Erste Group Bank Ag · VIE:EBS
Erste Group Bank — H1 2013 Earnings Presentation
22 slides from Erste Group Bank's earnings presentation, Jul 30, 2013
Slide 1: Erste Group Bank AG Half year results 2013
Erste Group Bank AG Half year results 2013 Solid retail & SME business Sound funding and capital position 30 July 2013 Andreas Treichl, Chief Executive Officer Franz Hochstrasser, deputy CEO Herbert Juranek, Chief Operation Officer Gernot Mittendorfer, Chief Risk Officer Manfred Wimmer, Chief Financ
Slide 2: Presentation topics
Presentation topics − Erste Group’s development in HY 2013 − Central and Eastern Europe − Repayment of participation capital − Outlook 2013 Press Conference – HY results 2013 2 30 July 2013
Slide 3: Income statement (IFRS) HY 2013
Income statement (IFRS) HY 2013 − NII impacted by gradual decline in loan book, mainly in retail and SME business, and lower reinvestment yields for financial assets; also impacted by changed presentation of Czech pension fund result (H1 12 NII impact: EUR 19.3m) − Decline in risk provisions across
Slide 4: Balance sheet (IFRS) – assets
Balance sheet (IFRS) – assets − Customer loans declined mainly due to the reduction in retail and SME business (most notably in HU and RO), also impacted by depreciation of CEE local currencies in H1 2013 − Higher share of secured loans and deconsolidation of Ukraine lead to lower risk-weighted asse
Slide 5: Balance sheet (IFRS) – liabilities
Balance sheet (IFRS) – liabilities − Slight decline in equity due to negative currency translation effects (capital increase not included) − Continued strong underlying customer deposit inflows, in CZ offset by changed presentation of Czech pension fund − Improved core tier 1 ratio (capital increase
Slide 6: Erste Group's Segment highlights
Erste Group’s Segment highlights – Improvement in RO, solid results in EBOe, CZ and SK Romania EB Oesterreich Czech Republic Slovakia in EUR million 1-6 13 1-6 12 ∆ 1-6 13 1-6 12 ∆ 1-6 13 1-6 12 ∆ 1-6 13 1-6 12 ∆ Operating income 391 383 2% 478 472 1% 729 792 (8%) 266 268 (1%) Operating expenses (15
Slide 7: Loan book – Limited demand reflected in loan book
Loan book – Limited demand reflected in loan book − Customer loans decreased by 1.6% ytd mainly Customer loans by main segments on reduction in GCIB business − Austria: overall stable, qoq increase in retail and 150 133.9 133.5 131.9 130.3 129.8 SMEs/local corporates but decline in municipalities 19
Slide 8: Asset quality – AT, CZ & SK improve, while RO stabilises
Asset quality – AT, CZ & SK improve, while RO stabilises − Positive migration in performing categories Erste Group: NPL ratio vs NPL coverage − Increase of low risk share in CEE, especially coming 30% 65% from CZ and SK 63.1% 62.6% 62.4% 25% 61.2% 61.7% 20% 60% − CZ/SK lower NPL ratio than AT 15% −
Slide 9: Funding update – Inflows strengthening funding base
Funding update – Inflows strengthening funding base − Stable retail & SME customer deposit base Customer deposit trends by main segments − Overall, retail & SME deposits remain flat − GCIB deposits increased by 10.3% ytd 122.3 122.2 123.3 123.1 122.5 125 − Nominal decline in CZ mainly on changed 5.2
Slide 10: Funding update – Excess liquidity position underpins LTRO repayment
Funding update – Excess liquidity position underpins LTRO repayment − Short-term funding needs very well covered Evolution of funding mix 100% 3.2% 3.0% 3.0% 2.7% 2.7% 8.2% 8.3% 8.3% − Long-term funding 90% 8.5% 9.0% 80% 13.8% 10.5% 12.2% 11.1% 11.2% − Elevated deposit volumes limit long term fundin
Slide 11: Solid capital position
Solid capital position − Capital increase of EUR Core tier 1 ratio 660m successfully placed excl. Part capital (total risk) − Erste Group already 10,7% comfortably meets its 10,1% After capital increase 10,3% 9,6% targeted 10% fully loaded Basel 3 common equity tier- 7,7% 7,8% 1 ratio 6,9% Basel 2.5
Slide 12: Capital requirements – more than fulfilled at Erste Group and its subsidiaries
Capital requirements – more than fulfilled at Erste Group and its subsidiaries Core tier 1 ratio Local solvency ratios (excl. Part cap; Basel 2.5) 22.3% 22.0% 17.4% 16.4% 12.8% 10.1% 9.9% 12.0% required 10.0% required 8.0% 7.0% required required Erste Group shows core tier 1 ratios (total risk): Loc
Slide 13: Presentation topics
Presentation topics − Erste Group’s development in HY 2013 − Central and Eastern Europe − Repayment of participation capital − Outlook 2013 Press Conference – HY results 2013 13 30 July 2013
Slide 14: Operating environment: macro trends – Signs of economic recovery visible in CEE
Operating environment: macro trends – Signs of economic recovery visible in CEE Real GDP growth in Erste Group‘s core markets (in %) 4.4 2010 2012 − Growth mainly driven by exports, 3.2 2011 2013e 2.7 however, domestic demand has also 2.1 2.3 2.2 2.0 1.8 1.8 1.6 1.5 started to gradually improve 1.3
Slide 15: Austrian banks keep funding in CEE stable
Austrian banks keep funding in CEE stable Cross-border credits of Austrian banks to selected countries in CEE2) 20 (unconsolidated, as of quarter end) − In an international comparison, deleveraging Securities Loans to non-banks in CEE has been moderate (except for HU) 15 Loans to banks − CEE61) has
Slide 16: Loans vs. deposits in CEE
Loans vs. deposits in CEE − Retail business in CEE 70 65,1 65,3 − Local customer deposits are key pillar of Erste’s refinancing 60 Erste Group has as of HY 2013:* 50 • EUR 50.9 bn loans in CEE vs. − Erste Group had as of YE 2012: • EUR 53.1 bn local deposits in CEE in EUR 40 − EUR 50.9 bn loans in C
Slide 17: Presentation topics
Presentation topics − Erste Group’s development in HY 2013 − Central and Eastern Europe − Repayment of participation capital − Outlook 2013 Press Conference – HY results 2013 17 30 July 2013
Slide 18: Good investment for the Republic of Austria
Good investment for the Republic of Austria Erste Group paid a dividend of 8% p.a. to the Republic of Austria, amounting to EUR 448m gross − 2009: the Republic of Austria subscribes for Participation Capital issued by Erste 448m Group amounting to EUR 1,224m 56m − Adjusted for the costs of capital t
Slide 19: Presentation topics
Presentation topics − Erste Group’s development in HY 2013 − Central and Eastern Europe − Repayment of participation capital − Outlook 2013 Press Conference – HY results 2013 19 30 July 2013
Slide 20: Interest rate environment in Europe
Interest rate environment in Europe Development of 10y government bonds Austria 35 Czech Republic 30 Germany Greece 25 Euro Lehman Italy Spain 20 15 10 GR 5 IT, ESP CZ, AUT, DE 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Press Conference – HY results 2
Slide 21: Erste Group in 2013 – Outlook
Erste Group in 2013 – Outlook − Erste Group expects a slight improvement in economic performance for Central and Eastern Europe in H2 2013, even though growth will remain moderate − For 2013 Erste Group expects operating result to decline up to 5% compared to 2012 − Lower operating income as a resul
Slide 22: Shareholder structure
Shareholder structure By investor By region CaixaBank Other Austria ERSTE Stiftung Versicherungsv. 9.1% 2.7% direct Privatstiftung 15.1% Continental 4.1% Europe ERSTE Stiftung indirect* 27.1% 8.5% Austria Employees 42.4% 2.3% Retail investors 6.7% Institutional UK & Ireland investors 8.7% 54.3% Nort