Addiko Bank Ag · VIE:ADKO
Addiko Bank — FY2022 Earnings Presentation
62 slides from Addiko Bank's earnings presentation, Mar 8, 2023
Slide 1: YE22 Results Presentation
YE22 Results Presentation Herbert Juranek (CEO) Edgar Flaggl (CFO) Tadej Krašovec (CRO) Ganesh Krishnamoorthi (CMO & CIO) Constantin Gussich (Investor Relations) 8 March 2023
Slide 2: Executive Summary & Business Update
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 3: Key Highlights 2022
Key Highlights 2022 • 2022 net profit at €25.7mn (YE21: €13.6mn), 2022 EPS at €1.32 − Fourth quarter result after tax €6.1mn (3Q22: €7.0mn, 2Q22: €6.1mn, 1Q22: €6.5mn) − Cost of Risk at 47bps or €15.4mn including prudent management overlay • Return on Tangible Equity (@14.1% CET1 ratio) at 4.5% YTD
Slide 4: Key Topics
Key Topics • Opinion from auditor for mandatory reclassification of treasury portfolio in EU entities Reclassification obtained and executed in 3Q22 due to the change in the overall strategy of the bank of Financial • Pre-clearance procedure initiated with FMA resulted in negative feedback in Januar
Slide 5: Guidance 2022 Confirmed by Actuals
Guidance 2022 Confirmed by Actuals For the full year 2022 the Group delivered: Outlook 2022 (as revised upwards in 1H22) 2022 results ➔– Gross performing loans: c. €3.3bn with >10% growth in focus €3.3bn with 11% ➔– Net Banking Income: above €240mn €248.9mn ➔– Operating expenses: below €167mn due to
Slide 6: Achievements of the Transformation Program
Achievements of the Transformation Program • 18-month Transformation Program launched with 1H21 results, closed by year-end 2022 Goals • Significant business momentum and revenue growth achieved, Addiko brand repositioned Achieved • Efficient cost management delivered in parallel to boosting revenue
Slide 7: Strong Growth in Focus Portfolio
Strong Growth in Focus Portfolio Focus portfolio development Development during 2022 Gross performing loans (€mn) +11% 2.722 • Transformation Program, launched in 2.446 2.401 2.352 1H21, continued to yield strong business 1.188 Zoom-in view results in 2022 1.059 1.040 1.057 SME • YTD growth in foc
Slide 8: Current Economic Environment
Current Economic Environment GDP forecasts1 (%, real growth) Forecasts • Global economy strongly affected 2022E 2023E 2024E 2023E 2024E 2025E 2026E by the consequences of Russia’s Base Base Base Pessimistic Pessimistic Base Base war in Ukraine and the turmoil Slovenia 5.7% 1.9% 3.0% (2.8%) (0.2%) 3.
Slide 9: Foundations Set to Become the Leading Specialist Bank for Consumer & SME
Foundations Set to Become the Leading Specialist Bank for Consumer & SME Customers in the CSEE Region Business Update Improving dynamics YoY €mn, digital users and clients in thousands YoY • New business: up 22% YoY driven by digital 1,322 +24% channel & 350 new partnerships 125 1,066 -29% • Pri
Slide 10: Digital Roadmap Executed with Cost Savings YoY
Digital Roadmap Executed with Cost Savings YoY EURO & Card Digital lending Enabled 350 Introduction of Consumer improvements without branch partners variable pricing in Croatia support Risk & Credit E2E Process New Mobile App SME Bureau engine optimization & SME Online for accounts integration autom
Slide 11: 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 12: Executive Summary & Business Update
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 13: Financial Performance 2022 at a Glance
Financial Performance 2022 at a Glance 5.60% Financial Performance 2022 4Q21 1Q22 2Q22 3Q22 4Q22 5.10% YTD, €mn 64.0 64.2 4.60% 62.5 60.1 58.2 2021 YoY 17.1 4.10% 19.3 NCI 17.3 17.0 19.1 3.60% Net Netinterest interest income income 176.4 169.5 +4.1% 3.17% 3.02% 3.08% NIM 2.86% 2.87% 3.10% Net fee &
Slide 14: Recent Capital Development
Recent Capital Development Capital development fully-loaded % CET1/TCR, YTD, RWA in €mn 1 Addiko Group 3,598 3,751 3,716 3,538 3,481 RWFL 1.02% 1.64% 0.00% 0.32% 1.41% 0.06% 0.01% €+52.5mn change in OCI: ECB waiver for €-58.1mn change in OCI: • €+56.9mn structural FX • €-56.9mn reversal of reclassif
Slide 15: Current Dynamics on Capital Requirements Going Forward
Current Dynamics on Capital Requirements Going Forward Capital requirements as of 2023 • Unchanged at 3.25% P2R • At least 56.25% must be held in CET1 (2023) capital and at least 75% in Tier 1 capital 20.0% 20.0% 20.0% • Yearly review as part of SREP CBR already includes Combined • Systemic Risk Buf
Slide 16: Continuous Reduction of NPEs
Continuous Reduction of NPEs NPE volume & ratio development Quarterly NPE formation & exit €mn, YTD €mn, QTD 1Q22 2Q22 3Q22 4Q22 NPE ratio 3.5% 3.4% 2.9% 2.4% NPE ratio Formation 16.4 19.9 23.7 28.3 (on-balance loans)1 4.7% 4.8% 4.0% 3.3% 2.5 1.4 4.2 3.6 13.2 3.7 7.3 2.1 244 238 12.9 12.5 12.3 12.6
Slide 17: Cost of Risk at a Glance
Cost of Risk at a Glance Credit loss expenses on financial assets 2022 YTD, €mn, positive number for release • 2022 credit loss expenses of €-15.4mn resulting in - 6.1 0.1 0.47% cost of risk (on net (12.5) loans): Impairments (negative) Releases (positive) − Consumer: -0.59% (15.4) (15.4) (9.0) − SM
Slide 18: Executive Summary & Business Update
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 19: Acceleration Program until 1H24 to Further Drive Value Generation
Acceleration Program until 1H24 to Further Drive Value Generation Business Growth in Focus Areas 1 Unlock potential of existing footprint Tap additional revenue & profit Prepare market expansion pools Plug & Play platform Digital Consumer lending Digital SME Operational Excellence & Digital lending
Slide 20: Mid-Term Targets
Mid-Term Targets Updated Targets Previous Targets Rationale Focus vs. Non-Focus Acceleration Program to lead Business (Gross Performing Loans) >95% in Focus c. 95% in Focus to higher share in Focus Focus loan book growth c. 10% CAGR unchanged Due to accelerated shift into Net Interest Margin >3.8% c
Slide 21: Outlook 2023 and Wrap-Up
Outlook 2023 and Wrap-Up The group currently expects: – Gross performing loans: c. €3.5bn with >10% growth in focus ➔ – Net Banking Income: up by ca. 10% positively impacted by the rising interest curve, ➔ despite increasing funding costs and run-down of non-focus Outlook 2023 – Operating expenses:
Slide 22: Additional Materials
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 23: Addiko at a Glance
Addiko at a Glance Overview of Addiko Operating as one region - one bank YE22, % 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 ✓ (4%2) Authority (“FMA”)1 an
Slide 24: 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 • Growth in focus
Slide 25: Addiko's Commitment to the Sustainable Development Goals
Addiko’s Commitment to the Sustainable Development Goals ESG in Addiko - It is the little things that count Next steps Environment Social Governance • CRO appointed as ESG Officer in Addiko • Implementation of initially 21 initiatives clustered into 15 initiatives Carbon footprint Making ESG work th
Slide 26: Balance Sheet Composition
Balance Sheet Composition Assets Liabilities and Equity 2022, €bn 2022, €bn 6.0 6.0 Other ✓• Liquid balance sheet Other Assets 0.2 0.2 0.1 Liabilities ✓• Strong deposit base - LCR ratio: 307% (2021: 252%) Due to Credit 0.5 Institutions - Loan-deposit ratio Direct (customer) : 66.4% (YE21: ✓• Liquid
Slide 27: 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 2022 YTD QTD QTD QTD QTD Full year 4Q22 3Q22 2Q22 1Q22 2021 yield yield yield yield yield Consumer 6.9% 6.8% 6.8% 6
Slide 28: Consumer and SME Lending Development
Consumer and SME Lending Development Consumer (from 1Q21 Micro shifted to SME) SME €mn, YTD €mn, YTD 1.476 1.525 1.535 1.431 1.389 1.342 1.312 1.306 1.332 1.370 1.188 1.164 1.177 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 1Q2
Slide 29: 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) -16% -33% -31% 1.469 1.252 Large Corp. & 724 841 Public 613 582 307 147 Mortgages 744 639 535 435 2019 2020 2021 2022 • Non-Focu
Slide 30: Digital Lending Platforms in All Major Markets
Digital Lending Platforms in All Major Markets WebLoan (Consumer & SME) Group Application Processing System – GAPS (Consumer) Simple entry point for loan requests with Simple branch loan Application Processing System instant initial offer (final approval & closure in including CDE (Credit Decision E
Slide 31: Consumer Customer Base
Consumer Customer Base Customer base1 Customers’ years of relationship with Addiko Number of clients (excl. NPE), ths. 2022 <1 Year 24% of customer base attracted Micro shifted to over last 3 years SME as of 1Q21 13% 1-3 Years 731 11% 724 727 Total: 30 27 689 Micro 60% 727 ths. >6 Years 16% 3-6 Year
Slide 32: Focus in Consumer Remains on High-Margin Product Offering
Focus in Consumer Remains on High-Margin Product Offering Unsecured lending products for Consumer 2022 Fast cash loans Payroll loans Sales finance (POS) • Unsecured loan • Unsecured loan for customers with • Unsecured loan for financing goods and Description • Non payroll (salary with the Bank not s
Slide 33: Growth in Consumer Lending Slowly Returning
Growth in Consumer Lending Slowly Returning Addiko market share – unsecured consumer loans (stock outstanding, 2022E)1,2 • Consumer lending market size Bosnia & grew by +2.7% vs. 2021 Serbia Croatia Slovenia Montenegro Herzegovina Market • Serbian market with strong Size, 7.5 9.6 4.3 4.2 1.0 growth
Slide 34: SME Customer Base
SME Customer Base Customer base Customers’ years of relationship with Addiko Number of clients (excl. NPE), ths. 2022 < 1 year 30% of customer base attracted 14% over last 3 years Micro shifted to 12.6 SME as of 1Q21 1-3 years 0.2 1.4 Total: 16% 12.3 0.2 37.7 >6 years 55% 37.7 ths. 1.3 36.5 1.2 Medi
Slide 35: Digital Transformation Reflected
Digital Transformation Reflected Digital capabilities YTD +12% YoY Registered Mobile Banking 118 150 188 230 258 +3% Mobile banking users (vs. PQ) Users (ths.)2 +11% YoY +3% Digital users 273 (vs. PQ) 246 210 177 26% Bank@Work (3Q22: 24%, 1H22: 26%, 1Q22: 28%, YE21: 28%) 149 37% Digital consumer loa
Slide 36: Financial Performance 2022 in Detail
Financials: Financial Performance 2022 in Detail Key financials P&L •1 Operating result at €73.6mn up 34.0% YoY: in €mn YTD QTD − Net banking income up 5.3% YoY driven by YE22 (YTD) YE21 (YTD) +/- PY 4Q22 3Q22 +/- PQ strong development in Consumer & SME, Net interest income 176.4 169.5 4.1% 47.1 44.
Slide 37: Key Performance Drivers 2022
Financials: Key Performance Drivers 2022 Net interest income Net fee and commission income €mn €mn NIM 288bp 298bp 287bp 302bp 308bp 317bp 41% 44% 43% 36% % of 39% 43% +4.1% NII 169.5 176.4 +8.5% +5.0% +3.0% +5.4% 66.8 72.5 +12.5% +1.0% -11.2% 41.3 43.4 44.7 47.1 17.0 19.1 19.3 17.1 YE21 (YTD) YE22
Slide 38: Interest Income Dynamics
Financials: Interest Income Dynamics Interest income by quarter1 Gross yield by quarter2 €mn 53.1 4Q21 1Q22 2Q22 3Q22 4Q22 49.2 47.1 47.5 8.8 45.4 7.0% 7.0% 6.9% 6.8% 6.8% 7.0 Consumer Other 6.7 1.4 7.2 6.5% 6.3% 6.5% 6.4% 6.6% Public & 6.4 1.6 4.2 new new new new new Large 1.9 business business bus
Slide 39: Breakdown of Other Interest Income
Financials: Breakdown of Other Interest Income Treasury interest income by quarter €mn • HTC bond portfolio strategy: interest income from the instruments held under the Hold-to-Collect (HTC) bond portfolio strategy in EU entities. This portfolio is steered as the HTC bond portfolio, based on Other
Slide 40: Interest Expense Dynamics
Financials: Interest Expense Dynamics Interest expense by quarter Cost of funding by quarter1 €mn 6.0 0.74% 0.2 0.5 4.5 0.9 Treasury 4.4 4.1 4.1 Deposits – 0.6 0.47% 0.9 Group Cost Credit 1.0 0.5 0.37% 1.0 of Funding2 0.35% 0.34% 0.34% Institutions 0.4 0.3 0.40% Direct 0.2 0.4 0.4 Deposits - 0.30% 0
Slide 41: Perspective on Interest Rate Sensitivity
Financials: Perspective on Interest Rate Sensitivity Estimated impact on NII and NIM for parallel interest rate shifts Interest binding structure of customer deposits €mn, calculated based on YE22 balance sheet % of customer deposits, calculated based on YE22 balance sheet D NIM +25bp +30bp +34bp +4
Slide 42: Commission Income Dynamics
Financials: Commission Income Dynamics Net fee and commission income by quarter Key highlights €mn • Net fee and commission income with strong 19.1 19.3 improvements while 4Q22 is impacted by seasonal 17.3 1.3 0.9 effects in FX/DCC and card business Non-Focus 17.0 17.1 and Other 1.3 1.1 0.6 • Bancas
Slide 43: Other Income & Other Result
Financials: Other Income & Other Result Other income breakdown (YTD) €mn 2021 2022 1 Lower regulatory charges for recovery and resolution fund Deposit guarantee -5.8 -6.5 1 Bank levies and other taxes -4.2 -3.8 Restructuring: No restructuring costs in 2022, 2 Recovery and Resolution Fund -1.2 -0.6 T
Slide 44: Development of Operating Expenses
Financials: Development of Operating Expenses Operating expenses development by quarter Other Administrative expenses €mn 2022 YTD, €mn Other1 7.9 12% Advertising 6.8 11% Total: 32.0 3.0 IT 5% €61.8mn 52% Legal & Advisory 43.6 12.2 43.3 Depreciation 41.7 41.9 20% 41.1 And 4.6 4.2 Premises Expenses A
Slide 45: Financials: Balance Sheet
Financials: Balance Sheet Detailed balance sheet overview (YTD) €mn 2016 2017 2018 2019 2020 2021 2022 Cash reserves 1,878.2 1,285.9 1,002.9 899.4 1,156.3 1,361.7 1,382.9 Investment Portfolio 1,409.4 1,296.6 1,208.9 1,135.1 965.5 1,044.8 1,084.4 Financial assets held for trading 17.4 19.8 24.3 38.5
Slide 46: Financials: Income Statement
Financials: Income Statement Detailed income statement overview (YTD) €mn New P&L logic 2016 2017 2018 2019 2020 2019 2020 2021 2022 Interest income calculated using the effective interest method 232.2 226.0 209.6 207.4 194.3 207.4 194.3 185.5 192.9 Other interest income 6.0 8.3 4.2 3.4 2.6 3.4 2.6
Slide 47: Financials: Breakdown by Entity
Financials: Breakdown by Entity 2022 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 53.6 42.7 16.3 15.0 33.8 10.9 Net commission income 26.7 14.5 8.
Slide 48: Focus Portfolio - Maturity Breakdown
Financials: Focus Portfolio - Maturity Breakdown Remaining contractual maturity Gross performing loans, €mn +11% Consumer SME Total 1,535 1,188 Consumer SME 2,722 6 1.389 1.057 Total 2,446 >10Y 5 1 27 > 10Y 26 1 >10Y 1,055 5-10Y 865 190 1,121 5-10Y 845 276 5-10Y 390 527 1-5Y 1,229 1-5Y 511 718 917 1
Slide 49: Non-Focus Portfolio - Maturity Breakdown
Financials: Non-Focus Portfolio - Maturity Breakdown Remaining contractual maturity Gross performing loans, €mn Large Mortgage Corporates Public -31% 535 239 67 Total 841 Large Mortgage Corporates Public 356 349 0 7 >10Y Total 435 101 46 582 > 10Y >10Y 274 0 3 277 130 81 12 5-10Y 223 5-10Y 108 41 11
Slide 50: Risk: Strong Risk Management Framework
Risk: Strong Risk Management Framework Non-performing loan portfolio (YTD) NPE Volumes, 1,229 761 606 404 329 277 244 244 230 238 238 194 187 183 183 163 €mn NPE Coverage 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% 76.7% 78.9% 75.4% Ratio1 (Ex-Collateral) 14.3% NPE
Slide 51: Risk: Robust Asset Quality in Portfolios
Risk: Robust Asset Quality in Portfolios Focus Non-Focus Consumer SME €mn, rounded €mn, rounded €mn, rounded > 90 1,836 1,858 1,827 1,742 1,748 days 1,766 32 34 1,691 32 32 49 45 61-90 24 48 39 > 90 49 59 days 41 1,579 75 days 72 45 31-60 61-90 62 days days < 30 > 90 31-60 days days days 61-90 1,129
Slide 52: Risk: Provision Coverage Evolution
Risk: Provision Coverage Evolution Stage 1, 2 and 3 assets1 Business segments: Stage 1 & 2 (Performing) coverage1 €mn 2022 (YTD) ECL coverage (YTD) By Segment 3Q22 1H22 1Q22 2021 4,474 4,456 4,477 4,408 Focus Focus 1.7% 1.9% 1.9% 1.9% 2.0% 4,362 194 187 183 183 163 450 Consumer 2.1% 2.8% 2.9% 2.8% 2
Slide 53: Risk: Climate Risk Industry Exposure - Quantitative Assessment
Risk: Climate Risk Industry Exposure - Quantitative Assessment Non-retail portfolio exposure (excl. Consumer and Mortgage segments) YE22 Highly affected exposure: by industry 6% 9% 33% 13% Total: €143mn • Classification as “highly affected 18% industries” is based on the 21% average financed GHG emi
Slide 54: Risk: NPE Formation and Exit Dynamics
Risk: NPE Formation and Exit Dynamics NPE movements YE21 vs. YE22 – group level €mn Previous risk framework (before 1.1.2016) New risk framework (from 1.1.2016) 194 163 4 59 (35) (59) 2021 NPE reduction NPE formation NPE reduction NPE formation 2022 Quarterly NPE formation & exit - group level Consu
Slide 55: Risk: Low NPE Concentration, Well Provisioned and Carefully Managed
Risk: Low NPE Concentration, Well Provisioned and Carefully Managed Overview of Top 10 NPEs 2022, Group of Borrowers, €mn Borrower Total Exposure Country Description Metal industry and mechanical NPE 1 9.5 Croatia engineering Coverage for Top 10 NPEs (2022) NPE 2 4.7 Croatia Construction industry Co
Slide 56: 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% 78.8% 79.3% 78.7% 70.4% 64.1% 76.3% 68.6% 68.5% 72.4% 81.2% 79.9% Collateral)1 6.6% 5.9% 6.1% 5.3% 4.5% 4.6% 4.0% 4.0% 3.7% NPE Ratio2 3.5% 3.2%
Slide 57: 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 84.8% 78.8% 78.7% 70.4% 64.1% 68.6% 71.6% 77.6% 77.4% 53.4% 53.5% 91.0% 49.6% 40.6% 61.8% Ratio1 11.2% 9.4% 5.8% 4.5% 4.6% 4.5% 4.5% 4.0% 3
Slide 58: Risk: CHF Loans Significantly Managed Down
Risk: CHF Loans Significantly Managed Down CHF portfolio overview CHF conversion across countries €mn % of Total 5.5% 4.4% 3.4% 1.9% 1.7% 1.3% 1.3% 1.1% Credit Risk • In the past, several legislation initiatives on CHF loans were started but Exposure 1 eventually rejected, questioning the constituti
Slide 59: Capital: Capital Position Remains Strong
Capital: Capital Position Remains Strong Capital development transitional % CET1/TCR, YTD, RWAs transitional in €mn RWA 3,625 €+139.1mn 3,764 €-36.0mn 3,728 €-174.4mn 3,553 €-66.0mn 3,487 0.71% 0.31% 0.78% 1.02% 1.00% 0.72% 0.66% 0.84% 0.05% 0.11% 0.39% 0.63% 0.01% 0.19% CET1/ TCR 22.2% 21.8% 21.1%
Slide 60: Capital: Further Details
Capital: Further Details Breakdown of capital position and capital requirements1 Transitional 20.0% fully-loaded 22.2% 21.8% 20.3% 21.1% 20.0% 17.7% Addiko is using the standardised approach for its RWA calculation with most of its RWAs stemming from credit risk 2019 2020 2021 1H22 3Q22 2022 RWA bre
Slide 61: Capital: Credit Risk RWA in Focus vs. Non-Focus
Capital: 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 2022, €mn 2022, €mn Public Large Finance Corporate 139 26 Mortgages 260 2,935 2,929 Corporate Consumer Center (6
Slide 62: 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