Consolidated Results for 4 Qs 2002 Promises kept. Warsaw, 14 February 2003

Transcription

1 Consolidated Results for 4 Qs 22 Promises kept Warsaw, 14 February 23

2 Merger process at fal stage Fancial results for 4 Qs 22 (PAS) Appendix: credit risk management results busess divisions The latest IR news on the ternet: 2

3 Promises kept IT merger on time Gross prit higher than 21 Costs lower than 21 Lower net provisions Executed synergies higher than forecast Extra Increase number clients New novative products and services The latest IR news on the ternet: 3

4 Operational merger almost fished. Focus on busess 23 Ma projects completed IVQ2 > one IT platform up and runng > fal structure retail network established > implementation Multicash Client 3. and Videotel for corporate and SME clients > centralisation restructurg and collection for corporate clients > Bank s ATM network connected with EURONET Key levers for success 23 Income growth Cost cuttg Risk management > development product fer > enhanced marketg > retail scorg >HQ restructurg > completion restructurg retail network > Fal implementation the IT system to support monitorg and collection with CRM Area > MIS lked MbO > E-bankg upgrade > Contuation staff restructurg > Further works on Basel II rules with Credit Risk Management The latest IR news on the ternet: 4

5 Execution Integration Costs and Synergies 22 admistration / fice supplies 9% promotion / communication 2% IT 37% promotion / communication 3% consultg 18% IT 1% Synergies Execution others 6% Cost Execution depreciation 1% admistration / fice supplies 1% others,5% personnel synergies 46% personnel (cl severances) 57% Merger related annual synergies EUR 5m (operational) plus EUR 2m (IT related), to be fully realised from 24 onwards Plan (%) Execution (%) synergies costs Synergies realised 22 are higher by 11% than planned; Integration costs are lower than budgeted (by 11% 22 cludg cost accruals) Execution synergies maly results from employment reduction Execution personnel synergies cludes remuneration and fixed costs savgs resultg from FTE reduction Severance payments constitute 57% total costs curred 22 (cludg cost accruals) 5 Plan (%) Exec. (%) The latest IR news on the ternet: 5

6 Optimisation Employment and Branch Network Outlets without GBG 1 Employees FTEs Decrease number outlets by 21 4Q 22 and 6 for whole year due to closg overlaps and efficient units, 15% decrease employment level (by 2,12 persons) 22, regardless PBK Brokerage House corporation to the Bank (197 persons added) 2Q2, Staff restructurg process (reduction up to 2,3 employees announced April 2) is on gog. The latest IR news on the ternet: 6

7 22 Fancial results: PAS and IAS Polish Accountg Standards Higher gross but lower net prit Gross prit Lower costs and net provisions Total costs * Net prit Net provisions */ Gross prit cludes item Share net prits (losses) subsidiaries priced by equity accountg Consolidated data, mio PLN International Accountg Standards (22) Gross prit Startg from 4Qs 2 results the Bank will disclose selected P&L items accordg to IAS along with full fancial statements PAS. The differences between prits accordg to PAS and IAS stem from the fact that 22 BPH PBK was gradually elimatg discrepancies the Bank s balance sheets prepared accordance with the two accountg standards. At the end 21 the difference specific and general risk provisions the balance sheet positions (IAS position was higher) amounted to circa PLN 2 Mio. As a result regular adjustments the course 22 the said b/s positions, i.a. the balances loans loss provisions under PAS and IAS became equal. However, this difference was reflected the Bank s P&L accounts at the year-end PAS IAS PAS IAS 5 Net prit 22 The latest IR news on the ternet: 7

8 Merger process at fal stage Fancial results for 4 Qs 22 (PAS) Appendix: credit risk management results busess divisions The latest IR news on the ternet: 8

9 Polish Economy and Bankg: non-flationary growth % y/y GDP Dom.Demand Investments Private cons. CPI M3 Exports (vol) Q and bankg sector 2 Q Q Q4 2E Q4 brought further deterioration banks deposit base, household deposits (term+ca) fell Dec 3.9%y/y, corporate deposits rose 1.4%y/y Banks pricg policy stabilised, banks charge sub 4% above tervention rate for corp. credit and fer 2.5% below tervention rate on deposits 35 Wage bill expected to turn black Q2 3, corporate prits improve 4Q 2 Polish economy... Poor global outlook did not affect Polish exports as Poland fers low margal cost Gradual growth recovery driven by strong exports, robust consumption and less severe vestment recession Still low domestic demand and deep food deflation pushed flation down Fallg money supply, but one has to account for special factors (bond issues, shift to vestment funds) Cash (%y/y) Current accounts, households (%y/y) Term deposits, households (%y/y) Household savg terest rate (below terv. rate), RA Corporate credit terest rate (above terv. rate), RA The latest IR news on the ternet: 9

10 22 - each quarter black k (1) BPH PBK Group (consolidated, mio PLN) * Gross prit Net prit */ Gross prit cludes item Share net prits (losses) subsidiaries priced by equity accountg Despite poor macroeconomic situation gross prit 22 higher than 21 Lower 22 net prit comparison to 21 due to comparable tax levels (change accountg policy 21 re. deferred tax) The latest IR news on the ternet: 1

11 22 - each quarter black k (2) BPH PBK quarterly results (consolidated, mio PLN) ,3 Net prit Gross prit ,6 1Q2 2Q2 3Q2 4Q2 */ Gross prit cludes item Share net prits (losses) subsidiaries priced by equity accountg The latest IR news on the ternet: 11

12 Selected Consolidated Fancial Data for 4 Qs Net loans* Deposits* Accordg to PAS; million PLN Assets Equity Net loan crease - 3.6% comparison to 21 (strong crease mortgage loans, prudent and cautious approach to new corporate lendg) Lower deposits due to savgs shift (to anti-tax certificates fered by CA IB) and further terest rate cuts Decrease assets results from a drop fancial sector receivables Stable equity as a good base for further loan growth */ receivables due to / due from non-fancial and budget sector The latest IR news on the ternet: 12

13 Structure Consolidated Operatg Income for 4 Qs 22 Break-down operatg come Lower result on bankg activity maly due to: lower margs on deposits, replacg equity and one-time ga 21 (Pension Fund sale), Adjusted (without SWAP) net terest come higher by 19 mio PLN 5.3% crease net commissions and fees as a result new price list troduction, product packages and sales management systems, Net terest come Almost 7% crease the result on fancial and FX operations maly due to restructurg participations portfolio (which let resolve reserves) as well as come from sale debt securities and new accountg regulations (marked - to market valuation Incl. SWAPs: 791 Incl. SWAPs: 559 Net commissions and fees Revenue from shares vestment portfolio required), Payment transactions as the ma driver fee and commission come. Breakdown net commission and fees ( %) Result on fancial operations and FX from securities from loans mio PLN 66. from payments foreign trade operations other Only for BPH PBK The latest IR news on the ternet: 13

14 Significant cost reduction BPH PBK % Structure total costs ( mio PLN) ,7 2, ,9 Depreciation BGF Admistration Personnel general costs depreciation ( mio PLN) 1Q2 2Q2 3Q2 4Q2 Total costs lower by 7.4% (129 mio PLN) due to a successful cost cuttg program Costs 22 cluded 64 mio PLN reserves for future costs (for restructurg) Adjusted (without reserves for future costs) cumulative costs for 4 quarters 22 lower than whole 21 by 193 mio PLN Net fees and commissions cover: 42% total operatg costs or 8% remuneration costs The latest IR news on the ternet: 14 Unconsolidated data accordg to PAS

15 Quality Loan Portfolio as at (slight improvement) Consolidated loan portfolio Unconsolidated loans and guarantees In % In % ,8 68,7 7, Lost Doubtful ,5 8,9 8,1 12,3 1 4,5 4,8 3,4 5,2 5,3 5,5 12, Substandard Watch Normal Normal Watch Substandard Doubtful Lost Irregular credit exposure also contas receivables collaterised 1% by guarantees entities good fancial situation or cash. As at Dec. 31, 22 the gross value such receivables amounted to 435 Mio PLN (45 substandard, 266 doubtful and 124 lost). After deductg such receivables from the Bank s irregular portfolio, the share irregular loans, as at Dec. 31, 22, would decrease by ca 2 pp. The provision coverage irregular portfolio would, turn, improve by ca 4 pp. The latest IR news on the ternet: 15 All data accordg to PAS

16 Detailed formation on provision and collateral coverage 8-5.3% Differences between provisions and adjustments Net provisions 22 lower by 5.3% comparison to 21 General risk provision the amount 58 mio PLN booked 22 and 1.5 mio PLN 21 Adjusted net provision (without general risk provision) lower by 11% Provision for exposure to Stocznia Szczec Group constitutes 26% net provisions 22 Consolidated data, mio PLN Co ve ra g e ra tio (%) Volume ( m PLN) Provisions Collate rals & Provisions Chng (%) Chng (%) Chng (%) - normal ,7,1, -,1*,* - - watch ,9,,1-66,5 59,6 - - irre gular ,4 41,2 44,9 9, 89,3 91,3 2,2 - sub-standard ,8 8,3 7,1-14,5 68,5 72, 5,1 - doubtful ,4 19,1 2, 4,7 85,6 85,6, - lost ,8 63,2 65,6 3,8 99, 98,9 -,1 - total ,2 9,7 1, 3,1 26,1* 24,6* -5,7 - provisions */ Without collaterals for normal loans, which are presented after reclassification to a higher risk category Consolidated data The latest IR news on the ternet: 16 All data accordg to PAS

17 Selected Consolidated Fancial Data for 4Qs 22 - Efficiency Ratios: Basic efficiency ratios 1 1 1, ,5.32 ROAE* GROAE** ROAA*** C/I**** Analysis loan and deposit portfolio CAR Loans/Deposits Loans/Assets Marg cl. SWAPs */ net prit to average equity; **/ gross prit (cludg net prits subsidiaries) to average equity ***/ net prit to average assets; ****/ C/I = (overhead costs + depreciation) / result on bankg operations The latest IR news on the ternet: 17 All data accordg to PAS

18 Merger process at fal stage Fancial results for 4 Qs 22 (PAS) Appendix: credit risk management results busess divisions The latest IR news on the ternet: 18

19 Corporate Credit Risk Management (1) the consequent split responsibilities between corporate bankg division and credit risk management division has been volved to assure full dependence credit decision makg process and credit risk and portfolio quality assessment Corporate Credit Risk units set up on the Head Office and Macro-region level are responsible for: regular credit portfolio analysis and recomendation loan application and credit decision makg and verification monitorg activities, risk and return relation to the supervised credit portfolio Credit risk controllg and quality management unit established the structure the Credit Risk Management Area is responsible for: monitorg and management Bank s credit portfolio development methods and tools risk management quality procedures the credit busess review and providg for proper and consistent execution the bdg credit process standards verification new credit products dustry and product focus the Credit Risk Management has been troduced The centralised Credit Risk management departments have been set up with dustry (DRK1) and special clients/products (DRK2) focus. A set detailed special policies for dustries has been troduced defg basic rules the Bank s policy towards these dustries. The policies undergo a regular review and updatg process. Such specialisation enables to crease efficiency the credit process, makg risk-adequate credit decisions and proper management and control the risk taken. the split functions credit portfolio management between Credit Risk Management Area and Restructurg and Work Out Area Credit Risk Management Division has been troduced Exposures with creased credit risk are subject to a special treatment. Busess units credit risk units identify these cases usg a Watch List tool and decide on transfer to tensive management. If the situation deteriorates significantly, the credit exposure is transferred to specialised units the Work Out Area. The irregular credit portfolio has been centralised and is under direct management Restructurg Department or Recovery Department. All irregular credit exposures identified till the end 3Q have been verified accordg to the Bank s strategy. The credit exposures identified 4Q are analysed and Bank s strategy for each case is defed. The latest IR news on the ternet: 19

20 Corporate Credit Risk Management (2) new ratg system The Bank has troduced a new ratg system to evaluate a client s creditworthess and volved credit risk, which conforms with HVB/BACA Group standard. The customer is assigned a ratg category on the basis quantitative factors, qualitative factors, ratg its capital group and additional formation (warng signals). To each ratg category an expected default frequency (EDF) ratio has been assigned. The client s ratg category/ EDF ratio shall be used as a basis for standard risk cost calculation and will be an important parameter the Bank s credit portfolio management. At the current stage, the ratg system along with a concept overall exposure per capital group/ customers is a base for the Bank s competence system. After completg a ratg category assignment to some 85% its corporate portfolio (excludg project fancg, real estate fancg, fancial stitutions and termediaries, municipalities), the Bank is reviewg and verifyg the results for their quality and consistency, order to make sure that the data are reliable for portfolio assessment and management purposes. credit portfolio review In 22 special field audit and sample portfolio review was performed by the Bank with support its auditor and subsequent detailed review the entire portfolio was performed by the Bank. It enables to identify cases with creased risk and to undergo Intensive Management Program. In relation to exposures undergog IMP the needed action reducg risk is described (i. e. decrease exposure, additional collaterals, defe a strategy with maximum exposure limit). Plans Bank plans to troduce the new unified standard loan documentation contag the General Rules and Conditions (Regulam kredytowy), standardised drafts for loan product agreements as well libraries for special clauses used to mitigate credit risk volved a given transaction Subsequently, it is planned to draft a modular structure loan documentation cludg precise rules for approval changes and exceptions to the bdg regulations as well as to build an IT supported system makg standards available to the users and allowg for their centralised admistration. The standards for collateral legal documentation are as well under a complex review process. The Bank conducts projects focused on further improvg credit risk assessment process as well as implementation methods for portfolio credit risk management: - implementation standardised risk cost as a part pricg policy and specific credit risk provisions budgetg, - development methodology economic capital assessment for credit risk assets and risk adjusted performance measurement. In 1Q 23 an IT system supportg supervision and liquidation irregular exposures especially retail bankg will be implemented. IT system will be used corporate bankg as well as SME s clients. The separate project is conducted to co-ordate works to implement Basel II standards. The latest IR news on the ternet: 2

21 Number clients and their satisfaction is improvg Small enterprises and private dividuals Number Bank s clients ( ) Very satisfied Unsatisfied Dec. '1 May/June '2 Dec. '2 2 II IV VI VIII X XII The latest IR news on the ternet: 21

22 Retail Bankg Network * Results 22 A A combation combation a a stable stable net net marg marg level, level, changes changes network network organisation, organisation, implementation implementation customer customer segmentation segmentation resulted resulted a a contous contous improvement improvement C/I C/I ratio. ratio. Retail Bankg Network ( mln PLN) 1Q 22 2Q 22 3Q 22 4Q Income Costs NET INCOME ,67% Break-down Income 48,79% 8,% 69,6% 51,3% C/I 49,7% 46,5% 53,6% 4,% 19,53% Interest come on deposits Interest come on loans Fees&Commission,% 1Q 2 2Q 2 3Q 2 4Q 2 22 * without Headquarter costs - only Network Sales The latest IR news on the ternet: 22

23 Retail Bankg Interest margs mataed LOANS 2,9% 3,2% 3,3% 3,3% DEPOSITS 2,7% 2,8% 2,8% 2,8% 1Q 22 2Q 22 3Q 22 4Q 22 1Q 22 2Q 22 3Q 22 4Q 22 A very very stable stable level level terest terest marg marg on on desposits desposits and and loans loans durg durg Well-defended Well-defended terest terest marg marg on on deposits deposits and and loans loans a a fallg fallg market market rates rates environment environment let let achieve achieve good good results results Retail Retail Bankg Bankg Division Division The latest IR news on the ternet: 23

24 ROR accounts Deposits&Loans mln PLN Deposits&Loans Market share Retail Bankg - Market Shares Loans & Deposits* III 22 VI 22 IX ,% 1,% 8,% 6,% 4,% 9,78% 9,76% 9,83% 9,73% 8,19% 8,6% 8,4% 9,8% XII 22 1,% Deposits Loans 5,% ,78% 8,6% 8,4% ,9% ,%,% III 22 VI 22 IX 22 XII 22 Deposits Loans High High volume volume growth growth loans loans Market Market share share growth growth loans loans Stable Stable shares shares deposits deposits,% III 22 VI 22 IX 22 XII 22 Market share */ Individuals&Small Enterprises together, without GBG **/ cludg GBG Sources: Loans & Deposits - Consolidated Balance Sheet Polish National Bank; Current accounts - press formation (Rzeczpospolita) The latest IR news on the ternet: 24

25 Retail Bankg - Payment Cards & ATM % th 4th position position number number payment payment cards cards issued issued Q 21 IQ 22 IIQ 22 IIIQ 22 IVQ 22 Bankg Cards for Private Individuals ` + 23% 23% crease crease number number payment paymentcards cards rd rd largest largest ATM ATM network network Sce Sce December December 2, 2, BPH BPH PBK PBK clients clients have have an an access access to to additional additional Euronet Euronet Worldwide Worldwide ATMs ATMs Poland Poland Clients Clients can can use use them them on on same same terms terms as as the the Bank s Bank s ATMs. ATMs. 4Q 21 2Q 22 4Q 22 ATM`s * / without GBG Source: press formation (Rzeczpospolita) The latest IR news on the ternet: 25

26 Retail Bankg Innovative and enriched fer Individuals Individuals clients: clients: Great Great success success a a credit credit card card campaign campaign cards cards sold sold by by the the end end December December Very Very good good achievement achievement sales sales anti-tax anti-tax product product (Investment (Investment certificates certificates CA CA IB IB FIM FIM Pro Pro Lokata Lokata - - PLN PLN milion milion sale sale November November and and December December 22) 22) +62.8% +62.8% crease crease mortgage mortgage loan loan volumes volumes comparison comparison to to a a stable stable share share the the market market mortgage mortgage lendg lendg (14.4% (14.4% at at the the end end December, December, 22) 22) Number BPH PBK Credit Cards sold period: June-December VI 22 VII 22 VIII 22 IX 22 X 22 XI 22 XII % 2 87 Busess Busess clients: clients: Harmonium Harmonium Pro Pro - - troduction troduction December, December, A A package package covers covers a a current current account account or or Sezam Sezam Manager, Manager, Video-Tel Video-Tel (electonic (electonic bankg) bankg) and and up up to to 5 5 Maestro Maestro Busses Busses Cards, Cards, a a telephone telephone bankg bankg service service and and overdraft overdraft Branch Branch packages packages for for Doctors, Doctors, Lawyers Lawyers and and Tax Tax Advisors Advisors - - troduction troduction December, December, Mortgage loans volume* mln PLN market shares: % % % % XII 21 III 22 VI 22 IX 22 XII 22 * / without GBG 12.6% 13.% 12.7% 13.5% 14.4% The latest IR news on the ternet: 26

27 Retail Bankg - Alternative Distribution Channels* Call Center number customers e-bankg number customers X 2, X 2, XII 21 III 22 VI 22 IX 22 XII 22 XII 21 III 22 VI 22 IX 22 XII 22 Number Number Call Call Center Center and and E-bankg E-bankg customers customers dubled dubled twelve twelve months months BPH BPH PBK PBK became became one one the the leaders leaders alternative alternative distribution distribution channels channels * / without GBG **/ Internet accounts, SMS, WAP The latest IR news on the ternet: 27

28 Innovative Corporate Bankg Products - a success on the market! BusessWeek January 23 TRANS-Collect by BPH PBK Best Corporate Bankg Service Dynamic Standg Order Internal recurrent settlements between retail and corporate clients the Bank. New state--theart product fered by BPH PBK only The latest IR news on the ternet: 28

29 Major corporate deals 4 Q 22 ZEW Kogeneracja S.A. PLN 5,, Accor S.A. EUR 33,2, 2-year Polskie Sieci Elektroenergetyczne S.A. PLN 4,, 3-year BA-Creditanstalt Leasg Poland Sp z o.o. PLN 5,, 3-year OPTIMUS S.A. PLN 2,, 1-year Commercial Paper Program Sell & lease-back transaction Bond Issue Program Commercial Paper Program Commercial Paper Program Sole Arranger Sole Lender Sole Arranger Sole Arranger Sole Arranger TVN Sp. z o.o. Carlsberg Okocim SA Fortis Sp. Z o.o. Heitman International USD 7,, 5-year Syndicated Facility USD 5,, Short Term Facility Sole Arranger & Agent PLN 2,, 3-year Commercial Paper Program Dealer EUR 5,3, 5-year Loan Sole Lender EUR 18,, 5-year Loan Sole Agent & Arranger The biggest real estate fancg CEE! The latest IR news on the ternet: 29

30 Corporate Bankg Electronic Bankg for Corporate Clients: An crease a number electronic transfers to total number payment orders (%) Prile 5.1& 5.3 tegration pot 66,6 69,46 7,21 October November December Treasury Sales to Corporate Clients - Income on selected products Commercial Paper 4Q 22 New issues ( PLN mio) Average I - IX X XI XII 8,% 7,% 6,% 5,% 4,% 3,% 2,% 1,%,% 5,% 3,5 3, 2,5 2, 1,5 1,,5, In mm PLN Avg. I-IX October November Defember Avg. I-IX October November Defember FX-Spot CCS/Frwd FxOption Depo Avg. I-IX October November Defember Avg. I-IX October November Defember BPH PBK Outstandg ( PLN mio) Market share Average I - IX X XI XII 4,5% 4,% 3,5% 3,% 2,5% 2,% 1,5% 1,%,5%,% The latest IR news on the ternet: 3

31 INM Division - Achievements 22 Tradg Department Market maker foreign exchange market Liquidity provider OTC options Leadg market maker t-bond tradg (1st place Primary Dealers Rankg Mistry Fance) ALM Department Second place NBP Rankg 22. Market maker all PLN money market products for both domestic and foreign banks. Growg share PLN clearg volumes. Custody Department Best Custodian Poland accordg to GSCS Benchmarks Magaze rankg with highest score the CEE region Growg share custody services for vestment funds Developg services for domestic and foreign customers allowg for crease automation processes. Sales & Origation Departments Implementation 2nd and 3rd package INM Sales Offer (cludg derivatives transactions based on Umowa Ramowa) Dynamic management Clients collaterals Growg share Polish debt origation market The latest IR news on the ternet: 31

32 INM Division - Necessary actions 23 Clients Focus on developg relationships and quality service provided to customers Target medium and large Polish corporates Ga market share among stitutional clients both foreign and local Support product development for Retail Division and Corporate Centers clients Products Introduction new sales product fer and documentation based on ISDA standards to improve and optimize credit risk management Active market makg all PLN market segments Develop new activities/products to capitalize on expected market growth, build up market presence pla vanilla and structured products build commercial paper and bonds origation, placement capabilities and actively develop secondary market Introduce best market risk management standards Establish close cooperation with the Group to enrich product range for Polish customers Increase market share custody busess through close cooperation with the Group Channels Direct pressional sales treasury products through central and regional sales desks Offer standard products (FX and money market) through branches and corporate centers Develop electronic distribution for pla vanilla products The latest IR news on the ternet: 32

33 INM Division - Key levers for fancial results Growth prit from sales and debt origation activities are key levers for achievg fancial targets Sales & Debt Origation Creation proactive sales, focusg on hedgg struments, tailor made transactions and debt origation Decle margs on pla vanilla products Tradg Growth activities related to sales support Revenue growth Custody Steady growth custody busess ALM Growth volumes le with balance sheet growth coupled with decle marg (market spread and refancg costs) The latest IR news on the ternet: 33