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

Erste Group investor presentation Q1 2022 results

29 April 2022

Erste Group starts 2022 with strong topline performance

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.

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

Setting the frame for today's presentation

• • Strong start to 2022 despite many challenges

  • • Faster and more sizable than expected rate hikes in Czech Republic, Hungary and Romania to counter inflation

  • • Economic growth robust during Q1 22 in CEE & Austria, but outlook lowered across the board for 2022 while inflation expectations continue to rise

• • Operating result up 10.4% in Q1 22

  • • Operating income advances by 11.4%, driven by exceptional NII (+18.8%) and fee (+14.0%) growth, while trading and FV result impacted by valuation effects (savings banks, Hungary)

  • • Operating expenses increase (+12.0%) inflated by Sberbank Europe-related deposit insurance contributions (EUR 68.2m) and significantly higher regular deposit insurance contributions, booked for the full year of 2022 in Q1 22

• • Continued benign credit risk environment in Q1 22

  • • Risk costs at 13 bps, lowest NPL ratio since IPO at 2.3%

  • • Full cushion of performing loan loss provisions of EUR 630m still available for reallocation/release

• • Minor tweaks in 2022 guidance

  • • Lowered GDP growth and higher inflation expectations in CEE & Austria, impacted by anti-Russia sanctions

  • • At least high single digit NII growth, up from at least mid-single digit growth

  • • Fee growth in mid-single digits, up from low to mid-single digit growth

• • Reported fully loaded CET1 ratio at 13.7%

  • • No consideration of ytd profit

  • • No consideration of positive FX translation effect within OCI

  • • Full implementation of structural FX risk

Updated impact analysis of Ukraine war/Russia sanctions on Erste Group

• • Erste Group has no direct subsidiaries in Russia (RU), Ukraine (UA) or Belarus (BY)

• • Erste Group has only immaterial credit exposure (EUR ~50m gross) to RU, UA and BY, accordingly confirms

  FY2022 guidance for risk costs (<20bps)

• • Full portfolio screening confirmed the limited impact on customers of Erste Group

  • • EUR 6.4bn (1.9% of Erste Group's total of EUR 338bn) client credit exposure potentially directly affected, e.g. due to local operations or larger shares of EBITDA generated in RU, UA and/or BY or due to sectoral sanctions

  • • EUR 240m from the above are under Watch - already classified as Stage 2 - hence no increase in provisioning

  • • Who are these customers? Mainly well-diversified, multi-national companies in the energy, automotive and natural resources sectors

• • Banking exposures

  • • Banking exposure to Austrian and European banks with exposure to RU, UA and/or BY are no cause for concern

• • Deposit insurance contributions in relation to Sberbank Europe AG wind-down

  • • Not expected to lead to material negative economic impact as significant recoveries from asset sales likely

  • • Austria: booking in the amount of EUR 46.5m - full recovery through asset sales likely, however, timing unknown

  • • Hungary: regulatory authority issued order for immediate payment - EUR 21.7m

  • • Czech Republic: no booking as regular annual deposit insurance contribution bill is expected in May 2022 and currently no detailed/precise estimates available