BAWAG Group AG · VIE:BG
BAWAG — Q3 2022 Earnings Presentation
32 slides from BAWAG's earnings presentation, Oct 19, 2022
Slide 1: BAWAG Group Q3 2022 Results
BAWAG Group Q3 2022 Results 19 October 2022 19 October August 20212022 | BAWAG | BAWAG Group AG Group AG
Slide 2: Highlights Q3 2022
Highlights Q3 2022 - Q3 ’22 incorporates full write-off of City of Linz receivable of €254m in risk cost (€190m after tax) - Q3 ’22 (including City of Linz): Net loss of €(58)m and EPS €(0.66) EARNINGS - Adjusted Q3 ’22 (excluding City of Linz): Net profit of €132m, EPS of €1.49, and RoTCE of 19.3%
Slide 3: Financial performance
Financial performance Q3'22 Q3'22 YTD '22 YTD'22 P&L | € million reported adjusted vPY reported adjusted vPY Balance Sheet & Capital | € million Q3'22 Q2'22 vPQ vPY Core revenues 335 335 10% 986 986 9% Total assets 55 997 55 029 2% 3% Operating income 336 336 9% 993 993 9% Interest-bearing assets (a
Slide 4: Capital development and distribution
Capital development and distribution QUARTERLY CAPITAL DEVELOPMENT CAPITAL DEVELOPMENT 13.3% 0.1% (0.1%) -a Gross capital generation ~+60bps in Q3 ‘22 / +180bps YTD ‘22 (0.3%) 13.0% 0.6% -b Write-off fully provisioned in regulatory capital in prior years 12.7% f CET1 Target: -c OCI primarily related
Slide 5: Retail & SME
Retail & SME Financial performance Customer development € million Q3'22 Q3'21 vPY Q2'22 vPQ € million Q3'22 Q3'21 vPY Q2'22 vPQ Core revenues 255.8 229.8 11% 254.1 1% Housing loans 16 160 15 602 4% 16 109 - Net interest income 190.5 165.4 15% 184.1 3% Consumer and SME 6 348 5 204 22% 6 244 2% Net co
Slide 6: Corporates, Real Estate & Public Sector
Corporates, Real Estate & Public Sector Financial performance Customer development € million Q3'22 Q3'21 vPY Q2'22 vPQ € million Q3'22 Q3'21 vPY Q2'22 vPQ Core revenues 77.4 73.1 6% 72.2 7% Corporates 4 085 4 118 (1%) 4 243 (4%) Net interest income 67.5 64.8 4% 64.2 5% Real Estate 6 607 5 569 19% 6
Slide 7: Agenda
Agenda 1 Q3 2022 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 19 October 2022 | BAWAG Group AG 7
Slide 8: P&L & key ratios
P&L & key ratios Q3'22 Q3'22 Q3'22 Q3'22 P&L | € million reported adjusted Q3'21 vPY vPQ Key ratios reported adjusted Q3'21 vPY vPQ Net interest income 260.0 260.0 233.8 11% 4% Return on Common Equity (7.1%) 16.2% 13.9% 2.3pts 0.2pts Net commission income 75.0 75.0 71.7 5% (4%) Return on Tangible Co
Slide 9: Balance sheet
Balance sheet Balance sheet | € million Q3'22 Q3'21 vPY vPQ Capital & RWA | € million Q3'22 Q3'21 vPY vPQ Customer loans 36 705 34 004 8% (1%) Common equity 3 207 3 595 (11%) (4%) Securities and bonds 5 816 6 495 (10%) 2% Tangible common equity 2 678 3 059 (12%) (5%) Credit institutions and cash 12
Slide 10: P&L details – core revenues
P&L details – core revenues Increasing core revenues in Q3 ‘22 € million 335.0 Net interest income (NII) up 4% vPQ … net interest margin (NIM) at 323.4 327.3 2.31% in Q3’22 305.5 315.8 75.0 ‒ Average customer loans flat in Q3 ’22 72.5 81.4 77.8 NCI 71.7 ‒ Bank positioned for rising interest rate env
Slide 11: P&L details – operating expenses
P&L details – operating expenses Continued efficiency measures countering inflationary pressures € million Core operating expenses 121.8 CIR at 35.1% in Q3 ’22 down (4.1pts) vPY and (0.6pts) vPQ 120.4 ‒ Significant inflationary pressure offset by several operational 120.4 initiatives launched over t
Slide 12: P&L details – risk costs
P&L details – risk costs Applying prudent approach while closely monitoring macro environment € million … excluding the write-off of City of Linz receivable in Q3 ‘22 Risk costs / average interest-bearing assets 35.3 (Risk costs-management overlay) / average interest-bearing assets ECL management ov
Slide 13: 2022 Outlook
2022 Outlook Confirming outlook … revenue outlook revised upwards P&L OVERVIEW* RETURN TARGETS* previous updated Core revenues FY ’21: €1,220m >7% growth ~9% growth Operating expenses: FY ’21: €485m ~2% net cost-out ~2% net cost-out RoTCE Regulatory charges FY ’21: 16.1% >17% FY ’21: €52m ~€55m expe
Slide 14: Agenda
Agenda 1 Q3 2022 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 19 October 2022 | BAWAG Group AG 14
Slide 15: 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 €m Stage 3 2% 2% 2% 2% 885 862 Stage 2 4% 4% 4% 811 8% 254 254 631 City of Linz 254 631 608 631 Customer NPLs 557 Stage 1 94% 94% 94% 90% YE '19 YE '20 Q
Slide 16: Retail & SME
Retail & SME HOUSING LOANS CONSUMER & SME CURRENT ENVIRONMENT - Tightened credit box in Q1 ‘22 after Western Europe Overdrafts & Credit cards having taken similar measures during Finance leasing/ 6% 10% factoring the pandemic 27% - Further tightened to account for high 31% €6.3 inflation impacting c
Slide 17: Corporates, Real Estate & Public Sector
Corporates, Real Estate & Public Sector CORPORATES* REAL ESTATE PUBLIC SECTOR* By industry By underlying By funding & type Services Residential 8% Food&Beverage 2%5% 15% 6% 21% Pharmaceuticals 15% Office B-2-C Mixed €4.2 €6.6 42% €4.6 5% 17% Engineeing & B-2-B Industrial/Logistics billion billion bi
Slide 18: Investment book and Cash
Investment book and Cash Q2 ‘22 Q3 ‘22 Cash & Cash equivalent 7% 8% As of Q3 ‘22, cash and cash equivalents (mainly money at central banks) at €12.1b ... TLTRO III of €6.4b €10.6b +€ 1.5b €12.1b Investment book primarily serves as liquidity book of the Bank in % in % Securities portfolio “under-inve
Slide 19: Regulatory Capital
Regulatory Capital Strong capital position CET1 Capital and ratios € billion dividend CET1 capital (post dividend) CET1 ratio (post dividend) 3.1 3.3 0.3 2.8 3.0 0.1 2.8 0.2 0.1 0.1 Capital distribution plans: 14.7% 15.0% - €207m dividends accrued for YTD ’22 based on dividend policy 13.1% 12.7% 13.
Slide 20: Balance sheet & asset quality overview
Balance sheet & asset quality overview € billion 56 80% secured lending with €16b of mortgages SOLID ASSET QUALITY and a (Austria, Germany, Netherlands and Western DISCIPLINED UNDERWRITING Europe) with a blended LTV in the mid-60’s 23 Real Estate with blended LTV < 60% , NPL ratio b 79bps, and over
Slide 21: Funding, capital & earnings
Funding, capital & earnings € billion 56 HIGHLY PROFITABLE BUSINESS MODEL €28b retail deposits … ~80% total deposit funding … No negative rates or fees assessed to Based on interest bearing assets a our retail customers as a result of the negative interest rate environment 194 186 Mortgage and publi
Slide 22: Agenda
Agenda 1 Q3 2022 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 19 October 2022 | BAWAG Group AG 22
Slide 23: BAWAG Group franchise
BAWAG Group franchise FRANCHISE Multi-brand and multi-channel commercial bank with approximately 2.1 million customers across our core markets DELIVERING Mid-teens Return on Tangible Common Equity (RoTCE) ~14% versus sector of ~5% since 2012 RESULTS BEST-IN-CLASS Cost-income ratio (CIR) of 39.5% in
Slide 24: Our performance since IPO
Our performance since IPO in € million 2017 2018 2019 2020 2021 Total shareholder return development since IPO Indexed as of 24 October 2017; BAWAG Group 16% Profit before tax 500 573 604 371 600 as of 30 September 2022 EuroStoxx Banks Index (SX7P) (19%) Stoxx 600 Banks Index (SX7E) (29%) Net income
Slide 25: BAWAG transformation over the past decade
BAWAG transformation over the past decade CAGR >10% PRINCIPLES OF OUR TRANSFORMATION 711 743 653 653 Pre-provision profit 592 526 FIRM CULTURE: Our company values and culture are defined by accountability, (€ million) 429 502 meritocracy, and embracing change 323 279 2.35 2.32 2.24 2.30 2.29 2.27 2.
Slide 26: The BAWAG culture
The BAWAG culture Leadership & Embracing Change Accountability, Meritocracy & Inclusion - Actions speak louder than words - Our greatest asset is our human capital - We value integrity, character and work ethic - Investing in developing and empowering our people - Experienced Senior Leadership Team
Slide 27: Strategy focused on execution and continuous improvement
Strategy focused on execution and continuous improvement GROWTH IN Core markets: Austria, Germany, Switzerland, Netherlands (DACH/NL region), Western Europe and the United States CORE MARKETS Criteria for core markets: Fiscal position (single A or better sovereign rating), legal infrastructure, and
Slide 28: M&A … Strategic Optionality
M&A … Strategic Optionality M&A HISTORY SINCE 2015 M&A TARGETS & UNDERWRITING CRITERIA MARKETS CUSTOMER FRANCHISE EFFICIENCY ✓ 11 acquisitions closed - Focus on core markets … - Focus towards Retail & SME - Operational turn-around One acquisition in US signed ✓ early 2022 DACH/NL region, Western Eur
Slide 29: M&A track record .. 11 acquisitions completed (since 2015)
M&A track record .. 11 acquisitions completed (since 2015 ) EXPERIENCED WITH BOLT-ON ACQUISITIONS TO BUILD OUT CUSTOMER FRANCHISE 2015 2016 2017 2018 2019 2021 2022 2) DEPFA BANK PLC PEAK BANCORP INC 1) 1.7 million CARDS Bausparkasse AG DEPFA bank plc Signed deal to acquire €1.6 billion ASSETS >500K
Slide 30: Investor relations calendar
Investor relations calendar UPCOMING ROADSHOWS, CONFERENCES AND FINANCIAL EVENTS SHAREHOLDER STRUCTURE 5% shares bought back 19 October Results Q3 2022 19-20 October Roadshow London 89.1m shares Week of 14th of Roadshow US November 18 January 2023 Kepler Chevreux Conference Shares bought back Shares
Slide 31: 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 32: Definitions
Definitions Adjusted NPL ratio excluding the write-off of the City of Linz receivable NPL exposure (economic) / exposure B/S leverage Pre-provision profit Total assets / IFRS equity Operating income less operating expenses (excluding regulatory charges) Book value per share Reserve ratio Common equi