Richard Gaskin, Acting President & CEO George … brand positioning & improved efficiency Richard...
Transcript of Richard Gaskin, Acting President & CEO George … brand positioning & improved efficiency Richard...
New brand positioning & improved efficiencyRichard Gaskin, Acting President & CEO
George Newcomb, Deputy President & CFO
Ewa Piwowar, Investor Relations Leader
28 November 2011
28.11.2011 | New brand positioning & improved efficiency | 2
DisclaimerThis presentation does not constitute or form any part of an offer, invitation orinducement to sell or subscribe, or any solicitation of an offer to purchase orsubscribe for any securities. This presentation does not purport to contain allinformation that a prospective investor might require, and neither thispresentation nor any part of it nor the fact of its distribution shall form the basisof, or be relied on in connection with, any contract for the purchase orsubscription of any securities.
The forecasts and forward-looking statements contained in this presentationare necessarily based upon a number of assumptions and estimates that, whileconsidered reasonable by us, are inherently subject to significant business,operational, economic and competitive uncertainties and contingencies, manyof which are beyond our control, and upon assumptions with respect to futurebusiness decisions that are subject to change. Actual results may differmaterially from those projected. Certain items of numerical information andother amounts and percentages set forth in this presentation may not add upto the correct total due to rounding.
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1
2
3
Business overview
Market environment
Growth agenda
4
5
Financial performance
Summary
Agenda
6 Appendix
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Business overview
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NationalityPrevious
Employers
Yrs of financial services
exp.
No. of industries
Yrs of GE exp.
No. ofcountries
Yrs of exp. in PL
Leadership team
Richard GaskinCEO
EN
GE CapitalFord Motor Co3MLloyds Bank
22 2 11 6 2
Ronald James MalakIT, Quality, Services & Security
US
GE Capital, CitigroupProgressive Corp.Standard OilColgate Palmolive
25 4 4 8 7
George NewcombCFO
US GE CapitalArthur Andersen 20 2 15 2 2
Krzysztof NowaczewskiOperations
PL GE Capital 13 1 13 3 10
Mathias SeidelRisk
DEGE CapitalAllianz GroupDeutsche Bank
21 3 13 6 5
Grazyna UtrataLegal
PL
ING Bank ŚląskiWielkop. Bank Kredyt.Bank ZachodniBZ WBKLukas Bank
20 1 1 1 20
Grzegorz JurczykRetail
PL
GE CapitalSantanderFiat Bank PolskaBain & Company
14 2 5 8 18
Grzegorz DąbrowskiCorporate
PLPekao SABPHPBK
22 1 3 1 22
Today presenters
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NationalityPrevious
Employers
Yrs of financial services
exp.
No. of industries
Yrs of GE exp.
No. ofcountries
Yrs of exp. in PL
Veronica IvanovićHR
CZ EURO RSCGPhilip Morris 12 3 13 5 1
Mariusz KosteraMarketing
PL
Equa Fin. ServicesHSBCBank HandlowyKredyt Bank
10 2 <1 2 15
Marcin BergerAudit
PL
GE Real EstateGE Corporate Audit StaffGE Money Bank
6 3 9 3 5
Monika GodzińskaProductivity Mgmt
PL GE Money Bank Alstom 7 5 7 1 11
Maja GoettigResearch
PL
BPH Centre for Social and Economic Research
7 2 3 1 8
Ewa PiwowarInvestor Relations
PLBPHPBKEBRD
18 5 3 3 24
Paweł SmardzMB & SB Support
PLInstitute for International Reasearch
5 3 3 1 11
Leadership team
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Launched branch strategy
Merger of GE Capital Bank and GE Bank Mieszkaniowy and creation of GE Money Bank
Acquisition of Polsko-Amerykanski Bank Hipoteczny
GE acquires of Solidarnosc Chase DT Bank and creation of GE Capital Bank
GE acquires 66% of Bank BPH
Spin-off of Bank BPH with transfer of 80% assets to Pekao
Legal merger with PBK
First quotation on WSE
Bank BPH as one of 9 commercial banks created after spin-off from NBP
1989 1995 1998 2001 2005 2006 2007 2008
Legal merger of both Banks completed at end-2009
Our history in Poland
December 2009:
• Legal merger of Bank BPH & GE Money Bank
• GE increased its stake in BPH to 89%
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Deposits/Funds
Treasury
Consumer Lending
SME & Mid Caps
Mortgage (PLN)
Banking systems
GE Money transformation in Poland
High return Specialty Finance
Created a sustainable business model
Strengthened banking capabilities
Nation-wide Retail& Commercial Bank
Cash Loans
CardsAutoLoans
Agents/Dealers
Mortgage Sales Finance
Mid Cap lendingDeposits SME lending
Product & process capabilities
Very high High Good Limited None
+
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Ownership structure & governancePrice/Share (PLN)
35
45
55
65
75
85
95
105
115
Jan
-10
Ma
r-1
0
Ma
y-1
0
Jul-
10
Se
p-1
0
No
v-1
0
Jan
-11
Ma
r-1
1
Ma
y-1
1
Jul-
11
Se
p-1
1
No
v-1
1BPH WIG Banki WIG20 WIG
Public
*/ As of 15 November 2011
• 45% or 5 members of Supervisory Board (SB)
independent, including Chairperson
• 55% of SB members Polish nationals
89% 11%
Current shareholding structure
• Current market value: PLN 3.5B*
• Included in sWIG80, WIG, WIG-Poland and WIG-Banki
indices since June 17
• Price trend consistent with the market … however,
the Bank’s stock illiquidity makes us more vulnerable
Corporate Governance
GE’s stake ultimately down to 75%
Profitable business
Strategy Update
Jul-10 Nov-11
MinPLN 37.9012 Sep 11
MaxPLN 77.001 Apr 11
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Sizeable network 4Q’09 4Q’10 3Q’11
Branches 319 285 281
Franchise Outlets 155 157 142
Agents (K) 2.8 1.4 1.1
ATMs 248 240 240
SME Mobile Advisors 238 160 87
SME Regional Advisory Centers 17 18 18
Employees 7,571 6,869 6,412
Robust customer base
Private Individuals (MM) 1.9 1.5 1.3
SME (K) 91 92 85
Corporate (K) ~2 ~2 ~2
Repositioning for future growth
BPH key metrics
IDEO branches
• Separated spaces for different activities
• Privacy & home-like interior
• Innovative solutions:
• Touch & Go system
• Self-zone
• Real time video meetings with advisors
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Current market shares
0.1
0.2
0.3
0.3
0.6
0.5
0.4
0.5
0.7
1.0
0.7
0.9
2.0
2.8
11
7
10
21
25
15
26
37
45
44
51
49
104
144
11
17
26
23
15
29
30
41
40
36
40
64
89
140
16
22
30
32
38
39
45
50
53
59
74
94
142
187
AssetsPLN B
LoansPLB B
Total net revenuesPLN B
DepositsPLN B
BPH IR analysis based on Q3’11 results of listed banks.
# 9 # 11# 9 # 8
Top 10 bank in Poland
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Market environment
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9.512.1 12.4 12.7 12.9 12.5 11.8
2008 2009 2010 2011 2012 2013 2014
5.1
1.7
3.8 4.03.2 3.7 4.1
2008 2009 2010 2011 2012 2013 2014
9.6
-1.1 -2.0
7.9
4.2 4.3 4.5
2008 2009 2010 2011 2012 2013 2014
Solid macro fundamentals ...
Investments dynamics to moderate in ’12(VPY %)
Unemployment to increase further in ’12(%, registered rate, eop)
Per capita income to expand 5.8% CAGR(GDP per capita, ‘000 PLN)
GDP growth slowdown in ’12(VPY %)
… but external environment less supportiveSources: StatOffice, Bank BPH Economic Research Team
33.5 35.3 37.1 39.7 41.6 43.9 46.6
2008 2009 2010 2011 2012 2013 2014
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Tensions in financial markets threat for economy …
… but risks to banking sector contained
Consumer confidence and indebtedness
FX & Interest rates
2.22.9 2.9
3.3 3.3 3.0 2.9
2.19
0.19 0.11 0.09 0.080.81
1.63
2008 2009 2010 2011 2012 2013 2014
CHF/PLN 1M CHF LIBOR
Source: Bloomberg, StatOffice, National Bank of Poland
0.0
1.0
2.0
3.0
4.0
5.0
4
5
6
7
8
9
10
Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11
NPL loans (%), LA NPL housing loans (%), RA
Credit portfolio quality of banks in Q3’11
-30
-25
-20
-15
-10
350,000
400,000
450,000
500,000
550,000
Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11
Household loans (quarter avg., PLN MM), LA
Consumer confidence (quarter avg., pts), RA
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Growth agenda
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315
451
2Q'11 3Q'111,702 1,491
17,483 18,753
10,79810,882
2Q'11 3Q'11
Strategic execution
Investing in growth platforms
Innovations
• New products: current account Konto Maksymalne and cards: Visa payWave and MasterCard®
Debit Gold & Visa Prepaid Launch; factoring services at pre-launch stage
• Pilot of videoexpert extended for investment products
• Distribution channels: 7 new branches in IDEO format, 8 branches modernized,
134 ATMs replaced
• New contact management systems
Loans
+43%
SF + Auto
29,984
Go forward focus(Retail + Corporate + SME)
Mortgages
31,126
Originations
FX mtgceased
����1%
����12%
����7%
PLN B
P-loans
(PLN MM)
Corporate
(PLN MM)
383
503
2Q'11 3Q'11
+31%
136 155 160
Jul'11 Aug'11 Sep'11
Receivables
No increase in P-loans 30+ delinquencies y/y
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TARGET
Nov’09
12th8th
Jul’11
BPH’s rank among banks
Brand consideration„If you were to choose a bank now, which
banks would you consider?”
Customers
StakeholdersTrust Index
Aided brand awareness
TARGET
Employees
Communities
New brand positioning …
Reasons To Believe
• Customers: One page summary added to loan contracts highlighting its
key elements (payment schedules, benefits, cancellation)
• Employees: HealthAhead initiative promoting healthy life style for
employees and their families
• Stakeholders: Webcasting conferences for investors, analysts and media
• Communities: GE Volunteers 700 employees engaged with their families in
40 cities this year
Top 5 bank
„We want to be recognized as #1 on trust & Fair Play”
64%
80%
Nov'09 Jul'11
68
85
Nov'09 Jul'11 TARGET
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Partnering with media: TVN and Onet.pl
ACTION GOAL -> to be recognized as #1 on trust & Fair Play
Action results
~1.7K stories fulfilling regulations submitted (total submissions ~4.3 K)
16 programming entries in TVN (Dzień Dobry
TVN, Uwaga, Co za Tydzień, O tym się mówi)
Over 300K unique users on www.zwyklybohater.pl & ~ 1MM entries
2.2K Facebook fans
Over 500 bank spots / over 600 promo trailers
New brand positioning...
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Financial performance
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Overview
• NI of PLN 54 MM in Q3 … with PLN 158 MM YTD (vs. PLN 188 MM net loss in previous year)… interest margin of 3.6% maintained
• Robust new sales … PLN 503 MM of corporate loans … PLN 451 MM of new cash loans
• Non-mortgage losses flat; recent FX volatility impacted mortgage losses and drove uptick in total losses by PLN 11 MM q/q … properly secured loan book … NPL down to 10.4% from 10.7% in Q2
• CAR of 13.6% … adequate level of capital … ceased FX mortgage lending … no sovereign exposure outside Poland
Total net revenue = NII + Net F&C + Net trading income
• Successful navigation through volatile economy ... 3.2% higher NII q/q and total net revenue plateaued q/q
• Base costs down on prior quarter and year
Performance
Profitability
Loans
Costs
Losses
Safety & Soundness
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Key financial performance
Declining total net revenue arrested … working on growthF/ Favorable; */ Total net revenue = NII + Net F&C + Net trading income; **/ Net revenue after losses = Total net revenue + Impairment charges
• Profitability maintained … Q3’11
net income of PLN 54 MM
• Net interest income up 3% q/q …
F&C down 3%
• 3% reduction of base costs …
restructuring effects included
Q3’11
Net interest income
Net F&C
Total net revenue*
Net revenue after losses**
CostsEx-restructuring & one-offs
Impairment charges
Pre-tax profit
Net income
342 +3.2%
151 -3.1%
499 +0.5%
403 -2.1%
-338-338
+0.7%-2.6%
-96 +13.1%
74 -2.2%
54 -3.9%
PLN MM VPQ (%) YTD
1,007 -1.8%
471 -17.5%
1,499 -9.6%
1,201 +25.6%
9921,020
-14.5%-2.7%
-297 -57.6%
215 F
158 F
VPY (%)
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Retail business developmentReceivables
stable
PLN MM
Interest income + Net F&C
down 19%
Interest expenses
stable
Net revenue
down 31%
Losses
improved 57%
Net revenue after losses
down 13%
High quality originations
25,709 25,970518
417
189 191
329
226
3Q'10 3Q'11
140
60
191
166
3Q'10 3Q'11 3Q'10 3Q'11
3Q'10 3Q'11 3Q'10 3Q'11 3Q'10 3Q'11
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Corporate business developmentReceivables
improved 37%
PLN MM
Interest + F&C income
down 13%
Interest expenses
improved 31%
Net revenue
up 100%
Losses
stable
Net revenue after losses
up 100%+
Y/Y lending growth driving overall improvement
1,635
2,247
3833 31
21
612
42 3
10
3Q'10 3Q'11 3Q'10 3Q'113Q'10 3Q'11
3Q'10 3Q'11 3Q'10 3Q'11 3Q'10 3Q'11
28.11.2011 | New brand positioning & improved efficiency | 24
vv vv
SME business development
Receivables
down 6%
PLN MM
Interest + F&C income
up 20%
Interest expenses
up 16%
Net revenue
up 25%
Losses
improved 26%
Net revenue after losses
F
Positive early signs of turnaround
3,1052,910
6679
29 34
3645 46
34
-911
3Q'10 3Q'11 3Q'10 3Q'11 3Q'10 3Q'11
3Q'10 3Q'11 3Q'10 3Q'11 3Q'10 3Q'11
F/ Favorable;
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8,9309,168
8,549
3Q'10 2Q'11 3Q'11
DepositsPLN MM
Retail
down 4% y/y
Commercial
down 8% y/y
Managing deposit base to lending book … surplus liquidity of PLN 2B
5,496 5,509
5,074
3Q'10 2Q'11 3Q'11
3Q’10 2Q’11 3Q’11
Cost of deposits (%) 3.13 3.27 3.22
Average 3M WIBOR 3.82 4.43 4.72
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Cost of businessPLN MM
Base costs
down 1%
CIR (%)
up 6 pp.
C/ NRAL* (%)
improved 10 pp.
*/ Net revenue after losses
Better base costs in spite of increased marketing spending
342 338
3Q'10 3Q'11
6268
3Q'10 3Q'11
9484
3Q'10 3Q'11
28.11.2011 | New brand positioning & improved efficiency | 27
1. 51. 7 1. 8 1. 7
2Q ' 11 Jul' 11 A ug ' 11 Sep' 11
Improved asset quality
Robust portfolio quality*/ Cost of risk to avg. loan volumes**/ Total loans and guarantees
Impairment charges & cost of risk* NPL ratio
30+ delinquency of CHF mortgages (%)
28. 9 27. 5 27. 2 26. 4 26. 8 27. 7
3. 03. 1 3. 2 3. 2 3. 2 3. 2
9. 4
10. 2 10. 6 10. 9 10. 7 10. 4
2Q ' 10 3Q ' 10 4Q ' 10 1Q ' 11 2Q ' 11 3Q ' 11
Perf orm ing loans * * ( PL N B) Im paired loans * * ( PL N B) NPL
249 264
189
121116
85 96
3. 5% 3. 4%
2. 7%
1. 7% 1. 7%
1. 2% 1. 3%
0. 00%
0. 50%
1. 00%
1. 50%
2. 00%
2. 50%
3. 00%
3. 50%
4. 00%
0
50
100
150
200
250
300
1Q ' 10 2Q ' 10 3Q ' 10 4Q ' 10 1Q ' 11 2Q ' 11 3Q ' 11
Im pairm ent c h arg es C os t of ris k
30+ delinquency 3 MOB of P-loans (%)
3. 0
0. 3 0. 4
1Q ' 10 2Q ' 11 3Q ' 11
Crisis peak level
28.11.2011 | New brand positioning & improved efficiency | 28
Capital ratios well above requirements
Strong capital and liquidity positions
Capital ratios (%)
• CAR at 13.6% vs. 8% regulatory minimum
• No capital action necessary to meet proposed Basel 3 requirements
• Established back-up liquidity lines with parent
• FX assets largely funded by parent
2009 2Q’10 3Q’10 2010 1Q’11 2Q’11 3Q’11
Tier 1 3.2 3.1 3.1 3.2 3.2 3.2 3.3
Tier 2 0.7 0.7 0.7 0.7 0.7 0.7 0.7
Total 3.9 3.8 3.8 3.9 3.9 3.9 4.0
Capital (PLN B)
12.7 12.112.9 13.2 13.6 13.6 13.6
10.59.2
10.6 11.0 11.2 11.3 11.3
2009 Jun'10 Sep'10 2010 Mar'11 Jun'11 Sep'11
CAR Tier 1
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Summary
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Summary
Robust growth in lending
High quality originations
1
3
2
4
Loan portfolio resistant in volatile environment
Strengthened services and distribution
Full year profitability on plan 5
28.11.2011 | New brand positioning & improved efficiency | 31
Appendix
28.11.2011 | New brand positioning & improved efficiency | 32
-27
12
47 45 51 46
-143
25
5 25 8
1Q'09 2Q 3Q 4Q 1Q'10 2Q 3Q 4Q 1Q'11 2Q 3Q
Net income developmentPLN MM
Quarterly trend
-24
84
-27
-54
20
-170
3752
One-off items
4756 54
28.11.2011 | New brand positioning & improved efficiency | 33
*/ Net loans and advances to customers
Balance sheet structure improved
Liabilities & EquityAssets
PLN MM
3 B36.1 B 3 B38.6 B37. B37.7 B
8,120 7,747 7,644
14,009 14,951 14,517
13,965 15,027 16,401
3Q'10 2Q'11 3Q'11
GE lines
Deposits
Equity & other
27,808ex. 2Q’11 FX
impact
1,393 1,610 1,527
2,558 3,826 4,1411,526
1,446 1,4392,0472,985 2,187
28,57027,857 29,269
3Q'10 2Q'11 3Q'11
Net loans*
Investments
Intangibles, property &
equipment
Cash & balance with
Central Bank
Other
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* / Contractual maturity; **/ Loans granted in 2011; ***/ Current LTV adjusted to mortgage collaterals revaluation
16.8
17.3
16.7
3Q’10 4Q’10 1Q’11 2Q’11
Volume (PLN B)
17.4
Impaired loans
Total
PLN
FX
540
30.09.11
207
333
+58
V*
+20
+38
* / Q3’11 vs. Q2’11
+28
V* ex. FX impact
+20
+8
2.8 2.9
2Q'11 3Q'11
Volume (PLN MM)Ratio (%)
Mortgages
+11.5% +11.5% Data as of 30.09.11 Total PLN FX
Av. maturity* (years) 22.6 19.7 23.5
Av. Amount** (in PLN '000) 232 66 282
Av. LTV*** 80% 54% 83%
Portfolio growth dynamics (Sep'11/Sep'10) 11.5% -8.9% 14.6%
3Q’11
18.7
17.2ex. 2Q’11 FX
impact