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P. Mylonas: New strategic possibilities are being created

LAST UPDATE: 14:26

By Leonidas Stergiou

After the successful moves of the sale of National Insurance and the reduction of bad loans to a single-digit percentage, National Bank completed the commitments it had undertaken towards the European Competition Directorate (DGCom). The exit of Ethniki from the supervision of DGCom, which was a “dowry” of the 10-year crisis, creates new opportunities for development, extroversion and strategy for the Group.

This was emphasized by the management of the National Bank during the regular general meeting of shareholders, where special reference was made to the high capital and the rise in profitability that now allow the discussion with the supervisory authorities for the distribution of a dividend. It is recalled that in a recent presentation to analysts, the CEO of Ethniki, Mr. Pavlos Mylonas, had mentioned a percentage of 20% of the profits of 2022, so as not to affect the capital adequacy ratios, which aim to move at the level of 15- 20%.

Innovation

Reference was made to the strategic alliance with the American EVO in payment systems and the high investments in the digitization of the bank, which is even changing its central system, integrating into it all the new structures foreseen by the transformation program. These are changes starting from technology and product redesign to culture, staff training, reward, internal control, corporate governance and ESG criteria.

New securitizations

The next steps include NPL securitizations that will further reduce non-performing exposures by EUR 1.3 billion and are due to be completed by the end of Q3 2022. Thus, based on forecasts, NGB’s NPLs will are a thing of the past, as Mr. Mylonas said, because the amount will have been reduced to 500 million euros. He reminded that in 2020 bad loans amounted to 10 billion euros. The Frontier securitization was the key move that reduced the stock of non-performing loans without affecting the bank’s capital. On the contrary, as he said, the “cost” of the transaction was lower by 800 million euros than originally predicted.

New product-New market 25 billion

A structure is being created that will fund loan management companies to manage the real estate that is attached as collateral to the loans. In this way, properties will not end up in the majority of the hurry during auctions, as is the case today. For example, the interested party will be financed to acquire the property. As it was pointed out in a recent conference by executives of Ethniki, this is a new market of 25 billion euros.

International activity

In the international activities of the Group, Mr. Mylonas noted the departure from London and Malta, the stay in Cyprus, while he underlined the significant progress of the subsidiary in North Macedonia, where it presented a return on equity ratio of 10% and a cost-to-income ratio of 35 %. The goal is the further development of the presence in the market there.

Organic growth

Both the president of National Bank, Mr. Gikas Hardouvelis and the CEO, Mr. Pavlos Mylonas, referred to the significant organic growth of the Bank, which increased its share in the loan market by 4 percentage points, with the aim of moving higher. They pointed to the high capital base without equity increases and a divestment of the banking sector under a holding company (hive down) to partially offset the deferred taxation.

Greek economy

Regarding the Greek economy, Mr. Hardouvelis and Mylonas stated that there are development prospects due to tourism and the Recovery Fund.

Mr. Hardouvelis described the Greek economy as resilient, which will grow by 4% this year. However, he warned of significant risks in 2023 if the war in Ukraine continues and inflation as central banks tighten monetary policy will curb the growth outlook.

P. Mylonas

The Managing Director of the National Bank, Pavlos Mylonas, referred in his initial position mainly to the achievements that the bank has achieved in the last year and underlined the strategic possibilities that are now opening up for the National Bank, having on the one hand the strongest capital base in the market and on the other hand having completed the commitments and any limitations arising from the European restructuring program. There is, he said, strategic flexibility to take advantage of investment opportunities if and when they present themselves.

Goal achievement

Referring in particular to the high goals achieved by National Bank, Mr. Pavlos Mylonas emphasized, among other things:

First, the impressive reduction of “red loans”. After more than 10 years, the ratio of Non-Performing Exposures was below 10%, namely 7%, rapidly converging towards the average of European banks. Of course, Mr. Mylonas did not fail to point out that the challenge for the economy in this area is no longer how the banks manage them, but how the management companies will succeed in re-integrating the almost 50 billion euros of assets that are managed. For this purpose, National Bank established a new team within the bank, with the exclusive aim of financing the assets, which the administrators of the red loans will sell to new investors. It thus hopes to actively contribute to their reintegration into the healthy economy.

Secondly, moving to healthy loans, in 2021 the National Bank supported businesses and households with 1.4 billion euros of new loans, net, after repayments, which is a success and an important contribution to the development of the Greek economy. Through the first quarter of 2022, the bank increased its share of new retail loan disbursements by 5 percentage points.

Thirdly, the bank proceeded with a spectacular upgrade of its digital services, offering different transaction speeds, great facilities for its small and large customers and another, much wider, range of banking products and services.

Fourth, the National Bank succeeded in raising its capital adequacy ratio to 15% (after IFRS 9). In other words, it has the largest capital adequacy ratio in the market, by a wide margin, without even resorting to a capital increase. This fact opens the discussion for a dividend distribution, for the year 2022.

Fifth, the Group’s adjusted profit from continuing operations, after tax, amounted in 2021 to 834 million euros. Organic operating profits in particular increased by 40% year-on-year and reached 450 million euros, surpassing the target set for this year. Finally, Mr. Mylonas underlined that Ethniki enters into and looks forward to future strategic partnerships with fintech, and not only, companies, so as to achieve synergies and benefit from complex and innovative services, important for customers.

Source: Capital

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