UPDATE ON CAPITAL PLAN, Q GROWTH, AND STRATEGIC KPIs. Warsaw, 10 January 2018

Transcription

1 UPDATE ON CAPITAL PLAN, Q GROWTH, AND STRATEGIC KPIs Warsaw, 10 January 2018

2 INTRODUCTION The purpse f this dcument is t prvide an update n: Alir Bank s capital plan, in light f certain events having a material psitive impact n the Bank s capital psitin cmpared t the capital plan underlying the Digital Disruptr Strategy Implementatin Plan annunced n 4 Octber 2017 The 2017 grwth in light f significantly strnger Q grss lan bk grwth cmpared t the previusly cmmunicated guidance (allwed by the imprved capital psitin) The impact n Alir Bank s strategic KPI targets f: The market cnsensus interest rate hike scenari vs. the scenari assumed in the Bank s Strategy Implementatin Plan IFRS-9 implementatin The bill intrducing the remval f the annual limit f the pensin and disability cntributins The Mnetary Plicy Cuncil s reslutin f 5 December 2017 n lwering the remuneratin f the required reserve frm 1.35% t 0.50% frm 1 January

3 SUMMARY Alir Bank currently targets a Tier 1 rati f 15.0% and a TCR f 17.0% in 2020 (excluding the effects f any ptential dividend payut in 2020), i.e. 3.25pp abve the expected minimum regulatry requirements in 2020 The imprved capital psitin allwed the Bank t accelerate grwth in Q4 2017, leading t the cumulative 2017 grss lan bk grwth amunting t PLN 6.8 B (estimate), i.e. PLN 0.8 B abve the tp range f the strategic target and the previusly cmmunicated guidance The cumulative impact n the strategic KPI targets f: (i) assuming the current market cnsensus interest rate hike scenari, (ii) IFRS-9 implementatin, (iii) the bill intrducing the remval f the annual limit f the pensin and disability cntributins, and (iv) f the Mnetary Plicy Cuncil s reslutin lwering the remuneratin f the required reserve, is as fllws: 2020 KPI Target Strategy implementatin plan annunced n 4 Octber 2017 As adjusted fr the impact f the factrs listed abve ROE 14.1% 16.2% NIM 5.1% 5.3% C/I 39% 39% CR 1.6% 1.7% Annual grss lan bk grwth PLN 5-6 B PLN 5-6 B 3

4 ALIOR BANK S IMPROVED CAPITAL POSITION COMPARED TO THE CAPITAL PLAN ANNOUNCED ON 4 OCTOBER 2017 (1/3) Item Capital plan annunced n 4 Octber 2017 Updated capital plan OSII* Buffer Systemic Buffer frm 1 January 2018 AMA** 0.25% frm Q % Clearance assumed fr end-december bps gain n Tier 1 rati assumed in the strategy time hrizn N OSII buffer designatin in 2017 OSII buffer designatin f 0.25% nw assumed fr Q % in accrdance with the regulatr s guidelines frm December 2017 (resulting in a 1pp lwer TCR requirement) The regulatr s clearance received as planned in December 2017 Currently estimated Tier 1 rati gain f ~25bps in 2018 Further stages f the AMA prject planned fr (lwering the flr frm 80% currently and extending AMA t the BPH Cre and the Rmanian branch activities) with a prjected additinal psitive impact n the Tier 1 rati f 20bps in 2019 and 26bps in 2020 (nncumulative) Other develpments Q net prfit f 190 M significantly exceeding the assumptins in the riginal capital plan and market cnsensus * OSII Other Systemically Imprtant Institutins ** AMA Advanced Measurement Apprach (peratinal risk management) 4

5 ALIOR BANK S IMPROVED CAPITAL POSITION COMPARED TO THE CAPITAL PLAN ANNOUNCED ON 4 OCTOBER 2017 (2/3) Item Lwer impact f IFRS-9 in 2018 cmpared t the assumptins made in the capital plan underlying the Strategy Implementatin Plan (currently estimated Tier 1 impact ~16bps lwer as f 1 January 2018 vs. the capital plan annunced n 4 Octber 2017) in accrdance with the final regulatry transitinal prvisins relating t IFRS-9 implementatin IFRS-9 impact In accrdance with the initial calculatin as f 9 January 2018, and in accrdance with the 5-year amrtizatin scheme*, the negative impact f IFRS-9 n the Tier 1 rati is estimated at: bps (including negative deferred tax asset impact) bps (cumulative) bps (cumulative) Final IFRS-9 impact t be cmmunicated in the 2017 annual reprt (it may differ frm the abve-mentined initial calculatin and differences may be material) * In accrdance with CRR, the IFRS-9 impact n the capital ratis will be amrtized ver a 5-year perid as fllws: % % % % % % 5

6 ALIOR BANK S IMPROVED CAPITAL POSITION COMPARED TO THE CAPITAL PLAN ANNOUNCED ON 4 OCTOBER 2017 (3/3) Item Capital plan annunced n 4 Octber 2017 Updated capital plan Due t the psitive develpments in Alir s capital psitin, n utilizatin f capital ptimizatin instruments needed in rder t maintain the capital buffers at a safe level abve the regulatry requirements at all times in the strategy time hrizn Utilizatin f capital ptimizatin instruments Subdebt issues Temprary utilizatin f a guarantee line frm PZU in 2018 resulting in a Tier 1 capital release f PLN 230 M Securitizatin f crprate lan prtfli in 2018, resulting in a Tier 1 capital release f PLN 230 M (replacing the PZU guarantee line utilizatin) PLN 750 M in Q PLN 200 M in 2018 PZU guarantee line in place since Nvember 2017 (valid till 2020) which can be utilized with full flexibility with respect t the dates, perids and amunts (csts incurred nly when utilized): n utilizatin envisaged in the updated capital plan the instrument secures an additinal capital buffer (allwing a Tier 1 capital release f up t PLN 300 M) in case f any unexpected negative develpments r grwth exceeding the strategic targets Securitizatin f crprate lan prtfli still cnsidered in 2018, but in view f the imprved capital psitin the currently envisaged transactin size trimmed dwn (PLN 120 M vs. PLN 230 M Tier 1 capital release) and nly in rder t ptentially further speed up grwth cmpared t the strategic target f PLN 5-6 B annual grss lan bk grwth PLN 750 M issued in Q N further issuances needed (nr planned) in the strategy time hrizn in rder t maintain the TCR rati at a level at least 100bps abve the regulatry requirement at all times 6

7 ALIOR TARGETS A TIER 1 RATIO SIGNIFICANTLY ABOVE THE REGULATORY MINIMUMS THROUGHOUT THE STRATEGY TIME HORIZON Tier 1 rati evlutin 15.0% Assumed T1 regulatry requirement*** 11.9%* 10.25% 12.4%** Minimum T1 requirement fr 75% dividend payut in accrdance with the current KNF guidelines 11.75% % % 13.25% 2Q2017 3Q Target 2020 * After inclusin f 1H 2017 net prfit ** After inclusin f Q net prfit *** Assumptins: increase f Cnservatin Buffer by 125bps by 2019 and Alir designated as OSII frm Q4 18 (+25bps) 7

8 COUPLED WITH AN EQUALLY STRONG TCR BUFFER, LEADING TO ALIOR ACHIEVING DIVIDEND PAYOUT CAPACITY IN 2020 (DISTRIBUTION OF 2019 PROFIT), SUBJECT TO THE REGULATOR S GUIDELINES AND EXPECTATIONS TCR evlutin 17.0% Assumed TCR regulatry requirement*** 14.0%* 13.25% 16.0%** Minimum TCR requirement fr 75% dividend payut in accrdance with the current KNF guidelines % % 15.25% 13.75% 2Q2017 3Q Target 2020 * After inclusin f 1H 2017 net prfit ** Pr frma after inclusin f Q net prfit and PLN 750M subdebt issues cncluded in Q ** Assumptins: Systemic Buffer at 3% frm 2018, increase f Cnservatin Buffer by 125bps by 2019, Alir designated as OSII frm Q4 18 (+25bps) 8

9 THE IMPROVED CAPITAL POSITION ALLOWED ACCELERATION OF GROWTH IN Q4 2017, WHICH SIGNIFICANTLY EXCEEDED THE STRATEGIC TARGET AND THE PREVIOUSLY COMMUNICATED GUIDANCE 2017 quarterly grss lan bk grwth** evlutin (PLN B) ~ * ~6.8* Strategic annual target and previusly cmmunicated 2017 guidance (PLN B) 2.2 2,2 1Q'7 2Q'17 3Q'17 4Q'17 Cumulative 2017 Actual Estimate 2017 grwth f PLN 6.8 B (estimate) at PLN 0.8 B abve the tp range f the strategic target and the previusly cmmunicated guidance Despite the higher grwth, the Bank s liquidity psitin remained strng with the LCR rati at 121% as at 31 December 2017 (vs. the new increased regulatry minimum f 100% frm 1 January 2018) * Estimate as f 9 January 2018, subject t ptential adjustments ** Definitin: excluding lan lss prvisins, sale f NPLs, Buy-Sell-Back transactins and securitizatin, but including prtfli amrtizatin 9

10 2020 KPI TARGETS UNDER THE MARKET CONSENSUS INTEREST RATE HIKE SCENARIO AND INCLUDING ADDITIONAL ZUS COSTS AND RPP S RESOLUTION (1/2) Alir rate hike assumptins underlying the Strategy Implementatin Plan (nly 25bps till 2020) were cnservative in rder t separate the ptential impact f psitive macrecnmic develpments frm the managerial effrt; therefre, the impact f the current market cnsensus scenari n interest rate hikes is presented n the next slide in rder t prvide a better insight int Alir s strategic KPIs develpment Additinally, the impact f the fllwing factrs is being presented: IFRS-9 implementatin (based n the initial calculatin as f 9 January 2018) The bill intrducing the remval f the annual limit f the pensin and disability cntributins The Mnetary Plicy Cuncil s reslutin f 5 December 2017 n lwering the remuneratin f the required reserve frm 1.35% t 0.50% frm 1 January 2018 The targets presented n the next slide exclude the ptential additinal upside frm initiatives nt included in the base plan (e.g. the digital lan sale platfrm BANCOVO.), which as cmmunicated in the Strategy Implementatin Plan may cntribute an additinal +1.9pp t ROE and -0.8pp t C/I (currently nly the csts f thse initiatives are included in the base plan and reflected in the KPI targets n the next slide) 10

11 2020 KPI Target 2020 KPI TARGETS UNDER THE MARKET CONSENSUS INTEREST RATE HIKE SCENARIO AND INCLUDING ADDITIONAL ZUS COSTS AND RPP S RESOLUTION (2/2) Scenari assumed in the Strategy Implementatin Plan (25bps hike) 1 Scenari reflecting the current market cnsensus n interest rate hikes 2 ROE presented in the Strategy Implementatin Plan 14.1% 15.1% adjusted fr nly additinal ZUS csts, and RPP s reslutin % 14.7% adjusted fr nly IFRS % 16.5% adjusted fr IFRS-9, the additinal ZUS csts, and RPP s reslutin % 16.2% NIM presented in the Strategy Implementatin Plan 5.1% 5.2% adjusted fr nly RPP s reslutin 4 5.1% 5.2% adjusted fr IFRS-9 and RPP s reslutin 4 5.1% 5.3% C/I presented in the Strategy Implementatin Plan 39% 38% adjusted fr the additinal ZUS csts and RPP s reslutin 4 40% 39% CR presented in the Strategy Implementatin Plan 1.6% 1.6% adjusted fr IFRS % 1.7% Annual grss lan bk grwth PLN 5-6 B PLN 5-6 B 1 One PLN interest hike by end-2020 in January 2019 (25bps); n changes in interest rates n ther currencies 2 Interest rate hikes by end-2020: PLN in July 2018 (25bps), March 2019 (25bps), September 2019 (25bps), and June 2020; EUR in June 2019 (25bps), December 2019 (25bps), and September 2020 (25bps) 3 Reflecting the reductin in equity resulting frm IFRS-9 implementatin n 1 January 2018; the impact f IFRS-9 n net prfit is nt expected t be material 4 (i) The csts f the bill intrducing the remval f the annual limit f the pensin and disability cntributins expected t cme int frce frm 1 January 2019 (reflecting the direct csts, i.e. the part f the cntributins paid by the emplyer); (ii) The Mnetary Plicy Cuncil s (RPP) reslutin f 5 December 2017 n lwering the remuneratin f the required reserve frm 1.35% t 0.50% frm 1 January Neither develpment was assumed in the Strategy Implementatin Plan annunced n 4 Octber