Swiss Equities Conference 2016

Transcription

1 Swiss Equities Conference January 206 Page

2 Cautionary statement regarding forwardlooking statements This presentation by AG ( the Bank ) includes forward-looking statements that reflect the Bank s intentions, beliefs or current expectations and projections about the Bank s future results of operations, financial condition, liquidity, performance, prospects, strategies, opportunities and the industries in which it operates. Forward-looking statements involve matters that are not historical facts. The Bank has tried to identify those forward-looking statements by using the words may", will", would", should", expect", intend", estimate", anticipate", project", believe", seek", plan", predict", continue" and similar expressions. Such statements are made on the basis of assumptions and expectations which, although the Bank believes them to be reasonable at this time, may prove to be erroneous. These forward-looking statements are subject to risks, uncertainties and assumptions and other factors that could cause the Bank s actual results of operations, financial condition, liquidity, performance, prospects or opportunities, as well as those of the markets it serves or intends to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. Important factors that could cause those differences include, but are not limited to: changing business or other market conditions; legislative, fiscal and regulatory developments; general economic conditions in Switzerland, the European Union and elsewhere; and the Bank s ability to respond to trends in the financial services industry. Additional factors could cause actual results, performance or achievements to differ materially. In view of these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements. The Bank, its directors, officers and employees expressly disclaim any obligation or undertaking to release any update of or revisions to any forward-looking statements in this presentation and these materials and any change in the Bank s expectations or any change in events, conditions or circumstances on which these forward-looking statements are based, except as required by applicable laws or regulations. This presentation contains financial information which has been reviewed but not formally audited. This information is presented for illustrative purposes only and, because of its nature, may not give a true picture of the financial position or results of operations of the Bank. Furthermore, it is not indicative of the financial position or results of operations of the Bank for any future date or period. By attending this presentation or by accepting any copy of the materials presented, you agree to be bound by the foregoing limitations. Page 2

3 Our history and strategy A leading player in consumer finance in Switzerland; founded in 92 Foundation Banque commerciale et agricole E. Uldry & Cie in Fribourg Cooperation with respect to AMAG Leasing Launched credit cards through Migros partnership Reorganisation of business Launched saving products for retail and institutions First public Auto ABS in CH IPO at SIX Swiss Exchange GE acquired Bank Prokredit and Aufina Rebranded GE Money Bank Terminated AMAG Leasing cooperation Launched Conforama Launched TCS relationship Rebranded Cembra Money Bank GE share placement and buyback Evolved from a dual-product offering to a multi-product strategy with a multi-channel distribution A simple balance sheet, with no exposure to mortgages, and no full retail banking or private banking ambitions Strong focus on Switzerland and Consumer Finance Page 3

4 Investment highlights A leading Swiss consumer finance provider with a diversified, stable business with strong and consistent earnings CHF 4.bn receivables (June 205) 4% 45% 4% Return on equity (ROE) Personal loans Auto leases & loans Cards Earning per share (EPS) Core Tier ratio 4.% 7.0% 7.7% 2 9.7% 20.6% 8.7% H' June 205 Generating above average return on equity (ROE) while maintaining a strong capital position with significant excess capital build-up EPS guidance provided 9 August Annualised Page 4

5 Our value proposition Independent consumer finance specialist Diversified distribution through own branches, independent credit agents, car dealers and retailers combined with a strong online presence Premium price supported by superior personalized and flexible service in personal loans, auto leasing and credit cards Highly process driven organization, digitized where needed and with strong risk domain expertise Long-term experience in the Swiss consumer market with stable and consistent management Page 5

6 A leading player in personal loans.8bn Personal loan sector in Switzerland Cembra Money Bank 38.2% La Chaux-de-Fonds Lausanne Neuenburg Geneva Yverdon Basel Montreux Sitten 204 Personal loan receivables Biel Freiburg Frauenfeld Baden Winterthur Aarau St. Gallen Olten Zürich Wetzikon Solothurn Bern Bellinzona Bank-now Cashgate Migros Bank Cantonal banks National coverage with 25 branches Luzern Chur Diverse sourcing and distribution model with 25 branches, 200 independent credit agents (ca 30% of volume) and an efficient internet channel Premium pricing supported by personalised superior service with discretion and flexibility Fast and efficient process with underwriting in 30 minutes possible Average initial ticket size CHF 24k Strong marketing presence to attract and retain customers brand ambassador Christa Rigozzi Lugano Income and yield (in CHF mn).3%.3% Yield Interest income Company estimate. Personal lending as defined by ZEK. Page 6

7 A key player in auto leases and loan.7bn Auto lease sector in Switzerland Other 36.5% Cashgate 5.4% Multilease 6.% 203 Auto leasing receivables Bank-now 8.3% Diversified distribution Income and yield (in CHF mn) AMAG 9.5% 5.5% 5.3% Cembra Money Bank.0% BMW (Alphabet) 3.3% German speaking French speaking Italian speaking Yield A strong independent player no brand concentration (Audi biggest with 2%) Mix of new (42%) and used cars (58%) and a leading position in auto leases and loans for used cars in Switzerland Offering products through 3,200+ active large, medium and small auto dealers Dedicated field sales force (25 employees) supported by service centers in German, French and Italian speaking parts of Switzerland Personalized and flexible service offering Average initial ticket size CHF 23k Interest income Page outstanding vehicles leasing receivables (Swiss Leasing Association): CHF.5bn. SLA estimates that in 203 members of the SLA accounted for approximately 80-90% of whole Swiss leasing contract volumes.

8 0.6bn Growing quickly in credit cards Swiss credit card market (June 205) Cembra Money Bank 0.3% 6.0mn credit cards Swisscards (CS) Viseca (Aduno) Cornèr Bank Postfinance UBS Launched credit card offering in 2006, growing the portfolio by 2% p.a. over the last 7 years Credit card solutions for major retailers and organisations in Switzerland A fast growing portfolio (in,000 cards) Program # retailer in Switzerland Touring Club Switzerland A track record of innovation with tailored dualcard and attractive loyalty programs H'5 Income (in CHF mn) Fee income Interest income Growth opportunities New relationships and increased penetration of partners' customer base e.g. Cumulus: 560k credit cards out of 2.88mn loyalty cards NFC technology & increase in contactless payments no PIN needed up to CHF 40 Switzerland still largely a cash payment country Page 8

9 Business update Regulatory developments New interest rate cap: - 0% for personal loans - 2% for credit cards - Effective July 206 and for new contracts only - Set of measures to mitigate the financial consequences - Expected EPS impact of -0% when fully phased in over the next 36 months Changes effective Jan 206: - Cool-off period extended from 7 days to 4 days - Ban of aggressive advertising (self-regulation) Civil litigation: Zurich Commercial Court fully rejected claim by former credit agent in December 205 Technology Introduction of new eservice drives digitization and cost savings NFC kicking off: Cembra customers accounted for 22% of all NFC transactions in H 5 in Switzerland Different new payment apps Cembra acting as smart follower as long as there is no prevailing technology Business transition IT fully separated from GE within two year time frame completed Q4 205 Renewed and upgraded majority of IT landscape Continuing to reduce GE funding and lowering cost of funds below % Page 9

10 Further optimizing and diversifying funding Diversified, local funding sources (in CHF mn) Pre-IPO 3,92 3, '504 60% ' % Optimizing cost of funding Long-term funding: 45% Deposits: 55% Existing funding programs GE Senior 0.40% Bank loans & committed credit 2 CHF 500mn term facility 203/8 ; reduced to CHF 300mn in July CHF 500mn revolving facility 203/8; reduced to CHF 300mn in July Three senior bonds: 203/7; 204/9; 204/22 Coupons between 0.75% and.25% Two Auto ABS: 203/6 and 205/9 CHF 200mn each; Coupons 0.576% and 0.23% Three term loans totaling CHF 400mn from Swiss/international banks due 207/8; CHF 50mn IPO loan fully repaid in July Two revolving facilities from Swiss banks: in total CHF 200mn until 207/8 2.2% 47% 53% Cost of funding GE funding Independent funding 0.97% 3% 87% Institutional term deposits Retail term deposits and saving accounts Diversified portfolio across sectors & maturities Book of 00+ investors Circa 33,000 active depositors Fixed term offerings of 3-8 years (0.5% to.5%) Saving accounts are on demand deposits WA rate 0.75% Page Additional charges apply related to fees and debt issuance costs 2 Reflects bank loans & committed lines in place as at 30 June 205

11 Consistent risk appetite through cycles Unique framework Personal loans Strong Consumer Credit Act (CCA) protecting both customers and lenders: mandatory budget calculation, cool-off period, interest rate cap, credit bureau (ZEK) 5.0% 4.0% 3.0% 3.6% 30+ days past due 3.3% 3.0% 2.9% Robust underwriting and collections processes, including segmentation and scoring strategies built on extensive customer databases Debt enforcement offices present throughout Switzerland: - Payment arrangements, seizure of assets, salary garnishment - Issuance of loss certificate (valid for 20 years and transferable) Stable loss rate 2.0%.0% 0.0% Auto 4.0% 3.0%.3% 0.9% Non-performing loans (NPL) % % % 0.2% 0.6%.0%.0% 0.7% Adjusted Reported 2.0%.0% 0.0% 2007 Cards 4.0%.2%.0% 0.2% 0.2% % 0.2% % 0.2% H'5 3.0% Customer profiles 87% of receivables are by Swiss customers (62%) or settled foreign nationals (25%) 2.0%.0% 0.0% 2007.%.3% 0.5% 0.6% % 0.5% 203.% 0.4% 205 Adjusted for sale of loss certificates in June 203 and estimated lower recoveries in H2 3, 204 and H 5 Page

12 Strong capital position & shareholder returns Required and excess capital (in CHF mn) Excess capital 8% min. target.2% regulatory requirement Required capital Standard approach to credit risk with a riskweight of 75% for consumer loans; CHF 3,689mn RWA All core capital - No hybrid capital Tier ratio of 8.7% by end-june 205 Share buyback of CHF 00mn executed in May CHF Capital return to shareholders since IPO: CHF 279mn (in CHF mn) 64% 66% Page 2 Payout ratio Plus 00mn buyback in 205 Dividend Target dividend payout ratio of 60-70% of net income Reserves from capital contribution of CHF 276.5mn designated for future tax exempt dividend payments Options for excess capital include: - opportunistic M&A in Swiss consumer finance space and bolt-on acquisition of portfolios - special dividends - share buybacks

13 Targets and guidance Medium-term targets H 5 Outlook for full-year 205 Asset growth Net customer loan growth to be moderate and in line with Swiss GDP growth Profitability RoE target of at least 5% Capitalisation +0.7% 7.7% Business transition Optimize funding strategy and complete IT transition Regulatory changes Continuously adapt business to changes in regulatory environment Cost Drive digitisation and organisation simplification Target consolidated Tier capital ratio of minimum 8% Dividend payout Target payout ratio between 60% and 70% of consolidated net income 8.7% 70% 2 Increasing guidance for full-year 205 Earnings per share 3 EPS in the range of CHF Provision for losses Expected at % Annualised 2 Assumed distribution to determine Tier capital; to be revisited at year-end Based on an estimated weighted-average numbers of shares outstanding of about 28,800,000 for 205 Page 3

14 Appendix Page 4

15 Balance sheet Assets (in CHF mn; US GAAP ) V% Cash and equivalents (4) Net financing receivables 4,02 4,074 3,993 4,0 Personal loans,840,855 (),86,902 Auto loans and leases,668,662 0,647,703 Credit cards Other assets Total Assets 4,772 4,82 () 4,590 4,439 Liabilities (in CHF mn) 3rd party funding 3,92 3,34 7 2,960,680 Deposits 2,63,94,660,280 Short- & long-term debt,750,400 25, Due to Affiliates (00) 700,504 Other liabilities (4) 3 74 Total liabilities 4,036 3, ,790 3,358 Shareholders equity (3) 799,08 Total liabilities and equity 4,772 4,82 () 4,590 4,439 Risk-weighted assets 3,730 3,689 3,596 3,68 Tier capital ratio 8.7% 20.6% 9.7% 26.6% Includes net income adjusted for expected dividend distribution Page 5

16 P&L Income statement (in CHF mn; US GAAP ) H 5 H 4 V% Interest income () Interest expense (9.8) (20.5) (3) (4.7) (6.) (70.0) Net interest income () Insurance Credit card fees other (2) Commission and fee income Total income Provision for losses (20.8) (2.0) () (40.9) (7.0) (22.3) Operating expense (8.4) (82.6) (2) (6.4) (78.9) (64.4) Income before taxes Taxes (8.5) (7.6) 5 (37.3) (35.7) (35.9) Net income Basic earnings per share (EPS) Key ratios Net interest income / financing receivables Effective tax rate Return on average equity (ROE) Return on average assets (ROA) 7.% 2.0% 7.7% 2.9% 7.2% 2.4% 6.4% 2.8% 7.4% 2.% 7.0% 3.0% 7.0% 2.2% 4.% 2.9% 6.9% 2.2% 3.% 3.% Page 6

17 Operating expense Income statement (in CHF mn) H 5 H 4 V% Compensation and benefits GE Capital assessments / TSA (64) Professional services (2) Marketing Collection fees Postage and stationery (9) Rental expenses under operating leases (4) Information technology Depreciation and amortization Other (38) Total operating expenses (2) Adjusted operating expenses (2) Cost/income ratio (reported) 42.8% 44.5% 42.5% 50.5% 46.2% Cost/income ratio (adjusted) 3 4.0% 42.8% 42.5% 43.9% 46.2% Full-time equivalent employees (FTE) Transitional Service Agreement (TSA) from November In 204 «Information technology» was part of «Other» and «Professional Services» 3 Adjusted for one-off items: FINMA-related provision, share issuance tax, IPO-related costs Page 7