3rd Capital Markets Day Prague, 16 September 2005 Rainer ... · PDF file> Prague, 16 September...

> Macro and demographic trends

> 3rd Capital Markets Day

> Prague, 16 September 2005

> Rainer MünzHead of Research & Development

2

CMD Prague 200516 Sept 05

Macro and demographic trends

> Agenda

1. The big picture» Demographic trends» Macroeconomic trends

2. Long-term growth potentials» Growth paths» Banking of the unbanked» Credit products» Savings and wealth management products

3. Appendix» Macroeconomic forecasts by country

3



> We serve a region of close to 50 million

Home market population 2005: 48.5 million *

CZ

SK

AHU

SL CR

SR

21%

21%

17%

11%

17%

4%

9%*) Without Kosovo

4



> Our addressable market will stay flat

*) Without Kosovo

UN native population forecast (medium variant) *

49 48 48 47 47

0

10

20

30

40

50

60

2005 2010 2015 2020 2025

in m

illio

n

Austria Croatia Hungary Serbia & Mon Slovakia Slovenia Czech Republic

5



> Our clients will grow older

UN median age forecast 2005 - 2025 (medium variant)

30

35

40

45

50

55

2005 2010 2015 2020 2025

Austria Croatia Hungary Ser & Mon Slovakia Czech Republic

6



> Our markets are the fastest growing in Europe

Source: Eurostat

Real growth in Europe

2.4%2.0%

3.9%3.5%

3.3%3.7%

4.2%

3.9%

0.7%

1.2%0.8%

2.0%

3.4%2.7%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

1998 1999 2000 2001 2002 2003 2004

CE home market ex Serbia EU-15 Austria

7



> Our customers will quickly get wealthier

Source: Eurostat, Erste Bank

Trend GDP/capita forecasts

7,549

20,713

2,370

9,813

28,878

48,125

1,000

10,000

100,000

2000 2005 2010 2015 2020 2025

GD

P/ca

pita

(200

4 pr

ices

, log

sca

le)

CE home market ex Serbia Serbia EU-15 Austria

Trend forecast*Actual figures

*) EU-15/AUT diff: 50 bpsEU-15/CEE diff: 300 bpsEU-15/Serbia diff: 500 bps

8



> Productivity outstrips employment growth (1)

Source: Eurostat

CZ - Productivity vs employment

67.365.6 65.0 65.0 65.4 64.7 64.2

57.4

59.2 59.260.4 60.9

62.764.0

52

54

56

58

60

62

64

66

68

70

1998 1999 2000 2001 2002 2003 2004

Employment rateLabour productivity

9



> Productivity outstrips employment growth (2)

HU - Productivity vs employment

53.755.6 56.3 56.2 56.2

57.0 56.8

60.6 60.1 60.8

64.5

66.9 67.3

69.3

50

52

54

56

58

60

62

64

66

68

70

1998 1999 2000 2001 2002 2003 2004

Employment rateLabour productivity

Source: Eurostat

10



> Agenda



3. Appendix» Macroeconomic forecasts by country» Population forecasts by country

11



> CEE banking development stages

Infancy Growth Maturity

WIN/WIN WIN/LOSE

Romania,Bulgaria,Serbia,Ukraine

New EU members:HU, CZ, SL, SK…

Volatile growthEarly-stage, strategic

positioning

EU-15, Austria

Stable growthConsolidating position

for growth

5 – 10y 15 – 20y

GD

P/ca

pita

(dis

posa

ble

inco

me)

Time

12



> CEE growth paths

Wave 1: Savings, payment transfers

Wave 2: Current accounts, debit cards, mortgages

Wave 3: Credit cards, consumer finance

Wave 4: Wealth management – asset management, pensions, insurance

GD

P/ca

pita

(dis

posa

ble

inco

me)

Time

€2k

€5k

€7k

€10k

Early market positioning tobenefit from initial growth and

consolidate later

Wave 1

Wave 2

Wave 3

Wave 4

13



> Growth potential – Banking of the unbanked

Source: Fessel GfK, FMDS

2004 share of population (15+) with any bank account

93

83

6561 57

42

2832

0

10

20

30

40

50

60

70

80

90

100

A HR CZ SK HU SR RO UKR

in %

14



> Erste Bank client shares

Source: Fessel GfK, FMDS; Erste Bank

Cumulative client shares

54%

45%

27%

12% 10%

2%0%

10%

20%

30%

40%

50%

60%

CeskaSporitelna

SlovenskaSporitelna

Erste Bank &SPK AUT

Erste BankHU

Erste BankCRO

Novosadska

15



> Growth potential – Payment cards


2004 share of population (15+) using a bank card

76

59

5146 44

1117

24

0

10

20

30

40

50

60

70

80

AT HR CZ HU SK SR RO UKR

in %

16



> Growth potential – Mortgages

Source: EMF (Hypostat), EBRD

2003 mortgage penetration (mortgage/GDP)

46

26

8 85

1 20

5

10

15

20

25

30

35

40

45

50

EU-15 AUT SK HU CZ SR RO

in %

17



> Growth potential – Credit cards

Source: European Central Bank

Credit cards per 1,000 inhabitants as at 2003

580

265

21

92 87

120

100

200

300

400

500

600

700

EU-15 Austria Czech R Hungary Slovakia Romania

18



> Growth potential – Savings and/or asset products


2004 share of population (15+) with savings/asset product

73

30 28

20

8 103

0

10

20

30

40

50

60

70

80

A CZ HR HU SR RO UKR

in %

19



> Growth potential – Fund management 1

Source: EFAMA, Eurostat

FUM vs GDP/capita in Spain - Growing in tandem

1 2 4 5 723

38

64 70 78

114

162

204 206

183 178 171

202

233

0

50

100

150

200

250

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

in E

UR

bn

0

5

10

15

20

25

in E

UR

thou

sand

FUM Spain GDP/Capita

20



> Growth potential – Fund management 2

Source: VÖIG, Eurostat

FUM vs GDP/capita in Austria - Growing in tandem

3 5 9 11 11 12 12 16 1924

3141

56

8092

99 103111

125

0

20

40

60

80

100

120

140

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

in E

UR

bn

0

5

10

15

20

25

30

35

in E

UR

thou

sand

FUM Austria GDP/Capita

2004 level ofHungary and theCzech Republic

2004 level ofSlovakia and

Croatia

Austria EUaccession

21



> Agenda



3. Appendix» Macroeconomic forecasts by country

22



> Czech Republic – Macro outlook

Economic outlook» Strong and healthy growth on the back of

strong exports; positive growth outlookremains

» Low demand pressures, falling food andimport prices

» Reasonable fiscal discipline, although basedon current fiscal planning EMU entry not likelybefore 2010

» Elections in 2006

Interest rate & FX outlook» Inflation to stay around 2% (below CNB‘s

target), although National Bank has recentlyrevised inflation forecast upwards

» Flexible policy led to repo rate cuts by 75bpsin 1H05

» Further cuts unlikely, unless ECB cuts or CZKmoves below 29.5 consistently

» Currency: strong growth, budget in black vs.dividend outflow => stable or strong CZK

CZ - ST interest rates vs inflation

3.6

2.3 2.31.9 2.0

2.53.0

0.00.51.01.52.02.53.03.54.0

2002 2003 2004 2005 2006 2007 2008

in %

0.0

0.5

1.0

1.5

2.0

2.5

3.0

in %

3M interest rate (average) Inflation (average)

CZ - GDP/capita vs GDP growth

7.7 7.88.7

9.410.2

11.112.0

0

2

4

6

8

10

12

14

2002 2003 2004 2005 2006 2007 2008

in E

UR

thou

sand

0.00.51.01.52.02.53.03.54.04.55.0

in %

GDP/Capita Real GDP growth

23



> Slovakia – Macro outlook

Economic outlook» EU growth and reform star» Success driven by very successful structural

reforms: flat tax, second pension pillar, liberallabour laws, etc.

» In contrast to many CE countries growth ledby domestic demand

» Strong investments, slow-down of net exports(one company), pick-up in consumer goods

» Highly successful fiscal policies

Interest rate & FX outlook» Limited inflationary pressures (mainly related

to wage growth)» Ambitious inflation targets => further FX

appreciation will be needed» National Bank slashed repo rate by 100bps in

Q2 05 on the back of currency strength;another cut possible if SKK sub 38,0consistently

SK - GDP/capita vs GDP growth

4.8 5.46.2

7.17.9

8.79.5

0

2

4

6

8

10

12

2002 2003 2004 2005 2006 2007 2008

in E

UR

thou

sand

0.01.02.03.04.05.06.07.08.0

in %

GDP/capita Real GDP growth

SK - ST interest rates vs inflation

7.5

6.2

4.7

2.73.4

4.0 4.0

0.01.02.03.04.05.06.07.08.0

2002 2003 2004 2005 2006 2007 2008

in %

0.01.02.03.04.05.06.07.08.09.0

in %

3M interest rate (average) Inflation (average)

24



> Hungary – Macro outlook

Economic outlook» Economy has picked up momentum in Q2 05,

on track to grow between 3.5% and 4% in 05and 06

» Budget deficit to stay above 5% in 05 andremain key challenge

» Elections scheduled for 2006» Imbalances (budget deficit and current

account deficit) will require limitinggovernment investments

Interest rate & FX outlook» Inflation environment very benign, expect

stability around 3.5%» Currency: after turmoil in 03, credibility slowly

returning» National Bank remains in easing mode:

another 25-50bps rate cuts expected by endof 05

» Base rate likely to be below 5% in 2006

HU - ST interest rates vs inflation

8.98.2

11.1

7.46.7

6.0 5.8

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2002 2003 2004 2005 2006 2007 2008

in %

012345678

in %

3M interest rate (average) (%) Inflation (average) (%)

HU - GDP/capita vs GDP growth

6.8 7.27.9

8.69.2 9.8

10.4

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2002 2003 2004 2005 2006 2007 2008

in E

UR

thou

sand

0

1

2

3

4

5

in %

GDP/capita Real GDP (%, y/y)

25



> Croatia – Macro outlook

Economic outlook» Economy on solid growth track, with tourism

as the major growth driver» Growth will decelerate in 05, but is expected

to gain momentum thereafter on the back ofprivatisations, structural reforms and growingexports

» Fiscal deficit and external debt reductionremain a challenge

» EU accession not likely before 2010

Interest rate & FX outlook» Inflation is expected to remain tame; any

increases driven by administrative prices» Interest rates expected to experience

moderate downward pressure» Currency pegged to EUR; expected to remain

stable

CRO - ST interest rates vs inflation

4.55.5

6.8

5.5 5.2 4.8 4.8

0.01.02.03.04.05.06.07.08.0

2002 2003 2004 2005 2006 2007 2008

in %

0.00.51.01.52.02.53.03.54.0

in %

3M interest rate (average) Inflation (average) (%)

CRO - GDP/capita vs GDP growth

5.5 5.76.3 6.7 7.1

7.58.0

0.01.02.03.04.05.06.07.08.09.0

2002 2003 2004 2005 2006 2007 2008

in E

UR

thou

sand

0.0

1.0

2.0

3.0

4.0

5.0

6.0

in %

GDP/capita Real GDP (% y/y)

26



> Serbia – Macro outlook

Economic outlook» Solid real growth rates» Fiscal consolidation, budget surplus expected

in 2005» Pick-up in privatisation, especially in the

banking sector –> large part of currentaccount deficit covered by FDI inflows

» Political risks due to narrow majority of rulingcoalition

» Possible start of Stabilisation and AssociationAgreement negotiations with EU should havepositive impact, as should IMF programmeimplementation

Interest rate & FX outlook» Persistently high inflation; National Bank

target of 10% by end of 2005 seems unlikely» No real appreciation of CSD in 2005» Interest rates will remain high until further

economic progress is made

SR - GDP/capita vs GDP growth

1.92.1 2.2 2.3 2.4 2.5

2.6

0

1

1

2

2

3

3

2002 2003 2004 2005 2006 2007 2008

in E

UR

thou

sand

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%

in %

GDP/capita Real GDP (% y/y)

SR - ST interest rates vs inflation

32.2

27.129.0 30.0

25.0

NANA0

5

10

15

20

25

30

35

2002 2003 2004 2005 2006 2007 2008

in %

0%

5%

10%

15%

20%

25%

in %

Money market interest rate (average) Inflation (average) (%)

3rd Capital Markets Day Prague, 16 September 2005 Rainer ... · PDF file> Prague, 16 September...

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