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Annual General Meeting 2012 Erste Bank Presentation

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Annual General Meeting 2012 Erste Bank Presentation

  1. 1. 19th Annual General Meetingof Erste Group Bank AG15 May 2012Austria Center Wien
  2. 2. Heinz KesslerChairman of the Supervisory Board
  3. 3. First item on the agendaReport on the financial year 201119th Annual General Meeting 3 15 May 2012
  4. 4. Report on the financial year 2011of Erste Group Bank AG (consolidated)Andreas TreichlChairman of the Management Board
  5. 5. Economic environment in 2011Continued escalation of European debt crisis− Debt crisis escalates in the peripheral Europe - „voluntary“ haircut for Greece− New EBA capital regime for European banks comes as a surprise− Austria loses Standard & Poor’s AAA rating− Austrian banks criticized for CEE exposure− Orban-Government in Hungary pursues unorthodox economic policy− ECB counters credit squeeze by launching long-term refinancing operation in December− Question marks regarding future of euro19th Annual General Meeting 5 15 May 2012
  6. 6. Erste Group vs. EURO STOXX BanksFrom 1997 IPO to March 2012 (indexed, Dec 97 = 100)600 Erste Group: +56%500400 EURO STOXX Banks: -48%300200100 0 Dec97 Dec98 Dec99 Dec00 Dec01 Dec02 Dec03 Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Erste Bank EURO STOXX Banks Index19th Annual General Meeting 6 15 May 2012
  7. 7. Economic growth in CEE outpaces the euro zoneSignificant regional differences in 2011− Austria: healthy economic growth; Austria again grows faster than EU Real GDP Growth 2011 (in %)− Czech Republic: exceptionally competitive export industry drives growth in 2011 3.3 3.1 2.5− Slovakia: success story in the euro zone 1.7 1.7− Romania: EU structural funds and good 1.5 performance of agricultural sector support economic growth− Hungary: unorthodox economic policy of Orban government leads to economic SK AT RO CZ HU EURO uncertainty19th Annual General Meeting 7 15 May 2012
  8. 8. Cumulative profit since IPO: EUR 6.6 bnLoss in 2011 as a result of one-off effects Net profit (in EUR m) 1175 932 860 903 879 717 -719 2005 2006 2007 2008 2009 2010 201119th Annual General Meeting 8 15 May 2012
  9. 9. Difficult environment in 2011Extraordinary events affect our result - Write-down of goodwill in Romania 700 - Write-down of goodwill in Hungary 312 - Extraordinary provisions for Hungary (incl. conversion of foreign currency loans) 450 - Closing of CDS Portfolio 183 in EUR m19th Annual General Meeting 9 15 May 2012
  10. 10. Extraordinary charges (I)Write-down of goodwill in Romania− EUR 700m write-down of goodwill as a result of the slower than expected recovery following the deep recession of 2009-2010− Increase of the share in Romanian subsidiary BCR up to 93%− Intangible assets per year-end 2011: − EUR 1.1 bn goodwill − EUR 300 m brand value− New management with Thomas Spurny as CEO− Romania is and remains one of the most promising markets in CEE19th Annual General Meeting 10 15 May 2012
  11. 11. Extraordinary charges (II)Hungary: Write-down of goodwill and extra provisions− EUR 312 m write-down of goodwill as a result of the losses connected to unorthodox economic policy of Orban government− Additional risk provisions of EUR 450 m for forced conversion of FX mortgage loans and to substantially raise NPL coverage ratio− Business uncertainty and the lack of stable framework exacerbate the current situation− Negotiations between Hungary and IMF− Restructuring of Erste Bank in Hungary with a clear goal to reach a turnaround in 2014− New chairman of the board Radovan Jelasity19th Annual General Meeting 11 15 May 2012
  12. 12. Extraordinary charges (III)Valuation of credit default swaps (CDS) at fair value− Erste Group built up a global portfolio for diversification purposes in 1999− Investment portfolio: investments made until 2011 were always held to maturity and hence were valued as „financial guarantees” (held to maturity)− It was a part of regular credit risk reporting, included in all reports, also in those towards the Austrian National Bank & EBA− Trigger for the adjustment to fair value was change in business strategy as a result of escalation of sovereign debt crisis in the summer/autumn of 2011− Position at year-end 2011: reduction by 99% to EUR 57 m19th Annual General Meeting 12 15 May 2012
  13. 13. Record net interest income in 2011Erste Group‘s earnings power not impaired Operating income (in EUR bn) 7.6 7.6 7.5 7.0 0.3 0.1 0.1 0.6 6.2 1.8 1.8 1.8 0.4 2.0 1.9 4.9 5.2 5.4 5.6 3.9 2007 2008 2009 2010 2011 Net interest income Net fee income Net trading result19th Annual General Meeting 13 15 May 2012
  14. 14. Operating expenses kept stableActive cost management is one of our strengths Operating expense (in EUR bn) 4.0 3.8 3.8 3.9 3.6 0.4 0.4 0.4 0.4 0.4 1.3 1.2 1.2 1.2 1.1 2.2 2.3 2.2 2.3 2.3 2007 2008 2009 2010 2011 Personnel expenses Other administrative expenses Depreciation and amortisation19th Annual General Meeting 14 15 May 2012
  15. 15. Solid operating result in a difficult environmentResult of strict cost control and sustainable earnings power Cost income ratio 59% 57% 51% 50% 50% 2007 2008 2009 2010 201119th Annual General Meeting 15 15 May 2012
  16. 16. Risk costs driven by Hungary & RomaniaImprovement in the core markets AT, CZ and SK Risk Costs Risk Costs 2011 (in EUR m) (in EUR m) 2,267 Romania 2,057 2,021 Rest of Group 499 1,071 956 455 812 Hungary 2007 2008 2009 2010 201119th Annual General Meeting 16 15 May 2012
  17. 17. Increase in coverage ratio while defaults are risingCrises affects primarily the middle class – our customers NPL Ratio & NPL Coverage NPL-ratios in key segments 14% 65% 24.3% 23.5% 12% 61.0% 10% 60.0% 60% 8% 6% 55% 8.0% 4% 7.6% 8.5% 5.6% 5.6% 2% 0% 50% Dec 10 Dec 11 AT CZ RO SK HU NPL ratio NPL coverage (exc collateral) Mar 11 Jun 11 Sep 11 Dec 11 Mar 1119th Annual General Meeting 17 15 May 2012
  18. 18. Lending to real economyCore business of Erste Group Customer loans (in EUR bn) 129.1 132.7 134.7 134.8 126.2 114.0 19.5 18.7 19.8 19.8 20.1 20.7 48.6 48.6 49.0 85% of loans 44.6 46.6 38.4 to private customers or SMEs 60.5 62.0 64.7 65.8 65.5 53.3 2007 2008 2009 2010 2011 Mar 12 Retail &SME Austria Retail &SME CEE GCIB19th Annual General Meeting 18 15 May 2012
  19. 19. Reduction of exposure to peripheral EuropeExposure against sovereigns down to EUR 145 million Exposure to selected countries (in EUR m) 2,115 2,160 1,602 777 553 145 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 11 Greece Ireland Portugal Spain Italy19th Annual General Meeting 19 15 May 2012
  20. 20. Sustainable increase of customer depositsConfidence in Erste Group has increased Customer Deposits (in EUR bn) 117.0 118.9 122.3 112.0 109.3 6.1 5.5 5.8 100.1 5.9 6.1 5.6 48.1 47.8 49.2 45.3 43.5 39.3 55.9 59.3 60.9 62.3 63.6 50.2 2007 2008 2009 2010 2011 Mar 12 Retail &SME Austria Retail &SME CEE GCIB Group Markets19th Annual General Meeting 20 15 May 2012
  21. 21. Erste Group ready for Basel 3Building up a portfolio of highly liquid assets Short term funding vs collateral coverage 60 141.7% 148.4% 160% 50 107.4% 116.3% 120% in EUR Mrd 40 32.1 72.9% 31.6 31.6 30 23.4 25.727.6 24.0 27.9 80% 22.3 21.3 20 40% 10 0 0% Dec 08 Dec 09 Dec 10 Dec 11 Mar 12 Short-term funding Eligible collateral Collateral coverage19th Annual General Meeting 21 15 May 2012
  22. 22. Improving capital ratios show our strengthComplying with all requirements through internal capital generation Core tier 1 ratio Core tier 1 capital (in EUR bn) 10.2% 9.4% 11.0 11.4 9.2% 10.7 10.3 8.3% 1.7* 6.2 +78% 5.4 5.0% 5.2% Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Mar 12 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Mar 1219th Annual General Meeting 22 15 May 2012
  23. 23. Uncertainties regarding regulatory requirementsQuick adjustment to drastically changed environment necessary Capital requirements−Basel 3 (CRD IV)−European Banking Authority 9.0%−OeNB & FMA 2.8% 2007 Jun 201219th Annual General Meeting 23 15 May 2012
  24. 24. Strong start into 2012Early compliance with EBA requirement Return on Equity Net profit (in EUR m) 11.20% 347 9.60% 321 +7.8% +17% 1-3 11 1-3 12 1-3 11 1-3 1219th Annual General Meeting 24 15 May 2012
  25. 25. Visible growth of customer deposits in Q1 2012Loan demand still weak Loans to customers Customer deposits (in EUR bn) (in EUR bn) 134.8 +0.0% 134.8 122.3 118.9 +2.9% Dec 11 Mar 12 Dec 11 Mar 1219th Annual General Meeting 25 15 May 2012
  26. 26. Potential of Erste Group in CEEWe will profit from growth of these markets Loan and deposit penetration 2011 (as % of GDP) Euro zone 2011: Total loans: 119% Total deposits: 114% 85% 73% 66% 65% 60% 58% 56% 53% 41% 34% CZ SK RO HU HR Total loans to non-financial sector Total deposits from non-financial sector Quelle: Zentralbanken19th Annual General Meeting 26 15 May 2012
  27. 27. Strategy –Customer banking in the eastern part of the EU Erste Group Slovakia Czech Republic Clients: 2.4m The leading retail bank with 16.9 m customers Clients: 5.2m Retail loans: 25.8% One of the leading corporate banks Retail loans: 24.7% Retail dep.: 26.1% Retail dep.: 28.6% Branches: 292 Strong capital markets presence Branches: 654 Hungary Clients: 0.9m Retail loans: 14.5% Austria Retail dep.: 8.3% Clients: 3.2m Branches: 184 Retail loans: 19.3% Retail dep.: 18.9% Ukraine Branches: 1,050 Clients: 0.2m Croatia Romania Retail loans: 1.6% Clients: 0.9m Clients: 3.7m Retail dep.: 0.3% Retail loans: 13.8% Retail loans: 18.0% Branches: 131 Serbia Retail dep.: 12.8% Retail dep.: 23.1% Clients: 0.3m Branches: 667 Branches: 146 Retail loans: 3.1% EU or EU candidate country Retail dep.: 2.4% Non-EU or non-EU-candidate country Branches: 65 Indirect Presence19th Annual General Meeting 27 15 May 2012 27
  28. 28. Heinz KesslerChairman of the Supervisory BoardProposals for resolutions
  29. 29. Second item on the agenda Resolution on the appropriation of profit19th Annual General Meeting 29 15 May 2012
  30. 30. Third item on the agenda Resolution granting discharge to the members of the Management Board and the Supervisory Board19th Annual General Meeting 30 15 May 2012
  31. 31. Request to speakto the agenda items 1, 2 and 3−Report on the financial year 2011−Appropriation of profit−Granting discharge to the members of the Management Board and the Supervisory Board19th Annual General Meeting 31 15 May 2012
  32. 32. Fourth item on the agenda Resolution in the remuneration of the members of the Supervisory Board19th Annual General Meeting 32 15 May 2012
  33. 33. Fifth item on the agenda Resolution on elections to the Supervisory Board19th Annual General Meeting 33 15 May 2012
  34. 34. Sixth item on the agenda Appointment of an additional auditor19th Annual General Meeting 34 15 May 2012
  35. 35. Seventh item on the agenda Resolution on extending the authorization to issue convertible bonds, excluding the subscription rights of shareholders19th Annual General Meeting 35 15 May 2012
  36. 36. Eight item on the agenda Resolution on extending the applicability of the conditional capital19th Annual General Meeting 36 15 May 2012
  37. 37. Ninth item on the agenda Authorization to join a horizontally organized group (Gleichordnungskonzern) formed from the joint- liability scheme (Haftungsverbund) of the savings banks19th Annual General Meeting 37 15 May 2012
  38. 38. Tenth item on the agenda Resolution on amendments to the articles of association19th Annual General Meeting 38 15 May 2012
  39. 39. 19. Annual General MeetingErste Group Bank AG Thank you for your attention!

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