Alior Bank Sa · GPW:ALR
Alior Bank Sa — Q1 2013 Earnings Presentation
43 slides from Alior Bank Sa's earnings presentation, May 2013
Slide 1: Results presentation Q1 2013: Continuing profitable growth
ALIOR BANK S.A. Results presentation Q1 2013 Continuing profitable growth May 2013
Slide 2: Q1 2013 Highlights
Q1 2013 HIGHLIGHTS Positive cost & income development (Q1 2013 revenues up 32% and costs only 11% vs. Q1 2012) Net profit of 91 M up 68 % vs Q1 2012 Loan growth of 41% vs Q1 2012; 102 thsd new clients in Q1 2013 NIM under pressure , necessary actions taken to allow rebound in following quarters 2
Slide 3: Key Financials
KEY FINANCIALS M PLN Q1 2013 Q4 2012 % (A-B)/B Q1 2012 % (A-D)/D 2012 EOY A B C D E F Net interest income 200 193 4 152 32 711 Fee and commission expense 138 136 2 112 24 469 Trading result & other 56 80 -30 34 63 254 Operating income 394 409 -4 298 32 1 434 GAE before IPO expenses -202 -191 5 -182
Slide 4: Revenue dynamic outpaces cost increase significantly
REVENUE DYNAMIC OUTPACES COST INCREASE SIGNIFICANTLY 450M PLN 150% 409 145% 394 140% 400 386 135% 130% 340 125% 350 120% 314 115% 298 110% 300 105% 100% 95% 250 90% 85% 200 202 80% 190 191 200 182 75% 174 70% 61% 65% 56% 60% 150 55% 52% 51% 47% 55% 50% 45% 100 40% 35% 30% 50 25% 20% 15% 0 10% Q4 201
Slide 5: NIM - Alior remains among leaders on Polish market
NIM - ALIOR REMAINS AMONG LEADERS ON POLISH MARKET NIM FOR POLISH BANKS ALIOR NIM IN SELECTED PERIODS 4,5% 4,1% 3,8% 3,4% Q1 2013 4,1% 3,2% 2,6% 2,5% 2,2% 2% 2012 EOY 4,4% Q1 2012 4,3% Source: Millenium, BZWBK, BRE, Alior – Q1 2013 actual; rest of the banks analyst expectations Decreasing trend stil
Slide 6: Retail banking prominence does not hamper corporate business growth
RETAIL BANKING PROMINANCE DOES NOT HAMPER CORPORATE BUSINESS GROWTH REVENUE SPLIT LOAN BOOK SPLIT Treasury Other Factoring 1% business 4% Investment 2% loans 13% Business Customers Cash Loans 34% 30% RETAIL BOOK: 54% Retail Working CORPORATE BOOK; 46% Customers Capital 65% 27% MTG 21% Other retail 3
Slide 7: Fee income remains a significant stream of revenue
FEE INCOME REMAINS A SIGNIFICANT STREAM OF REVENUE Fee income split Insurance income split Brokerage Other Insurance 5% 1% stand alone 2% Insurance investment products 9% Transaction Insurance 35% 59% Life & job-loss insurance 89% Insurance income remains a dominant position of fee income. Accountin
Slide 8: Effective utilization of current infrastructure reflected in decreasing C/I ratio
EFFECTIVE UTILIZATION OF CURRENT INFRASTRUCTURE REFLECTED IN DECREASING C/I RATIO Q1 2013 C/I for selected Polish Banks Q1 2013 General and Admin Expenses Split 61% 61% Depreciation Taxes 57% 57% Other 9% 1% Incentive scheme 53% 51% 4% 50% 48% 48% 2% 44% 41% Banking Gurantee Fund 2% External service
Slide 9: Credit Risk
CREDIT RISK Q1 2013 NPL* 7,4% 6,6% 6,5% 6,3% 6,4% 5,9% 5,6% 4,0% 3,5% 1,2% 1,0% 0,6% TOTAL MTG Retail Corporate Q1 2013 2012 EOY Q1 2012 Q1 2013 coverage ratio 80% 73% 68% 70% 66% 60% 59% 54% 51% 29% 20% 20% TOTAL MTG Retail Corporate Q1 2013 2012 EOY Q1 2012 *Excluding NPL exposures where no provis
Slide 10: Market risk – low risk appetite
MARKET RISK – LOW RISK APPETITE Market risk mgmt key assumptions • No proprietary trading • No dependency on whole-sale funding • All clients trades in FX and commodities are closed instantly • Zero position in commodities • Stress test on FX rates: Max loss = 250 t PLN • Stress test on interest rat
Slide 11: Alior's capital utilized effectively
ALIOR’S CAPITAL UTILIZED EFFECTIVELY 25,0% 10,0% 9,0% 19,8%* 20,0% 18,7% 8,0% 15,8% 7,0% 15,0% 6,0% 5,0% 10,0% 4,0% 3,0% 5,0% 1,8% 2,0% 1,7% 1,4% 1,0% 0,0% 0,0% Q1 2012 2012 EOY Q1 2013 ROE ROA ROE decrease in Q1 related to 700m capital injection through IPO Slight downtick in ROA related to NIM pre
Slide 12: Current capital level enables further dynamic growth
CURRENT CAPITAL LEVEL ENABLES FURTHER DYNAMIC GROWTH Q1 2013 CAR for selected Polish banks 22% 19% 18% 15% 15% 15% 14% PEO BRE Handlowy PKO Alior Millenium BZ WBK Source: Millenium, BZWBK, BRE, Alior – Q1 2013 actual; rest of the banks analyst expectations Alior Tier 1: 13% 12
Slide 13: Alior's growth strategy works: increasing market share
ALIOR’S GROWTH STRATEGY WORKS: INCREASING MARKET SHARE Polish Banking Sector Polish Banking Sector 1 000 CREDITS (BLN PLN) DEPOSITS (BLN PLN) 930 800 730 600 530 400 330 130 200 Total Households Enterprices Companies Total Households Enterprices Companies DEPOSITS GROWTH 2012 LOANS GROWTH 2012 Total
Slide 14: Alior remains focused on innovation
ALIOR REMAINS FOCUSED ON INNOVATION Smart account (Konto Rozsądne) – a new current account with a 5% money back on grocery shopping – the customer can save up to 50 PLN per month and 400 PLN per year. Moreover, the account offers free ATM withdrawals worldwide and free internet transfers. The accoun
Slide 15: Customer acquisition on track – no signs of slowing down
CUSTOMER ACQUISITION ON TRACK – NO SIGNS OF SLOWING DOWN 1 589 1 487 108 104 1 079 89 1 383 1 481 990 Q1 2012 2012 EOY Q1 2013 Retail Corporate 15
Slide 16: Distribution network
DISTRIBUTION NETWORK Alior Express 750 759 100 109 528 Agency 16 441 441 304 Branch 208 209 209 Q1 2012 2012 EOY Q1 2013 16 Branches Agencies Alior Express
Slide 17: Strong brand recognition
STRONG BRAND RECOGNITION Unaided awareness Aided awareness TV communication awareness 17 Source: Millward Brown, March 2013
Slide 18: Strategic initiatives
STRATEGIC INITIATIVES Consumer Finance – started in March 2012 Gaining a strong footprint in over 570 location of major retailers (e.g. Euro RTV AGD, Mediaexpert, Avans, Agata Meble) Ever increasing presence online (Allegro, PayU, Neo24.pl) Alior Bank Express mini branches 109 new mini bra
Slide 19: 2013 Outlook
2013 OUTLOOK • Alior: further 0.25% rate cut FRA: 0,1% Macro • Unemployment still a factor • Real construction sector still challenged • Stable FX Carlo Tassara • Sell down 34% still no traction Regulator • Regulation T (retail easing) starts July 2013 • Insurance periodization: Alior compliant wi
Slide 20: Back up
ALIOR BACK UP 20
Slide 21: Polish macro outlook
Polish macro outlook GDP growth (% yoy) Investments and private consumption (% yoy) 11 4,30 9,0 3,90 9 7 Private Investments 2,90 5 consumption 4,1 3,2 2,00 2,1 2,5 3 2,5 1,60 1,60 1,0 0,5 1 -1 -0,4 0,6 -1,0 -1,2 -3 2009 2010 2011 2012 2013F 2014F 2009 2010 2011 2012 2013F 2014F Annual average Annua
Slide 22: Polish macro outlook
Polish macro outlook NBP referance rate (%) WIBOR 3M (%) 4,50 4,99 4,25 4,00 4,27 4,20 4,11 3,50 3,50 3,95 3,25 3,50 2009 2010 2011 2012 2013F 2014F 2009 2010 2011 2012 2013F 2014F End of period End of period FX rate (EUR/PLN) Fiscal policy (% of GDP) 20 60 4,46 Public debt 56,4 18 55,6 55,5 55,2 54
Slide 23: Polish market – loans and deposits
Polish market – loans and deposits Loans to households (bln PLN) Loans to corporations (bln PLN) 542 262 540 538 537 259 536 258 257 528 253 253 gru 11 mar 12 cze 12 wrz 12 gru 12 mar 13 gru 11 mar 12 cze 12 wrz 12 gru 12 mar 13 End of period End of period Deposits from households (bln PLN) Deposits
Slide 24: Pension funds' impact on Polish capital market
PENSION FUNDS’ IMPACT ON POLISH CAPITAL MARKET Key facts*: Pension funds aggregated stock portfolio in March 2013 : PLN 103.2bn. Funds’ stock portfolio accounted for 20.1% of the domestic market capitalization and nearly 42.3% of the domestic free float. Number of listed companies where Funds
Slide 25: Income statement snapshot
INCOME STATEMENT SNAPSHOT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 Interest income 109 221 347 494 161 352 576 851 270 310 340 364 355 Interest expense -46 -87 -132 -189 -60 -132 -219 -356 -118 -139 -146 -171 -155 Net interest income 63
Slide 26: Balance sheet snapshot
BALANCE SHEET SNAPSHOT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 Cash and balances with 224 239 327 476 397 372 347 449 582 592 702 1 030 729 Central Bank Financial assets held for 31 78 109 118 142 157 382 312 187 205 174 174 215 trading
Slide 27: Alior vs. market expectations
ALIOR VS. MARKET EXPECTATIONS BZ M PLN Actual Average UCI ESI JPM Citi MS WBK Net interest income 200,2 199,9 199,4 191,0 202,0 207,0 192,0 Net fee and commission 137,9 131,8 147,0 121,0 128,0 131,0 154,0 income Trading result 48,9 51,7 51,0 47,0 0,0 57,0 0,0 Net gain (Realized) on 1,4 other financi
Slide 28: Alior is comfortably positioned for the difficulties in the Polish construction sector
Alior is comfortably positioned for the difficulties in the Polish construction sector Total exposure to construction sector (1) Construction sector coverage Q1 2013 As of end of March 2013, construction sector accounted for 18% of total corporate loan book balance sheet Limited exposure Off balan
Slide 29: Shareholding structure
SHAREHOLDING STRUCTURE Alior Lux S.a r. l. & Co. S.C.A. and Alior Sp. z o.o. 36% Other shareholders 49% Genesis Asset Managers, LLP 6% European Bank for Reconstruction and Development 9% 105 managers of Alior Bank hold via LuxCo82 indirectly 2 414 118 shares and will receive 1 299 909 shares latest
Slide 30: Management
MANAGEMENT Management Board (CEO/ Wojciech Krzysztof Artur Michał Katarzyna Deputy CEOs) Witold Sobieraj Czuba Niels Maliszewski Skrok Hucał Sułkowska Lundorff Development Retail Banking Finance Risk and Corporate Finance Division Credit Risk CEO Division CF Banking Division Division Division Bankin
Slide 31: Employees
EMPLOYEES 4 873 5 049 4 216 1 748 1 745 1 581 3 128 3 301 2 635 Q1 2012 2012 EOY Q1 2013 Branches HQ 31
Slide 32: Distribution Network - branches
Distribution Network - branches Basic Facts: Ownership: Alior Bank Sqm avg: ~250 Avg # of employees: 11 Full product offering for retail and coporate clients Location: 90 largest cities # of branches: 209 32
Slide 33: Distribution Network - agencies
Distribution Network - agencies Basic Facts: Ownership: franchisee Sqm avg: ~50 Avg # of employees: 2 Profit split equally between bank and agent No credit competencies in agencies all done centrally by the bank Location: small towns # of agencies: 441 33
Slide 34: Distribution Network – Alior express
Distribution Network – Alior express Basic Facts: Ownership: Alior Bank Sqm avg: ~50 Avg # of employees: 5-6 (2 shifts) Simplified offering - 5 main products: Payments Current account Cash loan Term Deposits Investment insurance Location: convenient shopping malls 34 # of outlets: 109
Slide 35: Alior: The future of banking
Alior: The future of banking Why we started Alior The opportunity The concept 14 MM 4 MM Households(1) Companies(1) Top quality bank in Poland Superior Effective brand concept offering at a Entrepreneurial Bowler-hat bankers fair price society Significant client retention Technology centre
Slide 36: Alior: The future of banking delivered today
Alior: The future of banking delivered today The delivery (2009-9M 2012) Broad 1.4 million clients and #1 bank by new client acquisition (1) Overdelivery on financial targets platform #3 physical distribution network (5) and top 5 Internet Bank (6) (10) Versatile and advanced IT platform provi
Slide 37: A well-established banking platform designed for efficient growth
A well-established banking platform designed for efficient growth Strong, entrepreneurial management team with a proven track record of 1 achieving growth and profitability targets Attractive banking proposal based on quality of service, innovative technology- 2 based products, and strong brand 3 Mo
Slide 38: Excellent middleware layer gives ability for fast implementation
EXCELLENT MIDDLEWARE LAYER GIVES ABILITY FOR FAST IMPLEMENTATION Overview Core IT system structure Over 700 services implemented on middleware for financial and non-financial transaction, clients’ requests, back-office and integration of the flow Solution based on Jboss application server If n
Slide 39: Scalable IT platform and highly qualified engineers providing a competitive advantage
SCALABLE IT PLATFORM AND HIGHLY QUALIFIED ENGINEERS PROVIDING A COMPETITIVE ADVANTAGE Key IT aspects Case studies Cost efficient IT setup comparing to other competitors HSBC’s portfolio integration Cost advantage No any legacy systems Alior Sync vs. “new mBank” 15 June 15 September 24 October
Slide 40: 2012 Product development
2012 PRODUCT DEVELOPMENT Dual currency own issue Kill Bill 2 investement certificates Stand-alone life and World Business Credit Card property insurance for Retail Cash Loan w/ Loans for business clients with EU grants guaranteed lowest rate Loan products for Alior Sync Cash loan for Allegro Dedicat
Slide 41: Full Basel II compliant
FULL BASEL II COMPLIANT Capital Adequacy Capital 15 208 17,00% 1% 128 878 18% 16% 15,08% requirements 10% 14% 12,11% 12% 14,54% 12,93% 10% 8,93% 8% 6% 1 141 829 4% 89% 2% 0% IN THOUS. PLN 31.03.2012 31.12.2012 31.03.2013 Adequacy ratio Tier 1 Credit risk Market risk Operational risk Capital requriem
Slide 42: Contact details
Contact details Please direct all inquiries to: relacje.inwestorskie@alior.pl +48 22 417 3860 IR unit head: Piotr Bystrzanowski piotr.bystrzanowski@alior.pl 42
Slide 43: Disclaimer
DISCLAIMER This document has been prepared by Alior Bank S.A. (the “Bank”) solely for use at the Presentation. Any forward looking statements concerning future economic and financial performance of the Company contained in this Presentation are based on Financial Statement of the Bank for Q1 2013. B