Presentation of Komercijalna Banka AD Skopje
as at December 31, 2012
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Contents • Komercijalna Banka Overview 3 • The Republic of Macedonia 9 • The Macedonian Banking Sector 11 • Komercijalna Banka Financial Overview 19
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Komercijalna Banka Overview
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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 1,345.9 m) and deposits from
customers (EUR 1,111.0 m) and in terms of net loans to customers (EUR 743.0 m) as of December 31, 2012. Customer Base • Leading corporate customer base (42,211 customers) • Second largest retail customer base (848,078 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 98.19% private ownership (50.96% foreign, as at December 2012) and about 2% 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
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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
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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
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Overview (IV): ...the largest distribution network in the country...
67 branches including headquarters as at December, 2012
- Coverage of all major cities and economically significant regions
- 56 city branches (36 in Skopje + HQ1 & HQ2)
- 11 regional branches Second largest ATM network in the country
- 149 installed ATMs as at December 2012 (142 as at Dec 2011)
Fast expanding merchant network – Over 6,500 POS terminals installed as at
December 2012(>6,200 as at Dec 2011) State-of-the-art IT infrastructure
– Fully integrated – Real time
Branch Network
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Overview (V): ...and an enviable market position 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 and 2012 - Best Developing Trade
Financier for 2003, 2004, 2008 -Most active issuing bank In Macedonia in 2009
The most transparent company for 2008, 2009 & 2010
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
Market share as at December 31, 2012
Total assets 23.5% Capital and reserves 22.9% Total deposits from non-financial sector 27.6% Total net-loans to non-financial sector 23.8%
Total number of debit cards issued
16.7%
Total number of credit cards issued
19.0% Total number of merchants in the country acquiring bank cards issued by KB
41.6%
Total number of POS and ATM acquiring cards
23.6%
Total value of realized domestic payment operations
21.5%
Total number of accounts opened to legal entities
21.5%
Total trading realized at the MSE 17.9% Total number of transactions realized at the MSE
17.0%
Red Cross of the Republic of Macedonia - Gold Supporter Award 2012
The Republic of Macedonia
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The Republic of Macedonia - Macroeconomic Environment: The Fitch agency affirmed Macedonia’s foreign currency rating at “BB+”, In May 2012, the credit rating agency Standard & Poor’s has affirmed the credit rating of Macedonia for foreign and local currency as “stable BB/B with good outlook for future”. The rating affirmation is due to the favourable fiscal policy, low indebtedness, as well as to the expectations for the possible accession to EU.
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(2) 0.0 Central Government Budget surplus/deficit (% of GDP) -0.9 -2.7 -2.4 -2.5 -3.5
Inflation (CPI%) av. 8.3 -0.8 1.6 3.9 3.3 Current Account Bal.(EUR'm) -862.2 -457.1 -143.6 -224.3 -291.4 Gross External Debt (EUR'm) 3,304 3,780 4,106 4,847 5,070(3)
FX Reserves (EUR'm) 1,495 1,598 1,714 2,069 2,193 Foreign direct invest.(EUR'm) 399.9 145.0 160.0 336.8 104.8 Unemployment Rate (%)
33.8 32.2 32.0 31.4 /
MKD/EUR year end. 61.3 61.3 61.5 61.5 61.5
(1) Source: Ministry of Finance, State Statistical office, NBRM (2) Preliminary data (3) As at 30.09.2012
The Macedonian Banking Sector
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Structure • 16 active banks (4 large, 8 medium and 4 small) • 7 saving houses Characteristics • High concentration with four 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
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Macedonian Banking Sector (I): The structure and the characteristics
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Macedonian Banking Sector (II) ...assets...
2,296 2,846
3,654 4,082 4,390 4,964 5,385 5,738
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000
2005 2006 2007 2008 2009 2010 2011 2012
Total assets (EUR'm)
Total assets
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Macedonian Banking Sector (III) ...and placements to non-financial entities...
963 1,302
1,861
2,512 2,569 2,737 2,943 3,104
0 500
1,000 1,500 2,000 2,500 3,000 3,500
2005 2006 2007 2008 2009 2010 2011 2012
Placements to non-financial entities (net) (EUR'm)
Placements to non-financial entities (net)
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Macedonian Banking Sector (IV) ...and deposits from non-financial entities...
1,601 2,013
2,621 2,946 3,071
3,468 3,807 3,990
0 500
1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500
2005 2006 2007 2008 2009 2010 2011 2012
Deposits from non-financial entities (EUR'm)
Deposits from non-financial entities
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Macedonian Banking Sector (V) ...and capital & reserves...
354 364 416 471 500 524
595 641
0 100 200 300 400 500 600 700
2005 2006 2007 2008 2009 2010 2011 2012
Capital & reserves (EUR'm)
Capital & reserves
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Macedonian Banking Sector (VI) ...and financial results influenced by the crisis...
26
46
60 56
27
38
19 24
0 10 20 30 40 50 60 70
2005 2006 2007 2008 2009 2010 2011 2012
Net profit (EUR'm)
Net profit
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Macedonian Banking Sector (VII) ...and drop of profitability from 2009...
75.9 102.0 124.0 148.0
175.0 169.0 169.1
184.9
1.2% 1.8%
1.8% 1.4% 0.6% 0.8%
0.4% 0.4%
7.5%
12.3%
15.2%
12.5%
5.6%
7.3%
3.4% 3.8%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%
0.0 20.0 40.0 60.0 80.0
100.0 120.0 140.0 160.0 180.0 200.0
2005 2006 2007 2008 2009 2010 2011 2012
Profitability indicators (EUR'm and %)
NII ROAA ROAE
Komercijalna Banka Financial Overview
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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 (I): 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 2007 2008 2009 2010 2011 2012
Net Interest margin 3.9% 4.1% 3.5% 3.4% 3.4% 3.45%
Net fees and Commission / Income 24.5% 20.3% 20.4% 21.9% 22.7% 20.0%
Cost/Income 45.8% 45.8% 53.0% 52.0% 47.8% 44.3%
NPLs / Total Loans 10% 7% 8% 8.1% 9.6% 13.1%
NPL Coverage 78.8% 83.8% 89.8% 92.6% 87.3% 79.2%
Net Loans / Deposits (Customers) 54.3% 76.6% 78.1% 70.4% 65.1% 66.9%
ROE (1) 19.2% 22.0% 15.5% 17.9% 11.4% 5.86%
ROA (1) 1.9% 2.5% 1.8% 2.0% 1.4% 0.68 %
Capital adequacy 10.5% 9.9% 10.6% 11.1% 13.5% 13.2%
(1) After taxation
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Financial Performance (II): Financial indicators
1) Last traded price 2) Calculation according data in MKD
Financial indicators 2007 2008 2009 2010 2011 2012
Earnings per share (EPS) 8.3 11.2 8.8 11.6 7.8 4.0
Book value (BV) 42.7 50.6 56.5 64.6 68.0 68.4 Market price per share (1) 112.7 44.8 45.8 52.8 42.9 39.0 Dividend Yield
2.73%
6.88% 6.06% 5.22% 7.58% 8.33%
Price/Earnings (P/E) (2) 13.58 3.99 5.21 4.57 5.45 9.73 Price/Book value (P/B) (2)
2.64 0.88 0.81 0.82 0.63 0.57
Price/Total assets (P/A) (2)
0.262 0.100 0.093 0.092 0.075 0.066
Market capitalization(in mill. EUR) 227.1 90.2 92.2 106.4 97.8 88.9
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Financial Performance (III):Income statement (IFRS) in million EUR
2007 2008 2009 2010 2011 2012 Index 08/07
Index 09/08
Index 10/09
Index 11/10
Index 12/11
Net interest income 34.6 41.9 39.1 40.4 43.5 46.9 121.1 93.3 103.3 107.7 107.8 Net fee & commission income 13.5 12.4 11.2 12.6 13.9 14.6 91.9 90.3 112.5 110.3 105.0 Other income 7.0 6.6 4.7 4.9 3.9 11.6 94.3 71.2 104.3 79.6 297.4 Total income 55.1 60.9 55.0 57.9 61.3 73.1 110.5 90.3 105.3 105.9 119.2
Operating expenses -25.3 -28.0 -29.3 -30.3 -29.4 -32.5 110.7 104.6 103.4 97.0 110.5 Impairment losses -12.5 -7.9 -8.4 -4.5 -14.4 -31.8 63.2 106.3 53.6 320.0 220.8 Operating profit 17.3 25.0 17.3 23.1 17.5 8.8 144.5 69.2 133.5 75.8 50.3
Share of loss from associate 0.1 0.2 0.3 0.3 0.3 0.4 200.0 150.0 100.0 100.0 133.3 Profit before tax/loss 17.4 25.2 17.6 23.4 17.8 9.2 144.8 69.8 133.0 76.1 51.7
Taxation -0.9 -2.8 0.0 -0.1 -0.1 -0.1 311.1
- - 100.0 100.0 Profit after tax/loss 16.5 22.4 17.6 23.3 17.7 9.1 135.8 78.6 132.4 76.0 51.4
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Financial Performance (IV): Balance sheet (IFRS) in million EUR
* The decrease is a result of changing the course of the denar against the euro
2007 2008 2009 2010 2011 2012 Index Index Index Index Index 08/07 09/08 10/09 11/10 12/11
Assets
Cash and cash equivalents 172.5 180.1 144.0 383.1 479.2 488.7 104.4 80.0 266.0 125.1 102.0 Customer loans 401.8 570.7 635.1 663.9 698.7 743.0 142.0 111.3 104.5 105.2 106.3
Bank placements and loans 226.0 90.4 149.0 17.1 22.1 15.6 40.0 164.8 11.5 129.2 70.6
Total loans and placements 800.3 841.2 928.1 1,064.1 1,200.0 1,247.3 105.1 110.3 114.7 112.8 103.9 Other assets 63.5 56.0 64.4 87.6 103.3 98.6 88.2 115.0 136.0 117.9 95.5 Total assets 863.8 897.2 992.5 1,151.7 1,303.3 1,345.9 103.9 110.6 116.0 113.2 103.3
Liabilities Total deposits 752.7 770.9 843.5 971.9 1,091.8 1,128.6 102.4 109.4 115.2 112.3 103.4
Borrowings & other liabilities 25.1 24.4 35.3 49.6 56.6 61.4 97.2 144.7 140.5 114.1 108.5 Total liabilities 777.8 795.3 878.8 1,021.5 1,148.4 1,190.0 102.2 110.5 116.2 112.4 103.6
Shareholders funds Share capital 32.9 32.9 32.9 32.8 37.1 37.1 100.0 100.0 99.7* 113.1 100.0 Share premium 1.8 1.8 1.8 1.8 12.5 12.5 100.0 100.0 100.0 694.4 100.0 Reserves 32.6 45.0 61.5 72.4 87.6 97.2 138.0 136.7 117.7 121.0 111.0
Retained earnings 18.7 22.2 17.5 23.2 17.7 9.1 118.7 78.8 132.6 76.3 51.4
Shareholders funds 86.0 101.9 113.7 130.2 154.9 155.9 118.5 111.6 114.5 119.0 100.6 Total liabilities and shareholders funds 863.8 897.2 992.5 1,151.7 1,303.3 1,345.9 103.9 110.6 116.0 113.2 103.3
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Financial Performance (V): Total Assets
(1) Total balance sheet assets (based on net loans after provisions) (2) In 2006 and 2011 the Bank’s Independent Auditor is changed
0
200
400
600
800
1,000
1,200
1,400
1,600
2007 2008 2009 2010 2011 2012
Total assets (1) (in million EUR)
Placements to banks Loans to customers Cash and equivalents Other assets
1,346
1%
58%
33%
8%
15%
64%
15%
6%
10%
64%
20%
6% 864 897 993
1,152 1,303
1% 2%
55% 54%
36% 36%
8% 8%
26%
47%
20%
7%
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Financial Performance (VI): Gross Loans to Customers
363.1 512.7 577.6 605.8 657.8 723.3 94.7
122.1 130.3 132.8 129.2
136.9
2007 2008 2009 2010 2011 2012
Total Loans - Corporate vs Retail (EUR'm)
Corporate loans Retail loans
21%
79%
19% 18% 18%
16% 16%
81% 82% 82%
84% 84%
457.8
634.8 707.9 738.6
787.0 860.2
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Financial Performance (VII): Liabilities
(1) Total deposits include deposits from banks which represent less than 2% within total liabilities
97% 97% 96%
95% 95% 95%
3% 3% 4%
5% 5% 5%
2007 2008 2009 2010 2011 2012
Total Liabilities (EUR'm)
Total deposits Borrowed funds & other liabilities
778 795 879
1,022 1,148 1,190
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Financial Performance (VIII): Deposits – Customer Breakdown
(1) Corporate deposits include deposits from banks which represent 1.9% within total deposits
489.3 539.8 601.9 702.8 804.5 857.2
263.4 231.1 241.6
269.1 287.3 271.4
2007 2008 2009 2010 2011 2012
Deposits by customer category (EUR'm)
Retail deposits Corporate deposits
752.7 770.9 843.5 971.9
1,091.8 1,128.6
35%
76%
24%
74%
26%
72%
28%
71%
29%
70%
30%
65%
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Financial Performance (IX):Shareholders Equity and Capital Adequacy
14%
12%
10%
8%
6%
4%
2%
0% 40% 34% 31% 27%
32% 32%
38% 44% 54% 55%
57% 22%
22% 15%
18%
11% 6% 10.5%
9.9% 10.6%
11.1% 13.5%
13.2%
2007 2008 2009 2010 2011 2012
Shareholders Equity and Capital Adequacy (EUR'm)
Share capital incl.share premium Reserves Retained earnings Capital adequacy
101.9 113.7 130.2
154.9* 155.9
62% 86.0 101.9 113.7
68% 68%
*VI-th issue of shares in the amount of 15 million EUR
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Financial Performance (X): Income Breakdown
55.1 60.9
55.0 57.5 61.3
73.1
34.6 41.9 39.1 40.4 43.5 46.9
13.5 12.4 11.2 12.6 13.9 14.6 7.0 6.6 4.7 4.5 3.9
11.6
2007 2008 2009 2010 2011 2012
Income (EUR'm)
Total income Net interest income Fee and commission income Other income
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Financial Performance (XI): Expenses Breakdown
46% 42% 48%
49% 48%
42%
16% 18%
16% 15% 16%
15% 11% 11% 11%
11% 10% 9% 12%
13% 13% 15%
18% 18%
15% 16% 12% 10% 8%
16%
2007 2008 2009 2010 2011 2012
Operating expenses (EUR'm)
Wages, salaries and other employees' costs Materials and services Depreciation and amortization Insurance Other expenses
25.3 28.0 29.3 30.3 29.4
32.5
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Financial Performance (XII): Efficiency
55.1
60.9 55.0
57.9 61.3
73.1
45.8%
45.8%
53.0% 52.0%
47.8%
44.3%
38.0%
40.0%
42.0%
44.0%
46.0%
48.0%
50.0%
52.0%
54.0%
0 10 20 30 40 50 60 70 80
2007 2008 2009 2010 2011 2012
Total income and efficiency (million EUR and %)
Total income Cost/Income
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Financial Performance (XIII): Non-Performing Loans
(1) Gross corporate and retail loans excluding bank placements (2) New methodology applied as of 01.01.2009
Total loans % % NPL provisions NPLs/Total loans NPL provisions/NPLs
14% 8.1% 8% 9.6% 7% 10% 78.8% 83.8% 89.8% 84% 92.6 87.3% 10.7% 89.8%
NPL
457.8
634.8 707.9 (2)
738.6 787.0
860.2
46.5 46.0 55.9 59.9 75.6 113.1
36.7 38.5 50.2 55.5 66.0 89.6
0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0 900.0
1,000.0
2007 2008 2009 2010 2011 2012
Total loans (1) vs Non-Performing Loans (EUR'm)
10% 78.80%
13.1% 9.6% 8.1% 8% 7% 79.2% 87.3% 92.6% 89.8% 83.80
%
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Financial Performance (XIV): Asset Quality
85.8% 82.0% 88.0% 88.7% 88.0% 83.5%
5.9% 9.9% 4.6% 3.2% 4.5% 6.1%
3.2% 3.2% 2.0% 2.1% 2.0% 2.8%
1.5% 1.6% 0.6% 1.6% 0.5% 2.3% 3.6% 3.3% 4.8% 4.4% 5.0% 5.3%
2007 2008 2009 2010 2011 2012
Asset Risk Categories (%)
A B C D E