Eurobank S.a. · ATHEX:EUROB

Eurobank — Eurobank Ergasias Services and Holdings — 9M 2020 Earnings Presentation

50 slides from Eurobank's earnings presentation, Nov 19, 2020

  1. Slide 1: 9M 2020 Results

    9M 2020 Results 19 November 2020

  2. Slide 2: Disclaimer

    Disclaimer By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations: This presentation has been prepared by Eurobank Ergasias Services and Holdings S.A. (“Eurobank Holdings”) and its 100% subsidiary Eurobank S

  3. Slide 3: Table of contents

    Table of contents 9M2020 results highlights 3 Segmental analysis 9 9M2020 results review 14 Asset Quality 21 Appendix I – Supplementary information 27 Appendix II – Macroeconomic update 34 Appendix III – Glossary 44 Page 2

  4. Slide 4: 9M 2020 results highlights

    9M 2020 results highlights Page 3

  5. Slide 5: 9M20 results

    9M20 results Highlights Key financials Net profit1 €348m in 9M20; €172m in 3Q20 €m 9M20 9M19 Δ(%) 3Q20 2Q20 Δ(%) 1  Core pre-provision income (PPI) up 5.1% y-o-y at €648m; down 4.8% q-o-q Net interest income 1,020.1 1,030.8 (1.0) 331.3 349.5 (5.2)  NII down 1.0% y-o-y at €1,020m; down 5.2% q-o-q,

  6. Slide 6: Pre-provision income (PPI)

    Pre-provision income (PPI) Core PPI and other income (€ m) Δ PPI (q-o-q, € m) 13 28 3 63 184 Other income 214 224 213 212 213 57 59 0 397 70 68 65 Int'l 121 166 Greece 143 145 147 154 287 7 (18) 3Q19 4Q19 1Q20 2Q20 3Q20 PPI per region (€ m) 397 63 Δ ΝΙΙ 2Q20 PPI 3Q20 PPI Δ other income Δ commission

  7. Slide 7: Asset quality

    Asset quality NPEs formation1 (€ m) NPEs ratio (%) 31.1% 6 28.9% (52) 29.2% (5) (46) Int'l (77) Greece (195) 15.3% (16.2ppts) 14.9% (342) 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 Loan loss provisions (€ m) Provisions / NPEs (%) 1.6% 1.4% 1.3% 1.5% 1.7% Cost of Risk2 +740bps 62.5% 155 145 14

  8. Slide 8: Capital position

    Capital position 15.5% 42bps 27bps 15.6% (21bps) (36bps) 2.4% Tier II 15.4% 13.2% CET 1 CET1 FBL3: 11.2% 2Q20 CAD 3Q20 result1 VES cost Debt Securities at Other 3Q20 CAD FVOCI RWAs 40,822 (1,021)3 39,801 (€ m) Capital 6,310 172 (88) (148)2 (48)4 6,198 (€ m) Note: 2020 CET1 capital requirement at 6.2

  9. Slide 9: Funding and liquidity

    Funding and liquidity Highlights Deposits (€ bn) 87.3%  Deposits in Greece increased by €1.1bn in 9M20; €0.8bn q-o-q 83.2% 83.4% 81.6% 80.1% Net Loans /  Group Deposits up by €1.4bn in 9M20; up €1.0bn q-o-q Deposits ratio  LCR ratio at 122% in 3Q20, improved from 107% in 2Q20 45.3 45.2 46.2  Rep

  10. Slide 10: Segmental analysis

    A) urobank Holdings Segmental analysis | Page 9

  11. Slide 11: Eurobank Group segmental analysis

    Eurobank Group segmental analysis: Earnings generation diversified in different segments in Greece and regionally Key metrics (9M20) Net profit1 (q-o-q, € m) Net Assets RWAs TBV 2019 Profit1 RoTBV2 (€ bn) (€ bn) (€ m) RoTBV 133 (€ m) 58 Greek 13 19 9 Greek banking Banking 49.9 31.0 2,899 208 7.6% 1.

  12. Slide 12: Eurobank Investment Real Estate Portfolio

    Eurobank Investment Real Estate Portfolio Big boxes & 9M20 Mixed use Office Other retail Logistics Special use Total supermarkets No. of assets (#) 43 38 45 64 6 10 206 Market Value (€ m) 246 383 432 152 56 58 1,327 % of total MV 19% 29% 33% 11% 4% 4% 100% Price / GLA (€ /sqm) 2,228 1,166 1,101 1,82

  13. Slide 13: Bulgaria key metrics

    Bulgaria key metrics1 9M20 Highlights PPI and provisions (€ m)  Net profit €54m in 9M20; €18m in 3Q20  Core pre-provision income (PPI) down 7% y-o-y at €92m; up 9% q-o-q  NII up 2% y-o-y at €137m; up 3% q-o-q 39 PPI 24 32 29 31  Commission income down 1% y-o-y at €39m; up 9% q-o-q (10) (9) (11)

  14. Slide 14: Cyprus key metrics

    Cyprus key metrics1 9M20 Highlights PPI and provisions (€ m)  Net profit €53m in 9M20; €15m in 3Q20  Core pre-provision income (PPI) down 5% y-o-y at €66m; down 2% q-o-q 25 26 26 23 23 PPI  NII up 1% y-o-y at €77m; stable q-o-q (2) (4) (2) (1) (6)  Commission income down 6% y-o-y at €20m; down 8

  15. Slide 15: 9M 2020 results review

    9M 2020 results review Page 14

  16. Slide 16: Balance Sheet composition

    Balance Sheet composition Assets (€ bn) Liabilities and Equity (€ bn) 67.5 67.5 Equity 5.3 Net loans and 37.0 advances to customers Trading & • Core 63% Other other Tbills Deposits 46.2 • Time 37% issuers 2% 1% 17% Securities 8.9 GGBs 50% PP&E, intangibles and other assets 4.9 Other Derivatives gove

  17. Slide 17: Loans

    Loans Gross loans (€ bn) Performing loans (€ bn) +1.5bn organic loan growth 44.5 44.4 45.0 +3.51 34.7 34.5 7.5 7.7 40.6 40.7 7.6 31.8 31.2 30.4 7.3 7.4 International 1.1 1.1 1.1 7.8 8.0 7.1 International 7.0 6.8 Greece 3.5 3.5 Greece 3.5 3.5 1.1 Senior notes 1.1 1.1 Senior notes 20.4 20.5 21.0 13.7

  18. Slide 18: Net interest margin & spreads

    Net interest margin & spreads Net interest margin (bps) Deposit spreads (Greece, bps) 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q20 3Q20 Greece 204 200 194 204 188 Savings & Sight (58) (60) (55) (55) (59) International 266 265 255 231 226 Time (76) (71) (66) (59) (55) Group 219 215 208 210 197 Total

  19. Slide 19: Net interest income

    Net interest income NII breakdown (€ m) NII evolution (q-o-q, € m) Total NII 346 347 339 349 331 o/w Greece 247 247 244 260 240 o/w International 99 100 96 90 91 9 4 (2) 349 (2) 0 Loan margin 388 378 364 1 331 367 349 (28) Eurosystem 0 0 0 5 10 2Q20 3Q20 Deposits Bonds & other International Eurosyst

  20. Slide 20: Commission income

    Commission income Commission income breakdown (€ m) Commission income per region (€ m) 104 57bps over assets 104 94 92 95 94 95 21 92 88 28 88 15 Lending 17 16 24 Int’l 19 29 26 23 39 Network transactions 31 37 & credit cards 40 29 71 Greece 5 64 11 7 Capital Markets 6 76 66 5 66 Bancassurance & 20

  21. Slide 21: Operating expenses

    Operating expenses OpEx per region (€ m) OpEx breakdown (€ m) Greece (5.6%) 664 (2.5%) 647 227 237 82 82 220 213 213 Depreciation 57 60 57 56 56 International 225 231 Administrative 169 178 163 158 157 Greece 358 Greece staff cost Staff (11.3%) 334 3Q19 4Q19 1Q20 2Q20 3Q20 9M19 9M20 VES in Greece He

  22. Slide 22: Asset Quality

    Holdings Asset Quality | Page 21

  23. Slide 23: Loans under payment moratoria

    Loans under payment moratoria Payment moratoria in Greece1 2021 strategy Granular client segmentation enables targeted solutions to address the “cliff” €4.2bn €5.0bn €4.9bn effect post moratoria (December 2020): 26% 30% 29% Corporate  For Households: 26% 23% 23% Small Business  “Gefyra” (“Bridge”)

  24. Slide 24: Δ stock NPEs

    Δ stock NPEs (€m) 30 (459) (883) (130) Δ stock NPEs Group (6,784) 22 (301) (722) (112) Δ stock NPEs Solo (6,805) NPE inflows 182 164 152 132 84 (117) (103) NPE outflows (205) (53) (41) (303) (340) (65) (88) Cash Payments (86) (118) (38) (209) (262) (45) (12)(60) (15) (3) (64) (57) (32) (82) NPE net

  25. Slide 25: NPEs formation per segment (Greece)

    NPEs formation per segment (Greece) Mortgages (€ m) Consumer (€ m) 22 (17) 7 2 4 (41) 1 (67) (57) (80) (66) (81) (83) (85) (2) (4) (105) (3) (2) (123) (9) (10) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Small business (€ m) Corporate

  26. Slide 26: NPEs metrics (Group)

    NPEs metrics (Group) 90dpd bridge to NPEs (€ bn) NPEs per region Provisions & Provisions/ Total NPEs NPEs ratio collaterals / NPEs NPEs 0.2 (€ bn) (%) (%) (%) 6.1 1.1 Consumer 0.8 33.0 101.2 117 4.8 Mortgages 1.7 16.6 48.5 128 Small Business 1.0 27.5 60.6 125 Total Retail 3.5 21.5 63.9 125 Corporate

  27. Slide 27: Loans' stage analysis (Group)

    Loans’ stage analysis (Group) Loans’ stage breakdown Provisions stock over NPEs Δ 60.6% 62.5% (€ bn) 3Q19 4Q19 1Q20 2Q20 3Q20 55.1% 55.3% 55.6% q-o-q Stage 1 23.7 25.2 25.7 28.3 28.8 0.5 Stage 2 6.9 6.3 6.2 6.1 5.8 (0.3) Stage 3 13.8 13.0 13.0 6.2 6.1 (0.1) (NPEs) 1 Total 44.5 44.5 44.9 40.5 40.7 0.

  28. Slide 28: Appendix I – Supplementary information

    Appendix I – Supplementary information Page 27

  29. Slide 29: Summary performance

    Summary performance Balance sheet – key figures Income statement – key figures €m 3Q20 2Q20 €m 3Q20 2Q20 Gross customer loans 40,694 40,557 Net interest income 331.3 349.5 Provisions (3,734) (3,700) Commission income 95.1 87.8 Loans FVTPL 28 25 Operating income 610.8 500.6 Net customer loans 36,988

  30. Slide 30: Consolidated quarterly financials

    Consolidated quarterly financials Income Statement (€ m) 3Q20 2Q20 1Q20 4Q19 3Q19 Net Interest Income 331.3 349.5 339.4 346.7 345.9 Commission income 95.1 87.8 92.3 103.8 94.2 Other Income 184.3 63.4 2.7 28.2 13.3 Operating Income 610.8 500.6 434.4 478.7 453.5 Operating Expenses (213.4) (213.5) (220

  31. Slide 31: Consolidated financials

    Consolidated financials Income Statement (€ m) 9M20 1H19 Δ y-o-y (%) Net Interest Income 1,020.1 1,030.8 (1.0) Commission income 275.3 249.9 10.1 Other Income 250.4 84.6 >100 Operating Income 1,545.8 1,365.2 13.2 Operating Expenses (647.1) (664.0) (2.5) Pre-Provision Income 898.7 701.3 28.1 Loan Los

  32. Slide 32: International operations key figures – 3Q20

    International operations key figures – 3Q201 Bulgaria Cyprus Serbia Lux Sum Assets 5,667 6,786 1,615 1,855 15,923 Gross loans 3,988 1,983 1,229 526 7,726 Net loans 3,815 1,926 1,191 526 7,458 Balance Sheet (€m) 90dpd Loans 185 40 40 1 266 Balance NPE loans 303 73 55 1 431 Sheet Deposits 4,897 5,418

  33. Slide 33: Gross loans (International operations)

    Gross loans (International operations, € m) Bulgaria Cyprus 3,828 3,801 3,856 3,898 3,988 1,953 1,983 Other 1,910 617 1,804 1,874 530 528 547 575 151 155 164 141 149 Consumer 1,074 1,075 1,089 1,114 1,150 Mortgage 1,663 1,759 1,725 1,798 1,819 Business Business 2,224 2,198 2,220 2,209 2,221 3Q19 4Q1

  34. Slide 34: Deposits (International operations)

    Deposits (International operations, € m) Bulgaria Cyprus 5,596 5,501 5,578 5,438 5,418 4,763 4,821 4,684 4,696 4,897 Time 2,335 2,190 2,034 Time 1,628 2,671 2,451 1,764 1,670 1,619 1,601 3,269 Core 2,999 3,150 3,064 3,096 3,050 3,242 3,248 3,384 Core 2,925 3Q19 4Q19 1Q20 2Q20 3Q20 3Q19 4Q19 1Q20 2Q2

  35. Slide 35: Appendix II – Macroeconomic update

    Appendix II – Macroeconomic update Page 34

  36. Slide 36: Recent macro & market developments and FY-2020 outlook

    Recent macro & market developments and FY-2020 outlook  According to EC’s autumn forecasts (Nov-20), real GDP is estimated to decrease by -9.0% in 2020 and then recover by 5.0% and 3.5% in 2021 and 2022 respectively 2019 2019 2020* 2021* 2022* GDP €bn nominal Real % YoY Real % YoY Real % YoY Real %

  37. Slide 37: Selected indicators of domestic economic activity

    Selected indicators of domestic economic activity Economic Sentiment: after the first wave of the COVID- PMI Manufacturing: operating conditions in the 19 pandemic, the ESI recovered mildly manufacturing sector deteriorated at the start of 2020Q4 Retail Trade Volume: most of April’s 2020 Manufacturi

  38. Slide 38: Domestic Labour Market

    Domestic Labour Market The unemployment rate stood at 16.8% in Aug-20 from 15.6% in Mar- Government policies have slowed down the decrease of 20. According to EC’s autumn forecasts (Nov-20), the FY-20 employment (in terms of number of people) unemployment rate will rise to 18.0% from 17.3% in 2019 S

  39. Slide 39: Real Estate prices increased in FY 2019 and H1 2020

    Real Estate prices increased in FY 2019 and H1 2020 after a multi- year decline Index of Apartment Prices Index of Retail and Office Prices 2007Q1 – 2020Q1 2010H2 – 2019H2 Source: BoG Page 38

  40. Slide 40: Domestic fiscal measures and liquidity support

    Domestic fiscal measures and liquidity support: c.15% of GDP Total measures for 2020 and 2021 at €-24.8bn and €-2.7bn respectively. Fiscal cost at €-19.9bn and €-2.4bn for 2020 and 2021 respectively (including the recent 2nd lockdown measures) Public Investment Budget Budget Revenues: Budget Expendi

  41. Slide 41: Primary fiscal balance negative due to COVID-19 measures

    Primary fiscal balance negative due to the measures against the COVID-19 pandemic  2019 marked the 4th consecutive year with an overall surplus in programme terms  European Commission Autumn Forecasts:  Primary balances for 2020, 2021 and 2022 negative– at -3.8%, -3.6% and -0.8% of GDP respective

  42. Slide 42: European policy response

    European policy response European level stimulus Additional European Commission measures Next Generation EU Unemployment Multi Year Financial fund • ESM credit line: up to 2% of GDP for each Eurozone country initiative (SURE) Grants Framework 2021-27 €100bn €390 bn • Coronavirus Response Investment

  43. Slide 43: Sovereign's rating constant or improved due to reform momentum

    Sovereign’s rating constant or improved due to reform momentum ….. still significant distance to investment grade Moody's S&P Fitch Aaa AAA AAA Aa1 AA+ AA+ Aa2 AA AA Aa3 AA- AA- A1 A+ A+ A2 A A A3 A- A- Baa1 BBB+ BBB+ Baa2 BBB BBB Baa3 BBB- BBB- Ba1 BB+ BB+ Ba2 BB BB Ba3 BB- BB-  Moody’s recently (

  44. Slide 44: Bulgaria-Cyprus-Serbia macro-trajectory for 2020-2021

    Bulgaria-Cyprus-Serbia macro-trajectory for 2020-2021 COVID-19 induces recession  Strong growth momentum ahead of crisis: Bulgaria, Cyprus, Serbia expanded on average by 3.6%, 4.6%, 3.2% respectively between 2015-2019  Covid-19 induced recession is now seen to be milder in 2020 for regional econom

  45. Slide 45: Appendix III – Glossary

    Appendix III – Glossary Page 44

  46. Slide 46: Glossary – Definition of Alternative Performance Measures

    Glossary – Definition of Alternative Performance Measures (APMs) & other selected financial measures/ ratios This document contains financial data and measures as published or derived from the published consolidated financial statements which have been prepared in accordance with International Finan

  47. Slide 47: Glossary – Definition of Alternative Performance Measures

    Glossary – Definition of Alternative Performance Measures (APMs) & other selected financial measures/ ratios Adjusted net profit: Net profit from continuing operations before restructuring costs, goodwill impairment and gains/losses related to the transformation plan, net of tax Commission income: T

  48. Slide 48: Glossary – Definition of Alternative Performance Measures

    Glossary – Definition of Alternative Performance Measures (APMs) & other selected financial measures/ ratios Liquidity Coverage Ratio (LCR): The total amount of high quality liquid assets over net liquidity outflows for a 30-day stress period. Loans to Deposits: Loans and Advances to Customers at am

  49. Slide 49: Glossary – Definition of Alternative Performance Measures

    Glossary – Definition of Alternative Performance Measures (APMs) & other selected financial measures/ ratios Provisions/NPEs ratio: Impairment Allowance for Loans and Advances to Customers, including impairment allowance for credit related commitments (off balance sheet items) divided by NPEs at the

  50. Slide 50: Investor Relations contacts

    Investor Relations contacts Dimitris Nikolos +30 214 4058 834 E-mail: dnikolos@eurobankholdings.gr Yannis Chalaris +30 214 4058 832 E-mail: ychalaris@eurobankholdings.gr Christos Stylios +30 214 4058 833 E-mail: cstylios@eurobankholdings.gr E-mail: investor_relations@eurobankholdings.gr Fax: +30 210

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