Alior Bank Sa · GPW:ALR
Alior Bank Sa — FY2017 Earnings Presentation
53 slides from Alior Bank Sa's earnings presentation, Mar 8, 2018
Slide 1: Alior Bank S.A. 2017 Results Presentation
ALIOR BANK S.A. 2017 RESULTS PRESENTATION 8 March 2018
Slide 2: Agenda
AGENDA 2017 Summary 2017 Key financial issues SME update Innovations update Operational performance Appendix 2
Slide 3: Key Financial Highlights
KEY FINANCIAL HIGHLIGHTS • 2017 net profit of PLN 515 M in line with market consensus and 15% above market consensus from Jun’17 • ROE at 8.0%; with BPH Core target synergies fully loaded and excluding integration costs 12m’17 ROE would amount to 11.1% • Strong gross loan book growth acceleration in
Slide 4: 2017 Selected Highlights (1/2)
2017 SELECTED HIGHLIGHTS (1/2) • BPH merger successfully completed, with both integration costs and synergies significantly better than originally planned Operational merger completed in March 2017. Integration costs significantly below original plan (PLN 105 M actual vs. PLN 195M plan). Merger syne
Slide 5: 2017 Selected Highlights (2/2)
2017 SELECTED HIGHLIGHTS (2/2) • Innovation as a key Alior competence New management models for IT projects (Agilor) and innovations to position Alior among the most innovative financial institutions in Europe. • 2017 recognition of Alior achievements – selected examples „Company of the year” title
Slide 6: 2018 Guidance
2018 GUIDANCE 2017 Guidance* 2017 ACTUAL 2018 Guidance NIM 4.5% - 4.7% 4.6% 4.6% net interest margin C/I 54% - 60% 49.7% 44% costs / income C/I costs / income 45% - 49% 46.9% 44% excl. integration costs CoR 1.8% - 1.9% 1.7% 1.9% cost of risk Gross loan book growth** (12m) PLN 5.0 - 6.5 B PLN 6.9 B P
Slide 7: Agenda
AGENDA 2017 Summary 2017 Key financial issues SME update Innovations update Operational performance Appendix 7
Slide 8: 2017 Bottom Line Decomposition (in PLN M)
2017 BOTTOM LINE DECOMPOSITION (IN PLN M) YTD in PLN M 3 712 Other income 49 Trading result 369 NFC 453 1 846 NII 2 841 930 201 109 Market 221 82 - 21 consensus* PLN 514.5 M 686 516 Total revenues General Net impairment Bank tax Income tax Net profit Integration costs FV amortization Release of Net
Slide 9: BPH Core Merger Summary
BPH CORE MERGER SUMMARY* Originally communicated on 9 May 2017 283 Final 249 +146 2017 118 [PLN M] -28 -82 -88 -77 -195 Cost synergies Revenue dissynergies Integration costs (less restructuring Net impact provision release) +30 486 433 351 381 2018 [PLN M] 0 0 -82 -105 Cost synergies Revenue dissyne
Slide 10: Alior on Track to Achieve Best-in-Class ROE
ALIOR ON TRACK TO ACHIEVE BEST-IN-CLASS ROE ILLUSTRATIVE ANNUALIZED ROE (%) Factors affecting net result due to merger with Core BPH* (all amounts net of tax) 11.9 11.1 incl. BPH Core merger synergies PLN M 2016 2017 2018 4.4 and excl. integration costs 8.0 Gain on bargain 465 - - 7.5 purchase Restr
Slide 11: Improved Capital Position Allowed Acceleration of Growth in Q4'2017
IMPROVED CAPITAL POSITION ALLOWED ACCELERATION OF GROWTH IN Q4’2017, WHICH SIGNIFICANTLY EXCEEDED THE STRATEGIC TARGET AND THE PREVIOUSLY COMMUNICATED GUIDANCE 2017 quarterly gross loan book growth* evolution (PLN B) 6.9 Strategic annual target and 1.9 previously communicated 2017 guidance 1.4 (PLN
Slide 12: Significant Liquidity Position Enhancement in Q4 2017
SIGNIFICANT LIQUIDITY POSITION ENHANCEMENT IN Q4 2017 LCR +20 p.p. The Bank managed to significantly increase liquidity in spite of the very strong gross loan 124% 104% book growth of PLN 1.9 B recorded in Q4’2017… 30.09.2017 31.12.2017 Retail deposits [PLN B] …due to a very successful retail deposi
Slide 13: NIM Affected by the Significant Liquidity Increase
NIM AFFECTED BY THE SIGNIFICANT LIQUIDITY INCREASE. CONSISTENT POSITIVE DYNAMIC ON “CORE” NIM. INCREASE IN LIQUIDITY NEUTRAL FROM AN ROE PERSPECTIVE LCR NIM Trading securities 125% increased balance 124% impact: -14 bps 113% LCR 104% regulatory Minimum** =100% 4.7% 4.6% 4.7% 09.2017 10.2017 11.2017
Slide 14: Implementation of IFRS 9
IMPLEMENTATION OF IFRS 9 IFRS 9 impact on net assets* [PLN M] 6 805 196 5 979 5 1 -1 028 -826 Net Assets Dec'17 Expected credit loss Securities reclass. Other Deferred tax Net assets adjusted impact for IFRS 9 IFRS 9 reduces net assets by PLN 826 M (net of tax). The key driver of the impact are expe
Slide 15: Implementation of IFRS 9 – Capital Charge
IMPLEMENTATION OF IFRS 9 – CAPITAL CHARGE* The bank adopted the ”phase-in” option according to Regulation (EU) No 2017/2395 as regards transitional arrangements for mitigating the impact of the introduction of IFRS 9 Tier 1 charge from IFRS9 implementation (cumulative) 2018 2019 2020 2021 2022 2023
Slide 16: Implementation of IFRS 9 Expected Credit Loss
IMPLEMENTATION OF IFRS 9 EXPECTED CREDIT LOSS (ECL) FOR NON-DEFAULTED PORTFOLIO* Split of non-defaulted portfolio ECL impact by timing horizon by Stages (gross book value) PLN MM % share 11% - 295 29% 538 89% 71% 184 Stage 2 Stage 1 Stage 1 Stage 2 12 mths Life-time • Stage 2 constitutes 11% of tota
Slide 17: Agenda
AGENDA 2017 Summary 2017 Key financial issues SME update Innovations update Operational performance Appendix 17
Slide 18: Micro/SME 2017 Increasing Performance
MICRO/SME 2017 INCREASING PERFORMANCE 11% y/y lending growth* with focus on high margin Micro and 17% y/y growth of new clients acquisition [thousand] Small Micro Small Medium Large New Micro/SME clients Total: 20.3 22.45 8.6 7.5 4.8 18.3 5.5 +30% 3.9 3.2 15.7 4.0 5.2 2016 2017 2016 2017 2016 - exBP
Slide 19: Strategic Initiatives and New Developments for Micro/SME
STRATEGIC INITIATIVES AND NEW DEVELOPMENTS FOR MICRO/SME 2017 2018 MARKETING • Regular multichannel • New marketing concept campaigns agenda MULTICHANNEL DISTRIBUTION • Branches, Selective Brokers, Franchise • Wing to wing online • Call center • Mobile devices for branches AUTOMATED UNDERWRITING FOR
Slide 20: Strategic Initiatives and New Developments for Micro/SME
STRATEGIC INITIATIVES AND NEW DEVELOPMENTS FOR MICRO/SME 2017 2018 VAS AND NON-LEADING PRODUCTS • Zafirmowani.pl marketing events • Zafirmowani.pl – one-stop-shop • Unified Tax File generator • Accountancy module development • Cashback debit cards • New partnerships for non-banking services • Androi
Slide 21: Agenda
AGENDA 2017 Summary 2017 Key financial issues SME update Innovations update Operational performance Appendix 21
Slide 22: Alior Innovation Management Model Implementation Status
ALIOR INNOVATION MANAGEMENT MODEL IMPLEMENTATION STATUS Status 1 New leaders for innovations functions hired, with extensive international experience Done Implementation of Alior’s Innovation model is ready and is under Innovation Management Model announced in October 2 implementation. A cornerstone
Slide 23: New Leaders for Innovations Functions Hired
1 NEW LEADERS FOR INNOVATIONS FUNCTIONS HIRED INNOVATION CENTER FINTECH DEPARTMENT DEPARTMENT ANDRZEJ DOMINIAK DANIEL DASZKIEWICZ EMEA Regional Development Head- Citi FinTech and Corporate Innovation Global Lead – Citi Delivering solutions for retails businesses across Europe and Middle East Leaders
Slide 24: Innovation Model Is Ready
2 INNOVATION MODEL IS READY MODEL IS BEING DEPLOYED ACROSS THE ORGANIZATION, WITH KEY ADVANTAGES IDENTIFIED Fosters innovation Provides flexibility to strategy implementation • Delivers a framework for employees working in • Provides a mechanism for constant monitoring of innovation to develop thems
Slide 25: New Customer Centric iLab Focused on CX
2 NEW CUSTOMER CENTRIC iLAB FOCUSED ON CX Co-create with iLAB • New state-of-the-art iLab in Warsaw Spire (opens 1H 2018) • Customer is central part of our product and is with us trough whole product creation and delivery journey Product Creation • Quick and fast MVP Diagnosing Trends Product Discov
Slide 26: New Accelerator Starting 1H 2018
3 NEW ACCELERATOR STARTING 1H 2018 PROGRAM OVERVIEW Budget until 2020: PLN 30 M First Edition Focus: Open Banking Start: June 2018 Participants of the 1st edition: 6-8 FinTechs Support: Location: • Financing Located in Alior’s • Mentoring and workshops new Accelerator and Innovation Lab • Co-working
Slide 27: Open API Platform Scheduled for Deployment
3 OPEN API PLATFORM SCHEDULED FOR DEPLOYMENT ALIOR’S FINTECH STRATEGY KEY ELEMENT IS OUR NEW OPEN API PLATFORM STANDARD OPEN API ADDITIONAL BUSINESS MODELS AIS: PIS: Data: Data analytics Bank as TPP: Partnership with • Account • Available • Identity • To analyze • "Cash Collect” FinTech: information
Slide 28: FinTech Internal Projects Launched
4 FINTECH INTERNAL PROJECTS LAUNCHED BANCOVO. REALIZES THE BANK'S STRATEGY IN THE FINTECH AREA - ”PARTNER / INVEST / BUILD" ALIOR BANK INVESTED IN BANCOVO. BANCOVO. 2020 GOALS • BANCOVO. is the first financial marketplace in Poland offering • 2-3 Billion PLN in loan sales in 2020 a wide range of fin
Slide 29: IT Resources Management Model – Agilor Under Implementation
5 IT RESOURCES MANAGEMENT MODEL – AGILOR UNDER IMPLEMENTATION NEW WAYS OF WORKING BENEFIT OF USING NEW MODEL STATUS OF IMPLEMENTATION • Fixed delivery team (SQUAD) linked to • Increase of efficiency (more releases, • Pilot phase completed for 4 TRIBES business areas (TRIBES) less errors, better reso
Slide 30: Agenda
AGENDA 2017 Summary 2017 Key financial issues SME update Innovations update Operational performance Appendix 30
Slide 31: Key Financials – P&L
KEY FINANCIALS – P&L PLN M (annual) 2016 2017 ch. yoy (%) ch. yoy (PLN M) Total revenue 2 681 3 712 38 1 032 Profit from bargain purchase of Bank BPH 465 0 -100 -465 General administrative expenses -1 567 -1 846 18 -279 Impairment losses & provisions -800 -930 16 -130 Bank tax -131 -201 53 -70 Profi
Slide 32: Key Financials – Volumes and Ratios
KEY FINANCIALS – VOLUMES AND RATIOS PLN M 2016 2017 ch. yoy (%) ch. yoy (PLN M) Loans 46 247 51 267 10.9 5 019 Deposits 51 369 57 614 12.2 6 246 Total equity 6 160 6 762 9.8 602 Total assets 61 160 69 494 13.6 8 333 % (yearly) 2016 2017 ch. yoy (%) ch. yoy (pp) ROE 11.9 8.0 -32.9 -3.9 ROA 1.1 0.8 -3
Slide 33: Loan Book Split
LOAN BOOK SPLIT LOAN BOOK (PLN B) +5.0 (+10.9%) 51.3 Other business 46.2 1.3 1.2 Factoring 1.3 0.8 Investment loans 8.6 7.5 45% 44% Business Working capital 11.9 10.7 Other retail 0.7 0.8 0.8 0.8 Mortgage other 9.5 Mortgage real estate 8.4 56% 55% Retail 15.8 17.2 Cash Loans 2016 2017 33
Slide 34: Loan Portfolio Structure Development on Track to Achieve Strategic Targets
LOAN PORTFOLIO STRUCTURE DEVELOPMENT ON TRACK TO ACHIEVE STRATEGIC TARGETS Gross loan composition [%] Cash 31 30 28 loans segment Retail Mortgage 20 20 loans 20 5 7 Corporate segment Other 7 11 Large 15 16 7 9 7 Medium 11 7 13 Small 7 Micro 9 8 8 Leasing 3 1 2016 2017 2020 target 34
Slide 35: Deposit Book – Improved Mix of Current Accounts and Term Deposits
DEPOSIT BOOK – IMPROVED MIX OF CURRENT ACCOUNTS AND TERM DEPOSITS (IN PLN B) BANK L/D = 89.0% Successful retail deposit campaign +4.5 based among others on „Konto (+14%) Lokacyjne” (new type of savings account) resulted in Q4’17 retail Retail 36.5 deposit base increase of PLN 2.9 B 32.0 L/D = 77.3%
Slide 36: Key Credit Risk Ratios
KEY CREDIT RISK RATIOS Market avg.* NPL total -0.1 2.6 13.4% -0.1 10.8% 11.1% 11.8% 11.7% 8.2 10.8 2.8 2.5% 2.4% 2016 2017 2017 excl. OZE* 2016 2017 2016 2017 CORPORATE RETAIL MORTGAGE COVERAGE RATIO 50.0% 50.4% 66.6% 67.7% 41.8% 51 63 51 34.6% 34.2% 2016 2017 2017 excl. OZE* 2016 2017 2016 2017 Loa
Slide 37: Alior OZE Update
ALIOR OZE UPDATE • Total Alior Bank wind farm exposure: o 19 wind farms o ~ 2% of total loan book (PLN 1.1 B) • Provisioning of PLN 62 M (9% coverage of NPL), total provisioning including collective IBNR for OZE of PLN 84.5 M • All exposures serviced on time, all farms are in full capacity productio
Slide 38: Alior NIM Development
ALIOR NIM DEVELOPMENT (%) 4.5% 4.7% 4.7% 4.6% 4.1% NIM Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 -1.6% -1.8% -1.7% -1.7% CoR -1.9% NIM - CoR 2.9% 2.9% 3.0% 2.8% 2.2% Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 38
Slide 39: Capital Position Supports Future Loan Origination Objectives
CAPITAL POSITION SUPPORTS FUTURE LOAN ORIGINATION OBJECTIVES 15.2% 13.6% 12.1% 11.3% TIER 1 TCR 2016 2017 39
Slide 40: Agenda
AGENDA 2017 Summary 2017 Key financial issues SME update Innovations update Operational performance Appendix 40
Slide 41: Alior Stock Price Performance
ALIOR STOCK PRICE PERFORMANCE CHANGE OF THE PRICE (VS. END OF 2016) 60.6% 58.9% 52.8% 51.9% 50.6% 46.7% 44.5% 43.7% 41.4% 40.3% 40.8% 40.8% 37.6% 33.5% 33.0% 31.9% 25.9% 26.4% 20.7% 21.8% 18.3% 14.0% 12.6% 9.5% 12.2016 01.2017 02.2017 03.2017 04.2017 05.2017 06.2017 07.2017 08.2017 09.2017 10.2017 1
Slide 42: Q4 Bottom Line Decomposition (in PLN M)
Q4 BOTTOM LINE DECOMPOSITION (IN PLN M) QTD in PLN M 965 Other income 13 Trading result 100 NFC 115 449 NII 737 250 51 28 71 18 143 190 Total revenues General Net impairment Bank tax Income tax Net profit Integration costs FV amortization Net profit excl. administrative after tax after tax integrati
Slide 43: Polish Macro Outlook
POLISH MACRO OUTLOOK GDP growth (% yoy) Inflation (CPI % yoy) 4.6 4.5 3.8 2.1 2.1 3.3 2.9 0.8 -0.5 -1.0 2014 2015 2016 2017 2018F 2014 2015 2016 2017 2018F End of period Unemployment rate (%) NBP reference rate (%) 11.4 9.7 8.2 6.6 5.8 2.0 1.5 1.5 1.5 1.5 2014 2015 2016 2017 2018F 2014 2015 2016 201
Slide 44: Alior Bank Income Statement Snapshot
ALIOR BANK INCOME STATEMENT SNAPSHOT in PLN M 2016 2017 Interest income 2 644 3 601 Interest expense -698 -760 Net interest income 1 946 2 841 Fee and commission income 591 828 Fee and commission expense -260 -375 Net fee and commission income 331 453 Trading result 321 369 Net gain (realized) on ot
Slide 45: Alior Bank Balance Sheet Snapshot
ALIOR BANK BALANCE SHEET SNAPSHOT in PLN M 31 Dec’16 31 Dec’17 Cash and balances with the Central Bank 1 083 965 Financial assets held for trading 420 453 Available-for-sale financial assets 9 375 12 072 Investment securities held to maturity 2 1 118 Derivative hedging instruments 72 88 Amounts due
Slide 46: Alior Bank Shareholding
ALIOR BANK SHAREHOLDING LARGEST FREE FLOAT AMONG POLISH FINANCIAL INSTITUTIONS PZU SA, PZU Życie SA and PZU SFIO 32.22% UNIVERSUM Free float 53.73% 8.94% AVIVA OFE AVIVA BZ WBK 5.11% Nationale-Nederlanden OFE 46 *based on the number of shares registered on Extraordinary GM held on 5 December 2017
Slide 47: Alior Bank New Loans Sales in Retail & Corporate
ALIOR BANK NEW LOANS SALES IN RETAIL & CORPORATE RETAIL LOANS (NEW PRODUCTION PER QUARTER) Other retail 2 839 2 819 2 720 2 994 Mortgages 78 52 37 35 491 301 582 331 Cash loans 2 179 2 277 2 353 2 658 03.2017 06.2017 09.2017 12.2017 CORPORATE LOANS (NEW PRODUCTION PER QUARTER) 5 365 4 649 4 477 1 59
Slide 48: Alior Bank Customer Base
ALIOR BANK CUSTOMER BASE (IN PLN T) 4 115 4 132 3 928 3 980 3 834 Q4’16 1Q'17 Q2'17* Q3'17** 4Q'17 * slight decrease in number of clients in Q2’17 is of technical nature as a result of new definition of active client ** in Q3’17 Alior Bank terminated 156 thousand inactive accounts 48
Slide 49: FTE Evolution
FTE EVOLUTION -20.8% -5.2% 10 245 10 019 9 488 8 556 8 110 2016 Q1'17 Q2'17 Q3'17 Q4'17 49
Slide 50: Alior Bank Branches
ALIOR BANK BRANCHES NUMBER OF BRANCHES 1 010 960 914 905 Branches 299 284 269 267 Agencies 711 676 645 638 Q1'17 Q2'17 Q3'17 Q4'17 50
Slide 51: 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 51
Slide 52: 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 Bank contained in this Presentation are based on the consolidated financial statements of the Alio
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