Ladies and gentlemen, thank you for standing by. I am Geli, your Chorus Call operator. Welcome, and thank you for joining the Piraeus Financial Holdings Conference Call and Live Webcast to present and discuss Piraeus first half 2023 financial results. All participants will be in listen-only mode, and 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 First Half 2023 financial results. This is Christos Megalou, Chief Executive Officer, and I'm joined today by CFO Theo Gnardellis, Chryssanthi Berbati, and Xenofon Damalas. Piraeus Bank strong operating performance in the first half of 2023 demonstrates how well we are progressing towards our vision to become a best-in-class European bank. We have delivered our seventh consecutive quarter of profitable growth and our best quarterly performance ever, with EUR 238 million net profit, excluding one-offs. As a result, I would like to thank all the employees of Piraeus Bank that continue to deliver, as well as our clients for their continued support.
We are proud that the performance of Piraeus Group and the bank's leading role in the Greek market have been recognized by the prestigious international magazine Euromoney, awarding Piraeus the title of the Best Bank in Greece for 2023. Slide four shows our leading position across several market segments. Before elaborating on the bank's performance, I would like to comment on the macroeconomic environment. In 2023, the Greek economy remains on a growth trajectory, with first quarter real GDP increasing by 2.1% year-on-year. Despite the uncertain global sentiment, the Greek economy remains on a path of economic expansion for 2023 and beyond, reflecting the different phase that it finds itself in the current cycle. Our estimate for Greek GDP is for 3.4% growth this year, with inflation decreasing and unemployment being significantly reduced.
At the same time, real estate prices are showing a solid trend, with residential prices increasing by 14.5% in the first quarter of 2023 annually. Let's start our presentation with slide five, which displays our remarkable performance in the first half of the year. Profitability, efficiency, asset quality, capital adequacy, all presented improvement, almost reaching the yearly targets we have communicated. The business model we are pursuing is characterized by sustainable and diversified revenue pools, cost efficiencies, and a solid balance sheet. Slide six illustrate the highlights of our Q2 performance. We generated normalized earnings per share of EUR 0.18, running ahead of full year 2023 guidance provided in May. We produced a return on average tangible book of 15%.
We delivered 15% net revenue growth versus the previous quarter on the back of a 9% net interest increase and a 16% net fee income growth. Our net fees for Q2 have been the highest ever for Piraeus Bank. We recorded best-in-class cost-to-income ratio of 32% from 36% in Q1, despite the inflationary environment. We lowered further our NPE ratio to 5.5%, front loading our cleanup plan with two transactions in a quarter. We increased our NPE coverage to 57%. We achieved a EUR 800 million net credit expansion. Our CET1 ratio stands at a solid 12.3%, 80 basis points higher compared to the end of 2022. We increased our assets under management by 9% in a quarter. Slide seven sets out our earnings results in detail.
Our solid financial performance and the supportive macro environment position us to outperform our 2023 targets. Thus, today, we are upgrading our 2023 normalized earnings per share guidance to more than EUR 0.65, from more than EUR 0.55 previously, estimated in May, and our 2023 normalized return over tangible book value guidance to approximately 14% from approximately 12% previously. I will return to this in a while. Slides eight to 10 present all the update and information driving our strong net interest income performance. Slide eight, net interest margin expanded further in Q2 to 2.6%. Slide nine, loan pass-throughs were stable at 77%, while slide 10, our deposit beta stood at 12% at the end of June. Slide 11 presents the quarterly evolution of our net fee income.
We achieved a record high of EUR 141 million fees in Q2, corresponding to 75 basis points over asset, almost at par with European average. Our cost containment efforts continue unabated despite the inflationary headwinds. The strength of our operational efficiency is shown in the best-in-class 32% cost-to-income ratio, as shown on Slide 12. Our G&A costs recorded a 6% quarterly drop in Q2 to EUR 78 million, also a record low for our bank. Slide 13 provides a summary of our asset quality indicators. Our NPE ratio dropped to 5.5%, already meeting our year-end NPE target. NPE coverage is now at 57%, up 110 basis points versus the previous quarter.
NPEs dropped by EUR 400 million versus the previous quarter, as our cleanup plan was accelerated with two transactions in Q2, presented on slide 14 and 15. One transaction was concluded in late June, comprising retail loans, Project Senna, while a second one, Project Delta, has been classified as held for sale. The two NPE transactions minimize the legacy Retail portfolio of Piraeus Bank, offloading more than EUR 350 million retail and small business NPEs. The remaining NPE portfolio of EUR 2 billion, as shown on slide 16, has a clear path to almost halve in the next 18 months under a combination of organic strategies. On slide 17, we present the movement of our performing loans.
Q2 was a strong quarter, with EUR 800 million net credit expansion, helped by development programs and the Recovery and Resilience Facility, as well as the pipeline of our Corporate lending. For the second half of the year. We reconfirm our target for an additional EUR 1 billion net credit expansion. Piraeus has a strong liquidity profile presented on slides 18 and 19. Our deposit base is granular, stable, and of high quality. Our liquidity ratios are all solid, as evidenced by the 233% liquidity coverage ratio and the 61% loan to deposit ratio, both at the top percentile of the European space. Turning to our capital base on slides 20 and 21, Q2 capital position is on track to full year 2023 target, absorbing the NPE cleanup costs, accruals for 10% dividend payout, and the accelerated DTC amortization.
At the end of June, Piraeus Bank had a 17.1% total capital ratio, comfortably above requirements and supervisory guidance. Lastly, on slide 22, on wealth and asset management, our new strategy continues to bring results, with assets under management reaching EUR 8.2 billion at the end of June, recording a 9% increase in Q2. Moving now to our new forecasts for the year. We are pleased to provide you with a new set of estimates, upgrading our targeted KPIs for the second time, as shown on slide 23. For 2023, we now target a 14% return on tangible book versus 12% previously, or more than EUR 0.65 earnings per share versus EUR 0.55 previously.
Net interest margin is expected to be at approximately 2.5% this year, while we target a cost to core income ratio below 38%. We are also confident that our NPE ratio for the year will end up below 5%. Furthermore, we expect to achieve a CET1 ratio of 13% at the end of 2023. It is noted that our new set of targets are based on an assumed 4% deposit facility rate for the end of the year. Slide 24 presents the expected evolution of our CET1 ratio during the second half of the year. For 2024 and 2025, we remain committed to our previous targets as per our March 2023 business plan. Especially for 2024, we expect a 14% return over average tangible book value, assuming a 2.5% deposit facility rate.
The results of the 2023 supervisory stress test are presented on slide 26. The result evidence Piraeus Bank improvement of fundamentals, placing the bank at the 13th position among 70 EBA banks participating in the exercise. Piraeus' consistent and strong operating results in the previous quarters have supported our group's investment case, while the increasing trends in our performance continue to create significant shareholder value. Slide 28 summarizes the competitive advantages of Piraeus Bank across all areas. The commercial positioning and the financial strength of the bank indicate why its valuation remains attractive compared with its local and European peers. From slide 29 to slide 37, we present the drivers behind this performance and where we stand against our domestic and European peers. On slide 29, we demonstrate the sustainability of our return profile, which ranks in line with peers.
Same goes for net interest margin, as presented on slide 30. Our net fee margin is consistently above peer average, as presented on slides 31, while we also outperform in terms of cost to income, as illustrated on slide 32. Slide 33 displays the radical reduction of our NPE ratio after many years of dealing with the legacy stock. The massive cleanup we have undertaken has brought us to lowers versus peer average NPE ratio. Slide 34 and 35 present our capital position, which is now at par with our domestic peers, while our strong operating results have grown and are expected to continue to grow our capital buffers further.
Slide 36 illustrates the P/E multiples for Piraeus versus peer average, based on expected earnings as per public guidance, while slide 37 presents our current price to tangible book versus profitable EU banking comparisons multiple as expected, as estimated for year end 2023. Finally, before opening the floor to questions, a few words on the recent wildfires in Greece. Although our customers haven't experienced significant damages, we are in close contact with the local communities to identify the truly impactful ways through which Piraeus Bank can support businesses and households. With that, let's open the floor to take any questions you may have.
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, then you may press star and two. Those participating via the webcast, please review related information in the Q&A live session tab, should you wish to ask a question. For those participating in the questions and answer session, 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 Alevizakos Alevizos with Axia Ventures. Please go ahead.
Hi, thank you very much for the presentation, congratulations on this set of results. I've got two questions, if I may. First one is I can see your lending expansion-
Mr. Alevizakos, I'm sorry to interrupt you. This is the operator. Can you please speak a little closer to the microphone so that management can hear you?
Yep, apologies.
Thank you.
I hope now it's better. Congratulations on this set of results, and thank you very much for the presentation. My first question is on the lending expansion. Looking at the, looking at the numbers, coming from the Bank of Greece, your figure looks outstanding. I was wondering, what causes you to outperform so much the industry? Was there a single transaction that may have skewed the numbers towards that direction? Then second, part of that question is, I can still see the pass-through rates on lending continue to be very high. Do you expect this to continue, or you, assume some kind of, spread, contraction in the upcoming months?
The second part is, I can see now that the target for the ROTE has gone up to the 14%, which clearly buds accordingly to the DFR going to the 4%. Is this more coming from the asset side, i.e., you expect that you will be able to reprice more the loans, or do you assume now a lower deposit beta? Thank you very much.
Thank you, Alevizos, and thanks very much for the questions. Let me take the first one and then pass it on to our CFO, Theodore Gnardellis, for the rest of your questions. Our credit expansion for the first half, anchored on our efforts on the Q2, it was not related to one specific transaction. There are a number of granular transactions that have taken place and gave us this result.
The most important one was through the Hellenic Development Bank, which has increased our balances by EUR 210 million, and that's mostly small businesses and SMEs, which for that particular action, gave us a 42% market share. That explains also the metrics that you had in mind. At the same time, we had another EUR 130 million coming through the RRF-... which again, was a significant market share as of June, another 40%. The rest is mostly corporate exposures, mainly accord on energy transition and other corporate transactions, that increased our balances.
With this EUR 800 million credit expansion, we are in line to achieve the promised credit expansion for the year, which requires an additional EUR 1 billion, which comes and will come through a very healthy pipeline that mostly our corporate book enjoys.
On your question about pass-throughs, I mean, we are currently enjoying a higher than expected pass-through on the loans, 77%, as we disclose. We are budgeting a, some spread contraction going forward to close at a 70% pass-through. It's not a steady as it goes guidance when it comes to the asset side. It is gonna be lower than today, but higher than previously budgeted. There is a bit of an uplift from the from the half 1 performance. There is some carryover effect for the for the full year, so that obviously helps. It's not the main point of the NII. The main point is clearly the deposit beta. We are going much lower in terms of the of the of the beta increase.
We closed June at 12%. Even if we reach the 19% of December, the full year average is going to be at 13%, so much lower than originally expected and guided for. Let's remember also cost of risk, we always had a prudent guidance baked into the forecast for 120 basis points. We are now adjusting that to 100 basis points. And yeah, a lot of other small things, including a better fee performance, a better admin cost performance. All of that bakes in guides for a steady, normalized 14% return.
All right. Thank you both, and congratulations again.
The next question is from the line of Sevim Mehmet with JP Morgan. Please go ahead.
Good afternoon. Thank you very much, and congratulations also from my side on the results. If I may follow up on the growth question, how do you see the trends in the second half, particularly taking also into account the higher ECB rates now? How do you see both Corporate demand, but also maybe can you talk about the Retail demand? I heard there is now, obviously a support program by the government for mortgages, et cetera. Putting everything together, if you could please tell us about your expectations for growth in the second half of the year, that would be very helpful.
Maybe just on the 2024 and 2025 guidance, if I look at your NII over assets guidance, which is now 2.2% for 2025, I see that's come up from 2% previously, although the underlying BFR assumption is the same. Could you tell us what's changed there? Is it simply your expectations for still lower deposit betas through the cycle, or is there anything else that is that has moved there? Thank you.
Hi, Mehmet, and thank you for the question. On the growth on the remaining two quarters towards the end of the year, you know, what we are experiencing is a granular dialogue with the market on across industries, mostly supported from the RRF. And we expect also to be further supported by the further programs of the Hellenic Development Bank in SME and SB exposures. These are the driving forces, especially the RRF trend, for growth, for corporate balances, for the remaining of the year. There are some specific big trades as well.
For example, the Attica Ring Road will be awarded, and then further exposures may come out of that transaction. Overall is pretty much a corporate book case for the rest of 2023. On the retail, we are a big player and a big participant in the My Home program that you have referred to, which indeed is a very successful one. The first EUR 500 million have been allocated, and there is a second EUR 500 million that are coming through. The actual impact on disbursements for the next two quarters, we don't expect to be significant, so that will change the trend on retail mortgages. Retail mortgages demand remains weak.
We expect this to continue in the next two quarters, and we have to wait until first, second quarter of 2024 to possibly see some reversal in that trend. Mostly, primarily corporate, coming out of large corporate, infrastructure financing, SME and SB, supported by Recovery and Resilience Facility, and in the cases of SME and small business, by the Hellenic Development Bank products.
To your question on the 2024, 2025 guidance, Mehmet, now we're introducing a new 2023 revised guidance. The 2024 is an extra column we're bringing in just for clarity for everybody, and simply to demonstrate the sustainability of the 14% return between 2023 and 2024. 'Cause naturally, the question that most of you guys have is, "Okay, about 2023, but what about 2024?" Focus on what our current business plan prescribes for 2024. Nothing changes for 2025. The return is still 12% as it was. The capital increase is still 12%. Just assume that the guidance stays the same.
Okay, thanks very much.
The next question comes from the line of Butkov Mikhail, from Goldman Sachs. Please go ahead.
Good day. Thank you very much for the presentation, and congratulations. My, my first question is on net interest income. We could see some improvement, good improvement in the second quarter, which is, what, what's surprising to some extent, is that it is even bigger than in the first quarter, on a quarter-by-quarter basis. What con- contributed to the stronger quarterly performance, and when do you expect NII to peak, this year or, or maybe next year, already then? The second question is on the fee income. We can see some al- also solid improvement in the second quarter. What has supported that? Finally, on the NPEs, what...
It is said that one big corporate case translated into more than half of NPE buildup in the second quarter. The question is, are there any other big single corporate cases which are, let's say, on watch or on the radar, and which can be potentially at risk of adding up to the NPE's balances? Thank you very much.
Okay, thanks, Mikhail. Indeed, the NII of Q2 was spectacularly high. We can see on page eight, the drivers that contributed to this result. I have to say it was a much smaller hike of the deposit beta than we expected, and a slightly higher pass-through on the loans. That, together with higher DFR, that helped the cash part. Just remember that even after TLTRO, the bank remains strongly cash positive, with more than EUR 5 billion residual cash. That creates a tailwind on the NII as well, and that created this result. The speed by which the deposit beta will continue to hike, will determine when we reach the peak.
We expect that this peak, on a quarterly basis, will happen this year, probably in Q3, given our current forecast. The performance every quarter surprises. We just remain focused operationally to provide alternative opportunities to our customers, and not to contaminate the deposit base with higher betas. The fees, it was a record quarter for the bank, for a total of EUR 141. Definitely the loan part and the strong expansion that the bank showed, with some idiosyncrasies in there when it comes to the agri part, and some other fees that we collected, RRF related, et cetera.
That created kind of a perfect positive storm for fees on the loan side. But I gotta say, all the fee lines kind of contributed, so we had a very strong card quarter, funds transfer. So overall, a very good performance that also helps us increase the guidance on a fees per asset basis. Look, on the NPEs, indeed, we had this one case. Of course, we can't say names. But it was a big, it was a big part of our influence, the majority. Are there any more such cases? No. I would say right now there is no big watch list that we expect, and we are kind of on the fence as to whether we're gonna trigger a stage reclassification.
No such case exists, but there's no room for complacency here. We understand when the interest, where the interest rates have gone. We are seeing very high pass-throughs, so that causes extra caution for diligence and attention to the clients. The most important thing for us is to make sure we support clients-... rather than than than FR Stage classification, whatever comes our way, we will deal with it.
Okay. Thank you very much.
The next question is from the line of Memisoglu Osman with Ambrosia Capital. Please go ahead.
Hello, many thanks for the presentation. Just a few things that are left, I guess. One, on the securities income, it looks like your volumes were up a bit, but the income is lower QMQ. Just wondering if there are any one-offs either this quarter or last quarter, and any color guidance on outlook? That's the first one. Then the second one, you touched upon a bit on asset quality, but just wondering if you can elaborate on the rationale for accelerating the NPE reduction process. Just to confirm, the remaining EUR 2 billion you plan to work that through organically, did I hear that correctly? Thank you.
Thank you, Osman. Overall, the securities book has actually increased in returns. I guess you're looking only at the securities part of the line. If you include the money that the bank makes from derivatives that are used to hedge those positions, it's, it's actually an increase from EUR 93 million in Q1 to EUR 107 million. That's on page eight. All in all, it was a, it's a position that's continuing to enhance the NII of the bank. The, the increase happened primarily through risk-free T-bills. That's also why you would not see a bigger hike than what you would expect. Was really a deployment of cash onto some rather risk-free paper. On the NPEs.
Listen, I mean, the bank is making some very, very solid money right now, and as we've said last time, our plan is to deploy the extra capital that we're making above expectations to accelerate the cleanup of the bank and reach our asset quality target sooner. We knew that we were in a very strong trend for organic profitability. We decided to invest the money and accelerate the plan, bring those two transactions forward by about six to 12 months, and therefore, create a clear path to European average NPE ratio now. From now on, the plan is focused purely on organic reduction.
left of about 2 billion. 1 billion of that we expect to treat over the next 12-18 months on an organic basis, which would, allowing for the current inflow rate, get us to where we want to be in terms of NPE ratio, and bank all the organic profit to enhance capital buffers of the bank. That's the plan definitely for the next 6 months
Maybe just following up on that, the, the cost of risk, outlook, I mean, is that a conservative assumption per se, given what you're seeing on the ground now for 2024?
Well, it is in line with what we actually had in half one. We are continuing at that rate. We had said 120 basis points. We're now adjusting that to 100 basis points, which is aligned to the actual half-one result. Also, given the charges that we had to take on the inflows of the first semester. Is it conservative? It's definitely not aggressive. I would say it's, it's based on what we're seeing right now.
Sorry, I meant for 2024, the 80 basis points, is that?
Well, I mean-
conservative?
... re- reaching our NPE ratio target for 2023, yes, I would say there is some room there. Guys, for 2024 and 2025, we'll come back with a renewed guidance after we examine all the elements, most possibly with the Q3 results. Right now, there's a lot of elements in the 2024 and 2025 guidance that need to be re-educated, starting with net interest margin. The only point of the 2024 guidance, as I said before, is to illustrate that the bank is right now a 14% returning bank. Whether or not that can become 15% or 15.5%, it's, it's I think, besides the point.
Got it. Thank you.
The next question is from the line of Nellis Simon with Citibank. Please go ahead.
Oh, hi. Thanks, thanks for the opportunity. One technical question, which is, can you tell us how much cash you have in minimum reserve requirements sitting at the ECB? That would be my first question. Second, could you just refresh us on the loss budgets in terms of restructuring charges? I think you had only EUR 5 million in the first half. What's the likely one-off cost that you expect for the full year? Then just the same in terms of the loss budget for inorganic NPEs after the large, large activity in the second quarter. Those would be my questions. Thank you.
... Hi, Simon. Yeah, I guess after the, the latest ECB announcement, it's a fair question. The minimum reserve is EUR 600 million. The, the, the next question is the impact on the NII. On an annualized basis, that's around EUR 20 million versus previous plan. That's yet to be updated with along, along with everything else for the 2024 guidance. For 2023, we've measured the impact to be EUR 6 million, that's baked into the revised guidance, just to, for the avoidance-
Thanks.
Of doubt. For, for the cleanup, look, it's a, it's a, it's a higher cleanup charge than we had in the budget for the year, primarily because we basically front-loaded the 2024 transaction into 2023. We don't have major cleanup charges left. The cleanup process has completed. The bank is at a 5.5% NPE ratio, and we're headed to a lower than 5% ratio from organic flows.
Got it. In terms of the one-off costs, further less?
Well, we've got, we, we've got some restructuring costs, a very low number booked into Q1 and, and, and Q2. For, for the full year guidance for the capital, we are including a EUR 60 million charge. We will see how that gets deployed with between 2023 and 2024. We haven't announced any programs yet, but the guidance does, does budget for a, for a substantial FTE reduction between late 2023 and early 2024.
Understood. Thank you. Thank you very much.
The next question is from the line of Garrido Luis with Bank of America, Merrill Lynch. Please go ahead.
Yes, hello, and thank you for taking my questions. I have two, please. The first one on the NPE flows this quarter, that single corporate, which drove the majority of the increase, can you tell us which industry it was from? Can you give us an indication of the share of the top 20 corporate exposures in your books, just as a proportion of, of total corporate loans? The second question from me, just on the issuance guidance, if you could give us an update on, on where you stand for the rest of the year. Thank you.
Well, I think, I think we're basically now fishing for a name here. No, I mean, let's, let's, let's stick to what we've said. It was a, it was a substantial corporate exposure. It is rather public. It has affected the, the entire sector to, to some extent. The reason why there's no point mentioning industries here, is not to avoid the question, it's really that the case is so idiosyncratic and has some history behind it, that it's not really a predictor of the, of, of any industry performance per se. That's why let's, let's stick to where... You had the second part of your question. Sorry, can you repeat?
Yes, if you could give us some indication of, if you look at, let's say, your top 20 corporate exposures, how, what's, what, what's the proportion of the total corporate book they, that they represent?
Sorry, we're, we're looking that up. It's, it's not the majority, I would say. There's not of the total lending book, so there's no particular concentration risk right now. We are constrained also by EBA rules in terms of, you know, Pillar 1 concentration as well. We can come, we can come back to that with some disclosure later on.
Okay, thank you. Then on the issuance, update?
Yeah. We're, we're currently at, for, for MREL, you're saying, right? For bonds. Yes.
Yes.
We're currently at 21.6 MREL ratio, for a 21.8% target. We're basically there in terms of this year's requirement. We don't plan to issue anything more. The capital accrual for the year is another 70 basis points, as per guidance. That in itself will take us above 22%, so comfortably meeting the guided target for the year.
Okay, great. Thank you very much.
The next question is from the line of Dua Sharat with Amundi. Please go ahead.
Hi, good afternoon. Just very good results. Thank you, and thanks for the presentation. Just a question on the one item of guidance, which is still revised, but on the cost-to-income ratio. You've obviously done much better than the guided level in the first half, at 34%, and you're saying below 38% for the full year. Is there any reason that you can tell us why we should expect costs to increase significantly in the second half from that run rate?
No, not particularly. Right now, we, we did peak in NPU. We had a very good performance in admin costs. We're simply looking at the full year budget right now. We say less than 38 because let's just say that our model and our forecast have a significantly lower number. We're working for the best result possible, but we, we, we thought it's right to upgrade our guidance versus the previous number. We're, we're, we're headed for a very good cost income performance for the year.
Thank you very much.
The next question is from the line of Golub Iuliana with Goldman Sachs. Please go on.
Hello, good afternoon. Congratulations on the results, and thank you for the opportunity. I wanted to ask, I can see you revised the outlook on residential real estate prices for 2023, quite materially up. I think more than 2 percentage points for 2024. I was just wondering if you could please comment on what you are seeing on the ground in terms of real estate, and also in light of your comments on the call of weaker mortgage demand from from on retail? The second question, would you be able to give us a flavor of the conversations you are having with the rating agencies? You are obviously on positive outlook from both Fitch and S&P. We already saw two rounds of upgrades from S&P and Moody's.
I was just wondering if you can comment on any discussions you're having, also in light of possible upgrade of the sovereign later this year. Thank you.
Thank you. Thank you, Liliana. Let me take your retail real estate question. You know, we have on page 30, 73, you know, our projections for for the next for 2023 and the next few years, 2024 and 2025. Well, well, what we are experiencing in the Greek market, especially for residential real estate, is an uptick in prices, which is even higher than run rate of our estimates. That, having said that, these are mostly transactions that are taking place with own funds, and it doesn't seem to be requiring any mortgage financing. This explains the odd result of having real estate prices going up, but not an increase in in volume of mortgages.
The main reason is that there's a lot of demand from outside of Greece. We see a lot of demand coming from the Middle East, from Egypt, from Lebanon, from, you know, other, other jurisdictions. And these have been allocated mostly on the Athens Riviera, but generally in Athens. Some of them taking advantage of the, of the expiry of, the, the, the, the golden, the, the golden, visa rule, or, or the upgrade, which is about to come on EUR 500,000 per real estate. So there's an, an acceleration of demand from this particular source that we expect to continue.
A lot of cash transactions, which explains why, despite the uptick in prices, there is no mortgage demand, as we are experiencing. On the raters and the rating discussion, Liliana, look, I think the republic is on a safe path to an investment grade status. Some raters are obviously easier than others. We assess from the discussions that we've had, that this is a second semester of 2023 question. Some raters do expect to see some KPIs being met. They do expect to see the growth of the year, also projections for 2024. Some others are more comfortable with the sustainability and are on a clearer path.
For banks, the investment grade status will take some time. When it comes to Piraeus Bank, we know the idiosyncratic KPIs that have to do with asset quality, with capital quality. Overall, I would say balance sheet health and sustainable profitability, that the raters are looking for. P/B ratio is clearly a major metric in their assessment. Our acceleration of NPE cleanup was also driven by raters at this stage.
Very comprehensive. Thank you.
The next question is from the line of Gerstenkorn Maximilian with Jefferies. Please go ahead.
Hi. Yes, good afternoon. One from me on your impairments on other assets. I believe they came in a little bit higher than the usual run rate this quarter again. I was just wondering if you could give a little bit of color what those relate to, are those real estate related? Perhaps if you could give us an idea on what we should be expecting there, in terms of a run rate going forward. Thank you.
Thanks, Max. It's actually a technical effect from the consolidation of MIG. It's an impairment of its goodwill. You will see that countered by an abnormally high number in the trading and other income, that's basically coming from the fair valuation of the MIG investment. It's, it's actually within the operating profit, it's actually countered, and there's, and there's nothing, there's nothing budgeted for for the second semester, and it was not real estate related.
Okay. 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.
Thank you all for participating in our first half 2023 results conference call. We look forward to discussing with you all, physically or virtually, during our investor outreach program, commencing as of early September. In the meantime, please have all of you have a relaxing summer break.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.