Eurobank Ergasiasrvices A Aktie

Ladies and gentlemen, thank you for standing by. I'm Constantinos, your Chorus Call operator. Welcome, and thank you for joining the Eurobank conference call to present and discuss the second quarter 2026 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 2026 Results Presentation. Together with me is our CFO, Harris Kokologiannis, and the Investor Relations team. We will start with some key recent developments, then present our results and answer your questions.

The global environment remains agile and challenging with geopolitical developments weighing on market sentiment and adding to inflation. Inflationary pressures will push euro rates higher even as the European economy remains subdued despite a better-than-expected second quarter performance. Nevertheless, the economies in the regions where we operate have so far demonstrated remarkable resilience, supported by a number of factors. First, investment activity remains robust. In Greece, in particular, the government recently unveiled a EUR 23 billion national development program for the period 2026 to 2030, focused on infrastructure, climate resilience and regional economic convergence. Second, the tourism sector continues to demonstrate resilience. In both Greece and Cyprus, tourist arrivals rebounded swiftly and current trends point to a season broadly in line with last year's strong performance.

In Bulgaria, political stability has returned, providing support for economic growth. Nevertheless, the country still needs to address its budget deficit and persistent inflation. Finally, prudent fiscal management in both Greece and Cyprus has translated into strong primary services. This creates the fiscal space needed to implement targeted measures that help mitigate the impact of higher energy prices and inflation on households and businesses. In this context, credit expansion has remained strong across our region. Eurobank has successfully capitalized on this favorable environment, delivered double-digit annual loan growth driven by business lending in Greece and solid momentum in both Bulgaria and Cyprus.

Now let's move on to our financial results as highlighted on Slides 5 to 11. Eurobank reported strong financial performance in the first half of 2026 with volumes, NII and fee growth trends accelerated on a quarterly basis. As a result, adjusted net profit reached EUR 776 million and return on tangible book value at 16.6%. In more detail, loan growth continued unabated with a quarterly organic growth of EUR 1.6 billion. This is 10% up year-on-year. Managed funds, another key pillar of our strategy, increased by EUR 1.2 billion year-to-date or 30% on an annual basis, while deposits also increased by circa EUR 3 billion over the same period.

Net interest income rose 6.1% year-on-year as the quarter-on-quarter growth accelerated to 3.2%. Fees and commissions were up by 14% year-on-year, supported by a strong second quarter. As a result, core pre-provision income was up by 8% year-on-year to EUR 1.1 billion. Consequently, core operating profit reached EUR 952 million. This is 10% higher year-on-year.

Now let's move on our activities outside Greece. Non-Greece revenues were strong and summed up to EUR 361 million net profit, underscoring the strength and diversification of the group's franchise. This performance was driven by Cyprus, which contributed EUR 230 million and Bulgaria, EUR 120 million in net profit. The CET1 ratio stood steady at 15.4% and the total capital ratio at 20.3%.

So overall, the second quarter results demonstrate solid organic growth at a pace even faster than previously, both in Greece and across the region. Despite ongoing geopolitical risks, the strength of the underlying trends give us confidence that we will exceed our full year targets. Accordingly, on Slide 11, we present our updated targets revised upwards. We now expect full year 2026 EPS moving higher than our initial estimate with its growth clearly above the 10% mark, resulting in a return on tangible book value close to 17% compared with our previous guidance of 16%.

At this point, I would like to ask our CFO, Harris Kokologiannis, to present our first half results before opening the Q&A session.

Thank you, Fokion. Let's now provide more insight into the second quarter results. On Page 20 and on lending volumes, growth accelerated in the second quarter versus an already strong Q1, reaching EUR 1.6 billion, with EUR 0.8 billion from Greece, EUR 500 million from Bulgaria and EUR 200 million from Cyprus. In the first half, loan increase reached EUR 2.7 billion with a year-on-year rate at 10.5%. Based on year-to-date performance and our pipeline, we will comfortably exceed the EUR 3.8 billion full year target to reach at least EUR 4.5 billion, which translates to a year-on-year increase of 9%.

Group deposits shown on Page 21, rose significantly in the second quarter by EUR 3.1 billion, including EUR 1.4 billion from Greek corporate. Furthermore, Bulgaria and Cyprus had also a solid performance with EUR 600 million and EUR 400 million, respectively.

As regards managed funds on Page 24, during the quarter, managed funds rose by EUR 800 million to EUR 11 billion year-on-year. They are higher by EUR 2.5 billion or by circa 30%. Private banking customers' assets and liabilities reached EUR 14.9 billion, higher by 10% year-on-year.

Moving to profitability on Page 28. Quarter-on-quarter, net interest income increased by a solid 3.2%, reflecting higher loan and bond volumes and the Euribor effect. On a year-on-year basis, NII is higher by 6.1%. The net interest margin for the period increased to 248 basis points.

Based on first half trajectory, we revised upwards our full year NII guidance from EUR 2.6 billion to more than EUR 2.7 billion. This implies a year-on-year increase of circa 7% from 2.5% before. The new estimate assumes that ECB rates will remain flat at the current level of 2.25%.

Turning to fees on Page 29. Momentum strengthened with fees up 3.7% quarter-on-quarter to EUR 210 million. Our focus on wealth and insurance pays off as reflected by the 40% annual growth. Lending commissions remain solid and are higher year-on-year by 30%. Overall, group fees are higher year-on-year by 13.5%. As a result, we are revising our full year organic growth outlook to nearly 10% from 7% previously.

Moving to costs on Page 30. Quarter-on-quarter, OpEx remained broadly flat with limited fluctuation expected for the rest of the year, which is in line with the outlook provided in our previous call. As a result, we reaffirm our full year target of EUR 1.33 billion, implying a year-on-year increase of around 5.5%.

On Page 32, we summarize operating performance for the first half of the year. Core PPI reached EUR 1.1 billion, higher by 7.7% year-on-year. Loan loss provisions for the period amounted to EUR 148 million or 53 basis points, in line with our plan. Consequently, core operating profit reached EUR 952 million, higher by 10% year-on-year.

Moving on to asset quality on Page 34. NPE ratio decreased to 2.5%. Coverage decreased to 82.4% as per our guidance, driven by the utilization of overlays related with CHF loans conversion and the transfer of circa EUR 370 million household loans held for sale.

On capital end on Page 38, CET1 ratio remained stable quarter-on-quarter at 15.4% as organic profitability contribution was offset by strong loan and bond growth, payout accruals and DTC acceleration.

The total CAD ratio on Page 39 stands at 20.3%.

Overall, our first half performance is beating our initial expectations and makes us confident to revise upwards our full year guidance as shown on Page 11. The accelerated loan and AUM growth, the upgraded NII estimate and the strong performance in fees is driving EPS higher with growth at levels clearly above the 10% mark. As such, return on tangible book value is expected to be close to 17% versus 16% previously.

This completes my presentation, and we may open the floor for your questions.

The first question comes from the line of Gabor Kemeny with Autonomous Research.

Firstly, on the NII guide, a big upgrade. I believe your NII was annualizing around plus 7% already in the second quarter. So perhaps you could help us quantify how do you think about the benefit from higher euro rates in the second half, higher volumes? And if there is anything additional we should consider around spreads given the competitive environment?

My other question would be on tourism, actually. And how do you see the trends going to the peak tourist season? And if you see any possible impact implication for your businesses in either Greece and Cyprus? And I'll leave it there.

Let's start from the second part, and then I'll take the one as regards...

Thank you for the questions. As I mentioned in my introduction, the touring season, both in Greece and in Cyprus is doing very well. In terms of arrivals, we see a very material rebound after a couple of months of moderate pace when the war started. So based on what we see at the moment, we expect that the overall performance for the year 2026 is going to be close to the record performance that we have seen in 2025. Close means slightly below, but no more than 2% to 4%, let's say. So overall, the business is very good and the business remains very good also in terms of financing these projects as we have done in the previous years.

So actually, as regards the full year guidance on NII, it has taken into account the volume effect of EUR 2.7 billion in the first half of the year, plus EUR 1.8 billion for the second half. So as a total, the full year at EUR 4.5 billion. On the other hand, we have done as regards the increase of our bond position, although we may have some room for some further acquisitions up to EUR 1 billion for the rest of the year. No material change as regards the deposit spreads. The annualized MREL cost considering that we have front-loaded the major part of our issuances in the first half of the year and some further contraction of lending spreads, especially in corporate Greece as well as in the household in Bulgaria. So actually, these are the variables that are driving NII full year outlook at higher than EUR 2.7 billion and a year-on-year increase of plus 7%.

The next question comes from the line of Ben Caven-Roberts with Goldman Sachs.

Two from me, please. First on fees or commissions rather, you're guiding to 10% organic growth now, up from around 7%. So could you just comment on where you're seeing the biggest outperformance coming from versus your original expectations? And then where you see the main moving parts and key upside and downside risks embedded within your guidance? And then secondly, on cost of risk, could you please just provide a bit more color on current trends and anything moving beneath the surface?

Let's start from the cost of risk and then I'll take about commission income.

Yes. In terms of asset quality, we see overall a very resilient performance. As you can see on Slide 34, there is a mild formation every quarter between EUR 40 million to EUR 50 million per quarter. The NPE ratio dropped from 2.6% to 2.5% at the group level and remains at very low levels, both in Cyprus at 1.7% and in Bulgaria at 2.4%. This is on Slide 13 and 15, respectively.

Now cost of risk was 53 basis points in the first half of the year, and we would like to stick to our guidance of circa 55 basis points for the full year 2026.

Let me also comment since you asked about cost of risk. You may have noticed that our coverage has dropped to 82.4%. This is down from 94% in the first quarter. If you recall, when we presented the guidance for the full year 2026 in February of this year, that was the indication that we have given for coverage in the area of 80%. So this drop was expected and is driven by the utilization of provision overlays related with the Swiss franc loan portfolio conversion and a transfer of some loans to held-for-sale status. So this explains the drop in terms of coverage. But in terms of cost of risk, let me reiterate that what we have said remains valid for the full year 2026.

Now based on the revised full year estimate that we have done, the outperformance is coming primarily from the lending fees that were very strong in the first half of the year and the assets under management. For prudent reason, we have kept the non-Greek commission income generation as per our budget -- as per our initial budget. So this outperformance of lending and asset management in Greece actually is driving up the full year organic growth at 10% versus 7% previously and is enabling us to keep the full year 2026 total fees at budget levels. That means that implies for the headline number of fees, a mid-teens increase despite the fact that we have Eurolife in the fee line for one quarter less.

However, as regards Eurolife, let me mention again that the economic value of EuroLife in the second quarter is not lost anyway due to the agreement that we have made with the seller, but will not be booked to the fees and commissions and will be a benefit for group's NAV. And on this occasion, let me update [indiscernible] on Eurolife. As we have announced in our first quarter results, we have signed the contract with Fairfax in early May. Regulatory and supervisory approvals are progressing well and are moving forward. So we expect the closing of the transaction to take place by the end of third quarter.

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

I have 2 questions, please. One on the deposit growth, which was extremely strong this quarter as far as I can see, EUR 3.1 billion, and specifically also really good inflows into [ site ] accounts as well. I was wondering what drove that given it seems significantly larger than the ordinary moves? Is there anything transitionary in here? Or do you see this as a sustainable? And can I also ask if this is also included in your NII guidance for this year?

And secondly, on fees, I mean capital markets fees specifically. You participated in several investment banking deals and you look good in the lead tables, but there doesn't seem to be a visible impact on the commission this quarter. So I was wondering if I was reading that wrong, or if you're expecting that line to improve maybe towards the end of the year?

Sure. Actually, on deposits, it's coming from a number of driver. As we said, EUR 1.4 billion is coming from Greek corporate, another EUR 900 million is coming from the Greek retail, EUR 600 million from Bulgaria and EUR 400 million in -- from Cyprus. So I would say that a part of the Greek corporate may be less volatile than the rest, also a small part of Bulgarian deposits. But as regards to Greek retail or Cyprus, I would say, to a great extent, should be -- should remain stable over the next quarter. Now as regards to the second question, I pass to Fokion.

Yes. Indeed, we have seen a number of capital market transactions in which the bank has participated, but what we report in fees under capital markets include also a number of other stuff that show some seasonality. So if you compare the reading of this quarter, which was EUR 14 million versus the second quarter of 2025 at EUR 10 million, it shows a material increase, which, to a great extent, reflects the increased activity of capital markets in the second quarter of 2026. Unless we have another pipeline of transactions, we don't expect any additional fees beyond what we report on a regular basis.

Super. That's very helpful. Just if I may follow-up again on the deposit question. Would you expect that line to grow any further in the second half of the year just given the scale of the growth this quarter? And would you have any insights into what's driving this? Is it simply just a very strong economic picture across the group? Or is there anything specific going on?

As far as retail is concerned, the answer is yes. It's mainly a result of the economic growth. As regards corporate, we have to note that there are some idiosyncratic transaction of, for example, substantial capital increases. So we are talking about inflows and to a great extent from outside the country. So it's a number of drivers actually.

Now going forward, I would say that by the end of the year, we shouldn't expect any material fluctuation. So by the end of the year, you should incorporate in your model some flattish movement.

The next question is from the line of Noemi Peruch with Morgan Stanley.

I just have one on Swiss franc mortgages. If you could just update us on the participation rate that you're seeing and the average loss on this portfolio as the deadline has been extended to September?

Yes. Thank you for the question. I could say that overall, this Swiss franc conversion law that was voted in December of '25 has received rather warm welcome by borrowers. At least this is what we see on our numbers. So far, more than 50% of our balances that are within the perimeter of the law have participated. This is EUR 800 million. And about 60% of the number of borrowers that have also been participated. The average loss is between 16% to 18%. And we expect that this flow will continue until the end of September. You said very correctly that this is when the law will be still applicable. And we expect that the participation in terms of amount will increase from the current levels close to 2/3 of the initial perimeter.

And do you think the current amount of provisions are enough to cover [ trend ]?

Yes. Thank you for giving me the opportunity to clarify that. As you may recall, we had assumed in the past a countercyclical provisioning strategy. We have prudently provided for these loans, and therefore, even for the higher participation that we expect, we are fully provided.

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 all for participating on this call for the second quarter results. I would like to thank also all of you that with your questions, you help us to clarify and give details on our results. Let me wish a relaxing summer break for those of you that are going to have the opportunity to take one. And we're going to be available, Harris, myself and the Investor Relations team for any further questions. Thank you very much.

Ladies and gentlemen, thank you for standing by. I'm Constantino, your Chorus Call operator. Welcome, and thank you for joining the Eurobank conference call to present and discuss the full year 2025 financial results.

At this time, I would like to turn the conference over to Mr. Fokion Karavias, CEO. Mr. Karavias, you may now proceed.

Thank you. Ladies and gentlemen, good afternoon, and welcome to our call. Together with me is our CFO, Harris Kokologiannis, and the Investor Relations team. I'm starting the call with a quick review of the 2025 performance and then focusing on our business plan and the financial targets for the years 2026 to 2028. Harris will give you more details on the business drivers for the 3-year period. And finally, we will answer your questions.

So let me start with 2025. A year we outperformed all targets initially set as highlighted on Pages 7 to 14. It was a year of exceptional organic growth in loans, deposits and assets under management. More specifically, loans expanded by EUR 5.4 billion, well above the initial target of EUR 3.5 billion and deposits by more than EUR 4 billion, while managed funds and private banking grew by 30% and 12%, respectively. The positive impact of our M&A activities was also significant.

Our position in Cyprus was consolidated through the legal merger of the 2 banks and insurance companies, leading to realized synergies, while in Greece, our franchise was enhanced with the acquisition of Eurolife. Value creation was outstanding as net profit reached EUR 1.4 billion and return on tangible book value at 16%, 100 basis points higher than originally expected. It is noteworthy that the fourth quarter was especially strong, particularly on volumes and core operating income.

Loan expansion, primarily fueled by substantial corporate transactions in Greece surpassed EUR 2 billion. Deposits also rose by EUR 3.7 billion with notable contribution from Postbank in Bulgaria. Net interest income was up 2.5% from the previous quarter, proving that we are past the quarterly trough, while fees were also strong, up 11% quarter-on-quarter. Consequently, core operating income increased by 8% compared to the previous quarter. The strong performance allows us to increase shareholders' reward as we are distributing 55% of our 2025 profits. The total payout of EUR 717 million consists of EUR 0.118 cash dividend per share. This is up 12.7% versus last year, including the interim dividend and a new share buyback program of EUR 288 million to be approved by the AGM in April.

Now let me move into the 2026,'28 business plan. In recent years, the bank has undertaken several transactions aimed at strengthening its position within the 3 core markets, while also expanding operations beyond banking into insurance and wealth management. By integrating these acquisitions, the group is positioned to generate shareholder value through organic growth and synergy realization, leveraging a favorable macroeconomic environment and a diversified business model. This potential is reflected in our 3-year plan for 2026, '28, where return on tangible book value is forecasted to increase to 17% by 2028. This is 200 basis points higher than the previously committed 15% in the 2025, '27 plan.

Consequently, cumulative shareholder distributions are projected to increase by 50% in the years 2026, '28 in comparison with the preceding 3-year period. As shown on Page 16, such growth is facilitated by a positive economic background. The above average economic growth in our 3 core markets and the strong investment demand are expected to support banking business and strong credit expansion. At the same time, wealth management and insurance have the potential to grow even faster above the nominal GDP rate, given the relatively lower product penetration compared to EU. More specifically, starting from banking business, we anticipate that the group's organic loan growth will average 7.5% per year with Cyprus and Bulgaria seeing increases close to 10% annually. The adoption of the Euro in Bulgaria will also contribute to this growth.

Turning now to Wealth Management and Insurance, where our leading presence is reflected in the expected annual growth rates. Assets under management will increase by 21% and combined insurance and wealth management fees will rise by 30%, positioning them as the main fee growth contributors. By 2028, fees will account for 26% of total income. The key goals for the 2026,'28 business plan are summarized on Page 19. In summary, organic growth across business lines and synergies coming from our recent acquisitions deliver enhanced returns and rising earnings per share, while cost-to-income ratio declines and capital buffers remain intact. Earnings per share is expected to grow by circa 10% compounded annual growth rate, which drives the return on tangible book value to circa 17% by 2028.

So concluding, we have established a track record of consistently delivering our plan and exceeding our targets. In 2025, our well-diversified regional business model was further enhanced, reaching a balance sheet of close to EUR 110 billion. This is a strong base to consolidate and build upon as economic growth remains above average and demand for loans and financial services appears strong in our region. As such, the prospects for Eurobank remains strong for 2026 and the 3-year period.

At this point, I would like to ask Harris to present our business plan drivers in more detail.

Thank you, Fokion. Let's now provide more details about our 3-year business plan. Starting with Page 20, we outlined the main assumptions. Economic growth in our 3 core markets is projected to stay strong, ranging from 2% to 3.5%, which is noticeably above the European average. We expect interest rates to remain steady with the ECB deposit facility at 2% for 2026 and 2027, followed by 25 basis points increase in 2028. Moving to the loan volumes on Page 21. After a record year with a double-digit growth, loans are projected to maintain a solid momentum, rising by approximately EUR 3.8 billion in 2026 and surpassing EUR 12 billion over 3 years. This corresponds to an average annual growth rate of 7.5%.

In Greece, corporate lending is expected to expand by around 8% per annum, spurred by infrastructure investments, concessions, energy production and storage, manufacturing and tourism. Retail banking in Greece is gradually rebounding. In mortgages, last year was the first after 2007, where the bank recorded net growth, retaining its lead in new disbursements. This upward trend is likely to gather pace from 2026 onwards, fueled by rising demand for new houses, sustained interest from international buyers, a gradual shift toward bank financing over cars and ongoing support from the Greek government. Consumer lending should also accelerate driven by higher digital penetration, embedded finance proposals and increasing activity in car loans.

Bulgaria's loan portfolio is forecasted to grow by about 10% annually. taking advantage of favorable macroeconomic conditions, relatively low credit penetration and prospects following the euro adoption as of January 2026. Mortgage loans will account for roughly 45% of this growth with another 35% attributed to corporate segment. In Cyprus, following the completion of the legal merger, loan expansion is expected to pick up speed, mostly led by local corporate lending as well as participation to European syndicated deals.

Moving on to spreads on Page 22. Corporate lending spreads in Greece will keep declining, albeit at a slower pace due to surplus liquidity and competition. Bulgaria and Cyprus will see modestly falling lending spreads driven by local competition and mix, still standing above Greek levels. Deposit mix should improve in Greece, affecting positively the relevant beta and mitigating deposit spread decline due to rates. Group net interest margin is expected to slightly drop in 2026, driven by the trends in base rates and spreads, then recovered by a similar bit in 2028.

The factors driving interest income are summarized on Page 23. NII is expected to rise to EUR 2.6 billion in 2026, with strong loan expansion, higher bond holdings and deposit mix improvement, comfortably offsetting impact from lower base rates and narrow spreads. In the following years, NII should keep increasing, reaching circa EUR 3 billion in 2028, largely due to ongoing growth in volumes. Moving to fees and commissions on Page 24. Following an outstanding performance in 2025, group commissions are projected to achieve double-digit growth, primarily supported by increased income from wealth management and insurance as well as higher retail fees in Bulgaria and Cyprus.

As regards the insurance business on Page 25, the acquisition of Eurolife in Greece is forecasted to be completed in the second quarter of this year. Along with the CMP acquisition in Cyprus last year, our insurance franchise is enhanced substantially in these 2 countries. Furthermore, the low penetration of insurance business in our core markets, combined with promising cross-selling opportunities via bancassurance confirms solid business prospects. This translate to almost tripling insurance and bancassurance income, reaching circa EUR 200 million in 2028.

In Wealth Management on Page 26, fee growth is supported by our focused strategy, our well-established franchise and the market opportunities which are evident by comparing the asset management penetration in our core countries versus average. In this context, our business plan aims for an annual increase in managed funds by more than 20%, reaching circa EUR 18 billion in 2028 and by 11% in private banking customers' assets and liabilities to EUR 20 billion that year. As a result, wealth management fees are anticipated to nearly double from circa EUR 90 million in 2025 to EUR 170 million in 2028. Returning to Page 24 and summarizing our projections for fee income. This is expected to exceed EUR 1 billion in 2028, representing 90 basis points of assets and accounting for 26% of total income.

In Greece, these KPIs are anticipated to reach 100 basis points and 30%, respectively. Moving on to operating expenses on Page 27. The acceleration of IT CapEx is a key factor affecting the future trend. Over the 3 years, IT investments are projected to reach circa EUR 730 million. In Greece, CapEx increases to support the expansion of digital client offerings, enhance digital experience, further automate operations and cascade AI to middle and back office, commercial campaigns, software development and credit assessment process.

In Cyprus, IT CapEx is mainly driven by the operational merger, the systems integration in banking and insurance and further digitization initiatives. In Bulgaria by the new adoption and in Luxembourg by the implementation of a new core system. As regards staff costs, they rise by contained 3% per annum. This outcome reflects remuneration adjustments and upskilling programs as well as the implementation of 2 VESs in Cyprus and Greece collectively targeting circa 700 FTEs. In summary, in a challenging context, especially considering the accelerated developments on IT and digital, our operating and business models preserve a top-tier cost-to-income ratio, which decreases from 37% in 2025 to 35% in 2028.

On asset quality and on Page 29, in a favorable macro environment where asset quality remains resilient, we will continue to be prudent and adhere to our countercyclical strategy. In this context, cost of risk is projected to decline modestly to 55 basis points in 2026 and to 50 basis points by 2028. NPE coverage is anticipated to be around 80% during the business plan, while the NPE ratio should remain close to 2.5%.

Finally, on capital on Page 30, throughout the business plan, the group expects to generate circa 820 basis points or EUR 4.5 billion in organic capital, supporting a high loan growth, major IT investments, DTC acceleration and a EUR 2.6 billion payout. Maintaining a CET1 ratio of 14% or above, the group preserves a capital buffer over its OCR of higher than 300 basis points, translating to an internal capital target surplus of at least 100 basis points.

In summary, our diversified business model drives sustainable growth as shown on Page 19. Core profit is projected to reach EUR 1.9 billion in 2026 and EUR 2.3 billion in 2028, with return on tangible book value rising to 17%. Finally, EPS is anticipated to grow at circa 10% per annum over the business plan period.

This completes my presentation, and we may now open the floor for your questions.

The first question comes from the line of Kemeny, Gabor with Autonomous Research.

A couple of questions from me, please. The ROTCE guide, which is 17% by 2028. Can you walk us through the drivers of the expected improvement? I believe you are assuming one rate hike, which might be around 1/3 of the improvement, but it would be interesting to hear the drivers from you, please. And yes, the other thing was on loan growth, which you expect in the 7.8% 7.5% or so, again, I believe, for the business period having delivered once again double-digit loan growth. So can you perhaps walk us through the thinking here and the upsides and downsides to your guidance?

Okay. Thanks for the question. As you said, we expect the return on tangible book value to increase to 17% by 2028. For 2026, in particularly, we expect this to be at 16%. Now what are the drivers? It is what we mentioned, Harris and myself already. So loan growth which is going to drive higher the NII. Securities portfolio growth, which also is going to contribute to the NII growth. And then we have the growth in fee and commission income, where the largest driver is fees coming out of asset management and insurance business. And these are the biggest positive drivers.

And then we have also the OpEx, which is expected to increase close to 5% on average per year, which is a negative driver of the increase in terms of the return on tangible book value. the drivers that I just mentioned are going to increase -- to show a growth in terms of EPS of circa 10% per annum, which obviously drives the growth in terms of return on tangible book value.

As regards to the loan growth, I think Page 21 of the presentation is quite illustrative of the drivers. Following an exceptional year, I think, 2025, we'll continue the solid growth momentum. Now the main drivers here is corporate in Greece that will continue with a close to high single-digit growth ratio. Retail is gradually rebounding with mortgages moving to positive territory and consumer accelerated.

And on non-Greek operations, Cyprus and Bulgaria are expected to grow at a similar pace. Bulgaria, it's going to be, I would say, a balanced growth among the sectors, retail, corporate and in the retail, the major part is going to be mortgages and then consumer and small business. While in Cyprus is mostly related with corporate lending.

Just one small follow-up here. So the reason why you expect slower corporate growth in Greece is that you don't expect some of these bigger tickets you had recently to recur or any other reasons?

Actually, in the fourth quarter of the year, we had a few large transactions that were actually borderline whether to take place in 2026 or 2025. So you may appreciate that this, of course, numerically affects the growth in percentage terms.

The next question comes from the line of Caven-Roberts, Ben with Goldman Sachs.

I just wanted to ask if you could please elaborate on your capital allocation framework. You mentioned the 2028 target is greater than 14% and then also indicate the internal management target is around 13%. So is that explicitly leaving a buffer for some more M&A? Or what other opportunities set are you thinking around there? And then secondly, I just wanted to drill into AI and how you think it could help your business, but potentially also increase competition more broadly. There has been some discussion at the industry level around its potential impact on increasing deposit competition and potentially also for bancassurance. So I wanted to hear your perspective on that.

Okay. So let me start from the capital question. On Page 13, we show how capital -- organic capital generation has been allocated during the period 2021 to '25, effectively in asset growth, M&A and shareholder reward. And I think we have set a track record demonstrating that we are pursuing a capital optimization, keeping a balance between M&A that offer long-term value to our shareholders. organic growth, which is a multiple of the average across the EU and gradually increasing shareholder reward. So this is what we have done in the past.

Now let's go on Page 30 of the presentation where we show the capital evolution in the 3-year period 2026 to '28. So during this period, our estimate is that we're going to generate about 820 basis points of organic capital. And this is distributed -- actually 55% of that is distributed to shareholders. And if you calculate the euro amount of this distribution is going to be about 50% higher than the respective euro amount of the previous 3-year period. About 25% is going to be consumed in terms of asset growth and 20% is the rest. So out of the full envelope of organic capital generation, 55% goes to distribution, 25% asset growth and 20% the rest.

Now we believe that this is a sort of optimal allocation of the organic capital generated and also is a fair payout ratio. Given that we would like to keep during this period of 3 years, this excess capital of 100 basis points as a sort of optionality if there is any sort of M&A opportunity in any of the 3 countries in which we are present and either in banking or in insurance or in asset management. So this explains our thought process about how we allocate the organic capital generated. If this is clear, let me move on your second question about AI.

And let me try to give a more general answer to your question about IT investments in general because for the 3-year period, there is an envelope of about EUR 700 million in terms of IT CapEx. Now what are these IT projects? Let me mention a few of them, is enhancement of our digital platform for households and businesses in Greece and in Bulgaria. It is the modernization of our core IT platform in Greece is the operational integration in Cyprus, which is in progress, and we expect this to be completed in the first quarter of 2027. and a number of AI projects in an effort to integrate AI in our business model. Now this includes some projects related with operations automation, end-to-end credit underwriting automation, KYC, AML-related automation processes as well as introduction of AI in our call centers and in our digital assistance.

Obviously, these projects are expected to increase productivity. We have said that the cost-to-income ratio is going to decline at 35% by 2028. these productivity gains have been partially included on this 35% cost-to-income ratio. As we move forward, we would like to see how these projects evolve to make fresh estimates of the productivity gains that we may have. And according to that to update our cost-to-income ratio projection for 2028.

The next question comes from the line of Kantarovich, Alexander with Roemer Capital.

I would like to square the front-loaded and bulky IT spend with your rather gradual increase in operating costs. Can you please explain how do you see depreciation charges reacting to this IT spend?

Actually, it's going to be -- let's say, most of the CapEx will create depreciation from -- in a quite smooth way from 2027 and 2028. That has been included in our projections. But on the other side, we accelerate IT impairment so as to delete and eliminate depreciation on software that is now more on use. So we should not expect any spike in depreciation in the future years. Anyway, we show our OpEx projection for the 3-year period that it is expected to be at the area of 5%. This 5% is very close to the annual increase rate year-by-year. So there is no any spike in the former or in the latter years. This increase is quite smooth, I would say, year-by-year in the 3-year period.

That's great. That's great. And just to confirm, your distribution policy, if I read it correctly, it's above 50%, correct? But is it possible to be more specific, maybe 60%?

No, we said in terms of payout ratio for the 2025 financial results to be 55% this is EUR 717 million, split between a cash dividend and a share buyback program of EUR 288 million size. Going forward for 2026, we expect, again, the payout ratio to be 55%. And by 2028, we say at least 55%.

The next question comes from the line of Demetriou, Alex with Jefferies.

Just on the NIM outlook, could we unpack the decline for 2026 a little bit more? So if you look at the 4Q trends, the group NIM was quite stable, and we only saw a slight decline in the deposit spreads, where the main impact was really on the Greek lending spreads. So any color there would be very helpful.

Sure. Don't forget that in our plan, we compare year with year, not quarter by quarter. So on that front, as regards NII, not NIM, we have positive and negative drivers. On the positive side, we have the increased volumes on loans and bonds. the deposit mix improvement and a benefit from the release of liquidity in Bulgaria. On the negative side, we have the 25 basis points lower DFR versus 2025, lower loan spreads and increased MREL costs. And we show on Page 23, each driver with each quantum.

Now as regards net interest margin, here, it is affected by -- on the positive side by the deposit mix. On the negative side by the lending spreads and of course, by the base rates. But it's not expect something material. I would say this should be at the area of close to 10 basis points. Stabilized there for 2027 and then increase back to 2025 levels in 2028.

The next question comes from the line of Novosselsky, Ilija with Bank of America.

Just one question. So if I look at Slide 23, and I see your NII bridge, if I use all the moving parts, it brings me to a 2026 NII of EUR 2,619 million. Now if I just take your final NII, the Q4 EUR 647 million, and I assume it's flat, then your 2026 implied NII is only 1.2% higher. And I just wanted to ask, well, so your loan CAGR, you say 7.5%. time deposit mix should be better, securities should increase as well. So my question is, is there any reason why the quarterly NII should not be rising significantly from here or something on rate spreads or perhaps the 2026 NII is just conservative?

Sure. First of all, adding the numbers of the drivers that we have included on Page 23, we arrive at 2026 NII that is circa 3% higher than the one of that of 2025. So we cannot, let's say, multiplying the fourth quarter by 4 ignores any trends that we may have on spreads on lending spreads basically and deposit spreads, the MREL cost and all this. So putting in order the drivers that I have mentioned, we come up with a year-on-year increase at the area of 3%.

And maybe just one more question on this. Is there any reason why we should think that between the quarters, we can have a Q-on-Q drop or we should expect only sequential uptrend on the NII in 2026?

I would rather the second. [indiscernible] in the effect of days, of course.

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

I have just a couple of questions. One on fees, please. If I look at the fee income guidance for 2028, it looks a bit at the low end for me with 7% organic CAGR. I know you're starting from a high point compared to peers, but I thought there were some more synergies to be extracted and maybe some more room to improve fee penetration in the international markets. So is there a reason for this softness, if I may put it so?

And can I please clarify if you're using EUR 100 million flat contribution from EuroLife throughout the plan? Or is this actually increasing towards the end of the guidance period? My second question is on the EPS growth guidance of 10% CAGR. And does this include just this year's buyback, which you've just renewed at EUR 288 million? Or do you continue to assume buybacks in the outer years?

And my last question on Bulgaria and the Eurozone entry, you're obviously talking about a supportive backdrop there and better loan growth. But are there any headwinds you expect to see from this change, for example, when it comes to fee income or anything else that we should be aware about?

So let's say -- let's address your first questions and then Fokion may address the one of Bulgaria. As regards fee and commission income, first of all, don't ignore the fact that we recorded a very strong 2025 with a 15% year-on-year increase and a very strong photo, I would say, in the fourth quarter. So based on that, we build and conclude to a mark of higher than EUR 1 billion that it is double-digit growth or ignoring the EuroLife effect, it is about a 7% organic CAGR. On that front, I would say that there are drivers that have been prudently addressed in our plan as it is the lending fees, for example, where we have already recording high figures or retail fees in Greece, where we are quite prudent on our forecast.

And on the contrary, we base our growth on wealth management and insurance, where there is for the reasons that we explained, very high potential for growth as well as cross-selling and opportunities in retail fees in Bulgaria and Cyprus. So as regards Eurolife, Eurolife as of this year is included in our budget with EUR 100 million fees, but in this year, multiplied for 8 months out of the 12. So it's not going something that we are going to see in our P&L in 2028 alone. So for this year, it's about a number of close to EUR 65 million, EUR 67 million. But this is nothing less than the EUR 100 million mark divided by 12 and multiplied by 8. Now as regards your EPS question, for the projection of EPS, we have assumed a similar breakdown between cash and share buyback as used to be the case in 2025.

Now on Bulgaria, if I have understood well, your question was whether there are any sort of headwinds in terms of fee income. And this is a very valid question because in situations like that, FX fees or FX trading income declines. However, in the case of Bulgaria, because the country was in a currency board for a prolonged period of time, I don't remember how many years, it was close to 20 years. The FX-related income was anyway relatively low. So we may have a decline, but from a sort of low number.

The next question comes from the line of Michael Dan with [indiscernible]

Congratulations on the results, Fokion and Harris. I just had a question on the cost of risk guidance. Is the guidance inclusive on the NPE servicing fee renegotiation? And if -- when do you expect to announce the renegotiation to be completed?

Sure. As we have said, we expect to initiate such a negotiation in 2026 and any benefits should be from 2027 onwards. Currently, servicing fees account for about 12 basis points out of 60 that it is our total cost of risk, and we expect there a saving of close to 25% out of this number, but this has not been included in our calculations.

The next question comes from the line of Brzoza, Robert with PKO BP Securities.

Just one quick question related to the recent verdict from the Greek Supreme Court on the cap loans.

Yes, sure. As you know, we are still waiting for the final ruling of the Supreme Court, so that we have a clear view about the exact decision. But even if we assume a worst-case scenario, the impact for Eurobank is going to be 0 or very close to 0. First of all, the amount of [indiscernible] loans that we have in our portfolio as we speak is 0, effectively 0. And we have tried to make the calculation about potential retroactive claims when we had holdings of these loans. And again, this number is very close to 0. So as I said, we expect no impact for Eurobank out of that.

The next question comes from the line of Garrido Luis with Bank of America Merrill Lynch.

Two questions from me. The first on Bulgaria. Can you help us understand so the loan growth being faster than the general market loan growth and itself that being faster than GDP growth. So what you're effectively saying is that this is a market with low loan penetration. And on top of that, you plan to grow faster than the market. So effectively, you plan to capture some market share from other players or some types of loans. Maybe if you could give us some detail on the type of business that you want to grow faster than the market in Bulgaria.

And the second question, just on your capital and MREL planning. You gave some numbers on your expected senior preferred issuance through to 2028. Is that assuming you reach that 14% CET1 target?

Yes. Starting from your second question, the answer is yes. So as regards to Bulgaria, let's...

Yes, in Bulgaria, first of all, the credit penetration in the country is still below the EU average. And definitely, the entry into the euro would help into converge that to the EU average. But the estimates that we have about credit growth for our own portfolio in Bulgaria does not assume any material change in market share. So we have assumed that the market overall is going to grow at a level similar to what we have already said. So any sort of gains in terms of market share are going to be rather marginal.

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.

Let me thank you all for participating in this call. Let me also thank you for the numerous questions that we received and hopefully have helped us to clarify the 2025 results and our 3-year plan. Next month, we're going to be in London, and we will be glad to meet in person any of you. In the meantime, our IR is at your disposal for any follow-up questions. Thank you very much.

Ladies and gentlemen, thank you for standing by. I'm Constantinos, your Chorus Call operator. Welcome, and thank you for joining the Eurobank Holdings Conference Call to present and discuss the third quarter 2025 financial results.

At this time, I would like to turn the conference over to Mr. Fokion Karavias, CEO. Mr. Karavias, you may now proceed.

Thank you. Ladies and gentlemen, good afternoon, and welcome to the Eurobank 9 Months Results Presentation. Together with me is our CFO, Harris Kokologiannis; and the Investor Relations team. We are starting with some key recent developments, then presenting our results and answering your questions.

The macroeconomic environment remains favorable across our core markets, Greece, Bulgaria and Cyprus, which continue to outperform the EU average in terms of growth. In Greece, fiscal performance remains solid, with the debt-to-GDP ratio improving the most among EU member states. At the same time, investments continue to be a key driver of economic expansion. Bulgaria's adoption of the euro on January 1 represents a significant milestone in its economic convergence. These positive trends are supporting banking business overall, and are reflected in sustained credit growth with expansion rates reaching double digits in both countries.

Let's now focus on Eurobank's strategic initiatives. As stated in the past, one of the pillars of our strategy is to diversify our income sources, both geographically across our core markets as well as through our primary business lines, that is banking, insurance and wealth management.

Milestones reflecting this strategy include the acquisition and integration of 3 banks in Bulgaria in the past and more recently, the acquisitions of Hellenic Bank and CNP Insurance in Cyprus. The legal merger of the 2 banks in Cyprus was successfully completed on September 1, and we are now advancing into the operational integration phase. Synergy realization is well underway with the initiatives implemented to date, capturing approximately 40% of the total targeted EUR 120 million envelope.

As part of this strategy, we recently announced the acquisition of the remaining 80% of Eurolife's life insurance operations in Greece, as shown on Slide 7. This transaction carries strong strategic importance, fully aligned with our vision of becoming a leading integrated banking and insurance organization. Eurolife was the natural partner for our group, given our long-lasting collaboration through the bancassurance partnership.

As such, we expect a smooth integration, which will strengthen our capacity to deliver integrated financial solutions to our customers. Eurolife has consistently demonstrated robust and recurring profitability. The acquisition is expected to increase fee and commission income by approximately 12%, or around EUR 100 million, driving the contribution of insurance and asset management to over 30% of total fees. Additionally, the transaction will enhance return on tangible book value by about 100 basis points, and earnings per share by EUR 0.02 before any potential revenue and cost synergies.

Slide 8 highlights our regional insurance presence. ERB Cyprialife commands a 30% market share in Cyprus and Eurolife holds 22% in Greece. In Bulgaria, we continue to operate successfully through a well-established bancassurance model, cooperating with a major European partner.

Now, let's move on to our financial results as highlighted on Slides 5 to 12. Eurobank reported robust financial performance for the 9-month period, achieving an adjusted net profit of EUR 1.058 billion and a return on tangible book value of 16.2%. In more detail, net interest income was up by 4% year-on-year to EUR 1.9 billion, stable quarter-on-quarter, while commissions were up by 24% year-on-year. Core operating profit approached EUR 1.3 billion at par with the previous year.

Loan growth continued unabated with quarterly and 9-month net increases of EUR 1.1 billion and EUR 3.3 billion, respectively, on track to exceed the revised full year target of EUR 4 billion. Deposits were also up by EUR 900 million quarter-on-quarter, and Wealth Management performance has been impressive, with managed funds ending EUR 900 million in the quarter and being up by 32% year-on-year, already exceeding the full year targets.

On our regional operations, performance was strong for another quarter, netting EUR 557 million or 53% of total, highlighting the group's diversified franchise. Cyprus net profit reached EUR 370 million and Bulgaria's EUR 167 million.

Asset quality remained resilient for another quarter at the group level. The CET1 ratio stood at 15.5% and the total capital at 18.9%, following the legacy Tier 2 call in September.

So in conclusion, the 9-month results confirmed our strong track record to deliver organic results as well as take inorganic growth initiatives. Going forward, our priorities are the operational merger of Eurobank Limited in Cyprus and the integration of Eurolife's activities.

On organic performance, the 9-month results were better than our initial plan. We now expect return on tangible book value roughly 1 percentage point higher than the original target that is close to 16%, supported by higher NII and stronger fees. Our dividend policy remains unchanged, so we are distributing an interim dividend of EUR 0.047 per share in a couple of weeks, actually on November 12, and overall, more than 50% of our profits for the year.

At this point, I would like to ask our CFO, Harris Kokologiannis, to present our third quarter results before opening the Q&A session.

Thank you, Fokion. Before start, let me note that reported profit has been affected by EUR 25 million contribution to the school's refurbishment project. This has been offset by the positive impact from additional negative goodwill related with the CNP insurance acquisition in Cyprus.

Let's now provide more insight and look into the third quarter results. Starting on Page 21 on lending volumes. The group continued its solid growth trajectory with EUR 1.1 billion and EUR 3.3 billion in the third quarter and 9 months, respectively. Corporate loans in Greece and mortgages in Bulgaria were the primary drivers of this increase. In Greece, there are signs of increased activity for mortgage lending as we are experiencing net growth for a second consecutive quarter, along with an acceleration in consumer lending.

Given these trends and the current pipeline, the full year loan growth is projected to be at least EUR 4 billion. Group deposits on Page 22 increased in the third quarter by EUR 0.9 billion, mainly due to retail deposits in Greece with positive contribution from Bulgaria.

The loan-to-deposit ratio on Page 23 remains stable at 67%, while the liquidity coverage ratio reached a healthy 180% despite the legacy EUR 950 million Tier 2 call. As regards managed funds on Page 25, as at September end, managed funds reached EUR 9.3 billion, exceeding the full year target.

More specifically, in the third quarter, wealth sector accelerated its growth pace. Quarter-on-quarter, managed funds increased by EUR 800 million and year-on-year are higher by EUR 2.2 billion, or 32%. Private banking customers' assets and liabilities amounted to EUR 14 billion, up by 10% year-on-year.

Moving to profitability on Page 29. On a year-on-year basis, NII is higher by 4%. Quarter-on-quarter, net interest income remained stable as the impact from the lower Euribor by circa 25 basis points and lending spread decrease in Greece and Bulgaria was fully offset by the higher loan and bond volumes. The net interest margin for the 9 months stood at 246 basis points.

Moving on fees on Page 30. This quarter matched previous period's record performance with a reading of EUR 193 million. On a year-on-year basis, commissions are higher by 24%. Fees over asset ratio stood at 75 basis points for the group, and 84 basis points for Greece.

On Page 31, group operating costs increased by 6% on a like-for-like basis, with Greece expenses rising by 6.8% due to higher IT spending and staff remuneration. The cost-to-core-income ratio for the 9 months was 37.8%.

On Page 33, we summarize operating performance for the 9 months of the year. Core PPI reached EUR 1.529 billion, stable year-on-year. Loan loss provisions for the period amounted to EUR 238 million, or 61 basis points in line with our plan. Consequently, core operating profit reached EUR 1.292 billion at par with the previous year.

Moving on to asset quality on Page 35. NPE ratio stayed at 2.8% with coverage rising further to 94%. On capital on Page 39, organic profitability contributed 67 basis points to the CET1 ratio, which remained stable quarter-on-quarter, absorbing the impact of strong asset growth, payout accrual and DTC amortization.

The total CAD ratio on Page 40 decreased by 90 basis points to 18.9% after the EUR 950 million legacy Tier 2 call. In conclusion, during the third quarter, the group maintained a strong performance momentum, driven by high lending growth, increased deposits, and assets under management and solid profitability. Net interest income was stable quarter-on-quarter as loan and bond growth offset lower base rates, while fee income remained strong across all segments.

Based on the performance over the past 9 months, the group anticipates surpassing its 2025 revenue targets. Additionally, the return on tangible book value for the year is now projected to be approximately 100 basis points higher than the planned 15% level. This completes my presentation, and we may now open the floor for your questions.

The first question comes from the line of Kemeny, Gabor with Autonomous Research.

First one would be on NII, which impressively stabilized in the third quarter. Shall we see this as a kind of inflection point? And going forward, do you think that your NII will possibly switch to growth modes, together with loans and securities? That's the first question.

Second question would be on the payout, which I believe you indicated could be above 50%. Could you be possibly a bit more specific here? And indicate how high could this possibly get? And my third question is the Eurolife deal, another substantially from Eurobank. Having -- once you close the deal, and I guess you guide for this 120 basis points capital impact, do you see yourselves as fully utilizing your capital surplus? Or do you view Eurobank to have any excess left post completion?

Let me take the first and the third question, if I have understood well the third question because the line is not so clear. And then Fokion may elaborate on the payout issue. As you saw, NII was indeed flat quarter-on-quarter and 4% up year-on-year. So in this context, it is expected to easily exceed the EUR 2.5 billion budget target, assuming, of course, that rates will remain at 2% until year-end. And this is due to higher loan and bond volumes and better wholesale funding cost, while we see some controls and measuring on the deposit cost and the gradual slow improvement of deposit mix.

Now whether third quarter, we are at an inflection point, my view is that second, third and fourth quarter will be at quite close level and third quarter NII is close to bottom level. Let's stay there on for the moment. On Eurolife and as regards our capital standing regarding Eurolife acquisition, let me start with the current position. As we speak, our excess capital currently stands at 150 basis points. That is comparing 15.5% with 14% that it is the level of capital where we feel comfortable, including not only P2G, but also management buffer.

If we utilize the additional AT1 capacity of 100 to 110 basis points, the internal management target is being reduced to 13%. So that means that our excess capital rises up to 250, 260 basis points. And accounting for the Eurolife acquisition and the capital impact of 120 basis points, the excess capital becomes 130 basis points. This is, let's say, the picture regarding our capital spending. I don't know whether that was your question or something else. Let's pass to Fokion for the moment for the payout.

Yes. In terms of the payout, we keep saying that we commit on a payout ratio higher than 50%. Let's say, it's going to be in the range between 50% to 60%.

Very clear and helpful. Just one small follow-up on -- do you -- are you planning to issue AT1 to fund the Eurolife deal? Or is this just a possibility for the more remote future?

As I have said, we have an unused capacity of 100 basis points. This may be utilized depending on market condition on an opportunistic basis.

The next question comes from the line of Munari, Filippo with JPMorgan.

So just one actually on the Eurolife deal. Can you maybe please give us some initial indication of what level and also the nature of the revenue and cost synergies that we might be seeing?

Actually, the full P&L of Eurolife on a before tax basis will be incorporated in the insurance income of -- as regards the group P&L. And on that front, we should expect something close to EUR 100 million additional insurance income. Did I answer your question or...

Yes. Maybe if you can just give us an indication if there is any potential kind of like additional cost synergies that you can realize or revenue synergies that can sort of like see through P&L despite -- I mean, besides the integration.

This EUR 100 million is the normalized current profit before tax of Eurolife. We are now in the process of reviewing the possibility of cost and revenue synergies. But then in due course, we should be able to update you. But what is more important than the synergies is the growth potential of this business because insurance penetration in Greece is well below the EU average. Premiums as a percentage of GDP is about half of what is in the rest of the EU. Therefore, this is where we see the value of this acquisition. We expect that we have, over time, quite strong growth rates of this business, both through bancassurance, but also through the independent agents of Eurolife.

The next question comes from the line of Novosselsky, Ilija with Bank of America.

Two questions from my side. First, on your security strategy. Currently, you have about EUR 24.6 billion in your securities portfolio. If I remember correctly, in your business plan, you were saying that by the end of this year, it will be EUR 23 billion. And then by the end of 2027, it's going to be more than EUR 25 billion. So can I just ask how can we expect this to move from now on, and whether you would get some benefit from reinvestment maturing securities, or it would be mainly from nuance? And my second question is for the fees that you pay for NPE servicers. Do you have any update on what is happening on that front? So for example, whether you're renegotiating, and what can we expect to come with that in the future?

Regarding your first question, currently, we stand the investment securities to total assets at close to 23%. Now actually, we have set specific limits for each country based on selective and idiosyncratic KPIs such as loan assets, loans to assets or investment securities to assets. For instance, limits in Bulgaria are quite lower as it has higher proportion of loans over assets. While on the contrary, in Cyprus are higher given its substantial excess liquidity. Overall, for the group, the proportion of bonds to total assets may reach up to 27% area. Now as regards to your second question, our intention is to enter to some sort of renegotiation with doValue in the next 12 months.

The next question comes from the line of Butkov, Mikhail with Goldman Sachs.

I have a few questions. One on NII. I think your -- in the previous conference call, you said that EUR 2.5 billion NII is confirmed on the basis of 1.5% policy rate. So as we are at around 2% on consensus outlook, what is -- can you remind maybe on the sensitivity to -- for 25 basis points, and what incremental support can it have? And then maybe -- apologies, maybe I didn't catch the answer on the first question related to Eurolife, but what is your current internal target capital ratio? And do you see it changing as a result of acquisition of the insurance company? And also, when do you expect to receive the Danish compromise status?

Yes. Let me start from the NII. Our sensitivity hasn't changed since the last call. So it remains at EUR 35 million per 25 basis point rate cut. So as I said at the beginning, considering that base rates remained at the 2% level until year-end, our NII is expected to easily exceed EUR 2.5 billion.

Now regarding your second question as regards our internal capital level currently stands at 14% following a potential issuance of AT1, this will go down to 13%. Now as regards our Danish compromise, the first step is to qualify as a financial conglomerate. This is something that as we have included in the announcement of the transaction, it is within our intention to do as of 2026, but you may appreciate that it is a long process, may take longer than 2026, but it is something that, of course, it does reserve any effort to get the qualification to proceed with the Danish compromise.

So the process is, first, you receive the financial conglomerate status, and then there will be some other -- some additional time to get their Danish compromise.

Correct. Correct.

Is that correct?

Correct. Correct. Because we have to be assessed under the financial conglomerate that we fulfill all the quantitative and qualitative criteria by the regulator. We have to be assessed by the regulator that we fulfill all the quantitative and qualitative criteria so as to be eligible for the Danish compromise.

The next question comes from the line of Kladis, Panagiotis with Alpha Finance.

Three questions from my side, please. First, on spreads. We see some pressure mainly on corporate spreads in Greece. So I would like your comment on your expectations going forward. And if we can have a comment on the other segments on the retail front. Second, on the loan growth for 2026, what are your expectations? Maybe it's a bit early, but I think any comment would be useful. So what are your expectations for 2026? And if you can comment per country? And last one, and forgive me if I missed that, if there are any estimates, what will be the relief on your regulatory capital if you manage to use the Danish compromise?

Okay. Starting from letting spread, I think what we see is fully anticipated in our budget. So in our budget, we had assumed a decrease in the corporate spreads in Greece from 210 to 185. We are well within this range. At the end, we may be a few bps better. On the retail segment, we don't see any material movements in one direction or the other. In Cyprus as well, we don't see any material movement. In Bulgaria, we see some normalization of spreads coming from very, very high levels in the previous years, also taking into account the adoption as of next year.

Now as regards, this gives me an opportunity to refer to loan growth for 2025. In 9 months, the loan portfolio, as you have seen, expanded organically by EUR 3.3 billion, out of which, in Greece -- from Greece are coming the EUR 2.1 billion. And from Southeastern Europe is coming the rest EUR 1.2 billion. So EUR 3.3 billion versus initial target of EUR 3.5 billion for the full year 2025. So it appears that we are on track to meet or even exceed the revised target of EUR 4 billion.

Now as regards the composition in Greece, it's mostly driven by Greek corporates and in Bulgaria, primarily from mortgage and business loans. While I have to say we are also present in the international syndicate loan market. In Greece, the growth is coming from the sectors that we have mentioned in the past, such as energy production, storage and distribution, infrastructure projects, logistics, pharmaceutical, tourism. While we have seen lately, some net positive growth, although it's quite early and the numbers are small, but we have seen for a couple of consecutive quarters, net growth in the mortgage market in Greece.

Now for 2026, we are -- you may appreciate that we are in a stage to -- of preparing our business plan for the next 3 years. So we are going to be able to update you in our full year 2025 call, where, as every year, we update you in detail of our business plan, but what I can say that 2026 is going to be one more good year for loan growth. Now as regards to your last question on Danish compromise, when achieved, it's going to give us a capital relief of 50 basis points -- of close to 50 basis points.

Okay. If I may follow up on the first question on the corporate loan spreads, do you think that we have seen the trough or you expect some further deterioration over the coming quarters?

For certainty, I can say that we see a deceleration at the declining pace.

The next question comes from the line of Nigro, Alberto with Medionanca.

The first one is more technical question on Eurolife impact on capital. Can you tell us how much is going as deductions and how much is within the threshold -- the capital thresholds? The second one is still on bancassurance. You will be a fully vertically integrated bancassurance model in Greece and Cyprus. How easily would be to expand this model also in Bulgaria? And if you see any upside from this strategy? And the third one is on fees. If you can update us on the fee income target for 2025.

Regarding your first question, the smaller part of the consideration will be weighted at 250 basis points, for the room corresponding to the significant financial institution. While the major one is one-to-one deduction from capital. And the combination of the above results is the 120 basis points total CET1 impact.

On fee commission income, following 2 very good quarters and based on the 9 months performance, we have revised upwards our guidance to levels higher than EUR 740 million, mainly driven by transaction, bancassurance and wealth management fees. Now, on your second question, it is true that now we have an integrated -- fully integrated model for insurance/bancassurance in Greece and Cyprus.

In Bulgaria, I mentioned during my introductory call, we continue to operate successfully through a well-established and tested bancassurance model, cooperating with a major European partner. At the moment, we don't have any plans or we don't see any opportunity to get a factory within the group in Bulgaria. But obviously, if such opportunity arises, it is something that we may review quite carefully.

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

Most of my questions have been answered. I wanted to ask you about Cyprus in specifically post-acquisition, how are things going on the ground versus your plans? Regarding synergies, what is left out there? Are we close to normal operations per your plan? Or are there still opportunities, challenges that are in front of you? Any color there would be helpful.

Yes. Thanks for the question. Opportunities and challenges never stop, as a general answer to your question. Now as I said before, we completed on September 1, the legal merger of the 2 banks. On October 10, we completed the legal merger of the insurance companies. So we operate under one bank and under one insurance company for life and P&C.

However, we have ahead of us the operating integration, especially in the bank, therefore, moving into a single IT platform, this will take something like 15 to 18 months. So we should be in place by the end of 2026 or beginning of 2027.

Now in terms of synergies, as I mentioned during my introductory note, we have completed -- we have realized, as a matter of fact, 40% of the EUR 120 million, which is the total envelope. Therefore, there is still work for us to do there, both on the cost side and the synergy side. So all in all, the integration is moving ahead according to plan, but it is far from completed. We still have a lot of work to do.

Understood. And if I could maybe squeeze in 2 relatively technical questions. One, on your loan growth, do you have organic at 1.1%, reported at 0.7%. Just wondering what the gap is. I guess part of it is Cyprus, from my understanding, but if there's something else there because FX was not really a factor. And also with regards to NII outlook, deposit -- time deposit repricing, is it going as you had expected? Or are there any material changes on that front?

On the first part, the difference is twofold. The one is FX. And the second is the sale of a EUR 200 million NPE portfolio in Cyprus from Eurobank Ltd to the Cyprus Asset Management Company State Interest Asset Management Company with the acronym KEDIPES. So these are loans, which now have been reclassified as assets held for sale. This was a legacy portfolio originated from the ex-Cooperative Bank and Cyprus Asset Management Company has guaranteed this portfolio and its NPEs. And with this agreement, KEDIPES takes back these NPEs on its balance sheet and the guarantee ends. And the result of this transaction was a gain of EUR 10 million that it is under our other income line.

The rest is FX mainly coming from dollar. And as regards deposit pricing evolution, I think it is going quite smoothly and well within our plan. What you may appreciate is that if you go on Page 22 of the presentation, you may see that gradually with -- on the upper right-hand side of the presentation, gradually with the decrease of base rates, we see some deescalation of the mix of time to total. So from a peak of 36%, now on a group basis, we are at 33%. And in Greece from 33% peak, we are currently at 29%, which is, of course, a positive evolution.

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.

Okay. I would like to thank you all for participating in this call. I would like to thank you also for the very interesting questions that we received. And hopefully, we fully answered. For any follow-up questions, any clarifications, our investment -- our investor team will be available. Thank you very much.