Bank Zachodni WBK Group Results th January, 2014

Transcription

1 Bank Zachodni WBK Group Results th January, 2014

2 Bank Zachodni WBK S.A. ("BZ WBK") cautions that this presentation contains forward-looking statements. These forward-looking statements are found in various places throughout this presentation and include, without limitation, statements concerning our future business development and economic performance. While these forward-looking statements represent our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: (1) general market, macro-economic, governmental and regulatory trends; (2) movements in local and international securities markets, currency exchange rates and interest rates; (3) competitive pressures; (4) technological developments; and (5) changes in the financial position or credit worthiness of our customers, obligors and counterparties. The risk factors that we have indicated in our past and future filings and reports could adversely affect our business and financial performance. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Forward-looking statements speak only as of the date on which they are made and are based on the knowledge, information available and views taken on the date on which they are made; such knowledge, information and views may change at any time. BZ WBK does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. The information contained in this presentation is subject to, and must be read in conjunction with, all other publicly available information, including, where relevant any fuller disclosure document published by BZ WBK. Any person at any time acquiring securities must do so only on the basis of such person's own judgment as to the merits or the suitability of the securities for its purpose and only on such information as is contained in such public information having taken all such professional or other advice as it considers necessary or appropriate in the circumstances and not in reliance on the information contained in the presentation. In making this presentation available, BZ WBK gives no advice and makes no recommendation to buy, sell or otherwise deal in shares in BZ WBK or in any other securities or investments whatsoever. Neither this presentation nor any of the information contained therein constitutes an offer to sell or the solicitation of an offer to buy any securities. Note: Statements as to historical performance or financial accretion are not intended to mean that future performance, share price or future earnings (including earnings per share) for any period will necessarily match or exceed those of any prior year. Nothing in this presentation should be construed as a profit forecast. 2

3 Table of Contents Market Environment Merger Update & YTD 13 Highlights Group performance - Business - Results 3

4 Table of Contents Market Environment Merger Update & YTD 13 Highlights Group performance - Business - Results 4

5 Macroeconomic Scenario GDP (real annual growth %) Interest Rate NBP Reference Rate (%) End of period 4,5 1,9 1,5 3,1 3,3 4,50 4,25 2,50 3,00 4, (e) 2014(e) 2015(e) (e) 2015(e) Inflation (CPI %) Exchange Rate PLN/EUR End of period 4,3 3,7 4,42 0,9 1,4 2,4 4,09 4,15 4,00 3, (e) 2015(e) (e) 2015(e) 5 Source: National Bank of Poland, Central Statistical Office, Santander Research

6 Macroeconomic Environment Investments and Consumption C/A Balance and Foreign Trade Turnover %YoY 8,5 7,7 Current account balance (EURbn) Export (%YoY) Fixed Import (%YoY) investment 3,7 12,1 11,3 13,6 2,6 3,0 5,9 4,8 1,8 12,2 0,8 8,9 11,0 0,7 2,3-0,4-1,0 Private -5,3-4,8 consumption -0,8-0,5-14,2-18, (e) 2014(e) 2015(e) (e) 2014(e) 2015(e) Unemployment Rate Fiscal Policy Indicators* % Labour Force Survey Unemployment (seasonally adjusted) by Eurostat Source: National Bank of Poland, Central Statistical Office, Eurostat, Santander Research 10, % of GDP General government debt General government balance 56,4 55,6-5,0-3,9-4,4 57,5 50,4 50,8 4,4-3, (e) 2014(e) 2015(e) * 2014 imacted by reform of pension system

7 Financial System: Credit Evolution Credit Growth PLN billion Total Loans ,2% 3,6% Dec.12 Mar.13 Jun.13 Sep.13 Dec.13 Loans to Households (Mortgage Credit) PLN billion ,1% 3,8% Dec.12 Mar.13 Jun.13 Sep.13 Dec.13 PLN billion Loans to Corporations ,4% 0,8% Dec.12 Mar.13 Jun.13 Sep.13 Dec.13 Loans to Households (Consumer Credit) PLN billion ,8% ,9% Dec.12 Mar.13 Jun.13 Sep.13 Dec.13 Source: National Bank of Poland Volume Y-o-Y Variation % 7

8 Financial System: Deposit Evolution Deposit Growth Total Deposits Corporate Deposits PLN billion ,1% PLN billion ,9% 4,7% -7,6% Dec.12 Mar.13 Jun.13 Sep.13 Dec.13 Household Deposits Dec.12 Mar.13 Jun.13 Sep.13 Dec.13 Mutual Funds PLN billion 7,7% ,6% PLN billion ,6% 29,6% Dec.12 Mar.13 Jun.13 Sep.13 Dec.13 Dec.12 Mar. 13 Jun. 13 Sept. 13 Dec Source: National Bank of Poland Volume Y-o-Y Variation %

9 Table of Contents Market Environment Merger Update & YTD 13 Highlights Group performance - Business - Results 9

10 Merger with Kredyt Bank Merger Plan ahead of Target Legal merger on 4th January, 2013 / Integration commenced Revised organisational structures in place Process harmonisation & increased productivity Rebranding of all branches supported by marketing campaign Continuous focus on meeting Revenue & Cost Synergies Customer Data migrated to BZ WBK IT platform / Full integration Ongoing in 2014 End

11 Final step of integration - KB Client & Product Migration Step 1 Legal Merger 4 Jan 2013 Step 2 Brand Migration Sep 2013 Jan 2014 Apr 2014 Jul 2014 Step 3 Clients / Products Migration October 2014 Brand Migration Clients and Products Migration to single IT system Joint, comprehensive product offer Joint sales network rebranding of 320 branches Aligned service in branches Unified branch operating model and resulting back office process changes Change of colors of e- banking services, one internet website Completed Migration assumptions and design Concept and approach to migration Products mapping and gaps identification Comprehensive migration plan Completed Preparation of Clients for migration Preparation of migration to target e-banking system Ongoing communication about upcoming changes through multiple channels IT architecture and tools development and testing Designing and implementing target IT architecture Development of tools required for migration Conducting multiple migration tests to assure flawless clients migration Detailed design and dress rehearsals of the migration weekend Migration of Corporate Clients 11

12 BZ WBK + KB Merger Benefits Fully Phased Pre-Tax Synergies: PLN 465mn Phase In Fully Phased Pre-Tax Synergies (PLN mn) Cost Synergies: PLN 340mn before tax (ca. 36% of 2011 KB s cost base ) Revenue Synergies: ca. PLN 125mn before tax (ca. 2% of 2011 aggregated revenue base) Cost Synergies (PLN mn) c. 175 c. 220 c Year 1 Year 2 Year 3 BZ WBK s ambition is to achieve higher than planned synergies 204 Integration Expenses Planned integration costs estimated to amount to ca. PLN 432mn before tax. Planned capital expenditure of ca. PLN163mn before tax HR OPEX Cost Synergies Revenue Synergies Total 12

13 Cost Synergies ahead of Plan Y-o-Y Operational Cost Reduction (excl. Other & Integration costs) * PLN m -221mn / -8% 2,784 2, mn / -6% 2, Costs excluding once off accounting policy change of PLN 89m Staff Costs Administration Costs Amortisation 2013 savings of PLN 221m vs 2011 in excess of targeted annual savings of PLN 175m at time of merger 2014 annualised cost savings from 2012 & 2013 cost synergies estimated at PLN 285m for * 2011, 2012 on like for like basis

14 Table of Contents Market Environment Merger Update & YTD 13 Highlights Group performance - Business - Results 14

15 Key Highlights Business Development Qtr 4 Net Interest Margin at 3.54% F&C influenced by Loan, FX & Insurance Fees PLN 9m of ALM gains in Qtr 4 vs PLN 107m recognized in Qtr 3 & PLN 288m in Q s 1 to 3 Revised bancassurance model Balance Sheet Development Increase in Retail and SME activity in Qtr 1 Q-o-Q loan balance influenced by closed CHF Mortgage book, reducing Property book exposure and Polish Zloty appreciation. Strong growth in deposit funding in preparation for credit growth Sustained Profit Generation Net profit: PLN 1.98bn Underlying operating income: PLN 3.1bn Underlying costs: PLN 2.6bn (excl. integration costs) 2013 Cost to income ratio at 42.7% (excl. integration costs) Capital Strength and Liquidity * Total Capital Ratio at 13.9%* Core Tier 1 Ratio at 11.4% Loan to Deposit ratio at 86.7% 3 Year Bond Issuance in Qtr 4 PLN 500m 15 *According to local criteria

16 Key Facts BZ WBK as at Total 830 Gdańsk Pomorskie 18 8 Zachodnio- Warmińsko- Pomorskie Mazurskie Szczecin Kujawsko- Mazowieckie Podlaskie Poznań Pomorskie Łódź Warsaw Lubuskie Wielkopolskie Lublin Wroclaw Dolnośląskie Łódzkie Opolskie Częstochowa Lubelskie Świętokrzyskie BZ WBK Partner as at Total 113 Śląskie Kraków 20 5 Podkarpackie 58 5 Małopolskie BZ WBK Features Branches 830 Agencies 113 ATMs Employees ( FTE s) 12.6** Corporate Banking Centres 12 Balance Sheet P & L Assets PLN m Loans PLN m Deposits PLN m Income PLN m Costs PLN (2 862) m PBT PLN m ROE* 15.6* % 16 *ROE excl. integration costs and one-off income from revised bancassurance model ** As at AVIVA JVs were consolidated (additional 62 FTE s)

17 Business: Portfolio Evolution Performing Loan Portfolio +1% Y-o-Y PLN m 73.0% -2.4% Y-o-Y Variation Q-o-Q Variation Mortgage ,0% -1,0% Other personal ,4% -1,4% Total personal ,3% -1,1% Business ,7% -3,5% Total gross loans ,0% -2,4% Dec.12 Mar.13 Jun.13 Sep.13 Dec. 13 Comments Year on Year performing loans (like for like basis): Mortgage Loans +2% / Cash Loans +8% SME +1% / Corporate & GBM Loans +2% Total Performing Loans +1% PLN loans comprise 65% of total loan portfolio Qtr 4 Total Performing Loans 2.4% due to reduction in Business Loans (mainly Property) and Mortgage repayments 17 Merged Bank

18 Business: Deposits + Funds Evolution Active Management of Deposits PLN m 66.8% 3.1% Y-o-Y Variation Q-o-Q Variation Demand ,1% 6,4% Savings ,9% -2,3% Time Deposits ,1% 3,3% Customer Deposits ,8% 3,1% Dec. 12 Mar. 13 Jun.13 S ep. 13 Dec Ret ail Business Comments 9.2% Dec.12 Mar.13 Jun.13 Sep.13 Dec. 13 Mutual Funds Year on Year performance (on a like for like) basis: Total Deposits +1% Retail Deposits +3% Business Deposits -3% Mutual Funds +9% L/D ratio on the level of 86.7% at year-end. 18 Merged Bank

19 Business: Market Share Market Share (%) Market Share (%) December 2013 June 2013 December 2012 Loans Total Loans Cash Loans Deposits Total Deposits Personal Deposits Business Deposits

20 Table of Contents Market Environment Merger Update & YTD 13 Highlights Group performance - Business - Results 20

21 Results: Net Interest Income Net Interest Income +5.4% Y-o-Y PLN m NIM by Q, % 42.4% -0.3% 4,40 3,26 3,40 3,59 3, Q12 1Q13 2Q13 3Q13 4Q 2013 Comments 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 Net Interest Income +5.4% Year on Year (on a like for like basis) NII gains made in Qtr s 1 to 3 retained in Qtr 4 NIM % includes Swap income on hedged funding Close management of funding costs Continued focus on product mix and margins 21 Merged Bank

22 Results: Net Fees Qtrly Fee growth driven by increased loan and insurance fees PLN m Y-o-Y Variation Q-o-Q Variation % 3.0% ebusiness & payments ,4% -0,2% Investment banking ,3% 1,3% Current accounts & money transfer ,2% -1,3% FX fees ,9% 1,4% Loan fees ,0% 3,8% 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 Insurance fees ,2% 13,9% Other ,1% 38,9% Comments Net Fee Income + 3.0% Q-o-Q / + 6% vs. Q1 Y-o-Y Net Fees 3.2% (like for like) 2014 fee income will supported by merger plan and increase productivity Total ,5% 3,0% 1. Brokerage fees, distribution and management fees 2. Includes off-balance sheet guarantees commissions, issue arrangement fees, credit card fees, structured product fees and other 22 Merged Bank

23 Results: Total Income Qtr 4 Total Income increase due to bancassurance transaction PLN m 47.2% Y-o-Y Variation Q-o-Q Variation Net Interest Income ,4% -0,3% % Fees ,4% 3,0% Subtotal ,2% 0,8% Gain/Loss on financial transactions + Others Gain arising from revised bancassurance model ,7% -55,9% 419 Total Income ,2% 22,6% 4Q Q Q Q Q 2013 Dividend income One-off income from revised bancassurance model Gain/Loss fnancial transaction+ Others Fees Net Interest Income Comments Total Income (like for like basis) flat Y-o-Y (excl. bancassurance transaction) Investment book repositioned post-merger leading to total gains of ca. PLN 298m in 2013 of which PLN 288m reflected in Q s 1 to 3 One-off income from revised bancassurance model of PLN 419m (PLN 335m after tax) reflected in Qtr 4 results 23 Merged Bank

24 Results: Administrative Expenses and Amortization Underlying costs under control PLN m % 15.0% Y-o-Y Variation Q-o-Q Variation Staff costs ,8% 3,0% Administrative Expenses ,5% 32,0% Amortization ,0% -4,1% Other costs ,4% 137,7% Underlying costs ,0% 15,0% Integration costs ,5% 197,6% Total ,5% 25,7% 4Q Q Q Q Q Staff Costs Administrative Expenses Amortisation Other Costs Merged Bank Q Q Q Q Q 2013 Integration costs Comments Underlying costs -5.7% Y-o-Y (on a like for like basis) Merged bank FTE s lower by 2k vs. Dec 2011 Cost savings achieved ahead of integration plan Integration costs higher in Q4 and in line with assumptions Q-o-Q cost increase driven by marketing (+ 33m), IT, consulting (+11m), stationery (+5m) & Regulatory (+15m).

25 Results: Net Operating Income Underlying Operating Income +6.3% Y-o-Y PLN m % % underlying Y-o-Y Variation Q-o-Q Variation Net Interest Income + Fees ,2% 0,8% Gain on financial transactions + Others ,7% -55,9% Adm. Expenses + Amortization + Other (2 598) (1 779) 46,0% 15,0% costs Underlying operating income ,4% -20,2% Gain arising from revised bancassurance 419 model Integration costs (264) (38) 594,7% 192,1% Net operating income ,2% 20,2% 4Q Q Q Q Q 2013 Operating surplus Comments Net underlying operating income +6.3% Y-o-Y Q-o-Q underlying operating income lower by 20.2% due to lower gains on ALM book and higher (non-recurring) Qtr 4 operating costs 25 Merged Bank

26 Results: Provisions and Loan Quality PLN m Provision Charge at 1% Provisions & Annualised Total Credit Loss Ratio NPL (%) 1,23% 1,11% 1,09% 1,00% 1,01% 5,4% 7,6% 8,2% 7,9% 7,9% Q12 1Q13 2Q13 3Q13 4Q13 4Q12 1Q13 2Q13 3Q13 4Q13 Coverage Ratio (%) Provisions Annualised total credit loss ratio NPL s Sales 53,5% 57,9% 51,3% 54,5% 53,8% NPL Loans totaling PLN 694m sold during 2013 Positive after tax impact of PLN 3.5m 4Q12 1Q13 2Q13 3Q13 4Q13 26 Merged Bank

27 Results: Net Profit Net Underlying Profit + 3.9% Y-o-Y PLN m Y-o-Y Variation Q-o-Q Variation Profit before Taxes ,9% 21,6% Taxes (500) (374) 33,6% 22,5% Net Profit ,3% 4Q Q Q Q Q 2013 Dividend income from AVIVA Group One-off income from revised bancassurance model (net of tax) Net Profit adjusted by intregration costs (net of tax 19%) Net profit excluding integration costs and bancassurance transaction* ,2% -24,9% Attributable profit ,3% 21,3% Comments Net profit excluding integration costs and income from the revised bancassurance model +3.9% Y-o-Y (like for like basis). Excellent results despite the challenging business and interest rate environment. Very good cost management through ongoing efficiency measures, the execution of the merger plan and the implementation of a number of corporate changes. Risk charge below management expectations pre-merger. 27 * Net integration costs (tax rate 19%)

28 Results: Key Indicators Merged Bank C/I % Solvency Ratio % ROE % -5.7 p.p p.p p.p. quarterly 50,2% 14,3% 16,6% 44,5% 13,9% 12,1% 1Q Q C/I at 42.7% (including integration costs 47.0%) Core Tier 1 Ratio at 11.4% ** ROE at 18.8% (including integration costs 16.6%) 2013 C/I at 45.8% (excluding integration costs and the gain arising from revised bancassurance model) ** ROE at 15.6% (excluding integration costs and the gain arising from revised bancassurance model) 28 **YTD ROE

29 Conclusions: 2013 Activity Uniform brand, product and service offering for customers Active management of deposit base and funding costs Results Close management of Net Interest Income in lower interest rate environment Solid fee generation, increasing Q-o-Q Costs under tight control, Integration costs in line with merger assumptions Credit quality improving Headcount reduction: -2k vs. end-2011 Investment book re-positioning post merger Commercial Activity Introduction of the attractive account for customers Implementation of standardized offer of term deposits for individual clients Successful national marketing campaign for the merged bank and for new products Corporate Actions Revised BZ WBK / Aviva Bancassurance model Asset Management sale process Closing expected in H1, 2014 Acquisition of 60% of Santander Consumer Bank Closing expected in Qtr 2,

30 ANNEXES BZ WBK Group P&L Account BZ WBK Group Balance Sheet BZ WBK Group Net Interest Margin Evolution 30

31 BZ WBK Group Profit & Loss Account for the period ( in PLN k): 4Q Q Q Q Q Q Q Q 2012 Interest income Interest expense ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) Net interest income Fee and commission income Fee and commission expense (85 421) (82 078) (75 210) (68 157) (57 806) (51 667) (50 639) (50 940) Net fee and commission income Dividend income (1 766) Net trading income and revaluation Gains (losses) from other financial securities Net gains/(losses) on subordinated entities (319) Other operating income Impairment losses on loans and advances ( ) ( ) ( ) ( ) ( ) ( ) ( ) (80 806) Operating expenses incl.: ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) Bank's staff, operating expenses and management costs ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) Depreciation/amortisation (51 349) (53 563) (57 420) (56 989) (33 556) (34 102) (33 417) (36 865) Other operating expenses (16 448) (6 868) (2 129) (9 699) (11 330) (4 349) (6 690) (3 773) Operating profit Share in net profits (loss) of entities accounted for by the equity method Profit before tax Corporate income tax ( ) ( ) (94 075) (95 413) ( ) (88 519) (89 822) (88 807) Consolidated profit for the period of which: attributable to owners of BZ WBK S.A attributable to non-controlling interests

32 BZ WBK Group Balance Sheet 4Q Q Q Q Q 2012 ASSETS Cash and balances with central banks Loans and advances to banks Financial assets held for trading & hedging Loans and advances to customers Investment securities Investments in associates and joint ventures Intangible assets Goodwill Property, plant & equipment Current income tax assets Net deferred tax assets Assets classified as held for sale Investment property Other assets Total assets LIABILITIES, Deposits from central bank Deposits from banks Financial liabilities held for trading & hedging Deposits from customers Debt securities in issue Subordinated liabilities Current income tax liabilities Other liabilities Total liabilities Equity Equity attributable to owners of BZ WBK S.A Share capital Other reserve funds Revaluation reserve Retained earnings Profit of the current period Non-controlling interest in equity Total equity Total equity and liabilities

33 BZ WBK Group - Net Interest Margin Evolution NIM by Q, % 4,27 4,32 4,34 4,40 4,05 4,17 4,14 4,22 3,26 3,41 3,59 3,54 3,23 3,40 3,58 3,51 1Q12 2Q12 3Q 12 4Q12 1Q13 2Q13 3Q13 4Q 2013 Incl. swap points Excl. swap points 33 Merged Bank

34 Contact: Eamonn Crowley Chief Financial Officer Agnieszka Dowżycka Investor Relations Director Tel