Investor Presentation

Transcription

1 Investor Presentation April 08 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 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 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 A leading player in consumer finance Personal loans Auto leases & loans Credit cards Cembra Money Bank ca 36% 07 Personal loan receivables Bank-now Cashgate Migros Bank Cantonal banks Captives AMAG Leasing BMW FCA Capital Ford Credit MultiLease PSA Finance 07 Auto leasing volumes Independent Bank-now Cashgate Cembra (5%) (incl. EFL) Cembra Money Bank.% 6.6mn credit cards Swisscard (CS) Viseca (Aduno) Cornèr Bank Postfinance UBS RCI Finance National coverage with 8 branches Diversified distribution A fast growing portfolio Neuenburg Basel Biel Aarau Solothurn Bern Baden Zürich Luzern Winterthur St. Gallen Chur (in,000 cards) 803 Program Freiburg Lausanne Geneva Sitten Lugano German speaking French speaking Italian speaking Diverse distribution model with 8 branches, 0 independent credit agents (30%) and an efficient internet channel Premium pricing supported by personalised superior service Strong marketing presence to attract and retain customers Page 5 Strong independent player no brand concentration Mix of new (35%) and used cars (65%) Offering products through 3,600 active dealers dedicated field sales force combined with 3 service centers Launched offering in 006 growing the portfolio by 7% p.a. Track record of innovation with tailored dual-card and attractive loyalty programs Strong increase in contactless payments (NFC) Smart follower strategy for new technologies

6 Performance highlights IPO targets (Oct. 03) Asset growth Net customer loan growth to be moderate and in line with Swiss GDP growth (0.)%.% (0.3)% 0.9%.0%.0% organic Profitability RoE target of at least 5%.% 7.0% 7.7% 7.% 6.7% Capitalisation Target Tier capital ratio of minimum 8% 9.7% 0.6% 9.8% 0.0% 9.% Dividend payout Target payout ratio for ordinary dividend between 60% and 70% of net income 6% 66% 66% 68% 69% Earnings per share (EPS) Dividend yield % 5.6% 5.% 6.0% 3.9% Including extraordinary dividend of CHF.00 per share Page 6

7 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 EFL Autoleasing Partnerships / Joint Ventures eny Finance Focus on consumer finance or consumer finance related areas primarily in Switzerland is key Page 7

8 Executing on the Strategy Defend the core business Build the future Gain size through external growth & diversify % organic asset growth Renewed Migros contract for 5 years New partnerships - Hyundai - Harley-Davidson - Interio Executing on digital agenda - CRM investment - Modernizing front-end Cards innovation - Samsung Pay - Garmin / Fitbit Swissbilling acquisition EFL acquisition Eny refinancing model: duplicable Page 8

9 Key financials 07 P&L (in CHF mn) Interest income Interest expense Net interest income Insurance Credit card fees Loans and leases Other Commission and fee income Total income Provision for losses Operating expense Income before taxes (.7) (5.) (67.9) (6.5) (.6) (67.5) 8.9 V% (5) (7) (5) 5 8 nm 7 0 Environment Consumer confidence improving consumer loan market recovering First 8 months with new interest rate caps (0% and %) Domestic interchange reduced from 70bps to bps as of August 07 Managing business Asset growth of % across all business lines acquisitions (8%) and organic growth (%) Successfully closed EFL Autoleasing acquisition funding synergies locked-in Stable loss performance: 30+ DPD at.8% and NPL at 0.%... loss Excellent cost discipline with cost/income ratio of.% Taxes 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) (38.8) %.% 6.7%.9% (38.) %.5% 7.% 3.0% Strong results Net income of CHF.5mn or CHF 5.3 per share supported by strong H 7 result Offsetting lower interest income in personal loans with growth in cards income Solid return on equity (ROE) of 6.7% Tier capital ratio of 9.%... Ordinary dividend of CHF 3.55 per share proposed Page 9

10 Off-BS Deposits 65% Capital market 35% Diversified funding Diversified funding sources (in CHF mn) Pre-IPO '50 GECC funding ' Development of CoF and remaining term Funding programs Senior unsecured ABS (Auto) Bank loans Institutional term deposits Six issuances of between 00mn to 00mn with coupons of 0.8% to.5% A credit rating from S&P with outlook «stable» Two issuances of CHF 00mn each with coupons of 0.% and 0.3% AAA-rated by Fitch / Moody s One remaining loan of CHF 00mn Portfolio of 0+ institutional investors (corporates, pension funds, banks etc.) Diversified across sectors and maturities.0%.5.70%.0.0 Avg. remaining term (years) % 0.97% 0.8%.09% 0.7% 0.66% 0.6% 0.5% Cost of funding Retail term deposits and saving accounts Committed revolving credit lines Circa 9,000 depositors Fixed term offerings of 3 8 years with attractive rates (0.30% to 0.80%) Four facilities of between CHF 50mn to 00mn each 0 03 H' 0 H'5 05 H'6 06 H'7 07 Page 0

11 Stable asset quality Delinquencies¹.0% Write-Off Performance by Year of Origination 6.0% 3.0%.0%.%.%.% 30+ days past due.9%.0%.8%.8%.8%.8%.8% 5.0%.0% 3.0% % 0.0% 0.8% 0.7% 0.6% Non-performing loans (NPL)¹ 0.5% 0.5% 0.% 0.% 0.% 0.% 0.%.0%.0% 0.0% Months Credit Grade³ 00% 90% 80% 70% 60% 50% 0% 30% 0% 0% 0% CR CR CR3 CR&5 Note: The five consumer ratings (CR) and their associated probabilities of default are: CR: 0.00%.0%; CR:.%.97%; CR3:.98% 6.99%; CR: 7.00% 3.6%; CR5: 3.7% and greater Page 3% 3% 9% 55% Loss rate.0%.%.%.0% 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 ³ Based on the Bank Personal Loans, Credit cards and Group Auto Leases & Auto Loans

12 Strong capital base and attractive dividend policy CET capital (in CHF mn) Dividend per share since IPO 0.0% 9.% CET capital ratio Excess capital.00 Extraordinary dividend 8% minimum target.% regulatory requirement 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, million All core capital; no hybrid capital Internal minimum CET target of 8% significantly above regulatory minimum requirement of.% Above-average CET capital ratio of 9.% as per year-end Ordinary dividend Target payout ratio for ordinary dividend between 60% and 70% of net income Excess capital / extraordinary dividend Return excess Tier capital above 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 Page

13 Stable outlook and guidance for 08 Medium-term targets 07 Outlook for 08 Asset growth Net customer loan growth to be moderate and in line with Swiss GDP growth.0% Organic:.0% Revenues Additional revenues from credit cards growth and acquisitions expected to be offset by lower interest income from personal loans following the implementation of the rate cap in July 06 Profitability RoE target of at least 5% 6.7% Provision for losses Loss performance expected to be in-line with prior years performance Operating expenses Capitalisation Target Tier capital ratio of minimum 8% 9.% Increase in cost following increase in headcount and following investments in digitalization resulting in a healthy but slightly higher cost/income ratio Dividend payout Target payout ratio for ordinary dividend between 60% and 70% of net income 69% Guidance for full-year 08 Earnings per share EPS anticipated to be in the range between CHF Proposal to the Annual General Meeting of Shareholders on 8 April 08 Page 3

14 Appendix Page

15 P&L Income statement (in CHF mn) V% Comments Interest income Interest expense Net interest income Insurance Credit card fees (.7) (6.5) (5) (7) (5) 5 8 Lower interest income driven by the reduction in APR following the introduction of the rate caps the vast majority of the lending book has now been repriced Higher APR on Cumulus Mastercard and lower interest expense due to favorable repricing of funding Loans and leases Other Commission and fee income Net revenues Provision for losses Operating expense Income before taxes (5.) (67.9) (.6) (67.5) 8.9 nm Increase in insurance revenue driven by a nonrecurring one-off fee in 07 Credit cards fees performance driven by the increase in the number of cards (+0%) and by the increase in transaction volume (+7%) Interchange (after contributions for loyalty) accounted for c. % of credit card fee income Taxes Net income (38.8).5 (38.) 3.7 Loss rate of.0% reflecting the continued risk management discipline Basic earnings per share (EPS) Key ratios Net interest income / financing receivables Cost/income Effective tax rate Return on average equity (ROE) Return on average assets (ROA) 6.5%.%.% 6.7%.9% 7.%.5%.0% 7.% 3.0% Page 5

16 Operating expenses Income statement (in CHF mn) V% Comments Compensation and benefits Professional services Marketing Collection fees Postage and stationery Rental expenses under operating leases Information technology Depreciation and amortisation Other (.6) (0.7) 0 7 (9) 8 () () Lower pension costs (CHF.5mn) offset by higher headcount following the EFL & Swissbilling acquisitions Driven by business development and continued investment in simplification and regulatory requirements Lower marketing cost following large-scale advertising campaign in 06 to promote new rates in personal loans Driven by growth in credit cards and invoice financing (Swissbilling) Lower HQ rental costs and non-recurring costs following branch closures in 06 Total operating expenses Cost/income ratio 67.9.% % 0 6 Lower costs mainly driven by timing of IT investments Full-time equivalent employees Swissbilling EFL Autoleasing () 7 8 Increase in amortisation following IT investments and Swissbilling acquisition Declining headcount in the Bank offset by the acquisitions of EFL Autoleasing and Swissbilling Page 6

17 Balance sheet Assets (in CHF mn) V% Comments Cash and equivalents Net financing receivables Personal loans 8,56,78 669,073,70 (37) Growth in receivables partly financed via cash Fewer upcoming debt maturities in 08 Auto leases and loans Credit cards Other (Swissbilling) Other assets Total Assets, ,099,6 7-5, nm 3 5 Financing receivables growth across all products organic growth added CHF 6mn (%) and acquisitions contributed CHF 37mn (8%): - EFL: CHF 78mn - eny: CHF mn - Swissbilling: CHF 5mn Liabilities (in CHF mn) Funding Deposits 3,08,67 3,87,355 3 Increase in funding driven by EFL acquisition Deposits increased to 65% of total funding driven by institutional Short- & long-term debt Other liabilities Total liabilities Shareholders equity, 66,3 885,50 35, (6) 3 5 Equity was up as a result of 07 net income (CHF.5mn) and OCI (CHF 8.0mn) partially offset by the dividend payment (CHF 5.5mn) in April 07 Total liabilities and equity 5,099,857 5 Page 7