Addiko Bank Ag · VIE:ADKO
Addiko Bank — Q3 2023 Earnings Presentation
49 slides from Addiko Bank's earnings presentation, Nov 8, 2023
Slide 1: 3Q23 Results Presentation
3Q23 Results Presentation Herbert Juranek (CEO) Edgar Flaggl (CFO) Tadej Krašovec (CRO) Ganesh Krishnamoorthi (CMO & CIO) Constantin Gussich (Investor Relations) 8 November 2023
Slide 2: Executive Summary & Business Update
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 3: Key Highlights 3Q23
Key Highlights 3Q23 • YTD 3Q23 net profit up 53% YoY to €30.1m (3Q22: €19.6m), 3Q23 EPS at €1.55 − Third quarter result 2023 after tax at €10.6m (2Q23: €9.8m, 1Q23: €9.7m) − Cost of Risk remained benign at -27bps (€-9.5m) Earnings • Return on average Tangible Equity at 5.5% YTD (3Q22 YTD: 3.4%) & As
Slide 4: Update on Key Developments in Acceleration Program
Update on Key Developments in Acceleration Program Key developments • Full year guidance for >10% focus book growth on track while customer deposits increased • Partnership universe further extended to Business >520 partners 1 Growth in Focus Areas • Romania expansion assessment according to time-pl
Slide 5: Growth in Focus on Track - While Keeping Prudent Underwriting
Growth in Focus on Track - While Keeping Prudent Underwriting Focus portfolio development Gross performing loans (€m) YoY • +11% YoY growth in focus book (+14% YoY +10% +11% excluding medium SME) 2,994 • +10% growth in focus book in the first 2,702 2,722 nine months of 2023 267 SME 2,446 319 299
Slide 6: Further Progress in Becoming the Leading Specialist Bank for Consumer & SME Customers
Further Progress in Becoming the Leading Specialist Bank for Consumer & SME Customers in the CSEE Region Business Update Improving dynamics YoY €m, digital users and clients in thousands YoY • Strong customer growth +51% YoY in cash loans 1,152 +14% • Solid new business (+10%YoY) delivered with 1,
Slide 7: Financials & Risk Update
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 8: Financial Performance 3Q23 at a Glance
Financial Performance 3Q23 at a Glance Financial Performance 3Q23 3Q22 4Q22 1Q23 2Q23 3Q23 5.80% YTD, €m 77.0 5.30% 72.9 3Q22 YoY 67.8 4.80% 64.0 64.2 17.7 17.0 NCI 15.6 4.30% Net interest interest income income 167.5 129.3 +29.5% 19.3 17.1 3.90% 3.80% 3.55% 3.80% Net feeNet & commission fee & NIM 5
Slide 9: Capital Position Remains Strong
Capital Position Remains Strong Capital development fully-loaded % CET1/TCR, YTD, RWA in €m Addiko Group 3,481 3,507 3,559 3,640 RWAFL 0.22% 0.04% 0.15% 0.20% 0.01% 0.30% 0.05% 0.01% 0.44% CET1/ 20.0% 20.0% 19.9% 19.5% TCR fully-loaded 2022 OCI Reg. & RWA 1Q231 OCI Reg. & RWA 1H231 OCI Reg. & RWA 3Q
Slide 10: Balanced NPE Development in First Nine Months of 2023
Balanced NPE Development in First Nine Months of 2023 NPE volume & ratio development Quarterly NPE formation & exit €m, YTD €m, QTD 4Q22 1Q23 2Q23 3Q23 NPE ratio 3.5% 2.9% 2.4% 2.2% NPE ratio Formation 28.3 19.9 21.0 19.8 (on-balance loans)1 4.7% 4.0% 3.3% 3.1% 2.5 13.2 1.1 1.5 1.1 7.2 8.0 8.6 244 1
Slide 11: Cost of Risk at a Glance
Cost of Risk at a Glance Credit loss expenses on financial assets 3Q23 YTD, €m, positive number for release Impairments (negative) (5.7) 4.5 • 3Q23 credit loss expenses (0.3) Releases (positive) of €-9.5m YTD resulting in -0.27% cost of risk (on net (9.2) (9.5) loans, not annualised): (8.0) − Consum
Slide 12: ESG Action Plan on Track - Key Developments in 2023
ESG Action Plan on Track - Key Developments in 2023 ✓ Addiko has published its first Environment ESG strategy ✓ ESG governance has been strengthened, inclusion of ESG in the Bank´s internal policies ✓ Further improvement of risk identification and materiality assessment of climate-related and other
Slide 13: Environment
Environment Addiko helps its employees & customers to become more climate neutral Initiative Goal Development in 2023 11.5% electric & hybrid cars Electromobility • Replacing the car-fleet with the electric & hybrid cars ordered Office space • Reducing office spaces and number of branches 2.2% reduc
Slide 14: Social
Social Addiko supports social equality on all levels Initiative Goal Development in 2023 48% women on executive and Diversity and • Further strengthen diversity and inclusion (gender, age and middle management inclusion national equality) positions, 23 different nationalities • Hybrid work, celebrat
Slide 15: Governance
Governance Sound principles of governance in Addiko’s DNA Initiative Goal Development in 2023 • ESG regularly discussed at management board level Corporate bodies & • Update guidelines to include ESG-related matters First ESG strategy published code of conduct • Whistleblowing & complaints to addres
Slide 16: Outlook & Wrap-Up
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 17: Outlook 2023 and Wrap-Up
Outlook 2023 and Wrap-Up Outlook 2023 confirmed in challenging environment (as upgraded in 1H23): 3Q23 (YTD) – Gross performing loans: c. €3.5b with >10% growth in focus ➔ €3.49bn with 10% – Net Banking Income: up by c. 15% positively impacted by the rising interest ➔ 17.9% YoY Outlook curve, despit
Slide 18: Additional Materials
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 19: Management Team Since June 2021
Management Team Since June 2021 Herbert Juranek Edgar Flaggl Tadej Krašovec Ganesh Krishnamoorthi Chief Executive Officer Chief Financial Officer Chief Risk Officer Chief Market, IT & Digitalisation Officer Chair of the Management Board Member of the Management Board Member of the Management Board M
Slide 20: Addiko at a Glance
Addiko at a Glance Overview of Addiko Operating as one region - one bank 3Q23, % of Group Assets (rounded) ✓ Fully licensed bank with HQ in Austria, focused 100% on Central ✓ and South Eastern Europe ✓ Addiko Bank AG is regulated by the Austrian Financial Market Austria ✓ (5%2) Authority (“FMA”)1 an
Slide 21: Economic Environment
Economic Environment GDP forecasts1 (%, real growth) Forecasts (based on June 2023) • A possible recession across the 2023E 2023E 2024E 2024E 2025E 2026E entire euro area, a deteriorating 2022 Base Pessimistic Base Pessimistic Base Base international environment and Slovenia 5.4% 1.4% (1.0%) 2.5% (1
Slide 22: Addiko's Commitment to the Sustainable Development Goals
Addiko’s Commitment to the Sustainable Development Goals ESG in Addiko - It is the little things that count Environment Social Governance Making ESG work through Vision Carbon footprint reduction Committed to the good good governance Addiko helps its employees Sound principles of Addiko supports soc
Slide 23: Balance Sheet Composition
Balance Sheet Composition Assets Liabilities and Equity 3Q23, €b 3Q23, €b 6.2 6.2 Other Liabilities Other Assets 0.2 0.2 ✓• Liquid balance sheet 0.1 Due to Credit ✓• Strong deposit base Institutions - LCR ratio: 331% (YE22: 307%) 0.6 Direct - Loan-deposit ratio Deposits (customer) : 68.5% (YE22: ✓•
Slide 24: Acceleration of Growth in Focus Areas Consumer & SME
Acceleration of Growth in Focus Areas Consumer & SME Gross performing loans in focus segments Gross yield by segment1 Gross loans of focus segments as % of total gross performing loans 3Q23 YTD QTD QTD QTD Full year 3Q23 2Q23 1Q23 2022 yield yield yield yield Consumer 7.0% 7.2% 7.1% 7.0% 6.9% % in f
Slide 25: Consumer and SME Lending Development
Consumer and SME Lending Development Consumer (Micro shifted to SME as of 1Q21) SME €m, YTD €m, YTD 1,668 1,606 1,525 1,535 1,562 1,476 1,298 1,326 1,389 1,431 1,243 1,342 1,312 1,164 1,177 1,188 1,188 1,106 1,059 1,040 1,057 1,028 928 791 774 Gross 646 Performing Loans 2016 2017 2018 2019 2020 2021
Slide 26: Digital Lending Platforms in All Major Markets
Digital Lending Platforms in All Major Markets WebLoan (Consumer & SME) Group Application Processing System – GAPS (Consumer) Simple entry point for loan requests with Simple branch loan Application Processing System instant initial offer including CDE (Credit Decision Engine) Achievements 3Q23 Achi
Slide 27: Digital Transformation
Digital Transformation Digital capabilities YTD +13% YoY Registered Mobile Banking 118 150 188 230 251 258 284 +3% Mobile banking users (vs. PQ) Users (ths.)2 +11% YoY +2% Digital users (vs. PQ) 295 273 266 246 210 25% Bank@Work 177 (1H23: 26%, 1Q23: 27%, YE22: 26%, 3Q22: 24%) 149 35% Digital consum
Slide 28: Financials: Financial Performance 3Q23 in Detail
Financials: Financial Performance 3Q23 in Detail Key financials P&L in €m YTD QTD •1 Operating result up 40.3% YoY to €78.1m: 3Q23 (YTD) 3Q22 (YTD) +/- PY 3Q23 2Q23 +/- PQ − Net banking income up 17.9% YoY driven Net interest income 167.5 129.3 29.5% 59.3 55.9 6.1% by strong development in Consumer
Slide 29: Financials: Key Performance Drivers 3Q23
Financials: Key Performance Drivers 3Q23 Net interest income Net fee and commission income €m €m NIM 297bp 367bp 355bp 380bp 390bp % of 43% 30% 30% 30% 30% +29.5% NII 167.5 +13.6% 129.3 +13.9% +7.1% +6.1% -9.2% +9.3% +4.2% 52.2 55.9 59.3 55.4 50.3 15.6 17.0 17.7 3Q22 (YTD) 3Q23 (YTD) 1Q23 (QTD) 2Q23
Slide 30: Financials: Interest Income Dynamics
Financials: Interest Income Dynamics Interest income by quarter1 Gross yield by quarter2 €m 72.7 67.3 3Q22 4Q22 1Q23 2Q23 3Q23 6.8% 6.8% 7.0% 7.1% 7.2% 61.0 19.1 Consumer 17.1 6.4% 6.6% 7.5% 7.6% 7.8% 53.1 new new new new new Other 13.8 business business business business business 49.2 1.8 Public &
Slide 31: Financials: Breakdown of Other Interest Income
Financials: Breakdown of Other Interest Income Treasury interest income by quarter €m • HTC bond portfolio strategy: interest income from the instruments held under the Hold-to-Collect (HTC) bond portfolio strategy in EU Other interest entities. This portfolio is steered as the HTC bond portfolio, b
Slide 32: Financials: Interest Expense Dynamics
Financials: Interest Expense Dynamics Interest expense by quarter Cost of funding by quarter1 €m 13.4 1.3 11.4 3Q22 4Q22 1Q23 2Q23 3Q22 1.4 Deposits - 2.0 Network 0.30% 0.40% 0.50% 0.55% 0.70% 8.7 3.0 1.1 0.4 Direct Treasury 0.9 0.23% 0.74% 1.52% 1.76% 2.12% Deposits 2.4 Deposits – 6.0 2.1 Credit 0.
Slide 33: Financials: Commission Income Dynamics
Financials: Commission Income Dynamics Net fee and commission income by quarter Key highlights €m 19.3 • Net fee and commission income continued recovery 0.9 17.1 17.7 in 3Q23 mainly driven by higher card business, Non-Focus 17.0 0.6 0.7 bancassurance and remaining FX/DCC business and Other 15.6 0.9
Slide 34: Financials: Other Income & Other Result
Financials: Other Income & Other Result Other income breakdown (YTD) €m 3Q22 3Q23 Deposit guarantee -4.6 -4.5 Higher bank levies and other taxes while lower frontloaded 1 1 Bank levies and other taxes -1.9 -3.1 regulatory charges from the recovery and resolution fund Recovery and Resolution Fund -0.
Slide 35: Financials: Development of Operating Expenses
Financials: Development of Operating Expenses Operating expenses development by quarter Other Administrative expenses €m 3Q23 YTD, €m Other1 5.5 5.0 12% Advertising 11% 2.5 Total: 23.4 €46.2m IT Legal & Advisory 5% 51% 45.0 9.7 43.3 43.7 43.1 41.9 21% 4.3 Premises Expenses Depreciation 4.2 4.3 4.2 A
Slide 36: Financials: Balance Sheet
Financials: Balance Sheet Detailed balance sheet overview (YTD) €m 2019 2020 2021 2022 3Q23 Cash reserves 899.4 1,156.3 1,361.7 1,382.9 1,278.9 Investment Portfolio 1,135.1 965.5 1,044.8 1,084.4 1,222.0 Financial assets held for trading 38.5 36.4 32.6 22.8 31.8 Investment securities 1,096.6 929.0 1,
Slide 37: Financials: Income Statement
Financials: Income Statement Detailed income statement overview (YTD) €m 2019 2020 2021 2022 3Q22 3Q23 Interest income calculated using the effective interest method 207.4 194.3 185.5 192.9 141.2 188.7 Other interest income 3.4 2.6 2.2 2.3 0.9 12.2 Interest expense (27.8) (22.3) (18.2) (18.7) (12.8)
Slide 38: Financials: Breakdown by Entity
Financials: Breakdown by Entity 3Q23 YTD Addiko Bank d.d., Addiko Bank d.d., Addiko Bank d.d., Addiko Bank a.d., Addiko Bank a.d., Addiko Bank A.D., (€m, IFRS) Zagreb Ljubljana Banja Luka Sarajevo Beograd Podgorica Net interest income 53.0 42.6 15.7 14.5 30.2 9.1 Net commission income 16.1 10.8 6.9
Slide 39: Risk: Strong Risk Management Framework
Risk: Strong Risk Management Framework Non-performing loan portfolio (YTD) NPE Volumes, 1,229 761 606 404 277 244 194 163 161 159 153 €m NPE Coverage Ratio1 61.7% 67.5% 67.0% 75.4% 73.8% 73.6% 71.9% 75.4% 77.0% 78.0% 79.2% (Ex-Collateral) 14.3% NPE Ratio2 9.2% 8.1% 5.6% 3.9% 3.5% 2.9% 2.4% 2.4% 2.4%
Slide 40: Risk: Robust Asset Quality in Portfolios
Risk: Robust Asset Quality in Portfolios Focus Non-Focus Consumer SME €m, rounded €m, rounded €m, rounded 1,968 > 90 1,909 1,886 days 1,858 1,872 39 > 90 1,829 33 46 40 61-90 37 33 days 1,748 1,777 44 34 26 77 days 32 61-90 45 68 45 days 59 73 31-60 31-60 days days < 30 < 30 > 90 days days days 61-9
Slide 41: Risk: Provision Coverage Evolution
Risk: Provision Coverage Evolution Stage 1, 2 and 3 assets1 Business segments: Stage 1 & 2 (Performing) coverage1 €m 3Q23 (YTD) ECL coverage (YTD) By Segment 1H22 1Q22 2022 3Q22 4,427 4,509 4,408 4,362 4,382 153 183 163 161 159 Focus Focus 1.4% 1.6% 1.7% 1.7% 1.9% 413 413 434 409 448 Consumer 1.9% 2
Slide 42: Risk: NPE Formation and Exit Dynamics
Risk: NPE Formation and Exit Dynamics Quarterly NPE formation & exit - group level Consumer SME Mortgages Large Corporates Public Finance €m €m €m €m €m Net -4.8 0.0 -1.6 -2.7 0.8 0.5 -0.7 0.3 -15.3 -2.3 -0.6 -2.4 -1.4 0.0 0.0 0.0 0.8 0.0 0.0 -0.2 12.6 11.6 11.5 13.2 1.1 0.0 0.0 10.1 7.2 8.0 8.6 1.1
Slide 43: Risk: NPE and Cost of Risk Development
Risk: NPE and Cost of Risk Development Focus Non-Focus3 €m Consumer SME €m €m NPE Coverage Ratio (Excl. 78.8% 79.3% 78.7% 80.2% 64.1% 76.3% 68.6% 76.3% 72.4% 81.2% 79.9% 82.5% Collateral)1 6.6% 6.1% 5.3% 5.2% 4.0% 4.0% 3.7% NPE Ratio2 3.2% 3.5% 3.2% 3.1% 3.0% 2021 3Q22 2022 3Q23 2021 3Q22 2022 3Q23
Slide 44: Risk: NPE and Cost of Risk Development by Business Segment
Risk: NPE and Cost of Risk Development by Business Segment Consumer SME Mortgages Large Corporates Public Finance €m €m €m €m €m NPE Coverage Ratio1 78.8% 78.7% 80.2% 64.1% 68.6% 76.3% 77.6% 77.4% 80.2% 53.5% 91.0% 91.2% 40.6% 61.8% 65.8% 9.4% 5.8% 5.3% 5.4% 5.1% 4.5% 4.5% 4.0% 3.7% NPE Ratio2 3.2%
Slide 45: Risk: CHF Loans Significantly Managed Down
Risk: CHF Loans Significantly Managed Down CHF portfolio overview CHF status across countries €m % of Total 5.5% 4.4% 3.4% 2.0% 1.7% 1.3% 1.1% 1.0% 1.0% 1.0% • Several legislative initiatives on CHF loans were launched, but ultimately Credit Risk Exposure 1 rejected because the parliamentary constit
Slide 46: Capital: Capital Requirements & Guidance Going Forward
Capital: Capital Requirements & Guidance Going Forward Capital requirements as of 2023 (excluding P2G) • Unchanged at 3.25% (no change expected for 2024) P2R • At least 56.25% must be held in CET1 (2023) capital and at least 75% in Tier 1 capital 19.5% 19.5% 19.5% • Yearly review as part of SREP • S
Slide 47: Capital: Further Details
Capital: Further Details Breakdown of capital position1 Fully-loaded 21.6% 21.3% Addiko is using the standardised approach for 20.0% 19.9% 19.5% its RWA calculation with most of its RWAs stemming from credit risk Expiration of IFRS 9 transitional capital rules as of 1 January 2023 leading to no diff
Slide 48: Capital: Credit Risk RWA in Focus vs. Non-Focus
Capital: Credit Risk RWA in Focus vs. Non-Focus Risk weighting for focus portfolio is in line with overall contribution to loan book Credit risk RWA Credit risk RWA: breakdown by segment1 3Q23, €m 3Q23, €m Public Large Finance Corporate 3,111 11617 Mortgages 227 Corporate 544 Center Consumer Total:
Slide 49: Disclaimer
Disclaimer THESE RESULTS AND STATEMENTS (HEREINAFTER REFERRED TO AS “MATERIALS”) WERE CAREFULLY PREPARED BY ADDIKO BANK AG. HOWEVER, THE MATERIALS HAVE NOT BEEN INDEPENDENTLY VERIFIED. THEREFORE, ADDIKO BANK AG MAKES NO REPRESENTATION AND GIVES NO WARRANTY, NEITHER IMPLIED NOR EXPRESSED, AND ASSUMES