25 th Annual General Meeting Erste Group Bank AG

Transcription

1 25 th Annual General Meeting Erste Group Bank AG 24 May 2018 Wiener Stadthalle

2 Friedrich Rödler Chairman of the supervisory board

3 First item on the agenda Report on the financial year

4 Report on the financial year 2017 of Erste Group Bank AG (consolidated) Andreas Treichl CEO Erste Group

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. 5

6 Operating environment Strong economic development in Erste Group s key markets Real GDP growth (in %) Domestic demand contribution to GDP growth (in %) AT CZ SK RO HU HR AT CZ SK RO HU HR CEE economies grew faster than the euro zone in 2017 (euro zone GDP grew by 2.4% yoy in 2017) Domestic demand remained significant growth driver in 2017 Insignificant contribution of exports to GDP growth in

7 Operating environment Solid public finances in Erste Group s markets General government balance (in % of GDP) Public debt (in % of GDP) Maastricht limit: 60% Maastricht limit: -3% AT CZ SK RO HU HR AT CZ SK RO HU HR General government balance in all markets except Romania within Maastricht limit Public debt in most markets below 60% Maastricht limit; Austria, Hungary and Croatia are exceptions, but with a positive trend 7

8 Business environment Low interest rates still hurt, CZ rates have started to rise 3m Interbank 10-year Gov 0.36% -0.26% 2016 Austria 0.58% -0.33% 2017 ECB cut discount rate to 0% in March 2016; maintains expansionary monetary policy stance 0.41% 0.29% 2016 Czech Republic 1.02% 0.41% 2017 National bank increased its benchmark rate from historic low of 0.05% to 0.75% in Aug and Nov 2017 and Feb % 0.58% 2016 Romania 3.92% 0.95% 2017 Central bank increased policy rate from historic low of 1.75% to 2.50% in Jan, Feb and May % -0.26% Slovakia Hungary Croatia 3.14% 2.96% 0.61% 0.92% 0.99% 0.14% -0.33% 0.36% 2016 As part of euro zone ECB rates are applicable in SK Base rate was cut to historic low of 0.9% in May Central bank maintains discount rate at 3.0% since 2015 Source: Bloomberg. 8

9 Business performance: customer loans and deposits Continued loan growth, strong deposit base, balanced business 31/12/16 31/12/17 Customer loans (net) Customer deposits Loan/deposit ratio Group AT/EBOe AT/SB AT/OA CZ RO SK HU HR RS Other in EUR bn in EUR bn Not meaningful 94.7% 92.4% 96.1% 93.2% 98.8% 96.6% 297.3% 279.5% 73.2% 72.3% 66.8% 63.7% 89.7% 93.6% 70.4% 72.1% 100.8% 97.5% 117.9% 110.1% 9

10 Business performance: operating revenues and expenses Pressure on revenues eases, increase in costs due to regulatory requirements and IT Operating revenues Operating expenses 6, , % 6, ,852 in EUR m 4, , % 4, ,310 in EUR m 4,375 4,353 2,339 2, Net interest income Net fee and commission income Net trading result Other income Personnel expenses Other administrative expenses Depreciation and amortisation 10

11 Business performance: operating result and cost/income ratio Operating turnaround is under way, led by AT, HU and RO Group AT/EBOe AT/SB AT/OA CZ RO SK HU HR RS Other Geographic segments in EUR m 2,663 2, % 55.3% 46.2% 49.4% 57.5% 55.9% 47.7% 49.8% 65.2% 67.3% Not meaningful 60.2% 62.4% 63.1% 64.5% 70.7% 70.4% 52.2% 52.8% 48.5% 49.7% Performance summary Group operating result still down, but growing positive momentum across geographies Operating turnaround in: Austrian savings banks driven by rising net interest and fee income Other Austria supported by rising fee and trading income Romania due to better cost performance Hungary on the back of successful Citi integration 11

12 Business performance: risk costs Risk costs hit another all-time low Group AT/EBOe AT/SB AT/OA CZ RO -62 SK HU HR RS Other Geographic segments in EUR m -0.09% -0.03% -0.69% -2.19% -0.87% -0.17% 0.15% 0.09% 0.10% 0.13% 0.18% 0.31% 0.36% 0.01% 0.08% 0.53% 0.31% 0.72% 1.75% 0.63% Not meaningful Performance summary Excellent credit risk environment across the board, with increases in selected segments due to single corporate cases: Increase in Other Austria driven by single corporate restructuring Rise in Croatia due to large scale corporate default All other markets show exceptional performance 12

13 Business performance: asset quality in 2017 Strong asset quality improvement across all segments NPL volume NPL ratio NPL coverage (exc collateral) Group AT/EBOe AT/SB AT/OA CZ RO SK HU HR RS Other ,980 1,758 5,776 6,678 in EUR m 4.9% 4.0% 2.5% 2.0% 4.9% 4.2% 5.5% 5.6% 3.2% 2.1% 11.8% 8.1% 4.5% 3.8% 9.7% 5.5% 11.2% 12.3% 6.8% 3.3% 11.7% 31.3% 69.1% 68.8% 59.3% 57.1% 58.1% 58.3% 63.9% 50.2% 82.8% 92.5% 85.3% 92.7% 72.1% 79.7% 75.0% 89.3% 72.4% 70.9% 99.1% 112.0% 56.6% 96.7% 13

14 Business performance: other result Other result improves as banking levies decline Other result * Levies on banking activities in EUR m in EUR m Other result improves as banking levies decline Decrease in banking levies due to one-off banking tax payment in Austria in the previous year and lower recurring payments *) Includes other operating result and gains/losses from financial assets and liabilities not measured at fair value through profit or loss, net. 14

15 Business performance: pre-tax result and taxes on income Further increase in pre-tax result Pre-tax result Taxes on income 1,950 2,078 in EUR m in EUR m Other result improvement and lower risk costs lead to further improvement of pre-tax result Tax rate is at 19.7% in

16 Business performance: net result and dividend Dividend raised to EUR 1.2 per share on the back of record net profit Net result Dividend 1, % 1,316 in EUR m +20.0% in EUR Highest net profit in corporate history Payout ratio equates 39.2% 16

17 Business performance: regulatory capital position Continued strong capital position: phased-in CET1 ratio at 13.4% Regulatory capital (EUR bn) Risk-weighted assets (EUR bn) Capital ratios (in %) CET1 AT1 Tier 2 Credit RWA Market risk CET1 Tier 1 Total capital Op risk 17

18 Q1 18 performance summary Operating result pressure eases as NII and fees grow Operating revenues Operating expenses Operating result 1, % 1, ,051 1,083 in EUR m in EUR m in EUR m 1, % 1, % Net interest income Net fee and commission income Net trading result Other income Personnel expenses Other administrative expenses Depreciation and amortisation 18

19 Q1 18 performance summary Net profit improves on net release of risk provisions in Q1 18 Risk costs Other result Net result in EUR m in EUR m in EUR m % Risk costs remain at historic low supported by releases Other result declines due to lower securities sales Return on tangible equity of 11.8% 19

20 Q1 18 performance summary Volume growth & excellent asset quality Customer loans (net) Customer deposits NPL ratio +1.8% in EUR m +2.9% in EUR m 139, , , , % 3.7% 31/12/17 31/03/18 31/12/17 31/03/18 31/12/17 31/03/18 Customer loan growth mainly driven by the Czech Republic, Slovakia and Austria Continued inflow of customer deposits despite low interest rate environment Asset quality improves further 20

21 Share price performance Share price 2017 up 30% and year-to-date plus 5% in EUR

22 Better aligning employee with shareholder interests Increasing the number of employee shareholders in Erste Group Bank AG On 1 January 2018 the Mitarbeiterbeteiligungsstiftungsgesetz 2017 (Employee Participation Foundation Act) entered into force that means A new form of employee participation in Austria through the incorporation of a Mitarbeiterbeteiligungsstiftung (employee participation foundation) Transfer of shares for free or at a discounted rate of eg. Erste Group Bank AG to employees Tax and social insurance exemption up to a value of EUR 4,500 per year and employee Prerequisite is the fiduciary custody and administration by the employee participation foundation until the termination of the employment contract Uniform execution of voting rights at the annual general meeting by the employee participation foundation On this basis Erste Group Bank AG intends to launch an Employee Share Programme and to found Erste-Mitarbeiter- Privatstiftung (Erste Employee Foundation); this step is in preparation and planned to enter into force in June 2018 Details about the Employee Share Programme 2018: The structure is similar to the ESOP (employee share ownership programme) / MSOP (management stock option plan) as approved by the AGM in 2001 In a first step, the employees will make their existing shares in Erste Group Bank AG available to the employee participation foundation for trustee custody and administration and will receive 1 additional share in Erste Group Bank AG for every 10 shares Through further employee share programmes in the coming years, shares in Erste Group Bank AG will be donated to the employees of Erste Group Bank AG It is the aim that Erste-Mitarbeiter-Stiftung holds >1% in Erste Group Bank AG over the next 5 years The employees council is involved in the incorporation of Erste-Mitarbeiter-Stiftung and the implementation of the employee share programme 2018 The basis for the allocation of the shares is the resolution of the AGM of Erste Group Bank AG from May 2017 to item 9 "Acquisition of own shares for no designated purpose"; the corresponding repurchase programme (over 2 years, 300,000 shares; this equals 0.07% of the share capital) will be published in the near future 22

23 Conclusion Outlook 2018 Macro outlook 2018 Real GDP growth of approx. 3-5% expected in 2018 in CEE and Austria Real GDP growth to be driven by solid domestic demand, as real wage growth and low unemployment support economic activity in CEE Solid public finances across CEE Business outlook 2018 ROTE for 2018 targeted at 10%+ (based on average tangible equity in 2018) Assumptions for 2018: slightly growing revenues (assuming 5%+ net loan growth and further interest rate hikes in CZ and RO); slightly falling expenses due to lower project-related costs; increase in risk costs, but remaining at historically low levels Risk factors for guidance Impact from other than expected interest rate development Political or regulatory measures against banks Geopolitical risks and global economic risks 23

24 Thank you for your attention!

25 Agenda Items Friedrich Rödler Chairman of the supervisory board

26 Second item on the agenda Appropriation of the profit 26

27 Third item on the agenda Grant of discharge to the members of the management board 27

28 Fourth item on the agenda Grant of discharge to the members of the supervisory board 28

29 Fifth item on the agenda Resolution on the remuneration of the members of the supervisory board 29

30 Sixth item on the agenda Appointment of an additional auditor 30

31 Seventh item on the agenda Reduction of the number of supervisory board members 31

32 Eighth item on the agenda Authorisation to issue convertible bonds 32

33 Ninth item on the agenda Authorised capital 33

34 Tenth item on the agenda Amendments of the articles of association 34

35 25 th Annual General Meeting Erste Group Bank AG Q & A

36 25 th Annual General Meeting Erste Group Bank AG Resolutions

37 Second item on the agenda Appropriation of the profit 37

38 Third item on the agenda Grant of discharge to the members of the management board 38

39 Fourth item on the agenda Grant of discharge to the members of the supervisory board 39

40 Fifth item on the agenda Resolution on the remuneration of the members of the supervisory board 40

41 Sixth item on the agenda Appointment of an additional auditor 41

42 Seventh item on the agenda Reduction of the number of supervisory board members 42

43 Eighth item on the agenda Authorisation to issue convertible bonds 43

44 Ninth item on the agenda Authorised capital 44

45 Tenth item on the agenda Amendments of the articles of association 45

46 25 th Annual General Meeting Erste Group Bank AG Thank you for your active participation!