NBG Group Q2 Results 2018 PRESS RELEASE. NBG Group: Q2.18 results highlights

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1 NBG Grup Q2 Results 208 PRESS RELEASE NBG Grup: Q2.8 results highlights 208 SSM NPE reductin target already met NBG cmpleted a 2bn NPL dispsal f unsecured retail and SBLs in Greece fr a ttal cnsideratin f c6% f the utstanding principal amunt; the transactin was capital accretive adding c8 bps t CET rati In Q2.8 NPE reductin std.3bn ahead f the SSM target, delivering already the FY.8 SSM requirement Dmestic NPE stck drps by 0.5bn qq n negative frmatin f 0.3bn and write-ffs f 0.2bn NPE and NPL cverage f 60% and 84% respectively, cmbine with NPE and NPL ratis f 43% and 30% in Greece Q2.8 dmestic CR at 48bps frm 67bps in Q.8, aided by recveries related t the NPL sale; recurring CR significantly lwer qq (at c0bps), drives the return t perating prfitability LCR exceeds 00%; Q2 dmestic inflws f 0.9bn Eursystem funding remains at just 2.8bn, cmprising nly f TLTRO funding Fllwing ELA eliminatin in end-nvember 207, NBG s LCR rati is nw ver the minimum regulatry requirement f 00% (7%) The remval f ECB s waiver in August 208 leaves NBG s funding cst unaffected as Greek svereign paper was replaced by investment grade cvered bnds Dmestic depsits pick up in Q2.8 (+2% qq), despite the cntinuus relaxatin f capital cntrls since the beginning f the year CET rati at 6.2% CET rati at 6.2% factring in Banca Rmaneasca (BROM) and NBG Albania impairment charges Pr frma fr the H.8 PAT and the reductin in RWAs fllwing the cmpletin f NBG Albania sale in July, CET at 6.4% and 3.0%, taking int accunt the IFRS 9 full impact Grup PAT frm cntinuing peratins at 4m in H.8 against lsses f 59m in H.7 Operating prfitability imprvement in Greece reflects the sharp de-escalatin in CR (-68bps yy), ffsetting cre revenue reductin Dmestic NII at 523m (-23% yy) mainly due t the IFRS 9 impact (Q) and the repricing f c 0.8bn f the mrtgage bk linked with yr Greek T-Bills (Q2) H.8 OpEx at 433m in Greece (+3% yy), driven by G&As (+6% yy), which is due t seasnal factrs and shuld reverse in H2 OpEx is set t return t negative grwth rates upn cmpletin f the nging VES (c500 FTEs) benefiting persnnel expenses in H2.8, with the full charge taken in Q2 Lan impairments declined by 64% yy t 56m in Greece (H.8 CR at 08bps), bringing perating result t psitive territry in H.8 ( 50m) Dmestic PAT frm cntinuing peratins at 28m vs lsses f 73m in H.7 Athens August 3, 208

2 NBG Grup Q2 Results 208 NBG s Q2.8 financial results evidence the cntinued imprvement f the balance sheet and, mre imprtantly, a turning pint in P&L trends. Indeed, fllwing the Q return t psitive perating results, cre prfitability cntinued t strengthen in Q2. Regarding asset quality, NBG successfully cmpleted the sale f 2bn f unsecured lans at a capital accretive price (+8 bps t CET). Mrever, NPE reductin cntinued in Q2 fr a 9 th cnsecutive quarter, with the utperfrmance vs the Q2 SSM target reaching c.3bn. NBG thus has already fulfilled the FY target and will be aiming t maintain its buffer during H2. Regarding liquidity, NBG has achieved a large liquidity buffer fllwing the terminatin f access t ELA in Nvember 207. Despite ECB s eliminatin f the waiver n Greek debt, the impact n ur funding cst is zer. NBG s ECB expsure currently slely cmprises TLTRO funding. Imprtantly, NBG has achieved an LCR rati f 7% in July. Regarding P&L perfrmance, NBG prduced a psitive perating prfit f 44m, up frm 25m in the previus quarter, driven by significant and sustained cst f risk deescalatin. PPI is expected t have trughed in Q2, with crprate lan expansin, increased fee incme and cst cutting expected t lead the rebund. The main shrtterm prfit drivers are a CR f c0bps, 500FTE VES, which is near cmpletin, and further cntainment f G&As. Athens, August 3, 208 Paul Mylnas Chief Executive Officer, NBG 2

3 NBG Grup Q2 Results 208 Key Financial Data P&L Grup m H.8 H.7 yy Q2.8 Q.8 qq NII % % Net fees & cmmissins % % Cre incme % % Trading & ther incme 9 0-0% (6) 25 n/m Incme % % Operating expenses (468) (457) +2% (238) (23) +3% Cre PPI % % PPI % % Prvisins (58) (432) -64% (38) (20) -69% Operating prfit 69 (33) n/m % Other impairments (0) (9) +4% () n/m PBT 59 (42) n/m % Taxes (8) (7) +4% (2) (6) >00% PAT (cntinuing peratins) 4 (59) n/m % PAT (discntinued peratins) 2 38 (68) n/m % Minrities (20) (6) +2% (0) (0) -6% One-ffs (VES cst) (40) - n/m (40) - n/m PAT (reprted) 9 (43) n/m (5) 34 n/m Fr cmparability reasns, NII & trading incme have been restated in the previus perids t reclassify the interest incme f the lan t the Greek State frm NII t trading incme under IFRS 9 2 H.7 PAT (discntinued peratins) includes the impairments n Rmania and Serbia reflecting agreements t sell belw bk ( 5m) Balance Sheet Grup m Q2.8 Q.8 Q4.7 2 Q3.7 Q2.7 Q.7 Ttal assets Lans (Grss) Prvisins (0 8) (0 439) ( 35) (0 868) (0 937) ( 44) Net lans Securities Depsits Equity Tangible Equity Grup Balance Sheet has been adjusted fr planned divestments f Ethniki Insurance and Banca Rmaneasca that have been classified as nn-current assets held fr sale and liabilities assciated with nn-current assets held fr sale 2 Grup Balance Sheet in Q4.7 is pr frma fr IFRS 9 accunting standards Key Ratis Grup H.8 Q2.8 Q.8 FY.7 H.7 Q2.7 Liquidity Lans-t-Depsits rati 74% 74% 76% 77% 86% 86% ELA expsure ( bn) LCR rati 2 86% 86% 66% 4% n/a n/a Prfitability NIM 3 (bps) Cst f Risk (bps) Risk adjusted NIM Asset quality NPE rati 42.% 42.% 42.7% 43.7% 45.% 45.% NPE cverage rati 60.2% 60.2% 60.2% 6.2% 55.7% 55.7% Capital CET rati 6.2% 6.2% 6.5% 7.0% 6.5% 6.5% RWAs ( bn) FY.7 Lans-t-depsits and NPE cverage ratis are adjusted fr IFRS 9 2 LCR rati at 7% as at end-july, NIM is adjusted fr IFRS 9 / Risk adjusted NIM = NIM minus CR 3

4 NBG Grup Q2 Results 208 P&L Greece m H.8 H.7 yy Q2.8 Q.8 qq NII % % Net fees & cmmissins % % Cre incme % % Trading & ther incme 5-55% (7) 22 n/m Incme % % Operating expenses (433) (42) +3% (220) (23) +3% Cre PPI % % PPI % % Prvisins (56) (43) -64% (35) (2) -72% Operating prfit 50 (53) n/m 37 3 >00% Other impairments (9) (7) +23% (0) n/m PBT 4 (60) n/m % Taxes (3) (3) -2% (8) (4) 9% PAT (cntinuing peratins) 28 (73) n/m % PAT (discntinued peratins) % % Minrities (8) (5) +23% (9) (9) -4% One-ffs (VES cst) (40) -- n/m (40) -- n/m PAT (reprted) 0 (54) n/m (6) 26 n/m Fr cmparability reasns, NII & trading incme have been restated in the previus perids t reclassify the interest incme f the lan t the Greek State frm NII t trading incme under IFRS 9 P&L SEE & Other m H.8 H.7 yy Q2.8 Q.8 qq NII % % Net fees & cmmissins +3% 6 6 0% Cre incme % % Trading & ther incme 4 () n/m 3-67% Incme % % Operating expenses (36) (36) -2% (8) (8) +3% Cre PPI % % PPI 2 2-2% 0-9% Prvisins (2) () +46% (3) n/m Operating prfit % % Other impairments () () -42% () (0) >00% PBT 8 9-3% % Taxes (5) (4) +26% (3) () >00% PAT (cntinuing peratins) 3 5-0% 3-74% PAT (discntinued peratins) (2) (02) -98% () () -36% Minrities () () 0% () () -29% PAT (reprted) 0 (89) n/m 9-84% 4

5 NBG Grup Q2 Results 208 Asset Quality NPE reductin cntinued in Q2.8, with the stck f dmestic NPEs dwn by 0.5bn qq, driven by negative NPE frmatin f 0.3bn and write-ffs f 0.2bn. The qq NPE mvement incrprates the recently cmpleted NPL dispsal f unsecured retail and SBLs in Greece f an utstanding principal amunt f c 2bn. The cnsideratin f the transactin, which amunted t c6% f the principal amunt, was capital accretive adding c8bps t CET. Fllwing the NPL sale, NPE reductin stands.3bn ahead f target, fulfilling already the FY.8 SSM requirement. The net NPE reductin achieved since end-205 amunts t 5.5bn, reflecting negative NPE frmatin (- 2.bn) and write ffs (- 3.4bn), with the bulk f the latter eventually sld. The NPE rati in Greece drpped by 50bps qq t 42.6% in Q2.8, with NPE cverage settling at 60.%. Dmestic 90dpd frmatin als remained in negative territry in Q2.8 (- 99m frm - 57m in Q.8). 90dpd rati settled at 30.4% (-50bps qq) n cverage f 84.0% (82.8% at the Grup level). In SE Eurpe, the 90dpd rati settled at 3.8% n cverage f 62.8%. Dmestic 90dpd ratis and cverage Dmestic NPE ratis and cverage 57% 66% 34% 37% 6% 92% 20% 30.4% 30.5% 44% 46% 94% 80% 36% 42.6% 42.% 54% 20% 84.0% 82.8% 42% 67% 60.% 60.2% Mrtgages Cnsumer SBL Crprate Ttal GRE Grup Mrtgages Cnsumer SBL Crprate Ttal GRE Grup Dmestic NPE stck mvement SE Eurpe includes the Grup s businesses in Cyprus and the Frmer Yugslav Republic f Macednia 5

6 NBG Grup Q2 Results 208 Liquidity Grup depsits increased by 2.3% qq t 4.2bn in Q2.8, reflecting mainly dmestic market develpments. Dmestic depsits amunted t 39.3bn n accelerating quarterly inflws f 866m. In SE Eurpe, depsits were up by 2.7% qq t.9bn. On an annual basis, Grup depsits grew by 8.2% yy, reflecting depsit inflws f 3.0bn in Greece, despite cntinuus capital cntrl uplifts. As a result, NBG s L:D rati imprved further t 73% in Greece (75% in Q.8) and 74% at the Grup level. Eursystem remains at 2.8bn currently frm 2.3bn at end-q4.6, cmprising f TLTRO funding frm the ECB, with the Bank enjying a large liquidity buffer. Fllwing ELA eliminatin in end- Nvember 207, ur LCR rati is nw ver the minimum regulatry requirement f 00% (at 7% as at end-july). The remval f ECB s waiver in August 208 leaves NBG s funding cst unaffected as Greek svereign paper was replaced by investment grade cvered bnds. Eursystem funding ( bn) bn f interbank funding ELA ECB 2Q5 4Q6 Q7 2Q7 3Q7 4Q7 Q8 2Q8 Aug '8 NBG dmestic depsit flws per quarter ( bn) Q4 Q5 2Q5 3Q5 4Q5 Q6 2Q6 3Q6 4Q6 Q7 2Q7 3Q7 4Q7 Q8 2Q8-0.6bn + 3.9bn 6

7 NBG Grup Q2 Results 208 Capital CET rati f 6.2% in Q2.8, factring in impairment charges fr the sales f Banca Rmaneasca and NBG Albania, stands cmfrtably abve regulatry requirements. Pr frma fr the H.8 PAT and the reductin in RWAs fllwing the cmpletin f NBG Albania sale in July, CET stands at 6.4% and 3.0%, taking int accunt the IFRS 9 full impact. CET rati 6.5% 6.2% 6.4% 2Q8 CET FL at 2.8% n a reprted basis 9.38% 3.0% DTC: 4.7bn OCR: 2.875% CET: 6.0bn CET: 5.8bn CET: 9.375% CET: 5.9bn CET: 4.6bn Q8 2Q8 208 Regulatry Requirement 2Q8 CET pr frma fr H.8 PAT & NBG Albania sale 2Q8 CET FL pr frma fr H.8 PAT & NBG Albania sale 7

8 NBG Grup Q2 Results 208 Prfitability Greece: PAT frm cntinued peratins amunted t 8m in Q2.8 frm 0m the previus quarter, reflecting the 72% qq decrease in lan impairments that ffset the pressure in cre incme (-5% qq) and trading lsses f 9m in a deterirating internatinal envirnment against gains f 34m in Q.8. On an H basis, the sharp de-escalatin in CR (-68bps yy) brught perating result t psitive territry in H.8 ( 50m) against the lsses f 53m in H.7; the Bank reprted PAT frm cntinued peratins f 28m cmpared t lsses f 73m in H.7. NII amunted t 255m frm 269m in Q.8, reflecting the impact f restructurings and sustained deleveraging in the retail bk, with crprate balances stable qq. Mst Imprtantly, Q2.8 NII was negatively affected by the rate adjustment n 0.8bn f mrtgages linked t yr. Greek T-Bills. NIM als decreased by 20bps qq t 267bps. On a H.8 basis, NII declined by 23% yy. Net fee and cmmissin incme amunted t 54m frm 57m the previus quarter n lwer retail lending-related fees. On an annual basis, net fees grew by 3% yy, driven by the eliminatin f ELA-related fees. Trading lsses f 9m in Q2.8 mainly reflect the lsses frm derivatives ( 4m) vs gains f 2m in Q.8. On an H basis, the trading line was supprtive, generating gains f 25m. Q2.8 perating expenses amunted t 220m frm 23m in Q.8. The quarterly mvement mainly reflects a pick-up in G&As n increased expenses related t prfessinal services (legal, audit and cnsulting fees). Persnnel expenses remained practically stable at 36m (+% qq). On an annual basis, OpEx settled at 433m (+3% yy), again driven by higher G&As, which is due t seasnal factrs and shuld reverse in H2. OpEx is expected t return t negative grwth rates upn cmpletin f the nging Vluntary Exit Scheme (VES) benefiting persnnel expenses in H2.8, with the full charge taken in Q2. Lan impairments amunted t 35m in Q.8 frm 2m the previus quarter, aided by recveries related t the 2bn NPL dispsal. As a result, CR drpped sharply t 48bps frm 67bps in Q.8, with recurring prvisining rate still lwer in Q2.8 vs Q.8. H.8 CR settled at 08bps frm 276bps in H.7, cnstituting the key driver fr ur return t perating prfitability. SE Eurpe: In SE Eurpe, PAT frm cntinued peratins reached 3m ( m in Q.8), reflecting higher prvisins and taxatin. On an annual basis, the Grup reprted PAT frm cntinued peratins f 3m frm 5m a year ag. SE Eurpe includes the Grup s businesses in Cyprus and the Frmer Yugslav Republic f Macednia 8

9 NBG Grup Q2 Results 208 Name Abbreviatin Definitin Cmmn Equity Tier Rati Cmmn Equity Tier Rati Fully Laded Cre Depsits CET rati CET CRD IV FL CET capital as defined by Regulatin N 575/203, with the applicatin f the regulatry transitinal arrangements fr IFRS 9 impact (H.8) ver RWAs CET capital as defined by Regulatin N 575/203, withut the applicatin f the regulatry transitinal arrangements fr IFRS 9 impact (H.8) ver RWAs Cnsist f current, sight and ther depsits, as well as savings accunts, and exclude reps and time depsits Cre Incme CI Net Interest Incme ( NII ) + Net fee and cmmissin incme Cre Operating Result (Prfit / (Lss)) -- Cre Pre-Prvisin Incme Cre PPI Cre Incme less perating expenses Cst f Risk / Prvisining Rate CR Cre incme less perating expenses and prvisins (credit prvisins and ther impairment charges) Credit prvisins f the perid annualized ver average net lans Cst-t-Cre Incme Rati C:CI Operating expenses ver cre Incme Cst-t-Incme Rati C:I Operating expenses ver ttal incme Equity / Bk Value BV Equity attributable t NBG sharehlders Funding cst / Cst f funding -- The blended cst f depsits, ECB refinancing, rep transactins, ELA funding (until late Nvember, 207), as well as cvered bnd and securitizatin transactins Grss Lans -- Lans and advances t custmers befre allwance fr impairment Liquidity Cverage Rati LCR Lans-t-Depsits Rati L:D Net lans ver ttal depsits, perid end Net Interest Margin NIM Net Lans -- Lans and advances t custmers Nn-Perfrming Expsures Nn-Perfrming Expsures Cverage Rati Nn-Perfrming Expsures Frmatin Nn-Perfrming Expsures Rati NPEs NPE cverage NPE frmatin NPE rati The LCR refers t the liquidity buffer f High Quality Liquid Assets (HQLAs) that a Financial Institutin hlds, in rder t withstand net liquidity utflws ver a 30 calendar-day stressed perid NII annualized ver average interest earning assets. The latter include all assets with interest earning ptentials and includes cash and balances with central banks, due frm banks, financial assets at fair value thrugh prfit r lss (excluding Equity securities and mutual funds units), lans and advances t custmers and investment securities (excluding equity securities and mutual funds units). Nn-perfrming expsures are defined accrding t EBA ITS technical standards n Frbearance and Nn-Perfrming Expsures as expsures that satisfy either r bth f the fllwing criteria: (a) material expsures which are mre than 90 days past due, (b) the debtr is assessed as unlikely t pay its credit bligatins in full withut realizatin f cllateral, regardless f the existence f any past due amunt r f the number f days past due Stck f prvisins (allwance fr impairment fr lans and advances t custmers) ver nnperfrming expsures excluding lans mandatrily classified as FVTPL, perid end Net increase / (decrease) f NPEs, befre write-ffs Nn-perfrming expsures ver grss lans, perid end Nn-Perfrming Lans NPLs Lans and advances t custmers in arrears fr 90 days r mre 90 Days Past Due Cverage Rati 90 Days Past Due Frmatin 90 Days Past Due Rati Operating Expenses Operating Prfit / (Lss) -- Pre-Prvisin Incme PAT (Cntinuing Operatins) Risk Weighted Assets 90dpd cverage 90dpd frmatin 90dpd / NPL rati OpEx, csts PPI -- RWAs Stck f prvisins ver lans and advances t custmers in arrears fr 90 days r mre excluding lans mandatrily classified as FVTPL, perid end Net increase / (decrease) f lans and advances t custmers in arrears fr 90 days r mre, befre write-ffs and after restructurings Lans and advances t custmers in arrears fr 90 days r mre ver grss lans, perid end Persnnel expenses + General, administrative and ther perating expenses ( G&As ) + Depreciatin and amrtisatin n investment prperty, prperty & equipment and sftware & ther intangible assets. Fr H.8, perating expenses excludes the VES cst f 40m. Ttal incme less perating expenses and prvisins (credit prvisins and ther impairment charges) Ttal incme less perating expenses, befre prvisins (credit prvisins and ther impairment charges) Prfit fr the perid frm cntinuing peratins. Fr H.8, PAT (cntinuing peratins) excludes the VES cst f 40m. Assets and ff-balance-sheet expsures, weighted accrding t risk factrs based n Regulatin (EU) N 575/203 Tangible Equity / Bk Value TBV Cmmn equity less gdwill & intangibles (gdwill, sftware and ther intangible assets) Ttal depsits -- Due t custmers 9

10 NBG Grup Q2 Results 208 Disclaimer N representatin r warranty, express r implied, is r will be made in relatin t, and n respnsibility is r will be accepted by Natinal Bank f Greece (the Grup ) as t the accuracy r cmpleteness f the infrmatin cntained in this annuncement and nthing in this annuncement shall be deemed t cnstitute such a representatin r warranty. Althugh the statements f fact and certain industry, market and cmpetitive data in this annuncement have been btained frm and are based upn surces that are believed t be reliable, their accuracy is nt guaranteed and any such infrmatin may be incmplete r cndensed. All pinins and estimates included in this annuncement are subject t change withut ntice. The Grup is under n bligatin t update r keep current the infrmatin cntained herein. In additin, certain f these data cme frm the Grup s wn internal research and estimates based n knwledge and experience f management in the market in which it perates. Such research and estimates and their underlying methdlgy have nt been verified by any independent surce fr accuracy r cmpleteness. Accrdingly, yu shuld nt place undue reliance n them. Certain statements in this annuncement cnstitute frward-lking statements. Such frward lking statements are subject t risks and uncertainties that may cause actual results t differ materially. These risks and uncertainties include, amng ther factrs, changing ecnmic, financial, business r ther market cnditins. As a result, yu are cautined nt t place any reliance n such frward-lking statements. Nthing in this annuncement shuld be cnstrued as a prfit frecast and n representatin is made that any f these statement r frecasts will cme t pass. Persns receiving this annuncement shuld nt place undue reliance n frward-lking statements and are advised t make their wn independent analysis and determinatin with respect t the frecast perids, which reflect the Grup s view nly as f the date heref. n 0