Bank Handlowy w Warszawie S.A. after 2Q ‘06 expansion and ... · Retail cards Pre-paid cards...

Bank Bank HandlowyHandlowy w w WarszawieWarszawie S.A. after 2Q ‘06 S.A. after 2Q ‘06

-- expansion and better resultsexpansion and better results

2

Strong mid year results

139

180

236

107

0

100

200

300

400

1H05 1H06

MM PLN3438%318

Source: Bank’s Financial Disclosures

3

Increase in capital return and efficiency

7,8%343318Net income, MM PLN

10,7%444401Gross income, MM PLN

(8,3%)1,0601,155Operating Income, MM PLN

14,8%67,3%

1,9%11,7%

1H06 ZmianaVariance

14,6%71,8%

1,6%9,1%

1H05

Capital Adequacy RatioCost / IncomeReturn on AssetsReturn on Equity


4

Achievements in 2 Q 2006

Transaction ServicesCapital 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 Emaxtakeover 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

� 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 financingTreasury

�Financing of two vessels for Norwegian fleet company�New functionalities to factoring products

�High growth in fx product sales, especially FX options� e-Trade electronic platform launch

Source: Bank’s Financial Disclosures, data in MM PLN

5

„Profits rise in springtime” ... in 1 H 2006Consumer Bank

� 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

� Internet accounts increased security

� Attractive pricing of the Citibank overdraft product

�Free of charge internet cash transfer

� 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


6

Citibank payment cards - prestigious and innovative

Retail cards Pre-paid cards

Business cards

� Prepaid cards’ offer awarded by the„The Banker”� Innovative application – pre-paid cards for social aid funds and scholarships.

100

125

150

1H05 1H06

Number of pre-paid cards

28%

� 9% more business credit cards issued in 1H 06 v. 1 H 05

� 12% increase to 613 thousand retail credit cards�Strong sales of Citibank MasterCard FIFA 2006� Innovative cash loan within credit card by phone

At the end of 1 half 2006 the Bank issued 1,04 million payment cards

Źródło: Sprawozdania finansowe Banku

7

Balance Sheet structure

5.3 5.01.7 2.45.2 5.9

17.3 18.2

3.43.1

31.12.05 30.06.06

3.8 3.7

5.9 5.3

7.2 8.1

6.5 7.4

9.610.1

12.05 30.06.06

Deposits - financial

Other Liabilities

Shareholders’ capital

Deposits – non-financial

Liabilities in trading portfolio5%

13%

(9%)

5%33,0 34,6

14%

5%33,0 34,6

(9%)

7%

8%

Assets Liabilities

31.

Available for sale

Loans - financial

Trading portfolio

Other assets

Loans – non- financial

Source: Bank’s Financial Disclosures, data in MMM PLN

8

28%72%

26%

74%

Corporates Individuals

Loans

0

2000

4000

6000

8000

31.12.05 30.06.060

2000

31.12.05 30.06.06

Retail loansCorporate clients loans

Non-financial sector laons

31.12.05 30.06.06

-0,5% 14%

9%

Market (w/o mortgage)

6%

Market

Source: Estimates, pro-forma data

9

0

4000

8000

12000

31.12.05 30.06.06

0

2000

4000

6000

31.12.05 31.03.06 30.06.06

27%73%

Corporates Individuals

26%

74%

DepositsNon-financial sectors deposits

31.12.05 30.06.06

8% 3%

8%

Market

17%

Market

7%

Non-Financial Corporate depositsIndividuals’ deposits

Source: Estimates, pro-forma data

10

Results after 1st half 2006

PLN MM 1H06 1H05Wzr/(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%


11

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%)


3.00%3.50%4.00%4.50%5.00%5.50%6.00%6.50%7.00%

1/1/

05

3/1/

05

5/1/

05

7/1/

05

9/1/

05

11/1

/05

1/1/

06

3/1/

06

5/1/

06

198 196

33

-7

112

83

-401060

110160210260310360

1H05 1H06

Coupons AFS Trading

debt instruments Yields on Treasuries

12

Expansion but with cost discipline

366

284 283

338

6147

-60

40

140

240

340

440

540

640

740

1H05 1H06

CitiFinancial

GCB

CIB

32%

-1%

-8%

697 682-2%

� Corporate segment costs under control, partly offset by one-off expenses in 2nd Q06� Cost cutting effect in retail, even more clearly visible with 7% decrease 2Q06/1Q06� Branch network expansion in CitiFinancial


13

24%

73%

3%

Cost of Credit

-3000-100010003000500070009000

1100013000150001700019000

2005 1H06

Not at risk loans

At risk ofimpairment

Provisions

Loans portfolio quality

13%

Impairment split 1H06

13%IBNR

Portfolio approach

Individual Impairment loss

81%81%Provision coverage ratio

2005 1H06

� Stabilization of loans at risk of impairment share

Source: Bank’s Financial Disclosures, data pro-forma

14

1 H 2006 ResultsCorporate and Investment Bank

244

170 161

311

194

221

-60

40

140

240

340

440

540

640

740

840

1H05 1H06

Result on activity,MM PLNMM 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/mGross profit 352 358 (6) -2%

Assets, mm PLN 31,265 32,525 (1,260) -4%Liabilities, mm PLN 28,519 28,728 (209) -1%

Other operating income� 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

Result on financial oper.

Fee Result

Interest Result


15

Quarterly resultsCorporate and Investment Bank

2Q05 1Q06 2Q062Q06 / 2Q05

2Q06 / 1Q06

2Q06 / 2Q05

2Q06 / 1Q06

Interest income 129 102 120 (27) 18 (21%) 18%Fee income 80 79 79 (1) (0) (1%) (0%)Hanza/TFI*) 8Treasury 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, %


16

1 H 2006 ResultsConsumer Bank

Result on activity,MM PLNMM 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%

233

111 134

21 19

210

0

100

200

300

400

1H05 1H06

� 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

Result on financial oper.

Fee Result

Interest Result


17

Quarterly results

2Q05 1Q06 2Q062Q06 / 2Q05

2Q06 / 1Q06

2Q06 / 2Q05

2Q06 / 1Q06

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%)

zmiana zmiana, %


18

1 H 2006 Results

45

3

8

76

0

25

50

75

100

1H05 1H06

Result on activity,MM PLN

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%

Fee Result�Further expansion of outlets’ network – 24 branches and 9 points of sale in 1 H 06 (v. 13 branches in 1 H 2005)

� 32% increase related to new branches opening expenses

Interest Result


19

Quarterly results

2Q05 1Q06 2Q062Q06 / 2Q05

2Q06 / 1Q06

2Q06 / 2Q05

2Q06 / 1Q06

Operating income 26 42 42 16 0 63% 0%Expenses (27) (27) (35) (1) (7) 3% 27%

zmiana zmiana, %


20

Notes exchange versus shareholder structure

75%

12%13%

COICIFAPozostali / Other

� 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

2,622,44Earnings per share

1H05 1H06

Kurs akcji BHW i obrotyBHW daily stock price and volumes

55

60

65

70

75

2005

Aug

2005

Sep20

05 O

ct20

05 N

ov20

05 D

ec20

06 Ja

n20

06 Feb

2006

Mar

2006

Apr

2006

May

2006

Jun

2006

Jul

2006

Aug

Stoc

k Pr

ice

(PLN

)

-10

10

30

50

70

90

110

130

150

Stoc

ks (t

hous

ands

)

Volume

BHW stock price

*) 2,53 % points out of 14,33% BHW shares available for exchange has been converted

21

InvestorRelations

Sławomir S. Sikora,President of the Management Board

Lidia Jabłonowska-Luba, Management Board Member, CFO

Katarzyna Otko-Dąbrowska Investor Relations

citibank handlowyBank Handlowy w Warszawie S.A.Ul. Senatorska 1600-923 WarszawaPolskaTel. +48 (22) 657 72 [email protected]

Bank Handlowy w Warszawie S.A. after 2Q ‘06 expansion and ... · Retail cards Pre-paid cards...

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