This article first appeared on GuruFocus.

Release Date: November 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

National Bank of Greece SA (NYSE:NBGPRA.PFD) reported a strong profit after tax of nearly $1 billion for the first nine months of 2025.

The bank's return on tangible equity stood at 16.1%, indicating robust financial performance.

Loan expansion was significant, with a 12% year-on-year increase, and a strong pipeline of corporate disbursements is expected to further boost growth.

Fee income showed strong performance, particularly in investment products, with mutual fund market share gains.

The bank maintains a solid capital position with a CET1 ratio of 19%, allowing for strategic optionality and a $200 million interim dividend distribution.

Operating expenses increased by 6.5% year-on-year, reflecting higher costs related to IT investments and inflationary pressures.

The cost of risk, while low, still represents a challenge in maintaining asset quality amidst external economic uncertainties.

There is a potential pressure on deposit growth due to the rising trend in assets under management.

The bank's net interest income was slightly down due to market interest rate declines, though it is expected to recover.

The bank faces challenges in maintaining its cost-to-income ratio amidst ongoing investments in technology and human capital.

Warning! GuruFocus has detected 8 Warning Sign with NBGPRA.PFD.

Is NBGPRA.PFD fairly valued? Test your thesis with our free DCF calculator.

Q: Your recurring cost growth of 6.5% seems high. Can you discuss the trajectory from here and any expected savings from the new core banking system? Also, with a 19% CET1 ratio, how long will you maintain such strong excess capital, and will you consider actions beyond a slightly higher payout? A: Costs are indeed at the high end of our range, and Q4 will likely be similar. We plan a voluntary exit scheme in early 2026 to offset some trends. Regarding capital deployment, we will update on any changes in our payout strategy at the end of the year.

Q: With a large capital buffer, are you considering bolt-on acquisitions in Greece? Also, regarding NII, can you increase your securities portfolio further, and how should we expect NII from securities to perform? A: We seek value creation, not transactions for their own sake. There aren't many meaningful acquisition targets in Greece. On NII, securities have supported us for a long time, and while we might increase slightly, the current NII from securities is a good reference point. We expect some upside in deposit costs as well.

Q: Can you elaborate on the significant provision release this quarter and your strategy for future provision releases given your high NP coverage ratio? A: The provision release was due to a better-than-expected result from the sale of an NP portfolio, Project Italia. We aim to maintain high coverage levels while gradually normalizing our cost of risk, as our current coverage allows for some reduction.

Q: With rates stabilizing, how long will it take for repricing lag to affect stable loan yields? Also, any updates on mortgages and disbursements? A: While Q3 was the trough for NII, some repricing will continue, countered by loan growth. Mortgage disbursements are increasing, and we expect this trend to continue, supporting growth in the retail sector.

Q: Regarding your senior preferred debt, will it increase as you reduce your CET1 ratio? Also, can you provide details on the growth in non-Greek government debt in your securities book? A: Our issuance of senior preferred bonds will depend on our capital deployment strategy. For the securities book, we invest prudently, mainly in EU sovereign bonds, and classify shorter-term bonds under our head-to-collect-and-sell portfolio.

Q: Can you provide more color on the strong pipeline of disbursements in Q4, particularly in the corporate sector? A: The approved loans are mostly in project finance, energy, and construction, including hotels and hospitality. These projects take time to fully disburse the approved credits.

Q: With your IT system upgrade nearing completion, should we expect lower IT spending next year? Also, how do you plan to gain market share in assets under management, and could this pressure deposit growth? A: We've reached the peak of IT expenses, but ongoing technological advancements will require continued investment. Our strategy in assets under management is paying off, with significant market share gains, and it hasn't negatively impacted our core savings franchise.

Q: What are your thoughts on potential capital allocation in Cyprus, and any plans for bank assurance reorganization? A: We cannot discuss bank assurance or comment on Cyprus at this time.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.