Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Erste Bank — Q3 2003 Earnings Presentation
37 slides from Erste Group Bank's earnings presentation, Nov 13, 2003
Slide 1: Erste Bank – strategies implemented
> Erste Bank – strategies implemented > Q3 2003 Results Teleconference 13 November 2003 > Andreas Treichl, CEO Reinhard Ortner, CFO
Slide 2: Q3 2003 – Financial highlights
> Q3 2003 – Financial highlights Erste Bank Group - Key ratios » ROE 13.4% up from 12.7% at YE 2002 (13.1% in H1 03) » Based on a 57.8% increase in net profit to EUR 255.1m » Strong improvement in Austria – net profit up 52.6% yoy » 54% contribution to net profit from CE subsidiaries » CIR at 64.4%
Slide 3: Q3 2003 – Business update
> Q3 2003 – Business update Progress update on Austrian retail initiatives Retail branches: Op. Profit Pretax Profit » 4 branches to be sold to Vorarlberg savings banks by YE 03 » 14 branches to be closed until Q1 2004 Net Profit » Additional reduction of branch headcount by 3% by YE 2004 » 4% reduc
Slide 4: Business update (cont): Postabank acquisition
> Q3 2003 – Business update (cont) Acquisition of Postabank important building block in CE strategy » Postabank acquisition increases customer base to 11.6 million » Greatly improves market position - #2 per clients, #2 in retail loans » Increased cross-selling opportunities through 3rd largest bran
Slide 5: Business update (cont): Highlights at CE subsidiaries
> Q3 2003 – Business update (cont) Highlights at CE subsidiaries » SLSP stake increased to 70.1% in September 2003 » Additional 2.82% acquired for the total consideration of EUR 14.1m » Equates to a price/book multiple of 1.66x » In negotiations with government to acquire another 10% of SLSP » Merge
Slide 6: Key figures of EB subsidiaries in Central Europe
> Key figures of EB subsidiaries in Central Europe Q3 2003 Results (IFRS) 2 EB stake 97.9% 70.1% 99.6% 77.3% Q3 03 Q3 02 Q3 03 Q3 02 Q3 03 Q3 02 Q3 03 Q3 02 Net Profit (EUR m) 177.1 161.4 50.5 20.7 11.2 3.4 23.9 25.2 ROE (%) 24.2 24.4 19.9 9.6 18.6 7.0 15.6 21.8 Cost / Income ratio (%) 61.8 60.9 49.
Slide 7: Group Results
> Group Results > Group Income Statement Group Balance Sheet P&L Details Divisional Figures Outlook and Targets
Slide 8: EB Group Income Statement (IFRS)
> Q3 2003 EB Group Income Statement (IFRS) EUR m Q1-Q3 2003 Q1-Q3 2002 % Change Net interest income 1,934.7 1,835.0 5.4 Risk provisions for loans and advances (298.6) (272.2) 9.7 Net commission income 727.5 695.2 4.6 Net trading result 170.6 126.5 34.9 General administrative expenses (1,837.0) (1,81
Slide 9: EB Group Balance Sheet (IFRS) – Assets
> Q3 2003 EB Group Balance Sheet (IFRS) Assets EUR m 30.9.2003 31.12.2002 % Change Cash and balances with central banks 2,512 3,181 (21.0) Loans and advances to credit institutions 17,851 15,492 15.2 Loans and advances to customers 65,854 64,435 2.2 Risk provisions for loans and advances (2,781) (2,
Slide 10: EB Group Balance Sheet (IFRS) – Liabilities
> Q3 2003 EB Group Balance Sheet (IFRS) Liabilities EUR m 30.9.2003 31.12.2002 % Change Amounts owed to credit institutions 27,774 26,425 5.1 Amounts owed to customers 64,329 61,308 4.9 Debts evidenced by certificates 16,815 14,191 18.5 Provisions 6,122 5,488 11.6 Other liabilities 5,969 5,220 14.3
Slide 11: P & L Details – Net interest income
> P & L Details – Net interest income Increase supported by ALM positioning » Group NIM1 stable at 2.30% (2.33% in H1 03) » Austria: NII up 2.3% Other » Quarterly split: Q1= EUR 617.6 m » NIM stable at 1.9% (1.92% in H1 03) CE Q2= EUR 672.5 m » Improvement despite weaker savings bank segment (-2.5%)
Slide 12: P & L Details – Risk provisions
> P & L Details – Risk provisions Expectations of flat provisions at YE 2003 maintained » Risk provisions overall increase by 9.7% yoy in line with budget » Austria: Up 7% to EUR 269.8m Other » Quarterly split: » Mainly due to increases in Large Corporates (+19.1%) and Retail & Real Q1= EUR 97.2 m E
Slide 13: P & L Details – Net commission income
> P & L Details Net commission income Improved performance from securities business » Up 4.6% to EUR 727.5m at EB Group » Austria: up 9% yoy » Continued positive trends at Savings banks segment and Other » Quarterly split: Trading and Investment banking CE Q1= EUR 228.9 m Q2= EUR 253.0 m » Positive
Slide 14: P & L Details – Net trading result
> P & L Details Net trading result Slight quarterly slowdown but results still strong » Net trading result increased by 35% to EUR 170.6m » Austria: Up 33% compared to Q3 02 Other » Quarterly split: Q1= EUR 60.1 m » Q3 2003 EUR slightly down on strong first 2 quarters CE Q2= EUR 64.5 m » Strong cont
Slide 15: P & L Details – General administrative expenses
> P & L Details General administrative expenses Costs under control » Group expenses slightly increased by 1.2% to EUR 1,837.0m Other » Quarterly split: » Excluding depreciation (up 13.3%), costs decreased by 0.6% Q1= EUR 605.1 m CE Q2= EUR 618.0 m Austria Q3= EUR 614.1 m » Austria (inc. Int’l Busin
Slide 16: P & L Details – Other operating results
> P & L Details Other operating results Marked-to-market valuation of bond portfolio affects Q3 result » Higher amortisation of Goodwill due to CS minority buyout, acquisition of Rijecka banka and other smaller Other » Quarterly split: acquisitions in 2002 and 2003 CE Q1= EUR 22.6 m Q2= EUR 38.1 m »
Slide 17: EB Group Divisional Figures – Overview
> Q3 2003 EB Group Divisional Figures Overview Austria CE Subsidiaries Int. Business Corp. Center TOTAL EB GROUP In EUR m 1-9 2003 1-9 2002 1-9 2003 1-9 2002 1-9 2003 1-9 2002 1-9 2003 1-9 2002 1-9 2003 1-9 2002 Net interest income 1,220.3 1,195.8 618.5 545.4 108.5 103.2 (12.5) (9.5) 1,934.7 1,835.0
Slide 18: EB Group Divisional Figures – Details Austria
> Q3 2003 EB Group Divisional Figures Details - Austria Savings banks Retail & Real Est. Large Corp. Trading & Inv.B. TOTAL AUSTRIA In EUR m 1-9 2003 1-9 2002 1-9 2003 1-9 2002 1-9 2003 1-9 2002 1-9 2003 1-9 2002 1-9 2003 1-9 2002 Net interest income 625.9 641.7 394.8 395.9 113.9 110.9 85.6 47.3 1,2
Slide 19: EB Group Divisional Figures – Details Central Europe
> Q3 2003 EB Group Divisional Figures Details - Central Europe CS SLSP EB Hungary Croatia 1 TOTAL CE In EUR m 1-9 2003 1-9 2002 1-9 2003 1-9 2002 1-9 2003 1-9 2002 1-9 2003 1-9 2002 1-9 2003 1-9 2002 Net interest income 341.7 361.2 179.3 113.4 42.9 30.4 54.5 40.4 618.5 545.4 Risk provisions for loan
Slide 20: Asset quality at EB Group
> Q3 2003 - Asset quality at EB Group Development at EB Group (including SBs) » Decrease in NPLs by 4.6% at EB Group from EUR 4,120m at YE 2002 to EUR 4,023m » Sale of CS’ bad bank portfolio reduces NPLs by EUR 234m and risk provisions by EUR 237m » NPL coverage at EB Group for Q3 2003 at 70.4%, wit
Slide 21: Asset quality – Credit risk by segments, NPL coverage
> Q3 2003 - Asset quality at EB Group Credit risk by segments – NPL coverage ratios Total Outstanding 1 EUR m Low Risk Management Sub- Doubtful Total NPL’s Risk NPL Attention standard Provisions Coverage Austria Total 66,230 10,329 3,650 3,494 83,703 3,494 2,122 60.7% CE Total 21,811 776 322 369 23,
Slide 22: Outlook and targets
> Outlook and targets The year ahead » Erste Bank reiterates confidence in achieving a minimum 25% increase in net profit at YE 2003 » Despite possible EUR 25m one-off charge for EB Group Pension Fund » EB will propose an increased dividend of EUR 1.5 per share to 2004 AGM » Expenses » Reduction of
Slide 23: Appendix
> Appendix > Overview of international exposure Key financial data of CE subsidiaries Quarterly income statement Quarterly balance sheet Quarterly divisionals Key financial data Shareholder structure IR Contacts
Slide 24: Overview of international exposures
> Overview of international exposures Credit Risk by regions at EB Group Low Risk Management Substandard Doubtful Total outstanding attention in EUR m Q3 2003 FY 2002 Q3 2003 FY 2002 Q3 2003 FY 2002 Q3 2003 FY 2002 Q3 2003 FY 2002 share in % share in % Austria 46,809 48,241 9,277 9,213 3,526 3,723 3
Slide 25: Overview of international exposures (cont)
> Overview of international exposures (cont) Credit Risk by industry sectors at EB Group Low Risk Management Substandard Doubtful Total outstanding attention in EUR m Q3 2003 FY 2002 Q3 2003 FY 2002 Q3 2003 FY 2002 Q3 2003 FY 2002 Q3 2003 FY 2002 share in % share in % Banking & insurance 42,673 31,9
Slide 26: Financials of CE subsidiaries – Ceská sporitelna Group
> Q3 2003 Financials (IFRS) of CE subsidiaries Ceská sporitelna Group EUR m Q3 2003 Q3 2002 % Change Net interest income 362.7 377.5 (3.9) Risk provisions for loans and advances 55.0 (5.7) >100,0 Net commission income 179.3 162.5 10.3 Net trading result 28.5 32.9 (13.6) General administrative expens
Slide 27: Financials of CE subsidiaries – Slovenská sporitelna
> Q3 2003 Financials (IFRS) of CE subsidiaries Slovenská sporitelna EUR m Q3 2003 Q3 2002 % Change Net interest income 183.9 118.6 55.1 Risk provisions for loans and advances 0.3 (6.9) >100.0 Net commission income 36.1 30.8 17.4 Net trading result 8.1 7.0 16.1 General administrative expenses (112.9)
Slide 28: Financials of CE subsidiaries – Erste Bank Hungary Group
> Q3 2003 Financials (IFRS) of CE subsidiaries Erste Bank Hungary Group EUR m Q3 2003 Q3 2002 % Change Net interest income 45.3 32.8 38.1 Risk provisions for loans and advances (8.3) (5.5) 50.9 Net commission income 20.5 11.2 83.0 Net trading result 9.6 4.9 95.9 General administrative expenses (51.5
Slide 29: Financials of CE subsidiaries – Erste Bank Croatia
> Q3 2003 Financials (IFRS) of CE subsidiaries Erste Bank Croatia EUR m Q3 2003 Q3 2002 1 % Change Net interest income 60.0 56.4 6.4 Risk provisions for loans and advances (8.4) (6.2) 35.5 Net commission income 8.9 6.9 29.0 Net trading result 5.9 9.3 (36.6) General administrative expenses (43.3) (40
Slide 30: EB Group Quarterly Results (IFRS)
> EB Group Quarterly Results (IFRS) P&L Details EUR m Q1'01 Q2'01 Q3'01 Q4'01 Q1'02 Q2'02 Q3'02 Q4´02 Q1'03 Q2'03 Q3'03 Net interest income 313 357 389 380 585 634 616 628 618 673 645 Risk provisions (48) (45) (55) (56) (89) (94) (89) (134) (97) (109) (93) Net commission income 136 142 143 154 244 2
Slide 31: EB Group Quarterly Balance Sheet (IFRS)
> EB Group Quarterly Balance Sheet (IFRS) Balance Sheet Details EUR m Q1'01 Q2'02 Q3'01 Q4'01 Q1'02 Q2'02 Q3'02 Q4´02 Q1'03 Q2'03 Q3'03 Total assets 80,114 82,327 81,485 86,033 117,684 121,068 124,797 121,222 125,081 129,153 130,481 Loans & advances credit inst. 22,879 22,579 20,341 21,485 21,372 21
Slide 32: EB Group Quarterly Divisionals – Austria Details
> EB Group Quarterly Divisionals Austria - Details In EUR m Savings Banks Retail & Real Estate Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Net interest income 189.1 230.3 222.3 224.9 202.8 220.5 202.6 131.7 134.2 130.1 135.0 129.0 130.3 135.5 Risk provisions (
Slide 33: EB Group Quarterly Divisionals – Central Europe Details
> EB Group Quarterly Divisionals Central Europe - Details In EUR m Ceska sporitelna Slovenska sporitelna Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Net interest income 121.3 126.3 113.6 116.2 113.3 116.9 111.6 37.3 39.3 36.8 47.8 51.4 70.7 57.2 Risk provision
Slide 34: EB Group Quarterly Divisionals – Overview
> EB Group Quarterly Divisionals Overview In EUR m International Business Corporate Center Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q303 Net interest income 38.5 30.4 34.3 31.5 31.2 41.9 35.4 (0.9) (3.5) (5.1) (8.1) (3.2) 2.8 (12.2) Risk provisions (9.9) (9.5) (1
Slide 35: Key financial data
> Q3 2003 Results Key financial data in EUR m YE 1998 YE 1999 YE 2000 YE 2001 YE 2002 Q3 2003 Tier 1 Capital pursuant to § Austrian Banking Act 1,611 1,753 2,125 2,337 3,800 3,958 Total own funds pursuant to § Austrian Banking Act 3,176 3,296 3,956 4,308 6,983 7,343 Risk weighted assets 26,488 27,75
Slide 36: Current shareholder structure
> Current shareholder structure By Investor Type By Region Austria Verein Others 6.1% Continental Europe 0.2% 9.0% Private investors AVS 8.4% 35.0% UK & Ireland 13.6% North America Employees 15.1% Institutional investors 1.7% 41.6% Savings banks 7.2% Free float Austria 58.9% 62.1% Q3 2003 Results 13
Slide 37: 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: