Alpha Bank S.a. · ATHEX:ALPHA
Alpha Bank — Investor Presentation (June 2016)
50 slides from Alpha Bank's investor presentation, June 2016
Slide 1: Investor Presentation June 2016
I N V E S T O R P R E S E N TA T I O N June 2016
Slide 2: Table of Contents
Table of Contents Pages I. Q1’16 Performance Highlights 3 II. Q1’16 Performance 15 1. Balance Sheet 15 2. Pre Provision Income 17 3. Asset Quality 22 4. Liquidity 29 5. Capital 31 III. Appendix 33 IV. Macroeconomic Update 46 This presentation contains forward-looking statements, which include commen
Slide 3: I. Q1'16 Performance Highlights
I. Q1’16 Performance Highlights Investor Presentation 3
Slide 4: Reforms and Confidence Driven Investment to Outweigh the Effect of Fiscal Measures
I Reforms and Confidence Driven Investment to Outweigh the Effect of Fiscal Measures GDP Drivers (contribution per component in pps) Retail Sales and Consumer Confidence Indicator 3% 3% 5% Hundreds 2% 2% 0 0% 1% 1% 0% 0% -5% -1% -1% -20 -2% -2% -10% -3% -3% -40 GDP -4% growth -4% -15% -5% (yearly) -
Slide 5: Fiscal Adjustment Is Under Way Along With the Clearance of Government Arrears
I Fiscal Adjustment Is Under Way Along With the Clearance of Government Arrears Government Arrears – GDP growth Primary GG Balance – Revenues – Primary Expenditure (% of GDP) in € bn 50 5 12 2% GDP growth 49 (yearly) 3.5 10 1.1 4.8 0% 48 8.5 47 2.0 8 -2% 1.6 0.7 6.7 46 0.7 0,8 0.9 2.1 part of 0.3 6
Slide 6: Restoration of profitability in Q1 2016 signals a positive year ahead
I Restoration of profitability in Q1 2016 signals a positive year ahead Q1 Q4 qoq % Q1 yoy % Profit & Loss (€ million) 2016 2015 change 2015 change (€ billion) 31/3/2016 31/12/2015 Assets 68.2 69.3 NII 483 487 (0.7%) 475 1.7% Net Loans 45.8 46.2 Fees and commissions 79 84 (5.9%) 84 (6.2%) Deposits 3
Slide 7: Positive trajectory of core operating performance
I Positive trajectory of core operating performance Core PPI build-up, mainly supported by OPEX1,2 Third consecutive quarter of Core PPI well above impairment1,2 467 426 (€ million) +€29mn +10.6% 299 278 270 38 299 (€ million) 270 1 292 290 (5) (5) 258 255 219 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q4 2015 Δ
Slide 8: NII affected by counterbalancing drivers and less calendar days
I NII affected by counterbalancing drivers and less calendar days NII build-up Wholesale funding positively affected by Pillar II reduction and LME that took place end- (€ million) 2015 487 1 488 17 483 Cost benefit of Pillar II bonds already locked in to be fully phased-in in 2017 (5) Greek G
Slide 9: Seasonal deposit inflows in Q4'15 partially offset in Q1'16
Eurosystem funding reliance gets reduced; I Seasonal deposit inflows in Q4’15 partially offset in Q1’16 Eurosystem funding reduced Eurosystem collateral pool (cash values) (€ billion) (€ billion) 29.4 +0.5 27.2 24.4 Pillar II 5.1 24.1 23.5 3.5 (0.5) 2.0 2.0 (0.3) Bonds ELA ELA 24.6 22.8 19.6 ELA 15.
Slide 10: Best in class Cost to Income ratio at 48% vs. system average of 54%
I Best in class Cost to Income ratio at 48% vs. system average of 54% OPEX build-up (€ million) -€42mn -13.3% 429 316 3 308 (64) 274 31 (49) (6) (35) (1) Reported Greek Other Core Δ Δ Δ Core Cyprus Other Reported 1 Q4'15 VSS One-offs Q4'15 2 Staff G&As Depreciation Q1'16 2 VSS One-offs Q1'16 C/I rat
Slide 11: Households' formation in Greece declines; Business formation affected by targeted actions
Households’ formation in Greece declines; I Business formation affected by targeted actions Group NPL formation evolution NPL formation by segment - Greece (€ million) Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Mostly targeted actions on troubled corporate loans already in the NPE Business2 perimeter 987 470 NPL
Slide 12: NPE formation in line with expectations; Restructurings per quarter increase
NPE formation in line with expectations; I Restructurings per quarter increase NPEs formation-Greece Domestic NPEs restructured flows (€ billion) (€ billion) 26.9 1.4 12.8 1.3 3.4 8.9 14.4 0.9 EBA FNPLs 9.4 14.1 0.8 14.2 EBA NPLs (0.5) (0.2) 18.0 NPEs Provisions Net NPEs Entries Exits NPEs Impairmen
Slide 13: Common Equity Tier I Ratio of 16.3%; Fully Loaded ratio at 15.9%
I Common Equity Tier I Ratio of 16.3%; Fully Loaded ratio at 15.9% GGBs appreciation allows for significant benefit to our capital position upon Common Equity Tier I (CET1) ratio build up impacted by AFS valuation normalisation of economic conditions CET1 capital (€ 8,701 8,604 8,494 8,282 Gain of c
Slide 14: Reduced SEE presence results to breakeven performance
I Reduced SEE presence results to breakeven performance Romania Alpha SEE Network Mar-13 Mar-16 Entry: Greenfield 1994 Serbia Branches: 130 Countries of Presence 7 4 Employees: 1,862 Entry: Acquisition(2) 2002 Branches: 75 Gross Loans (in €mn): 2,839 Employees: 950 Deposits (in €mn): 1,472 Branches
Slide 15: II. Q1'16 Performance
II. Q1’16 Performance 1. Balance Sheet Investor Presentation 15
Slide 16: Balance Sheet composition
II Balance Sheet composition Asset split Liabilities and equity split (€ billion) (€ billion) 69.3 69.3 68.2 68.2 Cash 1.7 Cash 1.4 5.9 Securities Securities 5.7 19.6 ELA 19.7 ELA EFSF bonds 4.3 EFSF bonds 4.3 4.8 ECB 4.4 ECB Time 13.1 13.5 Time deposits deposits 31.0 31.4 46.2 45.8 Net loans Net lo
Slide 17: II-2. Pre Provision Income
II-2. Pre Provision Income Investor Presentation 17
Slide 18: Resilient core PPI; NII supported by reduced cost of funding
II Resilient core PPI; NII supported by reduced cost of funding Recurring PPI breakdown 1, 2 Negative contribution of loans to NII counterbalanced by depos & funding (€ million) (€ million) 570 575 567 586 573 475 482 488 487 483 68 80 85 86 87 Bonds & 292 290 299 other 278 270 560 572 573 558 537 L
Slide 19: Loan and deposit spreads
II Loan and deposit spreads Reduced net loan balances with declining spreads Deposit outflows change deposit mix & increased cost (bps) (bps) 472 474 469 460 454 (63) (61) (67) (€ billion) 49.7 (82) 47.7 47.0 46.2 45.8 (92) (€ billion) 36.0 31.1 30.5 31.4 31.0 End of quarter 20.4 16.0 13.5 13.1 13.5
Slide 20: Operating expenses down by 1.5% yoy
II Operating expenses down by 1.5% yoy OPEX Evolution1 (13.3%) (€ million) 316 284 290 € million Q1’16 Q1’15 yoy % 278 27 274 26 26 26 26 Depreciation 154 (22.9%) Staff costs 129 134 (3.1%) 119 127 131 119 General expenses General expenses 119 119 (0.1%) Wages & Salaries 134 131 132 135 (4.2%) 129 D
Slide 21: OPEX gradual reduction; further opex reduction by incorporating benefits from VSSs
OPEX gradual reduction; further opex reduction by incorporating benefits from VSSs II in Cyprus and Greece Staff costs evolution1 General expenses evolution1 (€ million) (€ million) +Citi 164 162 159 +Citi 157 148 154 123 127 131 Remedial 122 120 119 119 134 135 management / crisis 131 132 129 drive
Slide 22: II-3. Asset Quality
II-3. Asset Quality Investor Presentation 22
Slide 23: Coverage of group non performing loans
II Coverage of group non performing loans 57% 136% Evolution of coverage for the Group Business 126% 73% 75% 79% 79% 57% 76% 63% 67% 69% 70% 67% Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Collateral Total NPL Coverage Coverage Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Collateral Total NPL Coverage Coverage 117% 70
Slide 24: Non-performing exposures (NPEs) also include performing forborne loans
II Non-performing exposures (NPEs) also include performing forborne loans NPE perimeter includes NPLs and performing restructured loans (€ billion) NPL NPL NPE NPE Ratio Coverage Ratio Coverage 37% 70% 52% 50% 61.9 ECB methodology separates the 90 days past due, IFRS non- Provisions 16.1 performin
Slide 25: Detailed overview of Alpha Bank's asset quality by portfolio
II Detailed overview of Alpha Bank’s asset quality by portfolio (€ billion) Wholesale SBL Mortgages Consumer Total Gross loans 27.1 6.8 20.8 7.3 61.9 (-) Provisions (7.1) (3.0) (3.3) (2.7) (16.1) Net loans 19.9 3.8 17.5 4.6 45.8 NPLs 7.7 5.0 7.1 3.3 23.1 NPL ratio 28.4% 74.2% 34.0% 45.6% 37.4% NPEs
Slide 26: NPL Management Units Analysis
II NPL Management Units Analysis Loans perimeter managed by NPL Units NPL Management Units balances breakdown by segment (€ billion) (€ billion) 27.0 52.3 25.3 Retail Wholesale €18.9bn €8.1bn 7.5 24.8 32.3 18.9 0.5 Performing 5.0 Performing 9.2 19.5 13.9 8.1 3.4 5.6 5.5 NPLs NPLs 4.0 20.0 0.6 2.5 1.
Slide 27: On track to develop NPL servicing platforms
II On track to develop NPL servicing platforms Aktua Hellas will deploy innovative loss mitigation strategies, to achieve KKR to manage €1.2bn of large Corporate NPEs on behalf of Alpha Bank higher recovery rates, supporting current Alpha Bank practice. Aktua will and Eurobank manage a large part of
Slide 28: NPL management legislation implemented and expected within 2016
II NPL management legislation implemented and expected within 2016 Main amendments Impact NPLs servicing New servicing companies to & sales be incorporated including Bank of Greece issued act prescribing the licensing requirements Aktua Hellas and Pillarstone Greece (‘Manco’) Allow for more ef
Slide 29: II-4. Liquidity
II-4. Liquidity Investor Presentation 29
Slide 30: Deposits flow for the quarter in line with system
II Deposits flow for the quarter in line with system Alpha Bank deposits evolution in Greece (€ billion) Q2: Q3: Q4: Q1: (€4.0bn) (€0.2bn) +€0.7bn (€0.5bn) 30.3 +2.0 26.3 +1.2 Δ Time (0.4) 26.7 26.0 +0.3 26.2 (0.5) (0.8) (3.7) (2.3) Δ Core In Q4’15, there were inflows of €0.7bn stemming from Mar-1
Slide 31: II-5. Capital
II-5. Capital Investor Presentation 31
Slide 32: Common Equity Tier I Ratio of 16.3%; Fully Loaded ratio at 15.9%
II Common Equity Tier I Ratio of 16.3%; Fully Loaded ratio at 15.9% Common Equity Tier I (CET1) ratio build up CET1 capital 8,701 8,604 8,494 8,282 (€ million) 16.6% 16.5% 4 bps 16.3% 15.9% (19 bps) (3 bps) (13 bps) CET1 Yearly DTA CET 1/1/16 Decrease of Reserves AFS Reserve Other/ CET1 Fully loaded
Slide 33: III. Appendix
III. Appendix Investor Presentation 33
Slide 34: Business Volumes
III Business Volumes % (€ million) Mar 2016 Dec 2015 Sep 2015 Jun 2015 Mar 2015 Mar 2016 / Mar 2015 Group Gross Loans 61,895 62,015 62,133 62,634 63,116 (1.9%) Mortgages 20,794 20,840 20,859 20,974 21,170 (1.8%) Consumer Loans 5,848 5,872 5,835 5,773 5,828 0.3% Credit Cards 1,409 1,425 1,402 1,475 1
Slide 35: Diversified business book and shipping portfolio
III Diversified business book and shipping portfolio Group loans breakdown Wholesale loans portfolio structure – Group Other 13% Industry 22% Services 6% Wholesale loans 44% Mortgages 34% Real Estate 7% €61.9bn €27.1bn Shipping 7% Trade 21% Credit Cards 2% Tourism 7% Consumer loans SBLs Transportati
Slide 36: Wealth Management evolution
III Wealth Management evolution Alpha Private Bank balance increased with Citi acquisition Asset Management impacted by the adverse operating environment (€ million) (€ million) 4,250 4,170 3,695 2,188 2,307 1,689 1,515 2,303 276 188 1,219 168 1,106 945 1,955 866 1,768 1,297 307 382 185 95 106 94 Ma
Slide 37: SEE Operations
III SEE Operations (€ million) Cyprus Δ% Romania Δ% Serbia Δ% Albania Δ% TOTAL Δ% Mar-16 qoq qoq qoq qoq qoq Deposits 1,714 1.8% 1,472 6.4% 367 (6.7%) 403 (0.5%) 3,956 2.3% Gross Loans 5,333 0.9% 2,839 1.7% 701 (2.4%) 365 (0.6%) 9,238 0.8% Loan Market Share 4.9% 5.6% 4.1% 8.4% Mortgages 2,447 (0.9%)
Slide 38: Alpha Bank Group
III Alpha Bank Group (€ million) Q1 2016 Q1 2015 yoy % change Net interest income 482.9 475.0 1.7% Net fee and commission income 78.6 83.8 (6.2%) Income from financial operations 3.0 26.0 (88.3%) Other Income 11.5 11.6 (1.3%) Operating Income 576.0 596.3 (3.4%) Staff costs (129.5) (133.6) (3.1%) Gen
Slide 39: Group Results by Business Unit
III Group Results by Business Unit Commercial & Investment Banking & Asset Retail SE Europe Other Group Corporate Treasury Management (€ million) Jan-Mar Jan-Mar Jan-Mar Jan-Mar Jan-Mar Jan-Mar Jan-Mar 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 Operating Income 283.2 257.0
Slide 40: Results: Retail Business Unit
III Results I Retail Business Unit (€ million) Q1’16 Q4’15 Q3’15 Q2’15 Q1’15 Q4’14 Q3’14 Q2’14 Operating Income 283.2 294.9 298.3 286.9 257.0 250.8 237.2 232.6 Net Interest Income 255.5 266.9 273.6 256.6 230.1 221.9 210.7 205.5 Net fee and Commission Income 26.3 28.4 23.9 29.0 25.5 27.0 25.1 25.6 In
Slide 41: Results: Commercial & Corporate Business Unit
III Results I Commercial & Corporate Business Unit (€ million) Q1’16 Q4’15 Q3’15 Q2’15 Q1’15 Q4’14 Q3’14 Q2’14 Operating Income 211.7 221.5 222.5 216.7 207.8 220.7 220.0 218.3 Net Interest Income 175.4 182.8 187.1 180.5 171.8 179.2 177.8 177.8 Net fee and Commission Income 33.7 35.7 33.0 31.8 33.5 3
Slide 42: Results: Asset Management Business Unit
III Results I Asset Management Business Unit (€ million) Q1’16 Q4’15 Q3’15 Q2’15 Q1’15 Q4’14 Q3’14 Q2’14 Operating Income 11.7 14.6 10.6 16.5 19.2 16.0 13.6 13.0 Net Interest Income 4.0 4.1 4.1 4.1 4.0 4.2 4.1 3.6 Net fee and Commission Income 8.1 8.8 7.2 12.1 15.3 11.8 9.4 8.4 Income from Financial
Slide 43: Results: Investment Banking & Treasury Business Unit
III Results I Investment Banking & Treasury Business Unit (€ million) Q1’16 Q4’15 Q3’15 Q2’15 Q1’15 Q4’14 Q3’14 Q2’14 Operating Income (30.9) (12.0) (47.9) (19.5) 11.0 21.3 22.9 19.0 Net Interest Income (23.7) (44.3) (54.5) (38.6) (9.7) 6.9 8.3 6.1 Net fee and Commission Income 2.2 1.9 (2.7) (3.4) 0
Slide 44: Results: SE Europe Business Unit
III Results I SE Europe Business Unit (€ million) Q1’16 Q4’15 Q3’15 Q2’15 Q1’15 Q4’14 Q3’14 Q2’14 Operating Income 86.4 86.1 96.6 89.8 71.1 93.6 101.4 102.9 Net Interest Income 71.3 77.1 77.6 79.1 78.7 80.9 85.2 81.8 Net fee and Commission Income 7.8 8.0 8.0 7.5 8.4 8.3 8.8 8.4 Income from Financial
Slide 45: Results: Other Business Unit
III Results I Other Business Unit (€ million) Q1’16 Q4’15 Q3’15 Q2’15 Q1’15 Q4’14 Q3’14 Q2’14 Operating Income 13.9 (108.7) (3.6) (5.6) 30.1 (56.9) 7.8 14.3 Net Interest Income 0.4 (0.2) 0.4 0.2 0.1 0.1 0.3 0.3 Net fee and Commission Income 0.6 0.7 0.1 0.3 0.2 0.2 0.1 0.2 Income from Financial Opera
Slide 46: IV. Macroeconomic Update
IV. Macroeconomic Update Investor Presentation 46
Slide 47: Economic Developments: Mixed Signals
IV Economic Developments : Mixed Signals GDP and Economic Sentiment Net Employment Flows of the Private Sector (in thousands) 2% Q32014 600 January-April 160 Q22015 1% 120 400 GDP % yoy change Q12014 Q42014 80 1% 200 40 Q12015 Q22014 0% - - 80 90 100 -1% -40 Q42015 -200 -80 -1% -400 -120 Q12016 -2%
Slide 48: Completion of the First Review
IV Completion of the First Review Prior Actions Legislated in May 2016 Income Tax Reforms Pension Reforms Indirect Taxation – Other Privatisation and NPL framework (€ 1.8 bn) (€ 1.8 bn) Fiscal Measures (€ 1.8 bn) Investment Fund • Establishment of a single main • A Fund fully operational within • An
Slide 49: Liquidity – Investment Dynamics
IV Liquidity – Investment Dynamics Categories of Government Arrears (in € million) List of Privatisations according to the updated Asset Development Plan € 775 mln income 1. Regional Airports (14 regional airports divided into two clusters of 7 airports each) tax refunds, € 180 Tax Refunds 2. Hellin
Slide 50: 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 4017 Dimitrios Kostopoulos Elena Katopodi Manager Assistant Manager Investor Relations Division Investor Relations Divisio