Addiko Bank Ag · VIE:ADKO
Addiko Bank — H1 2024 Earnings Presentation
54 slides from Addiko Bank's earnings presentation, Aug 8, 2024
Slide 1: 1H24 Results Presentation
1H24 Results Presentation Herbert Juranek (CEO) Edgar Flaggl (CFO) Tadej Krašovec (CRO) Ganesh Krishnamoorthi (CMO & CIO) Constantin Gussich (Investor Relations) 8 August 2024
Slide 2: Executive Summary & Business Update
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 3: Key Highlights 1H24
Key Highlights 1H24 • 1H24 net profit up 31% YoY to €25.5m (1H23: €19.5m), EPS at €1.32 − Second quarter result 2024 after tax at €9.9m (1Q24: €15.6m ) − Cost of Risk on net loans remained benign at -0.44% (€-15.5m) Earnings • Return on average Tangible Equity increased to 6.6% (1H23: 5.4%) & • Oper
Slide 4: Takeover Offers By Agri Europe and NLB
Takeover Offers By Agri Europe and NLB • Partial takeover offer by Agri Europe Cyprus − Agri currently holds 9.99% in Addiko − Partial takeover offer for an additional 17% at an offer price of €16.24 per share (cum dividend) Takeover • Takeover offer by Nova Ljubljanska banka Offers − Takeover offer
Slide 5: Outlook 2024 Impacted by Takeover Offers
Outlook 2024 Impacted by Takeover Offers Income & Business Risk & Liquidity Profitability >6% i Loan Growth1 CAGR 2023-2026 i CoR3 c.1% RoATE5 c. 6.5% Outlook <3% 2024 NIM2 >3.8% NPE Ratio4 as guiding principle DPS6 >€1.2 NBI2 >4.5% YoY TCR >18.35% <80% OPEX <€191m i LDR Ramp-up until 2026 Additiona
Slide 6: Acceleration Program Continued to Drive Value Generation
Acceleration Program Continued to Drive Value Generation Key developments Developments in 1H24 • Consumer outperforming SME with a strong +31% YoY growth in new business Business • Disbursements via partnership universe growing by 26% YoY 1 Growth in Focus Areas • New products launched in SME: auto-
Slide 7: Continued Growth in Focus
Continued Growth in Focus Focus portfolio development Gross performing loans (€m) • Total book (gross performing loans) up 2% Total Book 3,304 3,436 3,486 3,547 since YE23 (up 3% YoY) YoY • +8% YoY growth in focus book (+11% YoY +4% +8% excluding medium SME) 3,134 • New business generation up +4
Slide 8: Visible Progress in Business with Consumer & SME Customers in CSEE
Visible Progress in Business with Consumer & SME Customers in CSEE Business Update Improving dynamics YoY €m, YTD YoY • Strong customer growth in cash loans (+16% YoY) 758 791 52 +4% • Solid new business delivered (+31% YoY) with 60 premium pricing (+36bp YoY) -12% 311 Consumer 370 -16% • Card
Slide 9: Financials & Risk Update
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 10: Financial Performance 1H24 at a Glance
Financial Performance 1H24 at a Glance Financial Performance 1H24 2Q23 3Q23 4Q23 1Q24 2Q24 5.80% YTD, €m 79.3 5.30% 77.0 77.4 76.6 1H23 YoY 72.9 18.4 4.80% 17.7 16.9 16.9 17.0 Net Netinterest interest income income 120.6 108.1 +11.5% NCI 4.30% 3.90% 3.89% 3.89% 3.97% 3.80% Net fee Net & commission f
Slide 11: Capital Position Remains Strong
Capital Position Remains Strong Capital development fully-loaded % CET1/TCR, YTD, RWA in €m Addiko Group 3,653 3,694 3,692 RWAFL 0.10% 0.05% 0.23% 0.04% 0.02% 0.01% CET1/ TCR 20.4% 20.3% 20.4% fully-loaded 1 1 2023 2023 OCI OCI Reg. Reg. & Equity Equity RWA RWA 1Q24 1Q24 OCI OCI Reg. Reg. & Equity E
Slide 12: Balanced NPE Development Continues in 1H24
Balanced NPE Development Continues in 1H24 NPE volume & ratio development Quarterly NPE formation & exit €m, YTD €m, QTD 3Q23 4Q23 1Q24 2Q24 NPE ratio 2.9% 2.4% 2.0% 2.1% 2.0% NPE ratio Formation 19.8 24.9 24.5 21.4 (on-balance loans)1 4.0% 3.3% 2.8% 2.9% 2.8% 4.3 0.7 0.8 1.1 10.3 9.4 7.8 8.6 +6% 11
Slide 13: Cost of Risk at a Glance
Cost of Risk at a Glance Expected credit loss expenses on financial assets 1H24 YTD, €m, positive number for release 2.8 0.3 • 1H24 expected credit loss Impairments (negative) (8.5) expenses of €-15.5m YTD Releases (positive) resulting in -0.44% cost of (15.8) risk (on net loans): (15.5) (10.1) − Co
Slide 14: Outlook & Wrap-Up
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 15: Adjusted Outlook 2024 and Wrap-Up
Adjusted Outlook 2024 and Wrap-Up Income & Business Risk & Liquidity Profitability Loan Growth1 >6% CoR3 c.1% RoATE5 c. 6.0% Outlook CAGR 2023-2026 prev. c. 6.5% 2024 NIM2 >3.8% NPE Ratio4 <3% DPS6 >€1.2 as guiding principle Adjusted NBI2 >4.5% YoY TCR >18.35% OPEX <€195m LDR <80% prev. <€191m Ramp-
Slide 16: Additional Materials
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 17: Management Team Since June 2021
Management Team Since June 2021 Herbert Juranek Edgar Flaggl Tadej Krašovec Ganesh Krishnamoorthi Chief Executive Officer Chief Financial Officer Chief Risk Officer Chief Market, IT & Digitalisation Officer Chair of the Management Board Member of the Management Board Member of the Management Board M
Slide 18: Addiko at a Glance
Addiko at a Glance Overview of Addiko Operating as one region - one bank 1H24, % of Group Assets (rounded) ✓ Fully licensed bank with HQ in Austria, focused 100% on Central ✓ and South-Eastern Europe ✓ Addiko Bank AG is regulated by the Austrian Financial Market Austria ✓ (5%2) Authority (“FMA”)1 an
Slide 19: Current Shareholder Structure
Current Shareholder Structure Agri Europe Cyprus (Cyprus) 9.99% Diplomat Pay D.O.O. Alta Pay Group DOO (Serbia) 9.99% 31.89% European Bank for Reconstruction and Development (EBRD) Dr. Jelitzka + Partner (Austria) 9.63% WINEGG Realitäten GmbH (Austria) Wellington Management Group LLP (USA) 8.40% Bra
Slide 20: Key Macroeconomic Assumptions
Key Macroeconomic Assumptions Previous GDP forecasts (%, real growth) Forecast 2024E 2025E 2026E Δ 2023A Base Base Base 2024 Slovenia 1.6% 2.5% 2.6% 2.6% -0.2% Croatia 3.1% 2.9% 2.7% 3.0% -0.1% Serbia 2.5% 3.0% 3.3% 3.5% +1.0% Bosnia & 1.7% 2.5% 2.9% 3.4% +0.5% Herzegovina Montenegro 6.0% 4.2% 3.7%
Slide 21: Addiko's Commitment to the Sustainable Development Goals
Addiko’s Commitment to the Sustainable Development Goals ESG in Addiko - It is the little things that count Environment Social Governance Making ESG work through Vision Carbon footprint reduction Committed to the good good governance Addiko helps its employees Sound principles of Addiko supports soc
Slide 22: Balance Sheet Composition
Balance Sheet Composition Assets Liabilities and Equity 1H24, €b 1H24, €b Other 6.1 6.1 Liabilities ✓• Liquid balance sheet Other Assets 0.1 0.2 Due to Credit ✓• Strong deposit base 0.1 Institutions - LCR ratio: 355% (YE23: 313%) 0.6 Direct - Loan-deposit ratio Deposits (customer): 70.5% (YE23: ✓• L
Slide 23: Addiko Story Well Positioned for Strong Growth in Mid-Term
Addiko Story Well Positioned for Strong Growth in Mid-Term • We will turn Addiko into leading CSEE specialist bank for Consumer & SME customers Vision • We are focused and offer the best digital products to challenge universal banks • We will accelerate the bank’s transformation and generate value f
Slide 24: Acceleration of Growth in Focus Areas Consumer & SME
Acceleration of Growth in Focus Areas Consumer & SME Gross performing loans in focus segments Gross yield by segment1 Gross loans of focus segments as % of total gross performing loans 1H24 YTD QTD QTD Full year 2Q24 1Q24 2023 yield yield yield Consumer 7.4% 7.4% 7.3% 7.1% % in focus 40% 51% 56% 62%
Slide 25: Consumer and SME Lending Development
Consumer and SME Lending Development Consumer (Micro shifted to SME as of 1Q21) SME €m, YTD €m, YTD 1,752 1,803 1,668 1,706 1,606 1,535 1,562 1,342 1,312 1,389 1,298 1,326 1,310 1,322 1,332 1,243 1,188 1,188 1,059 1,040 1,057 1,028 928 791 774 Gross 646 Performing Loans 2016 2017 2018 2019 2020 2021
Slide 26: New Business on a Monthly Basis
New Business on a Monthly Basis New business continued during 1H24 €m 1H24YTD: 428 85 77 74 69 67 68 64 69 57 62 59 61 60 63 63 Consumer 48 53 38 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. 90 1H24YTD: 363 78 81 72 72 68 72 72 67 63 64 64 66 SME 54 55 52 45 40 Jan. Feb. Mar. Apr. May
Slide 27: Digital Lending Platforms in All Major Markets
Digital Lending Platforms in All Major Markets WebLoan (Consumer & SME) Group Application Processing System – GAPS (Consumer) Simple entry point for loan requests with instant Simple branch loan Application Processing System initial offer including CDE (Credit Decision Engine) Achievements 2Q24 Achi
Slide 28: Digital Transformation
Digital Transformation Digital capabilities YTD +10% YoY Registered Mobile Banking 118 150 188 230 258 277 291 305 +2% Mobile banking users (vs. PQ) Users (ths.)2 +9% YoY +2% Digital users (vs. PQ) 315 301 289 273 246 210 26% Bank@Work (1H24: 26%, YE23: 25%, 3Q23: 25%, 1H23: 26%) 177 149 35% Digital
Slide 29: Accelerated Run-Down of Non-Focus in Line With Plans
Accelerated Run-Down of Non-Focus in Line With Plans Non-Focus portfolio development Mortgages, Large Corp. & Public Fin. gross performing loans (€m) -16% -33% -33% -19% -12% 1,469 1,252 Large Corp. & 724 841 613 Public 582 307 469 413 147 105 Mortgages 744 639 79 535 435 364 333 2019 2020
Slide 30: Financials: Financial Performance 1H24 in Detail
Financials: Financial Performance 1H24 in Detail Key financials P&L in €m YTD QTD •1 Operating result up 8.9% YoY to €54.0m (up 1H24 (YTD) 1H23 (YTD) +/- PY 2Q24 1Q24 +/- PQ 14.7% excl. one-off costs): Net interest income 120.6 108.1 11.5% 60.8 59.8 1.8% Net fee and commission income 35.3 32.5 8.4%
Slide 31: Financials: Key Performance Drivers 1H24
Financials: Key Performance Drivers 1H24 Net interest income Net fee and commission income €m €m NIM 367bp 395bp 380bp 389bp 397bp % of 30% 29% 30% 28% 30% NII +11.5% +8.8% +8.4% +1.8% 120.6 +8.4% 108.1 +9.3% 55.9 59.8 60.8 32.5 35.3 17.0 16.9 18.4 1H23 (YTD) 1H24 (YTD) 2Q23 (QTD) 1Q24 (QTD) 2Q24 (Q
Slide 32: Financials: Interest Income Dynamics
Financials: Interest Income Dynamics Interest income by quarter1 Gross yield by quarter2 €m 78.1 76.0 76.2 72.7 2Q23 3Q23 4Q23 1Q24 2Q24 67.3 7.1% 7.2% 7.2% 7.3% 7.4% 21.2 Consumer 20.9 20.7 19.1 7.6% 7.8% 7.8% 8.0% 8.0% new new new new new 17.1 1.4 business business business business business Other
Slide 33: Financials: Breakdown of Other Interest Income
Financials: Breakdown of Other Interest Income Treasury interest income by quarter €m Other interest 17.1 19.1 20.9 20.7 21.2 income (total) • HTC bond portfolio strategy: interest income from the instruments 17.8 held under the Hold-to-Collect (HTC) bond portfolio strategy in EU 17.6 17.4 entities.
Slide 34: Financials: Plain Vanilla Investment Portfolio
Financials: Plain Vanilla Investment Portfolio Evolution of Investment Portfolio1 Key highlights €m 1,290 1,179 20 1,062 1,109 19 112 10 • Investment portfolio at €1.3b as of 1H24: Equity 19 114 45% of the portfolio are in securities in HTC 18 117 12 Corporations 13 118 21 book and 55% in securities
Slide 35: Financials: Interest Expense Dynamics
Financials: Interest Expense Dynamics Interest expense by quarter Cost of funding by quarter1 €m 17.3 16.4 15.5 2Q23 3Q23 4Q23 1Q24 2Q24 2.8 2.2 Deposits - 1.5 0.55% 0.70% 0.82% 0.84% 0.83% 13.4 1.1 Network 1.4 1.2 1.3 11.4 1.4 4.1 Direct 3.3 3.5 Deposits 1.76% 2.12% 2.37% 2.74% 2.99% Treasury 2.0 D
Slide 36: Financials: Perspective on Interest Rate Sensitivity
Financials: Perspective on Interest Rate Sensitivity Estimated impact on NII and NIM for parallel interest rate shifts Interest binding structure of customer deposits €m, calculated based on 1H24 balance sheet % of customer deposits, calculated based on 1H24 balance sheet Shift -25bps -50 bps -75 bp
Slide 37: Financials: Commission Income Dynamics
Financials: Commission Income Dynamics Net fee and commission income by quarter Key highlights €m • Net fee and commission income 2Q24 increasing 18.4 17.7 due to higher income from accounts & packages, Non-Focus 17.0 16.9 16.9 0.6 0.7 bancassurance and card business and Other 0.9 0.5 0.5 • Other pr
Slide 38: Financials: Other Income & Other Result
Financials: Other Income & Other Result Other income breakdown (YTD) €m 1H23 1H24 Lower deposit guarantee due to no collection of the Deposit guarantee -2.9 -2.5 premium in Croatia for the fourth quarter 2023 and 1H24 1 1 Bank levies and other taxes -1.8 -4.3 Higher bank levies and other taxes mainl
Slide 39: Financials: Development of General Administrative Expenses (OPEX)
Financials: Development of General Administrative Expenses (OPEX) OPEX development by quarter Other Administrative expenses €m 1H24 YTD, €m Other1 4.6 4.0 12% Advertising 11% 16.2 Total: 50.4 45% IT 5.2 €36.3m 46.7 46.5 4.2 Legal & Advisory 14% 45.0 43.1 6.4 4.4 4.2 4.3 18% Depreciation 4.2 Premises
Slide 40: Financials: Balance Sheet
Financials: Balance Sheet Detailed balance sheet overview (YTD) €m 2020 2021 2022 2023 1H24 Cash reserves 1,156.3 1,361.7 1,382.9 1,254.5 1,126.6 Investment Portfolio 965.5 1,044.8 1,084.4 1,208.1 1,318.6 Financial assets held for trading 36.4 32.6 22.8 29.5 28.9 Investment securities 929.0 1,012.2
Slide 41: Financials: Income Statement
Financials: Income Statement Detailed income statement overview (YTD) €m 2020 2021 2022 2023 1H23 1H24 Interest income calculated using the effective interest method 194.3 185.5 192.9 247.3 121.3 137.2 Other interest income 2.6 2.2 2.3 29.7 7.0 17.1 Interest expense (22.3) (18.2) (18.7) (49.0) (20.1
Slide 42: Financials: Breakdown by Entity
Financials: Breakdown by Entity 1H24 YTD Addiko Bank d.d., Addiko Bank d.d., Addiko Bank d.d., Addiko Bank a.d., Addiko Bank a.d., Addiko Bank A.D., (€m, IFRS) Zagreb Ljubljana Banja Luka Sarajevo Beograd Podgorica Net interest income 38.2 30.7 11.2 12.1 22.9 6.4 Net commission income 11.9 7.5 4.6 4
Slide 43: Risk: Strong Risk Management Framework
Risk: Strong Risk Management Framework Non-performing loan portfolio (YTD) NPE Volumes, €m 1,229 761 606 404 277 244 194 163 138 146 137 NPE Coverage Ratio1 61.7% 67.5% 67.0% 75.4% 73.8% 73.6% 71.9% 75.4% 80.9% 81.4% 80.7% (Ex-Collateral) 14.3% NPE Ratio2 9.2% 8.1% 5.6% 3.9% 3.5% 2.9% 2.4% 2.1% NPE
Slide 44: Risk: Robust Asset Quality in Portfolios
Risk: Robust Asset Quality in Portfolios Focus Non-Focus Consumer SME €m, rounded €m, rounded €m, rounded 2,038 1,978 43 1,968 1,958 1,925 > 90 1,944 1,931 1,886 44 78 39 31 > 90 39 days 46 38 41 33 40 81 39 45 days 67 61-90 77 days 61-90 days 31-60 31-60 days days < 30 < 30 days days > 90 days 1,90
Slide 45: Risk: Provision Coverage Evolution
Risk: Provision Coverage Evolution Stage 1, 2 and 3 assets1 Business segments: Stage 1 & 2 (Performing) coverage1 €m 1H24 (YTD) ECL coverage (YTD) By Segment 1Q23 2023 3Q23 1H23 4,509 4,518 4,513 4,521 4,427 153 138 146 137 Focus Focus 1.4% 1.4% 1.4% 1.4% 1.6% 159 413 580 557 523 448 Consumer 1.5% 1
Slide 46: Risk: NPE Formation and Exit Dynamics
Risk: NPE Formation and Exit Dynamics Quarterly NPE formation & exit - group level Consumer SME Mortgages Large Corporates Public Finance €m €m €m €m €m Net -2.7 -2.8 +4.4 -0.6 0.3 -12.9 +5.3 -6.5 -2.4 -2.9 -0.9 -1.0 0.0 +3.5 -0.53 -1.5 -0.2 -0.4 -0.1 -0.1 11.2 13.4 12.7 0.0 0.0 0.0 0.0 0.0 10.1 8.6
Slide 47: Risk: Low NPE Concentration, Well Provisioned and Carefully Managed
Risk: Low NPE Concentration, Well Provisioned and Carefully Managed Overview of Top 10 NPEs 1H24 Group of Borrowers, €m Borrower Total Exposure Country Description Metal industry and mechanical NPE 1 8.9 Croatia engineering Coverage for Top 10 NPEs NPE 2 2.4 Croatia Construction industry Coverage 71
Slide 48: Risk: NPE and Cost of Risk Development
Risk: NPE and Cost of Risk Development Focus Non-Focus3 €m Consumer SME €m €m NPE Coverage Ratio (Excl. 78.7% 80.1% 80.8% 80.8% 68.6% 73.9% 81.8% 78.3% 79.9% 80.9% 79.9% 84.0% Collateral)1 5.3% 5.4% 5.4% 5.5% 3.7% 3.5% NPE Ratio2 3.0% 3.0% 3.1% 3.1% 2.3% 2.3% 2022 1H23 2023 1H24 2022 1H23 2023 1H24
Slide 49: Risk: NPE and Cost of Risk Development by Business Segment
Risk: NPE and Cost of Risk Development by Business Segment Consumer SME Mortgages Large Corporates Public Finance €m €m €m €m €m NPE Coverage Ratio1 78.7% 80.8% 80.8% 68.6% 81.8% 78.3% 77.4% 82.0% 82.6% 91.0% 78.1% 83.8% 61.8% 73.2% 98.1% 7.1% 7.3% 5.8% 5.8% 4.8% 4.7% 4.5% 4.5% 3.7% 4.0% NPE Ratio2
Slide 50: Risk: CHF Loans Significantly Managed Down
Risk: CHF Loans Significantly Managed Down CHF portfolio overview CHF status across countries €m • Several CHF initiatives rejected because parliamentary constitutional service % of Total classified such drafts as unconstitutional and unlawful under European law 5.5% 4.4% 3.4% 2.0% 1.7% 1.3% 1.1% 0.
Slide 51: Capital: Capital Requirements & Guidance Going Forward
Capital: Capital Requirements & Guidance Going Forward Capital requirements as of 2024 (excluding P2G) • Unchanged at 3.25% P2R • At least 56.25% must be held in CET1 (Draft for 2025) capital and at least 75% in Tier 1 capital 20.4% 20.4% 20.4% 20.4% 20.4% 20.4% • Yearly review as part of SREP • Sys
Slide 52: Capital: Further Details
Capital: Further Details Breakdown of capital position1 Fully-loaded Addiko is using the standardised approach for 20.0% 19.9% 20.4% 20.4% its RWA calculation with most of its RWAs stemming from credit risk Expiration of IFRS 9 transitional capital rules as of 1 January 2023 leading to no difference
Slide 53: Capital: Credit Risk RWA in Focus vs. Non-Focus
Capital: Credit Risk RWA in Focus vs. Non-Focus Risk weighting for focus portfolio is in line with overall contribution to loan book Credit risk RWA Credit risk RWA: breakdown by segment1 1H24, €m 1H24, €m Large Public Corporate Finance Mortgages 3,120 7614 192 Corporate Center 556 Consumer Total: €
Slide 54: Disclaimer
Disclaimer THESE RESULTS AND STATEMENTS (HEREINAFTER REFERRED TO AS “MATERIALS”) WERE CAREFULLY PREPARED BY ADDIKO BANK AG. HOWEVER, THE MATERIALS HAVE NOT BEEN INDEPENDENTLY VERIFIED. THEREFORE, ADDIKO BANK AG MAKES NO REPRESENTATION AND GIVES NO WARRANTY, NEITHER IMPLIED NOR EXPRESSED, AND ASSUMES