the effect of our NMD hedges, Q3 versus Q4, we are at the same level. Lastly, on your question on MREL expenses, for us, the MREL instruments are something that will support the balance sheet growth going forward.
If you take out some opportunities we have for optimizing costs because of refinancings of existing MREL instruments towards the end of our business plan horizon, I think the expectation is that MREL costs, yes, will go up.
Thank you.
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 Sevim Mehmet with JPMorgan. Please go ahead.
Hi again. Thanks very much for taking my follow-up question. I just wanted to ask one on the buyback. I understand the EUR 300 million will be in the form of a buyback, and then you have the other EUR 200 million in the form of a buyback. Basically, that is EUR 500 million announced for this year. Just wanted to confirm. Given that you're still running the buyback from last year, I think there is a residual amount left, and so far the daily purchases are below EUR 1 million. How comfortable are you that you can do that in the open market this year? Or is there, is there maybe another methodology there? Thanks very much.
First of all, the current program is running well. I think it's approaching 80% to completion, so we're nearly there. The new buyback programs will start after the AGM of April, so sometime in June, I suppose. We're comfortable having looked at the numbers with our consultants that it's without new, let's say, methodologies, as you suggested, we'll be able to tackle this.
Okay, super. Thanks very much.
As a final reminder to register for a question, please press star and one on your telephone. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Mylonas for any closing comments. Thank you.
Okay. Thank you all for joining us for this full year and fourth quarter financial results call. Any further questions you may have, we're on standby. I guess we'll see you in London, in the big conference that's occurring there in March. Thank you all, and see you soon.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a pleasant day.