Erste Group Bank Ag · VIE:EBS
Erste Group Bank — H1 2012 Earnings Presentation
94 slides from Erste Group Bank's earnings presentation, Jul 31, 2012
Slide 1: Erste Group – H1 2012 results presentation
Erste Group – H1 2012 results presentation 31 July 2012 Solid bottom line performance complemented by improved capital position Andreas Treichl, CEO, Erste Group Manfred Wimmer, CFO, Erste Group Gernot Mittendorfer, CRO, Erste Group
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: H1 2012 executive summary – EBA capital ratio reached 9.9%
H1 2012 executive summary – EBA capital ratio reached 9.9% (ex retained earnings) − Net profit of EUR 453.6m in H1 2012 impacted by positive and negative one-off items: − Gain on buyback of tier 1 and tier 2 instruments in the amount of EUR 413.2m (pretax) − Goodwill adjustment of EUR 210m (pretax)
Slide 4: Presentation topics
Presentation topics − Business performance − Update on Hungary & Romania − Credit risk − Funding − Capital − Outlook − Appendix − Segments − Asset quality − CEE local consolidated results − About Erste Group − Shareholder structure H1 2012 results 31 July 2012 4 Vienna
Slide 5: Operating environment: macro trends – CEE continued to outgrow the euro zone
Operating environment: macro trends – CEE continued to outgrow the euro zone in Q2 2012 − Economic sentiment has deteriorated and triggered Real GDP growth in CEE downward revisions for GDP growth in CEE 8 2012 euro zone avg. -0.2% − AT: slowing down, but continuously outgrowing euro zone 6 4.2 3.3
Slide 6: Operating environment: macro trends – Encouraging market signals despite slowdown
Operating environment: macro trends – Encouraging market signals despite slowdown − CEE debt markets finding favour with investors 5 year CDS as the region has remained largely unscathed Mar 2009 from the euro-zone debt crisis 754 − Strong demand from foreign investors especially for Czech and Polis
Slide 7: Key financial indicators – Cash EPS & ROE increased yoy
Key financial indicators – Cash EPS & ROE increased yoy YTD cost income ratio YTD net interest margin 57.3% 52.5% 3.06% 2.99% 51.7% 51.9% 2.92% 2.83% 49.4% 2.73% 1-6 08 1-6 09 1-6 10 1-6 11 1-6 12 1-6 08 1-6 09 1-6 10 1-6 11 1-6 12 Cash earnings per share** Cash return on equity** 2.10 15.2% 14.7% 2
Slide 8: Income statement (IFRS) H1 2012
Income statement (IFRS) H1 2012 – Pre-tax profit down driven by weaker net trading result in EUR million 1-6 12 1-6 11 Change Comment Net interest income 2,651.7 2,703.9 (1.9%) Reduction in non-core business Risk provisions for loans (981.8) (920.8) 6.6% High provisions in RO in H1 2012 Net fee and
Slide 9: Income statement (IFRS) Q2 2012
Income statement (IFRS) Q2 2012 – Buybacks and goodwill adjustment affected net income in EUR million Q2 12 Q1 12 Change Comment Net interest income 1,314.8 1,336.9 (1.7%) Reduction in non-core business Risk provisions for loans (401.2) (580.6) (30.9%) HU provison shift, improvement in AT, CZ & SK N
Slide 10: Balance sheet (IFRS) – Sustained RWA reduction in non-core business
Balance sheet (IFRS) – Sustained RWA reduction in non-core business in EUR million Jun 12 Dec 11 Change Comment Cash and balances with central banks 5,737 9,413 (39.1%) Loans and advances to credit institutions 13,311 7,578 75.7% Excess liquidity deposited with central banks Loans and advances to cu
Slide 11: Balance sheet (IFRS) – Loan-to-deposit ratio improved
Balance sheet (IFRS) – Loan-to-deposit ratio improved to 109.6% in EUR million Jun 12 Dec 11 Change Comment Deposits by banks 24,844 23,785 4.5% LTRO inflow Customer deposits 122,252 118,880 2.8% Growth mainly in AT, CZ & SK Debt securities in issue 30,254 30,782 (1.7%) Lower funding requirements in
Slide 12: Segment highlights – CZ, AT & SK strong, restructuring in RO and HU
Segment highlights – CZ, AT & SK strong, restructuring ongoing in RO and HU Top segment performers in H1 2012: Czech Republic Slovakia EBOe in EUR million 1-6 12 1-6 11 Change 1-6 12 1-6 11 Change 1-6 12 1-6 11 Change Operating income 792 853 (7.2%) 268 279 (4.0%) 472 486 (2.9%) Operating expenses (
Slide 13: Presentation topics
Presentation topics − Business performance − Update on Hungary & Romania − Credit risk − Funding − Capital − Outlook − Appendix − Segments − Asset quality − CEE local consolidated results − About Erste Group − Shareholder structure H1 2012 results 31 July 2012 13 Vienna
Slide 14: Hungary update – Operating in a challenging environment
Hungary update – Operating in a challenging environment − Hungary has started official talks with IMF/EU in July 2012 − Enactment of the amendment of the Central Bank Act − New fiscal package has also played a significant role in starting negotiations − Combination of new taxes and spending cuts − R
Slide 15: Romania update – Structural reforms to continue despite political turmoil
Romania update – Structural reforms to continue despite political turmoil − New government committed to continue Key economic indicators reforms based on the agreement with the IMF- European Commission 8 7.3% 9% − Political actions led to criticism from EU 6% in EUR thousand 6 2.5% 6.5 6.4 6.4 5.8 3
Slide 16: Romania update – BCR expected to return to profitability in 2013
Romania update – BCR expected to return to profitability in 2013 − Key priority 1: improve asset quality − Improved workout, restructuring and recovery capabilities for substandard and non-performing loans − Reduction of high stock of non-performing loans, evaluation of NPL sales in the retail and c
Slide 17: Presentation topics
Presentation topics − Business performance − Update on Hungary & Romania − Credit risk − Funding − Capital − Outlook − Appendix − Segments − Asset quality − CEE local consolidated results − About Erste Group − Shareholder structure H1 2012 results 31 July 2012 17 Vienna
Slide 18: Loan book review – Limited demand reflected in loan book
Loan book review – Limited demand reflected in loan book − Customer loans decreased by 0.6% ytd mainly Customer loans by main segments on reduction in Hungary & International Business 150 134.1 135.2 134.7 134.8 133.9 − Growth of retail portfolio in Slovakia and secured 120 18.7 19.3 19.8 19.8 19.2
Slide 19: Asset quality review – NPL coverage improved slightly year-to-date
Asset quality review – NPL coverage improved slightly year-to-date − New NPL formation mainly driven by real estate Erste Group: NPL ratio vs NPL coverage business and Romania − Reduced NPL sales in Q2 2012: EUR 70m 30% 63.9% 65% 61.9% − NPL coverage ratio up to 61.2% ytd 25% 60.6% 61.0% 61.2% 20% 6
Slide 20: Asset quality review – Segment round-up
Asset quality review – Segment round-up: HU and RO remained challenging − Retail & SME/Austria: positive trend continued NPL ratios in key segments − Risk costs remained at low level − NPL coverage ratio remained at comfortable level 30% 26.2% while low risk share increased in both EBOe and 24.6% 25
Slide 21: Asset quality review – Risk costs increased driven by Romania & GCIB
Asset quality review – Risk costs increased driven by Romania & GCIB − Slovakia: good quality loan growth continued Risk costs in key segments − Risk costs further decreased − New NPL inflows mainly in real estate business 10% − Slight loan growth driven by retail segment 8% 6.32% 6% − Czech Republi
Slide 22: Drill-down on selected asset classes – Exposure to peripheral Europe
Drill-down on selected asset classes – Consistent reduction of exposure to peripheral Europe Total net exposure of Erste Group (incl. savings banks) to selected European countries: in EUR million Sovereign Bank Other Total net exposure Dec 10 Dec 11 Jun 12 Dec 10 Dec 11 Jun 12 Dec 10 Dec 11 Jun 12 D
Slide 23: Presentation topics
Presentation topics − Business performance − Update on Hungary & Romania − Credit risk − Funding − Capital − Outlook − Appendix − Segments − Asset quality − CEE local consolidated results − About Erste Group − Shareholder structure H1 2012 results 31 July 2012 23 Vienna
Slide 24: Funding update – Customer deposits are core to our business model
Funding update – Customer deposits are core to our business model − Customer deposits grew by 2.8% ytd Customer deposit trends by main segments − Most visible inflows in Czech Republic, Slovakia and EBOe − FX effects reversed compared to Q1 12 with CZK and RON 125 120.8 121.5 118.9 122.3 122.3 weake
Slide 25: Funding update – Successful long-term issuance in H1 2012
Funding update – Successful long-term issuance in H1 2012 − Short-term funding needs very well covered Evolution of funding mix − Investment in highly liquid assets led to continuously rising 100% 3.2% 3.2% 3.0% 3.0% 2.2% collateral coverage of short-term funding needs 90% 5.8% 8.5% 9.0% 8.2% 8.0% 8
Slide 26: Presentation topics
Presentation topics − Business performance − Update on Hungary & Romania − Credit risk − Funding − Capital − Outlook − Appendix − Segments − Asset quality − CEE local consolidated results − About Erste Group − Shareholder structure H1 2012 results 31 July 2012 26 Vienna
Slide 27: Capital position – Further improvement in capital position
Capital position – Further improvement in capital position − EBA capital ratio at 9.9% as of June 2012 (excluding Core tier 1 ratio retained earnings for H1 2012) (total risk) 10.4% − EBA capital ratio including retained earnings at 9.2% 9.4% 10.4% as of June 2012 8.3% − CET1 (Basel 2.5) ratio: 10.4
Slide 28: Presentation topics
Presentation topics − Business performance − Update on Hungary & Romania − Credit risk − Funding − Capital − Outlook − Appendix − Segments − Asset quality − CEE local consolidated results − About Erste Group − Shareholder structure H1 2012 results 31 July 2012 28 Vienna
Slide 29: Conclusion – Outlook
Conclusion – Outlook − Erste Group's core markets expected to show a mixed economic performance in 2012 − While Austria, Romania and Slovakia are projected to post some economic growth, Erste Group’s other core CEE markets are expected to contract in 2012 − In line with the weakening economic outloo
Slide 30: Presentation topics
Presentation topics − Business performance − Update on Hungary & Romania − Credit risk − Funding − Capital − Outlook − Appendix − Segments − Asset quality − CEE local consolidated results − About Erste Group − Shareholder structure H1 2012 results 31 July 2012 30 Vienna
Slide 31: Segment review – Core segments affected by one-off items
Segment review – Core segments affected by one-off items Retail & SME GCIB Group Markets Corporate Center Total group in EUR million 1-6 12 1-6 11 1-6 12 1-6 11 1-6 12 1-6 11 1-6 12 1-6 11 1-6 12 1-6 11 Net interest income 2,192.1 2,326.7 257.2 261.8 107.3 65.6 95.1 49.8 2,651.7 2,703.9 Risk provisi
Slide 32: Core segment – Austria
Core segment – Austria EBOe’s and savings banks net profit up yoy Savings banks EB Oesterreich Austria in EUR million 1-6 12 1-6 11 1-6 12 1-6 11 1-6 12 1-6 11 Net interest income 476.7 492.2 312.2 321.5 788.9 813.7 Risk provisions for loans and advances (110.8) (123.1) (54.3) (65.2) (165.1) (188.3)
Slide 33: Core segment Central and Eastern Europe (1)
Core segment Central and Eastern Europe (1) – Diverging trends in operating performance… Czech Republic Romania Slovakia Hungary in EUR million 1-6 12 1-6 11 1-6 12 1-6 11 1-6 12 1-6 11 1-6 12 1-6 11 Net interest income 570.6 590.0 284.3 354.9 211.0 221.3 175.9 189.1 Risk provisions for loans and ad
Slide 34: Core segment Central and Eastern Europe (2)
Core segment Central and Eastern Europe (2) – …and risk cost levels across the region continued Croatia Serbia Ukraine CEE in EUR million 1-6 12 1-6 11 1-6 12 1-6 11 1-6 12 1-6 11 1-6 12 1-6 11 Net interest income 128.9 127.9 18.1 18.2 14.4 11.6 1,403.2 1,513.0 Risk provisions for loans and advances
Slide 35: Segment Retail & SME – Positive performance in core business hurt by HU & RO
Segment Retail & SME – Positive performance in core business hurt by HU & RO − Operating result down as reduced operating expenses in EUR million 1-6 12 1-6 11 Change did not fully offset decrease in operating income Net interest income 2,192.1 2,326.7 (5.8%) − Operating income decreased by 6.3% yoy
Slide 36: Segment Retail & SME – Loan book analysis
Segment Retail & SME – Loan book analysis Segment Retail & SME - Segment Retail & SME - Customer loans by Basel II customer segment Customer loans by currency 120 114.8 115.2 114.4 114.4 114.2 100% 2.0% 2.2% 2.2% 2.0% 2.2% 6.7 6.3 6.7 6.7 6.4 14.9% 14.4% 13.7% 13.1% 12.5% 80% 90 21.6% 21.0% 21.6% 21
Slide 37: Segment GCIB excl IB
Segment GCIB excl IB – Net profit declined on higher risk costs and lower fees − Operating result declined on lower fee income − NII was up on increased volume and improved margins in the in EUR million 1-6 12 1-6 11 Change large corporate business Net interest income 215.1 210.0 2.4% − Fee income d
Slide 38: International Business (GCIB) – Continuing reduction of non-core business
International Business (GCIB) – Continuing reduction of non-core business − Targeted reduction in business and close-out of CDS portfolio visible in International Business division’s in EUR million 1-6 12 1-6 11 Change result Net interest income 42.1 51.7 (18.6%) − Operating income, especially net t
Slide 39: Segment GCIB (incl IB) – Loan book analysis
Segment GCIB (incl IB) – Loan book analysis Segment GCIB - Segment GCIB - Customer loans by currency Customer loans by Basel II customer segment 30 100% 3.7% 3.5% 4.5% 4.9% 5.4% 1.2% 1.2% 1.7% 1.6% 1.5% 5.7% 5.7% 5.7% 6.3% 6.0% 80% 10.1% 9.9% 9.3% 8.3% 8.2% 19.3 19.8 19.8 in EUR billion 18.7 19.2 20
Slide 40: Segment Group Markets
Segment Group Markets – Despite difficult market conditions net profit increased − Operating result improved on increased net interest income and strict cost management in EUR million 1-6 12 1-6 11 Change − NII increased on shift of interest income on trading securities in Net interest income 107.3
Slide 41: Segment Corporate Center
Segment Corporate Center – Buy-backs and goodwill adjustment drove other result − What is in the Corporate Center? − Business areas which cannot be allocated to relevant business in EUR million 1-6 12 1-6 11 Change lines, one-offs, amortisation of customer relationships and Net interest income 95.1
Slide 42: Retail & SME: Austria/EB Oesterreich
Retail & SME: Austria/EB Oesterreich – Net profit up on lower risk costs & positive other result − Operating result decreased year-on-year − NII decreased as a result of the lower interest rate environment in EUR million 1-6 12 1-6 11 Change − Customer deposits increased by 3.4% ytd Net interest inc
Slide 43: Retail & SME: Austria/EB Oesterreich – Loan book analysis
Retail & SME: Austria/EB Oesterreich – Loan book analysis Segment EB Oesterreich - Segment EB Oesterreich - Customer loans by Basel II customer segment Customer loans by currency 30 27.5 28.0 28.2 28.1 28.2 100% 1.7% 2.0% 1.9% 1.8% 1.9% 1.7 1.7 1.8 1.8 1.8 16.0% 15.4% 14.4% 14.2% 13.6% 80% in EUR bi
Slide 44: Retail & SME: Austria/Savings banks – Solid operating performance
Retail & SME: Austria/Savings banks – Solid operating performance − Operating result decreased year-on-year due to weaker net interest income in EUR million 1-6 12 1-6 11 Change − NII decreased as a result of the lower interest rate environment Net interest income 476.7 492.2 (3.1%) and reduced marg
Slide 45: Retail & SME: Austria/Savings banks – Loan book analysis
Retail & SME: Austria/Savings banks – Loan book analysis Segment Savings Banks - Segment Savings banks - Customer loans by Basel II customer segment Customer loans by currency 40 37.7 37.7 37.6 37.4 37.6 100% 3.2% 3.5% 3.4% 3.4% 3.6% 1.6 1.6 1.6 1.6 1.6 20.1% 19.6% 18.9% 18.5% 17.1% 30 80% in EUR bi
Slide 46: Retail & SME: Czech Republic
Retail & SME: Czech Republic – Lower risk costs drove increase in net profit − Operating result decreased on lower operating income driven by weaker trading result yoy in EUR million 1-6 12 1-6 11 Change − NII slightly down due to currency depreciation but remained Net interest income 570.6 590.0 (3
Slide 47: Retail & SME: Czech Republic – Loan book analysis
Retail & SME: Czech Republic – Loan book analysis Segment Czech Republic - Segment Czech Republic - Customer loans by Basel II customer segment Customer loans by currency 20 18.1 17.9 17.8 17.2 17.3 100% 0.2% 3.3% 0.3% 3.4% 0.3% 3.7% 0.2% 3.4% 0.2% 3.8% 0.8 0.6 0.7 0.6 0.7 16 5.5 5.6 5.5 5.5 80% 5.3
Slide 48: Retail & SME: Romania
Retail & SME: Romania – Restructuring efforts reflected in financial results − Operating result decreased on lower NII − Lower operating expenses and strong trading result in EUR million 1-6 12 1-6 11 Change softened decline Net interest income 284.3 354.9 (19.9%) − RON depreciation, lower margins a
Slide 49: Retail & SME: Romania – Loan book analysis
Retail & SME: Romania – Loan book analysis Segment Romania - Segment Romania - Customer loans by currency Customer loans by Basel II customer segment 15 100% 1.3% 1.7% 1.7% 1.7% 1.7% 12 11.1 11.0 11.2 11.1 11.0 80% in EUR billion 1.5 1.1 1.3 1.2 1.0 60.4% 59.9% 60.6% 61.1% 61.3% 9 60% 4.3 4.4 4.4 4.
Slide 50: Retail & SME: Slovakia
Retail & SME: Slovakia – Continuous solid operating and bottom line performance − Operating result down against strong H1 2011 − NII slightly declined mainly on changed investment strategy in EUR million 1-6 12 1-6 11 Change − Fees were stable year-on-year Net interest income 211.0 221.3 (4.7%) − Ne
Slide 51: Retail & SME: Slovakia – Loan book analysis
Retail & SME: Slovakia – Loan book analysis Segment Slovakia - Customer loans by Basel II customer segment Segment Slovakia - Customer loans by currency 8 6.3 6.3 100% 0.4% 0.4% 0.3% 0.1% 0.2% 5.9 6.0 6.2 6 0.1 0.2 0.3 0.2 0.1 80% in EUR billion 1.4 1.3 1.2 1.3 1.4 0.3 0.3 0.3 0.3 0.3 60% 4 99.6% 99
Slide 52: Retail & SME: Hungary – Adapting to the new business environment
Retail & SME: Hungary – Adapting to the new business environment − Operating result was up 1.2% in local currency, but decreased in EUR as a consequence of HUF in EUR million 1-6 12 1-6 11 Change depreciation Net interest income 175.9 189.1 (7.0%) − NII declined on portfolio reduction as effect of F
Slide 53: Retail & SME: Hungary – Loan book analysis
Retail & SME: Hungary – Loan book analysis Segment Hungary - Segment Hungary - Customer loans by currency Customer loans by Basel II customer segment 10 100% 0.1% 0.1% 0.2% 0.2% 0.2% 7.9 7.7 19.7% 20.5% 22.0% 22.3% 21.2% 8 0.4 7.1 0.4 6.9 6.8 80% 0.4 0.4 in EUR billion 2.3 0.4 6 2.3 2.1 2.1 2.0 60%
Slide 54: Retail & SME: Croatia
Retail & SME: Croatia – Solid operating result impaired by increase in risk costs − Operating result improved on slightly higher NII and lower operating expenses in EUR million 1-6 12 1-6 11 Change − NII improved on increased margins in SME business; currency- Net interest income 128.9 127.9 0.8% ad
Slide 55: Retail & SME: Croatia – Loan book analysis
Retail & SME: Croatia – Loan book analysis Segment Croatia - Segment Croatia - Customer loans by currency Customer loans by Basel II customer segment 5.8 5.8 5.9 6.0 6.0 6 100% 0.2% 0.3% 0.3% 0.2% 0.3% 0.5 0.6 0.7 0.7 0.7 14% 14% 13% 13% 13% 80% in EUR billion 4 2.5 2.4 2.5 2.5 2.5 60% 66% 66% 67% 6
Slide 56: Retail & SME: Serbia
Retail & SME: Serbia – Operating performance and net result improved in H1 12 − Operating result up on higher net fee income and positive net trading result in EUR million 1-6 12 1-6 11 Change − NII flat in EUR, but up 8.4% in LCY on loan growth Net interest income 18.1 18.2 (0.5%) − Margins in reta
Slide 57: Retail & SME: Serbia – Loan book analysis
Retail & SME: Serbia – Loan book analysis Segment Serbia - Segment Serbia - Customer loans by currency Customer loans by Basel II customer segment 600 100% 0.9% 0.9% 0.9% 0.9% 0.9% 4.1% 3.9% 3.8% 3.8% 3.8% 461.7 480.3 485.6 482.4 481.0 2.2 2.5 2.8 3.4 3.6 80% in EUR million 400 274.9 286.5 277.9 276
Slide 58: Retail & SME: Ukraine – Higher loss due to weak net trading result
Retail & SME: Ukraine – Higher loss due to weak net trading result − Operating result down on weak trading in EUR million 1-6 12 1-6 11 Change − NII increased on higher revenues from interest-bearing securities Net interest income 14.4 11.6 24.1% − Net fee income improved on the back of strengthened
Slide 59: Retail & SME: Ukraine – Loan book analysis
Retail & SME: Ukraine – Loan book analysis Segment Ukraine - Segment Ukraine - Customer loans by currency Customer loans by Basel II customer segment 800 100% 1.3% 1.2% 1.5% 1.8% 1.7% 600 80% in EUR million 479 497 470 441 0.0 3.2 50 440 3.1 73.0% 69.7% 0.0 51 3.0 60% 80.2% 80.2% 75.6% 400 64 141 15
Slide 60: Presentation topics
Presentation topics − Business performance − Update on Hungary & Romania − Credit risk − Funding − Capital − Outlook − Appendix − Segments − Asset quality − CEE local consolidated results − About Erste Group − Shareholder structure H1 2012 results 31 July 2012 60 Vienna
Slide 61: Asset quality analysis – Key definitions
Asset quality analysis – Key definitions − Key asset quality indicators are based Risk category Agency ratings on on-balance sheet customer loans Low risk AAA to BB / Aaa to Ba − Reported NPL and NPL coverage ratios Management attention B exclude collateral Substandard CCC to C / − Broad NPL definit
Slide 62: Asset quality analysis – Loan book overview
Asset quality analysis – Loan book overview Customer loans by Basel II customer segments Customer loans by industries 150 134.1 135.2 134.7 134.8 133.9 7.8 7.6 8.2 8.0 7.6 6.0% 120 4.0% 3.1% 2.9% 5.0% 38.8% in EUR billion 61.0 62.4 62.1 62.5 62.3 5.1% 90 60 13.4 13.4 13.2 13.0 12.9 4.7% 7.0% 30 51.9
Slide 63: Asset quality analysis – Loan book by segments
Asset quality analysis – Loan book by segments Low risk Mgmt attention Substandard Non-performing Total loan book Risk provisions NPL coverage NPL ratio Jun 12 Dec 11 Jun 12 Dec 11 Jun 12 Dec 11 Jun 12 Dec 11 Jun 12 Dec 11 Jun 12 Dec 11 Jun 12 Dec 11 Jun 12 Dec 11 Retail & SME 81,726 80,952 18,007 1
Slide 64: Asset quality analysis – Loan book by region
Asset quality analysis – Loan book by region (country of origination) Low risk Mgmt attention Substandard Non-performing Total loan book in EUR million Jun 12 Dec 11 Jun 12 Dec 11 Jun 12 Dec 11 Jun 12 Dec 11 Jun 12 Dec 11 Share of total Share of total Core market 89,698 89,007 19,871 21,768 4,147 4,
Slide 65: Asset quality analysis – Total exposure by region Jun 12
Asset quality analysis – Total exposure by region (country of origination) Jun 12 Management Non- Credit risk Low risk Substandard in EUR million attention performing exposure Core market 148,386 23,348 4,942 11,754 188,429 Austria 78,011 9,156 1,568 3,392 92,128 Croatia 6,214 2,076 465 1,159 9,914
Slide 66: Asset quality analysis – Total exposure by region Dec 11
Asset quality analysis – Total exposure by region (country of origination) Dec 11 Management Non- Credit risk Low risk Substandard in EUR million attention performing exposure Core market 142,947 25,055 4,889 10,822 183,714 Austria 76,513 9,114 1,686 3,316 90,629 Croatia 5,954 2,417 466 982 9,818 Ro
Slide 67: Asset quality analysis – Financial assets
Asset quality analysis – Financial assets Financial assets by country of origination Financial assets by currency (30 Jun 2012: EUR 41.3 bn) (30 Jun 2012: EUR 41.3 bn) 14.6% 1.1% 27.9% 3.4% 5.6% 2.6% 1.6% 3.4% 8.0% 3.5% 4.8% 21.1% 3.5% 21.6% 64.0% 13.5% AT CZ SK US DE HU RO IT GB Other EUR CZK USD H
Slide 68: Balance sheet drill-down – Trading assets
Balance sheet (IFRS) drill-down – Trading assets as of 30 Jun 2012 − YTD flat in EUR m Sovereign Banks Other Total Trading CZ 1,468 29.1% 1 0.3% 6 1.2% 1,475 24.8% SK 510 10.1% 0 0.0% 0 0.0% 510 8.6% RO 645 12.8% 2 0.5% 5 0.9% 652 10.9% HU 1,435 28.4% 1 0.2% 37 7.3% 1,473 24.7% AT 23 0.5% 238 59.7%
Slide 69: Balance sheet drill-down – Financial assets at fair value
Balance sheet (IFRS) drill-down – Financial assets at fair value as of 30 Jun 2012 − Decline of close to EUR 1bn due to the reduction in non-core assets in EUR m Sovereign Banks Other Total FV CZ 110 76.4% 144 42.0% 12 3.5% 267 31.5% SK 28 19.4% 1 0.3% 10 2.8% 39 4.6% RO 6 3.8% 0 0.0% 2 0.4% 7 0.8%
Slide 70: Balance sheet drill-down – Financial assets available for sale
Balance sheet (IFRS) drill-down – Financial assets available for sale as of 30 Jun 2012 − Investment of surplus liquidity mainly in Austria, Slovakia, Czech Republic and in preparation for Basel 3 liquidity requirements in EUR m Sovereign Banks Other Total AfS CZ 1,533 11.9% 257 5.1% 108 2.4% 1,898
Slide 71: Balance sheet drill-down – Financial assets held-to-maturity
Balance sheet (IFRS) drill-down – Financial assets held-to-maturity as of 30 Jun 2012 − Investment of surplus liquidity mainly in Czech Republic, Austria, Slovakia, and Romania; preparation for Basel 3 liquidity requirements in EUR m Sovereign Banks Other Total HTM CZ 6,319 41.8% 351 19.7% 25 2.5% 6
Slide 72: Off-balance sheet items – Exclusively related to customer business
Off-balance sheet items – Exclusively related to customer business in EUR million 201206 201203 2011 2010 Guarantees and warranties 6,861 6,842 6,920 7,826 of which: in relation to corporate business 6,076 6,084 6,170 Undrawn lines, loan commitments, promissory nots 14,794 18,570 18,579 19,446 of wh
Slide 73: Presentation topics
Presentation topics − Business performance − Update on Hungary & Romania − Credit risk − Funding − Capital − Outlook − Appendix − Segments − Asset quality − CEE local consolidated results − About Erste Group − Shareholder structure H1 2012 results 31 July 2012 73 Vienna
Slide 74: Key local entity data – Ceska sporitelna
Key local entity data (IFRS, consolidated) – Ceska sporitelna Key figures and ratios 1-6 12 1-6 11 Rate and margin environment Cost/income ratio 41.9% 40.8% Return on equity 19.8% 19.7% 80% 71.9% 8% 67.3% 67.3% 69.8% 69.7% Jun 12 Dec 11 Change Erste Group stake 97.99% Solvency ratio 13.4% 13.1% 60%
Slide 75: Key local entity data – Banca Comerciala Romana (BCR)
Key local entity data (IFRS, consolidated) – Banca Comerciala Romana (BCR) Key figures and ratios 1-6 12 1-6 11 Rate and margin environment Cost/income ratio 40.2% 40.9% Return on equity (15.0% ) 4.4% 150% 134.1% 135.5% 134.6% 136.2% 140.0% 15% Jun 12 Dec 11 Change Erste Group stake 93.27% 12% Solve
Slide 76: Key local entity data – Slovenska sporitelna
Key local entity data (IFRS, consolidated) – Slovenska sporitelna Key figures and ratios 1-6 12 1-6 11 Rate and margin environment Cost/income ratio 40.4% 38.2% Return on equity 18.8% 21.2% 100% 8% Jun 12 Dec 11 Change 83.4% 83.6% 79.5% 77.3% 77.9% Erste Group stake 100.0% 100.0% 80% Solvency ratio
Slide 77: Key local entity data – Erste Bank Hungary
Key local entity data (IFRS, consolidated) – Erste Bank Hungary Key figures and ratios 1-6 12 1-6 11 Rate and margin environment Cost/income ratio 36.1% 40.5% Return on equity 0.7% (13.1% ) 270% 12% Jun 12 Dec 11 Change Erste Group stake 99.94% 191.8% 10% 184.4% 177.5% 177.6% Solvency ratio 15.3% 17
Slide 78: Key local entity data – Erste Bank Croatia
Key local entity data (IFRS, consolidated) – Erste Bank Croatia Key figures and ratios 1-6 12 1-6 11 Rate and margin environment Cost/income ratio 39.3% 41.0% Return on equity 9.0% 9.7% 180% 148% 6% Jun 12 Dec 11 Change 150% 154% 155% 145% Erste Group stake 69.25% 150% 3.9% 4.1% 4.1% Solvency ratio
Slide 79: Key local entity data – Erste Bank Serbia
Key local entity data (IFRS, consolidated) – Erste Bank Serbia Key figures and ratios 1-6 12 1-6 11 Rate and margin environment Cost/income ratio 62.6% 67.7% Return on equity 8.0% 5.3% 120% 20% 103.8% 100.4% 105.3% Jun 12 Dec 11 Change 96.7% 98.4% Erste Group stake 80.49% 100% Solvency ratio 23.8% 2
Slide 80: Key local entity data – Erste Bank Ukraine
Key local entity data (IFRS, consolidated) – Erste Bank Ukraine Key figures and ratios 1-6 12 1-6 11 Rate and margin environment Cost/income ratio 115.0% 86.6% 225% Return on equity na 0.8% 500% 25% 20.3% 23.3% Jun 12 Dec 11 Change Erste Group stake 100.0% 400% 228% 20% Solvency ratio 27.4% 22.0% 30
Slide 81: Presentation topics
Presentation topics − Business performance − Update on Hungary & Romania − Credit risk − Funding − Capital − Outlook − Appendix − Segments − Asset quality − CEE local consolidated results − About Erste Group − Shareholder structure H1 2012 results 31 July 2012 81 Vienna
Slide 82: Strategy – A real customer need is the reason for all business
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 local Large, local corporate Focu
Slide 83: Strategy – Customer banking in the eastern part of the EU
Strategy – Customer banking in the eastern part of the EU Austria Czech Republic Slovakia − Leading retail and corporate bank Clients: 3.2m Clients: 5.2m Clients: 2.4m with 16.9 m customers in 8 Retail loans: 19.3% Retail loans: 24.0% Retail loans: 26.3% Retail dep.: 18.9% Retail dep.: 28.0% Retail
Slide 84: Erste Group's intangible asset split
Erste Group’s intangible asset split – Intangibles declined on BCR goodwill adjustment in Q2 Intangibles composition 6 5 4.6 in EUR billion 0.6 4 0.4 3.5 3.5 3.5 0.2 3.2 0.3 0.6 0.6 0.6 3 0.5 0.3 0.3 0.6 0.3 0.5 0.2 0.2 0.2 0.3 0.5 0.5 0.2 2 0.3 0.5 0.5 0.4 0.4 0.4 0.3 0.3 0.3 0.4 1 1.8 0.3 1.1 1.1
Slide 85: Erste Group historic financials – Quarterly income statement (IFRS)
Erste Group historic financials – Quarterly income statement (IFRS) in EUR million Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Net interest income 1,368.0 1,397.5 1,343.4 1,302.0 1,401.9 1,430.2 1,434.9 1,336.9 1,314.8 Net fee and commission income 469.5 452.4 472.5 455.2 450.9 445.9 435.2
Slide 86: Erste Group historic financials – Quarterly balance sheet (IFRS)
Erste Group historic financials – Quarterly balance sheet (IFRS) in EUR million Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Cash and balances with central banks 6,540 5,030 5,839 5,043 6,605 5,743 9,413 5,480 5,737 Loans and advances to credit institutions 16,408 14,464 12,496 16,
Slide 87: Quarterly segment reporting – Overview of main segments
Quarterly segment reporting – Overview of main segments in EUR million Retail & SME GCIB Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Net interest income 1,190.8 1,212.6 1,177.0 1,105.1 1,087.0 134.1 132.2 149.2 128.2 129.0 Risk provisions for loans and advances (404.1) (880.4) (388.0
Slide 88: Quarterly segment reporting – Austria sub-segments
Quarterly segment reporting – Austria sub-segments in EUR million EB Oesterreich Savings banks Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Net interest income 168.6 180.3 164.1 161.7 150.5 258.1 249.8 273.6 240.9 235.8 Risk provisions for loans and advances (30.2) (27.5) (8.7) (31.4)
Slide 89: Quarterly segment reporting – CEE sub-segments (1)
Quarterly segment reporting – Central and Eastern Europe sub-segments (1) CEE - Details in EUR million Czech Republic Romania Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Net interest income 305.6 310.3 283.0 282.6 288.0 168.9 162.7 154.7 153.0 131.3 Risk provisions for loans and adva
Slide 90: Quarterly segment reporting – CEE sub-segments (2)
Quarterly segment reporting – Central and Eastern Europe sub-segments (2) CEE - Details in EUR million Croatia Serbia Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Net interest income 66.6 66.8 67.1 64.1 64.8 9.6 8.9 9.3 8.7 9.4 Risk provisions for loans and advances (27.2) (21.9) (37.
Slide 91: Group statistical data – Development of key financial ratios
Group statistical data – Development of key financial ratios in EUR million 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Jun 12 Tier 1 Capital pursuant to Austrian Banking Act 1,753 2,125 2,337 3,800 3,912 4,377 5,112 6,185 6,674 7,448 11,450 12,219 11,909 11,685 Total own funds
Slide 92: Presentation topics
Presentation topics − Business performance − Update on Hungary & Romania − Credit risk − Funding − Capital − Outlook − Appendix − Segments − Asset quality − CEE local consolidated results − About Erste Group − Shareholder structure H1 2012 results 31 July 2012 92 Vienna
Slide 93: Shareholder structure
Shareholder structure – Total number of shares: 394,568,647 By investor By region Caixa Bank Other 9.7% 2.9% ERSTE Stiftung Continental 24.2% Europe 24.8% Austria Savings banks 47.1% 4.4% Employees 2.1% UK & Ireland 5.6% Institutional Retail investors investors 5.2% 54.4% North America 22.9% Free fl
Slide 94: Investor Relations contacts
Investor Relations contacts − Erste Group Bank AG, Graben 21, 1010 Vienna Fax +43 (0)5 0100-13112 E-mail: investor.relations@erstegroup.com Internet: http://www.erstegroup.com/investorrelations http://twitter.com/ErsteGroupIR http://www.slideshare.net/Erste_Group Reuters: ERST.VI Bloomberg:EBS AV Da