National Bank of Greece S.A. (ETE) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by. I am Gaily, your Chorus Call operator. Welcome, and thank you for joining the National Bank of Greece conference call to present and discuss the first quarter 2020 financial results. [Operator Instructions] The conference is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Pavlos Mylonas, CEO of National Bank of Greece. Mr. Mylonas, you may now proceed.

Good afternoon, everyone. And good morning to those of you joining from the U.S. Welcome to our first quarter financial results call. I'm joined by Christos Christodoulou, the group CFO; and Gregory Papagrigoris, Head of IR. After my introductory remarks, the CFO will go into more detail on our financial performance, and then we will turn to Q&A. So let's begin. Capitalizing on a very successful management of the health/lockdown phase of the crisis, Greece is gradually lifting restrictions of movement, with most remaining ones to be lifted within the next few weeks. Thus, Greece moves with optimism to the next phase of the crisis, with the goal of successfully restarting the economy. Uncertainty will need to come down further, initially helped by the large swath of government support measures. Specifically, these will exceed EUR 15 billion, equivalent to 8% of GDP, with about 1/3 coming from European-sourced funds. To these figures, one will need to add the approximately EUR 33 billion support, including EUR 22 billion in the form of grants provided over the next 3 to 4 years, arising from the recently announced 3 -- 75 -- EUR 750 billion European recovery fund, named the Next Generation EU. Of course, the commission's proposal needs to be approved and, hopefully, without much delay. Albeit early days, additional positive news is that there exist nascent signs that confidence is beginning to return to the economy, as evidenced by various leading indicators such as individuals mobility data as well as bank transaction data. Though admittedly premature, projections on the decline in economic activity and the prospective recovery by 2021 may need to be revised for the better. NBG's initial response to the COVID crisis was to ensure the health and safety of our employees and clients, adopting strict measures at head offices and branches. We successfully transitioned into a remote work-from-home operating model with appropriate controls in place, allowing approximately 70% of our staff to work remotely at its peak cyber-securely and productively. At the same time, we accelerated our digital customer onboarding and engagement. The results have been impressive. Digit (sic) [ digital ] channel transactions have increased 60% year-on-year. More than 130,000 customers have been digitally onboarded year-to-date. Active users of digital channels are up by more than 50% year-on-year. In this second phase, NBG is committed to supporting all its clients weather the crisis by providing the necessary liquidity support. To this end, we have also focused on the rapid implementation of payment moratoria covering the period for most of 2020 to both our corporate and retail clients. So far, NBG has received approximately 60,000 applications, corresponding to EUR 4 billion of loan balances, mostly mortgages and corporates. NBG is also actively participating in all the government support schemes involving state guarantees, co-financing and interest rate subsidies. I believe that the rapid and successful shift in our operating model to work from home; and the new service model, i.e., the new products I just mentioned, reveal the success of our transformation program in making NBG more agile and, of course, more digital. NBG's balance sheet strengths and strategic flexibility are important competitive advantages and will provide significant strengths during this crisis. The first quarter results, without a doubt, support this assertion. We addressed the issue of COVID-19 related provisions decisively, front-loading approximately EUR 0.5 billion of loan provisions in the first quarter. Within this amount, the COVID-related provisions amount to more than EUR 400 million, standing at 150 basis points of net domestic loans. That's on a non-annualized rate. Based on current economic projections and given the unprecedented level of uncertainty, we believe these provisions cover the total amount needed for COVID-19. To this amount, 100 basis points of underlying recurring quarterly credit risk charges are added, on an annualized rate this time. And as a result, our coverage ratio has been increased by nearly 300 basis points quarter-on-quarter. Despite the very sizable cost of risk charge, group PAT exceeded EUR 400 million. This result, along with the future PPI capacity, provides substantial room to absorb incremental provisions for NPE-related inorganic actions going forward. As regards our core operating performance, core PPI has remained broadly unchanged quarter-on-quarter at EUR 137 million. This is a result of lower core income, which has been offset by lower costs. As Christos will elaborate on each of these drivers in detail, I just want to highlight the reduction in our domestic personnel and G&A expenses, with the former reduced by 8% year-on-year, only partly reflecting the 1,100 FTEs reduction from the past year's successful VES. On a full year basis, the operational cost savings from this will amount to EUR 40 million. Turning to our capital position. Our CET1 and total capital ratios stand at 15.5% and 16.4%, respectively, absorbing the totally -- the total anticipated COVID-19 charge-offs as well as the annual IFRS 9 transitional charge. Our capital position is circa 500 basis points above the COVID-adjusted OCR capital threshold of 11.5%. Clearly, visibility in this environment is extremely limited. However, there are some points that appear clear. First, the migration to digital banking is accelerating beyond expectations, and NBG has made impressive steps in this area over the past 2 years. Second, a new, radically different and more efficient operating model for banks is emerging, which will occupy management for the years to come. And third, in this new operating environment driven by huge upcoming structural changes in the economies, opportunities will be captured by the ones most flexible and adept. In closing, I would like to say that our success in changing the bank over the past 2 years as well as our timely and effective response to the pandemic crisis are testament to NBG's change momentum and established transformational capacity. Coupled with our balance sheet strengths and strategic flexibilities, these elements will make the difference as we continue to rise to the oncoming challenges and support the national effort in this difficult period. With that, I would like to pass the floor to our CFO, Christos, who will provide additional insights to our financial performance before we turn to Q&A.

Thank you, Pavlos. So starting with the P&L highlights on Slide 6. The key takeaway is the resilience of our core operating profit complemented by trading gains that support our pre-provision income, which as a result grew nearly 4x on a year-on-year basis. This allowed the absorption of the total anticipated COVID loan impairments, also leaving substantial room to accommodate NPE-related inorganic actions going forward. Core income remained broadly stable year-on-year, aided by strong growth in fees at 12%, while NII declined by 4%, reflecting the aggressive NPE cleanup of 2019, the lower interest income from securities due to portfolio sales and the GGB swap in January, plus the costs from the Tier 2 issuance in July 2019. Cost optimization efforts continued to produce impressive results. Domestic personnel expenses declined by over 8% year-on-year, reflecting the benefit of the 2019 VES that expired in February 2020. The last leg of approximately 300 employees leaving the bank during Q1 '20 has not been fully factored in. Moreover, a provisional VES charge of EUR 90 million has been booked this quarter, providing flexibility for further cost rationalization, while our tight management of general and admin expenses is set to provide further savings. The realization of large one-off items, namely the EUR 515 million gain from the GGB swap in January and the gains of EUR 264 million from the sale of "held to collect and sell" securities in February, allowed us to address the issue of the incremental provisions for the COVID crisis decisively, front-loading the total anticipated charge. Of course, we need to underline that this is subject to the information currently available and with the caveat of the unprecedented levels of uncertainty, especially with a macroeconomic [ focus ]. Having said that, COVID-related provisions came in at EUR 416 million, which corresponds to a non-annualized cost of risk of 143 basis points. On top of that, the underlying Q1 '20 cost of risk is EUR 70 million or an additional 96 basis points. The high cost of risk level in Q1 '20 is attributed to the bank's standpoint regarding the macro outlook in the context of COVID, with key macroeconomic variables projected to record a sizable contraction, being only partially offset by post-model procyclicality adjustments in line with accounting and regulatory guidance. Baseline GDP envisages a recessionary environment in 2020, with the annual charge reaching minus 7.5%, where recovery is envisaged for 2021, with the average GDP growth rate at plus 5% year-on-year. Despite the high provision charges, group attributable profit after tax amounted to EUR 304 million in Q1 '20 compared to EUR 41 million a year ago, even after absorbing sizable one-offs, including the EUR 90 million provisional VES charge. As Pavlos said, such profitability levels provide further flexibility in our NPE strategy, allowing us to be ready to launch NPE-related inorganic actions in a timely manner. Turning to Slide 7, on asset quality. Our NPEs dropped by EUR 0.2 billion this quarter to EUR 10.4 billion, reflecting efforts across organic channels. The improvement in flows in the first 2 months of the year was offset in March due to the COVID uncertainty and before the crystallization of the impacts from the introduction of payment holiday measures. The domestic NPE ratio now stands at 31.8%, down 40 basis points quarter-on-quarter and 7.3 percentage points year-on-year. Cash coverage climbed to 56%, up by nearly 3% quarter-on-quarter. On the liquidity front, domestic deposits expanded by EUR 1.7 billion this quarter, driven by state deposits, while domestic private deposits maintained a positive momentum. LCR and NSFR ratios remain at levels well above regulatory thresholds. Our exposure to the ECB TLTRO facilities have been gradually increasing, and this will allow us to provide credit to corporates and households at a negative funding cost of minus 100 basis points. In terms of capital, CET1 and total capital ratios in Q1 stand at 15.5% and 16.4%, respectively, comfortably absorbing the total anticipated provisions related to COVID-19, the full year IFRS 9 transitional adjustments and still standing almost 500 basis points above the COVID-adjusted regulatory threshold of 11.5%. Going into further detail on profitability on Slide 9. Group operating profit reached EUR 426 million in Q1 '20 compared to EUR 16 million in Q4 '19, reflecting our resilient core pre-provision income and the large trading gains. Excluding noncore income and the COVID-related provisions, group operating margin expanded to 92 basis points in Q1 compared to 22 basis points in previous quarter, driven by lower operating costs and lower underlying provisions. Turning to Slide 10. Domestic NII amounted to EUR 262 million in Q1 '20 from EUR 271 million in Q4 '19, mostly due to lower NPE interest income driven by the sizable portfolio sales in 2019 and lower NII from securities. Performing NII remained at similar levels, reflecting the healthy production of new loans in Q1 '20 as well as curings. Indeed, domestic loan disbursements were up by EUR 1.1 billion, a 53% increase year-on-year. Excluding COVID-related provisions, risk-adjusted NII remains at healthy levels of EUR 192 million in Q1 '20 versus EUR 164 million the previous quarter. Moving on to Slide 11. Domestic deposits amounted to EUR 44 billion, expanding by EUR 1.7 billion this quarter. Low interest rate bearing deposits increased their share to 72% of total deposits versus 70% a year ago, allowing our blended deposit yield to edge lower to 29 basis points. Time deposit yield dropped further by 12 basis points this quarter to 52 basis points, with new time deposit production coming at 30 basis points. The repricing of time deposits benefited NII by EUR 4 million this quarter and will continue to support this year's top line as the ongoing repricing becomes fully factored in. On Slide 13. Following a seasonally strong Q4, domestic fee income amounted to EUR 63 million, up 13% year-on-year on the back of the strong recovery in retail fees which exhibit a 25% growth year-on-year mostly driven by the increase in card-related fees, intermediation fees and digital channels. Corporate fees remained weak across the sector due to competition. Moving on to OpEx on Slide 14. As already mentioned, domestic personnel expenses dropped by 8.2% year-on-year, reflecting part of the benefit of the 2019 VES, with the full year impact for 2020 estimated at over EUR 40 million. Domestic general and admin expenses were marginally lower year-on-year, while high depreciation charges reflect the first-time adoption of IFRS 16 and the Prodea de-consolidation in mid '19. Excluding depreciation charges, domestic staff costs and general and admin expenses as a percentage of core income dropped by 270 basis points to 49.4% in Q1 '20 from 52.1% in Q1 '19. A bit more detail on asset quality on Slides 16 to 20. NPE reduction continued, driven by mortgages, benefiting from restructurings involving the debt forgiveness through our [ innovative products-driven set ]. As already mentioned, the improvement in NPE flows in the first 2 months of the year was offset in March due to COVID uncertainty, as the implementation of relief measures is not yet reflected in March flows. As the CEO mentioned with regards to payment holiday measures, until mid-May, NBG received about 60,000 applications, corresponding for an amount of approximately EUR 4 billion. In terms of risk concentration, on Slide 20, NBG has a well-diversified loan portfolio, with less than 20% of our corporate clientele estimated to be relatively more affected by COVID. Sectors such as accommodation, services related to air transport, retail trade, media, machinery and equipment should see a fairly large share of their turnover affected by the ongoing economic crisis. And their recovery is likely to be more delayed versus that of less-affected sectors. During difficult and uncertain times, the bank produced solid profitability and fortified further its balance sheet. This was complemented by our operational efficiency and our transformational capacity leading to a strong reaction to the challenges and opportunities posed by the crisis. We will continue to closely monitor the impacts of COVID and review our financial performance and business plans [ according ]. On this note, I would like to open the floor to questions. Thank you.

[Operator Instructions] The first question comes from the line of Floriani, Jonas with Axia Ventures.

A few questions from my side. The first one is just wondering what is the latest from your side on the NPE reduction plan. I remember that there were talks of a sizable securitization before the outbreak. So just wondering how you're thinking about that now in terms of size and timing given that you're already incorporating some of the losses through the P&L. Then second, could you please give us an update on unrealized trading gains as of Q1 and maybe as of May as well? That will be great. And then on new disbursements for the year, I've seen the figure for Q1, which it has been quite strong and, I think, for obvious reasons that this is happening, but then how that links to your expectation for the full year. I mean, is this like, let's say, an early uptick in disbursements and then we're going to see a bit less? Is this going to match your previous expectation for new disbursements in 2020?

Okay, I'll take the first and the third, and Christos will take the second. NPE reduction plans have been thrown into disarray because of COVID, okay, clearly. We were expecting to do a securitization in Q3 2020, and that is certainly going to go back. That does not mean we still don't plan to do that securitizations. The question is the timing, and the question there will be the market conditions. If we are ready and when the market conditions allow, we will do that, similar securitization that we'll describe [ project pioneer ]. Now NPE creation by COVID, we need to see what happens after the end of the payment holiday. Most of 2020 NPE creation, formation will be distorted by the payment holiday. These will come to an end at the -- in the fourth quarter of 2020, and in 2021, we will see what arises from that. And that is the visibility on that is not high. You can take a guess at what we think it is from the provisions we have taken. So that is the NPE strategy as it's being formulated now. So some uncertainty. We will do the securitization when markets open. How much NPEs will be created: We think we've taken the provisions now. And we can do the reduction one way or another, organic or inorganically. We'll see, so -- but this will be further formulated as developments occur. Now on the disbursements. It's going to be a strange year because disbursements will -- are not as critical as they used to be because what happens is there will be no repayments due to the holidays, the payment holidays. So any disbursements will create a net expansion in the book. So with -- these very few repayments and the government-sponsored programs and any normal disbursements they do will probably, ironically, if you want, in 2020 -- to a higher net loan book expansion than in 2019. Christos?

Thank you, Pavlos. So if I got your question right: What we have realized in the first quarter in terms of the "held to collect and sell" portfolio is a loss to our OCI of approximately EUR 120 million. And since then, we have seen no significant volatility in our portfolio. Now in terms of our trading book, that's fair values in the P&L, we have a unrealized [ upset ] of about EUR 15 million. And that's the numbers.

The next question comes from the line of Bairaktari, Angeliki with Autonomous Research.

I think in the beginning of the presentation you mentioned the macro assumptions that underpin your COVID-19 provisions that you have booked this quarter. Would you mind repeating those, please, in terms of like the GDP reduction you expect for 2020 and, I imagine, increased or V-shaped recovery that you expect in 2021? If you could give us some color on that, that would be helpful. Then on the additional EUR 90 million VES charge, could you indicate what savings we should be expecting from this? I suspect that the savings will be incremental to the EUR 40 million. Could you please confirm that and provide us with an amount? And with regards to TLTRO, I can see that the Eurosystem funding has increased for you in May to EUR 5 billion. What is the maximum capacity that you can draw under TLTRO? And could you please give us an indication of the benefit that you expect to have from these on your net interest income? And last question, on the disbursements. I hear you that loan growth is going to be higher this year because of all the moving parts due to the coronavirus. I was wondering. What is the interest rate that you charge on the entrepreneurship fund loans and also on the guaranteed loan scheme? Are those comparable to the back book, or are those lower? Because obviously they are partly subsidized by the government and so the cost of risk on those should theoretically be lower. Are you passing this lower cost of risk and RWA relief to the customer through a lower rate?

Okay. On the macros, the macro -- GDP macro assumption that was used in the current IFRS 9...

Yes. It was -- Angeliki, It was 5 -- 7.5% for 2020 and a recovery of plus 5.1% for 2021. That's the benchmarks that we use for the calculation of provisions.

On the VES, it's a rule of thumb of around 2x, so the savings will be half the EUR 90 million. And then on the TLTRO, I think you can do the math, but the calculation is that we can do around EUR 10 billion. The maximum we can do is EUR 10 billion, which is about -- and we're around EUR 5 billion now. On the rates, it depends on the program. There are various programs here. Clearly, the amount that is subsidy from the state, whether it's in the form of co-financing, interest rate subsidy, guarantee, will be passed on in one form or another to the client, but that benefit is not always an interest rate reduction. It is also in terms of other terms such as collaterals, et cetera. So yes, the benefit will be passed by -- passed on, but it's not always interest rates.

If I may just follow up on the TLTRO, on the maximum EUR 10 billion that you can do. Do you expect to get a yield of negative 50 bps on this? Or do you -- are you going to go for the negative 100 bps, which I understand is conditional on loan growth? That's my first follow-up...

Okay, as you remember, the rules have changed. And all you need to do is not have a reduction in your loan balances. So given what we've described about disbursements, I think it is going to be relatively easy to get the maximum minus 100 basis points.

That's clear. And on the higher loan balances, I guess, from your answer, I guess we shouldn't really expect a similar impact -- a pickup in NII, a significant pickup in NII, this year on the back of the loan growth because this loan growth comes mainly from the subsidized or guaranteed government programs. Is that fair?

The conclusion is fair. There are lots of moving parts, though. Clearly, there will be more NII from [ PEE ] disbursements, okay? However, you will have on the back book less curings than we had expected and some corporates renegotiating down their rates. So [ PEE ] loan -- there'll be some factors on [ PEE ] loan interest. Then you're going to have the NPE interest -- loan interest, which will go down both because of inorganic and, of course, the high level of provisioning. Security rates are going down. Deposit rates, though, on the other hand, are going down as well. We have a full year impact of the Tier 2. So there are a lot of moving parts there, where if you add them all together, you get to your conclusion that NII will probably be flat and maybe slightly down low single digits in what -- low single digits.

The next question comes from the line of Sevim, Mehmet with JPMorgan.

Just to follow up on provisions and your securitization plan, please. Because you wanted to use your strong profitability this year to prevent a hive-down, can we assume that you could still potentially front-load potential securitization costs, some of them at least, irrespective of the timing of its launch in the coming quarters? That's my first question, please.

Shall -- do you want to give both, or should we respond to first?

Yes. And the second one is just a technical one on the state-guaranteed scheme. What are the risk weightings applied to the loans under the scheme?

All right, Christos will take the first...

Yes. So the answer is absolutely. We want to capitalize on the profitability projects that we have in 2020 to build up coverage for any inorganic actions that we have. There's nothing more to say there.

Okay. And the loans will benefit, to the extent of the guarantee, [ from a 0 risk ] weighting.

[Operator Instructions] The next question is from the line of Boulougouris, Alexandros with Wood & Co.

Yes. Regarding the cost of risk question, if I may, and following the front-loading of the COVID charges from the second quarter. Should we expect a 100 bps, more or less, cost of risk in the following quarters, excluding any inorganic to the transaction? That's my first question. My second question is on fees. What would be the impact of COVID and the closure of the country in part of Q1, Q2 mostly? So what should we expect for fees in the -- on a full year basis.

Thank you for the question. So with regards to the cost of risk, your assessment is correct. You should be expecting on the underlying cost of risk from this quarter onwards the 100 basis points that we said. Of course, other things being equal, the disclaimer we made was clear and loud that we took provisions based on what we know today and given the uncertainty around. Now with regards to fees, from what we expect during the year given also the uncertainty, we are predicting to be about 10% to 15% down compared to the fee mark that we had for 2019. We are strong with retail. We are [ largely in ] pace with corporate, and that will bring us to the mark that I mentioned.

Okay. And just as a follow-up. Should all these imply that core PPI should be more or less stable this year? I mean given all the trends that also Mr. Mylonas said before on NII [ and the costs ].

Well, I would say yes. It could be a bit up, a bit down, but we anticipate that the gap that we think [ that accomplished ] will be covered by the savings in OpEx. And we don't expect any significant deviation from that.

The next question comes from the line of Nigro, Alberto with Mediabanco (sic) [ Mediobanca ].

Just can you tell us how much do you expect in terms of capital relief from the new CRR proposal, i.e., intangibles deduction in the CET1, SME-supporting factor? And then just one follow-up, a clarification on the cost savings, EUR 40 million cost savings this year. Are these including also the cost saving coming from the restructuring costs booked this quarter? I didn't get it.

See, if Basel IV delays is the question, yes. The -- that's anyway down the road. In 2022, I think, is -- it was going to be implemented. And the -- any pushback is not affecting the current year or next year but in 2022 will give us the savings of -- it was about around 100 basis points, if I remember correctly. Now the second question was on -- can you repeat the second question? Because I'm not sure [ about it ].

Yes. On the cost savings coming this year, the EUR 40 million, if this includes also the savings coming from the restructuring costs that you booked this quarter.

Okay, I got it, [ okay ]. The EUR 40 million I referred to is only due to the VES that has already occurred. There will be more savings from other actions, especially on G&A. And therefore, total reduction in OpEx will be more than that...

The next question comes from the line of Fuzaylov, Roman with Prince Street Capital Management.

I just had a question about lending yields. So I'm looking at Page 13 of the presentation. On the lower left-hand side, you have the lending yields by segment. And it looks like new production is at higher levels than the back book, but it looks like that the overall yield actually moved down in Q1. So I'm surprised by -- is this to say that the yields on new production have moved up only recently? Because I would have thought that, if this was the case, you would have seen overall blended yields in Q1 actually move up instead of down.

That's a very good observation, a question I -- asked earlier. The answer is twofold. One is that new production is relatively small, so it's not affecting the total. And the second is, and I mentioned it in one of my answers to the previous -- one of my previous questions, was that there's been some hits to the back book in terms of curings and in terms of corporates seeking lower rates. So there is -- there are some moving parts in the back book.

And is the back book entirely fixed, or is there a floating component to it?

It is entirely floating, but you have [ renegotiation by the markets ], so which is driving the -- one part of the corporates and especially pre COVID where there was -- they had a bit more bargaining power. And then it's the curings that are going into the back book because this is the performing back book that are with lower yields than the rest. So there's a mix effect.

And do you expect -- as total new production starts to go up over the course of the rest of the year, if it does, will the yields on new production come down as a result of that, meaning do we only see these higher numbers now because new production is as low as it is?

The new production will be somewhere between the back book and the front book because, as you know, most of the new production will have government-guaranteed elements. And therefore, the benefit of a government scheme will be in part of those yields. That -- so the answer is yes.

The next question comes from the line of Bakhshi, Ashwinder with Barings.

I have 3 quick questions. First question, what is the expectation around drawdown from corporates? And what is the size of sort of undrawn lines that you have outstanding, if you're seeing further drawdowns there happening? That's the first question. Second question, on your existing portfolio, performing portfolio, what proportion of that do -- are you seeing clients come up to you for -- asking for renegotiation? And the third question is I understand government has announced a lot of plans to sort of support troubled customers. When you look at your book and when you look at the government plans, are you quite comfortable that most of the government plans to support troubled industries would cover your troubled customers? Or are there proportion of your -- or any segments of your loan book which actually wouldn't be covered by the government plans and therefore you'll have to provide for them separately?

I will pick up the first question with regards to the credit lines and the drawdowns. So we've seen about between EUR 200 million and EUR 300 million drawdowns in during March. Since then, the activity was low. And currently we have about EUR 0.5 billion of committed undrawn credit facilities. So that's the numbers.

Okay, on the renegotiations. I see the answer to my previous question got me in trouble -- no. I'm joking. It's the large guys that have the renegotiating power. So it's our largest corporate customers that have asked for lower rates. Remember, pre COVID, they were able to access the bond market, the mini-bond market as we call it. And therefore, they were saying, "Either you lower rates or we go to the bond market." So they had some power to bring down rates, but it was only just the largest group. And the last question was on the government programs. I think that, even without the announcement yesterday of the big EUR 750 billion European plan, the amount of money, the EUR 15 billion that I mentioned in my introductory remarks, seems to cover most of the cash gap of the corporate sector [ in risk ]. So now it does -- if every customer get what they should is what -- our role is to get that money from the government programs and provide it to our customers. And have no doubt that we will do that, but on a macro level, consistent with our macro projections, the cash gap of the corporate sector seems to be in line with the public support programs. And if more comes, then the GDP will decline even less than what we mentioned earlier in the call.

We have a follow-up question from the line of Floriani, Jonas with Axia Ventures.

Yes. Just a follow-up on fees, maybe more on the strategic part of it. I remember that, when you guys released the strategic plan and the business plan last year, a big part of your increase in fees was -- it was relying upon pricing and cross-selling. So I take that, given the circumstances today, the volume component of fees is likely to be severely affected, but I'm just wondering. Since you released the business plan, what has been the progress on your developments there? I remember there was also a component of cross-selling ratio increasing. If there's any update you could give us until the outbreak, I think, would be helpful. And also, how do you think beyond the crisis? I mean how are you thinking about these dynamics going forward once this is kind of back to normal? Are there any adjustments you'd be willing to do?

Okay. On the retail side, we've been spot on. We had a very ambitious budget for fees and we've exceeded it by a little. So on the retail side, everything is -- was moving very well pre COVID. Now we'll see what happens thereafter, though this is -- there are transactions that are moving to the banking system from outside the bank system. So that would be a plus. Where there was a shortfall was on the corporate side. Clearly, investment banking is not -- is nowhere, and it doesn't look like there will be anywhere in the next little while. Though, in 2021, this crisis may lead to some sort of M&A in the private sector. And then the cross-sell clearly is -- and the disbursement fees are behind schedule on the corporate side. So there we have created a new department which is called transaction services, which we are responsible for cross-sell. That is being rolled out now. So once we can get more into the -- in contact with clients, that will improve. So I think the -- if you want, the simple summary is very good on retail, very satisfied corporate due to COVID. We need to do more work; and the transaction services shift is one, and the new rollout of the corporate Internet banking platform. And we can link them up more to -- their systems with us, [ and that is ] going to produce more fees.

The next question is from the line of Memisoglu, Osman with Ambrosia Capital.

Just following up on the lending rates discussion. You just talked about recently about the state guarantees. It sounded like -- please correct me if I'm wrong. They're lowering the rates, but in the post-COVID environment you have more leverage with the corporates. So overall, are you seeing overall rates moving higher? Or what kind of mix should we assume? What percentage of the disbursements are state guaranteed versus not? And also, is the pace picking up or slowing down, let's say, versus April? Any color would be helpful.

Okay. The [ difficult ] answer to your question is that the guaranteed program hasn't started yet, okay? It's going to start. Hopefully, if the messages from the government are what -- are still on track, it's going to be next -- it's next week, okay? We put in our bids, all 4 banks, for part of the funds. Remember there's about EUR 1 billion, going up to EUR 2 billion; and the 4 banks had to pitch for their share. We've done that. The numbers will be announced, I think, tomorrow. And then we'll sign the contracts and start contacting our clients and see what happens. So this is a competitive process. We have seen many joint clients with other banks, so the rates, we will see where they come out. Now -- so yes, there will be competition to bring them down because there are 4 banks, but you're right that there are also -- they're looking for the cash. So we will see how that plays out over the next few months. So a bit -- a good question, but it's just a bit too early for it.

Okay. So it's not safe to say, because of COVID, lending rates overall headline would move higher. That's...

No. I think that would be -- that would not be right.

[Operator Instructions] We have a follow-up question with Bairaktari, Angeliki with Autonomous Research.

Just a follow-up question on -- actually repeating a question of one my colleagues which I think was not answered previously. What do you expect the impact to be from the elimination of the deduction of software intangibles and also from the SME-supporting factor which are going to be included in the CRD V package currently under preparation in the European Commission?

Angeliki, we don't expect to have a much of savings from there, just a few basis points, based on our assessment at the time...

[Operator Instructions] The next question is from the line of Kladis, Panagiotis with Eurobank Equities.

Just a quick question on the sale of national insurance. Apparently this was not -- there was not a successful outcome. So where we stand right now.

We are discussing with DG Comp our options. And when we have something to say more on that, we'll let you know.

[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Mylonas for any closing comments. Thank you.

Thank you all for taking the time to join us being the second bank in a row today. We are open for questions, myself, Christos and Greg. And I don't know when we'll see you again in person, but I'm sure we will be talking to you and maybe Zoom-ing with you in the near future. So thank you very much.

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