2014 Annual Results. 4Q 2014 Francisco Gómez CEO. Madrid. January 30 th, 2015

Transcription

1 2014 Annual Results 4Q 2014 Francisco Gómez CEO Madrid. January 30 th, 2015

2 Disclaimer This presentation has been prepared by Banco Popular Español solely for informational purposes. It may contain estimates and forecasts with respect to the future development of the business and to the financial results of the Banco Popular Group, which stem from the expectations of the Banco Popular Group and which, by their very nature, are exposed to factors, risks and circumstances that could affect the financial results in such a way that they might not coincide with such estimates and forecasts. These factors include, but are not restricted to: (i) changes in interest rates, exchange rates or any other financial variables, both on the domestic as well as on the international securities markets, (ii) the economic, political, social or regulatory situation, and (iii) competitive pressures. In the event that such factors or other similar factors were to cause the financial results to differ from the estimates and forecasts contained in this presentation, or were to bring about changes in the strategy of the Banco Popular Group, Banco Popular does not undertake to publicly revise the content of this presentation. The information contained in this presentation refers to the date that appears on it, and it is based on information obtained from reliable sources. This presentation contains summarized information and may contain unaudited information. In no case shall its content constitute an offer, invitation or recommendation to subscribe or acquire any security whatsoever, to make or cancel any kind of investments, nor it is intended to serve as a basis for any contract or commitment whatsoever. Its content shall not be considered as any kind of advice. Banco Popular Group does not assume any responsibility for the losses, direct or indirect, which could derive from the use of this document or its content. This document shall not be reproduced, distributed or published, not whole not partially, without the previous written consent of the Bank. 2

3 Agenda Popular Milestones Results analysis Key highlights P&L Commercial activity Risk management Liquidity & Solvency Outlook Brand reinforcement 3

4 Popular Milestones 4

5 2014 results key highlights I Successfully overcoming a difficult year Adequate results according to the environment: -With high regulatory pressure and still strong economic challenges II Gradual return to normal 330M -Back to dividend payments -Increase of credit production -Solid and recurrent margins -Speed-up on REO sales 5

6 2014 Popular s key milestones 1.Positive results in the AQR & ST 2.Continued SMEs leadership 3.Market reference in profitability & geographic 4.Business diversification 5.Strengthening strategic alliances 6

7 Banco Popular successfully passed the Comprehensive Assessment Baseline scenario Adverse scenario CET1 phased-in (CRDIV/CRR at dec-16) CET1 phased-in including MCN s (CRDIV/CRR at dec-16) 10.93% 7.56% 11.84% 8.47% Minimum 8% 5.5% Excess over the minimum ( M) 2,485 1,756 Including MCN s 3,258 2,529 7

8 Popular continues to lead the SME segment SMEs Market Share (%) Bank 1 Bank 2 Bank 3 Bank 4 Bank 5 Bank 6 4.2% Bank 7 4.2% Bank 8 3.8% Bank 9 2.4% Bank % Bank % Bank % Bank % Bank % 7.6% 17.1% 14.9% 13.7% 12.1% 12.1% > 31,000m of SMEs financing New production of SMEs and self-employed +18% Leader in ICO loans 78,232 new SMEs and self-employed 1 in 4 SMEs is a client Source: AQR and Stress test results Peers: CX, Santander, Unicaja, Liberbank, Bankia, BBVA, NCG, Caixabank, Ibercaja, BMN, Kutxa, Bankinter, Sabadell, Cajamar and Popular. Latest available data 8

9 which allows Popular to be best in class in profitability NIM (%), latest available data 1.52% 1.39% 1.34% 1.24% 1.16% 1.00% Popular Bank 1 Bank 2 Bank 3 Bank 4 Bank 5 Source: Quaterly reports Peers: Sabadell, Bankinter, Caixabank, Bankia and Liberbank. Latest available data 9

10 Popular has continued strengthening and diversifying its business Driving the Mexican business The acquisition of BX+ becomes effective Business development with an expected opening of 50 new branches Reinforcement of the retail and card business in Spain Adquisition of Citibank s card and retail business in Spain: 2,000 M of deposits 1,400 M of credit 1,1 M of cards 10

11 bolstering the relationship with its strategic partners and reaching added value agreements Card business - Formalization of a Joint Venture to maximize value and to enhance the card business growth - Capital gains above 400 M - Option to recover the control after three years Depositary & custody business - Agreement on the management of the depositary and custody business of investment and pension plans Profit contribution of the card business 2015E Popular on standalone 2015E 49% of the card business Recurring future 49% of the card business 31M 41M+32% 80M 11

12 2. Results analysis 12

13 2.1 Key highlights 13

14 2013 earnings have been restated to take into account new IFRIC-21 ( M) 2013 Published 2013 Restatement Net Interest Income 2,411 2,411 Commissions Trading & others Of Which: Other operating expenses Gross Margin 3,657 3,551 Pre-provision Profit 1,933 1,828 Profit before taxes Net Profit The application of IFRIC 21 forces to account the extraordinary payments to the DGF retroactively in 2013, with an effect which is showed above Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

15 4Q14 results key highlights 1. Best 2. Strong 3. Improvement 4. Liquidity in class margin quality -Leader in Net Interest Margin and customer spread in the sector, and highest proportion of revenues coming from retail business -Card business deconsolidated in 4Q14 -Net profit reaches 330M, a 31.4% increase vs. 2013*, in line with our budget commercial activity, focused on SMEs -Record quarter of gross new credit production in every segment -SMEs new production +50.7% QoQ and +18% up in Leaders in ICO loans (21% market share) for three years in a row in asset quality -NPL ratio continues to fall (61 p.b. in the year) and stands at 13.78% -4Q14 sets a new record in real estate assets sales and Capital strength -LTD Ratio at 113.4% -Regulatory CET1 at % (+33 b.p. vs. 3Q14) -Leverage Ratio at 5.54%, one of the bests in the sector, which shows a high capital quality * 2013 Restated data Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

16 2.2 P&L 16

17 Profit and Loss account and ratios ( M) 12M-13* 12M-14 Dif. 12M14 Vs. 12M13 (%) Net Interest Income 2,411 2, % Commissions % Trading & others > Gross Margin 3,551 3, % General expenses and Amortizations 1,723 1, % Pre-provision Profit 1,828 2, % Net provisions 2,436 2, % Provisions for loans and others 1,515 1, % Provisions for real estate assets and Goodwill 1, % Writte-offs recovery % Capital Gains % Profit before taxes % Net Profit % NPL ratio 14.39% b.p. NPL coverage 40.19% 41.43% 125 b.p. Efficiency ratio 44.28% 44.54% 26 b.p. Loan to deposit ratio % % 308 b.p. * 2013 Restated data Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

18 Quarterly Profit and Loss account ( M) 4Q-13* 3Q-14 4Q-14 Dif. 4Q14vs 4Q13* (%) Dif. 4Q14vs 3Q14(%) Net Interest Income % -9.5% Commissions % -15.3% Trading & others % > Gross Margin % 1.4% General expenses and Amortizations % -5.7% Pre-provision Profit % 11.2% Net provisions % -63.6% Provisions for loans and others % -74.1% Provisions for real estate assets and Goodwill % 51.6% Writte-offs recovery % 34.5% Capital Gains % % Profit before taxes % 96.6% Net Profit % -3.1% * 2013 Restated data Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

19 Net Interest Income in 4Q14 grows 3.4% over the previous quarter like for like Net Interest Income evolution (%) 1.57% 1.52% % 2,411 2,331 Fixed income portfolio reduces its contribution in 188 M 552 4Q13 3Q14 4Q14 12M13 12M14 Card business NIM (%) Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

20 Active pricing management allows us to have a customer spread well in excess of our stock Higher customer spread on new production with asset / liability improvement potential 3.52% +94 b.p. 4.15% +62 b.p. 2.58% 3.53% 0.64% -97 b.p. 1.61% Customer spread on new production Customer spread on stock New production on the asset side Stock New production on the liability side Stock Our loan profitability is ahead of our competitors including in very competitive products such as ICO loans 3.53% 3.32% 3.00% 2.65% 2.34% POP Bank 1 Bank 2 Bank 3 Bank 4 Peers: Caixabank, Bankinter & Bankia. Data peers as of 3Q14, with the exception of Bankinter and Sabadell, as of 4Q days 1 year 2 years 3 years 5 years Popular 2.30% 2.25% 3.86% 3.87% 4.08% Average peers 2.22% 2.24% 3.73% 3.66% 3.81% (Ex. One-offs) Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

21 and increasing in like to like terms Customer yields and costs evolution (including commercial paper) (%), Excluding singular transactions Q13 1Q14 2Q14 3Q14* 4Q14 Customer spread Customer loan yield Customer deposit cost * Adjusted for the card business deconsolidation Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

22 Customer funds cost downward trend continues in 4Q14 Term deposits cost evolution (Quarterly average in %) b.p. over 3Q14 new production cost Maturities profile and repricing of time deposits ( M) Data as of 31/12/ % 21.1% 16.0% 18.2% 11.5% New production rate Dec-14: 0.57% ,368 9,110 6,891 7,877 4,943 4Q13 1Q14 2Q14 3Q14 4Q14 Difference Stock cost New production cost 1Q15 2Q15 3Q15 4Q15 > 1 year Time deposits maturities Cost of maturities (%) % over total maturities Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

23 We retain our leadership in NIM with the lowest carry trade dependency Customer spread comparison 4Q2014 (%) NIM 4Q2014 (%) LOGO Average ex POP NIM 4Q2014 ex-carry trade LOGO Average ex POP (%) LOGO Average ex POP Peers: Banco Sabadell, Caixabank, Bankinter & Bankia. Latest available data Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

24 Fees stable QoQ isolating the effect of the card business JV Fees & Commisions evolution ( M) % Q14 2Q14 3Q14 4Q14 Card business Trading & other income ( M) 12M13 12M % +134% (1) Q13 1Q14 2Q14 3Q14 4Q14 * 2013 Restated data 12M13* 12M14 (1) 83% over 2013 data published Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

25 Expenses affected by corporate activities and NPAs, although we expect an improvement in 2015 Personnel expenses Other administrative expenses ( M) Card business Personnel evolution 15,430 15,546 15,520 15, An early retirement plan has been launched in 4Q for 104 employees ( M) Card business Branch evolution 2,166 2,155 2,152 2, Q14 2Q14 3Q14 4Q14 1Q14 2Q14 3Q14 4Q % % M13 12M14 12M13 12M14 Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

26 Accumulated Pre-provision Profit of 2,005M, posting a 9.7% YoY (*) increase Pre-provision Profit ( M) , % (1) 2,005 * 2013 Restated data 4Q13* 3Q14 4Q14 12M13* 12M14 (1) + 3.7% over 2013 published data Cost to income ratio (%) 49.7% 53.9% 50.3% 44.3% +26 b.p. (2) 44.5% 4Q13* 3Q14 4Q14 12M13* 12M14 (2) b.p. over 2013 published data Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

27 Lower provisioning expenses in 4Q14 due to the strong effort in 3Q Loan & RE impairments ( M) Write-off recoveries RE impairments Loan impairments Loan impairments RE impairments Write-off recoveries % -15.0% 2,697 2,292 1, ,515 1, Q14 4Q14 12M13 12M14 Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

28 Positive performance on Net Profit which reaches 330M Net Profit ( M) +31.4% (1) * 2013 Restated data (1) + 1,6% over 2013 published data 12M13* 12M14 Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

29 2.3 Commercial activity 29

30 The recovery of the credit activity continues with gross new production up +3.4% YoY in 2014 Gross lending new production ( M) +25.6% +54.6% 5,709 5,521 4,526 4,639 2,483 2,265 1,858 1, ,878 2,345 2,869 2,595 7,170 2, ,910 Gross lending evolution ( M) Total lending (ex-construction & RE purposes) +2,5% 81,603 83,792 83,642 4Q13 1Q14 2Q14 3Q14 4Q14 SME Individuals Rest of companies and foreign affiliates +3.4% 21,129 21,855 9,970 8,708 1,192 1,427 9,967 11,719 4Q13 3Q14 4Q14 Lending to construction & Real Estate purposes -10.6% 20,312 18,830 18,151 12M13 12M14 4Q13 3Q14 4Q14 Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

31 which allow us to maintain our privileged position in SMEs & corporates Credit market share evolution (%) Source: BoS & internal elaboration Corporates market share evolution (%) Source: BoS & internal elaboration +169 b.p. +54 b.p. 6.89% 7.33% 7.43% 10.26% 11.57% 11.95% 4Q12 4Q13 4Q14 ICO loans Ranking 4Q2014 (3) 4Q12 4Q13 3Q14 (1) (2) 21% 19% 19% 17% 15% 12% 11% Bank 2 Bank 1 Bank 3 9% (1) Latest available data November2014. (2) Latest available data. (3) Latest available data December Source: ICO Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

32 In 2014 we have intensified our commercial activity with SMEs & corporates 685 AGRO managers through 650 specialized branches Campaigns to attract & acquire new SME customers More than 1,000 company managers & 39 specialized company centers to support our customer s daily activity 48 collective company agreements with a business volume of 4,600 M Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

33 which have resulted in further new business and new customers New SMEs, proffesionals & selfemployed in + 78, : Credit evolution by segment (4Q14 vs. 3Q14) Credit lines & loans to companies +57% Leasing + 33% Bill-discounting +5% Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

34 2.4 Risk management 34

35 In 4Q14 the NPL ratio continued to decline and have decreased by 61 b.p. in 2014 Net NPL s evolution ( M) NPL s ratio (%) -61 b.p. -7 b.p. 3,463M Subjective doubtful 14.39% 13.97% 13.85% 13.78% 3, Q13 2Q14 3Q14 4Q14 4Q13 2Q14 3Q14 4Q14 Real Estate NPL Non-RE NPL 56.30% 53.73% 7.53% 7.26% Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year Q13 4Q14 4Q13 4Q14 35

36 Satisfactory coverage levels NPL coverage (%) Coverage over total risk and foreclosed assets (2) (%) 100% with guarantees (1) +17 b.p.. 40% 41% 53% 13.56% 13.73% 4Q13 Without Write-offs With Write-offs 4Q14 4Q13 4Q14 (1) Net guarantees from BoS haircut (2) Credit, guarantees, write-offs and repossessed Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

37 We achieve maximum sales levels as the market stabilizes Real Estate Assets sales (1) ( M) Q13 1Q14 2Q14 3Q14 4Q14 Sales mix (%) By product Land Finished building +80.7% 82% (1) Does not include sales from RE developers 18% dec-14 nov-14 oct M land sold in 2014 x4 x2 1, M12 12M13 12M14 By investor Wholesale Retail 11% 89% Selling price a 2.2% over net book value Wholesale transactions amounting 160M for the first time Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

38 The optimization of the sales force and distribution channels will allow us to reach our 2015 target Real Estate workforce evolution Sales channels structure Improvement of our human capital base and RE sales force Optimizing our distribution channels Aliseda s workforce Commercial workforce % Branches % Commercial Agents % Internet Potential growth +31% +13% % 65 40%-60% 10%-30% 30%-50% 3% 22% 75% E RE sector sales 2014 Popular sales 2014 Increasing our RE sales target for 2015, 2bn (+33% vs sales) Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

39 2.5 Liquidity & Solvency 39

40 In the current environment of ample liquidity (TLTRO), we have prioritized the reduction of cost Customer funds evolution ( M) Retail funds mix (%) (2) 32% 37% 38% -2.7% (1) (2) 68% 63% 62% 85,237 86,754 82,905 24,178 28,023 27,476 10,029 10,886 10,278 50,377 47,476 44, % YoY 4Q13* 3Q14 4Q14 Term deposits Demand deposits (2) 32.5%/67.5% over 2013 Published data Evolution of off-balance sheet items ( M) +11% 4Q13* 3Q14 4Q14 Term deposits Demand deposits (1) -2.6% over 2013 Published data Rest retail funds Commercial paper 15,953 16,912 17,714 7,612 7,972 8,215 8,342 8,939 9,499 4Q13 3Q14 4Q14 * 2013 Restated data Investment funds Other funds Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

41 The improvement of the funding structure initiated years ago prevails Loan to deposit ratio (%) ECB exposure (%) TLTRO: 100% in 2014 ( 5,696M) +33% 9,990 7,500 4, % 121.2% 110.3% 113.4% Q13 4Q14 (1) 3,758 2, Q14 5,696 4Q14 (1) 110.4% 2013 Published data Rest ECB TLTRO LTRO Note: From January 1st 2014, due to the entry into force of IFRS 11, the equity method is applied to jointly controlled entities. For comparative purposes, this criterion has been applied to information concerning the financial year

42 Strong capital position and a high quality capital High quality capital: - No potential impact from changes in insurance companies capital treatment ( Danish Compromise ) Common Equity Tier 1 (phased in) 11.50% - Limited monetization of DTAs - No inclusion of unrealized gains on capital calculation Common Equity Tier 1 (fully loaded, pro forma) 10.38% - Higher density of risk-weighted assets than the industry - No impact coming from risk weighting of non-eu bonds Leverage ratio (fully loaded, pro forma) 5.54% 42

43 Progressively moving towards a normalized dividend policy by setting partial cash dividends 2014 dividends Dividen type Dividend per share 1 st Interim Dividend Scrip 1 cent. 2 nd Interim Dividend Scrip 1.2 cent. 3 rd Interim Dividend Scrip 1.8 cent. Total 4 cent. Next dividends estimates: - Complementary 2014 of scrip - First interim dividend in 2015 of 0.02 in cash 43

44 3. Outlook 44

45 Outlook 1. The 2. Positive 3. Improving 4. The 5. Our robustness of the economic recovery will help to stabilize the banking business signs in credit demand more visible, especially in the SME business, Popular s core business our profitability through the reinforcement of our customer spread and cost efficiency are key for Popular further reduction of NPL entries and the increase in REO sales will continue to be a top priority, and they will lead to a decrease in 2015 NPA and a reduction in cost of risk capital strength allows us to improve shareholder s remuneration 45

46 4. Brand reinforcement 46

47 Our corporate image continues to adapt to changing times Actual 47

48 Our commitment is to moving ahead and ensuring our clients do the same Visual language Digital environment 48

49 49

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51 Many thanks For further information: