Earnings Presentation FY 2013

FY 2013 Results
13 March 2014
BAWAG P.S.K. Bank für Arbeit und Wirtschaft
und Österreichische Postsparkasse AG
Mitten im Leben.
Mitten im Business.
www.bawagpsk.com
BAWAG P.S.K. delivers strong results in 2013
Net profit of € 229.1m delivered in 2013
Return on equity increased to 11.6% from 6.5% in 2012
Operating income increased by 11.0% to € 1,034m
Core operating expenses reduced by 5.1% to € 573.9m
Restructuring provisions of € 75.3m taken
Risk costs further decreased by 34.6% to € 98.2m
Risk-weighted assets cut by 22.4% to € 16bn
1
Continued focus on our core businesses
2
Repositioning of balance sheet continued
3
Efficiency and productivity program supports sustainably lower cost base
4
Capital, risk & liquidity position further improved – 9.4% fully loaded Basel 3 CET 1 ratio
13 March 2014
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
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1
Continued focus on core businesses delivers results
Focus on superior products & services that our customers value drives our performance
Multi-channel approach
Multi-channel approach enables BAWAG P.S.K. to offer attractive
banking products across Austria anytime
Significant IT investments to support sales front-end capabilities & digital
evolution – i.e. mobile apps, direct banking (easybank) & e-banking platform
Branch initiative “Filialoffensive” completed – network of 477 branches
operated in cooperation with Austrian Post
Clear, fair and intuitive banking supported by “box concept“
Joint BAWAG P.S.K. / Post branches
461
477
“KreditBox” (consumer loans): Market share increased from 7.4% to 8.0%1)
330
150
2010
“KontoBox” (current accounts): Net increase of 21,000 accounts (+1.7%) –
more than 252,000 “KontoBox” products sold since launch in 2011
“ErtragsBox” & “VorsorgeBox” (securities & insurance): Launched in 2013
2011
2012
2013
Box concept
BAWAG P.S.K.’s retail business outperforms the Austrian market1)
Retail loans +4.0% vs. -0.3% Austrian market
BAWAG P.S.K. continued its focus on core corporate lending with
more than € 2.3bn in new business volume – Emphasis on riskadjusted pricing
1) Source: ECB / OeNB Monetary Statistics (Dec. 2013)
13 March 2014
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
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2
Repositioning of balance sheet continued
Further disposal of non-core assets, subsidiaries and reduction of CEE exposure
Total assets
Continued material de-risking of balance sheet and disposal of
(11%)
41.1bn
41.3bn
non-core assets improving balance sheet & capital efficiency
36.4bn
Balance sheet reduction primarily driven by
2011
2012
LTRO repayment (€ 2.25bn), redemption of own issues (€ 1.5bn) and
reduced derivative market values (€ 1.0bn) on the liability side
2013
Reduced money-market positions and exit of non-core assets (i.e. AfS
securities, legacy structured credit book) on the asset side
CEE loan exposure
(51%)
1,440m
CEE loan exposure further reduced to € 0.7bn (less than 2% of
1,146m
712m
2011
2012
total assets) – Focus on continuing to manage down exposure
Entire sale of legacy structured credit portfolio in 2013 – RWAs
2013
reduced by € 1.2bn compared to 2012
Legacy structured credit portfolio – RWAs
Restructured leasing business to focus on consumer-based
(100%)
vehicle financing in Austria; Exit from CEE platforms & Fleet
1,755m
1,188m
0m
2011
2012
2013
Sale of a retail and small business non-performing loan
portfolio (€ 0.3bn assets) & non-core subsidiaries
Note: in €
13 March 2014
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
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3
Efficiency and productivity program lowers cost base
Restructuring measures allow for significant cost reduction in 2014 and improved efficiency
Core operating expenses
(5%)
604.5m
BAWAG P.S.K. accelerated its restructuring program in the second
half of 2012 and throughout 2013
573.9m
Incurred € 75m restructuring reserve in 2013 and total investment
of € 142m since 2011 to implement restructuring program
2012
2013
Cornerstones of the restructuring program
Active
FTEs1)
(13%)
3,659
3,181
Business rationalisation; Focus on core channels, products and services
Reducing corporate overhead to reflect the size and strategy of the Bank
Mapping our value chain to identify areas of core competencies
2012
2013
CAPEX
Creating a culture focused on driving operational efficiencies, productivity &
encouraging continuous operational improvement every year
FTE reduction will drive significant cost savings going forward
flat
45m
2012
45m
2013
Significant investments of € 45m in core businesses maintained
Follows on from significant investments in the branch network, digital
platforms and enhancements to the core banking system
Note: in € 1) Excluding employees on any form of temporary leave or who have entered an agreement under a social compensation scheme; 2013 figure as of Jan. 1, 2014
13 March 2014
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
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4
Capital position further improved
Strong improvement of capital ratios despite partial redemption of participation capital
CET 1 capital ratio1)
RWA optimisation program led to reduction of € 7.2bn riskweighted assets (31% decrease) over the course of 2012 & 2013
+6.6pts
11.0%
7.8%
2011
2012
14.4%
2013
Total capital ratio
Discontinuation of proprietary trading activities (€ 0.7bn), sale of structured
credit portfolio (€ 1.8bn) and reduction of non-core assets
Implemented Internal Ratings-Based (“IRB”) models for our core
businesses; Contributed to RWA relief and consistent with overall
market standards
+6.4pts
18.7%
12.3%
13.8%
2011
2012
2013
Risk-weighted assets2)
(31%)
23.2bn
2011
20.6bn
2012
16.0bn
Achieved CET 1 ratio1) 14.4% YE 2013 (equal to fully loaded Basel 3
CET 1 ratio of 9.4%) & Total capital ratio of 18.7%
Redeemed € 200m participation capital over the course of 2013
Bank will redeem remaining € 350m participation capital in 1Q 2014
which also includes a € 125m shareholder equity contribution
Bank plans for 10% fully loaded Basel 3 CET 1 ratio during 2014
2013
Note: in € 1) Common Equity Tier 1 including participation capital and non-controlling interests in relation to risk-weighted assets acc. to CRD III 2) YE 2011 and 2012 figures prior to IRB application
13 March 2014
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
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4
Solid risk and liquidity position
Risk costs and NPL ratio further decreased | Strong liquidity position & potential maintained
Risk costs
De-risking activities as driver behind reduced risk costs,
reduced non-performing loans and enhanced credit quality
(37%)
155m
150m
98m
Risk costs /
avg. loans &
receivables
Proactive de-risking of CEE exposure and other non-core assets
2011
2012
2013
55bps
50bps
34bps
Sale of a retail and small business non-performing loan portfolio
(€ 0.3bn assets) & non-core subsidiaries
NPL ratio
Core funding sources (savings & current accounts) kept stable
at € 22bn versus an overall deleveraged balance sheet
(1.84pts)
5.21%
2011
4.86%
2012
3.37%
Regulatory surplus liquidity remains solid at € 6.3bn
2013
Loan-to-deposit ratio
Significant liquidity potential
Large number of unencumbered assets of approximately € 9bn
(10.2pts)
105.5%
101.3%
Loan-to-deposit ratio of 95%
95.3%
Own issues run-off releases additional covered bond potential
Total mid-term liquidity potential of approximately € 11bn
2011
13 March 2014
2012
2013
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
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Loan portfolio overview
Austria is the primary market for BAWAG P.S.K.
Customer loans &
receivables by geography
Loans & receivables1)
from credit institutions
Austria
from customers
78%
27.5bn
25.6bn
2.4bn
5.2bn
24.8bn
3.8bn
94% of our loan portfolio consists of
exposure to Western Europe,
predominantly Austria
CEE exposure further reduced
> 85% lending in Euros
23.2bn
22.3bn
6%
21.0bn
Well diversified portfolio ensured by
conservative limit setting for single
clients, sectors & countries
CEE & Other
16%
Western Europe
2011
2012
2013
Loans & receivables by segment2)
Treasury Services & Markets
3%
Credit RWAs by segment
Treasury Services & Markets
Corporate Center
19%
10%
Corporate
Center
19%
Corporate
Lending & 49%
Investments
Corporate
Lending &
Investments 43%
35%
Retail &
Small Business
22%
Retail &
Small Business
Retail & Small Business accounts for
approx. 35% of loans & receivables
Risk costs3) for Retail & Small
Business at 25bps and for Corporate
Lending and Investments at 42bps
NPL ratio in Retail & Small Business
at 3.2% and in Corporate Lending
and Investments at 2.8%
Note: figures as of 31.12.2013; in € m 1) Excl. loans & receivables securities 2) Incl. provisions 3) Risk costs in relation to average loans & receivables (incl. provisions)
13 March 2014
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
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FY 2013 Results – Income statement
Net profit of € 229.1m delivered in 2013
in € m
2012
2013
Net interest income
597.4
580.2
Net fee and commission income
194.7
188.0
Core revenues
792.1
768.2
Gains and losses on financial instruments
128.9
10.8
Other operating income
Operating income
Core revenues
(17.2)
0.0
(6.7)
(2.9%)
(3.0%)
216.1
0
(23.9)
0.0
87.2
49.7
0.0
38.9
1,034.0 0.0
>100%
11.0%
(345.2)
(320.9)
Other administrative expenses
(203.8)
(198.5)
(5.3)
(2.6%)
Depreciation and amortisation
(55.5)
(54.5)
(1.0)
(1.8%)
(604.5)
(573.9)
(30.6)
(5.1%)
(43.2)
(106.9)
63.7
>100%
(647.7)
(680.8)
5.1%
Operating profit before bank levy
284.1
353.2
33.1
0.0
69.1
24.3%
Bank levy
(25.3)
(25.3)
0.0-
-
Operating profit before risk costs
258.8
327.9 0.0
26.7%
Total operating expenses
Risk costs
Valuation results of associates at equity
Profit before tax
Income taxes
Profit after tax
(150.1)
(98.2)
69.1
0.0
(51.9)
1.5
(0.9)
0.0
2.4
110.2
(0.2)
110.0
Minorities
(2.7)
Net profit
107.3
13 March 2014
228.8 0.0
1.7
230.5 0.0
(1.4)
229.1 0.0
792.1m
768.2m
2012
2013
67.6%
Personnel expenses
Restructuring expenses and other one-off items
(3%)
(3.4%)
102.2
0.0
(24.3)
Core operating expenses
931.8
Delta
(7.0%)
Core operating expenses
(5%)
604.5m
573.9m
2012
2013
(34.6%)
-
Net profit
118.6
0.0
(1.9)
>100%
+114%
120.5
0.0
(1.3)
>100%
(48.1%)
121.8
>100%
-
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
229.1m
107.3m
2012
2013
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FY 2013 Results – Financial position | Key ratios
CET 1 ratio improved by 6.6 percentage points to 14.4% since year-end 2011
Financial position (in € m)
Return on RWA
2012
2013
Delta
Total assets
41,265
36,402
(11.8%)
Customer loans and receivables
22,275
20,980
(5.8%)
Customer deposits
21,999
22,013
0.1%
1,895
2,053
8.3%
20,618
16,001
(22.4%)
2012
2013
Delta
IFRS equity
1)
Risk-weighted assets
Key ratios (in %)
CET 1 capital ratio (Basel 2.5)
11.0%
14.4%
3.4pts
n/a
9.4%
-
Tier 1 capital ratio (Basel 2.5)
11.7%
15.3%
3.6pts
Total capital ratio (Basel 2.5)
13.8%
18.7%
4.9pts
6.49%
11.61%
5.12pts
0.49%
1.25%
0.76pts
69.51%
65.84%
(3.67pts)
1.45%
1.49%
0.04pts
n/a
2.06%
-
0.50%
0.34%
(0.16pts)
4.86%
3.37%
(1.49pts)
101.3%
95.3%
(6.0pts)
Resources
2012
2013
Delta
Active workforce (in FTEs)
3,659
3,181
(13.1%)
461
477
3.5%
Return on equity
3)
Return on risk-weighted assets 4)
Cost-income ratio
5)
6)
Net interest margin
Business net interest margin7)
Risk costs / loans and reveivables
NPL ratio9)
Loan-to-deposit ratio
New bank branches
8)
1.25%
0.49%
2012
2)
CET 1 capital ratio (Basel 3)
+0.76pts
2013
Total capital ratio
+4.9pts
18.7%
13.8%
2013
2012
Active FTEs
(13%)
3,659
3,181
2012
2013
Note: in € 1) Excluding participation capital and non-controlling interests 2) Common Equity Tier 1 according to CRR (Basel 3, fully loaded; excluding any transitional capital such as minorities,
hybrids and participation capital) in relation to risk-weighted assets according to CRD III 3) Net profit / average IFRS equity (excluding participation capital and non-controlling interests) 4) Net profit /
average risk-weighted assets 5) Total operating expenses / operating income 6) Net interest income / average total assets 7) Net interest income (excl. Corporate Center) / average total assets
(excl. Corporate Center) 8) Risk costs / average loans & receivables (incl. provisions) 9) Non-performing loans / loans & receivables (incl. provisions)
13 March 2014
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
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FY 2013 Results – Business segments
All core business segments with positive results in 2013
2013: Operating income by segment (€ 1,034m)
Treasury Services & Markets
Income statement by segment 2013
in € m
10%
15%
Corporate
Center
Retail &
Small 51%
Business
24%
Corporate
Lending &
Investments
Balanced revenue distribution
Retail & Small Business franchise
contributing 51% operating income &
34% profit before tax
Corporate Lending & Investments
contributing 24% operating income
Corporate Center primarily nonrecurring items; Related to 1-off
effects from sale of non-core assets,
restructuring expenses and
impairments on subsidiaries
Retail & Corporate Treasury
Corporate
Lending & Services
Small
Center
Business Investments & Markets
Total
Net interest income
343.6
197.1
53.2
(13.7)
580.2
Net fee and commission income
147.1
44.2
7.3
(10.5)
188.0
Core revenues
490.7
241.3
60.4
(24.2)
768.2
35.0
10.5
38.4
132.2
Gains and losses on financial instruments
Other operating income
2.6
-
-
3)
216.1
47.0
4)
49.7
1,034.0
Operating income
528.3
251.8
98.8
155.0
Core operating expenses
(427.6)
(91.1)
(36.4)
(18.8)
-
-
-
(106.9)
(106.9)
29.3
353.2
(25.3)
(25.3)
Restructuring expenses and other one-off items
Operating profit1)
Bank levy
Risk costs
Profit before tax 2)
1)
2)
3)
4)
5)
100.7
160.7
62.4
-
5)
(573.9)
-
-
(23.5)
(53.9)
0.1
(20.9)
(98.2)
77.2
106.8
62.5
(17.8)
228.8
Before bank levy and risk costs
Including share of profit or loss of associates accounted for using the equity method; 2013: € (0.9)m
Mainly related to the sale of structured credit portfolio and to the sale of subsidiaries
Mainly related to the sale and lease-back of our headquarters
Mainly related to provisions for different restructuring expense & other 1-off items
Note: in €; segmentation based on new reporting structure as of Jan. 1, 2014
13 March 2014
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
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Outlook 2014
We will continue to strongly position BAWAG P.S.K. as most efficient bank in Austria
BAWAG P.S.K. Positioning
Key Financial & Operating Targets in 2014
Development of our products and services for our
retail and corporate customers
Market share in consumer lending > 8.5%
> 73% variable deposits as % total deposits
Investment in businesses that meet Bank’s overall
profitability targets
Return on equity > 10%
Focus on cost efficiency & operational excellence
Core operating expenses < € 500m
Prudent and stable risk profile with stable earnings
Risk costs as % loans & receivables < 30bps
Maintain strong capital, funding and liquidity position
Fully loaded Basel 3 CET 1 ratio > 10%
Total deposits maintained at € 20bn
Austria-focused, transparent, lower risk & more efficient
13 March 2014
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
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IMPORTANT DISCLAIMER: This presentation is prepared solely for the purpose of providing general information about BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische
Postsparkasse Aktiengesellschaft, Georg-Coch-Platz 2, 1018 Wien („BAWAG P.S.K.“). The information does not constitute investment or other advice or any solicitation to participate in
investment business. This presentation does not constitute an offer or recommendation to purchase any securities or other investments or financial products. In respect of any information
provided past performances do not permit reliable conclusion to be drawn as to the future performances. BAWAG P.S.K. does not make any representation, express or implied, as to the
accuracy, reliability or completeness of the information contained in this presentation. BAWAG P.S.K. disclaims all warranties, both express and implied, with regard to the information
contained in this presentation. Actual results may vary from forecasts and variations may be materially positive or negative. In no event shall BAWAG P.S.K. be liable for any loss, damages,
costs or other expenses of any kind (including, but not limited to, direct, indirect, consequential or special loss or loss of profit) arising out of or in connection with any use of, or any action
taken in reliance on, any information contained in this presentation. BAWAG P.S.K. assumes no obligation for updating the provided information in this presentation. The content in this
presentation are not to be relied upon as a substitute for professional advice.
13 March 2014
BAWAG P.S.K. Bank für Arbeit und Wirtschaft und Österreichische Postsparkasse Aktiengesellschaft
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