Brd Groupe Societe Generale Sa (romania) · BVB:BRD
Brd Groupe Societe Generale Sa (romania) — BRD - Groupe Société Générale — FY2017 Earnings Presentation
45 slides from Brd Groupe Societe Generale Sa (romania)'s earnings presentation, Feb 7, 2018
Slide 1: BRD Group Results Full-Year and 4th Quarter 2017
BRD - GROUP R E S U LT S F U L L - Y E A R AN D 4 TH Q U AR T E R 2 0 1 7 FEBRUARY 2018
Slide 2: Disclaimer
DISCLAIMER The consolidated balance sheet and profit and loss account for the period ended December 31, 2017 were examined by the Board of Directors on February 7, 2018. The financial information presented for the year ended December 31, 2017 and comparative periods has been prepared according to IF
Slide 3: Introduction
INTRODUCTION EBRD
Slide 4: 2017: Full Year Net Profit at RON 1.4bn, +85% Y/Y
2017: FULL YEAR NET PROFIT AT RON 1.4BN, +85% Y/Y Strong momentum in core revenues Net interest income (+8.4% y/y) gaining momentum, mostly on Core NBI* growing volumes RON 2,777m +4.9% vs 2016 Healthy loan advance (+5.3% y/y) Large and growing retail deposit base (+5.8% y/y) Core GOI* RON 1,333m +5
Slide 5: Q4 2017: Building Momentum in Core Revenue Growth
Q4 2017: BUILDING MOMENTUM IN CORE REVENUE GROWTH NBI excluding non Material advance of core NBI* recurring items (RON m) Core NBI* up +9.4% vs Q4 2016, driven by higher net interest income and improvement in net fees and commissions revenues +9.4% Double digit growth rate in lending production for
Slide 6: Macroeconomic & Banking Environment
2 MACROECONOMIC & BANKING ENVIRONMENT
Slide 7: Economic Growth Above Expectations
ECONOMIC GROWTH ABOVE EXPECTATIONS Largest GDP growth in Europe expected for 2017 GDP GROWTH 6.2% Strong economic momentum in 2017, mostly fueled by consumption boom 4.8% Q3 17 GDP accelerated significantly at +8.6% y/y (seasonally 3.9% 3.5% adjusted) from +5.9% y/y in the previous quarter with hous
Slide 8: Improved Annual Lending Dynamics
IMPROVED ANNUAL LENDING DYNAMICS LOANS (RON bn) yoy* Overall credit growth at +3.6% y/y at December 2017 end, with 245 +3.6% lending to individuals as main driver (+6.6% y/y) 230 233 Housing loans up +11.6% y/y, still supported by the “Prima Casa” loans 123 +0.9% 122 120 Modest advance on consumer l
Slide 9: The Quality of Bank Assets Continues to Improve
THE QUALITY OF BANK ASSETS CONTINUES TO IMPROVE NPL RATIO NPL ratio continued its downward trend … 20.7% …as a result of write off operations and sale of defaulted loans portfolios NPL ratio at 7.3% at November 2017 end, lower by 2.2 ppts y/y as 13.6% compared to December 2016 end 9.5% 6.5% 7.3% 5.7
Slide 10: 4th Quarter and 2017 BRD Group Results
3 4TH QUARTER AND 2017 BRD GROUP RESULTS
Slide 11: Enhanced Digital Intensity
ENHANCED DIGITAL INTENSITY Significant growth across remote banking channels Further enhancing digital offer c c c Stock of remote banking contracts up +21% y/y at December Enhancement of the mobile application functionality 2017 end (+12% internet and +45% mobile banking) face and fingerprint authe
Slide 12: Intensified Commercial Relationships, Rapidly Growing Remote Banking Transactions
INTENSIFIED COMMERCIAL RELATIONSHIPS, RAPIDLY GROWING REMOTE BANKING TRANSACTIONS AVERAGE INDIVIDUAL CUSTOMER Continuing to record robust commercial growth EQUIPMENT RATE 4.16 2.33m active clients Stock of active clients increased by + 41,000 y/y 4.07 3.95 Individuals Small business 2.19m clients 11
Slide 13: Actively Co-financing Companies Under EU and National Funded Programs
ACTIVELY CO-FINANCING COMPANIES UNDER EU AND NATIONAL FUNDED PROGRAMS LEVERAGING ON THE EXPERTISE OF OUR DEDICATED STRUCTURE European Funds 2014-2020 co-financing of over 180 investment projects, representing ~ 370 investment and working capital loans, amounting to ~ EUR 60m granted in 2017 (EUR 20m
Slide 14: Healthy Credit Growth Pushed Up by New Loan Production to Individuals
HEALTHY CREDIT GROWTH PUSHED UP BY DOUBLE-DIGIT INCREASE IN NEW LOAN PRODUCTION TO INDIVIDUALS LOANS TO INDIVIDUALS PRODUCTION (RON m) Double digit growth rate in lending production for individuals Q4-17 vs. 2017 vs. Strong advance of new housing loans, with increasing share of Q4-16 2016 BRD specif
Slide 15: Enlarged Deposit Base and Expanding Assets Under Management
ENLARGED DEPOSIT BASE AND EXPANDING ASSETS UNDER MANAGEMENT DEPOSITS (outstanding amounts, RON bn) Still elevated deposit inflows on retail segment yoy* 44.2 +3.8% Retail savings +5.8% y/y vs December 2016 end 41.2 42.2 Non retail deposits quasi stable y/y in a context of comfortable 16.4 17.5 16.2
Slide 16: Dynamic Rise in Core Revenues
DYNAMIC RISE IN CORE REVENUES NET BANKING INCOME (RONm) Substantially higher core NBI*… excl. non incl. non recurring * recurring NBI up +9.4% in Q4 2017 and +4.9% in 2017 excluding non 725 +9.4% +8.7% recurring items (gains on sale of AFS instruments, mostly VISA) 667 Non recurring 4 73 +8.6% +2.5%
Slide 17: Acceleration of Investments in Business Model Transformation
ACCELERATION OF INVESTMENTS IN BUSINESS MODEL TRANSFORMATION, ENHANCED OPERATIONAL PERFORMANCE OPERATING EXPENSES (RON m) excl. non incl. non Q4 2017 operating expenses influenced by the upfronting of recurring * 410 recurring upcoming transformation costs +7.0% +15.2% Non recurring 356 29 Accelerat
Slide 18: Improved Asset Quality
IMPROVED ASSET QUALITY GROSS LOANS – December 31, 2017 breakdown by segment and currency (RON bn) Loan portfolio market mix 65.2% on individuals market segment 34.8% on legal entities market segment Consolidation of RON lending Share of RON denominated loans at 61.7% (vs 56.6% as of 12/2016) Trend i
Slide 19: Cost of Risk Influenced by Strong Recovery Performance
COST OF RISK INFLUENCED BY STRONG RECOVERY PERFORMANCE COST OF RISK EVOLUTION (RON m) Q4 2017 NCR highlights Strong recovery performance, mainly from legal entities NPL exposures (near 90 MRON in net provision reversals), leading to overall net release of provisions of 95 MRON in Q4-2017 Key ratios
Slide 20: Very Strong Financial Results on Robust Business Growth
VERY STRONG FINANCIAL RESULTS ON ROBUST BUSINESS GROWTH AND NON RECURRING POSITIVE COST OF RISK ITEMS NET PROFIT (RON m) 349 +121.7% incl. non recurring items Net profit up +85% y/y in 2017 (+121.7% y/y in Q4 2017) supported by healthy income growth and positive cost of risk Non-recurring 157 374 it
Slide 21: Solid Capital Position
SOLID CAPITAL POSITION SOLVENCY RATIO * +88bp +0.04bp -46bp Solid Tier 1 capital base -73bp CAR at 19.49% at December 2017 (incl. current year result) comfortably above regulatory requirement 19.76% 19.49% 2017 Dec-16 OCI RWA Other Dec-17 Retained profit * Bank only, incl. current year result (unaud
Slide 22: Conclusions
CONCLUSIONS EBRD
Slide 23: Conclusions
CONCLUSIONS Continued improvement of customer experience through continuous development of digital capacities Healthy credit growth pushed up by double-digit increase in new loan production to individuals Enlarged deposit base and expanding assets under management Dynamic rise in core revenues drive
Slide 24: An Active Engagement in the Romanian Society
AN ACTIVE ENGAGEMENT IN THE ROMANIAN SOCIETY SPORT CULTURE • Cultural Journalism/ Scena9.ro • BRD Bucharest Open • Platform for the new creators Rezidenta BRD Scena9 • Romanian Handball Federation •Classical Music: Sonoro, Stradivarius •Performing Arts: Sibiu Festival, National Theater Festival, Ide
Slide 25: Recognized Excellence
RECOGNIZED EXCELLENCE BRD Asset Management: BRD Eurofund -Best EURO denominated investment fund Best in Leasing – BRD Sogelease Best Sub-custodian Bank in Romania, 2017 “Safest Bank in Romania”, Global Finance - the 4th consecutive year “Friendliest Bank for Youth” MasterCard Bank of the Year Awards
Slide 26: Transform to Grow: 2020 Vision
TRANSFORM TO GROW 2020 VISION BRD STRATEGIC OBJECTIVES F E B R U A R Y 1 2 TH 2 0 1 8
Slide 27: BRD: A Universal Banking Group with Leading Franchises
BRD: A UNIVERSAL BANKING GROUP WITH LEADING FRANCHISES ACROSS THE BOARD RETAIL CORPORATE SPECIALIZED AFFILIATES 2 191 ths active individual customers 18.2 ths SME customers 100% owned by BRD 115 ths active small business customers # 3 on local leasing market 2.1 ths large corporate customers # 1 on
Slide 28: Positive Developments in the Banking Environment, Challenges and Opportunities
POSITIVE DEVELOPMENTS IN THE BANKING ENVIRONMENT IN THE RECENT PAST, SIGNIFICANT CHALLENGES AND OPPORTUNITIES AHEAD Macro-context – Current opportunities and future challenges Strong and sustained GDP growth in the last years Unsustainable GDP growth in the mid-term – Economy Rising interest rates,
Slide 29: Strategic Objectives
OUR STRATEGIC OBJECTIVES FOR 2020 Achieve core solid profitability growth on both retail and corporate segments, driven by superior customer experience, strong employee engagement, and by the bank's commitment to having a positive contribution to the Romanian society and banking sector Proactively u
Slide 30: BRD Transformation Program
BRD TRANSFORMATION PROGRAM Transformation Program 2020 Goals Ambition & Strategy Accelerate the transformation Transformation Program structured around four pillars of the business model Enable the bank to reach its 2020 objectives IS & Retail Corporate Operations Projects FULL-YEAR AND 4TH QUARTER
Slide 31: Retail – Towards a More Customer Centric, Digital, and Efficient Bank
RETAIL – TOWARDS A MORE CUSTOMER CENTRIC, DIGITAL, AND EFFICIENT BANK CUSTOMIZE THE VALUE ADAPT THE DISTRIBUTION STREAMLINE THE OPERATING PROPOSITION CHANNEL MIX MODEL AND INVEST IN PEOPLE Key Objective: Adjust the value Key Objective: Reposition the channel Key Objective: Optimize processes and pro
Slide 32: Moving Toward an Omni-Channel Business Model
MOVING TOWARD AN OMNI-CHANNEL BUSINESS MODEL, COMBINING HUMAN EXPERTISE AND DIGITAL EFFICIENCY REMOTE PLATFORMS BRANCHES Business centers Specialized Platforms for Corporate Various branch Greater EXPERTISE, format via physical and remote channels, for customers’ key projects CLIENTS Contact Center
Slide 33: Corporate – Fully Activate Value Growth Levers
CORPORATE – FULLY ACTIVATE VALUE GROWTH LEVERS AND FURTHER INCREASE LOAN ORIGINATION ACHIEVE MATERIAL AND FOCUS ON VALUE GROWTH OPTIMIZE PROCESSES AND PROFITABLE LOAN VOLUME LEVERS ORGANIZATIONAL SET-UP GROWTH Key Objective: Maximize value Key Objective: Outperform corporate Key Objective: Improve b
Slide 34: Operations – Simplified Organization and Optimized Processes
OPERATIONS – SIMPLIFIED ORGANIZATION AND OPTIMIZED PROCESSES FOR INCREASED REACTIVITY AND QUALITY MORE AGILE ORGANIZATION ENHANCE PROCESS EFFICIENCY OPTIMIZE COST BASE Key Objective: Revise organization Key Objective: Achieve superior Key Objective: Maximize financial structure and increase alignmen
Slide 35: Accelerate Digital Readiness Through Innovative, Open, and Agile Approaches
ACCELERATE DIGITAL READINESS THROUGH INNOVATIVE, OPEN, AND AGILE APPROACHES GROW THE INFORMATION TRANSFORM THE DELIVERY BOOST INNOVATION SYSTEMS VALUE MODELS AND EXPERTISE Continuous interactions with an entire Trusted partner, custodian of clients’ AGILE First and developing ecosystem data Reduce t
Slide 36: 2020 Financial Targets
2020 FINANCIAL TARGETS +7% * Solid growth on loan book Loans HEALTHY VOLUME GROWTH Deposits +4% * Sustainable funding sources Higher value extraction on both Retail an KEY TARGETS Non Retail portfolios • INCREASED INVESTMENTS IN Solid volume growth TRANSFORMATION GOI >+4% * Pressure on margins • ENH
Slide 37: Q&A Session
Q&A SESSION EBRD
Slide 38: Appendix
APPENDIX EBRD
Slide 39: BRD Group | Key Figures
BRD GROUP | KEY FIGURES RON m Q4-2017 Q4-2016 Change 2017 2016 Change Net banking income 725 667 +8.7% 2,786 2,778 +0.3% Operating expenses (410) (356) +15.2% (1,473) (1,388) +6.2% Gross operating income 315 311 +1.3% 1,313 1,390 -5.6% Reported financial results Net cost of risk 88 (122) n/a 360 (48
Slide 40: BRD Group | Key Figures
BRD GROUP | KEY FIGURES Loans and deposits RON bn Dec-16 Dec-17 vs. Dec-16 (1) 28.5 30.3 +5.3% Net loans including leasing (RON bn) Retail 19.3 21.0 +7.6% Non retail 9.2 9.3 +0.4% (1) 42.2 44.2 +3.8% Total deposits (RON bn) Retail 26.0 27.8 +5.8% Non retail 16.2 16.4 +0.5% Loan to deposit ratio 67.6
Slide 41: BRD | Key Figures for Bank Only
BRD | KEY FIGURES FOR BANK ONLY RON m Q4-2017 Q4-2016 Change 2017 2016 Change Net banking income 680 619 +9.8% 2,641 2,634 +0.3% Financial results Operating expenses (385) (335) +15.0% (1,388) (1,310) +5.9% Gross operating income 295 284 +3.8% 1,254 1,324 -5.3% Net cost of risk 95 (112) n/a 376 (461
Slide 42: BRD | Stock Price Performance
BRD | STOCK PRICE PERFORMANCE Market capitalisation 15.0 4,000 EUR 1.9 bn 14.0 3,500 13.0 3,000 12.0 2,500 11.0 2,000 10.0 1,500 9.0 1,000 8.0 7.0 500 6.0 0 Volume ('000 shares, rhs) Price (RON, lhs) BRD is part of the main market indices on the Bucharest Stock Exchange BRD is in Top 5 largest domes
Slide 43: Financial Calendar for 2018
FINANCIAL CALENDAR FOR 2018 8th February: Preliminary 2017 financial results and annual press conference 19th April: General Shareholders Meeting 19th April: General Assembly of Shareholders and publication of the 2017 BoD Report 4th May: Q1-2018 results publication 2nd August: H1-2018 results publi
Slide 44: Glossary – Client Segmentation
GLOSSARY – CLIENT SEGMENTATION The Retail category is comprised of the following customer segments: • Individuals – BRD provides individual customers with a range of banking products such as: savings and deposits taking, consumer and housing loans, overdrafts, credit card facilities, funds transfer
Slide 45: BRD Groupe Societe Generale - Investor Relations
BRD GROUPE SOCIETE GENERALE - INVESTOR RELATIONS +4 021 380 47 62 investor@brd.ro www.brd.ro
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