Eurobank S.A. · ATHEX:EUROB
Eurobank — Q2 2017 Earnings Presentation
54 slides from Eurobank's earnings presentation, Aug 30, 2017
Slide 1: Second Quarter 2017 Results
Second Quarter 2017 Results 30 August 2017
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 Highlights 3 2Q2017 results review 10 Asset Quality 18 International operations 24 Appendix I – Supplementary information 31 Appendix II – Macroeconomic update 35 Appendix III – Glossary 48 Page 2
Slide 4: 2Q17 results highlights
2Q17 results1 Highlights Key financials 1 Net profit €40m in 2Q17 and €76m in 1H17 €m 2Q17 1Q17 Δ(%) 1H17 1H16 Δ(%) Core pre-provision income (PPI) up 4.6% q-o-q; up 9.1% y-o-y Net interest income 388.9 381.5 2.0 770.4 771.0 (0.1) NII up 2.0% q-o-q; stable y-o-y Commission income 71.9 68.8 4.5 1
Slide 5: Pre-provision income (PPI)
Pre-provision income (PPI) Core PPI and other income (€ m) Highlights 67 31 55 40 35 Other income Core pre-provision income (PPI) up 4.6% q-o-q; up 9.1% y-o-y 208 220 216 Core PPI NII up 2.0% q-o-q at €389m; stable y-o-y 199 206 Commission income up 4.5% q-o-q; up 19.4% y-o-y Operating expen
Slide 6: Asset quality
Asset quality NPEs formation1 (€ m) 90dpd formation1 (€ m) 50.0 50.0 50.7 50.8 51.1 Coverage (% ) 65.0 65.5 66.1 65.5 65.3 Coverage (% ) 45.1 45.6 45.2 45.0 44.1 Ratio (% ) 34.7 34.8 34.7 34.8 34.6 Ratio (% ) 492 154 Int'l 149 91 6 Greece 85 Int'l (170) (72) (16) (28) (108) (23) Greece (193) (85) 2Q
Slide 7: Funding and liquidity
Funding and liquidity Eurosystem funding (€ bn) Comments 34.0 32.7 Current ELA funding at €9.9bn; €2.5bn down from 2017 peak 9.8 Outstanding Pillar II bonds €1.0bn1 19.0 Group deposits up by €0.4bn q-o-q; fully offsetting 1Q17 outflows 15.7 13.9 13.8 2.1 3.4 12.2 22.9 2.6 2.3 TLTRO II €1.3bn
Slide 8: Capital position
Capital position Phased-in CET1 Fully loaded Basel III CET1 (FLB3) 49bps 17.4% 250bps 16.9% 3bps 17.3% 10bps 0 17.4% 5bps 17.4% 14.4% 60bps 13.8% properties sale 1Q17 CET1 2Q17 result 2Q17 CET1 AFS & other 2Q17 pro-forma FLB3 incl. pref. 2Q17 pro-forma DTA phase out 2Q17 pro-forma Preference adjustm
Slide 9: Redemption of preference shares through issuance of Tier II bonds
Redemption of preference shares through issuance of Tier II bonds Tier II bonds Total Capital (FLB3) 250bps 17.1% Eurobank plans to redeem €950m state preference shares through issuance of Tier II bonds 14.6% Coupon c.6.4%1 payable in cash, tax deductible 12.25% Non-convertible Tier II bond
Slide 10: International Operations
International Operations Core PPI (€ m) Net Profit1 (€ m) 74 66 69 42 64 65 30 30 26 28 2Q16 3Q16 4Q16 1Q17 2Q17 2Q16 3Q16 4Q16 1Q17 2Q17 Loan loss provisions (€ m) Net Loans and Deposits (€ bn) 3.1% 1.9% 1.9% 1.6% 1.5% Cost of Risk 10.4 52 6.8 31 31 27 26 3.7 2.9 2.4 1.7 1.8 1.5 1.2 0.9 0.8 0.5 Int
Slide 11: 2Q 2017 results review
2Q 2017 results review Page 10
Slide 12: Loans and deposits
Loans and deposits Gross loans (€ bn) Deposits (€ bn) Δ loans l-f-l1 (€m) 54 (195) 348 119.9% 117.2% 114.8% 115.1% 113.8% 51.0 50.6 50.7 Loans/Deposits 50.2 50.1 7.5 International 7.4 7.5 7.5 7.7 Greece 34.0 33.7 34.1 33.0 33.4 21.9 Business 10.6 10.4 21.7 21.7 21.4 21.5 10.2 10.2 10.7 International
Slide 13: Assets
Assets Total assets (€ bn) Gross Loans Consumer 12% Business 53% 64.0 Mortgages 35% Net loans and advances to customers 38.8 Securities Trading & other GGBs 6% 19% Securities 11.2 PP&E, intangibles and other assets GTBs 3.7 EFSF Derivatives 13% 1.8 41% Loans and advances to banks 2.3 Deferred tax as
Slide 14: New time deposits spreads and client rates (Greece)
New time deposits spreads and client rates (Greece) Time deposit client rates (bps) Deposits mix Core 114 57% 106 Time 105 43% 100 97 99 92 91 92 89 89 88 86 88 88 87 85 86 82 80 80 New time deposit spreads (bps) 77 80 76 75 76 74 74 (97) 75 73 (107) (102) 74 (109) (92) 73 72 72 70 (102) (112) (113)
Slide 15: Net interest income
Net interest income NII breakdown (€ m) NII per region (€ m) Total NII 388 389 390 381 389 388 389 390 381 389 106 104 107 108 108 International Greece 281 282 285 283 274 487 480 470 Loan margin 442 447 2Q16 3Q16 4Q16 1Q17 2Q17 NII evolution q-o-q (€ m) 3 389 381 1 0 6 0 (3) Bonds & other 57 51 55
Slide 16: Spreads & net interest margin
Spreads & net interest margin Lending spreads (Greece, bps)1 Deposit spreads (Greece, bps) 2Q16 3Q16 4Q16 1Q17 2Q17 2Q16 3Q16 4Q16 1Q17 2Q17 Corporate 507 511 524 516 493 Savings & Sight (56) (53) (53) (51) (49) Retail 460 447 435 416 432 Time (103) (103) (96) (90) (88) Total 477 470 467 451 454 Tot
Slide 17: Commission income
Commission income Commission income breakdown (€ m) Commission income per region (€ m) Fees excl. €m 71 70 75 71 75 Govt. bps 40 41 45 44 47 guarantees expense 71 72 Int’l 69 71 72 66 61 66 69 61 21 19 Lending 28 28 20 19 18 25 27 26 35 Network Greece 37 34 34 37 44 44 44 39 8 8 Capital Markets 35 6
Slide 18: Operating expenses
Operating expenses OpEx per region (€ m) OpEx breakdown (€ m) Greece (3.5%) 502 250 247 244 (2.6%) 489 242 245 36 33 68 66 61 66 67 International Depreciation 194 181 Administrative 182 181 181 177 178 Greece Staff 272 275 2Q16 3Q16 4Q16 1Q17 2Q17 1H16 1H17 Cost-to-income ratio (%) Headcount and net
Slide 19: Asset Quality
Asset Quality | Page 18
Slide 20: NPEs formation per segment (Greece)
NPEs formation per segment (Greece) Mortgages (€ m) Consumer (€ m) 315 278 100 35 38 22 28 (7) (2) (15) (9) (22) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 Small business (€ m) Corporate (€ m) 139 71 51 12 14 (27) (15) (36) (24) (73) (67) (60) 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 1Q16 2Q16
Slide 21: NPEs analysis (Greece)
NPEs analysis (Greece) Δ stock NPEs (€ m) Retail portfolio PEs NPEs 512 Performing Non - Performing 112 € 9.2 bn € 9.3 bn (155) (254) Δ stock NPEs (395) Non- Performing Forborne 90dpd Performing Forborne € 2.0 bn € 4.2 bn Non- Performing Forborne 0-89dpd € 2.7 bn 513 Corporate portfolio 190 NPE form
Slide 22: NPEs metrics (Group)
NPEs metrics (Group) 90dpd bridge to NPEs (€ bn) NPEs per region Provisions & Provisions/ Total NPEs NPEs ratio4 collaterals / NPEs NPEs 0.8 22.1 (€ bn) (%) (%) (%) 4.0 Consumer 3.4 64.6 80.1 85 17.3 Mortgages 6.3 40.0 34.7 105 Small Business 4.3 66.4 44.2 100 Total Retail 14.0 50.9 48.6 99 Corporat
Slide 23: Asset quality metrics - 90dpd loans
Asset quality metrics - 90dpd loans 90dpd ratio per segment (%) 90dpd ratio per region (%) €3.0bn €5.1bn €3.7bn €5.5bn €17.3bn 38.0 37.6 37.7 38.0 37.7 Greece 52.1 47.9 34.7 34.8 34.7 34.8 34.6 Group 34.5 29.1 28.7 17.7 17.5 17.3 16.9 15.7 International 2Q16 3Q16 4Q16 1Q17 2Q17 Consumer Mortgages Sm
Slide 24: 90dpd formation per segment (Greece)
90dpd formation per segment (Greece) Mortgages (€ m) Consumer (€ m) 245 221 216 84 82 83 72 66 171 54 55 160 43 41 35 35 36 119 129 17 22 115 118 6 109 101 94 84 84 73 82 72 (12) (9) (20) (39) 22 8 4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 2Q17 4Q12 2Q13 4Q13 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 2Q17 Sm
Slide 25: International operations
International operations Page 24
Slide 26: International presence
International presence Total Assets (€ bn) 1.5 Net Loans (€ bn) 0.5 Deposits (€ bn) 1.2 Total Assets (€ bn) 1.3 Net Loans (€ bn) 0.9 Deposits (€ bn) 0.8 Total Assets (€ bn) 2.6 Branches (#) 80 Net Loans (€ bn) 1.7 Deposits (€ bn) 1.9 Branches (#) 147 Total Assets (€ bn) 3.4 Net Loans (€ bn) 2.4 Tota
Slide 27: Income statement highlights
Income statement highlights Core PPI (€ m) Pre Provision Income (€ m) 86 2Q16 8 3 80 3Q16 7 75 4 69 ROM 18 67 3 4Q16 10 4 LUX 3 1Q17 8 8 23 28 9 19 20 CYP 2Q17 8 7 7 33 7 SER 2Q16 29 3Q16 30 30 31 29 29 BUL BUL 4Q16 31 25 1Q17 28 ROM 8 10 10 11 2Q17 29 2Q16 3Q16 4Q16 1Q17 2Q17 2Q16 7 Net Profit befo
Slide 28: Gross Loans
Gross Loans Romania (€ m) Bulgaria (€ m) 2,604 2,580 2,671 2,530 2,558 361 359 Consumer 357 354 353 14% 2,046 2,093 2,081 2,080 19% 2,016 359 370 366 367 Consumer 860 377 46% 868 861 54% 862 862 Mortgage 32% 725 716 716 710 Mortgage 35% 701 6M17 1,452 6M17 1,375 1,311 1,341 1,365 Business 962 1,007
Slide 29: Deposits
Deposits Romania (€ m) Bulgaria (€ m) 2,813 2,811 2,860 2,675 2,716 1,893 1,887 1,939 1,852 920 899 934 Time 1,847 937 901 33% 1,128 1,110 1,074 976 1,042 44% Time 67% 56% 1,814 1,893 1,913 1,926 Core 1,737 765 777 865 876 806 Core 6M17 6M17 6M16 9M16 FY16 3M17 6M17 6M16 9M16 FY16 3M17 6M17 Serbia (
Slide 30: Asset quality
Asset quality Romania Bulgaria 64.3% 66.5% 72.0% 73.4% 73.9% 74.5% 72.1% 62.8% Coverage 60.3% 60.4% Coverage 90dpd 26.6% 25.7% 25.8% 25.8% 23.7% 19.9% 20.1% 19.5% 18.9% 17.7% 90dpd 90dpd gross 90dpd gross formation - formation (€ m) 2 - (€ m) (1) (2) (4) (1) (2) (5) (4) 2Q16 3Q16 4Q16 1Q17 2Q17 2Q16
Slide 31: Key figures – 2Q17
Key figures – 2Q17 Romania Bulgaria Serbia Cyprus Lux Sum Assets 2,630 3,421 1,301 4,328 1,468 13,148 Gross loans 2,016 2,671 963 1,551 461 7,661 Balance Sheet (€m) Net loans 1,671 2,357 854 1,482 461 6,824 Balance 90dpd Loans 478 472 158 91 2 1,201 Sheet Deposits 1,847 2,860 760 3,746 1,216 10,429
Slide 32: Appendix I – Supplementary information
Appendix I – Supplementary information Page 31
Slide 33: Summary performance
Summary performance Balance sheet – key figures Income statement – key figures €m 2Q17 1Q17 €m 2Q17 1Q17 Gross customer loans 50,116 50,210 Net interest income 388.9 381.5 Provisions (11,304) (11,469) Commission income 71.9 68.8 Net customer loans 38,812 38,741 Operating income 496.1 490.5 Customer
Slide 34: Consolidated quarterly financials
Consolidated quarterly financials Income Statement (€ m) 2Q17 1Q17 4Q16 3Q16 2Q16 Net Interest Income 388.9 381.5 389.9 388.8 388.0 Commission income 71.9 68.8 71.4 65.6 60.9 Other Income 35.3 40.2 55.1 31.3 67.4 Operating Income 496.1 490.5 516.5 485.7 516.3 Operating Expenses (244.9) (243.9) (241.
Slide 35: Consolidated financials
Consolidated financials Income Statement (€ m) 1H17 1H16 Δ y-o-y (%) Net Interest Income 770.4 771.0 (0.1) Commission income 140.6 117.8 19.4 Other Income 75.6 130.9 (42.3) Operating Income 986.6 1,019.8 (3.3) Operating Expenses (488.8) (501.8) (2.6) Pre-Provision Income 497.9 518.0 (3.9) Loan Loss
Slide 36: Appendix II – Macroeconomic update
Appendix II – Macroeconomic update Page 35
Slide 37: Key points and summary of views
Key points and summary of views Recent macro developments In Q1 2017, real output expanded by 0.4%, both on a quarterly and an annual basis Labor market conditions continue to improve; jobless rate at 64-month low of 21.7% (May 2017) Employment growing at an annual rate of c. 2.0%; labor produ
Slide 38: Economic activity is recovering following the mid-2015 crisis
Economic activity is recovering following the mid-2015 crisis Gross Domestic Product Private Consumption Government Consumption Investment Exports of Goods & Services Imports of Goods & Services Source: ELSTAT, Eurobank Economic Research Page 37
Slide 39: Selected indicators of domestic economic activity
Selected indicators of domestic economic activity Higher frequency data point to improving GDP dynamics in the period ahead Economic Sentiment Indicator PMI manufacturing Retail trade volume Industrial production Source: ELSTAT, MARKIT, Eurobank Economic Research Page 38
Slide 40: Domestic labour market
Domestic labour market Conditions improving lately, but serious challenges remain Unemployment rate: still elevated despite recent declines Long term unemployment: a drain on human capital stock Labour productivity growth: improvement in Q1 2017, but sustainable gains Employment: positive contributi
Slide 41: Activity in tourism and shipping industries
Activity in tourism and shipping industries Held back GDP growth in 2016, but upbeat expectations for this year Revenues from services exports (% of GDP) Tourism revenue: rising contribution to GDP growth Transportation revenue: steep declines in 2015 & 2016 Net exports had a negative contribution
Slide 42: Greece: recent fiscal performance & 2017 outlook
Greece: recent fiscal performance & 2017 outlook 2016 marked the 4th consecutive year of a surplus position in the general government primary balance FY-2016 primary surplus at 3.9% of GDP (4.2% of GDP programme terms), strongly outperforming the 0.5% of GDP target Year-to-July 2017 budget exe
Slide 43: Gradual improvement in domestic financial conditions
Gradual improvement in domestic financial conditions Further stabilization of macro environment, relaxation of CCs to facilitate return of bank deposits Net private-sector deposit inflow of c. €6.7bn between July 2015 and July 2017(*) Outflow of c. €0.2bn year-to-date due to earlier programme-
Slide 44: Greece outlook 2017
Greece outlook 2017 Macro indicators: realizations & forecasts 2015, €bn 2015 2016 2017 Real Real (nominal) Real (YoY%) (YoY%) (YoY%) Downside risks GDP 175.7 -0.2 0.0 1.7 Delays in the conclusion of upcoming reviews Private Consumption 122.8 -0.2 1.4 0.9 low ownership of reforms Government Consumpt
Slide 45: Progress in the privatization programme
Progress in the privatization programme Important projects already completed Establishment of the Hellenic Corporation of Assets and Participants S.A. (HCAP); appointment of Supervisory Board and Board of Directors Transfer of the 14 Regional Airports to the concessionaire Privatization of the
Slide 46: Significant progress in programme conditionality
Significant progress in programme conditionality Eurogroup of June 15 th 2017 acknowledged fulfilment of 2 nd review conditionality Medium-Term Fiscal Strategy Primary surplus target of 3.5% of GDP to be maintained until 2022 2018-2021 New parametric measures to yield c. 0.3% of GDP through 2018 Pre
Slide 47: Developments following June Eurogroup agreement
Developments following June 15 Eurogroup agreement Moody's upgraded Greece's long-term issuer rating as well as all senior unsecured bond and programme ratings to Caa2 and (P)Caa2 from Caa3 and (P)Caa3, respectively. The outlook has been changed to positive from stable. Moody’s upgraded the rati
Slide 48: Milestones for the completion of the next (3rd) programme review
Milestones for the completion of the next (3 rd) programme review Expected to commence after the German federal elections in late September Industrial action: Adoption of legislation envisioning an increase to 50% in the quorum for first-degree Labour market unions to vote on a strike (Key deliverab
Slide 49: Appendix III – Glossary
Appendix III – Glossary Page 48
Slide 50: Glossary - Methodology
Glossary - Methodology 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 Financial Reporting Standards (IFRS). Additional sources used, include information derived
Slide 51: Glossary – Definition of Financial measures / ratios
Glossary – Definition of 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 Dividend income, Net trading income, Gains less losses from investment securities and net
Slide 52: Glossary – Definition of Financial measures / ratios
Glossary – Definition of Financial measures / ratios Cost of Risk: Impairment losses on Loans and Advances charged in the reported period, annualized and divided by the average balance of Loans and Advances to Customers. The average balance of Loans and Advances to Customers is calculated as the ari
Slide 53: Glossary – Definition of Financial measures / ratios
Glossary – Definition of Financial measures / ratios Loans to Deposits: Loans and Advances to Customers (net of Impairment Allowance) divided by Due to Customers at the end of the reported period. Risk-weighted assets (RWAs): Risk-weighted assets are the bank's assets and off-balance-sheet exposures
Slide 54: 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