Erste Group 2017 results: Net profit of EUR 1.31bn (ROTE 11.5%) prompts increased dividend proposal of EUR 1.20 per share Page 1
Business environment Strong macroeconomic development in Erste Group's markets 2017 2018 Real GDP growth (in %) Unemployment rate (EOP , in %) 13.2 8.2 11.3 7.5 11.6 7.0 10.1 euro area 2018 5.5 5.3 5.0 4.9 4.7 4.4 4.2 4.0 4.0 3.9 3.5 3.4 3.4 3.0 3.0 2.9 2.9 2.8 2.8 2.8 1.8 AT CZ SK RO HU HR RS AT CZ SK RO HU HR RS In 2018, all CEE countries seen above average GDP growth for euro area Domestic demand expected to remain the main driver of economic growth, also in 2018 Investment in automation needed to cope with labour shortages Source: Erste Group Research Page 2
Business environment Healthy public finances in Erste Group's markets 2017 2018 General government balance (in % of GDP) Public debt (in % of GDP) 81 Maastricht 79 79 1.2 75 limit: 60% 72 71 61.5 65.6 0.3 0.0 0.2 0.1 51 50 -0.5 Maastricht -0.8 36 36 35 -1.0 limit: -3% -1.0 33 -1.5 -2.0 -2.5 -3.0 -3.4 AT CZ SK RO HU HR RS AT CZ SK RO HU HR RS Budget deficits within Maastricht limit in all markets, with the exception of Romania Public debt in major CEE markets below 60% Maastricht limit; Austria, Hungary and Croatia are exceptions, but show a positive trend Source: Erste Group Research Page 3
Business environment: CZ further increases key policy rate to 75bps in Feb 2018 10YR gov (%) 3M Interbank (%) Source: Bloomberg Austria Czech Republic Romania 0.58 1.63 0.63 3.92 4.36 0.53 0.36 1.02 3.31 3.90 1.04 0.41 0.73 -0.26 0.41 0.65 1.76 -0.33 -0.33 0.95 -0.33 0.29 0.40 0.58 2016 2017 Q3 17 Q4 17 2016 2017 Q3 17 Q4 17 2016 2017 Q3 17 Q4 17 National bank decided to lift its benchmark rate Central bank increases policy rate from historic ECB cut discount rate to zero in March 16 from historic low of 0.05% to 0.75% in hikes low of 1.75% to 2.25% in hikes in January and Maintains expansionary monetary policystance between August 2017 and February 2018 February 2018 Slovakia Hungary Croatia 0.94 3.14 2.96 0.87 0.54 0.83 2.97 0.36 0.33 0.60 2.29 0.37 0.99 -0.26 -0.33 -0.33 -0.33 0.13 0.03 0.14 2016 2017 Q3 17 Q4 17 2016 2017 Q3 17 Q4 17 2016 2017 Q3 17 Q4 17 As part of euro zone, ECB rates are National bank cut the benchmark interest rate Central bank maintains discount rate at 3.0% applicable in SK to record low of 0.9% in May 2016 since 2015 Page 4
Business performance Strong growth in loans of 6.8% and exceptional inflow of customer deposits, up 9.4% 31.12.16 31.12.17 Customer loans (net, EUR bn) Customer deposits (EUR bn) Loan/deposit ratio (%) 130.7 138.0 94.7 Group 139.5 92.4 151.0 30.6 31.8 96.1 AT/EBOe 31.4 33.7 93.2 39.5 39.9 98.8 AT/SB 41.1 96.6 42.6 21.4 29.2 73.2 CZ 72.3 25.0 34.6 7.1 10.6 66.8 RO 63.7 7.2 11.3 10.2 11.4 89.7 SK 93.6 11.7 12.5 3.2 4.6 70.4 HU 3.6 5.0 72.1 5.8 5.7 100.8 HR 97.5 5.8 6.0 0.8 0.7 117.9 RS 0.9 0.8 110.1 Page 5
Business performance Net inflow of EUR 6 bn in retail deposits, EUR 2.4 bn in investment products in 2017 Investment products vs Customer Deposits volumes (% share as per end-2017) 38% 60% 70% 77% 82% 86% 92% 100% 62% 40% 30% 23% 18% 14% 8% Ø AT CZ RO SK HU HR RS Customer deposits Managed investment products Page 6
Business performance Strong retail loan growth of 10.4% yoy 2017 Retail Highlights NEWLY-GRANTED MORTGAGES OVERALL MORTGAGE VOLUME EUR 7.5 bn EUR 41.2 bn to nearly 100,000 households across CEE Up 7.8%, on strong growth in CZ, SK and AT CONSUMER LENDING OVERALL UNSECURED CONSUMER LENDING EUR 7.4 bn EUR 13.7 bn in newly disbursed unsecured loans Up 6.1% yoy, reflecting high domestic demand Page 7
Business performance Branches with new look and feel, tight link to digital channels Branches are being transformed Advisory competence sets us Branches serve a purpose at full speed apart from the competition Digital is key, but 5 of 6 Erste In Vienna, up to 50 advisors at Proactive, data-driven and per- clients (also) visit branches flagship stores; extended hours sonalised advisory at service branches More time and space to advise Ceska to keep modernizing clients: data analytics re. client around 50 branches per year needs, paperless processes, self-service units BCR to invest EUR 50 mn in next two years Page 8
Business performance George: the first pan-European digital banking platform George: one platform across all 1 in 4 Erste clients are active Entry point for new cooperations our markets digital users API- based architecture allows Preparing to expand to all 16 cooperation with third parties Around 20% of consumer loans million Erste customers in were launched digitally in seven markets Co-developed with customers, Austria, Czechia and Slovakia highly personalizable PSD2 to play to George’s strength More than 30% of new deposits as a continuously evolving open Protecting client data and pri- opened fully digitally banking platform vacy remains central focus Page 9
Business performance Corporate net loans reach EUR 47.5 bn 2017 Corporate Highlights NET LOAN GROWTH TOP PERFORMING SUBSIDIARIES* EUR 2.4 bn +27.5% +19.7% +17.5% net new loans in 2017 Hungary Czech Republic Slovakia BLOCKCHAIN TECHNOLOGY TOP GROWTH SECTORS* Batavia: blockchain-based trade +24% +12% +9% financing platform - promises to reduce transactions from 7 days to 1 hour Automotive Cyclical Construction * (YOY VOLUME) Page 10
Business performance Pressure on revenues eases, increase in costs driven by regulatory requirements and IT Operating revenues (EUR mn) Operating expenses (EUR mn) +3.2% -0.3% 4,158 6,691 4,028 6,669 250 242 460 284 223 453 1,783 1,852 1,236 1,310 4,375 4,353 2,339 2,389 2016 2017 2016 2017 Net interest income Net fee and commission income Personnel expenses Other administrative expenses Net trading result Other income Depreciation and amortisation Page 11
Business performance Operating turnaround is under way, especially in AT, HU and RO 2016 2017 Operating result (EUR mn) Cost/income ratio (%) Performance summary Group operating result still 2,633 60.2 Group 2,511 62.4 down, but growing positive 391 63.1 momentum across geogra- AT/EBOe 374 64.5 phies 424 70.7 AT/SB 442 70.4 Operating turnaround in: 713 48.5 CZ 701 49.7 266 56.8 Austrian savings banks driven RO 273 55.3 by rising net interest and fee 320 46.2 SK income 288 49.4 145 57.5 HU 174 55.9 Romania due to better cost performance 213 47.7 HR 208 49.8 21 65.2 Hungary on the back of RS 22 67.3 successful Citi integration Page 12
Business performance Risk costs hit another all-time low 2016 2017 Absolute (EUR mn) Relative (%) * Performance summary Excellent credit risk 196 0.15 Group 132 0.09 environment across the 29 0.10 board, with increases only AT/EBOe -26 -0.09 due to single corporate 54 0.13 AT/SB cases -13 -0.03 70 0.36 CZ 1 0.01 -62 -0.69 RO 7 0.08 48 0.53 SK 30 0.31 -92 -2.19 HU -35 -0.87 48 0.72 HR 116 1.75 4 0.63 RS -1 -0.17 * Relative risk costs are defined as annualised risk costs over average gross customer loans Page 13
Business performance Asset clean-up is over; NPL ratio drops to 4.0% 2016 2017 NPL volume (EUR mn) NPL ratio (%) NPL coverage (excl collateral; %) 6,678 4.9 69.1 Group 5,776 4.0 68.8 781 2.5 59.3 AT/EBOe 631 2.0 57.1 1,980 4.9 58.1 AT/SB 1,758 4.2 58.3 695 3.2 82.8 CZ 525 2.1 92.5 928 11.8 85.3 RO 632 8.1 92.7 475 4.5 72.1 SK 458 3.8 79.7 339 9.7 75.0 HU 209 5.5 89.3 704 11.2 72.4 HR 783 12.3 70.9 56 6.8 99.1 RS 32 3.3 112.0 Page 14
Business performance Further increase in pre-tax result Pre-tax result (in EUR mn) Taxes on income (in EUR mn) 2016 2017 2,078 1,950 -414 -410 2016 2017 Other result improvement and lower risk costs Tax rate at 19.7% in 2017 lead to further improvement of pre-tax result Page 15
Business performance Proposed dividend raised to EUR 1.20 per share Net result (in EUR mn) Dividend (EUR per share) 1.20 1,316 1.00 1,265 968 0.50 2015 2016 2017 2017 2015 2016 Proposal Highest net profit in corporate history Payout ratio is equal to 34.0% Page 16
Business performance Excellent capital generation across the years Common equity tier one capital ratio (Basel 3, fully loaded) 12.9 % 12.8 % 12.0 % 11.4 % 11.2 % 10.6 % 9.4 % 9.2% 8.3 % DEC 2009 DEC 2010 DEC 2011 DEC 2012 DEC 2013 DEC 2014 DEC 2015 DEC 2016 DEC 2017 Page 17
Outlook 2018 Macro outlook 2018 Business outlook 2018 Risk factors for guidance Dividend proposal: EUR 1.20 Impact from other than expect- Real GDP growth of approx. 3- per share ed interest rate development 5% expected in 2018 in CEE and Austria ROTE for 2018 targeted at 10%+ Political or regulatory measures (based on average tangible equity in against banks Real GDP growth to be driven by 2018) solid domestic demand, as real Geopolitical risks and global wage growth and declining unem- Assumptions for 2018: slightly gro- ployment support economic activity economic risks wing revenues (assuming 5%+ net in CEE loan growth and interest rate hikes in CZ and RO); slightly falling expenses Solid public finances across CEE due to lower project-related costs; increase in risk costs, but remaining at historically low levels Page 18
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