BWAGF - BAWAG Group AG (BWAGF) Q4 2023 Earnings Call Transcript
2024-02-01 19:41:04 ET
BAWAG Group AG (BWAGF)
Q4 2023 Earnings Conference Call
February 01, 2024 04:00 AM ET
Company Participants
Anas Abuzaakouk - Chief Executive Officer
David O'Leary - Chief Risk Officer
Enver Sirucic - Chief Financial Officer & Deputy Chief Executive Officer
Conference Call Participants
Mehmet Sevim - JPMorgan
Hugo Cruz - KBW
Gabor Kemeny - Autonomous Research
Jovan Sikimic - RBI
Tobias Lukesch - Kepler Cheuvreux
Simon Nellis - Citibank
Presentation
Anas Abuzaakouk
Good morning, everyone. I hope everyone is keeping well. I'm joined this morning by Enver, our CFO; as well as joined by David O'Leary, our Chief Risk Officer. We have a lot to cover today, so let's jump right into it with a summary of full year 2023 results on Slide 3.
So for the full year 2023, we delivered a record net profit of €683 million, earnings per share of €8.31 and a return on tangible common equity of 25%. The underlying operating performance of our business was very strong with pre-provision profits of €1.40 billion, up 22% versus prior year and a cost income ratio of 31.8%.
Total risk costs were €93 million with a low NPL ratio of 1%. The fourth quarter was strong with a net profit of €177 million, earnings per share of €2.15 and a return on tangible common equity of 25.7%. We delivered on all of our 2023 targets. We also distributed €480 million of capital in the form of €305 million dividends and completed €175 million share buyback during the course of 2023, which reduced our shares outstanding by 5% and which now stand at 78.6 million shares.
In terms of customer loan growth and capital, average customer loans were flat quarter-over-quarter and down 7% versus prior year. Average customer funding was up 2% quarter-over-quarter and up 6% versus prior year. We generated 330 basis points of gross capital for the year. We ended the year with a CET1 ratio of 14.7%, net of the dividend accrual and excess capital of €475 million, equal to approximately 250 basis points. We will be proposing a dividend of €5 per share or €393 million to the AGM in April.
In terms of business activity, 2023 was defined by staying patient and disciplined, given the significant movement in rates, high inflation and subdued consumer confidence. We saw an impact on customer lending volumes as high rates and inflation translated into anemic growth negatively impacting lending opportunities across both the retail and SME business as well as the corporate, real estate and public sector business.
However, this dynamic is one that we believe will be temporary in nature. Once markets settle into a new normal of interest rates and inflation subsides, we anticipate a pickup in originations and overall lending levels. Despite our record performance in 2023, our best years are still ahead. Our strategy has been consistent since 2012, one focused on being patient, disciplined, cutting through the noise and consistent execution. This patient and disciplined approach to commercial lending focused on risk-adjusted returns, not blindly chasing volume growth and thinking beyond the immediate quarter is not always obvious or understood....
BAWAG Group AG (BWAGF) Q4 2023 Earnings Call Transcript