Piraeus Financial Holdings SA (BPIRF) Q1 2025 Earnings Call Highlights: Strong Profit Growth ...
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Piraeus Financial Holdings SA (BPIRF) reported a strong net profit of EUR 284 million for Q1 2025, marking a 22% increase year-on-year.
The company achieved a return on average tangible book value of 14.7%, surpassing the 2025 target of approximately 4%.
Asset quality remains solid with a non-performing exposure (NPE) ratio at 2.6% and a historic low cost of risk at 35 basis points.
The loan book expanded by EUR 1.1 billion in Q1 2025, continuing the strong momentum from 2024.
Piraeus Financial Holdings SA (BPIRF) increased its assets under management to EUR 12.5 billion, already exceeding the 2025 target.
Negative Points
Net interest income declined by 7% annually due to a material drop in interest rates.
The company faces potential capital volatility from its securities book, which was not booked in amortized cost.
There is uncertainty regarding the impact of Basel 4 and other regulatory changes on capital ratios.
The mortgage market growth is expected to be moderate, with some initiatives progressing slower than anticipated.
Further reductions in net interest income are expected in the coming quarters due to the normalization of base rates.
Q & A Highlights
Q: What is the rationale behind the choice of not booking the increase in the securities book in amortized cost, and how are you managing potential capital volatility from these positions? Also, could you clarify the capital impact from the acquisition of ethnic insurance? A: The decision was to book the new additions under the OCI book with corresponding hedging instruments to avoid volatility. The capital impact from the ethnic insurance acquisition is expected to be between 150 and 160 basis points, with potential application of Article 49 of CRR3, though not currently in the primary plan.
Q: How should we think about credit expansion seasonality across the year, and can you provide any insights into the current lending pipeline or changes in customer behavior? A: The first quarter was particularly strong with significant transactions setting the tone for the year. We are not upgrading our full-year guidance yet but remain vigilant. The retail consumer market is positive, and we expect moderate growth in the mortgage market by year-end.
Q: How does the business outlook change if rates go below certain levels, and what are the drivers behind the increased NII sensitivity this quarter? A: The increased sensitivity is due to the unfreezing of mortgages, which are now sensitive to rate cuts. The assumed pass-through of rate cuts into time deposit costs is at 60%, currently at 52%. We expect the NII guidance to hold even with rate cuts, as growth is expected to mitigate any potential drop.
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