Acquisition of Air Bank Group
Supporting material for shareholder meeting to be held on June 22nd, 2021
Published on May 20th, 2021
Updated on May 25th, 2021 (updated for response to shareholder feedback)
OF INSIDE INFORMATION
TABLE OF CONTENT
1 STRATEGIC RATIONALE | UPDATED |
- ACQUISITION OVERVIEW
3 BUSINESS CASE | UPDATED |
- ANTICIPATED CAPITAL POSITION AT CLOSING
5 CORPORATE GOVERNANCE AND OPERATING MODEL | UPDATED |
- KEY RISKS
7 PPF OFFER AND MONETA SHARE PRICE DEVELOPMENT | UPDATED |
8 RESPONSE TO SHAREHOLDER FEEDBACK | NEW |
- HISTORICAL FINANCIAL RESULTS AND GROWTH RATES
- COMBINED BUSINESS PLAN - DETAIL
- KEY MESSAGES
2
ACQUISITION RATIONALE: MID TO LONG TERM VALUE CREATION
The acquisition of Air Bank Group is transformational and unique opportunity to accelerate growth and strengthen returns in medium to long term
INVESTMENT THESIS | TARGETED SHAREHOLDER BENEFITS |
- Establishing a leading Czech retail bank
- Increasing customer base to above 2.4 million, the third largest in the Czech Republic
- Increasing competitive capabilities
- ~25% increase in loan base
- ~48% increase in deposit base
- Aspiring for strong retail market shares through retail and small business focus
- Targeting CZK 1.8 billion of annual cost synergies by 2025
- Targeting improving recurrent profitability and returns
Reinforced profitability
EPS & DPS Accretive
Based on conservative growth1
Targeting net profit of more than CZK 8.5 billion from 2024 annually
Targeting EPS and DPS Accretion of 15-25% starting from 2024 through 2026
Targeting loan growth of 6.7% and deposit growth of 5.4%
Source: MONETA and Air Bank Group company data. (1) CAGR (2021-2026).
3
STRUCTURAL REALITIES OF CZECH BANKING SECTOR
SIZE AND CONCETRATION ADVANTAGE
MID-SIZED BANKS DILEMAS
MONETA IN CONTEXT OF ITS SIZE
Large banks consistently generate 64% of banking industry's revenues, deploy 64% of Tier 1 capital and produce 70% of net earnings (2017 - 2020).
Their size advantage is not challengeable through organic growth therefore consolidation is the mean how to obtain economies of scale, cost parity and similar capital efficiency.
Medium sized banks generate 18% of banking industry's revenues, deploy 23% of Tier 1 capital and produce 17% of net earnings (2017 - 2020).
Their revenues and profits are challenged by both large and small sized banks as well as through cost considerations. The challenge is formidable in the realm of retail banking.
MONETA managed to increase balance sheet size 2.0times (19% CAGR) through organic growth and Wüstenrot acquisition between 2016 and 2020 to maintain revenues and profits.
MONETA generates 6% of banking industry's revenues, deploy 4% of Tier 1 capital and produces 5% of net earnings (2017 - 2020) due to focus on retail and small business. Pricing and cost pressures create formidable challenges to maintain profit and capital efficiency.
Source: CNB - ARAD. Large banks are considered as banks with a total balance sheet of more than 10% of the total assets of the
banking sector, medium-sized banks between 2-10% of total assets and small banks with a balance sheet less than 2% of the 4 banking sector.
OPERATING INCOME STRUCTURE
Medium-sized banks face challenges concerning ability to generate operating income and achieve capital efficiency
TOTAL OPERATING INCOME (CZK bn)1
181.0 | 192.3 | 204.2 |
181.4 | ||
10.3 | 10.2 | 10.5 | 11.0 | |||||
2017 | 2018 | 2019 | 2020 | |||||
MONETA | Banking sector, total | |||||||
TIER 1 (CZK bn) | 2017 | 2018 | 2019 | 2020 | ||||
Market | 457.7 | 480.2 | 527.2 | 611.8 | ||||
MONETA | 20.7 | 20.1 | 20.7 | 23.4 | ||||
LARGE BANKS (CZK bn)2
115.9 | 123.5 | 131.6 | 114.4 |
Cumulative operating income at 64%
2017 2018 2019 2020
294 | 304 | 336 | 399 | TIER 1 |
MEDIUM-SIZED BANKS (CZK bn)2
34.7 | 33.5 | 35.2 | 32.4 | Cumulative |
operating | ||||
income at 18% | ||||
2017 | 2018 | 2019 | 2020 | |
105 | 113 | 121 | 136 | TIER 1 |
SMALL BANKS (CZK bn)2
10.1 | 13.2 | 15.5 | 14.4 | Cumulative |
operating | ||||
income at 7% | ||||
2017 | 2018 | 2019 | 2020 | TIER 1 |
36 | 41 | 50 | 52 |
Source: CNB - ARAD. Large banks are considered as banks with a total balance sheet of more than 10% of the total assets of the banking sector, medium-sized banks between 2-10% of total assets and small banks with a balance sheet less than 2% of the banking
sector.5 Note: (1) Market and MONETA excluding CZK 1.1bn as one-off gain from the Acquisition; market including foreign branches and building societies; MONETA consolidated incl. Wüstenrot from 2Q 2020; (2) Does not include foreign branches and building savings banks.
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Disclaimer
Moneta Money Bank a.s. published this content on 28 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 May 2021 10:16:03 UTC.