Bank BPH FY 2015 Earnings

Transcription

1 Bank BPH FY 2015 Earnings Conference & webcast 22 March

2 Overview of FY 2015 In PLN Goodwill Following receipt of confirmation from the majority shareholders of Bank BPH from GE Group, that any potential transaction involving the sale of Bank BPH is unlikely to achieve a price in excess of "Tangible Book Value", the Bank s Management Board made a decision to impair from the 2015 balance sheet 155 MM goodwill at the Bank level (plus an additional 761 MM at the Group level) Profitability 2015 profit before tax w/o one-offs of 35 MM one-off events in 4Q: goodwill impairment, restructuring charge, BFG additional costs, support fund for MTG borrowers driving FY loss of 1,072 MM and pre-tax loss of 1,105 MM Performance Retail loans and commercial limits granted of 8.7 B, up 22% y/y good sale of cash loans and corporate limits Costs Operating costs up 15% y/y influenced by restructuring reserve and BFG down 2% y/y excl. one-offs Quality Loan losses of 44 MM impaired loans down 19% y/y NPL ratio of 7.5% down 1.9 pp. y/y high recovery and successful debt sale 2 Safe & sound TCR at 16.6% and Tier I at 14.2% under Basel 3 rules liquidity and market risk maintained at a safe level Tier II capital injection (sub-debt) of CHF 75 MM in response to CHF portfolio capital adder

3 Goodwill (Bank valuations industry context) 6 Bank valuations Factors driving down bank valuations 5 4 Lehman Brothers case Sep'08 '08 1. Decline in Rate Cap 25% 10% Profitability pressure Bank 1 Bank 2 Bank 3 2. Increase in BFG and support funds** (in PLN B) Profitability pressure Lower ability to dividend M&A s P/BV* 3. Increase in CAR threshold 12% 12% Specific add on Acquirer/Acquiree Year P/BV implied from M&A Bank A/ Bank B Bank C/ Bank D Bank E/ Bank F Bank G/ Bank H Bank I/ Bank J plus NBP rates down from 6.25% to 2.5% Insurance regulations Interchange plus Other regulations in process */ Source: Own estimates based on available information **/ Source: Report on the condition of banks in 2012, UKNF 2013; ZBP Materials of the Polish Sejm Public Finance Committee sitting, 9 February Industry revaluing

4 Bank valuations Bank BPH context Bank valuations Year Bank BPH P/BV history P/BV BPH * Lehman Brothers case Sep'08 Bank's avg BPH acquisition ~2X BV Non-MTG bank anticipated not higher than 1x book value 1. 60% decline in Rate Cap % increase in BFG and support funds Factors driving down Bank BPH valuation 3. ~30% increase in CAR threshold 4. and other impacting on sector (PLN MM) 5. Following receipt of confirmation from the majority shareholders of Bank BPH S.A. from GE Group, that any potential transaction involving the sale of Bank BPH is unlikely to achieve a price in excess of "Tangible Book Value", the Bank s Management Board made a decision to impair from the 2015 balance sheet PLN 155 million goodwill at the Bank level (plus an additional PLN 761 million at the Group level). 25% 10% % 12.00% 14.77% Leads to goodwill write off (non-mtg bank) 2.5x 2x Tangible Book multiplier 1x Goodwill Book Value ~1x Profitability pressure Profitability pressure Lower ability to dividend Purchase price (2008) Possible sale price (Based on other M&A activity & industry share prices) (1Q 2016) Non-cash accounting impact, no impact on CAR, liquidity or stability The Bank s liquidity of ca. PLN 6 B and GE back up credit line of ca. PLN 9 B */ Bank BPH data prior demerger in November 2007 was estimated.

5 Business Transformation Plan Step 1: Step 2: own branches offering full range of products 182 branches transferred into partner outlets with simplified business model existing franchise branches cash loans sale performance up 88% in 2015 y/y 16 branches to be closed Back office reduction of ca. 12% Restructuring cost of up to PLN 212 MM Substantial reinvestment in IT systems Focus on building multichannel product and services business model modern internet and mobile platforms Biometric technology Smartphones Computers Client Tablets Branches Maintaining and increasing revenues Future cost savings of ca. PLN 200 MM annually Social media Call Center Post Enhancing value with or without a new owner 5

6 Financial performance PLN MM FY 15 VPY Net interest income 833 (11%) Core portfolio (PLN MM, net, average) 12% 9,172 8,914 8,763 8,909 8,856 9,154 9,631 9,908 Net F&C + trading + other Total net revenue 1 Impairment charges RANR (18%) 1,184 (13%) (44) (24%) 1,140 (13%) 5,120 5,068 5,046 5,049 5,063 5,366 5,629 5,901 4,052 3,846 3,717 3,860 3,793 3,788 4,002 4,007 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 Commercial Retail Costs (1,105) (2%) Exit portfolio (PLN MM, net, average) Growth in core portfolio starting to outpace fall in exit portfolio Goodwill 916 MM Restructuring 177 MM MTG support fund 24 MM BFG additional 23 MM Profit before tax w/o one-offs One-offs 35 (80%) (1,140) (>100%) 13,995 13,710 13,435 13,155 12,861 12,598 12,325 12, Pre-tax loss (1,105) (>100%) 13,704 13,445 13,186 12,925 12,649 12,403 12,158 11,911 Net loss (1,072) (>100%) 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 FX MTG* Sales & Auto Core portfolio growing financials impacted by one-offs 6 1/ Total net revenue = NII + Net F&C + Net trading income + Other operating income and expenses 2/ Risk Adjusted Net Revenue = Total net revenue + Impairment charges */ Constant FX as of 4Q 14

7 Retail performance highlights Total retail sales* (PLN MM) 48% Mortgage loans sales (PLN MM) 99% Record high sales of cash loans ~91 K cash loans extended in 2015 total value of PLN 2.9 B, up 43% y/y dynamic net portfolio increase to PLN 3.9 B, up 25% y/y 2,271 3,362 Cash loans up 43% Increasing mortgage loans sales recognized in independent rankings and 11 times #1 in Bankier.pl rating of loans with LTV up to 80% ~535 K C/As serviced at YE 2015, up 11% y/y ~18 K credit cards issued in 2015 Constant improvement in Sez@m internet platform and mobile banking Investments gross sales (PLN MM) 12% C/A balance (PLN MM, eop) 25% NFC payments 284 K internet banking users, up 14% y/y Existing franchise branches performance up 88% in 2015 y/y 1,152 1,291 Net sales up 15% 1,890 2,369 */ Incl.: cash loans, mortgage loans, cards, overdrafts 7 Solid growth in retail sales focus on offer development

8 Commercial performance highlights Renewals New SME sales* (PLN MM) 2% 1,373 1,397 3, Corporate sales* (PLN MM) 2,319 13% 3,975 2,607 Solid corporate limits origination, up 13% y/y high growth of new investment loans: granted PLN 209 MM, up 76% y/y Continued cooperation with BGK in 2015 granted 3.4 K loans worth PLN 537 MM Factoring turnover (PLN MM) 1,211 1,368 C/A balance (PLN MM, eop) Very good factoring sales turnover exceeded PLN 2 B 170 K invoices financed, up 33% y/y Online credit calculator for SME launched 39% 1% 1,545 2,142 2,680 2,700 */ Limits granted 8 Focus on high quality commercial originations

9 Retail non-mtg key metrics (excl. goodwill impact) PLN MM Receivables & deposits (AVG, gross) 7,619 7,291 4,907 4,637 Receivables (avg, net, core) up 5% q/q 3,965 4,172 3,481 3,750 1Q'15 2Q'15 3Q'15 4Q'15 NII Fees & FX income down 17% 241 down 28% 228 6% 4% H'15 2H' Receivables Deposits Revenue down 20% Losses RANR increase down 27% H'15 2H' Revenue trend trails asset growth 9

10 PLN mortgage key metrics (excl. goodwill impact) PLN MM Receivables (AVG, gross) 1,815 1,882 Receivables (avg, net) up 4% 1,728 1,665 NII growing Fees & FX income decrease 3Q'15 4Q' % Revenue growing Losses improvement RANR growing Stable PLN mortgage portfolio growing originations 10

11 FX mortgage key metrics (excl. goodwill impact) PLN MM Receivables (AVG, gross) 13,264 13,910 Receivables (avg, net) down 2% 13,389 13,162 3Q'15 4Q'15 NII Fees & FX income up 51% down 73% 116 5% Revenue Losses RANR 115 up 11% 127 improvement up 71% Majority of funding benefit passed to clients via reduction of FX spreads 11

12 SME key metrics (excl. goodwill impact) PLN MM Receivables & deposits (AVG, gross) 2,061 2,213 2,297 1,854 NII Fees & FX income down 11% down 8% 10% 4% Receivables Deposits Revenue Losses RANR down 10% improvement up 3% Assets stabilizing, continued high quality portfolio 12

13 Corporate key metrics (excl. goodwill impact) PLN MM Receivables & deposits (AVG, gross) 2,566 2,286 2,421 2,214 Receivables (avg, net) up 2% 2,513 2,460 3Q'15 4Q'15 NII down 8% Fees & FX income down 3% 6% 14% Receivables Deposits Revenue down 5% Losses improvement RANR stable Portfolio inflected to growth 13

14 Business cost performance Costs (PLN MM) C/I ratio (%) 2% reduction on core up 13 pp. on core reflective of lower rate environment 1, % 23 BFG 2% MTG support fund 1, Restructuring 73% Goodwill 83% 2% 15% BFG Restructuring 1,132 1,105 Core 83% 96% Core Restructuring to secure ~200 MM annual cost reduction for reinvestment and bottom line improvement 14

15 Asset quality Losses NPL ratio 3 Core losses excl. Debt Sale (DS) Average price on debt sale up 72% y/y 11.3% 9.4% 7.5% 7.5% Costs of risk excl. DS Debt sale (108) (137) Booked risk cost (57) (44) Cost of risk ratio 1 0.2% 0.2% Stable (at 0.2%) cost of risk ratio YTD 2015 vs Higher core losses influenced by one-offs as forbearance implementation in all portfolios. Positive impact from debts sale for total risk costs. 1H'14 2H'14 1H'15 2H'15 Performing loans (PLN B) Impaired loans (PLN B) NPL Drop of NPL ratio in 2015 due to reduced impaired assets and total portfolio growth. Retail 30+ delinquency(%) 2 Corporate and Mid SME average PD (%) 5.1% 4.1% 3.7% 4.1% 3.9% 3.3% 2.6% 2.3% 1.6% 1.4% 1.7% 1.5% 1.5% 1.3% 0.9% 0.8% 1H'14 2H'14 1H'15 2H'15 SME MICRO MTG CHF MTG PLN PID Maintaining the improvement trend of delinquencies in retail portfolios during % 1.6% 2.4% 2.1% 2.0% 1.2% 1.3% 1.6% 1H'14 2H'14 1H'15 2H'15 Mid SME Corporate Despite minor increase of average PD in Corporate, still very good quality of Commercial portfolio. 1/ Costs measured in the relation to total credit portfolio 2/ With delinquency cut-off at 180 dpd 3/ Based on gross volumes, end of period 15

16 Capital and liquidity positions Capital ratios (%, eop) TCR TCR at 16.6% and Tier I ratio at 14.2% well above the regulatory minimums Recommended TCR Strong liquidity position Ca. PLN 6 B of highly liquid assets Recommended Tier I 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 Jan'16* TCR TCR minimum Tier I GE back up line of ca. PLN 9 B FX MTG related additional capital requirements: 2.77 pp. for TCR and 2.08 pp. for Tier I additional 1.25 pp. since Jan 16 to cover conservation buffer 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 Jan'16* Tier1 Tier 1 minimum Strong and stable capital and liquidity positions */ Based on stand-alone data. 16

17 Summary In PLN 1. Following receipt of confirmation from the majority shareholders of Bank BPH from GE Group, that any potential transaction involving the sale of Bank BPH is unlikely to achieve a price in excess of "Tangible Book Value", the Bank s Management Board made a decision to impair from the 2015 balance sheet 155 MM goodwill at the Bank level (plus an additional 761 MM at the Group level) 2. Booked 177 MM reserve for restructuring costs to fund Business Transformation Plan driving future run rate savings of 200 MM per annum (for reinvestment and bottom line improvement) 3. Full year PBT of 35 MM at operating level loss of 1,105 MM after one offs (Goodwill, Restructuring, BFG, Mortgage Support Fund) 4. Strong growth in sales, asset, and revenue trends with stable core cost base 5. Maintaining strong portfolio quality 6. Increased Capital to meet higher Regulatory thresholds 17

18 Disclaimer This presentation does not constitute or form any part of an offer, invitation or inducement to sell or subscribe, or any solicitation of an offer to purchase or subscribe for any securities. This presentation does not purport to contain all information that a prospective investor might require, and neither this presentation nor any part of it nor the fact of its distribution shall form the basis of, or be relied on in connection with, any contract for the purchase or subscription of any securities. The forecasts and forward-looking statements contained in this presentation are necessarily based upon a number of assumptions and estimates that, while considered reasonable by us, are inherently subject to significant business, operational, economic and competitive uncertainties and contingencies, many of which are beyond our control, and upon assumptions with respect to future business decisions that are subject to change. Actual results may differ materially from those projected. Certain items of numerical information and other amounts and percentages set forth in this presentation may not add up to the correct total due to rounding. 18