H1 2018 results presentation Strong net profjt of EUR 774 mn based - - PowerPoint PPT Presentation

H1 2018 results presentation Strong net profjt of EUR 774 mn based

• n improved operating performance

and benign risk environment

2

Business environment Strong economic outlook for Erste Group‘s markets

AT 3.1 3.4 4.2 3.3 2.7 2.2 3.6 4.1 3.9 4.0 2.8 3.0 SK HU CZ RO HR 3.2 3.5 RS

Real GDP growth (in %) Wage growth (avg, in %)

AT 7.8 11.6 6.5 12.3 3.8 2.6 5.7 14.2 4.6 12.8 2.7 2.1 SK HU CZ RO HR

Summary

3.4 0.8 RS

euro area 2018

CEE macroeconomic growth set to be well above Euro- area in both 2018 and 2019 Real wage growth driven by continued strong economic growth and low unemploy- ment

2018 2017 2019 Q1 2018 Source: Erste Group Research Source: Erste Group Research, Bloomberg

3

RS*

55.6 61.3

DE

37.9 64.1

Business environment Sustainable CEE public debt outlook well below Eurozone average

CZ HR PL SI FR PT RO AT SK HU ES IT

Gross public debt (% of GDP)

25.6 60.4 61.0 108.2 108.5 57.3 55.1 34.0 72.9 109.5 132.0 34.6 73.6 97.0 125.7 35.0 73.6 98.3 131.8

Maastricht limit for public debt Average for Eurozone (2017)

50.6 50.9 45.9 78.0 78.4

Source: European Commission, Erste Group Research * only 2019 forecast 2017 2028 CEE COUNTRIES

4

Business environment Rising interest rates across CEE

Austria Slovakia Hungary Croatia Czech Republic Romania

National bank decided to lift its benchmark rate from historic low of 0.05% to 1.00% in Aug and Nov 2017 & Feb and June 2018

ECB cut discount rate to zero in March 16 Maintains expansionary monetary policy stance

Central bank increased policy rate from historic low of 1.75% to 2.50% in January, February and May 2018

National bank cut the benchmark interest rate to record low of 0.9% in May 2016 As part of euro zone ECB rates are applicable in SK Central bank maintains discount rate at 3.0% since 2015

3M INTERBANK (%) 10YR GOV (%) Source: Bloomberg

1–6 17 1–6 17 1–6 17 1–6 17 1–6 17 1–6 17 Q1 18 Q1 18 Q1 18 Q1 18 Q1 18 Q1 18 1–6 18 1–6 18 1–6 18 1–6 18 1–6 18 1–6 18 Q2 18 Q2 18 Q2 18 Q2 18 Q2 18 Q2 18

0.57 0.71 1.87 1.89 1.88 3.71 4.61 4.46 4.76 0.73 0.75 0.72

• 0.33

0.29 0.89 0.86 0.64 2.15 2.46 0.92

• 0.33
• 0.33

1.85

• 0.33

3.29 2.39 2.90 2.65

• 0.33

0.21 0.06 0.02 0.38 0.26 0.25 0.10

• 0.33

0.26

• 0.33
• 0.33

0.85 0.81 1.07 0.77

5

Business performance Net profjt of EUR 774mn based on improved operating performance

QoQ net profjt reconciliation (EUR mn) YoY net profjt reconciliation (EUR mn)

Q1 18 1–6 17 Q2 18 1–6 18 +30.4 % +24.0 %

64 53 36 6 25 73 29 11 4 51 81 178

336 625 438 774

Operating income Operating income Operating expenses Operating expenses Risk costs Risk costs Other result Other result Taxes on income Taxes on income Minorities Minorities

6

Business performance 7.1% YoY loan growth and continued customer deposits infmow, up 7.7%

Customer loans (net; EUR bn) Customer deposits (EUR bn) Loan / deposit ratio (%)

135.1 139.5 144.7 92.8 92.4 92.3 40.1 41.1 42.1 41.2 42.6 44.6 97.4 96.6 94.4 7.1 7.2 7.5 10.4 11.3 11.3 68.5 63.7 66.5 3.3 3.6 3.6 4.9 5.0 5.5 67.7 72.1 66.5 30.5 31.4 31.8 33.7 145.6 151.0 156.8 33.7 34.8 90.6 93.2 91.3 24.0 25.0 26.8 32.4 34.6 35.3 73.9 72.3 75.9 10.9 11.7 12.4 12.1 12.5 13.3 90.2 93.6 93.5 5.8 5.8 6.0 5.8 6.0 6.1 100.5 97.5 97.9 0.8 0.9 1.1 114.9 110.1 113.5

Group AT/SB RO RS HR HU AT/EBOe CZ SK

JUN 17 DEC 17 JUN 18

0.7 0.8 0.9

7

Business performance Strong retail loan growth of 6.5% YoY

Retail Highlights for H1 2018 NEWLY-GRANTED MORTGAGES +6.1% YoY INFLOW OF RETAIL DEPOSITS +8.0% YoY provided to over 51,000 households continued infmow in all markets

EUR 3.87 bn EUR 7.92bn

CONSUMER LENDING +8.7% YoY BANCASSURANCE VOLUMES Average loan size: EUR 6,000 total premium written in H1 2018

EUR 3.99bn EUR 622 mn

8

Business performance Digital sales with growing contribution to overall lending growth

53%

50% 20%

• f our active

clients opt for digital banking YoY increase in mobile trans- actions QoQ jump in mobile sales on stronger mobile app usage

15%

• f total new

consumer loans sold digitally

9

Business performance George is the digital assistant of over 2.6 million customers

Two new markets added in H1 2018:

Czech clients use George app 6x more than previous ofgering most downloaded bank app in Slovakia

Austria‘s leader in digital banking: 80% YoY more active users of George app

Fall 2018 1,551,000 687,000 402,000

10

Business performance Corporate loan growth driven by large companies and SMEs

H1 2018 Corporate Highlights TOTAL GROSS LOANS TOP PERFORMING SUBSIDIARIES* up 6.1% YoY

EUR 51.2bn

SME LENDING TOP GROWTH SECTORS* IN OUR PORTFOLIO 10.3% YoY loan volume growth 1,300 new SME clients acquired

*(YOY VOLUME)

+ 48% + 20% + 13%

Automotive Telecom & Media Natural Resources and Agriculture

Czechia

+ 14.1%

Hungary

+ 16.7%

Slovakia

+ 21.5%

11

Business performance Higher operating revenues due to strong NII and fees

Operating revenues (EUR mn) Operating expenses (EUR mn)

1-6 18 1-6 18 1-6 17 1-6 17 +2.5% +3.6% 1,151 624 3,374 3,293 2,004 2,076 136 103 189 12 232 228 628 1,217

Net interest income Net fee and commission income Personnel expenses Other administrative expenses Net trading result Other income Depreciation and amortisation

2,214 959 2,143 911

12

Operating result (EUR mn)

Business performance Operating result higher in most markets

223 204

AT/SB

151 137

RO

195 203

AT/EBOe

340 363

CZ

1,289 1,298

Group

148 148

SK

101 105

HR

85 88

HU

12 9

RS

1-6 17 1-6 18

13

Business performance Continued releases of risk provisions

Performance summary

YoY improvement due to con- tinued asset quality improve- ments, particularly in Corpo- rate business (esp. in HR); net releases in most markets Risk costs seen higher in H2 18, but remaining at historically low levels

AT/SB RO AT/EBOe CZ Group SK HR HU RS Absolute (EUR mn) Relative (%) *

1-6 17 1-6 18 Relative risk costs are defined as annualised risk costs over average gross customer loans

• 12
• 4
• 14
• 9

104

• 73

20 12 88 9

• 33
• 19
• 1

4

• 10
• 35

14

• 6
• 0.02
• 0.06

0.34

• 0.38
• 0.07
• 0.09
• 0.08
• 0.27

0.15

• 0.12

0.36 0.19 2.79 0.23

• 1.82
• 0.96
• 0.12

0.71

14

Business performance NPL ratio improves to 3.6%, lowest level in ten years

NPL volume (EUR mn) NPL ratio (%) NPL coverage (excl collateral; %)

1,758 4.2 58.3 1,722 4.0 61.6

AT/SB

632 8.1 92.7 539 6.7 95.3

RO

631 2.0 57.1 612 1.9 63.0

AT/EBOe

525 2.1 92.5 543 2.0 96.1

CZ

5,776 4.0 68.8 5,321 3.6 72.0

Group

458 3.8 79.7 454 3.6 80.3

SK

783 12.3 70.9 721 11.0 75.3

HR

209 5.5 89.3 179 4.7 77.2

HU

32 3.3 112.0 142.8 22 2.0

RS

Dec 17 Jun 18

15

Business performance Excellent capital generation across the years

9.2 % 9.4 % 11.2 % 11.4 % 10.6 % 12.0 % 8.3 %

DEC 2009 DEC 2013 DEC 2017 DEC 2011 DEC 2015 DEC 2010 DEC 2014 JUN 2018 DEC 2012 DEC 2016

Common equity tier one capital ratio (Basel 3, fully loaded)

12.8 % 12.9 %

Tie decline in H1 2018 was mainly attributable to one-time efgects (buy-out of last large minority shareholder in BCR and currency efgects), as well as a rise in RWA

12.5 %

16

Outlook

Macro outlook 2018 Business outlook 2018 Risk factors for guidance

Real GDP growth of approx. 3-4% 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 fjnances across CEE

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 interest rate hikes in CZ and RO); slightly falling expenses due to lower pro- ject-related costs; risk costs to remain at historically low levels

Impact from other than expected interest rate development Political or regulatory measures against banks Geopolitical risks and global economic risks