Erste Group Bank Ag · VIE:EBS
Erste Group Bank — H1 2010 Earnings Presentation
24 slides from Erste Group Bank's earnings presentation, Jul 30, 2010
Slide 1: Erste Group Bank AG H1 2010 results presentation
Erste Group Bank AG H1 2010 results presentation 30 July 2010, Vienna Andreas Treichl, Chief Executive Officer Manfred Wimmer, Chief Financial Officer Bernhard Spalt, Chief Risk Officer
Slide 2: Erste Group business snapshot – Retail market leadership in the eastern part of the EU
Erste Group business snapshot – Retail market leadership in the eastern part of the EU Czech Republic Slovakia Ukraine Clients: 5.3m Retail loans: 26.6% Clients: 2.5m Clients: 0.1m Retail dep.: 29.4% Retail loans: 26.5% Retail loans: 1.7% Retail dep.: 27.5% Retail dep.: 0.3% Branches: 660 Branches:
Slide 3: Macroeconomic trends – What has changed in CEE in Q2 2010?
Macroeconomic trends – What has changed in CEE in Q2 2010? − Economic growth continued to be driven by exports in Q2 2010 − Industrial output increased significantly across the region − No improvement of household consumption to date − More balanced growth forecast for next year with domestic demand
Slide 4: Macroeconomic trends – Focus: GDP growth and export shares in CEE
Macroeconomic trends – Focus: GDP growth and export shares in CEE − Growth is set to return to most CEE countries GDP growth in CEE in 2010 4.3 5.0 3.1 − Growth is mainly driven by exports while domestic 1.2 1.8 0.9 1.3 demand remains weak 0.0 − Romania: VAT increase expected to have negative -5.0 -
Slide 5: Macroeconomic trends – Focus: CEE public finance update
Macroeconomic trends – Focus: CEE public finance update − CEE governments have introduced measures Agreed 2010 fiscal deficit targets in % of GDP 0 2 4 6 8 10 12 14 to meet agreed fiscal deficit targets − In agreement with international organisations such as Ireland 11.5 the IMF and EBRD Spain 9.3 −
Slide 6: H1 2010 financial highlights – Solid margins and continued strong operating profitability
H1 2010 financial highlights – Solid margins and continued strong operating profitability − Net profit declined by 4.1% to EUR 471.9 million Cash earnings per share * − Lower Cash-EPS and Cash-ROE due to substantially enlarged capital base 2.5 2.10 1.89 − Resilient NIM advances to 3.04% (H1 09: 2.92
Slide 7: H1 2010 financial highlights – Operating result continued to improve in all key segments
H1 2010 financial highlights – Operating result continued to improve in all key segments in EUR million 1-6 10 1-6 09 Change Q2 10 Q1 10 Q2 09 Retail & SME 1,569.5 1,346.8 16.5% 831.0 738.5 708.2 Austria 419.8 376.4 11.5% 219.7 200.0 177.3 EB Oesterreich 193.8 153.2 26.5% 98.7 95.0 79.3 Savings Bank
Slide 8: Q2 2010 financial highlights – Higher revenues and lower costs drive operating result
Q2 2010 financial highlights – Higher revenues and lower costs drive operating result Operating income per quarter Operating expenses per quarter 2,500 1,200 984 953 945 1,922 1,921 1,922 1,936 1,954 1,000 920 927 2,000 82 141 99 91 94 97 in EUR million 160 105 in EUR million 199 93 460 472 494 800
Slide 9: Erste Group's customer deposits – Deposit growth continues to outpace loan growth
Erste Group’s customer deposits – Deposit growth continues to outpace loan growth − Customer deposits grew by 4.0% ytd (up 2.7% yoy) Customer deposit trends by main segments − Mainly based on solid growth in Austria and strong inflows in the Czech Republic 125 113.5 113.3 112.0 115.6 116.6 − Retail
Slide 10: Erste Group's loan book – Loan demand across the segments remained subdued
Erste Group’s loan book – Loan demand across the segments remained subdued − Customer loans increased by 1.4% ytd; up 2.2% yoy − Growth in Retail & SME loans in Austria and CEE ytd and yoy was driven mainly by appreciation of CHF and CEE currencies vs euro − GCIB loan book declined by 2.5% ytd, and
Slide 11: Erste Group's asset quality – Group trends: stable new NPL formation, coverage up
Erste Group’s asset quality – Group trends: stable new NPL formation, coverage up − NPL coverage ratio continued to improve Erste Group: NPL ratio vs NPL coverage comparing to both H1 2009 as well as Q2 2010 30% 65% − Continued consolidation in new NPL formation 25% − Excellent performance in Austri
Slide 12: Erste Group's asset quality – Segment round-up: Austria & GCIB perform well
Erste Group’s asset quality – Segment round-up: Austria & GCIB perform well − Retail & SME/Austria: stable asset quality accompanied by stable NPL ratios in key segments risk costs − Portfolio composition improved as share of lower risk class rose; NPL coverage ratio moved up 18% 15.4% 16% − P&L ris
Slide 13: Erste Group's funding profile – Retail deposits remain a key pillar in the funding mix
Erste Group’s funding profile – Retail deposits remain a key pillar in the funding mix − Customer deposits are the main source of funding Evolution of Erste Group's funding mix − Providing a solid funding base in all local currencies − Reflected in loan/deposit ratio improvement to 112.7% 100% 3.0%
Slide 14: Group's capital position – Further strengthening of the capital base
Erste Group’s capital position – Further strengthening of the capital base Total capital reconciliation 18 16.1 0.2 -0.1 16.5 0.6 -0.5 16 in EUR billion 3.4 3.6 14 12 12.7 12.9 10 Total Net profit AfS FX-∆ Dividend Total capital capital Dec 09 Equity Minority capital Jun 10 Press conference 30 July
Slide 15: Erste Group's capital position – European stress test confirms solid capitalisation levels
Erste Group’s capital position – European stress test confirms solid capitalisation levels Tier 1 ratio Tier 1 ratio Core tier 1 ratio (credit risk)1 (total risk)2 (total risk)3 11.2% 10.8% 9.6% 9.2% 8.6% 8.3% 7.2% 6.2% 5.2% 2008 2009 H1 10 2008 2009 H1 10 2008 2009 H1 10 1) Tier 1 ratio (credit ris
Slide 16: Group income statement (IFRS)
Group income statement (IFRS) – in EUR million 1-6 10 1-6 09 Change Q2 10 Q1 10 Q2 09 Net interest income 2,684.8 2,505.3 7.2% 1,361.2 1,323.6 1,279.3 Risk provisions for loans and advances (1,084.2) (892.1) 21.5% (553.0) (531.2) (521.9) Net fee and commission income 965.0 888.2 8.6% 493.5 471.5 443
Slide 17: Group balance sheet (IFRS) – Assets
Group balance sheet (IFRS) – in EUR million Jun 10 Dec 09 Change Cash and balances with central banks 6,540 5,996 9.1% Loans and advances to credit institutions 16,408 13,140 24.9% Loans and advances to customers 130,960 129,134 1.4% Risk provisions for loans and advances (5,796) (4,954) 17.0% Tradi
Slide 18: Group balance sheet (IFRS) – Liabilities and equity
Group balance sheet (IFRS) – in EUR million Jun 10 Dec 09 Change Deposits by banks 26,730 26,295 1.7% Customer deposits 116,558 112,042 4.0% Debt securities in issue 29,841 29,612 0.8% Trading liabilities 3,392 3,157 7.4% Provisions 1,613 1,670 (3.4%) Tax liabilities 321 361 (11.1%) Liabilities asso
Slide 19: Core segments
Core segments Retail & SME GCIB Group Markets Corporate Center Total group in EUR million 1-6 10 1-6 09 1-6 10 1-6 09 1-6 10 1-6 09 1-6 10 1-6 09 1-6 10 1-6 09 Net interest income 2,290.5 2,198.2 293.0 272.8 56.8 123.1 44.5 (88.9) 2,684.8 2,505.3 Risk provisions (902.6) (741.5) (181.6) (150.7) 0.0 0
Slide 20: Core segment Austria
Core segment Austria Savings Banks EB Oesterreich Austria in EUR million 1-6 10 1-6 09 1-6 10 1-6 09 1-6 10 1-6 09 Net interest income 477.3 471.1 319.4 325.0 796.6 796.1 Risk provisions (135.9) (178.1) (87.7) (74.3) (223.6) (252.4) Net fee and commission income 203.0 189.5 172.1 140.4 375.1 329.9 N
Slide 21: Core segment Central and Eastern Europe (1)
Core segment Central and Eastern Europe (1) – Czech Republic Romania Slovakia Hungary in EUR million 1-6 10 1-6 09 1-6 10 1-6 09 1-6 10 1-6 09 1-6 10 1-6 09 Net interest income 536.1 529.9 415.2 390.8 209.5 178.4 185.9 164.9 Risk provisions (188.1) (120.8) (241.7) (176.7) (66.7) (58.3) (114.5) (65.1
Slide 22: Core segment Central and Eastern Europe (2)
Core segment Central and Eastern Europe (2) – Croatia Serbia Ukraine CEE in EUR million 1-6 10 1-6 09 1-6 10 1-6 09 1-6 10 1-6 09 1-6 10 1-6 09 Net interest income 117.6 107.9 12.4 15.8 17.0 14.3 1,493.8 1,402.1 Risk provisions (48.5) (25.8) (4.6) (4.0) (14.8) (38.4) (679.0) (489.1) Net fee and comm
Slide 23: Outlook – Slow economic recovery, better regulatory visibility
Outlook – Slow economic recovery, better regulatory visibility − Most CEE markets have emerged from recession… − Austria, Czech Republic, Slovakia and Hungary set to grow in low single digits in 2010 − In Romania the recovery will be more protracted with growth not expected to return before 2011 − E
Slide 24: H1 2010 executive summary – Strong operating performance continued in Q2 2010
H1 2010 executive summary – Strong operating performance continued in Q2 2010 − Continued revenue growth and cost management pushed cost/income ratio to new low − Operating income rose by 4.1% to EUR 3,889.8 million despite a 30% yoy decline in the net trading result − Operating result improved by 1