HPB Group 9M 2022
Investor information
Management Board Jurišićeva ulica 4, HR-10000 Zagreb Phone: +385 1 4804 400, +385 1 4804 409 Fax: +385 1 4810 773
Zagreb, October 28, 2022 No: F21-7/2022-TB
Home Member Stock Exchange Identifier HPB-R-A Regulated Market/
Segment
LEI 529900D5G4V6THXC5P79
State of Issuer Republic of Croatia
ISIN HRHPB0RA0002
Zagreb Stock Exchange Inc. Official Market
Zagreb Stock Exchange Inc. Croatian Financial Services Supervisory Agency ("HANFA") Croatian News Agency OTS HINA
Subject: HRVATSKA POŠTANSKA BANKA, p.l.c. - Other non-regulated information
Hrvatska poštanska banka, p.l.c. announces Investor's materials for the period ended September 30, 2022.
Hrvatska poštanska banka, p.l.c.
Hrvatska poštanska banka, d.d. Jurišićeva ulica 4, 10000 Zagreb, Croatia phone: 072 472 472 [email protected] www.hpb.hr Management Board: Marko Badurina, Chairman Anto Mihaljević, Member Ivan Soldo, Member Marijana Miličević, President of the Supervisory Board IBAN: HR46 2390 0011 0700 0002 9 SWIFT: HPBZHR2X OIB: 87939104217 Registered with Zagreb Commercial Court under number MBS: 080010698 Base Capital 1.214.775.000,00 kn, divided into 2.024.625 ordinary shares in nominal amount of 600,00 kn (paid in full)
Limitation of liability
- The information and data contained in this presentation are intended to be general background information on Hrvatska poštanska banka p.l.c. as the parent company of the Hrvatska poštanska banka Group (hereinafter referred to as the Bank, Group or HPB and its activities. It is supplied in summary form and therefore not necessarily complete. Certain statements contained herein may be statements of future expectations and other forward-looking statements about HPB, which are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. In addition to statements which are forward-looking by reason of context, words such as "may", "will", "should", "expects", "plans", "contemplates", "intends", "anticipates", "believes", "estimates", "predicts", "potential", or "continue" and similar expressions typically identify forward-looking statements. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. As such, no forwardlooking statement can be guaranteed. Undue reliance should not be placed on these forward-looking statements. Many factors could cause our results of operations, financial condition, liquidity, and the development of the industries in which we compete, to differ materially from those expressed or implied by the forward-looking statements contained herein.
- This presentation contains financial and non-financial information and statistical data relating to HPB. Such information and data are presented for illustrative purposes only. This presentation may include information and data derived from publicly available sources that have not been independently verified, therefore HPB hereby expressly makes no representation of warranty of any kind, including, but not limited to the accuracy, completeness or reliability of the provided information and data. This presentation is for information purposes only and contains neither a recommendation to buy or sell nor an offer of sale or subscription to shares nor does it constitute an invitation to make an offer to sell shares.
- This presentation has been prepared and the data checked with the greatest possible care. Nonetheless, rounding, transmission, typesetting and printing errors cannot be ruled out. In the summing up of rounded amounts and percentages, rounding-off differences may occur.
HPB Group's strong growth supported by new acquisitions
- HPB Group was significantly strengthened by the acquisition of Nova hrvatska banka d.d. and Pronam Nekretnine d.o.o. in 2022
- On April 14, 2022, HPB took control over NHB and on July 4, 2022, acquired 100% ownership share in company Pronam Nekretnine d.o.o.
- Acquisition of ownership share in Pronam Nekretinine d.o.o. and receivable rights that Sberbank Europe AG (SBAG) has towards Pronam Nekretnine and NHB marks the end of loan and deposit relationship of NHB and thus HPB Group with SBAG
- Merging process of Pronam Nekretnine d.o.o. with parent company is underway, and is expected to close in 2022
-
Intensive acquisition activities of NHB continued, and integration with the parent company is expected in 2023
-
Consolidated unaudited financial statements include the financial result of NHB from the acquisition date (April 14, 2022) to the reporting date (September 30, 2022), while other subsidiaries are exempted from consolidation in accordance with Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 Text with EEA relevance in these financial statements
- This report contains all data available and known at the time of creation and the aforementioned circumstances may have an impact on the content of the report.
Continuation of intensive activities for NHB integration until the end of 2023
1 Executive Summary
2 Macroeconomic environment
3 Financials
HPB Group achieved a record net profit
- The third quarter was marked by an increase in assets of HRK 3.4 bn in all segments of the gross loan portfolio, which was followed by a strong growth in total deposits
- Realized record net profit at the consolidated level as a result of gains from the bargain purchase and continued profit generation of the parent company
- Continuation of intensive integration activities of NHB as one of the key priorities of both banks
- By acquiring Pronam Nekretnine d.o.o. on July 4, loan and deposit relationship of HPB Group with SBAG ended
- Bank signed the Code of Ethics of the Ministry of Economy and Sustainable Development with the aim of reliable and transparent exchange of HRK with EUR currency
Consolidated data HPB and NHB 30. 9. 2022.
NHB made significant contribution to Group's results, with improved asset quality
Source: Nova hrvatska banka d.d., management reports as of 30.9.2022 or for the period 14.4. – 30.9.2022 and HPB management reports; financial indicators as of 30.9.2022 or for the period 1.1. – 30.9.2022.
HPB Group stride towards the Top 5 banks
|
|
30. 6. 2022. |
30. 9. 2022. |
| Assets |
HRK mn |
37,922 |
41,273 |
| Net loand to cistomers |
HRK mn |
21,909 |
22,688 |
| Deposits |
HRK mn |
31,049 |
34,760 |
| Equity |
HRK mn |
3,345 |
3,326 |
| NPL ratio |
% |
6.9 |
6.3 |
| NPL coverage |
% |
74.4 |
76.5 |
|
|
1. 1. - 30. 6. 2022. |
1. 1. - 30. 9. 2022. |
| Income |
HRK mn |
587 |
991 |
| Net profit |
HRK mn |
1,066 |
1,122 |
| Cost-to-income ratio |
% |
75.6 |
71.1 |
| Return on equity (ROE) |
% |
31.9 |
33.7 |
9
Market share by total assets as of 30.6.2022 (in HRK bn)
* Include consolidated data HPB + NHB as of 30.6.2022
▪ Historically highest level of assets reached with an increase of HRK 3.4 bn in this quarter
- Achieved funding synergies the acquisition of HPB enabled financial stability and stopped the initial outflow of NHB deposits caused by the Russian invasion of Ukraine; deposit growth in all segments exceeded HRK 3.7 bn
- Improved quality of HPB Group's loan portfolio as a result of the effect of efficient collection and recovery of part of the portfolio, with effective cost management; NPL coverage significantly above the market level
- Source: HPB management reports ▪ Realized record net profit at the consolidated level as a result of the gain on bargain purchase and realized operating profit of HPB
Efficient utilization of the loan portfolio development potential
- The realized growth of gross loan portfolio in all segments in Q3 in the amount of HRK 1.0 bn, mostly in retail and corporate and government segment, is the result of successfully implemented acquisition activities
- Gross retail loans dominate the total loans with the share of 53.1%, as a result of HPB's strategic focus on this segment, with favorable financing conditions, especially in APN tranches in which HPB has a significant share, and in 2022 it achieved a historic result in terms of the number of processed and approved loans
Improved loan portfolio quality
|
|
30. 6. 2022 |
30. 9. 2022 |
| Exposure (total loans) |
HRK mn |
31,497 |
34,466 |
| Total NPL stock |
HRK mn |
2,182 |
2,160 |
| NPL % |
% |
6.9 |
6.3 |
| Loss allowance for loans |
HRK mn |
(1,964) |
(2,012) |
| NPL provision |
HRK mn |
(1,623) |
(1,652) |
| PL provision |
HRK mn |
(340) |
(361) |
| NPL Coverage |
% |
74.4 |
76.5 |
| NPLs not covered by provisions |
HRK mn |
218 |
148 |
- Effective management of the loan portfolio with determined collection enabled the maximization of these effects on the reduction of the NPL ratio despite the growth of the total volume of loans
- NPL coverage significantly above market average in RH
1 Executive Summary
2 Macroeconomic environment
3 Financials
Economic indicators (y-o-y)
Source: Croatian Bureau of Statistics https://www.dzs.hr/eng (June, July, August and September 2022)
Fiscalization system data
*Source:https://www.porezna-uprava.hr/Dokumenti (data for 9M 2020, 2021 and 2022) "I- ACCOMMODATION AND FOOD SERVICE ACTIVITIES " 13
27/10/2022 "G- WHOLESALE AND RETAIL TRADE OF MOTOR VEHICLES AND MOTORCYCLES, REPAIR OF MOTOR VEHICLES AND MOTORCYCLES "
1 Executive Summary
2 Macroeconomic environment
3 Financials
Record net profit of HRK 1.1 bn
Extremely strong quarter with operating profit HRK 98.2 million
|
|
6M
2022 |
9M
2022 |
Net
interest
income |
HRK
mn |
320 |
520 |
Net
fee
income |
HRK
mn |
114 |
195 |
Net
trading
income |
HRK
mn |
(29) |
(24) |
Net
other
income |
HRK
mn |
0 |
(9) |
Operating
income |
HRK
mn |
406 |
682 |
Employee
expenses |
HRK
mn |
(148) |
(236) |
Administrative
expenses |
HRK
mn |
(114) |
(182) |
| Depreciation |
HRK
mn |
(30) |
(49) |
Deposit
insurance |
HRK
mn |
(15) |
(17) |
Operating
expenses |
HRK
mn |
(307) |
(485) |
Operating
profit |
HRK
mn |
99 |
197 |
Bargain
purchase
(badwill) |
HRK
mn |
1
019
, |
1
019
, |
| Provisioning |
HRK
mn |
(60) |
(93) |
Net
profit |
HRK
mn |
1
066
, |
1
122
, |
Cost-to-income
ratio |
% |
75
6 |
71
1 |
(ROA)
Return
on asset |
% |
2
8 |
3
0 |
Return
on equity
(ROE) |
% |
31
9 |
33
6 |
Operating profit development in Q3 2022 (in HRK mn)
Consolidated data are not fully comparable, considering that the NHB's results are shown in the total consolidated result exclusively for the period starting from April 14, 2022, while HPB's results of HPB are shown from January 1, 2022, until the reporting date
- Record net profit of HPB Group of HRK 1.1 bn as a result of a bargain purchase resulting from the difference between the fair value of the acquired net assets of NHB and the acquisition cost
- Net interest income and net commissions and fees income are the key drivers of the realized operating profit in the third quarter of 2022 in the amount of HRK 98.2 mn
- Net loss from trading (trading HRK 62.8 million, FX trading + HRK 39.1 million) under the strong influence of inflation and the rise in reference interest rates of central banks, which led to a decrease in the price of securities and an increase in the yield on them
- Operating expenses under the influence of intensive regulatory projects, acquisition activities, general price growth due to rising inflation, which is mainly reflected in the increase in prices of energy products and suppliers, as well as the optimization of HPB Group's IT infrastructure and processes
- Cost of provisioning is a result of changes in methodology and parameters for provisioning calculation to align with the group policy, as well as increased provisions for legal
- 15
- Source: HPB management reports
cases
Realized financial synergies are additional growth potential
Composition of operating expenses (in HRK mn) 30. 9. 2022.
Source: HPB management reports
Structure of net provision expenses
Structure of net provision expenses (in HRK mn) 30. 9. 2022
- Stage 1&2 affected by changes in methodology and parameters of calculation of NHB's expected credit losses with group policy
- Other provisions are mostly related to legal cases
Historical level of assets in amount of HRK 41.3 bn
|
|
30. 6. 2022 |
30. 9. 2022. |
| Liquid assets |
HRK mn |
9,088 |
11,619 |
| Securities |
HRK mn |
6,093 |
6,077 |
| Gross loans |
HRK mn |
23,727 |
24,541 |
| Net loans |
HRK mn |
21,909 |
22,688 |
| Other assets |
HRK mn |
831 |
890 |
| Total assets |
HRK mn |
37,922 |
41,273 |
| Deposits |
HRK mn |
31,049 |
34,760 |
| Loan liabilities |
HRK mn |
2,692 |
2,366 |
| Other liabilities |
HRK mn |
837 |
822 |
| Total liabilities |
HRK mn |
34,577 |
37,947 |
| Paid-in capital |
HRK mn |
1,215 |
1,215 |
| Accumulated other comprehensive income |
HRK mn |
(126) |
(202) |
Retained earnings or loss
carried forward |
HRK mn |
488 |
528 |
| Other reserves |
HRK mn |
702 |
662 |
| Profit or loss for the year |
HRK mn |
47 |
104 |
| Badwill (Gain on bargain purchase) |
HRK mn |
1,019 |
1,019 |
| Equity and reserves |
HRK mn |
3,345 |
3,326 |
| Loan-to-deposit ratio |
% |
70.6 |
65.3 |
| NPL ratio |
% |
6.9 |
6.3 |
| NPL coverage |
% |
74.4 |
76.5 |
- 30. 6. 2022 30. 9. 2022.
- HPB Group reached the historically highest level of assets, which confirms that it is a challenger that the competition must count on
- An increase in assets generated by an increase in deposits, where inflows were retained in the form of liquid instruments (+27.8%) due to the time lag until utilization
- Increase in the volume and quality of the loan portfolio
- A slight decrease in capital due to lower prices of securities in the portfolio of HPB Group
HPB Group without significant exposure to entities from Russia, Belarus and Ukraine
- In response to Russian aggression against Ukraine, numerous countries of the world, including members of the European Union, introduced sanctions against Russia and Belarus
- HPB has implemented and continues to monitor changes in EU restrictive measures (sanctions), especially in the area of financial services
- NHB, and thus HPB Group, has no exposure to Sber Group as of September 30, 2022.
HPB has no exposure to entities in Ukraine and Belarus, and has minimal exposure to entities in Russia (0.00001%)
NHB has low exposure to entities in Russia, Ukraine and Belarus (balance sheet 0.03% and off-balance sheet 0.28%)
We follow and support the needs of the Croatian economy
* Hrvatske autoceste are included in construction industry, with a share of 56.1% in the total exposure
HPB Group is a safe and reliable partner in deposit business
- Customer deposits are key financing source (84.0%); a vista deposits dominate in the structure of HPB's deposits (84.6%), while in the NHB's structure term deposits make up the majority (59.0%) due to longer fixed terms and attractive interest rates
- In the third quarter, a strong increase in deposits of HRK 3.7 billion (+12.0%) was recorded in all segments: corporate + HRK 3.0 billion (+20.7%), retail + HRK 525.9 million (+3.4%) and financial institutions + HRK 136.8 million (+16.2%)
- Other liabilities relate primarily to loans received from credit institutions CBRD, CNB repo loans and foreign financial institutions.
Financial and liquidity position in the HPB Group maintained stable
- Loan-to-deposit ratio decreased at the consolidated level by 5.3 p.p. compared to the previous quarter due to increased inflow of deposits after a temporary deposits outflow at the end of the first and beginning of the second quarter due to the impact of the geopolitical situation in Europe on NHB's
- Improved liquidity position of the Group with solid liquidity reserves and consolidated (HPB and NHB) liquidity coverage ratio of 149.0%
- Customer deposits dominate funding mix with a share of 84.0%