investors meeting - patria bank | credite, carduri, investitii · over 87% of the deposit base is...

Investors meeting

Bucharest, November 10th 2016

Copyright © Patria Bank 2016

CONTENT

2

3 Operational model

Merger implementation status4

2 Strategy of Patria Bank post-merger

1 About the Merger

Appendix 1 - 25

1. About the MERGER

3


1.1. Patria Bank – Group structure

4

Patria Bank Group comprises Patria Bank (former Nextebank) as parent of BancaComerciala Carpatica and Patria Credit IFN (non-banking financial services)

Patria Bank has started a merger process with Banca Carpatica, whereby BancaCarpatica shall absorb Patria Bank, estimated implementation date 31.dec.2016

GROUP STRUCTURE: PRE-MERGER

Emerging Europe Accession Fund UA

98.43%

Patria Bank

(Apr-2016)

100%

64.16% 100%

Banca Carpatica, listed on BSE

(Jan-2016)

Patria Credit IFN

(Oct_2015)

SAI Patria Asset

Management

100%

SAI Carpatica Asset Management

GROUP STRUCTURE: POST-MERGER

Emerging Europe Accession Fund UA

78%

Patria Bank SA*

(listed on BSE)

100% 100%

SAI Patria Asset Management

Patria Credit IFN

(Oct_2015)

* the legal merger process implies Banca Carpatica absorbing Patria Bank;

the merged bank shall remain listed on Bucharest Stock Exchange and

shall be named Patria Bank

Copyright © Patria Bank 2016 5

1.2. Patria Bank and Banca Carpatica – historical figures

Fast and solid Turnaround of Patria Bank (a small bank) over the last 2.5 years (2014-2016):

NPL ratio drastically decreased from 52% (2013) to 18% (2015)

Building new business generation capacity of 100+m Eur new loans/year, through theacquired Micro business line, new SME and Retail business lines Building newoperational model of automated operations & digital banking

Impact of “Darea in plata” law captured in 2016 cost of risk (limited impact)

Pre-merger Turnaround of BCC has just started in Q3 2016 through:

Headcount restructuring (-200 FTEs in 2016 compared to beginning of theyear; almost finalized)

Branch network optimization (-34 branches in 2016; an important partalready realized)

Revenues from workout: 4 mil. EUR, Sept.2016 YTD

PATRIA BANK BANCA CARPATICA

AuditedAudited

(restated)Audited Forecast

000 EUR 2013 2014 2015 2016

Liquid assets 537,545 392,510 426,144 387,174

Loans, net 273,404 238,640 175,483 141,022

Investments in subsidiaries 3,083 2,684 1,553 1,456

Other assets 91,952 83,887 72,252 71,445

Total Assets 905,984 717,721 675,432 601,097

Customer deposits 628,871 643,551 630,687 559,232

Equity 88,372 42,404 25,025 36,623

Net Banking Income (before cost of risk) 49,142 48,220 27,802 21,262

Cost of risk (5,635) (52,508) (10,257) (5,162)

Net Banking Income (after cost of risk) 43,507 (4,288) 17,545 16,100

OPEX (34,201) (32,473) (30,285) (25,903)

Net result 8,691 (45,687) (16,974) (10,946)

Cost/Income 79% -757% 173% 161%

Audited Audited Audited Forecast

'000 EUR 2013 2014 2015 2016

Liquid assets 113,004 153,028 129,648 84,763

Loans, net 60,834 67,329 120,064 131,312

Investments in subsidiaries 391 - 4,859 32,332

Other assets 16,757 11,151 14,034 17,952

Total Assets 190,987 231,508 268,606 266,359


Equity 22,916 51,214 49,481 55,478


Cost of risk (3,986) 304 (1,369) (3,396)

Net Banking Income (after cost of risk) 2,598 7,456 12,381 15,160

OPEX (22,533) (13,678) (15,330) (17,345)

Net result (20,180) (6,426) (1,813) (2,260)

Cost/Income 867% 183% 124% 114%


1.3. Merger valuations and share exchange

174 194

Book value Fair value

BCC (RON m)

238 262

Book value Fair value

PBK (RON m)

1.12 x book 1.10 x book

3.0566 share exchange ratio

• Independent (EY) valuations of the two banks as of May 2016 (Reference rate)

• Same valuation methods, unified approach

RON 156 m increase of BCC’s capital through the merger

• withdrawal requests from minority shareholders amount to 18.8% of capital

(market report published on Nov. 8th )


1.4. Rationale for the Merger

7

To increase Scale:

Network of 85 Branches (national coverage, including a few 2nd tier towns)

Reaching a Total Assets size of ~1 bln. Eur, to 1.2% market share

Deposits remained very sticky - despite 3 years of reputational issues around the former main shareholder of BCC and its group the bank decreased with ~ 10% its deposits base. Over 87% of the deposit base is retail, very granular and with good maturity profile.

To improve profitability:

OPEX synergies of 23% from the Merger (43m ↘ 33m annual OPEX - 2017 merged /2016 cumulated) – after a significant OPEX decrease (-14%) in BCC in 2016 vs.2015 through turnaround measures & reorganization plans

the Merged Bank will break-even in 2017 after the merger (excluding the P&L impact of the project Posta Romana distribution project)


1.5. Better size of the Merged bank starting 2017

Audited Audited Forecast Audited Audited ForecastForecast

consolidatedPlan

'000 EUR Dec.2015 May-16 Dec.2016 Dec.2015 May-16 Dec.2016 Dec.2016 Dec.2017

Liquid assets 129,648 84,577 84,763 426,144 410,486 387,174 477,523 279,767

Loans, net 120,064 122,548 131,312 175,483 157,769 141,022 275,614 434,154

Investments in

subsidiaries4,859 36,837 32,332 1,553 1,437 1,456 4,954 4,954

Total Assets 268,606 258,506 266,359 675,432 642,600 601,097 848,335 809,983

Customer deposits 203,707 197,005 201,770 630,687 584,511 559,232 751,041 697,456

Due from Banks 956 2,209 5,333 2 1 - 10,943 12,906

Equity 49,481 52,866 55,478 25,025 38,477 36,623 61,679 77,043

Patria Bank Banca Comerciala Carpatica Merged Bank

45%

47%

49%

Dec.2015 May-16 Dec.2016

26%

25%23%

Dec.2015 May-16 Dec.2016

32%

54%

Dec.2016 Dec.2017

Loans/TA by bank

Merged bank


8.3

23.7 4.7

3.3

10.3

9.9 23.3

36.9

Forecast 2016consolidated

Merged 2017

Merger impact on operational income

Net fee income, trading incomeand other op. income

Recoveries from Write off

Net interest income after cost ofrisk

Total net operational income

30 26

43 33

4

17 10

OPEX BCC2015

2016 savings OPEX BCC2016

OPEX PBK2016

OPEX 2016(PBK+BCC)

Mergersynergies

OPEX 2017Merger*

Merger related operational costs savings

EUR mEUR m

9

1.6. Better performance of the Merged bank starting 2017

Only+ 10%

* Without the ‘Posta Romana’ project

Consolidated Merged Bank

Audited Forecast Audited Forecast Forecast Plan

'000 EUR 2015 2016 2015 2016 2016 2017

Net interest income 10,909 12,225 10,776 8,926 18,658 25,975

Cost of risk, net (1,369) (3,396) (10,257) (5,162) (10,331) (2,227)

Net interest income after cost of risk 9,539 8,828 519 3,764 8,327 23,748

Net Banking Income (after cost of risk) 12,381 15,160 17,545 16,100 23,325 36,948

OPEX (15,330) (17,345) (30,285) (25,903) (35,207) (37,476)

Gross result (3,021) (2,213) (15,269) (10,946) (12,877) (2,199)

Net result (1,813) (2,260) (16,974) (10,946) (12,924) (2,199)

Cost/Income 124% 114% 173% 161% 151% 101%

ROA -0.7% -0.8% -2.5% -1.8% -1.7% -0.3%

Patria Bank BCC

Bank would breakeven in 2017 if Posta Romanaproject impact excluded

** includes PL for PBK FY 2016 and 9 months BCC (Apr to Dec '16)

**

2. Post-merger STRATEGY

10


2.1. Patria Bank – Shareholding

11

Merged Patria Bank shall have as majority shareholder, owning 78%, Emerging Europe Accession FundUA (“EEAF”), private equity fund owned whose main investors are IFI’s (EBRD, EIF, DEG, BSTDB)

EEAF is advised by Axxess Capital Partners, one of the most experienced Private Equity team inRomania, with extensive expertise in Financial Services, having previously managed 2 other banks, 4leasing companies, 5 other non-banking financial institutions

Performance in Financial Services: 56% IRR & 5.6 x Money

Value creation through:

• Fast-growth strategies• Innovative business models• Empowered managerial team• Entrepreneurial approach


Significant growth opportunities are available in the Romanian market to increase financialintermediation & consolidate the local banking players

Penetration of Financial Sector is lowest in EU (59% banking assets /GDP)

50% of the population does not have a relationship with a bank, while 45% of the population lives in the rural area

over 80% of the banking assets are owned by foreign banks

Bank growth strategy based on 3 pillars

Classic Banking model – national distribution through 85-100 Bank Branches

3rd Party Distribution model – distribution through commercial partnerships with nation-wide distribution networks,such as the network of Postal Offices

Acquisitions opportunities – distressed bank acquisitions or portfolios - are expected to appear in the market

Business model focused on alternative distribution channels, automated operations & digitalbanking leads to a profitable mid sized bank (ROE of 12.8% in 2019)

2.2. Patria Bank’s Strategy

KEY POINTS


2.3. The 3 strategic pillars for growth

Organic growth

Classic branch model (85)

3rd party distribution model

Strong growth of loan portfolio, CAGR 2016-2019

Retail, 49%

SME, 17%

Micro, 20%

3rd Party

Classic

2016 2017 2018 2019

Loans portfolio, gross (EUR m)661

350

423540

Micro

SME

Retail

2016 2017 2018 2019

Loans portfolio, gross (EUR m)

741

350

513

625

• Distressed banks• Lines of business• Performing portfolios

Acquisition opportunities

Corporate, APL and workout portfolio (BCC)

Copyright © Patria Bank 2016page 14

x2.3 times increase in productive assets (net loans), including through the 90m portfolio acquisition

+30% increase in Total Assets

x2,3 times increase in Own funds, considering a capital increase planned for Q3 of 2017

Increase by 2.9% of RoA (from -1.7% in 2016 to +1.2% in 2019)

Reduction of Cost Income ratio to 75% ( from 151% in 2016)

(above comparison between 2019 objectives for the merged bank are made against the 2016 consolidated balance sheet of the parent-PBK as suitable comparatives)

(the projections presented in the table to the left include the hypothesisand projections related to the strategic project of banking servicesintermediation through Posta Romana, for the period 2017-2019).

2.4. Strategic objectives for 3 years post-merger

Consolidated

EUR m Forecast Plan Plan Plan

2016 2017 2018 2019

Loans, net 276 434 540 646

Total Assets 848 810 911 1,096

Own funds 40 60 77 92

ROE -21.0% -3.4% 10.0% 13.3%

ROA -1.7% -0.3% 0.9% 1.2%

Cost/Income 151% 101% 79% 75%

Merged Bank

3. Operational model

15


Digital Office + Client Enrollment

Main initiatives

IB / MB

Phone Banking

Completely renewed Products

Contact center

Mobile Salesforce Platform

Developments

Completely new Internet Banking and Mobile Banking platforms

Phone banking – new solution imbedded in the Contact Center platform

Digital Office (embedding biometric signature and OCR):

o Assisted Banking Platform for Clients Enrollment & transactions / in

branches and 3rd party outlets (postal offices)

o Online customer enrollment

Contact center -> expected to be fully deployed early 2017

Direct Salesforce Platform – expected to be launched in 2017

M-Pos transaction capabilities for mobile sales force and 3rd party outlets

Up-to-date and competitive Lending products offering (Retail, IMM and Micro)

Good retention of deposit customers

3.1. Initiatives for operational improvement


Data center infrastructure

Main initiatives

Rebranding & new Branch Concept

SIEM

Branch network optimization

Developments

New branch concept covers external signage and interior

functional design

95% of data center infrastructure has been upgraded during 2016,

including improvements on security layers and infrastructure

A new platform for security incidents management in progress of

implementation

Optimization of branches network in terms of distribution and

customers servicing

3.2. Upgrades / investments

4. Merger Status

18


Merger implementation status BCC – PBK

FINALIZED BCC – PBK Merger project has been delivered to Trade Registry in August 2016

October 5th, 2016 – BCC EGSM approved the merger

Withdrawing rights exercising period for BCC shareholders: October 5th – November 7th

Results of the withdrawing rights exercising: 3 shareholders (individuals) exercised their rights,these shareholders holding 414.699.946 BCC shares (18.83% of the bank’s equity)

November 8th 2016 – PBK EGSM approved the merger

WORK IN PROGRESS Work in progress to finalize the delivery of necessary documentation to NBR, for pre-approval of

the merger

NEXT STEPS NBR pre-approval of the merger

Delivery of merger documentation to Trade Registry, Court

Merger implementation – December 31, 2016

Delivery to FSA of the offering circular for capital increase of the bank, as result of the merger process

Legal registration of the merger – February 2017

4.1


THANK YOU!

CONTACT

[email protected]

5. Appendix

21


Appendix 15

Key economic and banking indicators*

* Source: national sources, Eurostat, RBI/Raiffeisen RESEARCH

Bank assets (EUR bn,

2015)

Assets-to-GDP (2000)

Assets-to-GDP(2015)

CE 788 78% 97%

SEE 223 37% 79%

hereof, Romania 92 29% 59%

Romania growth rates continue tobe the highest in Europe

Financial intermediation still lagsbehind the region average

Foreign ownership in Romanianbanking sector is among thehighest in the region (>80%);opposite trend in the CE and SEEcountries

Consolidation actions in bankingsector will continue (a certain sizeand market share is essential for asustainable profitability)


5 Appendix 2. Proforma BS and P&L for 2016-2019

Consolidated

Forecast Plan Plan Plan

''000 EUR 2016* 2017 2018 2019

Liquid assets 477,523 279,767 276,700 361,427

Loans, net 275,614 434,154 539,561 645,575

Other Assets 95,199 96,062 95,073 88,710

Total Assets 848,335 809,983 911,335 1,095,713


Total Liabilities 786,656 732,940 826,180 998,463

Equity 61,679 77,043 85,155 97,249


Cost of risk (10,331) (2,227) (9,250) (16,035)

Net Banking Income (after cost of risk) 23,325 36,948 48,223 56,411

OPEX (35,207) (37,476) (38,193) (42,586)

Net result, (12,924) (2,199) 8,111 12,095

of which due to Posta Romana project 0 (3,155) (397) 2,652

of which Merged Bank (12,924) 956 8,508 9,443

* includes PL for PBK FY 2016 and 9 months BCC (Apr to Dec '16)

Merged Bank


Disclaimer

The contents of this Presentation will not be interpreted or considered as a financial or fiscal opinion and any potentialinvestor may wish to use competent assistance from their legal and business advisers or from any other domain, for arelevant consultancy. This Presentation does not represent and cannot be used as a selling bidding offer, an invitation toacquire shares or request to purchase shares from the Issuer, coming from any person in any jurisdiction whereas such anoffer, invitation or request is illegal. The Presentation for investors cannot be used for, or in connection with an invitationto purchase shares from the Issuer. The Presentation offers the Management’s estimations and projections as regards theIssuer’s activity taking into consideration the financial market and banking evolution. The Management’s valuations shouldnot constitute the basis to substantiate an investment decision.

investors meeting - patria bank | credite, carduri, investitii · over 87% of the deposit base is...

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