Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Q1 2015 Earnings Presentation
47 slides from Erste Group Bank's earnings presentation, May 7, 2015
Slide 1: Erste Group investor presentation Q1 2015 results
Erste Group investor presentation Q1 2015 results 7 May 2015 Erste Group posts net profit of EUR 226m in Q1 15 amid robust CEE business environment; outlook for 2015 confirmed Andreas Treichl, CEO Erste Group Gernot Mittendorfer, CFO Erste Group Andreas Gottschling, 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) 22 19 43 19 34 226 36 226 181 301 103 1 15 42 71 55 Q4 14 Operating Operating Risk costs Other Taxes on Minorities Q1 15 1-3 14 Operating Operating Risk costs Other Taxe
Slide 5: Executive summary – Q1 15 extras & banking charges
Executive summary – Group income statement performance: Q1 15 extras & banking charges Extraordinary effects Direct charges and levies on banking activities • Full annual resolution funds contributions of EUR 54.9m • Ex ante deposit insurance contributions (excluding European booked in other operati
Slide 6: 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 57.0% 56.1% 2.62% 2.55% 2.66% 1.51% 2.55% +1.9% -49.7% 484 727 741 757 741 1,124 1,099 1,126 1,099 0.57% 364 183 183 1-3 14 1-3 15 Q4 14 Q1 15 1-3 1
Slide 7: 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) 202,570 202,570 26 261 512 1,062 2,603 288 2,169 902 1,586 2,154 196,287 196,287 1,241 388 31/12/14 Cash Trading, Loans to Net loans Intangibles Other 31/03/
Slide 8: Executive summary – Key balance sheet data
Executive summary – 31/12/14 Key balance sheet data 31/03/15 Loan/deposit & loan/TA ratio Net loans & credit RWA* NPL coverage ratio & NPL ratio in EUR bn +2.2% 98.6% 98.9% 68.9% 67.9% 120.8 123.4 61.6% 60.9% 87.1 87.6 8.5% 8.1% Loan/deposit ratio Loans/total assets Net loans Credit RWA NPL coverage
Slide 9: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 9
Slide 10: Business environment – Solid domestic demand expected to drive economic growth in 2015
2014 Business environment – 2015 Solid domestic demand expected to drive economic growth in 2015 Real GDP growth (in %) Dom. demand contribution* (in %) Net export contribution* (in %) Consumer price inflation (ave, in %) 4.0 1.5 3.6 3.0 2.7 3.0 1.2 2.7 2.4 1.1 2.6 2.4 2.5 2.8 2.8 2.5 2.2 2.0 1.2 0.
Slide 11: Business environment – Continuously decreasing interest rates driven by ECB policy
Business environment – 3M Interbank 10YR GOV Continuously decreasing interest rates driven by ECB policy Austria Czech Republic Romania 2.27% 5.36% 1.98% 0.87% 3.84% 3.03% 3.03% 0.95% 0.52% 0.37% 0.52% 0.34% 1.83% 0.45% 0.33% 1.21% 1.21% 0.30% 0.45% 2.66% 0.05% 0.08% 0.05% 0.33% 1-3 14 1-3 15 Q4 14
Slide 12: Business environment – Limited currency volatility in CEE
Business environment – Limited currency volatility in CEE EUR/CZK EUR/RON +0.7% -0.1% -0.5% -1.1% +0.4% -1.6% 27.4 27.6 27.6 27.6 27.7 27.6 4.50 4.45 4.44 4.45 4.48 4.41 1-3 14 1-3 15 Q4 14 Q1 15 31/12/14 31/03/15 1-3 14 1-3 15 Q4 14 Q1 15 31/12/14 31/03/15 • Czech National Bank maintains exchange r
Slide 13: Business environment – Market shares: stability in all markets, challenges in RO corporate
31/03/14 Business environment – 31/12/14 Market shares: stability in all markets, challenges in RO corporate 31/03/15 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 19.0% 17.4% 18.1% 19.6% AT 19.2% AT 18.8% AT 18.4% AT 20.4% 23.6% 19.2% 26.6% 10.6% CZ 23.3% CZ 18.6% CZ 2
Slide 14: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 14
Slide 15: Business performance: performing loan stock & growth
YoY 31/03/14 Business performance: performing loan stock & growth – QoQ 31/12/14 Performing loan volume grows by 2.2% in Q1 15 31/03/15 Business line view (BL) Geographic view (geo) 115.2 27.2 4.2% AT/EBOe 28.0 5.0% Group 117.4 2.1% 120.1 2.2% 28.5 10.2 43.2 AT/OA 11.1 16.0% Retail 44.1 3.7% 6.9% 1.
Slide 16: Business performance: customer deposit stock & growth
YoY 31/03/14 Business performance: customer deposit stock & growth – QoQ 31/12/14 Deposits grow by 1.8% in Q1 15 31/03/15 Business line view (BL) Geographic view (geo) 119.4 28.7 4.4% AT/EBOe 29.9 4.0% Group 122.6 0.0% 124.8 1.8% 29.9 4.9 2.1% 62.6 3.7% AT/OA 4.0 Retail 64.6 5.0 26.3% 64.9 0.5% 24.7
Slide 17: Business performance: NII and NIM
Business performance: NII and NIM – Q1 14 Q4 14 NII impacted by lower unwinding in RO and lower volumes in HU Q1 15 Business line view (BL) Geographic view (geo) 1.124 2.62% 145 1.53% Group 1.126 2.66% AT/EBOe 157 1.67% 1.099 2.55% 158 1.74% 538 4.35% 99 1.15% Retail 542 4.45% AT/OA 93 1.34% 552 4.5
Slide 18: Business performance: operating income
Q1 14 Business performance: operating income – Q4 14 Stable yoy on one-off, down qoq on lower NII and higher fees in Q4 14 Q1 15 Business line view (BL) Geographic view (geo) Highlights 1,691 1,691 • QOQ decline in group operating income driven by Group 1,760 Group 1,760 lower NII in Q1 15 and stron
Slide 19: Business performance: operating expenses
Q1 14 Business performance: operating expenses – Q4 14 Costs down qoq and yoy on lower administrative expenses Q1 15 Business line view (BL) Geographic view (geo) Highlights 963 963 • Costs down qoq on seasonality, yoy lower on Group 1.004 Group 1.004 decline in administrative expenses and lower 948
Slide 20: Business performance: operating result and CIR
Q1 14 Business performance: operating result and CIR – Q4 14 Solid operating performance in Q1 15 Q1 15 Business line view (BL) Geographic view (geo) 727 57.0% 727 57.0% Group 757 57.0% Group 757 57.0% 741 56.1% 741 56.1% 391 52.6% 100 59.3% Retail 349 57.7% AT/EBOe 85 68.4% 385 53.4% 102 59.8% 138
Slide 21: Business performance: risk costs
Q1 14 Business performance: risk costs (abs/rel*) – Q4 14 Risk costs decline substantially in RO and HU, both yoy and qoq Q1 15 Business line view (BL) Geographic view (geo) 364 1.14% 21 0.30% Group 484 1.51% AT/EBOe 38 0.51% 183 0.57% 22 0.30% 51 1.64% 119 1.02% AT/OA 78 2.47% Retail 94 0.80% 67 59
Slide 22: Business performance: non-performing loans and NPL ratio
31/03/14 Business performance: non-performing loans and NPL ratio – 31/12/14 Asset quality improvement continues apace: NPL ratio down to 8.1% 31/03/15 Business line view (BL) Geographic view (geo) 12,238 9.6% 986 3.5% Group 10,878 8.5% AT/EBOe 1,012 3.5% 10,560 8.1% 993 3.4% 1,688 14.2% 3,410 7.3%
Slide 23: Business performance: allowances for loans and NPL coverage
31/03/14 Business performance: allowances for loans and NPL coverage – 31/12/14 NPL coverage at comfortable 67.9% 31/03/15 Business line view (BL) Geographic view (geo) 7,660 62.6% 673 68.2% Group 7,491 68.9% AT/EBOe 697 68.9% 7,174 67.9% 687 69.2% 847 50.2% 2,363 69.3% AT/OA 862 58.1% Retail 2,360
Slide 24: Business performance: other result
Q1 14 Business performance: other result – Q4 14 Resolution funds contributions and HU banking tax weigh on other result Q1 15 Business line view Geographic view Highlights -124 -124 • YOY deterioration in group other result due to Group -120 Group -120 booking of full annual European resolution fun
Slide 25: Business performance: net result
Q1 14 Business performance: net result – Q4 14 Strong net result on lower risk costs and solid operating performance Q1 15 Net result by business line Net result by geography Highlights 103 103 • Substantially improved net profit as Group 42 Group 42 extraordinary effects almost offset each other 22
Slide 26: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 26
Slide 27: Assets and liabilities: YTD overview
Assets and liabilities: YTD overview – Loan/deposit ratio stable at 98.9% (Dec 14: 98.6%) Assets (EUR bn) Assets (in %) Liabilities & equity (EUR bn) Liabilities & equity (in %) 196.3 202.6 196.3 202.6 100% 100% 8.2 4.0% 4.1% 9.0 3.9% 4.4% 7.8 7.7 16.4 7.5% 8.1% 14.8 50.1 52.3 25.5% 25.8% 7.4 8.3 3.
Slide 28: Assets and liabilities: customer loans by country of risk
Assets and liabilities: customer loans by country of risk – Performing loans up 4.2% yoy, NPLs down 13.7% Net customer loans (EUR bn) Performing loans (EUR bn) Non-performing loans (EUR bn) +2.9% +4.2% -13.7% 119.9 120.8 123.4 117.4 120.1 12.2 3.4 115.2 3.5 0.3 2.8 3.2 6.0 2.8 3.2 5.7 5.7 5.7 0.8 5.
Slide 29: Assets and liabilities: allowances for customer loans
Assets and liabilities: allowances for customer loans – Decrease in allowances mainly due to CHF conversion in Hungary in Q1 15 Quarterly development (EUR m) Highlights • Low gross NPL inflows result in lower allocations and lower risk costs in Q1 15 • Insignificant level of NPL sales in Q1 15 614 •
Slide 30: Assets and liabilities: financial and trading assets
Assets and liabilities: financial and trading assets * – LCR at comfortable 121.5% By geography (EUR bn) By debtor type Liquidity buffer (EUR bn) -2.6% 45.8 44.6 43.0 100% 24.8% 8.1 10.6% 11.6% 11.4% 23.3% 8.5 9.0 21.5% 2.2 12.1% 11.2% 10.5% 20.3% 3.9 2.1 2.0 1.2 1.3 5.3 4.8 5.1 45.4 44.0 40.1 39.8
Slide 31: Assets and liabilities: intangibles
Assets and liabilities: intangibles – Intangibles amount to only 13.8% of book value Quarterly development of intangibles (EUR bn) Highlights • Regular customer relationship amortisation 2.4 amounted to EUR 2.5m booked in operating expenses in Q1 15 • CZ and SK goodwill are carried in EUR 0.6 • No g
Slide 32: Assets and liabilities: customer deposit funding
Assets and liabilities: customer deposit funding – Customer deposits grow by 1.8% in Q1 15, up 4.4% yoy By customer type By product type Highlights • YTD increase driven by Retail and SME +4.4% • Stable product structure 124.8 122.6 124.8 119.4 122.6 119.4 0.3 5.9 0.6 0.7 0.3 0.4 5.0 4.9 0.3 0.6 0.4
Slide 33: Assets and liabilities: debt vs interbank funding
Assets and liabilities: debt vs interbank funding – Stable wholesale funding base Debt securities issued (EUR bn) Interbank deposits (EUR bn) -0.5% -32.9% 31.0 31.1 30.9 24.4 Sub debt 3.8 4.5 4.7 3.4 Overnight deposits Suppl. capital 1.2 0.4 0.9 Term deposits 0.4 1.3 Hybrid issues 0.4 Repurchase agr
Slide 34: Assets and liabilities: ST vs LT funding
Assets and liabilities: ST vs LT funding – Limited LT funding needs Maturity profile of debt (EUR bn) 3.7 2.8 2.7 2.6 2.6 2.4 1.9 2.0 0.9 1.0 0.6 0.8 0.4 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027+ Debt CEE Capital exc Tier 1 Covered bonds Senior unsec. bonds • Increased appeti
Slide 35: Assets and liabilities: capital position
Assets and liabilities: capital position – Unaudited quarterly profit not yet reflected in CET1 capital Basel 3 capital (phased-in) Risk-weighted assets (phased-in) Basel 3 capital ratios (phased-in) 16.5% 15.8% 15.7% 15.7% 15.5% 15.9 16.1 15.7 15.8 16.0 102.2 101.8 98.0 100.6 100.6 0.0 0.0 0.0 0.0
Slide 36: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 36
Slide 37: Conclusion – Outlook
Conclusion – Outlook • Operating environment anticipated to be conducive to credit expansion • Real GDP growth of between 2-3% expected in 2015 in all major CEE markets, except Croatia • Real GDP growth to be driven by solid domestic demand • Real GDP growth in Austria expected at below 1% in 2015 •
Slide 38: Presentation topics
Presentation topics • Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information Page 38
Slide 39: Additional information: new segmentation
Additional information: new segmentation – Business line and geographic view Erste Group – Business segments Group ALM & Savings Large Commercial Other Group Intragroup Corporate Retail SME Local CC Banks Corporates Real Estate Corporate Markets Elimination Center (ALM&LCC) (AT/SB) (LC) (CRE) (OC) (
Slide 40: Additional information: income statement
Additional information: income statement – Year-to-date and quarterly view Year-to-date view Quarterly view in EUR million 1-3 14 1-3 15 YOY-Δ Q1 14 Q4 14 Q1 15 YOY-Δ QOQ-Δ Net interest income 1,123.9 1,098.5 -2.3% 1,123.9 1,125.6 1,098.5 -2.3% -2.4% Net fee and commission income 452.1 461.0 2.0% 45
Slide 41: Additional information: group balance sheet – Assets
Additional information: group balance sheet – Assets Quarterly data Change in EUR million Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 10,373 7,267 8,010 7,835 8,223 -20.7% 4.9% 4.9% Financial assets - held for trading 13,610 12,954 11,641 10,531 11,366 -16.5% 7.9% 7.9
Slide 42: Additional information: group balance sheet – Liabilities and equity
Additional information: group balance sheet – Liabilities and equity Quarterly data Change in EUR million Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities - held for trading 7,042 7,152 8,488 7,746 8,988 27.6% 16.0% 16.0% Derivatives 6,341 6,347 7,563 7,188 8,163 28.7% 13.6
Slide 43: Additional information: gross customer loans
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) 127.5 127.7 128.3 128.3 130.6 127.5 127.7 128.3 128.3 130.6 130.6 127.5 127.7 128.
Slide 44: Additional information: footprint
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: 5.0m Customers: 2.3m in 7 geographically connected Employees: 10,547 Employees: 4,291 countries Branc
Slide 45: Additional information: strategy
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 46: Additional information: shareholder structure
Additional information: shareholder structure – Total number of shares: 429,800,000 By investor By region UNIQA Versicherungsverein Privatstiftung Other Harbor International Fund Erste Stiftung, direct 4.1% 2.5% Lone Pine Capital 4.0% 10.8% 4.1% Continental Europe Erste Stiftung, indirect * 23.3% 9.
Slide 47: Investor relations details
Investor relations details • Erste Group Bank AG, Milchgasse 1 (mezzanine floor), 1010 Vienna Fax : +43 (0)5 0100-13112 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