Q3 2022 results presentation

4 November 2022

On track for ~14% ROTE in 2022 & updating the financial path to 2024

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 priorities 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 priorities under my leadership (1) -

Strategic continuity, 2 key priorities & focus on higher share of wallet

Unchanged geographic focus

Unchanged vertical focus

Unchanged product focus

  • Excel at capturing existing and newly emerging growth opportunities in Central and Eastern Europe including Austria
  • Bolt-onacquisitions, eg Commerzbank in Hungary, intended purchase of Sberbank CZ loan portfolio, only in existing markets

  • Retail (private individuals, micros)
  • Corporates & Markets (SME, large corporates, commercial real estate, financial institutions)
  • Public sector (municipalities, sovereigns)

  • Full suite of retail products/advisory (mortgages, savings/investments, current accounts, etc)
  • Full service/advisory offering for corporates
  • Focus on hybrid digital/physical product and advisory delivery

Key priority No. 1: improved data analytics to better understand clients' needs and help clients build up and

secure wealth and hence improve their financial health

Key priority No. 2: significant expansion of digital offering: turning George from an interface into a platform allowing for third party service integration

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Key priorities under my leadership (2) -

Updating the financial path to 2024: CIR target upped to ~52% (from 55%)

NII

Fees

Costs

Risk costs

ROTE

Loan growth

2022e 2023e

~20% ~10%

~6%

~5%

~6%

~7-8%

<20bps

<35bps

~14%

13-15%

>10%

~5%

Key drivers

  • Healthy loan growth in 2022 and 2023
  • Current euro zone forward rate curve materialises; increased deposit repricing, albeit from low levels
  • Fees offer a structural growth opportunity (asset management, insurance, payments)
  • Cost updrift to be capped in single digits, despite wage inflation
  • High quality loan book paired with significant management overlays
  • Strong double-digit ROTE track record since 2015; only exception 2020 (Covid)
  • Exceptional loan growth in 2022 followed by growth deceleration due to cooling economy and higher interest rates

Key assumptions: significant economic slowdown, but no negative yoy real GDP growth in 2023; beyond impact of potential Czech banking tax of max EUR 100m pa from 2023 to 2025 no further material political or regulatory interventions; no further worsening of geopolitical situation; stabilisation of European energy situation.

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Disclaimer

Erste Group Bank AG published this content on 04 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 November 2022 06:45:07 UTC.