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Banco Sabadell1Q13 Results
April 25th, 2013
Disclaimer
Banco Sabadell cautions that this presentation may contain forward looking statements with respect to the business. financial condition. results of operations. strategy. plans and objectives of the BancoSabadell Group. While these forward looking statements represent our judgement and future expectations concerning the development of our business. a certain number of risks. uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include. but are not limited to. (1) general market. Macroeconomic. governmental. political and regulatory trends. (2) movements in local and international securities markets. currency exchange rate. and interest rates. (3) competitive pressures. (4) technical developments. (5) changes in the financial position or credit worthiness of our customers. obligors and counterparts. These risk factors could adversely affect our business and financial performance published in our past and future filings and reports. including those with the Spanish Securities and Exchange Commission (Comisión Nacional del Mercado de Valores).
Banco Sabadell is not nor can it be held responsible for the usage. valuations. opinions. expectations or decisions which might be adopted by third parties following the publication of this information.
Financial information by business areas is presented according to GAAP as well as internal BancoSabadell group´s criteria as a result of which each division reflects the true nature of its business. These criteria do not follow any particular regulation and can include forecasts and subjective valuations which could represent substantial differences should another methodology be applied.
The distribution of this presentation in certain jurisdictions may be restricted by law. Recipients of this presentation should inform themselves about and observe such restrictions.
These slides do not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe to any securities nor shall they or any one of them form the basis of or be relied on in connection with any contract or commitment whatsoever.
3
1. 1Q13 in summary and commercial highlights
2. 1Q13 Results
3. Commercial activity and liquidity
4. Risk and capital management
5. Managing real estate assets
6. Update on M&A activity
Index
22
4
1. 1Q13 in summary
33
5
1Q13 in summary
�Good income generation in a low interest rate environment
�Cost control and delivery of synergies
�Strong coverage levels with problematic assets growing at a slower pace
� Intensified commercial efforts to sell real estate properties are showing results and units sales are up by 26% YoY
�Comfortable capital position even including recent acquisitions. No market capital call in the pipeline
44
6
Commercial highlights
�Remarkable success in customer gathering, now with main focus on customer value
�Strong deposit growth and positive impact from flight-to-quality, reflected in our new marketing campaign
�Commissions from the old Banco CAM network showing a faster growth than that of Sabadell, closing the gap with the rest of the group
�Significant increase in market shares with emphasis on SMEs and corporates
55
7
2. 1Q13 Results
66
1Q13 Results
Euros in million
8
Mar. 12 Mar. 13% var 13/12
Net Interest Income 407.3 451.2 10.8%
Equity Method & Dividends 5.6 -6.3 ---Commissions 133.5 168.4 26.1%Trading Income & Forex 161.4 292.7 81.4%Other Operating Results -15.6 -26.3 69.4%Gross Operating Income 692.2 879.8 27.1%
Personnel Costs -188.0 -260.3 38.5%Administrative Costs -94.2 -147.1 56.2%Depreciations -32.0 -50.4 57.2%Pre-provisions Income 378.1 422.0 11.6%
Total Provisions & Impairments -293.4 -325.0 10.7%Gains on sale of assets 28.0 -2.5 -108.9%Badwill ---Profit before taxes 112.6 94.6 -16.0%Taxes and others -32.6 -43.5 33.4%
Attributable Net Profit 80.0 51.1 -36.1%
77
1Q12 2Q12 3Q12 4Q12 1Q13
Lower NII growth …
Net interest income 1Q13:+10.8% YoY
407.3447.0
526.4487.3
451.2
9
Net interest income evolutionEuros in million
88
... in a low interest rate environment …
Customer loan yield, cost of customer funds and Eur ibor 12 monthsIn percentage
10
2.21%
1.59%1.44%1.36%1.70%
2.83%
1.48%2.03%2.00%2.12%2.11%2.06%2.00%1.97%1.85%
2.19%2.09%
5.56%4.93%
4.21%3.79%
3.53% 3.49% 3.50% 3.65% 3.86% 3.99%4.12% 4.22% 4.28% 4.16%
4.04% 4.02% 3.94%
1.91%1.61%
1.26% 1.24% 1.22% 1.28% 1.42% 1.53%1.92% 2.14% 2.07% 2.00%
1.50%1.22%
0.74% 0.54%0.55%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
* Monthly average
Customer loan yields holding up well despite lower interest rates
Euribor 12 months*Cost of customer fundsCustomer loan yield
99
11
… and customer spreads reaching an inflection point
Margin evolutionIn percentage
Spread evolution on new contractsIn percentage
Customer spread between new contracts on loans and deposits (excluding sight deposits)Net interest margin Customer spread
Spreads for new production have increased significantly
1.26%
0.85%
1.31%
1.96%2.00%
1Q12 2Q12 3Q12 4Q12 1Q13
1.61%1.42%
1.28% 1.21% 1.14%
2.16% 2.16%2.01%
1.93%1.75%
1Q12 2Q12 3Q12 4Q12 1Q13
Highest levelsince January2012
1010
Active price management
Spreads are improving in all segments of the loan book
Credit portfolio spreadsBasis points
12
*Product Mar-12 Dec-12 Mar-13 Var QoQ Var YoY Mar-12 Dec-12 Mar-13 Var QoQ Var YoY
Credits 363 410 417 +7 +54 279 366 395 +29 +116Loans 278 385 364 -21 +86 216 225 234 +9 +18Mortgages to individuals 146 179 174 -5 +28 83 86 87 +1 +4Leasing 226 249 338 +89 +112 125 139 144 +5 +19Renting 525 701 751 +50 +226 345 417 447 +30 +102Commercial loans 368 485 469 -16 +101 404 502 491 -11 +87Confirming 270 397 412 +15 +142 280 375 398 +23 +118Forfaiting 349 496 521 +25 +172 382 526 567 +41 +185Total loans 287 374 353 -21 +66 182 177 182 +5 +0
Front book spreads Back book spreads
* March 2012, Banco Sabadell stand alone
*
1111
13
Contractual rates on depositsIn percentage
New deposits have already seen a reduction in interest rates
New deposits by maturitiesSplit of maturities, in percentage
The cost of new deposits has been reduced while the term has been extended
Stock New production
3.32% 3.26%3.35%
3.58%
3.36%
2.80%
2.50%
3.06%
3.39%
2.16%
1Q12 2Q12 3Q12 4Q12 1Q13
1212
22% 25%15% 11% 15%
16% 13%
9%7%
9%
14% 19%
16%
11%8%
16%
6%19%
52%
53%
56%36%43%
4% 3%
1Q12 2Q12 3Q12 4Q12 1Q13
Up to 3 months From 3 to 6 monthsFrom 6 to 12 months From 12 to 18 monthsAbove 18 months
Good performance in commissions …
26.1 24.8 25.2 26.6
47.5 48.2 55.8 54.7
59.973.6
83.694.0
25,9
52,4
90,1
8.7
1Q12 2Q12 3Q12 4Q12 1Q13
Asset Mgmt ServicesLending
Commission income 1Q13:+26.1% YoY
Commissions from fixed income issues
168.4
133.5
155.3164.6
175.3
14
Commissions evolutionEuros in million
1 Including mutual funds commissions and pension funds and non-life insurance brokerage1313
15
7,6087,8728,012
9,230
Original BS network Original B. CAM network
1T12 1T13
15,923
8,922
16,841
11,906
Original BS network Original B. CAM network
1T12 1T13
… showing convergence of the old B.CAM network and the rest of the group
Net commissions: credit cardsEuros in thousand
Net commissions: current accountsEuros in thousand
+5.8%
+5.3%+33.4%
+17.2%
Commissions from the old Banco CAM network showing a faster growth
1414
16
Personnel expenses are reduced as synergies are delivered …
182.2221.5
292.2 281.2258.4
5.8
5.8
2.0
1.95.9
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13eRecurrent Non-recurrent
Personnel expenses 1Q13:+38.5% YoY
188.0 Recurrent personnel expenses1Q13*:
-13% YoY
227.2
* Including Banco CAM in 2012 and excluding non-recurrent expenses.
294.2 287.1260.3
250
Delivery of synergies
Personnel expenses evolutionEuros in million
1515
17
93.8113.1
151.9 153.1 147.1
1.9
0.9
0.4
1Q12 2Q12 3Q12 4Q12 1Q13 2Q13e
… as well as in general expenses on a like-for-like basis
General expenses 1Q13:+56.2% YoY
Non-recurrent
94.2 Recurrent general Expenses 1Q13*:
-5,8% YoY
115.1
Recurrent
154.0151.9
147.1
135
Delivery ofsynergies
General expenses evolutionEuros in million
* Including Banco CAM in 2012 and excluding non-recurrent expenses. 1616
18
Dec-12 Mar-13 Jun-13e Sep-13e Dec-13e
Revised plan Level of achieved synergies
41% of synergies already achieved
� Achievement of synergies is ahead of plan
84%
38%
41%
� 96% of the branch closures required by the European Commission and 99% of the planned headcount reduction have been achieved
� In addition, another 21 branches will be closed during 2013 and the headcount will be reduced by another 23 employees
Level of achievementIn percentage
1717
19
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13
49.7%47.0%
49.7%51.1%
45.7%
40.8%
47.6%47.3% 46.3%
Mar. 11 Jun. 11 Sep. 11 Dec. 11 Mar. 12 Jun. 12 Sep.12 Dec. 12 Mar. 13
Optimising the network
1,467
10,721 10,610
1,379
10,699
1,387
Lydian P. Bank
Acquisition
1,383
10,675 10,550
1,382
2,202
16,754
Banco CAMAcquisition
16,413
2,204
1,898
15,59614,957
1,889
Employee and branch evolutionIn number
Cost income evolutionin %
Branches Employees
1818
20
3. Commercial activity and liquidity
1919
21
Remarkable success in customer gathering
Growing the customer base …
8,800 new customers per
week
The main driver is customer value, particularly in the old B. CAM network
Jan.13 Feb. 13 Mar. 13 1Q13
Individuals 28,144 30,028 32,536 90,708
Companies 7,658 8,438 8,236 24,332
% Var.Total 0.3%
Dec. 12 Mar. 135,502,584 5,517,110
Evolution of total number of customers
2020
22
… the old B. CAM network converging with the rest of the group …
Cuenta Expansión: 80,554 new accounts in 1Q13
Cuenta Expansión Negocios: 33,612 new accounts in 1Q13
48,525
80,554
32,029
Original BSnetwork
Original B. CAMnetwork
Total newaccounts
27,006
6,606
33,612
Original BSnetwork
Original B. CAMnetwork
Total newaccounts
New accounts Var. (%)
Total accounts
Original BS network 48,525 12.8% 428,720
Original B. CAM network 32,029 107.5% 61,832
Total 80,554 19.6% 490,552
New accounts Var. (%)
Total accounts
Original BS network 27,006 16.3% 192,236
Original B. CAM network 6,606 108.5% 12,694
Total 33,612 19.6% 204,930
2121
… with strong growth in customer funds, even in a low interest rate environment
53 ,4 4 6
75,4 2 0 75,0 58 8 0 ,1798 2 ,6 9 2
M ar-12 Jun-12 Sep-12 Dec-12 M ar-13
Organic growth:
€8.3bn Non-organic growth:
€20.9bn
Positive impact from flight-to-quality, reflected in our new
marketing campaign
23
Customer funds evolutionEuros in million
Organic growth: c.16%
2222
24
3.94%Feb. 12
Feb. 13
5.39%Nov.12
Mar.13
+37 pbs
Gaining market share both in individuals …
5.55%Dec. 11
Dec. 12
+52 bps
+37 bps
6.36%Mar. 12
Mar. 13
+40 bps
6.07%
5.76% 6.76%
+17 bps
4.11%
Credit card volumeHousehold term deposits
Payroll accounts Transactionality 1
Note: Data is presented like-for-like, including B. CAM in 20121 Including cheques, transfers, SEPA transfers, receivables and promissory notes
2323
25
… as well as in companies
12.31%Aug. 12
Mar. 13
8.48%Feb. 12
Feb. 13 9.71%
+123 bps
32.59%
+2,028 bps
10.59%
8.84%Feb. 12
Feb. 13
+175 bps
10.68%
+139 bps 9.29%Dec. 11
Dec. 12
Sabadell continues to provide credit to SMEs and corpo ratesNote: Data is presented like-for-like, including B. CAM in 2012
Corporate credit
Sight deposits companies Volume at BS card PoS
ICO loans (publicly subsidised loans)
2424
26
137.1%137.8%
174.8%
182.1%168.3%
146.7% 144.0%
125.8%118.4%
2007 2008 2009 2010 2011 2012 1Q13
Ex. EPA815 1,322
5,8113,439 4,516
10,500
-2,682
15,452
2007 2008 2009 2010 2011 2012 1Q13 2013e
Commercial gap improvement continues …
Change in commercial gapEuros in million
Loan to deposit ratioEuros in million
Banco CAM acquisition
Customer funds and loans evolution Euros in million
1 Other on-balance sheet term funds include term deposits and other funds placed in the retail network: preference shares, mandatory convertible bonds, senior debt, commercial paper and other. Excludes repos. Note: In 2012, changes in commercial funding cap include adjustments for capital increase.2012 numbers include Banco CAM
Mar-12 Dec-12 Mar-13% Var.
YoY
On-balance sheet customer funds 53,446 80,179 82,692 54.7%Other on-balance sheet term funds1
34,103 53,095 53,819 57.8%Sight deposits 19,343 27,085 28,874 49.3%
Off-balance sheet funds 18,345 20,659 21,173 15.4%Mutual funds 8,295 8,585 8,987 8.3%Pension funds 2,929 3,709 3,731 27.4%Third party insurance products 5,780 7,313 7,270 25.8%
Total funds 71,791 100,838 103,865 44.7%
Gross loans to customers ex repos 74,235 115,392 113,389 52.7%
2525
27
Deposits65.2%
ICO financing4.8%
Wholesale funding21.6%
Prefs0.1%
Retail issues3.4%
Repos4,9%
… maintaining a balanced funding structure …
Group funding structure Group wholesale funding breakdown
Covered bonds63.2%
Senior debt1.5%
Prefs + Subordinated
3,7%
ECP4.4%
Securitisation19.1%
GGB8.1%
2626
28
… and efficiently managing liquidity
Group wholesale funding maturities Euros in million
Maturity by product type Euros in million
ECB liquidity position Euros in million
1,429
0 197
4,022
2,8043,037 3,050
1,562
796
2,765
0
1,000
2,000
3,000
4,000
5,000
2Q12
3Q12
4Q12
2014
2015
2016
2017
2018
2019
>2020
2Q12 3Q12 4Q12 2014 2015 2016 2017 2018 2019 >2020 Outst. Amo untCovered bonds (CH) 1,429 0 197 2,946 2,804 2,577 1,907 1,445 796 2,132 16,233Covered bonds (CT) 0 0 0 0 0 0 0 0 0 0 0GGB 0 0 0 1,006 0 0 1,066 0 0 0 2,072Senior debt 0 0 0 0 0 157 0 100 0 25 282Preference and Subordinated 0 0 0 0 0 302 77 0 0 590 969Other mid- and long-term financial instruments 0 0 0 70 0 0 0 18 0 18 106TOTAL 1,429 0 197 4,022 2,804 3,037 3,050 1,562 796 2,765 19,661
December 2012 23,650
Returned amounts 2013January 30 1,150February 1 1,000February 20 500February 27 500Total amount 3,150
March 2013 20,500
2727
29
Mortgage Covered Bonds Over-collateralization Ratio
Mortgage Covered Pool
58,829 Total Eligible36,803
Total Not Eligible22,026
Maximum IssuanceAmount29,442
Covered Bonds(allocated and retained)
25,727
Over-collateralization Ratio 229%
Data as of March 2013
Euros in Million
OCRatio over-eligible
portfolio143%
2828
30
4. Risk and capital management
2929
31
Evolution of NPLs and RE assets
Evolution of NPLs, substandard and real estate asse ts, ex-APSEuros in million
9.1% of global coverage ex-APS (loans and real estate assets)
2Q12 3Q12 4Q12 1Q13Net entries 249 667 1,094 385Change in RE assets 522 327 233 394Net entries + Change in RE assets 771 994 1,327 778Write-offs 228 232 387 247Quarterly change in non-performing assets 543 762 940 5 31
4T12 1T13NPLs volume 10,287 10,424RE assets 5,927 6,320NPLS+ RE assets 16,214 16,744Substandard exposure 2,844 2,897
Total problematic assets ex-APS 19,058 19,641
Total provisions ex-APS 9,410 9,516
Coverage ex-APS 49.4% 48.4%
3030
32
NPL ratios by segment
NPL ratios by segment, excl. APSIn percentage
Note: NPL ratio is calculated including contingent risk.
The NPL ratio increased by 36 basis points in 1Q13
2Q12 3Q12 4Q12 1Q13
Real Estate development and/or construction purposes 25.33% 26.87% 32.50% 38.38%BS stand-alone 26.30% 25.01% 29.96% 36.03%
Construction purposes non-related to real estate dev. 4.19% 4.28% 5.53% 5.96%BS stand-alone 3.92% 3.92% 5.04% 5.76%
Large corporates 6.32% 6.92% 7.10% 7.40%BS stand-alone 2.91% 3.43% 3.88% 4.10%
SME and small retailers and self-employed 7.33% 7.98% 9.00% 8.98%BS stand-alone 6.64% 7.26% 7.30% 7.09%
Individuals with 1st mortgage guarantee assets 6.16% 6.67% 7.61% 8.07%BS stand-alone 3.42% 3.82% 4.41% 4.70%
NPL ratio 7.82% 8.46% 9.33% 9.69%
BS stand-alone 6.24% 6.78% 7.41% 7.98%
3131
33
1Q13BS ex-
APSAPS Total
Real estate assets 39.4% 47.8% 43.3%Real estate development loans 36.0% 44.2% 39.8%Total real estate exposure 37.4% 45.6% 41.2%
Construction 6.2% 42.6% 7.8%Large corporates 3.7% 27.2% 4.7%SME and small retailers and self-employed 5.2% 27.3% 8.0%Individuals 3.6% 11.6% 4.1%Other 3.3% 59.2% 4.4%Rest of loan book 4.0% 22.3% 5.2%
Total loan book and RE assets 9.1% 38.3% 13.8%
Coverage
Maintaining high coverage levels of credit and real estate exposure
Coverage by segmentSplit between Asset Protection Scheme and rest
13.8% of coverage of total loans and real estate assets
3232
34
No market capital call in the pipeline
Core capital evolution including Penedés and Banco Ga llegoIn percentage
Minimum level according to Basel III CRD IV
Comfortably exceeding minimum capital levels according to Basel 3, even on a fully phased in bas is
Evolution on a fully phased in basis
Core capital evolution according to Basel III CRD IV 12.2%
11.1%
9.7%10.3%
9.5% 9.5%9.9%
10.6%10.4%
Dec.12 Mar.13 2013e 2014e 2015e 2016e 2017e 2018e 2019e
7.0%
4.0%-4.5%
5.0%4.9%
5.7%
6.8%7.7%
9.4%
11.2%
3333
35
5. Managing Real Estate assets
3434
36
Latest commercial efforts are showing results …
Target 2013: >16,000 units sold
Sales evolutionNumber of units
1,988
2,945 2,8645,976
2,497
1Q 2Q 3Q 4Q
2012 2013
+26%
3535
37
In 89% of the houses sold by Sabadell in 1Q13 the price
was below €100,000
62% of the houses sold by Sabadell in 1Q13 without
mortgage financing
31%
49%
66%
71%
76%
83%
Barcelona
Madrid
Hosp.Llobregat
Zaragoza
Sevilla
Valencia
Source: XVI Informe sobre el mercado de la vivienda Tecnocasa-Univ. Pompeu Fabra (Mar 2013)
Transactions with a price <€100,000 (%, Spain sector data)
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
Hipotecas sobre viviendas(número)
Compraventa de viviendas nuevas y2ª mano (unidades)
Source: INE
� Higher proportion of affordable houses
� Increase in the number of cash transactions
3737
… addressing market segmentswith positive momentum ….
404039393636
Spanish house transaction and mortgage data (monthly)
Number of mortgages
Number of house transactions
3636
38
38,618
22,968
41,790
30,332 29,83925,360
2007 2008 2009 2010 2011 2012
… and with an offer that is meeting strong demand
� Strong demand for coastal properties
� Increased importance of foreign buyers
8,3%
2,6%
-0,6%
Mediterranean coast and islands
Inland
Price declines from peak
Change in number of transactions2012 vs. 2011
-30%
-41%
-39%Madrid /Barcelona
Source: Consejo General del Notariado
75% of Sabadell’s finished properties are located along
the coast
14% of Sabadell sales in 1Q13 where to foreign
buyers
Number of transactions by foreign buyers
Source: Ministerio de Fomento, TINSA
38384141404037373737
39
More efficient marketing campaigns …
Better results than in 4Q12Results after 5 weeks of latest marketing campaign
More than 35% more offers received than in the last
campaign of 2012
2.5% 2.7%Conversion rate (online contacts/visits)
5.8% 6.1%Conversion rate (offers/ contacts)
393942424141
� More than 3,600 offers received
� More than 3,000 buyers on waiting lists
� Increase in the reservation rate by number of contacts
� Price increases in selected developments (for example in Valencia and Cádiz)
� Auction sales when properties receive more than one offer
3838
4Q12 Campaign 1Q13 Campaign
3838
40
… addressing all market segments
Solvia launches its “Premium” brochure
http://www.solviarealestate.com/premium/catalogo.pd f 4040434342423939The “Premium” brochure is available online:
3939
41
6. Update on M&A activity
41414444434340404040
42
Update M&A: BMN
� Asset and liability transfer concerning the former Caixa Penedésbanking network in Catalonia and Aragon
� Estimated integration date: October 12th, 2013
Loans €10bn
Customer funds
€8,2bn
RWA ~€5.3bn
Branches 462
Clients ~900,000
Employees ~2,000
Data as of February 2013.
Key
num
bers
424245454444
Synergies €66M
4141
ROE(post synergies)
10%
Number of branches and split of loans and customer funds by region
# Branches: 37Loans: 8% Customer funds: 5%
# Branches: 350Loans: 76%Customer funds: 84%
# Branches: 32Loans: 7% Customer funds: 5%
# Branches: 24Loans: 6%Customer funds: 4%
# Branches: 9Loans: 2%Customer funds: 1%
# Branches: 10Loans: 1% Customer funds: 2%
Huesca
Zaragoza
Lleida
Barcelona
Girona
Tarragona
4141
43
Update M&A: Banco GallegoK
ey n
umbe
rs
Loans €2,200M
Customer funds
€3,000M
Branches 183
Employees 737
Clients ~125.000
Assets €4,200M
RWA €1,900M
NPL ratio 8.3%
� Capital injection by the FROB of €245 million
� Sabadell significantly increases its presence in a region that represents 5.3% of Spanish GDP
14% coverage of total loans
434346464545
Synergies €19M
4242ROE
(post synergies)14%
Galicia branch network, pro-forma
Branch market
share of 7%
BSBanco GallegoPro-forma
Loans by segment
Corporates 27%SMEs 18%Rest of companies 8%Mortgages 41%Rest of individuals 6%
28
117
145
A Coruña
Pontevedra
Ourense
Lugo
6 16
229 57
66
3 14
1710 30
40
4242
44
Sabadell branch distribution
4444
Total number ofbranches: 636
20062001
Total number ofbranches: 1.187
Total number ofbranches: 2.338Total number of
branches: 1.853
Note: The region of León is included in Asturias and not in Castilla y León.
Market share by region
4747464643434343
2012
4% 5%13%
≥ 10%≥4 y <10%<4%
7%13%
6%
13%
10%
6%12%
13%
6%
5%
14%
10%
6%7%
4%
5% 5%
5%
2013e
45
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