ING Bank Śląski. ING Bank Śląski results after 3Q November 2005

Transcription

1 results after 3Q November Warsaw, 10 November

2 Macroeconomic environment waiting for economic growth acceleration Slight economic growth in 3Q - GDP up by 3.6% (estimated) compared with 2.1% in 1Q and 2.8% in 2Q Increase of inflation rate in September to the level of 1.8% y/y resulting mainly from the increase of fuel prices (still low inflation pressure) Slow recovery on labour market Increase of nominal salaries at the level covering inflation rate Appreciation of PLN slowed down (strengthening of USD on core markets, decreasing yield on Polish bonds) Further decrease of interest rates (two cuts in 3Q ) (5) (10) (15) Growth in GDP, investment and consumption (%) 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q02 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 GDP Consumption Investment Exchange rates Unemployment rate (%) Lombard rate and WIBOR 3M (%) Inflation (y/y in %) Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 EUR USD I II III IV V VI VII VIII IX X XI XII 0 01'01 05'01 09'01 01'02 05'02 09'02 01'03 05'03 09'03 01'04 05'04 09'04 01'05 05'05 09'05 0 I II III IV V VI VII VIII IX X XI XII WIBOR 3M Lombard rate November 1 results after 3Q

3 Banking sector in visible impact of recovery in macroeconomy Depositsdynamics(y-o-y%) (10.0) 6.1 (4.2)(5.6) 10.7 (5.1) 16.0 (1.4) 16.6 (2.2) (2.0) (1.3) (1.3) Continuation of favorable trends: Increased activity in September assets of banking sector were about 8% higher in comparison with end of : households kept high peace of lending volumes increase and visible revitalizing of deposits corporates high balances kept on corporate accounts and limited demand for loans Good results of banking sector after 3 quarters of net result amounted to about PLN 7 bn compared with PLN 5.7 bn in the same period of Households Corporates (1) Loans dynamics (y-o-y %) November (5.0) (10.0) Households (0.6) 14.2 (2.2) Corporates 12.8 (4.0) (1) 16.3 (2.7) 14.9 (1.5) 18.7 (0.8) Note: (1) corporates, non-monetary financial institutions, non-commercial institutions servicing private households, local authorities, social security funds Share of non-performing loans ( %) results after 3Q Lost Doubtful Below standard

4 revenues - revenues structure comparable with 2Q amounts in mio PLN -2.3% +0.3% +20.6% +27.5% +2.4% Q 3Q 3Q 3Q 3Q 3Q 3Q 3Q Retail Banking: Increase of interest income followed by lower fees and commissions (resulting from change of bank s offer to more competitive) Increased income from capital markets (brokerage services) Lower income from lending activities Wholesale Banking: Higher income from the sale of Financial Markets products Higher lending income (in big corporates and mid-size clients segments) Higher income from custody and brokerage services (capital markets) Lower income on Cash Management products (lower margins and more competitive fees and commission charges) Trading: Very good income on trading activities of Financial Markets division ALCO: Positive change of Centrum Banku Śląskiego valuation resulting from strengthening EUR/PLN rate in January - February period Positive NN PTE valuation Higher interest from own funds November 3 results after 3Q

5 expenses - increase of operational expenses resulting from back-office rebuilding process and increased sale support Amounts in mio PLN +11.1% +67.1% +0.3% -5.5% +5.2% Q 3Q 3Q 3Q 3Q 3Q 3Q 3Q Personnel costs: New organizational structure supporting sales forces Increased employment in sales network Increased base salaries Incentives scheme based on key performance indicators (KPI) Operations area rebuilding process Marketing costs: Increased brand recognition from 65% in to 81% Bank recognized as institution offering mortgages in PLN Creation of attractive offer of saving products available through multichannel distribution model Depreciation: Strict monitoring of investment outlays and projects Currently run projects may result in higher depreciation in coming years Other operating expenses: Strict control of cost budgets Purchases chain optimization Limitation of cost level by increasing usage of electronic distribution channels November 4 results after 3Q

6 results - higher revenues and lower risk costs are main factors improving results after 3Q in mio PLN IAS /IFRS IAS /IFRS IAS /IFRS 9M 12M 9M 9M /9M Retail banking 621,1 839,7 607,0-14,1 97,7% Core business 618,0 835,7 602,4-15,5 97,5% FM products sales 3,1 4,0 4,5 1,4 143,9% Corporate banking 449,2 605,0 450,7 1,5 100,3% Core business 352,0 469,5 322,7-29,4 91,7% FM products sales 86,2 114,4 100,0 13,8 116,1% Equity Markets 11,0 21,2 28,0 17,0 255,2% Own operations 175,2 245,3 217,3 42,0 124,0% Proprietary trading 89,7 122,3 108,2 18,5 120,6% ALCO and other 85,5 123,0 109,1 23,5 127,5% Revenue total 1 245, , ,9 29,4 102,4% Operational expenses, including: 785, ,2 826,5 41,1 105,2% Personnel cost 351,6 464,3 390,7 39,1 111,1% Marketing cost 24,7 37,2 41,4 16,6 167,1% Depreciation 95,4 145,6 95,7 0,3 100,3% Other expenses 305,5 392,9 288,7-16,9 94,5% Other operating expenses 8,2 28,2 10,2 2,0 124,6% Result before risk cost 460,1 621,8 448,4-11,7 97,5% Risk cost -171,7-150,9 68,2 240,0-39,7% Result before tax 288,4 470,9 516,6 228,3 179,2% CIT -58,3-93,3-95,4-37,1 163,7% Result after tax 230,1 377,6 421,2 191,2 183,1% Tax adjustment (FPU Act) 18,4 17,2-3,0-21,4 Result after tax adjusted 248,5 394,8 418,2 169,7 168,3% Factors influencing change of gross result in mio PLN Q Revenue Total Risk costs 3Q expenses Analytical profit and loss account based on management accounts: result on banking activity includes positive balance of other operating income and costs, share of profits (losses) in subsidiaries accounted for under equity method, result from assets and disposal groups classified as held for sale not qualifying as discontinued operations, profits (losses) of minorities for consolidated subsidiaries and result on extraordinary items November 5 results after 3Q

7 results - results after 3Q in quarterly layout PLN million IQ IIQ IIIQ IVQ IQ IIQ IIIQ Retail banking 211,0 204,7 205,4 218,6 204,0 197,5 205,4 Core business 209,8 203,6 204,5 217,8 202,6 196,1 203,7 FM products sales 1,1 1,1 0,9 0,8 1,4 1,4 1,7 Corporate banking 140,2 146,1 162,9 155,9 155,9 145,0 149,8 Core business 109,1 112,6 130,3 117,5 110,0 108,0 104,7 FM products sales 27,4 30,8 27,9 28,2 34,8 29,4 35,8 Equity Markets 3,7 2,6 4,7 10,2 11,1 7,6 9,3 Own operations 38,8 79,1 57,3 70,1 67,7 87,2 62,4 Proprietary trading 24,3 37,6 27,7 32,6 42,0 39,5 26,6 ALCO and other 14,5 41,5 29,5 37,5 25,7 47,6 35,8 Revenue total 389,9 429,9 425,6 444,5 427,6 429,6 417,7 Operational expenses, including: 242,6 267,6 275,2 282,8 275,6 283,6 267,3 Personnel cost 116,0 114,2 121,3 112,7 133,6 131,5 125,5 Marketing cost 3,1 14,0 7,6 12,5 10,7 15,6 15,1 Depreciation 39,0 24,7 31,7 50,2 31,4 31,3 32,9 Other expenses 83,8 113,6 108,1 87,4 99,9 94,7 94,0 Other operating expenses 0,7 0,9 6,6 20,0 0,0 10,3-0,1 Result before risk cost 147,4 162,3 150,4 161,7 152,0 146,1 150,4 Risk cost -70,3-62,9-38,6 20,9 18,0 6,2 44,1 Result before tax 77,1 99,4 111,8 182,6 169,9 152,3 194,5 CIT -16,9-19,8-21,6-35,0-32,5-28,8-34,2 Result after tax 60,2 79,7 90,2 147,5 137,5 123,5 160,3 Tax adjustment (FPU Act) 0,0 19,1-0,7-1,2-1,8-0,9-0,3 Result after tax adjusted 60,2 98,8 89,5 146,3 135,7 122,6 160,0 Analytical profit and loss account based on management accounts: result on banking activity includes positive balance of other operating income and costs, share of profits (losses) in subsidiaries accounted for under equity method, result from assets and disposal groups classified as held for sale not qualifying as discontinued operations, profits (losses) of minorities for consolidated subsidiaries and result on extraordinary items November 6 results after 3Q

8 results - results after 3Q Balance sheet consolidated (net) w mio PLN TOTAL ASSETS 35,607 38,669 41,435 Cash and due from NBP 895 1, Due from other financial institutions 10,749 9,254 12,998 Financial assets held for trading 4,976 7,254 6,368 Debt securities held for investment 7,014 9,372 9,429 Due from non-financial and budgetary entities 10,408 10,179 10,190 Other assets and inter-period settlements 1,565 1,548 1,561 TOTAL LIABILITIES 35,607 38,669 41,435 Due to banks and other financial institutions 2,494 3,099 3,240 Due to customers and budgetary entities 27,650 29,560 32,443 Own funds 2,761 3,063 3,060 Net result for the year Other liabilities and inter-period settlements 2,308 2,688 2,274 w % share in banking sector (%) Assets Deposits Loans Equity (excl. current year result) 2,761 3,063 3,060 Total Assets 35,607 38,669 41,435 ROA 1.1% 1.4% 1.3% ROE 14.3% 16.9% 18.2% C/I (PAS) 63.2% 65.2% 64.2% RAROC (based on EUR) 23.1% 17.5% 19.1% Solvency ratio 15.66% 17.44% 15.50% Increased balance sheet amount resulting from dynamic increase of retail deposits Change of assets profile decrease of loans volume and increased share of debt securities ING BSK is well positioned in terms of capitalization and liquidity to growth lending activity November 7 results after 3Q

9 Changes in organization and infrastructure - further optimization resulting in increasing effectiveness PROCESSES Regional Operating Center (RCO) Optimization Project. Development of final model after RCO optimization, support applications prepared for realization of processes under the new architecture. Retail Review of processes for improving quality of services offered by the Bank. First effects visible opening of current and savings accounts possible through the Internet and telephone. Best Service. Training program developed for retail branches network employees. Analysis of customer satisfaction from Bank services is the base for changes in training scheme. Corporate Project started. Current processes and possibilities of improvement of client servicing are being analyzed. Cash services outsourcing. Outsourcing services introduced in selected cash centers. Optimization of ATMs network management project. IT Migration of network branches to one integrated IT platform. Process of PC change for 5000 users finalized. Cards Project. Preparation to the implementation of new application for credit and debit cards servicing. New Management Information System Project. November 8 results after 3Q

10 Retail banking - friendly bank with attractive offer Increased number of saving accounts by 147 thousands (+25%) during the first 3 quarters followed by increase of volume by PLN 3.2 bn (+40%) Increased value of investment funds net assets by PLN 1.1 bn (+104%) during the first 3 quarters Increase of total mortgages value from PLN mio in December to PLN mio in September (+6.6%), mortgages in PLN increased by PLN mio (+50.1%) Development of lending portfolio in small business segment increase of volume by 5.5% Savings accounts Investment funds assets Mortgages in PLN Housholds and small business (volumeinmiopln) 2, ,248 (in mio PLN) 829 2,168 (including loans secured by mortgages, volumes in mio PLN) , , ,044 1, Q 04 4Q 04 1Q 05 2Q 05 3Q Q 05 2Q 05 3Q Q 04 4Q 04 1Q 05 2Q 05 3Q November 9 results after 3Q

11 Retail banking - friendly bank with attractive offer cont d Growth of issued credit cards from 31.7 thousand in December to 99.3 at the end of September (+213%), increased amount of limits granted from PLN mio to PLN mio (+119%), growth of limit used on credit cards by 165% Significant increase of internet banking users by thousand (+96%), including small business clients increasing by 80% Increase share of electronic transactions the amount of transactions conducted in September 20% higher in comparison with previous year Bancassurance development: sale of additional modified insurance packages for current account owners, preparations to Investment Insurance Deposit subscription Number of credit cards Number of internet banking users (in thousand) (in thousand) Q 04 4Q 04 1Q 05 2Q 05 3Q Q 04 4Q 04 1Q 05 2Q 05 3Q November 10 results after 3Q

12 Corporate banking - the best bank for corporates Regained position on corporate deposits market during the 3rd quarter bank acquired PLN 1.7 bn from corporate clients Growth of loans in big and mid-size corporate segments by PLN 320 mio (+9.2%) in comparison with the end of Gradually increasing sale of loans supported by EU Substantial growth of internet banking users by 61% in comparison with the end of New products: Probiznes Plus, Elixir III for strategic clients, REPO transactions Corporate Deposits (in mio PLN) 9, , ,666 11, Corporate Deposits (segments) 11, (in mio PLN) 11,508 Lower income from lending activity compensated by increasing revenues from the sale of FM products and structured transactions Q 04 4Q 04 1Q 05 2Q05 3Q Strategic Big corporates Mid-size Number of ING OnLine users EU loans (including committed facilities ) Corporate loans (segments) (in thousand) (in mio PLN) , (in mio PLN) II.05 III.05 IV.05 V.05 VI.05 VII.05 VIII.05 IX Q 05 2Q 05 3Q Strategic Big Mid CRK * */ Restructuring portfolio November 11 results after 3Q

13 Market position - further strengthening of position in deposits, conservative lending policy Bank Households loans - volume (PLN million) market Bank Households deposits - volume (PLN million) market 6, ,000 20, ,000 5,500 5, ,000 18,000 8,10 8,10 220, ,000 4,500 4,000 3,500 3,000 2, ,47 XII I II III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX 2,34 100,000 80,000 60,000 40,000 16,000 14,000 12, ,39 XII I II III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX 210, , , , ,000 IN G Bank Śląski Market IN G Bank Śląski Market Bank Corporate loans - volume (PLN million) market Bank Corporate deposits - volume (PLN million) market 13, ,000 14, ,000 11, ,000 12, ,25 120,000 9, ,51 5,30 130,000 10,000 8, ,77 100,000 80,000 7,000 XII I II III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX 100,000 6,000 XII I II III IV V V I V II V III IX X XI XII I II III IV V V I V II V III IX 60,000 Market Market November 12 results after 3Q

14 Quality of the loan portfolio - higher than the average in banking sector Quality of ING BSK loan portfolio in mio PLN IFRS 3Q Exposure total / IFRS outstanding Provisions total Portfolio coverage ratio (%) 8,9% 9,5% 8,3% 7,9% Corporates regular / not impaired sub-standard / impaired doubtful / impaired lost / impaired Provisions / Impairment Allocation of general provisions / IBNR Provisions for off- balance sheet liabilities Irregular portfolio coverage (%) / impaired portfolio 30,0% coverage 67,7% 71,8% 80,6% Retail regular / not impaired sub-standard / impaired doubtful / impaired lost / impaired Provisions / Impairment Allocation of general provisions / IBNR Provisions for off- balance sheet liabilities Irregular portfolio coverage (%) / impaired portfolio 67,4% 97,9% coverage 69,0% 70,7% Share of irregular loans in total portfolio 25,72% 12,56% Share of impaired portfolio 9,78% 8,63% Good quality of ING BSK loan portfolio resulting from : improvement in credit risk management and debt collection systems favourable results of portfolio restructuring slow growth of the new portfolio Share of impaired portfolio in the peer group ( %) Peer group November 13 results after 3Q

15 Risk costs - releases higher than increases On Balance Sheet Contingent liabilities Recoveries Provision from offbalance Total Impairment IBNR Provision in mio PLN IBNR Retail Banking Corporate Banking , Total The overall risk costs presented in Profit & Loss Account at the end of September amounted to PLN 68.2 mio, of which PLN 74.4 mio concerns impairment, PLN 4.9 mio concerns recovered interest, PLN 1 mio concerns fixed assets impairment, PLN -6.2 mio concerns vindication costs, PLN -1.5 mio concerns sundry debtors and PLN -4.3 mio concerns investment property impairment. November 14 results after 3Q