Piraeus Bank’s Strong 2024 Earnings and Strategic Growth

Piraeus Bank Sa ((BPIRY)) has held its Q4 earnings call. Read on for the main highlights of the call.

Piraeus Financial Holdings recently held its earnings call, revealing a strong financial performance for 2024. The company showcased significant earnings growth, an expanding loan book, and improved asset quality. Despite these achievements, challenges with foreclosed assets and cost management persist. The overall sentiment was optimistic, driven by strategic initiatives and a robust capital position.

Record Earnings and Dividend Increase

Piraeus Financial Holdings reported record earnings of €1.1 billion for 2024, marking a 36% increase year-on-year and surpassing their initial budget. The company announced a cash dividend of €0.30 per share, a substantial rise from the previous year’s €0.06 per share, reflecting its strong financial health.

Loan Book Expansion

The bank’s performance loan book expanded by €3.6 billion, or 12% year-on-year, reaching a total of €33.7 billion. This growth exceeded the initial target set for 2024, highlighting the bank’s successful lending strategies and market penetration.

Asset Management Growth

Assets under management saw a significant increase of 23%, reaching €11.4 billion. This growth was primarily driven by mutual funds, indicating strong investor confidence and effective asset management strategies.

Improved Asset Quality

Piraeus Financial Holdings achieved a reduction in its NPE ratio to 2.6%, with a stable cost of risk at 21 basis points, excluding servicing fees. This improvement underscores the bank’s effective risk management and asset quality enhancement efforts.

Strong Capital Ratios

The bank’s CET1 ratio increased by 135 basis points to 14.7%, with a total capital ratio of 19.9% and an MREL ratio at 29.2%. These strong capital ratios provide a solid foundation for future growth and financial stability.

Digital and Strategic Initiatives

Piraeus Financial Holdings is advancing its digital transformation with successful rebranding efforts and the planned launch of a digital bank, Snappi, expected by mid-2025. These initiatives are set to enhance customer experience and operational efficiency.

Foreclosed Assets Challenges

The bank faces challenges with its foreclosed assets portfolio, which requires provisioning efforts to reduce the balance to €1.5 billion. However, organic sales are anticipated to take time to align with European averages.

Cost Management Concerns

Recurring staff costs increased by 3.5%, and total recurring expenses grew by 3.8%, influenced by inflation and variable compensation. These factors pose challenges to maintaining cost efficiency.

Potential Impact of Government Measures

Government-imposed measures are expected to impact fees by approximately €30 million, along with an additional €25 million one-off related to school subsidies. These measures could affect the bank’s financial performance in the short term.

Forward-Looking Guidance

CEO Christos Megalou provided robust guidance for the full year 2024 and beyond. The company plans to distribute a €0.30 cash dividend per share, representing a 6% yield. Piraeus aims to expand its loan book by €12 billion by 2028 and return 40% of profits to shareholders from 2025 onwards. The NPE ratio is expected to fall below 2% by the end of 2027, with the ECB deposit facility rate stabilizing at 2% from the end of 2025, supporting growth plans.

In conclusion, Piraeus Financial Holdings’ earnings call reflected a positive outlook with strong financial performance and strategic growth initiatives. While challenges remain in cost management and foreclosed assets, the company’s robust capital position and forward-looking strategies offer a promising future.