PIRAEUS BANK GROUP July 2018
TABLE OF CONTENTS 01 EXECUTIVE SUMMARY 02 ASSET QUALITY 03 CAPITAL 04 LIQUIDITY & FUNDING 05 2018 EU WIDE STRESS TEST OUTCOME 06 APPENDIX
01 . EXECUTIVE SUMMARY
01 4 | EXECUTIVE SUMMARY
01 1.1 NOTABLE FACTS ABOUT GREECE Greece is ranked 6th according to GDP per Capita (in PPP international US dollars) compared with 62 economies with 1 non-investment grade rating in 2017 2 Greece is ranked 20th in terms of its Current Account compared with 62 economies with non-investment grade rating in 2017. Taking into account that it has no control over its currency, the ranking should be adjusted further upwards 3 The fiscal situation is strengthening. Greece is ranked 4th in terms of budget balance across 62 economies with non- investment grade rating in 2017 Largest historically bailout progamme. Through the three adjustment progammes, € 289bn have been disbursed 4 (including the pending last trance of € 15bn from ESM, based on the decisions of the 21 June 2018 Eurogroup) 5 Official sector holds 83% of Greece’s public debt Greece is the 10th largest global tourism destination among OECD countries. Greece’s tourist arrivals per population 6 ranks 5th among EU countries. Greece reached the 24th position in the global rankings of the Travel and Tourism Competitiveness Index 2017 Greek merchandise shipping holds the 1st position globally representing 20% of total world dwt and 49% of the total EU 7 fleet. The Greek-flagged fleet ranks 7th internationally and 2nd in the EU (in terms of dwt). Greek shipowners control 29% of the world crude oil tankers’ fleet, 22% of the world dry bulk carriers’ fleet and 16% of the world chemical and products tankers’ fleet Graduation rates are high. Greece has high tertiary enrolment and upper secondary graduation rates compared to other 8 OECD countries 5 | EXECUTIVE SUMMARY
01 1.2 IMPROVING OUTLOOK FOR THE GREEK ECONOMY Real GDP Returns to Growth Trajectory (2017: +1.4%, Q1.18: +2.3%) Real Estate Prices Stabilizing (House Prices Q1.18: -0.2%) 3.0 2.3 2.1 QoQ % change YoY % change House Price Index yoy % Commercial Price index yoy % 2 2.0 -0.7 0 -0.6 1.0 -2 -4 0.0 -6 -1.0 -8 -10 -2.0 2018- -12 2019 -3.0 outlook -14 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Η1.09 Η2.09 Η1.10 Η2.10 Η1.11 Η2.11 Η1.12 Η2.12 Η1.13 Η2.13 Η1.14 Η2.14 Η1.15 Η2.15 Η1.16 Η2.16 Η1.17 Η2.17 Unemployment Rate Fallen Significantly (2017: 21.5%) Economic Sentiment Indicator (ESI) & Manufacturing PMI Point to Improving GDP Dynamics 30 Unemployment Rate Economic Sentiment Indicator (left axis) PMI Manufacturing (right axis) 115 60 25 110 19.7 55 18.0 20 105 50 100 15 95 45 10 90 40 85 2018- 5 2019 35 80 outlook 0 75 30 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q2.04 Q2.05 Q2.06 Q2.07 Q2.08 Q2.09 Q2.10 Q2.11 Q2.12 Q2.13 Q2.14 Q2.15 Q2.16 Q2.17 Q2.18 Sources: ELSTAT, BoG, Bloomberg, Piraeus Bank Economic Research 6 | EXECUTIVE SUMMARY
01 1.3 GREEK BANKING | KEY CHARACTERISTICS 1 All four Greek systemic banks under SSM supervision as of Nov.2014 2 High concentration: the 4 systemic banks command ~95% of the market Capital controls since mid-2015: still in place, though significantly relaxed 3 4 Large amount of Greek wealth held outside the country 5 High level of banknotes in circulation: c.20% as % of GDP vs. c.9% for Euroarea average 6 Greek Sovereign exposure cap imposed by the SSM to Greek banks in early 2015 7 Improving access to interbank and capital markets for the Greek financial sector since mid 2017 8 Restructuring Plan with DG Comp: legally binding commitments post recapitalizations of 2013,2015 9 NPE operational targets until 2019 committed to SSM as of mid 2016 10 HFSF | Relationship Framework Agreement with banks 11 Enhanced corporate governance framework | international expertise in bank BoDs 7 | EXECUTIVE SUMMARY
01 1.4 PIRAEUS BANK BOARD OF DIRECTORS Chairman Independent Non Executive Members George Handjinicolaou Karel De Boeck Non Executive Chairman Vice Chairman Chair of the Strategy Committee Chair of the Risk Management Committee, Member of the Audit Committee, Strategy Committee • Former Deputy CEO of ISDA where he served since 2011, Senior Management positions in Dresdner Former CEO at Dexia and Fortis Group, Former Vice Chair of ABN AMRO Bank and Holding NV Kleinwort Benson, Bank of America Merrill Lynch and UBS in London and New York Executive Members Arne Berggren Christos Megalou Chair of the Remuneration Committee, Chair of the Nominations Committee, Managing Director (CEO) Member of the Strategy Committee and of the Risk Management Committee Chair of the Executive Committee • Former Senior Advisor to IMF, banks and organizations Former CEO of Eurobank Ergasias SA, Vice-Chairman of Southern Europe of Credit Suisse Investment Banking, Distinguished Fellow (Global Federation of Competitiveness Councils) George Georgakopoulos EnricoTommasoCucchiani Executive General Manager, Piraeus Legacy Unit Member of the: Audit Committee, Board Members’ Nominations Committee, Remuneration Member of the Executive Committee Committee, Strategy Committee Former CEO of Eurobank Romania (BancPost), former CEO of 4Finance • Former CEO of Intesa San Paolo, CEO of Think Global Investments, Management Board of Allianz Non Executive Members Solomon Berahas David Hexter Member of the: Risk Management Committee, Audit Committee, Board Members’ Nomination Chair of the Audit Committee, Member of the: Risk Management Committee, Board Members’ Committee, Remuneration Committee Nominations Committee, Remuneration Committee, Strategy Committee CEO of Tiresias SA, Group Risk Director at Eurobank • Chair and Board member of banks, commercial institutions (EBRD, Citi, Supervisory Board member Zachodny Bank) Alexander Blades Member of the: Risk Management Committee, Remuneration Committee, Board Members’ Nomination Committee, Strategy Committee Venetia Kontogouris Partner at Paulson & Co. Inc • Founder and Managing Director of Venkon Group, LLC Per Anders Fasth • Family operated business with PE investments, VC investment in hi-tech • Real Estate portfolio consisting of commercial and residential development HFSF Representative, Member of the: Risk Management Committee, Audit Committee, Board Members’ Nomination Committee, Remuneration Committee, Strategy Committee • Former CEO of SBAB Bank and Senior Executive of SEB • Non Executive Board member of Scandinavian banks / financial institutions 8 | EXECUTIVE SUMMARY
01 1.5 PIRAEUS BANK SHAREHOLDER STRUCTURE Piraeus Shareholder Structure (Mar.2018) Shareholder structure of Piraeus Bank presents great Individuals diversity; total number of common shareholders 30k 5% The Hellenic Financial Stability Fund holds 26% of HFSF outstanding common shares 26% The remaining 74% is held by the private sector; 68% by legal entities and 6% individuals Strong international presence with significant part of free float held by foreign institutional investors Institutional Investors & Legal Entities Common Shares 69% Private sector 322 mn HFSF 115 mn Total 437 mn 9 | EXECUTIVE SUMMARY
01 1.6 PIRAEUS BANK STRENGTHS AND GOALS STRENGTHS GOALS market leader in loans and deposits reduce NPLs and NPEs to a normalised level sound capital and liquidity position maintain a strong capital base strong reinvigorated management team re-establish wholesale market funding access delivering on our transformation strategy create a profitable and sustainable business model 10 | EXECUTIVE SUMMARY
01 1.7 PIRAEUS AT A GLANCE #1 #1 €6 3.6bn in loans in deposits ❶ Assets 571 12.5k € 41.4bn ❷ Net Loans branches headcount 5.2mn € 43.1bn >1.9mn ❸ Deposits customers e-banking users ❹ 14.4% CET-1 ratio [phased-in] 11 years >515k mobile banking average length of 96% ❺ Loans-to-Deposits ratio customer relationships users * data for Group operations in Mar.18 * data for domestic operations in Jun.18 11 | EXECUTIVE SUMMARY
01 1.8 PIRAEUS BANK LEADING POSITION IN GREECE Gross Loans - Greece Customer Deposits - Greece Greek Branch Network 35% business 30% 29% 597 26% 27% 482 21% 21% 486 21% 19% 355 55 2% 1% Source: Bank of Greece for Greek market data and financial information for banks, as of Mar.18 (Attica Β ank as of Dec.17) 12 | EXECUTIVE SUMMARY
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