Download Banca Transilvania presentation

Alexandru Ioan Cuza University of Iasi
01.03.14
Business Description
Recommendation
Recommendation
Main Features
HOLD
Current price
RON 1.68
Target price
RON 1.7
3rd bank by assets share
3rd Card issuer in Romania
1st Visa card Issuer
Market Profile
1.8
Ticker: TLV
Exchange: BSE
52-week price range
1.161 – 1.7550
1.4
Average daily volume
267,358,941
1.3
Shares outstanding
2,206,436,324
1.2
Market Capitalization
3,830,373,458.46
Book value per share
1.00
1.7
1.6
1.5
1.1
Closing price
Business
Description
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
1
Target price and current price
Return on Equity (2014F) 13.37%
P/BV
1.39
Business Lines
Corporate Banking
 Well-diversified portfolio
 49% of total loans
Retail Banking
 89% of customers
 Leader in innovation and technology
SMEs
 Bank for entrepreneurial people
 New product packages
HealthCare Division
 No competition
 45% share of potential clients
Business
Description
Business Description
Shareholders Structure
20.2%
24.8%
EBRD
14.61%
Bank of Cyprus
9.98%
The investment division
of World Bank
3.53%
2.4%
52.6%
Romanian individual investors
Romanian institutional investors
Foreign individual investors
Foreign institutional investors
Business
Description
Industry Overview &
Competitive
Positioning
Industry Overview
Macroeconomic background
Unemployment rate (2013)
Investment
Saving
CPI annualand
change
% Rates
30
7
6
25
5
20
4
3
15
2
10
1
05
20%
10%
0%
Real GDP growth rate
Annual inflation rate
Upper bound
Lower bound
Investment rate
Saving rate
8
6
4
2
0
-2
-4
-6
-8
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
% 10
Dec.11
Jan.12
Feb.12
Mar.12
Apr.12
May.12
Jun.12
Jul.12
Aug.12
Sep.12
Oct.12
Nov.12
Dec.12
Jan.13
Feb.13
Mar.13
Apr.13
May.13
Jun.13
Jul.13
Aug.13
Sep.13
Oct.13
Nov.13
Dec.13
%0
%
30%
Source: National Bank of Romania
Industry Overview &
Competitive Positioning
Industry Overview
Banking sector overview
Banks/100,000 citizens
branches
0
5
10
15
20
Industry Overview &
Competitive Positioning
25
May/2013
Dec/2012
Jul/2012
Feb/2012
Sep/2011
Apr/2011
Nov/2010
Jun/2010
Jan/2010
Aug/2009
Mar/2009
Oct/2008
May/2008
6,800
6,600
6,400
6,200
6,000
5,800
5,600
5,400
5,200
5,000
4,800
Dec/2007
Number of branches and employees in Romania
Luxemburg
Ireland
Cyprus
Austria
Malta
Finland
Latvia
Lithuania
Denmark
Estonia
Germany
Hungary
Poland
Sweden
Netherlands
Portugal
Italy
Slovenia
France
Belgium
Croatia
Spain
United Kingdom
Czech Republic
Slovakia
Bulgaria
Greece
Romania
74
72
70
68
66
64
62
60
58
56
54
52
thou.
employees
1,000s
employees in Banking sector
Source: National Bank of Romania
Industry Overview
Banking sector overview
%
Financial Intermediation
400
350
300
250
200
150
100
50
0
Assets/GDP
EU Median
Industry Overview &
Competitive Positioning
Loans/GDP
EU-27 (average)
Deposits/GDP
Romania
Source: National Bank of Romania
Competitive Positioning
Porter Analysis
Herfindahl–Hirschman Index
3,000
Threat of
Entry
2,500
2,000
Competition
in the
industry
Bargaining
power of
suppliers
1,500
1,000
500
Threat of
Substitute
Products
Bargaining
power of
customers
0
Source: Team estimates, National Bank of Romania
Industry Overview &
Competitive Positioning
Competitive Positioning
Market Share in Total Banking Assets
25%
20%
15%
10%
5%
0%
BCR
BRD
BT
CEC bank
Unicredit Tiric Raiffeisen bank
Market Share by Assets Dec-12
Volksbank
Alpha Bank
ING Bank
Bancpost
Market Share by Assets Dec-13
Source: Company data
Industry Overview &
Competitive Positioning
Competitive Positioning
Loans and Deposits of peers
140%
120%
100%
80%
60%
40%
20%
0%
BCR
BRD
Loan/Deposit ratio
BT
UniCredit Tiriac bank
Deposits from customers/Total Liabilities ratio
Source: Company data
Industry Overview &
Competitive Positioning
Valuation
Valuation Models
Residual Income Model
Sum of PV of Residual Income
Justified P/BV Model
Total equity (2018F)
178.7
6,367.1
Total equity (2014F)
3,524.3
P/BV ratio
Value of equity
3,703.0
Justified P/BV
3,790.9
Number of shares (millions)
2,206.4
Number of shares (millions)
TLV value / share
RIM
1.68
2,206.44
1.68
TLV value / share
Target Price
1.70 RON
1.013
1.72
Justified P/BV
1.72
Source: Team Estimates
Valuation
Sensitivity Analysis for Justified P/BV Model
LT growth rate
Cost of equity - perpetuity
LT ROE
1.00%
2.00%
3.00%
4.00%
5.00%
12.36%
12.86%
13.36%
13.86%
14.36%
11.5%
1.44
1.42
1.39
1.36
1.32
1.54
1.46
1.39
1.33
1.27
12.5%
1.58
1.57
1.55
1.54
1.52
1.72
1.63
1.56
1.48
1.42
13.5%
1.71
1.72
1.72
1.72
1.72
1.90
1.81
1.72
1.64
1.57
14.5%
1.85
1.87
1.88
1.90
1.93
2.08
1.98
1.88
1.80
1.72
15.5%
1.99
2.01
2.05
2.08
2.13
2.26
2.15
2.05
1.95
1.87
Source: Team estimates
Valuation
Financial Analysis
Financial Analysis
Net Profit
Income Breakdown
1,400
600
1,200
500
1,000
400
800
300
600
200
400
100
200
0
0
2009
2010
2011
2012
2013 2014e 2015e
2009
2010
Net interest income
2011
2012
2013
Net fee and comission income
2014e
2015e
Net trading income
Source: Company Data, Team Estimates
Financial
Analysis
Financial Analysis
Net Interest Income
1,400
1,200
1,000
800
600
400
200
0
2009
2010
2011
2012
2013
2014e
2015e
RON million
Source: Company Data, Team Estimates
Financial
Analysis
Financial Analysis
Gross Loans to Customers
Loans and Deposits Interest Rates
25,000
16%
20,000
14%
12%
15,000
10%
8%
10,000
6%
4%
5,000
2%
0%
0
2009
RON million
2010
2011
2012
2013
2014e
2015e
2009
2010
RON million
2011
2012
Deposit interest rates
2013
2014E
2015E
Loans interest rates
Source: Company Data, Team Estimates
Financial
Analysis
Financial Analysis
Net Fee and Commission Income
500
450
400
350
300
250
200
150
100
50
0
RON million
2009
2010
2011
2012
2013
2014e
2015e
Source: Company Data, Team Estimates
Financial
Analysis
Financial Analysis
Operations Growth for 2013
17%
20%
10%
5.38%
8.00%
13%
10%
0%
Active clients
Account
operations
Debit and
credit cards
Card
transactions
market share
Financial
Analysis
Cards
transaction
volume
Financial Analysis
NPL Ratio
Coverage Ratio
14%
12%
10%
8%
6%
Solvency Ratio
125%
125%
120%
120%
115%
115%
110%
110%
105%
105%
100%
100%
4%
2%
0%
2011
2012
2013
2011
2012
2013
2011
2012
2013
Source: Company Data
Financial
Analysis
Risk Analysis
Risk Analysis
Probability
Impact
Legend
Risk Analysis
Risk Analysis
2.44
2.4
2.36
2.32
2.28
2.24
2.2
Monte Carlo Simulation
2.16
2.12
2.08
2.04
2
1.96
1.92
1.88
1.84
1.8
1.76
1.72
1.68
1.64
1.6
1.56
1.52
1.48
1.44
1.4
1.36
1.32
1.28
1.24
1.2
Risk Analysis
Mean: 1.69
Iterations: 10,000
SELL
HOLD
BUY
4.94%
84.5%
10.56%
Conclusion
Conclusion
Increase in assets
Increasing NPL and
provision expenses
Stable macroeconomic
background
HOLD
Decreasing net interest
income margin
Increasing net fee
income margin
Current Price
Target Price
1.70
1.70
Conclusion
Conclusion
THANK YOU!
Special thanks to:
• CFA Institute Research Challenge
• CFA Society of Romania
• Industry Mentor-Bogdan Bilaus, CFA
• Faculty Advisor-Silviu Ursu, PhD
• FRM, Alexandru Ioan Cuza University of Iasi
• Banca Transilvania
Appendix – part 1
Macroeconomic Indicators
BT Framework
Banking sector
Real GDP Growth Rate of Romania
BT Clients Structure
Banking sector performance
CPI annual change %
Shareholders structure
Assets, Loans and Deposits of Banking sector
Real GDP growth rate of EU countries
Number of branches
Market share by assets
GDP per capita of Romania
Geographic coverage
Bank distribution in terms of solvency ratio
GDP per capita of EU countries
Advantages of Flexcube core-banking system
NPL ratio of credit institutions (%)
Unemployment rate of EU countries
Corporate Governance
Distribution of credit institutions’ market share based on ROA
Labor force demand
Private sector loans in domestic and foreign currencies
Investment and Savings Rates, Current account deficit of Romania
Money aggregates
Number of banks and population of EU countries
Number of branches in EU countries
Number of branches in Romania
Herfindahl-Hirschmann index values for EU countries
Credit institutions and branches with foreign capital in EU countries
Liability structure of credit institutions operating in Romania
Financial intermediation, international comparison
Credit to households; lending for house purchase; RON
Porter Analysis
BT and BRD equity comparison
Concentration of the Romanian banking system
Appendix – part 2
Valuation
Stock Exchange Market
Financial Analysis
Monte Carlo Simulation for Justified P/BV
Banca Transilvania S.A. daily stock prices (RON)
Income & Expense distribution in BT business lines
Statement of financial position
BT share price, traded volume and news flow since 2011
Loans as % of Deposits
Income Statement (RON million)
USD/RON and EUR/RON exchange rate dynamics
Capital Adequacy indicators
Operating model
Romanian banking sector everyday transactions activity
Cost to income ratio
Residual income model
BET, BET-C, CECEBNK, SX7E Index comparison with BT
Loans and deposits relation
Justified P/BV model
BET, WIG, BUX and FTASE Index comparison
Main items of gross operating revenues
Cost of equity
Regression Analysis
Gross operating income and credit risk provision
Justified P/BV sensitivity analysis
IEA, NII and NFI
Monte Carlo Simulation for Residual
Income model based on long-term growth
rate changes
NIM and NFI annualized evolution
Balance sheet growth
BT loans and Advances to customers
Objectives and results of BT (2013)
Banca Transilvania S.A. daily stock prices (RON)
Appendix
1.8
1.7
2.13% downside
1.6
1.5
1.4
1.3
Closing price
Current price
Target price
1.2
1.1
1
Source: BVB
Back to the list of contents
Appendix
BT Clients Structure
1%
9%
1%
89%
Retail Banking
Corporate Banking
Healthcare Division
SME
Source: Company data
Back to the list of contents
Income & Expense distribution in BT business lines
Appendix
600
60%
52%
52%
500
50%
42%
40%
400
40%
300
30%
200
20%
100
10%
Total Income
Total Expense
Operating Margin
Source: Company data
Healthcare
Division
Retail
SME
0%
Corporate
Banking
0
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Loans as % of Deposits
Appendix
120%
110%
111%
107%
100%
80%
60%
40%
20%
0%
2010
2011
2012
BT
Romanian Banking Sector
Source: Company data and NBR
Back to the list of contents
Appendix
Shareholders structure
20.2%
24.8%
2.40%
52.6%
Romanian individual investors
Romanian institutional investors
Foreign individual investors
Foreign institutional investors
Source: Company data
Back to the list of contents
Real GDP Growth Rate of Romania
Appendix
%
10
8
6
4
2
0
-2
-4
-6
-8
Source: NIS
Back to the list of contents
CPI annual change %
Appendix
7
6
5
4
3
2
1
0
Annual inflation rate
Upper bound
Lower bound
Source: NIS
Back to the list of contents
Capital Adequacy indicators
Appendix
24
20
16
12
8
4
Solvency ratio (%)
Tier 1 capital ratio for credit risk (%)
Minimum requirement for Solvency ratio (%)
Source: NBR
Back to the list of contents
Banking sector performance
Appendix
5.00
20.0%
4.00
15.0%
3.00
10.0%
2.00
1.00
5.0%
0.00
0.0%
-1.00
-5.0%
-2.00
Bln. RON
-3.00
-10.0%
Net Profit/Net Loss (RON bn.)
ROE (%)
Source: NBR
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Assets, Loans and Deposits of Banking sector
Appendix
80%
70%
60%
50%
40%
30%
20%
10%
0%
2008
2009
2010
2011
2012
Jun/2013
Assets/GDP
Loans/GDP
Deposits/GDP
Source: NBR
Back to the list of contents
Cost to income ratio
Appendix
52.91%
52.22%
49.50%
48.10%
46.80%
45.40%
46.10%
45.02%
2013
2012
2013
2012
2013
BCR
BRD
UniCredit Tiriac Bank
BT
Source: Company data
2012
2013
2012
Back to the list of contents
Loans and deposits relation
Appendix
140.00%
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
BCR
BRD
BT
UniCredit Tiriac bank
Loan/Deposit ratio
Deposits from customers/Total Liabilities ratio
Source: Company data
Back to the list of contents
Number of branches
Appendix
889
602
550
189
BCR
BRD
TLV
Unicredit Tiriac
Source: Company data
Back to the list of contents
Market share by assets
Appendix
25.00%
20.00%
15.00%
10.00%
5.00%
19.0%
12.7%
8.5%
6.7%
6.5%
7.1%
4.3%
4.6%
3.8%
3.3%
0.00%
Market share by assets Dec-12
Market share by assets Q1-2013
Source: Company data
Back to the list of contents
Geographic coverage
Appendix
Source: Company data
Back to the list of contents
Justified P/BV sensitivity analysis
Appendix
LT growth rate
Cost of equity - perpetuity
LT ROE
1.00% 2.00% 3.00% 4.00%
5.00%
12.36% 12.86% 13.36% 13.86% 14.36%
11.5%
1.44
1.42
1.39
1.36
1.32
1.54
1.46
1.39
1.33
1.27
12.5%
1.58
1.57
1.55
1.54
1.52
1.72
1.63
1.56
1.48
1.42
13.5%
1.71
1.72
1.72
1.72
1.72
1.90
1.81
1.72
1.64
1.57
14.5%
1.85
1.87
1.88
1.90
1.93
2.08
1.98
1.88
1.80
1.72
15.5%
1.99
2.01
2.05
2.08
2.13
2.26
2.15
2.05
1.95
1.87
Source: Team calculations
Back to the list of contents
Appendix
BT share price, traded volume and news flow since 2011
RON 2.0
RON 1.8
RON 1.6
Issue of
295,735,713
new shares
RON 1.4
Buyback of
1,166,000
shares
16 new shares
issued for every 100
held by
stockholders
2013 gross profits
increase by 30%
over 2012
RON 1.2
RON 1.0
RON 0.8
RON 0.6
RON 0.4
RON 0.2
Robert Rekkers
resigns as CEO
BT borrows $45
mln from EBRD
and IFC to
finance SMEs
Rumors of
taking over Bank
of Cyprus
Omer Tetik
officialy named
as new CEO
RON 0.0
10000000
8000000
6000000
4000000
2000000
0
Source: BVB
Traded volume
Back to the list of contents
Main items of gross operating revenues
Appendix
450.0
400.0
350.0
300.0
250.0
200.0
150.0
100.0
50.0
0.0
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
Net Interest income (RON m)
Net fee and commission income (RON m)
Gross operating income (RON m)
Source: Company data
4Q13
Back to the list of contents
Gross operating income and credit risk provision
Appendix
350.0
300.0
250.0
200.0
150.0
100.0
50.0
0.0
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
-50.0
-100.0
-150.0
-200.0
Gross operating income (RON m)
Net impairment losses on assets (RON m)
Net profit (RON m)
Source: Company data
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IEA, NII and NFI
Appendix
32,000
40.0%
31,000
30.0%
30,000
20.0%
29,000
10.0%
28,000
0.0%
27,000
-10.0%
26,000
-20.0%
25,000
24,000
-30.0%
23,000
-40.0%
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
Interest earning assets (RON m)
Net interest income (%, qoq)
Net fee and commission income (%, qoq)
Source: Company data
Back to the list of contents
NIM and NFI annualized evolution
Appendix
6.00%
5.00%
5.01%
4.00%
3.96%
3.65%
3.00%
3.48%
3.29%
3.20%
1.50%
1.51%
3.43%
3.62%
2.00%
1.00%
1.49%
1.53%
1.07%
1.16%
1.22%
1.32%
1Q13
2Q13
3Q13
4Q13
0.00%
1Q12
2Q12
3Q12
4Q12
NII (annualized*)/Avg. IEA (%)
NFI (annualized*)/Avg. Total Assets (%)
*NII and NFI annualized based on quarterly figures
Source: Company data
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Balance sheet growth
Appendix
18.0%
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
2010
2011
2012
2013
2014E
2015E
Loans growth
Deposits growth
2010-2018E average loan growth
2010-2018E average deposit growth
Source: Company data
2016E
2017E
2018E
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2.03
2.01
1.99
1.97
1.95
1.93
1.91
1.89
1.87
1.85
1.83
1.81
1.79
1.77
1.75
1.73
1.71
1.69
1.67
1.65
1.63
1.61
1.59
1.57
1.55
1.53
1.51
1.49
1.47
1.45
1.43
Monte Carlo Simulation for Justified P/BV
Appendix
BT stock price
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Statement of financial position
(million Ron)
Appendix
FY 09 A
FY 10 A
FY 11 A
FY 12 A
FY 13 A
FY 14 F
FY 15 F
FY 16 F
FY 17 F
FY 18 F
Cash and cash equivalents
3,183.3
3,696.8
4,546.5
5,576.3
4,102.3
4,138.6
4,469.7
4,144.9
4,074.8
4,319.2
Placements with banks
1,520.7
1,221.5
769.4
1,383.1
1,758.5
1,924.0
1,929.0
1,911.4
2,038.6
2,188.0
Investment securities
2,645.2
3,865.7
5,933.6
6,568.9
8,947.6 10,289.7 11,524.5 12,792.2 14,071.4 15,197.1
Assets
Loans to customers
Property and equipment
11,542.3 12,264.8 14,035.3 15,457.5 16,667.2 18,106.4 19,666.7 21,282.5 22,920.5 24,295.8
276.6
260.5
266.6
290.0
289.0
294.8
299.8
304.3
310.4
316.6
Intangible assets
10.2
47.4
69.1
80.1
82.9
85.4
88.0
91.0
94.2
97.5
Equity investments
95.8
105.5
70.0
74.1
74.0
74.0
74.0
74.0
74.0
74.0
Other assets
94.1
82.0
127.3
142.1
144.6
160.3
175.4
172.0
175.3
175.0
Total assets
19,368.3 21,544.2 25,817.8 29,572.0 32,066.0 35,073.2 38,227.0 40,772.3 43,759.2 46,663.2
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Statement of financial position - continued
Appendix
Liabilities
Deposits from banks
259.1
333.2
251.2
46.0
419.0
350.7
382.3
407.7
437.6
466.6
15,059.2
17,324.4
20,280.2
23,232.9
25,803.9
27,590.8
29,798.0
31,883.9
33,956.4
35,993.7
1,865.1
1,401.4
2,469.0
2,969.3
2,067.3
2,981.2
3,249.3
3,057.9
3,063.1
3,033.1
254.9
257.6
260.1
288.8
337.9
350.7
382.3
407.7
437.6
466.6
Other liabilities
99.9
155.7
237.5
340.1
355.5
275.5
370.0
320.8
393.9
336.0
Total liabilities
17,538.4
19,472.2
23,498.0
26,877.1
28,983.5
31,548.9
34,181.9
36,078.0
38,288.5
40,296.1
1,176.2
1,560.5
1,860.2
1,989.5
2,292.9
2,645.7
3,061.1
3,551.0
4,161.4
4,891.6
0.0
0.0
(1.9)
(7.8)
(0.8)
(0.8)
(0.8)
(0.8)
(0.8)
(0.8)
97.7
0.0
0.7
0.0
0.0
0.0
0.0
0.0
0.0
0.0
369.8
300.4
235.0
376.1
430.1
496.9
576.0
704.3
831.6
951.6
21.2
26.9
34.1
38.1
29.0
29.0
29.0
29.0
29.0
29.0
165.0
184.3
191.7
298.9
331.3
353.5
379.8
410.8
449.4
495.6
1,829.9
2,072.0
2,319.8
2,694.9
3,082.6
3,524.3
4,045.1
4,694.3
5,470.7
6,367.1
19,368.3
21,544.2
25,817.8
29,572.0
32,066.0
35,073.2
38,227.0
40,772.3
43,759.2
46,663.2
Deposits from customers
Loans from banks and
other financial institutions
Other subordinated
liabilities
Equity
Share capital
Own shares
Share premium
Retained earnings
Revaluation reserve
Other reserves
Total equity
Total liabilities and equity
Source: Company data, Team estimates
Back to the list of contents
Income Statement (RON million)
Interest income
Interest expense
FY 09 A
FY 10 A
FY 11 A
FY 12 A
FY 13 A
FY 14 F
FY 15 F
FY 16 F
FY 17 F
FY 18 F
2,060.9
1,862.7
1,804.2
2,012.4
2,093.7
2,130.7
2,177.4
2,278.1
2,367.1
2,440.4
(1,341.5)
(890.9)
(932.4) (1,074.5)
(899.7)
(874.9)
(852.7)
(832.9)
(808.3)
(774.0)
719.3
971.8
871.9
937.9
1,194.0
1,255.8
1,324.7
1,445.2
1,558.8
1,666.4
396.6
(43.6)
401.2
(44.2)
441.0
(51.7)
487.7
(63.0)
435.1
(73.4)
487.3
(80.0)
545.8
(87.2)
605.9
(94.2)
666.4
(100.8)
726.4
(106.8)
353.1
357.0
389.3
424.7
361.7
407.3
458.6
511.7
565.7
619.6
Net interest income
Fee and commission income
Fee and commission expense
Net fee and commission income
Net trading income
Other operating income
Operating income
Net impairment losses on assets
Personnel expenses
Depreciation and amortization
Other operating expenses
Operating expenses
Profit before income tax
Income tax expense
Taxation rate
Profit for the year
Appendix
138.9
119.0
117.1
131.2
128.8
137.9
148.9
161.5
175.3
191.0
29.8
18.5
24.4
42.8
39.2
41.1
43.2
45.3
47.6
50.0
1,241.1 1,466.2 1,402.7 1,536.5 1,723.7 1,842.1 1,975.3 2,163.7 2,347.3 2,527.0
(415.8)
(652.1)
(380.8)
(379.4)
(407.4)
(417.2)
(427.0)
(436.8)
(446.6)
(456.4)
(326.1)
(350.9)
(368.9)
(409.6)
(441.3)
(463.4)
(481.9)
(498.8)
(513.7)
(529.2)
(61.2)
(54.2)
(49.3)
(46.4)
(56.8)
(45.6)
(42.7)
(39.5)
(36.4)
(37.3)
(266.6)
(280.0)
(325.4)
(360.3)
(375.1)
(390.1)
(403.8)
(415.9)
(426.3)
(436.9)
(1,069.6) (1,337.2) (1,124.4) (1,195.8) (1,280.6) (1,316.3) (1,355.3) (1,391.0) (1,423.0) (1,459.8)
171.5
129.0
278.2
340.8
443.1
525.9
620.0
772.8
924.3 1,067.2
(23.3)
(20.2)
(49.7)
(20.3)
(68.2)
(84.1)
(99.2)
(123.6)
(147.9)
(170.8)
13.6%
15.7%
17.9%
6.0%
15.4%
16.0%
16.0%
16.0%
16.0%
16.0%
148.2
108.7
228.5
320.4
374.9
441.7
520.8
649.1
776.4
896.4
Source: Company data, Team estimates
Back to the list of contents
Operating model
Appendix
FY 09 A
FY 10 A
FY 11 A
FY 12 A
FY 13 A
FY 14 F
FY 15 F
FY 16 F
FY 17 F
FY 18 F
Investment Securities
Investment Securities
% growth
2,645.2
3,865.7
5,933.6
6,568.9
8,947.6
10,289.7
11,524.5
12,792.2
14,071.4
15,197.1
46.1%
53.5%
10.7%
36.2%
15.0%
12.0%
11.0%
10.0%
8.0%
Placements with banks
Placements with banks
% of total assets
1,520.7
1,221.5
6.3%
769.4
3.6%
1,383.1
5.4%
1,758.5
5.9%
1,924.0
6.0%
1,929.0
5.5%
1,911.4
5.0%
2,038.6
5.0%
2,188.0
5.0%
Loans
Loans and advances to
customers, gross
% growth
12,234.0
13,542.7
15,694.6
17,568.5
19,160.3
20,693.1
22,348.5
23,912.9
25,467.3
26,995.3
10.7%
15.9%
11.9%
9.1%
8.0%
8.0%
7.0%
6.5%
6.0%
260.5
-5.8%
47.4
364.4%
82.0
0.4%
266.6
2.3%
69.1
46.0%
127.3
0.6%
290.0
8.8%
80.1
15.8%
142.1
0.6%
289.0
(0.3%)
82.9
3.5%
144.6
0.5%
294.8
2.0%
85.4
3.0%
160.33
0.5%
299.8
1.7%
88.0
3.0%
175.37
0.5%
304.3
1.5%
91.0
3.5%
172.02
0.5%
310.4
2.0%
94.2
3.5%
175.32
0.4%
316.6
2.0%
97.5
3.5%
175.04
0.4%
Fixed assets
Property and equipment
% growth
Intangible assets
% growth
Other assets
% of total assets
276.6
10.2
94.1
Back to the list of contents
Operating model - continued
Deposits
Loans and advances to customers, net
Allowance for loan losses
% of loans and advances to customers
Loans to customers, gross
Deposits from customers
Ratio of loans / deposits
Deposits from banks
% of total assets
Loans from banks and other financial
institutions
% of total assets
Other subordinated liabilities
% of total assets
Cash, deposits from customers
Cash and cash equivalents
% of deposits from customers
Interest income
Loans and advances to customers
% of loans and advances to customers
Current accounts held with banks
% of cash and cash equivalents
Available for sale securities
% of investment securities
Placements with banks
% of placements with banks
Total interest income
Appendix
11,542.3
(692)
6.0%
12,234.0
15,059.2
81.2%
259.1
1.3%
12,264.8
(1,278)
10.4%
13,542.7
17,324.4
78.2%
333.2
1.5%
14,035.3
(1,659)
11.8%
15,694.6
20,280.2
77.4%
251.2
1.0%
15,457.5
(2,111)
13.7%
17,568.5
23,232.9
75.6%
46.0
0.2%
16,667.2
(2,493)
15.0%
19,160.3
25,803.9
74.3%
419.0
1.3%
18,106.4
(2,587)
12.5%
20,693.1
27,590.8
75%
350.7
1.0%
19,666.7
(2,682)
12.0%
22,348.5
29,798.0
75%
382.3
1.0%
21,282.5
(2,630)
11.0%
23,912.9
31,883.9
75%
407.7
1.0%
22,920.5
(2,547)
10.0%
25,467.3
33,956.4
75%
437.6
1.0%
24,295.8
(2,700)
10.0%
26,995.3
35,993.7
75%
466.6
1.0%
1,865.1
1,401.4
2,469.0
2,969.3
2,067.3
2,981.2
3,249.3
3,057.9
3,063.1
3,033.1
9.6%
254.9
1.3%
6.5%
257.6
1.2%
9.6%
260.1
1.0%
10.0%
288.8
1.0%
6.4%
337.9
1.1%
8.5%
350.7
1.0%
8.5%
382.3
1.0%
7.5%
407.7
1.0%
7.0%
437.6
1.0%
6.5%
466.6
1.0%
3,183.3
21.1%
3,696.8
21.3%
4,546.5
22.4%
5,576.3
24.0%
4,102.3
15.9%
4,138.6
15.0%
4,469.7
15.0%
4,144.9
13.0%
4,074.8
12.0%
4,319.2
12.0%
1,638.0
14.2%
98.7
3.1%
274.9
10.4%
49.3
3.2%
2,060.9
1,537.2
12.5%
44.4
1.2%
254.4
6.6%
26.7
2.2%
1,862.7
1,436.3
10.2%
39.4
0.9%
294.0
5.0%
34.6
4.5%
1,804.2
1,425.7
9.2%
36.8
0.7%
520.1
7.9%
29.8
2.2%
2,012.4
1,498.5
9.0%
33.1
0.8%
534.5
6.0%
27.6
1.6%
2,093.7
1,502.8
8.3%
27.3
0.7%
565.9
5.5%
34.6
1.8%
2,130.7
1,514.3
7.7%
29.1
0.7%
599.3
5.2%
34.7
1.8%
2,177.4
1,553.6
7.3%
24.9
0.6%
665.2
5.2%
34.4
1.8%
2,278.1
1,604.4
7.0%
24.4
0.6%
703.6
5.0%
34.7
1.7%
2,367.1
1,652.1
6.8%
21.6
0.5%
729.5
4.8%
37.2
1.7%
2,440.4
Back to the list of contents
Operating model - continued
Interest expense
Deposits from customers
% of deposits from customer
Loans from banks and other financial institutions
% of loans from banks and other financial institutions
Available for sale securities
% of investment securities
Deposits from banks
% of deposits from banks
Total interest expense
Net fee and commission income
Fee and commission income
% growth
Fee and commission expense
% growth
Net trading income
% growth
Other operating income
% growth
Operating expenses
Net impairment losses on assets
% of loans and advances to customers
Personnel expenses
% growth
Depreciation and amortization
% of fixed assets
Other operating expenses
% growth
Source: Team estimates
Appendix
1,119.1
7.4%
216.1
10.2%
0.0
0.0%
6.3
2.4%
1,341.5
816.4
4.7%
70.7
4.3%
0.0
0.0%
3.8
1.1%
890.9
834.7
4.1%
70.0
2.6%
22.4
0.4%
5.3
2.1%
932.4
916.7
3.9%
113.3
3.5%
33.6
0.5%
11.0
23.9%
1,074.5
812.5
3.1%
82.8
3.4%
0.0
0.0%
4.4
1.1%
899.739
786.3
2.9%
83.3
2.5%
0.0
0.0%
5.3
1.5%
874.9
774.7
2.6%
72.6
2.0%
0.0
0.0%
5.4
1.4%
852.7
765.2
2.4%
62.4
1.8%
0.0
0.0%
5.3
1.3%
832.9
747.0
2.2%
56.0
1.6%
0.0
0.0%
5.3
1.2%
808.3
719.9
2.0%
49.0
1.4%
0.0
0.0%
5.1
1.1%
774.0
396.6
401.2
441.0
487.7
435.1
487.3
545.8
605.9
666.4
726.4
1.1%
9.9%
10.6%
(10.8%)
12.0%
12.0%
11.0%
10.0%
9.0%
44.2
51.7
63.0
73.4
80.0
87.2
94.2
100.8
106.8
1.5%
16.9%
21.9%
16.5%
9.0%
9.0%
8.0%
7.0%
6.0%
119.0
117.1
131.2
128.8
137.9
148.9
161.5
175.3
191.0
(14.3%)
(1.6%)
12.0%
(1.8%)
7.0%
8.0%
8.5%
8.5%
9.0%
18.5
24.4
42.8
39.2
41.1
43.2
45.3
47.6
50.0
(38.1%)
32.1%
75.3%
(8.5%)
5.0%
5.0%
5.0%
5.0%
5.0%
415.8
652.1
380.8
379.4
407.4
417.2
427.0
436.8
446.6
456.4
3.6%
5.3%
2.7%
2.5%
2.4%
2.4%
2.4%
2.3%
2.3%
2.2%
326.1
350.9
7.6%
54.2
17.6%
280.0
5.0%
368.9
5.1%
49.3
14.7%
325.4
16.2%
409.6
11.0%
46.4
12.5%
360.3
10.7%
441.3
7.7%
56.8
15.3%
375.1
4.1%
463.4
5.0%
45.6
12.0%
390.1
4.0%
481.9
4.0%
42.7
11.0%
403.8
3.5%
43.6
138.9
29.8
61.2
21.3%
266.6
498.8
513.7
529.2
3.5%
3.0%
3.0%
39.5
36.4
37.3
10.0%
9.0%
9.0%
415.9
426.3
436.9
3.0%
2.5%
2.5%
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Residual income model
Profit for the year
Total equity
Residual Income
ROE
Appendix
FY 09 A
148.2
1,829.9
Valuation 31-12-2014 (RON million)
FY 09 A
Residual income
Continuing value
Discount factor
Present value of RI and CV
Sum of PV of Residual
Income
Total equity
Value of equity
Number of shares
(millions)
TLV value / share
Source: Team estimates
FY 10 A
108.7
2,072.0
(160.0)
5.57%
FY 11 A
228.5
2,319.8
(73.9)
10.41%
FY 12 A
320.4
2,694.9
(24.9)
12.78%
FY 13 A
374.9
3,082.6
(23.0)
12.98%
FY 14 F
441.7
3,524.3
(13.3)
13.37%
FY 15 F
520.8
4,045.1
(0.5)
13.76%
FY 16 F
649.1
4,694.3
39.8
14.86%
FY 17 F
776.4
5,470.7
49.9
15.28%
FY 18 F
896.4
6,367.1
17.8
15.15%
FY 10 A
FY 11 A
FY 12 A
FY 13 A
FY 14 F
FY 15 F
(0.5)
FY 16 F
39.8
FY 17 F
49.9
0.879
(0.4)
0.771
30.7
0.675
33.7
FY 18 F
17.8
177.4
0.588
114.7
178.7
3,524.3
3,703.0
2,206.44
1.68
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Justified P/BV model
Total equity
Justified PB
Number of shares (millions)
TLV value / share
Appendix
FY 18 F
6,367.1
3,790.9
2,206.4
1.72
Cost of equity
FY 15 F
13.77%
FY 16 F
13.94%
FY 17 F
14.29%
Discount rate
0.879
0.771
0.675
CV assumptions
ROE
Long-term growth rate
13.5%
3.0%
FY 18 F
Perpetuity
14.84%
13.36%
0.588
Source: team estimates
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Cost of equity
YTM Romanian government bond
YTM 30yrs German government bonds
Long-term inflation differential
Risk-free rate
Equity risk premium
Adjusted β
Cost of equity
Appendix
FY 15 F
3.67%
FY 16 F
3.84%
FY 17 F
4.19%
FY 18 F
4.74%
Perpetuit
y
2.53%
0.73%
3.26%
9.13%
1.11
13.77%
Total ERP
Country risk premium
Equity risk premium
9.13%
3.38%
5.75%
Raw β
Bloomberg adjusted β
1.16
1.11
9.13%
1.11
13.94%
9.13%
1.11
14.29%
Differential inflation
CPI Romania
CPI Germany
9.13%
1.11
14.84%
9.13%
1.11
13.36%
Long-term target
2.50%
1.77%
Source: team estimates
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Appendix
BT loans and Advances to customers
In RON thousands
Individuals
Trading
Manufacturing
Construction
Services
Transport
Real Estate
Agriculture
Free Lancers
Chemical Industry
Energy Industry
Financial Institutions
Telecommunication
Mining Industry
Fishing Industry
Government Bodies
Others
Total loans and Advances to customers before impairment allowance
Less allowances for impairment losses on loans
Allowances for impairment losses on loans as a % of Total loans and Advances to
customers before impairment allowance
Total loans and advance to customers, net of impairment allowance
Source: NBR
31-Dec-12
6,325,313
2,882,807
2,507,113
990,287
941,908
702,256
526,755
729,524
382,202
315,305
322,277
312,254
125,484
170,697
7,255
31,030
296,018
17,568,485
(2,111,004)
31-Dec-11
5,819,493
2,712,410
2,196,027
838,050
829,219
632,995
474,057
560,453
340,535
322,707
249,034
197,103
108,477
142,517
4,607
27,560
239,398
15,694,642
(1,659,352)
12.02%
10.57%
15,457,481
14,035,290
% increase
8.69%
6.28%
14.17%
18.17%
13.59%
10.94%
11.12%
30.17%
12.24%
-2.29%
29.41%
58.42%
15.68%
19.77%
57.48%
12.59%
23.65%
11.94%
27.22%
10.13%
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Advantages of Flexcube core-banking system
For the customer
Appendix
For the bank
 Client enrollment is just a matter of signing the
form
 Process automation and optimization
 Customer electronic files (ID scan included)
 Account attachments are automatically posted
 Customer info update for all agencies/branches
 Centralization of IT infrastructure
 24/7 available e-channels: a key ingredient for selfbanking
 Account statements available in all branches and
Internet Banking
 Reconciliation and automatic transfer of bill
payments
 End of day/month processes considerably faster
Source: Company data
Back to the list of contents
-2
Estonia
Romania
Germany
Bulgaria
Sweden
Austria
Malta
Slovakia
Greece
Portugal
Slovenia
Italy
Cyprus
Croatia
Hungary
Spain
Netherlands
Finland
Czech Republic
Denmark
Luxembourg
Belgium
France
Ireland
United Kingdom
-6
Poland
Lithuania
-4
Latvia
Real GDP growth rate of EU countries
Appendix
6
4
2
0
-8
Source: Eurostat
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Appendix
GDP per capita of Romania
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: Eurostat
Back to the list of contents
Appendix
GDP per capita of EU countries
Country
Serbia
Bulgaria
Romania
Hungary
Poland
Croatia
Latvia
Lithuania
Estonia
Slovakia
Czech Republic
Portugal
Malta
Greece
Slovenia
Cyprus
Spain
European Union (28 countries)
European Union (27 countries)
Italy
Euro area (18 countries)
Euro area (EA11-2000, EA12-2006, EA13-2007, EA15-2008, EA16-2010, EA17-2013, EA18)
Euro area (17 countries)
Euro area (12 countries)
European Union (15 countries)
United Kingdom
France
Germany (until 1990 former territory of the FRG)
Iceland
Belgium
Finland
Ireland
Netherlands
Austria
Sweden
Denmark
Switzerland
Norway
Luxembourg
Source: Eurostat
2004
2,500
2,600
2,800
8,100
5,300
7,400
4,900
5,400
7,200
6,300
9,000
14,200
11,600
16,700
13,600
17,300
19,700
21,600
21,700
24,000
24,300
24,900
24,400
24,900
26,000
29,900
26,500
26,600
36,500
28,000
29,100
36,900
30,200
28,700
32,400
36,500
40,400
45,600
59,900
2005
2,700
3,000
3,700
8,800
6,400
8,100
5,800
6,300
8,300
7,100
10,200
14,600
12,200
17,400
14,400
18,400
21,000
22,400
22,500
24,500
25,000
25,600
25,200
25,600
26,800
31,000
27,300
27,000
44,300
29,000
30,000
39,200
31,500
29,800
33,000
38,300
41,300
52,900
65,000
2006
3,100
3,400
4,500
8,900
7,100
8,900
7,200
7,400
10,000
8,300
11,500
15,200
12,800
18,700
15,500
19,500
22,400
23,600
23,700
25,300
26,200
26,800
26,300
26,800
28,100
32,700
28,400
28,100
43,800
30,200
31,500
41,600
33,100
31,300
35,000
40,200
42,700
58,100
71,700
2007
3,900
4,000
5,800
9,900
8,200
9,800
9,600
8,900
12,000
10,200
12,800
16,000
13,700
19,900
17,100
20,700
23,500
24,900
25,100
26,200
27,500
28,000
27,600
28,000
29,400
34,200
29,600
29,500
48,000
31,600
34,000
43,100
34,900
33,000
36,900
41,700
43,200
61,100
78,000
2008
4,400
4,600
6,500
10,500
9,500
10,700
10,500
10,100
12,100
11,900
14,800
16,200
14,600
20,800
18,400
21,800
23,900
25,000
25,100
26,300
28,000
28,400
28,100
28,500
29,100
29,900
30,100
30,100
32,200
32,400
34,900
40,100
36,200
34,000
36,100
42,800
46,400
65,300
76,400
2009
4,000
4,600
5,500
9,100
8,100
10,100
8,600
8,400
10,400
11,600
13,600
15,900
14,400
20,500
17,300
20,900
22,800
23,400
23,500
25,200
26,900
27,100
27,000
27,400
27,400
25,700
29,300
29,000
27,200
31,600
32,300
35,800
34,700
33,100
31,500
40,500
47,100
56,500
71,400
2010
3,800
4,800
5,800
9,600
9,200
10,100
8,600
8,900
10,700
12,100
14,300
16,300
15,400
19,600
17,300
21,000
22,700
24,400
24,500
25,700
27,500
27,700
27,700
28,100
28,500
27,800
29,900
30,500
29,800
32,700
33,300
34,700
35,300
34,100
37,300
42,600
53,300
65,000
77,400
2011
4,400
5,200
6,200
9,900
9,600
10,400
9,800
10,200
12,100
12,800
14,800
16,100
16,000
18,500
17,600
21,100
22,700
25,100
25,200
26,000
28,200
28,400
28,400
28,800
29,200
28,200
30,700
31,900
31,600
33,600
35,000
35,500
35,900
35,700
40,800
43,200
60,300
71,300
80,300
2012
4,100
5,400
6,200
9,800
9,900
10,300
10,900
11,000
13,000
13,200
14,600
15,600
16,300
17,200
17,200
20,700
22,300
25,500
25,600
25,700
28,400
28,500
28,500
28,900
29,700
30,300
31,100
32,600
32,900
34,000
35,500
35,700
35,800
36,400
42,800
43,900
61,900
77,500
80,700
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Appendix
Unemployment rate of EU countries
Country
Austria
Luxembourg
Netherlands
Germany
Malta
Czech Republic
Romania
Denmark
Belgium
Finland
United Kingdom
Sweden
Slovenia
Poland
Estonia
France
Italy
Hungary
Cyprus
Bulgaria
Lithuania
Slovakia
Ireland
Latvia
Croatia
Portugal
Greece
Spain
2012
4.3
5.1
5.3
5.5
6.4
7
7
7.5
7.6
7.7
7.9
8
8.9
10.1
10.2
10.2
10.7
10.9
11.9
12.3
13.4
14
14.7
15
15.9
15.9
24.3
25
2013
:
5.9
6.7
5.3
6.5
7
7.2
7
8.4
8.2
:
8
10.2
10.4
:
10.8
:
:
16
12.9
11.8
14.2
13.1
:
17.6
16.5
:
26.4
Labor force demand
Period
Vacancies
Hiring
thousand; monthly averages
2011Q1
39.2
30.8
2011Q2
42.4
31.2
2011Q3
38.3
30.4
2011Q4
36.7
26.5
2012Q1
36.9
26.4
2012Q2
37.9
26.3
2012Q3
37.8
26.6
2012Q4
38.6
26.8
2013Q1
39.0
26.5
2013Q2
39.6
26.4
2013Q3
41.5
27.0
2013 Oct.-Nov
43.0
26.5
Source: NIS, NBR
: Missing data
Source: Eurostat
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Jan.09
Mar.09
May.09
Jul.09
Sep.09
Nov.09
Jan.10
Mar.10
May.10
Jul.10
Sep.10
Nov.10
Jan.11
Mar.11
May.11
Jul.11
Sep.11
Nov.11
Jan.12
Mar.12
May.12
Jul.12
Sep.12
Nov.12
Jan.13
Mar.13
May.13
Jul.13
Sep.13
Nov.13
USD/RON and EUR/RON exchange rate dynamics
Source: NBR
USD/RON
Appendix
4.7500
4.5000
4.2500
4.0000
3.7500
3.5000
3.2500
3.0000
2.7500
2.5000
EUR/RON
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Dec/2001
Apr/2002
Aug/2002
Dec/2002
Apr/2003
Aug/2003
Dec/2003
Apr/2004
Aug/2004
Dec/2004
Apr/2005
Aug/2005
Dec/2005
Apr/2006
Aug/2006
Dec/2006
Apr/2007
Aug/2007
Dec/2007
Apr/2008
Aug/2008
Dec/2008
Apr/2009
Aug/2009
Dec/2009
Apr/2010
Aug/2010
Dec/2010
Apr/2011
Aug/2011
Dec/2011
Apr/2012
Aug/2012
Dec/2012
Apr/2013
Aug/2013
Private sector loans in domestic and foreign currencies
Source: NBR
Appendix
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
loans to private sector in domestic currency percent
loans to private sector in foreign currency
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Appendix
Investment and Savings Rates, Current account deficit of Romania
Period
2011Q1
2011Q2
2011Q3
2011Q4
2012Q1
2012Q2
2012Q3
2012Q4
2013Q1
2013Q2
2013Q3
Investment rate
Saving rate
25.5
26.1
26.8
26.9
27.0
27.1
27.4
27.0
26.4
25.0
24.5
Quarters' average (%)
21.8
22.1
22.5
22.4
22.1
22.7
22.9
22.6
22.8
23.2
23.3
Current account
deficit/GDP
3.7
4.0
4.3
4.5
4.8
4.4
4.5
4.4
3.6
1.8
1.2
Domestic investment rate is the ratio of gross capital formation to GDP.
Domestic saving rate is the difference between national gross disposable income and final
consumption as a share of GDP.
Source: NBR, NIS
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Appendix
Money aggregates
M3 (Broad money) (RON thousand)
M1 (Narrow money)
300,000,000.0
80,000,000.0
70,000,000.0
250,000,000.0
60,000,000.0
200,000,000.0
50,000,000.0
150,000,000.0
40,000,000.0
30,000,000.0
100,000,000.0
20,000,000.0
50,000,000.0
10,000,000.0
M1 (Narrow money)
currency in circulation (RON thousand)
Sep. 2013
May. 2013
Jan. 2013
Sep. 2012
May. 2012
Jan. 2012
Sep. 2011
May. 2011
Jan. 2011
Sep. 2010
May. 2010
Jan. 2010
Sep. 2009
May. 2009
Jan. 2009
Sep. 2008
May. 2008
Jan. 2008
Sep. 2007
May. 2007
0.0
Jan. 2007
Sep. 2013
Apr. 2013
Nov. 2012
Jun. 2012
Jan. 2012
Aug. 2011
Mar. 2011
Oct. 2010
May. 2010
Dec. 2009
Jul. 2009
Feb. 2009
Sep. 2008
Apr. 2008
Nov. 2007
Jun. 2007
Jan. 2007
0.0
M1 (Narrow money)
overnight deposits (RON thousand)
Source: NBR
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Appendix
Number of banks and population of EU countries
Country
Population
Nr of banks
Romania
Greece
Bulgaria
Slovakia
Czech Republic
United Kingdom
Spain
Croatia
Belgium
France
Slovenia
Italy
Portugal
Netherlands
Sweden
Poland
Hungary
Germany
Estonia
Denmark
Lithuania
Latvia
Finland
Malta
Austria
Cyprus
Ireland
Luxemburg
20,121,641
10,815,197
7,364,570
5,410,836
10,513,209
63,181,775
46,704,314
4,284,889
11,099,554
66,616,416
2,055,496
59,685,227
10,487,289
16,819,595
9,633,490
38,186,860
9,908,798
80,585,700
1,311,870
5,602,536
2,955,986
2,005,200
5,454,444
452,515
8,414,638
1,117,000
4,593,100
537,853
39
40
30
28
56
358
290
35
103
623
23
694
151
253
168
691
189
1842
31
161
91
63
303
27
731
101
458
147
Banks/100,000
citizens
0.193821
0.369850
0.407356
0.517480
0.532663
0.566619
0.620928
0.816824
0.927965
0.935205
1.118951
1.162767
1.439838
1.504198
1.743916
1.809523
1.907396
2.285765
2.363039
2.873699
3.078499
3.141831
5.555103
5.966653
8.687242
9.042077
9.971479
27.330888
Number of branches in EU countries
Country
Branches per 100,000
inhabitants
Austria
Bulgaria
Czech Republic
Estonia
France
Germany
Greece
Italy
Latvia
Lithuania
The Netherlands
Poland
Portugal
Slovakia
Slovenia
Spain
Hungary
EU-27 average
Romania 2011
Romania 2012
53
52
20
13
59
44
32
53
20
23
15
39
59
20
34
83
33
43
30
28
Romania 2013 Q2
27
Source: European Banking Federation
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branches
Jun/2013
Mar/2013
Dec/2012
Sep/2012
Jun/2012
Mar/2012
Dec/2011
Sep/2011
Jun/2011
Mar/2011
Dec/2010
Sep/2010
Jun/2010
Mar/2010
Dec/2009
Sep/2009
Jun/2009
Mar/2009
Dec/2008
Sep/2008
Jun/2008
Mar/2008
Dec/2007
Number of branches in Romania
Appendix
6,800
74
6,600
72
6,400
70
6,200
68
6,000
66
5,800
64
62
5,600
60
5,400
58
5,200
56
5,000
54
4,800
52
thou. employees
Source: NBR
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Concentration of the Romanian banking system
Assets of top five banks as a
share in total assets (%)
Period
2008
2009
2010
2011
2012
Aug/2013
54.3
52.4
52.7
54.6
54.7
54.0
Appendix
Loans of top five banks as a
share in total loans (%)
Deposits of top five banks as a
share in total deposits (%)
53.3
53.4
51.5
52.3
54.4
55.9
54.0
52.0
55.4
58.0
54.9
53.5
60.0
58.0
56.0
54.0
52.0
50.0
48.0
2008
2009
2010
2011
2012
Assets of top five banks as a share in total assets percent
Aug/2013
Loans of top five banks as a share in total loans
Deposits of top five banks as a share in total deposits
Source: NBR, ECB (Statistical Data Warehouse)
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Herfindahl-Hirschmann index values for EU countries
Market share of
top five banks
(%)
HH index (point)
Austria
36
395
Bulgaria
50
738
Czech Republic
61
999
Estonia
90
2,493
France
45
545
Germany
33
307
Greece
79
1,487
Italy
40
410
Latvia
64
1,027
Lithuania
84
1,749
The Netherlands
82
2,026
Poland
44
568
Portugal
71
1,191
Slovakia
72
1,221
Slovenia
58
1,115
Spain
51
654
Hungary
54
806
EU-27 average
59
1,066
Romania*
54
834
Country
Appendix
3,000
2,500
2,000
1,500
1,000
500
0
Source: ECB (Statistical Data Warehouse)
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Appendix
Credit institutions and branches with foreign capital in EU countries
Country
Assets of foreign-owned credit
institutions as a share in total assets. (%)
Credit institutions (branches and subsidiaries)
with foreign capital. (Number)
96.40
94.43
92.68
90.80
88.36
73.58
61.93
61.32
58.13
29.48
27.16
22.49
15.42
10.17
8.66
7.44
4.09
3.33
13
12
38
36
26
22
56
16
27
10
64
35
27
62
102
128
145
204
Estonia
Lithuania
Czech Rep.
Romania
Slovakia
Bulgaria
Poland
Latvia
Hungary
Slovenia
Austria
Portugal
Greece
The Netherlands
Italy
Spain
Germany
France
Aug. 2013
Source: ECB (Statistical Data Warehouse)
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Appendix
Liability structure of credit institutions operating in Romania
Dec.
2008
Dec.
2009
Dec.
2010
Dec.
2008
Dec.
2011
Jun.
2012
Aug.
2012
Dec.
2012
Mar.
2013
Aug.
2013
69.3*
73.6
73.2
73.5
75.2
76.1
76.8
77.8
78.0
78.6
-Interbank deposits
2.1
5.4
3.4
3.4
5.0
4.7
4.6
2.5
2.2
1.9
-Government sector deposits
3.1
2.1
1.7
1.4
1.5
1.4
1.3
1.3
1.3
1.4
-Corporate deposits
20.2
19.3
19.0
19.0
17.7
18.3
18.5
18.9
19.1
19.5
-Houshold deposits
24.4
26.7
27.0
28.7
29.2
29.5
30.2
31.7
31.6
31.8
-Capital and reserves
10.6
12.0
14.2
16.2
16.9
17.3
18.0
18.8
19.3
19.7
-Other liabilities
8.9
8.1
7.9
4.8
4.9
4.9
4.2
4.6
4.4
4.3
-Foreign liabilities
30.7
26.4
26.8
26.5
24.8
23.9
23.2
22.2
22.0
21.4
Liabilities
Domestic Liabilities, of which
*-percent of total liabilities
Source: NBR
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Appendix
Financial intermediation, international comparison
Austria
315.50
Loans/GDP
(%)
112.44
Bulgaria
114.45
70.84
69.07
Czech Republic
125.86
55.35
75.04
Estonia
115.89
78.83
58.83
France
397.38
105.99
95.35
Germany
311.12
98.09
118.86
Greece
228.23
118.30
86.66
Italy
269.52
112.19
95.70
Latvia
128.49
65.59
37.74
Lithuania
74.25
48.99
38.95
The Netherlands
415.79
177.98
149.38
Poland
93.05
53.72
52.83
Portugal
337.13
152.32
127.45
Slovakia
83.54
49.54
56.81
Slovenia
143.23
84.59
58.93
Spain
341.21
156.76
145.02
Hungary
114.26
53.85
48.63
EU-27
351.72
120.03
113.43
Romania
68.93
38.44
33.58
Country
Assets/GDP (%)
Deposits/GDP
(%)
104.66
The
Netherlands
Assets/GDP
Loans/GDP
Deposits/GDP
Max
Max
Max
415.79
The
Netherlands
Min
Romania
EU-27
68.93
177.98
The
Netherlands
Min
Romania
38.44
149.38
Min
Romania
33.58
Median
Median
Median
143.23
84.59
75.04
351.72
120.03
113.43
Source: NBR, ECB (Statistical Data Warehouse)
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Appendix
Credit to households; lending for house purchase; RON
140,000,000.0
4,000,000.0
3,500,000.0
120,000,000.0
3,000,000.0
100,000,000.0
2,500,000.0
80,000,000.0
2,000,000.0
1,500,000.0
60,000,000.0
1,000,000.0
40,000,000.0
500,000.0
Credit to households (RON thousand)
Sep. 2013
May. 2013
Jan. 2013
Sep. 2012
May. 2012
Jan. 2012
Sep. 2011
May. 2011
Jan. 2011
Sep. 2010
May. 2010
Jan. 2010
Sep. 2009
May. 2009
Jan. 2009
Sep. 2008
May. 2008
Jan. 2008
Sep. 2007
Ron Thousands
May. 2007
Sep. 2013
Apr. 2013
Nov. 2012
Jun. 2012
Jan. 2012
Aug. 2011
Mar. 2011
Oct. 2010
May. 2010
Dec. 2009
Jul. 2009
Feb. 2009
Sep. 2008
Apr. 2008
Nov. 2007
Jun. 2007
Jan. 2007
Ron Thousands
Jan. 2007
20,000,000.0
0.0
Deposit from households
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Bank distribution in terms of solvency ratio
8 - 10%
10 - 12%
Appendix
12 - 16%
16 - 20% 20 - 24%
24 - 30%
above 30%
Period
Number of banks
Dec/2008
2
6
9
4
2
3
6
Dec/2009
0
2
14
7
2
2
4
Dec/2010
0
2
16
7
0
3
4
Dec/2011
2
3
8
9
5
1
4
Jun/2012
1
4
10
7
6
0
4
Dec/2012
1
2
15
4
4
2
3
Mar/2013
1
4
15
6
0
1
4
Jun/2013
1
5
14
5
0
1
5
Source: NBR
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May/2013
Mar/2013
Jan/2013
Nov/2012
Sep/2012
Jul/2012
May/2012
Mar/2012
Jan/2012
Nov/2011
Sep/2011
Jul/2011
May/2011
Mar/2011
Jan/2011
Nov/2010
Sep/2010
Jul/2010
May/2010
Mar/2010
Jan/2010
Nov/2009
Sep/2009
Jul/2009
May/2009
Mar/2009
Jan/2009
Nov/2008
Sep/2008
Jul/2008
May/2008
Mar/2008
NPL ratio of credit institutions (%)
Appendix
25.00
20.00
15.00
10.00
5.00
0.00
Source: NBR
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Appendix
Distribution of credit institutions’ market share based on ROA
ROA<0
0≤ROA<1
1≤ROA<2
2≤<=ROA<3
ROA≥3
2008
9.9
22.8
32.2
6.7
28.3
2009
21.0
47.7
30.1
0.1
1.0
2010
21.9
53.6
21.7
2.8
0.0
2011
44.7
28.8
24.8
1.6
0.0
2012
59.8
18.2
19.8
2.2
0.0
Period
Source: NBR
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130,000
14,000,000
120,000
100,000
90,000
12,500,000
80,000
12,000,000
70,000
60,000
Jul. 2013
14,500,000
Mar. 2013
140,000
Nov. 2012
POS terminals (units)
Jul. 2012
6,000
Mar. 2012
6,000,000
Nov. 2011
7,000
Jul. 2011
7,000,000
Mar. 2011
8,000
Nov. 2010
8,000,000
Jul. 2010
9,000
Sep. 2013
Jun. 2013
Mar. 2013
Dec. 2012
Sep. 2012
Jun. 2012
Mar. 2012
Dec. 2011
Sep. 2011
Jun. 2011
Mar. 2011
Dec. 2010
Sep. 2010
Jun. 2010
Mar. 2010
Dec. 2009
Sep. 2009
Jun. 2009
Mar. 2009
Dec. 2008
Sep. 2008
Jun. 2008
Mar. 2008
Jul. 2013
Mar. 2013
Nov. 2012
Jul. 2012
Mar. 2012
Nov. 2011
Jul. 2011
Mar. 2011
Nov. 2010
Jul. 2010
Mar. 2010
Nov. 2009
Jul. 2009
Mar. 2009
Nov. 2008
Jul. 2008
Active cards (units)
Mar. 2010
9,000,000
Nov. 2009
10,000
Jul. 2009
10,000,000
Mar. 2009
11,000
Nov. 2008
11,000,000
Jul. 2008
12,000
Mar. 2008
12,000,000
Mar. 2008
Jul. 2013
Mar. 2013
Nov. 2012
Jul. 2012
Mar. 2012
Nov. 2011
Jul. 2011
Mar. 2011
Nov. 2010
Jul. 2010
Mar. 2010
Nov. 2009
Jul. 2009
Mar. 2009
Nov. 2008
Jul. 2008
Mar. 2008
Romanian banking sector everyday transactions activity
Appendix
ATMs (units)
Cards in circulation (units)
110,000
13,500,000
13,000,000
11,500,000
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Source: NBR
Appendix
Porter Analysis
Threat of Entry
Forces
1.
2.
Threat of Entry
3
0
No interaction
Bargaining power of suppliers
3
1
Insignificant
Bargaining power of
customers
2
2
Low
Threat of Substitute Products
2
3
Average
Competition in the industry
4
4
High
5
Very high
Capital Requirements
Product differentiation for overcoming
customer loyalty
3. NBR supervision
4. Existence of economies of scale
Bargaining power of suppliers
1. Specialized labor force required
2. Limited number of input sources
3. Strong position of labor unions
Final rating
2.8
Bargaining power of customers
1. Undifferentiated product
2. Price sensitivity of customers
3. Large volume customers
Threat of Substitute Products
1. No perfect substitute for loans
2. Substandard product
3. Government programs existence
Competition in the industry
1. Relatively large competitors
2. Law product differentiation.
3. Fixed costs are high
4. The rivals are diverse in strategies
5. High exit barriers
Scale of interaction
Points
Threat of Entry
Competition in the
industry
Threat of Substitute
Products
Bargaining power of
suppliers
Bargaining power of
customers
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Appendix
BT and BRD equity comparison
1.8
1.7
1.6
1.5
1.4
1.3
1.2
1.1
1
0.9
0.8
1/4/13
2/4/13
3/4/13
4/4/13
5/4/13
6/4/13
TLV RO equity
7/4/13
8/4/13
9/4/13
10/4/13
11/4/13 12/4/13
1/4/14
2/4/14
BRD (Reference date 01.03.2013 )
Source: Bloomberg
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Appendix
BET, BET-C, CECEBNK, SX7E Index comparison with BT
1.8
1.7
1.6
1.5
1.4
1.3
1.2
1.1
1
0.9
0.8
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
BET-C Index (Reference date 01.03.2013 )
TLV RO equity
SX7E Index (Reference date 01.03.2013)
CECEBNK Index (Reference date 01.03.2013)
Jan-14
Feb-14
BET Index ( Referrence date 01.03.2013)
Source: Bloomberg
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BET (RO)
WIG (PL)
BUX (HU)
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
Feb-12
Jan-12
Dec-11
Nov-11
Oct-11
Sep-11
Aug-11
Jul-11
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
BET, WIG, BUX and FTASE Index comparison
Appendix
1.4
1.2
1
0.8
0.6
0.4
0.2
0
FTASE (GR)
Source: Bloomberg
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Appendix
Regression Analysis
We have conducted simple regression analysis between BT returns and BET index returns in order to identify the value Beta.
Dependent Variable:
TLV_CLOSE_PRICE_RETURN
Method:
Least Squares
Sample:
1 271
Included observations:
271
Variable
BET_INDEXRETURN
Coefficient
1.166806
STd. Error
0.091560
t-Statistics
12.74367
Prob.
0.0000
R-squared
0.372131
Mean dependent var.
0.104347
Adjusted R-squared
0.372131
S.D dependent var.
1.406576
S.E of regression
1.114546
Akaike info criterion
3.058454
Sum squared residuals
335.3974
Schwarz criterion
3.071746
Log likelihood
-413.4206
Hannan-Quinn criterion
3.063791
Durbin-Watson statistics
1.918392
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Appendix
Objectives and results of BT (2013)
Objectives of BT for 2013
Results (based on Dec 2013)
Total assets: 8% increase
+ 8.4%
Total credits: 8% increase
+ 7.83%
Total resources from clients: 10% increase
+ 11.07 %
Credits / Deposits: 74.63%
74.25%
Cost / Income: maximum 52%
48.7%
Source: Company data
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Appendix
Corporate Governance
OECD Criteria
BT’s score for
each criteria
BT’s score after
applying weights
Ensuring the Basis for an Effective
Corporate Governance Framework
10
1
The Rights of Shareholders and Key
Ownership Functions
9
1.8
The Equitable Treatment of Shareholders
8
1.6
The Role of Stakeholders in
Corporate Governance
10
1
Disclosure and Transparency
9
1.8
10%
20%
20%
20%
20%
10%
The Responsibilities of the Board
9
1.8
SUM
9
Source: Team estimates
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1.694-1.695
1.693-1.694
1.691-1.692
1.689-1.69
1.688-1.689
1.687-1.688
1.686-1.687
1.685-1.686
1.684-1.685
1.683-1.684
1.682-1.683
1.681-1.682
1.68-1.681
1.679-1.68
1.678-1.679
1.677-1.678
1.676-1.677
1.675-1.676
1.674-1.675
1.673-1.674
1.672-1.673
1.671-1.672
1.67-1.671
1.669-1.67
1.668-1.669
1.667-1.668
1.666-1.667
1.665-1.666
1.664-1.665
1.663-1.664
1.662-1.663
1.661-1.662
1.66-1.661
1.659-1.66
1.658-1.659
1.657-1.658
1.656-1.657
1.655-1.656
1.654-1.655
Monte Carlo Simulation for Residual Income model based on long-term growth rate changes Appendix
10.00%
9.00%
8.00%
7.00%
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Source: Team estimates
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