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Q3 2014 results presentation hosted by Andreas Treichl, CEO, Erste Group Gernot Mittendorfer, CFO, Erste Group Andreas Gottschling, CRO, Erste
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Asset quality improvement gains momentum as AQR confirms solid capital base Andreas Treichl, CEO Erste Group Gernot Mittendorfer, CFO Erste Group Andreas Gottschling, CRO Erste Group
30 October 2014
Erste Group investor presentation Q3 2014 results
Page
Disclaimer – Cautionary note regarding forward-looking statements
2
• THE INFORMATION CONTAINED IN THIS DOCUMENT HAS NOT BEEN INDEPENDENTLY VERIFIED AND NO REPRESENTATION OR WARRANTY EXPRESSED OR IMPLIED IS MADE AS TO, AND NO RELIANCE SHOULD BE PLACED ON, THE FAIRNESS, ACCURACY, COMPLETENESS OR CORRECTNESS OF THIS INFORMATION OR OPINIONS CONTAINED HEREIN.
• CERTAIN STATEMENTS CONTAINED IN THIS DOCUMENT MAY BE STATEMENTS OF FUTURE EXPECTATIONS AND OTHER FORWARD-LOOKING STATEMENTS THAT ARE BASED ON MANAGEMENT’S CURRENT VIEWS AND ASSUMPTIONS AND INVOLVE KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS, PERFORMANCE OR EVENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED IN SUCH STATEMENTS.
• NONE OF ERSTE GROUP OR ANY OF ITS AFFILIATES, ADVISORS OR REPRESENTATIVES SHALL HAVE ANY LIABILITY WHATSOEVER (IN NEGLIGENCE OR OTHERWISE) FOR ANY LOSS HOWSOEVER ARISING FROM ANY USE OF THIS DOCUMENT OR ITS CONTENT OR OTHERWISE ARISING IN CONNECTION WITH THIS DOCUMENT.
• THIS DOCUMENT DOES NOT CONSTITUTE AN OFFER OR INVITATION TO PURCHASE OR SUBSCRIBE FOR ANY SHARES AND NEITHER IT NOR ANY PART OF IT SHALL FORM THE BASIS OF OR BE RELIED UPON IN CONNECTION WITH ANY CONTRACT OR COMMITMENT WHATSOEVER.
Page
Presentation topics
3
• Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information
Page
Executive summary – Group income statement performance
QoQ net profit reconciliation (EUR m)
YoY net profit reconciliation (EUR m)
4
• Improvement in other result due to intangible write-downs in Q2 14 • Higher risk costs in line with guidance in RO (Retail, SME, LC) on
the back of accelerated NPL reduction • Taxes impacted by negative change in deferred taxes related to
the Austrian tax group in Q2 14
• Deterioration in other result driven by one-off intangible write-downs in RO, HR, AT and booking of full consumer loan law impact in HU
• Increase in taxes due to negative change in deferred taxes related to the Austrian tax group
• Stable operating performance due to lower costs and improved net fee and commission income
-554
Q3 14 Minorities
26
Taxes on income
138
Other result
803
Risk costs
447
Operating expenses
46
Operating income
35
Q2 14
-1,033
146 141
-1.484
431
1-9 14
403
Minorities
42
Taxes on income
Risk costs Other result
1.118
430
Operating expenses
Operating income
1-9 13
Page
Executive summary – Group income statement performance: 1-9 14 one-off summary
One-offs with effect on regulatory capital
• Additional risk provisions of about EUR 400m in Romania • Fully booked in 1-9 14 to fund accelerated legacy NPL resolution; • Booked in risk costs of Retail, SME and CRE segments (BL) and
Romania segment (geo)
• Hungary: consumer loan law (bid-/ask-spread, unilateral interest and fee changes) impact of EUR 360.8m • Booked in other operating result • No clarity yet on potential additional losses in Hungary from FX loan
conversion into HUF expected for 2015; hence no provision included in Q3 14 figures
• Negative change in deferred taxes (net) of EUR 141.1m • Minor impact of 9 and 18bps in fully-loaded and phased-in scenario • Accounting standard-induced booking, under Austrian tax regulation
tax losses can be carried forward indefinitely
One-offs with no effect on regulatory capital
• Write-down of intangible assets related to Romania • Write-down of full remaining goodwill of EUR 319.1m • Write-down of full value of customer relationships and brand of
EUR 489.8m • Booked in other operating result of Group Corporate Center (BL) and
Other segment (geo)
• Write-down of full remaining goodwill related to Croatia and minor participations • Total impact of EUR 101.8m • Booked in other operating result of Group Corporate Center (BL) and
Other segment (geo)
5
Page
Executive summary – Key income statement data
Net interest income & margin
6
Operating result & cost/income ratio Cost of risk
Banking levies
Reported EPS & ROE
Cash EPS & cash ROE
-0.2%
1-9 14
2,334
1-9 13
2,339
879
432
Q3 14
2.75%
Q2 14
1.35%
+34.5%
1-9 14
1,675
1-9 13
1,245
808798
Q3 14
52.3%
Q2 14
53.9%
Q3 14
1,126
2.68%
Q2 14
1,120
2.61%
5554
Q3 14 Q2 14
209247
1-9 14 1-9 13 1-9 14
-3.47
-18.3%
1-9 13
0.85 4.6%
Q3 14
-1.30
-21.7%
Q2 14
-2.42
-37.6%
1-9 14
-1.56
-8.2%
1-9 13
1.06 4.6%
Q3 14
-1.39
-23.3%
Q2 14
-0.44
-6.9%
1-9 14
3,370
2.64%
1-9 13
3,516
2.68%
in EUR m
in EUR m
in EUR m in EUR m
in EUR in EUR
Page
Executive summary – Group balance sheet performance
YTD total asset reconciliation (EUR m)
YTD equity & total liability reconciliation (EUR m)
7
• Lower cash position driven by reduced placement with ECB resulting from negative interest rates introduction
• Increase in net customer loans ytd despite significant decline in RO, HU thanks to solid performance of AT, SK retail business lines
• Lower intangibles due to significant write-downs, mainly RO
• Decline in customer deposits mainly driven by final deconsolidation of Czech pension fund (EUR 1.8bn) and lower deposits in Erste Bank Hungary and EBOe
• Increase in trading liabilites driven by negative derivatives’ fair value increase
• Lower debt securities due to maturities of unsecured bonds
507196,973
30/09/14 Other assets
53
Intangibles
985
Net loans Loans to banks
1,211
Trading, financial assets
218
Cash
1,291
31/12/13
200,118
817
196,973
30/09/14 Equity
1,133
2,354
Other liabilities
1,059
Debt securities
1,912
Customer deposits
Bank deposits
Trading liabilities
2,013
31/12/13
200,118
Page
Executive summary – Key balance sheet data
Loan/deposit & loan/TA ratio
8
Net loans & credit RWA* NPL coverage ratio & NPL ratio
Basel 3 (phased-in) capital ratios*
Regulatory (B3)* & tangible equity
Liquidity coverage & leverage ratio
120.5 119.9
Net loans
+0.4%
Credit RWA
87.2 84.9
30/09/14 31/12/13
NPL ratio
8.9% 9.6%
NPL coverage
68.8% 63.1%
61.2%
Loans/total assets
59.9%
Loan/deposit ratio
100.3% 98.0%
10.9
CET1 (phased-in)
8.5
11.2
Tangible equity
8.9
16.3% 15.7%
11.4% 10.8%
Total capital CET 1 * Dec 13 pursuant to Basel 2.5
LCR
106.6%
5.3%
LR (phased-in)
106.3%
5.2%
in EUR bn
in EUR bn
Page
Presentation topics
9
• Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information
Page
Business environment – Slower export performance offset by improved domestic demand in 2014
Real GDP growth (in %)
10
Dom. demand contribution* (in %) Net export contribution* (in %)
Unemployment rate (eop, in %)
Current account balance (% of GDP)
Gen gov balance (% of GDP)
Consumer price inflation (ave, in %)
Public debt (% of GDP)
• CEE economies grew faster than the euro zone in Q2 2014 (euro zone GDP grew by 0.7% yoy in Q2) • Positive outlook for 2014 supported by Q2 GDP data: AT (+0.1%), CZ (+2.7%), RO (+1.2%), SK (+2.5%), HU (+3.9%) • Domestic demand has visibly improved across the region while export has also contributed to growth with strong industrial production
• Solid public finances across Erste Group‘s core markets • Sustainable current account balances, supported by competitive economies; Hungary has announced new austerity package
HR
-1.3 -1.3
HU
3.3
1.1
RO
1.6
-0.9
SK
1.5
-0.8
CZ
2.5
-0.7
AT
1.1
-1.0
2014 2013
HR
-0.5 -0.9
HU
3.3
1.5
RO
1.8
3.5
SK
2.2 1.4
CZ
2.5
-0.9
AT
0.8 0.2
HR
0.2
2.3
HU
0.1
1.7
RO
1.2
4.0
SK
0.3 1.4
CZ
0.5 1.4
AT
1.7 2.1
HR
18.0 17.3
HU
7.8 10.2
RO
7.2 7.2
SK
13.5 14.2
CZ
6.7 7.0
AT
4.9 4.9
HR
1.0 0.9
HU
4.0 4.1
RO
-1.4 -1.1
SK
4.0
2.1
CZ
0.0
-1.4
AT
3.3
1.5 -2.4
RO
-2.7 -2.3
SK
-2.6 -2.6
CZ
-1.7 -1.5
AT
-2.8 -1.5
HR
-5.5 -4.9
HU
-2.7
6777
3855
46
81 7377
3955
45
87
HR HU RO SK CZ AT
* Contribution to real GDP growth. Domestic demand contribution includes inventory change. Source: Erste Group Research, EU Spring Economic Forecast 2014.
SK
-0.3
RO
4.4
0.4
HR AT
0.6
CZ
1.6 0.7
HU
1.2 0.4 0.7
0.0 0.0 0.8
Page
Business environment – Historic low interest rate environment poses challenges
Austria
11
Czech Republic Romania
Slovakia
Hungary
Croatia
• ECB cut discount rate to 0.05% in Sept 14 • Maintains expansionary monetary policy
stance
• National bank maintains ultra-low interest rates since November 2012 at 0.05%
• Central bank cut policy rate to historic low of 3.00% in September 2014
• As part of euro zone ECB rates are applicable in SK
• National bank concluded easing cycle on 22 July 2014 after cutting base rate to historic low of 2.1%
• Central bank maintains discount rate at 7.0% since mid-2011
1-9 14
1.66%
0.25%
1-9 13
1.94%
0.21%
10YR GOV 3M Interbank
1-9 14
1.78%
0.36%
1-9 13
1.99%
0.47%
1-9 14
4.81%
2.45%
1-9 13
5.41%
4.46%
1-9 14
2.14%
0.25%
1-9 13
2.54%
0.21%
1-9 14
5.12%
2.51%
1-9 13
5.97%
4.64%
1-9 14
0.68%
1-9 13
1.30%
Q3 14
1.32%
0.17%
Q2 14
1.68%
0.30%
Q3 14
1.34%
0.35%
Q2 14
1.73%
0.36%
Q3 14
4.25%
2.14%
Q2 14
4.84%
2.54%
Q3 14
1.79%
0.17%
Q2 14
2.24%
0.30%
Q3 14
4.53%
2.17%
Q2 14
5.03%
2.54%
Q3 14
0.78%
Q2 14
0.62%
Source: Bloomberg.
Page
Business environment – Limited currency volatility, except one-off CZK devaluation in November 2013
EUR/CZK
12
EUR/RON
EUR/HUF
EUR/HRK
• YOY depreciation of CZK self-induced by national bank in order to jump-start economy and domestic demand in particular
• YTD development marked by stability
• RON movements marked by limited volatility • QOQ appreciation driven by improving economic performance
• YOY depreciation driven by policy uncertainties despite improving headline economic fundamentals
• Strong grip of national bank on HRK is reflected in lack of volatility
+6.8%
1-9 14
27.5
1-9 13
25.7
+0.6%
Q3 14
27.6
Q2 14
27.4
+0.3%
30/09/14
27.5
31/12/13
27.4
+0.9%
1-9 14
4.45
1-9 13
4.41
-0.2%
Q3 14
4.41
Q2 14
4.43 4.41
31/12/13
4.47
-1.4%
30/09/14
+4.1%
1-9 14
308.7
1-9 13
296.7
+2.1%
Q3 14
312.2
Q2 14
305.9
+4.6%
30/09/14
310.6
31/12/13
297.0
+0.8%
1-9 14
7.62
1-9 13
7.56
+0.3%
Q3 14
7.62
Q2 14
7.60
31/12/13
7.63
+0.2%
30/09/14
7.64
Source: Bloomberg.
Page
Business environment – Market shares: stability in AT, CZ and SK, challenges in RO, HU
Gross retail loans
13
• RO: qoq increase following continued rise in new business volumes (Q3 14: EUR 271m, +94.9% yoy, +10.2% qoq)
• HU: market share development is a function of legacy FX business
Gross corporate loans
• AT: higher volumes in the Savings banks
• RO: selective lending policy with focus on quality customers and NPL sales
• HU: portfolio concentration to preferred sectors
Retail deposits
• RO: declining markets share mainly due to deposit repricing
• HU: focus also on alternative saving products such as investment funds where EBH has double-digit market share
Corporate deposits
• SK: successful acquisition of new clients
• RO: stable share due to continued inflows
• HU: reviewing deposit repricing
RS 3.5% 3.4% 3.3%
HR 13.8% 13.8% 13.7%
HU 15.3% 15.3% 15.6%
RO 18.1% 17.9% 17.9%
SK 26.6% 26.3% 25.8%
CZ 23.5% 23.5% 23.7%
AT 19.0% 19.1%
31/08/14 30/06/14 30/09/13
21.5%
SK 11.9%
11.3% 11.1%
CZ 19.0% 18.9% 19.0%
AT 17.5% 17.0%
RS 2.8% 2.8% 2.9%
HR 15.7% 15.5% 15.6%
HU 5.9% 5.9% 7.1%
RO 18.3% 19.4%
RS 2.9% 2.9% 2.7%
HR 12.7% 12.6% 12.8%
HU 6.4% 6.5% 7.7%
RO 17.0% 17.2%
18.7%
SK 26.2% 26.3% 26.3%
CZ 26.1% 26.5% 27.2%
AT 18.2% 18.3%
HR
RS 4.2% 4.4% 5.0%
11.5% 11.4% 11.0%
HU 5.7% 5.8% 6.2%
RO 13.6% 13.6% 13.9%
SK 12.6%
11.7% 9.5%
CZ 10.6% 10.6%
9.8%
AT 20.1% 21.4%
AT market shares for 31/08/14 not yet available
Page
Presentation topics
14
• Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information
Page
Business performance: performing loan stock & growth – Solid qoq increase in performing loan stock
Business line view (BL)
Geographic view (geo)
15
• Second consecutive quarter with rising performing loans due to solid developments in key customer segments
• Reallocation of about EUR 1.5bn of performing loans from SME to LC as per 1 Jan 2014 distorts yoy comparison, as does EUR 1.0bn shift from LC to OC as per 31 Dec 2013
• Visible deleveraging in CRE yoy
• RO: stable development qoq, deleveraging yoy driven by SME • Consistent strong performance of SK on the back of resurgent
demand for consumer loans, strong mortgage loan demand • Decline in HU yoy across all business lines, stabilising qoq
0.5 0.5 0.5
HR 5.5 5.6 5.6
HU 3.6 3.6 4.2
SK 7.8 7.5 6.9
RO 7.0 7.1 7.7
CZ 17.7 17.6 18.4
RS
AT/OA 11.0 10.6 11.4
AT/EBOe 27.6 27.3 27.1
OC 2.0 1.7 0.8
CRE 7.5 7.4 8.8
LC 8.1 8.1 7.3
AT/SB 35.9 35.5 34.9
SME 18.9 18.9 20.6
Retail 43.9 43.5 44.1
Group 116.9 115.7 117.0
18.4% 155.3%
1.7% -14.6%
-0.2% 10.3%
1.2% 2.8%
0.4% -8.2%
0.9% -0.4%
1.0% -0.1%
-0.5% -3.1%
-1.0% -1.1%
-1.4% -14.2%
3.5% 12.5%
-0.5% -8.9%
0.2% -4.1%
3.6% -3.8%
1.1% 2.0%
QoQ YoY
in EUR bn in EUR bn
30/09/14
30/09/13 30/06/14
Page
Business performance: customer deposit stock & growth – Deposit decline overstated by EUR 1.8bn CZ one-off
Business line view
Geographic view
16
• Retail: EUR 1.0bn yoy decline is overstated by EUR 1.8bn due to final deconsolidation of Czech pension fund (allocated to Retail)
• Shift from SME to LC distorts comparison
• Underlying trend in CZ stable (see left side explanation) • YOY slight decline in EBOe driven by Retail business line due to
liability repricing with positive margin effect; stable qoq • Decline in Hungary yoy due to persistent corporate deposit outflows;
smaller, but still significant decline in Retail due to shift from deposits into asset management
RS 0.5 0.6 0.6
HR 5.1 4.5 4.6
HU 3.7 3.6 4.6
SK 9.5 9.2 8.7
RO 8.5 8.4 8.4
CZ 24.2 24.5
26.7
AT/OA 4.1 5.3 5.1
AT/EBOe 29.7 29.7 30.0
OC 0.1 0.0 0.0
CRE 1.3 1.0 1.4
LC 3.9 5.5 5.0
AT/SB 34.8 34.8 33.9
SME 10.6 10.6 11.8
Retail 63.2 63.1 64.2
Group 120.1 120.2 122.0
22.8% 177.5%
31.6% -11.7%
-28.8% -21.8%
0.2% 2.7%
-0.3% -10.2%
0.2% -1.5%
-0.2% -1.6%
-13.1% -14.9%
13.1% 10.6%
3.1% -19.5%
3.0% 9.4%
1.0% 2.2%
-1.5% -9.4%
-22.0% -18.7%
0.0% -1.0%
QoQ YoY
in EUR bn in EUR bn
30/09/14 30/06/14 30/09/13
Page
Business performance: NII and NIM – NII stable qoq, down yoy on lower volumes and CZK effect
Business line view
Geographic view
17
• Group NII down yoy mainly due to lower volumes & margins in RO and FX effects in CZ
• Retail: yoy decline in BCR, still shrinking business in HU and FX impact in CZ despite strong development in EBOe, qoq up mainly on loan volumes and deposit margins in SK
• SME, LC: yoy NII impacted by reallocation from SME to LC
• AT/EBOe: yoy up due to changes of deposit pricing • CZ: yoy decline in NII mainly on FX effects, despite positive
developments in retail (higher mortgage volume, despite FX-effect) • RO: yoy decrease driven by significantly lower average loan
volumes, compounded by margin compression; qoq decline due to lower unwinding impact
159
122
69
8
59
78
112
150
254
102
144
8
67
112
229
100
9
64
67
116
117
230
104
152
RS
HR
HU
SK
RO
CZ
AT/OA
AT/EBOe
171
228
58
40
17
40
47
213
70
19
46
144
545
18
37
55
219
29
142
550
OC
CRE
LC
AT/SB
ALM&LCC
SME
Retail 559
Group 1.126 1.120
1.176
Q3 14 Q2 14 Q3 13
2.16% 2.16%
1.76% 1.76% 1.79%
1.60% 2.35% 2.52% 2.41%
1.68% 1.84%
1.70% 0.41% 0.52% 0.65%
2.57% 2.61% 2.77%
4.53% 4.49% 4.53%
2.68% 2.61% 2.71%
4.86%
4.86% 4.72%
3.14% 3.31%
2.88% 4.18% 4.07%
3.84% 4.01% 4.03% 4.26%
3.99% 3.97%
4.71% 3.24% 3.24% 3.32%
1.40% 1.18% 1.17%
1.73% 1.74%
1.46%
in EUR m in EUR m
Page
Business performance: operating income – Operating income decline due to lower trading result qoq, lower NII yoy
Business line view
Geographic view
18
Highlights • Decline in group operating income driven by
lower NII yoy and lower net trading and fair value result qoq
• Retail: yoy decline in NII driven by lower volumes and margins (RO, HU) and FX effect (CZ), improved qoq in SK
• SME: yoy decline due to reallocation to LC • SBs: qoq decline impacted by lower net
trading and FV result • GCC (prior to intragroup elimination): NII
impacted by lower capital benefit from free capital, fee income down on higher fee expenses from internal service providers
• AT/EBOe: NII yoy up on change in deposit
pricing, fee income up on merger with brokerjet, and payment and insurance fees
• CZ: NII, net fee and commission income and net trading result impacted by FX effect
• RO: NII down yoy on lower volumes and margins in all major business lines and qoq on retail and net trading & FV result
• HR: yoy increase in NII on lower funding costs
389
82
355
10312
88
113
147
220
165
328
235
28
12
103
114
147
191
361
170
250
57
13
106
153
178
354
151
326
255
Other
RS
HR
HU
SK
RO
CZ
AT/OA
AT/SB
AT/EBOe
Group 1,696 1,731
1,780
237
58
112
840
25
-43
75
112
25
67
63
328
71
846
-44
51
24
55
85
355
206
828
20
26
94
52
83
326
25
205
IC
GCC
GM
OC
CRE
LC
AT/SB
ALM&LCC
SME
Retail
Group 1,696 1,731 1,780
Q3 13 Q2 14 Q3 14
in EUR m in EUR m
Page
Business performance: operating expenses – Cost decline slightly exaggerated in Q3 14
Business line view
Geographic view
19
Highlights • Group operating expenses declined yoy on
lower personnel expenses and on discontinuation of customer stock amortisation as of Q3 14
• Retail: yoy improvement mainly on cost saving measures in CZ and RO, up qoq in AT/EBOe (merger with brokerjet) and HU
• CRE: yoy decline driven by strict cost management and deconsolidation of leasing entities
• GCC (prior to intragroup elimination): yoy and qoq driven by discontinuation of BCR customer relationship amortisation
• AT/OA: down yoy on leasing entities deconsolidation effect, which increased costs in HR, qoq increase at Holding level
• CZ: improvement yoy in personnel expenses, supported by FX effect
• RO: yoy decline in personnel expenses due to restructuring measures
• Other: mirrors GCC and IC developments
82
154
66
9
9
35
45
62
92
183
83
229
146
69
9
45
42
65
78
165
74
239
147
27
45
43
79
165
79
220
Other
RS
HR
HU
SK
RO
CZ
AT/OA
AT/SB
AT/EBOe
Group 887
933 964
460
43
-94
172
43
13
31
17
229
20
73
-118
182
43
12
20
20
239
13
73
448
-127
150
15
21
21
220
15
72
457
IC
GCC
GM
OC
CRE
LC
AT/SB
ALM&LCC
SME
Retail
Group 887
933 964
Q3 14 Q2 14 Q3 13
in EUR m in EUR m
Page
Business performance: operating result and CIR – Operating result stable, cost/income ratio improved
Business line view
Geographic view
20
128
103
116
96
58
0
3
53
68
85
207
82
99
90
-41
3
58
73
83
113
196
30
3
63
87
99
190
72
105
102
Other
RS
HR
HU
SK
RO
CZ
AT/OA
AT/SB
AT/EBOe
Group 808 798 816
51
116
69
62
51
-97
69
12
35
46
99
164
74
-132
12
35
65
46
133
380
147
-124
51
10
31
105
10
133
383
IC
GCC
GM
OC
CRE
LC
AT/SB
ALM&LCC
SME
Retail 386
Group 808 798 816
Q3 14 Q2 14 Q3 13
47.5%
73.4% 77.1%
72.5% 43.9% 44.0%
39.9% 40.6% 36.3% 39.7% 43.3% 44.0% 42.0% 44.3%
40.9% 41.7% 46.5% 45.7% 46.9%
52.4% 43.6% 50.2%
67.6% 67.3% 69.7%
60.2% 58.9% 61.9%
52.3% 53.9% 54.2%
45.9% 38.3% 38.4%
58.5% 50.1% 50.4%
39.9% 36.6%
47.0% 25.6% 23.5% 27.3%
67.6% 67.3% 69.7%
35.2% 35.6%
30.7% 54.4% 54.1% 54.4%
52.3% 53.9% 54.2%
in EUR m in EUR m
Page
Business performance: risk costs (abs/rel*) – Higher risk costs on additional provisions in Romania
Business line view
Geographic view
21
• Increase in group risk costs in line with guidance, due to higher provisions in RO on the back of accelerated NPL reduction
• Retail: significant qoq increase in RO (adapted LGDs for legacy portfolio) and to a lesser extent in HU
• SME: yoy and qoq increase almost solely in RO • LC: higher risk provisions yoy and qoq in RO, more than offset yoy
decline in AT, CZ and SK
• AT/EBOe: improvement due to increased risk costs in SME in Q2 14 • AT/OA: yoy decline in Holding and Immorent • RO: significant increase in Retail (adapted LGDs), SME and LC and
less pronounced in CRE on the back of accelerated NPL reduction • HU: qoq development driven by lower provisioning requirements in
Retail and CRE in Q2 14
43
17
2
42
45
6
35
6
2
17
14
34
70
35
4
36
40
36
70
10
RS
HR
HU
SK
RO 618
182 117
CZ
AT/OA 131
AT/EBOe
105
100152
101
879
398
184
43
6
105
55
58
461
-1
75
42
432
19
91
140
OC
CRE
LC
AT/SB
SME
Retail 61
Group
5.15% -0.17%
2.08% 3.72% 4.05% 3.86%
5.74% 3.09%
2.86% 0.44% 0.43% 0.59%
3.19% 2.62%
1.53% 3.40% 0.52%
0.90% 2.75%
1.35% 1.42%
2.92% 1.40% 1.56% 2.13% 2.49% 2.54% 3.24% 1.31% 3.09%
0.82% 0.69% 0.33%
25.24% 7.26%
4.17% 0.77% 0.74% 0.72%
2.23% 2.24%
4.03% 0.14% 0.49% 0.09%
Q3 14
Q3 13 Q2 14
in EUR m in EUR m
*) Relative risk costs are defined as annualised quarterly risk costs over average gross customer loans.
Page
Business performance: non-performing loans and NPL ratio – Asset quality improvement gains momentum
Business line view
Geographic view
22
• Continued decline of group NPL volume and group NPL ratio on supportive trends in Retail, SME (BL) and RO, HU (geo)
• NPL sales amounted to EUR 341.3m in Q3 14 • Retail: EUR 56.2m • Corporate: EUR 285.1m
• Reallocation of about EUR 800m from SME to LC is key reason for yoy NPL increase in LC & decline in SME; underlying trends stable
• NPL sales mainly in RO (EUR 275.7m); decline in NPL ratio less pronounced due to declining overall loan volume; further significant NPL sales expected
• Minor sales in AT/OA (Holding, Immorent), CZ, SK and HU
7994RS 101
HR 1,263 1,242 1,300
HU 1,279 1,306
1,544
SK 422 426 384
RO 2,538
2,933 3,244
CZ 867 855 910
AT/OA 1,431 1,568
1,363
AT/EBOe 1,002 1,018 1,025
35OC
143 106
CRE 1,847 2,035 1,983
LC 1,164 1,196
668
AT/SB 2,446 2,506 2,597
SME 2,472 2,698
3,496
Retail 3,291 3,420 3,650
Group 11,422
11,996 12,448
6.7% 5.9%
4.3% 19.8%
21.7% 18.5%
12.6% 12.9%
8.4% 6.4% 6.6% 6.9%
11.5% 12.5%
14.5% 7.0% 7.3% 7.6% 8.9% 9.4% 9.6%
17.4% 16.3%
13.7% 18.7% 18.3% 18.9%
26.3% 26.4% 27.0%
5.1% 5.4% 5.3%
26.5% 29.3% 29.6%
4.7% 4.6% 4.7%
11.5% 12.9%
10.7% 3.5% 3.6% 3.6%
30/06/14 30/09/13
30/09/14
in EUR m in EUR m
Page
Business performance: allowances for loans and NPL coverage – NPL coverage rises to multi-year high of 68.8%
Business line view
Geographic view
23
• Improving group coverage ratio over the past quarters following significant provisioning in RO
• Retail, LC, SME: increase in risk provisioning and coverage to fund accelerated NPL reduction in RO
• AT/OA qoq coverage rise reflects additional provisions in LC • RO substantial qoq coverage increase to fund accelerated NPL
reduction • Continued increase in coverage in HR
637174RS
HR 743 713 662
HU 807 806
977
SK 358 358 356
RO 2,084 1,894 2,089
CZ 682 678 721
AT/OA 829 841
770
AT/EBOe 682 697 681
167187
OC
CRE 1,102 1,142 1,155
LC 872 776
469
AT/SB 1,561 1,573 1,518
SME 1,639 1,724
2,168
Retail 2,578 2,366 2,480
Group 7,864
7,674 7,837
60.9% 66.6%
47.0% 59.6% 56.1% 58.3%
74.9% 64.9% 70.2%
63.8% 62.8%
58.4% 66.3%
63.9% 62.0%
78.4% 69.2% 67.9% 68.8%
64.0% 63.0%
73.0% 75.8% 80.5%
58.8% 57.4%
50.9% 63.1% 61.7% 63.3%
84.7% 83.9%
92.7% 82.1%
64.6% 64.4%
78.7% 79.3% 79.2%
57.9% 53.6% 56.5%
68.1% 68.4% 66.5%
30/09/14 30/06/14 30/09/13
in EUR m in EUR m
Page
Business performance: other result – Q3 14 driven by Hungarian consumer loan law
Business line view
Geographic view
24
Highlights • QOQ improvement in group other result due
to goodwill impairments in Q2 14; Q3 14 other result still burdened by HU one-off
• Retail: yoy and qoq deterioration driven by HU consumer loan law passed in July 14 (Q3 14 impact: EUR 230.5m)
• SME: Q2 14 impacted by one-off income from insurance payment (in AT/EBOe)
• LC: driven by releases of risk provisions of contingent credit risk liabilities in EBOe in Q2 14
• CRE: down yoy and qoq due to impairments of repossessed assets at Immorent
• GCC: goodwill impairments in Q2 14; GCC has to be read in conjunction with IC elimination
• AT/SB: driven by losses on AfS securities in Q2 14 and positive valuation effects in Q3 14
• AT/OA: impacted by negative effects in Immorent
• RO: deterioration in Q3 impacted by impairments of repossessed assets
• Other: volatility in Other segment mirrors developments in GCC and IC elimination
-54
0
-2
-17
-12
-12
-22
-9
-1
-6
0
-1
-10
-14
-1
-11
-31
20
-23
0
-1
-12
-50
-11
-22
30
-8
Other -957
RS
HR
HU -247
-142
SK
RO
CZ
AT/OA
AT/SB
AT/EBOe
Group -344
-1.147 -136
0
2
1
137-50
-5
-6
-13
-9
-1
-30
-5
-18
-136
-65
0
-2
-11
-31
-25
17
-146
-155
-1
-26
-9
30
-40
-6
-273
IC
GCC -886
GM
OC
CRE
LC
AT/SB
ALM&LCC
SME
Retail
Group -344
-1.147
Q2 14 Q3 13
Q3 14
in EUR m in EUR m
Page
Business performance: net result – Q3 14 net loss due to HU one-off and higher risk costs in Romania
Net result by business line
Net result by geography
25
Highlights • QOQ improvement in net result, significant
one-offs (goodwill, taxes) in Q2 14, Q3 14 net loss due to higher risk costs in RO and consumer loan law in HU
• Retail affected by HU consumer loan law and higher provisioning requirements in RO
• SME and CRE impacted by higher provisioning requirements in RO
• GCC and Other segments driven by intangibles write-downs in Q2 14
• Return on equity at -21.7% in Q3 14, following -37.6 % in Q2 14 and 4.2% in Q3 13
• Cash return on equity at -23.3% in Q3 14, following -6.9 % in Q2 14 and 2.6% in Q2 13
128
65
-58
1
5
4
51
-3
120
-52
3
57
1
9
-89
46
-66
127
-5
5
66
-80
-1
11
-228
44
-458
115
-26
3
Other -1.127
RS
HR
HU
SK
RO
CZ
AT/OA
AT/SB
AT/EBOe
Group -554
-1.033
54
0
-94
48
5
-72
-13
3
3
49
200
128
-4
9
-74
-7
5
8
-4
112
4
-86
39
-6
-78
-69
3
-33
-49
-279
IC
GCC -1.133
GM
OC
CRE
LC
AT/SB
ALM&LCC
SME
Retail
Group -554
-1.033
Q3 14 Q2 14 Q3 13
in EUR m in EUR m
Page
Presentation topics
26
• Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information
Page
Assets and liabilities: YTD overview – Loan/deposit ratio balanced at 100.3%
Assets (EUR bn)
27
Assets (in %)
Liabilities & equity (EUR bn)
Liabilities & equity (in %)
30/09/14
197.0
8.8 1.5
120.5
7.2
51.1
8.0
31/12/13
200.1
8.8 2.4
119.9
8.4
51.3
9.3
Other assets Intangibles Net loans Loans to banks Trading, financial assets Cash
30/09/14
197.0
13.7 7.1
31.2
120.1
16.5 8.5
31/12/13
200.1
14.8 6.0
33.1
122.4
17.3 6.5
Equity Other liabilities Debt securities Customer deposits Bank deposits Trading liabilities
100%
30/09/14
4.5% 0.7%
61.2%
3.6%
25.9%
4.1%
31/12/13
4.4% 1.2%
59.9%
4.2%
25.6%
4.6% 100%
30/09/14
6.9% 3.6%
15.8%
61.0%
8.4% 4.3%
31/12/13
7.4% 3.0%
16.6%
61.2%
8.6% 3.2%
Page
Assets and liabilities: customer loans by country of risk – Second consecutive quarter of increase in performing loans, NPLs decline
Net customer loans (EUR bn)
Performing loans (EUR bn)
28
Non-performing loans (EUR bn)
• Improved stability of net customer loans and rise in performing loans due to: • Increases in Austrian and Slovak loan books offset declines in Hungary, Romania and Croatia • Continued stable growth in Slovakia (yoy & ytd) and stability in the Czech Republic (ytd)
• YTD decline in NPL stock driven by lower gross inflows on group level and lower NPLs in Austria, Hungary and Romania
19.9
7.4 9.5
5.6 6.8 0.9 6.2
2.8
+0.4%
30/09/14
120.5
63.9
19.0
8.3 8.2
2.7
6.5 0.9 5.8 3.1
31/12/13
119.9
62.7
19.0
7.6 9.1
5.3 6.8 0.9 5.8
30/09/13
121.7
62.5
4.8
AT CZ SK RO HU HR RS Other EU Other
+1.3%
30/09/14
116.9
62.9
18.7
8.2 7.7
4.2 5.9 0.8 5.3
3.1
31/12/13
115.4
61.6
18.7
4.6 6.1 0.8 5.4 2.8
30/09/13
117.0
61.4
19.7
7.3 8.3
4.8 6.1 0.9 5.8
2.8
8.0 7.5
-7.1%
30/09/14
11.4
2.9
1.0 0.5
2.7
1.4
1.5 0.1
0.8 0.4
31/12/13
12.3
3.1
1.1 0.5
3.2
1.7
1.5 0.1
0.8 0.3
30/09/13
12.4
3.1
1.0 0.4
3.5
1.8
1.5 0.1 0.7 0.3
Page
Assets and liabilities: allowances for customer loans – Increase in allowances despite decline in NPL volume
Quarterly development (EUR m)
29
Highlights • Higher allocations due to booking of
additional provisions in Romania • Higher qoq level of use due to higher qoq
NPL sales (EUR 341.3m vs EUR 134.9m) • P&L unwinding impact = interest income
from impaired loans = EUR 159m ytd
46564498
827586 398
431380
506 614
1,026
31/03/14
7,655
+1.4%
30/09/14
7,859 15
1,263
30/06/14
58 41
7,836
30/09/13
1,046
7,669 35
78 7,747
31/12/13
14 55
Exchange-rate and other changes (+/-) Releases
Interest income from impaired loans Use Allocations
• Erste Group does not accrue interest on NPLs • When a loan turns NPL Erste Group estimates
the recoverable amount and the time frame of recovery
• The recoverable amount is discounted to present (at the effective interest rate of the underlying contract) and a provision reflecting the time value of money is created, ie a higher provision than without discounting
• The time value is released through NII until recovery realisation
• Total unwinding contribution to NII in Romania: 2013 = EUR 142m, 2014e = ~ EUR 80-100m
Unwinding impact explained
Page
Assets and liabilities: financial and trading assets * – LCR at comfortable 106% (YE 13: 107%)
By geography (EUR bn)
By debtor type
30
Liquidity buffer (EUR bn)
• Liquidity buffer is defined as unencumbered collateral plus cash
• Total liabilities are defined as total on balance sheet liabilities excluding total equity
• Increase as of Sep 14 mainly on broader scope of consolidation (driven by EBA requirements)
30/09/14
43.4
12.1
8.4
6.3
5.0 1.3 2.1
8.2
31/12/13
44.9
12.6
8.6
6.0
4.6 3.1
13.4
8.6
6.0
4.8 3.8 2.1
7.9
2.1
7.8
30/09/13
46.6 -3.3%
AT CZ SK
RO HU DE Other
100%
30/09/14
76.7%
12.1%
11.2%
31/12/13
75.0%
12.6%
12.3%
30/09/13
75.7%
12.4%
11.9%
Sovereign Banks Other
30/09/14
44.5
24.3%
31/12/13
39.8
21.5%
31/12/12
40.1
20.3%
31/12/11
34.6
17.8%
Liquidity buffer as % of total liabilities Liquidity buffer
* Excludes derivatives held for trading.
Page
Assets and liabilities: intangibles – Significant reduction in intangibles to only 14.6% of book value
Quarterly development of intangibles (EUR bn)
31
Highlights • Extraordinary intangible write-downs
amounted to EUR 931.7m (thereof goodwill of EUR 420.9m and value of customer relationships and brand in RO of EUR 489.8m)
• CZ and SK goodwill are carried in EUR • No goodwill related to Hungary • No goodwill related to Romania • Significantly reduced customer relationship
amortisation expenses booked in operating costs of the Group Corporate Center as of Q3 14
30/09/14
1.5
0.0 0.0 0.1
0.5
0.2 0.1
0.6
30/06/14
1.4
0.0 0.0 0.1
0.5
0.2 0.1
0.5
31/03/14
2.4
0.3
0.3
0.3
0.5
0.2 0.2
0.6
31/12/13
2.4
0.3
0.3
0.3
0.5
-40.3%
0.2
0.6
30/09/13
2.8
0.6
0.2
0.3
0.5
0.2
0.2
0.6
0.3
BCR goodwill Customer relationships Brand (mainly BCR)
CZ goodwill
SK goodwill Other goodwill Software
Page
Assets and liabilities: customer deposit funding – Decline in customer deposits driven by EUR 1.8bn Czech one-off
By customer type
By product type
32
Highlights • YTD decline driven mainly by:
• Final deconsolidation of Czech pension fund (EUR 1.8bn), one-off effect impacting retail
• Slight decline in EBOe due to successful deposit repricing with positive margin effect
• Increase in term deposits at the expense of overnight deposits due to interest rate environment
30/09/14
120.1
59.8
59.4
0.5 0.4
31/12/13
122.4
65.1
56.0
0.9 0.5
30/09/13
122.0
66.4
53.6
1.5 0.5
Overnight deposits Term deposits Repurchase agreements FV deposits
87.8
30/09/14
86.1
120.1
-1.9%
0.5 4.9
23.5 19.1
122.4
8.4
31/12/13
6.1 0.4 5.8
30/09/13
122.0
87.1
23.2
4.8 6.5 0.5
Households Non-financial corporations
FV deposits
Other financial corporations General governments
Page
Assets and liabilities: debt vs interbank funding – Decline in both issued debt and interbank funding
Debt securities issued (EUR bn)
Interbank deposits (EUR bn)
33
• YTD decline in issued debt driven by maturities of senior unsecured bonds, with no need to issue new debt due to excellent liquidity situation
• Excluding senior unsecured debt, stability in debt funding mix
• Decline in interbank deposits mainly due to slight balance sheet contraction
0.3 2.8
7.2
0.9 0.5
13.9
0.4 1.1 4.0
31/12/13
33.1
0.3 2.1
7.4
1.9 0.8
15.5
0.4 1.2 3.6
30/09/13
32.3
0.0
-5.8%
7.3
2.1 0.8
14.9
2.1
1.2 3.5
30/09/14
31.2
0.4
Other Public sector CBs Mortgage CBs Other CDs, name cert’s Certificates of deposit Senior unsec. bonds Hybrid issues Suppl. capital Sub debt
-4.7%
30/09/14
16.5
1.5
9.6
5.4
31/12/13
17.3
2.7
10.3
4.3
30/09/13
23.2
2.6
11.7
8.9 Repurchase agreements Term deposits Overnight deposits
Page
Assets and liabilities: ST vs LT funding – Limited LT funding needs, solid ST funding collateral coverage
Maturity profile of debt (EUR bn)
Wholesale funding outflow (<1y) v collateral coverage
34
• Continued emphasis on retail issues and private placements in very moderate funding plan
• Average maturity of issues during Q1-3 2014 amounts to 7.6 years and represents an extension of the current redemption profile
• Repurchase of supplementary capital in the amount of EUR 346.4m was successfully completed in October 2014
• Collateral coverage ratio increased due to significantly lower gross short term funding outflow volumes
• The volume of unencumbered eligible collateral has an increasing trend due to investments in central bank eligible assets only
• Short term wholesale funding is quoted on a gross basis – net short term wholesale funding (netting with short term interbank and central bank placements) unchanged
30/09/14
41.5
20.2
31/12/13
37.0
23.6
156.6%
31/12/12
33.9
20.5
165.1%
31/12/11
31.6
22.3
141.2%
31/12/10
27.9 24.0
116.3%
205.0%
Collateral coverage Unencumbered collateral (post haircut) Wholesale funding outflow (<1y)
2026+
1.4
2025
0.2
2024
0.6
2023
0.7
2022
2.5
2021
2.8
2020
1.5
2019
1.7
2018
2.5
2017
2.5
2016
3.8
2015
3.6
2014
0.7
Senior unsec. bonds Covered bonds
Capital exc Tier 1 Debt CEE subs
Page
Assets and liabilities: capital position – CET 1-ratio (fully loaded) at 10.5%, supported by minority capital uplift
Basel 2.5/Basel 3 capital (EUR bn)
Risk-weighted assets (EUR bn)
35
Basel 2.5/Basel 3 capital ratios
• Negative impact of EUR 0.6bn due to increase in net loss as of 1-9 14
• Increase in Tier 2 mainly due to higher IRB surplus
• Slight qoq increase in RWAs due to: • Model changes in AT (adapted LGDs) and
CZ, SK (adapted PDs): EUR 1.1bn • Exposure increase: EUR 0.7bn • Portfolio downgrades in AT, SK: EUR 0.2bn
• Basel 3 CET1 ratio (final) equalled 10.5% at 30 September 2014 (YE 2013: 10.8%) • Includes 60 bps capital uplift related primarily
to the inclusion of savings banks’ minority capital in CEE subsidiaries, as recently clarified with the Austrian Financial Market Supervisory Authority FMA; applicable immediately in fully loaded scenario only
30/06/14
16.1
11.5
0.0
4.7
0.0
31/03/14
15.9
11.3
0.0 4.5 0.0
31/12/13
16.0
11.2
0.4
4.2 0.2
30/09/13
15.7
10.8
0.4
4.3 0.2
30/09/14
15.7
10.9
0.0
4.9
0.0
CET1 AT1 Tier 2 Tier 3
30/06/14
98.0
84.9
10.4 2.7
31/03/14
102.2
87.9
11.0 3.3
31/12/13
97.9
84.9
10.2 2.9
30/09/13
99.0
86.6
9.3 3.0
30/09/14
100.6
87.2
10.7 2.7
Credit RWA Op risk Trading risk
30/06/14
16.5
%
11.7
%
11.7
%
31/03/14
15.5
%
11.1
%
11.1
%
31/12/13
16.3
%
11.8
%
11.4
%
30/09/13
15.8
%
11.2
%
10.9
%
30/09/14
10.8
%
10.8
%
15.7
%
Tier 1 Total capital CET1
Basel 2.5 Basel 3 Phased-in
Basel 2.5 Basel 3 Phased-in
Basel 2.5 Basel 3 Phased-in
Page
Presentation topics
36
• Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information
Page
Conclusion – Outlook • For Erste Group (consolidated):
• Risk costs of EUR 2.1-2.4 billion depending on booking of Hungarian consumer loan law impact (EUR 350-400m, EUR 360.8m of which have already been booked) in risk provisions or other operating result; any costs related to the unlikely, but still possible discounted conversion of Hungarian retail FX loans are not included in this guidance;
• A net loss for 2014 of EUR 1.4-1.6 billion; • A CET 1-ratio (fully loaded, based on current definitions) of comfortably above 10.0% at year-
end; • Strongly improved post-provision result and net profit (ROTE: 8-10%) in 2015, despite still
disproportionate banking levies.
• For the geographic segment Romania: a full normalisation of risk costs at 100-150 bps of average gross customer loans starting in 2015, accompanied by an accelerated NPL reduction already in 2014; a lower, but sustainable operating result due to a lower unwinding impact on net interest income;
• For the geographic segment Hungary: a gradual normalisation of risk costs to 150-200 bps (by 2016) of average gross customer loans based on the assumption that all government actions will be completed in 2014; a lower, but sustainable operating result due to lower net interest income
37
Page
Presentation topics
38
• Executive summary • Business environment • Business performance • Assets and liabilities • Outlook • Additional information
Page
Additional information: new segmentation – Business line and geographic view
Retail
Erste Group – Business segments
SME ALM &
Local CC (ALM&LCC)
Savings Banks
(AT/SB)
Large Corporates
(LC)
Commercial Real Estate
(CRE)
Other Corporate
(OC)
Group Markets
(GM)
Group Corporate
Center (GCC)
Intragroup Elimination
(IC)
Erste Group – Geographical segmentation
Austria Central and Eastern Europe Other
EBOe & Subsidiaries (AT/EBOe)
Savings Banks (AT/SB)
Other Austria
(AT/OA)
Czech Republic
(CZ)
Romania (RO)
Slovakia (SK)
Hungary (HU)
Croatia (HR)
Serbia (RS)
• Holding Business • Erste Group Immorent • Erste Asset Management
• Asset/Liability Management • Local Corporate Center
• Investment Banking • International Business
• Other Subsidiaries • Group bookings • Holding Corporate Center • Free Capital
• Holding ALM • Holding CC • Other Subsidiaries • Group bookings and
IC elimination • Free Capital
39
Page
Additional information: income statement – Year-to-date and quarterly view
40
in EUR million 1-9 13 1-9 14 YOY-Δ Q3 13 Q2 14 Q3 14 YOY-Δ QOQ-ΔNet interest income 3,515.8 3,369.6 -4.2% 1,175.9 1,119.7 1,126.0 -4.2% 0.6%Net fee and commission income 1,343.7 1,372.7 2.2% 449.5 454.9 465.8 3.6% 2.4%Dividend income 68.1 62.9 -7.6% 20.2 15.4 33.0 63.6% >100.0%Net trading and fair value result 184.2 166.5 -9.6% 80.7 87.7 28.4 -64.8% -67.6%Net result from equity method investments 19.7 11.6 -41.3% 7.5 8.3 0.1 -98.8% -99.0%Rental income from investment properties & other operating leases 131.8 134.1 1.8% 46.6 45.1 42.5 -8.8% -5.9%Personnel expenses -1,679.0 -1,607.0 -4.3% -552.5 -546.1 -515.0 -6.8% -5.7%Other administrative expenses -860.9 -821.9 -4.5% -283.9 -265.2 -264.2 -6.9% -0.4%Depreciation and amortisation -384.6 -354.8 -7.7% -127.8 -121.8 -108.0 -15.5% -11.3%Gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net 24.3 14.3 -41.0% 6.7 4.9 13.2 97.0% >100.0%Net impairment loss on financial assets not measured at fair value through profit or loss -1,245.0 -1,674.9 34.5% -460.7 -431.9 -878.8 90.7% >100.0%Other operating result -520.2 -1,628.6 >100.0% -142.6 -1,152.0 -356.8 >100.0% -69.0%
Levies on banking activities -247.1 -208.7 -15.6% -62.4 -54.3 -54.6 -12.6% 0.5%Pre-tax result from continuing operations 598.0 -955.5 n/a 219.6 -781.0 -414.0 n/a -47.0%Taxes on income -31.0 -433.9 >100.0% -56.0 -235.9 -98.3 75.4% -58.3%Net result for the period 567.0 -1,389.3 n/a 163.5 -1,016.9 -512.3 n/a -49.6%
Net result attributable to non-controlling interests 136.4 94.6 -30.6% 35.2 16.2 42.0 19.3% >100.0%Net result attributable to owners of the parent 430.6 -1,484.0 n/a 128.4 -1,033.1 -554.2 n/a -46.3%
Operating income 5,263.3 5,117.5 -2.8% 1,780.4 1,731.1 1,695.8 -4.7% -2.0%Operating expenses -2,924.4 -2,783.7 -4.8% -964.2 -933.1 -887.3 -8.0% -4.9%Operating result 2,338.9 2,333.8 -0.2% 816.2 798.0 808.5 -0.9% 1.3%
Year-to-date view Quarterly view
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Additional information: group balance sheet – Assets
41
in EUR million Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 YOY-Δ YTD-Δ QOQ-ΔCash and cash balances 11,852 9,301 10,373 7,267 8,010 -32.4% -13.9% 10.2%Financial assets - held for trading 14,219 12,283 13,610 12,954 11,641 -18.1% -5.2% -10.1%
Derivatives 6,930 6,342 6,482 6,480 7,611 9.8% 20.0% 17.5%Other trading assets 7,289 5,941 7,128 6,474 4,030 -44.7% -32.2% -37.8%
Financial assets - at fair value through profit or loss 575 529 512 456 444 -22.8% -16.1% -2.7%Financial assets - available for sale 20,569 20,678 20,956 21,923 21,940 6.7% 6.1% 0.1%Financial assets - held to maturity 18,190 17,779 17,191 16,955 17,026 -6.4% -4.2% 0.4%Loans and receivables to credit institutions 7,757 8,377 9,962 8,548 7,166 -7.6% -14.5% -16.2%Loans and receivables to customers 121,656 119,945 119,805 120,005 120,451 -1.0% 0.4% 0.4%Derivatives - hedge accounting 1,788 1,944 2,212 2,489 2,764 54.6% 42.2% 11.1%Changes in fair value of portfolio hedged items 0 0 0 0 0 n/a n/a n/aProperty and equipment 2,402 2,320 2,330 2,347 2,356 -1.9% 1.6% 0.4%Investment properties 941 951 1,035 975 952 1.2% 0.2% -2.4%Intangible assets 2,766 2,441 2,408 1,438 1,456 -47.4% -40.3% 1.3%Investments in associates and joint ventures 217 208 226 211 191 -12.3% -8.2% -9.8%Current tax assets 98 100 119 101 107 9.1% 6.4% 5.3%Deferred tax assets 852 719 672 411 461 -45.9% -35.9% 12.0%Assets held for sale 106 75 82 158 150 42.0% >100.0% -5.2%Other assets 4,096 2,471 2,409 2,158 1,859 -54.6% -24.8% -13.9%Total assets 208,084 200,118 203,903 198,398 196,973 -5.3% -1.6% -0.7%
Quarterly data Change
Page
Additional information: group balance sheet – Liabilities and equity
42
in EUR million Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 YOY-Δ YTD-Δ QOQ-ΔFinancial liabilities - held for trading 7,154 6,475 7,042 7,152 8,488 18.6% 31.1% 18.7%
Derivatives 6,706 6,087 6,341 6,347 7,563 12.8% 24.2% 19.2%Other trading liabilities 448 388 702 805 925 >100.0% >100.0% 14.8%
Financial liabilities - at fair value through profit or loss 2,377 2,339 2,275 2,278 2,161 -9.1% -7.6% -5.1%Deposits from banks 0 0 0 0 0 n/a n/a n/aDeposits from customers 498 460 449 435 363 -27.1% -21.0% -16.5%Debt securities issued 1,878 1,879 1,826 1,843 1,797 -4.3% -4.3% -2.5%Other financial liabilities 0 0 0 0 0 n/a n/a n/a
Financial liabilities measured at amortised cost 175,397 170,786 172,918 168,155 166,139 -5.3% -2.7% -1.2%Deposits from banks 23,163 17,299 24,421 18,803 16,483 -28.8% -4.7% -12.3%Deposits from customers 121,512 121,955 118,996 119,814 119,698 -1.5% -1.9% -0.1%Debt securities issued 30,425 31,245 29,217 29,190 29,414 -3.3% -5.9% 0.8%Other financial liabilities 298 286 285 348 545 83.1% 90.3% 56.3%
Derivatives - hedge accounting 615 644 681 724 755 22.8% 17.2% 4.3%Changes in fair value of portfolio hedged items 870 734 910 983 1,072 23.2% 46.1% 9.1%Provisions 1,474 1,448 1,491 1,607 1,822 23.6% 25.9% 13.4%Current tax liabilities 89 85 83 88 95 6.3% 12.3% 7.8%Deferred tax liabilities 200 169 182 132 199 -0.4% 17.7% 51.3%Liabilities associated with assets held for sale 0 0 0 0 0 n/a n/a n/aOther liabilities 4,613 2,654 3,251 3,199 2,590 -43.9% -2.4% -19.0%Total equity 15,294 14,785 15,069 14,080 13,652 -10.7% -7.7% -3.0%
Equity attributable to non-controlling interests 3,501 3,466 3,542 3,626 3,707 5.9% 7.0% 2.2%Equity attributable to owners of the parent 11,793 11,319 11,527 10,454 9,945 -15.7% -12.1% -4.9%
Total liabilities and equity 208,084 200,118 203,903 198,398 196,973 -5.3% -1.6% -0.7%
Quarterly data Change
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Additional information: gross customer loans – By risk category, by currency, by industry
Gross cust. loans by risk category (EUR bn)
43
Gross customer loans by currency (EUR bn) Gross customer loans by industry (EUR bn)
Gross customer loans by risk category in %
Gross customer loans by currency in %
30/06/14
127.7
96.3
16.0 3.4
12.0
31/03/14
127.5
95.1
16.7 3.4
12.2
31/12/13
127.7
95.3
16.6 3.6
12.3
30/09/13
129.5
95.7
17.5 3.9
12.4
30/09/14
128.3
97.3
16.1 3.5
11.4
Low risk
Management attention
Substandard
Non-performing
100%
30/06/14
75.4%
12.6% 2.6%
9.4%
31/03/14
74.6%
13.1% 2.7%
9.6%
31/12/13
74.6%
13.0% 2.8%
9.6%
30/09/13
73.9%
13.5% 3.0%
9.6%
30/09/14
75.9%
12.5% 2.7%
8.9%
10.7 1.7 1.6
30/09/13
129.5
89.5
25.2
11.2 1.9 1.6
30/09/14
128.3
90.6
24.1
9.9 1.8 2.0
30/06/14
127.7
90.0
24.2
10.1 1.8 1.7
24.1
127.5
89.9
24.1
10.2
31/03/14
1.6
31/12/13
127.7
89.6
1.7
EUR CEE-LCY CHF Other USD
70.5%
19.0% 7.9%
1.4% 1.3%
31/03/14
70.5%
18.9% 8.0% 1.3% 1.2%
31/12/13
70.2%
18.9% 8.4%
1.3% 1.3%
30/09/13
69.1%
30/06/14
8.7% 1.5% 1.2%
30/09/14
19.5% 18.8% 7.7%
1.4% 1.5%
70.6%
9.5
30/06/14
8.3
6.5 5.9 5.8 4.5
3.7 3.6
8.3
31/03/14
127.5
51.3
19.8
9.5
8.3
6.7 5.8 5.8 4.8
3.8 3.5 8.2
31/12/13
127.7
51.3
20.0
9.3
8.4
6.7 6.1 5.6 4.7
3.8 3.5 8.3
30/09/13
129.5
51.9
20.2
9.6
8.6
7.1 6.0 5.7 4.8
3.8 3.7
8.1
30/09/14
128.3
52.2
20.3
9.2
8.1
6.3 5.8 5.8
127.7
51.7
19.9
8.5
4.7
3.6 3.6
Households
Real estate
Manufacturing
Trade
Construction
Public admin
Financial inst.
Services
Tourism
Transport & comms
Other
Page
• Leading retail and corporate bank in 7 geographically connected countries
• Favourable mix of mature & emerging markets with low penetration rates
• Potential for cross selling and organic growth in CEE
Additional information: footprint – Customer banking in Austria and the eastern part of the EU
Erste Group footprint Highlights
44
Direct presence
Indirect presence
Customers : 0.9m
Hungary
Employees : 2,798
Branches: 128
Customers : 3.0m
Romania
Employees : 7,093
Branches: 551
Customers : 0.3m
Serbia
Employees : 961
Branches: 68
Customers : 1.1m
Croatia
Employees : 2,746
Branches: 159
Customers: 5.1m
Czech Republic
Employees : 10,443
Branches : 645
Customers: 2.4m
Slovakia
Employees : 4,252
Branches: 293
Customers: 3.4m
Austria
Employees: 15,576
Branches: 965
Page
Additional information: strategy – A real customer need is the reason for all business
Retail banking
Corporate banking
Capital markets
Public sector
Interbank business
Customer banking in Central and Eastern Europe
Eastern part of EU Focus on CEE, limited exposure to other Europe
Focus on local currency mortgage and consumer loans funded by local deposits FX loans only in EUR for clients with EUR income (or equivalent) and where funded by local FX deposits (RO, HR & RS) Savings products, asset management and pension products Potential future expansion into Poland
Focus on customer business, incl. customer-based trading activities In addition to core markets, presences in Poland, Turkey, Germany and London with institutional client focus and selected product mix Building debt and equity capital markets in CEE
Financing sovereigns and municipalities with focus on infrastructure development in core markets Any sovereign holdings are only held for market-making, liquidity or balance sheet management reasons
Large, local corporate and SME banking Advisory services, with focus on providing access to capital markets and corporate finance Real estate business that goes beyond financing Potential future expansion into Poland
Focus on banks that operate in the core markets Any bank exposure is only held for liquidity or balance sheet management reasons or to support client business
45
Page
Additional information: shareholder structure – Total number of shares: 429,800,000
By investor By region
46
* Including Sparkassen 1.1%, Sparkassen Beteiligungs GmbH & Co KG and other syndiate members
12.7%
7.8% 4.1%
1.0%
9.7%
4.0%
51.6%
9.1%
Erste Stiftung, direct Erste Stiftung, indirect * UNIQA Versicherungsverein Privatstiftung Employess Retail investors
Harbor International Fund CaixaBank
Institutional investors
2.5%
22.6%
41.6%
7.8%
25.5%
Continental Europe North America Austria UK & Ireland Other
Page
Investor relations details
• Erste Group Bank AG, Milchgasse 1 (mezzanine floor), 1010 Vienna Fax : +43 (0)5 0100-13112 E-mail: [email protected] Internet: http://www.erstegroup.com/investorrelations
http://twitter.com/ErsteGroupIR http://www.slideshare.net/Erste_Group Erste Group IR App for iPad, iPhone and Android http://www.erstegroup.com/de/Investoren/IR_App
Reuters: ERST.VI Bloomberg: EBS AV Datastream: O:ERS ISIN: AT0000652011
• Contacts Thomas Sommerauer Tel: +43 (0)5 0100 17326 e-mail: [email protected] Peter Makray Tel: +43 (0)5 0100 16878 e-mail: [email protected] Simone Pilz Tel: +43 (0)5 0100 13036 e-mail: [email protected] Gerald Krames Tel: +43 (0)5 0100 12751 e-mail: [email protected]
47