Alior Bank Sa · GPW:ALR
Alior Bank Sa — FY2012 Earnings Presentation
37 slides from Alior Bank Sa's earnings presentation, March 2013
Slide 1: Results presentation 2012 - More capital to support the growth
ALIOR BANK S.A. Results presentation 2012 More capital to support the growth March 2013
Slide 2: Thank you for the IPO!
To 75 institutional investors and 14,000 persons: Thank you for the IPO! 700 M PLN more capital for Alior to grow further 2.1BN PLN IPO = Largest private IPO ever in Poland ~1BN USD Free Float 64% ; Daily turnover ~3M USD 2
Slide 3: How we steer for profitable growth
HOW WE STEER FOR PROFITABLE GROWTH Financial Customer Process Learning • Deliver high • Be most • Automate • Innovation ROE attractive labs with bank • Specialize customer, • Grow suppliers, business • Be accessible employees • Strategic for new Partners • No surprises customers • Management develop
Slide 4: 2012 Key Financial Highlights
2012 KEY FINANCIAL HIGHLIGHTS M PLN 2011 2012 +/- Operating revenue 995 1 434 44% General & administrative -640 -922 44% expnses General & administrative expnses excl. IPO and Mgmt -635 -763 20% Incentive Cost of risk -189 -282 49% Profit before tax 166 230 39% Profit before tax excl. IPO and 170 39
Slide 5: 2012 Key Financial Highlights Quarterly Development
2012 KEY FINANCIAL HIGHLIGHTS QUARTERLY DEVELOPMENT M PLN Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Operating revenue 995 298 638 1 025 1 434 General & administrative -640 -182 -371 -571 -922 expnses General & administrative expnses excl. IPO and Mgmt -635 -182 -371 -571 -763 Incentive Cost of risk -1
Slide 6: 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 7: Steadily increasing revenue at incremental C/I at 30%
STEADILY INCREASING REVENUE AT INCREMENTAL C/I AT 30% Revenue Cost (m PLN) (m PLN) 1 434 763 640 1 025 995 571 465 638 680 371 287 423 298 182 143 195 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2012 2011 2012 C/I 61% 58% 56% 53% Significant cost advantage due to high capacity in operating platform and automation
Slide 8: Effective use of capital reflected in increasing ROE and ROA
EFFECTIVE USE OF CAPITAL REFLECTED IN INCREASING ROE AND ROA ROA ROE 2,0* 19,8* 1,3 15,0 2011 2012 2011 2012 ROE ROA Q1 2012 18,2% Q1 2012 1,4% Q 2 2012 19,5% Q 2 2012 1,6% Q3 2012 20,5% Q3 2012 1,7% Q4 2012 19,8% Q4 2012 2,0% 8 *NOT INCLUDING ONE-OFF IPO MGMT INCENTIVE EXPENSES
Slide 9: 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 10: Growth of customers
GROWTH OF CUSTOMERS Retail client acquisition growth Almost 0,5 M clients acquired in 2012 rate of 60% 1 383 THSD 1 487 THSD 1 260 104 1 105 990 987 903 793 85 644 617 1 383 903 2011 2012 Q1 Q2 Q3 Q4 Retail Business 2011 2012 Examples of Alior effective client acquisition initiatives Kill Bill Alior
Slide 11: Growth of network
GROWTH OF NETWORK 750 100 438 441 230 208 209 2011 2012 Branches Agencies Alior Express Over 300 outlets opened in 2012. Development of distribution network is key in attracting clients from different segments 11
Slide 12: Brand awareness
BRAND AWARENESS Alior remains a strong brand with high recognition Spontenous recognition Aided TV comm awareness 12 Source: Millward Brown/SMGKRC, December 2012
Slide 13: Customer value our product innovation
CUSTOMER VALUE OUR PRODUCT INNOVATION Alior is the most recommended financial institution Alior 41 Inteligo 40 BPS 28 mBank 25 BZWBK 23 BGŻ 23 ING 22 Millennium 18 Pocztowy 16 PKO 7 Kredyt Bank 6 PEKAO 3 Source: Puls Biznesu, 21 February 2012 Premia account for EFX platform Online exchange for Earni
Slide 14: Retail banking remains a dominant revenue generator
RETAIL BANKING REMAINS A DOMINANT REVENUE GENERATOR W/O INFLUENCING THE BANK’S UNIVERSAL PROFILE LOAN BOOK REMAINS IN AN ALMOST REVENUE SPLIT EQUAL SPLIT Other Factoring 3% 4% business Cash 3% Loans Investme nt loans 29% 37% 11% 60% Working Capital 28% MTG 21% Other RETAIL BOOK: 53% Retail Business
Slide 15: New initiatives getting traction
3 NEW INITIATIVES GETTING TRACTION Alior Sync: a Virtual Bank – launched mid June 2012 Cutting edge technology recognized world wide (BAI and London Technology award) 160k new clients gained form June 2012 till EOY. Deposits: 963 M (2012 EOY) Loans: 20 M (2012 EOY) Alior Bank Express min
Slide 16: Very stable high NIM also in 2012
VERY STABLE HIGH NIM ALSO IN 2012 NIM* 4.46% 4.47% 1 2 2011 2012 Deposit margin: 1,1 % Financial assets margin: 0,2% Loan margin: 4,3% All based on market to market calculation Q4 in 2011 & 2012 impacted by significant deposit *NIM: net interest income/average intrest earning assets (based on end of
Slide 17: Fee income contribution remains at 30% of total income
FEE INCOME CONTRIBUTION REMAINS AT 30% OF TOTAL INCOME Fee income split Insurance income split Brokerage fees Other fees Insurance Insurance stand 6% 2% investment alone products 1% 11% Banking fees Insurance fee 33% 59% Life & job-loss insurance 88% Insurance income remains a dominant position of f
Slide 18: Effective risk management ensuring high asset quality
EFFECTIVE RISK MGMT ENSURING HIGH ASSET QUALITY AND PROFITABLE PORTFOLIO PERFORMANCE NPL 7.7% 8.0% 6.8% 4.1% 1.4% 0.5% 2011 2012 MTG Retail Corporate Coverage Ratio 78.1% 59.5% 52.4% 41.2% 25.2% 14.0% 2011 2012 MTG Retail Corporate 18
Slide 19: Sufficient capital buffer for further organic development
SUFFICIENT CAPITAL BUFFER FOR FURTHER ORGANIC DEVELOPMENT 18.70% 2012 TIER 1 FOR POLISH BANKS* 14.54% 13.30% 13.60% 11.90% 11.40% 10.90% 9.90% 9.30% 9.40% Alior CAR EOY 2012: 17% *Source: Citi Research report 22 January 2013, data for banks for 9m 2012 except for Alior EOY 19
Slide 20: Cost leverage delivered and still high capacity to grow
COST LEVERAGE DELIVERED! AND STILL HIGH CAPACITY TO GROW Alior on track to achieve C/I < 42% 2012 C/I FOR POLISH BANKS* 62% 56% 57% 58% 53% 45% 45% 46% 38% 39% Capacity for growth: • Core it system: up to 7 m customers • Scalable hardware and datawarehouse • Automation of most retail processes • Spe
Slide 21: 2013 Outlook
2013 OUTLOOK Large corporates FX products Mini-branches: +100, X-sell Alior Sync: X-sell, Growth Consumer Finance: Activation, Growth Behavioral CRM and Scoring Macro impact on loans Carlo Tassara 34% 21
Slide 22: Back up
ALIOR BACK UP 22
Slide 23: 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 24: The opportunity in Poland - creation of an innovative new bank
THE OPPORTUNITY IN POLAND – FOR THE CREATION OF AN INNOVATIVE NEW BANK Significant market growth... ...resulting from under penetration... Loans to households Loans to corporations % of GDP, 2007 and 2010 PLN Bn PLN Bn 200 600 532 533 300 265 272 144 140 150 475 500 250 223 222 220 416 376 400 200 1
Slide 25: Polish macro environment remains highly attractive
POLISH MACRO ENVIRONMENT REMAINS HIGHLY ATTRACTIVE DESPITE THE TURMOIL IN WESTERN EUROPE Strong, crisis resilient GDP Strong and stable domestic Declining perception of Polish risk growth demand relative to GDP Real GDP growth (%) Domestic private consumption / GDP (%) CDS (bps) Poland Western Europ
Slide 26: Polish macro outlook - it will only get better now
POLISH MACRO OUTLOOK - IT WILL ONLY GET BETTER NOW Resumption of growth momentum after period of economic slowdown • Acceleration of economic growth over 2013 based on domestic demand recovery. • Expected gradual improvement in the coming quarters after weak 1Q with average annual growth at 1,8% in
Slide 27: Income statement snapshot
INCOME STATEMENT SNAPSHOT Income statement Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 snapshot 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 Interest income 235 109 221 347 494 161 352 576 851 270 580 920 1 284 Interest expense -131 -46 -87 -132 -189 -60 -132 -219 -356 -118 -257 -402
Slide 28: Balance sheet snapshot
BALANCE SHEET SNAPSHOT Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 M PLN 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 Cash and balances 220 224 239 327 476 397 372 347 449 582 592 702 1 030 with Central Bank Financial assets 2 876 2 951 1 824 2 460 2 540 2 705 2 371 3 683 3 219 2 300
Slide 29: Mgmt incentive scheme impact on P&L
MGMT INCENTIVE SCHEME IMPACT ON P&L Although mgmt incentive scheme closed in 2012 is funded by Carlo Tassara according to IFRS 2 its’ cost has to be recognized in bank’s P&L (149 M PLN). No cash outflows from the bank No cash compensation for mgmt One-off expense is equity neutral Net profit after M
Slide 30: 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 31: Scalable IT platform and highly qualified engineers
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 32: Alior is comfortably positioned for difficulties in Polish construction sector
Alior is comfortably positioned for the difficulties in the Polish construction sector Total exposure to construction sector (1) Construction sector coverage 12M 2012 As of end of December 2012, construction sector accounted for 23% of total corporate loan book balance Limited sheet exposure Off b
Slide 33: Management stock option plan
MANAGEMENT STOCK OPTION PLAN New long term incentive program for Alior top management Top management will receive warrants end of 2013, 2014 and 2015 if the bank’s share price is performing better than WIG bank index 2013: 1.1 MM shares at strike price equal to: IPO price plus 10.0% 2014: 1.1
Slide 34: Alior Bank's innovative approach to FX market
ALIOR BANK'S INNOVATIVE APPROACH TO FX MARKET Why different? Alior - Market leader in innovation in FX market First bank in CEE which introduced algotrading system for FX trading Feb-09 Autodealing – first FX platform introduced Access to global services allowing to execute with e-banking acco
Slide 35: Shareholding structure
SHAREHOLDING STRUCTURE As of 31.12.2012 As of 06.02.2013 Alior Lux S.a Alior Lux S.a r. l. & Co. r. l. & Co. Other S.C.A. and Other S.C.A. and shareholders Alior Sp. z shareholders Alior Sp. z 44% o.o. 49% o.o. 36% 36% European European Bank for Bank for Reconstructio Reconstructio n and n and Devel
Slide 36: Alior IR team
ALIOR IR TEAM Please direct all inquiries to: PIOTR BYSTRZANOWSKI UNIT HEAD relacje.inwestorskie@alior.pl FABIOLA KOLAGO- WINIARSKA +48 22 417 3860 CONTACTS W/ INVESTORS AND LOGISTICS AGNIESZKA DYMURA OBLIGATORY REPORTING AND PROCEDURES 36
Slide 37: 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 2012. Bank