Ladies and gentlemen, thank you for standing by. I’m Galik, your Chorus Call operator. Welcome and thank you for joining Eurobank Ergasias Conference Call to present and discuss the First-Half 2019 Financial Results. At this time, I would like to turn the conference over to Mr. Fokion Karavias, CEO. Mr. Karavias, you may now proceed.

Ladies and gentlemen, good afternoon, and welcome to the Eurobank first-half 2019 results presentation. After an overview of the highlights, our Chief Financial Officer, Harris Kokologiannis, will give you a more detailed presentation of our results, and finally, we will answer your questions. Let me start with the macroeconomic background. We still see a stable environment locally in spite of deceleration in the eurozone activity. For instance, although a slightly weaker tourism season is expected in 2019, in the first six months, revenues were reported up 15% year-on-year. Furthermore, the economic sentiment indicator for the month of July recorded a significant improvement, according to EU data released on Tuesday, despite a slight decrease in both the euro area and the EU. Investment-led strategies to be implemented by the new government could accelerate economic growth next year, create new jobs and increase the pace of the real estate market economy. For the banking system, funding conditions continue to improve as seen in deposit gathering and interbank markets with GGBs offering is supportive, but dropped. In addition, the full lift of capital controls is further boosting sentiment and the return into normality. Let me now update you on the progress of our transformational plan. Following the binding agreement for the €2 billion mortgage securitization with Pimco in June, the transaction’s final structure and documentation has been settled with the SSM. As a result, earlier today, the bank received a draft SRT approval of the Supervisory Board. This allows us to deconsolidate the NPE balance of €1.8 billion, while retaining 100% of the securitization senior notes. In parallel, our discussion with Pimco for the €7.5 billion multi-asset securitization and our loan servicer continue, targeting a binding agreement around the end of September. So overall and following the SSM approval, the transformational plan is executed on time and we are looking forward to successfully concluding it, derisking our balance sheet and raising an NPL ratio below 16% by the end of the year. This will enable the bank to go after new business opportunities in Greece and in Asia. Let me now focus on our financial results for the first half of 2019, with highlights shown on Slide 5. Our net profits in the first-half of 2019 reached €90 million. On a year-on-year basis, core pre-provision income was down 3.4%, driven by net interest income down by 3.6% year-on-year, while commissions increased by almost 13% mainly due to the Grivalia merger. Operating expenses on a comparable basis were flat year-on-year with Greece actually 2.2% lower. Now on asset quality metrics. Our stock of NPEs receded by €2.2 billion in the quarter, mainly as a result of the Pillar classified assets for sale and also due to the organic negative NPE formation of €200 million in the quarter. As a result, the NPE ratio improved by almost 8 percentage points year-on-year, growing below 33%. The coverage of NPEs by the inflated cash provisions increased by 70 basis points from the quarter to 54.5%. On capital, our fully loaded Basel III ratio improved by 30 basis points to 13.7%, while our total capital ratio reached 18.4%, which is the highest in the Greek market and supports execution of our NPE acceleration plan. Deposits gathering continued with an increase of €0.5 billion in Greece and €1.9 billion at the group in the second quarter, which includes €1.1 billion in Bulgaria through acquisition. As a result, the group loan-to-deposit ratio declined to a new low of 86.5%. As for our international operations, we are excited to complete the Piraeus Bank Bulgaria acquisition, and thus, strengthen our presence in the country. In the first-half of the year, profitability remained solid across the region, contributing 35% of the group pre-provision income. Overall, as our accelerated plan for the cleanup of the balance sheet is executed on a timely manner and the expectations for economic growth are improving, the focus will gradually shift more towards the financing of the economy, the increase on the performing loan book, further penetration across all areas which support fee and commission income and further cost containment. At this point, I would like to ask our CFO, Harris Kokologiannis, to present our results in detail before opening the Q&A session.

Thank you, Fokion. Let’s now provide some more insights on the second quarter results, which include Grivalia for the full quarter and Piraeus Bank Bulgaria for one month. Furthermore, €2 billion Pillar portfolio is being reclassified as held for sale following the binding agreement with Pimco signed on the 26th of June. Taking into account the draft SRT decision we received earlier today, we envisage the closing of the transaction and the deconsolidation of the portfolio within September. Moving to the capital position and on Page 8. In the second quarter, the fully loaded CET1 ratio increased by 50 basis points, up 13.7% as a result of the improvement of Greek government bonds, which more than offset the impact from the acquisition of Piraeus Bank Bulgaria and new loan production of international. Total capital ratio amounted to 18.4%, which is almost 470 basis points higher than in 2019 overall capital requirements. Moving to Slide 9 and on liquidity. As shown at the right part of the page, in the second quarter, the organic increase of group deposits amounted to €0.8 billion and, including the impact of Piraeus Bulgaria to €1.9 billion. This loan-to-deposit ratio receded further in the second quarter to 87%. Moving on Page 12 and on lending growth. In the first-half of the year, the organic increase of performing loans amounted to €400 million. If we add on that the impact of Piraeus Bulgaria by €600 million and deducted €200 million performing mortgages included in the Pillar securitization, we get the first-half growth figure of €800 million that is shown at the right part of the page. On Page 15, net interest income for the group remains flat quarter-on-quarter at €342 million, with international business recording higher income by €6 million, mainly related with new lending and the impact of Piraeus Bulgaria for one month. On a year-on-year basis, net interest income is lower by 3.6%. On next page, Page 16, net commission income increased in the second quarter to €19 million, following the contribution of Grivalia business by €50 million. Furthermore, the rest of the business showed an increase of €9 million growth, coming mainly from network and lending activities both in Greece and international. As a result, on a year-on-year basis, fee income is higher by almost 13%. On Page 17, operating expenses on a like-for-like basis are steady for the group and lower by 2.2% in Greece as a result of lower staff costs. In the beginning of the year, staff in Greece decreased by 200 employees, while the outlook is for a similar organic decrease for the second-half of the year. Further on pre-provision income and on Page 6. On the top left of the page, core PPI increased in the second quarter to €208 million as a result of Bulgaria’s contribution in the organic growth of commissions. PPI amounted to €265 million, including €30 million negative goodwill relating with Piraeus Bulgaria and €27 million gains from the sale of foreign NPE covering bonds. Moving then on asset quality and on Page 7, as shown in the top left of the page, net NPE formation amounted this quarter to €205 million, almost double the previous quarter, mainly due to lower NPEs inflows. NPE stock decreased quarter-on-quarter by €2.2 billion, driven by the Pillar securitization, negative formation, high collateral liquidations and the like. As a result, the NPE ratio receded at the end of June to 52.8%, which is lower by 790 basis points compared to one year ago. Cost of risk of our net loans amounted in the second quarter to 2% and loan provisions to €183 million, which including full the cost of Pillar, as well as an extraordinary charge of €80 million in Serbia. For the full-year 2019, we reiterate our outlook for the cost of risk between 1.7% and 1.8%, implying the cost of risk for the second-half of the year of approximately 1.5%. Finally, on this page, provision coverage at the end of June increased to 54.5%, higher by 170 basis points versus the end of last year as a result of negative formation in the loan and average coverage of the Pillar portfolio. As regards to our NPE reduction plan and on Page 19, first-half organic decrease amounting to €700 million, and including the impact of Pillar securitization and Piraeus Bulgaria to €2.4 billion. This is leaving us for the second-half of the year perceived €1.1 billion organic decrease and complete the Cairo securitization, for which we are very confident to fulfill. The target for the end of this year is for an NPE balance of €6.4 billion on a group basis and an NPE ratio of 15.9%. This completes my presentation and we may now open the floor for your questions.

The first question is from the line of Floriani Jonas with Axia Ventures. Please go ahead.

Good morning – sorry, good afternoon, guys. Thanks for the presentation. My first question is on Slide 20. So it looks like and also checking the results from the other Greek banks, it looks like the inflow in the second quarter has been positive across the Board. So I’m just wondering from your side, do you see that as a sustainable rate now going forward? I mean, the €220 million as expectation for the next quarters? And if you can make any comments on the default in Greece, that will be great? Then my second question is still on NPEs but on Slide 19. Just wondering what will be the breakdown of the NPE reduction, the €1.3 billion NPE reduction that you show there on the slide? And where is your next securitization is being accounted for? I think as far as I remember, you had a plan for another securitization. So, just wondering if it’s inside of €1.3 billion, or if it’s an extra or maybe inside the €1.7 billion? And then finally, on the margins, it seems like there’s a bit of a margin pressure this quarter as well. So if you can, maybe make some comments on the NIM environment and expectations now for the second-half of the year, it will be great? Thanks. Thanks, guys.

Sure. Thank you very much for the questions. I will take the questions about NPEs. But before answering your questions, I would like to clarify your second question. You referred to the – on Page 19, the €1.3 billion and €1.7 billion reduction for the years 2020 and 2021, is this well understood?

Exactly, exactly.

Okay. So let me start from this year from 2019. And then before commenting on the question about the inflow, which is indeed the lowest that we have seen during the last two quarters, let me try to wrap up our performance in terms of asset quality. So as we mentioned before, on Page 7, we see the NPE ratio down 32.8%, which is 8 percentage points lower year-on-year. But besides this drop, what is equally important is that during this period, this – the cast coverage has remained roughly unchanged, and actually during the last quarter, we had an uplift of 70 basis points. In terms of the negative NPE formation, which is €200 million and to a great extent is driven by the low inflows. We had a good performance across all different segments, as you can see on Page 21. Mortgages, small businesses and corporate all segments had a nice negative performance. And in the second-half of the year, we expect the organic reduction to be €1.1 billion, €1.2 billion. This is a figure with which we feel comfortable when compared with the €7.8 billion that we had in the first-half of the year. And we believe that mainly on the third and also on the fourth quarter, we would be able to meet this reduction. Now let me comment more specific about your question in terms of the €219 million NPE inflows that we had in the second quarter. This lower reading is a combination of a number of factors, such as, first of all, better products that we offer for a number of loan segments like mortgages. And these products have helped more sustainability in terms of the restructuring that we have done. Second, second factor is the higher real estate prices, which have improved the sentiment of the borrowers and provide incentive to the borrowers to become performing on their loans. And a third factor is the overall improvement of the economy and the higher sentiment that we see, something that has been also depicted in the statistics of the EU, as I mentioned before. Now, how sustainable is this figure? I think we can say that the trend is going to be positive. Obviously, we can expect some volatility, some ups and downs for fiscal 2019, but I think moving forward, we should see a clear trend of lower NPE inflows. Now, let me come on Page 19, and the reduction of €1.3 billion and €1.7 billion in terms of the NPE balances for the years 2020 and 2021, respectively. Given that we complete the bulk of the NPE induction this year, the reduction for the next two years is going to come mainly through organic NPE reduction. So restructurings or liquidations of real estate or write-offs. In 2021, there is a portfolio sale, which, however, is relatively small amount, is below €1 billion, and this is scheduled for the second-half of 2021. So this is about the NPEs. Let me pass to Harris to answer the question about the margins.

Thank you, Fokion. The answer to your question regarding margin, yes, the answer is yes. There is some pressure, especially coming from the corporate portfolio, although this pressure is much less than what we have seen in the previous quarters. To some degree, this is expected to continue for the coming quarters. But this is giving me the opportunity to provide a more holistic update about our profitability based on the recent trends, pre-provision stability, but also bottom line stability. For the full-year 2019, we expect net interest income to be lower by low single-digit than the previous year, mainly as a result of lower interest from NPEs and lower spreads on the performing corporate and small business portfolio, as I mentioned before. On the other hand, we should say that the growth of performing loans abate the pressure to some degree from the cleanup of our balance sheet. More specifically, last year, performing loans increased by €700 million, while for this year, we expect the organic increase to accelerate and reach €1.2 billion. In the first-half, we increased organically performing loans by €400 million. Accounting for the Pillar securitization and acquisition of Piraeus Bulgaria, the total book expanded by approximately €800 million, while in the second-half, we expect organic growth of approximately €800 million, plus €1 billion from the Pillar senior note. It is positive to note here that the mortgage, specifically the mortgage loan market, which has remained very sluggish during the last few years, is recently coming back. And this is in line with the recovery of the residential, as shown in the high production volume and the Fed annual increase of the residential properties index. Furthermore, we should point that the importance of our international business as it is improving quarter-on-quarter since it secures a sustainable growth base of SRT [ph] spreads higher by approximately 130 to 140 basis points than the loan book with very low NPE ratio, of course. It is expected that net interest income from international business to reach approximately 30% of group’s NII in the coming years. Now, let me provide also an update regarding the other significant lines of our profit and loss. On fees and commissions, on a year-on-year basis, fee income is higher by almost 13% due to the contribution of Grivalia, the increase of network fees and of international. For the rest of the year, it is expected to continue at a similar pace of increase for the reasons mentioned above, but also due to fees related with lending-related fees that are on the pipeline and are expected to realize in the third and fourth quarter. From 2020 onwards, apart from the expected growth due to the volume of business and the full phasing of Grivalia, a number of initiatives are examined related to the pricing of transaction-related fees or that starting [ph] on transactions than today are provided for free. Furthermore, given the normalization of the – in the customer sentiment and especially after the recent elimination of capital controls, the business of profit management and bancassurance will accelerate boosting the respective fees income. Now on operating expenses. On operating – on costs, we reiterate the guidance that we have given in the previous quarter for a like-for-like decrease of cost in Greece by approximately 3% in 2019, driven by lower staff cost. And as we said, on a yearly basis, we expect for the full-year 2019, we expect a decrease of staff in Greece by 400 people from 9,000 to approximately 8,600. Of course, the incorporation of Grivalia and also Piraeus Bulgaria late in the year, we lead the headline number to show year-on-year increase of approximately 3%. However, it should be noted here that Piraeus Bulgaria cost synergies amount to €25 million per annum, 80% of which is expected to be realized until the end of 2020. Now given that the NPE reduction plan absorbs obviously significant resources and amount of time in this year, we should expect further rationalization of the operating cost base in Greece as of 2020, focusing specifically on the number of branches again and the number of staff. Now regarding core pre-provision income and summarizing what I have said before, core PPI is expected to be lower in 2019 by low single-digit ratio versus 2018. This is the most updated outlook. Furthermore, we reiterate our outlook for the cost of risk of approximately 1.7% this year. That means that we expect the cost of risk of 1.5% for the second-half of the year. And conclusively, net profit before one-offs are similar with the one that we had in 2018 of €200 million. Overall, as a conclusive statement, I will say that as our accelerated plan for the cleanup of our balance sheet is executed on a timely manner, as it appears. The focus will gradually shift more and more towards in the financing of the economy, the growth of loan book, business developments across all areas that support the business income, and of course, further cost containment.

That’s great. Thanks, Harris.

The next question comes from the line of Bairaktari Angeliki with Autonomous Research. Please go ahead.

Hi, thank you very much for taking my questions. First of all, on the Cairo securitization, can I ask whether you reiterate the guidance that you have given previously for the loss from that during your terms of around €1.2 billion to €1.4 billion? And should we expect that to be disclosed by the end of this year. or is it going to be disclosed, the final number, next year? And then given that you have now done the Pillar transaction at the mark, which admittedly was higher than most of us would have expected. And I remember that when you announced the Cairo transaction, you had said that the coverage on the rest of the book after the transaction was expected to be more or less not very far from the current level, if I remember correctly. Do you – does that still stand, or do you expect – effectively, is the market going to be the one that you had guided for initially, which is, if I remember correctly, was something close to €0.30 on the dollar, or could it be better closer to the Pillar transaction, which was €0.68 on the dollar? That’s my first question. My second question, and apologies, I wasn’t sure – I didn’t understand what you said on the Pillar senior terms. Is that now included in loans as of Q2? And if yes, what is the amount, please, that you have? I know that the nominal is €1 billion, but do you have €1 billion, or is there a smaller amount? I think I missed that in your comments. And then third question, you have booked a significant gain from Greek government bonds. Could you give us the amount, the face value of Greek government bonds on balance sheet as of the second quarter? And could you tell us whether that increased quarter-on-quarter and whether there is any room to buy more while complying with the ECB cap? And if you could also update the usual sensitivity that you gave. GGBs have rallied even further since the end of June. So if you could give us an indication of what is the quarter-to-date gain on your CET1, that would be helpful for us? And the fourth question on my side. A number of one-offs this quarter. Would it be possible to just split them out? If I’m not mistaken, you have €30 million in other income on revenues and you have the extraordinary cost of risk charge in Serbia, which is, if I’m not mistaken, is related to Swiss franc mortgages. Let me know if that is not the case. And then you also have some restructuring costs. Could you please split those out, please? Thank you.

Okay. Angeliki, thank you for your questions. They’re quite a few and all of them are welcome. Let me start from the question regarding the two securitization, and then Harris will take the rest. Now in terms of the senior note of Pillar, indeed the nominal amount is €1 billion, slightly above €1 billion, €1.05 billion. And the – this bond is going to carry a fixed coupon of 1.85%. And it has not been booked on the loans yet. Therefore, on the slide that we have about performing loans, this amount is not included yet, but this is our intention as soon as we closed the transaction. Now given that you mentioned about the senior note, it is a good opportunity to mention that based on the approval that we received from the SSM that I mentioned earlier this draft approval. The risk weighting on this bond is going to be based on the standardized methodology. And therefore, it’s going to carry a risk of 100%, roughly 100%. And based on the risk-weighted assets of the underlying portfolio of loans, the risk weighting of the senior note is going to be roughly similar. So we’re not going to have any sort of material change from that. In terms of Cairo, and your question whether we reiterate our guidance for €1.2 billion to €1.4 billion regarding the size of the mezzanine, we confirm that. Indeed, we reiterate this guidance and definitely, we should have the final figure before the event as our intention is to close this transaction before year-end. Now what was not clear to us is about this €0.30 that you mentioned regarding Cairo. We have never provided any sort of guidance about the price on Cairo. The only guidance that we have provided is on the size of the mezzanine NPEs. And you could potentially make some assumptions and calculation based on that. So let me pass now to Harris for the rest of the questions.

Now regarding the government bonds, the face value of the government bonds taken over the last quarters are €2.4 billion. Actually, we are capped from the ECB’s decision back in 2015. There is no room for further increase unless there is some relaxation of this decision. And in the first – in the second quarter, we recorded an upside in our capital of approximately €300 million. In the third quarter, we have some further upside given that ECB’s have been further improved. Regarding one more to provide you a total picture, on the positive side, we had €30 million negative goodwill coming from Piraeus Bulgaria. This is recorded as under other income. On the negative side, we had in the line of loan provisions an amount of €18 million for the reason that we mentioned in Serbia. And below the line, we have cost of a voluntary exit scheme, which on an after-tax basis amounts for the first-half at € 41 million. Then, we have a restructuring cost for Piraeus Bulgaria of €16 million that relates to the closure of branches and indebtedness for period. And these are the most important one-offs in the first-half. Regarding the second-half, actually, we don’t expect any similar amount. So actually, we don’t expect something more than €10 million, I would say.

Thank you. If I may just follow-up on the Cairo securitization. Let me just ask the question differently. I know you haven’t given any guidance on the marks. But you had – I think, if I’m not mistaken, you had given at some point some indication of the coverage on the remaining of the book assets. So on those €6.6 billion that you had currently, previously €6.4 billion gross NPLs at the end of 2019, could you give us an indication on the coverage on the remaining book that you expect? I know it cannot be precise, but more or less what you have in your budget or what you would like to share.

Yes. First of all, the coverage in the Cairo book is around 53%, 53.5%, so it’s not that different than the rest of the portfolio, which is 54.5%. And regarding your question of what kind of coverage we expect post the completion of the securitization transaction of both Pillar and Cairo, yes, we reiterate the guidance that the coverage is not going to change in any material way.

Okay. Thank you very much.

The next question is from the line of Boulougouris Alexandros with WOOD & Co. Please go ahead.

Thank you for the presentation. A quick question on the net interest income again. Is it fair to assume that the current levels in the quarter should be stable in the second-half, around €340 million, which should imply a year-on-year growth for the full-year of around 3 reduction – sorry no growth, drop of 3% approximately? If I remember correctly in the previous conference call, you had assumed a 2% decline year-on-year, I think, in NII. And maybe if you could give us a bit the trends for 2020 in terms of net interest income? That’s my first question. My second related again to the question from my colleague previously regarding the other income. I didn’t catch how exactly it entailed. If you could repeat that, the outlook? And the third question regarding provisions, which you said it will be about 150 bps in the second-half compared to the higher levels in the first-half. Is this related to transactions, I assume that you had the incremental? And then my final question, regarding the guidance for 10% ROE in 2020. Is there any update on that? I assume it’s still also. Thank you.

Thank you, Alexandros, for your questions. I think for the trend in the coming two quarters, the answer is yes. We don’t expect any material volatility of net interest income from the current levels. So for this reason, we provided an updated outlook for loan decrease on net interest income. Regarding 2020, if you – although, we could appreciate that we are just now starting preparing our business plan and budget for next year, so more precise estimates could be provided in the third and fourth quarter results. But the big picture is that, any impact from the NPEs acceleration plan, especially from the two big securitization will appear in 2020, mainly through a decrease of NPV unwinding, partly offset from the single tranche coupon. Overall, the impact, as we have said also in the past, is estimated that approximately between €100 million and €120 million, which is expected to be partly offset on a core PPI basis by an accelerated versus 2019 performing loan growth, both in Greece and the region, lower funding cost from deposits and repos, high fees and commissions, including, of course, the full phasing of Grivalia and cost synergies from Bulgaria. But what will be of – the most important element of 2020 profitability will be the much lower cost of risk, for which for sure we elaborate on that later. Let me come to the other income. Other income in the first – the line other income in the first – in the second quarter includes €30 million negative goodwill from the Piraeus Bulgaria acquisition and another €27 million gain from sale of foreign and some Greek government bonds. And regarding cost of risk, the outlook for the second-half of the year is for a cost of risk of 1.5% on net loans. Now regarding the 2020 return on equity guidance, based on what we have addressed and we’ve seen this year, we expect next year, the pre-provision income to be roughly around €850 million, cost of risk to decline substantially below 1%, and this should project a return on equity close to 10%.

Okay, that’s very helpful. Thank you.

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

Thank you. Let me thank you all for your participation in this call. Thank you for your questions, and we are looking forward to seeing you even in Athens when you visit us or in many of the road shows in London or in New York. Thank you.