Alpha Bank S.a. · ATHEX:ALPHA
Alpha Bank — FY2019 Earnings Presentation
59 slides from Alpha Bank's earnings presentation, Mar 27, 2020
Slide 1: Alpha Bank FY 2019 Results
Alpha Bank FY 2019 Results Investor Presentation March 27, 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 • Business Highlights 3 • Macroeconomic Update 11 Alpha Bank • Financial Performance Analysis 14 • ESG 26 • Appendix 29 Asset Quality 29 Capital 35 Volumes 37 P&L 43 3
Slide 4: Deteriorating short-term prospects of the Greek economy as the COVID-19 pandemic spreads across Europe
Deteriorating short-term prospects of the Greek economy as the COVID-19 pandemic spreads across Europe Further to previous clear recovery path, post COVID-19 outbreak, the Global economy as well as the Greek economy are surrounded with heightened uncertainty that is evolving The impact of Covid-
Slide 5: Improved capital and liquidity position to withstand the COVID-19 induced turbulence
Improved capital and liquidity position to withstand the COVID-19 induced turbulence Robust capital ratio Liquidity enhanced 104bps 19.0% Liquidity metrics 31/12/2019 Mar-20 17.9% Group Deposits (€bn) 40.4 41.5 17.4% 17.9% CET1% Cash & Balances with CBs (€bn) 2.0 3.1 13.75% 12.875% 2019 Deposits den
Slide 6: Regulatory and fiscal measures to address the challenges of Covid-19
Regulatory and fiscal measures to address the challenges of Covid-19 EBA ECB Greek Government Classification of forbearance - No Exercise temporary flexibility regarding Tax Deferrals and Social security automatic re-classification under the the classification of debtors as “UTP” deferrals or subsid
Slide 7: Alpha Bank’s key priority is to support our Customers, Businesses and Households
Alpha Bank’s key priority is to support our Customers, Businesses and Households Bank’s role: a) Ensure business continuity, to be able to support national effort b) Build on the measures taken by the Government to support affected sectors c) Take additional steps in the same direction Bank’s suppor
Slide 8: Employee Health and Safety of Utmost Importance; High levels of Operational Readiness
Employee Health and Safety of Utmost Importance; High levels of Operational Readiness Bank’s initiatives Guarantee Health and Safety Maintain flow of operations Special purpose leaves to most vulnerable employees Ongoing procedures to ensure that a solid operational plan is in place to guarantee
Slide 9: Project Galaxy remains key to the successful implementation of our 2020 – 2022 Strategy
Project Galaxy remains key to the successful implementation of our 2020 – 2022 Strategy Project Galaxy: Decisive de-risking of our balance sheet and CoR de-escalation Front-loaded, substantial NPE reduction through a large scale securitization transaction using the Hellenic Asset Protection Sche
Slide 10: Projects Galaxy and Neptune: Progress to date and Covid-19 impact
Projects Galaxy and Neptune: Progress to date and Covid-19 impact The Covid-19 pandemic has materially impacted current operating and market conditions, Project Galaxy remains for the Bank a very strategic project and the Group is committed, on the back of significant progress that has been made to
Slide 11: Pages
Pages • Business Highlights 3 • Macroeconomic Update 11 Alpha Bank • Financial Performance Analysis 14 • ESG 26 • Appendix 29 Asset Quality 29 Capital 35 Volumes 37 P&L 43 11
Slide 12: Fiscal and monetary policy responses to support economic activity in the Euro Area
Fiscal and monetary policy responses to support economic activity in the Euro Area Deteriorating short-term prospects of the Greek economy Heightened uncertainty causes turbulence in capital markets as the COVID-19 pandemic spreads across Europe ECB announcement of the 4.5% €750 bn PEPP (incl. Greek
Slide 13: Day-by-day Greek Government policy reactions to contain the COVID-19 pandemic
Day-by-day Greek Government policy reactions to contain the COVID- 19 pandemic and fiscal measures to support domestic economic activity 900 National Lockdown (with specific exemptions) 800 3rd set of measures announced by MOF 700 Closedown of city hotels from 23/3 to end of April 600 Lockdown of co
Slide 14: Pages
Pages • Business Highlights 3 • Macroeconomic Update 11 Alpha Bank • Financial Performance Analysis 14 • ESG 26 • Appendix 29 Asset Quality 29 Capital 35 Volumes 37 P&L 43 14
Slide 15: FY 2019 Financial Performance Overview
FY 2019 Financial Performance Overview Financial Performance Capital – CET1 and CAD ratios stable at 17.9% • Robust capital position with phased in CET1 ratio at 17.9% • NII at €1,547mn, down by 11.9% y-o-y, as a result of deleveraging linked with NPE reduction • Fully Loaded CET1 ratio at 14.9% • B
Slide 16: Q4 2019 Group P&L and Balance Sheet
Q4 2019 Group P&L and Balance Sheet yoy FY FY yoy % Q4 Q3 qoq % Profit & Loss (EUR mn) Balance Sheet (EUR bn) 31/12/2019 30/09/2019 31/12/2018 change 2019 2018 1 change 2019 2019 change (EUR bn) Net Interest Income (NII) 1,547 1,756 (11.9%) 387 383 1.0% Assets 63.5 62.7 61.0 2.4 Net fee and commissi
Slide 17: CET1 and CAD ratios stable qoq at 17.9%
CET1 and CAD ratios stable qoq at 17.9% CET1 ratio evolution qoq 8,671 8,495 8,510 9,006 6,943 Capital, EUR mn 18.0% 1bp 104bps 19.0% 23bps 2bps 17.9% 17.9% (21bps) (18bps) 14.9% CET1 Period FVOCI DTA RWA Other CET1 CAD Tier 2 CAD FLB3 IFRS9 Sep-19 Profits Dec-19 Dec-19 pf Tier 2 CET1 Dec-19 Minimum
Slide 18: Q4 2019 Core PPI at €208.7mn
Q4 2019 Core PPI at €208.7mn PPI qoq evolution EUR mn (€10mn) 121.1 285.2 256.4 219.1 4.0 (73.4) 208.7 (66.1) (2.5) (0.4) (11.4) Q3 19 Trading Q3 19 Δ ΝΙΙ Δ Fees Δ Other Δ OPEX Q4 19 Trading Extraordinary Q4 19 Reported PPI and Other Core PPI Income Core PPI Costs Reported PPI Core PPI in Q4 2019
Slide 19: Net Interest Income higher by €4mn in Q4 2019; NIM flat qoq
Net Interest Income higher by €4mn in Q4 2019; NIM flat qoq NII qoq evolution New disbursements EUR mn EUR bn NIM, % 2.44% 2.45% Year Q1 Q2 Q3 Q4 FY 19 443.8 459.0 426.6 426.6 +€4mn 388.4 388.6 383.2 1.8 0.6 2.7 387.1 2019 0.6 0.9 1.0 1.0 3.5 (1.2) 2018 0.6 0.7 0.6 1.0 3.0 Funding cost rates NII NII
Slide 20: Net Fee and Commission income increased by 3% yoy
Net Fee and Commission income increased by 3% yoy Net Fee & Commission Income evolution yoy Net Fee & Commission Income evolution qoq EUR mn EUR mn +€9mn (€2.5mn) 2 340 96 3 1 2 IB & Brokerage 2 93 331 2 9 Asset Gathering 16 3 7 (2) 60 & Bancassurance 54 17 271 Commercial 77 73 Banking 269 FY 18 Car
Slide 21: Recurring Operating Expenses reduced by 2% yoy
Recurring Operating Expenses reduced by 2% yoy Recurring OPEX evolution yoy Recurring OPEX evolution qoq EUR mn EUR mn (€22mn) €11mn 1,087 9 34 1,065 1,087 1,065 266 278 Depreciation 102 (14) 192 Depreciation 37 (16) (35) 145 205 Abroad 35 & amortization & amortization Staff costs 464 Staff costs 11
Slide 22: Group deposit inflows of €1.6bn for 2019
Group deposit inflows of €1.6bn for 2019 Group deposits evolution Loan to Deposit ratio evolution EUR bn % +€1.6bn 106% 0.8 40.4 1.4 104% 38.7 (0.5) 103% (0.1) 5.9 104% Abroad 6.0 103% 101% 102% 32.7 34.5 100% 98% Greece 97% Dec-18 Individuals Business State Abroad Dec-19 Q4 18 Q1 19 Q2 19 Q3 19 Q4
Slide 23: Negative gross organic formation in Greece
Negative gross organic formation in Greece NPE reduction - Greece Negative gross formation in Greece EUR bn 27.7 Gross (0.47) (0.06) (0.38) (0.26) (0.49) Formation 25.0 EUR bn (€3.1bn) 21.9 Entries 0.66 0.68 0.60 0.48 0.49 18.8 (0.74) (0.86) (0.86) (0.97) Exits (1.13) Dec-16 Dec-17 Dec-18 Dec-19 Q4
Slide 24: Gross organic NPE formation in Greece across segments
Gross organic NPE formation in Greece across segments Negative gross formation in Retail Gross formation (Organic) - Wholesale Gross formation (Organic) - Retail EUR mn EUR mn 60 (51) (11) (117) (189) (186) (193) (208) (286) (476) Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Gross for
Slide 25: Group Cost of Risk at 2.0%; NPE cash coverage stable at 44%
Group Cost of Risk at 2.0%; NPE cash coverage stable at 44% Group CoR Group CoR incl. modification losses (over Gross loans) Group NPE Coverage Total Group NPE cash coverage Coverage 99% 99% Wholesale 53% 44% 44% SBL 45% 3.3% Mortgage 32% Consumer 57% 2.1% 2.0% Sep-19 Dec-19 1.9% 1.9% Group NPL Cove
Slide 26: Pages
Pages • Business Highlights 3 • Macroeconomic Update 11 Alpha Bank • Financial Performance Analysis 14 • ESG 26 • Appendix 29 Asset Quality 29 Capital 35 Volumes 37 P&L 43 26
Slide 27: Alpha Bank’s Sustainability Strategy
Alpha Bank’s Sustainability Strategy 1 2 3 4 For the Market For our People For the Environment For the Society 61% Branches accessible by people with disabilities 6,969 Employees (Bank level) (10,530 at Group level) 86% of annual energy consumption stemming from electricity (vs. 88% in 2018) 582 Spo
Slide 28: Alpha Bank’s key actions to respond to emerging ESG/ Sustainability Regulations/Trends
Alpha Bank’s key actions to respond to emerging ESG/ Sustainability Regulations/Trends Emerging Regulations/Trends Alpha Bank’s key actions European Commission’s Alpha Bank has endorsed the six Principles of Responsible Alpha Bank demonstrates a Action Plan on Financing Banking (PRB). positive tre
Slide 29: Pages
Pages • Business Highlights 3 • Macroeconomic Update 11 Alpha Bank • Financial Performance Analysis 14 • ESG 26 • Appendix 29 Asset Quality 29 Capital 35 Volumes 37 P&L 43 29
Slide 30: Wholesale and Small Business portfolio in Greece
Wholesale and Small Business portfolio in Greece Diversified wholesale portfolio Performing wholesale portfolio in Greece and expected COVID-19 impact Note: Loans including on and off-balance sheet exposures (€2.1bn Wholesale off balance sheet exposures) Not to be affected Sectors to be more affecte
Slide 31: Auctions and repossession activity evolution
Auctions and repossession activity evolution Auctioned properties FY19 successfully auctioned properties: Breakdown by highest bidder 3.871 3.489 3rd parties unsuccessfully 18% 60% Alpha Bank 62% successfully auctioned 38% 40% 82% 2018 2019 Auctioned properties volume during November was the highe
Slide 32: NPL stock in Greece down by €2.4bn y-o-y
NPL stock in Greece down by €2.4bn y-o-y Wholesale Gross NPL formation - Greece NPL reduction - Greece EUR mn EUR bn 142 163 103 110 (€2.4bn) (43) 14.6 14.2 13.9 12.1 12.2 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Retail Gross NPL formation - Greece EUR mn Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 (218) (254) (271) (3
Slide 33: Detailed overview of Alpha Bank’s 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 4.8 14.3 5.2 41.8 (-) Accumulated Provisions (2.7) (1.6) (2.0) (1.7) (8.0) Net loans 14.8 3.2 12.4 3.5 33.8 NPLs 2.6 2.8 4.9 1.8 12.2 NPL ratio 14.8% 59.2% 34.3% 35.6%
Slide 34: Detailed overview of Alpha Bank’s asset quality by portfolio – Group
Detailed overview of Alpha Bank’s asset quality by portfolio – Group (€ bn) Wholesale SBL Mortgages Consumer Total Gross loans 20.7 4.8 17.5 5.7 48.7 (-) Accumulated Provisions (3.4) (1.6) (2.7) (1.8) (9.6) Net loans 17.3 3.2 14.7 3.9 39.2 NPLs 3.5 2.9 6.3 2.0 14.7 NPL ratio 16.9% 59.2% 35.8% 35.6%
Slide 35: Pages
Pages • Business Highlights 3 • Macroeconomic Update 11 Alpha Bank • Financial Performance Analysis 14 • ESG 26 • Appendix 29 Asset Quality 29 Capital 35 Volumes 37 P&L 43 35
Slide 36: Group RWA and CET1 capital
Group RWA and CET1 capital Group Risk Weighted Assets EUR bn Credit Risk Weights per portfolio (€0.6bn) 48.1 0.3 47.5 104% 3.8 (0.7) (0.2) 3.6 79% 1.2 1.5 66% 43.1 42.4 Sep-19 Credit Market Operational Dec-19 Performing Net NPE Total Loan Portfolio RWA Density Credit Market Operational Equity to reg
Slide 37: Pages
Pages • Business Highlights 3 • Macroeconomic Update 11 Alpha Bank • Financial Performance Analysis 14 • ESG 26 • Appendix 29 Asset Quality 29 Capital 35 Volumes 37 P&L 43 37
Slide 38: Balance Sheet composition
Balance Sheet composition Asset split Liabilities and Equity split EUR bn EUR bn 63.5 63.5 61.0 61.0 Cash 2.0 0.3 ELA Cash 3.1 ECB 1.9 3.1 ECB Due from Banks Due from Banks 3.3 Due to 2.5 Due to 7.2 Banks 7.1 Banks excl. excl. ECB Securities 7.0 Securities 8.7 ECB/ELA 17. Time 18. Time 0 deposits 0
Slide 39: Business Volumes
Business Volumes %Dec 2019/ (€ mn) Dec 2019 Sep 2019 Jun 2019 Mar 2019 Dec 2018 Dec 2018 Group Gross Loans 48,731 49,147 51,330 51,836 52,463 (7.1%) Mortgages 17,474 17,709 18,052 18,311 18,561 (5.9%) Consumer Loans 4,258 4,327 4,402 4,418 4,446 (4.2%) Credit Cards 1,415 1,351 1,280 1,341 1,456 (2.8
Slide 40: New financing of €3.5bn in FY 2019
New financing of €3.5bn in FY 2019 New disbursements – per category EUR mn FY 2019 Business disbursements – per sector Other Media & 20% Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Communication Transportation 2018 2018 2018 2018 2018 2019 2019 2019 2019 2019 1% 31% Agriculture Individuals 33 34 36 58 160 48 70 7
Slide 41: Deposits flow per quarter
Deposits flow per quarter Alpha Bank deposits evolution in Greece Deposits breakdown – December 2019 EUR bn Q1: Q2: Q3: Q4: €0.3bn €0.3bn €0.4bn €0.8bn Time 33.3 33.7 34.5 40% 32.7 33.0 0.9 0.9 0.4 0.4 0.2 0.2 Δ Time (0.5) Core (0.6) 60% Δ Core Dec-18 Core Time Mar-19 Core Time Jun-19 Core Time Sep-
Slide 42: Wealth management evolution
Wealth management evolution Alpha Private Bank balances Asset Management balances EUR mn EUR mn 4,539 4,341 4,261 2,282 1,167 61 1,323 1,274 1,723 186 1,612 117 1,548 2,934 2,782 1,025 994 2,739 673 512 501 236 248 437 Dec-17 Dec-18 Dec-19 Dec-17 Dec-18 Dec-19 Money Market Mutual Funds Discretionary
Slide 43: Pages
Pages • Business Highlights 3 • Macroeconomic Update 11 Alpha Bank • Financial Performance Analysis 14 • ESG 26 • Appendix 29 Asset Quality 29 Capital 35 Volumes 37 P&L 43 43
Slide 44: PPI and NII breakdown
PPI and NII breakdown Core PPI breakdown NII decomposition EUR mn EUR mn 522 469 481 485 486 427 388 389 383 387 67 59 55 47 50 243 213 215 219 209 428 396 398 397 399 (51) (50) (49) (50) (52) (265) (17) (17) (16) (11) (10) (279) (256) (266) (278) Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 1
Slide 45: Loan and deposit spreads
Loan and deposit spreads Net loan balances & spreads Deposit mix & cost evolution EUR bn EUR bn 423 408 (51) (50) (49) (49) (50) 407 402 402 % Total 40.2 39.9 39.9 38.7 38.9 39.3 39.6 40.4 39.5 39.3 End of 18.0 17.3 16.8 17.0 42% 18.0 quarter balances 20.8 20.9 21.9 22.8 23.4 58% Q4 18 Q1 19 Q2 19 Q
Slide 46: Operating Expenses
Operating Expenses EUR mn FY 18 FY 19 yoy % Recurring OPEX evolution EUR mn Staff costs (464) (448) (3.4%) 279 265 266 278 General Administrative 256 Depreciation & (522) (473) (9.4%) 26 37 expenses 35 37 35 amortisation Depreciation and 138 General (102) (145) 41.7% 109 115 118 130 amortisation adm
Slide 47: Ambitious Management team leading Alpha Bank’s new strategy
Ambitious Management team leading Alpha Bank’s new strategy Alpha Bank proceeds with the delivery of its strategic plan with important appointments: Anastasia Sakellariou is appointed Chief Transformation Officer and Fragiski Melissa Chief Human Resources Officer Organizational Chief Executive Offic
Slide 48: SEE Operations
SEE Operations1 EUR mn Δ% Δ% Δ% Δ% Dec-19 Cyprus yoy Romania yoy Albania yoy Total SEE yoy Deposits 2,146 (3.0%) 2,594 5.3% 526 4.4% 5,266 1.7% Gross Loans 3,583 (16.5%) 2,656 1.9% 296 (0.2%) 6,535 (9.2%) Mortgages 1,871 (10.2%) 1,173 6.1% 72 1.7% 3,115 (4.4%) Consumer Credit 237 (8.0%) 238 (4.0%) 3
Slide 49: Alpha Bank Group
Alpha Bank Group qoq% yoy % (€ mn) Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 change change Net interest income 387.1 383.2 388.6 388.4 426.6 1.0% (9.3%) Net fee and commission income 93.1 95.6 81.2 70.2 86.3 (2.6%) 8.0% Income from financial operations 121.1 79.9 123.7 73.8 64.3 … … Other Income 6.0 6
Slide 50: Group Results by Business Unit
Group Results by Business Unit Investment Asset Commercial & Retail SE Europe Banking & Other Group Corporate Management (€ mn) Treasury Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 Operating Income 802.0 983.6 601.9 70
Slide 51: Results: Retail Business Unit
Results: Retail Business Unit (€ mn) Q4 2019 Q3 2019 Q2 2019 Q1 2018 Q4 2018 Operating Income 198.7 203.0 203.9 196.5 240.7 Net Interest Income 164.7 164.8 174.1 175.4 202.5 Net fee and Commission Income 32.2 35.9 27.9 20.2 27.1 Trading & Other 1.7 2.3 1.9 0.9 11.0 Operating Expenses (150.1) (145.7)
Slide 52: Results: Commercial & Corporate Business Unit
Results: Commercial & Corporate Business Unit (€ mn) Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Operating Income 119.6 166.0 153.8 162.5 163.9 Net Interest Income 129.2 128.7 130.5 130.9 141.8 Net fee and Commission Income 32.4 35.0 28.9 29.2 38.3 Trading & Other (42.0) 2.2 (5.7) (2.4) (16.2) Operating
Slide 53: Results: Asset Management Business Unit
Results: Asset Management Business Unit (€ mn) Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Operating Income 19.5 18.1 18.4 14.5 12.1 Net Interest Income 3.9 3.6 3.4 2.9 2.2 Net fee and Commission Income 14.5 12.5 11.3 9.8 10.2 Trading & Other 1.1 2.0 3.7 1.8 (0.3) Operating Expenses (9.3) (9.0) (9.1) (7
Slide 54: Results: Investment Banking & Treasury Business Unit
Results: Investment Banking & Treasury Business Unit (€ mn) Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Operating Income 196.5 96.5 148.0 105.8 107.6 Net Interest Income 35.1 33.1 27.4 26.7 27.7 Net fee and Commission Income 5.3 4.5 5.3 3.8 2.7 Trading & Other 156.1 58.9 115.3 75.4 77.2 Operating Expens
Slide 55: Results: SE Europe Business Unit
Results: SE Europe Business Unit (€ mn) Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Operating Income 66.6 67.2 67.2 64.6 56.4 Net Interest Income 52.9 53.7 52.6 51.2 51.9 Net fee and Commission Income 8.6 8.0 7.8 7.3 7.7 Trading & Other 5.1 5.5 6.8 6.1 (3.1) Operating Expenses (59.7) (53.0) (51.0) (48.6
Slide 56: Results: Other Business Unit
Results: Other Business Unit (€ mn) Q4 2019 Q3 2019 Q2 2019 Q1 2019 Q4 2018 Operating Income 6.5 14.4 13.1 (10.6) 19.2 Net Interest Income 1.3 (0.8) 0.6 1.3 0.5 Net fee and Commission Income (0.0) (0.2) (0.0) (0.0) 0.2 Trading & Other 5.2 15.4 12.5 (11.9) 18.5 Operating Expenses (79.2) (24.5) (18.2)
Slide 57: Glossary (1/2)
Glossary (1/2) APM Definitions Relevance of the metric Reference number Abbreviation Accumulated Provisions and FV The item corresponds to (i) "the total amount of provision for credit risk that the Group has recognized and derive from contracts with Standard banking 1 LLR adjustments customers", as
Slide 58: Glossary (2/2)
Glossary (2/2) Relevance of the Reference APM Definitions Abbreviation metric number Non Performing Exposure Total Accumulated Provisions and FV adjustment plus the value of the NPE collateral divided by NPEs at the end of the reported period. NPE Total coverage equals the NPE Total Asset quality me
Slide 59: 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 +