Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Erste Bank — H1 2004 Earnings Presentation
43 slides from Erste Group Bank's earnings presentation, Aug 17, 2004
Slide 1: Erste Bank – sustaining profit growth, H1 2004 Results
> Erste Bank – sustaining profit growth > H1 2004 Results > Teleconference Vienna, 17 August 2004
Slide 2: Table of Contents
> Table of Contents Hosts Presentation Appendix Andreas Treichl, CEO 03 H1 04 Financial Highlights 29 Overview of International Exposures 04 Operating Performance by Reinhard Ortner, CFO 31 H1 04 Financials of CE Segment Subsidiaries Gabriele Werzer, 05 Key Figures of CE Head of IR subsidiaries 35 E
Slide 3: H1 2004 – Financial highlights
> H1 2004 – Financial highlights Erste Bank Group - Key performance indicators » Total Assets up 7% to EUR 137.6bn » Cash ROE 16.6% (FY 032:13.7%) » Net commission income up 17.3% to » CIR 64.4% (FY 03: 64.2%) EUR 565.2m » Tier 1 ratio 6.6% (FY 03: 6.3%) » Risk provisions down 4.4% to EUR » Cash EPS
Slide 4: H1 2004 – Operating performance per segment
> H1 2004 – Operating performance per segment Operating result shows healthy growth rates at core segments EUR m H1 2004 H1 2003 % Change Austria 406.5 397.2 2.3 Savings banks 172.8 185.3 (6.7) Retail & Real Estate 90.1 83.6 7.8 Retail Branches 36.5 32.9 10.9 SME 8.3 7.0 18.6 Own savings banks 21.5
Slide 5: Key figures of EB subsidiaries in Central Europe
> Key figures of EB subsidiaries in Central Europe HY 2004 Results (IFRS) as reported by local entities 1 2 EB stake 97.96% 80.01% 99.90% 68.56% H1 04 H1 03 H1 04 H1 03 H1 04 H1 03 H1 04 H1 03 Net Profit (EUR m) 135.4 104.4 39.6 34.8 13.0 5.7 20.9 16.7 ROE (%) 25.7 22.6 19.7 20.7 11.6 9.6 19.0 18.0
Slide 6: H1 2004 – Business update
> H1 2004 – Business update Postabank – update on integration process » Improved YE 2004 outlook confirmed » ROE at least 10% at merged EB Hungary » Positive contribution to Group segments » Headcount reduction – approx. 80% of 2004 target achieved » > 550 employees out of 2004 target of 700 » Branc
Slide 7: H1 2004 – Business update (cont)
> H1 2004 – Business update (cont) EB confirms Retail & Real Estate target of 10% ROE in 2005 EUR m H1 03 H1 04 90.1 Op. Profit Net Profit 83.5 40 36.5 30 32.9 21.5 20 18.0 14.3 18.9 13.7 15.7 11.0 10 12.4 8.3 10.5 6.3 4.4 8.5 9.0 7.1 0.0 2.2 0 -7.1 -6.4 -10.1 -10 Total Branches SME Real Estate Own
Slide 8: H1 2004 – Business update (cont)
> H1 2004 –Business update (cont) Focus on areas for improvement Retail: SME: » Number of branches down to 149 from 163 » SME portfolio unchanged at EUR 1.5bn since » Customer attrition contained at 4.3% YE 03 » Further 4 branches to be sold by end Q3 04 » Risk provisions decrease 16% yoy » Headcoun
Slide 9: H1 2004 Group Results
> H1 2004 Group Results > Group Income Statement Group Balance Sheet P&L Details Asset Quality Divisional Figures 9
Slide 10: EB Group Income Statement (IFRS)
> H1 04 EB Group Income Statement (IFRS) EUR m H1 2004 1 H1 2003 % Change Net interest income 1,317.1 1,290.1 2.1 Risk provisions for loans and advances (196.8) (205.9) (4.4) Net commission income 565.2 481.9 17.3 Net trading result 108.3 114.6 (5.5) General administrative expenses (1,291.5) (1,222.
Slide 11: EB Group Balance Sheet (IFRS) – Assets
> H1 04 EB Group Balance Sheet (IFRS) Assets EUR m 30.6.2004 31.12.2003 % Change Cash and balances with central banks 2,709 2,549 6.3 Loans and advances to credit institutions 17,681 13,140 34.6 Loans and advances to customers 70,523 67,766 4.1 Risk provisions for loans and advances (2,827) (2,772)
Slide 12: EB Group Balance Sheet (IFRS) – Liabilities
> H1 04 EB Group Balance Sheet (IFRS) Liabilities EUR m 30.6.2004 31.12.2003 % Change Amounts owed to credit institutions 30,034 25,704 16.8 Amounts owed to customers 66,779 64,839 3.0 Debts evidenced by certificates 18,792 16,944 10.9 Provisions 6,732 6,366 5.7 Other liabilities 5,861 5,515 6.3 Sub
Slide 13: P&L Details – Net interest income
> P & L Details – Net interest income CE performance helps NII despite slightly weaker Austrian results » Group NIM 1 2.21%; slightly down on 2.3% at YE 2003 (Q1 04: 2.25% ) Other » Quarterly split: Q1= EUR 656.9 m » Excluding one-off at SLSP in 2003 margin remained unchanged CE Q2= EUR 660.2 m Aust
Slide 14: P&L Details – Risk provisions
> P & L Details – Risk provisions Improving asset quality in Austria leads to lower risk provisions » Risk provisions decrease by EUR 9m (-4.4%) yoy Other » Quarterly split: » Austria: down EUR 16m (8.7%) to EUR 168.8m Q1= EUR 108.2 m CE Q2= EUR 88.6 m » Reflects improved credit risk situation in al
Slide 15: P&L Details – Net commission income
> P & L Details Net commission income Continued strong growth rates in CE » Sound growth of Group commission income (up 17.3%) to EUR 565.2m Other » Quarterly split: Q1= EUR 281.4 m » Austria: up 9.9% yoy, supported by very strong Q1 04 CE Q2= EUR 283.8 m » Main drivers are strong improvement at the
Slide 16: Asset gathering at EB Group: positioned for growth
> Asset gathering at EB Group: positioned for growth Notable market growth in Austria, CE market share continues to increase Total Market size (EUR bn) Erste Bank Group market share (%) 118.2 120 49.8 50 100 45 80 40 FY 2001 35 31.8 FY 2001 H1 2004 30 27.5 H1 2004 10 8.4 25 8 20 17.1 6 15 3.4 3.4 7.
Slide 17: P&L Details – Net trading result
> P & L Details Net trading result Strong CE performance counters decrease in Austria » Net trading result declines by 5.5% » Weaker Q2 in securities and derivatives business Other » Quarterly split: Q1= EUR 62.4 m CE Q2= EUR 45.9 m » Austria: down 24.6% (EUR 20.5m) on very strong H1 03 Austria due
Slide 18: P&L Details – General administrative expenses
> P & L Details General administrative expenses Moderate cost growth in Austria, CE influenced by Postabank » 5.6% increase in Group expenses » Excluding Postabank cost increases contained at 2.2% Other » Quarterly split: Q1= EUR 642.3 m » Austria (including Int’l Business and Corporate Center) up 1
Slide 19: P&L Details – Other operating results
> P & L Details Other operating results Marked to market valuation of securities impacts Q2 04 result » Change in treatment of goodwill main difference yoy Other » Quarterly split: » Increased contribution to deposit insurance CE Q1= EUR 20.8 m Austria Q2= EUR –35.3 m » Mainly at CS due to higher vo
Slide 20: H1 2004 – Asset quality at EB Group
> H1 2004 - Asset quality at EB Group Positive Development at EB Group (including SBs) » NPLs at EUR 4,032m unchanged to YE 2003 (EUR 4,038m) » Improvement of NPL ratio to 3.1% of total exposure, down from 3.4% at YE 2003 » Further decrease of NPLs in Austria (down 2.8% since YE 2003) » NPLs in CE s
Slide 21: Asset quality at EB Group – NPL coverage ratios
> H1 2004 - Asset quality at EB Group Credit risk by segments – NPL coverage ratios Total Outstanding 1 EUR m Low Risk Management Sub- Non- Total NPL’s Risk NPL Attention standard perfoming Provisions Coverage Austria Total 70,673 10,906 3,496 3,410 88,484 3,410 2,120 62.2% CE Total 25,546 1,054 261
Slide 22: EB Group Divisional Figures – Overview
> H1 2004 EB Group Divisional Figures Overview Austria CE Subsidiaries Int. Business Corp. Center TOTAL EB GROUP In EUR m H1 2004 H1 2003 H1 2004 H1 2003 H1 2004 H1 2003 H1 2004 H1 2003 H1 2004 H1 2003 Net interest income 792.9 801.2 455.9 416.1 74.2 73.0 (5.9) (0.3) 1,317.1 1,290.1 Risk provisions
Slide 23: EB Group Divisional Figures – Austria
> H1 2004 EB Group Divisional Figures Details - Austria Savings banks Retail & Real Est. Large Corp. Trading & Inv.B. TOTAL AUSTRIA In EUR m H1 2004 H1 2003 H1 2004 H1 2003 H1 2004 H1 2003 H1 2004 H1 2003 H1 2004 H1 2003 Net interest income 409.6 423.3 257.0 259.3 74.2 75.6 52.1 43.0 792.9 801.2 Ris
Slide 24: EB Group Divisional Figures – Central Europe
> H1 2004 EB Group Divisional Figures Details - Central Europe CS SLSP EB Hungary 3 Croatia TOTAL CE In EUR m H1 2004 H1 2003 H1 2004 H1 2003 H1 2004 H1 2003 H1 2004 H1 2003 H1 2004 H1 2003 Net interest income 243.3 230.1 92.5 122.2 80.8 28.6 39.3 35.2 455.9 416.1 Risk provisions for loans and adv.
Slide 25: Summary and Outlook
> Summary and Outlook > Key Performance Drivers Outlook and Targets 25
Slide 26: H1 2004 – Key Performance Drivers
> H1 2004 – Key Performance Drivers CE contribution continues to grow » Net commission income – strong performance group-wide » Continuing strength of CE net interest margins » Growth in CE Lending » Contribution from enlarged Hungarian business » Improving Asset quality » Increasing share of growin
Slide 27: Outlook and targets
> Outlook and targets Guidance for 2004 » EB Group net profit after tax and minorities of at least EUR 500m within reach for 2004 » Outlook 2004 for CE subsidiaries » CS and SLSP: maintain Return on Equity above 20% » EB Croatia: Return on Equity above 18% » Merged EB Hungary: Return on Equity at le
Slide 28: Appendix
> Appendix > Overview of international exposure Key financial data of CE subsidiaries Quarterly income statement Quarterly balance sheet Quarterly divisionals Key financial data Reminder of Q1 04 Accounting Changes Shareholder structure IR Contacts 28
Slide 29: Overview of international exposures
> Overview of international exposures Credit Risk1 by regions at EB Group Low Risk Management Substandard Non performing Total outstanding attention in EUR m H1 2004 FY 2003 H1 2004 FY 2003 H1 2004 FY 2003 H1 2004 FY 2003 H1 2004 FY 2003 % of total % of total Core Markets 76,795 71,448 11,104 10,875
Slide 30: Overview of international exposures (cont)
> Overview of international exposures (cont) Credit Risk1 by industry sectors at EB Group Low Risk Management Substandard Non performing Total outstanding attention in EUR m H1 2004 FY 2003 H1 2004 FY 2003 H1 2004 FY 2003 H1 2004 FY 2003 H1 2004 FY 2003 % of total % of total Banking & insurance 44,0
Slide 31: Financials (IFRS) of CE subsidiaries – Ceska sporitelna
> H1 2004 Financials (IFRS) of CE subsidiaries Ceská sporitelna Group EUR m H1 2004 H1 2003 % Change Net interest income 258.0 238.1 8.4 Risk provisions for loans and advances (12.3) 17.2 > 100.0 Net commission income 127.5 115.7 10.2 Net trading result 25.4 15.6 62.8 General administrative expenses
Slide 32: Financials of CE subsidiaries – Slovenska sporitelna
> H1 2004 Financials (IFRS) of CE subsidiaries (cont) Slovenská sporitelna Group EUR m H1 2004 H1 2003 % Change Net interest income 97.4 128.5 (24.2) Risk provisions for loans and advances 3.1 (1.6) - Net commission income 32.2 24.1 33.6 Net trading result 7.0 5.1 37.3 General administrative expense
Slide 33: Financials of CE subsidiaries – Erste Bank Hungary & Postabank
> H1 2004 Financials (IFRS) of CE subsidiaries (cont) Erste Bank Hungary Group & Postabank Group EUR m H1 2004 1 H1 2003 1 % Change Net interest income 91.5 74.4 23.0 Risk provisions for loans and advances (18.9) (2.9) > 100.0 Net commission income 23.6 16.8 40.5 Net trading result 9.5 7.9 20.3 Gene
Slide 34: Financials of CE subsidiaries – Erste Bank Croatia
> H1 2004 Financials (IFRS) of CE subsidiaries (cont) Erste Bank Croatia EUR m H1 2004 H1 2003 % Change Net interest income 42.4 39.3 7.9 Risk provisions for loans and advances 2.1 (4.8) > (100.0) Net commission income 7.4 5.8 27.6 Net trading result 6.0 4.5 33.3 General administrative expenses (30.
Slide 35: EB Group Quarterly Results (IFRS)
> EB Group Quarterly Results (IFRS) P&L Details EUR m Q1'01 Q2'01 Q3'01 Q4'01 Q1'02 Q2'02 Q3'02 Q4´02 Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 Q2'04 Net interest income 313 357 389 380 585 634 616 628 618 673 645 652 657 660 Risk provisions (48) (45) (55) (56) (89) (94) (89) (134) (97) (109) (93) (108) (108) (
Slide 36: EB Group Quarterly Balance Sheet (IFRS)
> EB Group Quarterly Balance Sheet (IFRS) Balance Sheet Details EUR m Q1'02 Q2'02 Q3'02 Q4´02 Q1'03 Q2'03 Q3'03 Q4'03 Q1'04 Q2'04 Total assets 117,684 121,068 124,797 121,222 125,081 129,153 130,481 128,575 136,091 137,574 Loans & advances credit inst. 21,372 21,175 23,117 18,673 19,185 20,867 20,36
Slide 37: EB Group Quarterly Divisionals – Austria
> EB Group Quarterly Divisionals Austria - Details In EUR m Savings Banks Retail & Real Estate Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Net interest income 224.9 202.8 220.5 202.6 215.4 210.2 199.4 135.0 128.9 130.3 135.5 126.9 125.9 131.1 Risk provisions (
Slide 38: EB Group Quarterly Divisionals – Central Europe
> EB Group Quarterly Divisionals Central Europe - Details In EUR m Ceska sporitelna Slovenska sporitlena Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Net interest income 116.2 113.3 116.9 111.6 119.1 121.5 121.8 47.8 51.4 70.7 57.2 55.4 45.5 47.0 Risk provision
Slide 39: EB Group Quarterly Divisionals – Overview
> EB Group Quarterly Divisionals Overview In EUR m International Business Corporate Center Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Net interest income 31.5 31.2 41.9 35.4 38.3 35.3 38.9 (8.1) (3.0) 2.8 (12.2) 0.4 (2.2) (3.6) Risk provisions (17.3) (10.0) (
Slide 40: Key financial data
> H1 2004 Results Key financial data in EUR m YE 1998 YE 1999 YE 2000 YE 2001 YE 2002 YE 2003 Q2 2004 Tier 1 Capital pursuant to § Austrian Banking Act 1,611 1,753 2,125 2,337 3,800 3,912 4,291 Total own funds pursuant to § Austrian Banking Act 3,176 3,296 3,956 4,308 6,983 7,146 7,431 Risk weighted
Slide 41: Reminder of accounting changes at Q1 2004
> Reminder of accounting changes at Q1 2004 Most important one-off items in Q1 04 » Early application of IFRS 3 (mandatory from Jan 2005) » Replacement of linear depreciation by annual impairment of goodwill » Various one-off items influence Q1 04 P&L of EB Group » Pre-tax profit includes extraordin
Slide 42: Current shareholder structure
> Current shareholder structure Total numbers of shares: 241,442,892 (post 4:1 split 8 July 2004) H1 2004 Results Teleconference 17 August 2004 42
Slide 43: Investor relations contacts
> Investor relations contacts Erste Bank, Graben 21, 1010 Vienna Fax +43 (0)5 0100-13112 E-mail: investor.relations@erstebank.at Internet: www.erstebank.com Reuters: ERST.VI Bloomberg: EBS AV Datastream: O:ERS Securities ID: 065201 Investor relations Gabriele Werzer Tel: +43 (0)5 0100-11286 E-Mail: