Core PAT at €855m in 9M23 and €346m in 3Q23
9M23 Group core PAT nears €0.9b, driven by positive NII momentum
o Sustained NII, up by 73% yoy and 6% qoq, reflects ECB’s continued base rate repricing, benefitting loan NII, offsetting higher deposit and wholesale funding costs; NIM continued to rise, reaching 322bps in 3Q23
o Fees increased by +4% qoq on the back of solid growth in the retail and corporate banking businesses, led by cards, trade finance, deposit bundles and investment products; on a like for like basis, excluding the merchant acquiring deconsolidation, 9M23 fees were up by +15% yoy
o Operating expense discipline continues, with 9M23 personnel and G&A expenses up by 1% yoy, fending off inflationary pressures; combined with higher depreciation charges reflecting our ambitious and unique by domestic standards IT strategy, total costs were 3% higher yoy; 9M23 C:CI stood at 31.4%
o 9M23 CoR settled at 66bps1, well below our FY23 guidance of c80bps, reflecting the benign macro environment
o Core RoTE rose further, reaching 20.8% in 3Q23 (17.8% in 9M23), before adjusting for excess capital
Domestic PE balances €0.6b higher qoq to €28.0b; disbursements2 pick up to nearly €2b in 3Q23
o Disbursements2 were up by +40% qoq to €1.9b in 3Q23, driven by SMEs, shipping and project finance
o The pick up was mainly in corporate disbursements2, with retail strengthening; 3Q23 corporate momentum continues into 4Q23
o Domestic deposits continued to rise, up by +€1.1b ytd, driven by retail customers, despite the corporate drawdowns at the beginning of the year
o Netting off TLTRO (€1.85b) and factoring in our net lender interbank position, excess liquidity increased further to €7.4b in 3Q23, underlying NBG’s liquidity advantage
Domestic NPE ratio at 3.6%, with coverage reaching c94%
o Organic NPE flows amounted to just €150m on a ytd basis, well inside our FY23 expectation
o Domestic NPE stock at €1.1b in 3Q23, €0.6b3 lower qoq, reflecting the NPE clean-up transaction
o NPE ratio of 3.6% in Greece (3.7% at the Group level), down by c170bps qoq and c230bps yoy
o Domestic NPE coverage kept rising to a high of c94% (Group Stage 3 coverage at 55%), while Stage 2 ratio dropped to 10.7%, with coverage at a sector-high of 7.1%
CET14 at 17.9% with total capital ratio4 at 20.3%
o CET1 ratio4 up by c60bps qoq to 17.9% in 3Q23, driven by strong organic profitability; total capital ratio4 at 20.3% (+c200bps qoq)
o Following the €0.5b Tier II issuance in September 2023, MREL ratio increased to 24.5%, exceeding the January 2024 interim target of 22.7% by c180bps
o NBGs’ long-term credit rating has been upgraded by two-notches to ‘Ba1’ by Moody’s and to ‘BB’ by Fitch in September 2023, reflecting benign economic conditions, as well as the bank’s balance sheet de-risking and sharp profitability improvement
Our Transformation Program supports the delivery of our targets and improvements to our commercial and operating model
o Our Transformation Program is a key competitive advantage, supporting the rapid change of NBG into a more agile and efficient organization, enhancing revenue generation through service model improvements, cross-selling, astute partnerships and new business offerings, and upgrading technology infrastructure, notably the digital offering, but also the ongoing replacement of our Core Banking System
o Top digital market offering in Greece, manifested by our leading market shares in monthly active users (mobile: 32%, internet: 25%) and digital sales (cards: 55%, consumer: 34%, insurance: 52%). Our digital sales increased to 1.1m in 3Q23 from 0.7m in 3Q22
o We are incorporating ESG in our business strategy, risk management, governance, data and systems, leading the market in terms of RES financing and materially supporting the green transition of businesses and households. We are also market leaders in disclosing financed emission measurements as per the Partnership for Carbon Accounting Financials (PCAF), while we have also committed to 2030 financed emissions targets for 6 Net Zero Banking Alliance (NZBA) sectors/portfolios
1 Underlying / 2 At the Bank level / 3 including the NPE portfolio of €0.6b reclassification to HfS / 4 Including period PAT and dividend accrual
“The economic backdrop in Greece is quite positive. Activity remains strong despite the monetary policy-led slowdown in the euro area, its main trading partner, as well as the impact of the floods in central Greece. The recent upgrades to investment grade status acknowledge the hard-won gains in competitiveness for the economy, the strong fiscal over-performance and the political commitment to policy reforms. Economic sentiment remains very positive and is attracting high levels of investment, domestic and foreign.
In this supportive environment, combined with the ongoing transformation of the Bank and its inherent comparative advantages, NBG excelled. In 3Q23, NBG demonstrated compelling P&L strength, delivering superior performance across all lines, capitalizing on its distinct balance sheet. Robust momentum in core income was combined with a tightly managed cost base and a solid asset quality performance. With our results improving substantially every quarter in 2023, core PAT rose to €0.9b in 9M23, yielding a core RoTE of c18%.
The notable returns generated substantial capital; 60bps qoq and 220bps yield ytd, leading the CET1 capital ratio to nearly 18% and the total capital ratio above 20%. The excess capital provides the Bank with significant strategic flexibility, including with regards to returning capital to shareholders.
The critical balance sheet strengths continue to stand out. Despite the rapid rise in interest rates, loan activity was solid, up by 5% during the past 12 months, led by corporate demand. Moreover, the Bank has not experienced any new net NPE inflows in 3Q23 and with the latest transaction, the domestic NPE ratio declines to 3.6%, and in absolute terms to about €1b, €0.1b net of provisions. As importantly, the Bank’s liquidity position, arising from our stable core deposit base, remains robust, with excess liquidity rising further.
The Bank intends to leverage the favorable conjuncture to accelerate its transformation. Key is to complete the successful IT and digital strategy --unique in Greece-- which has already given the Bank significant advantages in efficiency as well as customer service, and which is clearly distinguishing the Bank to a widening degree. These assets, combined with its unique customer base, arising from many decades of hard-earned trust, will serve us well in a more competitive future, ensuring that we remain the Bank of First Choice.”
Athens, 7 November 2023
Pavlos Mylonas
Chief Executive Officer, NBG