Alior Bank Sa · GPW:ALR
Alior Bank Sa — FY2018 Earnings Presentation
55 slides from Alior Bank Sa's earnings presentation, Feb 28, 2019
Slide 1: Alior Bank S.A. 2018 results presentation
Alior Bank S.A. 2018 results presentation February 28th 2019
Slide 2: Agenda
Agenda Key highlights Digital Disruptor Strategy update Bank’s risk profile Financial results 2019 guidance Appendix 2
Slide 3: Key financial issues
Key financial issues • Impressive bottom line growth of 51% y/y (2018: PLN 713 M vs. 2017: PLN 472 M). Net profit increase q/q of 4% (Q4’18: PLN 180 M vs. Q3’18 PLN 173 M). • 11.7% ROE (increase of 4.4 pp y/y). Quarterly ROE of 11.2% in Q4’18 vs. 7.9% in Q4’17. • 2018 gross loan book growth of PLN 5
Slide 4: 2018 key achievements
2018 key achievments • Retail client growth of 220 thousand to over 4 M. • Impressive cash loan sales at the level of PLN 7.2 B. • Current account sales growth of 78% in Q4’18 (y/y). • Electronic channels cash loan distribution growth of 62% in Q4’18 (y/y). • Business client growth of 22.5 thousand
Slide 5: Financial results 2018 (in PLN M)
Financial results 2018 (in PLN M) Net result (YTD) Revenues +297 3 956 3 658 (+8.1%) 435 371 436 +242 713 431 472 (+51.3%) 2 856 3 085 2017 2018 2017 2018 NII NFC other General and administrative expenses Net impairment charges and write-downs -149 +139 1 054 1 854 915 1 705 89 (+15.2%) (-8.0%) 915
Slide 6: 2018 key financial ratios
2018 key financial ratios NIM (YTD) C/I ratio (YTD) 50.7% - 7.6 p.p. 0.0 p.p. 43.1% 4.6% 4.6% 2017 2018 2017 2018 CoR (YTD) ROE (YTD) 11.7% + 0.14 p.p. + 4.4 p.p. 1.71% 1,85 7.4% 2017 2018 2017 2018 6
Slide 7: Selected Awards received in 2018
Selected Awards received in 2018 7
Slide 8: Agenda
Agenda Key highlights Digital Disruptor Strategy update Bank’s risk profile Financial results 2019 guidance Appendix 8
Slide 9: Further loan volume growth in strategic segments
Further loan volume growth in strategic segments New loan sales in micro* (in PLN B) New leasing sales* (in PLN B) New cash loan sales (in PLN B) Temporary drop in loan sales related to increased focus in 3Q and 4Q 2018 on Maintaining high sales of leasing … ...as well as cash loans. offering loans
Slide 10: Change in the portfolio structure in line with the strategy
Change in the portfolio structure in line with the strategy Loan portfolio structure (%) Cash loans 31 30 29 28 Retail segment 20 20 20 Mortgage loans 20 7 6 5 Other 7 11 16 15 Large 15 7 7 7 Business 9 Medium 11 6 segment 7 Small 13 7 10 9 Micro 8 7 8 Leasing 1 3 2016 2017 2018 2020 target 10
Slide 11: Retail Client Segment: increase in the number of clients
Retail Client Segment: increase in the number of clients Number of Retail Clients (in M) New customers opening current accounts (in T) +58% +12% 26.4 29.5 18.7 22.3 21.4 220 T 4.03 3.99 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 3.94 3.90 New customers - cash loan (in T) 3.81 +35% +16% 8.9 9.7 9.3 10.8 8.0 Q4’17
Slide 12: Retail Client Segment: building primary relationship
Retail Client Segment: building primary relationship Current account sale (Number of new current accounts for NtB* and NtP* clients - in T) Number of new Priority customers (in T) 21.7 22.1 +78% 16.1 18.7 17.8 +16% 43.6 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 37.7 30.8 30.1 Number of new current accounts with
Slide 13: Retail Client Segment: importance of digital channels
Retail Client Segment: importance of digital channels Sales of cash loans in electronic channels (PLN m) +62% +16% 320 277 253 233 198 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 On-line sales of current and savings accounts (in T) +194% +21% 15.7 12.9 10.7 • 62% increase in sales of cash loans through 7.9 electr
Slide 14: Retail Client Segment: network transformation and efficiency improvement
Retail Client Segment: network transformation and efficiency improvement Number of employees and branches Bankers' efficiency Number of employees in branches in the Retail Client Segment Efficiency - Average monthly sales of current accounts* per banker -18% -2% +117% +30% 8.7 6.7 1722 1661 1585 145
Slide 15: Retail Client Segment: high quality of service in branches
Retail Client Segment: we maintain high quality of service in branches NPS Own Branches NPS Franchise Branches 76% 78% 78% 78% 79% 60% 59% 59% 60% 53% Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 The bank maintains high and stable service level in branches and franchise branches confi
Slide 16: Retail Client Segment: remote channels and mobile banking
Retail Client Segment: development of remote channels and implementation of the latest mobile banking solutions 16
Slide 17: Business Client Segment: increase in primary clients and transactions
Business Client Segment: increase in both number of primary clients and transactions Customers with a main transactional relationship Numer of Business Clients (in T) (Clients paying ZUS/US from the Alior Bank account) +2% + 3% +13% 60 302 60 289 61 759 59 756 59 954 65500 60500 55500 +4% 50500 4550
Slide 18: Business Client Segment: Diversifying revenues, growing micro segment share
Business Client Segment: Diversifying revenues and increasing the share of the high-margin micro segment Business client segment revenue structure Product revenue structure (based on management data in %) (based on management data in %) 2% 1% 13% 12% 26% 27% 32% 31% 20% 16% 19% 20% 53% 56% 33% 38% 2
Slide 19: Growing share of BGK guarantees in micro loan portfolio
Dynamically growing share of BGK guarantees in the micro loan portfolio leads to rapid increase in collateral coverage Share of the portfolio with BGK guarantees in the micro portfolio Share of new sales with BGK guarantees in the micro portfolio A significant part of the portfolio of loans from the
Slide 20: Business Client Segment: Digital Disruptor Strategy and online acquisition
Business Client Segment: Digital Disruptor Strategy effectively enhances efficiency thanks to significant acquisition of online customers and in automated loan processes New Business Clients acquired online Automated loan processes (new accounts openings) (new sales limit w PLN M) Share of online ac
Slide 21: Business Client segment: simplification and automation of processes
Business Client segment: simplification and automation of processes, growing range of online functionality 21
Slide 22: Zafirmowani.pl: 1000 new clients acquired
Zafirmowani.pl: 1000 new clients acquired We have implemented: Online invoicing and VAT registration The zafirmowani.pl portal Settlement of KPiR and lump sum + JPK: VAT, PKPIR, EWP, FA Virtual business card unique visitors in 2018 Partner offers (MojaRecepcja, Link4, SEO, www, ...) 572 T Knowledge
Slide 23: The robot factory will enable further automation
The robot factory will enable further automation and increase of process efficiency 2020 TARGET: Launch of "ROBOT FACTORY" 118 robotic processes at the Bank • 45 processes already implemented (including the expansion of 8 already existing processes). • Another 25 processes and improvements queued fo
Slide 24: Completed 1st edition of the acceleration program
We have completed the 1st edition of the acceleration program and started work on the next one 24
Slide 25: Agenda
Agenda Key highlights Digital Disruptor Strategy update Bank’s risk profile Financial results 2019 guidance Appendix 25
Slide 26: Capital adequacy
Capital adequacy Capital ratios and capital requirements in total (in PLN M) Minimum capital limits (%) 14 000 40 12 000 35 13.25% 13.125% 7 768 7 838 7 831 8 157 30 10 000 7 651 1.25% 11.125% 10.25% 1.88% 25 8 000 1.25% 1.875% 20 4.00% 3.00% 6 000 15.8 15.2 15.4 15.4 15.3 15 3.00% 3.00% 4 000 12.1
Slide 27: Structure and quality of the loan portfolio
Structure and quality of the loan portfolio Total loan portfolio (in PLN M) Retail client portfolio (in PLN M) Business client portfolio (in PLN M) 58 917 26 869 30 147 32 048 24 524 54 670 1 671 7% 4 024 15% 2 609 8% 2 178 7% 1 065 4% 989 4% 26 869 46% 10 491 33% 24 524 45% 9 632 32% 7 863 32% 8 12
Slide 28: The quality of new loan sales
The quality of new loan sales Sales volume and quality of new loan sales in the retail client segment (in PLN M) 2.00% 3 668 4 000 3 391 3 366 3 487 1.80% 1.73% 3 123 3 500 Improving the quality of credit growth. 1.60% 3 000 1.40% 2 477 1.20% 2 500 1.16% Cash loan: 1.00% 2 000 0.80% 0.80% 1 500 • Th
Slide 29: Credit risk provisioning within the IFRS 9 framework
Credit risk provisioning within the IFRS 9 framework Portfolio volumes by stages (in PLN M) Credit risk costs according to IFRS9 (in PLN M) +1 087 -82 399 +642 +38 61 480 -184 6 919 23 5 832 +3 966 6 356 6 540 2 730 3 372 41 277 45 243 -60 831 -64 771 531 468 Opening balance Stage 1 Stage 2 Stage 3
Slide 30: Quality of the OZE portfolio (wind farms) and industry perspective
Quality of the OZE portfolio (wind farms) and the industry perspective Predicted vs. real black energy prices and Green Certificates On-balance exposure 194.7 Coverage ratio (%) 181.6 170.1 169.7 (PLN M) 168.4 163.8 175.6 184.3 2017 2018 2017 2018 123.5 Stage 2 (PL) 365.9 482.3 14.5% 11.1% OZE finan
Slide 31: Methodology of IFRS 9 - adjustment of the opening balance
Methodology of IFRS 9 - adjustment of the opening balance Increasing the level of Bank's security by implementing anticyclical solutions based on the FLI (Forward Looking Information) methodology, consistent with the provisions of IFRS 9. • As part of the adjustment to the opening balance of 2018, t
Slide 32: Agenda
Agenda Key highlights Digital Disruptor Strategy update Bank’s risk profile Financial results 2019 guidance Appendix 32
Slide 33: P&L YTD
P&L YTD Change y/y PLN M 2017 2018 Change y/y (PLN M) Revenues including: 3 658 3 956 8.1% 297 Net interest income 2 856 3 085 8.0% 228 Net fee and commission income 431 436 1.2% 5 Net trading income and other 371 435 17.2% 64 General administrative expenses -1 854 -1 705 -8.0% 149 Net impairment ch
Slide 34: Volumes
Volumes Change y/y PLN M 2017 2018 Change y/y (PLN M) Loans, including: 50 129* 54 246 4 117 8.2% Retail segment 27 454* 29 443 1 989** 7.2% Business segment 22 675* 24 802 2 127 9.4% Deposits. including: 57 657 62 436 4 779 8.3% Retail segment 36 573 43 945 7 372 20.2% Business segment 21 085 18 49
Slide 35: Net interest income (in PLN M)
Net interest income (in PLN M) YTD QTD NIM* 4.6% 4.5% 4.6% 4.6% 4.6% 3 956 COF* 1.09% 1.22% 1.22% 1.21% 1.20% 3 601 435 358 +228 Other interest income 1 023 (+8.0%) 3 085 991 995 937 948 2 856 105 106 Net interest income 92 105 119 781 803 742 737 763 Interest income related to loans, 3 521 3 242 le
Slide 36: Net fees and commissions (in PLN M)
Net fees and commissions (in PLN M) YTD QTD 212 211 218 196 200 806 826 29 revenue from 25 15 23 88 21 17 9 88 bancassurance activity 24 19 66 20 96 +5 brokerage commissions 66 70 254 58 57 62 213 (+1.2%) NFC 110 115 436 109 105 107 431 payment and credit cards service 409 417 105 99 103 106 110 fee
Slide 37: Bank maintains a high level of cost effectiveness
Bank maintains a high level of cost effectiveness Operating costs (in PLM M) YTD QTD 500 450 456 70.0% 1 854 -149 430 1 705 450 411 407 177 (-8.0%) 31 43 60.0% 12 43 75 175 400 45 55 17 44 106 350 50.7% 17 17 50.0% 47.1% 597 amortization 45.0% 44.0% 300 43.1% 528 40.0% BFG costs 162 118 136 250 gene
Slide 38: Agenda
Agenda Key highlights Digital Disruptor Strategy update Bank’s risk profile Financial results 2019 guidance Appendix 38
Slide 39: 2019 guidance
2019 guidance 2018 actual YTD 2019 guidance 2020 strategic target NIM net interest margin 4.6% 4.6% 4.5% C/I* cost/income 43.1% 41% 39% CoR cost of risk 1.85% 1.8% 1.7% Gross loan book growth** 5.6 PLN B 5 PLN B 5 – 6 PLN B (M 12) *Cost to income ratio (C/I): counter - group operation costs (excludi
Slide 40: Agenda
Agenda Key highlights Digital Disruptor Strategy update Bank’s risk profile Financial results 2019 guidance Appendix 40
Slide 41: 2018 net bottom line decomposition (PLN M)
2018 net bottom line decomposition (PLN M) 3 956 Trading result and other revenues 435 NFC 436 1 705 1 054 NII 3 085 208 Market 72 275 consensus** PLN 716 M 713 785 Total revenues General Net Bank tax Income tax Net profit Increase in Net profit excl. administrative impairment impairment due increas
Slide 42: Acquisition of SKOK Jaworzno
Acquisition of SKOK Jaworzno In January 2019, the Bank's Supervisory Board expressed its consent to the Bank’s acquistions of SKOK Jaworzno. On January 31st, 2019, the KNF expressed its consent to the acquisition. The key process dates are as follows: • 01/04/2019 – legal merger Since 2014, the Bank
Slide 43: Market risk and liquidity risk
Market risk and liquidity risk In 2018, the Bank improved the liquidity risk profile both by increasing the balance and quality of liquid assets, as well as increasing the stability and 133% diversification of funding sources. 129% 124% The improvement of liquidity measures is the result of an incre
Slide 44: Operational risk
Operational risk The actual materialisation of exposures to In the period 2016-2018, the Bank reduced In the period 2016-2018, the Bank did not operational risk is below the market its appetite for operational risk. exceed the set limit of operational losses. benchmark. The annual limit of operation
Slide 45: Macroeconomic outlook
Macroecnomic outlook GDP growth (% y/y) Inflation (CPI % y/y) 2.0 1.8 1.6 4.6 5.1 3.8 3.6 2.9 -0.6 -0.9 2015 2016 2017 2018P 2019P 2015 2016 2017 2018P 2019P year average NBP reference rate (%) Unemployment rate (%) 9.7 8.2 6.6 5.8 5.6 1.5 1.5 1.5 1.5 1.5 2015 2016 2017 2018P 2019P 2015 2016 2017 20
Slide 46: Income statement
Income statement PLN M 2018 2017 Interest income* 3 956 3 601 Interest expense -872 -745 Net interest income 3 085 2 856 Fee and commission income 826 806 Fee and commission expense -389 -375 Net fee and commission income 436 431 Trading and revaluation result 372 338 Net gain (realized) on other fi
Slide 47: Balance sheet
Balance sheet PLN M 31.12.2018 31.12.2017 Cash and balances with the Central Bank 1 639 965 Amounts due to banks 612 902 Financial assets 13 728 13 643 measured at fair value through total income 7 280 n/d measured at fair value through profit or loss 515 n/d measured at amortized cost 5 932 n/d ava
Slide 48: New loans sales (PLN M)
New loans sales (PLN M) Retail loans (new sales per quarter) Other retail 2 994 2 832 2 878 2 928 3 313 35 Mortgages 35 39 49 63 391 301 351 363 348 Consumer loans 2 658 2 441 2 466 2 517 2 887 12.2017 03.2018 06.2018 09.2018 12.2018 Business loans (new quarterly sales) 4 477 4 327 Other 3 901 1 170
Slide 49: Alior Bank shareholding
Alior Bank shareholding The largest free float among Polish financial institutions PZU SA and PZU SFIO UNIVERSUM 31.91% Other Shareholders 49.36% 7.25% 5.82% AVIVA OFE and AVIVA SANTANDER 5.66% Nationale-Nederlanden OFE BlackRock Inc 49 *Based on the number of shares registered at the EGM convened f
Slide 50: Consistent increase in the number of clients
Consistent increase in the number of clients +247 (+6.2%) 4 178 4 227 4 071 4 125 3 980 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 50
Slide 51: Alior Bank Group – FTE evolution
Alior Bank Group – FTE evolution -2.9% 8 477 8 345 8 401 8 248 8 228 367 341 374 442 501 8 110 8 004 8 027 7 807 7 727 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 bank subordinate entities 51
Slide 52: Alior Bank branches
Alior Bank branches Number of branches 905 883 874 864 861 267 253 244 221 218 Branches Franchise branches 638 630 630 643 643 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 52
Slide 53: 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
Slide 54: Contact details
Contact details Please direct all inquiries to: relacje.inwestorskie@alior.pl +48 734 412 408 IR department head: Piotr Bystrzanowski piotr.bystrzanowski@alior.pl 54
Slide 55: 55
55