Erste Group Bank Ag · VIE:EBS
Erste Group Bank — FY2015 Earnings Presentation
45 slides from Erste Group Bank's earnings presentation, Feb 26, 2016
Slide 1: Erste Group investor presentation FY 2015 preliminary results
Erste Group investor presentation FY 2015 preliminary results 26 February 2016 Erste Group posts net profit of EUR 968.2m in 2015 (ROTE: 10.8%) on return of volume growth to CEE, normalisation in risk costs and reduced one-offs – solid capital position underpins dividend proposal of EUR 0.5 per shar
Slide 2: Disclaimer – Cautionary note regarding forward-looking statements
Disclaimer – Cautionary note regarding forward-looking statements • THE INFORMATION CONTAINED IN THIS DOCUMENT HAS NOT BEEN INDEPENDENTLY VERIFIED AND NO REPRESENTATION OR WARRANTY EXPRESSED OR IMPLIED IS MADE AS TO, AND NO RELIANCE SHOULD BE PLACED ON, THE FAIRNESS, ACCURACY, COMPLETENESS OR CORREC
Slide 3: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 3
Slide 4: Executive summary – Group income statement performance
Executive summary – Group income statement performance QoQ net profit reconciliation (EUR m) YoY net profit reconciliation (EUR m) 277 158 968 174 11 61 204 1.200 40 66 87 62 1.355 -1.383 106 82 2014 Operating Operating Risk costs Other Taxes on Minorities 2015 Q3 15 Operating Operating Risk costs O
Slide 5: Executive summary – Key income statement data
Executive summary – Key income statement data Net interest income & margin Operating result & cost/income ratio Cost of risk in EUR m in EUR m in EUR m 2.65% 2.59% -6.1% -65.0% 2.57% 2.59% 60.5% 56.5% 4,495 4,445 3,091 2,084 2,903 0.64% 0.44% 1,112 1,120 736 664 729 211 144 2014 2015 Q3 15 Q4 15 201
Slide 6: Executive summary – Group balance sheet performance
Executive summary – Group balance sheet performance YTD total asset reconciliation (EUR m) YTD equity & total liability reconciliation (EUR m) 199,743 24 918 199,743 1,364 2,589 1,485 684 4,515 196,287 5,063 5,363 196,287 2,637 1,879 591 31/12/14 Cash Trading, Loans to Net loans Intangibles Other 31
Slide 7: Executive summary – Key balance sheet data
Executive summary – 31/12/14 Key balance sheet data 31/12/15 Loan/deposit & loan/TA ratio Net loans & credit RWA NPL coverage ratio & NPL ratio in EUR bn +4.2% 98.6% 98.4% 68.9% 120.8 125.9 64.5% 61.6% 63.0% 87.1 84.7 8.5% 7.1% Loan/deposit ratio Loans/total assets Net loans Credit RWA NPL coverage
Slide 8: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 8
Slide 9: Business environment – Solid CEE GDP growth expectations for 2016
2015 Business environment – 2016 Solid CEE GDP growth expectations for 2016 Real GDP growth (in %) Dom. demand contribution* (in %) Net export contribution* (in %) Consumer price inflation (ave, in %) 4.9 4.6 4.5 4.3 1.3 4.5 1.2 1.1 3.8 0.8 3.4 3.5 3.6 1.5 1.6 2.7 0.4 0.4 2.4 2.2 2.0 2.1 0.4 0.5 0.8
Slide 10: Business environment – Decline in market interest rates continued in Q4 15
Business environment – 3M Interbank 10YR GOV Decline in market interest rates continued in Q4 15 Austria Czech Republic Romania 4.57% 1.55% 4.03% 1.48% 1.11% 1.11% 3.81% 3.56% 1.00% 0.90% 0.83% 0.50% 2.29% 1.14% 0.94% 0.21% 0.10% -0.03% -0.09% 1.70% 0.36% 0.33% 0.31% 0.29% 2014 2015 Q3 15 Q4 15 2014
Slide 11: Business environment – Limited currency volatility in CEE
Business environment – Limited currency volatility in CEE EUR/CZK EUR/RON -0.5% -0.1% -2.5% 0.0% +0.7% +0.8% 27.5 27.4 27.1 27.1 27.7 27.0 4.44 4.45 4.43 4.46 4.48 4.52 2014 2015 Q3 15 Q4 15 31/12/14 31/12/15 2014 2015 Q3 15 Q4 15 31/12/14 31/12/15 • Czech National Bank maintains exchange rate stabi
Slide 12: Business environment – Market shares: mostly stable, RO impacted by NPL sales, write-offs
31/12/14 Business environment – 30/09/15 Market shares: mostly stable, RO impacted by NPL sales, write-offs 31/12/15 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 19.2% 18.8% 18.4% 20.4% AT 19.4% AT 18.6% AT 18.5% AT 18.8% 23.3% 18.6% 25.7% 11.2% CZ 22.8% CZ 18.8% CZ 25
Slide 13: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 13
Slide 14: Business performance: performing loan stock & growth
YoY 31/12/14 Business performance: performing loan stock & growth – QoQ 30/09/15 Performing loan volume increases by 4.4% yoy, up 0.9% qoq 31/12/15 Business line view (BL) Geographic view (geo) 117.4 28.0 4.4% AT/EBOe 29.0 4.5% Group 121.5 0.7% 122.6 0.9% 29.2 11.1 44.1 AT/OA 11.2 2.7% Retail 46.0 4
Slide 15: Business performance: customer deposit stock & growth
YoY 31/12/14 Business performance: customer deposit stock & growth – QoQ 30/09/15 Deposits grow by 4.4% yoy, up 2.0% qoq 31/12/15 Business line view (BL) Geographic view (geo) 122.6 29.9 4.4% AT/EBOe 30.0 1.5% Group 125.4 1.2% 127.9 2.0% 30.3 4.0 64.6 AT/OA 3.9 -7.7% Retail 66.0 4.8% -4.5% 67.7 2.5%
Slide 16: Business performance: NII and NIM
Business performance: NII and NIM – Q4 14 Q3 15 Stable yoy and qoq NII in Q4 15 supported by loan growth, stable NIM Q4 15 Business line view (BL) Geographic view (geo) 1,126 2.66% 157 1.67% Group 1,112 2.57% AT/EBOe 160 1.83% 1,120 2.59% 161 1.82% 542 4.45% 93 1.40% Retail 558 4.44% AT/OA 100 1.38%
Slide 17: Business performance: operating income
Q4 14 Business performance: operating income – Q3 15 Q4 15 operating income stable qoq, down yoy on trading & FV result Q4 15 Business line view (BL) Geographic view (geo) Highlights 1,760 1,760 • Yoy decline primarily due to positive FX conversion- Group 1,692 Group 1,692 related trading one-off of
Slide 18: Business performance: operating expenses
Q4 14 Business performance: operating expenses – Q3 15 Q4 15 costs stable yoy, up qoq on seasonally higher costs Q4 15 Business line view (BL) Geographic view (geo) Highlights 1,004 1.004 • Yoy costs almost stable; qoq up due to Group 956 Group 956 1,017 1.017 seasonality, driven by other administra
Slide 19: Business performance: operating result and CIR
Q4 14 Business performance: operating result and CIR – Q3 15 Operating result down qoq and yoy on weak trading & FV result, costs Q4 15 Business line view (BL) Geographic view (geo) 757 57.0% 757 57.0% Group 736 56.5% Group 736 56.5% 664 60.5% 664 60.5% 349 57.7% 85 68.4% Retail 385 54.8% AT/EBOe 10
Slide 20: Business performance: risk costs (abs/rel)
Q4 14 Business performance: risk costs (abs/rel*) – Q3 15 Risk costs remain at benign levels in Q4 15 Q4 15 Business line view (BL) Geographic view (geo) 484 1.51% 38 0.51% Group 144 0.44% AT/EBOe 15 0.20% 211 0.64% 30 0.40% 78 2.47% 94 0.80% AT/OA 0 -0.01% Retail 81 0.67% 10 0.32% 37 0.31% 30 0.64%
Slide 21: Business performance: non-performing loans and NPL ratio
31/12/14 Business performance: non-performing loans and NPL ratio – 30/09/15 NPL ratio improves to 7.1%, excluding Romanian NPL sale impact 31/12/15 Business line view (BL) Geographic view (geo) 10,878 8.5% 1,012 3.5% Group 9,717 7.4% AT/EBOe 895 3.0% 9,314 7.1% 861 2.9% 1,483 11.8% 2,938 6.2% AT/OA
Slide 22: Business performance: allowances for loans and NPL coverage
31/12/14 Business performance: allowances for loans and NPL coverage – 30/09/15 NPL coverage remains at comfortable level of 64.5% 31/12/15 Business line view (BL) Geographic view (geo) 7,491 68.9% 697 68.9% Group 6,721 69.2% AT/EBOe 561 62.7% 6,009 64.5% 539 62.6% 862 58.1% 2,360 80.3% AT/OA 894 63
Slide 23: Business performance: other result
Q4 14 Business performance: other result – Q3 15 Q4 15 other result burdened by one-offs, mainly related to Romania Q4 15 Business line view Geographic view Highlights -120 -120 • Yoy deterioration in group other result mainly due to Group -154 Group -154 higher one-offs in Q4 15 (EUR 121.0m) on acc
Slide 24: Business performance: net result
Q4 14 Business performance: net result – Q3 15 Q4 15 net result up yoy on lower risk costs, down qoq Q4 15 Net result by business line Net result by geography Highlights 42 42 • Yoy rise in profitability primarily driven by lower Group 277 Group 277 risk costs; qoq decline in net profit due to highe
Slide 25: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 25
Slide 26: Assets and liabilities: YTD overview – Loan/deposit ratio stable at 98.4%
Assets and liabilities: YTD overview – Loan/deposit ratio stable at 98.4% (Dec 14: 98.6%) Assets (EUR bn) Assets (in %) Liabilities & equity (EUR bn) Liabilities & equity (in %) 196.3 199.7 196.3 199.7 100% 5.9 100% 7.8 12.4 4.0% 6.2% 7.7 3.9% 14.2 7.5% 7.1% 2.9% 14.8 50.1 47.5 25.5% 23.8% 7.4 4.8 3
Slide 27: Assets and liabilities: customer loans by country of risk
Assets and liabilities: customer loans by country of risk – Performing loans up 4.4% yoy, NPLs down 14.4% Net customer loans (EUR bn) Performing loans (EUR bn) Non-performing loans (EUR bn) +4.2% +4.4% -14.4% 124.5 125.9 121.5 122.6 10.9 120.8 3.4 117.4 3.4 3.2 3.2 0.5 3.2 5.9 6.0 3.2 5.5 0.6 0.7 5.
Slide 28: Assets and liabilities: allowances for customer loans
Assets and liabilities: allowances for customer loans – Decrease in allowances mainly due to continued NPL reduction in Q4 15 Quarterly development (EUR m) Highlights • Higher allocations in Q4 15 on the back of higher NPL infows • P&L unwinding impact = interest income 580 581 from impaired loans =
Slide 29: Assets and liabilities: financial and trading assets – LCR at 117.4%
Assets and liabilities: financial and trading assets * – LCR at comfortable 117.4% By geography (EUR bn) By debtor type Liquidity buffer (EUR bn) -1.7% 43.0 42.2 42.3 100% 24.8% 24.9% 11.6% 10.1% 10.3% 8.5 8.7 9.2 21.5% 11.2% 9.5% 7.9% 2.1 1.3 1.5 1.2 1.5 1.6 4.8 4.5 4.7 45.4 46.1 39.8 6.0 6.3 5.8 7
Slide 30: Assets and liabilities: customer deposit funding
Assets and liabilities: customer deposit funding – Customer deposits grow by 2.0% qoq, up 4.4% yoy By customer type By product type Highlights • Continued deposit inflows driven by Retail +4.4% segment with highest demand for overnight deposits amid low interest rate environment 127.9 125.4 127.9 12
Slide 31: Assets and liabilities: debt vs interbank funding
Assets and liabilities: debt vs interbank funding – Stable wholesale funding base Debt securities issued (EUR bn) Interbank deposits (EUR bn) -4.8% -4.0% 31.1 30.6 17.4 29.7 Sub debt 4.5 Overnight deposits 5.4 Suppl. capital 14.8 3.1 0.9 5.5 14.2 Term deposits 0.4 0.4 Hybrid issues 1.9 0.4 0.4 0.4 R
Slide 32: Assets and liabilities: LT funding – Limited LT funding needs
Assets and liabilities: LT funding – Limited LT funding needs Maturity profile of debt (EUR bn) 4.3 2.7 2.6 2.7 2.8 2.6 1.9 1.0 1.1 0.7 0.9 0.4 0.3 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028+ Debt CEE Capital exc Tier 1 Covered bonds Senior unsec. bonds • Total issuance activit
Slide 33: Assets and liabilities: capital position
Assets and liabilities: capital position – B3FL CET1 ratio advances to 12.0%, driven primarily by capital build-up Basel 3 capital (phased-in) Risk-weighted assets (phased-in) Basel 3 capital ratios (phased-in) 17.9% 16.8% 16.8% 15.7% 15.8% 16.9 17.6 100.6 101.8 100.3 100.4 98.3 16.8 15.8 16.1 3.2 1
Slide 34: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 34
Slide 35: Conclusion – Outlook 2016
Conclusion – Outlook 2016 • CEE economic environment anticipated to be conducive to credit expansion • Real GDP growth of between 1.5-3.8% expected in 2016 in all major CEE markets, including Austria • Real GDP growth to be driven by solid domestic demand • Return on tangible equity (ROTE) expected
Slide 36: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 36
Slide 37: Additional information: segmentation – Business line and geographic view
Additional information: segmentation – Business line and geographic view Erste Group – Business segments Group ALM & Savings Large Commercial Other Group Intragroup Corporate Retail SME Local CC Banks Corporates Real Estate Corporate Markets Elimination Center (ALM&LCC) (AT/SB) (LC) (CRE) (OC) (GM)
Slide 38: Additional information: income statement – Year-to-date and quarterly view
Additional information: income statement – Year-to-date and quarterly view Year-to-date view Quarterly view in EUR million 2014 2015 YOY-Δ Q4 14 Q3 15 Q4 15 YOY-Δ QOQ-Δ Net interest income 4,495.2 4,444.7 -1.1% 1,125.6 1,112.3 1,120.4 -0.5% 0.7% Net fee and commission income 1,869.8 1,861.8 -0.4% 49
Slide 39: Additional information: group balance sheet – Assets
Additional information: group balance sheet – Assets Quarterly data Change in EUR million Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 7,835 8,223 7,011 11,097 12,350 57.6% 57.6% 11.3% Financial assets - held for trading 10,531 11,366 9,022 8,805 8,719 -17.2% -17.2% -1
Slide 40: Additional information: group balance sheet – Liabilities and equity
Additional information: group balance sheet – Liabilities and equity Quarterly data Change in EUR million Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities - held for trading 7,746 8,988 6,632 6,364 5,867 -24.3% -24.3% -7.8% Derivatives 7,188 8,163 5,875 5,654 5,434 -24.4% -
Slide 41: Additional information: gross customer loans
Additional information: gross customer loans – By risk category, by currency, by industry Gross cust. loans by risk category (EUR bn) Gross customer loans by currency (EUR bn) Gross customer loans by industry (EUR bn) 128.3 130.6 130.4 131.2 131.9 128.3 130.6 130.4 131.2 131.9 130.6 130.4 131.2 131.
Slide 42: Additional information: footprint
Additional information: footprint – Customer banking in Austria and the eastern part of the EU Erste Group footprint Highlights Czech Republic Slovakia • Leading retail and corporate bank Customers: 4.8m Customers: 2.3m in 7 geographically connected Employees: 10,501 Employees: 4,205 countries CZ Br
Slide 43: Additional information: strategy – A real customer need is the reason for all business
Additional information: strategy – A real customer need is the reason for all business Customer banking in Central and Eastern Europe Eastern part of EU Focus on CEE, limited exposure to other Europe Retail Corporate Capital Public Interbank banking banking markets sector business Focus on local cur
Slide 44: Additional information: shareholder structure
Additional information: shareholder structure – Total number of shares: 429,800,000 By investor By region Uniqa Versicherungsverein BlackRock Inc Other Privatstiftung Erste Stiftung direct 4.0% 2.9% Harbor International 4.1% 9.9% Fund 4.9% Erste Stiftung indirect * Continental Europe 9.3% 25.3% Aust
Slide 45: Investor relations details
Investor relations details • Erste Group Bank AG, Am Belvedere 1, 1100 Vienna E-mail: investor.relations@erstegroup.com Internet: http://www.erstegroup.com/investorrelations http://twitter.com/ErsteGroupIR http://www.slideshare.net/Erste_Group Erste Group IR App for iPad, iPhone and Android http://w