Eurobank S.a. · ATHEX:EUROB
Eurobank — Investor Presentation (September 2013)
49 slides from Eurobank's investor presentation, September 2013
Slide 1: Investor presentation
12ifm0105 Investor presentation September 2013
Slide 2: Overview
Page 1 Overview 1 One of the four systemic banks in Greece with 20% and 19% market share in loans and deposits respectively The Eurobank Increased scale and improved competitive position with the acquisition of two “good” banks, New Hellenic Postbank Group and New Proton Bank Established prese
Slide 3: Overview of the Eurobank Group
Page 2 Overview of the Eurobank Group
Slide 4: The Eurobank Group at a glance
Page 3 The Eurobank Group at a glance Eurobank at a glance Key figures (€bn)(2) One of the four systemic banks in Greece, with 20% and 19% market 30 June 2013 share in loans and deposits respectively (1) Customer loans (net) 48.3 HFSF is the main shareholder with 95% stake following the Customer
Slide 5: The new management team
Page 4 The new management team Photo Photo Photo Christos Megalou, CEO Michael Colakides, Deputy CEO, Constantinos Vousvounis, Risk Management General Manager Group Corp. & Inv. Banking Photo Photo Photo Stavros Ioannou, Fokion Karavias, Harris Kokologiannis, General Manager Retail Banking General M
Slide 6: Strategic objectives of the new management team
Page 5 Strategic objectives of the new management team Objectives: 1 Transform our business and operating model to focus on being our clients' primary banking relationship 2 Restore the bank's profitability 3 Integrate New Hellenic Post Bank and New Proton Bank 4 Introduce private sector capital
Slide 7: Strategic transformation program
Page 6 Strategic transformation program Built around deposit and daily banking needs of clients (vs. lending) Client-relationship Establish new client segmentation model along client size and revenue potential business model Focus on profitable target clients in retail and corporate Launch c
Slide 8: Recent M&A activity
Page 7 Recent M&A activity Transaction highlights Key benefits Transformational acquisition, resulting in material increase in scale Eurobank agreed to acquire the entire share capital of NHPB (“good bank”) for a total consideration of €681m Significant funding benefits from matching liquidity
Slide 9: Acquisition of NHPB and Proton substantially improved Eurobank's size and profile
Page 8 Acquisition of NHPB and Proton substantially improved Eurobank’s size and profile Group net customer loans (30 June 2013, €bn) Group customer deposits (30 June 2013, €bn) Market Market 11% 19% share(1) 17% 20% share(1) L/D 48.3 ratio 136% 64% 58% 116% 6.8 0.6 41.0 10.5 1.0 41.7 30.2 As report
Slide 10: Transformation of the Greek banking sector
Page 9 Transformation of the Greek banking sector Loan market share(1) of top 4 banks in Greece Market share of top 4 banks(2) 91% Greece 91% +32% consolidation Portugal 60% Turkey 53% 59% Italy 51% Germany 42% Spain 41% Poland 41% 2005 H1 2013 (1) Based on gross loans (2) Market share by total asse
Slide 11: Eurobank and the consolidation of the Greek banking sector
Page 10 Eurobank and the consolidation of the Greek banking sector Recent acquisitions as %(1) of customer loans (2) Acquired banks Piraeus 45% 55% CPB (3) Alpha Bank 73% 27% (4) Eurobank 85% 15% (5) NBG 95% 5% Acquired loans (%) “Good” banks Manageable asset quality Leave room for potential Control
Slide 12: Position of Eurobank in the Greek banking sector
Page 11 Position of Eurobank in the Greek banking sector Gross loans market share (30 June 2013) Deposits market share (30 June 2013) Gross domestic loans (€bn) Market share Domestic deposits (€bn) Market share BOP 68.5 29.6% BOP 50.2 28.6% 23.1% 23.1% Alpha 53.4 NBG 40.6 NHPB: 7.7 20.7% Eurobank EU
Slide 13: Liquidity and funding position of Eurobank
Page 12 Liquidity and funding position of Eurobank Net loan / deposit ratio (30 June 2013) Eurosystem funding / total assets (30 June 2013) (3) Peer 2 127% Alpha 24.1% (1) (2) (1) Peer 1 116% Eurob 21.3% (2) 116% NBG 20.5% (3) Peer 3 102% BOP 16.8% Notes: : Proton solo data as at 31 May 2013; Peer d
Slide 14: Asset quality of Eurobank
Page 13 Asset quality of Eurobank 90+ dpd ratio (30 June 2013) Loan loss reserves / gross loans (30 June 2013) 90+ dpd LLP (€bn) coverage BOP 33.2% 25.1 16.3% 49% BOP Alpha 31.8% 20.3 Alpha 16.3% 51% (1) (1) Euro 25.3% 14.0 Eurob 12.6% 50% NBG 20.8% 14.5 NBG 11.0% 53% Eurobank acquired “good” banks
Slide 15: Capital evolution
Page 14 Capital evolution Capital (€m) 2,832 - +380 +176 +780 -701 -283 3,184 RWAs (€m) 36,228 -2,124 +5,434 39,538 2 3 Notes: 1. Deleveraging and investment securities reduction. 2. Capital gain from strategic partnership with Fairfax Holdings Ltd 3. Operating and extraordinary results of 1H13
Slide 16: Profitable international presence
Page 15 Profitable international presence Key facts about international operations Development of loans and deposits (€bn) International operations represent 16% of the Group’s assets(1) L/D 143% 95% ratio − Presence in six countries outside of Greece 8.1 8.5 − Romania is the largest and represent
Slide 17: Combined Group key metrics
Page 16 Combined Group key metrics (1) (1) (2) Enlarged Group Combined Total assets (€m) 67,386 13,583 1,178 82,147 Key figures Gross loans (€m) 46,315 7,667 1,328 55,310 Net loans (€m) 40,987 6,766 564 48,317 Deposits (€m) 30,185 10,518 964 41,667 Net loans / deposits (%) 135.8% 64.3% 58.5% 116.0%
Slide 18: The road to profitability
Page 17 The road to profitability
Slide 19: 2012 vs. 2007 financial performance
Page 18 2012 vs. 2007 financial performance PBT: 2012 vs. 2007 (€m)(1) Comments 1,075 -459 Sharp deterioration of profitability since 2007 peak mainly -333 driven by: -1,266 ‒ Impairments: cost of risk increased from 100bps in 2007 192 to 369bps in 2012 ‒ Lower NII: mainly driven by increased cost
Slide 20: Starting point: adjusted H1 2013 pre-provision performance
Page 19 Starting point: adjusted H1 2013 pre-provision performance H1 2013 adjusted pre-provision income (€m) Standalone run-down of Eurosystem funding costs between January and June (annualised: €48m) Improvement of deposit spreads (annualised: €60m) 153 713 Income from recapitalisation bonds
Slide 21: Substantial scope to improve profitability through synergies with low execution risk
Page 20 Substantial scope to improve profitability through synergies with low execution risk Annual Pre-tax Synergies 2015(1) (€m) Comments Lower deposit costs due to market consolidation and NHPB time deposit costs converging to Eurobank levels 44% Funding 89 NHPB interbank funding costs decrea
Slide 22: Integration plan in place and strong integration track record
Page 21 Integration plan in place and strong integration track record Integration plan Timing Integration strategy for NHPB based on One Bank – Two Brands Branch network Two separate brands will be maintained, with the optimization of the two 9 months branch networks and the integration of the pro
Slide 23: Key drivers of future profitability
Page 22 Key drivers of future profitability Standalone benefits There is scope for operational improvements as the cost base adapts to the new environment Operational efficiency (in addition to merger synergies) Deposit spreads Deposit costs in Greece are expected to normalise in the medium term
Slide 24: Operating expense normalisation
Page 23 Operating expense normalisation Cost-to-income development (%) Group OpEx (€m) Group cost / income ratio 1,358 -27% Greece cost / income ratio 994 82 72 59 FY08 1H13 - annualized Notes: Excludes Polish and Turkish operations sold in 2012 48 42 Excellent cost containment track record. 27% A
Slide 25: Significant upside potential from normalisation of deposit costs
Page 24 Significant upside potential from normalisation of deposit costs Eurobank Greek deposits spreads development (bps)(1) Greek crisis provoked significant deposit outflows and subsequent pricing deterioration Time deposit pricing deteriorated by 370bps since Q4 2007 269 Pricing to be rest
Slide 26: Potential to significantly reduce reliance on Eurosystem funding
Page 25 Potential to significantly reduce reliance on Eurosystem funding 1 Gradual run-down on a standalone basis(1) 2 Recent acquisitions improve liquidity(2) Cost of (Eurosystem funding, in €bn) Eurosystem 2.3% 1.6% 1.3% funding (%) 19.5 30.1 17.5 27.2 22.6 23.3 21.8 ELA 8.0 21.2 21.1 20.7 6.0 19.
Slide 27: Potential recovery of fee & commission income
Page 26 Potential recovery of fee & commission income Net fee & commission income / average total assets Due to the crisis, fee and commission income contracted from 0.9% of total assets in 2007 to 0.4% in 1H2013 Commission income is highly dependent on macro 0.92% environment and markets perfor
Slide 28: Asset quality trends
Page 27 Asset quality trends Greek 90dpd formation (€m) 805 -39% YoY 730 718 696 633 613 576 525 534 493 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Decreasing NPL formation (1) As reported data (no pro forma adjustment)
Slide 29: Cost of risk normalisation
Page 28 Cost of risk normalisation Cost of risk development for Eurobank (Greece) 4.4% Greek provision charges increased by 310bps on average net loans during the crisis 3.8% 4.2% Asset quality hinges on macro but also regulatory environment: − New law on household insolvency should stem the 2.8
Slide 30: Roadmap for Eurobank's return to the private sector
Page 29 Roadmap for Eurobank’s return to the private sector
Slide 31: Roadmap for Eurobank's return to the private sector
Page 30 Roadmap for Eurobank’s return to the private sector 17 July 2013: Greek authorities statement on Eurobank “We will undertake to place a substantial equity stake in Eurobank to a privately owned strategic international investor by end-March 2014. To this end, we will contract consultants by e
Slide 32: Appendix 1: H1 2013 results overview
Page 31 Appendix 1: H1 2013 results overview
Slide 33: Eurobank 2Q 2013 Highlights
Page 32 Eurobank 2Q 2013 Highlights 1H13 net profit at €45m after €533m non-recurring earnings; 2Q13 losses at €244m before extraordinary items. NII gains 9% qoq to €301m; Greek NII up 15% qoq. Costs down 8.5% yoy; quarterly OpEx the lowest in 7 quarters. Quarterly core PPI at €120m vs. €93m
Slide 34: New acquisitions add size and improve liquidity
Page 33 New acquisitions add size and improve liquidity Gross loans: Deposits: Ongoing de-risking of the loan book L/D ratio improves to 116% pro-forma for NHPB & NPB pro-forma for NHPB & NPB 50.0 49.0 Group L/D 48.6 48.2 47.8 47.4 ratio pro-forma Int’l for NHPB & Operations NPB 41.7 Greece: pro-for
Slide 35: NII evolution: Greek NII bottoms out
Page 34 NII evolution: Greek NII bottoms out NII evolution per segment Imminent NII normalization factors Deposit spreads: August spreads already 20 bps better than 1H13. Total NII Interest on €5.8bn EFSF bonds (80-100bps) running for the full period going forward. Eurosystem funding cost redu
Slide 36: Group NIM recovers driven mostly by improvement in Greece
Page 35 Group NIM recovers driven mostly by improvement in Greece Evolution of Greek spreads (%) Evolution of NIM 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 NIM (%) 2Q12 3Q12 4Q12 1Q13 2Q13 Core deposits 0.16 -0.33 -0.41 -0.51 -0.55 -0.51 -0.50 Group 2.11 2.06 1.77 1.67 1.83 Time deposits & -2.28 -2.57 -2.9
Slide 37: Resilient commissions aided by network activities and capital markets
Page 36 Resilient commissions aided by network activities and capital markets Commission income evolution per segment Commission income evolution per region 98 89 86 82 78 80 81 Adding back Govn’t 69 71 78 guarantees cost 65 62 69 71 61 65 67 62 61 Non-banking services Greece Insurance Mutual Funds
Slide 38: Ongoing cost reduction
Page 37 Ongoing cost reduction Regional evolution of costs OpEx down 27% cumulatively since 2008 Vs. 2Q12 -8% Vs. Av.Q08 -27% Int’l 269 256 254 249 248 1,566 Operations POL Greece TUR 1,358 -365 -27% Quarterly evolution of costs Int’l Operations 993 -145 269 266 Vs. Depr 256 249 2Q12 -31% Admin -9%
Slide 39: Greek 90dpd formation on declining trend; provision charge stable
Page 38 Greek 90dpd formation on declining trend; provision charge stable 90dpd formation 90dpd ratio Greek formation down 29% qoq 874 2Q12 3Q12 4Q12 1Q13 2Q13 811 Group 19.6% 21.3% 22.8% 24.6% 26.4% 768 Greece 20.5% 22.5% 24.2% 26.3% 28.1% 710 Int’l Ops 16.0% 16.6% 17.2% 17.8% 19.2% 695 594 601 Loa
Slide 40: Int'l Operations L/D ratio at 95%
Page 39 Int’l Operations L/D ratio at 95% Loans-to-deposits ratio below 100% +1.0 +3.5 +14% +71% Δnet loans & Δdeposits FY07-1H13 Net Loans Deposits € bn
Slide 41: Int'l Operations: Resilient revenues but bottom line affected by asset quality costs
Page 40 Int’l Operations: Resilient revenues but bottom line affected by asset quality costs Operating Income Operating expenses Provision charge Net Profit € m.
Slide 42: Appendix 2: Macroeconomic update
Page 41 Appendix 2: Macroeconomic update
Slide 43: Significant fiscal improvement
Page 42 Significant fiscal improvement General government deficit (% of GDP) Greek 10Y Government Bond yield (%) 40% Eurozone 2012 15.6 Average: 4.0% 30% 10.8 9.6 20% 6.3 4.1 10% 10.0% 3.2 2.1 0.7 0% 2008 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 2014 2015 2016 Note: Estimates post 2011 Sour
Slide 44: Regaining of competitiveness
Page 43 Regaining of competitiveness Real harmonised competitiveness indicator(1) (1999 Q1=100) Trade balance (% of GDP) 120 3.0 2.5 1.5 110 109 (0.1) 100 (2.5) 90 92 (6.0) (6.8) (7.8) 80 1999 2001 2003 2005 2007 2009 2011 2013 2009 2010 2011 2012 2013 2014 2015 2016 Greece Eurozone average Note: Es
Slide 45: Return of confidence in the banking system
Page 44 Return of confidence in the banking system Deposits (€bn) Funds contributed to Greek banks (€bn) 50 250 38.9 40 30 200 Elections 20 Jun-12 176 10 3.1 150 Jun-10 Jun-11 Jun-12 Jun-13 0 HFSF Private Investors Note: Total deposits and repos of domestic non-financial institutions Note: HFSF incl
Slide 46: Investors focus again on Greece
Page 45 Investors focus again on Greece Recent foreign investments in Greece New corporate debt issuances (€m) Company Sector Investor Investment (€m) Coupon 9.875 8.750 7.875 8.000 8.250 9.750 8.750 (%) 700 DESFA Oil & Gas SOCAR 400 500 325 Qatar Petroleum (1) 200 250 275 Heron Utilities 44 192 Int
Slide 47: Macro, political risks in the way to sustainable growth
Page 46 Macro, political risks in the way to sustainable growth Marginal parliamentary majority of coalition Fixed investment (% of GDP) Independent MPs 11 Independent Greeks Right-wing 30% PASOK Syriza 18 27% Social Democrats Left Golden Dawn 25% 28 72 Ultra nationalist 23% New Democracy 18 Conserv
Slide 48: Funding gap and potential buffers
Page 47 Funding gap and potential buffers (€bn) 2012 2013-2016 2017-2020(1) Funding gap for 2014 and 2015 currently estimated at €4.4bn Gross borrowing needs 111.0 84.2 28.1 and €6.5bn respectively Overall general govt balance To avoid any further austerity measures, the Government could (accrua
Slide 49: Legal Notice
Page 48 Legal Notice This presentation has been prepared by and is the sole responsibility of Eurobank. It has not been reviewed, approved or endorsed by any third party retained by Eurobank. This presentation is provided for information purposes only. The contents of this presentation do not consti