Alior Bank Sa · GPW:ALR
Alior Bank Sa — FY2016 Earnings Presentation
39 slides from Alior Bank Sa's earnings presentation, Mar 9, 2017
Slide 1: ALIOR BANK S.A. 2016 results presentation
ALIOR BANK S.A. 2016 results presentation March 9, 2017 1
Slide 2: Agenda
AGENDA 1 Highlights 2 Operational Performance 3 Outlook 4 Appendix 2
Slide 3: Highlights
HIGHLIGHTS Alior performance and merger progress on track, both provide solid base for 2017 Very strong and healthy business growth - 2016 Alior stand alone bottom line up by 57% yoy on like to like basis (excluding banking tax and BPH Core related one- offs), Alior / BPH Core legal merger close
Slide 4: Merger with BPH Core status
MERGER WITH BPH CORE STATUS Gain on bargain purchase generated on the transaction to strengthen Alior’s capital position: PLN 508 m, Crucial component of synergies secured - HR optimization agreed with trade unions and announced (2400 employees of which 674 layoffs in Jan-Feb 2017), Branch bas
Slide 5: Record bottom line growth – doubled compared to 2015
RECORD BOTTOM LINE GROWTH – DOUBLED COMPARED TO 2015 ch. yoy M PLN 2016 2015 (%) Total revenues 3 189 2 166 47 General administrative expenses including: -1 567 -1 108 41 Net impairment -800 -672 19 Banking tax -131 Gross profit 691 386 79 Income tax -73 -77 -5 Net profit 618 309 100 5
Slide 6: Bottom line decomposition
BOTTOM LINE DECOMPOSITION in PLN m 1 2 3 4 -264 508 14 618 360 Alior Gain on Restructuring Alior CoreBPH bargain standalone reserve & Group purchase integration costs 6
Slide 7: Alior standalone up 57% y-o-y
1 ALIOR STANDALONE UP 57% Y-O-Y ch. yoy in PLN m 2016 2015 (%) Total revenues 2 549 2 166 18 General administrative expenses -1 150 -1 108 4 Net impairment -788 -672 17 Banking tax -125 Gross profit 610 386 58 Income tax -126 -77 64 Net profit 360 309 17 Net profit excluding banking tax 485 309 57 7
Slide 8: Core BPH as expected (2 months consolidated in 2016)
2 CORE BPH AS EXPECTED (2 MONTHS CONSOLIDATED IN 2016) in PLN m CoreBPH Total revenues 146 General administrative expenses -109 Net impairment -12 Banking tax -6 Gross profit 19 Income tax -5 Net profit 14 Net profit excluding banking tax 20 8
Slide 9: Gain on BPH Core transaction
3 GAIN ON BPH CORE TRANSACTION in PLN m Gain on bargain purchase price breakdown (m PLN) -63 -23 508 313 282 Gain on the Fair value Adjustments for Other adjustments Gain on transaction deferred tax bargain purchase 9
Slide 10: Restructuring reserve and integration costs
4 RESTRUCTURING RESERVE AND INTEGRATION COSTS Restructuring reserve and in PLN m Integration costs Total revenues -14 Costs -307 Net impairment 0 Gross -321 Income tax 57 Net -264 10
Slide 11: Gain on purchase finances integration costs 2016
GAIN ON PURCHASE FINANCES INTEGRATION COSTS 2016 • Difference between the acquisition price and the acquired net assets at book value in the amount of PLN 282 m allowed to create restructuring reserve for 2017 HR optimization, • Hence integration cost will decrease in 2017 (195 m PLN currently vs. 4
Slide 12: New synergies target of PLN 374 m vs PLN 304 m previously
NEW SYNERGIES TARGET OF PLN 374 M VS PLN 304 M PREVIOUSLY Previous version in PLN m 2017 2018 2019 Synergies 76 265 304 Current version in PLN m 2017 2018 2019 Synergies 167 351 374 12 * Current integration costs for 2016 include PLN 37 m of integration costs and PLN 268 m of restructuring reserve.
Slide 13: Agenda
AGENDA 1 Highlights 2 Operational Performance 3 Outlook 4 Appendix 13
Slide 14: Historically high organic loan book development – yoy +PLN 6.9 bn
HISTORICALY HIGH ORGANIC LOAN BOOK DEVELOPMENT – YOY +PLN 6,9 BN Loan book split in PLN bn Alior Alior+CoreBPH 46,3 +50% 1,3 Other business 0,8 Factoring +22% 37,8 7,5 Investment 0,7 loans 0,5 44% 30,9 6,5 0,1 10,7 0,4 Working 44% Capital 5,5 1,1 43% 8,7 Business 0,8 Other retail 0,7 Mortgage other
Slide 15: Comfortable level of deposits reaches desired mix of current and term accounts
COMFORTABLE LEVEL OF DEPOSITS REACHES DESIRED MIX OF CURRENT AND TERM ACCOUNTS As result of the merger Alior increased its deposit base by PLN 12,7 bn and loan book by PLN 8,5 bn (L/D = 90%) in PLN bn Alior Alior+CoreBPH Retail +50% L/D=79% 14% 32,0 24,5 21,4 14,8 12,5 12,9 17,3 Term, own 12,0 banki
Slide 16: Key credit risk ratios: NPL ratio deceleration
KEY CREDIT RISK RATIOS: NPL RATIO DECELARATION NPL total (%) Market avg.* Alior+ Alior+ Alior CoreBPH Alior CoreBPH 13,1 13,6 Alior+ 12,4 Alior 12,0 11,6 11,8 CoreBPH 11,0 11,3 10,8 10,8 10,1 10,0 9,0 10,9 2,9 2,8 2,6 2,6 2,5 2,5 2,5 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q4'16 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16
Slide 17: Satisfactory Alior standalone NIM level delivered
SATISFACTORY ALIOR STANDALONE NIM LEVEL DELIVERED Alior NIM development (%) Alior Alior+ CoreBPH NIM 4,6 4,3 4,2 4,5 4,5 4,1 2015 Q1'16 1H'16 Q3'16 2016 2016 CoR -2,3 -2,1 -2,0 -2,1 -2,1 -1,9 2,3 2,2 2,2 2,4 2,4 2,2 NIM - CoR 2015 Q1'16 1H'16 Q3'16 2016 2016 NIM formula 2015: NII for 2015 divided by
Slide 18: Fees and commissions on path to rebound post Q1'17
FEES AND COMMISSIONS ON PATH TO REBOUND POST Q1’17 in PLN m Net F&C 91 F&C income 79 74 180 140 135 fees related to C/A, loans, transfers 99 72 78 bancassurance 12 payment and credit 24 12 42 cards servicing 24 23 brokerage fees 21 22 28 Q4'15 Q4'16 Q4'16 -61 -61 F&C expenses -89 New pricing effecti
Slide 19: Capital position supports dynamic and profitable organic loan origination
CAPITAL POSITION SUPPORTS DYNAMIC AND PROFITABLE ORGANIC LOAN ORIGINATION 13,6% 12,5% 11,3% 9,7% Q4'15 Q4'16 TCR Tier-1 19
Slide 20: Cost development – Alior stand alone costs lower than in 2015
COST DEVELOPMENT – ALIOR STAND ALONE COSTS LOWER THAN IN 2015 (Q4’16 VS. Q4’15) QTD in PLN m Covered by gain on bargain purchase 706 268 * 109 325 292 37 Q4’15 Q4’16 Integration CoreBPH Restructuring Q4’16 costs costs reserve * Q4’15 costs include contribution to Mortgage Relief Fund equal to PLN 9
Slide 21: Extensive footprint provides high potential for non-HR synergies
EXTENSIVE FOOTPRINT PROVIDES HIGH POTENTIAL FOR NON-HR SYNERGIES 2th largest distribution network among Polish banks 2 138 1 128 1 079 942 622 481 464 453 386 381 Bank 1 Alior Bank 2 Bank 3 Bank 4 Bank 5 Bank 6 Bank 7 Bank 8 Bank 9 Data for Banks as at the end of Q3’16, Alior Q4’16. Source: Prnews.
Slide 22: Agenda
AGENDA 1 Highlights 2 Operational Performance 3 Outlook 4 Appendix 22
Slide 23: Going forward: 2017 Outlook
GOING FORWARD 2017 Outlook 2017 consensus of PLN ~360 m NIM ~4,5% C/I ~45% ALR standalone C/I ~60% total CoR ~1,9% Loan growth 2017 PLN 6,5 billion net Consensus projection based on 3 most recent reports. 23
Slide 24: Agenda
AGENDA 1 Highlights 3 Operational Performance 4 Outlook 5 Appendix 24
Slide 25: Key ratios
KEY RATIOS (%) 2016 2015 ch. yoy ROE 12,7 9,5 3,2 ROA 1,2 0,9 0,3 C/I 49,1 51,1 -2,0 CoR 1,9 2,3 -0,4 L/D 90,1 91,8 -1,7 NPL ratio 9,8 9,3 0,5 NPL coverage ratio 56,6 58,1 -1,5 CAR 13,6 12,5 1,1 Tier 1 11,3 9,7 1,6 25
Slide 26: Polish macro outlook
POLISH MACRO OUTLOOK GDP growth (% yoy) Inflation (CPI % yoy) Unemployment rate (%) 3,7 3,90 13,4 13,4 3,30 3,30 2,80 11,4 1,4 0,9 9,7 1,60 1,40 0,0 8,3 8,0 -0,6 -0,9 2012 2013 2014 2015 2016 2017F 2012 2013 2014 2015 2016 2017F 2012 2013 2014 2015 2016 2017F End of period End of period FX rate (EUR
Slide 27: Polish banking sector – growth of the main balance sheet figures
POLISH BANKING SECTOR – GROWTH OF THE MAIN BALANCE SHEET FIGURES Assets Loans +7,0% +5,2% +4,4% +6,3% 1 711 1 663 1 670 1 609 1 600 1 631 1 163 1 108 1 105 1 097 1 136 1 142 1 532 1 569 1 577 1 039 1 074 1 090 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
Slide 28: Polish banking sector – main P&L lines performance
POLISH BANKING SECTOR – MAIN P&L LINES PERFORMANCE NII NFC Result on banking activity +4,3 -5,1 -4,1 16,5 14,4 14,2 14,4 13,8 9,3 9,2 9,4 9,9 9,7 3,3 3,1 3,1 3,2 3,1 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 X - CHANGE VS. Q4’15 (%) Expenses* Net impai
Slide 29: Alior Bank continues its market share expansion
ALIOR BANK CONTINUES ITS MARKET SHARE EXPANSION Deposits MARKET SHARE Loans 5,1% 4,9% 3,7% 3,9% 3,8% 3,4% Q4'15 Q3'16 Q4'16 Q4'15 Q3'16 Q4'16 Alior’s deposits as well as gross loans according to published financial statements. Non financial loans for sector loans data Deposits Quarterly growth (%) L
Slide 30: Alior Bank income statement snapshot
ALIOR BANK INCOME STATEMENT SNAPSHOT in PLN m Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Interest income 632 663 694 724 858 Interest expense -233 -251 -250 -233 -259 Net interest income 400 412 444 491 599 Dividend 0 0 0 0 0 Fee and commission income 140 138 137 135 180 Fee and commission expense -61 -51 -61 -5
Slide 31: Alior Bank balance sheet snapshot
ALIOR BANK BALANCE SHEET SNAPSHOT 31 Dec’15 31 Mar’16 30 Jun’16 30 Sep’16 31 Dec’16 Cash and balances with Central Bank 1 750 666 726 1 285 1 083 Financial assets held for trading 391 360 402 310 420 Financial assets available for sale 4 253 6 008 8 505 5 394 9 358 Investment securities held to matu
Slide 32: Alior Bank shareholding
ALIOR BANK SHAREHOLDING Largest free float among Polish financials institutions 25,19% PZU S.A. 63,61% 4,03% Free float PZU Życie SA & TFI PZU SA 7,17% Aviva OFE Aviva BZWBK* * on the basis of number of shares registered on Extraordinary GSM which took place on July 29, 2016. 32
Slide 33: Alior Bank new loans sales in retail & SME
ALIOR BANK NEW LOANS SALES IN RETAIL & SME Retail loans (new production per quarter) 2 705 2 270 2 273 2 415 78 Other retail 2 253 2 010 44 49 70 550 1 809 55 481 Mortgages for 1 641 46 529 459 456 real estate 66 1 530 556 90 55 629 562 526 1 865 2 077 Cash loans 1 697 1 765 1 742 1 407 1 114 990 94
Slide 34: Alior Bank customer base
ALIOR BANK CUSTOMER BASE Slight decline of customer base as a result of inactive accounts cleaning in Q3’16. in ths. 4 115 55 133 exBPH - business clients 3 084 3 213 3 130 877 133 134 132 Alior - business clients exBPH - retail clients 2 952 3 080 2 996 3 050 Alior - retail clients Q1’16 Q2’16 Q3’1
Slide 35: Alior Bank & T-Mobile partnership in Poland
ALIOR BANK & T-MOBILE PARTNERSHIP IN POLAND Revenue growth Strong customer acquisition PLN m • 30-35 ths. new customer acquisition per quarter, 95% active +60% customers 67 • Unique and fully integrated device financing process – 140 ths devices financed since launch, PLN 125 m new loan volume 42 •
Slide 36: Alior Bank headcount
ALIOR BANK HEADCOUNT FTEs 10 245 4 417 6 615 Outlets 3 538 3 630 Headquaters 879 5 828 3 077 2751 Alior CoreBPH Alior+CoreBPH 36
Slide 37: Wind farms portfolio
WIND FARMS PORTFOLIO Total ALR wind farm exposure: ~ 3% of total loan book Total number of exposures: 19 projects, All projects financed by ALR are completed. Potential number of NPL’s : 10 projects (ca 600 m PLN) Provisioning: 2016 34 m PLN, 2017 40-60 m PLN (10% coverage of NPL) Collateral coverag
Slide 38: 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 38
Slide 39: 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 2016. Bank