Microsoft PowerPoint - Bank BPH Presentation

Financial Results for 1Q08
Page 1

Financial Results for 1Q2008

Kick-Start of Business Rebuilding

Warsaw, May 9, 2008

Financial Results for 1Q08
Page 2

Executive summary

Macroeconomic situation

1Q08 financial results

Appendices

Loan book overview

Business development

Financial Results for 1Q08
Page 3

Financial Highlights

Continued business only

1Q08

1Q07

1Q08/ 1Q07

Net interest income

154

107

44%

Net F&C

Net trading result

-8

Total net revenue*

235

199

18%

Costs

192

130/169**

48%/14%**

Other operating result

792%

Impairment charges

-8

-13

42%

Pre-tax profit

16%

Net profit

21%

Total net revenue=NII+Net F&C+Net trading result+Net income from investments; Deposits=Amounts owed to customers; Loans=Net loans and advances to customers

IFRS consolidated data in PLNm

B/S changes in 1Q08 (in PLNm)

8% deposits to 6,055 (from 5,621)

5% loans

to 6,501 (from 6,165)

5% equity

to 1,551 (from 1,473)

3% assets

to 12,604 (from 13,027)

** Excluding impact of „Cost Allocation” in 1Q07

Financial Results for 1Q08
Page 4

Efficiency Ratios (%)

ROE net = net profit to av. shareholders’ equity; ROE pre-tax = pre-tax profit to av. shareholders’s equity; ROA = net profit to av. assets; CIR = general administrative expenses/ (total net revenue + other
operating result); Margin = NII to av. total assets

0.0 pp

ROE

pre-tax

1.3 pp

ROE

net

19,3

2 5

1Q08

2007

0.1 pp

ROA

net

6.8 pp

CIR

13,4

12,1

1 7

1Q08

2007

1,5

1,4

1Q08

2007

71,8

64,9

1Q08

2007

1.3 pp

Margin

4,79

3,53

5 ,5

1Q08

2007

2.5%

Net profit/

FTE

(PLNths)

55,0

56,4

1Q08

2007

5.0 pp

Loans/

Assets

5 5

1Q08

2007

3.0 pp

Loans/

Deposits

107

110

12 0

1Q08

2007

Financial Results for 1Q08
Page 5

Bank BPH Key Statistics

as at end-March 2008

*Bank BPH customers have free of charge access to more than 3,200 ATMs
(including 1,249 of EuroNet and all Pekao machines); **Without unpaid,
maternity and child care leaves; ***Bank started to acquire Corporate Clients
from 30 Nov. 2007 i.e. immediately after spin-off; ****Active cards only

Branch Network Density by Voivodship

Key data

2007

1Q08

Outlets

200

Partner outlets

Own ATMs*

206

Employees (FTEs)**

3,172

3,422

Retails Clients, including (‘000):

692.9

699.1

Private Individuals

626.4

629.4

Small Enterprises

66.5

69.7

Corporate Clients***

286

Retail banking cards, including (‘000):

494.5

518.6

Credit cards****

104.8

Debit cards

385.9

403.9

Charge cards

10.6

9.9

(1) Regional GDP per capita (in % of Polish average); Source:
Company data, Central Statistical Office

Lubuskie

Dolnoslaskie

Wielkopolskie

Zachodniopomorskie

Pomorskie

Kujawsko

Pomorskie

Warminsko

Mazurskie

Podlaskie

Mazowieckie

Lubelskie

Podkarpackie

Malopolskie

Swietokrzyskie

Lodzkie

Slaskie

Opolskie

Gdansk/

Warsaw

Krakow

Katowice

Silesia

Poznan

Lubuskie

Dolnoslaskie

Wielkopolskie

Zachodniopomorskie

Pomorskie

Kujawsko

Pomorskie

Warminsko

Mazurskie

Podlaskie

Mazowieckie

Lubelskie

Podkarpackie

Malopolskie

Swietokrzyskie

Lodzkie

Slaskie

Opolskie

Gdansk/Gdynia/Sopot

Warsaw

Krakow

Katowice

Silesia

Poznan

<80%(1)

80%-95%(1)

95%-105%(1)

105%-120%(1)

>120%(1)

Number of outlets

<80%(1)

80%-95%(1)

95%-105%(1)

105%-120%(1)

>120%(1)

Number of outlets

House Savings and Loan Office

Corporate Centers and Corporate Macroregions

315

- Back office

Brokerage Office

1,228

Head Office

263

Credit Analyzes and Collection Centers

208

- Management of outlets

1,294

- Front office

Outlets, incl.:

Corporate Centers and Corporate Macroregions

- Back office

Brokerage Office

Head Office

Credit Analyzes and Collection Centers

- Management of outlets

- Front office

1, 817

Outlets, incl.:

Financial Results for 1Q08
Page 6

Behind:

Spin-off legally effective

November 29, 2007

Financial settlement of spin-off finalized

February 29, 2008

GE Money filing with KNF

Legal Background

Ahead:

KNF approval for GE Money to take control over Bank BPH

Acquisition of Bank BPH by GE Money

up to few weeks after KNF

approval

Completion of BPH285 migration to Pekao

end of May, 2008

Integration with GE Money Bank

by end of 1H2009

Financial Results for 1Q08
Page 7

Executive summary

Macroeconomic situation

1Q08 financial results

Appendices

Loan book overview

Business development

Financial Results for 1Q08
Page 8

5,8

6,5

6,3

4,3

3,2

2,4

6,9

6,0

4,8

4,0

4,4

5,4

6,3

6,6

7,3

9,0

15,9

18,0

26,2

20,8

17,6

16,4

18,3

16,6

10,1

6,4

3,9

1,2

8,6

5,3

4,9

4,8

2008 GDP Growth Forecast Still Above 5%

GDP (%, y/y)

Investments (%, y/y)

Contribution to GDP growth

5,0

4,4

5,2

4,7

6,9

5,0

3,7

5,6

5,1

2,5

5,1

1,6

1,4

5,3

2,7

4,4

0,5

7,75

Private consumption (%, y/y)

All figures reported as quarter average (unless stated otherwise)

Despite global economy slow down, pace of economic
growth in Poland will stay above 5% in 2008 (5.8% for
1Q08)

Domestic demand: consumption and investments still
driving economic expansion

-3

-1

1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08

(

tio

)

net exports
i nventories
i nvestments

publ i c consumpti on
pri vate consumpti on
GDP

Financial Results for 1Q08
Page 9

37,7

25,5

23,1

20,3

15,3

12,1

4,3

4,0

8,6

-4,5

-0,5

1,3

1,7

25,0

40,2

38,3

37,3

31,6

29,5

23,7

16,1

20,1

21,5

19,2

24,2

38,8

-10

Corporate

Household

8,6

17,8

26,0

19,9

16,8

15,2

24,2

22,9

21,0

21,5

23,0

29,9

22,3

15,7

9,7

7,8

5,3

8,5

9,3

8,3

4,5

5,0

6,9 8,6

11,7

8,3

Corporate

Household

4,9%

10,1%

13,6%

19,4%

19,6%

16,9%

6,8%

2001

2002

2003

2004

2005

2006

2007

Ever Increasing Inflation

CPI to reach its peak in 3Q08, but monetary policy
tightening cycle close to end – our expectations:
interest rates to be hiked to 6.00%

Corporate loans revival to continue in 2008

Household loans growth still exceeding 35%

Corporate and household loans

(%y/y, quarterly averages)

Corporate and household deposits

(%y/y, quarterly averages)

Inflation (%, y/y) and 1M WIBOR

NPL in commercial banks (share %)*

2,4

3,5

4,1

4,3

4,8

5,2

5,6

1,6

1,1

3,6

2,3

0,6 0,8

1,4

2,1

5,6

4,7 4,6

4,3 4,1

6,5

4,1

Inflation

1M WIBOR

*/ according to NBP

Financial Results for 1Q08
Page 10

Executive summary

Macroeconomic situation

1Q08 financial results

Appendices

Loan book overview

Business development

Financial Results for 1Q08
Page 11

198,5

234,6

46,8

-1,0

-10,2

1,0

140

280

1Q07

Net interest

income

Net F&C

Trading

result

Net income

from

investments

1Q08

54,0%

65,6%

37,2%

44,5%

-3,3%

1,5%

0,4%

0,0%

-5%

45%

95%

1Q07

1Q08

Net income from
investments

Trading result

Net F&C

Net interest
income

Total net revenue

18% growth (or PLN 36m) of net revenue driven by:

44% jump of net interest income mainly on higher loan

and deposit base

1% deterioration of net F&C i.a. due to higher costs of

domestic payments

Net trading result without interest income on trading

positions booked in NII; economic trading result equal to

PLN 5.5m

+18%

Net F&C coverage (%)

1Q08

1Q07

of general costs

45.4

67.8

of remuneration costs

105.3

129.0

PLNm

All data consolidated and pro-forma 1Q07 (spin-off adjusted) unless stated otherwise

Revenue Side

1Q08 vs. 1Q07

Financial Results for 1Q08
Page 12

192,4

130,2

39,1

14,5

2,0

4,0

2,7

100

200

1Q07

Personnel

Building

maintenance

& rents

Other

expenses

Depreciation Allocation of

costs*

1Q08

-13,4

-7,7

-15

-8

-1

1Q07

1Q08

Cost Side

1Q08 vs. 1Q07

Costs (incl. depreciation)

Impairment charges

+47.8% o

r +13.7%

without „

Cost allo

cation” i

mpact

Total costs up by 47.8% or 13.7% excl. positive impact of „Costs allocation”*
recognized only until spin-off

Personnel expense up by 21% due to i.a. key staff retention, bonuses and base salary
upgrade as well as recruitment of new personnel (FTE number up by 250 in Q1)

1Q08

1Q07

PLNm

*referring to transactions between continued and discontinued operations
defined by internal cost allocation system introduced in relation to spin-off

39,1

169.3

Financial Results for 1Q08
Page 13

Assets Structure

1Q08 vs. end-2007

Assets

3% drop of assets as a result of: (i) closing short term liquidity buffer and consequent

shrinkage of investment financial assets (-45%) and (ii) decrease of other assets (-35%)

not fully offset by higher loans (+5%) and dues from banks (+38%)

Retail loans dominating total loan portfolio

Share of PLN denominated loans up to 64%

1 192

1 642

2 101

2 187

1 605

2 218

1 051

970

6 165

6 501

6 000

12 000

31.12.07

31.03.08

net loans*

trading assets

dues from banks

investments
financial assets
other

*Net loans and advances to customers

PLNm

13,027

12,604

-3.3%

26%

28%

70%

73%

50%

100%

31.12.07

31.03.08

Organiz. Related Party

Corporate

Private Individuals

SME

Loans

Financial Results for 1Q08
Page 14

576

644

1 856

3 006

1 551

1 473

3 501

1 347

6 055

5 621

6 000

12 000

31.12.07

31.03.08

deposits*

dues to banks

evidenced by
certificates
shareholders'
equity
other

Liabilities Structure

1Q08 vs. end-2007

Liabilities

Deposits

62% reduction of dues to banks following i.a. closing of short term liquidity buffer

Almost 8% (or PLN 434m) upturn in deposits

* Amounts owed to customers

PLNm

27%

23%

74%

73%

50%

100%

31.12.07

31.03.08

Corporate

Private Individuals

SME

Financial Results for 1Q08
Page 15

Executive summary

Macroeconomic situation

1Q08 financial results

Appendices

Loan book overview

Business development

Financial Results for 1Q08
Page 16

Loan Book Break-down by Segment And Currency

end-March 2008 vs. end-2007

Loan portfolio for Bank BPH stand-alone = utilized loans +
guarantees; PI – Private Individuals; SME – Enterprises with
up to PLN 10m annual turnover (within Retail Division)

Organiz. Related

Party

1% (vs. 1%)

Corporate

1% (vs. 0%)

SME

28% (vs. 26%)

Residential

mortgages

58%

(vs. 59%)

PI excl. Mtg

12% (vs. 14%)

62%

64%

35%

33%

100%

31.12.2007

31.03.2008

PLN

EUR

CHF

Financial Results for 1Q08
Page 17

Impaired Loan Portfolio

Loan portoflio for Bank BPH stand-alone

Impaired loans

(% of total loans)

Provisions

(% of impaired loans)

11,2%

5,2%

3,1%

9,9%

3,1%

5,0%

12%

Total

SME

31.12.2007

31.03.2008

67%

69%

67%

65%

69%

68%

60%

65%

70%

Total

SME

31.12.2007

31.03.2008

Financial Results for 1Q08
Page 18

Loan Portfolio by Products

end-March 2008 vs. end-2007

Multipurpose

line; 36%

Mortgages;

0,1%

Revolving

loans; 63%

Guarantees;

Other

5% (vs. 6%)

Mortgage

14% (vs.

14%)

Overdraft

24% (vs.

20%)

Investment

Loan

31% (vs.

34%)

WCL*

26% (vs.

26%)

Other

15% (vs.

15%)

Real Estate

Loan

54% (vs.

54%)

Constr. Loan

32% (vs.

31%)

Card

16% (vs.

17%)

Personal

Overdraft

22% (vs.

22%)

Other

3% (vs. 3%)

Cash Loan

59% (vs.

58%)

PI (excl. Mtg): PLN 0.8bn (vs. PLN 0.8bn)

SME: PLN 1.8bn (vs. PLN 1.6bn)

Residential Mortgages: PLN 3.8bn (vs. PLN 3.6bn)

Corporate*: PLN 0.15bn (vs. PLN 0.06bn)

*Including Organizational Related Party

Loan portoflio for Bank BPH stand-alone

Financial Results for 1Qs 2008
Page 19

6,8

6,0

5,1

1Q07*

4Q07

1Q08

6,4

6,1

5,6

1Q07*

4Q07

1Q08

Retail Business Development – Total Sales

Retail loan volumes

+15%

Margins (%):

Retail deposit volumes**

+34%

Margins (%):

Growth in cash loan sales of Pożyczka od Ręki (+23% y/y to PLN 0.44 bn), while total
cash loan portfolio up by 13% y/y to PLN 0.50 bn

Focus on structured investment products (SCD)

2.9

3.4

3.0

2.4

PLN bn

Market shares (%):

2.4

2.8

2.4

2.1

*1Q07 post spin-off pro-forma
**including SCD (in Bank BPH b/s)

3.1

2.7

2.4

2.3

Financial Results for 1Qs 2008
Page 20

Number of Retail Customers per Products

as at end-March 2008

SME

605

369

315

105

447

Total loans Consumer

loans

Mortgages

Credit

cards*

Personal

accounts

Deposits

Total loans WCL* and

debits

Investment

loans

Other loans Harmonium

packages

Deposits

*Active cards only

in ths

*Working capital loans

Financial Results for 1Qs 2008
Page 21

5,0

6,5

6,9

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

1Q07

4Q07

1Q08

Retail Business Development –
Investment Products

-28.7%

BPH TFI assets

BPH TFI assets down by -PLN 2bn vs. March’07 due to global slump on equity markets

BPH TFI market share of 4.5%

Five issues of structured deposits (PLN 0.34bn sales)

Top Dywidenda (April–May ‘07), Top Dywidenda 2 (July ‘07), Lokata Indeks Plus (Aug.-

Sept. ‘07), Lokata Stabilne Akcje (Oct.-Nov. ‘07), Lokata na Bank (Feb-Mar’08)

PLN bn

Financial Results for 1Qs 2008
Page 22

c.a. 2.5% market share

Growth of ROR packages: +26.4 ths y/y

55.4% share of color** packages (+4.1 pp. y/y)

Growth of PI deposit volume (+42% y/y)

447

434

420

300

350

400

450

500

1Q07*

4Q07

1Q08

+6.3%

Retail Business Development – RORs and
Term Deposits

(new customers acquisition)

ROR accounts for PI

*1Q07 post spin-off pro-forma

**Silver, Gold, Sez@m Max, Private Banking

‘000

Financial Results for 1Qs 2008
Page 23

SME and PI (in ’000)

1Q07*

4Q07

1Q08

Internet banking

197

227

242

Call center**

229

277

336

Retail Business Development –
Credit Cards & Alternative Distribution
Channels

Credit cards*

+23

‘000

*Active cards only
**incl. transactional services

+47

111

122

100

150

1Q07*

1Q08

Credit cards transaction volume

+10%

PLNm

105

100

120

1Q07

4Q07

1Q08

31%

Financial Results for 1Qs 2008
Page 24

1Q07*

4Q07

1Q08

+13%

Retail Business Development – Harmonium &
Quick Loans for SME

More than 86% of SME customers using Harmonium packages

New e-Harmonium package launched – cheapest on the market

Deposit base enhanced (+7% y/y)

Growth of loans for SME: 25% y/y (to PLN 1.84bn)

Harmonium packages

‘000

*1Q07 post spin-off pro-forma

Financial Results for 1Q08
Page 25

3,77

3,65

3,35

42,7%

41,1%

27,4%

1Q'07

2007

1Q08

50%

100%

Retail Business Development –
Mortgage Lending

Residential Mortgages

Market shares (%):

+12

PLN share

3.9

2.9

Sale of mortgage loans higher by 5% in 1Q08 vs. 4Q07

As at 31.03.2008

Total

PLN

Av. maturity*

19.1 years

16.5 years

21.1 years

Av. amount** (in PLN ‘000)

128

Av. LTV***

50%

58%

45%

NPL

2.2%

2.5%

1.9%

Portfolio growth dynamics
(March’08/ March’07)

12%

75%

-11%

*contractual maturity; **loans granted in 1Q2008 with only small portion of FX loans; ***current LTV
adjusted to mortgage collaterals revaluation

PLN bn

*1Q07 post spin-off pro-forma

3.1

Financial Results for 1Q08
Page 26

Corporate Banking – Ambitious Strategy

Re-establishing of Corporate Centers network throughout the country: 8 Centers
already operational for all 10 Centers planned to be opened by end-2008

Human capital and resources being restored

Pre spin-off product and service quality retained - most of products already in active
sales

Customer portfolio to be gradually rebuilt - 286 new corporate customers served at
the end of 1Q (revised plan to have over 1,200 customers at end-2008)

124

Deposits

149

Loans

1Q average

March 31, 2008

Volumes (in PLNm)

Financial Results for 1Q08
Page 27

Corporate Banking - Transactional Banking

TransKasa

: recent cooperation

agreement with Kolporter: B2C

services enabling collection of utility

payments (by over 80 country-wide

billers) at press-rooms and shops;

TransKasa installed in ca. 1,000 Points

of Sale (POS) all over the country

Corporate Customers Service:

BusinessLine servicing ca. 300 clients

Cash Management

Electronic Banking

BusinessNet

1Q08 monthly growth

100

150

200

250

300

III

BusinessNet sales increase: currently

240 customers in place

Financial Results for 1Q2008
Page 28

INM Business Development

place of Research Team in macro-economic

ranking of Parkiet Daily in 1Q08

Focus on rebuilding INM/ Treasury Sales and
implementation of new products for Corporate
and SME segments

Introduction of business model for sales of
financial market products and services in Retail/
SME, Corporate and Financial Institutions
segments

Place

in macroeconomic

ranking

Jan-Mar 2008

PLN 86m

Structured

Investment Products

Originated

Jan-Mar 2008

136%

100%

1Q'07

1Q'08

Sales margin from treasury products for Corporate
and Retail segments*

* results from sales of treasury products and custody services generated by INM Division are
presented entirely in the results of Retail and Corporate segments

+36

43% y/y growth of sales of
structured investment products for
Retail Clients in 1Q08

36% y/y increase of net income
from sales of treasury products (incl.
fixed income) for Retail/ SME,
Corporate and Financial Institutions
Clients in 1Q08