Eurobank S.A. · ATHEX:EUROB
Eurobank — Eurobank EFG — FY2008 Earnings Presentation
65 slides from Eurobank's earnings presentation, Mar 4, 2009
Slide 1: Full Year 2008 Results
SW-EUB022-2007-03-19-CMD-V7 4 March, 2009 Full Year 2008 Results
Slide 2: Q4 2008: an exceptionally challenging operating environment
Q4 2008: an exceptionally challenging Page 2 operating environment Worldwide investor distress and a liquidity squeeze Signs of improvement in liquidity since January Greece Economic growth an advantage vs. the EU Solid banking system Risks stemming from fiscal and current account defici
Slide 3: Q4 2008: an exceptionally challenging operating environment (continued)
Q4 2008: an exceptionally challenging Page 3 operating environment (continued) Our New Europe countries Cyprus & Poland: politically stable and financially sound Bulgaria, Romania, Serbia & Turkey: some risks and some hidden strengths Ukraine: fragile political context, sharp economic slowdo
Slide 4: Solid performance in a turbulent environment
Solid performance in a turbulent Page 4 environment Net profit at €652m The entire 4Q 08 profits have been used to create €240 million of pre- emptive provisions against potential future credit losses Pre-provision income grows to €1.6 billion, up 6% vs. 2007 Resilient NIM at 3.17% Deposit
Slide 5: Solid performance in a turbulent environment (continued)
Solid performance in a turbulent Page 5 environment (continued) Cost growth decelerates to 15.7% y-o-y. Group costs are practically flat for the last 3 quarters. New Europe C/I improves to 64.1% from 75.8% a year ago New Europe profitability rises 88% to € 137m Return on Equity at 16% Stro
Slide 6: Our priorities
Page 6 Our priorities To sustain and improve pre-provision earnings capacity (Loan margin, fee business, cross-selling, cost containment) To further strengthen the Risk Management process (Underwriting, collection, conservative provisioning policy) To improve the effectiveness of balance sheet
Slide 7: Managing risks
Page 7 Managing risks 7
Slide 8: Prudent management of the €57bn loan book
Page 8 Prudent management of the € 57 bn loan book Concentration in A-rated countries A balanced portfolio € 47.7 bn (83% of total) € 30.6 bn € 26.5 bn 42.4 Business Household (54% of total) (46% of total) 0.2 1.8 0.1 0.1 1.8 2.2 UKR 0.2 0.2 1.2 1.6 SEE € 8.7 bn 12.8 (16% of total) € 0.7 bn 9.4 9.4
Slide 9: Business lending in Greece at €23.6bn
Page 9 Business lending in Greece at € 23.6bn Limited exposure in higher risk areas: Shipping, construction, A diversified loan book real estate (% per segment on total GR gross loans) Limited single name exposure: - Top 20 group exposures to corporates equal 5% of consolidated loan book Shippin
Slide 10: Household lending in Greece at €18.8bn
Page 10 Household lending in Greece at € 18.8bn Consumer Lending in Greece: Mortgage Lending in Greece: Managing exposures…selective lending Eurobank LTVs vs European practice (%) Market share 30.0% Netherlands 28.3% 26.4% Spain 25.0% Ireland 22.9% Eurobank 2004 2005 2006 2007 2008 40 50 60 70 80 90
Slide 11: Managing New Europe exposures
Page 11 Managing New Europe exposures A third of the portfolio secured with Instalment payments not proportionally primary residential mortgages affected from currency devaluation € 14.7 bn Poland (CHF) 113 * Mortgages 100 +37 -24 € 4.3 bn F/X impact Interest impact POL & CYP Avg. 07 Feb.09 € 2.3 bn
Slide 12: Managing New Europe exposures (cont.)
Page 12 Managing New Europe exposures (cont.) SEE gross loans excl. mortgages at € 7.4bn Ample coverage at 98% of NPLs FY 07 FY 08 297 304 98% Consumer 32% SBB 184 70% 120 18% Secured 50% Wholesale Provisioning stock NPLs Provisions Coverage 50% Secured NE provision coverage per segment € 6.8 bn ~ 5
Slide 13: Ukraine – Intensified loan recovery efforts
Page 13 Ukraine – Intensified loan recovery efforts Macro NPLs (% of loans) 103% Real GDP Public Debt grow th Inflation CA (%GDP) (%GDP) 25.5 6.3% 16.6 17 17.4 1310.6 2007 7.6 6 2.5% 2008 2009e -3 -2 -4.2-6.2 Ukraine Provisions Coverage 1Q08 4Q08 Source: IMF Loan Book Composition Fragile macro and
Slide 14: Increased provisions being recorded
Page 14 Increased provisions being recorded NPLs (% of loans) Quarterly provisioning charge (€ m) 240 2.74% Group NPLs 233 2.66% 2.40% 2.45% 2.54% 96 2.06% New Europe 151 1.83% 105 49 + 1.52% 1.30% 1.30% New Europe 20 137 85 102 Greece FY 07 3M 08 H1 08 9M 08 FY 08 4Q 07 3Q 08 4Q 08 Pre- emptive pro
Slide 15: Conservative provisioning policy
Page 15 Conservative provisioning policy Flow rates 4Q 08 for NPLs Provisions Collaterals Recovery € 284m Rates NPL Definition: Provisioning Corporates 45 Corporates ~ 40% € 233m Rates Latest 180 days or material credit event Corporates 30 0.5% Small Business Small Business 40% 57 ~ 60% SBs 41 1.8%
Slide 16: Performance Review
Page 16 Performance Review 16
Slide 17: Key themes of FY08 results
Page 17 Key themes of FY 08 results Intensified deposit gathering Balanced lending growth Sound liquidity Accelerated cost containment … still producing sustainable pre-provisioning income of €1.6bn 17
Slide 18: Strong deposits growth at 26.3% y-o-y
Page 18 Strong deposits growth at 26.3% y-o-y Loans at 122.4% of deposits, from 130% in 9M07 Group deposit gathering (€ bn) Greek deposits annual growth (%) – Eurobank vs. market 33.1 31.2 24.9 20.7 24.2 20.1 Eurobank Other NE 45.7 15.9 Poland / Cyprus 17.1 17.8 15.7 14.9 Greece 12.9 Greek market 6.
Slide 19: Sound liquidity position and low debt maturities in 2009
Page 19 Sound liquidity position and low debt maturities in 2009 Maturity Profile of Outstanding Wholesale Debt Liquidity contingency above € 3bn 3,136 Tier I 750 Low er Tier II ABS Additional liquidity availability ~ € 6bn 1,989 EMTN 1,778 1,318 750 1,134 Debt maturities under € 1.2 bn for 1,
Slide 20: Balanced and controlled business growth across segments and geographies
Page 20 Balanced and controlled business growth across segments and geographies Total Group Lending (€ bn) + 22.4% 57.1 +0.7 10.2 +36% 46.7 +0.4 +1.7 4.5 +155% Other +1.6 7.5 +0.4 1.8 +0.7 Poland & Cyprus +1.1 42.4 + 13.3% +0.3 Greece 37.4 +3.6 FY 07 Business Consumer Mortgage FY 08 Lending Lending
Slide 21: Strong NII growth at 19% y-o-y, resilient NIM at 3.17%
Page 21 Strong NII growth at 19% y-o-y Resilient NIM at 3.17% NII quarterly evolution Net interest margin (%) 621 608 590 560 566 517 482 497 445 Total NII 457 404 417 3.28 352 382 3.22 3.21 342 Loan margin 322 3.17 3.17 Interest rate gapping 7 4 5 FY 07 1Q 08 1H 08 9M 08 FY 08 11 13 17 10 3 74 72 7
Slide 22: Deposits: Behind the Euro curve; Loans: Improvement in spreads
Page 22 Deposits: Behind the Euro curve Loans: Improvement in spreads Evolution of Greek spreads (bps) New Europe NIM: continuous improvement 3Q 08 4Q 08 FY 08 NIM per country 1H 08 9M 08 FY 08 Sight & Savings Accounts 2.64 1.68 2.39 Romania 3.64% 4.24% 4.73% Time & Client EMTNs -0.05 -0.41 -0.10 Bu
Slide 23: Robust Group recurring revenues, up 15.6% y-o-y
Page 23 Robust Group recurring revenues, up 15.6% y-o-y Total Fees Composition Breakdown of Operating Income 634 -2.6% 618 Lending Activities 170 248 + 406 Network & 119 Other Activities 3,004 107 Capital Markets 154 722 4Q 08 114 2,598 Mutual Funds & AUM 116 75 Insurance 54 46 4Q 07 721 Non-banking
Slide 24: Greek costs grow by a mere 3.1% from 11% a year ago
Page 24 Across the board cost reduction already paying off: Greek costs grow by a mere 3.1% from 11% a year ago Evolution of Greek costs in 2008 (€ m) + 27m + 3.1% Y-o-Y growth at 3.1% in Dec. 08 from 4.8% in Sept. 08 +18 +15 897 870 Costs in 3Q 08 and 4Q 08 78 +7.6% 73 (3) (4) lower than respec
Slide 25: Group expansion decelerates to 10.9% y-o-y
Across the board cost reduction initiatives are paying off: Page 25 Group expansion decelerates to 10.9%* y-o-y Costs controlled at previous quarters’ levels Decelerating cost growth (% y-o-y) Our commitment for 2009: 26.1 25.8 27.5 24.4 22.4 Group 20.7 Greece Operating costs to remain below €1.5
Slide 26: Profitability
Page 26 Profitability 26
Slide 27: New Europe profitability up 88% to €137m
Page 27 New Europe profitability up 88% to € 137m Net profits per country New Europe profits y-o-y Bulgaria 70.8 Romania 27.3 175 PAT (excl. Ukraine) Serbia 39.4 Turkey 19.8 Poland 13.4 88 + 88% 137 Total PAT Cyprus 4 FY 08 FY07 73 Ukraine -38.0 FY 07 FY 08 Figures in € m. 27
Slide 28: FY 08: Profitability at €652m
Page 28 FY 08: Profitability at € 652m 4Q08 profits set aside 4Q 08 profits set aside (€ m) Recurring revenues up 15.6% y-o-y 815 652 Resilient NIM at 3.17% 4Q 196 5 Costs under control, at previous quarters’ 647 levels 9M 618 Conservative provisions Return on Assets at 0.90% FY 07 FY 08
Slide 29: Disciplined capital management
Page 29 Disciplined capital management 29
Slide 30: Solid capital base
Page 30 Solid capital base 5,976 950 Government Preference Shares 5,026 4,623 -100 Regulatory 1,158 Adjustments Tier II Minority Interest 331 -573 1,258 -182 3,868 Goodwill Preference Shares 705 Regulatory Subdebt 3,868 Core Tier I Adjustments and Tier I Ordinary Equity 3,587 Statutory Equity Core T
Slide 31: Solid capital base to be further bolstered in 2009
Page 31 Solid capital base to be further bolstered in 2009 Risk Weighted Assets growth (€ m) Government plan to add ~ 200bps to capital ratios Capital Adequacy FY 08 (%) With 3,955 preference 3,214 shares 2,534 Core Tier I ratio 8.0% 1,693 1,598 1,040 Tier I ratio 8.0% 10.0% Total CAR ratio 10.4% 12
Slide 32: Sustainable pre-provision income, able to withstand and absorb shocks
Page 32 Sustainable pre-provision income, able to withstand and absorb shocks Evolution of pre-provision income in 2008 4Q 08 supports outlook for 2009 381 -16 -65 + + + Cost 212 NIM Volumes Savings - 1,551 Fees 1,462 Δ ΝΙΙ Δ Fees Δ Non Δ OpEx Core Income FY 07 FY 08 FY 09e 2008 evolution Outlook fo
Slide 33: Full FY 08 Review
Page 33 Full FY 08 Review 33
Slide 34: Loan growth at 22.4% y-o-y
Page 34 Loan growth at 22.4% y-o-y Group Household Lending Total Group Lending + 21.2% 26.5 New Europe 21.8 57.1 14.8 + 22.4% 11.3 + 31.3% Mortgages 4.3 + 131% 46.7 14.7 3.4 + 30% Consumer credit 10.6 + 10.5% 11.7 9.3 +59.1% New Europe FY 07 FY 08 42.4 Group Business Lending + 13.3% 37.4 + 23.5% 30.
Slide 35: Strong deposits growth at 26.3% y-o-y
Page 35 Strong deposits growth at 26.3% y-o-y Deposit gathering momentum (€ bn) Significantly outpacing the Greek market – growth at 20.1% + 9.5 Group deposit additions at € 9.5bn vs loan additions of €8.5 bn over the past year 45.7 Loan / deposits ratio improves to 122.4% from 126.2% a 36.2 y
Slide 36: Strong NII growth at 19% y-o-y – robust loan margin reflects repricing
Page 36 Strong NII growth at 19% y-o-y – robust loan margin reflects repricing NII quarterly evolution NII Regional Breakdown (€ m) 621 608 590 560 566 + 19% 517 2,385 482 497 445 457 Total NII 2,004 404 417 705 382 + 69% 352 New Europe excl. * 417 342 Loan margin 322 1,661 + 8.3% Greece excl. * 1,5
Slide 37: Resilient NIM at 3.17%
Page 37 Resilient NIM at 3.17% Evolution of Greek spreads (bps) FY 07 1Q 08 1H 08 9M 08 FY 08 Group NIM (%) 3.28 3.22 3.17 3.21 3.17 3Q 08 4Q 08 FY 08 Sight & Savings Accounts 2.64 1.68 2.39 Time & Client EMTNs -0.05 -0.41 -0.10 New Europe NIM: continuous improvement Total Deposits 0.61 0.05 0.54 NI
Slide 38: Fee income recedes 2.6% y-o-y
Page 38 Fee income recedes 2.6% y-o-y Lending fees up 46% in FY 08 - 4Q 08 reflects the deceleration in loan growth Capital market fees contract 26% y-o-y, mirroring turbulent markets Outflows to deposits and poor market conditions drive fees from mutual funds down 35% y-o-y NE fees expand 3
Slide 39: Group cost expansion decelerates to 10.9%, Greek expenses up 3.1% y-o-y
Page 39 Group cost expansion decelerates to 10.9%*, Greek expenses up 3.1% y-o-y Personnel expenses down 9.6% from 3Q 08 levels Decelerating cost growth (% y-o-y) 26.1 25.8 27.5 NE expenses down 4.2% q-o-q 24.4 22.4 20.7 Greek Cost / Income at 40.2% 15.7 Group Strong efficiency gains in New
Slide 40: Fortifying provisions with 4Q 08 profits
Page 40 Fortifying provisions with 4Q 08 profits Group NPL Ratio (% of loans) NPLs at 2.74%, from 2.40% in FY 07 Past Due >90 Days at 3.9% 2.76% 2.74% Greek NPLs at 3.0% 2.40% Course of business provisions at €233m in 4Q 08 – 4Q 08 profits used to create pre-emptive provisions of € 240m Co
Slide 41: New Europe
Page 41 New Europe 41
Slide 42: Balanced exposure across seven countries
Page 42 Balanced exposure across seven countries NE gross loans NE deposits 14,727 + 59% 8,731 + 62% 9,251 5,400 FY 07 FY 08 FY 07 FY 08 Figures in € m. 42
Slide 43: New Europe profitability up 88% to €137m
Page 43 New Europe profitability up 88% to € 137m Net profits per country New Europe profits y-o-y Bulgaria 70.8 174.7 PAT (excl. Ukraine) Romania 27.3 Serbia 39.4 Turkey 19.8 88 Poland 13.4 + 88% 137 Total PAT Cyprus 4 FY 08 73 FY07 Ukraine -38.0 FY 07 FY 08 Figures in € m. 43
Slide 44: NE Operating Income up 63.5% y-o-y, strong efficiency gains
NE Operating Income up 63.5% y-o-y Page 44 Strong efficiency gains Cost growth decelerates Cost / Income (%) improves by 12 p.p. y-o-y NE share of Group operating income NE operating income, € m NE share of Group expenses NE operating expenses, € m + 63.5% 32% 82.4 77.4 + 38% 43% 75.8 36% 23% 1,044
Slide 45: Segmental Performance
Page 45 Segmental Performance 45
Slide 46: PBT at €790m
Page 46 PBT at € 790m PBT* per Segment Group PBT* Share of 38.7% 32.7% 6.1% 22.7% 14.0% profits FY 08 306 258 180 1,052 790 111 48 (113) Retail Corporate Wealth Global & New Europe Capital & Other FY 07 FY 08 Management Capital Markets * after Minority Interest Figures in € m. 46
Slide 47: Retail – revenues and profits rebase
Page 47 Retail – revenues and profits rebase Quarterly PBT evolution (€ m) 111 112 112 FY08/FY 78 (2%) 3% 29% (30%) 104 growth 100 90 84 28 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 FY 08 1,312 FY 07 FY 08 – Cost to Income 44.3% 46.2% 1,336 607 401 – Return on Equity 42.2% 29.7% 306 – Share of
Slide 48: Corporate – high efficiency, increased share of profits
Page 48 Corporate– high efficiency, increased share of profits Quarterly PBT evolution (€ m) 63 64 65 66 59 57 52 47 FY08/FY 78 15% 5% 22% 20% growth 397 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 FY 08 344 258 FY 07 FY 08 – Cost to Income 31.6% 28.8% 216 – Return on Equity 23.9% 23.4% 114 – Sh
Slide 49: Wealth Management – revenues affected by markets
Page 49 Wealth Management – revenues affected by markets Quarterly PBT evolution (€ m) 35 FY 08/FY 07 (38%) 3% (58%) 27 29 24.6 25.2 growth 14.2 9.1 0 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 FY 08 111 FY 07 FY 08 48 – Cost to Income 34.2% 56.4% 178 – Return on Equity 82.2% 35.9% 63 115 – Sha
Slide 50: Global & Capital Markets – revenues affected from continuing market turbulence
Page 50 Global & Capital Markets – revenues affected from continuing market turbulence Quarterly PBT evolution (€ m) 63 63 57 52.6 53 56 FY 07/FY 08 (16%) 9% (24%) 44 growth 26 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 257 307 180 FY 07 FY 08 – Cost to Income 22.9% 29.8% – Return on Equity 70.
Slide 51: New Europe: sharper efficiency
Page 51 New Europe: sharper efficiency Quarterly PBT evolution (€ m) 51 43 FY 08/FY 07 63% 33% 214% 202% 29 growth 24 -3.7 5 11 (12) 1,042 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 697 FY 07 FY 08 638 – Cost to Income 81.9% 66.9% 522 – Share of Revenues 22.6% 31.8% 220 – Share of profits 3.5%
Slide 52: Solid Shareholder Returns
Page 52 Solid Shareholder Returns 52
Slide 53: Group profits at €652m
Page 53 Group profits at € 652m Group profits (€ m) 4Q08 profits set aside Recurring revenues up 15.6% y-o-y 835 Resilient NIM at 3.17% 4Q 216 652 647 Costs under control, at previous quarter levels 9M 618 Conservative provisions FY 07 FY 08 Return on Assets at 0.90% Return on Equity a
Slide 54: Appendices
Page 54 Appendices 54
Slide 55: The Environment: Key macro and market data
Page 55 The Environment: Key macro and market data 55
Slide 56: A challenging environment
Page 56 A challenging environment GDP growth (%) CPI (%) Public Debt / GDP Current Account / Unemployment (%) GDP (%) (%) 2008e 2009f 2008e 2009f 2008e 2009f 2008e 2009f 2008e 2009f EU 1.0% (1.8%) 3.7% 1.2% 60.6% 67.4% (1.0%) (1.5%) 7.0% 8.1% Greece 2.9% 0.2% 4.2% 2.5% 94% 96.2% (13.4%) (12.8%) 8.3%
Slide 57: Greek banks enter the crisis with an advantage vs. European peers
Page 57 Greek banks enter the crisis with an advantage vs. European peers Market penetration – Banks’ Leverage ratio remains low – Loans/GDP (%) Equity/Assets (%) Greece EU 52.1% 52.9% Greece EU 6,7% 42.4% 39.7% 3,6% Corporate Household FY 08 Source: Bank of Greece Source: ECB, Bank of Greece, Eurob
Slide 58: Volatile markets
Page 58 Volatile markets Euribor normalizes… … credit risk higher since September… 6 250 iTraxx 200 150 5 100 50 4 0 30.9.08 7.10.08 14.10.08 21.10.08 28.10.08 4.11.08 11.11.08 18.11.08 25.11.08 2.12.08 9.12.08 16.12.08 23.12.08 30.12.08 6.1.09 13.1.09 20.1.09 27.1.09 3.2.09 10.2.09 17.2.09 24.2.09
Slide 59: Summary Figures & Ratios
Page 59 Summary Figures & Ratios 59
Slide 60: Summary Figures
Page 60 Summary Figures Summary Figures (€ m) FY 08 FY 07 Δ% New Europe Net Interest Income 2,384.7 2,003.6 19.0% 768.9 Net fees & Commissions 543.4 557.8 -2.6% 237.6 Insurance and Non banking fees 74.8 76.2 -1.9% 5.1 Total Operating Income 3,277.0 2,816.4 16.4% 1,043.8 Operating Expenses 1,566.4 1,
Slide 61: Financial Ratios
Page 61 Financial Ratios Financial Ratios FY 08 FY 07 Net Interest Margin 3.17% 3.28% Cost-Income 47.8% 48.1% NPLs (% of loans) 2.7% 2.40% NPLs coverage 74.4% 92.1% Provision Charge (% of net loans)* 1.27% 1.01% Tier Ι Ratio 8.0% 9.22% Total Capital Adequacy 10.4% 12.23% ROA after tax 0.90% 1.36% RO
Slide 62: FY 08 - Key figures of New Europe operations
Page 62 FY 08 - Key figures of New Europe operations Romania Bulgaria Serbia Cyprus Poland Turkey Ukraine NE Δ% Total Assets 6,018 4,212 2,013 1,162 4,922 2,104 830 21,242 48.4% Balance Sheet Total Loans 3,953 3,347 1,145 426 4,097 1,022 741 14,732 59.2% Total Deposits 2,417 1,943 697 955 1,766 741
Slide 63: FY 2008 – Summary per Segment
Page 63 FY 2008 – Summary per Segment Segmental Results 2008 Wealth Global & Capital Capital & Elimination Total (€ m) Retail Corporate Management Markets Other Center New Europe Interest income 1,191 312 22 81 9 0 769 2,385 Net fee & commission income 57 43 70 139 -3 0 238 543 Net Insurance income
Slide 64: FY 2007 – Summary per Segment
Page 64 FY 2007 – Summary per Segment Segmental Results FY 07 Wealth Global & Capital Capital & Elimination NE excl. Total (€ m) Retail Corporate Management Markets Other Center New Europe Pl & Ukr Interest income 1,147 252 42 112 7 0 443 384 2,004 Net fee & commission income 54 41 114 173 -2 0 177
Slide 65: Contacts
Page 65 Contacts EFG Eurobank Ergasias, 20 Amalias Avenue, 105 57 Athens, Greece Fax: +30 210 3337 160 E-mail: investor_relations@eurobank.gr Internet: www.eurobank.gr Reuters: EFGr.AT Bloomberg: EUROB GA Investor Relations Dimitris Nikolos Tel: +30 210 3337688 E-mail: dnikolos@eurobank.gr Marle