Q3 2023 results presentation
Vienna, 30 October 2023
Continued strong operating and risk performance
Willi Cernko, CEO Erste Group
Stefan Dörfler, CFO Erste Group
Alexandra Habeler-Drabek, CRO Erste Group
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.
Page 2
PRESENTATION TOPICS
EXECUTIVE SUMMARY
MACROECONOMIC AND BUSINESS UPDATE
OPERATING TRENDS
WHOLESALE FUNDING AND CAPITAL FINANCIAL OUTLOOK
APPENDIX
Page 3
EXECUTIVE SUMMARY: P&L PERFORMANCE
Operating and risk performance drive net profit
QoQ net profit development | YTD net profit development |
in EUR m | in EUR m |
-8.5% | |||
896 | 29 | 28 | |
165 | |||
820 | |||
42 | 51 | ||
22 |
Q2 23 Operating | Operating Risk costs | Other | Taxes on Minorities Q3 23 |
income | expenses | result | income |
+40.2% | ||||
293 | 31 | 14 | ||
235 | ||||
1,582 | 408 | 2,310 | ||
1,647 |
1-922 Operating | Operating Risk costs | Other | Taxes on Minorities 1-923 |
income | expenses | result | income |
Strong operating performance continues in Q3 23
- NII and fees set new quarterly records
Parameter updates contribute to increase in risk costs
- Quarterly risk costs primarily booked in Austrian entities
Slightly weaker net result due to risk releases in Q2 23
NII remained key revenue driver in 1-9 23, up 23.7%
- Net fee income also made a strong positive contribution as did trading and FV result supported by improved valuations
Cost inflation in line with expectations Continued strong credit risk performance
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EXECUTIVE SUMMARY: P&L DASHBOARD
On track to deliver upgraded 2023 guidance
Net interest margin | Cost/income ratio | | |||||||
in % | in % | ||||||||
2.50 | 2.45 | 2.50 | G23: <50% | ||||||
2.24 | 2.25 | 51.6 | 51.9 | 49.7 | |||||
46.2 | 44.7 | ||||||||
Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 | Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 |
Banking levies | Earnings per share |
Risk cost ratio | |
in bps | |
G23: <10 bps |
37
2830
-4-2
Q3 22 Q4 22 Q1 23 Q2 23 Q3 23
Return on tangible equity
54
22
in EUR m | in EUR |
99
1.98 1.90
1.19 | 1.39 |
1.10 | |
22 27
in % | |
20.2 | 19.1 |
13.614.6
12.2
G23: >15%
Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 | Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 |
Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 |
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EXECUTIVE SUMMARY: BALANCE SHEET PERFORMANCE
Encouraging loan trends, stable core customer deposits
YTD total asset development
in EUR bn
+4.1% | ||||||
0.0 | 0.3 | 337.2 | ||||
4.0 | ||||||
9.7 | ||||||
323.9 | ||||||
3.8 | 3.7 | |||||
31/12/22 | Cash | Trading, | Loans to | Net loans Intangibles | Miscella- | 30/09/23 |
financial | banks | neous | ||||
assets | assets |
YTD equity & total liability development
in EUR bn
337.2 | ||
2.4 | ||
5.2 | 0.4 | |
323.9 | ||
0.8 | 11.8 | |
5.6 |
31/12/22 Trading | Bank | Customer | Debt Miscellaneous Equity 30/09/23 |
liabilities | deposits | deposits | securities liabilities |
Underlying loan growth accelerates in Q3 23
- Driven by EBOe (corporate), Slovakia and Croatia (retail & corporate)
- Czech performance understated due to qoq currency depreciation
Rise in interbank lending due to higher deposit inflows
Stable retail and SME deposits
- Quarterly volatility driven exclusively by large corporates and financial institutions business
- Core deposits (Retail, SME, Savings Banks) broadly stable ytd despite continued inflation pressures
Senior unsecured and covered bonds issuance drive increase in debt securities
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EXECUTIVE SUMMARY: BALANCE SHEET DASHBOARD
Balance sheet metrics strong across the board
Loan/deposit ratio | Loan & deposit growth | Asset quality | ||||||||||||
in % | yoy, in % | in % | ||||||||||||
13.0 | 12.1 | 96.8 | 94.6 | 96.7 | 96.7 | |||||||||
G23: ~5% | 94.3 | |||||||||||||
9.4 | ||||||||||||||
12.0 | ||||||||||||||
90.2 | 7.0 | |||||||||||||
85.5 | 85.1 | 87.4 | 7.1 | 6.9 | 3.7 | G23: ~ 2% | ||||||||
85.0 | 6.4 | |||||||||||||
2.0 | 2.0 | 2.1 | 2.0 | 2.0 | ||||||||||
1.4 | ||||||||||||||
Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 | Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 | Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 |
Loan growth | Deposit growth | NPL coverage ratio | NPL ratio | |||||||||||
Capital ratios (final) | Liquidity ratios | Leverage ratio | ||||||||||||
in % | in % | in % |
19.0 18.7
17.9 18.2 18.0
14.2 | 14.0 | 14.9 | 14.5 | ||||
13.8 | |||||||
Total capital ratio | |||||||
CET 1 ratio | |||||||
Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 |
1) Q3 23 pro forma CET1 at 15.0%.
145.4 | 146.0 | 148.7 | 6.6 | 6.3 | 6.6 | 6.6 | |
142.1 | 6.1 | ||||||
138.0 | |||||||
142.0 | 139.1 | 140.0 | 144.6 | 142.7 | 1) |
Liquidity coverage ratio
Net stable funding ratio
Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 | Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 |
1) NSFR as of 08/23.
Page 7
PRESENTATION TOPICS
EXECUTIVE SUMMARY
MACROECONOMIC AND BUSINESS UPDATE
OPERATING TRENDS
WHOLESALE FUNDING AND CAPITAL FINANCIAL OUTLOOK
APPENDIX
Page 8
MACROECONOMIC AND BUSINESS UPDATE: ECONOMIC FORECASTS *
Slower growth in 2023,moderate recovery in 2024
Real GDP growth | Consumer price inflation | Unemployment rate | |||||||||||||||||||||||
2023 | in % | avg, in % | avg, in % | ||||||||||||||||||||||
2024 | 17.9 | 9.5 9.0 | |||||||||||||||||||||||
3.3 | 3.2 | 3.5 | 10.9 | 10.7 | 10.4 | 12.7 | 6.0 6.0 | 5.6 | 5.7 | 6.9 | 6.6 | ||||||||||||||
2.6 | 2.6 | 4.6 4.5 | |||||||||||||||||||||||
2.5 | 2.6 | 7.4 | 8.1 | ||||||||||||||||||||||
1.6 | 1.5 | 2.1 | 1.6 | 5.5 | 6.5 | 5.5 | 5.1 | 2.7 | 3.3 | 3.8 3.5 | |||||||||||||||
0.6 | 3.9 | 2.2 | 4.2 | ||||||||||||||||||||||
-0.1 | -0.6 | ||||||||||||||||||||||||
AT CZ | SK | RO | HU | HR | RS | AT CZ SK | RO HU HR RS | ||||||||||||||||||
AT CZ | SK | RO | HU | HR RS |
Lower household consumption to impact economic growth in 2023; rebound expected in 2024 Declining inflation expected toward year-end 2023, supported by lower energy prices
Current account balance | General government balance | Public debt | ||||||||||||||||||||||
% of GDP | % of GDP | % of GDP | ||||||||||||||||||||||
1.3 | 1.9 0.8 | 1.0 | 0.0 | 0.3 | 0.7 | 0.2 | 77 75 | 58 57 | 71 69 | 63 61 | ||||||||||||||
48 | 48 | 54 | 52 | 60 | ||||||||||||||||||||
-0.5 | -1.6 | -0.8 | 45 46 | |||||||||||||||||||||
-2.0 | -2.1-2.4 | -3 | ||||||||||||||||||||||
-2.0-2.5 | ||||||||||||||||||||||||
-3.2 | -2.8 | |||||||||||||||||||||||
-4.0 | -4.3 | -4.3 | -3.8 | -2.8 | ||||||||||||||||||||
-6.9-6.5 | ||||||||||||||||||||||||
-5.2 | ||||||||||||||||||||||||
AT CZ SK | RO HU | HR RS | -5.5-5.5 | |||||||||||||||||||||
AT CZ | SK | RO | HU HR | RS | AT | CZ SK | RO HU HR RS |
Labour markets expected to remain strong across CEE & AT
Fiscal and current account balances set to improve on the back of lower energy prices
* Source: Erste Group Research.
Page 9
MACROECONOMIC AND BUSINESS UPDATE: RETAIL BUSINESS
Retail loans up year-to-date
Slightly growing loan book amid economic slowdown
- Housing loan demand stabilisation continued at low levels; increasing demand in certain countries (CZ, RO) and for renovation loans to improve energy efficiency
- New business volumes for consumer loans remain at high levels
- Risk profile of the retail loan portfolio remains excellent
Broadly stable retail deposit base
- NII growth mostly liability-driven on the back of euro zone interest rate hikes
Stock of securities savings plans increased further in Q3 23
- New sales of savings plans strengthened
- Continued shift from investment funds to bonds due to higher yield environment
Retail digital platform George continues to grow
- 9.5 million users onboarded to George across 6 markets
- Continued focus on driving digital adoption among our retail customers
- Digital sales reach 48%, supported by assisted digital sales initiatives in CZ, HR, RO and SK
Fee income supported by insurance brokerage and payment fees
Housing and consumer loans
in EUR bn
70.8 71.7 72.3 73.2 72.9
12.0 12.3 12.5 13.0 13.0
Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 | ||
Housing loans | Consumer loans | |||||
Securities savings plans
in thds, eop
+20.8%
997 1,060 1,110
918 943
Q3 22 | Q4 22 | Q1 23 | Q2 23 | Q3 23 |
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Erste Group Bank AG published this content on 30 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 October 2023 06:36:12 UTC.