Q3 2020 Business Update amid Covid-19
Credit risk -
-
Risk provisions: heavy-lifting executed in Q2, lower risk costs expected in 2021
•
•
.
•
•
-
Total risk provisions of EUR 194.7m or 46bps in Q3 20
September review of macro forecasts did not lead to significant
FLI updrift additional allocation of EUR 5.5m (Q2: EUR 300m)
Significant increase in credit risk (SICR) overlays in relation to
most Covid-19-affected sectors (cyclical industries,
transportation, hotels and leisure), resulted in an expected credit
loss (ECL) additional increase of EUR 22.3 m (Q2: EUR 90m)
Ordinary course of business risk costs, driven primarily by Covid-
19 related negative corporate rating migrations, amounted to
approx. EUR 167m
Provisioning peak for 2020 likely in Q2 20, outlook for 2020
confirmed at 65-80bps
Improved outlook for 2021, assuming no significant
deterioration in macro environment
Key IFRS 9 stage migration trends
•
•
Stage 2 increased (driven by FLI update as well as SICR overlays
described above) from 8.3% at YE19 to 16.7% as of Q3 20
Stage 1 declined almost by the same amount to 80.4% in Q3 20
·
Stage 3 was stable at 2.2%, as reflected in the NPL ratio
•
•
For Q4 20 slight increase in stage 3 expected, due to increased
migrations to default after the end of some moratoria
Comfortable coverage ratios across the stage spectrum
Stage 1 and Stage 2 coverages slight increase vs YE19, while
Stage 3 increased to 58.8% in Q3 20 from 56.6% at YE19
In Q4 20 maintenance of strong coverage ratios expected
Risk cost development in 2020e
(baseline scenario, in bps of average gross customer loans)
15
148
46
Q1 20
Q2 20
Q3 20
Risk provisions by IFRS9 stages
~65-80
2020e
CLA
Coverage
in EUR million
Dec 19
Mar 20 Jun 20
Sep 20
Sep 20
Sep 20
Stage 1
88.8%
86.5%
81.0%
80.4%
341
0.3%
Stage 2
8.3%
10.7%
16.1% 16.7%
1,124
4.0%
Stage 3
2.3%
2.2%
2.3%
2.2%
2,200
58.8%
POCI
0.3%
0.2%
0.2%
0.2%
124
33.0%
Subject to IFRS9
99.7%
99.7%
99.6%
99.6%
3,789
2.3%
Not subject to IFRS 9
Gross customer loans
0.3%
0.3%
0.4%
0.4%
0
0.0%
163,417
164,268 167,369
168,276
3,789
2.3%
ERSTEŚ
Group
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