BAWAG Group AG · VIE:BG
BAWAG — FY2021 Earnings Presentation
38 slides from BAWAG's earnings presentation, Mar 1, 2022
Slide 1: BAWAG Group FY 2021 Earnings
BAWAG Group FY 2021 Earnings 01 March 2022 01 March August 2021 2022 | BAWAG | BAWAG Group Group AG AG
Slide 2: Highlights FY 2021
Highlights FY 2021 - Q4 ’21: Net profit of €164m, EPS of €1.84, and RoTCE of 21.3% - FY ’21: Net Profit of €480m, EPS of €5.39, and RoTCE of 16.1% EARNINGS - Pre-provision profit of €743m (+14% vPY) and CIR at 39.5%; Risk cost ratio of 23bps - All 2021 targets outperformed - Average customer loans +
Slide 3: Financial performance
Financial performance P&L | € millions 2021 vPY Q4'21 vPY vPQ Balance Sheet & Capital | € millions Q4 '21 Q3 ‘21 vPQ vPY Core revenues 1,220 4% 316 6% 3% Total assets 56,325 54,370 4% 6% Operating income 1,229 5% 318 5% 3% Interest-bearing assets (average) 42,630 41,337 3% 4% Operating expenses (485
Slide 4: Resilient franchise strengthened post-pandemic
Resilient franchise strengthened post-pandemic Record results in 2021 GROWING CORE REVENUES REDUCING OPERATING EXPENSES ROTCE AT PRE-PANDEMIC LEVELS In € million In € million Return on tangible common equity +5% (8%) 1,220 530 16.1% 16.1% 1,163 485 2019 2021 2019 2021 2019 2021 STRONG ASSET QUALITY
Slide 5: Capital development and distribution
Capital development and distribution CAPITAL DEVELOPMENT CAPITAL GENERATION -a Gross capital generation of +230bps in 2021 ~+230bps (FY ‘21 gross capital generation) CAPITAL DISTRIBUTION b- Dividend of €3.00 per share, or €267m, will be proposed to (1.3%) 15.0% Annual General Meeting on 28 March 202
Slide 6: Retail & SME
Retail & SME Financial performance Customer development € millions 2021 vPY Q4' 21 vPY vPQ € millions 2021 vPY Q4' 21 vPY vPQ Core revenues 911.2 3% 232.8 6% 1% Housing loans 15,781 10% 15,781 10% 1% Net interest income 660.1 (1%) 168.2 2% 2% Consumer and SME 5,348 9% 5,348 9% 3% Net commission inco
Slide 7: Corporates, Real Estate & Public Sector
Corporates, Real Estate & Public Sector Financial performance Customer development € millions 2021 vPY Q4' 21 vPY vPQ € millions 2021 vPY Q4' 21 Q3 ‘21 vPY vPQ Core revenues 292.4 6% 79.4 15% 9% Corporates 4,047 2% 4,047 4,118 2% (2%) Net interest income 258.4 9% 70.9 20% 9% Real Estate 5,740 16% 5,
Slide 8: Execution of our strategy in 2021
Execution of our strategy in 2021 Focusing on the things that we can control GROWTH IN OUR ‒ Strong organic growth: +9% average customer loan growth in 2021 across businesses. Building a banking platform that provides CORE MARKETS our customers with simple, transparent and affordable financial produ
Slide 9: M&A update: Peak Bancorp
M&A update: Peak Bancorp Agreement signed to acquire Peak Bancorp (Idaho), holding company of Idaho First Bank ‒ Community-bank based in Idaho focused on Retail & SME with net profit of $5.7m in 2021 KEY FACTS ABOUT ‒ Simple and clean balance sheet: Deposits $470m, customer loans $399m, equity $42.6
Slide 10: Agenda
Agenda 1 FY 2021 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 01 March 2022 | BAWAG Group AG 10
Slide 11: P&L & key ratios
P&L & key ratios P&L | € millions 2021 vPY Q4 ‘21 vPY vPQ Key ratios 2021 vPY Q4 ‘21 vPY vPQ Net interest income 938.3 3% 243.3 4% 4% Return on Common Equity 13.6% 5.1pts 18.1% 8.4pts 4.2pts Net commission income 282.1 11% 72.5 13% 1% Return on Tangible Common Equity 16.1% 5.9pts 21.3% 9.7pts 4.9pts
Slide 12: Balance sheet
Balance sheet Balance sheet | € millions 2021 2020 vPY Capital & RWA | € millions 2021 2020 vPY Customer loans 34,963 32,129 9% Common equity 3,636 3,419 6% Securities and bonds 6,330 7,525 (16%) Tangible common equity 3,101 2,867 8% Credit institutions and cash 13,060 10,796 21% CET1 capital 3,012
Slide 13: P&L details – core revenues
P&L details – core revenues Solid core revenues in Q4 ‘21 € million 297.9 297.3 301.7 305.5 315.8 64.3 70.1 71.7 72.5 Net interest income (NII) up 4% vPQ … net interest margin (NIM) at NCI 67.7 2.26% in Q4 ’21 … outperforming our FY ’21 outlook ‒ Strong net asset growth in Q4 ’21 … average customer
Slide 14: P&L details – operating expenses
P&L details – operating expenses Continued efficiency measures countering inflationary pressures € million Core operating expenses Restructuring charges 144.7 ~22 121.8 121.2 120.4 121.8 CIR at 38.3% in Q4’21 down (9.6pts) vPY and (0.9pts) vPQ … FY’21 CIR at 39.5% (down 4.8pts vPY) ‒ Outperformed 20
Slide 15: P&L details – risk costs
P&L details – risk costs Entering normalized risk environment € million Risk costs / average interest-bearing assets Q4 ‘21 risk costs €20m and FY ’21 risk cost of €95m … in line with our target of below €100m 45.3 ‒ Strong asset quality performance … entering more normalized risk cost environment ‒
Slide 16: 2022 Outlook
2022 Outlook P&L OVERVIEW RETURN TARGETS Core revenues FY ’21: €1,220m >4% growth Operating expenses: RoTCE FY ’21: €485m ~2% net cost-out FY ’21: 16.1% >17% Regulatory charges FY ’21: €52m <€50m expected CIR <38% FY ’21: 39.5% Risk costs FY ’21: €95m ~20bps Profit before tax FY ’21: €600m >€675m No
Slide 17: 2025 Targets and opportunities
2025 Targets and opportunities FINANCIAL TARGETS OPPORTUNITIES NOT CAPTURED IN OUR TARGETS Profit before tax (PBT) >€750 million No rate hikes assumed … 100bps increase in 3-month Euribor leads to approximately +€100 million net interest income p.a. Earnings per share (EPS) >€7.25 No additional M&A
Slide 18: Agenda
Agenda 1 Q3 2021 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 01 March 2022 | BAWAG Group AG 18
Slide 19: Details on reserves
Details on reserves Continuing to remain prudent despite improved economic outlook IFRS 9 Migration- Customer Segment Assets Non-performing stage 3 loans, in €m Stage 3 2% 2% 2% Stage 2 4% 4% 885 862 8% 811 254 254 City of Linz (CoL) 254 Stage 1 94% 94% 90% 631 608 Customer NPLs 557 YE '19 YE '20 YE
Slide 20: Retail & SME
Retail & SME Portfolio overview of €21.1b of customer loans and leases Payment deferral overview NPL ratio Reserve development Reserve ratio Payment holiday Assets average time on paying ratio Q4 '21 payments (expired (expired deferrals) (bn) YE '19 YE '20 YE '21 YE '19 YE '20 YE '21 YE '19 YE '20 Y
Slide 21: Corporates, Real Estate & Public Sector
Corporates, Real Estate & Public Sector CORPORATES* REAL ESTATE PUBLIC SECTOR* By industry By underlying Customer types Services Residential Food&Beverage 16% 18% Mixed 25% 3% 32% Pharmaceuticals Office €4.1 €5.8 48% €5.0 B-2-C 12% Industrial/Logistics 52% billion 18% billion billion Engineeing & B-
Slide 22: Investment book and Cash
Investment book and Cash Q3 ‘21 Q4 ‘21 Cash & Cash equivalent 8% 14% €12.0b +€ 1.1b €13.1b in % in % As of Q4 ‘21, cash and cash equivalents (mainly money at central banks) at €13.1b ... TLTRO III of €6.4b 92% Cash Cash equivalent 86% Investment book primarily serves as liquidity book of the Bank In
Slide 23: Regulatory Capital
Regulatory Capital Strong capital position CET1 Capital and ratios € billion dividend CET1 capital (post dividend) CET1 ratio (post dividend) Capital distribution plans: 3.4 ‒ €267m dividends accrued for 2021 3.3 3.3 3.3 3.1 0.5 0.5 0.1 0.3 ‒ €460m dividend relating to 2019/2020 profits distributed
Slide 24: ESG Update
ESG Update E S G ENVIRONMENTAL INITIATIVES SOCIAL INITIATIVES GOVERNANCE - Reducing our direct CO2 emissions … 100% green EMPLOYEES - ESG committees set up across our organization: electricity adopted, continuous footprint - Special bonus of € 300 for all employees in 2021 • ESG committee at Supervi
Slide 25: ESG Update
ESG Update Making progress towards 2025 targets Target 2025 2021 highlights CO2 EMISSIONS (scope 1 & 2, in t CO2) - Adopting 100% green electricity >50% reduction - Reduction of physical footprint in 2021 (HQ and branches) … continuous assessment Reducing our CO2 footprint compliments our vs 2020 -
Slide 26: City of Linz overview
City of Linz overview Scenario Analysis for potential outcomes of interim decision of Supreme Court Receivable of €254 million on balance sheet as of 31 December 2021 Valid contract Invalid contract Receivable fully provisioned in CET1 through prudential filter in 2020, i.e. no impact on capital reg
Slide 27: Agenda
Agenda 1 FY 2021 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 01 March 2022 | BAWAG Group AG 27
Slide 28: BAWAG Group franchise
BAWAG Group franchise FRANCHISE Multi-brand and multi-channel commercial bank with approximately 2.2 million customers across our core markets DELIVERING Mid-teens Return on Tangible Common Equity (RoTCE) ~14% versus sector of ~5% since 2012 RESULTS BEST-IN-CLASS Cost-income ratio (CIR) of 39.5% dri
Slide 29: Our performance since IPO
Our performance since IPO in € million 2017 2018 2019 2020 2021 Total shareholder return development since IPO Indexed as of 24 October 2017; BAWAG Group 33% Profit before tax 500 573 604 371 600 as of 31 December 2021 EuroStoxx Banks Index (SX7E) (14%) Stoxx 600 Banks Index (SX7P) (11%) Net income
Slide 30: BAWAG transformation over the past decade
BAWAG transformation over the past decade CAGR >10% PRINCIPLES OF OUR TRANSFORMATION 711 743 653 653 Pre-provision profit 592 526 FIRM CULTURE: Our company values and culture are defined by accountability, (€ million) 429 502 meritocracy, and embracing change 323 279 2.35 2.32 2.24 2.30 2.29 2.27 2.
Slide 31: The BAWAG culture
The BAWAG culture Leadership & Embracing Change Accountability, Meritocracy & Inclusion • Actions speak louder than words • Our greatest asset is our human capital • We value integrity, character and work ethic • Investing in developing and empowering our people • Experienced Senior Leadership Team
Slide 32: Strategy focused on execution and continuous improvement
Strategy focused on execution and continuous improvement GROWTH IN Core markets: Austria, Germany, Switzerland, Netherlands (DACH/NL region), Western Europe and the United States CORE MARKETS Criteria for core markets: Fiscal position (single A or better sovereign rating), legal infrastructure, and
Slide 33: M&A … Strategic Optionality
M&A … Strategic Optionality M&A HISTORY SINCE 2015 M&A TARGETS & UNDERWRITING CRITERIA MARKETS CUSTOMER FRANCHISE EFFICIENCY 11 acquisitions closed, with 2 deals ✓ closed in 2021 … - Focus on core markets … - Focus towards Retail & SME - Operational turn-around One acquisition in US signed DACH/NL r
Slide 34: M&A track record
M&A track record .. 11 acquisitions completed or signed since 2015 EXPERIENCED WITH BOLT-ON ACQUISITIONS TO BUILD OUT CUSTOMER FRANCHISE 2015 2016 2017 2018 2019 2021 2022 2) DEPFA BANK PLC PEAK BANCORP INC 1) 1.7 million CARDS Bausparkasse AG Signed deal to acquire Signed deal to acquire €1.6 billi
Slide 35: Targets & capital distribution
Targets & capital distribution ESG TARGETS RETURN TARGETS CAPITAL DISTRIBUTION 2025 2021- 2025 RoTCE >17% Dividends ~€1.4 billion CIR <38% CO2 >50% emission reduction (own scope 1 & 2 vs. 2020) FINANCIAL TARGETS 2025 Share buyback up to €425 million Women quota 2022 subject to regulatory approval (S
Slide 36: Investor relations calendar
Investor relations calendar UPCOMING ROADSHOWS, CONFERENCES AND FINANCIAL EVENTS SHAREHOLDER STRUCTURE 1-2 March Virtual FY 2021 roadshow 16 March Morgan Stanley Financials Conference 100% 28 March Annual General Meeting Free float 30 March Jefferies Pan-European Mid-Cap Conference 01 April Dividend
Slide 37: IMPORTANT DISCLAIMER
IMPORTANT DISCLAIMER: This presentation is prepared solely for the purpose of providing general information about BAWAG Group, Wiedner Gürtel 11, 1100 Wien. The information does not constitute investment or other advice or any solicitation to participate in investment business. This presentation doe
Slide 38: Definitions
Definitions B/S leverage Pre-provision profit Total assets / IFRS equity Operating income less operating expenses (excluding regulatory charges) Book value per share Reserve ratio Common equity (excluding AT1 capital and dividends) / number of shares outstanding Total reserves / Asset volume of cust