Slide 1: Erste Group investor presentation FY 2016 preliminary results
Erste Group investor presentation FY 2016 preliminary results 28 February 2017 Erste Group delivers 12.3% ROTE in 2016, proposes EUR 1 DPS and confirms guidance for 2017 Andreas Treichl, CEO Erste Group Gernot Mittendorfer, CFO Erste Group Willibald Cernko, 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) 1,265 18 50 35 88 82 337 968 95 533 81 159 86 351 73 115 Q3 16 Operating Operating Risk costs Other Taxes on Minorities Q4 16 2015 Operating Operating Risk costs Other T
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 2.59% in EUR m in EUR m in EUR m 2.51% 2.52% -8.3% 61.5% 4,445 2.43% 59.8% 4,375 -73.2% 2,903 2,663 729 0.39% 1,073 1,107 660 666 0.11% 196 132 37 2015 2016 Q3 16 Q4 16 2015 2
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) 74 208,227 208,227 911 2,462 1,795 4,758 229 44 1,336 10,067 6,003 199,743 199,743 419 1,106 31/12/15 Cash Trading, Loans to Net loans Intangibles Other 31/1
Slide 7: Executive summary – Key balance sheet data
Executive summary – 31/12/15 Key balance sheet data 31/12/16 Loan/deposit & loan/TA ratio Net loans & credit RWA NPL coverage ratio & NPL ratio in EUR bn +3.8% 98.4% 94.7% 69.1% 125.9 130.7 64.5% 63.0% 62.7% 84.7 83.0 7.1% 4.9% 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 – Continued solid CEE GDP growth expectations for 2017
2016 Business environment – 2017 Continued solid CEE GDP growth expectations for 2017 Real GDP growth (in %) Dom. demand contribution* (in %) Net export contribution* (in %) Consumer price inflation (ave, in %) 6.7 5.9 4.8 2.5 4.3 2.2 1.6 1.4 1.5 3.3 3.1 3.4 3.5 1.0 2.7 2.9 2.0 0.7 0.7 2.3 2.7 2.4 2
Slide 10: Business environment – Interest rates remain at very low levels in Q4 16
Business environment – 3M Interbank 10YR GOV Interest rates remain at very low levels in Q4 16 Austria Czech Republic Romania 3.50% 3.36% 3.01% 3.29% 0.74% 0.41% 0.67% 0.43% 0.45% 0.46% 0.13% 0.30% 0.57% 0.57% -0.02% -0.30% -0.31% 1.10% -0.23% 0.31% 0.29% 0.29% 0.29% 0.65% 2015 2016 Q3 16 Q4 16 2015
Slide 11: Business environment – Limited currency volatility in CEE
Business environment – Limited currency volatility in CEE EUR/CZK EUR/RON -0.9% 0.0% 0.0% +0.9% +1.0% +0.4% 27.3 27.0 27.0 27.0 27.0 27.0 4.45 4.48 4.46 4.51 4.52 4.54 2015 2016 Q3 16 Q4 16 31/12/15 31/12/16 2015 2016 Q3 16 Q4 16 31/12/15 31/12/16 • Czech National Bank maintains exchange rate stabil
Slide 12: Business environment – Market shares: mostly gains except in RO, HU
31/12/15 Business environment – 30/09/16 Market shares: mostly gains except in RO, HU, due to NPL sales 31/12/16 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 19.4% 19.0% 18.5% 18.5% AT 19.6% AT 19.4% AT 18.8% AT 19.6% 22.8% 19.4% 25.2% 11.7% CZ 22.9% CZ 19.4% CZ 25.2%
Slide 13: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 13
Slide 14: Performing loan volume increases by 4.9% in 2016
YoY 31/12/15 Business performance: performing loan stock & growth – QoQ 30/09/16 Performing loan volume increases by 4.9% in 2016 31/12/16 122.6 4.9% • Rising performing loan volume trend continues in Q4 16 Group 126.6 128.6 1.6% across most geographies, most pronounced in AT/OA, SK, 29.2 HU, RS & H
Slide 15: Deposits advance by 7.9% in 2016, despite zero interest rates
YoY 31/12/15 Business performance: customer deposit stock & growth – QoQ 30/09/16 Deposits advance by 7.9% in 2016, despite zero interest rates 31/12/16 127.9 7.9% • Exceptional deposit growth across all geographies, despite Group 134.0 138.0 3.0% zero interest rate environment as retail and corpora
Slide 16: NII improvement in Q4 16 (qoq) mainly due to one-offs
Business performance: NII and NIM – Q4 15 Q3 16 NII improvement in Q4 16 (qoq) mainly due to one-offs Q4 16 1,120 2.59% Group 1,073 2.43% 1,107 2.52% • Yoy slight decline on lower interest income from government 161 1.82% bonds as well as lower unwinding impact; main segment AT/EBOe 161 1.81% impact
Slide 17: Operating income rises qoq and yoy, primarily due to one-offs
YoY Q4 15 Business performance: operating income – QoQ Q3 16 Operating income rises qoq and yoy, primarily due to one-offs Q4 16 1,681 3.0% • Yoy up primarily due to better trading result and rental income Group 1,643 1,732 5.4% (one-off due to first time consolidation of subsidiaries), partly 261 o
Slide 18: Operating costs up due to IT and regulatory projects, one-offs
YoY Q4 15 Business performance: operating expenses – QoQ Q3 16 Operating costs up due to IT and regulatory projects, one-offs Q4 16 1,017 4.8% • Yoy cost increase driven by higher IT and consulting Group 983 1,065 8.4% expenses, higher personnel costs, and one-off due to first 175 time consolidation
Slide 19: Operating result almost unchanged qoq and yoy
YoY Q4 15 Business performance: operating result and CIR – QoQ Q3 16 Operating result almost unchanged qoq and yoy Q4 16 Operating result YoY & QoQ change Cost/income ratio 664 60.5% Group 660 0.3% 59.8% 666 0.9% 61.5% 86 67.0% AT/EBOe 96 33.7% 61.8% 115 19.5% 61.4% 122 67.4% AT/SB 121 -16.5% 65.9%
Slide 20: Risk costs remain at historically low levels in Q4 16
Q4 15 Business performance: risk costs (abs/rel*) – Q3 16 Risk costs remain at historically low levels in Q4 16, even though up qoq Q4 16 211 0.64% • Yoy improvement driven by significantly reduced new Group 37 0.11% 132 0.39% allocations and higher releases 30 0.40% • Qoq development partially attr
Slide 21: NPL ratio improves for 12th consecutive quarter to 4.9%
31/12/15 Business performance: non-performing loans and NPL ratio – 30/09/16 NPL ratio improves for 12th consecutive quarter to 4.9% 31/12/16 9,314 7.1% • Continued decline of group NPL volume in Q4 16 mainly due Group 7,308 5.5% 6,678 4.9% to low NPL inflows, continued portfolio upgrades and net 86
Slide 22: NPL provision coverage edges up to excellent 69.1%
31/12/15 Business performance: allowances for loans and NPL coverage – 30/09/16 NPL provision coverage edges up to excellent 69.1% 31/12/16 6,009 64.5% • NPL cash coverage rises to excellent 69.1%, as NPL stock – Group 4,948 67.7% 4,613 69.1% supported by NPL sales and upgrades – declined faster tha
Slide 23: Other result with significant negative one-offs in Q4 16
Q4 15 Business performance: other result – Q3 16 Other result with significant negative one-offs in Q4 16 Q4 16 -216 • Yoy deterioration primarily due to extraordinary banking tax Group -61 -412 payment of EUR 200.9m in Q4 16, other one-offs (see below) -18 • Qoq decline driven by extraordinary Aust
Slide 24: Q4 net result down on one-offs, mainly banking tax payment in Austria
Q4 15 Business performance: net result – Q3 16 Q4 16 net result down on one-offs, mainly banking tax payment in Austria Q4 16 204 • Yoy profitability deterioration driven by one-off Austrian Group 337 banking tax payment, consumer protection provisions in 86 Romania and Slovak goodwill write-down 29
Slide 25: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 25
Slide 26: Loan/deposit ratio down to 94.7% at Dec 16
Assets and liabilities: YTD overview – Loan/deposit ratio down to 94.7% at Dec 16 (Dec 15: 98.4%) Assets (EUR bn) Assets (in %) Liabilities & equity (EUR bn) Liabilities & equity (in %) 208.2 208.2 199.7 100% 199.7 4.8 100% 18.4 6.2% 8.8% 5.9 14.6 2.9% 7.0% 2.3% 12.4 7.1% 14.2 47.6 23.8% 22.9% 47.5
Slide 27: Net customer loans up 3.8% in 2016, NPLs down 28.3%
Assets and liabilities: customer loans by country of risk – Net customer loans up 3.8% in 2016, NPLs down 28.3% Net customer loans (EUR bn) Performing loans (EUR bn) Non-performing loans (EUR bn) +3.8% +4.9% -28.3% 128.9 130.6 126.6 128.6 9.3 125.8 3.4 122.6 3.4 3.2 3.3 0.4 3.3 6.3 6.4 3.4 6.0 6.2 0
Slide 28: Allowances for customer loans – lower NPL interest income weighs on NII
Assets and liabilities: allowances for customer loans – As asset quality improves lower interest income from NPLs weighs on NII Quarterly development (EUR m) Highlights • Development of interest income from NPLs: • 2013: EUR 270m 182 • 2014: EUR 202m 483 • 2015: EUR 162m 6,009 400 571 803 • 2016: EU
Slide 29: Financial and trading assets – LCR remains at excellent 142.6%
Assets and liabilities: financial and trading assets * – LCR remains at excellent 142.6% By geography By debtor type Liquidity buffer +1.4% in EUR bn in EUR bn 42.3 43.1 42.8 100% 26.7% 26.7% 10.3% 9.3% 8.9% 24.8% 24.9% 9.2 9.8 9.9 7.9% 7.5% 7.3% 1.5 1.1 1.0 1.6 2.3 2.4 51.2 51.2 4.7 4.5 4.8 45.4 46
Slide 30: Customer deposit funding – deposits grow 3.0% qoq, up 7.9% yoy
Assets and liabilities: customer deposit funding – Customer deposits grow by 3.0% qoq, up 7.9% yoy By customer type By product type Highlights in EUR bn in EUR bn • Continued deposit inflows driven by Retail +7.9% segment with highest demand for overnight deposits amid low interest rate environment
Slide 31: Declining wholesale funding reliance, as customer deposits grow strongly
Assets and liabilities: debt vs interbank funding – Declining wholesale funding reliance, as customer deposits grow strongly Debt securities issued Interbank deposits in EUR bn in EUR bn -8.3% +3.0% 29.7 15.2 Sub debt 14.2 14.6 27.3 27.2 Overnight deposits 5.9 Hybrid issues 3.3 4.6 3.6 Term deposits
Slide 32: LT funding – Limited LT funding needs
Assets and liabilities: LT funding – Limited LT funding needs Maturity profile of debt in EUR bn 3.1 3.0 2.7 2.7 2.8 1.9 1.9 1.1 0.8 0.7 0.6 0.3 0.2 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029+ Debt CEE Capital exc Tier 1 Covered bonds Senior unsec. bonds • Erste Group issued mo
Slide 33: Capital position – 12.8% B3FL CET1 ratio in target area
Assets and liabilities: capital position – At 12.8% B3FL CET1 ratio remains in target area of 12.75%+ Basel 3 capital (phased-in) Risk-weighted assets (phased-in) Basel 3 capital ratios (phased-in) in EUR bn in EUR bn 18.7% 18.5% 18.4% 17.9% 17.6% 18.9 18.5 18.8 100.5 101.0 100.7 101.8 17.6 17.7 98.
Slide 34: Regulatory capital requirements (SREP) for 2017, buffer to MDA & ADIs
Assets and liabilities: capital position – Regulatory capital requirements (SREP) for 2017, buffer to MDA & ADIs • Almost unchanged capital requirements in 2017, excluding P2G significant decline vs 2016 Erste Group Consolidated Erste Group Unconsolidated Phased-in Fully loaded Phased-in Fully loade
Slide 35: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 35
Slide 36: Conclusion – Outlook 2017
Conclusion – Outlook 2017 • Real GDP growth of between 1.5-4.5% expected in 2017 in CEE and Austria Macro outlook • Real GDP growth to be driven by solid domestic demand, as real wage growth and 2017 declining unemployment support economic activity in CEE • Solid public finances across CEE • ROTE fo
Slide 37: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 37
Slide 38: New segmentation – Business line and geographic view
Additional information: new segmentation – Business line and geographic view Erste Group – Business segments ALM & Group Group Savings Intragroup Retail Corporates Local CC Corporate Markets Banks Elimination (ALM&LCC) Center • SME • Other Subsidiaries • Local Large Corporate • Asset/Liability Manag
Slide 39: 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 2015 2016 YOY-Δ Q4 15 Q3 16 Q4 16 YOY-Δ QOQ-Δ Net interest income 4,444.7 4,374.5 -1.6% 1,120.4 1,073.4 1,107.0 -1.2% 3.1% Net fee and commission income 1,861.8 1,783.0 -4.2% 48
Slide 40: Group balance sheet – Assets
Additional information: group balance sheet – Assets Quarterly data Change in EUR million Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 12,350 14,641 12,982 14,743 18,353 48.6% 48.6% 24.5% Financial assets - held for trading 8,719 9,960 10,373 9,731 7,950 -8.8% -8.8% -1
Slide 41: Group balance sheet – Liabilities and equity
Additional information: group balance sheet – Liabilities and equity Quarterly data Change in EUR million Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities - held for trading 5,867 6,612 6,146 6,272 4,762 -18.8% -18.8% -24.1% Derivatives 5,434 5,782 5,341 4,933 4,185 -23.0%
Slide 42: Gross customer loans – By risk category, currency, industry
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) 131.9 132.6 132.5 133.9 135.3 131.9 132.6 132.5 133.9 135.3 133.9 135.3 131.9 132.
Slide 43: 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: 4.7m Customers: 2.3m in 7 geographically connected Employees: 10,371 Employees: 4,247 countries CZ Br
Slide 44: 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 45: Ratings – Composition of Erste Group Bank AG's 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 - bbb+ (Individual Rating ) + Financial Profile ▲ a- Asset Risk ba1 Anchor bbb Capital baa2 Business Position Strong +1 Profitability ba1
Slide 46: Shareholder structure – Total number of shares: 429,800,000
Additional information: shareholder structure – Total number of shares: 429,800,000 By investor By region Unidentified Erste Foundation Unidentified 11.1% 13.9% 13.9% Savings Banks Austria 4.7% Rest of world 28.5% Other Syndicated 2.9% 3.8% 9.9% Caixa 24.3% 0.9% Continental Europe Employees 5.0% Ret
Slide 47: 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