BAWAG Group AG · VIE:BG
BAWAG — Q3 2021 Earnings Presentation
34 slides from BAWAG's earnings presentation, Oct 28, 2021
Slide 1: BAWAG Group Q3 2021 Earnings
BAWAG Group Q3 2021 Earnings 28 October 2021 28 October August 20212021 | BAWAG | BAWAG Group Group AG AG
Slide 2: Agenda
Agenda 1 Q3 2021 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 28 October 2021 | BAWAG Group AG 2
Slide 3: Highlights Q3 2021
Highlights Q3 2021 • Net Profit of €123m in Q3 ’21, EPS of €1.38, and RoTCE of 16.4% EARNINGS • Pre-provision profit of €187m and CIR at 39.2% • Risk cost of €22m … no ECL reserves released • Average customer loans +4% vPQ and +7% vPY BALANCE SHEET • CET1 ratio (post dividend) of 14.7%, up 70bps vYE
Slide 4: Financial performance
Financial performance P&L | € millions Q3 ‘21 vPY vPQ YTD ‘21 vPY Balance Sheet & Capital | € millions Q3 ‘21 Q2 ‘21 vPQ vYE Core revenues 306 3% 1% 905 4% Total assets 54,370 54,132 - 2% Operating income 307 6% 2% 911 5% Interest-bearing assets (average) 41,337 40,701 2% 1% Operating expenses (120)
Slide 5: Capital development … CET1 ratio (FL)
Capital development … CET1 ratio (FL) Dividend distribution ~+60bps ‒ €158m dividends accrued based on dividend policy for YTD ’21 earnings (50% of net profit) (Q3 ’21 gross capital generation) 15.5% ‒ €460m dividend (€5.17 per share) relating to 2019/2020 profits distributed in 2021 due to ECB divi
Slide 6: Retail & SME
Retail & SME Financial performance Customer development € millions Q3 ‘21 Q3 ‘20 vPY Q2 ‘21 vPQ € millions Q3 ‘21 Q3 ‘20 vPY Q2 ‘21 vPQ Core revenues 229.8 219.6 5% 225.8 2% Housing loans 15,602 14,042 11% 15,181 3% Net interest income 165.4 165.3 - 163.5 1% Consumer and SME 5,204 5,027 4% 5,069 3%
Slide 7: Corporates, Real Estate & Public Sector
Corporates, Real Estate & Public Sector Financial performance Customer development € millions Q3 ‘21 Q3 ‘20 vPY Q2 ‘21 vPQ € millions Q3 ‘21 Q3 ‘20 vPY Q2 ‘21 vPQ Core revenues 73.1 68.6 7% 70.2 4% Corporates 4,118 4,107 - 3,586 15% Net interest income 64.8 59.3 9% 61.7 5% Real Estate 5,569 4,986 12
Slide 8: Agenda
Agenda 1 Q3 2021 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 28 October 2021 | BAWAG Group AG 8
Slide 9: P&L & key ratios
P&L & key ratios P&L | € millions Q3 ‘21 Q3 ‘20 vPY vPQ Key ratios Q3 ‘21 Q3 ‘20 vPY vPQ Net interest income 233.8 234.6 - 1% Return on Common Equity 13.9% 9.3% 4.6pts 0.2pts Net commission income 71.7 62.8 14% 2% Return on Tangible Common Equity 16.4% 11.1% 5.3pts 0.1pts Core revenues 305.5 297.3 3
Slide 10: Balance sheet
Balance sheet Balance sheet | € millions Q3 ‘21 Q4 ‘20 Delta Capital & RWA | € millions Q3 ‘21 Q4 ‘20 Delta Customer loans 33,887 32,004 6% Common equity 3,595 3,419 5% Securities and bonds 6,495 7,525 (14%) Tangible common equity 3,059 2,867 7% Credit institutions and cash 12,030 10,921 10% CET1 ca
Slide 11: P&L details – core revenues
P&L details – core revenues Solid core revenues in Q3 ‘21 … NCI continues recovery € million 297.3 297.9 297.3 301.7 305.5 62.8 64.3 70.1 71.7 Net interest income (NII) up 1% vPQ … net interest margin (NIM) at NCI 67.7 2.24% in Q3 ‘21 ‒ Slightly decreasing NIM at 2.24% … continued changing asset mix
Slide 12: P&L details – operating expenses
P&L details – operating expenses Costs targets on track € million Core operating expenses Restructuring charges 144.7 CIR at 39.2% in Q3’21 down (4.0pts) vPY and (0.9pts) vPQ … ~22 125.3 121.8 121.2 120.4 YTD ’21 CIR at 39.9% (down 3.1pts vPY) On track to meet full-year targets … working on measures
Slide 13: P&L details – risk costs
P&L details – risk costs Strong underlying asset quality € million Risk costs / average interest-bearing assets Q3 ‘21 risk costs €22m … risk cost ratio at 21bps 49.7 ‒ Strong asset quality performance … continued improving underlying 45.3 trend ‒ Normal risk cost run-rate in Retail & SME ~€15m 29.3
Slide 14: Details on reserves
Details on reserves Continuing to remain prudent despite improved economic outlook IFRS 9 Migration- Customer Segment Assets*) Non-performing stage 3 loans, in €m 860 885 883 904 871 254 254 254 254 Stage 3 2% 2% 2% 2% 2% 254 City of Linz (CoL) 7% 6% 6% 10% 8% Stage 2 605 631 629 650 617 Customer NP
Slide 15: 2021 Forecast
2021 Forecast 2021 FORECAST (in € million) Net interest income ~930 Net commission income ~280 RoTCE ~15% FY 2021 reporting Core revenues ~1,210 1 March 2022 CIR ~40% Other income ~10 Operating Income ~1,220 Profit Annual General Meeting ~€575m 28 March 2022 Operating expenses ~(485) before tax Pre-
Slide 16: Agenda
Agenda 1 Q3 2021 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 28 October 2021 | BAWAG Group AG 16
Slide 17: Retail & SME
Retail & SME Portfolio overview of €20.8b of customer loans and leases Payment deferral overview Assets NPL ratio Reserve development Reserve ratio Payment holiday average time paying ratio Q3 '21 (expired on payments (expired deferrals, (€bn) Q4 '19 Q4 '20 Q3 '21 Q4 '19 Q4 '20 Q3 '21 Q4 '19 Q4 '20
Slide 18: Corporates, Real Estate & Public Sector
Corporates, Real Estate & Public Sector CORPORATES* REAL ESTATE PUBLIC SECTOR* By industry By underlying Customer types Services Residential 12% 18% Food&Beverage 25% Mixed 5% Pharmaceuticals 33% Office €4.2 9% €5.6 43% €4.3 B-2-C Industrial/Logistics billion 17% billion billion 57% Engineeing & B-2
Slide 19: Investment book and Cash
Investment book and Cash Q2 ‘21 Q3 ‘21 Cash & Cash equivalent 8% 8% €13.1b -€ 1.1b €12.0b in % in % As of Q3 ‘21, cash and cash equivalents (mainly money at central banks) at €12.0b ... TLTRO III of €6.4b Cash Cash equivalent 92% 92% Cash down €1.1b vPQ due to funding of loan growth Investment book
Slide 20: Regulatory Capital
Regulatory Capital Strong capital position CET1 Capital and ratios € billion dividend CET1 capital (post dividend) Capital distribution plans: CET1 ratio (post dividend) 3.4 ‒ €158m dividends accrued based on dividend policy for YTD ’21 3.3 3.3 earnings 3.1 3.1 0.5 0.5 0.1 0.3 0.5 ‒ €460m dividend r
Slide 21: Capital distribution policy
Capital distribution policy ~€2.6 billion of capital available thru 2025 Additional capital Dividend policy Share Buyback 2022 thru 2025 Organic growth, M&A, 1 minority and/or platform 50% for 2021 >12.25% Target CET1 % investments 55% for 2022-2025 2 Share buybacks and/or special dividends Regulato
Slide 22: City of Linz overview
City of Linz overview Scenario Analysis for potential outcomes of interim decision of Supreme Court Receivable of €254 million on balance sheet as of 30 September 2021 Valid contract Invalid contract Receivable fully provisioned in CET1 through prudential filter in 2020, i.e. no impact on capital re
Slide 23: Agenda
Agenda 1 Q3 2021 Highlights and segment performance 2 Detailed financials 3 Supplemental information 4 Group Overview & Strategy 28 October 2021 | BAWAG Group AG 23
Slide 24: BAWAG Group franchise
BAWAG Group franchise FRANCHISE Multi-brand and multi-channel commercial bank with over 2.3 million customers across our core markets DELIVERING Mid-teens Return on Tangible Common Equity (RoTCE) ~14% versus sector of ~5% since 2012 RESULTS BEST-IN-CLASS Cost-income ratio (CIR) ~40% driven by simpli
Slide 25: BAWAG transformation over the past decade
BAWAG transformation over the past decade CAGR >10% PRINCIPLES OF OUR TRANSFORMATION 711 ~735 653 653 Pre-provision profit 592 526 FIRM CULTURE: Our company values and culture are defined by accountability, (€ million) 429 502 meritocracy, and embracing change 323 279 2.35 2.32 2.24 2.30 2.29 ~2.25
Slide 26: The BAWAG culture
The BAWAG culture Leadership & Embracing Change Accountability, Meritocracy & Inclusion • Actions speak louder than words • Our greatest asset is our human capital • We value integrity, character and work ethic • Investing in developing and empowering our people • Experienced Senior Leadership Team
Slide 27: Strategy focused on execution and continuous improvement
Strategy focused on execution and continuous improvement Our focus is on Austria, Germany, Switzerland, Netherlands (DACH/NL region), Western Europe and United States GROWTH IN 1 CORE MARKETS Criteria for core markets: Fiscal position (single A or better sovereign rating), legal infrastructure, and
Slide 28: M&A … Strategic Optionality
M&A … Strategic Optionality M&A HISTORY SINCE 2015 M&A TARGETS & UNDERWRITING CRITERIA MARKETS CUSTOMER FRANCHISE EFFICIENCY 11 total acquisitions: Closed 9 deals ✓ with 2 new deals signed in 2021 • Focus on core markets … • Focus towards retail • Operational turn-around DACH/NL region, Western • Bo
Slide 29: ESG as a part of proactive risk management
ESG as a part of proactive risk management Overview: Operationalizing ESG with a low ESG risk starting point LENDING PORTFOLIO REDUCING OUR OWN EMISSIONS • Low exposure to industries with significant ESG risk • Several initiatives in the past to reduce own scope 1 and scope 2 CO2 emissions …. near 1
Slide 30: Targets & capital distribution
Targets & capital distribution MEDIUM TERM ESG TARGETS CAPITAL DISTRIBUTION RETURN TARGETS 2025 RoTCE >17% Dividends ~€1.4 billion CIR <38% CO2 >50% emission reduction (own scope 1 & 2 vs. 2020) FINANCIAL TARGETS 2025 Share buyback >12.25% CET1 % Women quota 2022 €500 million (Supervisory Board & Se
Slide 31: ~10% annual EPS growth through 2025
~10% annual EPS growth through 2025 2021 2025 2021-2025 2012 Forecast Plan CAGR Growing high quality earnings in € million Net interest income 582 ~930 >1,000 2% • Net interest income +2% p.a. mainly from retail loan growth • Net commission +3% p.a. mainly from advisory business Net commission incom
Slide 32: Investor relations calendar
Investor relations calendar UPCOMING ROADSHOWS, CONFERENCES AND FINANCIAL EVENTS SHAREHOLDER STRUCTURE 28 October Virtual Q3 2021 roadshow Management Board 2.6 GoldenTree 22 November Citi Pan-Asia conference 12.1 87.9% T. Rowe Price Free Float 24 November Deutsches Eigenkapitalforum 5.6 Wellington 5
Slide 33: Important Disclaimer
IMPORTANT DISCLAIMER: This presentation is prepared solely for the purpose of providing general information about BAWAG Group, Wiedner Gürtel 11, 1100 Wien. The information does not constitute investment or other advice or any solicitation to participate in investment business. This presentation doe
Slide 34: Definitions
Definitions B/S leverage Reserve ratio Total assets / IFRS equity Total reserves / Asset volume of customer segments excluding public lending Book value per share Return on common equity (RoCE) Common equity (excluding AT1 capital and dividends) / number of shares outstanding Net profit / average IF