Eurobank S.A. · ATHEX:EUROB
Eurobank — EFG Eurobank Ergasias — 9M 2005 Earnings Presentation
41 slides from Eurobank's earnings presentation, Nov 10, 2005
Slide 1: 9M 2005 Results
10 NOVEMBER 2005 9M 2005 RESULTS
Slide 2: Cautionary Statement Regarding Forward-Looking Information
PAGE 2 Cautionary Statement Regarding Forward-Looking Information This presentation may contain projections or other forward – looking statements related to EFG Eurobank Ergasias S.A. that involve risks and uncertainties. Readers are cautioned that these statements represent the Group’s judgments an
Slide 3: Contents
PAGE 3 Contents 1. 9M 2005 Financial Highlights pg.4 2. Other Strategic Initiatives and pg. 7 New Developments 3. Financial Review pg.11 4. Segmental Performance pg.24 5. Rising Profitability for Shareholders pg.31 6. Appendices pg.35
Slide 4: 9M 2005 Financial Highlights
PAGE 4 1 HIGHLIGHTS 1 9M 2005 Financial Highlights
Slide 5: Another strong set of results
PAGE 5 1 HIGHLIGHTS Another strong set of results 9M 2005 Net Profit jumps 53.8% to € 385 m Record Operating Income up 25.5% to €1.4bn NII increases 23.9% y-o-y Total Fees jump 35.7% y-o-y ROE enhanced to 23.0%
Slide 6: …as robust business expansion continues
PAGE 6 1 HIGHLIGHTS …as robust business expansion continues Gross Loans up 25.5% to €25.7 bn Asset gathering delivers - Customer Funds jump 29.3% to € 36.1 bn Cost / Income ratio shrinks further to 46.3%, 42.7% in Greece Core Profit climbs 46% Quarterly record growth of 39.2%
Slide 7: Other Strategic Initiatives and New Developments
PAGE 7 2 OTHER INITIATIVES 2 Other Strategic Initiatives and New Developments
Slide 8: Greece: Organic network expansion to capture local opportunities
PAGE 8 2 OTHER INITIATIVES Greece: Organic network expansion to capture local opportunities To further bring our network at par with client needs and market growth, we plan to establish 65 new branches by end-2006 (30 in place by end-2005) Focus on: deposit gathering; selling household loans, asset
Slide 9: Building our presence in the region
PAGE 9 2 OTHER INITIATIVES Building our presence in the region Maturity of our presence Aim to capture 10% market share in Loans in Bulgaria, Romania and Serbia Initiation – High Growth Phase Maturity Phase by 2009 Major Restructuring GREECE Bulgaria: ready to deliver BULGARIA Restructuring fairly a
Slide 10: Future regional expansion
PAGE 10 2 OTHER INITIATIVES Future regional expansion 50 new branches established in the region in 2005; open 100 new branches in 2006: 20 in Bulgaria 30 in Romania 50 in Poland Refurbish and relocate a large number of existing branches Uniform software application blueprint for all New Europe count
Slide 11: Financial Review
PAGE 11 3 FINANCIAL REVIEW 3 Financial Review
Slide 12: Strong credit growth across all segments
PAGE 12 3 FINANCIAL REVIEW Strong credit growth across all segments Total Group Lending Net additions of € 1.2 bn loans in 3Q 05 + 25.5% 25,663 Household lending surges 34.8% to € 12.2 bn in 9M 05 20,451 + 75.1% 1,490 Mortgages soar 40.2% y-o-y with € 430m net additions in 3Q 05 New Europe 851 Busin
Slide 13: Outpacing the local credit market by 7.2 pps
PAGE 13 3 FINANCIAL REVIEW Outpacing the local credit market by 7.2 pps Eurobank vs Market y.o.y. growth Market shares (August ’05) per lending category 4.5% 3.0% 38.7% 2.0% 0.7% 0.5% 0.6% 31.2% 29.1% 28.8% 38%* 23.3% 19%* 18% 17.6%* 15.4% 16.1% 17.1% 13.1% 6.6% Total Household Mortgage Business Tot
Slide 14: Preferred asset manager in Greece – strong deposit gatherer in New Europe
PAGE 14 3 FINANCIAL REVIEW Preferred asset manager in Greece – strong deposit gatherer in New Europe Total AUM expand 29.3% y-o-y to € 36.1bn Customer Funds Organic AUM (excl. Intertrust) rose robustly by 23.6% New Europe contribution at € 2.9 bn, from € 0.9 bn in 9M 04 - robust increase in existing
Slide 15: Well-diversified loan book with Household lending at 47.5% of total
PAGE 15 3 FINANCIAL REVIEW Well-diversified loan book with Household lending at 47.5% of total Mortgages are 21.8% of loan book, from 19.5% one year ago Business lending at 52.5% of the loan book More profitable Small Business Banking is 27% of business portfolio, from 24.7% in 9M04 Shift to more pr
Slide 16: Record NII growth of 9.5% in 3Q 05
PAGE 16 3 FINANCIAL REVIEW Record NII growth of 9.5% in 3Q 05 NII at € 981m, up 23.9% y-o-y and NIM remains robust 9.5% q-o-q 3.46 352 3.62 3.55 3.50 3.38 3.31 321 302 308 283 Total NII 1H 04 9M 04 FY 04 1Q 04 1H 05 9M 05 + 10.9% 278 236 250 206 222 NII contribution per region 36 Loan margin 31.1 27
Slide 17: Efficient loan mix leads to spread enhancement
PAGE 17 3 FINANCIAL REVIEW Efficient loan mix leads to spread enhancement Consumer Book: Volumes & Spreads 9.28 9.16 Spread evolution per category 8.82 8.65 All spreads Greece only 5.9 5.4 5.7 5.1 FY 04 2Q 05 3Q 05 9M 05 Total Deposits & Repos 0.84 0.90 0.97 0.92 FY 04 1Q 05 2Q 05 3Q 05 GR Consumer
Slide 18: Banking Fees soar 35.9% to €287m
PAGE 18 3 FINANCIAL REVIEW Banking Fees soar 35.9% to € 287m Banking fee generation of €108.4 m in 3Q 05 vs. €90m in 2Q 05, q-o-q growth at 20.4% Mutual Funds & AUM fees expand 67.1% y-o-y, with MF spread at 0.95% Capital Markets fees rise 59% Total fees (incl. non-banking fees), jump 35.7% to €333m
Slide 19: Total Operating Income grows 25.5% driven by Core Income
PAGE 19 3 FINANCIAL REVIEW Total Operating Income grows 25.5% driven by Core Income Record NII growth of 24% and Fee growth of 36% drive Total Operating income Core Income rises 26.7% y-o-y, contributing 95.5% of Total Operating Income New Europe contributes 10.8% of Total Operating Income and 11.3%
Slide 20: Record efficiency gains – Cost / Income at 46.3%
PAGE 20 3 FINANCIAL REVIEW Record efficiency gains – Cost / Income at 46.3% Cost/Income (%) Cost/Income at 42.7% for Greek operations, from 43.8% in 1H 05 51.9 51.8 49.5 49.2 Group 3Q Expenses at or below 2Q levels 46.3 9M 04 42.7 Total Group costs rise 12% to € 637m, reflecting FY 04 9M 05 ongoing
Slide 21: Credit quality maintained, supported by strict provisions
PAGE 21 3 FINANCIAL REVIEW Credit quality maintained, supported by strict provisions Group NPL Ratio (% of loans) Low NPLs at 3.1%, covered by 90% Healthy credit to households, with NPLs at 2.91% 2.94% 3.04% 3.12% 2.2%, in spite of robust portfolio growth of 34.8% Provisioning normalising at 1.32% o
Slide 22: Consumer lending rebalancing
PAGE 22 3 FINANCIAL REVIEW Consumer lending rebalancing Risk adjusted spreads* (bps) 562 Less emphasis on “big ticket” sub- 527 548 segment, which offers lower spreads 482 More focus on personal loans and credit cards 283 298 271 276 Higher risk mix rewarded by more profitable business on a risk-adj
Slide 23: Core profit jumps 45.9% to €448.3m
PAGE 23 3 FINANCIAL REVIEW Core profit jumps 45.9% to € 448.3m Record rise of Core Revenues Wide ‘Positive jaws’ (NII +Total Fees) at 26.7% 480 New Europe contributes 5.5% of Core Profit (from 4.9% in 1H 05) 440 Sharper efficiency in Greece with Core Revenues +26.7% cost / income dropping to 42.7% 4
Slide 24: Segmental Performance
PAGE 24 4 SEGMENTAL PERFORMANCE 4 Segmental Performance
Slide 25: Profits before tax € 511m, up 42% y-o-y
PAGE 25 4 SEGMENTAL PERFORMANCE Profits before tax* € 511m, up 42% y-o-y PBT* per Segment Group PBT* 9M04/5 growth +58% + 16% + 80% + 36% + 92% 9M 05 245 + 42% 511 Delta 359 108 94 155 9M 04 51 81 79 11 3 28 10 6 Retail Corporate AM, PB & Ins Global & New Europe Capital & Other 9M 04 9M 05 Capital M
Slide 26: Retail – increasing momentum
PAGE 26 4 SEGMENTAL PERFORMANCE Retail – increasing momentum 9M04/5 +31% + 6% + 65% + 58% Cost to Income 52.2% 44.9% growth Return on Equity 35.7% 40.5% 771 Share of profits 43.0% 48.0% 590 346 326 245 182 Retail: incorporating customer current accounts, savings, deposits, investment savings product
Slide 27: Corporate – profits maintained
PAGE 27 4 SEGMENTAL PERFORMANCE Corporate – profits maintained 9M04/5 growth +7.3% + 10.2% -13.4% + 16% Cost to Income 31.6% 33.9% Return on Equity 19.4% 17.7% 198 Share of profits 22.6% 18.4% 185 94 67 37 81 Corporate: incorporating direct debit facilities, current 61 accounts, deposits, overdrafts
Slide 28: AM, PB & INS – highest top line growth
PAGE 28 4 SEGMENTAL PERFORMANCE AM, PB & INS – highest top line growth 9M04/5 +66% + 51% + 80% Cost to Income 41.9% 39.8% growth Return on Equity 68.7% 75.8% 85 Share of profits 7.9% 9.9% 52 51 34 Asset Management, Private Banking and Insurance: 28 incorporating private banking services, including t
Slide 29: Global & Capital Markets – overall strong results
PAGE 29 4 SEGMENTAL PERFORMANCE Global & Capital Markets – overall strong results 9M04/5 Cost to Income 33.6% 27.0% growth +27% + 6.8% + 36% Return on Equity 66.9% 97.1% Share of profits 36.5% 21.1% 148 108 116 79 40 Global & Capital Markets: incorporating investment banking services including corpo
Slide 30: New Europe – substantial growth across all lines
PAGE 30 4 SEGMENTAL PERFORMANCE New Europe – substantial growth across all lines Cost to Income 80.1% 83.4% 9M04/5 growth +42% + 46% + 131% + 92% Return on Equity 20.6% 9.6% Share of profits 1.6% 2.1% 152 127 New Europe contributes 11% of Total Operating Income, 9.8% of NII and 20% of costs as per s
Slide 31: Rising profitability for shareholders
PAGE 31 5 RISING PROFITABILITY 5 Rising profitability for shareholders
Slide 32: 9M Net Profit jumps 53.8% to €385m
PAGE 32 5 RISING PROFITABILITY 9M 05 Net Profit jumps 53.8% to € 385 m Group Net Profit quarterly evolution New record quarterly profit growth of 37.9% at + 37.9% 160.2 € 160.2m in 3Q 05 New Europe contributes 116.1 108.5 4.1% of net profits, from 89 90 3.8% one year ago 80 81 1Q 04 2Q 04 3Q 04 4Q 0
Slide 33: High Returns for Shareholders
PAGE 33 5 RISING PROFITABILITY High Returns for Shareholders RoE Shareholders’ Equity at € 2.4bn 25 23.0 Hybrid Tier I capital at € 182m 20 20.2 21.1 Tier II capital at € 620m 15 16.7 16.7 16.8 16 RoA at 1.38%, from 1.14% in FY 04 10 5 Return on Equity at new high of 23% 0 1Q 04 1H 04 9M 04 FY 04 1Q
Slide 34: In line with Financial Targets
PAGE 34 5 RISING PROFITABILITY In line with Financial Targets FY 2004 9M 2005 Targets 2005-2006 Revenue growth >20% 25.5% >15% p.a. Cost/ Income (Group) 52.1% 46.3% < 48% in 2006 Cost/ Income (Greece) 49.1% 42.7% < 46% in 2006 Return on Equity 16.76% 23.04% >20% in 2006 EPS Growth EPS €1.1 49.1% >23
Slide 35: Appendices
PAGE 35 6 APPENDICES 6 Appendices
Slide 36: Financial Ratios
PAGE 36 6 APPENDICES Financial Ratios Financial Ratios 9M 05 9M 04 Net Interest Margin 3.5% 3.3% Cost-Income 46.3% 51.9% NPLs (% of loans) 3.1% 2.8% NPLs coverage 90.5% 99.4% Provision Charge (% of loans) 1.32% 1.19% Tier Ι Ratio 8.57% 8.03%* Total Capital Adequacy 11.00% 9.93%* ROA after tax 1.38%
Slide 37: Summary Figures
PAGE 37 6 APPENDICES Summary Figures Summary Figures (€ m) 9M 05 9M 04 ∆% New Europe Net Interest Income 981.0 791.7 23.9% 94.9 Net fees & Commissions 287.2 211.3 35.9% 53.5 Non banking fees 46.1 34.2 34.8% 0 Core Income 1,314.2 1,037.2 26.7% 148.4 Non core income 61.4 59.2 3.7% 0.3 Total Operating
Slide 38: Balance Sheet Figures
PAGE 38 6 APPENDICES Balance Sheet Figures Portfolio of Loans (Gross, € m) 9M 05 9M 04 ∆% Consumer Loans 6,601 5,056 30.5% Mortgages 5,587 3,984 40.2% Loans to Households 12,188 9,041 34.8% Small Business Loans 3,624 2,817 28.7% Loans to Medium Enterprises 5,529 4,765 16.0% Loans to Corporates 4,321
Slide 39: 9M 2005 – Summary per Segment
PAGE 39 6 APPENDICES 9M 2005 – Summary per Segment Treasury & Capital Capital & Elimination New Segmental Results 9M 2005 (€ m) Retail Corporate AM, PB & INS Total Markets Other Center Europe Interest income 675 140 14 59 -4 0 96 981 Net fee & commission income 48 26 70 89 1 0 53 287 Net Insurance i
Slide 40: 9M 2004 – Summary per Segment
PAGE 40 6 APPENDICES 9M 2004 – Summary per Segment Segmental Results 9M 2004 (€ m) Treasury & Capital & Elimination New Retail Corporate AM, PB & INS Total Capital Markets Other Centre Europe Interest income 529 130 4 58 1 0 69 792 Net fee & commission income 29 25 56 64 1 0 35 211 Net Insurance inc
Slide 41: Contacts
PAGE 41 6 APPENDICES Contacts EFG Eurobank Ergasias, 8 Othonos Str., 10557 Athens, Greece Fax: +30 210 3337 337 E-mail: investor_relations@eurobank.gr Internet: www.eurobank.gr Reuters: EFGr.AT Bloomberg: EUROB GA Investor Relations Dimitris Nikolos Tel: +30 210 3371162 E-mail: dnikolos@eurobank.gr
EFG Eurobank Ergasias — 9M 2005 Earnings Presentation on 6ix