BAWAG Group AG · VIE:BG
BAWAG — Q1 2019 Earnings Presentation
28 slides from BAWAG's earnings presentation, May 14, 2019
Slide 1: Q1 2019 Earnings
Q1 2019 Earnings Anas Abuzaakouk, CEO BAWAG Group Enver Sirucic, CFO BAWAG Group 14 May 2019 14 May 2019 | BAWAG Group AG 1
Slide 2: Q1 2019 Highlights and segment performance
Q1 2019 Highlights and segment performance Detailed financials Appendix 14 May 2019 | BAWAG Group AG 2
Slide 3: Highlights Q1 2019
Highlights Q1 2019 Executing on our strategy and on track to meet full year targets Delivered strong earnings ... Profit before tax (PBT) of €127m and €97m of net profit, up 9% and 12% vPY ... normalized PBT of €151m and €116m net profit (Q1 accounts for ~85% of full year regulatory charges) Executi
Slide 4: Financial performance
Financial performance Key highlights Q1 ‘19 Q1 ’19 vPY vPQ Q1 ’19 2019 Target € millions Core revenues 287 +2% - Operating income 298 - +3% Cost-income ratio (CIR) 42.4% <43% Operating expenses (126) (3%) (7%) Return on Tangible Risk costs (12) (25%) (10%) Common Equity (RoTCE) Regulatory charges (3
Slide 5: Capital development
Capital development Highly capital accretive business model Capital generation Capital deployment +70bps gross capital generation during Q1 ‘19 • €215m dividend for 2018 paid in May ’19 (~110bps)1) • Q1 ‘19 dividend accrual based on dividend 14.5% 0.7% (0.3%) 14.9% policy of 50% net profit attributa
Slide 6: Proven M&A track record
Proven M&A track record Experienced with bolt-on acquisitions to build out customer franchise Acquisition track record Recent developments Closed Q2 ’19 €0.1b assets, Closing of latest bolt-on acquisitions €1b factoring Closed new volume Expansion into Germany (leasing & factoring) & Switzerland Q
Slide 7: Retail & SME
Retail & SME Financial performance Customer development € millions Q1 '19 Q1 '18 Q4 '18 vPY vPQ € millions Q1 '19 Q1 '18 Q4 '18 vPY vPQ Net interest income 147.0 143.2 146.5 3% - Housing loans 9,073 8,522 9,075 6% - Net commission income 61.6 62.0 58.2 (1%) 6% Consumer and SME 4,184 4,115 4,059 2% 3
Slide 8: Retail & SME
Retail & SME Strategic & operational initiatives Austria Germany/Switzerland 1 “Concept 21” network transformation 1 Continued transformation momentum • 14 new-built branches in place by end of Q2 ‘19 • Continued progress in Südwestbank, start:bausparkasse • 62 fully standalone and refurbished branc
Slide 9: Corporates & Public
Corporates & Public Financial performance Customer development € millions Q1 '19 Q1 '18 Q4 '18 vPY vPQ € millions Q1 '19 Q1 '18 Q4 '18 vPY vPQ Net interest income 64.7 64.6 63.8 - 1% Corporate lending 6,393 7,747 6,835 (17%) (6%) Net commission income 11.6 13.1 12.4 (11%) (6%) Asset backed lending 4
Slide 10: Detailed financials
Q1 2019 Highlights and segment performance Detailed financials Appendix 14 May 2019 | BAWAG Group AG 10
Slide 11: P&L & key ratios
P&L & key ratios P&L | € millions Q1 ‘19 Q4 ‘18 vPY vPQ Key ratios Q1 ‘19 Q4 ‘18 vPY vPQ Net interest income 214.5 216.3 3% (1%) Return on Common Equity 10.3% 11.8% 0.4pts (1.5pts) Net commission income 72.5 70.2 (3%) 3% Return on Common Tangible Equity 12.0% 13.7% 0.5pts (1.7pts) Core revenues 287.
Slide 12: Balance sheet
Balance sheet Continued focus on customer business Balance sheet | € billions Q1 ’19 Q4 ’18 Delta Capital & RWA | € billions Q1 '19 Q4 '18 Delta Customer loans Common equity 30.2 30.5 (1%) 3.8 3.7 3% Securities and bonds Tangible common equity 6.7 6.9 (3%) 3.3 3.2 2% Credit institutions and cash CET
Slide 13: P&L details – core revenues
P&L details – core revenues Higher net interest and net commission income Core revenues Summary € millions NII NCI NIM Net interest income (NII) (1%) vPQ … net interest margin (NIM) at 2.26% 2.15% 2.15% 2.28% 2.25% 2.26% ‒ Positive development in core products ‒ International mortgage portfolio run
Slide 14: P&L details – operating expenses
P&L details – operating expenses Operating expenses Summary € millions OPEX Cost-income ratio • Q1 ‘19 cost base lower than Q4 … Q4 higher due to one-off effects and seasonality 43.6% 47.1% • Q1 ‘19 cost-income ratio at 42.4% … below 2019 43.9% 42.4% 42.4% target of <43% 136.4 • First-time consolida
Slide 15: P&L details – risk costs
P&L details – risk costs Proactive risk management to maintain conservative risk profile Risk costs Summary € millions Risk costs Risk costs / average interest-bearing assets Q1 ‘19 risk cost ratio at 13bps … business focused on developed markets … 73% DACH region and 27% Western Europe / United Sta
Slide 16: Regulatory Capital
Regulatory Capital Continued strong capital generation CET1 Capital (FL) Key developments € billions CET1 capital (FL) CET1 ratio (FL) Total capital ratio • Earnings and lower RWA generating ~70bps • Q1 includes effect from IFRS16 first-time application 15.5% 17.2% 17.2% 16.3% 18.7% of ~€260m RWA …
Slide 17: Targets
Targets On track to meet Full Year targets Metrics 2019 2020 CAGR >6% >6% Profit before tax >€600m >€640m absolute Cost-income ratio <43% <40% Return on 15% to 20% Tangible Common Equity CET1 ratio (FL)1) 12% to 13% Earnings per share (EPS) >€6.00 >€6.40 before capital actions >€4.50 >€4.80 1) Excee
Slide 18: Appendix
Q1 2019 Highlights and segment performance Detailed financials Appendix 14 May 2019 | BAWAG Group AG 18
Slide 19: BAWAG Group at a glance
BAWAG Group at a glance • One of Austria‘s leading retail banks … more than 2.5m customers & solid market shares > 2.5m • Focused on developed countries with 73% of customer loans 73% customers in DACH region & 27% in Western Europe & USA €47b customer loans • Organic & inorganic growth in DACH regi
Slide 20: Upside optionality
2019-2020 plan Key business drivers Business drivers Opportunity set Grow core retail products into existing 17% Core retail product market growth … grow into existing 17% 1 Basis for >6% PBT growth targets market share entitlement of salary current market share of current accounts, deliver on strat
Slide 21: Capital management
Capital management RWA development Organic capital Future capital generation generation drivers 2018: 5% decline Future: modest organic growth while targeting density of low 40s M&A 2017: +2.2% • RoTE 15% to 20% 2018: 3 acquisitions Future: strict underwriting 2018: +2.6% • RWA density reduction Ave
Slide 22: Normalized P&L / RoTCE performance
Normalized P&L / RoTCE performance Profit before tax (PBT) Regulatory charges € millions • Regulatory charges front-loaded in Q1 … impact 153 160 153 143 146 143 132 151 on quarterly profit and return ratios 127 117 • €34m regulatory charges included in Q1 profit before tax … ~85% of total regulator
Slide 23: Bank transformation
Bank transformation Focus on things we control and drive operational excellence Profitability Key topics Pre-tax profit (€ millions) Exited CEE exposure & non-core assets +€550m Discontinued trading and structured credit book 573 More than doubled CET 1 ratio 445 500 419 316 23 191 Structura
Slide 24: Business overview
Business overview Developing towards a Retail & SME franchise in the DACH region Retail & SME Business Corporates & Public Sector Business • Austria as the core & foundation, combined with niche platforms in • Selective underwriting of opportunities across DACH, Western Europe & Germany & Switzerlan
Slide 25: New segmentation
New segmentation Changes to segmental reporting and allocations Segments impacted by change DACH BAWAG P.S.K. International easygroup Südwestbank Corporates & Retail Business Public Sector Retail & SME Corporates Retail & SME Corporates & Public Treasury and Corporate Center unchanged Regulatory cha
Slide 26: Financial calendar
Financial calendar 24 July 2019 Start of the quiet period 07 August 2019 Results H1 2019 23 October 2019 Start of the quiet period 06 November 2019 Results Q3 2019 14 May 2019 | BAWAG Group AG 26
Slide 27: 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 28: Annex – Definitions and abbreviations
Annex – Definitions and abbreviations After-tax earnings per share NPL ratio Net profit / weighted average number of shares outstanding Non-performing loans (NPLs) / exposure; as of June 2017, the ratio’s denominator was B/S leverage changed from loans and receivables (incl. provisions) to exposure