BAWAG Group AG · VIE:BG
BAWAG — Q2 2020 Earnings Presentation
31 slides from BAWAG's earnings presentation, Jul 28, 2020
Slide 1: Q2 2020 Earnings
Q2 2020 Earnings Anas Abuzaakouk, CEO Enver Sirucic, CFO 28 July 2020 28 July 2020 | BAWAG Group AG 1
Slide 2: Q2 2020 Highlights and segment performance
Q2 2020 Highlights and segment performance Detailed financials Group Overview & Strategy 28 July 2020 | BAWAG Group AG 2
Slide 3: Highlights Q2 2020
Highlights Q2 2020 Net Profit of €61m, EPS of €0.70, and RoTCE 8.9% Pre-provision profit of €160m and CIR 43.9% EARNINGS Significant items: ECB Euro area adverse economic scenario (-12.6% in 2020; +3.3% in 2021) applied for macro assumptions resulting in +€40m general reserves across all segments In
Slide 4: Financial performance
Financial performance Key highlights P&L | € millions Q2 ‘20 vPY vPQ H1 ‘20 vPY Balance Sheet & Capital | € millions Q2 ‘20 Q1 ‘20 vPQ vYE Core revenues 284 (2%) (3%) 575 - Total assets 51,278 46,510 10% 12% Operating income 284 (9%) (4%) 580 (5%) Interest-bearing assets 40,505 39,063 4% 10% Operati
Slide 5: Capital development … CET1 ratio (FL)
Capital development … CET1 ratio (FL) Strong capital position 1 Q1 ’20 CET1 ratio excluding dividend at 13.9% ~+90bps 2 OCI: primarily related to tightening credit spreads (Q2’20 gross capital generation through earnings and OCI) positively impacting OCI 14.8% 3 Dividend deduction of 140bps (€291m):
Slide 6: Current environment
Current environment Unemployment rate forecast Unemployed in Austria Austria in %1) indexed as of 9 March 20202) 200 8% 7,3% 180 − Lockdown in Austria was implemented affecting all 7% 6,6% 160 5,9% businesses with the exception of critical infrastructure mid 6% 6,8% 140 120 5% 5,8% of March … phased
Slide 7: Retail & SME
Retail & SME Financial performance Customer development € millions Q2 ‘20 Q2 ‘19 vPY Q1 ‘20 vPQ € millions Q2 ‘20 Q2 ‘19 vPY Q1 ‘20 vPQ Core revenues 213.8 217.2 (2%) 229.9 (7%) Housing loans 11,030 10,191 8% 10,672 3% Net interest income 166.2 156.8 6% 168.1 (1%) Consumer and SME 5,547 5,363 3% 5,5
Slide 8: Retail & SME
Retail & SME Portfolio overview of €18.5b of customer loans and leases Credit profile Payment Reserve development (€m) Reserve ratio Assets NPL ratio holiday as Q2 '20 (€b) YE '19 Q1 '20 Q2 '20 YE '19 Q1 '20 Q2 '20 of 24 July Retail & SME secured 15.5 1.8% 2.7% 100 105 106 0.66% 0.69% 0.68% Retail &
Slide 9: Corporates & Public
Corporates & Public Financial performance Customer development € millions Q2 ‘20 Q2 ‘19 vPY Q1 ‘20 vPQ € millions Q2 ‘20 Q2 ‘19 vPY Q1 ‘20 vPQ Core revenues 68.4 71.4 (4%) 69.1 (1%) Corporate lending 4,483 6,475 (31%) 4,858 (8%) Net interest income 59.5 61.3 (3%) 58.4 2% Asset backed lending 5,055 4
Slide 10: Corporates & Public
Corporates & Public Portfolio overview of €13.9 billion of customer loans CORPORATE LENDING … €4.4b; (8%) vPQ ASSET BACKED LENDING … €5.1b; +3% vPQ By underlying By geography 4% 6% 13% 6% 20% %-share of Cyclical Net book Corporate Customer 21% 6% NPL volume 17% 4% sectors value (€m) lending Business
Slide 11: Investment book and Cash
Investment book and Cash Continued to deploy excess cash into high-quality securities YE ‘19 Q2 ‘20 Cash & Cash equivalent As of Q2 ‘20, cash and cash equivalents (mainly money 10% at central banks) at €9.1b ... TLTRO III of €5.8b in 20% Q2 ’20 (net incremental B/S impact of €5.2b vYE) €7.1b in % +€
Slide 12: Detailed financials
Q2 2020 Highlights and segment performance Detailed financials Group Overview & Strategy 28 July 2020 | BAWAG Group AG 12
Slide 13: P&L & key ratios
P&L & key ratios P&L | € millions Q2 ‘20 Q2 ‘19 vPY vPQ Key ratios Q2 ‘20 Q2 ‘19 vPY vPQ Net interest income 227.8 220.6 3% 4% Return on Common Equity 7.4% 13.7% (6.3pts) (0.1pts) Net commission income 55.8 70.0 (20%) (22%) Return on Tangible Common Equity 8.9% 16.2% (7.3pts) (0.2pts) Core revenues
Slide 14: Balance sheet
Balance sheet Growing overall balance sheet thru increased interest-bearing assets Balance sheet | € billions Q2 ‘20 Q4 ‘19 Delta Capital & RWA | € billions Q2 ‘20 Q4 ‘19 Delta Customer loans 31.4 30.5 3% Common equity 3.4 3.3 2% Securities and bonds 8.0 5.4 50% Tangible common equity 2.8 2.7 3% Cre
Slide 15: P&L details – core revenues
P&L details – core revenues Solid revenues in Q2 ... COVID-19 mainly had an impact on NCI € millions Net interest income (NII) up 4% vPQ … net interest margin (NIM) at 2.27% in Q2 ‘20 ‒ Growth of average interest-bearing assets by €2.3b 290.6 290.8 293.9 291.8 283.6 in Q2 drives higher NII ‒ Positiv
Slide 16: P&L details – operating expenses
P&L details – operating expenses Absolute costs lower versus prior quarter and prior year Cost-income ratio at 43.9% in Q2 ’20 and 43.0% in H1 ’20 € millions Year-over-year decrease resulting from ongoing efficiency and centralization measures … effect from specific cost items positively impacted by
Slide 17: P&L details – risk costs
P&L details – risk costs Higher risk costs due to COVID-19 ... Strong underlying asset quality € millions Risk costs / average interest-bearing assets Reserve for updated macro-forecast and payment deferrals Q2 ‘20 risk costs at ~€75m … ratio at 74bps Risk costs / average interest-bearing assets (w/
Slide 18: Details on reserves
Details on reserves IFRS 9 MIGRATION – CUSTOMER SEGMENT ASSETS NPL volume (stage 3), in €m 953 2% 2% 2% 2% 2% 884 857 833 830 5% 4% 4% 5% Stage 3 254 10% Stage 2 254 City of Linz 254 254 254 Stage 1 93% 93% 94% 93% 87% 699 630 Customer NPLs 603 579 576 Q2 '19 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q2 '19 Q3 '1
Slide 19: Regulatory Capital
Regulatory Capital Strong capital position € billions Share buyback Impact of various capital measures: dividend CET1 capital (post dividend & buyback) ‒ SME Supporting Factor: impact used to offset CET1 ratio (post dividend) organic growth ‒ Software intangibles: Impact of +25-30bps to 3.2 CET1 to
Slide 20: Outlook and Targets
Outlook and Targets Updated 2020 outlook OUTLOOK 2020 MEDIUM-TERM TARGETS Based on normalized environment AS OF Q1 ‘20 UPDATED Net interest income Fairly stable up to 3% FY ’19: €879m Return on tangible Net fee and commission income Down up to 15% Decreasing AGM FY ’19: €284m 10 - 15% common equity
Slide 21: Group Overview & Strategy
FY 2019 Highlights and segment performance Detailed financials Group Overview & Strategy 28 July 2020 | BAWAG Group AG 21
Slide 22: BAWAG Group
BAWAG Group COMPANY PROFILE CAPITAL MANAGEMENT MEDIUM-TERM TARGETS Based on normalized environment Focused on organic and inorganic growth One of Austria‘s leading retail banks with 2.4 million customers & solid market shares Return on tangible Dividend policy of common equity (RoTCE) 50% payout rat
Slide 23: Strategy pillars of our growth strategy
Strategy 4 pillars of our growth strategy Drive efficiency through Maintaining a safe and Growing in our core markets Focus on Customer Centricity operational excellence secure risk profile • Our foundation is Austria with a focus • Build multi-channel and multi-brand • Our DNA is to focus on the th
Slide 24: Bank transformation
Bank transformation Focusing on things we control and driving operational excellence Increased profitability … KEY METRICS Pre-tax profit (€ millions) 2012 2013 2014 2015 2016 2017 2018 2019 +€581m 604 573 RoTCE 500 3% 11% 15% 17% 18% 15% 15% 16% 445 419 C/I ratio 70% 68% 54% 48% 46% 47% 44% 43% 316
Slide 25: Main pillars of BAWAG Group
Main pillars of BAWAG Group We entered the crisis in a strong position EFFICIENT & HIGH-RETURN STRONG FUNDING & RESILIENT BUSINESS MODEL BUSINESS MODEL LIQUIDITY Strong customer deposit base … represent Strategic transformation since 2012 more than 2/3 of funding CIR 70% 17% 18% 15% 15% 15% 16% Focu
Slide 26: Customer businesses €32.4 billion
Customer businesses €32.4 billion As of June 2020 RETAIL & SME CORPORATES & PUBLIC CUSTOMER BUSINESSES By product 84% secured 10% €32.4 billion of which … 32% 32% 16% ~75% €18.5b €13.9b in % in % 60% 14% Secured or public 36% sector lending Housing loans Consumer & SME (secured) Corporate lending As
Slide 27: Developing towards a Retail & SME franchise
Developing towards a Retail & SME franchise Retail & SME Business Corporates & Public Business Focus on 2.4 million • current accounts • auto and • Focus on developed markets … DACH region, Western Europe & the United States • Disciplined & conservative corporate, asset backed and public sector lend
Slide 28: Proven M&A track record
Proven M&A track record Experienced with bolt-on acquisitions to build out customer franchise Q2 ’19 3) €0.1b assets, 3k customers €1b factoring volume Q1 ’19 Q2 ’19 €0.6b assets 50k customers Continued focus on companies within the DACH region 2) Assessing Banks, specialty finance companies, 2018 €
Slide 29: Investor relations calendar
Investor relations calendar UPCOMING ROADSHOWS AND CONFERENCES SHAREHOLDER STRUCTURE Managing Board 1.6% 78.2% Free Float 28 Jul Digital one-on-one and group meetings GoldenTree 21.8 30 Jul Asia investor call 17 Sep Citi Virtual Small, Mid-Cap & Growth Conference T. Rowe Price 5.6 in % 23 Sep BAML F
Slide 30: Important Disclaimer
IMPORTANT DISCLAIMER: This presentation is prepared solely for the purpose of providing general information about BAWAG Group, Wiedner Gürtel 11, 1100 Wien. The information does not constitute investment or other advice or any solicitation to participate in investment business. This presentation doe
Slide 31: Annex – Definitions and abbreviations
Annex – Definitions and abbreviations After-tax earnings per share (‘EPS‘) Pre-tax earnings per share Net profit / weighted average number of shares outstanding (diluted) Profit before tax / weighted average number of shares outstanding (diluted) B/S leverage Reserve ratio Total assets / IFRS equity