Slide 1: Erste Group investor presentation Q3 2015 results
Erste Group investor presentation Q3 2015 results 6 November 2015 Erste Group posts net profit of EUR 276.9m in Q3 15 supported by loan growth and improving asset quality Andreas Treichl, CEO Erste Group Gernot Mittendorfer, CFO Erste Group Andreas Gottschling, 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 • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 3
Slide 4: Executive summary – Group income statement performance
Executive summary – Group income statement performance QoQ net profit reconciliation (EUR m) YoY net profit reconciliation (EUR m) 277 84 176 764 261 19 46 7 61 132 1.296 66 1.081 27 69 -1.425 Q2 15 Operating Operating Risk costs Other Taxes on Minorities Q3 15 1-9 14 Operating Operating Risk costs
Slide 5: Executive summary – Key income statement data
Executive summary – Key income statement data Net interest income & margin Operating result & cost/income ratio Cost of risk in EUR m in EUR m in EUR m 2.64% 2.58% 2.59% -4.1% -67.6% 2.57% 3,370 3,324 55.5% 56.5% 2,334 2,238 1,599 0.58% 0.44% 1,113 1,112 762 736 518 191 144 1-9 14 1-9 15 Q2 15 Q3 15
Slide 6: 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) 201,171 48 201,171 737 994 519 324 3,687 2,857 2,222 196,287 3,262 942 2,611 196,287 1,382 31/12/14 Cash Trading, Loans to Net loans Intangibles Other 30/09/
Slide 7: Executive summary – Key balance sheet data
Executive summary – 31/12/14 Key balance sheet data 30/09/15 Loan/deposit & loan/TA ratio Net loans & credit RWA NPL coverage ratio & NPL ratio in EUR bn +3.1% 98.6% 99.3% 68.9% 69.2% 120.8 124.5 61.6% 61.9% 87.1 85.8 8.5% 7.4% Loan/deposit ratio Loans/total assets Net loans Credit RWA NPL coverage
Slide 8: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 8
Slide 9: Business environment – Solid domestic demand expected to drive economic growth in 2015 & 2016
2015 Business environment – 2016 Solid domestic demand expected to drive economic growth in 2015 & 2016 Real GDP growth (in %) Dom. demand contribution* (in %) Net export contribution* (in %) Consumer price inflation (ave, in %) 4.4 3.7 2.1 4.3 3.5 3.0 2.8 3.3 1.5 1.3 1.4 3.2 3.2 3.5 1.0 0.8 2.5 2.8
Slide 10: Business environment – Slightly rising long-term interest rates in Q3 15, yoy down
Business environment – 3M Interbank 10YR GOV Slightly rising long-term interest rates in Q3 15, yoy down Austria Czech Republic Romania 4.81% 1.78% 4.10% 1.66% 1.20% 3.58% 3.81% 1.15% 1.00% 0.76% 0.90% 0.68% 2.45% 1.12% 1.14% 0.25% 0.12% -0.01% -0.03% 1.81% 0.36% 0.34% 0.31% 0.31% 1-9 14 1-9 15 Q2 1
Slide 11: Business environment – Limited currency volatility in CEE
Business environment – Limited currency volatility in CEE EUR/CZK EUR/RON -0.1% -1.1% -1.9% -0.1% -0.3% -1.4% 27.5 27.5 27.4 27.1 27.7 27.2 4.45 4.44 4.44 4.43 4.48 4.42 1-9 14 1-9 15 Q2 15 Q3 15 31/12/14 30/09/15 1-9 14 1-9 15 Q2 15 Q3 15 31/12/14 30/09/15 • Czech National Bank maintains exchange r
Slide 12: Business environment – Market shares: mostly stable, RO corporate impacted by NPL sales
30/09/14 Business environment – 30/06/15 Market shares: mostly stable, RO corporate impacted by NPL sales 30/09/15 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 19.1% 17.7% 18.1% 20.1% AT 19.4% AT 18.6% AT 18.4% AT 19.3% 23.4% 18.8% 26.1% 10.6% CZ 22.8% CZ 18.6% CZ 25.5
Slide 13: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 13
Slide 14: Performing loan stock & growth – Performing loan volume increases by 4% yoy
YoY 30/09/14 Business performance: performing loan stock & growth – QoQ 30/06/15 Performing loan volume increases by 4% yoy, up 1% qoq 30/09/15 Business line view (BL) Geographic view (geo) 116.9 27.6 4.0% AT/EBOe 28.6 5.1% Group 120.3 1.4% 121.5 1.0% 29.0 11.0 43.9 AT/OA 11.3 2.0% Retail 45.4 4.7%
Slide 15: Customer deposit stock & growth – Deposits grow by 4.5% yoy
YoY 30/09/14 Business performance: customer deposit stock & growth – QoQ 30/06/15 Deposits grow by 4.5% yoy, moderately up qoq 30/09/15 Business line view (BL) Geographic view (geo) 120.1 29.7 4.5% AT/EBOe 29.9 1.1% Group 124.5 0.3% 125.4 0.7% 30.0 4.1 -7.1% 63.2 4.5% AT/OA 4.0 Retail 65.8 3.9 -3.3%
Slide 16: NII and NIM – Stable qoq NII in Q3 15 supported by loan growth
Business performance: NII and NIM – Q3 14 Q2 15 Stable qoq NII in Q3 15 supported by loan growth Q3 15 Business line view (BL) Geographic view (geo) 1.126 2.68% 152 1.73% Group 1.113 2.59% AT/EBOe 159 1.86% 1.112 2.57% 160 1.83% 550 4.53% 104 1.40% Retail 552 4.43% AT/OA 105 1.45% 558 4.44% 100 1.38
Slide 17: Operating income – Q3 15 stable yoy, slightly down qoq
Q3 14 Business performance: operating income – Q2 15 Q3 15 operating income stable yoy, slightly down qoq Q3 15 Business line view (BL) Geographic view (geo) Highlights 1,696 1,696 • Qoq decline due to net trading result and dividend Group 1,710 Group 1,710 income in Q3 15 while NII stabilises; yoy
Slide 18: Operating expenses – Q3 15 stable qoq despite EU deposit insurance contributions
Q3 14 Business performance: operating expenses – Q2 15 Q3 15 stable qoq despite EU deposit insurance contributions Q3 15 Business line view (BL) Geographic view (geo) Highlights 887 887 • Qoq costs almost stable despite booking of Group 949 Group 949 956 956 EU deposit insurance contributions (Austr
Slide 19: Operating result and CIR – Operating result decreases by 3.4% qoq
Q3 14 Business performance: operating result and CIR – Q2 15 Operating result decreases by 3.4% qoq Q3 15 Business line view (BL) Geographic view (geo) 808 52.3% 808 52.3% Group 762 55.5% Group 762 55.5% 736 56.5% 736 56.5% 383 54.4% 102 60.2% Retail 367 55.7% AT/EBOe 107 58.8% 385 54.8% 103 60.9% 1
Slide 20: Risk costs – Risk costs decline further in Q3 15 to 44bps
Q3 14 Business performance: risk costs (abs/rel*) – Q2 15 Risk costs decline further in Q3 15 to 44bps Q3 15 Business line view (BL) Geographic view (geo) 879 2.75% 10 0.14% Group 191 0.58% AT/EBOe -8 -0.11% 144 0.44% 15 0.20% 70 2.23% 398 3.40% AT/OA Retail 113 0.95% 0 7 -0.01% 0.20% 81 0.67% 36 0.
Slide 21: Non-performing loans and NPL ratio – NPL ratio improves to 7.4%
30/09/14 Business performance: non-performing loans and NPL ratio – 30/06/15 NPL ratio improves to 7.4%, reaches 5-year low 30/09/15 Business line view (BL) Geographic view (geo) 11,422 8.9% 1,002 3.5% Group 10,102 7.7% AT/EBOe 942 3.2% 9,717 7.4% 895 3.0% 1,431 11.5% 3,291 7.0% AT/OA 1,445 11.3% Re
Slide 22: Allowances for loans and NPL coverage – coverage up to 69.2%
30/09/14 Business performance: allowances for loans and NPL coverage – 30/06/15 NPL coverage excluding collateral edges up to 7-year high at 69.2% 30/09/15 Business line view (BL) Geographic view (geo) 7,864 68.8% 682 68.1% Group 6,887 68.2% AT/EBOe 583 61.9% 6,721 69.2% 561 62.7% 829 57.9% 2,578 78
Slide 23: Other result – burdened by CHF conversion in HR
Q3 14 Business performance: other result – Q2 15 Q3 15 other result burdened by CHF conversion in HR Q3 15 Business line view Geographic view Highlights -344 -344 • Yoy improvement in group other result mainly due Group -22 Group -22 to lower one-offs in Q3 15 (CHF conversion in HR -154 -154 in Q3 1
Slide 24: Net result – up yoy and qoq on lower risk costs, one-offs
Q3 14 Business performance: net result – Q2 15 Q3 15 net result up yoy and qoq on lower risk costs, one-offs Q3 15 Net result by business line Net result by geography Highlights -554 -554 • Continued turn-around in profitability driven by Group 261 Group 261 lower risk costs and significantly reduce
Slide 25: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 25
Slide 26: Assets and liabilities: YTD overview – Loan/deposit ratio stable at 99.3%
Assets and liabilities: YTD overview – Loan/deposit ratio stable at 99.3% (Dec 14: 98.6%) Assets (EUR bn) Assets (in %) Liabilities & equity (EUR bn) Liabilities & equity (in %) 196.3 201.2 196.3 201.2 100% 6.4 3.2% 100% 7.8 11.1 4.0% 5.5% 7.7 3.9% 14.8 17.4 7.5% 8.7% 50.1 47.9 25.5% 23.8% 7.4 8.4 3
Slide 27: Customer loans by country of risk – Performing loans up 3.3% yoy
Assets and liabilities: customer loans by country of risk – Performing loans up 3.3% yoy, NPLs down 14.9% Net customer loans (EUR bn) Performing loans (EUR bn) Non-performing loans (EUR bn) +3.3% +4.0% -14.9% 124.5 121.5 11.4 120.5 120.8 116.9 117.4 10.9 3.2 3.2 0.4 3.2 3.2 5.9 3.1 3.2 5.6 0.5 0.7 0
Slide 28: Allowances for customer loans – Decrease due to continued NPL reduction
Assets and liabilities: allowances for customer loans – Decrease in allowances mainly due to continued NPL reduction in Q3 15 Quarterly development (EUR m) Highlights • Low gross NPL inflows result in lower allocations and lower risk costs in Q3 15 • Moderate level of NPL sales in Q3 15 675 • P&L un
Slide 29: Financial and trading assets – LCR at comfortable 120%
Assets and liabilities: financial and trading assets * – LCR at comfortable 120% By geography (EUR bn) By debtor type Liquidity buffer (EUR bn) -2.9% 43.4 43.5 42.2 100% 24.8% 24.5% 11.2% 11.6% 10.1% 8.2 9.1 21.5% 8.7 9.5% 12.1% 11.2% 20.3% 2.1 2.1 1.3 1.2 1.3 1.5 5.0 4.8 4.5 45.4 45.7 40.1 39.8 6.3
Slide 30: Customer deposit funding – Customer deposits grow by 2.3% ytd
Assets and liabilities: customer deposit funding – Customer deposits grow by 2.3% ytd, up 4.5% yoy By customer type By product type Highlights • Erste Group benefits from excellent funding +4.5% position in retail segment 125.4 125.4 • Decline in corporate deposits ytd driven by 120.1 122.6 120.1 12
Slide 31: Debt vs interbank funding – Stable wholesale funding base
Assets and liabilities: debt vs interbank funding – Stable wholesale funding base Debt securities issued (EUR bn) Interbank deposits (EUR bn) -1.9% +5.7% 31.2 31.1 30.6 17.4 Sub debt 16.5 4.0 4.5 Overnight deposits 5.4 Suppl. capital 14.8 3.1 1.1 0.4 0.9 Term deposits 0.4 0.4 Hybrid issues 5.4 1.9 0
Slide 32: LT funding – Limited LT funding needs
Assets and liabilities: LT funding – Limited LT funding needs Maturity profile of debt (EUR bn) 4.2 2.7 2.6 2.7 2.7 2.6 1.9 1.0 1.0 1.0 1.0 0.7 0.4 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027+ Debt CEE Capital exc Tier 1 Covered bonds Senior unsec. bonds • In September Erste Gro
Slide 33: Capital position – Clean B3FL CET1 ratio at 11.6%
Assets and liabilities: capital position – Clean B3FL CET1 ratio at 11.6% Basel 3 capital (phased-in) Risk-weighted assets (phased-in) Basel 3 capital ratios (phased-in) 16.8% 16.8% 15.7% 15.8% 15.7% 16.8 16.9 101.8 15.7 15.8 16.1 100.6 100.6 100.3 100.4 0.0 0.0 0.0 0.0 0.0 10.7 2.7 3.2 10.8 3.4 3.6
Slide 34: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 34
Slide 35: Conclusion – Outlook
Conclusion – Outlook • Operating environment anticipated to be conducive to credit expansion • Real GDP growth of between 2-4% expected in 2015 in all major CEE markets, except Croatia • Real GDP growth to be driven by solid domestic demand • Real GDP growth in Austria expected at below 1% in 2015 •
Slide 36: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 36
Slide 37: Additional information: new segmentation – Business line and geographic view
Additional information: new segmentation – Business line and geographic view Erste Group – Business segments Group ALM & Savings Large Commercial Other Group Intragroup Corporate Retail SME Local CC Banks Corporates Real Estate Corporate Markets Elimination Center (ALM&LCC) (AT/SB) (LC) (CRE) (OC) (
Slide 38: Additional information: income statement – Year-to-date and quarterly view
Additional information: income statement – Year-to-date and quarterly view Year-to-date view Quarterly view in EUR million 1-9 14 1-9 15 YOY-Δ Q3 14 Q2 15 Q3 15 YOY-Δ QOQ-Δ Net interest income 3,369.6 3,324.3 -1.3% 1,126.0 1,113.4 1,112.3 -1.2% -0.1% Net fee and commission income 1,372.7 1,372.6 0.0
Slide 39: Additional information: group balance sheet – Assets
Additional information: group balance sheet – Assets Quarterly data Change in EUR million Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 8,010 7,835 8,223 7,011 11,097 38.5% 41.6% 58.3% Financial assets - held for trading 11,641 10,531 11,366 9,022 8,805 -24.4% -16.4% -2
Slide 40: Additional information: group balance sheet – Liabilities and equity
Additional information: group balance sheet – Liabilities and equity Quarterly data Change in EUR million Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities - held for trading 8,488 7,746 8,988 6,632 6,364 -25.0% -17.8% -4.0% Derivatives 7,563 7,188 8,163 5,875 5,654 -25.2% -
Slide 41: 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) 128.3 128.3 130.6 130.4 131.2 128.3 128.3 130.6 130.4 131.2 130.6 130.4 131.2 128.
Slide 42: Additional information: footprint – Customer banking in Austria and the eastern part of the EU
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 Customers: 4.8m Customers: 2.3m in 7 geographically connected Employees: 10,522 Employees: 4,243 countries CZ Br
Slide 43: Additional information: strategy – A real customer need is the reason for all business
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 Focus on local cur
Slide 44: Additional information: shareholder structure – Total number of shares: 429,800,000
Additional information: shareholder structure – Total number of shares: 429,800,000 By investor By region Uniqa Versicherungsverein Privatstiftung Other Erste Stiftung direct Harbor International Fund 4.1% 2.9% 4.9% 10.3% Erste Stiftung indirect * Continental Europe 9.4% 25.5% Austria 38.2% 9.9% Cai
Slide 45: Investor relations details
Investor relations details • Erste Group Bank AG, Milchgasse 1 (mezzanine floor), 1010 Vienna Fax : +43 (0)5 0100-13112 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