Erste Group Bank Ag · VIE:EBS
Erste Group Bank — FY2021 Earnings Presentation
52 slides from Erste Group Bank's earnings presentation, Feb 28, 2022
Slide 1: Erste Group investor presentation FY 2021 preliminary results
Erste Group investor presentation FY 2021 preliminary results 28 February 2022 Erste Group closes FY 2021 with record net profit, ROTE of 12.7% Bernd Spalt, CEO Erste Group Stefan Dörfler, CFO Erste Group Alexandra Habeler-Drabek, 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 • Key developments and executive summary • Macroeconomic and business update • Operating trends • Volumes • Revenues and costs • Impairments and asset quality • Capital and wholesale funding • Key takeaways and outlook • Additional information Page 3
Slide 4: Key developments (1) – Hot topic: Ukraine
Key developments (1) – Hot topic: Ukraine • Erste Group has no direct subsidiaries in Russia, Ukraine or Belarus and has only immaterial credit exposure towards those countries. No meaningful additional risk provisions are currently anticipated in this context. • Market exposures (trading book and b
Slide 5: Key developments (2) – Setting the frame for today's presentation
Key developments (2) – Setting the frame for today’s presentation • Encouraging business environment in 2021 • Economic growth in CEE & Austria has outperformed expectations • Faster than expected rate hikes in Czech Republic, Hungary and Romania • Strong operating result in 2021: +17.1% • Accelerat
Slide 6: ESG update: focus on the S(ocial) and the G(overnance)
ESG update: focus on the S(ocial) and the G(overnance) – Alignment of employee with shareholder interests • Erste Group plans to launch employee share programme (ESP) • Key goals of employee share programme • Turn employees of the bank in CEE and Austria into shareholders of Erste Group • Foster lon
Slide 7: Executive summary – Group income statement performance
Executive summary – Group income statement performance QoQ net profit reconciliation (EUR m) YoY net profit reconciliation (EUR m) +145.6% 72 183 242 1,923 1,136 -11.5% 533 63 86 127 472 80 587 138 783 55 8 Q3 21 Operating Operating Risk costs Other Taxes on Minorities Q4 21 2020 Operating Operating
Slide 8: Executive summary – Key income statement data
Executive summary – Key income statement data Net interest income & margin Operating result & cost/income ratio Cost of risk 2.08% 2.05% in EUR m in EUR m in EUR m 4,976 2.08% +17.1% 4,775 1.98% 1,295 0.24% 3,436 58.1% -0.07% 53.4% 2,935 1,221 1,306 906 842 107 159 -31 2020 2021 Q3 21 Q4 21 2020 202
Slide 9: 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) +10.8% +10.8% 307,428 1,103 307,428 3 260 1,454 1,062 14,218 465 19,453 6,362 9,657 277,394 7,114 277,394 151 31/12/20 Cash Trading, Loans to Net loans Intan
Slide 10: Executive summary – Key balance sheet data
Executive summary – 31/12/20 Key balance sheet data 31/12/21 Loan/deposit & loan/TA ratio Net loans & credit RWA NPL coverage ratio & NPL ratio in EUR bn 86.9% 85.6% +8.6% 90.9% 59.9% 58.6% 180.3 88.6% 166.1 101.7 111.2 2.7% 2.4% Loan/deposit ratio Loans/total assets Net loans Credit RWA NPL coverag
Slide 11: Presentation topics
Presentation topics • Key developments and executive summary • Macroeconomic and business update • Operating trends • Volumes • Revenues and costs • Impairments and asset quality • Capital and wholesale funding • Key takeaways and outlook • Additional information Page 11
Slide 12: Macroeconomic update – CEE & AT recovery continues in 2022, rate hikes in CZ, HU & RO
Macroeconomic update – CEE & AT recovery continues in 2022, rate hikes in CZ, HU & RO • CEE & AT economies have shown remarkable Real GDP expectations for 2022 (in %) resilience and adaptability through Covid-19 • AT: recovery to reaccelerate after relatively weak winter tourism season 5.4 • CZ & SK
Slide 13: Macroeconomic update – Economic rebound set to continue in 2022
Macroeconomic update – 2021 2022 Economic rebound set to continue in 2022, albeit at slower pace Real GDP growth (in %) Dom. demand contribution* (in %) Net export contribution* (in %) Consumer price inflation (avg, in %) 10.4 7.4 6.2 5.3 9.6 5.5 5.4 7.5 7.1 4.9 4.8 5.0 2.1 1.7 7.2 4.3 3.9 6.3 5.6 5
Slide 14: Business update – Retail – what's happening on the ground? (1)
Business update – Retail – what‘s happening on the ground? (1) • Strong demand for housing loans throughout 2021 Loan portfolio • Refinancing and increased mortgage demand in expectation of (in EUR billion) (further) interest rate hikes as the key drivers in CEE Housing loans Consumer loans • Rising
Slide 15: Business update – Retail – what's happening on the ground? (2)
Business update – Retail – what‘s happening on the ground? (2) • Clients continue to go digital Number of George users • More than 7.8 million users onboarded to George across 6 (in thsd) markets, vast majority of clients use mobile app • Clients appreciate broad digital offering of banking products
Slide 16: Business update – Corporates & Markets – what's happening on the ground?
Business update – Corporates & Markets – what‘s happening on the ground? • Loan demand continues to grow Corporate loan stock development • Loan volume grew by more than EUR 5bn yoy; highest growth (gross, business line view, in EUR bn) in our major markets in Austria, Romania and the Czech Republic
Slide 17: Presentation topics
Presentation topics • Key developments and executive summary • Macroeconomic and business update • Operating trends • Volumes • Revenues and costs • Impairments and asset quality • Capital and wholesale funding • Key takeaways and outlook • Additional information Page 17
Slide 18: Operating trends: net loan stock & growth
Operating trends: net loan stock & growth – YoY 31/12/20 QoQ 30/09/21 Strong net loan growth in 2021 31/12/21 166.1 8.6% • Yoy growth strong and well balanced across all key Group 175.9 2.5% 180.3 business lines: Retail (+9.3%) driven by housing 35.4 5.0% loans, Savings Banks (+6.9%), Corporates (+9
Slide 19: Operating trends: customer deposit stock & growth
Operating trends: customer deposit stock & growth – YoY 31/12/20 QoQ 30/09/21 Strong deposit growth, loan/deposit ratio at 85.6% 31/12/21 191.1 10.2% • Yoy growth due to exceptional inflows of Retail Group 207.5 1.5% 210.5 (+11.2%) as well as Corporate deposits (+14.1%); 42.1 7.9% Savings Banks also
Slide 20: Operating trends: NII and NIM
Operating trends: NII and NIM – Q4 20 Q3 21 NII growth accelerates on rising rates and volume growth Q4 21 1,186 2.05% • NII up yoy on solid volume growth and improved rate Group 1,221 1.98% 1,306 2.08% environment, primarily in CZ AT/EBOe 156 160 1.44% 1.40% • Qoq increase due to higher CZ interest
Slide 21: Operating trends: operating income
Operating trends: operating income – YoY Q4 20 QoQ Q3 21 5th consecutive record fee performance and NII drive revenues Q4 21 1,869 7.4% • Revenues up yoy, pushed by exceptional fee and Group 1,944 3.2% 2,007 strong NII performance AT/EBOe 283 294 10.3% • Qoq increase attributable to best NII print s
Slide 22: Operating trends: operating expenses
Operating trends: operating expenses – YoY Q4 20 QoQ Q3 21 Costs increase on higher personnel and administrative spend Q4 21 1,097 6.2% • Yoy increase due to higher personnel costs Group 1,038 12.3% 1,165 (employee share programme, bonus accruals); other 192 -4.2% administrative expenses, depreciati
Slide 23: Operating trends: operating result and CIR
Operating trends: operating result and CIR – YoY Q4 20 QoQ Q3 21 Operating result up 17.1% in 2021, CIR improves to 55.6% Q4 21 Operating result YoY & QoQ change Cost/income ratio 772 58.7% Group 906 9.0% -7.2% 53.4% 842 58.1% 90 68.0% AT/EBOe 126 41.2% 1.3% 57.1% 128 59.1% 159 64.5% AT/SB 173 1.5%
Slide 24: Operating trends: risk costs (abs/rel)
Operating trends: risk costs (abs/rel*) – Q4 20 Q3 21 Benign risk environment throughout 2021 – risk costs of 9 bps Q4 21 Group -31 425 -0.07% 1.00% • Steep decline of yoy risk costs attributable to few 107 0.24% defaults, absence of special UTP assessment and 39 0.44% updated management overlays (C
Slide 25: Operating trends: asset quality – NPL ratio and coverage
Operating trends: asset quality – NPL ratio and coverage 31/12/20 30/09/21 NPL ratio at historic low, coverage ratio at comfortable level 31/12/21 2.7% 88.6% 92.7% • NPL ratio improves to 2.4% and NPL coverage Group 2.4% 2.4% 90.9% increases to 90.9% on decreasing yoy NPL stock 1.6% 63.4% 63.6% and
Slide 26: Operating trends: other result
Operating trends: other result – Q4 20 Q3 21 Other result deteriorated in 2021 on valuation effects Q4 21 -58 • Yoy deterioration attributable selling losses from Group -91 -83 securities in Q4 21 AT/EBOe -1 4 • Other result improves qoq due to breakage costs for -10 early loan repayment in previous
Slide 27: Operating trends: net result
Operating trends: net result – Q4 20 Q3 21 Net profit increases more than twofold in 2021 Q4 21 146 • Yoy profitability up on lower risk costs and improved Group 533 472 operating performance 48 • Minor qoq decline attributable to higher risk costs AT/EBOe 87 80 and increased operating costs (employ
Slide 28: Presentation topics
Presentation topics • Key developments and executive summary • Macroeconomic and business update • Operating trends • Volumes • Revenues and costs • Impairments and asset quality • Wholesale funding and capital • Key takeaways and outlook • Additional information Page 28
Slide 29: Wholesale funding and capital: debt vs interbank funding
Wholesale funding and capital: debt vs interbank funding – Stable wholesale funding reliance, as customer deposits grow strongly Debt securities issued Interbank deposits in EUR bn in EUR bn -4.1% -9.9% 33.5 32.1 Sub debt 35.4 Overnight deposits 30.7 4.9 Senior non-preferred bonds Term deposits 5.4
Slide 30: Wholesale funding and capital: LT funding
Wholesale funding and capital: LT funding – Stable LT funding needs in 2022 with recurrence of covered bond funding Maturity profile of debt in EUR bn 5.2 3.5 3.6 2.9 2.4 2.4 2.1 1.4 1.2 0.6 0.7 0.1 0.0 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034+ Senior unsec. bonds Senior non-
Slide 31: Wholesale funding and capital: MREL update
Wholesale funding and capital: MREL update – All resolution groups successfully completed their inaugural MREL issuances MREL resolution groups (December 2021) Preliminary 3year MREL issuance plan (avg. p.a.) in EUR bn in EUR m 191 ~1,000 – 2,000 83 66 ~400-500 ~300-400 ~300-400 22 23 18 8 ~100-200
Slide 32: Wholesale funding and capital: CET1 ratio waterfall
Wholesale funding and capital: CET1 ratio waterfall – Fully loaded CET1 ratio advances to 14.5% at YE2021 in % 0.27 -0.11 1.60 -0.66 -0.18 0.13 0.12 14.50 14.20 -1.15 0.27 CET1 Target 13.5% Reg. Min CET1 10.2% (MDA threshold; P2G excluded) YE’20 ∆ RWA Profit Dividend Intangibles Risk Costs OCI Minor
Slide 33: Wholesale funding and capital: capital & RWA
Wholesale funding and capital: capital & RWA – Risk-weighted assets grow by 7.9% in 2021, in line with loan growth Basel 3 capital Risk-weighted assets Basel 3 capital ratios in EUR bn in EUR bn 19.7% 19.4% 19.1% 18.7% 18.6% 23.8 23.9 24.8 127.1 128.5 129.6 16.5% 23.6 16.3% 23.4 16.2% 121.0 16.0% 15
Slide 34: Wholesale funding and capital: uses of (excess) capital
Wholesale funding and capital: uses of (excess) capital – Organic capital generation supports business growth and capital return CET1 requirement (SREP) • Priorities for the use of (excess) capital 11.16% Pillar 2 CET 1 guidance 1.00% 1. Funding organic business growth Pillar 2 CET 1 requirement 0.9
Slide 35: Presentation topics
Presentation topics • Key developments and executive summary • Macroeconomic and business update • Operating trends • Volumes • Revenues and costs • Impairments and asset quality • Capital and wholesale funding • Key takeaways and outlook • Additional information Page 35
Slide 36: Conclusion – Key takeaways and outlook for 2022
Conclusion – Key takeaways and outlook for 2022 2021 key takeaways 2022 outlook • 2021 was a year of broad-based macro recovery • Real GDP to rise ~3-5% in 2022 in Erste Group’s core Operating • Loan growth accelerated to +8.6% in 2021 CEE markets and Austria environment • Deposit growth came in at
Slide 37: Presentation topics
Presentation topics • Key developments and executive summary • Macroeconomic and business update • Operating trends • Volumes • Revenues and costs • Impairments and asset quality • Capital and wholesale funding • Key takeaways and outlook • Additional information Page 37
Slide 38: 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 in 7 Customers: 4.5m Customers: 2.1m geographically connected countries Employees: 9,711 Employees: 3,644 CZ Bra
Slide 39: Additional information: strategy
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 Acting as Prosperi
Slide 40: Additional information: market shares
Additional information: market shares – 31/12/20 30/09/21 Commanding market shares across the CEE region 31/12/21 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 21.1% 22.6% 22.0% 24.4% AT 21.2% AT 23.4% AT 23.0% AT 25.6% 23.9% 21.2% 25.6% 12.2% CZ 24.4% CZ 21.2% CZ 26.6%
Slide 41: Additional information: income statement
Additional information: income statement – Year-to-date and quarterly view Year-to-date view Quarterly view in EUR million 2020 2021 YOY-Δ Q4 20 Q3 21 Q4 21 YOY-Δ QOQ-Δ Net interest income 4,774.8 4,975.7 4.2% 1,185.6 1,220.8 1,306.2 10.2% 7.0% Interest income 5,107.9 5,108.9 0.0% 1,225.0 1,274.8 1,
Slide 42: Additional information: group balance sheet (assets)
Additional information: group balance sheet – Assets Quarterly data Change in EUR million Dec 20 Mar 21 Jun 21 Sep 21 Dec 21 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 35,839 53,954 48,421 47,125 45,495 26.9% 26.9% -3.5% Financial assets held for trading 6,356 6,464 6,088 6,244 6,473 1.8% 1.8% 3.7% De
Slide 43: Additional information: group balance sheet (liabilities and equity)
Additional information: group balance sheet – Liabilities and equity Quarterly data Change in EUR million Dec 20 Mar 21 Jun 21 Sep 21 Dec 21 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities held for trading 2,625 2,192 2,412 2,193 2,474 -5.8% -5.8% 12.8% Derivatives 2,037 1,631 1,392 1,364 1,624 -20.3% -20.3
Slide 44: Additional information: regulatory capital position/requirement (SREP)
Additional information: regulatory capital position/requirement (SREP) – Capital requirements (SREP) for 2022 slightly up on higher CCyB Erste Group Consolidated Erste Group Unconsolidated ECB Capital Relief Fully loaded Fully loaded Measures 1) Fully loaded Fully loaded 2019 2020 Q4 2021 Q4 2021 YE
Slide 45: Additional information: Multiple point of entry resolution strategy
Additional information: Multiple point of entry resolution strategy – MREL compliance at Point of Entry Levels (bail-in) Ownership Structure Resolution Groups Erste Group Bank AG 100% 69.3%** & Savings Banks + other subs 100% 100%* 99.9% Banca Česká Slovenská Erste Bank Erste Bank Comercială spořite
Slide 46: Additional information: MREL details Austrian resolution group
Additional information: MREL details Austrian resolution group: MREL requirement based on RWA fulfilled MREL capacity based on TREA (RWA)* Key take-aways in % • Erste Group’s setup is based on a multiple point of entry 33.68% (MPE) resolution approach Interim MREL Target**: • In Q2 2021, Erste Group
Slide 47: 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) 179.8 184.2 179.8 184.2 184.2 171.8 176.1 171.8 176.1 179.8 170.0 4.3 6.1 5.3 4.4
Slide 48: Additional information: financial and trading assets
Additional information: financial and trading assets* – LCR at excellent 177.3% By geography By debtor type Liquidity buffer +16.1% in EUR bn in EUR bn 82.5 50.9 28.9% 100% 78.6 8.0% 7.5% 7.2% 43.8 43.8 25.3% 27.7% 12.1 9.2% 9.1% 9.1% 64.6 10.6 10.6 0.7 5.2 0.7 0.7 3.7 3.7 5.9 6.0 6.0 6.3 82.8% 83.4
Slide 49: Additional information: Ratings – Composition of issuer ratings
Additional information: Ratings – Composition of Erste Group Bank AG’s issuer ratings Macro Profile SACP - Stand-Alone Credit Profile VR - Viability Rating Strong a (Individual Rating ) + Financial Profile ▲ a Asset Risk baa2 Anchor bbb+ Capital baa1 Business Position Strong +1 Profitability baa3 Ca
Slide 50: Additional information: shareholder structure
Additional information: shareholder structure – Total number of shares: 429,800,000 By investor By region Erste Foundation direct Unidentified * Unidentified * 5.92% Sparkassen Beteiligungs 12.79% Gmbh & Co KG 12.79% Identified Trading ** Identified Trading ** 10.60% Austria 1.09% Rest of world Blac
Slide 51: Additional information: segment structure
Additional information: segment structure – Geographical/operating and business segment view Erste Group – Geographical/operating segments Austria Central and Eastern Europe Other EBOe & Savings Other Czech • Holding ALM Slovakia Romania Hungary Croatia Serbia Subsidiaries Banks Austria Republic • H
Slide 52: Investor relations details
Investor relations details • Erste Group Bank AG, Am Belvedere 1, 1100 Vienna 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 App for iPad, iPhone and Android http://w