Erste Group Bank Ag · VIE:EBS
Erste Group Bank — FY2010 Earnings Presentation
25 slides from Erste Group Bank's earnings presentation, Feb 25, 2011
Slide 1: Erste Group Bank AG 2010 results presentation
Erste Group Bank AG 2010 results presentation 25 February 2011, Vienna Strong operating performance and declining risk costs drive net profit growth Andreas Treichl, Chief Executive Officer Manfred Wimmer, Chief Financial Officer Bernhard Spalt, Chief Risk Officer Herbert Juranek, Chief Operating Of
Slide 2: Improved risk assessment in CEE
Improved risk assessment in CEE CDS spreads (as of 23.2.2011) − Slovak government bonds cheaper than Italian 0 200 400 600 800 1000 Greece 930 − Strong interest for the EUR 1.25bn Ireland 595 increase on Slovak government bonds Portugal 473 − The risk assessment of the CEE region Ukraine 471 has bee
Slide 3: Erste Group's business – Retail market leadership in the eastern part of the EU
Erste Group’s business – Retail market leadership in the eastern part of the EU − Focus on the eastern part of the European Union − Erste Group is the leading retail bank − Erste Group is one of the leading corporate banks − Erste Group is the leading bond originator − Erste Group is the leading fun
Slide 4: Operating environment: macro trends – What happened in CEE in 2010?
Operating environment: macro trends – What happened in CEE in 2010? − Industry was the main economic growth driver in CEE in 2010 − Economic recovery was export-driven in most of CEE (AT, CZ, SK & HU) − Improved household consumption in selected countries, e.g. AT, CZ − Fiscal discipline turned out
Slide 5: Operating environment: macro trends – Economic growth outlook in CEE
Operating environment: macro trends – Focus: Economic growth outlook in CEE − In 2011 more balanced growth is expected Real GDP growth in CEE supported by a rebound of domestic demand 8% 4.1% 4.0% − Domestic demand expected to pick up and become 2.8% 2.3% 2.2% 2.0% 1.9% an important growth contribut
Slide 6: 2010 financial highlights – Rising net profitability and resilient margins
2010 financial highlights – Rising net profitability and resilient margins − Net profit grew by 12.4% to EUR 1,015.4 million Cash earnings per share * − Lower cash-EPS and cash-ROE due to substantially enlarged capital base 5.0 3.92 4.0 3.14 3.76 2.89 − NIM on interest bearing assets remained stable
Slide 7: 2010 financial highlights – Operating result continued to perform well
2010 financial highlights* – Operating result continued to perform well in EUR million 2010 2009 Change Q4 10 Q3 10 Q4 09 Retail & SME 3,177.2 3,005.9 5.7% 799.4 808.0 851.1 Austria 853.6 816.2 4.6% 223.6 210.2 231.2 EB Oesterreich 394.3 328.3 20.1% 103.7 96.8 84.7 Savings banks 459.3 488.0 (5.9%) 1
Slide 8: 2010 financial highlights – Record operating income, strict cost control
2010 financial highlights – Record operating income, strict cost control Operating income per quarter Operating expenses per quarter 2,500 1,200 1,954 2,010 927 953 945 973 945 1,922 1,936 1,905 1,000 2,000 82 141 99 144 72 94 97 95 102 in EUR million 105 in EUR million 460 472 494 476 495 800 1,500
Slide 9: Customer deposit review – Deposit growth continued to outpace loan growth
Customer deposit review – Deposit growth continued to outpace loan growth − Customer deposits grew by 4.4% in 2010 (+1.5% qoq) Customer deposit trends by main segments − Primarily a result of steady growth in Austria and strong inflows in the Czech Republic and Romania 125 112.0 115.6 116.6 115.3 11
Slide 10: Loan book review – Loan demand across the segments remained subdued
Loan book review – Loan demand across the segments remained subdued − Customer loans increased by 2.8% yoy; Customer loans by main segments * up 0.9% qoq − Retail & SME segment growth mainly driven by currency 150 132.7 129.1 130.3 131.0 131.5 movements (EUR/CZK, EUR/CHF, CHF/HUF) 18.4 18.7 120 19.5
Slide 11: Asset quality review – Group trends: declining NPL formation, rising coverage
Asset quality review – Group trends: declining NPL formation, rising coverage − New NPL formation decreased yoy and qoq; Erste Group: NPL ratio vs NPL coverage risk costs improved to 155bps in 2010 − Risk costs as a percentage of average customer 30% 65% loans amounted to 161bps in 2009; 134bps in Q
Slide 12: Asset quality review – Segment round-up: Austria excelled, CEE still mixed
Asset quality review – Segment round-up: Austria excelled, CEE still mixed − Retail & SME/Austria: improving asset quality NPL ratios in key segments leads to reduced NPL ratio − Fall in non-performing and substandard category as 20% 18.0% well as increase in low risk asset class continued − NPL cov
Slide 13: Asset quality review – Segment round-up cont'd: Slovakia led in CEE
Asset quality review – Segment round-up cont'd: Slovakia led in CEE − Romania: new NPL formation mainly related to Risk costs in key segments SME segment but slowed down overall − NPL coverage ratio went down due to sales of highly 700 provisioned unsecured consumer loans 607 600 531 553 60 504 − On
Slide 14: Erste Group's funding profile – Retail deposits remained a key pillar
Erste Group’s funding profile – Retail deposits remained a key pillar in the funding mix − Customer deposits remained the primary source of funding Evolution of Erste Group's funding mix − Providing a solid funding base in all local currencies − Reflected in loan/deposit ratio improvement to 113.4%
Slide 15: Erste Group's capital position – Retained earnings drive capital growth
Erste Group’s capital position – Retained earnings drive capital growth Total capital reconciliation 18 0.1 17.1 0.1 0.1 -0.4 -0.1 16.1 1.2 16 in EUR billion 3.5 3.4 14 12 13.6 12.7 10 Total Net profit Own AfS FX-∆ Dividend Other Total capital shares capital Dec 09 Dec 10 Equity Minority capital − T
Slide 16: Erste Group's capital position – Further strengthening of capital ratios
Erste Group’s capital position – Further strengthening of capital ratios Tier 1 ratio Core tier 1 ratio (total risk)1 (total risk)2 10.2% 9.2% 9.2% 8.3% 6.2% 5.2% 2008 2009 2010 2008 2009 2010 1) Tier 1 ratio (total risk) = tier 1 capital incl. hybrid and after regulatory deductions divided by total
Slide 17: Group income statement
Group income statement in EUR million 2010 2009 Change Q4 10 Q3 10 Q4 09 Net interest income 5,412.5 5,220.9 3.7% 1,337.0 1,390.7 1,380.0 Risk provisions for loans and advances (2,031.2) (2,056.6) (1.2%) (442.8) (504.2) (607.4) Net fee and commission income 1,936.0 1,772.8 9.2% 495.3 475.7 459.5 Net
Slide 18: Group balance sheet
Group balance sheet in EUR million Dec 10 Dec 09 Change Cash and balances with central banks 5,839 5,996 (2.6%) Loans and advances to credit institutions 12,496 13,140 (4.9%) Loans and advances to customers 132,729 129,134 2.8% Risk provisions for loans and advances (6,119) (4,954) 23.5% Derivative
Slide 19: Group balance sheet
Group balance sheet in EUR million Dec 10 Dec 09 Change Deposits by banks 20,154 26,295 (23.4%) Customer deposits 117,016 112,042 4.4% Debt securities in issue 31,298 29,612 5.7% Derivative financial instruments 7,996 3,749 >100.0% Trading liabilities 216 721 (70.0%) Provisions 1,545 1,670 (7.5%) Cu
Slide 20: Segment review – Core segments
Segment review – Core segments Retail & SME GCIB Group Markets Corporate Center Total group in EUR million 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 Net interest income 4,593.8 4,530.3 574.2 570.5 156.4 193.2 88.1 (73.1) 5,412.5 5,220.9 Risk provisions (1,844.6) (1,788.6) (186.5) (267.9) 0.0
Slide 21: Core segment – Austria
Core segment – Austria Savings Banks EB Oesterreich Austria in EUR million 2010 2009 2010 2009 2010 2009 Net interest income 941.4 957.1 644.3 637.5 1,585.8 1,594.6 Risk provisions (303.3) (331.3) (148.3) (151.4) (451.6) (482.7) Net fee and commission income 421.6 393.6 345.2 302.8 766.7 696.4 Net t
Slide 22: Core segment – Central and Eastern Europe (1)
Core segment – Central and Eastern Europe (1) Czech Republic Romania Slovakia Hungary in EUR million 2010 2009 2010 2009 2010 2009 2010 2009 Net interest income 1,087.2 1,080.8 798.6 836.8 426.8 385.9 387.1 353.6 Risk provisions (365.8) (288.1) (506.7) (532.4) (123.2) (156.5) (244.3) (170.8) Net fee
Slide 23: Core segment – Central and Eastern Europe (2)
Core segment – Central and Eastern Europe (2) Croatia Serbia Ukraine CEE in EUR million 2010 2009 2010 2009 2010 2009 2010 2009 Net interest income 247.9 223.4 27.5 28.1 32.9 27.1 3,008.0 2,935.7 Risk provisions (106.0) (74.5) (8.2) (7.0) (38.8) (76.7) (1,393.0) (1,305.9) Net fee and commission inco
Slide 24: Conclusion – Outlook
Conclusion – Outlook − CEE economies set to continue economic recovery in 2011 − Austria, Czech Republic and Slovakia to build on their solid performance of 2010 − All of Erste Group’s CEE markets are expected to grow in 2011 − Strong operating performance to be sustained in 2011 − Expectation based
Slide 25: 2010 executive summary – Strong operating performance & declining risk costs
2010 executive summary – Strong operating performance & declining risk costs − Continued strong operating performance – cost/income ratio improved to 48.9% (2009: 50.2%) − Operating income rose by 3.0% to EUR 7,804.7m due to strong NII and fee income, which more than offset a 22% decline in net trad