BAWAG Group AG · VIE:BG
BAWAG — Q1 2022 Earnings Presentation
33 slides from BAWAG's earnings presentation, Apr 26, 2022
Slide 1: BAWAG Group Q1 2022 Results
BAWAG Group Q1 2022 Results 26 April 2022 26 April2021 August 2022||BAWAG BAWAG Group Group AG AG
Slide 2: Highlights Q1 2022
Highlights Q1 2022 - Q1 ’22: Net profit of €111m, EPS of €1.24, and RoTCE of 14.2% - Pre-provision profit of €205m (+14% vPY) and CIR at 37.0% EARNINGS - Risk cost ratio of 19bps … ECL management overlay at €64m - Regulatory charges of €38m representing ~80% of full year charge - Underlying RoTCE of
Slide 3: Financial performance
Financial performance P&L | € millions Q1'22 Q1'21 vPY Q4'21 vPQ Balance Sheet & Capital | € millions Q1'22 Q4'21 vPQ Core revenues 323 297 9% 316 2% Total assets 54,475 56,325 (3%) Operating income 325 301 8% 318 2% Interest-bearing assets (average) 42,099 42,630 (1%) Operating expenses (120) (122)
Slide 4: Capital development and distribution
Capital development and distribution CAPITAL DEVELOPMENT CAPITAL DEVELOPMENT -a Gross capital generation of ~+60bps in Q1 2022 ~+60bps - RWA increase due to implementation of regulatory guidelines (Q1 ‘22 gross capital generation) b and FX impacts 15.0% -c OCI primarily related to widening credit sp
Slide 5: Retail & SME
Retail & SME Financial performance Customer development € millions Q1'22 Q1'21 vPY Q4'21 vPQ € millions Q1'22 Q1'21 vPY Q4'21 vPQ Core revenues 245.8 222.8 10% 232.8 6% Housing loans 15,890 14,862 7% 15,781 1% Net interest income 171.7 163.1 5% 168.2 2% Consumer and SME 5,492 4,994 10% 5,348 3% Net
Slide 6: Corporates, Real Estate & Public Sector
Corporates, Real Estate & Public Sector Financial performance Customer development € millions Q1'22 Q1'21 vPY Q4'21 vPQ € millions Q1'22 Q1'21 vPY Q4'21 vPQ Core revenues 72.7 69.7 4% 79.4 (8%) Corporates 3,900 4,129 (6%) 4,047 (4%) Net interest income 64.8 61.0 6% 70.9 (9%) Real Estate 6,089 4,955
Slide 7: Agenda
Agenda 1 Q1 2022 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 26 April 2022 | BAWAG Group AG 7
Slide 8: P&L & key ratios
P&L & key ratios P&L | € millions Q1'22 Q1'21 vPY vPQ Key ratios Q1'22 Q1'21 vPY vPQ Net interest income 242.0 229.6 5% (1%) Return on Common Equity 12.2% 8.6% 3.6pts (5.9pts) Net commission income 81.4 67.7 20% 12% Return on Tangible Common Equity 14.2% 10.2% 4.0pts (7.1pts) Core revenues 323.4 297
Slide 9: Balance sheet
Balance sheet Balance sheet | € millions Q1'22 Q1'21 vPY vPQ Capital & RWA | € millions Q1'22 Q1'21 vPY vPQ Customer loans 35,132 33,124 6% - Common equity 3,665 3,435 7% 1% Securities and bonds 5,646 6,771 (17%) (11%) Tangible common equity 3,133 2,895 8% 1% Credit institutions and cash 11,912 10,9
Slide 10: P&L details – core revenues
P&L details – core revenues Increasing core revenues in Q1 ‘22 € million 315.8 323.4 297.3 301.7 305.5 72.5 81.4 67.7 70.1 71.7 Net interest income (NII) down 1% vPQ … net interest margin (NIM) NCI at 2.33% in Q1 ’22 ‒ Stable asset development in Q1 ’22 … average customer loans flat 2.33% vPQ and av
Slide 11: P&L details – operating expenses
P&L details – operating expenses Continued efficiency measures countering inflationary pressures € million Core operating expenses 121.8 121.2 120.4 121.8 120.4 CIR at 37.0% in Q1 ’22 down (3.5pts) vPY and (1.8pts) vPQ ‒ Significant inflationary pressure offset by several operational initiatives lau
Slide 12: P&L details – risk costs
P&L details – risk costs Entering normalized risk environment while closely monitoring macro environment € million Risk costs / average interest-bearing assets Q1 ‘22 risk costs €20m and 19bps risk cost ratio ‒ Ongoing strong asset quality performance … more normalized risk cost environment in Q1 ‘2
Slide 13: 2022 Outlook
2022 Outlook Reconfirmed despite changed geopolitical environment P&L OVERVIEW RETURN TARGETS Core revenues RoTCE FY ’21: €1,220m >4% growth FY ’21: 16.1% >17% Operating expenses: FY ’21: €485m ~2% net cost-out CIR <38% FY ’21: 39.5% Regulatory charges FY ’21: €52m <€50m expected OUTLOOK ASSUMPTIONS
Slide 14: Agenda
Agenda 1 Q1 2022 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 26 April 2022 | BAWAG Group AG 14
Slide 15: Current environment
Current environment BAWAG‘S BUSINESS PRINCIPLES BAWAG‘S EXPOSURE 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 DACH/NL region, Wes
Slide 16: 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% Stage 2 4% 4% 4% 885 862 877 8% 811 City of Linz (CoL) 254 254 254 254 Stage 1 94% 94% 94% 90% 631 608 623 Customer NPLs 557 YE '1
Slide 17: Corporates, Real Estate & Public Sector
Corporates, Real Estate & Public Sector CORPORATES* REAL ESTATE PUBLIC SECTOR* By industry By underlying Customer types Services Residential 14% 17% Food&Beverage Office 30% 2% Pharmaceuticals 36% Mixed €4.0 12% €6.1 44% €4.7 B-2-C Industrial/Logistics billion 17% billion billion 56% Engineeing & B-
Slide 18: Investment book and Cash
Investment book and Cash Q4 ‘21 Q1 ‘22 Cash & Cash equivalent 6% 14% -€ 2.0b €11.1b €13.1b in % As of Q1 ‘22, cash and cash equivalents (mainly money at central in % banks) at €11.1b ... TLTRO III of €6.4b 86% Cash Cash equivalent 94% Investment book primarily serves as liquidity book of the Bank In
Slide 19: Regulatory Capital
Regulatory Capital Strong capital position CET1 Capital and ratios € billion dividend CET1 capital (post dividend) CET1 ratio (post dividend) Capital distribution plans: 3.3 3.4 3.3 ‒ 2021 dividend of €267m decided by Annual General Meeting on 3.1 3.1 28 March 2022 … paid out early April 2022 0.5 0.
Slide 20: 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 31 March 2022 Valid contract Invalid contract Receivable fully provisioned in CET1 through prudential filter in 2020, i.e. no impact on capital regard
Slide 21: Agenda
Agenda 1 Q1 2022 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 26 April 2022 | BAWAG Group AG 21
Slide 22: 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 23: 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 13% Profit before tax 500 573 604 371 600 as of 31 March 2022 EuroStoxx Banks Index (SX7P) (14%) Stoxx 600 Banks Index (SX7E) (22%) Net income 449
Slide 24: 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 25: 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 26: 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 27: 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 28: 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) DEPFA BANK PLC PEAK BANCORP INC 1) 1.7 million CARDS Bausparkasse AG Signed deal to acquire Signed deal to acquire €1.6 billion ASSETS
Slide 29: 2025 Targets and opportunities
2025 Targets and opportunities FINANCIAL TARGETS OPPORTUNITIES NOT CAPTURED IN OUR TARGETS Profit before tax (PBT) >€750 million No rate hikes assumed … 100bps increase in 3-month Euribor leads to approximately +€100 million net interest income p.a. Earnings per share (EPS) >€7.25 No additional M&A
Slide 30: Targets & capital distribution
Targets & capital distribution ESG TARGETS RETURN TARGETS CAPITAL DISTRIBUTION 2025 2021- 2025 RoTCE >17% Dividends ~€1.4 billion CIR <38% CO2 >50% emission reduction (own scope 1 & 2 vs. 2020) FINANCIAL TARGETS 2025 Share buyback target €425 million Women quota 2022 (2 tranches) subject to regulato
Slide 31: Investor relations calendar
Investor relations calendar UPCOMING ROADSHOWS, CONFERENCES AND FINANCIAL EVENTS SHAREHOLDER STRUCTURE 26 April Virtual Q1 2022 roadshow 100% 12 May UBS Pan European Small & Mid cap conference Free float 08 June Goldman Sachs European Financials Conference 07 July Start of quiet period Top instituti
Slide 32: 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 33: 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 and dividends) / number of shares outstanding Total reserves / Asset volume of cust