MBH Bank PLC. Class A · BET:MKBBANK
MBH Bank PLC. Class A — MKB Bank — FY2019 Earnings Presentation
48 slides from MBH Bank PLC. Class A's earnings presentation, Mar 25, 2020
Slide 1: MKB Group 2019 Flash Report presentation
2019 MKB Group Flash Report presentation Budapest, 25 March 2020
Slide 2: Executive summary
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 3: Executive summary Overview
• EU Commitments fulfilled: Uniquely in Europe, MKB has closed TOCI PAT the restructuring period with an outstanding financial result • Record profit in 2019: HUF 37.4 bln (HUF 44.1 bln unadjusted), HUF54.1%34.08 bln HUF 37.36 bln 21.2% ROAE ; -72.5% 5.6% ; -82.8% • Capital position further
Slide 4: Key factors – 2019
• Strong push for decreasing costs: EU Commitments Realignment resulted in decreasing personnel expenses and improving organizational efficiency. Wage inflation partially neutralised the gains Bonus and welfare costs was strongly bound to profitability RWA Total Assets • Ongoing balance sheet
Slide 5: COVID-19
Rating MKB Bank’s credit ratings by Moody’s Investor Service has been upgraded to Ba3 on 28 January 2020 confirming the achievements of MKB Bank. MKB Bank successfully launched its instant payment system („AFR”) solution on 2nd March 2020. Problem- AFR free operation creates the foundation for furth
Slide 6: Business environment
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 7: Outstanding results in 2019
Adjusted profit after tax Adjusted ROAE (%) Cost/income ratio (HUF bln) (%, adjusted) • 21.20% ROAE stands out from the competition 80 40 100 • HUF 37.4 bln profit 23.73% 57.57% 55.03% 54.16% 80 21.20% 51.05% 60 (adjusted) means higher than 18.63% 37.36 35.37 14.28% 60 total asset based market 25.18
Slide 8: Business environment: yields, inflation, wages
• Yield curves were shifted 340 EUR/HUF rate Average inflation and wage growth (y/y %) downwards - spreads narrowed 4Q 335 significantly 330 +6.48 • Wage inflation remained high 325 320 HUF/EUR putting stress on wages (11.4% +2.80% 315 yearly average) 310 • Inflation rate started to grow in 4Q - 305
Slide 9: Financials at a glance MKB Group
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 10: Profit after tax and business corrections
Profit after tax (HUF bln, YTD, unadjusted) and ROAE (%) 75.7% y/y increasing cumulated profit after tax: HUF 7.9 bln profit added in 4Q: 44.1 Stable core income 7.9 36.2 Favourable ALM results from fruitful portfolio adjustments in +76% 2H 25.1 Costs increase: IT OPEX and bonus related cost b
Slide 11: Adjusted PAT and TOCI
Total Comprehensive Income Adjusted Total Comprehensive Income (YTD, HUF bln) (YTD, HUF bln) Y/Y change TOCI (adjusted) increased by HUF bln % HUF +12.0 bln y/y +30.89% 44.1 7.9 4Q 35.4 37.4 3.7 +2.0 +5.62% • Sustainable profit genera- tion (+5.6% y/y) based on PAT 25.1 25.2 19.2 16.7 slightly incre
Slide 12: Financials at a glance MKB Group
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 13: Excellent performance in 2019; higher incomes and lower costs
2017 2018 2019 Y/Y (Y) P/P Y/Y (P) P&L (HUF bln) 4Q(Y) 4Q 4Q(Y) 3Q 3Q(Y) 4Q 4Q(Y) % % % Net operating income 1 36.6 -0.5 33.1 25.6 33.9 5.6 39.5 19.28% -78.08% - Gross operating income 1 81.4 14.0 78.0 33.8 60.4 20.2 80.7 3.39% -40.23% 44.05% Net interest income 39.58 9.40 40.50 10.48 32.01 8.80 40.
Slide 14: Adjusted PAT
Y/Y change 33.8 HUF bln % 20.2 • HUF 20.2 bln gross income: stable Core income 14.0 15.5 +6.2 +44.0% (HUF 19.6 bln; +5.2% y/y) supported by positive 11.1 GOI ALM FVTPL results. Realisation of the underlying results of the ALM portfolio were still ongoing in 4Q 2018 1Q 2019 2Q 2019 3Q 2019 4Q 2019 4Q
Slide 15: Ongoing balance sheet management to cover EU commitments
2017 2018 2019 Y/Y P/P Balance sheet (HUF bln) 4Q 4Q 3Q 4Q % % • EU restriction induced balance sheet Financial assets 109.6 82.9 95.5 117.8 42.16% 23.34% management resulted in 5.6% y/y total assets decrease Trading portfolios 72.3 79.3 44.4 20.7 -73.87% -53.28% Securities 902.7 710.7 757.3 594.7 -
Slide 16: Cost-to-income ratio shows improved efficiency
2017 2018 2019 KPIs based on adjusted PAT Y - Y (Y) P-P Y - Y (P) 4Q(Y) 4Q 4Q(Y) 3Q 3Q(Y) 4Q 4Q(Y) Profitability TRM - Total revenue margin 3.83% 2.87% 3.89% 7.20% 4.28% 4.38% 4.31% 0.4%-pt -2.8%-pt 1.5%-pt NIM - Net income margin 1.86% 1.92% 2.02% 2.23% 2.27% 1.90% 2.18% 0.2%-pt -0.3%-pt 0.0%-pt NF
Slide 17: Volume KPIs and portfolio quality
2017 2018 2019 4Q 4Q 3Q 4Q Y-Y P-P YTD • 51.05% CIR (-6.5%-pt y/y) showing Volume KPIs improved cost efficiency and sustainability LTD - Loan to deposit ratio 61.0% 70.36% 72.19% 79.63% 9.3%-pt 7.4%-pt 9.3%-pt Securities ratio 44.1% 41.56% 40.26% 34.07% -7.5%-pt -6.2%-pt -7.5%-pt • 4.18% Core income
Slide 18: Capital position
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 19: Capital development
Capital (HUF bln) +25.48% HUF 40.3 bln (+25.5% y/y) capital 198.5 accumulated in 2019: 44.1 7.9 190.5 +7.9 • Record profit of HUF 44.1 bln (unadjusted) in 2019 44.1 36.2 36.2 • HUF -3.3 bln OCI driven by ALM 158.2 portfolio restructuring in 2H 4.1 -4.7 4.0 0.1 -3.1 -0.1 25.1 -3.3 HUF 7.8 bln TOCI in
Slide 20: HUF 30 bln addition to regulatory capital in 2019
Total RWA (HUF bln), CAR (%) Development of regulatory capital (HUF bln) +19.22% 936.8 930.8 920.8 907.8 919.5 870.2 -8.01 22.59% 43.24 -4.09 0.08 196.55 -1.53 164.87 166.99 19.32% 4.16% -0.13 36.22 17.90% 18.16% -4.80 10.07 -3.15 15.73% 4.13% 3.04% 4.11% Tier2 28.00 37.75 2.40% 12.04% Tier2 18.42%
Slide 21: Business income
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 22: Net interest and net fee income
Y/Y change HUF bln 10.8 • Slight decrease in net interest income: Net interest 10.7 10.5 9.4 8.8 -0.6 income robust customer net interest income despite submerging yields and RWA limited lending Banking book net interest affected by ALM portfolio 4Q 2018 1Q 2019 2Q 2019 3Q 2019 4Q 2019 adjustmen
Slide 23: General administrative expenses
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 24: Improved cost efficiency, CIR
Cost level on 2015 basis(HUF bln) Cost rates (cumulated, %) 69.35% -8.3% 56.5 58.7 58.05% 53.9 55.0 54.16% 52.9 52.9 -29.9% 53.22% 44.8 44.9 57.57% 41.2 55.03% 46.37% 36.4 51.05% 48.46% 43.96% 2016 2017 2018 3Q(Y) 2019 2019 CIR Cost/(income+OCI) 2015 2016 2017 2018 2019 Inflation adjusted 2015 GAE G
Slide 25: Breakdown of general administrative expenses
Breakdown of GAE (HUF bln) Temporary administrative expenses increase in 4Q 7.3 7.5 +3.3% • Personnel expenses in 4Q affected by profitability-bound bonus costs 4.9 4.5 4.5 Savings stemming from headcount reduction in Personnel expenses 2019 was neutralized by wage inflation HUF 21.3 bln personnel e
Slide 26: Portfolio quality
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 27: NPL, NPE and DPD90+ portfolio
NPL, NPE and DPD90+ portfolio (HUF bln) NPL coverage and NPL rate (IFRS*) DPD90+ coverage and DPD90+ rate NPL % -47.48% 110.7% 110.3% 183.37% 81.5 99.5% 12.0% 169.55% 10.0% DPDP90+ rate 0.8 65.4 87.0% 85.3% 10.0% 142.09% 148.88% 1.1 8.4% 69.2% 69.0% 70.2% 72.0% 118.92% 49.3 65.8% 8.0% 46.1 43.4 42.8
Slide 28: Non-performing portfolio build-down
Non-performing portfolio build-down (NPE*) (HUF bln) • Portfolio cleansing: during 2019, MKB Bank completed NPL portfolio divestments in total of HUF NPL rate 8.35% 4.30% 41 bln (-52.4%) • HUF 22.5 bln retail portfolio batch sales 81.48 7.25 4.99 • Total of HUF 18.5 bln corporate deal volume Off-bal
Slide 29: Business segments results
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 30: Loan volumes increase in low RWA segments
Breakdown of gross customer loans1 Breakdown of deposits 1,2 Number of clients (HUF bln) (HUF bln) (thousand) +11.4 -3.0 -145.5 974.2 986.0 976.7 1,410.2 266.5 965.3 967.7 1,372.0 1,365.9 259.8 261.8 260.9 36.8 263.5 1,330.2 3.4 4.6 4.0 1.2 4.6 1.2 9.6 1,226.5 43.3 41.5 39.1 32.2 42.6 582.8 569.0 4.
Slide 31: Business segments results
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 32: Balance sheet management limits growth
Gross corporate loans* breakdown (HUF bln) and Corporate deposit* (HUF bln) and market Corporate client numbers (in thousands) market share** (%) share** (%) -7.91% 43.3 42.6 6.10% 6.06% 5.67% 5.13% 41.5 40.2 4.88% 7.26% 39.1 7.09% 6.85% 6.63% 3.5 454.7 462.0 458.4 28.3 427.0 424.5 5.80% 29.4 29.1 2
Slide 33: Investment loans
Volumes (HUF bln) New disbursement (HUF bln) -1.05% 11.7 -13.56% • Investment loans decreased by 1.05% 110.7 116.2 112.1 114.6 109.6 10.5 (y/y): closing volume amounted to HUF 109.6 bln, making up 25.8% of the 8.2 7.9 corporate loans 7.1 Investment loans* • Disbursement of HUF 37.2 bln in 2019: slig
Slide 34: Business segments results
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 35: Leasing: continuous growth of the portfolio
Gross volumes by customers (HUF bln) Active clients (in thousands) +11.49% 43.7 45.3 168.1 168.4 42.9 163.8 40.7 38.1 154.5 18.2 151.1 26.5 28.1 19.8 17.2 25.5 16.3 15.5 24.5 23.8 119.7 127.4 130.2 130.1 23.8 24.2 25.5 26.9 22.5 115.4 11.9 10.4 11.0 11.3 10.2 0.1 0.1 0.1 0.1 0.1 4Q 2018 1Q 2019 2Q 2
Slide 36: Rapid growth in car stock financing
Stock financing Retail car financing Wholesale, agricultural and machine (HUF bln) (HUF bln) financing (HUF bln) +26.97% +18.19% 53.9 21.8 50.2 50.8 51.9 20.4 102.9 49.1 18.9 98.7 89.8 94.1 16.9 17.0 87.0 16.3 15.8 15.0 13.4 12.5 10.6 11.1 13.7 14.0 14.2 7.0 5.1 4.4 3.8 3.9 4Q 2018 1Q 2019 2Q 2019 3
Slide 37: Business segments results
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 38: Strong loan disbursement due to Babaváró programme
Retail gross loans* (HUF bln) and market share** Deposits* (HUF bln) and market share** Retail client number (%) (%) (in thousands) 3.99% 3.88% 3.75% 3.32% 3.33% 3.13% 3.22% 3.21% 3.10% 3.01% 179.5 179.0 179.7 177.7 176.8 3.4 4.0 4.6 4.6 6.2 245.5 241.1 239.3 236.9 227.4 +9.5 288.9 287.5 283.1 286.5
Slide 39: Unsecured loans
Volumes (HUF bln) and market share (%) New disbursement(HUF bln) and market share (%) 5.30% 5.18% 5.03% 4.57% 4.43% 2.58% 2.38% 1.88% 2.03% 1.90% • Secured loans slightly decreased (HUF -3.5 bln q/q) due to the continuous demand for 231.4 227.0 „Babaváró” loan and the sale of non- 223.9 5.8 204.4 20
Slide 40: Business segments results
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 41: Private Banking and Treasury savings
Corporate* savings (HUF bln) Retail savings (HUF bln) and market share** (%) • The introduction of MÁP+ securities had a material but in Q4 decreasing effect on deposits and 1,508.0 1,516.6 4.24% 4.11% 1,447.0 1,473.6 1,418.3 3.94% 3.82% 3.74% investment funds. 408.9 382.3 379.4 358.9 401.5 784.9 77
Slide 42: Annexes
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 43: Investment funds and managed portfolios
Breakdown of investment funds (HUF bln) +11.3% 4.7% 4.4% 4.4% 4.4% 4.4% 307.1 272.6 279.4 273.9 276.0 • Increasing Investment Fund portfolio: despite the outflow generated by MÁP + at summer, investment fund portfolio 238.6 244.3 238.6 240.0 271.8 increased by 12.6% y/y, driven by yield and inflow i
Slide 44: MKB Funds
Breakdown of total fund assets Number of members (thousand pax) • MKB Voluntary Pension Fund had a (HUF bln) membership count of 83.4 thousand +5.04% persons, while its funds on the personal accounts reached HUF 138.2 bln by the 158.5 86.7 end of 2019 154.3 154.4 155.1 85.8 150.9 85.0 134.6 134.6 13
Slide 45: Annexes
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 46: Abbreviations
MKB, MKB Bank, MKB Group y/y Year on year MKB Group p/p Period on period EU commitments Required range of certain EU Commitments marked in brackets, as defined bp Basis point in the following public document: CAGR Compounded Annual Growth Rate https://ec.europa.eu/competition/state_aid/cases/261437/
Slide 47: Disclaimer
Executive summary Business environment Financials at a glance MKB Group Adjusted Profit After Tax, Total Comprehensive Income Profit and Loss, KPIs Capital position Business income General administrative expenses Portfolio quality Business segments results Corporate segment Leasing segment Retail se
Slide 48: Disclaimer
DISCLAIMER This presentation contains statements that are, or maybe deemed to be, “forward-looking statements” which are Investor Relations prospective in nature. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding Email: [email protected] futur