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21st Annual General Meeting of Erste Group Bank AG
21 May 2014 Austria Center Vienna
Friedrich Rödler Chairman of the supervisory board
21 May 2014 AGM 2014
First item on the agenda
3
Report on the financial year 2013
Report on the financial year 2013 of Erste Group Bank AG (consolidated) Andreas Treichl Chairman of the management board
21 May 2014 AGM 2014 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.
21 May 2014 AGM 2014
Operating environment – Weak domestic demand impacts economic growth
6
RS CZ
2.0
-0.9 -0.9
1.8
AT
1.7
0.4 0.9
2.8
1.0
2.4
-1.5
1.6
HR
0.0
-1.0
-1.9
-0.2
HU
2.3
1.1
-1.7
1.6
SK
1.7
0.9
1.8
3.0
RO
3.0 3.5
0.6
2.3
2011 2013 2014e 2012
Real GDP growth in Erste Group‘s core markets (in %)
2014e eurozone average: 1.1%
21 May 2014 AGM 2014
Operating environment – Main components of real GDP growth
7
Contributions of domestic demand and net exports in 2013 (in %)
HR
-0.8 -1.0 -0.1
-3.0
5.5
RS CZ
4.4
RO HU
1.6
0.4
SK
0.7
-0.9 -0.3 -0.7
AT
1.2
-1.0
Net exports Domestic demand
21 May 2014 AGM 2014
Operating environment – Low government debt levels in CEE
8
RS
68.4
-6.5 HR
67.6
-5.5
HU
79.5
-2.9
SK
57.1
-2.7
RO
39.3
-2.8
CZ
44.8
-1.7
AT
82.3
-2.7
Public debt/GDP Gen gov balance/GDP
Public debt in Erste Group‘s core markets (in %, 2014e)
Eurozone avg. budget deficit: 2.5% Eurozone avg. public debt: 96.0%
21 May 2014 AGM 2014
Operating result – Cost/income ratio at 52.5%
9
Operating income in EUR m
-3.7%
2013
6,961
4,858
1,810
293
2012
7,230
5,235
1,721
273
Net interest income Net fee and commission income Net trading result
-2.7%
2013
3,654
2,232
1,069
352
2012
3,757
2,284
1,106
367
Personnel expenses Other administrative expenses Depreciation and amortisation
Operating expenses in EUR m
-4.7%
2013
3,308
2012
3,473
Operating result in EUR m
21 May 2014 AGM 2014
Risk costs – Still elevated, continued significant decline
10
347
178176268
531
2012
1,980
1,307
322
0
2011
2,267
1,725
352
12
2010
2,021
1,393
452
0
2009
1,763
2013
306
-12
2,057
1,306
483
0
933
-11% -13%
Retail & SME: CEE Retail & SME: Austria
GCIB Group Markets
5-year risk cost history in EUR m
21 May 2014 AGM 2014
Post-provision operating profit – Continuation of positive trend
11
5-year post-provision operating profit history in EUR m
1,493
2010
1,361
2011
+10%
2012
1,766
2009
1,715
2013
+3% 1,544
21 May 2014 AGM 2014
Results in CEE – Segment Retail & SME
12
5-year post-provision operating profit history in EUR m
722
529
931884
2009
1,051
2010 2013 2012
+36%
2011
+46%
21 May 2014 AGM 2014
Results in CEE – Segment Retail & SME
13
5-year post-provision profit history in EUR m
-493
10-24
2 10102 9985
93 112
565
192
2009
75
961
4
551
2013
1,061
16 24 263 74
674
2012
763
59 27 248
-330
749
2011
554
6
256
710
2010
968
87 61
RO CZ HR SK RS HU Data aligned by contributions of EB Ukraine
21 May 2014 AGM 2014
Other result – 2013: goodwill impairments and banking levies
14
Other result in EUR m (other operating result + results from financial assets)
-692
-442-454
2011 2012 2009 2010 -1,683
2013
-1,170
21 May 2014 AGM 2014 15
Banking taxes – Banking taxes slow down capital formation
311 +27%
167
41
103
2013
+33.0%
49
246
2012
165
32
2011
185
132
53 0
2010
50
0 50 0
Austria
Slovakia Hungary
In 2011, banking tax in Hungary was offset by the costs of repayment of foreign currency loans at non-market rates. In addition to the banking tax, Hungary introduced a financial transaction tax in 2013.
21 May 2014 AGM 2014
Pre-tax profit (without banking tax) 685.3
Banking tax - 311.2
Tax payments - 311.0
Net profit 2013 ~61.0
Banking taxes – Significant burden on net profit
Erste Group‘s tax rate amounts to ~90%
in EUR m
16
21 May 2014 AGM 2014
Net profit – Reconciliation to underlying net profit
17
-571.6
Reported net profit
61.0
Deconsolidation EB Ukraine
59.7
Banking taxes
255.6
Goodwill impairments
389.6
Selling gains real estate/
financial assets
12.6
Positive tax effect in RO
120.7
Underlying net profit
632.6
capital neutral
in EUR m
21 May 2014 AGM 2014
Dividend – Dividend of EUR 0.20 per share proposed to AGM
18
5-year dividend history in EUR
2011
0.20
2013
0.65
0.40
2010 2012 2009
0.70
0.00
21 May 2014 AGM 2014
Balance sheet – Loan/deposit ratio improves to 104.3%
19
5-year loan and deposit history in EUR bn
122.4
2013
127.7 128.8 132.3 112.0 117.0
2009
123.1
2010
134.8
2011
131.9
2012
-3.2%
118.9
-0.5%
Customer deposits Loans and advances to customers
21 May 2014 AGM 2014
Balance sheet – Asset quality and coverage stable
20
Asset quality summary in %
0
2
4
6
8
10
12
14
0
10
20
30
40
50
60
70
30/9/13 31/12/13
9.7
61.7
31/3/13
9.4
62.4
31/12/12
9.2
62.6
9.6 9.6
30/6/13
63.0 63.1
NPL coverage (excl. collateral) NPL ratio
21 May 2014 AGM 2014
Capital – Capital increase, redemption of participation capital
21
Core tier 1 ratio excl. participation capital
(total risk)
Core tier 1 capital in EUR m
11,199 10,681
31/12/10 31/12/11
11,848 11,019
31/12/13 31/12/12
11.4%
31/12/13
9.6%
7.7%
31/12/10 31/12/12
7.8%
31/12/11
21 May 2014 AGM 2014
Share price performance – Erste Group share rose by 5.4% in 2013
22
15
20
25
30
Dec 12 Mar 13 Jun 13 Sep 13 Dec 13 Mar 14
in EUR
21 May 2014 AGM 2014
Q1 14 performance summary – Net result at EUR 103.3 m, elevated tax rate
23
Q1 data as well as comparative data on this slide are based on the FINREP standards, which have been introduced on 1 January 2014.
Operating result in EUR m
727758-4%
1-3 14 1-3 13
364372-2%
1-3 14 1-3 13
Risk costs in EUR m
Loan/deposit ratio
Mar 14
100.3%
Dec 13
98.0%
Mar 14
9.6%
Dec 13
9.6%
NPL ratio
21 May 2014 AGM 2014
Challenges for the year 2014 Asset Quality Review and Stress Test
24
− Stress test with harsh and to some extent inconsistent assumption, in particular for CEE
− Stress factors comprise: − GDP, unemployment, inflation, interest rates, real estate prices, government bonds − Currency devaluations in CEE (15% - 25%)
Stress assumptions, accumulated GDP contraction (2014 – 2016)
-5.0%
AT CZ HU CEE Core
Markets, avg.
IT GIIPS avg.
SK IE
-1.0% -1.2%
RO GR PT ES
-1.5%
HR
-3.2% -3.9%
-11.8%
-5.2%
-1.3% -2.7%
-4.2%
-1.8% -2.2%
21 May 2014 AGM 2014 25
25
Outlook
− Erste Group expects a stable operating environment in its markets in Austria and CEE: while economic growth is expected to average 1.9% (Erste Group Research) in 2014, interest rates are expected to remain persistently low or fall even further in certain geographies
− Erste Group aims to keep operating profit stable (± 2%) at about EUR 3.1 billion
− Net customer loans are set to remain stable (± 2%) at about EUR 120 billion
− In light of the upcoming ECB Asset Quality Review, Erste Group does not expect a decline in risk costs beyond 5% or to about EUR 1.7 billion
− Erste Group does not anticipate to recognise deferred tax assets in the Austrian tax group in 2014, which will result in a significantly elevated tax rate of about 40%
− The decline in banking taxes from EUR 311 million in 2013 to about EUR 270 million in 2014 should positively affect net profit
Friedrich Rödler Chairman of the supervisory board
Agenda items
21 May 2014 AGM 2014
Second item on the agenda
28
Appropriation of the profit
21 May 2014 AGM 2014
Third item on the agenda
29
Grant of discharge to the members of the management board
21 May 2014 AGM 2014
Fourth item on the agenda
30
Grant of discharge to the members of the supervisory board
21 May 2014 AGM 2014
Fifth item on the agenda
31
Remuneration of the members of the supervisory board
21 May 2014 AGM 2014
Sixth item on the agenda
32
Election to the supervisory board
21 May 2014 AGM 2014
Seventh item on the agenda
33
Appointment of an additional auditor
21 May 2014 AGM 2014
Eighth item on the agenda
34
Resolution on the revocation of the existing authorized capital and the new authorization to increase the registered capital against cash contribution and/or contribution in kind, with the possibility of the exclusion of the subscription rights.
21 May 2014 AGM 2014
Ninth item on the agenda
35
Amendments of the articles of association
21st Annual General Meeting Erste Group Bank AG
Q & A
21st Annual General Meeting Erste Group Bank AG
Resolutions
21 May 2014 AGM 2014
Second item on the agenda
38
Appropriation of the profit
21 May 2014 AGM 2014
Third item on the agenda
39
Grant of discharge to the members of the management board
21 May 2014 AGM 2014
Fourth item on the agenda
40
Grant of discharge to the members of the supervisory board
21 May 2014 AGM 2014
Fifth item on the agenda
41
Remuneration of the members of the supervisory board
21 May 2014 AGM 2014
Sixth item on the agenda
42
Election to the supervisory board
21 May 2014 AGM 2014
Seventh item on the agenda
43
Appointment of an additional auditor
21 May 2014 AGM 2014
Eighth item on the agenda
44
Resolution on the revocation of the existing authorized capital and the new authorization to increase the registered capital against cash contribution and/or contribution in kind, with the possibility of the exclusion of the subscription rights.
21 May 2014 AGM 2014
Ninth item on the agenda
45
Amendments of the articles of association
21st Annual General Meeting Erste Group Bank AG
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