Alior Bank Sa · GPW:ALR
Alior Bank Sa — Q3 2019 Earnings Presentation
54 slides from Alior Bank Sa's earnings presentation, Nov 5, 2019
Slide 1: Alior Bank S.A. Q3 2019 results presentation
Alior Bank S.A. Q3 2019 results presentation Alior Bank S.A. | November 5th, 2019 (Consolidated results of the Group)
Slide 2: Agenda
Agenda 1 Key highlights 2 Financial results 3 Credit risk 4 2019 guidance 5 Appendix 2
Slide 3: Key highlights
Key highlights Strong increase in capital ratios (TCR = 16.24%; TIER1 = 13.37%). Surplus of 162 bps (TIER1) and 249 bps (TCR) above regulatory minimums. The highest level of these ratios in the last 3 years. PLN 125 M net profit. Significant impact of the provision related to the CJEU ruling (PLN -8
Slide 4: Tier1 ratio increase by 56 bps from the beginning of 2019
Tier1 ratio increase by 56 bps from the beginning of 2019 TIER1 TCR 13.37% 16.24% 12.81% 15.85% 162 bps 249 bps 11.75% * 11.29% 11.13% -25 bps 13.75% * 13.65% 13.13% -25 bps 10.25% 13.25% Współczynnik Tier1 ratio Tier 1 Tier1 Tier 1 ratio KNF minimum minimum KNF Łączny TCR współczynnik kapitałowy TC
Slide 5: Impact of the CJEU ruling on the Bank's results
Impact of the CJEU ruling on the Bank's results The Bank decided to fully comply with the CJEU ruling regarding the consumer's right to reduce the total cost of credit in the event of its early repayment and the application (starting from 11/09/2019) of the principles resulting from the above. Impac
Slide 6: We have taken steps to improve the profitability of the cash loan portfolio
We have taken steps to improve the profitability of the cash loan portfolio 1 2 3 4 Distribution model Product changes New CRM strategy Education improvement • Commission convertion into • New models implementation • Excluding internal • 3 large training programs interest rate increasing sales conso
Slide 7: Q3 2019 financial results (PLN M)
Q3 2019 financial results (PLN M) Net result Revenues +77 +31 (+8%) 1 059 208 rezerwa Provision related (+17%) Impactrezerwy on revenues of provision 982 - 102 177 wpływ związanej z -25 związana z to CJEU ruling related to CJEU ruling wyrokiem TSUE na przychody (-3%) wyrokiem TSUE - 83 Net result wy
Slide 8: Q3 2019 key financial ratios
Q3 2019 key financial ratios NIM ratio (QTD) ROE ratio (QTD) 12.28% 4.67% 4.63% 11.29% -0.28 p.p. - 0.25% -3.94 p.p. - 4.93% wpływ Impactrezerwy of Impactrezerwy wpływ of związanej z provision related provision zrelated związanej 4.39% wyrokiem TSUE to CJEU ruling wyrokiem TSUE to CJEU ruling 7.35%
Slide 9: Prizes and awards received in recent months
Prizes and awards received in recent months #1 place in the mobile banking category, #1 place in the online banking category, #2 place in the traditional banking category, #3 place in the mortgage banking category in the "Newsweek Friendly Bank" ranking #1 place in the Forbes magazine’s "Friendly Ba
Slide 10: Development of loan volumes in strategic segments (PLN B)
Development of loan volumes in strategic segments (PLN B) (managerial approach) New micro sales New mortgage loans sales New cash loans sales A slight decrease in new sales in the micro ...with the growing sales of mortgage …and a stable level of cash loan sales. segment due to the loan policy tight
Slide 11: Increase in the acquisition of new clients in each of key channels
RETAIL Increase in the acquisition of new clients in each of key channels CLIENTS Number of retail clients (M) New clients opening current accounts (T) +16% 106 T 32.3 29.5 30.0 30.7 26.4 4.1 4.1 21.4 4.0 4.0 4.0 Q2’18 II kw. 2018 Q3’18 III kw. Q4’18 2018 IV kw. 2018 Q1’19 I kw. 2019 Q2’19 II kw. 20
Slide 12: Increasing effectiveness in building lasting relationships with clients
RETAIL Increasing effectiveness in building lasting relationships with clients CLIENTS Current accounts sales (T) (number of new current accounts for New to Bank and New to Product clients) Number of new priority clients (T) +52% +15% 24.2 27.0 18.7 21.7 22.2 17.8 46.4 43.6 43.5 43.3 37.7 I kw. 2018
Slide 13: The dynamic growth of digital channels
RETAIL The dynamic growth of digital channels CLIENTS Sales of cash loans in remote channels (PLN M) Alior Bank Mobile Application users* (T) +40% +60% 387 398 361 362 357 320 315 253 277 278 247 216 II kw. 2018 Q2’18 III Q3’18 kw. 2018 IVQ4’18 kw. 2018 I kw. 2019 Q1’19 II kw. 2019 Q2’19 III Q3’19 k
Slide 14: Quality leader – we care about the convenience of our clients
RETAIL Quality leader – we care about the convenience of our clients CLIENTS NPS own branches Alior is a leader in service quality 60% 63% 63% 64% 59% 59% Secure connection from mobile banking Q2’18 II kw. Q3’18 2018 III kw. Q4’18 2018 IV kw. Q1’19 2018 I kw. 2019 Q2’19 II kw. Q3’19 2019 III kw. 201
Slide 15: Development of self-service options in remote channels
RETAIL Development of self-service options in remote channels and adaptation to the legal CLIENTS requirements – the main direction of development in Q3’19 Q3 2019 Currency Exchange - new online and Enabling installment loans for mobile version (iOS and Android). foreigners with a longer than touris
Slide 16: Dynamic increase in the number of clients and transactions
Dynamic increase in the number of clients and transactions MICRO CLIENTS Micro business clients* (number of business clients in T) New Micro business clients (T) +55% +20% 7.1 8.4 7.5 7.9 5.6 4.7 5.1 1 Q1’18 kw. '18 2Q2’18 kw. '18 3 Q3’18 kw. '18 4 Q4’18 kw. '18 1 kw. '19 Q1’19 2 Q2’19 kw. '19 3 Q3’
Slide 17: Increased efficiency due to significant online client acquisition
MICRO Increased efficiency due to significant online client acquisition CLIENTS New Micro clients acquired online Sales of 4x4 account in the micro segment (new accounts in T) (number of accounts sold in T) 35% 3 33% +33% Share of online acquisitions 30% 2.5 22% 25% 2 2.1 19% 1.6 1.6 1.5 1.5 18% 18%
Slide 18: Increased lending security
MICRO Increased lending security CLIENTS Share of the portfolio with BGK guarantees New Micro sales coverage with BGK guarantees in the total Micro portfolio 92% 90% 87% 88% 52% 49% 45% 41% 4Q4’18 IV kw.’18 kw. '18 1I Q1’19 kw.’19 kw. '19 2IIQ2’19 kw.’19 kw. '19 3 Q3’19 III kw.’19 kw. '19 IVQ4’18 kw
Slide 19: New corporate banking strategy development
BUSINESS New corporate banking strategy development CLIENTS Reorganization of the sales network for the SME and Large client, including increased effectiveness supervision and regularity of actions. Increased efficiency of the credit process as a result of organizational changes and IT investments i
Slide 20: By 2022, increasing importance of lending in the small and medium segments
BUSINESS By 2022, increasing importance of lending in the small and medium segments CLIENTS Business clients share in the structure of the credit portfolio 21.7 22.9 Small 26.3 27.2 27.7 28.3 Medium 25.3 25.7 26.1 26.4 26.9 27.2 Large 53.0 51.4 47.5 46.3 45.4 44.5 2018 30.09.2019 Q3 2019 2019 2020 2
Slide 21: Transformation of the business client base into more active and lasting relationships
Transformation of the business client base into more active and lasting relationships BUSINESS CLIENTS Business clients Small/Medium/Large* (number of business clients in T) New business clients +9% 368 352 379 292 297 279 256 IQ1’18 kw.’18 IIQ2’18 kw.’18 III kw.’18 Q3’18 IV kw.’18 Q4’18 I kw.’19 Q1
Slide 22: We are developing an offer related to EU and public funds in cooperation with BGK
We are developing an offer related to EU and public funds in cooperation with BGK BUSINESS CLIENTS An extensive product offer using EU funds Creative Europe guarantee for Thermomodernization loan - Biznesmax guarantee from the clients from creative industries financing from EU funds SG OP Guarantee
Slide 23: Agenda
Agenda 1 Key highlights 2 Financial results 3 Credit risk 4 2019 guidance 5 Appendix 23
Slide 24: P&L statement – primary data
P&L statement – primary data PLN M Q3 2019 Q3 2018 Change q/q Chane q/q (%) Revenues, including: 957 982 -25 -3% Net interest income 802 783 20 2% Net fee and commission income 173 179 -6 -3% Net trading income and other -18 20 -39 -189% General administrative expenses -372 -411 39 -10% Net impairme
Slide 25: Volumes
Volumes PLN M 30.09.2019 30.09.2018 Change y/y Change y/y (%) Loans, including: 56 684 53 261 3 424 6% Retail segment 31 021 28 749 2 272 8% Business segment 25 664 24 512 1 152 5% Deposits, including: 64 739 60 099 4 641 8% Retail segment 46 642 40 942 5 699 14% Business segment 18 098 19 156 -1 05
Slide 26: Net interest income (PLN M)
Net interest income (PLN M) Y/y comparison Quarterly split NIM* 4.63% 4.60% 4.68% 4.66% 4.59% COF* 1.21% 1.20% 1.20% 1.17% 1.17% (+6.6%) 3 094 1 074 after 2 936 +151 1 020 1 046 1 029 excluding 996 1 020 the reserve 326 for the 329 106 103 106 116 Other interest income 105 CJEU ruling 2 435 2 284 In
Slide 27: Net fee and commission (PLN M)
Net fee and commission (PLN M) Y/y comparison Quarterly split 350 400 858 305 813 Remuneration for Wynagrodzenie insurance z tyt. pośrednictwa 283 287 286 267 26 300 72 sprzedaży brokerageubezpieczeń 59 23 29 23 Payment cards and credit 250 24 300 185 231 Obsługa kart płatniczych i kredytowych 66 86
Slide 28: Bank maintains high level of cost effectiveness (PLN M)
Bank maintains high level of cost effectiveness (PLN M) General and administrative expenses (y/y comparison) General and administrative expenses (quarterly) C/I* 44.1% 42.8% C/I* 44.1% 43.1% 49.9% 44.6% 42.8% 1 298 -20 1 278 512 89 (-1.5%) 145 131 411 407 182 122 394 372 Koszty BFG BGF costs 17 17 1
Slide 29: Agenda
Agenda 1 Key highlights 2 Financial results 3 Credit risk 4 2019 guidance 5 Appendix 29
Slide 30: Structure and quality of the loan portfolio
Structure and quality of the loan portfolio Total loan portfolio (PLN M) Retail client portfolio (PLN M) Business client portfolio (PLN M) 28 533 62 159 33 626 26 869 58 917 32 048 2 381 7% 5 128 18% 2 609 8% 4 024 15% 989 4% 894 3% 28 533 46% 11 174 33% 26 869 46% 10 491 33% 30% 7 650 27% 8 128 4 0
Slide 31: Process improvements and risk assessment policies implemented in 2019
Process improvements and risk assessment policies implemented in 2019 • Tightening cut-off policy for Micro, Small, Midium, Large segments in the business client segment, including Agro Exposure limits and the level • Lowering the concentration limits on the debtor and the joint risk group of accept
Slide 32: The quality of the business loan portfolio – CoR in Q3'19 increased due to the Agro segment
The quality of the business loan portfolio – CoR in Q3'19 increased due to the Agro segment CoR in business client segment CoR decomposition in Q3’19 in business client segment 7.00% 6.00% 5.00% 4.98% +0.36% 4.00% 3.52% +1.46% 3.00% 3.52% 2.00% 2.09% 1.38% 1.70% 1.00% 0.00% IVQ4’18 kw'18 IQ1’19 kw'1
Slide 33: Portfolio evolution in the large enterprise segment (PLN M)
Portfolio evolution in the large enterprise segment (PLN M) - 1 455 346 492 8 844 8 227 Q4’18IVbalance Bilans kw.'18 Payments and maturing Spłaty i kredyty loans zapadające Renewals Odnowienia Newsprzedaż Nowa sales Q3’19 III Bilans balance kw.'19 A temporary slowdown in the growth of the large ente
Slide 34: Quality of the renewable energy portfolio (wind farms) and industry perspective
Quality of the renewable energy portfolio (wind farms) and industry perspective On-balance exposure (PLN M) Coverage ratio (%) 2017 2018 09.2019 2017 2018 09.2019 Stage 2 (PL) 365.9 482.3 463.52 14.5% 11.1% 9.57% Stage 3 (NPL) 683.5 493.5 409.04 14.3% 24.4% 23.34% RES (total) 1 049.4 975.8 872.56 14
Slide 35: Constant improvement in the quality of new loan sales
Constant improvement in the quality of new loan sales Sales volume and quality of new cash loan sales (PLN M) 2 500 2.5% 1 942 2 025 2 000 1 722 1 755 1 745 1 707 1 807 1 766 2.0% 1.91% 1 654 1 623 1 269 1 500 1 262 1 242 1.54% 1.5% Amount of granted credits 1.31% 1 000 1.06% 1.06% 1.0% Default rate
Slide 36: Agenda
Agenda 1 Key highlights 2 Financial results 3 Credit risk 4 2019 guidance 5 Appendix 36
Slide 37: 2019 guidance
2019 guidance Q3’19 actual (YTD) 2019 guidance NIM 4.6% 4.5% net interest margin (including impact of CJEU reserve in Q3) (change from 4.6%) C/I* 42.8% 41% cost/income CoR 2.4% 2.3% cost of risk Gross loan book growth** 3.9 PLN B 5 PLN B (12 months) The Bank’s strategy update process has started. Ne
Slide 38: Agenda
Agenda 1 Key highlights 2 Financial results 3 Credit risk 4 2019 guidance 5 Appendix 38
Slide 39: By 2022, a significant reduction in the share of the loan portfolio in the Large segment
By 2022, a significant reduction in the share of the loan portfolio in the Large segment Credit portfolio structure (%) Cash loans 31 30 29 30 30 29 29 28 Retail segment 20 20 20 20 21 21 Mortgage loans 20 20 7 6 5 6 6 6 Other 7 6 10 10 15 13 11 11 16 Large 15 6 6 6 7 6 7 6 6 9 6 6 Business Medium 1
Slide 40: Bank's capital position allows to maintain dynamic loan volume growth
Bank's capital position allows to maintain dynamic loan volume growth (+) Q2'18 and Q3’18 result count: 72bps (-) increase in volume in 4Q’18: 1bps (+) portfolio securitization:17bps (+) Q3’18 result count: 35bps (-) increase in volume in 2Q’19: 3bps (+) 1H’19 result count: 34bps (+) AMA2: 33bps (+)
Slide 41: Macroeconomic outlook
Macroeconomic outlook GDP growth (% y/y) Inflation (CPI % y/y) 2.4 2.0 5.1 1.6 4.9 3.8 4.3 3.1 -0.6 -0.9 2015 2016 2017 2018 2019P 2015 2016 2017 2018 2019P Real change Year average NBP reference rate (%) Unemployment rate (%) 9.7 8.2 6.6 5.8 1.5 1.5 1.5 1.5 1.5 5.1 2015 2016 2017 2018 2019P 2015 20
Slide 42: Income statement
Income statement Q3 2018 PLN B Q3 2019 Adjusted data Interest income* 1 029 996 Interest expenses -226 -214 Net interest income 802 783 Fee and commission income 305 283 Fee and commission expenses -132 -105 Net fee and commission income 173 179 The result on financial assets measured at fair value
Slide 43: Balance sheet
Balance sheet PLN B 30.09.2019 31.12.2018 Cash and balances with the Central Bank 947 1 639 Amounts due to banks 2 945 612 Financial assets 12 707 13 728 Measured at fair value through total income 6 950 7 280 Measured at fair value through P&L 682 515 Measured at amortized cost 5 076 5 932 Derivati
Slide 44: New loans sales (PLN M)
New loans sales (PLN M) Retail loans (new quarterly sales)* 3 279 3 313 2 965 3 037 409 486 378 457 918 557 570 765 Kredyty hipoteczne Mortgage loans Consumer Kredyty loans ratalne 1 952 2 030 2 010 2 061 Cash loans Pożyczka Q4’18 IVQ'18 Q1’19 IQ'19 Q2’19 IIQ'19 Q3’19 IIIQ'19 Business loans (new qua
Slide 45: Alior Bank – shareholding
Alior Bank – shareholding PZU SA Group Other Shareholders 31.91% 31.94% 48.06% 53.69% 7.25% Aviva OFE 7.25% Aviva Santander 7.12% 7.12% 5.66% Nationale-Nederlanden OFE The largest free float among Polish financial institutions. 45 *Based on the number of shares registered at the AGM convened for Jun
Slide 46: Number of clients
Number of clients +135 (+3.2%) 4 318 4 313 4 227 4 224 4 178 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 46
Slide 47: Alior Bank Group – FTE evolution
Alior Bank Group – FTE evolution -1.1% 8 248 8 228 8 269 8 288 8 159 442 501 509 503 505 7 807 7 727 7 760 7 785 7 654 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Alior Bank Subordinated entities 47
Slide 48: Alior Bank – number of branches
Alior Bank – number of branches 864 861 855 858 832 221 218 215 214 213 643 643 640 644 619 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Franchise branches Own branches 48
Slide 49: Change in the presentation of the transaction margin on FX transactions
Change in the presentation of the transaction margin on FX transactions 2018 2018 Change Before change After change Interest income 3 085 3 085 Fee and commission income 436 274 710 The result on financial assets measured at fair value through 372 -274 98 profit or loss and FX result The result on d
Slide 50: Impact of accounting adjustments on net profit 2018 (PLN M)
Impact of accounting adjustments on net profit 2018 (PLN M) Q1’18 Q2’18 3.3 0.9 - 6.8 - 7.0 - 2.9 195.6 199.8 171.1 154.5 Net result Secutiries/ IFSR 9 EIR Net result Net result IFSR 9 EIR change Net result reported BGF change adjusted reported adjusted Q3’18 Q4’18 15.9 6.0 - 4.1 - 2.1 172.9 176.8 1
Slide 51: First half of 2019 tax adjustment impact on net profit (mln PLN)
First half of 2019 tax adjustment impact on net profit (mln PLN) - 81 - 10 239 158 148 Profit before Tax Net profit prior Tax Net profit after tax to adjustment adjustment adjustment 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 Financial Report of the Alior Bank Group for
Slide 53: Contact
Contact Please direct all inquiries to: relacje.inwestorskie@alior.pl +48 723 684 995 53
Slide 54: Thank you for attention
Thank you for attention Q3 2019 Alior Bank S.A. results presentation Alior Bank S.A. | 05/11/2019