First Investment Bank Ad · BSESOF:FIB
First Investment Bank Ad — Q4 2018 Earnings Presentation
50 slides from First Investment Bank Ad's earnings presentation, 2019
Slide 1: First Investment Bank 2019
FIRST INVESTMENT BANK 2019 CONFIDENTIAL
Slide 2: Table of contents
Table of contents Section 1 Macro environment 3 Section 2 Banking system overview 10 Section 3 Fibank profile 15 Section 4 2018 Q4 Results and profitability 27 Section 5 Management and corporate governance 36 Section 6 Capitalization & leverage 39 Section 7 Funding and liquidity 44 Section 8 Appendi
Slide 3: Macro environment
SECTION 1 MACRO ENVIRONMENT 3
Slide 4: Country profile
Country profile • Full name: Republic of Bulgaria • Memberships: European Union (since 2007), NATO (since 2004) • Population: 7.2 M AUSTRIA HUNGARY • Capital: Sofia SWITZ. • Area: 110,994 sq km (42,855 sq miles) • Official language: Bulgarian SLOVENIA E • CROATIA Traditional religion: Orthodox Chris
Slide 5: Bulgarian economy had strong results with high growth and low unemployment
Bulgarian economy had strong results over past few years with high growth and low unemployment BULGARIAN GDP INFLATION & KEY DRIVERS OF GROWTH ABOVE EU UNEMPLOYMENT THE BULGARIAN AVERAGE DECREASED SINCE 2012 ECONOMY HICP & Unemployment • In September 2018, the country's GDP real growth (%, 2012-2017
Slide 6: Economy expected to continue strong growth of ~3-4% p.a.
Going forward, the economy is expected to continue strong growth anywhere between ~3-4% p.a. GDP GROWTH EXPECTED UNEMPLOYMENT EXPECTED TO CONTINUE AT TO FURTHER DECREASE & KEY DRIVERS OF THE ATTRACTIVE LEVELS INFLATION TO INCREASE BULGARIAN ECONOMY GDP real growth HICP & Unemployment (%, 2016-2021F)
Slide 7: Bulgarian Economic Overview
Bulgarian Economic Overview Macroeconomic indicators 2013 2014 2015 2016 2017 2018 EUR M 42, 010 42, 824 45, 288 48, 128 51, 662 55, 181 GDP Growth, % 0.9 1.8 3.5 3.9 3.8 3.1 EUR M 535.6 530.6 (15.4) 1,244.0 1, 578,2 2,547.5 Current account % of GDP 1.3 0.1 0.0 2.6 3.1 4.6 EUR M 1, 384 347 2, 399 1,
Slide 8: Macro environment: Key indicators historic development
Macro environment: Key indicators historic development Indicators 2013 2014 2015 2016 2017 2018 Gross domestic product (BGN million) 82,166 83,634 88,571 94,130 98,361 107, 925 Gross domestic product, real growth (%) 0.9 1.3 3.6 3.9 3.6 3.1 - Consumption, real growth (%) (1.9) 2.2 3.8 3.3 4.5 9.9 -
Slide 9: Mid-term macro forecast
Mid-term macro forecast MACRO ASSUMPTIONS FAVOURABLE MACRO ENVIRONMENT 2018-2020F IN THE MID TERM (2018-2020F) Spring forecast ▪ Positive assumptions of the economic development during 2019, Ministry of 2017 2018 2019F 2020F the period 2018-2020; Finance ▪ Stable growth in GDP to slow down in 2018 &
Slide 10: Banking sector overview
SECTION 2 BANKING SECTOR OVERVIEW 10
Slide 11: Sector prospects: loan demand, consolidation, upward interest rates
Sector prospects: gradual increase in loan demand, on- going consolidation & new upward interest rate cycle. BNB FORECAST 2018-19 TOTAL TOTAL NET Annual rate of change 2018 2019f LOANS DEPOSITS PROFIT Claims on non-government sector 4.9% 5.6% Loans, Deposits, Net profit, BGNb BGNb - claims on non-fi
Slide 12: Current Status of the Bank System
Current Status of the Bank System Banking Sector as at 30 December 2018 у/oy 2013 2014 2015 2016 2017 2018 Bank system assets, BGN M 85 747 85 135 87 524 92 095 97 807 105 557 Growth of assets in the bank system,% 4.0 (0.7) 2.8 5.2 6.2 7.9 Bank system profit, BGN M 584.9 746.3 898.4 1 262.3 1 174.0
Slide 13: Fibank and the Bulgarian Banking System
Fibank and the Bulgarian Banking System Fibank and the Banking Sector as at 30 December 2018 in BGN M September 2018 December 2018 Growth, % Banking system 103,191 105,557 2.3% Assets Fibank 9,234 9,312 0.8% Deposits (other than from Banking system 83,236 84,571 1.6% credit institution) Fibank 8,077
Slide 14: Banking sector: Fibank in Top 5 banks at December 2018
The banking sector: 25 banks & foreign branches operated in the country. Fibank in Top5 banks at December 18. GROUP 1: TOP 5 BANKS GROUP 2: OTHER BANKS TOTAL ASSETS MARKET SHARE TOTAL ASSETS MARKET SHARE (Q4’18, BGNm) (Q4’18%) (Q4’18, BGNm) (Q4’18, %) UniCredit Bulbank 19,413.6 18.4% Raiffeisenbank
Slide 15: Fibank profile
SECTION 3 FIBANK PROFILE Tatananae Cin Hit — +t y | ‘IC annana ane a
Slide 16: Fibank aspires to be one of the best banks in Bulgaria
Fibank aspires to be one of the best banks in Bulgaria, recognized as innovative & customer-oriented bank BUSINESS MODEL VISION AHEAD TO STRONG COMPETITIVE IN LINE WITH GROW FORWARD IN ADVANTAGES SUPPORTIVE BANK MISSION RETAIL & SME TO OUTPACE PEERS ▪ Fibank aspires to be RETAIL BANKING among the be
Slide 17: 25 years of stable development with focus on innovation
Top 3 Player: 25 years of stable development with focus on innovation and customer experience Fibank Fibank issued Fibank Fibank Fibank Fibank first in Fibank Launches Fibank was Albania EUR200m realized acquired MKB the Balkans its Smart Lady welcomed established established as Eurobonds. the Union
Slide 18: Top 4 player in assets, loans and deposits
Fibank is top 4 player in assets, loans and deposits at December 2018. Committed to innovation & product leadership TOTAL ASSETS LOANS DEPOSITS Market share (Q4/18 & 2017) Market share (Q4/18 & 2017) Market share (Q4/18 & 2017) * 3 * 4 4 * *At the beginning of 2018 has finished the legal merger of C
Slide 19: Increased market shares in consumer loans and retail deposits
Increased market shares in consumer loans & retail deposits at December 2018 as part of long-term strategy. RETAIL CONSUMER MORTGAGE CORPORATE DEPOSITS LOANS LOANS LOANS Market share (2018 & 2017) Market share (2018 & 2017) Market share (2018 & 2017) Market share (2018 & 2017) 2 * 3 * * * * 5 6 *At
Slide 20: Diverse and stable business model
Fibank with diverse and stable business model. Business mix weighted towards traditional banking. UNIVERSAL & Mortgage lending TRADITIONAL BANKING Investment & depository services Private banking, Gold & coins Deposit and savings products Payment services, е-banking RETAIL Consumer lending ▪ Retail
Slide 21: Customer profile: 92% retail customers
Fibank customer profile: 92% retail customers, 63% in 25-55 age group. Strong potential for cross selling CUSTOMERS GREW YOUNG & WELL- 22.4% OF RETAIL CLIENTS 1.36% DURING 2018 BALANCED CUSTOMER WITH LOAN PRODUCTS. TO REACH ~1.2 M PROFILE CROSS SALE POTENTIAL Total number of customers, Number of cus
Slide 22: Distribution platform: country-wide branch network
Distribution platform: Country-wide branch network with 154 locations in Bulgaria & 10 abroad (Cyprus & Albania) MAP OF BRANCHES FULL RANGE OF SERVICES CYPRUS BRANCH RETAIL BUSINESS ▪ Fibank Cyprus branch has CLIENTS CLIENTS operated since 1997, initially mainly in the area of DEPOSIT PRODUCTS corpo
Slide 23: Multi-channel distribution network
Multi-channel distribution network with adequate balance between physical locations & remote banking channels PHYSICAL REMOTE DISTRIBUTION DISTRIBUTION MULTI-CHANNEL CHANNELS DISTRIBUTION NETWORK CHANNELS ▪ Branch network is the ▪ New integrated e- main channel for Physical channels Remote channels
Slide 24: Group structure: clear strategic focus on Bulgaria
Group structure: Clear strategic focus on business in Bulgaria CORPORATE 3 KEY SUBSIDIARIES IN GROUP STRUCTURE FINANCIAL SECTOR FIRST INVESTMENT BANK AD ▪ Replication of the successful business model Parent in Bulgaria & its adaptation to the Albanian banking market through a subsidiary bank company
Slide 25: Key subsidiaries: sound performance in 2018
Key subsidiaries: Sound performance & results in 2018, growing contributors to Group profit FIRST INVESTMENT DINERS CLUB FIHEALTH BANK - ALBANIA BULGARIA INSURANCE ▪ In 2018, First Investment Bank – ▪ For 2017 the company reported a net ▪ In 2017, Fi Health Insurance increased Albania Sh.a. reported
Slide 26: Recent awards confirm successful development
Recent awards confirmed Fibank’s successful development & strong focus on innovation & digitalization EFMA-ACCENTURE DMI AWARDS 2018 2 AWARDS ON BANK OF THE EUROMONEY DIGITAL CARDS YEAR AWARDS AWARDS ▪ Fibank won second place in the Offering Innovation category of the Efma- Accenture DMI Awards 2018
Slide 27: Results & profitability
SECTION 4 RESULTS & PROFITABILITY 27
Slide 28: BGN 164.8m net profit in 2018
Fibank with BGN 164,8m net profit in 2018, used as a strong tool for internal capital generation. Income statement, BGNth 2016 2017 2018 FINANCIAL HIGHLIGHTS 2017 Net interest income 319,179 260,926 1 267,088 1 For 2018, net interest income amounted to BGN Net fee & commission income 91,486 102,146
Slide 29: Profitability: key ratios
Fibank with sound financial indicators. Improved profitability & coverage ratios due to conservative policy Key ratios, % 2016 2017 2018 CET1 ratio 12.01 12.87 13.33 FINANCIAL HIGHLIGHTS 2018 T1 capital ratio Capital adequacy position at 2018 strengthened further Capital 15.1 15.87 16.18 1 Total Cap
Slide 30: Retail business: retail loans
Retail business: Retail loans well-balanced in terms of products & FX. Growing share of consumer loans. RETAIL LOANS STRUCTURE OF KEY HIGHLIGHTS & BY PRODUCT RETAIL LOANS COMMENTS Retail portfolio, BGNm Retail portfolio,% ▪ As of 31 December 2018, First +13.5% Investment Bank kept its third place in
Slide 31: Retail business: microlending portfolio
Retail business: Growing focus & share of Microlending portfolio. Gross amount reached BGN 140m at 2018. MICROLENDING GROWING SHARE OF KEY HIGHLIGHTS & PORTFOLIO MICROLENDING COMMENTS ▪ In 2018, the microlending portfolio grew by 16.0% to BGNm 140,422 +16.0 % thousand compared to BGNm 121,553 thousa
Slide 32: Retail business: retail deposit base
Retail business: Stable & granular retail deposit base, >80% covered by deposit guarantee scheme RETAIL DEPOSITS RETAIL DEPOSITS BY KEY HIGHLIGHTS & BY PRODUCT CURRENCY COMMENTS Deposits to individuals, BGNm Retail deposits by currency, % ▪ As at 31 December 2018, First 6.0% Investment Bank stepped
Slide 33: Leading in Commercial Lending with Top 2 Position
Leading in Commercial Lending With Top 2 Position Fibank’s loan book is predominantly …with a leading position in the Bulgarian sector… Corporate Loans(2) Market Share, Q4’18 commercial focused… Fibank’s main competitive advantages in the commercial banking Loan Portfolio by Type, Q4’18(1) market ar
Slide 34: Commercial business: corporate deposits grew 29.7%
Commercial business: Deposits from corporates grew 29.7% in 2018 outpacing banking system averages. CORPORATE DEPOSITS CORPORATE DEPOSITS KEY HIGHLIGHTS & BY PRODUCT BY CURRENCY COMMENTS Corporate deposits by product, Corporate deposits by currency, % ▪ Attracted funds from corporates and BGNm 29.7%
Slide 35: Payment services: growth in fund transfers
Payment services: Registered growth in fund transfers in both BGN & FX. Well-established market position. FUND TRANSFERS FUND TRANSFERS SOLID MARKET IN BGN IN FX CURRENCY SHARES Outgoing transfers Outgoing transfers Market share of in BGN, (000’ numbers) in FX, (000’ numbers) fund transfers in BGN,
Slide 36: Management & corporate governance
SECTION 5 MANAGEMENT & CORPORATE GOVERNANCE 36
Slide 37: Cooperation with the IFC: CG & RM enhancement project
Cooperation with the IFC: Successful CG & RM enhancement project during 2015 2015 Implementation Project IFC COOPERATION CORP.GOVERNANCE RISK MANAGEMENT MILESTONES DELIVERABLES DELIVERABLES ▪ In 2010, Fibank asked the IFC to prepare a diagnostic assessment of ✓ Fibank introduced full CCO function in
Slide 38: Organizational structure ensures effective running of key functions
Organizational structure ensures effective running of key functions & clear separation of duties. SUPERVISORY BOARD (Chair: Evgeni Lukanov, Deputy Chair: Maya Georgieva, Members: Georgi Mutafchiev, Radka Mineva, Jordan Skortchev, Jyrki Koskelo) AUDIT PRESIDING RISK REMUNERATION COMMITTEE COMMITTEE C
Slide 39: Capitalization & leverage
SECTION 6 CAPITALIZATION & LEVERAGE 39
Slide 40: Regulatory capital in line with CRD IV
Regulatory capital well in line with CRD IV (Basel III). Profit retention following GMS in September’18 to support CET1. REGULATORY OWN FUNDS REGULATORY CAPITAL CALCULATIONS REQUIREMENTS Regulatory capital, BGN,m Own funds calculations, ▪ Since 1 January 2014, the provisions YE2017 YE2018 of the CRD
Slide 41: Capital buffers in line with CRD IV
Fibank to maintain capital buffers in line with CRD IV. New O-SII capital buffer applicable since 2018. CAPITAL BUFFERS COMMENTS ▪ In addition to the capital requirements, Fibank maintains Types of capital buffers maintained by the Bank, % capital buffers in compliance with the requirements of Ordin
Slide 42: Capital indicators exceed minimum requirements
Capital indicators exceeds minimum requirements. Ratio calculations consistent with CRD IV. CAPITAL CAPITAL ADEQUACY RATIO INDICATORS CALCULATIONS Capital adequacy indicators for 2016/ 2017, ▪ Common Equity Tier 1 capital ratio is the Common Equity Tier 1 capital of the institution expressed as a pe
Slide 43: Capital indicators improved; hybrid capital
Capital indicators improved due to de-leverage measures. Hybrid capital fully compliant to absorb losses. CET1 T1 TCA AT1: RATIO RATIO RATIO HYBRID CAPITAL CET1 ratio, % Tier 1 capital ratio, % TCA ratio, % ▪ As at YE16, Fibank had issued +0.8 ppt +0.3 ppt +0.8 ppt +0.4 ppt two hybrid instruments +0
Slide 44: Funding & liquidity
SECTION 7 FUNDING & LIQUIDITY 44
Slide 45: Customer deposits main source of funding
Customer deposits main source of funding with 95% of liabilities. Stable growth covered state aid repayment. DEPOSITS: MAIN STABLE GROWTH TO LDR SUPPORTING FUNDING SOURCE ADDRESS AID REPAYMENT LIQUIDITY Structure of liabilities, % Customer deposits, BGNm Net loan/deposit ratio, in % 120 10 % 7,912 8
Slide 46: Strong liquidity well above minimum levels
Strong liquidity in line with market. Liquidity ratios well above minimum required levels. LIQUID ASSETS GREW LCR & NSFR WELL STRONG LIQUIDITY DESPITE SA REPAYMENT ABOVE MIN LEVELS RATIOS Liquid assets, BGNm LCR & NSFR indicators % Liquidity indicators, % 11.3 % 400 35.0 2,304 2,211 350 335 29.1 326
Slide 47: Appendix
SECTION 8 APPENDIX ap \ae j want ltt 1 im AN WO A eanon ‘|
Slide 48: Awards
Awards Best Bank in Bulgaria Quality of Service 2010 2002 Bank of the year by market share, by Bank of 2003 Bank of the Customer, 2011 2006 2012 the year association by the influential Bulgarian daily “Pari” 2008 2009 (“Money”) 2001 2011 Bank of the year by Bank of the year 2007 The best customers s
Slide 49: Awards
Awards Brand/ Products/ Web/Other awards 2007 Best public company on the Bulgarian 2008 Stock Exchange, by "Dnevnik" 2004 Financial product of the year, by International newspaper 2005 Most Innovative Banking Product 2006 Finance Exhibition “Banks, Investments, 2014 (Credit and Debit Card) by Global
Slide 50: Awards
Awards Brand/ Products/ Web/Other awards “Product of the Year” – Debit card for 2018 children and teenagers - category “Bank cards” 2017 “Product of the Year” Debit card for children and teenagers - category b2b awards 2018 2018 “Bank cards” Category “Socially responsible campaign” 2017 Consumer cre
First Investment Bank AD — Q4 2018 Earnings Presentation on 6ix