green finance framework investor presentation
TRANSCRIPT
August 2021 | BAWAG Group AG 1
Green Finance Framework –
Investor Presentation
August 2021
August 2021 | BAWAG Group AG 2
BAWAG Group Overview and Q2 2021 Highlights
Sustainability @ BAWAG Group
Green Finance Framework
Funding & Liquidity
Detailed Financials
[ ] August 2021 | BAWAG Group AG 3
BAWAG Group
One of Austria‘s leading banking groups with
2.3 million customers across DACH/NL region
COMPANY PROFILE
3
Delivering simple, transparent and reliable financial
products and services that meet our customer’s
needs across multiple brands and channels
Focused on developed markets … DACH/NL
region, Western Europe and the United States
Organic & inorganic growth in DACH/NL region
and developed markets
Dividend policy of
50% payout ratio of net profits
TARGETSCAPITAL MANAGEMENT
OUR STRATEGY
Safe and
secure
Efficiency and
operational
excellence
Growing in our
core markets
Focus on
Customer
Centricity
Focused on organic
and inorganic growth
Committed to returning excess
capital to shareholders
2020 results: €285m net profit, 10.2% RoTCE,
CIR 44.3% and CET1 ratio (post dividend) 14.0%
… against backdrop of global pandemic and
prudent and conservative provisioningNew Targets & 4-year Plan through 2025
to be presented at Investor Day on
20 September ‘21
Developing more towards a Retail & SME franchise
… targeting mid-term 80% profit contribution from
Retail & SME versus 73% in H1 ‘21
2021*
RoTCE
~15%CIR
~ 40%
* Excluding any potential impacts from City of Linz legal ruling
[ ] August 2021 | BAWAG Group AG 4
BAWAG Group
1) BAWAG P.S.K., easybank and Südwestbank are the main brands for banking operations of BAWAG P.S.K Based on most recent major holdings notifications
Company structure and issuing entities Shareholder structure of BAWAG Group AG
• Public listing on the Vienna Stock Exchange
• Granular and well diversified investor base with ~80%
free float
Other
subsidiaries
Issuer of capital
instruments
Issuer of debt
instruments
AT1, Tier2
SNP, SP,
Covered
Moody's
Issuer Rating A2 (stable)
Covered bonds Aaa
Senior preferred A2
Senior non-preferred Baa1
Tier 2 Baa2
Additional Tier 1 Ba1
BAWAG P.S.K.
BAWAG Group
1)
in %T. Rowe Price
78.2%Free Float
70.1
5.6
GoldenTree
21.8
Managing Board
2.5
August 2021 | BAWAG Group AG 5
Strategy4 pillars of our growth strategy
Growing in our core markets
‒ Our foundation is Austria with focus on
DACH/NL region and developed markets
‒ Grow profitably into current account
market share entitlement in Austria and
address significant market opportunity in
retail products across DACH/NL region
‒ Organic growth drivers ... Partnerships &
platforms, enhancing digital engagement
and growing share of wallet of 2.3 million
customers
‒ Inorganic growth drivers … pursuing
earnings-accretive M&A meeting our
Group RoTCE targets of at least 15%
Drive efficiency through
operational excellence
‒ Our DNA is to focus on the things we
control through “self-help”
management
‒ Simplify, standardize, and automate
product offerings across all channels
‒ Create simple end-to-end processes
across the Bank
‒ Continuously optimize our processes,
footprint, and technology infrastructure
‒ Embrace various forms of technological
change and invest judiciously in
technology
Maintaining a safe and
secure risk profile
‒ Maintain fortress balance sheet ..
strong capital position, stable retail
deposits and low risk profile
‒ Focus on mature, developed and
sustainable markets
‒ Applying conservative and disciplined
underwriting in markets we understand
with focus on secured lending
‒ Proactively manage and mitigate non-
financial risk
‒ Build multi-channel and multi-brand
franchise from branches-to-partners-to-
platforms-to-digital products
‒ Physical network focused on high-touch
and high-quality advisory
‒ Leverage technology to simplify
processes and reduce complexity
‒ Enhance analytical capabilities to
improve customer experience
‒ New partnerships and lending platforms
to provide 24/7 customer access
Focus on Customer Centricity
Committed to responsible, sustainable and profitable growth considering ESG
August 2021 | BAWAG Group AG 6
Bank transformationFocusing on things we control and driving operational excellence
Private company Public company
2013 2014 2015 2016 2017 2018 2019 2020
RoTCE 11% 15% 17% 18% 15% 15% 16% 10%
C/I ratio 68% 54% 48% 46% 47% 44% 43% 44%
CET1 (FL)post dividend
9.4% 12.2% 12.3% 13.6% 13.5% 14.5% 13.2% 14.0%
NPL ratio 2.5% 2.0% 1.9% 1.7% 1.8% 1.7% 1.7% 1.5%
Assets (€b) 36.6 34.9 35.7 39.7 46.1 44.7 45.7 53.1
191
316
419 445500
573604
371
2013 2014 2015 2016 2017 2018 2019 2020
Pre-tax profit (€ millions)
Increased profitability … KEY METRICS
PILLARS OF OUR TRANSFORMATION
-02
00
02
04
06
2013 2014 2015 2016 2017 2018 2019 2020
Pre-tax profit
3m Euribor
Structurally fixed cost base
Focus on simple core products
Focus on core markets … exited CEE and
non-core assets
More than doubled CET1 ratio
Significantly increased profitability despite
declining / negative rates
Completed 9 acquisitions in DACH region from
2015 thru 2020 … two new deals signed in 2021
… without relying on interest rates
2.5%
2.0% 1.9%1.7% 1.8% 1.7% 1.7%
1.5%
36 3217 15 17 12
18
56
2013 2014 2015 2016 2017 2018 2019 2020
NPL ratioRisk cost ratio (in bps)
… maintaining fortress balance sheet
Discontinued trading activitiesTransformed business to address prolonged
negative interest rate environment
August 2021 | BAWAG Group AG 7
Highlights Q2 2021
EARNINGS
• Targets for 2021 updated: RoTCE ~15% and CIR ~40%
• New 4-year-plan thru 2025 will be communicated at our Investor Day on 20 September ’21
• €420m dividends (€4.72 per share) will be proposed to AGM on 27 August ’211)
• M&A: Signed deal to acquire Hello bank! Austria; Depfa deal expected to close in H2 ‘21
• Average customer loans stable vPQ and +3% vPY
• CET1 ratio (post dividend) of 14.4%, up 40bps vYE
• Dividend distributions … will propose €420m dividends (€4.72 per share) to AGM on 27 August ’211)
… accrued €95m H1 ‘21 dividend
• Additional excess capital of €436m (post-dividend deductions) above 12.25% CET1 target
• Net Profit of €119m in Q2 ’21, EPS of €1.34, and RoTCE of 16.3%
• Pre-provision profit of €181m and CIR at 40.1%
• Risk cost of €24m … no ECL reserves released
BALANCE SHEET & CAPITAL
OUTLOOK
1) Dividend payout in early October
August 2021 | BAWAG Group AG 8
Financial performanceKey highlights
Note: All equity, capital, ratios and per share data reflect deduction of remaining €420m earmarked dividend from 2019/2020 profits as well as €95m dividend accrual for H1 ’21
P&L | € millions Q2 ‘21 vPY vPQ H1 ‘21 vPY
Core revenues 302 6% 1% 599 4%
Operating income 303 6% - 604 4%
Operating expenses (121) (3%) - (243) (3%)
Pre-provision profit 181 14% 1% 361 9%
Regulatory charges (2) (20%) (96%) (56) 45%
Risk costs (24) (68%) (19%) (53) (59%)
Profit before tax 156 93% 62% 253 55%
Net profit 119 94% 62% 193 56%
Ratios
RoCE 13.7% 6.3pts 5.1pts 11.1% 3.7pts
RoTCE 16.3% 7.3pts 6.1pts 13.2% 4.3pts
CIR 40.1% (3.7pts) (0.4pts) 40.3% (2.6pts)
Risk cost ratio 0.23% (0.51pts) (0.06pts) 0.26% (0.40pts)
Balance Sheet & Capital | € millions Q2 ‘21 Q1 ‘21 vPQ vYE
Total assets 54,132 52,970 2% 2%
Interest-bearing assets (average) 40,701 40,824 - -
Customer loans (average) 32,480 32,494 - 1%
Customer deposits (average) 32,505 31,979 2% 2%
Common Equity 3,504 3,435 2% 2%
Tangible Common Equity 2,966 2,895 2% 3%
CET1 Capital 2,903 2,835 2% 4%
Risk-weighted assets 20,142 20,054 - -
CET1 Ratio (post dividend) 14.4% 14.1% 0.3pts 0.4pts
Per share data Q2 ‘21 vPY vPQ H1 ‘21 vPY
Earnings (€) 1.34 92% 61% 2.17 55%
Book value (€) 39.43 3% 2% 39.43 3%
Tangible book value (€) 33.38 5% 2% 33.38 5%
Shares outstanding (€ m) 88.86 1% - 88.86 1%
August 2021 | BAWAG Group AG 9
Regulatory CapitalStrong capital position
20.8 20.2 20.1 20.1 20.1
14.8%
17.0%
5.9%
16.3%
19.6%
6.4%
16.3%
19.6%
6.0%
16.5%
19.8%
6.1%
16.8%
20.0%
6.1%
RWA | € billions |Tier 1 ratio | Total capital ratio | Leverage ratio
Q4’20
3.3
Q2’20
3.1
Q1’21
14.1%13.4% 14.0%
2.9
Q3’20
14.0% 14.4%
0.5
Q2’21
3.13.3
2.8
3.4
0.3
2.82.8
0.3
2.8
0.50.5
Note: All ratios post dividend accrual 1) Dividend payout in early October
dividend
CET1 ratio (post dividend)
CET1 capital (post dividend)
€ billion
CET1 Capital and ratios Capital distribution plans:
‒ €95m dividends accrued based on dividend policy
for H1 ’21 earnings
‒ €420m dividends (€4.72 per share) relating to
2019/2020 profits will be proposed to AGM on 27 August 20211)
Capital development:
‒ Tier1 capital ratio increased to 16.8% and Total Capital ratio to 20.0% in Q2 ’21
‒ Target CET1 ratio of 12.25% is ~310bps above MDA trigger of 9.14%
‒ Current CET1 ratio 528bps above MDA trigger of 9.14%
Other:
‒ City of Linz receivable fully provisioned through
prudential filter in 2020 with no impact on capital
distribution plans in worst-case scenario
August 2021 | BAWAG Group AG 10
By geography
92%
8%
52%48%
Customer businesses €33.5 billion
10
As of June 2021
DACH/NL Western Europe & USA
Consumer & SMEHousing loans
CORPORATES & PUBLIC
Public clients
Asset backed lendingCorporate lending
28%
37%
35%
€13.2bin %
€20.3bin %
€13.2bin %
75%
25%
€20.3bin %
By product
CUSTOMER BUSINESSES
DACH/NL Western Europe & USA
80%Secured or public
sector lending
76%Lending in
DACH/NL
€33.5 billion of which …
24%Western Europe &
USA
RETAIL & SME
August 2021 | BAWAG Group AG 11
Key developments
Payment deferral overview
Retail & SMEPortfolio overview of €20.3b of customer loans and leases
Highly collateralized Retail & SME business (86%) … primarily mortgages
Consumer & SME lending primarily personal loans to primary banking
customers (~80%)
Total reserve build +€14m (+5%) vs YE ‘20 and stable reserve ratio at 1.46%
90% of expired payment deferrals are current (paying again) with average payment period of 9 months
87% of loans, in active deferral or non-paying after deferral expiration,
already captured in stage 2/3
In Austria, public moratorium expired with 31 January 2021 ... Overall, very
positive customer behavior, but we will remain prudent and cautious
Payment Holidays Trend Development
6.8%
2.1%
1.2%
0.3%0.6%
Q2 ‘21Q1 ‘21Q4 ‘20Q3 ‘20Q2 ‘20
Q4 '19 Q4 '20 Q2 '21 Q4 '19 Q4 '20 Q2 '21 Q4 '19 Q4 '20 Q2 '21 31.12.2020 30.06.2021
Housing Loans 15.2 1.8% 1.5% 1.3% 76 95 91 0.88% 0.65% 0.60% 1.0% 0.2% 91% 9
Consumer & SME 5.1 1.9% 2.8% 3.4% 100 187 204 2.39% 3.79% 4.02% 1.7% 0.7% 88% 9
Total Retail & SME 20.2 1.9% 1.9% 2.0% 176 281 295 0.96% 1.46% 1.46% 1.2% 0.3% 90% 9
average time
on payments (expired
deferrals, in
months)
Payment holidayAssets
Q2 '21
(€bn)
paying ratio (expired
deferrals)
NPL ratio Reserve development Reserve ratio
August 2021 | BAWAG Group AG 12
Q4 '19 Q4 '20 Q2 '21 Q4 '19 Q4 '20 Q2 '21 Q4 '19 Q4 '20 Q2 '21 31.12.2020 30.06.2021
Total Corporates and Public 13.2 1.0% 1.2% 1.1% 77 115 126 0.58% 0.82% 0.95% 0.2% 0.1% 100% 9
Corporate & Asset Backed
Lending8.6 1.4% 1.8% 1.7% 76 114 125 0.78% 1.27% 1.47% 0.4% 0.1% 100% 9
average time
on payments (expired
deferrals, in
months)
Assets
Q2 '21
(€b)
Payment holidaypaying ratio
(expired
deferrals)
NPL ratio Reserve ratioReserve development
Corporates & Public Portfolio overview of €13.2 billion of customer loans … whereof €4.7b in public sector
CORPORATE LENDING … €3.7b; (13%) vPQ ASSET BACKED LENDING … €4.9b; (1%) vPQ
By geography
– Disciplined and conservative underwriting over the years focused on risk-
adjusted returns and not chasing volume growth
– Proactively managing higher-risk cyclical exposures … De-minimis remaining
exposure of €16m (down by ~ 86% vs YE´19)
Historically disciplined underwriting:
- Senior secured
- Day 1 LTC/V < 65%
- Interest Coverage Ratio (ICR
>2.0x)
Industrial / LogisticsResidential
OtherShopping / RetailOffice
Underwriting overview
By industry
USA
Spain Germany
Ireland
Austria
OtherNordics
By underlying
Comments
Mixed
- Resilient portfolio performance
through lockdowns with continued
2Q ‘21 improving fundamentals
- Direct exposure to Hotel/Retail of ~
8%, of which ~16% NPL, proactive
management and conservative LLPs
- Hotel/Retail with over 39% avg. pay
down, ~6 months interest reserve
Payment deferral overview
Services
Lender Financing
Engineering & B-2-B
Pharmaceuticals
B-2-C
Telecommunication
Food & Beverage
Healthcare
Other
August 2021 | BAWAG Group AG 13
Q2 ‘21
17%
16%
36%
29%
2%
8%
92%
Investment book and Cash
AAA AA A BBB BB
Investment
book
Cash &
Cash equivalent
€5.5bin %
Cash Cash equivalent
€13.1bin % +€ 2.0b
-€ 0.4b
Q1 ‘21
As of Q2 ‘21, cash and cash equivalents (mainly money at central banks) at €13.1b ... TLTRO III of €6.4b
Investment book primarily serves as liquidity book of
the Bank
Focus on low credit risk, high liquidity, shorter
duration and solid diversification in terms of
geography and issuers:
− No non-performing assets
− 98% portfolio investment grade, with 70% A or
higher
− Weighted average life of 4.0 years
− 300 positions, average size ~€17m
7%
93%
€11.1bin %
24%
17%
32%
24%
3%
€5.9bin %
August 2021 | BAWAG Group AG 14
BAWAG Group Overview and Q2 2021 Highlights
Sustainability @ BAWAG Group
Green Finance Framework
Funding & Liquidity
Detailed Financials
August 2021 | BAWAG Group AG 15
Key highlights of BAWAG Group’s ESG setup
GOVERNANCE
GREEN INITIATIVES
OTHER INITIATIVES
• Executive body of ESG-topics is the Non-Financial Risk & ESG Committee at Management Board
level … decision taken to establish an ESG committee at Supervisory Board level
• Dedicated ESG officers in key functions
• Lending: Green loan origination increased from €0.3b in 2018 to €0.8b in 2020
• Own emissions: Reduce own Scope 1 and Scope 2 CO2 emissions mid-term … 97% of green
electricity today with target of 100%
• Lending criteria: Lending/exclusion criteria for specific industries introduced in Q1 ‘21
• Women target quota introduced in Q1 ’21: 33% in Supervisory Board and 33% in senior
leadership team (including Managing Board) until 2027
August 2021 | BAWAG Group AG 16
ESG embedded into our strategic roadmapCommitted to responsible, sustainable and profitable growth
ENVIRONMENT SOCIAL GOVERNANCE
‒ Reduce own Scope 1 and Scope 2 CO2 emissions
mid-term
‒ Switch to 100% green electricity mid-term …
already at 97% as of YE ’20 … as of 1 January
2021, all Südwestbank locations switched to
green energy suppliers
‒ Continuously increasing ESG-related products –
both for environmental and social factors
‒ Lending/exclusion criteria for specific industries
introduced in Q1 ‘21 … low or no volumes in
customer book already today: total exposure to
defense industry, nuclear energy, fossil fuels and
industries with other ethical risks represented less
than 0.1% of Group exposure (lending)
‒ Planning a green bond issuance in 2021 … subject
to market conditions
‒ Empower our clients by continuously enhancing
our services and digital/online functionalities for
their financial well-being
‒ Empower our employees by offering broad-based
career opportunities and focus on enhancing
training and development programs
‒ Increase the number of women in management
positions … offering targeted development
programs … Women target quota introduced in
Q1 ’21: 33% in Supervisory Board and 33% in
senior leadership team (including Managing
Board) until 2027
‒ Intensify collaboration with dedicated partners,
bundling activities across the region and drawing
on our various franchise assets in support of our
local communities
‒ Executive body of ESG-topics is the Non-Financial
Risk & ESG Committee at Managing Board level
‒ Selective topics like Data Privacy & IT security are
integrated in Supervisory Board Committees
‒ Establishing a clear governance to address climate
risks … addressing supervisory expectations and
regulations
‒ Newly formed ESG committee at the Supervisory
Board level, will be established during Q3 ‘21
‒ Disclosure will be continuously enhanced
For further details see: https://www.bawaggroup.com/BAWAGGROUP/IR/EN/ESG
August 2021 | BAWAG Group AG 17
BAWAG’s 2019-20 Sustainability achievements
1) new business in Amundi funds sold by BAWAG P.S.K./easybank
Inclusion of ESG criteria in the product implementation process made mandatory
22% of new fund business1) in 2020 went into funds with an ESG investment approach and 8% of the
total investment portfolio as of December 2020
Launched responsible marketing and sales policy
97% of total electricity consumption derived from renewable energy sources
COVID-19 support for SMEs and retail customers via bridging loans, guarantees and deferrals
Establishment of a Non-Financial Risk & ESG Committee
Monitoring of customer satisfaction through touchpoint surveys in 2020 with approximately 91% of
customers being “very satisfied” or “satisfied” with the quality of advice we provide
BAWAG Group has 0% sector exposure in the lending book to the Defense industry, Nuclear energy, Tobacco, & Fossil fuels
August 2021 | BAWAG Group AG 18
Responsibility at BAWAG
Endorsing the UN Sustainable Development Goals (SDGs) BAWAG’s Sustainability Program 2020
‒ Being one of the largest banking groups in Austria with 2.3 million customers, BAWAG understand its business activities
have a significant impact on the domestic economy, local
communities, and the overall environment of the markets it operates in
Our Green Finance Framework will also support SDGs 7, 9, 11, 12,
13 & 15
‒ As part of a 2018 group wide survey into Corporate Social Responsibility in the BAWAG Group, BAWAG created 7 areas
for action to align with the below UN SDGs
BAWAG’s CSR engagement
1st place in green
electricity, Ecolabelled
electricity and gas in 2019
& 2020 (VKI)
‘Recommended’ Award
won 9 years in a row by
easybank May 2019
(FMVÖ)
Joint winner in
consumer transparency
test September 2019
(ÖGVS, Gesellschaft für
Verbraucherstudien
GmbH)
Ranked 54th Globally
(Forbes 2019 Global
World’s Best employers
2000)
PUBL
IC
✓ Area of action 1: CSR Strategy
✓ Area of action 2: Ethics and integrity (SDG 16)
✓ Area of action 3: Responsibility towards customers (SDG 1,8)
✓ Area of action 4: Sustainability in our core business (SDG 1, 7, 8, 9, 12, 13)
✓ Area of action 5: Social responsibility and personal commitment (SDG 4)
✓ Area of action 6: Employee promotion and development, diversity and
equal opportunities (SDG 4,5)
✓ Area of action 7: Environmental and climate protection (SDG 1, 7, 8, 13, 16)
Best Banking Group
Governance in 2019 &
2020 (cfi.co)
August 2021 | BAWAG Group AG 19
BAWAG Group’s alignment to the UN SDGs
• BAWAG Group provides access to financial services for different groups in
society though simple and user-friendly banking products
• Provide SMEs with access to banking and financing products
• Provide accessible branch locations and a range of banking products
and services
• Through sponsorship agreements, provide projects to expand financial
education and digitalization skills
• Provide care and education for preschool children at the company day-care
centre in Vienna
• Ensure an equal number of male and female participants in continuing
education programmes through BAWAG P.S.K. Women's Advancement Plan
• Female and male employees have equal access to initiatives to promote work-
life balance
• The BAWAG P.S.K Women’s Advancement plan is a binding framework to
promote equal opportunity within the company
• The BAWAG P.S.K. Women’s Award to put the spotlight on projects
spearheaded by women
• Increasing the share of renewable energy in the global energy mix offered by
the subsidiary easy green energy
• Focussing on using energy from renewable sources at all sites in the long term
• Promote innovative entrepreneurship through banking and financing products
• Supporting SME customers with bridging loans, deferrals and guarantees
throughout Covid-19 crisis
• Strategically focus on countries with stable legal systems
• Committed to fair and humane working conditions in business relationships
• Finance the implementation and modernization of projects that serve to
expand and improve infrastructure services in rural regions
• Projects include the fields of education, health, water supply and public
transport
• Promote sustainable consumption choices through financing products for
energy-efficient construction and refurbishment (KlimaBonus Wohnen) as well
as consumption (KlimaBonus Haushalt)
• Contribution to a 10-year framework for sustainable consumption and
production behaviour
• Drive environmental and climate protection at the Group level and raise
awareness of climate change among stakeholder groups: advising customers
on sustainable investment opportunities or energy-efficient construction
projects; employees integrating resource-saving initiatives into their work
• Clear guidelines and processes designed to prevent white-collar crime as well
as market abuse and corrupt behaviour within the group
• Work of a Chief Information Security Office and information campaigns for
customers to help combat organized crime online
August 2021 | BAWAG Group AG 20
BAWAG Group’s Sustainability ProgrammeSeven Point Action Plan
1: CSR strategy
Goal: Strengthening the CSR activities and CSR awareness Current status
Improvement in sustainability rating agency rankings …
Redefinition of the internal CSR organization and broadening of CSR responsibilities within
the Group ✓
Evaluation of the existing materiality analysis with BAWAG Group subsidiaries in Germany
and Switzerland
In implementation/ planning ✓ Implemented … Ongoing
2: Ethics and integrity (SDG 16)
Goal: Ensuring compliance with all guidelines and policies Current status
Expansion of the training program for employees on the subject of information security ✓
Launch of revised, mandatory anti-corruption self-learning program for employees
Conducting annual risk analyses and audits and, based on these, defining Group-wide
control priorities …
Integration of the assessment of potential sustainability risks into the annual risk control self-
assessment process for divisions and subsidiaries
Extension of the whistleblowing tool to German subsidiaries
Establishment of a clear governance to address climate risks, to address supervisory
expectations and regulations
3: Responsibility towards customers (SDG 1, 8)
Goal: Appropriate products and services for every life circumstance and every stage of life Current status
Evaluation and implementation of measures to simplify processes for investment products ✓
Process evaluations and screenings to support our customers in the shift to digital and the use
of digital services…
4: Sustainability in our core business (SDG 1, 7, 8, 9, 12, 13)
Goal: Being a reliable financial partner for retail and commercial customers and for the
regional economyCurrent status
Expansion of the sustainable offerings in BAWAG PSK’s residential and consumer lending business ✓
Continuation of New Chance account for financial inclusion of disadvantaged population groups …
Expansion of the range of ESG-related products
Introducing of ESG-related lending criteria and/or exclusion criteria for specific industries
Issuance of a green bond (subject to market conditions)
Expansion of the range of paperless, purely digital product application processes for retail and
corporate customers
5: Social responsibility and personal commitment (SDG 4)
Goal: Further focus on volunteer days, crowdfunding.at, and measures to improve
financial education and digital literacy Current status
Continuation of commitment to financial education and continuation of measures to increase
digital competence among different age and social groups…
Expanding awareness of volunteering among BAWAG Group employees …
Extension of volunteer days to all BAWAG Group employees in Austria ✓
Support for financing of regional social projects on crowdfunding.at …
Development and publication of a Group-wide sponsoring policy ✓
6: Employee promotion and development, diversity and equal opportunity (SDG 4, 5)
Goal: Appreciation and advancement of employees Current status
Increase in the proportion of women in management positions through implementation of the
Women’s Advancement Plan…
Simplification of application processes through the use of innovative recruiting technologies ✓
Expansion of employee offerings for individualized learning through new online platforms ✓
Extension of the MbO process to employees of SüdwestbankNot
implemented
Revision of and process improvements in the MbO system
Harmonization of employee benefits for all subsidiaries
7: Environmental and climate protection (SDG 1, 7, 8, 13, 16)
Goal: Reducing our environmental impact so as not to endanger the basis of life for future
generationsCurrent status
Implementation of measures to optimize energy consumption during branch conversions in
Austria (for example replacement of lighting with LED lamps and replacement of air
conditioning and heating systems)
✓
Acquisition of an electric car for internal logistics ✓
Switch to green energy suppliers at all BAWAG Group locations …
Digitalization measures to reduce paper use …
Continuation of the replacement of existing IT equipment with equipment with energy
efficiency certification…
Reduction of Scope 1 and Scope 2 CO2 emissions …
August 2021 | BAWAG Group AG 21
Sustainability Governance at BAWAG
Supervisory Board
Management Board: Non-Financial Risk and ESG Committeeconsists of Management Board, ESG officers and selective BAWAG senior staff to decide on
strategic ESG topics and get regular reports
ESG OfficersESG officers from key functions covering Risk Management, Human Resources,
Legal & Governance, Corporate Communications and Investor Relations
Working groupsVarious working groups covering specific ESG topics
A signatory to the UN Global Compact, BAWAG Group is committed to complying
with the ten principles focusing on labor
rights, human rights, environmental protection and anti-corruption
Signed the UN Global Compact Women’s Empowerment Principles (WEP) in 2015,
complying with the seven WEP
August 2021 | BAWAG Group AG 22
BAWAG Group Overview and Q2 2021 Highlights
Sustainability @ BAWAG Group
Green Finance Framework
Funding & Liquidity
Detailed Financials
August 2021 | BAWAG Group AG 23
Key highlights of the BAWAG Green Finance
Framework
Eligibility criteria largely aligned to the EU Taxonomy; indicative eligible asset
portfolio (as of Aug 2021) of ‘green buildings’ fully aligned to the Taxonomy
Use of proceeds aligned to the UN SDGs as well as the specific targets underlying
these SDGs
Total exposure in lending book to defense industry, nuclear energy, fossil fuels and
industries with other ethical risks represented less than 0.1% of Group exposure as of end
2020. Further, these sectors are explicitly excluded from the Green Finance Framework
Commitment to report annually and getting an external review on the allocation of
green bond proceeds
Aligned to the latest market guidelines, including ICMA GBP 2021, LMA GLP 2021
and the ICMA Harmonized Framework for Impact Reporting 2021
Framework externally reviewed by Sustainalytics which has determined that it aligns
to the four core components of the GBP/GLP, and that BAWAG is well-positioned to
manage and mitigate any environmental and social risks
August 2021 | BAWAG Group AG 24
The next step in delivering BAWAG’s sustainability strategy
Contributes to the mobilization of debt capital markets for climate change mitigation
Contributes to achieving selected UN SDGs through green financing
Supports our Financing principle of mandatory ESG criteria for new product and services
Contributes to the growth of the green bond market and diversification of our investor base
BAWAG’s rationale for issuing a Green Bond
August 2021 | BAWAG Group AG 25
“Sustainalytics is of the opinion that the BAWAG Green Finance Framework is credible and impactful and aligns with the four core components of
the Green Bond Principles 2021 and the Green Loan Principles 2021.”
Sustainalytics is of the opinion that BAWAG Group demonstrates a commitment to sustainability driven by its business strategy of “responsible and
profitable growth with ESG considerations”
⚫ Green Bond proceeds will be allocated to finance and/or
refinance loan instruments of BAWAG in the following categories:
❑ Green buildings (SDG 7.3, 11.c)❑ Renewable energy (SDG 7.2, 13.1)
❑ Clean Transportation (SDG 11.2)❑ Energy efficiency (SDG 7.3, 9.4)❑ Environmentally Sustainable
Management (SDG 11.a, 15.A)❑ Sustainable Water and Wastewater
Management (SDG 11.5)
❑ Pollution Prevention & Control (SDG 11.6, 12.5)
❑ Circular Economy (SDG 12.5)
⚫ The evaluation and selection process for Eligible Loans will be
carried out by Green Finance Committee (“GFC”)
⚫ In identifying Green Loans and their
non-financial impacts BAWAG may rely on external consultants and their data sources
⚫ The Net Proceeds of the Green Finance Instruments issued under
this Green Finance Framework will be managed by BAWAG in a portfolio approach.
⚫ BAWAG aims to allocate the full within 36 months of the issuance
⚫ Allocation of green bond proceeds will be reported annually
⚫ Where feasible, BAWAG intends to report on the environmental impacts of the projects funded with
the Green Finance Instruments’ proceeds
1. Use of Proceeds2. Process for Loan
Evaluation and Selection3. Management of proceeds 4. Reporting
Eligible project categories defined in the Green Bond Framework will help in achieving the following UN SDGs
BAWAG’s Green Finance Framework is in alignment with
the ICMA GBP 2021 & LMA GLP 2021
August 2021 | BAWAG Group AG 26
Pillar 1: Use of proceeds
ICMA GBP Project
CategoryEligibility criteria
UN SDG
Targets
Green buildings
• New and existing buildings that are within the top 15% performing by energy use in the country
• Buildings that have undergone refurbishments resulting in an increase in energy of efficiency of at least 30% against
a baseline or two label steps increase in energy performance certificate compared to original built quality
• Energy Efficiency measures as defined in 7.3., 7.4., 7.5. and 7.6. of Annex 1 to the EU Taxonomy Climate Delegated
Act, 21 April 2021
Renewable energy
• Onshore and offshore wind energy
• Solar (Photovoltaic)
• Small scale hydro power (<25 MW)
• Geothermal energy with direct emissions ≤ 100g CO2e/kWh
• Construction, renovation or refurbishment of electricity grids that partly transmit renewable energy. Only assets
aimed at increasing the share of renewables in the Austrian electricity grid are eligible
Clean Transportation
• Low-carbon transport vehicles and infrastructure including:
o Fully electrified or other low carbon public transportation,
o Fully electrified, plug-in hybrid electric or hydrogen passenger and freight vehicles
o Infrastructure related to electric transportation of passengers and freight
Energy efficiency
• Refurbishment, rehabilitation and renovation investments in non-fossil fuel-based technologies, that are improving
the efficiency of energy consumption at least by 15%
• Energy efficiency improvements and replacements in the grid including investments and / or expenditures to
increase the flexibility and technical availability of the grid and investments aimed at reducing / minimising energy
losses
• Smart grids, energy storage facilities, metering systems, and other intelligent electricity systems decreasing the
intermittency of renewable energy’s share in total energy
Environmentally sustainable
management of living
natural resources and land
use
• Certified agricultural practices under sustainable certification schemes, such as EU Organic, ISCC for the biogas
feedstock, Global G.A.P. (Livestock / poultry production is not eligible under this category.), and / or equivalent
national or international certification
• Sustainable agriculture, including the improvement and recovery of agricultural lands and local farming
• Support the adoption, promotion and implementation of conservation agriculture techniques / practices, applicable
FSC forestry activities
• Urban greening projects, such as park and Green Areas
Sustainable Water and
Wastewater Management
• Water treatment facilities, activities and technologies that increase water quality, sanitation facilities
• Upgrades to wastewater treatment plants to remove nutrients, wastewater discharge infrastructure
• Technologies that increase water-use efficiency, water recycling and reuse & water saving systems
Pollution Prevention and
Control• Waste prevention, waste reduction and waste recycling. This includes the development, operation and upgrade of
recycling plants and recycling activities such as for metals, plastic and paper
Eco-efficient and / or
circular economy adapted
products, production
technologies and processes
• Solutions that extend the product life cycle
• Production that uses renewable or recycled resources, such as products that substitute critical materials with
biological or bio-based materials
• Products that can be recycled or composted, where the input feedstock derives from recycled/reused waste
Use of
proceeds
Process for
Loan
Evaluation
and
Selection &
Management
of proceeds
Reporting
August 2021 | BAWAG Group AG 27
Pillar 2 & Pillar 3: Process for Loan Evaluation and Selection &
Management of Proceeds
⚫ BAWAG’s GFC is formed by members of
Retail & SME, Investor Relations, Risk
Management, Human Resources,
Corporate Legal, Treasury, Corporate
Communications, and other parties to be
nominated as subject matter experts
⚫ Green Loans (re)financed through Green
Finance Instruments are evaluated and
selected by the GFC based on
compliance with the Green Eligibility
Criteria
⚫ The GFC will oversee its implementation
and meet at least once a year.
⚫ In identifying Green Loans and their non-
financial impacts BAWAG may rely on
external consultants and their data
Sources.
⚫ It is part of BAWAG’s transaction
approval process to ensure that all its
activities comply with internal
environmental and social directives
Green Finance
Committee
(“GFC”) will
manage this
Green Finance
Framework
Green Loans
will be
evaluated and
selected by the
GFC
Eligible Green Assets Portfolio
⚫ The Net Proceeds of the Green Finance Instruments
issued under this Green Finance Framework will be
managed by BAWAG in a portfolio approach
⚫ Additional Green Loans will be added to the Loan
Portfolio to the extent required.
⚫ BAWAG aims to allocate the full amount of proceeds
from each Green Finance Instrument within 36
months of the issuance of that Green Finance
Instrument.
⚫ Whilst any Green Finance Instruments’ Net Proceeds
remain unallocated, BAWAG will hold and/or invest,
at its own discretion, in its treasury liquidity portfolio,
in cash or other short-term and liquid instruments,
Eligible
assets portfolio Green
Financing Proceeds
Liquidity
Portfolio
Management of proceeds
BAWAG will
ensures that all
Green Loans
comply with
official national
and
international
environmental
and social laws
and regulations
Process for Loan Evaluation and Selection
Use of
proceeds
Process for
Loan
Evaluation
and
Selection &
Management
of proceeds
Reporting
August 2021 | BAWAG Group AG 28
Pillar 4: Reporting
⚫ BAWAG will make and keep readily available reporting on the allocation of Net Proceeds to the Loan Portfolio on a nominal equivalence
basis one year from the issuance of the applicable Green Finance Instruments, to be renewed annually until full allocation.
⚫ BAWAG will not double count the financing of any Green Loans
Allocation reporting
Allocati
on
details
BAWAG will report on
an aggregated basis,
indicators such as
✓ the size of the Loan
Portfolio;
✓ the total amount of
proceeds allocated
to the Loan
Portfolio;
✓ the balance (if any)
of unallocated
proceeds;
✓ the amount or the
percentage of new
financing and
refinancing;
✓ the amount or the
percentage of
encumbered and
non-encumbered
loans;
✓ the geographical
distribution of the
assets (at country
level);
✓ the total volume of
Green Finance
Instruments
outstanding
Impact reporting
Impact metrics• Where feasible, BAWAG intends to report on the environmental impacts of
the projects
Potential impact indicators under each of the eligible project category:
Green buildings
• Level of certification, if applicable
• Level of Energy Performance Certificate (EPC), if applicable
• Estimated annual reduced and / or avoided emissions (in tCO2eq.)
• Estimated annual energy consumption (in kWh/m2)
Renewable energy• Installed renewable energy capacity (in MW)
• Estimated annual CO2 emissions avoided (in TCO2eq.)
Clean Transportation
• Number of vehicles
• Greenhouse gas (“GHG”) savings (in TCO2eq.)
• GHG savings (tonnes per year) due to the installed technology (direct), by
transferring freight or passenger transport from road to, for example, railway
(indirect) or both (as applicable)
• Number of EV charging stations units installed, if applicable
Energy efficiency
• Distance of transmission (Km)
• Energy transmitted (MWh per year)
• Energy savings (MWh per year), if applicable
• GHG savings (tonnes per year)
• Number of smart meters installed, if applicable
Environmentally sustainable
management of living natural
resources and land use
• Sustainable agriculture land area (hectares)
• Sustainable agriculture / farming certification scheme, if available
• Type of crop and its proportion, if available
• Conservation agriculture techniques / practices and relative output figure, if
available
• Land restored (hectares)
Sustainable Water and
Wastewater Management
• Annual absolute (gross) water savings (in m3 or in %)
• Annual absolute (gross) amount of wastewater treated, reused or avoided (in
m3 or in %)
• No. of people with access to improved sanitation facilities
Pollution Prevention and Control• Type and annual amount of recycled waste (tonnes)
• Energy generation (MWh per year)
Eco-efficient and / or circular
economy adapted products,
production technologies and
processes
• Annual savings of relevant resources (e.g., tonnes raw material/year)
• Estimated annual GHG emission avoided or reduced (tCO2e) and/or energy
savings (MWh per year), if applicable
Use of
proceeds
Process for
Loan
Evaluation
and
Selection &
Management
of proceeds
Reporting
[] August 2021 | BAWAG Group AG 29
Green buildings portfolio and impact
Source: Drees & Sommer
1. Average remaining legal term of Green Bond loan within the total portfolio
2. Based on legally committed signed amount by the issuer for the portfolio or portfolio components eligible for green bond financing
• The assets included within the portfolio are within the top 15% of most energy efficient properties within Germany & Austria, & all properties within the Netherlands
portfolio are EPC rated A or better – this aligns the Green Finance portfolio with the latest EU taxonomy delegated act 2021
• BAWAG has identified over €2.8b of Green assets within its portfolio with an average remaining legal term between 19.5 – 28.9 years
• In line with BAWAG’s strategic focus on retail banking in the DACH/NL region, the portfolio contains only residential mortgages in Austria, Germany and the
Netherlands, >75% Single Family Houses
• The current portfolio has 81 ths. tCO2/year3 annual CO2 emissions avoidance and annual final energy savings of 553 ths. MWh/year4
3. Greenhouse gas emissions avoidance determined by multiplying the final energy savings with the carbon emissions intensity
4. Final energy savings calculated using the difference between the top 15% and the national building stock benchmarks
Green loan origination by year … >50% originated in last 3 years
€0.3b
€0.4b
€0.8b
2018 2019 2020
Germany; 8%
Austria; 83%
Netherlands; 9%
Average portfolio lifetime1 (years)
20.1
25.828.5
20.5
25.528.5
19.5
26.628.9
Germany Austria Netherlands
Total Single family house Multi family houses
Portfolio location split2 by region
Austria Vienna / Lower Austria € 1,068m
Styria / Carinthia € 673m
Upper Austria € 295m
Tirol / Vorarlberg € 102m
Burgenland € 101m
Salzburg € 77m
Total AT € 2,317m
Germany Baden-Württemberg € 168m
Other € 51m
Total DE € 219m
Netherlands Total NL € 244m
TOTAL € 2,780m
[] August 2021 | BAWAG Group AG 30
Green buildings portfolio and its impact
Low carbon buildingsSigned amount
(€m)1
Annual energy savings
(MWh/year)5
Annual CO2 emissions avoidance
(tCO2/year)6
Number of
buildings
Au
stri
a
Single family houses – AT 1,757 473,965 66,507 9,718
Multi family houses – AT 560 48,997 6,875 3,192
Total Austria 2,317 522,962 73,383 12,910
Germ
an
y
Single family houses – DE 129 12,923 3,016 1,393
Multi family houses – DE 90 7,586 1,771 849
Total Germany 219 20,509 4,787 2,242
Neth
erl
an
ds Single family houses – NL 233 8,641 2,207 1,851
Multi family houses – NL 12 482 123 97
Total Netherlands 244 9,123 2,330 1,948
Total 2,780 552,594 80,500 17,100
1. Legally committed signed amount by the issuer for the portfolio or portfolio components eligible for green bond financing
2. Portion of the total portfolio cost that is financed by the issuer
3. Portion of the total portfolio cost that is eligible for Green Bond
4. Average remaining term of Green Bond loan within the total portfolio
5. Final energy savings calculated using the difference between the top 15% and the national building stock benchmarks
6. Greenhouse gas emissions avoidance determined by multiplying the final energy savings with the carbon emissions intensity
Source: Drees & Sommer
• BAWAG’s Green building portfolio is formed 100% of low carbon buildings, with a total signed amount over €2.8bn from over 17,100 buildings as of 30 June 2021
August 2021 | BAWAG Group AG 31
Second Party Opinion / External Review - Sustainalytics
“Sustainalytics is of the opinion that the BAWAG Green Finance Framework is credible and impactful and aligns
with the four core components of the Green Bond Principles 2021 and the Green Loan Principles 2021”
Sustainalytics is of the opinion that BAWAG Group demonstrates a commitment to sustainability driven by its
business strategy of “responsible and profitable growth with ESG considerations”
• Sustainalytics considers that the
eligible categories are aligned with
those recognised by the Green Bond
Principles 2021 and the Green Loan
Principles 2021
• Sustainalytics considers that the
eligible categories will lead to positive
environmental impacts and advance
the UN Sustainable Development
Goals (“SDGs”), specifically SDGs 6, 7,
11, and 12.
Pillar 1: Use of
Proceeds
Pillar 2: Process for
Loan Evaluation
and Selection
• Based on the establishment of a Green
Finance Committee, Sustainalytics
considers this evaluation and selection
process to be in line with market
practice.
• BAWAG will establish the Loan
Portfolio to include Eligible Green
Projects and ensure proceeds are
allocated fully within 36 months of
issuing an instrument.
• Based on the establishment of the
Loan Portfolio and the handling of
unallocated net proceeds,
Sustainalytics considers this process to
be in line with market practice.
Pillar 3:
Management of
Proceeds
Pillar 4: Reporting
• Based on the commitment to
periodically report portfolio allocation
along with the reporting on category-
wise impact indicators in the
Framework, Sustainalytics considers
this to be in line with market practice
Source: Sustainalytics
August 2021 | BAWAG Group AG 32
BAWAG Group Overview and Q2 2021 Highlights
Sustainability @ BAWAG Group
Green Finance Framework
Funding & Liquidity
Detailed Financials
[] August 2021 | BAWAG Group AG 33
Funding & Liquidity
STRONG CUSTOMER DEPOSIT FUNDING …
Customer deposits
Wholesale funding secured
Wholesale funding unsecured
TLTRO
Others
Equity
… COMFORTABLE MATURITY PROFILE
Covered bonds important capital market funding source … €1.75b executed in 2020 and €1.0b executed in 1H 2021 ...
9 benchmark bonds outstanding with up to €750m issue size and maturities up to 2041
Participated in TLTRO III up to full capacity of €6.4b
P2R optimization executed … €175m AT1 and €200m Tier2 issued in Sep ’20
Additional ~€1.0b-1.5b senior instruments to replace maturities, meet MREL requirement and build buffer until year
end 2023
Liquidity coverage ratio
265%
Liquidity buffer
€11.1b
LIQUIDITYFUNDING
€ millions notional
Liquidity buffer
Including other marketable
securities
€14.6b
61
%
9%
6%
12
%
4%8%
Jun '21
Covered Senior Non-Preferred Tier 2* AT1*
500
32
400
475
500
500 500
750
500 500 500 500
200 500
0
100
200
300
400
500
600
700
800
900
1000
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041
[] August 2021 | BAWAG Group AG 34
MREL
Own funds
Senior non-preferred & other
subordinated (not own funds)
Legacy MREL-eligible
instruments
LIQUIDITY
3.8 18.9%
0.6 2.9%
0.9 4.6%
Jun '21 Jun '21 RWA
26.4%€5.2b
25.32%
MREL-REQUIREMENT
New MREL decision received in Feb ’21 fully reflecting
CRR2/BRRD2 with final requirements from 1 January
2024:
Requirement applicable at BAWAG P.S.K. level
(consolidated)
MREL ratio as of Q2 2021 of 26.4% already in line
with end state requirement of 25.32% of RWA
Currently no subordination requirement
Interim target lowered due to COVID-19 pandemic
… 2022 interim target of c. 22% already met
Our MREL strategy with consideration of multi-year
phase in:
€500m SNP successfully issued in August 2019
Additional ~€1.0b-1.5b senior instruments to
replace maturities, meet MREL requirement and
build buffer until year end 2023
MREL-STRATEGY
Requirement 1 January 2024
August 2021 | BAWAG Group AG 35
BAWAG Group Overview and Q2 2021 Highlights
Sustainability @ BAWAG Group
Green Bond Framework
Funding & Liquidity
Detailed Financials
August 2021 | BAWAG Group AG 36
P&L & key ratios
Net interest income up 1% vPQ; up +2% vPY ... stable net interest
margin at 2.28%
NCI +4% vPQ … further recovery taking hold after easing of
lockdowns during Q2 ’21
Risk costs of €(24)m in Q2 ‘21 … no reserves released
P&L | € millions Q2 ‘21 Q2 ‘20 vPY vPQ
Net interest income 231.6 227.5 2% 1%
Net commission income 70.1 55.8 26% 4%
Core revenues 301.7 283.3 6% 1%
Other revenues 0.8 1.1 (27%) (79%)
Operating income 302.5 284.4 6% -
Operating expenses (121.2) (124.7) (3%) -
Pre-provision profit 181.3 159.7 14% 1%
Regulatory charges (2.0) (2.5) (20%) (96%)
Risk costs (23.8) (74.6) (68%) (19%)
Profit before tax 156.2 81.0 93% 62%
Income taxes (37.0) (19.4) 91% 61%
Net profit 119.1 61.3 94% 62%
Key ratios Q2 ‘21 Q2 ‘20 vPY vPQ
Return on Common Equity 13.7% 7.4% 6.3pts 5.1pts
Return on Tangible Common Equity 16.3% 9.0% 7.3pts 6.1pts
Net interest margin 2.28% 2.26% 0.02pts -
Cost-income ratio 40.1% 43.8% (3.7pts) (0.4pts)
Risk cost ratio 0.23% 0.74% (0.51pts) (0.06pts)
Earnings per share (in €) 1.34 0.70 92% 61%
Tangible book value per share (in €) 33.38 31.91 5% 2%
August 2021 | BAWAG Group AG 37
Balance sheetGrowth in customer loans
Stable average interest-bearing assets vYE thru mix of growth in
customer loans offsetting lower securities and bonds … Risk
weighted assets stable vYE
Issued €500m 20yr mortgage covered bond at MS+4bps in Q1 ’21 and
€500m 10yr mortgage covered bond at MS-1bp in May ‘21
Tangible Common Equity +3% vYE and CET1 ratio at 14.4%
(+40bps) post deduction of €420m earmarked dividend (for 2019
and 2020) and €95m dividend accrual (for H1 ‘21)
Balance sheet | € millions Q2 ‘21 Q4 ‘20 Delta
Customer loans 32,371 32,004 1%
Securities and bonds 6,628 7,525 (12%)
Credit institutions and cash 13,104 10,921 20%
Other assets 2,029 2,671 (24%)
Total assets 54,132 53,122 2%
thereof average interest-bearing assets 40,701 40,850 -
Customer deposits 33,034 32,415 2%
Own issues 7,149 6,475 10%
Credit institutions 7,493 7,522 -
Other liabilities 1,962 2,356 (17%)
Common equity 3,504 3,419 2%
Dividend accrual 515 460 12%
AT1 capital & Minorities 475 475 -
Total liabilities & equity 54,132 53,122 2%
Capital & RWA | € millions Q2 ‘21 Q4 ‘20 Delta
Common equity 3,504 3,419 2%
Tangible common equity 2,966 2,867 3%
CET1 capital 2,903 2,802 4%
Risk-weighted assets 20,142 20,073 -
CET1 ratio (post dividend) 14.4% 14.0% 0.4pts
Leverage ratio 6.1% 6.0% 0.1pts
Liquidity Coverage Ratio 265% 231% 34pts
August 2021 | BAWAG Group AG 38
P&L details – core revenuesSolid core revenues in Q2 ‘21 … NCI continues recovery
Average customer loans | Average interest-bearing assets | € billions
€ million
31.5 31.5 32.3 32.5 32.5
40.4 40.4 40.9 40.8 40.7
2.31%2.26%
283.3
Q2’20
70.1
2.28%
Q3’20
2.27%
Q4’20 Q1’21
231.6
2.28%
Q2’21
297.3 297.9 297.3 301.7
55.8
227.5
62.8
233.6234.6
64.3 67.7
229.6
NII
NIM
NCI
Net interest income (NII) up 1% vPQ … net interest margin (NIM) at 2.28% in Q2 ‘21
‒ Stable NIM at 2.28% with continued changing asset mix over time (more secured vs. unsecured
lending) impacting overall NIM
‒ Interest rate sensitivity (primarily exposed to 3-
months-Euribor) +/- 100 bps parallel shift in
interest rates = +/- € 100m NII/year
Net commission income (NCI) up 4% vPQ
‒ Ongoing recovery in Q2 ’21 with stronger advisory business (securities & insurance)
‒ Still subdued activity in selected business areas compared to pre-pandemic levels
Outlook for 2021
‒ Expect core revenues growing ~2% in 2021
August 2021 | BAWAG Group AG 39
P&L details – operating expenses
€ million
Costs targets on track
40.5%43.8%
121.2
Q1’21Q2’20 Q3’20
43.2%
Q4’20
47.9%40.1%
Q2’21
124.7 125.3
144.7
121.8
CIR
~22
CIR at 40.1% in Q2’21 down (3.7pts) vPY … H1 ’21 CIR at 40.3% (down 2.6pts vPY)
On track to meet full-year targets … gradual decrease
over the coming quarters resulting from efficiency
measures
Adapting to post COVID-19 world … multiple initiatives focused on greater scale, greater digital
engagement, and continued rollout of simplification
roadmap across the Group
Outlook for 2021
‒ Operating expenses expected below €485m in 2021
‒ Targeting CIR ~40% in 2021
Core operating expenses
Restructuring charges
August 2021 | BAWAG Group AG 40
ECL Management overlay (in €m)
P&L details – risk costsStrong underlying asset quality
€ million
Risk costs / average interest-bearing assets
NPL ratio (as reported and excluding CoL)
1.5% 1.5% 1.5% 1.5% 1.5%
1.1% 1.1% 1.1% 1.1% 1.1%
74 bps
Q2’20
29.3
Q3’20 Q4’20 Q1’21 Q2’21
74.6
49.745.3
23.8
Q2 ‘21 risk costs €24m … risk cost ratio at 23bps
‒ Strong asset quality performance … continued improving underlying trend
‒ Normal risk cost run-rate in Retail & SME ~€15m
‒ No ECL reserves released … ECL management
overlay stands at €70m in Q2 ’21 (vs. €52m in Q1 ’21)
Maintain safe & secure balance sheet & portfolio risk management
‒ Focused on developed markets … 76% DACH/NL
region and 24% Western Europe / United States
‒ Conservative underwriting with a focus on secured
lending … 80% of customer loans is secured or public sector lending
Outlook for 2021
‒ Expected total risk costs under €100m in 2021 … no
ECL reserve releases included in outlook
- 9 38 52 70
49 bps44 bps
29 bps23 bps
August 2021 | BAWAG Group AG 41
Q4 '19 Q2 '20 Q4 '20 Q2 '21
Stage 1 39 67 67 67
Stage 2 17 56 64 80
Stage 3 205 226 271 276
Total Reserves 262 349 402 423
Total Reserve Ratio % 0.94% 1.25% 1.42% 1.47%
Details on reserves
41
Continuing to remain prudent despite improved economic outlook
IFRS 9 Migration- Customer Segment Assets Non-performing stage 3 loans, in €m
Stage 1
Stage 2
Stage 3
Customer NPLs
City of Linz (CoL)
ECLs (Stage 1&2) and SPECIFIC RESERVES (Stage 3)
NPL ratio (excluding City of Linz) flat at 1.1% … cash coverage of 45%
Total reserves of €423m, up €21m vYE ’20 (+5%) … total reserve ratio at 1.47%
Total ECL of €147m, up €17m (+13%) vYE ’20 … of which €70m (48%)
comprised of management overlay … monitoring economic recovery H2 ‘21
Stage 2 assets continue to decline (6% of portfolio) approaching pre-COVID
levels … have not executed any routine retail NPL sales since Q2 ‘20
City of Linz receivable fully provisioned through prudential filter in 2020 with
no impact on capital distribution plans in worst-case scenario
Key developments
€ billions
Customer Segments 31.3 32.4 33.2 34.1
less Public Sector 3.4 4.4 4.9 5.6
Asset base 27.9 28.0 28.3 28.5
€ million
94%
88% 90% 92%
4%
10% 8% 6%
2% 2% 2% 2%
Q4 '19 Q2 '20 Q4 '20 Q2 '21
31.3 32.4 33.2 33.53.4 4.4 4.9 4.727.9 28.0 28.3 28.8
NPL ratio excl. CoL (%)
NPL cash coverage excl. CoL
NPL ratio (%)
NPL cash coverage
1.1% 1.0% 1.1% 1.1%
37% 39% 46% 45%
1.7% 1.5% 1.5% 1.5%
32% 36% 62% 61%
557 582 631 650
254 254254 254
811 836885 904
Q4 '19 Q2 '20 Q4 '20 Q2 '21
August 2021 | BAWAG Group AG 42
Capital development … CET1 ratio (FL)
Strong capital position
~+60bps (Q2 ’21 gross capital generation)
Capital distribution plans
€95m dividends accrued based on dividend
policy for H1 ’21 earnings
→ €420m dividends (€4.72 per share) relating to
2019/2020 profits will be proposed to AGM on
27 August ’211)
Capital development
+60bps gross capital generation in Q2 ‘21
Excess capital
Additional excess capital €436m (post-dividend
deductions) above 12.25% CET1 target
Other items
City of Linz receivable fully provisioned through
prudential filter in 2020 with no impact on capital
distribution plans in worst-case scenario
Q1 2021 Earnings Q2 2021
pre-
dividend
Dividend
accrualQ2 2021 Dividend
accrual
14.1%14.4%
17.0%
0.6%0.5%
2.1%
.
b
a
a
b
(0.3%)
1) Dividend payout in early October
August 2021 | BAWAG Group AG 43
Capital distribution update
€1.84b
€2.47b
€2.90b
€3.42b
9.14%minimum
requirement
(SREP)
12.25%Management
targetMDA buffer
311 bps = €626m
“Earmarked dividends”
256 bps = €515m
Excess capital
216 bps = €436m
CET 1 Capital
17.0%pre-dividend
14.4%post-dividend
~480 bps = €955m Total Excess capital
Dividends of €515m deducted from CET1 capital …
– €420m dividends relating to 2019/2020 profits
– €95m dividends accrued for H1 ’21 earnings
In addition €436m excess capital versus CET1 target 12.25% …
earmarked for organic growth, M&A and/or share buybacks
1
2
3
1
2
CET1 target 12.25% represents +311bps (€626m) buffer to SREP 9.14%3
Capital distribution plans:
− €95m dividends accrued based on dividend policy for H1 ’21 earnings
− €420m dividends (€4.72 per share) relating to 2019/2020 profits will be proposed to the AGM on 27 August 2021 (dividend payout in early October)
Consistent average annual
capital generation through
earnings +220bps since 2017
August 2021 | BAWAG Group AG 44
2021 Outlook
Operating expenses: FY ’20: €520m
Core revenuesFY ’20: €1,170m
OUTLOOK 2021
Regulatory chargesFY ’20: €59m
Below €485m
~2% growth
~€60m expected
Other incomeFY ’20: €3m
€0m expected
Risk costsFY ’20: €225m
Below €100m
TARGETS
2021RoTCE
~15%CIR
~40%
Note: Excluding any potential impacts from City of Linz legal ruling
New Targets & 4-year Plan through 2025 will
be presented at the Investor Day on
20 September ‘21
August 2021 | BAWAG Group AG 45
M&A Update
STRATEGIC RATIONALE
Two acquisitions signed to-date in 2021 with deminimis credit risk
CAPITAL &FINANCIALS
SIGNING & EXPECTED
CLOSING
Hello bank! Austria DEPFA bank
• Strategic acquisition of leading online retail brokerage
platform in Austria with 80k customers
• Rebrand to easybank … Integrate into existing offering to
become #1 retail domestic brokerage platform in Austria
• Product factory that enhances Retail & SME offering with
growth potential
• Capital accretive deal … expecting Day 1 gain >€60m net of all wind-down costs
• Day 1 gain to be reinvested in accelerating BAWAG
Group transformational initiatives into sustainable
future profitability
• Signed: July 2021
• Expected closing: Q4 ’21 or Q1 ‘22
• Strategic bank wind-down opportunity
• Leveraging BAWAG Group’s Advisory team, existing operational capabilities, and systems to execute
accelerated wind-down of covered bond focused bank
• Minimal-to-no credit risk on balance sheet
• Signed: February 2021
• Expected closing: H2 ‘21
• CET1 impact: Low double digit (basis points)
• Targeting >€10m pre-tax profit & RoTCE >15% post-transformation
• Primarily fee income driven business
Strategic acquisitions of bolt-on retail brokerage platform and an accelerated bank wind-down
creating new growth and reinvestment opportunities … No impact to capital distribution plans
August 2021 | BAWAG Group AG 46
‒ Continued focus on companies within the
DACH/NL region and developed markets
‒ Assessing banks, specialty finance
companies, performing loan portfolios,
complimentary financial service companies
and FinTechs
‒ Primary focus on core Retail & SME Banking
(Mortgages, Consumer Lending, SME,
Product Factories) and Specialty Finance
(Leasing, Factoring)
‒ Targeting companies requiring operational
turnaround through simplification,
standardization and technology
enhancement
‒ Also targeting wind-down / run-off
opportunities to leverage restructuring
advisory unit in both M&A and advisory
capacity
Proven M&A track recordExperienced with bolt-on acquisitions to build out customer franchise
2019
2019€0.1b assets,
€1b factoring volume
2019 €0.6b assets
Bausparkasse AG2018 €0.5b assets
2017 €7.4b assets
2017, commercial
card issuing business1.7m cards
2016 €2b assets
2016 €1.6b assets
2015 €0.7b assets
1) rebranded: easyleasing 2) rebranded: start:bausparkasse 3) rebranded: Health Coevo AG
1)
2)
3)
3k customers
50k customers
85k customers
100k customers
>500k customers
500k customers
5k customers
50k customers
Key M&A targets
2021 Signed deal to acquire DEPFA Bank plc,
closing expected in H2 ’21DEPFA Bank plc
2021 Hello bank! Austria Signed deal to acquire Hello bank!, closing
expected Q4 ‘21 / Q1 ‘22
August 2021 | BAWAG Group AG 47
City of Linz overview
Receivable of €254m on balance sheetas of 30 June 2021
Receivable fully provisioned in CET1 through prudential filter in 2020, i.e. no impact on capital
regardless of outcome of lawsuit
Future dividend payments will be based on a net profit excluding CoL impact in case of a further
write down of the receivable becoming necessary
Latest update from May ‘21: BAWAG filed appeal against second instance ruling … final decision of
contractual validity being decided by the Austrian
Supreme Court
Scenario Analysisfor potential outcomes of interim decision of Supreme Court
Net profitReceivable remains
valued @60%
CET1 Capital
Dividend
Valid contract Invalid contract
Up to +60bps
increase of CET1 ratio
No impact
(€254)m gross receivable,
~(€190)m net impact
No impact
No impact1)
1) Dividend payout would be based on net profit excluding City of Linz impact
Decision of Supreme Court is only an interim decision regarding validity of contract … as basis for
further litigation on the payment claims each party
raised
Next step litigation on claims each party raised (i.e. damages in case of BAWAG)
August 2021 | BAWAG Group AG 48
Annex – Definitions and abbreviations
B/S leverage
Total assets / IFRS equity
Book value per share
Common equity (excluding AT1 capital and dividends) / number of shares outstanding
Common Equity Tier 1 capital (CET1)
including interim profit and deducts earmarked dividends
Common Equity Tier 1 ratio
Common Equity Tier 1 capital (CET1) / risk-weighted assets
Core revenues
The total of net interest income and net fee and commission income
Cost-income ratio
Operating expenses (OPEX) / operating income
Customer Loans
Loans to customers measured at amortized cost
Common equity
Equity attributable to the owners of the parent; excluding minorities, AT1 and deducted
dividend accrual
Earnings per share (EPS)
Net profit / weighted average number of shares outstanding (diluted)
FL … Fully-loaded
Leverage ratio
Tier 1 capital (including interim profit and dividend accruals) / total exposure
(calculation according to CRR)
Net interest margin (NIM)
Net interest income (NII) / average interest-bearing assets
NPL cash coverage
Stage 3 including prudential filter / NPL exposure economic
NPL ratio
NPL exposure economic / exposure
Reserve ratio
Total reserves / Asset volume of customer segments excluding public lending
Return on common equity (RoCE)
Net profit / average IFRS common equity and deducted dividend accruals
Return on tangible common equity (RoTCE)
Net profit / average IFRS tangible common equity and deducted dividend accruals;
Risk cost ratio
Provisions and loan-loss provisions, impairment losses and operational risk
(risk costs) / average interest-bearing assets
Tangible book value / share
IFRS tangible equity (excluding AT1 capital, deducted dividend accruals) / number of
shares outstanding
Tangible common equity
Common equity reduced by the carrying amount of intangible assets
Total capital ratio
Total capital / risk-weighted assets
vPY … versus prior year period vPQ … versus prior quarter period
vYE … versus year-end
Note: Tables in this presentation may contain rounding differences. Already published historic figures may vary due to adjustments.
August 2021 | BAWAG Group AG 49
IMPORTANT DISCLAIMER: This presentation is prepared solely for the purpose of providing general information about BAWAG Group, Wiedner Gürtel 11, 1100 Wien.
The information does not constitute investment or other advice or any solicitation to participate in investment business. This presentation does not constitute an offer
or recommendation to purchase any securities or other investments or financial products. In respect of any information provided past performances do not permit
reliable conclusion to be drawn as to the future performances. BAWAG Group does not make any representation, express or implied, as to the accuracy, reliability or
completeness of the information contained in this presentation. BAWAG Group disclaims all warranties, both express and implied, with regard to the information
contained in this presentation. This presentation contains forward-looking statements relating to the business, financial performance and results of BAWAG Group or
the industry in which BAWAG Group operates. These statements may be identified by words such as “expectation”, “belief”, “estimate”, “plan”, “target” or “forecast”
and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions and involve risks and uncertainties.
Various factors could cause actual future results, performance or events to differ materially from those described in these statements and neither BAWAG Group nor
any other person accepts any responsibility for the accuracy of the opinions expressed in this presentation or the underlying assumptions. No obligation is assumed
to update any forward-looking statements. In no event shall BAWAG Group be liable for any loss, damages, costs or other expenses of any kind (including, but not
limited to, direct, indirect, consequential or special loss or loss of profit) arising out of or in connection with any use of, or any action taken in reliance on, any
information contained in this presentation. BAWAG Group assumes no obligation for updating the provided information in this presentation. The content in this
presentation are not to be relied upon as a substitute for professional advice. This presentation shall not be forwarded to any third party.