ETE infographic

National Bank completed the first half of 2022 with strong profitability and improved efficiency, during which profits after taxes reached 546 million euros and the NPL ratio dropped to 6.1%.

At the same time, NBG’s organic profits amounted to 280 million euros, increased by 40% on an annual basis, while disbursements of new loans amounted to 3 billion euros, increased by almost 50% on an annual basis.

CET1 FL increased to 15% from 13.8% in H1 2021 and Total Capital Adequacy FL to 16.7%, taking into account the strategic partnership with EVO Payments.

Commenting on NGE’s performance, CEO Pavlos Mylonas said:

“Economic activity in Greece during the first half of 2022 absorbed the shocks created by geopolitical instability and the sharp rise in inflation, achieving performance that consistently exceeded expectations. Targeted fiscal support measures combined with employment and wage growth are offsetting the pressures on real household disposable income, lending considerable resilience to domestic demand.At the same time, encouraging high frequency indicators and a strong recovery in tourism, which is expected to exceed the unprecedented levels of 2019 before the advent of the pandemic, will contribute to maintaining Greece’s dynamic growth throughout the second half of 2022.

The results of the first half of 2022 record a consistently strong course in all areas of the Bank’s activities: organic profitability, strengthened by 40% on an annual basis, continues to improve in line with the target we have set for 2022, while the quality of the Balance Sheet we are approaching that of the European banks, with Non-Serviced Exposures after forecasts forming at €0.4 billion, with no indications or trends of creating new Non-Serviced Exposures due to high inflation. Our capital position remains strong, with our CET1 ratio standing at 15.0% (after full implementation of IFRS 9) and expected to strengthen further by 60bp. approx., following the finalization of the strategic partnership for the card acceptance business in Q4 2022.

Analysis of the composition of profitability reveals strong performance in all key categories. In particular, net interest income benefited from the expansion of the NPL portfolio, which registered an increase of €2.3 billion year-on-year and an impressive increase of €1.1 billion compared to the previous quarter. In addition, net fee income rebounded strongly by 23% year-on-year, while despite high inflation operating expenses remained almost flat and credit risk costs continued to normalize at 70bps. about. In summary, the organic profits of the Group in the first half of 2022 amounted to €280 million, while the profits for the period attributable to the Bank’s shareholders amounted to €546 million.

Looking ahead to H2 2022 and beyond, we expect challenges to continue, with uncertainty remaining high. However, Greece is emerging with a sense of confidence from a period of significant restructuring, with the economy expected to continue to demonstrate resilience, despite the challenges. Over the last few years, NGE has transformed into an organization with much greater dynamism and flexibility. So at this difficult time, we will play our part by supporting the economy – which includes many of our current and future customers – in the midst of a period of intense turbulence.”

In more detail, in the figures announced by NBG:

Ta organic profits increased by 40% on an annual basisas a result of the impressive recovery of organic revenues, the maintenance of operating expenses at approximately the same levels and the normalization of credit risk costs:

– The strong recovery in net interest income in Q2 2022 (+8% qoq), mainly as a result of the impressive increase in serviced loans in Greece (+€1.1bn qoq), restored net interest income on track for growth (+1% y-o-y in H1 2022), despite the full absorption of the negative impact of the Frontier portfolio securitization

– The impressive increase in net commission income was maintained (+23% year-on-year), supported by Retail and Corporate banking loan disbursements, and mainly by commissions from cards, payments and trade finance

– Despite rising inflation throughout H1 2022 and the Bank’s strategic investment in IT, operating expenses remained almost unchanged (+1% y/y), as a result of prudent cost management and continued retrenchment of staff costs (-2% on an annual basis). The cost-to-organic revenue ratio further improved to 50.1% from 52.1% in 1H 2021 (48.8% in 2Q 2022), reflecting organic revenue growth

– The cost of credit risk remained on a de-escalation trajectory, rising to 68 m.p. in H1 2022, supported by negative net MEA flows and their high coverage ratio

– Taking into account the profits from financial operations, discontinued operations and other non-recurring profits / (losses), the profits for the period attributable to the Bank’s shareholders amounted to €546 million.

The loan disbursements in Greece saw a strong recovery in Q2 2022 by 80% approximately on a quarterly basis, boosting NPLs by €1.1 billion in one quarter:

– Loan disbursements strengthened significantly in Q2 2022, reaching €1.9 billion, reflecting Corporate Banking loan disbursements

– At the six-month level, loan disbursements amounted to €3.0 billion, up by approximately 50% year-on-year, increasing service-performing loans in Greece by €2.3 billion year-on-year

Ta MEA in Greece were further reduced to €1.9 billion or €0.4 billion after provisions, with the MEA index standing at 6.1%

– Despite the now reduced perimeter of regulated MEAs, organic flows remained at negative levels in Q2 2022 (-€0.1bn on a quarterly basis), reflecting successful loan restructurings

– The MEA ratio of 6.1% in Greece (6.3% at Group level), further reduced by 40 bp. on a quarterly basis and 670 sq.m. on an annual basis, aligns with our 2022 target

– The MEA coverage ratio from accumulated provisions of 80.8% in Greece in Q2 2022, strengthened by 320 bp. from around the end of 2021 despite the de-escalation of credit risk costs, reflecting the maintenance of organic MEA flows at negative levels

– Despite the intense inflationary pressures, including the sharp increase in energy costs, there are no indications of an increase in the MEAs of customers who had joined programs of either State or Bank support, nor of other customers

– The conclusion of a binding agreement for the securitization of the Frontier II portfolio is expected immediately

The index CET1 and Total Capital Adequacy Ratio after the full implementation of IFRS9 amount to 15% and 16.1% respectively:

– The CET1 ratio and the Total Capital Adequacy Ratio after the full implementation of IFRS 9 stood at 15.0%2 and 16.1%2 respectively, supported by the organic profitability of the Bank (+50 bp), which absorbed the increase in Asset-weighted assets due to high loan disbursements in the quarter (-30bp) and increased volatility in bond markets partially impacting the valuation of bonds at fair value through other comprehensive income (FVTOCI)

– The finalization of the strategic partnership with EVO Payments, which is expected in Q4 2022, will further strengthen capital adequacy ratios by 60 bp. approximately, shaping the CET1 ratio and the Total Capital Adequacy Ratio after the full implementation of IFRS9 at 15.6% and 16.7%, respectively

The strong momentum of the successful Transformation Program continues to provide impetus for immediate change

– Important achievements of the Transformation Program in the 1st half of 2022 are the progress made in the results of our commercial activities, with a significant increase in commissions in Retail and Corporate Banking. In terms of our operating model, we have made significant progress in the process of replacing the Core Banking System, we have further increased the level of centralization and automation of the lending and credit guarantee & letter of guarantee (LC/LG) processes, while we have implemented actions to reduce real estate costs

– The Bank’s digital transformation continues to deliver impressive results, with registered users of our digital channels reaching 3.5 million (+10% year-on-year) and active users reaching 2.6 million (+14%) on an annualized basis) in June 2022. In addition, the sale of products to both households and businesses through the Bank’s digital channels, including agreements with external partners, saw an impressive increase of 58% year-on-year. Our expanding partner network continues to be a competitive advantage as we maintain over 50% market share in third-party consumer loans

– Regarding the Bank’s ESG strategy, NGE successfully completed the 2022 Extreme Climate Risk Simulation Exercise conducted by the European Central Bank (ECB), with the Bank’s overall assessment being in line with the average level of the European Banks that participated and the exposure of our business model to transition climate risks to be assessed as a lower sustainability risk. The conclusions of the exercise reflect the strong commitment and progress we have already made in the field of ESG, laying the foundations of an effective climate risk management framework and the timely adaptation of its processes and strategies

– With the successful completion of the sale of National Insurance and the fulfillment of other smaller commitments, NGE completed the Restructuring Plan agreed between the Hellenic Republic and the European Commission after receiving state aid for the recapitalization of the Bank in 2012