CrediaBank S.A. (CREDIA) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I'm Costantino, your Chorus Call operator. Welcome, and thank you for joining the Crediabank conference call to present and discuss the full year 2025 financial results. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Eleni Vrettou, CEO of CrediaBank. Mr. Vrettou, you may now proceed.

Ladies and gentlemen, good morning, and welcome to our full year 2025 Results Conference Call. I'm Eleni Vrettou, Chief Executive Officer of CrediaBank. I am joined here today by Ms. Valerie Skoubas, our CFO; Mr. Vangel Kanelis, Chief of Strategy; Mr. George Kouroumalos, Chief Risk Officer; and Mr. Konstantinos Manolopoulos, Deputy CFO and Head of Investor Relations. After my introductory remarks, Valerie will go into more detail over our financial performance, and then we will turn into Q&A. So let's begin. CrediaBank has picked up pace in the fourth quarter, delivering record growth and recurring profitability exceeding the target set driven by record new disbursements and resulted in robust growth rates in net interest and fee income. As a result, we reached another record in the history of the bank, delivering recurring pre-provision profit of EUR 82.5 million in 2025, confirms the strength of our business model. We are proud to announce that we reported new all-time highs in all key financial metrics, such as loans, deposits, net interest income, fee income and recurring profit before tax. At this point, I would like to congratulate and thank all our people that are driving force behind the bank's success. 2025 was an exceptional year marked by a series of significant milestones such as the first issuance of international bonds of AT1 and Tier 2 in the bank's history. The bank's first move for international expansion with the upcoming acquisition of the 70% of HSBC Malta, which is subject to regulatory approval. A strategic partnership with Euronet in the areas of payments, merchant acquiring and cards, which is subject to the satisfaction of certain conditions precedent, including, among others, the execution of 4 key strategic cooperation agreements leading to CrediaBank having access to the largest ATM network in Greece. The new identity of the bank with its rebranding. The launch of our new concept brands -- experienced branch concept, the completion of the operational systems integration of ex-Attica and ex-Pancreta systems, the first acquisition of performing mortgage loans portfolio in Greece. And finally, the exclusive discussions, which are currently at the stage of due diligence regarding the potential acquisition of a 70% stake in Pantelakis Securities, a move that will enhance our fee income product factories and further diversified the fee revenue pools. The transformation blueprint of the bank has come off with flying colors. The restructuring of the bank, which began 3 years ago has now yielded tangible results, creating a bank with a healthy capital position, recurring and growing profitability after years of losses, continuously improving its cost base and establishing an international footprint. It is highlighted that only in the last 6 months of 2025, we accelerated our transformation journey with the introduction of the new brand concept, the establishment of strategic partnerships as well as our first move for international expansion. On top of that, the record financial performance demonstrates our agile and successful business model and that there is a clear need for banking alternatives in the mature and consolidated banking environment like Greece. Proof to this is that for yet another quarter, we grew faster than our historical market share and well above the market average. Turning to our financials into more detail. On loans, new disbursement surged by 47% year-on-year to EUR 3.4 billion in 2025, setting a new record for our bank and while exceeding our full year target of EUR 2.1 billion of disbursements. Hence, our loan book sold by 36% year-on-year versus 8% for the market on average, outpacing the system by approximately 5x. This means that we have increased our market share in new loan production to 11% for the year. This is significantly higher than our market share in the back book, which is north of 3%. On the deposit side, we also outperformed the system, and we operate a highly liquid balance sheet with customer deposits strongly up 11% year-on-year versus 5% for the market and with a significantly improved mix as core deposits account for 47% of our deposit base versus 43% in 2024. In the same vein, our cost of deposits further improved as our time deposit cost has [indiscernible] 119 basis points year-on-year compared to the 97 basis points average Europe drop. This trend is expected to continue at a lower pace, however, while we should also be benefiting in the medium to longer term from an improved deposit mix. From another angle, our top-tier loan-to-deposit ratio of 66% allows us to implement our strategy of financing the great economy and primarily SMEs and individuals unabated. Total client assets, meaning deposits plus assets under management shaped at EUR 7.6 billion, up 11% year-on-year. Group deposits grew 11% year-on-year while our assets under management grew by 10% year-on-year with total assets under management shaping at EUR 833 million from EUR 756 million a year ago. Asset quality dynamics remained benign, with the NPE ratio flattish quarter-on-quarter at 2.9%, broadly in line with Greek banks following a very successful HAPS transaction in the last quarter of 2024. Our NPE coverage also widened north of 48%, while new NPE flows are well contained being approximately 1% on an annualized basis on average for the last 5 quarters. On the P&L front, we delivered record growth in recurring pre-provision income. Specifically, our recurring pre-provision income surged by 88% year-on-year to EUR 82.5 million, which is a new record for our bank. On a like-for-like basis, meaning excluding the income contribution of NPEs, our recurring CPI more than doubled. We reported quarterly top line growth for yet another quarter as NII and fee income were the gross linchpin. NII accelerated by 14% quarter-on-quarter and by 58% year-on-year to a new all-time high, benefiting from strong net credit expansion and lower cost of deposits. Thus, our NIM widened by 21 basis points quarter-on-quarter and remained resilient for the full year despite the lower benchmark rates. On top of that, fee income also recorded a new all-time high, driven by the robust performance of all fee income factories. As a result, fees raised their contribution significantly and now account for 16% of recurring revenues versus 13% in 2024. Although our operating costs were obviously affected by the merger with Pancreta Bank, cost containment efforts have started to bear fruit as recurring operating expenses fell by 4% year-on-year in Q4 '25 and driven by lower G&A costs. Therefore, cost-to-income ratio dropped to an all-time low at 61.7% in Q4. The restructuring actions completed during the first quarter of 2025, meaning the branch closures, the voluntary exit scheme and the systems integration are expected to lead to further cost efficiencies and reductions from the fourth quarter of 2025 onwards. As such, merger synergies and implemented actions thus far have already locked in EUR 25 million of cost savings on an annualized basis. Valerie will elaborate further on that front shortly. Finally, as far as the bottom line is concerned, our recurring pre profit before tax jumped by 93% year-on-year and hit a new high at EUR 57.8 million in first half 2025, indicating the disciplined focus on profitable growth. Lastly, our capital base remains strong and well above the regulatory minimum requirements. The CET1 ratio widened by 43 basis points quarter-on-quarter to 11%, in line with our guidance in the first half 2025 results, and 200 basis points higher than the minimum regulatory threshold requirements benefit from the period profit and DTA moves despite the elevated credit expansion and incremental restructuring actions post-merger that have consumed capital. Similarly, our total capital ratio shaped at a robust 17.5%, more than 380 basis points higher than the relevant regulatory requirements. Turning to the strategic priorities. 2025 was the year of restart and has set the foundation for long-term growth. Our priorities are: first, continued growth in Greece without compromising the quality of our portfolio. Second, the SMEs integration of HSBC Malta. Third, the implementation of our digital transformation, both in the front end and the middle back office operations and the realization of further synergies. Fourth, value creation through bolt-on acquisitions with a focus on product factors. Fifth, efficiency gains in capital generation. Sixth, balance sheet optimization. And finally, seventh, the further enhancement of our presence in the capital markets. We will present more details of our strategy at our Capital Markets Day this coming Monday, and we'll be delighted to see you all there. Therefore, we won't give any guidance or comments on 2026 outlook today. Very briefly, however, I will shed some more light on the aforementioned strategic priorities. First target, Greece. With regards to Greece, we target to keep on gaining further market share by expanding our product [indiscernible] offering, continuously launching new products, while we still aim to offer the best possible service to our clients. Second target Malta. With regards to the Malta acquisition, we submitted the regulatory filing in January 2026, and we expect the transaction to close by the first quarter of 2027, after having received the regulatory approvals in 2026, the completion of the mandatory tender offer again in 2026 and the operational readiness in the first -- by the first quarter of 2027. We are in constant communication with the regulatory authorities to ensure smooth closing. System integration has already commenced as well, and the overall project [indiscernible] is on track based on the time line agreed with HSBC as seller. Third target digital and synergies. Our digital transformation program has now been launched and continues unabated to enhance customer journeys across all our channels and at the same time, optimize costs. As part of that initiative, a digital transformation program has kicked off, and we have already mapped the main digital capabilities we want to build both back-end and front-end. In parallel, we are delivering improvements to our existing digital offering. First product deliveries are expected starting third quarter of 2027, while the whole program will last 3 years. In the context of our transformation and operational excellence initiatives, we are also reviewing processes and procedures to ensure higher efficiencies and productivity, which will ultimately lead to better customer experience, shorter time to money, higher revenue, lower costs and ultimately higher profitability. Within the framework of synergy and efficiency gains, we believe that these are already evident as depicted from our continuous improved and record low for us cost-to-income ratio. The effort is obviously a nonstop one and is still ongoing. Within our revised target operating model, more synergies should come to the fore, while incremental gains to those, especially on the revenue side, as we intend to exploit the synergies from the asset management and insurance subsidiaries of the [indiscernible] entity. This, however, should start bearing fruit from 2027 onwards after the Malta-closing. Fourth target value creation and M&A. As management, we have built a solid track record of acquisitions, both bolt-on but also strategic ones with the creation of CrediaBank, which is ultimately the outcome of a 4-way merger of former Attica Bank, the operative Bank of Central Macedonia and HSBC Greece. We're expanding into Malta while we have also proceeded with very successful strategic partnerships like our recent agreement with Euronet. We are currently in exclusive negotiations with Pantelakis Securities with the main idea here being the further expansion of our fee-generating capabilities. Within this framework, we are also examining post potential bolt-on acquisitions or strategic partnerships in other product areas, particularly in insurance and asset management to further strengthen our fee income. Our fee income generation nearly doubled in 2025, but we aim to strengthen further our fee income and origination to reduce NII dependency and there is plenty of room for growth. In this spectrum, our focus remains in wealth management and the further expansion of Bancassurance product offering, both of which are expected to increase the noncredit related fees of the bank. Fifth, target efficiency gains in capital. Benefits from the ongoing restructuring deleveraging efforts, we are targeting efficiency gains and capital aggression. Number 6, balance sheet optimization. Our balance sheet optimization exercise is more of a longer-term story. On this pillar, we aim for improving both our asset and liability side mix, which will ultimately lead to higher NIMs and profitability. The process has already kicked off and we have tangible results to show but we took target for further gains primarily driven from the leveraging of our balance sheet and gradual ovulation of low or noninterest-earning assets with ones that generate higher yields Finally, we are exploring possible actions that will allow the further expansion of the group, diversification of our capital [indiscernible] and third, the further increase was pre-close. In this context, we have called for an Extraordinary General Meeting on the 16th of March, where shareholders will be called to grant a new authorization to the Board of Directors for the increase of the share capital of the bank of an amount of up to EUR 300 million amongst others. We are also revising all our other noncore assets that could be excluded to generate additional capital, along with other actions, continue the synthetic securitizations that we have completed so far very successfully that will end up being capital accretive. Our mission is clear, to strive to become the best bank for everyone. 2025 marks a restart, we hope that 2026 will cement our presence and growth across all our areas. Thank you once again for your time today, and we are looking forward to seeing you on Monday. I'll now pass the floor to Valerie to present our 2025 financial results in more detail. Thank you.

Thank you, Eleni. Good morning from my side as well. I'm Valerie Skoubas, CFO of the bank. I will start with the key highlights of the full year results as presented on Slide 11. In 2025, we reported record growth and recurring profitability, fueled by strong momentum in our core income line. In more detail, recurring pre provision income continued its upward path and surged by 88% year-on-year to a new record high at EUR 82.5 million. On the same side, recurring core PPI pre-provision income, which excludes the volatile noncore income soared by 126% year-on-year, marking 12 consecutive quarters of quality growth. Moreover, adjusting for NPE income, our full year PPI more than doubled compared to 2024. Key driver of this exceptional performance was the robust core income growth. Specifically, net interest income has accelerated by 58% year-on-year and 14% Q-on-Q, posting a new all-time high powered by higher interest income from loans, thanks to the strong net credit expansion and higher income from investment securities while cost of deposits has started to deescalate. As a result, net interest margin widened by 21 basis points quarter-on-quarter and fell by just 4 basis points year-on-year despite the decline in interest rates. Our improved deposit mix has aided also on the excellent performance. It is important to highlight at this stage that the contribution of NPEs was nearly 0, following the cleanup in end of 2024. 99% of our interest income is attributed to performing exposures versus 85% in 2024. On top of that, fee income recorded a new all-time high and nearly doubled on a yearly basis, thanks to robust growth across all factories while noncore revenues also boosted recurring operating income by 59% year-on-year in 2025. Reported top line was also bolstered by these one-off revenues of EUR 53.2 million in Q4, resulting from the sale of our participation in the interbanking system company DIAS, our agreement of our payment sector, the merchant acquiring business, the card business and our ATMs, to Euronet and our new partnership with Mastercard coupled with the annual revaluation of our real estate and property sales. Moving on to the cost side, recurring OpEx rose by 46% year-on-year, obviously affected by the consolidation of Pancreta Bank. Nonetheless, recurring OpEx were down 4% year-on-year in Q4 as the first signs of synergies are becoming evident. Hence, recurring cost-to-income ratio squeezed by more than 500 basis points year-on-year to a new record low of 63.5% in 2025, thanks to the strong top line growth. Post implementation of the voluntary exit scheme, which kicks in, in February of 2024, our total headcount decreased by 18%, 266 FTEs now to 1,202 while we are operating a network of 66 branches throughout the country from 86 in 2024. As a result, locked-in synergies on an annualized basis from the executed voluntary exit scheme from the branch rationalization and many other actions, topped the EUR 25 million mark. Moreover, one-off expenses of EUR 46 million burdened the 2025 results, of which EUR 39 million related to voluntary exit cost and EUR 7 million to other restructuring expenses rebranding, et cetera. Loan loss provisions came in at EUR 21.7 million in 2025. And including EUR 18 million is repairing provisions and EUR 4 million, which is the cost of the synthetic securitization. As a result, our underlying cost of risk shaped at 37 basis points in Q4 '25 from 58 basis points in Q3. While our all-in costs, including the aforementioned cost of the synthetic narrowed to 55 basis points from 64 basis points in Q3. Recurring profit before tax hit a new high and jumped by 93% year-on-year to EUR 57.8 million in 2025, due to the robust performance of core revenues, NII and net fees. Reported earnings before tax came in at EUR 64.1 million against a loss of EUR 368 million last year. Now if we turn to our balance sheet. First and foremost, we have posted new records both on the asset and the liability side. In more detail, disbursements hit a new all-time tie in Q4 to EUR 946 million, up 52% year-on-year and also reached EUR 3.4 billion for the year, up 47% versus 2024. We well exceeding our full year target of EUR 2.1 billion. Thus, we have managed to achieve net credit expansion of EUR 257 million in Q4 from EUR 306 million in Q3, due to the higher repayments in wholesale lending, leading to a net credit expansion of EUR 1.1 billion for the year, exceeding again our full year target. If we turn to Slide 20, we have EUR 5.5 billion of loans, which include the EUR 1.1 billion seniors of the 2 securitizations. Performing loans posted an impressive increase of 36% in 2025, outpacing by approximately 5x banking systems loan growth. Corporate lending remains the spearhead of our growth, while retail lending is also gathering pace. We, therefore, estimate that our market share in new production increased to 11.4% in 2025. Moreover, we also have EUR 1.4 billion of securities with Greek government bonds, including T-bills and other sovereign constituting the bulk, 80% of the total. In parallel, our DTA is at EUR 225 million, and we are clean of any DTC. In the same vein, as shown on Slide 24, our group deposits rose by 11% year-on-year outperforming again the market that grew by 5% year-on-year. Specifically, deposits hit a new high at circa EUR 6.8 billion and represents our main source of funding, constituting 80% of the total liabilities and equity. On a more positive tone, individual deposits represent the bulk of our deposits at 61%. The client funds stood at EUR 7.6 billion, supported primarily by the deposits, while assets under management grew 10% year-on-year. If we move to capital on Slide 30 we present the evolution of our CET1. Our CET1 ratio widened by 40 basis points Q-on-Q to 11%, well above the regulatory minimum threshold of 9% and in line with our guidance in half on 2025 results. Benefiting from the period profits and the DTA moves, despite the elevated credit expansion that consumed 50 basis points and the incremental restructuring charges that have cost 20 basis points. As discussed in previous conference calls, front-loading, restructuring charges was a strategic decision that allows us to realize synergies earlier. And as a result, the temporary pressure on our regulatory capital was in line with our strategy and our expectations. Finally, if we go to Slide 35 and 36, asset quality dynamics remain benign with our NPE ratio flattish Q-on-Q at 2.9%, will start cash coverage ratio widened by 40 basis points Q-on-Q to 48.2%. In the same manner, new NPE flows are well contained being at circa 1% on average on an annualized basis. With that, I concluded my presentation. We may now open the floor for Q&A. Thank you.

[Operator Instructions] The first question comes from the line of Boulougouris Alexandros with Euroxx Securities.

I understand that most of the color will be given on Monday. But could you give us a bit of color on loan yields and deposit costs? We've seen loan yields slightly weaker in Q4, but do you see now spreads stabilizing as Euribor is also stable at around 2%? And maybe a bit on deposit cost at around 90 bps, you are mentioning that deposit cost to be escalating and there will be repricing in the next couple of months. But if you give us a bit more color would be great.

Alex, thank you for your question. This is Konstantinos. On Slide 14, we have -- we present the evolution of deposit costs and loan yields. As you may appreciate, things have stabilized more or less in Q4, which we have seen most of the impact coming from the escalation of Euribor. So new production, as we speak, comes at broadly the same levels on both sides of the balance sheet. So Q1 should be seem very similar to the trends we've seen up until now. And I think that this is more or less the main benefits as we have said in the past, will come from mix effects rather than yields or spreads on their own.

The next question comes from the line of Richard Jonathan.

It's Jonathan Richards from Edison Group in London. A couple of quick questions from me. I do understand that you're having to the more detail on Monday. But firstly, could you give us an idea of how you've been able to grow the loan book so quickly versus the rest of the broader Greek market while still closing branches and not compromising on credit quality? And then secondly, just in terms of the cost of income ratio targeting, what do you guys think the medium-term outlook for that ratio can be? And what will really drive that? Are you looking do it from the cost side, continued branch closures are more on the revenue side.

Okay. So I will start with the second question, which is exactly around costs. So indeed, like our cost remains high, but this is actually -- the trend has been constantly improving, like if you take into account that 3 years ago, we started looking with cost were likely not twice as high as the revenues, what 3x buyback then. So secondly, the target that we have is that effectively for like 2026, we expect that our cost income ratio will be in the high 50s. Reason for that is that we will continue to invest in particularly people that will be necessary for the upgrade of the organization given the Malta expansion. So you're going to prepare against certain control functions in group growth, that are necessary because of our systemic status. And after that, in the medium term, we actually expect that this will go well below this threshold and in line with our rest of the peers. Now what this will drive like these cost efficiencies, a couple of things. So first of all, right now, what you see in our cost base and what you will see in 2026, is that effectively, we carry all the costs, and we carry the cost of integrating and implementing Malta acquisition, but without having the Malta consolidation benefiting from that. So what you will see as actually streamlining the cost base will be the consolidation of Malta and the efficiencies that we'll be creating between the 2 geographies. In the medium term, what you will see is that, first of all, let me know, other than the efficiencies that you will see, there are further cost optimizations in Malta itself. One coming from the optimization of offshoring services that currently HSBC provides. This is quite a significant cost that currently is borne by the local entity there, given the system support, operation support that the HSBC provides to all the group companies centrally, this comes with a very hefty markup. Therefore, we have identified that we can create cost synergies just from Malta alone of around EUR 20 million leyear-on-year. The second thing that you will see benefiting the cost both in Greece and in Malta is the investments we are doing right now on systems. So as we mentioned, digital right now is not just on the front end to build like and improve the customer journey and the customer interfaces. But also, like the project emphasizes how we optimize internal processes and we digitalize like we automate in many processes that currently run manually, demanding a lot of extra head count. So therefore, as this program is deployed, and I did mention that this is a 3-year program, we are going to start seeing this excess capacity that we have now that is necessary on a manual basis that we will either be redeployed in more productive operations or like from late 2026 onwards will actually be released. Again, turning back to Malta as well on the medium term, what we see is that as you -- as we have communicated to the market already, we have committed to basically no redundancies, no terminations or change of benefits or employment in Malta for the next 2 years at least, so until 2029. But after that, like together with the unions, we will see whether we can do any voluntary exit programs that basically will further streamline the population in Malta. So that is on the cost ratio. Now going back to the loan book, I think, like basically, what we do is that we have found a niche in the market in the sense that, what we see is that the 4 systemic banks right now mostly focus on looking at the same clients, they do prioritize the large corporate segments versus the SMEs. We, on the other hand, we prioritize the SME and the individuals versus the rest of the market because this is our niche. So what we do in this SME sector, we try to provide the best-in-class service. When we say best-in-class, is the fastest time to money, time to yes and time to money versus anybody else in the market. Based on the NPS scores we have and also like the monitoring of such like an actual execution of transactions to customer feedback, we believe that we are about 2/3 better than the rest of the market, particularly in these segments. So what we do is absolutely we have managed to create a very high Net Promoter Score and effectively through that to try to gain more access and larger tickets in this SME along with the cross-selling that it comes. We're also present in the large corporate space. So what you will see in more detail on Monday is that we're also particularly successful in the structured finance area. Where, again, our service optimization is basically what is able to generate us more volume versus the rest of the market. Now looking at the percentage growth, obviously, we are gaining more and more market share because we start from a lower [indiscernible] Base. Last thing on our strategy that helps us like growth faster than the market is actually that we have been very successful in our strategy of acquiring performing portfolios in the secondary market. As we mentioned, we have done the first performing loan transactions. We were the preferred bidder and buyer for an exiting bank UCI exited its operations in Greece. This is a circa EUR 90 million performing mortgage portfolio we have acquired in a competitive process. Equally, we've done other transactions in this area in the reperforming field that has allowed us to further improve our market share versus the rest of the market.

Ladies and gentlemen, there are no further questions at this time. I would now turn the conference over to Ms. Eleni Vrettou for any closing comments.

Thank you very much all for attending today's call. We all look forward to seeing you on Monday and where we can actually speak into a lot more detail around our guidance for the medium and long term. Thank you all. Have a very nice weekend.

Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for calling. Have a pleasant day.