Good afternoon, everyone, and welcome to the Piraeus Capital Markets Day. A very warm welcome to those of you here with us in the room, our webcast audience. Thank you also to our hosts and partners. Good also to see Piraeus has brought London some of the Greek sunshine as well. Today is about delivery and the next chapter, and showing how scale, balance, sheet strength, and digital execution underpin profitable growth. Most of you, of course, will be familiar with the Piraeus story, the largest bank in Greece. Today is all about how the bank has set itself up for success for the next chapter of growth. Today, we will be looking at where that growth is set to come from. As you can see by looking at the agenda behind me, we've got a really exciting afternoon lined up for you.
We're going to be hearing from some key members of the executive team. Christos Megalou will provide a CEO strategic overview. We'll also be assessing the next chapter for the Greek economy with a fireside chat with Chief Economist, Dr. Ilias Lekkos. We'll be showcasing Ethniki Insurance, recently acquired to become part of the Piraeus portfolio. We'll be looking at the strategic rationale for the acquisition. In part two, we'll hear from Piraeus CFO, Theo Gnardelis, on the business plan and the financials, followed by an extended Q&A with both Theo and Christos. Today, we're going to focus on the facts, delivery, and where incremental value comes from across capital earnings and operating efficiency. Q&A will come later. Please hold your questions. Please turn your phones to silent. Roving mics are in the room. Online viewers are able to submit your questions via the portal.
In a moment, we'll hear from the CEO of Piraeus, Christos Megalou, but first, let's start with a short film on Piraeus's transformation journey since 2017. As you'll see in a few moments, all the voices in this film are the team at Piraeus Bank.
2017 was a turning point. With a new chairman and board of directors in place, and a new CEO at the helm, it's the moment when we started to journey from crisis to success, from mission impossible to Europe's best growth story.
We started with hard decisions to restore trust, closing more than half our branches, cutting our headcount by 10,000, selling billions of euros of bad loans, and building a new leadership team.
We achieved best-in-class operating efficiency, and at the same time, we transformed our approach and culture.
We embedded transparency, accountability, and meritocracy across the organization.
Each pillar reinforced the others. Strong governance enabled bold action, which in turn restored market confidence and allowed us to invest in innovation and growth.
After a decade of looking inward, we looked outward towards our customers. We focused on delivering what they need in the way they need it.
By 2021, we were ready to grow again, and the market agreed, investing EUR 1.38 billion.
That trust in our vision paid off as we increased lending to the economy by almost EUR 8 billion, delivered record profits, started paying dividends to shareholders, and fully privatized in 2024. Alongside these successes, we stayed focused on the future. A strong new brand, a completely reimagined branch model, market-leading digital services, and the commitment to sustainable banking.
We have rebuilt and reimagined Piraeus. Now, we are accelerating growth, diversification, and innovation, and creating lasting value for customers, communities, and shareholders.
We are looking forward to the next chapter.
Good, good afternoon, everybody, and thank you very much for being here with us in this very exciting venue to present to you our 2026- 2030 business plan. Just to acknowledge first the volatile times that we are living in, as we know, the last five days have been quite turbulent and, you know, we monitor with vigilance developments. We look at what could possibly happen in the future. A lot depends on how long this crisis will last. I'm not here to talk about the developments in the Middle East and in Iran, but I'm here to talk about Piraeus 2026- 2030 business plan.
Going straight into what Piraeus' plan is promising, we wanna be strong and profitable.
We will improve our efficiencies and we will optimize our capital. These are the three overarching strategic priorities for myself and the management team. The key enablers, the franchise, the risk management, the platform of delivering of products, AI and technology, and people and culture. The target, you have it in front of you, what we are promising and what we are guiding the market. 18% return on tangible book value, a cost-income ratio that's gonna be best in class in Europe, from 33% we are right now down to 30%, earnings per share growth of 10% year-on-year for the next five years, dividends per share significantly improved 17% year-on-year, an improvement on shareholder returns, total shareholder returns year-on-year of 13%, and a Net Promoter Score above 20.
This is what this plan is all about. Our core strengths, 4.5 million customers, 50% of the active population in Greece are the customers of Piraeus Bank. Number one in deposits, the biggest franchise, branch network in the market, delivering these results that we are talking about. We are very proud of our recognitions in the market, but we are mostly proud for our MSCI AAA on sustainability. We are the only Greek corporate that is a AAA from MSCI in the sustainability agenda. Five businesses that are delivering these results. 2025 or EUR 2.7 billion from businesses, from individuals, from wealth and asset management, insurance, and the financial markets. That's what is the Piraeus machine producing in 2025. Where are we operating?
We are operating in Greece, in a country where there is significant improvement in everything that the talks macro. The sovereign spreads are improving, the economy grows, credit is in demand, fiscal is improving, and we have quite a lot of upside on segments. Loans to GDP 84%, average Europe 110. AUM to GDP a meager 12%, we see Europe at about 100. Insurance premium from the 2% that we are currently are at 5%-7% in Europe, there is a lot of growth in this market. At the same time, we have converged. Who would imagine that Greece would be trading at par with Italy and France? This is what is happening on the longer term yields. Greek debt is sustainable.
Greece is growing faster than the European average and will continue to grow faster up until the period we are talking about at the business plan. Unemployment is at historic low, improving disposable income, improving demand for credit and affordability. The surpluses continue to be at the core of the government's agenda. This sustained fiscal discipline is what keeps the economy going and what will be creating the growth of the future. That's how the primary surpluses are coming in. Debt- to- GDP ratio, there is no other country in Europe that is reducing the debt- to- GDP ratio with the rates that Greece is managing to reduce historically, but also projected to go to the next few years.
That's a very positive backdrop for the effort we are doing as a bank. Let's reflect one moment on what we have achieved so far. 2016 to 2025, look at the numbers. They speak for themselves. This is a great achievement of this management team. Whatever we have promised over the years, we have delivered. What could have possibly be a better launchpad than what we have achieved in 2025? The numbers are there for you to see. Significant improvement across all board and two milestone transactions. One, the acquisition of Ethniki Insurance, the enabler of growth for the next five years, and the launch of snappi, the neobank who already has 60,000 customers onboard. What this plan is all about?
The Piraeus 2030 plan is about profitability and growth, is about efficiencies, and is about optimizing our capital allocation and making sure our shareholders are rewarded throughout this period for their patience of being our shareholders. How are we going to achieve this? By playing to our strengths. We're gonna be growing, essentially, the Greek economy, being the number one player in the market, growing our loans, deposits, our assets under management, and the gross written premium that Ethniki Insurance is producing and will be producing in the future. This is not about basically cost-cutting.
Efficiency that we will be doing over the years will come because we have the ambition to take our cost income ratio down to 30%, improving revenues and managing costs in the best possible way, achieving stellar results on the insurance business, taking the expense ratio down to 8%, and delivering efficiencies from technology and artificial intelligence that we estimate here at EUR 70 million with about 80% being already in the plan that you have in front of you. Capital is an area where there's a lot of debate in Greece, and one of the things that I can tell you, we are thinking very seriously about our capital position. We are thinking very seriously about the buffers that we need to have in order to operate in a market like Greece, a Eurozone country with growth rates above average.
We believe that the new guidance we are giving you now, the 12.5 CET1 ratio and the capital buffer of 200 and above, is the right level of capital for our low-risk operation, because the balance sheet of Piraeus is a low-risk balance sheet by all means, and we have distribution to the shareholders as key in our strategy. EUR 5 billion between now and 2030, and that's what we are promising, and this is what we will be delivering. How are we gonna achieve that? The strategic enablers, the franchise, the risk management, very prudent risk management, the services platform, multi, omni-channel, delivering on products, the use of technology and artificial intelligence, and most importantly, our people, our culture, and our delivery mechanism, which is enabled through our people. The franchise power and our services platform are second to none.
The branches, the market share that we have in most of the country, the leading position in across the client age groups, the delivery that we do through the platforms, the diversification of protection and insurance and property that will come out of our new investment in Ethniki Insurance. These are going to be the enablers to achieve the results that we are promising here with this plan. Two words of snappi. snappi is a low-cost, locally regulated, very important, but with a European banking license offering that is catering for the emerging Greek sophisticated younger generation, that we see them evolving, and we see that they are attracted by our snappi offering.
We have, for three months of operation, 60,000 clients, average age from 18 to 35, and this is where the focus is going to be for snappi with a view of achieving within the next year, 300,000 clients on their app and usage. Quality, credit underwriting, prudent credit underwriting, and making sure this is reflected across the book is our mantra and our pillar for the next few years. We are very proud of what we have achieved in the later vintages of credit underwriting that we have been doing the last few years. We maintain this quality, and we will continue to underwrite with prudence.
Our mortgages book, as we are, has a loan to value ratio at 50%, very conservative if you look at it compared to Europe, and 73% of our exposures are collateralized. That's against an average of 50% in Europe. A very solid, very conservative book which we intend to continue developing this way. With the use of AI and innovation, we are planning to improve both the top line and all our OpEx. We are investing in all those areas that we see. We are building factories with Accenture, Anthropic is our new, let's say, franchise that we will be announcing very soon. We are very focused and confident in delivering efficiencies on the one hand and top line on the other.
Finally, our people. We are improving our discretionary pay, and we will be doing even more so to our people. We are hiring new people. We didn't have the opportunity to do it before, but we are now in a position to do it. We are focusing in improving the skill set, improving the delivery of our employees. Let's look at what we can achieve with the various segments that we are working on. On the corporate and investment banking, we are the number one bank in CIB in the Greek market.
We are promising significant loan growth, high single-digit number over a year over a year over the next five years, a Net Promoter Score that will be above 30 and about 50% of capital consumption will come from our exposure in CIB. Retail. I nnovation, technology, and delivery are gonna be driving our retail offering. New products are coming, new platforms are coming, the mortgages book is developing. We were very pleased that in 2025, mortgages were up, Net credit expansion EUR 100 million. We are planning EUR 300 million for 2026 and a lot more for 2030. This will be an added fuel in our delivery of NII and bottom line. The retail will play increasingly a much bigger role in our offering going forward. Wealth and Asset Management.
We are driving AUM growth on products, on platforms. We are driving AUM growth significantly as we did the last few years, the numbers that we are presenting in this plan could definitely go better because for the next five years, we haven't assumed any significant market appreciation. Watch out, things could be even better than the numbers that you see here on the chart. Insurance. That's a key pillar of our future growth.
Insurance means working together with our bancassurance channel, the most efficient channel in the Greek market, motivating the agent network, 1,000 agents, plus being all over Greece of Ethniki Insurance, working together with Ethniki Insurance and the management team there, and Dimitri Mazarakis and his team, in delivering what we believe it could be a real growth driver for the future going forward. The numbers you see here on the chart speak for themselves. Finally, that's the story. 18% return on tangible book value by 2030. A cost income ratio that is best in class in Europe, 30% by 2030. Improving our customer offering with a net promoter score above 20, that is what I am promising you today. Earnings per share, year-on-year growth of 10%, and that's without using any buybacks.
We're talking about cash, dividend and without reducing the number of shares, 10% EPS growth, a dividend per share that will grow at 17% and a total shareholder return which will be 13% taking into account return on tangible book value and dividends per share. This is what this plan is all about. This is what we will be hearing in the next hour or so. I'm very happy that all of you are here with me today and you are here with the management team, and I'm looking forward at the end of the presentation to take all the questions that you can get. Thank you very much.
Thank you, Christos. A really interesting overview, as Christos said, we'll come back for questions with Christos and Theo later in the session. In a few moments, I'll be talking to the Piraeus Chief Economist, Dr. Ilias Lekkos, for an overview on the Greek economy. To show the central role that Piraeus plays across the Greek business sector, we're going to take a brief look into the Piraeus corporate banking franchise. For context, Piraeus has the largest loan book in Greece with energy, agriculture, and digital infrastructure, a particular focus. Here's a flavor for you.
Piraeus is the biggest commercial bank in Greece with its total wholesale book exceeding EUR 28 billion today, having achieved double-digit growth rates over the last three years.
We have not forgotten the lessons we learned during the crisis. We're using this to optimize and make our liability structure as efficient as possible because we know it matters. This balance sheet strength derived from the liquidity and capital position allows the bank to extend credit of any size to our corporate clients.
We have levers in the growth of the Greek economy in the sectors we consider there is a lot of appetite and a lot of activity. The first sector we consider is strategic for Piraeus and definitely we have a leadership position, is in the energy sector. We have actively financed more than EUR 3 billion projects in the wind sector, photovoltaic, as well as pump storage power networks. At the same time, we have utilized this expertise and know-how outside the Greek perimeter. Today as Piraeus, we are financing offshore wind parks in U.K., photovoltaic parks in France and Italy. The second sector we have a competitive advantage as Piraeus is the agricultural sector, which is one of the most important sectors in Greece, that accounts about 10% of the GDP. We have managed to build an industrial team, a team which is not a banking team.
They don't have a banking background, but they have an agricultural background. These are people coming from overseas. They have seen the best experience, international experience from Netherlands and France. We have brought new ideas about the greenhouses and how we can improve the agricultural production. We have designed a specific investment program for this area. More than EUR 300 million investments are going to be realized over the next years out of this initiative of Piraeus. Looking ahead, the biggest opportunities in Greece, I can see them in the data centers, in fiber optic network development, as well as in the defense sector. We're currently financing one of the biggest data centers developed in Greece by PIMCO. This is a EUR 200 million investment, which is currently under development.
Talking about the defense sector, together with the European Investment Bank, we have designed a new program, which specifically focusing providing financing and liquidity to SME companies that are active on this sector. Piraeus' strong liquidity position, driven by the highest deposits in the Greek markets, gives corporate the funding we need in order to achieve our growth plans and in order to fund the growth of our corporate clients and the growth of the Greek economy.
We want to set the Piraeus story now in the context of the macro environment, both in Greece and also globally. Who'd have thought that an economy seen a few years ago as Europe's headache is now truly finding its feet? To frame the macro situation in context and to discuss the next chapter for Greece, I'd like to invite up to the stage Dr. Ilias Leikkos, Chief Economist at Piraeus. Ilias, good to see you. First of all, I mean, you've clearly had a front row seat over the last few years to witness this remarkable transformation. Just give everyone a reminder of how much has changed in recent years. I know you have some graphs to illustrate some data points in terms of trends in investment and consumption to start with.
Yeah, I mean, thank you very much, Richard. You know, everybody here follows the Greek economy, saying that, you know, the recent macroeconomic events in Greece have been volatile, you know, is the understatement of the year. I mean, over the past 10, 15 years, we had to deal with the global financial crisis, the Greek sovereign crisis, COVID, the Russian invasion to Ukraine, and the hiking cycle by the ECB. Things have been sort of very interesting, to say. The important thing is that, you know, during that period, lessons have been learned. Nowadays, it is a fact that, as Mr. Megalou said, Greece right now has the best fiscal position in Europe. We are running substantial primary fiscal surpluses.
Again, we have one of the most attractive sovereign debt profile. At the same time, Greece has been able to grow by twice the euro area average over the past two, three years. Overall, we are entering this new phase at a very strong position. To answer your question about, you know, the future, the next chapter, as we're discussing here, I think that people have not really appreciated that the Greek economy is still at the early stage, at the early stages of its business cycle. For instance, if you look at the chart here on the screen, with the yellow line, you can see the Greek business cycle. If you're lucky enough to be macroeconomists, you know that this is the output gap. For everybody else, it's the business cycle. Okay.
With the blue line, you can see the year-over-year growth in investments, gross fixed capital formation. You can see that there is a very tight link between the business cycle and investments, both in the good years, but also in the bad years. What's really important though to notice is that in the last few years, you know, 2023, 2024, 2025, there is a gap between the two. Investments have not grown fast enough.
Mm-hmm
... to meet the return of growth in the Greek economy. That is very important because in reality, what this graph shows you is that there is a speed limit to how fast the Greek economy can grow.
Mm-hmm.
We really need to invest more to improve the growth potential of the Greek economy. This speed limit is not only on the corporate sector. If you go and look at the next chart here, you can see that there is a speed limit in the household sector as well. For me, the yellow line here is a very interesting and very exciting variable. Probably I'm the only one who has this feeling. In reality, the yellow line here shows you the households' confidence, households' employment expectations. The reason that I like this variable is because it's a variable that it's not something that I estimate. It's not something that the government estimates. It's what the Greek households themselves feel about their employment opportunities.
You can see that when households feel confident, they consume more, they spend more.
Yeah. Yeah.
It's only natural. Again, you can see that in the past few years, there's a substantial gap about, you know, confidence, expectations and consumption. Again, Greek households are still very conservative in their way of thinking. Looking forward, I think that the next chapter in the Greek economy will be sort of driven by both investments, but also consumption.
Let's look then at capital productivity and corporate profitability. I mean, growth is good for the local economy and Greek households. What's the business case for a foreign investor to look at Greek assets?
Yeah, that's a very interesting question because, you know, growth is good if you are in Greece, but, you know, if you are a fund manager, if you are an investor looking to invest in Greece, you need to wonder, "Why should I
Yeah.
do it?" It's very interesting to see how productive is the current, the existing capital in Greece. Here you can see, in a sense, the ratio of how much we produce given the existing invested capital in the Greek economy. You can see that, you know, during the boom years of the past, invested capital was very productive in Greece. There was a huge drop during the crisis years. If you look at the past couple of years, again, there has been a substantial recovery in the productivity of the Greek economy. Productivity means one thing, profitability. Here you can see the EBITDA. It's not based on IFRS standards. It's based on Eurostat's accounting standards. In reality, the y-axis is in billions of euros.
You can see the EBITDA of the entire Greek corporate sector. You can see again that there has been a substantial pickup in the productivity of the Greek corporate sector over the past couple of years.
Just looking at this through the lens of foreign investors, and just looking at FDI in Greece, what's the interest been until now and where is the opportunity? Which sectors are looking most promising?
I think that the, there has been a very popular myth is that, you know, Greece does not attract FDI, but that's not true. I mean, there are sectors like tourism, hotels or infrastructure projects, but these are projects or sectors that, you know, usually, analysts associate with Greece.
Mm-hmm.
Okay? I don't know how many people know that, for instance, the Greek private healthcare sector has been able to attract substantial, you know, investments from foreign, you know, funds. The private educational sector has been able to attract quite a lot of interest from abroad. There is a very nice mix of traditional sectors, but also new sectors.
That are emerging.
Exactly.
Many people know that the RRF, the Recovery and Resilience Facility, is being or has been a big part of the Greek recovery story, but the fund expires at the end of 2026. Is there going to be a cliff effect next year as funding is withdrawn? What's your view on that?
Again, this is one of the questions that I get a lot from people who look to invest or have invested in Greece.
Mm.
It is true that the RRF has been a game changer for the Greek economy, without any doubt. Because legally the fund expires at the end of 2026, a lot of people think that there is gonna be a cliff effect and there's gonna be no funding in the Greek economy after the end of this year. This is not true. I mean, if you look at this chart, this is a very sort of busy chart. But it shows you the evolution of the RRF. I want you to focus on the blue bars, because the blue bars shows you the disbursements of the funds to Greek corporates to finance their investment products... their investment projects.
Mm-hmm.
Okay. You can see that the disbursements extend far and above 2026. You will have disbursements in 2027 and 2028. In fact, the data in this chart refer to December 2025. Every project that will be finalized during the course of this year will add to the size of the blue bars going forward. The important thing to notice is that there is no cliff effect. There is a very slow tapering off the RRF funds over the course of the next two or three years.
Is there really enough support, do you think, for the Greek economy after the expiration of the RRF?
I, again, I don't think that, people have fully appreciated
Uh
the extent of the buffers that the Greek government has been able to build during recent years. And when I say or talk about buffers, I think, you know, the Greek government has been very effective and very efficient in fighting tax evasion.
Mm.
When we talk about fighting tax evasion, in reality we mean that, you know, tax revenues grow far and above the pace of growth of the Greek economy.
Mm.
That has allowed the Greek government to build substantial buffers that they can spend over the next few years. Just to show you some data, here there are two parts, the blue part of the bars and the yellow part. The blue part is something that everybody's very familiar in Greece. It's the public investment program. It's the vehicle through which the Greek government finances large infrastructure spending. Okay? Everybody knows that.
Mm.
What is not very clear and very obvious to people is the yellow bars. The yellow bars show you the buffers that the Greek government has been able to build through excess tax revenues. Just to give you an idea, I mean, we're talking about if you look at 2029, the sum of the unallocated buffer, the yellow part, and the public investment program sum up to EUR 20 billion. We said that the RRF has been a game changer.
Mm.
The RRF, the size of the RRF was EUR 36 billion. These EUR 36 billion would be dispersed to the Greek economy from 2021 all the way to 2029. In 2029 you will have EUR 20 billion alone coming from the Greek government. That tells you that there's a substantial tax dividend that will be returned to the Greek economy.
To make up the difference.
Exactly.
Given all of the above and what you have just taken us through, what's the outlook for credit?
Yes. Now this chart and the next one is the charts that, you know, my colleagues and my team didn't want me to show to you. Somehow they believe that they're gonna be too difficult for you to understand. Okay. I'm gonna take you through the graphs. If you have a problem.
Be easy on us. Come on
I will apologize later on. In reality, what you see here, with the yellow line you see business investment, quarter after quarter at any point in time. Okay? That's the yellow line. The blue line is corporate lending, new corporate lending, again quarter- after- quarter. The ratio between the yellow line and the blue line tells you in reality the % of new business investment that's financed out of corporate lending. It's as simple as that.
Mm.
You can see that in the good years between 2000-2008, that was very close to 100%. It was 95%, 90%, sometimes 100%. You can see that after the recovery of the Greek economy from 2018, 2019 onwards, investment has improved, but business funding, it not so much. Right now the percentage of investment, business investment that's financed out of bank lending is about 65%. Looking forward, the next chapter in the Greek banking sector will come from the expansion of both lines. I've spent, you know, the past 10 minutes, 15 minutes saying to everybody that, you know, we need more investment in the Greek economy.
Mm.
The percentage of that investment that will be financed out of banking loans will increase as well. You know, talking about the last bit, talking about an untapped opportunity.
Mm.
Here you can say, you can see exactly the same chart, but for mortgages. The yellow line is a residential investment, and the blue line is new mortgage lending. Okay. You can see that, you know, in reality, you know, construction activity in Greece and mortgage lending, they have been dead for during the time of the Greek crisis. Again, you can see that residential investment has picked up from very low levels, but has improved while, you know, mortgage lending is only now beginning to basically to gain some traction. In 2025, essentially the last two months of 2025, November and December, were the first period we saw the mortgage book, it growing again
Mm
after 2009. This is the next opportunity going forward for the Greek banking sector and the Greek economy.
Just in terms of the opportunity in the last sort of minutes or so, I mean, would it be fair to say that the way you look at the economic outlook, bringing all these things together could be characterized by cautious optimism? Is that the way you see things in terms of the next few years?
That's a very nice way to put it. I mean, the Greek economy is trying to grow and to recapture its previous status. We're trying to do so in a global environment that we all see every day.
It's volatile. Yeah.
It's very volatile. It's very unpredictable.
Yeah.
At least now we have the tools and we have the buffers to continue growing in this very challenging environment.
To some extent, it'd be fair to say that you've been used to volatility as well, navigating volatility over the years.
Richard, we've seen everything.
You've seen everything.
Nothing, nothing can put us off course.
Dr. Ilias Lekkos, thank you very much indeed. Really appreciate.
Thank you very much.
really appreciate your insights. Thank you. Cheers.
Now we're gonna switch things up a little as we turn our attention to a new jewel in the crown of Piraeus Bank. A brief introduction to Ethniki Insurance, which we're gonna tell you a little bit more about in detail in a moment. We've got a short film for you to sum up Ethniki's heritage, its market-leading position, and its sector coverage. As I alluded to, in a moment, we're gonna hear from the CEO of Ethniki, Dimitris Mazarakis, and Piraeus' CFO, Theo Gnardelis, to discuss a bit more about the strategy behind Ethniki. Let's just hear a bit more about the background now in this short film.
Here we are.
Hi, Theo.
Welcome.
Hello, everyone.
Dimitris. This is Dimitris. You've led companies in Greece. You've led companies in the Middle East. Welcome back from the Middle East now. You've led the Insurance Association in Greece, so insurance. You've been around the block. Let's educate these guys on the Greek insurance market. What is it about?
Before we are talking about the market, first of all, I would like to welcome you and the whole management team of Piraeus for this warm welcome. It is a privilege for me to be part of this winning team, I could say, especially at that point of time leading a legacy organization to the next chapter. Let's go directly to your questions regarding the market. Yeah, I've been more than 30 years in the market. I know inside out the Greek insurance, and I have seen a lot of ups and down in the Greek insurance market following the ups and downs of the Greek economy.
Despite the solid recovery post-COVID period, the insurance penetration in Greece remains at the level approximately of 2.5%. Well behind the European average and most of countries in the Southern Europe. This indicates a protection gap on the one hand, while on the other hand indicates I could say an opportunity, a growth opportunity. Now, if we consider this and take into also consideration the fact that as Elias said before, that Greece has a positive story, a positive macroeconomic outlook. Second, there is the regulatory momentum in Greece and significant tax incentives, especially towards property, natural catastrophe insurance, for both commercial and residential properties. Last, the continuous improvement of insurance awareness of the Greek population.
We could expect a medium to high single digit growth of the overall market. At this point, I think Ethniki Insurance within the Piraeus ecosystem is very well positioned. Is very well positioned not only to follow the market growth, but outperform the growth of the market.
Okay. I mean, the cynics would say that we've been at this 2.5% penetration for a long time, but you're expecting growth above nominal GDP, kind of a slight convergence at European average. Then what about Ethniki in more detail? Are you gaining share? What do you think you stand for going forward?
Yes, we're expecting the growth of the market higher than the GDP growth because as I said, we combine all these factor. I strongly believe that we are in an inflection point. Now, as for Ethniki and what I said before, that we are very well-positioned. This is based on the following, let's say, factor or truths. First of all, Ethniki Insurance, as you told me to say. Ethniki Insurance is one of the few multi-distribution channel carrier. We have a leading agency, a leading non-tied agency, and of course, we have bancassurance that we are gonna up our game, especially over the next chapter with Piraeus Bank. We are a company that we have a leading presence in each and every line of business.
We are doing life, investment, health, personal accident, but also we are doing property and casualty, motor, mobility, property, and all other financial liabilities there is. Multi-distribution, multi-line of business, scale. Today, just for today, because for tomorrow, we are gonna be the leader. Today, we are the second largest in premium insurer in Greece. The brand equity. I don't think that there is any other brand in Greek insurance market that could compare with Ethniki Insurance. Last is, the customer advocacy. Another area that we excel and their relationship NPS is at least 12 points above the NPS of the market, the average NPS of the market.
Combining all this, along with a great management team that we have built in Ethniki, make me confident that the next chapter, not only we are gonna win the future, but we are gonna dominate the future.
Good. I like that. Let's talk then about Piraeus. I mean, we're gonna talk in a little bit about, you know, how Ethniki is plugging into Piraeus financially from a customer franchise perspective. We know what Ethniki will do for Piraeus, but what can Piraeus, as an owner and as a channel, do you think, do for Ethniki?
I could say three things. First, stability. You know, for many, many years, especially after the financial crisis, Ethniki Insurance was for sale. It is critical to have that shareholder stability. As long as an insurance company is a long-term player, investment, financial institution, that shareholder stability is critical for us, for our people, for our sales force to know what should expect for in the future. Stability is the one. Second is the scale. I think Mr. Megalou mentioned before that we are in a position to combine a leading face-to-face distribution channel, agency, tied agency and non-tied agency, along with the most productive bank insurance platform in Greece. The results is gonna be what you can see in the screen here.
We are gonna dub down actually the revenue over the next five-year period. The bank insurance is gonna lead that transformation. Today, bank insurance is 17%, and we are going to of the total revenue, and is gonna reach almost to 50% by 2030. Bank insurance is gonna be the engine of growth and create that scale. The third is synergies. Synergies across all the functions of both organizations from technology and procurement to asset management and people. I heard before to talk about the investment in technology, in AI, and how we're gonna optimize, let's say, and improve the efficiency.
With Haris, we are talking about how we're gonna take advantage of specific AI investments that are relevant for both for Piraeus Bank, but also for Ethniki Asfalistiki. Taking all this into consideration, I think that we're creating that engine for growth. This and our aspiration for 2030 reflects that. We can see the gross written premium down as I said. We can see the return on equity, significant increase. At the same time, we shrink our expense from 13 to 18 as Mr. Megalou mentioned before, and this is not an cost-cutting gain, it is a scale gain.
When you grow, you are creating economies of scale, at the same time, you are investing technology in order to become more efficient and improve the customer experience. All of them, at the end of the day, is gonna triple our profit before tax from... At a solo level, I'm not, I'm not gonna talk right now at the corporate level because you cover all of them. Yes. Again, if you allow me, stability, scale, and synergies are the secret recipe and what Piraeus bring to Ethniki.
Good. Hopefully, it won't be so secret after the end of today. Your priorities, five years, this is a five-year plan. Tell me the five things you wanna focus on.
Yeah. The first priority is the accelerated growth. We will continue to professionalize our tied agency. We will accelerate the bank insurance sales, optimize the non-tied agency, and experiment in digital. This is the first strategic priority. The second is the 360 coverage of our customers, either we're talking about retail customer or corporate customers, and how we're going to improve the customer experience. The third one is operational efficiency. As I mentioned before, we're running a holistic program for continuous improvement or business process reengineering, and we're trying to embed into the organization, the mindset of eliminate, simplify, and automate. Taking all of this, we strongly believe that we're gonna go to 8%, in the region of 8%, expense rate.
Are the synergies is the fourth priority. The more I work with Piraeus, the more I see the synergies and the opportunities, either in the revenue side or in the cost efficiency side. Synergies is the fourth priority. Last, but not least, is the capital efficiency and how we are going to strengthen our balance sheet and our P&L through our real estate strategy, through reinsurance strategy, and of course, by concluding our health strategy that will allow us to differentiate our value proposition, protect the legacy, but also differentiate the value proposition in the market. Last but not least, we have the same enabler as the mother company, Piraeus, data and technology and talent and culture.
Great. You're not off the hook yet. Forget these guys, forget these cameras. What are you holding back? What have you not given me?
Okay. I will ask you to go out, and then I'm gonna talk. It's a tricky question.
I'm gonna hold you accountable.
As I said, the more I work with the team here, the more I realize that there are untapped opportunity. Even though we have a very, let's say, aggressive, stretching plan, there are opportunities in both retail and corporate business. And, you know, especially in bancassurance. Again, the Piraeus bancassurance is the most productive and efficient bancassurance platform in Greece. However, we are skewed towards unit-linked or asset management type of products. There is room to leverage our rich customer base with protection type of products, with life, with personal accident, with health, but also with motor, with property. We're gonna cover 360, as I said before, the needs of individual.
The same time, we have heard about the focus areas in the corporate. There is a significant untapped opportunity in corporate that will give that certainty to investors to continue that journey. Yes, there are some opportunities that we have to work further the next five to six month with Vasilis, with Theo, and I'm gonna be in a position to share with you my secret later this year, and for sure I'm gonna commit for the next plan cycle. For the time being, I think, we have a very aggressive plan, and the focus is to deliver that plan.
We're confident that we can do that and deliver our promises and build the credibility quarter by quarter, year by year, and don't be...
I need to push you all the time. Thanks for doing this. Appreciate it.
Thank you.
Thank you. Okay, so that brings part one to a close. We're now gonna give you all a breather with a 15-minute break. Coffee and tea is at the back. After the break, we're gonna turn our attention to digital solutions across the bank, the CFO's business plan and financials, and that much promised extended Q&A with both Theo and Christos. We'll see you all shortly.
Ladies and gentlemen, if I could ask you to return to your seats. Do please bring your teas and coffees back to your seats with you as we return for the next session.
Ladies and gentlemen, in part two, as you can see from the agenda here, we're going to focus on execution, how technology, data, and product innovation elevate experience and returns. Also, coming up, we're going to be looking at the business case for Piraeus with Piraeus CFO, Theodoros Gnardellis, who of course you saw earlier on, followed by an extended Q&A, where we'll also be joined by Christos Megalou. Can I also ask you when, if you have questions, to please wait for the mic to come to you before you ask the question so everyone in the room and also on the webcast can hear your question. First, though, before we get to that Q&A, we're going to look at how Piraeus is innovating in digital solutions from retail mortgage platforms like Odyssey to investor tools such as Brainy and FarmClick in the agricultural sector.
Here's a snapshot for you.
In Piraeus, technology is paired with a culture, a culture of technology, of agility, of innovation that comes from the top and permeates straight down to the bottom to every single employee.
Piraeus has moved beyond the stage of digital adoption and is defining digital banking. Five years ago, 65% of transactions were happening digitally. Today, this number exceeds 99%. Our customer base has grown more than 3 million customers. We are providing personalized service at scale. We are leveraging the power of artificial intelligence and clouds, extending the capabilities and our services beyond traditional banking boundaries.
Technology, especially artificial intelligence, are changing the mortgage lending business very significantly. We're now developing a new platform called Odyssey, a next-generation artificial intelligence-enabled platform that is going to lead to a more digital, seamless process for the customer. Once we achieve that, Odyssey, through its own brand, we expect to become a one-stop e-shop for mortgages, which is going to unlock vast opportunities that exist at this point in the Greek market. The platform is designed to scale up to other credit products, also to other partners. This unlock also opportunities in other credit products in the Greek market.
In wealth management, technology is absolutely critical. We have developed 2 very important digital solutions, one for small clients and one for our private banking clients. The name of the game here is personalization. We want each customer, instead of getting ready-made solutions, getting very personalized portfolios and very personalized solutions. I think that we are ahead of the competition at least 12 months now. We are creating ecosystems such as the one we are doing in the agricultural sector, FarmClick, which is a one-stop marketplace that connects 700,000 farmers, our customers. This platform allows farmers to actually buy the input, fertilizers, et cetera, but also to sell their product in the international markets, and also it provides financing if they need to finance their purchases.
The strategy is to combine the banking scale with the platform's technology in order to create new income streams for the bank and value for the customer.
Our plan is to bridge the gap that exists between business and technology and create fusion teams for the bank that will operate more or less like a technology company. This brings continuous innovation in a way that is sustainable, you don't need huge investments and huge transformation programs to achieve.
Okay. Got 20 minutes for this. Why own Piraeus? Piraeus is the fastest-growing Greek banking profit pool like this. If somebody wants to invest in Greek banking growth, Piraeus is the fastest growing by far. We saw it on track record and this is what this plan is committing to. Efficiency, 30% cost to income, you heard it from our CEO, lowest in Europe, not because costs go down, but because we are investing in technology to contain the cost increase so that the efficiency increases. Revenues outpace cost increases while doing massive technological investments. Number three, it's a differentiator. Optimized customer allocation. We're big distributors. We're committing to the distribution of EUR 5 billion over the next five years. We're gonna make a lot of money on this franchise, and we're gonna give it back to shareholders.
We're gonna deploy it so that shareholder value continues to increase and people can start feeling it. We proved that this year with the distribution step up to 55%, taking the capital to our target capital level of 12.5, close to it, 12.7. Profitability increase, 10% CAGR on EPS, taking us from EUR 0.82 to EUR 1, to over EUR 1.3. Where is that coming from? Clearly, the growth of credit funded by low-cost deposit is generating and sustaining the strong NII effect that this balance sheet has. EUR 0.55 comes from NII. EUR 0.15 comes from insurance and assets management, and we can discuss whether that is all that there is there or there's more. This is where this plan snapshot has been taken. It has been taken at EUR 0.15 insurance and asset management fees. OpEx, EUR 0.10, the turn.
OpEx will increase, right? It will increase by EUR 0.10 a share. As you see, the overall picture paints, together with the tax normalization rate to 29%, paints that to EUR 1.3. This is where the money's gonna come from. Let's talk about loans first. The Greek credit asset class, this is what we're about. EUR 15 billion of corporate loans will be added to the balance sheet over the next five years, most of it from infrastructure, large corporate, substantial part from SME and shipping. More importantly, on NII, it's happening profitably. The spread erosion is contained to 35 basis points between now and 2030. We're landing at 1.8% spread. This is happening normally. It happens linearly. It goes down linearly. We've seen it go down linearly.
The erosion has been happening at 5, 6, 3 basis points per quarter. It's a great defense on pricing that's going on by the corporate franchise and the control functions there. It's a result of the RaRoC-focused culture of Piraeus, where funding cost needs to be paid for, proper ACL assumptions are there in terms of expected credit losses. Everybody needs to pay for capital. That calculates naturally to the fair spread of the exposures. We do not cannibalize prices. Retail. We love retail. We love what's going on. We've been waiting for it. The biggest question we've been getting from you guys is, real estate markets are thriving, GDP is growing, why are mortgages not there? What's going on? I think it took time, right? Interest rates normalizing, rental yields going up, mortgages are increasing in this plan.
We had EUR 100 million of net credit expansion in 2025. We're taking that up to EUR 500 million in 2030. What's making us all the more optimistic for that? The growth that happened in 2025 that led to this expansion did not come from state-sponsored programs. The state-sponsored programs were giving EUR 200 million dispersals in 2024 and 2025. All the delta came from arm's length price mortgages. It came from all the macro stuff that Elias talked about before, that gap of equity-only transactions going on, the fact that people were waiting for lower interest rates. You can get a fixed rate mortgage 20-year now in Greece for a very attractive price with what the franchise is doing, on retail and, you know, it's just better to buy than rent.
I think this, we think this is what's going on, and it will continue to happen. Healthy addition also from small business, total growth, EUR 2.5 billion out of the EUR 18 billion-19 billion credit growth we're gonna be seeing. Lots of stuff going on in retail right now, pushing innovation, as Vasilis just talked about with Haris and George in the video. One thing we're particularly proud of, and we're gonna launch it, is what we call Project Odyssey. Odyssey is what customers used to go through in Greece to take a mortgage. We need to rethink the branding when we actually launch this, 'cause the outcome is gonna be, I don't know, Ithaca, maybe. It's, it's an AI-powered digital platform.
It will operate as a standalone branded digital broker where people can go in, upload documents, and get very quick update on what's going on, feel more comfortable that they're not trapped in some funnel, nine-month funnel of banking and state bureaucracy until they get to that bright end in the tunnel. Client assets. Piraeus is the number one depositor in Greece. We grew deposits by EUR 3.3 billion in 2025. We grew AUM by EUR 3+ billion, Achilleas, in AUM in 2025, half of it from net sales. This is not a big customer asset plan, right? We're assuming a 3% CAGR on deposits, and we're assuming a 7% CAGR on assets under management. Client assets are growing on this plan at half the pace they grew in 2025. Why?
Just to prove that even if this was to happen, if deposits don't pick up at the level that we expect, the plan can fund itself, and I will explain what that is in a bit. How is the plan funding itself? We're gonna be adding EUR 19 billion of loans over the next five years. The corporate loans and the retail loans. Not a lot of bonds. We're way up there. Got EUR 17 million of bonds. We're gonna add a couple when we find opportunities, that's gonna be there. Cash and other, that's kind of the net delta. How are we funding this? EUR 12 billion come from deposits. As per track record, it could be more. We'll discuss. It's an NII upside, but right now, the assumption, the plan snapshot is for EUR 12 billion.
The plan gets funded from reduction of non-yielding assets. That EUR 6 billion negative is DTA, HAPS senior notes, real estate that's not making us any money on repossessed. We're monetizing all of that over the coming period, that's why NIM goes up from 2.2% to 2.6%. Why would NIM go up otherwise? We got spread erosion, maybe coupled by the one rate increase we're expecting, we're expecting in 2027 mid-year. Theoretically, it shouldn't, but it does. It does because of this, because you've got EUR 6 billion of no revenue-generating assets. They go away, they become cash, and that positive effect goes up.
That's the only reason why Piraeus has been having a NIM handicap versus some of its peers. Not because our asset classes are lower yielding, but because we were carrying this big bulk of non-yielding assets that was bringing the average down. That goes away. What used to be 20% of non-yielding assets in the balance sheet becomes 10, and the LDR goes from 67 to 75, a much healthier balance sheet, much faster revenue generating balance sheet than what we had in the past. Nobody cares about Ethniki here, but let's talk about it for a little bit. Ethniki revenue in 2027 will add to our fee line EUR 120 million. That number becomes EUR 210 million in 2030. Very rapidly increasing. Why is that?
It's because their GWP, as Dimitris told me before, grows to EUR 1.6, primarily because of that bank apart. The GWP contribution from the banking channel that Ethniki was in partnership with, generated EUR 100 million. The Piraeus franchise in 2030 will generate EUR 700 million, and that's simply business as usual, Piraeus traditional bancassurance power selling unit-linked products, primarily. 90%-95% of the production is that. Once you do that, then you start accumulating what we call contractual service margin, which means future profitability of these contracts are getting plugged onto the balance sheet and they start increasing the reserves of Ethniki Asfalistiki and then it amortizes over time in the P&L. That's why the EUR 120 jumps to EUR 210 and will continue to be jumping in the coming years. We do not just look...
Career limiting move, Xenofon. Right. We do not just look at P&L, right? We're not selling oranges. We're selling long-term insurance contracts, monitoring that stock of future profit, monitoring CSM is what Dimitri and I and the teams are always looking at when we look at productivity of products. Overall, very healthy plug on the P&L, on the fee line. It's the primary reason of fee growth for the Piraeus franchise going forward, we can discuss the other assumptions. Very healthy balance sheet. Solvency goes up, as we said, to above 250%. It was actually a higher number. We, kind of, shaved it down because it will look much higher. One thing to remember, solvency ratio level threshold, 100%. That's, kind of, the regulatory floor.
Healthy levels, 140%-150%. Solvency ratio goes way up because we're assuming very minimal dividends from the daughter to the parent. If we were to increase that, those dividend levels, solvency would go down, but CET1 would go up. The CET1 trajectory that we've got now assumes practically zero dividends out of Ethniki. We're keeping the money there to fund other growth opportunities to create a stronger company, but it is a CET1 upside option if we choose to pull it. Expense rate, same story as Piraeus, I would say, right? It's scale, tech investment, keeping efficiency higher and combined ratio very healthily going down below 95% and strong productivity. NII, we talked about those EUR 0.55. That's basically on the EPS growth. That's basically 1.9 going to 2.6.
Most of it coming from the growth. Growth at a healthy 4.5%, defending that spread and keeping the erosion that we have on the load spread on the left, so that combined, we can get that net EUR 700 million NII plug. It's very important. It's a big part of the assumption of the plan, right? EUR 850 million massively outpaces the EUR 150 million erosion that the spread gives us. Of course, a healthy addition by bonds countering the very low-cost deposits of EUR 12 billion of deposits basically countered by EUR 2 billion of bonds. Revenue from services. That's the new name for fees. Banking, flat. Flat banking fees throughout five years' time. It's an assumption. It's a revenue pool. It includes transactions. We know about the fintech erosion. There's pricing.
There's all sorts of regulation going on. It's an assumption. Other people are talking about mid-single digit growth or low single digit growth. The assumption is that we can achieve our, our fee aspiration, through insurance and asset management. Asset management is plugging in EUR 50 million. Insurance and bank insurance is plugging in EUR 125 million. That is coming from the EUR 210 million of Ethniki that we mentioned before. Is that all? As I tried to push my friend Dimitri before, it's definitely not all, but this is where we are right now, right? This is what we have modeled right now, simply taking into account the plug of Piraeus into Ethniki Asfalistiki and what that brings to the franchise in terms of productivity.
In terms of P&L, it brings, I think we've calculated, if we were to take it out and replace it with the previous status quo, calculates to about EUR 35 million-EUR 40 million synergies out of this EUR 125 million million. Definitely the protection opportunity is there. Most of this production, as we said, is life savings products. You can package it up with AUM if you want and talk about it in conjunction with wealth management. In effect, out of the EUR 700 million that we've got on bancassurance targets for 2030, 10% is protection, right? We're talking about the biggest corporate franchise in the country and the biggest retail franchise in the country. We're not selling car insurance. We're not selling B2B. How big could that be?
At first, estimate says that we could probably identify opportunities of about EUR 70 million additional premium over the coming years with very attractive loss ratios. That would plug in to that number as well. I think the story is that we will keep working and on top of the opportunities, quantifying them bottom up, we do not guide top down from stuff, from benchmarks. We guide for things that we're feeling, that we're selling, that we're doing. You know, the more you pull on this thread, the more stuff you find out. OpEx. OpEx, as we said, goes up. Does it go up a lot? No, it goes up about 10% over the five-year period. Why does it only go up by this?
We've got about EUR 60 million of AI efficiencies plugged into the plan, and I think with Hari, as we said, there's more to come on this. The first use cases we've got in front of us say that we can economize between staff costs and G&A about EUR 60 million in AI. The rest and most of the adjustment comes from depreciation by doing the technology investment, but also from salary adjustments and variable compensation that absolutely needs to happen in Piraeus to step up that cost per FTE to approximately close to about EUR 70,000 from the current EUR 54 million, in alignment with other benchmarks.
It's money well spent for all this productivity that's coming in and translates to a cost to income ratio, as we said, of 30%. Asset quality, we never stop. Balance sheet looks great. We never stop, right? NPE ratio continues going down 1.5%. The repossessed portfolio of real estate, which, you know, has taken some hype in the past, we're the number one seller of repossessed properties right now in Greece. We sold more than EUR 200 million of properties, closing contracts in 2025 at a profit, and we continue going down to that pace, and we're gonna be dropping below EUR 500 million over the coming years. At that pace, we're not gonna be doing massive inorganics, taking big losses for shareholders.
We've set up the organic machine, and it's working well. DTC, another big star of the show a couple of years back, is basically going away much faster than we thought, right? We reached single-digit DTC over CET1 level, including prudential deductions that we did, and we're doing very strong profitability and very strong distributions. Basically, we're a year away after 2030 from getting rid of this thing once and for all, sending that letter to the minister and say, "We're out of this law," and be done with this. Capital. 12.7 is the starting point. Our CEO talked about the adjustment of the CET1 target to 12.5 after the projected de-risking of the balance sheet and the improvement of capital buffers that we've seen.
What's very important here, why did we do this? People come to us and say, "Why did you step up distribution to 55%? Why did you dip into your 13% articulated target?" We know this. We know the profitability that's coming. We know how much capital is getting generated. Now is the time to give it, to start giving back to the shareholders, set the baseline at that 55%, and gradually step it up to 60% and 65%, give out distribution on a 60% average payout that basically comes out of 22%, 22 percentile points of CET1 generation through P&L, 7 of which is what we need for all of that growth we talked about. What do we do?
We make money, we use what we need to grow, and the rest we deploy. This plan is talking about cash deployment, and this is what the primary distribution assumption we've got in this plan is. It could be something else. The baseline assumption is that we're gonna be distributing in cash what was mentioned by our CEO, about EUR 5 billion of dividends over the next five years' time to reach the same levels, I would say, 13.5. I would not pay a lot of attention to the 13.5. I had some questions as to why 13.5? Why are you not talking to the 12.5 you talked about? This is a bottom-up plan, right? We calculate the profit, we calculate the distribution, we set out the payout ratio.
The most important thing is that in gross on model, these three blocks even themselves out. This is what we wanna do. I've got 20 seconds, but I think I'm done. I think we can switch it to Q&A. Mr. Megalou, if you wanna come back and Chryssanthi Berbati, Deputy CFO, and Xenofon Damalas, Head of IR, you guys have a mic in case we got a question from the crowd. Here we are, looking forward to your questions.
Yes.
Ben.
microphone.
Thank you very much. This is Ben Caven-Roberts from Goldman Sachs. Just the two questions from me, please. First, could you elaborate a bit on the fee opportunity outside of Ethniki? Obviously there's banking fees is one component of it, but also the wealth and asset management fees and the opportunity you see there. Secondly, just on Ethniki, how are you thinking about the role of AI within that business and whether there's any potential competitive impact from, you know, some of what we've been hearing about more in the industry around greater price comparisons, and AI tools that might help consumers look at different insurance products using AI?
Let me cover the first question, and Theo, you cover the second one. On fees, it was very clearly, you know, indicated also in the graph. We have almost flattish, you know, the banking fees. One could argue that, you know, obviously they could be, you know, a little bit higher over time. We have been able to achieve growth in our in our banking book, and usually this we associate with fees as well. We wanted to be prudent and conservative, and we wanted to show that this plan is not based on, let's say, exaggerated arguments about the future. On the other area of growth, we have been able, over the last three years, to grow significantly our wealth and asset management business.
In this plan, we have a high single-digit growth and not as much as what we have been growing the book and the fees over the last, over the last 3 years. Again, there, we wanted to be conservative. We think we can do better, but we don't want, again, to base the whole story of the growth of Piraeus in numbers that people will start criticizing. Solid numbers, results that they are coming through. The estimates that we have on the growth of wealth and asset management fees don't take into account any price appreciation of the markets going forward for the next 5 years. We see the dips and the ups and downs of the markets, so you could safely assume that we could be talking a higher number.
Now, if I start giving out numbers and guidances, Chryssanthi and Xenofon will start telling me, "Oh, you know, you're promising things to the market." What I can tell you for sure is that this is a conservative plan, and wealth and asset management, even the banking fees, in a way, are two areas for growth. Everything that we can achieve through the first plan of Ethniki Insurance and the second plan is gonna be coming on top. Theo?
I mean, the AI opportunity, it's blowing up. People keep talking about it. The fact is that the use cases are still materializing. Investments are happening. Definitely on all three areas, Ethniki can benefit, and there's a strong AI budget in conjunction with the overall group for AI in the future. I think the use cases in Piraeus are crystallizing a bit faster on Ethniki, both in terms of commercial and, kind of, you know, life pricing that's going on, as well as claims management. Definitely lots of application there. Crystallizing the digital strategy and the direct sales on digital channels, how that's gonna come out is important for the next plan. I think we see the opportunity. I don't think we've grasped it yet.
Definitely not to materialize to numbers, I wouldn't bake any of that in this current plan yet. I think in the coming phases, we're gonna see more of that. Yes, Alex. Yeah, yeah.
Hi. Thank you. This is Alex Boulougouris from Euroxx Securities. Thank you for the.
A bit closer to the microphone, Alex.
Okay. This is Alexandros Boulougouris from Euroxx Securities. Thank you for the presentation. Very detailed and thorough. Quick clarification on the insurance segment, on the bancassurance agreements that Ethniki Insurance had with NBG, and you had with, I believe NBG, with NN and Ergon. Could you clarify, these have been unwound now? If you could clarify this a bit better. Thank you.
Absolutely. Theo?
Yeah. There's two segments to this story. There were exclusive bancassurance agreements, as you said. When it comes to Ethniki with her previous bancassurance partner, that has been resolved, and the parties have mutually agreed to release themselves of exclusivity as of 2027, hence the assumption of being introduced into the network of Piraeus. When it comes to the Piraeus prior and current active relationships, even in 2026, we're still big sellers of bancassurance products with these relationships, Vassili. The assumption is that the stock will run down in the future, and that's why you see kind of a gradual drop of these third-party fees that we mentioned.
I would say that legally Ethniki and their previous partner have agreed to release themselves, and that was the major component of the strategy, bringing Ethniki into the network. That's why this is happening as of 2027. We're using 2026 as a migration year, prepping products, shifting the culture of the network, so that we do not experience any blip, neither on the customer experience or nor on the sales productivity of the network. It's great, it's a great addition for us, especially outside the urban areas where the Ethniki brand is very, very strong. Actually, I think it will facilitate sales there from a branding perspective, Vassili. From a commercial perspective, we need to make sure that everything is working, IT systems.
You know, you click the button, you get the contract. Everything needs to work in play. That's why we took that year to prepare and not suffer any turbulence in the commercial productivity. Andreas, you need the mic.
Mic.
Hello. I'm Andreas Souvleros from Eurobank Equities. Your medium-term target for deposits seems relatively conservative. Could this be interpreted as an intensifying competition ahead of digital banks and all this? I have another question. Does your business plan imply any gain in your market share in loans or in assets under management and deposits?
Okay. Quick answer to the first one is no. It's not because of competition. It is simply the assumption, to be very fair, is this is what we need to fund the plan. This is what we need to fund the growth plan. If you look at it, you're right. On average, this is a EUR 2 billion growth. Last year, we did EUR 3.3 billion. EUR 2 billion growth per annum. Last year, we did EUR 3.3 billion. If you want to correlate that with the delta, this is what I always like to look at, the delta of deposits over the delta of loans. What % of the loans growth is being funded by deposits? It's a much higher ratio, and it has been a much higher ratio than what this plan assumes. That means that in terms of customer assets, there's an upside.
If you wanna put it on deposits, that's an NII upside, clearly. If you wanna put it on, if you wanna say, "No, I'm gonna hold back on deposits 'cause I wanna push asset management much more," then it's a, it's a fee upside that was mentioned before. It's clearly there, we cannot say that it's not. Market share effect is that with these numbers, market share would go down in deposits, but it hasn't gone down for the past whatever number of years, Vassili, which makes us confident that, you know, this is a what I need to fund the plan kind of number rather than what will commercially actually happen. Mic over there. Yeah, yeah.
Hi, I have a question.
Alex, a bit closer to the...
I have two questions for me. First, I'm looking for the loans.
We can't hear you.
... the microphone.
Can you make it work?
Sorry. Hi, Alex Demetriou from Jefferies.
There we go.
I have two questions. Firstly, on the wealth management strategy, is it really just, you know, further penetration of your customer base that you have now? Is it growing the private bank? Or kind of a little bit more color there would be really helpful. Just secondly, if we think about one of the other things that's kinda hampered mortgage growth, you know, more recently, it's also been around the kinda supply of housing in Greece. How do you kinda see that evolving over the next couple of years? Is it further investment? Are these properties, you know, coming back online? Any help for there? Thanks.
Alex, on the wealth and asset management business, basically what we have there is the private banking business. We have the mutual fund business, which is essentially the retail product that we distribute through our banking network, the very efficient sales network that we have. We have what we call the third-party business, which is basically the private bank that introduces clients outside Greece. I mean, with our partners in Switzerland and in Europe.
All of it together is a pot that grew up significantly the last few years with assets under management of around EUR 14 billion and a fee pot, which is from a meager, you know, EUR 30 million- EUR 40 million to about EUR 110 million- EUR 120 million in 2025, and will continue to grow. In the strategy, there is multi. We have digital products that we are already launching. One very efficient product that I personally use is Brainy, which is the robo-advisor that we're distributing through our Piraeus Securities business for our securities clients. That, but is basically an electronic platform, a robo-advisor that allocates you on the basis of your.
Of your perceived risk profile and your willingness to risk or not. We have the platform of the private banking itself which is using the UBS platform of advisors, of electronic advisory, which is we're using to optimize our investment proposition to our clients. The biggest mutual fund business in the Greek market, which is the engine of growth for the fees of the business, which is basically the mutual funds which we distribute through the retail network of Piraeus. As to how this whole thing is structured is single product owned by Piraeus in the mutual fund business, open architecture in private banking, high net worth individuals and family offices. We do both, plus the technology improvements on the technology front.
The growth in that business will come also from disposable income, ability to invest, client money and so on and so forth. We have been very efficient in actually turning retail banking clients, EUR 66 billion of deposits, the largest deposit number in the Greek market, into asset management clients, improving the discretionary basis of our client base. That has been also a game changer as well. Theo?
Question, I think Alex was about.
Second question.
... mortgages, right?
Yeah
Yeah. I mean, it's difficult to correlate what we're seeing here as increased mortgage demand to macro elements. If, if that was, if that was the case, we would've modeled this change long back and, you know, probably would have answers to the questions as to why it did not happen sooner, why is it not happening bigger? The fact is that intrinsically the market, yes, housing supply will increase because of, you know, renovation that's going on to old properties, closed properties, you know, you know all of the stats. I think more importantly, right now we've got kind of this benign mix of rental yields going up, disposable income going up, and people have monetary certainty. They know they can get fixed rate mortgages for a long period of time.
They don't need to expose themselves into payment volatility in the future anymore, given where the curves are. That flattening of the risk-free curve, together with a healthy spread addition, is creating that peace and quiet to people, and they feel more comfortable. What we need to take out of the equation is the Odyssey. We need to take out the Odyssey of the equation, and I think we're gonna be able to get to that EUR 500 million of expansion.
We were really positively disposed by the EUR 100 million net credit expansion that we saw last year in mortgages, even without deploying this, you know, new platform and some of the other stuff because of the market intrinsics that we just talked about. We expect to see more. It's gonna be an engine for growth, the mortgages, for the next few years.
Simon? Oh, Gabor. No?
Is this working?
It is working.
Hi. Gábor Kemeny from Autonomous.
Yes.
Just knowing that the investors in the room can invest in four large Greek banks, potentially, can you just distill again into a few sentences of why, what you think differentiates Piraeus relative to the peers? The reason I'm asking is some of the factors we heard about, like high single-digit long growth, DTAs on the balance sheet, senior securitizations which can be invested into higher yielding assets. This is something which I believe all four can offer. Just once again, the key differentiating factors at Piraeus.
Theo,
We cannot hide the growth opportunity that this franchise brings. We are, as I said, the number one Greek lender. Whoever wants to invest in Greek growth and not regional growth, or whoever wants to invest in Greek credit, this is what we're about. We were the number one lender expanding. We continue being with this guidance and funded by a very strong low cost deposit book. That's a clear differentiator. The other thing I would say is that in terms of capital allocation, management, and distribution, we're bringing the level down to where we think it's right for shareholders. We're not holding back any buffers, right? We're, that's why we came out with big distribution numbers here.
If you look at yields, if you look at just pure EPS growth, which by the way, this is without buybacks, right? We're pure cash payers in this plan, and EPS grows 10%, no buybacks, right? Big profitability growth coming from big Greek credit growth with whatever assumptions you wanna talk about the market in terms of VCL, about the quality of the market, et cetera. We're not talking about other areas, and all of the money that's made out of this franchise comes back to shareholder, gets deployed for shareholder value.
Gabor, just to say here, I mean, what really, if you look at what we have achieved from 2016- 2017 to where we are now, the journey of the last few years, you acknowledge where we were then and when we are now, the big differentiation of Piraeus vis-à-vis the market is that whatever we have promised in very, very challenging situations and markets, we have delivered. That's what we are achieving with, we have achieved in the past, and that's what we are claiming that we will do in the future.
Thank you. Very fair points. Just one more question from me. The volatility in the past few days, yeah, I believe that your bonds have been volatile like every other Greek bank's bonds, but maybe a bit more than that. I guess if there is a message from credit markets, is that maybe you should be running with a little more capital, what would be your response to that?
Look, volatility is there and it has always been in the banking markets. We look at the big picture. We are confident that in an economy like Greece, with a rate that is growing, the level of capital that we create over a time, which is based on very conservative assumptions and is not pie in the sky. It's not our, let's say, prerogative in order to feel comfortable with ourselves to keep equity away from our shareholders, and that was the philosophy and our philosophy always. We are creating capital out of this plan. We bake volatility into our assumptions. Risk management is the work that the banks do. That's good. We do it very efficiently. We wanna reward our shareholders.
Taking our target CET1 from 13% to 12.5% was a reflection of the P2G reduction, where the regulators came and said, "This bank is less risky than it was before," so P2G, 24-25 basis points down. We said, we have to give this to our shareholders. We increased our payout ratio from 50% to 55%. That's the philosophy that we are running this bank for. Not to feel comfortable accumulating capital and sitting on idle capital, but use it for the benefit of the shareholders.
Yes, Simon.
Simon. Thank you.
Thanks very much. I was hoping that you could maybe elaborate a bit more on the integration of Ethniki into Piraeus, what needs to be done in terms of technology, staffing? Also, I know this is, you're trying to look forward, but Ethniki was loss-making, what, two years ago? Can you just kind of tell us what's been done, maybe this is for Dimitris, on how it's improved the profitability so far and what further actions need to be taken to achieve your plans? 'Cause I think a lot of the growth is coming from Ethniki.
Yeah.
Thank you.
All right. There's a very big project, as you can understand, going on right now and has been going on in Piraeus around the integration of Ethniki, and it has multiple aspects. The most important ones are, one, I would say, product, right? Product design that comes from Ethniki, from the franchise of the bancassurance, giving out the specs as to what customers are expecting out of the branches, and then Ethniki prepping themselves with products, running the actuarial exercise, running the pricing exercise, preparing their products for launch. Second one is definitely IT, where the systems and the procurement systems that come in the front end with the branches that need to be linked to the back end with Ethniki, they need to be there. The third one is governance, risk management, controls, and overall compliance, right?
We're setting up risk appetite framework adjustments, policies, how to make sure that solvency is correlated with CET1, what does good look like, what does bad look like. Setting up the KPIs. This is very important, because as risk starts being generated more and more, we need to make sure that the balance sheet is always secure. We need to go to the level two KPI, the level three KPI, because in insurance, if something goes wrong and you find out too late, then there's not much you can do. That's clearly their own profitability, that loss-making that you saw in the past was from what I discussed on reserves in a previous session, on reserves that Ethniki had to take to protect its health book. That's gone right now.
It's very well reserved, and the profitability goes up by reduction of claims, and containment of expenses as they grow, their top line. This year, 2025, it was a EUR 48 million profit. I think in 2026, we're going to EUR 70-ish, EUR 80?
66
66.
One-
70
180.
Let's call it 70.
[audio distortion]
Yeah.
[audio distortion]
Okay. What's more important is the profit generation that comes out of 2027. That is the year that Piraeus gets plugged in and the bancassurance GWP kind of steps up. That loss-making picture that you had, think about it as one-off reserves, provisions that had to be taken to protect the book. The book now is well protected, so we're starting with a baseline of EUR 50 million profit right now, not minus X. We're stepping it up very healthily over the coming years. The turbo boost happens in 2027 when the power of the Piraeus network comes into the franchise.
The bancassurance angle, Simon, is really powerful. You know, this is the most efficient, most effective bancassurance franchise in the market. We've proven it before. The number one player is there before, because of us.
Ethniki will be the number one player from 2017 onwards. There is a lot that we can gain also on the top line with this association.
Gents, we've got a question from Alberto Negro.
I think Cecile also had a question.
Oh, sorry.
Yeah, no?
I think-
We're gonna get to Alberto in a bit.
Thank you. It's just a follow-up, 2 follow-up question on insurance. Cecile Mouton, Crédit Agricole. The first one is you say Ethniki is gonna be plugged in in 2027. What is the equipment rate you expect in 2030 and in the long term? The second one is on the solvency ratio. I understand that 250% is the normal evolution of the solvency ratio. Is it your target? Meaning if you had to upstream dividend, would you issue debt in order to maintain this ratio?
On the first one, the question was what?
Is the equipment rate. What's the percentage of Piraeus customers you hope to equipped with Ethniki products?
Oh, the penetration, yeah.
The penetration.
Yeah, yeah.
Penetration ratio.
The fact is that when it comes to penetration, we've got about a 20% penetration rate now on the active customer base with bancassurance products. This assumes it become 25, so not a radical change. As I said, Banca 1.0, as we call it, is Piraeus as is plugged into Ethniki and creating a much bigger company. We say that Ethniki is the number two company, but as Arsenis said, it's only because the number two and not the number one because we made the number one what it is, right? That's definitely it's not a penetration or a massive penetration. That's what Banca 2.0 can help us with. You know, look at other customers, other opportunities. Everybody needs to be protected.
Everybody needs to accumulate for the future. I think those state bailout, you know, thinking will gradually go away. The government is pushing for that. It's giving the incentives. There's a big protection opportunity out there, both on the individual and on the business side. The other one was?
Solvency ratio.
Solvency ratio.
Solvency.
Solvency ratio, as I said, definitely not the target. The target is around 150%. I would say 50, 60 points above kind of the threshold is what we wanna be about. I guess a natural question out of that would be, okay, fine, why are you not dividending out, stepping up your CET1? Probably will. That 13.5, potentially higher. If we were to solve back to 150, it's at least one percentile point, probably one percentile five on the CET1 that gets plugged in, that 13.5 could become even higher. The next question will come, what about distributions? We're not gonna be solving for 250. This is just to show that the profitability of Ethniki is such that it's creating a very strong balance sheet.
It can protect itself against turbulence if it ever was to happen. It will not, the CET1 of the group would not suffer if there was volatility and if there was turbulence on the insurance side of the, of the group.
Can we get a question?
Now we can, yes.
Yeah.
The microphone.
Oh.
You have the microphone.
Oh, you have. Yeah, yeah.
Just-
Richard has the mic.
Rich.
Not, not a question from me, but from Alberto Negro. He asks, considering the cautious stance on fees, on insurance solvency ratio, and on the Danish Compromise, capital will grow much faster than what you are projecting. How can you deploy this capital? What is the preference between organic and inorganic growth versus a faster, higher payout ratio? He says, "Sorry for not being there.
Well, look, we are the management team that is no shy when it comes in doing strategic transactions. When it came to our attention that we had the opportunity to buy a very big player in the insurance market, we took this opportunity, and we did Ethniki Insurance. That's in our DNA. If there is an opportunity in the future and we have accumulated capital, you know, obviously we, you know, we are going to be in a position to take it if we so choose. That's number one. Number two, again, we don't wanna accumulate capital for the sake of accumulating and sitting on it and feeling comfortable. We wanna be distributing to our shareholders. Number one priority is gonna be shareholder distribution, as we said.
As we will grow capital, if opportunities come our way and we feel comfortable and there is a strategic rationale and there is accretive to the offering of Piraeus, we might as well take it. Areas, one area could possibly be asset management. We feel we can do more there if we find a target that's acceptable to us on a return profile that we want. Investment banking is another area. With the Euronext acquisition, we see an opportunity in actually becoming a regional player in brokerage and investment banking, and that's another area where we could possibly deploy some excess capital. What we can promise is that whatever excess capital we generate, we will be using with distribution returns being the number one priority for us.
Anything else?
Any other question? Okay. Well, we are really on time. It says we have still one minute and 34. Is it over? The red, this is what it means. First of all, I'd like to thank you all for being so patient. I was betting with the team that it's gonna be impossible to keep for two hours so many people in the room and that the people will start leaving as we do the presentation, but obviously it didn't happen. I thank you for that. I think we are very happy to have you here and giving you an opportunity to look at our, the way we look at the future as Piraeus.
I think we are, and we were in a position to demonstrate to you that we have the ambition, we have the tools, and we have the capacity to deliver on what we are promising. What we are promising, it's no exaggeration, is one of the most profitable growth stories in the banking sector in Europe. With that, I'd like to thank you all for being patient, and thank you very much for being with us.