Ladies and gentlemen, thank you for standing by. I am Nina, your call recall operator. Welcome, and thank you for joining the Piraeus Bank conference call and live webcast to present and discuss Piraeus full year 2025 financial results. All participants will be in a 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 Bank's CEO, Mr. Christos Megalou. Mr. Megalou, you may now proceed.
Good afternoon, ladies and gentlemen. Good morning to those joining us from the U.S. This is Christos Megalou, Chief Executive Officer, and I am joined today by Theo Gnardellis, Chryssanthi Berbati, and Xenofon Damalas to present and discuss Piraeus fourth quarter and full year 2025 results. Today, I will take you through the first two sections of the presentation, covering the main financial and business achievements for the full year period and demonstrating our standing in the European banking landscape. This will be followed by a Q&A session. Let's begin with our presentation and slide four. Piraeus is the leading bank in Greece, ranking first across all major business lines. We serve 4.5 million clients with a workforce of 8,100 employees in Greece.
Our total assets stand at EUR 91 billion, with EUR 37 billion in client loans and EUR 66 billion in client deposits, representing 28% market share in deposits. We operate an omni-channel distribution platform with 370 branches, 1,500 ATMs, and serving 3.2 million digital clients. Our mobile app is top ranked, reflecting our commitment to digital excellence and customer satisfaction. We are a leader in sustainable banking, with EUR 5 billion in sustainable financing, EUR 2.2 billion in Green bonds outstanding, and a strong focus on supporting small businesses and farmers. All these outstanding results have been delivered thanks to our people and our clients. Let's move on to slide five for the key highlights of our full year 2025 performance.
We generated normalized return on average tangible book value of 16%, or 14% on a reported basis. Our earnings per share reached EUR 0.82 post the AT1 coupon, fully absorbing the fast decumulation of base rates. On the back of our strong performance, we increased our payout ratio to 55%. We intend to distribute EUR 0.40 per share cash dividend in Q2 2026, on top of the EUR 100 million share buyback that was completed in the fourth quarter of 2025. In total, we are on track to a total distribution of EUR 592 million out of the 2025 profit, which corresponds to a 7% yield. We have expanded our loan book by a Europe-leading growth rate of 11% year-on-year, and achieved EUR 4 billion net credit expansion, maintaining pricing discipline at the same time.
Importantly, net credit expansion reached EUR 300 million in the retail segment after 15 years of contraction. Our cost to core income ratio stands at 33%, among the best in the European banking market, confirming our strong cost discipline. Revenues from services reached EUR 700 million in 2025, up 7% year-over-year. Our revenue diversifying efforts are reflected in our services revenues over total revenues of 26%, and fees over assets that exceed 80 basis points. Both metrics are best in class in Greece and close to or above average in Europe. EUR 0.7 billion net revenues in 2025, with net interest income rising in Q4, quarter-on-quarter, and we consider that we are now well past the trough in net interest income.
Asset quality dynamics remain solid, with the NPE ratio at 2%, while organic cost of risk shaped at 52 basis points. NPE coverage increased to 73% from 65% a year ago, solidifying our balance sheet. Our assets under management increased to EUR 14.5 billion in 2025, up 25.7% year-on-year, with EUR 1.5 billion net inflows. Client deposits rose by EUR 3.2 billion annually and are now at EUR 66 billion. Practically, our deposits almost fully funded our credit expansion in 2025. Our total capital ratio reached 18.7%, absorbing the Ethniki Insurance acquisition, 55% distribution accrual, the strong loan growth, and DTC amortization. We maintain a buffer of 275 basis points above Pillar 2 guidance, with a CET1 ratio standing at 12.7%.
Slide six presents the details of our fourth quarter and full year operating results. The reported pre-provision income was up 7% quarter-on-quarter. Below pre-provision income, the quarter has some one-offs aimed at further strengthening our balance sheet in the areas of non-performing assets and non-core participations to lay out a clean backdrop for the new strategy. We sustainably grow our tangible book value per share, now at EUR 5.9 per share, which is net of the EUR 0.30 per share cash dividend paid in June 2025, the EUR 0.08 per share of share buyback in November 2025, and the impact of the Ethniki Insurance acquisition. On slide seven, we present our strong loan origination dynamics. Performing loans increased by 11% in 2025, driven not only by all business lending segments, but also by an increase in household lending.
Importantly, Q4 marked a new cycle, a record of EUR 250 million for mortgage disbursements. On slide eight, we present a detailed sector breakdown of our CIB net credit expansion of EUR 3.6 billion in 2025. As you can see, our corporate platform outreach is very granular, reaching all sectors of the Greek economy. Among other initiatives, we are increasing our presence in syndicated deals, and we are offering greenhouse technology financing solutions. At the same time, we keep focusing on SME clients in Greece, as shown by the top performance in disbursements. Slide nine demonstrates that we have achieved Europe's strongest corporate loan growth while maintaining pricing discipline, which is a testament to the commercially rigorous approach of all of our teams.
We have been able to compete and win business while pricing at par with the market average and keeping risk-adjusted returns at the core of our business credit underwriting. Turning to slide 10. The key milestone to note is that 2025 is the first year that mortgage loan growth, net of repayments, has turned positive, with net credit expansion of EUR 110 million. This follows net consumer loan growth, which already turned positive in 2024. Consumer disbursements have been growing since 2021 by 10%, but this growth was previously outweighed by heavy repayments. We now have reached an inflection point that bodes well for future expansion of our loan book and revenue streams. Slide 11 outlines the impressive evolution of our services revenues, which is being supported by loan originations, asset management, and bancassurance.
Ethniki Insurance contributed for circa one month with the growth of the new operating model still to come, expected to elevate services revenues with expansion across all segments of the market, namely life and health protection and P&C protection. More on this during our Capital Markets Day next week. Slide 12 demonstrates the growing trend of assets under management, that reached EUR 14.5 billion in December, backed by strong net inflows of EUR 1.5 billion. We have upscaled our investment solutions offering to private banking and retail clients, incorporating robo-advisors, while our open architecture strategy, combining Piraeus Asset Management expertise with a wide suite of best-of-breed third-party products, is paying off. Slide 13 presents detailed information regarding net interest income intrinsics. In a nutshell, our growing CIB loan book drove NII improvement, along with the stabilization of base rates.
Spread erosion was milder in Q4 versus the previous quarter, while deposit costs stabilized. As a result, NII rose by 1% in a quarterly basis, indicating that the trough of the cycle is behind us, given current yield curves. Turning to slide 14, our cost control efforts kept G&A costs under control while still making extensive IT investments. Overall, we remain cost conscious, maintaining cost to core income ratio below 35%. Slide 15 provides a summary of our asset quality indicators. Our NPE ratio stands at 2%, while the organic cost of risk shaped at 51 basis points in the fourth quarter. Our NPE coverage in strengthened, reaching 73%, while our stage one, stage two, and stage three coverage ratios are increasing, standing higher than EU average. Piraeus enjoys a superior liquidity profile presented on slide 16.
Our liquidity ratios remain strong, as evidenced by the high balance of deposits at EUR 66 billion and 216% liquidity coverage ratio. Turning to our capital base on slide 17, our CET1 ratio stood at 12.7% at the end of December, post the Ethniki Insurance acquisition, absorbing loan growth, 55% distribution accrual, and accelerated DTC amortization. Slide 18 depicts Ethniki Insurance performance in 2025. Profitability was significantly improved to EUR 45 million before tax at a recurring level, from EUR 26 million in the previous year. With a leading 14% market share and 1.9 million customers, gross written premium posted growth in health and P&C. On slide 19, we present an update on Snappi, our neobank, with its own portable pan-European banking license.
Snappi launched commercially in September and is already gaining significant traction with its fully digital, app-based, branchless, low CapEx model, as it currently has 60,000 app users. Turning to the second section of our presentation for our positioning within the competitive landscape, I want to point out that Piraeus is in a leading position in Greece in terms of performing loans, deposits, equity brokerage, and network, as highlighted on slide 21. In addition, Piraeus ranks above, at par, or above average on all major KPIs in the European banking space. In slides 22-27, we present the key metrics for Piraeus versus European bank averages. On slide 22, Piraeus delivers best in class loan growth in Europe, outpacing EU peers by wide margin. On slide 23, our net interest margin is far above the European average, reflecting our pricing power and effective balance sheet management.
Slide 24, net fee and commission income over assets is well above the European average and the best in Greece. Slide 25, our cost to core income ratio is best in class in Europe, demonstrating our ongoing focus on operational efficiency and cost discipline. On slide 26, Piraeus returns on tangible book value is well above the EU average, highlighting our ability to generate superior returns for our shareholders. Concluding with slide 27, despite our strong fundamentals in absolute and relative terms in relation to our European peers, Piraeus trade below EU banks with similar earnings, implying significant upside for our shareholders. With that, let's now open the floor to your questions.
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. One moment for the first question, please. The first question is from the line of Mehmet Sevim with JPMorgan. Please go ahead.
Good afternoon. Thanks very much for your time. I have just a couple of questions, please. One on the fee income this quarter, which you renamed to revenues for service, from services. Seemed like a very good, strong print. I was just wondering if there are any one-offs or anything else to highlight in that print, or is this a good run rate for us to consider for 2026? Maybe related to that also, it seems like a strong initial contribution from the business in just one month. I was wondering how we should think about 2026 when it comes to revenue contribution and integration costs here, and maybe anything else that we should be aware of when it comes to modeling the business.
Finally, just want to ask on the payout ratio, which came in higher than expected with the EUR 0.40 per share dividend payment. At the same time, you said one fell slightly below the target of 13%. How do you balance this? Going forward, should we think about this double payout ratio as the base, or is there anything that you'd like to highlight here as well? Thanks very much.
Hi, Sevim, and thank you for the question. I'll start with the fee income. We had, indeed, a very strong fourth quarter, and this is highlighting the franchise value of Piraeus. We have always maintained that, you know, we are a strong earner in fees over assets. Particular areas like asset management, the banking business, the bankers who runs our areas of growth for us, and they will continue to be. For the fourth quarter, there were a few, let's call it, highlights, especially on the investment banking side. I wouldn't extrapolate this number for the whole of the year.
I would just say, and of course, we will come with guidance on next week on our Capital Markets Day in London. I would just say that this is an indication of the strong franchise value that results in fees from services for Piraeus Bank. Now, on the payout ratio and the level of capital, first of all, we thought that we felt very comfortable with the level of capital that we were in, given the balance sheet and given the way the bank has de-risked over the years. Therefore, to...
give an extra return to our shareholders from 50%-55%, we thought it was more than appropriate, given the fact that with the level of CET1 that we are currently at, we are at a total capital level of above 270 basis points above P2G. Of course, this whole exercise was facilitated by the fact that the P2G went down to 1%. As you can imagine, given the strong fundamentals of the bank, we thought that this reduction on the P2G should be passed to our shareholders. This is what we did right now, rewarding our shareholders with an extra 5% on the payout ratio.
On your question, Mehmet, about, you know, Ethniki, this is really one month plus a few days that you're seeing here. Let's just wait for the March 5th , where we're gonna be giving you guys a detailed guidance. We're giving a preview of the solo result, I mean, it's still an audit, and it's gonna be published by the end of March, but we're giving you kind of a preview on page 18. We'll discuss much more about Ethniki and the accounting effect and the value effect on the group consolidation on March 5th. Let's just wait for that.
Super. Thanks very much.
The next question is from the line of Benjamin Caven-Roberts with Goldman Sachs International. Please go ahead.
Afternoon. Thank you very much for the presentation and for taking my questions. Just two, please. Firstly, could you please provide some further color on the one-offs that were recorded this quarter? If we should expect any further one-offs going into 2026, for instance, relating to the recent Katseli ruling. Secondly, on the net credit expansion, just looking through the different categories, as you mentioned, a very positive pickup in mortgages, but large corporate net credit expansion was a little lower in Q4. Could you elaborate on how we should think about that mix and run rate going forward? Thank you.
Hi, indeed, quarter four, we found the opportunity, and we recorded some one-off expenses, which are below the normalized line. What primarily we did was on the cost side, there were some adjustments that we did on the ES and some transaction-related costs with the Ethniki trade. Valuation adjustment that was done on the equity and the NPA line, and of course, on loans, where we are, we're all aware of the Swiss franc legislative actions that happened throughout the quarter. As a result, there was an additional adjustment there. Given the nature of these adjustments, I would not say that these are, you know, to be repeated in the future.
We will not have, again, one-offs of that kind going forward. Overall, the guidance and the profitability, the communication that we will be giving, and we have given in the past, regarding 25 is on the reported side. Our objective is always to be meeting that, both on a returns a ratio perspective and on a nominal perspective. This is what we did. So kind of nothing to write home about there that produces the future. Robert, also on the loan growth, as we were going into the fourth quarter, you know, we were well above our target of EUR 3.5 billion by some margin, and then therefore, there was no real urgency on pushing forward.
Naturally, you know, we have been, you know, slowing down a little bit in the fourth quarter, so that we will be in a position to have a very strong Q1. Nothing to think about the Q4 credit expansion, especially on the CIB, other than that the trend is very strong. We have a very strong pipeline, and as we will come up with a new guidance on the March 5th in our Capital Markets Day, you will see this coming through.
Very helpful. Thank you.
The next question is from the line of Gabor Kemeny with Autonomous Research. Please go ahead.
Hello. I have a question on your capital distribution. If you could comment on how you think about the mix of cash dividends and buybacks going forward, in light of the strong performance of the shares recently. There's the first one. Second question on the net interest margin. Do you see the NIM stabilizing going forward? Is Q4 a good run rate for the coming quarters, or do you see any additional headwinds coming through? Thank you.
Gabor, hi. I mean, on capital distribution, you know, the way we are right now, we think cash. That's what, you know, we're planning for 2026, and this is how we strategically look to, you know, conduct ourselves in the future.
On the NIM Gabor, indeed, I think we're reaching a point, given the interest rates status and what we're seeing on spreads where NIM is finding its lows. There are some tailwinds actually on the ratio that we'll be discussing next week, but I'll refer you to the March 5th for those.
Right. Thanks. Thanks so much. just another quick one on your capital ratio. I think you had a valid case for increasing your payout, the CET1 ratio, slightly dropped below 13. How would you think about steering your capital going forward? Are you looking to build it up to 13 or above? or is there now a possibility that you know, stay maybe a little bit below that?
Gabor, look, I think this is a franchise that, you know, generates earnings. It's a high yielding one, high distribution one, and generates capital as well. We have been talking about our strategic direction and philosophy on distributions and rewarding our shareholders. In the future, as we generate, as we generate more capital, you know, we will be following the same strategic direction. We will come with specific guidance on the Capital Markets Day. You know, our philosophy is this is a capital accretive franchise, and we have to be delivering more capital to our shareholders.
Brilliant. Thank you.
The next question is from Simon Nellis with Citibank, please go ahead.
Thanks for the opportunity. First question would be on the losses from participations or impairments. Can you just elaborate on what the nature of those one-offs are? Second question would be on the increase in bank insurance fees. I guess that's with existing insurance partners. How do you see that transition from existing insurance partners to Ethniki Insurance occurring, and the impact might have on that line? Those will be my two questions. Thank you.
Hi, Simon. yeah, the one-off part of the adjustments on associates had to do with one of the a particular case that exists in our book. We saw some market intrinsics, some market information that led us to do a one-off valuation adjustment on the particular exposure. As I said, this is a very one-off situation. This does not prelude to any further such one-offs. It was something that we found an opportunity to do now, so that we can have, a, kind of clean horizon ahead with no kind of gray areas or question marks.
How much was that, if I can ask?
EUR 35 million was the one-off adjustment that we had done on the equity side. You can find it on page, I believe 52. Yeah. On the bancassurance fees, yeah, it was a strong quarter. I mean, the generally, as a bancassurance franchise, we know that, you know, Piraeus is running the strongest bancassurance sales. quarter four was particularly strong. It is with the existing partners that we've got. The arrangements that we've got with the two bank insurance partners are, of course, active. It's a testament of how the network continues to produce insurance regardless of other things that might be happening on the side.
The particular line, I think we will see it next week in conjunction with a lot of other things that are affecting the future overall of the group when it comes to insurance sales and insurance revenue. Let's just hold on for another week.
Thanks so much.
The next question is from the line of Ilija Novosselsky with Bank of America. Please go ahead.
Hi. Hi, thanks for taking my questions. One question on your interest expense paid on deposits. I can see that it's constant in the quarter. As far as I know, that relates to both the actual expense on deposits and also the hedge impact, and both of them seem to be constant, or I would have expected both of them to have a positive impact. Maybe if you can tell us how we should see interest expense from customer deposits developing from here, maybe split between the two impacts. Then again, if I stay on the hedges, if I look into the Excel data set on the NII section, I see big changes in the non-maturing deposit hedging cost, which is kind of offset by a similar change in the IRS liability side.
Maybe if you can tell us, what has caused that, because the change is around EUR 90 million in each of the lines. Maybe finally, one more on the hedges. You started with EUR 10 billion, you have about EUR 9 billion now. How can we expect the portfolio to develop throughout this year? Thank you.
... yeah, overall, the deposit costs, as you saw, we have netted out and well pointed out with the NMDs, it's on 29 basis points right now. It is a flat situation. There's multiple, I would say, minor movements there. You know, for the future, I know we're trying to keep the line, but you guys keep coming back on guidance for the future. For the future, right now, what we can tell you is that it's a stable outlook. If you wanna make an assumption, I think that's a fair, that's a fair one.
My answer to your hedging question, from a strategy perspective, it depends a little bit on our outlook on interest rates. We will be discussing that next week. I said many times, when one believes that you have reached a terminal level of interest rates, then those positions stop having value, or you can, you know, you're free to kind of materialize and monetize the value that these carry. Again, let's discuss this more next week.
Thank you.
The next question is from Andreas Souvleros, with Eurobank Equities. Please go ahead.
Hello from my side, and congratulations for the results. I have one quick question, which is regarding the calendar provisioning, that is around EUR 300 million, if I'm not wrong, and remains a meaningful drag, on the common equity tier one ratio. Could you please clarify under what timeline or condition this, is expected to be reversed?
Hi, Andreas, thank you for the question. Indeed, it is of course, part of the capital supercession reduction that you use for, following the calendar provisioning guidance. It will reduce over time, the expectation that I would say we do it rapidly, probably around the 50% mark over the next five years. Part of the recovery strategy, that's the way calendar works: you front load, and then eventually, as recovery, hopefully you release.
Okay. Thank you.
The next question is from Fernando Gil de Santivañes , with Intesa Sanpaolo. Please go ahead.
I thank you for taking my question. This is a very general one, regarding the latest Supreme Court ruling, the last fifth of February, on interest payments. Can you give us some color, some views on the balances the bank has, what potential impact might we see, and if this ruling is to be appealed by banks or not? Any word would be very helpful. Thank you very much.
Thank you, Fernando. Let me start on the Katseli Law by saying that the Katseli Law served its purpose, I would say, when it was legislated in 2010. If you look at the exposures that we have in our book right now, and Theo will follow up with the numbers, all the Katseli Law exposures that we have in our balance sheet are stage one paying loans and performing. Which means that, you know, there was some good work done out of this law. We are monitoring this decision. Also we have to wait, I'm afraid, for the final script, because details matter.
We can give you an outlook of what we have in our books, and what that could potentially mean. Theo?
Yeah. Fernando, the overall book that we've got right now on the balance sheet of such loans, about EUR 50 million. Obviously, depending on how the decision will be scripted, there might have to be adjustments there, which is a percentage of that. We have a hypothesis obviously, which is being budgeted out, within 2026, and that will be included in any guidance in the guidance we give out next week. You understand, it's a percentage of EUR 50 million, so actually, it's within the margin of error of any cost or risk estimation for the future.
Okay. Thank you.
As a reminder, if you would like to ask a question, please press star and one on your telephone. The next question is from Stephan Potgieter , with UBS. Please go ahead.
Good afternoon. You've answered most of my questions, just follow up on the Katseli Law loans. The ruling there, obviously outlining your own exposure, do you have any views of what this could mean for the industry? I suppose most of these loans are sitting in the securitization structures, in the scheme, if you have any views on that.
Stefan, again, we need to wait for the, we need to wait for the, for the actual detailing, because, you know, the impact might range a lot, obviously. It's, it's a cash recovery question of these securitizations. It doesn't, it doesn't concern Piraeus Bank or the banks overall, given the fact that these loans are derecognized. In terms of the overall recovery, the outlook of hubs and what that means, this is to be seen as we see the details. Overall the outfits are producing cash reserves with the overall recoveries that come out of these loans are a percentage, I would say small percentage of the expected recoveries.
we'll see that, what that means for this phase, for the future. Overall, I think, for the bank's balance sheets, no effect.
Thanks very much. See 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.