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Public investor presentation 2020

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ALTUM Public investor presentation 2020

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Public investor presentation 2020

  1. 1. INVESTOR PRESENTATI ON April 2020 “ partner and financial expert in economic development ”
  2. 2. Disclaimer This presentation and any materials distributed or made available in connection herewith (collectively, the “presentation”) have been prepared solely for your use and benefit for information purposes only and are the sole responsibility of Akciju sabiedrība "Attīstības finanšu institūcija ALTUM" (the “Company”), and have not been verified, approved or endorsed by any lead manager, bookrunner, underwriter or adviser retained by the Company. This presentation do not contain all of the information that is material to an investor. By accessing, downloading, reading or otherwise making available to yourself any content of the presentation, in whole or in part, you agree to be bound by the following limitations and accept the terms and conditions as set out below. No information contained in the presentation may be copied, photocopied, duplicated, reproduced, passed on, redistributed, published, exhibited or the contents otherwise divulged, released or disseminated, directly or indirectly, in whole or in part, in any form by any means and for any purpose. The presentation does not constitute or form part of, and should not be construed as, an offer, solicitation or invitation to subscribe for, underwrite or otherwise acquire, any securities of the Company or any member of its group nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of the Company or any member of its group, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. If any such offer or invitation is made, it will be done pursuant to separate and distinct documentation in the form of a prospectus and any decision to purchase or subscribe for any securities pursuant to such offer or invitation should be made solely on the basis of such prospectus and not this presentation. Any person considering the purchase of any securities of the Company must inform himself or herself independently before taking any investment decision. By accessing this presentation the recipient will be deemed to represent that they possess, either individually or through their advisers, sufficient investment expertise to understand the risks involved in any purchase or sale of any financial instrument or any other information contained herein. This presentation should not be construed as legal, tax, investment or other advice and any recipient is strongly advised to seek their own independent advice in respect of any related investment, financial, legal, tax, accounting or regulatory considerations. The presentation has been provided to you solely for your information and background and is subject to amendment. Further, the information in this presentation has been compiled based on information from a number of sources and reflects prevailing conditions as of its date, which are subject to change. The information in this presentation is subject to verification, completion and change without notice and the Company is not under any obligation to update or keep current the information contained herein. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of their respective members, directors, officers, advisers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation, and any reliance you place on such information or opinions will be at your sole risk. Neither the Company nor any of its respective members, directors, officers, advisers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising, directly or indirectly, from any use of this presentation or its contents or otherwise arising in connection therewith. This presentation includes "forward-looking statements," which include all statements other than statements of historical facts, and involve known and unknown risks, uncertainties and other important factors beyond the Company’s control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Accordingly, any reliance you place on such forward-looking statements will be at your sole risk. These forward-looking statements speak only as at the date as of which they are made. Past performance of the Company cannot be relied on as a guide to future performance. No statement in this presentation is intended to be a profit forecast. This presentation is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction. THIS PRESENTATION IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH PUBLICATION, RELEASE OR DISTRIBUTION WOULD BE UNLAWFUL. This presentation and the information contained herein are not an offer of securities for sale in the United States. No securities have been or will be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or with any securities regulatory authority of any state or other jurisdiction of the United States and securities may not be offered, sold or delivered within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws and may only be sold outside of the United States in reliance on Regulation S under the Securities Act and otherwise in compliance with all applicable laws and regulations in each country or jurisdiction in which any such offer, sale or delivery of securities is made. The Company does not intend to register or to conduct a public offering of any securities in the United States. This presentation and its contents may not be viewed by persons within the United States (within the meaning of Regulation S under the Securities Act).
  3. 3. Presenters: 3 Reinis Berzins Chairman of the Board Elina Salava Financial advisor of the Board
  4. 4. CONTENT: I. General Information II. Key Credit Highlights III. Portfolio overview IV. Profitability and efficiency V. Funding and Liquidity VI. Risk Management VII. Key Financial and Performance indicators
  5. 5.  100% LV state-owned financial institution, with shareholders as follows: OWNERSHIP ALTUM a strategic engine of Latvia’s economic development Ministry of Economics 30% Ministry of Agriculture 30% Ministry of Finance 40% KEY PARAMETERS  provides access to finance in the areas prioritized by the government and implements the state policy in the national economy  operates in 5 regional centers 16 consulting offices in LV ACTIVITY Financial instruments* 617 MEUR  operates in accordance with a special law issued by Republic of Latvia Saeima / Law on Development Financial Institution UNIQUE STANDING IN THE INDUSTRY Risk coverage reserve 88 MEUR Contracts # 22 022 Rated by Moody’s Baa1 TCE/TMA** 29.4% * Loans, Guaranties, Venture Capital Funds, Land Fund **Tangible common equity/Total tangible managed assets, including the outstanding guarantees accounted for in the off-balance sheet Data as of 31.12.2019
  6. 6. Key milestones of ALTUM LZF 2017 Rating  On 15 June 2017 Moody`s assigned to ALTUM an investment grade rating Baa1with a stable outlook 2015 Established  On 15 April 2015 three state owned companies were merged into ALTUM 2015 Land fund  On 1 July 2015 the Land Fun administered by the ALTUM was put into action 2020  Design and implementation of crisis finical instruments for SME and Midcaps – credit guarantees and working capital loans 2017 First bond issue  In October 2017 ALTUM issued EUR 20M bond, becoming the first national development institution in the CEE countries that has issued the green bonds Volume of guarantees 2018  In Q2 2018 the volume of guarantee portfolio exceeded the loan portfolio Guarantees exceeded Loan portfolio Pillar role
  7. 7. 65 MEUR 62 MEUR 60 MEUR 68 MEUR 2016 2017 2018 2019 Land fund Guarantees Loans Venture Capital Business model at glance  Long-term profitability  Extra credit risk covered by public funding – Risk coverage reserve and Portfolio loss reserve  Guarantees issued by ALTUM have 270 MEUR back-up guarantee in the Latvian state budget  No dividend payments by law MID TERM TENDENCIES LOANS VENTURE CAPITAL GUARANTEES LOANS GUARANTEES VENTURE CAPITAL MID TERM TENDENCIES Land fund Portfolios 443 MEUR 454 MEUR 496 MEUR 560 MEURTotal assets
  8. 8. CONTENT: I. General Information II. Key Credit Highlights III. Portfolio overview IV. Profitability and efficiency V. Funding and Liquidity VI. Risk Management VII. Key Financial and Performance indicators
  9. 9. Key Credit Highlights  Ownership by The Republic of Latvia rated A3/A+/A- by Moody’s, S&P and Fitch OWNERSHIP  Clearly expressed state support - extra credit risk is covered by the public funding STATE SUPPORT  Long-term issuer credit rating Baa1 assigned by Moody’s, standalone rating upgraded to Baa3 RATING  Equity ratio (TCE/TMA) 29.4%  Liquidity ratio 250%+ SOLID FINANCIAL METRICS  Improving operational efficiencyTRACK RECORD  Prudent corporate governance and professional management team CORPORATE GOVERNANCE
  10. 10. CONTENT: I. General Information II. Key Credit Highlights III. Portfolio overview IV. Profitability and efficiency V. Funding and Liquidity VI. Risk Management VII. Key Financial and Performance indicators
  11. 11. MID TERM TENDENCIES LOANS VENTURE CAPITAL GUARANTEES Client segments +16.6% YOYPORTFOLIO +15.3% YOYNew transactions in 2019 Fastest growing segment – +30% during 2019 (mostly Housing and Energy efficiency guarantees) INDIVIDUALS Largest segment - 40% of the portfolio, 50% of the new volumes (mostly corporate guarantees and investment loans) SME and Midcaps Segment with historical sentiment (mostly loans and Land fund activities) AGRICULTURE
  12. 12. SME and MidCap Agriculture[CEL LRANGE] Individuals Financial… Loans, 104 Guarantees, 135 Export credit guarantees`… Loans, 108 Guarantees 11 Land fund 38 Guarantees, 129 Loans, 13 Venture capital 68 Loans 1 ALTUM portfolio map • Housing guarantees • Housing loans • Housing energy efficiency guarantees • Housing energy efficiency loans Individuals • Land purchase loans • Land fund (Reverse rent and IP) • Loan guarantees • Investment and working capital loans Agriculture • Venture capital funds – 4 generations, BIF and BIF 2 • Loans Financial intermediaries • Investment and working capital loans • Energy efficiency & renewables loans • Loan guarantees • Export credit guarantees SME and Midcap 617 MEUR Data as of 31.12.2019, MEUR
  13. 13. ALTUM COVID-19 crisis financial instruments Investment loans restructure Individual Credit guarantee Portfolio Credit guarantee WC loans NEW Finance lease restructure WC loans, Overdrafts restructure WC loans, Overdrafts NEW Banks for SME and Midcap Fast and efficient for small size companies Amount max 250 TEUR Up to 50% of loan Cap rate at 20%, 4 MEUR per bank ECL calculation up-front State funding to cover credit risk 25 MEUR Amount max 5 MEUR (in portfolio ave guarantee 230 TEUR) Up to 50% of loan ECL calculation up-front State funding to cover credit risk 25 MEUR Volume 240 MEUR Additional security for up to 715 MEUR loans Volume 200 MEUR Amount max 1 MEUR ECL calculation up-front State funding to cover credit risk 50 MEUR ECL – expected credit loss
  14. 14.  As situation is uncertain we do not consider it practicable to provide a quantitative estimate of the potential impact  ALTUM expects that its borrowers would ask for temporary relief in form of payment deferral, fee waivers, extensions of repayment term  Centralised guidance from ECB on ready-made macroeconomic scenarios ALTUM would apply in ECL calculations and SICR assessment  Despite available crisis products in the market expected SICR* of underlying borrower for ordinary guarantees issued leading to higher ECL or guarantee claim  No substantial negative effect upon liquidity is expected  Might be delay in timing for originally planned exits in VC funds for 2020-2021 The impact of COVID-19 on ALTUM * SICR – significant increase in credit risk
  15. 15. Latvian Land Fund 5 M EUR 5.6 M EUR 1.1 M EUR 17.3 M EUR 9.1 M EUR KURZEME RIGA DIST. VIDZEME ZEMGALE LATGALE 3 195 ha 1 923 ha 3 058 ha 4 379 ha 858 ha Portfolio 38.1 MEUR 13 413 ha Volumes 2019 16.3 MEUR Data as of 31.12.2019
  16. 16. CONTENT: I. General Information II. Key Credit Highlights III. Portfolio overview IV. Profitability and efficiency V. Funding and Liquidity VI. Risk Management VII. Key Financial and Performance indicators
  17. 17. 434 463 529 617 2.8% 2.3% 2.1% 1.0% 0.% 1.% 2.% 3.% 4.% 5.% 6.% 7.% 8.% 9.% 10.% 0 100 200 300 400 500 600 700 2016 2017 2018 2019 Portfolio Year overheads VS Portfolio  «25K project». Fully redrafted loan assessment process. 35% of the total number of the issued reviewed remotely. Increased capacity of regional centres – average amount issued in regional centres increased to 71.4 TEUR in 2019 vs 40 TEUR in 2018  Improvement of IT infrastructure in 2019 provides simplified and faster data processing and information flow and reduced manual input Improving operational efficiency Portfolio vs Overheads 4.9 2.2 8.7 4.1 8.1 2.2 4.0 6.0 4.5 8.1 0 2 4 6 8 2015 2016 2017 2018 2019 Profit dynamics Profit ALTUM Company Profit ALTUM Group inmillionEURinmillionEUR
  18. 18. CONTENT: I. General Information II. Key Credit Highlights III. Portfolio overview IV. Profitability and efficiency V. Funding and Liquidity VI. Risk Management VII. Key Financial and Performance indicators
  19. 19.  According to Cabinet of Ministers Regulations the public financing funds can be prolonged. In practice, the funds remain on ALTUM balance sheet and are used to finance new programmes  All borrowings are of medium or long term (from 5 to 10 years and beyond) 19 Debt structure 9 9 21 20 2 19 62 25 7 23 55 55 55 77 31 108 Loans from International Financial Institutions Bond issued Loans from State Treasury and Rural Support Service Public funding Total liabilities Funding maturity profile by type of funding source as at 31.12.2019 (in MEUR) < 1 year 1-5 years 5-10 years 10-15 years > 15 years
  20. 20. Bonds issued by the Republic of Latvia… Cash at Banks (Aa1-Aa3)… Cash at Banks (Baa1-Baa3) 24 Cash at Banks (Ba1-Ba3) 6 Cash at State Treasury, 138 Liquidity portfolio as at 31.12.2019, MEUR  High liquidity ratio – maintained over 582%*  Diversified exposure  Current buffer – in accordance with the programme rules and agreements with the State Treasury, ALTUM has unused credit lines from the State Treasury to finance the support programmes (23.5 MEUR) Exceptionally strong liquidity position * Liquidity ratio: due from other credit institutions and the Treasury with a maturity of up to 1 month and available-for-sale Investment securities by the amount of the total liabilities maturing within 6 months and total financial commitments maturing within 6 months (off- balance items)
  21. 21. CONTENT: I. General Information II. Key Credit Highlights III. Portfolio overview IV. Profitability and efficiency V. Funding and Liquidity VI. Risk Management VII. Key Financial and Performance indicators
  22. 22.  New model for calculation of expected credit losses was introduced by the end of 2019 as part of ALTUM’s core system.  KYC process and client on-boarding is centralized  Digitalization of loan origination and automatization of workflow processes were implemented Enhanced Risk Management
  23. 23. Qualitative assessment of loan portfolio 13% 11% 8% 6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0 50,000 100,000 150,000 200,000 2016 2017 2018 2019 Loan portfolio Ratio of Past due over 90 days 16%17% InthousandofEUR
  24. 24. CONTENT: I. General Information II. Key Credit Highlights III. Portfolio overview IV. Profitability and efficiency V. Funding and Liquidity VI. Risk Management VII. Key Financial and Performance indicators
  25. 25. Key Financial data (TEUR) 2019 2018 2017 2016 Net interest income * 11,569 11,302 11,602 11,024 Profit for the period 8,131 4,092 8,709 2,170 Cost to income Ratio (CIR) ** 52.6% 74.8% 50.3% 88.4% Employees 203 222 230 242 Total assets 560,061 495,939 453,668 443,400 Tangible Common Equity(TCE)/Tangible Managed Assets (TMA) 29.4% 37.1% 35.1% 36.5% Equity 232,738 221,590 222,848 210,406 Total risk coverage: 87,456 77,815 67,593 66,508 - Risk coverage reserve 99,778 85,276 62,651 63,636 - Risk coverage reserve used for provisions -27,829 -19,268 -4,753 -4,323 - Portfolio loss reserve within Reserves (specific reserve capital) 15,507 11,807 9,695 7,195 Liquidity Ratio 180 days 582% 227% 482% 449% Key financial and performance indicators (1) * Due to reclassification of fees and commission related to lending activities following the industry practise, excludes fees and commission not related to lending activities, the comparatives for 2018 have been reclassified with subsequent ratio recalculation. ** Due to reclassification of staff and administrative costs to be compensated as well as respective income on compensation, the comparatives for 2018 have been reclassified with subsequent ratio recalculation.
  26. 26. Financial instruments (gross value), TEUR 2019 2018 2017 2016 Outstanding (by financial instrument) Loans 240,412 217,131 207,585 217,429 Guarantees 284,232 236,895 182,376 147,175 Venture capital funds 68,331 59,698 62,299 64,785 Total 592,975 513,724 452,260 429,389 Number of contracts 22,022 18,280 14,402 11,449 Volumes granted (by financial instrument) Loans 71,559 66,443 51,869 59,465 Guarantees 98,240 88,765 68,615 56,109 Venture capital funds 9,022 4,149 2,638 21,356 Total 178,821 159,357 123,122 136,929 Number of contracts 5,466 5,464 4,697 4,461 Leverage for raised private funding 142% 162% 185% 162% Key financial and performance indicators (2)
  27. 27. www.altum.lv

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