Half Year 2024 BAWAG Group AG Earnings Call Transcript
Key Points
- Bawag Group AG (BWAGF) delivered a net profit of EUR175 million in Q2, with earnings per share of EUR2.22 and a return on tangible common equity of 24%.
- The company maintained a low NPL ratio of 1.1%, indicating solid credit performance across its businesses.
- Bawag Group AG (BWAGF) has a strong balance sheet with EUR12.5 billion in cash and an LCR of 220%.
- The company signed two strategic acquisitions, Canara Bank in the Netherlands and Barclays Consumer Lending business in Germany, expected to add significant pre-tax profit by 2026 and 2027 respectively.
- The CET1 ratio increased to 16.5%, up 90 basis points from the prior quarter, reflecting strong capital generation.
- Customer loans were down 3% in Q2 and 4% year-over-year, largely driven by the corporate business.
- Net interest income was down 1% versus the prior quarter, reflecting challenges in maintaining revenue growth.
- The company expects muted customer loan growth for the year due to the overall economic environment and subdued demand for mortgages.
- Operating expenses increased by 1% in the quarter, driven by inflationary pressures and collective bargaining agreements.
- The retail risk costs have returned to pre-COVID levels, indicating potential challenges in maintaining low risk costs moving forward.
Good morning, everyone. I hope everyone is keeping well. I am joined this morning by Enver, our CFO. Let's start with a summary of the second quarter results on slide 3. During the second quarter, we delivered net profit of EUR175 million, earnings per share of two years. EUR2.22 and a return on tangible common equity of 24%.
The operating performance of our business was very strong with pre-provision profits of EUR263 million and a cost-income ratio of 33%. Total risk costs were EUR28 million, translating into a risk cost ratio of 27 basis points. We did not release any credit reserves with an ECL management overlay of EUR80 million.
We have a low NPL ratio of 1.1% and continue to see solid credit performance across our businesses. In terms of our balance sheet and capital average customer loans were down 1% and average customer deposits were up 1% quarter-over-quarter.
Our CET1 ratio was 16.5%, up 90 basis points from prior quarter. After considering the second quarter dividend accrual
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