PERFORMANCE IN 2018
Unaudited
QUICKLY DONE, AT FAVOURABLE PRICE AND EFFICIENT
MISSION
We create conditions for a better life in Croatia.
VISION
Bank in Croatian ownership with relevant market influence, that takes the best possible care of its customers, shareholders and community.
*for strategy realization, increase of capital is needed
- Net profit HRK 150.2 million, highest gross profit since Bank's foundation HRK 183.2 million,
- Increase in market share in almost all relevant segments, retail +13.4%, SME +20.6%, in accordance with strategic guidelines and limited capital capabilities.
- Operating income HRK 302.4 million, decrease due to lower interest margins, merger of Jadranska banka p.l.c., launch of development projects and other activities,
- Significantly lower credit loss expense, due to better collection. Despite lower cost of risk, HPB needed the year with significant NPL coverage (67.4%),
- book value of the shares increased by 5.0% on a yearly basis, amounting to HRK 988
- Jadranska banka acquired, expected end oh the process during first half of 2019.
- Important launched projects: business model of cooperation with diaspora, cooperation with Hrvatska pošta, improvement of data quality, transformation of SME business model, digital banking, operating efficiency, change of corporate culture
SUMMARY OF RESULTS IN 2018 – record gross profit achieved and improvement in almost all relevant indicators
|
2017 |
2018 |
Change |
GROSS PROFIT
(before tax) |
HRK 12.5 mil. |
HRK 183.2 mil. |
+1,370% |
| NET PROFIT |
HRK 8.3 mil. |
HRK 150.2 mil. |
+1,702% |
| OPERATING INCOME |
HRK 372.4 mil. |
HRK 302.4 mil. |
(18.8%) |
| ROAE |
0.4% |
7.7% |
+7.3 b.p. |
| ASSETS |
HRK 19.8 bill. |
HRK 21.3 bill. |
+7.3% |
| GROSS LOANS |
HRK 12.3 bill. |
HRK 12.5 bill. |
+1.3% |
| NPL SHARE |
17.2%
59.8% coverage |
15.8%
67.4% coverage |
(1.4 p.p.) |
| DEPOSITS |
HRK 16.9 bill. |
HRK 18.3 bill. |
+8.5% |
• best gross profit since HPB's foundation achieved
- operating income lower due to decrease in interest margins and large liquidity surplus
- with growth of 7.3% HPB took 6th place by size of assets in Croatia
- loans: increase in market share of strategic segments, retail and SME, with decrease in exposures toward the state and large companies at the same time
- cost of risk: significantly lower cost of risk as a result of collection activities and good NPL coverage
- deposits: HPB continues to be one fo the Bank's with the strongest client trust
- continuously strong liquidity position: liquidity coverage ratio (LCR) 175%, and net stable funding ratio (NSFR) 153%
- Capital adequacy 17.53%
- Most important launched projects: business model with diaspora, cooperation with Hrvatska pošta, improvement of data quality, transformation of SME business models, digital banking, operational excellence, corporate culture change
HPB p.l.c.
LOANS – deleveraging by the central government and an decrease in loans to large corporations have been neutralized by retail and SME loan growth
Gross loans (in HRK million) 12,333 12,489 (477) (577) +159 +343 +677 +32 Dec 31 2017 central government large corporations local government SME retail other Dec 31 2018
Loan structure (Dec 31 2017) Loan structure (Dec 31 2018)
commentary on 2018 trends
- increase in gross loan volume by +1.3%
- deleveraging by the government continues (-13.4%) in accordance with favorable fiscal movements, in addition to fall in loans to large corporations (-31.6%) as a result of repayments through state guarantees, have been neutralized by an increase in strategic segments - SME by +20.6% and retail by +13.4%
- market share is stable with position being improved in retail segment
HPB p.l.c.
1) estimate by HPB p.l.c. as per Dec 31 2018
PERFORMANCE IN 2018
Source: HPB p.l.c., management reports – segmented view
5
term deposits demand deposits other liabilities equity and reserves
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commentary on 2018 trends
- depositors' trust is reflected by an increase in deposits by 8.5 percent with market share increasing to 5.6 percent
- retail and corporate have continued with growth, with considerable spillover from term deposits (-14.7%) to demand deposits (+31.4%), contributing favorably to average funding price
- Deposits remain HPB's primary source of funding (86.3%), with a dominant share of domestic currency (i.e. 2/3) in total deposit structure
| CATEGORY |
MARKET SHARE1) |
|
| DEPOSITS |
5.7%
Dec 31 2017: 5.5% |
|
| - |
4.8% |
|
| retail |
Dec 31 2017: 4.7% |
|
| - |
8.5% |
|
| corporate |
Dec 31 2017: 8.0% |
|
HPB p.l.c.
Liabilities and equity (in HRK million)
MARKET SHARES – Market share growth in line with capital capacity
market shares (segmented) market share in deposits
PERFORMANCE IN 2018 HPB p.l.c. NOTE: owing to insufficient capital adequacy, Bank has initiated activities aimed at shrinking exposures between 09/2014 and 09/2015, whilst between 10/2016 and 08/2017 balance sheet growth had to cease due to a threat of breaching 5% market share threshold (capital requirement for structural systemic risk before relevant regulation had changed)
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JADRANSKA BANKA –
the acquisition of Jadranska banka strengthens our presence in the region of middle Dalmatia
commentary
- Jul 04 2018 signing of share purchase agreement
- Jul 13 2018 recapitalization of Jadranska banka by HPB with a capital injection of HRK 110 million
- Feb 12 2019 signing of merger contract conclusion expected in 1H 2019
- market share increased over 5.5 percent, with an addition of app. 40 thousand new clients
- stronger presence in Šibensko kninska county which according to DZS estimate for 2016 has 102 thd. inhabitants, representing a leverage for future expansion
HPB p.l.c.
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DISCLAIMER
This Presentation has been prepared solely for the purpose of presenting HPB p.l.c.'s (hereafter referred to as: HPB or the Bank) unaudited unconsolidated results for the period from Jan 01 to Dec 31 2018, at a press conference held on February 27 2019.
This presentation does not comprise all potential information and should be viewed together with management verbal presentation at the conference itself, and has been prepared solely for the purpose of presenting HPB at the conference. The presentation is not comprehensive or complete, nor does it comprise all information that might be necessary to for a potential investment decision.
All information and opinions constituting this Presentation have been prepared by the Bank, and were not an object of an audit process or some other form of assurance. It is assumed that consequent events can influence these information, and that the Bank is not obliged to subsequently refresh or change any of the information in this presentation.
Each interested party that is considering buying HPB shares, is directed to his own appraisal and judgement of HPB's financial position, together with corresponding risks. Bank, its management and employees, hereby do not give any statements or guarantees, nor will they guarantee for any liability that might be allegedly arisen from wrong statement or guarantee.
The Bank (including related parties, management, employees or any other person involved), will bear no liability, to the extent permitted by the law, for any losses, damages or expenses that might be incurred as a result of the interested party's or any third party's reliance on information contained in this Presentation or for any statements related to this Presentation.
Certain information included in this Presentation might be linked with HPB's future goals, i.e. "Strategic guidelines" or "Strategic goals". HPB hereby does not give any statement, forecast or guarantee that HPB's future goals will be achieved. Future goals can not be deemed as a scenario most likely to happen nor as the standard scenario, but only represent possible scenarios for development HPB's business operations.