BayernLB Group Q results

Transcription

1 BayernLB Group Q results Good performance in core business and solid capital base Stephan Winkelmeier, CFO 13 November 2013

2 Agenda 1 Core statements and key figures 3 Page 2 Financial performance 6 3 Balance sheet 14 4 Implementation of the EU conditions 19 5 Outlook 21 6 Appendix: Detailed charts 23 Press Call 13 November 2013 Page 2

3 Core statements and key figures Good performance in core business and solid capital base Financial performance Earnings before taxes in the first nine months amounted to EUR 773m (9m 2012: EUR 234m) including a one-time gain of EUR 351m from the sale of GBW AG Profit before taxes in Q3 was EUR 54m after one-off charge of EUR -64m taken on the disposal of Unionbank in Bulgaria Good core business has produced earnings before taxes totalling EUR 602m (9m 2012: EUR 237m) in the three positive quarters to date Capital Solid capital base with a core tier 1 ratio (EBA) of 14.8% (31 Dec 2012:11.6%) Well prepared for Basel III requirements: Fully loaded core tier 1 ratio forecast to be 11.5% on 1 Jan 2014 Payments to the owners Payment of a fifth tranche in November 2013 brings total paid to the Free State of Bavaria up to EUR 1.2bn After including the replenishment of the silent partner contributions, BayernLB has transferred an amount of approx. EUR 1.6bn to its owners in the past 12 months Press Call 13 November 2013 Page 3

4 Core statements and key figures Key figures Total assets fell by nearly EUR 26bn to approximately EUR 261bn thanks particularly to big cuts in assets and liabilities held for trading and the winding down of non-core business Risk positions reduced by 10.7% to approximately EUR 90bn Capital ratios (under German GAAP and Basel II.5) improved again as a result of the ongoing winding down of risk positions and the replenishment of silent partner contributions to their nominal values Earnings before taxes in EUR m > +100% RoE in % +3.8 Pp CIR in % Pp Employees -4.5% ,932 9,481 1 Jan - 30 Sep Jan - 30 Sep Jan - 30 Sep Jan - 30 Sep Jan - 30 Sep Jan - 30 Sep Dec Sep 2013 Total assets in EUR bn Risik positions SolvV in EUR bn Core capital ratio in % Core tier 1 ratio in % -8.9% -10.7% +2.5 Pp +3.2 Pp Dec Sep Dec Sep Dec Sep Dec Sep 2013 Press Call 13 November 2013 Page 4

5 Agenda 1 Core statements and key figures 3 Page 2 Financial performance 6 3 Balance sheet 14 4 Implementation of the EU conditions 19 5 Outlook 21 6 Appendix: Detailed charts 23 Press Call 13 November 2013 Page 5

6 Financial performance Net interest and net commission income stable Item Earnings EUR m / % Comments Net interest income Risk provisions Net interest income after risk provisions Net interest income (before and after risk provisions) 1, , % 1, ,183 The 5.7% rise in net interest income to EUR 1,427m primarily reflects a change in hedge accounting at DKB Net interest income after risk provisions rose 12.0% y/y 1 Jan - 30 Sep Jan - 30 Sep 2013 Net commission income % 212 Net commission income virtually unchanged after adjusting for the net commission expenses of LBS Bayern which was sold in Jan - 30 Sep Jan - 30 Sep 2013 Press Call 13 November 2013 Page 6

7 Financial performance Gains or losses on financial investments contains large one-time item Item Earnings EUR m / % Comments Gains or losses on financial investments Jan - 30 Sep Jan - 30 Sep 2013 Negative impact of EUR -167m from measurement of the ABS Umbrella hedging instrument Gain of EUR 351m from the sale of GBW AG EUR 64m charge on the disposal of Bulgaria-based Unionbank Expenses for bank levies 1 Jan - 30 Sep % 1 Jan - 30 Sep Virtually unchanged expense fully booked in the first quarter MKB: DKB: BayernLB: EUR 46m EUR 3m EUR 3m Administrative expenses 1 Jan - 30 Sep , % 1 Jan - 30 Sep ,034 Administrative expenses at yearbefore level after adjusting for additions to pension provisions due to Federal Employment Court ruling and the sale of LBS Bayern Press Call 13 November 2013 Page 7

8 Financial performance Risk provisions remain moderate Risk provisions of EUR -245m are nearly 17% less than year-before period and in line with expectations Net write-backs of EUR 8m at BayernLB driven by good economic conditions and high portfolio quality High provisions at MKB due to the tough political and economic situation there Net additions resulting from a change in methodology had a substantial impact on DKB Non-performing loan ratio still around 3.3% Risk provisions in EUR m Breakdown by Group unit in EUR m 1 Jan - 30 Sep Jan - 30 Sep % 1 Jan - 30 Sep Jan - 30 Sep 2013 BayernLB MKB DKB LBLux Press Call 13 November 2013 Page 8

9 Financial performance Significantly less volatility in gains or losses on fair value measurement Gains or losses on fair value measurement item decreased by 10% to EUR 251m The decrease was due to the already-mentioned change in hedge accounting at DKB In 2013, the impact from cross currency swaps, own credit spread and strategic liquidity reserve was considerably reduced The earnings components of gains or losses on fair value have become much less volatile overall in EUR m % 43 ABS securities (trading book) Currency-related transactions Other fair value gains Gains in fair value measurement item balanced by offsetting negative entries in net interest income Fair value adjustments Strategic liquidity reserve Own credit spreads Cross currency swaps Jan - 30 Sep Jan - 30 Sep 2013 Press Call 13 November 2013 Page 9

10 Financial performance Good performance in core business Core business accounted for nearly 70% of total income and 78% of profit before taxes Results of the Non-Core Unit driven much higher by a large one-time gain on the sale of GBW Core business (EUR m) Non-Core business (EUR m) 1 Jan - 30 Sep 2013 Total income 1,453 (69%) 650 (31%) 2,103 Risk provisions -107 (44%) -137 (56%) -245 Administrative expenses -738 (71%) -296 (29%) -1,034 Profit before taxes 602 (78%) 171 (22%) 773 Risk positions 68,929 (77%) 20,734 (23%) 89,663 Press Call 13 November 2013 Page 10

11 Financial performance Positive contribution to earnings from all segments DKB's profit before taxes much lower than year-before due to low interest rate environment plus impact on 2012's earnings from a one-time gain on the sale of DKB Immo and gains from fair value measurement The NCU's profit before taxes of EUR 190m (9m 2012: EUR 1m) due primarily to one-time gain on the sale of GBW which more than offset the negative earnings from the RU and MKB and the decline in earnings at LBLux Core units Non Core Unit Corporates & Mittelstand Real Estate & Savings Banks/ Association DKB sub-group Markets Central Areas & Others RU LBLux MKB Other Consolidation Earnings before taxes EUR m Q Q ) ) Extraordinary gain of EUR 41m from the sale of DKB Immo Press Call 13 November 2013 Page 11

12 Financial performance Measures to improve ability to sell Region Measures Since 2010, great efforts have been made to restructure MKB as a whole. Hungary However, due to the ongoing difficult political and economic situation in southeastern Europe, the plan now is to split MKB into two parts. Splitting off MKB's risky commercial real estate business into a separate company owned 100% by BayernLB will improve the chance of selling MKB because MKB will then be almost completely able to finance itself, its risk profile will be lower and it will be smaller sized. Splitting off the commercial real estate assets will increase the number of potential buyers for MKB. Bulgaria The sale of Unionbank in Oct 2013 reduces the complexity of MKB. BayernLB's funding was completely repaid. Romania Sale of Romexterra Leasing expected to take place in Q4 2013; MKB's funding has already been fully repaid. Sale of Nextebank aimed for at the beginning of 2014; a binding offer has already been received. Press Call 13 November 2013 Page 12

13 Agenda 1 Core statements and key figures 3 Page 2 Financial performance 6 3 Balance sheet 14 4 Implementation of the EU conditions 19 5 Outlook 21 6 Appendix: Detailed charts 23 Press Call 13 November 2013 Page 13

14 Balance sheet Total assets and risks steadily being scaled back Significant deleveraging in the BayernLB Group since 2009: Total assets: -38% to EUR 261bn Risk positions: -55% to EUR 90bn Leverage ratio: rose from 2.7% to 5.8% Core capital ratio: increased from 9.2% to 15.4% Risk positions in EUR bn Systematic deleveraging in EUR bn / % 200 Non-core business Core business Total assets EUR bn -38% Core capital ratio in % -55% Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Sep 13 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Sep 13 Leverage ratio in %: Press Call 13 November 2013 Page 14

15 Balance sheet Restructuring Unit continues to successfully unwind non-core portfolio Even after the transfer of an additional EUR 13bn of non-strategic, non-core portfolios to the RU as at 1 Jan 2013 in accordance with the EU ruling, the credit/investment portfolio shrank by EUR 7bn to around EUR 25bn Reduction still proceeding faster than planned Winding down strategy continues to be effective Since its founding in 2009, the RU has contributed EUR 378 million to earnings before taxes Gross credit volume/risk assets in EUR bn Portfolio breakdown as at 9/2013 in % Earnings before taxes in EUR m % Gross credit volume Risk assets 17% 30% % % bn new portfolios 6% 17% 11% 14% ABS securities Corp. banking, project finance, other lending business Jul Dec Jan Sep 2013 Source: Restructuring Unit-Report 9 (no connection to Germany) German public sector lending (outside Bavaria) Real estate Single Name Credit Investments Residential term loans Financial institutions/public sector (abroad) 110 Dec 2009 Dec 2010 Dec 2011 Dec 2012 Sep 2013 Total Press Call 13 November 2013 Page 15

16 Balance sheet ABS portfolio significantly reduced The portfolio shrank by 72% between Dec 2007 and Sep 2013 With the goal of minimising losses, portfolio reduction mainly driven by repayments/maturity of assets Selected assets are sold when market conditions are favourable Up to EUR 6 bn of BayernLB's ABS portfolio has been hedged against default since December 2008 by a CDS guarantee agreement with the Free State of Bavaria. Of this, BayernLB bears a first loss EUR 1.2 bn which has already been included in the accounts. Realised losses as of September 2013 of EUR 1.1 bn are within the first loss amount borne by the Bank Nominal value in EUR bn % 14.4 RMBS prime RMBS non-prime CDO/CLO CMBS ABS Consumer ABS Commercial Dec Dec Dec Dec Dec Dec Sep 2013 Press Call 13 November 2013 Page 16

17 Balance sheet Well prepared for fully loaded Basel III Solid core tier 1 ratio (EBA) of 14.8% as at 30 Sep 2013 (Basel II.5/based on German GAAP) Basel III requirements expected to be fully met: The Free State of Bavaria's silent capital contribution of EUR 3bn will be fully recognized by end of 2017 Core tier 1 ratio as at 1 Jan 2014 (Basel III / IFRS, fully loaded) projected to be 11.5% The main reason for the increase in risk positions is Basel III and for the decrease in core tier 1 capital is the switchover from German GAAP to IFRS Basel II.5 German GAAP (HGB) Basel III IFRS (fully loaded) EUR bn % 11.5% Dec 2012 Risk positions Core tier 1 (EBA) 14.8% % Sep Dec 2013 projection Core tier 1 ratio (EBA) Core tier 1 ratio (fully loaded) Jan 2014 projection -1.4 Press Call 13 November 2013 Page 17

18 Agenda 1 Core statements and key figures 3 Page 2 Financial performance 6 3 Balance sheet 14 4 Implementation of the EU conditions 19 5 Outlook 21 6 Appendix: Detailed charts 23 Press Call 13 November 2013 Page 18

19 Fast pace set in fulfilling EU conditions Repay around EUR 5 bn in state aid to the Free State of Bavaria by 2019 In compliance with the EU's repayment plan, BayernLB paid another EUR 50m to the Free State of Bavaria in November 2013 This fifth tranche brings the total paid up to nearly EUR 1.2bn Of this amount, EUR 931 m went towards repaying state aid; EUR 250 m as fee payments for Umbrella guarantee agreement This brings the remaining amount of state aid to be repaid down to EUR 4,029 million The second report by the trustee appointed by the EU to monitor BayernLB's compliance confirms that the Bank is fulfilling all EU conditions Repayment of state aid Date Payment to the Free State of Bavaria of which silent partner contributions of which clawback Umbrella fee Remaining balance of state aid In EUR m Target 3,000 1,960 4,960 Nov ,720 Feb ,269 May ,089 Aug ,059 Nov ,029 Total 1, Press Call 13 November 2013 Page 19

20 Agenda 1 Core statements and key figures 3 Page 2 Financial performance 6 3 Balance sheet 14 4 Implementation of the EU conditions 19 5 Outlook 21 6 Appendix: Detailed charts 23 Press Call 13 November 2013 Page 20

21 Outlook BayernLB still expects consolidated profit before taxes for full-year 2013 to be in the black. Nonetheless, the NCU is expected to produce more significant charges in Q4. Earnings forecast This applies especially to MKB, which operates in an economic and political environment that remains difficult. For one, the Hungarian government is planning more politically motivated interventions with regard to outstanding foreign currency loans while for another, additional restructuring at MKB will result in further charges. No forecast about HGB (German GAAP) earnings can be made at this time. Further enhance customer-driven business model focused on Germany: Pursue targeted growth in core business incl. DKB by prudently weighing risks and rewards BayernLB focus Continue to rapidly unwind non-core business and further restructure MKB Exercise tight cost discipline to increase earnings power, efficiency and profitability: Cut administrative expenses at BayernLB (not including Group subsidiaries) by 15% by 2017 Biggest challenge in the next few years will be repaying capital as required by the terms of the EU Commission ruling. Press Call 13 November 2013 Page 21

22 Agenda 1 Core statements and key figures 3 Page 2 Financial performance 6 3 Balance sheet 14 4 Implementation of the EU conditions 19 5 Outlook 21 6 Appendix: Detailed charts 23 Press Call 13 November 2013 Page 22

23 Appendix Year-on-year earnings comparison in EUR m 1 Jan - 30 Sep Jan - 30 Sep 2012 Change in %/pp Net interest income 1,427 1, Risk provisions in the credit business Net interest income after risk provisions 1,183 1, Net commission income Gains or losses on fair value measurement Gains or losses on hedge accounting Gains or losses on financial investments Income from interests in companies measured at equity Administrative expenses -1,034-1, Expenses for bank levies Other income and expenses Gains or losses on restructuring Earnings before taxes >100.0 Cost/income ratio (CIR) 53.3% 63.6% Pp 1) Return on equity (RoE) 7.3% 3.5% 3.8 Pp 2) 1) CIR = administrative expenses/net interest income + net commission income + gains or losses on fair value measurement + gains or losses on hedge accounting + other income and expenses 2) Profit before taxes excluding non-controlling interests, expenses for bank levies and gains or losses on restructuring / subscribed capital + compound capital instruments + capital and retained earnings. Up to and including 2012, excludes the share of earnings and equity from BayernLabo which is a non-competitive business. Press Call 13 November 2013 Page 23

24 Appendix Quarterly earnings comparison in EUR m Q Q Q Net interest income Risk provisions in the credit business Net interest income after risk provisions Net commission income Gains or losses on fair value measurement Gains or losses on hedge accounting Gains or losses on financial investments Income from interests in companies measured at equity Administrative expenses Expenses for bank levies Other income and expenses Gains or losses on restructuring Earnings before taxes Press Call 13 November 2013 Page 24

25 Appendix Segment Overview in EUR m 1 Jan - 30 Sep 2013 Corporates & Mittelstand Real Estate & Savings Banks/ Association DKB Markets Central Areas & Others Non Core Unit Consolidation Group Net interest income ,427 Risk provisions in the credit business Net commission income Gains or losses on fair value measurement Gains or losses on hedge accounting Gains or losses on financial investments Income from interests in companies measured at equity Administrative expenses ,034 Expenses for bank levies Other income and expenses Gains or losses on restructuring Earnings before taxes Return on equity (RoE) (%) ) Cost/income ratio (CIR) (%) ) As from financial year 2013, the share of earnings and equity from BayernLabo is included in the calculation of RoE (in percent) at Group level. Press Call 13 November 2013 Page 25

26 Appendix Balance sheet overview in EUR bn 30 Sep Dec 2012 Change in % Loans and advances to banks Loans and advances to customers Assets held for trading Financial investments including interests in companies valued at equity Total assets Liabilities to banks Liabilities to customers Securitised liabilities Liabilities held for trading Equity Subordinated capital Press Call 13 November 2013 Page 26

27 Disclaimer The information in this presentation constitutes neither an offer nor an invitation to subscribe to or purchase securities or a recommendation to buy. It is solely intended for informational purposes and does not serve as a basis for any kind of obligation, contractual or otherwise. Rounding differences may occur in the presentation. Press Call 13 November 2013 Page 27

28 BayernLB Investor BayernLB Relations Communications & Press Telephone: +49 (0)89/2171/ Tel: +49 (0)89/2171/ Investor Presentation December 2012 Page Nr.