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INVESTOR PRESENTATION January 2015
PIVDENNYI BANK GROUP
2
Brief profile
Founded in 1993 Pivdennyi Bank is a strong regional player, the 19th largest Ukrainian Bank by total assets and 18th by gross loan portfolio and 20th largest in Ukraine by deposits
The Bank is one of the few Ukrainian banks that does not need additional capitalization based on the results of the diagnostic assessment conducted by international audit company Ernst & Young Audit Services LLC in accordance with the requirements set by the National Bank of Ukraine. The assessment has been envisaged by the International Stand-by Arrangement with the International Monetary Fund and the Financial Sector Support Project for Ukraine run by the World Bank.
The Bank remains profitable for the year 2014 despite the difficult situation in Ukrainian Financial Sector Less than 1% of Bank assets are in Donetsk and Lugansk regions The Bank has it’s head office in Odessa with 4 branches and 134 outlets in Ukraine, 249 ATMs and 3551 point-of-sale (POS)
terminals. In 2014 the Bank opened new outlets in Khmelnitsky and in Mukachevo. For optimization of the operational activities and within the process of implementation of new Automated Banking System “B2”
branches of the Bank are reorganized to outlets. The new ABS “B2” will allow to improve customer services, and provide customers with the new innovative products.
In 2014 the Bank successfully implemented the technology «3D Secure», which increases the security of online payments For the convenience of the customers the Bank has introduced new service "Internet Banking" The Bank serves over 30 000 corporate and SME customers and over 400 000 individual customers Pivdennyi Bank Group is comprised by Pivdennyi Bank in Ukraine, PB’s daughter bank Regional Investment Bank in Latvia with a
representative offices in Ukraine, Belgium and Russian Federation Pivdennyi has a proven track records with 4 debt capital market syndicated loans and debut Eurobond successfully repaid in
August 2010 as well as a long history of bilateral projects Pivdennyi Bank cooperates with KfW and Black Sea Trade and Development Bank under SME financing programs The Bank has the following credit ratings : Credit Rating (Ukraine): uaA+
Moody’s Investors’ Service: LT Bank Deposits – Foreign Currency: ‘Ca';
Fitch Ratings (International Rating Agency): Long-term IDR: ‘CCC'; Small and Medium enterprises have traditionally been the main business line of the Bank The Bank has an experienced and stable management team with over 2 500 employees
Source: Pivdennyi Bank
3
Historical Overview
• Successful AML examination by F.A.T.F. commission resulting in Ukraine’s exclusion from F.A.T.F.’s “Black list”
• Brand of the year, Gold Trade Mark & other awards
• Member of S.W.I.F.T.
• Member of Interbank Currency Exchange
• Member of Professional Association of Registrars & Custodians
• Associated member of Europay Int.
• Thomas Cook dealer
• First IFRS audited by PWC
• Bank’s 9,98% acquisition by East Capital Explorer Financial Institutions Fund
• Fourth USD 46 MIO syndicated loan was obtained with over 1.5x oversubscription
• First in Ukraine a 5-year USD 20 MIO special SME finance bilateral loan was obtained from Black Sea Trade and Development Bank
• One of 4 Ukrainian banks to cooperate with KfW on more then 5 years SME financing program
• Foundation 03.12.1993
• European Business Assembly’s Gold Trade Mark of Ukraine
• Acquisition by current Beneficial Owners
• First commercial Bank in Ukraine to issue customer bonds
• First underwriter deals for customers
• Visa International associated member
• Licensed for precious metals trading
• First factoring and leasing transactions
• Winner of World Bank’s tender for project SASM in Ukraine
• First rated by Moody’s “B2/NP”
• Upgraded by Fitch Ratings to “B-”
• Debut USD 25 MIO international syndicated loan obtained
• B1 debt instruments’ rating is received from Moody’s
• Debut USD 25 MIO International syndicated loan paid out
• Second USD 45 MIO syndicated loan was obtained with 1.5x oversubscription
• 3-d USD 30 MIO International syndicated loan was obtained
• 3-year USD 100 MIO debut Eurobond issued
• Pivdennyi group was created with assets over USD 1 Billion
• New Head Office premises
• Acquisition of the Regional Investment Bank (‘RIB’) in Latvia
• National Bank of Ukraine has registered capitalization of dividends in amount of UAH155 MIO and EUR 3,8MIO subordinated debt received from East Capital
• Pivdennyi has repaid it’s USD46 MIO syndicated loan and all maturing in 2009 bilateral loans
• Fitch Ratings has confirmed Pivdennyi Group’s rating on “B-” level
• USD 14 MIO Subordinated loan received from KFW
• Debut USD 100 MIO Eurobond was repaid in full at maturity
• Fitch Ratings confirmed bank’s rating on “B-” level and changed outlook to “stable” from “negative”
• Moody’s Investors Service confirmed bank’s rating on “B3” level and changed outlook to “stable” from “negative”
Source: Pivdennyi Bank
2003
• Fitch Ratings has confirmed Pivdennyi Group’s rating on “B-” level with a “stable” outlook
• Moody’s Investors Service has confirmed Pivdennyi Group’s rating on “B3” level with a “stable” outlook
• New Chairperson of the Board
1993 1994 1997 2000 2001 2003 2004 2005 2006 2007 2008 2009 2010 2011
• Fitch Ratings has confirmed Pivdennyi Group’s rating on “B-” level, outlook “Stable”
• Bank won a tender from the Ministry of Finance of Ukraine on the EIB loan servicing for the construction of high-voltage line Rivne-Kyiv
2012 2013
• Fitch Ratings has confirmed Pivdennyi Group’s rating on “B-” level, revised outlook to “Negative”
• Moody’s Investors Service downgraded group’s rating to “Caa2” with outlook “Negative”.
2014
• New Automated Banking System “B2” is implemented
• Opening of new outlets in Khmelnitsky and Mukachevo
• The Bank has successfully passed the diagnostic assessment of the NBU. According to the assessment the Bank does not need additional capitalization
4
Group’s shareholder structure
Recent activities: 1997-2006 - «Vivien» Ltd., Director and owner2003-2006 – Deputy Chairman of Supervisory Council and major
shareholder of JSB «Pivdennyi», owns major stakes in a number of holding’s companies
Mark Is. Bekker
Was born on May 11th, 1945 in Vladivostok, Russia
Resident of Ukraine, domiciled in Odessa
Higher education, degree in refrigeration technologies engineering
Recent activities:
1990 – Small Enterprise «Kompanjony», Director and owner1992 - «Tekom» Ltd., General director and owner1995- Chairman of Supervisory Council and major shareholder of JSB “Pivdennyi” 2006- Chairman of Supervisory Council of A/S Regionala Investiciju Banka, owns major stakes in a number of holding’s companies
Yuriy A. Rodin
Was born on January 21st, 1950, in Odessa.Resident of Ukraine, domiciled in Odessa.
Higher education – master of mathematics,certified in assets management by State securities and fund market commission
+ family members+ family members
53,7%22,3%
Founded in 1997, East Capital is a leading, independent asset manager specializing in Eastern European financial markets. The company, which is headquartered in Stockholm, with offices in Paris, Tallinn, Moscow, Oslo, Hong Kong and Milan,
The East Capital Financial Institutions Fund is a EUR 500m private equity fund, which makes equity investments in companies within the financial sector in Eastern Europe ,
10%
Other Minority Shareholders
14,0%
57,2%
Other Minority Shareholders42,8%
Regional Investment Bank
Pivdennyi Bank
East Capital Explorer Financial Institutions Fund
5
Supervisory Board
YURIY RODIN MARK BEKKER
• Senior Advisor• More than 14 years of
experience in the banking sectors of Russia and Eastern Europe
• Joined East Capital in 2006. Previously held senior positions at UFG and Charlemagne Capital
• MBA from Georgetown University and BA from Dartmouth College. CFA charter holder
• Acting First Deputy Chairman of the Board
• More then 10 years of banking experience
• Degree in English language and literature
• Joined Pivdennyi Bank in 2002 as a Senior Economist of Commercial Department
• 2003 - Head of Department in Corporate Division
• 2006 - Deputy Head of Financial Policy Division in Pivdennyi
• 2010 – Acting First Deputy Chairperson of the Board
• 18 years with ABN AMRO, entirely international
• 10 years as an independent management consultant
• Partner at COB Europe LLC
• Senior Consultant at Contractor for ING IGA
• Associate Consultant at The Communications Group
• RAO and Manager of Ops/IT at ABN AMRO Bank NV
Source: Pivdennyi Bank
PIM DE BRUIJN(independent director)
ALLA VANETSYANTS MARGOT JACOBS(independent director)
• Chairman of Supervisory Council and major shareholder of JSB “Pivdennyi”
• Chairman of Supervisory Council of A/S Regionala Investiciju Banka
• Major owner in a number of holding’s companies
• Deputy Chairman of Supervisory Council of A/S Regionala Investiciju Banka
• Major owner in a number of holding’s companies
6
Pivdennyi Group’s Geographic Presence
Current Network: 4 branches 134 outlets 249 ATMs 3551 point-of-sale (‘‘POS’’)
terminals
Pivdennyi BankRegional Investment Bank
Expansion strategy to European Union through opening of branches of Regional Investment Bank in CEE countries:
Representative offices in Belgium, Ukraine and Russian Federation
Source: Pivdennyi Bank
15%
7%8%23%
47%
Non-residents
East
West
Center
South
7
Pivdennyi Bank in Odessa
Odessa region is one of the most important regions in the country : Odessa region is the largest in Ukraine (5.5% of
the territory) – 33.31 thousand km2
Odessa region contributes to 4.4% of the Ukrainian GDP and 5.6% of the total population (over 2.39 mln residents) and has the lowest level of unemployment in Ukraine
Odessa is one of the largest sea ports on the Black Sea and the largest in Ukraine
Services sector, mainly represented by SMEs, is the main factor of growth
Odessa region is Pivdennyi Bank’s “home market” The Bank’s market share in the region varies from 20%
to 30.0% depending on products. The Bank has a very loyal customer base comprised
mainly of SMEs and large corporates many of which have been with the Bank since its creation
Odessa
Source: Pivdennyi Bank,
Ukrainian statistics committee
On 31 December 2014
Pivdennyi’s Loan Portfolio by Regions
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General strategy
Pivdennyi Bank is a classic universal commercial bank serving corporate (Large Corporates & SME) and retail customers and will target
those segments within at least next 3 years
The Bank will keep its focus on SME and corporate banking mainly through lending
The Bank will retain its strong market position in the Southern Ukraine (20-30% depending on products)
Pivdennyi bank will continue its cautious expansion strategy out of home region through a large distribution network
Pivdennyi Bank Group performs its expansion to EEC region through the establishment of branches and representative offices of Regional
Investment Bank (‘RIB’) headquartered in Latvia
The Bank will continue its advancement to retail banking sector only through deposit taking and settlement products
Assets, Loans & Equity Operating* & Net income
Source: Pivdennyi Bank
140,37165,86
279,72
430,39
860,85
655,07
610,11
770,71
726,21
824,18
1 094,28
23,00 28,68
71,89102,86 122,09
4,79
84,7045,51
61,66 63,18 67,06
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Operating income Net income
1 586 2 198
4 410
8 667
11 774 11 43812 308
12 61413 503
14 534
25 318
1 1961 643
3 230
6 856
9 6878 774 8 621
9 1418 208
8 702
11 980
159 251528 834 1 464 1 481 1 581
1638 1 741 1 8172 374
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Assets Loans (Total loans) Equity
* Operating Profit before Admin & Other OE
1%3%
4%
19%
4% 24%
22%
4%19%
Alcohol
Fuel & Oils
Rolled metal
Non-Food Consumer Goods
Foods
Agricultural Products
Other
Pharmaceutics & Medicine
Distribution chains
6%4%
19%
26%
29%
9%1%
2% 4% Manufacturing
Other
Agriculture & Food Industry
Construction, RE
Wholesale & Retail Trade
Transport & Communication
Tourism & Hotel Services
Finance & Investment
Individuals
9
Pivdennyi will retain its strategy in lending policy by focusing on selected cash-rich industries
The Bank plans to keep current structure of its loan portfolio
Cautious approach to retail lending
Wide breakdown of industries exposure with further decrease in concentration is expected
Lending strategy
Loan book Structure
Breakdown of the wholesale and retail trade
On 31 December 2014
Source: Pivdennyi Bank
26%
74%
Large SME
3% 6% 11%
36%29%
11%
1%
3% Manufacturing
Other
Agriculture & Food Industry
Construction, RE
Wholesale & Retail Trade
Transport & Communication
Tourism & Hotel Services
Finance & Investment
47%
53%
0%
Term Loans Credit Line Overdraft
18%
9%
5%22%
46%
Non-residents
East
West
Center
South
10
Lending strategy
Corporate Loan Portfolio
* corporate clients with sales of less than EUR 50m yearly and/or with not more than 250 employees
Regional Structure of SME Loans*
SME Loan Portfolio (Industry Breakdown)
SME loan products
Source: Pivdennyi Bank
On 01 Jan 2015
On 01 Jan 2015On 01 Jan 2015
On 01 Jan 2015
Pivdennyi will retain its funding strategy by focusing on customer deposits in the local market
The Bank plans to keep current structure of its funding
Cautious approach to DCM borrowings will be in place
Increase in the level of deposits through implementation of new products within settlement products line is expected
The Bank will continue its activity in syndicated loans market and bilateral cooperation with International Financial Organizations as well as its activity in trade finance and structured finance segments
4%
91%
5%
Due to therbanks
Customeraccounts
Otherborrowings
11
Funding strategy
Funding Structure
Breakdown of the customer accounts
Source: Pivdennyi Bank
74%
26%
Corporate and SME customers
Individual Customers
On 01 Jan 2015
On 01 Jan 2015
13,97%
18,46%
15,11%
10,63%
0,33%
5,53%
2,83%3,65% 3,60% 3,20%
1,52%2,18%
1,57% 1,19%
0,04%0,71% 0,37% 0,47%
0,46%
0,34%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
RoE RoA
12
Capitalisation strategy
Current major shareholders plan to retain current level of control over the bank
Management intends to keep equity ratio above 12.0% in the future
The majority shareholders are willing and able to support the Bank by additional capital
Shareholders provide regular capital injections Dividends to shareholders have always been capitalised
2010 2011UAH MIO 2012
Total Risk Adjusted Assets, Off-Balance Sheet Commitments and Market Risk
9 282,8 9 418,2 9 834,1 9 783,5 11 322,2 16 357,4
Share capital 875,3 927,0 965,8 956,9 956,9 956,9
Share premium 335,6 335,6 335,6 335,6 335,6 335,6
Retained earnings 62,8 95,9 104,7 170,9 232,3 244,8
Minority interest 20,7 19,0 30,3 70,4 75,2 293,3
Tier-1 capital1 294,4 1 377,5 1 436,4 1 533,8 1 600,0 1 830,6
Tier-1 capital ratio 13,9% 14,6% 14,6% 15,7% 14,1% 11,2%
Revaluation reserve for fixed assets
103,0 139,3 139,4 142,5 142,6 238,8
Revaluation reserve for investment securities available for sale
1,1 1,1 0,0 0,0 0,0 0,0
Subordinated debt 199,6 210,3 175,8 190,8 168,4 288,4
Currency translation reserve 82,1 62,6 62,0 64,3 74,4 304,8
Tier-2 capital 385,8 413,3 377,2 397,6 385,5 832,0
Tier-1 and Tier-2 capital 1 680,2 1 790,8 1 813,6 1 931,4 1 985,5 2 662,6
Capital adequacy ratio 18,1% 19,0% 18,4% 19,7% 17,5% 16,3%
Efficiency
2013 2009
Source: Pivdennyi Bank
2014
13
Contacts
Andrew Dobriy
Director of Treasury and
International Business
Tel. +38 (0482) 307037
e-mail: [email protected]
