Eurobank S.a. · ATHEX:EUROB
Eurobank — H1 2019 Earnings Presentation
60 slides from Eurobank's earnings presentation, Aug 30, 2019
Slide 1: 1H2019 Results
1H2019 Results 30 August 2019
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 1H2019 results 3 1H2019 results review 11 Asset Quality 18 International operations 26 Appendix I – Acceleration Plan for NPE reduction 35 Appendix II – Supplementary information 40 Appendix III – Macroeconomic update 44 Appendix IV – Glossary 54 Page 2
Slide 4: 1H2019 results
Sy eurobank| 1H2019 results | Page 3
Slide 5: 2019 Transformational Plan - Execution timetable
2019 Transformational Plan - Execution timetable Action Timetable Merger with Grivalia €2bn mortgage NPEs Binding agreement with Pimco securitization (Pillar) SRT1 approval Exclusivity agreement with Pimco €7.5bn multi-asset Binding agreement with Pimco September securitization (Cairo) SRT1 approval
Slide 6: 1H19 results
1H19 results Highlights Key financials €m 1H19 1H18 Δ(%) 2Q19 1Q19 Δ(%) 1 Net profit1 €90m in 1H19; €63m in 2Q19 Net interest income 684.8 710.7 (3.6) 342.1 342.7 (0.2) Core pre-provision income (PPI) down 3.4% y-o-y; up 8.9% q-o-q NII down 3.6% y-o-y at €685m; stable q-o-q Commission income3 15
Slide 7: Pre-provision income (PPI)
Pre-provision income (PPI) Core PPI and other income (€ m) Δ PPI (q-o-q, € m) 31 40 14 14 58 Other income 213 214 221 208 191 44 60 265 62 63 68 Int'l 62 (7) 24 205 Greece 151 151 161 140 129 (1) 2Q18 3Q18 4Q18 1Q19 2Q19 PPI per region (€ m) 254 265 244 235 Δ ΝΙΙ 1Q19 PPI 2Q19 PPI Δ other income Δ c
Slide 8: Asset quality
Asset quality NPEs formation1 (€ m) NPEs ratio (%) 40.7% 39.0% 37.0% 36.7% (204) Int'l (110) (115) Greece (1) (199) (205) 32.8% (790bps) (400) 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 Loan loss provisions (€ m) Provisions / NPEs (%) 1.9% 2.0% 1.9% 1.8% 2.0% Cost of Risk2 55.9% 54.5% 53.7% 5
Slide 9: Capital position
Capital position FBL 3 CET1 Phased in CET1 Total CAD 250bps 18.4% 190bps 30bps 15.9% 75bps 13.4% - 13.7% (18bps) (26bps) 1Q19 FLB3 2Q19 result Debt Piraeus Bank Other 2Q19 FLB3 IFRS 9 Other 2Q19 CET1 Tier I & II Total CAD CET1 Securities at Bulgaria CET1 transition transitions FVOCI RWAs 39,750 - -
Slide 10: Funding and liquidity
Funding and liquidity Interbank repos and eurosystem funding (€ bn) Deposits (€ bn) 5.3 5.0 4.4 3.4 15.7 4.9 4.8 13.8 5.9 11.1 5.7 5.9 10.0 5.8 o/w €1.1bn PBB 7.1 41.3 5.1 39.1 39.4 3.2 2.0 1.3 1.3 37.6 36.4 Mar 17 Mar 18 Mar 19 Jun 17 Sep 17 Jun 18 Sep 18 Jun 19 Dec 17 Dec 18 11.8 International 10.
Slide 11: International Operations
International Operations Core PPI (€ m) Net Profit1 (€ m) 68 62 63 62 60 60 40 40 36 31 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 3 Loan loss provisions (€ m) Net Loans and Deposits (€ bn) 1.1% 1.0% 1.1% 1.2% 2.0% Cost of Risk 11.8 33 7.1 19 16 16 4.6 5.2 14 3.6 1.7 1.0 0.9 1.1 0.5 Int'l 4 B
Slide 12: 1H2019 results review
1H2019 results review Page 11
Slide 13: Loans
Loans Gross loans (€ bn) Performing loans (€ bn) 46.8 45.4 45.0 45.0 o/w €0.7bn PBB 43.6 6.3 o/w €0.6bn PBB 6.4 6.4 6.5 International 29.0 28.2 28.4 7.4 27.5 27.5 International 5.7 5.9 6.7 5.4 5.6 Greece 21.0 Greece 20.7 20.6 Business 20.6 Business 20.5 11.3 11.2 11.8 11.9 12.0 Mortgages Mortgages 1
Slide 14: Balance Sheet composition
Balance Sheet composition Assets (€ bn) Liabilities and Equity (€ bn) 62.4 62.4 6.4 Equity 35.8 Net loans and advances to customers • Core 57% Trading & 41.3 other • Time 43% Deposits 14% Securities 7.2 GGBs 52% PP&E, intangibles and other assets 5.8 Other governments ECB 1.3 Derivatives 2.4 bonds O
Slide 15: Spreads & net interest margin
Spreads & net interest margin Lending spreads (Greece, bps)1 Deposit spreads (Greece, bps) Performing 2Q18 3Q18 4Q18 1Q19 2Q19 Corporate 424 410 421 396 392 2Q18 3Q18 4Q18 1Q19 2Q19 Retail 401 379 380 371 371 Consumer 1,022 997 965 967 982 Savings & Sight (50) (50) (49) (51) (52) SBB 533 463 489 468
Slide 16: Net interest income
Net interest income NII breakdown (€ m) NII evolution (q-o-q, € m) Total NII 356 352 353 343 342 o/w Greece 272 266 268 254 248 o/w International 84 86 86 89 94 Loan margin 343 6 342 407 395 397 370 375 0 (4) (1) (1) Bonds & other 57 64 50 65 61 Money market & Repos (27) (33) (26) (27) (27) 1Q19 2Q1
Slide 17: Commission income
Commission income Commission income breakdown (€ m) Commission income per region (€ m) 59bps over assets 94 94 90 90 23 79 17 Lending 79 24 74 74 26 Int’l 17 66 23 66 18 23 15 37 36 Network 23 33 64 Greece 31 70 31 6 Capital Markets 43 16 56 12 Asset Management 51 15 9 5 13 1 Rental & other income 1
Slide 18: Operating expenses
Operating expenses OpEx per region (€ m) OpEx breakdown l-f-l1 (€ m) Greece (2.2%) 436 (0.1%) 436 217 217 226 218 224 32 59 Depreciation 45 47 50 50 53 International 161 139 Administrative 172 170 177 168 172 Greece Staff 244 238 2Q18 3Q18 4Q18 1Q19 2Q19 1H18 1H19 Cost-to-income ratio (%) Headcount
Slide 19: Asset Quality
Sy eurobank| Asset Quality | Page 18
Slide 20: NPE reduction Acceleration plan (FY18-FY21)
NPE reduction Acceleration plan (FY18-FY21) € bn 16.7 (13.3) 0.1 (0.7) 14.3 (1.8) (1.1) 6.4 (6.8) 5.1 (1.3) 3.4 (1.7) 1H19 Piraeus Bank 2H19 FY18 Pillar 1H19 Cairo FY19 FY20 FY21 NPE reduction Bulgaria NPE reduction Group 37.0% 32.8% 15.9% 12.7% 8.8% NPE ratio Note: Estimated group NPE ratios assumi
Slide 21: Δ stock NPEs (€m)
Δ stock NPEs (€m) Δ stock NPEs Group (151) (649) (1,021) (1,319) (2,209) Δ stock NPEs Solo (471) (872) (108) (1,178) (2,254) 366 346 NPE inflows 287 272 219 (326) (308) NPE outflows (384) (401) (366) (107) (80) (148) (114) (93) Cash Payments (245) (67)(86) (243) (113) (26) (169) (139) (8) (119) (229
Slide 22: NPEs formation per segment (Greece)
NPEs formation per segment (Greece) Mortgages (€ m) Consumer (€ m) 315 278 100 22 38 35 38 28 0 7 1 2 (9) (22) (41) (7) (2) (15) (5) (3) (2) (80) (66) (83) (9) (90) (105) (123) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q1
Slide 23: NPEs metrics (Group)
NPEs metrics (Group) 90dpd bridge to NPEs (€ bn) NPEs per region Provisions & Provisions/ Total NPEs NPEs ratio4 collaterals / NPEs NPEs (€ bn) (%) (%) (%) Consumer 1.3 43.5 87.6 97 Mortgages 3.9 30.7 43.4 110 0.4 2.6 14.3 Small Business 3.4 55.9 52.4 107 11.3 Total Retail 8.6 39.5 53.7 100 Corporat
Slide 24: Loans’ stage analysis (Group)
Loans’ stage analysis (Group) Loans’ stage breakdown Provisions stock over NPEs Δ 55.9% 53.7% 53.2% 53.8% 54.5% (€ bn) 2Q18 3Q18 4Q18 1Q19 2Q19 q-o-q Stage 1 20.3 20.3 21.4 21.5 22.4 0.9 Stage 2 7.4 7.3 7.0 7.0 6.9 (0.1) Stage 3 19.0 17.7 16.7 16.5 14.3 (2.2) (NPEs) 1 Total 46.7 45.3 45.0 45.0 43.6
Slide 25: Repossessed Real Estate Portfolio (Greece)
Repossessed Real Estate Portfolio (Greece) Repossessions Real Estate Portfolio1 Sales Pipeline: 108 properties of €28m value already agreed 5,0k properties of €0.6n value 487 104 456 186 190 # Properties # Properties 68 74 93 28 53 73 3 REO Portfolios (1,056 properties) to be disposed 50 Residential
Slide 26: Property Auctions progress
Property Auctions progress Property auctions breakdown Conducted auctions breakdown (1H19) # of 2,579 3,601 1,487 properties 10% 3rd parties 29% acquisitions, 25% 41% 17% 38% 425 properties 34% 65% Acquired by 33% the Bank, 25% 83% 2017 2018 1H19 Suspended/Cancelled Barren Conducted Page 25
Slide 27: International operations
International operations Page 26
Slide 28: International presence
International presence Total Assets (€ bn) 1.3 Net Loans (€ bn) 0.5 Total Assets (€ bn) 1.5 Deposits (€ bn) 1.1 Net Loans (€ bn) 1.0 Deposits (€ bn) 0.9 Branches (#) 80 Total Assets (€ bn) 6.0 Net Loans (€ bn) 1.7 Total Assets (€ bn) 5.4 Net Loans (€ bn) 3.6 Deposits (€ bn) 5.2 Private Banking 8 Dep
Slide 29: Bulgaria P&L
Bulgaria P&L PPI (€ m) OpEx (€ m) 62 24 25 21 21 22 29 30 30 27 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 Loan loss provisions (€ m) Net Profit (€ m) 30 18 18 17 9 8 15 8 8 8 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 Page 28
Slide 30: Bulgaria B/S and Asset quality
Bulgaria B/S and Asset quality Gross Loans (€ m) NPE ratio and Provisions / NPEs 3,779 523 Consumer 2,905 2,919 2,912 2,985 58.2% Provisions / 56.0% 50.6% 52.3% NPEs 379 402 405 423 1053 42.9% Mortgage 876 890 907 918 17.7% 15.1% NPE ratio 2,203 12.2% 11.2% 11.0% Business 1,650 1,627 1,600 1,644 2Q1
Slide 31: Cyprus P&L
Cyprus P&L PPI (€ m) OpEx (€ m) 26 24 23 22 21 9 9 7 7 7 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 Loan loss provisions (€ m) Net Profit (€ m) 20 16 16 15 14 3 3 3 3 3 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 Page 30
Slide 32: Cyprus B/S and Asset quality
Cyprus B/S and Asset quality Gross Loans (€ m) NPE ratio and Provisions / NPEs 1,739 1,769 1,629 1,639 1,632 136 143 124 132 132 Other 79.0% Provisions / 74.3% 65.0% NPEs 62.2% 61.6% 1,505 1,507 1,500 1,603 1,627 Business 5.5% 5.0% 5.5% 5.4% 5.3% NPE ratio 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q1
Slide 33: Serbia P&L
Serbia P&L PPI (€ m) OpEx (€ m) 12 11 12 12 12 8 8 7 7 7 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 Loan loss provisions (€ m) Net Profit (€ m) 20 6 5 3 4 3 2 2 (10) 1 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 Page 32
Slide 34: Serbia B/S and Asset quality
Serbia B/S and Asset quality Gross Loans (€ m) NPE ratio and Provisions / NPEs 1,058 1,079 1,056 1,068 1,031 371 Consumer 59.1% 60.6% 347 363 381 393 57.9% 55.9% Provisions / 54.2% NPEs 154 155 152 150 117 Mortgage 529 541 556 525 558 Business 10.1% 8.5% 7.8% 7.0% 7.5% NPE ratio 2Q18 3Q18 4Q18 1Q19
Slide 35: Key figures – 2Q19
Key figures – 2Q19 Bulgaria Cyprus Serbia Lux Sum Assets 5,352 5,979 1,490 1,324 14,145 Gross loans 3,779 1,769 1,068 469 7,085 Net loans 3,602 1,709 1,024 468 6,803 Balance Sheet (€m) 90dpd Loans 274 60 54 1 389 Balance Sheet NPE loans 415 93 74 1 582 Deposits 4,623 5,203 867 1,115 11,808 Core Inco
Slide 36: Appendix I – Acceleration Plan for NPE reduction
Appendix I – Acceleration Plan for NPE reduction Page 35
Slide 37: Corporate Transformation and Acceleration Plan for NPE reduction
Corporate Transformation and Acceleration Plan for NPE reduction The Corporate Transformation and Acceleration Plan includes: The execution of the NPE reduction plan for 2019 as submitted to the SSM in September 2018 The securitization of circa €7bn of NPEs, the management of which reflects a
Slide 38: Step 1: Cairo Securitization
Step 1: Cairo Securitization SPV (L.3156/03) (As of June-19) Assets Liabilities & Equity €62.4bn €62.4bn Liabilities Assets Other assets (incl. Equity Performing Loans Class A and DTC) (Senior) Cairo to be Step 1 managed by Liabilities independent Class B1 Class B2 servicer (Mezz.) (Mezz.) Other NPE
Slide 39: Step 2: Hive-down of core banking operations
Step 2: Hive-down of core banking operations Structure after Step 1 Structure after Step 2 Shareholders Shareholders Eurobank Ergasias Listed in ASE, becomes HoldCo Eurobank Ergasias Hive-down 100% Assets Liabilities & Step 2 DTC Equity New Eurobank Senior Notes retained by New SPV Assets Liabilitie
Slide 40: Step 3: De-recognition of NPEs
Step 3: De-recognition of NPEs Shareholders Eurobank Ergasias Listed in ASE, becomes HoldCo 100% SPV Senior Notes retained by New Eurobank New Eurobank A (Senior) Assets Liabilities & DTC Equity B2 B1 Cairo (Mezz.) (Mezz.) FPS (servicer) B1 and C1 junior notes C2 C1 distributed to shareholders (Juni
Slide 41: Appendix II – Supplementary information
Appendix II – Supplementary information Page 40
Slide 42: Summary performance
Summary performance Balance sheet – key figures Income statement – key figures €m 2Q19 1Q19 €m 2Q19 1Q19 Gross customer loans 43,508 44,976 Net interest income 342.1 342.7 Provisions (7,735) (8,822) Commission income 89.9 65.8 Loans FVTPL 55 60 Operating income 489.5 422.5 Net customer loans 35,828
Slide 43: Consolidated quarterly financials
Consolidated quarterly financials Income Statement (€ m) 2Q19 1Q19 4Q18 3Q18 2Q18 Net Interest Income 342.1 342.7 353.0 352.0 355.9 Commission income 89.9 65.8 94.3 79.1 73.8 Other Income 57.5 13.8 14.5 40.1 31.3 Operating Income 489.5 422.5 461.8 471.2 461.0 Operating Expenses (224.2) (217.6) (226.
Slide 44: Consolidated financials
Consolidated financials Income Statement (€ m) 1H19 1H18 Δ y-o-y (%) Net Interest Income 684.8 710.7 (3.6) Commission income 155.6 137.9 12.9 Other Income 71.3 63.9 11.6 Operating Income 911.7 912.5 (0.1) Operating Expenses (441.9) (436.1) 1.3 Pre-Provision Income 469.9 476.4 (1.4) Loan Loss Provisi
Slide 45: Appendix III – Macroeconomic update
Appendix III – Macroeconomic update Page 44
Slide 46: Recent macro & market developments and FY-2019 outlook
Recent macro & market developments and FY-2019 outlook FY19 outlook, recent macro & market developments Market consensus forecast for full-year GDP growth at 1.9%; 1Q2019: 1.3% y-o-y and 0.2% q-o-q Jobless rate stood at 17.2% in May-19, lower by 10.6 ppts relative to its historical high in Sep-1
Slide 47: Greece: Key macro indicators - Realizations & forecasts
Greece: Key macro indicators - Realizations & forecasts 2018, €bn* 2018* 2019** 2020** Real Real (nominal) Real (YoY%) (YoY%) (YoY%) GDP 184.7 1.9 2.2 2.2 Private Consumption 125.6 1.1 1.3 1.2 Government Consumption 35.4 -2.5 3.1 0.4 Gross Fixed Capital Formation 20.5 -12.2 10.1 10.8 Exports 66.7 8.
Slide 48: The economy grew for an 8th quarter in a row in 1Q2019
The economy grew for an 8th quarter in a row in 1Q2019, although at a decelerating rate – downside risks from the foreign sector Source: ELSTAT, Eurobank Research Page 47
Slide 49: Selected indicators of domestic economic activity
Selected indicators of domestic economic activity Economic Sentiment: a post elections rebound PMI Manufacturing: well above the 50 units no-change threshold Retail Trade: negative growth continues in April-May 2019 Industrial Production: deceleration and weak growth in 2Q2019 Source: ELSTAT, IOBE,
Slide 50: Domestic Labour Market
Domestic Labour Market Improving but major challenges remain; reversal of disinvestment critical Unemployment rate: continued decline but still elevated Employment: growth remains close to 2.0% Long Term Unemployment: a drain of human capital stock Labour Productivity Growth: poor performance contin
Slide 51: Real Estate prices increase in FY 2018 after a multi-year decline
Real Estate prices increase in FY 2018 after a multi-year decline Between 4Q2007 and 4Q2017, apartment prices declined cumulatively by 42.3 per cent Downward index trend mainly due to the contraction of disposable income, the increase of unemployment, limited access to credit and the excess supp
Slide 52: Domestic financial conditions gradually improve
Domestic financial conditions gradually improve Full lift of Capital Controls effective from 1st September Further stabilization of macro environment to facilitate return of bank deposits 1. Private-sector deposits increase by €8.1bn or 6.4% in 2018; 5.8% y-o-y increase in June 2019 2. Cash outs
Slide 53: Fiscal Deficit Corrected
Fiscal Deficit Corrected Primary balances targets over-performed but with a toll on growth: 2018 marks the 5th year in the past 6 years with a significant primary surplus in programme terms ELSTAT 2019 (1st Notification): FY-2018 primary surplus at 4.4% of GDP (4.3% of GDP in EPPS terms, Ministr
Slide 54: 2019 Budget Execution inline with targets
2019 Budget Execution inline with targets Expectations for fulfilling 2019 Budget target: Jan.-Jun. 2019 Budget execution: primary balance stood at a surplus of €0.4 bn, ca €1.95 bn higher relative to the respective budget target. Stock of arrears: €2.1 bn at end of June 2019 (decreased on a mon
Slide 55: Appendix IV – Glossary
Appendix IV – Glossary Page 54
Slide 56: Glossary – Definition of Alternative Performance Measures (APMs)
Glossary – Definition of Alternative Performance Measures (APMs) & other selected financial measures/ ratios 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 Finan
Slide 57: Glossary – Definition of Alternative Performance Measures (APMs)
Glossary – Definition of Alternative Performance Measures (APMs) & other selected 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 net trading income, gains less lo
Slide 58: Glossary – Definition of Alternative Performance Measures (APMs)
Glossary – Definition of Alternative Performance Measures (APMs) & other selected financial measures/ ratios Provisions (charge) to average Net Loans ratio (Cost of Risk): Impairment losses on Loans and Advances charged in the reported period, annualized and divided by the average balance of Loans a
Slide 59: Glossary – Definition of Alternative Performance Measures (APMs)
Glossary – Definition of Alternative Performance Measures (APMs) & other selected financial measures/ ratios Risk-weighted assets (RWAs): Risk-weighted assets are the Group's assets and off-balance-sheet exposures, weighted according to risk factors based on Regulation (EU) No 575/2013, taking into
Slide 60: 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