Erste Group Bank AG Annual General Meeting 2016 presentation
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Transcript of Erste Group Bank AG Annual General Meeting 2016 presentation
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23rd Annual General Meeting Erste Group Bank AG 11 May 2016 Austria Center Vienna
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Friedrich Rödler Chairman of the supervisory board
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First item on the agenda
Report on the financial year 2015
3
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Report on the financial year 2015 of Erste Group Bank AG (consolidated)
Andreas Treichl CEO Erste Group
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Disclaimer – Cautionary note regarding forward-looking statements
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• 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.
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Operating environment – Strong economic development in Erste Group‘s markets
Real GDP growth (in %)
Domestic demand contribution to GDP growth (in %)
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• CEE economies grew faster than the euro zone in 2015 (euro zone GDP grew by 1.5% yoy in 2015) • Domestic demand remained significant growth driver in 2015 • Insignificant contribution of exports to GDP growth in 2015
CZ
2.5
4.3
AT
1.5 0.9
1.6
HR
1.5
HU
2.2
2.9
RO
4.1 3.8
SK
3.5 3.6
HR
1.1 1.1
HU
1.7 1.8
RO
4.8 5.3
SK
2.2
4.7
CZ
1.6
4.6
AT
1.3 0.7
2016 2015
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Operating environment – Solid public finances in Erste Group‘s markets
General government balance (in % of GDP)
Public debt (in % of GDP)
7
• General government balance in all markets except Croatia within Maastricht limit • Public debt in most markets below 60% Maastricht limit; Austria, Hungary and Croatia are exceptions
HR
-3.2 -3.3
HU
-2.0 -1.9
RO
-3.0
-1.5
SK
-2.5
-3.0
CZ
-1.1 -1.4
AT
-1.4
-1.9
8775
39
53
41
87 88
75
41
53
40
85
SK HR RO CZ AT HU
2015 2016
Maastricht limit: -3%
Maastricht limit: 60%
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Business environment – Historic low interest rate environment poses challenges
Austria
8
Czech Republic Romania
Slovakia Hungary Croatia
• ECB cut discount rate to 0% in March 16; maintains expansionary monetary policy stance
• National bank maintains ultra-low interest rates since Nov 2012 at 0.05%
• Central bank cut policy rate to historic low of 1.75% in May 2015
• As part of euro zone ECB rates are applicable in SK
• Base rate was cut to historic low of 1.05% in April 2016
• Central bank maintains discount rate at 7.0% since mid-2011
2014 2015
1.11%
0.10%
1.48%
0.21%
10-year Gov 3m Interbank
2014 2015
1.11%
0.33%
1.55%
0.36%
2014 2015
4.03%
1.70%
4.57%
2.29%
2014 2015
1.38%
0.10%
1.93%
0.21%
2014 2015
4.12%
2.01%
4.80%
2.41%
2014 2015
0.86% 0.73%
Source: Bloomberg.
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Business performance: customer loans and deposits – Continued loan growth, stable deposit base, balanced business
Customer loans (net)
Loan/deposit ratio
9
0.3 0.3
RS 0.7 0.5
HR 6.0 6.1
HU 3.1 3.6
SK 9.3 8.0
RO 7.2 7.2
CZ 19.7
Other
18.0
AT/OA 12.1 11.7
AT/SB 38.0 37.0
AT/EBOe 29.5 28.3
Group 125.9 120.8
in EUR bn
31/12/15 31/12/14
Customer deposits
107.3% 94.5%
111.3% 122.7%
77.9% 90.8% 87.3% 83.1%
75.9% 81.4%
74.6% 73.5%
326.9% 294.2%
100.5% 102.6%
97.4% 94.6% 98.4% 98.6%
-0.5 0.1 0.6 0.6
5.4 5.0 4.0 3.9
10.7 9.7 9.4 8.9
26.4 24.5
3.7 4.0
37.9 36.1
30.3 29.9
127.9 122.6
in EUR bn Not meaningful
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Business performance: operating revenues and expenses – Pressure on revenues, slight increase in costs
Operating revenues Operating expenses
10
-1.5%
2015
6,772 255 210
1,862
4,445
2014
6,878 271 242
1,870
4,495
Other income Net trading and fair value result Net fee and commission income Net interest income
466
+2.2%
2015
3,869 445
1,179
2,245
2014
3,787
1,137
2,184
Depreciation and amortisation Other administrative expenses Personnel expenses
in EUR m in EUR m
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Business performance: operating result and cost/income ratio – Operating result slips year-on-year
Geographic segments
Performance summary
• Positive operating performance in: • EB Oesterreich • Savings Banks • Other Austria (Large Corporates & Commercial
Real Estate)
• Pressure on operating performance in: • Hungary due to lower volumes driven by
government legislation • Romania due to NPL disposals and lower
performing volumes • Czech Republic due to low interest rate
environment & card fee cap
11
Other -104 -53
RS 19 12
HR 215 216
HU 157 267
SK 334 327
RO 340 400
CZ 751 787
AT/OA 323 298
AT/SB 469 447
AT/EBOe 400 390
Group 2,903 3,091
66.9% 76.4%
46.6% 45.9%
53.5% 39.7% 44.3% 44.9% 50.1%
45.3% 47.6% 45.7%
51.6% 52.0%
67.3% 67.6%
61.6% 61.8%
57.1% 55.1%
in EUR m
2015 2014
Not meaningful
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Business performance: risk costs – Risk costs fall in almost all segments
Geographic segments
Performance summary
• Healthy or improving credit risk environment across the board: • Romania • Austria, supported by all three subsegments • Hungary, improving but still elevated
• Relatively high risk costs in:
• Croatia, due to challenging economic environment
12
77
16
51
85
11
58
97
79
84
59
Other
RS
HR 167 155
HU 106 152
SK
RO -16 924
CZ 135
AT/OA 269
AT/SB 199
AT/EBOe 104
Group 729 2,084
3.05% 0.68% 0.64%
-0.18%
1.78% 2.73% 2.44% 2.28% 2.37%
0.51% 9.39%
0.73% 0.61%
2.15% 0.21% 0.50% 0.20% 0.36% 0.56%
1.63%
in EUR m
2015 2014
Not meaningful
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Business performance: asset quality in 2015 – Strong asset quality improvement driven by Hungary, Romania and Croatia
NPL volume
NPL coverage (exc collateral)
13
60
83
41
75
Other
RS
HR 1,032 1,262
HU 655 1,157
SK 540 422
RO 1,712 2,138
CZ 834 821
AT/OA 1,345 1,483
AT/SB 2,219 2,441
AT/EBOe 861 1,012
Group 9,314 10,878
13.5% 15.2%
10.5% 14.1% 15.3%
18.4% 18.7%
26.8% 5.6% 5.0%
20.2% 23.7%
4.1% 4.4%
10.5% 11.8%
5.6% 6.3%
2.9% 3.5%
7.1% 8.5%
in EUR m
31/12/15 31/12/14
NPL ratio
99.8% 75.6%
88.4% 75.8%
67.4% 60.4% 59.0% 64.0% 65.7%
82.4% 77.4% 82.2%
72.4% 79.7%
53.2% 58.1% 57.7%
64.0% 62.6%
68.9% 64.5% 68.9%
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Business performance: other result – Improvement in Other result driven by lower one-offs
Other result *
Levies on banking activities
14
• Improvement in other result was biggest contributor to bottom line turn around after risk costs, in 2015
• Lower banking levies in Hungary and Slovakia support year-on-year decrease in banking levy charge
-535
2015 2014
-1,735 -236
-256
2015 2014
in EUR m in EUR m
*) Includes other operating result and gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net.
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Business performance: pre-tax result and taxes on income – Massive turn-around in pre-tax result
Pre-tax result
Taxes on income
15
• Low risk costs and improved other result drive pre-tax result into positive territory
• Tax rate is at 22.2% in 2015
-728
2015
1,639
2014
-364
-521
2015 2014
in EUR m in EUR m
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Business performance: net result and dividend – Dividend reinstated at EUR 0.5 per share
Net result
Dividend
16
• Payout ratio equates 22.2%
2015
968
2014
-1,383
2015
0.5
2014
0.0
in EUR m in EUR
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Business performance: regulatory capital position – Capital build continues at fast pace in 2015, resulting in 12.3% in CET1 ratio
Regulatory capital (EUR bn)
Risk-weighted assets (EUR bn)
17
Capital ratios (in %)
15.8
5.2
2015
17.6
5.4
12.1
2014
10.6
Tier 2 CET1
2015
98.3 2.8
10.8
84.7
2014
100.6 3.2 10.3
87.1
Trading risk Op risk Credit RWA
2015
17.9
12.3
12.3
2014
15.7
10.6
10.6
CET1 Tier 1 Total capital
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Q1 16 performance summary – Upfront booking of deposit insurance fees, lower revenues weigh on operating result
Operating revenues
Operating expenses
18
Operating result
461 443
-3.5%
1-3 16
1,629 50 44
1,092
1-3 15
1,689 57 72
1,099
Other income Net trading and fair value result Net fee and commission income Net interest income
554 565
281 334
+6.4%
1-3 16
1,009 110
1-3 15
948 113
Depreciation and amortisation Other administrative expenses Personnel expenses
in EUR m in EUR m in EUR m
620741
-16.3%
1-3 16 1-3 15
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Q1 16 performance summary – Net profit advances by 22% in Q1 16
Risk costs
Other result
19
Net result
• Risk costs plummet due to Other Austria, Romania, Hungary and Croatia
• Other result includes full-year 2016 resolution fund contribution of EUR 64.7m
• Net profit rises resulting in return on equity of 9.8%
56
183-69.2%
1-3 16 1-3 15
-137-143
1-3 16 1-3 15
in EUR m in EUR m in EUR m
275226
+21.7%
1-3 16 1-3 15
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Q1 16 performance summary – Volume growth paired with continued asset quality improvement
Customer loans (net)
Customer deposits
20
NPL ratio
• Customer loan growth mainly driven by the Czech Republic
• Continued inflow of customer deposits despite low interest rate environment
• Across the board improvement in asset quality
31/03/16 31/12/15
125,897 126,740
+0.7%
128,640
+0.5%
127,946
31/12/15 31/03/16
in EUR m in EUR m
6.7%
31/03/16
7.1%
31/12/15
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Share price performance – Improving performance increasingly reflected in share price, up 50.3% in 2015
21
15
20
25
30
35
30/1
2/14
30/0
1/15
28/0
2/15
31/0
3/15
30/0
4/15
31/0
5/15
30/0
6/15
31/0
7/15
31/0
8/15
30/0
9/15
31/1
0/15
30/1
1/15
31/1
2/15
31/0
1/16
29/0
2/16
31/0
3/16
30/0
4/16
in E
UR
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Conclusion – Outlook 2016
• CEE economic environment anticipated to be conducive to credit expansion • Real GDP growth of between 1.5-4.1% expected in 2016 in all major CEE markets, including Austria • Real GDP growth to be driven by solid domestic demand
• Return on tangible equity (ROTE) expected at about 10-11% in 2016 underpinning continued dividend payout • Support factors: continued loan growth; further asset quality improvement amid a benign risk
environment; positive one-off related to VISA sale in the amount of about EUR 127m pre-tax • Headwinds: persistent low interest rate environment affecting group operating income, primarily NII;
lower operating results in Hungary (lower volumes) and Romania (following asset re-pricing); banking levies (total of banking taxes, FTT, resolution fund and deposit insurance fund contributions) expected at about EUR 360m pre-tax in 2016
• Risks to guidance • Geopolitical risks and global economic risks • Impact from negative interest rates • Consumer protection initiatives
22
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Thank you for your attention!
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Agenda Items
Friedrich Rödler Chairman of the supervisory board
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Second item on the agenda
Appropriation of the profit
25
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Third item on the agenda
Grant of discharge to the members of the management board
26
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Fourth item on the agenda
Grant of discharge to the members of the supervisory board
27
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Fifth item on the agenda
Resolution on the remuneration of the members of the supervisory board
28
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Sixth item on the agenda
Appointment of an additional auditor
29
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Seventh item on the agenda
Amendments of the articles of association
30
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23rd Annual General Meeting Erste Group Bank AG
Q & A
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23rd Annual General Meeting Erste Group Bank AG
Resolutions
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Second item on the agenda
Appropriation of the profit
33
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Third item on the agenda
Grant of discharge to the members of the management board
34
Page
Fourth item on the agenda
Grant of discharge to the members of the supervisory board
35
Page
Fifth item on the agenda
Resolution on the remuneration of the members of the supervisory board
36
Page
Sixth item on the agenda
Appointment of an additional auditor
37
Page
Seventh item on the agenda
Amendments of the articles of association
38
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23rd Annual General Meeting Erste Group Bank AG
Thank you for your active participation!