Exane Spain Investors Day. Francisco Sancha Bermejo Group CFO Madrid, January 16 th, 2014

Transcription

1 Exane Spain Investors Day Francisco Sancha Bermejo Group CFO Madrid, January 16 th, 2014

2 Disclaimer This presentation has been prepared by Banco Popular Español solely for purposes of information. It may contain estimates and forecasts with respect to the future development of the business and to the financial results of the Banco Popular Group, which stem from the expectations of the Banco Popular Group and which, by their very nature, are exposed to factors, risks and circumstances that could affect the financial results in such a way that they might not coincide with such estimates and forecasts. These factors include, but are not restricted to, (i) changes in interest rates, exchange rates or any other financial variables, both on the domestic as well as on the international securities markets, (ii) the economic, political, social or regulatory situation, and (iii) competitive pressures. In the event that such factors or other similar factors were to cause the financial results to differ from the estimates and forecasts contained in this presentation, or were to bring about changes in the strategy of the Banco Popular Group, Banco Popular does not undertake to publicly revise the content of this presentation. This presentation contains summarised information and may contain unaudited information. In no case shall its content constitute an offer, invitation or recommendation to subscribe or acquire any security whatsoever, nor is it intended to serve as a basis for any contract or commitment whatsoever. 2

3 Agenda main priorities 2. Strategic partnership on the management of the non core unit 3. Banco Popular: a business model with high recurrent revenues 4. Conclusions 3

4 We began 2013 with the goal of reaching the profitability expected for Banco Popular Commercial activity main priorities 1 Managing assets and liabilities margins 2 Increasing profitable market share in assets and liabilities with special focus on SMEs and independent professionals 3 Splitting the RE business from the commercial activity. Managing two branch networks with specific and differentiated targets 4

5 1 We have been able to heavily reduce the cost of deposits while gaining volumes at the same time. Still room to go in Cost of time deposits and commercial paper Quarterly average (% ) 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 Stock cost Frontbook cost Reference euribor Maturities profile and repricing of time deposits and commercial paper (, million) Data as of 30/09/2013 2,78 2,52 2,63 2,18 2, % % % 10.0% % Q13 1Q14 2Q14 3Q14 >3Q14 Time deposits & CP maturities Cost of the maturities (%) % over total maturities 5

6 1 2 We reinforced our commercial effort to SMEs: more resources allocated, more customers gained and more loans granted We continue to place our trust in SMEs & self employees Best-in-class in ICO lines (1) granted in 3Q13: 747M +5.7% vs. 4Q12 loans to SMEs +42% vs. 3Q12 renting transactions +22% vs. 3Q12 leasing transactions new SMEs & self employees in 9M13 Gaining market share: 1 of every 5 SMEs banks with us +47% vs. 4Q12 SMEs managers: 141 in 90% of the Spanish regions (1) ICO lines: Public credit lines prefunded for Corporates loans 6

7 3 Finally, the creation of our non core unit has allowed us to triple sales And we will continue accelerating them with the recent strategic agreement with Kennedy Wilson and Värde Partners Real Estate Assets sales (, millions) (nº units) +3.2x Finished buildings sales +3x +2.5x 3Q12 3Q13 Sales split by nationality 23% 77% Spanish buyer Foreign buyer 5% 0.4% 0.6% 2% 0.6% 4% 0.6% 1% 1% 24% 1% 11% 14% 1% 27% 4% 3%

8 Agenda main priorities 2. Strategic partnership on the management of the non core unit 3. Banco Popular: a business model with high recurrent revenues 4. Conclusions 8

9 Strategic partnership on the management of the non core unit JV with a strategic partner (Kennedy Wilson & Värde Partners) to manage our non core unit. The partner will hold a 51% and Banco Popular will retain a 49% Exclusive partnership agreement for 10 years Banco Popular will maintain full control over the pricing of the disposals Structure Impacts Banco Popular Kennedy Wilson & Värde Partners million+ 100M earn-out in 4Q13: 49% 51% Capital Gains 51% in cash 49% through the revaluation of the retained stake Servicing company of the Non-Core Business 2 Real Estate foreclosed assets management NPAs loans management: Developers: NPLs & substandard Capital generation BIS-3 Fully loaded 253 million net: +30 bps. of capital in 4Q13 Retail mortgages: NPLs 9

10 To optimize the management and speed up the divestment on NPAs(1) Strategic rationale of the Deal 1 To take advantage of the knowledge and expertise of a specialized partner to optimize the management of part of the NPAs with mortgage collateral 2 Speed up the divestment on NPAs, which should provide funding and capital synergies 3 Generate a significant capital gain ( 710M+ 100M earn-out) to boost provisions by year end 4 Use this platform to grow through servicing to third parties (1) NPAs: NPLs + foreclosed assets 10

11 We have a sound track record setting JVs and partnerships backed by the trust of our partners Launchment of new bank Targobank (2010) Reinforcement of the joint-venture in bancassurance (2011) Joint-venture in merchant acquiring services to the Spanish business (2012) Joint-venture in ATM business in Spain (2013) Joint-venture in Real Estate Servicing Unit (2013) Crédit Mutuel is a leading player in the French banking sector Market share of 17.3% of credits and 12.7% Allianz is Europe's largest insurer Top 20 World's largest corporations Top 5 World's leading asset managers Evo is a leading privately-held payments processor and acquirer for multinational corporations Euro Information is the IT Services subsidiary of Group Crédit Mutuel/CIC More than 3,000 ATMs Kennedy Wilson is a international firm of investment services and RE with EUR14Bn in assets under management of deposits 23.8 million customers Relationship with Popular initiated in 2005 Relationship with Popular initiated in 1988 & Joint Venture recently reinforced Popular significant shareholders > 4.2% stake Among the top largest non-bank acquirers in the United States Relationship with Popular initiated in 2012 Strong relationship with Popular initiated in 2005 that continues today: 2 nd deal and main shareholders > 4.3% stake Värde Partners is an investment consultant focus on alternative markets with EUR 7Bn in assets under management Relationship that begins today

12 Agenda main priorities 2. Strategic partnership on the management of the non core unit 3. Banco Popular: a business model with high recurrent revenues 4. Conclusions 12

13 A profitable business model focused on SMEs Focus in SMEs SME market share clearly above other segments % of loans 32% 47% Branches 6,2% 68% 53% Individuals 3,5% pop Spain SMEs and Self-employees 16,0% (1) SMEs and self-employees Retail (1) Market share based on SME loan volume according to Oliver Wyman report (2012) being SMEs the most profitable and growing 18% 19,9% 18,5% 83% 57% 13,0% 82% 6,8% 17% 43% Customers ATAs Gross operating profit sep-13 Source: Banco Popular; ICO SMEs and self employees Rest Popular Market share - Government sponsored SME loans 13

14 among the best in relative terms Total domestic branches Loans to customers ( m) Retail operating result 9M13 (m ) Bank X2.6 Bank 1 203,3 X1.9 Bank X1.0 Bank X2.0 Bank ,9 X º Bank X1.5 Bank ,1 X1.6 Bank X0.7 Bank X1.0 Bank 4 106,8 X1.0 Bank X ,5 Bank X0.4 Source: Banks (Caixabank, Santander, BBVA and Sabadell) 9M13 results. Domestic operations for Santander and BBVA only. Retail operating result: Net interest income+ commissions operating expenses depreciation and amortization 14

15 Best-in-class efficiency ratio Pre-provision profit (ex trading) over loans 3Q13 vs. 4Q12 (annualized) Efficiency ratio (9M13) (% ) 1.63% -14 pp 55,1% 1.23% 1.27% 0.98% 1.00% 0.83% 41,6% 0.54% 0.43% POP Bank 1 Bank 2 Bank 3 9M13 Average Peers 9M13 4Q12 3Q13 Banks: Bankinter, Caixabank and Sabadell Banks: CaixaBank, Sabadell and Bankinter Caixabank adjusted by restructuring and extraordinary costs 15

16 that allow us to report a high and sustainable pre-provision profit over time Pre-provision profit leadership (1) ( bn) Average : 2.9 Average : 1.9 Average : 2.0 1,6 1,8 2,0 2,4 2,7 2,9 3,5 2,5 1,9 2,0 2, E (1) Banco Popular and Pastor data aggregated until 2010, pro-forma for 2011 and consolidated figures for 2012 y 9M13 16

17 This sound profitability has allowed us to charge very high provisions - Eur19bn since 2007 and reinforce our capital base at the same time Core Capital evolution (1) (%) Provisions (2) ( bn) Core Capital increase 89% 12, ,0 10,3 Significant provisions in 2012 according to new regulation 9,4 8,6 6,5 7, T13 proforma T13 (1) Includes ABB of 450mn done in December 13 and AT1 in october (2) Write-offs included 17

18 We maintain our conservative coverage levels. The provisioning effort covers 17% of Spanish risk NPLs coverage +4p.p. Foreclosed assets coverage (1) +7p.p. 44% 48% 76% with mortgage guarantee 40% 47% 3Q12 3Q13 3Q12 3Q13 NPAs (2) coverage +1p.p. (, billion) Total cumulative provisions 07-9M13 (write offs included) +19 bn 21 2 (1) Spain. Including financial stakes (2) NPAs: NPLs+ write-offs + foreclosed assets + financial stakes 18

19 High quality and sound capital levels Core Tier 1 Basilea evolution High capital quality 9, ,3 60% 55% 3Q11 3Q12 3Q13 proforma RWAs / Total assets 50% 45% 40% 35% Spanish bank1 Spanish bank 3 Spanish bank 2 Spanish bank 5 Spanish bank 4 30% 3.00% 4.00% 5.00% 6.00% (1) Includes ABB of 450mn done in December and AT1 in October Tangible equity / Tangible assets Banks: SAN España, BBVA España, Bankinter, Sabadell & Caixabank last available data. European banks: analysts reports. We are expecting to close 2013 with a CT1 Basel 3 fully loaded >10% 19

20 Agenda main priorities 2. Strategic partnership on the management of the non core unit 3. Banco Popular: a business model with high recurrent revenues 4. Conclusions 20

21 Outlook The macro, micro (interest rates) and regulatory environment will remain complex, although the improvement of the economy is becoming gradually more evident 2 Our priorities remain unchanged: we will continue to focus on growth in SME lending, gathering deposits as well as managing margins proactively 3 We expect a significant reduction of NPL formation in The sale of REO will remain a top priority 5 Banco Popular s business model is demonstrated as the most adequate in the current competitive position 21

22 22