Erste Group Bank Ag · VIE:EBS
Erste Group Bank — H1 2017 Earnings Presentation
17 slides from Erste Group Bank's earnings presentation, Aug 4, 2017
Slide 1: Erste Group posts net profit of EUR 624.7 million in H1 17
Erste Group posts net profit of EUR 624.7 million in H1 17 Press conference 4 August 2017 Page 1
Slide 2: Business environment – CEE is the fastest growing EU region
Business environment – Central and Eastern Europe is the fastest growing EU region 2017 2018 Real GDP growth (in %) Inflation (CPI average, in %) 2% 5.1 euro zone (2017f) 3.9 3.7 3.7 2.9 3.1 3.0 3.3 2.8 2.7 3.2 2.4 2.5 2.1 2.2 1.7 1.9 2.0 2.0 1.8 1.0 1.0 1.4 1.3 AT CZ SK RO HU HR AT CZ SK RO HU HR C
Slide 3: Business environment – Solid public finances in the markets of Erste Group
Business environment – Solid public finances in the markets of Erste Group 2017 2018 Budget deficit (in % of GDP) Public debt ratio (in % of GDP) AT CZ SK RO HU HR 81 60% 81 80 79 Maastricht limit 72 71 -0.4 -0.4 -0.8 -0.8 52 -1.0 50 -1.5 -1.5 -1.5 36 36 38 38 -2.5 -2.7 -2.7 -3.4 -3.4 -3% Maastricht
Slide 4: Business environment – CEE economies are creating jobs faster than the euro zone
Business environment – CEE economies are creating jobs much faster than the euro zone Unemployment (in %) Employment (in % of workforce population aged 15-64) 2017 2018 2013 Q1 2017 Q1 10.9 73 10.0 8.6 7.8 67 68 66 66 63 63 5.7 5.7 5.4 5.5 60 60 4.2 57 57 4.1 3.6 3.6 52 AT CZ SK RO HU HR EURO CZ SK
Slide 5: Business environment – Czech Rep. increases key policy rate by 20 bp in August
Business environment – Czech Rep. increases key policy rate by 20 bp in August 2017 3M Interbank 10YR GOV IN % Source: Bloomberg Austria Czech Republic Romania 3.51 3.46 3.66 3.75 0.58 0.49 0.57 0.56 0.51 0.85 0.47 0.58 -0.18 -0.26 -0.33 -0.33 0.29 0.29 0.71 0.65 0.28 0.29 0.62 0.66 1-6 16 1-6 17 Q1
Slide 6: Customer loans and deposits – Strong growth in loan volume and deposits
Business performance: customer loans and deposits – 30/06/16 Strong growth in loan volume (6% yoy) and deposits (11.6 % yoy) 31/12/16 30/06/17 Customer loans (net) Customer deposits Loan/ deposit ratio 127.4 130.4 97.7 Group 130.7 138.0 94.7 135.1 145.6 92.8 30.0 30.8 97.6 AT/EBOe 30.6 31.8 96.1 30.
Slide 7: Retail – Clients value Erste's click and mortar offering
Business performance: retail – Clients value Erste’s click and mortar offering Highlights in H1 17 Customers increasingly rely on digital channels for their everyday MORTGAGES banking needs: 1 in 4 clients are active digital users at Erste EUR 3.5 bn in nearly 50,000 newly granted mortgages Growing
Slide 8: Corporate – Real progress in corporate lending: 5% yoy growth
Business performance: corporate – Real progress in corporate lending: 5% yoy growth 30/06/16 31/03/17 30/06/17 % Gross corporate loans Corporate deposits Highlights 19.2 19.2 AT 20.0 19.9 EUR 46.2 bn total corporate loan portfolio 19.1 11.8 of Erste Group CZ 19.7 11.8 19.7 12.2 EUR 1.2 bn new loans
Slide 9: Corporate – 75% of new corporate loans in H1 granted to SMEs
Business performance: corporate – 75% of new corporate loans in H1 17 granted to SMEs Structure of EUR 46.2bn total loan portfolio Highlights 4% Erste Group services ~100,000 companies, 4% Financial out of which 75% are SMEs representing Healthcare 1% 18% Institutions Other Natural ~ 15% of the tota
Slide 10: Operating income and expenses – Low interest rates impact income, IT investments drive costs
Business performance: operating income and expenses – Low interest rate environment impacts income, IT investments drive costs Operating Income Operating Expenses IN EUR MN IN EUR MN 0.7% 3,317 3,293 118 136 120 1.2% 103 885 911 1,980 2,004 218 228 610 624 2,194 2,143 1,153 1,151 1-6 2016 1-6 2017 1
Slide 11: Operating result and cost/income ratio
Business performance: operating result and cost/income ratio – Increase in fee and commission income could not offset NII pressure 1-6 2016 1-6 2017 Operating result Cost/income ratio 1,336 59.7 Group 1,289 60.8 179 64.7 AT/EBOe 195 63.4 202 71.7 AT/SB 223 70.0 360 47.4 CZ 340 49.7 146 53.9 RO 151 5
Slide 12: Risk costs remain at historically low levels
Business performance: risk costs – Risk costs remain at historically low levels (15 bp at Group level) 1-6 2016 1-6 2017 Absolute Relative * Highlights 26 0.04 Group Year-on-year risk per- 104 0.15 formance characteri- 2 0.02 AT/EBOe sed by a reduced level -14 -0.09 of net releases and a 16 0.08 AT/
Slide 13: Asset quality – NPL ratio improves for the 14th consecutive quarter to 4.7%
Business performance: asset quality – NPL ratio improves for the 14th consecutive quarter to 4.7% 31/12/16 30/06/17 NPL volume NPL ratio NPL coverage ratio (excl. collateral) 6,678 4.9 69.1 Gruppe 6,496 4.7 68.5 781 2.5 59.3 AT/EBOe 688 2.2 60.0 1,980 4.9 58.1 AT/SB 1,908 4.6 57.3 695 3.2 82.8 CZ 55
Slide 14: Net profit – Solid result places Erste Group on track for ROTE of 10%+
Business performance: net profit – Solid result places Erste Group well on track to deliver ROTE of 10%+ in 2017 QoQ net profit reconciliation (EUR m) YoY net profit reconciliation (EUR m) 30 33 27 15 33 24 23 58 79 124 55 23 362 842 262 625 Q1 17 Operating Operating Risk Other Taxes on Minorities Q
Slide 15: Regulatory capital – CET1 solid at 12.8%, impacted by RWA inflation
Business performance: regulatory capital – CET1 (Basel 3, fully loaded) solid at 12.8%, impacted mainly by RWA inflation Regulatory capital (EUR bn) Risk-weighted assets (EUR bn) Capital ratios (B3, phased-in; in %) 18.7 18.5 19.9 101.8 106.8 18.8 3.6 3.2 13.2 13.8 5.2 17.4 13.4 13.4 5.2 15.1 0.7 0.
Slide 16: Capital ratios – Excellent capital generation across the years
Business performance: capital ratios (Basel 3, fully loaded) Excellent capital generation across the years Common equity tier one capital ratio (Basel 3, fully loaded) 12.0% 12.8% 12.8% 11.2% 11.4% 10.6% 9.2% 9.4% 8.3% 5.2% DEC 08 DEC 09 DEC 10 DEC 11 DEC 12 DEC 13 DEC 14 DEC 15 DEC 16 JUN 17 Page 1
Slide 17: Conclusion – Outlook 2017
Conclusion – Outlook 2017 • Real GDP growth of between 2.1-5.1% expected in 2017 in CEE and Austria Macro outlook • Real GDP growth to be driven by solid domestic demand, as real wage growth and 2017 declining unemployment support economic activity in CEE • Solid public finances across CEE • ROTE fo