Erste Group Bank Ag · VIE:EBS
Erste Group Bank — H1 2012 Earnings Presentation
22 slides from Erste Group Bank's earnings presentation, Jul 31, 2012
Slide 1: Half year results 2012
Erste Group Bank AG Half year results 2012 31 July 2012, Vienna Solid bottom line performance complemented by improved capital position Andreas Treichl, CEO Franz Hochstrasser, Deputy CEO Manfred Wimmer, CFO Gernot Mittendorfer, Chief Risk Officer Herbert Juranek, COO 29 February 2012 Annual result
Slide 2: Presentation topics
Presentation topics − Erste Group’s development in HY 2012 − Central and Eastern Europe − Outlook 2012 31 July 2012 2 HY results 2012 Press conference
Slide 3: H1 2012 executive summary
H1 2012 executive summary – EBA capital ratio reaches 9.9% (ex retained earnings) − Net profit of EUR 453.6m in H1 2012 impacted by one-off items: − Gain on buyback of tier 1 and tier 2 instruments − Goodwill adjustment for BCR − Costs related to the FX mortgage interest subsidy legislation in Hunga
Slide 4: Income statement H1 2012
Income statement H1 2012 – Pre-tax profit down driven by weaker net trading result in EUR million 1-6 12 1-6 11 Change Comment Net interest income 2.651,7 2.703,9 (1,9%) Reduction in non-core business Risk provisions for loans (981,8) (920,8) 6,6% Extraordinarily high provisions in RO in H1 2012 Net
Slide 5: Income statement Q2 2012
Income statement Q2 2012 – Buybacks and goodwill adjustment affected net income in EUR million Q2 12 Q1 12 Change Comment Net interest income 1.314,8 1.336,9 (1,7%) Reduction in non-core business Risk provisions for loans (401,2) (580,6) (30,9%) HU provison shift, improvement in AT, CZ & SK Net fee
Slide 6: Balance sheet H1 2012 – assets
Balance sheet H1 2012 – Sustained RWA reduction in non-core business in EUR million Jun 12 Dec 11 Change Comment Cash and balances with central banks 5,737 9,413 (39.1%) Loans and advances to credit institutions 13,311 7,578 75.7% Excess liquidity deposited with central banks Loans and advances to c
Slide 7: Balance sheet H1 2012 – liabilities and equity
Balance sheet H1 2012 – Loan-to-deposit ratio improved to 109.6% in EUR million Jun 12 Dec 11 Change Comment Deposits by banks 24,844 23,785 4.5% LTRO inflow Customer deposits 122,252 118,880 2.8% Growth mainly in AT, CZ & SK Debt securities in issue 30,254 30,782 (1.7%) Successful issuance of cover
Slide 8: Asset quality review
Asset quality review – Loan demand remains low − New NPL formation mainly driven by Real Estate Erste Group: NPL ratio vs NPL coverage business and Romania 63.9% − Reduced NPL sales in Q2 2012 30% 65% 61.9% 25% 60.6% 61.0% 61.2% − NPL coverage ratio up to 61.2% ytd 20% 60% − NPL coverage ratio sligh
Slide 9: Asset quality review – segment round-up
Asset quality review – Segment round-up: HU and RO remained challenging − Austria, Czech Republic & Slovakia: Positive trend NPL ratios in key segments continued 30% − Austria: Risk costs remained at low level, NPL coverage ratio 26.2% 24.6% remained at comfortable level 25% − Slovakia: Good quality
Slide 10: Funding update
Funding update – Erste Group constantly strengthened funding profile Customer deposits grew by 2.8% compared to YE 2011 Evolution of funding mix − Most visible inflow in Czech Rep, Slovakia and EBOe 100% 3.2% 3.2% 3.0% 3.0% 2.2% − Retail & SME deposits increased by 2.3% ytd 90% 5.8% 8.5% 9.0% 8.2% 8
Slide 11: Capital requirements
Capital requirements – more than fulfilled at Erste Group and its subsidiaries 27.4% 23.8% Basel 2.5 EBA 18.6% Local requirements 17.6% 15.2% 13.4% 11.7% 10.4% 9.9% 12.0% required 10.0% 9.0% by required June 2012 8.0% 7.0% as of required 1.1.2013 Excl. hybrid capital (plus event. and the EUR 540m ad
Slide 12: Drill-down on selected asset classes
Drill-down on selected asset classes – No significant exposure to peripheral Europe Total net exposure of Erste Group (incl. savings banks) to selected European countries: in EUR million Sovereign Bank Other Total net exposure Dec 10 Dec 11 Jun 12 Dec 10 Dec 11 Jun 12 Dec 10 Dec 11 Jun 12 Dec 10 Dec
Slide 13: Presentation topics
Presentation topics − Erste Group’s development in 2011 − Central and Eastern Europe − Outlook 2012 31 July 2012 13 HY results 2012 Press conference
Slide 14: Operating environment: macro trends
Operating environment: macro trends – CEE continued to outgrow the euro zone in Q2 2012 Real GDP growth in CEE − Deterioration of economic sentiment triggered 8 2012 euro zone avg. -0.2% 6 4.2 downward revisions for GDP growth in CEE 3.3 2.7 2.6 2.5 4 2.1 2.0 1.7 1.7 1.3 1.2 − AT: slowing down, but
Slide 15: Operating environment: macro trends
Operating environment: macro trends – Despite growth slowdown, encouraging market signals − CEE debt markets finding favour with investors as the region has remained largely unscathed from the euro-zone debt crisis − Strong demand from foreign investors especially for Czech and Polish government bon
Slide 16: Austrian banks keep the funding in CEE stable
Austrian banks keep the funding in CEE stable Cross-border funding of Austrian banks to selected countries in CEE2) (unconsolidated, as of quarter end) − In an international comparison, deleveraging in CEE has been moderate 25.0 Non-Monetary financial institutions (= governments, corporates, funds e
Slide 17: Erste Group's Segment highlights
Erste Group’s Segment highlights – CZ, AT & SK strong, in RO and HU restructuring ongoing Czech Republic Slovakia EBOe in EUR million 1-6 12 1-6 11 Change 1-6 12 1-6 11 Change 1-6 12 1-6 11 Change Operating income 792 853 (7.2%) 268 279 (4.0%) 472 486 (2.9%) Operating expenses (359) (366) (1.9%) (11
Slide 18: Erste Group's loans granted in CEE
Erste Group’s loans granted in CEE – Are by more than 90% funded by local deposits 70 65.8 − Retail business in CEE 63.8 − Local customer deposits are key pillar for 60 refinancing 50 EUR 53.2bn loans in CEE vs. − Erste Group had as of HY 2012: in EUR bn 40 EUR 54.5bn local deposits in CEE − EUR 53.
Slide 19: Status quo Hungary and Romania
Status quo Hungary and Romania Operating in a challenging environment − Hungary: Final agreement with IMF/EU expected in Q4 2012 − Hungarian markets expected to be volatile until agreement is reached − Financial transaction tax to be introduced in 2013 − EBH: with new strategy to profitability in 20
Slide 20: Presentation topics
Presentation topics − Erste Group’s development in 2011 − Central and Eastern Europe − Outlook 2012 31 July 2012 20 HY results 2012 Press conference
Slide 21: Interest rate environment in Europe
Interest rate environment in Europe Development of 10y government bonds 31 July 2012 21 HY results 2012 Press conference
Slide 22: Conclusion – Outlook
Conclusion – Outlook − Erste Group's core markets expected to show a mixed economic performance in 2012 − Austria, Romania and Slovakia: expected to post some economic growth − Erste Group’s other core CEE markets: expected to contract in 2012 − In line with the weakening economic outlook across Eur