BAWAG Group AG · VIE:BG
BAWAG — Q2 2022 Earnings Presentation
34 slides from BAWAG's earnings presentation, Jul 21, 2022
Slide 1: BAWAG Group Q2 2022 Results
BAWAG Group Q2 2022 Results 21 July 2022 21 July 2022 August 2021 || BAWAG BAWAG Group Group AG AG
Slide 2: Highlights Q2 2022
Highlights Q2 2022 - Q2 ’22: Net profit of €134m, EPS of €1.50, and RoTCE of 19.0% EARNINGS - Pre-provision profit of €213m (+18% vPY) and CIR at 35.7% - Risk costs of €30m, of which €6m related to ECL management overlay that stands at €70m - Average customer loans +5% vPQ and +13% vPY BALANCE SHEET
Slide 3: Financial performance
Financial performance P&L | € millions Q2'22 vPY vPQ H1'22 vPY Balance Sheet & Capital | € million Q2'22 Q1'22 vPQ vPY Core revenues 327 8% 1% 651 9% Total assets 55,029 54,475 1% 2% Operating income 331 10% 2% 657 9% Interest-bearing assets (average) 44,530 42,099 6% 9% Operating expenses (118) (2%
Slide 4: Capital development and distribution
Capital development and distribution QUARTERLY CAPITAL DEVELOPMENT 15.0% (0.2%) 15.2% 0.7% (0.3%) (0.3%) e (0.7%) CAPITAL DEVELOPMENT f (1.5%) 12.7% -a Gross capital generation of ~+70bps in Q2 ‘22 / 120bps in H1 ‘22 CET1 Target: 12.25% -b RWA increase due to organic business growth and FX Capital r
Slide 5: Balance sheet & asset quality overview
Balance sheet & asset quality overview € billion 55 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 22 Real Estate with blended LTV < 60% , NPL ratio b 70bps, and over
Slide 6: Funding, capital & earnings
Funding, capital & earnings € billion 55 HIGHLY PROFITABLE BUSINESS MODEL €28b retail deposits … 75% total deposit funding … No negative rates or fees assessed to our Based on interest bearing assets a retail customers as a result of the negative interest rate environment 193 186 Mortgage and public
Slide 7: Retail & SME
Retail & SME Financial performance Customer development € millions Q2'22 Q2'21 vPY Q1'22 vPQ € millions Q2'22 Q2'21 vPY Q1'22 vPQ Core revenues 254.1 225.8 13% 245.8 3% Housing loans 16,109 15,181 6% 15,890 1% Net interest income 184.1 163.5 13% 171.7 7% Consumer and SME 6,244 5,069 23% 5,492 14% Ne
Slide 8: Corporates, Real Estate & Public Sector
Corporates, Real Estate & Public Sector Financial performance Customer development € millions Q2'22 Q2'21 vPY Q1'22 vPQ € millions Q2'22 Q2'21 vPY Q1'22 vPQ Core revenues 72.2 70.2 3% 72.7 (1%) Corporates 4,243 3,586 18% 3,900 9% Net interest income 64.2 61.7 4% 64.8 (1%) Real Estate 6,487 4,888 33%
Slide 9: Agenda
Agenda 1 Q2 2022 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 21 July 2022 | BAWAG Group AG 9
Slide 10: P&L & key ratios
P&L & key ratios P&L | € millions Q2'22 Q2'21 vPY Q1'22 vPQ Key ratios Q2'22 Q2'21 vPY Q1'22 vPQ Net interest income 249.5 231.6 8% 242.0 3% Return on Common Equity 16.0% 13.8% 2.2pts 13.3% 2.7pts Net commission income 77.8 70.1 11% 81.4 (4%) Return on Tangible Common Equity 19.0% 16.4% 2.6pts 15.9%
Slide 11: Balance sheet
Balance sheet Balance sheet | € million Q2'22 Q2'21 vPY Q1'22 vPQ Capital & RWA | € million Q2'22 Q2'21 vPY Q1'22 vPQ Customer loans 37,176 32,487 14% 35,132 6% Common equity 3,351 3,504 (4%) 3,340 - Securities and bonds 5,698 6,628 (14%) 5,646 1% Tangible common equity 2,820 2,966 (5%) 2,808 - Cred
Slide 12: P&L details – core revenues
P&L details – core revenues Increasing core revenues in Q2 ‘22 € million 315.8 323.4 327.3 301.7 305.5 Net interest income (NII) up 3% vPQ … net interest margin (NIM) at 72.5 81.4 77.8 2.25% in Q2’22 70.1 71.7 NCI ‒ Increase in assets in Q2 ’22 … average customer loans up 5% vPQ and average interest
Slide 13: P&L details – operating expenses
P&L details – operating expenses Continued efficiency measures countering inflationary pressures € million Core operating expenses 121.8 121.2 CIR at 35.7% in Q2 ’22 down (4.4pts) vPY and (1.3pts) vPQ 120.4 120.4 ‒ Significant inflationary pressure offset by several operational initiatives launched
Slide 14: P&L details – risk costs
P&L details – risk costs Applying prudent approach while closely monitoring macro environment € million Risk costs / average interest-bearing assets (Risk costs-management overlay) / average interest-bearing assets ECL management overlay 30.3 Q2 ‘22 risk costs €30m and 27bps risk cost ratio 5.9 23.8
Slide 15: 2022 Outlook
2022 Outlook Updated P&L composition while return targets reconfirmed despite changed geopolitical environment P&L OVERVIEW RETURN TARGETS previous updated Core revenues FY ’21: €1,220m >4% growth >7% growth Operating expenses: FY ’21: €485m ~2% net cost-out ~2% net cost-out RoTCE Regulatory charges
Slide 16: Agenda
Agenda 1 Q2 2022 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 21 July 2022 | BAWAG Group AG 16
Slide 17: Current environment
Current environment BAWAG‘S BUSINESS PRINCIPLES BAWAG‘S EXPOSURE & ACTIONS TAKEN 1 Focus on mature, developed and stable markets (Austria, Germany, Switzerland, Netherlands (DACH/NL), Western Europe and USA - No direct exposure to Russia, Ukraine or Belarus reflecting our strategic focus towards DAC
Slide 18: Acquisition of assets of Sberbank Europe
Acquisition of assets of Sberbank Europe - On 1 March 2022 Sberbank Europe AG (now in liquidation) was prohibited from continuing business operations - BAWAG Group purchased a consumer loan portfolio in Germany and a bond portfolio OVERVIEW - Purchase price was directly paid to the Austrian deposit
Slide 19: 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% 885 875 862 4% 4% 4% 811 Stage 2 8% 254 254 254 254 City of Linz (CoL) 94% 94% 94% 90% Stage 1 631 608 621 557 Customer NPLs YE '1
Slide 20: Corporates, Real Estate & Public Sector
Corporates, Real Estate & Public Sector CORPORATES* REAL ESTATE PUBLIC SECTOR* By industry By underlying By funding & type Services Residential Food&Beverage 2%5% 15% 15% Office 24% Pharmaceuticals 14% B-2-C Mixed 6% €6.5 41% €4.3 17% Engineeing & B-2-B Industrial/Logistics €5.1 5% billion billion b
Slide 21: Investment book and Cash
Investment book and Cash Q1 ‘22 Q2 ‘22 Cash & Cash equivalent 6% 7% As of Q2 ‘22, cash and cash equivalents (mainly money at central banks) at €10.6b ... TLTRO III of €6.4b €11.1b -€ 0.5b €10.6b Investment book primarily serves as liquidity book of the Bank in % in % Securities portfolio “under-inve
Slide 22: Regulatory Capital
Regulatory Capital Strong capital position CET1 Capital and ratios € billion dividend CET1 capital (post dividend) CET1 ratio (post dividend) Capital distribution plans: 3.4 3.3 - €135m dividends accrued for H1 ’22 based on dividend policy 3.1 of 55% payout ratio of net income 0.5 0.1 0.3 2.8 2.8 0.
Slide 23: City of Linz overview
City of Linz overview Scenario Analysis for potential outcomes of interim decision of Supreme Court Receivable of €254 million on balance sheet as of 30 June 2022 Valid contract Invalid contract Receivable fully provisioned in CET1 through prudential filter in 2020, i.e. no impact on capital regardl
Slide 24: Agenda
Agenda 1 Q2 2022 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 21 July 2022 | BAWAG Group AG 24
Slide 25: BAWAG Group franchise
BAWAG Group franchise FRANCHISE Multi-brand and multi-channel commercial bank with approximately 2.2 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 26: 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 5% Profit before tax 500 573 604 371 600 as of 30 June 2022 EuroStoxx Banks Index (SX7P) (19%) Stoxx 600 Banks Index (SX7E) (28%) Net income 449 4
Slide 27: 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 28: 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 29: 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 30: 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 31: 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) PEAK BANCORP INC DEPFA BANK PLC 1) 1.7 million CARDS Bausparkasse AG Signed deal to acquire Signed deal to acquire €1.6 billion ASSE
Slide 32: Investor relations calendar
Investor relations calendar UPCOMING ROADSHOWS, CONFERENCES AND FINANCIAL EVENTS SHAREHOLDER STRUCTURE 21 July Q2 2022 virtual roadshow 21 September BofA 27th Annual Financials CEO Conference 2022 100% Free float 6 October Start of quiet period 20 October Results Q3 2022 20 October Q3 roadshow Top i
Slide 33: 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 34: Definitions
Definitions 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 equity (excluding AT1 capital, dividends and buyback of €325m (1.1.2022)) / number of shares Total reserves / Ass