Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Erste Bank — H1 2005 Earnings Presentation
47 slides from Erste Group Bank's earnings presentation, Aug 1, 2005
Slide 1: Erste Bank H1 2005 Results Teleconference
> Erste Bank - Strongest quarter ever > H1 2005 Results > Teleconference Vienna, 1 August 2005 > Andreas Treichl, CEO Reinhard Ortner, CFO
Slide 2: Presentation topics
> Presentation topics 1. H1 2005 Highlights 2. H1 2005 Financial Statements 3. Divisional Information 4. Asset quality 5. Outlook and Targets 6. Appendix NB From 1 January 2005 the revised IASB standards IAS 32 (Financial Instruments: Disclosure and Presentation) and IAS 39 (Financial Instruments: R
Slide 3: H1 2005 – Financial highlights
> H1 2005 – Financial highlights Cash EPS » Net Profit + 40.9% to EUR 335.7m 1.60 1.40 1.40 » Total Assets + 9.2% to EUR 152.7bn 1.20 1.00 1.00 0.86 » Tier 1 Ratio at 6.5% in EUR 0.80 0.71 0.63 0.60 » Cost/Income Ratio 62.0% 0.40 0.20 » Cash ROE 18.7% 0.00 H1/01 H1/02 H1/03 H1/04 H1/05 Cost/Income R
Slide 4: H1 2005 – Operating performance per segment
> H1 2005 – Operating performance per segment Strong Austrian retail and sound CE performance drive double digit growth EUR m H1 05 H1 04 % Change Austria 433.2 406.3 6.6 Savings banks 171.9 172.8 (0.5) Retail & Mortgage 125.2 89.9 39.3 thereof Retail Branches 49.0 36.5 34.2 SME 12.5 8.3 50.6 Own sa
Slide 5: Key figures of EB subsidiaries in Central Europe
> Key figures of EB subsidiaries in Central Europe H1 2005 Results (IFRS) as reported by local entities EB stake 97.97% 100.00% 99.90% 61.95% H1 05 H1 04 +/-% H1 05 H1 04 +/-% H1 05 H1 04 +/-% H1 05 H1 04 +/-% Net Profit (EUR m) 160.3 148.9 8% 47.7 39.6 20% 34.5 13.4 >100% 22.7 22.7 0% ROE (%) 23.9
Slide 6: Erste Bank expanding its footprint
> Erste Bank expanding its footprint Acquisition in Serbia increases customer base to 12.1 million BY Clients: 5.4m; #1 Retail deposits: 33% Branches: 647 D PL Clients: 2.5m; #1 Retail deposits: 34% Branches: 304 CZ UA Clients: 0.8m; # 2 Retail deposits (inc. SBs): 22% SK Branches: - „Own“ :144 A -
Slide 7: Update on Serbia
> Update on Serbia Novosadska banka acquisition » Total assets of EUR 132.3 million as of 31 December 2004 » Largest player in Vojvodina with 10% market share and overall market share in Serbia of 2% » 873 employees in 71 branches serving around 260,000 customers » Deal signed on 15 July, closing ex
Slide 8: New Group Architecture Update
> New Group Architecture Update NGA Projects proceeding according to plan Retail 2008 » Product development and sales initiative for Structured Investment Products implemented - 1H 2005 sales for Austria and Czech Republic met targets; roll-out in all countries by Q4 2005 » Sales management techniqu
Slide 9: New Group Architecture Update (cont)
> New Group Architecture Update (cont) NGA Projects proceeding according to plan Group Performance Model » Group-wide comparability over all business lines (first wave) now possible and implementation of Group- wide controlling tool started (roll-out until YE 2006) » Initiatives in credit risk manag
Slide 10: Presentation Topics
> Presentation Topics 1. H1 2005 Highlights 2. H1 2005 Financial Statements 3. Divisional Information 4. Asset quality 5. Outlook and Targets 6. Appendix H1 2005 Results Teleconference 1 August 2005 10
Slide 11: H1 05 Group Income Statement (IFRS)
> H1 05 Group Income Statement (IFRS) Improvement in net profit driven by strong operating performance EUR m H1 05 H1 04 % Change Net interest income 1,386.5 1,318.5 5.2 Risk provisions for loans and advances (209.9) (196.8) 6.7 Net commission income 617.0 563.6 9.5 Net trading result 105.2 108.3 (2
Slide 12: H1 05 EB Group Balance Sheet (IFRS) – Assets
> H1 05 EB Group Balance Sheet (IFRS) Assets – double digit growth in CE customer loans EUR m 30.6.2005 31.12.2004 restated % Change Cash and balances with central banks 2,463 2,723 (9.5) Loans and advances to credit institutions 19,840 15,684 26.5 Loans and advances to customers 77,227 72,843 6.0 R
Slide 13: H1 05 EB Group Balance Sheet (IFRS) – Liabilities
> H1 05 EB Group Balance Sheet (IFRS) Liabilities – moderate growth in retail funding EUR m 30.6.2005 31.12.2004 restated % Change Amounts owed to credit institutions 35,582 28,551 24.6 Amounts owed to customers 71,125 68,213 4.3 Debts evidenced by certificates 19,871 19,710 0.8 Provisions 8,076 7,5
Slide 14: Presentation Topics
> Presentation Topics 1. H1 2005 Highlights 2. H1 2005 Financial Statements 3. Divisional Information 4. Asset quality 5. Outlook and Targets 6. Appendix H1 2005 Results Teleconference 1 August 2005 14
Slide 15: H1 2005 Divisional Figures - Overview
> H1 2005 Divisional Figures - Overview Austria CE Subsidiaries Int. Business Corp. Center TOTAL EB GROUP In EUR m H1 05 H1 04 H1 05 H1 04 H1 05 H1 04 H1 05 H1 04 H1 05 H1 04 Net interest income 772.6 792.9 535.1 457.3 75.1 74.2 3.8 (5.9) 1,386.5 1,318.5 Risk provisions (168.3) (168.8) (31.9) (16.0)
Slide 16: H1 2005 Divisional Figures - Austria
> H1 2005 Divisional Figures - Austria Savings banks Retail & Mortgage Large Corp. Trading & Inv.B. TOTAL AUSTRIA In EUR m H1 05 H1 04 H1 05 H1 04 H1 05 H1 04 H1 05 H1 04 H1 05 H1 04 Net interest income 409.1 409.6 257.3 257.0 73.0 74.2 33.2 52.1 772.6 792.9 Risk provisions (86.8) (87.0) (52.6) (56.
Slide 17: Savings banks
> Savings banks H1 2005 Highlights » Operating results nearly flat yoy - net profit Segment Savings banks H1 05 H1 04 % chg contribution lower due to Operating Income (EUR m) 584.5 583.0 0.3% » Positive impact on H1 2004 other operating result by one savings bank’s sale of branches in CE Operating E
Slide 18: Retail and Mortgage business
> Retail and Mortgage business H1 2005 Highlights Segment Retail & M‘ge H1 05 H1 04 % chg » Net profit contribution triples yoy Operating Income (EUR m) 439.8 411.2 6.9% » ROE reached FY 2005 10% target on strongly improved performance of all subsegments Operating Expenses (EUR m) (314.6) (321.3) (2
Slide 19: Large Corporates
> Large Corporates H1 2005 Highlights Segment Large Corp H1 05 H1 04 % chg » Reduction in net profit contribution by EUR 6.8m (21.9%) due to lower other operating result Operating Income (EUR m) 109.1 103.7 5.2% » NII improved compared to Q1 2005, slightly Operating Expenses (EUR m) (42.6) (40.6) 4.
Slide 20: Trading & Investment banking
> Trading & Investment banking H1 2005 Highlights Segment Trading & IB H1 05 H1 04 % chg » Decline of net profit contribution (EUR 7.4m) mainly Operating Income (EUR m) 114.9 127.8 (10.1%) due to weaker NII Operating Expenses (EUR m) (45.3) (47.3) (4.2%) » NII decreases by 36.2% (EUR 19m) Operating
Slide 21: H1 2005 Divisional Figures – Central Europe
> H1 2005 Divisional Figures – Central Europe Czech Republic Slovak Republic Hungary Croatia TOTAL CE In EUR m H1 05 H1 04 H1 05 H1 04 H1 05 H1 04 H1 05 H1 04 H1 05 H1 04 Net interest income 287.6 244.7 92.8 92.5 97.6 80.8 57.1 39.3 535.1 457.3 Risk provisions (13.4) (12.3) (5.1) 3.1 (9.2) (8.8) (4.
Slide 22: Česká spořitelna
> Česká spořitelna H1 2005 Highlights » Net profit contribution improves by 48.6% (38.5%)* Segment contribution H1 05 H1 04 % chg supported by strong operating performance Operating Income (EUR m) 457.6 399.3 14.6% » Strong loan growth overcompensates negative effect Operating Expenses (EUR m) (267.
Slide 23: Slovenská sporitel'ňa
> Slovenská sporitel’ňa H1 2005 Highlights » Up nearly 50% yoy on operating performance and Segment contribution H1 05 H1 04 % chg buyout of remaining minorities in Q1 2005 Operating Income (EUR m) 141.4 131.7 7.3% » NII flat yoy (-4.1%)* » NIM declines to 3.2% mainly due to Operating Expenses (EUR
Slide 24: Erste Bank Hungary
> Erste Bank Hungary H1 2005 Highlights Segment contribution H1 05 H1 04 % chg » Net profit contribution doubled on H1 2005 Operating Income (EUR m) 144.7 113.9 27.0% » NII increase 20.8% yoy (17.2%)* Operating Expenses (EUR m) (86.7) (83.5) 3.9% » NIM slightly down to 5.18% on Q1 2005 but volume gr
Slide 25: Erste Bank Croatia
> Erste Bank Croatia H1 2005 Highlights Segment contribution H1 05 H1 04 % chg » Net profit contribution slightly down on higher risk costs and higher minorities Operating Income (EUR m) 66.4 52.7 26.0% » Operating result improved strongly by 44.8% Operating Expenses (EUR m) (34.3) (30.6) 12.3% » NI
Slide 26: International business and Corporate center
> International business and Corporate center International business – Highlights Corporate Center - Highlights » Net profit continues to increase – up 7.6% » Lower intragroup profit elimination leads to declining commissions and expenses » NII stable yoy (up 1.2%) » Expenses affected negatively by
Slide 27: Presentation Topics
> Presentation Topics 1. H1 2005 Highlights 2. H1 2005 Financial Statements 3. Divisional Information 4. Asset quality 5. Outlook and Targets 6. Appendix H1 2005 Results Teleconference 1 August 2005 27
Slide 28: H1 2005 Asset quality
> H1 2005 Asset quality Improved cover ratio reflects quality of asset growth Low Risk Mgmt. Att'n Sub-standard Non-Perform. Total1 Risk Provisions NPL Coverage2 H1 05 FY 04 H1 05 FY 04 H1 05 FY 04 H1 05 FY 04 H1 05 FY 04 H1 05 FY 04 H1 05 FY 04 Austria Total 77,778 70,733 11,019 10,440 2,657 3,075
Slide 29: Presentation Topics
> Presentation Topics 1. H1 2005 Highlights 2. H1 2005 Financial Statements 3. Divisional Information 4. Asset quality 5. Outlook and Targets 6. Appendix H1 2005 Results Teleconference 1 August 2005 29
Slide 30: CE plays an ever increasing role
> CE plays an ever in creasing role CE contributes 67% to Group net profit 226.4 Austria, International and Corp. Center » Net profit contribution of CE subsidiaries soars CE Subsidiaries by 50% in first half 2005 160 151.0 140 » Austrian contribution improves by 7% 120 109.3 EUR m » Retail and mort
Slide 31: Group Outlook and Targets
> Group Outlook and Targets Outlook 2005 » Erste Bank is confident to reach a net profit of at least EUR 660m at YE 2005 Target 2006 » Erste Bank confirms net profit target EUR 750m in 2006 » Resulting in a ROE of at least 18% » Based on a CIR no higher than 61% Cost-Income Ratio Cash ROE 18.7% >18.
Slide 32: Presentation Topics
> Presentation Topics 1. H1 2005 Highlights 2. H1 2005 Financial Statements 3. Divisional Information 4. Asset quality 5. Outlook and Targets 6. Appendix H1 2005 Results Teleconference 1 August 2005 32
Slide 33: Macro overview
> Macro overview Real GDP growth Inflation (average) 8.0% 20.0% 7.0% 16.0% 6.0% 5.0% 12.0% 4.0% 3.0% 8.0% 2.0% 4.0% 1.0% 0.0% 0.0% 2002 2003 2004 2005e 2006e 2007e 2008e 2002 2003 2004 2005e 2006e 2007e 2008e Austria Czech Republic Slovakia Hungary Croatia Serbia Austria Czech Republic Slovakia Hung
Slide 34: 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 H1 2005 FY 2004 H1 2005 FY 2004 H1 2005 FY 2004 H1 2005 FY 2004 H1 2005 FY 2004 % of total % of total Core Markets 85,560 79,450 11,365 10,891
Slide 35: 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 H1 2005 FY 2004 H1 2005 FY 2004 H1 2005 FY 2004 H1 2005 FY 2004 H1 2005 FY 2004 % of total % of total Banking & insurance 50,3
Slide 36: H1 2005 Financials (IFRS) of CE subsidiaries (cont)
> H1 2005 Financials (IFRS) of CE subsidiaries (cont) Česká spořitelna Group EUR m H1 2005 H1 2004 restated % Change Net interest income 299.1 279.0 7.2 Risk provisions for loans and advances (3.1) (13.2) (76.7) Net commission income 144.7 135.3 6.9 Net trading result 21.6 27.3 (20.9) General admini
Slide 37: H1 2005 Financials (IFRS) of CE subsidiaries (cont)
> H1 2005 Financials (IFRS) of CE subsidiaries (cont) Slovenská sporiteľňa Group EUR m H1 2005 H1 2004 restated % Change Net interest income 99.2 102.0 (2.7) Risk provisions for loans and advances (5.1) 3.2 >100.0 Net commission income 41.1 33.7 22.0 Net trading result 7.5 7.4 1.4 General administra
Slide 38: H1 2005 Financials (IFRS) of CE subsidiaries (cont)
> H1 2005 Financials (IFRS) of CE subsidiaries (cont) Erste Bank Hungary Group EUR m H1 2005 H1 2004 restated % Change Net interest income 107.8 94.3 14.3 Risk provisions for loans and advances (13.6) (19.5) (30.3) Net commission income 29.7 24.3 22.2 Net trading result 17.4 9.8 77.6 General adminis
Slide 39: H1 2005 Financials (IFRS) of CE subsidiaries (cont)
> H1 2005 Financials (IFRS) of CE subsidiaries (cont) Erste Bank Croatia EUR m H1 2005 H1 2004 restated % Change Net interest income 59.3 42.8 38.6 Risk provisions for loans and advances (4.3) 2.1 >100.0 Net commission income 10.0 7.5 33.3 Net trading result (0.6) 6.0 <-100.0 General administrative
Slide 40: EB Group Quarterly Results (IFRS)
> EB Group Quarterly Results (IFRS) P&L Details EUR m Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Net interest income 618 673 645 652 658 661 677 703 681 705 Net commission income 229 253 246 269 281 283 285 287 311 306 Net trading result 60 55 56 44 62 46 48 60 57 48 Income from ins
Slide 41: EB Group Quarterly Balance Sheet (IFRS)
> EB Group Quarterly Balance Sheet (IFRS) Balance Sheet Details EUR m Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 Q2'04 Q3'04 Q4´04 Q1'05 Q2'05 Total assets 125,081 129,153 130,481 128,575 136,129 137,517 142,221 139,812 148,202 152,660 Loans & advances credit inst. 16,535 18,146 17,851 13,140 18,747 17,846 19,30
Slide 42: EB Group Quarterly Divisionals
> EB Group Quarterly Divisionals Overview In EUR m Savings Banks Retail & Mortgage Q2 03 Q3 03 Q4 03 Q1 4 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Net interest income 220.5 202.6 215.4 210.2 199.4 208.5 231.5 204.1 204.9 135.5 126.9 125.8 131.1 127.0 132.1 128.4
Slide 43: EB Group Quarterly Divisionals – Austria Details
> EB Group Quarterly Divisionals Austria - Details In EUR m Savings Banks Retail & Mortgage Q2 03 Q3 03 Q4 03 Q1 4 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Net interest income 220.5 202.6 215.4 210.2 199.4 208.5 231.5 204.1 204.9 135.5 126.9 125.8 131.1 127.0 132
Slide 44: EB Group Quarterly Divisionals – Central Europe Details
> EB Group Quarterly Divisionals Central Europe - Details In EUR m Ceska sporitelna Slovenska sporitlena Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Q4 04 Q1 05 Q2 05 Net interest income 111.6 119.1 122.2 122.5 124.9 140.4 141.2 146.4 57.2 55.4 45.5 47.0 47.8 45.5 4
Slide 45: H1 2005 Results – Key financial data
> H1 2005 Results Key financial data 1 in EUR m YE 1998 YE 1999 YE 2000 YE 2001 YE 2002 YE 2003 YE 2004 H1 2005 Tier 1 Capital pursuant to § Austrian Banking Act 1,611 1,753 2,125 2,337 3,800 3,912 4,377 4,462 Total own funds pursuant to § Austrian Banking Act 2 3,176 3,296 3,956 4,308 6,983 7,009 7
Slide 46: Current shareholder structure
> Current shareholder structure Total numbers of shares: 243,183,600 By Investor Type By Region Austria Verein Others 6.0% Continental Europe 0.9% 32.2% 6.4% UK & Ireland 17.2% Employees 1.8% Savings banks North America Institutional investors 7.0% Austria Private 17.6% 45.9% 57.9% investors 7.1% Fr
Slide 47: 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: