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Erste Group Bank AG - SWOT Analysis & Company Report

Published: April 2014 · Publisher: FriedlResearch
This report from April 2014 contains in-depth data about Erste Group and its operations and markets. It contains a company overview, business and strategy description, financial ratios, valuation & forecast data, SWOT analysis, plus data on key events.
Report Type Company Profiles
Language English
Format Electronic (PDF)
Pages77
Frequency Updated Quarterly
Availability Will be emailed within 1 business day
Reference No. 0888-0001
Price € 149,00
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Synopsis

This report has been published in April 2014 and contains in depth information and data about Erste Group and its operations and markets. It contains a company overview, business and strategy description, financial ratios, valuation & forecast data, SWOT analysis, plus data on key events.

FriedlResearch is a Vienna based market research company, which helps foreign investors, corporate executives and financial professionals to understand the dynamic markets and companies of Austria and the Central- and Eastern European countries Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Russia, Slovakia, Slovenia and the Ukraine.

Summary

FriedlResearch’s "Erste Group Bank AG - Company Profile & SWOT Analysis" contains in depth information and data about the company, its markets and its operations.

The profile provides
- a company overview, including its strategy and its shareholder structure,
- economic indicators for Austria and Central- and Eastern Europe,
- an investigation of the business and competitive environment in Austria and Central- and Eastern Europe,
- product and service offerings,
- detailed financials including share information, ratings, balance sheet, income and CF statements for the past 5 years,
- key financial figures including the most important ratios, risk provisions, EBIT and last quarter results,
- valuation and forecast data for the next 3-4 years,
- SWOT analysis,
- a banking industry and company outlook,
- plus information on key corporate actions and events affecting the company.

Scope

• Examines and identifies key information and issues about "Erste Group Bank AG" for business intelligence requirements
• Studies and presents the company's strengths, weaknesses, opportunities (growth potential) and threats (competition).
• Strategic and operational business information is objectively reported
• Provides analysis on financial ratios of the company
• The profile also contains information on business operations, company history, major products and services, prospects, key competitors, key management, locations and subsidiaries

Reasons To Buy

• Quickly enhance your understanding of Erste Group
• Gain insight into the marketplace and a better understanding of internal and external factors which could impact the industry
• Increase business/sales activities by understanding your competitors’ businesses better
• Recognize potential partnerships and suppliers
• Obtain yearly profitability figures

Key Highlights

From a strategic point of view, Erste Group is highly dependent on the economic development in the CESEE region. In meantime, the worst is over now in the CESEE.

In Romania and Hungary, the economy is growing again. The Czech Republic is expected to return to growth in 2014.

The recession in Slovenia and Croatia is projected to end in 2015. In the medium term, the frame conditions will remain tense. In CESEE, though.

Most challenges could be managed by Erste Group. Despite enormous macroeconomic and market difficulties, Erste Group could improve its capital ratio and could absorb write-offs in foreign markets.

In the next quarters, Erste Group faces slightly stagnating results. Due to several reasons, the banking group´s profitability will remain under pressure.

• First, the low interest rate and the small interest margins cause a decrease in the net interest income. Due to the extremely loose monetary policy, a trend reversal is not in sight yet.
• Second, the lending growth will be very modest. Private households and companies remain cautious and continue to deleverage. Only in the Czech Republic and in Austria, Erste Group registered a small lending growth this year.
• Third, although the peak has been left behind, loan loss provisions for bad debt remain high. Apart from Hungary, risk provisions are going down. The decrease in loan loss provisions will be more than offset by lower operating income.
• In the next years, Erste Group must improve its asset quality in order to retain confidence of the financial markets. Erste Group will take years to bring the NPL ratio down to the pre-crisis level.
• Moreover, the economic uncertainty and the unpredictable market conditions in Hungary are further downside factors.
• In the next quarters, Erste Group is forced to continue the strict cost management. CEO Andreas Treichl has repeatedly explained that Erste Group will continue its austerity program.

For Erste Group, the medium-term outlook is more promising than the short-term outlook. After 2015, Erste Group has good prospects to record substantially higher profits. As the lending activity is pegged to the deposits, Erste Group will not record the same dynamic growth rates as in the years before 2008.

• First, the economic frame conditions are expected to improve. As soon as the CESEE region returns to robust growth rates, Erste Group will be one of the first beneficiaries.
• Second, significant lending growth and an increase in net interest margins are likely.
• Moreover, Erste Group´s asset quality will improve slowly, but steadily in the course of the next years.
• Slovakia, Austria and the Czech Republic will remain Erste Group´s core pillars in terms of net income. In Slovakia and in the Czech Republic, the growth potential is not exhausted yet.
• In addition, market uncertainties will disappear gradually. Until 2015, the banking crisis in Hungary will be solved. Already in 2013, Hungary´s economy returned to growth.
• Finally, Romania has good prospects to become Erste Group´s most profitable market. For Erste Group, the Romanian market has the highest growth potential. In the medium term, Romania will become the most important growth driver.

The upward potential is limited, though. Unlike its Austrian competitors RBI or UniCredit Bank Austria, Erste Group did not manage to enter the markets in Poland and Russia in time. In Ukraine Erste Group had to withdraw again. Hence, three major markets are missing in Erste Group´s map.

In Poland, there are no acquisition targets in sight yet. Potential takeover targets are currently valued rather high. As a consequence, a market entry in Poland will not take place before 2015. Anyway, the banking group does not have enough resources to start another bigger expansion step.

In Southeastern Europe, the takeover of medium-sized takeover targets is more likely, though. Erste Group considers taking over certain units of the publicly held Hypo Group.
In order to improve its organic growth potential, Erste Group will have to cut the pay-out ratio.
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Erste Group Bank AG
Bawag P.S.K.
Oberbank AG
Raiffeisenlandesbank Oberösterreich AG
Raiffeisenlandesbank Nieder-sterreich-Wien AG
VBAG
UniCredit Bank Austria
UniCredit Group
Raiffeisen Bank International AG
Raiffeisen Zentralbank
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1 CONTENTS

1.1 TABLE OF CONTENTS
1 CONTENTS 2
1.1 TABLE OF CONTENTS 2
1.2 LIST OF TABLES 4
1.3 LIST OF FIGURES 5
2 ABOUT FRIEDL RESEARCH 6
3 SYNOPSIS 7
4 INTRODUCTION 8
5 COMPANY OVERVIEW 9
5.1 KEY FACTS 9
5.1.1 Basics 9
5.1.2 Number of customers 9
5.1.3 Number of branches 9
5.1.4 Number of employees 9
5.2 CORPORATE STRATEGY 10
5.3 FIELDS OF ACTIVITY 11
5.4 HISTORY 11
5.5 LOCATIONS AND SUBSIDIARIES 12
5.6 MANAGEMENT BOARD 13
5.7 SHAREHOLDER STRUCTURE 14
5.7.1 By Investor 14
5.7.2 By Region 15
5.8 MOST IMPORTANT NEWS AFTER THE PUBLICATION OF FY 2013 RESULTS 15
6 ECONOMIC FRAME CONDITIONS 22
6.1 ECONOMIC FRAME CONDITIONS IN AUSTRIA 22
6.1.1 Overview 22
6.1.2 Key Economic Data 23
6.1.3 Austria SWOT Analysis 24
6.2 ECONOMIC FRAME CONDITIONS IN CENTRAL, EASTERN AND SOUTHEASTERN EUROPE 25
6.2.1 Overview 25
6.2.2 Croatia 25
6.2.3 Czech Republic 28
6.2.4 Hungary 30
6.2.5 Romania 33
6.2.6 Serbia 35
6.2.7 Slovakia 38
6.2.8 CESEE Ratings 40
6.2.9 CESEE SWOT Analysis 41
7 AUSTRIAN BANKING INDUSTRY 42
7.1 INDUSTRIAL FRAME CONDITIONS IN AUSTRIA 42
7.1.1 Overview 42
7.1.2 Structural features of the Austrian banking market 42
7.1.3 Key Figures Q1-Q3 2013 (consolidated) 43
7.1.4 Assets and Capitalization 43
7.1.5 Liquidity 44
7.1.6 Profitability 45
7.1.7 Subsidiaries in CESEE 46
7.1.8 Exposure to CESEE 46
7.1.9 Erste Group´s Competitors 47
7.2 SWOT ANALYSIS 48
7.3 OUTLOOK 48
8 FINANCIAL DATA 50
8.1 STOCK DATA 50
8.1.1 Overview 50
8.1.2 Financial Calendar 50
8.1.3 Payout Ratio 50
8.1.4 Return on Equity after Tax 51
8.1.5 Cash return on Equity after Tax 51
8.1.6 Earnings per Share 51
8.1.7 Cash earnings per Share 51
8.1.8 Price-Earnings Ratio 51
8.1.9 Dividend Yield 51
8.1.10 Total Shareholder Return 52
8.1.11 Book Value per Share 52
8.1.12 Price-Book Ratio 52
8.2 ASSETS & LIABLITIES 52
8.2.1 Balance Sheet 52
8.2.2 Asset Quality 53
8.2.3 Funding 55
8.3 EARNINGS 57
8.3.1 Income Statement (Year-on-Year) 57
8.3.2 Income Statement (Quarter-on-Quarter) 59
8.3.3 Net Interest Margin 59
8.3.4 Cost-income ratio 59
8.4 CASH FLOW 60
8.4.1 Cash Flow Statement 2008 - 2012 60
8.5 EQUITY 61
8.5.1 Core tier-1 ratio 61
8.5.2 Tier-1 ratio (credit risk) 61
8.5.3 Solvency ratio 61
8.6 SEGMENT REPORT (BY COUNTRY) 62
8.6.1 Austria 62
8.6.2 Czech Republic 62
8.6.3 Romania 63
8.6.4 Slovakia 63
8.6.5 Hungary 64
8.6.6 Croatia 64
8.6.7 Serbia 65
8.6.8 Ukraine (liquidated) 65
8.6.9 Segment Profile 66
8.7 OTHER INFORMATION 66
8.7.1 Ratings 66
8.7.2 Selected interests 66
8.7.3 Corporate Actions 67
9 SWOT ANALYSIS 68
9.1 STRENGTHS 68
9.2 WEAKNESSES 68
9.3 OPPORTUNITIES 69
9.4 THREATS 70
9.5 SWOT SUMMARY 70
10 FORECAST & VALUATION 72
10.1 ECONOMIC FRAME CONDITIONS 72
10.2 MANAGEMENT STATEMENT 72
10.3 COMPANY OUTLOOK 72
10.4 FINANCIAL FORECAST 2014 - 2017 74
10.5 STOCK VALUATION 74
11 APPENDIX 76
11.1 RELATED FRIEDL RESEARCH COMPANY REPORTS 76
11.2 RESEARCH METHODOLOGY 76
11.3 DISCLAIMER 76

1.2 LIST OF TABLES

Table 1: Erste Group Bank AG – Key Facts 9
Table 2: Erste Group Bank AG – Number of customers (million) 9
Table 3: Erste Group Bank AG – Number of branches 9
Table 4: Erste Group Bank AG – Number of employees 9
Table 5: Erste Group Bank AG – Corporate strategy 10
Table 6: Erste Group Bank AG – Locations and Subsidiaries 13
Table 7: Erste Group Bank AG – Management Board 14
Table 8: Erste Group Bank AG – Economic Frame Conditions in Austria 24
Table 9: Erste Group Bank AG – Austria SWOT Analysis 24
Table 10: Erste Group Bank AG – Key Economic Data Croatia 28
Table 11: Erste Group Bank AG – Key Economic Data Czech Republic 30
Table 12: Erste Group Bank AG – Key Economic Data Hungary 33
Table 13: Erste Group Bank AG – Key Economic Data Romania 35
Table 14: Erste Group Bank AG – Key Economic Data Serbia 38
Table 15: Erste Group Bank AG – Key Economic Data Slovakia 40
Table 16 Erste Group Bank AG – CESEE Ratings 41
Table 17: Erste Group Bank AG – CESEE SWOT Analysis 41
Table 18: Erste Group Bank AG – Assets and Capitalization (in EUR billion) 44
Table 19: Erste Group Bank AG – Profitability (in EUR billion) 45
Table 20: Erste Group Bank AG – Industrial Frame Conditions in Austria (in EUR billion) 46
Table 21: Erste Group Bank AG – Subsidiaries in CESEE (in EUR billion) 46
Table 22: Erste Group Bank AG – Exposure to CESEE (in EUR billion) 47
Table 23: Erste Group Bank AG – Austrian banking sector SWOT Analysis 48
Table 24: Erste Group Bank AG – Stock Data Overview 50
Table 25: Erste Group Bank AG – Financial Calendar 50
Table 26: Erste Group Bank AG – Payout Ratio 2006 – 2013 51
Table 27: Erste Group Bank AG – Return on Equity after Tax 2006 – 2013 51
Table 28: Erste Group Bank AG – Cash Return on Equity after Tax 2006 – 2013 51
Table 29: Erste Group Bank AG – Earnings per Share 2006 - 2013 51
Table 30: Erste Group Bank AG – Cash earnings per Share 2006 - 2013 51
Table 31: Erste Group Bank AG – Price-Earnings Ratio 2006 - 2013 51
Table 32: Erste Group Bank AG – Dividend yield 2006 - 2013 51
Table 33: Erste Group Bank AG – Total shareholder return 2006 - 2013 52
Table 34: Erste Group Bank AG – Book value per share 2006- 2013 52
Table 35: Erste Group Bank AG – Price-Book ratio 2006 - 2013 52
Table 36: Erste Group Bank AG – Balance Sheet 2008-2013 53
Table 37: Erste Group Bank AG – Income Statement 2008-2013 57
Table 38: Erste Group Bank AG – Income Statement 2012-2013 59
Table 39: Erste Group Bank AG – Net interest margin 2006-2013 59
Table 40: Erste Group Bank AG – Cost-income ratio 2006-2013 59
Table 41: Erste Group Bank AG – Cash Flow Statement 2008 - 2012 61
Table 42: Erste Group Bank AG – Equity Table 2006 - 2013 61
Table 43: Erste Group Bank AG – Tier-1 ratio 2006- 2013 61
Table 44: Erste Group Bank AG – Solvency ratio 2006 - 2013 62
Table 45: Erste Group Bank AG – Segment Report Austria 62
Table 46: Erste Group Bank AG – Segment Report Czech Republic 62
Table 47: Erste Group Bank AG – Segment Report Romania 63
Table 48: Erste Group Bank AG – Segment Report Slovakia 63
Table 49: Erste Group Bank AG – Segment Report Hungary 64
Table 50: Erste Group Bank AG – Segment Report Croatia 64
Table 51: Erste Group Bank AG – Segment Report Serbia 65
Table 52: Erste Group Bank AG – Segment Report Ukraine 65
Table 53: Erste Group Bank AG – Erste Group Segment Profile 66
Table 54: Erste Group Bank AG – Ratings 66
Table 55: Erste Group Bank AG – Interests 67
Table 56: Erste Group Bank AG – Corporate Actions 67
Table 57: Erste Group Bank AG – Erste Group SWOT Analysis 71
Table 58: Erste Group Bank AG – Valuation 2013 – 2017 74

1.3 LIST OF FIGURES

Figure 1: Erste Group Bank AG – Shareholder Structure by Investors 14
Figure 2: Erste Group Bank AG – Shareholder Structure by Region 15
Figure 3: Erste Group Bank AG – Asset Quality 53
Figure 4: Erste Group Bank AG – NPL Coverage Ratio 54
Figure 5: Erste Group Bank AG – Risk Costs 55
Figure 6: Erste Group Bank AG – Funding Mix (in %) 56
Figure 7: Erste Group Bank AG – Customer Deposits (in EUR billion) 57
Figure 8: Erste Group Bank AG – Income Figures in EUR million 58
Figure 9: Erste Group Bank AG – Income Forecast 2013 – 2017 74

COUNTRIES COVERED

Austria
Bulgaria
Croatia
Czech Republic
Hungary
Romania
Serbia
Slovakia
Ukraine

COMPANIES MENTIONED

Erste Group Bank AG
Bawag P.S.K.
Oberbank AG
Raiffeisenlandesbank Oberösterreich AG
Raiffeisenlandesbank Nieder-sterreich-Wien AG
VBAG
UniCredit Bank Austria
UniCredit Group
Raiffeisen Bank International AG
Raiffeisen Zentralbank
Copyright © FriedlNet. You may share using our tools Please don't cut content from FriedlNet and redistribute by email or post to the web.