Good morning to the Half Year Results Press Conference of Erste Group. Our press conference today is hosted by the Board of Erste Group led by Bernsh Palp. They will guide you first through the slides about the half year results, after which we will take your questions. And with this, I hand over to Mr. Schpalt, please.
A very good morning, ladies and gentlemen, and warm welcome to the half year press conference of Erste Group. I would like to start with a slide that refers to the situation in which we find ourselves. We're in the fifth month of a very terrible health crisis throughout the world. It has, of course, its impact. And we've experienced a lot in these five months.
And it's our major task to concentrate first on the health of our staff and our customers. And we've always made this right from the beginning. As soon as the lockdown was announced, our campus, which comprises 5,000 people, was reduced to 150,000 people. We all worked from home, and it worked very well. And then when the economy was opened up again, we said we'll start again very slowly, come back to our offices, and we'll see to it that our employees are safe and that our customers are safe.
And in this context, we said, this is a situation that you cannot try out, that you cannot rehearse, that you are confronted with in reality. And we would like to continue to learn. We would like to learn from what our employees witness every day. And we are very proud of this, and we understand the whole process. We have a highly competent medical center.
Occupational medicine is something that we are really focusing on. And we're quite fortunate because our medical center is one of the best occupational medicine centers throughout Austria. We also said that in a context where we experience new situations, where the memory is still fresh, we must understand what is going on and what we can learn from the future. For the future, this new way of working has become something that's very relevant, where we can take decisions. What we've done is, in cooperation with the University of Vienna, we have made a very broad employee survey, which is based on academic hypothesis on scientific basis that we can use later on to say how can we go on, what are the long term conclusions from this.
We have 18,000 employees that participated. We had 14,000 inputs. And we'll, of course, use this in order to opt for an evidence based future to take our decisions that way. And I'm looking forward to this process. And now to the half year press conference mode.
Where do we start? How do we did we enter the crisis? And how robust is our region? We're quite fortunate that as opposed to many other countries throughout the world, our governments, starting with Austria, all other countries were looking at Austria, and we found the right conclusions. The Austrian government and the others copied this.
Austria said as long as there is no injection against this disease, we must reduce the dissemination. And we shut down the entire economy and just keep up the essential structure. As soon as the disease is flattening out, then we can open up again. And if you look at these figures here, this was exactly the case. The answer of our policymakers was correct.
We experienced this reduction of the disease of infections, and we could open up everything again pretty soon to return to a normal economic development. So this was highly important. These were very courageous decisions that the government took. And the situation is characterized by the fact that all actors were working together. They said this is a crisis that is endogenously induced, and we have to stick together in order to help economy get on its feet again.
Let's look at the individual CEE countries. How have they managed to survive the crisis? Well, in contrast to other crisis, these countries were very strong economically with low unemployment rates, with very low debts. And the banking business, that is to say, the deposits and the loans were well balanced. So what we find is a very stable risk resilient situation where we can say we can actually digest this economic downturn.
And we're quite strong in these regions. And this is very important to understand. Of course, the economy experienced a slowdown, but we'll also find a way out. And this is important because we have to be optimistic for the future. If you look what has happened, all states reacted quite quickly
And they said it has to be guaranteed in an economy that the business community can survive with large programs that were provided with loans, with short time work schemes, etcetera. And all countries in our regions actually implemented the same structures. 10%, 12%, 13%, 14% of the GDP was invested. So everybody realized that the situation was serious. The announcements were made quickly and were also implement everything was implemented very quickly.
So this actually limited the first crisis. How are things going on? If you look at the chart in the middle, the short time work schemes that was started in Austria is going down again now. In other words, these measures are showing a result. We are reaching a type of stabilization.
However, this situation has to be looked at very attentively. The crisis is not over. As long as we have no actual treatment, we will have to live with the situation and have to handle it. And we already know this. You saw yesterday how the GDPs in Europe will be developing.
It's quite obvious if switch off the light in the economy, then, of course, you will have a dampening effect. But as soon as we emerge out of this crisis, as soon as possible, we have the chance of seeing 2021 as a year of recovery, and there are a lot of indicators for this, not back to the level of 2019. But next year, we'll already be in a recovery phase. And we have to do everything that the state, that the companies, that the banks, that the capital investors will make a plan how this will work. It was quite clear from the start.
This is a health crisis that we have not experienced before. It's not a financial crisis. It's not a banking crisis. Right from the start, the banks played a very important role. They were not the problem of the situation, but much rather part of the solution of the problem.
In other words, there are major state programs that we are involved in. We supported over 1,000,000 customers since the lockdown. Euros 16,500,000,000.0 were invested in COVID measures in order to overcome this critical first phase. At the same time, our customer deposits have risen by 5.1%. This was a time of insecurity, and all our customers in our region trusted us and knew that their money was safe in our banks.
And our entire volume has our loan volume has grown not because there was a larger demand. Our loan volume grew because there were these state programs, programs that were state guaranteed, and there were moratoria that expressed that certain loans were frozen or paybacks were frozen. In all, the basic business model was very robust and sorted. Here you see again that we could increase customer loans and deposits. This was we have learned this from the last crisis that the loan deposit ratio, to what extent loans refinanced by deposits, is very robust.
We now have a ratio that more customer loans are refinanced by customer deposits, so the situation is robust in the individual sectors. Before moving on to Peter Bosek, let me mention the following. All these programs that helped revive the business situation are found in all of Europe, and this is a major concern of mine. It's a major performance of Europe that this business plan and the stability measures helped Europe, a plan from 2021 to 2027. Where does Europe want to remain competitive?
We are witnessing a new world political order now. How can we be self assured and how can we become set the right measures? I think what is important as well is that, of course, that everything comes under the rule of law. But this Europe has made a major step here, integration, and it will help the European recover business to recover. Well, Peter Balsik.
Well, as I said, this was a major challenge for all of us in the region. There was the worry about the workplace. And of course, we tried to support our customers as best to the best possible extent. It all started on Friday, March 13. And people did not only buy toilet paper but also hoarded cash.
So in the first days of the shutdown, we had to secure cash for all of our customers. After a few days, this was over. And people realized that they will always have access to cash. And this was also the basic decision of the politicians in all countries that banks are part of the critical infrastructure And our subsidiaries and our local banks were open throughout the time. All the branches were open.
Of course, fewer people came to the branches around the first of the month. We mentioned time and again, don't come on the first of the month because people are used to coming right at the beginning of the month in order to make their payments and in order to get their money. And in order to prevent this onslaught, we tried to mitigate this and to tell people to come in the course of the month. Part of the customer contact was, of course, shifted to George. 9,000,000 customers used this.
We have one point had 1,700,000 logins per day. And I would like to thank all my IT colleagues, all my telecommunication colleagues. People, of course, were telephoning a lot. And people talked longer on the telephone because there was no physical distancing. In this phase, I telephoned way into the wee hours of the night.
In addition to cash, the cash supply, I was in charge of executing all the moratoria for the retail sector. We wanted to take the pressure off the people. People who had to make payments didn't know how they could handle this. And I know that part of our customers can pay back all their money, But we wanted to reassure them that this was possible because the mental setting is very important in this context. Second was, of course, the corporate side to provide all the aid and assistance possible.
And in our region, the liquidity situation, especially of SMEs, became critical. So we had to take appropriate measures, implement the measures that the government set. And of course, in the course of this year, their papers were not ready, and they had not made their tax declarations, etcetera. Another interesting factor. What has changed in the customer behavior in addition to the digital channels being used most of the time?
In the payment behavior, a lot of things have changed. Contactless payments have become something usual. Well, contactless payments, this was not only a matter of transferring the virus, but it was the rigmarole around the cash desks and the cashiers. And people realized that contactless payments was the right thing. And contactless payment is something that has come to say because payment transfers usually change very slowly.
But here, the trade community and the commercial community was interested in getting this through. Then the housing programs have developed very stable. There were a few slowdowns in the field of consumption financing because people were insecure and they did not want to buy a lot. The insurance business has also developed well. We are expecting an increase in the years to come because the situation in the past has led to a fact whether you want to be safe on the financial and health side.
This will definitely have an impact on the insurance business. And asset management was also interesting. In March, the markets, of course, dropped drastically. Then the central banks intervened rapidly, and the markets recovered again. And it we advised our customers, telling them that regular investment is the thing of the day.
The more you invest, the more you are on the safe side. And now I'd like to move on to Ingo. Retail banking and corporate banking, we said right from the start, don't panic. We communicated with our corporates and market customers in time. And in the first six months, we managed to increase our gross loan volume by 4.4%.
We have the strategy of organic growth in our customer bases, and we actually managed to gain market shares. And this went over all segments. It was quite dramatic in the corporate business with the SMEs. They could not react that quickly. But in the meantime, we have seen this upswing in all fields.
And in contrast to the public opinion, we actually contributed our part to this. As to the capital markets, the issuance has developed very positively over €50,000,000 where these are not only organizations in Eastern Europe. These are also customers from the financial sectors. And this led to an overall mandated transactions volume of 94% in equity and debt capital markets. And the markets will remain open, so there will be more to see in this sector.
How are we going to go on in this sector? If we look into the future, this was the first half year now. And of course, we want to be available also in the future and take measures that should help our customers secure liquidity. Not all transactions and contracts have been amended or not all agreements have been amended so far, but we are going to help our customers to use the guarantee programs provided by the state. And we'll also support our customers in managing their risks in the export business and on the working capital side.
With the larger customers, what we find is that they are planning acquisitions. They are building war chests, as it were, And they are ready for a longer period where things are not that rosy. As to the capital market side, we'll do business very well. As to turndown in the first quarter, a lot has come back in the second quarter, so the capital markets will remain open for further customer business. So this was a short outlook, and I'd like to hand on to Alexandra.
Thank
you. Hello, and very good morning. In unusual times, in an unusual setup, and even though we can't see each other in person, I do hope that I will be able to convey all the points that are important from a risk view. My colleagues have told you what our priorities were during the crisis and will continue to be. So apart from making sure everybody stays healthy, it's making sure that we keep calm.
Don't panic and keep calm. Those were the big slogans. A big building block in this support is a remarkable and bold regulatory relief program that helps us fight the crisis. This includes relief in the minimum requirements to capital and liquidity. There's a certain flexibility in rules that are otherwise quite rigid and importantly, and risk weighted asset relief to support SME lending.
All of that helps us help others. It has been said there is massive support from the on the part the state. And that means that so far, no tangible NPLs and defaults in our portfolio. But still, we have booked big risk provisions. In the first half year, in total, euros $675,000,000, and more than €600,000,000 of that were posted in the second quarter.
Why so much risk cost? 200,000,000 about €200,000,000 from normal business, normal banking business, but not because of individual defaults, but because of the deterioration of some customers' rating. And the big portion of €400,000,000 because we have to take into account the worsening macroeconomic outlook, and we have to take that into account in our parameters. Technically, you might read it, it is the famous FLI update and manual overlays. And that mainly describes that we have to reflect the macroeconomic deterioration in our portfolio.
At the portfolio level, we provide for future individual defaults that we expect. What has remained unchanged and very positive because there have been no tangible defaults is the low NPL ratio, two and point also an increase, a high increase of the coverage of more than 91%. We see and we hear and we all expect that states and governments are ready to renew the moratoria that expire. This was the case in Serbia. In Hungary, the discussion has started in Austria as well.
And all of that means that individual defaults and rising bankruptcies will not be expected before the end of this year or probably more of that next year. For us, this means, as we did in the second quarter, we book risk provisions upfront. But that also means that we have to prepare our processes even better, that the close contact that we already have with our customers will be further intensified in order to be able to take the best steps in good time in order to get out of this crisis. And with that, I hand over to Stefan. Thank you, Alexandra.
Hello, ladies and gentlemen. Before Bernd Spalter will talk about the outlook into the future, something that you are probably most interested in, I'm going to give you an overview of the most important figures and parameters of Heste Group after the first half year twenty twenty. If we look at the result of 2020 from January to June, it is, of course, massively impacted by what Alexandra has just explained to you, namely the risk cost component. This is why I really don't have to explain this big yellow block, which is the change between the same time last year and this year. It's a massive change in the risk cost situation, not because there have actually been more risk cases, but because of our forward looking expectations we have provided for it.
Let me concentrate on the operative side. On the one hand, on the operating income, you see a decline, and I can explain that very easily in this slide. This was marked by the collapse of the capital markets and the decline in trading and fair value results. And everything else has remained more or less flat year to date, so has not really changed remarkably. But on the other hand, we see a slight improvement on the cost side.
Not a surprise again. Because of the lockdowns, many activities also in our company have not been undertaken and which would have produced costs. And apart from that, for several years, we have been very good in mitigating the cost growth. Just a full short statement on other the other result. One year ago, the first half year, we had a case in Romania together with Bauschberg Harte, which is no longer in our books.
So this is why there is a good result in other results. And minority can be explained easily. Our colleagues in the savings banks in the first half year, of course, suffered from risk cost. And this is why their result is lower, which means that this is positively reflected in the net result as far as the share is concerned. Just a few comments on net interest, one of the most essential individual components of our result.
Without speaking about all the details, let me draw your attention to the Austrian result. This is extraordinarily good given the current environment. And this may be explained apart from the fact that all my colleagues did an excellent job, but that in the Eurozone, the impact of the massive rate declines and the low interest rate environment has been around for years. So this has not meant an additional burden. On the other hand, in our very important market of the Czech Republic, in the first half year, interest rates were dropped to 0.25% in the key rate, and that, of course, had a massive impact on our net interest result there.
And the Czech crown became weaker against the euro, and this is why the euro result is weaker in The Czech Republic. I think those are the main aspects that you need to keep in mind when looking at these results. In sum total, and I've said it before, operating income is relatively stable. The decline in trading. There is increase in the year to date comparison, but we have to be careful when we talk about the second half year because, of course, the impact of the situation in The Czech Republic and the low interest environment will continue, will depend very much on what the production side is will be like, whether in 2020, we will have the same excellent result as in 2019.
Right now, we expect a slightly weaker result when it comes to net interest than in 2019. Fees, there is a decline. I'm not going to talk about the individual components. Peter Bostek and Ingo Blyer can do that much better than I can, but it's important to mention that there is a massive decline in the second quarter because of the lockdown. But we think that in Q3 and Q4, in the year on year comparison, the situation will improve.
June wasn't bad, July as well. So we are optimistic. Operating expenses, again, three components I'd like to talk about. Year on year, flat when it comes to personnel expenses and also flat when it comes to depreciation and amortization. This is the dark blue part.
Clear savings, of course, in other administrative expenses, quite obviously, because of the situation during the lockdown. Meanwhile, we are convinced against all expectations before this year that in 2020, we will have a lower total cost than in 2019, of course, for reasons that are not particularly pleasant. Well, a few words on the costincome ratio. I've talked to many of you, and we said how important is the costincome ratio as a parameter. My opinion is clear.
Over a longer period, it's an important and significant parameter, not the only one and maybe not the most important one, but it's an important one because it shows how much how big the revenue will be from all my investments. In the short term, it doesn't help too much. Why? In times where business is wonderful, I will never be able to not improve my costincome ratio. And in difficult times, it's the opposite.
So this is why, yes, it's become worse. Second quarter was relatively good. So in short, our objective is 55% costincome ratio. We keep to that, but that is utopian to expect that for 2020 or 2021. We have to be quite clear about that.
And this takes me to a very important and essential slide in the positive sense. Let me make a short detour from the crisis. We show you the development since 2010. Why do we do that? If you look at the Erste Group development from 9.2% CET1 to 14.2 right now, just imagine that the banks, all of the banks, and I think Erste Bank is a good example, but others as well, if we had now had the ratios of 2010 or '29 when the crisis started, I don't think that we want to even imagine that.
And this confirms what Bernd Schwarz said in the beginning and Peter Bossert confirmed. We are very much convinced that we are going to support this region and our customers, and we contribute to a solution of the corona problems. And that, of course, means we have to have a strong capital base. Alexandra, you said it. Of course, the regulator helped.
And to be fair, the increase in 2020 is partly due to the fact that we very successfully weathered the beginnings of the crisis. But it's also fair to say 50 basis points of that rise, so more or less net rise, is on the back of the regulatory support measures, particularly because the SME supporting factor has been applied here. Last comment, and that is important for our investors, but also for the capital market and in sum total for ST Group.
We,
in accordance with the capital strength and we have communicated to the GSD, we have accrued the dividend, so we have provided for a dividend. And I'm sure Ben Spike will comment on that. As long as the supervisory authority regulates it as that, there will be no payment, but we provide for it in our capital planning. So please take into account that those 14.2% common equity Tier one ratio includes dividend payment provisions. And with that, I would like to hand over to Bernd Speijt.
Thank you, Stefan. The outlook 2020, what's the situation that we're in? Right now, the economy has been slowed down significantly. But I think the outlook is quite good. All of the countries are robust enough in order to be able to afford the fiscal measures, and it has to be said.
The fact that 10% or 15% of the GDP are promised does not mean that we can actually do it, but all of our countries can actually fulfill that pledge. So we have a situation where the states have not only realized that they need to help, but they are actually able to help. And that is a big boon in our region. And we, as a bank, go into the situation, not only with a robust capital situation, but also with a business model that really works. That is a good situation of departure.
But of course, a bank always reflects the economy. Once the economy worsens, we are going to also reflect that in our figures. That means we will have lower organic growth this year. There will be reticence among corporate customers and retail customers when it comes to long term decisions. But still, we will be seeing that the economy is able to weather this crisis and help itself.
You've already seen all the interest rate reductions have were already done in previous years. Now the Czech Republic has gone down from 2% to 0.25%. So all of that has already been factored into our result. And that is probably our basis. But of course, that will have an impact on our profitability this year.
Now talking about credit quality. Alexandra has said all the most important thing. One thing I think is particularly important. I praise give great praise to the government saying they did the right thing, namely provide liquidity in a time where revenues go down, but these costs stay at the same level, and people have not a lot of money. But you don't have to be an economist to understand that if you put loans into a declining economy, it's only a question of time until all capital reserves are used up.
No matter whether it's the state, the banks or the companies, everyone needs to work in the same direction in order to get out of this situation. I think we are perfectly poised to play an important massive role in providing capital from those who have the capital to the companies who need the capital to get out of the crisis. Credit alone does not solve the problem. We need all the players, all the stakeholders. That is an important thing to point out.
And we do need a vision for the future and a good outlook for the future. We need to have a vision that people can believe in and trust in, where people feel safe not only in the sense of having a job, but also in the sense of being able to spend money. Capital position. I think it has already been very well described by Stefan. We have a record capital position, 14.2% CET1 ratio.
We've never had it. And of course, now we have a better regulatory environment. But there is we will be in a situation where we can save capital and accrue capital. We always said we want to pay out dividends. In March, even before the ECB commented on the issue, we said we defer our postponed our AGM to the fourth quarter, not only for health reasons because a physical AGM cannot easily be held, but also because we want to take our time to make a decision on do we pay out a dividend and if so, how much.
We want to wait until we have more clarity about what is the situation like, when will we get out of the crisis. Right now, we see a situation where the ECB still has held up its recommendation not to pay out dividends, and it's been prolonged until the end of the year from October. And of course, we are going to keep within that recommendation. So we are not going to pay out a dividend in 2020. Nevertheless, we had a wonderful year 2019, and 2020 is going to be a business year that will justify paying out a dividend.
So that we will not change anything in our plan to pay out the dividend whenever this is possible, and we think that is an extremely important thing to point out. Well, in conclusion, the net profitability with the risk cost that we have already anticipated is going to be lower. Maybe I can come back to the risk cost issue. The things that we booked now is just an upfront measure for a deterioration of the economy, which will probably lead to more insolvency, more bankruptcy, more defaults next year. And the more we all can do, and I'm not only talking about banks, the more we can do to make sure that companies are healthy when it comes to their capital, the more risk provisions we will need.
So we are quite optimistic that we will be a vital player. And with that, I would like to conclude our presentation, and I'm looking forward to a vibrant discussion.
We can give a sign to the operator to take the questions from our listeners. Probably, we have to allow for a few seconds for everyone to settle in.
Now take our first question from Boris Granthall of Bloomberg News. Please go ahead. Your line is open.
Hello. I didn't want to be the first one, but now I am the first one. Sorry. Two questions. First, can you hear me?
Dividend. Have I understood this correctly? The way you worded it, you made this provision for 2019 and 2020. I assume that if nothing unforeseen happens, that you will pay out both dividends. So you will not pay out dividend for 2020 in 'twenty one, but for other business years 2019 and 2020.
Have I understood this correctly? You pay out the dividends for both years. Me explain it once more very briefly and as precise as possible and exactly as possible. What the first declaration, the €1.5 per share that are already posted for 2019. This is quite clear.
And this will not change until the 2020. Number two, for the first half year 2020, and this has been already discussed with the GST, connected with the assumption that you want to pay a dividend, but you do not specify how big it will be. A calculation will be made 55%. This is the average of the past three years of the payout ratio. And this will be deducted from the capital.
This is 137,000,012 basis points. So as such, this is not prejudiced, neither for the AGM twenty twenty nor for a later deal resolution concerning the payout because we, the Managing Board and the Supervisory Board, decided to pay out the dividend for 2020. This was taken back because of the crisis situation. In other words, it's correct what you assume that the provisioning and as soon as we have the regulatory permission, we will pay out for 2019 and 2020 in one. But we have no we cannot make any declaration as to the amount.
For 2020, the original dividend will not apply. This decision has not been taken neither by the Managing Board nor by the Supervisory Board nor by the AGM. But technically, you are correct, the most probable version, probably also with other banks, will be to have one payout in 'twenty one with a cumulated view of both business years. So I hope that this clarifies that my explanation clarifies your question. However, if you do not take the €150 that you have provisioned for, What is what could be the new calculation of the amount?
Because the amount is already put aside. No, no, no, no. This is not well, this is saved as to the balance sheet. Well, I think this is just provisions. These are just provisions.
And as to the balance sheet 2020, this is the reference date. There, you have to make a new dedication as it were. But we've taken the amount back together with the Supervisory Board. So the amount has not been declared. At the moment, as Mr.
Spike has already said, naturally, we have to keep to the regulatory provisions of the ECB. Second question, as to the risk factors, the risk costs have become higher. Can you make can you say anything about 2021 as far as the direction is concerned? Will the risk costs go up? Or has the peak been reached in 2020?
Or is it too early to say? Well, everything is partly true, what you've said, yes. We have a more we have a clearer picture now. We have made a macro update, so we can actually go to 65 to 80 basis points. And for 2020 in Q2, the peak will have been reached as far as risk provisions are concerned.
2021, it's too early to say. What we can say is in the investors' call, we've mentioned this again and again, we want to put as much as possible as early as possible as the biggest amount in the balance sheet. And of course, you do this in order to relieve future periods. So as much as we can, we'll be posting this year as early as possible. Short supplement on my part.
You've heard about our ideas of the macroeconomic situation in 2020. We have had a strong setback. In 2021, we'll have the first recovery period. In 'twenty two, if we would have another shutdown, then the situation would be totally different, but we do not assume this. Thank you.
We will take a question from Jacob Thurman of Deep Press. Please go ahead.
A very good day. Two questions. As to the risk costs, can you give us any idea? So the peak will be reached, but what about the overall year? How high will be the risk costs?
And the second question, the interest income has risen. Is the net interest income, is this because the number of corporate loans has increased? And the corporate loans, when it comes to these subsidiary packages, are they profitable for the bank? And do you also profit from the crisis here because the credit business that the loan business has been expanded? I'll start with the risk costs.
The 65 to 80 basis points are calculated on the actual loan volume, euros 1,100,000,000.0 to €1,300,000,000 for the entire year. And if you deduct this from what we booked, what we posted in the first half year, then you have the expectations for the second half year. As to the net interest result, let me give you the following answer.
The
volume is an important factor in the interest result. Volume and margin, these are the essential factors. The volume at the beginning of this year was much higher at the 2019. And thus, the interest result in the first half year twenty twenty was carried by higher volume than the last year. This is the basic explanation.
So we had a very strong business year 2019. And this is the reason why our interest result is still so positive, and we'll see what the second half year has in store. As to the state guaranteed corporate loans, whether they are business for us, these loans have caps within which we move. For instance, with the COFA guaranteed guarantees, this is 1%. If the transactions are carried out as planned, then I would say it's a moderate business for us.
With a 0% interest, things look different. Well, the 0%, I don't think I have to comment on this. We need a magic wand in order to be able to earn something with this. Be happy that we have no magic wand. Sorry.
What about the moratoria on the retail customers' side in Austria. In all, you're quite right, the moratorium in Austria relates to retail banking. And at the moment, we have a share of about 9% of the customers that have this more opt in moratorium. This has already been finished. And now the demand is reduced, the demand for an extension of the moratorium.
It's only half the customers. 9%, you said, 9%. As to the loan volume, how much is that? Well, I have to check on that. I can't tell you right away.
We move to
Cleedorffer from QR. Two questions from my understanding. Plus 2.2% says one chart and the other one said plus 4.4%. What is the difference between the two? And about the years, a speaker told us quite recently that there could be a reduction of the outlets.
First question, the 2.2% loan volume is the overall level, the overall customer level. The 4.4% is corporates and markets. They refer to the corporate business. The overall loan volume has risen by 2.2%. And as to the branch network, we're, of course, observing this.
I would say that we will reduce our branches by 10% to 15% in the years to come. But this is something that is under constant observation. We've this throughout. Not much has changed during corona times. Of course, there was a downturn in the branch visits, but we're around 80% to 90% customer footfall.
So we'll so the shutdowns will be about 10% to 15% in the years to come. I
can now give you the answer. In Austria, not only Erste Bank but also the savings banks, so total Austria business in Moratoria, euros 5,000,000,000. And as an additional forbearance measures, where there were changes, about €2,800,000,000 It's important to note that many of the customers that ask us for forbearance didn't ask for total forbearance but some part of it and deferrals, and only a part of that refers to complete deferrals. Most of them pay at least part of the loans back. [SPEAKER UNIDENTIFIED Hello.
A question on your reserves. Banks may use the opportunity of last year's to get capital from the ECB. So what are your reserves right now? And why are you hoarding so much money? For what purpose?
Maybe I can start with a technical answer. You must have heard about the TLTRO liquidity program. Right now, we are at Version three of it. This has been provided as a specific answer to the corona crisis by the ECB. It was start it started in June.
And right now, as a group, all Austrian units and the Slovak bank, that's also in the Eurozone, 10,000,000,000. And the net increase was about twothree of that because other parts had already been included in previous programs. So it's a very clear intention, And it's been specified as such in the requirements of the ECB that all those volumes are dedicated to business investments. And only in that case, you have the right to use the very beneficial interest rates. And that's the answer to your question.
All the liquidity that has been brought into the market by the ECB has the objective of supporting the economy that it will not always work in the short term and will always take a little delay is something that your question has already anticipated. And you're right. That is due to the fact that the readiness to invest and the demand is dampened in the current environment. That is the answer. So it's not our fault.
I can tell you, we are not only ready to give it out, but we are trying to make sure that this money is available to our customers and economy. Something to add, if I might. Of course, that is liquidity and not capital. So what has been provided here is liquidity and not capital. Can you explain the difference to me?
Well, capital would mean if there was some sort of a stake that participation that the ECB would hold in our bank, but that's not the case. Liquidity just means cash that we can forward. We take it on as a loan, if you like, and put it out as a loan. And we provide it to our customers in the form of a loan. Thank you.
Well, maybe I can add something on the percentages because you asked for volumes. The volume in percent in Austria is 5%. So in terms of volume, 5% participation in the moratorium, and that is the same for Retail and for Corporate. So that is now the complete and exhaustive answer.
So no more questions in the line. Thank you very much to everyone who listened to us today. I give the final words to Mr. Spalt, given the fact that we don't meet this time at the campus.
Yes. Well, ladies and gentlemen, thank you very much for your interest and for participating in this press conference. Usually, in summer, in the half year press conference, we try to meet in person and to talk to everyone. I do hope that we will be able to do that very soon. Will hope that we will be able to welcome you in person soon.
But thank you very much
for
being part of this.