Erste Group Bank AG

Andreas Treichl – Chief Executive Officer and Chairman Andreas Gottschling – Chief Risk Officer Gernot Mittendorfer – Chief Financial Officer

Gabor Kemeny – Autonomous Research Matteo Ramenghi – UBS Johan Ekblom – Bank of America Merrill Lynch Riccardo Rovere – Mediobanca SpA Johannes Thormann – HSBC Investment Bank plc Eleni Papoula – Berenberg Bank Alan Webborn – Société Générale Marta Jezewska-Wasilewska – Wood & Company Benjamin Goy – Deutsche Bank Pawel Dziedzic – Goldman Sachs Cristina Marzea – Barclays Hadrien de Belle – Keefe Bruyette & Woods

Thank you very much Thomas. Good morning, ladies and gentlemen.

Let’s start on Page 4 with the executive summary and let’s go again through the reconciliation of our net profit on a year-to-year basis. In the first nine months of 2013, we showed a net profit of EUR 431 million.

Now what happened in the first nine months of this year, the drop in operating income of EUR 146 million was nearly compensated by reduction of expenses of EUR 141 million. As a result of that operating result actually remained more or less flat.

Risk cost increased substantially by EUR 430 million mainly due to the booking of additional risk cost in Romania. And then you see a dramatic deterioration of our other results.

I will go through the components of that in a minute and then a sharp increase in taxes also due to deferred taxes related to the Austrian tax group. As a result of that the net result for the first nine months of this year is EUR 1.484 billion in line with our announcement on July 3.

Let me again quickly go through the one-off effects in our P&L this year. And on next page, we have two different types, one those effects that had no effect on the regulatory capital and those one of that do have an effect on the regulatory capital.

The risk provisions of EUR 400 million in Romania of course do have an effect on regulatory capital. And then we booked EUR 360.8 million based on the new consumer loan legislation in Hungary.

We have booked that in the other operating result. That might still change as we do not have the final legislation yet.

And we’d like to point out again that there might be additional losses on a potential FX loan conversion that is still expected to happen during the next three to six months. However, the likelihood of such a loss seems relatively small for us at this point in time.

Then we have the negative change of the deferred taxes of EUR 141 million. Those, however, have a minor effect only on regulatory capital, particularly on a fully loaded basis.

The impact is only 9 basis points. No effects on the regulatory capital have the write-downs of our intangible assets in Romania, where we wrote down our intangibles in full, the goodwill, the customer relation and brand.

And then, we have another EUR 100 million of remaining goodwill related to Croatia and a couple of minor participations. So a total of around EUR 1 billion.

If we go to Page 6, the main ratios, you can see that actually the net interest margin bounced back a little bit, so that in the third quarter of this year, it was again at a level that we had during the first nine months of 2013, a level of 2.68%. The operating result more or less flat and the cost income ratio actually went down from 53.9% to 52.3%.

Cost of risk, of course, surged from 135 basis points in the second quarter to 275 basis points in the third quarter as we booked most of the provisions in this quarter. Our bank leverage came down a bit due to the reduction of the banking tax in Austria for us and the halving of the banking tax in Slovakia, but they are still at a very elevated level.

EPS and ROE are of course in negative territory. We look at the balance sheet, on Page 7, balance sheet dropped from EUR 200 billion to EUR 97 billion, although for the first time we actually show an increase in net loans of EUR 0.5 billion, but the reduction of intangibles and of bank-to-bank business reduced our balance sheet.

On the liability side, not much to mention other than the increase in the trading liabilities, which are the negative values of our derivatives, you don’t see the equivalent on the asset side. That’s due to the fact that the increase in the positive value of the derivatives has been offset by a reduction of mainly our Hungarian treasury bills by over EUR 2 billion.

We go to Page 8, look at the main ratios, also in terms of risk and liquidity. Actually, you see an improvement.

Loan-to-deposit ratio is more or less stable. Credit risk assets have increased to 61%, which is good.

The NPL coverage has improved dramatically from 63% to 68.8%. And for the first time in a long time, we see the NPL ratio dropping below the 9% level to 8.9%, a development that we hope to continue during the next quarters.

Capital is at 10.8% and the liquidity coverage ratio and leverage ratio are both in a comfortable zone. So if we go to Page 10, the business environment, you actually see there quite a dramatic change in our region.

Whereas overall the region, including Austria, is clearly outperforming the rest of Europe in terms of growth, you see a shift in the components. Whereas net export contribution has dropped in almost all our countries vis-à-vis last year, domestic demand finally is growing strongly vis-à-vis last year, where we have drop in domestic consumption.

And with exception of Croatia, you actually see domestic demand growing again. And we hope that that will continue because that is actually what is driving our loan growth a lot more than increased exports, given that we are a retail bank.

In terms of unemployment rate, a slight improvement in most of our countries, with the exception of Croatia, where it’s going up still to 80%, and a strong performance actually on the current account balance. The Czech Republic moved to a zero level, whereas, with the exception of Romania, where you have a current account deficit of 1.4%, which is one-tenth of what Romania had several years ago, the other countries are all in positive territory with account surpluses.

On the public debt side, we see an increase in Austria and in Croatia, whereas in the other countries it’s stable. And actually in the Czech Republic it’s going down slightly, which we look as a positive sign given that, on one hand, public debt is shrinking and domestic demand is growing.

Page 11, interest rates are low, to the lowest level in a long time. That’s a challenge for us.

Both short-term and long-term interest rates continue to drop and are at the lowest level ever in the region. On the foreign exchange side, on Page 12, actually very, very low volatility with the exception of the depreciation of the Czech crown last year to the level of CZK27.

But other than that, astonishingly low volatility actually in all our currencies. If you look at our performance in terms of market shares in the region, on Page 13, you see that on the retail loan side we have a little growth and gain in market share in Slovakia, and, for the first time in a long time, also in Romania, whereas in the other countries it’s either flat or slightly down.

On the corporate loan side, an increase in Austria and in Slovakia and a continued decrease of our market share, not totally unwanted in Romania and in Hungary. On the retail deposit side, you see the big drop in market share in the Czech Republic, which is mainly almost entirely due to the pension fund of EUR 1.8 billion that was taken out of our deposit base.

Other than that it’s relatively stable. And on the corporate deposit side, actually we see slight market share gains in the Czech Republic, in Slovakia and a drop in Austria due to our low requirements on that front.

So we didn’t price accordingly in Austria. If we go to Page 15, you see an increase in our performing loan stock.

So in last quarter we made up what we had lost in the beginning of the year and you see relatively stable performances and increase in Austria and in Slovakia. On the deposit side, again, I think the main event was the one-off in the Czech Republic of EUR 1.8 billion.

Other than that, you see relatively stable performance this year. No major changes.

We don’t expect any further moves on that front during the next quarters. NII and net interest margin, I pointed out a slight bounce back of our net interest margin overall and actually net interest income in the third quarter slightly, slightly higher than in the second quarter.

Overall, you can see that the margins remain relatively flat with the exception of Romania, where margins dropped from 4.7% down to 4%. Go to operating income, more or less more or less flat.

You see on a geographic view, a slight increase in Erste Bank Austria, flat vis-à-vis last year in the savings bank segment. The drop in the Czech Republic is mainly due to the FX, as you can see, in second and third quarter almost flat.

A drop in Romania, pretty clear why that happened. And an increase in Slovakia.

And in the rest of the Group, all relatively stable. On the expense side, you see a reduction of operating expenses on a Group level.

However, that reduction is overstated due to the fact that in the third quarter, EUR 26 million of pension liability costs that were in personnel expenses are now in net interest income, so it’s reducing net interest income and it’s also reducing personnel expenses. But overall, I think we see continued good cost management in the Group and will continue to do so during the next quarters.

So as a result of that we see a flat operating result and then improved cost income ratio on the Group level. You see cost income ratios in all the countries dropping, dropping slightly with the exception of Romania but that’s not due to bad cost management, but due to the fact that the income side dropped quite considerably.

With that, I pass on to our Chief Risk Officer, Andreas Gottschling.

Thank you and good morning from me. Turning to Page 21, you see that risk costs and quarter three doubled roughly, both year-on-year and quarter-on-quarter, in line with the announcement of July 3.

They were dominated by the additional charge of the EUR 400 million alluded to then and allocated to Romania across all business lines with a significant block in the retail segment to revised recovery expectations. Regionally, except in Romania, the risk costs either declined or stayed approximately stable.

Turning to Page 22, on the non-performing loans and it’s ratio, it was overall an excellent quarter regarding the development because they declined across almost every segment and geographical region by the size of EUR 1 billion year-on-year and EUR 0.5 billion quarter-on-quarter, leading to an improvement of the ratio, as you heard first time under 9% for a long time. Around two-thirds of this change was achieved by sales and one-third by other workout means.

Regionally Romania dominated the sales activity, with the Orion sale, which was included in the quarter two P&L as a late event. And just for recall, it was a EUR 1.5 billion run, exposure was EUR 1 billion underlined loans to customers at that time.

The further sales of at least that magnitude in Romania are already in the pipeline. Now, turning to Page 23, the main allocations for allowances was in the large corporate segment and geographically in Romania.

This allowed us the long-term high in the coverage ratio in spite of the sales activities. It’s also noteworthy that Croatia is closing in on the announced 60% coverage target that we have for the group overall.

With this, I will hand over to the CFO.

Good morning. From my side, we continue on Page 27, and there you can see highlighted the overall development on the asset and liability side.

61% of our assets is now net customer loans, which is a very positive development and is underlining the concentration on our region. The reduction on the customer deposit side was already commented by our CEO, mainly driven by the deconsolidation of the Czech pension fund.

We continue on Page 28, there you see second quarter in a row, where we could grow our net customer loans, our healthy loans. And this was accompanied with the reduction of our non-performing loans.

It was already mentioned that we are now at below 9% NPL ratio. And this is the first time that we are below 9% for quite a while.

We continue on Page 30, financial and trading assets, pretty stable development in terms of liquidity buffers. This is just confirming our outstanding liquidity situation, and this is a continuous development that we could see over the last couple of quarters already.

Page 31, an overview on intangibles. No meaningful development in the last quarter.

The main write-downs were happening already with the announcement of the half-year result. And there you see basically just software and intangibles related to the Czech and the Slovak operations.

Page 32, deposit funding overview by customers and products. You see a slight shift in customer behavior, increase of term deposits, little bit less overnight deposits, but mainly a very stable development.

Page 33, shows you the debt securities issued. We have on a year-on-year basis slight increase on sub debt and a slight decrease in the overall securities issued.

This is reflected in the current situation that we’re operating on a cost-to-income ratio of 100. And if we continue on Page 34, looking at the maturity profile of our debt issue, our continuation of what we’ve seen in the last two years that we had quite substantial maturities in the last three years between EUR 5 billion and EUR 6 billion, where not every maturing debt was replaced.

And you see a significantly lower redemption amount in the next two years and a pretty stable distribution over the next couple of years. Collateral coverage vis-à-vis wholesale funding outflow, again, very positive development and very comfortable position.

We come on Page 35 to the capital ratios. As announced already with the half-year results, phased-in Basel III ratio as of end of September 10.8%, solvency 15.7%.

And we’ve announced already on Sunday, after the AQR results or together with the AQR results that we are now including in the fully loaded Basel III ratio a 60 basis points capital uplift, which is related to the inclusion of savings bank’s minority capital in the CEE subsidiaries. And this was clarified with the Austrian financial market authorities, an effect that we did not include in our capital calculation as of half year.

And with this, I hand over to Mr. Treichl for the conclusion and the outlook.

Thank you very much, Gernot. On Page 37, the outlook.

As you probably can see, no major changes or any changes actually to the outlook that we gave with the half-year results, with the exception of a few words. And that is on the core tier 1 ratio, we now say that we remain comfortably above the 10%.

Risk cost, we maintain our guidance of €2.1 billion to €2.4 billion. And we have given a range of the consumer loan law impact in Hungary of €350 million to €400 million.

€360.8 million of that has already been booked. And hopefully in the fourth quarter we give clarity on whether that will be booked to remain in the other operating income or will be booked under risk provisions.

That’s why we keep the range of €2.1 billion to €2.4 billion. So if that remains in the other operating income, we see risk cost in the range of €2.1 billion.

Otherwise it will be €2.4 billion if it’s booked in the risk provisions. We maintain a cautious view and maintain our outlook for the net loss of 2014 of €1.4 billion to €1.6 billion.

And we reiterate our outlook for 2015 of strongly improved post-provisioning results and a net profit that will lead to a return on tangible equity between 8% and 10% in 2015. For Romania we maintain our outlook for 2015.

That risk cost will be in the range of 100 to 150 bps. You’ve seen the accelerate NPL reduction already this year.

We hope we’ll continue that. And a sustainable but somewhat lower operating result, mainly due to the unwinding impact on net interest income slowly coming down.

In Hungary we look for also a normalization of risk cost and to 150 to 200 basis points in 2016, the latest. Ladies and gentlemen, that’s our presentation.

We’re now ready to take any questions you might have.

Hello there. So firstly, on your capital position, you are comfortably above the 10% CET 1-ratio, but you benefited from the minority uplift and even so your CET 1-ratio declined slightly in Q3.

So I was just wondering what drove the increase in the RWAs and should we expect further increases here? I guess it has to do with the higher level of performing loans, but I wonder whether you could give us some color on this.

Hi, Gabor. The question can be easily answered.

This is a parameter revision that had to do with the loss-given-default parameter in the IRB model that drove most of this. So this is just a recalibration.

And it’s of course a slight component is the growth of the loan book, but that was not the majority of it. And actually we do not expect a further up-drift as we can see it right now.

So would you expect your capital ratio to even improve over the coming quarters?

Yes, stable to improving, this is where we stand right now, depending overall on the business development. I mean, we can see a second quarter in a row where we could grow our loan book slow.

But if this pace is continuing, we should be stable to slightly better.

Okay. Thank you.

That’s clear. And then just quickly on your NII assumption.

So your NII declined slightly in Romania even though the stock of NPLs came down substantially. I mean if you manage to reduce your Romanian NPLs to the level you expect, roughly EUR 2 billion, by the end of this year, how shall we think about your sustainable NII in Romania?

It impact from unwinding you could not see fully in the third quarter because we derecognized the asset in August, because we have to wait until we have closed the transaction for derecognition. Concerning the second big sales that we have in the pipeline, most probably we will not be in a position to derecognize it this year.

We are well advanced in the process and want to close it this year. But given the experience from the last transaction, I think it might be coming in the first quarter and then we will see the full impact first quarter, second quarter next year from the reduction of unwinding.

The fourth quarter of this year will give you already an indication of where we are going to. So there will be a significant drop in net interest income due to the reduction of the NPL stock.

That’s very clear. And just finally, you announced management changes and you flagged that you intend to shift the corporate business back to low-cost segments.

My question would be how shall we think about your other Austria segment then? I mean, you have several cross-border exposures here in the loss-making.

Do you intend to run off the entire book or most of it?

That is too early to say and actually the shift is something that depends on the due segmentation. What we basically announce with that is that we want to increase our efforts to gain client share in our SME business.

The decision on how we structure and segment the large corporate and corporate business is something that we will announce with year-end results 2014.

That’s very helpful. Thanks very much.

Yes, good morning and thank you for the presentation. I have three quick questions.

The first one is on the comprehensive assessment. Clearly a good outcome for Erste.

I was wondering if you expect any additional charge to be taken on the back of it, or maybe not because your own assessment back in July was already stricter than the one of the ECB and the EBA. The second question is just some color on the NPL sales in Romania.

Clearly a very welcome acceleration on that front. I was wondering if your feeling is driven by the fact that you now have a lower book value and it meets the potential buyers’ requirements or actually it’s the market which has opened up for that, or both, I guess.

And then on Hungary, do you see the potential for any NPL disposal there or is it a much more difficult environment because there is less investors’ interest? Thank you.

Okay. On the AQR charge, as far as we currently see it, we do not expect any additional bookings that become mandatory out of that at the current time.

On the NPL sales, the answer is both. The market has become a lot warmer as well as, of course, when you have the level of provisions that we’ve just shown you, then it is much easier to sell.

And Hungary, you’re right; there’s still not the same level of interest that we’ve seen, for example, in Romania for this kind of asset.

Thank you very much.

Thank you. Just a two questions, if I will, and I’m sorry if you touched upon this earlier.

Firstly, on Romania provisioning, in your July announcement you talked about €400 million of incremental provisions in Romania. If I strip out the €80 million you said you took last quarter, that leaves about €320 million this quarter.

Then the underlying provisions have been pretty stable at €100 million to €120 million up until this quarter when they suddenly jumped to closer to €300 million. Is this just the costs of cleaning up the Romania NPL book turned out to be larger than you expected or how should we think about the underlying trends here?

Why was there such a big jump? And then the second question I guess coming back to an earlier question on changes to risk-weighted assets.

Just looking at the moving assets versus the moving risk-weighted assets, we see Hungary assets fell by €1 billion despite that risk-weighted assets went up. So if you say that’s a parameter I can see that happening with higher loss given defaults, for example.

But in Romania we have the opposite effect where actually the risk-weighted assets are failing twice as fast as the asset reduction. Can you explain why you have those two contradictory outcomes?

On Romania, you’re right; this was the cost of cleaning up the NPL book that is driving this jump. On the risk-weighted assets changes, it’s a specific set of assets that differs between the two countries, why one has such a strong run-off of the risk-weights versus the volume, versus the other.

Thank you.

Good morning to everybody. Just a couple of quick questions.

One, a small follow-up on what Matteo asked before. If I understand correctly you’re saying that among the three different provisions from the AQR, so the one on the sample file, the one on the projection of findings, and on the generic provisions, I understand correctly that you expect to book no further adjustments on any of the three categories, not just the first one.

I just want to be 100% sure of that. And the second question is on cost.

It seems to me that you think that the level of cost reported in this quarter is a bit surprising, may be too good. Is that correct interpretation of what you said?

And if this is the case, what would you think would have been, let’s say, a more normalized level of cost? Thank you.

On the AQR, it is clear that we cannot possibly book something based on a projection because that would be not congruent to IFRS. So that certainly won’t happen and we do not expect to book in the other two categories.

That said, we will only have our first supervisory college with the new supervisors in the coming weeks. So there is still information that we don’t have on that, so that might change through Q4.

We have at the current moment though absolutely no indication to expect any booking in these two categories.

In terms of cost development, the quarterly run rate would be between EUR 900 million to EUR 910 million and we have not received the final invoice concerning the AQR, which we are expecting in the next coming days and that will drive up costs in the fourth quarter. So, third quarter cannot be repeated in the fourth quarter.

Okay. Thank you.

If I may follow up just one second on the AQR, this is just to – I see no mention in your presentation of what is the level of non-performing exposures according to the, let’s say, AQR. And I can’t see in the template either, I can’t see obviously for any bank.

Just to better understand what will happen in 2015, will banks be required to report non-performing (indiscernible) exposures aligned to the definition of the EBA or will you continue to report NPLs management attention loans, substandard loans? How is it going to work, the disclosure, from now on?

Thanks.

I actually cannot tell you whether we will be legally required to directly report them other than to the EBA. However, we have decided that we will report them starting in 2015 according to the new definition.

And we expect to be able to issue the kind of guidance on how to convert one into the other with the first quarter of 2015 results.

Thank you very much. Very clear, thanks.

Good morning, everybody. I’m Johannes Thormann, HSBC.

Just one question regarding your outlook for the rest of 2014 and the impact of Hungary and also the, probably of the net interest income going down in Romania and Hungary again. Could you give us an indication as you currently reach the mid-point of your guidance what would drive a profit in Q4?

And then what do you see as risk there and probably also give the likelihood of what you see currently more possible. Thank you.

On net interest income on Hungary there won’t be a negative impact in the fourth quarter. Because we don’t have the law issue then we will not see the solution on the unfair treatment of customers.

So this will be most likely coming in the first quarter of next year and then we’ll see the impacts. Romania, as I was mentioning already earlier, will be coming already in the fourth quarter.

In terms of operating result performance we were saying at the half year that we might be slightly below our guidance, which was flat plus or minus 2%. Where we see it right now it will be moving towards the guidance.

And in terms of net profit development there won’t be any significant impairment tests that might lead to significant changes on this line. The tax calculation will be happening in the last months of the year, when once we have the results and other than that we expect a normalized quarter.

Yes. So in principle I told you that we don’t – we didn’t change the outlook.

We are now more or less in the middle of our outlook and due to the fact there is a still couple of questions open that Gernot just pointed out. We don’t want to change the outlook and keep the range between EUR 1.4 billion and EUR 1.6 billion.

Okay. Thank you.

Hi. I just have a few questions.

Firstly on the ECB comprehensive assessment. Do you expect that such an exercise will be an annual phenomenon?

So would you expect stress test and/or an asset quality review happening more frequently going forward? So that’s the first question.

And the second question on Hungary. I noticed that you increased the guidance for risk costs relating to the consumer loan law from EUR 300 million up to EUR 400 million.

I was just wondering what drove this increase. And then finally in Hungary, you’re saying that you did assume a normalization of the risk subject to all government actions being completed in 2014.

Given that there are only two months until the end of 2014, how close do you think we are to that statement? Thank you.

On Hungary we said that already earlier that it will be between EUR 300 million and EUR 400 million, the impact. So there’s no change to that statement.

We’re just updating. The current booking is EUR 360.8 million and this is our current assessment.

Things might be changing in Hungary, but at the moment we just confirm with the third quarter bookings that our calculations that we’ve announced are right. And the government action that we are including, I mean the normalized run rate for risk costs is based on the solution of the unfair treatments on the consumer act and the announced change of Swiss franc loans to local currency loans.

And whenever this is happening this is a prerequisite for giving a risk guidance on the clean Hungarian bank.

In terms of the asset quality review being repeated annually, I would not currently expect that. I think given the ECB’s guidance on their intention to build up a European credit register under the acronym of AnaCredit.

We can expect in 2016 anyway that it’s not necessary to do this in a decentralized fashion anymore, because they will have all the data locally available to do the exact same assessment. And until then I would think it’s much more likely that they would look at the assets that have not been included in the AQR on a point-by-point basis because that is still something like nearly 40% of the assets in the European system.

Therefore, I would not expect this exercise in its form to repeat itself. A stress test is given under the Pillar 2 requirement anyway.

It’s very likely now under having one eurozone supervisory regime to have a harmonized stress test for all banks in the eurozone, which will not make it necessary to repeat the exercise in the same fashion as it was done this time because this time we still had an orchestration of local supervisors trying to execute what otherwise would have been lots of different local stress tests. And this harmonization can now be done centrally through the parameter requirements of the single supervisory mechanism.

So, in short, no, not until 2016 and then it will not be done by us; it will be done centrally by them. That’s my expectation.

Perfect, thank you.

Hi, good morning. Thanks for the call.

A few questions if I may. With regards to the recent management board departures, could you put the sort of what you’re thinking about in terms of the, I suppose the old corporates and markets business and the market’s activities?

What’s up for discussion? Are we talking about a relatively significant downsizing of this business?

What is the rationale for putting things back into the local markets? And just a little bit more color of why that’s happened and why it’s happened now, that would be useful.

You talked about or you mentioned that your margin had picked up a little bit in Q3. Is it fair to say that it’s going to tick back down again in Q4, because clearly the interest rate issue is still with you?

It would be interesting to know what you think about that as well. Thirdly, has the phone been going now the AQR is out of the way and everybody wants to start swapping assets?

It’s something that you talked about a few quarters ago in terms of not much happening in terms of asset swapping, asset purchases and sales in the CEE region until the AQR was out of the way. Well, it’s out of the way now, but has anything changed in your view?

That would also be interesting. And then just one or two little points of detail.

What was going on in the other income in the savings bank in Q3? And what was the other operating result cost in the Czech Republic in Q3?

Thank you.

Maybe we’ll start with the activity on the asset side. I think that has been increasing since we made these statements quite steadily.

We have not seen that we have an oversupply in the sense that now the market is clogged yet, whereas on quite to the contrary; I think the activity there is still steadily increasing and therefore there is not really a visible change yet. But I think it might be also a bit early now given that we have only four days to digest a huge amount of numbers to see strategic deals of very large sizes emerging.

I think that is only to come.

On net interest income in Q4, as I was mentioning already earlier you will see the impact of unwinding. There is an uplift of the local net interest margin by 70 basis points through the unwinding effect.

And this will be disappearing through the next couple of quarters depending on the speed of reduction of our non-performing loan exposures. On the other income in the Czech Republic I think it was a €10 million real estate fund valuation impact negative.

And savings banks I’m checking at the moment, Alan. I’m coming back in a second, yes.

Okay, let me do the question on the rationale of putting things back into the local markets. Basically our aim is simplification.

We’re in the process of course of centralizing even more than in the past risk management and liquidity management, performance management. We are getting much more on a Group-wide control of all those issues.

What we are trying to attempt is, as I said before, one thing much more concentration on the SME business in the local countries. And number two, a simplification eliminating too many cross-border or cross-group exposures, and just setting a clear target for the countries and not having too much overlay within the Group.

So the main drive of that is internal and external transparency and a substantial simplification in our group.

Can I ask do you think this will potentially result in lower costs? Do you think there are too many costs in Austria related to these businesses?

Of course. You got the point.

We don’t want to talk about it, yet because we don’t want to talk about unlaid eggs, but that’s exactly what you – what we’re aiming at.

Thank you.

Hi, good morning. Thank you for the presentation.

I have a question regarding your admin costs, in particular where the sort of drops were booked. They were booked in this other segment.

Can you give us a little bit more color what were the savings and how sustainable they are over the coming quarters and next year, because apparently the cost performance year-to-date seems to be continuously a positive surprise to us in each quarter results. Thank you.

Yes. I mean this is – you know that we are – in this environment we have to continuously work on our cost base and then administrative expenses.

We were mentioning already one additional effect that we could see this quarter, but other than that I think overall the cost discipline is something that we are continuously trying to show and that we are continuously working on it. So, in a nutshell, the cost developments are a little – are better than we were announcing and they are of a recurring basis because we need to reflect the soft business environment through a really good cost discipline.

Thank you.

Yes, good morning. Firstly starting or coming back to Romania, you still say in the presentation that in Romania the negative impact from the unwinding will roughly be EUR 50 million at the midpoint.

From your comments I would expect that the Orion portfolio had hardly any impact on Q3, so this would leave a quite massive drop then for Q4. Maybe you can quantify this a little bit better.

And then again on Romania, you now seem to be in the market with the Saturn portfolio, mainly corporate loans. Maybe you could give us a bit more color on this Orion portfolio.

Was that on mortgages, because I just want to try to understand whether you received market or bids/market values for most of your different loan categories you have in Romania? And then lastly, Mr.

Treichl commented positively on domestic demand. Is that something you already see in your consumer loan book or are you then actually confident that you will see it shortly, let’s say, Q4 or Q1 some first impacts here?

Thank you.

Okay. So let’s start on the Orion portfolio.

The customer types in there were SME, micro, large corporate and mostly from regional recovery portfolios. And with Saturn we have commercial real estate and a significant amount of larger chunky corporates in there.

So that’s the difference. The Saturn portfolio is of a notional value that is also bigger than the Orion portfolio.

And in terms of the bids we’ve received from there, we’ve got actually now with the Saturn portfolio a multiple of the interest that we had for the Orion portfolio.

I’m coming back now to the question on the savings bank segment, the jump in other result. This is due to inter-company elimination on consolidated funds, which was not booked in the half year results and this is now reflected.

So it’s an inter-company elimination.

Okay. On the question of consumer loans, if you look at the performance in the third quarter and NII and net interest margin and volume, you’ll see that we have a slight increase in volumes in the retail segment.

So it bounced back in the third quarter, and in the savings banks. And if you look and compare it also with the performance of NII and the net interest margin, you will see that mainly actually the improvement on that came from retail and therefore also from consumer lending.

So this is a rather recent development, so it’s a bit too soon to say whether that will actually continue. What I can say is that given the numbers that we’ve seen for the moment and we link that to sort of the macro indicators that we have in most of our countries, given the shift from export led gross to local domestic consumption led growth.

Yes, there is a chance that they might continue. But we are not firm enough yet on that trend that we would say.

Finally we have a turn around, we still want to watch it for a couple of quarters. Is that okay?

Yes, thank you.

Good morning and thank you for the call. I have just a few follow up questions and one new one.

Maybe I start with the new one. Can you perhaps talk a little bit about how you see future of your Hungarian operations?

So you reiterated that you don’t see or you don’t expect any further losses over FX conversion, but do you believe that after passing this hurdle the situation in the country will normalize and over medium, near-to-medium term you will be able to return to any sort of level of profitability that would be acceptable from your cost of equity point of view?

If you allow me I would rather choose not to answer that question. We’re working on our situation in Hungary and it’s too early to give a comment.

I know that is not very satisfying, but that is all I want to say at this point in time. So please accept it.

Okay. That’s clear.

So then I have just one clarifying comment/question, and I guess it would touch on many comments that you made before. So you’re saying that 2014 you’re probably moving towards your previous guidance so your pre-provision profits will look a little bit more robust that you expected before.

But then maybe a high-level comment on how sustainable this improvement is. Is it just that timing perhaps that worked a bit better for you or you actually – because you made a comment that NII probably will still be under pressure but the cost improvement is not maybe fully sustainable?

So how big a portion of that improvement is actually sustainable and could support profitability going forward and how much of that is just a temporary effect?

It’s a combination of both. First, when we were saying, talking about the second-half development and with our July 3 announcement, we were calculating the impact of an accelerated NPL disposal.

And, as I was mentioning already, it has a significant impact on our Romanian operations. The same is true for FX or the bid/ask rate and the unilateral interest increase in Hungary.

These effects will come for sure. They are coming a little bit later than we’ve expected because in the middle of the year it looked like that latest in the third quarter we will see the full resolution of the (indiscernible) decision in Hungary.

And going forward it has a negative impact on net interest income because we will have definitely a lower outstanding because this EUR 360 million that we were booking as a reserve at the moment will be reducing our loan book in Hungary. And you can see going forward we will have lower margins and lower net interest income.

The same is true for Romania on the unwinding. But what we are saying for 2015 is we will have a lower income out of these items but a higher quality, and we will have lower risk provisions going forward.

On the cost side, majority of the savings on the administrative expense side are recurring. We have just had an extraordinary quarter due to the pension liability recalculation.

That was an impact that will be coming in the next year as well but it will be lower because interest rate levels cannot go a lot lower from these levels as we are seeing it right now. So a diminishing impact, but still an impact.

Overall I would say a majority of the measures that you could see have a recurring impact and a quite positive impact

That’s clear. Thank you.

Hi. Good morning.

Apologies to continue on this comment on the operating performance. Clearly you’ve done very well, flat year-on-year in the nine months.

Just looking at the last quarter I think most of your units had that easy declining trend, but I notice on your Page 20 of the presentation a EUR 70 million swing in other segment on the operating profit. Could you give us some guidance or some color what was behind that and how sustainable this is?

And then wrapping on your comments, is there any potential color you could give us for 2015 operating profit? If your full year comes at around minus 2%, which would be the lowest of your guidance, that would suggest somewhere around EUR 700 million operating profit in 4Q, down from the EUR 800 million you had this quarter.

Is that the right run rate to think of for 2015 given still some NII pressures but some other offsets?

2015, we are talking about return on tangible net guidance and we come up with more color and details with the full-year result presentation where we usually give a guidance for the full year. And this is something we will continue.

So, as I was mentioning earlier already, Q4 will give you an indication for the full year because we see already impacts that we were mentioning because some of the NPLs are derecognized already in the third quarter so we receive full impact. And that will give you some flavor how 2015 will look like.

The other segment on the geographic distribution, this is as to the liability management on the holding side, this is a fluctuating number so there you will see quarters with positive and you will see quarters with a negative number there. Overall I think the operating result performance was very satisfying over the first nine months.

Okay, so possibly further decline in operating profit for Q and maybe the bottom in first quarter 2015 would that be a fair comment?

It’s your comment.

Okay. Okay.

Great. Thanks.

Thanks.

Good morning. Thanks for your presentation.

A very, very quick question on my side. How should we think about the tax rate going forward?

That would be useful. Thank you.

Yes, tax rate next year, we are updating on a continuous quarterly basis our calculations around about 25%, 27% is something we are talking at the moment. More clarification we can give with the full-year results because this is depending on our distribution of results in various tax groups.

Okay, no, that’s good enough. Thank you.

Okay. Thank you very much for listening in.

Thank you very much for participating and we’ll hear each other at the end of February when we present our fourth-quarter results. And we are looking forward to a number of very exciting presentations during the next years so it’s going to remain very challenging and very interesting.

Thanks very much for your interest. Have a good day.