BAWAG Group AG · VIE:BG
BAWAG — Q1 2020 Earnings Presentation
34 slides from BAWAG's earnings presentation, Apr 27, 2020
Slide 1: Q1 2020 Earnings
Q1 2020 Earnings Anas Abuzaakouk, CEO Enver Sirucic, CFO 27 April 2020 27 April 2020 | BAWAG Group AG 1
Slide 2: Dealing with an unprecedented crisis
Dealing with an unprecedented crisis 1 2 TAKING CARE OF OUR SUPPORTING OUR CUSTOMERS & EMPLOYEES LOCAL COMMUNITIES Task force established end of February … 100% of branches open in Austria and Germany Supporting the real economy in Austria, operational continuity, health and safety Germany, Switzerl
Slide 3: Q1 2020 Highlights and segment performance
Q1 2020 Highlights and segment performance Detailed financials Group Overview & Strategy 27 April 2020 | BAWAG Group AG 3
Slide 4: Highlights Q1 2020
Highlights Q1 2020 Net Profit of €61m, EPS of €0.69, and RoTCE 9.1% EARNINGS Pre-provision profit of €171m and CIR 42% Significant items: incremental general reserve build in Retail & SME segment of €25m in Q1 ’20 Q1 ’20 accounting for 85% of full-year regulatory charges Customer loan growth +2% Q-o
Slide 5: Financial performance
Financial performance Key highlights P&L | € millions Q1 ‘20 Q1 ‘19 vPY Q4 ‘19 vPQ Balance Sheet & Capital | € millions Q1 ‘20 Q4 ‘19 vPQ Core revenues 292 287 2% 294 (1%) Total assets 46,510 45,662 2% Operating income 296 298 (1%) 314 (6%) Customer loans 31,110 30,467 2% Operating expenses (125) (1
Slide 6: Capital development … CET1 ratio (FL)
Capital development … CET1 ratio (FL) Strong capital position 1 YE ’19 CET1 ratio excluding dividend at 14.4% ~+40bps 2 RWA up 2% driven by net asset increase (Q1’20 gross capital generation through earnings) OCI/Other: primarily related to widening credit 3 14.4% spreads negatively impacting OCI 0.
Slide 7: Main pillars of BAWAG Group
Main pillars of BAWAG Group We entered the crisis in a strong position EFFICIENT & HIGH-RETURN STRONG FUNDING & RESILIENT BUSINESS MODEL BUSINESS MODEL LIQUIDITY Strong customer deposit base … represent Strategic transformation since 2012 more than 2/3 of funding CIR 70% 17% 18% 15% 15% 15% 16% Focu
Slide 8: Customer businesses €31.8 billion
Customer businesses €31.8 billion As of March 2020 RETAIL & SME CORPORATES & PUBLIC CUSTOMER BUSINESSES By product 83% secured 11% €31.8 billion of which … 27% 17% 36% 75% €18.3b €13.5b in % 58% in % 14% 37% Secured or public sector lending Housing loans Consumer & SME (secured) Corporate lending As
Slide 9: Retail & SME
Retail & SME Financial performance Pre-tax profit down 10% vPY impacted by rising risk € millions Q1 '20 Q1 '19 vPY Q4 '19 vPQ costs … net asset growth +9% vPY and +1% vPQ Core revenues 229.9 208.5 10% 223.4 3% Net interest income 168.1 147.0 14% 163.6 3% Pre-provision profit +17% vPY ... Strong und
Slide 10: Retail & SME
Retail & SME Portfolio overview of €18.3b of customer loans and leases Credit profile Assets Total reserves Reserve ratio Total reserves Reserve ratio LTV NPL ratio Q1 '20 (€b) YE '19 (€m) YE '19 Q1 '20 (€m) Q1 '20 Consumer & SME (Unsecured) 3.2 n/a 2.0% 75 2.39% 99 3.14% Consumer & SME (Secured) 2.
Slide 11: Business initiatives
Business initiatives Ongoing execution of strategic initiatives while responding real-time to customer needs 1 2 RESPONDING REAL-TIME TO CONTINUING ON EFFICIENCY CUSTOMER NEEDS MEASURES AND BUSINESS INITIATIVES Full network and customer service channel availability: AUSTRIA INTERNATIONAL 100% of bra
Slide 12: Corporates & Public
Corporates & Public Financial performance € millions Q1 '20 Q1 '19 vPY Q4 '19 vPQ Pre-tax profit down 34% vPY impacted by rising risk costs … net asset growth +2% vPQ and down (3%) Core revenues 69.1 76.3 (9%) 71.9 (4%) vPY driven by reduced corporate lending Net interest income 58.4 64.7 (10%) 61.4
Slide 13: Corporates & Public
Corporates & Public Portfolio overview of €13.5 billion of customer loans CORPORATE LENDING ASSET BACKED LENDING By underlying Underwriting overview %-share of Historically disciplined underwriting: Senior 4%4% secured, day 1 LTC/V < 65%, and ICR > 2.0x 19% Cyclical Net book Corporate Customer 21% 5
Slide 14: Investment book and Cash
Investment book and Cash Deploying excess cash into high-quality securities YE 2019 Q1 ‘20 Cash & Investment book primarily serves as liquidity book of Cash equivalent 10% the Bank … managing excess cash as we focus on 20% deploying into customer loans €7.1b €5.6b in % € (1.5b) in % As of Q1 ‘20, Ca
Slide 15: FY 2019 Highlights and segment performance / Detailed financials
FY 2019 Highlights and segment performance Detailed financials Group Overview & Strategy 27 April 2020 | BAWAG Group AG 15
Slide 16: P&L & key ratios
P&L & key ratios P&L | € millions Q1 ‘20 Q1 ‘19 vPY vPQ Key ratios Q1 ‘20 Q1 ‘19 vPY vPQ Net interest income 219.9 214.5 3% (2%) Return on Common Equity 7.5% 11.0% (3.5pts) (5.9pts) Net commission income 71.9 72.5 (1%) 3% Return on Tangible Common Equity 9.1% 12.9% (3.8pts) (6.9pts) Core revenues 29
Slide 17: Balance sheet
Balance sheet Continued focus on balance sheet optimization and growing our customer business Balance sheet | € billions Q1 ’20 Q4 ’19 Delta Capital & RWA | € billions Q1 ’20 Q4 ’19 Delta Customer loans 31.1 30.5 2% Common equity 3.2 3.3 (2%) Securities and bonds 6.8 5.4 27% Tangible common equity 2
Slide 18: P&L details – core revenues
P&L details – core revenues Solid revenues in Q1 ... COVID-19 will have an impact on NCI mainly € millions Net interest income (NII) down 2% vPQ … net interest margin (NIM) at 2.34% ‒ Stable NIM development, lower number of days in 293.9 291.8 Q1 versus Q4 driving NII reduction 287.1 290.6 290.8 ‒ S
Slide 19: P&L details – operating expenses
P&L details – operating expenses Absolute costs lower versus prior quarter and prior year Cost-income ratio at 42.3% in Q1 ’20 … initiatives started in 2019 showing effect - Austrian Network to 88 branches vs. originally € millions planned 100 branches as part of Concept 21 - Harmonizing technology
Slide 20: P&L details – risk costs
P&L details – risk costs Higher risk costs due to COVID-19 ... Strong underlying asset quality € millions Risk costs / average interest-bearing assets Q1 ‘20 risk cost ratio at 58bps ‒ includes €25m general reserve in Retail & SME to address COVID-19-related effects … applying IMF macro scenarios an
Slide 21: Regulatory Capital
Regulatory Capital Strong capital position CET1 Capital (FL) € billions CET1 ratio at Q1 2020 of 12.7% … deducting dividend for FY ’19 and Q1 ’20 (~€260m) RWA density remained stable at 45% 3.1 3.2 3.0 2.7 2.7 Outlook for 2020: Capital accretion thru earnings and higher risk weighted assets from org
Slide 22: Update on Capital
Update on Capital ECB provides temporary relief and recommendations 1 2 RESPONSE OF EUROPEAN CENTRAL BANK IMPACT ON BAWAG GROUP ECB allows banks to fully use capital and liquidity buffers BAWAG Group: 2% P2R needs to be held with 1.00% SREP: 10.2% 1.12% CET capital at the minimum … 88bps 1.00% 1.00%
Slide 23: Funding & Liquidity
Funding & Liquidity FUNDING LIQUIDITY STRONG CUSTOMER DEPOSIT FUNDING … … AND COMFORTABLE MATURITY PROFILE € millions notional Liquidity coverage ratio 135% Equity 8% Others 4% 4% TLTRO / LTRO 10% Wholesale funding unsecured 10% Wholesale funding secured 676 544 565 Liquidity buffer Customer deposit
Slide 24: Outlook and Targets
Outlook and Targets OUTLOOK 2020 MEDIUM-TERM TARGETS Based on normalized environment Net interest income FY ’19: €879m Fairly stable AGM postponed to fourth quarter 2020 Return on tangible Net fee and commission income Down up to 15% common equity (RoTCE) FY ’19: €284m >15% Other income FY ’19: €78m
Slide 25: Group Overview & Strategy
FY 2019 Highlights and segment performance Detailed financials Group Overview & Strategy 27 April 2020 | BAWAG Group AG 25
Slide 26: BAWAG Group
BAWAG Group COMPANY PROFILE CAPITAL MANAGEMENT MEDIUM-TERM TARGETS Based on normalized environment Focused on organic and inorganic growth One of Austria‘s leading retail banks with 2.5 million customers & solid market shares Return on tangible Dividend policy of common equity (RoTCE) >15% 50% payou
Slide 27: Strategy pillars of our growth strategy
Strategy 4 pillars of our growth strategy Drive efficiency through Maintaining a safe and Growing in our core markets Focus on Customer Centricity operational excellence secure risk profile • Our foundation is Austria with a focus • Build multi-channel and multi-brand • Our DNA is to focus on the th
Slide 28: Bank transformation
Bank transformation Focusing on things we control and driving operational excellence Increased profitability … KEY METRICS Pre-tax profit (€ millions) 2012 2013 2014 2015 2016 2017 2018 2019 +€581m 604 573 RoTCE 500 3% 11% 15% 17% 18% 15% 15% 16% 445 419 C/I ratio 70% 68% 54% 48% 46% 47% 44% 43% 316
Slide 29: Developing towards a Retail & SME franchise
Developing towards a Retail & SME franchise Retail & SME Business Corporates & Public Business Focus on 2.5 million • current accounts • auto and • Focus on developed markets … DACH region, Western Europe & the United States • Disciplined & conservative corporate & asset backed lending customers in
Slide 30: Proven M&A track record
Proven M&A track record Experienced with bolt-on acquisitions to build out customer franchise Q2 ’19 3) €0.1b assets, 3k customers €1b factoring volume Q1 ’19 Q2 ’19 €0.6b assets 50k customers Continued focus on companies within the DACH region 2) 2018 €0.5b assets 85k customers Assessing Banks, spe
Slide 31: Response of governments
Response of governments Stimulus packages of Austria and Germany €4b immediate crisis management fund for €600b “Economic Stabilization Fund” available to companies with >250 employees providing: ‒ liquidity for companies (including bridge loans & credit guarantees and tax deferrals) ‒ €400b to guar
Slide 32: Investor relations calendar
Investor relations calendar UPCOMING ROADSHOWS AND CONFERENCES SHAREHOLDER STRUCTURE 78.2% Free Float 27 Apr Digital one-on-one and group meetings GoldenTree 21.8 6 May Goldman Sachs Small and Mid-Cap Conference 12 May UBS Pan European Small and Mid-Cap Conference T. Rowe Price 5.6 in % 13 May KBW E
Slide 33: Important Disclaimer
IMPORTANT DISCLAIMER: This presentation is prepared solely for the purpose of providing general information about BAWAG Group, Wiedner Gürtel 11, 1100 Wien. The information does not constitute investment or other advice or any solicitation to participate in investment business. This presentation doe
Slide 34: Annex – Definitions and abbreviations
Annex – Definitions and abbreviations After-tax earnings per share (‘EPS‘) NPE ratio Net profit / weighted average number of shares outstanding (diluted) Non-performing exposure (NPEs) / exposure B/S leverage Pre-tax earnings per share Total assets / IFRS equity Profit before tax / weighted average