Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Q2 2015 Earnings Presentation
45 slides from Erste Group Bank's earnings presentation, Aug 7, 2015
Slide 1: Erste Group investor presentation Q2 2015 results
Erste Group investor presentation Q2 2015 results 7 August 2015 Erste Group continues on profitable path in Q2 15 as asset quality improves and capital ratios strengthen Andreas Treichl, CEO Erste Group Gernot Mittendorfer, CFO Erste Group Andreas Gottschling, 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 • 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) 62 151 487 36 121 62 261 226 21 1 8 1.106 422 22 0 -930 Q1 15 Operating Operating Risk costs Other Taxes on Minorities Q2 15 1-6 14 Operating Operating Risk costs Other
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 2.62% 2.58% 2.59% -1.5% -53.0% 2.55% 56.1% 55.5% 1,525 1,503 796 2,244 2,212 0.57% 0.58% 1,099 1,113 741 762 374 183 191 1-6 14 1-6 15 Q1 15 Q2 15 1
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) 46 802 197,532 197,532 1,226 571 2,670 1,951 196,287 160 196,287 824 1,333 1,114 902 1,087 31/12/14 Cash Trading, Loans to Net loans Intangibles Other 30/06/
Slide 7: Executive summary – Key balance sheet data
Executive summary – 31/12/14 Key balance sheet data 30/06/15 Loan/deposit & loan/TA ratio Net loans & credit RWA NPL coverage ratio & NPL ratio in EUR bn +2.2% 98.6% 99.2% 68.9% 68.2% 120.8 123.5 61.6% 62.5% 87.1 85.7 8.5% 7.7% 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 • Outlook • Additional information Page 8
Slide 9: Business environment – Solid domestic demand expected to drive growth in 2015 & 2016
2015 Business environment – 2016 Solid domestic demand expected to drive economic growth in 2015 & 2016 Real GDP growth (in %) Dom. demand contribution* (in %) Net export contribution* (in %) Consumer price inflation (ave, in %) 2.3 3.7 3.5 3.7 3.0 3.2 3.5 3.4 3.1 3.3 1.6 1.6 2.8 1.4 2.2 2.4 2.3 1.1
Slide 10: Business environment – Divergence between short-term and long-term rates in Q2 15
Business environment – 3M Interbank 10YR GOV Divergence between short-term and long-term rates in Q2 15 Austria Czech Republic Romania 2.00% 5.10% 1.83% 4.15% 1.25% 0.76% 3.58% 1.17% 3.03% 0.68% 0.52% 0.45% 2.60% 1.21% 1.12% 0.30% 0.15% 0.05% -0.01% 1.92% 0.37% 0.34% 0.33% 0.31% 1-6 14 1-6 15 Q1 15
Slide 11: Business environment – Limited currency volatility in CEE
Business environment – Limited currency volatility in CEE EUR/CZK EUR/RON +0.3% -0.8% -1.5% -0.4% -0.2% -0.1% 27.4 27.5 27.6 27.4 27.7 27.3 4.46 4.45 4.45 4.44 4.48 4.48 1-6 14 1-6 15 Q1 15 Q2 15 31/12/14 30/06/15 1-6 14 1-6 15 Q1 15 Q2 15 31/12/14 30/06/15 • Czech National Bank maintains exchange r
Slide 12: Business environment – Market shares: mostly stable, RO corporate impacted by NPL sales
30/06/14 Business environment – 31/03/15 Market shares: mostly stable, RO corporate impacted by NPL sales 30/06/15 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 19.0% 17.5% 18.2% 20.1% AT 19.3% AT 18.6% AT 18.4% AT 19.0% 23.5% 18.9% 26.5% 10.6% CZ 23.2% CZ 18.9% CZ 25.6
Slide 13: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 13
Slide 14: Performing loan volume grows by 4.0% yoy, edges up qoq
YoY 30/06/14 Business performance: performing loan stock & growth – QoQ 31/03/15 Performing loan volume grows by 4.0% yoy, edges up qoq 30/06/15 Business line view (BL) Geographic view (geo) 115.7 27.3 4.0% AT/EBOe 28.5 4.8% Group 120.1 0.4% 120.3 0.2% 28.6 10.6 43.5 AT/OA 11.9 7.4% Retail 44.8 4.2%
Slide 15: Deposits grow by 3.6% yoy, stable qoq
YoY 30/06/14 Business performance: customer deposit stock & growth – QoQ 31/03/15 Deposits grow by 3.6% yoy, stable qoq 30/06/15 Business line view (BL) Geographic view (geo) 120.2 29.7 3.6% AT/EBOe 29.9 0.7% Group 124.8 -0.2% 0.0% 124.5 29.9 5.3 -25.0% 63.1 4.2% AT/OA 5.0 Retail 64.9 4.0 -20.8% 65.
Slide 16: Q2 15 NII & NIM stable yoy and qoq
Business performance: NII and NIM – Q2 14 Q1 15 Q2 15 NII & NIM stable yoy and qoq Q2 15 Business line view (BL) Geographic view (geo) 1.120 2.61% 159 1.74% Group 1.099 2.55% AT/EBOe 158 1.74% 1.113 2.59% 159 1.86% 545 4.49% 100 1.18% Retail 552 4.50% AT/OA 103 1.42% 552 4.43% 105 1.45% 144 2.61% 22
Slide 17: Q2 15 operating income stable yoy and qoq
Q2 14 Business performance: operating income – Q1 15 Q2 15 operating income stable yoy and qoq Q2 15 Business line view (BL) Geographic view (geo) Highlights • Marginal yoy decline exclusively attributable to lower 1,731 1,731 net trading and fair value result in Q2 15 Group 1,689 Group 1,689 1,710
Slide 18: Costs flat qoq, slightly up yoy
Q2 14 Business performance: operating expenses – Q1 15 Costs flat qoq, slightly up yoy Q2 15 Business line view (BL) Geographic view (geo) Highlights 933 933 • Costs flat qoq, yoy slightly up on higher Group 948 Group 948 949 949 personnel and other administrative expenses 448 147 due to higher head
Slide 19: Operating result up by 2.8% qoq, down by 4.6% yoy
Q2 14 Business performance: operating result and CIR – Q1 15 Operating result up by 2.8% qoq, down by 4.6% yoy Q2 15 Business line view (BL) Geographic view (geo) 798 53.9% 798 53.9% Group 741 56.1% Group 741 56.1% 762 55.5% 762 55.5% 380 54.1% 103 58.9% Retail 385 53.4% AT/EBOe 102 59.8% 367 55.7%
Slide 20: Risk costs remain low in Q2 15, due to Austria and Romania
Q2 14 Business performance: risk costs (abs/rel*) – Q1 15 Risk costs remain low in Q2 15, due to Austria and Romania Q2 15 Business line view (BL) Geographic view (geo) 432 1.35% 35 0.49% Group 183 0.57% AT/EBOe 22 0.30% 191 0.58% -8 -0.11% 70 2.24% 61 0.52% AT/OA 67 2.03% Retail 59 0.50% 7 113 0.95
Slide 21: NPL ratio falls for the 6th consecutive quarter to 7.7%
30/06/14 Business performance: non-performing loans and NPL ratio – 31/03/15 NPL ratio falls for the 6th consecutive quarter to 7.7% 30/06/15 Business line view (BL) Geographic view (geo) 11,996 9.4% 1,018 3.6% Group 10,560 8.1% AT/EBOe 993 3.4% 10,102 7.7% 942 3.2% 1,568 12.9% 3,420 7.3% AT/OA 1,52
Slide 22: NPL coverage excluding collateral at solid 68.2%
30/06/14 Business performance: allowances for loans and NPL coverage – 31/03/15 NPL coverage excluding collateral at solid 68.2% 30/06/15 Business line view (BL) Geographic view (geo) 7,674 64.0% 697 68.4% Group 7,174 67.9% AT/EBOe 687 69.2% 6,886 68.2% 583 61.9% 841 53.6% 2,366 69.2% AT/OA 892 58.6
Slide 23: Q2 15 other result benefits from financial asset gains and lack of one-offs
Q2 14 Business performance: other result – Q1 15 Q2 15 other result benefits from financial asset gains and lack of one-offs Q2 15 Business line view Geographic view Highlights -1.147 -1.147 • YOY improvement in group other result due to no Group -143 Group -143 intangible write-downs (mostly BCR) i
Slide 24: Q2 15 net result confirms return to profitability
Q2 14 Business performance: net result – Q1 15 Q2 15 net result confirms return to profitability in Q1 15 Q2 15 Net result by business line Net result by geography Highlights -1.033 -1.033 • Q2 15 net profit confirms turnaround achieved in Group 226 Group 226 Q1 15, driven by Austria, Romania, Hunga
Slide 25: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 25
Slide 26: Assets and liabilities: YTD overview – Loan/deposit ratio stable at 99.2%
Assets and liabilities: YTD overview – Loan/deposit ratio stable at 99.2% (Dec 14: 98.6%) Assets (EUR bn) Assets (in %) Liabilities & equity (EUR bn) Liabilities & equity (in %) 196.3 197.5 196.3 197.5 100% 6.6 3.4% 100% 7.8 7.0 4.0% 3.5% 7.7 3.9% 14.8 15.7 7.5% 8.0% 50.1 49.0 25.5% 24.8% 7.4 8.8 3.
Slide 27: Customer loans by country of risk – Performing loans up 4.0% yoy
Assets and liabilities: customer loans by country of risk – Performing loans up 4.0% yoy, NPLs down 15.8% Net customer loans (EUR bn) Performing loans (EUR bn) Non-performing loans (EUR bn) +2.8% +4.0% -15.8% 120.1 120.8 123.4 117.4 120.3 12.0 3.2 115.7 3.3 0.4 2.9 3.2 6.0 0.6 2.9 3.2 10.9 5.6 0.9 5
Slide 28: Allowances for customer loans
Assets and liabilities: allowances for customer loans – Decrease in allowances mainly due to continued NPL reduction in Q2 15 Quarterly development (EUR m) Highlights • Low gross NPL inflows result in lower allocations and lower risk costs in Q2 15 • Moderate level of NPL sales in Q2 15 614 • P&L un
Slide 29: Financial and trading assets – LCR at comfortable 118%
Assets and liabilities: financial and trading assets * – LCR at comfortable 118% By geography (EUR bn) By debtor type Liquidity buffer (EUR bn) -5.4% 45.8 43.5 43.4 100% 25.8% 10.7% 11.6% 11.1% 24.8% 8.2 9.0 9.1 11.9% 11.2% 9.0% 21.5% 2.2 20.3% 3.4 1.2 2.1 1.4 1.3 45.4 47.3 5.0 4.8 4.8 40.1 39.8 6.1
Slide 30: Customer deposit funding – Deposits grow by 1.6% ytd
Assets and liabilities: customer deposit funding – Customer deposits grow by 1.6% ytd, up 3.6% yoy By customer type By product type Highlights • Erste Group benefits from excellent funding +3.6% position in retail segment 124.5 124.5 • Decline in corporate deposits ytd driven by 120.2 122.6 120.2 12
Slide 31: Debt vs interbank funding – Stable wholesale funding base
Assets and liabilities: debt vs interbank funding – Stable wholesale funding base Debt securities issued (EUR bn) Interbank deposits (EUR bn) -3.6% -16.5% 31.0 31.1 18.8 29.9 Sub debt 4.0 4.5 16.4 Overnight deposits 4.8 Suppl. capital 15.7 1.2 0.4 0.9 0.4 6.4 Term deposits 1.0 Hybrid issues 0.4 3.3
Slide 32: LT funding – Limited LT funding needs
Assets and liabilities: LT funding – Limited LT funding needs Maturity profile of debt (EUR bn) 3.7 2.6 2.6 2.7 2.7 1.9 2.0 1.8 0.9 1.0 0.8 0.6 0.4 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027+ Debt CEE Capital exc Tier 1 Covered bonds Senior unsec. bonds • Increased appetite for
Slide 33: Capital position – B3FL CET1 ratio reaches 11.3%
Assets and liabilities: capital position – B3FL CET1 ratio reaches 11.3% at 30 June 15, phased-in CET1 ratio at 11.6% Basel 3 capital (phased-in) Risk-weighted assets (phased-in) Basel 3 capital ratios (phased-in) 16.8% 16.5% 15.8% 15.7% 15.7% 16.1 16.8 101.8 15.7 15.8 16.1 98.0 100.6 100.6 100.3 0.
Slide 34: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 34
Slide 35: Conclusion – Outlook
Conclusion – Outlook • Operating environment anticipated to be conducive to credit expansion • Real GDP growth of between 2-4% expected in 2015 in all major CEE markets, except Croatia • Real GDP growth to be driven by solid domestic demand • Real GDP growth in Austria expected at below 1% in 2015 •
Slide 36: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 36
Slide 37: Additional information: new segmentation – Business line and geographic view
Additional information: new segmentation – Business line and geographic view Erste Group – Business segments Group ALM & Savings Large Commercial Other Group Intragroup Corporate Retail SME Local CC Banks Corporates Real Estate Corporate Markets Elimination Center (ALM&LCC) (AT/SB) (LC) (CRE) (OC) (
Slide 38: Additional information: income statement – Year-to-date and quarterly view
Additional information: income statement – Year-to-date and quarterly view Year-to-date view Quarterly view in EUR million 1-6 14 1-6 15 YOY-Δ Q2 14 Q1 15 Q2 15 YOY-Δ QOQ-Δ Net interest income 2,243.6 2,211.9 -1.4% 1,119.7 1,098.5 1,113.4 -0.6% 1.4% Net fee and commission income 907.0 917.4 1.1% 454
Slide 39: Additional information: group balance sheet – Assets
Additional information: group balance sheet – Assets Quarterly data Change in EUR million Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 7,267 8,010 7,835 8,223 7,011 -3.5% -10.5% -14.7% Financial assets - held for trading 12,954 11,641 10,531 11,366 9,022 -30.4% -14.3%
Slide 40: Additional information: group balance sheet – Liabilities and equity
Additional information: group balance sheet – Liabilities and equity Quarterly data Change in EUR million Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities - held for trading 7,152 8,488 7,746 8,988 6,632 -7.3% -14.4% -26.2% Derivatives 6,347 7,563 7,188 8,163 5,875 -7.4% -1
Slide 41: 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) 127.7 128.3 128.3 130.6 130.4 127.7 128.3 128.3 130.6 130.4 130.6 130.4 127.7 128.
Slide 42: 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: 5.0m Customers: 2.3m in 7 geographically connected Employees: 10,545 Employees: 4,283 countries Branc
Slide 43: Additional information: strategy – A real customer need is the reason for all business
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 44: Additional information: shareholder structure
Additional information: shareholder structure – Total number of shares: 429,800,000 By investor By region Uniqa Versicherungsverein Privatstiftung Other Lone Pine Capital Erste Stiftung direct 4.1% 2.6% Harbor International Fund 4.0% 10.7% 4.4% Erste Stiftung indirect * Continental Europe 9.4% 25.0%
Slide 45: Investor relations details
Investor relations details • Erste Group Bank AG, Milchgasse 1 (mezzanine floor), 1010 Vienna Fax : +43 (0)5 0100-13112 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