Earnings presentation 2Q20
July 30th 2020
Disclaimer
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2
Main figures
Strong core business
Net Interest Income | Fee Income | |
(recurrent) | (recurrent) | |
+6.4% | +8.4% | |||||||||
1H20 vs 1H19 | 1H20 vs 1H19 | |||||||||
Conservative loan book | ||||||||||
Cost of Risk | Reinforced Coverage | |||||||||
53 bps | 20 bps | NPLs | REOs | NPAs | ||||||
+131bps | +217bps | +184ps | ||||||||
1H20 | 1H20 underlying | QoQ | QoQ | QoQ | ||||||
Commercial dynamism
Mutual funds | Mortgage book | |
(performing) | ||
+14.0% | +5.0% | |
YoY | YoY | |
Robust Capital
CET1 FLCET1 FL buffer MDA buffer
14.01% | €932m | 400 bps | ||
+103bps QoQ | ||||
3
1. | Summary | ||
Agenda | 2. Commercial Activity | ||
3. Asset Quality | |||
4. | Results analysis | ||
5. Solvency | |||
6. | Liquidity and Fixed Income portfolio | ||
7. | Appendix |
4
Highlights
Commercial activity
- Positive commercial dynamics maintained despite Covid-19 outbreak.
- Total performing book +7.4% YoY and +3.7% QoQ driven by mortgages +1.0% QoQ and corporates +9.9% QoQ.
- Customer funds increased +5.0% YoY and +4.9% QoQ.
- Mutual funds +14.0% YoY and +7.5% QoQ, outperforming the sector by 13 percentage points on a yearly basis.
- On balance sheet funds +4.6% YoY and +5.0% QoQ.
- Focus on digital transformation keeps supporting commercial dynamics. Mortgage sales originated by an online lead were 9.5% of total sales in the quarter. Consumer loans signed remotely were 30% in the quarter compared to 16% in 2019.
Asset quality
- Non-performingloans decreased in the quarter to €806m. NPL ratio stands at 3.1% down from 3.2% last quarter.
- NPL coverage increases by 131 bps in the quarter and it now stands at 50%.
- Gross real estate asset outflows of €44m in the quarter, €145m in the year. Stock is down c.8% in the year despite Covid-19.
- Foreclosed assets coverage increases by 217 bps in the quarter.
- NPA ratio drops from 8.2% to 7.9% QoQ while coverage increases by 184 bps in the quarter standing at 50%.
5
Highlights
Profitability
- Recurrent NII +6.4% 1H20 vs 1H19 supported by loan book growth, cheaper retail funding and lower wholesale funding costs that more than offset lower contribution from the ALCO portfolio and NPLs.
- Recurrent fees +8.4% 1H20 vs 1H19. Strong commercial activity, specially in insurance and mutual funds.
- Closing transaction of non-life insurance business between Caser and Helvetia.
- Recurrent cost of risk remains under control at 20 bps in 1H20. Total cost of risk, including extraordinaries, of 53bps in 1H20.
- Impairments of c. €40m conducted in the quarter on foreclosed assets, absorbing model updates and frontloading the expected impact of the Covid-19.
Solvency & Liquidity
- CET1 ratio fully-loaded(1) stands at 14.01%, +127bp YoY and +103bp QoQ, supported by organic generation, market recovery, closing of insurance transaction (Caser), reduction of RWAs from state guaranteed loans and SME / infrastructure support factor.
- TBVps increased to €1.02, +8.5% YoY (incl. cancellation of shares purchased in buyback program).
- Strong liquidity position. LCR ratio stands at 233%, NSFR at 121% and LtD at 98%.
(1) CET1 FL does incorporate capital release from IFRS-9 and sovereign filter. It deducts the approved and executed but not cancelled share buy back program. | 6 |
1. | Summary | ||
Agenda | |||
2. Commercial Activity | |||
3. Asset Quality | |||
4. | Results Analysis | ||
5. Solvency | |||
6. | Liquidity and Fixed Income portfolio | ||
7. | Appendix |
7
Customer funds
Total customer funds breakdown. € m
€ m | 2Q19 | 1Q20 | 2Q20 | QoQ | YoY | |||||||||||||||
Customer funds € bn | ||||||||||||||||||||
Customer Funds | 30,971 | 30,990 | 32,524 | 4.9% | 5.0% | (exc. Public Institutions) | ||||||||||||||
Customer Funds on Balance Sheet | 25,129 | 25,018 | 26,277 | 5.0% | 4.6% | 30.3 | ||||||||||||||
Public Institutions | 2,193 | 2,096 | 2,236 | 6.7% | 2.0% | 28.8 | 28.9 | |||||||||||||
Retail Customer | 22,936 | 22,923 | 24,041 | 4.9% | 4.8% | 6.2 | ||||||||||||||
5.8 | 6.0 | |||||||||||||||||||
Demand deposits | 17,337 | 18,559 | 19,874 | 7.1% | 14.6% | |||||||||||||||
Term deposits | 5,599 | 4,363 | 4,167 | -4.5% | -25.6% | 5.6 | 4.4 | 4.2 | ||||||||||||
Off-balance sheet | 5,842 | 5,972 | 6,247 | 4.6% | 6.9% | |||||||||||||||
Mutual funds | 3,394 | 3,597 | 3,868 | 7.5% | 14.0% | 19.9 | ||||||||||||||
17.3 | 18.6 | |||||||||||||||||||
Pension Plans | 1,467 | 1,420 | 1,437 | 1.2% | -2.0% | |||||||||||||||
Insurance Funds | 982 | 955 | 942 | -1.4% | -4.1% | |||||||||||||||
Number of branches | 629 | 579 | 579 | 0.0% | -7.9% | Jun 19 | Mar 20 | Jun 20 | ||||||||||||
Customer funds per branch (€ m)(1) | 47 | 49 | 52 | 5.0% | 11.6% | Demand deposits | Term deposits | Off-balance sheet | ||||||||||||
- Total customer funds increased by €1.5bn in the quarter, the best 2nd quarter in the last 6 years. The majority of the growth comes from demand deposits at no cost and mutual funds.
- Mutual funds positive net inflows of €87m in the quarter, 17% market share.
- Customer funds per branch are up 11.6% YoY supporting our branch network restructuring initiatives.
Note: customer funds do not include repos | 8 |
(1) Adjusted by agencies funds. |
Asset management and insurance
Mutual funds AuMs. € bnInsurance premiums. € m+16% | 93 | 94 | |||||||||||||||||||
3.9 | 84 | ||||||||||||||||||||
CAGR | |||||||||||||||||||||
3.4 | 23 | 24 | |||||||||||||||||||
21 | |||||||||||||||||||||
3.1 | |||||||||||||||||||||
34 | 39 | 42 | Home | ||||||||||||||||||
Life | |||||||||||||||||||||
2.5 | |||||||||||||||||||||
28 | 32 | 28 | Other | ||||||||||||||||||
2Q17 | 2Q18 | 2Q19 | 2Q20 | 1H18 | 1H19 | 1H20 |
Mutual funds fee income | Recurrent insurance income(1) (€ m) | |||
10 | 20% | |||
25 | ||||
15% | 23 | |||
23 | ||||
5 | 10% | |||
5% | ||||
0 | 0% | |||
1H18 | 1H19 | 1H20 |
- Weight of mutual fund fees over total fee income keeps growing. Positive evolution of mutual fund portfolio profitability due to a more balanced mix.
- Strong momentum on the residential mortgage business line supports insurance business growth.
(1) Excluded dividends received from Caser. | 9 |
Lending: Performing loan book
Performing loan book breakdown. Gross | Performing loan book growth. YoY | |
€ m | 2Q19 | 1Q20 | 2Q20 | QoQ | YoY | |||||
Public sector | 2,575 | 3,307 | 3,238 | -2.1% | 25.8% | |||||
Loans to businesses | 5,771 | 5,581 | 6,132 | 9.9% | 6.2% | 5.2% | 5.0% | |||
Real Estate Developers | 281 | 341 | 388 | 13.8% | 38.0% | 4.6% | ||||
Other Corporates | 5,490 | 5,240 | 5,744 | 9.6% | 4.6% | |||||
Loan to individuals | 14,577 | 15,140 | 15,283 | 0.9% | 4.8% | |||||
Residential mortgages | 13,714 | 14,254 | 14,403 | 1.0% | 5.0% | 1.9% | ||||
Consumer and others | 863 | 886 | 879 | -0.8% | 1.9% | |||||
Other loans | 603 | 336 | 617 | 81.2% | 2.0% | |||||
Total performing book | 23,525 | 24,364 | 25,270 | 3.7% | 7.4% | |||||
Total (exc Public sector) | Corporates | Consumer & others Residential mortgages | ||||||||
Total performing book (exc | 20,951 | 21,056 | 22,031 | 4.6% | 5.2% | |||||
Public sector) | ||||||||||
- Sustainable yearly growth across the entire portfolio of +7.4%.
- Residential mortgage book posts positive yearly and quarterly growth, capturing market share, despite severe lockdown.
10
Lending: New lending
Total lending € m (excl. public sector)
3,559 | ||||||
2,287 | 2,330 | |||||
2,372 | ||||||
1,271 | 1,177 | |||||
2Q | ||||||
1Q | 1,015 | 1,153 | 1,187 | |||
1H18 | 1H19 | 1H20 | ||||
Consumer lending. € m | ||||||
171 | ||||||
154 | ||||||
128 | ||||||
88 | ||||||
81 | ||||||
52 | ||||||
2Q | 73 | 83 | 76 | |||
1Q | ||||||
1H18 | 1H19 | 1H20 |
Residential mortgage. € m
927 | +12% | ||||||
856 | 828 | ||||||
YoY | |||||||
415 | |||||||
462 | 376 | ||||||
2Q | 394 | 451 | 511 | ||||
1Q | |||||||
1H18 | 1H19 | 1H20 | |||||
Corporates. € m | |||||||
2,503 | |||||||
1,273 | 1,331 | 1,904 | |||||
2Q | 727 | 712 | |||||
1Q | 546 | 618 | 599 | ||||
1H18 | 1H19 | 1H20 |
Total new lending in the quarter favored by state guaranteed loans, 68% of total new loans excl. public sector. Residential mortgages new lending is up +12% 1H20 vs 1H19 and +10% 2Q20 vs 2Q19.
Mortgage new lending market share of c. 6%(1) as of May 2020 in the year while maintaining strict lending policies in new production.
1) College of Spanish Notaries as of May.
11
Digital transformation
Consumer | ||
loans | Mortgage | Broker |
Digital sales | 2Q20 | 30% | 10% | 73% | Notable growth | |||
/total | 2Q19 | 16% | 1% | 46% | wary CAPEX | |||
Active | Playstation | Wallet / | ||||||
Digital | clients | Bizum | ||||||
Clients | 2Q20 | 54% | c. 20,000 | c. 90,000 | Multichannel | |||
48% | accumulated | client acquisition | ||||||
2Q19 | Users in 2Q20 | |||||||
Payments | ||||||||
Wires | Queries | (transactions) | ||||||
Activity | 2Q20 | 84% | 89% | c. 1.2 Million | Increased efficiency | |||
2Q19 | 75% | 83% | & service | |||||
+20% QoQ | ||||||||
Continuous development of additional remote capabilities increasing customer experience and sales conversion.
"Junto a ti"
- Remote managers service launched at the end of 2019.
- Number of managers have increased by c.6X in the last quarter.
- Access to c.10% of total active clients.
Liby
- Artificial intelligence virtual assistant launched in 2Q20.
- Capabilities to perform and automate specific administrative tasks.
12
1. | Summary | ||
Agenda | 2. Commercial Activity | ||
3. Asset Quality | |||
4. | Results Analysis | ||
5. Solvency | |||
6. | Liquidity and Fixed Income portfolio | ||
7. | Appendix |
13
Performing loan book
Sector (1) | Liberbank |
Businesses loan book
Business
24.3%
42.6%
57.0%
Sector | Weight / total book |
(%) | |
Industry & manufacturing | 3.5% |
Wholesalers & retail | 3.2% |
Food industry | 2.8% |
Services & education | 2.3% |
Utilities | 1.8% |
Real Estate | 2.1% |
Logistics | 1.5% |
Financial activities | 1.2% |
Tourism | 1.4% |
Healthcare | 1.0% |
Other | 3.4% |
- Defensive book with little exposure to the most affected sectors.
- C. 20% of total businesses loan book already has a state guarantee.
- Tourism and restaurants exposure remains flat QoQ despite significant growth of loan book backed on state guarantees scheme.
- Negligible exposure to airlines and oil industry.
Residential mortgage
Public sector
40.1%
5.7%12.8%
Consumer loan book
Pure consumer lending book stands at €611m, -1.4% QoQ representing 2.4% of our total performing loan | |
book (vs c.7% (3) peers). | |
| NPL ratio of c.4.4%. Average yield is 6.5%, well below the sector. |
| Revolving credit exposures is negligible, €23m. The product has been removed from portfolio offering. |
Other 2
Consumer
4.3%
7.4%
3.5%
2.4%
Liberbank has no open market agreements. |
1) | Data from Bank of Spain as of March 2020 | 14 |
2) | Other loans in the case of Liberbank are mainly pension advancements to public administration. | |
3) | Peers are Spanish listed banks |
Mortgage porfolio
Total book. Key metrics
| 95% of loan book from domestic customers. | Geographic breakdown | |
| Average LTV is 52% and affordability ratio c.27%. | 13% | |
12% | |||
- 4% of the book has LTV > 80% versus 15% in the sector.
7%
0% | ||||
Mortgage NPL Ratio (1) | ||||
27% | ||||
3.5% | ||||
8% | 20% | 4% | ||
2.4% | ||||
2.1% | ||||
4% | ||||
LBK 1Q20 | LBK 2Q20 | Sector |
2020 new origination
- All risk assessment and management processes are performed by bank staff independently of the origination channel.
- Holder average age is 39 years.
- Average ticket size c. 20% up YoY, standing at €144k in 2020.
- At least one borrower has a permanent job in 99% of the contracts.
- C.60% of mortgages have two or more debtors.
Metrics at origination
70%26%71%
Loan to value Affordability(2) | Fixed rate |
1) Data from Bank of Spain as of May.
15
Customers support
State guaranteed loans (ICO). Key metrics
- ICO lines: Loans granted under this scheme amount to €1,614m as of June 30th. 75% of this amount is backed by the state.
- Quota allocated to Liberbank is €1,708m, 1.85% of total ICO Scheme.
- 71% of the allocated quota has already been granted as of June 30th.
- c.€500m left to be used until September end.
Guaranteed | |||
1,215 | 1,614 | ||
Total | |||
SMEs | 1,278 | 430 | 1,708 |
Corporates
Granted moratoriums
- Liberbank has been proactive granting moratoriums supporting our customers.
5%1%
- Two thirds of the moratorium granted come from the private initiative.
Residential mortgages | Consumer loans |
16
Activity recovery
Activity evolution. Liberbank
Credit and debit card activity. (base 100)
140 | ||||||||||||
120 | 112 | |||||||||||
100 | ||||||||||||
80 | ||||||||||||
60 | ||||||||||||
40 | ||||||||||||
Jun 19 | Jul 19 | Aug 19 | Sept 19 | Oct 19 | Nov 19 | Dec 19 | Jan 20 | Feb 20 | Mar 20 | Apr 20 | May 20 | Jun 20 |
Point of sale devices activity. (base 100)
180 | |||||||||||
160 | |||||||||||
140 | |||||||||||
120 | 108 | ||||||||||
100 | |||||||||||
80 | |||||||||||
60 | |||||||||||
40 | |||||||||||
20 | |||||||||||
0 | |||||||||||
Jun 19 | Jul 19 | Aug 19 Sept 19 | Oct 19 | Nov 19 | Dec 19 | Jan 20 | Feb 20 | Mar 20 | Apr 20 | May 20 | Jun 20 |
1600
1400
1200
1000
800
600
400
200
0
Credit lines usage. (€ m) | |||||||||||
57% | 62% | ||||||||||
1,261 | 43% | ||||||||||
1,264 | |||||||||||
1,079 | |||||||||||
540 | 481 | ||||||||||
616 | |||||||||||
724 | 780 | ||||||||||
463 | |||||||||||
Dec 19 | Mar 20 | Jun 20 | |||||||||
Drawn (€m) | Undrawn (€m) | Usage (%) | |||||||||
70%
50%
30%
10%
-10%
-30%
-50%
- Activity levels have recovered in June, standing above 2019 levels as a result of limited exposure to geographies with high reliability on tourism.
- Drawn credit lines have decreased by 40% versus last quarter. It reflects relatively lower liquidity tension within our clients.
- Past-dueloans below 90 days are 50% lower than at the end of 2019.
17
Non performing loans
NPL stock evolution. € m
3,205 | -20% | |||||||||
YoY | ||||||||||
with no portfolio | ||||||||||
sales | ||||||||||
1,011 | 812 | 806 | ||||||||
2016 | 2Q19 | 1Q20 | 2Q20 |
NPLs coverage
NPLs Coverage | 100% | |||
+131 bps QoQ | ||||
70% | ||||
50% | 46% | |||
21% | ||||
Total | Real Estate | Corporates & | Residential | Other individuals |
Developers | SMEs (exc RED) | mortgages |
NPL ratio benchmarking (1)
13.9%
11.3% | 2nd lowest |
among peers (2) | |
8.6% | ||||||||||
9.1% | 6.8% | |||||||||
8.4% | 7.8% | 5.8% | 5.7% | 5.4% | ||||||
5.1% | ||||||||||
4.8% | ||||||||||
4.8% | 4.7% | |||||||||
6.4% | ||||||||||
4.9% | 4.5% | |||||||||
4.1% | 3.9% | |||||||||
3.3% | 3.2% | 3.1% | ||||||||
2016 | 2Q17 | 2017 | 2Q18 | 2018 | 1Q19 | 2Q19 | 3Q19 | 2019 | 1Q20 | 2Q20 |
Liberbank Sector
NPLs mix
Other 7% | Real Estate |
Developers 10% |
Mortgages
39% Corporates
44%
(1) | NPLs over gross loan book (not including repos nor off-balance sheet assets).Source: Bank of Spain. April data. | 18 |
(2) | Spanish listed Banks as of most updated available figures. |
Impairments
Cost of Risk(1). bps
53
49
24 | 24 | 25 | 23 | |
20 | ||||
2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | ||
Underlying CoR (bps) | Total CoR (bps) | |||||
Quarterly loan loss provisions. € m
38
31 | ||||||||||||||
16 | 27 | |||||||||||||
16 | 16 | 15 | ||||||||||||
15 | ||||||||||||||
11 | ||||||||||||||
2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | ||||||||||
Recurrent LLP (€ m) | Non-recurrent LLP (€ m) | |||||||||||||
- Total cost of risk is 53 bps in the first half of the year, where underlying cost of risk is 20 bps.
(1) Accumulated loan loss provision / gross loans.
19
Foreclosed assets
Foreclosed assets stock evolution. € m | Outflows mix. 1H20 (1) | |
78 | ||||
Residential | ||||
Property 27% | ||||
188 | ||||
Land 53% | ||||
1,462 | 1,353 | |||
CRE 8% | ||||
Building under | ||||
2019 | Entries | Sales & Other | 2Q20 | construction 11% |
- €44m of outflows in the quarter.
- Sales mix totally aligned with portfolio in terms of asset breakdown and geographic exposure.
- > 60% of total sales come from Castilla La Mancha.
Foreclosed assets (€ m) | Gross Debt | NBV | NBV Mix | Coverage |
Residential | 370 | 197 | 29% | 47% |
Commercial RE | 183 | 113 | 16% | 38% |
Building under construction | 252 | 139 | 20% | 45% |
Land | 548 | 238 | 35% | 57% |
Total | 1,353 | 686 | 100% | 49% |
- Coverage levels increase by 217 basis points in the quarter.
- Impairments of c. €40m conducted in the quarter on foreclosed assets, absorbing model updates and frontloading the expected impact of the Covid-19.
(1) | Gross debt excluding investment properties | 20 |
(2) | Turnover = Annualized outflows over average foreclosed assets |
Non performing assets
Gross NPAs. € m
6,238 | 50% | ||||||||||||||||||
NPAs coverage | |||||||||||||||||||
+184 bps QoQ | |||||||||||||||||||
3,205 | 3,836 | ||||||||||||||||||
1,584 | 2,749 | ||||||||||||||||||
1,011 | 2,159 | ||||||||||||||||||
3,033 | 806 | ||||||||||||||||||
2,252 | |||||||||||||||||||
1,738 | |||||||||||||||||||
1,353 | |||||||||||||||||||
2016 | 2Q18 | 2Q19 | 2Q20 | ||||||||||||||||
NPA ratio (1) | REOs | NPLs | |||||||||||||||||
23.96% | |||||||||||||||||||
14.92% | |||||||||||||||||||
10.46% | |||||||||||||||||||
7.87% | |||||||||||||||||||
2016 | 2Q18 | 2Q19 | 2Q20 |
NPL ratio
13.93%
6.75%
4.12%
3.09%
2016 | 2Q18 | 2Q19 | 2Q20 |
Texas ratio (2)
127%
81%
63%
50%
2016 | 2Q18 | 2Q19 | 2Q20 |
(1) NPA ratio calculated as NPLs & foreclosed assets over gross loans and foreclosed assets (not including repos) | 21 |
(2) Texas ratio calculated as gross NPLs & foreclosed assets over equity (excl. minority interests) and provisions related to NPLs & foreclosed assets |
1. | Summary | ||
Agenda | 2. Commercial Activity | ||
3. Asset Quality | |||
4. | Results Analysis | ||
5. Solvency | |||
6. | Liquidity and Fixed Income portfolio | ||
7. | Appendix |
22
Net interest income
NII performance. € m | NII yearly evolution | |
136.5
Recurrent
+6.4%
1H20 vs 1H19
14
14.1 | 7 |
55
20
259
113.7 | 116.3 | 116.3 | 120.5 | 122.4 | 122.3 |
230 | |||||
1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | NII 1H19 Performing | NPLs | Retail | Fixed | Wholesale Other | NII 1H20 | ||
loan book | funding | income | funding | ||||||||||
Recurrent | Non-recurrent | ||||||||||||
- Recurrent net interest income up by +6.4% 1H20 vs 1H19 supported by loan book growth, cheaper retail funding and lower wholesale funding costs that more than offset lower contribution from the ALCO portfolio and NPLs.
23
Net interest income: Margins
Margin performance (%)
1.64 | 1.63 | 1.59 | 1.62 | 1.59 | 1.60 | 1.58 | |||||||||||||
1.57 | 1.57 | ||||||||||||||||||
1.26(1) | |||||||||||||||||||
1.17 | 1.16 | 1.18 | 1.14 | 1.15 | |||||||||||||||
1.13 | 1.12 | 1.13 | 1.11 | ||||||||||||||||
2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | |||||||||||
Customer spread | Net Interest Margin | ||||||||||||||||||
Recurrent Net Interest Margin |
Customer loan yield and cost of funds
1.78 | 1.70 | 1.72 | 1.69 | 1.71 | 1.68 | |||
1.66 | 1.64 | |||||||
1.61 | ||||||||
1.69 | 1.63 | 1.69 | 1.65 | 1.68 | 1.64 | 1.63 | 1.61 | 1.58 |
0.05 | 0.06 | 0.06 | 0.06 | 0.06 | 0.05 | 0.04 | 0.02 | 0.01 | ||||||||||||||
2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | ||||||||||||||
Customer loan yield | Customer loan yield (performing) | |||||||||||||||||||||
Cost of customer funds |
- Both, customer spread and NIM hold resilient to extremely low reference rates.
(1) Explained by extraordinary income of € 14m from the DGF dispute. | 24 |
Note: NIM = NII / ATAs |
Net interest income: Asset yields
Lending yields. Basis points (1)
Yield (bps) | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 |
Total Book (Back book) | 171 | 168 | 166 | 164 | 161 |
Back Book (Exc. Public sector) | 176 | 175 | 177 | 174 | 172 |
Front Book | 149 | 124 | 190 | 186 | 168 |
Front Book (Exc. Public sector) | 246 | 242 | 217 | 220 | 170 |
Mortgages (Back book) | 133 | 136 | 135 | 133 | 134 |
Front Book | 199 | 199 | 173 | 163 | 158 |
SMEs (Back book) | 238 | 232 | 231 | 226 | 224 |
Front Book | 271 | 254 | 263 | 266 | 185 |
Corporates (Back book) | 162 | 160 | 160 | 157 | 161 |
Front Book | 199 | 166 | 148 | 156 | 150 |
- The above rates refer to the drawn amounts and reflect actual contribution to NII
- Mortgage front book remains above the back book despite strong activity in a challenging scenario.
- SMEs front book impacted by ICO loans granted in the quarter.
25
Net interest income: Cost of funding
Term deposits maturities
0.89% | 1,353 | ||||
0.79% | 1,163 | ||||
0.69% | |||||
0.59% | |||||
0.49% | 748 | 764 | |||
0.39% | |||||
0.29% | |||||
0.07% | 0.10% | 0.12% | 0.05% | 254 | |
0.19% | |||||
0.09% | 0.05% |
-0.01%
3Q20 | 4Q20 | 1Q21 | 2Q21 | > 2Q21 | |
Maturities (€ m) | Cost of maturities | ||||
Term deposits. Cost evolution (1)
0.09 | 0.09 | 0.09 | 0.09 | ||||||||||||||||||||||||||||||||||||
0.08 | 0.08 | 0.07 | |||||||||||||||||||||||||||||||||||||
0.08 | 0.06 | ||||||||||||||||||||||||||||||||||||||
0.04 | |||||||||||||||||||||||||||||||||||||||
0.05 | 0.05 | 0.05 | |||||||||||||||||||||||||||||||||||||
0.04 | |||||||||||||||||||||||||||||||||||||||
0.02 | 0.02 | ||||||||||||||||||||||||||||||||||||||
0.01 | |||||||||||||||||||||||||||||||||||||||
0.00 | |||||||||||||||||||||||||||||||||||||||
2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | |||||||||||||||||||||||||||||||
Stock | New Production | ||||||||||||||||||||||||||||||||||||||
Capital markets maturities
4,000 | 3.00% |
3,500 | 2.08% | 1.34% | |||||||||||||||||||||||||||||||
2.50% | |||||||||||||||||||||||||||||||||
3,000 | 1.50% | 2.00% | |||||||||||||||||||||||||||||||
2,500 | 1.50% | ||||||||||||||||||||||||||||||||
2,000 | 0.38% | 1.00% | |||||||||||||||||||||||||||||||
0.14% | |||||||||||||||||||||||||||||||||
1,500 | |||||||||||||||||||||||||||||||||
0.50% | |||||||||||||||||||||||||||||||||
1,000 | 0.00% | ||||||||||||||||||||||||||||||||
500 | -0.50% | ||||||||||||||||||||||||||||||||
400 | 370 | 310 | 1,200 | 3,250 | |||||||||||||||||||||||||||||
0 | -1.00% | ||||||||||||||||||||||||||||||||
2020 | 2021 | 2022 | 2023 | > 2023 | |||||||||||||||||||||||||||||
Maturities (€ m) | Cost of maturities | ||||||||||||||||||||||||||||||||
€400m of maturities left for the second half
of the year at 38 bps.
(1) Euro currency
26
Fee income
Fee income evolution. € m
86
38 | |||||||
55 | |||||||
6 | 50 | ||||||
45 | 45 | ||||||
45 | 45 | 49 | 50 | 48 | |||
2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | |||
Recurrent | Non-recurrent | ||||||
Fee income breakdown
€ m | 2Q19 | 1Q20 | 2Q20 | 1H19 | 1H20 | YoY | ||
(%) | ||||||||
Total Fees | 45 | 50 | 86 | 90 | 136 | na | ||
Recurrent net fees | 45 | 50 | 48 | 90 | 98 | 8.4% | ||
Banking fees | 28 | 29 | 29 | 55 | 58 | 5.9% | ||
Non-banking fees | 17 | 21 | 19 | 36 | 40 | |||
12.4% | ||||||||
Mutual Funds | 8 | 9 | 9 | 15 | 18 | 19.1% | ||
Insurance | 7 | 10 | 8 | 17 | 18 | 6.5% | ||
Others* | 2 | 2 | 2 | 3 | 4 | 16.0% | ||
Non recurrent fees | 0 | 0 | 38 | 0 | 38 | na | ||
Note: Others include brokerage and pension funds among others
- Recurrent fees increased +8.4% in 1H20 vs 1H19.
- Resilient card activity and new pricing launched in 2020 is supportive for banking fees while non-banking fees keep growing as activity maintains the positive trend, specially in insurance and mutual funds businesses.
27
Closing of Caser Seguros transaction
Helvetia has closed the acquisition of a controlling stake in Caser, where Liberbank is a significant shareholder. We have sold a 2.2% stake in the transaction and we now hold a stake of just below 10%.
Profitable agreement
- Distribution agreement novated with Caser:
- Recurrent fee scheme remains unchanged.
- One off payment of €43m already received.
- 38m already accounted for in the quarter.
- Remaining €5m to be accounted for in a maximum of 4 years.
- From 2023 onwards we will receive 50% of the insurance business result.
- Dividend payment from Caser is expected to resume in 2021 at pre transaction levels.
With positive impact in solvency
- CET1 Fully loaded: Positive impact of 23 bps.
- Total Capital fully loaded: Positive impact of 42 bps.
Non-life insurance is a key business line for Liberbank and it will continue to be very profitable under the new agreement.
28
Costs
Number of branches
1,379-8%
1,036 | YoY | ||
743 | |||
629 | 579 | ||
2010 2015 2Q18 2Q19 2Q20
Number of employees
6,838 | -3% | |
5,143 | YoY | |
4,031 | 3,767 | 3,668 |
2010 | 2015 | 2Q18 | 2Q19 | 2Q20 |
Costs evolution
-2% | |||||||||||||||||||
YoY | |||||||||||||||||||
195 | 196 | (recurrent) | |||||||||||||||||
22 | 20 | ||||||||||||||||||
56 | 53 | ||||||||||||||||||
118 | 7 | ||||||||||||||||||
116 | |||||||||||||||||||
1H19 | 1H20 | ||||||||||||||||||
Personnel costs | Extraordinary | Admin costs | Amortizations | ||||||||||||||||
Recurrent efficiency (%) (1) | 1H19 | 1H20 | |||||||||||||||||
Cost to Income | 59% | 55% | |||||||||||||||||
Cost to Income (exc. Trading) | 62% | 56% | |||||||||||||||||
- Operating expenses are down 2% YoY on a recurrent basis. There is an extraordinary of c. €7m under personnel expenses in the quarter that comes from previous workforce reduction plans.
- Recurrent efficiency excluding trading income has improved by 6 percentage points YoY.
(1) | Like for Like comparison. Removes NII extraordinary, Casser fees, dividends and non recurrent personnel expenses. | 29 |
Profit and loss statement
Var. 1H20 vs 1H19 | ||||||||||||
€ m | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | 1H19 | 1H20 | € m | % | ||
Interest Income | 134 | 138 | 137 | 140 | 154 | 140 | 272 | 293 | 22 | 8% | ||
Interest Cost | -20 | -21 | -20 | -20 | -17 | -17 | -42 | -35 | 7 | -17% | ||
Net Interest Income | 114 | 116 | 116 | 121 | 137 | 122 | 230 | 259 | 29 | 13% | ||
Dividends | 5 | 0 | 0 | 2 | 0 | 0 | 6 | 0 | -5 | -96% | ||
Results from equity method stakes | 2 | 21 | 3 | 4 | 0 | 25 | 23 | 25 | 2 | 7% | ||
Net fees | 45 | 45 | 45 | 55 | 50 | 86 | 90 | 136 | 46 | 51% | ||
Gains on financial assets & others | 5 | 12 | 5 | 2 | 6 | 0 | 16 | 5 | -11 | -67% | ||
Other operating revenues/(expenses) | -21 | -5 | -11 | -41 | -15 | -14 | -26 | -29 | -3 | 11% | ||
Gross Income | 150 | 188 | 159 | 142 | 177 | 219 | 339 | 396 | 57 | 17% | ||
Administrative expenses | -89 | -85 | -88 | -79 | -85 | -91 | -174 | -175 | -2 | 1% | ||
Staff expenses | -59 | -59 | -60 | -58 | -58 | -64 | -118 | -123 | -5 | 4% | ||
General expenses | -30 | -26 | -27 | -20 | -26 | -26 | -56 | -53 | 3 | -5% | ||
Amortizations | -11 | -11 | -11 | -11 | -10 | -10 | -22 | -20 | 1 | -7% | ||
Pre Provision Profit | 51 | 93 | 60 | 53 | 82 | 118 | 144 | 200 | 57 | 39% | ||
Provisions | -6 | -7 | -5 | -7 | -4 | -4 | -13 | -8 | 5 | -36% | ||
Impairment on financial assets | -14 | -16 | -16 | -15 | -31 | -38 | -29 | -68 | -39 | 135% | ||
Impairment losses on other assets | 0 | -2 | -2 | -1 | -2 | -9 | -2 | -12 | -10 | 447% | ||
Other profits or losses | -3 | -6 | -5 | -18 | -17 | -41 | -9 | -59 | -50 | 549% | ||
Profit Before Taxes | 28 | 62 | 31 | 11 | 27 | 25 | 90 | 53 | -37 | -41% | ||
Taxes | -7 | -10 | -8 | 3 | -8 | -4 | -17 | -12 | 6 | -33% | ||
Net Income Attributable | 21 | 52 | 24 | 15 | 19 | 21 | 73 | 41 | -32 | -44% | ||
30
1. | Summary | ||
Agenda | 2. Commercial Activity | ||
3. Asset Quality | |||
4. | Results Analysis | ||
5. Solvency | |||
6. | Liquidity and Fixed Income portfolio | ||
7. | Appendix |
31
Solvency
CET 1 fully loaded quarterly evolution (1) | CET 1 fully loaded benchmark (2) | |
43 | CET1 FL does not include | |||||||||||||||||||
14.01% | ||||||||||||||||||||
any capital relief: (3) | ||||||||||||||||||||
23 | 5 | |||||||||||||||||||
19 | | IFRS 9 transitional | +29 bps | |||||||||||||||||
13 | 11 | | Sovereign prudential | +3 bps | ||||||||||||||||
12.98% | filter | +9 bps | ||||||||||||||||||
| Software deductions | |||||||||||||||||||
14.1% 14.0%
13.3%
11.9% 11.8% 11.6% 11.5%
10.8%
CET1 Ratio | 2Q20 | Change in | SME & | Caser Valuation | Other CET1 Ratio | Peer 1 Lbk Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 |
Mar 20 | Earnings | RWAs | infra. | adj. & | June 20 | |
support | others | |||||
factor |
- CET1 ratio fully-loaded stands at 14.01%, +103bp QoQ. Organic generation, reduction in RWAs, the closing of Caser transaction, regulatory changes and valuation adjustments all have positive impact in capital ratios in the quarter.
- Total capital ratio fully-loaded stands at 15.7%, +119 bps in the quarter.
(1) | CET1 FL incorporates the full impact of IFRS-9 and Covid 19 provisions. It includes full net profit 2019 and 2020. | 32 |
(2) | Peers are Spanish listed banks, updated as of 2Q20 when information is available. | |
(3) | Software deduction is an estimated impact |
Solvency
Capital buffers (1) (2) | TBVps (4) | ||
€932m | 400 bps | ||
CET 1(3) FL buffer | MDA(3) buffer |
15.73% | 17.00% | +8.5% | ||||
13% | ||||||
YoY | ||||||
1.72% | ||||||
1.72% | ||||||
2.6% | 1.02 | |||||
0.99 | ||||||
2.0% | ||||||
0.95 | ||||||
1.4% | 0.01 | |||||
14.01% | 15.27% | |||||
2.5% | 1.02 | |||||
0.99 | ||||||
8.41% | 0.94 | |||||
4.5% | ||||||
Fully Loaded | Phased In | June 19 | Mar 20 | June 20 | ||
CET 1 | Tier 2 | |||||
2020 SREP Requirement | TBVps | Dividend |
CET 1 Pillar 1 CET 1 CCB CET 1 P2R AT1 T2
- CET 1 fully-loaded regulatory buffer over the SREP-CET1 requirement has increased by €142m in the quarter. MDA buffer stands at 400bps, +125 bps in the quarter.
- Treasury shares purchased in the buyback program, representing c.2% of the share capital, are expected to be cancelled shortly.
(1) | CET1 FL incorporates the full impact of IFRS-9. It includes full net profit 2019 and 2020. | 33 |
(2) | The solvency ratios deduct 61.6 million treasury shares acquired under the share repurchase program approved in December19. |
- Applying P2R (CRD-V) flexibility. Maximum distributable amount calculated as total capital phased in minus total SREP requirement.
- TBVPs deducts 61.6 million treasury shares that are intended to be cancelled.
1. | Summary | ||
Agenda | 2. Commercial Activity | ||
3. Asset Quality | |||
4. | Results Analysis | ||
5. Solvency | |||
6. | Liquidity and Fixed Income portfolio | ||
7. | Appendix |
34
Liquidity position
Liquidity position. € bn | Liquidity ratios | |
4.9 | 12.4 |
7.5 | |||||||
Ratio | 2Q19 | 1Q20 | 2Q20 | ||||
LtD | 95% | 99% | 98% | ||||
LCR | 249% | 248% | 233% | ||||
NSFR | 120% | 112% | 121% | ||||
Liquid assets (exc. used Covered Issuance Capacity | Total |
collateral and with haircuts)
35
Wholesale funding
Wholesale funding. Breakdown | Wholesale Funding. Price Evolution (%) (1) | |
0.35% | ||||
0.32% | ||||
Money | 0.28% | |||
Markets 25% | ||||
Capital | 0.19% | |||
Markets 45% | ||||
0.10% | ||||
ECB 30% | ||||
Mar-18 | Mar-19 | Dec-19 | Mar-20 | Jun-20 |
TLTRO III: €4.5bn | 0.88% |
-0.48%-0.58%
Money Markets | ECB | Capital Markets |
(1) Average cost for the quarter
36
Fixed income portfolio
Fixed income portfolio. Evolution (€ bn) (1)
9.6 | 10.0 | ||
9.1 | 9.1 | ||
Mar-19 | Dec-19 | Mar-20 | Jun-20 |
(1) Based in acquisition cost
Issuer breakdown
Private
Debt 10%
Issuer | € bn | % | |
Private Debt | 1.0 | 10% | |
Public Debt | 9.0 | 90% | |
Public | ow SAREB | 1.7 | 17% |
Debt 90% | Total | 10.0 | 100% |
Fixed income portfolio. Breakdown (2)
Portfolio | Amount | Yield | Duration |
(€ bn) | |||
Fair value through OCI | 0.4 | 0.35% | 0.8 |
Amortised cost | 9.6 | 1.16% | 2.8 |
Total | 10.0 | 1.13% | 2.7 |
(2) Weighted average duration in years. Yields EOP.
37
1. | Summary | ||
Agenda | 2. Commercial Activity | ||
3. Asset Quality | |||
4. | Asset Quality | ||
5. Solvency | |||
6. | Liquidity and Fixed Income portfolio | ||
7. | Appendix | ||
38
Balance Sheet
Interbank (€ 3.1 bn)(1)
Net lending
(€ 26.2bn)
Fixed Income
(€ 11 bn)
Foreclosed Assets (€ 0.7bn) (3)
DTAs (€ 1.8bn)
Other (€ 2.0bn) (2)
Investments (€ 0.9bn)
Customer
deposits
(€ 26.3bn)
ECB (€ 4.5bn)
Long term funding (€ 1.5bn)
Interbank & repos (€ 3.8bn)
Covered bonds (€ 3.6bn)
Tax liabilities (€ 0.1bn) &
Rest (€ 2.4bn)(4)
Equity (€ 3.2bn)
Demand deposits | 83% |
Term deposits | 17% |
Marketable Securities (€ 0.4bn)
Assets €45.8 bn
(1)Interbank include cash and interbank deposits
Liabilities & Equity €45.8 bn
(2)Rest of assets include tangible and intangible assets and derivative hedging among others (3)Assets currently held for sale
(4)Rest of liabilities include provisions, accrued interests and micro-hedging among others
39
Shareholders and book value
Shareholding base
(1)Includes Flicka Forestal, Corporación Masaveu and Fundación María Cristina Masaveu (2)Includes Fundación Caja Asturias, Fundación Caja Extremadura and Fundación Caja Cantabria (3)Includes stake through derivatives
(4)Includes Inmosan SA
Source: CNMV as of June 30th 2020
Share metrics and book value (1)
1Q20 | 2Q20 | |
Share and liquidity: | ||
# O/S shares (m) (2) | 2,979 | 2,979 |
Last price (€) | 0.14 | 0.15 |
Max price (€) | 0.35 | 0.19 |
Min price (€) | 0.12 | 0.13 |
Avg. traded volume (#shares m) | 6.2 | 7.4 |
Avg. traded volume (€ m) | 1.66 | 1.20 |
Market Capitalization (€ m) | 415 | 448 |
Book Value: | ||
BV. (€ m) | 3,098 | 3,207 |
TBV. (€ m) | 2,946 | 3,052 |
Ratios: | ||
BVps (€) | 1.04 | 1.08 |
TBVps (€) (2) | 0.99 | 1.02 |
(1)Book value deducting intangible assets
(2)Deducts 61.6 million of treasury shares planned to be cancelled.
40
Institutional Investors & Analysts Contact
relación.inversores@liberbank.es
+ 34 91 422 58 37
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Disclaimer
Liberbank SA published this content on 30 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 July 2020 11:00:03 UTC