Erste Group Bank Ag · VIE:EBS
Erste Group Bank — FY2008 Earnings Presentation
24 slides from Erste Group Bank's earnings presentation, Feb 27, 2009
Slide 1: Erste Group – Preliminary 2008 results presentation
ERSTE GROUP Erste Group – Preliminary 2008 results presentation 27 February 2009, Vienna Andreas Treichl, CEO Manfred Wimmer, CFO Bernhard Spalt, CRO
Slide 2: FY 08 financial highlights – Executive summary
FY 08 financial highlights – Executive summary ERSTE GROUP Erste Group reports net profit of EUR 860 million (2007: EUR 1,175 million) Net profit was impacted by a number of extraordinary effects: + EUR 601.8 m sale of the insurance business - EUR 570 m writedown of goodwill (Serbia, Ukraine, Romani
Slide 3: FY 08 financial highlights – Improved capital ratios after insurance sale
FY 08 financial highlights – Improved capital ratios after insurance sale ERSTE GROUP Net profit declined by 26.8% yoy to EUR 859.6m Cash earnings per share * including write down of goodwill in Q4 08 offsetting the positive impact of the insurance sale 4.5 3.92 Adjusted for the goodwill write down
Slide 4: FY 08 financial highlights – Revenue growth outpaces cost growth
FY 08 financial highlights – Revenue growth outpaces cost growth ERSTE GROUP Operating income per quarter Operating expenses per quarter 2,000 1,725 1,767 1,755 1,752 1,200 1,037 1,052 1,664 965 948 59 82 102 1 1,000 932 95 95 482 94 in EUR million 1,500 487 94 92 504 492 510 800 355 in EUR million
Slide 5: FY 08 financial highlights – Segment operating performance overview
FY 08 financial highlights – Segment operating performance overview ERSTE GROUP Key Retail & SME segment recorded strongest Operating result per segment * improvement in operating performance of all segments Excellent NII growth of 23.5% in EUR million 2008 2007 Change Net commission growth of > 5 %
Slide 6: Summary financials of CEE subsidiaries
Summary financials of CEE subsidiaries Results (IFRS) as reported by local entities* ERSTE GROUP 97.99% 69.17% 100.00% 99.94% in EUR million 2008 2007 Change 2008 2007 Change 2008 2007 Change 2008 2007 Change Net profit after minorities 626.1 482.8 29.7% 541.0 250.4 >100.0% 136.7 133.1 2.8% 128.8 98
Slide 7: Erste Group in CEE – The region of choice in a tough environment
Erste Group in CEE – The region of choice in a tough environment ERSTE GROUP Czech Republic Slovakia Ukraine Clients: 5.3m Retail loans: 29.2% Clients: 2.6m Clients: 0.1m Retail dep.: 31.3% Retail loans: 23.9% Retail loans: 1.6% Retail dep.: 29.4% Retail dep.: 0.1% Branches: 658 Branches: 275 Branch
Slide 8: Group income statement (IFRS) – Net profit increases supported by insurance deal
Group income statement (IFRS) – Net profit increases supported by insurance deal ERSTE GROUP in EUR million 2008 2007 Change Net interest income 4,913.1 3,945.8 24.5% Risk provisions for loans and advances (1,071.4) (454.7) >100,0% Net fee and commission income 1,971.1 1,857.9 6.1% Net trading resul
Slide 9: Group balance sheet (IFRS) – Loan growth in line with expectations
Group balance sheet (IFRS)* – Loan growth in line with expectations ERSTE GROUP in EUR million Dec 08 Dec 07 Change Cash and balances with central banks 7,556 7,615 (0.8%) Loans and advances to credit institutions 14,344 14,937 (4.0%) Loans and advances to customers 126,185 113,956 10.7% Risk provis
Slide 10: Group balance sheet (IFRS) – Solid deposit growth despite seasonal slow-down
Group balance sheet (IFRS)* – Solid deposit growth despite seasonal slow-down ERSTE GROUP in EUR million Dec 08 Dec 07 Change Deposits by banks 34,672 35,165 (1.4%) Customer deposits 109,305 100,116 9.2% Debt securities in issue 30,483 31,078 (1.9%) Trading liabilities 2,519 1,756 43.5% Underwriting
Slide 11: Erste Group's loan book – Quarterly loan book trends by segments
Erste Group’s loan book – Quarterly loan book trends by segments ERSTE GROUP Loan growth exceeds 10% in 2008 Customer loans by main segments * Retail & SME is main contributor 150 122 126 126 In Austria loan stock grew by EUR 6.1 bn or 114 116 120 22 11%, on the back of organic growth and wider 23 2
Slide 12: Retail portfolio CEE benefits from risk-mitigating factors
Retail portfolio CEE benefits from risk-mitigating factors ERSTE GROUP High share of secured loans Healthy LTV levels Average LTV at portfolio level in our 4 largest markets (Czech Republic, Hungary, Romania and Slovakia accounting for 90% of the total retail mortgage book) ranges between 51% (Hunga
Slide 13: Loan book in detail: CEE = EUR 48.2 bn – Local currency loans dominate
Loan book in detail: CEE = EUR 48.2 bn – Local currency loans dominate the book ERSTE GROUP Currency split of CEE loan book (Q3 08: EUR 48.2 bn) 9.9% 0.4% 2.0% 22.3% CEE retail loans by country (Q3 08: EUR 24.8 bn) 65.4% 1.6% 8.3% 0.6% 13.3% 40.1% LCY EUR USD CHF Other Customer split of CEE loan boo
Slide 14: Loan book in detail: CEE retail = EUR 24.8 bn
Loan book in detail: CEE retail = EUR 24.8 bn – Retail portfolio benefits from risk-mitigating factors ERSTE GROUP CEE secured retail loans by currency Retail loans - secured/unsecured split (Q3 08: EUR 13.5 bn) (Q3 08: EUR 24.8 bn) 3.0% 12.5% 22.0% 54.0% 33.1% 54.4% 21.0% LCY EUR CHF USD Secured lo
Slide 15: Erste Group's risk costs – FY 2008 risk cost composition
Erste Group‘s risk costs – FY 2008 risk cost composition (segment view) ERSTE GROUP Risk costs rose to EUR 1,071m (2007: EUR 455m) and 88 bps (2007: 43 bps) Absence of extraordinary releases at the Austrian savings banks and in Romania in 2008 Higher provisionsing levels across all geographies due t
Slide 16: Erste Group's risk costs – Major risk cost drivers in 2008
Erste Group‘s risk costs – Major risk cost drivers in 2008 (segment view) ERSTE GROUP Incremental risk cost conribution analysis Increase is attributable to substantial releases in 2007 (in EUR million) (base effect) and additional provisions in relation to a savings bank merger. While Erste Group c
Slide 17: Erste Group's risk costs – Quarterly risk costs
Erste Group‘s risk costs – Quarterly risk costs (segment view) ERSTE GROUP Risk costs in key segments Quarterly risk cost development (main segments) 4% 500 469 2.93% 3% 400 in EUR million 2.10% 1.82% 300 221 2% 218 1.31% 200 163 0.94% 0.91% 119 314 1% 100 185 179 131 53 0% 0 -1% (100) GCIB Austria
Slide 18: Erste Group's asset quality – Non-performing loans and NPL coverage
Erste Group’s asset quality – Non-performing loans and NPL coverage ERSTE GROUP Group NPL ratio vs group NPL coverage NPL distribution (2008: EUR 6.4 bn) 3.5% 100% 2.9% 1.3% 3.0% 10.1% 2.4% 2.5% 80% 2.9% 2.2% 2.4% 3.9% 2.5% 71% 60% 4.3% 41.4% 2.0% 69% 68% 66% 62% 1.5% 40% 1.0% 20% 7.9% 0.5% 0.0% 0%
Slide 19: Erste Group's customer deposits – Quarterly deposit trends by segments
Erste Group’s customer deposits – Quarterly deposit trends by segments ERSTE GROUP Stable deposit base throughout 2008 Customer deposit trends by main segments * Deposits grew by more than 9% in 2008 150 Steady increases in Austria 120 109 104 109 111 100 in EUR billion Fastest growth in Central and
Slide 20: Erste Group historic financials – Quarterly income statement (IFRS)
Erste Group historic financials – Quarterly income statement (IFRS) ERSTE GROUP in EUR million Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Net interest income 903.7 953.8 986.6 1,101.7 1,151.1 1,154.9 1,267.3 1,339.8 Net fee and commission income 438.9 446.0 469.3 503.7 491.9 510.3 486.8 482.1 N
Slide 21: Core segment – Austria: Strong NII partly offsetting weaker fee income
Core segment – Austria Strong NII partly offsetting weaker fee income ERSTE GROUP Savings Banks EB Oesterreich Austria in EUR million 2008 2007 2008 2007 2008 2007 Net interest income 974.1 864.6 617.4 580.5 1,591.5 1,445.0 Risk provisions (275.8) (96.2) (92.5) (101.1) (368.3) (197.3) Net fee and co
Slide 22: Core segment Central and Eastern Europe (1) – Strong margins drive NII growth
Core segment Central and Eastern Europe (1) – Strong margins drive NII growth in CEE ERSTE GROUP Czech Republic Romania Slovakia Hungary in EUR million 2008 2007 2008 2007 2008 2007 2008 2007 Net interest income 1,092.7 820.1 741.6 510.8 334.8 291.4 294.3 245.7 Risk provisions (116.6) (70.1) (121.2)
Slide 23: Core segment Central and Eastern Europe (2) – Fee income also posts rise
Core segment Central and Eastern Europe (2) – Fee income also posts rise in 2008 ERSTE GROUP Croatia Serbia Ukraine CEE in EUR million 2008 2007 2008 2007 2008 2007 2008 2007 Net interest income 193.6 158.0 33.5 16.2 33.0 8.0 2,723.6 2,050.2 Risk provisions (24.7) (18.3) (6.6) 0.1 (21.0) (10.3) (440
Slide 24: Erste Group's capital position – Agreement with the Republic of Austria
Erste Group’s capital position – Agreement with the Republic of Austria ERSTE GROUP Erste has signed an agreement allowing to issue participation capital and hybrid capital up to EUR 2.7bn Participation capital (acc §23 Para 4&5 of Austrian Banking Act) is pari passu with ordinary shares, non-diluti