Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Erste Bank — Q3 2004 Earnings Presentation
42 slides from Erste Group Bank's earnings presentation, Nov 12, 2004
Slide 1: Erste Bank – on course for full year targets
> Erste Bank – on course for full year targets > Q3 2004 Results > Analyst Presentation / Teleconference London, 12 November 2004
Slide 2: Table of Contents
> Table of Contents Hosts Presentation Appendix Andreas Treichl, CEO 03 Q3 04 Financial Highlights 25 Update on Retail and Mortgage 04 Q3 04 Operating 26 Asset Quality Reinhard Ortner, CFO Performance by Segment 28 Group Architecture Project Gabriele Werzer, 05 Key Figures of CE 29 Overview of Inter
Slide 3: Q3 2004 – Financial highlights
> Q3 2004 – Financial highlights Erste Bank Group - Key performance indicators » Cash ROE 17.3% after 13.7%1 at YE 2003 » CIR 64.5% slightly up from 64.2% at YE 2003 » Cash EPS2 EUR 1.61 up 21% from 1.33 in first three quarters 2003 17.3% 16.3% Cash EPS Cash ROE EUR 1.61 14.1% EUR 1.33 13.6% 13.4% E
Slide 4: Q3 2004 – Operating performance per segment
> Q3 2004 – Operating performance per segment Strong performance in Central Europe » Adjusted for 2003 one-off at SLSP and first time consolidation of Postabank, operating result in CE increases by 16% EUR m 1-9.2004 1-9.2003 % Change Austria 601.7 604.4 (0.4)% Savings banks 260.0 267.4 (2.8)% Retai
Slide 5: Key figures of EB subsidiaries in Central Europe
> Key figures of EB subsidiaries in Central Europe Q3 2004 Results (IFRS) as reported by local entities 1 EB stake 97.97% 80.01% 99.90% 68.56% 1-9 1-9 1-9 1-9 1-9 1-9 1-9 1-9 +/-% +/-% +/-% +/-% 2004 2003 2004 2003 2004 2003 2004 2003 Net Profit (EUR m) 204.0 178.1 15% 57.9 51.9 12% 17.0 10.7 59% 28
Slide 6: Update on Hungary
> Update on Hungary Postabank – update on integration » Legal Merger completed successfully » Merged entity named Erste Bank Hungary » Card, Client Data and Account Migration executed smoothly » Second migration wave (retail loans, corporate accounts and loans) to take place in Q1 2005 » Integration
Slide 7: Update on Hungary (cont)
> Update on Hungary (cont) Co-operation with Magyar Posta » Co-operation with the Hungarian Post (Magyar Posta) finalised » Product roll-out to start 1 December 2004 » Agreements on sale of 3 product categories signed » Current Account Products group, covering current accounts, savings accounts, dep
Slide 8: Q3 2004 Group Results
> Q3 2004 Group Results > Group Income Statement Group Balance Sheet P&L Details Asset Quality Divisional Figures 8
Slide 9: EB Group Income Statement (IFRS)
> Q3 04 EB Group Income Statement (IFRS) P&L - Bottom line increases by 50% EUR m 1-9.20041 1-9.2003 % Change Net interest income 1,993.7 1,934.7 3.0% Risk provisions for loans and advances (306.9) (298.6) 2.8% Net commission income 851.8 727.5 17.1% Net trading result 156.2 170.6 (8.4)% General adm
Slide 10: EB Group Balance Sheet (IFRS) – Assets
> Q3 04 EB Group Balance Sheet (IFRS) Assets – strong increase in CE customer loans EUR m 30.9.2004 31.12.2003 % Change Cash and balances with central banks 2,802 2,549 9.9% Loans and advances to credit institutions 19,113 13,140 45.5% Loans and advances to customers 72,117 67,766 6.4% Risk provisio
Slide 11: EB Group Balance Sheet (IFRS) – Liabilities
> Q3 04 EB Group Balance Sheet (IFRS) Liabilities – FY 04 Tier 1 ratio to reach 6.4% despite growing balance sheet EUR m 30.9.2004 31.12.2003 % Change Amounts owed to credit institutions 31,217 25,704 21.4% Amounts owed to customers 68,983 64,839 6.4% Debts evidenced by certificates 19,693 16,944 16
Slide 12: P&L Details – Net interest income
> P & L Details – Net interest income Strong performance of CE subsidiaries » Group NIM1 2.2%; slightly down on 2.3% at YE 2003 (H1 04: 2.2%) » Excluding one-off EUR 28m contribution at SLSP in 2003 margin was stable Other » Quarterly split: » Austria: NII down 2.4% yoy (up 1.0% on Q2 04) Q1= EUR 65
Slide 13: P&L Details – Risk provisions
> P & L Details – Risk provisions Flat outlook for risk provisions maintained for YE 2004 » Increase in risk provisions by EUR 8m (2.8%) yoy mainly due to CE subsidiaries Other » Quarterly split: Q1= EUR 108.2 m » Austria: down EUR 14m (5.3%) to EUR 255.5m yoy CE Q2= EUR 88.6 m » Reflecting improved
Slide 14: P&L Details – Net commission income
> P & L Details Net commission income Strong contribution from CE subsidiaries » EB Group commission income up by 17.1% to EUR 851.8m » Austria: up 8.4% yoy; slightly up on Q2 04 (+0.6%) Other » Quarterly split: Q1= EUR 281.4 m » Main drivers remain Large Corporate segment (up 31% - mainly CE Q2= EU
Slide 15: P&L Details – Net trading result
> P & L Details Net trading result “Regional hedge” supports the net trading result » EB Group net trading result down 8.5% on very strong first 9 months 2003 Other » Quarterly split: Q1= EUR 62.4 m » Improvement of 4.2% on weaker Q2 04 CE Q2= EUR 45.9 m Austria Q3= EUR 47.8 m » Austria: decline of
Slide 16: P&L Details – General administrative expenses
> P & L Details General administrative expenses Higher cost growth in CE due to Postabank integration » EB Group administrative expenses increase by 6.2% » Excluding Postabank integration and restructuring, costs up by only 2.8% Other » Quarterly split: Q1= EUR 642.3 m » Austria (including Int’l Bus
Slide 17: P&L Details – Other operating results
> P & L Details Other operating results Third quarter valuation gains improve other operating result » Other operating result impacted by one-offs recorded in Q1 04 Other » Quarterly split: Q1= EUR 20.8 m » Payment to deposit insurance (up 29% yoy) CE Q2= EUR –35.3 m » Mainly due to higher contribut
Slide 18: EB Group Divisional Figures – Overview
> Q3 2004 EB Group Divisional Figures Overview Austria CE Subsidiaries Int. Business Corp. Center TOTAL EB GROUP In EUR m 1-9 2004 1-9 2003 1-9 2004 1-9 2003 1-9 2004 1-9 2003 1-9 2004 1-9 2003 1-9 2004 1-9 2003 Net interest income 1,191.6 1,220.3 689.1 618.5 113.3 108.5 (0.3) (12.5) 1,993.7 1,934.7
Slide 19: EB Group Divisional Figures – Details Austria
> Q3 2004 EB Group Divisional Figures Details - Austria Savings banks Retail & Mortgage Large Corp. Trading & Inv.B. TOTAL AUSTRIA In EUR m 1-9 2004 1-9 2003 1-9 2004 1-9 2003 1-9 2004 1-9 2003 1-9 2004 1-9 2003 1-9 2004 1-9 2003 Net interest income 618.1 625.9 383.9 394.8 108.8 113.9 80.8 85.6 1,19
Slide 20: EB Group Divisional Figures – Details Central Europe
> Q3 2004 EB Group Divisional Figures Details - Central Europe 3 CS SLSP EB Hungary Croatia TOTAL CE In EUR m 1-9 2004 1-9 2003 1-9 2004 1-9 2003 1-9 2004 1-9 2003 1-9 2004 1-9 2003 1-9 2004 1-9 2003 Net interest income 367.4 341.7 140.3 179.3 120.2 42.9 61.2 54.5 689.1 618.5 Risk provisions for loa
Slide 21: Outlook and Targets
> Outlook and Targets
Slide 22: Outlook and targets
> Outlook and targets Guidance for 2004 » EB Group confirms net profit after tax and minorities of at least EUR 500m » Outlook 2004 for CE subsidiaries » MS and SLSP: maintain Return on Equity above 20% » EB Croatia: Return on Equity above 18% » Merged EB Hungary: Return on Equity at least 10% ; pos
Slide 23: Extending the home market?
> Extending the home market? Current Intentions Priorities: » Increase stake in SLSP to 100% in 2005 » Look at smaller acquisitions in Hungary and Croatia » Savings Bank (CEC) in Romania Key Criteria: » Aiming for ultimate 20% market share » Broad customer base » Retail focus » Limited loan portfoli
Slide 24: Appendix
> Appendix > Update on Retail and Mortgage Asset Quality Group Architecture Project Overview of international exposure Key financial data of CE subsidiaries Quarterly income statement Quarterly balance sheet Quarterly divisionals Key financial data Shareholder structure IR Contacts 24
Slide 25: Update on Retail and Mortgage
> Update on Retail and Mortgage Overall improvement subdued by weaker Mortgage results EUR m 1-9 03 1-9 04 134.4 135 Op. Profit 131.1 54.3 Net Profit 50 51.5 40 29.3 29.4 30 21.2 29.4 20.2 25.4 18.1 20 19.2 12.4 18.6 14.9 9.3 14.1 8.3 10 10.7 1.3 3.5 0 -5 -10.8 -11.7 -14.9 -15 Total Branches SME Mor
Slide 26: Asset quality at EB Group
> Q3 2004 - Asset quality at EB Group Coverage ratio increase at EB Group (including SBs) » NPLs at EUR 4,055m slightly up 0.4% on YE 2003 (EUR 4,038m) » Further improvement of NPL ratio to 3.0% of total exposure, down from 3.4% at YE 2003 » NPLs slightly decrease in Austria (down 1.9% since YE 2003
Slide 27: Asset quality – credit risk by segments
> Q3 2004 - Asset quality at EB Group Credit risk by segments – NPL coverage ratios Total Outstanding 1 EUR m Low Risk Management Sub- Non- Total Risk NPL Attention standard perfoming Provisions Coverage Austria Total 73,891 10,585 3,372 3,443 91,290 2,161 62.8% CE Total 26,471 1,045 299 506 28,266
Slide 28: Group Architecture Project
> Group Architecture Project Main impact on revenues and cost of Group Architecture Projects 2008 Revenue enhancement Group Large Corporate 20 – 30m Croup Card Project 40 – 45m Consumer Finance not yet quantified Cost reduction Procurement approx. 80m IT – Operations not yet quantified Decentralised
Slide 29: Overview of international exposures
> Overview of international exposures Credit Risk1 by regions at EB Group Low Risk Management Substandard Non performing Total outstanding attention in EUR m Q3 2004 FY 2003 Q3 2004 FY 2003 Q3 2004 FY 2003 Q3 2004 FY 2003 Q3 2004 FY 2003 % of total % of total Core Markets 78,776 71,448 10,735 10,875
Slide 30: Overview of international exposures (cont)
> Overview of international exposures (cont) Credit Risk1 by industry sectors at EB Group Low Risk Management Substandard Non performing Total outstanding attention in EUR m Q3 2004 FY 2003 Q3 2004 FY 2003 Q3 2004 FY 2003 Q3 2004 FY 2003 Q3 2004 FY 2003 %of total %of total Banking & insurance 47,314
Slide 31: Financials (IFRS) of CE subsidiaries – Ceska sporitelna
> Q3 2004 Financials (IFRS) of CE subsidiaries Keská spoPitelna Group EUR m 1-9 2004 1-9 2003 % Change Net interest income 389.5 357.5 9.0 Risk provisions for loans and advances (18.6) 54.2 >100,0 Net commission income 193.8 176.7 9.7 Net trading result 30.4 31.6 (3.8) General administrative expense
Slide 32: Financials of CE subsidiaries – Slovenska sporitelna
> Q3 2004 Financials (IFRS) of CE subsidiaries (cont) Slovenská sporiteQRa Group EUR m 1-9 2004 1-9 2003 % Change Net interest income 148.3 189.3 (21.7) Risk provisions for loans and advances 2.8 0.3 <-100,0 Net commission income 49.5 37.1 33.4 Net trading result 10.4 8.2 26.8 General administrative
Slide 33: Financials of CE subsidiaries – Erste Bank Hungary
> Q3 2004 Financials (IFRS) of CE subsidiaries (cont) Erste Bank Hungary Group & Postabank Group 1 EUR m 1-9 2004 1-9 2003 % Change Net interest income 136.3 113.1 20.5 Risk provisions for loans and advances (31.2) (5.8) >100,0 Net commission income 36.5 26.6 37.0 Net trading result 19.5 15.7 24.6 G
Slide 34: Financials of CE subsidiaries – Erste Bank Croatia
> Q3 2004 Financials (IFRS) of CE subsidiaries (cont) Erste Bank Croatia EUR m 1-9 2004 1-9 2003 % Change Net interest income 65.7 60.5 8.6 Risk provisions for loans and advances (3.5) (8.5) (58.6) Net commission income 12.0 9.0 34.0 Net trading result 11.1 5.5 >100,0 General administrative expenses
Slide 35: EB Group Quarterly Results (IFRS)
> EB Group Quarterly Results (IFRS) P&L Details EUR m Q1'01 Q2'01 Q3'01 Q4'01 Q1'02 Q2'02 Q3'02 Q4´02 Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 Q2'04 Q3'04 Net interest income 313 357 389 380 585 634 616 628 618 673 645 652 657 660 677 Risk provisions (48) (45) (55) (56) (89) (94) (89) (134) (97) (109) (93) (10
Slide 36: EB Group Quarterly Balance Sheet (IFRS)
> EB Group Quarterly Balance Sheet (IFRS) Balance Sheet Details EUR m Q1'02 Q2'02 Q3'02 Q4´02 Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 Q2'04 Q3'04 Total assets 117,684 121,068 124,797 121,222 125,081 129,153 130,481 128,575 136,091 137,574 142,238 Loans & advances credit inst. 21,372 21,175 23,117 18,673 19,18
Slide 37: EB Group Quarterly Divisionals
> EB Group Quarterly Divisionals Overview In EUR m Total Austria Total CE Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Net interest income 395.5 405.6 419.0 402.5 398.3 394.6 398.7 193.9 222.2 202.4 210.9 225.5 230.3 233.2 Risk provisions (86.4) (98.5) (85.0) (
Slide 38: Quarterly Divisionals – Austria Details
> EB Group Quarterly Divisionals Austria - Details In EUR m Savings Banks Retail & Mortgage Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Net interest income 202.8 220.5 202.6 215.4 210.2 199.4 208.5 128.9 130.3 135.5 126.9 125.9 131.1 127.0 Risk provisions (45.
Slide 39: Quarterly Divisionals – Central Europe Details
> EB Group Quarterly Divisionals Central Europe - Details In EUR m Ceska sporitelna Slovenska sporitelna Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Net interest income 113.3 116.9 111.6 119.1 121.5 121.8 124.1 51.4 70.7 57.2 55.4 45.5 47.0 47.8 Risk provision
Slide 40: Key financial data
> Q3 2004 Results Key financial data in EUR m YE 1998 YE 1999 YE 2000 YE 2001 YE 2002 YE 2003 Q3 2004 Tier 1 Capital pursuant to § Austrian Banking Act 1,611 1,753 2,125 2,337 3,800 3,912 4,073 Total own funds pursuant to § Austrian Banking Act 3,176 3,296 3,956 4,308 6,983 7,146 7,152 Risk weighted
Slide 41: Current shareholder structure
> Current shareholder structure Total numbers of shares: 241,442,892 By Investor Type By Region Austria Verein Others 6.0% Capital Research Continental Europe 0.7% 5.0% 32.5% 7.5% UK & Ireland 17.3% Employees 2.4% Savings banks North America Institutional investors 7.0% Austria Private 16.2% 39.2% 5
Slide 42: Investor relations contacts
> Investor relations contacts Erste Bank, Graben 21, 1010 Vienna Fax +43 (0)5 0100-13112 E-mail: investor.relations@erstebank.at Internet: www.erstebank.com Reuters: ERST.VI Bloomberg: EBS AV Datastream: O:ERS Securities ID: 065201 Investor relations Gabriele Werzer Tel: +43 (0)5 0100-11286 E-Mail: