Erste Group Bank Ag · VIE:EBS
Erste Group Bank — Erste Bank — Q1 2006 Earnings Presentation
48 slides from Erste Group Bank's earnings presentation, Apr 28, 2006
Slide 1: Erste Bank: strongest operating result to date
> Erste Bank: - strongest operating result to date > Q1 2006 results > Teleconference Vienna, 28 April 2006 > Andreas Treichl, CEO Reinhard Ortner, CFO Gabriele Werzer, IR
Slide 2: Presentation topics
> Presentation topics 1. Q1 2006 highlights 2. Financial statements 3. Divisional information 4. Asset quality 5. Outlook and targets 6. Appendix NB Figures of prior years (2005 and 2004) have been adapted pursuant to the requirements of IAS 32 and IAS 39. Details of these changes were outlined in t
Slide 3: Q1 2006 financial highlights
> Q1 2006 financial highlights * EPS (in EUR) 0.83 » Net profit: + 49.5% to EUR 239.6m yoy » Total assets: + 4.0% to EUR 158.8bn ytd 0.67 » Tier 1 ratio: 10.2% » Tier 1 capital increased by 2.7bn in January 06 0.38 0.40 0.39 0.33 » Cost/income ratio: 59.6% 0.28 » Return on equity: 15.6% » On 68% hig
Slide 4: Operating results per segment
> Operating results per segment Double-digit growth in all core business segments EUR m Q1 2006 Q1 2005 % Change Austria 249.5 216.1 15.5 Savings banks 96.9 90.1 7.5 Retail & Mortgage 67.1 55.1 21.9 thereof - Retail Branches 27.8 22.4 24.1 - SME 5.9 6.2 (5.4) - Own savings banks 15.2 14.5 5.4 - Mort
Slide 5: Key figures of EB subsidiaries in Central Europe
> Key figures of EB subsidiaries in Central Europe Results (IFRS) as reported by local entities 97.97% 100.00% 99.90% 61.95% 95.60%* Q1 06 Q1 05 +/- Q1 06 Q1 05 +/- Q1 06 Q1 05 +/- Q1 06 Q1 05 +/- Q1 06 Q1 05 +/- Net profit (EUR m) 87.6 80.8 8.4% 24.1 24.1 0.0% 20.6 17.4 18.4% 12.0 11.7 2.6% (5.2) 0
Slide 6: Update on Banca Comerciala Romana (BCR)
> Update on Banca Comerciala Romana (“BCR”) Preparing for completion in June 2006 » Close cooperation between TCC and BCR management » Joint planning meetings and implementation of joint budgeting processes » Further initiatives in the run up to completion to ensure a smooth start to the 12–18-month
Slide 7: New Group Architecture (NGA) - Update
> New Group Architecture (NGA) - Update Significant further progress of NGA initiatives expected in 2006 Retail 2008 Group Procurement 9 Structured Investment Products 9 On track 9 Sales Management Techniques » Consumer Finance » Rollout of local business projects by YE 2006 Cards Information Techno
Slide 8: Presentation topics
> Presentation topics 1. Q1 2006 highlights 2. Financial statements 3. Divisional information 4. Asset quality 5. Outlook and targets 6. Appendix Q1 2006 Results 28 April 2006 8
Slide 9: Group income statement (IFRS)
> Group income statement (IFRS) Substantial net profit improvement on strong operating performance EUR m Q1 2006 Q1 2005 % Change Net interest income 724.0 672.7 7.6 Risk provisions for loans and advances (109.1) (101.3) 7.7 Net commission income 342.2 311.1 10.0 Net trading result 91.2 57.2 59.4 Ge
Slide 10: Group balance sheet (IFRS) - Assets
> Group balance sheet (IFRS) Assets – continued growth in CE customer loans EUR m 31-Mar-06 31-Dec-05 % Change Cash and balances with central banks 2,787 2,728 2.2 Loans and advances to credit institutions 18,604 16,858 10.4 Loans and advances to customers 84,310 80,419 4.8 Risk provisions for loans
Slide 11: Group balance sheet (IFRS) - Liabilities
> Group balance sheet (IFRS) Liabilities – moderate increase in customer deposits EUR m 31-Mar-06 31-Dec-05 % Change Amounts owed to credit institutions 36,213 33,911 6.8 Amounts owed to customers 75,151 72,793 3.2 Debts evidenced by certificates 19,900 21,291 (6.5) Provisions 8,845 8,635 2.4 Other
Slide 12: Presentation topics
> Presentation topics 1. FY 2005 highlights 2. Financial statements 3. Divisional information 4. Asset quality 5. Outlook and targets 6. Appendix Q1 2006 Results 28 April 2006 12
Slide 13: Divisional figures – Core segments
> Divisional figures – Core segments Substantial net profit growth in all core divisions Austria CE Subsidiaries Int. Business Corp. Center TOTAL EB GROUP In EUR m Q1 06 Q1 05 Q1 06 Q1 05 Q1 06 Q1 05 Q1 06 Q1 05 Q1 06 Q1 05 Net interest income 376.5 384.2 303.2 259.8 34.4 36.1 9.9 (7.4) 724.0 672.7
Slide 14: Core Segment Austria
> Core Segment Austria Austria – strong performance in all business segments Savings banks Retail & Mortgage Large Corp. Trading & Inv.B. TOTAL AUSTRIA In EUR m Q1 06 Q1 05 Q1 06 Q1 05 Q1 06 Q1 05 Q1 06 Q1 05 Q1 06 Q1 05 Net interest income 199.4 204.1 129.6 128.4 34.6 35.5 13.0 16.2 376.5 384.2 Ris
Slide 15: Savings Banks
> Savings Banks Q1 2006 highlights » Operating result improves by 7.5% yoy mainly Segment Savings Banks Q1 06 Q1 05 % chg driven by strong commission income Operating income (EUR m) 303.6 294.3 3.2 » Down on very strong Q4 2005 Operating expenses (EUR m) (206.8) (204.2) 1.3 » NII down 2.3% yoy due t
Slide 16: Retail and Mortgage
> Retail and Mortgage Q1 2006 highlights » Retail Austria – strong operating result driven by a Segment Retail & M'ge Q1 06 Q1 05 % chg 14.3% yoy (+11.3% qoq) rise in commission income Operating income (EUR m) 226.3 212.0 6.7 » ROE surpasses 11% target Operating expenses (EUR m) (159.1) (156.9) 1.4
Slide 17: Retail and Mortgage - details
> Retail and Mortgage - details R & M Austria – increasing net profit in all business units Operating profit Net profit (EUR m) (EUR m) 27.8 Q1 2005 Q1 2006 Q1 2005 Q1 2006 22.4 15.2 14.5 13.2 11.0 8.7 7.2 6.2 5.9 5.9 6.1 6.1 5.3 4.6 3.7 3.0 3.0 0.0 0.5 Branches SME Own SBs Mortgage Subsidiaries Bra
Slide 18: Large Corporates
> Large Corporates Q1 2006 highlights » Net profit contribution substantially up by 73.4% Segment Large Corp Q1 06 Q1 05 % chg » Operating result increases by 11.2% Operating income (EUR m) 56.6 52.5 7.8 » Supported by successful private equity subsidiary “Capexit” Operating expenses (EUR m) (21.9)
Slide 19: Trading & Investment Banking
> Trading & Investment Banking Q1 2006 highlights » Net profit contribution rises by 53.9% mainly as a Segment Trading & IB Q1 06 Q1 05 % chg result of excellent trading results Operating income (EUR m) 76.4 62.4 22.5 » NII decreases by 19.8% yoy (EUR -3.2m) but Operating expenses (EUR m) (25.6) (22
Slide 20: Core segment Central Europe
> Core segment Central Europe CE subsidiaries – continuing strong increase in net profit contribution Czech Republic Slovakia Hungary Croatia Serbia TOTAL CE In EUR m Q1 06 Q1 05 Q1 06 Q1 05 Q1 06 Q1 05 Q1 06 Q1 05 Q1 06 Q1 05 Q1 06 Q1 05 Net interest income 172.1 139.7 50.7 45.6 52.5 47.1 27.4 27.4
Slide 21: Česká spořitelna
> Česká spořitelna Q1 2006 highlights » Net profit contribution up 22.7% yoy (16.5%)* Segment contribution Q1 06 Q1 05 % chg » As a result of strong operating performance +38.4% Operating income (EUR m) 270.6 227.1 19.1 (31.5%) Operating expenses (EUR m) (145.0) (136.3) 6.4 » NII increases by 23.2%
Slide 22: Slovenská sporiteľňa
> Slovenská sporitel’ňa Q1 2006 highlights » Net profit contribution up 11.5% (9.0%)* yoy on Segment contribution Q1 06 Q1 05 % chg 14.3% (11.7%) increase in operating performance Operating income (EUR m) 75.7 68.3 10.8 » NII up 11% yoy (8.5%) Operating expenses (EUR m) (45.3) (41.7) 8.5 » Strong lo
Slide 23: Erste Bank Hungary
> Erste Bank Hungary Q1 2006 highlights » Net profit contribution up 2% (6.6%)* yoy Segment contribution Q1 06 Q1 05 % chg » Operating result improved by 10.9% (15.9%) Operating income (EUR m) 76.2 72.3 5.4 » NII up 11.5% yoy (16.5%) Operating expenses (EUR m) (43.1) (42.4) 1.6 » Supported by strong
Slide 24: Erste Bank Croatia
> Erste Bank Croatia Q1 2006 highlights » Net profit contribution improves by 6.9% (4.2%)* Segment contribution Q1 06 Q1 05 % chg » Operating result remains flat yoy and qoq due to weaker Operating income (EUR m) 36.5 32.1 13.6 NII and a strong increase in expenses mainly driven by Operating expense
Slide 25: Erste Bank Serbia
> Erste Bank Serbia Q1 2006 highlights » Net loss of 5.7m EUR resulting from restructuring Segment contribution Q1 06 Q1 05 % chg expenses and investments Operating income (EUR m) 2.0 - - Operating expenses (EUR m) (6.2) - - » NII – increasing lending volumes » NIM 5.8% Operating result (EUR m) (4.2
Slide 26: Core segments – Int'l Business and Corporate Center
> Core segments – INT. BUSINESS and CORP. CENTER Int’l Business – Q1 06 highlights Corporate Center – Q1 06 highlights » Net profit strongly up by 32.4% yoy supported by a » NII – positively impacted by interest income on capital significant decline in risk costs and strict cost raised (approximatel
Slide 27: Presentation topics
> Presentation topics 1. Q1 2006 highlights 2. Financial statements 3. Divisional information 4. Asset quality 5. Outlook and targets 6. Appendix Q1 2006 Results 28 April 2006 27
Slide 28: Asset quality
> Asset quality NPL cover ratio continues to improve Low Risk Mgmt. Att'n Substandard NPL Total¹ Risk Provisions NPL Coverage2 Q1 06 YE 05 Q1 06 YE 05 Q1 06 YE 05 Q1 06 YE 05 Q1 06 YE 05 Q1 06 YE 05 Q1 06 YE 05 Austria Total 78,026 75,544 11,345 12,267 2,277 2,431 3,185 3,275 94,833 93,517 2,174 2,1
Slide 29: Presentation topics
> Presentation topics 1. FY 2005 highlights 2. Financial statements 3. Divisional information 4. Asset quality 5. Outlook and targets 6. Appendix Q1 2006 Results 28 April 2006 29
Slide 30: Erste Bank Group targets
> Erste Bank Group targets Outlook 2006 Net profit(1) growth Above 20% in 2006 Mid term targets Net profit(1) growth More than 20% p.a. average until 2009 Cost/income ratio Below 55% in 2009 Return on equity(2) 18-20% in 2009 (1) Net profit after tax and minorities (2) Based on a Tier 1 ratio of at
Slide 31: Presentation topics
> Presentation topics 1. FY 2005 highlights 2. Financial statements 3. Divisional information 4. Asset quality 5. Outlook and targets 6. Appendix Q1 2006 Results 28 April 2006 31
Slide 32: Macro overview
> Macro overview Real GDP growth Inflation (average) 8.0% 20.0% 7.0% 16.0% 6.0% 5.0% 12.0% 4.0% 3.0% 8.0% 2.0% 4.0% 1.0% 0.0% 0.0% 2002 2003 2004 2005e 2006e 2007e 2008e 2002 2003 2004 2005e 2006e 2007e 2008e Austria Czech Republic Slovakia Hungary Croatia Serbia Austria Czech Republic Slovakia Hung
Slide 33: Overview of international exposures
> Overview of international exposures Credit Risk1 by regions at EB Group Low Risk Management Substandard Non performing Total outstanding attention in EUR m Q1 06 YE 05 Q1 06 YE 05 Q1 06 YE 05 Q1 06 YE 05 Q1 06 YE 05 % of total % of total Core Markets 91,598 89,322 12,393 12,890 2,562 2,826 3,511 3
Slide 34: Overview of international exposures (cont)
> Overview of international exposures (cont) Credit Risk1 by industry sectors at EB Group Low Risk Management Substandard Non performing Total outstanding attention in EUR m Q1 06 YE 05 Q1 06 YE 05 Q1 06 YE 05 Q1 06 YE 05 Q1 06 YE 05 % of total % of total Banking & insurance 52,450 47,514 753 799 59
Slide 35: Financials (IFRS) of CE subsidiaries: Česká spořitelna
> Financials (IFRS) of CE subsidiaries Česká spořitelna EUR m Q1 2006 Q1 2005 % Change Net interest income 178.1 154.7 15.1 Risk provisions for loans and advances (10.8) (1.9) >100.0 Net commission income 78.2 76.4 2.4 Net trading result 17.8 13.6 30.9 General administrative expenses (145.0) (143.4)
Slide 36: Financials of CE subsidiaries: Slovenská sporiteľňa
> Financials (IFRS) of CE subsidiaries (cont) Slovenská sporiteľňa EUR m Q1 2006 Q1 2005 % Change Net interest income 52.8 51.0 3.5 Risk provisions for loans and advances (2.8) (0.1) >100.0 Net commission income 19.2 19.6 (2.0) Net trading result 5.8 3.5 65.7 General administrative expenses (45.3) (
Slide 37: Financials of CE subsidiaries: Erste Bank Hungary
> Financials (IFRS) of CE subsidiaries (cont) Erste Bank Hungary EUR m Q1 2006 Q1 2005 % Change Net interest income 57.2 50.0 14.4 Risk provisions for loans and advances (6.4) (6.7) (4.5) Net commission income 12.7 15.6 (18.6) Net trading result 11.0 8.5 29.4 General administrative expenses (43.1) (
Slide 38: Financials of CE subsidiaries: Erste Bank Croatia
> Financials (IFRS) of CE subsidiaries (cont) Erste Bank Croatia EUR m Q1 2006 Q1 2005 % Change Net interest income 29.4 29.3 0.3 Risk provisions for loans and advances (2.6) (2.2) 18.2 Net commission income 6.1 4.7 29.8 Net trading result 2.9 0.1 >100.0 General administrative expenses (20.5) (16.7)
Slide 39: Financials of CE subsidiaries: Erste Bank Serbia
> Financials (IFRS) of CE subsidiaries (cont) Erste Bank Serbia EUR m Q1 2006 Q1 2005 1) % Change Net interest income 1.3 2.3 (43.5) Risk provisions for loans and advances (1.4) (2.6) (46.2) Net commission income 1.1 1.0 10.0 Net trading result 0.4 2.0 (80.0) General administrative expenses (6.2) (2
Slide 40: EB Group quarterly results (IFRS)
> EB Group quarterly results (IFRS) Profit & loss statement - details EUR m Q1'04 Q2'04 Q3'04 Q4'04 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Net interest income 650 652 666 693 673 697 694 731 724 Net commission income 281 283 285 287 311 306 305 335 342 Net trading result 62 46 48 60 57 48 66 70 91 Income fro
Slide 41: EB Group quarterly balance sheet (IFRS)
> EB Group quarterly balance sheet (IFRS) Balance sheet - details EUR m Q1'04 Q2'04 Q3'04 Q4´04 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Total assets 136,128 137,517 142,221 139,812 148,202 152,660 156,931 152,660 158,815 Loans & advances credit inst. 18,747 17,846 19,304 15,684 19,545 19,840 20,058 16,858 18,
Slide 42: EB Group quarterly by divisions
> EB Group quarterly by divisions Core segments In EUR m Total Austria Total CE Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Net interest income 384.2 388.4 383.4 394.2 376.5 259.8 273.0 273.6 290.3 303.2 Risk provisions (80.1) (88.2) (99.1) (83.9) (80.4) (13.9) (18.0) (20.0) (28.2) (
Slide 43: EB Group quarterly by divisions: Austria details
> EB Group quarterly by divisions Austria - details In EUR m Savings Banks Retail & Mortgage Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Net interest income 204.1 204.9 209.2 215.7 199.4 128.4 128.9 126.6 127.2 129.6 Risk provisions (40.5) (46.3) (58.2) (70.7) (44.1) (26.5) (26.1) (2
Slide 44: EB Group quarterly by divisions: Central Europe details
> EB Group quarterly by divisions Central Europe - details In EUR m Czech Republic Slovakia Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Net interest income 139.7 145.6 149.5 160.2 172.1 45.6 47.2 47.0 55.1 50.7 Risk provisions (7.0) (6.4) (6.5) (13.8) (10.8) (0.1) (5.0) (3.9) (2.2) (
Slide 45: EB Group quarterly by divisions: Central Europe details
> EB Group quarterly by divisions Central Europe - details In EUR m Croatia Serbia Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Net interest income 27.4 29.7 23.7 19.5 27.4 - - 0.9 1.2 0.5 Risk provisions (2.1) (2.2) (4.0) (6.1) (2.6) - - (0.7) (3.2) (1.4) Net commission income 4.6 5.
Slide 46: FY 2005 Results: Key financial data
> FY 2005 Results Key financial data EUR m YE 1998 YE 1999 YE 2000 YE 2001 YE 2002 YE 2003 YE 2004 YE 2005 Q1 2006 Tier 1 Capital pursuant to § Austrian Banking Act 1,611 1,753 2,125 2,337 3,800 3,912 4,377 5,112 7,789 Total own funds pursuant to 1 § Austrian Banking Act 3,176 3,296 3,956 4,308 6,98
Slide 47: Current shareholder structure
> Current shareholder structure Total numbers of shares: 308,032,560* By Investor Type By Region Others Austria Verein 5.0% Continental Europe 0.9% 6.4% 30.5% UK & Ireland 17.2% Employees 1.5% Savings banks Institutional investors 7.2% North America Austria 48.6% Private investors 17.6% 7.2% 57.9% F
Slide 48: Investor relations contacts
> Investor relations contacts Erste Bank, Graben 21, 1010 Vienna Fax +43 (0)5 0100-13112 E-mail: investor.relations@erstebank.at Internet: www.erstebank.com Reuters: ERST.VI Bloomberg: EBS AV Datastream: O:ERS ISIN: AT0000652011 * The new EB shares issued as part of the capital increase in January 2