BANCA CARIGE SPA BANCA CARIGE SPA Cassa di Risparmio di Genova e Imperia HSBC Italian Banks Conference London, 19 th January 2006-1-
Agenda Carige s background The Strategic Plan 2005 first results The adoption of IAS/IFRS Carige share performance Annexes -2-
Agenda Carige s project: background history and results The Strategic Plan 2005 first results The adoption of IAS /IFRS Carige share performance Annexes -3-
Carige s background Independence and growth 1483-1989 1990-1998 1999-2004 A long history: one of the oldest banks in the world Capital base strengthening and opening to new shareholders: from a savings bank to a listed stock company Expansion and diversification: from a regional to a multilocal network from a bank to a financial group -4-
The timeline of events Establishment of Cassa di Risparmio di Genova 1483 1483 1846 1846 Foundation of Monte di Pietà di Genova Change of name to Cassa di Risparmio di Genova e Imperia 1929 1929 1967 1967 Merger of Monte di Pietà into Cassa di Risparmio di Genova 1991 1991 Creation of a Multifunctional group 1992 1992 Banca Carige becomes the banking subsidiary of Foundation 1994 1994 IPO: first savings bank to be floated on the Italian Stock Exchange 1995 1995 Commitment of the Foundation to privatise Banca Carige. 1997 1997 Capital increase reserved to institutional investors 1998 1998 1999 1999 Acquisition of the Italian insurance activities of Baloise Group; the non life company Carige Ass.ni and the life Merger of financial company Carige Vita subsidiaries Nuova (formerly Levante Ass.ni and Basilese Vita Nuova) -5- Acquisition of 124 branches from BdS, Intesa and Capitalia 2000 2002 2000 2002 Establishment of Carige AM SGR SpA - acquisition of Banca C. Ponti 2003 2003 International partnership agreements (CNCE, WestLB and El Monte); acquisition of BML and Cassa di Risparmio di Savona 2004 2004 Sharecapital increase; acquisition of Cassa di Risparmio di Carrara
M&A activity Year Capital collected Euro mn Year Acquisitions Euro mn 1994-95 IPO 105 1993-95-99 Cassa di Risparmio di Savona 227 1996-97 Bond conversion into new shares 61 1991-2004 Insurance companies 303 1997 Capital increase underwritten by La Basilese 46 1999-2002 Banca del Monte di Lucca 63 Capital increase underwritten 1998 by institutional investors 116 Capital increase underwritten 1999 by CNCEP, CDC, WestLB 236 2000 21 branches from Banco di Sicilia 60 2001 61 branches from Intesa 277 2002 42 branches from Capitalia 127 2001 Issue of a subordinated loan 400 Capital increase and issue of 2003 subordinated convertible bonds 306 2003 Cassa di Risparmio di Carrara 174 2004 Banca Cesare Ponti 33 Total 1,270 Total 1,264 The capital collected was entirely invested in acquisition -6-
The Group s structure Fondazione CR Genova e Imperia CNCE WestLB Others 43.37% 11.02% 5.84% 39.77% Banca Carige S.p.A. - Cassa di Risparmio di Genova e Imperia Banking Trustee Insurance Financial Real Estate 95.90% 54.00% 90.00% 51. 09% CR Carrara 20.00% 76.93% Centro Fiduciario C.F. S.p.A. 100.00% 98.24% 1,25% as own shares 0.50% 99.50% Carige AM SGR S.p.A. 60.00% 60.00% 100.00% 99.99% Galeazzo S.r.l. Columbus Carige Immobiliare S.p.A. 90.00% 0.01% Cesare Ponti PRIAMAR Finance Srl Immobiliare Ettore Vernazza S.p.A. 47.50% 10% as own shares 100.00% Immobiliare Carisa S.r.l. -7-
The geographical expansion 1989 2006 3 131 (96%) branches in Liguria and 94 (69%) in Genoa province 1 131 2 246 (50%) branches in Liguria 1 35/24 4 7 40/62 12/30 19/19 246/15 54/27 1/5 3/11 33/37 13 2 9 3 9/34 7/24 27 Banking branches Insurance outlets 37/53 Insurance outlets only Branches Employees Regions Provinces Branches/ outlets Employees Regions Provinces (*) Nice (France) included. Bank 137 2,962 4 8 Banks (*) 497 4,788 12/20 57/103 Insurances 407 378 20/20 98/103 Group 904 5,166 20/20 99/103-8-
The growth in results Lending and deposits Shareholders equity CAGR*: 11.4% 46,964 CAGR*: 15.1% 2,177 8,380 226 1989 2005E Net profit 1989 2005E Employees CAGR*: 12.4% 133,9 2,962 CAGR*: 3.5% 5,166 20,5 Millions of Euro. 1989 2005E 1989 2005E 2005E: first assessment, data not approved by the Board yet -9- *CAGR = compound annual growth rate. IAS compliant data
Agenda Carige s background The The Strategic Plan Plan 2005 first results The adoption of IAS Carige share performance Annexes -10-
Our strategy Independence and growth 1990-1998 1999-2004 2005-2008 Capital base strengthening and opening to new shareholders Expansion and diversification Rationalisation and profitability enhancement -11-
Our mission The strategic objective of Carige Group is to affirm as a national financial group (properly a financial conglomerate according to the EU Directive 2002/87) equipped to provide banking, financial, insurance and pension solutions establishing strong ties with local markets, able to differentiate in the quality of service through an integrated multi-channel distribution system and the quality of resources and structures. Financial group National Quality of service Quality of resources and structures Complete offer of banking, financial and insurance products and services Aggregation point for smaller banks Stronghold in Liguria Out of Liguria it distinguishes itself for the attention to the relationship with local communities Focus on retail Widespread and intensive use of technology Specialisation of distribution and production structures Unitary management of the Group s keyexpertises Professional development of human resources -12-
The core priorities of the Strategic Plan Strengthening of operating efficiency and profitability enhancement Profitability enhancement of subsidiaries (banks and insurances) and of each business area (lending, wealth management, payment system) Cost Management Growth through productivity improvement Increase of volumes per employee: cross-selling, up-selling and retention in Liguria rising of market share outside Liguria, also in synergy with insurance agents Risk management Re-engineering of business processes Control of the economic impact of risks -13-
A Capital Increase to continue the growth Carige Board has just approved a project of capital increase that will be realised in the first half of 2006 (subject to Supervisory Authority s permission). The amount: 165 million free capital increase (IAS reserves) and 200 millions paid capital increase. The capital increase improves Carige Solvency ratios. It aims at allowing the growth of the Group, both via internal and external ways. -14-
The plan of internal growth The Group has drawn up a plan to increase the number of its branches between 2006 and 2009. The new branches will be localised in the regions next to Liguria (Lombardia, Piemonte, Emilia Romagna, Toscana), in order to enforce the brand where it already exists. The Plan foresees 82 openings (59 under Carige brand and 23 under the brands of the other banks of the Group). The localisation of the new branches responds to two main principles: - market attractiveness: client potential, competition. - achievement of a minimum market share: in the most attractive areas, we have selected the provinces where the new openings allow us to achieve a market share of 5 p.c., which we consider to be the minimum (market share) to grant a sufficient presence to develop the business. -15-
Targets 2005E (*) 2008E CAGR 08-05E CARIGE GROUP Deposits and lending ( bn) 47 57 6.6% Net profit ( mn) 134 220 18.0% Shareholders equity ( mn) 2,177 2,688 7.3% ROE 6.2% 8.2% ROE corrected (**) 8.2% 10.3% Cost / Income Ratio 64.8% 54.7% Tier 1 ratio 5.8% 8.2% Total capital ratio 9.2% 11.8% Deposits and lending ( bn) 39 46 5.7% Net profit ( mn) 136 207 15.0% Dividends ( mn) 87 108 7.7% CARIGE BANK Shareholders equity ( mn) 2,202 2,663 6.5% ROE 6.2% 7.8% ROE corrected (**) 8.2% 9.7% Cost / Income Ratio 59.4% 49.9% EPS ( ) 0.122 0.148 6.7% BVPS ( ) 1.907-1,2% 1.977 P/E ( ) P/BV ( ) 27.0 1.67 22.3 1.73-6.2% 1.2% CAGR = compound annual growth rate (*) First assessment, data not approved by the Board yet. IAS compliant data -16- (**) Equity net of the revaluation of the participation in Bank of Italy (547 mn).
Cost / income ratio development REVENUES NET OPERATING INCOME 1200 1000 800 600 801 306 CAGR 8.5% CAGR: 9.4 % 1,023 407 Non interest income 500 400 300 283 CAGR 17.8% 463 400 200 0 495 2005E(*) CAGR: 7.6 % 616 2008E Net interest income 200 100 - Cost income ratio 2005E(*)... 64.8%... 2008E 54.7% 800 600 400 200 OPERATING COSTS 518 184 334 CAGR CAGR 2.6% 3.8% CAGR: 4.7 % CAGR: 1.5 % 560 206 G&A 354 Personnel expenses CAGR = compound annual growth rate 0-2005E(*) 2008E (*) First assessment, data not approved by the Board yet. -17-
The main Projects of the Strategic Plan In order to achieve the goals of the Strategic Plan Carige has implemented these main projects: Re-definition of the organisational structure Commercial strengthening program The collaboration branches + insurance agents Liguria project Cost management program -18-
Main Projects of the Strategic Plan Re-definition of the organisational structure Commercial strengthening program The collaboration branches + insurance agents Liguria project Cost management program -19-
Re-definition of the organisational structure Management / Auditing Planning and Control Public relations Internal Auditing Wealth Management Production Non life PM Life SGR Finance Payment systems PM Loans dept. (Private and Corporate) PM PM Distribution Marketing Liguria branches Outside Liguria branches Insurances network Support RESOURCES (Personnel and ICT) ADMINISTRATION PM : Product marketing -20-
Main Projects of the Strategic Plan Re-definition of the organisational structure Commercial strengthening program The collaboration branches + insurance agents Liguria project Cost management program -21-
The Commercial strengthening program outside Liguria The Commercial strengthening program of the network has two targets: ensure the attainment of the commercial plan targets, allowing both short term results and the achievement of system levels (cost/income of every branch of intervention <50%) carry out the organisational conditions (structure, skills and systems) to permanently support the network in further commercial development of the Group ( selling more and selling better ) -22-
The network has different cost/income levels Operating costs Millions of euro Areas Cost/Income Number of branches 251 :: Gross operating income Millions of euro Network s Cost/ income Rate 43% Liguria 33% 236 Branches Outside Liguria have levels of commercial performance that have to be increased Outside Liguria 50% 242 589 * Direct operating costs (personnel + rent + other direct costs) The Bank has immediately concentrated its attention on 91 branches by means of a shock therapy -23-
How the program works 11 Strategic role of the Commercial Planning Office: 1.1 Creation of a customer analysis system that, for homogeneous customer clusters, identifies: - the financial needs of the target customers to be filled - the possible gaps between current and potential supply 1.2 Identification of commercial initiatives / alliances on the target customers (existing and new ones) to support and direct the commercial activity of the network through: - the creation of target customers lists -the indication of the commercial approach to follow 2 Introduction of a tool that provides the branches with a structured method for the attainment of the targets and the work planning 3 Introduction of dedicated sale channels - branch commercial resources dedicated entirely to the development of the existing customers - developers dedicated to the activity of acquisition of new customers - call center in out-bound support 4 Construction of a commercial trend monitoring system: - to help the network to analyse and to upgrade the effectiveness of the commercial action - to improve head office validation and tuning the commercial initiatives A -> B -> C -> -24-
The program has gradually involved the whole network outside Liguria The first 91 branches N. of branches Start Area Phase 1 30 2004 Nov Lazio, Umbria, Puglia Phase 2 32 2005 Jan Lombardia, Piemonte, Emilia, Veneto Phase 3 29 2005 Mar Sicilia, Sardegna Phase 4 29 2005 May Lazio, Umbria, Puglia, Sicilia, Sardegna Phase 5 27 2005 Jun Lombardia, Veneto Phase 6 42 2005 Sept Piemonte, Emilia R. Phase 7 33 2005 Oct Toscana (CR Carrara) -25-
The commercial results (1/2) Marketing Funnel of Business Developers and Call Center (acquisition of new customers) 60,055 60,055 41,365 18,690 8,062 10,628 7,995 2,633 More than 2,500 new customers More than 30 appointments over 100 calls from call center activity Potential Customers to acquire Contacts Not interested Interested Still to visit Visits Unsuccess Success 100% 100% 31% 18% 4% Data at 2005/12/30-26-
The commercial results (2/2) Marketing Funnel of Branches (action on existing customers) 280,509 98,240 182,269 105,631 Branches ~70,000 new products (more than 100% of period target) Potential Customers to develop Still to contact Number of contacts Not interested 6,871 Interested 69,767 Customers developed (at least 1 product sold) More than 1 contact out of 3 has positive result About 40% of potential customers must be still contacted 100% 65% 25% 38% of contacts Data at 2005/12/30-27-
Summary of results On the first 91 branches On all the branches involved Economic impact at the end of 2005 Revenues: +8 M (+13%) Cost/income: - 10 p.p. (from 70% to 60%) Volumes: + 550 million (+18%) Revenues: +20 M (+12%) Cost/income: -5 p.p. (from 50% to 45%) Volumes: + 1 billion (+11%) Qualitative results A more effective way of doing which is being extended throughout the Group over the next two years so giving a base for sustainable and continual growth -28-
Main Projects of the Strategic Plan Re-definition of the organisational structure Commercial strengthening program The collaboration branches + insurance agents Liguria project Cost management program -29-
The collaboration branches + insurance agents: a high potential n. of customers [ 000] 1,750 Customers of the Group 1,719 n. of customers [ 000] 1,750 Shared customers 1,500 1,500 1,250 1,000 1015 995 1,250 1,000 10 750 360 724 750 20 500 250 0 704 Total customers 635 Banks customers 655 69 Insurances customers Extra Liguria Liguria 500 250 0 30 Shared customers Extra Liguria Liguria There is a high potential to swap customers. -30-
How the collaboration works Insurance headquarters Prepare insurance customers lists Insurance agent contacts his customers and schedules the appointments with the local Branch manager SALE OF BANKING AND FINANCIAL PRODUCTS TO INSURANCE CUSTOMERS: ASSURBANCA CUSTOMERS Bank headquarters Prepare bank customers lists Branch manager contacts his customers and schedules the appointments with the local Insurance agent SALE OF INSURANCE PRODUCTS TO BANK CUSTOMERS: BANCASSURANCE Exploitation of the respective customer relationships and product skills -31-
The commercial results (1/2) Marketing Funnel Assurbanca (Banking services sold by bank branches to insurance customers; 165 insurance agents and 185 branches) 72,209 54,931 Potential insurance customers Still to contact 17,278 10,816 6,462 725 5,737 Contacts Not Interested Still to Visits interested visit 3,412 Unsuccess 2,325 Success (Banking Contracts signed) 100% 24% 9% 8% 3% a 13 % hit rate is very high, if compared to the average levels of any other sales campaign (2-5%) About 75% of potential customers have still to be contacted. 13% of contacts Data at 2005/12/23-32-
The commercial results (2/2) Marketing Funnel Bancassurance (Insurance services sold by insurance agents to bank customers) 37,653 15,069 Rate of success: 18% 22,584 6,971 15,613 8,056 7,557 3,464 4,093 40% of potential customers have still to be contacted. Potential bank customers Still to contact Contacts Not Interested Still to Visits interested visit Unsuccess Success (Insurance Contracts signed) 100% 60% 41% 20% 11% 18% of contacts Data at 2005/12/23-33-
Main Projects of the Strategic Plan Re-definition of the organisational structure Commercial strengthening program The collaboration branches + insurance agents Liguria project Cost management program -34-
Liguria project: the core region Leadership in Liguria Half of the network is still in Liguria, with 246 branches (202 Banca Carige, 42 CR Savona and 2 Cr Carrara) out of 496. LIGURIA The market share in Liguria in deposits and lending is ~33%. Banking branches and insurance agents insurance agents only -35-
The cross selling index in Liguria is still low N clients 200.000 150.000 100.000 50.000 Liguria Extra Liguria 0 1 2 3 4 5 6 7 8 9 10+ N products In Liguria more than 200,000 customers (~one third) have only a product and in average each customer has 2.6 products (current account included) -36-
Ligurian network needs an action of tune up A set of interventions all over the client lifecycle process is being defined: a further phase of segmentation of customers is being implemented and in Liguria consultants dedicated to affluent and small business segments have been created in addition to the ones dedicated to private, large corporate and SME segments. consultants 3 221 92 Private Affluent Large corporate SME Small Business 43 200 Customer lifecycle Acquiring new customers Developing existing customers Retaining existing customers Mass Market -37-
Higher personalization of the relationship in Liguria Affluent Small Small business Start July 2005 Sept. 2005 Customers 55,000 20,000 Consultants 221 200 Branches 199 200-38-
Main Projects of the Strategic Plan Re-definition of the organisational structure Commercial strengthening program The collaboration branches + insurance agents Liguria project Cost management program -39-
Cost management program New functions at a Group level Key activities Centralisation of the purchasing office Cost Management Management of deals and purchases Inside and outside benchmarking prices service Price/volume analysis Zero based costing Control of expense levels Support to short and medium term planning Identification of areas where savings are needed and possible Total Cost of Ownership Process Reengineering -40-
Cost Management Program: results by area of intervention Eur/000 13,000 1,9 0,2 0,1 13,1 M 12,000 11,000 0,6 0,9 0,1 10,000 1,2 9,000 1,0 0,5 8,000 7,000 6,000 2,7 2.71 0,4 0,2 0,1 12,2 5,000 4,000 0,9 3,000 2,000 1,6 0,8 1,000 0,9 INFOPROVIDER MAIL SECURITY E-PROCUREMENT (Stationary) TLC MARKETING Still To do IT ENERGY TLC SAVING (contracts already signed) HR SAVINGS Work in progress POS IT (Maintenance) G&A (Global service) Already implemented Communications expenses Fleet Manage ment TOTAL IMPACT ON OPERATING COSTS (2005) -41-
Agenda Carige s background The Strategic Plan 2005 2005 first first results The adoption of IAS Carige share performance Annexes -42-
2005 first results The first assessments of the results of the year 2005 give a net profit of ~ 135 millions (+20% on 2004). Deposits ( bn) Lending ( bn ) 31.8 +4,4% 33.3 12.3 +11,2% 13.7 2004 2005 2004 2005 Net interest margin ( mn) Revenues ( mil ) 483 +2,5% 495 +12,7% 306 271 2004 2005 2004 2005 2004 Proforma IAS compliant data 2005 First assessment, data not approved by the Board yet. -43-
Agenda Carige s background The Strategic Plan 2005 first results The adoption of IAS Carige share share performance Annexes -44-
10 years of success... Carige celebrates the tenth anniversary of listing: ten years of success. The confidence placed in the Bank by the 40,000 shareholders has made the share price triple, from 1 to 3. This, means, considering the annual dividends, an average return of ~16 p.c. per year. Today Carige is one of the main Italian banking groups, with ~1,000 points of sale. It includes five banks, two insurance companies and an asset management company. For these reasons our share was ranked (by Il Mondo ) as one of the 30 most reliable shares in the world. -45-
Ordinary shares Annual average yield per ordinary share since 1994 Market capitalisation: ~ 4 bn 20.000.000 18.000.000 Capital gain (a) 12.0% Dividend Yield (b) 4.4% 3,500 16.000.000 Total Return (a+b) 16.4% 3,000 Number of shares 14.000.000 12.000.000 10.000.000 8.000.000 Price 12 january 2006 (3.410 ) 2,500 2,000 Official Price ien euro ) 6.000.000 4.000.000 1,500 2.000.000 0 1,000 I.P.O.17JAN95 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 TODAY -46-
Agenda Carige s background The Strategic Plan 2005 first results The of IAS The adoption of of IAS IAS /IFRS Carige share performance Annexes -47-
First Time Adoption of IAS - impact on Net Equity 515 (*) 18 +573 +573 2,251 +26 +26 1,704 1,678 (127) (37) (8) 206 7 Capital and reserves at 2005/01/01 pre IAS Loans to customers Securitization Reserves for risks and charges Tangible fixed assets Intangible fixed assets Financial assets Other items Capital and reserves at 2005/01/01 post IAS Without Bank of Italy participation revaluation Millions of euro. Fiscal effect net. (*) The item includes the revaluation of Bank of Italy participation for 547 M -48-
Agenda Carige s background The 2005-2007 Business Plan The adoption of IAS 2005 first results Carige share performance Annexes Supplements -49-
Annexe n.1 Carige Group: ranking in Italian Market Total assets 17 th Lending and deposits 18 th Shareholders' equity 13 th Employees 16 th Branches 14 th Net Profit 16 th Fitch Fitch A Moody s Moody s A2 A2 Standard&Poor s Standard&Poor s A- A- -50-
Annexe n.2 The new organisation chart GENERAL MANAGER Planning control and organization Public relations Internal auditing Control and management of risks PLANNING & CONTROL DEPUTY GENERAL MANAGER ADMINISTRATION DEPUTY GENERAL MANAGER PRODUCTS DEPUTY GENERAL MANAGER NETWORK General and Legal secretary ICT Problematic credits Loans dept. Wealth management Corporate Retail Commercial support innovatory projects Liguria Payment systems Marketing Commercial planning... Accountancy Credits recovery North Italy Human resources Services centre South Italy SUPPORT PRODUCTION DISTRIBUTION -51-
The participation in Bank of Italy (an example) Annexe n.3 % participation N. of Shares Value of the participation Value of Value of each share Value of the Banking Groups owning in Bank of Italy entered in the each share at book value (*) participation Bank of Italy shares balance sheet at book value (millions of euro) (euro) (euro) (millions of euro) (a) (b) Banca Intesa 26.8 80,430 433 5,384 45,472 3,657 San Paolo Imi 17.2 51,690 185 3,579 45,472 2,350 Capitalia 11.2 33,450 229 6,846 45,472 1,521 Unicredito 10.8 32,310 46 1,424 45,472 1,469 Bnl 2.8 8,490 117 13,781 45,472 386 Mps 2.5 7,500 4 533 45,472 341 Carifirenze 1.9 5,556 55 9,899 45,472 253 Total first seven groups 73.1 219,426 1,069 4,872 9,978 (without Carige) Banca Carige 4.0 11,869 0.5 41 45,472 540 C.R. Savona 0.0 123 1.7 13,450 45,472 6 C.R. Carrara 0.0 101 0.4 3,497 45,472 5 Banca del Monte di Lucca 0.0 2 0.0 9,988 45,472 0 Total shares owned by Carige 4.0 12,095 2.5 208 550 Total shares 300,000 (*) Shareholders' equity (Book value) of Bank of Italy at 31 dec 2003 13,641,585,767 Bank of Italy's total shares 300,000 Value of each share at book value at 31 december 2003 45,472-52-
Annexe n.4 The Trans-European Corridors -53-
Disclaimer This document has been prepared by Banca Carige Spa solely for information purposes and for use in presentation of the Group s strategies and financials. The information contained herein has not been independently verified. No representation or warranty, express or implied., is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. Neither the company, its advisors or representatives shall have any liability whatsoever for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The forward-looking information contained herein has been prepared on the basis of a number of assumptions which may prove to be incorrect and, accordingly, actual results may vary. This document does not constitute an offer or invitation to purchase or subscribe for any shares and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. The distribution of this presentation in certain jurisdictions may be restricted by law. Recipients of this presentation should inform themselves about and observe such restrictions. The information herein may not be reproduced or published in whole or in part, for any purpose, or distributed to any other party. By accepting this document you agree to be bound by the foregoing limitations. -54-
BANCA CARIGE Cassa di Risparmio di Genova e Imperia INVESTOR RELATIONS Roberta Famà Maurizio Marchiori Matteo Campodonico Via Cassa di Risparmio 15 16123 GENOVA Tel. 39 010 579 4877 Fax. 39 010 579 4875 e-mail: investor.relations@c2.carige.it http: www.gruppocarige.it -55-