Alior Bank Sa · GPW:ALR

Alior Bank Sa — H1 2018 Earnings Presentation

36 slides from Alior Bank Sa's earnings presentation, Aug 9, 2018

  1. Slide 1: Alior Bank S.A. 1H'2018 Results Presentation

    ALIOR BANK S.A. 1H’2018 RESULTS PRESENTATION 9 August 2018

  2. Slide 2: Agenda

    AGENDA KEY HIGHLIGHTS OPERATIONAL PERFORMANCE 2018 GUIDANCE APPENDIX 2

  3. Slide 3: Key Highlights (1/3)

    KEY HIGHLIGHTS (1/3) • Q2’18 net profit above market expectations – PLN 196 M (vs. PAP consensus: PLN 189 M). Growth of PLN 31 M qoq*. Net profit yoy dynamics of +96%. • ROE at the level of 12.6% (150 bps increase vs. Q1’18*). • 6% increase of operational revenue qoq primarily due to NII improvement

  4. Slide 4: Key Highlights (2/3)

    KEY HIGHLIGHTS (2/3) • CoR decrease to the level of 1.7% (vs. 1.8% in Q1’17) • Capital adequacy ratios significantly higher than assumed in the strategy: Tier 1 of 12.20% and TCR of 15.43%. • Gross loan book growth 1H’18 of PLN 3 B, of which PLN 1.5 B in Q2’18. • New client acquisition amounted to 1

  5. Slide 5: Key Highlights (3/3)

    KEY HIGHLIGHTS (3/3) New product offering development in line with Digital Disruptor Strategy: • Retail clients: • New savings account „Konto Mocno Oszczędnościowe” (PLN 2 B new deposits and 43 thousand accounts in Q2’18) • Apple Pay (77 thousand transactions amounting to PLN 3.1 M since launch in m

  6. Slide 6: Q2'18 Bottom Line Decomposition (in PLN M)

    Q2’18 BOTTOM LINE DECOMPOSITION (IN PLN M) QTD in PLN M 1 025 Other income 49 Trading result 108 NFC 105 430 269 763 NII 53 77 16 212 196 Total revenues General Net Bank tax FV amortization Net profit excl. Income tax Net profit administrative impairment after tax FV amortization expenses 6

  7. Slide 7: Loan Portfolio Structure Development on Track to Achieve Strategic Targets

    LOAN PORTFOLIO STRUCTURE DEVELOPMENT ON TRACK TO ACHIEVE STRATEGIC TARGETS GROSS LOAN BOOK COMPOSITION [%] Cash loans 31 30 29 28 RETAIL SEGMENT Mortgage loans 20 20 20 20 7 6 5 Other 7 11 16 15 Large 15 7 BUSINESS 8 9 7 SEGMENT Medium 11 7 7 Small 13 7 9 10 Micro 8 8 Leasing 1 3 5 2016 2017 Q2’18 2

  8. Slide 8: Alior Bank Among Leaders in Cash Loan Sale

    ALIOR BANK AMONG LEADERS IN CASH LOAN SALE... NEW SALES OF CASH LOANS [PLN B] 1.8 1.7 1.6 Q4’17 Q1’18 Q2’18 Over 90% of loan volume in Q2’18 sold in either own branches or agencies 8

  9. Slide 9: Improving Credit Quality and Drop of Cost of Risk

    … CONCURRENTLY IMPROVING CREDIT QUALITY THAT RESULTS IN THE DROP OF PORTFOLIO COST OF RISK 5,0% 68% 69% 69% 70% 67% 4,0% 65% 4,0% 3.3% 60% 3,0% 2.6% 2.7% 2.5% 55% 1.9% 1.8% 2,0% 1.7% 1.7% 1.7% 50% 1,0% 45% 0,0% 40% 2016 2017 Q1’18 Q2’18 2020 target Cash loan CoR Group CoR ratio Loan CoR ratio Loan C

  10. Slide 10: Further Growth of Loan Volumes in Micro and Leasing Segments

    FURTHER GROWTH OF LOAN VOLUMES IN MICRO AND LEASING SEGMENTS LOAN BOOK – MICRO NEW SALE – MICRO* [IN PLN B] [IN PLN M] +4.7% 5.5 5.7 5.2 736 737 31.12.2017 31.03.2018 30.06.2018 Q1’18 Q2’18 LEASING LIABILITIES* NEW SALE – [IN PLN B] LEASING [IN PLN M] +29% 2.7 2.1 +28% 776 1.7 605 31.12.2017 31.03.2

  11. Slide 11: Digital Disruptor - Modern Offer and Processes for Retail Clients

    DIGITAL DISRUPTOR - FURTHER DEVELOPMENT OF A MODERN OFFER AND PROCESSES FOR RETAIL CLIENTS Cash loan New „Mocno Oszczędnościowe” account • Increase in sales volumes of • 2 billion new funds in Q2'18 pre-approved offers by 189% (Q2 vs. Q1) supported • 43 thousand accounts, including by the implementa

  12. Slide 12: Digital Disruptor - Modern Offer and Processes for Business Clients

    DIGITAL DISRUPTOR - FURTHER DEVELOPMENT OF A MODERN OFFER AND PROCESSES FOR BUSINESS CLIENTS Enrichment of the offer for Mechanism of split payment Business Clients • Zafirmowani.pl enriched Number of clients • The Bank implemented the product and integrated with services infrastructure to support t

  13. Slide 13: Agenda

    AGENDA KEY HIGHLIGHTS OPERATIONAL PERFORMANCE 2018 GUIDANCE APPENDIX 13

  14. Slide 14: Key Financials – P&L

    KEY FINANCIALS – P&L PLN M Q2 2018 Q1 2018 ch. qoq. (%) ch. qoq. (PLN M) Total revenue 1 025 969 5.7 55 General administrative expenses -430 -456 -5.7 26 Impairment losses & provisions -269 -241 11.7 -28 Bank tax -53 -50 6.3 -3 Profit before tax 273 223 22.5 50 Income tax -77 -58 32.4 -19 Net profit

  15. Slide 15: Key Financials – Volumes and Ratios

    KEY FINANCIALS – VOLUMES AND RATIOS PLN M 30.06.2018 31.12.2017 change (PLN M) change (%) Loans 52 674 51 267 1 408 2.7 Deposits 59 645 57 657 1 988 3.4 Total equity 6 336 6 691 -355 -5.3 Total assets 70 538 69 516 1 022 1.5 % quarterly Q2 2018 Q1 2018 ch. qoq. (p.p.) ch. qoq. (%) ROE 12.6 11.1 1.5

  16. Slide 16: Capital Position

    CAPITAL POSITION TIER 1 TCR 15.42% 15.43% Regulatory Regulatory 12.09% 12.20% minimum minimum 13.13% 11.13% 31.03.2018 30.06.2018 31.03.2018 30.06.2018 The current level of capital ratios The current capital plan TIER1 and TCR ratios leaves a The level of capital ratios assumes reaching TIER1 and co

  17. Slide 17: Deposits – Current Accounts and Term Deposits Structure

    DEPOSITS – CURRENT ACCOUNTS AND TERM DEPOSITS STRUCTURE (IN PLN B) BANK: L/D = 88.3% +1.1 (+3%) Retail L/D = 71.6% 38.2 39.3 14.0 14.7 14.1 22.6 23.4 25.1 Term deposits, securities issued, other 31.12.2017 31.03.2018 30.06.2018 Current deposits -0.5 (-2%) Business 20.9 20.4 L/D = 115.1% 11.6 12.3 11

  18. Slide 18: Stabilization of Liquidity Position Allows for NIM Improvement

    STABILIZATION OF LIQUIDITY POSITION ALLOWES FOR NIM IMPROVEMENT LCR RATIO Required 130% 127% level 100% 124% 31.12.2017 31.03.2018 30.06.2018 COST OF FINANCING* [%] 1.22 1.22 1.20 1.15 Q3’17 Q4’17 Q1’18 Q2’18 All data presented on a quarterly basis. *Cost of financing; interest expense excl. cost of

  19. Slide 19: Profitability

    PROFITABILITY NIM (YTD)* 4.8% 4.7% 4.6% 4.5% 4.6% Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 CoR -1.8% -1.7% -1.7% -1.8% -1.7 (YTD) NIM – CoR 3.0% 3.0% 2.9% 2.8% 2.8% (YTD) Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 *2017 data not restated 19

  20. Slide 20: Fees and Commission Breakdown (in PLN M)

    FEES AND COMMISSION BREAKDOWN (IN PLN M) -3.3 (-3.1%) NET F&C 109 105 +3.6 (+1.8%) Increases in fee and commission income 200 due to growth related F&C INCOME 196 to cards and loans 20.9 15.3 bancassurance 56.7 62.4 payment and credit cards servicing 20.1 19.3 brokerage fees Higher commission fees r

  21. Slide 21: Key Credit Risk Ratios

    KEY CREDIT RISK RATIOS Market average* NPL TOTAL +0.2 -0.1 13.3% 13.5% 0.0 11.5% 11.4% 9.7 11.8 2.9 2.4% 2.4% Mar’18 Jun’18 Mar’18 Jun’18 Mar’18 Jun’18 BUSINESS RETAIL MORTGAGE NPL COVERAGE RATIO 67.9% 68.6% 42.5% 41.1% 66 36.4% 35.7% 57 53 Mar’18 Jun’18 Mar’18 Jun’18 Mar’18 Jun’18 Loan portfolio st

  22. Slide 22: Agenda

    AGENDA KEY HIGHLIGHTS OPERATIONAL PERFORMANCE 2018 GUIDANCE APPENDIX 22

  23. Slide 23: 2018 Guidance

    2018 GUIDANCE 1H’18 ACTUAL 2018 GUIDANCE NIM 4.6% 4.6% net interest margin C/I* 44.4% 44% cost/income CoR 1.7% 1.8% cost of risk Gross loan book PLN 3.0 B PLN 5.5-6.5 B growth** *Cost/Income ratio: numerator – costs (excl. banking tax), denominator – revenue (NII, NFC, trading and other) **Gross vol

  24. Slide 24: Agenda

    AGENDA KEY HIGHLIGHTS OPERATIONAL PERFORMANCE 2018 GUIDANCE APPENDIX 24

  25. Slide 25: Polish Macro Outlook

    POLISH MACRO OUTLOOK GDP GROWTH (% YOY) INFLATION (CPI % YOY) 2.0 1.7 4.6 4.7 3.8 3.3 2.9 0.0 -0.6 -0.9 2014 2015 2016 2017 2018F 2014 2015 2016 2017 2018F year average NBP REFERENCE RATE (%) UNEMPLOYMENT RATE (%) 11.4 9.7 8.2 6.6 5.8 2.0 1.5 1.5 1.5 1.5 2014 2015 2016 2017 2018F end of period 2014

  26. Slide 26: Income Statement Snapshot

    INCOME STATEMENT SNAPSHOT in PLN M Q2’18 Q1’18 Interest income* 991 948 Interest expense -228 -210 Net interest income 763 737 Fee and commission income 200 196 Fee and commission expense -94 -87 Net fee and commission income 105 109 Net gain (realized) on other financial instruments 108 78 Net gain

  27. Slide 27: Balance Sheet Snapshot

    BALANCE SHEET SNAPSHOT in PLN M 30 Jun’18 31 Dec’17 Cash and balances with the Central Bank 1 480 965 Financial assets 12 881 13 643 Derivative hedging instruments 72 88 Amounts due from banks 743 902 Loans and advances to customers 52 674 51 267 Assets pledged as collateral 336 409 Property, plant

  28. Slide 28: New Loans Sales

    NEW LOANS SALES RETAIL LOANS (NEW SALES PER QUARTER) Other retail 2 819 2 720 2 994 2 832 2 878 Mortgages 52 37 35 39 49 Cash loans 301 351 363 491 331 2 277 2 353 2 658 2 441 2 466 06.2017 09.2017 12.2017 03.2018 06.2018 CORPORATE LOANS (NEW SALES PER QUARTER) Other corporate 4 649 4 477 4 327 Inve

  29. Slide 29: Alior Bank Shareholding

    ALIOR BANK SHAREHOLDING LARGEST FREE FLOAT AMONG POLISH FINANCIAL INSTITUTIONS PZU SA, PZU Życie SA and PZU SFIO UNIVERSUM 31.92% Other shareholders 49.32% 7.25% 5.85% AVIVA OFE, AVIVA BZ WBK 5.66% Nationale-Nederlanden OFE BlackRock Inc. 29 *based on the number of shares registered on AGM held on 2

  30. Slide 30: Alior Share Price Performance in 1H'18

    Share price [PLN] 70 0 20 30 50 60 90 40 80 100 10 03.01.2018 09.01.2018 15.01.2018 19.01.2018 25.01.2018 31.01.2018 06.02.2018 12.02.2018 16.02.2018 22.02.2018 28.02.2018 06.03.2018 ALIOR 12.03.2018 turnover 16.03.2018 - Obrót 22.03.2018 28.03.2018 05.04.2018 11.04.2018 ALIOR SHARE PRICE PERFORMANC

  31. Slide 31: Alior Bank Customer Base (in T)

    ALIOR BANK CUSTOMER BASE (IN T) +1.3% 3 928 3 980 4 071 4 125 3 834 Q2’17 Q3’17 Q4’17 Q1’17 Q2’18 31 *In Q3’17 Alior Bank terminated 156 thousand inactive accounts.

  32. Slide 32: FTE Evolution

    FTE EVOLUTION -15.4% +0.3% Increase due to conversion of civil contracts into employment contracts. 9 488 8 556 8 110 8 004 8 027 7 827 Q2’17 Q3’17 Q4’17 Q1’17 Q2’18 32

  33. Slide 33: Alior Bank Branches

    ALIOR BANK BRANCHES NUMBER OF BRANCHES 960 914 905 883 874 Branches 284 269 267 253 244 Agencies 676 645 638 630 630 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 33

  34. Slide 34: 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 Bank contained in this Presentation are based on the consolidated financial statements of the Alio

  35. Slide 35: 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 35

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