Bff Bank Spa · MIL:BFF
Bff Bank Spa — BFF Banking Group — Debt Investor Presentation (May 2018)
30 slides from Bff Bank Spa's debt investor presentation, May 2018
Slide 1: BFF Banking Group Overview
BFF Banking Group Overview May 2018 A Bank Like No Other 11
Slide 2: BFF Banking Group: A Bank Like No Other
BFF Banking Group: A Bank Like No Other General Overview (4) Historical Financials - €/m FY2013 FY2014 FY2015 FY2016 FY2017 Net Interest Income(5) 97.2 107.7 133.0 166.9 172.8 ▪ Leading financial services provider to suppliers of the European Net Banking Income(5) 108.0 117.4 141.9 174.8 180.3 Healt
Slide 3: Long and Successful Track Record in a Changing Environment
Long and Successful Track Record in a Changing Environment ▪ Established in 1985 ▪ Spanish subsidiary active ▪ Expand funding base: ▪ Acquisition of ▪ Listing on Borsa Italiana ▪ Authorized to ▪ Initial investment of €260k (the since 2011 ▪ Senior bond issued in June 2014 Magellan in June Stock Exch
Slide 4: Leading Provider of Credit Management and Working Capital Solutions to Public Sector Suppliers
Leading Provider of Credit Management and Working Capital Solutions to Public Sector Suppliers in Southern Europe and CEE Structural Delay in Payments in the Public Sector €255bn of Public Sector expenditures in the countries we operate in ▪ Some European countries have structural delays in payments
Slide 5: Key Credit Highlights
Key Credit Highlights 1 ▪ Market leader in an unpenetrated market with high barriers to entry ▪ Long track record in dealing with Public entities and deep knowledge of the payment dynamics and strategies Leader in a large ▪ Long-standing relationship with top suppliers to the PA (leading multination
Slide 6: We Operate in an Underpenetrated €255bn Market
1 Business Profile We Operate in an Underpenetrated €255bn Market, with Leadership Position in Many Geographies and Attractive Opportunities for Growth… Key Considerations BFF Positioning Total Public Expenditure in Goods and Service (€bn) Non-recourse Factoring outstandings 2020E ▪ Total potential
Slide 7: …With a Solid Business Model…
1 Business Profile …With a Solid Business Model… Suppliers Debtors ▪ Leading multinational and national suppliers of the ▪ Entities of the public administration in public sector low dilution risk Europe negligible Cost of Risk ▪ Recurring business thanks to long-standing ▪ Long track record in d
Slide 8: …With Revenues Coming from both Suppliers and Debtors
1 Business Profile …With Revenues Coming from both Suppliers and Debtors Focus on Non-recourse Factoring – Revenues Model Stable Regulatory Framework ▪ Non-recourse purchase of receivables towards the European Public ▪ BFF has a consolidated experience in collecting LPIs form the Administration (Nat
Slide 9: A Growing Business, Increasingly Diversified…
1 Business Profile A Growing Business, Increasingly Diversified… Key Considerations Customer Loans Evolution (€m) By Product (€m) 3,018 ▪ Significant customer loans growth with an 2,499 627 higher contribution from less capital 1,962 447 intensive segments 1,555 1,314 1,137 297 840 1,037 ▪ Ongoing d
Slide 10: …With a Positive Trend in Earnings through Every Season
1 Business Profile …With a Positive Trend in Earnings through Every Season Net Income (2007-2017) IT Lira 500m (€260k) invested in 1985 – c.€530m dividend distributed and no capital injection after the incorporation Regulated financial intermediary BFF with Banking License Credit Bubble Financial Cr
Slide 11: Recurring Earning Capacity & Growth in Net Banking Income
2 Profitability Recurring Earning Capacity & Growth in Net Banking Income Key Considerations Adjusted Net Banking Income(1) (€m) ▪ Adjusted net banking income CAGR 2013-17 of BFF only With BFF Polska 14%: Net Interest 8.2% 8.0% 7.6% 7.0% 6.6% Margin(2) ▪ +3% growth in 2017 vs. 2016 (net of one-off)
Slide 12: Potential for Further Funding Cost Optimization
2 Profitability Potential for Further Funding Cost Optimization Interest expenses - €m ▪ Reduction in cost of funding continued with an average cost of funding of 2.0% in 2017, more than offsetting Tier 2 BFF only With BFF Polska Average +18% issuance and BFF Polska acquisition cost funding 1,085 1,
Slide 13: Outstanding Cost Efficiency, despite Investment in Growth
2 Profitability Outstanding Cost Efficiency, despite Investment in Growth Key Considerations Cost / Income (1,3) ▪ Best in class Cost / Income ratio(1): Number of 113 151 188 409 412 Employees ▪ Cost / income ratio historically around 30%(3) Tot. Adj. 32 38 43 56(1) 61(1) ▪ Successfully managed the
Slide 14: High Recurring Profitability and Significant Internal Capital Generation
2 Profitability High Recurring Profitability and Significant Internal Capital Generation Key Considerations Net Income adj(1) (€m) ▪ Almost doubled net income in the last 5 years to €84m Considering NI BFF only With BFF Polska of €92.5m for 2017 ▪ 2017 adjusted net income include €7.5m “new” costs n
Slide 15: High Credit Quality Asset Base..
3 Risk Profile High Credit Quality Asset Base.. Balance sheet breakdown as of December 2017 (€m) ▪ 91%(1) of total assets consist of exposure to the public 4,447 Other, of which €81mm cash sector with assets composed of commercial receivables and and cash equivalent, €31m tax 206 101 AFS assets and
Slide 16: …Translating in Negligible Credit Risk…
3 Risk Profile …Translating in Negligible Credit Risk… Net Non Performing Loans (NPL) Evolution (€m) ▪ Total Net Impaired Loans amounts to €94.7m as of December 0.2% 0.2% 0.1% 0.5% 0.6% Net NPL Ratio 2017, 3.1% of total net loans, and is mainly made up of net 49% 85% 86% 60% 54% NPL Coverage past du
Slide 17: …And a Limited Cost of Risk, with Conservative Provisions
3 Risk Profile …And a Limited Cost of Risk, with Conservative Provisions ▪ Negligible cost of risk of 20bps in 2017: Cost of Risk (bps) ▪ 6bps related to the SME factoring business BFF only With BFF Polska (in run-off) ▪ 10bps related to BFF Polska (excl. SME 20 o/w 6bps factoring business) related
Slide 18: …Backed by a Strong Capital Position
3 Risk Profile …Backed by a Strong Capital Position despite high RWA density due to Standard Model... Total Capital Ratio - Banking Group ex TUB Capital Ratio(1) ▪ Robust capital position maintained also after the cash acquisition of BFF Polska, the full 2017 adjusted net income pay-out and the DBRS
Slide 19: …with Additional Buffer from LPI Stock
3 Risk Profile …with Additional Buffer from LPI Stock Key Considerations LPI Stock Evolution (Excl. BFF Polska) (€m) • LPI stock represents a further buffer to an already strong capital position as BFF is entitled to receive 100% of amounts due. Stock of €350m (pre-tax) still to go through the P&L 5
Slide 20: Fortress Balance Sheet…
4 Funding & Liquidity Fortress Balance Sheet… ▪ Conservative asset / liability management approach: Breakdown of Balance Sheet YE2017 (€m) funding duration higher than that of receivables LCR 287.2% ▪ Customer loans funded through a well diversified NSFR(1) 116.7% funding base with shorter maturity
Slide 21: …With Consistent Access to Funding Through the Years
4 Funding & Liquidity … With Consistent Access to Funding Through the Years and Diversified since becoming a Bank… Available Funding(1,2) (€m) Regulated financial intermediary BFF with Banking License Sovereign Debt Credit Bubble Financial Crisis Low interest rate and plenty of liquidity for Gov and
Slide 22: …increasingly Diversified
4 Funding & Liquidity …increasingly Diversified FY17 Drawn Funding Breakdown (%) Funding Sources Bonds: Total Drawn: • Proven successful access to institutional capital markets as an €2,606m unrated (and unlisted) bank Total Available: • Issuances of both senior unsecured and Tier 2 transactions €3,
Slide 23: Key Takeaways
Key Takeaways BFF Banking Group: A Bank Like No Other Market leader in large and underpenetrated markets €255bn market Solid and simple business model with a clear and transparent >15% CAGR 2013-2017(1) loan book 20bps Cost of Risk Low risk profile coupled with solid capital position 17.5% TC ratio(
Slide 24: Appendix
Appendix bffgroup.com 24
Slide 25: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation €m FY16 FY17 Group BFF Reported Net income 72,1 95,5 Change in LPI accounting from 40% to 45% (17,8) One-off IPO costs 2,4 1,7 Magellan acquisition costs 7,6 - Extraordinary contribution to Resolution fund 1,5 - Exchange rates movement (offset at the comprehensive
Slide 26: Summary Profit & Loss
Summary Profit & Loss €m FY16 FY16 FY16 FY16 FY16 FY17 FY17 FY17 Reported Reported Magellan Combined Adjustments Adjusted Reported Adjustments Adjusted BFF 5M Interest Income 190,2 13,8 204,0 0,0 204,0 237,9 -25,2 212,8 Interest Expenses -31,0 -6,1 -37,1 0,0 -37,1 -39,9 0,0 -39,9 Net Interest Income
Slide 27: Summary Balance Sheet
Summary Balance Sheet €/m 1Q16 1H16 9M16 FY16 1Q17 1H17 9M17 FY17 Combined Reported Reported Reported Reported Reported Reported Reported Assets Cash and ash Balances 0,1 0,9 0,0 0,1 0,0 3,7 20,6 80,9 Financial Assets Held for Trading 0,0 0,0 0,3 0,2 0,0 0,0 0,0 0,0 Financial Assets at Fair Value 3,
Slide 28: Traditional Business Subject to Seasonality, with Peak in Q4
Traditional Business Subject to Seasonality, with Peak in Q4 Loans Evolution by Quarter (€m) 1Q 2Q 3Q 4Q BFF 3,018 Polska 2,499 2,531 2,557 2,596 627 2,270 2,319 2,212 489 507 545 392 447 2,391 390 406 2,052 2,043 2,050 2,050 1,962 1,880 1,927 1,806 1,554 1,603 1,457 1,343 1,349 1,356 1,145 2014 201
Slide 29: Shareholders' structure
Shareholders' structure Shareholders (%) 45.67% 54.33% BFF Luxembourg S.àr.l. (Centerbridge) Free Float 29 29 Source: Shareholders’ official communications to BFF. As per Company website
Slide 30: Disclaimer
Disclaimer This presentation may contain written and oral "forward-looking statements", which includes all statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a number or assumptions, expectations, p
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