Erste Bank : Präsentation Telefonkonferenz - 1. Halbjahr 2022 (englisch)

Erste Group investor presentation Q2 2022 results

1 August 2022

Strong business performance in an uncertain environment

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.

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Presentation topics

• Key developments and executive summary
• Macroeconomic and business update
• Operating trends
• • Volumes
  • Revenues and costs
  • Impairments and asset quality
• Capital and wholesale funding
• Key takeaways and outlook
• Additional information

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Key highlights -

Setting the frame for today's presentation

• Continued strong business and financial performance in H1 22
• • Economic growth robust during H1 22 in CEE & Austria, but outlook clouded by uncertainties
  • Higher than expected loan growth (+6.3% ytd), driven by AT, SK, RO and HR, corporate business
  • NII growth of 15.9% in H1 22 driven primarily by rate hikes in the CZ, RO and HU, volume growth
  • Fees up 10.5% in H1 22, but stagnating at high level in Q2 22 due to less investment activity by clients
  • Operating expenses up 8.7% in H1 22, driven by other administrative expenses
  • Operating result up by 10.3% in H1 22; cost/income ratio at 55.1%
  • Partial release of general provisions for FLI, benign underlying credit risk environment led to net release of risk costs; EUR 500m of crisis-related general provisions available for portfolio and macro deterioration
  • Risk cost guidance of <20 bps for FY2022 (base scenario) confirmed
  • Planned FY2022 dividend per share of EUR 1.9 accrued pro rata in H1 22; CET1-ratio of 14.2%
• No gas from Russia stress scenario disruptive, but manageable for CEE region overall
• • Currently Russian gas continues to flow to CEE, EU gas embargo seems not feasible
  • Specific level of vulnerability depends on gas share in energy mix, Russian import dependency, storage capacity and storage levels
  • Higher prices will lead to declining demand and substitution where possible
  • Governments are reacting, aiming to substitute other forms of energy production for gas
  • Energy prices will continue to drive inflation unless geopolitical conflict is resolved/sanctions unwound

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Executive summary -

Group income statement performance

QoQ net profit reconciliation (EUR m)		YoY net profit reconciliation (EUR m)

	+53.3%
	36	84
	144	116	688
	185
449	74

Q1 22 Operating Operating Risk costs	Other	Taxes on Minorities Q2 22
income expenses	result	income

	+23.9%
182	109	58	28	1,137
356		23
918

1-621 Operating Operating Risk costs	Other	Taxes on Minorities 1-622
income expenses	result	income

• Qoq net result rises strongly on improved operating performance and lower risk costs (Covid related releases), partially offset by higher tax charge and higher minorities contribution
• Operating income primarily attributable to strong NII growth
• Operating expenses improve on up-front booking of deposit insurance contributions in Q1 22 and reversal of Austrian Sberbank-related contributions in Q2 22

• Yoy net profit growth primarily driven by substantially higher operating result and lower risk costs
• Operating income up on rate hikes in CEE - NII up by 15.9%; strong fee performance (double-digit rise in payment services and asset management)
• Costs primarily up due to higher deposit insurance contributions and IT expenses

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