Alior Bank Sa · GPW:ALR
Alior Bank Sa — FY2019 Earnings Presentation
62 slides from Alior Bank Sa's earnings presentation, Feb 28, 2020
Slide 1: Alior Bank SA 2019 Annual Financial Performance
Alior Bank SA 2019 Annual Financial Performance Alior Bank S.A. | February 28th 2020 | Consolidated Group performance
Slide 2: Agenda
Agenda 1 Key highlights 2 Operational performance 3 Financial performance 4 Credit risk 5 2020 guidance 6 Appendix 2
Slide 3: Key highlights
Key highlights 3
Slide 4: Key financial issues
Key financial issues Net profit in 2019 of PLN 253 M (vs. PLN 713 M in 2018). Bottomline under pressure due to ECJ ruling regarding the reimbursement of costs in the event of early repayment of consumer loans (PLN -306 M impact on the net result) and credit risk costs in the Agro segment (PLN -345 M
Slide 5: 2019 key achievements
2019 key achievements Increase in the number of individual clients y/y by 117 T to the level of 4.15 M with a dynamically growing number of new ROR with a systematic inflow of funds (increase by 65% y/y). Dynamic increase in the number of clients in the Micro segment to over 192 T (vs. 159 T at the
Slide 6: Impact of the ECJ ruling on the Bank's performance
Impact of the ECJ ruling on the Bank’s performance The Management Board of the Bank decided to fully comply with the ECJ ruling regarding the consumer's right to reduce the total cost of credit in the event of its early repayment and the application (starting from 11/09/2019) of the principles resul
Slide 7: Actions taken to improve profitability of cash loan portfolio give results
Actions taken to improve profitability of cash loan portfolio give results Distribution model Product changes New CRM strategy improvement • Commission convertion into • New models implementation • Excluding internal consolidation interest rate. increasing sales in a simplified from remuneration sys
Slide 8: 2019 financial results (PLN M)
2019 financial results (PLN M) Net result Revenues +217 4 173 3 956 (+5.5%) -154 -378 161 559 wpływ wyroku ECJ ruling TSUE impact --161 667 (-22%) 710 rezerwa związana ECJ ruling impact dotyczącego zwrotu concerning fees prowizji* return* zconcerning wyrokiem fees TSUE (-4.1%) return* pozostałe przy
Slide 9: 2019 key financial ratios
2019 key financial ratios NIM ratio ROE ratio 4.71% 11.74% 4.63% - 0.12 p.p. -0.19% 8.44% -7.92 p.p. wpływ wyroku ECJ ruling impact wpływ wyroku ECJ ruling impact TSUE dotyczącego concerning fees return* TSUE concerning fees -4.63% 4.51% zwrotu prowizji** dotyczącego return* zwrotu prowizji* 3,82% 2
Slide 10: Development of loan volumes in strategic segments (PLN B)
Development of loan volumes in strategic segments (PLN B) (managerial approach) New micro sales New mortgage loans sales New cash loans sales New leasing sales A decrease in new sales in the ...with the growing sales …and a high level micro segment due to the loan …as well as leasing sales. of mortg
Slide 11: We have opened the first branch in a modern format
We have opened the first branch in a modern format The new branch • The concept of the branch was created in response to the changing needs of clients as a place of professional financial consulting. • Comfortable, sound-proofed rooms provide greater discretion during finance talks. • A space of new
Slide 12: TIER1 ratio at record high level
TIER1 ratio at record high level TIER1 TCR 13.48% 16.20% 15.85% 12.81% 198 pbs 270 pbs 11.29% 13.65% 11.13% 11.50% 13.13% 13.50% 10.25% 13.25% Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q4’16 Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 W
Slide 13: The most important awards and prizes received in 2019
The most important awards and prizes received in 2019 Products & customer service • First place in two categories: "Mobile banking" and „Online banking" in the "Newsweek Friendly Bank" ranking. • Second place in traditional banking and third in the 'Mortgage Banking' category in the "Newsweek Friend
Slide 14: Operational performance
Operational performance 14
Slide 15: Retail segment: An increase in the number of clients
RETAIL Retail segment: An increase in the number of clients SEGMENT Number of retail clients (M) New clients opening current accounts (T) -6% 29.5 32.3 30.0 30.7 26.4 27.8 +117 T 4.15 4.03 Q3’18 III kw. 2018 Q4’18 IV kw. 2018 Q1’19 I kw. 2019 Q2’19 II kw. 2019 Q3’19 III kw. 2019 IV Q4’19 kw. 2019 Ne
Slide 16: Building a lasting relationship
RETAIL Building a lasting relationship SEGMENT Current accounts sales (T) (number of new current accounts for New to Bank and New to Product clients) Number of new priority clients (T) +30% 27.0 28.3 +33 T 21.7 22.2 24.2 17.8 175 142 113 II Q2’18 kw. 2018 IIIQ3’18 kw. 2018 IV Q4’18 kw. 2018 Q1’19 I
Slide 17: The growing importance of digital channels
RETAIL The growing importance of digital channels SEGMENT Sales of cash loan in remote channels (PLN M) Alior Bank Mobile Application users (T) +5% +64% 456 387 398 361 362 337 357 320 315 277 278 247 III Q3’18 kw. 2018 IV Q4’18 kw. 2018 Q1’19 I kw. 2019 Q2’19 II kw. 2019 Q3’19 III kw. 2019 IVQ4’19
Slide 18: Significant growth of clients' satisfaction
RETAIL Significant growth of clients’ satisfaction SEGMENT NPS own branches Alior Bank among the top banks with the highest increase in 2017-2019 in the ARC Monitor Satisfaction 2019 study 60% 64% 53% NPS Alior Bank +16 points 2018, y/y 24 pkt 2017 2018 2019 NPS increase from 2017 +8 points 2019, y/
Slide 19: Development of remote channels and convenient banking
RETAIL Development of remote channels and convenient banking SEGMENT Q4'19: Development of remote channels Quick internal consolidation Implementation of PUSH process available in Alior functionality at Alior Mobile. Online and Alior Mobile. Possibility to update personal data in Alior Mobile and Al
Slide 20: Micro segment: Increase in the number of clients and improvement of relationality
MICRO MIKRO Micro segment: Increase in the number of clients and improvement of relationality SEGMENT Opening of Micro current accounts (T) New Micro business clients (T) +45% +53% 30.5 10.9 7.1 8.4 7.5 7.9 16.9 21.1 5.6 4.7 5.1 Q1’18 1 kw. '18 Q2’18 2 kw. '18 3 Q3’18 kw. '18 4 Q4’18 kw. '18 Q1’19 1
Slide 21: Increased efficiency due to significant online client acquisition
Increased efficiency due to significant online client acquisition MICRO SEGMENT New Micro clients acquired online Sales of 4x4 accounts in the Micro segment (new accounts in items; % of openings online) (number of new accounts in T items) 45,0% 6 000 +180% Share of online acquisitions in new clients
Slide 22: An increase in the quality of new sales
MICRO An increase in the quality of new sales SEGMENT Share of the portfolio with BGK guarantees New Micro sales coverage with BGK guarantees in the total Micro portfolio 92% 92% 93% 88% 54% 52% 49% 45% 1Q1’19 kw. '19 2Q2’19 kw. '19 3 Q3’19 kw. '19 4 Q4’19 kw. '19 1 IQ1’19 kw. '19 kw.’19 2IIQ2’19 kw
Slide 23: The most important implementations of 2019
MICRO The most important implementations of 2019 SEGMENT Automatic opening process of iKonto Possibility of registering a Trusted Ensuring compliance with applicable Biznes Account and 4x4 Account in Profile in Alior Online and signing regulations regarding operation of the Split Alior Online. publi
Slide 24: Business segment: Transformation of the business client base
BUSINESS Business segment: Transformation of the business client base into more active SEGMENT and lasting relationships Business clients Small/Medium/Large* (number of business clients in T) New business clients +13% 368 352 379 335 292 297 279 -1.4 T 256 35.4 33.8 32.4 I Q1’18 kw.’18 II Q2’18 kw.’
Slide 25: In the last quarter of 2019, sales increased with a new approach to risk assessment
BUSINESS In the last quarter of 2019, sales increased with a new approach to risk assessment SEGMENT New sales limit* Sales limit in automatic decision process (PLN M, Small/Medium/Large segment) (PLN M, Small/Medium/Large segment) 2019 = PLN 679 M 482 288 309 X '19 XI '19 XII '19 new sales 1 215 1
Slide 26: Project successes in the area of transactional products in 2019
BUSINESS Project successes in the area of transactional products in 2019 SEGMENT Virtual Payment Cards for Companies • One of the first virtual multi-currency card in the world in offer • On sale from July 2019 • Nomination in the e-COMMERCE POLSKA awards 2019 competition • The offer includes virtua
Slide 27: We are developing an offer related to EU and public funds in cooperation with BGK
BUSINESS We are developing an offer related to EU and public funds in cooperation with BGK SEGMENT The widest EU funds product offer on the market Since the beginning of the program, we have granted over 15,000 COSME guarantees - 3rd place in the sale of de minimis 2nd place in the sale of this guar
Slide 28: Alior Bank has a successful track record of process automation and robotization
Alior Bank has a successful track record of process automation and robotization INNOVATION Robot Factory We implement 100 Every quarter, we improve and technologies for partial automation (RDA) as well "robotic" implement a minimum as automation that processes of 10 new processes does not require hu
Slide 29: 2019 acceleration program outcome
2019 acceleration program outcome INNOVATION The second edition (2019) FinTechs Partners Projects outcome Launching pilot or implementation Pilot cooperation with 2 program participants projects with 7 program participants Another successful investment in 2019 • Together with 2 other banks and 2 ven
Slide 30: Financial performance
Financial performance 30
Slide 31: P&L statement – primary data
P&L statement – primary data PLN M 2019 2018 Change y/y Chane y/y (%) Revenues, including: 3 794 3 956 -161 -4% Revenue excluding the impact of the ECJ ruling* 4 173 3 956 217 5% Net interest income 3 181 3 085 97 3% Net fee and commission income 667 710 -43 -6% Net trading income and other -54 161
Slide 32: Volumes
Volumes PLN M 2019 2018 Change y/y Change y/y (%) Loans, including: 55 871 54 246 1 625 3% Retail segment 31 869 29 443 2 426 8% Business segment 24 002 24 803 -801 -3% Deposits, including: 64 999 62 436 2 564 4% Retail segment 46 603 43 945 2 658 6% Business segment 18 396 18 491 -95 -1% L/D ratio
Slide 33: Net interest income (PLN M)
Net interest income (PLN M) y/y comparison NII quarterly Q1’19 Q2’19 Q3’19 Q4’19 4 194 MTD COF excluding the effect 3 956 +103 4 059 of the ECJ ruling Dec 2019: NIM* 4.70% 4.70% 4.62% 4.51% 435 439 +2.6% 3 085 3 181 1.20% 1.17% 1.14% 1.12% 1.08% COF** 3 521 3 620 1 074 1 055 excluding the effect exc
Slide 34: Net fee and commission (PLN M)
Net fee and commission (PLN M) y/y comparison NFC quarterly 350 400 305 308 1 166 Remuneration zfor Wynagrodzenie tyt.insurance pośrednictwa 287 286 sprzedaży brokerageubezpieczeń 300 283 26 27 1 099 264 265 267 23 100 23 29 88 21 15 24 300 Payment cards and credit 250 Obsługa kart płatniczych i kre
Slide 35: Bank maintains high level of cost effectiveness (PLN M)
Bank maintains high level of cost effectiveness (PLN M) Y/y comparison Quarterly split C/I* 43.1% 43.0% C/I* 47.3% 45.2% 44.1% 43.1% 49.9% 44.6% 42.8% 43.0% 1 705 -75 1 630 106 512 -4.4% 157 175 456 430 411 407 122 394 248 55 17 Koszty BFG BGF costs 17 17 372 352 43 12 528 43 45 44 59 12 Amortyzacja
Slide 36: Credit risk
Credit risk 36
Slide 37: Structure and quality of the loan portfolio
Structure and quality of the loan portfolio Total loan portfolio (PLN M) Retail client portfolio (PLN M) Business client portfolio* (PLN M) 26 869 26 801 34 519 61 320 32 048 2 215 8% 2 019 8% 58 917 2 820 8% 2 609 8% 4 025 15% 4 888 18% 989 4% 743 3% 26 801 44% 11 402 33% 26 869 46% 10 491 33% 6 88
Slide 38: Process improvements and risk assessment policies for business segment implemented in 2019
Process improvements and risk assessment policies for business segment implemented in 2019 • Tightening cut-off policy for Micro, Small, Midium, Large segments in the business client segment, including Agro Exposure limits and the level • Lowering the concentration limits on the debtor and the joint
Slide 39: Business client risk costs influenced by higher write-offs for the Agro segment
Business client risk costs influenced by higher write-offs for the Agro segment COR in business client segment COR decomposition in 2019 in business client segment 7,00% 6,00% 0.59% 5,00% 4,00% 4.2% 1.27% 3.4% 3,00% 3.43% 2,00% 2.2% 1.58% 1,00% 0.8% 0,00% IV kw'18 IQ1’19 kw'19 IIQ2’19 kw'19 IIIQ3’19
Slide 40: Very good quality of new sales in the business client segment
Very good quality of new sales in the business client segment New sales in the business client segment 2019 • Only 3% of new sales was dedicated to major clients (TOP 10 largest groups) Portfolio diversification • Lower share of the construction sector and commercial real estate by 5 p.p. (compared
Slide 41: Increasing diversification of the business client segment portfolio
Increasing diversification of the business client segment portfolio Average loan amount for new sale in business client segment New sales in the business client segment Medium and Large segment (PLN M) 20% Micro MIKRO 9.62 24% 24% 8.32 Small SE 28% 7.37 - 7% 10% Medium MID Large LARGE 3% 12% 15% AGR
Slide 42: Constant improvement in the quality of new loan sales
Constant improvement in the quality of new loan sales Sales volume and quality of new cash loan sales (PLN M) 2 500 5,0% 1 942 2 025 2 009 1 722 1 755 1 745 1 707 1 807 1 766 1 654 2 000 4,0% 1 623 Kwota udzielonych Amount of grantedkredytów credits 1 500 1 262 1 242 1 269 3,0% DR MOB6 Default (poMO
Slide 43: Stable and adequate liquidity position
Stable and adequate liquidity position LCR ratio Deposit balances (PLN B) 138% 148% 2.9 2.8 133% 135% 133% 2.7 2.4 3.1 13.5 13.3 13.2 12.7 13.3 Pozostałe Other depozyty deposits 7.8 6.4 5.6 6.4 6.3 Detal -- terminowe Retail term deposits Biznes - terminowe Business - term deposits 28.2 28.8 28.8 30.
Slide 44: 2020 guidance
2020 guidance 44
Slide 45: 2020 guidance
2020 guidance 2019 actual 2020 guidance NIM 4.5% 4.5% net interest margin C/I* 43.0% 43% cost/income COR cost of risk 2.39% 2.0% Gross loan book growth** (12 months) PLN 3.9 B PLN 5 B *Cost to income ratio (C/I): counter - group operation costs (excluding bank tax); denominator - revenues (net inter
Slide 46: Appendix
Appendix 46
Slide 47: Number of clients (T)
Number of clients (T) +149 (+3.5%) 4 376 4 318 4 313 4 227 4 224 IVQ4’18 kw.'18 IQ1’19 kw.'19 IIQ2’19 kw.'19 IIIQ3’19 kw.'19 IVQ4’19 kw.'19 47
Slide 48: Alior Bank Group – FTE evolution
Alior Bank Group – FTE evolution -1.0% 8 228 8 269 8 288 8 159 8 143 501 509 503 505 519 7 727 7 760 7 785 7 654 7 624 IVQ4’18 kw.'18 IQ1’19 kw.'19 IIQ2’19 kw.'19 IIIQ3’19 kw.'19 IVQ4’19 kw.'19 Alior Bank Subordinated entities 48
Slide 49: Number of branches
Number of branches 861 855 858 832 820 218 215 214 213 212 643 640 644 619 608 Q4’18 IV kw.'18 I Q1’19 kw.'19 IIQ2’19 kw.'19 IIIQ3’19 kw.'19 IVQ4’19 kw.'19 Franchise branches Own branches 49
Slide 50: Significant improvement in the credit portfolio structure by 2022
Significant improvement in the credit portfolio structure by 2022 Credit portfolio structure (%) 30 29 31 29 28 27 31 Cash loans Retail segment 20 21 21 20 21 20 Mortgage loans 20 7 6 6 6 6 7 6 Other 10 10 11 16 15 12 15 6 Large 6 6 7 6 6 9 6 6 Business 11 6 Medium 6 segment 11 12 7 11 Small 7 11 10
Slide 51: Bank's capital position allows to maintain dynamic loan volume growth
Bank's capital position allows to maintain dynamic loan volume growth (+) Q2'18 and Q3’18 result count: 72bps (+) portfolio securitization:17bps Lowering the OSII buffer for Alior to (-) increase in volume in 4Q’18: 1bps (+) Q3’18 result count: 35bps 0% lowers the minimum PFSA limit (-) increase in
Slide 52: Macroeconomic outlook
Macroeconomic outlook GDP growth (% y/y) Inflation (CPI % y/y) 3.5 4.9 5.1 4.0 2.0 2.3 3.1 3.3 1.6 -0.6 2016 2016 2017 2017 2018 2018 2019 2019 2020P 2020F 2016 2016 2017 2017 2018 2018 2019 2019 2020F 2020P Real change Year average NBP reference rate (%) Unemployment rate (%) 8.2 6.6 5.8 5.2 5.2 1.
Slide 53: Income statement
Income statement PLN M 2019 2018 Interest income* 4 059 3 956 Interest expenses -878 -872 Net interest income 3 181 3 085 Fee and commission income 1 166 1 099 Fee and commission expenses -499 -389 Net fee and commission income 667 710 The result on financial assets measured at fair value through 10
Slide 54: Balance sheet
Balance sheet PLN M 31.12.2019 31.12.2018 Cash and balances with the Central Bank 1 379 2 079 Amounts due to banks 213 173 Financial assets 15 799 13 728 Measured at fair value through total income 10 439 7 280 Measured at fair value through P&L 544 515 Measured at amortized cost 4 816 5 932 Derivat
Slide 55: New loans sales (PLN M)
New loans sales (PLN M) Retail loans (new quarterly sales)* 3 279 3 313 3 371 2 965 3 037 409 486 489 378 457 918 765 Kredyty hipoteczne Mortgage loans 557 570 1 155 Kredyty ratalne Consumer loans Pożyczka Cash loans 1 952 2 030 2 010 2 061 1 728 Q4’18 IV kw.'18 Q1’19 I kw.'19 II Q2’19 kw.'19 III Q3
Slide 56: Shareholding of Alior Bank
Shareholding of Alior Bank* 31,91% PZU SA Group 48,06% 31.93% 53.70% 7,25% Other Shareholders 7.25% 7,12% AVIVA OFE AVIVA Santander 5,66%7.12% Nationale-Nederlanden OFE The largest free float among Polish financial institutions. 56 *Based on the number of shares registered at the AGM convened for Ju
Slide 57: Change in the presentation of the transaction margin on FX transactions
Change in the presentation of the transaction margin on FX transactions 2018 2018 Change Before change After change Interest income 3 085 3 085 Fee and commission income 436 274 710 The result on financial assets measured at fair value through 372 -274 98 profit or loss and FX result The result on d
Slide 58: Quality of the renewable energy portfolio (RES) and industry perspective
Quality of the renewable energy portfolio (RES) and industry perspective RES balance (PLN M) • Timely service of obligations in 2019. 1 049 976 • Continued reduction of exposures - by 21% in 2019. 776 • A large number of OZE companies prepay loans, including clients in NPL. Significant improvement i
Slide 59: Impact of accounting adjustments on net profit 2018 (PLN M)
Impact of accounting adjustments on net profit 2018 (PLN M) Q1’18 Q2’18 3.3 0.9 - 6.8 - 7.0 - 2.9 195.6 199.8 171.1 154.5 Net result Secutiries/ IFSR 9 EIR Net result Net result IFSR 9 EIR change Net result reported BGF change adjusted reported adjusted Q3’18 Q4’18 6.0 15.9 - 4.1 - 2.1 172.9 176.8 1
Slide 60: 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 Financial Report of the Alior Bank Group for
Slide 61: Contact
Contact Please direct all inquiries to: relacje.inwestorskie@alior.pl +48 723 684 995 61
Slide 62: Thank you for attention
Thank you for attention 2019 Annual Financial Performance 62 Alior AliorBank BankS.A. S.A.| |28.02.2020 28 lutego 2020 r. | Wyniki skonsolidowane Grupy