Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Erste Bank — FY2003 Earnings Presentation
41 slides from Erste Group Bank's earnings presentation, Mar 18, 2004
Slide 1: Erste Bank – maintaining earnings growth
> Erste Bank – maintaining earnings growth > Full Year 2003 (Preliminary) Results > Analyst Presentation London, 18 March 2004 > Andreas Treichl, CEO Jack Stack, CEO Ceská sporitelna
Slide 2: FY 2003 – Financial highlights (preliminary)
> FY 2003 – Financial highlights (preliminary) Erste Bank Group - Key ratios » Net profit increases by 38.4% to EUR 353.3m » ROE 13.7% up from 12.7% at YE 2002 » Cash ROE 16.6% (adjusted for Goodwill) » Substantial decrease of CIR to 64.2% from 67.9% at YE 2002 » Revenues increase by 7% and costs gr
Slide 3: Ceska Sporitelna FY 2003 IFRS Consolidated Results
Ceska Sporitelna FY 2003 IFRS Consolidated Results (Unaudited)
Slide 4: CS achieved record Profits and ROE
> FY 2003 CS achieved record Profits and ROE Ø CS overcame the negative interest rate environment through » Good growth in loans, deposits, fees, trading, assets under management and insurance income » Expense management where the combination of personnel expenses and other administrative expenses w
Slide 5: 2003 Financial Highlights
> 2003 Financial Highlights Shareholders ACTUAL TARGET Profit growth 31.2% 15 - 20% ROE 23.7% > 20.0% Cost / Income ratio 59.8% 60 - 62% FY 2003 (Preliminary) Results Analyst Presentation London 5
Slide 6: Group Profit & Loss Statement
> Group Profit & Loss Statement Highlights Ø Operating Profit increased by 8.1% compared to 2002 to CZK 10,141 m Ø Net Profit rose by 31.2% to CZK 7,615 m compared with full year 2002 (excluding extraordinary release of general provisions, growth was approximately 19%) Ø ROE reached 23.7% (21.4% in
Slide 7: Group Balance Sheet
> Group Balance Sheet Highlights* Ø Total assets increased by 6.6% YTD to CZK 554.0 bn Ø Gross loans to clients (excl. CKA) increased by 18.5% to CZK 178.2 bn Ø Amounts owed to customers grew by 6.4% to CZK 428.6 bn; total client funds under CS Group management rose by 7.9% to CZK 474.2 bn Ø Balance
Slide 8: Portfolio Structure and Development
Portfolio Structure and Development Overview Key Growth Drivers Ø Corporate lending increased by 196.1 bn CZK 20.7 bn (31.5%) 173.8 bn ð Large Corporates CZK 14.6 bn (+ Corporates 39.2%) + 31.5% p.a. ð Medium Corporates CZK 2.9 bn (+ 14.0%) ð Corporate mortgage CZK 3.0 bn (+ Retail 61.6%) + 22.2% p.
Slide 9: Outlook for 2004
>Outlook for 2004 POSITIVES: Ø Very positive expectation from EU entrance for economic growth and increased transparency Ø Positive real Gross Domestic Product growth Ø Loan demand strong; mortgages continue to be in high demand Ø Ever improving professional staff Ø Reduction in corporate income tax
Slide 10: Group Financial Targets for 2004
>Group Financial Targets for 2004 Net Profit after Taxes è 10 - 15% growth ROE è above 20% Cost/Income ratio è 58 - 60% Net Interest Margin è flat to slight improvement FY 2003 (Preliminary) Results Analyst Presentation London 10
Slide 11: Loan Portfolio Targets for 2004
Loan Portfolio Targets for 2004 Ø Above average loan growth to continue (targeting 10 - 15%) ð SMEs 10 -15% ð Corporate 8 - 10% ð Retail total increase 20 - 25% • Private mortgages 30 - 40% • Consumer finance 18 - 24% Ø Implementation of global standards in Basel 2 FY 2003 (Preliminary) Results Anal
Slide 12: Key figures of EB subsidiaries in Central Europe
> Key figures of EB subsidiaries in Central Europe Preliminary 2003 Results (IFRS) 1 2 EB stake 97.9% 70.1% 99.6% 77.3% FY 03 FY 02 FY 03 FY 02 FY 03 FY 02 FY 03 FY 02 Net Profit (EUR m) 234.9 184.3 66.3 29.5 14.6 7.4 29.9 28.4 ROE (%) 23.7 21.4 19.2 10.1 18.3 10.1 14.7 18.6 Cost / Income ratio (%)
Slide 13: Preliminary Group Results
> Preliminary Group Results > Group Income Statement Group Balance Sheet P&L Details
Slide 14: Preliminary 2003 EB Group Income Statement (IFRS)
> Preliminary 2003 EB Group Income Statement (IFRS) EUR m YE 2003 YE 2002 % Change Net interest income 2,586.8 2,463.0 5.0 Risk provisions for loans and advances (406.4) (406.4) 0.0 Net commission income 996.6 944.3 5.5 Net trading result 214.6 167.4 28.2 General administrative expenses (2,460.8) (2
Slide 15: P&L Details – Net interest income
> P & L Details – Net interest income Regional diversity supports sound NII growth » Group NIM1 stable at 2.30% Other » Quarterly split: » Austria: NII up 1.2% Q1= EUR 617.6 m CE » NII growth in Austria supported by substantial improvement Q2= EUR 672.5 m Austria Q3= EUR 644.6 m in large corporates
Slide 16: P&L Details – Risk provisions
> P & L Details – Risk provisions Group risk provisions flat overall as expected » NPL coverage stable at 70% despite sale of CS bad bank portfolio in Q3 2003 Other » Quarterly split: Q1= EUR 97.2 m CE » Provision charge improved to 62 BP Q2= EUR 108.7 m Austria Q3= EUR 92.7m » Austria: slight incre
Slide 17: P&L Details – Net commission income
> P & L Details Net commission income Positive trends continue » Group commission income improved by 5.5% to EUR 996.6m » Austria: up 8.3% yoy Other » Quarterly split: Q1= EUR 228.9 m CE » Supported by a very strong contribution from Trading and Q2= EUR 253.0 m Investment banking segment Austria Q3=
Slide 18: P&L Details – Net trading result
> P & L Details Net trading result Stronger markets in 2003 reflected in Group result » Net trading result increased by 28.2% to EUR 214.6m Other » Quarterly split: Q1= EUR 60.1 m CE » Austria: Up 10.8% to EUR 137m despite weaker H2 03 Q2= EUR 64.5 m Austria Q3= EUR 55.9 m » Strong contribution from
Slide 19: P&L Details – General administrative expenses
> P & L Details General administrative expenses Costs in line with forecast » Group expenses slightly increased by 1.2% to EUR 2,460.7m » Adjusted for one-off pension charge of EUR 32m costs decrease by 0.1% Other » Quarterly split: Q1= EUR 605.1 m » Excluding depreciation (up 17%) expenses decline
Slide 20: P&L Details – Other operating results
> P & L Details Other operating results Strong impact of one-off items at CE subsidiaries » Amortisation of Goodwill increased by 39% mainly due to CS minority buyout and acquisition of Rijecka banka Other » Quarterly split: Q1= EUR 22.6 m during 2002 CE Q2= EUR 38.1 m Austria Q3= EUR 68.0 m » Incre
Slide 21: Business update and outlook
> Business update and outlook > Business update Outlook and Targets
Slide 22: FY 2003 – Business update
> FY 2003 – Business update Austrian retail initiatives Progressing Op. Profit Pretax Profit Retail branches: Net Profit ü Closure of 14 branches by Q1 2004 ü 3% reduction of branch headcount by YE 2004 on track 75 70 ü 4% target for reduction of administrative expenses by YE 2004 55 SME: ü SME port
Slide 23: FY 2003 – Business update (cont)
> FY 2003 – Business update (cont) Postabank – update on integration process » Integration project with 21 integration teams active since Dec 2003 » Detailed master plan implemented – integration to be completed by mid 2005 » Branch network rationalization started in January 2004 leading to target o
Slide 24: Outlook and targets
> Outlook and targets Guidance for 2004 » Erste Bank will again report double digit net profit growth in 2004 » Outlook 2004 for CE subsidiaries » CS and SLSP to maintain Return on Equity above 20% » EB Croatia ROE to stay above 18% » EB Hungary expected to achieve a positive ROE based on revised bu
Slide 25: 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 26: Overview of international exposures
> Overview of international exposures Credit Risk1 by regions at EB Group Low Risk Management Substandard Non performing/ Total outstanding attention Doubtful 2 in EUR m FY 2003 FY 2002 FY 2003 FY 2002 FY 2003 FY 2002 FY 2003 FY 2002 FY 2003 FY 2002 share in % share in % Austria 46,545 48,241 9,111
Slide 27: Overview of international exposures (cont)
> Overview of international exposures (cont) Credit Risk1 by industry sectors at EB Group Low Risk Management Substandard Non performing/ Total outstanding attention Doubtful 2 in EUR m FY 2003 FY 2002 FY 2003 FY 2002 FY 2003 FY 2002 FY 2003 FY 2002 FY 2003 FY 2002 share in % share in % Banking & in
Slide 28: Ceská sporitelna Group financials
> Preliminary 2003 Financials (IFRS) of CE subsidiaries Ceská sporitelna Group EUR m YE 2003 YE 2002 % Change Net interest income 489.2 502.4 (2.6) Risk provisions for loans and advances 61.8 (9.4) > 100.0 Net commission income 251.5 226.9 10.8 Net trading result 37.4 30.1 24.3 General administrativ
Slide 29: Slovenská sporitelna Group financials
> Preliminary 2003 Financials (IFRS) of CE subsidiaries (cont) Slovenská sporitelna Group EUR m YE 2003 YE 2002 % Change Net interest income 240.9 168.2 43.2 Risk provisions for loans and advances 3.3 (18.8) > 100.0 Net commission income 51.3 43.4 18.2 Net trading result 10.8 8.6 25.6 General admini
Slide 30: Erste Bank Hungary Group financials
> Preliminary 2003 Financials (IFRS) of CE subsidiaries (cont) Erste Bank Hungary Group EUR m YE 2003 YE 2002 % Change Net interest income 61.8 48.0 28.8 Risk provisions for loans and advances (7.5) (8.2) (8.5) Net commission income 28.8 17.3 66.5 Net trading result 11.6 6.3 84.1 General administrat
Slide 31: Postabank Group financials
> Preliminary 2003 Financials (IFRS) of CE subsidiaries (cont) Postabank Group 1 2 EUR m YE 2003 YE 2002 % Change Net interest income 90.9 77.9 16.7 Risk provisions for loans and advances 3.1 (10.5) > (100.0) Net commission income 8.5 11.2 (24.1) Net trading result 8.1 5.1 58.8 General administrativ
Slide 32: Erste Bank Croatia financials
> Preliminary 2003 Financials (IFRS) of CE subsidiaries (cont) Erste Bank Croatia EUR m YE 2003 YE 2002 1 % Change Net interest income 82.6 75.0 10.1 Risk provisions for loans and advances (12.5) (15.9) (21.4) Net commission income 12.5 10.6 17.9 Net trading result 10.7 11.5 (7.0) General administra
Slide 33: 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 Q4'03 Net interest income 313 357 389 380 585 634 616 628 618 673 645 652 Risk provisions (48) (45) (55) (56) (89) (94) (89) (134) (97) (109) (93) (108) Net commission income 136 1
Slide 34: EB Group Quarterly Balance Sheet (IFRS)
> EB Group Quarterly Balance Sheet (IFRS) Balance Sheet Details EUR m Q2'02 Q3'01 Q4'01 Q1'02 Q2'02 Q3'02 Q4´02 Q1'03 Q2'03 Q3'03 Q4'03 Total assets 82,327 81,485 86,033 117,684 121,068 124,797 121,222 125,081 129,153 130,481 128,575 Loans & advances credit inst. 22,579 20,341 21,485 21,372 21,175 2
Slide 35: EB Group Quarterly Divisionals – Austria
> 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 Q4 03 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Net interest income 189.1 230.3 222.3 224.9 202.8 220.5 202.6 215.4 131.7 134.2 130.1 135.0 129.0 130.3 135.5
Slide 36: EB Group Quarterly Divisionals – Central Europe
> 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 Q4 03 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Net interest income 121.3 126.3 113.6 116.2 113.3 116.9 111.6 119.1 37.3 39.3 36.8 47.8 51.4 70.7 5
Slide 37: 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 Q4 03 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Net interest income 38.5 30.4 34.3 31.5 31.2 41.9 35.4 38.3 (0.9) (3.5) (5.1) (8.1) (3.2) 2.8 (12.2) 0.4 Risk pro
Slide 38: Key financial data
> Preliminary 2003 Results Key financial data in EUR m YE 1998 YE 1999 YE 2000 YE 2001 YE 2002 YE 2003 Tier 1 Capital pursuant to § Austrian Banking Act 1,611 1,753 2,125 2,337 3,800 3,912 Total own funds pursuant to § Austrian Banking Act 3,176 3,296 3,956 4,308 6,983 7,009 Risk weighted assets 26,
Slide 39: Current shareholder structure
> Current shareholder structure Total numbers of shares: 59,943,808 By Investor Type Free Float (59.9%) split by Region Austria Verein Others 6.1% 1.2% Private investors Continental Europe Austria 34.0% 34.7% 8.3% 11.0% Employees UK & Ireland 1.7% 28.2% Institutional investors 42.9% Savings banks No
Slide 40: 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:
Slide 41: Q&A
> Q&A