Alpha Bank S.a. · ATHEX:ALPHA
Alpha Bank — Debt Investor Presentation (January 2020)
48 slides from Alpha Bank's debt investor presentation, January 2020
Slide 1: Alpha Bank Credit Update
Alpha Bank Credit Update Investor presentation January 2020
Slide 2: Disclaimer
Disclaimer Systemic bank established in 1879 This presentation has been prepared and issued by Alpha Bank solely for informational purposes. For the purposes of this disclaimer, this presentation shall mean and include materials, including and together with any oral commentary or presentation and an
Slide 3: Pages
Pages • Macroeconomic Overview 3 Alpha Bank • Alpha Bank Overview & Strategic Plan 2020-2022 7 Credit Update • Financial Performance 23 Operating Performance 24 Asset Quality 31 Capital, Liquidity & Funding 35 Appendix 39 3
Slide 4: The Greek economy has entered a sustainable growth trajectory
From To Real GDP restored to stable and positive growth rate 0.7% ~2.0% The Greek economy has Real GDP average annual growth, % 2015-2018 2020-2022 entered a sustainable growth trajectory Declining unemployment 25% 14.5% Unemployment rate, % 2015 2022 Disposable income on the rise Disposable income,
Slide 5: New policy mix and reforms aim to push for faster economic growth
New policy mix and reforms aim to push for faster economic growth Key areas of reform Market momentum Already 22% average reduction in the real estate tax (ENFIA) Commercial Real Estate prices Net FDI1 in Real Estate completed Corporate income tax rate from 28% to 24% Index 2010 = 100 EUR bn D
Slide 6: Upward trajectory of ratings reflects macro and banking sector improvement
Upward trajectory of ratings reflects macro and banking sector improvement Hellenic Republic and Alpha Bank’s Rating Evolution Hellenic Republic Upward Rating Trajectory Three major rating agencies – Long Term Issuer / Senior Unsecured Ratings B1 (stable) / BB- (Positive) / BB- (stable) Hellenic Rep
Slide 7: Pages
Pages • Macroeconomic Overview 3 Alpha Bank • Alpha Bank Overview & Strategic Plan 2020-2022 7 Credit Update • Financial Performance 23 Operating Performance 24 Asset Quality 31 Capital, Liquidity & Funding 35 Appendix 39 7
Slide 8: Superior positioning to drive Greece's 2nd largest lender to a new era
Superior positioning to drive Greece’s 2nd largest lender to a new era Overview & Strategic Plan 140 years track record as a stable and privately managed Bank with a client driven business model Strong brand reputation that c. 3.1mn customers stands for credibility and in Greece with reliability1 an
Slide 9: Alpha Bank at a Glance
Alpha Bank at a Glance Systemic bank established in Overview & Strategic Plan Gross Loans Breakdown Balance sheet structure 1879 (Sep-19) (€bn) 3% All figures as of 30/09/2019 9% 62.7 62.7 Wholesale Loans 10% 42% Mortgages 11.3 Other 14.8 Other Gross Loans €49.1bn Greece 86% €49.1bn SBLs Consumer Lo
Slide 10: Transformation plan supported by best in class capital position and operating performance
Alpha Bank’s transformation plan strongly supported by Best in class Capital position and Operating performance Overview & Strategic Plan Leading PPI generation Strong capital ratio with superior quality 9M Annualized PPI / Average Assets CET1 (Phased-in) Total Assets 62.7 64.0 65.8 59.1 RWAs (€bn)
Slide 11: One of the most active banks in Europe in terms of portfolio sales
One of the most active banks in Europe in terms of volumes of portfolio sales1 2018 2019-2020 “Project Mars” “Project Neptune” Corporate Portfolio ▪ On Balance sheet: “Project Venus” “Project Jupiter” “Project Mercury” ▪ On Balance sheet: €260mn €1.8bn ▪ Non-Performing mostly ▪ SMEs loan portfolio s
Slide 12: Where we want to be in 2022
Where we want to be in 2022 Overview & Strategic Plan From Post Galaxy in To Q3 2019 2020 2022 Decisive de-risking of NPE ratio1 44% ~20% <10% the balance sheet and CoR de-escalation Cost of Risk2 ~200bps <100bps <70bps Cost/ Income3 55% <48% Continuously improving efficiency Cost/ Assets ~170bps <1
Slide 13: Tangible value creation levers to deliver value to shareholders
We have identified tangible value creation levers, which we will use to deliver value to our shareholders Overview & Strategic Plan 1 2 3 ~9% 2022 ROE Project Galaxy Operating model Customer-centric growth ~Up to EUR 12bn NPE ~EUR 120mn (>10%) reduction in Increase penetration from 1.3 to securitiza
Slide 14: Overview of NPE acceleration plan (project Galaxy)
Overview of NPE acceleration plan (project Galaxy) Project Galaxy Alpha Bank AE Non-Core NPEs – Project Galaxy i iii 100% Hive-down Mortgage loans Senior SPV notes Retail Secured “New” Alpha Bank Wholesale DTC Retail Unsecured Performing assets Core NPEs New CEPAL (Servicer) Mezzanine/Junior ii Serv
Slide 15: Decisive action on Non-Core NPEs to reach SSM targets well ahead of plan
Decisive action on Non-Core NPEs to reach SSM targets well ahead of plan Project Galaxy NPE ratio1, % 44.1 ~20 NPL ratio1, % 27.8 ~10 Alpha Bank intends NPE stock, 18.9 EUR bn ~0.5 to apply to the Up to 12 recently approved ~7 Hercules Asset Q3 2019 Further reduction Securitization Pro forma for Pro
Slide 16: Improved quality of retained €7bn NPE portfolio
Improved quality of retained €7bn NPE portfolio will be a key component of the value creation strategy Bank perimeter in Greece Transformation plan materially addressing high risk areas... …resulting in a significantly better portfolio quality Retail NPEs Wholesale NPEs Evolution of total portfolio,
Slide 17: Transaction opens clear path towards an NPE ratio <10% by 2022
Transaction opens clear path towards an NPE ratio <10% by 2022 with lower cost of risk over the period Project Galaxy NPE ratio1,2 ~20% <10% NPL ratio1,2 ~10% <5% ~7 NPE stock2 EUR bn ~2.0 ~1.5 <3.5 Focus on restructurings Pro forma for Modification Closing 2022 securitization strategies procedures
Slide 18: Cost of Risk is expected to be significantly reduced post Galaxy
Cost of Risk is expected to be significantly reduced post Galaxy Main driver of Cost of Risk is the management of troubled assets, therefore Cost of Risk is expected to normalise in line with NPE ratio reduction Group NPE Coverage Group Cost of Risk bps Group NPE ratio2, % Cost of Risk 1.9% 1.7% 3.2
Slide 19: Project Galaxy: Solid planning with frontloaded actions
Project Galaxy: Solid planning with frontloaded actions Full engagement with rating agencies and reputable international investors affirms timeline is on track Timing Status Portfolio selection: up to EUR 12bn Oct 2019 Acquisition of Centerbridge’s stake in Cepal H1 2020 Commercial terms signe
Slide 20: Maintaining strong capital ratios and ample buffers
Maintaining strong capital ratios and ample buffers above requirements has been and will remain core to our strategy Capital position targets Key capital Phase-in of capital requirements vs. capital targets management targets Capital as % of RWAs De-risking of our balance sheet ~17.0% should allow ~
Slide 21: Controlled capital buffer well above minimum requirements
Starting from a position of strength we will retain a controlled capital buffer well above minimum requirements Capital position targets Tangible BV EUR bn 8.1 RWAs ~47 ~43 EUR bn Alpha Bank’s Buffers in 2022 well above 18.3% 2.4% 2.4% Regulatory Requirements ~17% 3.5% ~2.0% Key drivers of ~2% organ
Slide 22: Decisive actions to reduce NPEs place Alpha Bank in position of strength relative to peers
Decisive actions to reduce NPEs, places Alpha Bank in position of strength relative to peers; Post Galaxy, Alpha Bank’s NPE ratio below 20% in 2020 Banks with frontloaded NPE reduction plans Banks with no large transaction (as of 30.09.2019, PF for significant Transactions) announcement (as of 30.09
Slide 23: Pages
Pages • Macroeconomic Overview 3 Alpha Bank • Alpha Bank Overview & Strategic Plan 2020-2022 7 Credit Update • Financial Performance 23 Operating Performance 24 Asset Quality 31 Capital, Liquidity & Funding 35 Appendix 39 23
Slide 24: A. Operating Performance
A. Operating Performance 24 24
Slide 25: Q3 2019 Financial Performance Overview
Q3 2019 Financial Performance Overview Financial Performance Capital – 18% CET1 • Phased in CET1 ratio increased by 25bps q-o-q to 18.0%, positively affected by • Core PPI effectively flat q-o-q at €216mn in Q3 GGBs performance 2019, as the decline in NII was counterbalanced by the increase in net f
Slide 26: Q3 2019 Group P&L and Balance Sheet highlights
Q3 2019 Group P&L and Balance Sheet highlights yoy % Balance Sheet qoq 9M 9M Q3 Q2 qoq % Profit & Loss (€ mn) 1 30/09/2019 30/06/2019 change 31/12/2018 2019 2018 change 2019 2019 change (€ bn) (€ bn) Net Interest Income (NII) 1,160 1,329 (12.7%) 383 389 (1.4%) Assets 62.7 63.0 (0.2) 61.0 Net fee and
Slide 27: Q3 2019 Core PPI effectively flat q-o-q at €216mn
Q3 2019 Core PPI effectively flat q-o-q at €216mn Stable Pre-provision Income underpinned by sustainable net interest and net fee and commission income evolution PPI q-o-q evolution (€mn) Core Focus 323 +€2mn 70 285 214 14 216 (109) (4) (3) (5) Q2 19 Trading Q2 19 Δ NII Δ Net Fee & Δ Other income Δ
Slide 28: Net Interest Income decreased by 1.4% q-o-q; NIM at 2.4%
Net Interest Income decreased by 1.4% q-o-q; NIM at 2.4% Resilient Net Interest Income supporting pre-provision income NII q-o-q evolution (€mn) NIM% 2.5% 2.5% 2.4% -€5.4mn • Net Interest Income in Q3 2019 stood at €383.2mn, reduced q-o-q, as the negative 388.4 388.6 4.2 383.2 impact from loans, lin
Slide 29: Net Fee and Commission income up by €14mn q-o-q
Net Fee and Commission income up by €14mn q-o-q, supported by cards performance Increasing Fee and Commission Income supported by commercial banking activities, asset management and bancassurance Net Fee & Commission Income evolution q-o-q (€mn) +€14mn Q3 2019 Net Fee and Commission Income increased
Slide 30: Recurring Operating expenses decreased by 2.0% on a yearly basis
Recurring Operating expenses decreased by -2.0% on a yearly basis Reduction supported by ongoing headcount reduction and other cost efficiency measures in place Recurring OPEX y-o-y (€ mn) -€16.5mn or -2.0% On an annual basis • In Greece recurring operating expenses declined by 4.0% y-o-y to €643mn
Slide 31: B. Asset Quality
B. Asset Quality ot ALPHA BANK
Slide 32: NPE stock in Greece down by €3.3bn y-o-y
NPE stock in Greece down by €3.3bn y-o-y Ongoing NPE management through disposals and organic reduction initiatives has been moderate paced so far… NPE Reduction – Greece (€bn) NPE Ratio1 53.6% 51.7% 49.5% 48.8% 45.7% (€8.5bn) 27.7 25.0 22.5 21.9 The announced Strategic 1 0.2 0.4 0.3 19.2 Plan to ad
Slide 33: Detailed overview of asset quality by portfolio – Greece
Detailed overview of Alpha Bank’s asset quality by portfolio – Greece (€ bn) Wholesale SBL Mortgages Consumer Total Gross loans 17.5 4.9 14.5 5.2 42.1 (-) Accumulated Provisions (2.7) (1.7) (2.0) (1.8) (8.1) Net loans 14.9 3.2 12.6 3.4 34.0 NPLs 2.3 2.9 5.0 1.9 12.1 NPL ratio 12.9% 60.6% 34.6% 36.4%
Slide 34: Detailed overview of asset quality by portfolio – Group
Detailed overview of Alpha Bank’s asset quality by portfolio – Group (€ bn) Wholesale SBL Mortgages Consumer Total Gross loans 20.8 4.9 17.7 5.7 49.1 (-) Accumulated Provisions (3.4) (1.7) (2.8) (1.9) (9.8) Net loans 17.4 3.2 14.9 3.7 39.3 NPLs 3.2 3.0 6.4 2.1 14.7 NPL ratio 15.6% 60.6% 36.3% 36.3%
Slide 35: C. Capital, Liquidity & Funding
C. Capital, Liquidity & Funding 35 35
Slide 36: Strong capital position based on standardised methodology for risk weights
Strong capital position based on standardised methodology for risk weights CET1 ratio at 18.0%, increased by 25bps, positively CET1 ratio quarterly evolution (€ mn) affected by our Greek Government Bonds portfolio CET1 8,454 8,671 8,686 7,119 capital valuation 33bps 12bps 18.0% 18.1% CET1 ratio
Slide 37: Simple Balance sheet with growing deposit base and increased liquidity
Simple Balance sheet with growing deposit base and increased liquidity Asset split (€ bn) Liabilities and Equity split (€ bn) 62.7 62.7 60.3 60.3 Cash and balances 0.9 1.1 Cash and balances with Central Banks ELA 3.2 ECB with Central Banks 1.9 Due from Banks 3.6 3.1 ECB Due from Banks 2.6 6.7 Due to
Slide 38: Improved liquidity profile supported by increased deposit inflow
Improved liquidity profile supported by increased deposit inflow and termination of Eurosystem funding Lower reliance on Eurosystem funding Thousands Group deposits on positive trend (€ bn) Thousands 39.6 10.2 (€7.0bn) 38.7 39.3 34.9 6.0 5.9 6.0 7.0 5.5 4.1 3.4 3.2 32.7 33.3 33.7 0.3 29.3 4.1 3.2 3.
Slide 39: D. Appendix
D. Appendix “ ALPHA BANK
Slide 40: Key drivers of future organic capital generation
Key drivers of future organic capital generation Organic capital generation is driven by new business growth, cost of risk reduction and continued focus on operating expenses 2022 Target RoE: 9% Cost of risk Operating expenses Operating income (bps) (€mn) Net Fee and commission income (€mn) Recurrin
Slide 41: Track record of Operating expenses reduction
Track record of Operating expenses reduction OpEx decreased by €294mn (>20%) in 2013-2019E demonstrating a strong track record of OpEx reduction and further optimisation attainable by 2022 Group recurring Opex and C/I Further reduction in Group recurring Opex: 2019E to 2022 (€mn and %) (€mn) C/I1 64
Slide 42: Net Loan and deposits evolution in Greece
Net Loan and deposits evolution in Greece Systemic bank established in 1879 New loan disbursements supported by growing and granular deposit base at lower funding cost Net Loans1 Customer Deposits1 Net Loan evolution Lending spreads evolution Deposit volumes Deposit interest rates Core (€bn) bps (€b
Slide 43: Businesses and Individuals: Key metrics and levers
Businesses and Individuals: Key metrics and levers Systemic bank established in 1879 €14bn of new disbursements in Businesses and Individuals segments constitute a key pillar to customer centric growth initiatives Businesses Segment1 Individuals Segment1 Gross disbursements 2019-22 Net Fee and commi
Slide 44: Positive contribution of international business with disciplined allocation of capital
Positive contribution of international business with disciplined allocation of capital Further enhance revenue diversification leveraging our international business with attractive 2022 targets Gross Loans, 9M 2019 Target RoE 9% Deposits, 9M 2019 Target CAD Romania Albania Advance to Tier 1 bank sta
Slide 45: Creating a market-leading sizeable servicer combining Alpha Bank and CEPAL platforms
Creating a market-leading sizeable servicer by combining the capabilities of Alpha Bank’s and CEPAL’s servicing platforms Project CEPAL Alpha Bank Servicing Platform Galaxy A Leading servicer in the market with: First licensed servicer by the Bank of Established platform with wide ▪ End-to-end servi
Slide 46: Ambitious Management team leading Alpha Bank's new strategy
Ambitious Management team leading Alpha Bank’s new strategy Organizational effectiveness Management team1 Chief Executive Officer General Manager Member of the V. Psaltis Executive Committee Growth & Innovation S. Filaretos Chief Human Resources Officer (CHRO) F. Melissa2 Communication & External En
Slide 47: Ratings
Ratings Hellenic Republic Upward Rating Trajectory B1 (stable) / BB- (Positive) / BB- (stable) Rising investor Solid domestic Falling Lift of Capital Positive Deposit Growth appetite for demand Unemployment Controls Trends Prospects Greek Assets Builds a solid base for Alpha Bank’s Upward Rating Tra
Slide 48: Alpha Bank Contacts
Alpha Bank Contacts Lazaros Papagaryfallou General Manager – CFO +30 210 326 2261 cfo-office@alpha.gr Dimitrios Kostopoulos Elena Katopodi Stella Traka Manager Deputy Manager Senior Investor Relations Division Investor Relations Division Investor Relations Officer +30 210 326 2271 +30 210 326 2272 +
Alpha Bank — Debt Investor Presentation (January 2020) on 6ix