Erste Group Bank Ag · VIE:EBS
Erste Group Bank — H1 2016 Earnings Presentation
14 slides from Erste Group Bank's earnings presentation, Aug 5, 2016
Slide 1: Erste Group powers ahead in H1 2016
Erste Group powers ahead in H1 2016: Net profit of EUR 841.7 million, core capital ratio at 13.3%, further accelerating asset quality improvement Press Conference 5 August 2016 Page
Slide 2: General Economic Conditions – Robust economic environment in Erste Group's markets
General Economic Conditions – 2016 Robust economic environment in Erste Group’s markets 2017 Real GDP growth (in %) Contribution of domestic demand to GDP growth (in pp) 5.7 5.0 4.1 3.6 3.1 3.1 2.8 2.5 2.7 2.4 2.9 2.2 2.0 1.8 2.0 2.1 2.0 1.4 1.6 1.4 1.3 1.7 1.7 1.6 AT CZ SK RO HU HR AT CZ SK RO HU H
Slide 3: General Economic Conditions – Sound public finances in core CEE markets
General Economic Conditions – 2016 Sound public finances in Erste Group’s core CEE markets 2017 Budget deficit (in % of GDP) Government debt (in % of GDP) 84 83 87 86 75 74 Maastricht limit: 60% -1.1 -1.0 53 53 -1.6 -1.5 40 39 41 42 -2.0 -2.2 -2.5 -2.4 -2.7 -2.8 -2.9 Maastricht limit: -3% -3.5 AT CZ
Slide 4: Business Environment – Historically low interest rates create challenging setting
Business Environment – 3m Interbank Historically low interest rates create challenging setting 10-year Gov Austria Czech Republic Romania 0.56% 0.58% 0.64% 3.30% 3.51% 0.47% 0.32% 0.29% 0.02% -0.18% 1.17% 0.71% 1-6 15 1-6 16 1-6 15 1-6 16 1-6 15 1-6 16 • In March 2016, ECB lowered • Central bank has
Slide 5: Loans to customers and deposits – Growth in deposits and lending
Development of business: loans to customers and deposits – Dec 15 Growth in deposits (+1.9% YTD) and lending (+1.8% YTD) June 16 Customer loans (net) Customer deposits Loan-to-deposit ratio 125.9 127.9 98.4% Group 127.4 130.4 97.7% 29.5 30.3 97.4% AT/EBOe 30.0 30.8 97.6% 38.0 37.9 100.5% AT/SB 38.7
Slide 6: Operating income and operating expenses
Development of business: operating income and operating expenses – Slight decline in revenues, rise in costs on upfront booking of deposit insurance fees Operating Income Operating Expenses -2.4% in EUR in EUR 3,399 3,317 million million 137 134 108 130 +4.4% 917 885 1,897 1,980 223 218 560 610 2,21
Slide 7: Operating income, cost-to-income ratio
Development of business: operating income, cost-to-income ratio – 1-6 15 Lower operating income due inter alia to one-time effects, lower revenues 1-6 16 Operating Income Cost/Income ratio Summary 1,503 55.8% • Stable development of business, especially Group 59.7% 1,336 in: AT/EBOe 210 59.2% • Croa
Slide 8: Risk costs – 93% year-on-year drop
Development of business: risk costs – 1-6 15 93% year-on-year drop in risk costs due to NPL volume decline and recoveries 1-6 16 Geographic segments Summary 374 0.58% • Healthy and improved credit risk situation Group 26 0.04% in all countries: 14 0.09% AT/EBOe 2 0.02% • Hungary AT/SB 25 0.13% • Aus
Slide 9: Asset quality – Substantial improvement in all segments
Development of business: asset quality – Dec 15 Substantial improvement of asset quality in all segments June 16 NPL volumes NPL ratio NPL cover (excl. collateral) 9,314 7.1% 64.5% Group 65.6% 7,746 5.8% AT/EBOe 861 2.9% 62.6% 829 2.7% 60.6% AT/SB 2,219 5.6% 57.7% 2,064 5.2% 59.2% AT/OA 1,345 10.5%
Slide 10: Other result – Improvement due to sale of VISA stake
Development of business: other result – Improvement due to sale of VISA stake, lower banking taxes in Hungary Other result * Tax on banking activities in EUR in EUR million million -44 -108 -165 -137 1-6 15 1-6 16 1-6 15 1-6 16 • Improved other result due to positive one- • Significant reduction in
Slide 11: Pre-tax and net results at historic highs
Development of business: pre-tax and net results Half-year pre-tax profit and net result at historic highs Pre-tax results Net result in EUR in EUR 1,267 million million 842 964 487 1-6 15 1-6 16 1-6 15 1-6 16 • Pre-tax result benefits from historically low risk costs and improvement in other compre
Slide 12: Regulatory capital – Solid profitability yields strong capital base
Development of business: regulatory capital – Solid profitability yields strong capital base Regulatory capital (EUR billion) Risk-weighted assets (EUR billion) Capital ratios (phased-in; in %) 18.7 18.9 101.0 17.9 98.3 17.6 2.8 3.4 10.8 14.2 5.4 13.4 13.3 5.4 12.3 12.3 0.1 0.0 84.7 83.4 12.1 13.4 3
Slide 13: Capital ratios (Basel 3, fully-loaded) – Development since 2008
Development of business: capital ratios (Basel 3, fully-loaded) – Development since 2008 CET1 ratio pursuant to Basel 3, fully-loaded 12.7% 12.0% 11.2% 11.4% 10.6% 9.2% 9.4% 8.3% 5.2% Dec. 08 Dec. 09 Dec. 10 Dec. 11 Dec. 12 Dec. 13 Dec. 14 Dec. 15 June 16 Page 13
Slide 14: Closing remark – Outlook 2016
Closing remark – Outlook 2016 • General economic conditions anticipated to be conducive to credit expansion • Real GDP expected to grow between 1.4 to 4.1% in all major CEE markets, including Austria, in 2016 • Real GDP growth driven by robust domestic demand • Return on tangible equity (ROTE) expec