Addiko Bank Ag · VIE:ADKO
Addiko Bank — Q1 2024 Earnings Presentation
46 slides from Addiko Bank's earnings presentation, May 8, 2024
Slide 1: 1Q24 Results Presentation
1Q24 Results Presentation Herbert Juranek (CEO) Edgar Flaggl (CFO) Tadej Krašovec (CRO) Ganesh Krishnamoorthi (CMO & CIO) Constantin Gussich (Investor Relations) 8 May 2024
Slide 2: Executive Summary & Business Update; Financials & Risk Update; Outlook & Wrap-Up
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 3: Key Highlights 1Q24
Key Highlights 1Q24 • 1Q24 net profit up 61% YoY to €15.6m (1Q23: €9.7m) and up 42% vPQ • Return on average Tangible Equity increased to 8.0% (1Q23: 5.4%) Earnings • Operating result up 41% YoY to €28.5m reflects continued momentum on earnings despite higher & deposit funding costs and inflation imp
Slide 4: Strong Growth Momentum in Focus Continued
Strong Growth Momentum in Focus Continued Focus portfolio development Gross performing loans (€m) • Total book (gross performing loans) up 1% Total Book 3,304 3,361 3,486 3,520 since YE23 (up 5% YoY) • +10% YoY growth in focus book (+12% YoY +2% excluding medium SME) 3,074 • New business generatio
Slide 5: Visible Progress in Business with Consumer & SME Customers in CSEE
Visible Progress in Business with Consumer & SME Customers in CSEE Business Update Improving dynamics YoY €m YoY 379 • Strong customer growth in cash loans (+27% YoY) 346 +10% 26 • Solid new business delivered (+37% YoY) with 27 -6% premium pricing (+49bp YoY) 151 171 -12% Consumer • Card acce
Slide 6: Addiko Story Well Positioned for Strong Growth in Mid-Term
Addiko Story Well Positioned for Strong Growth in Mid-Term • We will turn Addiko into leading CSEE specialist bank for Consumer & SME customers Vision • We are focused and offer the best digital products to challenge universal banks • We will accelerate the bank’s transformation and generate value f
Slide 7: Executive Summary & Business Update; Financials & Risk Update; Outlook & Wrap-Up
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 8: Financial Performance 1Q24 at a Glance
Financial Performance 1Q24 at a Glance 5.80% Financial Performance 1Q24 1Q23 2Q23 3Q23 4Q23 1Q24 YTD, €m 77.0 77.4 76.6 5.30% 72.9 1Q23 YoY 67.8 -0.1% 4.80% 17.7 16.9 16.9 17.0 Net Netinterest interest income 59.8 52.2 +14.5% NCI 15.6 4.30% 3.90% 3.89% 3.89% 3.80% Net fee Net & commission fee & NIM
Slide 9: Capital Position Remains Strong
Capital Position Remains Strong Capital development fully-loaded % CET1/TCR, YTD, RWA in €m Addiko Group 3,653 3,694 RWAFL 0.10% 0.05% 0.23% CET1/ TCR 20.4% 20.3% fully-loaded 2023 2023 OCI OCI Reg. Reg. && Equity Equity RWA RWA 1Q24 1Q24 changes changes adjustments adjustments developm. Developm. (
Slide 10: Balanced NPE Development Continues in 1Q24
Balanced NPE Development Continues in 1Q24 NPE volume & ratio development Quarterly NPE formation & exit €m, YTD €m, QTD 2Q23 3Q23 4Q23 1Q24 NPE ratio 2.9% 2.4% 2.0% 2.1% NPE ratio Formation 21.0 19.8 24.9 24.5 (on-balance loans)1 4.0% 3.3% 2.8% 2.9% 4.3 0.7 1.5 1.1 10.3 8.0 8.6 9.4 +6% 11.5 11.2 13
Slide 11: Cost of Risk at a Glance
Cost of Risk at a Glance Expected credit loss expenses on financial assets 1Q24 YTD, €m, positive number for release • 1Q24 expected credit loss 2.0 Impairments (negative) (3.8) (0.0) expenses of €-6.9m YTD Releases (positive) resulting in -0.20% cost of risk (on net loans): (6.9) (6.9) (5.1) − Cons
Slide 12: Executive Summary & Business Update; Financials & Risk Update; Outlook & Wrap-Up
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 13: Outlook 2024 and Wrap-Up
Outlook 2024 and Wrap-Up Income & Business Risk & Liquidity Profitability Loan Growth1 >6% CoR3 c.1% RoATE5 c. 6.5% Outlook CAGR 2023-2026 2024 NIM2 >3.8% NPE Ratio4 <3% DPS6 >€1.2 as guiding principle Confirmed NBI2 >4.5% YoY TCR >18.35% OPEX <€191m LDR <80% Ramp-up until 2026 Additional costs for
Slide 14: Additional Materials
Executive Summary & Business Update Financials & Risk Update Outlook & Wrap-Up Additional Materials
Slide 15: Management Team Since June 2021
Management Team Since June 2021 Herbert Juranek Edgar Flaggl Tadej Krašovec Ganesh Krishnamoorthi Chief Executive Officer Chief Financial Officer Chief Risk Officer Chief Market, IT & Digitalisation Officer Chair of the Management Board Member of the Management Board Member of the Management Board M
Slide 16: Addiko at a Glance
Addiko at a Glance Overview of Addiko Operating as one region - one bank 1Q24, % 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 17: Recent Developments in the Shareholder Structure (c. 48.5% free float)
Recent Developments in the Shareholder Structure (c. 48.5% free float) Alta Pay Alta Pay Group acquired an additional The agreements are conditional on the 9.99% shifted 9.19% holding by Infenity MW Funds Group 19.96% in financial instruments: necessary regulatory and merger control from Infenity Mg
Slide 18: 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 Environment Social Governance Making ESG work through Vision Carbon footprint reduction Committed to the good good governance Addiko helps its employees Sound principles of Addiko supports soc
Slide 19: Balance Sheet Composition
Balance Sheet Composition Assets Liabilities and Equity 1Q24, €b 1Q24, €b 6.2 6.2 Other Other Assets Liabilities ✓• Liquid balance sheet 0.2 0.2 0.1 Due to Credit ✓• Strong deposit base - LCR ratio: 416% (YE23: 313%) Institutions 0.5 Direct - Loan-deposit ratio Deposits (customer): 69.5% (YE23: ✓• L
Slide 20: 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 1Q24 YTD Full year 2023 yield Consumer 7.3% 7.1% % in focus 40% 51% 56% 62% 65% (stock) 2016 2017 2018 2019 2020 74
Slide 21: Consumer and SME Lending Development
Consumer and SME Lending Development Consumer (Micro shifted to SME as of 1Q21) SME €m, YTD €m, YTD 1,752 1,668 1,706 1,535 1,562 1,606 1,389 1,298 1,326 1,310 1,322 1,342 1,312 1,243 1,188 1,188 1,059 1,040 1,057 1,028 928 791 774 Gross 646 Performing Loans 2016 2017 2018 2019 2020 2021 2022 1Q23 1
Slide 22: New Business on a Monthly Basis
New Business on a Monthly Basis New business continued during 1Q24 €m 1Q24YTD: 203 77 69 68 64 69 62 59 61 60 63 63 57 53 Consumer 48 38 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. 90 1Q24YTD: 177 78 81 72 72 72 72 67 63 64 66 SME 55 52 45 40 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep
Slide 23: 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 instant Simple branch loan Application Processing System initial offer including CDE (Credit Decision Engine) Achievements 1Q24 Achi
Slide 24: Digital Transformation
Digital Transformation Digital capabilities YTD +13% YoY Registered Mobile Banking 118 150 188 230 258 263 291 298 +3% Mobile banking users (vs. PQ) Users (ths.)2 +11% YoY +2% Digital users (vs. PQ) 301 308 273 277 246 210 26% Bank@Work (YE23: 25%, 3Q23: 25%, 1H23: 26%, 1Q23: 27%) 177 149 35% Digita
Slide 25: Financials: Financial Performance 1Q24 in Detail
Financials: Financial Performance 1Q24 in Detail Key financials P&L in €m YTD QTD •1 Operating result up 40.6% YoY to €28.5m: 1Q24 (YTD) 1Q23 (YTD) +/- PY 1Q24 4Q23 +/- PQ Net interest income 59.8 52.2 14.5% 59.8 60.6 -1.3% − Net interest income up 14.5% YoY driven Net fee and commission income 16.9
Slide 26: Financials: Key Performance Drivers 1Q24
Financials: Key Performance Drivers 1Q24 Net interest income Net fee and commission income €m €m NIM 355bp 389bp 389bp % of 30% 28% 28% NII +14.5% +8.4% +16.0% -1.3% +8.5% -0.1% 52.2 60.6 59.8 15.6 16.9 16.9 1Q23 (QTD) 4Q23 (QTD) 1Q24 (QTD) 1Q23 (QTD) 4Q23 (QTD) 1Q24 (QTD) • Continued positive traje
Slide 27: Financials: Interest Income Dynamics
Financials: Interest Income Dynamics Interest income by quarter1 Gross yield by quarter2 €m 76.0 76.2 72.7 1Q23 2Q23 3Q23 4Q23 1Q24 67.3 7.0% 7.1% 7.2% 7.2% 7.3% 20.9 20.7 Consumer 61.0 19.1 7.5% 7.6% 7.8% 7.8% 8.0% new new new new new 17.1 business business business business business Other 1.5 13.8
Slide 28: Financials: Breakdown of Other Interest Income
Financials: Breakdown of Other Interest Income Treasury interest income by quarter €m Other interest 13.8 8.8 17.1 19.1 20.9 20.7 income (total) • HTC bond portfolio strategy: interest income from the instruments held under the Hold-to-Collect (HTC) bond portfolio strategy in EU 17.6 17.4 entities.
Slide 29: Financials: Interest Expense Dynamics
Financials: Interest Expense Dynamics Interest expense by quarter Cost of funding by quarter1 €m 16.4 15.5 2.2 1Q23 2Q23 3Q23 4Q23 1Q24 1.5 13.4 1.2 Deposits - 1.4 Network 0.50% 0.55% 0.70% 0.82% 0.84% 1.3 11.4 1.4 3.5 3.3 Direct 2.0 Deposits 1.52% 1.76% 2.12% 2.37% 2.74% Treasury 8.7 3.0 1.1 0.4 De
Slide 30: Financials: Commission Income Dynamics
Financials: Commission Income Dynamics Net fee and commission income by quarter Key highlights €m • Net fee and commission income 1Q24 increasing 17.7 due to higher income from accounts & packages, Non-Focus 17.0 16.9 16.9 0.7 0.5 0.5 bancassurance and card business and Other 15.6 0.9 0.7 • Other pr
Slide 31: Financials: Other Income & Other Result
Financials: Other Income & Other Result Other income breakdown (YTD) €m 1Q23 1Q24 Lower deposit guarantee due to no collection of the Deposit guarantee -2.2 -1.0 premium in Croatia for the fourth quarter 2023 and 1Q24 1 1 Bank levies and other taxes -0.9 -2.2 Higher bank levies and other taxes drive
Slide 32: Financials: Development of General Administrative Expenses (OPEX)
Financials: Development of General Administrative Expenses (OPEX) OPEX development by quarter Other Administrative expenses €m 1Q24, €m Other1 2.2 13% Advertising 2.1 12% Total: 8.1 1.3 €17.0m 47% IT Legal & Advisory 46.7 46.5 8% 45.0 43.7 43.1 3.3 4.4 4.2 4.3 20% Depreciation 4.3 Premises Expenses
Slide 33: Financials: Balance Sheet
Financials: Balance Sheet Detailed balance sheet overview (YTD) €m 2020 2021 2022 2023 1Q24 Cash reserves 1,156.3 1,361.7 1,382.9 1,254.5 1,218.8 Investment Portfolio 965.5 1,044.8 1,084.4 1,208.1 1,226.7 Financial assets held for trading 36.4 32.6 22.8 29.5 22.7 Investment securities 929.0 1,012.2
Slide 34: Financials: Income Statement
Financials: Income Statement Detailed income statement overview (YTD) €m 2020 2021 2022 2023 1Q23 1Q24 Interest income calculated using the effective interest method 194.3 185.5 192.9 247.3 58.1 68.0 Other interest income 2.6 2.2 2.3 29.7 2.9 8.1 Interest expense (22.3) (18.2) (18.7) (49.0) (8.7) (1
Slide 35: Financials: Breakdown by Entity
Financials: Breakdown by Entity 1Q24 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., (€m, IFRS) Zagreb Ljubljana Banja Luka Sarajevo Beograd Podgorica Net interest income 19.1 15.5 5.5 5.4 11.3 3.2 Net commission income 5.7 3.6 2.2 2.1
Slide 36: Risk: Strong Risk Management Framework
Risk: Strong Risk Management Framework Non-performing loan portfolio (YTD) NPE Volumes, €m 1,229 761 606 404 277 244 194 163 138 146 NPE Coverage Ratio1 61.7% 67.5% 67.0% 75.4% 73.8% 73.6% 71.9% 75.4% 80.9% 81.4% (Ex-Collateral) 14.3% NPE Ratio2 9.2% 8.1% 5.6% 3.9% 3.5% 2.9% 2.4% 2.1% NPE Ratio 2.0%
Slide 37: Risk: Robust Asset Quality in Portfolios
Risk: Robust Asset Quality in Portfolios Focus Non-Focus Consumer SME €m, rounded €m, rounded €m, rounded 1,978 1,968 1,958 1,925 > 90 1,944 1,886 44 1,909 39 31 > 90 39 days 46 38 41 1,829 40 81 33 39 days 67 61-90 33 44 77 days 61-90 68 days 31-60 31-60 days days < 30 < 30 days days > 90 days No 1
Slide 38: Risk: Provision Coverage Evolution
Risk: Provision Coverage Evolution Stage 1, 2 and 3 assets1 Business segments: Stage 1 & 2 (Performing) coverage1 €m 1Q24 (YTD) ECL coverage (YTD) By Segment 2023 3Q23 1H23 1Q23 4,509 4,518 4,513 4,382 4,427 153 138 146 Focus Focus 1.4% 1.4% 1.4% 1.6% 1.7% 161 159 413 580 557 409 448 Consumer 1.5% 1
Slide 39: Risk: NPE Formation and Exit Dynamics
Risk: NPE Formation and Exit Dynamics Quarterly NPE formation & exit - group level Consumer SME Mortgages Large Corporates Public Finance €m €m €m €m €m Net -1.6 -2.7 -2.8 +4.4 -0.7 0.3 -12.9 +5.3 -0.6 -2.4 -2.9 -0.9 0.0 0.0 +3.5 -0.53 0.0 -0.2 -0.4 -0.1 11.5 11.2 13.4 1.5 0.0 0.0 0.0 0.0 10.1 8.0 8
Slide 40: Risk: NPE and Cost of Risk Development
Risk: NPE and Cost of Risk Development Focus Non-Focus3 €m Consumer SME €m €m NPE Coverage Ratio (Excl. 78.7% 79.0% 80.8% 81.0% 68.6% 72.3% 81.8% 82.3% 79.9% 80.7% 79.9% 80.5% Collateral)1 5.3% 5.4% 5.6% 5.1% 3.7% 3.7% NPE Ratio2 3.0% 3.1% 3.1% 3.1% 2.3% 2.6% 2022 1Q23 2023 1Q24 2022 1Q23 2023 1Q24
Slide 41: Risk: NPE and Cost of Risk Development by Business Segment
Risk: NPE and Cost of Risk Development by Business Segment Consumer SME Mortgages Large Corporates Public Finance €m €m €m €m €m NPE Coverage Ratio1 78.7% 80.8% 81.0% 68.6% 81.8% 82.3% 77.4% 82.0% 82.5% 91.0% 78.1% 78.3% 61.8% 73.2% 78.2% 7.1% 7.4% 5.8% 4.8% 4.8% 4.5% 4.5% 4.8% 3.7% 4.0% NPE Ratio2
Slide 42: Risk: CHF Loans Significantly Managed Down
Risk: CHF Loans Significantly Managed Down CHF portfolio overview CHF status across countries €m • Several CHF initiatives rejected because parliamentary constitutional service % of Total 5.5% 4.4% 3.4% 2.0% 1.7% 1.3% 1.1% 0.9% 0.9% classified such drafts as unconstitutional and unlawful under Europ
Slide 43: Capital: Capital Requirements & Guidance Going Forward
Capital: Capital Requirements & Guidance Going Forward Capital requirements as of 2024 (excluding P2G) • Unchanged at 3.25% P2R • At least 56.25% must be held in CET1 (2024) capital and at least 75% in Tier 1 capital 20.3% 20.4% 20.3% 20.4% 20.3% 20.4% • Yearly review as part of SREP • Systemic Risk
Slide 44: Capital: Further Details
Capital: Further Details Breakdown of capital position1 Fully-loaded Addiko is using the standardised approach for 20.0% 20.0% 20.4% 20.3% its RWA calculation with most of its RWAs stemming from credit risk Expiration of IFRS 9 transitional capital rules as of 1 January 2023 leading to no difference
Slide 45: 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 1Q24, €m 1Q24, €m Large Public Corporate Finance Mortgages 3,126 8915 205 Corporate Center 574 Consumer Total: €
Slide 46: 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