Zagreb, June 14 2016
HPB TRENDOVI 2016
- Operating profit exceeds the record set in 2015
- Net profit slightly below 2015 due to higher impairment losses
- Plan for 2016.: net profit remains unchanged, higher operating profit
- Loan and deposit growth
- Market share and number of clients significantly higher
PRELIMINARY FINANCIAL RESULTS FOR THE PERIOD FROM JAN 01 TO MAY 31 2016
MARKET SHARES:
LOANS + 0,2 pp in Q1/16 = 4,62%(∆Q1/16: HPB: +1,3%, sector: -3,0%)
DEPOSITS + 0,2 pp in Q1/16 = 4,98%(∆Q1/16: HPB: +0,2%, sector: -3,8%)
CLIENTS & PRODUCTS
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HPB p.l.c.
OPERATING PROFIT – CONTINUOUS GROWTH
- INTEREST INCOME: interest income is less than expected in spite of volumegrowth, partially recouped by reducedinterest expenses
- 300 FEES: growth in retail and corporate exceeds decline in cash payments, cardfees (interchange) and absence of arranger fee (one-off transaction in 2015)
- TRADING: effective FX position management & positive FX translationdifferences (+16,5% y-o-y) + bond sale
- OTHER INCOME: one-off inflow in 2015 from insurance collection, only regulartransactions in 2016
- COSTS: reduction achieved through savings in cash tranportation, postal & telecommunication services, security andprotection services (…)
DECREASE IN INTEREST INCOME IN SPITE OF VOLUME GROWTH, IMPROVED STRUCTURE OF LOAN PORTFOLIO
Interest income
(in HRK million)
Corporate
lower interest rate + lower volume on average & decreased margins
Retail
- volume growth, lower interest rates
- Portfolio structure changed in favour of housing loans bearing smaller margin, but new clients havebetter cross sellingpotential
NET INTEREST INCOME:3,1% LESS THAN PLANNED
Interest expense
(u mil. HRK)
- continuous decline of interest rates on term deposits
- strong growth of demand deposits
HPB p.l.c.
ytd '16/ ytd '15ytd '16/ Plan
FEES AND COMMISSIONS – HIGHER THAN PLANNED
CORPORATE
- increased income from FX payment operations
- higher guarantee volume and associated income (+46%)
RETAIL
Higher income from bundles & HPB combinations, and insurance policy
CASH PAYMENTS (CHANNELS)
- cash payments declined less than expected
- number of users receiving pension "cash in hand" is continuously decreasing
CARDS OPERATIONS
slight decrease due to regulatory ceiling imposed on interchange fees in 12/2015 and fee spilloverinto bundled products
FEE EXPENSE
- cash payment expenses have decreased in line with associated revenue
- higher costs in card operations (transaction fees towards credit card companies)
OPERATING COSTS ARE LESS THAN PLANNED
PERSONNEL
- actual costs less than planned
- staff number 1.041 (-36 y-o-y)
GENERAL & ADMINISTRATIVE EXPENSES
savings achieved in postal and telecommunication services, cashtransport, security services and IT equipment maintenance (…)
AMORTIZATION & DEPRECIATION
- decrease in comparison with 2015 due to expired useful life of assets
- CAPEX in 2016 and implementation of new technologies imply that furtherdecrease of these expenses is not expected in the future
DEPOSITE INSURANCE
new regulatory charge for EU recovery fund, charge calculated since the end of 2015, dynamics in line with the plan
PROVISIONS FOR IMPAIRMENT LOSSES
- • higher provisions for impairment losses caused by the needto recognize additional impairments on already identifiedNPLs, and not due to portfolio deterioration
- • higher litigation provisions due to unexpected court verdict against the bank
- • such provisioning dynamics is not expected in the remainderof 2016, whereat quarterly calculation of provisions will becarried out in June 2016, for large exposures
- • NPL disposal process is currently underway, wherefrompositive effects are expected
• NPL coverage ratio is above market average, with HPB'sindicator being stable, as opposed to market indicator whichis increasing
STRONG RETAIL LOANS GROWTH, IN SPITE OF DECLINING MARKET
DEPOSIT GROWTH ABOVE PLAN AND MARKET
HPB p.l.c.
CORPORATE: MARKET SHARE GROWTH IN DEPOSITS AND STABILIZED MARKET SHARE IN LOANS
- • Loan movement in 2015 is determined by the decrease in exposure to an individual group, whilst the dynamics in 2016 is in line with the market
- •Fluctuating market shares in deposits with strong growth recorded in Q1 2016
RETAIL: ROBUST GROWTH IN ALL SEGMENTS
- • loans approved ytd 2016amount to HRK 720 million (6.598 loans)
- therein HRK 377 million relates to housing loans (954 kredita)
- • 14.405 new current accounts opened(ytd 2015 = 12.658; +14% y-o-y)
- • 7.545 insurance policies(+11% y-o-y)
*source for the sector: HNB (aggregate data for the period ending Mar 31 2016)
11
SuperSmart HPB current account
- •First and only on Croatian market
- •Online account opening via video call – without coming to a branch
- • Product in line with international trends (6 countries inEurope)
- •Targeted group – clients of other banks and completely new users
- •Opening in few simple steps:
Thorough changes of HPB internally and externally
Mobile bankingmHPB
- • Still most advanced mobile banking inCroatia
- •additional functionalities from Feb 2016
- •SuperSmart account from May 2016
- • Strong growth in number of users andtransactions (y-o-y):
- users +55%
- transactions +169%
- • development of mobile banking solutionsfor corporate subjects during 2016
Pošta & HPB MasterCard card
- • payment in up to 12 instalments at every sales outlet in Croatia and in theworld
- • User can independently definerepayment mode and number ofinstalments for each purchase
Postal office becomes a "bank within the post"
- • HPB cash loans available in 130 postal offices
- • 400 postal offices satisfies basicfinancial needs of clients
- •130 loans in the first month
SIGNIFICANT PROJECTS FLOW AS PLANNED
HPB p.l.c.
Thank you for your attention Q & A