1H23 Financial Results

1H23 core PAT at €508m, of which €288m in 2Q23

  Group core PAT exceeds €0.5b in 1H23, yielding a core RoTE of >16%  

 o Positive NII momentum maintained at +11% qoq in 2Q23, reflecting ECB base rate repricing, far offsetting loan spread tightening and higher deposit and MREL related funding costs; NIM up by c40bps qoq 
o Fee income growth picks up at +6% qoq on the back of solid volume growth especially in the retail business, spearheaded by cards, deposit bundles and investment product related fees; adjusting for the deconsolidation impact of the merchant acquiring business, fees are up by 14% yoy 
o Operating expenses remain tightly contained, with personnel and G&As up by just +1% yoy, despite sectoral wage increases in late 2022 and still high but abating inflationary pressures; total OpEx increased by +3% yoy on the back of higher depreciation charges (+12% yoy), reflecting our ambitious IT strategy
o CoR remains below 70bps, comparing favorably to the FY23 guidance of c80bps

  Disbursements1 pick up in 2Q23 to €1.4b; domestic deposits up by nearly €1b qoq

o Disbursements1 amounted to €1.4b in 2Q23, up by 22% qoq, driven by corporates (+30% qoq) 
o Domestic PE loans increased by +€0.8b yoy to €27.4b in 2Q23, settling marginally lower ytd (<1%) due to higher repayments of working capital facilities from cash rich corporates mainly in 1Q23; 2H23 pipeline is large and is expected to allow PEs to expand robustly to the end of the year
o Domestic deposits rebounded in 2Q23 (+2% qoq), driven by mass market and premium customers, recovering from the 1Q23 slump driven by corporate withdrawals and early repayments; on an ytd basis deposits are up by 1% or €0.4b   
o TLTRO balance at just €1.9b in June 2023, reduced further by €3.1b qoq, with excess liquidity increased by c€1b qoq to c€7b

  Domestic NPE stock at €1.7b or just €0.3b net of provisions  

o Small pick-up in mortgage arrears in 2Q23 well inside guidance 
o Net NPE movement of just +€0.03b in 2Q23
o Domestic NPE ratio and coverage at 5.3% and 82.1%, respectively 

  CET1 at 17.3%2, with total capital ratio at 18.4%2

o Strong organic profitability raises CET1 ratio by c80bps qoq to 17.3%2 in 2Q23
o Including MREL resources total capital already at 22.5%, practically at par with the 01.01.2024 requirement of 22.7%

  NBG ranks 5th among 70 participating EU banks in the 2023 EBA Stress Test and a top performer in Greece; our Transformation Program continues to be the delivery engine for the achievement of all of our targets

o NBG successfully completed the 2023 ΕΒΑ Stress Test (ST), with substantial improvement compared with the previous EU-wide ST, despite increased severity of the macro assumptions; the minimum level of CET1 landed at 13.1% under the adverse scenario (6.4% in 2021 ST), incurring a maximum depletion of 271bps in the first year of the test (2023), relative to an average maximum depletion of c350bps for peer Banks in Greece, rendering NBG the top performer domestically. Most importantly, considering NBG’s cumulative CET1 depletion in the 3 year period at just 136bps under the adverse scenario, NBG ranked 5th among 70 participating European banks

o Commercial effectiveness and operational efficiency continue to improve through the sustained centralization and automation of processes and upgrading technology, with the Transformation Program being the delivery engine; the final step in the strategy is the ongoing replacement our Core Banking System

o We opt to form partnerships that enhance our fee generating capacity; in this context we completed in June the purchase of a 7.5% stake in EPSILON NET along with the signing of a long-term, exclusive strategic agreement for the joint design, development, and distribution of products and digital services focusing on strengthening and supporting entrepreneurship in Greece

o Reflecting the accelerating migration to digital channels, digital subscribers and active monthly users increased by 9% yoy to 3.8m and 2.3m in 2Q23, respectively, while digital sales surged to 1m units compared to 0.6m in 2Q22. Our successful digital strategy is reflected in our leading market shares in digital onboarding (individuals: 26%, business: 46%), monthly active users (internet: 25%, mobile: 32%) and digital sales (cards: 61%, consumer: 35%, insurance: 54%)

o We are enhancing further our ESG capabilities and infrastructure, capturing emerging opportunities from the green transition of the Greek economy and leading the market in sustainable financing. We received the year’s Diamond ESG & Social Responsibility award "CR Index 2022-23” by the Corporate Responsibility Institute (CRI)

“The Greek economy is in a favourable and rare economic and political conjuncture as regards the improved prospects for a world recovery, combined with its own hard-won competitiveness and solid prospects for further reform. Specifically, economic activity remains relatively strong, and inflation is dropping rapidly, while the European economy appears set to recover from the successive price shocks and the concomitant tightening of monetary and fiscal policy. In this positive environment, Greece’s economic growth is driven by investment and exports, supported by significant FDI, drawn by the attractiveness of the economy.

Building on the country’s sustained growth momentum and the Bank’s strong fundamentals, we have delivered a compelling financial performance in the first half of 2023, underpinned by the unique strength of our balance sheet and our successful transformation. Our 1H23 core PAT exceeded €0.5b, translating into a core RoTE of >16%, driven by the impressive growth in our core income, combined with contained operating costs -- with the C:CI at 32% -- and gradually normalizing credit risk charges. Our strong core profitability is generating capital on a sustainable basis, with the CET1 and total capital ratios rising by c80bps qoq for a second quarter in a row, and now standing at 17.3% and 18.4%, respectively. At the same time, our liquidity position remains a strong competitive advantage, comprising of a large and stable core deposit base, while our net cash position has increased further to near €7b. Importantly, our residual net NPE exposure amounts to just €0.3b, nearly flat ytd, while the small pick-up in mortgage arrears in 2Q23 is comfortably within our FY23 guidance, confirming once again the resilient nature of our loan book.

With leading economic indicators pointing to stronger growth for the remainder of 2023, we will continue to implement our successful multi-year transformation effort with the goal of improving further our product and service offering to meet the rapidly changing needs of our clients in a more efficient and customer friendly manner. We remain committed -- as the Bank of First Choice-- to play a leading role in supporting our clients as they lead the Greek economy forward.

Athens, 1 August 2023
Pavlos Mylonas
Chief Executive Officer, NBG