Delta Bank No. 1 in consumer finance in Ukraine Delta Bank No ...
description
Transcript of Delta Bank No. 1 in consumer finance in Ukraine Delta Bank No ...
Presentation
2006–2008
Delta Bank No. 1 in consumer finance in Ukraine
Delta Bank No. 1 in consumer finance in Ukraine
Overview of Macroeconomic Environment and Banking Sector
Ukraine has continued its high economic growth record performance for the past five yearsRecord high NBU international reserves ($37bn)Longterm rated B1 (positive outlook) and B+ (stable) by Moody’s and Fitch respectivelyRapid wage growth expected to continue, on the back of strong GDP and given that Ukrainian wages remain low, highlights the growth potential of the banking sectorStable monetization progress to support economic growthRecent WTO accessionStable currency and strong fiscal performanceSignificant government spending on infrastructure, driving productivity growthExtensive deregulation and liberalization
•••• •••••
Increasing levels of disposable income, decreasing inflation and a large young population create a favorable environment for the banking sector Financial stability and strong economic growth in Ukraine stipulate robust development of the banking sector to service increasing financial flows (bank assets to GDP is 83% as of 2007YE) Low penetration of the banking sector (62% loans/GDP; 39% deposits/GDP) and retail services in particular (only 35% share of retail loans in total loan portfolio) provide ground for further growth Public confidence in the sector increased substantially over the past few years with retail bank deposits rising rapidly
•
•
•
•
1
Brief Overview
Banking Sector
Key figures
2007 2008E 2009F
Real GDP, % 7.6 6.9 6.3
Consolidated fiscal revenues, UAH bn
219.9 311.5 394.1
Consolidated fiscal deficit, % of GDP
1.1 1.5 1.9
Current account balance, % of GDP
4.2 6.1 6.5
Net Foreign Direct Investment inflow, USD bn
9.2 8.0 10.1
Money supply, UAH bn 391.3 576.1 735.7
Consumer Price Index, % aop
12.8 26.0 16.0
2001 2002 2003 2004 2005 2006 2007Total Assets ($bn) 7.9 12.7 16.6 26.7 42.4 67.4 118.5Total Credits ($bn) 5.4 7.9 12.7 16.7 28.4 53.4 87.6Total Deposits ($bn) 4.8 7.1 11.5 15.6 26.3 36.2 55.5
Structural Information Number of Banks 189 182 179 182 186 193 196Assets of Top 10 Banks (% of Total) 53.3% 50.8% 52.7% 52.1% 55.8% 52.4% 51.2%
Market Share State owned Banks n.a. 12.0% 9.5% 7.7% 9.3% n.a. n.a.Market Share Foreign owned Banks n.a. 7.0% 7.5% 7.1% 17.3% 27.6% 35.0%
Profitability and Efficiency Return on Assets 1.2% 1.2% 1.0% 1.1% 1.3% 1.6% 1.5%Return on Equity 7.5% 8.0% 7.6% 8.4% 10.4% 12.2% 12.7%Total Capital Ratio 20.7% 18.5% 14.4% 16.8% 15.0% 14.2% 13.9%NIM n.a. 6.0% 5.8% 6.1% 5.8% 5.9% 4.9%Average Interest Rate Spread 16.2% 13.4% 10.7% 7.8% 6.2% n.a. n.a.
E – estimate, F – forecast Source: Derzhkomstat, NBU, State Treasury, IER calculations and forecast
Source: National Bank of Ukraine
Ownership Structure
35yearold founder and original CEO of Bank DeltaPersonal Details: Education: Degree in Accounting, Ph. D. in Economics from Kyiv National Economic UniversityProfessional Experience: • exshareholder of a top5 bank in Ukraine• 12 years of banking experience• over 6 years in Board level positions • Entrepreneur of The 2007 in Ukraine by Ernst&Young
2
Nikolay Lagun
Icon Private Equity is a leading private equity fund in Russia and Ukraine with over $1 billion under management. The fund invests in fast growing financial, telecommunications, media and IT companies and in retail trade projects in Russia and the CIS. Icon’s mission is to achieve effective partnership with market leaders that would significantly increase their value. The fund’s team has dynamic experience in the successful execution of private equity projects and vast expertise in corporate governance.
Icon Private Equity
49%
51%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Delta Bank at a Glance / Market Position
3
Key Performance Indicators as of September 01, 2008 Position
Consumer loans issued in ‘0608 $1,2 Bn No.1
Total number of active customers 1,400,424 Top 5
Total customer base 2,081,245 Top 8
New clients acquired per month 37,000 No.1
Credit cards issued per month 57,000 No.1–2
Total Retail Loan Portfolio $563 Mio 14th*
Credit Card Loan Portfolio $320 Mio Top 2
Retail Deposit Growth to 01.01.2008 470% No.1
Number of retail partners 680 No.1
Sales Outlets (Card, Cash) 2,099 No.1
Number of employees 6,809
Source: Delta Bank`s estimate* according to National Bank of Ukraine as of 01.08.2008
Competitive Landscape
4
Major Players Strengths Weaknesses
strong management team largest sales network (incl. strategic
cooperation with UkrPost) strong growth in retail deposits very strong credit card business
unparalleled risk management expertise powerful customer service (collection) center
highcost POS network
largest network of branches large customer base
access to funding developed credit card products
wellknown brand
no key focus on the segment poor manageability due to large scale
access to key retailer chains full support from SG access to funding
nonbanking institution no revolving credit card product
relatively small POS network
aggressive strategy to access key retailers access to funding from Alfa group
solid franchise in car loans
no key focus on the segment aggressive pricing leads to low APR
no revolving credit card product
access to funding from parent group weak local team
failure to access key retailers no credit card product
Delta Bank: Consumer Focused Model
5
Consumer Credit
Main Sales Channels
CashLoans
CreditCards
CarLoans
PersonalLoans
SalesFinance
POSs inShops / Partners
Credit CardDeposit CardPaper LoansCash Loan
Corporate Sales
Credit CardDeposit Card
Branches
DepositsCredit Card
Deposit CardCash Auto
Brokers
Credit CardDeposit Card
Other SalesChannels:
UkrPost
Internet banking
Telemarketing
POS loans forpurchase ofconsumer
goods
Nonpurposeinstallment
loans
Channels
Products
Revolvingprivate labelcredit cards
RevolvingCreditCards
Used Cars
New Cars Home EquityLoans
Nonpurposeloans issued at
bank offices
Overview of Major Products
6
It is planned to almost double theRetail Loan Portfolio in 2008
POSLoans
Share of RetailLending Portfolio
Jan2008Product Comments
Traditional Delta Bank product
Over 2,000 points of sale (POSs)
Client acquisition channel
Market leader (share 20–25%)
65%
CreditCards
Yearend target around 2m active cards
Cards for subprime segment (basic functionality focused on lending)
Market leader in cards issuing (over 100,000 per month)
Instant card technology – client receives functioning card in 30 minutes
31%
CashLoans
Introduced in Q4 2007
Focus on distribution through alternative channels (UKrPost)
Distribution through branches, brokers, agents
4%
Car Loansand Secured
Lending
Used car lending introduced in Q3 2007
New car lending to be introduced in Q2 2008
Home equity loans considered for end 2008 / beginning 2009
0%
Dec2008
34%
59%
6%
1%
0,00
100 000,00
200 000,00
300 000,00
400 000,00
500 000,00
600 000,00
700 000,00
800 000,00
01 Ja
n 20
08
01 M
ar 2
008
01 M
ay 2
008
01 Ju
l 200
8
01 S
ep 2
008
01 N
ov 2
008
01 Ja
n 20
09
Card
Cash (card)
Cash
Secured
Auto
POS Loans
Source: Delta Bank Projections
Strategy – Funding
7
Favorable debt and market conditions
Emphasis on unique strategy and growth prospects
Lack of similar financial sector issuers from Ukraine
Aggressive pricing and shortterm tenor
Luck
Building credit history
Issue of debut IFRS audited statements
Started preparation towards an international and a local credit rating
Debut assetbacked financing paved the way to fullfledged securitization
Launch debut retail deposit program
Increase scale of retail deposit campaign through extensive POS outlets and UkrPost network
Launch debut SME deposit program
Launch deposit program for local insurers and assets managers
Wholesale FundingApproach
2006
Diversification ofWholesale Sources
Building LocalFunding Franchise
2007 2008
0–9 Months 9–18 Months 18–30 Months
• No. 1 local bond issuer in 2006 • In November 2006, Delta pioneered consumer loan ABS in Ukraine
• 11 bond issues in 2006–2007 for the total amount of nearly $400m • Successfully repaid all2006 bonds • Balanced liabilities structure
• $540 Mio retail deposits to be collected in 2008• Public “True Sale” securitization deal is being prepared for Q4 2008 – Q1 2009
LongtermStrategy: Diversified portfolio with strong local funding and without dependence on any single source
2006YE 2007YE 8M2008Foreign Debt
Local Debt
Corporate Deposits
Retail Deposits 80%51%
24%
16%
21%39%
12%
28%
10%11%
0%
9%
Funding TimelineUSD
20,000,000equiv.
UAH denominateddomestic bond1year maturity
Sep 2006
USD20,000,000
equiv.UAH denominateddomestic covered
bond36 months maturity
Oct 2006
USD80,000,000
equiv.UAH denominated
domestic bond1year maturity
USD 7,500,00equiv.
UAH denominateddomestic
covered bond
USD22,500,000
equiv.UAH denominated
domesticcovered bond
Dec 2006
USD40,000,000
equiv.UAH denominated
domestic bond1year maturity
Nov 2006
USD100,000,000
equiv.Udomestic AH
denominated bond1year maturity
Mar–May 2007
USD75,000,000
equiv.UAH denominated
domestic bond1year maturity
Oct–Nov 2007
USD20,000,000
equiv.
Total attracted: USD 390 mio
Total repaid:USD 365 mio
Outstanding:USD 25 mio
UAH denominateddomestic bond1year maturity
Jan 2008
USD30,000,000
certificate of deposit1year maturity
Sep–Nov 2007
USD5,000,000
certificate of deposit1year maturity
Feb 2008Attracted
Repaid
USD 40,000,000equiv.
UAH denominateddomestic bond
USD 20,000,000equiv.
certificate of deposit
USD 60,000,000
equiv.UAH
denominateddomestic bond
USD 40,000,000
equiv.UAH
denominateddomestic bond
USD 75,000,000
equiv.UAH
denominateddomestic bond
Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Jan Feb Mar Apr May Jun Jul Aug SepOct Nov Dec
2006 2007 2008
USD20,000,000
equiv.UAH denominated
domestic bond
USD 80,000,000
equiv.UAH denominated
domestic bond
Delta Bank has an impeccable trackrecord in fulfilling its obligations
8
Strategy Deposit Program
9
Maximize utilization of existing Delta branch networkOffer attractive conditions (price) for deposit programsAggressive advertising and promotion of deposit programsImplement core banking system to be able to offer full service transaction banking services (current account and salary account)Explore alternative means of deposit attraction (UkrPost, branch agency concept)
Key Strategic Initiatives In Deposits
Delta Bank manages to attract 115% ofplanned volume of private individuals’
deposits in 1H2008
With a massive deposit program started only in December 2007 Delta Bank got to a fantastic 11th place in retail deposit
acquisition among Ukrainian banks
Bank
Funds of private individuals
01.01.2008 01.07.2008Increase in
1H2008Share in
increase (%)
Number of branches at 01.07.2008
0 All banks of Ukraine 125 613 553 147 273 114 21 659 561 100% 23 5781 PrivatBank 17 649 454 21 488 311 3 838 857 17,70% 2 9702 Nadra 5 038 658 6 851 590 1 812 932 8,40% 7013 PromInvestBank 6 536 084 7 863 846 1 327 762 6,10% 9664 Finance and Credit 4 220 891 5 451 363 1 230 472 5,70% 3925 Oshchadbank 3 865 300 5 069 511 1 204 211 5,60% 6 1406 Ukrprombank 5 783 684 6 873 465 1 089 781 5,00% 3057 UkrEximBank 4 572 658 5 652 773 1 080 116 5,00% 1448 Rodovid Bank 2 685 039 3 633 997 948 958 4,40% 1569 Ukrgazbank 2 549 875 3 454 582 904 707 4,20% 329
10 Raiffeisenbank Aval 10 900 763 11 683 388 782 625 3,60% 1 18511 Delta Bank 215 017 830 099 615 082 2,80% 3612 FUIB 1 536 142 2 096 769 560 626 2,60% 12713 Bank Kyiv 1 323 509 1 770 444 446 935 2,10% 11214 CB Hreshchatyk 1 062 761 1 481 462 418 701 1,90% 15615 Alfa Bank 333 349 697 512 364164 1,70% 53
4 Finance and Credit
312
360
0
50
100
150
200
250
300
350
400UAH,
mio
Planned
Actual
A recordbreaking retail deposit per branch acquisition ratioof 721 thousand USD is more than 5 times higher then in peer banks
Branch Network & Expansion
10
Geography of Bank’s POS Network as of 01.08.2008Bank’s Units as of 01.08.2008
Increasing a number of POSes at UkrPost is a strategic priority for 2H2008
Branches
Promo Outlets
POS Outlets
Total POS and Promo Outlets
47
365
2,116
2, 482+ Head Office
The plan for 2008 is to open 38 more branche
Source: Management data
Ivano Frankovsk(45 )
(28 )Chernovtsy
(59)Khmelnytsky
Uzhgorod
(27)
Lvov
(137) Ternopol(52)
Lutsk(44)
Rovno(47)
Vinnytsya(56)
Zhytomyr(53)
Chernigov(45)
Sumi(38)
Kiev(189)
Poltava(61)Cherkasy
(46)
Kharkov(121)
Lugansk(115)
Donetsk(162)
Mariupol(16)
Zaporozhye(131)
Krivoy Rog(68)
Kirovograd(54)
Kherson(66)
Simferopol and Crimea(125)
Nikolaev(85)
Odesa(105)
Dnepropetrovsk(124)
BelarussiaMinsk
0
50
100
150
200
250
01.06.2008 01.07.2008 01.08.2008 01.09.2008 01.12.2008F
Strategic Cooperation With UkrPost
11
• Never before done in Ukraine• Development of a new deposit collection channel, which is: 16,000 post offices 45,000 postmen Penetration into a greater part of towns and villages of Ukraine• Increase of number of retail deposits
• A 5year exclusive agreement with UkrPost, from mid–2006• Provides Delta with unparalleled coverage in Ukraine through its network of 16,000 post offices across the country• Delta Bank supplies UkrPost with: Own computers Software Ongoing training• The Bank has an exclusive agreement for: Debt repayment Collection of deposits Loan granting• More Delta’s own employees to be installed in UkrPost outlets in the future• Current agreement requires Delta’s approval for any other operator to cooperate with UkrPost
Акція діє з 26.06.2008р. по 01.10.2008р.
Банк є учасником Фонду гарантування вкладів фізичних осіб. Свідоцтво № 178 від 27.04.2006
Innovation – the “POSTMAN” sales channel
Deposits through UkrPost, projections, tsd USD
Exclusive Partnership with Ukrainian Post
Share of Loan Repayments through UkrPostgrowth with every month
0,00%5,00%
10,00%15,00%20,00%25,00%30,00%35,00%40,00%45,00%50,00%
702 2 355
7 231
14 335
23 324
33 860
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
Jul 2008 Aug 2008 Sep 2008 Oct 2008 Nov 2008 Dec 2008
Retail Banking Market Segmentation
12
Bankable Population Higher Middle HNWI
Characteristics
Mo
nth
ly N
et In
com
e ($
)
Bankable Population, Age
Over 2,200
600–2,200
300–600
200–300
<200
20–24 25–2915–19 30–49 50–59 60 +
7.3
2.7
0.6
17.5
6.6
Upper & Lower Middle
HNWI
Middle and Promising
Mass
xx.x Headcount of client group, mio
A 28yearold branch manager Monthly income of $2,800Middleclass foreign car (VW)Rents an average apartment in KievConsumptionoriented lifestyle
•••••
Banking Needs Sophisticated 360o servicingInvestment productsMortgages for elite housing
•••
Characteristics A 35yearold IT specialist, working for one of the largest Ukrainian companiesMarried, 2 childrenMonthly income of $900Lowclass foreign car (Chevrolet)Rents an apartment, but hopes to buy a flat in suburbs
• ••••
Banking Needs Current account and debit / credit cardsMortgage loan or car loan
• •
Lower Middle
Characteristics A clerk in a small companyMonthly income of $450Lowclass domestic car (Lada)Spends 80% of income on consumer goodsNo substantial savings
•••• •
Banking Needs Standard account / debit cardConsumer finance
••
Characteristics A 48yearold construction worker in BerdyanskFamily 2 children No carwith Does not trust banks
• •••
Banking Needs Salary accountDebit card
••
Mass
Source: SMG / KRC, 20042006; GfK; Ukrgosstat; Ukrainian Ministry of Finance Note: Population over 15 years old
Segment of Delta Bank = 75% of Bankable Population
Superior Risk management
The first Ukrainian retail bank to develop strong risk management functionsLed by a team of top specialists with experience from other CEE / CIS countriesExpected losses below 5–6%
•••
Developed a stateoftheart scoring system (KolmogorovSmirnov score – “KS” – close to 40%)Effective collection strategy (with 200–220 contacts per day), monitoring and fraud prevention systemsConstant benchmarking and motivation of sales force on risk numbersRisk management division consisting of four departments:
••••
First default below 3% for POS loans and 9% for credit cardsLate delinquencies (90+ days overdue) for recent vintages are around 2% for POS loans and 4% for credit cards
••
Credit policy – with the most advanced scoring system in the market Underwriting – a multistage system, processing up to 50,000 applications per day, 24/7, making it one of Ukraine’s largest client databasesCollections – a threefold system ranging from full call / SMS notifications, to persistent calls to relatives, neighbors, friends and employersFraud prevention and detection – monitoring of merchants (POS) and sales staff, detecting fraud trends as well as testing monitoring applications
••••
13
Delta Bank’s risk management function is arguably one of the most sophisticated among Ukrainian banks
0,0%
2,0%
4,0%
6,0%
8,0%
10,0%
12,0%
01.02.2008 01.03.2008 01.04.2008 01.05.2008 01.06.2008 01.07.2008 01.08.2008 01.09.2008
Paper
Card+Cash
0
500
1 000
1 500
2 000
2 500
3 000
Jan 2008 Feb 2008 Mar 2008 Apr 2008 May 2008 Jun 2008 Jul 2008 Aug 2008
Overall1st Defaultratio dropsbelow 3%
Collection:UAH perhour per one
operator
Source: Management data
Superior Risk management
14
POS loans of 90+ days past due by months on books
Portfolio quality is continuously being improved
Jan 2007 Apr 2007 Jul 2007 Sep 2007 Dec 2007
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Source: Management data
Months
POS loans of 30+ days past due by months on books
0%
2%
4%
6%
8%
10%
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Months
%
%
Loan Portfolio Statistics
15
Loans Issuances (POS+Cards)
Retail Loan Portfolio (POS+Cards)
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
0
50 000
100 000
150 000
200 000
250 000
300 000
Number of loans issued Loans issued
USD, Mio
0
100
200
300
400
500
600
Loans portfolio, USD Mio
Average MoM growth rate – 14,4%
Loan Portfolio Statistics (Cont’d)
16
POS Loan Portfolio by Type of Goods as of 01.09.2008 Cash & POS Loan Portfolioby Loan Amounts as of 01.09.08
Cash & POS Loan Portfolioby Residual Maturity as of 01.09.08
2,5% 5,1%4%
4%
1%
14,1%
32,1%
27,7%
5,5%
3,1% 9,9% below $200
$200$300
$300$500
$500$1,000
$1,000$2,000
$2,000$3,000
$3,000$5,000
over $5,000
7%3%
3%
15%
33%
39%
below 1M
12M
23M
36M
612M
over 12M
Audio/Video/DVD
Domestic tech
Computers
Furniture
Mobile phone/Palms
Motor bikes
TV
Construction materials
Other
27%
18%
6%7%
17%
16%
Delta Bank Call Center – Key to a Top Quality Customer Service
The key to success for our business is emphasis on the best possible client service together with the realization of their financial needs
•
17
Client Focus Continuous Service Development
SL 80/20 Hot – Line*
“Marketing Relationships” aiming toward maintaining the current clients as well as gaining new clients in order to establish a mutually benefiting longterm relationship The main task of the call center is to maintain a high quality and consistent level of service. It is important for us not to overlook a single request from any of our clients and that all requests are solved in a timely manner
•
•
The Core Concept
Clientoriented and a personalized approach Selection and training of personnel oriented towards providing the best service and possible solutions to the client
Presence of automated banking systems that allow for faster informationhandling and decisionmaking processes with the goal of reaching and further developing longterm relationships with clients
• •
•
Key Client Service Strategies
Number of Incoming Calls
Number of Calls Serviced by HotLine operators
0,00%
10,00%
20,00%
30,00%
40,00%
50,00%
60,00%
70,00%
05.2
007
06.2
007
07.2
007
08.2
007
09.2
007
10.2
007
11.2
007
12.2
007
01.2
008
02.2
008
03.2
008
04.2
008
05.2
008
06.2
008
07.2
008
08.2
008
0
100 000
200 000
300 000
400 000
500 000
04.2
007
05.2
007
06.2
007
07.2
007
08.2
007
09.2
007
10.2
007
11.2
007
12.2
007
01.2
008
02.2
008
03.2
008
04.2
008
05.2
008
06.2
008
07.2
008
08.2
008
09.2
008F
** Note: SL 80/20 (service level 80/20) is a standard for response time which means that an incoming call should be received in 20 seconds. The optimum efficiency level is 80%Source: Management data
Key Financial Indicators
18
*F forecast Source: Management Data
USD Million, end of period
Total Assets
Total Loan Portfolio
Capital
Net Interest Income
Net Fees and Commission Income
Operating Income
Operating Expenses
Administrative Expenses
Net Income before Provisions and Taxation
CIR
ROA
ROE
NIM
1Q 2007
352.9
241.8
78.7
(1.6)
13.1
22.7
(9.3)
(2.7)
0.2
65.03%
0.32%
1.33%
20,53%
2Q 2007
398
252
78.8
(3.7)
26.9
51.3
(21.8)
(6.1)
2.0
74.65%
0.20%
0.92%
16.86%
3Q 2007
442
322
78.7
(3.8)
43.1
83.0
(35.6)
(11.0)
1.8
85.58%
0.03%
0.16%
21.61%
4Q 2007
705.7
514.6
111.0
(5.1)
65.8
127.0
(53.3)
(20.1)
2.5
87.82%
0.23%
1.37%
20.80%
1Q 2008
930.9
641.8
113.9
31.2
(2.6)
56.6
(26.7)
(4.7)
4.9
49.50%
2.36%
18.34%
17.04%
2Q 2008
1 001.1
710.1
120.1
68.3
(4.2)
124.5
(60.1)
(14.0)
10.1
69.66%
1.82%
14.84%
16.70%
2008 F*
1 271.7
883.6
127.0
154.0
(12.7)
278.9
(142.7)
(33.5)
21.2
65.26%
1.49%
13.03%
17.89%
Contact information
Mr. Viktor Guroma,Head of FI Department, �TreasuryPh. 38 044 3915135Fax 38 044 3915111Email: [email protected]
Mr. Vitaliy Masyura,First Deputy Chairman ofthe Board of DirectorsPh. 38 044 3915100Fax 38 044 3915112Email: [email protected]
Mr. Oleksiy Sukovaty,Deputy Head of FI and Debt Origination Division, TreasuryPh. 38 044 3915135Fax 38 044 3915111Email: [email protected]
Disclaimer
The information contained herein has been obtained from sources believed by Delta Bank (‘Delta’) to be reliable.Whilst all reasonable care has been taken to ensure that the facts stated herein are accurate and that the opinions and expectations contained herein are fair and reasonable, no representation or warranty, express or implied, is made by Delta or any of its respective agents or affiliates with respect to the fairness, completeness, correctness, reasonableness or accuracy of the information, opinions and expectations contained herein.Any opinion, estimate or projection in this presentation constitutes an opinion, estimate or projection as of the date of this presentation, and there can be no assurance that the future financial or other performance of Delta will be consistent with any such opinion, estimate or projection.The information in this presentation is subject to change without notice, it may be incomplete or condensed, and it may not contain all material information concerning Delta.