Erste Group Bank Ag · VIE:EBS
Erste Group Bank — FY2017 Earnings Presentation
18 slides from Erste Group Bank's earnings presentation, Feb 28, 2018
Slide 1: Erste Group 2017 results: net profit of EUR 1.31bn prompts increased dividend proposal
Erste Group 2017 results: Net profit of EUR 1.31bn (ROTE 11.5%) prompts increased dividend proposal of EUR 1.20 per share Page 1
Slide 2: Strong macroeconomic development in Erste Group's markets
Business environment Strong macroeconomic development in Erste Group's markets 2017 2018 Real GDP growth (in %) Unemployment rate (EOP, in %) 13.2 8.2 11.3 7.5 11.6 7.0 10.1 euro area 2018 5.5 5.3 5.0 4.9 4.7 4.4 4.2 4.0 3.9 4.0 3.4 3.4 3.5 2.9 2.8 3.0 2.8 2.9 3.0 2.8 1.8 AT CZ SK RO HU HR RS AT CZ
Slide 3: Healthy public finances in Erste Group's markets
Business environment Healthy public finances in Erste Group's markets 2017 2018 General government balance (in % of GDP) Public debt (in % of GDP) 81 79 Maastricht 79 1.2 limit: 60% 75 72 71 0.3 65.6 0.2 0.1 0.0 61.5 51 50 Maastricht -0.5 -0.8 35 33 36 36 -1.0 limit: -3% -1.0 -1.5 -2.0 -2.5 -3.0 -3.
Slide 4: CZ further increases key policy rate to 75bps in Feb 2018
Business environment: CZ further increases key policy rate to 75bps in Feb 2018 3M Interbank (%) 10YR gov (%) Source: Bloomberg Austria Czech Republic Romania 0.58 1.63 0.36 0.63 0.53 3.92 4.36 0.41 1.02 1.04 3.31 3.90 0.73 -0.26 -0.33 -0.33 -0.33 0.41 0.65 0.95 1.76 0.29 0.40 0.58 2016 2017 Q3 17 Q
Slide 5: Strong growth in loans and exceptional inflow of customer deposits
Business performance Strong growth in loans of 6.8% and exceptional inflow of customer deposits, up 9.4% 31.12.16 31.12.17 Customer loans (net, EUR bn) Customer deposits (EUR bn) Loan/ deposit ratio (%) 130.7 138.0 94.7 Group 139.5 151.0 92.4 30.6 31.8 96.1 AT/EBOe 31.4 33.7 93.2 39.5 39.9 98.8 AT/S
Slide 6: Net inflow in retail deposits, EUR 2.4 bn in investment products in 2017
Business performance Net inflow of EUR 6 bn in retail deposits, EUR 2.4 bn in investment products in 2017 Investment products vs Customer Deposits volumes (% share as per end-2017) 38% 60% 70% 77% 82% 86% 92% 100% 62% 40% 30% 23% 18% 14% 8% Ø AT CZ RO SK HU HR RS Customer deposits Managed investment
Slide 7: Strong retail loan growth of 10.4% yoy
Business performance Strong retail loan growth of 10.4% yoy 2017 Retail Highlights NEWLY-GRANTED MORTGAGES OVERALL MORTGAGE VOLUME EUR 7.5 bn EUR 41.2 bn to nearly 100,000 households across CEE Up 7.8%, on strong growth in CZ, SK and AT CONSUMER LENDING OVERALL UNSECURED CONSUMER LENDING EUR 7.4 bn
Slide 8: Branches with new look and feel, tight link to digital channels
Business performance Branches with new look and feel, tight link to digital channels Branches are being transformed Advisory competence sets us Branches serve a purpose at full speed apart from the competition Digital is key, but 5 of 6 Erste In Vienna, up to 50 advisors at Proactive, data-driven an
Slide 9: George: the first pan-European digital banking platform
Business performance George: the first pan-European digital banking platform George: one platform across all Entry point for new cooperations 1 in 4 Erste clients are active our markets digital users API- based architecture allows Preparing to expand to all 16 cooperation with third parties Around 2
Slide 10: Corporate net loans reach EUR 47.5 bn
Business performance Corporate net loans reach EUR 47.5 bn 2017 Corporate Highlights NET LOAN GROWTH TOP PERFORMING SUBSIDIARIES* EUR 2.4 bn +27.5% +19.7% +17.5% net new loans in 2017 Hungary Czech Republic Slovakia BLOCKCHAIN TECHNOLOGY TOP GROWTH SECTORS* Batavia: blockchain-based trade financing
Slide 11: Pressure on revenues eases, increase in costs driven by regulatory requirements and IT
Business performance Pressure on revenues eases, increase in costs driven by regulatory requirements and IT Operating revenues (EUR mn) Operating expenses (EUR mn) -0.3% +3.2% 6,691 4,028 4,158 250 6,669 242 284 223 453 460 1,783 1,852 1,236 1,310 4,375 4,353 2,339 2,389 2016 2017 2016 2017 Net inte
Slide 12: Operating turnaround is under way, especially in AT, HU and RO
Business performance Operating turnaround is under way, especially in AT, HU and RO 2016 2017 Operating result (EUR mn) Cost/income ratio (%) Performance summary Group 2,633 60.2 Group operating result still 2,511 62.4 down, but growing positive 391 63.1 AT/EBOe 374 64.5 momentum across geogra- 424
Slide 13: Risk costs hit another all-time low
Business performance Risk costs hit another all-time low 2016 2017 Absolute (EUR mn) Relative (%) * Performance summary Group 196 0.15 Excellent credit risk 132 0.09 environment across the 29 0.10 AT/EBOe -26 -0.09 board, with increases only 54 0.13 due to single corporate AT/SB -13 -0.03 cases 70 0
Slide 14: Asset clean-up is over; NPL ratio drops to 4.0%
Business performance Asset clean-up is over; NPL ratio drops to 4.0% 2016 2017 NPL volume (EUR mn) NPL ratio (%) NPL coverage (excl collateral; %) 6,678 4.9 69.1 Group 5,776 4.0 68.8 781 2.5 59.3 AT/EBOe 631 2.0 57.1 1,980 4.9 58.1 AT/SB 1,758 4.2 58.3 695 3.2 82.8 CZ 525 2.1 92.5 928 11.8 85.3 RO 6
Slide 15: Further increase in pre-tax result
Business performance Further increase in pre-tax result Pre-tax result (in EUR mn) Taxes on income (in EUR mn) 2016 2017 1,950 2,078 -414 -410 2016 2017 Other result improvement and lower risk costs Tax rate at 19.7% in 2017 lead to further improvement of pre-tax result Page 15
Slide 16: Proposed dividend raised to EUR 1.20 per share
Business performance Proposed dividend raised to EUR 1.20 per share Net result (in EUR mn) Dividend (EUR per share) 1.20 1,316 1.00 1,265 968 0.50 2015 2016 2017 2015 2016 2017 Proposal Highest net profit in corporate history Payout ratio is equal to 34.0% Page 16
Slide 17: Excellent capital generation across the years
Business performance Excellent capital generation across the years Common equity tier one capital ratio (Basel 3, fully loaded) 12.0 % 12.8 % 12.9 % 11.2 % 11.4 % 10.6 % 8.3 % 9.2% 9.4 % DEC 2009 DEC 2010 DEC 2011 DEC 2012 DEC 2013 DEC 2014 DEC 2015 DEC 2016 DEC 2017 Page 17
Slide 18: Outlook 2018
Outlook 2018 Macro outlook 2018 Business outlook 2018 Risk factors for guidance Real GDP growth of approx. 3- Dividend proposal: EUR 1.20 Impact from other than expect- 5% expected in 2018 in CEE and per share ed interest rate development Austria ROTE for 2018 targeted at 10%+ Political or regulator