CEE AND POLAND S MARKETS DIVISIONS

Transcription

1 CEE AND POLAND S MARKETS DIVISIONS E. Hampel Head of CEE Division, CEO of BA-CA F. Ghizzoni Head of Poland s Markets Division, Head of CEE Division at BA-CA

2 EXECUTIVE SUMMARY CEE continues to be a highly attractive market, with strong growth and declining risk UniCredit has a unique franchise in the CEE Region and is focused on developing its strategy for growth Strong emphasis on organic growth, but also ready to capture acquisition opportunities Targeting the most attractive products and segments by leveraging on the Group competences and product factories 2

3 AGENDA Macroeconomic and banking scenario UniCredit positioning in CEE Overall strategy of UniCredit in the Region Conclusions 3

4 CEE REGION CONTINUING TO DELIVER STRONG GROWTH WITH LOW AND REDUCING RISK GDP growth in CEE is well above EU Significantly improved risk profile: 78% of the Region s GDP investment grade Real GDP growth Risk profile - S&P rating weighted per GDP (1) CEB SEE Other EU-12 May 2004 Other 0,6% 'BBB' 19,3% 'BB' 40,0% 'A' 15,1% 'B' 23,0% May 2007 Other 0.5% 'AA' 2,1% 'A' 23.5% 'BBB' 52.9% 'BB' 21.6% 'AA' 1.5% pps > BBB- 36.5% > BBB- 77.9% Note: CEB: Central Europe (Poland, Czech Republic, Slovakia, Hungary and Slovenia) and the Baltic countries (Estonia, Latvia and Lithuania); SEE: Bulgaria, Romania, Croatia, Bosnia & Herzegovina and Serbia; Other: Turkey, Russia and Ukraine. Source: UniCredit Group New Europe Research Network 4 AA : Slovenia; A : Poland, Czech Rep, Slovakia, Lithuania, Estonia BBB : Croatia, Russia, Hungary, Bulgaria, Romania, Latvia BB : Turkey, Serbia, Ukraine (1) For May 2007 S&P ratings, GDP as per end of 2006 For May 2004 S&P ratings, GDP as per end of 2003

5 GROWTH DRIVEN BY BOTH HOUSEHOLDS AND CORPORATE SECTOR Personal Consumption growth (2000=100) Fixed Investment growth (2000=100) CEE CEE EU EU Sustainable high economic growth driven by both: Rising household consumption as households are expected to sharply improve their life standards to approach the EU ones Lively investment activities in the corporate sector (e.g. building of new production capacity and infrastructural projects), with bank financing, leasing and factoring as main sources of external funding Source: UniCredit New Europe Research Network, Eurostat. 1 From EBRD Life in Transition Survey. CIS includes Georgia, Kazakhstan, Kyrgyz and Mongolia 5

6 STRONG MACROECONOMIC PERFORMANCE AND STILL LOW BANKING PENETRATION TO DRIVE SIGNIFICANT GROWTH OF BANKING VOLUMES Banking penetrations in 2006 (Loans+Deposits)/ GDP 214% CEE Loans volumes growth (1) (2000 =100, in Euro terms) Total loans Retail Corporate CAGR % p.a % p.a. 77% 1 EMU 2 CEE Branches per mln inhabitants EMU 2,3 CEE CEE Dep. volumes growth (1) (2000 =100, in Euro terms) Total deposits Retail Corporate % p.a. CAGR % p.a. 23% p.a. 23% p.a. Note: (1) Total loans/deposits include general gov.t, non-financial corporations, households and when available non-profit institutions serving households (NPISHs) and non-monetary financial institutions (Non-MFIs); CEE: new EU members (excluding Latvia), Croatia, Turkey, Bosnia, Serbia, Russia and Ukraine; (2) European Monetary Union; (3) as of Source: UniCredit Group New Europe Research Network based on data from local Central Banks.

7 GOOD ENVIRONMENT TRANSLATING IN STRONG GROWTH OF BANKING PROFITABILITY Volumes Revenue Drivers Impact on revenues NET PROFITS (1) Before tax 50 CAGR % Spreads Retail vs. corporate mix bn Fees & Comm. vs. interest income mix bn Credit Risk Drivers Impact on cost of risk Favourable macroeconomic outlook 10 Mix retail vs. corporate loans 5 High loan volume growth (1) Net Profit are calculated for CEE 9, including Poland, Czech Rep., Hungary, Slovakia, Croatia, Bulgaria, Romania, Turkey and Russia. Net of extraordinary items Sources: Central Banks and UniCredit Group New Europe Research Network 7

8 THE EXPECTED BANKING PROFITABILITY GROWTH TO BENEFIT OF GROWTH OF RETAIL BANKING VOLUME. CAGR volumes Market Growth ( 06-09) 55% +28% CAGR WITH ~ 780 BN NEW VOLUME POOL 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% Ukraine 8% 4% Kazakhstan 6% Romania Serbia 4% Baltics Bulgaria Bosnia Slovakia Croatia Czech Republic Slovenia Hungary Poland 7% Turkey 13% Russia 48% Russia, Turkey, Poland, Ukraine, Romania and Kazakhstan makes 85% of new Retail volumes 0% Total new volumes (loans + deposits) pool of ~ 780 bn (1) 09 Market Size volumes (bn ) Source: Strategy, Planning & Control CEE, CEE Research estimates Note: (1) Bubbles represent expected increase of market volumes = loans + deposits ( ); CAGR volumes are in local currency 8

9 AS WELL AS OF CORPORATE BANKING VOLUME CAGR volumes Market Growth ( 06-09) 45% 8% +26% CAGR WITH ~ 710 BN NEW VOLUME POOL 40% 35% 30% 25% 20% 15% 10% 5% Kazakhstan 5% Ukraine Baltics 5% Bulgaria Serbia 3% Romania Bosnia Slovakia 4% Slovenia Poland 4% Czech Republic Croatia Hungary Turkey 10% Russia 62% Russia, Turkey, Poland, Ukraine, Romania and Kazakhstan makes 89% of new Corporate volumes 0% Total new volumes (loans + deposits) pool of ~ 710 bn (1) 09 Market Size volumes (bn ) Source: Strategy, Planning & Control CEE, CEE Research estimates Note: (1) Bubbles represent expected increase of market volumes = loans + deposits ( ); CAGR volumes are in local currency 9

10 REGIONAL BANKING SECTOR GENERATING A POOL OF ADDITIONAL REVENUES OF ~120 BN IN (20% CAGR) CAGR revenues Market Growth ( 06-09) 35% Russia 30% 4% Kazakhstan 59% 25% 20% 15% 10% 5% 5% Ukraine Baltics (2) Serbia Romania (3) 4% Slovenia Croatia Hungary Slovakia Czech Republic 7% Poland 11% Turkey Russia, Turkey, Poland, Ukraine, Romania and Kazakhstan representing 90% of the additional Revenue pool 0% Total additional revenue pool vs 06 of ~120 bn (1) 10 Source: Strategy, Planning & Control CEE, CEE Research estimates Note: (1) Bubbles represent expected additional banking market revenues vs 2006 (cumulative); CAGR revenues are in local currency; CAGR of Turkey is normalized for the extraordinary items in 2006 (capital gains on real estate and participations) (2) Bulgaria (3) Bosnia 09 Market Size revenue pool (bn )

11 AGENDA Macroeconomic and banking scenario UniCredit positioning in CEE Overall strategy of UniCredit in the Region Conclusions 11

12 A POWERFUL FRANCHISE, N 1 IN THE REGION UniCredit Key figures in CEE (2006) ~ 102 bn Total assets (1) ; ~10.5% of the Group (3) ~ 5.1 bn Revenues (1) ; ~18% of the Group (3) ~ 25 million customers (1),(2) ~ 3,200 branches (1),(2) ~ 69,000 employees (1) Strong market positioning: (4) 8.0% market share in total assets 7.3% market share in revenues 7.1% market share in total pre-tax profit Leadership in: Asset under management (14 bn) Credit Cards (~ 6.5 mln) and leasing (~ 3 bn new leased assets) 12 Source: UniCredit as of 31/12/2006 Note: (1) ATF (Kazakhstan) included on pro-forma basis; KFS consolidated proportionally at ~40% (2) Turkey at 100%, including ca. 8 mln dormant clients (3) Including Capitalia on pro-forma basis (4) Kazakhstan not included

13 AN UNIQUE EXTENSIVE NETWORK: PRESENT IN 20 COUNTRIES, WITHIN TOP 5 IN 10 COUNTRIES Poland Nr. 1 Baltic Count. Nr bn Czech Rep. Nr bn 0.6 bn Ukraine Nr. > bn Russia Nr bn Slovakia Nr bn Hungary Nr bn Slovenía Nr bn Croatia Nr. 1 Bosnia Nr bn 0.9 bn Turkey Nr bn Romania Nr bn Bulgaria Nr bn Serbia Nr bn 13 Azerbaijan Nr. >10 Kazakhstan Nr bn Kyrgistan Tajikistan Legend: Ranking NL Net Loans (NL) Source: Note: UniCredit as of 31/12/2006; Ranking based on local countries IAS/LAS All countries at 100%, Rep. Offices not included

14 BALANCED PORTFOLIO IN TERMS OF COUNTRY AND RISK PROFILE CONTRIBUTION OF CONSOLIDATED PROFIT PER COUNTRY (1) RISK PROFILE (2) (weighted per UniCredit Consolidated profit contribution) Kazkhstan 2% Romania 3% Bulgaria 4% Other 4% May 2007 Other 0,9% > BBB- at 81%, +21 pps vs. 3y ago Hungary 5% Czech Republic 7% Poland 37% 'BBB' 34,2% 'A' 46,0% Croatia 10% Russia 11% Turkey 17% 'BB' 18,1% 'AA' 0,8% Well diversified country portfolio, with low and improving risk profile ~80% of profit coming from Investment grade countries (~+20 pps vs. 3y ago) Source: UniCredit data as of 2006, with Turkey at 50% Note: (1) ATF (Kazakhstan) included on pro-forma basis 14 AA : Slovenia; A : Poland, Czech Rep, Slovakia, Lithuania, Estonia BBB : Croatia, Russia, Hungary, Bulgaria, Romania, Latvia, Kazakhstan BB : Turkey, Serbia, Ukraine, BIH Note: (2) For May 2007 S&P ratings, Net profit as per 2006

15 RETAIL REPRESENTING TODAY ALMOST HALF OF REVENUES POSITIONING STILL STRONGER IN CORPORATE Retail representing almost 50% of revenues but market share lower than that of corporate suggests room for further growth UCG CEE REVENUE SPLIT PER SEGMENT Other (1) 22% Retail 49% Corporate 29% Russia 2.1% 1.1% Corporate Retail Poland 23.8% 15.1% Corporate Retail Ukraine 1.4% 0.1% Corporate Retail Romania (2) 7.7% 5.3% Corporate Retail Turkey 9.6% 12.2% LOANS MARKET SHARES PER SEGMENTS Corporate Retail Source: CEE Research Market Shares; as of Note: (1) Including Treasury and others (2) Romania as of Q

16 EXCELLENT FINANCIAL PERFORMANCE IN 2006, CREATING SUBSTANTIAL VALUE FOR UNICREDIT GROUP REVENUES mln 4, % 4,948 COST INCOME RATIO (%) 55.5% -3.8 pp 51.7% Sustained Revenue growth (+18%) driven by customer volumes and commissions Efficiency high and improving in spite of all merger costs and branch expansion programs CONSOLIDATED PROFIT mln 1, % EVA AND RARORAC 801 mln, % +56% pp 19,2% 15,2% EVA Rarorac Overall, substantial increase in Net Income for the Group Strong value creation growth benefiting from improved profitability (Rarorac +4 pps up to 19.2%) Note: All figures are shown at effective (historic) FX rates, while y/y changes are shown at constant FX rates and at constant perimeter, not including Kazakhstan Note: C/I ratio changes at constant perimeter 16

17 AGENDA Macroeconomic and banking scenario UniCredit positioning in CEE Overall strategy of UniCredit in the Region Conclusions 17

18 OPERATING MACHINE READY FOR GROWTH AS MERGERS AND INTEGRATION ACTIVITIES ARE ALMOST COMPLETED ACTIVITIES DATES STATUS Merger between Koc Bank and Yapi Kredi in Turkey completed Oct Asset transfer to BA-CA successfully completed Feb Merger in Slovakia completed, leading to the creation of country's 4th largest bank 1 st merger in Romania between Bank Tiriac and HVB Romania successfully completed in Sept. 2006; second with UCB completed Triple legal merger in Bulgaria completed; technical merger completed Completion of the merger of the Ukrainian operations planned and well on track March 2007 May 2007 July 2007 Sept Czech Republic and BiH mergers are proceeding as planned year-end 2007 Poland spin-off/merger and new BPH200 disposal well on track year-end

19 UNICREDIT IN CEE IS DESIGNING ITS STRATEGY ACCORDING TO ITS CURRENT POSITIONING AND MARKET GROWTH POTENTIAL Positioning Market share in revenues End of % 20% BiH Croatia Bulgaria Ride the market growth and selective product factories Poland (12% CAGR) 15% % of UCI Total Revenues in the CEE 10% Selective organic growth 5% 0% Slovakia Czech Rep Slovenia Serbia Hungary Baltics Kazakhstan(30% CAGR) Romania (13% CAGR) Ukraine Aggressive organic and external growth based on opportunities (24% CAGR) Turkey (13% CAGR) Russia (30% CAGR) Market potential Additional Revenue Pool vs 2006 Cumulative (bn ) All UCG countries of presence in CEE are of strategic importance, creating a network Russia, Turkey, Poland, Ukraine, Romania and Kazakhstan key markets for future growth based on the best combination of positioning, additional revenue pool and market potential Source: Strategy, Planning & Control CEE, CEE Research estimates 19

20 THREE STRATEGIC PILLARS Organic Growth Cross-border initiatives and product factories External Growth Opening up-to 800 new branches (700 in key markets) Focus on markets, business segments and product lines of high potential Exploiting economies of scale and leveraging on Group competencies and product factories 20

21 ORGANIC GROWTH IN KEY MARKETS: MANY INITIATIVES INCLUDING OPENING UP-TO ~ 700 BRANCHES IN 3 YEARS 1 Turkey Opening 350 new branches in Continue to increase sales effectiveness focusing on the most promising products (e.g. mortgages) and segments (SME) Consolidate leading credit cards and AUM by opening 350 new independent sales agents Russia Corporate banking moving to retail (e.g. use strength of corporate to gain retail customers) Continue expansion of branch network and retail lending (~ 120 branches by 2008) Further strengthen investment banking (e.g. acquisition of ATON) ORGANIC GROWTH AND SEIZE ACQUISITION OPPORTUNITIES Ukraine Dynamic branch expansion plan, with 160 total branches by 2009 Romania Take advantage of 20% retail growth and 4th largest revenue pool in CEE by reaching ~ 300 branches in 3 years Poland Complete spin-off and merger by end 2007 Improve efficiency, branch optimization and commercial effectiveness 21 CONSOLIDATE MKT SHARE

22 FOCUS ON MORE SOPHISTICATED AND PROFITABLE SEGMENTS, AS SHOWN BY THE NEW STRATEGY ADOPTED FOR ROMANIA 1 70% 60% 50% 40% 30% 20% 10% 0% Volume growth ( CAGR) Mutual funds Small cap loans Insurance Consumer leasing Currency Mortgages Small cap deposits Securities other than shares ROMANIAN MARKET FORECAST Mid cap deposits Priority segments Listed shares Large cap loans Large cap deposits Mid cap loans Consumer deposits (incl. C/A) 06 mktsize (volumes EUR bn) EUR 1 bn volume pool Consumer lending incl. overdraft FOCUS ON ROMANIA KEY STRATEGIC INITIATIVES Special focus on: Corporate mid cap segment via lending product and process upgrades plus new services in leasing and factoring Retail affluent segment via account and cash management services, product innovations in mortgage, consumer lending and asset gathering Enter Mass Market consumer lending redesigning products, processes and credit risk models, leveraging on Clarima expertises Enter Small Cap segment in full scale, developing appropriate risk management and IT solution Main segments targeted Primarily mass market Primarily affluent/upper mass Small caps Mid caps Large caps Doubling the number of branches in the next 3 years, reaching up to ~ 300 branches (1) Expected new market revenues generated in (2) C/A = current account Source: UCR Planning & Control, Mkt data; BCG analysis 22

23 SEVERAL INITIATIVES IN ALL OTHER COUNTRIES FOCUSED ON THE MOST PROMISING PRODUCTS / SEGMENTS 1 HIGH MARKET POSITIONING Keep market share focusing on profitability and efficiency LOWER POSITIONING Organic growth with focus on products and segments of high potential CROATIA Increase product penetration of client base and acquire new clients through new products in retail and corporate Reinforce current Market Share of Mortgages (~30%) and AUM (~40%) and reach leadership in cards, consumer loans and cash management BULGARIA Further develop retail business through optimization of branch network and renovation of existing one Set-up of an integrated corporate finance strategy with UniCredit Markets and Investment Banking (MIB) BOSNIA&HERZEGOVINA Optimize branch network and sales force Implement Management Information System and relationship management tools to foster sales productivity HUNGARY: Retail organic growth through opening of new branches and fix sales points, as well as Corporate doubling the # of sales points (from 25 to 50) within 3 years CZECH REPUBLIC: Strengthen Retail presence focusing on Mortgage Loans and SMEs and reinforce corporate banking leadership by leveraging on cross-border clients, EU funds distribution and treasury products SLOVAKIA: Foster Retail positioning by selective opening of new branches and acquire new clients through Corporate relationships SLOVENIA: Expand the Branch Network (up to ~30) and other sales channels (mobile sales, call centre, internet) SERBIA: 50 new branches over next 2 years reaching market share of ~10% in Retail (from ~6%) and increase of Corporate Portfolio by cross border initiatives BALTIC COUNTRIES (Estonia, Lithuania and Latvia): Increase focus on corporate business 23

24 CROSS-BORDER INITIATIVES IN RETAIL TO IMPROVE BRANCH NETWORK AND STANDARDIZED SERVICE MODEL TO INCREASE CUSTOMER SATISFACTION 2 INCREASE EFFICIENCY AND EFFECTIVENESS CUSTOMER SATISFACTION IMPROVED COST TO SERVE OPTIMIZE BRANCH NETWORK TO INCREASE SALES EFFECTIVENESS CUSTOMER SATISFACTION ACTIONS AND POTENTIAL Improve Front Office / Back Office ratio strengthening the commercial machine Swift transactions to alternative distribution channels Centralize back-office activities Branch model standardization (from 2,400 branches in 2005 to 2,990 in 2006 with standard model adopted) Processes re-design and increase time available for sales activities with focus on Golden Clients (+26% of small business and affluent customers (1) Break even time for new branch opening from to months Launched a costumer satisfaction research across the Region (to be completed by year end in all CEE countries) A market standard approach for retail banks (TRI*M) used in order to have comparable results within the Group and vis-à-vis competitors Roll-out in Turkey and Croatia (excellent first results in Croatia with TRI*M index for Retail at 76 Vs 69 Europe average) Note: (1) From 7,6 mio to 9,6 mln customers 24

25 RETAIL: LEVERAGING ON GROUP SEGMENT COMPETENCES AND GROUP PRODUCT FACTORIES 2 ACTIONS AND POTENTIAL LEVERAGING ON GROUP CAPABILITIES IN THE MOST PROMISING SEGMENTS CONSUMER CREDIT AND CARDS (2) SMALL BUSINESS ASSET GATHERING Increase number of credit cards (at ~ 6,5 million cards in CEE) leveraging on Clarima and Yapi Kredi best practice and create a common card factory (initiative to be launched in H2 2007) Support existing business model with dedicated credit processes, risk management tools and IT solutions First JV with Clarima in Bulgaria (Romania under evaluation) Develop commercial alliances for consumer lending business (e.g. Nissan- Renault in Russia and Fiat in Turkey) Over 1 million customers in the Region already acquired adopting a dedicated business model for SMEs Further improvement expected through reinforcement of dedicated risk tools Pioneer now active in the most important countries of CEE CEE Region representing significant contribution to Pioneer total net sales (ca. 8% in 2006), with an increasing trend Pioneer Investments is ranked as #1 in Croatia, Bulgaria and Poland with over 20% market share in each country Note: (1) From 7,6 mio to 9,6 mln customers (2) Rebranding of Clarima: pending regulatory approval

26 CORPORATE: SEVERAL INITIATIVES CURRENTLY RUNNING IN ORDER TO BETTER OPERATE IN THE REGION 2 ACTIONS AND POTENTIAL DEDICATED SERVICE MODEL FOR MULTINATIONAL AND CROSS BORDER CLIENTS GLOBAL ACCOUNT MANAGEMENT (GAM) CROSS BORDER CLIENTS GROUPS (CBCG) Designed new GAM Model and launched pilot for the Region. Rollout expected to be completed by the end of the year According to 2006 data, multinationals with turnover above 250 mln are ~1,600 (Groups) Set-up of International Desk completed in all CEE Countries as single point of contact and advisory to the clients operating in more than one CEE country Project ongoing, full roll-out across the Region will allow quick and cost efficient intra-group payments, quick and standardized credit processes and guarantees and harmonized account opening In 2006, ~11,000 clients operating across CEE were part of this network (+9% Vs. 2005) 26

27 CORPORATE: LEVERAGING ON THE GROUP S BEST PRACTICES AND PRODUCT FACTORIES 2 INTEGRATION WITH GROUP BEST PRACTICES AND PRODUCT LINES GLOBAL FINANCIAL SERVICES (GFS) INVESTMENT BANKING (MIB) LEASING FACTORING ACTIONS AND POTENTIAL Started roll-out of a cross-border cash management solution for CEE (pilot in Russia, Romania and Bulgaria) Capture the majority of the trade-finance volumes in the Region by leveraging on the presence and positioning Rationalization of Correspondent Banking activities in all CEE countries gaining easy and efficient access to 4,400 banks worldwide Currently present in 13 CEE countries Establishing dedicated organizational model for IB activities (pilot in Poland and Russia) # 1 with ca. 3 bn new leased assets (2006) in the Region, already established in most of CEE countries of UniCredit Factoring services provided in 16 CEE countries ranking #1 in Poland, Turkey and Bulgaria 27

28 THE RECENTLY ANNOUNCED ACQUISITION OF ATF BANK IN KAZAKHSTAN IS A COMPLEMENTARY ACTION OF UNICREDIT IN ENTERING THE NEW FAST-GROWING ECONOMIES 3 Population: 15 mln Nominal GDP: 62 bn GDP/capita: 4,000 Population: 7 mln Nominal GDP: 6 bn GDP/capita: 900 Note: country data as of 2006 Population: 5 mln Nominal GDP: 2 bn GDP/capita: 430 Population: 27 mln Nominal GDP: 13 bn GDP/capita: 470 Population: 7 mln Nominal GDP: 2 bn GDP/capita: STRATEGIC HIGHLIGHTS The acquisition of ATF Bank in Kazakhstan has given UniCredit the first real foot-print in Asiatic region The bank already strong in Corporate ranking (n.3), will further develop its retail franchise covering the fastest growing segment Starting with 54 branches in 2006, as of June 2007, ATF as already reached ~ 110 branches across the country with year-end target of ~ 150 (further development envisaged) Beside Kazakhstan as such, the whole Region comprising all surrounding countries represents a concrete opportunity for the Group with ~61 mln inhabitants and 85 bn Nominal GDP Already present in Kyrgyzstan, Tajikistan and South Siberia with dedicated operations, ATF will further develop in that region ( Ring Strategy ) using its market knowledge and UniCredit s best practices

29 AGENDA Macroeconomic and banking scenario UniCredit positioning in CEE Overall strategy of UniCredit in the Region Conclusions 29

30 CONCLUSIONS CEE continues to be a highly attractive market, with strong growth and declining risk Unicredit has a unique franchise in the CEE Region, with the best positioning in the market with balanced country portfolio in terms of risk and profitability Now that the merger season is over with almost all integrations completed, UniCredit can focus on developing its strategy for growth This is designed according to positioning and market potential with Russia, Turkey, Poland, Ukraine, Romania and Kazakhstan as key markets for future growth combined with the selective growth by product and segment in other countries Strong emphasis on organic growth, but also ready to capture acquisition opportunities Targeting the most attractive products and segments by leveraging on the Group competencies and product factories Set the basis for further sustainable double digit growth delivering high value for the shareholders 30