Banking Sector

Banking is a Risky Business ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Layman’s Perspective ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

An analyst perspective ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Macro Factors ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Structure of assets/liabilities ,[object Object],[object Object],[object Object],Asset/Liability Structure Loans/Total Assets 55.7 52.8 51.5 55.9 46.9 (Cash+ Interbank)/Total Assets 7.5 11.4 10.4 7.6 9.9 Securities/Total Assets 30.3 30.6 33.0 30.7 38.1 Total 93.5 94.8 94.9 94.2 94.9 Deposits/Total assets 58.2 59.2 54.3 50.8 47.3 Borrowed Funds/Total Assets 25.3 25.9 25.3 27.8 26.2 Assets/equity 12.1 15.9 10.6 10.0 9.2

Structure of securities ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Source/Application of funds Composition + Total Deposits 70 70 68 65 64 + Short-Term Borrowings 2 8 8 7 2 + Long-Term Borrowings 29 23 24 28 34 IBL 100 100 100 100 100 Composition + Net Loans 62 59 58 61 52 + Short-Term Investments 0 14 15 10 0 + Long-Term Investments 34 20 23 24 43 + Interbank Assets 5 7 5 4 5 IEA 100 100 100 100 100

Revenue Drivers ,[object Object],[object Object],[object Object],[object Object],[object Object],Income Statement Interest income 146.1 250.0 340.9 362.5 301.5 Interest expense 101.0 176.8 257.7 264.9 207.3 Net Interest Income 45.1 73.3 83.3 97.6 94.2 Trading Income 14.9 10.3 30.5 21.9 26.2 Fees and commissions 32.5 54.4 67.7 65.7 60.0 Other operating income 63.9 98.1 160.8 191.4 207.4 + Non-Interest Income 111.4 162.9 259.0 279.0 293.6 - Non-Interest Expense 109.3 180.1 272.2 287.9 278.2 Pretax Pre-Provision Profit 47.2 56.1 70.1 88.8 109.7 - Provision for Loan Losses 8.1 22.1 27.7 39.1 44.7 - Net Non-Operating Losses (Gains) -0.1 -0.4 -0.6 0.0 -0.8 Pretax Income 39.1 34.4 43.0 49.7 65.8

Key performance ratios NIM 2.1 2.3 2.2 Spread 1.1 1.0 0.9 Pre-impairment Profit Margin Cost to income (Efficiency ratio) 79.3 76.4 71.7 Loans to deposits ratio 94.7 109.9 99.3 ROE 10.1 7.8 9.5 ROA 0.8 0.7 1.0 Yield on IEA 8.7 8.4 6.9 Cost of IBL 7.6 7.4 6.0 Earning Assets/Int Bear Liab 118.9 122.0 132.4 CASA Ratio IEA-IBL 684.8 786.7 1069.4 Asset Quality Loan Loss reserves 51.7 51.7 Accumulated Provisions/Gross Loans (%) 1.9 2.3 Loan Loss provisions 39.1 44.7 Cost of risk(%) 1.5 1.8 Provisions growth (YoY) 41.1 14.4 Coverage ratio 52.7 53.7 NPL ratio 3.6 4.2 Gross NPL 98.4 96.3 NPL formation (YoY) 138.4 -2.1

Valuation ,[object Object],[object Object],BPS 250.0 266.5 401.9 420.2 460.1 P/B 2.4 3.2 1.9 0.8 2.1 EPS 41.4 30.9 32.9 32.1 41.9 P/E 14.2 27.6 23.4 10.4 22.7 Dividend Payout 23.5 32.5 35.4 34.2 28.6

What is this hype about Basel? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Regulatory Requirements Tier1 ratio 9.2 7.4 10.7 10.3 12.9 CAR 13.4 11.7 13.5 14.7 19.2 RWA 2085.9 #VALUE! 4211.2 4393.5 3556.6

Risk management ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Value At Risk ,[object Object],[object Object],[object Object],[object Object],Z-factor for 95% confidence 1.65 Volatility Mean returns Periodic VAR Annualizing factor Annualized VAR Daily 2.58% 0.05% -4.21% Daily VAR 15.8 -67.42% More conservative Weekly 5.12% 0.28% -8.16% Weekly VAR 7.2 -60.88% More conservative Monthly 10.68% 1.41% -16.21% Monthly VAR 3.5 -61.03% More conservative

Market Risk ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Credit Risk ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Standardized Approach ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Internal Ratings Approach ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Capital & Risk Weighted Assets ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Operational Risk ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Asset Liability/Liquidity Management ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Liquidity Liquid assets/TA 7.5 24.0 23.5 16.7 9.9 Liquid assets/Customer deposits 12.9 40.6 43.3 32.8 21.0 Liquidity buffer (Liquid assets-short term debt) 169.6 684.0 832.5 543.9 425.6

Susceptibility & Sustainability ,[object Object],[object Object],[object Object],[object Object]

Banking Sector

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