Delta Bank
description
Transcript of Delta Bank
2009
Presentation
Delta Bank- No. 1 in consumer finance in Ukraine
Real 2Q2009 Gross Domestic Product (GDP) reached only 82%* of theyear‟s earlier figure of the same period
9M2009 Consumer Price Index reached 109,1%*
Real Disposable Income melted by 8,3%*
Real Salary Index in August 2009 constituted 88,7% if compared to August2008 *
9M2009 Retail Trade Turnover reached UAH 319 billions which was 83,8%from the result of 9M2008*
FX rate jumped from 5.05 at the beginning of „08 to over 7.8 UAH/USD YE08
Macroeconomic Outlook
2
2005 2006 2007 2008 2009 2010
Population, mn 3 46.90 46.60 46.40 46.10 e 45.90 f 45.70 f
Nominal GDP, US$bn 3 85.70 107.60 141.90 183.10 101.90 f 117.60 f
Nominal GDP, UAHbn 3 438.7 543.5 716.3 949.9 855.8 f 999.3 f
GDP per capita, US$ 4 1826 2307 3059 3969 e 2219 f 2571 f
Real GDP growth, % change y-o-y 3 2.7 7.3 7.6 2.1 -14.7 f 1.3 f
Budget balance, UAHbn 3 -7.8 -3.7 -7.7 -14.2 -77.9 f -69.9 f
Budget balance, % of GDP 3 -1.8 -0.7 -1.1 -1.5 -9.1 f -7.0 f
Consumer prices, % y-o-y, eop 3 10.3 11.6 16.6 22.3 15.0 f 16.0 f
Central Bank policy rate, % 1,5 9.50 8.50 9.00 12.00 9.50 f 9.00 f
Exchange rate UAH/US$, eop 6 5.05 5.05 5.05 7.80 9.00 f 8.00 f
Imports, US$bn 7 36.16 44.14 60.41 84.65 60.95 f 64.00 f
Exports, US$bn 7 35.02 38.95 49.84 67.71 55.86 f 59.49 f
Trade balance, US$bn 7 -1.14 -5.19 -10.57 -16.94 -5.09 f -4.50 f
Current account, US$bn 7 2.53 -1.62 -5.92 -12.94 e 0.36 f 1.67 f
Current account, % of GDP 8 2.95 -1.50 -4.17 -7.07 e 0.36 f 1.42 f
Foreign reserves ex gold, US$bn 7 19.11 21.90 31.79 31.54 25.00 f 23.00 f
Import cover, months g&s 7 5.2 4.9 5.3 3.8 e 4.1 f 3.5 f
Total external debt stock, US$mn 2,7 39619.0 54512.0 82663.0 103230.0 85524.0 f 90377.0 f
Total external debt stock, % of GDP 8 46.24 50.65 58.27 56.37 e 83.95 f 76.88 f
Notes:
e BMI estimates.
f BMI forecasts.
1 Discount Rate;
2 JEDH;
Sources:
3 State Statistics
Committee.
4 State Statisitics
Committee;
5 NBU/BMI;
6 BMI;
7 National Bank of Ukraine;
8 National Bank of
Ukraine/BMI Calculation.
UKRAINE - MACROECONOMIC FORECASTS**
Factors influencing consumer lending market
* Source: Ukraine State Statistics Committee
** Source: Business Monitor International
143,00%
109,40%
142,50%
106,10%
91,70%
103,10%
0,00%
20,00%
40,00%
60,00%
80,00%
100,00%
120,00%
140,00%
160,00%
Nominal Income Actual Disposable Income
Expenditures
2Q2008
2Q2009
Ukrainian Population Income and Expenditures(compared to the corresponding period of the previous year)
SUK001BJ1 v2
Consumer Lending
3
Key players, September 2009*
Privat Bank; 36%
Ukrsibbank; 10%
Delta Bank; 54%
Platinum Bank; 1%
Estimated consumer finance market volume in September 2009 was c. UAH115 mio. - down 4,5 times from UAH 510 mio of September 2008 *
Market shares: Delta Bank– 54%, PrivatBank– 36%, Ukrsibbank – 10%,Platinum Bank – 1%*
Significant change in CONSUMER‘S BEHAVIOR
23%** contraction in number of active credit cards during 09M09
As a reference to nine month of YE 2008 number of credit card operationsissued by Ukrainian banks during nine month of YE2009 is down by 9%, aswell as in amount of a single operation – 5%**
Average loan amount in Sep09 was UAH 2 400* compared to UAH 3 190* ayear earlier
Average maturity of a loan:
September 2009 - 7 month,
September 2008 – 12 month *
Credit Cards not offered to new clients*
Services finance ceased
Cash lending – not offered
Purpose-oriented lending is active
0% lending ceased
Market’s key players*
2008 2009
Delta Bank
PrivatBank
Alfa-Bank
Eurocreditbank
Pravex-Bank
ProstoFinance
Home Credit Bank
VAB Bank
Renissance Capital
Russian Standard
FirstCredit Union.
Delta Bank;
PrivatBank;
UkrsibBank;
Platinum Bank.
Market changes
* Source: Delta Bank data
** Source: NBU reporting
SUK001BJ1 v2
Consumer Focused Model – Changes Provoked by the Environment
Sales Finance
POS loans for purchase of consumer
goods
Cash
Loans
Non-purpose installment
loans
Credit Cards
Revolving Credit Cards
Revolving private label credit cards
Car Loans
Used Cars
New cars
Personal Loans
Non-purpose loans issued at
bank offices
Home Equity Loans
Consumer Credit
Main Sales Channels
Channels
Products
Brokers
Credit Card
Deposit Card
Other Sales
Channels:
POSs in
Shops / Partners
Credit Card
Deposit Card
Paper Loans
Cash Loan
Corporate Sales Branches
Deposits
Credit Card
Deposit Card
Cash
Auto
Credit Card
Deposit Card
UkrPost
Internet banking
Telemarketing
4
Only to loyal
customers
Only to loyal
customers
Only to loyal
customersOnly to debit
cards +
overdrafts
Only to loyal
customers
SUK001BJ1 v2
Consumer Lending – Delta’s Dynamics
5
Effective
business
model allows
to stay
profitable
even in
difficult
market
conditions
Increasing number of loan applications with simultaneous reduction of relative level of rejections confirm a positive
dynamics in the consumer finance business
POS loans issuance dynamics POS loan application dynamics, rejection levels
126,8
63,8
19,5 17,310,2 14,4
16,714,7 26,2
43,355,4
62,3 61,0
0,0
20,0
40,0
60,0
80,0
100,0
120,0
140,0
160,0
180,0
200,0
Sep-0
8
Oct-0
8
Nov-0
8
Dec-0
8
Jan-0
9
Fe
b-0
9
Mar-0
9
Apr-0
9
May-0
9
Jun-0
9
Jul-0
9
Aug-0
9
Sep-0
9
Issuance, mio UAH
Issuance, Fact, mio UAH
38,3%
54,5%
59,7%61,9%
60,1%
55,4%55,2%58,9%
53,8%
45,1%45,6%46,4%48,7%
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
Sep-0
8
Oct-0
8
Nov-0
8
Dec-0
8
Jan-0
9
Fe
b-0
9
Mar-0
9
Apr-0
9
May-0
9
Jun-0
9
Jul-0
9
Aug-0
9
Sep-0
9
Number of Applications Approved Number of Applications Rejected
Rejection Ratio
15,3 15,1 14,0 14,0 13,6 13,1 12,9 12,9 12,9 12,8
0,0
5,0
10,0
15,0
20,0
25,0
30,0
35,0
40,0
1 2 3 4 5 6 7 8 9 10
%
Loan Portfolio Returns
Cost of Funding
Net Loan Portfolio Margin
0-9 Months
Favorable debt and market
conditions
Emphasis on unique strategy
and growth prospects
Lack of similar financial sector
issuers from Ukraine
Aggressive pricing and short-
term tenor
Luck
10-21 Months
Building credit history
Issue of debut IFRS audited
statements
Started preparation towards
an international and a local
credit rating
Attracting foreign funding
22-33 Months
Launch debut retail deposit
program
Increase scale of retail
deposit campaign through
extensive POS outlets
Launch debut SME deposit
program
Launch deposit program for
local insurers and assets
managers
2006 2007 2008
Wholesale Funding
Approach
Diversification of
Wholesale
Sources
BuildingLocal
Funding
Franchise
Strategy - Funding
No. 1 local bond issuer
in 2006
In November 2006, Delta
pioneered consumer loan
ABS in Ukraine
11 bond issues in 2006-
2007 for the total amount
of nearly $400m
Successfully repaid all
2006 bonds
Balanced liabilities
structure
UAH 2,314 billion retail
deposits collected in 2008
Successfully repaid all
2006-2007 bonds
6
80%
0%11%
9%2006YEForeign Debt
Local Debt
Corporate Deposits
Retail Deposits
51%
12%
28%
10%2007YE 4%
38%
58%
2008YE
34-45 Months
Full-scale retail deposit
program
Reliance on domestic
funding
Repayment of all foreign
funding
Corporate products (salary,
cash settlement etc.)
2009
Using Local
Funding
Franchise
$390 Mio foreign
funding fully repaid
Maintaining a high level
of deposit prolongation
0% 23%
23%
54%
9M2009
SUK001BJ1 v2
Local Funding Base
7
Average Maturity Deposit Retention Ratio
0,98
0,49
0,590,64
0,42
0,35
0,600,54
0,50
0,130,17
0,30
0,41
0,56
0,39
0,53
0,71
0,41
0,72
0,610,61
0,71
0,00
0,20
0,40
0,60
0,80
1,00
1,20
Jan-0
8
Feb-0
8
Mar-
08
Apr-
08
May-0
8
Jun-0
8
Jul-08
Aug-0
8
Sep-0
8
Oct-
08
Nov-0
8
Dec-0
8
Jan-0
9
Feb-0
9
Mar-
09
Apr-
09
May-0
9
Jun-0
9
Jul-09
Aug-0
9
Sep-0
9
Oct-
09
Deposit Portfolio Development
0,00 2,00 4,00 6,00 8,00
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Months
While the
banking
system in
whole shown a
decline in
retail deposits
volume, Delta
Bank
continued to
rise its
portfolio
0,00
500,00
1 000,00
1 500,00
2 000,00
2 500,00
0,00
50,00
100,00
150,00
200,00
250,00
UA
H,
Millio
ns
UA
H,
Billio
ns
All Banks, left scale
Delta Bank Deposits, right scale
SUK001BJ1 v2
Superior Risk management
8
Under normal market conditions Delta Bank used to issue UAH 150-200 mio of consumer loans per month
Operating scoring model (second generation), loan issuance policy oriented for the volume of issuance (rules for loyalty, moderate
credit load, etc.)
Automatic decision making (“white” zone) allowed to assess an application and to make a loan issuance decision within 20
minutes and to review 480 thousand of applications per month
Delta Bank’s risk management function is arguably one of the most sophisticated among Ukrainian banks
Modeling, Prognosis and Actions
Detailed stress testing of the loan portfolio and the future issuances quality exposed the vulnerabilities of the loan issuance policy
under the circumstances of dramatic devaluation and loss of income by Ukrainian population (unemployment, decline of income, etc.)
Based on the results of modeling, a number of decisions was made:
Reduction of the credit exposure per one customer (reduction of the maximum loan amount, rising the personal income
requirements, etc.)
Limiting the maximum loan maturity to 12 months
Rejecting all loan applications made by individuals employed in the most risky sectors of economy (construction, production,
etc.)
Chosing the loyal clients and to offer them a selection of alternative products and to reduce the overall maturity of the portfolio
to increase the portfolio turnover
Abolition of the “white” (automatically approved) zone (all the applications are now to be reviewed individually), some loyalty
rules, etc.
Such decisions reduced the volume of issuances to UAH 15-20 mio per month, reduced the number of loan applications passed to the
credit expertise department 10 times, allowed to build the high-quality portfolio during crisis times and to continue the loan issuance
In the beginning of June a new, more sophisticated and validated on the crisis-population, scoring model (third generation) was
implemented, the loan issuance policy was amended as to the maximum loan amount and other loan parameters. Such changes
made it possible to increase the loan issuance volume to UAH 60-70 mio per month
Loan Issuance in the Pre-Crisis Environment
Even in the most difficult time period
Delta Bank never suspended its lending
SUK001BJ1 v2
Superior Risk management (Cont’d)
9
Portfolio Delinquency Ratio,
% of issued loans, evaluated on the date
Source: Internal MIS
Continuous improvement of loan portfolio quality made it possible for Delta to achieve a volume
of loans delinquent for 90+ days of only 2,51% of the total issuance amount
Operating scoring card
(2nd generation)
Expected decline of quality of
issuance related to dramatic
devaluation and unemployment
Analysis of the major crisis threats,
implementation of amendments to the loan
issuance policy, reduction of the issuance volume
Implementation of the new scoring card
(3rd generation), rising the number of
issuances
Opportunities we see for Delta
Our Response to the Changed Environment
10
• Go to a viable corporate banking with a primary focus on cash management services with limited credit exposure
• Add and proactively sell (cross-sell to our 3.5 mio customer base) transactional banking services on the top of our strong presence in retail credit
We will become a more universal bank, i.e.:
• Given 3.5mio customer base we lend only to “the best” clients (cross-sell, up-sell facilities)
• We go to Salary Projects niche: we provide credit card loans to employees of survived companies which lost their servicing banks due to insolvency/state bail-out during crisis
• POS loans continue to show very good credit quality (0,5% on 1st default)
We are more cautious to risk in retail:
• We are looking around for potential M&A targets in Ukraine that would provide scale to Delta‟s position in a post-crisis life
We look beyond crisis:
Source: NBU Data, Delta Bank`s Management Accounting
Delta Bank Performance Indicators
Total customer base
Net Margin
CAR
Cash In Hand and
Highly Liquid Assets
UAH 2,09 bn
Equity
UAH 1,9 bn
Key Performance Indicators as of September 30, 2009
Consumer Loan
Portfolio
12,41%
Net Assets UAH 6,1 bn 3,5 mio
7,03%
UAH 2,3 bn
Net Profit
11,43%
UAH 1,07 bn
RoA
11
Credit Card Loan
Portfolio
Retail Deposit
Portfolio
RoE
0,36%
3,52%
UAH 510 mio
UAH 7,9 mio
NPL
Number of
Employees
3,107
Contact information
Mr. Vitaliy Masyura,
First Deputy Chairman of the Board of
Directors
Ph. 38 044 391-51-00
Fax 38 044 391-51-12
E-mail: [email protected]
12
The information contained herein has been obtained from sources believed by Delta
Bank („Delta‟) to be reliable.
Whilst all reasonable care has been taken to ensure that the facts stated herein are
accurate and that the opinions and expectations contained herein are fair and
reasonable, no representation or warranty, express or implied, is made by Delta or
any of its respective agents or affiliates with respect to the fairness, completeness,
correctness, reasonableness or accuracy of the information, opinions and
expectations contained herein.
Any opinion, estimate or projection in this presentation constitutes an opinion,
estimate or projection as of the date of this presentation, and there can be no
assurance that the future financial or other performance of Delta will be consistent
with any such opinion, estimate or projection.
The information in this presentation is subject to change without notice, it may be
incomplete or condensed, and it may not contain all material information concerning
Delta.
Disclaimer
13