Volksbanks. December 2016

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1 Association of Volksbanks December 2016

2 Overview Association, Volksbank Wien Association of Volksbanks The Association of Volksbanks currently consists of 15 primary institutions (regional Volksbanks and specialized banks). Central organization of the Association is Volksbank Wien AG. Moody s Rating (Volksbank Wien) Long Term Bank Deposit Rating: Outlook Bank Deposit Rating: Covered Bonds Rating Baa2 Stable Aaa Fitch Ratings (Association) Long Term Issuer Default Rating (IDR): Outlook IDR: BBB- Positive Association Assets & Capital 1) Volksbank Wien Assets & Capital 1) Total assets: EUR 27.4 bn. Risk-weighted assets (total risk): EUR 14.7 bn. CET1 ratio (total risk): 11.7% Equity ratio (total risk): 14.8% Total assets: EUR 10.1 bn. Risk-weighted assets (total risk): EUR 3.0 bn. CET1 ratio (total risk): 12.8% Equity ratio (total risk): 13.1% 1) As of 30 September

3 Association of Volksbanks: current structure Association of Volksbanks k 15 primary banks ca. 93,000 commercial customers (predominantly SME) ca. 1.1 million private customers Primary banks 1) 12 Regional Volksbanks (a restructuring process is currently being implemented: by mid-2017 the number of primary banks will decrease to 8 regional Volksbanks and 2 specialized banks through mergers in the sector) 3 Specialized banks (Apothekerbank, Ärztebank, Sparda Bank Austria) 15 Primary banks Volksbank Wien AG Is one of the regional Volksbanks and central organization (CO) of the Association of Volksbanks Volksbank Einlagensicherung eg Deposit protection (Einlagensicherung) of the Association of Volksbanks ÖGV 2) rband) ÖGV g system by Ö senschaftsver embers of the d early warning scher Genoss nks are full me Auditing and (Österreichis Primary ba The regional Volksbanks and specialized banks have established an Association of Credit Institutions according to section 30a, Austrian Banking Act (Association of Volksbanks) in 2012 based on a joint liability scheme and a joint liquidity scheme. 1) As of 12/2016 2) The central organization Volksbank Wien is audited by KPMG 2

4 Association of Volksbanks: key aspects Joint liability scheme The CO Volksbank Wien and the regional Volksbanks have established a joint liability scheme. They are mutually obliged to jointly support a member institution should difficulties arise. Liabilities and contributions are unlimited. Joint liquidity scheme The central organization and the Volksbanks form a strategic liability and funding scheme. The Volksbanks have to hold their liquidity at the CO, the CO is responsible for the Association s compliance with regulatory liquidity requirements. Management of capital and risk The CO is in charge of the Association s s equity capital planning; the central organization and the other Volksbanks are subject to common principles of risk management which are defined in an annual centralized planning process. Right to issue directives The central organization is authorized to issue general or individual directives to the Volksbanks. General directives are aimed at all Volksbanks while individual directives are issued to specific banks. Planning process The central organization is responsible for the Association s planning process, for controlling and reporting, as well as for an optimization of the IT, marketing and organization business areas. 3

5 Association s governance LIABILITY SCHEME Legally required deposit guarantee VOLKSBANK WIEN AG (CO) Sole responsibility for tasks according to 30a, Austrian Banking Act Cooperation agreement VEG Volksbank Einlagensicherung eg Deposit guarantee, investor compensation Management via issuance of directives Performance of control functions Volksbanks "8 + 2" VBVM Volksbanken-Vertriebs- Vertriebs und Marketing eg ÖGV and VEG jointly perform tasks in relation to the early warning system ( 61, Austrian Banking Act) Volksbanken Leistungsfonds Trust fund within the consolidation group Responsible for the implementation ti of the cooperation agreement The governance structure of the Association of Volksbanks has been optimized and was approved by the regulator on 01 July The main modifications are a change in the support mechanism (instead of Volksbank Haftungsgenossenschaft eg now the central organization is responsible for providing support or implementing recovery procedures if needed by any of the Volksbanks) and the establishment of a trust fund. 4

6 Liability scheme, VEG, VBVM LIABILITY SCHEME Central organization Sole responsibility for tasks resulting from 30a Volksbanken Leistungsfonds The Association contract forms the basis of the liability scheme and determines the central organization s responsibilities (tasks according to 30a, Austrian Banking Act). The central organization performs significant control functions (management of equity, liquidity and risk, internal organization & IT, planning process), is responsible for the compliance with regulatory requirements and has the right to issue general e and individual dua directives. es The Volksbanken Leistungsfonds is a trust fund established in order to provide funds for the potential support or recapitalization of Volksbanks in order to prevent a threatening deterioration of earnings, financial position, capital structure or liquidity situation. VEG Volksbank Einlagensicherung eg (VEG) provides the legally required deposit guarantee and investor compensation for the Volksbank sector. VBVM Volksbank Vertriebs- und Marketing eg (VBVM) is responsible for the implementation of the cooperation agreement. Main tasks include the promotion of cooperation in sales activities and the harmonization of processes. 5

Eight regional banks will be formed through mergers Year of last merger taking place Total assets of fvolksbanks k (including assets of fbanks to be merged), in EUR bn., as of 30 September 2016.

7 Eight regional banks will be formed through mergers Year of last merger taking place Total assets of fvolksbanks k (including assets of fbanks to be merged), in EUR bn., as of 30 September Volksbank Wien: assets excluding central organization function Volksbank Oberösterreich Volksbank Niederösterreich Volksbank Wien Volksbank Vorarlberg Volksbank Tirol Volksbank Salzburg Specialized institutions Sparda Bank Austria 0.9 Volksbank Kärnten 1.3 Volksbank Steiermark Ärzte-/Apothekerbank

8 Contents Overview and governance Loans and advances to customers and NPL Liquidity and funding 7

9 Loans and advances to customers Distribution of loans and advances to customers (EUR bn.) 1) The volume of the Association s loans and advances to customers was EUR 26.5 bn. as of 30 September Focus on Austria: As of 30 September 2016 Austria accounted for ca. 94% of loans and advances to customers, followed by Germany (ca. 3%) and Switzerland (ca. 1%). 1) Based on total credit lines extended. As of 30 September 2016 Definition Corporate: operating revenue above EUR 50 m. Definition Corporate SME: volume of loan above EUR 1.5 m. and operating revenue below EUR 50 m. Definition SME: volume of loan below EUR 1.5 m. and operating revenue below EUR 50 m. Definition Retail SME: volume of loan below EUR 1 m. and operating revenue below EUR 50 m. 8

10 Distribution of non-performing loans Distribution of non-performing loans by business fields (EUR m.) 1) The volume of the Associations s non-performing loans was EUR 1.1 bn. as of 30 September ) As of 30 September

11 Development of non-performing loans 4.5 Development of Association s non-performing loans (EUR bn.) Based on the Association s loans and advances to customers of EUR 26.5 bn. the NPL ratio was 4.3% as of 30 September 2016, representing a year-on-year decrease of approximately 0.6 percentage points. The decrease in non-performing loans in the third quarter of 2015 is mainly due to the fact that the former central organization VBAG was split and the wind-down unit immigon portfolioabbau ag subsequently left the Association of Volksbanks. 10

12 Contents Overview and governance Loans and advances to customers and NPL Liquidity and funding 11

13 Volksbanks deposits Development of Volksbanks deposits between 2003 and HY (EUR bn.) 1) HY Demand deposits Time deposits Savings deposits 2) Other The Association of Volksbanks k deposits stood at EUR 20 bn. as of 30 June In the previous year the fact that Volksbank Osttirol-Westkärnten, Volksbank Gmünd and Volksbank Almtal left the Association as well as the spin-off of immigon portfolioabbau ag resulted in a decrease in deposits. 1) Source: Oesterreichische Nationalbank 2) Other: foreign customers deposits 12

14 Level of liquidity is comfortable Expected development of the liquidity pool (EUR bn.) / / / / / / / / / /2017 Bonds ECB credit claims Central bank deposits Cash, foreign exchange, gold Covered bond reserve The liquidity cushion held by the central organization Volksbank Wien for the Association of Volksbanks is comfortable and currently reaches approximately EUR 4.1 bn. 13

15 Maturity profile as of 30 September 2016 Maturity profile of Association s issues (EUR m.) 1) 1,200 1,167 1, onwards Senior Bonds Covered bonds Mortgage bonds Subordinated bonds 2) The Association of Volksbanks k has a covered dbond program backed by mortgages of the regional Volksbanks k at its disposal, long-term liquidity can be generated through the issuance of covered bonds. 1) Excluding nostro accounts 2) Upper and lower tier 2 capital 14

16 Contact details Karl Kinsky Tel: +43 (0) Head of Investor Relations Mail: Manuela Elsensohn-Pauser Tel: +43 (0) Investor Relations Mail: Homepage: Address: VOLKSBANK WIEN AG, Schottengasse 10, 1010 Wien 15

17 Disclaimer This presentation is made for information purposes only, it is non-binding and shall not be treated as giving any form of investment advice. Please note that there may be forward looking statements in this presentation. Such statements are based on current expectations and are therefore subject to a number of known and unknown risks and uncertainties. The actual results and performances of VOLKSBANK WIEN AG or the Association of Volksbanks and any of their affiliates may differ materially from any such expected future result or performance as expressed in or implied by the said forward looking statements. Reasons for such forward looking statements to eventually differ materially from actual results include, among others, various regulatory and economic factors beyond VOLKSBANK WIEN AG s or any of their affiliates control. VOLKSBANK WIEN AG assumes no obligation whatsoever to update or correct any information made in this presentation. This presentation has been made with due diligence. Neither VOLKSBANK WIEN AG nor its directors, officers, employees, affiliates, advisers, representatives or any other person assumes any liability whatsoever as to the currentness, accuracy or completeness of the information or opinions contained in this presentation or for any loss howsoever arising from any use of or reliance on this presentation or its contents or otherwise arising in connection therewith. Errors and omissions excepted. The redistribution of this presentation and the information contained herein (in whole or in part) is strictly prohibited. The presentation must not be copied, reproduced, distributed or passed (in whole or in part) to any other person without prior written consent of VOLKSBANK WIEN AG. All rights reserved. 16

18 VOLKSBANK. Vertrauen verbindet.

Association of Volksbanks.

Association of Volksbanks. Association of Volksbanks Vienna, September 2016 www.volksbankwien.at Contents Overview and governance Loans and advances to customers and NPL Liquidity and funding Page 1 Overview Association, Volksbank