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Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London
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Erste Group at Bank of America Merrill Lynch Banking Conference 25-27 September 2012, London

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Building franchise value in an uncertain world

Building franchise value in an uncertain world

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  • 1. Erste Group –Bank of America Merrill Lynch Banking Conference25-27 September 2012, LondonBuilding franchise value in an uncertain worldAndreas Treichl, CEO, Erste Group
  • 2. 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.BoA ML Banking Conference Building franchise value in25-27 September 2012 2 an uncertain world
  • 3. Presentation topics−Erste Group’s core market: Central and Eastern Europe−Building franchise value in CEE−Conclusion−AppendixBoA ML Banking Conference Building franchise value in25-27 September 2012 3 an uncertain world
  • 4. CEE outgrew the euro zone during the crisis –The region benefits from strong fundamentals Real GDP/capita cumulated growth rates 2008-2012 CEE will continue to Expansion improve its >6 3 to 6 competitiveness and attract 0 to 3 -6 to -0 investments based on: < -6 Contraction − Lower indebtedness − Viable wage levels − Increased productivity − Reasonable tax systems − Favourable locationSources: Erste Group Research, Eurostat: Economic Forecast Spring 2012BoA ML Banking Conference Building franchise value in25-27 September 2012 4 an uncertain world
  • 5. Manageable indebtedness in CEE –CEE countries are the least indebted countries in Europe Debt to GDP 500 (%) 445 450 400 349 350 330 300 288 288 290 296 296 273 273 246 247 in % 250 226 229 238 209 200 174 186 150 131 111 114 118 100 50 0 RO SK CZ PL SI BG DE FI HU AT FR IT LU SE DK NL GR ES UK BE PT IE Public debt Private debtSources: Erste Group Research, EurostatBoA ML Banking Conference Building franchise value in25-27 September 2012 5 an uncertain world
  • 6. Attractive competitive business environment –Labour costs still dramatically lower in CEE Labour costs (per hour in USD) 60 55 50 49 50 45 46 43 44 44 40 38 32 30 28 22 20 12 12 12 13 10 10 10 6 4 5 5 0 RS BG RO HR HU SK PL SI PT CZ GR ES IT IE NL FR AT FI DE DK SE BESources: Erste Group Research, EIU: Economist Intelligence UnitBoA ML Banking Conference Building franchise value in25-27 September 2012 6 an uncertain world
  • 7. Attractive competitive business environment –Productivity approaching Western European levels Productivity in industry (% of EU27)180 166 168 158 159 160160 143140 EU 17 avg= 112.8% 117120 108100 92 93 87 91 81 80 70 59 61 60 54 49 42 40 37 23 20 0 BG RO HR PL HU PT GR SK ES FR SI CZ UK IT BE NL DK DE FI SE ATSources: Erste Group Research, EurostatBoA ML Banking Conference Building franchise value in25-27 September 2012 7 an uncertain world
  • 8. Favourable tax systems in CEE –Lower total taxes compared to rest of Europe Total taxes & social contributions (% of GDP) 60 55 50 49 46 46 45 45 EU 17 avg= 40.2% 42 43 44 40 40 40 37 38 38 35 35 32 33 33 34 30 30 27 28 28 25 20 15 BG RO SK IE PL ES GR CZ PT UK HU SI DE NL FI IT AT FR SE BE DKSources: Erste Group Research, EurostatBoA ML Banking Conference Building franchise value in25-27 September 2012 8 an uncertain world
  • 9. CEE is an attractive investment destination –Industrial production has significantly increased in CEE Industry production index (2005 = 100, as of Jun 12)180 169160 144140 131 119 120120 111 112 103 103 107 107 111100 92 EU 17 avg= 96 80 86 87 90 78 60 ES PT UK FR HR BG BE NL SI DE IE HU AT CZ RO PL SKSources: Erste Group Research, EurostatBoA ML Banking Conference Building franchise value in25-27 September 2012 9 an uncertain world
  • 10. Slovakia turned into car producing powerhouse –Highest car manufacturing per capita in the world Slovakia: cars produced per year 1000 850 800 640 in thousand 600 571 576 562 461 400 281 295 226 224 218 200 182 125 127 116 42 0 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12eSources: Erste Group Research, OICABoA ML Banking Conference Building franchise value in25-27 September 2012 10 an uncertain world
  • 11. Encouraging market signals –Debt markets acknowledge improvement Lt government bond yields Lt government bond yields Jan 2001 Sep 2012 10.4 19.7 8.1 8.3 6.8 4.8 4.9 5.0 5.1 5.1 5.2 5.2 5.4 7.2 8.4 4.9 4.8 5.1 5.7 1.6 2.1 2.3 2.4 2.7 DE FR IE ES AT PT IT GR CZ HU SK PL DE AT FR CZ SK PL IE IT ES HU PT GR CEE set to be the fastest growing region of Europe for the next decadeSources: Erste Group ResearchBoA ML Banking Conference Building franchise value in25-27 September 2012 11 an uncertain world
  • 12. Presentation topics−Europe’s growing region: Central and Eastern Europe−Erste way of building franchise value−Conclusion−AppendixBoA ML Banking Conference Building franchise value in25-27 September 2012 12 an uncertain world
  • 13. The growing part of Europe –Erste Group’s core markets Czech Rep Slovakia Austria Franchise value based on #1 #1 #2 – Leading presence – Attractive markets – Low financial intermediation rates Romania Hungary Croatia Serbia Ukraine Indirect presence #1 #2 #3 #12 #20 market positions based on retail business as of June 2012BoA ML Banking Conference Building franchise value in25-27 September 2012 13 an uncertain world
  • 14. Solid underlying portfolio mix –64% of total exposure in AT, CZ & SK Total credit risk (Jun 12: EUR 225bn) 9 HU 5.1% 8 RO 8.5% 7 Long term yield % 6 HR 4.4% 5 AT 40.9% 4 CZ 16.2% SK 6.5% 3 2 1 -1.0 0 1.0 3.0 5.0 7.0 9.0 11.0 -1 AAA AA A+ A- BBB BB+ Rating * Average of S&P, Moodys and Fitch RatingBoA ML Banking Conference Building franchise value in25-27 September 2012 14 an uncertain world
  • 15. Operating result development –Risk costs driven by Hungary and Romania Operating result (in EUR bn) 3.8 3.8 3.6 HU & RO 3.0 responsible for 48% of 2.5 2.1 2.0 risk costs 1.1 2.3 2.0 0.5 1.6 1.8 1.4 0.4 0.4 1.0 0.4 2.1 1.9 1.8 1.5 1.7 1.2 1.4 1.0 0.8 2004 2005 2006 2007 2008 2009 2010 2011 H1 2012 Post-provision profit Risk provisionsBoA ML Banking Conference Building franchise value in25-27 September 2012 15 an uncertain world
  • 16. Healthy liquidity and funding position –Retail deposits are core to our business model Balance sheet development 160 80% 132 135 134 126 129 117 119 122 120 114 112 70% 109 97 100 65% 64% 64% in EUR bn 91 63% 80 60% 80 73 68 73 60% 56% 56% 40 53% 52% 50% 0 40% 2004 2005 2006 2007 2008 2009 2010 2011 Jun 12 Customer loans Customer deposits Deposits + Equity to Total assetsBoA ML Banking Conference Building franchise value in25-27 September 2012 16 an uncertain world
  • 17. Significantly enhanced capital ratios –Core tier-1 ratio of 10.4% as of June 2012 Development of CT-1 capital (excluding hybrid) 12 11.0 10.7 11.3 10.3 3.4 3.3 9 3.3 3.3 in EUR bn 6.2 1.8 1.8 6 5.4 1.8 1.8 4.9 4.2 3.1 3.3 3.3 3.7 2.8 2.7 3 2.2 5.8 5.6 6.2 2.2 2.3 2.2 5.2 2.2 2.6 3.1 1.1 1.4 2.0 1.1 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Jun 12 Core tier-1 excl. minorities Part Cap MinoritiesBoA ML Banking Conference Building franchise value in25-27 September 2012 17 an uncertain world
  • 18. Balance sheet dominated by customer business –Tier 1 capital accounts for 5.4% of total assets Tier 1 Capital to Total Assets 5.4% 5.5% 5.1% 4.8% 4.1% 4.1% 4.1% 3.9% 3.6% 3.7% 3.2% 3.2% 2.3% 2.0% CA DB SG BAR BNP CS HBA DAN CBK RBS SAN UNI EBS HSBSources: Bloomberg, Erste Group Research, as of June 2012BoA ML Banking Conference Building franchise value in25-27 September 2012 18 an uncertain world
  • 19. Presentation topics−Erste Group’s core market: Central and Eastern Europe−Building franchise value in CEE−Conclusion−AppendixBoA ML Banking Conference Building franchise value in25-27 September 2012 19 an uncertain world
  • 20. Conclusion  Leading retail and SME bank in Austria and Central & Eastern Europe  Erste’s core markets expected to outgrow the EU and provide opportunities for profitable growth  Resilience of retail / SME focused business model was proven by performance through the crisis  Solid funding base, largely through retail deposits  Well-capitalised – 10.4% CT1 ratio at H1 2012 under Basel 2.5BoA ML Banking Conference Building franchise value in25-27 September 2012 20 an uncertain world
  • 21. Erste Group –Bank of America Merrill Lynch Banking Conference25-27 September 2012, London Thank you for your attention

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