Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Q1 2014 Earnings Presentation
47 slides from Erste Group Bank's earnings presentation, Apr 30, 2014
Slide 1: Erste Group investor presentation Q1 2014 results
Erste Group investor presentation Q1 2014 results 30 April 2014 Stabilising loan volume, continued cost discipline Andreas Treichl, CEO Erste Group Gernot Mittendorfer, CFO Erste Group Andreas Gottschling, CRO Erste Group Page
Slide 2: Disclaimer – Cautionary note regarding forward-looking statements
Disclaimer – Cautionary note regarding forward-looking statements • THE INFORMATION CONTAINED IN THIS DOCUMENT HAS NOT BEEN INDEPENDENTLY VERIFIED AND NO REPRESENTATION OR WARRANTY EXPRESSED OR IMPLIED IS MADE AS TO, AND NO RELIANCE SHOULD BE PLACED ON, THE FAIRNESS, ACCURACY, COMPLETENESS OR CORREC
Slide 3: Presentation topics
Presentation topics • Executive summary • Operating environment • Assets and liabilities • Business performance • Outlook • Appendix Page 3
Slide 4: Executive summary – Group income statement performance
Executive summary – Group income statement performance QoQ net profit reconciliation (EUR m) YoY net profit reconciliation (EUR m) 177 33 103 48 57 8 27 47 327 103 33 31 165 -370 41 8 Q4 13 Operating Operating Risk costs Other Taxes on Minorities Q1 14 1-3 13 Operating Operating Risk costs Other Tax
Slide 5: Executive summary – Key income statement data
Executive summary – Key income statement data Net interest income & margin Operating result & cost/income ratio Cost of risk G: ±2% G: -5% 1.65% 2.71% 2.62% 2.73% 2.62% 56.1% 57.0% -4.1% -2.0% 1.14% 1,197 1,124 1,169 1,124 529 758 727 760 727 372 364 364 1-3 13 1-3 14 Q4 13 Q1 14 1-3 13 1-3 14 Q4 13
Slide 6: Executive summary – Group balance sheet performance
Executive summary – Group balance sheet performance YTD total asset reconciliation (EUR m) YTD total liability reconciliation (EUR m) 2,970 203,903 7,121 203,903 139 33 298 2,081 284 863 1,585 1,001 200,118 568 200,118 1,072 31/12/13 Cash Trading, Loans to Net loans Intangibles Other 31/03/14 31/12/
Slide 7: Executive summary – Key balance sheet data
Executive summary – 31/12/13 Key balance sheet data 31/03/14 Loan/deposit & loan/TA ratio Net loans & credit RWA NPL ratio & NPL coverage ratio -0.1% G: ±2% in EUR bn 98.0% 100.3% 119.9 119.8 63.1% 62.6% 59.9% 58.8% 84.9 87.9 9.6% 9.6% Loan/deposit ratio Loans/total assets Net loans Credit RWA NPL c
Slide 8: Presentation topics
Presentation topics • Executive summary • Operating environment • Assets and liabilities • Business performance • Outlook • Appendix Page 8
Slide 9: Business environment – Ongoing macroeconomic stabilisation
2014 Business environment – 2015 Ongoing macroeconomic stabilisation Real GDP growth (in %) Private consumption growth Consumer price inflation (ave, in %) Unemployment rate (eop, in %) 18.0 18.4 14.5 14.3 2.7 2.4 3.3 9.9 10.4 3.0 1.5 1.5 1.4 2.7 1.2 3.4 7.5 7.1 2.5 7.2 7.1 2.7 1.7 1.9 2.0 1.7 1.9 2
Slide 10: Business environment – Interest rate environment still challenging
Business environment – 3M Interbank Interest rate environment still challenging 10YR GOV Austria Czech Republic Romania 5.79% 5.36% 5.24% 5.36% 5.47% 2.27% 2.31% 2.27% 2.66% 1.98% 2.15% 1.94% 2.56% 2.66% 1.84% 1.98% 0.30% 0.30% 0.50% 0.37% 0.41% 0.37% 0.21% 0.24% 1-3 13 1-3 14 Q4 13 Q1 14 1-3 13 1-3
Slide 11: Business environment – Limited currency volatility, despite CZK devaluation
Business environment – Limited currency volatility, despite CZK devaluation in November 2013 EUR/CZK EUR/RON +7.3% +2.9% +0.1% +2.6% +1.2% -0.3% 27.4 26.7 27.4 27.4 27.4 4.39 4.50 4.45 4.50 4.47 4.46 25.6 1-3 13 1-3 14 Q4 13 Q1 14 31/12/13 31/03/14 1-3 13 1-3 14 Q4 13 Q1 14 31/12/13 31/03/14 EUR/HUF
Slide 12: Business environment – Market shares: stability in AT, CZ and SK, challenges in RO, HU
31/03/13 Business environment – 31/12/13 Market shares: stability in AT*, CZ and SK, challenges in RO, HU 28/02/14 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 19.0% 16.8% 18.3% 20.5% AT 19.0% AT 17.1% AT 18.3% AT 20.4% 23.7% 19.2% 27.5% 9.9% CZ 23.6% CZ 19.0% CZ 26.9%
Slide 13: Presentation topics
Presentation topics • Executive summary • Operating environment • Assets and liabilities • Business performance • Outlook • Appendix Page 13
Slide 14: Assets and liabilities: YTD overview – Loan/deposit ratio balanced at 100.3%
Assets and liabilities: YTD overview – Loan/deposit ratio balanced at 100.3% Assets (EUR bn) Assets (in %) Liabilities & equity (EUR bn) Liabilities & equity (in %) 200.1 203.9 200.1 203.9 100% 3.2% 100% 9.3 10.4 4.6% 5.1% 6.5 7.0 3.5% 17.3 24.4 8.6% 12.0% 51.3 52.3 25.6% 25.6% 8.4 10.0 4.2% 4.9% 12
Slide 15: Assets and liabilities: customer loans by country of risk
Assets and liabilities: customer loans by country of risk – Stabilisation of net loans and performing loans in Q1 14 Net customer loans (EUR bn) Performing loans (EUR bn) Non-performing loans (EUR bn) -0.1% -0.2% -0.5% 122.7 119.9 119.8 118.1 115.4 12.2 12.3 12.2 115.2 2.6 2.7 0.3 0.3 0.3 6.6 2.7 2.
Slide 16: Assets and liabilities: allowances for customer loans
Assets and liabilities: allowances for customer loans – Slight decline in allowances follows stabilisation of NPL volume Quarterly development (EUR m) Highlights • Stock of allowances for impairments declined slightly ytd on the back of lower NPL stock vs year-end 2013 -1.2% • QoQ improvement in new
Slide 17: Assets and liabilities: financial and trading assets – LCR at 107%
Assets and liabilities: financial and trading assets – LCR at comfortable 107% (YE 13: 109%) By geography (EUR bn) By debtor type Liquidity buffer (EUR bn) +2.1% 47.0 45.8 44.8 100% 11.9% 12.3% 10.6% 8.4 8.1 7.8 21.5% 20.7% 2.1 13.2% 12.6% 12.1% 20.3% 2.1 2.2 3.5 3.1 3.9 17.8% 4.1 4.6 5.3 40.1 39.8
Slide 18: Assets and liabilities: intangibles
Assets and liabilities: intangibles – Intangibles reduced in size, currently at 20.9% of book value Quarterly development of intangibles (EUR bn) Highlights • Customer relationships are subject to regular 2.9 amortisation 2.8 2.8 -1.3% • Quarterly customer relationship amortisation charge averages b
Slide 19: Assets and liabilities: customer deposit funding
Assets and liabilities: customer deposit funding – Decline in customer deposits driven by EUR 1.8bn Czech one-off By customer type By product type Highlights -2.4% • YTD decline driven mainly by: 123.1 122.4 • Final deconsolidation of Czech pension fund 123.1 122.4 119.4 119.4 (EUR 1.8bn), one-off e
Slide 20: Assets and liabilities: debt vs interbank funding
Assets and liabilities: debt vs interbank funding – Decline in deposits and issued debt offset by increase in interbank funding Debt securities issued (EUR bn) Interbank deposits (EUR bn) -6.3% +41.2% 34.5 33.1 3.5 Sub debt 24.4 Overnight deposits 31.0 3.6 Suppl. capital Term deposits 1.2 0.0 3.4 1.
Slide 21: Assets and liabilities: ST vs LT funding
Assets and liabilities: ST vs LT funding – Limited LT funding needs, solid ST funding collateral coverage Maturity profile of debt (EUR bn) Wholesale funding outflow (<1y) v collateral coverage 3.8 165.1% 156.6% 3.5 141.2% 139.4% 2.7 2.7 116.3% 2.4 2.4 2.4 37.0 37.6 31.6 33.9 1.5 1.5 27.9 27.0 1.3 2
Slide 22: Assets and liabilities: capital position – Basel 3 implementation
Assets and liabilities: capital position – Basel 3 implementation as of 31 March 2014 Basel 2.5/Basel 3 capital (EUR bn) Risk-weighted assets (EUR bn) Basel 2.5/Basel 3 capital ratios Basel 2.5 Basel 3 Basel 2.5 Basel 3 Basel 2.5 Basel 3 Phased-in Phased-in Phased-in 16.6% 16.3% 15.9% 15.8% 15.5% 16
Slide 23: Presentation topics
Presentation topics • Executive summary • Operating environment • Assets and liabilities • Business performance • Outlook • Appendix Page 23
Slide 24: Business performance: performing loan stock & growth
YoY 31/03/13 Business performance: performing loan stock & growth – QoQ 31/12/13 Stabilisation in Q1 14 driven by Retail and SME in AT, SK, CZ 31/03/14 Business line view Geographic view 118.1 26.8 1.5% Group 115.4 Group -2.4% AT/EBOe 27.0 AT/EBOe -0.2% 27.2 0.7% 115.2 12.4 -17.4% 43.9 -1.5% AT/OA 1
Slide 25: Business performance: customer deposit stock & growth
YoY 31/03/13 Business performance: customer deposit stock & growth – QoQ 31/12/13 Deposit decline overstated by EUR 1.8bn CZ one-off 31/03/14 Business line view Geographic view 123.1 -2.9% 30.1 -4.7% Group 122.4 Group AT/EBOe 30.0 AT/EBOe -2.4% -4.2% 119.4 28.7 5.0 -1.9% 64.6 -3.1% AT/OA 4.4 AT/OA R
Slide 26: Business performance: NII and NIM
Business performance: NII and NIM – Q1 13 Q4 13 NII down yoy and qoq on lower volumes, lower margins and CZK effect Q1 14 Business line view Geographic view 1.197 2.71% 135 1.38% Group 1.169 2.73% AT/EBOe 145 1.47% 1.124 2.62% 145 1.53% 555 4.52% 103 1.12% Retail 547 4.37% AT/OA 108 1.29% 538 4.35%
Slide 27: Business performance: operating income
Q1 13 Business performance: operating income – Q4 13 Decline in NII weighs on operating income Q1 14 Business line view Geographic view Highlights 1,748 1,748 • Decline in qoq and yoy group operating Group 1,732 Group 1,732 1,691 1,691 income driven by NII, partly offset by an 835 240 improved net t
Slide 28: Business performance: operating expenses
Q1 13 Business performance: operating expenses – Q4 13 Improvements mainly on lower personnel expenses Q1 14 Business line view Geographic view Highlights 990 990 • Group operating expenses declined due to Group 972 Group 972 963 963 lower average headcount (yoy) and 465 153 seasonally higher costs
Slide 29: Business performance: operating result and CIR
Q1 13 Business performance: operating result and CIR – Q4 13 Lower operating income only partly offset by lower costs Q1 14 Business line view Geographic view 758 56.6% 758 56.6% Group 760 56.1% Group 760 56.1% 727 57.0% 727 57.0% 370 55.7% 87 63.9% Retail 392 53.2% AT/EBOe 84 64.6% 391 52.6% 100 59
Slide 30: Business performance: risk costs (abs/rel)
Q1 13 Business performance: risk costs (abs/rel) – Q4 13 Lower risk costs mainly in SME and commercial real estate Q1 14 Business line view Geographic view 372 1.13% -4 -0.06% Group 529 1.65% AT/EBOe 32 0.45% 364 1.14% 21 0.30% 104 3.13% 132 1.12% AT/OA 137 4.32% Retail 118 1.01% 51 1.64% 119 1.02%
Slide 31: Business performance: non-performing loans and NPL ratio
31/03/13 Business performance: non-performing loans and NPL ratio – 31/12/13 Stable NPL volume, stable NPL ratio 31/03/14 Business line view Geographic view 12,232 9.4% 1,011 3.6% Group 12,296 9.6% AT/EBOe 1,070 3.8% 12,238 9.6% 986 3.5% 1,188 8.8% 3,610 7.6% AT/OA 1,638 13.4% Retail 3,466 7.4% 1,68
Slide 32: Business performance: allowances for loans and NPL coverage
31/03/13 Business performance: allowances for loans and NPL coverage – 31/12/13 NPL coverage remains comfortably above 60%-target 31/03/14 Business line view Geographic view 7,632 62.4% 677 67.0% Group 7,753 63.1% AT/EBOe 682 63.7% 7,660 62.6% 673 68.2% 744 62.6% 2,493 69.1% AT/OA 868 53.0% Retail 2
Slide 33: Business performance: other result
Q1 13 Business performance: other result – Q4 13 Q1 14 impacted by full recognition of Hungarian banking tax Q1 14 Business line view Geographic view Highlights -76 -76 • QOQ rise in group other result due to one-off Group -450 Group -450 goodwill write-downs of EUR 330.8m in Q4 -124 -124 -12 -4 13;
Slide 34: Business performance: income tax and net result
Q1 13 Business performance: income tax and net result – Q4 13 Income tax rate in line with expectations at 41.6%, ROE at 3.6% Q1 14 Net result by business line Net result by geography Highlights 177 177 • Group income tax rate almost doubled yoy to Group -370 Group -370 guided level of about 40%, du
Slide 35: Presentation topics
Presentation topics • Executive summary • Operating environment • Assets and liabilities • Business performance • Outlook • Appendix Page 35
Slide 36: Conclusion – Outlook
Conclusion – Outlook • Erste Group expects a stable operating environment in its markets in Austria and CEE: while economic growth is expected to average 1.9% (Erste Group Research) in 2014, interest rates are expected to remain persistently low or fall even further in certain geographies • Erste Gr
Slide 37: Presentation topics
Presentation topics • Executive summary • Operating environment • Assets and liabilities • Business performance • Outlook • Appendix Page 37
Slide 38: Additional information: new segmentation – Business line and geographic view
Additional information: new segmentation – Business line and geographic view Erste Group – Business segments Group ALM & Savings Large Commercial Other Group Intragroup Corporate Retail SME Local CC Banks Corporates Real Estate Corporate Markets elimination Center (ALM&LCC) (AT/SB) (LC) (CRE) (OC) (
Slide 39: Additional information: income statement – Quarterly view
Additional information: income statement – Quarterly view in EUR m Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Net interest income 1,196.7 1,143.3 1,175.9 1,169.2 1,123.9 Net fee and commision income 447.4 446.8 449.5 462.8 452.1 Dividend income 26.8 21.2 20.2 21.6 14.6 Net trading and fair value result 30.7 72.8
Slide 40: Additional information: group balance sheet – Assets
Additional information: group balance sheet – Assets in EUR m Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Cash and cash balances 8,453 10,578 11,852 9,301 10,373 Financial assets - held for trading 15,438 15,258 14,219 12,283 13,610 Derivatives 8,926 7,507 6,930 6,342 6,482 Other trading assets 6,512 7,751 7
Slide 41: Additional information: group balance sheet – Liabilities and equity
Additional information: group balance sheet – Liabilities and equity in EUR m Mar 13 Jun 13 Sep 13 Dec 13 Mar 14 Financial liabilities - held for trading 8,845 7,533 7,154 6,475 7,042 Derivatives 8,476 7,044 6,706 6,087 6,341 Other trading liabilities 368 489 448 388 702 Financial liabilities - at f
Slide 42: Additional information: gross customer loans – Split by currency
Additional information: gross customer loans – Split by currency Gross customers loans by currency (EUR bn) Gross customers loans by currency in % 130.3 129.8 129.5 127.7 127.5 100% 2.1 1.6 1.9 1.7 1.9 1.6 1.7 1.6 1.7 1.6 1.6% 1.2% 1.5% 1.3% 1.5% 1.2% 1.3% 1.3% 1.3% 12.1 11.5 11.2 10.7 10.2 9.3% 8.8
Slide 43: Additional information: gross customer loans – Migration trends
Additional information: gross customer loans – Migration trends Gross customers loans by risk category (EUR bn) Gross customers loans by risk category in % 130.3 129.8 129.5 127.7 127.5 100% 12.2 12.6 12.4 12.3 12.2 9.4% 9.7% 9.6% 9.6% 9.6% 4.1 3.8 3.9 3.6 3.4 3.1% 2.9% 3.0% 2.8% 2.7% 18.9 18.3 17.5
Slide 44: Additional information: footprint
Additional information: footprint – Customer banking in Austria and the eastern part of the EU Erste Group footprint Highlights Czech Republic Slovakia • Leading retail and corporate bank Customers: 5.2m Customers: 2.4m in 7 geographically connected Employees : 10,425 Employees : 4,216 countries Bra
Slide 45: Additional information: strategy – A real customer need is the reason for all business
Additional information: strategy – A real customer need is the reason for all business Customer banking in Central and Eastern Europe Eastern part of EU Focus on CEE, limited exposure to other Europe Retail Corporate Capital Public Interbank banking banking markets sector business Focus on local cur
Slide 46: Additional information: shareholder structure
Additional information: shareholder structure – Total number of shares: 429,800,000 By investor By region 2.8% 9.1% 13.1% 4.0% 4.1% 26.0% 7.1% 1.5% 43.0% 8.0% 7.5% 53.0% 20.7% Erste Stiftung, direct Institutional investors Austria UK & Ireland Other Erste Stiftung, indirect * Austria Versicherungsve
Slide 47: Investor Relations contacts
Investor Relations contacts • Erste Group Bank AG, Graben 21, 1010 Vienna Fax : +43 (0)5 0100-13112 E-mail:investor.relations@erstegroup.com Internet: http://www.erstegroup.com/investorrelations http://twitter.com/ErsteGroupIR http://www.slideshare.net/Erste_Group Erste Group IR App for iPad, iPhone