Erste Group Bank Ag · VIE:EBS
Erste Group Bank — FY2014 Earnings Presentation
47 slides from Erste Group Bank's earnings presentation, Feb 27, 2015
Slide 1: Erste Group investor presentation FY 2014 preliminary results
Erste Group investor presentation FY 2014 preliminary results 27 February 2015 Erste Group closes 2014 with profitable quarter as loan growth re-emerges, asset quality improves and capital position strengthens; outlook confirmed Andreas Treichl, CEO Erste Group Gernot Mittendorfer, CFO Erste Group A
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: return to profitability in Q4 14
Executive summary – Group income statement performance: return to profitability in Q4 14 QoQ net profit reconciliation (EUR m) YoY net profit reconciliation (EUR m) 42 60 23 7 117 109 385 223 788 394 65 116 331 -554 10 -1.442 Q3 14 Operating Operating Risk costs Other Taxes on Minorities Q4 14 incom
Slide 5: Executive summary – Group income statement performance: 2014 one-off summary
Executive summary – Group income statement performance: 2014 one-off summary One-offs with effect on regulatory capital One-offs with no effect on regulatory capital • Additional risk provisions of about EUR 400m in Romania • Write-down of intangible assets related to Romania • Fully funding acceler
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 +21.7% in EUR m 2.69% 2.65% 4,685 -0.3% 4,495 2.68% 2.66% 57.0% 2,159 2.75% 3,099 3,091 52.3% 1,774 1,126 1,126 808 757 879 1.51% 484 2013 2014 Q3 14 Q4 14 2
Slide 7: Executive summary – Group balance sheet performance: net loans grow for the first time
Executive summary – Group balance sheet performance: net loans grow for the first time since 2011 YTD total asset reconciliation (EUR m) YTD equity & total liability reconciliation (EUR m) 200,118 200,118 1,272 2,497 1,465 167 1,984 1,138 553 1,342 196,287 934 889 1,000 196,287 183 31/12/13 Cash Tra
Slide 8: Executive summary – Key balance sheet data
Executive summary – 31/12/13 Key balance sheet data 31/12/14 Loan/deposit & loan/TA ratio Net loans & credit RWA* NPL coverage ratio & NPL ratio in EUR bn +0.7% 98.0% 98.6% 68.9% 119.9 120.8 63.1% 59.9% 61.6% 84.9 87.1 9.6% 8.5% 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 – Improved domestic demand expected to drive economic growth in 2015
2014 Business environment – 2015 Improved 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 %) 3.5 1.5 3.5 1.2 2.9 2.5 2.8 2.4 2.4 2.1 2.8 1.1 2.4 2.4 2.5 2.2 2.1 0.8 2.0
Slide 11: Business environment – Historic low interest rate environment poses challenges
Business environment – 3M Interbank 10YR GOV Historic low interest rate environment poses challenges Austria Czech Republic Romania 5.36% 1.99% 2.07% 4.57% 1.55% 1.34% 4.25% 1.48% 3.84% 1.32% 0.87% 3.98% 2.29% 0.95% 2.14% 1.83% 0.46% 0.36% 0.35% 0.34% 0.22% 0.21% 0.17% 0.08% 2013 2014 Q3 14 Q4 14 20
Slide 12: Business environment – Limited currency volatility in CEE
Business environment – Limited currency volatility in CEE EUR/CZK EUR/RON +6.0% 0.0% +1.1% +0.6% +0.4% +0.3% 26.0 27.5 27.6 27.6 27.4 27.7 4.42 4.44 4.41 4.43 4.47 4.48 2013 2014 Q3 14 Q4 14 31/12/13 31/12/14 2013 2014 Q3 14 Q4 14 31/12/13 31/12/14 • YOY depreciation of CZK self-induced by national
Slide 13: Business environment – Market shares: stability in AT, CZ and SK, challenges in RO, HU
31/12/13 Business environment – 30/09/14 Market shares: stability in AT, CZ and SK, challenges in RO, HU 31/12/14 Gross retail loans Gross corporate loans Retail deposits Corporate deposits 19.0% 17.1% 18.3% 20.4% AT 19.1% AT 17.7% AT 18.1% AT 20.1% 23.6% 19.0% 26.9% 10.2% CZ 23.4% CZ 18.8% CZ 26.1%
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 31/12/13 Business performance: performing loan stock & growth – QoQ 30/09/14 Third consecutive quarter in performing loan growth 31/12/14 Business line view (BL) Geographic view (geo) 115.4 27.0 1.8% AT/EBOe 27.6 3.6% Group 116.9 1.2% 117.4 0.5% 28.0 10.6 43.1 AT/OA 11.0 4.7% Retail 43.9 2.3% 1.
Slide 16: Business performance: customer deposit stock & growth
YoY 31/12/13 Business performance: customer deposit stock & growth – QoQ 30/09/14 Rise in deposits despite EUR -1.8bn CZ one-off 31/12/14 Business line view Geographic view 122.4 30.0 0.1% AT/EBOe 29.7 -0.3% Group 120.1 2.1% 0.7% 122.6 29.9 4.4 -9.5% 64.9 -0.5% AT/OA 4.1 Retail 63.2 2.1% 4.0 -3.9% 6
Slide 17: Business performance: NII and NIM – NII stable qoq, down yoy
Business performance: NII and NIM – Q4 13 Q3 14 NII stable qoq, down yoy on RO, HU and CZK effect Q4 14 Business line view Geographic view 1.169 2.73% 145 1.47% Group 1.126 2.68% AT/EBOe 152 1.73% 1.126 2.66% 157 1.67% 547 4.37% 108 1.29% Retail 550 4.53% AT/OA 104 1.40% 542 4.45% 93 1.34% 165 2.74%
Slide 18: Business performance: operating income – Operating income rises on strong fees and trading result
Q4 13 Business performance: operating income – Q3 14 Operating income rises on strong fees and trading result Q4 14 Business line view Geographic view Highlights 1,732 1,732 • Increase (yoy and qoq) in group operating income Group 1,696 Group 1,696 driven by strong fee performance in Q4 14 and 1,760
Slide 19: Business performance: operating expenses – Seasonal cost updrift in Q4 slightly exaggerated
Q4 13 Business performance: operating expenses – Q3 14 Seasonal cost updrift in Q4 slightly exaggerated Q4 14 Business line view Geographic view Highlights 972 972 • Seasonally higher operating expenses in Q4 14, Group 887 Group 887 impacted by one-off partial retirement expense in 1.004 1.004 the a
Slide 20: Business performance: operating result and CIR – Operating result stable yoy
Q4 13 Business performance: operating result and CIR – Q3 14 Operating result stable yoy Q4 14 Business line view Geographic view 760 56.1% 760 56.1% Group 808 52.3% Group 808 52.3% 757 57.0% 757 57.0% 392 53.2% 84 64.6% Retail 383 54.4% AT/EBOe 102 60.2% 349 57.7% 85 68.4% 166 29.4% 103 69.8% SME 1
Slide 21: Business performance: risk costs – Risk costs decline qoq and yoy
Q4 13 Business performance: risk costs (abs/rel*) – Q3 14 Risk costs decline qoq and yoy Q4 14 Business line view Geographic view 529 1.65% 32 0.45% Group 879 2.75% AT/EBOe 10 0.14% 484 1.51% 38 0.51% 4.32% 118 1.01% AT/OA 70 137 Retail 398 3.40% 2.23% 78 2.47% 94 0.80% 27 0.58% 121 1.89% CZ 36 0.77
Slide 22: Business performance: non-performing loans and NPL ratio
31/12/13 Business performance: non-performing loans and NPL ratio – 30/09/14 Asset quality improvement accelerates: NPL ratio down 110bps yoy 31/12/14 Business line view Geographic view 12,296 9.6% 1,070 3.8% Group 11,422 8.9% AT/EBOe 1,002 3.5% 10,878 8.5% 1,012 3.5% 1,638 13.4% 3,466 7.4% AT/OA 1,
Slide 23: Business performance: allowances for loans and NPL coverage
31/12/13 Business performance: allowances for loans and NPL coverage – 30/09/14 NPL coverage rises again, reaching 68.9% 31/12/14 Business line view Geographic view 7,753 63.1% 682 63.7% Group 7,864 68.8% AT/EBOe 682 68.1% 7,491 68.9% 697 68.9% 868 53.0% 2,361 68.1% AT/OA 829 57.9% Retail 2,578 78.4
Slide 24: Business performance: other result – Normalisation of other result due to lower one-offs
Q4 13 Business performance: other result – Q3 14 Normalisation of other result due to lower one-offs Q4 14 Business line view Geographic view Highlights -450 -450 • YOY improvement in group other result due to Group -344 Group -344 significantly lower goodwill impairments in Q4 14 -120 -120 (EUR 54.
Slide 25: Business performance: net result – Return to net profit in Q4 14
Q4 13 Business performance: net result – Q3 14 Return to net profit in Q4 14 Q4 14 Net result by business line Net result by geography Highlights -370 -370 • Return to net profit in Q4 14 following Group -554 Group -554 significant one-offs (goodwill, taxes, higher 42 42 17 risk costs in RO and cons
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 – Loan/deposit ratio balanced at 98.6%
Assets and liabilities: YTD overview – Loan/deposit ratio balanced at 98.6% Assets (EUR bn) Assets (in %) Liabilities & equity (EUR bn) Liabilities & equity (in %) 200.1 196.3 200.1 196.3 100% 6.5 3.2% 100% 9.3 7.8 4.6% 4.0% 7.7 3.9% 17.3 14.8 8.6% 7.5% 51.3 50.1 25.6% 25.5% 8.4 7.4 4.2% 3.8% 122.4
Slide 28: Assets and liabilities: customer loans by country of risk
Assets and liabilities: customer loans by country of risk – Re-emerging loan growth, double-digit yoy decline in NPLs Net customer loans (EUR bn) Performing loans (EUR bn) Non-performing loans (EUR bn) +0.7% +1.8% -11.5% 120.0 120.5 120.8 115.4 116.9 117.4 12.3 2.8 3.1 3.2 2.8 3.1 3.2 0.3 11.4 5.8 5
Slide 29: Assets and liabilities: allowances for customer loans
Assets and liabilities: allowances for customer loans – Increase in allowances despite decline in NPL volume Quarterly development (EUR m) Highlights • Lower allocations due to booking of lower qoq provisions in Romania • Higher qoq level of use due to higher qoq NPL sales 614 • P&L unwinding impact
Slide 30: Assets and liabilities: financial and trading assets – LCR at comfortable 118%
Assets and liabilities: financial and trading assets * – LCR at comfortable 118% (YE 13: 107%) By geography (EUR bn) By debtor type Liquidity buffer (EUR bn) -4.3% 44.9 43.4 43.0 100% 24.8% 12.3% 11.2% 11.6% 7.8 8.2 8.5 21.5% 2.1 12.6% 12.1% 11.2% 20.3% 3.1 2.1 2.1 1.3 1.2 4.6 5.0 4.8 45.4 40.1 39.8
Slide 31: Assets and liabilities: intangibles – Significant reduction in intangibles
Assets and liabilities: intangibles – Significant reduction in intangibles to only 14.6% of book value Quarterly development of intangibles (EUR bn) Highlights -41.0% • Extraordinary intangible write-downs 2.4 amounted to EUR 964.8m 2.4 (thereof goodwill of EUR 475.0m and value of customer relations
Slide 32: Assets and liabilities: customer deposit funding
Assets and liabilities: customer deposit funding – Increase in customer deposits despite EUR -1.8bn Czech one-off By customer type By product type Highlights • YOY increase driven despite final +0.1% deconsolidation of Czech pension fund (EUR 1.8bn), one-off effect impacting retail 122.4 122.6 122.4
Slide 33: Assets and liabilities: debt vs interbank funding
Assets and liabilities: debt vs interbank funding – Decline in both issued debt and interbank funding Debt securities issued (EUR bn) Interbank deposits (EUR bn) -6.0% -14.4% 33.1 17.3 31.2 31.1 Sub debt 16.5 3.6 Overnight deposits 1.2 4.0 4.5 Suppl. capital 4.3 14.8 0.4 Term deposits 1.1 0.9 Hybrid
Slide 34: Assets and liabilities: ST vs LT funding
Assets and liabilities: ST vs LT funding – Limited LT funding needs, solid ST funding collateral coverage Maturity profile of debt (EUR bn) Wholesale funding outflow (<1y) v collateral coverage 3.9 237.1% 3.7 2.8 2.7 165.1% 156.6% 2.6 2.5 141.2% 41.0 37.0 1.8 2.0 31.6 33.9 22.3 23.6 20.5 1.0 17.3 0.
Slide 35: Assets and liabilities: capital position – B3FL CET 1-ratio at 10.6%
Assets and liabilities: capital position – B3FL CET 1-ratio at 10.6% Basel 2.5/Basel 3 capital (EUR bn) Risk-weighted assets (EUR bn) Basel 2.5/Basel 3 capital ratios Basel 2.5 Basel 3 Basel 2.5 Basel 3 Basel 2.5 Basel 3 Phased-in Phased-in Phased-in 16.5% 16.3% 15.7% 15.7% 15.5% 16.0 15.9 16.1 15.7
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 rising 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 – Business line and geographic view
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 – 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 2013 2014 YOY-Δ Q4 13 Q3 14 Q4 14 YOY-Δ QOQ-Δ Net interest income 4,685.0 4,495.2 -4.1% 1,169.2 1,126.0 1,125.6 -3.7% 0.0% Net fee and commission income 1,806.5 1,869.8 3.5% 462
Slide 41: Additional information: group balance sheet – Assets
Additional information: group balance sheet – Assets Quarterly data Change in EUR million Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 YOY-Δ YTD-Δ QOQ-Δ Cash and cash balances 9,301 10,373 7,267 8,010 7,835 -15.8% -15.8% -2.2% Financial assets - held for trading 12,283 13,610 12,954 11,641 10,531 -14.3% -14.3
Slide 42: Additional information: group balance sheet – Liabilities and equity
Additional information: group balance sheet – Liabilities and equity Quarterly data Change in EUR million Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 YOY-Δ YTD-Δ QOQ-Δ Financial liabilities - held for trading 6,475 7,042 7,152 8,488 7,746 19.6% 19.6% -8.7% Derivatives 6,087 6,341 6,347 7,563 7,188 18.1% 18.1
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) 127.7 127.5 127.7 128.3 128.3 127.7 127.5 127.7 128.3 128.3 127.7 127.5 127.7 128.
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: 2.4m in 7 geographically connected Employees : 10,504 Employees : 4,275 countries Bra
Slide 45: 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 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