Alior Bank Sa · GPW:ALR
Alior Bank Sa — Q3 2016 Earnings Presentation
38 slides from Alior Bank Sa's earnings presentation, Nov 9, 2016
Slide 1: Alior Bank S.A. Q3 2016 results presentation
ALIOR BANK S.A. Q3 2016 results presentation November 9, 2016 1
Slide 2: Agenda
AGENDA 1 Highlights 2 Alior / BPH core merger 3 Operational Performance 4 T-Mobile update 5 Outlook 6 Appendix 2
Slide 3: Highlights
HIGHLIGHTS Profitability uplift and good operational performance ensures reaching 2016 targets. Substantial NIM improvement accompanied by flat CoR NIM minus CoR up 20 bps, Good quarterly loan volume development (1 bn net) slightly impacted by seasonality, Alior / BPH Core merger on track Al
Slide 4: Dronn – the virtual advisor
Dronn – the virtual advisor Dronn is an intelligent virtual agent, designed to respond quickly and consistently to customers and interactively guide them through a personalized conversation. Last year, the system was implemented for debt collection campaigns. Since September 2016 the system is used
Slide 5: BPH Core transaction completed
HIGHLIGHTS BPH Core transaction completed Tender offer and squeeze out executed successfully, De-merger month ahead of the plan, Alior commenced integration upon de-merger on Nov 4th, No revision to announced synergies – 460 m PLN annual synergies by 2019, Downward revision of integration
Slide 6: Agenda
AGENDA 1 Highlights 2 Alior / BPH core merger 3 Operational Performance 4 T-Mobile update 5 Outlook 6 Appendix 6
Slide 7: Operational merger key steps
OPERATIONAL MERGER KEY STEPS Demerger of Bank BPH and transfer of the Bank BPH Core Business to Alior Bank on November 4th – one month ahead of plan November’16 BPH demerger Securing of operational activities processes Nov’16 Customers & employees retention Nov-Dec’16 Customers activation orie
Slide 8: BPH Core business transformation program
BPH CORE BUSINESS TRANSFORMATION PROGRAM Pre-demerger synergies status Plan Actual 2016 4 Nov’16 Branches conversion 114 109 Branches closing 83 87 FTEs 4 070 3 944 8
Slide 9: Integration cost / synergies update (post-demerger)
INTEGRATION COST / SYNERGIES UPDATE (POST-DEMERGER) No changes to planned synergies Synergies 2016 2017 2018 2019 HR 0 54 143 176 IT & Operations 35 51 154 160 Other -22 -29 -32 -32 Total 13 76 265 304 Integration costs revised – down PLN 150 m Old Revised Integration costs 2016 2017 2018 2019 Total
Slide 10: Q1-Q3 proforma key financials for combined institution
Q1-Q3 PROFORMA KEY FINANCIALS FOR COMBINED INSTITUTION Actual Alior BPH Core Combined in PLN m Q1-Q3’16 Q1-Q3’16 Q1-Q3’16 Total revenues 1 831 736 2 567 Costs -861 -616 1 477 Net profit 249 -2 247 Loans 35 089 8 646 43 745 Deposits 37 432 12 346 49 778 5 878 5 878 Equity (including PLN 1,5 bn for 1
Slide 11: Agenda
AGENDA 1 Highlights 2 Alior / BPH core merger 3 Operational Performance 4 T-Mobile update 5 Outlook 6 Appendix 11
Slide 12: Key financials
KEY FINANCIALS Q3'16 Q3'15 (A/B)-1 (D/G)-1 M PLN Q3'16 Q2'16 Q3'15 YTD YTD (%) (%) A B C D E F G Net interest income 1 347 1 101 22 491 444 384 28 Net fee and commissions 240 252 -5 76 76 89 -15 Trading result & other 244 241 1 82 83 78 5 Operating income 1 831 1 595 15 648 603 550 18 General Admini
Slide 13: Loan book
LOAN BOOK Loan book split in PLN m +19% +3% 35 089 34 136 401 Other business 325 502 Factoring 534 29 389 Investment 6 191 121 6 103 loans 505 43% 43% 4 917 43% 7 931 Working Business 7 791 Capital 7 065 350 Other retail 383 818 809 Mortgage other 656 918 Mortgage 7 631 7 939 real estate 6 243 57% 5
Slide 14: Deposit base
DEPOSIT BASE L/D = 94% in PLN m Retail +18% -3% L/D=81% Deposits Loans 64% 57% 24 558 23 926 Term, own 20 314 banking sec., other 14 662 13 058 Current 11 987 Loans 20 063 9 895 10 868 8 327 Q3'15 Q2'16 Q3'16 Q3'16 Corporate +21% +1% L/D=109% Term, own Deposits Loans banking sec., 36% 43% other 13 4
Slide 15: Credit risk overview
CREDIT RISK OVERVIEW NPL total (%) 13,1 13,6 Market avg.* 12,0 12,4 11,0 11,3 10,8 9,8 10,1 10,0 9,4 11,3 2,9 2,2 2,8 2,6 2,6 2,5 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Coverage ratio (%) 65 66 67 Market avg.* 65 63 59 57 57 54 54 50 63 48 32 34 31
Slide 16: Rebound of profitability
REBOUND OF PROFITABILITY Alior NIM development (%) NIM 4,6% 4,3% 4,5% 4,2% 2015 Q1'16 1H'16 Q3'16 CoR -2,3% -2,1% -2,0% -2,1% 2,3% 2,2% 2,2% 2,4% NIM - CoR 2015 Q1'16 1H'16 Q3'16 NIM – CoR rebound driven by higher NIM and stable CoR levels NIM formula 2015: NII for 2015 divided by average IEA form 2
Slide 17: Fees and commissions
FEES AND COMMISSIONS 89 87 Net F&C 79 76 76 145 140 138 137 135 F&C income 75 72 fees related to C/A, 75 71 82 loans, transfers 26 24 21 29 bancassurance 13 24 payment and credit 24 24 23 25 cards servicing 19 21 17 13 17 brokerage fees Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 -51 F&C expenses -56 -61 -61 -59
Slide 18: Capital position
CAPITAL POSITION 20,9% 16,1% 12,7% 12,5% 13,5% 17,3% 13,4% 10,3% 10,6% 9,7% Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 TCR Tier-1 Q2’16 increase reflects PLN 2,2 bn rights issue. Q1’16 CAR calculation includes the effect of guarantee and counter guarantee agreements concluded on March 31, 2016. 18
Slide 19: Cost development as planned
COST DEVELOPMENT AS PLANNED 325,1 287,2 297,1 276,6 11,5 11,4 325,1 276,6 275,7 285,7 Q4'15 Q1'16 Q2'16 Q3'16 Integration costs 19
Slide 20: Sizable customer base
SIZABLE CUSTOMER BASE Slight decline of customer base as a result of inactive accounts cleaning in Q3’16. Q1’16 Q2’16 Q3’16 Branches 1 874 1 930 1 844 Consumer Finance 520 560 541 T-Mobile 558 590 611 Total retail clients 2 952 3 080 2 996 Business clients 132 133 134 Total number of clients 3 084 3
Slide 21: Sales network
SALES NETWORK 4th largest distribution network among Polish banks 2 124 1085 947 801 627 481 468 465 394 391 Bank 1 Bank 2 Bank 3 Alior Bank 4 Bank 5 Bank 6 Bank 7 Bank 8 Bank 9 Data for Banks as at the end of Q2’16, Alior Q3’16 and number three if partner networks are accounted for. Alior Tesco T-M
Slide 22: Agenda
AGENDA 1 Highlights 2 Alior / BPH core merger 3 Operational Performance 4 T-Mobile update 5 Outlook 6 Appendix 22
Slide 23: T-Mobile partnership in Poland
T-MOBILE PARTNERSHIP IN POLAND Income (m PLN) Strong customer acquisition 18,3 • 35-37 ths. new customer acquisition per quarter, 16,2 95% active customers 14,6 • Unique and fully integrated device financing process (T-Mobile POS and remote channels in Q1 2017) – 140 ths devices financed, 125 m new
Slide 24: Agenda
AGENDA 1 Highlights 2 Alior / BPH core merger 3 Operational Performance 4 T-Mobile update 5 Outlook 6 Appendix 24
Slide 25: Going forward: 2016 outlook maintained
GOING FORWARD 2016 Outlook maintained 2016 consensus of PLN 322 m* NIM ~4,6% C/I below 48% excluding banking tax CoR ~2,3% Loan growth 2016 PLN 5 billion net *based on the following analysts forecasts: SG – February 8; Ipopema – February 8; Citi – February 19; JP Morgan – February 26. 25
Slide 26: Agenda
AGENDA 1 Highlights 2 Alior / BPH core merger 3 Operational Performance 4 T-Mobile update 5 Outlook 6 Appendix 26
Slide 27: Income statement snapshot
INCOME STATEMENT SNAPSHOT in PLN m Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Interest income 614 632 663 694 724 Interest expense -231 -233 -251 -250 -233 Net interest income 384 400 412 444 491 Dividend 0 0 0 0 0 Fee and commission income 145 140 138 137 135 Fee and commission expense -56 -61 -51 -61 -59 Net f
Slide 28: Balance sheet snapshot
BALANCE SHEET SNAPSHOT 30 Sep’15 31 Dec’15 31 Mar’16 30 Jun’16 30 Sep’16 Cash and balances with Central Bank 1 348 1 750 666 726 1 285 Financial assets held for trading 365 391 360 402 310 Financial assets available for sale 4 016 4 253 6 008 8 505 5 394 Hedging derivatives 123 140 161 54 62 Receiva
Slide 29: Shareholding
SHAREHOLDING Largest free float among Polish financials institutions 25,19% PZU S.A. 4,03% PZU Życie SA & TFI PZU SA 57,58% Free float 7,17% Aviva OFE Aviva BZWBK* 6,04% Genesis Asset Managers LLP** * on the basis of number of shares registered on Extraordinary GSM which took place on May 5, 2016. *
Slide 30: New loans sales in retail & SME
NEW LOANS SALES IN RETAIL & SME Retail loans (new production per quarter) 2 415 2 270 2 273 2 253 Other retail 70 2 010 44 49 55 Mortgages for 1 681 1 809 46 529 459 456 481 66 1 641 1 530 real estate 73 90 556 629 55 546 562 526 1 697 1 765 1 742 1 865 Cash loans 1 407 1 062 1 114 990 949 Q3'14 Q4'
Slide 31: Employees
EMPLOYEES FTEs 6 687 6 749 6 504 6 361 6 526 3 750 3 733 Outlets 3 697 3 524 3 655 2 807 2 837 2 871 2 937 3 017 Headquaters Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 31
Slide 32: Continued growth of market share
CONTINUED GROWTH OF MARKET SHARE Deposits MARKET SHARE Loans 4,0% 3,9% 3,8% 3,7% 3,6% 3,3% Q3'15 Q2'16 Q3'16 Q3'15 Q2'16 Q3'16 Alior’s deposits as well as gross loans according to published financial statements. Deposits Quarterly growth (%) Loans Total Retail Corporate Total Retail Corporate ALIOR
Slide 33: Polish macro outlook
POLISH MACRO OUTLOOK GDP growth (% yoy) Investments and private consumption (% yoy) 10,6 Investments Private 4,50 consumption 3,90 7,1 6,5 3,40 3,2 3,30 2,6 3,00 4,1 0,8 0,9 3,6 0,2 2,5 2,1 1,90 1,60 -2,4 -1,8 2010 2011 2012 2013 2014 2015 2016F 2010 2011 2012 2013 2014 2015 2016F End of period End
Slide 34: Polish macro outlook
POLISH MACRO OUTLOOK NBP reference rate (%) WIBOR 3M (%) 4,50 4,99 4,25 4,13 3,50 3,95 2,50 2,71 2,00 2,06 1,50 1,50 1,72 1,70 2010 2011 2012 2013 2014 2015 2016F 2010 2011 2012 2013 2014 2015 2016F End of period End of period FX rate (EUR/PLN) Fiscal policy (% of GDP) 4,46 57,2 30 60 56,2 55,6 25 5
Slide 35: Polish banking sector – growth of the main balance sheet figures
POLISH BANKING SECTOR – GROWTH OF THE MAIN BALANCE SHEET FIGURES Assets Loans +3,8% +6,3% +4,6% +4,9% 1 662 1 670 1 609 1 600 1 631 1 569 1 577 1 170 1 178 1 538 1 532 1 108 1 105 1 097 1 055 1 039 1 074 1 090 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15
Slide 36: Polish banking sector – main P&L lines performance
POLISH BANKING SECTOR – MAIN P&L LINES PERFORMANCE NII NFC Result on banking activity +9,2 -5,3 +5,7 16,5 14,4 14,2 14,4 9,9 3,4 3,3 13,7 9,0 9,3 9,2 9,4 3,1 3,1 3,2 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 X - CHANGE VS. Q3’15 (%) Expenses* Net impai
Slide 37: 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 37
Slide 38: 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 Q3’2016. B