Eurobank S.A. · ATHEX:EUROB
Eurobank — Q3 2014 Earnings Presentation
59 slides from Eurobank's earnings presentation, Nov 7, 2014
Slide 1: Third Quarter 2014 results
Third Quarter 2014 results 7 November 2014
Slide 2: Disclaimer
Disclaimer By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations: This presentation has been prepared by Eurobank. The material that follows is a presentation of general background information about Euroban
Slide 3: Table of contents
Table of contents Highlights 3 3Q2014 results review 12 International operations 20 Appendix I – Supplementary information 24 Appendix II – ECB Comprehensive Assessment – Findings 33 Appendix III – ECB Comprehensive Assessment – Comparison 45 Appendix IV – Macroeconomic update 49 Page 2
Slide 4: 3Q2014 results highlights
3Q2014 results1 Highlights Key financials 1 Core pre-provision income (PPI) (NII plus commissions less €m 3Q2014 2Q2014 operating expenses) up 8% q-o-q, PPI slightly down (-2.3% q-o-q) Net interest income 378.6 375.3 to €217.1m Commission income 70.9 69.9 Net interest income (NII) up by 0.9% q-o-q
Slide 5: Capital position
Capital position Phased-in CET1 ratio Equity to CET1 capital bridge (€ m) 527 6,384 6,211 1 950 (107) 17.0% 16.1% (72bps) (950) 5,014 (18bps) (247) Preference shares Preference shares CET1 capital Equity Intangibles TBV Minority interest DTC impact 3Q2014 result Other regulatory 2Q2014 3Q2014 adjust
Slide 6: Capital position under CRDIV/CRR
Capital position under CRDIV/CRR Fully loaded Basel III CET11 Key points Regulatory treatment of Deferred Tax Assets (DTA) as per recent legislation 16.1% DTAs related to loan loss provisions and PSI loss eligible to be converted into Deferred Tax Credits (80bps) 13.9% (DTC) (130bps) (10bps) O
Slide 7: Asset quality
Asset quality 90dpd coverage 90dpd formation down by 38.2% q-o-q, driven by small business and household lending Accelerating provisioning in order to increase faster coverage 250bps 53.6% ratio Coverage ratio up by 250 basis points q-o-q to 53.6%, post 51.1% 50.3% €331m write-offs in 9M2014 4
Slide 8: 2014 provisions – AQR findings
2014 provisions – AQR findings Evolution of provisions stock (€ bn) 2014 provisions analysis (€m) Coverage 53.6% 54.5% ratio Δ bond 331 loans 1,278 provisions Reclassified bond loans 0.3 9.5 9.5 1,008 1,014 1.0 9.2 49 (325) 8.2 1.3 0.4 959 8.2 7.8 Provisions Δ in 9M2014 9M2014 9M2014 9M2014 FY2013 Δ
Slide 9: 90dpd gross formation per segment (Greece)
90dpd gross formation per segment (Greece) Mortgages (€ m) Consumer (€ m) 241 245 210 227 234 205 221 214 201 190 160 171 173 164 138119 162 100 117 103 122 115 147 149 143135 78 92 79 76 94 72 33 75 56 100 84 6 82 54 43 55 72 66 41 (35) 1Q2009 3Q2009 1Q2010 3Q2010 1Q2011 3Q2011 1Q2012 3Q2012 1Q2013
Slide 10: Asset quality metrics
Asset quality metrics 90dpd & performing restructured per segment Provisions coverage (%) 1 >90dpd 0-89 dpd >90dpd ratio (%) restructured Consumer 44.6 €3.1 bn €0.2 bn 79.4 Mortgages 21.7 €4.0 bn €2.2 bn Small Business 50.5 €3.7 bn €0.5 bn 60.7 Corporate 33.0 €6.3 bn €1.2 bn 53.6 Total 33.0 €17.1 bn
Slide 11: Pre-provision income (PPI)
Pre-provision income (PPI) PPI per region (€ m) Δ PPI (€ m) Greece International 222 217 194 67 62 178 64 3 1 222 151 10 217 141 69 56 (19) 54 96 95 85 155 155 56 61 131 47 110 87 95 37 40 34 2Q2014 PPI Δ ΝΙΙ Δ Δ other Δ opex 3Q2014 PPI commission income income Page 10
Slide 12: Summary performance
Summary performance Balance sheet – key figures Income statement – key figures €m 3Q2014 2Q2014 €m 3Q2014 2Q2014 Gross customer loans 51,783 51,785 Net interest income 378.6 375.3 Provisions (9,163) (8,428) Commission income 70.9 69.9 Net customer loans 42,620 43,357 Operating income 474.8 489.8 Cus
Slide 13: 3Q 2014 results review
Qerm 3Q 2014 results review
Slide 14: Loans and deposits
Loans and deposits Gross loans (€ bn) Deposits (€ bn) Δ before write-offs, bond loans (456) (540) (392) reclassification (€ m) 53.8 52.9 52.4 51.8 51.8 111.0% 109.4% 109.3% 103.4% 99.8% 8.1 Loans/Deposits 8.0 7.9 International 7.8 7.6 41.9 41.9 42.7 41.3 40.5 Greece 8.1 9.2 International 8.3 8.8 8.3
Slide 15: Liquidity
Liquidity Eurosystem funding (€ bn) ECB collateral by type (September 2014) 17.0 16.3 1 EFSF bonds Loans Other 10% 5% 4% 3 Pillar III Of which 12% €1.6bn EFSF bonds 11.4 10.7 (15.5%) 9.1 9.0 14.3 10.7 9.1 9.0 2 Pillar II 69% 5.6 2.0 Dec 2013 Mar 2014 Jun 2014 Sep 2014 Oct 2014 ELA ECB Total collater
Slide 16: New time deposits spreads and client rates (Greece)
New time deposits spreads and client rates (Greece) New time deposit spreads (bps) Deposits mix (183) (190) (193) Time Core 67% (200) 33% (234) (208) (240) (215) (247) (248) (259) (262) (260) (265) (264) (292) (316) (305) (322) (325) Time deposit client rates (bps) (358) (370) (352) 408 New producti
Slide 17: Net interest income
Net interest income NII breakdown (€ m) NII per region (€ m) 386 367 375 379 320 119 102 103 99 International 115 275 267 269 274 205 Greece 557 597 Loan margin 542 519 525 1 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 Capital & bonds 47 42 37 20 NII evolution q-o-q (€ m) 19 (32) (15) (10) Market & Eurosyste
Slide 18: Spreads & net interest margin
Spreads & net interest margin Lending spreads (Greece, bps) Deposit spreads (Greece, bps) 554 Savings 520 (30) (29) (42) and sight (49) (43) 498 503 509 Corporate (170) (151) (192) Total (213) 472 (238) (240) (202) 456 457 Total (268) 447 (289) 449 Time (326) 432 427 423 418 418 Retail 1 1 3Q2013 4Q
Slide 19: Commission income
Commission income Commission income breakdown (€ m) Commission income per region (€ m) Total fees 0.37% 0.38% excluding 0.36% Fees / Assets 83 85 80 86 85 0.35% 0.34% Govt. guarantees expense 71 71 69 70 70 69 70 70 8 8 65 Rental & other 65 12 12 income 6 10 25 25 13 Insurance 25 27 8 8 23 11 9 Inte
Slide 20: Operating expenses
Operating expenses OpEx per region (€ m) OpEx breakdown (€ m)1 306 267 894 (11.4%) 268 77 258 70 68 78 792 Depreciation 68 International 75 324 286 (4.9%) Administrative 229 Greece 196 200 190 491 430 Staff 4Q2013 1Q2014 2Q2014 3Q2014 9M2013 9M2014 Cost-to-income ratio (%) Headcount evolution (#) 19
Slide 21: International operations
Qerm International operations
Slide 22: International presence
International presence Total Assets (€ bn) 1.0 Net Loans (€ bn) 0.4 Deposits (€ bn) 0.8 Total Assets (€ bn) 1.4 Net Loans (€ bn) 0.9 Deposits (€ bn) 0.8 Total Assets (€ bn) 3.4 Branches (#) 95 Net Loans (€ bn) 2.0 Deposits (€ bn) 1.9 Branches (#) 187 Total Assets (€ bn) 3.0 Net Loans (€ bn) 2.2 Tota
Slide 23: Income statement highlights
Income statement highlights Operating income (€ m) Operating expenses (€ m) 145 77 73 70 68 68 136 134 130 129 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 Provision charge (€ m) Net income before non-recurring charges (€ m) 174 (4) (14) (27) (18) 90 72 51 57 (102) 3Q2013 4Q
Slide 24: Key figures
Key figures Romania Bulgaria Serbia Cyprus Lux Sum Assets 3,382 2,977 1,445 3,650 1,016 12,470 Gross loans 2,576 2,546 936 1,177 369 7,604 Balance Sheet (€m) Net loans 2,040 2,192 859 1,131 369 6,591 Balance Sheet 90dpd Loans 822 595 151 94 2 1,664 Deposits 1,875 2,542 819 3,183 753 9,172 Operating
Slide 25: Appendix I – Supplementary information
Appendix I – Supplementary information
Slide 26: Quarterly financials
Quarterly financials Income Statement (€ m) 3Q20131 4Q20132 1Q2014 2Q2014 3Q2014 Net Interest Income 319.9 386.0 367.2 375.3 378.6 Commission income 69.2 70.0 64.5 69.9 70.9 Other Income 15.2 27.7 29.2 44.6 25.3 Operating Income 404.2 483.7 460.9 489.8 474.8 Operating Expenses (252.8) (305.5) (266.6
Slide 27: Nine month financials
Nine month financials Income Statement (€ m) 9M20131 9M2014 Δ y-o-y (%) Net Interest Income 883.8 1,121.1 26.9 Commission income 199.1 205.3 3.1 Other Income (8.5) 99.1 >100.0 Operating Income 1,074.4 1,425.5 32.7 Operating Expenses (732.8) (791.9) 8.1 Pre-Provision Income 341.6 633.6 85.5 Loan Loss
Slide 28: Income statement highlights (Greece)
Income statement highlights (Greece) Operating income (€ m) Operating expenses (€ m) 354 229 339 327 345 196 200 180 190 275 1 1 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 3Q2013 4Q2013 1Q2014 2Q2014 3Q2014 Provision charge (€ m) Net income before non-recurring charges (€ m) 557 422 414 366 383 (217) (200)
Slide 29: Assets
Assets Total assets (€ bn) Gross Loans Consumer 13% Corporate 74.3 37% Mortgages 36% Small Business Net loans and advances to customers 42.6 14% Securities Other GGBs securities 9% T-Bills 9% 8% Securities 17.1 Other government PP&E, intangibles and other assets 6.3 bonds Loans and advances to banks
Slide 30: Liabilities
Liabilities Funding (€ bn) Wholesale funding Repos Securitizations 12% Other 1 Wholesale 62.9 Interbank 11% Funding 1.5 takings 42% Repos EMTNs 9.7 Covered 31% bonds 18% ECB funding 9.1 Subordinated Notes 15% Deposits EFSF bonds Deposits 71% 42.7 Time Core 65% 35% 1. GGBs, GTBs, Corporate, Sovereign
Slide 31: Private Banking
Private Banking Market leader in Greece with holistic servicing model in 3 countries AuM (€ bn) Data as of September 2014 Relationship AuM (€ m) Clients (#) Managers (#) 6.1 6.2 6.2 6.3 6.3 0.9 0.9 0.9 1.0 Greece 3,068 3,651 45 0.9 2.2 2.3 2.2 2.3 2.2 Luxembourg 2,167 1,056 11 3.0 3.0 3.1 3.1 3.1 Cy
Slide 32: Asset Management
Asset Management Market leader in Greece with 26.9% market share in mutual funds AuM (€ m) Net Inflows (€ m) 227 3,128 Institutional Asset 304 Equity 151 Management 2,727 Mutual Funds 287 74 Fund of funds 326 20 76 13 54 204 Special 3 4 20 536 purpose (36) (25) (6) (33) (21) 35 Mutual Balanced 541 1
Slide 33: Insurance and Equity brokerage
Insurance and Equity brokerage Eurolife ERB Insurance Eurobank Equities 3rd largest insurance provider in Greece in 2013, operating both Dominant position in domestic capital markets, consistently in life and non-life segments, focused on retail ranking number one over the past 5 years 2013 RO
Slide 34: Appendix II – ECB Comprehensive Assessment Findings
Appendix II – ECB Comprehensive Assessment Findings
Slide 35: Comprehensive Assessment (CA) Overview
Comprehensive Assessment (CA) Overview Unprecedent exercise performed by European Central Bank (ECB) across 130 European banks The CA represents a step towards the full harmonisation of the European banking system Results and findings of the CA based on two main pillars: Asset Quality Review (
Slide 36: Comprehensive Assessment Results (1/2)
Comprehensive Assessment Results (1/2) ECB will use the Dynamic B/S to assess the capital position of Eurobank The Dynamic B/S, which includes the €2.9bn share capital increase completed in May 2014, incorporates the Restructuring Plan (RP) for the 2014-2016 period approved by European Commissio
Slide 37: Comprehensive Assessment Results (2/2)
Comprehensive Assessment Results (2/2) Static B/S AQR Overview (€ bn) Baseline (€ bn) Adverse (€bn) 5.8 4.0 (2.8%) 3.6 3.0 15.3% 9.5% 8.0% (1.1) 3.0 3.0 10.6% 7.8% (5.8%) 5.5% 7.8% 0.8 7.8% (2.2) 2.0% 0.4 1 1.0% CET1 2013 AQR impact AQR AQR AQR Adjusted Aggregate ST ST adjusted ST adjusted 1 adjuste
Slide 38: Capital Enhancement Factors
Capital Enhancement Factors The following factors would create a capital buffer of €1.4bn to increase the stressed CET1 ratio from 5.5% to 9.5%2 Dynamic B/S Adverse Scenario & Capital Enhancement Factors (€ bn) Factors to generate €1.4bn (408bps) of extra capital buffer 2.9 7.5% 4.0 (9.9%) 0.3 (2.
Slide 39: AQR review perimeter and key findings (1/2)
AQR review perimeter and key findings (1/2) 84% of Eurobank loan book reviewed; 97% of Greek and 17% of International portfolio Credit file review and collateral valuation performed over €9.9bn of Greek corporate loans representing 64% of the Greek Corporate portfolio The AQR review resulted i
Slide 40: AQR review perimeter and key findings (2/2)
AQR review perimeter and key findings (2/2) Limited adjustments in terms of NPEs from the credit file review, mainly stemming from the SME portfolio Stock of provisions in place as of September 2014, largely in line with the level envisaged in the AQR exercise NPEs evolution (€ bn) Provisions po
Slide 41: Stress Test (Dynamic B/S) – Adjusted PPI
Stress Test (Dynamic B/S) – Adjusted PPI1 Adjusted PPI evolution (€ m) Adjusted PPI current run rate vs stressed (€ bn) Baseline scenario Adverse scenario 911 862 2.6 803 2.4 758 693 2.0 579 1.7 0.9 411 (Static B/S) 0.4 0.3 (Static B/S) 1 adj. 1H2014 actual 2014 2015 2016 adj. 1H 2014 Cum. Adj. PPI
Slide 42: Stress Test Summary results – Dynamic B/S
Stress Test Summary results – Dynamic B/S Baseline Scenario (€ bn) 2.6 2.9 (1.7) (0.2) (0.6) 5.1 4.0 (0.8) 15.1% 0.3 3.0 10.6% (1.3) 7.8% CET1 2013 Gross AQR Impact Tax Impact AQR adjusted May 2014 Share 3y Cumulative adj. 3y Cumulative 3y Cumulative 3y Cumulative Other 1 ST adjusted CET1 CET1 capit
Slide 43: Stress Test Summary results – Static B/S
Stress Test Summary results – Static B/S Baseline Scenario (€ bn) 4.0 0.9 2.9 3.6 10.6% 0.3 3.0 9.5% (1.3) 7.8% (1.6) (0.2) 0.8 (0.4) (0.9) 2.0% 1 CET1 2013 Gross AQR Tax Impact AQR adjusted 3y Cumulative 3y Cumulative 3y Cumulative 3y Cumulative Other ST adjusted CET1 May 2014 Share ST adjusted CET
Slide 44: ECB CA provisions versus Blackrock II Lifetime Credit Loss Projections
ECB CA provisions versus Blackrock II Lifetime Credit Loss Projections (CLPs) Static B/S - Baseline scenario (€ bn) Static B/S - Adverse scenario (€ bn) 14.7 13.6 12.8 11.8 11.9 11.2 10.8 10.3 9.5 9.5 9.5 9.5 1.3 1.3 8.2 8.2 2013 9M2014 2014 ST 2015 ST 2016 ST Blackrock II 2013 9M2014 2014 ST 2015 S
Slide 45: Stress Test – Key Assumptions
Stress Test – Key Assumptions Scope of Exercise Macro Assumptions Capital adequacy was assessed over a three-year time Variable Baseline Scenario Adverse Scenario period (2014-2016) against a Common Equity Tier 1 (CET 1) ratio benchmark of 8.0% and 5.5% in the Baseline and (%) 2014 2015 2016 2014
Slide 46: Appendix III – ECB Comprehensive Assessment Comparison with peers
Appendix III – ECB Comprehensive Assessment Comparison with peers
Slide 47: AQR comparison versus peers
AQR comparison versus peers AQR impact on CET 1 ratio (bps) AQR key findings Peer 1 Eurobank Peer 2 Peer 3 Lowest adjustment to NPE ratio (+2.2%) Highest coverage ratio both pre and post AQR adjustment (182) (281) (317) (370) NPE ratio1 Coverage ratio1 NPE increase +2.2 +2.3 +5.2 +10.2 48.2% 45.
Slide 48: Stress Test CET1 comparison versus peers (Dynamic B/S)
Stress Test (ST) CET1 comparison versus peers (Dynamic B/S) Baseline Scenario CET1 (%) post AQR and ST Adverse Scenario CET1 (%) post AQR and ST Baseline Dynamic scenario included PPI from Mitigating factors (actual 9M2014 PPI, DTC), Restructuring Plans and impairments according provide a signif
Slide 49: PPI comparison versus peers (Static B/S)
PPI comparison versus peers (Static B/S) Eurobank’s actual 2013 PPI affected negatively the ST PPI projections under the Static B/S and the Dynamic Adverse scenario Adjusted PPI versus actual (€ m) ST PPI projections 2014-2016 - Baseline scenario (€ m) 1,210 1,125 1,156 1,0011,012 987 4,245 798 828
Slide 50: Appendix IV – macroeconomic update
Appendix IV – macroeconomic update
Slide 51: Adjustment program success stories & socioeconomic costs
Adjustment program success stories & socioeconomic costs Success stories 2009 2013 Δ 2013/2009 (improvement ) General government (% GDP) -15.6 -3.2 12.4 General government primary balance (% GDP) -10.5 0.8 11.3 Interest expense (€ bn) 12.3 7.3 5.0 Current account balance (% GDP) -11.2 0.7 11.9 Curre
Slide 52: Economic sentiment indicator close to 6½ year highs
Economic sentiment indicator close to 6½ year highs; PMI manufacturing levels above the boom-or-bust threshold of 50 early in 2014 for the first time since mid- 2008 Improvement in key real-activity & sentiment indicators signals brightening macroeconomic conditions going forward Bounce in depos
Slide 53: External deficit closing rapidly while real GDP is slightly recovering
External deficit closing rapidly while real GDP is slightly recovering Benefiting from increasing tourism revenue, recovering exports & lower interest payments Real GDP growth YoY and QoQ seasonally adjusted- realisations & forecasts* (ESA95) Ratio of exports to imports of goods and services 4.0%
Slide 54: Greek real GDP growth and components (%, YoY)
Greek real GDP growth and components (%, YoY) Realizations & forecasts 2008 2009 2010 2011 2012 2013 2014F 2015F Private consumption 3.1% -1.4% -7.3% -10.9% -8.1% -2.0% -0.6% 1.6% Public consumption -2.1% 1.6% -4.3% -6.6% --5.0% -6.5% -3.1% -2.9% Gross fixed capital formation -6.6% -13.2% -20.9% -16
Slide 55: Key domestic product markets further facilitate the price adjustment process
Key domestic product markets further facilitate the price adjustment process Post-EMU entry cumulative losses in labour cost competitiveness already eliminated Wage pass-through to domestic consumer inflation still incomplete, but accelerating lately ULC-based REER Greece’s REER cumulative growt
Slide 56: Labour market reform and the domestic recession lead to rapid wage adjustment
Labour market reform and the domestic recession lead to rapid wage adjustment Minimum wage (€ per month) Average annual earnings (% YoY) 2000 1800 Greece EA-18 1600 6.6 7.2 5.7 1400 6.2 5.6 4.7 5.2 4.6 4.4 1200 3.4 € 877 1000 2.8 2.7 2.9 2.5 1.8 1.8 2.6 2.2 2.5 1.8 2.0 2.2 1.8 € 684 800 -1.5 -1.7 60
Slide 57: Destruction of physical and human capital risks a decline of potential output
Destruction of physical (and human) capital risks a decline of potential output in the initial post-crisis years Gross fixed capital formation (% GDP) Unemployment rate % (yearly average) 30.0 30 Greece EA-18 Greece EU-18 28.0 25 26.0 24.0 20 22.0 15 20.0 18.0 10 16.0 14.0 5 12.0 0 10.0 2000 2010 20
Slide 58: Key issues on the agenda of the 5th program review
Key issues on the agenda of the 5th program review Measures for the coverage of projected 2015 fiscal gap (1.1%-of-GDP) Social Security System reform agenda (e.g., additional reforms required to secure long-term viability of the Social Security System, measures for improving social security contribu
Slide 59: Investor Relations contacts
Investor Relations contacts Dimitris Nikolos +30 210 3337 688 E-mail: dnikolos@eurobank.gr Yannis Chalaris +30 210 3337 954 E-mail: ychalaris@eurobank.gr Christos Stylios +30 210 3337 428 E-mail: cstylios@eurobank.gr Address: 20 Amalias Avenue, 105 57, Athens, Greece Group E-mail: investor_relations