National Bank Of Greece S.a. · ATHEX:ETE
National Bank Of Greece — Debt Investor Presentation (September 2020)
62 slides from National Bank Of Greece's debt investor presentation, September 2020
Slide 1: Fixed Income Presentation: Green Bond Framework and Credit Update
Fixed Income Presentation Green Bond Framework and Credit Update September 2020
Slide 2: Disclaimer
Disclaimer Not an Offer to Sale The information contained herein is not and must not be construed to be an offer to sale or to purchase or an invitation or any type of solicitation or a recommendation or an advice to invest in any way on the shares or any other security issued or to be issued by the
Slide 3: Table of Contents
Table of Contents 01 Macro 02 Bank Overview 03 Green Bond Framework 04 Profitability & Balance Sheet Evolution 05 Asset quality 06 Capital, MREL, Liquidity & Funding 07 Appendix 2
Slide 4: Macro
NATIONAL BANK 01} Macro
Slide 5: Maximum impact of the Covid19 shock felt in 2Q20
01 Macro The maximum impact of the Covid19 shock has been felt in 2Q20, especially by the business sector Gross value added, gross operating surplus and mixed income Composition of GDP growth by expenditure component & compensation of employees 9 y-o-y contributions 9 12 y-o-y 12 6 in pps 6 9 9 3 3
Slide 6: High frequency indicators rebounded in July-August
01 Macro High frequency indicators rebounded in July-August, especially on the production and retail side; tourism activity remains suppressed but also picked up slightly Retail trade & manufacturing production PMI & sectoral confidence indicators 15 y-o-y 15 60 40 10 10 5 5 50 0 0 0 -5 -5 40 -40 -1
Slide 7: Fiscal reaction cushions the shock
01 Macro Fiscal reaction cushions the shock, assisted by monetary stimulus and countercyclical credit expansion EU Recovery and Resilience Fund will speed up the curing process and economic transformation Bank lending growth (y-o-y) & corporate credit expansion State budget revenue, expenditure & pr
Slide 8: Bank Overview
02 Bank Overview 7
Slide 9: NBG at a glance
02 Bank Overview NBG at a glance Trusted brand 1H20 PAT at €465m¹ Balance sheet metrics with more than (+90%yoy) continue to improve 100 years of history Branches 388 1H PAT 465mn LCR 216% FTEs 9,1k NIM3 216bps NSFR 116% Total assets 74,1bn C:I 60% L:D 65% NPE Coverage 57,2%/ Gross Loans 34,7bn CoR2
Slide 10: Group and Shareholder Structure
02 Bank Overview Group and Shareholder Structure Group Structure (material subsidiaries) Shareholder Structure Domestic institutional 5,8% Domestic retail 7,7% Hellenic Financial Stability Fund; 40,4% International institutional; 46,1% Ethniki Insurance and NBG Cyprus have been reclassified as non-c
Slide 11: The Bank's Transformation Plan aims to deliver value for its investors
02 Bank Overview The Bank’s Transformation Plan aims to deliver value for its investors Sustained improvement across financial metrics Profitability1 Asset Quality, Capital & Liquidity1 2018 2019 H1 2020 2018 2019 H1 2020 Net Interest 272bps 268bps 216bps NPE Coverage 59.2% 53.4% 57.2% Margin Fees /
Slide 12: NBG credit positioning vs. domestic peers across various metrics
02 Bank Overview NBG credit positioning vs. domestic peers across various metrics1 Liquidity & Capital NPE Ratio & Coverage Gross & Net NPEs Gross L:D 65% 83% 98% 82% NPE cash 45% 43% NPEs 10,3 23,0 18,3 5,6 57% 62% coverage (bn) LCR 216% 169% 113% Not Not Not disclosed NSFR >100% disclosed disclose
Slide 13: A history of climate action leadership
02 Bank Overview A history of climate action leadership ISS Corporate Solutions NBG receives certificates for Ranked Category adhering to 5 act4Greece 1 “Highest Rating €507m Standards related to Carbon Footprint CSR report by Institutional Compliance and crowdfunding Shareholder Renewable Energy Go
Slide 14: The Bank has responded to the COVID-19 crisis swiftly and efficiently
02 Bank Overview The Bank has responded to the COVID-19 crisis swiftly and efficiently Safety and resilience Support to corporates & Acceleration of digital of operations households transformation • Health and safety of our • Payment moratoria extended to • Digital subscribers reach 2.7m in employee
Slide 15: We actively support our customers through this unprecedented crisis
02 Bank Overview We actively support our customers through this unprecedented crisis Loan payment moratoria has been met with moderate demand while government & EU support schemes will boost future loan growth Loan Payment Moratoria Government Support Schemes EIB Group Support Schemes Approved appli
Slide 16: Signs of recovery appear post the lockdown
02 Bank Overview Signs of recovery appear post the lockdown Continuing step-by-step improvement of economic activity 1 • GDP decline in 2Q of historical proportions (-15.2% y-o-y) in line with the euro area average Activity edges up in • Sharp drop in business turnover by 25% in 2Q but with clear si
Slide 17: Exchange of part of GGB holdings produced one-off P&L impact
02 Bank Overview The exchange of part of our GGB holdings produced a one-off P&L impact of €515mn The positive P&L impact supported the frontloading of Covid19 related provisions in Q12020 February 2019 Exchange Impact January 2020 Exchange Impact • Net Interest Income 110mn • One of P&L impact 515m
Slide 18: Domestic personnel and G&A costs reduced by c20% in 2 years
02 Bank Overview Domestic personnel and G&A costs have been reduced by c20% in 2 years Additional efficiency enhancement programs are rolled out in line with the Bank’s transformation plan Personnel & G&As costs (€m) | Domestic Headcount & branches | Domestic HR cost -15% Branches (#) FTEs (#) 268 2
Slide 19: Subsidiary disposals expected to be completed in 2021
02 Bank Overview Subsidiary disposals are expected to be completed in 2021 The Bank is exploring all options for the disposal of NBG Insurance Completed In progress NBG Cyprus NBG Insurance NBG Pangea BROM NBG Egypt Completion of Completion of Divestment from Divestment from Divestment from divestme
Slide 20: Solid track-record of NPE disposals
02 Bank Overview Solid track-record of NPE disposals NPE reduction efforts will peak with the completion of Project Frontier Purchaser Servicer Completed: Total c.€4.5bn Signed: €1.6bn In progress: c.€6.5bn Project Earth: €2.0b Project Symbol: €0.9b Project Icon: €1.6b Consumer / Credit Cards, SBL S
Slide 21: Project Frontier is a decisive step towards cleaning up the balance sheet
02 Bank Overview Project Frontier is a decisive step towards cleaning up the balance sheet A single securitization transaction to dispose c60% of our current NPE stock Key steps completed ✓ Data remediation completed c€6b of Gross Book Value ✓ Initial Business Plan completed ✓ Real Estate revaluatio
Slide 22: Green Bond Framework
03 | Green Bond Framework 21
Slide 23: NBG's Sustainability Awards and Distinctions
03 Green Bond Framework NBG’s Sustainability Awards and Distinctions Capital Finance International Hellenic Responsible Business Award` ‘Best Corporate Governance Greece 2018’ NBG Corporate Governance Framework awarded Silver Award among Private ‘Best Corporate Governance Greece 2017’ Enterprises Se
Slide 24: NBG's sustainability strategy
03 Green Bond Framework NBG’s sustainability strategy Objectives The Environment The Community The Cultural Heritage • Responsible towards the environment and • Concern for vulnerable social groups • Actions to protect the Greek cultural the implementation of a well-aimed heritage Environmental Poli
Slide 25: NBG's sustainability performance indicators and ratings
03 Green Bond Framework NBG’s sustainability performance indicators and ratings Environmental Products Offered: • Approval for participation in financing of Renewable Energy Sources (RES) investments EUR 507 million (2019) • Green Banking Portfolio EUR 40.42 40.42 customers million(2019) (2019) NBG’
Slide 26: NBG is the leading Greek provider of renewable energy financings
03 Green Bond Framework NBG is the leading Greek provider of renewable energy financings The Bank expects to increase its exposures to Renewable energy portfolios Renewable energy (RE) portfolio evolution Renewable energy (RE) portfolio breakdown by type w.a. remaining 8,6y 8,8y 9,4y 10y maturity bi
Slide 27: Green Bonds issuance: Rationale
03 Green Bond Framework Green Bonds issuance: Rationale Collaborate to address the climate change challenge Facilitate private investment in the renewable space Demonstrate our commitment to support the transition to a lower carbon economy Support Greece’s Green Agenda, for a transition to a lignite
Slide 28: Green Bond Framework: Use of Proceeds
03 Green Bond Framework Green Bond Framework: Use of Proceeds Use of Project Management External Reporting proceeds selection of proceeds review 1 2 3 Investments in: Eligible categories: Contribution to the UN Sustainable • Onshore Wind Energy development Goals: ✓Equipment • Solar Thermal Energy ✓C
Slide 29: Green Bond Framework: Project Evaluation and Selection
03 Green Bond Framework Green Bond Framework: Project Evaluation and Selection Use of Project Management External Reporting proceeds selection of proceeds review Steering Group The Green Bonds Committee will be responsible for: – Reviewing and validating the selection of Eligible Assets based on the
Slide 30: Green Bond Framework: Management of proceeds
03 Green Bond Framework Green Bond Framework: Management of proceeds Use of Project Management External Reporting proceeds selection of proceeds review 1 2 As long as the Green Bond(s) are outstanding, it is Net proceeds of the Green Bond(s) will be managed by intended to exclusively allocate an amo
Slide 31: Green Bond Framework: Reporting
03 Green Bond Framework Green Bond Framework: Reporting Use of Project Management External Reporting proceeds selection of proceeds review 1 Allocation of proceeds reporting ✓Total amount of proceeds allocated to Eligible Assets ✓Total amounts allocated by category ✓Amount and / or percentage of new
Slide 32: Green Bond Framework: External review
03 Green Bond Framework Green Bond Framework: External review Use of Project Management External Reporting proceeds selection of proceeds review Use of Proceeds • Aligned with those recognized by the Green Bond Principles 2018 Project Evaluation / Selection • Aligned with market practice Management
Slide 33: Profitability & Balance Sheet Evolution
04 Profitability & Balance Sheet Evolution 32
Slide 34: Group operating result up +25% qoq
04 Profitability & Balance Sheet Evolution Group operating result up +25% qoq Despite COVID-19 pressure and deteriorating economic environment Group operating result bridge 1H20 (€ m) Group operating profit decomposition 2Q20 (bps) Excl. €10m of 2Q Excl: trading one-off Reported Covid19 provisions &
Slide 35: Domestic NII pressure abates in 2Q20
04 Profitability & Balance Sheet Evolution Domestic NII pressure abates in 2Q20 (-1% qoq) Funding cost savings offset lending NII drop due to lower lending rates Domestic NII breakdown (€ m) Domestic NIM & CoR (bps); Risk adj NII (€ m) 287 281 278 Total 293 284 271 262 259 256 238 276 NIM¹ ex. cash
Slide 36: The lockdown put pressure on fees
04 Profitability & Balance Sheet Evolution The lockdown put pressure on fees (-14% qoq) 1H fees still up 4% yoy Domestic fees (€ m) Domestic retail fees decomposition (€ m) YoY 40bps 32bps 37bps 36bps Fees/Assets1 68 +15% -10% qoq, incorporating the 59 YoY maximum Intermediation & Covid19 impact 21
Slide 37: Cost reduction accelerates in 2Q20
04 Profitability & Balance Sheet Evolution Cost reduction accelerates in 2Q20 1H20 personnel and G&A expenses lower by 9.2% and 6.1% yoy Group OpEx by category (€ m) Domestic Branch evolution (#) Domestic Group 528 527 1H20 1H19 yoy 1H20 1H19 yoy 510 -73 branches 486 Personnel 228 251 -9% 241 264 -9
Slide 38: Loan disbursements reach €2.8b ytd
04 Profitability & Balance Sheet Evolution Loan disbursements reach €2.8b ytd Solid pipeline of >€2b in 2H20 Greek loan evolution; performing loans1 (€ b) Corporate Portfolio2 Concentration Primary Sector 1% 28.6 27.8 27.9 27.6 27.6 Net loans1 Transport & Logistics 5% Real Estate 8% Hotels, Leisure
Slide 39: Repricing of time deposits provides support to domestic NII
04 Profitability & Balance Sheet Evolution Repricing of time deposits provides support to domestic NII Private deposit momentum maintained; savings deposits market share reaches c.36% Greek deposit yields (bps) Greek deposits evolution (€ b) 80 79 New 71% 76% Core deposits/total 64 production 52 at
Slide 40: Asset quality
NATIONAL BANK 05 | Asset quality 39
Slide 41: The Bank has decreased its stock of NPEs by ~€11.7bn since 2015
05 Asset Quality The Bank has decreased its stock of NPEs by ~€11,7bn since 2015 The reduction in 2020 so far is purely organic with limited NPE inflows -€11,7b NPE 49,0% Ratio 44,9% 43,9% 40,9% 2,8 1,5 32,2% 31,8% 2,1 30,9% NPEs (€bn) 22,0 4,8 19,2 0,2 0,3 17,7 15,6 10,8 10,6 10,3 FY 2015 FY 2016 F
Slide 42: NPE inflows reduce sharply in 2Q20 despite uncertainty
05 Asset Quality NPE inflows reduce sharply in 2Q20 despite uncertainty Payment moratoria and government subsidies schemes support negative NPE formation Domestic NPE stock per category – 2Q20 (€ b) NPE balance change (€ m, Bank) 6,1 FNPE & other impaired 1,6 NPE inflows 395 332 254 289 140 Curings
Slide 43: NPE coverage at 57.2%
05 Asset Quality NPE coverage at 57,2% High NPL coverage provides flexibility for future disposals Domestic 90dpd ratios and coverage | 2Q20 Domestic 90dpd – NPE bridge (€ b) | 2Q20 Collateral 72% 23% 67% 63% 66% coverage1 43% 0,3 10,3 2,6 0,3 90dpd 32% 106% 24% 7,1 ratio 21,4% 20,9% 118% 9% 90dpd 5
Slide 44: Exposure to Stage 3 loans keeps coming down via organic means
05 Asset Quality Exposure to Stage 3 loans keeps coming down via organic means S3 coverage stands at 51.4% at 1H 2020 Group loan staging and evolution (€ b) Group Stage 2 ratios and coverage (%) Group Stage 3 ratios and coverage (%) Δ qoq Stage 3 13,6 10,4 10,9 10,7 -0.3 36,4% o/w: €2.7b FPEs €2.1b
Slide 45: Capital, MREL, Liquidity & Funding
06 Capital, MREL, Liquidity & Funding 44
Slide 46: Reinforced buffers due to organic capital generation and regulatory allowance
06 Capital, MREL, Liquidity & Funding Reinforced buffers due to organic capital generation and regulatory allowance 1H20 CET1 at 15.9% despite frontloading of COVID-19 related provisions Capital Requirements Capital as of 1H 2020 Pre Post Capital CET1 15,9% Relief Measures Relief Measures Tier 2 1,0
Slide 47: NBG's MREL Resources vs. MREL Formula and Ranking
06 Capital, MREL, Liquidity & Funding NBG’s MREL Resources vs. MREL Formula and Ranking 1 NBG has been granted a transition period of up to 31/12/2025 to meet its MREL target 2 Liabilities Ranking Subordination H1 2020 NBG MREL under Greek Legal Regime MREL formula1 requirement 1 Resources3 (as % of
Slide 48: Sound liquidity profile provides strong foundation for creditors
06 Capital, MREL, Liquidity & Funding Sound liquidity profile provides strong foundation for creditors LCR & NSFR well above regulatory thresholds Loans to Deposits Liquidity Coverage Ratio (Bank, %) (Bank, %) 80% 216% 200% 75% 160% 70% 120% 80% 65% 65% 40% 60% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2
Slide 49: Optimization of funding profile has eliminated interbank exposures
06 Capital, MREL, Liquidity & Funding Optimization of the funding profile has eliminated interbank exposures Liquidity position boosted by take-up of TLTRO III Eurosystem funding ECB Available collateral (Bank, €b) (Bank, nominal values, €b) ECB ELA 22,8 Pools of Credit Claims GGBs & T-Bills Retaine
Slide 50: Deposit base accounts for 77% of total funding
06 Capital, MREL, Liquidity & Funding Deposit base currently accounts for 77% of total funding Funding cost has reached all time lows Funding Structure (%) Deposits Breakdown (%) 3% 6% 2% Current & Sight Deposits Individuals Time Deposits 18% 16% ECB Corporate 78% 19% 58% Government and agencies Int
Slide 51: Sovereign, bank and debt ratings on upwards trajectory
06 Capital, MREL, Liquidity & Funding Sovereign, bank and debt ratings on upwards trajectory Key drivers that could lead to a rating upgrade of Hellenic Republic: Next scheduled update for the 06/11/2020 - 23/10/2020 sovereign Hellenic Republic B+ BB BB- • Reduced risk of crystallisation of banking
Slide 52: Covered bonds used to reintroduce NBG to the capital markets
06 Capital, MREL, Liquidity & Funding Covered bonds were utilized as the instrument to reintroduce NBG to the capital markets NBG Covered Bond – Key Features Transaction Highlights • On October 2017, NBG completed the first Greek covered bond transaction since 2009, pricing a 3-year 750 million cove
Slide 53: NBG's inaugural Tier2 issuance in 2019 signaled continued market access
06 Capital, MREL, Liquidity & Funding NBG’s inaugural Tier2 issuance in 2019 signaled continued market access Summary Terms Allocations Issuer National Bank of Greece S.A. Issuer Rating Caa1 (Moody’s) / B- (S&P) / CCC+ (Fitch) Geography Investor Type Exp. Issue Rating Caa2 (Moody’s) / CCC (S&P) / CC
Slide 54: Appendix
NATIONAL BANK 07 | Appendix 53
Slide 55: NBG's Transformation Plan designed to support a new operating model
07 Appendix NBG’s Transformation Plan is designed to support a move towards a new operating model • Finalization of Icon transaction despite Covid19 pandemic outbreak • New performance management system agreed with CLEAN-UP AND • Preparation of Frontier securitization for imminent launch Labor Union
Slide 56: Group P&L
07 Appendix Group P&L €m 2Q20 1Q20 QoQ 1H20 YoY NII 273 278 -2% 551 -8% Net Fees & Commissions 57 66 -14% 123 +3% Core Income 330 344 -4% 674 -6% Trading & other income³ 12 774 -98% 786 >100% Income 342 1 118 -69% 1 460 +69% Operating Expenses (199) (208) -4% (406) -1% Core PPI 131 137 -4% 268 -14%
Slide 57: Group Balance Sheet
07 Appendix Group Balance Sheet1 €m 2Q20 1Q20 4Q19 3Q19 2Q19 Cash & Reserves 6,705 5,650 3,519 2,975 1,859 Interbank placements 3,562 3,794 3,008 3,333 3,085 Securities 15,276 11,586 9,408 9,051 10,209 Loans (Gross) 34,755 34,917 34,983 35,372 37,228 Provisions (Stock) (5,864) (5,961) (5,761) (6,354
Slide 58: Regional P&L: Greece & Other International
07 Appendix Regional P&L: Greece & Other International Greece International¹ €m 2Q20 1Q20 4Q19 3Q19 2Q19 €m 2Q20 1Q20 4Q19 3Q19 2Q19 NII 259 262 272 284 293 NII 14 16 17 17 16 Net fees & commissions 54 63 68 60 58 Net fees & commissions 3 3 3 4 4 Core Income 313 325 340 344 351 Core Income 16 19 20
Slide 59: ESMA Alternative Performance Measures (APMs), definitions
07 Appendix ESMA Alternative Performance Measures (APMs), definition of financial data and ratios used This presentation contains financial information and measures as derived from the Group and the Bank financial statements for the period ended 30 June 2020 and for the year ended 31 December 2019,
Slide 60: Definition of financial data, ratios used and APMs (continued)
07 Appendix Definition of financial data, ratios used and APMs (continued) Name Abbreviation Definition Balance Sheet B/S Statement of financial position Third covered bond CBPP3 ECB Covered Bond Purchase Programme purchase programme Common Equity Tier 1 CET1 ratio CET1 capital as defined by Regulat
Slide 61: Definition of financial data, ratios used and APMs (continued)
07 Appendix Definition of financial data, ratios used and APMs (continued) Net interest income over average interest earning assets. Net Interest Margin equals net interest income divided by the average of interest earning assets Net Interest Margin NIM (the average of interest earning assets at the
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