Revised Financial Projections 2020: Impact of Covid-19 Outbreak
Explore the revised financial projections for 2020 amidst the economic impact of the Covid-19 outbreak. Key indicators, scenarios, and perspectives are analyzed, highlighting changes in net loans, deposits, banking income, operating expenses, and more.
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Presentation Transcript
REVISED REVISED 2020 2020 PERSPECTIVES PERSPECTIVES General Shareholders Assembly APRIL 23 - rd 2020
NOTE NOTE The budget validated by BRD Board of Directors on March 9th was prepared before the Covid-19 outbreak, based on normal economic conditions At this stage, the long term economic consequences induced by the Covid-9 outbreak remain highly uncertain Nevertheless, the following projections aim at giving a first, high level estimate of the impact of the current crisis on BRD activity, based on certain assumptions BUDGET 2020 C3 P2
SCENARIO SCENARIO M a c r o S c e n a r i o Strict lockdown lasting until mid May, followed by a progressive lifting of restrictions GDP drop expected to reach -6.5% (vs +1.7% in initial budget) Interest rates expected to fall to 2.5% in average (for robor 3m) vs 3.2% in the initial budget (very close to current level of 2.55%) Exchange rate likely to be under pressure : 2020 average exchange rate assumption of 4.90 (vs 4.82 in the initial budget) K e y a s s u m p t i o n s Commercial assumptions Significant decrease of production of loans to individuals (-25% vs 2019) Stable loan outstanding amount for corporates, but with different structure (less investment loans, more liquidity lines) Globally stable level of deposits Sharp drop of transaction volumes during crisis period Asset management : material decrease of assets under management in March, and very low inflows expected until year end Cancellation of internet banking/mobile banking subscription fees, in order to promote the usage of remote banking solutions Moratorium Simulation based on Government Emergency Ordinance enacted on 31/03/2020 BUDGET 2020 C3 P3
REVISED 2020 KEY INDICATORS REVISED 2020 KEY INDICATORS, , CONSIDERING THE IMPACT OF COVID IMPACT OF COVID- -19 OUTBREAK 19 OUTBREAK CONSIDERING THE ECONOMIC ECONOMIC Revised projections for 2020 Evo Evo A 2018 A 2019 A19/ A18* E20/ A19* 30.4 31.3 +2.3% 31.2 -0.7% Total Net loans (RON bn) 21.7 22.4 +2.4% 22.1 -1.7% Retail 8.7 8.9 +2.0% 9.2 +1.8% Corporate 45.2 45.9 +0.6% 46.1 +0% Total Deposits (RON bn) 29.8 30.4 +0.8% 30.6 +0.1% Retail 15.4 15.5 +0.2% 15.6 -0.1% Corporate + + + Net loans/deposits 67% 68% 68% 1 ppt -0.5 ppt * Variation at constant exchange rate BUDGET 2020 C3 P4
REVISED 2020 FINANCIAL PROJECTIONS, REVISED 2020 FINANCIAL PROJECTIONS, CONSIDERING THE ECONOMIC ECONOMIC IMPACT OF COVID IMPACT OF COVID- -19 OUTBREAK CONSIDERING THE 19 OUTBREAK Revised perspectives for 2020 Evolution 19/18 2018 2019 RON m NBI drop estimated at -10% vs 2019 negative interest rate effect material decrease of loan origination sharp drop of transaction volume, negatively impacting net fee and commission income lower net income from financial transactions NET BANKING INCOME 3,115 3,270 +5.0% Operating expenses reduced contributions to deposit guarantee and resolution funds compared to 2019 ongoing review of investment plan adjustment of cost basis OPERATING EXPENSES (1,489) (1,677) +12.7% FINANCIAL RESULTS GROSS OPERATING INCOME 1,626 1,593 -2.0% Cost of risk around 100 bp NET COST OF RISK 230 204 -11.6% NET RESULT 1,563 1,499 -4.1% +3.5 pts COST/INCOME RATIO 47.8% 51.3% RATIOS ROE at 8-10% -2.4 pts ROE 21.5% 19.1% BUDGET 2020 C3 P5
