Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Erste Bank — 9M 2006 Earnings Presentation
49 slides from Erste Group Bank's earnings presentation, Oct 30, 2006
Slide 1: Erste Bank: continued strong operating performance in Q3 2006
> Erste Bank: - continued strong operating performance in Q3 2006 > 9M 2006 Results > Presentation and Teleconference London, 30 Oct 2006 > Andreas Treichl, CEO Reinhard Ortner, CFO
Slide 2: Disclaimer
> 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 CORRECTN
Slide 3: Presentation topics
> Presentation topics 1. Q3 and 9M 2006 highlights 2. Financial statements 3. Divisional information 4. Asset quality 5. Outlook and targets 6. Appendix NB Figures of prior years (2005 and 2004) have been adapted pursuant to the requirements of IAS 32 and IAS 39. Details of these changes were outlin
Slide 4: 9M Financial highlights
> 9M Financial highlights » Net profit: + 27.6% to EUR 649.3m yoy EPS (in EUR)1) 2.12 2.18 » Total assets: + 6.5% to EUR 162.6bn ytd 1.53 » Tier 1 ratio: 10.0% 1.33 » Tier 1 capital increased by EUR 2.7bn in Jan 06 1.02 0.85 0.90 » Cost/income ratio: 60.2% » Return on equity: 13.0%2) 1-9 00 1-9 01 1
Slide 5: Operating results per segment
> Operating results per segment Strong momentum before consolidation of BCR EUR m 1-9 2006 1-9 2005 % Change Austria 690.8 641.2 7.7 Savings banks 286.5 262.5 9.1 Retail & Mortgage 185.9 183.4 1.3 thereof - Retail Branches 73.9 72.4 2.1 - SME 19.8 19.2 3.1 - Own savings banks 41.5 36.2 14.8 - Mortga
Slide 6: Update on Banca Comercială Română
> Update on Banca Comercială Română Completion of acquisition » Shares transferred and purchase price paid on BCR return on equity guidance 12 October 2006 >35% * » BCR financials will be consolidated in EB Group results from closing date (12 Oct 2006) >23% New management board appointed » Vote of c
Slide 7: Update on Bank Prestige (Ukraine)
> Update on Bank Prestige (Ukraine) Preparation for closing of transaction Ukrainian banking market growing rapidly... 55.0% » Closing expected within next few weeks - awaiting 50 50.8% 60% approval from Ukrainian competition authorities 40 50% 37.4% 39.0% » General shareholders meeting in October e
Slide 8: Update on New Group Architecture project
> Update on New Group Architecture project Ambitious new NGA targets reflect future opportunities » 2008 pre-tax profit target raised from EUR 210m to EUR 270m » BCR and Bank Prestige not yet included in NGA programme new 2008E nd EUR +55m i sed a lio) H1 2006 old 2008E tim Revenue enhancement o (op
Slide 9: Presentation topics
> Presentation topics 1. Q3 and 9M 2006 highlights 2. Financial statements 3. Divisional information 4. Asset quality 5. Outlook and targets 6. Appendix 9M 2006 Results 30 Oct 2006 9
Slide 10: Group income statement (IFRS)
> Group income statement (IFRS) Strong operating performance sustained throughout the Group EUR m 1-9 2006 1-9 2005 % Change Net interest income 2,261.5 2,063.5 9.6 Risk provisions for loans and advances (331.2) (329.1) 0.6 Net commission income 1,036.5 921.9 12.4 Net trading result 187.8 171.6 9.4
Slide 11: Group balance sheet (IFRS)
> Group balance sheet (IFRS) Assets – retail lending continues to drive growth EUR m 30-Sep-06 31-Dec-05 % Change Cash and balances with central banks 2,355 2,728 (13.7) Loans and advances to credit institutions 18,307 16,858 8.6 Loans and advances to customers 87,230 80,419 8.5 Risk provisions for
Slide 12: Group balance sheet (IFRS)
> Group balance sheet (IFRS) Liabilities – rising interest rates support increase in deposits EUR m 30-Sep-06 31-Dec-05 % Change Amounts owed to credit institutions 34,135 33,911 0.7 Amounts owed to customers 80,660 72,793 10.8 Debts evidenced by certificates 18,603 21,291 (12.6) Provisions 9,069 8,
Slide 13: Presentation topics
> Presentation topics 1. Q3 and 9M 2006 highlights 2. Financial statements 3. Divisional information 4. Asset quality 5. Outlook and targets 6. Appendix 9M 2006 Results 30 Oct 2006 13
Slide 14: Divisional figures – Core segments
> Divisional figures – Core segments Positive contribution from major core segments Austria CEE Int. Business Corp. Center TOTAL EB GROUP In EUR m 1-9 06 1-9 05 1-9 06 1-9 05 1-9 06 1-9 05 1-9 06 1-9 05 1-9 06 1-9 05 Net interest income 1,157.5 1,156.0 941.2 806.3 108.8 114.5 54.1 (13.3) 2,261.5 2,0
Slide 15: Core Segment Austria
> Core Segment Austria Austria – Strong overall performance despite seasonal slowdown Savings banks Retail & Mortgage Large Corp. Trading & Inv.B. TOTAL AUSTRIA In EUR m 1-9 06 1-9 05 1-9 06 1-9 05 1-9 06 1-9 05 1-9 06 1-9 05 1-9 06 1-9 05 Net interest income 616.5 618.3 386.2 383.9 105.4 105.4 49.4
Slide 16: Savings Banks
> Savings Banks 1-9 2006 highlights » Operating result increases by 9.1% yoy on Segment Savings Banks 1-9 06 1-9 05 % chg strong commission income and flat costs Operating income (EUR m) 908.9 882.9 2.9 Operating expenses (EUR m) (622.4) (620.3) 0.3 » NII slightly down - 0.3% yoy » Strong increase i
Slide 17: Retail and Mortgage
> Retail and Mortgage 1-9 2006 highlights » Retail Austria – net profit increases by 8.1% yoy Segment Retail & M'ge 1-9 06 1-9 05 % chg » Q3 commission income impacted by seasonally weaker Operating income (EUR m) 658.6 656.7 0.3 securities business, costs decline by 2.2% qoq » Branches – net profit
Slide 18: Retail and Mortgage - details
> Retail and Mortgage - details R & M Austria – Improvement at branches & SME business Operating profit (EUR m) Net profit (EUR m) 72.4 73.9 1-9 05 1-9 06 1-9 05 1-9 06 41.5 36.2 37.9 32.8 29.3 26.7 21.3 19.9 19.2 19.8 17.7 15.5 15.3 15.2 3.2 5.0 6.5 0.4 Branches SME Own SBs Mortgage Subsidiaries Br
Slide 19: Large Corporates
> Large Corporates 1-9 2006 highlights » Net profit up strongly by 63.2% Segment Large Corp 1-9 06 1-9 05 % chg » Supported by strong commission income and revaluation Operating income (EUR m) 176.7 160.0 10.4 gains in OOR Operating expenses (EUR m) (71.6) (64.2) 11.5 » NII unchanged yoy » Pressure
Slide 20: Trading & Investment Banking
> Trading & Investment Banking 1-9 2006 highlights » Net profit contribution rises by 31.4% Segment Trading & IB 1-9 06 1-9 05 % chg » Supported by very strong trading performance in Q1 06 Operating income (EUR m) 189.3 169.7 11.5 and further improvement of commission income Operating expenses (EUR
Slide 21: Core segment Central Europe
> Core segment Central Europe CEE subsidiaries – Strong operating performance Czech Republic Slovakia Hungary Croatia Serbia TOTAL CEE In EUR m 1-9 06 1-9 05 1-9 06 1-9 05 1-9 06 1-9 05 1-9 06 1-9 05 1-9 06 1-9 05 1-9 06 1-9 05 Net interest income 527.4 434.8 164.5 139.8 167.9 150.1 78.5 80.7 2.9 0.
Slide 22: Česká spořitelna
> Česká spořitelna 1-9 2006 highlights » Net profit contribution up 15.1% yoy (9.0%)* Segment contribution 1-9 06 1-9 05 % chg » Supported by strong operating result +29.1% (22.2%) Operating income (EUR m) 812.7 693.8 17.1 » NII increases by 21.3% yoy (14.8%) Operating expenses (EUR m) (443.8) (408.
Slide 23: Slovenská sporiteľňa
> Slovenská sporitel’ňa 1-9 2006 highlights » Net profit contribution up 15.7% (12.6%)* yoy Segment contribution 1-9 06 1-9 05 % chg supported by strong loan growth and higher rates Operating income (EUR m) 240.8 210.8 14.2 » NII up 17.7% yoy (14.6%) Operating expenses (EUR m) (137.5) (122.7) 12.0 »
Slide 24: Erste Bank Hungary
> Erste Bank Hungary 1-9 2006 highlights » Net profit contribution up 2.3% (9.8%)* yoy Segment contribution 1-9 06 1-9 05 % chg » Adjusted for a release of risk provisions (EUR 6.4m) at Group Operating income (EUR m) 248.0 223.0 11.2 level in 2005, net profit increased by more than 20% Operating exp
Slide 25: Erste Bank Croatia
> Erste Bank Croatia 1-9 2006 highlights » Net profit contribution up by 3.7% (2.2%)* - Segment contribution 1-9 06 1-9 05 % chg Operating result up by 1.4% (-0.1%) Operating income (EUR m) 113.0 103.8 8.9 » Impact of high marginal reserve requirements Operating expenses (EUR m) (61.1) (52.6) 16.2 »
Slide 26: Erste Bank Serbia
> Erste Bank Serbia 1-9 2006 highlights » Net negative contribution of EUR 16.6m resulting Segment contribution 1-9 06 1-9 05 % chg mainly from non-recurring restructuring costs: Operating income (EUR m) 5.0 1.9 >100 » Risk provisions for incumbent loan portfolio » Severance payments Operating expen
Slide 27: Core segments – Int'l Business and Corp. Center
> Core segments – Int’l Business and Corp. Center Int’l Business – 1-9 06 highlights Corporate Center – 1-9 06 highlights » Net profit up by 19.3% yoy supported by declining » NII - EUR 53m of additional interest income from risk costs and lower costs capital increase included » NII down -5.0% yoy »
Slide 28: Presentation topics
> Presentation topics 1. Q3 and 9M 2006 highlights 2. Financial statements 3. Divisional information 4. Asset quality 5. Outlook and targets 6. Appendix 9M 2006 Results 30 Oct 2006 28
Slide 29: Asset quality
> Asset quality NPL ratio at EB Group stable compared to YE 2005 Low Risk Mgmt. Att'n Substandard NPL Total¹ Risk Provisions NPL Coverage2 Q3 06 YE 05 Q3 06 YE 05 Q3 06 YE 05 Q3 06 YE 05 Q3 06 YE 05 Q3 06 YE 05 Q3 06 YE 05 Austria Total 80,524 75,544 10,297 12,267 2,051 2,431 3,298 3,275 96,170 93,5
Slide 30: Presentation topics
> Presentation topics 1. Q3 and 9M 2006 highlights 2. Financial statements 3. Divisional information 4. Asset quality 5. Outlook and targets 6. Appendix 9M 2006 Results 30 Oct 2006 30
Slide 31: Erste Bank outlook and targets
> Erste Bank outlook and targets Outlook 2006 & 2007 2006: Net profit growth above 20% » No substantial contribution from BCR » Positive one-offs in H2 2006 offset by one negative one-off 2007: Net profit expected to increase by at least 25% » Based on generally positive outlook for CEE subsidiaries
Slide 32: Presentation topics
> Presentation topics 1. Q3 and 9M 2006 highlights 2. Financial statements 3. Divisional information 4. Asset quality 5. Outlook and targets 6. Appendix 9M 2006 Results 30 Oct 2006 32
Slide 33: 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 Q3 06 YE 05 Q3 06 YE 05 Q3 06 YE 05 Q3 06 YE 05 Q3 06 YE 05 % of total % of total Core Markets 98,181 89,322 11,420 12,890 2,503 2,826 3,667 3
Slide 34: 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 Q3 06 YE 05 Q3 06 YE 05 Q3 06 YE 05 Q3 06 YE 05 Q3 06 YE 05 % of total % of total Banking & insurance 52,558 47,514 1,356 799
Slide 35: Key figures of EB subsidiaries in CEE
> Key figures of EB subsidiaries in CEE Results (IFRS) as reported by local entities 97.99% 100.00% 99.92% 64.68% 80.49% 1-9 06 1-9 05 +/- 1-9 06 1-9 05 +/- 1-9 06 1-9 05 +/- 1-9 06 1-9 05 +/- 1-9 06 1-9 05 *) +/- Net profit (EUR m) 258.3 253.3 2.0% 73.8 71.1 3.8% 62.9 51.7 21.7% 37.4 36.3 3.0% (21.
Slide 36: Financials (IFRS) of CEE subsidiaries: Česká spořitelna
> Financials (IFRS) of CEE subsidiaries Česká spořitelna EUR m 1-9 2006 1-9 2005 % Change Net interest income 545.0 481.5 13.2 Risk provisions for loans and advances (32.5) (4.6) >100 Net commission income 237.0 229.4 3.3 Net trading result 38.6 37.8 2.1 General administrative expenses (443.8) (431.
Slide 37: Financials (IFRS) of CEE subsidiaries: Slovenská sporiteľňa
> Financials (IFRS) of CEE subsidiaries (cont) Slovenská sporiteľňa EUR m 1-9 2006 1-9 2005 % Change Net interest income 167.8 153.4 9.4 Risk provisions for loans and advances (9.6) (9.2) 4.3 Net commission income 61.1 63.7 (4.1) Net trading result 15.2 9.2 65.2 General administrative expenses (137.
Slide 38: Financials (IFRS) of CEE subsidiaries: Erste Bank Hungary
> Financials (IFRS) of CEE subsidiaries (cont) Erste Bank Hungary EUR m 1-9 2006 1-9 2005 % Change Net interest income 182.0 153.9 18.3 Risk provisions for loans and advances (25.2) (19.4) 29.9 Net commission income 58.1 42.2 37.7 Net trading result 22.1 25.7 (14.0) General administrative expenses (
Slide 39: Financials (IFRS) of CEE subsidiaries: Erste Bank Croatia
> Financials (IFRS) of CEE subsidiaries (cont) Erste Bank Croatia EUR m 1-9 2006 1-9 2005 % Change Net interest income 84.6 86.3 (2.0) Risk provisions for loans and advances (10.3) (8.4) 22.6 Net commission income 20.9 16.4 27.4 Net trading result 13.6 7.0 94.3 General administrative expenses (61.2)
Slide 40: Financials (IFRS) of CEE subsidiaries: Erste Bank Serbia
> Financials (IFRS) of CEE subsidiaries (cont) Erste Bank Serbia EUR m 1-9 2006 1-9 2005 1) % Change Net interest income 5.7 6.8 (16.2) Risk provisions for loans and advances (8.9) (6.8) 30.9 Net commission income 2.7 2.9 (6.9) Net trading result (0.6) 5.1 n.a. General administrative expenses (20.5)
Slide 41: EB Group quarterly results (IFRS)
> EB Group quarterly results (IFRS) Profit & loss statement - details EUR m Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Net interest income 666 693 673 697 694 731 724 758 780 Net commission income 285 287 311 306 305 335 342 356 339 Net trading result 48 60 57 48 66 70 91 45 51 Income fro
Slide 42: EB Group quarterly balance sheet (IFRS)
> EB Group quarterly balance sheet (IFRS) Balance sheet - details EUR m Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Total assets 142,221 139,812 148,202 152,660 156,931 152,660 158,815 160,229 162,569 Loans & advances credit inst. 19,304 15,684 19,545 19,840 20,058 16,858 18,604 19,890 18,
Slide 43: EB Group quarterly by divisions
> EB Group quarterly by divisions Core segments In EUR m Total Austria Total CEE Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Net interest income 383.4 394.2 376.5 377.0 404.0 273.6 290.3 303.2 321.5 316.4 Risk provisions (99.1) (83.9) (80.4) (78.5) (93.3) (20.0) (28.2) (24.1) (28.1)
Slide 44: EB Group quarterly by divisions: Austria details
> EB Group quarterly by divisions Austria - details In EUR m Savings Banks Retail & Mortgage Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Net interest income 209.2 215.7 199.4 196.5 220.6 126.6 127.2 129.6 127.7 128.9 Risk provisions (58.2) (70.7) (44.1) (43.1) (46.1) (27.2) (25.3) (2
Slide 45: EB Group quarterly by divisions: CEE details
> EB Group quarterly by divisions CEE - details In EUR m Czech Republic Slovakia Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Net interest income 149.5 160.2 172.1 180.7 174.6 47.0 55.1 50.7 56.3 57.5 Risk provisions (6.5) (13.8) (10.8) (11.3) (10.4) (3.9) (2.2) (2.8) (4.7) (2.0) Net
Slide 46: EB Group quarterly by divisions: CEE details
> EB Group quarterly by divisions CEE - details In EUR m Croatia Serbia Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Net interest income 23.7 19.5 27.4 26.3 24.8 0.9 1.2 0.5 1.0 1.5 Risk provisions (4.0) (6.1) (2.6) (4.7) (3.0) (0.7) (3.2) (1.4) 0.3 (0.5) Net commission income 6.1 7.2
Slide 47: Q3 2006 Results: Key financial data
> Q3 2006 Results Key financial data EUR m YE 1998 YE 1999 YE 2000 YE 2001 YE 2002 YE 2003 YE 2004 YE 2005 Q3 2006 Tier 1 Capital pursuant to § Austrian Banking Act 1,611 1,753 2,125 2,337 3,800 3,912 4,377 5,112 8,177 Total own funds pursuant to 1 § Austrian Banking Act 3,176 3,296 3,956 4,308 6,98
Slide 48: Current shareholder structure
> Current shareholder structure Total number of shares: 308,955,605* By Investor Type By Region DIE ERSTE österreichische Spar-Casse Others Privatstiftung 30.5% Continental Europe 0.9% Austria Verein 6.4% 5.0% Employees Capital Research & Mgmt. 1.8% UK & Ireland 5.1% 17.2% Savings banks 7.2% Private
Slide 49: 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 ISIN: AT0000652011 Investor relations Gabriele Werzer Tel: +43 (0)5 0100-11286 E-Mail: gab