Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Q1 2019 Earnings Presentation
48 slides from Erste Group Bank's earnings presentation, May 3, 2019
Slide 1: Erste Group investor presentation Q1 19 results
Erste Group investor presentation Q1 19 results (unaudited) 3 May 2019 Operating performance improves on strong revenue growth; guidance confirmed 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) -33.3% 565 48 58 79 +12.2% 37 118 51 377 117 19 19 19 377 6 336 6 Q4 18 Operating Operating Risk costs Other Taxes on Minorities Q1 19 1-3 18 Operating Operating Risk co
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 in EUR m in EUR m in EUR m 2.27% 2.18% 2.33% 2.18% 0.12% 0.01% 63.0% 59.3% +11.2% 1,210 1,161 1,161 43 1,083 656 741 590 656 -36 -36 -54 Q4 18 Q1 19 1-3 18 1-3 19 Q4 18 Q1 19
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) +2.9% +2.9% 243,706 243,706 18 564 886 2,636 1,068 3,578 1,112 3,638 236,792 2,637 236,792 1,167 1,261 231 31/12/18 Cash Trading, Loans to Net loans Intangib
Slide 7: Executive summary – Key balance sheet data
Executive summary – 31/12/18 Key balance sheet data 31/03/19 Loan/deposit & loan/TA ratio Net loans & credit RWA NPL coverage ratio & NPL ratio in EUR bn 91.8% 91.4% +1.8% 74.5% 73.4% 63.1% 62.4% 149.3 152.0 95.9 99.6 3.2% 3.0% 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 – Economic outlook remains strong for 2019-2020
2019 Business environment – 2020 Economic outlook remains strong for 2019-2020 Real GDP growth (in %) Dom. demand contribution* (in %) Net export contribution* (in %) Consumer price inflation (avg, in %) 4.9 3.6 3.6 4.1 4.4 3.1 2.9 3.1 3.4 3.7 3.8 3.4 3.2 3.1 3.0 2.8 1.3 2.3 2.5 2.5 2.8 2.9 2.6 0.8
Slide 10: Business environment – CZ has increased key policy rate in eight steps to 2.0%
3M Interbank Business environment – 10YR GOV CZ has increased key policy rate in eight steps to 2.0% since August 2017 Austria Czech Republic Romania 1.87% 2.04% 1.85% 4.80% 4.97% 4.80% 0.75% 1.85% 4.46% 0.42% 0.60% 2.01% 2.94% 0.42% 1.91% 2.01% 1.85% -0.33% -0.31% -0.32% -0.31% 0.86% 3.01% 2.94% 1-
Slide 11: Business environment – Emerging market volatility has minor impact on CEE currencies
Business environment – Emerging market volatility has minor impact on CEE currencies EUR/CZK EUR/RON +1.1% -0.7% +0.3% +1.7% +1.6% +2.6% 25.4 25.7 25.9 25.7 25.7 25.8 4.66 4.74 4.66 4.74 4.65 4.77 1-3 18 1-3 19 Q4 18 Q1 19 31/12/18 31/03/19 1-3 18 1-3 19 Q4 18 Q1 19 31/12/18 31/03/19 • Czech Nationa
Slide 12: Business environment – Market shares: mostly stable or increasing shares across the region
31/03/18 Business environment – 31/12/18 Market shares: mostly stable or increasing shares across the region 31/03/19 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 20.2% 21.0% 19.6% 21.7% AT 20.4% AT 21.7% AT 20.0% AT 21.3% 23.3% 20.7% 25.4% 12.6% CZ 23.6% CZ 20.9% CZ 2
Slide 13: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 13
Slide 14: Performing loans continue to grow across all geographies
YoY 31/03/18 Business performance: performing loan stock & growth – QoQ 31/12/18 Performing loans continue to grow across all geographies 31/03/19 140.5 • Rising performing loan volume trend continued in Q1 19 Group 148.0 7.2% 1.9% across all geographies 150.7 • Yoy development driven by Corporates
Slide 15: Deposit build-up continues in Q1 19
YoY 31/03/18 Business performance: customer deposit stock & growth – QoQ 31/12/18 Deposit build-up continues in Q1 19 31/03/19 155.3 7.0% • Continuation of exceptional deposit growth across all Group 162.6 166.2 2.2% geographies despite zero/low interest rate environment as 34.4 retail and corporate
Slide 16: NII advances 7.2% yoy, seasonally lower qoq
Business performance: NII and NIM – Q1 18 Q4 18 NII advances 7.2% yoy, seasonally lower qoq Q1 19 1,083 2.27% • Yoy NII increase (+7.2%) mainly driven by AT and CZ due to Group 1,210 2.33% higher business volumes and in CZ rising interest rates; also 1,161 2.18% strong contribution from RO; NIM decl
Slide 17: Operating income up yoy, mainly on NII and net trading and FV result
YoY Q1 18 Business performance: operating income – QoQ Q4 18 Operating income up yoy, mainly on NII and net trading and FV result Q1 19 1,655 7.0% • Yoy up in most segments on the back of good macro Group 1,819 1,772 -2.6% environment; strong rise in NII, improved net trading and FV 270 result and b
Slide 18: Q1 cost development impacted by deposit insurance contributions
YoY Q1 18 Business performance: operating expenses – QoQ Q4 18 Q1 cost development impacted by deposit insurance contributions Q1 19 1,065 4.8% • Yoy cost increase mainly driven by higher personnel Group 1,079 1,116 3.4% expenses and deposit insurance; increase in depreciation 180 driven by IFRS 16
Slide 19: Operating result up 11.2% yoy, qoq decline due to deposit insurance
YoY Q1 18 Business performance: operating result and CIR – QoQ Q4 18 Operating result up 11.2% yoy, qoq decline due to deposit insurance Q1 19 Operating result YoY & QoQ change Cost/income ratio 590 64.3% Group 741 11.2% -11.4% 59.3% 656 63.0% 90 66.7% AT/EBOe 111 -21.0% 61.5% -35.7% 73.0% 71 85 76.
Slide 20: Net releases in Q1 19 after minor allocations in previous quarter
Q1 18 Business performance: risk costs (abs/rel*) – Q4 18 Net releases in Q1 19 after minor allocations in previous quarter Q1 19 -54 -0.22% • Yoy and qoq development characterised by continuation of Group 43 0.12% -36 0.01% healthy asset quality, resulting in net releases in most -11 -0.22% geograp
Slide 21: NPL ratio improves further to 3.0%
31/03/18 Business performance: non-performing loans and NPL ratio – 31/12/18 NPL ratio improves further to 3.0% 31/03/19 5,464 3.7% • NPL volume declines qoq by EUR 0.2bn to EUR 4.7bn in Group 4,881 3.2% 4,691 3.0% Q1 19 concurrent with loan growth leading to the NPL ratio 620 1.9% improvement. NPL
Slide 22: NPL coverage rises to 74.5%
31/03/18 Business performance: allowances for loans and NPL coverage – 31/12/18 NPL coverage rises to 74.5% 31/03/19 3,963 73.0% • NPL coverage rises yoy and qoq, exceptionally strong in Group 3,563 73.4% 3,480 74.5% Central & Eastern Europe 388 62.8% • Stock of provisions and stock of NPLs declined
Slide 23: Other result declines on resolution fund contributions
Q1 18 Business performance: other result – Q4 18 Other result declines on resolution fund contributions Q1 19 -124 • Yoy other operating result remained stable, minor impact due Group -72 -130 to higher resolution fund contributions -11 • Qoq deterioration due to booking of full-year resolution fund
Slide 24: Net profit rises yoy, down qoq on tax line and other operating result
Q1 18 Business performance: net result – Q4 18 Net profit rises yoy, down qoq on tax line and other operating result Q1 19 336 • Yoy profitability rises on better operating performance Group 565 377 • Qoq development driven by DTAs booked in Q4 18 as well as 64 contributions into resolution fund and
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 – Loan/deposit ratio stable at 91.4%
Assets and liabilities: YTD overview – Loan/deposit ratio stable at 91.4% at Mar 19 (Dec 18: 91.8%) Assets (EUR bn) Assets (in %) Liabilities & equity (EUR bn) Liabilities & equity (in %) 243.7 236.8 243.7 236.8 100% 2.3 100% 16.4 7.4% 6.7% 2.5 20.3 7.5% 1.1% 8.3% 0.9% 17.5 17.7 45.2 18.6% 18.5% 43.
Slide 27: Customer loans by country of risk – Net customer loans up 1.8%
Assets and liabilities: customer loans by country of risk – Net customer loans up 1.8%, NPLs down 3.9% ytd Net customer loans (EUR bn) Performing loans (EUR bn) Non-performing loans (EUR bn) +7.0% +7.2% 149.3 152.0 148.0 150.7 142.1 4.6 4.7 140.5 4.6 4.7 -14.2% 3.7 7.5 7.8 3.7 7.4 7.7 6.9 1.5 1.6 1.
Slide 28: Financial and trading assets – LCR at excellent 150.9%
Assets and liabilities: financial and trading assets * – LCR at excellent 150.9% By geography By debtor type Liquidity buffer +5.2% in EUR bn in EUR bn 41.8 42.0 39.9 100% 26.7% 27.4% 26.9% 9.2% 9.4% 9.3% 9.5 10.5 7.6% 9.0% 23.3% 9.0 10.9% 58.7 0.7 55.5 0.8 0.7 51.2 52.2 3.5 3.5 3.3 4.9 5.0 5.2 4.5
Slide 29: Customer deposit funding – Customer deposits grow by 2.2% ytd
Assets and liabilities: customer deposit funding – Customer deposits grow by 2.2% ytd, driven by households and corporates By customer type By product type Highlights in EUR bn in EUR bn • Continued deposit inflows driven by Retail +7.0% segment with highest demand for overnight deposits amid low in
Slide 30: Debt vs interbank funding – Taking advantage of favourable market conditions
Assets and liabilities: debt vs interbank funding – Taking advantage of favourable market conditions Debt securities issued Interbank deposits in EUR bn in EUR bn +8.5% -3.3% 29.7 21.0 20.3 28.7 Sub debt 26.4 5.8 Senior unsec. bonds 3.7 Overnight deposits 6.0 17.7 Term deposits Certificates of depos
Slide 31: LT funding – Limited LT funding needs in 2019
Assets and liabilities: LT funding – Limited LT funding needs in 2019 Maturity profile of debt in EUR bn 3.2 3.3 2.9 2.1 2.1 1.8 1.6 1.5 1.4 1.4 0.3 0.4 0.2 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031+ Senior unsec. bonds Covered bonds Capital exc Tier 1 Debt CEE • Funding needs
Slide 32: LT funding – MPE resolution strategy
Assets and liabilities: LT funding – MPE resolution strategy Resolution strategy Austrian resolution group • Major entities within the Austrian resolution group *: • Direct presence in 7 geographically connected countries • Erste Group Bank AG • Erste Group’s setup suggests a multiple point of entry
Slide 33: Capital position – B3FL CET1 ratio at 13.2%
Assets and liabilities: capital position – B3FL CET1 ratio at 13.2% (excluding interim profit) Basel 3 capital (phased-in) Risk-weighted assets (phased-in) Basel 3 capital ratios (phased-in) in EUR bn in EUR bn 18.2% 18.2% 17.6% 17.4% 17.2% 20.9 21.3 114.0 116.3 117.0 114.6 116.8 20.1 20.3 20.1 14.5
Slide 34: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 34
Slide 35: Conclusion – Outlook 2019
Conclusion – Outlook 2019 • Real GDP growth of approx. 3% expected in 2019 in CEE and about 2% in Austria Macro outlook • Real GDP growth to be driven by solid domestic demand, as real wage growth and 2019 low 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: New segmentation – Business line and geographic view
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: Income statement – Year-to-date and quarterly view
Additional information: income statement – Year-to-date and quarterly view* Year-to-date view Quarterly view in EUR million 1-3 18 1-3 19 YOY-Δ Q1 18 Q4 18 Q1 19 YOY-Δ QOQ-Δ Net interest income 1,082.6 1,160.9 7.2% 1,082.6 1,210.0 1,160.9 7.2% -4.1% Interest income 1,222.0 1,356.6 11.0% 1,222.0 1,37
Slide 39: Group balance sheet – Assets
Additional information: group balance sheet* – Assets Quarterly data Change in EUR million Mar 18 Jun 18 Sep 18 Dec 18 Mar 19 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 25,246 16,888 15,237 17,549 16,382 -35.1% -6.6% -6.6% Financial assets held for trading 6,603 6,888 6,034 5,584 6,331 -4.1% 13.4% 13.
Slide 40: Group balance sheet – Liabilities and equity
Additional information: group balance sheet* – Liabilities and equity Quarterly data Change in EUR million Mar 18 Jun 18 Sep 18 Dec 18 Mar 19 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities HfT 2,940 3,070 2,865 2,508 2,277 -22.5% -9.2% -9.2% Derivatives 2,384 2,529 2,153 2,000 1,979 -17.0% -1.1% -1.1% Othe
Slide 41: Regulatory capital position/requirement (SREP)
Additional information: regulatory capital position/requirement (SREP) – Capital requirements (SREP) for 2019; Erste Group target of 13.5% unchanged • Combined impact of countercyclical buffers amounts to 44bps in 2019 • Management buffer targeted in 100-150bps range Erste Group Consolidated Erste G
Slide 42: Gross customer loans – By risk category, currency, industry
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) 152.0 152.8 155.4 152.0 152.8 155.4 155.4 146.0 148.5 146.0 148.5 152.0 152.8 5.3
Slide 43: Footprint – Customer banking in Austria and the eastern part of the EU
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: 4.6m Customers: 2.2m in 7 geographically connected Employees: 9,953 Employees: 4,070 countries CZ Bra
Slide 44: Strategy – A real customer need is the reason for all business
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: Ratings – Composition of Erste Group Bank AG's issuer ratings
Additional information: Ratings – Composition of Erste Group Bank AG’s issuer ratings Macro Profile SACP - Stand-Alone Credit Profile VR - Viability Rating Strong a (Individual Rating ) + Financial Profile ▲ a Asset Risk baa2 Anchor bbb+ Capital baa1 Business Position Strong +1 Profitability baa3 Ca
Slide 46: ESG ratings, indices and alignment with UN SDGs
Additional information: ESG ratings, indices and alignment with UN SDGs ESG Ratings and Indices UN Sustainable Development Goals In principle, Erste Group supports all SDGs. Given its regional footprint and business model, Erste Group is in fact able to make notable contributions to Included in the
Slide 47: Shareholder structure – Total number of shares: 429,800,000
Additional information: shareholder structure – Total number of shares: 429,800,000 By investor By region Erste Foundation 1 Unidentified * Unidentified * 11.34% Savings Banks & 15.94% Savings Banks 15.94% Austria Foundations 2 26.18% 5.89% Identified Trading ** Identified Trading ** 2.52% Other Syn
Slide 48: 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