2Q 2006 results. Warsaw, 10 August 2006

Transcription

1 2006 2Q 2006 results Warsaw, 10 August 2006

2 Information for investors Some statements contained in this press release represent future predictions and forecasts. Such statements are based on the current views and assumptions of the Management Board and they incorporate known and unknown types of risk and some degree of uncertainty. The actual results, achievements and occurrences may considerably vary from the data presented in these statements due to such elements as: (I) the general economic conditions, (II) the FM results (III), the frequency and severity of insured loss cases, (IV) the level and trends of the mortality and incidence rate, (V) the duration of specific conditions, (VI) the interest rates, (VII) the FX rates, (VIII) general competitive factors, (IX) amendments to laws and regulations, and (X) changes in the policy of the government and/or statutory authorities. ING Bank Śląski shall not assume the obligation of updating any items of information being speculations as to the future, presented herein. 1

3 Changes to the composition of the Supervisory Board and Management Board On 27 April 2006, the General Shareholders Meeting acknowledged the resignation tendered by: Mr. Andrzej Wróblewski from his capacity as the Supervisory Board chairman, Mr. Jerzy Rokita from his capacity as the Secretary to the Supervisory Board, and Messrs. Lech Węclewski and Hans van der Noordaa from their capacities as Members of the Supervisory Board. At the same time, the following individuals were appointed to the Board: Ralph Hamers, Jerzy Hausner, Mirosław Kośmider and Wojciech Popiołek. Supervisory Board (as at 30 June 2006): Anna Fornalczyk Eli Leenaars Wojciech Popiołek Ralph Hamers Jerzy Hausner Mirosław Kośmider Marc van der Ploeg Igno van Waesberghe Chairwoman Deputy Chairman Secretary On 05 July 2006: - Mr. Krzysztof Brejdak tendered his resignation from his capacity as Vice-President of the Management Board, effective as of 05 July Mr.Grzegorz Cywiński tendered his resignation from his capacity as Vice-President of the Management Board, effective as of 01 August Mr. Don Koch tendered his resignation from his capacity as Vice-President of the Management Board, effective as of 01 August At the same time the Supervisory Board appointed Mr. Mirosław Boda and Ms. Marlies van Elst to the positions of Vice-Presidents of the Management Board, effective as of 01 August Management Board (as at 01 August 2006): Brunon Bartkiewicz Mirosław Boda Ian Clyne Marlies van Elst Ben van de Vrie Michał Szczurek Maciej Węgrzyński President Vice-President Vice-President Vice-President Vice-President Vice-president Vice-President 2

4 ING Bank Śląski performance in 1H growth of core values PLN million 1H H 2006 change Interest revenue 327,4 447,6 + 36,7% Commission revenue 253,3 304,6 + 20,3% Result on core activity 842,4 890,4 + 5,7% Gross profit 329,5 403,5 + 22,5% Net profit 258,2 332,1 + 28,6% Total assets and liabilities ,8% Equity ,0% ROA (%) 1,3 1,5 + 15,4% ROE (%) 16,9 21,7 + 28,4% Profitability ratio * (%) 27,0 34,8 + 28,9% Earnings per 1 ordinary share 19,85 25, ,6% 3

5 Macroeconomic environment - pronounced economic growth GDP growth of approximately 5%, mainly driven by domestic demand. Despite certain acceleration in price growth over the second quarter, inflation continues to be low. In June 2006, prices were 0.8% higher than a year earlier. Core inflation ratios show no inflation pressure. Better standing of the society in terms of income due to an increase in the number of the employed and unrecorded payroll growth. F/X rates and the bonds and equity markets affected by the developments on the global markets: investors leave the emerging markets following an increase of interest rates in the US and the euro zone. Drop in interest rates (down by 0.5 p.p. during H1) it is expected that the interest rates will remain unchanged until the end of Unemployment rate (%) I II III IV V V I V II V III IX X XI XII GDP, consumption and investment growth rate (%) 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 GDP Consumption Inves tments 2Q 06 FX Rates Core interest rates and inflation (%) gru 04 sty 05 lut 05 mar 05 kwi 05 maj 05 cze 05 lip 05 sie 05 wrz 05 paź 05 lis 05 gru 05 sty 06 lut 06 mar 06 kwi 06 maj 06 cze 06 EUR USD CHF 01'05 02'05 03'05 04'05 05'05 06'05 07'05 08'05 09'05 10'05 11'05 12'05 01'06 02'06 03'06 04'06 05'06 06'06 WIBOR 3M lombard rate Inflation

6 Banking sector in favourable trends of the previous year continue Increased activeness in June 2006, the assets of the banking sector were 9.2% higher than a year earlier: - households maintaining a high growth rate of lending (mainly as a result of gains in FX-housing loans) and moderate growth of deposits in bank accounts - Institutional clients limited growth rate of lending as companies have had considerable own resources from good financial performance in 2005 Good financial results of the banking sector net profit in 1H 2006 totalled approximately PLN 5.8 billion, up from PLN 4.6 billion in the same period last year Recommendation S concerning best practices in terms of loans secured with mortgage % Share of problem receivables Q Q Q Q Q Q loss doubtful sub-standard Deposit growth rate (y/y) % Loan growth rate (y/y) % Household loans Q Q households corporates Q Q Households corporates Other: 59% Home loans 41% PLN 33% FX 67% 5

7 Market position of ING Bank Śląski - further reinforcement of the position on the household deposit market and improved position on the corporate client market Bank Households loans - volume (PLN million) market Bank Corporate loans - volume (PLN million) market ,87 2,55 2,47 2,22 2,34 2,12 2, ,34 5,47 5,51 5,30 5,09 5,40 5, XII I II III IV V VI VII VIII IX X XI XII I II III IV V VI XII I II III IV V VI VII VIII IX X XI XII I II III IV V VI ING Bank Śląski Market ING Bank Śląski Market Bank Households deposits - volume (PLN million) market Bank Corporate deposits - volume (PLN million) market ,19 7,39 8,10 8,10 8,52 8,67 8, , ,82 7,77 8,25 8,09 8,22 7, XII I II III IV V VI VII VIII IX X XI XII I II III IV V VI XII 2004 I II III IV V VI VII VIII IX X XI XII 2005 I II III IV V VI ING Bank Śląski Market ING Bank Śląski Market 6

8 Retail Banking - excellent product offer Projects Offer Promotions Pilot programme to launch 2 bank outlets operating on a franchise basis (in Poznań and Gniezno) At the end of June, the Private Banking 2006 project was completed. From 2005 to June 2006, there were built 29 Private Banking Centres special service points for upscale clients Implementing new rules of the credit capacity calculation for retail clients Successful savings offer (OKO), supported by nation-wide marketing campaigns New debit card giving the customers the ability to personalise their own debit card image New investment products: the Multiasset deposit; the fund plus deposit and an innovative umbrella fund (ING Parasol SFIO shifting monies between the sub-funds the Client gets tax benefits) Free-of-charge transfers made via the Internet and the automated telephone service Campaign Money loves interest Campaign to promote the Lion Account for Small Business: The Bank for businesses that are doing well Nation-wide promotional campaign promoting PLN mortgage loans: We promise to grant mortgage loans on beneficial conditions The advertising campaign for Visa payment cards of ING Bank Śląski (including business payment cards): You will love your daily shopping with the Visa card Promotion of the Spring and Summer Cash Loan offer Campaign to promote the photo-card 7

9 Acquisition of Retail clients funds - further reinforcement of the position in the segment Portfolio of funds acquired from retail clients: (PLN million) 25, % Change / : +331% 20, , ,947 3, % +141% 15, , ,10 5 1, , % 1, ,000 6,682 5,000 8,681 11, , ,775 13, , % 6, Q Q Q Q Q Q 2006 Saving A ccounts Term Accounts TFI Assets Current A cco unts ILT/ILU + 24% 8

10 ING Bank Śląski - the Leader in Savings - effects of the Money loves interest campaign for the Open Savings Account At the end of June 2006, the value of the Open Savings Account portfolio reached the level of PLN 14.1 billion compared with PLN 11.2 billion at the end of June The funds went up by PLN 2.9 billion, or 26% ING Bank Śląski - the leader on the deposit market: Growth of the portfolio value resulted from large-scale marketing campaigns: - On 23 June, we finished the Money loves interest campaign - On 30 June, we finished the Bank for business that are doing well campaign for PROFIT LION ACCOUNT addressed to Small Businesses ING Bank Śląski awarded in the ranking of the BANK monthly: the strong position on the deposit market and good financial results (number three in the ranking) were appreciated Savings accounts of households and Small Business clients: (PLN million) +122% 1, ,110 2, ,317 6, Q Q Q Q Q Q

11 Structured products - At ING Bank, we know how to build up your wealth effectively Investment products as an alternative for more active Clients ING Bank offers top quality financial services developed within the international framework of ING Group and well-tried on international markets: structured products (Investment Term Deposit, Investment Insurance Deposits), open-end investment funds (FIO), dual currency deposits and portfolio management services The success of structured products, such as the Investment Term Deposit (ILT) and the Investment Insurance Deposit (ILU) whose profitability depends in an innovative manner on the parameters of the FX and stock exchange market. On 26 June 2006, there was finished the subscription of the newest ILU, Multiassets, providing access to a broad market of stocks of the biggest companies listed on world exchanges without the need to open a brokerage account Increase of ILT/ILU volume during 2 quarters of 2006 by PLN 215 million almost double in comparison with the whole year 2005 ILT and ILU volume: (PLN million) +1194% Q Q Q Q Q Q Q 2006 ILT ILU 10

12 Investment funds - world-wide investments within one s reach ING TFI reported increase of investment funds assets to the level of PLN 8,3 billion TFI Funds- Why are they so special? A modern and attractive offer full of profitable products ING TFI was the first fund corporation on the Polish market to introduce an innovative umbrella fund called ING Parasol SFIO to its offer, appreciated by customers. Until 31st July 2006 assets of this fund reached PLN million During 1st half of 2006 investment funds assets distributed by ING Bank Śląski Group increased by PLN 944 million, in comparison with PLN 1.2 billion during whole year Assets of investment funds distributed by the Group of ING Bank Śląski*: (PLN million) +200% , , I Q 2005 II Q 2005 III Q 2005 IV Q 2005 I Q 2006 II Q * Retail segment funds assets 11

13 Small business loans - visible growth Increased activity in small business segment: Dynamic growth of lending portfolio in small business segment reported from the beginning of 2006 During 2 quarters of 2006 lending volume in segment increased by PLN 112 million, what represents increase by 100% in comparison with the whole 2005 (PLN 52 million) Visible growth of cash loans volume in 1st half 2006 volume was doubled Total volume of loans to small business clients: Volume if cash loans to small business clients: (PLN million) (PLN million) % I Q 2005 II Q 2005 III Q 2005 IV Q 2005 I Q 2006 II Q I Q 2005 II Q 2005 III Q 2005 IV Q 2005 I Q 2006 II Q

14 Mortgages in local currency - rocketing sales of mortgage loans Record sales of mortgage products in 2Q 2006: Making the Bank s offer more flexible and tailoring it to suit the needs of clients and the current market situation: the possibility of funding up to 100% of the investment project; new rules of credit capacity calculation. The success of the nation-wide campaign maintained under the theme We promise to grant mortgage loans on good conditions : volume of PLN denominated loans reached PLN million, what represents increase by 78% from the end of June 2005 Acquisition of new clients interested in the attractive offer for PLN-denominated mortgages the sales of mortgage loans in 1H 2006 totaled PLN million, almost three times higher than in the same period of PLN-mortgage loans in PLN million (including cash loans secured with mortgage): 23% x 2,7 8% % % % 18% H H Mortgages in local currency Sales value of loans extended in PLN million 13

15 Development of distribution channels Distribution Channels Increased numbers of clients with access to Internet banking to thousand Increased numbers of clients making transactions by means of short text messages (SMS) to thousand Number of branches: 332 Number of ATMs: 563 Pilot franchising outlets: Poznań and Gniezno 29 Private Banking Centers Number of retail clients having access to Internet banking: (in thousand) Number of clients with SMS service: (in thousand) 152,8 199,9 267,4 +176% 299,3 361,9 406,0 421,6 40,7 51,1 60,8 +162% 66,9 79,8 95,4 106,5 14 4Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2006

16 Franchise network - new quality at the Bank Self-service branch without manual cash handling Project objectives: Concentration on advisory and distribution of banking and insurance products Creating new quality modern outlets with innovative interior and equipment The Bank intends to open 50 new outlets of that type in the subsequent quarters Modern design of newly opened outlets: INTERNET TERMINAL TELEPHONE WITH ACCESS TO HALOŚLĄSKI SELF-SERVICE DESK ATM CASH DEPOSIT MACHINE 15

17 Corporate Banking - process excellence and optimisation of sales structures Projects Offer Promotions Corporate 2006 Programme establishment of 13 Corporate Client Support Sections New training project to increase sales of Financial Markets products in the Wholesale Network Pilot programme to test the new policy of FM limits and products Enriching the bank s offer for structured products by the introduction of the DCD Improving and enriching the offer for assets financing in co-operation with the companies from ING group: - Leasing (ING Lease and ING Car Lease) - Factoring (ING Commercial Finance) - Real estate financing (Śląski Bank Hipoteczny) Attractive offer of current financing for corporates Press campaign for current financing for corporates promoting the following products: - Long-term working capital loan - Current loan backed with bill of exchange - Factoring Promotional campaign for the offer for SME: You need a partner who listens carefully to talk business Campaign promoting the leasing offer in Corporate Banking Centres (CBKs) 16

18 Growth of lending - revitalization of lending activity Corporate Kredyty sieci loans korporacyjnej in PLN millions: w mln zł: ,406 8,537 8,558 8, ,994 8,696 8, The total corporate loan volume went up by PLN 965 million from the 2005 yearend, and by PLN 401 million from the same period last year. In the first half of 2006, the total corporate loan portfolio went up by approx. PLN 965 million. By comparison, in the same period in 2005 the volume gained PLN 153 million. Rebuilding the portfolio in the Large and Mid-sized Companies segment. 17

19 Increased revenues in big and mid-sized corporates segments Lending volume in big and mid-sized corporates: Revenue from the sale of FM products in big and mid-sized corporates: In PLN million +10% In PLN million +27% 4,054 4, H H H H 2006 Rebuilding of lending portfolio in big and midsized corporates segments Increased revenues in big and mid-sized corporates segments resulting from active sale of FM products in branches network 18

20 Development of electronic banking for corporates - a convenient solution for clients and lower costs of transaction service Number of INGBankOnline transactions: Number of SIMP installations (Mass Payment Service System) (transactions in thousands) +162% (pieces) +65% H H 2006 Number of transactions made with INGBankOnline in 1H 2006 was over 2.6 times higher than in the same period of 2005 Fast growth of clients using SIMP system, especially in big and mid-sized corporates segments (increase by 70%) Number of transactions doubled in comparison with the same period of

21 ING Bank Śląski results after 2Q increase of core measures PLN million 1H H 2006 zmiana Result on banking activity % Gross profit % Net profit % Total assets and liabilities 38,578 43, % Equity 3,322 3, % ROA (%) % Cost/income ratio (%): Solvency ratio (%): ROE (%): +0.9 pp pp pp Q Q Q Q Q Q 2006

22 ING Banku Śląski results after 2Q balance sheet structure Consolidated balance sheet (in net terms) Loans and other receivables gross structure: PLN million 2H 2005 end of H2006 Assets Total Cash and balances with the Central Bank Deposit accounts in other banks, loans and advances to other banks Financial assets at fair value through profit or loss Investment financial assets Loans and advances to customers Other assets and interperiod settlements Liabilities Total Liabilities due to the Central Bank and other banks Finsncial liabilities at fair value through profit or loss Liabilities due to customers Own equity Other liabilities and interperiod settlements Corporates 72% Deposits structure: Households 28% Own equity (excluding net profit of current year) Total assets ROA 1,3% 1,3% 1,5% ROE 16,9% 18,3% 21,7% Cost /Income ratio 65,2% 66,2% 65,6% Solvency ratio 17,44% 18,60% 15,82% Corporates 36% Households 64% 21

23 ING Bank Śląski performance - segment reporting Income statement of ING Bank Śląski (analytical, consolidated): PLN million 6M M M M 2005 / 6M 2006 Retail banking 390,5 805,9 467,6 77,1 119,8% Corporate banking 289,7 579,8 292,5 2,8 101,0% Own operations 183,1 322,5 138,9-44,1 75,9% Proprietary trading 71,0 115,5 64,2-6,9 90,3% ALCO 112,0 207,0 74,8-37,2 66,8% Income total 863, ,2 899,1 35,8 104,1% Operational expenses, including: 558, ,3 589,5 31,2 105,6% Personnel costs 265,2 516,6 279,2 14,1 105,3% Headcount restructuring cost 0,0 11,3 0,0 0,0 x Marketing costs 26,3 54,9 26,2-0,1 99,5% Depreciation 62,8 128,3 69,2 6,4 110,3% Other expenses total 204,0 409,3 214,9 10,8 105,3% Result before risk costs 305,0 587,9 309,6 4,6 101,5% Risk costs 24,5 118,0 94,0 69,5 383,3% Result before tax 329,5 705,8 403,5 74,1 122,5% CIT -63,9-139,4-68,3-4,3 106,8% Result after tax 265,5 566,4 335,3 69,7 126,3% - assigned to the shareholders of the holding company 258,2 549,5 332,1 73,8 128,6% - assigned to minority shareholders 7,3 17,0 3,2-4,1 44,0% 22

24 ING Bank Śląski performance - results for 2005 and 2006 on a quarterly basis Quarterly income statement of ING Bank Śląski (analytical, consolidated): PLN million IQ IIQ IIIQ IVQ IQ IIQ Retail banking 197,2 193,2 202,0 213,5 225,4 242,3 Corporate banking 151,3 138,4 144,2 145,9 141,4 151,1 Own operations 84,3 98,8 68,2 71,2 82,5 56,5 Proprietary trading 39,0 32,0 25,4 19,0 44,6 19,6 ALCO 45,2 66,8 42,8 52,2 37,9 36,9 Income total 432,8 430,4 414,4 430,5 449,2 449,8 Operational expenses, including: 276,1 282,2 266,9 295,1 297,7 291,8 Personnel costs 133,6 131,5 125,5 125,9 139,8 139,4 Headcount restructuring cost 0,0 0,0 0,0 11,3 0,0 0,0 Marketing costs 10,7 15,6 15,1 13,5 11,8 14,4 Depreciation 31,4 31,3 32,9 32,6 36,6 32,6 Other expenses total 100,4 103,6 93,4 111,8 109,4 105,4 Result before risk costs 156,7 148,3 147,5 135,4 151,5 158,1 Risk costs 16,7 7,8 46,7 46,7 47,5 46,5 Result before tax 173,4 156,1 194,2 182,1 199,0 204,5 CIT -34,3-29,7-34,5-41,0-35,3-33,0 Result after tax 139,1 126,4 159,7 141,2 163,8 171,5 - assigned to the shareholders of the holding company 135,7 122,6 160,0 131,3 162,4 169,7 - assigned to minority shareholders 3,5 3,8-0,2 9,9 1,4 1,8 23

25 ING Bank Śląski income - Retail banking as the growth driver for the Bank PLN million +19.8% +1% -24.1% Q Q Q Q Q Q 2006 Retail Banking: Corporate Banking: Proprietary trading: Income from deposits and mutual funds goes up the market has appreciated our deposit strategy Higher income on credit activity credit cards Higher income on the activity on the capital market (brokerage services) Higher income on sales of Financial Markets products to the retail client segment Favourable valuation of 20% of shares in the NN Pension Fund Society (NN PTE) Lower income on loans in the strategic client segment - as a result of fierce competition in terms of margin; as regards the large and mid-size companies reconstruction of the portfolio and stabilisation of income Lower income on deposits - lower margins due to interest rate drop Higher income on the sales of Financial Market products (large and mid-sized company segment) Higher income on custody and brokerage activity (capital markets) Lower income on proprietary funds due to drop of interest rates Drop of income from proprietary trading of Financial Markets Income on revaluation of an investment real property measurement Positive result on a hedging transaction related to the Bank s costs incurred in foreign currencies 24

26 ING Bank Śląski expenses - costs go up as a result of restructuring the operational back-office area and providing more sales support PLN million +5.3% ~ +10.3% +5.3% Q Q Q Q Q Q Q Q 2006 Staff costs: Marketing costs: Amortisation/ Depreciation: Other expenses: The incentive system reflected good performance of the Bank after the first 2 quarters of 2006 Indexation of salaries Shifting in time the effects of headcount restructuring Consistent policy of supporting sales activities while maintaining the marketing costs at the same level as in the same period last year The recognition of ING Bank Śląski brand* went up from 78% in May 2005 to 80% in April 2006 Increase in amortisation/ depreciation due to the projects implemented at the Bank (mainly investment projects in the area of IT infrastructure in the Sales Network and Head Office; revisualisation of branches) Main growth factors: Sarbanes-Oxley Act compliance costs (SOX Project) Project of service effectiveness improvements (Retail 2006, Corporate 2006) Lower VAT return in comparison with previous year Decrease of expenses as insurance payment received for claim from year 2005 * induced brand recall 25

27 Quality of lending portfolio - gradual decrease of provisioning volume Impairment write-offs (in PLN milion): Share of problem loans compared with peer group (in %) ,5 10,5 13,1 9,0 12,2 8,3 11,1 7,9 10,1 7,0 6,4 9,2 0 Q Q Q Q Q Q Impairment write-offs IBNR Provisions for off-balance sheet liabilities 6 5 Q Q Q Q Q Q ING Bank Śląski Peer group Impairment write-offs in 2Q 2006: Balance-sheet exposure Contingent liabilities Recovery of In PLN millions Group total written-off IBNR Impairment IBNR Provision receivables provision Retail operations Wholesale operations GRAND TOTAL