BANK MILLENNIUM GROUP Grupa Banku Millennium

Transcription

1 BANK MILLENNIUM GROUP Grupa Banku Millennium Institutional presentation November 2017

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 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 ( % ) Geographical structure of Polish imports (%) Source: Datastream 4

5 Macroeconomic overview General government deficit and debt Investment and capacity utilization (% GDP) (% y/y, %) EU funds utilization ( % GDP ) 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, 556 cooperative banks (active mainly in rural areas of the country) and additional 27 international banks acting in Poland in a form of branch More than 11 thousand banking outlets and c.a 170 thousand persons employed in the sector Top 5 banks in Poland comprise 50% of total assets of the sector and top 10 make 69%, 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 = 17.9%, CET1 = 16.5% ) confirmed by AQR/Stress tests Comfortable liquidity (L/D = 96%) supported margins, while interest rates at historical low levels. Profitability under pressure due to high obligatory burdens: new taxes, guarantee fund payments and regulatory limits on some earnings (insurance,interchange) 8

9 The biggest banks in Poland (as at 30 June 2017, PLN billion) 286,4 21,6 48,7 Loans and advances to clients Debt securities Other financial assets Other assets 170,5 12,0 149,8 Main Shareholder Employees Branches 204,6 28,8 125,7 9,5 29,8 105,1 129,4 9,5 120,2 4,6 33,7 27,1 83,4 86,9 72,0 69,5 3,1 3,4 11,1 17,8 56,0 64,5 61,8 11,7 7,0 47,3 44,7 49,1 PKO PEK BZW MBK ING BGŻ MIL GNB ALR RBP CITI Polish State Commerzbank Internat. Raiffeisen PZU+PFR Santander ING BNP Paribas BCP private PZU Citigroup Treasury owner 31.39% 32.8% 71.41% 69.42% 75.00% 88.98% 50.10% 55.73% 29.22% % 75.00% * ** *** ,8 2,7 12,9 33,5 44,6 20,4 19,7 (*) including 161 Santander outlets and 265 partner outlets (**) including 116 points of sale of former Sygma (***) including 711 partner outlets; 9

10 Recent M&A transactions in Poland in banking sector 1) 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 2.1 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 4.4 bn in 2016 Banking tax: PLN 3.5 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 Above 2 million accounts, 1.5 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 9.4%* (after banking tax) Proven trackrecord of tight cost control; Cost/Income ratio at 45.6% * One of the strongest CET1 ratio (20.5%)* and one of the lowest impaired loans ratio among top banks (*) in 3Q

14 Branch network in attractive regions and locations (as at 30 September 2017) 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 54 Szczecin 14 Bydgoszcz 27 Poznań Zielona Góra 23 5 Łódź 18 Wrocław 25 Opol 3 e Katowice Olsztyn 20 Warszawa 90 Kielce 2 Białystok 10 Lublin 8 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 4,000 active customers Agglomeration with population above 500,000 inhabitants 35 Kraków 20 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 Maria Jose Campos IT & operations Wojciech Rybak Retail Business 15

16 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. 25 years on WSE 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 retail branches. BCP become the 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 16

17 25 years on Warsaw Stock Exchange Early 90s Currently Early 90s Currently 0,80 PLN 7,35* PLN 33 m PLN 9 bn PLN 25, ,00 15, , , , Share price (zł) Market capitalisation (m PLN) * share price as at

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) Net Interest Income (PLN million) Net Commission Income (PLN million) CAGR* +10.4% CAGR* Market rates cut +6.1% Interchange cuts Recommendation U (**) Operating Income (PLN million) Costs & Cost/Income ratio (PLN million) ROE and Capital CAGR* +6.1% 57,4% 54,3% 50,2% 50,4% 49,6% 12,9% 13,4% 10,2% 10,6% 14,5% 11,8% 16,4% 17,3% 9,1% 10,4% Operating Cost Cost/Income ratio (recurrent) Shareholder Equity ROE CET1 (*) Compound average growth rate (**) new regulations on insurance business 24

25 Summary of achievements (2) Deposits of Individuals (PLN million) Deposits of Companies (PLN million) Consumer loans (PLN million) CAGR* +11.1% CAGR* +16.4% Mortgage Loans (PLN million) Companies Loans (PLN million) Provisions and NPL ratio (PLN million) PLN Loans CAGR* 3.7% CAGR* 7.6% ,1% 4,4% 4,2% 4,6% 4,5% m - 5Y average FX loans PLN loans P&L provisions NPL ratio (*) Compound average growth rate 25

26 Summary of achievements (3) Number of Active Customers (thousand) Number of e-customers (thousand) Number of Mobile Customers (thousand) Number of current accounts (thousand) Number of debit cards (thousand) Ranking in quality Among the top three banks since in Friendly Bank Retail Customers annual ranking of best banks in Poland by Newsweek magazine (*) Compound average growth rate 26

27 Main financial highlights of 3Q 2017 Continued gradual improvement of profitability and cost efficiency High quarterly Net profit of PLN million (+8% vs. 2Q 17; +35% vs.3q 16). 1-3Q Net profit reached PLN 502 million which is 32% higher y/y when adjusting for one-offs *) Improvement of ROE to 9.3% and Cost to Income to 45.6% Core income as main driver of the improvement Core income grew 13.2% y/y Net interest income up by 12.1% y/y Net commission strong growth of 16.5% y/y Low cost of risk and strong liquidity Impaired loans ratio at stable 4.6% Cost of risk at 54 b.p. ytd Loan to deposits slightly up to 83% after 5 quarters of fall High capital ratios Group s TCR and CET1 at 20.5% (without profit from current year) which comfortably exceed the minimum capital ratio thresholds **) (*) In 2016 extra capital gain from VISA and other extra charges, in 2017 adjustment for full payment of BFG resolution fee (**) Current minimum capital thresholds are 16.6% (TCR) and 12.8% (T1), changes to them are likely to occur in 4Q as a consequence of SREP/BION conclusion and full equivalence of Polish capital rules with EU CRR 27

28 Main business highlights of 3Q 2017 Retail business Strategic goal of over 300k active customers net growth in 3 years delivered Retail customer funds grew 7.8% yearly despite deceleration of deposits to 4.9% y/y 19% yearly growth of current and saving accounts balance Investment products grew 24% y/y PLN mortgage sale at PLN 725 million, Cash loans sale at PLN 599 million in 3Q Companies business Acceleration of all loans segments growth to over 10% yearly Record factoring sale of PLN 4.3 billion in 3Q Faster current accounts deposits growth of 12% yearly Innovations/Quality Bank Millennium achieved once again the highest positon in the ranking Newsweek Friendly Bank 2017 Breakthrough Collaboration in Financial Services award from BAI Global Innovation for solutions enabling access to e-administration 28

29 Market Leader in quality, on the forefront of innovations B.A.I. * PRIZE WINNER 1st place in the Traditional Banking 1st place in the Mobile Banking 2nd place in the Internet Bank Breakthrough Collaboration in Financial Services for innovative solutions in providing access to e- administration services TWO NOMINATIONS Product and Service Innovation for the service of buying city transport tickets and paying for parking with Bank Millennium s mobile app. Innovation in User Experience for the service of buying motor insurance fully online, with use of an innovative method of scanning data from the vehicle registration certificate via the mobile app. For 7 years on podium * (*) Newsweek s Friendly Bank ranking is based on mystery client surveys, in which auditors from an independent research company evaluate practically all aspects of customer service in both traditional and electronic service channels. (**) Bank Administration Institute (BAI) for over 90 years conducts research and publishes papers, which are a source of knowledge about current challenges and trends concerning the future of financial institutions. 29

30 Other recent major awards and achievements Quadruple podium 1st place in the Personal account 2nd place in Mortgage loans 3rd place in the Highest quality of service Laureate of the Safety Best Practices Reliable Employer 2016 For best employers in terms of recruitment policy, employee solutions and HR management. Service Quality Star Bank Millennium was honoured with the prestigious Service Star. ". Project of the Year 2016 Goodie wins the "Project of the Year" category in the Electronic Commerce Congress and Polish Banks Asociation Institution of the Year Bank Millennium came second in the Quality of the branch service category. Responsible Business Ranking 2017 Recognition in the Responsible Businesses 2017 of Dziennik Gazeta Prawna daily. 30

31 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. 31

32 Investor Relations contact: Artur Kulesza Head of Investor Relations Tel: Katarzyna Stawinoga Tel: Marek Miśków analyst Tel: Kanał na YouTube 32