Erste Group Bank Ag · VIE:EBS
Erste Group Bank — FY2016 Earnings Presentation
16 slides from Erste Group Bank's earnings presentation, Feb 28, 2017
Slide 1: Erste Group 2016 results
Erste Group 2016 results: EUR 1.26 bn net profit EUR 4.8 bn new net lending CET1 ratio of 13.4% Dividend of EUR 1 per share Press conference 28 February 2017 Page
Slide 2: Business environment – GDP growth expected to remain solid in CEE in 2017
Business environment – 2016 GDP growth expected to remain solid in CEE in 2017 2017 Real GDP growth (in %) At a glance 1.5 • Erste Group’s CEE core markets are AT 1.5 expected to see solid GDP growth of 1.5% to CZ 2.3 4.5% in 2017 2.7 3.3 • Domestic demand to remain key driver of SK 3.1 economic gro
Slide 3: Business environment – Solid public finances in the markets of Erste Group
Business environment – 2016 2017 Solid public finances in the markets of Erste Group Budget deficit (in % of GDP) Public debt ratio (in % of GDP) 0.5 83 81 85 83 74 74 Maastricht limit: 60% -0.6 53 53 -1.2 -1.4 -1.5 37 36 37 39 -1.6 -2.0 -2.2 -2.2 -2.8 -2.7 Maastricht limit: -3% -3.5 AT CZ SK RO HU
Slide 4: Business environment – Inflation expectations rising, unemployment rates declining
Business environment – 2016 2017 Inflation expectations rising, unemployment rates declining Inflation (average, in %) Unemployment (in %) 13.7 2.5 2.2 12.1 1.6 1.5 1.4 9.8 1.0 9.2 0.7 0.7 0.4 6.1 6.3 6.0 5.9 5.1 4.1 4.0 4.3 -0.6 -1.1 -1.5 AT CZ SK RO HU HR AT CZ SK RO HU HR • Consumer price inflati
Slide 5: Business environment – interest rates were again very low in Q4 16
Business environment – 3m Interbank 10-year Gov interest rates were again very low in Q4 16 Austria Czech Republic Romania 0.74% 0.67% 3.50% 3.36% 0.46% 0.43% 0.31% 0.29% -0.02% -0.23% 1.10% 0.65% 2015 2016 2015 2016 2015 2016 • ECB cut discount rate to 0% in • National bank has kept rates • Nationa
Slide 6: Customer loans and deposits – Growth in loan volume (+3.8%) and deposits (+7.9%)
Business performance: customer loans and deposits – Dec 15 Dec 16 Growth in loan volume (+3.8%) and deposits (+7.9%) Customer loans (net) Customer deposits Loan/deposit ratio 125.9 127.9 98.4% Group 130.7 138.0 94.7% 29.5 30.3 97.4% AT/EBOe 30.6 31.8 96.1% 38.0 37.9 100.5% AT/SB 39.5 39.9 98.8% 12.1
Slide 7: Digital is here … and growing strongly
Business Performance: Digital is here … and growing strongly • George and mobile growing by leaps and bounds • George set to crack 1 million users in AT, with one in eight adult Austrians already a user • 2017 launches in CZ, SK and RO will extend George to an additional 10 mn Erste customers and be
Slide 8: Operating income and expenses – Operating income slightly down, costs up
Business performance: operating income and expenses – Operating income slightly down, costs up Operating income Operating expenses -1.2% in EUR mn in EUR mn 6,772 6,691 210 255 272 261 +4.1% 1,862 1,783 3,869 4,028 445 453 1,179 1,236 4,445 4,375 2,245 2,339 2015 2016 2015 2016 Net interest income P
Slide 9: Operating result and cost/income ratio
2015 2016 Business performance: operating result and cost/income ratio – Lower operating result due to interest rate environment, investments in IT & future competitiveness Operating result Cost/income ratio At a glance 2,903 57.1% Group 2,663 60.2% • Income reflects low interest rate environment 40
Slide 10: Risk costs fall (-73%) across the region
2015 Business performance: risk costs – 2016 Risk costs fall (-73%) across the region, most notably in Hungary, Croatia Geographic view At a glance Group 729 0.56% 196 0.15% • Improvement in credit risk environment AT/EBOe 59 0.20% continues across all segments and regions 29 0.10% 84 0.21% AT/SB 54
Slide 11: Asset quality – NPLs declining substantially to low of 4.9%
Business performance: asset quality Dec 15 Dec 16 NPLs declining substantially across the region to low of 4.9% NPL volume NPL ratio NPL coverage ratio (excl. collateral) 9,314 7.1% 64.5% Group 6,678 4.9% 69.1% AT/EBOe 2.9% 62.6% 861 2.5% 59.3% 781 2,219 5.6% 57.7% AT/SB 1,980 4.9% 58.1% 1,345 10.5%
Slide 12: Other result – Slight improvement despite one-off banking tax
Business performance: other result – Slight improvement despite one-off payment of banking tax Other result* At a glance in EUR mn • Other result benefited in 2016 from sale of shares in VISA Europe -236 -389 Banking levies: • One-off payment of banking tax in Austria was made in full (EUR 200 mn) i
Slide 13: Pre-tax result and income tax – Net profit at all-time high, dividend doubled
Business performance: pre-tax result and income tax – Net profit at all-time high, dividend doubled Pre-tax result Net result in EUR m in EUR m 1,950 1,265 1,639 968 2015 2016 2015 2016 • Pre-tax result benefits from historically low • Dividend proposal of EUR 1 per share risk costs • ROTE of 12.3%
Slide 14: Regulatory capital – Much stronger capital base
Business performance: regulatory capital – Solid profitability results in much stronger capital base Regulatory capital (EUR bn) Risk-weighted assets (EUR bn) Capital ratios (phased-in; in %) 101.8 18.5 18.8 98.3 17.9 17.6 2.8 3.6 10.8 15.1 5.2 13.4 13.4 5.4 12.3 12.3 0.0 0.0 84.7 83.1 13.6 12.1 31/
Slide 15: Capital ratios (Basel 3, fully loaded) – Development since 2006
Business performance: capital ratios (Basel 3, fully loaded) – Development since 2006 Core tier 1 ratio (Basel 3, fully loaded) 12.8% 12.0% 11.2% 11.4% 10.6% 9.2% 9.4% 8.3% 5.0% 5.0% 5.2% Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16 Page 15
Slide 16: Conclusion – Outlook 2017
Conclusion – Outlook 2017 • Real GDP growth of between 1.5-4.5% 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