Ladies and gentlemen, thank you for standing by. I am Maria, your Chorus Call operator. Welcome, and thank you for joining the Piraeus Bank conference call and live webcast to present and discuss Piraeus first quarter 2026 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. Anyone who needs 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 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 our CFO, Theodore Gnardellis, and our Head of IR, Xenofon Damalas, to present and discuss Piraeus first quarter 2026 results. Piraeus delivered a strong start to 2026 with high quality earnings, strong volume and fee income growth, continued balance sheet strength and performance fully in line with our full year results targets. Before turning to our performance, let me briefly frame the macro environment. As you can see in slide four, the Greek economy remains resilient with growth expected to continue above the European average, a strong primary surplus, and a rapidly declining debt to GDP ratio. However, the global backdrop has become materially more uncertain.
The ongoing conflict in the Middle East is now a key macro variable, particularly through energy markets. For Europe, in particular, the impact is more pronounced given higher energy dependence. Against this backdrop, the relevance of strong balance sheets, recurring revenue streams, and disciplined risk management becomes even more critical. Let me now turn to our performance. Let's go to slide five. We delivered EUR 281 million net profit in Q1, corresponding to EUR 0.21 earnings per share, putting us firmly on track to achieve our full year target of approximately EUR 0.90 earnings per share. We achieved return on average tangible book value of 14.6%, fully in line with the 2026 target of 15%. Importantly, this level of profitability is achieved with improving revenue mix and strong efficiency and asset quality metrics.
We continue to deliver lending growth in Europe. Our loan book is up 11% year-on-year, reaching EUR 39 billion. During the first quarter, net credit expansion reached EUR 1.3 billion, continuing the strong momentum of 2025. Fee income grew 32% year-on-year, reaching EUR 210 million and accounting for 32% of total revenues. While fees over assets saved at 94 basis points, both metrics are best in class in Greece. Overall, core revenues grew 8% year-on-year with strong volume and fee growth, offsetting lower rates and spreads. Our assets under management increased to EUR 14.7 billion in the first quarter, up 17% year-on-year with EUR 500 million net inflows. Furthermore, deposits rose by 6% annually and are now at EUR 65 billion.
Our cost to income ratio stands at 37%, confirming top-tier efficiency. Asset quality dynamics remain solid with NPE ratio at 2.1%. Cost of risk at 32 basis points and NPE coverage at 70%. Our capital position remains strong. Total capital ratio reached 18.5%, absorbing the EUR 1.3 billion loan growth, an increased 57% distribution accrual for 2026, and accelerated DTC amortization, while retaining a buffer of 260 basis points above Pillar Two guidance. On the back of our solid financial performance, the annual general meeting of shareholders in April has approved a cash dividend amounting to EUR 0.40 per share out of the 2025 profits, on top of the EUR 100 million share buyback that was completed in the fourth quarter of 2025.
The total distribution will reach EUR 594 million out of 2025 profit, which corresponds to a yield of 7%. Slide six presents the details of our first quarter operating results. We sustainably grow our tangible book value per share, now at EUR 6.11 per share, which combined with dividends paid, has grown shareholder value by 6.5% year-on-year. On slide seven, we present our strong loan origination dynamics. In Q1, we achieved EUR 1.3 billion net credit expansion, supported by all business lending segments. Importantly, mortgages continue to recover with 185 million disbursements in Q1, up 95% year-on-year. Slide eight demonstrates our pricing discipline, which is a testament to the commercially rigorous approach of all our teams.
We have been able to compete and win business while pricing at par with the market average and keeping risk-adjusted return at the core of our business credit underwriting. Slide nine outlines the impressive evolution of our services revenues, supported by stellar combined insurance and assets under management results, which has yet to fully build up. Ethniki Insurance contributed EUR 20 million in the first quarter, on track with the annual target. Slide 10 demonstrates the growing trend of assets under management that reached EUR 14.7 billion, backed by strong net flow inflows of EUR 500 million. Slide 11 presents detailed information regarding net interest income intrinsics. In a nutshell, our growing loan and securities book drove NII increase in the first quarter with Euribor tailwinds still to come. Turning to slide 12, it is evident that our cost control allow us to comfortably meet targets.
Overall, we remain very cost-conscious using CapEx investments to ensure structural efficiency gains. Slide 13 provides a summary of our asset quality indicators. The key message is that our balance sheet is now structurally de-risked. We enjoy a robust liquidity profile presented on slide 14. Our strong deposit franchise, combined with superior LCR, supports profitable growth with ample funding capacity. Turning to capital on slides 15 and 16, our capital position is resilient and efficient and in line with internal targets, while at the same time, we are delivering attractive shareholder returns. As said, for 2026, we have elevated our distribution accrual ratio to 57% from 55% in 2025. Slide 15 depicts Ethniki Insurance highlights in the first quarter. Notably, gross written premia reached EUR 217 million, in line with full year aspirations and with minimal contribution for its banca channel.
Bancassurance integration with Piraeus is now at full implementation mode, with a goal to increase gross written premium production in 2027 by 30%. On slide 18, we present an update on Snappi, our neobank, which has currently just surpassed 100,000 customers. Snappi launched commercially in October 2025 and is already gaining significant traction with its fully digital app-based branchless low CapEx model, as it currently has more than 170,000 app users. On slide 19, there is a summary of our KPIs demonstrating that we are fully in line with our 2026 financial targets. Turning to the second section of our presentation for our positioning within the European competitive landscape. Piraeus is in a leading position in Greece in terms of performing loans, deposits, equities brokerage, and network, as highlighted on slide 21.
In addition, Piraeus ranks at par or above average on all major KPIs in the European banking space. In slides 22- 27, we present some of the key metrics for Piraeus versus European bank averages. In slide 22, Piraeus delivers best-in-class loan growth in Europe, outpacing EU peers by a wide margin. 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-income ratio is best in class in Europe, demonstrating our ongoing focus on operational efficiency and cost discipline. Slide 26, Piraeus return 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 trades below EU banks with similar earnings, implying significant upside for our shareholders. With that, let's now open the floor to your questions.
Thank you. Ladies and gentlemen, at this time, we will begin the question- and- answer session. Anyone who wishes to ask a question may press star followed by one on their telephone. If you wish to remove yourself from the question queue, then you may press star and two. For those participating in the question- and- answer session, please use your handset when asking your question for better quality. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question is from the line of Benjamin Caven -Roberts with Goldman Sachs. Please go ahead.
Afternoon. Thanks very much for the presentation and for taking the questions. Two from me, please. Just first on the macro environment. I see in the slides you mentioned that under the current high energy price scenario, Greek GDP could decline to 1.5% or 1.6%, but still higher than the EU average. If you do end up seeing oil prices staying higher for longer and further negative growth revisions, how sensitive do you see your lending pipeline being to that in 2026 and 2027? Where do you see upside and downside risks there? On the second point, just on the trading and other income for Q1, you know, fairly sharp move lower. How much do you expect that to reverse?
More broadly, are you happy with how those income profiles are set up, given how they perform in certain times of volatility? Thank you.
Thank you. Thank you, Ben. Thanks for the question. Let me cover the first one. Now we came in with a very strong first quarter on net credit growth. Taking into account what's happening in and the effect that this may have on a number of metrics including GDP growth, we stand firmly for, with our guidance. We think that, and we have seen that through the pipeline that we have and what we expect to happen within second and the quarters to come. We think that growth will not gonna be negatively affected.
We believe that we will be in a position to be above or at the EUR 3 billion guidance that we're giving for net credit growth. If there are any effects in certain areas of the business, we believe that we will be in a position to follow with other areas. We are particularly looking at hospitality as an area that could possibly be affected. Up until right now, we have not seen any significant delays in bookings or even cancellations. There is a scenario where there may be also a hospitality in Greece may be a beneficiary of the crisis given possible negative consequences for Turkey and Egypt.
However, we currently, on the basis of all the granular work that we are doing with clients, we remain firmly confirming our guidance for the year. Other areas, there has been shipping that sometimes is kind of being discussed as a possible area of concern. I can tell you, talking to a large number of our shipping clients, that we don't see any weakness there. To the contrary, one could argue that shipping sometimes in these in this crisis is a beneficiary of crisis rather than being negatively affected.
Just to give you a data from about 700 ships that our portfolio is financing and are navigating around the globe, we have almost 10 ships that are tied up in the area, the affected area. The rest are kind of really navigating, producing revenues for our clients. On the book and on the, how this could possibly crisis could possibly affect the economy, we remain steady at our guidance. Of course, we'll wait and see how this whole thing will evolve. On the trading side, I'll ask Theo to give us the outlook for trading post the first quarter.
Ben, first of all, on the, on the other income line, that - EUR 14 million that we see on page six, this is very much business as usual. It's something that happens in Q1. It was - EUR 10 million in Q1 2025. This is a line that is burdened by multiple things, real servicing fees, the DTC fees are there. And it's, and it's a line that you have this mild negative effect in the odd quarters of Q1 and Q3, but gets supported by investment properties revaluation. That's why it kind of evens itself out and is also positive in Q2 and Q4. These are the 2 x a year where we look at the investment property book again. No news on that line.
On the trading line, indeed, that -EUR 18 million was the effect of market volatility. Primarily, I would say from the bond book, the trading part of the bond book, it is an effect of spread widening to a large extent. That number has been almost fully reversed, and it's actually a positive number, quarter to date, in Q2. You know, we took a photograph exactly as the book is. It's very easy to play around that line and, you know, do some OCI recycling or sell some stuff out of your amortized cost book. We didn't do that. We didn't impair the unrealized losses or the OCI capital. This is what the print was.
The print quarter- to- date is positive. Until a few days ago, I would tell you that 100% reversed. I know it's almost 100% reversed, but it's right now it is a positive number quarter to date.
Very helpful. Thank you.
The next question is from the line of Gabor Kemeny with Autonomous Research. Please go ahead.
Yeah. Hi, thank you. On the recent increase in macro volatility, how do you think about the likelihood of this having an impact on your provisions? Specifically, on the creation of stage 2 and stage 1 provision in the next couple of quarters. If you could give us a flavor there, please. The other question will be on capital. Your 12.6% CET1 ratio is maybe towards the lower end in the sector. Can you walk us through how you think about the capital builds from here to the 13% target for the year in light of the increased distributions?
Finally, another quarter of outstanding loan growth, and NII obviously impacted by seasonality, but yes, grew more slowly. How do you see the trajectory of that loan growth translating into NII growth going forward? Thank you.
All right, Gabor. Thanks. Right now, the IFRS models, when it comes to performing exposure, coverage, are not producing any substantial sensitivities that will affect the performing exposure, coverage, going forward. Even with the 1.5% estimate, it would be a very mild effect if we were to eventually bake that in. Right now, the estimate holds at 1.9%. That is what we've got in the IFRS models. And it is in line with what also Bank of Greece announced very recently. Overall, I would not expect any substantial IFRS stage 1 and stage 2 model volatility.
We are much more focused when it comes to cost of risk on actual stage 3 inflows, making sure that we manage defaults and avoid substantial inflows that will create additional coverage requirements on the third stage. On 12.6% capital, obviously, it was a massive growth quarter for the bank. We almost took half the year's budget in one quarter. The coming quarters will be strong, you know, there will not be a repetition of Q1 3x. Even with that growth, we managed to almost absorb the entire growth and the increased distribution in our capital levels that were printed pretty much at the level of Q4 last year. Going forward, there are tailwinds on the capital.
We've got SRT transactions kicking in. As we said, the runway of growth is not expected to continue, and there are some other capital-generating initiatives in play. Overall, the guidance for capital holds. If anything, given the strong P&L intrinsics that we're looking at that are rather certain, I think we can safely confirm the 13% area capital for year-end. For NII, it's difficult to judge quarter to quarter. I mean, even the two days fewer accrual days that you've got in Q1 versus Q4, that is a EUR 10 million hit on the NII. If Q1 had exactly the same number of accruing days as Q4, it would be EUR 10 million higher.
It is a situation on the NII that we like very much. The frontloading of the credit growth, the fact that it is a quarter that still had rather static accruing, we've got tailwinds there. We accrue with the risk-free of almost 2%, and the spot right now is almost 2.15%. We've got a tailwind on the risk, on the risk-free. The spread erosion was somehow contained, frontloaded. Also, the bonds, generally, NII has a tailwind when it comes to our budget and the guidance expectations.
Thank you, Theo. A small follow-up, if I may. How do you see your capacity to boost your capital ratios by SRTs? If you can give us a sense on that.
Well, that's already in the plan. We've got a number of transactions in play. Obviously, the cost over CET1 relief is very good and very attractive and remains so. We're taking advantage of that. We were at 70 basis points capital relief as of Q4. We're gonna travel towards our average of 100 basis points of capital relief, so you can understand that's a 30 basis point enhancement over the course of the year. As I said, we're also very focused on achieving and potentially exceeding P&L expectations for the year. Organic capital generation together with SRTs, plus whatever growth expectation one might have, I think we'll get capital closer to the 13% area.
That's very helpful. Thank you.
The next question is from the line of Stephan Potgieter with UBS. Please go ahead.
Good afternoon. Thanks for the presentation. You answered most of my questions, so just maybe one- on one-off costs. Just to check on that. I don't think you've had any one-off costs in this quarter. Do you expect any integration or Ethniki costs, integration costs to come through in that line in the remaining quarters?
Very, very slim numbers, I would say, Stephan, over the course of the year. I mean, this quarter had approximately a EUR 6 million, I would say, headwind that we classified as one-off. This is pretty much the vicinity of the, of the numbers that we should be seeing in the coming quarters. May that be on some, as you say, Ethniki transformation costs, some VES costs. I would say we reported pretty much will be matching normalized returns for the, for the coming quarters.
Thanks. That's clear.
The next question is from Alex Demetriou with Jefferies. Please go ahead.
Hi, thanks for taking my question. If we could just talk about some of the NII dynamics kinda going forward. If you think about, you know, the low yield this quarter, we actually saw a tick up in more or less in line with kind of the rates going up as well. On the deposit side, you still have, you know, some kind of repricing benefits to come through. If we can kind of just talk about the NIM trajectory or how we can kinda see it evolving over the, you know, coming quarters, that'd be really helpful. Thank you.
Hi, Alex . It is rather difficult to model out today in this call all of the stuff that get baked into the NII trajectory. For example, one thing you didn't mention was the deposit evolution, the actual volume, what the side accounts will do, what is the expectation. As I said, we were expecting a run rate, let's say, of EUR 750 million expansion on the loans per quarter at the spreads that they came in. We met spread expectation, but volume was much higher. Bond growth was expected to be less than EUR 500 million for the quarter. It was actually EUR 2 billion. Overall, on the volume side, we have tailwind. On the risk-free side, 2% was the expected accrual.
We're looking now at 2.15% for the coming quarters. There's a tailwind there. Overall spread was expected to erode this quarter. It didn't, although that's a bit of a one-off situation for Q1. It definitely confirms that we're looking at a very mild spread erosion overall in the book. I think these all of these intrinsics versus our implied guidance and our budget assumptions for NII is creating tailwind. Let's not quantify it now. We're not gonna change guidance today. Definitely it is a line that is looking that it will print north of our original expectations. The challenge today is to manage the other lines, especially see what the trading line will eventually print.
We talked about it before. Cost of risk, it is also in play, again, it has been discussed, so that we meet at least what was the guidance that we talked about, on the CMD on the 5th of March.
Thank you. That's very clear. Are you able just to provide the current kind of loan yield that you're getting on the bond portfolio at the moment and what you were able to put the big volume that we saw in Q1 on?
The question was about the bond yield, yes?
Yeah, yes.
That's around 3.2%.
Thank you.
As a reminder, if you would like to ask a question, please press star and one on your telephone. Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Megalou for any closing comments. Thank you.
Thank you all for participating in our first quarter 2026 results conference call. We look forward to discussing with you all physically or virtually during our investor outreach program, which will start from next week. Thank you very much.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you for calling, and have a good afternoon.