BANK MILLENNIUM GROUP Grupa Banku Millennium

Transcription

1 BANK MILLENNIUM GROUP Grupa Banku Millennium Institutional presentation August 2018

2 INSTITUTIONAL PRESENTATION > Macroeconomic environment in Poland > Banking sector in Poland > Bank Millennium general overview and Strategy > Financial performance 2

3 Macroeconomic overview Interest rates evolution (%) FX rates evolution Q-o-Q (bp) Y-o-Y (bp) Q-o-Q 3.6% 5.3% 9.7% Y-o-Y 3.2% -2.5% 1.0% GDP growth & unemployment (%) Inflation (%) (% y/y) Investments & Consumption Source: NBP, GUS, Bank Millennium forecasts 3

4 Macroeconomic overview Exports, imports and current account balance (EUR billion) Current and capital account balance (% GDP) Geographical structure of Polish exports (2017, % ) Geographical structure of Polish imports (2017, %) Source: Datastream 4

5 Macroeconomic overview General government deficit and debt Investment and capacity utilization (% GDP) (% y/y, %) Net inflow of EU funds ( bln PLN ) FDI inflow (EUR billion) Source: Datastream, NBP 5

6 Macroeconomic overview Loans to households (PLN billion, % y/y) Households deposits (PLN billion, % y/y) Loans to companies (PLN billion, % y/y) Companies deposits (PLN billion, % y/y) Source: NBP 6

7 INSTITUTIONAL PRESENTATION > Macroeconomic environment in Poland > Banking sector in Poland > Bank Millennium general overview and Strategy > Financial performance 7

8 Polish banking sector overview Main highlights of the Polish banking sector: 35 fully registered banks, 551 cooperative banks (active mainly in rural areas of the country) and additional 29 international banks acting in Poland in a form of branch More than 10 thousand banking outlets and over 160 thousand persons employed in the sector Top 5 banks in Poland comprise 49% of total assets of the sector and top 10 make 68%, but consolidation of the sector is going on Highest standards in modern technology implementation (e.g. mobile users, pay-pass payments) and quality of service Strongly capitalized and highly competitive banking sector in Poland Strong resilience during last international financial crisis no bank went bankrupt or needed capital injection from the State or other authorities; recent falls of small co-operative banks Strong banking supervision and high level of solvency of Polish banks (average TCR = 19%, CET1 = 17% ) confirmed by AQR/Stress tests Comfortable liquidity (L/D = 97%) supported margins, while interest rates at historical low levels Profitability under pressure due to high obligatory burdens: new banking tax (highest in Europe), guarantee fund payments and regulatory limits on some earnings (insurance, interchange) 8

9 The biggest banks in Poland (as at 31 March 2018, PLN billion) 295,1 24,6 Loans and advances to clients Debt securities Other financial assets Other assets 55,9 (1) 182,7 13,9 157,6 43,6 10,1 133,6 127,3 32,8 10,4 5,8 (2) 202,8 34,7 29,7 73,0 71,9 70,5 4,2 3,5 58,4 120,0 109,1 19,7 14,3 13,4 44,5 85,7 90,3 10,7 2,9 48,0 52,3 51,6 19,1 41,4 20,2 PKO PEK BZW MBK ING MIL BGŻ ALR GNB CITI Main Shareholder Employees Branches State Commerzbank owner Polish private PZU+PFR Santander ING BCP BNP Paribas PZU Citigroup Treasury 31.39% 32.8% 71.41% 69.42% 75.00% 50.10% 88.98% 29.22% 55.73% 75.00% (1) BZWBK signed an agreement to purchase part of Deutsche Bank Polska core business (except FX mortgage): Loans PLN 17.8 bn, Deposits: PLN 10.4 bn as on June 2017 (2) BGŻ BNP signed an agreement of acquisition a core business from Raiffeisen Bank Polska (except FX mortgage): c.a. PLN 19 bn loans and PLN 34.4 bn deposits Comments re. branches: BZ WBK including 320 Santander branches and agencies, ING including 64 ING express in shopping centres, BGŻ including 98 customer service desk ex Sygma, Alior including 633 agencies. 9

10 Recent M&A transactions in Poland in banking sector 1) 1) 2) 2) ) 1) 1) 2) 2) 2) 3) 3) Upper logo: Buying entity Lower logo: Bought entity 10

11 Public and regulatory burden on banking sector BFG regular fee PLN 2.2 bn yearly (utilization: on SKOKs 4.4 bn so far) BFG extra fee (PLN 2.2 bn for coop banks in hidden taxation due to non taxdeductibility of: many provisions, banking tax, BFG fees CIT: PLN 4.7 bn in 2017 Banking tax: PLN 3,6 bn Costs connected with public tasks ) Costs of special systems for tax collection (STIR, split payment, daily control sheet JPK_WB) Mortgage Support Fund PLN 0.6 bn in 2015, more to come? VAT (PLN 2 bn) and other taxes (e.g local) Regulators costs refund (KNF, Financial Ombudsman) PLN 0.15 bn Costs connected with access to public administration (e.g. last 500+ subsidy was distributed mainly through commercial banks) 11

12 INSTITUTIONAL PRESENTATION > Macroeconomic environment in Poland > Banking sector in Poland > Bank Millennium general overview and Strategy > Financial performance 12

13 Bank Millennium today 2.5 million accounts, 1.7 million active clients and top brand in Poland About 5% average market share, with higher share in retail deposits, leasing and factoring Well developed retail banking platform with 359 branches in attractive locations Leadership in digital innovation and the best quality of service Profitability at pair with top Polish banks; ROE at 9.5%* (after banking tax) Proven trackrecord of tight cost control; Cost/Income ratio at 46% * The strongest CET1 ratio (21.3%)* and one of the lowest impaired loans ratio among top banks (*) in 2Q

14 Branch network in attractive regions and locations (as at 30 June 2018) 359 Millennium branches are covering entire Poland Number of branches in each region Top locations Majority of branches in best locations, including shopping centres Gdańsk 55 Szczecin 13 Bydgoszcz 28 Poznań Zielona Góra 23 6 Wrocław 26 Łódź 18 Opole 3 Katowice Olsztyn 20 Warszawa 83 Kielce 2 Białystok 10 Lublin 9 High quality and efficiency High service satisfaction at 90% Flexible opening hours (e.g. shopping centre branches open late and on weekends) Average branch supports over 4,300 active customers Agglomeration with population above 500,000 inhabitants 36 Kraków 22 Rzeszów 5 14

15 Relations with BCP and management composition BCP demonstrated in the past strong support to Bank Millennium in Poland; commitment in equity was shown during the capital increase concluded in February BCP also supported liquidity, especially in years (EUR 200 million bilateral loan matured in April 2011, and money market line until July 2010) Currently, no dependence from BCP funding and no exposure to BCP or Portuguese public debt managers from Portugal employed on permanent basis, including 3 Management ,4% Board members ,0% BCP stake evolution since ,8% 20,0% 46,2% 44,1% 50,1% BCP subscribed PLN 691 mln during the right issue 50,0% 49,6% 65,5% 65,5% Sale of 15.4% through ABB in March 15 0% 10% 20% 30% 40% 50% 60% 70% Joao Bras Jorge CEO Fernando Bicho Deputy CEO, CFO Wojciech Haase CRO Andrzej Gliński Corporate Business Wojciech Rybak Retail Business Antonio Pinto Digital & Marketing Jarosław Hermann IT & Operations 15

16 Bank Millennium share performance Market cap/liquidity (PLN million) Bank Millennium share performance vs. main indices Avg. daily turnover (PLN m) 5,7 6,8 7,9 Market Capitalization Bank Millennium shareholders structure ( ) General information on Bank Millennium shares BCP 35,5% No of shares: (listed ) Nationale-Nederlanden OFE 50,1% Listed: on Warsaw Stock Exchange since August 1992 Aviva OFE Remaining free float Index: WIG, WIG 30, mwig40, WIG Banks, WIG RESPECT, MSCI PL, FTSE GEM 5,4% Tickers: ISIN PLBIG , Bloomberg MIL PW, Reuters MILP.WA 9,0% (*) last day of quotation in June 2018 and

17 History of Bank Millennium at a glance Bank Inicjatyw Gospodarczych BIG S.A. is founded - the first bank under new law introduced after the collapse of communism in Poland. BIG S.A. is the first bank listed on the Warsaw Stock Exchange. Merger with Bank Gdański (a regional retail bank) change of the name to BIG Bank GDAŃSKI SA. Joint venture with Portuguese BCP to create the Millennium project a nation-wide network of modern branches. BCP become strategic shareholder in 2000 year. BIG Bank GDAŃSKI rebranded to Bank Millennium - a year before BCP adapted that name Change of the Bank's image, adoption of visual identity of the strategic shareholder - Banco Comercial Portugues (Millennium bcp) Successful capital increase through the rights issue worth PLN 1.1 billion Increase of a free-float after reduction of Millennium bcp participation to 50.1% Record net profit of 701 million PLN supported by one-off VISA transaction High TCR (22%) boosted by PLN 700 million Tier 2 issue The best growth among all banks listed on the WSE 72% Increase of Bank s shares 1-st step to open Mortgage Bank 17

18 Bank Millennium is entering new strategy period with very solid foundations Current Accounts Consumer Loans Deposits We are a leader in client acquisition We are a leader in client satisfaction & recommendation Gross addition of clients in thousands % of customers satisfied or very satisfied Net Promoter Score #2 with 36 pts E We are a leader in terms of digital banking We are a leader in terms of efficiency % of active mobile clients % of digital channels for key products Operating costs as % of Total Assets, % 27% 32% 44% 89% 1.4% 1.6% 1.7% 1.9% 1.9% 2.0% 15% Bank 1 Bank 3 Bank 4 Bank 5 Bank 6 1. Excluding banking tax 2. Second position among top Polish banks Source: Internal client satisfaction survey, Annual reports, Bank Millennium 18

19 We are fit for future we have the model that allows us to turn the upcoming trends to our advantage Changing market circumstances require new sets of skills and approach... and Bank Millennium has the winning model Raising expectations of customer experience standards and personalization 1 We are the most client centric bank and want to drive it further by becoming the most personalized bank, at mass scale Digitizing services and consumers' lives sectors without borders and the race to win direct customers' relationships in an openbanking reality Growing and increasingly concentrating market Increasing pressure on efficiency due to maturing banking market Regulatory changes (e.g. PSD2 and MIFID 2) putting pressure on incumbents but creating opportunities for agile challengers We are leaders in digital banking with a unique combination of breadth of services and customer experience. We will build on this advantage to develop wider services and keep first line relevance We are growing at the fastest pace in terms of gaining clients with main relationship. In addition we will launch four new and sustainable growth engines We have a leading cost efficient model, built over the latest technology and architected for change, which we will scale at marginal cost We will leverage coming regulatory changes to launch market offensive by leveraging our agile operating model, our strong digital and data science skills 19

20 We will complement current growth engine (acquisition) with new ones to further accelerate Why selected Our growth model Revenue potential Investments Consumer Loans Micro Business SME & Corporate Poland still far behind EU markets while forecasts very promising (>10% volume growth CAGR) Bank Millennium has lower penetration in consumer loans than its fair-share Significant part of business banking where we can leverage our winning Retail capabilities Very solid growth machine already in place with 28% revenue growth in the last three years We will be introducing break-through cyborgand robo-advisory models to fully leverage potential of digital and physical channels among our core target segments We will drive penetration among own base but also will venture into consumer loan for new-to-banks especially through digital offering enabled by the PSD2 regime We will introduce a strong offer to the market leveraging digital sales & servicing model and value added services We will deploy light industrial specialization model - already proven approach as in the current priority sectors we reach twice higher share of wallet...and we will launch the project of mortgage bank to support business growth 20

21 2020 strategic targets AMBITION by 2020 We want to gain scale by being a growth leader in Polish banking sector Core business Income growth by ~30% (vs. 2017) Double-digit volume growth in core selected areas Double the pace of active client acquisition Maintain Top 3 in customers NPS among banks at the best-in-class efficiency & risk level Cost-to-income ratio of 40% Cost of risk in line with historical trends and as a result generate appealing return to our shareholders 1 bln PLN Net Profit 1 Top 3 ROE in Polish banking industry 1 1. Excluding extraordinary legal, regulatory and tax events 21

22 Overview of Strategies since : Accelerated growth : Managing through the crisis Conservative liquidity management, strengthening capital ratios Improved risk management Improving core profitability drivers Restructuring of distribution platform, improving efficiency through strict cost management : Rebalancing the business model for profitability Rebalanced product mix (e.g., mortgage vs. cash loan, term vs. other deposits), deposits price optimization Setting Corporate lending on a growth track with new targeting tools and RM management models Focus on strengthening competitive advantage (online, mobile, quality, customer intelligence) Further reduced operating expenses by strict admin. cost management and lean initiatives : Focus on profitability preservation, while keeping organic growth target Accelerating acquisition of retail customers via traditional, new and digital channels, while maintaining segment profitability Keeping differentiating through customer experience, further leveraging digital and customer intelligence Keeping the growth momentum in corporate segment while improving profitability Maintaining operational excellence and strict cost control Complementing current growth engine in Retail (C/A acquisition) with new engines (cash Loan, investments and micro business) Accelerate the growth in Corporate through lending and enhanced sales force efficiency Focus growth around client satisfaction, in retail mass personalization and in business with sectorial knowledge approach Strong leverage of digital in banking and beyond as competitive edge Opportunistic approach to inorganic growth options Win the war for talent thanks to engaging and inspiring work environment 22

23 INSTITUTIONAL PRESENTATION > Macroeconomic environment in Poland > Banking sector in Poland > Bank Millennium general overview and Strategy > Financial performance 23

24 Summary of achievements (1) Net Income (PLN million) Core Income (PLN million) ROE & NIM (PLN million) CAGR* +6.2% 701 Visa gain and other one-offs CAGR* +6.6% 10,6% 11,8% 9,1% 10,4% 9,3% without banking tax ,43% 2,35% 2,23% 2,44% 2,56% ROE NIM Costs & Cost/Income ratio (PLN million) Provisions and NPL ratio (PLN million) Capital Adequacy (PLN million) 54,3% 50,2% 50,4% 49,6% 45,8% ,4% 4,2% 4,6% 4,5% 4,6% Cost of Risk (in bps) 14,5% 15,2% 13,4% 14,5% 16,7% 17,4% 16,4% 17,3% 22,0% 20,0% Operating Cost Cost/Income ratio (recurrent) P&L provisions NPL ratio Shareholder Equity T1 TCR (*) Compound annual growth rate 24

25 Summary of achievements (2) Customer Deposits (PLN million) Retail PLN Loans (PLN million) Companies Loans (PLN million) CAGR* +6% CAGR* CAGR* +13.7% +6.4% CAGR* +7.4% PLN mortgage Consumer loans Active retail Customers (thousand) On-line & mobile customers (thousand) Net Promoter Score (**) on-line Customers mobile Customers (*) Compound annual growth rate (**) Source: internal research of Bank Millennium 25

26 Main financial highlights of 2Q 2018 Profitability increase Net profit of 1H 2018 reached 348 million PLN, which means 11% yearly growth ROE at 9.5% and cost/income at 46.4% *) Operating income exceeds costs growth Operating income grew by 5.4% y/y outpacing costs growth of 4% y/y Net interest income grew by 6.2% y/y and Net Commission Income by 2.4% y/y Low cost of risk and improvement of loans quality Cost of Risk **) at 47 b.p. (annualised) Impaired loans (stage 3) ratio at 4.7% level Strong capital and liquidity ratios Group s Total Capital Ratio (TCR) at 23.4%, and CET1 ratio (= T1) at 21.3% much above minimum thresholds Loans to Deposits ratio at low level of 84% (*) with equal accrual through the year of BFG resolution fee booked upfront in 1H in the amount of 34.7 million PLN (**) Total net provisions to average net loans 26

27 Main business highlights of 2Q 2018 Retail business Active customers net growth in the last 12 months at 157 ths. Record sale of cash loans at 822 million PLN in 2Q (+41% y/y in 1H 18) New mortgage loans sale at high 863 million PLN in 2Q (+53% y/y in 1H 18) Customers funds grew by 8% yearly to reach 52.7 bn PLN +36% yearly growth of active mobile users Companies business Total loans to companies yearly growth accelerated to 12% y/y New quarterly record of factoring turnover of 4.8 bn PLN (+18% y/y in 1H 18) Leasing sale has grown to 856 million PLN in 2Q (+15% y/y in 1H 18) Volume of FX transactions grew by 26% and volume of guaranties and LC granted grew by 31% yearly Digital Innovations Over 400 ths goodie apps downloads, of which almost 300 ths in the first half of 2018; continuous development and new functionalities of Bank Millennium smart-shopping platform - goodie Many external awards confirming leadership position in the area of digital innovations 27

28 Bank Millennium Rating Fitch Rating Issuer Default (IDR) National Long-term IDR Short-term Viability Value BBB- A (pol) F3 bbb- Support 4 Rating Outlook stable Moody's Investor Service Ltd Long-term Deposit Short-term Deposit Standalone BCA CR Assessment Value Baa3 (positive outlook) Prime-3 ba2 Baa2/Prime-2 Capital Intelligence Rating (unsolicited) Long-term Foreign Currency Short-term Foreign Currency Financial Strength Support 3 Rating Outlook Value BBB A3 BBB stable 28

29 Most important awards and achievements The most innovative Bank 2017 in Leaders of the World of Banking and Insurance Competition Bank Millennium is the winner of the prestigious Efma-Accenture Innovation in Insurance Awards 2018 Bank Millennium is one of the winners of The Innovators 2018 contest for Pomoc w podróży (Help in Travel) widget in the mobile app Website without barriers Award for adjusting the website to the needs of people with disabilities. Awarded by the "Widzialni" Foundation The Golden Banker 1st place for Konto 360 and the title of Safe Bank. Also on the podium is the Impresja credit card and the Financial Elementarz educational program Bank Millennium is the digital leader in the Deloitte EMEA Digital Banking Maturity survey 2018 Report on the maturity of digital banking in EMEA 29

30 Disclaimer This presentation has been prepared by Bank Millennium for its stakeholders for information purpose only. The information presented in this presentation should be read together with other information published by the Bank (on in particular financial and current reports. Financial data presented hereby is based on the consolidated Bank Millennium Group level. The Bank prepares its financial statements according to International Financial Reporting Standards, therefore only interests from derivatives meeting formal hedge accounting principles are recorded as Net Interest Income while other interest from derivatives is booked in Results on Financial Operations. As this hedge accounting relationship changes through time and does not necessarily include the entire portfolio of FX and Cross Currency Interest Rate swaps, the Bank provides in this presentation pro-forma data which presents all margin from derivatives in Net Interest Income. In the Bank s opinion, aforementioned approach allows better understanding of Net Interest Income evolution as it reflects substance of the derivatives transactions which are related to the liquidity management of the assets and liabilities in foreign currencies. Statements regarding future refer only to the date on which they were created and are based on a knowledge, information and opinions available on this day. The Bank does not undertake obligation to publish any updates, modifications or revisions of the information, data or statements contained in this presentation unless such obligations arises under applicable laws and regulations. This presentation should not be treated as a recommendation to purchase securities, an offer, invitation or a solicitation of an offer to purchase, invest or conclude any transaction on securities, in particular with respect to securities of Bank Millennium. 30

31 Investor Relations contact: Artur Kulesza Head of Investor Relations Tel: Katarzyna Stawinoga Tel: Marek Miśków analyst Tel: Kanał na YouTube 31