About Valiant: Presentation for investors

Transcription

1 About Valiant: Presentation for investors May 2018

2 Our key messages 100% focus on retail banking Simple business model with a clear focus on mortgages Very high loan quality, with 97% of loans secured 21 years with stable or increasing dividends Sustainable and stable earnings Growth while keeping margins stable Interest rate risk: already low exposure further reduced Costs under control despite expansion Strategy implementation on track Market expansion: new innovative branches opened Full integration of Triba Bank AG on track Funding diversified through Triple-A covered bonds 2

3 Overview Part 1: About Valiant Part 2: Key financials Part 3: Strategy and targets Appendix 3

4 Valiant: 100% focused on retail and SME banking Independent retail and SME bank operating exclusively in Switzerland Close to clients through 91 branches, with strong local roots in 11 cantons (~50% of Swiss population). Digital presence across Switzerland Acquisition of Triba Partnerbank AG in Q ,000 employees, thereof 58% client advisors Total capital ratio: 16.1% Moody s A1/P-1, stable outlook 100% free float. Market cap ~ CHF 1.8bn We re simply a bank As per branches For us, having close ties with our clients means being where our clients are. 11 cantons Proximity to about 50% of the population of Switzerland

5 Simple business model. Clear focus on mortgages. Take in the money, look after the money, lend money. Payment Savings Pensions Funding Investment 51% of revenues from SME and self-employed Total income: CHF 438m 76% of revenues from interest income Net income: CHF 388m Medium-sized companies 19% Self-employed individuals and small companies 32% 19% 32% 47% Retail clients* 2% Affluent private clients 47% Other income 5% Trading income 3% Fee income 16% Interest income 76% At 31/12/2017 * Private clients without financing or assets with Valiant 5

6 Easy-to-understand balance sheet Total assets: CHF27.7bn as per 31/3/2018 Cash and due from banks 2.7 Due to banks (1.0) 85% of assets in loans 18.5 Client deposits Valuation differences and provisions account for <0.2% of total assets Loans 23.6 No goodwill despite a long history of take-overs Asset encumbrance ratio: 20.7% 5.1 Covered Bonds and Swiss Pfandbriefe Leverage ratio: 7.2% Other assets 1.4 Assets Other bonds (0.5) Other liabilities (0.3) 2.2 Equity capital Liab.& Equity 6

7 Very high quality of loans 93% of total loans in mortgages Client loans: CHF 23.6bn Mortgages: 82% residential, with 77% in Bern, Lucerne and Aargau Mortgages: CHF 22.0bn Due from clients 7 93 Office/business Commercial/ industry Other Basel Fribourg Jura+Western Switzerland Other CH Bern Residential Aargau Lucerne % of loans are covered (31/12/2016: 97%) Average residual term: 3.8 years (31/12/2017: 3.8 years) * Increase of residential mortgages share due to new detailed allocation of properties with dual use At 31/3/2018 Achieving growth while maintaining high quality 7

8 Low risk profile Low-risk retail banking business Long-term relationships and very high customer loyalty Very transparent, stable earnings Easy to understand balance sheet Asset quality very high No major legal costs in 20 years No goodwill despite a long history of takeovers Low credit risk Low market risk Low operational risk Restrictive lending policy Diversified client portfolio No exposure to potential real estate hot spots Prudent management of interest rate risk No proprietary trading Retail banking as main income source Moody s deposit ratings A1/P-1, outlook stable 8

9 Credit risk stable on a very low level Very high share of 1 st tier mortgages Share of 1 st tier mortgages Very low loan-to-value Loan-to-value (net) 94% 93% 94% 94% 94% 63% 63% 63% 63% 63% Q Q Non-performing loans < 0.2% of loans NPL / total loans Value adjustments and provisions on a low level Value adjustments and provisions for credit risk / total loans 0.22% 0.22% 0.14% 0.16% 0.12% 0.34% 0.34% 0.24% 0.23% 0.23% Q Q

10 21 years with stable or increasing dividends Stable, increasing distributions to shareholders since Valiant was founded in 1997 CHF, rebased * ** Stable payout ratios since 2007, increasing since 2013 as % ** 40 Payout ratio target of 40-70% of net profit * For the financial year 2006, an extraordinary jubilee dividend of CHF 1.40 was distributed ** proposed 10

11 Overview Part 1: About Valiant Part 2: Key financials Part 3: Strategy and targets Appendix 11

12 Improved and sustainable earnings power Stable margins despite declining interest rates Total net interest margin, bps Costs under control, including strategy implementation Cost/Income-Ratio as % incl. depreciation excl. depreciation Profitability stable Strengthened capital base, incl. acquisition of Triba in Q Net profit in CHF m, ROE as % Total capital ratio as %

13 Costs under control despite investments in strategy Cost/Income-Ratio as % incl. depreciation excl. depreciation Strict cost control in the past. Improving cost income ratios despite strategy implementation Cost savings of CHF 10m p.a. from IT service renewal (Basis FY 2016) Cost savings of CHF 4-5m p.a. from reductions of counters Synergies CHF 1m p.a. from Triba effective from H Cost reductions to partly offset investments in expansion and digitalisation 13

14 Q1 2018: Pleasing results Consolidated results Valiant without Triba Group profit +9.3% Operating profit +4.0% Net interest income* Net interest margin +4.8% 109bp +2.1% 109bp Operating performance improved again Fee and commission income +5.0% +1.9% Interest margin basically stable Operating expenses +4.3% +1.4% Capital ratio in target range, after Tier 2 call Client deposits -1.0% -0.6% Loans - of which mortgages +0.4% +0.5% +0.5% +0.6% Total capital ratio 16.1% Triba Partnerbank AG consolidated since * Before value adjustments in interest income 14

15 Q1 2018: Net interest margin at 109 bp % Q % 1.74% 1.64% 1.52% 1.42% 1.37% 1.01% 1.04% 0.70% 1.13% 1.13% 1.10% 1.09% 0.83% 0.51% 0.39% 0.32% 0.28% year CHF swap 5-year CHF swap month CHF Libor Average interest rate on assets Net interest margin Average interest cost in % of assets 15

16 Q1 2018: interest expense lowered again CHF m Interest expense in bp 83bp bp Client deposits incl. funds with negative interest rates Other bonds Swiss Pfandbriefe and Valiant covered bonds - Interest rate p.a bp bp 32bp % 1.91% 1.77% 1.58% 1.29% Q1 2018: 28bp Repayment of Tier2 bond lowers interest cost by CHF 6m p.a. from Q2 on 16

17 Q1 2018: Interest rate risk remains on a low level Duration of assets Duration of liabilities Duration of assets and liabilities stable Q Barwertsensitivität* Q Effect of covered bond issue (payment April 2018) ~ +100bp Swap-Volumen in CHF Mrd Q * Barwertsensitivität des ökonomischen Eigenkapitals in % (+100bps) 17 Swaps stable on a low level (<10% of total assets) Payer swaps added Q1 2017

18 Q1 2018: Loan growth at +0.4% Consolidated results Valiant without Triba 31/3/2018 in CHF m 31/12/2017 in CHF m Change Change Total assets % n.a. Client loans * % 0.5% Mortgages % 0.6% Due from customers % -0.9% Client deposits % -0.6% Coverage ratio on client deposits 78.5% 79.6% Total funding ratio* 102.4% 103.6% For 2018 we target loan growth of 2-3%, thereof 1% from the expansion. Due to the increasing risks in the real estate market, particularly for investment property, Valiant will continue its prudent lending policy. Valiant does not seek aggressive volume growth but prioritises margins and continued low risk levels. * Total funding (Client deposits and bonds) in % of client loans 18

19 Q1 2018: Total capital ratio on target level Total capital ratio in % Tier2 capital Eligible capital (CHF m) % 17.3% 17.2% 15.8% 16.1% Q Upper limit 17%* Lower limit 15% - thereof Tier Tier2 bond called in as per 31/3/2018 * In August 2017 Valiant introduced an upper limit for the total capital raitio of 17% 19

20 Overview Part 1: About Valiant Part 2: Key financials Part 3: Strategy and targets Appendix 20

21 Ambitious strategy and financial targets up to 2020 Geographic expansion and digitisation (base line: 2016) 10 new branches between Lac Léman and Lake of Constance Strengthen existing regions Digital expansion across Switzerland 80 additional client advisors Profitable growth Increased efficiency Capital management Loan growth p.a.: 2 3% in existing markets 2 3% in new regions Anorganic growth Additional growth will be achieved with existing middle- and back-office resources Total capital ratio: 15 17% ROE: 6 8% Payout ratio: 40 70% Dividend: at least CHF 4.00 We will maintain our cautious risk profile 21

22 Market expansion progress 91 existing branches Rheinfelden Frauenfeld Wil St. Gallen Expansion 2017: 2 new branches in Brugg AR and Morges VD 5 new branches in Lucerne region, from Triba Bank Nyon Vevey Expansion until 2020: 2 new branches p.a. 22

23 Digital and self-service solutions a priority 2 innovative branch offices launched in 2017 Traditional bank counters to be partially replaced Two modular branch offices opened in 2017, in Brugg and Morges (Video: Modular branch) Goal to have 80% of branches focusing on advice, without physical reception or cash handling Pilot project to analyse customer behaviour starting in 2018 Digitisation of client services is cost-effective and means services can be made available to clients for longer hours Around 65 jobs affected but no layoffs planned Recurring cost savings of between CHF 4 and 5 million are expected after completion of project Video-based reception allows for cost-efficient client interaction Increased focus on personal advice for clients Recurring cost savings expected to be CHF 4 5m after completion 23

24 Full integration of Triba on track Triba is a small regional bank in Lucerne 16,000 clients served through 5 branches in the canton of Lucerne Around 30 employees, thereof 90% client-facing CHF 960m assets, CHF 3m net profit, capital ratio 17.4% Branches Valiant (11 cantons) Branches Triba (canton of Lucerne) Successful purchase offer, Valiant now owns 97% Fair valuation at CHF 80m, offer price CHF 1450 per share Shares purchased in July 2017, paid out of cash Excellent operational and cultural fit In line with Valiant s strategy 2020 to expand into attractive regions Business model, systems and culture are very similar to Valiant Full integration planned by mid-2018 All employees and locations will be merged, creating a denser branch network in central Switzerland Integration to be completed by mid Full integration by mid-2018 Valiant: 86 branches Triba: 5 branches

25 Triple A-rated covered bonds diversify our funding Key elements of Covered Bonds-Programme Diversification of funding, in addition to Swiss Pfandbriefe, Reducîng interest-rate risk and funding risk Moody s Rating Aaa, listed in SIX Swiss Bond Index Long-term and continuous programme, with annual issues of around CHF 500m planned Two successful issues of total CHF 750m in November 2017 and March 2018 Lowered spreads since initial issue Spread in bps vs. mid swap, November 2017 April 2018 Nov 2017 issue (CHF 250m, 10 years, YTM 0.33%) March 2018 issue (CHF 500m, 6 years, YTM 0.04%) Q results

26 Outlook for 2018 Profitable growth of 2-3%, thereof 1% from expansion Interest margin: fight for every basis point - as in 2017 Strengthen turnaround in commission and fee business Further increase in operating profit 2018 profit expected to be in line with 2017* * without extraordinary income from RBA assistance fund of CHF 9.7m, last payment in

27 Overview Part 1: About Valiant Part 2: Key financials Part 3: Strategy and targets Appendix 27

28 Valiant with strong local roots Roots go back to 1824, when Ersparniskasse Murten was created Mergers with Luzerner Regiobank IRB Interregio Bank Merger of all subsidiary banks under the Valiant Bank umbrella Valiant Holding founded Merger of Spar- und Leihkasse Bern Gewerbekasse Bern BB Bank Belp Mergers with Obersimmentalische Volksbank Bank Jura Laufen Spar + Leihkasse Steffisburg Caisse d épargne de Siviriez Acquisition of Triba Partner Bank AG 28

29 Segment view Client loans: CHF 23.5bn Total income: CHF 438m Medium-sized companies Self-employed individuals and small companies Retail clients* Affluent private clients Medium-sized companies Self-employed individuals and small companies 19% 32% 47% Retail clients* Affluent private clients Clients: ~ 390,000 Self-employed individuals and small companies Affluent private clients Medium-sized companies Retail clients* Client assets: CHF 27.7bn Medium-sized companies Self-employed individuals and small companies 28% 8% 15% 49% Retail clients* Affluent private clients * Private clients without financing or assets with Valiant At 31/12/

30 Maturity structure of assets and liabilities Maturity structure of assets CHF 27.2bn Maturity structure of liabilities CHF 25.1bn > 5 years 21% 1-5 years > 5 years 8% 9% <1 year 12% At sight/ callable 14% 48% 1-5 years <1 year 17% 71% At sight/ callable As per 31/12/

31 Consolidated P&L Q Consolidated profit and loss statement Valiant Holding AG CHF m Q Q Change Interest and discount income % Interest expense % Net interest income (before value adjustments) % Value adjustments for credit risk, and loan losses % Net interest income (after value adjustments) % Net fee and commission income % Net trading income % Net other ordinary income % Total operating income (before value adjustments) % Personnel expenses % General and administrative expenses % Total operating expenses % Depreciation, and impairments of holdings % Other provisions and losses % Operating result % Extraordinary income Extraordinary expenses Changes in reserves for general banking risks Taxes % Consolidated net profit (incl. minority interests) % Minority interests Net profit (excl. minority interests) % 31

32 Consolidated balance sheet Q Consolidated balance sheet Valiant Holding AG CHF m 31/03/ /12/2017 Change Assets Cash & due from banks 2'716 2' % Due from customers 1'592 1' % Mortgage loans 22'023 21' % Financial investments & non-consolidated holdings 1'152 1' % Total other assets % Total assets 27'681 27' % Liabilities and equity Due to banks 1' % Customer deposits 18'542 18' % Bond issues and Swiss Pfandbriefe 5'642 5' % Other liabilities % Provisions % Equity (including minorities) 2'227 2' % Total liabilities and equity 27'681 27' % 32

33 Key figures 2013 Q Key figures Q Total assets in CHF bn Client loans in CHF bn Client deposits in CHF bn Deposit/loan coverage ratio Shareholders equity in CHF m Net profit in CHF m Risk-weighted assets in CHF bn Total capital ratio as % Cost/income ratio as % FTEs See 33

34 The Valiant share 46% owned by small private shareholders shareholders 100% free float Inst. investors ex Switzerland 11% Non-registered shares 19% Inst. investors Switzerland 24% Private shareholders 46% Largest shareholdings in April 2018: UBS (>5%), Highclere International Investors (>3%) Valiant share facts Dividend policy ISIN CH , Ticker: VATN.SW Total shares, par value à CHF 0.50 No treasury shares as per and Stable or rising dividends since foundation in 1997 Target payout ratio: 40-70% of net profit Dividend for 2017: CHF

35 Key per-share data since 2007 VATN share Book value/share in CHF Earnings/share in CHF P/E ratio Dividend payout ratio % Dividend yield as % Dividend in CHF Share price at 31 December in CHF Market capitalisation at 31 December in CHF m ,665 1,601 1,862 1,302 1,259 1,370 1,875 1,974 3,098 3,124 2,869 Figures as per 31/3/2018: Book value/share: CHF Share price: CHF Market cap: CHF 1,788m 35

36 Financial calendar and contact information Financial calendar 23 May 2018 Annual General Meeting in Bern 9 August 2018 H results 8 November M 2018 results Information for investors In German: In English: Contact Marcus Händel, Head of Investor Relations marcus.haendel@valiant.ch Phone +41 (31) This document is provided solely for your information. It does not constitute an offer to sell or an invitation or recommendation to purchase or sell specific products, engage in financial transactions or conclude any legal transactions. Before you make any decision based on this information, we urgently recommend that you consult your financial or client adviser. Prospective investors should not engage in transactions of this kind unless they are fully aware of the associated risks and are in a position to assume any losses incurred. Please also consult the brochure entitled Special Risks in Securities Trading, which you can order from us. The past performance of an investment is not a guide to future performance, i.e. the value of an investment may fall as well as rise. The preservation of value (or increase in value) of invested capital cannot be guaranteed due to price fluctuations. Although all reasonable care is taken to ensure that the information provided is correct as based on reliable sources, no representation or warranty is made, express or implied, regarding the correctness, reliability, timeliness or completeness of the information provided. To the extent permitted by law, Valiant Bank AG assumes no liability whatsoever for any loss, whether based on this information or as the result of the risks inherent in financial markets. Neither this document nor any copy thereof may be sent to or taken into the United States or distributed in the United States or to any US persons.