BAWAG Group AG · VIE:BG
BAWAG — FY2022 Earnings Presentation
36 slides from BAWAG's earnings presentation, Feb 13, 2023
Slide 1: Preliminary FY 2022 Results
BAWAG Group Preliminary FY 2022 Results 13 February 2023 February2021 August 13, 2023 | BAWAG | BAWAG Group AG Group AG
Slide 2: Agenda
AGENDA 1 Q4 2022 HIGHLIGHTS & SEGMENT PERFORMANCE 2 DETAILED FINANCIALS 3 OUTLOOK & TAKING STOCK SINCE OUR IPO 4 SUPPLEMENTAL INFORMATION 5 GROUP OVERVIEW & STRATEGY February 13, 2023 | BAWAG Group AG 2
Slide 3: Highlights 2022
HIGHLIGHTS 2022 EARNINGS BALANCE SHEET & CAPITAL OUTLOOK Q4 ’22: Net profit of €132m, EPS of €1.51, Average customer loans (1%) vPQ and +4% vPY Excess Capital: Maintaining dry powder for potential and RoTCE of 19.6% opportunities in coming quarters … any potential buyback will be under 100bps of CET
Slide 4: Financial Performance 2022
FINANCIAL PERFORMANCE 2022 2022 2022 vPQ P&L | € millions reported adjusted vPY Q4 ‘22 vPY adjusted Balance Sheet & Capital | € millions Q4 '22 Q3 ‘22 vPQ vPY Core revenues 1,330.4 1,330.4 9.0% 344.7 9.2% 2.9% Total assets 56 523 55 997 1% - Operating income 1,324.0 1,324.0 7.8% 330.9 4.2% (1.6%) In
Slide 5: Capital Development
CAPITAL DEVELOPMENT QUARTERLY CAPITAL DEVELOPMENT CAPITAL DEVELOPMENT a) Gross capital generation ~+60bps in Q4 ’22 and ~+250bps FY ’22 b) Q4 ’22: Primarily related to lower RWA 0.4% 14.0% (0.5%) FY ’22 : increase in RWA from business growth 0.6% 13.5% 13.0% with negative OCI impact from widening cr
Slide 6: Retail & SME
RETAIL & SME Financial performance Customer development € millions 2022 vPY Q4 ‘22 Q3 ‘22 vPY vPQ € millions 2022 vPY Q4 ‘22 Q3 ‘22 vPY vPQ Core revenues 1 027.0 13% 271.3 255.8 17% 6% Housing loans 15 972 1% 15 972 16 160 1% (1%) Net interest income 750.2 14% 204.0 190.5 21% 7% Consumer and SME 6 4
Slide 7: Corporates, Real Estate & Public Sector
CORPORATES, REAL ESTATE & PUBLIC SECTOR Financial performance Customer development € millions 2022 vPY Q4 ‘22 Q3 ‘22 vPY vPQ € millions 2022 vPY Q4 ‘22 Q3 ‘22 vPY vPQ Core revenues 296.6 1% 74.3 77.4 (6%) (4%) Corporates 3 771 (7%) 3 771 4 085 (7%) (8%) Net interest income 262.9 2% 66.4 67.5 (6%) (2
Slide 8: Investment Book and Cash
INVESTMENT BOOK AND CASH CASH & CASH EQUIVALENT As of Q4 ‘22, cash and cash equivalents (mainly money at central banks) at €13.2b ... TLTRO III of 4% Q3 ’22 8% Q4 ’22 €5.4b (paid back €1.0b in Q4 ’22 and further €2.0b in January ’23) €12.1b 41% €13.2b Securities portfolio “under-invested” … Higher 5
Slide 9: Agenda
AGENDA 1 Q4 2022 HIGHLIGHTS & SEGMENT PERFORMANCE 2 DETAILED FINANCIALS 3 OUTLOOK & TAKING STOCK SINCE OUR IPO 4 SUPPLEMENTAL INFORMATION 5 GROUP OVERVIEW & STRATEGY February 13, 2023 | BAWAG Group AG 9
Slide 10: P&L & Key Ratios
P&L & KEY RATIOS 2022 2022 Q3 ‘22 2022 2022 Q3 ‘22 P&L | € millions reported adjusted vPY Q4 ‘22 adjusted Key ratios reported adjusted vPY Q4 ‘22 adjusted Net interest income 1 021.1 1 021.1 9% 269.7 260.0 Return on Common Equity 9.8% 15.6% 2.0pts 16.4% 16.2% Net commission income 309.3 309.3 10% 75
Slide 11: Balance Sheet
BALANCE SHEET Balance sheet | € millions 2022 Q3 '22 2021 vPY vPQ Capital & RWA | € millions 2022 Q32022 Q3 ‘22 2021 vPY vPQ Customer loans 35 763 36 705 34 963 2% (3%) Common equity 3 215 3 207 3 636 (12%) 0% Securities and bonds 6 066 5 816 6 330 (4%) 4% Tangible common equity 2 693 2 678 3 101 (1
Slide 12: Core Revenues
CORE REVENUES Continued increase in Q4 ’22 €m Net interest income (NII) up 4% vPQ … net 335.0 344.7 interest margin (NIM) at 2.43% in Q4’22 323.4 327.3 315.8 • Average customer loans down (1%) vPQ and up 75.0 4% vPY in Q4 ’22 77.8 75.0 • Subdued loan growth from cautious consumer sentiment 72.5 81.4
Slide 13: Operating Expenses
OPERATING EXPENSES Continued efficiency measures countering inflationary pressures €m CIR at 35.7% in Q4 ’22 down (2.6pts) vPY 121.8 • Significant inflationary pressure offset by several 120.4 operational initiatives launched over the past two years 118.2 118.0 118.1 • Focused on absolute cost-out t
Slide 14: Risk Costs
RISK COSTS Applying prudent approach while closely monitoring macro environment € m … excluding the write-off of City of Linz receivable in Q3 ’22 36.2 Q4 ’22 risk costs €36.2m and 17bps underlying 35.3 risk cost ratio 30.3 • Ongoing strong credit performance … NPL ratio of 0.9% 12.4 • Risk cost run
Slide 15: Agenda
AGENDA 1 Q4 2022 HIGHLIGHTS & SEGMENT PERFORMANCE 2 DETAILED FINANCIALS 3 OUTLOOK & TAKING STOCK SINCE OUR IPO 4 SUPPLEMENTAL INFORMATION 5 GROUP OVERVIEW & STRATEGY February 13, 2023 | BAWAG Group AG 15
Slide 16: 2023 Outlook and Targets
2023 OUTLOOK AND TARGETS P&L OUTLOOK 2023 FINANCIAL TARGETS Net interest income FY ’22: €1,021m >€1.2b Profit before tax >€825m Core revenues >12% growth Earnings per share >€7.50 FY ’22: €1,330m Dividend per share >€4.10 Operating expenses FY ’22: €475m ~2% increase 2023 & BEYOND RETURN TARGETS Ris
Slide 17: Taking Stock Since Our IPO
TAKING STOCK SINCE OUR IPO … Consistent execution and delivery GROWING CORE REVENUES … … WHILE IMPROVING COST BASE HIGH PROFITABLE BUSINESS MODEL Core revenues (in € millions) Operating expenses (in € millions) Pre-provision profit (in € millions) +32% (10%) +43% >12% 529 1,220 1,330 1,010 485 475 ~
Slide 18: Capital Generation and Distribution
CAPITAL GENERATION and DISTRIBUTION A sustainable and balanced return to our shareholders STRONG CAPITAL GENERATION POWER LOWER SHARE COUNT FOLLOWING BUYBACKS Gross capital generation (in bps) Number of shares (in millions) € 2.0b capital returned … and invested in Average 220 / earmarked since IPO…
Slide 19: Agenda
AGENDA 1 Q4 2022 HIGHLIGHTS & SEGMENT PERFORMANCE 2 DETAILED FINANCIALS 3 OUTLOOK & TAKING STOCK SINCE OUR IPO 4 SUPPLEMENTAL INFORMATION 5 GROUP OVERVIEW & STRATEGY February 13, 2023 | BAWAG Group AG 19
Slide 20: Details on Reserves
DETAILS ON RESERVES Continuing to remain prudent in current environment IFRS 9 MIGRATION- CUSTOMER SEGMENT ASSETS NON-PERFORMING STAGE 3 LOANS, IN €m 885 862 2% 2% 2% 2% 811 Stage 3 Stage 2 4% 8% 4% 5% 254 254 City of Linz 254 538 Stage 1 94% 90% 94% 93% Customer NPLs 557 631 608 538 YE '19 YE '20 Y
Slide 21: Retail & SME
RETAIL & SME HOUSING LOANS CONSUMER & SME RISK MANAGEMENT FRAMEWORK Western Europe Other Tightened credit box in Q1 ’22 after having SME 6% Debit / 5% taken similar measures during the pandemic charge cards 8% 5% €16.0b €6.4b Consumer loans in % 55% Further tightened to account for high inflation 27
Slide 22: Corporates, Real Estate & Public Sector
Corporates, Real Estate & Public Sector CORPORATES* REAL ESTATE PUBLIC SECTOR* By industry By underlying By funding & type Services 5% Residential Food&Beverage 2% 9% 16% 24% Pharmaceuticals Office 6% 17% B-2-C 40% Mixed €3.9b Engineeing & B-2-B €6.1b Industrial/Logistics €4.6b 5% 19% in % Lender Fi
Slide 23: Capital Distributions & Framework
CAPITAL DISTRIBUTIONS & FRAMEWORK CAPITAL MANAGEMENT FRAMEWORK €2.0b capital returned to shareholders/ earmarked since IPO in 2017* 1 DIVIDEND POLICY 2 EXCESS CAPITAL MANAGEMENT 3 EXCESS CAPITAL DISTRIBUTION €0.73b 55% payout Organic growth, M&A, Share buybacks and/ share buyback (net profit) minori
Slide 24: Regulatory Capital
REGULATORY CAPITAL Strong capital position €b 3.3 3.1 0.3 3.0 Capital distribution plans: 2.8 2.8 0.2 0.3 • €305m dividend proposed for FY ’22 to AGM 0.1 0.1 on 31 March 2023 15.0% • Share buyback of €325m completed in 2022 13.5% 13.1% 13.0% 12.7% 3 Capital development: 2.7 2.7 2.8 2.8 • Q4 ’22 Tier
Slide 25: Sustainability – Our Key Focus Areas
SUSTAINABILITY – OUR KEY FOCUS AREAS Doing business sustainably is the key to long-term success for all our stakeholders 1 ENVIRONMENT 2 OUR PEOPLE 3 OUR CUSTOMERS AND COMMUNITIES What we We want to reduce our environmental We want to develop our employees, We want to be a sustainable partner for ta
Slide 26: Agenda
AGENDA 1 Q4 2022 HIGHLIGHTS & SEGMENT PERFORMANCE 2 DETAILED FINANCIALS 3 OUTLOOK & TAKING STOCK SINCE OUR IPO 4 SUPPLEMENTAL INFORMATION 5 GROUP OVERVIEW & STRATEGY February 13, 2023 | BAWAG Group AG 26
Slide 27: BAWAG Group – Who We Are
BAWAG GROUP – WHO WE ARE Multi-brand and multi-channel commercial bank WE ARE ... OUR VIEW OUR STRATEGY CREATING SHAREHOLDER VALUE €2.0b capital returned to shareholders / … a multi-brand and multi-channel Commercial banking is becoming commercial bank with approximately more commoditized … Focus on
Slide 28: Our Business Principles and Culture
OUR BUSINESS PRINCIPLES AND CULTURE The foundation for executing on our strategy CULTURE: Our company values and culture are defined by accountability, meritocracy, and embracing change Leadership and Accountability, embracing change meritocracy and inclusion Actions speak louder than words Our grea
Slide 29: Our Strategy Has Been Unchanged Since 2012
OUR STRATEGY HAS BEEN UNCHANGED SINCE 2012 ESG underpins our strategy driving responsible, sustainable and profitable growth EXECUTION SINCE IPO IN 2017 1 GROWTH IN CORE MARKETS FOCUSED ON SERVING OUR CUSTOMERS Core markets: Austria, Germany, Switzerland, Netherlands (DACH/NL region), Western Europe
Slide 30: M&A: Strategic Optionality
M&A: STRATEGIC OPTIONALITY M&A TARGETS & M&A HISTORY: TRANSFORMING BUSINESSES THRHOUGH UNDERWRITING CRITERIA OPERATIONAL TURNAROUND … RoTCE ~3% to >17% MARKETS FINANCIALS 2015 2016 2017 2018 • Focus on core markets … DACH/NL • Underwrite to RoTCE >20% region, Western Europe and USA • Solid balance s
Slide 31: Our Transformation
OUR TRANSFORMATION Ranking among the most profitable and efficient European banks with further ambitions SOLID ASSET QUALITY AND DISCIPLINED UNDERWRITING CAGR >10% 56 23 743 849 Pre-provision 711 592 profit (€ m) 502 6 323 80% secured 5 2.35 2.30 2.27 2.33 4 NIM (in %) 2.24 lending with €16b Wtd ave
Slide 32: Taking Stock Since Our IPO
TAKING STOCK SINCE OUR IPO … Consistent execution and delivery GROWING CORE REVENUES … … WHILE IMPROVING COST BASE HIGH PROFITABLE BUSINESS MODEL Core revenues (in € millions) Operating expenses (in € millions) Pre-provision profit (in € millions) +32% (10%) +43% >12% 529 1,220 1,330 1,010 485 475 ~
Slide 33: Capital Generation and Distribution
CAPITAL GENERATION and DISTRIBUTION A sustainable and balanced return to our shareholders STRONG CAPITAL GENERATION POWER LOWER SHARE COUNT FOLLOWING BUYBACKS Gross capital generation (in bps) Number of shares (in millions) € 2.0b capital returned … and invested in Average 220 / earmarked since IPO…
Slide 34: Shareholder Remuneration
SHAREHOLDER REMUNERATION A sustainable and balanced return to our shareholders SHAREHOLDER T. Rowe Price 6.1% STRUCTURE Wellington 5.9% We target a dividend payout of 55% of net profit, 1 Senior Leadership Team 3.6% barring unforeseen circumstances. Dividends will be distributed annually after the A
Slide 35: 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 36: Definitions
DEFINITIONS Adjusted NPL cash coverage Excluding the write-off of the City of Linz receivable Stage 3 including prudential filter/NPL exposure (economic) B/S leverage NPL ratio Total assets/IFRS equity NPL exposure (economic)/exposure Book value per share Pre-provision profit Common equity (excludin