Piraeus Bank 2020 Strategy Update: The Next Phase of Development
"Piraeus Bank will frontload its inorganic NPE reduction effort to 2020 and proceed with c.€7bn of securitisations. This is facilitated by the Hellenic Asset Protection Scheme “Hercules”, a tool that will provide additional support to Greek banks to speed up our de-risking initiatives." Piraeus Bank’s CEO Mr. Christos Megalou stated on Monday, while presenting Piraeus Bank 2020 Strategy Update.
In total, the NPE reduction planned in 2020 will be enhanced to c.€11bn, leading to a NPE ratio lower than 30% by end-2020 versus the initial target of close to 40%.
According the Piraeus Bank 2020 Strategy Update, along with the significant progress in 2019, the Bank completed in record time the very complex transaction of spinning-off its legacy platform and partnering with Intrum, an initiative that will overhaul the Bank’s de-risking efforts.
Furthermore, the €400mn Tier 2 issued in June 2019, was the first one by a Greek bank after 11 years. In total, these decisive actions increased the Bank’s capital position by c.250bps since mid- 2018.
As Mr. Megalou stated: "We are now turning the page for Piraeus Bank. We are fully focused on producing results and generating value for all of our stakeholders. Piraeus Bank is on track to attain its medium-term aspirations calling for c.10% return on tangible equity over the next 36 months."
Performance: Strong Progress in 2019
- Net Interest Income +2% yoy
- Net Fee Income +9% yoy on recurring basis
- Recurring Operating Expenses -5% yoy
- Recurring Core Pre Provision Income +16% yoy
- Loan disbursements of €4.1bn in FY.2019 exceeding initial target
- 17th consecutive quarter of NPE reduction at €24.5bn; historical low inflows in Q4.19
De-risking: Frontloading effort
- NPE reduction of c.€11bn in 2020
- NPE securitisations of c.€7bn in 2020 (c.€5bn “Vega”, c.€2bn “Phoenix”)
- NPE ratio c.15% at the end of 2022 from c.49% in 2019
- Cost of risk normalization in the following years
- Historical low level for defaults and re-defaults in Q4.19 at c.€260mn signal positive trends ahead
Returns: c.10% RoTE target brought earlier by a year, to 2022
- Acceleration of balance sheet growth dynamics
- Improved performance demonstrating recurring earning power
- Uniquely positioned to take advantage of recovering trends in Greece
- Performance supported by enhanced operating model and cost efficiency plan
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