Piraeus Financial Holdings – Full Year 2021 Financial Results
2021 Key Takeaways
• In twelve months, more than 95% of Sunrise plan has been executed, in absolute discipline with initial expectation
• NPE ratio down to c.12.5% vs c.45% a year ago, on track to c.8% level by end-2022
• Overperformance in annual organic NPE flow by €0.5bn (€1.2bn vs €1.7bn Covid-driven expectation)
• Total capital ratio at 15.9%
• New loan origination of €6.5bn, exceeding €5.7bn target; €1.0bn net credit expansion (disbursements minus repayments) in 2021
• Strong increase in client assets: deposits reached €55.4bn, up €5.8bn yoy, and mutual fund assets at record high of €3.4bn, up €0.9bn yoy
Financial Highlights
• Robust net fee income generation at €394mn, +25% yoy, with solid trends evident in almost all product lines; Q4.21 figure reached historical high level of €116mn
• Further cost containment with recurring operating expenses at €902mn, -4% yoy
• Pre provision income at €1,052mn on a recurring basis, +10% yoy
• Recurring cost-to-income at 46%, compared to 50% a year ago
• Organic cost-of-risk presented sizeable improvement to 53bps in Q4.21, on the back of accelerated derisking
• Recurring pre-tax profit of €665mn, more than double compared to a year ago
• Accounting for the NPE clean-up, reported result stood at -€3.0bn, in line with capital plan projections
Μanagement Statement
“For Piraeus Group, 2021 was a year of complete turnaround, through the execution of its strategic business plan, which drove its NPE ratio to c.12.5% at the end of 2021 from 45% a year ago, and aspires for single-digit NPE ratio within 2022, while maintaining solid capital position and enabling sustainable profitability for the short and medium term.
Our 2021 journey is proof of the commercial strength of our franchise. We continued supporting our clients and disbursed €6.5bn of new loans, ahead of our target of €5.7bn, while at the same time we advised our corporate customers in the raising of approximately €3.0bn in debt and equity capital markets. Our customer assets, namely deposits and mutual funds, increased by €6.8bn, a record high.
Piraeus Group’s 2021 financial performance demonstrated tangible improvement in all areas. Our recurring pre-tax profit reached €665mn, driven by resilient net interest income, despite the drastic NPE clean-up, record net fee income, continued cost discipline and significant improvement in organic loan impairments.
In 2021, the Greek economy posted strong GDP recovery of 8% and set the foundations for sustainable mid-single digit growth as of 2022 and for a number of years forward. The inauguration of projects under the Recovery and Resilience Facility and the implementation of related structural reforms, are expected to safeguard the growth prospects of the economy, even amid the uncertain environment that is evolving post the severe conflict between Russia and Ukraine.
The situation in Ukraine creates risks, affecting – among others – energy and agri prices, resulting in heightened inflationary pressures both in intensity and duration above initial estimates. Second-order effects may exert a negative impact on consumption and business activity. As the situation is still evolving, it is premature to assess the long-term impact to the Greek economy and society. However, as the prerequisites for sustainable growth for the Greek economy have been set, the consequences of the crisis could be mitigated based on relief measures at European level, similar to the ones taken to address the pandemic.
For Piraeus, the solid execution of our business plan to date, and the pragmatic assumptions that it is based on, allow us to be optimistic for the successful accomplishment of our targets, enabling us to support the Greek economy and provide attractive returns to our shareholders. In parallel, we continue contributing towards a cohesive and inclusive society, an objective more important now than ever before”.
Christos Megalou, Chief Executive Officer
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Pollfish Acquired by Prodege
PJ Tech Catalyst Fund, a seed stage technology fund operating out of Athens, Greece and backed by the European Investment Fund and Piraeus Bank announced that its portfolio company Pollfish has been acquired by Prodege, a cutting-edge marketing and consumer insights company based out of El Segundo, California.
Founded in 2013, Pollfish supports the needs of the modern researcher by offering a user-friendly and powerful global DIY platform for end-to-end research from survey creation to lightning-fast results. Aware that many organizations today require a quick turnaround, Pollfish leverages new technologies to improve respondent access, quality, and speed of response.
“We are very excited for the acquisition of Pollfish by Prodege, a leading provider of marketing and consumer insights. Congratulations to team Pollfish for its well-deserved success,” says PJ Tech Catalyst President & CEO, Nikos Antoniou.
“The acquisition of Pollfish is the result of hard work, good execution and persistence of its team. Together with the support of its investors the company has succeeded in growing from a promising tech start-up founded in Greece to a global DIY market research provider, operating from offices in NYC ” comments Vasilis Theoharakis, PJ Tech Catalyst’s representative to Pollfish BoD.
About Prodege, LLCProdege (www.prodege.com) is a cutting-edge marketing and consumer insights platform that leverages its global audience of reward program members to power its business solutions. Bolstered in 2021 by a major investment by Great Hill Partners, a Boston-based private equity firm, the company’s innovative offerings will continue to enable leading brands and agencies to gather insights and market to their target audiences. Through deep consumer profiling, Prodege partners can more effectively acquire new customers, boost engagement, increase revenue, and drive brand loyalty and product adoption.
About PollfishFounded in 2013, Pollfish (www.pollfish.com) allows businesses to connect with millions of customers globally & perform fast and iterative research. By embracing a product-first approach to research, its clients can create, target & analyze data in an all-in-one DIY platform.
About PJ Tech Catalyst FundPJ Tech Catalyst Fund (www.pjtechcatalyst.com). is a seed stage technology fund operating out of Athens Greece. The Fund is backed by the European Investment Fund and Piraeus Bank. Management/investment team of the Fund is Nikos Antoniou, Vasilis Theoharakis, Kostas Mallios, Christos Tsangos and Elena Gyftea.
Piraeus Financial Holdings included In 2022 Bloomberg Gender-Equality Index
Piraeus Financial Holdings announced that it is one of 418 companies across 45 countries and regions to join the 2022 Bloomberg Gender-Equality Index (GEI), a modified market capitalization-weighted index that aims to track the performance of public companies committed to transparency in gender-data reporting. This reference index measures gender equality across five pillars: female leadership & talent pipeline, equal pay & gender pay parity, inclusive culture, anti-sexual harassment policies, and pro-women brand.
The 2022 GEI expands globally to represent 45 countries and regions, including firms headquartered in Colombia and Uruguay for the first time. Member companies represent a variety of sectors, including financials, technology and utilities, which collectively have the highest company representation in the index.
Piraeus Financial Holdings’ CEO, Mr. Christos Megalou, states: “We are honoured to announce the inclusion of Piraeus Financial Holdings in Bloomberg’s 2022 Gender Equality Index as part of our constant commitment to be a pillar of stability and growth for the Greek economy and society. We believe that nurturing an inclusive workforce, reflecting the diversity of the community in which we operate, is imperative in order to innovate and grow. The comprehensive strategy we implement marks our determination to offer an equitable workplace where all employees thrive. Delivering positive and continuous benefits to society is a priority for us, not only as an employer, but also as a social partner that fosters the creation of a sustainable future for all.”
“We are proud to recognize Piraeus Financial Holdings and the other 417 companies included in the 2022 GEI for their commitment to transparency and setting a new standard in gender-related data reporting,” said Peter T. Grauer, Chairman of Bloomberg and Founding Chairman of the U.S. 30% Club. “Even though the threshold for inclusion in the GEI has risen, the member list continues to grow. This is a testament that more companies are working to improve upon their gender-related metrics, fostering more opportunity for diverse talent to succeed in their organizations.”
Piraeus Financial Holdings submitted a social survey created by Bloomberg, in collaboration with subject matter experts globally. Those included on this year’s index scored at or above a global threshold established by Bloomberg to reflect disclosure and the achievement or adoption of best-in-class statistics and policies.
Both the survey and the GEI are voluntary and have no associated costs. Bloomberg collected this data for reference purposes only. The index is not ranked. While all public companies are encouraged to disclose supplemental gender data for their company’s investment profile on the Bloomberg Terminal®, those that have a market capitalization of USD 1 billion are eligible for inclusion in the Index.
For more information on the GEI and how to submit information for next year’s index visit: https://www.bloomberg.com/gei. Bloomberg clients can access the GEI at {BGEI Index DES <GO>}.
Definitive agreements for the sale of Sunrise I portfolio of Non-Performing Exposures amounting to €7.2bn Gross Book Value
Piraeus Financial Holdings S.A. (“Piraeus”) announces that it has reached definitive agreements with Intrum AB (publ) and Serengeti Asset Management LP for the sale of forty-nine percent (49%) and two percent (2%) of the mezzanine and junior notes of the Sunrise I NPE portfolio respectively (the “Transaction”).
The Sunrise I portfolio consists of retail and corporate NPEs. It comprises c.205k loan exposures and a gross book value of €7.2bn, as at 30.09.2020.
The implied valuation for the Transaction, based on the nominal value of the senior notes and the sale price of the mezzanine and junior notes, corresponds to 34.5% of gross book value.
The Transaction is part of the wider Sunrise transformation programme Piraeus announced on 16 March 2021 and underlines the rapid progress in Piraeus’ c.€19bn NPE clean-up plan, leading to a single-digit NPE ratio within less than 12 months.
Piraeus Bank has already filed an application for the inclusion of the Sunrise I senior notes in the Hellenic Asset Protection Scheme (the “Hercules” scheme). The application relates to the provision of a guarantee by the Greek State on the senior notes of c.€2.45bn.
The Transaction will be classified as held for sale in Q2.2021. Together with Phoenix and Vega NPE transactions that are also pending completion this quarter, the Piraeus NPE ratio will radically drop to c.23% from the reported 46% of March 2021. Subject to the required approvals, the loans within the Sunrise I securitization perimeter are expected to be derecognized from Piraeus Financial Holdings consolidated statement of financial position within H2.2021.
The expected capital impact of the Transaction stands at c.2.7 percentage points over the December 2020 total capital ratio, taking into account the P&L effect and the RWAs relief of the Transaction.
Piraeus Bank will retain five percent (5%) of the mezzanine and junior notes of the Sunrise I securitization as per the respective securitization requirements. Conditional upon requisite supervisory and corporate approvals, Piraeus Financial Holdings is contemplating to distribute part or the whole of the remainder of the said instruments to its shareholders. Piraeus Bank will also retain one hundred percent (100%) of the senior notes.
The Transaction is subject to the ordinary terms and approvals by the competent Greek authorities, including the consent of the Hellenic Financial Stability Fund.
UBS Europe SE and Alantra CPAI Limited acted as arrangers and financial advisors to Piraeus on the Transaction. Paul Hastings (Europe) LLP and Moratis Passas Law Firm acted as Piraeus’ legal counsels on the Transaction, while Orrick Herrington & Sutcliffe LLP acted as the arrangers’ legal counsel on the Transaction.
Piraeus Financial Holdings successfully completes the issuance of its inaugural Additional Tier 1 instrument amounting to €600 million
In response to a query by the Hellenic Capital Market Commission, Piraeus Financial Holdings S.A.(“Piraeus”) announces that it has successfully completed the issuance of €600 million Fixed Rate Reset Additional Tier 1 Perpetual Contingent Temporary Write-Down Notes (“AT1 Notes”).
The issue was subscribed by close to 200 institutional investors, from more than 20 countries, with a total demand reaching €2.2 billion.
The AT1 Notes are perpetual, with no fixed redemption date callable at par in 2026. They carry a coupon of 8.75%, which is paid semi-annually in arrears. Piraeus has the right to cancel all or part of any payment of interest in its sole discretion at any time and the nominal amount of the AT1 Notes may be written down or cancelled if Piraeus or its Supervisory Authority determines that the Common Equity Tier 1 Ratio, as of any date, has fallen below 5.125%.
The AT1 Notes are rated Ca by Moody’s and CCC- by S&P.
Settlement will occur on 16 June 2021 and the AT1 Notes will be listed on the Euro MTF Market of the Luxembourg Stock Exchange. Listing on the Alternative Market of ATHEX is also intended.
The net proceeds from the issue of the AT1 Notes will be used for general corporate and financing purposes of the Piraeus Group and to further strengthen its capital base and capital adequacy ratios by approximately 200bps post the scheduled NPE clean-up.
The transaction is a testament of investor confidence in Piraeus‘ credit story and in the successful execution of its strategic Sunrise plan, currently in progress.
Goldman Sachs and UBS acted as Global Coordinators and Joint Bookrunners and Credit Suisse, Deutsche Bank and Morgan Stanley as Joint Bookrunners of the issue.
Resolutions of the Extraordinary General Meeting of Piraeus Financial Holdings S.A. April 7th, 2021
Piraeus Financial Holdings S.A. announces that the Extraordinary General Meeting of Shareholders, held on April 7th 2021 at 16:00 and conducted remotely in real-time, via teleconference was attended either in person or by proxy, by shareholders representing, a) 625,674,004 shares corresponding to 75.29% of the total 831,059,164 shares regarding the first, third and fourth item and b) 623,631,937 shares corresponding to 75,23% of the total 829,017,097 shares, regarding the second item.
The Extraordinary General Meeting discussed and adopted the following resolutions:
With regard to the 1st Item:
Granted authorization, according to article 24 par. 1 of Law 4548/2018, to the Board of Directors to resolve, with the quorum and majority required by law, the increase of the share capital of the Company by an amount that cannot exceed three times the paid up capital on the date of delegation of these powers to the Board of Directors, namely up to €14.959.064.952, with the issuance of new common registered voting shares, and to determine the specific terms and time plan of the increase in accordance with the applicable provisions of Law 4548/2018, including indicatively the structure of the increase, the method, the process and the offering price of the new shares, the power to restrict or disapply the pre-emptive right of the existing shareholders, in accordance with the provisions of article 27 par. 4 of Law 4548/2018, the categories of investors eligible to participate in it, the criteria of allocation between the various categories of investors in Greece and / or abroad, the conclusion of the necessary contracts or agreements with foreign and / or domestic intermediaries, organizers, coordinators or managers and / or other investment services companies, and in general to proceed to any necessary, requisite or expedient act, action or legal act for the implementation of the increase, including the relevant amendment of the Company’s Articles of Association. The Board of Directors may exercise the above power once or partially in several transactions. The above authorisations will be valid for three (3) years.
With regard to the 2nd Item:
1) Approved the increase of the nominal value of each existing common registered voting share of the Company from six euros (€6.00) to ninety-nine euros (€99.00) by reducing the total number of existing common registered shares of the Company from eight hundred thirty one million fifty nine thousand one hundred sixty four (831,059,164) shares to fifty million three hundred sixty seven thousand two hundred twenty three (50.367.223) new common registered voting shares with a nominal value of ninety-nine euros each, by merging sixteen and a half (16.5) existing shares into one (1) new share of the Company (reverse split) and the consequent increase of the share capital of the Company by the amount of ninety-three euros (€93.00) by capitalizing part of the existing “share premium” reserve, with the purpose of achieving an integer number of new shares.
2) Authorized the Board of Directors of the Company a) for the implementation of the decision of the General Meeting, and, if necessary, for the specialization and finalization of the terms and procedure of the reverse split, and the capitalization of part of the above reserve, for the purpose of achieving an integer number of shares, as well as for any related issue, b) to decide and regulate any fractional rights in shares, b) to combine (if it deems appropriate) the decision on the present item on the agenda with the decision on item 3, so that a single approval be obtained from the competent authorities as well as d) to supplement / modify the relevant figures in the respective amendment of the Articles of Association.
3) Approved the respective amendment of articles 5 and 25 of the Articles of Association of the Company regarding the share capital, and authorized the Board of Directors to take any decision and to take any action of adaptation and / or supplementation of these articles, with the appropriate relevant amounts and sizes, in accordance with the above decisions of the General Meeting for the completion of the amendment of the Articles of Association.
4) Authorized executives of the Company and of Piraeus Bank for the signing and submission of any required document before the public authorities and bodies and for the execution of all necessary actions for the implementation of the above decisions.
With regard to the 3rd Item:
1) Approved the reduction of the share capital of the Company by the amount of four billion nine hundred thirty five million nine hundred eighty seven thousand eight hundred fifty four euros (€4,935,987,854.00) by reducing the nominal value of each common share from ninety-nine euros (€99.00) to one euro (€1.00), without altering the total number of common registered shares of the Company, as such figure will have been determined following the corporate actions included in Item 2 of the agenda, and the formation of an equivalent special reserve of article 31 par. 2 of Law 4548/2018.
2) Granted authorization to the Board of Directors for the implementation of the relevant decision of the General Meeting and, if required, for the specialization and finalization of the terms and procedure of the above reduction.
3) Approved the amendment of articles 5 and 25 of the Articles of Association of the Company as a consequence of the above reduction of the share capital, and authorized the Board of Directors to take any decision and to take any action of adaptation and / or supplementation of these articles, with the appropriate relevant amounts and sizes, in accordance with the above decisions of the General meeting for the completion of the amendment of the Articles of Association.
4) Authorized executives of the Company and Piraeus Bank for the signing and submission of any required document before the public authorities and bodies and for the execution of all necessary actions for the implementation of the above decisions.
With regard to the 4th Item:
1) Granted authorization to the Board of Directors of the Company to establish a five (5) year stock option plan in accordance with the provisions of article 113 par.4 of Law 4548/2018 to executives and employees of the Company and its affiliated companies, within the meaning of article 32 of law 4308/2014, in the form of stock option rights (stock options), by increasing the share capital with the issuance of new shares and to determine, without prejudice to the provisions of the Law 3864/2010, the terms of the stock options, at its discretion, in accordance with the provisions of article 113 of Law 4548/2018, defining that the authorization is valid for five (5) years from the resolution of the General Meeting.
2) Decided that the maximum nominal value of all shares that may be awarded through the plan which will be established by the Board of Directors will correspond to 1.5% of the paid-up share capital of the Company on the date of the establishment of the plan by the Board of Directors of the Company.
Piraeus Group’s Announcement
In response to recent digital media reports and following a query by the Hellenic Capital Market Commission (HCMC), Piraeus Financial Holdings S.A. would like to apprise the investment community of the following.
Piraeus Group remains fully committed to the execution of its previously communicated business and transformation plan. An important pillar of this plan is the strategy for acceleration of the non-performing exposures (NPE) reduction through a variety of transactions and solutions, closely linked to the achievement of solid profitability and de-risking of the Bank’s balance sheet.
As already announced on 23 November 2020 at the presentation of the 9month 2020 results, the Bank’s capital position and NPE de-risking efforts are expected to be enhanced by the end of 2021, through a combination of strategic initiatives, including capital enhancing actions of €1bn already at implementation stage (gains from sovereign bonds, sale of merchant acquiring business, synthetic securitizations, etc), as well as the successful completion of the €7bn NPE securitizations (projects Phoenix and Vega).
The Bank’s key priority and objective remains the rapid reduction of non-performing exposures on its balance sheet, by leveraging both the current Hellenic Asset Protection Scheme (HAPS) and its anticipated extension, as well as any other tenable scheme that may be available in the future.
In this context, Piraeus Group is constantly exploring, analyzing and planning all available strategic options to enhance its capital position and has proceeded with all the necessary preparations in order to be able to benefit in a timely manner from any favorable opportunities, which may emerge in the markets. At the same time, the Group is working on a range of additional initiatives to maximize value in the interest of its shareholders, with the aim of fully de-risking its balance sheet. One of the options being assessed involves a share capital increase in the future, with the potential participation of the Hellenic Financial Stability Fund (HFSF), alongside private investors, if and when permitted by the applicable legislation and the HFSF decides upon its participation and its amount/size. However, until now, no corporate decision has been taken to implement any of the aforementioned potential options under assessment.
Piraeus Bank will inform the investment community as soon as any tangible and specific developments occur regarding its strategic initiatives, decisions or transactions which will have received the requisite approvals from the appropriate governance bodies, as prescribed in the applicable legislative and regulatory framework.
Piraeus Financial Holdings is closely cooperating with the Hellenic Financial Stability Fund, which, within the context of its institutional role and its legislated scope, maintains a continuous dialogue with the systemic banks in order to evaluate recommendations and options that serve to maintain the stability of the banking system in the public interest.
The release of the Group’s Full Year 2020 results is scheduled for mid-March 2021 and will be accompanied by a detailed update on the development and the stage of implementation of the capital enhancement actions that were made public by the announcement of 23.11.2020.