IBD\B\BS\V _English.1 17/02/ :00. ING Bank Śląski results. Warsaw, 17 February 2005

Transcription

1 ING Bank Śląski results Warsaw, 17 February 2005 February 2005

2 Macroeconomic environment mixed signals Decreasing rate of economic growth in Q4, although still among the highest in EU Seasonal incrase in unemployment rate Inflation rate above MPC s target Further appreciation of zloty Rising interest rates Growth in GDP, investment and consumption (%) (5) (10) (15) 1Q99 1Q00 1Q01 1Q02 1Q02 1Q04 GDP Consumption Investment Business sentiment index (20) (40) Sep-99 Aug-00 Jul-01 Jun-02 May-03 Apr-04 Industry Construction Retail trade Unemployment (%) Key NBP rate and WIBOR 3M (%) Inflation (y-o-y %) I II III IV V VI VII VIII IX X XI XII 0 01'01 07'01 01'02 07'02 01'03 07'03 01'04 07'04 0 I II III IV V VI VII VIII IX X XI XII WIBOR 3M Key NBP rate

3 Banking sector in visible impact of the revival of the economy Dynamics in deposits (y-o-y %) 30,0 21,3 25,2 20,0 16,6 16,0 10,7 21,1 22,9 10,0 6,1 0,0 (1,3) (1,4) (2,2) (2,0) (1,3) (4,2) (5,6) (5,1) (10,0) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Highest net result in the last 5 years achieved alongside: Decline in household deposits Increase in household loans ( mortgage loans) High level of financial resources on bank accounts and limited demand for loans from intitutional clients Significant improvement in quality of credit portfolio Favourable regulatory changes (CIT, change in portfolio classification rules, FPU Act) Higher margins (market rate changes) Households (1) Corporates Dynamics in lending (y-o-y %) Share of non-performing loans (%) 20,0 16,2 14,1 13,1 14,2 15,0 10,8 13,7 8,4 12,8 10,0 5,0 7,1 2,9 0,0 7,5 5,4 (5,0) 2,1 (0,6) (2,2) (4,0) (10,0) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Households (1) Corporates Q 2Q 3Q 4Q 1Q 2Q Below standard Doubtful Lost 3Q 9.8 4Q Note: (1) corporates, non-monetary financial institutions, non-commercial institutions serving households, local authorities, social security funds 2

4 Results of ING Bank Śląski improved income from business segments Retail Increase in income from cash management and savings products (including investment funds) attractive interest on Open Savings Account Lower loan income Wholesale Increase in deposit and custody income leading provider of cash management products and services Decrease in loan income completion of portfolio restructuring aimed at risk reduction Financial markets Proprietary trading, improved sales of Financial Markets products ALCO Significant increase (high FX gains related to Centrum Banku Śląskiego, higher valuation of the stake in the pension fund and higher interest income on own funds) Result on banking activity Reversal of declining trends in effectively all areas of activity 3

5 Results of ING Bank Ślaski stable income, low risk costs Operating costs Reorganisation enabled full cost control. Marketing activity to support sales of products and organisational restructuring resulted in increase in costs compared to Operating profit Over 19% improvement due to increased activity and stable cost base Risk cost provisions Significant reduction in risk costs (improvements in risk management, completion of the portfolio clean-up, conservative lending policy) Net profit Significant improvement due to lower risk costs and income tax adjustment (FPU Act) 4

6 Results of ING Bank Śląski results after 4 quarters PLNm 2002 Change / Retail banking % Wholesale banking % Core banking % FM products sales % Equity markets % Financial markets % ALCO and others % Result on banking activity 1,701 1,552 1, % Operating expenses 1,115 1,013 1, % Result before risk cost % Risk cost (380) (408) (202) % Profit before tax % Corporate income tax (65) (37) (93) (56) 252% Profit after tax % CIT rate adjustment to 19% from 27% (64) Tax adjustment resulting from FPU Act 17 Adjusted profit after tax % Equity (excluding net profit for the year) 2,542 2,678 2, % Total assets 26,941 28,917 34,968 6, % ROA 0.5% 0.1% 1.0% ROE 5.6% 1.1% 13.2% C/I (PAS) 65.6% 65.3% 61.9% RAROC (based on EUR) 14.1% 10.8% 23.1% Capital adequacy ratio 14.32% 14.60% 15.41% Note: The above figures are based on management accounts: result on banking activity includes share of profits (losses) in subsidiaries accounted for under equity method and profits (losses) of minorities for consolidated subsidiaries; total costs include other income and operating costs 5

7 Results of ING Bank Śląski results after 4 quarters Balance sheet consolidated (net) PLNm 2002 TOTAL ASSETS 26,941 28,917 34,968 Cash, due from NBP 997 1, Due from other financial institutions 7,988 7,739 11,381 Due from non-financial and budgetary 12,914 12,335 10,265 entities Debt securities 2,435 5,263 10,059 Other assets and inter-period settlements 2,608 2,497 2,369 TOTAL LIABILITIES 26,941 28,917 34,968 Due to banks and other financial 2,694 3,100 3,296 institutions Due to customers and budgetary entities 20,060 20,835 26,214 Own funds 2,542 2,678 2,770 Net result for the year Other liabilities and inter-period settlements 1,504 2,274 2,321 ING Bank Śląski s share of banking sector (%) Percent % 8 7,8 7 6,6 6,5 6,6 6,4 6 5,4 5,7 5,9 5,1 5,8 5,8 5 5,1 5,5 4,8 4,4 4 4,2 4,2 3, Assets Deposits Loans Increase in total assets due to dynamic growth in deposit volumes Change in asset profile - decrease in loans and increase debt securities ING BSK is well positioned in terms of capitalisation and liquidity to reverse the declining trend in the lending activity 6

8 Results of ING Bank Śląski improvement in quarterly results PLNm 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Retail banking Wholesale banking Core banking FM product sales Equity markets Financial markets (proprietary) ALCO and others Result on banking activity Operating expenses Result before risk cost Risk cost (102) (108) (103) (96) (72) (69) (61) (1) Profit before tax Corporate income tax 4 (11) (15) (15) (17) (20) (22) (35) Profit after tax CIT rate adjustment to 19% from 27% (64) Tax adjustment resulting from FPU Act (1) (1) Adjusted profit after tax (6) Improved result on banking activity in each quarter of compared to Higher costs were justified by increased commercial activity Reduction in provisions reflects improved business sentiment and high level of recoveries 7

9 Unique offering on retail deposits effectiveness of new strategy In 2H, Bank Śląski significantly improved its position on the household deposit market: - attractive offer - competitive interest rate - increased functionality of distribution channels ING BSK generated over PLN2.2bn of deposits Interest rate on PLN deposits at ING Bank Śląski (%) Growth in deposits of ING Bank Slaski in 2H (PLNm) OKO > PLN 100,000 5,50 Deposit 6 M % OKO < PLN100,000 5,25 Deposit 12 M % Deposit 6 M 5,75 Deposit 12 M 5,75 Deposit 24 M % Deposit 24 M 5,75 Saving account* % * Includes promotional offer 8

10 Market position stronger position in deposits, conservative lending policy PLNm 2002 Change / Deposits total (1) 21,763 22,703 28,525 +5, % Households 12,532 12,758 15,047 +2, % Corporates 9,231 9,945 13,478 +3, % Loans total (2) 15,316 13,846 11,371-2,476 82% Households 4,006 3,669 3, % Corporates 11,310 10,177 8,103-2,074 80% Loans written off balance , % Households % Corporates % Market share Up to 8,1% in from 6,8% in Significant improvement in quality of loan portfolio Loans total (3) 15,316 14,710 12,566-2,144 85% Household deposits success of the new strategy Corporate deposits strengthening of the position due to taking advantage of the favourable market situation (high level of free cash among corporates) Household loans morgage loans (new offering), credit cards, PLN307m transferred off balance sheet Corporate loans fall in demand for loans due to reduction in investment and healthy financial situation of Bank s strategic clients, conservative lending policy, PLN888m transferred off balance sheet Notes: (1) Financial, non-financial and budgetary sectors (2) Financial, non-financial and budgetart sectors; including subordinated loan (3) For comparability reasonas value increased by loans written-off balance 9

11 Market position stronger position in deposits, conservative lending policy Bank Household deposits volumes (m) Depozyty gospodarstw domowych - wolumeny (mln) Market rynek Bank Bank Corporate Depozyty korporacji deposits - wolumeny volumes (mln) (m) Market rynek , ,85 5,99 5,97 5,99 6,05 6,08 6,05 6,38 XII I II III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX X XI XII , ,22 8,88 8,28 8,13 8,50 XII I II III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX X XI XII ,33 9,27 9, ING Bank Śląski Market Rynek ING Bank Śląski Rynek Market Bank Household lending volumes (m) Kredyty gospodarstw domowych - wolumeny (mln) Market rynek Bank Kredyty korporacji - wolumeny (mln) Corporate lending volumes (m) Market rynek ,65 4,59 4,50 4,34 3,78 4,10 Łącznie Includes z kredytami loans spisanymi transferred do off pozabilansu balance sheet 3,82 3,54 3,62 3,50 3,36 3,25 3, ,87 XII I II III IV V VI VII VIII IX X XI XII I II III IV V VI VIIVIII IX X XI XII 2002 ING Bank Śląski z pozabilansem Market Rynek ,03 7,15 6,97 6,85 6,63 6,30 Łącznie Includes z kredytami loans spisanymi transferred do off pozabilansu balance sheet 6,38 6,05 6,38 5,99 6,20 5,80 5,90 5,34 XII I II III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX X XI XII 2002 ING Bank Śląski z pozabilansem Market Rynek

12 Quality of the loan portfolio visible improvement PLNm 2002 Loans total 15,316 13,846 11,371 Provisions total 1,753 1,258 1,016 Portfolio coverage ratio (%) 11.4% 9.1% 8.9% Wholesale 11,312 10,177 8,103 - regular 7,957 7,202 7,162 - sub-standard doubtful 1,313 1, lost 1, Provisions 1, Allocation of general provisions Irregular portfolio coverage (%) 35.5% 28.7% 67.0% Retail 4,005 3,669 3,267 - regular 3,302 3,176 2,868 - sub-standard doubtful lost Provisions Allocation of general provisions Irregular portfolio coverage (%) 71.7% 64.0% 96.3% Falling trend in risk cost: 1Q 2Q 3Q 4Q PLNm ING Bank Sląski offers high level of operational security: - Conservative classification of nonperforming exposures into high-risk groups - More conservative collateral evaluation than allowed by law The Bank continues to adapt its rating systems to meet Basel II criteria and ensure compliance of provisioning policy with IFRS The level of provisions as at 31 December from PAS perspective (applied prudently) Adoption of IFRS is going to cause a reduction in provisions part of which will be moved to equity (the impact of change in accounting standards is described on slide 12) Share of irregular loans in total portfolio 26.5% 25.1% 11.8% 11

13 Introduction of IFRS estimated impact PLNm PLNm PAS 31/12/ IFRS 1/1/2005 Change PLNm PLN m Profit after tax Net assets Polish Accounting Standards (PAS) ,136.0 (1) Valuation at amortised cost using effective interest rate 7.6 (1) (2) Difference between total specific provisions, general risk provision and contingent interest on non-performing loans and adjusting writeoffs due impairment of financial assets (3) Change in the valuation of real estate (4) Valuation of financial instruments related to long-term incentive plan (5) Goodwill (6) Deferred tax International accounting standards (IFRS) ,218.4 Specific provisions corporates and small firms (SMEs) Specific provisions individual customers and selected SME lines General Risk Provision 541 impaired 508 not impaired impaired 185 not impaired Allocation corporate 167 retail 56 Corporate - impairment Corporate - IBNR Retail - impairment Retail - IBNR General Risk Provision must not appear , Additional increase in dividend Nota: (1) Should be read together with information contained in report of the Management Board 12

14 Dividend proposed payment of 40 percent of profits Net profit (PLNm) Dividend (PLNm) EPS (PLN) Dividend per share, base (PLN) / payout ratio (%) 3.00 /20% 1.50 /20% 2.40 /20% 0.80 /36% /40% Additional dividend per share (PLN) 9.20 Total dividend per share (PLN) Dividend Yield (%): Dividend paid out of profit for the year 1.3% 0.5% 0.6% 0.2% 2.9% Total dividend 1.3% 0.5% 0.6% 0.2% 5.3% Implications for current policy changes: Improvement in profitability High capital adequacy ratio Adoption of IFRS and transfer of PLN120m from provisions to equity ING Bank Sląski s Board has proposed: Payment of 40% percent of net profit for (PLN147m) One-off payment of the entire amount of reserves transferred to equity (about PLN120m) Total proposed dividend for amounts to PLN267m Conversion to IFRS may increase volatility of profits: Management Board will review and may decide to set a new dividend payment policy going forward 13