BAWAG Group AG · VIE:BG
BAWAG — Q3 2019 Earnings Presentation
28 slides from BAWAG's earnings presentation, Oct 29, 2019
Slide 1: Q3 2019 Earnings
Q3 2019 Earnings Anas Abuzaakouk, CEO Enver Sirucic, CFO 29 October 2019 29 October 2019 | BAWAG Group AG 1
Slide 2: Q3 2019 Highlights and segment performance
Q3 2019 Highlights and segment performance Detailed financials Group Overview & Strategy 29 October 2019 | BAWAG Group AG 2
Slide 3: Highlights Q3 2019
Highlights Q3 2019 Well on track to meet full year targets … ongoing execution of strategy Delivered strong earnings ... Q3 ‘19 Profit before tax (PBT) of €164m (+2%), net profit of €124m, EPS of €1.26 (+1%)… Sep ’19 YTD PBT of €451m (+5%), net profit of €343m (+5%), EPS €3.47 (+6%) Capital return u
Slide 4: Financial performance
Financial performance Key highlights Sep ’19 2019 € millions Q3 ‘19 vPY vPQ YTD vPY YTD Targets Core revenues 291 + 4% ‒ 869 +4% CIR 42.7% <43% Operating income 315 + 5% +1% 926 +5% Cost-income-ratio Operating expenses (133) +5% (2%) (396) +4% Risk costs (17) +53% +12% (44) +39% RoTCE Return on Tang
Slide 5: Capital development
Capital development Strong cash / capital generating business model 15.7% 60bps gross capital generation in Q3 ‘19 15.1% 0.6% (0.8%) Capital return underway … pro forma numbers (1.9%) in line with FY ‘19 targets 13.0% Sep ’19 YTD reported pro forma1) Sep ’19 YTD dividend RoTCE 14.2% 17.7% share buyb
Slide 6: Committed to capital return
Committed to capital return Share buyback approval received from ECB SHARE BUYBACK CAPITAL RETURNED TO SHAREHOLDERS ECB approval received on 18 October … Austrian €400m Takeover Commission approved on 25 October €215m Full amount of €400m offered to buy back … voluntary partial tender offer Buyback
Slide 7: Retail & SME
Retail & SME Financial performance Customer development € millions Q3 '19 Q3 '18 Q2 '19 vPY vPQ € millions Q3 '19 Q3 '18 Q2 '19 vPY vPQ Net interest income 158.7 143.6 156.8 11% 1% Housing loans 9,200 8,910 9,087 3% 1% Net commission income 60.3 55.8 60.5 8% - Consumer and SME 4,988 4,240 4,846 18%
Slide 8: Retail & SME - update
Retail & SME - update Strategic & operational initiatives Austria Germany/Switzerland H1 ‘19 Continued transformation momentum • MediaMarktSaturn Austria … launched in Q1 ’19; over 50,000 • Banking platforms … continued progress in Südwestbank, new POS loans to date start:bausparkasse, cost & produc
Slide 9: Corporates & Public
Corporates & Public Financial performance Customer development € millions Q3 '19 Q3 '18 Q2 '19 vPY vPQ € millions Q3 '19 Q3 '18 Q2 '19 vPY vPQ Net interest income 61.7 62.4 61.3 (1%) 1% Corporate lending 6,566 6,793 6,474 (3%) 1% Net commission income 10.8 11.1 10.1 (3%) 7% Asset backed lending 4,46
Slide 10: Detailed financials
Q3 2019 Highlights and segment performance Detailed financials Group Overview & Strategy 29 October 2019 | BAWAG Group AG 10
Slide 11: P&L & key ratios
P&L & key ratios P&L | € millions Q3 ‘19 vPY vPQ Q1-3 ‘19 vPY Key ratios Q3 ‘19 vPY vPQ Q1-3 ‘19 vPY Net interest income 220.0 3% - 655.0 5% Return on Common Equity 13.3% (0.5pts) 0.3pts 12.2% (0.1pts) Net commission income 70.8 6% 1% 213.5 - Return on Tangible Common Equity 15.6% (0.4pts) 0.3pts 14
Slide 12: Balance sheet
Balance sheet Continued focus on balance sheet optimization and growing our customer business Balance sheet | € billions Q3 ’19 Q2'19 Delta Q4 ’18 Delta Capital & RWA | € billions Q3 ’19 Q2'19 Delta Q4 ’18 Delta Customer loans 30.7 31.1 (1%) 30.5 1% Common equity 3.8 3.7 3% 3.7 3% Securities and bon
Slide 13: P&L details – core revenues
P&L details – core revenues Stable development despite seasonality € millions NII NCI NIM Net interest income (NII) stable vPQ … net interest margin (NIM) at 2.28% 2.28% 2.25% 2.26% 2.30% 2.28% ‒ Growth in core products in Retail 279.6 286.5 287.1 290.6 290.8 ‒ Full quarter of latest acquisitions 70
Slide 14: P&L details – operating expenses
P&L details – operating expenses € millions OPEX Cost-income ratio Q3 ‘19 cost-income ratio at 42.4% … 47.1% 43.5% Sep ‘19 YTD cost-income ratio at 42.7% in 42.4% 42.4% 42.4% line with FY ‘19 target of under 43% ‒ Gradual expense increase related to new 136.4 136.0 branch network 133.4 126.5 126.4 ‒
Slide 15: P&L details – risk costs
P&L details – risk costs Proactive risk management to maintain conservative risk profile € millions Risk costs Risk costs / average interest-bearing assets Q3 ‘19 risk cost ratio at 18bps … business focused on developed markets … 72% DACH region and 28% Western Europe / 16 bps 18 bps United States 1
Slide 16: Regulatory Capital
Regulatory Capital Continued strong capital generation CET1 Capital (FL) € billions CET1 capital (FL) CET1 ratio (FL) Total capital ratio 17.2% 16.3% 18.7% 18.9% 19.5% Earnings generating ~ 60bps in Q3 ’19 15.2% 14.5% 14.9% 15.1% 15.7% Capital distribution underway … €400m share buyback approved by
Slide 17: Normalized P&L / RoTCE performance
Normalized P&L / RoTCE performance Profit before tax (PBT) Regulatory charges €€ millions millions 164 153 160 153 151 160 153 155 • Regulatory charges front-loaded in Q1 … 143 146 143 impact on quarterly profit and return ratios 132 127 117 • €34m regulatory charges included in Q1 profit before tax
Slide 18: Targets
Targets On track to meet Full Year targets Metrics 2019 2020 Profit CAGR >6% >6% before tax Absolute >€600m >€640m Cost-income ratio <43% <40% Return on 15% to 20% Tangible Common Equity CET1 ratio (FL)1) 12% to 13% Earnings per share (EPS) pre tax >€6.00 >€6.40 before capital actions post tax >€4.5
Slide 19: Group Overview & Strategy
Q3 2019 Highlights and segment performance Detailed financials Group Overview & Strategy 29 October 2019 | BAWAG Group AG 19
Slide 20: BAWAG Group
BAWAG Group COMPANY PROFILE CAPITAL MANAGEMENT TARGETS One of Austria‘s leading retail banks with Focused on organic and Metrics 2019 2020 2.5 million customers & solid market shares inorganic growth Profit CAGR >6% >6% FY ’18: €573m profit before tax … €437m net profit before tax Absolute >€600m >€
Slide 21: Sep '19 YTD Results
Sep ’19 YTD Results Strong fundamentals across the Group PROFITABILITY CAPITAL RISK PRO FORMA1) €451m 15.7% 1.9% 17.7% Profit before tax (+5% vPY) CET1 Ratio NPL ratio Return on Tangible Common Equity 14.2% 17.2% 1.4% 13.0% Return on Tangible Tier1 ratio NPL ratio excluding City of Linz CET1 Ratio C
Slide 22: Strategy pillars of our growth strategy
Strategy 4 pillars of our growth strategy Growing in our Making our Drive efficiency thru Maintaining a safe and core markets customers’ lives easier operational excellence secure risk profile • Our foundation is Austria with focus • Execute on Concept 21: • Our DNA is to focus on the things • Our b
Slide 23: Bank transformation
Bank transformation Focusing on things we control and driving operational excellence Increased profitability … KEY METRICS Pre-tax profit (€ millions) >640 2012 2013 2014 2015 2016 2017 2018 +€550m >600 573 RoTCE 3% 11% 15% 16% 17% 15% 14% 500 419 445 RoTCE 1% 8% 14% 16% 19% 18% 17% 316 (@12% CET1)
Slide 24: Business segments
Business segments Developing towards a Retail & SME franchise in the DACH region 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
Slide 25: Proven M&A track record
Proven M&A track record Experienced with bolt-on acquisitions to build out customer franchise Acquisition track record Recent developments Closed ✓ Continued focus on companies within the DACH region, €0.1b assets, Q2 ’19 3) €1b factoring often with Balance Sheets within a range of €1-10b Closed new
Slide 26: 2019 – 2020 Plan
2019 – 2020 Plan Key business drivers BASIS FOR >6% PBT GROWTH TARGETS NOT FACTORED IN TARGETS 1 2 3 4 5 6 Grow core retail products Proactive move Drive efficiencies through Maintain fortress Pursue M&A growth … Interest rate sensitivities … in Austria … niche player towards technology process & br
Slide 27: 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 28: 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 CET1 ratio … reflect CET1 capi