Ceska sporitelna General Presentation of CS Financial Group
Presentation Topics Ceska sporitelna s Development History Current market position Erste Group CS Group Product Offerings Retail clients Corporate clients Financial market products EU Programmes of CS Corporate Social Responsibility 2
History of Ceska sporitelna 12th February 1825 Sporitelna ceska was established 30th December 1991 Ceska sporitelna became a joint stock company December 2001 Ambitious 18 month transformation programme was completed 1825 1948 1991 2000 2001 2002 1948-1990 > After February 1948 small savings banks were nationalized > In 1967 one State Savings Bank was created and in 1969 it was split into Czech State Savings Bank and Slovak State Savings Bank as a result of Czechoslovak Federation Law 3rd August 2000 Erste Bank paid first half or EUR 531 m price and became 52% shareholder of CS March 2002 > Erste Bank through its major shareholder announced its intention to buy out minority shares of Ceska sporitelna. > Erste became 98% owner of Ceska sporitelna in the course of time 3
Erste Group Customer banking in the eastern part of the EU Austria Clients: 3.5m Retail loans: 19.3%* Retail dep.: 18.4%* Czech Republic Clients: 5.0m Retail loans: 22.8% Retail dep.: 25.5% Slovakia Clients: 2.3m Retail loans: 27.3% Retail dep.: 26.3% Leading retail and corporate bank in 7 geographically connected countries Branches: 954 Branches: 633 Branches: 290 Favourable mix of mature & emerging markets with low penetration rates Potential for cross selling and organic growth in CEE Absolut data reported as of June 30 th 2015; AT market shares for June 30 th 2015 not available yet * Data as of March 31 st 2015 Romania Hungary Croatia Serbia Clients: 3.0m Clients: 0.9m Clients: 1.1m Clients: 0.4m Retail loans: 17.7% Retail loans: 14.8% Retail loans: 13.8% Retail loans: 4.0% Retail dep.: 16.6% Retail dep.: 6.5% Retail dep.: 12.9% Retail dep.: 3.0% EU or EU candidate Branches: 509 Branches: 129 Branches: 159 Branches: 68 Indirect presence 4
Ceska sporitelna Today Today Ceska sporitelna is client oriented, modern and competitive bank of European quality Ceska sporitelna offers a complete range of financial products and related services to Private individuals Small and medium sized businesses Municipalities Large corporates The largest bank in the Czech Republic as measured by number of clients - five million clients Market leader in many business activities: Consumer lending Payment cards business ATM network Volume of provided mortgage loans Managing customer funds 5
Strategic goals of Ceska sporitelna for Y2015 In line with its updated strategy, Ceska sporitelna strives to be a bank that maintains a high level of client loyalty, thereby achieving above-average financial results on the banking market. As the main bank, it wants to take first place in terms of retail clients and second place among corporate clients, and in terms of client loyalty it aims to be the leader in all client segments. In order to achieve these goals, Ceska sporitelna intensively pursues: The digitisation of its services and internal processes Getting yet closer to its clients in the environments in which they operate Expanding and tailoring its offer for each client Strategic cost management Harmony with regulatory requirements in the optimisation of its costs and investments 6
Four new faces of CS retail division For whom For everyone 30,000+ net monthly income or wealth of 0.5 + mil 100,000 net monthly income or wealth of 1+ mil Small businesses and entrepreneurs with a turnover to 30 mil What Simple financial solutions for everyone Convinient financial solutions for financially capable clients Exclusive services for clients who want to increase the value of their property Financial services using deep knowledge of the client s business Values Friendliness Easiness Trust Professionalism Accountability Partnership Uniqueness Exclusivity Prestige Comprehensibility Consultant's report Proactivity 7
Ceska sporitelna Group Highlights Consolidated IFRS (in CZK mil) H1 2014 2014 H1 2015 Balance Sheet Total assets 900,332 902,589 923,499 Customer loans 489,483 500,039 510,765 Customer deposits 673,558 680,439 690,455 Profit & Loss Statement Operating result 11,468 22,906 10,857 Net profit 7,782 15,071 7,321 Financial Ratios Return on Equity - ROE 15.0% 14.5% 13.3% Net Interest Margin 3.6% 3.5% 3.3% Cost/Income Ratio 44.1% 44.3% 45.5% 633 branches 10,545 employees 5.0 mil. clients 1,565 ATMs & POS CS ratings Rating agency Long-term Short-term Outlook Fitch A- F2 stable Moody's A2 Prime-1 stable Standard & Poor's A- A-2 negative 8
Ceska sporitelna Financial Group CS subsidiaries offer customers wide range of supplementary financial products in area of: Building savings and building loans Leasing Pension supplementary insurance Factoring Net profit of selected subsidiaries IFRS, CZK mil 1-6 14 1-6 15 % Change Stavebni sporitelna CS 324 352 8.6% sautoleasing 50 57 14.0% Erste leasing 28 37 32.1% CS Penzijní spolecnost** -11 9 - Factoring CS 30 1-96.7% Building* Society Selected subsidiaries included in consolidation 100% 100% Factoring and Fortfaiting Services 100% Leasing Services 100% * Since 17/12/2014 CS holds 100% in Building Society 100% Pension Company Leasing Services ** Only the result of Pension Society of CS is captured, not the whole fund 9
CS market shares Market leadership maintained () Market leadership in: Total loans (market share of 19%) Number of customers (5.0 mil) Total mortgages (market share of 27%) Consumer loans incl. credit cards (market share of 30%) Total deposits (market share of 20%) 25% in retail deposits, 12% in corporate deposits 24% 23% 23% 23% 23% 18% 19% 18% 19% 18% 19% 18% 19% 18% 19% Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Total assets Retail loans Corporate loans No. 2 positions in: Total assets (market share 18%) Mutual funds with market share of 26% 26% 26% 26% 26% 26% 11% 11% 11% 12% 12% Source: CNB statistics, MMR, AKAT, Bank Card Association Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Retail deposits Corporate deposits 10
Awards from Prestigious Institutions Ceska sporitelna was honoured as The Bank of the Year 2014 in the Czech Republic according to the Banker Magazine CS earned The Bank of the Year 2014 in the Czech Republic also in 2003, 2004, 2005, 2008, 2009, 2010 a 2012 Ceska sporitelna earned the titles Bank Without Barriers of the Year 2014 and Mortgage of the Year 2014 and defended its title as The Most Trusted Bank of the Year 2014 in the Fincentrum Bank of the Year competition For the eleventh year running, Ceska sporitelna earned The Most Trusted Bank of the Year title in the Fincentrum Bank of the Year 2014 competition Ceska sporitelna was awarded for its innovations in the Best Innovator 2014 award by A. T. Kearney Ceská sporitelna became the Best financial services provider 2014 in the Construction and Investment Journal Ceska sporitelna won the Best Use of Digital Media award in the FLEMA Media Awards competition for its sale of mortgages via Facebook CS also received the Best Use of cinema advertisement award for We enjoy the family campaign Ceska sporitelna was awarded 2nd place at Company Opened to the People With Disabilities 2014 in TOP Odpovedna firma competition 11
Presentation Topics Ceska sporitelna s Development History Current market position Erste Group CS Group Product Offerings Retail clients Corporate clients Financial market products EU Programmes of CS Corporate Social Responsibility 12
Introduction to Erste Group Austria s first savings bank: Founded in 1819 - Erste Group went public in 1997 with a strategy to expand its retail business model into CEE - Acquisition of more than 10 banks between 1997 and 2008 Sale in 2012 2007 2008 New holding structure improving Group governance - Erste Group now runs market leading retail banking operations in the new EU member states, which remain underpenetrated compared to their Western European markets 2004 2005 2006 2003 2001 1997 2000 - Erste Group s customer base grew from 600,000 in 1997 to 16.2 million as of 2014 13
Consistent strategy since IPO 1997 Focus and Expansion Current Strategy of Erste Group Business Focus: Retail banking 1 Geographical focus: Central & Eastern Europe 2 3 Efficiency focus: Governance and Cost efficiency Corporate banking We want to be the leading retail bank in the eastern part of the European Union 14
Erste Strategy A real customer need is the reason for all business Customer banking in Central and Eastern Europe Eastern part of EU Focus on CEE, limited exposure to other Europe Retail banking Corporate banking Capital markets Public sector Interbank business Focus on local currency mortgage and consumer loans funded by local deposits FX loans only in EUR for clients with EUR income (or equivalent) and where funded by local FX deposits (RO, HR & RS) Savings products, asset management and pension products Large, local corporate and SME banking Advisory services, with focus on providing access to capital markets and corporate finance Real estate business that goes beyond financing Potential future expansion into Poland Focus on customer business, incl. customer-based trading activities In addition to core markets, presences in Poland, Turkey, Germany and London with institutional client focus and selected product mix Building debt and equity capital markets in CEE Financing sovereigns and municipalities with focus on infrastructure development in core markets Any sovereign holdings are only held for market-making, liquidity or balance sheet management reasons Focus on banks that operate in the core markets Any bank exposure is only held for liquidity or balance sheet management reasons or to support client business Potential future expansion into Poland 15
Erste Group Highlights Consolidated IFRS (in EUR million) H1 2014 2014 H1 2015 Balance Sheet Total assets 198,398 196,287 197,532 Customer loans 120,005 120,834 123,504 Customer deposits 120,250 122,583 124,533 Profit & Loss Statement Net profit -930-1,442 487 Financial Ratios Return on Equity - ROE -16.8% -13.6% 10.2% Net Interest Margin 2.6% 2.7% 2.6% Cost/Income Ratio 55.4% 55.1% 55.5% EB ratings Rating agency Long-term Short-term Outlook Fitch BBB+ F2 stable Moody's Baa2 Prime-2 stable Standard & Poor's BBB+ A-2 negative UNIQA Versicherungsv. Privatstiftung 4% Employees 1% Private investors 6% Institutional investors 51% 16.2 mil. clients 2,742 branches 44,222 employees Shareholder structure (as of 30 June, 2015) Lone Pine Capital 4% Harbor Int. Fund 4% direct 11% indirect 9% Criteria Caixa 10% 16
Presentation Topics Ceska sporitelna s Development History Current market position Erste Group CS Group Product Offerings Retail clients Corporate clients Financial market products EU Programmes of CS Corporate Social Responsibility 17
Product Offering for Retail Clients Accounts & Cards Personal Account (incl. products for pupils, students and absolvents) Service 24 (mobile & internet banking) Contactless debit cards Contactless credit cards ( Odměna and World ) Lending products Consumer loans (incl. loans consolidation) Loans from building savings Mortgages (CS Mortgage and American mortgage) Savings and Investment Products Term deposits (Internet Savings, Smart Savings) Mutual funds Building savings Retirement benefit schemes Life/non-life insurance 18
Product Offering for Corporate Clients Payment services Current accounts and business debit and credit cards Business 24 Internet banking, Business 24 Mobile bank Documentary business e-invoicing (@FAKTURA 24) Cross-Border Services Hedging FX risks, Commodities risk & Interest rate risks hedging Lending products Financing of working capital Financing of investments Trade finance Real estate project financing Syndicated & Club Finance Export & Project Finance Issuers Services Savings and Investment Products Employees Programmes Life insurance for employees Supplementary pension insurance corporate programme Consultancy and Support Financial & Strategic Advisory Grant Consultancy Debt & Rating, M&A Advisory Companies Valuation 19
Financial Market Products Treasury Investment products Products for foreign currency risk management Products for interest rate risk management Money market products Commodity derivatives, physical gold and electric energy sales Investment banking Bonds & Equities trading and brokerage Primary issues (domestic bonds, eurobonds, commercial papers) Corporate finance advisory Private Equity, Venture Capital, Acquisition Finance Asset management Investment advisory for institutional and private clients Individual portfolio management Research / Consultancy Custodian and securities/artworks depository services 20
EU Programmes of CS & Designed for public and private sector Involve a complex of products and services covering all project stages: Information EU News Monthly Journal (EU Office of CS) Suitable grant facility identification Project plan consultation, applicant and project acceptability verification Grant audit Full project and grant application preparation Including business plan, feasibility study Appendices and paperwork consultation Investment projects financing Suitable financing structure design short- and long-term financing combination tailored for the needs of particular project Possibility to pay off the credit or a part of it after obtaining the grant Respecting EU subsidized projects particularities: issuing standby credit, project phasing Comprehensive offer of additional bank services Grant retention Project and grant management and monitoring Tender preparation and management EU advisory services and assistance with project and application preparation are provided by a CS's subsidiary GRANTIKA CS 21
Special Programmes for CS s Customers TOP INNOVATION program Being the first bank in the Czech Republic, Ceska sporitelna offers to its corporate clients program designed for investments into further development through innovation of existing products, services, processes or technologies CS is building a network of cooperating partners of this program including advisors, venture funds, professional associations etc. TOP INNOVATION program includes Complete product range of bank financing Benefits in the form of interest benefit from EIB resources CMZRB subsidized loan Hedging of energy and commodity prices Advisory & education programs focused on innovation management 22
Special Programmes for CS s Customers RSI (guarantees) of EIF Portfolio guarantee of the European Investment Fund supporting innovation projects. CS was second bank in Europe, which qualified for the program in November 2012 The guarantee further develops program TOP Innovation and makes it more attractive to CS clients Key parameters of the guarantee: Focus on innovation projects Guaranteed exposure 50%, total limit CZK 2,250 mil. (EUR 90 mil.) SME businesses up to 250 employees, EUR 50 mil. turnover or EUR 43 mil. assets, Mid-caps (up to 500 employees) Eligible also for start ups max. 3 years from registration, max. 10% from total guaranteed limit Loan amount 25 thousands EUR up to EUR 7.5 mil. Loan maturity up to 7 years 23
Special Programmes for CS s Customers Global Loan EIB Global Loan is intended for the support of projects realized by municipalities and SMEs Definition of SME: 1. Annual turnover up to EUR 50 mil. 2. Up to 250 employees 3. Independence CS has signed contracts with the EIB in the total volume of EUR 1 100 mil. and the whole amount was successfully allocated First tranche of EUR 50 mil. drawn down in September 2004 Up to 100% of eligible project costs can be financed from Global Loan Global Loan is connected to grant support program of European Commission: Municipal Infrastructure Facility (MIF) and SME FF EE Window (energy efficiency) 24
Special Programmes for CS s Customers EIB Green Energy loan for SMEs Green Energy loan focused on energy efficiency projects combined with EU grants up to 10% of the loan amount Program is targeted on non-residential buildings, industry and renewable energy projects Key parameters of the EIB Green Energy loan: Final beneficiary: SME up to 250 employees, EUR 50 mil. turnover or EUR 43 mil. assets Purpose: Projects in industry and non-residential buildings - one measure or multimeasure. Loan: Loan amount up to EUR 12.5 m; Loan maturity min. 3 years; Maximum cost of EUR 25m Subsidy: 10% of the loan amount, max. subsidy of EUR 140,000 Energy performance have to result in at least 30% energy savings for building projects compared to the situation before implementation of the project, and 20% for projects other than building, or at least 20% CO2 savings 25
Presentation Topics Ceska sporitelna s Development History Current market position Erste Group CS Group Product Offerings Retail clients Corporate clients Financial market products EU Programmes of CS Corporate Social Responsibility 26
Corporate Social Responsibility in Q2 2015 Ceska sporitelna won the Zlata koruna (Golden Crown) award for Corporate Social Responsibility, newly granted in 2015. The winner was determined on the basis of an exclusive survey that Zlata koruna commissioned from Ipsos The oldest socially responsible project supported by Ceska sporitelna is the Palata Home, a facility providing care to visually impaired people. The bank was one of its founders 120 years ago, and it stands by its side to this day. In April and May, Ceska sporitelna s clients had the opportunity to help Palata in the Your Card Too Can Help project. For each payment with a Ceska sporitelna card, the bank made a contribution to the home for the purchase of special positioning care beds. In the year 2015, the contribution amounted to CZK 1,017,655; in the previous year it also exceeded CZK 1 mil The Ceska sporitelna Foundation distributed CZK 1 mil among 15 successful non-profit projects. In the third annual Grant Programme of the Ceska sporitelna Foundation, our clients could obtain up to CZK 70,000 for a non-profit organisation with which they cooperate, which is CZK 20,000 more than last year. The bank also distributed a million crowns in its grant programme for employees, who applied for finance for the nonprofits in which they volunteer. The Ceska sporitelna Foundation granted its Floccus award to organisations and individuals helping people who are on the fringe of society The country s oldest university, Charles University, and the country s oldest bank, Ceska sporitelna, have decided to join forces in enhancing education and science in the Czech Republic. The two institutions signed a Memorandum of Partnership and Cooperation in which they expressed their interest in cooperating in the Elixir for Schools project managed by the Depositum Bonum Foundation Ceska sporitelna is also the General Partner of the University of Hradec Kralove and also cooperates with universities in Brno, Ostrava, Olomouc and Jindrichuv Hradec 27
Contacts Ceska sporitelna, a. s. Olbrachtova 1929/62 140 00 Praha 4 Czech Republic Tel: +420 956 711 111 Fax: +420 224 641 511 Green line: 800 207 207 E-mail: csas@csas.cz Internet: www.csas.cz SWIFT: GIBA CZ PX Reuters: SPOPsp.PR 28