Eurobank S.A. · ATHEX:EUROB
Eurobank — Eurobank EFG — 9M 2008 Earnings Presentation
52 slides from Eurobank's earnings presentation, Oct 30, 2008
Slide 1: Nine Month 2008 Results
SW-EUB022-2007-03-19-CMD-V7 October 30, 2008 Nine Month 2008 Results
Slide 2: Solid performance in a turbulent environment
Page 2 Solid performance in a turbulent environment Net profit for the first three quarters of 2008 at €647m, 5% ahead of 2007 Recurring profits registered a very strong 18% y-o-y increase, with Q3 08 the best quarter ever. Net Interest Income expansion by 23.1% y-o-y corresponding to a €31m (
Slide 3: Solid performance in a turbulent environment (continued)
Page 3 Solid performance in a turbulent environment (continued) Cost reduction in Q3 08, down 3% from Q2 Improvement in C/I ratio both in Greece and New Europe New Europe achieved a further improvement in profitability to €52.0m for Q3 Return on Equity at 20.1% Strong capital position: Tie
Slide 4: Challenging macro environment
Page 4 Challenging macro environment Greece Decelerating but yet satisfactory economic growth of 3.2% in 2008 and 2.0% in 2009 (IMF projections) Government Support Program of € 28.0 bn designed to sustain credit expansion at 10% or more in 2009 Poland, Cyprus Healthy fundamentals and self fund
Slide 5: Challenging environment requires new set of priorities
Challenging environment requires Page 5 new set of priorities Continue focusing on deposit gathering and placing stronger emphasis on liquidity management. Use of alternative funding sources, if available, to complement self-financed expansion. Accelerate repricing of loan portfolio, implement m
Slide 6: Financial Highlights
Page 6 Financial Highlights 6
Slide 7: Key themes of 9M 08 results
Page 7 Key themes of 9M 08 results Intensified deposit gathering Balanced lending growth driven by repricing Safeguarding asset quality Accelerated cost containment Sound liquidity Disciplined capital management 7
Slide 8: Outstanding deposits growth accelerates further to 42.5% y-o-y
Intensified deposit gathering Page 8 Outstanding deposits growth accelerates further to 42.5% y-o-y Greek deposits annual growth (%) – Group deposit gathering (€ bn) Eurobank vs. market + 42.5% 46.1 33.1 31.2 Eurobank 24.9 +2.3 20.7 24.2 +4.7 9.3 17.1 17.8 Greek market 12.9 14.0 +3.0 32.4 +3.8 Sept.
Slide 9: Balanced and controlled business growth across segments and geographies
Balanced lending growth driven by repricing (1/3) Page 9 Balanced and controlled business growth across segments and geographies Total Group Lending (€ bn) Quarterly additions by country (€ m) 3,649 3,545 3,461 + 30.9% 56.5 1,409 +103% 2,689 +6.2 1,702 15.1 1,770 +7.1 43.1 805 Greece 186 New Europe
Slide 10: Strong NII growth at 23.1% y-o-y – loan margin the highest ever
Balanced lending growth driven by repricing (2/3) Page 10 Strong NII growth at 23.1% y-o-y – loan margin the highest ever NII quarterly evolution 621 +5.3% 590 560 566 517 482 457 Total NII 445 417 404 352 382 342 Loan margin 322 Interest rate gapping 11 13 17 10 3 7 4 Earnings on capital 54 74 72 7
Slide 11: NIM improves to 3.21% - Greek loan spreads stable
Balanced lending growth driven by repricing (3/3) Page 11 NIM improves to 3.21% - Greek loan spreads stable Strong repricing in New Europe Evolution of Greek spreads (bps) FY 07 1Q 08 1H 08 9M 08 Group NIM (%) 3.28 3.22 3.17 3.21 4Q 07 1Q 08 2Q 08 3Q 08 Sight & Savings Accounts 2.65 2.65 2.54 2.64 T
Slide 12: Well-spread risk through careful underwriting
Page 12 Safeguarding asset quality (1/3) Well-spread risk through careful underwriting Greece vs New Europe New Europe outstandings per currency (% of gross loans) (% of gross New Europe loans) Ukraine 1% Cyprus 1% Turkey 2% Local currency Mortgage FX Poland 7% 39% 22% Serbia 2% 100% 30% Greece 73%
Slide 13: Balanced exposures across segments
Page 13 Safeguarding asset quality (2/3) Balanced exposures across segments Retail vs. Wholesale Wholesale Loan Book Composition (% of gross loans) (% of gross loans) Consumer 22% Services 19% Commerce Construction Wholesale 28% & Real Estate 37% 18% Mortgages 25% Shipping 4% Municipalities - State
Slide 14: Credit quality under close scrutiny – still better than 2 years ago
Safeguarding asset quality (3/3) Page 14 Credit quality under close scrutiny – still better than 2 years ago Group NPL Ratio (% of loans) Past Due > 90 Days (% to gross loans) 3.05% 2.57% 2.66% 3.43 3.32 3.31 9M 06 9M 07 9M 08 9M 07 1H 08 9M 08 Bad Debt Provisions Coverage among the best in the sect
Slide 15: Costs down 3% q-o-q
Page 15 Accelerated cost containment (1/2) Costs down 3% q-o-q Total Costs per Region Total Costs per expense category -3% 389 401 375 Group 389 333 331 389 401 375 389 301 27 Depreciation 36 29 33 159 Admin. 145 144 235 140 224 230 215 214 Greece 207 212 177 171 New Europe 154 150 Staff 207 202 216
Slide 16: Group expansion decelerates to 15.5% y-o-y, Greek to 4.8%
Page 16 Accelerated cost containment (2/2) Group expansion decelerates to 15.5%* y-o-y, Greek to 4.8% Decelerating cost growth (% y-o-y) Cost / Income (%) 27.5 26.1 25.8 24.4 22.4 Group 75.8 11.3 20.7 11.1 10.9 Greece 8.6 7.9 63.6 4.8 48.7 1H 07 9M 07 FY 07 1Q 08 1H 08 9M 08 48.1 FY 07 40 41.4 9M 08
Slide 17: Self funded growth in the last 12 months
Page 17 Sound liquidity (1/2) Self funded growth in the last 12 months Deposit additions outpace loan additions Loans / Deposits Ratio Evolution (%) in the past 12 months (€ bn) 172 170 167 168 159 New Europe 130.1 13.8 13.4 126.2 125.5 124 120.1 119.9 119 Group 117 110 110 Greece Deposit additions
Slide 18: Sound liquidity position – only € 1.5 bn debt maturities in 2009
Sound liquidity (2/2) Page 18 Sound liquidity position – only € 1.5 bn debt maturities in 2009 Maturity Profile of Outstanding Wholesale Debt Self funded over the past year 2,972 Wholesale funding maturities for 2008 Low er Tier II already covered 750 ABS 1,900 EMTN - Debt maturities at € 1.5 bn
Slide 19: Solid capital base allowing for further expansion
Page 19 Disciplined capital management (1/2) Solid capital base allowing for further expansion Additional Subdebt 870 Capacity Additional Hybrid 290 Capacity 5,058 5,206 -173 Minority Interest Regulatory 343 1,108 Tier II -562 1,281 Adjustments -398 738 Goodwill Preference Shares Regulatory 4,098 Su
Slide 20: Careful RWA growth optimises the use of capital
Page 20 Disciplined capital management (2/2) Careful RWA growth optimises the use of capital Strong Capital Adequacy (%) Risk Weighted Assets growth (€ m) 3,955 3,214 13.2 12.2 2,534 11.2 11.0 Total CAD 10.6 10.1 1,693 1,598 9.7 9.2 8.5 8.7 8.2 Core Tier I 7.9 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 9M07 FY 0
Slide 21: 9M 08: Solid capital base and liquidity
Page 21 9M 08: Solid capital base and liquidity Growth continues in a controlled and decelerating manner Self funded growth over the last 12 months Loan to Deposits ratio improves to 119.9% Core Tier I at 8.7%, Total CAD ratio at 11.0% No subprime / toxic assets on the balance sheet Risk
Slide 22: 9M 08: Solid profitability at € 647m
Page 22 9M 08: Solid profitability at € 647m Robust Group recurring revenues (€ m) Recurring revenues up 21.6% y-o-y; 3Q + 21.6% 2,282 highest ever at € 777m 1,877 €(62) Strong NIM improving to 3.21% 175 113 Costs under control, down 3% q-o-q 9M 07 9M 08 9M 07 9M 08 Non Core Income* Recurring
Slide 23: Full 9M 08 Review
Page 23 © Eurobank EFG Full 9M 08 Review
Slide 24: Solid loan growth across all segments at 30.9% y-o-y
Page 24 Solid loan growth across all segments at 30.9% y-o-y Group Household Lending Total Group Lending + 30.9% 26.5 New Europe 20.2 56.5 14.2 3.9 + 30.9% 10.3 + 38.5% + 185% Mortgages 15.1 3.8 + 67% 43.1 12.2 Consumer credit 10.0 + 23.0% +103% 7.4 New Europe 9M 07 9M 08 41.4 Group Business Lending
Slide 25: Outstanding deposits growth accelerates further to 42.5% y-o-y
Page 25 Outstanding deposits growth accelerates further to 42.5% y-o-y Deposit gathering momentum +€2.3bn Significantly outpacing the Greek market – growth at 31.2% +€4.7bn New Europe maturing networks boost deposit gathering – +€3.0bn balances up 115.8% +€3.8bn 46.1 Group deposit additions at
Slide 26: Strong NII growth at 23.1% y-o-y, NE contribution on the rise
Page 26 Strong NII growth at 23.1% y-o-y – loan margin the highest ever, NE contribution on the rise NII quarterly evolution New Europe at 31% of Group NII - +5.3% 621 from 20% a year ago 590 560 566 517 + 23.1% 1,777 482 445 457 Total NII 417 1,444 509 404 + 88% 352 382 New Europe excl. * 271 342 L
Slide 27: Fee income advances 7.7% y-o-y
Page 27 Fee income advances 7.7% y-o-y Lending fees up 74% over 9M 07 –3Q 08 follows the deceleration in loan growth Turbulent market conditions drag capital market fees down 15% y-o-y Outflows to deposits and poor market conditions drive fees from mutual funds down 31% y-o-y NE fees expand
Slide 28: Robust Group recurring revenues, up 21.6% y-o-y
Page 28 Robust Group recurring revenues, up 21.6% y-o-y Total Operating Income up 16.5% y-o-y Breakdown of Operating Income 811 799 Total Op. Income 786 764 714 777 Recurring + 21.6% 770 689 2,282 735 650 721 664 633 1,877 581 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 175 €(62) Operating Income per
Slide 29: Group cost expansion decelerates to 15.5%, Greek expenses up 4.8%
Page 29 Group cost expansion decelerates to 15.5%*, Greek expenses up 4.8% y-o-y Strong cost containment - lean 3Q 08, down 3.1% over 2Q: Decelerating cost growth (% y-o-y) 27.5 - group Admin expenses down 9.5% q-o-q 26.1 25.8 - personnel expenses flat at 2Q 08 levels 24.4 22.4 Greek Cost / Inco
Slide 30: Credit quality under scrutiny – still better than 2 years ago
Page 30 Credit quality under scrutiny – still better than 2 years ago Group NPL Ratio (% of loans) NPLs at 2.66%, from 2.57% in 9M 07 Past Due >90 Days at 3.4% 3.05% Greek NPLs at 2.96% 2.66% 2.57% Coverage at 78% - coverage including collaterals at 111% Provisions rise to 112 bps in 3Q 08
Slide 31: New Europe
Page 31 © Eurobank EFG New Europe
Slide 32: 1,200 branches and client servicing points in New Europe
Page 32 1,200 branches and client servicing points in New Europe – representing 68% of total network Sept. 08 Networks 316 165 282 123 244 558 40 3 32
Slide 33: Evidence of softer, but still satisfactory growth in the region
Page 33 Evidence of softer, but still satisfactory growth in the region Real GDP CPI CA balance / Loans / External Debt/ Growth GDP (%) GDP (%) GDP (%) 2008e 2009e 2008e 2009e 2008e 2009e June 08 2007 Greece 3.2% 2.0% 4.4% 3.1% -14.0% -14.1% 100% 136.8% Cyprus 3.4% 2.8% 4.6% 3.5% -9.7% -7.8% 286% 11
Slide 34: NE Net loan additions at 107% of net deposit additions in 3Q 08
Page 34 NE Net loan additions at 107% of net deposit additions in 3Q 08 NE contributes 70% of group new loans - Deposit gathering accelerates to 116% total NE balances up 103% y-o-y in 9M 08 2,240 55 1,884 61 Cyprus 1,719 1,690 895 119 Cyprus 253 1,253 855 Poland 1,342 53 136 702 534 Poland 417 867
Slide 35: NE continues the strong performance in 3Q08
Page 35 NE continues the strong performance in 3Q08 Net profits contribution per quarter Net profits per country NE share of quarterly Group net profits NE net profits, € m 24.7% 21.0% 52.0 Bulgaria 55.8 46.4 9.1% Romania 34.9 19.7 Serbia 28.7 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 Tu
Slide 36: NE Operating Income up 84% y-o-y and 8% q-o-q
NE Operating Income up 84% y-o-y Page 36 and 8% q-o-q. Strong efficiency gains. NE Operating income at 33% of Cost / Income (%) improves Group vs 21% a year ago by 14 p.p. y-o-y NE share of Group operating income NE operating income, € m NE share of Group expenses NE operating expenses, € m 33% + 84
Slide 37: Segmental Performance
Page 37 Segmental Performance 37
Slide 38: Recurring PBT up 12%
Page 38 Recurring PBT up 12% PBT* per Segment Group PBT* Share of profits 35.4% 24.4% 6.2% 19.6% 15.6% 787 787 108 Non Core Income ** & Gapping 183 9M 08 679 278 Recurring Revenues 604 + 12% 192 154 122 49 (8) Retail Corporate Wealth Global & New Europe Capital & Other 9M 07 9M 08 Management Capital
Slide 39: Retail – revenues and profits rebase
Page 39 Retail – revenues and profits rebase Quarterly PBT evolution (€ m) 111 112 112 3Q 08/2Q 08 (2%) (7%) 13% (7%) 104 growth 100 90 84 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 3Q 08 327 145 333 FY 07 9M 08 157 – Cost to Income 44.3% 45.4% 98 84 – Return on Equity 42.2% 32.9% – Share of profits
Slide 40: Corporate – high efficiency, increased share of profits
Page 40 Corporate– high efficiency, increased share of profits Quarterly PBT evolution (€ m) 63 64 65 59 57 52 47 3Q 08/2Q 08 (4%) (2%) (50%) 1% growth 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 3Q 08 97 101 FY 07 9M 08 65 – Cost to Income 31.6% 29.1% 64 – Return on Equity 23.9% 22.9% 28.5 – Share of
Slide 41: Wealth Management – revenues affected by markets
Page 41 Wealth Management – revenues affected by markets Quarterly PBT evolution (€ m) 35 3Q 08/2Q 08 (20%) (6%) (36%) 27 29 24.6 25.2 growth 14.2 9.1 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 FY 07 9M 08 3Q 08 – Cost to Income 34.2% 49.2% 24 – Return on Equity 82.2% 60.3% – Share of profits 11.0% 6
Slide 42: Global & Capital Markets – revenues affected from continuing market turbulence
Page 42 Global & Capital Markets – revenues affected from continuing market turbulence Quarterly PBT evolution (€ m) 63 63 57 52.6 53 56 3Q 08/2Q 08 (17%) (5%) (21%) 44 growth 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 63 76 44 FY 07 9M 08 – Cost to Income 22.9% 26.5% – Return on Equity 70.7% 48.0% 1
Slide 43: New Europe: new record profitability
Page 43 New Europe: new record profitability Quarterly PBT evolution (€ m) 51 43 3Q 08/2Q 08 8% 3% 18% 18% 29 growth 24 -3.7 5 11 1Q 07 2Q 07 3Q 07 4Q 07 1Q 08 2Q 08 3Q 08 290 268 FY 07 9M 08 184 179 – Cost to Income 81.9% 66.7% – Share of Revenues 19.3% 32.7% – Share of profits 3.5% 15.6% 49 51 42
Slide 44: Solid Shareholder Returns
Page 44 Solid Shareholder Returns 44
Slide 45: Solid returns despite adverse conditions
Page 45 Solid returns despite adverse conditions Group profitability (€ m) + 5% 647 618* Recurring profits*** rise 18% 87 Non Core Income * * 143 & Gapping * 560 Recurring 9M 08 net profits at € 647m + 18% Profits*** 475 RoE at 20.1% 9M 07 9M 08 RoA at 1.21% Capital Adequacy Basle II Basle I
Slide 46: Appendices
Page 46 © Eurobank EFG Appendices
Slide 47: Summary Figures
Page 47 Summary Figures Summary Figures (€ m) 9M 08 9M 07 Δ% New Europe Net Interest Income 1,777 1,444 23.1% 550 Net fees & Commissions 447 409 9.2% 204 Insurance and Non banking fees 53 55 -3.5% 3 Total Operating Income 2,395 2,053 16.7% 785 Operating Expenses 1,165 966 20.7% 499 Impairment 413 29
Slide 48: Financial Ratios
Page 48 Financial Ratios Financial Ratios 9M 08 9M 07 Net Interest Margin 3.21% 3.29% Cost-Income 48.7% 47.0% NPLs (% of loans) 2.66% 2.57% NPLs coverage 77.6% 91.2% Provision Charge (% of net loans) 1.09% 1.04% Tier Ι Ratio 8.66% 9.85% Total Capital Adequacy 11.00% 13.18% ROA after tax 1.21% 1.47%
Slide 49: Key figures of New Europe operations
Page 49 Key figures of New Europe operations Romania Bulgaria Serbia Cyprus Poland Turkey Ukraine NE Δ% Total Assets 5,759 4,281 1,972 1,069 5,055 2,261 935 21,310 88% Balance Sheet Total Loans 4,142 3,349 1,190 341 4,121 1,142 781 15,065 103% Total Deposits 2,493 2,008 812 831 2,134 749 306 9,329 1
Slide 50: 9M 2008 – Summary per Segment
Page 50 9M 2008 – Summary per Segment Segmental Results 9M 08 Wealth Global & Capital Capital & Elimination Total (€ m) Retail Corporate Management Markets Other Center New Europe Interest income 903 227 18 72 6 0 550 1,777 Net fee & commission income 41 32 59 112 -1 0 204 447 Net Insurance income 0
Slide 51: 9M 2007 – Summary per Segment
Page 51 9M 2007 – Summary per Segment Segmental Results 9M 07 Wealth Treasury & Capital Capital & Elimination Retail Corporate New Europe Total (€ m) Management Markets Other Center Interest income 856 183 34 76 1 0 293 1,444 Net fee & commission income 42 30 89 131 -1 0 118 409 Net Insurance income
Slide 52: Contacts
Page 52 Contacts EFG Eurobank Ergasias, 20 Amalias Avenue, 105 57 Athens, Greece Fax: +30 210 3337 160 E-mail: investor_relations@eurobank.gr Internet: www.eurobank.gr Reuters: EFGr.AT Bloomberg: EUROB GA Investor Relations Dimitris Nikolos Tel: +30 210 3337688 E-mail: dnikolos@eurobank.gr Marle