BAWAG Group AG · VIE:BG
BAWAG — Q3 2023 Earnings Presentation
25 slides from BAWAG's earnings presentation, Oct 17, 2023
Slide 1: BAWAG Group Q3 2023 Results
BAWAG GROUP Q3 2023 RESULTS October 17, 2023
Slide 2: Agenda
AGENDA 1 Q3 2023 HIGHLIGHTS & SEGMENT PERFORMANCE 2 DETAILED FINANCIALS & OUTLOOK 3 SUPPLEMENTAL INFORMATION October 17, 2023 BAWAG Group 2
Slide 3: Highlights Q3 2023
HIGHLIGHTS Q3 2023 EARNINGS BALANCE SHEET & CAPITAL TARGETS Q3 ’23: Average customer loans (3%) vPQ … average Expect to meet or exceed 2023 financial targets: Net profit €186m, RoTCE of 27.6% and EPS of €2.25 interest-bearing assets (2%) vPQ Profit before tax > €875m, EPS > €8.20, DPS > €4.50 Core r
Slide 4: Financial Performance
FINANCIAL PERFORMANCE P&L | € millions Q3 ’23 vPY vPQ YTD ’23 vPY Balance Sheet & Capital | € millions Q3 ’23 Q2 ’23 vPQ vPY Core revenues 390.3 17% 1% 1,143.4 16% Total assets 52,857 53,127 (1%) (6%) Net interest income 313.7 21% 1% 913.9 22% Cash & Cash Equivalent excl. TLTRO 10,990 10,772 2% 92%
Slide 5: Capital Development
CAPITAL DEVELOPMENT ~90 basis points gross capital generation QUARTERLY CAPITAL DEVELOPMENT €386m Excess capital CAPITAL DEVELOPMENT a) Gross capital generation ~90bps in Q3 ’23 through earnings 0.9% 15.6% 14.8% 15.1% CAPITAL DISTRIBUTION (0.1%) 14.2% (0.5%) b) YTD ’23 dividend accrual of €278m base
Slide 6: Retail & SME
RETAIL & SME FINANCIAL PERFORMANCE CUSTOMER DEVELOPMENT € millions Q3 ’23 vPY vPQ YTD ’23 vPY € millions Q3 ’23 vPY vPQ YTD ’23 vPY Core revenues 289.6 13% 2% 848.6 12% Housing loans 15,442 (4%) (1%) 15,442 (4%) Net interest income 221.5 16% 2% 645.4 18% Consumer and SME 6,414 1% 1% 6,414 1% Net com
Slide 7: Corporates, Real Estate & Public Sector
CORPORATES, REAL ESTATE & PUBLIC SECTOR FINANCIAL PERFORMANCE CUSTOMER DEVELOPMENT € millions Q3 ’23 vPY vPQ YTD ’23 vPY € millions Q3 ’23 vPY vPQ YTD ’23 vPY Core revenues 79.4 3% (7%) 242.0 9% Corporates 3,749 (8%) (5%) 3,749 (8%) Net interest income 70.8 5% (6%) 214.8 9% Real Estate 5,252 (21%) (
Slide 8: Real Estate Lending
REAL ESTATE LENDING PORTFOLIO DEVELOPMENT UNDERWRITING PRINCIPLES • Residential + Industrial / Logistics make up 65% of • Focus on risk-adjusted returns across all cycles … be 5.7 6.1 5.3 5.3 total portfolio … Main drivers of growth in portfolio since patient lender with business that meets our risk
Slide 9: Agenda
AGENDA 1 Q3 2023 HIGHLIGHTS & SEGMENT PERFORMANCE 2 DETAILED FINANCIALS & OUTLOOK 3 SUPPLEMENTAL INFORMATION October 17, 2023 BAWAG Group 9
Slide 10: P&L & Key Ratios
P&L & KEY RATIOS P&L | € millions Q3 ’23 vPY vPQ YTD ’23 vPY Key ratios Q3 ’23 vPY vPQ YTD ’23 vPY Net interest income 313.7 21% 1% 913.9 22% RoCE 23.2% 7.0pts 0.1pts 20.9% 5.5pts Net commission income 76.6 2% - 229.5 (2%) RoTCE 27.6% 8.3pts - 24.9% 6.4pts Core revenues 390.3 17% 1% 1,143.4 16% Net
Slide 11: Balance Sheet
BALANCE SHEET Balance sheet | € millions Q3 ’23 vPY vPQ YTD ’23 vPY Capital & RWA | € millions Q3 ’23 vPY vPQ YTD ’23 vPY Total assets 52,857 (6%) (1%) 52,857 (6%) Common equity 3,246 1% 2% 3,246 1% thereof Ø interest-bearing assets 41,902 (6%) (2%) 42,664 (3%) Tangible common equity 2,735 2% 3% 2,7
Slide 12: Funding Overview
FUNDING OVERVIEW Customer funding (avg.) … ~94% total funding € billion DEPOSITS Share of covered bonds • Retail & SME deposits €26.3b, thereof ~80% insured by deposit guarantee scheme …. Average 44.3 44.7 39.2 41.9 deposit size of €12k 35.5 • Corporates & Public Sector deposits €5.8b … largest shar
Slide 13: Core Revenues
CORE REVENUES Continued strong NII development … stable NCI € millions Net interest margin Net interest income (NII) up 1% vPQ … net interest Net commission income margin (NIM) at 2.97% in Q3 ’23 Net interest income 386.8 390.3 • Average customer loans down (3%) vPQ 366.3 • Increase in NII due to in
Slide 14: Operating Expenses
OPERATING EXPENSES Efficiency and simplification initiatives counter inflationary headwinds € millions Operating expenses CIR CIR at 31.3% in Q3 ’23 down (0.2pts) vPQ • Focused on absolute cost targets and proactive cost 118.0 118.1 119.4 120.7 121.9 management • Executed multiple initiatives focuse
Slide 15: Risk Costs
RISK COSTS Applying prudent approach while closely monitoring macro environment € millions Risk costs/average interest-bearing assets Q3 ’23 risk costs €22m... risk cost ratio 21bps • Ongoing strong credit performance … NPL ratio of 1.0% • ECL management overlay at €80m end Sep ’23 … single- case CR
Slide 16: 2023 Outlook and Targets
2023 OUTLOOK AND TARGETS Expecting to meet or exceed all 2023 targets P&L OUTLOOK 2023 FINANCIAL TARGETS Net interest income FY ’22: €1,021m >€1.2b Profit before tax >€875m Core revenues Earnings per share >€8.20 FY ’22: €1,330m >14% growth Dividend per share >€4.50 Operating expenses FY ’22: €475m
Slide 17: Agenda
AGENDA 1 Q3 2023 HIGHLIGHTS & SEGMENT PERFORMANCE 2 DETAILED FINANCIALS & OUTLOOK 3 SUPPLEMENTAL INFORMATION October 17, 2023 BAWAG Group AG 17
Slide 18: Details on Reserves
DETAILS ON RESERVES Continuing to remain prudent in current environment IFRS 9 MIGRATION – CUSTOMER SEGMENT ASSETS NON-PERFORMING (STAGE 3) LOANS, in € million Stage 3 4% 2% 5% 2% 5% 2% 6% 2% Stage 2 608 558 588 538 Stage 1 94% 93% 93% 92% Customer NPLs YE ´21 YE ´22 Q2 ’23 Q3 ’23 YE ´21 YE ´22 Q2 ´
Slide 19: Retail & SME
RETAIL & SME HOUSING LOANS CONSUMER & SME RISK MANAGEMENT FRAMEWORK Credit box tightened through 2022 to account for high Western Europe/US Other SME inflation impacting customer ability to pay 5% 7% 8% Stress resilient customers with strong debt-service Debit/charge cards 5% ratios and loan to inco
Slide 20: Corporates, Real Estate & Public Sector
CORPORATES, REAL ESTATE & PUBLIC SECTOR CORPORATES1) REAL ESTATE PUBLIC SECTOR1) By industry Services By underlying By funding & type Food & beverage Pharmaceuticals 5% Residential 3% Term loans (incl. SSD) 19% 10% 21% 7% 2% Office Bonds B-2-C Industrial/Logistics Short term lending Engineering & B-
Slide 21: Investment Book and Cash
INVESTMENT BOOK AND CASH € billion 6.4 8% 5.1 5.0 5.1 5.1 24% €5.1b 38% in % 30% 2020 2021 2022 Q2 ’23 Q3 ’23 % of interest- 16% 12% 12% 12% 12% AAA AA A BBB bearing assets PORTFOLIO DEVELOPMENT Q3 ’23 OVERVIEW • Portfolio increase during COVID period (2020) when market volatility presented very • P
Slide 22: Capital Distributions & Framework
CAPITAL DISTRIBUTIONS & FRAMEWORK >€2.2b CAPITAL MANAGEMENT FRAMEWORK capital earmarked*/returned to shareholders since IPO in 2017 1 DIVIDEND POLICY 2 EXCESS CAPITAL MANAGEMENT 3 EXCESS CAPITAL DISTRIBUTION €0.9 billion 55% payout Organic growth, M&A, Share buybacks and/ share buyback (net profit)
Slide 23: Regulatory Capital
REGULATORY CAPITAL Strong capital position Dividend CET1 capital (post dividend) CET1 ratio (post dividend) € billion 3.1 3.1 3.0 Capital distribution plans: 0.3 2.9 0.3 0.2 2.8 0.2 Dividend accrual of €278m for Q3 ’23 based on dividend 0.1 policy Share buyback of €175m approved by ECB on October 4,
Slide 24: Important Disclaimer
IMPORTANT DISCLAIMER: This presentation is prepared solely for the purpose of providing general information about BAWAG Group, Wiedner Gürtel 11, 1100 Wien. The information does not constitute investment or other advice or any solicitation to participate in investment business. This presentation doe
Slide 25: Definitions
DEFINITIONS Adjusted (all Q3 2022 and YTD 2022 numbers are presented adjusted) Net interest margin (NIM) Excluding the write-off of the City of Linz receivable in Q3 2022 Net interest income (NII)/average interest-bearing assets B/S leverage NPL cash coverage Total assets/common equity (excluding ea