Bank Of Greece Sa · ATHEX:TELL
Bank Of Greece Sa — Investor Presentation (March 2016)
27 slides from Bank Of Greece Sa's investor presentation, March 2016
Slide 1: Restructuring, Reallocation and Economic Growth in Greece
Restructuring, Reallocation and Economic Growth in Greece Plutarchos Sakellaris Athens University of Economics and Business March 2016
Slide 2: Real GDP growth in crisis (from peak to first recovery year)
Real GDP growth in crisis (from peak to first recovery year) 0% -5% -10% -15% -20% -25% -30% USA 1929- Greece Latvia Argentina Germany Indonesia Thailand Iceland Mexico Korea 1998 Turkey Russia 1933 2008-2015 2008-2010 1998-2002 1928-1932 1998 1998 2008-2010 1995 2001 1998 Source: IMF, Angus Maddiso
Slide 3: GDP per Capita
GDP per Capita a 25,000 20,000 15,000 10,000 5,000 0 1950 1960 1970 1980 1990 2000 2010 2020 Source: Leounakis, N. and Sakellaris, P. “Greek Economic Growth since 1960”, Athens University of Economics and Business, Working Paper Series 16-2014 a. Great Expansion (1960 – 1973), Long Stagnation (1974
Slide 4: GDP per Capita (1974=100)
GDP per Capita (1974=100) a 250 200 150 100 50 0 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Greece USA Source: The Conference Board:
Slide 5: GDP Growth Decomposition
150% GDP Growth Decomposition 100% 76% 95% 46% 50% 35% 32% 26% 19% 0% -7% 4% -21% -46% -50% -58% -100% -150% 1961-1973 1974-1993 1994-2007 2008-2014 Great Expansion Long Stagnation Recovery Great Depression Labor input Capital Input TFP Source: Leounakis, N. and Sakellaris, P. “Greek Economic Growth
Slide 6: What determines productivity growth?
What determines productivity growth?
Slide 7: What determines productivity growth?
What determines productivity growth? • Technical improvement - new technology, methods and equipment, new products and services • Resource reallocation - entry and exit of firms, contraction of less productive firms and expansion of more productive firms
Slide 8: Firm-level evidence
Firm-level evidence • Scant evidence • Better institutions => Greater contribution of resource reallocation • US manufacturing (1977 – 1996): 90% ! Petrin et al., 2011 • Greek manufacturing (1999 – 2010) : Very Low ! Fakos – Sakellaris (2016 – preliminary)
Slide 9: Banks play a role in productivity growth
Banks play a role in productivity growth Credit is essential for production, investment, technology adoption, innovation
Slide 10: Back to the present
Back to the present
Slide 11: NPEs in the Eurozone
NPEs in the Eurozone Post-AQR NPE ratio Pre-AQR NPE ratio 70 60 50 40 30 20 10 0 CY GR IE SI PT IT MT ES AT LT LV BE DE EE SK FR LU NL FI Source: ECB Financial Stability Review May 2015, based on end-2013 AQR data.
Slide 12: The Evolution of NPLs in Greece
The Evolution of NPLs in Greece a 70 60 50 40 Total Consumer 30 Mortgage Business 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 Source: Bank of Greece a. % of amounts outstanding
Slide 13: Business NPEs (2015)
Business NPEs (2015) a 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Incidence of Business NPE's by Sector Provisions Coverage for NPE's by Sector Source: Bank of Greece a. Sectors sorted by Incidence of Business NPE’s
Slide 14: NPE and Coverage Ratios for Business Loans (2015)
NPE and Coverage Ratios for Business Loans (2015) a 80% 70% 60% 50% 40% 30% 20% 10% 0% Total SBPs SMEs CRE & Project Corporate Shipping Financial Companies Finance Non-Performing Exposure (NPE) Ratio (%) Provision Coverage Ratio (Total Impairement/NPEs) Source: Bank of Greece a. Sectors sorted by NP
Slide 15: Collateralization Ratio (2015)
Collateralization Ratio (2015) a 70,000,000 70% 60,000,000 60% 50,000,000 50% 40,000,000 40% € thousand NPE's Collateral on NPE's 30,000,000 30% Collateralization Ratio 20,000,000 20% 10,000,000 10% - 0% Total SMEs Corporate SBPs Financial CRE & Project Shipping Companies Finance Source: Bank of Gre
Slide 16: How do NPLs hurt growth?
How do NPLs hurt growth? Supply of credit: • Banks more risk-averse • Trapped liquidity in unproductive uses Demand for credit: • Debt overhang: Businesses that are over-indebted but with good prospects for revenue growth do not have incentive to expand capital and employment.
Slide 17: A Strategy for Resolving Europe's Problem Loans (IMF)
Source: “A Strategy for Resolving Europe’s Problem Loans”, Technical Background Notes, IMF, September 2015
Slide 18: PWC "Stars and Zombies" study
PWC “Stars and Zombies” study 2015
Slide 19: Stars and Zombies - PWC Executive Summary
Source: “Stars and Zombies - Greek corporates coming out of the crisis ”, PWC Executive Summary, September 2015
Slide 20: Stars and Zombies - PWC Executive Summary
Source: “Stars and Zombies - Greek corporates coming out of the crisis ”, PWC Executive Summary, September 2015
Slide 21: Stars and Zombies - PWC Executive Summary
Source: “Stars and Zombies - Greek corporates coming out of the crisis ”, PWC Executive Summary, September 2015
Slide 22: Stars and Zombies - PWC Executive Summary
Source: “Stars and Zombies - Greek corporates coming out of the crisis ”, PWC Executive Summary, September 2015
Slide 23: Stars and Zombies - PWC Executive Summary
Source: “Stars and Zombies - Greek corporates coming out of the crisis ”, PWC Executive Summary, September 2015
Slide 24: Institutional Requirements for NPL Resolution
Institutional Requirements for NPL Resolution • Active and efficient servicing • Insolvency Procedures: Determining viability of borrowers • Efficiency of judicial systems / Faster foreclosure of collateral • Market for loans / Attracting investors • Appropriate tax incentives to banks for quick res
Slide 25: Financial restructuring will need new management practices
Financial restructuring will need to be accompanied by new management practices
Slide 26: Back to the future
Back to the future • Macroeconomic stabilization • Structural reform: product and labor markets, institutions • Business Debt restructuring and new management practices • Restart of lending by banks – Focus on productive businesses NPL management
Slide 27: GDP per Capita Projection
GDP per Capita Projection 35,000 30,000 25,000 20,000 15,000 10,000 5,000 - 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Great Recovery No Crisis Source: Οwn ca