BZWBK Group Results 1Q12 April 26 th, 2012
2 This presentation as regards the forward looking statements is exclusively informational in nature and cannot be treated as an offering or recommendation to conclude any transactions. Bank Zachodni WBK shall not be liable for any consequences of decisions taken based on the forward looking statements contained in this document.
Important information Banco Santander, S.A. ("Santander") cautions that this presentation contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macroeconomic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates, and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors and other key factors that we have indicated in our past and future filings and reports, including those with the Securities and Exchange Commission of the United States of America (the SEC ), could adversely affect our business and financial performance. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities or any advice or recommendation with respect to such securities. The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by Santander. Any person at any time acquiring securities must do so only on the basis of such person's own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation. Nothing contained in this presentation is an offer of securities for sale into the United States or in any other jurisdiction. No offering of Securities shall be made in the United States except pursuant to registration under the U.S. Securities Act of 1933, as amended, or an exemption there from. Nothing contained in this presentation is intended to constitute an invitation or inducement to engage in investment activity for the purposes of the prohibition on financial promotion in the U.K. Financial Services and Markets Act 2000. In making this presentation available, Santander makes no recommendation to buy, sell or otherwise deal in shares in Santander or in any other securities or investments whatsoever and you should neither rely nor act upon, directly or indirectly, any of the information contained in this presentation in respect of any such investment activity. Note: Statements as to historical performance, historical share price or financial accretion are not intended to mean that future performance, historical share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast. Note: The results information contained in this presentation has been prepared according to IFRS as applied in Poland. As a result it may differ from the one disclosed by Santander Group. 3
Table of Contents 4 Macroeconomic Scenario and Financial System 31.03.2012 - Business - Results
Macroeconomic Scenario 5 GDP (real annual growth %) Interest Rate NBP reference rate (%) End of period 1.6 3.9 4.3 2.7 3.1 3.50 3.50 4.50 4.50 4.50 2009 2010 2011 2012(e) 2013(e) 2009 2010 2011 2012(e) 2013(e) Inflation (CPI %) Exchange Rate PLN/EUR End of period 3.5 2.6 4.3 3.9 2.5 4.11 3.96 4.42 4.18 3.83 2009 2010 2011 2012(e) 2013(e) 2009 2010 2011 2012(e) 2013(e) Source: National Bank of Poland, Central Statistical Office, Santander Research
Macroeconomic Scenario 6 % YoY Private consumption Fixed investments Investments and Consumption 5.7 2.1 3.2 3.1 1.9 9.6-1.2-0.2 8.5 5.2 EUR billion C/A Balance vs. FDI+EU funds Current account balance Foreign direct investments EU funds 8.5 8.5 5.4 6.9 9.3 6.7 10.3 11.0-12.2-16.5-15.9-11.3 2008 2009 2010 2011 2012 2009 2010 2011 2012 Unemployment Rate Fiscal policy indicators 16 % Registered unemployment 14 12 LFS unemployment (s.a.) 13.5 10.2 10 8 6 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 % of GDP General government debt General government deficit 56.4 54.9 55.4 50.9 53.4 7.3 7.9 5.5 3.4 3.0 2009 2010 2011 2012 2013 Source: National Bank of Poland, Central Statistical Office, Eurostat, Santander Research
Financial System: Credit Evolution 7 Slowdown in loan growth at the start of 2012 Total Loans Loans to Corporations PLN billion 758 767 799 841 862 853 11.2% PLN billion 215 221 231 244 253 254 15.0% 8.8% Dec.10 Mar.11 Jun.11 Sep.11 Dec.11 Mar.12 Loans to individuals (mortgage credit) -0.9% Dec.10 Mar.11 Jun.11 Sep.11 Dec.11 Mar.12 Loans to individuals (consumer credit) PLN billion 24.2% 276 279 298 322 329 323 15.7% PLN billion 143 1.1% 140 139 141 139 136-2.5% Dec.10 Mar.11 Jun.11 Sep.11 Dec.11 Mar.12 Dec.10 Mar.11 Jun.11 Sep.11 Dec.11 Mar.12 Volume Y-o-Y Variation % Source: National Bank of Poland
Financial System: Deposits Evolution 8 Deposit growth Total Deposits Corporate Deposits PLN billion 682 700 693 715 762 759 8.4% PLN billion 181 9.9% 169 177 181 203 182 7.5% 9.1% Dec.10 Mar.11 Jun.11 Sep.11 Dec.11 Mar.12 Household Deposits Dec.10 Mar.11 Jun.11 Sep.11 Dec.11 Mar.12 Mutual funds PLN billion 421 434 436 452 478 487 12.3% 24,2% 116 119 119 108 114 126 6,3% 9.8% Dec.10 Mar.11 Jun.11 Sep.11 Dec.11 Mar.12 Dec.10 Mar.11 Jun.11 Sep.11 Dec.11 Mar.12 Volume Y-o-Y Variation % Source: National Bank of Poland
Table of Contents 9 Macroeconomic Scenario and Financial System 31.03.2012 - Business - Results
Table of Contents 10 Macroeconomic Scenario and Financial System 31.03.2012 - Business - Results
BZWBK Group 11 BZ WBK features Branches 628 - incl. agencies 102 ATMs 1 045 Employees ( FTE s) 9.2 k Corporate Banking Centres 3 Business Banking Centres 7 Balance Sheet 31.03.2012 P&L 31.03.2012 Assets EUR 14 212 m Loans EUR 9 181 m Deposits EUR 10 473 m Total assets * +9.7% Y-o-Y Income EUR 224 m Costs EUR 108 m PBT EUR 97 m ROE** 21.1 % * The percentage YoY growth in total assets as at 31.03.2012 excludes the impact of a once-off transaction at end March, 2011 of EUR 2 763 m relating to the tender for BZ WBK shares by Banco Santander. The transaction was settled on 1 April 2011 ** Excluding Q4, 2011 once-off adjustments of EUR 21 m
Business: Portfolio Evolution 12 Loan growth driven by Cash Loans, SME and Large Corporate EUR m 31.03.12 31.03.11 Y-o-Y Variation Q-o-Q Variation 14.8% 0.2% Mortgage 1 823 1 659 9.9% -0.5% Other personal 1 222 1 109 10.2% 2.1% 8 295 8 729 9 157 9 497 9 520 Total personal 3 045 2 768 10.0% 0.6% Business 6 475 5 527 17.2% 0.1% Total gross loans 9 520 8 295 14.8% 0.2% Mar.11 Jun.11 Sep.11 Dec.11 Mar.12 Comments Y-o-Y variation excluding FX effect: Mortgage loans 6% Total personal 8% Business 15% Total Loans 13% PLN loans comprise 69% of total gross loan portfolio
Business: Loans by products 13 Personal lending +10.0 % Y-o-Y Cash Loans Individuals Mortgages EUR m EUR m 15.3% 9.9% 782 902 1 086 1 200 10.5% 573 623 8.7%* Mar.11 Mar.12 Mar.11 Mar.12 FX PLN Comments Gaining market share in cash loans Highest sale ever of cash loans in March * FX mortgage decrease of 1.5% excluding FX effect
Business: Deposits + Funds Evolution 14 Active management of deposits EUR m 5.7% 31.03.12 31.03.11-7.1% Y-o-Y Variation Q-o-Q Variation Demand 2 934 2 663 10.2% -0.1% 9 907 9 819 10 541 11 278 10 473 3 775 3 682 4 238 4 749 3 840 6 132 6 137 6 303 6 529 6 633 Mar.11 Jun.11 Sep.11 Dec.11 Mar.12 Retail Business Mutual Funds -19.6% Savings 1 606 1 635-1.7% 8.0% Time Deposits 5 933 5 609 5.8% -13.5% Customer Deposits 10 473 9 907 5.7% -7.1% Business deposits -19.1% Q-o-Q due to maturity of once off large corporate deposits. Retail deposits +8.2% Y-o-Y Mutual funds +8.8% Q-o-Q Comments 2 802 2 608 2 217 2 071 2 254 Mar.11 Jun.11 Sep.11 Dec.11 Mar.12
Business: Market Share 15 Market Share (%) March 2012 December 2011 March 2011 Total Banking System Loans Total Loans 4.22 4.20 4.12 - Cash Loans 3.79 3.62 3.23 Deposits + Funds Total Deposits 5.12 5.53 5.21 - Personal Deposits 5.82 5.80 5.94 - Business Deposits 4.24 5.18 4.31
Table of Contents 16 Macroeconomic Scenario and Financial System 31.03.2012 - Business - Results
Results: Net Interest Income 17 Net Interest Income +12.6% Y-o-Y EUR m NIM by Q, % 12.6% 3.3% 4,34 4,27 4,29 4,23 4,27 117 119 126 127 132 1Q11 2Q11 3Q11 4Q11 1Q12 1Q11 2Q11 3Q11 4Q11 1Q12 Comments Active management of Net Interest Margin
Results: Net Fees 18 Net Fees flat EUR m -2.5% 31.03.12 31.03.11 Y-o-Y Variation Q-o-Q Variation 0% 80 83 80 78 78 ebusiness & payments 15 23 5.1% -1.7% Investment banking 1 19 18-31.7% -2.6% Current accounts & money transfer 14 14-2.2% -0.8% FX fees 13 13 4.1% -10.1% 1Q11 2Q11 3Q11 4Q11 1Q12 Net Fees Comments Investment banking revenues impacted by lower volumes Strong underlying increase in insurance income Loan fees 7 5 40.9% -0.7% Insurance fees 6 3 77.7% 48.2% Other 2 4 4-14.8% 12.1% Total 78 80-2.5% 0% 1. Brokerage fees, distribution and management fees 2. Includes off-balance sheet guarantees commissions, issue arrangement fees, credit cards fees, structured product fees and other
Results: Total Income 19 Total Income grew at 6.4% Y-o-Y EUR m 31.03.12 31.03.11 Y-o-Y Variation Q-o-Q Variation 6.4% 2.0% Net Interest Income 132 117 12.6% 3.3% Fees 78 80-2.5% 0% 13 38 28 15 14 80 83 80 78 78 117 119 126 127 132 1Q11 2Q11 3Q11 4Q11 1Q12 Subtotal 210 197 6.4% 2.0% Gain/Loss on financial transactions + Others 14 13 5.1% -7.6% Total Income 224 210 6.4% 1.4% Gain/loss on financial transactions + Others Fees Net Interest Income
Results: Administrative Expenses and Amortization 20 Total expenses grew at 3.0% Y-o-Y and -19.8 % Q-o-Q EUR m 3.0% -19.8% 1 2 4 9 9 8 38 43 37 21 2 8 42 1 9 42 31.03.12 31.03.11 Y-o-Y Variation Q-o-Q Variation Staff costs 56 57-1.2% -8.7% Administrative Expenses 42 38 9.9% -1.6% 57 57 56 62 56 1Q11 2Q11 3Q11 4Q11 1Q12 Staff costs Administrative Expenses Amortization Other costs Once-off adjustments * Including the impact of once-off adjustments Amortization 9 9 2.7% -66.4% Other costs 1 1-20.3% -79.4% Total 108 105 3.0% -19.8% * Comments Increased marketing costs Y-o-Y Cost 4.8% Q-o-Q excluding once-off adjustments in Q4 2011 Initial costs related to the Kredyt Bank merger reflected in Q1 expenses
Results: Net operating income 21 Net operating income growth of 9.7% mainly driven by NII EUR m 9.7% 34.7% 105 129 129 107 116 21 86 1Q11 2Q11 3Q11 4Q11 1Q12 Operating surplus Once-off adjustments Net Interest Income + Fees Gain on financial transactions + Others Adm. Expenses + Amortization + Other costs Net operating income 31.03.12 31.03.11 Y-o-Y Variation Q-o-Q Variation 210 197 6.4% 2.0% 14 13 5.1% -7.6% (108) (105) 3.0% -19.8% 116 105 9.7% 34.7%* * Including the impact of once-off adjustments
Results: Provisions and Loan Quality 22 Asset quality improved quarter on quarter EUR m Provisions and Annualised total credit loss ratio NPL (%) 1,25% 1,20% 1,21% 1,21% 1,11% 1,00% 1,06% 1,00% 0,82% 5,8% 6,3% 6,0% 6,8% 7,0% 6,7% 6,5% 5,5% 5,4% 35 24 24 17 22 25 19 20 19 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Coverage ratio (%) 42,3% 41,3% 45,3% 44,1% 46,4% 50,2% 51,9% 49,0% 49,8% Provisions Annualised total credit loss ratio 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12
Results: Net Profit 23 Net Profit of EUR 76 Million on 31.03.2012, growth of 13% Y-o-Y EUR m 13.0% 57.4% 31.03.12 31.03.11 Y-o-Y Variation Q-o-Q Variation Profit before Taxes 97 83 16.2% 46.4% 67 15 * 91 83 69 21 48 76 -Taxes (21) (16) 29.6% 16.9% Net Profit 76 67 13.0% 57.4%* Attributable profit 74 64 16.3% 58.3% 1Q11 2Q11 3Q11 4Q11 1Q12 * Including the impact of once-off adjustments Net profit Once-off adjustments * In Q2 2011 dividend from Aviva entities of EUR 14.6 m
Results: Indicators 24 C/I % Solvency ratio % ROE % -1.6 p.p. + 0.5 p.p. + 3.4 p.p. 50,0 48,4 14,7 15,2 17,7 21,1 31.03.11 31.03.12 31.03.11 31.03.12 31.03.11 31.03.12
Conclusions: 25 Key points Good growth in loans Improving margin on deposits q/q Focus on net interest margin Loans Personal: +10.0% y/y Business: +17.2% y/y Loan/Deposit ratio: 87.7% Interest income Strong growth in interest income: +12.6% y/y +3.3% q/q Net profit Strong growth in net profit attributable profit of EUR 74 m + 16.3% y/y + 9.4% q/q (increase excl. once-off adjustments) Group Ongoing integration with Santander Group
26 ANNEXES P&L Account Balance sheet Net interest margin evolution
P&L Account 27 for the period (EUR k): 1Q 2012 4Q 2011 3Q 2011 2Q 2011 1Q 2011 Interest and similar income 223 151 216 498 207 367 195 410 187 812 Interest expense and similar charges (91 481) (89 006) (81 535) (76 601) (70 882) Net interest income 131 670 127 492 125 831 118 809 116 929 Fee and commission income 90 091 90 776 92 314 94 077 91 337 Fee and commission expense (12 043) (12 750) (11 867) (11 643) (11 258) Net fee and commission income 78 048 78 026 80 447 82 434 80 079 Dividend income 0 26 106 15 949 2 Net trading income and revaluation 9 465 11 750 25 423 16 803 9 184 Gains (losses) from other financial securities 627 1 164 356 1 290 (40) Gains (losses) from investment in subsidiaries and associates - - - - - Other operating income 3 870 2 163 1 846 3 631 4 134 Impairment losses on loans and advances (19 104) (20 220) (25 499) (18 618) (22 426) Operating expenses incl.: (108 221) (134 907) (105 209) (109 868) (105 046) Bank's staff, operating expenses and management costs (98 613) (104 620) (92 850) (99 351) (95 439) Depreciation/amortisation (8 716) (25 958) (8 149) (8 444) (8 488) Other operating expenses (892) (4 329) (4 210) (2 072) (1 120) Operating profit 96 354 65 493 103 300 110 430 82 818 Share in net profits (losses) of entities accounted for by the equity method 747 821 646 408 750 Profit before tax 97 101 66 314 103 946 110 838 83 567 Corporate income tax (20 996) (17 958) (20 996) (19 449) (16 204) Profit for the period 76 105 48 356 82 951 91 390 67 364 incl.: attributable to owners of BZ WBK S.A. 74 272 46 909 81 532 87 680 63 885 attributable to non-controlling interests 1 833 1 446 1 418 3 709 3 478
Balance Sheet 28 1 Q 2012 4Q 2011 3 Q 2011 2 Q 2011 1 Q 2011 ASSETS Cash and balances with central bank 675 034 343 322 755 103 526 608 302 576 Loans and advances to banks 338 494 290 008 401 369 147 584 370 178 Financial assets held for trading & hedging 822 085 1 439 641 1 080 340 876 218 663 052 Loans and advances to customers 9 181 148 9 155 911 8 760 648 8 355 804 7 934 820 Investment securities 2 832 276 2 806 270 2 779 763 3 076 886 3 277 150 Investments in associates and joint ventures 25 932 25 170 24 334 22 477 21 932 Intangible assets 33 184 36 406 41 262 42 274 39 895 Property, plant & equipment 117 385 120 368 121 327 124 813 127 505 Current income tax assets - 4 982 - Net deferred tax assets 58 288 59 009 67 206 72 629 75 771 Assets held for sale 19 898 19 894 10 741 11 524 611 Other assets 107 976 100 213 103 479 103 522 2 917 883 Total assets 14 211 700 14 401 194 14 145 572 13 360 339 15 731 373 LIABILITIES Deposits from central bank - - - - - Deposits from banks 1 258 075 603 311 1 191 393 1 414 246 764 650 Financial liabilities held for trading & hedging 239 209 350 523 371 476 156 255 239 543 Deposits from customers 10 472 953 11 278 234 10 541 167 9 818 793 9 906 854 Debt securities in issue - - - - - Subordinated liabilities 100 153 106 265 106 109 95 856 96 416 Current income tax liabilities 10 678-6 283 6 737 3 411 Other liabilities 253 344 260 694 186 995 218 856 3 029 973 Total liabilities 12 334 413 12 599 027 12 403 423 11 710 745 14 040 847 Equity Equity attributable to owners of BZ WBK S.A. 1 859 823 1 771 488 1 713 197 1 622 032 1 650 741 Share capital 175 993 175 993 175 993 175 993 175 993 Other reserve funds 1 153 482 1 131 661 1 129 990 1 126 778 1 047 322 Revaluation reserve 142 798 131 332 122 497 116 075 94 806 Retained earnings 311 891 47 268 47 268 48 791 267 542 Profit of the current period 75 659 285 234 237 449 154 395 65 078 Non-controlling interest 17 464 30 679 28 952 27 562 39 785 Total equity 1 877 287 1 802 167 1 742 149 1 649 594 1 690 526 Total equity and liabilities 14 211 700 14 401 194 14 145 572 13 360 339 15 731 373
Net interest margin evolution 29 NIM by Q, % 3,85 3,92 4,27 4,34 4,27 4,29 4,23 4,27 3,46 3,58 3,92 4,01 3,94 3,95 3,87 4,05 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 Incl. swap points Excl. swap points
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