1Q08 Results Optima 09

Transcription

1 Banco Sabadell 1Q08 Results Optima 09 24th April 2008

2 Disclaimer Banco Sabadell cautions that this presentation may contain forward looking statements with respect to the business, financial condition, results of operations, strategy, plans and objectives of the Banco Sabadell Group. While these forward looking statements represent our judgement and future expectations concerning the development of our business, a certain number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, (1) general market. Macroeconomic, governmental, political and regulatory trends, (2) movements in local and international securities markets. currency exchange rate, and interest rates, (3) competitive pressures, (4) technical developments, (5) changes in the financial position or credit worthiness of our customers, obligors and counterparts. These risk factors could adversely affect our business and financial performance published in our past and future filings and reports, including those with the Spanish Securities and Exchange Commission (Comisión Nacional del Mercado de Valores). Banco Sabadell is not nor can it be held responsible for the usage, valuations, opinions, expectations or decisions which might be adopted by third parties following the publication of this information. Financial information by business areas is presented according to GAAP as well as internal Banco Sabadell group s criteria as a result of which each division reflects the true nature of its business. These criteria do not follow any particular regulation and can include forecasts and subjective valuations which could represent substantial differences should another methodology be applied. The distribution of this presentation in certain jurisdictions may be restricted by law. Recipients of this presentation should inform themselves about and observe such restrictions. These slides do not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe to any securities nor shall they or any one of them form the basis of or be relied on in connection with any contract or commitment whatsoever. 22

3 1. Trends and strategy 2. Liquidity 3. Risk management 4. 1Q08 results 5. Optima 09 update 6. Outlook 33

4 Trends and strategy Enhancing our conservative management profile Funding our loan growth with customer deposits through a positive commercial gap Resilient net interest income in a more competitive environment; our balance sheet flexibility allows us to offset higher deposit costs with asset repricing Cost management a result of the operational efficiency gains driven by our Optima 09 business plan Non-performing loans increase in line with our change of economic cycle expectation 4

5 Activity levels consistent with the new environment YoY percentage change 22.6% 23.1% 20.0% 20.8% 16.5% 15.7% 15.8% Customer deposits 12.8% 13.6% Loans to customers 11.9% Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Customer deposits includes sight and term deposits 5

6 managing volumes Mar-07 Mar-08 % Var. Gross loans to clients 57,530 64, % Loans to companies 27,965 32, % On-BS customer funds 59,306 64, % Customer deposits 26,355 31, % Euros in millions 6

7 and the profit and loss account Mar-07 Mar-08 var. Net interest income ex-div % Net interest income % Equity Method % Commissions % Insurance Activ % Trading income & Forex % Gross Oper. Income % Other oper. income % Operating expenses % Depreciation % Net oper. Income % Asset los. & others % Other income Profit before taxes % Attributable Profit % 7

8 with efficiency and profitability Mar-07 Mar-08 Cost / Income ratio 42.8% 41.5% NPL ratio 0.39% 0.62% Coverage ratio 453% 295% ROE 21.6% 20.4% Core Capital 6.06% 6.05% 85

9 1. Trends and strategy 2. Liquidity 3. Risk management 4. 1Q08 results 5. Optima 09 update 6. Outlook 39 9

10 A balanced mix of loan and deposit growth 4,000 3,000 2,000 1, ,000-2,000 1Q07 2Q07 3Q07 4Q07 1Q08-3,000-4,000 Créditos de clientes Depósitos de clientes GAP Euros in millions Créditos Loans tode customers clientes Depósitos Customerde deposits clientes GAP 10

11 FINANCIACIÓN Y LIQUIDEZ We prioritise liquidity... Focus on aggressive deposit gathering campaigns Customer deposits evolution (Mar06 - Mar08) 30,652 31,838 26,485 26,355 27,048 27,422 21,574 22,303 24,350 Euros in millions Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 11

12 gaining market share in deposits 3.6% 2.5% 3.5% 3.4% 2.1% 2.1% 2.2% 3.41% 2.3% 3.49% 3.45% 3.46% 3.41% 2.15% 2.11% 2.10% 2.27% 2.31% 3.3% 3.30% 3.38% 3.35% 2.0% 3.27% 3.2% Loans to customers (lhs) Deposits (rhs) 3.1% Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Feb % Source: Bank of Spain. 12

13 FINANCIACIÓN Y LIQUIDEZ improving our funding mix Funding structure Wholesale funding breakdown Repos 3.6% Commercial paper 9.4% Preference shares 0.4% Wholesale 34.7% Covered bonds 40.1% Preference shares 2.3% Securitisati on 15.2% Customer deposits 51.9% Subordinate d debt 6.8% Senior debt 35.5% % Wholesale funding 32.8% 34.3% 36.5% 37.1% 38.8% 39.9% 39.9% 37.2% 34,7% 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 As of March

14 with a comfortable wholesale maturity calendar FINANCIACIÓN Emisiones en mercados de capitales (no incluye las titulizaciones) Wholesale funding maturity calendar, March ,700 1,119 1,660 1,143 1,324 1,127 1,145 1,579 1,520 1,769 1, ,461M ,775M ,095M ,716M M ,077M M ,580M ,847M ,922M Diversified maturity calendar 14

15 and capacity to transfer price increases to customers FINANCIACIÓN Emisiones en mercados de capitales (no incluye las titulizaciones) Loans with renegotiable pricing (in percentage of total book) >12 months 50.0% 2Q % 3Q08 9.7% 4Q08 9.8% 1Q % 15

16 1. Trends and strategy 2. Liquidity 3. Risk management 4. 1Q08 results 5. Optima 09 update 6. Outlook 3 16

17 Non performing loans increase according to our expectations Q08 NPL ratio: 0.62% Mar- System NPL ratio Banco Sabadell NPL ratio 08 GDP growth Euribor 12 months Unemployment -5 17

18 with higher specific provisions offset by lower generic Quarterly cost of risk (in bp) Generic Specific ** Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 ** adjusted for the 41.8m extraordinary provision in 4Q07 18

19 Nuestra cartera está diversificada We have a diversified portfolio Loan distribution by sector Services and others 35% Other loans to individuals 4% Mortgages to individuals 21% Developers 13% Pure mortgage Low exposure to pure mortgages Geographic distribution biased towards our natural market Primary sector 1% Industry 21% Construction 5% As of 31/03/2008 pure mortgage: mortgage loans to individuals and real estate developers 19

20 with a market share below our natural share Market share evolution 6.59% 7.90% 7.28% 7.57% 3.23% 3.25% 3.49% 3.38% 2.65% 2.44% 2.33% 2.28% working capital pure mortgage loans to customers 20

21 which reiterates our conservative profile Mortgage book LTV breakdown 46.4% 15.9% 5.8% (with additional collateral) 31.9% Very low exposure to high loan-tovalues <= 30% > 30% y <= 60% > 60% y <= 80% >80% As of 31/3/

22 In individuals, the bias towards the affluent segment Product segmentation Income segmentation Rest 8.5% Consumer credit 5.5% Private banking 6% Medium low income 8% Medium income 20% High income 32% Mortgages 86.0% (85% first residence) Medium high income 34% As of 31/3/

23 lowers risk profile in a turn of the cycle Debt/income evolution 29.4% 27.4% 27.9% 27.7% 27.2% 27.6% 28.4% 28.5% 28.7% Loan to value Stock 55.7% New 63.8% production Mar- 08 Debt/income sensitivity +1% 32.0% - 1% 26.7% Average mortgage ( 000 ) Stock 90.7 New production New production over the last 3 months 23

24 In developers, we are comfortable with our risk profile Construction and sales status Land financing breakdown Construction 1 st home 2 nd home 71.8% 71.1% 75.3% Rural 0.4% Finalista* 22.3% Pre-sale 1 st home 2 nd home 60.9% 62.3% 54.6% Urban 77.3% Geographic distribution biased towards our traditional natural market (Catalonia / city / first residende) As of 31/03/2008. *Finalist: Land already approved to be classified as urban. 24

25 and we have built a sizable generic provisioning buffer Generic provision fund evolution 1, , , , , , Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 Euros in millions 25

26 1. Trends and strategy 2. Liquidity 3. Risk management 4. 1Q08 Results 5. Optima 09 update 6. Outlook 3 26

27 Growing net interest income Q07 2Q07 3Q07 4Q07 1Q % % Mar-08 NII Equity-acc hold. 3.0 Commissions Insurance activity 21.8 Trading income 24.5 Forex 10.4 Gross Oper.Inc Rev. non fin op 8.3 Personnel exp Admin.exp Depreciation Other Op. costs -4.3 Net Oper.Inc Asset los. & other Other income 23.2 Inc.Before Taxes Corporate taxes Consol.Net Prof Minority interests -0.9 Net Profit Euros in millions Mar-07 Mar-08 Net interest income ex-dividends Dividends 27 26

28 repricing assets and with lower weighting of wholesale funding 32.8% 34.3% 36.5% 37.1% 38.8% 39.9% 39.9% 37.2% 34,7% % of wholesale funding 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q % 2.88% 3.23% 3.87% 3.57% 4.11% 4.45% 4.81% 4.78% Cost of wholesale funding 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q % 1.80% 1.68% 1.66% 1.76% 1.79% 1.78% 1.74% 1.76% Net interest margin 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 In percentage 27 28

29 with a positive effect on margin via funding mix 2.94% 2.92% 2.89% 2.91% 2.94% 2.94% 2.94% 2.93% 2.80% Customer spread 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q % 2.23% 2.14% 2.10% 2.11% 2.06% 1.93% 1.89% 2.02% Combined customer spread (*) 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q % 1.80% 1.68% 1.66% 1.76% 1.79% 1.78% 1.74% 1.76% Net interest margin 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 (*) Combined spread: asset yield (cost of customer funds + cost of wholesale funding). In percentage 27 29

30 Fees driven by lower activity in asset management Lending Services Mar-08 NII Equity-acc hold. 3.0 Commissions Insurance activity 21.8 Trading income 24.5 Forex 10.4 Asset Mgmt Gross Oper.Inc Rev. non fin op 8.3 Personnel exp Q07 2Q07 3Q07 4Q Q Admin.exp Depreciation Other Op. costs -4.3 Lending Services Asset Mgmt % Net Oper.Inc Asset los. & other Other income 23.2 Inc.Before Taxes Corporate taxes Consol.Net Prof Minority interests -0.9 Net Profit Euros in millions Mar-07 Mar-08 1 Includes asset management funds, pension funds and non-life insurance commissions 30 28

31 Strong momentum in life insurance Mar-08 NII Equity-acc hold Commissions Insurance activit 21.8 Trading income 24.5 Forex 10.4 Gross Oper.Inc Rev. non fin op 8.3 Personnel exp Admin.exp Q07 2Q07 3Q07 4Q07 1Q08 Depreciation Other Op. costs % Net Oper.Inc Asset los. & other Other income Inc.Before Taxes Corporate taxes Consol.Net Prof Minority interests -0.9 Net Profit Euros in millions Mar-07 Mar

32 Stable recurrent trading and forex Mar Q07 2Q07 3Q07 4Q07 1Q Mar-07 Mar-08-9,0% - 15,4 % - 0,8 % NII Equity-acc hold. 3.0 Commissions Insurance activity 21.8 Trading income 24.5 Forex 10.4 Gross Oper.Inc Rev. non fin op 8.3 Personnel exp Admin.exp Depreciation Other Op. costs -4.3 Net Oper.Inc Asset los. & other Other income 23.2 Inc.Before Taxes Corporate taxes Consol.Net Prof Minority interests -0.9 Net Profit Euros in millions Client-driven business Other 32 26

33 Discipline in both staff costs Q07 2Q07 3Q07 4Q07 1Q % + 4.5% Mar-08 NII Equity-acc hold. 3.0 Commissions Insurance activity 21.8 Trading income 24.5 Forex 10.4 Gross Oper.Inc Rev. non fin op 8.3 Personnel exp Admin.exp Depreciation Other Op. costs -4.3 Net Oper.Inc Asset los. & other Other income 23.2 Inc.Before Taxes Corporate taxes Consol.Net Prof Minority interests -0.9 Net Profit Euros in millions Mar-07 Mar-08 Recurrent Non-recurrent 33 32

34 and administrative expenses Q07 2Q07 3Q07 4Q07 1Q Mar Mar % Mar-08 NII Equity-acc hold. 3.0 Commissions Insurance activity 21.8 Trading income 24.5 Forex 10.4 Gross Oper.Inc Rev. non fin op 8.3 Personnel exp Admin.exp Depreciation Other Op. costs -4.3 Net Oper.Inc Asset los. & other Other income 23.2 Inc.Before Taxes Corporate taxes Consol.Net Prof Minority interests -0.9 Net Profit Euros in millions Recurrent Non-recurrent 34 35

35 Provisioning with a higher specific bias Cost of risk Q07 2Q07 3Q07 4Q07 1Q08 13bp 38bp 17bp 66bp 25bp Generic Specific Specific others* Rest Mar-08 NII Equity-acc hold. 3.0 Commissions Insurance activity 21.8 Trading income 24.5 Forex 10.4 Gross Oper.Inc Rev. non fin op 8.3 Personnel exp Admin.exp Depreciation Other Op. costs -4.3 Net Oper.Inc Asset los. & other Other income 23.2 Inc.Before Taxes Corporate taxes Consol.Net Prof Minority interests -0.9 Net Profit Euros in millions. * Specific provisions over and above the required calendar 35

36 1. Trends and strategy 2. Liquidity 3. Risk management 4. 1Q08 results 5. Optima 09 update 6. Outlook 3 36

37 We reiterate Optima 2009 s mission Boosting the value creation of our business model through the optimisation of our operational model 37

38 both in branch operational optimisation FTE* reduction 1Q08 Back-office FTE per branch 2.25 Optimising communication with branches Improving the document delivery to customers - 9 FTE - 38 FTE Changing operational circuits in international business -79 FTE Total FTE T e *FTE= Full Time Equivalents 38

39 as well as improvements in the corporate centre FTE* 1Q08 Outsourcing operational processes - 10 FTE Reorganising structure - 51 FTE Total - 61 FTE *FTE= Full Time Equivalents 39

40 using our already announced discretionality in costs management Active branch network expansion management: Selecting 22 best choices of branch openings: Higher probability of shortest break even under current environment Branch mergers to generate sinergies Organisational commercial network improvements Unit resizing based on revised expectations of future levels of activity and profitability 40 mm cost reduction from 2008 Cost and investment decisions based on project and process profitability Specific actions on unit costs 40

41 1. Trends and strategy 2. Liquidity 3. Risk management 4. Resultados 1T08 5. Actualización Optima Outlook 3 41

42 Thinking ahead Our conservative management will allow us to reinforce our market position We continue to optimise liquidity Increasing assets spreads Cost control Delivering Optima 09 Reinforcing risk management systems A more solid position after the market adjustment 42

43 SabadellAtlántico BancoHerrero Solbank Banco Urquijo ActivoBank