Profit after taxes of € 867 million closed in 2021 for the National Bank Group, compared to € 33 million in 2020. Profits after taxes from continuing operations at Group level amounted to € 833 million increased by 41% on an annual basis.
Net interest income increased by 3% on an annual basis, reflecting the significant increase in the serviced loan portfolio and the lower financing costs of the Bank. Serviced loans in Greece increased by € 1.4 billion on an annual basis in 2021, reflecting new loan disbursements3 amounting to € 4.9 billion (€ 2.1 billion in the fourth quarter of 2021).
Net commission income increased by 10% on an annual basis, reflecting the strong recovery in loan disbursements and economic activity in general, spearheaded by card procurement, brokerage services and digital channels.
The significant reduction in staff costs (-12% on an annual basis) absorbed the increase in depreciation as a result of the Bank’s extensive strategic investments in the IT sector, leading to a drastic de-escalation of operating costs by 6% on an annual basis in 2021. The index cost to organic revenue improved by almost 6 percentage points on an annual basis and stood at 52.3% in 2021.
Profits from financial transactions and other income amounted to € 404 million in 2021, incorporating high profits related to securities transactions (mainly Greek Government Bonds).
The cost of credit risk fell below 100m. in 2021, reflecting the gradual de-escalation of forecasts throughout the year, with the cost of credit risk reaching 68m.b. on average loans after forecasts in the 4th quarter 2021
According to an announcement by the Bank, the most important achievements of 2021 are the following:
– Organic profits increased at an accelerating rate (+ 40% on an annual basis) to € 450 million, as a result of the increase in organic revenue, the reduction of operating expenses and the normalization of credit risk costs, clearly demonstrating that the Transformation Program of the Bank bears fruit
– De-escalation of the Non-performing Exposure Index (NPV) to 7.0% from 11.9% 1 in the third quarter of 2021 and 13.6% 1 in the fourth quarter of 2020, reflecting the organic decrease of the NPU throughout the year and the classification of the Frontier II portfolio as an asset for sale. The ACE coverage ratio from accumulated forecasts increased further to 77% in 2021 from 63% in 2020
– Strong capital adequacy ratios, with the CET1 ratio at 16.9% 2 (+ approximately 120mp on an annual basis) and the Overall Capital Adequacy Ratio at 17.5% 2, incorporating the capital gain from its completion Frontier transaction of 150m.b. approximately (of which approximately 90m in the fourth quarter of 2021)
– The agreement with EVO Payments on the EIB card acceptance activity is a first step towards strategic partnerships in digital banking, creating significant synergies through the combination of the EIB’s broad customer base and EVO’s technological expertise in payment services.
– Active support of our customers throughout the coronavirus crisis, with loans in government loan installment programs (Bridge I & II) amounting to approximately € 2.2 billion (just € 0.2 billion active today)
o The successful digital transformation of the Bank is reflected in the increase of e-banking transactions by almost 30% on an annual basis, replacing the transactions in the branches, which have decreased by 56%, with the number of banking transactions increasing by 8% on an annual basis. based on 2021
Commenting on the results, the CEO of the Bank P. Mylonas “The results of the National Bank’s multi-year transformation effort are more visible than ever. Taking advantage of the country’s strong economic recovery, we have achieved high organic profitability, impressive results in reducing Non-performing Exposures, and growing our balance sheet combined with strong capital adequacy, reflecting the successful transition of the Bank to a more flexible and efficient operating model.
Starting with the quality of our loan portfolio, our exposure to Non-Performing Exposures in Greece decreased to € 2.1 billion or just € 0.5 billion after forecasts. The Non-performing Exposure Index in Greece stood at 6.9%, down by 7 percentage points on an annual basis, bringing us closer to the 6% target for the end of 2022, a whole year earlier than originally planned. At the same time, despite the continued normalization of provisions for non-performing loans throughout 2021, which stood at 68 basis points in the fourth quarter of 2021, the domestic coverage ratio of Non-performing Exposures from accumulated provisions increased to 78%. The lower cost of provisions reflects the positive trends in the rate of decline in Non-performing Exposures, as a result of the high rate of return on non-performing loans (curings) and the low rate of new defaults, taking into account customers who had joined programs debt relief facility (moratoria).
In terms of profitability, profits after taxes from continuing operations at Group level amounted to € 833 million, increased by 41% per year, reflecting the positive trends in all key areas of profitability of the Bank. Organic profits rose about 40% year-on-year to € 450 million, exceeding the target, as a result of improving organic revenue, drastically reducing costs and de-escalating provisions for bad loans, laying a strong foundation for achieving the target. for organic profits of € 0.5 billion at Group level for 2022. The decisive reduction of costs, with staff costs being reduced by 12% per year, as well as the resilience of net interest income, which increased by 3 % per year, are the main factors that contributed to the improvement of profitability, which also benefited from the increase of up-to-date loans by € 1.4 billion per year.
Finally, in terms of capital adequacy, the CET1 index increased by about 120 points. on an annual basis, at 16.9%, with the Overall Capital Adequacy Ratio amounting to 17.5%, reflecting the benefit of both the Frontier transaction that strengthened the Bank’s funds by + 150bps, as well as the strong our profitability. The completion of the sale of National Insurance and the strategic cooperation with Evo Payments, with the first expected to be completed in the coming weeks and the second in the fourth quarter of 2022, will further strengthen the Overall Capital Adequacy Ratio by further 160m.b. approximately, creating strong capital reserves of strategic importance.
With a view to 2022 and beyond, the outlook for the Greek economy appears particularly encouraging, despite inflationary pressures, which have risen sharply due to the Russian invasion of Ukraine. The fundamental size of the economy is strong and even in the current international context, Greece is expected to achieve remarkable growth in 2022 and even better results in 2023 and 2024. Therefore, the NBG targets remain ambitious. In particular, we aim to approach the European average of Non-Performing Exposures of around 3% and to continue to improve the rate of internal capital creation, both by further improving revenues and by reducing operating costs and normalizing forecasts. for bad loans.
Our goal is the Return on Tangible Equity (RoTE) to reach double digits. Our improved profitability and strong capital adequacy ratios are expected to enable us to implement a prudent dividend distribution policy in the near future. Achieving these ambitious goals requires even greater effort in a world characterized by rapid technological change as well as growing customer needs. Our Transformation Program will continue to give us a competitive edge in achieving this much needed change. Our investments in technology and our people are the critical ingredients for the successful implementation of our goal, to become the Bank of First Choice. The results so far, and in particular those of 2021, confirm our ability and commitment to achieve these goals. ”
Source: Capital
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