Erste Group Bank AG · VIE:EBS
Erste Group Bank — Q3 2011 Earnings Presentation
15 slides from Erste Group Bank's earnings presentation, Oct 10, 2011
Slide 1: Erste Group – 1-9 2011 trading update
Erste Group – 1-9 2011 trading update 10 October 2011 Major one-off charges, limited impact on core capital Andreas Treichl, Chief Executive Officer, Erste Group Manfred Wimmer, Chief Financial Officer, Erste Group Bernhard Spalt, Chief Risk Officer, Erste Group
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 − CDS reclassification & euro zone peripheral exposure − Hungary − Other items − Romania − IFRS 9 (effective interest rate method) alignment − Capital position − Participation capital strategy − Outlook . 10 October 2011 1-9 11 trading update 3
Slide 4: Executive summary (1) – Major one-off charges, limited impact on core capital
Executive summary (1) – Major one-off charges, limited impact on core capital − Taking decisive action in Hungary − The new political/economic reality requires a complete strategic rethink − Write-down of entire goodwill (EUR 312 million pre- and post-tax) − Provision for forced FX conversion (early
Slide 5: Executive summary (2) – Track record of strong underlying profitability
Executive summary (2) – Track record of strong underlying profitability * Quarterly reported net profit (in EUR m) 826 302 264 272 337 316 321 232 260 228 255 217 265 279 261 236 183 150-250 -603 ~ -1,450 Affected by extraordinary items Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3
Slide 6: Reclassification of CDS portfolio – History and key data
Reclassification of CDS portfolio – History and key data − Business was done until 2008 as part of the International Business − Advantages seen at that time: unfunded, yield pick up, portfolio diversification − Single reference entities, no basket default swaps; top banks and sovereigns − Hedges wer
Slide 7: Reclassification of CDS portfolio – Portfolio analysis
Reclassification of CDS portfolio – Portfolio analysis Maturity profile of CDS portfolio CDS split by entities 881 2014 onwards 652 673 646 540 580 429 Banks 46% Sovereign 262 54% 219 142 77 51 0 25 12 12 12 12 13 13 14 15 11 16 17 18 19 20 20 20 20 20 20 20 20 20 1 2 4 1 2 3 H H Q Q Q Q CDS split b
Slide 8: Update on euro zone peripheral exposure (1) – Significant risk reduction
Update on euro zone peripheral exposure (1) – Significant risk reduction across the board − Aggressive disposal programme ytd with focus on risk reduction − Strongest decline in Greek and Portuguese exposure − EUR 400 million of Italian exposure matures in January 2012 Net exposure of Erste Group* t
Slide 9: Update on euro zone peripheral exposure (2) – 95% of sovereign exposure marked-to-market
Update on euro zone peripheral exposure (2) – 95% of sovereign exposure is marked-to-market − No meaningful sovereign exposure to GR, IE, ES, PT as at 30 September 2011 − 81% of exposure is related to Italy and Spain (includes corporate and retail) Total net exposure of Erste Group (excluding saving
Slide 10: Hungary – Coping with a difficult operating environment
Hungary – Coping with a difficult operating environment − Heavy government intervention in the banking market − Introduction of a disproportionate banking tax as of 2010 − Nationalisation of private pension system − Early repayment (of FX loans) act − Threat of renegotiating county and municipality
Slide 11: Hungary: Early repayment of FX mortgages – Overview of the law
Hungary: Early repayment of FX mortgages – Overview of the law The Hungarian Parliament has recently passed a bill that allows full early repayment of FX Summary of the retail mortgage loans at a fixed exchange rate early repayment Banks would be responsible for covering all transaction-related
Slide 12: Other items – Romanian goodwill write-down, EIR alignment
Other items – Romanian goodwill write-down, EIR alignment − Partial goodwill write-down in Romania − EUR 700 million pre-tax (EUR 627 million post-tax) − Adjustment due to weaker economic performance of Romania and slower development of the banking market − Remaining goodwill of EUR 1.1 billion to b
Slide 13: Regulatory capital – Despite charges capital position remains strong
Regulatory capital – Despite charges capital position remains strong Core tier 1 ratio Core tier 1 ratio excl part-cap (total risk) (total risk) 9.2% 9.2% 8.3% 7.7% 7.7% 6.9% 5.0% 5.2% 5.0% 5.2% Dec 07 Dec 08 Dec 09 Dec 10 Dec 11e Dec 07 Dec 08 Dec 09 Dec 10 Dec 11e In response to the significantly
Slide 14: Outlook – Renewed internal capital generation in 2012
Outlook – Renewed internal capital generation in 2012 − Erste Group’s operating performance to remain a pillar of strength in 2011 − Expected to offset the negative impact on regulatory capital from extraordinary charges − Core Tier 1 ratio (total risk) at about 9.2% is expected to remain unchanged
Slide 15: Investor relations contacts
Investor relations contacts − Erste Group Bank AG, Graben 21, 1010 Vienna Fax +43 (0)5 0100-13112 E-mail: investor.relations@erstegroup.com Internet: www.erstegroup.com Reuters: ERST.VI Bloomberg: EBS AV Datastream: O:ERS ISIN: AT0000652011 − Investor relations Thomas Sommerauer Tel: +43 (0)5 0100 1