Erste Group investor presentation

H1 2020 results

31 July 2020

Moving ahead of the curve -

Forward-looking provisioning, strong capital position, continued dividend accrual

Bernd Spalt, 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

  • Addressing the key questions in an uncertain environment
    • CEE Covid-19 evolution update
    • Macroeconomic update
    • Business update
    • Operating trends
    • Asset quality and impairments
    • Capital trends and dividends
    • Key takeaways and outlook
  • Q2 20 presentation
    • Executive summary
    • Business environment
    • Business performance
    • Assets and liabilities
    • Additional information
      Covid-19 measures update

Page 3

CEE Covid-19 evolution update -

In terms of virus spread CEE is still among the least affected regions

  • Overall virus spread remains at low levels following highly effective policy responses
    • Only RO and RS experience larger - but in a global context manageable - waves of infections than in spring
    • All other countries see minor regional flare-ups, but remain well below spring levels

Previous peak active infections/1m pop

6,356

Current active infections/1m pop

4,555

3,553

3,504

2,282

1,657

1,065

1,789

1,483

869

1,036

490

912

891 995

839

770

503

517

211

167

193 205

187 98

NA

NA

NA

307 215

401

213 53

206 90 49

34

78

25

LU

NO

CH

DE

AT

SG

CZ

AU

US

FI

SK

NE

UK

SE

HR

FR

RS

RO

HU

IT

JP

13,033

Total cases/1m pop

Deaths/1m pop

9,877

8,523

7,819

3,961

4,398

4,067

3,077

2,765

2,462

2,257

2,663

2,272

1,680

1,420

1,333

1,168

459

674

581

179

47

228

110

79

5

34 564 6

451

59 392 5

358

564

32

462

60

113

62

228 8

LU

NO

CH

DE

AT

SG

CZ

AU

US

FI

SK

NE

UK

SE

HR

FR

RS

RO

HU

IT

JP

Source:https://www.worldometers.info/coronavirus/as downloaded on 26 July 2020.

Page 4

Macroeconomic update (1) -

CEE tackles Covid-19 challenge from a position of strength

Economy

Banking markets

Subsidiary banks

  • Strong labour markets
    • Unemployment rates at historic lows in most countries at the end of 2019
    • Real wage growth
  • Reduced external vulnerabilities
    • Materially improved current account balances in all Erste CEE countries
  • Deposit overhang & excess liquidity on system level in all key markets
  • No excesses, rather sustainable asset growth over the past years
  • Sustainable growth opportunities
  • Fully self-funded business model as opposed to parent company dependency
  • Focus on local currency lending
  • Historically low NPL ratios
  • Strong market shares
  • High capital ratios
  • Sound government finances
  • Manageable public debt
  • Low interest rates

Unemployment rates (in %)

Customer loans/GDP (in %)

Loan/deposit ratios (in %)

19

101

159

92

111

125

124

61

68

60

67

65

98

99 96

98

11

10

92

100

10

49

47

70 73

72

45

66

69

7

6

7

36

38

5

5

6

32

5

4

26

3

2

AT CZ

SK RO

HU HR RS

AT

CZ SK RO

HU HR RS

Group CZ

SK

RO

HU HR

RS

2007

2019

2007

2019

2019

2007

Page 5

Macroeconomic update (2) -

Extended, wave-shaped economic recovery is most likely scenario

  • Real GDP to decline 4%-9% in 2020 in Erste Group's core markets following severe lockdowns across CEE
    • Q2 20 expected to be hit the hardest; recovery to start already in Q3 on the back of opening up of the economies
    • Downward revision in Q2 20 was most apparent in AT, HR (due to weaker tourism assumptions) and SK (weaker industry)
  • Short-timeemployment situation improved in recent weeks, even though unemployment rate is expected to rise into 2021, albeit from benign levels
  • In 2021, economic recovery expected to continue at a higher intensity due to improved domestic and foreign demand compared to subdued 2020 levels

Most likely economic recovery scenario

Economic performance

Time

Evolution of real GDP forecasts

Evolution of short-time work schemes

2020e

2021e

1,400

7.1

4.6

5.8 5.4

1,200

4.2

4.5

4.5

4.1

4.7

4.7

3.9 3.9

1,000

3.1

3.0

800

600

-4.5

-4.2

-2.3-2.3

as of 30 April

400

-5.0

-4.7

-4.6

as of 31 July

200

-4.7

-6.0

-6.7-7.0 -7.5

-7.5

Source. Erste Group Research

0

-9.0

in thsd

AT

CZ

SK

HU

RO

30.03

6.04

13.04

20.04

27.04

4.05

11.05

18.05

25.05

1.06

8.06

15.06

22.06

29.06

6.07

13.07

20.07

Page 6

Business update (1) -

Retail - what's happening on the ground?

  • Diverging demand trends emerging in Q2 20
    • Continued strong demand for housing loans
    • Lower demand for consumer loans, but recovering as of late, even with tighter lending standards to adjust to COVID-19 world
    • Asset management sales volumes suffered from a volatile market environment; strategic focus on long term savings plans
    • Insurance sales declined during lockdowns but are in recovery mode
  • Customer interaction has changed since Covid-19but it is still too early to draw long term conclusions
    • Branch traffic has reached a low at the end of April amid severe lockdowns, but is since then in recovery mode; only CZ, SK and RO still >25% below pre-Covid-19 levels at end of June 20
    • Intensified customer contacts through pro-active personalised information provision and advice via branches, call centers and George to approx. 3.4m retail clients since the start of the lockdowns
    • All time high of digital activity and mobile transactions
    • Digital sales peaked during lockdowns
    • Cashless transactions on the rise
  • The Covid-19 crisis proves again that Erste Group fulfils its role as critical infrastructure, but even more that advice and support both by Erste advisors and in George is highly relevant to our customers

Monthly new sales volumes

(2019 vs 2020, in EUR million)

Housing loans

Consumer loans

873

861

825

839

910

2019

2020

804

716

716

730

731

589

573

400

414 420 407

439

350

374

376 352

326

287

194

Jan Feb Mar Apr May Jun

Jan Feb Mar Apr May Jun

Branch traffic development since Covid-19 (in %)

100

90

80

70

60

50

40

Pre-Covid-19

April 20

May 20

June 20

AT

CZ

SK

RO

HU

HR

RS

Page 7

Business update (2) -

Corporates - what's happening on the ground?

Clients cope with the new realities

Corporate loan stock development

    • Loan demand is still intact, albeit slowing in Q2
    • Volumes supported by guaranteed business as well as moratoria
    • Clients are building liquidity buffers and war chests
    • Most investment projects resumed after interruptions of various lengths
    • Some clients are already gearing up for acquisitions to take advantage of emerging opportunities
    • Well diversified loan demand across sectors
  • Clients continue to tap capital markets
    • 94 mandated transactions in H1 20 with a total issuance volume of EUR 54bn, mostly debt capital markets

(gross, business line view, in EUR bn)

+9.0%

+8.2%

+9.0%

+8.9%

+7.1%

50.6 55.2

52.5 56.8

53.0 57.7

53.3 58.1

53.8 57.6

YE

YE

Mar Mar

Apr Apr

May May

Jun Jun

18

19

19

20

19

20

19

20

19

20

  • Competition is intensifying again
    • At start of crisis initially widening of margins, with TLTRO3 re- emergence of price competition
    • State guaranteed loans come with interest rate caps, hence not supportive for maintaining margins
  • Automotive industry is returning to business
    • Slovakia: all car plants are in operation, most in 2-shift mode currently; production output -25-30% in H1 20 yoy
    • Czechia: decrease in production output -
      17% yoy, most manufacturers run a 2-shift production
    • Hungary: Large producer targets 3 shifts again from 1 August
    • Western Europe: implementation of incentives to push car sales

Page 8

Understanding operating trends (1) -

Moratoria and guarantees supported volumes, real business growth declined

  • Qoq net loan growth amounted to 1.6%, supported by:
    • Limited use of state-guaranteed loans of approx. EUR 0.6bn
    • Reduced redemptions on the back of obligatory moratoria and voluntary payment deferrals in the amount of EUR 0.6bn
    • Real business growth declined somewhat, estimated at 0.9% qoq, as growth was not a key priority in the current quarter
    • 2020e underlying net loan growth expected to be flattish
  • Erste Group so far supported more than 1m customers following Covid-19 lockdowns
    • Obligatory moratoria prevalent in CEE; in Serbia temporary obligatory moratorium expired at 30 June 2020, with limited impact so far
    • Moratoria and payment deferrals dominate in Austria
    • State guaranteed loans so far primarily booked in Austria

Composition of net loan growth in Q2 20

(in EUR bn)

163.7

1.4

0.6

161.1

0.6

Q1 20

Guarantees

Moratoria

Business

Q2 20

Volume-based moratoria participation

Volumes subject to key Covid-19 measures

(in %)

8,331

(in EUR m)

Opt-out

488

New state guaranteed loans

Retail

72

Other forbearance measure

Corpoarte

Opt-out

63

2,828

Moratoria

45

32

2,834

2,158

80

20

21

5,014

826

1,881

0

29

0

0

1,178

12

12

6

8

7

7

904

1,100

3

37

5

5

1,928

2,129

2

1,881

72

1,086

10

1,141

0

829

Data source: EBA reporting

Page 9

Understanding operating trends (2) -

Core revenues held up well in Q2 20, while costs declined

  • NII held up well in Q2 20, despite Covid-19 lockdowns
    • NII continues to get accrued for moratoria loans, only PV- negative modification losses lead to negative impact on NII (approx. EUR 26m, mostly Covid19-related in Q2 20)
    • Negative impact from rate cuts only partly mitigated by TLTRO3
    • Expectation for weaker H2 20 on strong H2 19 comps
    • Expectation is for slight decline in NII vs 2019
  • Fees declined yoy and qoq on the back of lockdown- related lower economic activity, primarily driven by lower payment transfer fees
    • Yoy decline mainly driven by payment services; effect compounded by negative SEPA fee impact (EUR 11m in H1 20), while securities and asset management business still grew
    • Qoq softening across all lines
    • Fees are expected to decline in mid-single digits in 2020
  • Trading & FV result staged a full recovery from Q1 20 lows as market volatility subsided; moving into positive territory ytd
  • Operating costs declined yoy and qoq, supported primarily by lower other administrative expenses
    • Lower advertising/marketing expenses yoy and qoq
    • Lower legal and consulting costs yoy and qoq
    • Costs set to improve yoy
  • Cost/income ratio at solid 55.5% in Q2 20, driven by strong revenue and cost performance

NII development

+2.9%

2,330 2,397

-0.1%

1,169 1,229 1,168

1-6 19 1-6 20Q2 19 Q1 20 Q2 20

Fee development

-8%

Q2 19

Q1 20

504

493

Q2 20

452

-13%

+3%

243

219

213

211

169

174

-27%

49

38

36

Total fees

Payment services

Securities & AM Lending business

& brokerage fees

Page 10

Credit risk -

Risk provisions: moving ahead of the curve

  • Total risk provisions of EUR 613.7m or 148bps in Q2 20
    • Update of forward-looking information (FLI) in relation to deteriorated macroeconomic forecasts resulting in a charge of EUR 300m
    • Introduction of significant increase in credit risk (SICR) overlays in relation to most Covid-19-affected sectors (cyclical industries, transportation, hotels and leisure), resulting in an expected credit loss (ECL) increase of EUR 90m
    • Ordinary course of business net provisions amounted to approx. EUR 224m
  • Provisioning peak for 2020 likely in Q2 20, outlook for 2020 adjusted to 65-80bps
  • Key IFRS 9 stage migration trends
    • Stage 2 increased (driven by FLI update as well as SICR overlays described above) from 8.3% at YE19 to 16.1% as of Q2 20.
    • Stage 1 declined almost by the same amount to 81.0% in Q2 20

Risk cost development in 2020e

(baseline scenario, in bps of average gross customer loans)

148

~65-80

~65-80

~65-80

15

Q1 20

Q2 20

Q3 20e

Q4 20e

2020e

Risk provisions by IFRS9 stages

Stage 3 was stable at 2.3%, as reflected in the NPL ratio

CLA

Coverage

For H2 20 slight increase in stage 3 expected, due to increased

in EUR million

Dec 19

Mar 20

Jun 20

Jun 20

Jun 20

migrations to default after the end of the moratoria

Stage 1

88.8%

86.5%

81.0%

328

0.2%

Comfortable coverage ratios across the stage spectrum

Stage 2

8.3%

10.7%

16.1%

1,022

3.8%

Stage 1 and Stage 2 shares stable vs YE19, while Stage 3

increased to 57.7% in Q2 20 from 56.6% at YE19

Stage 3

2.3%

2.2%

2.3%

2,187

57.7%

In H2 20 maintenance of strong coverage ratios expected

POCI

0.3%

0.2%

0.2%

125

33.4%

Subject to IFRS9

99.7%

99.7%

99.6%

3,662

2.2%

Not subject to IFRS 9

0.3%

0.3%

0.4%

0

0.0%

Gross customer loans

163,417

164,268

167,369

3,662

2.2%

Page 11

Credit risk -

Strong asset quality starting point

Development of NPL ratio

9.6

in %

8.5

9.2

7.6

8.5

7.1

6.6

4.7

4.9

4.0

3.2

2.5

2.4

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

20 H1

  • Continuously improving asset quality across all geographies and business lines since 2013
    • Asset quality has significantly benefitted from strong macroeconomies in Austria and CEE
    • NPL ratio at 2.4%, close to historical low in June 2020
  • High NPL ratio in the past was mainly due to Romania, Hungary, Croatia and commercial real estate
    • Significant amount of NPL sales in 2014-2016 driven mainly by Romania, Hungary and Croatia

Development of NPL coverage

in %

91

69

69

69

73

77

65

63

60

61

63

63

57

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

20 H1

  • NPL coverage at a historical high of 91.1% in June 2020 excluding collateral
    • NPL coverage ratio above 100% in CEE
    • Significant increase in coverage ratio in Romania, Hungary and Croatia; Czech Republic and Slovakia traditionally high
    • NPL coverage in Austria also increased; currently at 77%
  • Significant increase in Q2 2020 driven by forward looking risk provisioning

Page 12

Credit risk -

Gross credit exposure overview

Gross credit exposure by NACE code

Transport & comms Tourism

Other

3%

2%

Construction

4%

4%

Households

Services

28%

5%

Trade 5%

EUR 289bn

Manufacturing 7%

Jun 20

11%

16%

Real estate

Financial inst.

15%

Public admin

Focus exposures (gross)

Industry /

as of

of which

Savings

Comments

Category

June 20

Banks

Demand from construction industry

Metals

compensated partially for the lower capacities

€ 3.9bn

€ 0.9bn

in automotive

Focus on clients with well diversified product

and end market portfolios

Oil & gas

More than half of exposure is with 6 major oil &

€ 2.7bn

€ 0.1bn

gas companies in the region; most of them

entail large downstream operations

Slow ramping up of production capacities

Automotive

€ 3.5bn

€ 0.9bn

expected in the next months, benefitting from

public support schemes

Cyclical

Mixed picture, DIY and sports retail profited

from while apparel & fashion is one of the

consumer

€ 4.3bn

€ 1.3bn

hardest hit

products

Investments in stores and e-commerce weigh

on margins

Short-term work helps to bridge capacity

Machinery

reductions; order backlog satisfactory but low

€ 4.5bn

€ 1.6bn

new order intake

Impact varies significantly between sub-sectors

due to the high diversity of the industry

Passenger

Segments with a strong link / dependency on

€ 1.3bn

€ 0.1bn

tourism industry are particularly hit, a

transportation

prolonged period with no return to pre-crisis

level in the mid-term to be expected

Hotels &

Tourism improved after lock-down but 2020

€ 8.7bn

€ 3.4bn

will be significantly below previous years

leisure

Governmental support of industry in our core

regions AT and CRO

Page 13

Credit risk -

Further details on selected exposures

Snapshot: real estate

Snapshot: consumer loans

RRE - Non-profit housing associations

Czechia

3%

RRE - Other RRE for rent & sale

Austria Savings banks

7%

19%

19%

RRE - Development projects

Austria EBOe*

25%

Mixed portfolio

Slovakia

12%

CRE - Office

Croatia

CRE - Retail

6%

Romania

CRE - Other

EUR 34.9bn

Hungary

EUR 10.1bn

12%

Serbia

Jun 20

Jun 20

6%

14%

12%

19%

26%

17%

4%

  • One asset class under particular monitoring: CRE - Retail (12% of our overall Real estate portfolio) as fully closed during lockdown but customer traffic back to 70-90% of pre-Covid-19 levels
  • Benign outlook for residential portfolio (with non-profit-housing associations AT making up 2/3 of the portfolio)
  • Strong focus (more than 80%) on income producing projects
  • Low risk profile: RWA density 53%, LTVs ~60%, NPE ratio = 1.3%
  • Exposure focused on capitals and regional centres in CEE markets showing a positive demographic development
  • Consumer loan exposure represents 12% of the total retail portfolio exposure of Erste Group
  • 30+DPD delinquency rate is at 1.33%, similar to YE19
  • 90+ DPD delinquency rate is at 0.63%, similar to YE19 (w/o 180+DPD stock)
  • Outlook: moderate deterioration expected that can be handled by strengthened collection capacities and early preparations, such as pre-delinquency communication before the end of the moratoria.

*) Business view distribution before risk transfer, includes exposure classified in various NACE categories. Mixed portfolio includes both residential and commercial assets whose rating is based on financial standing of client rather than asset type or value.

Page 14

Capital position -

Strong fully loaded CET1 ratio of 14.2% with additional cushion

0.55

0.17

0.27

0.12

0.07

14.22

0.40

0.30

13.72

Mid term FL CET1 target: 13.5%

Reg. min CET1 10.2% (MDA

threshold; P2G excluded)

YE 19

∆ RWA SME

∆ RWA Other

OCI

Minorities

H1 20 profit H1 20 dividend CET1 - other

Q2 20

Supporting

inclusion FY 19

accrual

Factor

  • Main H1 20 capital/risk-weighted asset trends
    • RWA relief from early implementation of SME Supporting Factor in the amount of EUR 4.5bn
    • RWA Other: increase in credit RWA from business growth and market risk (-25bps) balanced with decreases in operational risk and other risks (+9bps)
    • OCI positions worsening mainly due to decrease in foreign currency translation (-34bps) and the FV changes of debt and equity instruments (-6bps)
    • 2019 minority interest profit and H1 20 eligible profit (ex minorities) included
    • Accrual of 2020 dividend based on 45% pay-out ratio, approx. EUR 0.32 per share in H1 20 (-12bps)
  • CET1 cushion amounts to approx. 90bps at 30 June 2020
    • Accrued but unpaid dividends for FY 2019 and H1 20 in the aggregate amount of EUR 782m or 68bps
    • Exclusion of H1 20 minorities profit and deduction of minorities risk costs in the aggregate amount of EUR 217m or 19bps

Page 15

Capital position -

Erste Group applies regulatory quick fixes conservatively

Quick Fix

Applied by

From

Phased-in/

Estimated impact

Comment

Erste Group

Fully loaded

on CET1 ratio*

SME Supporting

Q2 20

Fully loaded

+55 bps

Regulator pulled forward permanent

Factor

introduction from 2021 to Q2 20

Sovereigns in EU

currency (STD

Q2 20

Phased-in

+12 bps

approach)

Sovereigns in EU

currency (IRB

H2 20

Phased-in

+14 bps

approach)

Software

Q1 21

Fully loaded

+10-15 bps**

Retail loans backed by

H1 21

Fully-loaded

No impact

pensions

Leverage ratio and

+62 bps on leverage

Erste Group boasts strong leverage ratio

exclusion of central

Q2 20

Phased-in

ratio

(>6%), hence no need for application

banks

FVTOCI debt securities

Q2 20

Phased-in

+ 1 bp

Immaterial impact, hence no application

IFRS9 provisions for

Impact calculation not

Erste Group adopted fully loaded IFRS9

expected credit losses

Q2 20

Phased-in

yet available

approach right from inception in 2019

(ECL)

* Impact calculation based on Q2 20 RWA, ** Final regulatory technical standard not yet available

Page 16

Conclusion -

Key takeaways and outlook for 2020

Operating

environment

Business

performance

Credit risk

Capital position

Profitability

Risk factors to

guidance

Q2 20 key takeaways

  • From mid-March COVID-19 lockdowns caused standstill in social and economic life
  • Reopening of economies from May/June
  • Finetuning of health & economic protection measures
  • NII held up yoy, while fees suffered from lower economic activity during lockdowns
  • Full recovery of trading/FV result
  • Cost reduction due to reduced other admin expenses
  • Erste Group addressed Covid-19 risk provisioning challenge head on by providing 148bps in Q2 20, based on macro and vulnerable industries overlay, minor portfolio deterioration
  • Fully loaded CET 1 ratio at record 14.2%, despite continued dividend accrual for 2020
  • SME supporting factor contributed to strong capital performance
  • Profitability declined due to forward-looking provisioning and weaker core topline

2020 outlook

  • COVID-19lockdowns redefine macro outlook
  • Real GDP decline of between 4-9%expected in 2020, followed by recovery in 2021
  • CEE-wideconcerted fiscal mitigation efforts
  • Challenged revenue outlook amid economic downturn, rate cuts, expenses to improve
  • Lower organic growth, protected growth (guarantees) and freezing of good portfolio through moratoria
  • 2020e risk costs at approx. 65-80bps (of average gross customer loans)
  • Aim to frontload as much as is justifiable in 2020
  • CET1 ratio is expected to remain strong with significant cushion in case of worse than expected economic performance
  • Medium-termCET1 target of 13.5% unchanged
  • Net result expected meaningfully lower than in 2019
  • Management intends to pay dividend both for 2019 and 2020, subject to business conditions and to regulatory approval
  • Longer than expected duration of COVID-19 crisis
  • Political or regulatory measures against banks
  • Geopolitical, global economic and global health risks
  • Economic downturn may put goodwill at risk

Page 17

Presentation topics

  • Addressing the key questions in an uncertain environment
    • CEE Covid-19 evolution update
    • Macroeconomic update
    • Business update
    • Operating trends
    • Asset quality and impairments
    • Capital trends and dividends
    • Key takeaways and outlook
  • Q2 20 presentation
    • Executive summary
    • Business environment
    • Business performance
    • Assets and liabilities
    • Additional information
      Covid-19 measures update

Page 18

Executive summary -

Group income statement performance

QoQ net profit reconciliation (EUR m)

YoY net profit reconciliation (EUR m)

-75.1%

108

146

235

552

86

Q1 20 Operating Operating Risk costs

Other

income expenses

result

66 30 58

Taxes on Minorities Q2 20 income

-59.9%

732

121

31

718

168

1-619 Operating Operating Risk costs

Other

income expenses

result

294

129

72

Taxes on Minorities 1-620 income

  • Q2 20 net result declined to EUR 58.5m on higher risk costs due to Covid-19 induced update of risk parameters
  • Improvement in operating income driven by rebound of trading/FV result after negative valuation effects occurred in Q1 20; more than offsets lower NII and fees
  • Other result improves on non-recurrence of resolution fund contributions as well as HU banking levy
  • Yoy net profit mainly down on substantial rise in risk costs driven by parameter updates
  • Operating income declined mainly on trading/FV result following an exceptional performance in H1 19; improving NII (+2.9%) offsets weaker fees (-2.4%), while operating expenses improve slightly
  • Other result improves on neg. one-off in RO in H1 19

Page 19

Executive summary -

Key income statement data

Net interest income & margin

Operating result & cost/income ratio

in EUR m

-6.2%

in EUR m

2,330

2,397

2.18%

1,447

1,357

66.8%

2.18%

2.04%

2.10%

55.5%

805

1,229

1,168

552

1-6 19 1-6 20 Q1 20 Q2 20 1-6 19 1-6 20 Q1 20 Q2 20

Banking levies

Reported EPS & ROE

in EUR m

in EUR

Cost of risk

in EUR m

614

675

1.48%

0.15%

62

-43

1-6 19

1-6 20

Q1 20

Q2 20

Return on tangible equity

83

10.2%

6.6%

65

3.4%

11.5%

50

33

1.63

0.57

0.55

0.2%

3.8%

7.3%

0.2%

0.02

1-6 19

1-6 20

Q1 20

Q2 20

1-6 19

1-6 20

Q1 20

Q2 20

1-6 19

1-6 20

Q1 20

Q2 20

Page 20

Executive summary -

Group balance sheet performance

YTD total asset reconciliation (EUR m)

+7.7%

37

264,692

3,467

94

4,363

3,373

7,740

245,693

31/12/19 Cash

Trading,

Loans to

Net loans Intangibles Miscella- 30/06/20

financial

banks

neous

assets

assets

YTD equity & total liability reconciliation (EUR m)

+7.7%

264,692

940

723

1,232

8,824

8,844

245,693

316

31/12/19 Trading

Bank

Customer Debt Miscellaneous Equity 30/06/20

liabilities

deposits

deposits * securities liabilities

  • Total assets up by 7.7%, mainly driven by a substantial increase in cash (+72.4%), while net loans to customers increased by 2.2%
  • Increase in cash attributable to AT (liquidity placed at central banks) and to CZ (rise in cash position mirrors development in interbank and customer deposits)
  • Total liability growth driven by a continuation of rising customer deposits (+5.1%) and bank deposits (+67.3%)
  • Growing customer deposits result in a loan/deposit ratio of 89.6% (YE19: 92.2%)
  • Increase in equity mainly attributable to the issuance of AT1 instruments (+EUR 497m) in Q1 20
    • excl. lease liabilities as of 2020

Page 21

Executive summary -

Key balance sheet data

Loan/deposit & loan/TA ratio

92.2% 89.6%

65.2% 61.9%

Loan/deposit ratio

Loans/total assets

Net loans & credit RWA

in EUR bn

+2.2%

160.3 163.7

100.4 97.0

Net loans

Credit RWA

31/12/19 30/06/20

NPL coverage ratio & NPL ratio

91.1%

77.1%

2.5% 2.4%

NPL coverage

NPL ratio

B3FL capital ratios

18.5% 19.1%

13.7% 14.2%

Total capital

CET 1

B3FL capital & tangible equity1

in EUR bn

16.3 16.4

12.8 13.0

CET 1

Tangible equity

  1. Based on shareholders' equity, not total equity

Liquidity coverage & leverage ratio2

161.7%

148.0%

6.8% 6.6%

LCR

LR (B3FL)

2) Pursuant to Delegated Act

Page 22

Presentation topics

  • Addressing the key questions in an uncertain environment
    • CEE Covid-19 evolution update
    • Macroeconomic update
    • Business update
    • Operating trends
    • Asset quality and impairments
    • Capital trends and dividends
    • Key takeaways and outlook
  • Q2 20 presentation
    • Executive summary
    • Business environment
    • Business performance
    • Assets and liabilities
    • Additional information
      Covid-19 measures update

Page 23

Business environment -

Recession in 2020 due to Coronavirus; rebound expected in 2021

2020 2021

Real GDP growth (in %)

Dom. demand contribution* (in %)

Net export contribution* (in %)

Consumer price inflation (avg, in %)

7.1

5.4

6.4

4.2

4.5

3.9

4.1

4.2

5.0

3.3

4.2

4.7

3.0

2.8

3.4

3.1

2.9

0.7

0.9

0.6 1.2

0.6

1.4

1.8 2.0

-0.1

-0.5

1.0

0.9

-4.7

-4.6

-2.5

-2.2

-1.3

0.8

-6.0

-1.9

-2.4

-7.0

-4.2

-7.5

-4.7

-9.0

-5.6

-5.9

-4.5

-4.3

AT

CZ

SK RO

HU HR

AT CZ SK

RO HU HR

AT

CZ SK RO

HU HR

-0.2

• Erste Group's markets to decline by 4-9% in 2020; significant rebound expected in 2021

AT CZ

SK RO HU HR

Both exports and consumption will suffer in 2020; hardest hit industries expected to be tourism, services, transport, and retail trade

Inflation to moderate due to economic shock in 2020; expected CPIs still below pre COVID-19 levels

Unemployment rate (avg, in %)

Current account balance (% of GDP)

Gen gov balance (% of GDP)

Public debt (% of GDP)

13.2

2.0

88

85

89

87

10.4

1.0

0.3

73 70

0.2

8.3 8.5

8.5

60 60

60

6.2

5.8

5.9

41 44

5.1 4.9

-0.9

-2.8

-3.2

-3.0

39 41

4.5 4.8

-4.3

-4.3

-3.8

-1.5

-5.2

-2.1

-5.9

-2.7

-2.6

-3.1

-8.1

-7.3

-8.5

-3.5

-3.5

-9.0

AT CZ SK

RO HU HR

AT

CZ SK RO

HU HR

AT

CZ

SK

RO HU

HR

AT

CZ

SK RO HU HR

  • Unemployment rates will increase across the region in 2020
  • Lower tax revenues and higher social payments will lead to rising fiscal deficits

* Contribution to real GDP growth. Domestic demand contribution includes inventory change. Source: Erste Group Research, EU Commission

Page 24

Business environment -

Policy rate cuts in across CEE

Austria

Czech Republic

3M Interbank 10YR GOV

Romania

0.30%

-0.11%

-0.15%

-0.08%

-0.31%

-0.35%

-0.41%

-0.30%

1-6 19

1-6 20

Q1 20

Q2 20

  • ECB has kept its discount rate at zero & significantly increased quantitative easing as response to Coronavirus

1.82%

2.15%

1.37%

2.07%

0.58%

1.45%

1.22%

1.00%

1-6 19

1-6 20

Q1 20

Q2 20

  • National bank has cut the base rate in three steps by 200bps to 0.25% in March & May 2020

4.80%

4.37%

4.34%

4.41%

3.04%

2.56%

2.87%

2.24%

1-6 19

1-6 20

Q1 20

Q2 20

  • Central bank cut the key policy rate in two steps by 75bps to 1.75% in March & May 2020

Slovakia

Hungary

Croatia

0.65%

0.43%

0.26%

0.09%

2.94%

2.22%

2.23%

2.22%

0.97%

-0.31%

-0.35%

-0.41%

-0.30%

0.16%

0.69%

0.41%

1-6 19

1-6 20

1-6 19

1-6 20

Q1 20

Q2 20

Q1 20

Q2 20

• As part of the euro zone ECB rates and

• National bank cut the key policy rate in two

actions are applicable in SK

steps by 30bps to 0.60% in June & July

2020

Source: Bloomberg, Reuters for SK 10Y. Annual and quarterly averages.

1.95%

0.95%

0.66%

0.80%

1-6 19

1-6 20

Q1 20

Q2 20

  • Croatia joined ERM II in July 2020
  • Central bank cut its 1w repo from 0.3% to 0.05% in March 2020

Page 25

Business environment -

CEE currencies have weakened versus the euro since COVID-19 outbreak

EUR/CZK

+2.6%

+5.5%

+4.8%

25.7

26.4

25.7

27.1

25.4

26.7

1-6 19

1-6 20

Q1 20

Q2 20

31/12/19 30/06/20

  • CZK reached its weakest level in March 2020 since 2014; benchmark rate cut in three steps from 2.25% to 0.25% in March & May 2020

EUR/RON

+1.6%

+0.8%

+1.0%

4.74

4.82

4.80

4.84

4.79

4.84

1-6 19

1-6 20

Q1 20

Q2 20

31/12/19 30/06/20

  • RON depreciated significantly and remained close to its all time low in H1 2020; policy rate cut by 75bps to 1.75% in March & May 2020

EUR/HUF

+7.8%

+3.6%

+7.0%

320.5

345.4

339.2

351.6

331.2

354.3

1-6 19

1-6 20

Q1 20

Q2 20

31/12/19 30/06/20

  • HUF reached all time low versus the euro in early April but stabilised since then; key policy rate was cut by 30bps to 0.60% in

June & July 2020

Source: Bloomberg

EUR/HRK

+1.6%

+1.2%

+1.7%

7.42

7.54

7.49

7.58

7.44

7.57

1-6 19

1-6 20

Q1 20

Q2 20

31/12/19 30/06/20

  • HRK depreciated to its weakest level in April 2020 since 2016; 1w repo was cut to 0.05% in March 2020

Page 26

Business environment -

Stable market shares across the region

Gross retail loans

Gross corporate loans

20.7%

21.7%

AT

20.5%

AT

21.9%

23.5%

21.5%

CZ

23.8%

CZ

21.0%

23.8%

21.1%

26.3%

14.8%

SK

26.0%

SK

15.8%

26.0%

16.3%

16.8%

11.3%

RO

16.7%

RO

12.2%

16.9%

12.8%

11.5%

7.2%

HU

11.8%

HU

7.9%

11.9%

7.8%

13.9%

19.0%

HR

13.9%

HR

20.7%

13.8%

20.6%

7.0%

6.1%

RS

7.4%

RS

6.5%

7.3%

6.8%

30/06/19

31/03/20

30/06/20

Retail deposits

Corporate deposits

20.3%

21.8%

AT

20.8%

AT

23.9%

25.6%

12.3%

CZ

25.4%

CZ

12.3%

25.4%

12.7%

28.1%

15.0%

SK

28.3%

SK

12.3%

28.4%

12.5%

15.2%

14.8%

RO

14.6%

RO

14.7%

14.7%

13.6%

9.6%

5.8%

HU

10.3%

HU

6.5%

10.4%

6.5%

14.3%

14.8%

HR

14.8%

HR

16.1%

14.5%

15.1%

4.1%

6.6%

RS

4.5%

RS

7.2%

4.5%

6.9%

  • CZ: increasing yoy market share in a growing market
  • RO: increasing market shares driven mainly by mortgages
  • SK: declining yoy market share caused by aggressive pricing by some of the smaller competitors
  • SK: increasing market shares in both Large Corporate and SME segments
  • RO: increasing market share mainly in SME segment
  • HR: increasing yoy market share driven by strong SME business

Continued inflows in all markets

Changes mainly due to normal

despite low interest rate

quarterly volatility in corporate

environment

business

Stable qoq market shares

SK: yoy market share decline

across the region

mainly in the large corporate

segment due to pricing

* 30/06/2020 market share data for Austria not yet available

Page 27

Presentation topics

  • Addressing the key questions in an uncertain environment
    • CEE Covid-19 evolution update
    • Macroeconomic update
    • Business update
    • Operating trends
    • Asset quality and impairments
    • Capital trends and dividends
    • Key takeaways and outlook
  • Q2 20 presentation
    • Executive summary
    • Business environment
    • Business performance
    • Assets and liabilities
    • Additional information
      Covid-19 measures update

Page 28

Business performance: performing loan stock & growth -

Performing loans continued to grow, supported by state guarantees

YoY 30/06/19

QoQ 31/03/20

30/06/20

154.2

5.9%

Group

160.3

1.9%

163.3

33.2

3.7%

AT/EBOe

34.4

0.3%

34.5

44.5

6.8%

AT/SB

46.9

1.5%

47.6

14.2

14.9%

AT/OA

15.3

6.8%

16.4

28.8

-0.6%

CZ

28.2

1.7%

28.6

8.0

5.5%

RO

8.5

-0.6%

8.4

13.4

8.6%

SK

14.2

2.2%

14.5

4.2

12.1%

HU

4.6

1.5%

4.7

6.4

7.4%

HR

6.7

2.9%

6.8

1.3

23.5%

RS

1.5

6.8%

1.7

0.0

Other

0.1

Not meaningful

0.1

in EUR bn

  • Yoy development more pronounced in Corporates (+7.9%) than in Retail (+3.3%); solid contribution from Savings Banks
  • Qoq growth balanced between Retail and Corporates (+1.7% each)
  • Year-on-yearsegment trends:
    • AT/OA: solid contributions both from Large Corporates and Commercial Real Estate
    • HU: strong growth both in Retail (+14.9%) and in Corporates (+8.6%)
    • CZ: growth in Retail could not offset decline in Corporates business
    • RS: continuation of dynamic growth
  • Quarter-on-quartersegment trends:
    • Growth momentum decelerated amid COVID-19 induced economic downturn
    • AT/OA: Continuation of growth in Commercial Real Estate and Large Corporates business
    • RO: Retail business expands slightly while Corporates decline

Page 29

Business performance: customer deposit stock* & growth -

Deposit build-up continues in Q2 20

YoY 30/06/19

QoQ 31/03/20

30/06/20

169.7

Group

181.7

182.7

36.5

AT/EBOe

38.3

39.8

47.8

AT/SB

51.0

53.0

5.8

AT/OA

8.2

5.2

41.2

CZ

43.6

42.8

11.8

RO

12.2

12.3

13.9

SK

14.0

14.4

6.2

HU

6.3

6.7

6.7

HR

7.3

7.5

1.1

RS

1.3

1.4

-1.2

Other

-0.4

-0.4

in EUR bn

* Excludes lease liabilities as of 2020

7.7%

0.5%

9.1%

3.9%

11.1%

4.1%

-10.8%

-36.3%

4.1%

-1.7%

4.6%

0.8%

3.1%

2.6%

7.9%

6.2%

11.8%

2.5%

26.4%

7.4%

Not meaningful

  • Continuation of exceptional deposit growth across most geographies despite zero/low interest rate environment as retail and corporate clients park cash in overnight accounts
  • Yoy growth in absolute terms mainly driven by Retail segment (+EUR 5.6bn) and Corporates (+EUR 3.7bn); solid contribution from Savings Banks (+EUR 5.3bn)
  • Qoq increase across most geographies
  • Year-on-yearsegment trends:
    • AT/OA: decrease in Group Markets business
    • AT/SB: increase across all savings banks
    • AT/EBOe: solid growth in Retail (+6.5%) combined with strong development in Corporates (+17.3%; partially due to shift from Retail to Corporates of approx. EUR 500m)
    • RS: exceptional growth both in Corporates (+48.7%) and in Retail (+25.1%)
  • Quarter-on-quartersegment trends:
    • AT/OA: temporary increase in foreign branches (in particular in New York) in Q1 20
    • CZ: growth in Retail (+5.9%) and Corporates (+13.5%) did not offset decline in Group Markets (money market deposits)
    • HU: growth in Retail (+7.4%) more pronounced than in Corporates (+4.4%)

Page 30

Business performance: NII and NIM -

NII flat yoy, down qoq mainly on rate cuts and FX effect in CZ

Q2 19

Q1 20 Q2 20

1,169

2.18%

Group

1,229

2.18%

1,168

2.04%

156

1.56%

AT/EBOe

161

1.51%

160

1.56%

260

1.76%

AT/SB

267

1.72%

265

1.69%

90

0.97%

AT/OA

112

1.13%

114

1.10%

278

2.04%

CZ

292

2.14%

242

1.70%

107

3.44%

RO

112

3.38%

109

3.35%

109

2.59%

SK

111

2.51%

109

2.42%

52

2.73%

HU

55

2.71%

49

2.22%

69

3.13%

HR

69

3.06%

66

2.89%

14

3.44%

RS

15

3.24%

15

3.06%

34

Other

35

Not meaningful

39

in EUR m

  • Yoy NII development shows decline in CZ due to rate cuts and CZK depreciation; offset by improvements in AT, RO and
    RS
  • Qoq decline mainly due to lower NII in CZ (see above); weaker development across geographies due to Covid-19 induced crisis and neg. impact from modification losses due to deferred loan repayments
  • Year-on-yearsegment trends:
    • CZ: decline in NII mainly driven by lower interest rate environment (3 rate cuts in March and May 2020); FX impact EUR -15.4m
    • AT/OA: Group Markets business benefits from higher money markets trading, and improvements in the corporate business of the Holding driven by higher customer loan volumes
  • Quarter-on-quartersegment trends:
    • CZ: NII declines mainly driven by rate cuts and lower volume of repo operations; FX impact EUR -16.7m
    • Other geographies: negative impact from Covid-19 induced crisis

Page 31

Business performance: operating income -

Rebounding trading and FV result in Q2 20

YoY Q2 19

QoQ Q1 20

Q2 20

1,821

-0.7%

Group

1,663

8.8%

1,809

AT/EBOe

286

-1.3%

281

0.2%

282

405

6.1%

AT/SB

353

21.8%

430

164

45.1%

AT/OA

86

177.6%

238

406

-15.4%

CZ

391

-12.2%

343

RO

175

-7.2%

165

-1.1%

163

SK

154

-1.6%

142

6.3%

151

110

-12.5%

HU

108

-11.1%

96

108

-10.2%

HR

98

-0.2%

97

19

5.8%

RS

20

0.1%

20

-6

19

Other

Not meaningful

-12

in EUR m

  • Yoy development relatively stable as improvements in trading and FV result almost offset weaker fee income
  • Qoq improvement almost solely due to rebound of trading and FV result, offsetting decline in NII (-5.0%) and fees (-10.3%); fee development hit by Covid-19 induced crisis (Lockdown) resulting in lower payments as well as securities and insurance related fees
  • Year-on-yearsegment trends:
    • AT/SB: operating income improves mainly on trading/FV result due to valuation effects, minor increase in NII and fees
    • AT/OA: better NII and trading/FV result (due to weaker trading performance in Q2 19) as fees decline on lower securities fees related income
    • CZ: development mainly driven by lower NII due to lower repo business and rate cuts as well as weaker fee income and FX impact
  • Quarter-on-quartersegment trends:
    • AT/SB: strong improvement due to trading and FV result, offsetting decline in fee income (mainly securities and insurance fees)
    • AT/OA: recovery in Group Markets business after significant trading and FV losses in Q1 20, offsetting lower fee income, mainly from security related fees
    • CZ: see above; improvement in trading and FV result

Page 32

Business performance: operating expenses -

Cost discipline results in improved cost performance

YoY Q2 19

QoQ Q1 20

Q2 20

1,030

-2.6%

Group

1,111

-9.7%

1,003

AT/EBOe

166

-1.4%

189

-13.1%

164

264

-0.4%

AT/SB

293

-10.5%

263

95

-8.8%

AT/OA

90

-4.3%

86

183

-3.6%

CZ

195

-9.6%

177

RO

84

-3.1%

86

-5.3%

81

68

6.0%

SK

73

-2.0%

72

51

2.2%

HU

59

-11.9%

52

57

-4.8%

HR

57

-4.0%

54

15

-0.9%

RS

13

14.5%

15

48

Other

56

Not meaningful

40

in EUR m

  • Yoy costs down despite wage inflation
  • Qoq improvement mainly on booking of deposit insurance contributions in Q1 20 (EUR 88.3m); decline in IT, consulting and marketing expenses offsets slightly higher personnel expenses
  • Year-on-yearsegment trends:
    • AT/OA: improvement driven by lower IT costs in the Holding business
    • CZ: declining operating expenses due to CZK depreciation; personnel expenses increase on higher salaries, while marketing expenses decrease in local currency
  • Quarter-on-quartersegment trends:
    • AT/EBOe: improvement in cost performance reflect non- recurrence of deposit insurance contributions; reduction of marketing expenses while personnel expenses increase slightly
    • AT/SB: operating expenses decline on bookings of deposit insurance contributions in Q1 20; lower expenses for office space, consultancy and personnel offset higher IT expenses
    • CZ: non-recurrence of deposit insurance contribution more than offsets increase in personnel and office space expenses; pos. FX impact of EUR 10.7m

Page 33

Business performance: operating result and CIR -

CIR at 55.5% in Q2 20

YoY Q2 19

QoQ Q1 20

Q2 20

Operating result

791

Group

552

805

AT/EBOe

119

93

118

142

AT/SB

60

167

AT/OA

-5

69

151

CZ

223

195

167

RO

92

79

82

86

YoY & QoQ change

1.8% 46.0%

-1.1%

27.5%

18.2%

181.0%

119.2%

-3,341.6%

-25.2%-14.8%

-10.9%

3.4%

Cost/income ratio

56.6%

66.8%

55.5%

58.2%

67.1%

58.1%

65.1%

83.1%

61.1% 57.9%

36.3%

45.1%

50.0%

51.5%

47.8%

52.1%

49.9%

44.0%

SK

69

80

HU

59

50

45

HR

51

41

-7.5%

-24.9%-10.3%

-16.2%

15.1%

51.4%

47.3%

46.0%

54.2%

53.7%

52.8%

58.1%

43

4

4.9%

55.9%

78.3%

RS

7

Other

-54

5

-37

in EUR m

-52

-25.5%

30.1%

Not meaningful

64.1%

73.3%

Not meaningful

Page 34

Business performance: risk costs (abs/rel*) -

Risk cost development in line with guidance

Q2 19

Q1 20 Q2 20

Group

-7

62

-0.02%

0.15%

-5

614

-0.06%

1.48%

AT/EBOe

22

60

0.25%

-0.08%

0.68%

AT/SB

-9

15

0.12%

126

1.02%

6

0.15%

AT/OA

27

0.69%

84

2.06%

3

0.04%

CZ

24

112

0.34%

-10

1.54%

-0.48%

RO

-44

80

-2.01%

3.60%

16

0.47%

SK

11

52

0.31%

1.41%

-10

-0.93%

HU

-4

54

-0.35%

4.89%

4

0.21%

HR

12

0.68%

41

2.25%

1

0.36%

RS

2

0.46%

6

1.45%

Other

-2

-3

0

in EUR m

Not meaningful

  • Yoy and qoq risk cost development driven by update of risk parameters to reflect deteriorated macro outlook following Covid-19 induced crisis
  • Risk costs for half-year 2020 at 82bps
  • Year-on-yearsegment trends:
    • AT/EBOe: higher risk costs in Corporates than in Retail
    • AT/SB: risk costs increase across all savings banks
    • CZ: increase in risk costs more pronounced in Retail than in Corporates
  • Quarter-on-quartersegment trends:
    • see above (Covid-19 significant increase in credit risk overlay and forward-looking information due to new macro assumptions)

*) A positive (absolute) figure denotes risk costs, a negative figure denotes net releases. Relative risk costs are calculated as annualised quarterly impairment result of financial instruments over average gross customer loans.

Page 35

Business performance: non-performing loans and NPL ratio -

NPL ratio stable at 2.4%

30/06/19

31/03/20 30/06/20

4,476

2.8%

Group

3,944

2.4%

4,043

2.4%

500

1.5%

AT/EBOe

479

1.4%

453

1.3%

1,454

3.2%

AT/SB

1,301

2.7%

1,280

2.6%

397

2.7%

AT/OA

321

2.1%

328

2.0%

505

1.7%

CZ

499

1.7%

532

1.8%

469

5.5%

RO

321

3.7%

400

4.5%

445

3.2%

SK

411

2.8%

406

2.7%

131

3.0%

HU

105

2.2%

99

2.1%

541

7.8%

HR

469

6.6%

508

6.9%

20

1.5%

RS

20

1.3%

19

1.2%

13

Other

17

in EUR m

Not meaningful

17

  • NPL volume at EUR 4.0bn in Q2 20. NPL volume development driven by:
    • Decelerating level of recoveries and upgrades partially offsets gross new inflows
  • NPL sales of EUR 10.6m in Q2 20 (Q1 20: EUR 36.2m)
    • Retail: EUR 2.3m (Q1 20: EUR 29.0m)
    • Corporates: EUR 8.3m (Q4 19: EUR 7.2m)
    • Q2 20 NPL sales mainly in Romania, the Czech Republic and on Holding level

Page 36

Business performance: allowances for loans and NPL coverage -

NPL coverage rises to 91.1%

30/06/19

31/03/20 30/06/20

3,362

75.4%

Group

3,171

80.9%

3,662

91.1%

308

61.7%

AT/EBOe

299

62.5%

333

73.6%

914

62.9%

AT/SB

866

66.7%

948

74.2%

243

62.5%

AT/OA

222

73.2%

296

95.3%

495

98.1%

CZ

496

99.3%

598

112.4%

483

103.2%

RO

405

126.1%

469

117.4%

346

77.7%

SK

338

82.1%

389

95.8%

115

88.1%

HU

106

102.0%

148

151.2%

424

78.3%

HR

392

83.5%

427

84.1%

27

134.8%

RS

31

152.0%

36

187.0%

8

Other

16

Not meaningful

16

in EUR m

  • NPL coverage increases yoy and qoq due to rising allowances
  • Year-on-yearsegment trends:
    • Allocations of allowances in performing portfolio resulted in higher NPL coverage across all segments
  • Quarter-on-quartersegment trends:
    • AT/EBOe, AT/SB, SK, HU: coverage improvement driven by slight decrease in NPLs paired with higher loan loss allowances (mostly triggered by the transfer to stage 2 as a result of Covid- 19 significant increase in credit risk overlay and forward-looking information due to new macro assumptions)
    • CZ, HR: Increase of loan loss allowances at a faster pace than increase in NPLs resulted in higher NPL coverage; development of allowances mainly driven by additional bookings for performing portfolios (Covid-19 significant increase in credit risk overlay and forward-looking information due to new macro assumptions), but also by allocations for new defaults

Page 37

Business performance: other result -

Other result improves qoq

Q2 19

Q1 20 Q2 20

Group

-210

-129

-43

-6

AT/EBOe

-17

9

AT/SB

-12

4

2

AT/OA

-2

2

7

CZ

-28

1

-2

RO

-156

-13

1

-9

SK

-23

-17

-15

HU

-41

2

HR

-1

-6

-4

0

RS

0

0

Other

-29

14

-41

in EUR m

  • Yoy other operating result improves mainly on non-recurrence of legal provisions due to RO high court decision in Q2 19
  • Qoq improvement due to resolution fund contributions and full-year HU banking tax booked in Q1 20
  • Year-on-yearsegment trends:
    • RO: improvement driven by booking of legal provisions due to RO high court decision in Q2 19 (EUR 150.8m)
    • AT/EBOe: other operating result benefits from real estate selling gains
  • Quarter-on-quartersegment trends:
    • HU: bookings of resolution fund contribution and full-year banking levy in Q1 20 result in improved other operating result
    • Other geographies (except HR, RS): improvements mainly due to bookings of resolution fund contributions in Q1 20

Page 38

Business performance: net result -

Net profit declines on Covid-19 induced rise in risk costs

Q2 19

Q1 20 Q2 20

Group

355

235

58

AT/EBOe

87

36

36

AT/SB

19

6

11

AT/OA

-23

49

54

178

CZ

114

41

-71

RO

78

3

SK

50

28

7

HU

48

9

-14

26

HR

12

6

2

RS

-1

4

-34

Other

-30

-85

in EUR m

  • Yoy profitability hit by rising risk costs due to Covid-19 induced risk cost development following updates on risk parameters, offsetting improved other operating result
  • Qoq performance declines on risk costs, offsetting substantial improvements in operating performance after temporary decline in Q1 20
  • Year-on-yearsegment trends:
    • CZ: higher risk costs and lower operating performance (esp. due to lower NII following rate cuts and neg. FX effect) weigh on profitability
    • RO: non-recurrence of legal provisions more than offsets substantial increase in risk costs
    • HU: significant rise in risk costs as well as weaker operating performance result in net loss
  • Quarter-on-quartersegment trends:
    • AT/OA: net result improves on swing in net trading and FV result after temporary valuation losses in Q1 20; more than offsetts significant increase in risk costs
    • RO: profitability mirrors risk cost development
  • Return on equity at 0.2%, following 6.6% in Q1 20, and 9.3% in Q2 19
  • Cash return on equity at 0.3%, following 6.7% in Q1 20, and 9.4% in Q2 19

Page 39

Presentation topics

  • Addressing the key questions in an uncertain environment
    • CEE Covid-19 evolution update
    • Macroeconomic update
    • Business update
    • Operating trends
    • Asset quality and impairments
    • Capital trends and dividends
    • Key takeaways and outlook
  • Q2 20 presentation
    • Executive summary
    • Business environment
    • Business performance
    • Assets and liabilities
    • Additional information
      Covid-19 measures update

Page 40

Assets and liabilities: YTD overview -

Loan/deposit ratio at 89.6% (Dec 19: 92.2%)

Assets (EUR bn)

264.7

Assets (in %)

Liabilities & equity (EUR bn)

Liabilities & equity (in %)

264.7

245.718.4

4.4%

7.0%

100%

245.7

2.7

5.3%

1.0%

100%

22.0

8.3%

1.0%

10.7

44.3

47.7

18.0%

13.1

2.4

18.0%

23.127.4

160.3163.7

6.0

1.4

6.1

1.3

31/12/19 30/06/20

Cash

Trading, financial assets

Loans to banks

Net loans

Intangibles Miscellaneous assets

9.4%

65.2%

2.4% 0.6%

31/12/19

10.4%

173.8

182.7

70.8%

69.0%

61.9%

12.4%

30.4

29.4

11.1%

0.5%

5.4

6.7

2.2%

2.5%

20.5

21.2

8.3%

8.0%

2.3%

31/12/19

30/06/20

31/12/19

30/06/20

30/06/20

Trading liabilities

Equity

Bank deposits

Customer deposits

Debt securities

Miscellaneous liabilities

Page 41

Assets and liabilities: customer loans by country of risk -

Net customer loans up 2.2%, NPLs down 2.4% ytd

Net customer loans (EUR bn)

Performing loans (EUR bn)

Non-performing loans (EUR bn)

+2.2%

+2.5%

160.2

161.1

163.7

159.3

160.3

5.2

5.4

8.8

5.9

5.2

5.4

8.5

9.3

2.1

8.4

9.3

1.9

2.0

1.9

2.0

6.8

7.3

6.9

6.7

6.8

9.3

5.4

9.2

5.4

9.2

5.3

9.4

5.4

9.3

5.3

14.8

15.0

15.4

14.7

14.9

28.1

27.1

28.0

28.0

27.0

80.3

80.8

81.7

79.7

80.3

163.3

-2.4%

5.9

8.8

4.1

2.1

4.0

7.1

3.9

5.4

0.1

0.2

9.3

0.2

0.1

0.0

0.2

0.2

0.0

15.4

0.0

0.6

0.6

0.6

0.1

0.1

28.1

0.1

0.4

0.4

0.3

0.4

0.4

0.4

0.6

0.6

0.6

81.2

1.6

1.5

1.5

31/12/19

31/03/20

30/06/20

31/12/19

31/03/20

30/06/20

31/12/19

31/03/20

30/06/20

AT CZ SK RO HU HR RS Other EU Other

  • Performing loans enjoy solid growth across all geographies
  • Corporates performed better than Retail
  • Ytd decline in NPL stock across most geographies

Page 42

Assets and liabilities: financial and trading assets* -

LCR at excellent 161.7%

By geography

+7.1%in EUR bn

41.4

42.5

44.3

10.0

10.5

10.7

0.7

0.6

0.7

3.6

3.4

3.6

5.6

5.8

5.7

6.2

5.3

5.2

10.2

9.4

8.7

7.6

7.4

7.4

31/12/19

31/03/20

30/06/20

Other

SK

DE

CZ

HU

AT

RO

* Excludes derivatives held for trading

By debtor type

Liquidity buffer

in EUR bn

100%

27.0%

9.9%

9.2%

8.7%

24.6%

10.4%

9.6%

8.4%

65.3

23.0%

55.5

55.9

79.7%

81.2%

83.0%

31/12/19

31/03/20

30/06/20

31/12/19

31/03/20

30/06/20

Other

Liquidity buffer

Banks

Liquidity buffer as % of total liabilities

Sovereign

• Liquidity buffer is defined as unencumbered collateral plus cash

• Total liabilities are defined as total on balance sheet liabilities excluding total equity

Page 43

Assets and liabilities: customer deposit funding -

Customer deposits* up 5.1% ytd, driven by households

By customer type

By product type

Highlights

in EUR bn

in EUR bn

+5.1%

173.8

181.7

182.7

173.8

181.7

182.7

0.3

3.7

4.2

14.0

0.3

12.4

0.3

0.3

0.8

8.7

1.5

0.8

10.0

11.0

13.2

49.9

50.3

45.9

36.7

34.3

35.6

119.2

118.6

123.2

121.7

127.5

132.3

  • Continued deposit inflows driven by Retail segment with strong contribution from Corporate segment (esp. public sector) with highest demand for overnight deposits amid low interest rate environment
  • Increasing share of overnight deposits with significantly longer behavioural maturity provides a cost effective funding source

31/12/19

31/03/20

30/06/20

31/12/19

31/03/20

30/06/20

FV deposits & Lease liabilities

FV deposits & Lease liabilities

General governments

Repurchase agreements

Other financial corporations

Term deposits

Non-financial corporations

Overnight deposits

Households

* excludes lease liabilities as of 2020

Page 44

Assets and liabilities: debt vs interbank funding -

Reduced wholesale funding reliance, as customer deposits grow strongly

Debt securities issued

Interbank deposits

-3.1%

in EUR bn

+67.3%

in EUR bn

30.4

29.4

29.4

Sub debt

20.7

22.0

Overnight deposits

6.0

5.6

5.1

Senior non-preferred bonds

2.9

4.7

Term deposits

Senior unsec. bonds

0.5

0.7

0.7

Certificates of deposit

Repurchase agreements

8.3

7.6

8.2

Other CDs, name cert's

13.1

0.1

0.2

0.0

Mortgage CBs

2.0

1.1

1.1

1.1

Public sector CBs

13.2

17.4

Other

12.8

13.4

13.5

9.6

0.3

0.2

0.2

2.8

1.6

1.7

1.4

0.6

0.6

31/12/19

31/03/20

30/06/20

31/12/19

31/03/20

30/06/20

  • Overall, relative stable development while volumes of mortgage covered bonds have risen
  • Seasonal decline in interbank deposits mainly in overnight and term deposits in Q4

Page 45

Assets and liabilities: LT funding -

Stable LT funding needs in 2020

Maturity profile of debt

in EUR bn

3.5

3.0

1.8

2.1

2.4

2.1

2.7

2.2

1.4

0.9

1.1

0.1

0.7

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032+

Senior unsec. bonds Senior non-preferred bonds Covered bonds Capital exc Tier 1 Debt CEE

  • Erste Group started the year with a EUR 750m covered bond issuance in January 2020; pricing at MS+3pbs
  • Furthermore a EUR 500m perpNC7.2 AT1 was issued with a 3.375% annual coupon in the second half of January representing the second lowest coupon for a EUR AT1 ever printed
  • In Q2 2020, Erste Group continued its MREL-strategy by issuing a EUR 750m 7y senior preferred note at MS+115bp
  • The early-terminated LTRO II funding (termination in 12/2019) was rolled into the more attractive TLTRO III in the same amount in March 2020 and was further increased due to the favourable conditions for the reporting season 06/2020-06/2021 to a total volume of EUR 9.9bn as of June 2020

Page 46

Assets and liabilities: LT funding -

Targeting MPE approach

Resolution strategy

  • Direct presence in 7 geographically connected countries
  • Erste Group's setup suggests a multiple point of entry (MPE) resolution strategy
  • When determined, MREL needs are likely to be met with a mix of own funds, senior non-preferred and senior preferred instruments

CZ

SK

AT

HU

RO

HR

RS

Majority ownership

Minority ownership

Austrian resolution group

  • Major entities within the Austrian resolution group*:
    • Erste Group Bank AG
    • Erste Bank Oesterreich and its subsidiaries
    • All other savings banks of the Haftungsverbund
  • Subordination requirement does not seem to be a limiting factor
  • Binding MREL targets for the Austrian, Slovak, Romanian, Hungarian and Czech resolution groups have been received; for Croatia the first binding target is expected in 2021
  • All CEE resolution groups with a binding decision received in 2020 will receive a transition period until year-end 2023 enabling them to reach their MREL targets gradually

*) Subject to joint decision of resolution authority

Page 47

Assets and liabilities: LT funding -

Expected total MREL-related issuance volume unchanged

MREL resolution groups (2019)

Preliminary 5-year issuance plan (avg. p.a.)

152

in EUR bn

in EUR m

3,500-5,000

76

57

21

19

8

16

7

10

7

9

6

AT

CZ

SK

RO

HR

HU

Total assets Total RWA

  • Under MREL there are 6 resolution groups covered by the Single Resolution Board
  • The Austrian resolution group (parent company, EBOe and savings banks) is not considered a legal entity or reporting unit, hence there is neither a statutory reporting nor a capital requirement for the Austrian resolution group

~400-500 ~200-300~100-300~100-300~100-150

Holding CZ SK RO HR HU

  • CEE issuances will mainly be placed in domestic market
  • First NPS issuances by Erste Group Bank AG (in EUR) and BCR (in RON) in 2019 and Slovenská sporiteľňa in Feb 2020

Page 48

Assets and liabilities: capital position -

CET1 ratio rises to a strong 14.2%, phased-in to 14.3%

Basel 3 capital

Risk-weighted assets

Basel 3 capital ratios

in EUR bn

in EUR bn

21.8

21.5

22.0

21.3

22.0

118.8

121.4

118.6

120.5

115.3

3.2

2.9

2.8

3.4

3.3

4.2

3.6

14.3

14.7

4.2

4.1

3.5

14.2

14.9

14.5

1.5

1.5

1.5

2.0

2.0

103.9

102.4

16.1

15.9

16.3

15.8

16.4

101.7

100.8

97.5

14.8%

18.3%

14.3%

17.7%

15.0%

18.5%

14.8%

17.7%

14.2%

15.9%

19.1%

13.5%

13.1%

13.7%

13.1%

30/06/19

30/09/19

31/12/19

31/03/20

30/06/20

30/06/19

30/09/19

31/12/19

31/03/20

30/06/20

30/06/19

30/09/19

31/12/19

31/03/20

30/06/20

Tier 2

AT1

CET1

Market risk

Op risk

Credit RWA

CET1

Tier 1

Total capital

• CET1 capital improves by EUR 146m ytd •

YTD credit RWA development mainly on: •

CET1 ratio benefits from SME support

mainly on:

SME support factor: ca. -EUR 4.5bn

factor: +55bps

Inclusion of H1 20 interim profit: EUR 157m

Business growth: ca. + EUR 3.5bn

FX impact: -25bps

Minority interest: +EUR 352m

FX depreciation: ca. -EUR 0.9bn

Dividend for 2019 (and accrued for 2020)

OCI and prudential filter impact (mainly on FX

Rise in market risk driven by increased

included in capital ratios

impact): -EUR 468m

volatility

Medium-term target remains unchanged

• AT1 issuance in Q1 20: +EUR 497m

at 13.5%

Page 49

Presentation topics

  • Addressing the key questions in an uncertain environment
    • CEE Covid-19 evolution update
    • Macroeconomic update
    • Business update
    • Operating trends
    • Asset quality and impairments
    • Capital trends and dividends
    • Key takeaways and outlook
  • Q2 20 presentation
    • Executive summary
    • Business environment
    • Business performance
    • Assets and liabilities
    • Additional information
      Covid-19 measures update

Page 50

Additional information: segment structure -

Business line and geographic view

Erste Group - Business segments

Group

ALM &

Savings

Group

Intragroup

Retail

Corporates

Local CC

Corporate

Markets

Banks

Elimination

(ALM&LCC)

Center

SME

Other Subsidiaries

Large Corporate

Asset/Liability Management

Group bookings

Commercial Real Estate

Local Corporate Center

Holding Corporate Center

Public Sector

Free Capital

Erste Group - Geographical segmentation

Austria

Central and Eastern Europe

Other

EBOe &

Savings

Other

Czech

Slovakia

Romania

Hungary

Croatia

Serbia

Subsidiaries

Banks

Austria

Republic

(SK)

(RO

(HU)

(HR)

(RS)

(AT/EBOe)

(AT/SB)

(AT/OA)

(CZ)

Holding Business

Erste Group Immorent

Erste Asset Management

Intermarket Bank AG

  • Holding ALM
  • Holding CC
  • Other Subsidiaries
  • Group bookings and IC elimination
  • Free Capital

Page 51

Additional information: income statement -

Year-to-date and quarterly view

Year-to-date view

Quarterly view

in EUR million

1-6 19

1-6 20

YOY-

Q2 19

Q1 20

Q2 20

YOY-

QOQ-

Net interest income

2,329.7

2,396.9

2.9%

1,168.8

1,229.0

1,167.9

-0.1%

-5.0%

Interest income

2,742.0

2,645.2

-3.5%

1,385.5

1,391.7

1,253.5

-9.5%

-9.9%

Other similar income

839.4

759.3

-9.5%

414.1

395.1

364.2

-12.0%

-7.8%

Interest expenses

-554.9

-378.8

-31.7%

-283.6

-231.0

-147.9

-47.9%

-36.0%

Other similar expenses

-696.9

-628.8

-9.8%

-347.2

-326.8

-302.0

-13.0%

-7.6%

Net fee and commission income

980.4

956.7

-2.4%

492.7

504.2

452.5

-8.2%

-10.3%

Fee and commission income

1,189.0

1,146.0

-3.6%

593.2

604.6

541.4

-8.7%

-10.5%

Fee and commission expenses

-208.6

-189.3

-9.2%

-100.5

-100.4

-88.9

-11.5%

-11.4%

Dividend income

19.0

14.8

-21.9%

18.4

1.5

13.3

-27.9%

>100.0%

Net trading result

310.1

-19.2

n/a

156.8

-157.4

138.2

-11.9%

n/a

Gains/losses from financial instruments measured at fair value through profit or loss

-140.1

28.5

n/a

-63.0

37.5

-8.9

-85.8%

n/a

Net result from equity method investments

7.0

5.9

-16.4%

5.2

3.3

2.6

-50.6%

-21.3%

Rental income from investment properties & other operating leases

86.9

88.3

1.5%

42.4

44.8

43.5

2.6%

-2.9%

Personnel expenses

-1,255.9

-1,265.5

0.8%

-633.9

-630.0

-635.5

0.3%

0.9%

Other administrative expenses

-625.6

-583.3

-6.7%

-267.3

-344.8

-238.6

-10.8%

-30.8%

Depreciation and amortisation

-264.6

-265.9

0.5%

-129.1

-136.5

-129.4

0.2%

-5.2%

Gains/losses from derecognition of financial assets measured at amortised cost

0.9

0.3

-65.5%

0.6

0.4

-0.1

n/a

n/a

Other gains/losses from derecognition of financial instruments not measured at fair value through profit or loss

10.1

-2.1

n/a

9.4

-1.7

-0.5

n/a

-69.9%

Impairment result from financial instruments

42.8

-675.4

n/a

7.1

-61.7

-613.7

n/a

>100.0%

Other operating result

-351.0

-169.9

-51.6%

-219.9

-127.6

-42.3

-80.8%

-66.8%

Levies on banking activities

-64.7

-83.0

28.2%

-25.9

-49.9

-33.1

27.8%

-33.7%

Pre-tax result from continuing operations

1,149.8

510.1

-55.6%

588.0

361.3

148.8

-74.7%

-58.8%

Taxes on income

-212.7

-140.3

-34.0%

-117.2

-103.0

-37.3

-68.2%

-63.8%

Net result for the period

937.1

369.8

-60.5%

470.8

258.3

111.5

-76.3%

-56.8%

Net result attributable to non-controlling interests

205.2

76.1

-62.9%

115.9

23.0

53.0

-54.2%

>100.0%

Net result attributable to owners of the parent

731.9

293.8

-59.9%

354.9

235.3

58.5

-83.5%

-75.1%

Operating income

3,592.9

3,471.9

-3.4%

1,821.2

1,663.0

1,808.9

-0.7%

8.8%

Operating expenses

-2,146.0

-2,114.7

-1.5%

-1,030.4

-1,111.2

-1,003.5

-2.6%

-9.7%

Operating result

1,446.9

1,357.2

-6.2%

790.9

551.7

805.4

1.8%

46.0%

Page 52

Additional information: group balance sheet -

Assets

Quarterly data

Change

in EUR million

Jun 19

Sep 19

Dec 19

Mar 20

Jun 20

YOY-

YTD-

QOQ-

Cash and cash balances

16,843

15,638

10,693

23,031

18,433

9.4%

72.4%

-20.0%

Financial assets held for trading

6,464

7,215

5,760

7,706

6,984

8.0%

21.3%

-9.4%

Derivatives

3,101

3,551

2,805

4,034

3,233

4.2%

15.2%

-19.9%

Other financial assets held for trading

3,363

3,664

2,954

3,672

3,752

11.6%

27.0%

2.2%

Non-trading financial assets at fair value through profit and loss

3,377

3,350

3,208

3,130

3,122

-7.6%

-2.7%

-0.3%

Equity instruments

401

393

390

361

374

-6.6%

-4.1%

3.6%

Debt securities

2,459

2,539

2,335

2,250

2,129

-13.4%

-8.8%

-5.4%

Loans and advances to banks

0

0

0

0

0

n/a

n/a

n/a

Loans and advances to customers

518

419

483

519

619

19.6%

28.0%

19.2%

Financial assets at fair value through other comprehensive income

9,404

8,940

9,047

8,953

8,883

-5.5%

-1.8%

-0.8%

Equity instruments

285

312

210

139

132

-53.7%

-37.1%

-4.7%

Debt securities

9,119

8,629

8,836

8,815

8,750

-4.0%

-1.0%

-0.7%

Financial assets at amortised cost

199,411

204,079

204,162

207,133

214,464

7.5%

5.0%

3.5%

Debt securities

26,892

26,808

26,764

27,700

29,298

8.9%

9.5%

5.8%

Loans and advances to banks

23,035

25,241

23,055

24,264

27,418

19.0%

18.9%

13.0%

Loans and advances to customers

149,484

152,030

154,344

155,168

157,749

5.5%

2.2%

1.7%

Finance lease receivables

3,925

3,987

4,034

4,040

4,082

4.0%

1.2%

1.0%

Hedge accounting derivatives

168

182

130

226

270

60.5%

>100.0%

19.6%

Property and equipment

2,580

2,509

2,629

2,558

2,526

-2.1%

-3.9%

-1.2%

Investment properties

1,228

1,226

1,266

1,254

1,257

2.3%

-0.7%

0.2%

Intangible assets

1,490

1,491

1,368

1,322

1,331

-10.7%

-2.7%

0.7%

Investments in associates and joint ventures

204

202

163

163

166

-18.5%

2.0%

1.9%

Current tax assets

92

80

81

80

135

47.1%

66.9%

68.2%

Deferred tax assets

417

436

477

453

467

11.9%

-2.1%

3.2%

Assets held for sale

214

242

269

265

260

21.6%

-3.2%

-1.9%

Trade and other receivables

1,404

1,405

1,408

1,391

1,287

-8.4%

-8.6%

-7.5%

Other assets

1,039

1,119

1,001

1,191

1,019

-1.9%

1.8%

-14.5%

Total assets

248,261

252,101

245,693

262,898

264,692

6.6%

7.7%

0.7%

Page 53

Additional information: group balance sheet -

Liabilities and equity

Quarterly data

Change

in EUR million

Jun 19

Sep 19

Dec 19

Mar 20

Jun 20

YOY-

YTD-

QOQ-

Financial liabilities held for trading

2,518

2,751

2,421

3,322

2,737

8.7%

13.0%

-17.6%

Derivatives

2,125

2,411

2,005

2,945

2,308

8.6%

15.1%

-21.7%

Other financial liabilities held for trading

393

341

416

377

429

9.2%

3.3%

14.0%

Financial liabilities at fair value through profit or loss

14,605

14,550

13,494

12,591

12,607

-13.7%

-6.6%

0.1%

Deposits from customers

255

277

265

252

295

15.8%

11.4%

17.1%

Debt securities issued

13,914

13,754

13,011

12,128

12,136

-12.8%

-6.7%

0.1%

Other financial liabilities

436

520

219

211

177

-59.5%

-19.4%

-16.4%

Financial liabilities at amortised cost

205,560

208,728

204,143

219,988

222,321

8.2%

8.9%

1.1%

Deposits from banks

19,043

19,936

13,141

20,703

21,984

15.4%

67.3%

6.2%

Deposits from customers

169,004

171,831

173,066

181,439

182,376

7.9%

5.4%

0.5%

Debt securities issued

16,859

16,350

17,360

17,285

17,295

2.6%

-0.4%

0.1%

Other financial liabilities

653

611

576

560

666

2.0%

15.6%

19.0%

Lease liabilities

409

403

515

520

521

27.4%

1.1%

0.2%

Hedge accounting derivatives

276

291

269

207

209

-24.3%

-22.5%

0.7%

Fair value changes of hedged items in portfolio hedge of interest rate risk

0

0

0

0

0

96.6%

>100.0%

-5.5%

Provisions

2,004

2,001

1,919

2,046

2,033

1.4%

5.9%

-0.7%

Current tax liabilities

75

89

61

94

62

-17.8%

2.1%

-34.4%

Deferred tax liabilities

31

24

18

24

17

-45.8%

-6.3%

-31.5%

Liabilities associated with assets held for sale

7

7

6

7

7

-1.9%

19.2%

6.8%

Other liabilities

3,127

3,128

2,369

3,045

2,978

-4.8%

25.7%

-2.2%

Total equity

19,649

20,130

20,477

21,053

21,200

7.9%

3.5%

0.7%

Equity attributable to non-controlling interests

4,639

4,735

4,857

4,875

4,922

6.1%

1.3%

1.0%

Additional equity instruments

1,490

1,490

1,490

1,987

1,987

33.4%

33.4%

0.0%

Equity attributable to owners of the parent

13,520

13,904

14,129

14,190

14,291

5.7%

1.1%

0.7%

Subscribed capital

860

860

860

860

860

0.0%

0.0%

0.0%

Additional paid-in capital

1,477

1,477

1,478

1,478

1,478

0.1%

0.0%

0.0%

Retained earnings and other reserves

11,183

11,568

11,792

11,853

11,953

6.9%

1.4%

0.8%

Total liabilities and equity

248,261

252,101

245,693

262,898

264,692

6.6%

7.7%

0.7%

Page 54

Additional information: regulatory capital position/requirement (SREP) -

Capital requirements (SREP) for 2020; Erste Group target of 13.5% unchanged

  • Combined impact of reduced countercyclical buffers results in expected 18 bps at year-end 2020

Erste Group Consolidated

Erste Group Unconsolidated

ECB Capital Relief

Phased-in

Fully loaded

Measures 1)

Fully loaded

Phased-in

Fully loaded

2018

2019

Q2 2020

Q2 2020

YE 2020

2018

2019

Q2 2020

YE 2020

Pillar 1 CET1 requirement

4.50%

4.50%

4.50%

4.50%

4.50%

4.50%

4.50%

4.50%

4.50%

Combined buffer requirement

3.19%

4.91%

4.81%

2.31%

4.68%

3.07%

4.75%

4.73%

4.64%

Capital conservation buffer

1.88%

2.50%

2.50%

0.00%

2.50%

1.88%

2.50%

2.50%

2.50%

Countercyclical capital buffer 2)

0.31%

0.41%

0.31%

0.31%

0.18%

0.20%

0.25%

0.23%

0.14%

OSII/Systemic risk buffer

1.00%

2.00%

2.00%

2.00%

2.00%

1.00%

2.00%

2.00%

2.00%

Pillar 2 CET1 requirement 3)

1.75%

1.75%

0.98%

0.98%

0.98%

1.75%

1.75%

0.98%

0.98%

Pillar 2 CET1 guidance

1.05%

1.00%

1.00%

0.00%

1.00%

0.00%

0.00%

0.00%

0.00%

Regulatory minimum ratios excluding P2G

CET1 requirement

9.44%

11.16%

10.29%

7.79%

10.16%

9.32%

11.00%

10.22%

10.12%

1.50%

AT1

Tier 1 requirement

10.94%

12.66%

12.12%

9.62%

11.99%

10.82%

12.50%

12.05%

11.95%

2.00%

T2

Own funds requirement

12.94%

14.66%

14.56%

12.06%

14.43%

12.82%

14.50%

14.48%

14.39%

Regulatory minimum ratios including P2G

CET1 requirement

10.49%

12.16%

11.29%

n.a.

11.16%

9.32%

11.00%

10.22%

10.12%

1.50%

AT1

Tier 1 requirement

10.94%

12.66%

13.12%

n.a.

12.99%

10.82%

12.50%

12.05%

11.95%

2.00%

T2

Own funds requirement

12.94%

14.66%

15.56%

n.a.

15.43%

12.82%

14.50%

14.48%

14.39%

Reported CET1 ratio as of June 2020

14.28%

4)

21,59% 5)

  • Buffer to MDA restriction as of 30 Jun: 389bps
  • Available distributable items (ADI) as of 30 Jun 20: EUR 2.4bn (post 2019 dividend and AT1 coupon; based on CRR II, which allows additional own funds components to be included, ADIs are at EUR 4.9bn)
  1. Following ECB's announcement re. measures in reaction to COVID-19 on 12 March 2020. (MDA restrictions still apply in case of a combined buffer requirement breach).
  2. Planned values based on Q2 2020 exposure (Q2 20 countercyclical buffer of 0.31% for Erste Group consolidated)
  3. As of 12 March 2020 ECB brought forward measures for the use of the P2R re. capital stack (56.25% for CET1 capital and 75% for Tier 1 capital. The overall P2R remained at 1.75% for Erste Group
  4. Consolidated capital ratios pursuant to IFRS. Unconsolidated capital ratios pursuant to Austrian Commercial Code (UGB) and on phased-in basis. ADIs pursuant to UGB.
  5. Unconsolidated CET1 ratio based on Q1 20 figures

Page 55

Additional information: gross customer loans -

By risk category, by currency, by industry

Gross cust. loans by risk category (EUR bn)

Gross customer loans by currency (EUR bn)

158.7

161.1

163.4

164.3

167.4

158.7

161.1

163.4

164.3

167.4

3.4

4.5

4.3

4.1

3.9

5.3

5.7

4.0

2.3

2.5

2.6

3.5

2.5

2.5

3.4

3.3

3.2

5.0

15.5

4.9

16.1

5.3

20.1

19.2

3.1

3.2

2.9

3.2

3.0

16.0

37.1

35.6

36.7

35.8

36.0

133.2

136.4

137.9

134.9

138.4

121.8

119.4

116.1

117.6

114.1

30/06/19

30/09/19

31/12/19

31/03/20

30/06/20

30/06/19

30/09/19

31/12/19

31/03/20

30/06/20

Gross customer loans by industry (EUR bn)

163.4

164.3

167.4

158.7

161.1

9.7

9.7

9.5

9.5

9.3

4.7

4.7

4.7

4.5

4.4

4.6

4.3

4.4

4.5

9.6

4.7

9.8

9.8

9.9

9.5

4.0

4.8

4.7

4.5

4.1

6.4

5.9

5.7

5.9

7.2

5.8

7.3

7.4

7.4

7.2

9.4

9.2

9.5

9.2

9.0

13.5

12.6

13.1

12.8

12.6

27.6

26.4

26.6

25.6

25.3

Gross customer loans by risk category (in %)

100%

2.8% 2.7% 2.5% 2.4% 2.4% 10.1% 3.1% 9.6% 3.0% 9.8% 3.3% 12.3% 3.2% 11.5%3.4%

84.0%

84.7%

84.4%

82.1%

82.7%

30/06/19

30/09/19

31/12/19

31/03/20

30/06/20

Non-performing

Management attention

Substandard

Low risk

Gross customer loans by currency (in %)

2.1% 1.5% 2.1% 1.5% 2.0% 1.6% 2.1% 1.5% 2.0% 1.5%

22.6%1.9% 22.3%2.0% 22.7%1.8% 21.7%1.9% 22.0%1.8%

72.7%

72.8%

71.9%

72.1%

72.0%

30/06/19

30/09/19

31/12/19

31/03/20

30/06/20

Other

USD

CHF

CEE-LCY

EUR

66.6

67.8

69.4

68.6

69.8

30/06/19

30/09/19

31/12/19

31/03/20

30/06/20

Other

Financial inst.

Manufacturing

Transport & comms

Public admin

Real estate

Tourism

Construction

Households

Services

Trade

Page 56

Additional information: footprint -

Customer banking in Austria and the eastern part of the EU

Erste Group footprint

Highlights

CZ

AT

HR

Majority ownership

Minority ownership

Czech Republic

Slovakia

Customers: 4.5m

Customers: 2.2m

Employees: 9,946

Employees: 4,010

Branches: 456

Branches: 222

SK

Hungary

HU

Customers: 0.9m

Employees: 3,211

RO

Branches: 108

RS

Romania

Customers: 2.9m

Employees: 6,845

Branches: 429

Austria

Croatia

Serbia

Customers: 3.8m

Customers : 1.3m

Customers: 0.5m

Employees: 16,213

Employees : 3,314

Employees: 1,169

Branches: 869

Branches: 144

Branches: 90

  • Leading retail and corporate bank in 7 geographically connected countries
  • Favourable mix of mature & emerging markets with low penetration rates
  • Potential for cross selling and organic growth in CEE

Employees: FTEs as of end of reporting period

(The presented FTE data exclude FTEs outside Erste Group's core markets in Austria and CEE as well as FTEs of specific services entities not located in Austria)

Page 57

Additional information: strategy -

A real customer need is the reason for all business

Customer banking in Central and Eastern Europe

Eastern part of EU

Focus on CEE, limited exposure to other Europe

Retail

Corporate

Capital

Public

Interbank

banking

banking

markets

sector

business

Focus on local currency mortgage and consumer loans

funded by local deposits

FX loans (in EUR) only where funded by local FX deposits (Croatia and Serb ia)

Savings products, asset management and pension products

Expansion of digital banking offering

SME and local corporate banking

Advisory services, with focus on providing access to capital markets and corporate finance

Real estate business that goes beyond financing

Focus on customer business, incl. customer- based trading activities

In addition to core markets, presences in Poland, Germany, London, New York and Hongkong with institutional client focus and selected product mix

Building debt and equity capital markets in CEE

Financing sovereigns and municipalities with focus on infrastructure development in core markets

Any sovereign holdings are only held for market- making, liquidity or balance sheet management reasons

Focus on banks that operate in the core markets

Any bank exposure is only held for liquidity or balance sheet management reasons or to support client business

Page 58

Additional information: Ratings -

Composition of Erste Group Bank AG's issuer ratings

Macro Profile

Strong

+

Financial Profile

Asset Risk

baa2

Capital

baa1

Profitability

baa3

Funding Structure

a3

Liquid Resources

baa1

+

Qualitative Factors

Business Diversification

0

Opacity, Complexity

0

Corporate Behaviour

0

=

BCA Baseline Credit Assessment

baa1

+

Affiliate Support

0

=

Adjusted BCA

baa1

+

LGF Loss Given Failure

+ 2

Government Support

0

=

Issuer Rating / Senior Unsecured

Long-Term Outlook / Short-Term

A2 Positive / P-1

SACP - Stand-Alone Credit Profile

a

Anchor

bbb+

Business Position

Strong

+1

Capital & Earnings

Adequate

0

Risk Position

Adequate

0

Funding

Above Average

+1

Liquidity

Strong

+

Support

0

ALAC Support

0

GRE Support

0

Group Support

0

Sovereign Support

0

+

Additional Factors

0

=

Issuer Credit Rating

Long-Term Outlook / Short-Term

A Stable / A-1

VR - Viability Rating

(Individual Rating )

a-

SRF - Support Rating Floor

NF (No Floor)

IDR - Issuer Default Rating

Long-Term Outlook / Short-Term

A RWN* / F1

Status as of 29 April 2020

* Rating Watch Negative

Page 59

Additional information: ESG ratings, indices and alignment with UN SDGs

ESG Indices and Ratings

UN Sustainable Development Goals

Erste Group has been included in the Vienna Stock Exchange's sustainability index since its launch in 2008

Included since 2016: The FTSE4Good Index Series measures the performance of companies with strong environmental, social and governance (ESG) practices

Since 2017 included in the Euronext Vigeo Index: Eurozone 120

Included since 2019 in the Bloomberg Gender-Equality Index. Erste Group is the only Austrian company represented in this index (as of 2020).

Erste Group was awarded prime status in ISS ESG ratings in October 2018.

In March 2020, imug Investment Research confirmed the rating for Erste Group at positive (B), mortgage covered bonds are currently rated positive (BB) and raised the public sector covered bonds rating to very positive (A).

Erste Group was upgraded to AA in July 2019 and is considered a leader among 212 companies in the banking industry.

In principle, Erste Group supports all SDGs. Given its regional footprint and business model, Erste Group is in fact able to make notable contributions to the achievement of the below-mentioned SDGs:

  • Since its foundation 200 years ago, Erste Group's purpose has been to promote and secure prosperity. Erste Group values responsibility, respect and sustainability.
  • Financial literacy is key to economic prosperity. Therefore, Erste Group offers a variety of financial literacy trainings.
  • Erste Group respects and promotes work-life balance among its employees and also contributes to their good health.
  • Diversity and equal opportunity are key elements of Erste
    Group's human resource strategy.
  • For Erste Group social and/or ecological criteria are as important as economic criteria in its investment decision process.
  • Erste Group has launched social banking initiatives aiming at the financial inclusion of those parts of the population that are often excluded.
  • Erste Group contributes to the cultural and social development of society.
  • Erste Group aims at protecting the environment by minimising its ecological footprint, in particular with its consumption of energy and paper.
  • Erste Group cooperates with national and international organisations and it promotes corporate volunteering.

Page 60

Additional information: shareholder structure -

Total number of shares: 429,800,000

By investor

By region

Unidentified *

Identified Trading **

9.82%

2.02%

52.18%

Institutional

Erste Foundation 1

11.41%

Savings Banks &

Savings Banks

Foundations 2

6.83%

Other Syndicated 3

3.08%

9.92% Caixa

0.74%

4.00% Employees

Retail

Unidentified *

Identified Trading **

9.82%

Rest of world

2.02%

3.17%

Continental 24.53%

Europe

16.31%

UK & Ireland

Austria

27.77%

16.38%

North America

  1. Economic interest Erste Foundation, including Erste Employees Private Foundation
  2. Economic interest Savings Banks & Savings Banks Foundations
  3. Other parties to the shareholder agreement of Erste Foundation, Savings Banks and CaixaBank * Unidentified institutional and retail investors
    ** Including Market Makers, Prime Brokerage, Proprietary Trading, Collateral and Stock Lending positions which are visible through custodian banklists

Status as of 30 June 2020

Page 61

The monetary policy reaction -

A combination of rate cuts and quantitative easing

Type of measures

  • ECB (as part of the euro zone, actions applicable in AT & SK) cut its key rate to 0% in 2016; cut the deposit rate by 10 bps to -0.5% in 2019
  • ECB lowered financing costs for banks (TLTRO 3, PELTRO)
  • In addition to the EUR 20bn monthly purchases (+120bn by eoy), the ECB introduced the Pandemic Emergency Purchasing Programmme in the amount of EUR 1,350bn, providing flexibility for asset purchases over time, issuers and asset classes
  • CNB cut its key rate in three steps by 200bps to 0.25% in H1 2020
  • QE included in law, but has not yet been launched; only temporary measures expected
  • MNB cut its key policy rate in two steps to 0.60% & raised the O/N and 1w collateralised lending rate from 0.9% to 1.85% and introduced 1-w deposit tender at 0.9%
  • MNB confirmed that QE will be extended from the EUR 1.2bn programme
  • NBR cut its key rate in two steps by 75bps to 1.75%; narrowed facility corridor to ±50bps (from ±100bps); further interest cuts possible
  • NBR has purchased RON denominated Romanian government bonds in secondary market
  • HNB lowered 1Y and 5Y repo rates to 0.05% and 0.25% respectively
  • HNB has introduced QE with a direct bond purchases close to HRK 20bn - approx. 5% of GDP
  • CNB secured swap line with ECB in the size of EUR 2bn
  • Croatia joined the ERM II on July 10th - central parity set at 7.5345
  • NBS cut the key rate from 2.25% to 1.25% (50bps in 1Q20 and another 50bps in 2Q20); deposit facility rate at 0.75%, lending at 2.75%
  • NBS supported liquidity of the banking system through repo and FX swap auctions; typical QE has not been introduced
  • NBS might accept corporate bonds as collateral in monetary operations, with possibility of purchases on the secondary market
  • NBS offers remuneration of 10+50bps paid on obligatory reserve to lenders who cut lending rates by 50bps in government guarantee scheme

Page 62

The regulatory reaction -

Pragmatism paired with dividend restrictions

Type of measures

  • OeNB recommends banks to postpone share buybacks and consider the distribution of dividends with particular care
  • Potential recalibration of SRB and OSII buffers to prevent effective buffer requirements from increasing until the end of 2022
  • Financial market Stability Board recommends to leave the countercyclical capital buffer at a rate of 0%
  • Gradually reduced countercyclical capital buffer from 1.75% to 0.50%
  • Restriction on dividend payment
  • Relaxed limits on LTV; dropped limit on DSTI and DTI
  • Loosened capital and liquidity requirements by ECB
  • NBS reduced countercyclical capital buffer from 1.5% to 1.00% (as of August 2020)
  • Recommendation to refrain from dividend payment
  • Minimum reserve requirement eliminated
  • Restriction on dividend payments until end of September
  • Derogations from DTI & LTV limits and maximum tenor allowed for consumer loans amended under public moratorium
  • Flexibility regarding temporary usage of liquidity and capital buffers; recommendation against dividend payment
  • Loans amended under public and private moratoria will not be treated as forborne
  • Reduced mandatory reserve requirement from 12% to 9%
  • LCR requirement eased
  • Restriction on dividend payments
  • Restriction on dividend payments until YE 2020
  • Countercyclical buffer kept unchanged at 0%

Page 63

The political/fiscal reaction -

Lockdowns followed by fiscal support measures across CEE

Loan moratoria/payment holidays

Loan guarantees, bridge loans

Labour market support

(eg short-time work schemes)

Tax incentives

(Cuts, holidays, deferrals)

Direct payments

✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

COVID-19 measures (% of GDP)

13%

14%

7%

18%*

3%

11%

12%

* Hungary: COVID-19 data as % of GDP includes Central Bank measures

Page 64

The political/fiscal reaction -

Details on moratoria

Main characteristics

  • Statutory
  • Interest charged during deferral period & paid after the moratoria
  • Statutory
  • Interest charged during deferral period
  • Rate cap at 2w repo + 8pp
  • Statutory
  • Interest charged during deferral period & paid after the moratoria
  • Statutory
  • Interest cannot be charged on unpaid interest (monthly instalment cannot increase after moratoria & maturity will be extended)
  • Statutory
  • Interest capitalised & paid over the life of the contract (except mortgage for which interest will be accumulated & paid in 5 years)
  • Not statutory; banks encouraged to participate in moratoria
  • Interest capitalised & paid over the life of the contract
  • Statutory
  • Interest cannot be charged on unpaid interest

Opt-in /

out

Opt-in

Opt-in

Opt-in

Opt-out

Opt-in

Opt-in

Opt-out

Retail /

Corp

Retail

Micro

Retail

Corp.

Retail

Micro

SME

Retail

Corp.

Retail

Corp.

Retail

Corp.

Retail

Corp.

Period

Ext. to up to 7 months

3 to 6

months

Up to 9 months

Up to 9 months

Up to 9 months

Ext. to up to 6 months

Expired in June

Partici- pation*

Retail: 5%

Corp: 5%

Retail: 6%

Corp: 8%

Retail: 12%

Corp: 20%

Retail: 45%

Corp: 32%

Retail:7% Corp: 12%

Retail: 7%

Corp: 21%

Retail: 72%

Corp: 63%

Upfront

loss

None

None

None

EUR

17.6m (Q1

2020)

None

None

None

* Customer participation in moratoria at Erste Group subsidiaries as of June 30, 2020; moratoria participation in Austria includes deferrals

Page 65

The political/fiscal reaction -

Details on loan guarantees

Main characteristics

  • EUR 9bn programme for loans and guarantees for enterprises, especially SMEs
  • Bridging loans in case of liquidity shortages
  • EUR 33bn (COVID I, II, III) subsidised & guaranteed loan programmes
  • COVID Praha for SMEs in Prague
  • EUR 2.2bn in two state guarantee schemes (micro & SME, large corporates)
  • EUR 5.6bn guaranteed loans to enterprises
  • EUR 3bn state guarantee scheme for micro & SME loans
  • EUR 1.5bn guaranteed loans for companies
  • EUR 0.8bn working capital loans
  • EUR 2.2bn programme for state guaranteed loans for micro companies and SMEs

Guarantee

Up to 100%

80-90%

(30% cap at

portfolio level)

80-90%

80%

SME 80% Micro 90%

Up to 80%

80%

(30% cap at

portfolio level)

Interest

Subsidised (varies by products)

Subsidised with absolute cap

Absolute cap or subsidy of up to 4%

0-2.6%

Fully

subsidised

Zero for 50%

of the loan

  • 4% LCY
  • <3% EUR

Period

2-5 years

Up to 3 years

Up to 6 years

3-15 years

3-6 years

Up to 5 years

Up to 3 years

Page 66

Our response to Coronavirus -

Erste Group is there for its customers, communities and employees

Employees

70%-95% of HQ employees in home office in March-May

Retail customers

Corporate customers

Communities

Branches remaining open &

Expanding client advisory &

Supporting health care workers,

extending online services

transmitting state support

affected people, hospitals

  • Majority of HQ in home office
  • Psychological support
  • Health insurance benefit
  • Majority of HQ in home office
  • Protective equipment
  • 24/7 online doctor
  • Majority of HQ in home office
  • Special benefits for pregnant, elderly people
  • Majority of HQ in home office
  • Transport allowance
  • Psychological support
  • Majority of HQ in home office
  • High-riskemployees working exclusively from home office
  • Majority of HQ in home office
  • Psychological support
  • Majority of HQ in home office
  • Paid leave for high risk employees
  • Branches remain open
  • George available for moratorium applications
  • Branches remain open
  • Banker on phone/online
  • Branches remain open
  • Mobile ATMs available
  • Special COVID-19 website
  • Branches remain open
  • More call centre staff
  • Educational videos
  • Branches remain open
  • Repayment holiday
  • Tripled call centre capacity
  • Branches remain open
  • Public notary cost relief
  • Branches remain open
  • Special authorisation for pension payment
  • Extended credit facilities
  • Online process for moratorium applications
  • Extended phone service
  • Free payment terminals
  • Postponed repayments (beyond statutory)
  • Extended credit lines
  • Simplified processes
  • Flexible lending and account administration
  • Repayment holiday
  • Extended revolving credit facilities
  • Working capital loans
  • EIF guarantees for SME - up to 80%
  • Various fee reliefs, eased conditions offered for businesses
  • Donation to Austrian Red Cross
  • Donation to affected families
  • TV campaign on masks
  • Donation to emergency committee
  • Educational webinars
  • Loan programme and donations to health care workers
  • Donation to health care system & education & NGOs
  • Entrepreneurial education
  • Donation to hospitals
  • Special benefits to most vulnerable communities
  • Healthcare donations
  • Supporting disabled and elderly people

Page 67

Investor relations details

  • Erste Group Bank AG, Am Belvedere 1, 1100 Vienna

E-mail:investor.relations@erstegroup.com

Internet:http://www.erstegroup.com/investorrelations http://twitter.com/ErsteGroupIR http://www.slideshare.net/Erste_Group

Erste Group IR App for iPad, iPhone and Android http://www.erstegroup.com/de/Investoren/IR_App

Reuters:ERST.VI Bloomberg:EBS AV

Datastream: O:ERS ISIN: AT0000652011

  • Contacts

Thomas Sommerauer

Tel: +43 (0)5 0100 17326 e-mail: thomas.sommerauer@erstegroup.com

Peter Makray

Tel: +43 (0)5 0100 16878 e-mail: peter.makray@erstegroup.com

Simone Pilz

Tel: +43 (0)5 0100 13036 e-mail: simone.pilz@erstegroup.com

Gerald Krames

Tel: +43 (0)5 0100 12751 e-mail: gerald.krames@erstegroup.com

Page 68

Attachments

  • Original document
  • Permalink

Disclaimer

Erste Group Bank AG published this content on 31 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 July 2020 09:46:06 UTC