LEASING BANKING FACTORING - grenke.de · 31.12.2017 31.12.2018 31.12.2019 31.12.2020 31.12.2021. ... 2008 2009 2010 2011 2012* 2013 2014 2015* 2016 2017* CM2 CM2 Margin 15 ... Factoring:

February, 8th 2018

LEASING – BANKING – FACTORING ANNUAL PRESS CONFERENCE - FRANKFURT

GRENKE results represent a continuation of solid performance

New business 2017

in EUR millions

LEASING FACTORING

SME lending business

BANKING

356.2

442.8

2016 2017

1,592.5

1,975.7

2016 2017

25.3

30.7

2016 2017

+24.1% +21.2%

Leasing – Banking – Factoring | Investor Relations 2

+24.3%

Principal markets

GRENKE GROUP’S NEW BUSINESS* NEW BUSINESS GRENKE LEASING*

* As of December 31, 2017; based on new business volume


Business start-up financing

GRENKE Bank (incl. microcredit

business) 1.2%

New Business GRENKE Group

Leasing** 80.7%

New Business GRENKE Group

Factoring 18.1 %

DACH 24.8%

Northern/ Eastern Europe; 16.1%

Western Europe (without DACH);

25.6%

Southern Europe; 31.0%

Other regions; 2.5%

Leasing: Strong new business development

in our core markets Germany, France and Italy

in EUR millions

LEASING GROUP’S NEW BUSINESS IN 2017

Regions

DACH: Germany, Austria,

Switzerland

Western Europe (without DACH):

Belgium, France, Luxembourg, the

Netherlands, Southern Europe:

Croatia, Italy, Malta, Portugal,

Slovenia, Spain

Northern/Eastern Europe:

Denmark, Finland, Ireland, Norway,

Sweden, UK, Czech Republic,

Hungary, Poland, Romania,

Slovakia

Other regions:

Australia, Brazil, Canada, Chile,

Singapore, Turkey, UAE

489.8 506.1

613.4

318.4

48.0

DACH Western Europe

(without DACH)

Southern

Europe

North/East

Europe

Other

regions

France Italy


Germany

2017 results compared to 2016

KEY RESULTS 2017 2016 DIFFERENCE

Net Interest income EUR 246.6m EUR 217.8m + 13.2%

Operating result EUR 161.3m EUR 136.5m + 18.2%

Net profit EUR 125.0m

Guidance: EUR 118 – 124m

(adjusted)

EUR 103.2m

Guidance: EUR 98 – 102m

(adjusted)

+ 21.1%

Cost/Income ratio 52.4% 51.2% +2.3%

Equity ratio 17.7% 17.4% +1.7%

Loss rate 1.0% 1.2% - 16.7%


GRENKE Consolidated Group:

Trend in consolidated net profit

in EUR millions

CAGR 2012 – 2017: 24.1% (2001 – 2017: 15.8%)

Concluded contracts on hand

provide high degree of certainty

in revenue forecast

Planned for the future: Dividend

distribution of approximately

20 – 30% from after-tax profits

Average payout ratio:

26.3% (since 2002) 42.5 47.0

64.0

80.8

103.2

2012 2013 2014 2015 2016 2017

125.0


Leasing business model: Benefits

CUSTOMERS (SMES*)

INNOVATIVE DISTRIBUTION CON-

CEPT/DECENTRALIZED SALES

OPTIMUM RISK

MANAGEMENT

EFFICIENT CONTRACT

PROCESSING

RESELLER PARTNERS

MULTIPLE

ADVANTAGES

Presence at all relevant point

of sale through

Large reseller network

Direct sales

Key account-channel

No residual or warranty risks

Low default ratios through IT-based

model for forecasting losses/

expected loss

High diversification of contracts

Automated and cost-efficient leasing

logistics for “small-ticket” leasing

Online contract processing

Favorable refinancing terms

from capital markets

Sales support – low rates accelerate

investment decisions & easy handling

Strengthens customer loyalty

Direct and individual support

Increased sales (easier up-

and cross-selling)

Secured long-term planning through

constant rates & transparency

Flexibility through exchange option

Easy investment decisions

– fast & simple processing

No effort with the disposal of the equip-

ment (Asset-broker realization platform)

* Small and Medium-sized Enterprises


Our strategy for sustainable growth is based on two aspects:

CONTINUITY and CHANGE


CONTINUITY CHANGE

KEY VALUES

BUSINESS FOCUS

DIFFERENTIATION

Simple

Fast

Personal

Financial solutions for SME

Direct and indirect business on global scale

Efficient management of value levers

We standardize if possible

We measure to manage

We keep entrepreneurial spirit while growing

PRODUCTS AND SERVICES

MARKETS AND CHANNELS

VALUE CHAIN

Consolidate and expand product offerings

Further rollout digital products and services

Combine online and personal service

Extend regional presence*

Bundling approach of leasing, factoring, bank

Better exploit customer by next level CRM

Further digitize sales and admin processing

Provide new digital workplace to employees

Rollout professional HR management

* Plan for 2018: +2 countries (Baltics, New Zealand) to a total of 33; + 17 branches to a total of 153

Expansion

Australia

9

31 German locations

101 International locations

31 Countries

> 6,500 IT dealers in Germany

> 25,000 IT dealers international

Leasing – Banking – Factoring | Investor Relations

Baltics

Perspectives and needs for further growth

10 Leasing – Banking – Factoring | Investor Relations

EQUITY AND

FUNDING

Risk measurement

and CM calculation

EXISTING BUSINESS

NEW PRODUCTS

NEW MARKETS

Focus on competitive

advantages

Cover market opportunities

Cover innovation and trends

Established markets

Franchise

Legal frame and stability

Structure of SME

Equity ratio – different ways of requirements

Basis: solid balance sheet

EQUITY RATIO WITHIN TARGETS


EQUITY RATIO & ROE & TOTAL CAPITAL RATIO

16.8% 16.9% 17.0% 17.4% 17.7%

10.7%

13.2% 13.7%

15.0% 14.6%

2013 2014 2015 2016 2017

Equity Ratio (Balance Sheet)

Total Capital Ratio according to CRR ROE after Tax

17.68%

22.68%

15.65%

Economic capital (embedded value)

Balance sheet equity Regulatory capital

16.0%

10.5%

as a % of total assets (risk-weighted assets) as per Dec. 31, 2017

12

Finance

Funding Mix

Debt issuance program

Promissory notes (Schuldschein)

Revolving credit facility

Money market line

Commercial paper program

Overdraft facility

Loans

Asset-backed commercial paper

program

Global loan

Deposit business

Term deposits

Senior Unsecured Asset Based

GRENKE Bank

Approx.

2,275 EURm Approx.

748 EURm Approx.

687 EURm

61 % 20 % 19 % Status: January 29, 2018


in EUR millions until maturity in 2022

Maturity Structure: GRENKE Group uses matched funding

Treasury is strongly focused on financing the core business

MATCH-FUNDED MATURITY STRUCTURE OF PORTFOLIO

Existing portfolio

No maturity transformation

No interest rate risk

No extra liquidity requirement

– positive cumulative cash flow

Assets Cash Debts


(4.000,00)

(2.000,00)

-

2.000,00

4.000,00

31.12.2017 31.12.2018 31.12.2019 31.12.2020 31.12.2021

GRENKE’s experience enables it to calculate and forecast credit

losses more precisely

LOSS EXPECTATIONS

* Losses p.a. (of historical asset values, factored in) ** Present value of operating income of a lease contract less risk and individual contract costs

*** New calculation of CM2 margin

0%

5%

10%

15%

20%

25%

30%

0%

1%

2%

3%

4%

5%

6%

7%

8%

2012*** 2013 2014 2015*** 2016 2017***

Calculated loss expectations at contract start

CM2** Calculated actual loss expectations per end of period


LOSS RATE* (LEFT COLUMN)

0%

100%

200%

300%

400%

0%

1%

2%

3%

2009 2010 2011 2012 2013 2014 2015 2016 2017

Settlement of claims and risk provision (2009 = 100%)

Loss rate (left column) Volume of leased assets (2009 = 100%)

CM2 is made up of the present value of operating income

of a lease contract less risk and individual contract costs

in EUR millions

CM1 is calculated as the present value of the interest

margin net of commissions paid to third parties

in EUR millions

CM2 CM1

GRENKE Group Leasing:

Trend in new business and contribution margins

* New calculation of CM2/CM2-margin

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

200

400

600

800

1.000

1.200

1.400

1.600

1.800

2.000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

New Business Leasing CM1 Margin

0%

5%

10%

15%

20%

25%

30%

0

100

200

300

400

2008 2009 2010 2011 2012* 2013 2014 2015* 2016 2017*

CM2 CM2 Margin


GRENKE Group Leasing:

CM2 operative - easier and more transparent


16

CM1 Forecast

Subsequent

business

Forecast

Losses

Forecast

Insurance

CM2

Net interest

income

Settlement of

claims / risk

provision

Profit from

service

business

Gains /

losses from

disposals

Profit from

new

business

Operating

income

Staff costs Selling and

admin.

Expenses

Depreciation

and

impairment

Operating

result

Outlook 2018


KEY FINANCIAL AND STRATEGIC PERFORMANCE INDICATORS

New Business

expectations

GRENKE Group Leasing: 16 - 20%

GRENKE Group Factoring: 15 - 20%

Expansion/Product

diversification

Leasing: Cell divisions in our core markets France, Germany, Italy as well as

in Spain, United Kingdom and Canada

Leasing: New market entry: The Baltics and New Zealand

Factoring: New market entry: Portugal

Balance sheet We aim for an equity ratio of 16%

Profitability Stability of business model will lead to net profit of:

EUR 123m – 131m EUR (after new IFRS 9)

We aim to achieve a sustainable cost/income ratio under 55%

THANK YOU FOR YOUR KIND

ATTENTION!

Renate Hauss

Head of Investor Relations

Phone: +49 7221 5007-204

Fax: +49 7221 5007-4218

E-mail: [email protected]

Internet: www.grenkefactoring.de

www.asset-broker.de

www.grenkebank.de

GRENKE AG

Neuer Markt 2

76532 Baden-Baden

Germany

Reports are available at:

www.grenke.de/FinancialReports

Disclaimer

This presentation contains forward-looking statements. Forward-looking statements are statements that are neither facts nor a description of past events; they comprise

statements relating to our assumptions and expectations. Each statement made in this presentation that reflects our intentions, assumptions, expectations or forecasts as well as

the underlying presumptions is a forward-looking statement. These statements are based on planning figures, estimates and forecasts currently available to the Board of

Directors of GRENKE AG. Accordingly, forward-looking statements refer exclusively to planning data, estimates and forecasts at the time at which they are made.

We assume no responsibility to further develop or modify such statements in the event of fresh information being available or future events occurring.

By their very nature, forward-looking statements imply risks and uncertainty factors. A large number of key factors can contribute towards actual events varying quite substantially

from forward-looking statements. Such factors include the condition of the financial markets and the regional focal points of our investment activities.

This document is not for publication or distribution, directly or indirectly, in or into the United States. This document does not constitute or form part of an offer of securities or

subscription rights for sale or solicitation of an offer to purchase securities or subscription rights in the United States, Canada, Australia, Japan or in any other jurisdiction where

such offer may be restricted. The securities and subscription rights referred to in this document have not been, and will not be, registered under the US Securities Act of 1933, as

amended (the “Securities Act”), and may not be offered or sold in the United States or to or for the account or benefit of US persons (as such term is defined in Regulation S

under the Securities Act), except on the basis of an applicable exemption from registration or in a transaction not subject to the registration requirements of the Securities Act.

There will be no public offering of securities and subscription rights in the United States or anywhere else, except for Germany.


www.grenke-group.com

Documents

LEASING BANKING FACTORING - grenke.de · 31.12.2017 31.12.2018 31.12.2019 31.12.2020 31.12.2021. ... 2008 2009 2010 2011 2012* 2013 2014 2015* 2016 2017* CM2 CM2 Margin 15 ... Factoring: