Slide 1: Erste Group investor presentation Q1 2016 results
Erste Group investor presentation Q1 2016 results 4 May 2016 Erste Group posts net profit of EUR 274.7m (ROTE: 11.3%) in Q1 16 despite upfront booking of banking levies and regulatory charges Andreas Treichl, CEO Erste Group Gernot Mittendorfer, CFO Erste Group Andreas Gottschling, CRO Erste Group P
Slide 2: Disclaimer – Cautionary note regarding forward-looking statements
Disclaimer – Cautionary note regarding forward-looking statements • THE INFORMATION CONTAINED IN THIS DOCUMENT HAS NOT BEEN INDEPENDENTLY VERIFIED AND NO REPRESENTATION OR WARRANTY EXPRESSED OR IMPLIED IS MADE AS TO, AND NO RELIANCE SHOULD BE PLACED ON, THE FAIRNESS, ACCURACY, COMPLETENESS OR CORREC
Slide 3: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 3
Slide 4: Executive summary – Group income statement performance
Executive summary – Group income statement performance QoQ net profit reconciliation (EUR m) YoY net profit reconciliation (EUR m) 79 103 275 275 16 23 154 226 6 14 204 60 52 127 8 61 Q4 15 Operating Operating Risk costs Other Taxes on Minorities Q1 16 1-3 15 Operating Operating Risk costs Other Tax
Slide 5: Executive summary – Key income statement data
Executive summary – Key income statement data Net interest income & margin Operating result & cost/income ratio Cost of risk in EUR m in EUR m in EUR m 2.55% 2.59% -16.3% 61.9% -69.2% 2.51% 2.51% 60.5% 741 183 620 0.64% 1,099 1,092 1,120 1,092 664 620 0.17% 56 211 56 1-3 15 1-3 16 Q4 15 Q1 16 1-3 15
Slide 6: Executive summary – Group balance sheet performance
Executive summary – Group balance sheet performance YTD total asset reconciliation (EUR m) YTD equity & total liability reconciliation (EUR m) 206,369 206,369 18 496 410 844 1,253 406 1,874 694 1,138 3,118 2,291 199,743 199,743 745 31/12/15 Cash Trading, Loans to Net loans Intangibles Other 31/03/16
Slide 7: Executive summary – Key balance sheet data
Executive summary – 31/12/15 Key balance sheet data 31/03/16 Loan/deposit & loan/TA ratio Net loans & credit RWA NPL coverage ratio & NPL ratio in EUR bn +0.7% 98.4% 98.5% 66.5% 64.5% 125.9 126.7 63.0% 61.4% 84.7 84.9 7.1% 6.7% Loan/deposit ratio Loans/total assets Net loans Credit RWA NPL coverage
Slide 8: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 8
Slide 9: Business environment – Solid CEE GDP growth expectations for 2016
2016 Business environment – 2017 Solid CEE GDP growth expectations for 2016 Real GDP growth (in %) Dom. demand contribution* (in %) Net export contribution* (in %) Consumer price inflation (ave, in %) 4.8 4.4 2.7 4.1 3.8 2.1 3.2 3.5 3.5 1.6 1.8 2.4 2.2 2.3 1.1 1.3 1.1 2.6 2.3 1.0 2.5 2.2 0.9 0.8 1.2
Slide 10: Business environment – Interest rates remain at historically low levels in Q1 16
Business environment – 3M Interbank 10YR GOV Interest rates remain at historically low levels in Q1 16 Austria Czech Republic Romania 3.42% 3.03% 0.57% 0.45% 3.56% 3.42% 0.83% 0.52% 0.45% 0.57% 0.50% 0.45% 0.05% 0.94% 1.21% 0.62% -0.19% -0.09% -0.19% 0.33% 0.29% 0.29% 0.29% 0.62% 1-3 15 1-3 16 Q4 15
Slide 11: Business environment – Limited currency volatility in CEE
Business environment – Limited currency volatility in CEE EUR/CZK EUR/RON -2.1% -0.1% +0.1% +0.9% +0.7% -1.1% 27.6 27.0 27.1 27.0 27.0 27.1 4.45 4.49 4.46 4.49 4.52 4.47 1-3 15 1-3 16 Q4 15 Q1 16 31/12/15 31/03/16 1-3 15 1-3 16 Q4 15 Q1 16 31/12/15 31/03/16 • Czech National Bank maintains exchange r
Slide 12: Business environment – Market shares: mostly stable, RO impacted by NPL sales, write-offs
31/03/15 Business environment – 31/12/15 Market shares: mostly stable, RO impacted by NPL sales, write-offs 31/03/16 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 19.3% 18.6% 18.4% 19.0% AT 19.4% AT 19.0% AT 18.5% AT 18.5% 23.2% 18.9% 25.6% 12.0% CZ 22.8% CZ 19.4% CZ 25
Slide 13: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 13
Slide 14: Business performance: performing loan stock & growth
YoY 31/03/15 Business performance: performing loan stock & growth – QoQ 31/12/15 Performing loan volume increases by 1.0% ytd 31/03/16 120.1 3.1% • Rising performing loan volume trend continues in Q1 16, due Group 122.6 123.8 1.0% to qoq increases in most geographies, most pronounced in 28.5 AT and
Slide 15: Business performance: customer deposit stock & growth
YoY 31/03/15 Business performance: customer deposit stock & growth – QoQ 31/12/15 Deposits grow by 0.5% in Q1 16 31/03/16 124.8 3.1% • Continued inflow in customer deposits, mainly driven by CZ, Group 127.9 128.6 0.5% EBOe 29.9 2.2% • Yoy growth almost exclusively due to Retail business line AT/EBOe
Slide 16: Business performance: NII and NIM
Business performance: NII and NIM – Q1 15 Q4 15 Low interest rate environment results in NIM pressure Q1 16 1,099 2.55% • Yoy relatively stable as increase in Other segment (due to Group 1,120 2.59% 1,092 2.51% higher benefit from free capital) and AT/SB (driven by higher 158 1.75% loan volumes and
Slide 17: Business performance: operating income
YoY Q1 15 Business performance: operating income – QoQ Q4 15 Operating income decreases yoy and qoq Q1 16 1,689 -3.5% • Yoy down across all geographies except SK, HR primarily on Group 1,681 -3.1% net fee and commission income and lower net trading and FV 1,629 result 256 -3.9% AT/EBOe 261 • Qoq dec
Slide 18: Business performance: operating expenses
YoY Q1 15 Business performance: operating expenses – QoQ Q4 15 Upfront booking of deposit insurance fees trigger yoy cost increase Q1 16 948 6.4% • Yoy costs increase primarily due to upfront booking of deposit Group 1,017 1,009 -0.8% insurance contributions in the amount of EUR 71.7m 153 13.2% • Qo
Slide 19: Business performance: operating result and CIR
YoY Q1 15 Business performance: operating result and CIR – QoQ Q4 15 Operating result hit by upfront booking of deposit insurance fees Q1 16 Operating result YoY & QoQ change Cost/income ratio 741 56.1% Group -16.3% 60.5% 664 -6.6% 620 61.9% 103 59.7% AT/EBOe 86 -29.2% 67.0% 73 -15.2% 70.3% 118 66.6
Slide 20: Business performance: risk costs (abs/rel)
Q1 15 Business performance: risk costs (abs/rel*) – Q4 15 Risk costs plummet to historic lows in Q1 16 Q1 16 183 0.57% • Continued strong risk performance in Q1 16 supported by Group 211 0.64% 56 0.17% across the board yoy and qoq declining risk costs except 22 0.30% AT/SB, which remained flat at a
Slide 21: Business performance: non-performing loans and NPL ratio
31/03/15 Business performance: non-performing loans and NPL ratio – 31/12/15 NPL ratio improves to 6.7%, excluding Romanian NPL sale impact 31/03/16 10,603 8.1% • Continued decline of group NPL volume in Q1 16 mainly due Group 9,314 7.1% 8,856 6.7% to lower NPL inflows across geographic segments and
Slide 22: Business performance: allowances for loans and NPL coverage
31/03/15 Business performance: allowances for loans and NPL coverage – 31/12/15 NPL coverage improves to 66.5% 31/03/16 7,174 67.7% • NPL coverage improved to 66.5% after temporary decline at Group 6,009 64.5% 5,891 66.5% year-end exclusively due to adoption of EBA default 687 69.2% definitions AT/E
Slide 23: Business performance: other result
Q1 15 Business performance: other result – Q4 15 Other result improves yoy and qoq Q1 16 -143 • Yoy positive development as a result of lower banking tax in Group -216 -137 HU, despite overall higher contributions to recovery and -10 resolution funds (EUR 64.7m) AT/EBOe -18 • Qoq improvement mainly
Slide 24: Business performance: net result
Q1 15 Business performance: net result – Q4 15 Q1 16 net result up yoy and qoq on lower risk costs Q1 16 226 • Yoy and qoq rise in profitability driven by lower risk costs that Group 204 275 more than offset higher administrative expenses resulting 51 from upfront booking of deposit insurance contri
Slide 25: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 25
Slide 26: Assets and liabilities: YTD overview
Assets and liabilities: YTD overview – Loan/deposit ratio stable at 98.5% (Dec 15: 98.4%) Assets (EUR bn) Assets (in %) Liabilities & equity (EUR bn) Liabilities & equity (in %) 206.4 199.7 206.4 199.7 100% 6.6 3.2% 100% 14.6 6.2% 7.1% 5.9 2.9% 12.4 17.3 7.1% 8.4% 14.2 47.5 48.7 23.8% 23.6% 4.8 6.7
Slide 27: Assets and liabilities: customer loans by country of risk
Assets and liabilities: customer loans by country of risk – Performing loans up 3.1% yoy, NPLs down 16.1% Net customer loans (EUR bn) Performing loans (EUR bn) Non-performing loans (EUR bn) +2.7% +3.1% -16.1% 123.4 125.9 126.7 122.6 123.8 10.6 120.1 3.4 3.3 3.4 3.3 0.5 3.4 6.1 3.5 6.0 0.8 0.8 6.0 0.
Slide 28: Assets and liabilities: allowances for customer loans
Assets and liabilities: allowances for customer loans – Decrease in allowances mainly due to continued NPL reduction in Q1 16 Quarterly development (EUR m) Highlights • Qoq significant decline in allocations to allowances due to sharply reduced inflow of new NPLs 428 • Reduced use of allowances beca
Slide 29: Assets and liabilities: financial and trading assets
Assets and liabilities: financial and trading assets * – LCR at comfortable 122.9% By geography By debtor type Liquidity buffer in EUR bn in EUR bn -4.3% 44.6 42.3 42.7 100% 24.8% 24.9% 24.6% 11.4% 10.3% 9.8% 9.0 21.5% 9.2 9.3 10.5% 7.9% 7.8% 2.0 1.3 1.5 1.3 5.1 1.6 2.0 47.1 45.4 46.1 4.7 4.8 39.8 6
Slide 30: Assets and liabilities: customer deposit funding
Assets and liabilities: customer deposit funding – Customer deposits grow by 0.5% qoq, up 3.1% yoy By customer type By product type Highlights in EUR bn in EUR bn • Continued deposit inflows driven by Retail +3.1% segment with highest demand for overnight deposits amid low interest rate environment
Slide 31: Assets and liabilities: debt vs interbank funding
Assets and liabilities: debt vs interbank funding – Stable wholesale funding base Debt securities issued Interbank deposits in EUR bn in EUR bn -2.6% +5.7% 30.9 30.1 17.3 29.7 Sub debt 16.4 4.7 Overnight deposits 5.8 Suppl. capital 5.5 3.3 14.2 5.3 Term deposits 1.3 0.4 Hybrid issues 0.4 0.4 0.4 0.4
Slide 32: Assets and liabilities: LT funding
Assets and liabilities: LT funding – Limited LT funding needs Maturity profile of debt in EUR bn 3.5 2.7 2.8 2.8 2.6 2.6 1.9 1.8 1.1 0.9 0.7 0.5 0.3 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028+ Debt CEE Capital exc Tier 1 Covered bonds Senior unsec. bonds • Erste Group issued a
Slide 33: Assets and liabilities: capital position
Assets and liabilities: capital position – Clean B3FL CET1 at 12.3% Basel 3 capital (phased-in) Risk-weighted assets (phased-in) Basel 3 capital ratios (phased-in) in EUR bn in EUR bn 17.9% 17.6% 16.8% 16.8% 15.8% 17.6 17.7 101.8 100.3 100.4 98.3 100.5 16.8 16.9 16.1 10.8 3.4 3.6 3.0 2.8 2.8 12.3% 1
Slide 34: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 34
Slide 35: Conclusion – Outlook 2016
Conclusion – Outlook 2016 • CEE economic environment anticipated to be conducive to credit expansion • Real GDP growth of between 1.5-4.1% expected in 2016 in all major CEE markets, including Austria • Real GDP growth to be driven by solid domestic demand • Return on tangible equity (ROTE) expected
Slide 36: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 36
Slide 37: Additional information: new segmentation
Additional information: new segmentation – Business line and geographic view Erste Group – Business segments ALM & Group Group Savings Intragroup Retail Corporates Local CC Corporate Markets Banks Elimination (ALM&LCC) Center • SME • Other Subsidiaries • Local Large Corporate • Asset/Liability Manag
Slide 38: Additional information: income statement
Additional information: income statement – Year-to-date and quarterly view Year-to-date view Quarterly view in EUR million 1-3 15 1-3 16 YOY-Δ Q1 15 Q4 15 Q1 16 YOY-Δ QOQ-Δ Net interest income 1,098.5 1,092.2 -0.6% 1,098.5 1,120.4 1,092.2 -0.6% -2.5% Net fee and commission income 461.0 443.1 -3.9% 4
Slide 39: Additional information: group balance sheet – Assets
Additional information: group balance sheet – Assets Quarterly data Change in EUR million Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 8,223 7,011 11,097 12,350 14,641 78.0% 18.6% 18.6% Financial assets - held for trading 11,366 9,022 8,805 8,719 9,960 -12.4% 14.2% 14.
Slide 40: Additional information: group balance sheet – Liabilities and equity
Additional information: group balance sheet – Liabilities and equity Quarterly data Change in EUR million Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities - held for trading 8,988 6,632 6,364 5,867 6,612 -26.4% 12.7% 12.7% Derivatives 8,163 5,875 5,654 5,434 5,782 -29.2% 6.
Slide 41: Additional information: gross customer loans
Additional information: gross customer loans – By risk category, by currency, by industry Gross cust. loans by risk category (EUR bn) Gross customer loans by currency (EUR bn) Gross customer loans by industry (EUR bn) 130.6 130.4 131.2 131.9 132.6 130.6 130.4 131.2 131.9 132.6 130.6 130.4 131.2 131.
Slide 42: Additional information: footprint
Additional information: footprint – Customer banking in Austria and the eastern part of the EU Erste Group footprint Highlights Czech Republic Slovakia • Leading retail and corporate bank Customers: 4.8m Customers: 2.3m in 7 geographically connected Employees: 10,468 Employees: 4,208 countries CZ Br
Slide 43: Additional information: strategy
Additional information: strategy – A real customer need is the reason for all business Customer banking in Central and Eastern Europe Eastern part of EU Focus on CEE, limited exposure to other Europe Retail Corporate Capital Public Interbank banking banking markets sector business Focus on local cur
Slide 44: Additional information: shareholder structure
Additional information: shareholder structure – Total number of shares: 429,800,000 By investor By region Unidentified Erste Stiftung direct Unidentified Uniqa Versicherungsverein Privatstiftung 10.7% 9.9% 10.7% Other 4.1% Erste Stiftung indirect * 2.7% Harbor International 9.3% Austria Fund 32.2% 4
Slide 45: Investor relations details
Investor relations details • Erste Group Bank AG, Am Belvedere 1, 1100 Vienna E-mail: investor.relations@erstegroup.com Internet: http://www.erstegroup.com/investorrelations http://twitter.com/ErsteGroupIR http://www.slideshare.net/Erste_Group Erste Group IR App for iPad, iPhone and Android http://w