Bank Handlowy w Warszawie S.A. after 2Q 06 - expansion and better results
Strong mid year results 400 300 MM PLN 318 8% 343 107 200 180 100 139 236 0 1H05 1H06 2 Source: Bank s Financial Disclosures
Increase in capital return and efficiency 1H05 1H06 Zmiana Variance Operating Income, MM PLN 1,155 1,060 (8,3%) Gross income, MM PLN 401 444 10,7% Net income, MM PLN 318 343 7,8% Return on Equity 9,1% 11,7% Return on Assets 1,6% 1,9% Cost / Income 71,8% 67,3% Capital Adequacy Ratio 14,6% 14,8% 3 Source: Bank s Financial Disclosures
Achievements in 2 Q 2006 Capital markets and banking 215 MM PLN issue of 20-year notes for European Investment Bank, the largest public non-state Treasury issuance in 1sth half of 2006 M&A advisory for Computerland in Emax takeover valued at 122 MM Euro Sustainable leading position in commercial papers with 20% market share Back on the market with SME offer 200 new and active clients acquired Treasury High growth in fx product sales, especially FX options e-trade electronic platform launch Transaction Services New functionality of the mass payment SpeedCollect product on-line data availability Promotion of international transfers with more attractive pricing - 20% product revenue increase EU advisory services launch Trade financing Financing of two vessels for Norwegian fleet company New functionalities to factoring products 4 Source: Bank s Financial Disclosures, data in MM PLN
Profits rise in springtime... in 1 H 2006 Consumer Bank Internet accounts increased security Attractive pricing of the Citibank overdraft product Free of charge internet cash transfer Strong sales of investment products, the offer extended with 9 new equity subfunds denominated in Euro and USD New insurance products, i.a. SuperEmerytura (pension related product) Successful marketing of cash loan within credit card by phone High cash loan sales supported with media campaign Program implementation Your acquaintance CitiFinancial client Spring promotion of consolidation loan Installment s reduction Center Internet distribution channel promotion 5 Source: Bank s Financial Disclosures
Citibank payment cards - prestigious and innovative Retail cards Pre-paid cards Number of pre-paid cards 150 28% 12% increase to 613 thousand retail credit cards Strong sales of Citibank MasterCard FIFA 2006 Innovative cash loan within credit card by phone 125 Prepaid cards offer awarded by the The Banker 100 Innovative application prepaid cards for social aid funds and scholarships. Business cards 1H05 1H06 At the end of 1 half 2006 the Bank issued 1,04 million payment cards 9% more business credit cards issued in 1H 06 v. 1 H 05 6 Źródło: Sprawozdania finansowe Banku
Balance Sheet structure Assets Liabilities Loans non- financial 33,0 5% 34,6 9.6 5% 10.1 5% 33,0 34,6 3.1 3.4 (9%) Liabilities in trading portfolio Loans - financial Available for sale Trading portfolio Other assets 6.5 14% 7.4 7.2 13% 8.1 5.9 (9%) 5.3 3.8 3.7 31. 12.05 30.06.06 17.3 18.2 Deposits non-financial 7% Deposits - financial 5.2 8% 5.9 Other Liabilities 1.7 2.4 5.3 5.0 Shareholders capital 31.12.05 30.06.06 7 Source: Bank s Financial Disclosures, data in MMM PLN
Non-financial sector laons Loans 26% 74% 28% 72% Corporates Individuals 31.12.05 30.06.06 Corporate clients loans Retail loans 8000-0,5% Market 14% Market (w/o mortgage) 6000 4000 2000 6% 2000 9% 0 31.12.05 30.06.06 0 31.12.05 30.06.06 8 Source: Estimates, pro-forma data
Deposits 27% Non-financial sectors deposits 73% 26% 74% Corporates Individuals Non-Financial Corporate deposits 31.12.05 30.06.06 Individuals deposits 12000 8000 Market 8% 3% 8% 6000 4000 7% Market 17% 4000 2000 0 31.12.05 30.06.06 0 31.12.05 31.03.06 30.06.06 9 Source: Estimates, pro-forma data
Results after 1 st half 2006 PLN MM 1H06 1H05 Wzr/(spad) I/(D) Wzr/(spad) I/(D) % Net interest income 508.1 522.3 (14.2) (2.7%) Net fee and commission inco 302.4 283.7 18.7 6.6% Treasury 213.0 332.2 (119.2) (35.9%) Other operating revenue 38.8 15.2 23.6 155.1% Recurring income 1,062.3 1,154.9 (92.6) (8.0%) Op. expenses and depr. (748.1) (767.1) (19.0) (2.5%) Income on fixed assets sale 117.3 (1.1) 118.4 n.m. Movements in provisions 9.6 17.0 (7.4) n.m. Share in subs' profits 2.7 (2.5) 5.1 n.m. EBIT 443.8 401.4 42.5 10.6% Corporate tax (100.8) (83.1) 17.7 21.2% Net profit 343.1 318.2 24.8 7.8% 10 Source: Bank s Financial Disclosures, data in MM PLN
Treasury results PLN MM 1H06 1H05 Wzr/(spad) I/(D) Wzr/(spad) I/(D) % Trading portfolio income 5.9 15.1 (9.1) (60.6%) AFS portfolio income 33.2 112.3 (79.1) (70.5%) Foreign Exchange income 173.9 204.8 (30.9) (15.1%) Treasury 213.0 332.2 (119.2) (35.9%) Debt instruments interest 196.0 197.7 (1.7) (0.9%) 360 310 260 210 160 110 60 10-40 debt instruments 83 112 33 198 196-7 1H05 1H06 Coupons AFS Trading 7.00% 6.50% 6.00% 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% 1/1/05 3/1/05 5/1/05 Yields on Treasuries 7/1/05 9/1/05 11/1/05 1/1/06 3/1/06 5/1/06 11 Source: Bank s Financial Disclosures, data in MM PLN
Expansion but with cost discipline 740 640 697 47-2% 32% 682 61 540 440 340 240 140 40-60 284 366 1H05-1% 283 CitiFinancial GCB CIB -8% 338 1H06 Corporate segment costs under control, partly offset by one-off expenses in 2 nd Q06 Cost cutting effect in retail, even more clearly visible with 7% decrease 2Q06/1Q06 Branch network expansion in CitiFinancial 12 Source: Bank s Financial Disclosures, data in MM PLN
Cost of Credit 19000 17000 Loans portfolio quality Impairment split 1H06 3% 24% 15000 13000 Not at risk loans 11000 9000 7000 5000 3000 1000 13% 13% At risk of impairment Provisions 73% Individual Impairment loss Portfolio approach IBNR -1000 2005 1H06-3000 2005 1H06 Provision coverage ratio 81% 81% Stabilization of loans at risk of impairment share 13 Source: Bank s Financial Disclosures, data pro-forma
1 H 2006 Results Corporate and Investment Bank MM PLN Wzr/(Spad) I/(D) Wzr/(Spad) I/(D) 1H06 1H05 % Results on activity 611 739 (128) -17% One-off events 104-104 Expenses and depreciation (386) (416) (29) -7% Provisions 23 34 (11) n/m Gross profit 352 358 (6) -2% Assets, mm PLN 31,265 32,525 (1,260) -4% Liabilities, mm PLN 28,519 28,728 (209) -1% Lower interest income driven by lower loan interest rates deepened by lower loan volume Fee income increase offset by lack of sold HanZA TFI commissions Increase in interest rates dampened debt valuation, yet market factor volatility increased client sales and trading 840 740 640 540 440 340 240 140 40-60 311 170 244 1H05 Result on activity, MM PLN 194 161 221 1H06 Other operating income Result on financial oper. Fee Result Interest Result 14 Source: Bank s Financial Disclosures, data in MM PLN
Quarterly results Corporate and Investment Bank 2Q05 1Q06 2Q05 1Q06 2Q05 1Q06 2Q06 Interest income 129 102 120 (27) 18 (21%) 18% Fee income 80 79 79 (1) (0) (1%) (0%) Hanza/TFI*) 8 Treasury income 174 133 29 (41) (104) (23%) (78%) Operating income 383 314 228 (69) (86) (18%) (27%) Expenses (207) (190) (205) 18 (15) (9%) 8% *) Estimate zmiana zmiana, % 15 Source: Bank s Financial Disclosures, data in MM PLN
Consumer Bank 1 H 2006 Results MM PLN Wzr/(Spa d) I/(D) Wzr/(Spad) I/(D) 1H06 1H05 % Results on activity 363 364 (1) 0% One-off events 20-20 Expenses and depreciation (300) (304) (4) -1% Provisions 3 (9) (12) -135% Gross profit 86 51 36 70% Assets, mm PLN 2,623 2,306 317 14% Liabilities, mm PLN 5,985 6,435 (450) -7% Lower interest rates coupled with cards repricing Increase in fee revenue on investment and insurance products Recorded results of restructuring of branch network and employment 400 300 200 100 0 233 Result on activity, MM PLN 21 19 111 134 1H05 210 1H06 Result on financial oper. Fee Result Interest Result 16 Source: Bank s Financial Disclosures, data in MM PLN
Quarterly results zmiana zmiana, % 2Q05 1Q06 2Q05 1Q06 2Q05 1Q06 2Q06 Interest income 114 106 104 (8) (1) (7%) (1%) Fee income 59 63 71 4 9 6% 14% Operating income 173 168 176 (5) 7 (3%) 4% Expenses (156) (155) (145) 1 10 (1%) (6%) 17 Source: Bank s Financial Disclosures, data in MM PLN
1 H 2006 Results MM PLN Wzr/(Spad) I/(D) Wzr/(Spad) I/(D) 1H06 1H05 % Results on activity 84 48 36 75% Expenses and depreciation (62) (47) 15 31% Provisions (17) (8) (9) 112% Gross profit 6 (7) 13 n.m. Assets, mm PLN 742 440 302 69% Liabilities, mm PLN 125 107 17 16% 100 75 50 25 0 3 45 1H05 Result on activity, MM PLN 8 76 1H06 Further expansion of outlets network 24 branches and 9 points of sale in 1 H 06 (v. 13 branches in 1 H 2005) Fee Result Interest Result 32% increase related to new branches opening expenses 18 Source: Bank s Financial Disclosures, data in MM PLN
Quarterly results zmiana zmiana, % 2Q05 1Q06 2Q05 1Q06 2Q05 1Q06 2Q06 Operating income 26 42 42 16 0 63% 0% Expenses (27) (27) (35) (1) (7) 3% 27% 19 Source: Bank s Financial Disclosures, data in MM PLN
Notes exchange versus shareholder structure 12% 13% COIC IFA 1,51 bp *) higher free-float at 2Q06, as compared to 1Q06 (1,8 MM shares or 138 MM PLN market cap) Current total free-float 1,2 bln PLN Pozostali / Other 75% Stock Price (PLN) 75 70 65 60 Volume BHW stock price Kurs akcji BHW i obroty BHW daily stock price and volumes 150 130 110 90 70 50 30 10 Stocks (thousands) Earnings per share 1H05 2,44 1H06 2,62 55-10 2005 Aug 2005 Sep 2005 Oct 2005 Nov 2005 Dec 2006 Jan 2006 Feb 2006 Mar 2006 Apr 2006 May 2006 Jun 2006 Jul 2006 Aug 20 *) 2,53 % points out of 14,33% BHW shares available for exchange has been converted
Sławomir S. Sikora, President of the Management Board Investor Relations Lidia Jabłonowska-Luba, Management Board Member, CFO Katarzyna Otko-Dąbrowska Investor Relations citibank handlowy Bank Handlowy w Warszawie S.A. Ul. Senatorska 16 00-923 Warszawa Polska Tel. +48 (22) 657 72 00 www.citibank.pl RelacjeInwestorskie@citigroup.com 21