Erste Group Bank Ag · VIE:EBS
Erste Group Bank — FY2013 Earnings Presentation
22 slides from Erste Group Bank's earnings presentation, Feb 28, 2014
Slide 1: Erste Group Bank AG FY 2013 preliminary results
Erste Group Bank AG FY 2013 preliminary results 28 February 2014 Andreas Treichl, Chief Executive Officer Gernot Mittendorfer, Chief Financial Officer Andreas Gottschling, Chief Risk Officer
Slide 2: Presentation topics
Presentation topics − Erste Group’s development in 2013 − Erste’s tax environment − Central and Eastern Europe − Outlook 2014 Annual Press Conference 28th February 2014 Page 2
Slide 3: Income statement (IFRS) FY 2013 – Net profit down on impairments and tax effects
Income statement (IFRS) FY 2013 – Net profit down on impairments and tax effects in EUR million 2013 2012 Change Comment Net interest income 4,858.1 5,235.3 (7.2%) Low interest rates, subdued loan demand Risk provisions for loans (1,763.4) (1,980.0) (10.9%) Significant reduction in retail & SME busi
Slide 4: Income statement (IFRS) drill-down – Other operating result in detail
Income statement (IFRS) drill-down – Other operating result in detail Other operating result 2013: - EUR 1,081.9m Deconsolidation EB Ukraine -76.6 • Banking taxes and FTT: Banking & − AT: EUR 166.4m -311.0 transaction − HU: EUR 103.4m -311.0 taxes − SK: EUR 41.2m Goodwill non-cash • 2013 negative on
Slide 5: Balance sheet (IFRS) – Assets
Balance sheet (IFRS) – Assets Lower customer loans, lower RWAs in EUR million Dec 13 Dec 12 Change Comment Cash and balances with central banks 8,670 9,740 (11.0%) Loans and advances to credit institutions 9,062 9,074 (0.1%) Loans and advances to customers 127,698 131,928 (3.2%) Reduction in most se
Slide 6: Balance sheet (IFRS) – Liabilities
Balance sheet (IFRS) – Liabilities Strong deposit base in EUR million Dec 13 Dec 12 Change Comment Deposits by banks 17,126 21,822 (21.5%) Customer deposits 122,442 123,053 (0.5%) Stable in retail &SME, decline in term deposits Debt securities in issue 27,986 29,427 (4.9%) Value adjustments from Por
Slide 7: Segment highlights – Turnaround in RO, solid results in EBOe, CZ and SK
Segment highlights – Turnaround in RO, solid results in EBOe, CZ and SK Top segment performers in 2013: Romania EB Oesterreich Czech Republic Slovakia in EUR million 2013 2012 ∆ 2013 2012 ∆ 2013 2012 ∆ 2013 2012 ∆ Operating income 775 763 2% 962 953 1% 1,438 1,581 (9%) 541 538 1% Operating expenses
Slide 8: Loan book – Decline in GCIB and most CEE
Loan book – Decline in GCIB and most CEE − Customer loans declined by 3.2% yoy, 1.4% qoq Customer loans by main segments reductions mainly in GCIB, RO and HU 150 − Austria: stable loan book yoy, increase qoq 131.9 130.3 129.8 129.5 127.7 17.9 − CEE: overall declining loan book, most pronounced in RO
Slide 9: Asset quality – Decline in NPLs continued in Q4 2013
Asset quality – Decline in NPLs continued in Q4 2013, CZ & SK further improved, while RO stabilises − Second consecutive quarter of declining NPL stock, NPL Erste Group: NPL ratio vs NPL coverage coverage ratio improved to 63.1% 30% 65% − NPL reduction of EUR 175m qoq in Romanian retail & SME 62.6%
Slide 10: Funding update – Stable customer deposit performance
Funding update – Stable customer deposit performance Customer deposit trends by main segments − Relatively strong customer deposit base 123.1 123.1 122.5 122.1 122.4 125 − Decline by 0.5% yoy mainly on term deposits 5.5 6.2 6.1 6.5 5.6 (institutional clients) 100 in EUR billion 49.5 48.9 48.5 48.5 4
Slide 11: Funding update – Strong liquidity position, limited funding requirements
Funding update – Strong liquidity position, limited funding requirements Evolution of funding mix − Short-term funding needs very well covered 100% 3.2% 3.0% 3.0% 2.7% 2.8% − Investment in highly liquid assets resulted in comfortable 90% 8.5% 9.0% 8.2% 8.3% 7.9% 10.5% 12.2% 11.1% 9.1% collateral cov
Slide 12: Solid capital position
Solid capital position Erste Group comfortably meets the fully loaded Basel 3 equity tier-1 ratio Core tier 1 ratio excl. Part capital (total risk) 11,5% 10,8% 9,6% 7,7% 7,8% 6,9% Basel 2.5 Basel 3 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 13 Core tier 1 ratio (CT1 ratio) = tier 1 capital excl. hybrid
Slide 13: Presentation topics
Presentation topics − Erste Group’s development in 2013 − Erste’s tax environment − Central and Eastern Europe − Outlook 2014 Annual Press Conference 28th February 2014 Page 13
Slide 14: Impact of banking tax on Erste's net profit
Impact of banking tax on Erste’s net profit Pre-tax profit as big as banking tax Pre-tax profit (without banking tax) 685.3 Erste‘s tax Banking tax - 311.0 rate amounts to ~90% Current tax - 311.0 Net profit 2013 ~61.0 Annual Press Conference 28th February 2014 Page 14
Slide 15: State aid provided by Erste Group in 2009-2013
State aid provided by Erste Group in 2009-2013 The Austrian state received more than EUR 1 bn from Erste Group 500 464 448 450 400 350 300 EUR 1,039 m in EUR m 250 in total 200 150 120 100 50 0 Banking tax Dividend on participation capital Fees for state-guaranteed bonds Annual Press Conference 28th
Slide 16: Presentation topics
Presentation topics − Erste Group’s development in 2013 − Erste’s tax environment − Central and Eastern Europe − Outlook 2014 Annual Press Conference 28th February 2014 Page 16
Slide 17: 4Q13 GDP growth in CEE above expectations
4Q13 GDP growth in CEE above expectations Strong debt pre-financing done in most CEE countries Some of the CEE countries have achieved marginally better than expected economic growth in 2013 − However, growth was mainly driven by exports, domestic demand has just started to gradually improve − Consu
Slide 18: Fed tapering had no large impact on CEE yields after end-2013 implementation
Fed tapering had no large impact on CEE yields after end-2013 implementation 10Y yield development in CEE (as of May, 2013)** in % • Ample government prefinancing carried 8 out in Nov-Feb helps bond markets in Fed first announces the Fed actually Fed tapering had no big launches visible impact on CE
Slide 19: Direct impact of Ukraine on CEE limited
Direct impact of Ukraine on CEE limited 1,2% Exports directly to UA 1,0% Imports directly from UA In % of GDP, 2012 0,8% • Low direct dependency on the Ukrainian 0,6% economy 0,4% • Russian energy transport is important, but 0,2% end of heating season helps and it is not in 0,0% PL SK RO HU CZ the i
Slide 20: EU Funds 2014-2020
EU Funds 2014-2020 A 50% absorption would boost the GDP of CEE6’ by additional 1.5% per year Total Allocation in 2014-2020 in absolute terms – EUR m − CEE6 to receive EUR ~170 bn, half of the total EU Funds’ volume − A 50% absorption would lead to additional annual GDP boost in CEE6 of up to 1.5%, i
Slide 21: Presentation topics
Presentation topics − Erste Group’s development in 2013 − Erste’s tax environment − Central and Eastern Europe − Outlook 2014 Annual Press Conference 28th February 2014 Page 21
Slide 22: Conclusion – Outlook
Conclusion – Outlook − Erste Group expects a stable operating environment in its markets: − expected economic growth ~ 1.7% − persistently low or even falling interest rates − Erste Group anticipates a slow start to the year but aims to keep operating profit stable (± 2%) at about EUR 3.1 billion −