Bawag Group Ag · VIE:BG
Bawag — Bawag Group Ag Ord — Q4 2023 Earnings Presentation
27 slides from Bawag's earnings presentation, Feb 1, 2024
Slide 1: BAWAG Group Preliminary FY 2023 Results
BAWAG GROUP PRELIMINARY FY 2023 RESULTS February 1, 2024
Slide 2: Agenda
AGENDA 1 Q4 2023 HIGHLIGHTS & CAPITAL DEPLOYMENT 2 ASSET QUALITY 3 DETAILED FINANCIALS & OUTLOOK 4 SUPPLEMENTAL INFORMATION February 1, 2024 BAWAG Group 2
Slide 3: Highlights Q4 2023
HIGHLIGHTS Q4 2023 EARNINGS BALANCE SHEET & CAPITAL TARGETS & CAPITAL DEPLOYMENT Q4 ’23: Average customer loans and average interest- All 2023 targets achieved Net profit €177m, RoTCE of 25.7% and EPS of €2.15 bearing assets flat vPQ 2024 financial targets: Average customer deposits +2% vPQ … averag
Slide 4: Growing our franchise in line with our strategy
GROWING OUR FRANCHISE IN LINE WITH OUR STRATEGY Excess capital of €475m as of year-end 2023 providing dry-powder for signing M&A transaction Providing transactional banking to ~400k Retail & SME customers €17.1b total assets, thereof €12.4b mortgages Mortgage overview Leading Dutch digital bank €11.
Slide 5: Financial Performance
FINANCIAL PERFORMANCE P&L | € millions 2023 vPY Q4 ’23 vPY vPQ Balance Sheet & Capital | € millions Q4 ’23 Q3 ’23 vPQ vPY Core revenues 1,537.4 16% 394.0 14% 1% Total assets 55 448 52 857 5% (2%) Net interest income 1 230.2 20% 316.3 17% 1% Cash & Cash Equivalent excluding TLTRO 12 672 10 990 15% 63
Slide 6: Capital Development
CAPITAL DEVELOPMENT ~90 basis points gross capital generation in Q4 ‘23 QUARTERLY CAPITAL DEVELOPMENT Excess capital €475m CAPITAL DEVELOPMENT 0.9% 0.2% 15.3% 14.7% a) Gross capital generation ~90bps in Q4 ’23 and ~330bps in 14.2% 2023 through earnings (0.6%) CAPITAL DISTRIBUTION b) Earmarked FY ’23
Slide 7: Retail & SME
RETAIL & SME FINANCIAL PERFORMANCE CUSTOMER DEVELOPMENT € millions 2023 vPY Q4 ’23 vPY vPQ € millions 2023 vPY Q4 ’23 vPQ Core revenues 1 138.6 11% 290.1 7% - Housing loans 15 345 (4%) 15 345 (1%) Net interest income 865.6 15% 220.3 8% (1%) Consumer and SME 6 676 4% 6 676 4% Net commission income 27
Slide 8: Corporates, Real Estate & Public Sector
CORPORATES, REAL ESTATE & PUBLIC SECTOR FINANCIAL PERFORMANCE CUSTOMER DEVELOPMENT € millions 2023 vPY Q4 ’23 vPY vPQ € millions 2023 vPY Q4 ’23 vPQ Core revenues 321.7 8% 79.6 7% - Corporates 3 474 (8%) 3 474 (7%) Net interest income 286.4 9% 71.5 8% 1% Real Estate 5 098 (16%) 5 098 (3%) Public Sec
Slide 9: Agenda
AGENDA 1 Q4 2023 HIGHLIGHTS & CAPITAL DEPLOYMENT 2 ASSET QUALITY 3 DETAILED FINANCIALS & OUTLOOK 4 SUPPLEMENTAL INFORMATION February 1, 2024 BAWAG Group 9
Slide 10: Balance Sheet & Asset Quality Overview
BALANCE SHEET & ASSET QUALITY OVERVIEW € billion 55 DEVELOPMENTS Retail & SME: 80% secured lending, primarily a €15b of mortgages (Austria, Germany, • NPL ratio 1.0% (flat with PY) Netherlands and Western Europe); LTV<60%, • Stage 2 loans 6% of customer book (5% YE NPL Ratio 1.7% 2023) Real Estate:
Slide 11: Retail & SME
RETAIL & SME RETAIL & SME OVERVIEW CONSUMER & SME DEVELOPMENTS Retail & SME assets, in €b Credit box tightened since 2022 to account for cost Other inflation and rates impact on customer ability to pay NPL ratio 1.9% 1.6% 1.7% SME 5% 22 22 13% Ensure stress-resilient customers with strong debt- 21 D
Slide 12: Commercial Real Estate Lending
COMMERCIAL REAL ESTATE LENDING PORTFOLIO DEVELOPMENT UNDERWRITING PRINCIPLES 6.1 • Residential + Industrial / Logistics make up 65% of • Focus on risk-adjusted returns across all cycles … be 5.7 5.1 Total portfolio total portfolio … Main drivers of growth in portfolio patient lender with business th
Slide 13: Commercial Real Estate Lending
COMMERCIAL REAL ESTATE LENDING COLLATERAL STRUCTURE LTV STRUCTURAL FEATURES • 100% senior secured financings, no mezzanine or junior lending Multi-asset portfolio <50% • 81% multi-asset collateral pools structured as portfolio financing, significantly Single asset financing 6% 19% 9% <60% enhances r
Slide 14: Agenda
AGENDA 1 Q4 2023 HIGHLIGHTS & CAPITAL DEPLOYMENT 2 ASSET QUALITY 3 DETAILED FINANCIALS & OUTLOOK 4 SUPPLEMENTAL INFORMATION February 1, 2024 BAWAG Group 14
Slide 15: P&L & Key Ratios
P&L & KEY RATIOS P&L | € millions 2023 vPY Q4 ’23 vPY vPQ Key ratios 2023 vPY Q4 ’23 vPY vPQ Net interest income 1,230.2 20% 316.3 17% 1% RoCE 20.9% 5.3pts 21.6% 5.2pts (1.6pts) Net commission income 307.2 (1%) 77.7 4% 1% RoTCE 25.0% 6.4pts 25.7% 6.1pts (1.9pts) Core revenues 1,537.4 16% 394.0 14% 1
Slide 16: Balance Sheet
BALANCE SHEET Balance sheet | € millions 2023 vPY Q4 ’23 vPY vPQ Capital & RWA | € millions 2023 vPY Q4 ’23 vPY vPQ Total assets 55,448 (2%) 55,448 (2%) 5% Common equity 3,307 3% 3,307 3% 2% thereof Ø interest-bearing assets 42,464 (3%) 41,864 (5%) - Tangible common equity 2,775 3% 2,775 3% 1% Custo
Slide 17: Funding Overview
FUNDING OVERVIEW Customer funding (average) … ~93% total funding € billion Share of covered bonds DEPOSITS 44.5 41.9 • Retail & SME average deposits €26.5b, thereof ~80% insured by deposit guarantee scheme …. 39.2 Average deposit size of €12k • Corporates & Public Sector average deposits €5.7b… larg
Slide 18: Core Revenues
CORE REVENUES € millions Net interest margin NIM FY ‘23: 290bps Net interest income (NII) up 1% vPQ … net interest Net commission income margin (NIM) at 3.00% in Q4 ’23 Net interest income 386.8 390.3 394.0 • Average customer loans flat vPQ 366.3 344.7 76.6 77.7 76.7 Net commission income (NCI) up 1
Slide 19: Operating Expenses
OPERATING EXPENSES € millions Operating expenses CIR CIR FY ‘23: 31.8% (excluding regulatory charges) CIR at 32.0% in Q4 ’23 up 0.7bps vPQ • Focused on absolute cost targets and proactive cost 118.1 119.4 120.7 121.9 123.4 management • Executed multiple initiatives focused on greater scale, greater
Slide 20: Risk Costs
RISK COSTS € millions Risk cost ratio FY ‘23: 22bps Risk costs/average interest-bearing assets Q4 ’23 risk costs €30m ... risk cost ratio 29bps • Ongoing strong credit performance … NPL ratio of 1.0% • ECL management overlay in Q4 '23 stable at €80m vPQ 36.2 30.2 Maintain safe & secure balance sheet
Slide 21: 2024 Outlook and Targets
2024 OUTLOOK AND TARGETS P&L OUTLOOK (excluding M&A) 2024 FINANCIAL TARGETS (excluding M&A) Net interest income FY ’23: €1,230m +1% Profit before tax >€920m FY ’23: €910m Core revenues FY ’23: €1,537m +1% Operating expenses 2024 & BEYOND RETURN TARGETS FY ’23: €485m ~3% increase Return on tangible c
Slide 22: Agenda
AGENDA 1 Q4 2023 HIGHLIGHTS & CAPITAL DEPLOYMENT 2 ASSET QUALITY 3 DETAILED FINANCIALS & OUTLOOK 4 SUPPLEMENTAL INFORMATION February 1, 2024 BAWAG Group 22
Slide 23: Details on Reserves
DETAILS ON RESERVES Continuing to remain prudent in current environment IFRS 9 MIGRATION – CUSTOMER SEGMENT ASSETS NON-PERFORMING (STAGE 3) LOANS, in € million Stage 3 4% 2% 5% 2% 6% 2% Stage 2 608 609 538 Stage 1 94% 93% 92% Customer NPLs YE ´21 YE ´22 YE ’23 YE ´21 YE ´22 YE ‘23 NPL ratio 1.0% 0.9
Slide 24: Corporates, Real Estate & Public Sector
CORPORATES, REAL ESTATE & PUBLIC SECTOR CORPORATES1) REAL ESTATE PUBLIC SECTOR1) By industry Services By underlying By funding & type Food & beverage Residential 5% Term loans (incl. SSD) Pharmaceuticals 5% 21% 20% 7% 2% Office 11% Bonds B-2-C Industrial/Logistics Short term lending Engineering & B-
Slide 25: Capital Distributions & Framework
CAPITAL DISTRIBUTIONS & FRAMEWORK ~€2.6b CAPITAL MANAGEMENT FRAMEWORK capital earmarked*/returned to shareholders since IPO in 2017 1 DIVIDEND POLICY 2 EXCESS CAPITAL MANAGEMENT 3 EXCESS CAPITAL DISTRIBUTION €0.9 billion 55% payout Organic growth, M&A, Share buybacks and/ share buyback (net profit)
Slide 26: Regulatory Capital
REGULATORY CAPITAL Strong capital position Dividend CET1 capital (post dividend) CET1 ratio (post dividend) € billion 3.2 3.1 3.1 Capital distribution plans: 0.3 2.9 0.3 0.4 2.8 0.2 Dividend accrual of €393m for Q4 ’23 based on dividend 0.1 policy Share buyback of €175m executed during Q4 ’23 … 3.9m
Slide 27: Definitions
DEFINITIONS Adjusted (all Q3 2022 and YTD 2022 numbers are presented adjusted) Loan to Value (LTV) Excluding the write-off of the City of Linz receivable in Q3 2022 IFRS book value including prior liens excluding NPLs / Market value of real estate collaterals allocated B/S leverage excluding NPLs To