erste group annual general meeting 2013 presentation
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20th Annual General Meeting of Erste Group Bank AG
16 May 2013 Austria Center Vienna
Friedrich Rödler Chairman of the supervisory board
16 May 2013 AGM 2013
First item on the agenda
3
Report on the financial year 2012
Report on the financial year 2012 of Erste Group Bank AG (consolidated) Andreas Treichl Chairman of the management board
16 May 2013 AGM 2013 5
Disclaimer – Cautionary note regarding forward-looking statements
− 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.
16 May 2013 AGM 2013
Operating environment – Economic decline due to weak domestic demand
6
1.5
-1.9
1.6 1.0
CR
-0.8
-2.0
0.0
-2.3 HU
-0.2
-1.7
1.6 1.3
SK
0.5
2.0
3.2
4.4
RO RS
1.8
0.7
2.2
-1.1
CZ
-0.3
-1.2
1.9 2.3
AT
0.9 0.8
2.7 2.1
2013e 2012
2011 2010
Real GDP growth in Erste Group‘s core markets (in %)
13e euro zone avg.: -0.3%
16 May 2013 AGM 2013
Operating environment – Government debt is not a major issue in CEE
7
RS
60.1
-5.0 HR
73.1
-4.5
HU
79.8
-3.0
SK
54.9
-3.0
RO
35.9
-2.8
CZ
46.0
-3.2
AT
75.4
-2.3
Public debt/GDP Gen gov balance/GDP
Public debt in Erste Group‘s core markets (in %, 2013e)
Euro zone avg. budget deficit: 2.8% Euro zone avg. public debt: 95.1%
16 May 2013 AGM 2013
Operating income – Low demand lead to lower NII, fees
8
5-year operating income history in EUR m
1,843
-3.3%
2012
7,230
5,235
1,721
273
2011
7,479
5,569
1,787
122
2010
7,604
5,439
322
2009
7,579
5,221
1,773
585
2008
6,999
4,913
1,971
115
Net interest income Net fee and commission income Net trading result
16 May 2013 AGM 2013
Operating expenses – Continued strict cost control, lower headcount
9
5-year operating expense history in EUR m
-2.4%
2012
3,757
2,284
1,106
367
2011
3,851
2,324
1,152
375
2010
3,817
2,264
1,166
387
2009
3,807
2,228
1,202
378
2008
4,002
2,314
1,313
375
Other administrative expenses Personnel expenses Depreciation and amortisation
16 May 2013 AGM 2013
Operating profit – Stable despite low interest rate environment
10
5-year operating profit history in EUR m
2012
3,473
2011
3,628
2010
3,787
2009
3,771
2008
2,997
16 May 2013 AGM 2013
Risk costs – Still elevated, but best performance since 2008
11
347
178176268
186
2012
1,980
1,307
322
0
2011
2,267
1,725
352
12
2010
2,021
1,393
452
0
2009
2,057
1,306
483
-12.7%
0
2008
1,071
477
408
0
Retail & SME: CEE Retail & SME: Austria
GCIB Group Markets
5-year risk cost history in EUR m
16 May 2013 AGM 2013
Post-provision operating profit – First significant rise since 2008
12
5-year post-provision profit history in EUR m
1,361
1,926 1,766
2010
+9.7%
2011 2012
1,493
2009 2008
1,715
16 May 2013 AGM 2013
Other result – Lower net negative one-offs in 2012
13
Other result in EUR m (other operating result + results from financial assets)
-692
-442-454
2012
+991
2011
-1,683 2010 2009 2008
-1,349
16 May 2013 AGM 2013 14
Banking taxes – Banking taxes slow down capital formation
185
0
47
165 132
2010
+32.0%
0 2012
50
50
244
53
2011
32
0 Slovakia Hungary Austria
In 2011, banking tax in Hungary was offset by the costs of repayment of foreign currency loans at non-market rates.
16 May 2013 AGM 2013
Net profit – Reconciliation to underlying net profit
15
483.5
844.2
Underlying net profit
-360.7
Reported net profit
BCR restructuring
22.2
Selling loss EBUA
75.0
Banking taxes
187.4
Goodwill impairments
456.2
Selling gains real estate/
financial assets
56.8
Hybrid buybacks
323.3
• 2012 positive extraordinary effects: EUR 380.1m (post-tax) • 2012 negative extraordinary effects: EUR 740.8m (post-tax)
Capital neutral
16 May 2013 AGM 2013
Dividend – Dividend of EUR 0.4 per share proposed to AGM
16
5-year dividend history in EUR
+0.40
2012
0.40
2011
0.00 2010
0.70
2009
0.65
2008
0.65
16 May 2013 AGM 2013
Balance sheet – Loan/deposit ratio improves to 107.2%
17
5-year loan and deposit history in EUR bn
-2.1%
+3.5%
2011
123.1
2012
131.9 118.9
134.8
2010
117.0 132.3
2009
112.0 128.8
2008
109.3 126.2
Customer deposits Loans and advances to customers
16 May 2013 AGM 2013
Balance sheet – Asset quality stabilises, coverage up
18
Asset quality summary in %
0
2
4
6
8
10
12
14
0
10
20
30
40
50
60
70
31/12/12
9.2
62.6
30/9/12
9.2
63.1
30/6/12
9.2
61.2
31/3/12
8.8
61.9
31/12/11
8.5
61.0
NPL coverage (excl. collateral) NPL ratio
16 May 2013 AGM 2013
Capital – Best capital position since going public in 1997
19
Core tier 1 ratio in % (total risk)
11.2%
9.4%9.2%8.3%
31/12/12 31/12/11 31/12/10 31/12/09
11.848
31/12/12 31/12/11
10.681
31/12/10
11.019
31/12/09
10.276
Core tier 1 capital in EUR m
16 May 2013 AGM 2013
Share price performance – Erste Group share up 76.8% in 2012
20
13.59
24.03 25.55
0
5
10
15
20
25
30
+76.8%
+6.3%
16 May 2013 AGM 2013
Q1 13 performance summary – Risk costs declined, BCR improved
21
Income statement – Q1 13 vs Q4 12
Balance sheet – Mar 13 vs Dec 12
Asset quality
Capital
• Improvement in net result mainly due to negative one-offs in Q4 12 • Slight decline in operating income, operating expenses flat • Risk costs decreased significantly on improvements in Austria and Romania
• Reported deposits stable at EUR 123.1bn, but strong underlying inflows • Customer loans declined to EUR 130.3bn • Loan/deposit ratio improved to 105.9% vs 107.2%
• NPLs increased to 9.4% (Dec 12: 9.2%) • NPL coverage ratio stood at 62.4% (Dec 12: 62.6%) • NPL net inflows declined to EUR 134m yoy, up qoq on lower sales
• Core tier 1 ratio (Basel 2.5) stable at 11.2% (Dec 12: 11.2%) • Solvency ratio slightly up to 15.9% as of March 2013 (Dec 12: 15.5%) • Risk-weighted assets flat at EUR 105.1bn
Income statement – Q1 13 vs Q1 12
• Net profit of EUR 176.2m supported by significant reduction in risk costs • Decline in net profit due to significant one-off income in Q1 12 • Operating result impacted by subdued loan demand and low interest rates • Risk costs declined to 123bps (EUR 402.2m) of average customer loans
16 May 2013 AGM 2013 22
22
Outlook
−Erste Group expects a slight improvement in economic performance for Central and Eastern Europe in H2 2013, even though growth will remain moderate
− For 2013 Erste Group targets a stable operating result compared to 2012
− Slightly lower operating income as a result of moderate loan demand and the low interest rate environment is expected to be offset by lower operating costs
−A double-digit percentage decline is expected for group risk costs in 2013
− Mainly due to declining risk costs in Romania
−BCR is expected to return to profitability in 2013
Thank you for your attention!
Friedrich Rödler Chairman of the supervisory board
Agenda items
16 May 2013 AGM 2013
Second item on the agenda
25
Appropriation of the profit
16 May 2013 AGM 2013
Third item on the agenda
26
Grant of discharge to the members of the management board and the supervisory board
16 May 2013 AGM 2013
Fourth item on the agenda
27
Remuneration of the members of the supervisory board
16 May 2013 AGM 2013
Fifth item on the agenda
28
Election to the supervisory board
16 May 2013 AGM 2013
Sixth item on the agenda
29
Appointment of an additional auditor
16 May 2013 AGM 2013
Seventh item on the agenda
30
Authorisation to acquire own shares for the purpose of securities trading
16 May 2013 AGM 2013
Eighth item on the agenda
31
Authorisation to acquire own shares for no designated purpose
16 May 2013 AGM 2013
Ninth item on the agenda
32
Authorisation to acquire own participation certificates for the purpose of securities trading
16 May 2013 AGM 2013
Tenth item on the agenda
33
Authorisation to acquire own participation certificates for no designated purpose
20th Annual General Meeting Erste Group Bank AG
Q & A
20th Annual General Meeting Erste Group Bank AG
Resolutions
16 May 2013 AGM 2013
Second item on the agenda
36
Appropriation of the profit
16 May 2013 AGM 2013
Third item on the agenda
37
Grant of discharge to the members of the management board and the supervisory board
16 May 2013 AGM 2013
Third item on the agenda
38
a) Discharge of the members of the management board
16 May 2013 AGM 2013
Third item on the agenda
39
b) Discharge of the members of the supervisory board
16 May 2013 AGM 2013
Fourth item on the agenda
40
Remuneration of the members of the supervisory board
16 May 2013 AGM 2013
Fifth item on the agenda
41
Election to the supervisory board
16 May 2013 AGM 2013
Fifth item on the agenda
42
a) Reduction of the number of supervisory board members from ten to nine
16 May 2013 AGM 2013
Fifth item on the agenda
43
b) Election of Theresa Jordis to the supervisory board
16 May 2013 AGM 2013
Sixth item on the agenda
44
Appointment of an additional auditor
16 May 2013 AGM 2013
Seventh item on the agenda
45
Authorisation to acquire own shares for the purpose of securities trading
16 May 2013 AGM 2013
Eighth item on the agenda
46
Authorisation to acquire own shares for no designated purpose
16 May 2013 AGM 2013
Ninth item on the agenda
47
Authorisation to acquire own participation certificates for the purpose of securities trading
16 May 2013 AGM 2013
Tenth item on the agenda
48
Authorisation to acquire own participation certificates for no designated purpose
20th Annual General Meeting Erste Group Bank AG
Thank you for your active participation!
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