Nova Ljubljanska Banka D.d. · LJSE:NLBR
Nova Ljubljanska Banka D.d — H1 2018 Earnings Presentation
30 slides from Nova Ljubljanska Banka D.d's earnings presentation, September 2018
Slide 1: NLB Group presentation – H1 2018 results
NLB Group presentation – H1 2018 results September 2018
Slide 2: Disclaimer
Disclaimer IMPORTANT: YOU MUST READ THE FOLLOWING BEFORE CONTINUING. The following applies to this presentation, the oral presentation of the information in this presentation by Nova Ljubljanska banka d.d., Ljubljana ("NLB") or any person on behalf of NLB, and any question-and-answer session that fo
Slide 3: Introduction
Introduction
Slide 4: NLB's Management Board
NLB’s Management Board BLAŽ BRODNJAK ARCHIBALD KREMSER Chief Executive Officer (CEO) Chief Financial Officer (CFO) Chief Marketing Officer (CMO) ▪ Led NLB’s restructuring since Jul-13 ▪ Led NLB’s restructuring since Dec-12 ▪ Over 19 years of experience in financial ▪ Over 19 years of experience in f
Slide 5: Overview of NLB Group
Overview of NLB Group Key figures ✓ The largest banking and financial institution in Balance sheet (EURm) Jun-17 Dec-17 Jun-18 △ y-o-y Slovenia by total assets Total assets 12,070 12,238 12,516 +4% ✓ 23.2% market share by total assets (as of Jun-18) Loans to customers (net) 6,974 6,994 7,059 +1% Cus
Slide 6: Demonstrated significant improvement since financial crisis
Demonstrated significant improvement since financial crisis 2008 – 2012 2012 – 2013 2013 – 2016 2016 – today Financial crisis and Recapitalisation and Focus on growth Restructuring weak macro balance sheet cleanup and innovation Global financial crisis ~10% of GDP lost since ✓ Slovenian economy
Slide 7: Investment highlights
Investment highlights
Slide 8: Investment highlights of NLB Group
Investment highlights of NLB Group National champion in Slovenia and among top players in selected SEE markets 1 The largest banking and financial group in Slovenia, with unique track record in innovation 2 Leading positioning in high-growth SEE markets 3 Diversified credit portfolio, free of legacy
Slide 9: Slovenian macro environment supporting banking sector
1 Slovenian macro environment supporting banking sector Real GDP growth (2017) Nominal GDP by source and activities (EURbn) CAGR ’12 - 17 3.6% Public admin., health, 43,0 4,9% 4,6% 37,6 38,8 40,4 0,3 education Services 4,3% 36,1 36,2 0,3 4,2 14% 4,0% 0,3 3,3 0,3 3,7 43% 1,5 0,3 2,0 0,3 2,8 7,8 7,0 7
Slide 10: Dominant player in the Slovenian banking sector
1 Dominant player in the Slovenian banking sector Market leader across products in Slovenia 20.8 % Net loans to 4,547 1.9x customers(1) 2,382 2,174 1,930 1,852 EURm 24.6% 6,879 1.9x Customer 3,651 2,908 2,370 1,993 deposits(1) EURm 108 1.8x 60 57 55 52 Branch network(2) # % Market share as of Jun-18
Slide 11: Dominant player in the Slovenian banking sector – Retail banking
1 Dominant player in the Slovenian banking sector Retail banking High and stable market shares across products in Retail segment Retail net loans in Slovenia Retail deposits in Slovenia NLB market NLB market 30,2% 30,4% 30,7% 30,4% (1) share 23,9% share Δ% vs 23,5% 23,4% 23,3% 17.374 Dec-15 15.956 1
Slide 12: Dominant player in the Slovenian banking sector – Corporate banking
1 Dominant player in the Slovenian banking sector Corporate banking Strong growth in Mid Corporate and Small Enterprise loans (gross loans, EURm) • Largest bank in the country with the high capacity to lend to and service large clients Key business(1) 1,978 15% 2,281 -12% 2,013 -6% 1,887 • Serves ~1
Slide 13: Unique track record of innovation
1 Unique track record of innovation The pioneer of banking innovation in Slovenia Demonstrated success in moving to digital Mobile bank users(1) (‘000s) Online bank users(1)(2) (‘000s) 9% 16% 22% 34% 30% 32% First Slovenian bank to launch contactless cards 142 219 212 200 108 First Slovenian bank to
Slide 14: Present in attractive high-growth markets in SEE
2 Present in attractive high-growth markets in SEE, offering significant convergence potential Slovenia EUR Serbia RSD GDP (EURbn) 43.0 GDP (EURbn)(1) 36.8 Real GDP growth (%) 4.9 Real GDP growth (%) 1.9 Population (m) 2.1 Population (m) 7.0 Household indebtedness(4) 23% Household indebtedness(4) 20
Slide 15: Consistent volume and revenue growth in International delivering 20% RoE in H1'18
2 Consistent volume and revenue growth in International delivering 20% RoE(3) in H1’18 Net interest income (EURm) Profit after tax (EURm) (3) (3) CAGR ’15 - 17 RoE 10.5% 14.1% 18.8% 23.0% 19.7% 17% 146 137 95 125 18 4 15 14 14 24 25 23 63 5 17 16 8 15 70 +2.9% 72 11 2 17 18 43 24 55 -3.6% 53 16 1 5
Slide 16: Diversified loan portfolio
3 Diversified loan portfolio Focused on its core markets and cautious risk taking Credit portfolio by segment and geography • No large concentration in any specific industry or client (Group, Jun-18) segment Serbia Kosovo Institutions 6% 5% • NLB’s lending strategy focuses on its core markets of (1)
Slide 17: NLB has achieved a turnaround in asset quality
3 NLB has achieved a turnaround in asset quality Further improvements driven by active NPL management and economic recovery Gross NPL formation has been low Active workout drove gross NPL ratio Reduction of NPLs remains a key since 2014 (Group, EURm) down despite falling loan volumes focus Formation
Slide 18: Group refocused on profitable activities
4 Group refocused on profitable activities Core Slovenia Core members Non-core % of assets 18% 16% 29% 32% 3% (Jun-18)(1) Retail banking Corporate banking Financial markets(2) Foreign strategic markets • Assets booked under NLB d.d. or non-core subsidiaries • Largest retail banking • Market leader i
Slide 19: Strong revenue performance driven by stable NIM and resilient fee income
4 Strong revenue performance driven by stable NIM and resilient fee income Lower reinvestment rate compared to assets maturing Stable NIM (Group, %) resulting in decreasing net interest income (Group, EURm) 4,2 4,0 4,0 4,0 2,8 2,6 2,6 2,5 340 317 309 149 152 0,8 443 388 364 179 175 0,5 0,3 0,3 -30 -
Slide 20: Continuous cost reduction since 2012
4 Continuous cost reduction since 2012 Operating expenses reduction (Group, EURm) …with stable costs in H1’18 (Group, EURm) Cost / income 54.6% 58.3% Cost / income 57.7% 57.6% ratio ratio 368 % CAGR 12-17 (1) -32 285 -5% 287 12 +0.6% Wages & 197 -27 Other(2) -23 22 salaries Non-core 139 140 165 -3%
Slide 21: Funding structure driven by stable and price insensitive deposit base
5 Funding structure driven by stable and price insensitive deposit base Deposits accounting for 94% of funding (Group, EURm) Deposit split (Group, EURm) Loans / Jun-18 Deposits 75% 74% % total Mar-17 71% 70% ratio funding Term 9.879 10.018 37% as of 9.439 9.026 10.682 Jun-18 10.513 10.550 Sight 10.3
Slide 22: Well capitalised franchise with solid capital position
5 Well capitalised franchise with solid capital position… NLB Group CET1 capital and CET1 ratio (Group, EURm) • Highest quality capital (CET1) at Group and NLB d.d.(1), (4) reaching 18.7% in Jun-18 18,7% 17,0% 15,9% (3) • Increase in credit RWAs in H1 2018 is mainly due to lower coverage by impairme
Slide 23: Clear strategy to address current challenges
6 Clear strategy to address current challenges Key challenges Key priorities Focus on customer experience ✓ Omni-channel product distribution Sector and regulation Macro ✓ Partnership programmes ✓ End-to-end customer solutions • Regulatory interventions • Low interest rate environment Optimised prod
Slide 24: Investment highlights of NLB Group
Investment highlights of NLB Group National champion in Slovenia and among top players in selected SEE markets 1 The largest banking and financial group in Slovenia, with unique track record in innovation 2 Leading positioning in high-growth SEE markets 3 Diversified credit portfolio, free of legacy
Slide 25: Appendix A
Appendix A Additional materials
Slide 26: SEE banks continuing solid performance in H1'18
SEE banks continuing solid performance in H1’18 ✓ Profitability improvement across all markets in SEE, with 23% pre-provision income growth y-o-y ✓ Growing credit portfolio in all markets, with aggregate deposits balance marginally up q-o-q ✓ Reversal of pool provisions represents EUR12m of total PB
Slide 27: Double-digit increase in profit before tax since 2015
Double-digit increase in profit before tax since 2015 Normalising NLB Group profit before tax (Group, EURm) One-off items Reported PBT Normalised PBT •1 Exceptional items: CAGR ’15-’17 CAGR ’15-’17 2018: 49% 40% • EUR 12.2m gain on sale of the NLB Nov penziski fond, Skopje 237 238 2017: 162 • EUR 9.
Slide 28: Appendix B – Asset quality
Asset quality vo } NLB Group i
Slide 29: NPLs adequately covered by provisions and collateral
NPLs adequately covered by provisions and collateral, with limited off balance sheet non-performing exposures ✓ Total coverage exceeds 100% across segments ✓ Limited non-performing exposures from off-balance sheet items (~EUR87m) Group NPL structure (Jun-18, EURm) Corporate (Jun-18) Retail State Ban
Slide 30: Demonstrated impact to asset quality
Demonstrated impact to asset quality Impact on NPL ratio (Dec-13 to Jun-18, Group, EURm) NPL 25.6% 8.3% ratio Comments 514 • Cured clients, collections and collateral liquidation -122 contributed 39% of NPL 2.798 38 stock reduction since Dec-13 NPLs from loans granted since • Sale of NPL portfolio i
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