Investor Presentation

Transcription

1 Investor Presentation August 07 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

3 Our history A leading player in consumer finance in Switzerland; founded in 9 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 Launched FNAC GE acquired Bank Prokredit and Aufina Rebranded GE Money Bank Terminated AMAG Leasing cooperation Launched Conforama Launched TCS Rebranded Cembra Money Bank Acquisition of Swissbilling 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 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 4

5 Investment highlights A leading Swiss consumer finance provider with a diversified, stable business with strong and consistent earnings CHF 4.bn receivables (June 07) 8% 4% 40% Return on equity (ROE) Personal loans Auto leases & loans Cards Earning per share (EPS) Core Tier ratio 4.% 7.0% 7.7% 7.4% 9.7% 0.6% 9.8% 0.0% Generating above average return on equity (ROE) while maintaining a strong capital position with significant excess capital build-up Page 5

6 A leading player in personal loans.7bn Personal loan sector in Switzerland Cembra Money Bank ca 37% 06 Personal loan receivables Bank-now Cashgate Migros Bank Cantonal banks National coverage with 8 branches Lausanne Neuenburg Geneva Basel Biel Freiburg Aarau Solothurn Sitten Bern Baden Zürich Luzern Winterthur St. Gallen Chur Diverse sourcing and distribution model with 8 branches, 00 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 6k Strong marketing presence to attract and retain customers brand ambassador Christa Rigozzi Lugano Income and yield (in CHF mn).3%.% 0.7% Yield Interest income Company estimate. Personal lending as defined by ZEK. Page 6

7 A key player in auto leases and loan.6bn Auto lease sector in Switzerland Captives AMAG Leasing BMW FCA Capital Ford Credit MultiLease PSA Finance RCI Finance 06 Auto leasing volumes Diversified distribution Income and yield (in CHF mn) 5.3% 5.% 5.0% Independent Bank-now Cashgate Cembra (3%) EFL Autoleasing German speaking French speaking Italian speaking Yield A strong independent player no brand concentration (Audi biggest with 3%) 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 (5 employees) supported by service centers in German, French and Italian speaking parts of Switzerland Personalized and flexible service offering Average initial ticket size CHF k Interest income Page 7

8 0.7bn Growing quickly in credit cards Swiss credit card market (June 07) Cembra Money Bank.9% 6.5mn credit cards Swisscards (CS) Viseca (Aduno) Cornèr Bank Postfinance UBS Launched credit card offering in 006, growing the portfolio by 8% p.a. over the last 9 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 7 Income (in CHF mn) Fee income Interest income Growth opportunities New relationships and increased penetration of partners' customer base e.g. Cumulus: 685k credit cards out of.95mn 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 Auto receivables: CHF,658 million (+%) Combined receivables: CHF,50 million (+3%) Consumer finance market update H 7 Markets in H 7 Personal loan market stabilised in H 7 unchanged aggressive competition Number of credit cards up % and transaction volumes up 8% NFC volume doubled Cembra s performance Cembra managed to stabilise assets while defending price branch closures not affecting volume more online Defending market share aggressive peers with very low teaser rates (starting at 4.7%) Customers requesting more flexibility combination with cards Number of credit cards up 6% to 768,000 (up % y-o-y) market share increased to % Credit card fees up 6% y-o-y Volumes grew at twice the market growth New car sales slightly up (59k; +0.6%); used car market stable on high level (44k; +0.%) Maintaining pricing despite pressure from captives Stable market share in auto business Payment technology moving: - Market entry of SamsungPay - TWINT was relaunched in Q - ApplePay active in Swiss market Still many players and no winners Cembra sticks to smart follower strategy Leading on NFC 0% of NFC transactions in H 7 by Cembra Source: SNB Monthly Banking Statistics (Jan-May) Sources: auto-schweiz; Eurotax Page 9

10 Business development H 7 Cumulus Mastercard renewed Updated programme live since June addressing upcoming lower domestic interchange regulation (44 bps vs 70bps) which comes into effect August Major changes include: - Increased interest rate on overdrafts to.95% (from 9.9%) - Reduced loyalty points for transactions outside Migros stores to :3 (from : 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 4mn 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 80 merchants Financed 90,000 invoices in H 7 Scaling the business to become material in the future Expected to be loss making in FY 7 due to investments in infrastructure and personnel Page 0

11 Stable asset quality Delinquencies Write-Off Performance by Year of Origination 4.0% 6.0% %.0% 30+ days past due 5.0% 4.0% 3.0% % 0.0% Non-performing loans (NPL).0%.0% 0.0% Credit Grade Comments 00% 80% 60% 3% 4% 9% Stable risk appetite and customer profile Strong asset quality 40% Stable write-off performance in recent years 0% 55% 0% June 7 CR CR CR3 CR4&5 Note: The five consumer ratings (CR) and their associated probabilities of default are: CR: 0.00%.0%; CR:.%.97%; CR3:.98% 6.99%; CR4: 7.00% 3.6%; CR5: 3.7% and greater Page Non-performing loans (NPL) ratio is defined as the ratio of non-accrual financing receivables (at period-end) divided by the financing receivables Based on Personal Loans and Auto Leases & Loans portfolios

12 Off-BS Deposits 59% Non-Deposits 4% Funding Diversified, local funding sources (in CHF mn) ' '45 ' End of period funding cost Avg. remaining term (yrs) LCR NSFR 3,8 Leverage ratio Undrawn credit lines 0.8%.4 540% >00% 5.4% 500mn 3, %.7 908% >00% 5.4% 350mn 3,98 0.6%.9 695% >00% 5.6% 350mn Funding programs Senior unsecured ABS Bank loans Institutional term deposits Retail term deposits and saving accounts Committed revolving credit lines Six issuances of between 00mn to 50mn each Avg. remaining term of 4. yrs / avg. rate of 0.68%* Two AAA-rated issuances of CHF 00mn each Avg. remaining term of.3 yrs / avg. rate of 0.3%* Two loans of 00 mn and 50mn respectively Avg. remaining term of 0.6 yrs / avg. rate of 0.67% Diversified portfolio across sectors and maturities Book of 00+ investors Circa 3,000 depositors Fixed term offerings of 5 8 years Saving accounts are on-demand deposits Avg. rate of 0.55% / Avg. remaining term of.6 yrs Four facilities of between CHF 50mn to 00mn each Avg. remaining term of. yrs / avg. rate of 0.4%* 3,87mn, CHF 3,874mn, CHF 3,977 mn including deferred debt issuance costs on long- & short-term debt (US GAAP) Based on the revised NSFR framework published by the Basel Committee on Banking Supervision in January 04 * Additional charges apply related to fees and debt issuance costs Page

13 Strong capital position CET capital walk (in CHF mn) 0.0% 0.% CET ratio Net income H 7 7 (49) () Expected Purchase of ordinary own shares dividend (70%) Excess capital 8% minimum target.% regulatory requirement Comments Excess capital stood at CHF 83mn as of 30 June 07 Reserves from capital contributions of CHF 84.8mn (June 07) designated for future ordinary dividend payments (Swiss withholding tax exempt) eny Finance transaction will consume circa CHF 6mn capital (@8% T) and add RWA of circa CHF 3mn (75% risk-weight) intends to return excess Tier capital above c.0 % 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 RWA and capital (in CHF mn) Per share data H 6 H 7 Risk-weighted assets (RWA) 3,758 3,840 Basic earnings per share (EPS) Tier capital Number of shares 30,000,000 30,000,000 Tier capital ratio 0.0% 0.% Treasury shares Shares outstanding,803,67 8,96,373,84,70 8,85,830 Weighted-average numbers of shares outstanding 8,96,340 8,9,458 Derived from the Bank s statutory consolidated financial statements which were prepared in accordance with Swiss GAAP Includes full-year net income adjusted for expected dividend distribution 3 Based on weighted-average numbers of common shares outstanding Page 3

14 Outlook and guidance for 07 Medium-term targets H 7 Outlook for full-year 07 Asset growth Net customer loan growth to be moderate and in line with Swiss GDP growth Profitability RoE target of at least 5%.4% 6.9% Revenues Lower interest income from personal loans due to the introduction of the rate cap for new business since July 06 Continued growth in credit cards and new card generation (since June 07) with positive impact on revenues Cost base Capitalisation Target Tier capital ratio of minimum 8% 0.% 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% Guidance for full-year 07 confirmed Earnings per share EPS in the range between CHF Provision for losses In line with prior years performance Annualised Assumed distribution to determine Tier capital; to be revisited at year-end 07 Page 4

15 Appendix Page

16 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 BB/BC framework Smart follower for new technologies M&A transactions SWISSBILLING Partnerships / Joint Ventures Focus on consumer finance or consumer finance related areas primarily in Switzerland is key Page 6

17 H 7: Solid results in-line with guidance Environment Managing business Continued low interest rates inflation turning positive Consumer confidence improving consumer loan market showing sign of recovery First twelve months with new interest rate caps (0% and %) Domestic interchange fee to be reduced from 70bp to 44bp as of August 07 Asset growth of % across all business lines Successful launch of new Cumulus MC generation Swissbilling integration progressing Stable loss performance: 30+ DPD at.9% / NPL at 0.4%... loss Cost discipline focus with cost/income ratio of 43.3% Solid results Net income of CHF 69.4mn or CHF.46 per share in-line with guidance Return on equity (ROE) of 6.9% Delivering on all mid-term targets Strongly capitalised Tier capital ratio of 0.%... resulting in excess capital of CHF 83mn above Tier target of 8% Invest excess capital in growth or return to shareholders as per refined capital policy Includes net income adjusted for expected dividend distribution Page 7

18 P&L Income statement (in CHF mn) H 7 H 6 V% Comments Interest income Interest expense Net interest income Insurance 5. (.6) (4.) (8) () (8) (0) Lower interest income driven by lower APR following the introduction of rate caps Partially offset by lower interest expenses due to favourable repricing Credit card fees Loans and leases Other Commission and fee income Credit Cards fee increase driven by the increase in the number of cards issued and by fee initiatives Interchange (after contributions for loyalty) accounted for c. % of credit card fee income Total income Provision for losses Operating expense Income before taxes Taxes (.) (83.3) 87.9 (8.5) 97.4 (.7) (84.8) 90.9 (9.) (3) (3) () (3) (3) 3 4 New disclosure: Increase in Other driven by fee income from consolidation of Swissbilling Loss rate of.0% reflecting the continued risk management discipline Net income (3) 5 Decrease in opex due to reduced marketing spend and Basic earnings per share (EPS) (3) lower rental expenses Key ratios Net interest income / financing receivables Cost/income Effective tax rate Return on average equity (ROE) Return on average assets (ROA) 6.7% 43.3%.0% 6.9%.8% 7.3% 4.9%.0% 8.% 3.% Page 8

19 Operating expenses Income statement (in CHF mn) H 7 H 6 V% Comments Compensation and benefits Professional services Increase in salaries & wages mainly due to higher headcount (Swissbilling acquisition) Marketing Collection fees Postage and stationery Rental expenses under operating leases (34) (6) (9) 3 Driven by an increase in investment in digitisation and simplification Lower marketing cost following large-scale advertising campaign in H 6 to promote new rates in personal loans Information technology (6) 4 Lower handling fees for Post payment Depreciation and amortisation Other 7 4. (0.5) nm 5 Lower cost driven by H 6 branch closings one-off (0.4mn) and lower branch/hq rent Total operating expenses Cost/income ratio (reported) % % () 6 Lower cost driven by timing and expected to catch up in H 7 Full-time equivalent employees Swissbilling (0) 7 8 Increase in amortisation following Swissbilling acquisition Increase in FTE driven by Swissbilling Page 9

20 Balance sheet Assets (in CHF mn) V% Comments Cash and equivalents Net financing receivables Personal loans Auto leases and loans Credit cards 63 4,7,738, ,073,70,64 7 (8) 9 Lower cash position due to higher receivables High liquidity ahead of debt maturities in H 7 Financing receivables driven by growth in all product lines Other includes Swissbilling Other (Swissbilling) 3 - nm Other assets Total Assets 4,907 4,857 Liabilities (in CHF mn) 3rd party funding Deposits Short- & long-term debt Other liabilities 3 3,977,356,6 36 3,874,355, Slightly lower retail deposits replaced by institutional Deposits accounted for 59% of total funding Long-term debt increased by issuing an 8-year bond in June Total liabilities Shareholders equity Total liabilities and equity 4 4, ,907 4, ,857 3 (6) 4 Equity was down due to the dividend payments (97.3mn ordinary and 8.mn extraordinary), partially offset by the half-year net income Risk-weighted assets 3,840 3,758 Tier capital ratio 0.% 0.0 % Includes net income adjusted for expected dividend distribution Page 0

21 Provision for losses Provision for losses (in CHF mn) Personal loans % 3.0%.0% 3.3% 3.% 3.3% 30+ days past due 3.0% H'6 H'6 H'7.%.%.0% Loss rate.0% 0.7% 0.7% 0.7% 0.7% 0.0% Non-performing loans (NPL) Jun'4 Jun'5 Jun'6 Jun'7 Auto loans and leasing 4.0%.0%.8%.9% 30+ days past due 3.0% Loss rate defined as ratio of provision for losses on financing receivables to average financing receivables (net of deferred income and before allowance for losses). H 7 loss provision include Swissbilling. Non-performing loans (NPL) ratio defined as ratio of non-accrual financing receivables (at period-end) divided by financing receivables. Page 0.4% Comments 0.4% Loss performance in line with prior years Non-performing loans (NPL) Robust asset quality demonstrated by stable delinquencies, though small variations by product Loss guidance for 07 reaffirmed 0.4%.0%.0% 0.8% 0.9%.%.0% 0.% 0.% 0.% 0.% 0.0% Jun'4 Jun'5 Jun'6 Jun'7 Credit cards 4.0% 3.0%.0%.%.%.%.%.0% 0.5% 0.5% 0.5% 0.5% 0.0% Jun'4 Jun'5 Jun'6 Jun'7

22 Interest income & yield by product Average financing receivables (in CHF mn) H 7 H 6 V% Interest income (in CHF mn) H 7 H 6 V% Personal loans,760,803 () Personal loans (5) Auto leases and loans,657,673 () Auto leases and loans () Credit cards Credit cards Other - nm Other (.7) (.0) 70 Total financing receivables 4,66 4,7 Total interest income (8) Change in personal loans interest income Change in auto leases/loans interest income Change in credit cards interest income Avg. yield: 0.9% 9.6% 5.0% 5.0% 7.7% 7.3% 98.7 (.8) (.6) (0.5) (0.7) 3.3 (0.3) 7. H'6 interest income Rates Volumes other H'7 interest income Significantly reduced pricing since June 06 Lower average receivables (-%) H'6 interest income Rates Volumes other H'7 interest income H'6 interest income Rates Volumes other H'7 interest income Slightly lower receivables Defending rates Higher average receivables (+5%) New rate cap of % for credit cards Average receivables calculated on a yearly basis (-point average) Other includes deferred income and excess recoveries Page