Presentation of Komercijalna Banka AD Skopje as at ... Presentation of Komercijalna Banka AD Skopje...

Presentation of Komercijalna Banka AD Skopje

as at December 31, 2017


2

Contents • Komercijalna Banka Overview 3 • The Republic of Macedonia 11 • The Macedonian Banking Sector 13 • Komercijalna Banka Financial Overview 21

Skopje, March 2018

Komercijalna Banka Overview


4

Skopje, March 2018

Overview (I): A cornerstone of Macedonia’s financial sector...

Leading Market Position • Expected to keep market position as one of the leading banks in Macedonia with assets (EUR 1,715.4 m) and deposits from

customers (EUR 1,470.1 m) and in terms of net loans to customers (EUR 737.8 m) as at December 31, 2017. Customer Base • Leading corporate customer base (34,695 customers*) • Second largest retail customer base (930,068 customers) One of Macedonia’s Most Prominent Financial Institutions • Long-standing history • Well-established customer relationships Strong Brand Recognition • Associated with quality, innovation and trustworthiness Modern Corporate Governance Structure • Privatisation completed with 98.75% private ownership (30.2% foreign, as at December 2017) and about 1.25% held by the

Public sector • Diversified ownership structure with one single shareholder owning 10% (East Capital Explorer Investments AB, Stockholm,

Sweden) • EBRD has sold its share from 5.245% in November 2017. • Comprehensive, ‘best-practise’ corporate governance • Rigorous risk management and money laundering practices

* resident and non-resident corporate customers


5

Skopje, March 2018

Overview (II):...with a track record of significant achievements...

Experienced Team of Executives • Providing leading position in number of areas combined with maintaining stable market position

• History of product innovation and investments in new technologies Well Invested Distribution channels • Very well presented branch network covering all major cities and economically significant regions • Rapidly developing multi channel distribution network comprising POS Terminals, ATM’s, Info kiosks, E-Banking (both retail

& corporate, as well as f/x and in denars), Telephone banking, m-banking Fully Integrated IT platform • State-of-the-art system • Fully protected and readily upgradeable Driver of Sector Innovation • First to issue credit cards (1996) • First to operate ATMs and POS terminals (1996) • First to establish a dedicated brokerage house (1997) • Founded one of the country’s two second pillar pension funds (2005) • Founded the investment fund KB Publikum Invest AD (2009) • First issuer of contactless card payment (2015) • Introduction of 3D secure technology for safe on-line purchasing with VISA and MasterCard cards (2016) • Acceptance of MasterCard cards with BIN 2 (2016) • Creation of new investment fund KB Publikum MBI 10 by the investment fund KB Publikum Invest AD (2017) Profitable Operation with Sound Asset Quality • History of profitable operations • Adequately provisioned loan portfolio


6

Skopje, March 2018

Overview (III):...a long-standing successful history...

1955

1963

1966

1973

1990

Established as Komunalna Banka under municipal ownership

Leading role in rebuilding the economy and housing after disasterous earthquake in Skopje

Name change to Komercijalno Investiciona banka Skopje and merger with 3 banks

Operating as Stopanska Banka, Skopje Branch as part of an integrated banking system

Incorporated as an open joint stock company Start of a significant expansion phase based on organic and acquisitive growth establishing nationwide coverage


7

Overview (IV): ...the largest distribution network in the country... 68 branches including headquarters as at December, 2017

- Coverage of all major cities and economically significant regions

- 57 city branches (39 in Skopje and 18 regional)

- 11 regional branches Largest ATM network in the country

- 157 active ATMs as at December 2017. (158 as at December 2016) Total number of sales points*: – 5,235 as at December 2017 (5,193 in

December 2016); – Average number of active sale places** is

4,171 in December 2017; (3,947 in December 2016).

State-of-the-art IT infrastructure – Fully integrated – Real time

*According to the new methodology of NBRM for representation of this type of data. **an active sale place is the one where at least one transaction has been performed.

Branch Network

Skopje, March 2018


8

Skopje, March 2018

Overview (V): ...and an enviable market position

Market share of Komercijalna Banka AD Skopje as at 31.12.2017

Total assets 22.7% Capital and reserves 20.4%

Total deposits from non-financial sector 26.6% Total net-loans to non-financial sector 16.4%

Total number of issued cards 12.6% - debit cards 13.2% - credit cards 10.5% Total number of POS and ATM acquiring cards 18.0% Credit transfers in the country

- by value 24.1% - by number of transactions 20.9% Total number of transactional accounts 19.3% Total number of deponents 44.0%

Total trading realized at the MSE 17.2% Total number of transactions realized at the MSE 29.6%


9

Skopje, March 2018

Overview (VI): ...International banking awards

Bank of the Year for: • 2001 • 2002 • 2004 • 2005

• 2010 • 2011 • 2012

• The Best Bank for 2002, 2003 & 2004 • The Best Bank by Assets Strength for 2005,

2006 & 2007 • The Best Bank by Capital Strength for 2005 • The Best Bank by Gross Profit for 2005 &

2007 • The Best Bank by ROE for 2007

• The Best Bank in Macedonia for:

o 2004, 2005 o 2006, 2007 o 2008, 2009 o 2010, 2011 o 2012 & 2013 • Best foreign exchange for 2013 & 2014

• Best Internet Bank in Republic of Macedonia for 2015

• Best FX service provider in Macedonia for 2017 & 2018

• Best Developing Trade Financier for 2003, 2004, & 2008;

• Most active issuing bank In RM in 2009 • Award for most active participant in the

program of EBRD TFP (Trade Facilitation Program) for 2014, 2015 & 2016 (already 13 years in a row).

2007 Participant in the best financial deal

STP Excellence Award for: • 2007 • 2009 • 2010 • 2011 & • 2014

Euro STP Excellence Award for 2014

Award for excellent quality for performing payment and financial transfers – STP (Straight-Through-Processing) Award for 2016

http://upload.wikimedia.org/wikipedia/en/4/48/Deutsche_Bank-Logo.svg�


10

Skopje, March 2018

Overview (VI-continuing): ...Domestic banking awards

• National prize for the social responsibility practice of companies in Republic of Macedonia for 2008, 2009, 2011 & 2014.

Awards from the Macedonian Stock Exchange: • The most transparent company for : o 2008, 2009 o 2010, 2011 o 2014, 2015 & o 2016 (II place) • Plaque for achieving first place in turnover and number

of transactions carried out in 2012 and 2014; second place in 2016

• second place in 2015 - Award for listed company with biggest turnover and number of transaction

• Award for listed company with largest turnover in the last 20 years from the existence of the MSE;

• Award for MSE`s member with largest number of transactions and largest turn-over in the last 20 years from the founding of the MSE.

• Super brand in Macedonia for 2009 • Super brand in Macedonia for 2015/2016

Non government organization Transparency zero corruption

• Award for Corporate Social Responsibility Integrated Approach for 2009, 2010 and 2011

• Gold Supporter Award 2012

• Web site of the year for 2014 - under sponsorship by the Ministry of Information Technology

Red Cross of the Republic of Macedonia

• Prize for best corporate governance

The Republic of Macedonia


12

Skopje, March 2018

The Republic of Macedonia - Macroeconomic Environment:

In August 2017, The Fitch agency has confirmed the Macedonia’s rating “BB” and pointed out the credible monetary policy and solid and prudential macroeconomic policies of the country as providers of stability of exchange fx rate, low inflation and stable economic growth. In September 2017 the Credit Rating agency “Standard & Poor’s” has confirmed the credit rating of Macedonia in domestic and foreign currency to “BB- stable“, reflection of the balanced risks between public debt and political uncertainty from one side and good economic perspectives on the other side.

(1) Source: Ministry of Finance, State Statistical office, NBRM (2) Estimated data; * Q4 2017;

Key economic indicators (1) 2015 2016 2017

Industrial production volume index 4.9% 3.4% 0.2%

External Trade of RM (%) 10.8% 5.4% 16.0%

Real GDP growth (%) 3.9 (2) 2.9(2) 0.0

Central Government Budget surplus/deficit (% of GDP) -3.5 -2.6 -0.9*

Inflation (CPI%) av. -0.3 -0.2 1.4 Current Account Bal.(EUR'm) -177.1 -265.0 -133.7* Gross External Debt (EUR'm) 6,290 7,217 7,403

FX Reserves (EUR'm) 2,261.8 2,613.4 2,336.3 Foreign direct invest.(EUR'm) 202.8 316.9 229.1 Unemployment Rate (%) 26.1 23.7 21.9* MKD/EUR year end. 61.61 61.60 61.57

The Macedonian Banking Sector


14

Structure • 15 active banks (5 large*, 7 medium and 3 small) • 2 saving houses Characteristics • High concentration with the large banks • Low level of financial intermediation Significant growth prospects • Continuous growth of the level of privatization • Continuous growth of the participation of the foreign capital • Improvement of the ownership structure • Increased network • Continuous growth of the total assets, • Growth in loans • Increase of deposits, despite the worsening of the political situation in Republic of Macedonia • Increased banking capital • Constant increase in profitability and efficiency

Skopje, March 2018

Macedonian Banking Sector (I): The structure and the characteristics as at 31.12.2017

*As at 31.12.2017, the group of large banks is consisted of the following banks: Komercijalna Banka AD Skopje, Stopanska Banka AD Skopje, NLB Banka AD Skopje, Ohridska Banka AD Skopje and Halk Bank AD Skopje


15

Skopje, March 2018

Macedonian Banking Sector (II) ...assets...

6,878

7,233

7,513

6,500 6,600 6,700 6,800 6,900 7,000 7,100 7,200 7,300 7,400 7,500 7,600

2015 2016 2017

Total assets (EUR'm)

Total assets


16

Skopje, March 2018

Macedonian Banking Sector (III) ...and placements to non-financial entities...

3,967 4,216 4,494

0

1,000

2,000

3,000

4,000

5,000

2015 2016 2017

Placements to non-financial entities (net) (EUR'm)

Placements to non-financial entities (net)


17

Skopje, March 2018

Macedonian Banking Sector (IV) ...and deposits from non-financial entities...

4,971

5,250

5,518

4,600 4,700 4,800 4,900 5,000 5,100 5,200 5,300 5,400 5,500 5,600

2015 2016 2017

Deposits from non-financial entities (EUR'm)

Deposits from non-financial entities


18

Skopje, March 2018

Macedonian Banking Sector (V) ...and capital & reserves...

745 768

814

700 720 740 760 780 800 820

2015 2016 2017

Capital & reserves (EUR'm)

Capital & reserves


19

Skopje, March 2018

Macedonian Banking Sector (VI) ...and financial results...

75.3

102.9 106.6

0.0

20.0

40.0

60.0

80.0

100.0

120.0

2015 2016 2017

Net profit (EUR'm)

Net profit


20

Skopje, March 2018

Macedonian Banking Sector (VII) ...and increased profitability…

233.0

250.3

254.2

1.1% 1.5%

1.4%

10.4%

13.6% 13.5%

-0.5%

1.5%

3.5%

5.5%

7.5%

9.5%

11.5%

13.5%

15.5%

220.0

225.0

230.0

235.0

240.0

245.0

250.0

255.0

260.0

2015 2016 2017

Profitability indicators (EUR'm and %)

NII ROAA ROAE

Komercijalna Banka Financial Overview


22

Skopje, March 2018

Financial Performance (I): Highlights Financial Performance (I):

• In 2013 Komercijalna Banka AD Skopje acquired 200 ordinary shares issued by Investment fund Management Company KB Publikum Invest AD Skopje in total amount of EUR 200 thousand. The share of Komercijalna Banka AD Skopje increased from 50% to 64.29%.Thus, KB Publikum became subsidiary of the Bank.

• Pursuant to legislation, financial statements of subsidiary are incorporated in consolidated financial reports, starting from the date the control commences. * o As at 31.12.2017 the amount of total assets on consolidated basis is EUR 1,715.5 million, o the amount of total capital and reserves is EUR 189.1 million, o the amount of consolidated net profit is EUR 20.4 million, o Total assets of subsidiary on 31.12.2017 represents less than 1% of the total Bank’s assets.

• According to the Decision on consolidated supervision by NBRM (Official Gazette of the RM No.17/2008) if the amount of total assets of subsidiary is less than 1% of the amount of total assets of the parent entity, then subsidiary will not be included into the consolidated financial reports for the purposes of consolidated supervision. Therefore, the capital adequacy is not calculated on consolidated basis.

• The data from Income statement and Balance sheet in this presentation are on unconsolidated basis

* The Bank prepares semi-annual and annual consolidated financial reports in accordance with the requirements of NBRM


23

Skopje, March 2018

Key Performance Indicators 2006 2007 2008 2005

Net Interest margin 5.3% 3.8% 3.9% 4.1% 3.5%

Net fees and Commission / Income

Cost / Income

NPLs / Total Exposure

Net Loans / Deposits (Customers)

ROE (1)

Financial Performance (II): Highlights

23.0%

54.5%

9.1%

72.6% 42.4%

8.9%

1.0%

72.6%

14.8%

24.8%

56.6%

6.9 %

81.2 %

47.4 %

16.6 %

1.7 %

11.8 %(2)

24.5%

45.8%

5.2%

83.9%

54.3%

19.2%

1.9%

10.5%

20.3%

45.8%

5.4%

79.0%

76.6%

22.0%

2.5%

9.9%

6.2%

53.0%

78.1%

89.9%

15.5%

1.8%

10.6%

Key Performance Indicators 2015 2016 2017

Net Interest margin 3.73% 3.64% 3.21%

Net fees and Commission / Income 20.0% 19.0% 17.1%

Cost/Income 37.3% 36.5% 35.8%

NPLs / Total Loans 21.35% 15.84% (1) 15.51%

NPL Coverage 85.81% 83.75% 79.38%

Net Loans to customers / Deposits from customers 57.5% 52.6% 50.2%

ROE(2) 5.0% 7.2% 10.6%

ROA(2) 0.5% 0.8% 1.2%

Capital adequacy 13.81% 15.23% 15.99%

(1) Result of write-offs according to NBRM decision on credit risk(2) (2) After taxation


24

Skopje, March 2018

Financial Performance (III): Financial indicators

1) Last traded price 2) Calculation according data in MKD

Financial indicators 2015 2016 2017

Earnings per share (EPS) 3.61 5.52 8.76

Book value (BV) 72.7 76.3 82.7

Market price per share (1) 37.3 46.8 45.2 Dividend Yield 5.43% 5.21% 6.48%

Price/Earnings (P/E) (2) 10.35 8.48 5.16 Price/Book value (P/B) (2) 0.51 0.61 0.55 Price/Total assets (P/A) (2) 0.054 0.065 0.060

Market capitalization (in mill. EUR) 85.1 106.8 103.0


25

Skopje, March 2018

Financial Performance (IV):Income statement (IFRS) in million EUR

2015* 2016*

2017*

Index 16/15

Index 17/16

Net interest income 51.6 50.1 54.0 97.1 107.8

Net fee & commission income 14.6 14.1 13.4 96.8 95.0 Other income 6.8 10.2 11.1 150.0 108.8 Total income 73.0 74.4 78.5 101.9 105.5

Operating expenses -36.5 -33.2 -28.4 91.0 85.5 Impairment losses -27.9 -27.8 -28.8 99.6 103.6 Operating profit 8.6 13.4 21.3 155.8 159.0

Share of loss from associate 0.6 0.7 0.9 116.7 128.6 Profit before tax/loss 9.2 14.1 22.2 153.3 157.5

Taxation -1.0 -1.5 -2.2 150.0 146.7 Profit after tax/loss 8.2 12.6 20.0 153.7 158.7

* * Unconsolidated data


26

Skopje, March 2018

Financial Performance (V): Balance sheet (IFRS) in million EUR

* Unconsolidated data

2015*

2016* 2017*

Index Index

16/15

17/16 Assets

Cash and cash equivalents 449.1 545.5 605.1 121.5 110.9 Customer loans 773.5 736.3 737.8 95.2 100.2

Bank placements and loans 149.5 164.0 94.9 109.7 57.9

Total loans and placements 1,372.1 1,445.8 1,437.8 99.3 99.4 Other assets 208.0 195.4 277.6 93.9 142.1 Total assets 1,580.1 1,641.2 1,715.4 103.9 104.5

Liabilities Total deposits 1,367.4 1,428.0 1,491.5 104.4 104.4

Borrowings & other liabilities 47.0 39.3 35.5 83.4 90.3 Total liabilities 1,414.4 1,467.3 1,527.0 103.7 104.1

Shareholders funds Share capital 37.1 37.1 37.1 100.0 100.0 Share premium 12.5 12.5 12.5 100.0 100.0 Reserves 105.1 109.2 116.4 103.9 106.6

Retained earnings 11.0 15.1 22.4 137.3 148.3

Shareholders funds 165.7 173.9 188.4 104.9 108.3

Total liabilities and shareholders funds 1,580.1 1,641.2 1,715.4 103.9 104.5


27

Skopje, March 2018

Financial Performance (VI): Total Assets

(1) Total balance sheet assets (based on net loans after provisions)

0 200 400 600 800

1,000 1,200 1,400 1,600 1,800 2,000

2015 2016 2017

Total assets (1) (in million EUR)

Placements to banks Loans to customers Cash and equivalents Other assets

1,580

10% 45%

33% 12%

10% 49%

28% 13%

1,641

1,715

6%

43% 35%

16%


28

Skopje, March 2018

Financial Performance (VII): Gross Loans to Customers

753.0 646.2 637.0

219.2 218.5 221.0

2015 2016 2017

Total Loans - Corporate vs Retail (EUR'm)

Corporate loans Retail loans

864.7 972.2 858.0

25%

77%

23%

75%

26%

74%


29

Skopje, March 2018

Financial Performance (VIII): Liabilities

(1) Total deposits include deposits from banks which represent 1.4% within total liabilities in 2017

97%

97%

98%

3%

3%

2%

2015 2016 2017

Total Liabilities (EUR'm)

Total deposits Borrowed funds & other liabilities

1,527

1,467.3

1,414.4


30

Skopje, March 2018

Financial Performance (IX): Deposits – Customer Breakdown

(1) Corporate deposits include deposits from banks which represent 1.4% within total deposits in 2017.

1,008.1 1,016.1 1,073.5

359.3 411.9 418.0

2015 2016 2017

Deposits by customer category (EUR'm)

Retail deposits Corporate deposits

1,428.0 1,491.5

1,367.4

72%

28% 71%

29%

74%

26%


31

Skopje, March 2018

Financial Performance (X):Shareholders Equity and Capital Adequacy

30% 28% 26%

63% 63% 62%

7% 9% 12%

13.81%

15.23% 15.99%

9.00%

10.00%

11.00%

12.00%

13.00%

14.00%

15.00%

16.00%

17.00%

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

2015 2016 2017 Share capital incl.share premium Reserves Retained earnings Capital adequacy

Shareholders Equity and Capital Adequacy (EUR'm)

165.7 173.9 188.4


32

Skopje, March 2018

Financial Performance (XI): Income Breakdown

73.0 74.4 78.5

51.6 50.1 54.0

14.6 14.1 13.4 6.8 10.2 11.1

2015 2016 2017

Income (EUR'm)

Total income Net interest income Fee and commission income Other income


33

Skopje, March 2018

Financial Performance (XII): Expenses Breakdown

37%

41%

49%

11%

12%

14%

8%

9%

10%

14% 15%

17%

30% 23%

10%

2015 2016 2017

Operating expenses (EUR'm)

Wages, salaries and other employees' costs Materials and services

Depreciation and amortization Insurance

Other expenses

33.2 36.5 28.4


34

Skopje, March 2018

Financial Performance (XIII): Efficiency

73.0 74.4

78.5

37.3%

36.5%

35.8%

35.60%

35.80%

36.00%

36.20%

36.40%

36.60%

36.80%

37.00%

37.20%

37.40%

70.0

71.0

72.0

73.0

74.0

75.0

76.0

77.0

78.0

79.0

2015 2016 2017

Total income and efficiency (million EUR and %)

Total income Cost/Income

35

Skopje, March 2018


Financial Performance (XIV): Non-Performing Loans

Total loans % % NPL provisions NPLs/Total loans NPL provisions/NPLs

8.1% 8% 9.6% 7% 10% 78.8% 83.8% 89.8% 84% 92.6 87.3% 10.7% 89.8%

NPL

(1) Gross corporate and retail loans excluding bank placements (2) Effect of write-offs as per the amendments of the Decision on Credit Risk Management

864.7 858.0

207.6 137.0 133.1

178.1 114.7 105.6

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

2015 2016 2017

Total loans (1) vs Non-Performing Loans (EUR'm)

15.5% 15.8% 21.4% 79.4% 83.7% 85.8% 79.2%

972.2


36

Skopje, March 2018

Financial Performance (XV): Credit portfolio Quality

69.8%

87.9% 87.6%

6.0% 3.5%

4.5% 5.6%

0.8% 0.8% 18.6% 7.8%

7.1%

2015 2016 2017

Credit Risk Categories (%)

A B C D&E


37

Skopje, March 2018

Important Notice

Thank you!

Presentation of Komercijalna Banka AD Skopje as at ... Presentation of Komercijalna Banka AD Skopje...

Documents

Transcript of Presentation of Komercijalna Banka AD Skopje as at ... Presentation of Komercijalna Banka AD Skopje...