Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Q3 2019 Earnings Presentation
48 slides from Erste Group Bank's earnings presentation, Oct 30, 2019
Slide 1: Erste Group investor presentation Q3 19 results
Erste Group investor presentation Q3 19 results 30 October 2019 Continuation of volume growth drives operating performance Andreas Treichl, CEO Erste Group Bernhard Spalt, Deputy CEO Erste Group Stefan Dörfler, CFO Erste Group Alexandra Habeler-Drabek, 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) -0.4% 59 59 298 +38.4% 153 491 1,228 4 37 1,223 21 2 170 355 20 16 7 Q2 19 Operating Operating Risk costs Other Taxes on Minorities Q3 19 1-9 18 Operating Operating Risk
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 in EUR m in EUR m in EUR m 2.29% +12.0% 2.17% 2.18% 2.14% 0.03% 0.05% 2,233 3,372 3,517 1,994 56.6% 56.3% 1,188 791 786 1,169 -43 -7 0 -102 Q2 19 Q3 19 1-9 18 1-9 19 Q2 19 Q3
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) +6.5% +6.5% 252,101 1,261 252,101 16 614 365 8,519 1,289 9,873 6,138 236,792 1,965 236,792 2,278 243 1,911 31/12/18 Cash Trading, Loans to Net loans Intangib
Slide 7: Executive summary – Key balance sheet data
Executive summary – 31/12/18 Key balance sheet data 30/09/19 Loan/deposit & loan/TA ratio Net loans & credit RWA NPL coverage ratio & NPL ratio in EUR bn 91.8% 91.5% +5.7% 76.9% 63.1% 62.6% 149.3 157.8 73.4% 95.9 103.4 3.2% 2.7% 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 – Strong economic outlook for 2019-2020
2019 Business environment – 2020 Strong economic outlook for 2019-2020 Real GDP growth (in %) Dom. demand contribution* (in %) Net export contribution* (in %) Consumer price inflation (avg, in %) 5.6 5.2 5.0 4.5 4.6 4.7 3.9 3.8 3.7 3.3 3.3 3.3 3.3 3.2 3.0 0.8 2.6 2.6 2.6 2.7 2.5 2.3 2.5 2.6 2.7 2.4
Slide 10: Business environment – CZ has increased key policy rate in eight steps to 2.0%
3M Interbank Business environment – 10YR GOV CZ has increased key policy rate in eight steps to 2.0% since August 2017 Austria Czech Republic Romania 1.96% 2.10% 2.13% 2.15% 4.71% 4.61% 4.81% 0.68% 4.23% 0.11% 0.19% 1.61% 1.78% -0.32% -0.32% -0.27% 3.00% 3.13% 2.93% 1.06% 1.20% 2.47% -0.34% -0.40% 1
Slide 11: Business environment – CEE currencies remain remarkably stable versus the euro
Business environment – CEE currencies remain remarkably stable versus the euro EUR/CZK EUR/RON +0.5% +0.2% +0.2% +1.9% -0.4% +1.9% 25.6 25.7 25.7 25.7 25.7 25.8 4.65 4.74 4.75 4.73 4.65 4.74 1-9 18 1-9 19 Q2 19 Q3 19 31/12/18 30/09/19 1-9 18 1-9 19 Q2 19 Q3 19 31/12/18 30/09/19 • Czech National Bank
Slide 12: Business environment – Stable market shares across the region
30/09/18 Business environment – 30/06/19 Stable market shares across the region 30/09/19 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 20.3% 21.2% 19.8% 21.4% AT 20.7% AT 21.7% AT 20.3% AT 21.8% 23.5% 20.7% 25.6% 12.3% CZ 23.5% CZ 21.5% CZ 25.6% CZ 12.3% 23.6% 21.7% 25.
Slide 13: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 13
Slide 14: Performing loans continue to grow across most geographies
YoY 30/09/18 Business performance: performing loan stock & growth – QoQ 30/06/19 Performing loans continue to grow across most geographies 30/09/19 146.7 6.9% • Rising performing loan volume trend continued in Q3 19 Group 154.2 156.8 1.7% across most geographies 32.0 • Yoy development driven by Corp
Slide 15: Deposit build-up continues in Q3 19
YoY 30/09/18 Business performance: customer deposit stock & growth – QoQ 30/06/19 Deposit build-up continues in Q3 19 30/09/19 159.8 7.9% • Continuation of exceptional deposit growth across all Group 169.7 1.7% geographies despite zero/low interest rate environment as 172.5 retail and corporate clie
Slide 16: NII increases 2.5% yoy, up 1.6% qoq
Business performance: NII and NIM – Q3 18 Q2 19 NII increases 2.5% yoy, up 1.6% qoq Q3 19 1,158 2.27% • Yoy NII growth (+2.5%) mainly due to Corporates, solid Group 1,169 2.18% 1,188 2.14% contribution from Retail and Savings Banks; NIM decline due 160 1.56% to expanded balance sheet AT/EBOe 156 1.5
Slide 17: NII continues to grow, fee income advances in Q3
YoY Q3 18 Business performance: operating income – QoQ Q2 19 NII continues to grow, fee income advances in Q3 19 Q3 19 1,722 4.6% • Yoy up in most segments on the back of good macro Group 1,821 1,801 -1.1% environment; improvements in all major operating income 260 components 8.1% AT/EBOe 286 -1.6%
Slide 18: Costs improve on other administrative expenses
YoY Q3 18 Business performance: operating expenses – QoQ Q2 19 Costs improve on other administrative expenses Q3 19 1,026 -1.1% • Yoy cost decline driven by lower other administrative Group 1,030 1,015 -1.5% expenses (esp. expenses for office space and business 165 operating expenses), partially off
Slide 19: CIR improves to 58.6% ytd
YoY Q3 18 Business performance: operating result and CIR – QoQ Q2 19 CIR improves to 58.6% ytd Q3 19 Operating result YoY & QoQ change Cost/income ratio 696 59.6% Group 791 12.9% -0.6% 56.6% 786 56.3% 95 63.4% AT/EBOe 119 22.5% -2.3% 58.2% 117 58.5% 130 65.7% AT/SB 142 10.6% 1.2% 65.1% 143 64.6% 73
Slide 20: Net releases tapering off in Q3 19
Q3 18 Business performance: risk costs (abs/rel*) – Q2 19 Net releases tapering off in Q3 19 Q3 19 -29 -0.02% • Yoy and qoq development characterised by continuation of Group -7 0.03% 0 0.05% healthy asset quality, further net releases in different -6 0.00% geographies AT/EBOe -5 0.02% 4 0.06% -30 -
Slide 21: NPL ratio improves further to 2.7%
30/09/18 Business performance: non-performing loans and NPL ratio – 30/06/19 NPL ratio improves further to 2.7% 30/09/19 5,337 3.5% • NPL volume declines qoq by EUR 0.2bn to EUR 4.3bn in Group 4,476 2.8% 4,290 2.7% Q3 19 concurrent with loan growth leading to the NPL ratio 618 1.9% improvement. NPL
Slide 22: NPL coverage rises to 76.9%
30/09/18 Business performance: allowances for loans and NPL coverage – 30/06/19 NPL coverage rises to 76.9% 30/09/19 3,774 71.1% • NPL coverage rises yoy and qoq, exceptionally strong in Group 3,362 75.4% 3,282 76.9% Central & Eastern Europe 376 60.9% • Stock of provisions declined further, followin
Slide 23: Other result improves qoq after one-off hit in Q2
Q3 18 Business performance: other result – Q2 19 Other result improves qoq after one-off hit in Q2 19 Q3 19 -31 • Yoy other operating result relatively stable Group -210 -40 • Qoq development reflects legal provisions following RO high 5 court decision in Q2 19 AT/EBOe -6 -8 -2 • Year-on-year segmen
Slide 24: Net profit reflects solid operating performance and improved other result
Q3 18 Business performance: net result – Q2 19 Net profit reflects solid operating performance and improved other result Q3 19 454 • Yoy development driven by significant improvement of Group 355 491 operating result (+12.9%) 76 • Qoq profitability mirrors improved other result due to AT/EBOe 87 pro
Slide 25: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 25
Slide 26: Assets and liabilities: YTD overview – Loan/deposit ratio stable at 91.5%
Assets and liabilities: YTD overview – Loan/deposit ratio stable at 91.5% at Sep 19 (Dec 18: 91.8%) Assets (EUR bn) Assets (in %) Liabilities & equity (EUR bn) Liabilities & equity (in %) 252.1 252.1 236.8 15.6 6.2% 100% 236.8 2.8 1.1% 100% 7.4% 19.9 7.5% 7.9% 1.1% 2.5 17.5 17.7 45.9 18.6% 18.2% 43.
Slide 27: Customer loans by country of risk – Net customer loans up 5.7%
Assets and liabilities: customer loans by country of risk – Net customer loans up 5.7%, NPLs down 12.1% ytd Net customer loans (EUR bn) Performing loans (EUR bn) Non-performing loans (EUR bn) +5.7% +6.0% 155.3 157.8 154.2 156.8 149.3 4.8 4.7 148.0 4.7 4.7 -12.1% 4.6 8.1 8.5 4.6 8.1 8.4 7.5 1.7 1.8 7
Slide 28: Financial and trading assets – LCR at excellent 145.6%
Assets and liabilities: financial and trading assets* – LCR at excellent 145.6% By geography By debtor type Liquidity buffer +1.2% in EUR bn in EUR bn 41.8 42.5 42.3 100% 27.4% 26.9% 9.4% 9.9% 12.5% 24.5% 9.5 10.8 11.0 9.0% 10.4% 23.0% 9.1% 58.7 56.9 55.5 0.7 0.7 0.7 52.6 3.5 3.5 3.5 4.9 4.9 5.1 5.3
Slide 29: Customer deposit funding – Customer deposits grow by 6.1% ytd
Assets and liabilities: customer deposit funding – Customer deposits grow by 6.1% ytd, driven by households and corporates By customer type By product type Highlights in EUR bn in EUR bn • Continued deposit inflows driven by Retail +6.1% segment with highest demand for overnight deposits amid low in
Slide 30: Debt vs interbank funding – Taking advantage of favourable market conditions
Assets and liabilities: debt vs interbank funding – Taking advantage of favourable market conditions Debt securities issued Interbank deposits in EUR bn in EUR bn -0.5% +12.9% 29.7 30.8 19.9 29.6 Sub debt 19.0 Senior unsec. bonds 17.7 Overnight deposits 5.8 6.5 5.9 5.5 Term deposits Certificates of
Slide 31: LT funding – Limited LT funding needs in 2019
Assets and liabilities: LT funding – Limited LT funding needs in 2019 Maturity profile of debt in EUR bn 3.2 3.3 3.1 2.4 2.5 2.1 1.6 1.5 1.4 0.7 0.8 0.8 0.2 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031+ Senior unsec. bonds Senior non-preferred bonds Covered bonds Capital exc Tier
Slide 32: LT funding – MPE resolution strategy
Assets and liabilities: LT funding – MPE resolution strategy Resolution strategy Austrian resolution group • Major entities within the Austrian resolution group*: • Direct presence in 7 geographically connected countries • Erste Group Bank AG • Erste Group’s setup suggests a multiple point of entry
Slide 33: Capital position – B3FL CET1 ratio at 13.1%
Assets and liabilities: capital position – B3FL CET1 ratio at 13.1%, ex Q3 19 interim profit Basel 3 capital (phased-in) Risk-weighted assets (phased-in) Basel 3 capital ratios (phased-in) in EUR bn in EUR bn 18.4% 18.2% 18.2% 17.8% 17.2% 20.9 21.3 21.8 21.5 117.0 114.6 116.8 118.3 121.0 20.1 14.9%
Slide 34: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 34
Slide 35: Conclusion – Outlook 2019
Conclusion – Outlook 2019 • Real GDP growth of approx. 3-4% expected in 2019 in CEE and about 2% in Austria Macro outlook • Real GDP growth to be driven by solid domestic demand, as real wage growth and 2019 low unemployment support economic activity in CEE • Solid public finances across CEE • ROTE
Slide 36: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 36
Slide 37: Additional information: 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 38: Additional information: 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 1-9 18 1-9 19 YOY-Δ Q3 18 Q2 19 Q3 19 YOY-Δ QOQ-Δ Net interest income 3,372.0 3,517.4 4.3% 1,158.2 1,168.8 1,187.7 2.5% 1.6% Interest income 3,799.4 4,139.4 8.9% 1,314.0 1,385.5
Slide 39: Additional information: group balance sheet – Assets
Additional information: group balance sheet – Assets Quarterly data Change in EUR million Sep 18 Dec 18 Mar 19 Jun 19 Sep 19 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 15,237 17,549 16,382 16,843 15,638 2.6% -10.9% -7.2% Financial assets held for trading 6,034 5,584 6,331 6,464 7,215 19.6% 29.2% 11.6%
Slide 40: Additional information: group balance sheet – Liabilities and equity
Additional information: group balance sheet – Liabilities and equity Quarterly data Change in EUR million Sep 18 Dec 18 Mar 19 Jun 19 Sep 19 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities held for trading 2,865 2,508 2,277 2,518 2,751 -4.0% 9.7% 9.3% Derivatives 2,153 2,000 1,979 2,125 2,411 12.0% 20.5% 13
Slide 41: Additional information: regulatory capital position/requirement (SREP)
Additional information: regulatory capital position/requirement (SREP) – Capital requirements (SREP) for 2019/20; Erste Group target of 13.5% unchanged • Combined impact of countercyclical buffers amounts to 45bps in 2019, 61bps in 2020 • Management buffer targeted in 100-150bps range Erste Group Co
Slide 42: Additional information: 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) 155.4 158.7 161.1 158.7 161.1 158.7 161.1 152.0 152.8 152.0 152.8 155.4 4.5 5.0 4.
Slide 43: Additional information: 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: 4.6m Customers: 2.2m in 7 geographically connected Employees: 9,723 Employees: 4,085 countries CZ Bra
Slide 44: Additional information: 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: Additional information: 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 a (Individual Rating ) + Financial Profile ▲ a Asset Risk baa2 Anchor bbb+ Capital baa1 Business Position Strong +1 Profitability baa3 Ca
Slide 46: Additional information: ESG ratings, indices and alignment with UN SDGs
Additional information: ESG ratings, indices and alignment with UN SDGs ESG Ratings and Indices UN Sustainable Development Goals In principle, Erste Group supports all SDGs. Given its regional footprint and business model, Erste Group is in fact able to make notable contributions to Included in the
Slide 47: Additional information: 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 1 Unidentified * 10.97% 11.41% Savings Banks & 10.97% Identified Trading ** Identified Trading ** Savings Banks Austria 2.27% Foundations 2 Rest of world 2.27% 5.
Slide 48: 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