Key financial highlights
• 1H24 Group Core PAT at €646m (+27% yoy) reflecting core income strength
o NII continues to outperform the previously anticipated normalizing path; -3% qoq but +13% yoy, reaching €1.2b in 1H24, reflecting the full effect of the hedging cost of carry on deposits, higher MREL issuances and lower Euribor rates, partially absorbed by a pick up in loan NII on the back of strong loan disbursements in 2Q24; 1H24 NIM stood at 323bps, well above our previous FY24 target of <290bps, now upgraded to over 300bps
o 1H24 fee income growth at +15% yoy and +6% qoq, driven by higher volumes, with double digit yoy growth across products and sectors and especially in investment products and lending fees benefitting from a pick-up in new production; the number of customer transactions in 2Q24 was up +10% yoy on e-banking channels growth of +22% yoy.
o Continued operating expense discipline throughout 1H24, with 2Q24 costs flat qoq. Normalizing for variable pay accruals¹, 1H24 operating expenses grew by just +3.6% yoy, with 1H24 C:CI remaining at 30%
o CoR at 55bps in 1Η24, reflecting marginal organic NPE formation
o Core RoTE at 17.4% in 1H24 and 18.1% on attributable PAT, before adjusting for excess capital
o Guidance of core KPIs has been revised upwards based on 1H24 performance
• Robust balance sheet, with the dynamics accelerating in 2Q24, underpinned by increasing leverage
o Group PEs at €31.4b in 1H24, +€0.9b ytd and +2.4b yoy (+8% yoy), driven by a sharp pick up in corporate disbursements2 to €2.5b in 2Q24, with retail disbursements2 maintaining the positive 1Q24 momentum. In total, 2Q24 disbursements2 reached a multi-year high of €2.8b
o The current strong corporate pipeline provides confidence for the attainment of our FY24 PE expansion target
o Exposure to fixed rate assets provides a natural hedge against ECB rate normalization
o Group deposits in 2Q24 reverse 1Q24 adverse seasonality, with balances ending up nearly flat ytd, up by a solid +€1.4b yoy
o 1H24 net cash at €9.1b, despite the large disbursements, provides solid NII support and comprises NBG’s unique comparative advantage
o Moody’s upgrades NBG’s Bank rating by 2 notches to BBB, one notch above IG, highlighting our B/S strength and solid recurring profitability
• Group NPE ratio at 3.3% in 2Q24, net NPEs at €0.2b
o Group NPE stock at €1.2b in 2Q24; NPE coverage at 86%, with Stage 2 coverage at 8% and Stage 3 coverage at 50%
o 1H24 favorable asset quality trends drive a revision to our FY24 CoR guidance to <60bps from <65bps before
• CET13 at 18.3%, total capital ratio3 at 20.9%
o CET1 ratio3 increased by +c50bps ytd to 18.3% in 1H24, including a dividend accrual of c0.5% for a 40% payout in 2025 out of 2024 profits, reflecting strong profitability; Total Capital ratio3 at 20.9%, up by +c70bps ytd
o MREL ratio3 at 25.9%, exceeding the Jan25 requirement of 25.3%
• Our Transformation Program supports the delivery of sustainable results
o We focus on increasing sales capacity, cross-selling and service quality both in Corporate (new centralized middle-office & innovative offerings) and in Retail (enhanced service model for high-potential individual customers, new fee-generating products and embedded banking offerings)
o Our efforts on digital business keep delivering impressive results, with digital active users reaching the 3.0m mark in 2Q24 (market shares mobile: 31%, internet: 26%) and cumulative digital sales 1.4m units ytd (market shares cards: 41%, consumer: 33%, insurance: 45%)
o We continue to invest in upgrading our technology infrastructure (CBS replacement, introduction of paperless and GenAI capabilities) and in building an efficient operating model (simplification and optimization of key centralized processes)
o We further embed Climate & Environment considerations into our business strategy (new offerings for the renewables energy market and home energy upgrades), processes (EU taxonomy and Sustainable Finance operationalization), and reporting (financed and non-financed emissions measurements and progress towards meeting our net-zero targets)
“The second quarter was positive on many fronts. The Greek economy gathered pace during the period on the back of improved business and labor market conditions and the strengthening in fixed capital investment. Moreover, forward-looking indicators point to a continued strength in activity. Fiscal credibility and the ongoing risk-re-rating of Greek assets provide a further cushion to exogenous risks.
In this supportive macroeconomic backdrop, we delivered another strong P&L performance in 1H24. Indeed, 1H24 core PAT increased by +27% yoy to €646m, translating into a core RoTE of 17.4%. The positive momentum in core operating profitability reflects NII resilience to lower market rates, and strong fee income growth arising from accelerating activity. It also reflects prudent cost management and gradually normalizing credit risk charges on the back of insignificant organic NPE flows. These solid results lead us to revise upwards our 2024-2026 guidance.
Our strong profitability further enhanced our sector high capital buffers, leading CET1 and Total Capital ratios c50bps and c70bps higher ytd to 18.3% and 20.9%, respectively. The excess capital provides us with significant strategic flexibility, including with regards to returning capital to shareholders. As a first sign of that intention, following our return to dividend distributions, paying out 30% of FY23 net profit, we currently accrue 40% of this year’s earnings and aspire to increase distributions meaningfully in the years ahead.
The distinct strengths of our balance sheet continue to stand out. Loan disbursements picked-up sharply to a multi-year high of €2.8b in 2Q24. Moreover, 1H24 excess liquidity increased by €1.1b ytd to €9.1b, providing solid support to our NII and further enhancing NBG’s unique liquidity advantage.
Looking ahead, our strategic focus on technologized and digital excellence will enable us to support the Greek economy's growth trajectory, empowering our customers' ambitions and customer experience and provide them with innovative financial solutions. With the trust and dedication of our people, who are the backbone of our organization, we will continue to deliver value to our shareholders while fostering a culture of excellence and customer-centricity.”
Pavlos Mylonas
Chief Executive Officer, NBG