BANKING BUSINESS CREDIT RISK OVERVIEW

Transcription

1 BANKING BUSINESS CREDIT RISK OVERVIEW BGEO Investor Day 9 November 2017 Tbilisi, Georgia Speaker: Giorgi Chiladze, CRO, JSC Bank of Georgia

2 CONTENT Banking Business loan portfolio overview Cost of risk IFRS9 impact estimation Q&A 2

3 GEL Millions LOAN PORTFOLIO DYNAMICS NET BANKING BUSINESS LOAN PORTFOLIO 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, % 25% 21% 22% 19% 6,682 6,951 14% ,367 1,994 4, ,395 3, , ,179 2,211 1,833 1,735 4,541** 3,902 2,796 1,348 1,613 2, Sep 2017 RB CIB Other* Y-o-Y Growth Rate 25% 20% 15% 10% 5% 0% * Other mainly includes BNB, GLC and Banking Business eliminations ** Growth drivers in RB Sep 16 to Sep 17: Mortgages- 43% MSME 42% Consumer loans and credit card balances 30% 3

4 LOANS TO GDP TREND BANKING SECTOR CREDIT TO GDP*, % Banking Penetration (Sector Loans to GDP) 100% Ukraine 41.4% 80% 60% Armenia Bulgaria Georgia 48.1% 53.2% 55.7% 40% 20% Turkey Latvia Lithuania 56.9% 57.9% 62.1% 0% Russia Serbia 64.6% 74.7% Estonia 84.9% Bank loans to GDP, % * Based on NBG data Source: Central Banks, IMF, as of 31 Dec

5 STABLE LENDING ENVIRONMENT MORTGAGES* GEL 1,466 MILLION MSME GEL 1,501 MILLION DPD Portfolio 1.3% 1.3% DPD Portfolio 1.0% 0.6% 0.9% 0.7% 0.5% 0.7% 0.9% 0.4% 0.5% 0.5% 0.7% 0.6% 0.6% 0.9% 0.5% 0.7% 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 CONSUMER LOANS & CREDIT CARDS* GEL EXPRESS & OTHER RETAIL* GEL 353 MILLION 1,332 MILLION DPD Portfolio DPD Portfolio 1.3% 0.9% 1.0% 0.9% 0.7% 0.8% 1.1% 0.9% 1.0% 1.5% 1.2% 1.6% 1.3% 1.1% 1.1% 1.4% 1.1% 1.1% 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 * Includes RB and WM gross loans 5

6 DIVERSIFIED EXPOSURE CONCENCTRATION OF TOP 10 BORROWERS EXPOSURE BY SECTOR AS OF SEP 2017* 20% Manufacturing, 8.6% 15% 16.8% 16.6% 15.7% Micro loans, 13.4% SME loans, 9.3% Real estate, 5.1% Construction, 4.0% Trade, 3.7% Hospitality, 2.6% 12.7% 11.8% 10.4% Residential mortgage loans, 20.2% Consumer loans, 22.3% Other Sectors, 10.8% 10% Sep 2017 Top 10 Concentration * Sector breakdown based on gross Banking Business portfolio 6

7 DE-DOLLARISATION BANKING BUSINESS* CIB CURRENCY BREAKDOWN 27% 33% 28% 29% 29% 39% USD loans with non- USD income 27% GEL and other currency loans 26%** 73% 67% 72% 71% 71% 61% Sep 2017 Foreign Currency National Currency RETAIL BANKING* USD loans with USD income 47% RETAIL BANKING CURRENCY BREAKDOWN 50% 59% 50% 46% 40% 50% 41% 50% 54% 60% * Currency Breakdown based on gross loan portfolio ** Includes credit cards 51% 49% Sep 2017 Foreign Currency National Currency USD loans with non- USD income 36% USD loans with USD income 10% GEL and other currency loans 54%** 7

8 PORTFOLIO AMORTISATION MORTGAGES* GEL 1,466 MILLION MSME GEL 1,501 MILLION Average duration 3.8 years 77% 76% Average duration 1.6 years 35% 34% 21% 20% 35% 34% 9% 12% 16% 17% 7% 8% 0-3 Years 3-5 Years 5-10 Years >10 Years Sep 2016 Sep Years 3-5 Years 5-10 Years >10 Years Sep 2016 Sep 2017 GENERAL CONSUMER LOANS* GEL 632 MILLION HOME EQUITY CONSUMER LOANS* GEL 410 MILLION 97% 93% Average duration 1.2 years Average duration 2.6 years 3% 7% 47% 43% 23% 23% 29% 34% 0-3 Years 3-5 Years 5-10 Years >10 Years Sep 2016 Sep 2017 * Based on RB and WM gross loan portfolio 0-3 Years 3-5 Years 5-10 Years >10 Years Sep 2016 Sep

9 HIGH LEVEL OF COLLATERALISATION TOTAL LOAN BOOK BY COLLATERAL TYPES SEP 2016 VS SEP % 19% 3% 4% 10% 12% 65% 69% Real Estate and Cash Sureties Movable Assets Unsecured Inside end Sep 2016 Outside end Sep 2017 Based on standalone BOG data 9

10 STABLE REAL ESTATE ENVIRONMENT REAL ESTATE INDICES* 150 Inflation adjusted Real estate price index (3Q17=100, GEL) CAPITALISATION (RENT TO PRICE) RATIO* 12% 10% 8% 6% 4% 2% Capitalization Average 0% * Based on NBG Data (Average taken over 3Q07 and 3Q17) 10

11 GEL millions IMPROVING LOAN PORTFOLIO QUALITY BANKING BUSINESS NPL COMPOSITION BANKING BUSINESS NPL COVERAGE % 3.9% 3.4% % 4.2% 4.1% % 109.6% 110.6% 86.3% 82.8% 67.5% 132.1% 132.8% 120.6% 83.4% 86.7% 93.6% Sep 2017 CIB RB Other NPL/Gross Loan portfolio Sep 2017 NPL Coverage NPL Coverage adjusted by collateral value* * Only real estate assets are used for coverage adjustment 11

12 CONTENTS Banking Business loan portfolio overview Cost of risk IFRS9 impact estimation Q&A 12

13 COST OF RISK BANKING BUSINESS 2.7% 2.7% 2.2% 1.3% 1.3% 1.2% M17 RETAIL BANKING CORPORATE & INVESTMENT BANKING 1.8% 2.6% 2.3% 2.8% 1.6% 1.7% 2.2% 3.1% 0.9% 0.4% 0.8% 1.0% M M17 13

14 COST OF RISK - RETAIL BANKING COST OF RISK NET CHARGE-OFF RATE 3.2% 3.4% 3.1% 2.1% 2.5% 2.3% 2.4% 2.0% 2.0% 1.0% 0.5% 0.6% 0.5% 0.5% 0.4% 0.5% 0.5% 0.5% 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 14

15 COST OF RISK COMPOSITION RB & WM GROSS LOAN BOOK FOR SEP 2017 GEL 4,651.1 MILLION RB &WM 9M17 COST OF RISK 2.8% RB &WM 9M17 COST OF RISK DECOMPOSITION Express & Other Retail Loans Consumer Loans & Credit Cards 353 1, % 3.1% 1.19% RB &WM 9M17 LOAN YIELD Express & Other Retail Loans (47.7%) MSME 1, % 0.88% Consumer Loans & Credit Cards (20.7%) Mortgages 1, % 0.58% 0.13% MSME (12.4%) Mortgages (8.1%) Gross Loan Book Low Dollarisation level High Cost of Risk Decomposition 15

16 CONTENTS Banking Business loan portfolio overview Cost of risk IFRS9 impact estimation Q&A 16

17 IFRS 9 impact estimation Estimated impact on Banking Business Shareholder Equity Reduction by GEL 44 million to GEL 58 million Or by 2.7% to 3.6% No impact on Regulatory Capital No change to Cost of Risk through the cycle Key changes in impairment model Staging IFRS 9 introduces new 3-stage expected loss model compared to 2-stage incurred loss model in IAS 39 Calculation of impairment Stage 1: 12 months expected credit losses Stage 2 and 3: lifetime expected credit losses Macroeconomic parameters - Impairment under IFRS 9 is calculated based on forecasted macroeconomic parameters 17

18 QUESTIONS? BGEO Investor Day 9 November 2017 Tbilisi, Georgia

19 DISCLAIMER FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements, including, but not limited to, statements concerning expectations, projections, objectives, targets, goals, strategies, future events, future revenues or performance, capital expenditures, financing needs, plans or intentions relating to acquisitions, competitive strengths and weaknesses, plans or goals relating to financial position and future operations and development. Although BGEO Group PLC believes that the expectations and opinions reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations and opinions will prove to have been correct. By their nature, these forward-looking statements are subject to a number of known and unknown risks, uncertainties and contingencies, and actual results and events could differ materially from those currently being anticipated as reflected in such statements. Important factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements, certain of which are beyond our control, include, among other things: currency fluctuations, including depreciation of the Georgian Lari, and macroeconomic risk; corporate loan portfolio exposure risk; regional tensions; regulatory risk; cyber security, information systems and financial crime risk; investment business strategy risk; and other key factors that we have indicated could adversely affect our business and financial performance, which are contained elsewhere in this presentation and in our past and future filings and reports, including the 'Principal Risks and Uncertainties' included in BGEO Group PLC's Annual Report and Accounts 2016 and in its Half Year 2017 Results announcement. No part of this presentation constitutes, or shall be taken to constitute, an invitation or inducement to invest in BGEO Group PLC or any other entity, including any future entity such as BGEO Investments PLC or Bank of Georgia PLC, and must not be relied upon in any way in connection with any investment decision. BGEO Group PLC undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. Nothing in this presentation should be construed as a profit forecast. 19