Erste Group Bank AG (EBS) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Yes, the pandemic has changed our lives and the way we work. I very much regret that today's AGM can only be conducted in a virtual manner, and we can only present ourselves via the Internet. I herewith open the 27th Annual General Meeting of Erste Bank -- Erste Group Bank AG. I take the chair. In accordance with Section 116 Paragraph 1 of the Stock Corporation Act, in order to protect shareholders and other participants, the management board decided to make use of the new legal provision permitting the conduct of virtual annual general meetings. Today's AGM is, therefore, taking place as a virtual AGM within the meaning of the Corporate COVID-19 Act and the corporate COVID-19 regulation. With due consideration given to the interests of the company and the participants, the AGM is being webcast in its entirety. I welcome the shareholders of our company who are following the AGM on the Internet and our guests. Holding the AGM as a virtual general meeting in accordance with the COVID-19 regulation leads to certain changes and modifications in the course of the AGM and in the exercise of shareholders' rights, which were described in the convocation and the information made available on the company's website and which will be dealt with in detail by Notary Brix. First of all, the reports, in particular, the presentation by the management Board and the proposed resolutions on all items on the agenda will be presented on block. Then the special proxies will be given the floor to read out motions for resolutions. The general debate will then be held, that is the members of the Board of Management will read out and answer the questions received after the questions on all items on the agenda have been answered. The respective motions are to be voted on in the order of the agenda. I note that, first, the convocation to today's AGM was published in due time in Wiener Zeitung on the 13th of October in compliance with the provisions of Section 106 of the Stock Corporation Act; and that second, it was -- the convocation was disseminated electronically by pressetext in accordance with Section 107 Paragraph 3 of the Stock Corporation Act on the 13th of October. On the same day, also in accordance with the new Stock Exchange regulations, the convocation was sent to the shareholders via the intermediary chain pursuant to Section 180 Paragraph 2 of the Austrian Stock Exchange Act. The documents to be disclosed pursuant to Sections 108 Paragraphs 3 and 4 of the Stock Corporation Act were made available on the company's website on October 19, in particular, information about the organizational and technical requirements for participation pursuant to Section 3, Paragraph 3 in conjunction with Section 2 Paragraph 4 of the COVID-19 regulation, a question form and a proxy and instruction form for the special proxies pursuant to Section 3, Paragraph 4 of the COVID-19 Act. Notary Brix is requested to notarize the resolutions of today's AGM, to supervise the voting and to take minutes pursuant to Section 120 of the Stock Corporation Act. I would now ask Notary Brix to explain the modalities for the exercise of shareholders' voting rights at today's virtual AGM and the conduct of the AGM, which have already been made available on the company's website. Notary, please.

Shareholders in the convocation to the AGM of 13 October 2020, it was announced that today's AGM will be held as a virtual AGM without physical presence of shareholders. In addition, on 19 October, information on the organizational and technical requirements for participation in the AGM pursuant to Section 3 Paragraph 3, in conjunction with Section 2 Paragraph 4, of COVID-19 regulation was made accessible. Today's AGM will take place in the presence of the Chairman of the Supervisory Board, Friedrich Rodler; Chairman of the Management Board, Bernhard Spalt; members of the management Board, Ara Abrahamyan, Ingo Bleier, Stefan Dörfler, Alexandra Habeler-Drabek and David O'Mahony; the 4 special proxies, Nikolaus Adensamer, Michael Knap, Christoph Nauer and Ewald Oberhammer; and the lawyer, Richard wolf as Legal Adviser as well as myself as Notary Public. Peter Bosek has apologized and can't be present because he is in quarantine. As representative of the auditors, Sparkassen-Prfungsverband, Gerhard Margetich, who is available to answer questions we may have by telephone and e-mail, he will be following the AGM via livestream. The representatives of the auditor, PwC Wirtschaftsprfung GmbH, Dorotea-E. Rebmann, is available to answer questions by telephone or e-mail. She is also following the AGM via the livestream. As representatives of the FMA, the state commissioners received an invitation to today's AGM and have the opportunity to follow it via the live screen. The state commissioners can communicate with us during the AGM, and if necessary, contact the management board or the Chairman of the AGM. Now how will shareholders' rights be exercised today? The exercise of voting rights, the right to propose resolutions and the right to object can only be exercised by granting power of attorney and giving instructions to one of the special proxies proposed by the company. The right to information may also be exercised at the virtual AGM by the shareholders themselves or by their proxies by way of electronic communication, in text form by e-mail directly to the management board exclusively via the e-mail address, fragen.erste@hauptversammlung.at. As regards the transmission and the conduct of today's AGM in detail, the AGM will be transmitted in its entirety visually and acoustically in real-time on the Internet pursuant to Section 3 Paragraph 4 COVID-19 regulation, in conjunction with Section 102 Paragraph 4 Stock Corporation Act. Erste Bank -- Erste Group Bank AG offers you 2 alternative ways of accessing the Internet transmission. In German, please select 1 of the Erste Group Bank AG homepage, transmission 1; or 2, if you experience any disruptions during transmission, please switch to the other provider. The AGM will be held in German and simultaneously interpreted into English, and we kindly ask you to visit the live stream of the English website. In addition, sign language interpreters will be available for the duration of the entire AGM. By broadcasting the AGM on the Internet, all shareholders who so desire have the opportunity to follow the course of the AGM in real-time, including the presentation by the management board and the answers to shareholders' questions. How can the right to information be exercised by shareholders and their proxies authorized to exercise the right to information and the right to speak can submit their questions in text form to the management board electronically within a certain time window after the opening of the AGM exclusively via the e-mail address, fragen.erste@hauptversammlung.at. At today's AGM, these questions will be read out by the Chairman of the Supervisory Board and answered by the management Board. Please use a simple e-mail to the e-mail address, fragen.erste@hauptversammlung.at. You are requested to send this e-mail from the e-mail address stated in the Power of Attorney in order to ensure quick verification of your identity. This e-mail must contain the first name and surname or company name of the shareholders, the date of birth or the company register number of the shareholder, and the securities account number in order to enable the Board of Directors to establish the identity of and compliance with the deposit certificate. Please end your e-mail with your name, that is the replica of the name signature according to Section 13 Paragraph 2 of the Stock Corporation Act. The shareholders, thus, have the opportunity to react to developments at the AGM, for example, by asking additional or follow-up questions. The Chairman will structure the conduct of the AGM, as he does for a meeting, both shareholder presence and will announce, in particular, a specific time by which questions can be asked. Now let me move on to the special proxies. The shareholders also have the opportunity to change their instructions, in particular, to submit motions for resolutions to vote or change their instructions regarding voting on one or several items of the agenda, but also to raise objections to one or several items of the agenda with a relevant special proxy, even during the AGM, up to a certain point in time. To this end, please use a simple e-mail to the e-mail address of your special proxy to whom you have also sent your power of attorney. The addresses are adensamer.erste@hauptversammlung.at, knap.erste@hauptversammlung.at, nauer.erste@hauptversammlung.at, oberhammer.erste@hauptversammlung.at. In this simple e-mail, the person of the shareholders, that is first name and surname of the shareholder, or the company name of the shareholder, the date of birth or the company name or register of the shareholders in order to enable the special proxy to determine the identity of and compliance with the requirements. Please end your e-mail with your name and indicate your securities account number. The e-mail must be sent from the e-mail address specified in the Power of Attorney. Please note that during the AGM, communication with your proxy is only possible by e-mail. Availability of the proxy by telephone cannot be guaranteed. The time up to which instructions regarding motions, votes and objections possible is determined by the Chairman in the course of the general meeting. This point in time, we'll probably be close to the end of the general debate. Please note that it may be necessary to interrupt the virtual AGM for a short period of time in order to process questions put to the management board as well as instructions given by shareholders to the special proxies. This ends my summary of the modalities of today's virtual AGM.

Thank you, Dr. Brix, for this explanation. As Chairman, I note that today's AGM will be carried out in the way that was listed in the convocation on the organization's technical prerequisites for participation, Section 3, Paragraph 3, in connection with Section 2, section of the COVID-19 regulation. The list of participants will be finished before the first vote. I will sign it, and I will then announce the attendance. The list of participants will be electronically made available to the special proxy holders. And now, we are going to start with the agenda. Item 1 on the agenda, presentation of the approved annual financial statements, the management's report and the consolidated corporate governance report of the management board, the nonfinancial report, the draft resolution on the appropriation of profit as well as the report of the Supervisory Board for the financial year 2019, and presentation of the consolidated financial statements and the group management report for the financial year 2019. The approved financial statement, the management report, the Corporate Governance report, the nonfinancial report and the proposal on the profit appropriation as well as the report the supervisory report on the year 2019 were made available pursuant to Section 108 Paragraph 3 and 4 of the Stock Corporation on the company's website. The approved financial statements, the management report and the consolidated financial statement were audited by the Sparkassen-Prfungsverband, a statutory auditor; and the additional auditor, PwC, Wirtschaftsprfung GmbH, and received the nonqualified audit opinion. The PwC Wirtschaftsprfung GmbH was also entrusted with auditing the Corporate Governance report 2019 pursuant to Rules 1 to 76 of the Austrian Corporate Governance Code with limited collateral. The audit has not given rise to any objections. The Deloitte Audit Wirtschaftsprfungs GmbH was mandated with a restricted audit of the nonfinancial report 2019. The Supervisory Board has reviewed and approved the annual financial statement, the management report, the corporate governance report, the non-financial report and the consolidated financial statements and the group management report. The annual financial statement was approved and adopted. We, therefore, need no further approval by today's AGM. Dear shareholders, now a short flashback of 2019 and 2020 from the position of the Supervisory Board. Our long-standing non-executive Director, Brian O'Neill, died on the 20th of December 2019, after a short and serious illness, which filled us with great sadness. O'Neill was not only an internationally renowned financial expert, which enriched us with his knowledge, he was also a loyal friend of the Erste Group, whom we miss very much. We will always keep fond memories of him. On the Supervisory Board, in 2019, there were a number of changes. Matthias Bulach, Henrietta Egerth-Stadlhuber, Michele Sutter-Rudisser joined us as excellent finance, digitalization and governance experts as new members of the Supervisory Board. The Supervisory Board was left in 2019 by Elisabeth Bleyleben-Koren, and she also did not stand for reelection. My special thanks to her for her excellent and long-standing support. At the end of this AGM, the mandates of Wilhelm Rasinger and Gunter Griss will come to an end. Wilhelm Rasinger has been instrumental since 2005. He worked for us and helped us for more than 15 years. Gunter Griss was a member of the Supervisory Board since 2014. I should like to thank both gentlemen for their valuable and committed work on the Supervisory Board. Our also -- our thanks also go to Andreas Treichl, our CEO. After 26 years, he left the company on the 31st of December '20 -- 2019. Under him, the Erste Bank developed into a large bank from local beginnings. And now, I would like to read the message by Mr. Rasinger that he has sent us. Ladies and gentlemen, dear shareholders. For over 60 years, I've been a customer of the Erste Spar-Casse, or Erste Bank, and I'm closely connected with this bank. I only think of [indiscernible]. I was there from the first hour as a nonexecutive director. I'm extremely grateful to Andreas Treichl that he has enabled me, through his initiative and the [indiscernible] private free float and the capital market to be confirmed 3 times in my function for 15 years altogether. The management team around Bernhard Spalt is well positioned in order to resolve all the problems inherent in these difficult times. I should also like to thank Friedrich Rödler, the Chairman of the Supervisory Board, who was -- sorry, circumspection, commitment and skill and profound knowledge has been an important pillar of the bank. I'm convinced that better times are ahead for the shareholders. Thank you for the shared past, and I wish you all the best for the future. And I would also like to wish Mr. Rasinger only the best for the future. Let me continue. As to the composition and independence of the Supervisory Board, the criteria for the independents, the working method, the number of committees and the remit, the meetings of the Supervisory Board, and the focus of the activities, as to this, please let me refer to the corporate governance report. For the activities of the Audit Committee, let me refer to the annual financial statement 2019. Let me just mention that the Supervisory Board had 38 meetings and was informed quite comprehensively, enabling the Supervisory Board to realize all the tasks entrusted -- the Supervisory Board is entrusted with. And the Supervisory Board could also -- convenes itself from the orderly conduct of the management. In supplement to the report on supervisory, let me inform you that the Management Board has presented a new proposal for the appropriation of profits. After a review -- and the Supervisory Board actually agreed to the new profit appropriation. Let me just also mention a few words on the COVID-19 pandemic and how we continued our work as Supervisory Board. Although we had difficulties in meeting personally, we intensified our cooperation on the Supervisory Board since March 2020. The pandemic challenged us in keeping up the flow of communication. All planned and additional meetings could be held either virtually or in hybrid form and all necessary resolutions could be taken. Was also ensured that through informal meetings between the CEO and the Executive Committee of the Supervisory Board and current reports, the impact of the pandemic on the Erste Group, on the customers and the employees could be established -- could be discussed in detail. I should also like to thank the staff members of the Erste Group who managed the situation as best as they could. And I should also like to thank the team of our health center managed by Eva Holtl. The Austrian Corporate Governance Code prescribes that I will have to inform you now about the principles of our remuneration system. The remuneration of the members of the Management Board includes fixed performance, linked and other components, the latter consisting of contributions to the pension fund, the provident fund and various contributions in kind. In 2019, the performance-related remuneration and share equivalents, that is the so-called phantom shares, were paid out for the past years or allocated. Since -- as of 2010, the performance-linked part of the remuneration is spread over 5 years, in line with the regulatory provisions, and will only be paid out under certain conditions. With the view to the performance-related part for material risk-takers, that is members of the Management Board, heads of divisions, people assuming responsibilities relating to risks, a maximum of 60% are automatically distributed, half of it in cash and the other half in phantom shares. Phantom shares are paid out on the basis of the weighted average daily share price of Erste Bank in the previous year and are then paid out 1 year later, provided the set targets are met. The remaining component of performance-linked remuneration is spread over 5 years according to the same principle, that is to say, in the second year, 4% are paid out in cash and 4% in phantom shares. This is then repeated in the subsequent years. For other employees is the subsequent bonus system which depends on the company performance and the personal performance: a, bonuses for employees in the securities trading unit, they are either paid out once or the payout is spread over 2 years, depending on the sustained performance; b, for employees, in the branches, there is an annually and quarterly bonus depending on the individual performance. At least 40% of the targets are measured according to qualitative criteria and the maximum of 60% according to quantitative criteria. For all other employees, there are onetime performance premiums. No employee share ownership program is offered at the moment. The fixed remuneration of the Management Board amounted to EUR 5,325,000 in 2019. Other remuneration was EUR 1,637.4 million. Performance-related remuneration amounting to EUR 911,000 were paid out. For 2018, performance-related remuneration amounting to EUR 1,156.6 million was paid out. The noncash performance-related remuneration in 2019 amounted to the years before 2018, 33,344, and for 2018, 33,075 share equivalents, that is to say phantom shares. With a view to the EBA statement on dividends distribution, share buybacks and variable remuneration. At the 31st of March 2020, Supervisory Board decided that the variable remuneration, that is to say, the bonuses in 2019, will be paid out noncash in the form of phantom shares and a considerable part of the performance-related compensation will be deferred. Thus, the variable compensation for the Executive Directors for 2019 is linked to the development of the share price of Erste Group. Our comparable regulations for variable compensation also applied for the Management Boards of the subsidiaries. The inadequate adjustment of the variable part of the -- is now linked to the risks which result from the COVID-19 pandemic. The Supervisory Board remuneration paid out for the year 2018 and 2019 amounted to EUR 840,000. Moreover, the attendance fees of the AGM 2019 was approved with EUR 1,000 per meeting of the Supervisory Board and the committees. Further details on the remuneration system are found in the corporate governance report which was provided on our website. And you'll also find the details for the remuneration policy to be voted on. In connection with today's proposed remuneration policy, let me explain as far as it's a declared goal of Erste Bank to promote a sustainable and positive development of the company. Thus, the long-term interest of the shareholders but also of the employees should be secured. Thus, a considerable part of the performance-related compensation will be deferred and then paid out over several years. Thus, the long-term interest in the remuneration policy are being considered adequately. The principles do not encourage taking risks which go beyond the risks approved by the Supervisory Board. The management quality of the Executive Directors will also be evaluated, including the ESG criteria. The individual achievement of objectives will be assessed by the Supervisory Board. And in addition to financial performance targets, the nonfinancial criteria such as diversity environment and social responsibility, are being considered. Moreover, starting with 2020, sustainability was set as one of the performance targets by the CEO in order to underline the long-term, group-wide promotion and strengthening of sustainability as an important constituent of our corporate strategy. I'm now asking Mr. Dorfler to make his report on owned shares.

In 7,677,249 shares were paid out with the -- and 7,187,000 (sic) [ 7,187,249 ] shares were sold. The market making was the result and -- 21 million 600 (sic) [ 21,672,863 ], and the share capital was 0.4%. As to owned shares for 2019, there's an annual profit of EUR 1,175,203.

Thank you, Mr. Dörfler, for his report. And this takes us to the report by the CEO, Bernhard Spalt. I'm asking Mr. Spalt's presentation on the financial year 2019.

Thank you very much, Mr. Chairman. Good morning, ladies and gentlemen. A cordial welcome to our AGM. It's unusual to report on 2019 on the 10th of November 2020. I'd like to outline the motivation that has induced us to do so. When the health crisis broke out in early March this year, we asked ourselves what to do with our AGM, how to deal with a health hazard for people, for employees, for shareholders in a situation where we didn't know how to cope with this problem, a situation in which we didn't know how profound the crisis was, how long it would last, when it would end. In this context, we said we are going to postpone the AGM. At that time, we hoped that in the fourth quarter of 2020, we would be able to have a physical AGM because we wanted a physical AGM. We are a new team, and we wanted to have a physical discourse. At that time, we thought that by the fourth quarter, the health crisis would be under control. And then we said that in the fourth quarter, we would know more about the intensity of the crisis and its impact on our profitability, on our capitalization and our liquidity. So we thought that we would know more by that time. Now we are in the fourth quarter, and we are in the midst of a second setback, a second lockdown. Nevertheless, we know a great deal more about the disease. We know more about the economic forecasts. And today, we are able to make a proposal for profit distribution, which is very clear. But I will come to that later. What are we talking about when we are talking about the business year 2019, we're talking about a business year, which as far as the result goes, is a result that was achieved under the leadership of Andreas Treichl, and it's an excellent result. Andreas Treichl handed over a bank, a business, which is sound, strategically well positioned, and we are most grateful for that. We greatly appreciate that. We owe that to him. Looking back to 2019, it seems a long time ago, but nevertheless, it's important and it is the subject to be dealt with by today's AGM. The image you can see here is from Slovakia from the Tatra Mountains, by the way. Now how did we start into -- start 2019? This was a perfect illustration of the fact that our strategy, which we have been pursuing for 23 years, is absolutely right. We regard Europe and Eastern Europe, in particular, as our growth engine. You can see that all our markets in Central and Eastern Europe were growing significantly faster than Western Europe. Austria had a growth rate of 1.3%, but Hungary -- in terms of GDP, but Hungary was going 3x as fast and 3x as strongly. This is not just a snapshot. It's a confirmation of the trend, which we've been seeing for quite some time. All our economies were growing fast. They were growing steadily. They were steadier than Western European economies. Domestic demand was an essential growth factor. And although slightly weaker than in 2018, nevertheless, it confirmed that we were doing business in the right region for us. When we look at other conditions, again, we find a confirmation of the fact that we are doing business in the right region. The labor market is characterized by almost full employment. Of course, keeping the cost/income ratio under control is a challenge in that labor market context, but it's a sign of strength. It's a labor market that needs more labor than is currently available. And that was true of all our markets. At the same time, as you can see on the right-hand side of this chart, all our economies compared with the financial crisis 10 years ago, entered the new situation with very steady figures and the same holds for 2019 when no one knew about what would be coming. Our state debt was improving. Trade deficits were improving. All these countries were characterized by very strong and sturdy financial management. When we look at our own business, you can see how well-balanced our business model is. This is a wealth of figures, I know, but essentially, there is only one important element. It's the loan-to-deposit ratio. Our business, which is a simple business throughout the region, is characterized by the fact that our lending business, loans originated to retail customers, SMEs and corporate customers is covered by local saving deposits. And this makes us resilient in a period of crisis. Although the interest rate situation is difficult, zero interest or even negative interests, so we still have the unbroken inflow of savings deposits that refinanced our loans. We saw credit growth last year. There was no credit crunch, nothing whatsoever, and we had an increase in our savings deposits. When we look at our operating result, this is very important because we always have to ask ourselves, do we have a business model that works? Are we engaging in business that makes sense in the long term? What you can see here is that we have a very strong business model. Operating income increased by almost 5%. Operating expenses are lower than operating income. So for the first time, we generated a significantly improved cost/income ratio. I'll come back to that later. For the first time in years, in our net fee and commission income, we exceeded the EUR 2 billion mark. This is very important because on the Capital Markets Day in November 2019, we said that net fee and commission income is a major part of our strategy. Money that is being -- that is coming in is to be invested profitably. And in the field of asset management, we want to grow significantly. And we also want to grow in terms of insurance business, be it in providing for old age or health insurance or insurance against other risks, we want to grow there as well. Although the market penetration is still low. This was something that worked very well already in 2019, and it will become a stable anchor of our business strategy, and it will remain so in the years to come. When we look at the figures across our geographic segments, we can see that operating results have been going up. The cost/income ratio for the first time, dropped to 59%, for the first time below 60%. On our Capital Markets Day in 2019, we said that we're aiming at a cost/income ratio of 55% by 2024. Our income flows are being attacked and the net interest income is depressed because of the general interest landscape. We stick to this target, although it hasn't become easier, regardless of COVID. And net fee and commission income is something we regard as an essential element of our business model. When we look at the cost of risk. In 2019, similarly to 2018, the impression was that there is no more risk. In 2018, we had negative risk costs. In 2019, we had negligible risk costs on the basis of a situation of a positive economic development in all countries. Over 5 years, we saw net releases of provisions. We had positive developments, micro and macroeconomic developments. And you could get the impression that risk is no longer in existence. But when we get to 2020, risk -- I can tell you that risk hasn't disappeared. It has hidden well for quite some time, and this is part of our business model. It used to be part of our business model, and it will be so in the future. Last year, we had an extremely positive result as regards risk costs. This is also reflected in our nonperforming loan ratios, which declined to 2.5%. I've been with this bank for almost 30 years, and I can't remember a year where we reported 2.5% nonperforming loan ratio. And our coverage ratio last year were 74% for distressed loans, and that has gone up even further. It's no surprise. It's no miracle. It's due to the fact that we are a reflection of our economy. When our economy is doing well, when the order books are full, when employment is high, when revenues and profits are good, there are a few loans in default. But when the situation turns around, it will be different. So what needs to be remembered about 2019 is that we have an excellent portfolio. We have a well-balanced risk policy. We never saw a credit crunch. We were never afraid of originating loans. We kept growing but we were growing in a way that was never irresponsible. Now our net result last year, despite the fact that we had a good operating result and low-risk costs, it declined by 18%. Why was that? So there were 2 one-off effects. In Romania, the Supreme Court pronounced a judgment on Building Society saying that customers must be paid out. We are fighting against this judgment. It cost us EUR 150 million. And we had always been operating within the framework of laws on Building Society. And the second thing is, in December of 2019, the bank levy was doubled. This had 2 effects. One effect was that we had to take the higher bank levy into account in our result. And the second thing was that we had to book goodwill impairment in the amount of a double-digit million amount. So we booked 1 point -- almost EUR 1.5 billion in terms of goodwill -- sorry, in terms of the higher bank levy. The bank levy, which was doubled in 2019 was completely abolished at the beginning of 2020. So in 2019, we generated a net result of EUR 1.5 billion and -- net profit. And this year, in the context of this net profit and in the context of the regulatory environment, we are proposing distribution of a dividend of EUR 0.75 on 2 conditions. The conditions are as follows. The recommendation of the regulator not to pay out a dividend on condition that this recommendation is lifted and on condition that there are no other restrictions on profit distribution. The deadline for that is 8th of February 2021. If these 2 conditions are lifted by that time, we're going to pay out the dividend of EUR 0.75 per share. That sends out the message that in terms of capitalization and profitability and liquidity, we are in a position to pay out a dividend. It's a justified expectation on the part of shareholders to receive a dividend. This is something that will have to be discussed and voted on today, and we are convinced that we are doing the right thing. We -- I'm not going to violate any negative recommendation by the regulator. We are reacting within the regulatory environment. But in terms of fundamentals, we are able to pay out such a dividend. And if we are allowed to do so and if the shareholders agree, we will pay out a dividend. Now let me move on to capital and capital accretion. Capital accretion is -- was continuing throughout 2019. Our CET1 ratio is 14.7% (sic) [ 13.7% ] currently. We do have higher risk-weighted assets because we originated more loans, and loans constitute a higher risk. Nevertheless, we want to continue along these lines. We are profitable. We are strong in terms of capital and strong in terms of liquidity, and our business model works well. Now I'd like to say a few words about 2020. We can look back on 3 quarters of the year. The year didn't go as planned. The year didn't go as expected. I think that, that holds for all of us. The first few months of 2020, in fact, the first 2 months were quite relaxed. We saw a continuation of things in 2019. We had robust growth rates, full employment, a functioning business model, and then corona hit us. And that has changed the world. It's not been a European phenomenon. It's a global phenomenon. It hit us all in different ways. When we look at the consequences, in '20 -- what happened in 2020. We had an excellent start to the business year. Then in March, all of a sudden, a health crisis broke out in our countries. We had never seen anything like that before, no vaccination, no therapy available. And the essential strategic response of all our governments was to say, "Well, if this health hazard cannot be coped with through vaccination, we have to close down the economy." And therefore, governments in all our countries imposed a strict lockdown. The economy was brought to a standstill, except for critical infrastructure. Everything was brought down to 0, except for critical infrastructure. And for the first time, it became clear that banks are part of critical infrastructure, so our branches remained open. Our services continue to be provided, and we were quick in realizing that we had to protect health of our customers and our employees. This was our first priority. So very, very quickly. We changed over to home office systems. At the campus in Vienna, out of 5,000 people, only 150 remained here. All others were working from home. It worked very well in technological terms. And as Chairman Rödler said, we have a highly competent health center here, which helped us cope with these difficulties. We were able to protect our customers, our employees. We had everything under control. So critical infrastructure remained operational, but everything else was shut down. So we continued providing our services. And then all our countries, to varying degrees, developed similar programs: debt moratoria for borrowers who were not able to pay for quite some time; government-guaranteed loans, where possible; and we also reacted quickly to a situation which, otherwise, would have created a gap in liquidity. Whatever you think about these measures, I would say that the first lockdown was extremely effective. Of course, it was costly, very costly, but it's something that was essential in reacting to this critical and unknown phenomenon. Then the summer came, everything was more relaxed, infection rates went down significantly as a result of the lockdown, people were able to move outdoors, everything looked as if the crisis was over. But it isn't over. I said earlier, it takes a lot of patience to overcome this crisis, but it will be overcome. And I think it's absolutely essential not to shame and blame one another, not to ask who did things wrong. We have to ask ourselves what can we contribute to the overcoming of the crisis. So solidarity is essential. We need to outline a path for us to move on in the months to come. And we shouldn't close our eyes to the fact that the economy has gone down hugely. Does it help to inject capital into the economy? I think what we need is equity in order to come out stronger of this crisis. And we support the creation of a framework that enables SMEs to have access to capital. We're not going to depart from this position because we think it's essential. Now let's take a quick look at the first 9 months of 2020. Always, in the context of the crisis of the century, and considering that we are going through the crisis of the century, our operating result is extremely sound. Again, it shows that our business model is the right one. We see a slight decline in operating income, we were able to reduce our operating expenses. And again, there is no credit crunch. And this holds not just for us, but also for other banks. Banks want to provide finance. The question really is, how confident can we be that credits are taken out? Are businesses and people willing to finance investments? We are there to help. When you look at risk provisions, of course, they dominate the success of our business. There are 2 things to be said about that. This year, again, we find ourselves in a situation in which we report a record low in our NPL ratio. We still thrive on an economy that was booming. Liquidity gaps were filled. But in the second quarter of this year, we booked high-risk provisions because we know that next year, we are going to see a higher number of insolvencies and higher unemployment rates. This is what we anticipated. We didn't want to wait for it to happen. And we anticipate it this year, and this reflects the depth of the crisis. We have to be aware of the fact, the crisis will not just go away. It will cause real damage. It will hit, not only our profitability, it will hit us also personally and economically. We have to find a common way out of the crisis in order to return to a growth path. We still have an NPL ratio of 2.4%. It won't remain like that. We're going to see a higher NPL ratio as we go along. When you look at the net result of the first 9 months of 2019 and the first 9 months of 2020, there are 3 essential aspects. I mentioned the risk costs which have been built up in order to anticipate what's going to happen next year. We also had a significantly worse trading and fair value result this year. This is not surprising. We had massive volatility in the first quarter and difficulties on the stock exchanges as the crisis broke out. But we had significantly better other results because what happened in Romania with regard to the Building Society last year is not happening again. And the goodwill impairment in Slovakia, which we had to book last year, we won't be seeing again this year. So we had a sturdy operating result, which again, confirms our business model. Risk costs were high, and the trading result was worse. Therefore, our net income dropped by almost 48%, but again, it shows that we are doing the right thing. Finally, about this year's result. We are now at a CET1 ratio of 14.1%. This justifies us in planning to pay out a dividend. It also allows us to look at potential acquisitions because we think in our region, in Austria and the Balkans, Hungary, Czech Republic, Slovakia, Romania, we will be seeing potential targets. Banks will be up for sale, and if they fit to our business model, if they are in line with our strategy and if they're capital-accretive, we will take a closer look at them. So we will be acting out of the position of strength. Now I'd like to show you a brief video. I suppose you've seen this video before. [Presentation]

You may wonder why we are showing a commercial at the AGM. There's an answer to that. We bow to those entrepreneurs in a region who we profoundly respect for their courage. They're working around the clock, assuming their responsibility, being innovative, creating jobs. They are the backbone of our economy. I deeply respect these people for doing what is good for all of us. This is what we want to support because we want to preserve this attitude, and we all want to play our role in this context. I think it's important for us to remember who we are and what our role is in this critical phase of an economic downturn. I'm showing you 4 figures on this chart. And they express what is a major concern of ours. We have seen loan growth in the amount of 2.6%. What does this mean? Even in the crisis of the century, even when everything is being shut down, there is no credit tranche. We still want to originate loans. We do originate loans. We don't withdraw. Second point. At the same time, although the interest rate environment is at a record low, we have seen a 6.3% in our deposits. So customers trust us. And trust and confidence is an essential pillar of our business model. We've supported over 1 million customers in our region since the beginning of the lockdown. And in the context of moratoria and debt relief, we have implemented measures in the amount of EUR 18.4 billion in the COVID-19 context. So we try to live up to our responsibility, and we try to do the right thing. On this chart, I'd like to show you how our economies are doing and I'd also like to show you the loan volumes. Let me single out one example. All other countries follow the same model. Look at Austria, we expect a GDP to shrink by 6.2%. But next year, we will be seeing a recovery, 4.3% is the forecast. Now we'll see how much it's going to be after the second lockdown. But this year already, we've seen growth in our loan book. In Erste Bank Oesterreich and in the savings banks. And you can see a similar thing in all other countries. A steep decline of GDP in all countries. But next year, we're going to see growth in each of our countries. This is a health crisis that has been transformed into a real economic crisis, but the crisis will be over at some point in time. Yesterday, we heard that a vaccine is about to be available. I don't know yet what to think about that. But the crisis will be over at some point in time and then a recovery will set in because the fundamentals of our strategy haven't changed at all. We ourselves, and you can see that on our website, we've developed our own index where we call it BCE Recovery Index, of which is published weekly and on the basis of input factors, which are not measured by other indices. We try to measure how we are doing. We are using input factors like electricity consumption, air pollution, mobility in the food sector, mobility at the workplace. And we try to establish for our inter region what's happening on a grass root basis. And we can see that after a steep decline, we are seeing a kind of upswing. It's not linear. There is no linear recovery, but the curve is moving upwards. And our business model is going to benefit from that. If I may, let me attempt a brief outlook. So this year, we saw a steep drop in GDP in all our markets. Next year, we expect to see a non-linear recovery, but it will still be a recovery. Now going through a second lockdown. The government is taking certain measures. We will learn how to live with this situation. We stick to our outlook as regards risk costs. As Alexandra Habeler-Drabek said very early this year, we will be between 65 and 80 basis points, now we are at 70, but we're not going to change our outlook. And we think that next year, risk cost will be lower than this year. This is only logical because this year, we've already anticipated risk costs for 2021, and we have digested them. And next year is going to be fragile, but a year of recovery. This year, the net result will be significantly below that of 2019 because of the high-risk costs. And this year, we are going to propose a profit distribution, which we think is a strong statement on the part of the Management Board and the Supervisory Board that we want to live up to the expectations of our shareholders. Ladies and gentlemen, let me conclude my report. In the course of last year's Jubilee year, I'm sure you heard a lot about the development and the history of Erste Group. Now if I venture a look to the future, I'm doing so not without referring to our basis and the purpose of our company. Erste Group was established with the objective of generating and disseminating prosperity. This still holds for our group. We take this mandate seriously. I'm convinced that prosperity must rest on several pillars. And one of those pillars is trust and confidence. What you can see here are examples of 8 of our 16 million customers. One of them comes from Felbek, the western most province of Austria. During the past 200 years, we have addressed the most varied challenges and mastered them, and we're convinced that, together, with our customers, we will always master the COVID-19 challenge, and we will emerge stronger from this crisis. Thank you for your attention.

[Interpreted] Thank you, Mr. Spalt, for your report. On behalf of the Supervisory Board, I should also like to thank all members of the Management Board, also those who have left us in the meantime, and all employees of our company for a great commitment and the success for 2019, also over the past months, and we rather aggravating conditions of the pandemic. And this takes me to the second item on the agenda, Resolution on the Appropriation of 2019 Profit. The Management Board and the Supervisory Board propose the AGM may pass the following resolution. The profit available for distribution recognized in the company's financial accounts at the 31st of December 2019, amounting to EUR 644,700,000 will be appropriated as follows: For each share entitled to a dividend, a dividend of EUR 0.75 will be disbursed on the dividend payment day, adding up to a total of no more than EUR 322,350,000 provided that on the 8thh of February 2021. First, no mandatory legal ban on dividends is in effect. And second, in the company's own reconning, no recommendation of the European Central Bank applicable to the company opposes the payment of a dividend. To the extent that the profit available for distribution is not to be dispersed on the dividend payment day, in accordance with above calculation, it shall be carried forward to new account. The company is not entitled to any dividend payments from own shares. The dividend payment day is the 15th of February 2021. And now I give the floor to Stefan Dörfler to explain this Appropriation of Profits.

Let me mention the following justification. The European Central Bank published its recommendation, ECP 2019 on dividend distributions during the COVID-19 pandemic and repealing recommendation ECP 2021 on the 27th of March 2020. The purpose of the recommendation is to conserve capital so that credit institutions can continue to fulfill in funding households, small and medium businesses and corporations amid the coronavirus disease 2019. Holding the opinion that the level of economic uncertainty remains elevated, the European Central Bank decided to extend this recommendation on the 1st of January 2021, and its new distributions need to be postponed or canceled in order to preserve the capital position of credit institutions. It is important to keep the capital position of these companies, as this measure is temporary in nature. And warranted only by these exceptional circumstances, the European Central Bank intends to decide in quarter 4 of 2020 on the approach that we furthered after the 1st of January 2021. The recommendation issued by the European Central Bank is addressed to credit institutions that is to significant supervised entities and significant supervised groups as defined in points 16 and 22 of article 2 of regulation number 468-2014. And to the National Competent Authorities with regard to less significant supervised entities and less significant supervised groups as defined in points 7 and 23 of article 2 of Regulation EU #468-2014, that is ECB 2014-17, but not to shareholders who do not fall into any of the aforementioned categories. As the group's dividend policy is dictated by the bank's profitability, growth expectations and capital requirements, except for 2011 and 2014, dividend payments have been made every year since 1997. The Management Board would have proposed an unfortified dispersion of dividends this year too, had there been no COVID-19 pandemic. However, as the recommendation of the European Central Bank's [indiscernible] Office addressed to the company, the Management Board has resolved to refer to this recommendation. The management board, thus proposes not to pay out the dividend until after the 1st of January 2021, as there is currently no recommendation for the period after the 1st of January 2021 that opposes disbursements. However, in its recommendation, the European Central Bank announced that it will decide on the fourth quarter of '20 quarter. I quote, "On the approach to be followed after 1st of January 2021, in consideration of the economic environment -- of the financial system and the level of certainty around capital planning in view of how the COVID-19 pandemic is currently playing out, as explained by our CEO, and the ongoing economic uncertainty, the Management Board expects the European Central Bank to either extend its recommendation of the 27th of July or to issue a new recommendation possibly based on differentiated criteria." It is impossible to say, from today's perspective, what such a new recommendation will look like. It is particularly unclear which criteria this recommendation will include, how compliance with the criteria will be determined and who will assess this, which company data will have to be used and how long the review of the criteria will take and what procedure will be applicable in the event of differences in the opinion of the management board teams is imperative and the company's interest to comply with any future recommendations issued by the ECP concerning dividend disbursements. A dividend will only be paid after the 1st of January 2021, if no such a recommendation provides otherwise, as there is no knowing at this present point in time, whether a new recommendation will follow or what such a recommendation would likely contain, the company will need to closely consider all the facts with all due care and determine whether the conditions set forth in Section 2 of the resolution on the Appropriation of Profit presented to it by the AGM have been met for the disbursement of a dividend. Unless the company is able to determine, with reasonable assurance on the 8th of February 2021, at the start of the day, that the payment of a dividend is compatible with the recommendation of the ECP, no dividend will be paid out. This will also apply if the material criteria for a disbursement have been met, but not all formal criteria have been fulfilled yet. The company reserves the right to call an Extraordinary General Meeting if necessary. One short time supplement. Unlike previous years, the disbursement of dividends will be subject to withholding tax in accordance with the tax regulations. Thank you.

[Interpreted] Thank you, Mr. Dörfler. Now we come to item 3 on the agenda. Resolution on granting discharge to the members of the management board with regard to the financial year 2019. The management Board and the Supervisory Board propose the following: the management board members of the Erste Group Bank are granted discharge for the financial year 2019. And now item 4, resolution of granting discharge to the members of the Supervisory Board with regard to the financial year 2019. Reported resolution should be passed. The Supervisory Board members of the Erste Group Bank are granted discharge for the financial year 2019. And now to item 5 on the agenda, the resolution on appointment of an additional auditor to audit the annual financial statements and the management report as well as the consolidated financial statements and the group management report for the financial year 2021. The following resolutions should be taken. In addition to Sparkassen-Prüfungsverband in its capacity as statutory auditor. PwC Wirtschaftsprüfung GmbH will be appointed auditor of the company's annual financial statement, the management report as well as the consolidated financial statements and group management report for the financial year 2021 in accordance with Section 1 of the audit rules for savings banks, annex to Section 24 Savings Bank act. And now for the justification. In 2018, PwC was appointed additional auditor on the annual financial statements and management's report as well as the consolidated financial statements and the group management's report for the financial year 2019 by the AGM of Erste Group AG. Among other activities, the Audit Committee of the Erste Group Bank AG, Supervisory Board regularly reviewed and monitored the independence of PwC, particularly in connection with additional services provided to Erste Group, the non-Audit services, pursuant to Section 63a, Para 4 of the bank -- Banking Act in the financial year 2019. After consideration of the threats to the independence of PwC and submission of the statement of independence, in accordance with Section 270 Commercial Code by PWC Wirtschaftsprüfung GmbH, Audit Committee's recommendation to the Supervisory Board was to renew the audit mandate given to PwC as additional auditor of the Annual Financial Statements and Management's report as well as the consolidated financial statements and group management report for the financial year 2021. The fees in invoiced by the auditors of the Erste Group Bank AG and the subsidiaries for the year 2019 can be read up in the Erste Group annual report for financial year 2019. PwC's fees indicated in this report include the services of PwC and of companies belonging to the PwC network. And this takes me to item 6, elections to the Supervisory Board. The number -- the terms of Maximilian Hardegg, Gunter Griss and Wilhelm Rasinger will be expiring at the end of the AGM on the 10th of November. Brian O'Neill passed away on the 20th of December 2019. Therefore, 4 members would need to be appointed at today's AGM to ensure the number of supervisory board members totals 13 again, like after the election at the AGM in 2019. However, the Supervisory Board proposes to reduce the number of members appointed by the AGM to 12, so that 3 members will have to be appointed today. The proposal endorsing a decrease in the number of members must be voted on prior to the election of members. With a number supervisory board members appointed by the AGM, holding at least 12, at least 4 positions must be filled by women and men each in order to satisfy the minimum proportionality requirement set for the Section 867 Stock Corporation Act. If the Supervisory Board is staffed according to the election proposal below, that is capital representatives only, it will be composed of 4 women and 8 men, thus complying with the minimum proportionality requirements set forth by Section 867 of the Stock Corporation Act. No objection pursuant to Section 86-9 Stock Corporation Act was raised neither by the majority of capital representatives, nor by the majority of employee representatives. So that the full supervisory Board's compliance with a minimum proportionality requirement generally suffices. At present, employee representatives in the Supervisory Board number is 3 women and 3 men. It is hereby proposed to reelect supervisor board member Maximilian Hardegg. He has been a member of the Erste Group Bank Supervisory Board since 2015. He has accepted to stand for reelection. Gunter Griss will no longer be available, so that compliance with the age limit specified in subsection 12-1 of the Articles of Association is ensured. It is further proposed to elect Friedrich Santner and András Simor. Unfortunately, Maximilian Hardegg, Friedrich Santner and András Simor cannot personally introduce themselves at this AGM. I will therefore briefly introduce these 3 gentlemen. And afterwards, after the CVs of the 3 candidates, we will see a short introduction video, which was also published on the website -- on our website. I will start with Maximilian Hardegg. He studied agricultural sciences at the Weihenstephan Campus Technische Universität München in Freising, Germany. After working for the Vienna AWT Trade and Finance Corporation, Hardegg devoted himself to managing his family's estate. Maximilian Hardegg has been a member of the Supervisory Board of the Die Erste österreichische Spar-Casse Privatstiftung and a member of Supervisory Board of Èeská spoøitelna and member of Supervisory Board of Erste Mitarbeiterbeteiligung Privatstiftung. For further information, please refer to his CV available on our website. I will show you a video now to introduce Maximilian Hardegg. [Presentation]

I'm in charge of our family estate in the '20. So I joined our [indiscernible] and what fascinated me the most was the founding idea of the bank, which was founded 200 years ago by a priest and by citizens with an aim to help people who have no banking connection and to provide such a connection for these people in order to increase the prosperity. I gladly took up this idea because I have a lot of economic common sense and can contribute to this good path that the Erste Bank has had over 200 years. Thank you.

And this takes me to Friedrich Santner studied. He studied psychology and educational science. He has been Managing Director of Anton Paar GmbH, an Austrian company domiciled in Graz that develops, produces and distributes analytical instruments for laboratories and process analytical technology and provides custom-tailored automation and robotic solutions. Since 2017, Mr. Santner has been Chair of the Supervisory Board of Steiermärkische Bank und Sparkassen Aktiengesellschaft. For further information, please refer to the extensive CV available on our website since October 19, 2020. I'll show video introducing Mr. Santner. [Presentation]

A very good day, ladies and gentlemen. I'm Friedrich Santner. Let me briefly introduce myself. By profession, I'm a Managing Director of a Graz high-tech company, Anton Paark GmbH. We're active worldwide. As we have EUR 409 million in turnover each with technology. Each beer has been measured by us, soft drinks and chocolate, et cetera. All this goes through all the hands. In addition to this main task, I'm the Chairman of the Supervisory Board of Steiermärkische AG and also Chairman of [indiscernible]. And this is how I got to Erste Group. I'm looking forward to this job, my new job, and I will -- I promise to make a positive contribution to my group -- to your group.

Thank you. The third candidate is András Simor. He has a degree in international finances from the Budapest Business School. In the course of his career in the financial sector, he served as CEO of Creditanstalt Securities in Budapest, CEO of Creditanstalt Investment Bank in Vienna, CEO of Deloitte Hungary and he also served as governor of the Hungarian National Bank. In July 2013, he moved to the European Bank for reconstruction and development in London where he served as Vice President and CFO from 2014 to 2016 and as Senior Vice President, CFO and COO from 2016 to '19. From 1998 onwards to '22, Andras Simor also chaired the Supervisory Board of the Budapest Stock Exchange and sat on the Board of Directors of Deloitte Central Europe from 2002 to 2006. I also referred to the extensive CV available on our website. And now Andras Simor will introduce himself in his video. [Presentation]

Construction and development where I worked for 6 years in various positions, most recently as CFO and COO. I spent most of my adult life in the banking industry. I was privileged to serve as the Governor of the Central Bank of Hungary in a most challenging period between 2007 and 2013. During the '90s, I set up and led the investment banking subsidiary of Creditanstalt and later, Bank Austria in Hungary. And subsequently, I moved to Vienna to head up the investment banking operations across the region for the group. I would be most interested to work for the Erste Group in an oversight capacity, utilizing my experience both of the various segments of the financial industry and my knowledge of the Central East European region.

Thank you. The Nomination committee has established compliance with the reliability criteria and has also followed the EBA guidelines and the internal policy of Erste Group Bank AG for the selection and the aptitude assessment of Supervisory Board members, the suitability policy of Erste Group Bank AG. The Nomination Committee is obliged to carry out suitability assessments of the proposed candidates. In performing the suitability assessments, the Nomination Committee has established compliance with the reliability criteria, the presence of sufficient theoretical and practical experience, sufficient time availability as well as the demonstration of sufficient independence, the lack of any conflict of interest and conformity with the diversity criteria. Furthermore, all review was carried out to determine whether all the candidates contribute to the collective suitability of the full Supervisory Board. The Nomination committee has come to a positive decision for all candidates and has recommended that the Supervisory Board propose the election or reelection of the proposed candidates at the AGM. Supervisory Board has endorsed this assessment. Candidates who have already served the 5-year term of office as Supervisory Board members are to be appointed for the maximum term provided by law. For candidates who want to be appointed to the Supervisory Board of Erste Group Bank for the first time, a 3-year term of office is provided. The candidates proposed by the Supervisory Board were selected on the basis of the criteria set forth in Stock Corporation Act and the Federal Banking Act, including the diversity provision under Section 86-7 of the Stock Corporation Act. The candidates proposed by the Supervisory Board have submitted to the declaration required under Section 87-2 of Stock Corporation Act and this declaration is available on the company's website, referenced in the company [indiscernible]. I'm now reading out the proposed resolution. The [indiscernible] should be taken. The number of members of the Supervisory Board appointed by the AGM will be decreased from 13 to 12 members. Second, Maximilian Hardegg, born on the 26th of February, 1966, is appointed to the Supervisory Board of Erste Bank AG, effective from the end of the AGM until the end of the AGM due to resolve on the granting of discharge for financial year 2024. Third, Mr. Friedrich Santner, born on February 7, 1960; and Mr. Andras Simor, born on the 17th of May 1954, are appointing to the Supervisory Board of Erste Group Bank effective from the end of the AGM until the end of the AGM due to resolve on the granting of discharge for the financial year '22. And this takes me to item 7 on the agenda. Resolution on the remuneration policy setting out the principles for emoluments payable to management board members and supervisory board members. According to Section 78, in conjunction with Section 98a Stock Corporation Act, the Supervisory Board shall draw the principles for remuneration of Management Board and Supervisory Board members, these are called Remuneration Policy, and put them to the vote of the AGM at least once every 4 years. In accordance with Section 78b-1 Stock Corporation Act, the Board shall be recommendatory in nature. The resolution is not contestable. The remuneration policy put to the vote of the AGM was prepared by the Remuneration Committee to be finalized for adoption and was discussed in-depth and unanimously adopted by the Supervisory Board. The following resolution should be passed. Adoption of the remuneration policy, setting out the principles for emoluments payable to management, board members and supervisory board members. This remuneration policy has been attached to draft, the resolution is annex 1 and was made available to the Erste Group Bank AG website referenced by the company register under www.ersteroup.com/ no later than 20th of October 2020. And this takes me to Item 8 on the agenda. Resolution on the amendment of Section 19 of the Articles of Association. This has been made accessible on our website since the 19th of October 2020. Management and Supervisory Board, therefore, suggests that the AGM may take the following resolution. Section 19 of the Articles of Association will be amended by inserting the options for electronic participation in the AGM by remote participation and remote vote, items 19-10 to 19-15. These items follow the wording of the proposed resolution. I take it that I do not have to read out the proposed amendment in Item 19 -- item 19 are not necessary because this is all contained in the proposed resolution as published on our website on October 19, 2020. This concludes the presentation of the reports and the proposed resolutions of the management and Supervisory Board. And Mr. Spalt will take the floor again now. You have the floor.

Thank you very much, Mr. Chairman. I apologize, I failed to mention something in my presentation. Peter Bosek is in quarantine, and he decided to leave our bank. Peter Bosek, who has been a great friend of ours, spent a quarter of a century in this bank, and I should like to mention a couple of things. Peter Bosek was one of the architects of this bank. He was hugely committed to this bank. He was a great expert, and he helped to make us what we are today. I'm most grateful to him, and I wish him all the best for his future job, and he will always be a member of our family. Thank you very much. I fully endorse what you just said. So this ends the presentation of the report and the proposed resolutions of the Management Board and the Supervisory Board. And I now give the floor to each of the special proxies, asking them if they have received motions for resolutions from the shareholders who gave them their proxies. If so, please read them out. If not, please confirm that you have not received any motions. First, I give the floor to [ Nicolas Arden ].

Thank you very much, Mr. Chairman. I represent shareholder [ Butzlaff Germany, ] and I've received 1 motion regarding item 2 of the agenda. The motion reach that payment of the dividend be postponed until the final conclusion of the following proceedings. The Chamber of Economy and another body in the Czech Republic are engaged in litigation before the official court, a case for damages in the amount of more than CZK 15 billion with the Czech National Bank. Proceedings regarding the revocation of a judgment pronounced and with the Austrian National Bank, a case concerning the revocation of a banking license from 2020. So the proposal is to suspend payment or the dividend until these cases have been resolved. I take it that Mr. [indiscernible] has not received any additional motions. I give the floor to [ Michelle Knap. ] Thank you.

Mr. Chairman, I represent 450 shareholders holding 31,266,000 shares. 20 out of the 440 shareholders are private investors, all other are institutional investors. I've also received a motion on item 2 of the agenda from shareholder [ Radome Yona ] and 1949 is the ballot card number. I read out the motion. "Counter motion concerning Agenda 2. As shareholder of Erste Group Bank AG, I propose that the decision on payment of the dividend be postponed until the following proceedings are concluded. I can only read out the German sentences Cabot of arbitration chamber of the economy and Chamber of Agriculture, CZK 900, number 677 17 court -- official court in Prague, CZK 115 billion case for damages." And the speaker is mentioning the numbers of the cases [indiscernible] National Bank introduction of proceedings regarding the revocation of a banking license. 2018, Austria National Bank proceedings and at the revocation of a banking license. Case number -- proposal for a vote. I propose that a vote be taken on the counter proposal. And I ask for transmission of a certified copy of the minutes of the AGM. Signature, [ Radome Yona. ] I have not received any other motions.

Thank you, [ Mr. Knap. ] I now hand over to Christophe now. I can confirm that I have received no motions for resolutions and now give to [indiscernible].

Mr. Chairman, I, too, can confirm that I've received no motions.

[indiscernible] will include the motions in the minutes. Now here is current attendance according the list of attendance drawn up pursuant to Section 117 of the Austrian Stock Corporation at 2,158 shareholders are represented by the 4 special proxies who are entitled to cast 303,474,151 votes. The general meeting, therefore, has the necessary quorum to take valid decisions on all agenda items. The list of attendance is submitted electronically to the 4 special proxies for data privacy reasons. The list of attendance will not be disclosed on the Internet.

Now we are going to start the general debate, that is questions will be read out and answered. I will read out the questions put by shareholders and the members of the Supervisory Board will answer them as soon as we've read out and answered almost all questions, we will tell you how long questions can still be handed in. I'm going to read out the questions. Starting with a with questions by shareholder Stalla Investment GmbH. I've been asked to read out the questions fully in my capacity as Chairman of the Supervisory Board. I will try and meet the shareholders' expectations. "it will be a pleasure for the Chairman of the Supervisory Board to read out the surprisingly short comments by Stalla Investments GmbH clearly and with a firm voice. Stalla Investments GmbH, represented by its Managing Director, [ Hubert Henry Steilker. ] The company is represented by special proxy, Michelle Knap, from IVA." Ladies and gentlemen, in view of the fact that this is a virtual AGM, I will be very brief today in exercising my right to speak and put questions in accordance with the COVID-19 regulation, and I will focus on few aspects and questions only. I regret that we're not able to be present at the AGM, which is always characterized by productive and also amusing discussions with the bodies of Erste Group. I'm firmly convinced that it's -- I mustn't be remiss in thanking all employees of the bank for the enormous work they have done in 2019 and the efforts they will continue to make in the months to come. My cordial thanks expressed to them. We, as shareholders, greatly appreciate their dedication and commitment to our Erste Group. The dedication of the Management Board to the company is expressed not in the engine power of their service cars, but in their shareholdings. Evangelist Lucas knew that, because he said in the gospel, according to Lucas in Chapter 12:34, "Where your treasure is, there will be your heart." Therefore, my first question, how many shares do the members of the management board hold? I want to know that, individually, as of the record date of today's AGM. And an add-on question would each member of the management board, please explain why since the official beginning of the pandemic on the 11th of March did not acquire a single share of Erste Group outside the blocking periods. It appears that Bernhard Spalt, Chairman of the Management Board, is aware of this embarrassing situation and acquired 5,000 shares at the beginning of November. Ladies and gentlemen, today, for the first time, we have to deal was the report of the Supervisory Board on the remuneration policy, which we have to take note of remuneration policy for the coming 4 years. For the first time, we can take a vote on the remuneration report. And we are explicitly informed about the remuneration of the members of the management and the Supervisory Board. I, as a member of the Corporate Governance task Force and the Austrian Financial Reporting and Auditing Committee and it's working group on remuneration, take a great interest in this topic. Well, the remuneration policy of the Supervisory Board is presented in concrete figures. The remuneration policy for the Management Board members of Erste Group Bank AG is nothing but hot air. A vote on such a trivial collection of common places and tourism is simply too much for me. I will not be able to approve that. Therefore, my question to Chairman Rich Rödler, the total remuneration of [ Andreas Tic ] of EUR 2.8 million. How many times is that the average salary of an employee of Erste Group in 2019? And a question to the Chairman, which multiple does the Chairman regard as adequate in social and economic terms? A question for continues. Our management board members also hold various supervisory board functions or similar functions in Austrian and foreign companies and subsidiaries of Erste Group. Do our management board members receive separate remuneration for that? And to what extent can you give details on that? And why isn't there any indication thereof in the corporate governance report or in the remuneration policy to be voted on? Question to Ingo Bleier, "which are the 5 biggest single risks in the Corporate Customer and Commercial Real Estate segment defined by size of obligo -- size of exposure and average interest rate. Of course, we don't want to hear customers' name because this is not a question of naming and chiming. Like many other banks, Erste Group finances certain real estate companies whose rental income is often far below the financial expense. Profits are made solely and year after year through the so-called revaluation of real estate, the monetary policy of the ECP makes such revaluation gains possible. One could also say it is making some rich. A question to Alexandra Habeler-Drabek, "Do our risk models qualify -- quantify, I'm sorry, such real estate companies and all changes or factors in case the ECB one day decided to make some poor?" Question to Rich Rödler, "To what extent does the full Supervisory Board deal with the 5 biggest customers in the Corporate Customer Commercial Real Estate segment and their risks?" 2019 as a successful year. The last one of the first 200 years of the bank. It was a jubilee, which was celebrated. It was also the last year of Andreas [indiscernible], which was also celebrated. Some feel celebration was going a bit too far. But now It's high time to thank a member of our Supervisory Board, [ Wilhelm Hazinger. ] Over the past 15 years, he served on our Supervisory Board as a loyal and critical member. Thank you, Billy. Peter Bosek has served even longer for almost 25 years. Peter manages, come and go, usually, they come too early and they go to late. It's the opposite. With you, you're going far too early. None of us would -- none of your companions would have thought that you would just leave us, but that you would be going east is something none of the Supervisory Board members ever thought. One or the other may now regret that and regret on the things, perhaps as well. As shareholders, I have often criticized. I've also criticized you. Therefore, I wish you all the best for your new job as CEO of an exciting young bank in an exciting region of Europe. I wish you, from the bottom of my heart, every success. I hope you will be happy and also earn a bit of money. I would like to underline that no one deserves the degree of appreciation, which you deserve. And I thank you for your virtual attention. And I, the Chairman, hope that I have met Mr. Steiner's expectations in terms of rhetoric, although I'm no match to him. We now move on to the round of questions. And I have received questions from shareholder Knap. The questions were received in due time before the AGM, therefore, I can also answer the questions. First question. Mr. Knap was through his first question. So I can move on to question 2, consolidated governance report. The question goes to the Chairman of the Supervisory Board and the Chairman of the Audit Committee. "following an international governance trend, more and more supervisory boards in Austria separate the positions of Chairman of the Supervisory Board and Chairman of the Audit Committee. Our BI, for example, did so already, but not as Erste Group Bank AG. Are you considering or discussing such a separation of position?" The answer is the following. Erste Group Bank AG, the Chairman of the Supervisory Board and the Chairman of the Audit Committee, is not always the same person. After the AGM 2016 up to the AGM 2019, Mr. Homan was Chairman of the Audit Committee and I was Chairman of the Supervisory Board. A decision on the appointment of the Chair of the Supervisory Board and its committee is taken on the basis of the professional qualifications and the suitability of the candidates. Another question, "When will this separation be affected as Erste Group Bank AG?" I can answer the question as follows: after the elections to the [indiscernible] by the AGM, the Supervisory Board holds a constituent meeting to deal with their appointments to the committees and the assignment of functions. When it actually be -- there will again be different persons holding the Chair of Supervisory Board and the Audit Committee cannot be answered right now. And then Mr. Knap asks, "If not, any arguments against that?" So the important thing is the professional suitability. There are no legal regulatory or other reasons or any concern of incompatibility that would make a separation of the 2 functions expeditious or required as the supervisor -- as the regulator has perceived a potential compatibility between the 2 chairs, I have been asked to handle the chairmanship of the Audit committee. Next question. "The remuneration of Supervisory Board members not subject to income tax in Austria is subject to so-called withholding tax. Do the Supervisory Board members concerned receive their remuneration gross or net? Do the Supervisory Board members pay the withholding tax themselves so that they receive Supervisory Board remuneration reduced by the withholding tax?" The answer is yes. Next question by Mr. Knap. "The shareholdings of Erste Group Bank shareholders again is not disclosed in the annual report. Could you please close this gap in the future?" A simple answer to that, when you look at the annual report, note, this is Chapter 38 on Pages 189 and Page 190, you will find the shareholdings of Supervisory Board and Management Board members. But this is not part of the remuneration. Therefore, it doesn't need to disclosed in the Corporate Governance Report. Next question, "On-site inspections by supervisory authorities in the annual report on Page 9. Reference is made, 2 on-site inspections in the report by the Supervisory Board, which regulators perform on-site inspections in which areas where the findings addressed by the regulatory authorities and which essential findings of the regulatory authorities have to be implemented or are being implemented and which of our fields of activities are concerned?" Answer is the following. As of the end of 2019, there were open findings from 12 on-site inspections. Most of these inspections were inspections by the European Central Bank and by way and conducted by the Austrian National Bank, 2 nonrelevant inspections concerned, IT risks that were not model relevant. The ECP and O&P inspections concerned credit risk models. As of the end of 2019, there were 77 open findings, another 63 findings came in later, 3 of them a model relevant, 1 concerns IT security management. The final follow-up letter from the as-mentioned inspection is not yet available. Most of the findings concerned, credit risk models, validation of models, data quality, documentation, methodology and rating management. As of the end of 2019, the fine names were signed to the following areas: 57 filings, credit risk models now credit risk method, 6 findings on group credit risk management and the credit risk portfolio, the other findings, a small number of them were sent to other areas. All findings were addressed on the basis of a Risk Mitigation Plan and now being implemented. Many of the findings were closed in 2020, including findings from inspections performed in the previous year. The Audit Committee is following the implementation of the findings rank and receives reports in the course of its meetings. The next question concerns the savings bank segment, the acquisition of [ Arisa ] Bank in Skokie. The question is, "I take it with rather cryptic indication in the report on Page 32, booking of the negative goodwill for a new subsidiary of a savings bank; and on Page 37, positive effect from the goodwill impairment concern participations, which in the notes are shown under Scope of Consolidation Annual Report 126 and 127. Now what is this all about?" Our 25% subsidiary, Steiermarkische Bank [indiscernible] from Societe Generale which wants to exit from the bank participation in SEE acquired 56% of Ohridska Banka in North Macedonia. The participation was topped up to a higher percentage and a passive difference of -- was the result. So it was really a lucky bite for us. The answers will be given by Mr. Spalt. The question as follows. "As of 30th of December 2019, who owned the outstanding 8.43% of Ohridska Banka?" Next question, "Have we topped up further in the meantime? Is a squeeze out procedure in North Macedonia provided for by law and will we make use of that? Is the extensive data analysis of Ohridska Banka -- has this been concluded in the meantime and what are the results and details on the market position of Ohridska Banka should also be indicated?" Our public takeover bid, according to the Takeover Act, was addressed to all shareholders and wasn't limited to the participation of Societe Generale. What the agreement was Societe Generale, that it would agree -- accept our bid for its participations. Other shareholders also accepted our bid, which gave us a participation of 91.57%. So this was not due to a subsequent top-up. The outstanding shares belong to the free float. We know them by name and the next bigger package, 1.65% belongs to 1 private individual. And so 2 small shareholders currently hold only 6.84%, Steiermarkische Bank und Sparkassen in the second quarter of 2020, and within the framework of a capital increase of Ohridska Banka contributed EUR 10 million, increasing the share to 93.16%. Answer 3. None of the North Macedonian [ ats ] provides for a squeeze-out at a later point in time. This would only have been possible if we had received more than 95% in the takeover phase. And so for the data analysis, it will be concluded in November. According to IFRS, we have 12 months. And first time consolidation happened in November 2019. There will be no major changes, according to colleagues from Steria. A slight adjustment of bad will will have to be made, and possibly intangible assets in the form of a customer base will have to be booked, but we don't need to disclose that yet. Answer 5. Now the essential figures I'm going to read out come from the group reporting package on 2019, Ohridska Banka. Total assets end of 2019, EUR 686 million; loans to customers, EUR 468 million; customer deposits, EUR 522 million; branches, 28; market position, #4 in terms of total assets. Steiermarkische Bank Macedonia, an existing institution, total assets of EUR 399 million; loans to customers, EUR 262 million; deposits from customers, EUR 258 million; number of branches, 26; market position, #7 in terms of total assets. And if we were to consolidate that on a pro forma basis, market share in loans, 14.3% as of end of 2019; market share in deposits, 10.7% end of 2019; and a combined market position in terms of total assets, #4. Thank you very much.

Next question, from Mr. [ Klup ], concerns Hungary. It's a question to Mr. Spalt. It refers to Pages 50 and 51 in the annual report in 2019 as the Bank Hungary took over the building society business of Aegon Bank Hungary. 57,000 contracts were thus acquired to Erste Bank Hungary, which increased our market share to 14%. How much did we pay for the building society portfolio of Aegon? And how was the fair value of that portfolio determined? Any other transactions of that kind be envisaged -- being envisaged to increase our market share in Hungary? Mr. Spalt?

Compensation -- consideration paid was HUF 1.9 billion. That is EUR 5.2 million. We acquired a deposit portfolio of the Building Society of Aegon. We didn't take over any other parts of the business. All Building Society contracts still benefit from government premiums. While for contracts concluded as of October 2018, no such premiums are granted. On the basis of regular contributions from old contracts, the volume of the portfolio will increase up to 2023, and then it will continue to -- will gradually mature. The basis for the valuation is the yield from assets, mainly government bonds in which the building societies invest. The calculation of the fair value is based on the discounting of net interest income from the investment in government bonds. At peak times, HUF 44 billion, EUR 120 million over the remaining tenor of the deposit portfolio. Average yield, 2.8%. The cross-selling potential of this customer base was not taken into account in the valuation. Answer 3, Aegon was a great opportunity because we were able to acquire a portfolio in rundown mode at a very good price. We were able to win 50,000 new customers. And in a concentrated market like Hungary, we also benefit from an advertising effect. We're open to any acquisition that supports our core business and that is profitable beyond the capital costs, always on the prerequisite that this is being supported by the shareholders of Erste Bank Hungary, including Corvinus and EBRD.

The next question concerns Croatia, Page 53. In Croatia, tourism, with a share of 20% in GDP, plays an important role. Our 69.3% subsidiary, Erste Bank Croatia, Rijeka, has concluded their contract with the EBRD on a new credit line of EUR 150 million for the financing of tourism in Croatia and Montenegro. Now tourism is that economic sector which suffers most from the corona pandemic and will continue to suffer. The question is, how do you assess this tourism financing in Croatia and Montenegro after the experience of the summer of 2020? Has the full credit line been drawn and how is the credit risk divided between EBRD and Erste Bank Croatia? Ms. Habeler?

Let me say that the summer 2020 in Croatia was better than originally expected. But for the full year 2020, overnight stays declined by about 50% compared to 2019. There is a steep north-south gradient. Things are much better in the north. In Montenegro, logically speaking, the decline is even steeper, but our credit portfolio is only EUR 13 million in the hotel sector. The Croatian hotel portfolio is about 500 million. In Croatia, there is a private law moratorium for the tourism industry running until summer 2021. And we have offered this moratorium to our customers, and it was accepted by the majority of them. We've been happy to see that a major part of our customers benefiting from this moratoria are still paying interest, and we are confident that in 2016 to 2018, a great deal was invested in tourism and Croatia hotels, and tourist infrastructure are in very good condition. For 2021, we expect on, account of the geographic location, Croatia is easy to reach by car. We expect that Croatia will benefit from a slowdown of the epidemic very quickly. As regards the EUR 100 million, the credit line currently has been drawn up to EUR 50 million in various projects in Croatia where financed, none in Montenegro. And it's a pure refinancing line, so the risk is entirely [indiscernible] the Bank of Croatia.

Next question goes to Mr. Dörfler and concerns the real estate as a finance investment, EUR 1.3 million, we have residual book value. The question is to the geographical distribution, the asset classes of apartments, houses, hotels, the vacancy rates, and what about the rental losses?

Thank you. And so the geographic distribution, 80% goes to Austria, about 7% to the Czech Republic. And the remaining parts is distributed over other countries. About half of this -- of the assets in apartments, let me point out a nonprofit housing construction, and the remaining part goes to offices. The vacancy rates are quite low. And there is no tangible impact on our assets from COVID-19. The renters delays around EUR 2.1 million. However, this is, of course, does not consider the impact of the second lockdown.

Then we go to the litigations, pages 274, 275, and the half year financial report, Page 73, updates especially to the prospect liability claims and an update on the basic decision of the Supreme Court. What about that? And then also the foreign currency impact, what could be derived from this in the meantime? Ms. Habeler-Drabek will answer this question.

The mentioned procedures and the business years, well, not much has happened in these litigations. All litigations are still at court, of the first instance courts. And agreement, we also made agreements, but there were hardly any court sittings. And then, of course, we have these bundled emissions. And the expert opinion of the lawyers was presented. And the expert summarizes as follows: no indications for an indebtedness of the issue or the [ daughter ] can be read, according to the equity capital law. And thus, a future test of the realization is no longer necessary, and therefore, can be stopped. And the party discussions will only take in the future. As to Croatia, the Supreme Court decided that with the conversion of the former Swiss franc loans, because of the admission in 2015, this relieves the situation and the bank read is as follows, that the loan takers do not receive any further money. A lot was also changed into euro loans, and there are a lot of claims still pending. A lot of these are closed, very clearly not pertinent. I can't find this. Thank you.

The next question goes to Mr. Dörfler. The condition of dividend, item 2 of the agenda. You proposed a dividend of EUR 0.75 per share, payable on the 15th of February 2021 on condition that no legal obstacles will arise. The [ reifassen ] bond took a different cost from Erste Bank. Well, it was pretty sure that this does not depend on a deadline. Things will take their usual course. What induced you to this item on deadline, and what and if the deadline goes by without the payout will be made, could there probably be a scrip dividend be issued, this is additional shares and the shares to be issued could be taken from the stock of one's own shares. Has this alternative been discussed? And what spoke for it and what spoke against it? [indiscernible]

Thank you, Mr. Chairman, for this question. In the presentation, a lot of these items were addressed, but let me still mention the significance of the subject. It has always been the intention of the Erste Group Bank AG to pay a dividend. After intensive discussions and weighing all legal and regulatory conditions, especially considering the recommendation of the ECB, the management and the supervisory board, sir, have taken a decision to propose this conditional dividend payout. This proposal gives the shareholders security that if all conditions are met, the dividend will be paid out. And we also have the option at the beginning of next year to have an extraordinary AGM if this is considered to be pertinent. We do not exclude this. Moreover, the regulation that was issued because of COVID-19 has not been foregone yet. Erste Bank was, when the decision was taken, not convinced of this proposal to be able to carry out an AGM with all those trends and not a virtual AGM in January or February. So the second question, what happens if all these conditions take effect? So if the conditions cannot be met, format or materially, the entire assets will be carried forward to new accounts. Independent of this, the Erste Group Bank AG can also call an extraordinary AGM and to make a new proposal for the appropriation of profits. But this AGM is also -- has also as a deadline with [indiscernible] the financial statement 2020. Question 3, scrip dividend was discussed in detail, was also legally tested. Scrip dividends are not exclusively mentioned in our Stock Corporation Act. There are no concrete legal framework conditions, thus certain legal uncertainty contained -- connected with this for the company and for the shareholder. But what we can, of course, pay out a dividend in kind, but this is not a version that we considered. Thank you.

Next question refers to the remuneration policy. I will answer this. When working -- did you have external support when working out the remuneration policy? How much does this cost? And what were the external provide consultants? Yes, we had [ Professor ] [indiscernible]. She supported us when drafting the principles for the remuneration of the members of the supervisory and management Board in connection with para 78a and 98a of the Stock Corporation Act. Mrs. [indiscernible] is an Assistant Professor at the Business University in Vienna. As to the contractual conditions, we cannot give you any information on this because we cannot -- this is -- all I can say is that this is -- it doesn't amount to more than a 2-digit number, what she received. So this brings us to the end of the first round. And now we move on to the next questions. We have a number of questions on sustainability and environment. I have a number of questions by Mr. [ Baumuller ] but his questions are being answered at the moment. But he also wrote us a [ prologue ], which I would like to read out because the first questions put by other shareholders concerning sustainability come to bear here. So Mr. [ BaumULLer ] will have to wait a bit longer for answering -- for the answer to his questions. His prologue: My central concern, and I think this is also the central concern of many other shareholders is the issue of sustainability and the contributions that companies can make here. The accountability, they can provide in the form of nonfinancial reporting. And this is of special significance, especially in the EU, financial institutions are the focus of the tension. The keyword here is sustainable finance. In other words, action plan for the financing of sustainable growth. Capital flows should promote sustainable economic activity, and still this capital flows accordingly. That is the task of the financial sector. This list of questions includes 6 questions. We'll come back to this in a minute. He goes on to say, in a continuation to the writing of the questioner, I had the opportunity to talk to representatives of the Erste Group, and many of my [indiscernible] that the technical issues could be clarified. In many respects, this gave me the impression of the level of awareness of the relevant issues and a commitment to addressing them appropriately, not least on the part of the Supervisory Board, which by law is required by the special focus of the responsibilities in this regard. This and the obviously positive development of the nonfinancial reporting in the last few years has led to many of my usual questions omitted. And I would like to thank the company representatives very much for the openness they have shown in comparison to a large part of the other companies in the ATX. It also seems to me that the handling of sustainability issues with a remuneration policy can be emphasized is well founded in many points. Admittedly, financial sector, in particular, will remain at the center of the [ house of ] regulations by political actors in the coming years. And we can only wish all those involved in the sector every strength to continue to take appropriate account of this development and continue along the path that has been so positive so far. For your efforts in answering my following questions, I thank you very much. And I look forward to continuing our critical dialogue on sustainability. I wanted to read this out because the subsequent questions by other shareholders touch on this issue and focus on sustainability. I will now starting with the question that goes to Mr. Spalt, to [indiscernible] to Mr. Spalt, [indiscernible] with be voting [ ca ] 26. Our planet situation releases certain tilting points, for instance, the thawing of the permafrost region. Per 1 degree centigrade, we receive 2.5 meter increase in the sea level. 2,073 million people would have a temperature of 29 degree centigrade. Greenland and other Arctic ice sheets are melting. This all refers to meltings of this year, and I'm afraid of this development. And this is why I'm asking my questions that are the questions of an entire generation. We all have to be through this. In 2018, the International Energy Agency is responsible for the rapid heat increase. What can we do to mitigate all of this? Mr. Spalt?

Thank you, Mr. Chairman. Erste Group follows this urgency to mitigate this urgency, and we will revise our ideas. Fossil fuels, in account of several reasons, you have to provide energy safety for all those concerned, and this is why we have to use the transition time and look exactly into this transition time as concerns the exit from coal-based extract electricity. I think it is very important to make this transition as easy as possible. It's not what can we do and what can we not do? Much rather, the question is to find a way to a more sustainable and green Europe. Thank you.

Further questions by Mr. [ Hees ]. The asset group says it takes more than just offering sustainability funds to reduce this development.

We are trying to reinvest at 1.5-degree climate targets. We are fund managers. And there have been others who made an invest in ESG, over EUR 40 million were invested in these ESG funds. Green energy does not suffice. We have to change the consumer behavior. According to the fifth report of the IPCC, Inter-governmental Panel of Climate Change, the biggest growth of emissions is -- has to be mitigated. We have to be more transparent. And this is where we are working on setting up -- assessing carbon emissions. We are -- we are actually in line with all the authorities having the same acts. We want to create more transparency in our action. Our footprint will be linked with our offer in order to achieve the climate neutrality by [ 2050 ].

Next question goes to Mr. Bleier. It also comes from Mr. [ Hees ]. Global consumption of coal will have to decline by 78% by 2030. And the Secretary General of the United Nations says that we must not build any new coal-fired power plants. Erste Bank, however, does allow that and invest in coals. In 2022, a new coal-fired plant will be connected to the grid. By when can such investments be excluded?

Thank you, Mr. Chairman. Ladies and gentlemen, since I've been on the Management Board of Erste Group Bank AG, I don't remember financing a coal project or having approved that. As CEO Spalt said, we are continuously revising the policy. We have published our responsible financing policy. And you may rest assured that our exposure to coal will go down. And the [ Menic ] project, which I think is the one you referred to, will not be realized.

Another question by Mr. [ Hees ] to Mr. Bleier. 41 out of 54 big European banks have better exclusion criteria than Erste Bank. So 41 out of 54 European banks have better exclusion criteria for coal projects. Erste Group Bank Austria and other banks are not among those. When will you exclude coal projects or projects in which coal accounts for more than 20% of the power output? A list of all these companies can be found on the website coalexit.org, and the criteria apply as of the second week of November. Mr. Bleier?

Thank you very much. We are aware of the urgency within the framework of the 1.5-degree centigrade target of the Paris agreement. And we are about to revise our policies. We have to take the interests of our stakeholders into account and make sure that this transition works well also for our customers. We are determined to support the economies in our core regions in the transition phase, and we can see that governments in the core countries intend to work towards the 2030 targets. And otherwise, I refer to what Mr. Spalt already said.

Another question by Mr. [ Hees ] to Mr. Spalt, does Erste Group recognize that electricity generation from natural gas is no alternative to coal electrification? It's just as bad for the environment.

We would like to quote the special IEA report of 2020 on innovation in the field of clean energy. The report says in the value chain for low-carbon electricity, several technologies have reached a high degree of maturity, while others still a long way to go. Therefore, the European Commission regards natural gas as a transition source of energy. It's clear that in the coming years, we'll find a balance between fast changes through innovation, the exit from the most harmful resources such as coal, and the guarantee of modularity of the load of the grid. We will therefore, support the development of energy procurement in the region. We will follow it very carefully and support projects which diminish the dependence on coal, including through the use of hydrogen technology.

Next question from shareholder [ Yiss ] to Mr. Bleier. When will Erste Group no longer originate loans, issue bonds or issue shares if the companies concerned invest in oil and gas in the Arctic? Is that an exclusion criteria?

As we said already, as the group is highly sensitive to the problem of projects that are harmful for the environment, as far as I know, we are not involved in exploration projects in the Arctic. We would not finance projects there. So I can't tell you more about that.

Next question from shareholder [ Hees ] to Mr. Spalt. Can we expect publication of a 1.5-degree centigrade conforming carbon policy of Erste Group by the end of 2020.

Erste Group is working on a new coal policy with regard to the maximum climate increase limit of 1.5 degrees centigrade. We want to consult relevant NGOs in the elaboration of the new policy to obtain an independent external perspective on the issue of climate protection and sustainability. If we want to go -- if we want to get better, we will have to cooperate with NGOs. Together, we have to learn what can be implemented meaningfully. We are committed to preparing the new policy in the coming months, and we can confirm that any new financing transaction of coal-related assets or coal-dependent enterprises will be examined carefully.

Next question, from shareholder [ Peter Mifli ] to Mr. Dörfler. It concerns the dividend. I expect that this bank, as others, will follow the recommendation not to pay out a dividend. We congratulate you to the excellent result, and we thank all those who have contributed to it.

Thank you very much. I think we've already outlined the steps we have taken.

Next question, also from Mr. [ Peter Mifli ], addressed to me. I don't understand that CEO Treichl is to get 31.11% of the Management Board remuneration at the AGM. 2011, he said he earns in the month as much as the [indiscernible] President in a full year. Something must be left over from that amount. And a reduction of the 2,810 -- sorry, 2.810 million for 2019 should be reconsidered. I suppose you have added all remuneration components, but I must ask for your indulgence. We cannot retroactively reduce Management Board remuneration, and we see no reason why we should do that. Next question to Mr. Spalt, again from shareholder [ Peter Mifli ]. What we've read in the annual report with regard to Management Board remuneration, I don't like that. The share price was very -- took a very negative development this year.

Thank you. We always try to make the annual report as transparent as possible, but there are limits to what we can do. We will, of course, welcome your input and take your recommendations into account. As regards the share price, both the share price and the performance of our business were satisfactory until COVID-19 broke out. After that, however, all bank shares suffered greatly, and that is easy to understand when an economy is hit hard by policy measures taken by the government if there is a lockdown. That, of course, has implications for people's confidence in the performance of the bank. And when regulators restrict dividend distribution, this is something that is not good for the share price. So we're not happy with the share price, but it's directly related to the COVID crisis. It's not related to our business model. And as we saw yesterday, the share price reacted very positively when news came in about the possibility of a vaccine being available soon. And we are sure that our share price will recover. Thank you.

Another question from shareholder [ Peter Mifli ] put to me. Will Mr. Treichl leave the payment scheme? And what else is contained in other remuneration of EUR 1,637,000. Mr. Treichl originally was appointed as CEO of Erste Group Bank until the 30th of June 2020. He stepped down from the Management Board on the 31st of December 2019 but -- and his employment relationship ended according to the contract on the 30th of June this year. Other remuneration also contained contributions to the employee fund and to the pension funds. Next question, remunerations of the supervisory report increased by 28% from 2018 to 2019. We don't get a dividend. Why do only the Chairman and the Deputy Chairman of the Supervisory Board get more and not the other members? I don't know which figures you are referring to. But Supervisory Board remuneration was not increased for 2018 and '19. The Supervisory Board remuneration was adjusted -- it was last adjusted in the AGM for the business year 2017 and has remained the same since. Simple or ordinary Supervisory Board members get a fixed annual remuneration of EUR 60,000. The deputy of the Chairman, EUR 150,000, the first deputy -- first and second deputy, 90,000 -- sorry, first deputy, 90,000; second deputy, 80,000 and so on. Changes in the total only are due to the change in the number of Supervisory Board member. And the total sum of allowances for meetings is not the same because the number of meetings is not always the same. It must also be borne in mind that the annual report indicates the meeting allowance for the previous year but the Supervisory Board remuneration for the current year. Next question, shareholder [ Peter Mifli ] addressed to me. How many hours per year do the Chairman and his deputy of the Supervisory Board work for Erste Bank? I'm afraid I can't indicate the exact number of hours. I don't keep a log on those. I did so when I was a certified public accountant. But I can tell you that the time spent is extremely high. I spend 3 to 4 days a week at Erste campus, and it hasn't changed during corona times, although I work more from home. Next question from shareholder [ Peter Mifli ], a necessity of the -- I would like -- he would like to see an explanation of the need for an additional auditor. Does that come from the FMA? Is Erste Group Bank AG not satisfied with its auditor? What were the costs of the audit for 2018 and 2019? How much more will have to be paid once the additional auditor starts operating Erste Group as an international group. In addition to its statutory auditor, [ Sparkassen-Prüfungsverband ], has always had on a voluntary basis an additional internationally operating auditor because [ Sparkassen-Prüfungsverband ] can't audit abroad. A change of auditor occurred in 2017. It has nothing to do with our satisfaction with the auditor. It's required by law. The law requires a certain rotation. An EU directive says that auditors have to change at least every 10 years. Therefore, starting in 2017, PwC was recruited as an additional auditor. The costs of the auditor, statutory and the voluntary auditor, taken together amounted to EUR 13.2 million in 2019 and EUR 12.1 million in 2018. In 2019, EUR 5.9 million and in 2018, EUR 35.5 million accounted for by PwC. Sparkassen-Prüfungsverband 2019, EUR 7.3 million; 2018, EUR 6.6 million. Through the appointment of PwC as an additional auditor, audit costs have not increased over the years when Ernst & Young were the additional auditor. Of course, it always depends on the scope of the audit, but the costs are in accordance with market practice. Next question from shareholder [ Peter Mifli ], reduction in the number of Supervisory Board members is to be welcomed. What's the impact on remuneration? Could the Supervisory Board work with 10 members? The remuneration for an auditor, remember, as I said, is EUR 60,000 per year. And Supervisory Board remuneration is reduced by this amount if there is one member less and no meeting allowances are incurred. Second part of the question, I take it that you mean 10 capital representatives because we also have 6 employee representatives. The Supervisory Board of Erste Group has numerous tasks relating to financial and capital market issues. Moreover, the Supervisory Board has to meet the requirement of diversity in terms of various criteria: men, women, older people, younger people, different professional backgrounds. And with the current number of 12 capital representatives, we can meet these requirements, and it justifies the number of 12. Fewer capital representatives on the supervisory would not be appropriate. Another question from shareholder [ Peter Mifli]. What I said earlier also concerns the remuneration of the Management Board and the Supervisor Board. Would a reduction have an impact on remuneration? Well, we will pass on this suggestion. Next question, to Mr. Dörfler from shareholder [ Peter Mifli ]. Cost/income ratio in 2015 was 57%; 2019, 59%. What is the target for the cost/income ratio in 2020, '21 and '22?

Good indicators are to -- should be possible through the reduction in the number of branches by 5.3% and plus 2.5% customers. So between 2015 and 2019, the cost/income ratio was well above 60%. The medium- to long-term target in terms of cost/income ratio is still 50%. According to our guidance at the Capital Markets Day, we indicated our target for 2024. COVID hasn't made it easier to reach this target, but it still remains in effect. For 2020 and '21, we expect a negative impact on the operating result, although less so than in net profit because net profit is burdened by risk costs. Our earnings are depressed by interest rate reduction and the volatility in the markets, which had an impact on the trading and fair value result. The high cost discipline is a matter the Management Board is focused on, also in our subsidiaries. And we expect to generate a robust operating result also for the full year 2020.

Next question from shareholder [ Peter Mifli ] to Mr. Bleier. Mr. [ Peter Mifli ] says I'm a customer of Sparkasse Oberösterreich and I was struck to notice that branches are only open from 9 in the morning to 3 in the afternoon. Why do banks reduce their opening hours? Can we expect fees to be reduced accordingly?

Well, stepping in for Mr. Bosek, as regards -- you will have to ask Sparkasse Oberösterreich. We at Erste Bank Oesterreich are open from 9 to 6 in the afternoon at the major locations, and longer times for advisory can even be agreed upon, upon request. And opening hours have nothing to do or not much to do with our personnel policy. There are many other factors of influence.

The next question goes to Mr. [indiscernible] focuses on the impact of the corona epidemic in 2020. What about short-term work schemes?

Neither the Erste Bank AG nor their subsidiaries have used the short-term worker scheme. However, the measures by the government to secure worker is welcomed by us, of course, but we are of the opinion that these measures are aimed at companies that rely on state subsidies or state support, but we are not part of the cycle on this.

Next question, [ Peter Mifli ] to Mr. Dörfler, expectations for the results 2020.

As I've already said, the net results 2019 is about 68 to 80 basis points, and it will certainly be heavily burdened. As to concerning the operating results, this will go down slightly. Last week, we reported for -- had the report for the first 3 quarters. In the third quarter, it developed rather favorably. And now, of course, we'll have to wait for the impact of the lockdown on the fourth quarter. But we assume that it will be a slight turndown in 2020 as opposed to 2019.

Next question for Mr. Spalt. Expectations as to the share price, the development of the share price is made, I take it.

Thank you. I think I've already talked about this. The share price depends essentially on 2 factors. First is the assessment of the macroeconomic conditions in our region, and second, our ability and the willingness of the regulators to enable dividend payments. I think that the present lockdown, which is all across Europe, will be used also with us, our government, to make the right preparations so that we actually can steer through the next phase. And that also -- we also hope for a growth in the economy. And then of course, we'll also be able to pay out dividends.

And this takes me to the questions of Mr. [ BaumULLer ], the prologue I already have read out. Okay, question number one, which stands to Mr. Spalt, is addressed to Mr. Spalt. I would like to ask you to explain about sustainability means to Erste Group from a financial perspective derived from the roots of the group of companies in the [ savings bank ADR ]. So what's the difference here? What distinguishes the Erste Group in this point from all the other market players? How is this reflected in the day-to-day business and how is this reflected in the non-financing reporting presented?

Thank you. A very important question indeed. Since the foundation of the Erste Group about 200 years ago, responsibility towards society is an important part of our business activities. Those portions of the population that have no access to banks should be offered financial services. This was one of the main motives for setting up and founding our bank in 1819. As to this foundation idea, financial products and services should be provided to everyone in order to enhance prosperity, has not changed. The social banking programs set by Erste Group started in 2016 aimed at including people with a low income. Social banking was introduced in our local banks of Erste Group, and since its start has supported 32,500 customers. Loans of EUR 230 million were granted and educational programs were supported. With [ 130,000 ] customers, [indiscernible] Sparkhasse has supported about 19,000 people. The 224,000 new foundations were made. [indiscernible] the social finance, this was the [ good b ] credit before office micro credits for farmers and small entrepreneurs in Romania. In 2019, 1,294 loans were granted with a total volume of EUR 20.7 million. All loans taken together were EUR 23 million. For nonprofit organizations, social companies, the Erste Group offers operational credits, transition credits and investment credits. Erste Financial Life are the largest financial educational institution in Europe. Since its opening in October 2016, about 47,000 visitors could be counted within more than 2,500 guided tours.

Next question goes to Ms. Habeler-Drabek, again from Mr. [ Baumuller ]. I would like to ask you to explain with which concrete effects the business partner of Erste Group will be confirmed from next year onwards as a result of the new regulations? According to question 2, for instance, which additional obligations for borrowers to provide evidence will accompany the first time application of the disclosure and taxonomy regulation? Which developments and changes in behavior on the part of the business partners should be induced by this? What roles do future sustainable finance models play? And finally, in supplement to this, to what extent is the Erste Group as a financial institution aware of the sustainability of overall [indiscernible] of sustainable finance?

Well, I was extremely happy that you have reacted so positively. While you also said that we are taking this quite seriously, the sustainability issue, the fact that ESG has changed from me to the CRO, it does not mean that I'm just as committed to this issue. Naturally, what we want to express how high the value of this topic is. As to your concrete questions, 2 questions that I have to answer, I now relate to the concrete impact on our business partners. There is no doubt that this regulatory impact goes not only to us but also to our customers. It's our corporate customers to which this relates. These corporate customers, because of the taxonomy regulation, will have to improve their situation. Companies, as of the end of 2021, this was quite sure, must classify their activities, their income and their investments. They have to analyze whether the business activity meets the relevant criteria for environmental protection and whether other environmental goals are not impaired by this. This is a major challenge for us, but also for investors and banks to be the right information source for client and environmental risks of their credit portfolio. The Erste Group is fully aware of its obligations in connection with sustainable financing [ benchmark ]. Spalt has already mentioned this. And this doesn't only go for the environment, but also for social goals. And as has been said, let me mention again that in the past years, Erste Group has made a major contribution to equal challenges and finance information and financial inclusion of persons with very low income. And we are supported by all important rating agencies, in this sense are also valued accordingly, as you can see on our website.

Next question, by Mr. [ Baumuller ] again, goes to me and to herr Spalt, maybe. In my opinion, sustainability and sustainable management is, first and foremost, a governance issue that raises questions about the established role models. I would therefore ask you to use the individual qualification profiles of the members of the Board of Management and the Supervisory Board to show which extent of sustainability-related expertise is available. This goes especially for the question whether the overall available competence is suitable for sustainable corporate management according to the current understanding that is based on ecological and social success criteria, or to adequately demand and control them in the course of the Supervisory Board activities? Well, I can answer this as follows. As you know, the Management Board is a collegiate organ -- a collegiate group which has to meet the required qualifications and criteria. One of these criteria is experience in the field of sustainable management. And when nominating members of the management board, the nomination committee looks exactly into the qualifications of a candidate, whether he contributes to all the qualifications of the management board. Sustainability is of special significance. And therefore, it is with the CEO sustainabilities, among others, a key performance indicator of the group's CEO, and that's one of the criteria, according to which a potential bonus will be paid out. So this underlines the significance of this subject for Erste Group. The significance of the subject is, of course, different from the individual sectors. Corporate sector is particularly affected, especially when it comes to responsible finance, but also in the risk sector. The members of the management board have a lot of experience in all these fields, and I think we are well equipped here. If Bernd Spalt wants to supplement this, well, what comes to my mind in the public of ESG, environmental, social and government, the Ceská sporitelnaá has been a pioneer in the social banking. When I was CEO there, we extended in social practice and concentrated on 3 fields to support nonprofit organizations, to support start-up companies, to create sustainable jobs and also people who are in a financial strain to advise and support them. So one aspect -- this was one aspect of the ESG. And the second aspect, when I look back on many years of risk management activities, this implies, of course, we will have to fight money laundering. We'll have to regulate conflicts of interest and have very clean and clear government structures. And environmental -- the environmental issue has been newly positioned in our bank. This section reports to -- sector reports to me directly. And also internally and externally, we had -- we wrote out a number of applications, and highly qualified candidates for these jobs. We had over 150 applications within a very short period of time. And so we have stacked up the coworkers, and we know that this field is going to extend rather than shrink. Thank you.

Next question again by Baumüller. I would like to ask the members of the Board of Management and the Supervisory Board for a brief personal statement on the importance of the issue of sustainability in general, and in particular, for the management in supervision of the company. In addition, which focal points in the personal share of activity are planned for the current term of office and how to achieve greater transparency in terms of Erste Group's sustainability performance vis-à-vis its stakeholders?

Well, as for this question, I would like to refer to the questions. So they've already been answered by the individual members of the management board. It's been quite clear that on the Supervisory Board and on the Management Board, we are taking this issue and this topic very seriously and try to do our best in this field.

The nonfinancial statement was subject to a voluntary external audit by Deloitte. This question goes to Mr. Spalt.

In accordance with Austria's practice, this was performed with limited audit assurance. The benchmark for the internal audit of nonfinancial reporting by the Supervisory Board is, however, a higher sufficient audit reliability. For instance, [indiscernible] in literature, in my opinion, this results in a reliable -- reliability gap regarding just for information.

As to what were the reasons for commissioning the external service provider, to what extent is the actual benefit derived from the audit expose evaluated, please name the latter specifically?

Our concrete specific qualifications in reference to the two examination service providers that is in the sense of individuals, who signed the submitted certificate have in terms of nonfinancial reporting that is.

How does the statement below on Page 85 of the annual report, according to which on the selected standard GRE, the disclosures were reviewed, the Global Reporting Initiative were reviewed fit in with the statement in the attestation according to which it is examined whether information required in sections 243b and 267a of the Erste and company goal in connection with the Sustainability and Diversity Improvement Act, to what extent are they exposed -- disclosed in the report? In other words, what systematic approach did the external audit service provider adopted in this respect? 302/4 GRE (sic) [ GRI ], 305, 406, 405-1, which additional internal audit procedures were specifically set by the Supervisory Board to close the reliability gap mentioned above?

Thank you. Well, the mandate was newly -- right now in 2018, together with -- and Deloitte was selected as auditors. Gerhard Marterbauer and Christof Wolf, in charge of the team, both have long years of experience with Verbund, UNIQA and Wienerberger. In Austria, this is common practice that the audit opinion of the auditor is -- has limited security, limited assurance, which means that in addition to the assessment, also the specifications of paragraph -- sections 243 and 276 of the Austrian Company Code contained. And limited security, of course, limited liability is common practice here. This all -- it means that this complies with the legal requirements. The Supervisory Board will then evaluate with sufficient audit security. But this wording actually complies with our mandate. We just want to have confirm that the NFI report is in compliance with the legal requirements, and this is what we got. But of course, we will evaluate the whole matter. Let me also tell you that the Austrian Oversight Audit Board has looked into our report and has found no objections. As to the audit of the nonfinancial report follows, all statutory regulations and the Austrian Company Code and this, of course, all contained in the audit report as support by the own audit activity. But the Supervisory Board does not control the work of the external auditor, but we consider the result and the explanations. But let me stress again that this is just a voluntary audit in order to get enough -- to get this limited assurance.

Next question comes from Mr. Heis.

It goes to Mr. Bleier. Austria has no longer any energy from core. This is much stronger. As to the bank, we have an exposure of 0.2% of loan book as to the core industry direct and indirect exposure. In the asset management, we have no exposure at all. Thank you.

Thank you. We now move on to Mr. Schteilev question. How many shares do the Management Board members hold as of today?

In the Annual Report, in the notes in Chapter 38 on Pages 189 and 190, shareholding of the Management Board members are disclosed. Any changes in the shareholdings can be accessed under the following link, https://www.erstegroup.com/de/investoren/aktie/directorsdealings.

The next question also comes from Mr. Schteilev, who asks each Management Board members to explain why since the official beginning of the pandemic on the 11th of March, didn't buy a single Erste Group share outside the regulatory blocking periods?

This statement is not quite correct. As was already said, Mr. Spalt acquired 5,000 shares in Q3. Moreover, the Management Board received its entire bonus for 2019 in phantom shares and half the bonus is normally paid out as phantom shares, which means that the bonuses strongly depend on share performance. Moreover, the main focus since the outbreak of the pandemic was on protecting customers and employees and implementing numerous government decided support measures.

The next question concerns the total remuneration for Andreas Treichl of EUR 2.8 million. How many times the average salary of an employee in 2019 is that?

Relative -- related to the average salary of an employee, the multiple is 31.94 fold, but the amount you mentioned also includes contributions to the pension fund. Without contributions to the pension fund, the multiple is 24.8x.

Next question by Mr. Schteilev.

To me, which multiple does the Supervisory Board regard as adequate, socially and economically speaking?

The total remuneration of Andreas Treichl was critically reviewed in recent years by the nomination committee, and we can confirm that we regard the remuneration as in accordance with prevailing market practices.

Next question from Mr. Schteilev.

Do our Management Board members receive separate remuneration for other Supervisory Board functions? And why don't we find any indication of that in the corporate governance report or in the remuneration policy to be decided upon today?

Our Management Board members do not receive separate remuneration not published in the annual report. I hope we understand your question correctly. You wanted to know if a special remuneration is paid. We can confirm that all remuneration components are disclosed in the annual report. And the disclosure is made in accordance with the Austrian Corporate Governance Code. When Supervisory Board members take on -- sorry, when Management Board members take on Supervisory Board functions in other companies, they do not receive separate remuneration.

Then a question by Mr. Schteilev to Mr. Bleier. Which are the 5 biggest single risk in the corporate customers and commercial real estate segment defined on the basis of size of exposure and average interest rate? No names are to be mentioned. Mr. Bleier, I will try and answer your question as well as I can. I referred to the exposure, that is loans drawn and loan commitments made undrawn so far. A big Austrian telecommunication group represented in Eastern Europe is one of the 5 big ones, then a major automotive producer, a major metallurgical producer with production sites in our core markets and a big energy group. As regards real estate, there is only one among the top 5 that is a nonprofit residential developer. The top 5 account for 0.3% to 1.7% of our total portfolio. Sorry, that was the average interest rate, 0.3% to 1.7%. And according to our rating, these customers all have an investment-grade rating.

Next question to Ms. Habeler-Drabek. A quantification of risk models for real estate companies and changes of factors in case the ECB were to decide 1 day to make certain investors a bit poorer.

Thank you, Mr. Chairman. A very important point. The cash flow view is an essential principle of our loan origination criteria, and that also holds for real estate projects. The risk models for the financing on real estate projects are based on cash flow available for debt service, that is rental income minus costs, which are related to credit installments to be redeemed. The second component is loan-to-value. Basically, that is the market value of the properties to be financed. The rules are extremely strict and detailed. And each market value opinion is subjected to a plausibility check by our real estate appraisers, and we don't see any risk in connection with ECB decisions.

Next question to Ms. Habeler from shareholder, Alexander Kotslik. Will impairments on loans be expected for 2020?

For 2020, we expect risk costs of between 65 and 80 basis points relative to customer loans. As regards the current development of infection numbers and the impact we expected on the macroeconomic environment, it's realistic to expect that we will end the upper range of this guidance.

Another question from shareholder, Kotslik. Presence at Supervisory Board meetings 2019 and where Supervisory Board meetings in 2020 held as video conferences.