ca~ib annual emerging europe conference 5-6 october 2006, istanbul
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CA~IB Annual Emerging Europe Conference5-6 October 2006, Istanbul
2
Overview
BRD, the second largest bank in Romania, is part of the Societe Generale Group, one of the leading financial services provider in Europe (45,1 bln. Euro market capitalization).
BRD – GSG is operating as a universal bank, active in retail, corporate and investment banking, directly or through subsidiaries: BRD SOGELEASE – financial and operational leasing; ALD AUTOMOTIVE – car fleet management; BRD FINANCE – point of sale consumer loans; BRD SECURITIES – brokerage house; SG ASSET MANAGEMENT BRD – asset management firm; BRD/SG CORPORATE FINANCE – investment banking advisory services.
3
Summary
I. Key figures
II. Strong five-years performance
III. Positive outlook in the context of EU integration
4
Share capital EUR 210 million
Shareholder’s Equity EUR 546 million
Number of shares 696,901,518
Nominal value of the shares EUR 0,3
Market capitalisation (August 2006) EUR 3.5 bil
BRD, Key FiguresBRD, Key Figures
Societe Generale 58,33%
Others11.43%
BERD4,99%
SIF Banat Crisana4,73%
SIF Oltenia5,34%
SIF Muntenia5,27%
SIF Transilvania5,00%
SIF Moldova5,05%
5
STEADY GROWTH OF SHARE PRICESTEADY GROWTH OF SHARE PRICE
BRD, Key FiguresBRD, Key Figures
BRD capitalization exceeds 1 bilEUR
Variation of BRD shares price compared to BET
(1 January 2001 = 100)
0
500
1,000
1,500
Jan-
01
Apr-0
1Ju
l-01
Oct-
01
Jan-
02
Apr-0
2Ju
l-02
Oct-
02
Jan-
03
Apr-0
3Ju
l-03
Oct-
03
Jan-
04
Apr-0
4Ju
l-04
Oct-
04
Jan-
05
Apr-0
5Ju
l-05
Oct-
05
Jan-
06
BRD
BET
CBRD capitalization exceeds 1 bil EUR
BRD capitalization exceeds 2 bil EUR
BRD capitalization exceeds 3 bil EUR
6
NET BANKING INCOME
GROSS OPERATING INCOME
NET PROFIT
TOTAL ASSETS
SHAREHOLDERS’ EQUITY
BRD, Key figuresBRD, Key figures
2003 ( mil € )
(*)
(*)
(*)
203 211
100
63
1,975
290
92
72
1,830
237
267
2004 ( mil € )
139
89
2,956
379
367367
198198
5,25,22727
151533
551212
2002 ( mil € )
2005 ( mil € )
EMPLOYEES 4,340 4,250 4, 500 6,0006,000
7
COST/INCOME RATIO
ROE
BRD, Key figuresBRD, Key figures
2001 2002 2003 2004
48,9% 54,2% 52,6% 48%
34,9% 30,7% 24,7% 30%
2005
47%
37%
8
Market share
Corporate Loans 15%
Loans to individuals 20%
Corporate deposits 18%
Individuals deposits 16%
BRD, Key FiguresBRD, Key Figures
Number of cards 23%
26%Placement funds
9
RATINGRATINGS BRDS BRD
BRD – key figuresBRD – key figures
FITCH
Short term foreign currency debt F2
Long term issuer default A-
Support 1
Long term rating perspective Stable
Moody’s
Long term foreign currency debt Ba2
Financial strength perspective Positive
FITCH AA
Moody’s Aa2
S&P AA-
RATING SOCIETE GENERALERATING SOCIETE GENERALE
10
Summary
I. Key figures
II. Strong five-years performance
III. Positive outlook in the context of EU integration
11
178
2,055
191
441326
212181
1,059
1,327 1,2491,366
1,622
910
1,3941,784
1,006591670
6,645
4,365 4,258
5,636
4,5664,507
-
500
1,000
1,500
2,000
2,500
2001 2002 2003 2004 2005 30 Juin 2006
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Nombre d'agences Nombre de clients actifs (y.c. BRD Finance) x 1000
Nombres de cartes x 1000 Effectifs
STRONG FIVE YEARS PERFORMANCESTRONG FIVE YEARS PERFORMANCE
Number of units
Number of cards x1000
Number of active clients (including BRD Finance) x 1000
Staff number
12
2001 2002 2003 2004 2005 30 Juin 2006
Cost income
ratio48,9% 54,2% 52,6% 47,8% 46,8%
1 394
1 105
808
627523
Cost
Net Income
652
742
528
577
425340
261
383
287
262
REVENUES AND PRODUCTIVITY (MRON)
49,6%
806
406
400
Operating Income
+25%
+16%+14% / year
STRONG FIVE YEARS PERFORMANCE
13
STRONG FIVE YEARS PERFORMANCESTRONG FIVE YEARS PERFORMANCE
NET BANKING INCOME
Total = 1.403 million RON
Interest margin770 million RON
(2004: +2,5%)
554,94,9%%110,40,4%%
34,734,7%%
Commissions487 million RON
(2004 +27,5%)
OthersOthers141466 mmilillionlion
RONRON
Structure of the net banking income in 2005
Net banking income(BRD consolidated)
(million RON)
2001 2002 2003 2004 2005
526
627
808
+1%
+13%
1.105
+25%
1.403
+17%
% - evolution in comparable terms
(2004 = 32%)(2004 = 32%)
(2004 = 63%)(2004 = 63%)
14
STRONG FIVE YEARS PERFORMANCESTRONG FIVE YEARS PERFORMANCE
1.8582.524
3.6514.839
6.1107.325
272499
1.361
2.158
4.354
7.086
2001 2002 2003 2004 2005 30 Juin 2006
2 129
3 023
5 012
CLIPRI49%
CLICOM51%
+32% / year
6 997
+28%
+38%
10 464
14 410
+32%
CREDIT EXPANSION (MRON)
15
STRONG FIVE-YEARS PERFORMANCESTRONG FIVE-YEARS PERFORMANCE
A BALANCED DEVELOPMENT OF CREDITS AND DEPOSITS
2001 2002 2003 2004 2005
Loans to customers(BRD consolidated)
(end of period, millions of RON)
2.129
3.023
5.012
Individuals42%
Legal entities58%
+32% / an
2001 2002 2003 2004 2005
Customers’ deposits(BRD consolidated)
(end of period, millions of RON)
% - evolution in comparable terms
4.121
4.844
6.115
Individuals36%
Legal entities64%
+22% / an
8.587
6.997
+28%
+57%
+28%
+38%
14.681 10.464
16
BRD FINANCE – POINT OF SALE CONSUMER LOANSBRD FINANCE – POINT OF SALE CONSUMER LOANS
STRONG FIVE YEARS PERFORMANCESTRONG FIVE YEARS PERFORMANCE
T4 04 T1 05 T2 05 T3 05 T4 05
Balance of loans to customers(million RON)
83
131
178
259
338
Loans by card
BRD FINANCE started operations in 2004
Loans granted in stores
+ 274%/trim
% - evolution in comparable terms
17
BRD SOGELEASE – A TOP PLAYER ON THE LOCAL MARKET
STRONG FIVE YEARS PERFROMANCESTRONG FIVE YEARS PERFROMANCE Leasing portfolio evolution(end of period, milions of RON)
Total market (Output 2005) = around 7.250 million RON (55% held by bank subsidiaries 55%)
2002 2003 2004 2005
+281%
+54%
+28%
56
343
409
566
+ 96%/an
% - evolution in comparable terms
18
TOTAL COMMITEMENTS (BRD consolidated)
2001 2002 2003 2004 2005
Total assets
5,4 6,4 8,2 12,1 19,8
(end of period, billion RON)13,8
9,5
6,9
4,6
2,7
+34%
+26%
+34% / an
Loans
Off-balance sheet commitments (*)
(*) Unused limits, letters of indemnity, letters of credit etc
10,5
3,3
7,0
2,5
5,03,02,1
1,9
1,6
0,6
STRONG FIVE YEARS PERFORMANCESTRONG FIVE YEARS PERFORMANCE
% - evolution in comparable terms
19
2001 2002 2003 2004 2005
STRONG FIVE YEARS PERFORMANCESTRONG FIVE YEARS PERFORMANCE
Breakdown of OC Growth in 2005- Development of activity 5,8%- Social costs 4,4%- Others 2,3%- ∆ Consolidation area 1,3% 13,8%
Investments 2005: 29 million€ (2001-2005 164 million €)
CAREFULLY MANAGED OPERATING COSTS Operating cost
(BRD consolidated)(million RON)
425
340
257
+12%
+9,5%
528
+13,7 %
652
+13,8 %
% - evolution in comparable terms
20
6.997
2.129
3.023
5.012
10.464
2001 2002 2003 2004 2005
STRONG FIVE YEARS PERFORMANCESTRONG FIVE YEARS PERFORMANCE
Decrease in the cost of riskNCR/loans = 0,74 % in 2005(2004: 0,87%)
Decrease in the n° of non-performing loans also due to the improvement of the business environment in the past few years
COST OF RISK WELL UNDER CONTROL Net Cost of Risk (NCR)
(BRD consolidated)(million RON)
Non-commercial4
Commercial77
14 16
77
NPL/Total loans 1,7% 2,9% 2,2%
Total loans(millionRON)
1,4%
722003: a new calculation
method, according to
NBR regulations
81
1.0%
21
Operating profit
Cost of Risk
ROE
205 225 244
370335
1416
77
72
81
16
569
30,4%
34,9%
30,7%
24,9%
38,3% 37,2%
2001 2002 2003 2004 2005 30 Juin 2006
STRONG FIVE YEARS PERFORMANCESTRONG FIVE YEARS PERFORMANCE
406
742
577
383
287 523
RBE
RETURN ON EQUITY
22
Summary
I. Key figures
II. Strong five-years performance
III. Positive outlook in the context of EU integration
23
MACROECONOMIC TRENDS
The EU integration process will continue to have a positive impact on Romania’s economy: Estimated average growth in the range of 5-6.5% per year for the next five
years; Discipline in public policies will be encouraged due to EU monitoring;
o Romania has already a low public deficit and public debt, while inflation is continuously coming down.
Foreign investment is encouraged by increased stability Convergence forces will play an increasing role as the country moves
towards the euro. EU funds (30 bn. Euros until 2012) can help in much needed infrastructure
improvement.
POSITIVE OUTLOOKPOSITIVE OUTLOOK
24
SIGNIFICANT GROWTH POTENTIAL FOR THE FINANCIAL SECTOR
The Romanian financial sector is less developed than CEE peers: Penetration rate for banking services is less than 30%; Non-government loans at 21% of GDP; Households’ stock of debt is less than 20% of GDP; 9000 inhabitants per banking unit; Around 17% of adult population has a bank card;
Catch up expected if other countries’ experience is to be considered relevant.
POSITIVE OUTLOOKPOSITIVE OUTLOOK
25
BANKING SYSTEM INCREASINGLY COMPETITIVE
POSITIVE OUTLOOKPOSITIVE OUTLOOK
Structure of the banking system – 39 banks and subsidiaries of foreign banks. In 2006 over 90% of the banking assets owned by foreign banks:
1 Romanian private bank: Banca Transilvania 1 Romanian state owned bank (the Savings House) About twenty foreign banks, of which:
o 3 Austrian (BCR/Erste, Raiffeisen, Volksbank);o 2 Dutch (ING, ABN Amro)o 1 American (Citibank)o 4 Italian (of which Unicredit/HVB Tiriac)o 6 Greeko 1 Hungariano 1 French (BRD – GSG)
26
POSITIVE OUTLOOKPOSITIVE OUTLOOK
STRUCTURE OF THE BANKING SYSTEM – by market share in loansSTRUCTURE OF THE BANKING SYSTEM – by market share in loans
Banca Transilvania
4%
ING5%
Tiriac+HVB +Unicredit
10%
30 Other Banks25%
BCR25%
Raiffeisen Bank10%
Banc Post5%
BRD16%
27
BANKING SYSTEM INCREASINGLY SAFE
POSITIVE OUTLOOKPOSITIVE OUTLOOK
Improved regulations and strengthened supervision of the National Bank of Romania have contributed to increased safety of the banking system: Compliance with EU regulations, international accounting
standards became the norm;
Strict anti money laundering legislation;
Good capitalization of the banks (CAR 12% NBR threshold, most banks have more than 15%);
Some risks related to the foreign currency lending;
But the National Bank is taking preventive measures (high regulatory reserves; administrative constraints on credits);
28
BRD IS WELL POSITIONED TO TAKE ADVANTAGE OF THE MARKET DYNAMICS BRD IS WELL POSITIONED TO TAKE ADVANTAGE OF THE MARKET DYNAMICS
POSITIVE OUTLOOKPOSITIVE OUTLOOK
BRD’s main competitive advantages: Presence on all segments of the market – retail, micro finance, SMEs,
corporate clients, private banking, investment banking, asset management – with carefully tailored products;
Best network coverage – over 500 agencies all over Romanian territory; Excellent knowledge of the local market combined with the commercial
expertise of Societe Generale; Efficient organization and procedures – advanced integration with Societe
Generale’s procedures, organization, risk management, internal audit functions, financial consolidation etc.
Easy access to financing due to the good rating and SG’s support; Good capacity to innovate in response to market tendencies; Close contacts with Romanian central and local authorities and international
financial institutions;
29
STRONG FIVE YEARS PERFORMANCESTRONG FIVE YEARS PERFORMANCE
A RAPIDLY EXPANDING NETWORK
12 + 7 9 + 5 13 + 5
5 + 2
5 + 4
10 + 8
9 + 11
37 + 26
11
15 + 9
6 + 2
16 + 5
8 + 5
11 + 6
19 + 6
16 + 7
10 + 6
+ 114 agencies opened in 2005
+ 175 agencies opened in 2006 (until September)
(BRD Express)
Focus on high growth potential areas
VALAHIA
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