Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Q1 2021 Earnings Presentation
50 slides from Erste Group Bank's earnings presentation, Apr 30, 2021
Slide 1: Erste Group investor presentation Q1 2021 results
Erste Group investor presentation Q1 2021 results 30 April 2021 Erste Group starts well into 2021 Bernd Spalt, CEO Erste Group Stefan Dörfler, CFO Erste Group Alexandra Habeler-Drabek, 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 • Key developments and executive summary • Macroeconomic and business update • Operating trends • Volumes • Revenues and costs • Impairments and asset quality • Capital and wholesale funding • Key takeaways and outlook • Additional information Page 3
Slide 4: Key developments – Setting the frame for today's presentation
Key developments – Setting the frame for today’s presentation • CEE macro recovery fully intact, 2.8%-4.5% real GDP growth expected in 2021 • Improving health situation in CEE region • Strong vaccination drive allowing for gradual opening up of economies • Good outlook for industrial production • Fe
Slide 5: Executive summary – Group income statement performance
Executive summary – Group income statement performance QoQ net profit reconciliation (EUR m) YoY net profit reconciliation (EUR m) +50.9% +143.1% 26 4 21 67 8 63 355 46 355 20 166 389 235 146 41 6 Q4 20 Operating Operating Risk costs Other Taxes on Minorities Q1 21 1-3 20 Operating Operating Risk co
Slide 6: Executive summary – Key income statement data
Executive summary – Key income statement data Net interest income & margin Operating result & cost/income ratio Cost of risk 2.18% in EUR m in EUR m in EUR m 1.99% 2.05% 1.99% 1.00% +31.5% 1,229 58.7% 60.3% 1,172 1,186 1,172 425 0.08% 725 552 772 725 62 36 36 1-3 20 1-3 21 Q4 20 Q1 21 1-3 20 1-3 21
Slide 7: Executive summary – Group balance sheet performance
Executive summary – Group balance sheet performance YTD total asset reconciliation (EUR m) YTD equity & total liability reconciliation (EUR m) +9.9% +9.9% 1,789 304,969 1,840 304,969 27 155 361 1,531 6,011 987 14,304 18,116 10,517 277,394 277,394 433 31/12/20 Cash Trading, Loans to Net loans Intangi
Slide 8: Executive summary – Key balance sheet data
Executive summary – 31/12/20 Key balance sheet data 31/03/21 Loan/deposit & loan/TA ratio Net loans & credit RWA NPL coverage ratio & NPL ratio in EUR bn 86.9% +1.1% 81.7% 89.5% 88.6% 59.9% 55.0% 166.1 167.8 99.6 101.0 2.7% 2.6% Loan/deposit ratio Loans/total assets Net loans Credit RWA NPL coverage
Slide 9: Presentation topics
Presentation topics • Key developments and executive summary • Macroeconomic and business update • Operating trends • Volumes • Revenues and costs • Impairments and asset quality • Capital and wholesale funding • Key takeaways and outlook • Additional information Page 9
Slide 10: Macroeconomic update – CEE economies prove their resilience
Macroeconomic update – CEE economies prove their resilience, vaccination rollout is on track • Economic activity expected to rebound in 2021 CEE Recovery Index 1.2 (0 = point of lowest activity, based on weekly indicators) • Recovery to speed up from late spring once restrictions ease and economic a
Slide 11: Macroeconomic update – Economic rebound expected in 2021 & 2022
Macroeconomic update – 2021 2022 Economic rebound expected in 2021 & 2022 Real GDP growth (in %) Dom. demand contribution* (in %) Net export contribution* (in %) Consumer price inflation (avg, in %) 5.8 4.2 4.3 4.0 4.8 4.5 4.4 4.7 4.5 4.6 4.9 3.8 4.0 4.2 4.0 3.8 3.8 3.8 4.1 4.1 3.3 3.6 3.2 3.2 2.8 2
Slide 12: Business update – Retail – what's happening on the ground? (1)
Business update – Retail – what‘s happening on the ground? (1) • Strong demand for housing loans (new sales +36% in 2020), continues in Q1 2021 New sales volumes (in EUR million) • Continuously lower demand for consumer loans reflecting Housing loans Consumer loans uncertainty among specific segment
Slide 13: Business update – Retail – what's happening on the ground? (2)
Business update – Retail – what‘s happening on the ground? (2) • Customer interactions are changing due to Covid-crisis Development of digital sales Number of George users (2019 vs 2020, in thsd) (2019 vs 2020, in thsd pieces) • Branch traffic dropped significantly during the first lockdown in sprin
Slide 14: Business update – Corporates – what's happening on the ground?
Business update – Corporates – what‘s happening on the ground? • Recovery visible Corporate loan stock development • Loan demand mostly driven by large corporates; real (gross, business line view, in EUR bn) estate in pipeline • Industrial sectors performing very strong; investment +7.1% +5.4% +5.1%
Slide 15: Presentation topics
Presentation topics • Key developments and executive summary • Macroeconomic and business update • Operating trends • Volumes • Revenues and costs • Impairments and asset quality • Capital and wholesale funding • Key takeaways and outlook • Additional information Page 15
Slide 16: Operating trends: net loan stock & growth
Operating trends: net loan stock & growth – YoY 31/03/20 QoQ 31/12/20 Net loans continued to grow, up 1.1% ytd 31/03/21 161.1 4.2% • Yoy growth higher in Savings Banks (+5.6%) and in Group 166.1 167.8 1.1% Retail (+5.5%) than in Corporates (+3.3%) 34.8 3.1% • Qoq growth dynamics more pronounced in A
Slide 17: Operating trends: customer deposit stock & growth
Operating trends: customer deposit stock & growth – YoY 31/03/20 QoQ 31/12/20 Deposit growth continues apace, loan/deposit ratio down to 81.7% 31/03/21 181.7 13.0% • Acceleration of deposit inflows as retail and Group 191.1 7.5% 205.4 corporate clients park cash in overnight account AT/EBOe 38.3 42.
Slide 18: Operating trends: NII and NIM
Operating trends: NII and NIM – Q1 20 Q4 20 NII down yoy and qoq, reflecting continued pressure Q1 21 1,229 2.18% • NII down yoy due to decline in most geographies, Group 1,186 2.05% 1,172 1.99% most pronounced in CZ resulting from rate cuts, 161 1.51% margin pressure in AT AT/EBOe 156 1.44% 149 1.3
Slide 19: Operating trends: operating income
Operating trends: operating income – YoY Q1 20 QoQ Q4 20 Q1 21 was another record fee quarter Q1 21 1,663 10.0% • Revenues up yoy, pushed by rebound in net trading Group 1,869 1,829 -2.2% & FV result, record fees, while NII was down 281 -0.5% • Qoq slightly down on lower NII and lower but AT/EBOe 28
Slide 20: Operating trends: operating expenses
Operating trends: operating expenses – YoY Q1 20 QoQ Q4 20 Costs stable yoy and qoq despite higher deposit insurance Q1 21 1,111 -0.7% • Yoy costs improve slightly on lower personnel and Group 1,097 0.5% 1,103 marketing expenses, offsetting higher deposit insurance 189 1.4% contributions (EUR 107.6m
Slide 21: Operating trends: operating result and CIR
Operating trends: operating result and CIR – YoY Q1 20 QoQ Q4 20 CIR at 60.3%, seasonally up qoq Q1 21 Operating result YoY & QoQ change Cost/income ratio 552 66.8% Group 772 31.5% -6.0% 58.7% 725 60.3% 93 67.1% AT/EBOe -4.4% 68.0% 90 -2.0% 89 68.4% 60 83.1% AT/SB 159 107.0% -22.3% 64.5% 123 70.7% -
Slide 22: Operating trends: risk costs (abs/rel)
Operating trends: risk costs (abs/rel*) – Q1 20 Q4 20 Risk costs decline in Q1 21, risk guidance maintained Q1 21 Group 62 425 0.15% 1.00% • For the time being credit risk deterioration is not a 36 0.08% significant feature of the Covid-19 crisis… AT/EBOe 22 39 0.25% 0.44% • …but prudent guidance of
Slide 23: Operating trends: asset quality – NPL ratio and coverage
Operating trends: asset quality – NPL ratio and coverage 31/03/20 31/12/20 NPL ratio declines again as fallout from Covid-19 so far limited 31/03/21 2.4% 80.9% 88.6% • NPL ratio improves to 2.6% and NPL coverage Group 2.7% 2.6% 89.5% increases to 89.5% on lower NPL stock in Q1 21 62.5% AT/EBOe 1.4%
Slide 24: Operating trends: other result
Operating trends: other result – Q1 20 Q4 20 Other result stable yoy Q1 21 -129 • Other result stable yoy as cancellation of SK banking Group -58 -125 levy offsets rising resolution funds contributions AT/EBOe -17 4 • Qoq development attributable to full-year bookings of -16 resolution funds -12 AT/
Slide 25: Operating trends: net result
Operating trends: net result – Q1 20 Q4 20 Q1 21 net profit improves on lower risk costs Q1 21 235 • Yoy profitability up mainly on improved operating Group 146 355 performance due to rebound in trading and FV result, 36 supported by lower risk costs AT/EBOe 48 • Qoq performance driven by significan
Slide 26: Presentation topics
Presentation topics • Key developments and executive summary • Macroeconomic and business update • Operating trends • Volumes • Revenues and costs • Impairments and asset quality • Wholesale funding and capital • Key takeaways and outlook • Additional information Page 26
Slide 27: Wholesale funding and capital: debt vs interbank funding
Wholesale funding and capital: debt vs interbank funding – Stable wholesale funding reliance, as customer deposits grow strongly Debt securities issued Interbank deposits in EUR bn in EUR bn +6.0% +42.5% 32.5 35.3 30.7 Sub debt Overnight deposits 29.4 5.3 4.5 Senior non-preferred bonds Term deposits
Slide 28: Wholesale funding and capital: LT funding
Wholesale funding and capital: LT funding – Stable LT funding needs in 2021 with focus on senior preferred funding Maturity profile of debt in EUR bn 3.6 3.2 3.3 2.9 2.4 2.0 2.1 1.4 1.2 0.9 0.6 0.7 0.0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033+ Senior unsec. bonds Senior non-p
Slide 29: Wholesale funding and capital: MREL update
Wholesale funding and capital: MREL update – Expected total MREL-related issuance volume unchanged MREL resolution groups (March 2021) Preliminary 3year MREL issuance plan (avg. p.a.) in EUR bn in EUR m 192 1,000 – 2,500 77 66 ~450-550 20 22 17 9* 11 7 11 6 ~200-300 ~250-300 ~200-350 ~100-200 8 AT C
Slide 30: Wholesale funding and capital: capital position
Wholesale funding and capital: capital position – Strong fully loaded CET1 ratio of 14.05% In % 14.20 0.10 0.04 0.03 0.02 14.05 CET1 Target 13.5% Reg. min CET1 10.2% (MDA threshold; P2G excluded) YE 20 ∆ RWA OCI Risk Costs & NPE CET1 other Q1 21 • Strong Q1 21 CET1 ratio, staying above 13.5% CET1 ta
Slide 31: Presentation topics
Presentation topics • Key developments and executive summary • Macroeconomic and business update • Operating trends • Volumes • Revenues and costs • Impairments and asset quality • Capital and wholesale funding • Key takeaways and outlook • Additional information Page 31
Slide 32: Conclusion – Key takeaways and outlook for 2021
Conclusion – Key takeaways and outlook for 2021 Q1 21 key takeaways 2021 outlook • Real GDP to rise ~2.8%-4.5% in 2021 in Erste • Macro recovery on track in CEE Operating Group’s markets contingent on further development of • Loan growth in line with expectations at +1.1% ytd environment Covid-19 po
Slide 33: Presentation topics
Presentation topics • Executive summary • Macroeconomic update • Business update • Operating trends • Volumes • Revenues and costs • Impairments and asset quality • Capital and wholesale funding • Key takeaways and outlook • Additional information Page 33
Slide 34: 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 in 7 Customers: 4.5m Customers: 2.2m geographically connected countries Employees: 9,803 Employees: 3,753 CZ Bra
Slide 35: Additional information: strategy
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 customer
Slide 36: Additional information: market shares
Additional information: market shares – 31/03/20 31/12/20 Commanding market shares across the CEE region 31/03/21 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 20.5% 21.9% 20.8% 23.9% AT 21.1% AT 22.6% AT 22.0% AT 24.4% 23.8% 21.0% 25.4% 12.3% CZ 23.9% CZ 21.2% CZ 25.6%
Slide 37: Additional information: income statement
Additional information: income statement – Year-to-date and quarterly view Year-to-date view Quarterly view in EUR million 1-3 20 1-3 21 YOY-Δ Q1 20 Q4 20 Q1 21 YOY-Δ QOQ-Δ Net interest income 1,229.0 1,172.1 -4.6% 1,229.0 1,185.6 1,172.1 -4.6% -1.1% Interest income 1,391.7 1,208.0 -13.2% 1,391.7 1,
Slide 38: Additional information: group balance sheet – Assets
Additional information: group balance sheet – Assets Quarterly data Change in EUR million Mar 20 Jun 20 Sep 20 Dec 20 Mar 21 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 23,031 18,433 27,848 35,839 53,954 >100.0% 50.5% 50.5% Financial assets held for trading 7,706 6,984 6,764 6,356 6,464 -16.1% 1.7% 1.7
Slide 39: Additional information: group balance sheet – Liabilities and equity
Additional information: group balance sheet – Liabilities and equity Quarterly data Change in EUR million Mar 20 Jun 20 Sep 20 Dec 20 Mar 21 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities held for trading 3,322 2,737 2,845 2,625 2,192 -34.0% -16.5% -16.5% Derivatives 2,945 2,308 2,253 2,037 1,631 -44.6% -2
Slide 40: Additional information: capital position
Additional information: capital position – CET1 ratio at a strong 14.0%, phased-in at 14.3% Basel 3 capital Risk-weighted assets Basel 3 capital ratios in EUR bn in EUR bn 19.7% 19.4% 19.3% 19.1% 17.7% 23.6 23.4 120.5 116.1 120.2 121.0 16.5% 115.3 16.3% 22.4 15.9% 22.0 15.9% 21.3 3.4 3.3 3.6 14.2 3.
Slide 41: Additional information: regulatory capital position/requirement (SREP)
Additional information: regulatory capital position/requirement (SREP) – Capital requirements (SREP) for 2021; Erste Group target of 13.5% unchanged Erste Group Consolidated Erste Group Unconsolidated ECB Capital Relief Phased-in Fully loaded Measures 1) Fully loaded Fully loaded 2019 2020 Q1 2021 Q
Slide 42: Additional information: Multiple point of entry resolution strategy
Additional information: Multiple point of entry resolution strategy – MREL compliance at Point of Entry Levels (bail-in) Ownership Structure Resolution Groups Erste Group Bank AG 100% 69.3%** & Savings Banks + other subs 100% 100%* 99.9% Banca Česká Slovenská Erste Bank Erste Bank Comercială spořite
Slide 43: Additional information: MREL details Austrian resolution group
Additional information: MREL details Austrian resolution group: MREL requirement based on RWA fulfilled MREL capacity based on TREA (RWA)* Key take-aways in % • Erste Group’s setup is based on a multiple point of entry 34.10% (MPE) resolution approach • In April 2020, Erste Group Bank AG received it
Slide 44: Additional information: gross customer loans
Additional information: gross customer loans – By risk category, by currency, by industry Gross cust. loans by risk category (EUR bn) Gross customer loans by currency (EUR bn) Gross customer loans by industry (EUR bn) 167.4 168.3 170.0 171.8 167.4 168.3 170.0 171.8 170.0 171.8 164.3 164.3 167.4 168.
Slide 45: Additional information: financial and trading assets
Additional information: financial and trading assets* – LCR at excellent 194.6% By geography By debtor type Liquidity buffer +7.7% in EUR bn in EUR bn 45.7 42.5 43.8 100% 27.0% 80.8 9.2% 8.0% 7.9% 28.6% 25.3% 11.1 9.6% 9.2% 9.1% 10.6 65.3 10.5 64.6 0.7 0.7 0.7 3.9 3.4 3.7 6.0 6.1 5.8 5.3 6.0 6.3 81.
Slide 46: Additional information: Ratings – Composition of issuer ratings
Additional information: Ratings – Composition of Erste Group Bank AG’s issuer ratings Macro Profile SACP - Stand-Alone Credit Profile VR - Viability Rating Strong a (Individual Rating ) + Financial Profile ▲ a- Asset Risk baa2 Anchor bbb+ Capital baa1 Business Position Strong +1 Profitability baa3 C
Slide 47: Additional information: ESG ratings, indices and alignment with UN SDGs
Additional information: ESG ratings, indices and alignment with UN SDGs ESG Indices and Ratings UN Sustainable Development Goals In principle, Erste Group supports all SDGs. Given its regional footprint Erste Group has been included in the Vienna Stock and business model, Erste Group is in fact able
Slide 48: Additional information: shareholder structure
Additional information: shareholder structure – Total number of shares: 429,800,000 By investor By region Unidentified * Erste Foundation direct Unidentified * 5.90% Sparkassen Beteiligungs Identified Trading ** 10.07% Gmbh & Co KG Identified Trading ** 10.07% BlackRock Inc. 1.16% Rest of world 10.6
Slide 49: Additional information: segment structure
Additional information: segment structure – Geographical/operating and business segment view Erste Group – Geographical/operating segments Austria Central and Eastern Europe Other EBOe & Savings Other Czech • Holding ALM Slovakia Romania Hungary Croatia Serbia Subsidiaries Banks Austria Republic • H
Slide 50: Investor relations details
Investor relations details • Erste Group Bank AG, Am Belvedere 1, 1100 Vienna 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 and Android http://w