Addiko Bank Ag · VIE:ADKO
Addiko Bank — Q1 2022 Earnings Presentation
48 slides from Addiko Bank's earnings presentation, May 11, 2022
Slide 1: 1Q22 Results Presentation
1Q22 Results Presentation Herbert Juranek (CEO) Edgar Flaggl (CFO) Tadej Krašovec (CRO) Ganesh Krishnamoorthi (CMO & CIO) 11 May 2022
Slide 2: Executive Summary & Business Update
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 3: Key Highlights 1Q22
Key Highlights 1Q22 • 1Q22 net profit of €6.5mn (1Q21: €5.0mn), EPS at €0.33 • Return on Tangible Equity (@14.1% CET1 ratio) almost doubled to 4.5% (YE21: 2.5%) • Operating result up by 26.4% YoY to €14.3mn shows solid operative performance and Earnings reduction in operating expenses & Asset Qualit
Slide 4: Focus Portfolio Development on Track with Sharpened Approach in SME
Focus Portfolio Development on Track with Sharpened Approach in SME Focus portfolio development Gross performing loans (€mn) YoY • Transformation Program leading to ➔ 0% +4% +4% +8% 2,538 growth combined with efficient cost 2,446 2,352 2,361 management 1,106 Zoom-in • +15% YoY growth in focus
Slide 5: Meet “Oskar” - Brand Repositioning to Further Support Growth Momentum
Meet “Oskar” - Brand Repositioning to Further Support Growth Momentum Purpose “To make customers’ life easier, to help them in unpredicted situations and to help them get things they want.” Brand Promise „As experts in consumer and SME lending, we stand for speed and flexibility, and we promise to b
Slide 6: Solid Foundations to Becoming the Leading Specialist Bank for Consumer & SME Customers in CSEE
Solid Foundations to Becoming the Leading Specialist Bank for Consumer & SME Customers in CSEE Key Strategic Pillars Improving dynamics YoY €mn, digital users and clients in thousand YoY 325 +42% Consumer 32 • Strengthening Digital USP 229 -28% 45 143 • Net Customer growth Gross +85% disbursem
Slide 7: The Addiko Ecosystem for Consumer & SME Customers
The Addiko Ecosystem for Consumer & SME Customers Game changers drive the Addiko Consumer & SME Ecosystem 2023+ Plug & Play platform Digital Consumer 2022 lending Digital SME lending Cards & 2021 Payments Until Brand & USP refresh 2020 Shift to higher yielding BNPL Platform BNPL with FinTech partner
Slide 8: Powerful and Lovable Brand Character as Message Carrier
Powerful and Lovable Brand Character as Message Carrier Omni-channel marketing campaigns in all Addiko markets featuring Addiko’s new brand character “Oskar” during May & June 2022 Previous character Omni-Chanel marketing campaigns feat. Oskar “Fast loans “I don’t whenever and wherever judge, I TV l
Slide 9: Financials & Risk Update
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 10: Financial Performance 1Q22 at a Glance
Financial Performance 1Q22 at a Glance 5.60% Financial Performance 1Q22 1Q21 2Q21 3Q21 4Q21 1Q22 5.10% €mn 60.5 4.60% 59.0 60.1 58.2 56.7 1Q21 YoY 4.10% 14.8 16.8 17.9 17.3 17.0 NCI 3.60% Net Netinterest interest income 41.3 41.9 -1.6% 2.87% 2.85% 2.83% 2.86% 2.87% 3.10% NIM Net fee Net & commission
Slide 11: Capital Position Remains Strong
Capital Position Remains Strong Capital development1 Capital requirement & guidance % CET1/TCR, YTD, RWAs transitional and fully-loaded in €mn SREP 2021 (valid as of 1 March 2022) 14.60% 13.75% RWA 3,625 €+139.1mn 3,764 • Pillar 2 Requirement (P2R) of 3.25% 3.50% RWAFL 3,598 €+153.4mn 3,751 (4.1% in
Slide 12: Continued NPE Reduction in 1Q22
Continued NPE Reduction in 1Q22 NPE volume & ratio development Quarterly NPE formation & exit €mn €mn, QTD 2Q21 3Q21 4Q21 1Q22 NPE ratio 3.5% 3.4% 2.9% 2.8% Formation 33.4 26.0 35.3 16.4 NPE ratio (on-balance loans)1 4.7% 4.8% 4.0% 3.9% 4.0 16.5 4.4 20.0 1.4 10.1 6.2 2.1 244 238 10.7 11.5 11.3 12.9
Slide 13: Cost of Risk Remains Benign
Cost of Risk Remains Benign Credit loss expenses on financial assets 1Q22, €mn, positive number for release • 1Q22 IFRS 9 provisions of €-1.2mn resulting in -0.04% 1.2 cost of risk (on net loans): Impairments (negative) − Consumer: -0.31% Releases (positive) (4.3) 2.0 (0.1) − SME (incl. Micro): +0.1
Slide 14: Outlook & Wrap-Up
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 15: Transformation Program in a Nutshell
Transformation Program in a Nutshell • Transformation program leads to significant revenue growth combined with efficient cost management confirming that last year’s initiatives are bearing fruit Status • Next phase starting now: Brand repositioning to support growth momentum with campaigns & produc
Slide 16: Wrap-up
Wrap-up Outlook 2022 unchanged despite elevated inflation pressure – Gross performing loans: c. €3.3bn with >10% growth in focus ➔ – Net Banking Income: stable at 2021 level despite accelerated run-down in non-focus ➔ Current – Operating expenses: below €165mn excluding EURO project in Croatia (mid-
Slide 17: Additional Materials
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 18: Addiko at a Glance
Addiko at a Glance Overview of Addiko Operating as one region - one bank 1Q22, % of Group Assets (rounded) ✓ Fully licensed bank with HQ in Austria, focused 100% on Central ✓ and South Eastern Europe ✓ Addiko Bank AG is regulated by the Austrian Financial Market Austria ✓ (3%2) Authority (“FMA”)1 an
Slide 19: Clear Strategy to Transform Loan Book Towards Consumers & SMEs
Clear Strategy to Transform Loan Book Towards Consumers & SMEs Strategic pillars Near term – key insights Competitive specialist strategy • CSEE with higher growth CSEE compared mature markets in our market for our focus Pure-Play segments Consumer & SME • Still underserved niches 76% • Growth in fo
Slide 20: Current Environment Exceeding Previous Forecasts
Current Environment Exceeding Previous Forecasts GDP forecasts1 (%, real growth) Forecasts November 2021 Forecast Jan. 22 2021E 2022E 2021E 2022E 2023E 2024E 2021E Base Base Pessimistic Pessimistic Base Base Base Slovenia 5.2% 4.1% 3.0% 0.7% 3.3% 2.8% 6.6% Croatia 7.2% 5.0% 3.8% 1.6% 4.5% 4.0% 8
Slide 21: Simple Balance Sheet Composition 1Q22
Simple Balance Sheet Composition 1Q22 Assets Liabilities and Equity 1Q22, €bn 1Q22, €bn 5.8 5.8 Other Liabilities ✓• Liquid balance sheet Other Assets 0.2 0.2 Due to Credit ✓• Strong deposit base - LCR ratio: 259% (YE21: 252%) 0.2 Institutions Direct - Loan-deposit ratio 0.4 Deposits (customer) : 71
Slide 22: Acceleration of Growth in Focus Areas Consumer & SME
Acceleration of Growth in Focus Areas Consumer & SME Gross performing loans in focus segments Gross yield by segment1 Gross loans of focus segments as % of total gross performing loans 1Q22 YTD QTD Full year 1Q22 2021 yield yield Consumer 7.0% 7.0% 7.1% 66% 69% % in focus 40% 51% 56% 62% 65% 1Q21 1H
Slide 23: Consumer and SME Lending Development
Consumer and SME Lending Development Consumer (from 1Q21 Micro shifted to SME) SME €mn, YTD €mn, YTD CAGR: 12.4% 1,431 CAGR: 10.8% 1,342 1,312 1,306 1,332 1,370 1,389 1,188 1,103 1,106 1,059 1,040 1,055 1,092 1,057 1,028 928 791 774 646 Gross Performing Loans 2016 2017 2018 2019 2020 1Q21 1H21 3Q21
Slide 24: Non-Focus Reduction Accelerated in Line with Transformation Program
Non-Focus Reduction Accelerated in Line with Transformation Program Non-Focus portfolio development Mortgages, Large Corp. & Public Fin. gross performing loans (€mn) YoY -16% -4% -30% -4% -33% 1,469 1,252 1,196 Large Corp. & 724 841 806 613 586 Public 307 297 Mortgages 744 639 610 535 509
Slide 25: Digital Lending Platforms in All Major Markets
Digital Lending Platforms in All Major Markets WebLoan Group Application Processing System (GAPS) Simple entry point for loan requests with Simple branch loan Application Processing System instant initial offer (final approval & closure including CDE (Credit Decision Engine) in branch) Achievements
Slide 26: Digital Transformation Reflected
Digital Transformation Reflected Digital capabilities YTD +22% YoY Registered Mobile Banking 150 188 197 230 239 +4% Mobile banking users (vs. PQ) Users (ths.)2 +17% YoY +3% Digital users (vs. PQ) 254 246 217 210 177 Bank@Work 28% (YE21: 28%, 3Q21: 28%, 1H21: 28%, 1Q21: 29%) 37% Digital consumer loa
Slide 27: Financials: Financial Performance 1Q22 in Detail
Financials: Financial Performance 1Q22 in Detail Key financials P&L •1 Operating result at €14.3mn up by 26.4%: in €mn YTD QTD − Net Banking income up YoY influenced by 1Q22 (YTD) 1Q21 (YTD) +/- PY 1Q22 4Q21 +/- PQ loan growth and higher fee income from Net interest income 41.3 41.9 -1.6% 41.3 42.7
Slide 28: Financials: Key Performance Drivers 1Q22
Financials: Key Performance Drivers 1Q22 Net interest income Net fee and commission income €mn €mn NIM 287bp 288bp 287bp 35% 41% 41% (YTD) % of NII -1.6% +14.7% +1.9% -3.4% +17.2% -2.1% 41.9 42.7 41.3 14.8 17.3 17.0 1Q21 (QTD) 4Q21 (QTD) 1Q22 (QTD) 1Q21 (QTD) 4Q21 (QTD) 1Q22 (QTD) • Decline in regul
Slide 29: Financials: Interest Income Dynamics
Financials: Interest Income Dynamics • Micro sub-segment shifted to SME in 2021 (from Consumer) • No impact on yields since size of shifted portfolio <€20mn Interest income by quarter1 Gross yield by quarter2 €mn 1Q21 2Q21 3Q21 4Q21 1Q22 46.8 46.8 47.0 47.1 7.2% 7.2% 7.0% 7.0% 7.0% 45.4 Consumer Oth
Slide 30: Financials: Other Interest Income
Financials: Other Interest Income Other interest income by quarter €mn • Treasury and other income: stabilising due to the overall yield environment • Plain vanilla bond portfolio with bonds predominantly in investment grade (c. 77%) with c. 61% maturing in 2026: – 78% government bonds (74% investme
Slide 31: Financials: Interest Expense Dynamics
Financials: Interest Expense Dynamics Interest expense by quarter Cost of funding by quarter1 €mn Treasury 4.9 4.6 Group Cost 0.40% Deposits – 4.4 4.4 1.0 4.1 of Funding2 Credit 0.9 0.37% Institutions 0.3 0.9 0.9 Direct 0.37% 1.0 0.35% 0.35% Direct 0.4 0.4 Deposits 0.3 0.4 0.4 0.34% Deposits 0.3 0.2
Slide 32: Financials: Commission Income Dynamics
Financials: Commission Income Dynamics Net fee and commission income by quarter Key highlights €mn • Solid improvement of net commission income in 17.9 17.3 1Q22: up 14.7% YoY 16.8 17.0 1.3 Non-Focus 1.3 1.1 14.8 1.6 • Bancassurance more than doubled YoY due to and Other 1.4 accelerated business act
Slide 33: Financials: Other Income & Other Result
Financials: Other Income & Other Result Other income breakdown (YTD) €mn Lower regulatory charges for recovery and resolution fund, 1Q21 1Q22 1 and increases in bank levies and other taxes due to higher Deposit guarantee -1.4 -1.4 supervision fees charged by regulators Bank levies and other taxes -0
Slide 34: Financials: Development of Operating Expenses
Financials: Development of Operating Expenses Operating expenses development by quarter Administrative expenses €mn 1Q22 YTD, €mn Other2 2.0 13% Advertising 1.8 12% Total: 7.9 0.7 €15.4mn IT Legal & Advisory 5% 51% 44.4 43.6 3.0 Depreciation 42.4 19% And 4.6 40.7 41.1 4.6 Premises Expenses Amortizat
Slide 35: Financials: Balance Sheet
Financials: Balance Sheet Detailed balance sheet overview (YTD) €mn 2016 2017 2018 2019 2020 2021 1Q22 Liquid Assets 3,287.6 2,582.5 2,211.8 2,034.5 2,121.8 2,406.5 2,293.6 Cash reserves 1,878.2 1,285.9 1,002.9 899.4 1,156.3 1,361.7 1,272.1 Investment Portfolio 1,409.4 1,296.6 1,208.9 1,135.1 965.5
Slide 36: Financials: Income Statement
Financials: Income Statement Detailed income statement overview (YTD) €mn New P&L logic 2016 2017 2018 2019 2020 2019 2020 2021 1Q21 1Q22 Interest income calculated using the effective interest method 232.2 226.0 209.6 207.4 194.3 207.4 194.3 185.5 46.2 45.1 Other interest income 6.0 8.3 4.2 3.4 2.6
Slide 37: Financials: Breakdown by Entity
Financials: Breakdown by Entity 1Q22 YTD Addiko Bank d.d., Addiko Bank d.d., Addiko Bank d.d., Addiko Bank a.d., Addiko Bank a.d., Addiko Bank A.D., (€mn, IFRS) Zagreb Ljubljana Banja Luka Sarajevo Beograd Podgorica Net interest income 13.0 9.5 3.7 3.5 8.0 2.6 Net commission income 6.2 3.8 1.9 1.8 3
Slide 38: Risk: Strong Risk Management Framework
Risk: Strong Risk Management Framework Non-performing loan portfolio (YTD) NPE Volumes, €mn 1,229 761 606 404 329 277 244 244 230 238 238 194 187 NPE Coverage Ratio1 61.7% 67.5% 67.0% 75.4% 73.2% 73.8% 73.2% 73.6% 75.6% 71.7% 71.2% 71.9% 72.2% (Ex-Collateral) 14.3% NPE Ratio2 9.2% 8.1% 5.6% 4.6% 3.9
Slide 39: Risk: Robust Asset Quality in Portfolios
Risk: Robust Asset Quality in Portfolios Focus Non-Focus €mn, rounded Consumer (from 1Q21 Micro shifted to SME) SME €mn, rounded €mn, rounded 1,810 1,825 46 1,766 1,770 51 48 24 29 > 90 1,634 53 41 39 1,576 1,579 > 90 48 days 1,534 days 58 45 74 > 90 55 62 61-90 71 61-90 1,417 days 61 days days 59 1
Slide 40: Risk: Provision Coverage Evolution
Risk: Provision Coverage Evolution Stage 1, 2 and 3 assets1 Business segments: Stage 1 & 2 (Performing) coverage €mn 1Q22 ECL coverage (YTD) By Segment 2021 3Q21 1H21 1Q21 4,785 4,761 4,717 230 238 238 4,474 4,456 Focus Focus 1.9% 2.0% 2.4% 2.5% 2.4% 194 187 589 613 584 Consumer 2.8% 2.8% 3.3% 3.5%
Slide 41: Risk: Track Record of Consistent NPE Reduction
Risk: Track Record of Consistent NPE Reduction NPE movements since 2016 – group level €mn Previous risk framework (before 1.1.2016) New risk framework (from 1.1.2016) 761 (741) 260 187 121 (213) 2016 NPE NPEreduction release NPE formation NPE NPEreduction release NPE formation 1Q22 ADDIKO BANK AG 11
Slide 42: Risk: NPE Formation and Exit Dynamics
Risk: NPE Formation and Exit Dynamics NPE movements YE21 vs. 1Q22 – group level €mn Previous risk framework (before 1.1.2016) New risk framework (from 1.1.2016) 194 13 1 187 (10) (11) 2021 NPE reduction NPE formation NPE reduction NPE formation 1Q22 Quarterly NPE formation & exit - group level Consu
Slide 43: Risk: Update on NPE and Cost of Risk Development
Risk: Update on NPE and Cost of Risk Development Focus Non-Focus3 €mn Consumer (from 1Q21 Micro shifted to SME) SME €mn €mn NPE Coverage Ratio (Excl. 84.8% 84.5% 78.8% 78.9% 70.4% 72.0% 64.1% 64.5% 68.5% 71.3% 72.4% 72.3% Collateral)1 5.9% 6.1% 5.7% 5.7% 4.5% 4.8% 4.6% 4.0% 4.1% 4.0% NPE Ratio2 3.5%
Slide 44: Risk: Tightly Monitored NPE Development
Risk: Tightly Monitored NPE Development Consumer (from 1Q21 Micro shifted to SME) SME Mortgages Large Corporates Public Finance €mn €mn €mn €mn €mn NPE Coverage Ratio1 84.8% 78.8% 78.9% 70.4% 64.1% 64.5% 71.6% 77.6% 78.6% 53.4% 53.5% 53.6% 49.6% 40.6% 40.1% 11.2% 9.4% 8.3% 4.5% 4.1% 4.6% 4.0% NPE Ra
Slide 45: Risk: CHF Loans Significantly Managed Down
Risk: CHF Loans Significantly Managed Down CHF portfolio overview CHF conversion across countries €mn %Credit of Total Risk 5.5% 4.4% 3.4% 1.9% 1.7% 1.5% 1.3% 1.3% • In the past, several legislation initiatives on CHF loans have been started Exposure 1 but eventually rejected, questioning the consti
Slide 46: Update on Capital Position: Details
Update on Capital Position: Details Breakdown of capital position and capital requirements Transitional 19.7% IFRS 9 Addiko is using the standardized approach for 22.2% fully-loaded its RWA calculation, with most of its RWAs 20.3% 20.0% 19.8% 19.8% 20.4% stemming from credit risk 17.7% 13.75% SREP 2
Slide 47: Update on Capital Position: Credit Risk RWA in Focus vs. Non-Focus
Update on Capital Position: Credit Risk RWA in Focus vs. Non-Focus Risk weighting for focus portfolio is in line with overall contribution to loan book Credit risk RWA Credit risk RWA: breakdown by segment1 1Q22, €mn 1Q22, €mn Public Finance Large Corporate 37 Consumer 275 3,108 3,093 (14) Mortgages
Slide 48: Disclaimer
Disclaimer THESE RESULTS AND STATEMENTS (HEREINAFTER REFERRED TO AS “MATERIALS”) WERE CAREFULLY PREPARED BY ADDIKO BANK AG. HOWEVER, THE MATERIALS HAVE NOT BEEN INDEPENDENTLY VERIFIED. THEREFORE, ADDIKO BANK AG MAKES NO REPRESENTATION AND GIVES NO WARRANTY, NEITHER IMPLIED NOR EXPRESSED, AND ASSUMES