1 BANCA TRANSILVANIA 2016 Preliminary Financial Results February 2017
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AGENDA 3 1 2 3 4 5 A Banking Sector Dynamics Preliminary 2016 Highlights Performance in 2016 Overview of Business Lines BT Financial Group Financial Statements
11% 9% 7% 5% 3% 1% -1% -3% -5% -7% 390 380 370 360 350 340 330 320 NBR 2 nd definition BANK ASSETS hovering near RON 400bn benchmark 4 Bank assets expanding NPL ratio dropped to 10% total bank net assets source: NBR NPL ratio, % source: NBR 377 380 378 21.5% 20.7% 20.2% 370 354 362 353 352 351 364 0.5% 361 363 360 3.1% 2.4% 2.3% 3.6% 2.5% 4.6% 5.1% 16.2% 15.7% 13.5% 13.5% 11.3% 10.0% -5.3% -0.9% -0.7% -0.6% -1.0% net assets %YoY net assets in RONbn EBA definition 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
4% 3% 2% 1% 0% -1% -2% -3% -4% -5% -3.3% -2.7% -3.9% -4.5% -3.3% -3.4% -0.1% 0.6% 3.0% 2.8% 1.16% 1.17% 1.24% 13000% 12000% 11000% 10000% 9000% 8000% 7000% 6000% RON loans FCY loans LCY LOANS TO HOUSEHOLDS supporting the credit activity troughout the whole year 5 The rise in credit to households offsetting the decline in corporate loans Loans in LCY amounting to 57% of total loans at 2016-end loans non-government, %YoY source: NBR loans non-government, RONbn source: NBR 119 122 126 110 107 114 102 99 95 94 4Q13 2Q14 4Q14 2Q15 4Q15 2Q16 4Q16 4Q15 1Q16 2Q16 3Q16 4Q16
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 4Q 96 4Q 97 4Q 98 4Q 99 4Q 00 4Q 01 4Q 02 4Q 03 4Q 04 4Q 05 4Q 06 4Q 07 4Q 08 4Q 09 4Q 10 4Q 11 4Q 12 4Q 13 4Q 14 4Q 15 4Q16 ROMANIAN ECONOMY Acceleration to 4.8% YoY in 2016 6 GDP and Potential GDP YoY dynamics hit the pre-crisis levels in 2016 GDP vs. potential GDP source Statistics Office (NIS), BT estimates 10 8 6 4 2 0-2 Strong increase of FDIs > EUR 4bn FDIs (EUR, mn) source: National Bank of Romania (NBR) 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000-4 2,000 1,000-6 -8 GDP (MA4, %, YoY) Potential GDP (MA4, %, YoY) 0 2015 highlights PERFORMANCE IN 2015
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 C/A DEFICIT INTENSIFYING AND POLITICAL RISKS UP AT THE END OF 2016 7 The HICP YoY dynamics close to 0 in 4Q2016, after changing the trend HICP (YoY) source: Statistics Office (NIS) 3% Increasing pressures on bonds and FX markets in 4Q2016 EUR/RON vs. 10 YR T-Bonds yield (%) source NBR 4.6 3.8 2% 4.5 4.5 3.6 3.4 1% 4.5 3.2 0% 4.5 3.0 4.5 2.8-1% 4.4 2.6-2% 4.4 2.4 4.4 2.2-3% 4.4 EUR/RON 10 YR Bonds yield (%) (rhs.) 2.0-4% 2015 highlights PERFORMANCE IN 2015
Banca Transilvania s Business Development and Financial Performance 2016 preliminary figures 8
CAPITAL CREDIT ACTIVITY PROFITABILITY 2016 HIGHLIGHTS 9 Mil. RON 2016 2015 Operating income RONmn 2,823.4 2,755.4 2.5% Operating expenses RONmn (1,164.2) (1,345.9) -13.5% VBRO Bargaining gain RONmn 0.0 1,650.6 Gross profit before provisions RONmn 1,659.2 3,060.1-45.8% Net profit RONmn 1,233.4 2,417.7-49.0% EPS RON 0.34 0.80-57.6% Cost of risk (%) 3.07% 1.26% 143.9% NIM 3.40% 2.98% 0.4 pp NIM* 3.17% 2.98% 0.2 pp ROE 21.60% 45.21% -23.6 pp Cost-to-income ratio 41.23% 48.85% -7.6 pp Dec -16 Dec-15 Gross loans to customers RONmn 29,379.7 27,740.0 5.9% Deposits from customers RONmn 41,851.8 38,395.3 9.0% Gross Loans-to-deposits ratio 70.20% 72.25% -2.0 pp NPL ratio 4.62% 9.75% -5.1 pp Dec-16 Dec-15 Total equity RONmn 5,989.1 6,117.8-2.1% Tier 1 capital ratio (profit included) 17.39% 16.43% 5.8% Total capital ratio (profit included) 18.52% 17.82% 3.9% *without one-off adjustments (PPA adjustments : incurred loss and expected loss) BANKING SECTOR
BUSINESS PERFORMANCE 2016 at a glance 10 Total assets at RON 51.8 bn Enhanced ALM for higher efficiency Capital adequacy ratio at 18.5% Net fees and commissions at RON 509.5 mn 11.4% Y/Y CoR Net profit at RON 1,233.4 mn Strong capital base, supporting organic and non organic growth, after special dividend payout Driven by increased number of operations and additional cross-sell CoR at 3.07%, mainly driven by a very conservative approach with regard to the Foreclosure law and an aggressive asset quality improvement process Operating income positively influenced by increase in fees and commissions and other income Cost/income at 41.2% Cost to income was positively influenced by both recurrent and one-off items, excluding the one-off items the C/I ratio is at a comfortable 44%
TRENDS IN INCOME STRUCTURE 11 1.910-10,4% 2015 2016 531 1.711 223 1.346-13,5% 1.164 1,379 1,488 +11,4% 458 509 +2,3% 179 183 Net interest income Net fee and commission income Net trading income* Operating expenses VBRO loans adjustments * Visa transaction related income not included
LOAN STRUCTURE 12 Loans to Households, RONbn Loans to Companies, RONbn 13,6 0,0 15,1 0,1 14,1 3,1 14,3 3,2 5,3 6,9 8,3 8,1 11,0 11,1 Dec 15 Dec 16 Dec 15 Dec 16 Other Housing Consumption SMEs Large corporates Loans to Households Loans to Companies 71% 29% 79% 21% RON FX RON FX *SMEs identified according to internal classification rules
DEPOSIT STRUCTURE 13 Deposits from Households, RONbn Deposits from Companies, RONbn 23,3 5,1 26,4 7,9 15,1 5,2 15,5 5,4 18,2 18,4 9,9 10,1 Dec 15 Dec 16 Dec 15 Dec 16 Current accounts Deposits SMEs Large corporates Deposits from Households Deposits from Companies 58% 42% 77% 23% RON FX RON FX *SMEs identified according to internal classification rules
NPL RATIO AT 4.62% 14 108% 33% 33% 122% 45% 45% 127% 46% 46% 119% 40% 40% 117% 43% 54% NPL coverage with mortgage collaterals NPL coverage with provisions Banca Transilvania continued to provide a sound coverage ratio for its PAR 90 portfolio 6,4 75% 77% 81% 79% 74% 12 13 14 15 NPL coverage with mortgage collaterals NPL coverage with provisions 16 *For Financial Statements purposes the gross loans are netted by the unwinding adjustment; For coverage ratio purposes the respective adjustment is included in the total stock of provisions
Retail Banking 15 Retail loan portfolio reached RON 15.1 bn as at Dec 16 Retail Loan Portfolio, RONbn source: BT loans transferred from VBR 13.6 3.3 10.3 15.1 74,000 non-card retail loans disbursed in 2016 Market share for retail loans at December 2016-14% Internet banking users +19% vs yearend Mobile banking users +50% vs yearend 6.3 6.8 7.5 2.8 mn active cards, of which about 330,000 credit cards; BT is the market leader, both in terms of number of cards, as well as volume of transactions generated by its cards, with a market share of almost 20%. 2012 2013 2014 2015 2016
SME Banking 16 SME loan portfolio at RON 3.2 bn and 207,000 active clients SME Loan Portfolio, RONbn source: BT loans transferred from VBR 3.1 0.3 3.2 Banca Transilvania continued its specific focus on the SME business sector, offering almost 18,000 new loans in 2016 2.5 2.5 2.6 2.8 BT continued its partnership with DFIs, offering special loan and guarantee products to its SME clients Agriculture, Healthcare and European Structural Funds are on BT radar as specialized sectorial approaches 2012 2013 2014 2015 2016
1150% 1100% 1050% 1000% 950% 900% 850% 800% 750% 700% Corporate Banking 17 Corporate loan portfolio above RON 11.1 bn Corporate Loan Portfolio, RONbn source: BT loans transferred from VBR 0.88 An important reorganizational process was started in the Corporate business line, including new client segmentation & deeper sectorial specialization BT was present with lending facilities especially in the industrial manufacturing and agribusiness segments 9.9 10.0 10.1 11.1 BT continued to play an important role as co-lender of EU structural funds eligible projects 8.7 2012 2013 2014 2015 2016
Banca Transilvania Financial Group 18 As of 31.12.2016*: Total assets: 51.8 RON bn Total assets: 67 RON mn. Total assets: 130 RON mn. Total assets: 137 RON mn. AuM: 3,243 RON mn. Total assets: 542 RON mn. *Total assets for subsidiaries are presented under RAS rules
CAPITAL CREDIT ACTIVITY PROFITABILITY 2016 HIGHLIGHTS Consolidated Figures 19 Mil. RON 2016 2015 Operating income 2,987.0 2,854.3 4.6% Operating expenses (1,264.0) (1,406.5) -10.1% Bargaining gain 0.0 1,650.6 Gross profit before provisions 1,722.9 1,447.7 19.0% Net income 1,282.0 2,448.0-47.6% EPS RON 0.35 0.81-56.5% Cost of risk (%) 3.12% 1.27% 145.3% Cost of risk (%)* 3.51% 3.18% 10.3% NIM 3.34% 3.21% 4.0% NIM* 3.12% 3.21% -2.9% ROE (%) 21.44% 57.50% -62.7% Cost-to-income ratio (%) 42.32% 49.28% -14.1% Dec-16 Dec-15 Gross loans to customers RONmn 29,476.2 28,012.3 5.2% Deposits from customers RONmn 41,681.5 38,301.7 8.8% Loans-to-deposits ratio 70.72% 73.14% -3.3% Dec-16 Dec-15 Total equity RONmn 6,157.0 6,240.8-1.3% Tier 1 capital ratio (Profit included) 17.31% 16.70% 3.6% Total capital ratio (Profit included) 18.42% 18.07% 1.9%
ANNEX I INCOME STATEMENT YTD 2016 - Individual 20 IFRS, individual, RONmn 2016 2015 Net interest income 1,710.7 1,909.8-10.4% Net fee and commission income 509.5 457.5 11.4% Net trading income 183.5 179.4 2.3% Other net income* 419.7 208.7 101.1% Operating income 2,823.4 2,755.4 2.5% Personnel expenses (631.5) (650.3) -2.9% D&A (72.4) (77.6) -6.8% Other operating expenses (460.3) (618.0) -25.5% Operating expenses (1,164.2) (1,345.9) -13.5% Cost of risk (654.2) (795.0) -17.7% Bargaining gain 0.0 1,650.6 Net income before taxation 1,005.0 2,265.1-55.6% Income tax expense 228.4 152.5 49.7% Net income after taxation 1,233.4 2,417.7-49.0% * Including Visa transaction
ANNEX II BALANCE SHEET 2016 - Individual 21 IFRS, individual, RONmn Dec-16 Dec-15 Cash & cash equivalents 5,293.6 4,997.9 5.9% Placements with banks 2,524.9 3,676.8-31.3% Loans to customers, net 27,210.4 25,107.5 8.4% T-bills & securities 15,402.1 12,602.1 22.2% Fixed assets 453.1 409.5 10.6% Participations 136.7 84.9 61.0% Deferred tax assets 373.0 111.2 235.6% Other assets 379.2 352.8 7.5% Total assets 51,773.1 47,342.7 9.4% Deposits from banks 247.3 388.4-36.3% Deposits customers 41,851.8 38,395.3 9.0% Loans from banks and FIs 2,246.5 985.1 128.0% Subordinated loan 424.1 416.4 1.9% Other liabilities 1,014.4 1,039.7-2.4% Total liabilities 45,784.0 41,224.9 11.1% Shareholders equity 5,989.1 6,117.8-2.1%
ANNEX III INCOME STATEMENT YTD 2016 - Consolidated 22 IFRS, consolidated, RONmn 2016 2015 Net interest income 1,765.5 1,952.3-9.6% Net fee and commission income 544.8 487.0 11.9% Net trading income 197.4 179.9 9.7% Other net income* 479.3 235.1 103.8% Operating income 2,987.0 2,854.3 4.6% Personnel expenses (665.8) (676.7) -1.6% D&A (93.9) (91.7) 2.5% Other operating expenses (504.4) (638.1) -21.0% Operating expenses (1,264.0) (1,406.5) -10.1% Cost of risk (658.3) (797.6) -17.5% Bargaining gain 0.0 1,650.6 Net income before taxation 1,064.7 2,300.7-53.7% Income tax expense 217.3 147.3 47.5% Net income after taxation 1,282.0 2,448.0-47.6% * Including Visa transaction
ANNEX IV BALANCE SHEET 2016 - Consolidated 23 IFRS, consolidated, RONmn Dec-16 Dec-15 Cash & cash equivalents 5,293.7 4,997.9 5.9% Placements with banks 2,563.8 3,696.2-30.6% Loans to customers, net 27,232.9 25,225.6 8.0% T-bills & securities 15,399.7 12,629.6 21.9% Fixed assets 649.8 526.7 23.4% Deferred tax assets 377.9 113.9 231.7% Other assets 434.6 389.1 11.7% Total assets 51,952.4 47,579.1 9.2% Deposits from banks 247.3 388.4-36.3% Deposits customers 41,681.5 38,301.7 8.8% Loans from banks and FIs 2,304.9 1,129.7 104.0% Subordinated loan 424.1 416.4 1.8% Other liabilities 1,137.7 1,102.0 3.2% Total liabilities 45,795.5 41,338.3 10.8% Total equity 6,157.0 6,240.8-1.3% Total liabilities and equity 51,952.4 47,579.1 9.2%
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