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Banks’ role in supporting agriculture and food industry

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Banks’ role in supporting agriculture and food industry

  1. 1. Deloitte Consulting S.p.A. Agriculture and Agro-Industry in Slovak Republic Banks’ role in supporting agriculture and food industry Bratislava, November 16th , 2010
  2. 2. stant(Changevia'View-HeaderandFooter') - 2 - Forewords Efficient use of capital is a Bank strategic goal Support agriculture and food firms able to attract EU funds means mainly to comply with regulation successfully manage consensus generate more value for the bank and for the client Basel 2/3 Liquidity and Capital shortage Pressure from stockholders, stakeholders and communities Value creation driver
  3. 3. stant(Changevia'View-HeaderandFooter') - 3 - A (very) simplified exercise YE P/L Statement YE P/L Statement Sales 5,000 Sales 5,000 1st Pillar contribution 0 1st Pillar contribution 3,000 Production cost (monetary) (4,100) Production cost (monetary) (4,100) Production cost (non monetary) (400) Production cost (non monetary) (400) Net interest income (loss) (50) Net interest income (loss) (20) Other items and tax (450) Other items and tax (830) Net income 0 Net income 2,650 Pillar 2 Pillar 1 YE Financial Statement Assets Liabilities and NAV Cash & Sight deposits 0Providers 1,000 Client receivables 1,500Banks (sight accounts) 2,000 Warehouse 2,000Banks (mid/long term loans) 5,000 Investments 6,000 Other shareholders funds 0 Equity and ret. earnings 1,500 Net income 0 Total 9,500 Total 9,500 YE Financial Statement Assets Liabilities and NAV Cash & Sight deposits 2,650Providers 1,000 Client receivables 1,500Banks (sight accounts) 2,000 Warehouse 2,000Banks (mid/long term loans) 2,000 Investments 6,000 Other shareholders funds 3,000 Equity and ret. earnings 1,500 Net income 2,650 12,150 12,150
  4. 4. stant(Changevia'View-HeaderandFooter') - 4 - A (very) simplified exercise Score calculation a Financial P/L (50) (20) b Sales 5,000 8,000 c Operating P/L 500 3,500 d Cash flow 400 3,050 e Working capital 500 3,150 f Other shareholders funds 0 3,000 g Current liabilities 3,000 3,000 index 1 (a/b) -1.00% -0.25% index 2 (a/d) -12.50% -0.66% index 3 (d/c) 80.00% 87.14% index 4 (f/e) 0.00% 95.24% index 5 (g/b) 60.00% 37.50% Score 4.45144 6.13719 PD 1.15274% 0.21563% LGD 45% 45% EL 0.51873% 0.09703% Capital at Risk (1.000) 55.15 18.94 Basis point delta 42 Marginal value creation (CoC = 7.5%) 2.72 Better rating – Lower expected loss Additional value to share

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