MONETA Money Bank AS · PSECZ:MONET
MONETA Money Bank AS — Investor Presentation (September 2017)
63 slides from MONETA Money Bank AS's investor presentation, September 2017
Slide 1: Investor Presentation
Investor Presentation September 2017
Slide 2: Road to MONETA Money Bank
Road to MONETA Money Bank Twenty years of presence on the market IPO and rebranding to MONETA Money Bank MONETA Auto MONETA Leasing 2016 Acquired part of 2014 Agrobanka 2005 Acquired Multiservis Acquired VB Leasing 1998 1997 Rebranded to GE Money Bank and Acquired GE Money Auto IMP Leasing 2
Slide 3: Company snapshot
Company snapshot Highlights Financial Metrics in CZK in USD MONETA Money Bank is a leading retail and FY 2015 FY 2016 1H’17 FY 2015 FY 2016 1H’17 expanding small business bank in the Czech Republic with a well-established position in consumer finance Net Customer Loans 108.4bn 111.9bn 117.5bn 4.72bn
Slide 4: 2017 Target Financial KPIs
2017 Target Financial KPIs Metrics 2016 1H 2017 2017 Target Return on Equity 15.3% 19.1% ~ 14% Profit CZK 4.1bn CZK 2.2bn ~ CZK 3.65bn1 Cost to Income 45.1% 43.3% upper mid 40s Cost Base CZK 5.1bn CZK 2.3bn ~ CZK 4.8bn2 Cost of Risk 93bps 46bps 60-70bps1 NPL Ratio 6.3% 5.0% < 6% NPL Coverage 82.5% 8
Slide 5: MONETA's investment thesis
MONETA’s investment thesis Targeting “return to growth“ and stabilization of revenues by 2019 while delivering solid mid-term dividend returns 1 Attractive Macro Environment and Profitable Banking Sector 2 Clearly Defined Strategy and Strong Business Model 3 Sustainable Risk Management 4 “Fortress“
Slide 6: Attractive Macro Environment and Profitable Banking Sector
1 Attractive Macro Environment and Profitable Banking Sector 6
Slide 7: Macroeconomic environment
1 Macroeconomic environment Solid macroeconomic environment initiates interest rate increase cycle on basis of growth and increasing inflation CNB increased the two-week repo rate by 20 bps from Strong GDP Outlook Key Macroeconomic Indicators2 4 Aug’173 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 5.4% 1Q’17
Slide 8: Solid Czech banking sector
1 Solid Czech banking sector Banking sector characterized by strong liquidity, capitalization and solid “through the cycle“ profitability Country with Favourable Economic Outlook Supported by Strong Liquidity 2015 2016 2017F1 2018F1 Positive 75.4% GDP Growth 5.4% 2.5% 3.6% 3.2% Unemployment 6.5% 5.5
Slide 9: Overview of retail consumer market dynamics
1 Overview of retail consumer market dynamics Return to growth in consumer loans market, new volume pricing under pressure as competition significantly intensifies Consumer loans portfolio balances and new volume pricing1 in CZK bn Market New Volume Price 12.7% 12.4% 12.0% 11.4% 10.8% 10.6% 10.2% 9.
Slide 10: Clearly Defined Strategy and Strong Business Model
2 Clearly Defined Strategy and Strong Business Model 10
Slide 11: MONETA's strategy
2 MONETA’s strategy Targeting reinforcement of retail presence and development of small business lending franchise, strongly supported through digital distribution platform Develop digital capabilities to become digital leader Digital Capabilities Strong focus on prudent and sustainable risk managem
Slide 12: Digital roadmap
2 Digital roadmap Building our digital sales servicing and marketing capabilities Areas 2017 2018 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Lab 1 Entrepreneur C/A SME C/A and SME C/A and AutoLending Auto Lending Platform Platform Investments- online Investments - online Client Retail C/A and Retail C/A ongoing Empowerme
Slide 13: Strong business model
2 Strong business model Strong and profitable position in consumer lending, small business and agriculture segments differentiates MONETA from competitors Net loans and receivables to customers 93% Focus on small business and agriculture 73% 74% 77% 104% 91% Auto & 13% segments Leasing 1 6% 8% 3% 1%
Slide 14: Balanced retail & SME business portfolios
2 Balanced retail & SME business portfolios MONETA commands strong platform designed to serve target segments of retail and SME’s customers Retail Commercial Serving ~ 90 thousand customers and focusing on small business lending Serving ~ 1m customers ~ 9%1 of Czech population and SMEs, with presenc
Slide 15: Successful MONETA brand build up post IPO
2 Successful MONETA brand build up post IPO The platform is supported by loyal and satisfied customer base, new brand receiving solid market acceptance and growing awareness Retail Net Promoter Score1 differentiates the Bank from others Increasing spontaneous brand awareness4 of MONETA 49% MONETA 28
Slide 16: Underpinned by a broad brick and mortar network
2 Underpinned by a broad brick and mortar network Historically strong footprint, namely in small cities, supported by call centre capabilities and solid level of efficiency Broad and Balanced Geographic Reach… …with Enhanced Access to Customers in Smaller Towns North Prague (34) Bohemia (30) Approx.
Slide 17: Digital transformation initiated in November 2016
2 Digital transformation initiated in November 2016 Smart Banka awarded best mobile application, digital current account introduced and on-line lending capabilities releases planned for 2H 2017 Digital transformation progress Increasing digital banking penetration3 ths 6,553 6,543 6,672 Smart Banka
Slide 18: Sustainable Risk Management
3 Sustainable Risk Management 18
Slide 19: Balanced retail and commercial portfolios
3 Balanced retail and commercial portfolios MONETA’s lending franchise is equally distributed across retail and commercial Retail Net Loan Portfolio Commercial Net Loan Portfolio Other Loans1 Unsecured Instalment Inventory Financing 4% Loans & Overdrafts & Other 2% 4% Auto & Mortgage equipment 31 %
Slide 20: Targeted improvement in asset quality post IPO
3 Targeted improvement in asset quality post IPO Supported by benign macroeconomic environment, NPL monetization and maintenance of rigorous underwriting standards across segments and products Well Provisioned and Decreasing NPL Portfolio… …with low Cost of Risk Total NPL Coverage 1 83.8% 2.56% 83.0
Slide 21: "Fortress" Balance Sheet
4 “Fortress“ Balance Sheet 21
Slide 22: Balance sheet fundamentals
4 Balance sheet fundamentals Self-funded with solid liquidity, low leverage and strong capital position to sustain growth and dividend policy Simple and transparent balance sheet CZK bn Market leader in cost of funds CZK bn 160.2 160.2 0.17% 0.15% Other Liquid Assets1 39.01 Cost of Funds 2% 6% Other
Slide 23: Accelerating growth in lending and funding
4 Accelarating growth in lending and funding Maintaining and growing both lending and deposit taking activities in balanced manner across both retail and SME segments Loans Portfolio Evolution1 CZK bn Customer Deposits Portfolio Evolution CZK bn Acquisition of VB Leasing (CZK 11.9bn loans as of 111%
Slide 24: Capital management
4 Capital management Targeting to distribute excess capital through 2017 and 2018 dividends to enhance shareholder returns until growth stabilizes top line Anticipated consumption of excess capital in Evolution of excess capital in 1H’17 CZK m 18 months1 CZK 343m one-off gain from bond sale included
Slide 25: Attractive Profitability
5 Attractive Profitability 25
Slide 26: Delivering high returns with strong capitalization
5 Delivering high returns with strong capitalization Seeking revenue stabilisation by the end of 2019 on basis of balanced and sustainable growth Strong track record of delivering high returns … … with solid capitalization … … allowing for solid dividends with potential earnings uplift Excess capita
Slide 27: Dedicated and Experienced Management Team
6 Dedicated and Experienced Management Team 27
Slide 28: Experienced and international management team
6 Experienced and international management team International management team with strong expertise and high level of aspiration to deliver strategic objectives Management Board of MONETA Money Bank Years in Fin Years at Track record of success Services MONETA1/GE Tomáš Spurný – Chief Executive Offi
Slide 29: 1H 2017 Financial Performance Disclosure
1H 2017 Financial Performance Disclosure 29
Slide 30: 1H 2017 business performance
1H 2017 business performance Delivered consolidated net profit of CZK 2.2bn, RoTE of 19.1% 8.9% YoY increase in gross performing loan portfolio1, affirming commitment of “high single digit growth” 8.1% YoY growth in retail net performing loans, driven by mortgage2 (net loans up 17.5% YoY) and net co
Slide 31: Gross loan portfolio development
Gross loan portfolio development Strong balance growth despite continued early repayments pressure Gross loans and receivables to customers CZK bn Underlying client base stable Nr. of customers, ths Total Retail Commercial 1,064 36 1,039 (37) (23) Balance 31 Dec '16 118.0 59.3 58.7 482 447 New Volum
Slide 32: Net loan portfolio development
Net loan portfolio development Strong portfolio growth equally distributed across both segments Total retail loans new volume1 CZK bn Total commercial loans new volume1 CZK bn 18.3 YTD +42.9% 10.1 +37.0% 10.0 YTD 12.8 YTD 8.3 5.8 5.7 6.8 7.3 YTD 6.0 6.4 6.2 4.0 4.2 4.0 3.3 1Q'16 2Q'16 3Q'16 4Q'16 1Q
Slide 33: Net retail loan portfolio development
Net retail loan portfolio development Accelerating growth across all instalment lending products Unsecured retail loan balance keeps growing CZK bn Continuing turnaround in mortgage book CZK bn +2.9% +17.5% 36.6 36.9 36.8 37.1 37.7 17.7 16.5 4.3 4.1 15.1 15.3 15.6 4.7 4.7 4.6 31.9 32.2 32.3 32.8 33.
Slide 34: Consumer loans production and balance attrition
Consumer loans production and balance attrition Continued growth in loan production and success in reducing early repayments New consumer loans production CZK bn External loan balance attrition1 CZK bn 2.1 YTD (12.1)% 14.4 YTD 1.15 1.9 YTD 1.11 +28.2% 1.01 7.87 0.97 0.96 11.2 YTD 0.91 6.53 5.42 5.82
Slide 35: Small business loan expansion
Small business loan expansion Deployment of dedicated sales force drives strong results Small Business instalment lending balance CZK bn Small Business overdraft draw-downs1 CZK bn (1.2)%2 +46.6% 1.66 1.60 Unsecured Overdraft 1.48 1.46 1.51 1.52 1.37 Total Limit 1.15 1.21 1.13 Unsecured Instalment 1
Slide 36: Net commercial loan portfolio development
Net commercial loan portfolio development Selective real estate financing and investment lending to SMEs drives growth Investment loans portfolio balance CZK bn Auto & equipment loans & leases balance1 CZK bn +20.4% (7.4)% 33.5 31.4 31.6 16.2 Inventory 29.1 15.6 15.4 15.2 15.0 27.8 7.0 0.7 Financing
Slide 37: Margins evolution
Margins evolution Experiencing continued margin erosion with signs of stability in commercial segment Loan Portfolio Yield Net Interest Income1 CZK m 12.1% 6.3% 6.0% 5.8% 5.5% 5.1% 4.7% 11.6% 11.2% 10.7% 10.1% 9.4% 2,175 2,106 2,047 1,977 Retail 1,892 8.1% 7.9% 1,824 7.6% 7.2% 6.8% 6.4% Total Group
Slide 38: Net fees and commissions
Net fees and commissions Growth in sales of third party products reduces erosion of fee income Net Fee & Commission Income1 CZK m Highlights (7)% 7% YoY decline in net fees from CZK 988m to CZK 918m due to continuing decrease of servicing fees (down CZK 76m): 988 973 918 CZK 53m drop in deposit serv
Slide 39: Operating expenses
Operating expenses Managed flat costs against higher front-end employment, wage pressure and digitalization Operating Expenses1 CZK m Highlights 11.7% YoY increase in personnel expenses to CZK 1,174m: (1.7)% Retention reserve release impact in 2Q’16 (CZK 46m) 2,644 FTE´s increase (mainly front-end r
Slide 40: Cost of risk
Cost of risk Positive performance supported by benign economy and monetization of NPLs Net Impairments Evolution1 CZK m Highlights Positive macroeconomic environment persisted in 2Q’17 476 46bps total annualized Cost of Risk in 1H’17 41 Commercial CoR in 1H’17 influenced by several factors: Retail C
Slide 41: Overview of NPL development
Overview of NPL development NPL balance decreasing due to slightly lower NPL formation, stable cure rates and proactive NPL management Gross NPL Walk CZK m 1.9% of average performing receivables1 2,045 (2,359) 1.8% of average 1.6% of average performing receivables1 performing receivables1 (5,815) 1,
Slide 42: Gross receivables, NPL and coverage evolution
Gross receivables, NPL and coverage evolution Overall asset quality improves while conservative coverage is maintained Gross receivables breakdown CZK m NPL & coverage CZK m 6.9% 5.0% 80.4% 81.6% 122,533 114,727 7,894 Performing (21.7)% 6,181 1,783 +8.9% 1,347 106,833 116,352 6,111 4,834 7,894 6,181
Slide 43: Delivery Against Target & Outlook
Delivery Against Target & Outlook 43
Slide 44: 2017 guidance
2017 guidance1 Targeting to deliver consolidated net profit of CZK 3.65bn against guidance of CZK 3.4bn Metric 2017 Guidance1 Delivery1 Consolidated net profit > CZK 3.4bn CZK 2.2bn net profit, targeting CZK 3.65bn for the full year Reported RoTE of ~ 14% / Adjusted RoTE 19.1% Reported RoTE with Adj
Slide 45: Reporting dates and investor meetings
Reporting dates and investor meetings 3Q 2017 Earnings 9 November 2017 San Francisco Deutsche Bank Bank of America Merrill European Roadshow Wood & Co conference Roadshow conference Lynch conference San Francisco New York Europe London Prague 5 September 2017 6 – 7 September 2017 19 – 22 September 2
Slide 46: Appendix
Appendix MONEY BANK 4 MONETA
Slide 47: Annual General Meeting summary of results
Annual General Meeting summary of results Held on 24 April 2017 with quorum of 65.7% Approved Not approved Annual Separate Financial Statements of MONETA Money Recall of Mr. Denis Arthur Hall as Supervisory Board and Audit Bank, a.s. as at 31 December 2016 Committee member and instruction to recall
Slide 48: New branch and Digital Current Account
New branch and Digital Current Account New concept introduced Using new technologies Client provides Client selects the Client scans ID and Client accepts the Account open personal and contact payment method and driving license contract terms details transfers the money 48
Slide 49: Key financial information
Key financial information Key Balance Sheet Metrics Key P&L Metrics 1 CZKm 2014 2015 2016 1H’17 CZKm 2014 2015 2016 1H’17 1 Audited Audited Audited Restated4 Restated5 Assets P&L Cash and Cash Equivalents 11,746 15,475 20,235 33,099 Interest Income 9,670 9,522 8,494 3,813 Financial assets available
Slide 50: Consolidated statement of financial position (CZK)
Consolidated statement of financial position CZK denomination CZK m 30/06/2017 1 31/12/2016 Audited % Change Cash and balances with the central bank 33,099 20,235 63.6% Financial assets at fair value through profit or loss 35 26 34.6% Financial assets available for sale 5,340 13,749 (61.2%) Loans an
Slide 51: Consolidated statement of financial position (USD)
Consolidated statement of financial position USD denomination USD m 30/06/2017 1 31/12/2016 Audited % Change Cash and balances with the central bank 1,442.1 881.6 63.6% Financial assets at fair value through profit or loss 1.5 1.1 34.6% Financial assets available for sale 232.7 599.0 (61.2%) Loans a
Slide 52: Consolidated statement of profit or loss (CZK)
Consolidated statement of profit or loss and other comprehensive income1 CZK denomination CZK m 1H 2017 1H 20162 % Change Interest and similar income 3,813 4,376 (12.9%) Interest expense and similar charges (97) (95) 2.1% Net interest income 3,716 4,281 (13.2%) Fee and commission income 1,073 1,137
Slide 53: Consolidated statement of profit or loss (USD)
Consolidated statement of profit or loss and other comprehensive income1 USD denomination USD m 1H 2017 1H 20162 % Change Interest and similar income 166.1 190.7 (12.9%) Interest expense and similar charges (4.2) (4.1) 2.1% Net interest income 161.9 186.5 (13.2%) Fee and commission income 46.7 49.5
Slide 54: Key performance ratios
Key performance ratios 2016 2013 2014 2015 1H’17 Restated3 Profitability Yield (% Avg Net Loans) 10.3% 9.3% 8.7% 7.6% 6.6% Cost of Funds (% Avg Deposits) 0.6% 0.3% 0.2% 0.2% 0.2% NIM (% Avg Int Earning Assets) 7.5% 6.9% 6.7% 5.9% 4.9% Net Non-Interest Income / Operating Income (%) 27.6% 25.7% 23.1%
Slide 55: Shareholders' equity
Shareholders’ equity Equity and CET1 Breakdown CZK m Highlights 27,268 12% decline of shareholders’ equity as a result of: 23,992 (5,008) (974) (4) 2,195 20,819 (463) (2,195) CZK 5bn dividend distribution in Jun’17 21,266 Negative AFS reserve revaluation as a 18,453 result of bond sale (CZK 343m gai
Slide 56: Overview of CZK 2bn IPO mid-term budget
Overview of CZK 2bn IPO mid-term budget 12 months post-IPO MONETA has deployed 1/4 of budget across selected categories ATMs, Branches IT Separation CAPEX CZK m Digital CAPEX CZK m and other premises CAPEX CZK m Invested Invested 146 Card Invested 200 120 System1 263 ~600 ~600 ~800 480 137 654 Remai
Slide 57: Czech banking sector performance
Czech banking sector performance Strong market liquidity growth drives headwinds on pricing, profitability impacted by lower revenues Gross loans up 8% YoY CZK bn Deposits up 13% YoY CZK bn +8% +13% 2,554 2,552 2,639 2,693 3,512 3,571 2,487 3,165 3,215 3,207 Retail 1,193 1,221 1,251 1,272 1,302 1,73
Slide 58: Alternative performance measures
Alternative performance measures CZK million (unless otherwise indicated) 1H’17 2016 In this presentation, certain financial data and measures are presented which are not calculated pursuant to any accounting standard and which are therefore non-IFRS measures and alternative Reported Profit after ta
Slide 59: Glossary (1/2)
Glossary (1/2) Adjusted RoTE (at 15.5% CET1 Adjusted return on tangible equity is based on a management target CET1 Ratio of 15.5% CZK Czech Koruna Ratio) (an anticipated 14.5% required regulatory capital (including a 0.5% countercyclical buffer) Drawn limit Loans and receivables to customer balance
Slide 60: Glossary (2/2)
Glossary (2/2) Net Income/Net Profit Profit for the period after tax RWA density Ratio of RWA to total assets Net Interest Earning Assets Cash and balances with the central bank, financial assets at fair value through profit and loss, Small business loan balances Loans and receivables of unsecured i
Slide 61: Forward-looking statements
Forward-looking statements This presentation and subsequent discussion may contain projections, estimates, forecasts, targets, opinions, prospects, results, returns and forward-looking statements with respect to the 2017 financial guidance, profitability, costs, assets, capital position, financial c
Slide 62: Material assumptions for forward-looking statements
Material assumptions for forward-looking statements A number of economic, market, operational and regulatory assumptions were made by MONETA Money Bank, a.s., in preparing forward-looking statements (including the 2017 financial guidance) contained in this presentation, including, but not limited to
Slide 63: Disclaimer and other information
Disclaimer and other information THIS PRESENTATION IS NOT AN OFFER TO SELL OR A SOLICITATION OF OFFERS TO PURCHASE OR SUBSCRIBE FOR SHARES OF MONETA MONEY BANK, A.S. (THE “COMPANY”), OTHER SECURITIES OR OTHER FINANCIAL INSTRUMENTS. Copies of this presentation may not be sent to countries, or distrib
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