MASARYK UNIVERSITY Czech Republic

Transcription

1 MASARYK UNIVERSITY Czech Republic Markéta SMOLKOVÁ Matej ZABADAL Michal ŠPERKA Samuel ZIMA Tatiana KOLOŠTOVÁ COMMERCIAL BANK Czech Republic

2 INVESTMENT SUMMARY 2 RECOMMENDATION: HOLD PRICE TARGET: SHARE PRICE as of 12 th of April CZK 80 CZK POSITIVE SUCCESSFUL TURNAROUND EXCESS CAPITAL COMPETITIVE PRESSURE HIGH-RISK LOAN PORTFOLIO NEGATIVE PRICE TARGET UPSIDE [ ] 9 % PRICE CHART May 2016 April 2017 PT 87 CZK TICKER MONET:CP EXCHANGE Prague Stock Exchange 52W RANGE CZK DIVIDEND YIELD 9,7 % SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

3 BUSINESS DESCRIPTION

4 WELL-ESTABLISHED MID-SIZED BANK 4 RETAIL SME 149.4bn TOTAL ASSETS IN CZK GE SEPARATION ESTIMATED MARKET SHARE 12/2016 2,5 % 1997 ESTABLISHED REBRANDED TO GE MONEY BANK AND GE MONEY AUTO SUCCESSFUL IPO REBRANDED TO MONETA MONEY BANK 632 ATMs 230 BRANCHES 3114 EMPLOYEES SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

5 INDUSTRY OVERVIEW & COMPETITIVE POSITIONING

6 II.14 III.14 IV.14 V.14 VI.14 VII.14 VIII.14 IX.14 X.14 XI.14 XII.14 I.15 II.15 III.15 IV.15 V.15 VI.15 VII.15 VIII.15 IX.15 X.15 XI.15 XII.15 I.16 II.16 III.16 IV.16 V.16 VI.16 VII.16 VIII.16 IX.16 X.16 XI.16 XII.16 I.17 II E 2017E 2018E 2018E 2019E 2019E 2020E 2020E 2021E 2021E CZECHIA EXPERIENCING ROBUST GROWTH OUTLOOK MONETARY POLICY LOW INTEREST RATES CURRENCY STRENGTHENING IN 2017 PRODUCTION GROWTH 5,0% Real GDP 4,0% GDP GROWTH SUBSTANTIAL UNEMPLOYMENT VERY LOW 3,0% 2,0% 1,0% 2,5% 2,5% 2,4% 2,3% 2,0% INFLATION ABOVE TARGET 0,0% -1,0% CONSUMER & BUSINESS CONFIDENCE 104,0 103,0 102,0 101,0 100,0 99,0 98,0 Consumer Business LOANS BALANCE Total households and non-financial corporations CZKbn INTEREST RATES ANNUAL AVERAGES 2,00% 1,50% 1,00% 0,50% 0,00% Discount Rate Pribor 3M SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

7 STRONG COMPETITIVE PRESSURE PERSISTS 7 PRICING NEW RETAIL LOANS 15,0% 13,0% CZECH BANKING SECTOR FEE INCOME CZKbn 50 11,0% 9,0% 7,0% VOLUME RETAIL LOANS GROWTH 5,0% 0,0% -5,0% -10,0% ,2% Moneta -0,9% -0,3% -6,0% Market 4,1% 3,9% -4,6% 1,7% INTEREST INCOME CZKbn SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

8 REPRICING SECURES MARKET SHARE 8 PROFITABILITY Return on Average Assets MARKET SHARE DEVELOPMENT % of Total Assets 3,6% 3,4% 3,2% Moneta Market 2,8% ,3% 3,1% 2,9% 2,6% 2,7% 2,6% 2,5% 1,3% 1,2% 1,2% 1,3% bn 149.4bn SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

9 FINANCIAL

10 50,9 56,3 53,7 54,6 54,7 57,8 57,3 60,7 62,9 61,6 64,7 65,9 65,9 69,4 72,0 73,9 RISING VOLUMES, TUMBLING YIELDS 10 Retail lending Historical and projected Commercial lending Historical and projected 90,0 Retail volumes Yield on Retail Loans 14,0% 90,0 Commercial volumes Yield on Commercial Loans 6,0% 80,0 70,0 13,1% 12,6% 11,4% 10,4% 10,0% 10,4% 10,8% 11,2% 12,0% 10,0% 8,0% 80,0 70,0 4,4% 4,8% 4,0% 3,9% 3,9% 4,0% 4,1% 4,2% 5,0% 4,0% 3,0% 60,0 6,0% 4,0% 60,0 2,0% 50,0 2,0% 50,0 1,0% 40, E 2018E 2019E 2020E 2021E 0,0% 40, E 2018E 2019E 2020E 2021E 0,0% SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

11 HIGHLY SENSITIVE CoD & DECREASING MARGINS 11 Cost of deposits Historical and projected Net interest margin Historical and projected 2,0% 7,5% NIM (Team defined) 7,0% 6,9% 6,7% NIM (Moneta defined) 1,5% 1,0% 0,5% 0,30% 0,21% 0,17% 0,15% 0,25% 0,61% 0,92% 1,10% 6,5% 6,0% 5,5% 5,0% 4,5% 6,3% 6,2% 5,9% 5,4% 5,5% 5,2% 5,3% 5,4% 5,5% 5,2% 5,1% 5,1% 5,1% 5,3% 0,0% E 2018E 2019E 2020E 2021E 4,0% E 2018E 2019E 2020E 2021E SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

12 COST OF RISK HAS BOTTOMED OUT 12 Cost of risk as % of Net Loans Retail Commercial 3,5% 3,0% 2,5% 2,5% 2,1% 2,5% 2,9% 2,0% 1,5% 1,0% 0,5% 0,7% 0,8% 1,4% 0,8% 0,3% 1,5% 0,5% 1,7% 0,6% 0,8% 1,0% 1,2% 0,0% E 2018E 2019E 2020E 2021E SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

13 DECREASING FEE INCOME DUE TO COMPETITIVE PRESSURE REASONING a) Regulatory cap on interchange fees since 2015 b) Trend of switching from paid to free current accounts c) Bank assurance and asset management business not material 13 Net fee and commission income CZKbn Net fee and commission income Annual growth 3,0 2,5 2,0 1,5 1,0 2,7 2,3 2,0 1,7 1,6 1,5 1,5 1, E 2018E 2019E 2020E 2021E 5,0% 0,0% -5,0% -10,0% -15,0% -20,0% 2,4% -0,5% -3,6% -7,7% -15,3% -12,6% -12,1% -16,1% E 2018E 2019E 2020E 2021E SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

14 COST MANAGEMENT STABILIZES C/I 14 Cost to income ratio CZKbn REASONING: a) Only slight increase of C/I despite falling revenues 50,0% 45,0% 45,7% 46,0% 46,6% 46,5% 45,6% 44,8% 43,3% b) Successful separation below planned budget c) Capitalization of work and reduced depreciation expenses 40,0% 35,0% 39,3% E 2018E 2019E 2020E 2021E SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

15 3,3 3,1 3,2 3,6 3,4 4,7 4,5 4,1 NET INCOME DROPS DESPITE RISING INTEREST RATES 15 Net income CZKbn Return on Average Equity 5,0 4,5 4,0 3,5 3,0 16,0% 14,0% 12,0% 10,0% 11,6% 12,8% 14,7% 13,5% 13,4% 13,5% 13,0% 13,3% 2,5 8,0% 2,0 6,0% 1,5 1,0 0,5 4,0% 2,0% 0, E 2018E 2019E 2020E 2021E 0,0% E 2018E 2019E 2020E 2021E SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

16 RWA OPTIMIZATION SUCCESSFUL 16 Tier I Capital Ratio REASONING: a) RWA optimization completed successfully b) RWA density down from 90,4 % to 73,2 % in 12 months 35,0% 30,0% 25,0% 20,0% 15,0% 30,0% 17,7% 20,5% 18,6% 16,8% 16,2% 15,8% 15,5% c) 4bn of capital freed up 10,0% 5,0% 0,0% E 2018E 2019E 2020E 2021E SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

17 EARLY SHAREHOLDERS BEING REWARDED 17 Regulatory capital CZKbn 2017E-2021E Dividends 40,0 35,0 30,0 25,0 20,0 15,0 Excess Over Management Target Management Target 18,0 2,7 0,9 0,4 0,0 5,5 3,6 1,5 19,3 19,6 16,9 17,8 18,5 19,0 19,5 19, E 2018E 2019E 2020E 2021E *After the IFRS9 impact 12,0% Dividend yield 10,0% 8,0% Payout Ratio 110,0% 105,0% 9,7% 100,0% 8,7% 100,0% 8,0% 7,7% 80,0% 6,2% 6,0% 4,0% 2017E 2018E 2019E 2020E 2021E 120% 100% 80% 60% 40% 20% SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

18 VALUATION & RISKS

19 PT BASED ON VARIOUS MODELS 19 3-STAGE DIVIDEND DISCOUNT MODEL 3-STAGE RESIDUAL INCOME MODEL RELATIVE VALUATION P/E & P/TBV 87 CZK SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

20 INSUFFICIENT UPSIDE CONSIDERING ITS LONG-TERM RISKS 20 PRICE TARGET CONSENSUS HOLD CURRENT PRICE 80 DDM RESIDUAL INCOME PEERS P/E (2017/18) PEERS P/TBV (2017/18) SHORT-TERM: Volume growth offset by dropping yields LONG-TERM: Rising interest rates partially offset by cost of risk No more excess of capital SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

21 PT SENSITIVE MAINLY TO YIELDS AND COST OF RISK 21 DECREASE 87 CZK INCREASE SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

22 PRONOUNCED COMPETITIVE PRESSURE DAMPENS THE OPTIMISM 22 SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

23 CONCLUSION

24 IT S NOT ALL ABOUT THE DIVIDENDS 24 RECOMMENDATION HOLD COMPETITIVE PRESSURE EXCESS CAPITAL PRICE TARGET HIGH-RISK LOAN PORTFOLIO SUCCESSFUL STRATEGY 87CZK SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION RISK CONCLUSION

25 THANK YOU FOR YOUR ATTENTION!

26 PRESENTATION SLIDES INVESTMENT SUMMARY BUSINESS DESCRIPTION INDUSTRY & MACRO FINANCIAL VALUATION & RISKS CONCLUSION SUMMARY MONETA MACRO LOANS FEEs RWA + TIER I MODELS CONCLUSION INDUSTRY CoD + NIM C/I EXCESS CAP PT x CONSENSUS MONETA CoR NI + RoAE SENSITIVITY RISKS SUPPORT SLIDES COMMON STATEMENTS FINANCIAL VALUATION ECONOMY & INDUSTRY OTHER BALANCE SHEET I LOAN PORTFOLIO DDM Inputs PORTER Corporate Governance BALANCE SHEET II IEA/IBL I RI MODEL Inputs Corporate Structure INCOME STATEMENT I IEA/IBL II Cost of Equity Ownership INCOME STATEMENT II C-F STATEMENT KEY RATIOS I KEY RATIOS II Relative Valuation Bear/Bull Case Price Chart + Commentary CAPITAL RWAs SWOT

27 BALANCE SHEET

28 BALANCE SHEET ITEMS AS % OF TOTAL ASSETS

29 INCOME STATEMENT

30 INCOME STATEMENT ITEMS AS % OF TOTAL NET REVENUE

31 CASH-FLOW STATEMENT

32 LOAN PORTFOLIO

33 INTEREST-EARNING ASSETS AND INTEREST-BEARING LIABILITIES I

34 INTEREST-EARNING ASSETS AND INTEREST-BEARING LIABILITIES II

35 KEY FINANCIAL RATIOS I

36 KEY FINANCIAL RATIOS II

37 CET 1 CAPITAL Regulatory capital CZKbn 45,0 35,0 Excess Over Management Target Management Target Tier I Capital Ratio in percentage 35,0% 30,0% 25,0% 20,0% 30,0% 17,7% 20,5% 18,6% 16,8% 16,2% 15,8% 15,5% 18,0 25,0 2,7 0,9 0,4 0,0 5,5 3,6 1,5 19,3 19,6 16,9 17,8 18,5 19,0 19,5 19,9 15, E 2018E 2019E 2020E 2021E 15,0% 10,0% 5,0% 0,0% E 2018E 2019E 2020E 2021E

38 Risk-Weighted Assets ,9% 90,4% RWAs RWA density 73,2% 73,2% 73,2% 73,2% 73,2% 73,2% 124,6 126,6 125,9 128,4 122,4 119,1 114,7 109, E 2018E 2019E 2020E 2021E 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 00%

39 SWOT Analysis

40 Porter s 5 Forces Model COMPETITION NEW ENTRANTS High CONSUMERS Low Medium Medium High SUPPLIERS SUBSTITUTES

41 DDM Valuation model inputs

42 Residual Income valuation model inputs Return on Average Equity and Cost of Equity 16,0% 14,0% 12,0% 10,0% 8,0% 6,0% 4,0% 2,0% 0,0% RoAE CoE 13,8% 13,2% 12,9% 12,5% 13,0% 8,6% 8,6% 8,7% 8,6% 7,5% 2017E 2018E 2019E 2020E 2021E

43 Cost of Equity

44 P/E Relative Valuation 20,0 18,0 16,0 14,0 12,0 10,0 8,0 Raiffeisen Bank Internationa BRD-GROUPE Societe Generale Alior Bank SA ERSTE GROUP BANK AG Bank Handlowy w Warszawi Bank Pekao SA PKO Bank Polski SA KBC Bank Komerční banka OTP Bank PLC Moneta Money Bank ING Bank Slaski SA Bank Zachodni WBK SA Česká Spořitelna 6,0 4,0 UniCredit Bank 2,0 0,0 0,0 0,2 0,4 0,6 0,8 1,0 1,2 1,4 1,6 1,8 2,0 2,2 2,4 P/TBV

45 Bear/Bull Case Scenario

46 Corporate Governance The Rights of Shareholders and Key Ownership Functions Tomáš Spurný Chief Executive Officer The Responsibilities of the Board The Equitable Treatment of Shareholders Columbia Business School (MBA) McKinsey & Company Various CEO/CFO positions Under his leadership: Successful transition followed by rebranding and IT separation has been completed. The Role of Stakeholders in Corporate Governance Disclosure and Transparency Carl Normann Vökt Chief Risk Officer Jan Novotný Chief Commercial Banking Officer Phillip Holemans Chief Financial Officer

47 Corporate Structure

48 Ownership Structure

49 May-16 May-16 Jun-16 Jun-16 Jul-16 Jul-16 Jul-16 Aug-16 Aug-16 Sep-16 Sep-16 Oct-16 Oct-16 Nov-16 Nov-16 Dec-16 Dec-16 Dec-16 Jan-17 Jan-17 Feb-17 Feb-17 Mar-17 Mar-17 Apr Price Chart Since IPO > VTB: Moneta likely to be added to MSCI > 3Q Net income down by 20 %; dividend payout at least 70% > PM mentions Bank Tax > S&P rating investment grade BBB/A-2 stable outlook > JPM rated Moneta as Overweight; PT 92 CZK > GE Offered 294mn shares for 68 CZK/Share > Moneta s 2Q TCI jumps by 6,9% y/y, capital surplus will be used for growth and shareholders > GE Offered 125mn shares for 75 CZK/Share > Ex-dividend day 9,8 CZK/Share > Earnings release; 4% positive surprise, competitive pressure 60