Erste Group –8th Capital Markets Day9 December 2011, ViennaBuilding on our retail funding strengthFranz Hochstrasser, Depu...
Disclaimer –Cautionary note regarding forward-looking statements− THE INFORMATION CONTAINED IN THIS DOCUMENT HAS NOT BEEN ...
Presentation topics− Erste Group‘s balance sheet structure      − Predominance of customer loans and deposits      − Limit...
Funding –Erste Group’s balance sheet structure− Customer deposits & loans dominate the balance sheet− Declining interbank ...
Erste Group‘s funding mix –Customer deposits are primary source of funding− Solid loan-to-deposit ratio of 111.2%         ...
Loan-to-deposit ratios in core CEE markets –Limited intragroup funding requirements− Retail business in CEE markets       ...
Presentation topics− Erste Group‘s balance sheet structure      − Predominance of customer loans and deposits      − Limit...
Short-term funding –Main currencies EUR, USD, CHF− Net EUR short-term unsecured funding:                EUR -1.0 bn− Total...
Short-term funding –Solid liquidity position in volatile markets− Erste Group’s access to diversified                     ...
Presentation topics− Erste Group‘s balance sheet structure      − Predominance of customer loans and deposits      − Limit...
Long-term funding –Review 2011                                                                              Funding 2011 Y...
Long-term funding influences –International Business portfolio reduction− Portfolio volume decline to be continued, furthe...
Outlook long-term funding –Increased reliance on covered bonds− Long-term funding plan 2012                               ...
Covered bonds –Quick overview Austria and CEECover Pools                    Comments, Strategy                            ...
Presentation topics− Erste Group‘s balance sheet structure      − Predominance of customer loans and deposits      − Limit...
Issuance activities –Spread environment 2007 and 2011                                                  Senior             ...
Presentation topics− Erste Group‘s balance sheet structure      − Predominance of customer loans and deposits      − Limit...
Mortgage Cover Pool –Overview and key characteristics− Aaa Rating from Moody’s                                            ...
Public Sector Cover Pool –Overview and key characteristics                                                                ...
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Erste Group CMD11 - Building on our retail funding strength

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Erste Group‘s balance sheet structure − Predominance of customer loans and deposits − Limited intragroup funding requirements in CEE− Short-term funding − Main currencies EUR, USD, CHF − Overall position− Long-term funding − Review long-term funding YTD 2011 − Outlook− Peer group issuance activities

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Erste Group CMD11 - Building on our retail funding strength

  1. 1. Erste Group –8th Capital Markets Day9 December 2011, ViennaBuilding on our retail funding strengthFranz Hochstrasser, Deputy CEO
  2. 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.9 December 2011 8th CMDVienna 2 Building on our retail funding strength
  3. 3. Presentation topics− Erste Group‘s balance sheet structure − Predominance of customer loans and deposits − Limited intragroup funding requirements in CEE− Short-term funding − Main currencies EUR, USD, CHF − Overall position− Long-term funding − Review long-term funding YTD 2011 − Outlook− Peer group issuance activities− Appendix All data per 30 September 2011 unless stated otherwise.9 December 2011 8th CMDVienna 3 Building on our retail funding strength
  4. 4. Funding –Erste Group’s balance sheet structure− Customer deposits & loans dominate the balance sheet− Declining interbank loans, increase in trading assets 250 Total Assets Total Liabilities 250 216.1 216.1 206.4 206.2 200 200 121.6 in EUR billion in EUR billion 150 128.0 114.9 150 125.3 +2.7 +6.3 100 100 21.7 -1.0 22.7 24.2 +5.6 29.8 50 40.5 +2.5 38.0 50 36.0 +2.4 38.4 32.2 +1.8 30.6 20.9 -1.0 19.9 0 0 Sep 10 Sep 11 Sep 11 Sep 10 Other Own issues (incl. subordinated) Other Financial assets Interbank & Trading Net loans Interbank Customer deposits9 December 2011 8th CMDVienna 4 Building on our retail funding strength
  5. 5. Erste Group‘s funding mix –Customer deposits are primary source of funding− Solid loan-to-deposit ratio of 111.2% Evolution of Erste Groups funding mix− Total deposits of EUR 121.6 bn 100% 3.0% 6.2% 3.2% 5.8% 3.2% 8.5% 3.0% 9.0% 3.0% 7.7% 19.2% 18.1% 13.8% 10.5% 10.9% 80% 15.6% 16.3% 17.4% 15.9%− Predominately retail deposits (EUR 92.8 bn) 17.0% 60% 40% 54.6% 57.0% 58.9% 61.1% 61.0%− High share of sight deposits (EUR 47.9 bn) 20% 0% Dec 07 Dec 08 Dec 09 Dec 10 Sep 11 Customer deposits Issued bonds & CDs Deposits by banks Equity Subordinated capital (in % of cash balance sheet) Customer deposit split by type of customer Customer deposit split by type of deposit 23.7% 39.4% 76.3% 60.6% Retail deposits Corporate deposits Term deposits Sight deposits9 December 2011 8th CMDVienna 5 Building on our retail funding strength
  6. 6. Loan-to-deposit ratios in core CEE markets –Limited intragroup funding requirements− Retail business in CEE markets Local L/D ratios in core CEE markets 200% 178% − LCY customer deposits as key funding pillar 145% 135% − In general: long LCY & short FX 150% 106% − Solid funding base in most local currencies 100% 67% 67% 78%78% 76% 70% 50%− Intragroup funding 0% CS SLSP BCR EBC EBH − Future regulatory restrictions Local L/D ratios Local L/D ratio in LCY − Increase local funding − Developing local capital markets in CEE Intragroup funding in CEE − Local covered bond initiatives 8 6 in EUR billion 4 5.3 2 4.4 1.1 0 -0.6 BCR EBH EBC Other -29 December 2011 8th CMDVienna 6 Building on our retail funding strength
  7. 7. Presentation topics− Erste Group‘s balance sheet structure − Predominance of customer loans and deposits − Limited intragroup funding requirements in CEE− Short-term funding − Main currencies EUR, USD, CHF − Overall position− Long-term funding − Review long-term funding YTD 2011 − Outlook− Peer group issuance activities− Appendix All data per 30 September 2011 unless stated otherwise.9 December 2011 8th CMDVienna 7 Building on our retail funding strength
  8. 8. Short-term funding –Main currencies EUR, USD, CHF− Net EUR short-term unsecured funding: EUR -1.0 bn− Total ECB-eligible collateral: EUR 12.7 bn − Net short-term funding includes net FX swap position− Net USD short-term unsecured funding: EUR -3.5 bn− Total FED-eligible collateral: EUR 3.9 bn − Net short-term funding includes net FX swap position− Net CHF short-term unsecured funding: EUR -4.1 bn− Total SNB- eligible collateral: EUR 4.1 bn − CHF funding needs decreasing due to the FX mortgage conversion programme in Hungary − Net short-term funding includes net FX swap position9 December 2011 8th CMDVienna 8 Building on our retail funding strength
  9. 9. Short-term funding –Solid liquidity position in volatile markets− Erste Group’s access to diversified Short-term funding vs collateral coverage short-term funding sources remains 132.8% 60 140% open 107.4% 116.3% 50 120% − CPs and CDs in Europe & US, deposits, in EUR billion 72.9% 100% 40 32.1 repos 25.7 27.6 27.9 31.1 80% 30 23.4 24.0 23.4 − Short-term funding needs decreased 20 60% 40% considerably (Q3 2011: EUR 23.4 bn 10 20% compared to EUR 36.2 bn Dec 2007) 0 0% Dec 08 Dec 09 Dec 10 Sep 11− Central banks eligible collateral Short-term funding Collateral Collateral coverage increased Collateral split − EUR 31.1 bn vs. EUR 19.1 bn Dec 2007 (after haircut) 2.9% 3.7% 4.3% − Unencumbered collateral amounts to 5.2% approx. EUR 30 bn 13.2%− Currently no use of ECB, FED, SNB 70.7% facilities Governments/ Municipals Banks (incl. covered bonds) Own covered bonds Corporates Credit claims Other9 December 2011 8th CMDVienna 9 Building on our retail funding strength
  10. 10. Presentation topics− Erste Group‘s balance sheet structure − Predominance of customer loans and deposits − Limited intragroup funding requirements in CEE− Short-term funding − Main currencies EUR, USD, CHF − Overall position− Long-term funding − Review long-term funding YTD 2011 − Outlook− Peer group issuance activities− Appendix All data per 30 September 2011 unless stated otherwise.9 December 2011 8th CMDVienna 10 Building on our retail funding strength
  11. 11. Long-term funding –Review 2011 Funding 2011 YTD− Total funding plan 2011 of EUR 5.0 bn in % of total sucessfully executed 5.6%− 3 successful benchmark issues 24.4% 39.0% 55.3% − EUR 1 bn 10 yr Mortgage Pfandbrief 14.6% (mid swaps + 72 bps), January − EUR 750 m 5 yr Senior Unsecured (mid swaps + 120 bps), April Pfandbrief Subordinated debt Senior Unsecured - Retail Senior Unsecured - Wholesale − EUR 750 m 7 yr Public Sector Pfandbrief (mid swaps + 55 bps), September Funding 2011 YTD Amounts Spread Av. Maturity− Continued focus on extension of Senior Unsecured 2,069 121 5 maturity profile Retail 775 Wholesale 1,294 Pfandbrief 2,929 67 9 Subordinated debt 295 10.1 TOTAL 5,293 7.79 December 2011 8th CMDVienna 11 Building on our retail funding strength
  12. 12. Long-term funding influences –International Business portfolio reduction− Portfolio volume decline to be continued, further 30% reduction by end of 2012− Positive impact on funding needs− No new investments International Business Portfolio 25 22.1 20.9 19.8 20 17.8 15.7 in EUR billion 15 10 6.6 4.3 4.0 3.4 5 3.0 3.0 1.8 0 Dec 08 Jun 09 Dec 09 Jun 10 Dec 10 Sep 11 Total IFRS 7 Credit Risk Loans to Customers9 December 2011 8th CMDVienna 12 Building on our retail funding strength
  13. 13. Outlook long-term funding –Increased reliance on covered bonds− Long-term funding plan 2012 Long-term funding split − Approx. EUR 3.0 bn of funding is required 100% 5.6% 7.8% 10.0% 10.6% 80% 6.9%− Growth of cover pools and retail private 55.3% 60% placements provide flexibility 66.7% 40% 74.6% − Cover pool availability in 2012 is EUR 3.0 bn 14.6% − No need for senior unsecured benchmarks 20% 24.4% 23.3% − Retail issues up to EUR 700 m 0% 2007 2011 YTD 2012f Senior unsecured wholesale Senior unsecured retail Pfandbrief Subordinated debt Development cover pools (Austria) Redemption profile of Erste Group Sep 2011 16 6 5.3 5.2 1.5 4.8 5 in EUR billion in EUR billion 12 1.2 4 3.4 1.2 3.1 8 7.7 10.0 3 2.2 2.2 1.0 5.8 1.9 2.0 2 4 - 3.4 1.1 0.9 0.9 2.5 0.8 - 1 0.6 2.80 3.30 3.68 3.00 0.90 2.00 0 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2022+ 2007 2008 2009 2010 Sep 11 2013 f Public Mortgage Fundiert (CEE) Senior unsecured Covered bonds Subordinated debt Debt CEE subsidiaries9 December 2011 8th CMDVienna 13 Building on our retail funding strength
  14. 14. Covered bonds –Quick overview Austria and CEECover Pools Comments, Strategy Asset contributors for Austrian pool − Growth driven by Austrian mortgage business, legacy portfolios ofPool EUR 12.6 bn savings banks − Austrian public sector pool sinking SavingsIssues EUR 9.1 bn − Rating process for CEE pool in banks EBOe 44% 44% progress sWBB sBau EG, Immorent 6% 3% 3%Pool EUR 3.2 bn − Pool used for local CZK issuance onlyIssues EUR 2.1 bnPool EUR 0.4 bn − Pool used for local EUR issuance onlyIssues EUR 0.3 bn − Legal initiative to re-design Set-up covered bond framework − Initiative to amend current legal Set-up framework9 December 2011 8th CMDVienna 14 Building on our retail funding strength
  15. 15. Presentation topics− Erste Group‘s balance sheet structure − Predominance of customer loans and deposits − Limited intragroup funding requirements in CEE− Short-term funding − Main currencies EUR, USD, CHF − Overall position− Long-term funding − Review long-term funding YTD 2011 − Outlook− Peer group issuance activities− Appendix All data per 30 September 2011 unless stated otherwise.9 December 2011 8th CMDVienna 15 Building on our retail funding strength
  16. 16. Issuance activities –Spread environment 2007 and 2011 Senior Covered Bond 2007 2011 Actual spread 2007 2011 Actual spread Bank Rating Maturity Maturity in bp in bp of 2011 issues in bp in bp of 2011 issues Erste Group A1/A/A 5yr 11 120 310 7yr - 55 116 Intesa A2/A/A 7yr 12 175 522 10yr - 180 493 KBC A2/A-/A 5yr 7 210 583 no issuance Soc Gen Aa3/A+/A+ 5yr 5 87 380 5yr - 43 145 no RBI A1/A/A 3yr 145 289 no issuance issuance Unicredit A2/A/A 5y/2.5y 14 148 733 7yr - 123 4289 December 2011 8th CMDVienna 16 Building on our retail funding strength
  17. 17. Presentation topics− Erste Group‘s balance sheet structure − Predominance of customer loans and deposits − Limited intragroup funding requirements in CEE− Short-term funding − Main currencies EUR, USD, CHF − Overall position− Long-term funding − Review long-term funding YTD 2011 − Outlook− Peer group issuance activities− Appendix All data per 30 September 2011 unless stated otherwise.9 December 2011 8th CMDVienna 17 Building on our retail funding strength
  18. 18. Mortgage Cover Pool –Overview and key characteristics− Aaa Rating from Moody’s Cover Pool in EUR Total value of cover pool in EUR equivalent: 7,714,708,962− Strong and long existing legal framework for Austrian Pfandbriefe thereof loans in EUR: 5,747,608,375 − Highest LTV allowed by law is 60% => Erste Group’s LTV at thereof loans in CHF: 1,822,100,587 49.6% thereof substitute collateral in EUR equivalent: 145,000,000− First-ranking mortgage loans of mostly Austrian properties thereof swaps in EUR equivalent: − 93.5% Austria and 6.5% Germany− Solid mortgage origination through own savings bank network Issues in EUR− Recourse to borrower in default Total outstanding issues in EUR equivalent: 6,005,994,904− No NPLs in the cover pool (NPL is 90 days overdue payment) thereof issues in EUR: 4,757,022,020− Recalibration of assets done on a yearly basis thereof issues in CHF: 1,248,972,884 − Assets over €3m revaluation every 3 years Nominal over-collaterisation in %: 28.5% − Assets under €3m reassesment yearly (OENB real estate index) Present value over-collaterisation in %: 31.4%− Fix/floating mix: 9.7% fix and 90.3% floating rate loans Figures as per 30 September 2011, quarterly updates on our homepage www.erstegroup.com – Investor Relations – Debt Investors Regional distribution Austria Distribution by property type Lower Commercial Commercial Vienna Austria housing assets 31% 18% Upper (Multi-Family 27% Austria assets) Republic 2% 14% Austria 2% Salzburg 7% Non-profit Vorarlberg Housing 5% Tirol Assoc. (Multi- Burgenland Styria Family Residential Carinthia 11% 2% 17% assets) assets 5% 21% 38%9 December 2011 8th CMDVienna 18 Building on our retail funding strength
  19. 19. Public Sector Cover Pool –Overview and key characteristics Cover Pool in EUR− Aaa Rating from Moody’s Total value of cover pool in EUR equivalent: 3,686,730,182 thereof loans in EUR: 3,381,054,550− Strong and long existing legal framework for Austrian Pfandbriefe thereof loans in CHF: 109,775,633 thereof bonds in EUR equivalent: 195,900,000− 98% of the Cover Pool assets are originated in Austria, 2% in thereof Swaps in the Cover Pool in EUR equivalent: Germany Issues in EUR− Public sector loans represent 99% of the Cover Pool Total outstanding issues in EUR equivalent: 3,031,274,299 thereof issues in EUR: 2,579,343,321− Average exposure per entity is less than EUR 2m thereof issues in CHF: 451,930,978 Nominal over-collaterisation in %: 21.6%− Average seasoning is 4.2 years Present value over-collaterisation in %: 18.9% Figures as per 30 September 2011, quarterly updates on our homepage www.erstegroup.com – Investor Relations – Debt Investors Regional distribution Austria Distribution by type of borrower / guarantor Lower Vienna Austria Municipalities Guaranteed 19% 19% Upper 35% by Austria Government Republic 8% 6% Austria 9% Salzburg Guaranteed Vorarlberg 15% by Province 2% Tirol Carinthia Province Guaranteed 16% Burgenland Styria 5% 8% 23% Government Other by 2% 15% 1% 1% Municipalities 16%9 December 2011 8th CMDVienna 19 Building on our retail funding strength

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