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Presentation of Komercijalna Banka AD Skopje
as at December 31, 2013
Presentation of Komercijalna Banka AD Skopje
2
Contents • Komercijalna Banka Overview 3 • The Republic of Macedonia 10 • The Macedonian Banking Sector 12 • Komercijalna Banka Financial Overview 20
Skopje, March 2014
Komercijalna Banka Overview
Presentation of Komercijalna Banka AD Skopje
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Skopje, March 2014
Overview (I): A cornerstone of Macedonia’s financial sector...
Leading Market Position • Expected to keep market position as one of the leading banks in Macedonia with assets (EUR 1,411.7 m) and deposits from
customers (EUR 1,166.7 m) and in terms of net loans to customers (EUR 734.7 m) as of December 31, 2013. Customer Base • Leading corporate customer base (43,141 customers*) • Second largest retail customer base (873,161 customers) One of Macedonia’s Most Prominent Financial Institutions • Long-standing history • Well-established customer relationships Strong Brand Recognition • Associated with quality, innovation and trustworthiness Modern Corporate Governance Structure • Privatisation completed with 98.26% private ownership (48.41% foreign, as at December 2013) and about 1.5% held by the
Public sector • Diversified ownership structure with one single shareholder owning 10% (East Capital Explorer Investments AB, Stockholm,
Sweden) • EBRD active shareholder with Board representation (more than 5% participation) • Comprehensive, ‘best-practise’ corporate governance • Rigorous risk management and money laundering practices
* resident and non-resident corporate customers
Presentation of Komercijalna Banka AD Skopje
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Skopje, March 2014
Overview (II):...with a track record of significant achievements...
Experienced Team of Executives • Providing leading position in number of areas combined with maintaining stable market position
• History of product innovation and investments in new technologies Well Invested Distribution channels • Very well presented branch network - over 70% of the current network newly opened or refurbished in the past five years • Rapidly developing multi channel distribution network comprising POS Terminals, ATM’s, Infokiosks, E-Banking (both
retail & corporate, as well as f/x and in denars), Telephone banking Fully Integrated IT platform • State-of-the-art system • Fully protected and readily upgradeable Driver of Sector Innovation • First to issue credit cards (1996) • First to operate ATMs and POS terminals (1996) • First to establish a dedicated brokerage house (1997) • Founded one of the country’s two second pillar pension funds (2005) • Founded the investment fund KB Publikum Invest AD (2009) Profitable Operation with Sound Asset Quality • History of profitable operations • Adequately provisioned loan portfolio
Presentation of Komercijalna Banka AD Skopje
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Skopje, March 2014
Overview (III):...a long-standing successful history...
1955
1963
1966
1973
1990
Established as Komunalna Banka under municipal ownership
Leading role in rebuilding the economy and housing after disastrous earthquake in Skopje
Name change to Komercijalno Investiciona banka Skopje and merger with 3 banks
Operating as Stopanska Banka, Skopje Branch as part of an integrated banking system
Incorporated as an open joint stock company Start of a significant expansion phase based on organic and acquisitive growth establishing nationwide coverage
Presentation of Komercijalna Banka AD Skopje
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Overview (IV): ...the largest distribution network in the country...
69 branches including headquarters as at December, 2013
- Coverage of all major cities and economically significant regions
- 58 city branches (40 in Skopje and 18 regional)
- 11 regional branches Largest ATM network in the country
- 154 installed ATMs as at December 2013 (149 as at Dec 2012)
Fast expanding merchant network – Over 6,700 POS terminals installed as at
December 2013 (>6,500 as at Dec 2012) State-of-the-art IT infrastructure
– Fully integrated – Real time
Branch Network
Skopje, March 2014
Presentation of Komercijalna Banka AD Skopje
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Skopje, March 2014
Overview (V): ... market position
Market share as at December 31, 2013
Total assets 23.5% Capital and reserves 22.4% Total deposits from non-financial sector 27.5% Total net-loans to non-financial sector 22.3%
Total number of cards issued
16.0% Total number of merchants in the country acquiring bank cards issued by KB
39.8%
Total number of POS and ATM acquiring cards 21.6%
Total value of realized domestic payment operations 21.0%
Total number of accounts opened to legal entities
21.5% Total trading realized at the MSE 11.3% Total number of transactions realized at the MSE 13.8%
Presentation of Komercijalna Banka AD Skopje
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Skopje, March 2014
Overview (VI): ...and banking awards Banking Awards
- National prize for the social responsibility practice of companies in RM for 2008 2009 & 2011
- Bank of the Year for 2001, 2002, 2004 , 2005,
2010, 2011 and 2012
- The Best Bank for 2002, 2003 & 2004 - The Best Bank by Assets Strength for
2005, 2006 & 2007 - The Best Bank by Capital Strength for
2005 - The Best Bank by Gross Profit for 2005
& 2007 - The Best Bank by ROE for 2007
-The Best Bank in Macedonia for 2004, 2005, 2006, 2007, 2008 2009 , 2010, 2011,2012 & 2013 and Best foreign exchange Bank 2013
- Best Developing Trade Financier for 2003, 2004, 2008 -Most active issuing bank In RM in 2009 and award most active participant in the program of EBRD TFP (Trade Facilitation Programe) for 2013 nine years in a row
The most transparent company for 2008, 2009 & 2010 Plaque for achieving first place in turnover and number of transactions carried out in 2012
2007 Participant in the best financial deal
STP Excellence Award for 2007,2009,2010 and 2011
- Super brand in Macedonia for 2009
Non government organization – Transparency zero corruption
- Prize for best corporate governance
price for Corporate Social Responsibility Integrated Approach for 2009, 2010 and 2011
Red Cross of the Republic of Macedonia - Gold Supporter Award 2012
The Republic of Macedonia
Presentation of Komercijalna Banka AD Skopje
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Skopje, March 2014
The Republic of Macedonia - Macroeconomic Environment: The Fitch agency affirmed Macedonia’s foreign currency rating at “BB+” in October 2013, In November 2013 the Credit Rating Agency “Standard & Poor’s” has confirmed the long-term credit rating of Macedonia in domestic and foreign currency to “BB-“ (decreased in May from “BB”) and kept The short-term rating “B, with stable perspectives”.
Key economic indicators (1) 2008 2009 2010 2011 2012
Population (000's) 2,048 2,053 2,057 / /
GDP per capita (in EUR) 3,283 3,269 3,434 3,645 /
Real GDP growth (%) 5.0 -0.9 2.9 2.8 -0.4(2) Central Government Budget surplus/deficit (% of GDP) -0.9 -2.7 -2.4 -2.5 -3.9
Inflation (CPI%) av. 8.3 -0.8 1.6 3.9 3.3 Current Account Bal.(EUR'm) -862.2 -457.1 -143.6 -189.1 -225.7 Gross External Debt (EUR'm) 3,304 3,780 4,106 4,847 5,172
FX Reserves (EUR'm) 1,495 1,598 1,714 2,069 2,193 Foreign direct invest.(EUR'm) 399.9 145.0 160.0 336.8 72.0 Unemployment Rate (%) 33.8 32.2 32.0 31.4 31.0 MKD/EUR year end. 61.3 61.3 61.5 61.5 61.5
(1) Source: Ministry of Finance, State Statistical office, NBRM (2) Previous data (3) Estimated data (4) As at 30.09.2013
2013
/
/
3.1(3)
-4.1
2.8
-146.6
5,505 (4)
1,993
251.5
29.0
61.5
The Macedonian Banking Sector
Presentation of Komercijalna Banka AD Skopje
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Structure • 16 active banks (3 large, 8 medium and 5 small) • 5 saving houses Characteristics • High concentration with three large banks • Low level of financial intermediation Significant growth prospects • Continuous growth of the level of privatization • Continuous growth of the participation of the foreign capital • Improvement of the ownership structure • Increased network • Increased total assets • Growth in loans and deposits • Increased banking capital • Constant increase in profitability and efficiency
Skopje, March 2014
Macedonian Banking Sector (I): The structure and the characteristics
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Skopje, March 2014
Macedonian Banking Sector (II) ...assets...
5,385 5,738 6,008
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000
2011 2012 2013
Total assets (EUR'm)
Total assets
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Skopje, March 2014
Macedonian Banking Sector (III) ...and placements to non-financial entities...
2,943
3,104
3,282
2,700 2,800 2,900 3,000 3,100 3,200 3,300 3,400
2011 2012 2013
Placements to non-financial entities (net) (EUR'm)
Placements to non-financial entities (net)
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Skopje, March 2014
Macedonian Banking Sector (IV) ...and deposits from non-financial entities...
3,807
3,990
4,216
3,600 3,700 3,800 3,900 4,000 4,100 4,200 4,300
2011 2012 2013
Deposits from non-financial entities (EUR'm)
Deposits from non-financial entities
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Skopje, March 2014
Macedonian Banking Sector (V) ...and capital & reserves...
595
641
677
540 560 580 600 620 640 660 680 700
2011 2012 2013
Capital & reserves (EUR'm)
Capital & reserves
Presentation of Komercijalna Banka AD Skopje
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Skopje, March 2014
Macedonian Banking Sector (VI) ...and financial results influenced by the crisis...
19 24
38
0 5
10 15 20 25 30 35 40
2011 2012 2013
Net profit (EUR'm)
Net profit
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Skopje, March 2014
Macedonian Banking Sector (VII) ...and volatile profitability
169.1
184.9
197.7
0.4% 0.4% 0.6%
3.4%
3.8%
5.7%
-01%
01%
02%
03%
04%
05%
06%
07%
150.00 155.00 160.00 165.00 170.00 175.00 180.00 185.00 190.00 195.00 200.00
2011 2012 2013
Profitability indicators (EUR'm and %)
NII ROAA ROAE
Komercijalna Banka Financial Overview
Presentation of Komercijalna Banka AD Skopje
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Skopje, March 2014
Financial Performance (I): Highlights Financial Performance (I):
• In 2013 Komercijalna Banka AD Skopje acquired 200 ordinary shares issued by Investment fund Management Company KB Publikum Invest AD Skopje in total amount of EUR 200 thousand. The share of Komercijalna Banka AD Skopje increased from 50% to 64.29%.Thus, KB Publikum became subsidiary of the Bank.
• Pursuant to legislation, financial statements of subsidiary are incorporated in consolidated financial reports, starting from the date the control commences. o The amount of total assets on consolidated basis is EUR 1,411.9 million, o the amount of total capital and reserves is EUR 153.3 million, o the amount of total consolidated net profit is EUR 1.3 million. o Total assets of subsidiary on 31.12.2013 represents 0.01% of the total Bank’s assets.
• According to the Decision on consolidated supervision by NBRM (Official Gazete of the RM No.17/2008) if the amount of total assets of subsidiary is less than 1% of the amount of total assets of the parent entity, then subsidiary will not be included into the consolidated financial reports for the purposes of consolidated supervision. Therefore, the capital adequacy is not calculated on consolidated basis.
• The data from Income statement and Balance sheet in this presentation are on unconsolidated basis
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Skopje, March 2014
Key Performance Indicators 2006 2007 2008 2005
Net Interest margin 5.3% 3.8% 3.9% 4.1% 3.5%
Net fees and Commission / Income
Cost / Income
NPLs / Total Exposure
Net Loans / Deposits (Customers)
ROE (1)
Financial Performance (II): Highlights
23.0%
54.5%
9.1%
72.6% 42.4%
8.9%
1.0%
72.6%
14.8%
24.8%
56.6%
6.9 %
81.2 %
47.4 %
16.6 %
1.7 %
11.8 %(2)
24.5%
45.8%
5.2%
83.9%
54.3%
19.2%
1.9%
10.5%
20.3%
45.8%
5.4%
79.0%
76.6%
22.0%
2.5%
9.9%
6.2%
53.0%
78.1%
89.9%
15.5%
1.8%
10.6%
Key Performance Indicators 2011 2012 2013
Net Interest margin 3.4% 3.45% 3.3%
Net fees and Commission / Income 22.7% 20.0% 21.5%
Cost/Income 47.8% 44.3% 45.4%
NPLs / Total Loans 9.6% 13.1% 17.52%
NPL Coverage 87.3% 79.2% 76.15%
Net Loans to customers / Deposits from customers 65.1% 66.9% 63.0%
ROE (1) 11.4% 5.86% 0.9%
ROA (1) 1.4% 0.68 % 0.1%
Capital adequacy 13.5% 13.2% 14.1% (1) After taxation
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Skopje, March 2014
Financial Performance (III): Financial indicators
1) Last traded price 2) Calculation according data in MKD
Financial indicators 2011 2012 2013
Earnings per share (EPS) 7.9 4.0 0.6
Book value (BV) 68.0 68.4 67.2
Market price per share (1) 42.9 39.0 29.1 Dividend Yield 7.58% 8.33% 5.59%
Price/Earnings (P/E) (2) 5.45 9.73 51.73 Price/Book value (P/B) (2) 0.63 0.57 0.43 Price/Total assets (P/A) (2) 0.075 0.066 0.047
Market capitalization(in mill. EUR) 97.8 88.9 66.3
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Skopje, March 2014
Financial Performance (IV):Income statement (IFRS) in million EUR
2011 2012 2013* Index 12/11
Index 13/12
Net interest income 43.5 46.9 48.2 107.8 102.8 Net fee & commission income 13.9 14.6 14.5 105.0 99.3 Other income 3.9 11.6 4.7 297.4 40.5 Total income 61.3 73.1 67.4 119.2 92.2
Operating expenses -29.4 -32.5 -37.2 110.5 114.5 Impairment losses -14.4 -31.8 -29.3 220.8 92.1 Operating profit 17.5 8.8 0.9 50.3 10.2
Share of loss from associate 0.3 0.4 0.6 133.3 150.0 Profit before tax/loss 17.8 9.2 1.5 51.7 16.3
Taxation -0.1 -0.1 -0.2 100.0 200.0 Profit after tax/loss 17.7 9.1 1.3 51.4 14.3
* * Unconsolidated data
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Skopje, March 2014
Financial Performance (V): Balance sheet (IFRS) in million EUR
* Unconsolidated data
2011 2012
2013* Index Index 12/11 13/12
Assets Cash and cash equivalents 479.2 488.7 475.2 102.0 97.2 Customer loans 698.7 743.0 734.7 106.3 98.9 Bank placements and loans 22.1 15.6 16.0 70.6 102.6 Total loans and placements 1,200.0 1,247.3 1,225.9 103.9 98.3 Other assets 103.3 98.6 185.8 95.5 188.4 Total assets 1,303.3 1,345.9 1,411.7 103.3 104.9
Liabilities Total deposits 1,091.8 1,128.6 1,194.0 103.4 105.8 Borrowings & other liabilities 56.6 61.4 64.5 108.5 105.0 Total liabilities 1,148.4 1,190.0 1,258.5 103.6 105.8 Shareholders funds Share capital 37.1 37.1 37.1 100.0 100.0 Share premium 12.5 12.5 12.5 100.0 100.0 Reserves 87.6 97.2 102.3 111.0 105.2 Retained earnings 17.7 9.1 1.3 51.4 14.3 Shareholders funds 154.9 155.9 153.2 100.6 98.3 Total liabilities and shareholders funds 1,303.3 1,345.9 1.411.7 103.3 104.9
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Skopje, March 2014
Financial Performance (VI): Total Assets
(1) Total balance sheet assets (based on net loans after provisions) (2) In 2011 the Bank’s Independent Auditor is changed
0
200
400
600
800
1,000
1,200
1,400
1,600
2011 2012 2013
Total assets (1) (in million EUR)
Placements to banks Loans to customers Cash and equivalents Other assets
1,412
2%
54%
36%
8%
1,303(2) 1,346
1% 52%
34%
13%
1%
55% 36%
8%
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Skopje, March 2014
Financial Performance (VII): Gross Loans to Customers
657.8 723.3 726.0
129.2 136.9 154.4
2011 2012 2013
Total Loans - Corporate vs Retail (EUR'm)
Corporate loans Retail loans
880.4 860.2 787.0 16%
84%
16%
84%
18%
82%
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Skopje, March 2014
Financial Performance (VIII): Liabilities
(1) Total deposits include deposits from banks which represent less than 3% within total liabilities
95%
95% 95%
5%
5% 5%
2011 2012 2013
Total Liabilities (EUR'm)
Total deposits Borrowed funds & other liabilities
1,258.5
1,190 1,148.4
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Skopje, March 2014
Financial Performance (IX): Deposits – Customer Breakdown
(1) Corporate deposits include deposits from banks which represent 2.3% within total deposits
804.5 857.2 910.8
287.3 271.4 283.2
2011 2012 2013
Deposits by customer category (EUR'm)
Retail deposits Corporate deposits
1,091.8 1,128.6 1,194.0
76%
24%
76%
24%
74%
26%
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Skopje, March 2014
Financial Performance (X):Shareholders Equity and Capital Adequacy
*VI-th issue of shares in the amount of 15 million EUR
32% 32% 32%
57% 62% 67%
11% 6% 1% 13.5% 13.2%
14.1%
08%
09%
10%
11%
12%
13%
14%
15%
16%
2011 2012 2013
Share capital incl.share premium Reserves Retained earnings Capital adequacy
Shareholders Equity and Capital Adequacy (EUR'm)
154.9* 155.9 153.2
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Skopje, March 2014
Financial Performance (XI): Income Breakdown
61.3
73.1 67.4
43.5 46.9 48.2
13.9 14.6 14.5
3.9 11.6
4.7
2011 2012 2013
Income (EUR'm)
Total income Net interest income Fee and commission income Other income
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Skopje, March 2014
Financial Performance (XII): Expenses Breakdown
48% 42% 40% 16% 15% 14% 10%
9% 8% 18%
18% 17% 8% 16%
22%
2011 2012 2013
Operating expenses (EUR'm)
Wages, salaries and other employees' costs Materials and services Depreciation and amortization Insurance Other expenses
37.2 32.5 29.4
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Skopje, March 2014
Financial Performance (XIII): Efficiency
61.3
73.1
67.4
47.8%
44.3%
45.4%
42%
43%
44%
45%
46%
47%
48%
49%
54.00
56.00
58.00
60.00
62.00
64.00
66.00
68.00
70.00
72.00
74.00
2011 2012 2013
Total income and efficiency (million EUR and %)
Total income Cost/Income
34
Skopje, March 2014
Presentation of Komercijalna Banka AD Skopje
Financial Performance (XIV): Non-Performing Loans
(1) Gross corporate and retail loans excluding bank placements
Total loans % % NPL provisions NPLs/Total loans NPL provisions/NPLs
8.1% 8% 9.6% 7% 10% 78.8% 83.8% 89.8% 84% 92.6 87.3% 10.7% 89.8%
NPL
787.0 860.2 880.4
75.6 113.1
154.3 66.0 89.6 117.5
.00 100.00 200.00 300.00 400.00 500.00 600.00 700.00 800.00 900.00
1000.00
2011 2012 2013
Total loans (1) vs Non-Performing Loans (EUR'm)
17.5% 13.1% 9.6% 76.2% 79.2% 87.3%
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Skopje, March 2014
Financial Performance (XV): Asset Quality
88.0% 83.5% 81.9% 4.5% 6.1% 3.9%
2.0% 2.8% 5.1%
0.5% 2.3% 3.2%
5.0% 5.3% 5.9%
2011 2012 2013
Asset Risk Categories (%)
A B C D E
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Skopje, March 2014
Thank you!
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