Bff Bank Spa · MIL:BFF
Bff Bank Spa — BFF Banking Group — H1 2019 Earnings Presentation
26 slides from Bff Bank Spa's earnings presentation, Aug 8, 2019
Slide 1: 1H 2019 Results
1H 2019 RESULTS 8th August 2019 A Bank Like No Other®
Slide 2: 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
Slide 3: 1H 2019 Results: Key Highlights
1H 2019 Results: Key Highlights • €41.2m of Adjusted Net Income (+3% y/y) with 33% of Adjusted RoTE (32% in 1H18), despite €7.4m of lower net LPI Strong financial over-recovery vs. 1H18 performance • Stock of unrecognized off balance sheet LPI (back book income reserve) increased by €33m YoY to €391
Slide 4: +3% Growth in Adjusted Net Income
+3% Growth in Adjusted Net Income Adjusted Net income(1) (€m) ▪ €41.2m of 1H19 Adjusted Net Income, +3% vs. 1H18 Adjusted 30% 32% 33% Reported RoTE(2) ▪ Growing profitability: Adjusted RoTE of 33% vs. 32% in 1H18 51 41 40 +3% 41 38 ▪ However, the net LPI over-recovery was €7.4m lower than 6 7 10 38
Slide 5: Adjusted Net Interest Income and Net Banking Income
Adjusted Net Interest Income and Net Banking Income Adjusted Net Interest Income (€m) Ann. RoRWA (1) 9.0% 8.7% 7.7% Reported Ann. Net customer ▪ Adjusted Net Interest Income and Adjusted Net Banking int. income/loans(2) 6.0% 5.5% 4.6% 107 Income almost flat vs. 1H18 (-1% and -2% respectively), 25 87
Slide 6: Flat Interest Income Despite Lower LPI Over-Recovery
Flat Interest Income Despite Lower LPI Over- Recovery Adjusted Interest Income (€m) ▪ 1H19 interest income at €109m (+0.2% vs. 1H18), despite Ann. Customer €7.4m of lower net LPI over-recovery(1) accounted in P&L vs. 7.9% 7.1% 6.0% interest income/loans(2) previous year Reported ▪ €14.2m of lower LP
Slide 7: Improving Funding Costs
Improving Funding Costs Adjusted Interest expenses (€m) ▪ Reduction in cost of funding continued: – 1.56% in 1H19 vs. 1.82% in 1H18 and 1.73% in Average funding lines used (excluding 2,353 +11% 2,607 +22% 3,176 FY18 REPO, €m) – Increase in interest expenses at €23m (+6% y/y), Cost of funding 2.04% -
Slide 8: Good Operating Efficiency Despite Investment in Growth
Good Operating Efficiency Despite Investment in Growth Operating Costs(1) (€m) ▪ Highly efficient structure and improved operating Adjusted operating 2.46% 2.29% 2.01% leverage with Adjusted operating costs(1)/ Loans ratio of cost (1,2)/Loans (3) 2.01% in 1H19 vs. 2.29% in 1H18 and 2.46% in 1H17 Adj
Slide 9: Double Digit Growth in Customer Loans
Double Digit Growth in Customer Loans ▪ Strong growth in customer loans (+15% y/y) throughout the Customer Loans Evolution (€m) Group: − Italy growth y/y +11% 3,454 − International business 34% of total loans, up from 32% at 3,000 2,557 794 June 2018 647 506 ▪ Residual €2.5m (-12% vs. Dec-18) net cu
Slide 10: New Business Production across Countries
New Business Production across Countries Total New Business Volumes (€m) BFF Polska Group (€m) ▪ New business volumes at €2.0bn in 1H19, -4% y/y mainly driven by: 2,059 279 3 1,969 238 28 247 − Italy -4% y/y 2 1 2 279 28 247 − Spain -2% y/y and Poland -2% y/y 1,667 Czech − Portugal -21% y/y, due to
Slide 11: Business Plan Initiatives
Business Plan Initiatives Access to Polish deposit market could reduce further CoF ▪ Received the authorisation from the authorities to open a branch in 3.17% Poland (1) 2.37% Authorisation to ▪ The new branch will allow to collect online deposit and further reduce funding cost WIBOR open a branch i
Slide 12: Excess liquidity and no ECB financing
Excess liquidity and no ECB financing Available Funding(2;3) (€m) ▪ A diversified and flexible funding base to support business LCR 152.9% 250.8% 499.1% growth: NSFR 115.4% 111.3% 107.4% − Deposits account for 29% of drawn funds and are equal to 3,511 €879m as of 1H19 − Deposits with no or limited p
Slide 13: Fortress Balance Sheet
Fortress Balance Sheet Breakdown of Balance Sheet 1H19 (€m) ▪ Customer loans funded through a well diversified funding base Leverage ▪ Conservative asset / liability management Ratio 5.3% ▪ Flat Government bond portfolio at €1.1bn (23.2% of total assets down from 26.4% at 1H2018): negative mark-to-m
Slide 14: Negligible Credit Risk
Negligible Credit Risk ▪ Net NPLs excluding Italian municipalities in conservatorship down Net Non Performing Loans Evolution (€m) to €5.1m (-24% y/y and -26% vs. YE18) and 0.1% of net loans NPL Ratio 1.0% 1.1% 1.3% – Reduction in net NPLs thanks to collections Coverage Ratio 43% 38% 21% ▪ Increase
Slide 15: Strong capital position
Strong capital position Total Capital Ratio - Banking Group ex TUB Capital Ratio(1) SREP requirement ▪ Total Capital ratio of 16.1% and CET1 ratio of 11.6%: incl. CCB Under the Standard Model, the risk weighting factors for exposures to CET1 12.3% 10.9% 11.6% 7.80% NHS and other PA different from –
Slide 16: 1H 2019 Results: Key Highlights
1H 2019 Results: Key Highlights • €41.2m of Adjusted Net Income (+3% y/y) with 33% of Adjusted RoTE (32% in 1H18), despite €7.4m of lower net LPI Strong financial over-recovery vs. 1H18 performance • Stock of unrecognized off balance sheet LPI (back book income reserve) increased by €33m YoY to €391
Slide 17: Appendix
\ BFF iste" Appendix bffgroup.com 17
Slide 18: Focus on Deferral Income and Net Over-Recovery of LPI Collection
Focus on Deferral Income and Net Over-Recovery of LPI Collection Deferral Income of LPI collection ▪ BFF prudently recognizes in P&L on an accrual basis only 45% of LPI Outstanding Evolution (Excl. BFF Polska Group) (€m) legally due (discounted over 1800 days, i.e. 5 years horizon). 45% is the LPI o
Slide 19: Non-recourse Volumes
Non-recourse Volumes Non-recourse growth Volumes (€m) 1H19 vs 1H18 Italy 1H 2017 832 350 26 1,209 -4% 1H 2018 861 504 27 1,392 1H 2019 855 439 43 1,337 Spain 149 1H 2017 54 95 -2% 1H 2018 101 217 318 1H 2019 122 191 0 313 Portugal 1H 2017 71 1H 2018 65 -21% 1H 2019 51 Greece 1H 2017 0 0 1H 2018 4 0
Slide 20: New Business
New Business Non-recourse growth Volumes (€m) 1H19 vs. 1H18 Croatia 1H 2017 00 N.a. 0 0 1H 20181,277 N.a.% 0 1H 2019 00 60 NHS P.A. Other New Business growth New Business (€m) 1H19 vs. 1H18 Poland 1H 2017 151 39 18 208 1H 2018 216 27 5 248 -2% 1H 2019 211 34 244 Slovakia 1H 2017 28 0 28 1H 2018 25 2
Slide 21: Adjusted Net Income Reconciliation
Adjusted Net Income Reconciliation €m 1H17 1H18 1H19 Group BFF Reported Net income 50.7 41.3 38.1 Change in LPI accounting from 40% to 45% (17.8) One-off IPO costs 1.7 Exchange rates movement (offset at the comprehensive income and equity level) 2.5 (2.8) 0.8 Stock Options & Stock Grant 1.1 0.9 1.3
Slide 22: Summary Profit & Loss
Summary Profit & Loss 1H17 1H17 1H17 1H18 1H18 1H18 1H19 1H19 1H19 Reported Adjustments Adjusted Reported Adjustments Adjusted Reported Adjustments Adjusted Interest Income 126.7 -25.2 101.5 108.3 108.3 108.6 108.6 of which interest income calculated using the effective interest rate method 106.8 -2
Slide 23: Summary Balance Sheet
Summary Balance Sheet 1H17 FY17 1H18 FY 2018 1H19 Reported Reported Reported Reported Reported Cash and cash Balances 3.7 80.9 38.6 99.5 36.1 Financial assets measured at fair value through profit or loss 0.0 0.5 0.0 0.0 0.0 a) financial assets held for trading 0.0 0.0 0.0 0.0 0.0 b) financial asset
Slide 24: Breakdown by quarter – BFF Group
Breakdown by quarter – BFF Group Adjusted Values 2017 2018 2019 Data in €/m 1Q 2Q 3Q 4Q FY 1Q 2Q 3Q 4Q FY 1Q 2Q HY Interest income 54.8 46.8 44.4 66.8 212.8 53.4 54.9 49.3 74.0 231.6 55.9 52.7 108.6 Interest expenses (9.8) (10.3) (9.7) (10.1) (39.9) (11.3) (10.1) (10.3) (11.2) (42.9) (11.5) (11.3) (
Slide 25: Asset quality
Asset quality 30/06/2019 Gross Provision Net Total non performing 57,016 (11,805) 45,211 Total unlikely to pay 12,874 (2,560) 10,315 Total past due 38,940 (244) 38,695 Total 108,830 (14,609) 94,221 31/12/2018 Gross Provision Net Total non performing 65,106 (24,762) 40,344 Total unlikely to pay 8,680
Slide 26: 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 Polska Group 3,583 3,461 3,454 3,018 3,000 3,026 760 767 794 2,878 2,596 627 2,499 2,531 2,557 619 647 702 2,822 2,270 2,319 2,212 2,694 2,660 447 489 507 545 390 392 406 2,391 2,259 2,353 2,