Slide 1: Preliminary FY 2019 Earnings
Preliminary FY 2019 Earnings Anas Abuzaakouk, CEO Enver Sirucic, CFO 12 February 2020 12 February 2020 | BAWAG Group AG 1
Slide 2: Preliminary FY 2019 Highlights and segment performance
Preliminary FY 2019 Highlights and segment performance Detailed financials Group Overview & Strategy 12 February 2020 | BAWAG Group AG 2
Slide 3: Highlights 2019
Highlights 2019 All targets achieved FY 2019 Profit before tax (PBT) of €604m, +6% vPY STRONG EARNINGS Net Profit of €459m, +5% vPY Earnings per share of €4.69 (+7%), pro forma €5.22 (+19%) Dividend per share of €2.61 (+20%) Completed Concept 21: full separation from Austrian Post EXECUTING ON Germa
Slide 4: Financial performance
Financial performance Key highlights P&L | € millions 2019 vPY Q4 ‘19 vPY vPQ 2019 Target Core revenues 1,163 3% 294 3% 1% Operating income Operating expenses 1,241 (530) 6% 2% 314 (134) 8% (2%) - - Profit before tax €604m >600m ✓ Regulatory charges (42) 6% (3) - 52% Risk costs (69) 54% (25) 89% 46%
Slide 5: Capital development
Capital development Highly capital accretive business model ~230bps €2.61 (FY19 gross capital generation through earnings) dividend per share will be proposed to AGM 2.3% 14.5% (2.0%) Timing: 13.3% AGM: Held on 4 May 2020 (1.1%) Payment date: 13 May 2020 (0.4%) Calculation: Share Buyback M&A / other
Slide 6: Capital distribution ... focus on shareholder value
Capital distribution ... focus on shareholder value P2R requirements lowered, while using 13% as threshold for capital distribution Pillar 1 Requirement Countercyclical Buffer Pillar 2 Requirement (P2R) SIFI Pillar 2 Guidance (P2G) CAPITAL DISTRIBUTION >13%: dividends & buybacks Capital Conservation
Slide 7: Retail & SME: Financial performance
Retail & SME Financial performance Profit before tax growth of 1% in 2019 … adjusted for € millions 2019 2018 vPY Q4 '19 vPQ risk cost one-offs underlying growth of 3% Net interest income 626.0 575.4 9% 163.6 3% Net commission income 242.2 236.1 3% 59.9 (1%) Net asset growth of +7% vs prior year … d
Slide 8: Retail & SME: transformation in Austria, integration in Germany
Retail & SME Retail transformation in Austria … integration momentum in Germany AUSTRIA INTERNATIONAL RETAIL & SME “Core foundation … continued transformation“ “Building the platform“ Led by David O‘Leary (Managing Board) Led by Sat Shah (Managing Board) LEVERAGING ESTABLISHED PHYSICAL FOOTPRINT EST
Slide 9: Corporates & Public: Financial performance
Corporates & Public Financial performance € millions 2019 2018 vPY Q4 '19 vPQ Focused on risk-adjusted returns and not absolute volume growth Net interest income 249.1 250.4 (1%) 61.4 - Net commission income 43.0 48.6 (12%) 10.5 (3%) Continued pricing pressure across Corporate lending Core revenues
Slide 10: Corporates & Public
Corporates & Public − Conservative approach to lending … Focus on senior secured lending, free cash flow ASSET SPLIT CORPORATE LENDING generating companies with defensive business profile and solid capital structure Assets in €bn Corporate Lending Non-DACH – Industry Type Asset Backed Lending − Focu
Slide 11: Detailed financials
FY 2019 Highlights and segment performance Detailed financials Group Overview & Strategy 12 February 2020 | BAWAG Group AG 11
Slide 12: P&L & key ratios
P&L & key ratios P&L | € millions Q4 ‘19 vPY vPQ 2019 vPY Key ratios Q4 ‘19 vPY vPQ 2019 vPY Net interest income 223.9 4% 2% 879.0 5% Return on Common Equity 13.4% 0.9pts (0.4pts) 13.5% 0.8pts Net commission income 70.0 (0%) (1%) 283.5 - Return on Tangible Common Equity 16.0% 1.5pts (0.4pts) 16.1% 1
Slide 13: Balance sheet
Balance sheet Continued focus on balance sheet optimization and growing our customer business Balance sheet | € billions 2019 2018 vPY vPQ Capital & RWA | € billions 2019 2018 vPY vPQ Customer loans 30.5 30.5 (0%) (1%) Common equity * 3.3 3.5 (6%) (9%) Securities and bonds 5.4 6.9 (22%) (12%) Tangib
Slide 14: P&L details – core revenues
P&L details – core revenues Strong revenue momentum from NII growth € millions Net interest income (NII) +2% vPQ … net interest margin (NIM) at 2.36% ‒ Revenue uplift in Q4 ’19 … growth in Retail core 286.5 287.1 290.6 290.8 293.9 products drives positive momentum and margin expansion into 2020 70.2
Slide 15: P&L details – operating expenses
P&L details – operating expenses Cost-income ratio <43% in Q4 ’19 and FY’19 ‒ Despite seasonally higher operating expenses (restructuring expenses, etc.) in Q4 ’19 cost- € millions income ratio remained below 43% ‒ Normalized run-rate of €129m per quarter … 136.4 136.0 133.4 133.9 good line of sight
Slide 16: P&L details – risk costs
P&L details – risk costs Proactive risk management to maintain conservative risk profile € millions Risk costs / average interest-bearing assets Q4 ‘19 risk cost ratio at 27bps … includes one-offs (mainly addressing legacy NPL exposures) 25.0 Adjusted underlying run-rate in Q4 ‘19 consistent with pr
Slide 17: Regulatory Capital
Regulatory Capital Continued strong capital generation CET1 Capital (FL) € billions CET1 ratio at year-end of 13.3% BAWAG Group SREP requirement of 10.2% … P2R of 2.0% (down 25bps vPY) … P2G of 1.0% ECB published bank-specific data: 3.1 3.2 3.0 3.0 - average P2R 2.1% 2.7 - average P2G (non-binding)
Slide 18: Recent developments
Recent developments NEW FEDERAL GOVERNMENT IN AUSTRIA LEGAL CASE UPDATE – CITY OF LINZ New government program includes: ‒ On January 7, 2020, the court of the first instance issued interim judgement that swap contract was not valid; BAWAG Group ‒ Reduction of corporate income tax from 25% to 21% ann
Slide 19: 2020 Targets
2020 Targets 2019 fully delivered; unchanged 2020 targets Metrics 2020 2020 KEY DRIVERS Profit before tax >€640m Efficiencies of Concept 21 and new organizational setup Net profit >€480m Continued integration momentum in Germany Cost-income ratio <40% NII tailwinds from Q4 ’19 … driven by Retail & S
Slide 20: Group Overview & Strategy
FY 2019 Highlights and segment performance Detailed financials Group Overview & Strategy 12 February 2020 | BAWAG Group AG 20
Slide 21: BAWAG Group
BAWAG Group COMPANY PROFILE CAPITAL MANAGEMENT TARGETS Focused on organic Metrics 2020 and inorganic growth Profit before tax >€640m One of Austria‘s leading retail banks with 2.5 million customers & solid market Net profit >€480m shares Dividend policy of Cost-income ratio <40% 50% payout ratio Ret
Slide 22: 2019 Results
2019 Results Strong fundamentals across the Group PROFITABILITY CAPITAL RISK €459m +5% 13.3% 1.7% Net profit vPY CET1 ratio NPL ratio 16.1% 1.3pts 14.7% 1.2% Return on Tangible vPY Tier1 ratio NPL ratio excluding City of Linz Common Equity 42.7% (1.5pts) 17.0% 0.18% Cost-income ratio vPY Total capit
Slide 23: Strategy pillars of our growth strategy
Strategy 4 pillars of our growth strategy Drive efficiency through Maintaining a safe and Growing in our core markets Focus on Customer Centricity operational excellence secure risk profile • Our foundation is Austria with a focus • Build multi-channel and multi-brand • Our DNA is to focus on the th
Slide 24: Bank transformation
Bank transformation Focusing on things we control and driving operational excellence KEY METRICS Increased profitability … Pre-tax profit (€ millions) >640 2012 2013 2014 2015 2016 2017 2018 2019 +€581m 604 573 RoTCE 3% 11% 15% 17% 18% 15% 15% 16% 500 419 445 C/I ratio 70% 68% 54% 48% 46% 47% 44% 43
Slide 25: Developing towards a Retail & SME franchise
Developing towards a Retail & SME franchise Retail & SME Business Corporates & Public Business Focus on 2.5 million • current accounts • auto and • Focus on developed markets … DACH region, Western Europe & the United States • Disciplined & conservative corporate & asset backed lending customers in
Slide 26: Proven M&A track record
Proven M&A track record Experienced with bolt-on acquisitions to build out customer franchise Q2 ’19 3) €0.1b assets, 3k customers €1b factoring volume Q1 ’19 Q2 ’19 €0.6b assets 50k customers Continued focus on companies within the DACH region 2) 2018 €0.5b assets 85k customers Assessing Banks, spe
Slide 27: Investor relations calendar
Investor relations calendar H1 2020 ROADSHOWS AND CONFERENCES SHAREHOLDER STRUCTURE 78.2% 12-14 Feb London Free Float GoldenTree 14 Feb Paris 21.8 18 Feb Group Meeting, Vienna T. Rowe Price 5.6 24-27 Feb USA (New York, Boston, Chicago, Dallas) in % 04 Mar Introduction Call to Asian Investors 72.6 05
Slide 28: Important Disclaimer
IMPORTANT DISCLAIMER: This presentation is prepared solely for the purpose of providing general information about BAWAG Group, Wiedner Gürtel 11, 1100 Wien. The information does not constitute investment or other advice or any solicitation to participate in investment business. This presentation doe
Slide 29: Annex – Definitions and abbreviations
Annex – Definitions and abbreviations After-tax earnings per share (‘EPS‘) Pre-tax earnings per share Net profit / weighted average number of shares outstanding (diluted) Profit before tax / weighted average number of shares outstanding (diluted) B/S leverage Pro-forma EPS Total assets / IFRS equity