Erste Group posts net profit of EUR 624.7 million in H1 17 Press conference 4 August 2017 Page 1
Business environment – Central and Eastern Europe is the fastest growing EU region 2017 2018 Real GDP growth (in %) Inflation (CPI average, in %) 2% 5.1 euro zone (2017f) 3.9 3.7 3.7 3.1 3.0 3.3 2.9 3.2 2.8 2.7 2.4 2.5 2.1 2.2 2.0 2.0 1.7 1.9 1.8 1.4 1.3 1.0 1.0 AT CZ SK RO HU HR AT CZ SK RO HU HR CEE markets expected to grow by about 3-5% in 2017, well above the average for the euro zone Domestic demand is expected to be the main driver of economic growth in 2017 Consumption is supported by improving labour markets, wage increases and low inflation rates across the region Page 2
Business environment – Solid public finances in the markets of Erste Group 2017 2018 Budget deficit (in % of GDP) Public debt ratio (in % of GDP) CZ SK HU HR AT RO 81 60% 81 80 79 Maastricht 72 71 limit -0.4 -0.4 -0.8 -0.8 52 50 -1.0 38 -1.5 -1.5 -1.5 38 36 36 -2.5 -2.7 -2.7 -3.4 -3.4 -3% AT CZ SK RO HU HR Maastricht limit Almost all countries in the CEE region appear set to fulfill the Maastricht budget deficit criteria Public debt ratio in most countries below Maastricht‘s 60% GDP limit, with Austria, Hungary and Croatia being exceptions Page 3
Business environment – CEE economies are creating jobs much faster than the euro zone Unemployment (in %) Employment (in % of workforce population aged 15-64) 2017 2018 2013 Q1 2017Q1 73 10.9 10.0 8.6 68 67 7.8 66 66 63 63 5.7 5.7 5.5 5.4 60 60 57 4.2 57 4.1 3.6 3.6 52 EURO AT CZ SK RO HU HR CZ SK RO HU HR ZONE Unemployment levels expected to continue to decline Solid economic growth is leading to labor shortages in some markets Page 4
Business environment – Czech Rep. increases key policy rate by 20 bp in August 2017 3M Interbank 10YR GOV IN % Source: Bloomberg Austria Czech Republic Romania 3.75 3.66 3.51 3.46 0.58 0.49 0.57 0.56 0.85 0.51 0.47 0.58 -0.18 -0.26 -0.33 -0.33 0.71 0.29 0.29 0.65 0.29 0.28 0.66 0.62 1-6 16 1-6 17 Q1 17 Q2 17 1-6 16 1-6 17 Q1 17 Q2 17 1-6 16 1-6 17 Q1 17 Q2 17 ECB cut discount rate to zero in March 16 Central bank cut policy rate to historic low of Natl bank decided to lift benchmark rate from 1.75% in May 15 historic low of 0.05% to 0.25% in August 17 Maintains expansionary monetary policy stance Slovakia Hungary Croatia 3.22 3.29 3.46 3.11 0.70 0.60 1.07 0.98 0.41 0.35 0.81 0.63 1.25 -0.18 0.82 -0.26 -0.33 -0.33 0.25 0.16 1-6 16 1-6 17 Q1 17 Q2 17 1-6 16 1-6 17 Q1 17 Q2 17 1-6 16 1-6 17 Q1 17 Q2 17 National bank cut the benchmark interest rate Central bank maintains discount rate at 3.0% As part of euro zone ECB rates are to record low of 0.9% in May 16 since 2015 applicable in SK Page 5
Business performance: customer loans and deposits – 30/06/16 Strong growth in loan volume (6% yoy) and deposits (11.6 % yoy) 31/12/16 30/06/17 Customer loans (net) Customer deposits Loan/deposit ratio 127.4 130.4 97.7 Group 130.7 94.7 138.0 135.1 145.6 92.8 30.0 30.8 97.6 AT/EBOe 30.6 31.8 96.1 30.5 33.7 90.6 38.7 37.8 102.4 AT/SB 39.5 39.9 98.8 40.1 41.2 97.4 20.4 28.1 72.5 CZ 21.4 29.2 73.2 24.0 32.4 73.9 7.0 9.7 72.7 RO 7.1 10.6 66.8 7.1 10.4 68.5 9.6 10.9 87.5 SK 10.2 11.4 89.7 10.9 12.1 90.2 3.1 4.0 77.8 HU 3.2 4.6 70.4 3.3 4.9 67.7 5.7 5.4 105.5 HR 5.8 5.7 100.8 5.8 5.8 100.5 0.7 0.6 119.4 RS 0.8 0.7 117.9 0.8 0.7 114.9 IN EUR BN IN EUR BN IN % Page 6
Business performance: retail – Clients value Erste’s click and mortar offering Highlights in H1 17 Customers increasingly rely on digital channels for their everyday MORTGAGES banking needs: 1 in 4 clients EUR 3.5 bn are active digital users at Erste in nearly 50,000 newly granted mortgages Growing relevance of digital CONSUMER LENDING EUR 2 bn channels also for consumer loans and deposit products: In in newly disbursed consumer loans Slovenska sporitelna, 1 in 3 consumer loans were launched RETAIL DEPOSITS digitally EUR 9 bn in continued inflows across our markets Branches retain their key role for GROWTH IN ASSET MANAGEMENT providing advice on big-ticket EUR 282 mn financial decisions retail inflow vs. EUR 62 mn in H1 16 Page 7
Business performance: corporate – Real progress in corporate lending: 5% yoy growth 30/06/16 31/03/17 30/06/17 Gross corporate loans Corporate deposits Highlights % 19.2 19.2 EUR 46.2 bn total AT 20.0 19.9 corporate loan portfolio of Erste Group 19.1 11.8 CZ 19.7 11.8 19.7 12.2 EUR 1.2 bn new loans 11.5 11.1 granted in H1 17; SK 11.3 12.3 11.5 11.2 Significant growth in AUT, CZ and SK 13.7 13.9 RO 12.9 15.5 12.7 14.2 Destination of new loans 5.4 5.8 HU 5.7 6.7 Investment loans: ~50 % 5.6 6.5 Overdrafts and working capital: ~30% 14.0 11.1 Trade and Supply Chain Finance: ~10% HR 14.6 13.3 14.8 13.8 Acquisition finance: ~5% 4.7 4.6 RS 5.3 4.8 5.3 5.3 * Percentages represent market shares; AT market shares for 30/06/17 not yet available Page 8
Business performance: corporate – 75% of new corporate loans in H1 17 granted to SMEs Structure of EUR 46.2bn total loan portfolio Highlights Erste Group services ~100,000 companies, 4 % 4% out of which 75% are SMEs representing Financial 1% 18% Healthcare Institutions ~ 15% of the total CEE work force Other Natural 4% Resources & (in the private sector) TMT Energy 5% Hotel & Leisure 1,500 new SME clients added in H1 17; approval process for SME loans 7% reduced to 2-4 days Machinery 18% Growth industries in H1 17: 8% Real Estate Consumer automotive & transportation goods (+16% loan volume vs FY 16) consumer goods (+8%) 9% Automotive & health care (+5%) Transportation 13% 9% real estate (+5%) Public Sector Construction Page 9
Business performance: operating income and expenses – Low interest rate environment impacts income, IT investments drive costs Operating Income Operating Expenses IN EUR MN IN EUR MN 0.7% 3,317 3,293 118 136 1.2% 120 103 885 911 2,004 1,980 228 218 610 624 2,194 2,143 1,153 1,151 1-6 2016 1-6 2017 1-6 2016 1-6 2017 Net interest income Net fee and commission income Personnel expenses Other administrative expenses Net trading and fair value result Other income Depreciation and amortisation Page 10
Business performance: operating result and cost/income ratio – Increase in fee and commission income could not offset NII pressure 1-6 2016 1-6 2017 Operating result Cost/income ratio 1,336 59.7 Group 1,289 60.8 179 64.7 AT/EBOe 63.4 195 71.7 202 AT/SB 223 70.0 360 47.4 CZ 340 49.7 146 53.9 RO 151 50.9 167 44.6 SK 148 47.8 72 56.5 HU 85 55.8 107 47.1 HR 101 50.4 10 66.8 RS 12 62.6 IN EUR MN IN % Page 11
Business performance: risk costs – Risk costs remain at historically low levels (15 bp at Group level) 1-6 2016 1-6 2017 Highlights Absolute Relative * 26 0.04 Year-on-year risk per- Group 104 0.15 formance characteri- 2 0.02 sed by a reduced level AT/EBOe -0.09 -14 of net releases and a 0.08 16 continuation of histo- AT/SB -0.06 -12 rically low risk costs 26 (except HR) 0.27 CZ -10 -0.10 -15 -0.34 Country trends: RO 14 0.31 HR: increase due to a single 21 0.49 default in Corporates SK 20 0.42 HU: reduced level of net releases -72 -3.34 HU in Retail and Corporates -33 -1.59 16 0.48 CZ: net releases and HR 88 2.65 improved recoveries 1 0.31 RS -1 -0.15 IN EUR MN IN % * Relative risk costs are defined as annualised quarterly risk costs over average gross customer loans Page 12
Business performance: asset quality – NPL ratio improves for the 14th consecutive quarter to 4.7% 31/12/16 30/06/17 NPL volume NPL ratio NPL coverage ratio (excl. collateral) 6,678 4.9 69.1 Gruppe 6,496 4.7 68.5 781 2.5 59.3 AT/EBOe 688 2.2 60.0 1,980 4.9 58.1 AT/SB 1,908 4.6 57.3 695 3.2 82.8 CZ 553 2.3 85.7 928 11.8 85.3 RO 869 11.0 92.1 475 4.5 72.1 SK 469 4.2 75.3 339 9.7 75.0 HU 253 7.2 78.3 704 11.2 72.4 HR 845 13.2 68.6 56 6.8 99.1 RS 50 5.8 105.5 IN EUR MN IN % IN % Page 13
Business performance: net profit – Solid result places Erste Group well on track to deliver ROTE of 10%+ in 2017 QoQ net profit reconciliation (EUR m) YoY net profit reconciliation (EUR m) 30 33 27 15 33 24 23 79 58 124 23 55 362 842 262 625 Q1 17 Operating Operating Risk Other Taxes on Minorities Q2 17 1-6 16 Operating Operating Risk Other Taxes on Minorities 1-6 17 income expenses costs result income income expenses costs result income 25.8% yoy decline in net profit primarily driven by other Erste Group Q2 17 net profit amounted to EUR 362.5m; qoq result and increased, but still benign risk costs rise primarily due to improved NII and better other result (despite EUR 45.0m provisions for court rulings related to the Other result declined mainly on non-recurrence of positive passing on of negative interest rates to retail borrowers in AT) one-off (sales of shares in VISA Europe: EUR 138.7 mn) in Revenues increased on higher NII, supported by seasonally Q2 16 higher dividend income After net releases in H1 16, risk costs rose to 15 bps of Operating expenses improved primarily due to booking of average gross customer loans, remaining well ahead of full-year deposit insurance in Q1 17 guidance Page 14
Recommend
More recommend
