Slide 1: Erste Group Bank AG Annual results 2011
Erste Group Bank AG Annual results 2011 29 February 2012, Vienna Erste Group returns to profitability in Q4 11 - net loss 2011 reduced to EUR 718.9m Andreas Treichl, Chief Executive Officer Franz Hochstrasser, Deputy Chief Executive Officer Manfred Wimmer, Chief Financial Officer Gernot Mittendorfer
Slide 2: Presentation topics
Presentation topics − Erste Group’s development in 2011 − Central and Eastern Europe − Outlook 2012 29 February 2012 2 Annual results 2011 Press conference
Slide 3: FY 2011 executive summary – Strong Q4 net profit reduces FY 2011 net loss
FY 2011 executive summary – Strong Q4 11 net profit reduces FY 2011 net loss − Solid quarterly result of EUR 254.1m in Q4 11 on profitable core business − especially in Austria, Czech Republic, Slovakia and Croatia − FY 2011 net loss of EUR 718.9m a result of one-off items − Revaluation of written C
Slide 4: 2011 results – FY 2011 performance affected by one-off items in Q3
2011 results – FY 2011 performance affected by one-off items in Q3 in EUR million 2011 2010 Change Comment Net interest income 5,569.0 5,439.2 2.4% Solid performance of core business Risk provisions for loans (2,266.9) (2,021.0) 12.2% Up in HU, down or flat all other segments Net fee and commission
Slide 5: Q4 results – Solid net profit
Q4 results – Solid net profit in EUR million Q4 11 Q3 11 Change Comment Net interest income 1,434.9 1,430.2 0.3% Shifiting of NII on trading assets Risk provisions for loans (407.7) (938.4) (56.6%) Q3 11 impacted by HU one-off Net fee and commission income 435.2 445.9 (2.4%) Reduced securities busin
Slide 6: Balance sheet – Successful RWA reduction in non-core business
Balance sheet – Successful RWA reduction in non-core business in EUR million Dec 11 Dec 10 Change Comment Cash and balances with central banks 9,413 5,839 61.2% Temporary additional liquidity from LTRO Loans and advances to credit institutions 7,578 12,496 (39.4%) Reduced non-core business Loans and
Slide 7: Balance sheet – Loan-to-deposit ratio of 113.3% at end of 2011
Balance sheet – Loan-to-deposit ratio of 113.3% at end of the year 2011 in EUR million Dec 11 Dec 10 Change Comment Deposits by banks 23,785 20,154 18.0% LTRO Customer deposits 118,880 117,016 1.6% Growth in AT & RO, decline in HU Debt securities in issue 30,782 31,298 (1.6%) Derivative financial in
Slide 8: Off-balance sheet assets – Exclusively related to customer business
Off-balance sheet assets – Exclusively related to customer business in EUR million 2011 2010 Guarantees and warranties 6,920 7,826 of which: in relation to corporate business 6,170 Credit default swaps (protection sold) 0 0 Undrawn lines, loan commitments, promissory nots 18,579 19,446 of which: in
Slide 9: Asset quality review – New NPL formation declined yoy
Asset quality review – New NPL formation declined yoy − New NPL formation declined yoy Erste Group: NPL ratio vs NPL coverage − New formation mainly in Hungary (deterioration of corporate and real estate portfolio) and Romania (weak 30% 63.9% 65% SME business) 61.4% 61.0% 25% 60.6% 60.0% − Qoq: New
Slide 10: Asset quality review – Austria, Czech Republic and Slovakia improved
Asset quality review – Austria, Czech Republic and Slovakia improved, Hungary and Romania still mixed NPL ratios in key segments − Stable NPL ratio in Austria 25% 22.7% − Slight reduction of NPLs in savings banks 21.1% 20% − Further reduction of CHF loans due to conversion into EUR loans 15% 10% 8.0
Slide 11: Funding update – Customer deposits are primary source of funding
Funding update – Customer deposits are primary source of funding − Customer deposits are primary source of funding Evolution of Erste Group's funding mix − Customer deposits grew 2011 by 1.6% − Customer deposits grew within the last 4 years by more than 20%, while interbank money market funding 100%
Slide 12: Capital requirements – Erste Group and its subsidiaries comfortable
Capital requirements – Erste Group and its subsidiaries comfortable 25.6% EBA Local requirements 22.0% 17.2% 15.0% 15.1% 9.0% by 13.1% 12.0% June 2012 12.7% required 8.9% 10.0% required Erste Group’s 8.0% 8.0% capital gap as of required required 31.12.2011 amounts to EUR 166m, to be closed via retai
Slide 13: Presentation topics
Presentation topics − Erste Group’s development in 2011 − Central and Eastern Europe − Outlook 2012 29 February 2012 13 Annual results 2011 Press conference
Slide 14: Results of CEE subsidiaries – Czech Republic, Austria and Slovakia top performers
Results of CEE subsidiaries – Czech Republic, Austria and Slovakia top performers Czech Republic Slovakia EBOe in EUR million 2011 2010 Change 2011 2010 Change 2011 2010 Change Operating income 1,634 1,626 0.5% 553 537 2.9% 1,007 1,001 0.6% Operating expenses (714) (710) 0.6% (224) (222) 0.8% (609)
Slide 15: Refinancing needs of CEE-subsidiaries – Limited due to strong local deposit base
Refinancing needs of CEE-subsidiaries – Limited due to strong local deposit base − In 2011 Erste Group granted − in total EUR 134.8bn loans Lending in 2011: − whereof EUR 52.4bn in CEE - only EUR 10bn of CEE-loans out of total − vis-à-vis EUR 52,0bn local deposits EUR 135bn loans are funded out of V
Slide 16: Status quo Hungary and Romania
Status quo Hungary and Romania Operating in a challenging environment - Still fragile economic outlook for Hungary; Banking market is still very challenging - All three major rating agencies downgraded Hungary to non-investment grade − IMF-agreement on financial assistance program (EUR 15-20bn) to b
Slide 17: CEE sovereign bonds – Successful placements in 2012
CEE sovereign bonds – Successful placements in 2012 - CEE61) countries need to issue Development of CDS spreads about EUR 35 billion of new debt (Sep 2011 – Feb 2012) in 20122) (compared to the net issuance in the Eurozone of about EUR 300 billion) 1400 CDS spreads in CEE in 2012 significantly lower
Slide 18: CEE growth potential – Twice as high as in Eurozone
CEE growth potential – Twice as high as in Eurozone - Adjusted for cyclical component, CEE countries (apart from Hungary) have Average growth of potential output twice as high potential (according to the European Commission) growth than the Eurozone 6% (2-4% vs. 1%) in the 5% 2001-2008 2012-2013F fo
Slide 19: Presentation topics
Presentation topics − Erste Group’s development in 2011 − Central and Eastern Europe − Outlook 2012 29 February 2012 19 Annual results 2011 Press conference
Slide 20: Erste Group in 2012 – Focus on retail and corporate business in CEE
Erste Group in 2012 Focus on retail and corporate business in CEE − Despite subdued growth outlook for CEE, underlying macroeconomic data in core markets points towards stronger GDP growth than in most other EU countries − Austria, Czech Republic and Slovakia are well positioned to weather a potenti