Erste Bank : Presentation Teleconference H1 2021

Erste Group investor presentation

Q2 2021 results

30 July 2021

Operating performance gains momentum, risk environment remains benign

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.

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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 developments -

Setting the frame for today's presentation

• CEE macro recovery is in full swing, expected 2021 real GDP growth upgraded to 3-7%
• • Opening up of economies as vaccination rates advance
  • Economic growth in CEE & Austria has outperformed expectations so far this year
  • First rate hikes delivered in Czech Republic (June) and Hungary (June and July), further tightening expected
  • Improved loan growth guidance for 2021: mid-singledigit with upside
• Fee performance goes from strength to strength
• • Strong recovery in payment services fees under way
  • Asset management fees continue to make strong growth contribution
  • Guidance upgrade to high-singledigit growth in 2021
• Benign credit risk environment results in markedly improved 2021 risk cost guidance
• • Risk cost guidance revised to max 30bps in 2021, following 10bps in H1 21
  • NPL ratio estimated at max 3% at year-end 2021
• Further outlook upgrades
• • NII expected slightly up in 2021, operating result with solid positive operating jaws and net profit set to improve significantly, return to double-digit ROTE
• Erste Group returns to progressive dividend policy
• • Payout 2021: EUR 1.0 per share additional payment following ECB lifting its dividend restriction; subject to EGM approval in Q4 21
  • Payout 2022: Erste Group targets EUR 1.6 DPS for business year 2021

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Executive summary -

Group income statement performance

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

	+58.5%
		79	39	563
	12	59
	104
355	134

Q1 21 Operating Operating Risk costs	Other	Taxes on Minorities Q2 21
income expenses	result	income

+212.5%
2
147
154	918
592
12
319
294

1-620 Operating Operating Risk costs	Other	Taxes on Minorities 1-621
income expenses	result	income

• Q2 21 net result advanced to EUR 562.9m mainly on exceptional operating performance
• Rising operating income driven by NII (TLTRO III one-off booking of EUR 92.4m) and another record fee quarter
• Operating expenses and other result improve mainly on seasonal bookings (deposit insurance; resolution fund contributions and the HU banking levy) in Q1

• Yoy net profit growth primarily driven by lower risk costs and substantially higher operating income, offset higher tax charge and minorities
• Operating performance driven by improvements in all core income lines
• Higher minorities charge due to improved profitability at savings banks

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