Eurobank S.a. · ATHEX:EUROB
Eurobank — Q3 2017 Earnings Presentation
56 slides from Eurobank's earnings presentation, Nov 16, 2017
Slide 1: Third Quarter 2017 Results
Third Quarter 2017 Results 16 November 2017
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 3Q2017 results review 9 Asset Quality 17 International operations 23 Appendix I – Supplementary information 32 Appendix II – Macroeconomic update 36 Appendix III – Glossary 50 Page 2
Slide 4: 3Q17 results highlights
3Q17 results1 Highlights Key financials 1 Net profit2 €61m in 3Q17 and €132m in 9M17 €m 3Q17 2Q17 Δ(%) 9M17 9M16 Δ(%) Core pre-provision income (PPI) up 2.4% q-o-q; up 7.9% y-o-y Net interest income 369.3 364.4 1.3 1,090.5 1,088.6 0.2 NII up 1.3% q-o-q; stable y-o-y Commission income 66.8 66.5 0
Slide 5: Pre-provision income (PPI)
Pre-provision income (PPI) Core PPI and other income (€ m) Highlights 30 54 38 34 28 Other income Core pre-provision income (PPI) up 2.4% q-o-q; up 7.9% y-o-y 212 208 213 Core PPI NII up 1.3% q-o-q at €369m; stable y-o-y 202 199 Commission income up 0.5% q-o-q; up 17.8% y-o-y Operating expen
Slide 6: Asset quality
Asset quality NPEs formation1 (€ m) 90dpd formation1 (€ m) 49.9 50.6 50.7 51.1 51.6 Coverage (% ) 65.4 66.0 65.4 65.2 65.5 Coverage (% ) 46.4 46.0 45.9 45.1 44.7 Ratio (% ) 35.4 35.3 35.5 35.3 35.2 Ratio (% ) 150 150 (91) Int'l 85 Int'l (71) (20) Greece 26 (106) (111) 33 (7) Greece (194) (30) (90) 3
Slide 7: Funding and liquidity
Funding and liquidity Eurosystem funding (€ bn) Comments 32.7 Current ELA funding at €7.5bn; €5.0bn down from 2017 peak 9.8 Elimination of Pillar II bonds as of late October 2017 15.7 Group deposits up by €0.9bn q-o-q; €1.1bn in 9M17 14.0 13.8 2.1 3.4 11.1 22.9 2.6 9.7 €500m market issue of
Slide 8: Capital position
Capital position Phased-in CET1 CET1 / CAD (FLB3) 260bps 17.2% 17.4% 18bps 17.4% (18bps) 20bps 15.1% 14.6% 80bps (250bps) 13.8% 2Q17 CET1 3Q17 result Redemption of Romania sale 3Q17 CET1 AFS & other 3Q17 pro-forma Tier II capital 2016 FLB3 CET 1 3Q17 pro-forma Total CAD Preference FLB3 CET1 shares C
Slide 9: International Operations
International Operations Core PPI (€ m) Net Profit1 (€ m) 37 66 32 59 59 61 62 29 27 26 3Q16 4Q16 1Q17 2Q17 3Q17 3Q16 4Q16 1Q17 2Q17 3Q17 Loan loss provisions (€ m) Net Loans and Deposits (€ bn) 2.0% 2.0% 1.8% 1.8% 1.6% Cost of Risk 27 26 8.9 23 24 23 5.6 3.9 3.0 2.5 1.5 1.2 0.9 0.8 0.5 Int'l BUL SE
Slide 10: 3Q 2017 results review
Sy eurobank| 3Q 2017 results review | Page 9
Slide 11: Loans and deposits
Loans and deposits Gross loans (€ bn) Deposits (€ bn) Δ loans l-f-l1 (€m) (220) 466 4 120.1% 117.6% 117.6% 116.4% 112.0% Loans/Deposits 49.2 49.2 48.7 48.7 48.3 6.0 6.0 6.0 6.3 6.4 International 33.2 31.5 32.1 31.8 32.3 Greece 8.9 8.7 8.9 8.6 8.3 21.7 21.7 21.4 21.5 21.2 Business International Mortg
Slide 12: Assets
Assets Total assets (€ bn) Gross Loans Consumer 12% Business 53% 60.8 Mortgages 35% Net loans and advances to customers 37.2 Securities Trading & other 7% GGBs Securities 24% 8.8 EFSF PP&E, intangibles and other assets 27% 4.6 Derivatives Loans and advances to banks 1.7 2.3 GTBs Deferred tax asset1
Slide 13: New time deposits spreads and client rates (Greece)
New time deposits spreads and client rates (Greece) Time deposit client rates (bps) Deposits mix Core 114 56% 106 Time 105 44% 100 97 99 92 91 92 89 89 88 86 88 88 87 85 86 82 80 80 New time deposit spreads (bps) 77 80 76 75 76 74 74 (93) (92) 75 73 (107) (102) 74 (109) (91) 73 72 72 70 70 69 70 (10
Slide 14: Net interest income
Net interest income NII breakdown (€ m) NII per region (€ m) Total NII 366 367 357 364 369 366 367 364 369 357 81 84 83 84 83 International Greece 286 285 283 274 281 Loan margin 456 447 3Q16 4Q16 1Q17 2Q17 3Q17 420 425 426 NII evolution (q-o-q, € m) 6 0 2 369 364 Bonds & other 50 53 55 56 55 (1) (1
Slide 15: Spreads & net interest margin
Spreads & net interest margin Lending spreads (Greece, bps)1 Deposit spreads (Greece, bps) 3Q16 4Q16 1Q17 2Q17 3Q17 3Q16 4Q16 1Q17 2Q17 3Q17 Corporate 511 524 516 493 502 Savings & Sight (53) (53) (51) (49) (50) Retail 447 435 416 432 425 Time (103) (96) (90) (88) (83) Total 470 467 451 454 453 Tota
Slide 16: Commission income
Commission income Commission income breakdown (€ m) Commission income per region (€ m) Fees excl. €m 65 69 67 69 69 Govt. bps 39 43 42 45 46 guarantees expense Int’l 66 67 67 64 66 67 67 60 60 64 18 16 Lending 22 20 22 23 20 17 18 21 31 Network Greece 30 34 33 33 44 44 44 43 39 8 8 Capital Markets 5
Slide 17: Operating expenses
Operating expenses OpEx per region (€ m) OpEx breakdown (€ m) Greece (2.7%) 682 668 (2.0%) 224 223 47 45 221 222 223 International Depreciation 43 41 44 45 45 259 242 Administrative 181 181 178 178 179 Greece Staff 376 381 3Q16 4Q16 1Q17 2Q17 3Q17 9M16 9M17 Cost-to-income ratio (%) Headcount and net
Slide 18: Asset Quality
Sy eurobank| Asset Quality | Page 17
Slide 19: NPE stock evolution vs. SSM targets
NPE stock evolution vs. SSM targets 1 Stock evolution vs targets (€ bn) Δ stock NPEs (€ m) actual Initial targets Revised Targets 2016 2017 71 (143) (208) (304) Δ stock NPEs (552) 20.8 20.8 20.6 20.4 20.1 20.7 20.5 19.6 20.3 19.8 18.8 19.4 18.4 16.1 146 2 (32) NPE net flow (36) (3) (5) (116) (39) (7
Slide 20: NPEs formation per segment (Greece)
NPEs formation per segment (Greece) Mortgages (€ m) Consumer (€ m) 315 278 100 38 35 38 22 28 0 (7) (2) (15) (9) (22) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Small business (€ m) Corporate (€ m) 139 71 51 12 14 (27) (15) (36) (24) (46) (73) (84) (67) (60) 1Q16 2Q16 3Q16
Slide 21: NPEs metrics (Group)
NPEs metrics (Group) 90dpd bridge to NPEs (€ bn) NPEs per region Provisions & Provisions/ Total NPEs NPEs ratio4 collaterals / NPEs NPEs 0.9 (€ bn) (%) (%) (%) 21.6 Consumer 3.4 64.1 81.2 86 3.7 17.0 Mortgages 6.2 40.4 34.8 106 Small Business 4.2 65.4 44.8 96 Total Retail 13.8 50.9 49.2 98 Corporate
Slide 22: Asset quality metrics - 90dpd loans
Asset quality metrics - 90dpd loans 90dpd ratio per segment (%) 90dpd ratio per region (%) €3.0bn €5.0bn €3.7bn €5.3bn €17.0bn 37.7 37.7 38.0 37.9 38.0 Greece 53.2 50.2 35.4 35.3 35.5 35.3 35.2 Group 35.2 29.9 28.5 18.7 18.4 17.9 17.7 16.7 International 3Q16 4Q16 1Q17 2Q17 3Q17 Consumer Mortgages Sm
Slide 23: 90dpd formation per segment (Greece)
90dpd formation per segment (Greece) Mortgages (€ m) Consumer (€ m) 245 221 216 83 82 72 66 54 55 171 43 160 41 36 35 35 129 17 22 115 118 6 8 94 109 101 84 84 73 82 72 (12) (9) (20) 22 31 (39) 8 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 Smal
Slide 24: International operations
International operations Page 23
Slide 25: International presence
International presence Total Assets (€ bn) 1.4 Net Loans (€ bn) 0.5 Total Assets (€ bn) 1.3 Deposits (€ bn) 1.2 Net Loans (€ bn) 0.9 Deposits (€ bn) 0.8 Branches (#) 80 Total Assets (€ bn) 4.5 Net Loans (€ bn) 1.5 Total Assets (€ bn) 3.5 Net Loans (€ bn) 2.5 Deposits (€ bn) 3.9 Private Banking 8 Dep
Slide 26: Bulgaria P&L
Bulgaria P&L PPI (€ m) OpEx (€ m) 30 31 30 29 29 21 21 21 19 19 3Q16 4Q16 1Q17 2Q17 3Q17 3Q16 4Q16 1Q17 2Q17 3Q17 Loan loss provisions (€ m) Net Profit (€ m) 17 15 16 15 15 12 12 11 10 8 3Q16 4Q16 1Q17 2Q17 3Q17 3Q16 4Q16 1Q17 2Q17 3Q17 Page 25
Slide 27: Bulgaria B/S and Asset quality
Bulgaria B/S and Asset quality Gross Loans (€ m) 90dpd ratio and coverage 2,671 2,778 2,530 2,558 2,580 362 359 Consumer 69.1% 357 354 353 13% 66.5% 64.3% Coverage 60.4% 62.8% 863 860 31% 56% 862 862 861 Mortgage 20.1% 19.5% 18.9% 16.5% 17.7% 90dpd 9M17 1,452 1,553 1,311 1,341 1,365 Business 3Q16 4Q
Slide 28: Cyprus P&L
Cyprus P&L PPI (€ m) OpEx (€ m) 28 23 19 20 20 7 8 8 7 6 3Q16 4Q16 1Q17 2Q17 3Q17 3Q16 4Q16 1Q17 2Q17 3Q17 Loan loss provisions (€ m) Net Profit (€ m) 20 15 14 12 13 5 4 4 3 3 3Q16 4Q16 1Q17 2Q17 3Q17 3Q16 4Q16 1Q17 2Q17 3Q17 Romania classified as held for sale. All previous quarters restated accord
Slide 29: Cyprus B/S and Asset quality
Cyprus B/S and Asset quality Gross Loans (€ m) 90dpd ratio and coverage 1,534 1,540 1,516 1,551 1,525 18 19 17 17 18 Other 1% 76.3% 75.7% 75.2% 69.4% 71.0% Coverage 1,516 1,522 1,499 1,533 1,507 Business 99% 9M17 7.1% 6.8% 6.0% 5.9% 6.1% 90dpd 3Q16 4Q16 1Q17 2Q17 3Q17 9M16 FY16 3M17 6M17 9M17 Deposi
Slide 30: Serbia P&L
Serbia P&L PPI (€ m) OpEx (€ m) 11 11 11 11 11 9 8 7 7 7 3Q16 4Q16 1Q17 2Q17 3Q17 3Q16 4Q16 1Q17 2Q17 3Q17 Loan loss provisions (€ m) Net Profit (€ m) 5 4 4 4 3 3 3 3 3 3 3Q16 4Q16 1Q17 2Q17 3Q17 3Q16 4Q16 1Q17 2Q17 3Q17 Page 29
Slide 31: Serbia B/S and Asset quality
Serbia B/S and Asset quality Gross Loans (€ m) 90dpd ratio and coverage 73.0% 70.9% 997 70.6% 68.8% 963 65.6% Coverage 917 931 921 Consumer 246 279 301 236 256 30% 178 177 175 171 165 Mortgage 53% 17% 15.4% 16.1% 16.4% 16.4% 90dpd 12.0% 503 508 513 531 Business 489 9M17 3Q16 4Q16 1Q17 2Q17 3Q17 9M16
Slide 32: Key figures – 3Q17
Key figures – 3Q17 Bulgaria Cyprus Serbia Lux Sum Assets 3,515 4,510 1,321 1,428 10,774 Gross loans 2,778 1,525 997 453 5,753 Net loans 2,460 1,455 918 453 5,286 Balance Sheet (€m) 90dpd Loans 459 93 120 2 674 Balance Sheet NPE loans 625 147 109 2 883 Deposits 2,954 3,940 752 1,211 8,857 Operating I
Slide 33: Appendix I – Supplementary information
Appendix I – Supplementary information Page 32
Slide 34: Summary performance
Summary performance Balance sheet – key figures Income statement – key figures €m 3Q17 2Q17 €m 3Q17 2Q17 Gross customer loans 48,343 48,758 Net interest income 369.3 364.4 Provisions (11,150) (11,231) Commission income 66.8 66.5 Net customer loans 37,192 37,527 Operating income 463.6 465.3 Customer
Slide 35: Consolidated quarterly financials
Consolidated quarterly financials Income Statement (€ m) 3Q17 2Q17 1Q17 4Q16 3Q16 Net Interest Income 369.3 364.4 356.8 366.8 366.2 Commission income 66,8 66.5 64.3 66.0 59.8 Other Income 27.5 34.4 37.9 53.7 30.1 Operating Income 463.6 465.3 459.0 486.5 456.1 Operating Expenses (223.2) (223.1) (221.
Slide 36: Consolidated financials
Consolidated financials Income Statement (€ m) 9M17 9M16 Δ y-o-y (%) Net Interest Income 1,090.5 1,088.6 0.2 Commission income 197.6 167.7 17.8 Other Income 99.8 156.6 (36.3) Operating Income 1,387.9 1,413.0 (1.8) Operating Expenses (668.0) (681.8) (2.0) Pre-Provision Income 719.9 731.2 (1.5) Loan L
Slide 37: Appendix II – Macroeconomic update
Appendix II – Macroeconomic update Page 36
Slide 38: Key points and summary of views
Key points and summary of views Recent macro developments Real output expanded by 0.6% YoY in H1 2017, after remaining broadly stagnant throughout last year Private consumption has been the main driver of growth thus far, while private investment has yet to record a meaningful recovery Jobless
Slide 39: Economic activity is recovering following the mid-2015 crisis
Economic activity is recovering following the mid-2015 crisis Gross Domestic Product Private Consumption Government Consumption Investment Exports of Goods & Services Imports of Goods & Services Source: ELSTAT, Eurobank Research Page 38
Slide 40: Selected indicators of domestic economic activity
Selected indicators of domestic economic activity Higher frequency data point to improving GDP dynamics in the period ahead Economic Sentiment Indicator: strong improvement in 2017Q3 PMI manufacturing: above 50 units boom bust threshold for a 5th month in a row Industrial production: positive YoY% f
Slide 41: Domestic labour market
Domestic labour market Conditions improving lately, but serious challenges remain Unemployment rate: still elevated despite recent declines Long term unemployment: a drain on human capital stock 21.0% in July 2017 Labour productivity growth: remained stagnant in 2017Q2 Employment: positive contribut
Slide 42: Activity in tourism and shipping industries
Activity in tourism and shipping industries Held back GDP growth in 2016, but upbeat expectations for this year Revenues from services exports (% of GDP) Tourism revenue: rising contribution to GDP growth Transportation revenue: steep declines in 2015 & 2016 Net exports had a negative contribution
Slide 43: 2018 Draft Budget: Attainability of 2017 & 2018 primary balances
2018 Draft Budget: Attainability of 2017 & 2018 primary balances 2016 marked the 4th consecutive year of a surplus position in the general government primary balance FY-2016 primary surplus at +3.9% in programme terms vs. 0.5% of GDP target Draft Budget 2018: FY-2017 and 2018 primary surplus
Slide 44: Fiscal accounts: Expectations for fulfilling FY-2017 targets
Fiscal accounts: Expectations for fulfilling FY-2017 targets Year-to-September 2017 State budget execution supports attainability of full-year primary surplus target (2.2% of GDP) despite the Ordinary-budget revenue shortfall of €0.5 bn compared to the respective MTFS2018-21 target. The stock of
Slide 45: Domestic financial conditions: Gradual improvement underway
Domestic financial conditions: Gradual improvement underway Further stabilization of macro environment, relaxation of capital controls to facilitate return of bank deposits 1. Net private-sector deposit inflow of c. €7.2 bn between July 2015 and September 2017; inflow of c. €1.2bn year- to-date 2.
Slide 46: Key macro indicators: Realizations & forecasts
Key macro indicators: Realizations & forecasts 2016* 2017f** 2018f** Downside risks Real Real Real (YoY%) (YoY%) (YoY%) Delays in concluding future reviews GDP -0.2 1.8 2.4 Low ownership of reforms Slow pace of deposits return Private Consumption 0.0 1.1 1.4 Weaker than expected growth in the Govern
Slide 47: Progress in the privatization programme
Progress in the privatization programme Important projects already completed Privatisations revenue (2015-2018, € billion) Establishment of the Hellenic Corporation of Assets and Participations S.A. (HCAP); appointment of Supervisory Board and Board of Directors Transfer of the 14 Regional Airpo
Slide 48: Significant progress in programme conditionality
Significant progress in programme conditionality In the past few months the Greek government had two multi-bills approved by the Hellenic Parliament in order to fulfill the conditionality attached to the 2nd programme review. The key items of this conditionality were: Medium – Term Fiscal Primary su
Slide 49: Developments following the completion of the 2nd programme review
Developments following the completion of the 2nd programme review Moody's upgraded Greece's long-term issuer rating as well as all senior unsecured bond and programme ratings to Caa2 and Caa2 from Caa3 and Caa3, respectively. The outlook has been changed to positive from stable. Moody’s upgraded
Slide 50: Key prior actions for 3rd review and timeline
Key prior actions for 3rd review and timeline Key items in the upcoming 3rd programme review NPLs: Operation of e-auction platform Labour market: adopt legislation to increase the quorum for first-degree unions to vote on a strike to 50 percent Pensions: Recalculate and process pension applica
Slide 51: Appendix III – Glossary
Appendix III – Glossary Page 50
Slide 52: Glossary - Methodology
Glossary - Methodology This document contains financial data and measures as published or derived from the published consolidated financial statements which have been prepared in accordance with International Financial Reporting Standards (IFRS). Additional sources used, include information derived
Slide 53: Glossary – Definition of Financial measures / ratios
Glossary – Definition of Financial measures / ratios Commission income: The total of Net banking fee and commission income and Income from non banking services of the reported period. Other Income: The total of Dividend income, Net trading income, Gains less losses from investment securities and net
Slide 54: Glossary – Definition of Financial measures / ratios
Glossary – Definition of Financial measures / ratios Cost of Risk: Impairment losses on Loans and Advances charged in the reported period, annualized and divided by the average balance of Loans and Advances to Customers. The average balance of Loans and Advances to Customers is calculated as the ari
Slide 55: Glossary – Definition of Financial measures / ratios
Glossary – Definition of Financial measures / ratios Loans to Deposits: Loans and Advances to Customers (net of Impairment Allowance) divided by Due to Customers at the end of the reported period. Risk-weighted assets (RWAs): Risk-weighted assets are the bank's assets and off-balance-sheet exposures
Slide 56: Investor Relations contacts
Investor Relations contacts Dimitris Nikolos +30 210 3704 764 E-mail: dnikolos@eurobank.gr Yannis Chalaris +30 210 3704 744 E-mail: ychalaris@eurobank.gr Christos Stylios +30 210 3704 745 E-mail: cstylios@eurobank.gr E-mail: investor_relations@eurobank.gr Fax: +30 210 3704 774 Internet: www.eurobank