green finance framework investor presentation

August 2021 | BAWAG Group AG 1

Green Finance Framework –

Investor Presentation

August 2021


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


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


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


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


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%


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


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


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


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


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 %





Funding & Liquidity

Detailed Financials


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


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


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


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)


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


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 …


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





Funding & Liquidity

Detailed Financials


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


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


“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


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


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


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


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


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





Funding & Liquidity

Detailed Financials


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


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




Green Bond Framework

Funding & Liquidity

Detailed Financials


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%


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


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


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


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


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


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


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


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


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


‒ 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


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)


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.


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.

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