Erste Group Bank Ag · VIE:EBS
Erste Group Bank — FY2019 Earnings Presentation
49 slides from Erste Group Bank's earnings presentation, Feb 28, 2020
Slide 1: Erste Group investor presentation FY 2019 preliminary results
Erste Group investor presentation FY 2019 preliminary results 28 February 2020 Erste Group closes 2019 with strong operating performance, outlook for 2020 confirmed Bernhard Spalt, CEO Erste Group Stefan Dörfler, CFO Erste Group Alexandra Habeler-Drabek, CRO Erste Group Page
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 • Key takeaways and 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) -18.0% 102 340 98 1,793 305 -49.7% 86 1,470 491 61 72 108 82 184 247 1 70 Q3 19 Operating Operating Risk costs Other Taxes on Minorities Q4 19 2018 Operating Operating R
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 2.30% +8.7% 2.18% 2.14% 2.20% 2,973 2,735 0.17% 4,582 4,747 60.3% 39 0.05% 56.3% 786 739 82 1,188 1,229 0 -59 2018 2019 Q3 19 Q4 19 2018 2019 Q3 19
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) +3.8% +3.8% 245,693 1,609 245,693 139 631 633 56 10,948 236,792 236,792 11,208 87 6,856 4,517 3,952 365 31/12/18 Cash Trading, Loans to Net loans Intangibles
Slide 7: Executive summary – Key balance sheet data
Executive summary – 31/12/18 Key balance sheet data 31/12/19 Loan/deposit & loan/TA ratio Net loans & credit RWA NPL coverage ratio & NPL ratio in EUR bn 91.8% 92.2% +7.3% 77.1% 63.1% 65.2% 149.3 160.3 73.4% 95.9 100.4 3.2% 2.5% 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 • Key takeaways and outlook • Additional information Page 8
Slide 9: Business environment – Strong economic outlook for 2020
Business environment – 2019 2020 Strong economic outlook for 2020 Real GDP growth (in %) Dom. demand contribution* (in %) Net export contribution* (in %) Consumer price inflation (avg, in %) 5.9 4.9 4.8 3.8 4.1 4.4 3.4 3.4 3.5 3.6 3.8 3.7 3.5 3.3 2.8 2.9 2.7 3.0 3.1 2.4 2.2 2.3 2.5 2.2 2.0 1.9 1.9 0
Slide 10: Business environment – Interest rates
Business environment – 3M Interbank 10YR GOV CZ has increased key policy rate in nine steps to 2.25% Austria Czech Republic Romania 0.66% 1.98% 2.12% 2.15% 2.18% 4.77% 4.23% 4.34% 4.54% 0.05% -0.13% -0.27% 1.56% 1.42% 2.93% 2.89% 1.27% 1.20% 2.61% 2.97% -0.32% -0.36% -0.40% -0.40% 2018 2019 Q3 19 Q4
Slide 11: Business environment – CEE currencies remain mostly stable versus the euro
Business environment – CEE currencies remain mostly stable versus the euro EUR/CZK EUR/RON +0.1% -0.7% -1.2% +2.0% +0.8% +2.9% 25.6 25.7 25.7 25.6 25.7 25.4 4.65 4.75 4.73 4.77 4.65 4.79 2018 2019 Q3 19 Q4 19 31/12/18 31/12/19 2018 2019 Q3 19 Q4 19 31/12/18 31/12/19 • Czech National Bank ended its c
Slide 12: Business environment – Stable market shares across the region
Business environment – 31/12/18 30/09/19 Stable market shares across the region 31/12/19 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 20.4% 21.7% 20.0% 21.3% AT 20.7% AT 21.9% AT 20.5% AT 21.9% 23.6% 20.9% 25.6% 12.2% CZ 23.6% CZ 21.7% CZ 25.5% CZ 12.3% 23.8% 21.0% 25.
Slide 13: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Key takeaways and outlook • Additional information Page 13
Slide 14: Business performance: performing loan stock & growth
Business performance: performing loan stock & growth – YoY 31/12/18 QoQ 30/09/19 Performing loans continue to grow across all geographies 31/12/19 148.0 7.7% • Yoy development driven by Corporates (+10.7%) and Retail Group 156.8 159.3 1.6% (+5.4%); shift from Retail to Corporates in EBOe totalling 3
Slide 15: Business performance: customer deposit stock & growth
Business performance: customer deposit stock & growth – YoY 31/12/18 QoQ 30/09/19 Deposit build-up continues in Q4 19 31/12/19 162.6 6.9% • Continuation of exceptional deposit growth across all Group 172.5 173.8 0.8% geographies despite zero/low interest rate environment as 35.5 retail and corporate
Slide 16: Business performance: NII and NIM
Business performance: NII and NIM – Q4 18 Q3 19 NII increases 1.6% yoy, up 3.5% qoq Q4 19 1,210 2.33% • Yoy NII growth (+1.6%) mainly due to strong CZ, RO, Group 1,188 2.14% 1,229 2.20% Savings Banks and RS performance; NIM decline due to 168 1.61% margin pressure and changed balance sheet structure
Slide 17: Business performance: operating income
Business performance: operating income – YoY Q4 18 QoQ Q3 19 NII and fees drive operating income growth Q4 19 1,819 2.3% • Yoy up in most segments on the back of good macro and Group 1,801 1,862 3.4% volume performance; improvements in all major operating 287 income components, except net trading an
Slide 18: Business performance: operating expenses
Business performance: operating expenses – YoY Q4 18 QoQ Q3 19 Costs seasonally higher in Q4, in line with guidance Q4 19 1,079 4.0% • Yoy cost increase driven by higher marketing and IT Group 1,015 1,122 10.6% expenses; IFRS 16 impact on costs neutral 177 • Qoq deterioration primarily due to season
Slide 19: Business performance: operating result and CIR
Business performance: operating result and CIR – YoY Q4 18 QoQ Q3 19 CIR improves to 59.0% in 2019 Q4 19 Operating result YoY & QoQ change Cost/income ratio 741 59.3% Group 786 -0.2% 56.3% -6.0% 60.3% 739 111 61.5% AT/EBOe 117 -15.2% 58.5% -19.6% 67.4% 94 91 76.3% AT/SB 143 19.7% -24.0% 64.6% 109 74
Slide 20: Business performance: risk costs
Business performance: risk costs (abs/rel*) – Q4 18 Q3 19 Risk costs remain at benign levels in Q4 19 Q4 19 43 0.12% • Yoy and qoq development characterised by continuation of Group 0 0.05% 82 0.17% healthy asset quality and benign risk cost environment 1 0.09% • Q4 19 risk costs driven by: AT/EBOe
Slide 21: Business performance: non-performing loans and NPL ratio
Business performance: non-performing loans and NPL ratio – 31/12/18 30/09/19 NPL ratio improves further to 2.5% 31/12/19 4,881 3.2% • NPL volume declines to EUR 4.1bn in Q4 19, resulting in Group 4,290 2.7% 4,142 2.5% lowest NPL ratio since going public in 1997, supported by: 601 1.8% • Continued re
Slide 22: Business performance: allowances for loans and NPL coverage
Business performance: allowances for loans and NPL coverage – 31/12/18 30/09/19 NPL coverage rises to 77.1% 31/12/19 3,563 73.4% • NPL coverage rises yoy and qoq driven by NPL stock Group 3,282 76.9% 3,174 77.1% decrease followed by less significant allowances reduction 368 61.4% AT/EBOe 303 64.5% 2
Slide 23: Business performance: other result
Business performance: other result – Q4 18 Q3 19 Other result impacted by SK goodwill impairment in Q4 19 Q4 19 -72 • Yoy and qoq deterioration primarily resulting from Slovakian Group -40 -224 (banking tax-related) goodwill write-down in the amount of -24 EUR 165 million AT/EBOe -8 7 17 • Year-on-y
Slide 24: Business performance: net result
Business performance: net result – Q4 18 Q3 19 Net profit impacted by one-offs, higher risk costs Q4 19 565 • Yoy development driven by one-off write-down of Slovakian Group 491 247 goodwill, higher tax charge (Q4 18 benefitted from significant 63 one-off tax effects), higher risk costs and minority
Slide 25: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Key takeaways and outlook • Additional information Page 25
Slide 26: Assets and liabilities: YTD overview
Assets and liabilities: YTD overview – Loan/deposit ratio stable at 92.2% (Dec 18: 91.8%) Assets (EUR bn) Assets (in %) Liabilities & equity (EUR bn) Liabilities & equity (in %) 245.7 236.8 245.7 236.8 10.7 4.4% 100% 100% 7.4% 2.5 13.1 2.4 7.5% 1.1% 5.3% 1.0% 17.5 17.7 44.3 18.0% 18.6% 43.9 23.1 9.4
Slide 27: Assets and liabilities: customer loans by country of risk
Assets and liabilities: customer loans by country of risk – Net customer loans up 7.3%, NPLs down 15.1% in 2019 Net customer loans (EUR bn) Performing loans (EUR bn) Non-performing loans (EUR bn) +7.3% +7.7% 157.8 160.3 156.8 159.3 149.3 4.8 5.2 148.0 4.7 5.2 -15.1% 4.6 8.5 8.5 8.4 8.4 1.8 1.9 4.6 1
Slide 28: Assets and liabilities: financial and trading assets
Assets and liabilities: financial and trading assets* – LCR at excellent 148.0% By geography By debtor type Liquidity buffer -1.1% in EUR bn in EUR bn 41.8 42.3 41.4 100% 26.9% 9.4% 12.5% 11.8% 9.5 11.0 24.5% 24.6% 10.0 9.0% 9.4% 9.1% 0.7 0.7 0.6 58.7 3.5 3.6 56.9 55.5 3.5 4.9 5.1 5.7 5.3 5.1 5.2 81
Slide 29: Assets and liabilities: customer deposit funding
Assets and liabilities: customer deposit funding – Customer deposits grow by 6.9% in 2019, driven by households and corporates By customer type By product type Highlights in EUR bn in EUR bn • Continued deposit inflows driven by Retail +6.9% segment with highest demand for overnight deposits amid lo
Slide 30: Assets and liabilities: debt vs interbank funding
Assets and liabilities: debt vs interbank funding – Taking advantage of favourable market conditions Debt securities issued Interbank deposits in EUR bn in EUR bn +2.1% -25.6% 29.7 30.1 30.4 19.9 Sub debt 17.7 Overnight deposits 5.9 6.0 Senior non-preferred bonds 5.8 5.5 Term deposits 0.5 Senior uns
Slide 31: Assets and liabilities: LT funding
Assets and liabilities: LT funding – Stable LT funding needs in 2020 Maturity profile of debt in EUR bn 3.2 3.3 3.1 2.6 2.4 2.1 2.1 1.5 1.4 0.8 0.7 0.2 0.1 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032+ Senior unsec. bonds Senior non-preferred bonds Covered bonds Capital exc Tier
Slide 32: Assets and liabilities: LT funding – MPE resolution strategy
Assets and liabilities: LT funding – MPE resolution strategy Resolution strategy Austrian resolution group • Major entities within the Austrian resolution group*: • Direct presence in 7 geographically connected countries • Erste Group Bank AG • Erste Group’s setup suggests a multiple point of entry
Slide 33: Assets and liabilities: LT funding – MREL update
Assets and liabilities: LT funding – MREL update MREL resolution groups (2019) Preliminary 5-year issuance plan (avg pa) in EUR bn in EUR m 152 ~3,500-5,000 in all seniorities, in AT no MREL shortfall expected based on SRB‘s 76 2018 MREL policy 57 21 19 16 ~400-500 ~200-300 ~100-300 ~100-300 8 7 10
Slide 34: Assets and liabilities: capital position
Assets and liabilities: capital position – B3FL CET1 ratio at 13.7% Basel 3 capital (phased-in) Risk-weighted assets (phased-in) Basel 3 capital ratios (phased-in) in EUR bn in EUR bn 18.6% 18.4% 18.2% 18.2% 17.8% 21.3 21.8 21.5 22.0 114.6 116.8 118.3 121.0 118.1 20.9 15.0% 14.9% 14.5% 14.4% 14.4% 3
Slide 35: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Key takeaways and outlook • Additional information Page 35
Slide 36: Conclusion – Key takeaways and outlook for 2020
Conclusion – Key takeaways and outlook for 2020 2019 key takeaways 2020 outlook • CEE continued to grow in a sustainable and balanced Operating in the • Slight economic slowdown expected, with growth rates manner in 2019, with real GDP growth between 2.3% growth engine of between 2%-4% in CEE, 1.3%
Slide 37: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Key takeaways and outlook • Additional information Page 37
Slide 38: Additional information: segment structure
Additional information: segment structure – Business line and geographic view Erste Group – Business segments ALM & Group Group Savings Intragroup Retail Corporates Local CC Corporate Markets Banks Elimination (ALM&LCC) Center • SME • Other Subsidiaries • Local Large Corporate • Asset/Liability Mana
Slide 39: Additional information: income statement
Additional information: income statement – Year-to-date and quarterly view Year-to-date view Quarterly view in EUR million 2018 2019 YOY-Δ Q4 18 Q3 19 Q4 19 YOY-Δ QOQ-Δ Net interest income 4,582.0 4,746.8 3.6% 1,210.0 1,187.7 1,229.5 1.6% 3.5% Interest income 5,174.3 5,544.0 7.1% 1,374.9 1,397.4 1,4
Slide 40: Additional information: group balance sheet – Assets
Additional information: group balance sheet – Assets Quarterly data Change in EUR million Dec 18 Mar 19 Jun 19 Sep 19 Dec 19 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 17,549 16,382 16,843 15,638 10,693 -39.1% -39.1% -31.6% Financial assets held for trading 5,584 6,331 6,464 7,215 5,760 3.1% 3.1% -20.
Slide 41: Additional information: group balance sheet – Liabilities and equity
Additional information: group balance sheet – Liabilities and equity Quarterly data Change in EUR million Dec 18 Mar 19 Jun 19 Sep 19 Dec 19 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities held for trading 2,508 2,277 2,518 2,751 2,421 -3.5% -3.5% -12.0% Derivatives 2,000 1,979 2,125 2,411 2,005 0.3% 0.3% -
Slide 42: Additional information: regulatory capital position/requirement (SREP)
Additional information: regulatory capital position/requirement (SREP) – Capital requirements (SREP) for 2020; Erste Group target of 13.5% unchanged • Combined impact of countercyclical buffers amounts to 55 bps in 2020 • Management buffer targeted in 100-150bps range Erste Group Consolidated Erste
Slide 43: 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) 158.7 161.1 163.4 158.7 161.1 163.4 161.1 163.4 152.8 155.4 152.8 2.2 155.4 158.7
Slide 44: 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: 4.6m Customers: 2.2m in 7 geographically connected Employees: 9,679 Employees: 4,081 countries CZ Bra
Slide 45: Additional information: strategy
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 46: Additional information: Ratings – Composition of issuer ratings
Additional information: Ratings – Composition of Erste Group Bank AG’s issuer ratings Macro Profile SACP - Stand-Alone Credit Profile VR - Viability Rating Strong a (Individual Rating ) + Financial Profile ▲ a Asset Risk baa2 Anchor bbb+ Capital baa1 Business Position Strong +1 Profitability baa3 Ca
Slide 47: Additional information: ESG ratings, indices and alignment with UN SDGs
Additional information: ESG ratings, indices and alignment with UN SDGs ESG Ratings and Indices UN Sustainable Development Goals In principle, Erste Group supports all SDGs. Given its regional footprint Included in the Vienna Stock Exchange’s sustainability and business model, Erste Group is in fact
Slide 48: Additional information: shareholder structure
Additional information: shareholder structure – Total number of shares: 429,800,000 By investor By region Unidentified * Erste Foundation 1 Unidentified * 10.76% 11.41% Savings Banks & 10.76% Identified Trading ** Identified Trading ** Savings Banks Austria BlackRock Inc. 2.27% Foundations 2 Rest of
Slide 49: 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