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Delta Bank Delta Bank Presentation Transcript

  • Presentation Delta Bank - No. 1 in consumer finance in Ukraine 2009
  • Macroeconomic Outlook Ukrainian Population Income and Expenditures Factors influencing consumer lending market (compared to the corresponding period of the previous year) 160,00%  Real 2Q2009 Gross Domestic Product (GDP) reached only 82%* of the 143,00% 142,50% year‟s earlier figure of the same period 140,00% 120,00% 106,10% 109,40%  9M2009 Consumer Price Index reached 109,1%* 103,10% 100,00% 91,70%  Real Disposable Income melted by 8,3%* 80,00% 2Q2008  Real Salary Index in August 2009 constituted 88,7% if compared to August 60,00% 2Q2009 2008 * 40,00%  9M2009 Retail Trade Turnover reached UAH 319 billions which was 83,8% 20,00% from the result of 9M2008* 0,00% Nominal Income Actual Disposable Expenditures  FX rate jumped from 5.05 at the beginning of „08 to over 7.8 UAH/USD YE08 Income * Source: Ukraine State Statistics Committee UKRAINE - MACROECONOMIC FORECASTS** ** Source: Business Monitor International 2005 2006 2007 2008 2009 2010 Population, mn 3 46.90 46.60 46.40 46.10 e 45.90 f 45.70 f Nominal GDP, US$bn 3 85.70 107.60 141.90 183.10 101.90 f 117.60 f Nominal GDP, UAHbn 3 438.7 543.5 716.3 949.9 855.8 f 999.3 f GDP per capita, US$ 4 1826 2307 3059 3969 e 2219 f 2571 f Real GDP growth, % change y-o-y 3 2.7 7.3 7.6 2.1 -14.7 f 1.3 f Budget balance, UAHbn 3 -7.8 -3.7 -7.7 -14.2 -77.9 f -69.9 f Budget balance, % of GDP 3 -1.8 -0.7 -1.1 -1.5 -9.1 f -7.0 f Consumer prices, % y-o-y, eop 3 10.3 11.6 16.6 22.3 15.0 f 16.0 f Notes: Central Bank policy rate, % 1,5 9.50 8.50 9.00 12.00 9.50 f 9.00 f e BMI estimates. f BMI forecasts. Exchange rate UAH/US$, eop 6 5.05 5.05 5.05 7.80 9.00 f 8.00 f 1 Discount Rate; 2 JEDH; Imports, US$bn 7 36.16 44.14 60.41 84.65 60.95 f 64.00 f Exports, US$bn 7 35.02 38.95 49.84 67.71 55.86 f 59.49 f Sources: 3 State Statistics Trade balance, US$bn 7 -1.14 -5.19 -10.57 -16.94 -5.09 f -4.50 f Committee. Current account, US$bn 7 2.53 -1.62 -5.92 -12.94 e 0.36 f 1.67 f 4 State Statisitics Current account, % of GDP 8 2.95 -1.50 -4.17 -7.07 e 0.36 f 1.42 f Committee; 5 NBU/BMI; Foreign reserves ex gold, US$bn 7 19.11 21.90 31.79 31.54 25.00 f 23.00 f 6 BMI; Import cover, months g&s 7 5.2 4.9 5.3 3.8 e 4.1 f 3.5 f 7 National Bank of Ukraine; 8 National Bank of Total external debt stock, US$mn 2,7 39619.0 54512.0 82663.0 103230.0 85524.0 f 90377.0 f 2 Ukraine/BMI Calculation. Total external debt stock, % of GDP 8 46.24 50.65 58.27 56.37 e 83.95 f 76.88 f
  • SUK001BJ1 v2 Consumer Lending Market changes Market’s key players*  Estimated consumer finance market volume in September 2009 was c. UAH 115 mio. - down 4,5 times from UAH 510 mio of September 2008 * 2008 2009  Market shares: Delta Bank– 54%, PrivatBank– 36%, Ukrsibbank – 10%, Delta Bank Delta Bank; Platinum Bank – 1%* PrivatBank PrivatBank; Alfa-Bank UkrsibBank;  Significant change in CONSUMER‘S BEHAVIOR Eurocreditbank Platinum Bank.  23%** contraction in number of active credit cards during 09M09 Pravex-Bank ProstoFinance  As a reference to nine month of YE 2008 number of credit card operations Home Credit Bank issued by Ukrainian banks during nine month of YE2009 is down by 9%, as VAB Bank well as in amount of a single operation – 5%** Renissance Capital  Average loan amount in Sep09 was UAH 2 400* compared to UAH 3 190* a Russian Standard year earlier FirstCredit Union.  Average maturity of a loan: September 2009 - 7 month, September 2008 – 12 month * Key players, September 2009*  Credit Cards not offered to new clients* Platinum  Services finance ceased Bank; 1% Privat  Cash lending – not offered Bank; 36%  Purpose-oriented lending is active Delta Bank;  0% lending ceased 54% * Source: Delta Bank data ** Source: NBU reporting Ukrsibbank 3 ; 10%
  • SUK001BJ1 v2 Consumer Focused Model – Changes Provoked by the Environment Consumer Credit Sales Cash Credit Personal Car Loans Finance Loans Cards Loans Only to loyal customers POS loans for Non-purpose Non-purpose purchase of Revolving Credit installment Used Cars loans issued at consumer Cards loans bank offices goods Revolving Home Equity private label New cars Loans credit cards Main Sales Channels Channels POSs in Corporate Sales Branches Brokers Other Sales Shops / Partners Channels: Credit Card Credit Card Deposits Credit Card UkrPost Products Only to loyal Credit Card Only to Deposit Card loyal Deposit Card customers customers Only to debit cards + Deposit Card Deposit Card Internet banking overdrafts Cash Paper Loans Auto Cash Loan Telemarketing Only to loyal customers 4
  • SUK001BJ1 v2 Consumer Lending – Delta’s Dynamics POS loans issuance dynamics POS loan application dynamics, rejection levels Issuance, mio UAH 70 000 70,0% 61,9% 60,1% 59,7% 58,9% 200,0 60 000 54,5% 55,4% 55,2% 53,8% 60,0% 180,0 48,7% 50 000 45,1% 45,6% 46,4% 50,0% 160,0 38,3% 140,0 126,8 40 000 40,0% 120,0 30 000 30,0% 100,0 80,0 63,8 20 000 20,0% 62,3 61,0 55,4 60,0 43,3 10 000 10,0% 40,0 10,2 26,2 19,5 17,3 14,4 14,7 16,7 20,0 0 0,0% Jul-09 Jan-09 Jun-09 Oct-08 Apr-09 Sep-08 Nov-08 Dec-08 Aug-09 Sep-09 Feb-09 Mar-09 May-09 0,0 Jul-09 Jan-09 Jun-09 Oct-08 Apr-09 Sep-08 Nov-08 Dec-08 Aug-09 Sep-09 Feb-09 Mar-09 May-09 Number of Applications Approved Number of Applications Rejected Issuance, Fact, mio UAH Rejection Ratio Increasing number of loan applications with simultaneous reduction of relative level of rejections confirm a positive dynamics in the consumer finance business 40,0 % 35,0 Effective 30,0 Loan Portfolio business Returns model allows 25,0 Cost of Funding to stay 20,0 15,3 15,1 14,0 14,0 13,6 profitable 13,1 12,9 12,9 12,9 12,8 15,0 even in Net Loan difficult 10,0 Portfolio Margin market 5,0 conditions 0,0 5 1 2 3 4 5 6 7 8 9 10
  • Strategy - Funding Diversification of Building Local Using Local Wholesale Funding Wholesale Funding Funding Approach Sources Franchise Franchise 2006 2007 2008 2009 0-9 Months 10-21 Months 22-33 Months 34-45 Months  Favorable debt and market  Building credit history  Launch debut retail deposit  Full-scale retail deposit conditions  Issue of debut IFRS audited program program  Emphasis on unique strategy statements  Increase scale of retail  Reliance on domestic and growth prospects  Started preparation towards deposit campaign through funding  Lack of similar financial sector an international and a local extensive POS outlets  Repayment of all foreign issuers from Ukraine credit rating  Launch debut SME deposit funding  Aggressive pricing and short-  Attracting foreign funding program  Corporate products (salary, term tenor  Launch deposit program for cash settlement etc.)  Luck local insurers and assets managers Foreign Debt 2006YE 2007YE 10% 2008YE 4% 9M2009 9% 0% 23% 11% Local Debt 0% 28% 38% 51% 54% 58% Corporate Deposits 23% 80% 12% Retail Deposits No. 1 local bond issuer 11 bond issues in 2006- UAH 2,314 billion retail $390 Mio foreign in 2006 2007 for the total amount deposits collected in 2008 funding fully repaid In November 2006, Delta of nearly $400m Successfully repaid all Maintaining a high level pioneered consumer loan  Successfully repaid all 2006-2007 bonds of deposit prolongation ABS in Ukraine 2006 bonds Balanced liabilities structure 6
  • SUK001BJ1 v2 Local Funding Base Deposit Portfolio Development 250,00 2 500,00 UAH, Millions UAH, Billions All Banks, left scale While the 200,00 Delta Bank Deposits, right scale 2 000,00 banking system in 150,00 1 500,00 whole shown a decline in 100,00 1 000,00 retail deposits 50,00 500,00 volume, Delta Bank 0,00 0,00 continued to rise its portfolio Average Maturity Deposit Retention Ratio Oct-09 1,20 Sep-09 0,98 1,00 Aug-09 Jul-09 0,80 0,71 0,72 0,71 0,64 Jun-09 0,59 0,60 0,610,61 0,54 0,56 0,60 0,53 0,49 0,50 May-09 0,42 0,41 0,41 0,39 Apr-09 0,35 0,40 0,30 Mar-09 0,17 0,20 0,13 Feb-09 Jan-09 0,00 Feb-08 Mar-08 Feb-09 Mar-09 Apr-09 Apr-08 Aug-08 Sep-08 Oct-08 Aug-09 Sep-09 Oct-09 Jan-08 Jun-08 Nov-08 Dec-08 Jan-09 Jun-09 Jul-08 Jul-09 May-08 May-09 0,00 2,00 4,00 6,00 8,00 Months 7
  • SUK001BJ1 v2 Superior Risk management Delta Bank’s risk management function is arguably one of the most sophisticated among Ukrainian banks Loan Issuance in the Pre-Crisis Environment  Under normal market conditions Delta Bank used to issue UAH 150-200 mio of consumer loans per month  Operating scoring model (second generation), loan issuance policy oriented for the volume of issuance (rules for loyalty, moderate credit load, etc.)  Automatic decision making (“white” zone) allowed to assess an application and to make a loan issuance decision within 20 minutes and to review 480 thousand of applications per month Modeling, Prognosis and Actions  Detailed stress testing of the loan portfolio and the future issuances quality exposed the vulnerabilities of the loan issuance policy under the circumstances of dramatic devaluation and loss of income by Ukrainian population (unemployment, decline of income, etc.)  Based on the results of modeling, a number of decisions was made:  Reduction of the credit exposure per one customer (reduction of the maximum loan amount, rising the personal income requirements, etc.)  Limiting the maximum loan maturity to 12 months  Rejecting all loan applications made by individuals employed in the most risky sectors of economy (construction, production, etc.)  Chosing the loyal clients and to offer them a selection of alternative products and to reduce the overall maturity of the portfolio to increase the portfolio turnover  Abolition of the “white” (automatically approved) zone (all the applications are now to be reviewed individually), some loyalty rules, etc.  Such decisions reduced the volume of issuances to UAH 15-20 mio per month, reduced the number of loan applications passed to the credit expertise department 10 times, allowed to build the high-quality portfolio during crisis times and to continue the loan issuance  In the beginning of June a new, more sophisticated and validated on the crisis-population, scoring model (third generation) was implemented, the loan issuance policy was amended as to the maximum loan amount and other loan parameters. Such changes made it possible to increase the loan issuance volume to UAH 60-70 mio per month Even in the most difficult time period Delta Bank never suspended its lending 8
  • SUK001BJ1 v2 Superior Risk management (Cont’d) Portfolio Delinquency Ratio, % of issued loans, evaluated on the date Expected decline of quality of issuance related to dramatic devaluation and unemployment Operating scoring card Analysis of the major crisis threats, Implementation of the new scoring card (2nd generation) implementation of amendments to the loan (3rd generation), rising the number of issuance policy, reduction of the issuance volume issuances Source: Internal MIS Continuous improvement of loan portfolio quality made it possible for Delta to achieve a volume of loans delinquent for 90+ days of only 2,51% of the total issuance amount 9
  • Our Response to the Changed Environment Opportunities we see for Delta We will become a more universal bank, i.e.: • Go to a viable corporate banking with a primary focus on cash management services with limited credit exposure • Add and proactively sell (cross-sell to our 3.5 mio customer base) transactional banking services on the top of our strong presence in retail credit We are more cautious to risk in retail: • Given 3.5mio customer base we lend only to “the best” clients (cross-sell, up-sell facilities) • We go to Salary Projects niche: we provide credit card loans to employees of survived companies which lost their servicing banks due to insolvency/state bail-out during crisis • POS loans continue to show very good credit quality (0,5% on 1st default) We look beyond crisis: • We are looking around for potential M&A targets in Ukraine that would provide scale to Delta‟s position in a post-crisis life 10
  • Delta Bank Performance Indicators Key Performance Indicators as of September 30, 2009 Net Assets UAH 6,1 bn Total customer base 3,5 mio Equity UAH 510 mio Consumer Loan UAH 2,3 bn Portfolio Net Profit UAH 7,9 mio Credit Card Loan UAH 1,07 bn Cash In Hand and UAH 1,9 bn Portfolio Highly Liquid Assets Retail Deposit UAH 2,09 bn CAR 11,43% Portfolio Net Margin 7,03% NPL 12,41% RoA 0,36% Number of 3,107 RoE 3,52% Employees Source: NBU Data, Delta Bank`s Management Accounting 11
  • Contact information Mr. Vitaliy Masyura, First Deputy Chairman of the Board of Directors Ph. 38 044 391-51-00 Fax 38 044 391-51-12 E-mail: V.Masyura@deltabank.com.ua 12
  • 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. 13