BBVA CONTINENTAL. Investors Report. Fourth Quarter 2017

Transcription

1 CONTINENTAL Investors Report Fourth Quarter 2017

2 DISCLAIMER This document has been elaborated as a part of the information policies and transparency of and contains public information, own source and provided by third parties, that can be corroborated with their sources. This document has been prepared solely for informational purposes and does not constitute an offer, or invitation or solicitation of an offer to subscribe or purchase securities. This document and its contents does not constitute the basis for any contract or commitment. This document may not be photocopied, reproduced and/or distributed in whole or in part, without prior authorization from.

3 SECTIONS 01 Peruvian Economy & F Financial System Investment Highlights 04 Ratings 05 Social Responsibility and Awards Appendix Issued Debt

4 01 Peruvian Economy & Financial System

5 Peru: one of the most stable and fastest-growing economies in the region GDP Growth (Real) Inflation (End of Period) 3.6% 3.5% 3.2% 6.4% 2.0% 2.7% 2.3% 2.2% 2.0% 2.1% 4.3% 4.5% 3.1% 4.0% 3.7% 3.4% 2.7% 3.0% 2.0% -0.6% Peru Colombia Chile Mexico Brazil Average 2018 Projected Brazil Colombia Mexico Chile Peru Average 2018 Projected Source: International Monetary Found (IMF), Central Bank of Peru (BCRP) & Research 5

6 With sovereign investment grade, relatively stable currency and low indebtedness Credit Risk Profile A+ BBB+ BBB+ BBB- Investment Grade: BBB- Peruvian Public Debt (% of GDP) BB B BB- CCC- 48.8% 20% 20% Average debt of the General Government / GDP for countries with BBB+ rating for % 24% 25% Source: Standard & Poor s Currency depreciation against USD 5% 0% -5% -10% -15% -20% -25% -30% -35% -40% Jan-15 Mar-15 Jun-15 Set-15 Dec-15 Mar-16 Jun-16 Set-16 Dec-16 Mar-17 Jun-17 Set-17 Dec % -7.97% % % % Source: BCRP Chile Brazil Colombia Mexico Peru Source: Bloomberg 6

7 Peru has a solid Financial System with great opportunities to expand Performing loans and Deposits (S/Billions) Loans to private sector (% of GDP, 2016) CAGR L: D: D: 9.3% 7.7% % YOY 9.1% YOY 3.9% 62% 47% 36% 35% Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 1 Loans Deposits Chile Brasil Colombia Perú México 1 Other obligations are excluded from deposits Source: Superintendencia de Banca, Seguros y AFP (SBS) / World Bank (WB) 7

8 and a Central Bank that promotes PEN denomination of Loans Domestic currency Loans & Deposits (% Total Loans & Deposits) Steady reduction of legal reserve requirements in PEN to support loan growth. From 20.1% to 5% as of Dec % 65% 60% 55% 50% 45% 54% % % 53% Higher legal reserve requirement in USD linked to targets to reduce loans in USD 2. 67% % 68% % 67% % Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 1 Loans Deposits Exchange rate PEN/USD Measures to promote de-dollarization Measures to support de-dollarization Higher marginal reserve requirement in USD, reached 70%. Currency Repos to convert liquidity in USD into PEN. Lower marginal reserve requirements to increase liquidity in USD (40% as of Dec-17). 1 Other obligations are excluded from deposits 2 Excluded operations higher than USD10MM and 3 years from June 2015 Source: SBS & BCRP 8

9 Peruvian Financial System (September 2017) Financial system Banking system Other financial institutions Institution S/ Million Net loans Set-17 Deposits Set-17 1 Net Income Set-17 Banks (16) 226, ,587 5,453 Banco de la Nación 8,472 21, Cajas Municipales (12) 17,477 18, Financieras (11) 9,767 6, Cajas Rurales (6) 1,249 1,025-5 Edpymes (10) 1,772-5 Leasing (2) COFIDE 6, Agrobanco 1, The four largest banks concentrate around 83% of the banks loans and deposits 14% 10% 4% Loans Loans Deposits 1 1 Net Net Income 86% 90% 96% 1 Other obligations are excluded from deposits Source: SBS Banking System Other Financial Institutions 9

10 02

11 Shareholders and Subsidiaries are part of the Economic Group formed by Group and Breca: (Newco Peru S.A.C) BRESCIA (Holding S.A.) 50% 50% Comercializadora Corporativa S.A.C 0.009% % 92.24% Others 7.76% Inmuebles y Recuperaciones S.A. 100% 99.99% 99.99% 100% 100% 100% 100% Forum Comercializadora del Perú S.A. Forum Distribuidora del Perú S.A. 0.01% 0.01% Consumer Finance EDPYME Bolsa SAB S.A Asset Management SAF S.A. Sociedad Titulizadora S.A. 11

12 Group (December 2017) Appropriate balance between developed and emerging markets that allows the Group to diversify its sources of income by providing a high degree of recurrence in their results 18.4% of Group s Gross Income Gross Income Dec-17 1 Emerging Weight: 65% YoY var.: +14% Developed Weight: 35% YoY var.: +3% 1 Excludes Corporate activities; YoY change in constant Euros Source: Group 12

13 Principles of liquidity and capital management of Group Self-sufficient subsidiaries from a liquidity point of view, with robust supervision and control by parent company Retail profile of Group balance sheet with limited dependence on wholesale funding Parent and subsidiaries proven ability to access the wholesale funding markets (medium & long term) on a regular basis Ample high quality collateral available, compliant with regulatory liquidity requirements at a Group and Subsidiary level No No liquidity liquidity transfers transfers between between the the parent parent and and subsidiaries subsidiaries or or among among subsidiaries subsidiaries

14 Highlights - Group ROE ROA Assets ( millions) 6.4% 0.68% 690,059 Cost Control (YoY, %) Operating Expenses -2.3% Gross Margin + 7.7% Net Income ( millions) NPL Cost of Risk Impairment losses from Telefónica s Impact So-called "mortgage floor clauses" impact 3, Great Asset Quality 3,475 3,519 Dec % 4.4% 0.87% 4,642 1,123 Dec-17 Digital Strategy (YoY, %) +44% +25% Global Capital 15.4% Mobile customers Digital customers Strong Capital & Liquidity Ratios CET1 11.7% Coverage Ratio 65% Liquidity Coverage Ratio > 100%

15 15 Breca Business group founded by the Brescia Cafferata family, is one of the largest business conglomerates in Peru, with operations in Peru, Chile and Brazil Board of Directors Management Committee FINANCIAL SERVICES INSURANCE AND HEALTH INDUSTRY MINING TOURISM REAL ESTATE FISHING AND AGROINDUSTRY SPECIALIZED SERVICES Marcobre

16 03 Investment Highlights

17 Highlights - ROE ROA Assets (S/. millions) 19.52% 1.83% 76,591 Cost Control Efficiency Ratio 37.89% Operating Expenses - 2.3% (YoY, %) Net Income (S/. millions) 3.7% 1,338 1,387 Dec-16 Dec-17 Digital Strategy (YoY, %) +63% +37% Active mobile customers Active digital customers Great Asset Quality Strong Capital & Liquidity Ratios NPL 2.68% Global Capital CET1 Cost of Risk 1.27% 14.20% 9.92% Coverage Ratio % Loan-To-Deposit 101.6%

18 Strong banking platform Distribution network 1 One of the largest in the country 14,002 points of service More than 4.5 million customers Evolution in transactions per channel (December 2017) % 32% 11,387 14,064 14,002 Ranking Market Share 0% 15% 1% 26% 7,459 5,488 9,231 11,902 11,721 1st 23.3% 15% % 11% 2% 1,649 1,825 1,840 1, Dec-14 Dec-15 Dec-16 Dec-17 3rd 2nd 25.5% 15.4% 42% 26% Express agents ATM Branches 1 Source: ATM & Express agents form ASBANC, Branches from SBS 2 Other channels include Telephone Banking, POS, Net Cash and Automatic debit. Source: SBS & Branches ATM Express Agent Internet Banking Mobile Banking Others 2 18

19 Creando Oportunidades With the purpose of being the leading digital bank in the region Digital sales YTD Units (thousands) Main growth drivers % Digital sales by product 3% Product digitalization New products sales by digital channels: opening accounts, additional credit cards, assurance, One-click credit cards and mortgages Clients digitalization and branches incentives Digital sales team consolidation 14% 5% 4 Post-lead management and risks 34% % 5 Servers monitoring and stability Source: 19

20 Loans and Deposits Performance (S/ Million, %) Performing loans Deposits 1 38, ,154 2,132 8,433 1,408 9,103 7,497 CAGR 6.4% 42, ,191 2,254 9,562 1,194 9,016 8,633 8,700 10,125 47, ,548 2,419 10,391 1,201 1,134 9,816 10,128 YOY -0.6% 49,714 49, ,723 1,848 2,558 2,832 10,917 11,638 1,112 9,951 9,505 9,093 8,678 12,803 14,070 13,280 36,811 2,815 12,171 21,825 2,788 CAGR 7.2% 39,607 12,607 24,212 YOY -0.1% 47,287 48,714 48,646 3,046 3,168 3,267 16,011 16,763 14,732 28,230 28,784 30,647 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Corporate Large enterprise Middle enterprise SME Mortgage Consumer Credit card Microfinance Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Demand + Saving Term CTS 1 Other obligations are excluded from deposits Source: SBS 20

21 Retail Loans Performing loans (S/ Million, %) 7.4% bps bps 15,198 16, % -95 bps 49,714 49, % 20.01% Dec-16 Dec-17 Loans Market share 22.01% 21.06% Business Loans Banking System 81,556 YOY Variation 5.8% -4.1% -158 bps -123 bps 34,516 33,114 Dec-16 Dec-17 Loans Market share 23.20% 21.61% Source: SBS Banking System 234,767 YOY Variation 3.9% Dec-16 Dec-17 Loans Market share Banking System 153,212 YOY Variation 3.0% 21

22 Market Share - Loans % 21% 41% Corporate 42% 18% 20% 8% 8% 9% -51 9% 30% 30% SME 16% 15% 4% 5% % 22% Bank 1 Bank 3 Bank 4 Large enterprise 34% 35% 18% 17% 10% 10% 11% % Bank 1 Bank 3 Bank 4 Consumer 26% 24% 18% 19% 20% 20% Bank 1 Bank 3 Bank 4 Bank 1 Bank 3 Bank % 28% Middle enterprise 35% 36% 15% 15% 9% 9% % 11% 24% 24% Credit card 12% 14% 22% 22% 20% 17% YoY changes in basis points. Bank 1 Bank 3 Bank 4 Dec-16 Dec % 29% 32% 31% Bank 1 Bank 3 Bank 4 Falabella Mortgage 15% 15% 13% 14% Source: ASBANC Bank 1 Bank 3 Bank 4

23 High quality of loan portfolio (December 2017) Loans breakdown 0.2% 0.2% 1.4% 3.0% 3.7% 5.5% 5.7% 7.4% 21.9% 23.5% 3.7% 2.3% 24.2% 20.1% 20.7% 20.9% 10.4% 16.9% 5.5% 15.3% 17.6% 16.5% 26.9% 26.5% Microfinance Credit card Consumer Mortgage SME Middle enterprise Large enterprise Corporate Loans by economic sector Financial Services, 4% Electricity and water, 4% Agriculture and livestock, 4% Mining, 5% Transport, storage and communications, 7% Real estate, 9% Concentration Risk Construction, 3% 13.28% Others, 12% Manufacturing, 26% Commerce, 26% Top 20 Clients Dec - 13 Dec - 17 Dec - 17 Banking System 86.72% Others Source: ASBANC 23

24 Retail Deposits Deposits (S/ Million, %) 7.0% -55 bps 18,722 20, % -197 bps 48,714 48, % 20.03% Dec-16 Dec-17 Deposits Market share 23.17% 21.21% Banking System 99,977 YOY Variation 9.9% Business Deposits -4.6% -303 bps 29,992 28,618 Dic-16 Saldo Dic-17 Cuota 25.15% 22.12% Banking System 229,358 YOY Variation 9.1% Dec-16 Dec-17 Deposits Market share Source: SBS Banking System 129,380 YOY Variation 8.5% 24

25 Market Share - Deposits % 40% Retail Deposits Demand 49% 49% 8% 8% 2% 1% % 23% Business Deposits 36% 37% Demand 16% 15% 13% 14% % 21% Bank 1 Bank 3 Bank 4 Saving 45% 44% 13% 15% 14% 14% % 44% Bank 1 Bank 3 Bank 4 Saving 16% 16% 15% 12% 22% 20% % 15% Bank 1 Bank 3 Bank 4 Term 23% 13% 15% 13% 13% 14% -682 Bank 1 Bank 3 Bank 4 Term 25% 18% 18% 22% 17% 17% 11% 12% +9 21% 21% Bank 1 Bank 3 Bank 4 CTS 46% 45% 8% 8% 10% 10% Bank 1 Bank 3 Bank 4 Bank 1 Bank 3 Bank 4 YoY changes in basis points. Dec-16 Dec-17

26 Liabilities and Capital Breakdown 8% 0% 5% 23% 20% PEN +25% 6% 1% 7% 3% 17% 16% 6% 16% 7% 8% 21% 9% 12% 4% 4% 5% 22% 19% 24% Others Equity Wholesale funding REPOS CTS USD +29% 2% 4% 4% 5% 37% 27% 29% 28% 4% 4% 3% 5% 23% 14% 22% 20% 42% 32% 35% 30% Term Demand + Saving 35% 43% 49% 42% Dec-13 Dec-16 Dec-17 Dec-17 CONTINENTAL (PEN) Banking System Dec-13 Dec-16 Dec-17 Dec-17 CONTINENTAL (USD) Banking System Source: SBS & ASBANC 26

27 High level of self-financing and balance sheet denomination in PEN Loan-To-Deposit by currency Loan-To-Deposit - Peer group 103% 101% 109% 145% 135% 115% 110% 106% 101% 102% 102% 97% 88% 63% 69% 103% 95% 94% 97% 116% 106% 105% 114% 104% 120% 118% 114% 104% 102% 101% 102% 102% 95% 95% 89% Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 PEN USD Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Bank 1 Bank 3 Bank 4 Domestic Currency Performing Loans (% Total Loans) 67% 68% 67% 66% 67% 65% 54% 57% 57% 52% Domestic Currency Deposits 1 (% Total Deposits) 60% 54% 53% 52% 53% 53% 47% 51% 46% 57% 1 Other obligations are excluded from deposit. Source: SBS Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Banking System Average Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Banking System Average 27

28 Profit & Loss (S/. Millions) Dec-17 Dec-16 % Gross Financial Margin 2,870 2, Provisions for direct loans (539) (621) Net Financial Margin 2,331 2, Income from financial services 1,068 1, Expenses from financial services (303) (294) 3.2 Gain / Loss From Financial Operations (ROF) Operating Margin 3,683 3, Administrative expenses (1,468) (1,509) -2.7 Depreciation and amortization (123) (108) 13.0 Net Operating Margin 2,092 1, Asset valuation and other provisions (155) (114) 35.9 Other Income and Expenses (53) (29) 82.7 Profit / Loss Before Income Tax 1,883 1, Income tax (496) (431) 15.0 Net Profit 1,387 1, ,338 1,387 Net Profit 2016 Gross Financial Margin Provisions for direct loans Net Financial Services ROF Administrative Expenses 1 Other Results 2 Income tax Net Profit Includes administrative expenses, depreciation and amortization 2 Includes asset valuation, other provisions, and other income and expenses Source: ASBANC

29 Gross financial margin (S/ Million,%) 8.05% 7.41% 6.55% 6.10% 4.69% 4.35% 6.55% 6.35% 6.05% 5.47% 5.47% 5.31% 3.61% 3.45% 3.49% 8.00% 6.00% 4.00% 2.00% 0.00% 3,631 3,741 4,052 4,506 4, % -4.00% -6.00% (1,117) (1,055) (1,346) (1,623) (1,510) Dec-13 Dec-14 Dec-15 Dec-16 Dec % % Financial Expenses Financial Income NIM 1 NIM PEN NIM USD 1 NIM ratio: Gross financial margin for the last 12 months divided by average interest earning assets (interbank funds, investments, net loans). Source: SBS & ASBANC 29

30 Expenses management We manage an attractive efficiency ratio Efficiency Ratio (December 2017) Administrative expenses 1 (S/ Million, %) YOY (bps) Bank % +20 3,381 3,486 Bank % % -151 Bank % -37 1,628 1,591 1,392 1,444 1,304 1,347 Number of employees (December 2017) 21, % Banking System Average 3.1% -2.3% 3.7% 3.3% Dec-16 Dec-17 Dec-16 Dec-17 Dec-16 Dec-17 Dec-16 Dec-17 Market Share 9.4% 6,744 5,857 5,811 Bank 1 1 Includes Amortization and Depreciation Source: SBS Bank 4 Bank 3 Bank 1 Bank 4 Bank 3 30

31 Risk management Outstanding asset quality (December 2017) NPL ratio by product and segment (December 2017) % Microfinance 2.03% SME 6.73% % % % % Middle enterprise Large enterprise 1.00% 7.92% Corporate 0.00% 1.74% 2.23% 2.17% 2.41% 2.68% Car-loan Credit Card 2.01% 5.39% Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 NPL ratio Coverage ratio Consumer Mortgage 1.88% 1.66% Source: SBS 31

32 Risk management Best Risk Cost 1 ratio vs. Peer Group 2.80% 2.92% 3.05% YOY (bps) +13 Best NPL Ratio and Coverage Ratio (December 2017) Average Banking System % % 2.10% 2.09% 2.06% 1.47% 2.20% 2.03% 1.70% 1.28% 2.11% 2.06% 1.42% 1.88% 1.86% 1.81% 1.58% 1.26% 1.27% % % % Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Maintaining high levels of voluntary provisions (S/ Million) 3.04% 2.68% 2.85% 2.97% 3.15% Bank 4 Bank 1 Bank 3 3,472 3, % 3,092 3,351 Required Voluntary 2,477 2, ,781 1, % ,288 1,383 1,671 1, % 1,489 1, % 1,0681,154 NPL ratio Coverage ratio 1 Risk Cost: Provisions for the last 12 months between average loans from the last 12 months. Source: SBS Dec-16Dec-17 Dec-16Dec-17 Dec-16Dec-17 Dec-16Dec-17 Bank 1 Bank 3 Bank 4 32

33 Profitability management Net Profit (S/ Million, %) Return on Equity ROE (December 2017) Bank % YOY (bps) -218 Bank % ,926 2, % -123 Bank % -152 Banking System Average 18.36% 1,338 1,387 1,168 1, Return on Assets ROA (December 2017) Bank % YOY (bps) % 3.7% 4.5% 3.1% Bank % +1 Dec-16Dec-17 Dec-16Dec-17 Dec-16Dec-17 Dec-16Dec-17 Bank % +4 Bank 1 Bank 3 Bank % +13 Banking System Average 2.08% Source: SBS 33

34 Solvency management Regulatory capital & RWA (S/ Million) Main Capital Ratios 10,000 8,000 6,000 4,000 2,000 47,207 5,866 1,221 4,645 53,495 7,371 2,139 5,232 61,682 8,209 2,247 5,962 63,146 63,012 9,001 8,947 2,182 2,115 6,819 6,832 60,000 50,000 40,000 30,000 20,000 10, % 12.42% 13.31% 2.59% 4.00% 3.64% 9.84% 9.78% 9.67% 14.25% 14.20% 3.46% 3.36% (CE T1 (CE 8.69%) (CE T1 T1 8.75%) 8.32%) 10.80% 10.84% (CE T1 9.92%) Min % - Dec-13 Dec-14 Dec-15 Dec-16 Dec-17-10,000 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 TIER I TIER 2 RWA TIER I TIER 2 Source: SBS 34

35 Main changes in Capital Ratios Global capital ratio (YoY, %) +76 pbs -75 pbs 14.25% - 15 pbs +6 pbs -6 pbs +22 pbs -14 pbs + 1 pbs 14.20% Dec-16 RWA Exchange rate Subordinated Debt Reserves Detractions Provision Profits capitalization Capital Commitment Dec-17 Common Equity Tier I (YoY, %) +76 pbs - 75 pbs 9.74% - 10 pbs +13 pbs +22 pbs -7 pbs 9.92 % Dec-16 RWA Exchange rate Reserves Detractions Capitalization Profit of Capitalization profits Source: Capital Commitment Dec-17 35

36 04 Ratings

37 International & Local Rating Rating agencies have granted the best international and local ratings: Instrument Fitch Ratings Standard & Poors Foreign currency long term issuances BBB+ BBB Foreign currency short term issuances F2 A-2 Local currency long term issuances BBB+ BBB Local currency short term issuances F2 A-2 Outlook Stable Positive Instrument Apoyo & Asociados Equilibrium Negotiable Certificate of Deposits (CD) CP-1+ (pe) EQL 1+.pe p1+ Short term deposits CP-1+ (pe) EQL 1+.pe Categoría I Term deposits > 1 year AAA (pe) AAA.pe paaa Corporate bonds AAA (pe) AAA.pe paaa Subordinated bonds AA+ (pe) AA+.pe paa+ Leasing bonds AAA (pe) AAA.pe paaa Common shares 1a (pe) 1a Clase.pe PC N1 Issuer rating A+ A+ A+ PCR 37

38 05 Social Responsibility and Awards

39 The Bank maintains its commitment to society and is highly regarded in the market SOCIAL RESPONSIBILITY AWARDS Social, Economical and Environmental Responsibility Report Most Recommended Bank 2017 Reading Program: Leer es estar adelante Best Digital Bank 2017 is part of the Best Corporate Governance Principle s Index of companies. Source: 39

40 Appendix Issued Debt

41 Issued Debt International Local Bond Issue Date Call Date Maturity Currency Nominal ($ 000) Coupon Corporate Ago-12 - Ago-22 USD 500, % Corporate Abr-13 - Abr-18 USD 500, % Subordinated Set-14 Set-24 Set-29 USD 300, % Subordinated May-07 May-22 May-27 USD 20, % Subordinated Jun-07 - Jun-32 PEN 55, % Subordinated Nov-07 - Nov-32 PEN 50, % Subordinated Feb-08 - Feb-28 USD 20, % Corporate May-08 - May-18 PEN 60, % Subordinated Jul-08 - Jul-23 PEN 45, % Subordinated Set-08 - Set-23 PEN 50, % Subordinated Dic-08 - Dic-33 PEN 30, % Corporate Ago-10 - Ago-20 PEN 40, % Corporate Ago-10 - Ago-20 PEN 80, % Corporate Ago-11 - Ago-18 PEN 100, % Corporate Dic-11 - Dic-26 PEN 150, % Corporate Abr-12 - Abr-19 PEN 200, % Subordinated Oct-13 Oct-23 Oct-28 USD 45, % Corporate Abr-16 - Abr-19 PEN 150, % Corporate Abr-16 - Abr-19 PEN 100, % Corporate Jun-16 - Jun-21 PEN 150, % BAF Oct-16 - Oct-19 PEN 205, % BAF Ene-17 - Ene-20 PEN 200, % Corporate Nov-17 - Nov-20 PEN 350, % BAF Dic-17 - Dic-20 PEN 158, % Source: Total Debt S/ Millions Local 2,449 International 4,213 Total 6,662 63% 37% Local International 42

42 CONTINENTAL Investors Report Fourth Quarter 2017