Investor Presentation

Transcription

1 Investor Presentation December 2017 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. While the published numbers are rounded, they have been calculated based on effective values. All figures are derived from US GAAP financial information unless otherwise stated. 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 A leading player in consumer finance in Switzerland; founded in 1912 Foundation Banque commerciale et agricole E. Uldry & Cie in Fribourg Launched credit cards through Migros partnership Launched saving products for retail and institutions First public Auto ABS in CH IPO at SIX Swiss Exchange Launched FNAC eny Finance transaction GE acquired Bank Prokredit and Aufina Rebranded GE Money Bank Launched Conforama Launched TCS Rebranded Cembra Money Bank Acquisitions of Swissbilling and EFL Autoleasing Long-term expertise in the Swiss market 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 Page 3

4 Strategy Defend the core business Build the future Gain size through external growth & diversify Asset growth through strategic initiatives Invoice Finance Cross sell / upsell Grow fee-based income New card partners More services Cost management Digitize the business Simplify IT 3 year IT investment plan Simplify customer onboarding New CRM & Servicing Digitization Customer centric organization B2B/B2C framework Smart follower for new technologies M&A transactions SWISSBILLING EFL Autoleasing Partnerships / Joint Ventures eny Finance Focus on consumer finance or consumer finance related areas primarily in Switzerland is key 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 Performance highlights IPO targets (Oct. 2013) Asset growth Net customer loan growth to be moderate and in line with Swiss GDP growth H1 17 (0.4)% 2.1% (0.3)% 0.9% 2.4% Profitability RoE target of at least 15% 14.1% 17.0% 17.7% 17.4% 16.9% Capitalisation Target Tier 1 capital ratio of minimum 18% 19.7% 20.6% 19.8% 20.0% 20.2% Dividend payout Target payout ratio for ordinary dividend between 60% and 70% of net income 64% 66% 66% 68% - Earnings per share (EPS) Dividend yield % 5.6% 5.2% 6.0% - Page 6

7 A leading player in personal loans 1.7bn Personal loan sector in Switzerland 1 Cembra Money Bank ca 37% 2016 Personal loan receivables 1 Bank-now Cashgate Migros Bank Cantonal banks National coverage with 18 branches Lausanne Neuenburg Geneva Basel Biel Freiburg Aarau Solothurn Sitten Bern Baden Zürich Luzern Winterthur St. Gallen Chur Diverse sourcing and distribution model with 18 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 26k Strong marketing presence to attract and retain customers brand ambassador Christa Rigozzi Income and yield (in CHF mn) 11.3% 11.2% Lugano 10.7% Yield H1 17: managed to stabilise assets while defending price branch closures not affecting volume Interest income Company estimate. Personal lending as defined by ZEK. Page 7

8 A key player in auto leases and loan 1.7bn Auto lease sector in Switzerland Captives AMAG Leasing BMW FCA Capital Ford Credit MultiLease PSA Finance RCI Finance 2016 Auto leasing volumes Diversified distribution Income and yield (in CHF mn) 5.3% 5.1% 5.0% Independent Bank-now Cashgate Cembra (13%) EFL Autoleasing German speaking French speaking Italian speaking Yield A strong independent player no brand concentration (Audi biggest with 13%) Mix of new (40%) and used cars (60%) with a leading position in auto leases and loans for used cars in Switzerland Offering products through 3,400 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 22k H1 17: Maintaining pricing despite pressure from captives stable market share Interest income Page 8

9 0.8bn Growing quickly in credit cards Swiss credit card market (June 2017) Cembra Money Bank 11.9% 6.5mn credit cards Swisscards (CS) Viseca (Aduno) Cornèr Bank Postfinance UBS Launched credit card offering in 2006, growing the portfolio by 18% p.a. over the last 9 years Credit card solutions for major retailers and organisations in Switzerland A fast growing portfolio (in 1,000 cards) Program #1 retailer in Switzerland Touring Club Switzerland A track record of innovation with tailored dualcard and attractive loyalty programs 163 H1 17: Number of credit cards up 11% y-o-y to 768,000 credit card fees up 16% y-o-y H1 17 Income (in CHF mn) Page Fee income Interest income Growth opportunities New relationships and increased penetration of partners' customer base e.g. Cumulus: 685k credit cards out of 2.95mn loyalty cards NFC technology & increase in contactless payments no PIN needed up to CHF 40 Switzerland still largely a cash payment country

10 Business development H Cumulus Mastercard renewed Updated programme live since 1 June addressing upcoming lower domestic interchange regulation (44 bps vs 70bps) which comes into effect 1 August Major changes include: - Increased interest rate on overdrafts to 11.95% (from 9.9%) - Reduced loyalty points for transactions outside Migros stores to 1:3 (from 1:2 before) - Free cash withdrawal at Migros cashier - Changes to certain fees Overall non-material financial impact expected Refinancing of personal loan portfolio Strategic financing partnership with eny Finance AG, a pure online provider Personal loan portfolio of CHF 42mn to be refinanced by an SPV fully owned and consolidated by Cembra eny Finance AG will continue to service the portfolio on behalf of the SPV and originate new assets New personal loan assets continue to be refinanced by SPV Cembra will provide debt, equity and a range of services to the SPV eny Finance AG will remain an independent player in the Swiss personal loan market Swissbilling On-track investing in expanding the franchise and building new products Good pipeline of prospective merchants and working already with more than 280 merchants Financed 190,000 invoices in H1 17 Scaling the business to become material in the future Expected to be loss making in FY 17 due to investments in infrastructure and personnel Page 10

11 Acquisition of EFL Autoleasing AG Independent leasing provider active since 1954 (current owner purchased business in 2004) based in Winterthur (Switzerland) with 26 FTEs Auto leasing & auto loan portfolio of ca. CHF 280mn as per June 2017 EFL works with ca. 600 dealers and maintains Swiss captive relationships for Hyundai and SsangYong Sales force of five FTEs with two service centers in Winterthur and Nyon ca. 16,000 active customers Risk metrics and margins very similar to Cembra s existing auto lease & auto loan business No banking licence Page 11

12 EFL Autoleasing transaction rationale Strategy: Gain size through acquisitions in consumer finance in Switzerland EFL represents a unique opportunity to gain size in one of Cembra s core products Creating the leading independent auto lease & auto loan provider with a portfolio of ca. CHF 1.9bn with a market share of ~15% Synergies / Economies of scale 1) Funding: EFL currently funded at all-in costs of ca. 1.4%; refinancing at rates similar to Cembra s existing cost of funding => Synergies to be realized immediately 2) Operational: Realizing operational synergies by merging the businesses => Synergies to flow through over time Profitable growth: EPS accretive as of 2018 Increase overall profitability of Cembra s auto lease & auto loan business Page 12

13 Key financials P&L (in CHF mn) H Balance sheet as per 30 June 2017 Interest income Interest expense (12.6) (26.5) (in CHF mn) Assets Liabilities & Equity Net interest income Insurance Cash 613 Credit card fees Loans and leases Other Commission and fee income '738 Personal loans 2'356 Deposits Total income Provision for losses Operating expense Income before taxes Taxes (21.1) (83.3) 87.9 (18.5) (44.6) (167.6) (38.2) Net financing receivables '658 Auto leases & loans 1'621 Short- and long-term debt Net income Basic earnings per share (EPS) Ratios Net interest margin (NIM) Cost/income ratio Return on average equity (ROE) Return on average assets (ROA) % 43.3% 16.9% 2.8% % 42.5% 17.4% 3.0% Other 772 Credit cards 123 Easy to understand balance sheet No derivatives Cash at SNB Other Shareholders equity Page 13

14 Off-BS Deposits 59% Capital market 41% Diversified funding Diversified funding sources (in CHF mn) Pre-IPO 400 1' GECC funding 200 1' Development of CoF and term Funding programs Senior unsecured ABS (Auto) Bank loans Institutional term deposits Six issuances of between 100mn to 250mn with coupons of 0.18% to 1.25% A credit rating from S&P with outlook «stable» Two issuances of CHF 200mn each with coupons of 0.22% and 0.23% AAA-rated by Fitch / Moody s Two loans of 100mn and 150mn respectively Portfolio of 100+ institutional investors (corporates, pension funds, banks etc.) Diversified across sectors and maturities 2.20% % % Avg. remaining term 2.8 (years) % 0.97% 0.82% 0.74% 0.66% 0.62% Cost of funding Retail term deposits and saving accounts Committed revolving credit lines Circa 32,000 depositors Fixed term offerings of 3 8 years with attractive rates (0.30% to 0.80%) Four facilities of between CHF 50mn to 100mn each H1' H1' H1' H1'17 Page 14

15 Robust risk management Unique Swiss framework Strong consumer credit act (KKG) since 2003 protecting both customers and lenders - Mandatory budget calculation - Interest rate cap (10% and 12%) - Central credit bureau (ZEK) - 14 days cool-off period - Ban of aggressive advertising 700 debt enforcement offices throughout Switzerland: - Payment arrangements, seizure of assets, salary garnishment - Issuance of loss certificate (valid for 20 years and transferable) Stable loss rate 1.0% 1.1% 1.1% 1.0% Personal loans 4.0% 3.0% 2.0% 3.3% 3.2% 3.3% 3.0% 1.0% 0.7% 0.7% 0.7% 0.7% 0.0% 30+ days past due Non-performing loans (NPL) Jun'14 Jun'15 Jun'16 Jun'17 Auto leases & loans 4.0% 3.0% 2.0% 1.0% 0.8% 0.9% 1.1% 1.0% 0.2% 0.1% 0.1% 0.2% 0.0% Jun'14 Jun'15 Jun'16 Jun'17 Credit cards 4.0% 3.0% H1'17 2.0% 1.0% 0.0% 1.2% 1.2% 1.2% 1.2% 0.5% 0.5% 0.5% 0.5% Jun'14 Jun'15 Jun'16 Jun'17 Page 15

16 Stable asset quality Delinquencies Write-Off Performance by Year of Origination 2 4.0% 6.0% % 2.0% 30+ days past due 5.0% 4.0% 3.0% % 0.0% Non-performing loans (NPL) 1 2.0% 1.0% 0.0% Credit Grade Comments 100% 80% 60% 3% 14% 29% Stable risk appetite and customer profile Strong asset quality 40% Stable write-off performance in recent years 20% 55% 0% June 17 CR1 CR2 CR3 CR4&5 Note: The five consumer ratings (CR) and their associated probabilities of default are: CR1: 0.00% 1.20%; CR2: 1.21% 2.97%; CR3: 2.98% 6.99%; CR4: 7.00% 13.16%; CR5: 13.17% and greater Page 16 1 Non-performing loans (NPL) ratio is defined as the ratio of non-accrual financing receivables (at period-end) divided by the financing receivables 2 Based on Personal Loans and Auto Leases & Loans portfolios

17 Strong capital base and attractive dividend policy CET1 capital (in CHF mn) Dividend per share since IPO 20.0% 20.2% CET1 capital ratio Excess capital 18% minimum target 11.2% regulatory requirement Extraordinary dividend Ordinary dividend Conservative approach Standard approach to credit risk with risk weightings of 75% for all products; no internal models; risk-weighted assets (RWA) of CHF 3,840 million All core capital; no hybrid capital Internal minimum CET1 target of 18% significantly above regulatory minimum requirement of 11.2% Above-average CET1 capital ratio of 20.2% as per June 2017 Ordinary dividend Target payout ratio for ordinary dividend between 60% and 70% of net income Excess capital / extraordinary dividend Return excess Tier 1 capital above 20% to shareholders either via extraordinary dividends or share buybacks unless there is a more efficient allocation of capital in particular for internal or external growth Page 17

18 Outlook and guidance for 2017 Medium-term targets H1 17 Outlook for full-year 2017 Asset growth Net customer loan growth to be moderate and in line with Swiss GDP growth Profitability RoE target of at least 15% 2.4% 16.9% 1 Revenues Lower interest income from personal loans due to the introduction of the rate cap for new business since 1 July 2016 Continued growth in credit cards and new card generation (since June 2017) with positive impact on revenues Cost base Capitalisation Target Tier 1 capital ratio of minimum 18% 20.2% Continued cost discipline with investments in digitization leading to slightly higher cost/income ratio Dividend payout Target payout ratio for ordinary dividend between 60% and 70% of net income 70% 2 Guidance for full-year 2017 confirmed Earnings per share EPS in the range between CHF Provision for losses In line with prior years performance 1 Annualised 2 Assumed distribution to determine Tier 1 capital; to be revisited at year-end 2017 Page 18