BAWAG Group AG · VIE:BG
BAWAG — Debt Investor Presentation (August 2021)
49 slides from BAWAG's debt investor presentation, August 2021
Slide 1: Green Finance Framework – Investor Presentation
Green Finance Framework – Investor Presentation August 2021 August 2021 | BAWAG Group AG 1
Slide 2: BAWAG Group Overview and Q2 2021 Highlights
BAWAG Group Overview and Q2 2021 Highlights Sustainability @ BAWAG Group Green Finance Framework Funding & Liquidity Detailed Financials August 2021 | BAWAG Group AG 2
Slide 3: BAWAG Group
BAWAG Group COMPANY PROFILE CAPITAL MANAGEMENT TARGETS Focused on organic One of Austria‘s leading banking groups with and inorganic growth 2.3 million customers across DACH/NL region RoTCE CIR 2021* ~15% ~ 40% 2020 results: €285m net profit, 10.2% RoTCE, CIR 44.3% and CET1 ratio (post dividend) 14.
Slide 4: BAWAG Group
BAWAG Group Company structure and issuing entities Shareholder structure of BAWAG Group AG Issuer of capital AT1, Tier2 Managing Board instruments 2.5 78.2% Free Float GoldenTree 21.8 SNP, SP, 1) Issuer of debt Covered instruments in % T. Rowe Price 5.6 70.1 Other subsidiaries Moody's Issuer Rating
Slide 5: Strategy
Strategy 4 pillars of our growth strategy Drive efficiency through Maintaining a safe and Growing in our core markets Focus on Customer Centricity operational excellence secure risk profile ‒ Our foundation is Austria with focus on ‒ Build multi-channel and multi-brand ‒ Our DNA is to focus on the t
Slide 6: Bank transformation
Bank transformation Focusing on things we control and driving operational excellence KEY METRICS Increased profitability … Private company Public company Pre-tax profit (€ millions) 2013 2014 2015 2016 2017 2018 2019 2020 573 604 500 419 445 RoTCE 11% 15% 17% 18% 15% 15% 16% 10% 371 316 191 C/I rati
Slide 7: Highlights Q2 2021
Highlights Q2 2021 • Net Profit of €119m in Q2 ’21, EPS of €1.34, and RoTCE of 16.3% EARNINGS • Pre-provision profit of €181m and CIR at 40.1% • Risk cost of €24m … no ECL reserves released • Average customer loans stable vPQ and +3% vPY • CET1 ratio (post dividend) of 14.4%, up 40bps vYE BALANCE SH
Slide 8: Financial performance
Financial performance Key highlights P&L | € millions Q2 ‘21 vPY vPQ H1 ‘21 vPY Balance Sheet & Capital | € millions Q2 ‘21 Q1 ‘21 vPQ vYE Core revenues 302 6% 1% 599 4% Total assets 54,132 52,970 2% 2% Operating income 303 6% - 604 4% Interest-bearing assets (average) 40,701 40,824 - - Operating ex
Slide 9: Regulatory Capital
Regulatory Capital Strong capital position CET1 Capital and ratios Capital distribution plans: dividend € billion ‒ €95m dividends accrued based on dividend policy CET1 capital (post dividend) for H1 ’21 earnings CET1 ratio (post dividend) ‒ €420m dividends (€4.72 per share) relating to 3.3 3.4 2019
Slide 10: Customer businesses €33.5 billion
Customer businesses €33.5 billion As of June 2021 RETAIL & SME CORPORATES & PUBLIC CUSTOMER BUSINESSES By product 25% €33.5 billion of which … 28% 35% 80% €20.3b €13.2b in % in % 75% 37% Secured or public sector lending Housing loans Consumer & SME Corporate lending Asset backed lending Public clien
Slide 11: Retail & SME
Retail & SME Portfolio overview of €20.3b of customer loans and leases Payment deferral overview NPL ratio Reserve development Reserve ratio Payment holiday average time Assets paying ratio on payments Q2 '21 (expired (expired (€bn) Q4 '19 Q4 '20 Q2 '21 Q4 '19 Q4 '20 Q2 '21 Q4 '19 Q4 '20 Q2 '21 31.1
Slide 12: Corporates & Public
Corporates & Public Portfolio overview of €13.2 billion of customer loans … whereof €4.7b in public sector Payment deferral overview NPL ratio Reserve development Reserve ratio Payment holiday average time Assets paying ratio on payments Q2 '21 (expired (expired (€b) Q4 '19 Q4 '20 Q2 '21 Q4 '19 Q4 '
Slide 13: Investment book and Cash
Investment book and Cash Q1 ‘21 Q2 ‘21 Cash & Cash equivalent 7% 8% As of Q2 ‘21, cash and cash equivalents (mainly money at central banks) at €13.1b ... TLTRO III of €6.4b €11.1b in % +€ 2.0b €13.1b in % Investment book primarily serves as liquidity book of the Bank 93% 92% Cash Cash equivalent Foc
Slide 14: Sustainability @ BAWAG Group
BAWAG Group Overview and Q2 2021 Highlights Sustainability @ BAWAG Group Green Finance Framework Funding & Liquidity Detailed Financials August 2021 | BAWAG Group AG 14
Slide 15: Key highlights of BAWAG Group’s ESG setup
Key highlights of BAWAG Group’s ESG setup • Executive body of ESG-topics is the Non-Financial Risk & ESG Committee at Management Board GOVERNANCE level … decision taken to establish an ESG committee at Supervisory Board level • Dedicated ESG officers in key functions • Lending: Green loan originatio
Slide 16: ESG embedded into our strategic roadmap
ESG embedded into our strategic roadmap Committed to responsible, sustainable and profitable growth ENVIRONMENT SOCIAL GOVERNANCE ‒ Reduce own Scope 1 and Scope 2 CO2 emissions ‒ Empower our clients by continuously enhancing ‒ Executive body of ESG-topics is the Non-Financial mid-term our services a
Slide 17: BAWAG’s 2019-20 Sustainability achievements
BAWAG’s 2019-20 Sustainability achievements Establishment of a Non-Financial Risk & ESG Committee 22% of new fund business1) in 2020 went into funds with an ESG investment approach and 8% of the total investment portfolio as of December 2020 Launched responsible marketing and sales policy COVID-19 s
Slide 18: Responsibility at BAWAG
Responsibility at BAWAG Endorsing the UN Sustainable Development Goals (SDGs) BAWAG’s Sustainability Program 2020 ‒ Being one of the largest banking groups in Austria with 2.3 ✓ Area of action 1: CSR Strategy million customers, BAWAG understand its business activities ✓ Area of action 2: Ethics and
Slide 19: BAWAG Group’s alignment to the UN SDGs
BAWAG Group’s alignment to the UN SDGs • BAWAG Group provides access to financial services for different groups in • Finance the implementation and modernization of projects that serve to society though simple and user-friendly banking products expand and improve infrastructure services in rural reg
Slide 20: BAWAG Group’s Sustainability Programme
BAWAG Group’s Sustainability Programme Seven Point Action Plan 1: CSR strategy 5: Social responsibility and personal commitment (SDG 4) Goal: Strengthening the CSR activities and CSR awareness Current status Goal: Further focus on volunteer days, crowdfunding.at, and measures to improve Current stat
Slide 21: Sustainability Governance at BAWAG
Sustainability Governance at BAWAG A signatory to the UN Global Compact, BAWAG Group is committed to complying Supervisory Board with the ten principles focusing on labor rights, human rights, environmental protection and anti-corruption Management Board: Non-Financial Risk and ESG Committee consist
Slide 22: Green Finance Framework
BAWAG Group Overview and Q2 2021 Highlights Sustainability @ BAWAG Group Green Finance Framework Funding & Liquidity Detailed Financials August 2021 | BAWAG Group AG 22
Slide 23: Key highlights of the BAWAG Green Finance Framework
Key highlights of the BAWAG Green Finance Framework Aligned to the latest market guidelines, including ICMA GBP 2021, LMA GLP 2021 and the ICMA Harmonized Framework for Impact Reporting 2021 Eligibility criteria largely aligned to the EU Taxonomy; indicative eligible asset portfolio (as of Aug 2021)
Slide 24: BAWAG’s rationale for issuing a Green Bond
BAWAG’s rationale for issuing a Green Bond The next step in delivering BAWAG’s sustainability strategy Contributes to the mobilization of debt capital markets for climate change mitigation Contributes to achieving selected UN SDGs through green financing Supports our Financing principle of mandatory
Slide 25: Green Finance Framework alignment with ICMA GBP 2021 & LMA GLP 2021
BAWAG’s Green Finance Framework is in alignment with the ICMA GBP 2021 & LMA GLP 2021 2. Process for Loan 1. Use of Proceeds 3. Management of proceeds 4. Reporting Evaluation and Selection ⚫ Green Bond proceeds will be ⚫ The evaluation and selection ⚫ The Net Proceeds of the Green ⚫ Allocation of gr
Slide 26: Pillar 1: Use of proceeds
Pillar 1: Use of proceeds ICMA GBP Project UN SDG Eligibility criteria Category Targets • New and existing buildings that are within the top 15% performing by energy use in the country • Buildings that have undergone refurbishments resulting in an increase in energy of efficiency of at least 30% aga
Slide 27: Pillar 2 & Pillar 3: Loan Evaluation, Selection and Management of Proceeds
Pillar 2 & Pillar 3: Process for Loan Evaluation and Selection & Management of Proceeds Process for Loan Evaluation and Selection Management of proceeds Green Finance Eligible Green Assets Portfolio ⚫ BAWAG’s GFC is formed by members of Committee Retail & SME, Investor Relations, Risk ⚫ The Net Proc
Slide 28: Pillar 4: Reporting
Pillar 4: Reporting ⚫ BAWAG will make and keep readily available reporting on the allocation of Net Proceeds to the Loan Portfolio on a nominal equivalence basis one year from the issuance of the applicable Green Finance Instruments, to be renewed annually until full allocation. ⚫ BAWAG will not dou
Slide 29: Green buildings portfolio and impact
Green buildings portfolio and impact • The assets included within the portfolio are within the top 15% of most energy efficient properties within Germany & Austria, & all properties within the Netherlands portfolio are EPC rated A or better – this aligns the Green Finance portfolio with the latest E
Slide 30: Green buildings portfolio and its impact
Green buildings portfolio and its impact • BAWAG’s Green building portfolio is formed 100% of low carbon buildings, with a total signed amount over €2.8bn from over 17,100 buildings as of 30 June 2021 Signed amount Annual energy savings Annual CO2 emissions avoidance Number of Low carbon buildings (
Slide 31: Second Party Opinion / External Review - Sustainalytics
Second Party Opinion / External Review - Sustainalytics “Sustainalytics is of the opinion that the BAWAG Green Finance Framework is credible and impactful and aligns with the four core components of the Green Bond Principles 2021 and the Green Loan Principles 2021” Sustainalytics is of the opinion t
Slide 32: Funding & Liquidity
BAWAG Group Overview and Q2 2021 Highlights Sustainability @ BAWAG Group Green Finance Framework Funding & Liquidity Detailed Financials August 2021 | BAWAG Group AG 32
Slide 33: Funding & Liquidity
Funding & Liquidity FUNDING LIQUIDITY STRONG CUSTOMER DEPOSIT FUNDING … … COMFORTABLE MATURITY PROFILE € millions notional Covered Senior Non-Preferred Tier 2* AT1* 1000 Equity 8% 900 Liquidity coverage ratio Others 265% 4% TLTRO 12 800 750 % 200 500 Wholesale funding unsecured 6% 700 Wholesale fund
Slide 34: MREL
MREL MREL-REQUIREMENT MREL-STRATEGY LIQUIDITY New MREL decision received in Feb ’21 fully reflecting €5.2b 26.4% CRR2/BRRD2 with final requirements from 1 January 25.32% 2024: Legacy MREL-eligible instruments 0.9 4.6% Requirement applicable at BAWAG P.S.K. level (consolidated) Senior non-preferred &
Slide 35: Detailed Financials
BAWAG Group Overview and Q2 2021 Highlights Sustainability @ BAWAG Group Green Bond Framework Funding & Liquidity Detailed Financials August 2021 | BAWAG Group AG 35
Slide 36: P&L & key ratios
P&L & key ratios P&L | € millions Q2 ‘21 Q2 ‘20 vPY vPQ Key ratios Q2 ‘21 Q2 ‘20 vPY vPQ Net interest income 231.6 227.5 2% 1% Return on Common Equity 13.7% 7.4% 6.3pts 5.1pts Net commission income 70.1 55.8 26% 4% Return on Tangible Common Equity 16.3% 9.0% 7.3pts 6.1pts Core revenues 301.7 283.3 6
Slide 37: Balance sheet
Balance sheet Growth in customer loans Balance sheet | € millions Q2 ‘21 Q4 ‘20 Delta Capital & RWA | € millions Q2 ‘21 Q4 ‘20 Delta Customer loans 32,371 32,004 1% Common equity 3,504 3,419 2% Securities and bonds 6,628 7,525 (12%) Tangible common equity 2,966 2,867 3% Credit institutions and cash
Slide 38: P&L details – core revenues
P&L details – core revenues Solid core revenues in Q2 ‘21 … NCI continues recovery € million Net interest income (NII) up 1% vPQ … net interest margin (NIM) at 2.28% in Q2 ‘21 297.3 297.9 297.3 301.7 ‒ Stable NIM at 2.28% with continued changing asset 283.3 mix over time (more secured vs. unsecured
Slide 39: P&L details – operating expenses
P&L details – operating expenses Costs targets on track € million Core operating expenses CIR at 40.1% in Q2’21 down (3.7pts) vPY … Restructuring charges H1 ’21 CIR at 40.3% (down 2.6pts vPY) 144.7 On track to meet full-year targets … gradual decrease over the coming quarters resulting from efficien
Slide 40: P&L details – risk costs
P&L details – risk costs Strong underlying asset quality € million Risk costs / average interest-bearing assets Q2 ‘21 risk costs €24m … risk cost ratio at 23bps ‒ Strong asset quality performance … continued improving underlying trend 74.6 ‒ Normal risk cost run-rate in Retail & SME ~€15m ‒ No ECL
Slide 41: Details on reserves
Details on reserves Continuing to remain prudent despite improved economic outlook IFRS 9 Migration- Customer Segment Assets Non-performing stage 3 loans, in €m Stage 3 2% 2% 2% 2% 885 904 4% 811 836 Stage 2 8% 6% 10% 254 254 City of Linz (CoL) 254 254 Stage 1 94% 92% 88% 90% 631 650 557 582 Custome
Slide 42: Capital development … CET1 ratio (FL)
Capital development … CET1 ratio (FL) Strong capital position Capital distribution plans ~+60bps a €95m dividends accrued based on dividend (Q2 ’21 gross capital generation) policy for H1 ’21 earnings 17.0% b €420m dividends (€4.72 per share) relating to → 2019/2020 profits will be proposed to AGM o
Slide 43: Capital distribution update
Capital distribution update Consistent average annual capital generation through earnings +220bps since 2017 ~480 bps = €955m Total Excess capital 17.0% “Earmarked dividends” 1 Dividends of €515m deducted from CET1 capital … pre-dividend €3.42b 1 256 bps = €515m – €420m dividends relating to 2019/20
Slide 44: 2021 Outlook
2021 Outlook OUTLOOK 2021 TARGETS Core revenues FY ’20: €1,170m ~2% growth RoTCE CIR Other income €0m expected 2021 ~15% ~40% FY ’20: €3m Operating expenses: Below €485m New Targets & 4-year Plan through 2025 will FY ’20: €520m be presented at the Investor Day on 20 September ‘21 Regulatory charges
Slide 45: M&A Update
M&A Update Two acquisitions signed to-date in 2021 with deminimis credit risk Hello bank! Austria DEPFA bank • Strategic acquisition of leading online retail brokerage • Strategic bank wind-down opportunity platform in Austria with 80k customers STRATEGIC • Leveraging BAWAG Group’s Advisory team, ex
Slide 46: Proven M&A track record
Proven M&A track record Experienced with bolt-on acquisitions to build out customer franchise 2021 Hello bank! Austria Signed deal to acquire Hello bank!, closing Key M&A targets expected Q4 ‘21 / Q1 ‘22 2021 DEPFA Bank plc Signed deal to acquire DEPFA Bank plc, closing expected in H2 ’21 ‒ Continue
Slide 47: City of Linz overview
City of Linz overview Scenario Analysis for potential outcomes of interim decision of Supreme Court Receivable of €254m on balance sheet as of 30 June 2021 Valid contract Invalid contract Receivable fully provisioned in CET1 through prudential filter in 2020, i.e. no impact on capital regardless of
Slide 48: Annex – Definitions and abbreviations
Annex – Definitions and abbreviations B/S leverage NPL ratio Total assets / IFRS equity NPL exposure economic / exposure Book value per share Reserve ratio Common equity (excluding AT1 capital and dividends) / number of shares outstanding Total reserves / Asset volume of customer segments excluding
Slide 49: 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
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