Ab Artea Bankas · OMXVSE:ROE1L
Ab Artea Bankas — Šiaulių Bankas — Q2 2024 Earnings Presentation
41 slides from Ab Artea Bankas's earnings presentation, Jul 29, 2024
Slide 1: Q2`24 and H1`24 Financial Results
Šiaulių Bankas Q2`24 and H1`24 Financial Results July 29, 2024
Slide 2: Continuing Strong Growth Momentum with Sustained Profitability
Continuing Strong Growth Momentum with Sustained Profitability H1`24 Highlights ▪ Strong top-line growth: All-time high net interest income and net fee and commission income driven by solid volumes and pricing NET PROFIT ▪ Loan portfolio expansion: New lending volumes surged across all business line
Slide 3: Q2’24 Business Segment Highlights
Q2’24 Business Segment Highlights Corporate Private Investment ▪ Strong Corporate Lending Activity ▪ Mortgage & Consumer Lending ▪ SB Alternative Investment Fund III New corporate loan originations surged 22% Rebounds Šiaulių Bankas has launched a pioneering QoQ to €253 million in Q2`24, reflecting
Slide 4: Macroeconomic Overview
Macroeconomic Overview Section I
Slide 5: Key Macroeconomic Highlights
Key Macroeconomic Highlights A strong start to the year and positive business and consumer sentiments allow for expectations of a more vigorous economic recovery Lithuania`s Macroeconomic Forecasts (%) ▪ The external demand remained sluggish, however, given the even steeper decline in imports, the i
Slide 6: Lithuania Leads EU in Consumer Optimism
Lithuania Leads EU in Consumer Optimism Lithuania sustains the highest consumer optimism in the EU and restored purchasing power losses after the inflation shock Consumer Confidence (June 2024) Real Earnings Index (2015 Q1 = 100), % LT 170 5.6 3.5 PL -0.4 SE -2.7 DK 160 -3.8 MT -7.8 FI -8.1 BE -8.5
Slide 7: Employment Approached a 20-Year Record
Employment Approached a 20-Year Record Net Migration Flows (thou) Labour Market Indicators (sa, thou) Unemployment Rate (sa, %) 1600 300 72.1 1550 LT citizens 250 Total 44.9 1500 7.7% 1450 200 20.8 19.7 1400 13.9 11.1 150 1350 -1.2 7.5 7.6 6.4 4.9 3.5 -10.3 -1.8 -14.1 1300 -18.0 -19.4 -20.6 -9.0 100
Slide 8: Lithuania Remains Attractive Destination for FDI
Lithuania Remains Attractive Destination for FDI FDI (equity), Outstanding Amounts (€`bn) The Structure of FDI Outstanding Amounts by Investing Country in Q1`24 (%) 31.3 Germany 17.5 30.7 Estonia 11.2 29.8 Netherlands 9.9 28.8 28.3 Sweden 9.9 Latvia 5.9 26.4 26.1 US 5.1 25.4 25.4 24.6 24.8 United Ki
Slide 9: Lithuania Remains Attractive Destination for FDI
Lithuania Remains Attractive Destination for FDI Reflecting the global trend, FDI into Lithuania experienced a slight slowdown, but the country remains a sought-after investment destination with a steady flow of new projects FDI Flows to Lithuanian Lithuania`s Cities Among Top 10 EU FDI Destinations
Slide 10: Q2`24 and H1`24 Financial Results
Q2`24 and H1`24 Financial Results Section II
Slide 11: Financial Performance Highlights
Financial Performance Highlights Income Statement In €`m Q2`24 Q2`23 %∆ YoY H1`24 H1`23 %∆ YoY Net Interest Income 41.1 40.0 3% 80.6 75.4 7% Net Fee & Commission Income 7.3 5.1 42% 13.7 9.8 41% ▪ Net interest income (NII) continued to grow in H1`24, driven by loan Other 6.7 3.5 95% 18.1 9.9 83% book
Slide 12: Net Interest Income
Net Interest Income Key Highlights Net Interest Margin (NIM) Dynamics Net Interest Income YoY (€`m) ▪ Net interest income increased by 4% in 6.1% 6.5% 6.5% 6.5% +3% Q2`24, compared to Q1`24 5.6% 41.1 ▪ The increase was driven by growing loan 4.2% 3.9% 3.9% 10.7 portfolio while net interest margin (N
Slide 13: Loan Portfolio
Loan Portfolio Key Highlights Loan Yields 10.7% 10.0% 10.1% 9.5% ▪ The loan portfolio expanded by 5% since the last quarter and by 14% in the past year. This growth was largely driven by strong originations in our 7.5% 7.4% corporate banking segment supported by mortgages and consumer 5.2% 7.2% 7.0%
Slide 14: Funding
Funding Key Highlights Funding Portfolio Breakdown (Q2`24) Cost of Funding Due to Other banks 2% Other 5% 2.55% 2.61% ▪ Bank is primarily funded by 2.24% sticky local deposits Debt Securities 6% Term Deposits 1.82% ▪ Deposit portfolio is shifting TLTRO 9% 36% 1.35% toward a longer-term, more 0.73% 1
Slide 15: Net Fee & Commission Income
Net Fee & Commission Income Key Highlights Net Fee & Commission Income YoY (€`m) ▪ Net fee & commission income (NFCI) surged by 42% YoY, driven primarily +42% by the acquisition of INVL Retail business (asset management and life insurance) 7.3 ▪ Excluding the acquisition impact, NFCI increased by he
Slide 16: Operating Expenses
Operating Expenses (1) Key Highlights Operating Expenses Structure(1) (Q2`24) ▪ Operating expenses increased 22% QoQ, however excluding windfall tax Other 20% increase amounted to 11% QoQ Salaries ▪ Increased operating expenses reflects enlarged organization, ongoing Buildings & Premises 7% €24.1m 4
Slide 17: Healthy Underlying Asset Quality Trends
Healthy Underlying Asset Quality Trends Key Highlights Stage 2 and Stage 3 Dynamics 51% 57% 61% 61% 59% ▪ Recorded a record low cost of risk at 0.2% in 2Q`24 ▪ Sound asset quality reflected by declining Gross Stage 2 ratio ▪ Stage 3 loan coverage remains at historical levels 6.1% 6.7% 7.4% 7.2% 6.5%
Slide 18: Capital Ratios and Requirements
Capital Ratios and Requirements Sufficient Capital to Support Growth Going Forward and Future Capital Distribution Risk Weighted Assets (RWA) +9% Total Capital Ratio MREL Subordinated MREL 2 625 Surplus 2.26% 2.15% 1.42% 2 503 2 419 2 411 2 439 MB 0.43% 29.22% 27.80% Other EL Q2`23 Q3`23 Q4`23 Q1`24
Slide 19: New Organisational Structure and Reporting Segments
New Organisational Structure and Reporting Segments Corporate Private Investment Clients Clients Clients ▪ Comprehensive daily banking solutions for ▪ Daily banking – Comprehensive financial ▪ Asset management business – among the corporate clients solutions including current accounts, payments, str
Slide 20: Corporate Clients Segment Development
Corporate Clients Segment Development Key Highlights Corporate Loans (Q2`24) (€`m) Corporate Loans by Sectors (Q2`24) +15% Other 8% ▪ Continued strong loan book Healthcare 3% 1 856 1 928 growth by 15% YoY with 1 683 1 712 1 764 Utilities 3% Real Estate 29% record high newly originated Hospitality 4%
Slide 21: Private Clients Segment Development
Private Clients Segment Development Key Highlights Private Loans (Q2`24) (€`m) New Mortgage Agreements (Q2`24) (€`m) +19% 72.0 ▪ Mortgage originations rebounded to €72 million in 1 112 1 186 47.0 1 001 1 042 1 074 Q2`24 38.0 41.0 39.0 754 780 803 849 ▪ Consumer financing 732 originations remain stro
Slide 22: Investment Clients Segment Development
Investment Clients Segment Development Asset Management (€`m) Life Insurance (€`m) 1329 12000 Life Insurance Risk Under Management 1272 1108 1182 81 15.0 1080 79 10000 72 79 136 145 66 123 1479 1511 1529 1566 13.0 107 111 1103 8000 1435 11.0 1057 925 980 907 6000 9.0 7.0 4000 6.5 6.6 7.3 6.8 7.0 5.0
Slide 23: Investment Clients Segment Development
Investment Clients Segment Development Leading Capital Markets Business Bonds Originated by the Bank in Primary Market (Q2`24) (€`m) 92 ▪ Population in Lithuania is increasingly focusing on investing: the value of investments held in the bank amounted to €1.9 billion at the end of June, 62 10% highe
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Slide 25: Appendix
Appendix
Slide 26: Income Statement
Income Statement Q2`24 Q2`23 %∆ QoQ H1`24 H1`23 %∆ YoY In EUR`000 Interest income 61 106 46 943 30% 120 647 86 953 39% Other similar income 7 087 5 373 32% 13 027 9 526 37% Interest expense (27 143) (12 343) 120% (53 044) (21 112) 151% Net interest income 41 050 39 973 3% 80 630 75 367 7% Fee and co
Slide 27: Statement of Financial Position
Statement of Financial Position Jun` 24 Mar`24 %∆ QoQ Dec` 23 %∆ YTD Jun` 23 %∆ YoY In EUR`000 ASSETS Cash and cash equivalents 675 846 675 561 0% 751 499 (10%) 420 607 61% Securities in the trading book 218 793 221 928 (1%) 207 677 5% 63 911 242% Due from other banks 3 354 2 629 28% 3 013 11% 2 741
Slide 28: Life Insurance Income Reconciliation
Life Insurance Income Reconciliation Net Interest Income H1`24 H1`23 %∆ In €`m Revenue related to insurance activities €7.1m Net gain from trading activities (unit-linked contacts) €7.0m Interest income 119.8 87.0 38% Interest income (unit-linked contracts) 0.8 0.0 NA Interest income (unit-linked co
Slide 29: Key Financial Targets
Key Financial Targets Focus Areas 2024 2025 2026 2027–2029 Growth Loan BooDk €3.3bn €3.7bn €4.1bn CAGR: ~ 8 % Deposits €3.3bn €3.6bn €4.0bn CAGR: ~10% Total Operating Income €202m €211m €243m CAGR: ~10% Net Fee and Commission Income €27m €29m €33m CAGR: ~20% Efficiency Cost-to-Income Ratio 49.7% 53.
Slide 30: CRE Portfolio Analysis
CRE Portfolio Analysis Conservative and diversified CRE portfolio CRE: Underlying Property Types CRE: High Geographic Diversification Top 20 Corporate Real Estate Client Breakdown by Asset Class (Q2`24) CRE Split by Region (Q2`24) Other CRE 8% Siauliai 11% Shopping Centers Public Gyms 8% 27% Klaiped
Slide 31: Solid Liquidity Position
Solid Liquidity Position Securities Portfolio (Q2`24) Securities Portfolio (Q2`24) By Security Type, Bank-only By Accounting Method, Bank-only Corporate Bonds Fair Value Trading Book 10% 6% 2% €0.9bn €0.9bn Government Bonds 90% Amortised Cost 92% Liquid Assets (€`m) Strong Liquidity Position (Q2`24)
Slide 32: Loan Portfolio Segments Performance
Loan Portfolio Segments Performance Corporate Lending – Portfolio(1) Mortgage – Portfolio Consumer Financing – Portfolio mEUR mEUR mEUR 1 800 7.1% 7.2% 7.1% 7.5% 7.0% 6.0% 5.9% 380 12% 5.8% 5.8% 1 700 6.6% 7.0% 900 6% 5.3% 340 1 600 6.5% 800 11% 4.5% 5% 9.9% 10.0% 10.1% 1 500 5.7% 6.0% 300 9.9% 9.7%
Slide 33: Šiaulių Bankas Market Share in Lithuania
Šiaulių Bankas Market Share in Lithuania Loan Portfolio Market(1) Corporate Lending(1) 21.4% 20.1% 23.5% SEB SEB 26.8% Swedbank Swedbank 9.9% Luminor Luminor 13.1% Šiaulių Bankas Šiaulių Bankas 28.9% Others Others 26.6% 17.5% 12.2% Mortgage(1) Consumer Financing(1) 28.9% 27.3% SEB Šiaulių Bankas 36.
Slide 34: Group Shareholder Structure
Group Shareholder Structure Shareholder Structure (30 Jun `24) Number of Shareholders Other Domestic 19.9% Investors 27.5% 19 087 19 154 18 524 9.0% 16 573 7.3% 5.3% 21.1% 5.1% Other Foreign Investors 4.9% Algirdas Butkus Gintaras Kateiva (Founder) (Early-stage Investor) 9 053 Listed Baltic asset ma
Slide 35: Total Shareholder Returns & Broker Outlook
Total Shareholder Returns & Broker Outlook Šiaulių Bankas (SAB1L) TSR Performance vs. Market Index – Last 5 Years Analyst Outlook 200% +48% +38% +37% 180% +72% € 1.05 160% € 0.98 € 0.98 140% +21% 120% 100% 80% 60% 40% Swedbank Enlight Research Norne Šiaulių Bankas MSCI EM Europe ex Russia NR Index 1
Slide 36: Debt Securities in Issue
Debt Securities in Issue Security name Volume of issue Interest rate Maturity Registration date Currency Type SIAULIU BANKAS/BD 771 20251007 210,000,000 1.05% Oct 7, 2025 Sep 24, 2021 EUR Senior Preferred SIAULIU BANKAS/BD 287 20291223 20,000,000 6.15% Dec 23, 2029 Dec 20, 2019 EUR Subordinated SIAU
Slide 37: Management Board
Management Board Vytautas Sinius Šiaulių Bankas: Šiaulių Bankas: 12 years Daiva Šorienė 25 years ▪ Chief Executive Officer of Šiaulių Bankas ▪ Head of Corporate Clients ▪ Chairman of the Management Board of Šiaulių Bankas Financial Industry: Financial Industry: ▪ Deputy Chief Executive Officer of Ši
Slide 38: Board of Directors
Board of Directors Valdas Vitkauskas Mindaugas Raila ▪ Chairman of the Supervisory Council of Šiaulių Bankas since August 2022 ▪ Chairman at Willgrow, Girteka Logistics and SIRIN Development ▪ Member of the Supervisory Council of Šiaulių Bankas since June 2022 ▪ Member of the Supervisory Council of
Slide 39: High Focus on ESG As a Competitive Advantage
High Focus on ESG As a Competitive Advantage Šiaulių Bankas ESG Strategic Priorities Selected Case From ESG Strategic Priorities: Renovation Strong Institutional Environmental Partners: Sustainability Leading 65% building of the renovated multi-apartment Service Access buildings in Lithuania are fin
Slide 40: Šiaulių Bankas – An Award Winning Organisation
Šiaulių Bankas – An Award Winning Organisation Bank of the year, Lithuania 2013; 2015; 2016; 2019; 2021; 2022; 2023 Banking Awards, “Global Finance”: Asset Management Awards (INVL): 2023 Best bank in Lithuania 2023 Refinitiv Lipper Fund Awards - "INVL Baltic Fund” recognised as the best Emerging Eur
Slide 41: Disclaimer
Disclaimer General The material in this presentation has been prepared by AB Šiaulių Bankas (Šiaulių Bankas) and solely for use at this presentation. The information provided in this presentation pertaining to Šiaulių Bankas, its business assets, strategy and operations is for general informational