BAWAG Group AG · VIE:BG
BAWAG — Q2 2021 Earnings Presentation
33 slides from BAWAG's earnings presentation, Jul 26, 2021
Slide 1: Q2 2021 Earnings
Q2 2021 Earnings Anas Abuzaakouk, CEO Enver Sirucic, CFO 26 July 2021 26 July 2021 | BAWAG Group AG 1
Slide 2: Q2 2021 Highlights and segment performance
Q2 2021 Highlights and segment performance Detailed financials Supplemental information Group Overview & Strategy 26 July 2021 | BAWAG Group AG 2
Slide 3: Highlights Q2 2021
Highlights Q2 2021 • Net Profit of €119m in Q2 ’21, EPS of €1.34, and RoTCE of 16.3% EARNINGS • Pre-provision profit of €181m and CIR at 40.1% • Risk cost of €24m … no ECL reserves released • Average customer loans stable vPQ and +3% vPY • CET1 ratio (post dividend) of 14.4%, up 40bps vYE BALANCE SH
Slide 4: Financial performance
Financial performance Key highlights P&L | € millions Q2 ‘21 vPY vPQ H1 ‘21 vPY Balance Sheet & Capital | € millions Q2 ‘21 Q1 ‘21 vPQ vYE Core revenues 302 6% 1% 599 4% Total assets 54,132 52,970 2% 2% Operating income 303 6% - 604 4% Interest-bearing assets (average) 40,701 40,824 - - Operating ex
Slide 5: Capital development … CET1 ratio (FL)
Capital development … CET1 ratio (FL) Strong capital position Capital distribution plans ~+60bps a €95m dividends accrued based on dividend (Q2 ’21 gross capital generation) policy for H1 ’21 earnings 17.0% b €420m dividends (€4.72 per share) relating to → 2019/2020 profits will be proposed to AGM o
Slide 6: M&A Update
M&A Update Two acquisitions signed to-date in 2021 with deminimis credit risk Hello bank! Austria DEPFA bank • Strategic acquisition of leading online retail brokerage • Strategic bank wind-down opportunity platform in Austria with 80k customers STRATEGIC • Leveraging BAWAG Group’s Advisory team, ex
Slide 7: Retail & SME
Retail & SME Financial performance Customer development € millions Q2 ‘21 Q2 ‘20 vPY Q1 ‘21 vPQ € millions Q2 ‘21 Q2 ‘20 vPY Q1 ‘21 vPQ Core revenues 225.8 213.8 6% 222.8 1% Housing loans 15,181 13,475 13% 14,862 2% Net interest income 163.5 166.2 (2%) 163.1 - Consumer and SME 5,069 5,018 1% 4,994 2
Slide 8: Corporates & Public
Corporates & Public Financial performance Customer development € millions Q2 ‘21 Q2 ‘20 vPY Q1 ‘21 vPQ € millions Q2 ‘21 Q2 ‘20 vPY Q1 ‘21 vPQ Core revenues 70.2 68.4 3% 69.7 1% Corporate lending 3,674 4,483 (18%) 4,227 (13%) Net interest income 61.7 59.5 4% 61.0 1% Asset backed lending 4,888 5,055
Slide 9: Detailed financials
Q2 2021 Highlights and segment performance Detailed financials Supplemental information Group Overview & Strategy 26 July 2021 | BAWAG Group AG 9
Slide 10: P&L & key ratios
P&L & key ratios P&L | € millions Q2 ‘21 Q2 ‘20 vPY vPQ Key ratios Q2 ‘21 Q2 ‘20 vPY vPQ Net interest income 231.6 227.5 2% 1% Return on Common Equity 13.7% 7.4% 6.3pts 5.1pts Net commission income 70.1 55.8 26% 4% Return on Tangible Common Equity 16.3% 9.0% 7.3pts 6.1pts Core revenues 301.7 283.3 6
Slide 11: Balance sheet
Balance sheet Growth in customer loans Balance sheet | € millions Q2 ‘21 Q4 ‘20 Delta Capital & RWA | € millions Q2 ‘21 Q4 ‘20 Delta Customer loans 32,371 32,004 1% Common equity 3,504 3,419 2% Securities and bonds 6,628 7,525 (12%) Tangible common equity 2,966 2,867 3% Credit institutions and cash
Slide 12: P&L details – core revenues
P&L details – core revenues Solid core revenues in Q2 ‘21 … NCI continues recovery € million Net interest income (NII) up 1% vPQ … net interest margin (NIM) at 2.28% in Q2 ‘21 297.3 297.9 297.3 301.7 ‒ Stable NIM at 2.28% with continued changing asset 283.3 mix over time (more secured vs. unsecured
Slide 13: P&L details – operating expenses
P&L details – operating expenses Costs targets on track € million Core operating expenses CIR at 40.1% in Q2’21 down (3.7pts) vPY … Restructuring charges H1 ’21 CIR at 40.3% (down 2.6pts vPY) 144.7 On track to meet full-year targets … gradual decrease over the coming quarters resulting from efficien
Slide 14: P&L details – risk costs
P&L details – risk costs Strong underlying asset quality € million Risk costs / average interest-bearing assets Q2 ‘21 risk costs €24m … risk cost ratio at 23bps ‒ Strong asset quality performance … continued improving underlying trend 74.6 ‒ Normal risk cost run-rate in Retail & SME ~€15m ‒ No ECL
Slide 15: Details on reserves
Details on reserves Continuing to remain prudent despite improved economic outlook IFRS 9 Migration- Customer Segment Assets Non-performing stage 3 loans, in €m Stage 3 2% 2% 2% 2% 885 904 4% 811 836 Stage 2 8% 6% 10% 254 254 City of Linz (CoL) 254 254 Stage 1 94% 92% 88% 90% 631 650 557 582 Custome
Slide 16: 2021 Outlook
2021 Outlook OUTLOOK 2021 TARGETS Core revenues FY ’20: €1,170m ~2% growth RoTCE CIR Other income €0m expected 2021 ~15% ~40% FY ’20: €3m Operating expenses: Below €485m New Targets & 4-year Plan through 2025 will FY ’20: €520m be presented at the Investor Day on 20 September ‘21 Regulatory charges
Slide 17: Supplemental information
Q2 2021 Highlights and segment performance Detailed financials Supplemental information Group Overview & Strategy 26 July 2021 | BAWAG Group AG 17
Slide 18: Customer businesses €33.5 billion
Customer businesses €33.5 billion As of June 2021 RETAIL & SME CORPORATES & PUBLIC CUSTOMER BUSINESSES By product 25% €33.5 billion of which … 28% 35% 80% €20.3b €13.2b in % in % 75% 37% Secured or public sector lending Housing loans Consumer & SME Corporate lending Asset backed lending Public clien
Slide 19: Retail & SME
Retail & SME Portfolio overview of €20.3b of customer loans and leases Payment deferral overview NPL ratio Reserve development Reserve ratio Payment holiday average time Assets paying ratio on payments Q2 '21 (expired (expired (€bn) Q4 '19 Q4 '20 Q2 '21 Q4 '19 Q4 '20 Q2 '21 Q4 '19 Q4 '20 Q2 '21 31.1
Slide 20: Corporates & Public
Corporates & Public Portfolio overview of €13.2 billion of customer loans … whereof €4.7b in public sector Payment deferral overview NPL ratio Reserve development Reserve ratio Payment holiday average time Assets paying ratio on payments Q2 '21 (expired (expired (€b) Q4 '19 Q4 '20 Q2 '21 Q4 '19 Q4 '
Slide 21: Investment book and Cash
Investment book and Cash Q1 ‘21 Q2 ‘21 Cash & Cash equivalent 7% 8% As of Q2 ‘21, cash and cash equivalents (mainly money at central banks) at €13.1b ... TLTRO III of €6.4b €11.1b in % +€ 2.0b €13.1b in % Investment book primarily serves as liquidity book of the Bank 93% 92% Cash Cash equivalent Foc
Slide 22: Regulatory Capital
Regulatory Capital Strong capital position € billion CET1 Capital and ratios Capital distribution plans: dividend ‒ €95m dividends accrued based on dividend policy CET1 capital (post dividend) for H1 ’21 earnings CET1 ratio (post dividend) ‒ €420m dividends (€4.72 per share) relating to 3.3 3.4 2019
Slide 23: Capital distribution update
Capital distribution update Consistent average annual capital generation through earnings +220bps since 2017 ~480 bps = €955m Total Excess capital 17.0% “Earmarked dividends” 1 Dividends of €515m deducted from CET1 capital … pre-dividend €3.42b 1 256 bps = €515m – €420m dividends relating to 2019/20
Slide 24: City of Linz overview
City of Linz overview Scenario Analysis for potential outcomes of interim decision of Supreme Court Receivable of €254m on balance sheet as of 30 June 2021 Valid contract Invalid contract Receivable fully provisioned in CET1 through prudential filter in 2020, i.e. no impact on capital regardless of
Slide 25: Group Overview & Strategy
Q2 2021 Highlights and segment performance Detailed financials Supplemental information Group Overview & Strategy 26 July 2021 | BAWAG Group AG 25
Slide 26: BAWAG Group
BAWAG Group COMPANY PROFILE CAPITAL MANAGEMENT TARGETS Focused on organic One of Austria‘s leading banking groups with and inorganic growth 2.3 million customers across DACH/NL region RoTCE CIR 2021* ~15% ~ 40% 2020 results: €285m net profit, 10.2% RoTCE, CIR 44.3% and CET1 ratio (post dividend) 14.
Slide 27: 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 focus on ‒ Build multi-channel and multi-brand ‒ Our DNA is to focus on the t
Slide 28: ESG embedded into our strategic roadmap
ESG embedded into our strategic roadmap Committed to responsible, sustainable and profitable growth ENVIRONMENT SOCIAL GOVERNANCE ‒ Reduce own Scope 1 and Scope 2 CO2 emissions ‒ Empower our clients by continuously enhancing ‒ Executive body of ESG-topics is the Non-Financial mid-term our services a
Slide 29: Bank transformation
Bank transformation Focusing on things we control and driving operational excellence KEY METRICS Increased profitability … Private company Public company Pre-tax profit (€ millions) 2013 2014 2015 2016 2017 2018 2019 2020 573 604 500 419 445 RoTCE 11% 15% 17% 18% 15% 15% 16% 10% 371 316 191 C/I rati
Slide 30: Proven M&A track record
Proven M&A track record Experienced with bolt-on acquisitions to build out customer franchise 2021 Hello bank! Austria Signed deal to acquire Hello bank!, closing Key M&A targets expected Q4 ‘21 / Q1 ‘22 2021 DEPFA Bank plc Signed deal to acquire DEPFA Bank plc, closing expected in H2 ’21 ‒ Continue
Slide 31: Investor relations calendar
Investor relations calendar UPCOMING ROADSHOWS AND CONFERENCES SHAREHOLDER STRUCTURE 26 July BAWAG Group Q2 ’21 Earnings Release Managing Board 2.5 20 Sep BAWAG Group Investor Day 78.2% Free Float GoldenTree 22 Sep BAML conference 21.8 23 Sep 18th Bernstein Strategic Decision Conference 28 Oct BAWAG
Slide 32: 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 33: Annex – Definitions and abbreviations
Annex – Definitions and abbreviations B/S leverage NPL ratio Total assets / IFRS equity NPL exposure economic / exposure Book value per share Reserve ratio Common equity (excluding AT1 capital and dividends) / number of shares outstanding Total reserves / Asset volume of customer segments excluding