National Bank of Greece S.A.'s (NBGIF) CEO Pavlos Mylonas on Q1 2020 Results - Earnings Call Transcript
by SA Transcripts, https://seekingalpha.com/author/sa-transcriptsNational Bank of Greece S.A. (OTCPK:NBGIF) Q1 2020 Results Earnings Conference Call May 28, 2020 11:45 AM ET
Company Participants
Pavlos Mylonas - Chief Executive Officer
Christos Christodoulou - Group Chief Financial Officer
Gregory Papagrigoris - Head, Investor Relations
Conference Call Participants
Floriani Jonas - Axia Ventures
Bairaktari Angeliki - Autonomous Research
Sevim Mehmet - JP Morgan
Boulougouris Alexandros - Wood & Co.
Nigro Alberto - Mediobanca
Bakshi Ashwinder - Barings
Memisoglu Osman - Ambrosia Capital
Kladis Panagiotis - Eurobank Equities
Operator
Ladies and gentlemen, thank you for standing by. I am Galley, your Chorus Call operator. Welcome and thank you for joining the National Bank of Greece Conference Call to present and discuss the First Quarter 2020 Financial Results. All participants will be in listen-only mode and the conference is being recorded. The presentation will be followed by a question-and-answer session. [Operator Instructions]
At this time, I would like to turn the conference over to Mr. Pavlos Mylonas, CEO of National Bank of Greece. Mr. Mylonas, you may now proceed.
Pavlos Mylonas
Good afternoon, everyone, and good morning to those of you joining from the U.S. Welcome to our first quarter financial results call. I am joined by Christos Christodoulou, the Group CFO; and Gregory Papagrigoris, Head of IR. After my introductory remarks, the CFO will go into more detail on our financial performance and then we will turn to Q&A. So, let’s begin.
Capitalizing on a very successful management of the health/lockdown phase of the crisis, Greece is gradually lifting restrictions of COVID with most remaining ones to be lifted within the next few weeks. Thus Greece moves with optimism the next phase of the crisis with the goal of successfully restoring the economy.
Uncertainty will lead to come down further initially helped by the large swath of government support measures. Specifically, these will exceed €15 billion equivalent to 8% of GDP with about one-third coming from European sourced funds. To these figures one will need to add the approximate €33 billion support including €22 billion in the form grants provided over the next three years to four years arising from the recently announced €3 -- €75 -- €750 billion European recovery fund, named the next-generation EU. Of course, the commission proposal needs to be approved and hopefully without much delay.
Albeit early days, additional positive news is that there exists nascent signs that confidence is beginning return to the economy as evidenced by various leading indicators, such as individuals mobility data, as well as bank transaction data. Though admittedly premature, projections on the decline in economic activity and the prospective recovery by 2021 may need to be revised further.
NBG’s initial response to COVID crisis was to ensure the health and safety of our employees and clients, adopting strict measures at home, offices and branches. We successfully transition into a remote work-from-home operating model with appropriate controls in place allowing approximately 70% of our staff to work remotely at its peak, cyber securely and productively.
At the same time, we accelerate our digital customer onboarding and engagement. The results have been impressive. Digital channel transactions have increased 60% year-on-year. More than 130,000 customers have been digitally onboarded year-to-date. Active users of digital channels are up by more than 50% year-on-year.
In this second phase NBG is committed to supporting all its clients well in the crisis by providing the necessary liquidity support. To this end, we have also focused on the rapid implementation of payment moratorium, covering the period for most of the 2020 to both our corporate and retail clients. So far NBG has received approximately 60,000 applications corresponding to $4 billion loan balances, mostly mortgages and corporates.
NBG is also actively participating in all the government support claims involving state guarantees, co-financing and interstate services. I believe that the rapid and successful shift in our operating model to work from home and the new service model i.e. the new products, I just mentioned, reveal the success of our transformation program in making NBG more agile, and of course, more digital.
NBG’s balance sheet strength and strategic flexibility are important competitive advantages and will provide significant strengths during this crisis. The first quarter results without a doubt support this assertion. We addressed the issue of COVID-19 related provisions decisively, front loading approximately €0.5 billion of loan provisions in the first quarter. Within this amount, the COVID related provisions amount to more than €400 million standing at 150 basis points over net domestic loans. That’s on a non-annualized rate.
Based on current economic projections and given the unprecedent level of uncertainty, we believe these provisions cover the total amount is for COVID-19. To this amount, 100 basis points of underlying recurring quarterly creditors charges are added on an annual rate at this time and as a result, our coverage ratio has been increased by nearly 300 basis points quarter-on-quarter.
Despite the very sizable cost of risk charge, Group PAT exceeded €400 million. This result along with the future PPI capacity provides substantial room to absorb incremental provisions for NP related inorganic actions going forward.
As regards our core operating performance core PPI has remained broadly unchanged, quote-unquote, at €137 million. This is a result of lower core income which has been offset by lower costs.
As Christos will elaborate on each of these drivers in detail, I just want to highlight the reduction in our domestic personnel and G&A expenses, with the former reduced by 8% year-on-year, only partly reflecting the 1,100 FTEs reduction from the past year’s successful VES. On a full year basis, the operational cost savings from this will amount to €14 million.
Turning to our capital position, our CET1 and total capital ratios stands at 15.5% and 16.4%, respectively, absorbing the totally anti -- total anticipated COVID-19 charge-off, as well as the annual IFRS 9 transitional charge. Our capital position is circa 500 basis points above the COVID adjusted OCR capital threshold of 11.5%.
Nearly visibility in this environment is extremely limited. However, there are some points that appear clear. First, the migration to digital banking is accelerating beyond expectations and NBG has made impressive steps in this area over the past two years.
Second, a new radically different and more efficient operating model for banks is emergent which will occupy management for the years to come.
And third, there is new operating environment driven by huge upcoming structural changes in the economy, opportunity will be captured by the ones most flexible and adapt.
In closing, I would like to say that, our success in changing the bank over the past two years, as well as our timely and effective response to pandemic crisis are testament to NBG’s change momentum and establish transformational capacity. Coupled with our balance sheet strength and strategic flexibilities, these elements will make the difference as we continue to rise the oncoming challenges and support the national effort in this difficult period.
With that, I would like to pass the floor to our CFO, Christos, who will provide additional insights to our financial performance before we turn to the Q&A.
Christos Christodoulou
Thank you, Pavlos. So starting with the P&L highlights on slide six. The key takeaways the resilience of our core operating profits, complemented by early gains that support our pre-provision income, which as a result grew nearly 4 times on a year-on-year basis. These are allowed the absorption of the total anticipated COVID loan impairments, also leaving substantial room to accommodate NPE-related inorganic actions going forward.
Core income remained broadly stable year-on-year, aided by strong growth in fees at 12%, while NII declined by 4% reflecting the aggressive NPE of 2019, the low interest income from securities due to portfolio sales and the GGB swap in January, plus the costs from the Tier II issuance in July 2019.
Cost optimization efforts continue to produce impressive results, domestic personnel expenses declined by over 8% year-on-year, reflecting the benefit of the 2019 VES that expired in February 2020. The last leg of approximately 300 employees leaving the bank during Q1 ‘20 has not been fully factored in. Moreover, a provisional VES charge of €90 million has been booked this quarter, providing flexibility for further cost rationalization, while our tight management with general and admin expenses is said to provide further savings.
The realization of large one-off items, namely the €550 million gain from the GGB swap in January and the gains of €264 million from the sale of Tier II collect [ph] and sales securities in February, allowed us to address the issue of the incremental provision for the COVID crisis decisively, front loading the total anticipated charge. Of course, we need to underline that this is subject to the information currently available and with the caveat of the unprecedented glimmers of uncertainty, especially with the macroeconomics threat.
Having said that, COVID related provisions came in at €416 million, which corresponds to a non-annualized cost of risk 143 basis points. On top of that, the underlying Q1 ‘20 cost of risk is €70 million or an additional 96 basis points.
The high cost of risk level in Q1 ‘20 is attributed to the bank standpoint regarding the macro outlook in the context of COVID. With key macroeconomic variables projected to record a sizable contraction, being only partially offset by close model perspicacity adjustments in line with accounting and regulatory guidance.
Baseline GDP envisages a recessionary environment in 2020, with the annual charge between minus 7.5%, where recovery envisaged for 2021 with the average GDP growth rate at plus 5% year-on-year.
Despite the high provision charges Group attributable profit after tax amounted to €304 million in Q1 ‘20, compared to €41 million a year ago, even after absorbing sales of one-offs including the €90 million provisional VES charge. As Pavlos said, such profitability levels provide further flexibility in our NPE strategy, allowing us to be ready to launch NPE related inorganic actions in a timely manner.
Turning to slide seven on asset quality, Bank NPEs dropped by €0.2 billion this quarter to €10.4 billion, reflecting efforts across organic channels. The improvement inflow in the first two months of the year was observed in March due to the COVID uncertainty and before the crystallization of the impact from the introduction of payment holiday measures.
The domestic NPE rates are now stands at 51.8%, down 40 basis points quarter-on-quarter and 7.3 percentage points year-on-year. Cash coverage climbed to 56% up by nearly 3% quarter-on-quarter.
On the liquidity front, domestic deposits expanded by €1.7 billion this quarter, driven by safe deposits, while domestic private deposits maintain a positive momentum. LCR and NSFR ratios remain at levels well above
Our exposure to the ECB TLTRO facilities have been gradually increasing and this will allow us to provide credit to corporate and households at a negative funding cost of minus 100 basis points.
In terms of capital, CET1 and total capital ratios in Q1 stand at 15.5% and 16.4%, respectively. Comfortably absorbing the total anticipated provisions related to COVID-19, the full year IFRS 9 transitional adjustments and still standing almost 500 basis points above the COVID-adjusted regulatory threshold of 11.5%.
Going into further detail on profitability on slide nine, Group operating profit reached €426 million in Q1 ‘20, compared to €16 million in Q4 ‘19, reflecting our resilient core pre-provision income and the large trading gains.
Excluding non-core income and the COVID-related provisions, Group operating margin expanded to 92 basis points in Q1, compared to 22 basis points in previous quarter, driven by lower operating costs and lower underlying provisions.
Turning to slide 10, domestic NII amounted to €262 million in Q1 ‘20 from €271 million in Q4 ‘19. Mostly due to lower NPE interest income driven by the sizable portfolio sales in 2019 and lower NII from securities.
Performing NII remained at similar levels, reflecting the healthy production of new loans in Q1 ‘20, as well as earnings. Indeed, domestic loan disbursements were up by €1.1 billion, a 53% increase year-on-year. Excluding COVID-related provisions, risk-adjusted NII remains at healthy levels of €192 million in Q1 ‘20 versus €164 million the previous quarter.
Moving on to slide 11, domestic deposits amounted to €44 billion expanding by €1.7 billion this quarter. Low interest rate bearing deposits increased their share to 72% of total deposits versus 70% a year ago, allowing our blended deposit yield to edge lower to 29 basis points.
Time deposit yield dropped further by 12 basis points this quarter to 52 basis points, with new time deposit production coming at 30 basis points. The re-pricing of time deposits benefited NII by €4 million this quarter and will continue to support this year’s topline as the ongoing re-pricing becomes fully factored in.
On slide 13, following a seasonally strong Q4, domestic fee income amounted to €63 million, up 13% year-on-year on the back of the strong recovery in retail fees, which exhibit a 25% growth year-on-year, mostly driven by the increase in card related fees, intermediation fees and digital channels, corporate fees remained weak across the sector due to competition.
Moving on to OpEx on slide 14, as already mentioned, domestic personnel expenses dropped by 8.2% year-on-year, reflecting part of the benefit of the 2019 VES, with the full year impact for 2020 estimated at over €40 million.
Domestic general and admin expenses were marginally lower year-on-year, while higher depreciation charges reflect the first time adoption of IFRS 16 and the Prodea deconsolidation in mid-’19. Excluding depreciation charges, domestic staff costs and general and admin expenses as a percentage of core income dropped by 270 basis points to 49.4% in Q1 ‘20 from 52.1% in Q1 ‘19.
A bit more detail on asset quality on slide six -- on slides 16 to 20, NPE reduction continued driven by mortgages benefiting from restructurings involving the debt forgiveness through our innovative products Split & Settle.
As already mentioned, the improvement in NPE flows in the first two months of the year was offset in March due to COVID uncertainty, as the implementation of relief measures is not yet reflected in March flows.
As the CEO mentioned, with regards to payment holiday measures until mid-May, NBG received about 60,000 applications corresponding for an amount of approximately €4 billion.
In terms of risk concentration on slide 20, NBG has a well-diversified loan portfolio with less than 20% of our corporate clientele estimated to be relatively more affected by COVID. Sectors such as accommodation, services related to air transport, retail trade, media, machinery and equipment should see a fairly large share of their turnover affected by the ongoing economic crisis and their recovery is likely to be more delayed versus other less affected sectors.
During difficult and uncertain times, the bank produced solid profitability and fortified further its balance sheet. This was complemented by our operational efficiency and our transformational capacity leading to a strong reaction to the challenges and opportunities posed by the crisis. We will continue to closely monitor the impact of COVID and review our financial performance and business plans accordingly.
On this note, I would like to open the floor to questions. Thank you.
Question-and-Answer Session
Operator
[Operator Instructions] The first question comes from the line of Floriani Jonas with Axia Ventures. Please go ahead.
Floriani Jonas
Hey. Hi, guys. Good afternoon. Few questions from my side. Thanks for the presentation. The first one is, just wondering what is the latest from your side on the NPE reduction plan, I remember that there were talks of sizable securitization before the outbreak. So just wondering how you are thinking about that now in terms of size and timing given that you are already incorporating some of the losses through the P&L? Then second, could you please give us an update on unrealized trading gains as of Q1 and maybe as of May as well, that will be great. And then on new disbursements for the year, I have seen the figure for Q1, which it has been quite strong and I think for obvious reasons that this is happening. But then how that links to your expectation for the full year, I mean, is this like, let’s say, an early uptick in disbursements and then we are going to see a bit less, is this going to match your previous expectation for new disbursements in 2020?
Pavlos Mylonas
Okay. I will take the first and the third, and Christos will take the second. NPE reduction plans have been thrown into disarray because of COVID, okay, clearly. We were expecting to do a securitization in Q3 2020 and that is certainly going to go back. That does not mean we still don’t plan to do that securitizations.
The question is the timing, and the question there will be the market conditions. If we are ready and when the market conditions allow we will do that similar securitization that were described project planning.
Now NPE creation by COVID, we need to see what happens after the end of the payment holiday. Most of 2020 NPE creation formation will be distorted by the payment holiday. These will come to an end at the -- in the fourth quarter of 2020 and in 2021 we will see what arises from that and that is the visibility and that is not high. You can take a guess at what we think it is from the provisions we have taken. So that is the NPE strategy as it has being formulated now.
So some uncertainty, we will do the securitization when markets open. How much NPEs will be created, we think we have taken the provisions now and we can do the reduction one way or another, organic or inorganically, we will see. So, but this will be further formulated as developments occur.
Now on the disbursements, it’s going to be a strange year because disbursements will -- are not as critical as they used to be. Because what happens is there will be no repayments due to the holidays -- the payment holidays. So any disbursements will create a net expansion in the book.
So with these very few repayments and the government-sponsored programs and any normal disbursements we do will, probably, ironically, if you want in 2020 to a higher net loan book expansion than in 2019. Christos?
Christos Christodoulou
Okay. Thank you, Pavlos. So if I got your question right, what we have realized in the first quarter in terms of the held to collect and sell portfolio is a loss to our OCI of approximately €120 million and since then we have seen no significant volatility in our portfolio. Now in terms of our trading book, that’s fair values in the P&L, we have an unrealized capital of about €15 million and that’s the numbers.
Floriani Jonas
Thank you.
Operator
The next question comes from the line of Bairaktari Angeliki with Autonomous Research. Please go ahead.
Bairaktari Angeliki
Hello. Thanks for taking my questions. I think in the beginning of the presentation you mentioned the macro assumptions that underpin your COVID-19 provisions that you have booked this quarter, would you mind repeating those, please, in terms of like the GDP reduction you expect for 2020 and since I imagine increased or V shaped recovery that you expect in 2021, if you could give us some color on that that would be helpful? Then on the additional €90 million VES charge, could you indicate what savings we should be expecting from this, I suspect that the savings will be incremental to the €40 million. Could you please confirm that and provide us with an amount? And with regards to TLTRO, I can see that the eurosystem funding has increased for you in May to €5 billion. What is the maximum capacity that you can draw under TLTRO and could you please give us an indication of the benefit that you expect to have from these on your net interest income? And last question, on the disbursements, I hear you that loan growth is going to be higher this year because of all the moving parts due to the Coronavirus. I was wondering, what is the interest rate that you charge on the entrepreneurship fund loans and also on the guaranteed loan scheme? Are those comparable to the back book or are those lower, because obviously they are partly subsidized by the government and so the cost of risk on those should theoretically be lower, are you passing this lower cost of risk and RWA relief to the customer through a lower rate? Thank you very much.
Pavlos Mylonas
Okay. On the macros, the macro -- GDP macro assumption that was used in the current IFRS 9...
Christos Christodoulou
Yeah. It was -- Angeliki, it was 5.7% -- 7.5% for 2020 and a recovery of plus 5.1% for 2021. That’s the benchmarks that we use for the calculation of provisions.
Pavlos Mylonas
On the VES it’s a rule of thumb of around 2 times. So the savings will be half the €90 million. And then on the TLTRO, I think, you can do the math, but the calculation is that we can do around €10 billion -- the maximum we can do is €10 billion, which is about and we are around €5 billion now.
On the rates, it depends on the program, there are various programs here. Clearly, the amount that is subsidy from the state, whether it’s in the form of co-financing, interest rate subsidy, guarantee, will be passed on in one form or another to the client. But that benefit is not always an interest rate reduction, it is also in terms of other terms such as collaterals, et cetera. So, yeah, the benefit will be passed by -- passed on but it’s not always interest rates.
Bairaktari Angeliki
Thank you. If I may just follow up on the TLTRO, on the maximum €10 billion that you can do, do you expect to get a yield of negative 50 bps on this or do you -- are you going to go for the negative 100 bps, which I understand is conditional on loan growth? That’s my first follow-up.
Pavlos Mylonas
Okay. As you remember, the rules have changed and all you need to do is not have a reduction in your loan balances. So…
Bairaktari Angeliki
Okay.
Pavlos Mylonas
…given what we have described about disbursements, I think, it is going to be relatively easy to get the maximum minus 100 basis points.
Bairaktari Angeliki
Thank you. That’s clear. And on the higher loan balances, I guess, from your answer, I guess, we shouldn’t really expect a similar impact -- a pickup in NII -- a significant pickup in NII this year on the back of the loan growth, because this loan growth comes mainly from the subsidized or guaranteed government programs, is that fair?
Pavlos Mylonas
The conclusion is fair. There are lots of moving parts though. Clearly, there will be more NII from PEE disbursements, okay? However, you will have on the back book less curings than we had expected and some corporate renegotiating down their rates. So PEE loan there will be some factors on PEE loan interest.
Then you are going to have the NPE interest -- loan interest, which will go down both because of inorganic, and of course, the high level of provisioning. Security rates are going down. Deposit rates though on the other hand are going down as well. We have a full year impact of the Tier 2.
So there are a lot of moving parts there, where if you add them all together, you get to your conclusion that NII will, probably, be flat and maybe slightly down low-single digits…
Bairaktari Angeliki
Thank you very much.
Pavlos Mylonas
You want low-single digits.
Operator
The next question comes from the line of Sevim Mehmet with JP Morgan. Please go ahead.
Sevim Mehmet
Good afternoon. And thank you very much for the presentation. Just to follow up on provisions and your securitization plan please, because you wanted to use your strong profitability this year to prevent a hive down. Can we assume that you could still potentially frontload potential securitization costs, some of them at least irrespective of the timing of its launch in the coming quarters? That’s my first question, please.
Pavlos Mylonas
Sevim, do you want to give both or should we respond to first?
Sevim Mehmet
Yeah. And the second one is just a technical one on the state guaranteed scheme. What are the risk weightings applied to the loans under the scheme?
Pavlos Mylonas
All right, Christos will take the first...
Christos Christodoulou
Yeah. The -- so the answer is absolutely, we want to capitalize on the profitability projects that we have in 2020 to build up coverage for any mechanic actions that we have. There’s nothing more to say there.
Pavlos Mylonas
Okay. And the loans will benefit to the extent of the guarantee from -- for the risk weighting.
Sevim Mehmet
Great. Very clear. Thanks very much.
Operator
[Operator Instructions] The next question is from the line of Boulougouris Alexandros with Wood & Co. Please go ahead.
Boulougouris Alexandros
Yeah. Hello. Regarding the cost of risk question, if I may and following the front loading of the COVID charges from the second quarter, should we expect a 100 bps more or less cost of risk in the following quarters, excluding any inorganic to the transaction? That’s my first question. And my second question is on fees, what would be the impact of COVID and the closure of the country in part of Q1, Q2 mostly, so what should we expect for fees in the -- on a full year basis? Thank you.
Pavlos Mylonas
Thank you for the question. So with regards to the cost of risk, your assessment is correct. You should be expecting on the underlying cost of risk from this quarter onwards the 100 basis points that we said, of course, other things being equal, the disclaimer we made was clear and loud that we took provisions based on what we know today and given the uncertainty around.
Now with regards to fees, from what we expect during the year given also the uncertainty. We are predicting to be about 10% to 15% down compared to the fee market that we had for 2019. We are strong with retail. We are lacking in phase with corporate, and that will bring us to the mark that I mentioned.
Boulougouris Alexandros
Okay. Thanks. And just as a follow-up, should all these imply that core PPI should be more or less stable this year, I mean given all the trends that also Mr. Mylonas said before on NII and the costs?
Pavlos Mylonas
Well, I would say yes, it could be a bit up, a bit down, but we anticipate that the gap that we think accomplished will be covered by the savings in OpEx and we don’t expect any significant deviation from that.
Boulougouris Alexandros
Thank you.
Operator
The next question comes from the line of Nigro Alberto with Mediobanca. Please go ahead.
Nigro Alberto
Thank you for taking my question. Just can you tell us how much do you expect in terms of capital relief from the new CRR proposal i.e. intangibles deduction in the CET1 SME supporting factor? And then just one follow-up, a clarification on the cost savings, €40 million cost savings this year, are these including also the cost saving coming from the restructuring costs booked this quarter, I think you get it? Thank you.
Pavlos Mylonas
See, if the Basel IV delays is the question, yes, the -- that’s anyway down the road, in 2022, I think is -- was going to be implemented. And the any pushback is not affecting the current year or next year. But in 2022 will give us the savings of -- it was about around 100 basis points, if I remember correctly. Now the second question was on -- can you repeat the second question, because I am not sure about?
Nigro Alberto
Yeah. On the cost savings coming this year the €40 million, if this includes also the savings coming from the restructuring costs that you booked…
Pavlos Mylonas
Okay. Got it.
Nigro Alberto
…this quarter.
Pavlos Mylonas
The €40 million I referred to is only due to the VES that has already occurred. There will be more savings from other actions, especially on G&A, and therefore, total reduction in OpEx will be more than that...
Nigro Alberto
Okay. Thank you so much.
Operator
The next question comes from the line of Busalof Arman with Prince Street Capital Management [ph]. Please go ahead.
Unidentified Analyst
Hi, guys. Thank you very much for the call. I just had a question about lending yields. I am looking at page 13 of the presentation, on the lower left-hand side you have the lending yields by segment and it looks like new production is at higher levels than the back book, but it looks like that the overall yield actually moved down in Q1. So I am surprised by, is this to say that the yields on new production have moved up only recently, because I would have thought that, if this was the case we would have seen overall blended yields in Q1 actually move up instead of down?
Pavlos Mylonas
That’s a very good observation. A question I asked earlier. The answer is two-fold. One is that new production is relatively small. So it’s not affecting the total. And the second is and I mentioned it in one of my answers to the previous -- one of my previous questions, was that there’s been some hits to the back book in terms of curings and in terms of corporates seeking lower rates. So there is -- there are some moving parts in the back book.
Unidentified Analyst
And is the back book entirely fixed, or is there a floating component to it?
Pavlos Mylonas
It is entirely floating, but you have nego -- renegotiation expected which is driving the one part of the corporates and especially pre-COVID where there was -- they had a bit more bargaining power. And then it’s the curings that are going into the back book because this is the performing back book that are with lower yields than the rest, so there’s a mix effect.
Unidentified Analyst
Do you expect as total new production starts to go up over the course of the rest of the year, if it does, will the yields on new production come down as a result of that, meaning do we only see these higher numbers now because new production is as low as it is?
Pavlos Mylonas
The new production will be somewhere between the back book and the front book, because as you know, most of the new production will have government-guaranteed elements, and therefore, the benefit of a government scheme will be in part of those yields, that -- so that answer is, yes.
Unidentified Analyst
Okay. I see. Thank you, guys.
Operator
The next question comes from the line of Bakshi Ashwinder with Barings. Please go ahead.
Bakshi Ashwinder
Okay. Thank you so much. I have three quick questions. First question, what is the expectation around drawdown from corporates and what is the size of sort of undrawn lines that you have outstanding, if you are seeing further drawdowns there happening? That’s the first question. Second question, on your existing portfolio -- performing portfolio, what proportion of that do you -- are you seeing clients come up to you for asking for renegotiation? And the third question is, I understand government has announced a lot of plans to sort of support troubled customers, when you look at your book and when you look at the government plans. Are you quite comfortable that most of the government plans to support troubled industries would cover your troubled customers or are there proportion of your or any segments of your loan book, which actually wouldn’t be covered by the government plans, and therefore, you will have to provide for them separately? Thank you.
Pavlos Mylonas
I will pick up the first question with regards to the credit lines and the drawdowns. So we have seen about between €200 million and €300 million drawdowns in during March, since then the activity was low, and currently, we have about €0.5 billion of committed undrawn credit facilities, so that’s the numbers.
Christos Christodoulou
Okay. On the renegotiations, I see the answer to my previous question got me in trouble, no, I am joking. It’s the large guys that have the renegotiating power. So it’s our largest corporate customers that have asked for lower rates.
Remember pre-COVID they were able to access the bond market -- the mini-bond market as we call it, and therefore, they were saying, either you lower rates or we go to the bond market. So they had some power to bring down rates. But it was only just the largest group.
And the last question was on the government programs. I think that even without the announcement yesterday of the big €750 billion European plan, the amount of money the €15 billion that I mentioned in my introductory remarks seems to cover most of the cash gap of the corporate sector and risk.
So, yeah, now there is -- if every customer get what they should is what our role is to get that money from the government programs and provide it to our customers and have no doubt that we will do that. But on a macro level, consistent with our macro projections, the cash gap of the corporate sector seems to be in line with the public support programs and if more comes then the GDP will decline even less than what we mentioned earlier in the call.
Bakshi Ashwinder
All right. Thank you.
Operator
We have a follow-up question from the line of Floriani Jonas with Axia Ventures. Please go ahead.
Floriani Jonas
Yes. Hi, guys. Just a follow-up on fees, maybe more on the strategic part of it, I remember that when you guys released the strategic plan and the business plan last year, a big part of your increase in fees was -- it was relying upon pricing and cross-selling. So I take that given the circumstances today, the volume component of fees is likely to be severely affected. But I am just wondering, since you released the business plan, what has been the progress on your developments there, I remember there was also a component of cross-selling ratio increasing, if there’s any update you could give us until the outbreak, I think, would be helpful. And also, how do you think beyond the crisis, I mean, how are you thinking about these dynamics going forward once this is kind of back to normal, are there any adjustments you would be willing to do?
Pavlos Mylonas
Okay. On the retail side, we have been spot on. We had a very ambitious budget for fees and we have exceeded it by a little. So on the retail side everything is -- was moving very well pre-COVID. Now we will see what happens thereafter though this is -- there are transactions that are moving to the banking system from outside the bank system, so that would be a plus.
Where there was a shortfall was on the corporate side. Clearly, investment banking is not -- is nowhere and it doesn’t look like there will be anywhere in the next little while, though in 2021 this crisis may lead to some sort of M&A in the private sector.
And then the cross-sell. Clearly is and the disbursement fees are behind schedule on the corporate side. So there we have created a new department, which is called transaction services, which we are responsible for cross-sell, that is being rolled out now. So once we can get more into the -- in contact with clients that will improve.
So I think the -- if you want the simple summary, very good on retail, very satisfied corporate due to COVID. We need to do more work and the transaction services shift is one and the new rollout of the corporate Internet Banking platform and we can link them up more to -- their systems with us is going to produce more fees, all right.
Floriani Jonas
Got it. Yeah. Thanks. Thanks a lot.
Operator
The next question is from the line of Memisoglu Osman with Ambrosia Capital. Please go ahead.
Memisoglu Osman
Hello. Many thanks for your presentation. Just following up on the lending rates discussion, you just talked about recently about the state guarantees. It sounded like, please correct me if I am wrong there, lowering the rates but in the post-COVID environment you have more leverage with the corporates. So overall -- are you seeing overall rates moving higher or what kind of mix should we assume, what percentage of the disbursements are state guaranteed versus not? And also is the pace picking up or slowing down, let’s say, versus April, any color would be helpful? Thank you.
Pavlos Mylonas
Okay. The difficulty to answer your question is that the guaranteed program hasn’t started yet, okay? It’s going to start, hopefully, if the messages from the government are what -- are still on track, it’s going to be next week.
Memisoglu Osman
Okay.
Pavlos Mylonas
We put in our bids all four banks for part of the funds. Remember there’s about €1 billion going up to €2 billion and the four banks had to pitch for their share. We have done that. The numbers will be announced, I think, tomorrow, and then we will sign the contracts and start contacting our clients and see what happens.
So this is a competitive process. We have seen many joint clients with other banks. So the rates we will see where they come out right now. So, yes, there will be competition to bring them down because there are four banks, but you are right that there are also they are looking for the cash. So we will see how that plays out over the next few months. So a bit -- a good question but it’s just a bit too early for it.
Memisoglu Osman
Okay. So it’s not safe to say, because of COVID lending rates overall headline would move higher, that’s...
Pavlos Mylonas
No. I think that would be -- that would not be right.
Memisoglu Osman
Okay. Okay. Thank you.
Operator
[Operator Instructions] We have a follow-up question with Bairaktari Angeliki with Autonomous Research. Please go ahead.
Bairaktari Angeliki
Hi. Just a follow-up question on actually repeating a question of one my colleagues which I think was not answered previously. What do you expect the impact to be from the elimination of the deduction of software intangibles and also from the SME supporting factor, which are going to be included in the CRD five package currently under preparation in the European Commission?
Christos Christodoulou
Hi, Angeliki. We don’t expect to have a much of savings from there just a few basis points based on our assessment at the time.
Bairaktari Angeliki
Thank you.
Operator
[Operator Instructions] The next question is from the line of Kladis Panagiotis with Eurobank Equities. Please go ahead.
Kladis Panagiotis
Yes. Hello, gentlemen. Just a quick question on the sale of national insurance, apparently this was not -- there was not a successful outcome, so where we stand right now?
Pavlos Mylonas
We are discussing with DG Comp our options and when we have something to say more on that we will let you know.
Kladis Panagiotis
Okay. Great. Thank you.
Operator
[Operator Instructions] Ladies and gentlemen, there are no further questions at this time. I will now turn the conference over to Mr. Mylonas for any closing comments. Thank you.
Pavlos Mylonas
Thank you all for taking the time to join us being the second bank in a row today. We are open for questions, myself, Christos and Greg. And I don’t know when we will see you again in person, but I am sure we will be talking to you and maybe assuming with you in the near future. Thank you very much.
Operator
Ladies and gentlemen, the conference has now concluded and you may disconnect your telephone. Thank you for calling and have a pleasant evening.