Eurobank S.a. · ATHEX:EUROB
Eurobank — Q3 2018 Earnings Presentation
58 slides from Eurobank's earnings presentation, Nov 22, 2018
Slide 1: Third Quarter 2018 Results
Third Quarter 2018 Results 22 November 2018
Slide 2: Disclaimer
Disclaimer By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations: This presentation has been prepared by Eurobank. The material that follows is a presentation of general background information about Euroban
Slide 3: Table of contents
Table of contents 3Q18 results 3 3Q18 results review 11 Asset Quality 18 International operations 28 Appendix I – Supplementary information 37 Appendix II – Macroeconomic update 41 Appendix III – Glossary 52 Page 2
Slide 4: 3Q 2018 results
Sy eurobank| 3Q 2018 results | Page 3
Slide 5: 3Q18 results
3Q18 results Highlights Key financials Net profit1 €59m in 3Q18; €172m in 9M18, up 29.6% y-o-y €m 3Q18 2Q18 Δ(%) 9M18 9M17 Δ(%) 1 Core pre-provision income (PPI) up 0.8% q-o-q; up 1.1% y-o-y Net interest income 352.0 355.9 (1.1) 1,062.7 1,090.6 (2.6) NII down 1.1% q-o-q; down 2.6% y-o-y Commissi
Slide 6: Pre-provision income (PPI)
Pre-provision income (PPI) Core PPI and other income (€ m) Δ PPI (€ m) 28 51 33 31 40 Other income 213 217 213 214 200 59 9 255 62 55 62 63 Int'l 5 1 244 (4) Greece 151 157 145 151 151 3Q17 4Q17 1Q18 2Q18 3Q18 PPI per region (€ m) 267 255 240 244 Δ ΝΙΙ 2Q18 PPI 3Q18 PPI Δ other income Δ commission i
Slide 7: Asset quality
Asset quality NPEs formation1 (€ m) 90dpd formation1 (€ m) 5 Int'l (115) Greece (111) (110) 26 18 5 (199) (36) Int'l (210) (31) Greece (77) (311) (153) 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 NPEs ratio and Provisions / NPEs (%) Loan loss provisions (€ m) 1.9% 2.2% 1.9% 1.9% 2.0% Cost of R
Slide 8: Funding and liquidity
Funding and liquidity Eurosystem funding (€ bn) Highlights 32.7 Current Eurosystem funding at €2.5bn; €7.5bn down from December 2017 9.8 10.0 (75%) Current ELA funding at €1.2bn; €6.7bn down from December 2017 2.1 7.1 Group deposits up by €1.2bn q-o-q; €3.7bn in 9M18 1.4 5.1 22.9 1.3 Greece
Slide 9: Capital position
Capital position FBL 3 CET1 Phased in CET1 Total CAD 250bps 17.1% 40bps 14.6% 250bps 10bps 11.9% 11.7% (30bps) 2Q18 FLB3 CET1 3Q18 result AFS & other 3Q18 FLB3 CET1 IFRS 9 Other 3Q18 CET1 Tier I & II Total CAD transition transitions RWAs 37,250 - 443 37,693 546 - 38,239 - 38,239 (€ m) Capital 4,437
Slide 10: International Operations
International Operations Core PPI (€ m) Net Profit1 (€ m) 62 62 63 40 40 59 55 32 33 33 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Loan loss provisions (€ m) Net Loans and Deposits (€ bn) 1.6% 1.4% 1.2% 1.1% 1.0% Cost of Risk 23 10.0 20 17 16 14 6.0 4.6 3.4 2.7 1.6 1.1 1.0 0.8 0.5 Int'l BUL S
Slide 11: Acquisition of Piraeus Bank Bulgaria
Acquisition of Piraeus Bank Bulgaria Comments Key Figures Eurobank’s subsidiary in Bulgaria, Postbank, to acquire Piraeus Bank 9M18 Postbank PBB Combined Bulgaria (PBB)1 Gross Loans (€ bn) 2.9 0.9 3.8 Combined pro forma market share ~12% in terms of total loans, ranking #3 Deposits (€ bn) 3.4 1.
Slide 12: 3Q 2018 results review
3Q 2018 results review Page 11
Slide 13: Loans and deposits
Loans and deposits Gross loans (€ bn) Deposits (€ bn) Δ loans l-f-l1 (€m) 122 117 (143) 112.0% 109.6% 102.2% 99.3% 48.3 95.5% 47.2 47.0 Loans/Deposits 46.8 45.4 6.4 6.4 6.4 6.3 37.6 6.4 International 36.4 35.3 33.8 33.2 Greece 10.0 9.6 9.4 8.9 9.3 International 21.2 21.1 21.0 21.0 Business 20.7 27.5
Slide 14: Assets
Assets Total assets (€ bn) Gross Loans Consumer 9% Business 55% Mortgages 36% 57.3 Securities Net loans and advances to customers 35.9 Trading & other 13% Securities 7.6 GGBs 40% PP&E, intangibles and other assets 2.9 Derivatives 1.7 Loans and advances to banks 2.3 Other Deferred tax asset1 4.9 gove
Slide 15: Spreads & net interest margin
Spreads & net interest margin Lending spreads (Greece, bps)1 Deposit spreads (Greece, bps) Performing 3Q17 4Q17 1Q18 2Q18 3Q18 Corporate 468 451 454 424 410 3Q17 4Q17 1Q18 2Q18 3Q18 Retail 384 388 384 401 379 Consumer 1,006 984 993 1,022 997 Savings & Sight (50) (51) (50) (50) (50) SBB 506 523 479 5
Slide 16: Net interest income
Net interest income NII breakdown (€ m) NII evolution (q-o-q, € m) Total NII 369 373 355 356 352 o/w Greece 286 289 274 272 266 o/w International 83 84 81 84 86 6 9 (1) 356 (6) 2 352 Loan margin (14) 426 426 409 407 395 Bonds & other 55 55 58 57 64 Money market & Repos (26) (27) (30) (27) (33) 2Q18
Slide 17: Commission income
Commission income Commission income breakdown (€ m) Commission income per region (€ m) 55bps over assets 79 79 70 74 74 67 70 17 Lending 67 64 64 23 Int’l 18 18 23 16 21 18 23 21 33 Network 31 32 30 26 56 Greece 49 51 15 Capital Markets 43 43 8 9 9 5 13 12 13 12 Asset Management 10 3 Rental & other
Slide 18: Operating expenses
Operating expenses OpEx per region (€ m) OpEx breakdown (€ m) Greece (3.8%) 668 (2.3%) 653 223 226 219 217 217 45 47 Depreciation 45 46 47 45 47 International 242 242 Administrative 179 181 172 172 170 Greece Staff 381 364 3Q17 4Q17 1Q18 2Q18 3Q18 9M17 9M18 Cost-to-income ratio (%) Headcount and net
Slide 19: Asset Quality
Sy eurobank| Asset Quality | Page 18
Slide 20: NPE stock evolution vs. SSM targets (2017-2019)
NPE stock evolution vs. SSM targets 1 (2017-2019) Stock evolution vs targets (€ bn) Δ stock NPEs (€ m) Δ stock NPEs (304) (309) (471) Actual Targets 2017 - 2019 (1,346) (1,178) 457 366 NPE inflows 259 250 287 19.6 (364) (384) (326) NPE outflows (478) (463) 19.4 18.4 (107) 18.1 (124) (148) 17.8 (119)
Slide 21: NPEs formation per segment (Greece)
NPEs formation per segment (Greece) Mortgages (€ m) Consumer (€ m) 315 278 100 38 22 35 38 28 0 7 1 (9) (22) (7) (2) (5) (41) (15) (9) (90) (80) (105) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Small business (€ m) Corporate (€ m) 71
Slide 22: NPEs metrics (Group)
NPEs metrics (Group) 90dpd bridge to NPEs (€ bn) NPEs per region Provisions & Provisions/ Total NPEs NPEs ratio4 collaterals / NPEs NPEs (€ bn) (%) (%) (%) Consumer 1.4 43.6 88.9 99 0.6 17.7 Mortgages 6.0 39.8 41.9 111 3.1 14.0 Small Business 3.9 61.7 55.5 105 Total Retail 11.3 45.9 52.4 102 Corpora
Slide 23: Loans' stage analysis (Group)
Loans’ stage analysis (Group) Loans’ stage breakdown Provisions stock over NPEs 56.1% (€ bn) 4Q17 1Q18 2Q18 3Q18 Δ q-o-q 55.5% 55.9% 53.7% Stage 1 19.5 19.8 20.3 20.3 0.0 Stage 2 7.6 7.6 7.4 7.3 (0.1) 50.4% Stage 3 (NPEs) 20.0 19.6 19.0 17.7 (1.3) Total 47.1 47.0 46.7 45.3 (1.4) 4Q17 4Q17 post 1Q18
Slide 24: Asset quality metrics - 90dpd loans
Asset quality metrics - 90dpd loans 90dpd ratio per segment (%) 90dpd ratio per region (%) €1.2bn €4.8bn €3.5bn €4.4bn €14.0bn 38.0 36.3 36.3 50.6 36.0 35.2 34.4 Greece 33.4 33.2 32.5 30.7 29.5 30.9 24.6 30.9 16.7 14.4 Group 13.1 10.0 9.3 International 3Q17 4Q17 1Q18 2Q18 3Q18 Consumer Mortgages Sma
Slide 25: 90dpd formation per segment (Greece)
90dpd formation per segment (Greece) Mortgages (€ m) Consumer (€ m) 245 216 83 72 66 129 41 94 118 101 35 35 36 109 72 84 84 17 22 18 73 82 6 8 16 31 22 8 (1) (3) (12) (9) (20) (14) (39) (32) (62) (66) 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 3Q1
Slide 26: NPE reduction plan (FY18-FY21)
NPE reduction plan (FY18-FY21)1 NPE net flow 16% Securitizations & Sales Reduction mix Collateral 55% Liquidations 23% € bn 15.3 (3.7) Write-offs & other 6% 11.6 (3.8) 7.8 (2.4) 5.4 FY18 FY19 FY20 FY21 9M18 NPE ratio NPE ratio Greece1 43% ~17% Group 39% ~15% 1. Based on Bank Solo accounts. Submitted
Slide 27: Real Estate Portfolio (Greece)
Real Estate Portfolio (Greece) Repossessions Real Estate Portfolio1 Sales Pipeline: 155 properties of €43m value already agreed 4,3k properties of €0.5bn value 157 50 273 487 104 # Properties # Properties 78 106 66 68 74 73 61 41 33 17 19 10 11 10 8 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18
Slide 28: Property Auctions progress
Property Auctions progress Property auctions breakdown Conducted auctions breakdown (Jan-Oct 2018) # of 2,579 406 2,444 properties 10% 15% 3rd parties 1% acquisitions, 25% 15% 49% 1,251 properties 84% 65% 34% Aquired by the Bank, 85% 17% 2017 1/1-21/02/18 28/02-31/10/18 Suspended/Cancelled Barren Co
Slide 29: International operations
International operations Page 28
Slide 30: International presence
International presence Total Assets (€ bn) 1.4 Net Loans (€ bn) 0.5 Total Assets (€ bn) 1.4 Deposits (€ bn) 1.1 Net Loans (€ bn) 1.0 Deposits (€ bn) 0.8 Branches (#) 80 Total Assets (€ bn) 5.3 Net Loans (€ bn) 1.6 Total Assets (€ bn) 4.0 Net Loans (€ bn) 2.7 Deposits (€ bn) 4.6 Private Banking 8 Dep
Slide 31: Bulgaria P&L
Bulgaria P&L PPI (€ m) OpEx (€ m) 30 30 29 30 27 21 21 22 21 21 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Loan loss provisions (€ m) Net Profit (€ m) 18 17 15 13 13 14 12 10 9 8 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Page 30
Slide 32: Bulgaria B/S and Asset quality
Bulgaria B/S and Asset quality Gross Loans (€ m) NPE ratio and Provisions / NPEs 2,843 2,905 2,919 2,778 2,770 379 402 Consumer 362 365 373 58.2% 57.6% 56.0% Provisions / 50.8% NPEs 47.9% 877 876 890 863 870 Mortgage 22.5% 19.7% 18.9% 17.7% 15.1% NPE ratio 1,553 1,534 1,593 1,650 1,627 Business 3Q17
Slide 33: Cyprus P&L
Cyprus P&L PPI (€ m) OpEx (€ m) 23 21 20 20 19 7 7 8 7 7 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Loan loss provisions (€ m) Net Profit (€ m) 16 14 14 14 11 5 3 3 2 3 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Page 32
Slide 34: Cyprus B/S and Asset quality
Cyprus B/S and Asset quality Gross Loans (€ m) NPE ratio and Provisions / NPEs 1,584 1,611 1,629 1,639 1,525 124 Other 120 122 132 18 79.0% Provisions / 72.7% 74.3% 71.5% NPEs 64.1% 1,507 1,490 1,505 1,507 Business 1,464 7.1% 6.3% 6.1% 5.5% 5.0% NPE ratio 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18
Slide 35: Serbia P&L
Serbia P&L PPI (€ m) OpEx (€ m) 11 12 11 12 11 9 8 8 8 7 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Loan loss provisions (€ m) Net Profit (€ m) 6 5 5 4 4 3 2 3 2 1 3Q17 4Q17 1Q18 2Q18 3Q18 3Q17 4Q17 1Q18 2Q18 3Q18 Page 34
Slide 36: Serbia B/S and Asset quality
Serbia B/S and Asset quality Gross Loans (€ m) NPE ratio and Provisions / NPEs 1,015 1,008 1,031 1,058 997 363 Consumer 57.0% 57.9% 301 317 330 347 53.3% 54.2% Provisions / 49.7% NPEs 165 158 156 154 155 Mortgage 14.8% 12.6% 531 540 522 529 541 Business 11.0% 10.1% 8.5% NPE ratio 3Q17 4Q17 1Q18 2Q18
Slide 37: Key figures – 3Q18
Key figures – 3Q18 Bulgaria Cyprus Serbia Lux Sum Assets 3,999 5,270 1,420 1,351 12,040 Gross loans 2,919 1,639 1,058 466 6,082 Net loans 2,672 1,575 1,010 465 5,723 Balance Sheet (€m) 90dpd Loans 348 71 67 2 488 Balance Sheet NPE loans 441 81 90 2 614 Deposits 3,434 4,630 833 1,123 10,020 Operating
Slide 38: Appendix I – Supplementary information
Appendix I – Supplementary information Page 37
Slide 39: Summary performance
Summary performance Balance sheet – key figures Income statement – key figures €m 3Q18 2Q18 €m 3Q18 2Q18 Gross customer loans 45,296 46,699 Net interest income 352.0 355.9 Provisions (9,438) (10,555) Commission income 79.1 73.8 Loans FVTPL 59 62 Operating income 471.2 461.0 Net customer loans 35,917
Slide 40: Consolidated quarterly financials
Consolidated quarterly financials Income Statement (€ m) 3Q18 2Q18 1Q18 4Q17 3Q17 Net Interest Income 352.0 355.9 354.8 372.9 369.3 Commission income 79.1 73.8 64.0 69.9 66.8 Other Income 40.1 31.3 32.6 50.7 27.5 Operating Income 471.2 461.0 451.5 493.6 463.6 Operating Expenses (216.7) (217.1) (218.
Slide 41: Consolidated financials
Consolidated financials Income Statement (€ m) 9M18 9M17 Δ y-o-y (%) Net Interest Income 1,062.7 1,090.6 (2.6) Commission income 217.0 197.6 9.8 Other Income 104.0 99.8 4.2 Operating Income 1,383.7 1,387.9 (0.3) Operating Expenses (652.8) (668.0) (2.3) Pre-Provision Income 731.0 719.9 1.5 Loan Loss
Slide 42: Appendix II – Macroeconomic update
Appendix II – Macroeconomic update Page 41
Slide 43: Recent macro & market developments and FY-2018 outlook
Recent macro & market developments and FY-2018 outlook Recent macro & market developments Real GDP increased on an annual and on a quarterly basis for a 6th quarter in a row in 2018Q2 (1.8 ΥοΥ% and 0.2 QοQ%); net exports the main driver of growth in 2018H1; 1.5 YoY% growth in 2017, the fastest rat
Slide 44: Greece: Key macro indicators - Realizations & forecasts
Greece: Key macro indicators - Realizations & forecasts 2017, €bn* 2017* 2018** 2019** Real Real Real (nominal) (YoY%) (YoY%) (YoY%) GDP 180.2 1.5 2.1 2.3 Private Consumption 123.8 0.9 1.0 1.1 Government Consumption 35.7 -0.4 0.2 0.6 Gross Fixed Capital 23.2 9.1 0.8 11.9 Formation Exports 59.5 6.8 7
Slide 45: Selected indicators of domestic economic activity
Selected indicators of domestic economic activity Economic Sentiment: consumers’ confidence improves while business’s PMI Manufacturing: it dropped to a 6 months low in Oct-18. However it confidence deteriorates remained above the 50 units threshold for a 17th month in a row Retail Trade Volume: in
Slide 46: Domestic Labour Market
Domestic Labour Market Improving but major challenges remain; reversion of disinvestment critical Unemployment rate: still elevated despite recent declines Long Term Unemployment: a drain of human capital stock 27.9% in 4 Months Moving Average Jul-13 Long Term Unemployment: > 12 Months 19.0% in Jul-
Slide 47: Achievements and Structural Challenges (VIII): Real Estate
Achievements and Structural Challenges (VIII): Real Estate increase in H1 2018 after a multi-year decline Between Q4 2007 and Q4 2017, apartment prices declined cumulatively by 42.3 per cent Downward index trend mainly due to the contraction of disposable income, the increase of unemployment, li
Slide 48: Domestic financial conditions gradually improve
Domestic financial conditions gradually improve Further stabilization of macro environment to facilitate return of bank deposits and relaxation of CCs 1. Private-sector deposits recorded a 4.2% increase year to date; September 2018 increase at 7.5% yoy. 2. Cash outside the Greek banking system in
Slide 49: Fiscal Economics
Fiscal Economics Primary balances targets overperformed but with a toll on growth: 2017 marks the 4th year in the past 5 years with a primary surplus in programme terms; FY-2017 primary surplus at 4.2% of GDP vs. a 1.75% target and FY-2017 gross public debt at 178.6% of GDP. 2019 Draft Budget:
Slide 50: Fiscal Developments
Fiscal Developments Expectations for fulfilling 2018 Budget target: Year-to-Sept. 2018 budget execution data compatible with achievement of the 2018 primary balance target (3.5% of GDP) Primary surplus at €4.8 bn against a target €2.5bn: revenue above target by €1.0bn (with tax refunds below tar
Slide 51: 2018Q2: positive real GDP growth rate for a 6th quarter in a row
2018Q2: positive real GDP growth rate for a 6 th quarter in a row Net exports’ increase counterbalance domestic demand contraction in 2018H1 • Good news: demand from exports remains strong (+8.7 YoY% in 2018H1) and The economy expands private consumption rebounds in 2018Q2 (+1.0 YoY%) for a 6th quar
Slide 52: Main elements of the 21 June Eurogroup agreement
Main elements of the 21 June Eurogroup agreement Fourth (final) programme review • All agreed prior actions were deemed complete Primary surplus • 3.5% of GDP until 2022 • 2.2% of GDP on average from 2023 to 2060 Medium-term debt relief measures • Abolition of step-up interest rate margin related to
Slide 53: Appendix III – Glossary
Appendix III – Glossary Page 52
Slide 54: Glossary – Definition of Financial measures / ratios
Glossary – Definition of Financial measures / ratios This document contains financial data and measures as published or derived from the published consolidated financial statements which have been prepared in accordance with International Financial Reporting Standards (IFRS). Additional sources used
Slide 55: Glossary – Definition of Financial measures / ratios
Glossary – Definition of Financial measures / ratios Commission income: The total of Net banking fee and commission income and Income from non-banking services of the reported period. Other Income: The total of net trading income, gains less losses from investment securities and other income/ (expen
Slide 56: Glossary – Definition of Financial measures / ratios
Glossary – Definition of Financial measures / ratios Cost of Risk: Impairment losses on Loans and Advances charged in the reported period, annualized and divided by the average balance of Loans and Advances to Customers at amortized cost(the arithmetic average of Loans and Advances to Customers at a
Slide 57: Glossary – Definition of Financial measures / ratios
Glossary – Definition of Financial measures / ratios Risk-weighted assets (RWAs): Risk-weighted assets are the Group's assets and off-balance-sheet exposures, weighted according to risk factors based on Regulation (EU) No 575/2013, taking into account credit, market and operational risk. Phased in C
Slide 58: Investor Relations contacts
Investor Relations contacts Dimitris Nikolos +30 210 3704 764 E-mail: dnikolos@eurobank.gr Yannis Chalaris +30 210 3704 744 E-mail: ychalaris@eurobank.gr Christos Stylios +30 210 3704 745 E-mail: cstylios@eurobank.gr E-mail: investor_relations@eurobank.gr Fax: +30 210 3704 774 Internet: www.eurobank