Alpha Bank S.a. · ATHEX:ALPHA

Alpha Bank — Debt Investor Presentation (January 2018)

65 slides from Alpha Bank's debt investor presentation, January 2018

  1. Slide 1: Covered Bond Investor Presentation

    Covered Bond Investor Presentation January, 2018

  2. Slide 2: Disclaimer

    Disclaimer This presentation has been prepared and issued by Alpha Bank AE. By accepting delivery of or by reading this presentation, you agree to be bound by the following limitations: This document is being supplied to you solely for your information and it cannot be passed on, copied, reproduced,

  3. Slide 3: Table of Contents

    Table of Contents Pages I. Alpha Bank at a glance & Financial highlights 4 II. Capital 15 III. Liquidity & Funding 17 IV. Asset Quality 21 V. Alpha Bank’s Mortgage Business 25 VI. Covered Bond Programme I 39 VII. Macroeconomic Update & Greek Real Estate Market 52 VIII. Appendix 56 9M FY 2013 Results

  4. Slide 4: I. Alpha Bank at a glance & Financial highlights

    I. Alpha Bank at a glance & Financial highlights Covered Bond Investor Presentation 4

  5. Slide 5: Alpha Bank is Greece's 2nd largest lender

    I Alpha Bank is Greece’s 2nd largest lender Long term track record as a stable and privately managed financial institution throughout its over 130 1 years history, with a client driven business model and focus on affluent clientele 2 Stable and highly experienced management team ensuring firm implem

  6. Slide 6: Alpha Bank key highlights

    I Alpha Bank key highlights Strong capital base (CET1 ratio) Clean capital base (CET1 in €bn) 17.8% 17.7% 8.8 8.8 17.0% 16.8% 16.6% 23% 16.6% 38% 6.5 Strong and clean 5.6 capital position with 15.1% 14.6% 45% CET1 ratio at 17.8% 71% 73% 62% 31% 29% 27% Alpha Peer 1 Peer 2 Peer 3 Alpha Peer 1 Peer 2

  7. Slide 7: Alpha Bank key highlights

    I Alpha Bank key highlights Sep-17 Sep-17 Sep-17 SSM perimeter Delivery of the Actual Target Target NPE Reduction plan NPE (€ billion) 26.8 26.9  targets NPL (€ billion) 18.5 18.5  Greece Sep-17 Target Total Costs (€ million) 707  Employees (# FTEs) 8,820  Bank is on track to meet all restructur

  8. Slide 8: Alpha Bank overview in figures

    I Alpha Bank overview in figures Balance sheet structure (September 2017) Key Group Metrics (€ billion) 30/09/17 Gross Loan split (%) (€ billion) Gross Loans 58.5 Mortgages o/w in Greece 50.0 Businesses 54% 34% 61.3 61.3 Deposits 33.9 6.4 Other Other 12% 11.2 o/w in Greece 28.5 EFSF bonds 1.2 9.4 Eq

  9. Slide 9: Four Key Strategic Pillars

    Alpha Bank remains focused on its key strategic pillars underpinning its path to I viability  Enable NPL units to upsize restructuring  Enhance overall customer experience activity by shifting resources and upgrading Improve Renew focus on by streamlining processes and efficiency Asset Quality cus

  10. Slide 10: 9M 2017 Group P&L and Balance Sheet basic figures

    I 9M 2017 Group P&L and Balance Sheet basic figures 9M 9M yoy % Q3 Q2 qoq % Profit & Loss (€ million) 2017 20161 change 2017 2017 change Balance Sheet (€ billion) 30/9/2017 31/12/2016 30/09/2016 Net Interest Income (NII) 1,463 1,434 2.0% 487 494 (1.4%) Assets 61.3 64.9 66.2 Net Loans 43.6 44.4 44.9

  11. Slide 11: Q3 Core PPI performance in line with the €1.2bn run rate

    I Q3 Core PPI performance in line with the €1.2bn run rate for the full year 2017 PPI q-o-q evolution (€ million) 1.2bn 75 375 316 1 317 5 309 (9) (7) (6) Q2 17 Trading and one- Q2 17 Δ NII Δ Fees Δ OPEX & other Q3 17 Trading Οne-off costs Q3 17 Core PPI Reported PPI off costs Core PPI income Core P

  12. Slide 12: NII mainly impacted by lower contribution from the asset side

    NII mainly impacted by the lower contribution from the asset side, despite further I improvement of cost of funding NII q-o-q evolution Stabilisation of funding cost both in Eurosystem and time deposits (€ million) 494 8 487 (8) (1) (6) 1.29% 1.21% 1.13% 1.13% 1.13% 0.81% 0.75% 0.68% 0.67% 0.66% Q2

  13. Slide 13: Fees y-o-y supported by asset gathering and bancassurance fees

    I Fees y-o-y supported by asset gathering and bancassurance fees Net Fees & Commissions Income y-o-y Net Fees & Commission Income evolution q-o-q (€ million) (€ million) +2% 240.8 -7.5% 236.8 5.3 4.4 85.8 Investment Banking & 79.3 34.5 +22% 42.2 1.8 2.7 Brokerage 1.3 14.7 (5.2) (1.8) (0.5) (1.7) 13.

  14. Slide 14: Recurring OPEX fell by €9.2mn y-o-y

    I Recurring OPEX fell by €9.2mn y-o-y on the back of the ongoing platform rationalisation Recurring Operating Expenses decreased Recurring C/I ratio further improved (€ million) -€24.1mn Excluding remedial -3.1% management costs -€9.2mn -1.1% 65% Depreciation & 824 815 Amortisation 73 74 37 52 Remed

  15. Slide 15: II. Capital

    II. Capital Covered Bond Investor Presentation 15

  16. Slide 16: Strong capital position with CET1 ratio at 17.8%

    Strong capital position with Common Equity Tier I ratio at 17.8%; Fully Loaded CET1 II ratio at 17.7%; Tangible Equity at €9.0bn CET1 ratio quarterly evolution (€ million) Tangible FLB3 CET1 CAD Equity 9,038 9,019 excl. DTC 8,816 law at 12.1% CET1 8,800 8,804 capital 17.9% 17.9% 10bps 17.8% 17.7% (9

  17. Slide 17: III. Liquidity & Funding

    III. Liquidity & Funding Covered Bond Investor Presentation 17

  18. Slide 18: Loan to Deposit Ratio further improved

    Loan to Deposit Ratio further improved on the back of accentuated deposit inflows III and loans deleveraging Group Deposits y-o-y evolution Loan to Deposit ratio decreased further 154% (20pp) +€3.4bn 43.5 152% 5.8 141% 33.9 32.0 1.7 0.3 -€13bn 30.5 140% 5.4 5.1 132% 4.5 37.7 28.5 129% 26.0 26.9 Sept

  19. Slide 19: Eurosystem reliance on a steady disengagement path

    Eurosystem reliance on a steady disengagement path underpinned by a series of III positive initiatives Eurosystem funding y-o-y reduction Basic Balance Sheet funding sources (€ billion) Secured Liabilities/ Total Liabilities -€15.5bn 27.1 1.6 47% 30% 4.9 2.5 ECB Funding 8% 7% 2.8 17% 4.4 ELA Funding

  20. Slide 20: Successful track record of innovative financing structures

    III Successful track record of innovative financing structures Outstanding repo transactions per asset type Corporates 84% Greek Government correlated assets  One of the few shipping securitisations globally, raising $500mn, 6% Bonds & T-Bills concluded in 2014. Top tier shipping portfolio enabled

  21. Slide 21: IV. Asset Quality

    IV. Asset Quality Covered Bond Investor Presentation 21

  22. Slide 22: Negative formation of NPEs in Greece in Q3; NPE reduction in line with target

    Negative formation of NPEs in Greece by €0.2bn in Q3; NPE reduction in line with IV target NPE formation - Greece New NPE Targets1 (€ billion) (€ billion) -€10.0bn -37% 0.89 0.73 (0.65) (0.75) 26.8 26.9 (0.45) 25.1 (0.49) 21.4 16.8 27.5 27.0 26.8 Mar-17 Entries Exits Write-offs Jun-17 Entries Exits

  23. Slide 23: NPL stock in Greece down by €0.3bn in Q3

    IV NPL stock in Greece down by €0.3bn in Q3; NPL reduction in line with target NPL balances evolution - Greece New NPL targets1 (€ billion) (€ billion) Δ y-o-y -€7.9bn -€1.2bn -43% 19.7 19.6 19.5 18.5 18.5 17.0 18.8 13.4 18.5 10.6 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Sep-17 Sep-17 Dec-17 Dec-18 Dec-19

  24. Slide 24: Cash Coverage stable at 48% for NPEs

    IV Cash Coverage stable at 48% for NPEs Group impairment losses Group cost of risk (over Gross loans) (€ million) (bps) 9M16 9M17 9M16 9M17 €864mn €762mn 188bps 171bps 350 304 298 227 201 203 256 258 247 217 165 169 164 146 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 1

  25. Slide 25: V. Alpha Bank's Mortgage Business

    V. Alpha Bank’s Mortgage Business Covered Bond Investor Presentation 25

  26. Slide 26: Mortgage Lending: Organizational structure

    V Mortgage Lending: Organizational structure CEO Retail CRO COO Banking Housing & Credit Risk Credit Consumer Credit Control Retail Credit Data & Analysis Operations Loans  New Product  Sales  Target-setting  Policy &  Data  Data &  Legal and Sales & Branch Network Support Design  Channels 

  27. Slide 27: Clear segregation of duties through the Housing Loans Lifecycle

    V Clear segregation of duties through the Housing Loans Lifecycle Origination Credit Approval Collateral Assessment Final Approval Branch Retail Credit Division Credit Operations Division Retail Credit Division  Data & document validation  Application & documentation from  Title deeds validated a

  28. Slide 28: A complete portfolio with selectively designed products

    V A complete portfolio with selectively designed products Feature Details  Up to 75% for primary residences Maximum LTV  Up to 60% for secondary residences Loan Term  5-40 years  Single disbursement for property acquisition Disbursement  Partial disbursements for construction, according to the

  29. Slide 29: A low risk origination strategy supported by traditional channels

    V A low risk origination strategy supported by traditional channels… Originations per Channel 2008 2017  High Value/ Low Risk customers Origination Strategy  Financing main residences in urban areas 10% 21% focus  Main channel: Branch Network  Euro currency only  No State-related products Exter

  30. Slide 30: Corrective initiatives in response to the economic environment

    V Corrective initiatives in response to the economic environment 2009 2010 2011 2012 2013 2014 2015 2016 9M 2017  Restructuring  Mandatory Additional  Further  Sales via  Stricter criteria  Selected  Introduction of  Adjustments products unemployment options for Enhancement external regardin

  31. Slide 31: Basic Principles of the Underwriting process

    V Basic Principles of the Underwriting process Application  All incoming applications are being assessed based on the Centralized Total Retail Banking Exposure and Total Uncollateralized Global Obligor concept Process Underwriting process Amount  All types of exposure of  Fully centralized underw

  32. Slide 32: Overview of Credit Scoring Tools

    V Overview of Credit Scoring Tools Description Main Attributes  Age  Bank Customer  Number of  Statement Application  The model evaluates the information included in the  Area  Loan Amount Dependants Delivery Address Scorecards Application Forms. Both quantitative and qualitative  Estate Usa

  33. Slide 33: NPL Management model ensuring effective operational framework

    NPL Management model ensuring effective operational framework through segregation V of duties Board of Directors Strategic Board Risk Audit Troubled Assets Committee Level Committee Committee Chief Risk Officer Non-Performing Loans – Retail Banking Internal Channels Non-Performing Loans  Branch Net

  34. Slide 34: NPL organisation engaging c.3,000 FTEs

    V NPL organisation engaging c.3,000 FTEs for the retail portfolio under management Non-Performing Loans and Branches 450 FTEs Treasury Management Agencies / 1,900 FTEs Legal Offices 593 FTEs Non-Performing Loans – Retail 1 2 FTEs Non-Performing Loans Management - Non-Performing Loans Business Planni

  35. Slide 35: Key pillars of our Strategy towards NPE/NPL targets

    V Key pillars of our Strategy towards accomplishment of NPE/NPL targets  Increased oversight and active involvement of the BoD in the governance and management of Troubled Assets Governance, policies  Enhanced governance with clear roles and accountabilities and operating model  Optimisation of i

  36. Slide 36: Remedial management across all delinquency stages

    V Remedial management across all delinquency stages identifying value segments  The Bank has developed a sophisticated segmentation framework, including different segmentation frameworks for early and late stages of arrears  The applicable strategy considers the EBA status, the delinquency stage a

  37. Slide 37: Multidimensional channel management to drive recoveries

    V Multidimensional channel management to drive recoveries and prevent defaults Portfolio Segmentation Assignment to Channels Actions Taking into account the level of specialization and performance and aiming towards a borrower centric approach and improvement of the Bank's results Portfolio segmenta

  38. Slide 38: Expedite recovery pace through collateral enforcement

    V Expedite recovery pace while preserving assets’ value through collateral enforcement Denouncement <1 month <7 months <1 month < 8 months Assignment Real Estate Search Issue & delivery of Issue & delivery of Foreclosure Forced pre-notation to legal offices (RES) extrajudicial letter payment order /

  39. Slide 39: VI. Covered Bond Programme I

    VI. Covered Bond Programme I Covered Bond Investor Presentation 39

  40. Slide 40: Key Features of the Soft Bullet Alpha Bank Covered Bond Programme I

    VI Key Features of the Soft Bullet Alpha Bank Covered Bond Programme I Issuer/Originator/Servicer Alpha Bank A.E. Issuer Ratings RD/Caa3/CCC+ (Fitch/Moody’s/S&P) Programme Size EUR 8.0bn Covered Bond Rating B/B3 (Fitch/Moody’s) (E) Currency EUR Country Ceiling B/B3 (Fitch/Moody’s) Cover Pool Prime G

  41. Slide 41: Covered Bond Programme I Structure

    VI Covered Bond Programme I Structure 6 Oversight 4 Account Bank Transaction Account Reserve Ledger 3 Interest Rate Swap1 Soft Bullet Covered Swap Counterparty (Issuer/Originator/Servicer) 1 Bonds Covered Bond Swap1 Covered Bond Investors 2 Cover Pool Covered 5 Monitoring Bond Proceeds Trustee Asset

  42. Slide 42: Issuer Events and Events of Default

    VI Issuer Events and Events of Default • If the issuer event is triggered by a missed payment of principal at final maturity ate, the payment of such  An Issuer Insolvency Event, as defined in the Base Prospectus (pag. [65]) principal is deferred at the Extended Final Maturity  Failure to pay any

  43. Slide 43: Statutory Tests and Amortisation Test

    VI Statutory Tests and Amortisation Test  The Euro Equivalent of the Principal Amount Outstanding of all Series of Covered Bonds, together with all accrued interest, is not greater than 80% of the Nominal value of the Cover Pool (excluding for these purposes Loans in arrear of more than 90 days and

  44. Slide 44: Soft Bullet Principal Repayment Mechanism

    VI Soft Bullet Principal Repayment Mechanism Issue Date Timely Payment of Principal by the Issuer Original Tenor Yes No Back-Up Servicer is Full Redemption of Principal Issuer Event appointed Final Maturity Date Amortisation Test  The Replacement Servicer is obliged to sell in whole or in part the

  45. Slide 45: Greek Covered Bond Legislative Framework

    VI Greek Covered Bond Legislative Framework Factors Greece - Article 152 of Law 4261/2014 and Bank of Greece Act nr. 2620/28.8.2009  Universal credit institution or Special Purpose Entities (SPE), having Greece or another EEA country as home member state Bank Requirements  Satisfying certain minim

  46. Slide 46: CBPP3 Eligibility Criteria

    VI CBPP3 Eligibility Criteria General CBPP3 Criteria Additional Criteria (Greece & Cyprus) Alpha Bank To be eligible for the CBPP3 Greek covered bonds must meet the below criteria: Currency Only EUR-denominated  Issuer Residence The covered bonds must be issued by a euro area credit institution  A

  47. Slide 47: Covered Bond Criteria and Summary Pool Characteristics

    VI Covered Bond Criteria and Summary Pool Characteristics Loan Individual Eligibility Criteria Summary Characteristics of the Provisional Cover Pool 1. Existing Loans, denominated in Euro and owned by individual borrowers Aggregate Current Principal Balance (€) 717,230,814 resident in a Member State

  48. Slide 48: Cover pool characteristics (1/3)

    VI Cover pool characteristics (1/3) Maturity Year Seasoning W.A. Remaining Maturity: 13.12 years W.A. Seasoning: 9.18 years 29.5% 15.0% 14.1% 24.3% 23.3% 10.7% 9.8% 9.0% 7.7% 7.2% 6.0% 6.0% 6.1% 10.4% 4.7% 3.8% 5.6% 4.0% 2.9% 0.2% <= 5 5-6 6-7 7-8 8-9 9 - 10 10 - 11 11 - 12 12 - 13 13 - 14 14 - 15 >

  49. Slide 49: Cover pool characteristics (2/3)

    VI Cover pool characteristics (2/3) Original Loan to Value Current Loan to Indexed Value W.A. Original LTV: 60.1% W.A. Current Indexed LTV: 54.4% 26.8% 37.9% 8.6% 8.5% 7.8% 7.4% 7.6% 7.5% 7.2% 7.6% 5.0% 6.8% 7.0% 7.0% 7.1% 6.0% 6.5% 5.8% 3.0% 2.7% 5.4% 5.5% 4.9% 0.2% 0.1% 0.2% <=45% 45% - 50% - 55%

  50. Slide 50: Cover pool characteristics (3/3)

    VI Cover pool characteristics (3/3) Loan Delinquencies Loan Interest Rate W.A. Interest Rate: 2.4% 0 < Days <=29 6.5% 34.9% 34.8% 15.2% 8.1% Current 93.5% 2.8% 3.4% 0.7% 0.0% <= 1% 1% - 2% 2% - 3% 3% - 4% 4% - 5% 5% - 6% 6% - 7% 7% - 8% Interest Payment Type Index Payment Type (for floating rate loa

  51. Slide 51: Highlights

    VI Highlights Regulatory Highlights Structural and Portfolio Highlights Exempt from bail-in under the Greek BRRD Soft Bullet – 1 year Extension period Structured with the objective to comply with the CBPP3 Fitch / Moody’s ratings reaching the country ceiling at [B/B3] E ECBC Label (1st Greek Covered

  52. Slide 52: VII. Macroeconomic Update & Greek Real Estate Market

    VII. Macroeconomic Update & Greek Real Estate Market Covered Bond Investor Presentation 52

  53. Slide 53: Macro Data

    VII Macro Data GDP components (contribution): yoy change (s.a.) Confidence Indicators Rebound 5 100 110 0 90 80 100 -5 70 60 90 -10 50 -15 40 Industrial Confidence Indicator 80 Ι ΙΙ ΙΙΙ IV Ι ΙΙ ΙΙΙ IV Ι ΙΙ ΙΙΙ IV Ι ΙΙ ΙΙΙ IV Ι ΙΙ ΙΙΙ IV Ι ΙΙ ΙΙΙ Service Sector Confidence Indicator 30 2012 2013 2014

  54. Slide 54: Real Estate Market

    VII Real Estate Market Investment in Construction and Housing Market Indices Real Estate Prices (% yoy) Residential Investment, % GDP, lhs 12% 130 5 Investment in Construction (exc.res.), % GDP, lhs House Price/Income, rhs 120 10% House Price / Rent ratio, rhs 0 110 8% 100 -5 6% 90 80 -10 4% 70 2% -

  55. Slide 55: European Real Estate Market Overview

    VII European Real Estate Market Overview House Price Index (annual % change) Housing Loans to GDP Ratio, 2016 70% 17 2014 2015 2016 60% 12 50% 38% 40% 35% 7 30% 2 20% 10% -3 0% Portugal Greece Bulgaria Cyprus UK Germany Ireland Romania Italy Euroarea Spain France -8 Bulgaria Greece Cyprus Portugal R

  56. Slide 56: VIII. Appendix

    VIII. Appendix Covered Bond Investor Presentation 56

  57. Slide 57: Alpha Bank Group

    VIII Alpha Bank Group (€ million) 9M 2017 9M 2016 yoy % change Net interest income 1,463.0 1,434.0 2.0% Net fee and commission income 240.8 236.8 1.7% Income from financial operations 115.9 68.9 68.4% Other Income 42.5 41.9 1.4% Operating Income 1,862.2 1,781.5 4.5% Staff costs (353.8) (375.8) (5.9%

  58. Slide 58: Engagement with licensed independent servicers for NPE management

    Alpha Bank has actively engaged with licensed independent servicers for the VIII management of both retail and large corporate Non Performing Exposures  CEPAL, the 1st company to be licensed as a Servicer in Greece, is a  Pillarstone platform licensed in May 2017 by the Bank of Greece in order to

  59. Slide 59: Detailed overview of asset quality by portfolio - Greece

    VIIΙ Detailed overview of Alpha Bank’s asset quality by portfolio - Greece (€ billion) Wholesale SBL Mortgages Consumer Total Gross loans 20.7 6.3 16.4 6.7 50.0 (-) Provisions (4.9) (2.7) (2.5) (2.4) (12.5) Net loans 15.8 3.6 13.9 4.3 37.5 NPLs 5.1 4.7 5.8 2.9 18.5 NPL ratio 24.8% 74.0% 35.7% 42.8%

  60. Slide 60: Detailed overview of asset quality by portfolio - Group

    VIIΙ Detailed overview of Alpha Bank’s asset quality by portfolio - Group (€ billion) Wholesale SBL Mortgages Consumer Total Gross loans 25.1 6.4 19.8 7.2 58.5 (-) Provisions (6.3) (2.7) (3.4) (2.5) (15.0) Net loans 18.7 3.7 16.4 4.7 43.6 NPLs 7.0 4.7 7.0 3.1 21.8 NPL ratio 28.0% 73.8% 35.5% 42.2% 3

  61. Slide 61: Comparison of Legal Frameworks

    VIII Comparison of Legal Frameworks Greece Portugal Italy Netherlands Name of Instrument Greek Covered Bonds Obrigações Obrigações sector Obbligazioni Bancarie Dutch Covered Bonds Hipotecárias público Garantite (OBG) Special Banking Principle No Optional No No Supervision Bank of Greece Bank of Port

  62. Slide 62: Recent Secured Funding Transactions (1/2)

    Recent Alpha Bank Secured Funding Transactions (1/2) VIII Innovative Shipping Securitization Transaction In December 2014, Alpha Bank completed its inaugural shipping securitisation issuance of USD 500 million; In October 2017, the Bank placed with private investors its second financing transaction

  63. Slide 63: Recent Secured Funding Transactions (2/2)

    Recent Alpha Bank Secured Funding Transactions (2/2) VIII First Greek SME Securitization with revolving period since 2009 In December 2016, Alpha Bank issued a €640mn SME CLO, through Alpha proodos DAC, by privately placing €320mn of Class A Notes subscribed to by EIB, EBRD and an International Inve

  64. Slide 64: Glossary

    VIII Glossary Reconciliation of key Management’s definitions with terms in “Annual report (In accordance with Law 3556/2007)” Terms Definitions Abbreviation Accumulated Provisions or Loan Loss 1 Accumulated Impairment Allowance, as disclosed for credit risk monitoring purposes (note 41) LLR Reserve

  65. Slide 65: Alpha Bank Contacts

    Alpha Bank Contacts Vassilios Psaltis Lazaros Papagaryfallou General Manager – CFO Executive General Manager vep-office@alpha.gr lap-office@alpha.gr +30 210 326 2181 +30 210 326 2261 Dimitrios Kostopoulos Elena Katopodi Manager Assistant Manager Investor Relations Division Investor Relations Divisio

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