Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Erste Bank — Q3 2005 Earnings Presentation
48 slides from Erste Group Bank's earnings presentation, Oct 31, 2005
Slide 1: Erste Bank - a strong third quarter
> Erste Bank - a strong third quarter > 9 Months 2005 Results > Teleconference Presentation London, 31 October 2005 > Andreas Treichl, CEO Reinhard Ortner, CFO
Slide 2: Presentation topics
> Presentation topics 1. Q3 2005 Highlights 2. Financial Statements 3. Divisional Information 4. Asset quality 5. Outlook and Targets 6. Appendix NB From 1 January 2005 the revised IASB standards IAS 32 (Financial Instruments: Disclosure and Presentation) and IAS 39 (Financial Instruments: Recogniti
Slide 3: Financial highlights
> Financial highlights » Net Profit + 39.9% to EUR 508.8m EPS (in EUR) 2.12 » Total Assets + 12.2% to EUR 156.9bn 1.53 » Tier 1 Ratio at 6.3% 1.33 1.02 0.90 » Cost/Income Ratio 61.8% » Cash ROE 18.5% 1-9 01 1-9 02 1-9 03 1-9 04 1-9 05 Cost/Income Ratio Return on Equity 18.5% 68.3% 67.8% 16.3% 16.2%
Slide 4: Operating results per segment
> Operating results per segment Strong double digit growth for Austrian retail and Central Europe 1-9 2005 1-9 2004 % Change EUR m restated Austria 641.2 602.8 6.4 Savings banks 262.5 260.0 1.0 Retail & Mortgage 183.4 135.6 35.3 thereof - Retail Branches 72.4 54.2 33.6 - SME 19.2 12.4 55.1 - Own sav
Slide 5: Key figures of EB subsidiaries in Central Europe
> Key figures of EB subsidiaries in Central Europe Results (IFRS) as reported by local entities 97.97% 100.00% 99.90% 61.95% 83.28% ² 1-9 05 1-9 04 +/- % 1-9 05 1-9 04 +/- % 1-9 05 1-9 04 +/- % 1-9 05 1-9 04 +/- % 1-9 05 FY 04 +/- % restated restated restated restated Net profit (EUR m) 239.9 207.7
Slide 6: Update on Serbia
> Update on Serbia Novosadska banka transformation programme underway » Transformation programme started mid September 2005 » To be finalised by year end 2006 » New management team in place » Tender offer for the remaining stake 16.7% submitted to minority shareholders » Tender period ends on 7 Nove
Slide 7: The Romanian banking market
> The Romanian banking market High growth CEE market The Romanian banking market - Assets/GDP * 35 42.0% 45% » 22m inhabitants 38.2% 29.8 40% 30 » EU accession expected within 3 years 30.2% 31.6% 32.7% 35% 25 28.9% 23.0 30% » Still in early stage growth in EUR bn 20 25% » GDP/capita: EUR 2,800 at YE
Slide 8: Banca Comerciala Romana (BCR)
> Banca Comerciala Romana (BCR) Largest bank in Romania BCR business data (H1 05) * » No. 1 by assets » No. 1 by deposits Total assets: EUR 7.7bn » No. 1 by loans Total equity: EUR 1,042m Largest retail operation » 319 branches Net income: EUR 102m » 893 ATMs, 4,523 POS » 1.7m debit and credit cards
Slide 9: Casa de Economii si Consemnatiuni (CEC)
> Casa de Economii si Consemnatiuni (CEC) Former state savings bank CEC business data (2004) * » No. 5 by assets Total assets: EUR 1.3bn » No. 4 by deposits » No. 10 by loans Total equity: EUR 149m Largest retail network by locations Net income: EUR 17m » ~ 1,400 branches and agencies Return on equi
Slide 10: BCR is a solid strategic fit
> BCR is a solid strategic fit Romania is a natural extension to our home market » Borders Hungary and Serbia » Has strong trade links with all our existing markets » Expects EU entry within 3 years » Entered high growth phase BCR is the clear retail market leader » 4.5m clients; most ATMs, POSs » O
Slide 11: Presentation Topics
> Presentation Topics 1. Q3 2005 Highlights 2. Financial Statements 3. Divisional Information 4. Asset quality 5. Outlook and Targets 6. Appendix Q3 2005 Results 31 October 2005 11
Slide 12: Group Income Statement (IFRS)
> Group Income Statement (IFRS) Strong operating performance continues to drive net profit growth 1-9 2005 1-9 2004 % Change EUR m restated Net interest income 2,089.4 1,995.9 4.7 Risk provisions for loans and advances (329.1) (306.9) 7.2 Net commission income 921.9 848.9 8.6 Net trading result 171.
Slide 13: EB Group Balance Sheet (IFRS) - Assets
> EB Group Balance Sheet (IFRS) Assets – CE loan business drives asset growth 30-Sep-05 31-Dec-04 % Change EUR m restated Cash and balances with central banks 2,906 2,723 6.7 Loans and advances to credit institutions 20,058 15,684 27.9 Loans and advances to customers 79,946 72,843 9.8 Risk provision
Slide 14: EB Group Balance Sheet (IFRS) - Liabilities
> EB Group Balance Sheet (IFRS) Liabilities – moderate growth in retail funding 30-Sep-05 31-Dec-04 % Change EUR m restated Amounts owed to credit institutions 37,365 28,551 30.9 Amounts owed to customers 71,421 68,213 4.7 Debts evidenced by certificates 21,168 19,710 7.4 Provisions 8,403 7,500 12.0
Slide 15: Presentation Topics
> Presentation Topics 1. Q3 2005 Highlights 2. Financial Statements 3. Divisional Information 4. Asset quality 5. Outlook and Targets 6. Appendix Q3 2005 Results 31 October 2005 15
Slide 16: Divisional Figures - Overview
> Divisional Figures - Overview Erste Bank Group – Net profit improves in all core segments yoy Austria CE Subsidiaries Int. Business Corp. Center TOTAL EB GROUP In EUR m 1-9 05 1-9 04* 1-9 05 1-9 04* 1-9 05 1-9 04* 1-9 05 1-9 04* 1-9 05 1-9 04* Net interest income 1,156.0 1,191.6 810.6 691.3 114.5
Slide 17: Divisional Figures - Austria
> Divisional Figures - Austria Austria – Retail & Mortgage segment drives net profit Savings banks Retail & Mortgage Large Corp. Trading & Inv.B. TOTAL AUSTRIA In EUR m 1-9 05 1-9 04* 1-9 05 1-9 04* 1-9 05 1-9 04* 1-9 05 1-9 04* 1-9 05 1-9 04* Net interest income 618.3 618.1 383.9 383.9 105.4 108.8
Slide 18: Savings banks
> Savings banks Q3 2005 Highlights » Operating results up 1% yoy Segment Savings banks 1-9 05 1-9 04* % chg » Strong improvement on Q2 05 – up 10.9% Operating Income (EUR m) 882.9 875.1 0.9 Operating Expenses (EUR m) (620.3) (615.1) 0.9 » NII improves by 2.1% on previous quarter – Operating Result (
Slide 19: Retail and Mortgage business
> Retail and Mortgage business Q3 2005 Highlights Segment Retail & M'ge 1-9 05 1-9 04* % chg » Retail success story 2005 continues » ROE close to 10% ROE target for 2005 Operating Income (EUR m) 656.7 616.6 6.5 » Branches – operating result up 34% yoy; net profit Operating Expenses (EUR m) (473.2) (
Slide 20: Large Corporates
> Large Corporates Q3 2005 Highlights » Reduction in net profit contribution mainly due to Segment Large Corp 1-9 05 1-9 04* % chg 17% yoy decline in other operating result Operating Income (EUR m) 160.0 154.9 3.3 » Strong performance in Q3 05 (+24% qoq) Operating Expenses (EUR m) (64.2) (62.0) 3.7
Slide 21: Trading & Investment banking
> Trading & Investment banking Q3 2005 Highlights » Net profit contribution declines by EUR 10m Segment Trading & IB 1-9 05 1-9 04* % chg (-12.6%) mainly to weaker NII from ALM Operating Income (EUR m) 169.7 186.5 (9.0) » Flat compared to Q2 05 Operating Expenses (EUR m) (70.3) (72.1) (2.5) » NII de
Slide 22: Divisional Figures – Central Europe
> Divisional Figures – Central Europe Central Europe – Net profit contribution increases by more than 50% CS SLSP EB Hungary Croatia TOTAL CE ** In EUR m 1-9 05 1-9 04* 1-9 05 1-9 04* 1-9 05 1-9 04* 1-9 05 1-9 04* 1-9 05 1-9 04* Net interest income 439.1 369.6 139.8 140.3 150.1 120.2 80.7 61.2 810.6
Slide 23: Ceska sporitelna
> 0eská spo2itelna Q3 2005 Highlights » Net profit contribution up by 45.4% (35.5%)* Segment Contribution 1-9 05 1-9 04* % chg supported by a 22% (14%) improvement of Operating Income (EUR m) 698.1 597.5 16.8 operating result Operating Expenses (EUR m) (408.1) (360.1) 13.3 » Low interest rates compe
Slide 24: Slovenská sporitelna
> Slovenská sporitel’4a Q3 2005 Highlights » Net profit contribution up 51% (44.8%)* yoy on Segment Contribution 1-9 05 1-9 04* % chg operating performance and buyout of minorities Operating Income (EUR m) 210.8 200.2 5.3 in Q1 2005 Operating Expenses (EUR m) (122.7) (117.6) 4.3 » NII down 0.4% yoy
Slide 25: Erste Bank Hungary
> Erste Bank Hungary Q3 2005 Highlights » Net profit contribution more than doubles yoy Segment Contribution 1-9 05 1-9 04* % chg » NII up 24.9% yoy (21.9%)* Operating Income (EUR m) 223.0 176.2 26.6 » Commission income continues to grow strongly: Operating Expenses (EUR m) (133.6) (127.6) 4.7 up 24
Slide 26: Erste Bank Croatia
> Erste Bank Croatia Q3 2005 Highlights » Net profit contribution improves by 21.7% on Segment Contribution 1-9 05 1-9 04* % chg strong operating result (up 39%) despite higher Operating Income (EUR m) 103.8 84.4 23.0 risk provisions and increased minorities Operating Expenses (EUR m) (52.6) (47.6)
Slide 27: International business and Corporate center
> International business and Corporate center Internat. business – Q3 05 Highlights Corporate Center – Q3 05 Highlights » Increase in net profit – up 7.9% yoy » Lower intra-group profit elimination leads to declining commissions and expenses » NII stable yoy (up 1.1%) on stronger Q3 05 » Group initi
Slide 28: Presentation Topics
> Presentation Topics 1. Q3 2005 Highlights 2. Financial Statements 3. Divisional Information 4. Asset quality 5. Outlook and Targets 6. Appendix Q3 2005 Results 31 October 2005 28
Slide 29: Asset quality
> Asset quality NPL cover ratio continues to improve Low Risk Mgmt. Att'n Sub-standard Non-Perform. Total¹ Risk Provisions NPL Coverage2 30/9/05 FY 04 30/9/05 FY 04 30/9/05 FY 04 30/9/05 FY 04 30/9/05 FY 04 30/9/05 FY 04 30/9/05 FY 04 Austria Total 80,006 70,733 10,705 10,440 2,541 3,075 3,342 3,327
Slide 30: Presentation Topics
> Presentation Topics 1. Q3 2005 Highlights 2. Financial Statements 3. Divisional Information 4. Asset quality 5. Outlook and Targets 6. Appendix Q3 2005 Results 31 October 2005 30
Slide 31: Erste Bank Group outlook and targets
> Erste Bank Group outlook and targets EB confirms outlook and targets » EB anticipates a net profit of above EUR 660m at YE 2005 » Erste Bank Group targets average net profit growth of at least 15% p.a. until 2008 » Cost / income ratio is expected to improve to 57% in 2008 » Assuming a Tier 1 ratio
Slide 32: Presentation Topics
> Presentation Topics 1. Q3 2005 Highlights 2. Financial Statements 3. Divisional Information 4. Asset quality 5. Outlook and Targets 6. Appendix Q3 2005 Results 31 October 2005 32
Slide 33: Macro overview
> Macro overview Real GDP growth Inflation (average) 8.0% 20.0% 7.0% 16.0% 6.0% 5.0% 12.0% 4.0% 3.0% 8.0% 2.0% 4.0% 1.0% 0.0% 0.0% 2002 2003 2004 2005e 2006e 2007e 2008e 2002 2003 2004 2005e 2006e 2007e 2008e Austria Czech Republic Slovakia Hungary Croatia Serbia Austria Czech Republic Slovakia Hung
Slide 34: Overview of international exposures
> Overview of international exposures Credit Risk1 by regions at EB Group Low Risk Management Substandard Non performing Total outstanding attention in EUR m 30/9/05 FY 2004 30/9/05 FY 2004 30/9/05 FY 2004 30/9/05 FY 2004 30/9/05 FY 2004 % of total % of total Core Markets 88,685 79,450 11,232 10,891
Slide 35: Overview of international exposures (cont)
> Overview of international exposures (cont) Credit Risk1 by industry sectors at EB Group Low Risk Management Substandard Non performing Total outstanding attention in EUR m 30/9/05 FY 2004 30/9/05 FY 2004 30/9/05 FY 2004 30/9/05 FY 2004 30/9/05 FY 2004 % of total % of total Banking & insurance 51,8
Slide 36: Financials (IFRS) of CE subsidiaries - Ceska sporitelna
> Financials (IFRS) of CE subsidiaries Leská spoNitelna 1-9 2005 1-9 2004 % Change EUR m restated Net interest income 455.9 420.1 8.5 Risk provisions for loans and advances (4.4) (19.9) (77.9) Net commission income 217.2 204.8 6.1 Net trading result 35.8 32.6 9.8 General administrative expenses (408
Slide 37: Financials (IFRS) of CE subsidiaries - Slovenska sporitelna
> Financials (IFRS) of CE subsidiaries (cont) Slovenská sporiteOPa 1-9 2005 1-9 2004 % Change EUR m restated Net interest income 149.3 154.6 (3.4) Risk provisions for loans and advances (9.0) 3.0 >100,0 Net commission income 62.0 51.6 20.2 Net trading result 9.0 10.9 (17.4) General administrative ex
Slide 38: Financials (IFRS) of CE subsidiaries - Erste Bank Hungary
> Financials (IFRS) of CE subsidiaries (cont) Erste Bank Hungary 1-9 2005 1-9 2004 % Change EUR m restated Net interest income 165.2 139.6 18.3 Risk provisions for loans and advances (20.8) (32.0) (35.0) Net commission income 45.3 37.4 21.1 Net trading result 27.5 19.9 38.2 General administrative ex
Slide 39: Financials (IFRS) of CE subsidiaries - Erste Bank Croatia
> Financials (IFRS) of CE subsidiaries (cont) Erste Bank Croatia 1-9 2005 1-9 2004 % Change EUR m restated Net interest income 85.0 66.2 28.4 Risk provisions for loans and advances (8.3) (3.5) >100,0 Net commission income 16.1 12.1 33.1 Net trading result 6.9 11.2 (38.4) General administrative expen
Slide 40: Financials (IFRS) of CE subsidiaries - Novosadska Banka
> Financials (IFRS) of CE subsidiaries (cont) Novosadska Banka 1) EUR m 1-9 2005 FY 2004 % Change Net interest income 6.2 5.8 42.5 Risk provisions for loans and advances (6.3) (29.2) (71.2) Net commission income 2.7 3.5 3.8 Net trading result 4.7 2.1 > 100.0 General administrative expenses (6.6) (10
Slide 41: EB Group Quarterly Results (IFRS)
> EB Group Quarterly Results (IFRS) Profit & loss statement - details EUR m Q3'03 Q4'03 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Q3'05 Net interest income 645 652 658 661 677 703 681 705 703 Net commission income 246 269 281 283 285 287 311 306 305 Net trading result 56 44 62 46 48 60 57 48 66 Income fro
Slide 42: EB Group Quarterly Balance Sheet (IFRS)
> EB Group Quarterly Balance Sheet (IFRS) Balance sheet - details EUR m Q1'03 Q2'03 Q1'04 Q2'04 Q3'04 Q4´04 Q1'05 Q2'05 Q3'05 Total assets 125,081 129,153 136,129 137,517 142,221 139,812 148,202 152,660 156,931 Loans & advances credit inst. 16,535 18,146 18,747 17,846 19,304 15,684 19,545 19,840 20,
Slide 43: EB Group Quarterly by divisions
> EB Group Quarterly by divisions Overview In EUR m Total Austria Total CE * Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Net interest income 398.3 394.6 398.7 416.4 384.2 388.4 383.4 226.3 231.0 233.9 263.0 261.3 273.7 275.5 Risk provisions (90.4) (78.4) (86.7
Slide 44: EB Group Quarterly by divisions - Austria
> EB Group Quarterly by divisions Austria - details In EUR m Savings Banks Retail & Mortgage Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Net interest income 210.2 199.4 208.5 231.5 204.1 204.9 209.2 125.8 131.1 127.0 132.1 128.4 128.9 126.6 Risk provisions (48
Slide 45: EB Group Quarterly by divisions - Central Europe
> EB Group Quarterly by divisions Central Europe - details In EUR m Ceska sporitelna Slovenska sporitlena Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Net interest income 122.2 122.5 124.9 140.4 141.2 146.4 151.5 45.5 47.0 47.8 45.5 45.6 47.2 47.0 Risk provisio
Slide 46: Q3 2005 Results - Key financial data
> Q3 2005 Results Key financial data EUR m YE 1998 YE 1999 YE 2000 YE 2001 YE 2002 YE 2003 YE 20041 30-Sep-05 Tier 1 Capital pursuant to § Austrian Banking Act 1,611 1,753 2,125 2,337 3,800 3,912 4,377 4,435 Total own funds pursuant to 2 § Austrian Banking Act 3,176 3,296 3,956 4,308 6,983 7,009 7,2
Slide 47: Current shareholder structure
> Current shareholder structure Total numbers of shares: 243,183,600 * By Investor Type By Region Austria Verein Others 6.0% Continental Europe 0.9% 32.2% 6.4% UK & Ireland 17.2% Employees 1.8% Savings banks North America Institutional investors 7.0% Austria Private 17.6% 45.9% 57.9% investors 7.1%
Slide 48: Investor relations contacts
> Investor relations contacts Erste Bank, Graben 21, 1010 Vienna Fax +43 (0)5 0100-13112 E-mail: investor.relations@erstebank.at Internet: www.erstebank.com Reuters: ERST.VI Bloomberg: EBS AV Datastream: O:ERS Securities ID: 065201 Investor relations Gabriele Werzer Tel: +43 (0)5 0100-11286 E-Mail: