BAWAG Group AG · VIE:BG
BAWAG — Q3 2020 Earnings Presentation
29 slides from BAWAG's earnings presentation, Oct 27, 2020
Slide 1: Q3 2020 Earnings
Q3 2020 Earnings Anas Abuzaakouk, CEO Enver Sirucic, CFO 27 October 2020 27 October 2020 | BAWAG Group AG 1
Slide 2: Q3 2020 Highlights and segment performance
Q3 2020 Highlights and segment performance Detailed financials Group Overview & Strategy 27 October 2020 | BAWAG Group AG 2
Slide 3: Highlights Q3 2020
Highlights Q3 2020 Net Profit of €79m, EPS of €0.90, and RoTCE 11.1% EARNINGS Pre-provision profit of €165m and CIR 43.2% Risk cost of €50m, of which €14m general reserves … applying conservative provisioning 1-off item: Q3 ‘20 deposit insurance charge of €12m due to Commerzialbank fraud Interest be
Slide 4: Financial performance
Financial performance Key highlights P&L | € millions Q3 ‘20 vPY vPQ YTD vPY Balance Sheet & Capital | € millions Q3 ‘20 Q2 ‘20 vPQ vYE Core revenues 298 2% 5% 873 1% Total assets 51,238 51,278 - 12% Operating income 290 (8%) 2% 870 (6%) Interest-bearing assets 40,274 40,505 (1%) 9% Operating expens
Slide 5: Capital development … CET1 ratio (FL)
Capital development … CET1 ratio (FL) Strong capital position 1 Q3 ’20 CET1 ratio excluding dividend at 15.6% ~+50bps 2 Dividend deduction of 160bps (€331m): (Q3’20 gross capital generation through earnings) a‒ FY ‘19 dividend ~€230m and b‒ YTD dividend accrual of ~€101m per 15.6% dividend policy (5
Slide 6: Retail & SME
Retail & SME Financial performance Customer development € millions Q3 ‘20 Q3 ‘19 vPY Q2 ‘20 vPQ € millions Q3 ‘20 Q3 ‘19 vPY Q2 ‘20 vPQ Core revenues 219.6 219.1 - 213.8 3% Housing loans 11,749 10,299 14% 11,030 7% Net interest income 165.3 158.7 4% 166.2 (1%) Consumer and SME 5,539 5,472 1% 5,547 -
Slide 7: Retail & SME
Retail & SME Portfolio overview of €19.1b of customer loans and leases Reserve development Reserve ratio Payment holidays paying CREDIT PROFILE Assets ratio Q3 '20 NPL ratio YE '19 Q1 '20 Q2 '20 Q3 '20 YE '19 Q1 '20 Q2 '20 Q3 '20 Q2'20 22 October (expired (€b) deferrals) Secured 16.0 1.7% 100 105 10
Slide 8: Corporates & Public
Corporates & Public Financial performance Customer development € millions Q3 ‘20 Q3 ‘19 vPY Q2 ‘20 vPQ € millions Q3 ‘20 Q3 ‘19 vPY Q2 ‘20 vPQ Core revenues 68.6 72.5 (5%) 68.4 - Corporate lending 4,264 6,566 (35%) 4,483 (5%) Net interest income 59.3 61.7 (4%) 59.5 - Asset backed lending 4,986 4,467
Slide 9: Corporates & Public
Corporates & Public Portfolio overview of €13.6 billion of customer loans … whereof €4.3b in public sector Payment Deferral overview Reserve development Reserve ratio Payment holidays paying Assets ratio Q3 '20 NPL ratio YE '19 Q1 '20 Q2 '20 Q3 '20 YE '19 Q1 '20 Q2 '20 Q3 '20 Q2'20 22 October (expir
Slide 10: Investment book and Cash
Investment book and Cash Continued to deploy excess cash into high-quality securities YE ‘19 Q3 ‘20 Cash & Cash equivalent As of Q3 ‘20, cash and cash equivalents (mainly money 7% at central banks) at €9.3b ... TLTRO III of €5.8b in 20% Q2 ’20 €7.1b in % +€ 2.2b €9.3b in % Investment book primarily
Slide 11: Detailed financials
Q3 2020 Highlights and segment performance Detailed financials Group Overview & Strategy 27 October 2020 | BAWAG Group AG 11
Slide 12: P&L & key ratios
P&L & key ratios P&L | € millions Q3 ‘20 Q3 ‘19 vPY vPQ Key ratios Q3 ‘20 Q3 ‘19 vPY vPQ Net interest income 234.8 220.0 7% 3% Return on Common Equity 9.3% 13.8% (4.5pts) 1.9pts Net commission income 62.8 70.8 (11%) 13% Return on Tangible Common Equity 11.1% 16.4% (5.3pts) 2.2pts Core revenues 297.6
Slide 13: Balance sheet
Balance sheet Growing overall balance sheet thru increased interest-bearing assets Balance sheet | € billions Q3 ‘20 Q4 ‘19 Delta Capital & RWA | € billions Q3 ‘20 Q4 ‘19 Delta Customer loans 31.5 30.5 4% Common equity 3.4 3.3 4% Securities and bonds 7.8 5.4 45% Tangible common equity 2.9 2.7 6% Cre
Slide 14: P&L details – core revenues
P&L details – core revenues Solid core revenues in Q3 … NCI still impacted by COVID-19 effects € millions Net interest income (NII) up 3% vPQ … net interest margin (NIM) at 2.31% in Q3 ‘20 290.8 293.9 291.8 297.6 283.6 ‒ Positive trend resulting from TLTRO III impact 70.0 62.8 ‒ Trend expected to co
Slide 15: P&L details – operating expenses
P&L details – operating expenses Absolute costs lower versus prior year Cost-income ratio at 43.2% in Q3 ’20 and 43.1% YTD € millions Year-over-year decrease resulting from ongoing efficiency and centralization measures Planting the seeds for greater scale, greater digital 133.4 133.9 engagement bot
Slide 16: P&L details – risk costs
P&L details – risk costs Strong underlying asset quality € millions Risk costs / average interest-bearing assets General reserve including macro-forecast and payment deferrals Q3 ‘20 risk costs at ~€50m … ratio at 49bps Risk costs / average interest-bearing assets (w/o general reserve including macr
Slide 17: Details on reserves
Details on reserves IFRS 9 MIGRATION – CUSTOMER SEGMENT ASSETS Non-performing stage 3 loans, in €m 916 2% 2% 2% 2% 2% 836 860 4% 4% 5% 811 809 Stage 3 10% 254 10% Stage 2 254 City of Linz 254 254 254 Stage 1 93% 94% 93% 88% 88% 605 Customer NPLs 662 557 554 582 Q3 '19 Q4 '19 Q1 '20 Q2 '20 Q3 '20 Q3
Slide 18: Regulatory Capital
Regulatory Capital Strong capital position € billions CET1 Capital and ratios Impact of various capital measures: Share buyback CET1 capital (post dividend & buyback) ‒ Software intangibles: Impact of ~+25bps (net of dividend CET1 ratio (post dividend) prudential filter) to CET1 to be recognized in
Slide 19: Outlook and Targets
Outlook and Targets Updated 2020 outlook OUTLOOK 2020 MEDIUM-TERM TARGETS Based on normalized environment AGM FY ’20 30 October 2020 Net interest income FY ’19: €879m Increasing up to 4% Net fee and commission income Return on tangible Dividend FY ’19: €284m Decreasing ~10% common equity (RoTCE) dis
Slide 20: Capital distribution
Capital distribution What we plan to present to AGM (2019 resolutions) on 30 October 2020 Capital distribution in 2019 Future capital distribution €400m ~€230m dividend for 2019 earmarked for future payout €215m ~€101m YTD dividend accrual for 2020 as per dividend policy dividend for 2018 share buyb
Slide 21: Group Overview & Strategy
Q3 2020 Highlights and segment performance Detailed financials Group Overview & Strategy 27 October 2020 | BAWAG Group AG 21
Slide 22: BAWAG Group
BAWAG Group COMPANY PROFILE CAPITAL MANAGEMENT MEDIUM-TERM TARGETS Based on normalized environment Focused on organic One of Austria‘s leading retail banks with and inorganic growth 2.4 million customers & solid market shares Return on tangible Dividend policy of common equity (RoTCE) >15% 2019 resu
Slide 23: Strategy pillars of our growth strategy
Strategy 4 pillars of our growth strategy Drive efficiency through Maintaining a safe and Growing in our core markets Focus on Customer Centricity operational excellence secure risk profile • Our foundation is Austria with focus on • Build multi-channel and multi-brand • Our DNA is to focus on the t
Slide 24: Bank transformation
Bank transformation Focusing on things we control and driving operational excellence Increased profitability … KEY METRICS Pre-tax profit (€ millions) 2012 2013 2014 2015 2016 2017 2018 2019 +€581m 604 573 RoTCE 500 3% 11% 15% 17% 18% 15% 15% 16% 445 419 C/I ratio 70% 68% 54% 48% 46% 47% 44% 43% 316
Slide 25: Customer businesses €32.7 billion
Customer businesses €32.7 billion As of September 2020 RETAIL & SME CORPORATES & PUBLIC CUSTOMER BUSINESSES By product 84% secured 16% €32.7 billion of which … 32% 31% 13% ~77% €19.1b €13.6b in % in % 71% Secured or public 37% sector lending Housing loans Consumer & SME (secured) Corporate lending A
Slide 26: Proven M&A track record
Proven M&A track record Experienced with bolt-on acquisitions to build out customer franchise Q2 ’19 3) €0.1b assets, 3k customers €1b factoring volume Q1 ’19 €0.6b assets 50k customers Continued focus on companies within the Q2 ’19 DACH region and core Europe 2) Assessing banks, specialty finance c
Slide 27: Investor relations calendar
Investor relations calendar UPCOMING ROADSHOWS AND CONFERENCES SHAREHOLDER STRUCTURE Managing Board 1.8% 78.2% Free Float GoldenTree 27 Oct Digital one-on-one and group meetings 21.8 30 Oct Annual General Meeting (virtual; https://www.bawaggroup.com/agm) 11 Nov UBS Financials Conference in % T. Rowe
Slide 28: Important Disclaimer
IMPORTANT DISCLAIMER: This presentation is prepared solely for the purpose of providing general information about BAWAG Group, Wiedner Gürtel 11, 1100 Wien. The information does not constitute investment or other advice or any solicitation to participate in investment business. This presentation doe
Slide 29: Annex – Definitions and abbreviations
Annex – Definitions and abbreviations After-tax earnings per share (‘EPS‘) Pre-tax earnings per share Net profit / weighted average number of shares outstanding (diluted) Profit before tax / weighted average number of shares outstanding (diluted) B/S leverage Return on common equity (RoCE) Total ass