Slide 1: Erste Group investor presentation Q2 17 results
Erste Group investor presentation Q2 17 results 4 August 2017 Erste Group well on track to deliver 10%+ ROTE in 2017 Andreas Treichl, CEO Erste Group Gernot Mittendorfer, CFO Erste Group Willibald Cernko, CRO Erste Group Page
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: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 3
Slide 4: Executive summary – Group income statement performance
Executive summary – Group income statement performance QoQ net profit reconciliation (EUR m) YoY net profit reconciliation (EUR m) 30 33 362 27 15 842 33 24 23 58 79 262 124 625 55 23 Q1 17 Operating Operating Risk costs Other Taxes on Minorities Q2 17 1-6 16 Operating Operating Risk costs Other Tax
Slide 5: Executive summary – Key income statement data
Executive summary – Key income statement data Net interest income & margin Operating result & cost/income ratio Cost of risk 2,194 in EUR m in EUR m in EUR m 2,143 2.54% -3.5% 63.0% 2.40% 2.33% 2.44% 58.8% +304.9% 1,336 1,289 1,051 1,092 104 690 0.19% 0.11% 599 26 66 39 1-6 16 1-6 17 Q1 17 Q2 17 1-6
Slide 6: Executive summary – Group balance sheet performance
Executive summary – Group balance sheet performance YTD total asset reconciliation (EUR m) YTD equity & total liability reconciliation (EUR m) 218,156 218,156 67 274 589 913 406 4,468 7,561 2,700 878 7,489 208,227 3,252 208,227 802 31/12/16 Cash Trading, Loans to Net loans Intangibles Other 30/06/17
Slide 7: Executive summary – Key balance sheet data
Executive summary – 31/12/16 Key balance sheet data 30/06/17 Loan/deposit & loan/TA ratio Net loans & credit RWA NPL coverage ratio & NPL ratio in EUR bn +3.4% 94.7% 92.8% 69.1% 68.5% 62.7% 61.9% 130.7 135.1 83.1 86.2 4.9% 4.7% Loan/deposit ratio Loans/total assets Net loans Credit RWA NPL coverage
Slide 8: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 8
Slide 9: Business environment – Austria & CEE GDP growth expectations increased for 2017
2017 Business environment – 2018 Austria & CEE GDP growth expectations increased for 2017 Real GDP growth (in %) Dom. demand contribution* (in %) Net export contribution* (in %) Consumer price inflation (ave, in %) 5.7 5.1 4.9 3.3 3.2 4.3 3.7 3.9 3.7 2.5 2.9 2.8 3.1 3.0 2.7 3.2 2.2 2.7 1.9 1.8 2.0 2
Slide 10: Business environment – Czech Republic increases key policy rate by 20bps in August 2017
Business environment – 3M Interbank 10YR GOV Czech Republic increases key policy rate by 20bps in August 2017 Austria Czech Republic Romania 3.51% 3.46% 3.66% 3.75% 0.58% 0.49% 0.57% 0.56% 0.51% 0.85% 0.47% 0.58% 0.62% 0.66% -0.18% -0.26% -0.33% -0.33% 0.29% 0.29% 0.71% 0.65% 0.28% 0.29% 1-6 16 1-6
Slide 11: Business environment – CZK enters path of appreciation following depegging in April 2017
Business environment – CZK enters path of appreciation following depegging in April 2017 EUR/CZK EUR/RON -0.3% -1.8% -3.3% +0.4% +0.7% +0.6% 27.0 27.0 27.0 26.5 27.0 26.1 4.48 4.50 4.52 4.55 4.54 4.56 1-6 16 1-6 17 Q1 17 Q2 17 31/12/16 30/06/17 1-6 16 1-6 17 Q1 17 Q2 17 31/12/16 30/06/17 • Czech Nat
Slide 12: Business environment – Market shares: mostly stable or increasing shares across the region
30/06/16 Business environment – 31/03/17 Market shares: mostly stable or increasing shares across the region 30/06/17 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 19.5% 19.2% 18.7% 19.2% AT 19.9% AT 20.0% AT 19.0% AT 19.9% 22.9% 19.1% 25.2% 11.8% CZ 22.9% CZ 19.7% CZ 2
Slide 13: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 13
Slide 14: Business performance: performing loan stock & growth
YoY 30/06/16 Business performance: performing loan stock & growth – QoQ 31/03/17 Performing loans increase by 1.7% qoq, 6.7% yoy 30/06/17 124.7 6.7% • Rising performing loan volume trend continues in Q2 17 Group 130.8 133.1 1.7% across most geographies; underlying loan growth primarily in 29.7 CZ (s
Slide 15: Business performance: customer deposit stock & growth
YoY 30/06/16 Business performance: customer deposit stock & growth – QoQ 31/03/17 Deposits grow at 0.6% qoq, 11.6% yoy 30/06/17 130.4 11.6% • Exceptional deposit growth across all geographies yoy Group 144.7 0.6% despite zero interest rate environment as retail and corporate 145.6 clients parked cas
Slide 16: Business performance: NII and NIM
Business performance: NII and NIM – Q2 16 Q1 17 NII and NIM rebounds in Q2 17, after weak Q1 17 Q2 17 1,102 2.57% Group 1,051 2.33% 1,092 2.44% • Yoy decline due to lower interest income from government 156 1.83% bonds; main segment impact in Other (Holding ALM); positive AT/EBOe 155 1.59% developme
Slide 17: Business performance: operating income
YoY Q2 16 Business performance: operating income – QoQ Q1 17 Operating income up qoq mainly on higher NII, slightly lower yoy Q2 17 1,687 -0.7% • Yoy decline primarily due to lower trading and fair value result Group 1,618 1,675 3.6% and lower NII, while fee income improves 261 2.9% • Qoq increase m
Slide 18: Business performance: operating expenses
YoY Q2 16 Business performance: operating expenses – QoQ Q1 17 Operating costs improve qoq, after seasonally higher costs in Q1 17 Q2 17 972 1.4% • Yoy cost increase driven by higher IT costs and higher Group 1,018 985 -3.3% depreciation 155 3.8% • Qoq improvement driven by full-year deposit insuran
Slide 19: Business performance: operating result and CIR
YoY Q2 16 Business performance: operating result and CIR – QoQ Q1 17 Operating result and CIR improves qoq; still under pressure yoy Q2 17 Operating result YoY & QoQ change Cost/income ratio 716 57.6% Group -3.6% 63.0% 599 15.2% 690 58.8% 106 59.4% AT/EBOe 87 1.6% 66.9% 108 23.4% 59.9% 114 68.9% AT/
Slide 20: Business performance: risk costs (abs/rel)
Q2 16 Business performance: risk costs (abs/rel*) – Q1 17 Risk costs decline qoq and remain at historically low levels in Q2 17 Q2 17 -31 -0.09% • Yoy risk performance characterised by a reduced level of Group 66 0.19% 39 0.11% releases and a continuation of historically low risk costs -6 -0.08% (ex
Slide 21: Business performance: non-performing loans and NPL ratio
30/06/16 Business performance: non-performing loans and NPL ratio – 31/03/17 NPL ratio improves for the 14th consecutive quarter to 4.7% 30/06/17 7,746 5.8% • NPL volume declined to EUR 6.5bn in Q2 17 as NPL inflows Group 6,698 4.9% 6,496 4.7% decline across most countries (except HR, AT/EBOe, CZ) 8
Slide 22: Business performance: allowances for loans and NPL coverage
30/06/16 Business performance: allowances for loans and NPL coverage – 31/03/17 NPL provision coverage remains in comfort zone 30/06/17 5,083 65.6% • NPL provision coverage rose to 68.5%, as NPL stock Group 4,526 67.6% 4,451 68.5% declined faster than allowances for loans 502 60.6% AT/EBOe 423 59.5%
Slide 23: Business performance: other result
Q2 16 Business performance: other result – Q1 17 Other result improves qoq, down yoy due to positive one-off in Q2 16 Q2 17 93 • Yoy decline resulting from one-off gain in Q2 16 due to the Group -99 -68 sale of VISA Europe shares (EUR 138.7m) and provisions for 26 court rulings related to the passin
Slide 24: Business performance: net result
Q2 16 Business performance: net result – Q1 17 Q2 17 net result up qoq on strong operating performance and risk costs Q2 17 567 • Yoy profitability declined mainly on lower other result (gains of Group 262 VISA sale in Q2 16) 362 94 • Qoq increase driven by significantly improved operating AT/EBOe 6
Slide 25: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 25
Slide 26: Assets and liabilities: YTD overview
Assets and liabilities: YTD overview – Loan/deposit ratio down to 92.8% at Jun 17 (Dec 16: 94.7%) Assets (EUR bn) Assets (in %) Liabilities & equity (EUR bn) Liabilities & equity (in %) 218.2 218.2 208.2 100% 208.2 4.0 100% 8.8% 4.8 7.0% 2.3% 1.8% 25.8 11.8% 17.9 8.2% 18.4 14.6 44.9 22.9% 20.6% 47.6
Slide 27: Assets and liabilities: customer loans by country of risk
Assets and liabilities: customer loans by country of risk – Net customer loans up 3.4% ytd, NPLs down 2.7% Net customer loans (EUR bn) Performing loans (EUR bn) Non-performing loans (EUR bn) +6.1% +6.7% -16.1% 135.1 133.1 7.7 127.4 130.7 124.7 128.6 3.3 3.4 0.4 3.3 3.4 6.7 3.4 6.5 6.4 0.9 3.3 6.2 0.
Slide 28: Assets and liabilities: allowances for customer loans
Assets and liabilities: allowances for customer loans – As asset quality improves lower interest income from NPLs weighs on NII Quarterly development (EUR m) Highlights • Development of interest income from NPLs: • 2013: EUR 270m • 2014: EUR 202m 237 • 2015: EUR 162m • 2016: EUR 106m 451 450 • P&L u
Slide 29: Assets and liabilities: financial and trading assets
Assets and liabilities: financial and trading assets * – LCR at excellent 153.8% By geography By debtor type Liquidity buffer in EUR bn in EUR bn -5.8% 43.4 42.8 40.8 100% 26.7% 26.8% 9.4% 8.9% 9.8% 24.8% 24.9% 10.0 9.9 7.8% 7.3% 7.8% 9.1 1.2 1.0 53.7 1.9 2.4 0.9 51.2 4.4 2.9 45.4 46.1 4.8 5.2 5.8 5
Slide 30: Assets and liabilities: customer deposit funding
Assets and liabilities: customer deposit funding – Customer deposits grow by 0.6% qoq, up 5.5% ytd By customer type By product type Highlights in EUR bn in EUR bn • Continued deposit inflows driven by Retail +11.6% segment with highest demand for overnight deposits amid low interest rate environment
Slide 31: Assets and liabilities: debt vs interbank funding
Assets and liabilities: debt vs interbank funding – Limited wholesale funding reliance, as customer deposits grow strongly Debt securities issued Interbank deposits in EUR bn in EUR bn +9.3% -5.0% 28.0 27.2 17.9 26.6 Sub debt 16.4 Overnight deposits 6.2 Hybrid issues 4.0 6.1 6.4 14.6 Term deposits S
Slide 32: Assets and liabilities: LT funding
Assets and liabilities: LT funding – Limited LT funding needs Maturity profile of debt in EUR bn 3.0 2.8 2.8 2.7 2.0 1.9 1.9 1.3 1.3 0.8 0.7 0.6 0.2 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029+ Debt CEE Capital exc Tier 1 Covered bonds Senior unsec. bonds • In January 2017 Erste
Slide 33: Assets and liabilities: capital position
Assets and liabilities: capital position – B3FL CET1 solid at 12.8%, impacted mainly by RWA inflation Basel 3 capital (phased-in) Risk-weighted assets (phased-in) Basel 3 capital ratios (phased-in) in EUR bn in EUR bn 18.7% 18.7% 18.5% 18.4% 18.4% 19.9 103.6 106.8 18.9 18.5 18.8 19.0 101.0 100.7 101
Slide 34: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 34
Slide 35: Conclusion – Outlook 2017
Conclusion – Outlook 2017 • Real GDP growth of between 2.1-5.1% expected in 2017 in CEE and Austria Macro outlook • Real GDP growth to be driven by solid domestic demand, as real wage growth and 2017 declining unemployment support economic activity in CEE • Solid public finances across CEE • ROTE fo
Slide 36: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 36
Slide 37: Additional information: new segmentation
Additional information: new segmentation – Business line and geographic view Erste Group – Business segments ALM & Group Group Savings Intragroup Retail Corporates Local CC Corporate Markets Banks Elimination (ALM&LCC) Center • SME • Other Subsidiaries • Local Large Corporate • Asset/Liability Manag
Slide 38: Additional information: income statement
Additional information: income statement – Year-to-date and quarterly view Year-to-date view Quarterly view in EUR million 1-6 16 1-6 17 YOY-Δ Q2 16 Q1 17 Q2 17 YOY-Δ QOQ-Δ Net interest income 2,194.1 2,143.0 -2.3% 1,101.9 1,051.3 1,091.7 -0.9% 3.8% Net fee and commission income 884.9 910.9 2.9% 441
Slide 39: Additional information: group balance sheet – Assets
Additional information: group balance sheet – Assets Quarterly data Change in EUR million Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 12,982 14,743 18,353 24,731 25,842 99.1% 40.8% 4.5% Financial assets - held for trading 10,373 9,731 7,950 7,827 7,206 -30.5% -9.4% -7
Slide 40: Additional information: group balance sheet – Liabilities and equity
Additional information: group balance sheet – Liabilities and equity Quarterly data Change in EUR million Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities - held for trading 6,146 6,272 4,762 4,314 3,960 -35.6% -16.8% -8.2% Derivatives 5,341 4,933 4,185 3,855 3,646 -31.7% -
Slide 41: Additional information: regulatory capital position
Additional information: regulatory capital position – Capital requirements (SREP) for 2017; Erste target of 12.75%+ unchanged • Almost unchanged capital requirements in 2017, excluding P2G significant decline vs 2016 Erste Group Consolidated Erste Group Unconsolidated Phased-in Fully loaded Phased-i
Slide 42: Additional information: gross customer loans
Additional information: gross customer loans – By risk category, by currency, by industry Gross cust. loans by risk category (EUR bn) Gross customer loans by currency (EUR bn) Gross customer loans by industry (EUR bn) 135.3 137.5 139.6 135.3 137.5 139.6 137.5 139.6 132.5 133.9 132.5 133.9 135.3 6.7
Slide 43: Additional information: footprint
Additional information: footprint – Customer banking in Austria and the eastern part of the EU Erste Group footprint Highlights Czech Republic Slovakia • Leading retail and corporate bank Customers: 4.7m Customers: 2.3m in 7 geographically connected Employees: 10,197 Employees: 4,290 countries CZ Br
Slide 44: Additional information: strategy
Additional information: 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 cur
Slide 45: Additional information: Ratings
Additional information: Ratings – Composition of Erste Group Bank AG’s issuer ratings Financial Profile SACP - Stand-Alone Credit Profile VR - Viability Rating Asset Risk baa3 a- (Individual Rating ) Capital baa1 Profitability baa3 ▲ a- Funding Structure a3 Anchor bbb Liquid Resources baa1 Business
Slide 46: Additional information: shareholder structure
Additional information: shareholder structure – Total number of shares: 429,800,000 By investor By region Unidentified * Erste Foundation 1 Unidentified * 13.1% 11.1% 13.1% Savings Banks 2 Austria BlackRock Inc Rest of world 4.7% 4.0% 3.4% 28.3% Other Syndicated 3 3.8% 9.9% Caixa 24.7% 0.8% Continen
Slide 47: Investor relations details
Investor relations details • Erste Group Bank AG, Am Belvedere 1, 1100 Vienna E-mail: investor.relations@erstegroup.com Internet: http://www.erstegroup.com/investorrelations http://twitter.com/ErsteGroupIR http://www.slideshare.net/Erste_Group Erste Group IR App for iPad, iPhone and Android http://w