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Investor Presentaiton

E. Strategy and Outlook The strategic objectives for the Group are to become a stronger, safer and a more efficient institution with a sustainable and well-diversified business model committed to deliver sustainable shareholder returns. The key pillars of the Group's strategy are to: . . • • Grow revenues in a more capital efficient way; by enhancing revenue generation via growth in performing book and less capital-intensive banking and financial services operations (Insurance and Digital Economy) Improve operating efficiency; by achieving leaner operations through digitisation and automation Strengthen asset quality; maintaining high quality new lending, completing legacy de-risking, normalising cost of risk and reducing (other) impairments Enhance organisational resilience and ESG (Environmental, Social and Governance) agenda; by continuing to work towards building a forward-looking organisation with a clear strategy supported by effective corporate governance aligned with ESG agenda priorities KEY STRATEGIC PILLARS Growing revenues in a more capital efficient way; by enhancing revenue generation via growth in performing book, and less capital-intensive banking and financial services operations (Insurance and Digital Economy) Improving operating efficiency; by achieving leaner operations through digitisation and automation • • ACTION TAKEN IN FY2022 and to date A revised price list for charges and fees was implemented in February 2022 Liquidity fees were extended to a wider customer group in March 2022 and abolished in December 2022 following interest rate rises Net performing loan book grew to €9.6 bn, an increase of 3% in FY2022, despite macroeconomic uncertainty Fixed income portfolio grew to €2.5 bn, an increase of 30% in FY2022 For further information, please refer to Section B.2.5 'Loan portfolio quality' and Section D 'Business Overview' Completion of a VEP in July 2022, which led to the reduction of full time employees by 16% in FY2022; estimated gross annual saving of c.€37 mn (19%) of staff costs Rationalisation of branch footprint as 20 branches closed down in 2022 Completion of a small-scale targeted VEP in 1Q2022, by one of the Bank's subsidiaries, through which a small number of the Group's employees were approved to leave Further developments in the Transformation Plan and the digitisation of the Bank • • PLAN OF ACTION The structure of the Group's balance sheet is geared towards higher interest rates facilitating immediate growth in net interest income Grow performing book and increase in high quality new lending over the medium term Expand fixed income portfolio in 2023, subject to market conditions, to take advantage of the rising yields Enhance fee and commission income, e.g. on-going review of price list for charges and fees, increase average product holding through cross selling, new sources of revenue through introduction of Digital Economy Platform Profitable insurance business with further opportunities to grow, e.g. focus on high margin products, leverage on Bank's strong franchise and customer base for more targeted cross selling enabled by digital transformation Committed to maintain cost discipline in an inflationary environment Effectively eliminate restructuring costs as de-risking is largely complete Enhance procurement control Committing to maintain total operating expenses for 2023 to a range of €350-360 mn The cost to income ratio excluding special levy on deposits and other levies/contributions for 2023 is expected to decrease to mid-40s and to remain around similar levels in 2024 33
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