Delivering growth and value Business Unit Brazil of C&CC June 14, 2004 Fabio Barbosa SEVP - CEO of BU Brazil
Jan 04, 2016
Delivering growth and valueBusiness Unit Brazil of C&CC
June 14, 2004
Fabio BarbosaSEVP - CEO of BU Brazil
0 2
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004 / 2005
Appendices
Table of Contents
0 3
Dec 05 forecast
BRL/USD (eop) 3.25 (maintained)
IPCA 12M4.5% (revised from 5.1%)
Commitment to orthodox monetary policy has enabled stability to return
The inflationary pressures due to the exchange rate overshooting receded significantly and are expected to stabilize along 2004
0
2
4
6
8
10
12
14
16
18
20
Jan-
02
Mar
-02
May
-02
Jul-0
2
Sep
-02
Nov
-02
Jan-
03
Mar
-03
May
-03
Jul-0
3
Sep
-03
Nov
-03
Jan-
04
Mar
-04
May
-04
Jul-0
4
Sep
-04
Nov
-04
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
IPCA (% , 12 months) BRL / USD
IPC
A%
forecast
BR
L / U
SD
Sources: Brazilian Central Bank, IBGE, ABN AMRO
Dec 04 forecast
BRL/USD (eop) 3.05 (maintained)
IPCA 12M 6.8% (revised from 6.0%)
0 4
The current account is now well under control
Sources: Brazilian Central Bank
-25000
-20000
-15000
-10000
-5000
0
5000
10000
15000
20000
25000
30000
35000
Jan-
02
Feb
-02
Mar
-02
Apr
-02
May
-02
Jun-
02
Jul-0
2
Aug
-02
Sep
-02
Oct
-02
Nov
-02
Dec
-02
Jan-
03
Feb
-03
Mar
-03
Apr
-03
May
-03
Jun-
03
Jul-0
3
Aug
-03
Sep
-03
Oct
-03
Nov
-03
Dec
-03
Jan-
04
Feb
-04
Mar
-04
Apr
-04
Current Account Balance Trade Balance
The current account accumulated a USD5.8 billion surplus in 12 months ended in April (1.1% GDP). From 1999 to April 2004, the current account adjustment was equivalent to USD31.1 billion (5.8% GDP) driven mainly by exports.
US
D b
illio
n
0 5
The surplus of the current account allows to repay the IMF debt
Sources: Brazilian Central Bank, ABN AMRO
Balance of Payments - Financing Needs
2002 2003 2004FTrade Balance 13.1 24.8 27.8Current Account -7.7 4.1 6.3Amortization Medium and Long Term Debt -31.1 -27.2 -38.7 Short Term Debt -2.0 -3.5 -1.2Total external financing needs -40.8 -26.6 -33.6Foreign Direct Investment 16.6 10.1 12.0New Issuance 18.6 23.0 26.3Sources of financing 35.2 33.1 38.3IMF Support 11.5 4.8 -4.4 Amortization -4.6 -12.8 -4.4 Issuance 16.0 17.6 0.0Gross Reserves (-/+ = decrease/increase) 1.9 11.5 -0.7 Net Reserves (IMF agreement) 14.2 17.4 22.7
In USD billion
0 6
Source: Brazilian Central Bank
Market volatility does not reflect Brazil’s ability to withstand shocks
FX Denominated Debt / Total Debt
14
17
20
23
26
29
32
35
38
41
Ja
n-0
2
Ma
r-0
2
Ma
y-0
2
Ju
l-0
2
Se
p-0
2
No
v-0
2
Ja
n-0
3
Ma
r-0
3
Ma
y-0
3
Ju
l-0
3
Se
p-0
3
No
v-0
3
Ja
n-0
4
Ma
r-0
4
FX Indexed Debt/Total Debt
%
Brazil is in much better shape to deal with adverse external factors, compared to mid-90s and early 00s
… and currently.. Capital Markets Reform
Floating FX regime
Social Security Reform
Fiscal Responsibility Law
New Payments System
0 7
The government controls a comfortable majority in Parliament
Source: Santa Fé, ABN AMRO
Governing Coalition in the House (votes)
Oct-03 Apr-04
I. Left-wing 154 148
II. Center, center-right 235 234
(I + II) Governing Coalition 389 382
Share in House 76% 74%
PT 93 90
PT share of Governing Coalition 24% 24%
Oct-03 Apr-04
I. Left-wing 24 18
II. Center, center-right 27 28
(I + II) Governing Coalition 51 46
Share in Senate 63% 57%
PT 14 13
PT share of Governing Coalition 27% 28%
Governing Coalition in the Senate (votes)
0 8
Public support for the government remains high
Mar 03 Jun 03 Dec 03 Feb 04 Mar 04 May 04
Approves 79 78 70 65 60 60
Disapproves 12 13 21 24 31 32
Don't know 9 9 9 11 10 8
Favorable - Unfavorable 67 65 49 41 29 28
Mar 03 Jun 03 Dec 03 Feb 04 Mar 04 May 04
Good/excellent 45 52 41 40 35 35
Regular 34 36 42 41 43 44
Bad/negative 8 7 13 15 19 20
Don't know 13 6 4 4 3 2
Favorable - Unfavorable 37 44 28 25 15 15
Source: CNT / Sensus, ABN AMRO
Source: CNT / Sensus, ABN AMRO
Government’s Approval Rating (%)
President Lula’s Approval Rating (%)
Still high approval rating
Approval ratings have fallen, but are still at respectable levels
0 9
Continuous effort to complete reforms
Revision of mortgage legal framework
New regulation to reduce number of court actions against the
financial system regarding principal and interest
New Bankruptcy Law
Judiciary reform
Public and Private Partnership regulation
Power sector framework
Restored finance and strong government will facilitate reforms
0 10
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
%QoQ %QoQ annualized
%QoQ 1.40% 1.00% 0.30% 1.10% 1.00% -0.50%-0.90%-0.40% 0.70% 1.20% 0.10% -1.20%-0.90%0.50% 1.50% 1.60%
%QoQ annualized 5.60% 4.20% 1.30% 4.30% 4.10% -2.00%-3.70%-1.50% 2.80% 4.80% 0.60% -4.70%-3.60%2.00% 6.00% 6.60%
Mar-00
Jun-00
Sep-00
Dec-00
Mar-01
Jun-01
Sep-01
Dec-01
Jun-02
Sep-02
Dec-02
Mar-03
Jun-03
Sep-03
Dec-03
Mar-04
As a result, steady GDP growth seems to be finally achievable
GDP started to recover in Q303 albeit at a slower pace than expected. Recovery has been led by the manufacturing sector, responding to lower interest rates and robust external demand
Sources: IBGE
0 11
Source: Brazilian Central Bank, IBGE, ABN AMRO
forecast
IPC
A% S
elic%
Central Bank will likely continue to gradually ease monetary policy in 2004, reducing interest rates with caution and assessing recovery of economic activity
0
2
4
6
8
10
12
14
16
18
20
Jan-
02
Mar
-02
May
-02
Jul-0
2
Sep
-02
Nov
-02
Jan-
03
Mar
-03
May
-03
Jul-0
3
Sep
-03
Nov
-03
Jan-
04
Mar
-04
May
-04
Jul-0
4
Sep
-04
Nov
-04
0
5
10
15
20
25
30
IPCA (%, 12months) Selic (%, p.a.)
Dec 05 forecast
Selic (eop) 12% pa (maintained)
IPCA 12M 4.5% (revised from 5.1%)
Expected decline in inflation will allow further interest rate cuts
Dec 04 forecast
Selic (eop) 14.5% pa (revised from 13.5%)
IPCA 12M6.8% (revised from 6.0%)
0 12
13% 15%25%
66%
141% 144% 149%
Mexico Argentina Brazil Chile USA UK NL
Total Credit to Private Sector / GDP1
Sources: World Bank, European Union Web site, IBGE
Declining interest rates will enable significant volume growth in the still underdeveloped Brazilian banking market;
The penetration of total credit shows a large long term growth potential
Economic stability and low interest rates will unleash the growth potential
2002
2003
1Q04
365
395
408
Credit to the Private Sector *
* does not include external financing to the private sector
+13%
+8%
+1.5%
PeriodEOP Balance
in BRL billion
Growth
nominal
Source: Brazilian Central Bank, ABN AMRO
0 13
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004 / 2005
Appendices
Table of Contents
0 14
Training Competitive market conditions Engagement in decision-
making process
Sustainability Model
Client knowledge
Segmentation
Since the acquisition of Banco Real we have updated our IT infrastructure to competitive standards
Spreading ABN AMRO
Corporate Values Respect Professionalism Integrity Teamwork
ABN AMRO Brazil is a client led institution
0 15
Leveraging the local, regional and international presence to serve clients
Retail Banking
Consumer Finance
Commercial Banking
Insurance
Wholesale Banking
Asset Management
Largest foreign institution by branches, loans and deposits
Largest car financier in Brazil
Maintains relationship with +2500 companies
7th largest insurer; 5th largest pension fund by reserves
Relationship with +400 largest corporation in Brazil
4th largest privately owned; R$25.1 bio in AUM as of Mar 04
All data in the overview section are in Brazilian GAAP, in BRL and include all businesses of ABN AMRO Brazil - WCS and C&CC
ABN AMRO has leading positions and strong market shares in the full range of financial services
0 16
Leveraging on business units to grow the franchise
Payroll
Commercial and Wholesale
Retail
2
3
1
Mini Branch
Cross-sellingof financial
services, loan and investment
productsCurrent Accounts
Acquisition -Individuals and
Suppliers (SMEs)
Payroll Loans
2
3
1
Mini Branch
Main banker
Higher entry barrier
Capturing of Value Chain
opportunities through closer
client knowledge and Supplier
relations
As of 1Q04
• 34% of individuals current accounts were from Payrolls
• 29% of individual current accounts were from Mini Branches
0 17
Total Assets Total Loans
Net Income
Average inflationin period: 8.3% pa
The performance has been very good notwithstanding economic difficulties
22,26027,514
36,952
55,424 55,644
31,811
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Mar-04
9,57711,701
17,359
27,236 27,286
14,065
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Mar-04
298349
1,137
649
420
784
1,208 203
7
91
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Mar-03 Mar-04
in BRL millionin BRL million
in BRL million
All data in this slide are in Brazilian GAAP, in BRL and include all businesses of ABN AMRO Brazil - WCS and C&CC
Cayman Effect (negative)
57
Cayman Effect (positive)336
Annual CGR 25.6%
Annual CGR 29.9%
0 18
Results are underpinned by good efficiency ratiosOn a standalone basis ABN AMRO showed a significantly lower efficiency ratio in 2003 (55.7% w/o Sudameris), the integration of Sudameris impacts this ratio temporarily.
Efficiency Ratio
All figures based on Brazilian GAAP as published by each institution
65.0
%
55.9
%
56.8
%
55.7
%63.8
%
57.8
%
52.4
%
56.8
%
57.6
%
49.5
% 56.0
%
56.8
%
57.3
%
50.8
%
55.0
%
58.1
%
ABN AMRO Bradesco Itau Unibanco
Dec-01 Dec-02 Dec-03 Mar-04
61.5% 70.6% 76.8%
Dec-02 Dec-03 Mar-04
ABNAMROFee Revenue/ Personnel Expenses
0 19
The franchise continues to deliver high ROE
24.6%
18.5%
31.8%
13.6%15.9%
20.8%19.1%
31.2%
ABN AMRO Bradesco Itau Unibanco
1Q03 1Q04
All figures based on Brazilian GAAP as published by each institution
0 20
Retail is a key growth engine of the franchise ABN AMRO is stronger in the southeast, the wealthiest and most populated region of Brazil. Our strategy is to focus on this region and on the major Brazilian cities.
1 Bradesco
2 Itau
3 ABN AMRO
4 Santander*
5 HSBC*
6 Unibanco
5,167
3,172
1,947
1,909
1,516
1,279
Ranking Dec 03 Branch Network (includes Mini Branches)
* June 2003 figuresMini Branches: Branches in company premises
C&CC Revenue Breakdown
27%
55%
12%
5%
Retail Consumer Finance Commercial Banking Other
0 21
BR
L bi
llion
Consolidated Credit Portfolio(per business)
The growth of the retail loan book has been robust and relatively cycle proof
All data in the overview section are in Brazilian GAAP, in BRL and include all businesses of ABN AMRO Brazil - WCS and C&CC
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Dec-02 Dec-03 Mar-04
Commercial and Wholsale Consumer Finance Retail
+97%
+5%
+61%
Retail
Consumer Finance
Commercial and Wholesale
w/ SudamerisGrowth 1Q04/1Q03
+31%
Stable
-5%
w/o Sudameris
0 22
100
284
562
951
Classic Special Premium SMEs
This performance is due to above average acquisition of wealthy clients
62%54%
24%30%
13% 16%
2002 2003
Classico Especial Premium
ABN AMRO Individual Clients Acquisition (per segment)
83%
13%4%
Market Structure - Bankarized Individuals
Average Account Revenue(per segment)
Index: Average Revenue Classic Account = 100
0 23
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004 / 2005
Appendices
Table of Contents
0 24
mill
ion
clie
nts
5.66.2
6.8 7.1
8.3
Dec-99 Dec-00 Dec-01 Dec-02 Dec-03
Since the acquisition of Banco Real the client base increased by nearly 50%
Besides the strong organic growth, Sudameris acquisition has accelerated the process
0 25
The desired critical mass has been reached with the Sudameris dealABN AMRO is the 4th largest privately owned Brazilian bank by total loans and assets, and 3rd by deposits
Top Privately Owned Banks
Figures in Brazilian GAAP
Loansin BRL billion
Assetsin BRL billion
Depositsin BRL billion
Dec. 03 Dec. 033 Dec. 033Mar 04 Mar 04 Mar 04
54.3 176.1 58.054.9 161.0 59.2
38.7 118.7 36.738.9 127.0 34.6
27.9 69.9 25.427.3 71.5 27.4
27.2 55.4 26.727.3 55.6 26.1
16.3 58.9 18.00NA NA NA
1 Bradesco
2 Itau
3 Unibanco
4 ABN AMRO
5 Santander
All figures based on Brazilian GAAP as published by each institution
0 26
21%
49% 46%
27%
29%29%23%
15% 16%28%
10%7%
Sudameris AAR Total
Classico Especial Premium SMEs
Client BaseJan 2004
Financial assets are concentrated in a small percentage of the population. The wealthiest 2% hold almost half of net financial assets.
51%
22% 26%
Individual Clients - MixJan 2004
50%
32%
18%
Sudameris added more scale in wealthy retail clients and SMEs
0 27
Our retail growth strategy consists in providing differentiated services
0 28
Our retail model is relationship driven
Focus:1. Tailoring offers to needs and
potential of all segments2. Strengthening customer
relationships3. Managing ‘migration’ from
segment to segment over client’s lifetime
4. Growth in Especial and PJ5. Efficiency in Classico6. “Aspiration” in Premium
Especial
Clássico
Premium
LowerR$0–700
UpperR$2001-4000
PremiumR$4001–8000
Van GoghR$8001+
Selected Payroll to all Segments
Sole Proprietors PJ (up to R$20m)
PJ (up to R$100k)
Un
ive
rsity
Stu
de
nts
UpperR$701-1200
LowerR$1201–2000
Near-term growth potential
0 29
Relationship’s costs and revenues have to be calibrated
Classico(Low-income)
Especial(MassAffluent)
Premium(Affluent)
Lower PJ(Small SME)
Banking Needs
Credit for consumption Credit for daily expenses Savings/transactional product
Credit for asset building Credit for consumption Credit for daily expenses Savings/transactional product
Investment to generateand maintain value
Investment for consumption Reserve for extra spending Health protection
Short-term credit products Some use of transaction
products (supplier payment) Similar financial needs
of Individual
Demographic
Monthly income ofR$0-1.2k
Individuals withrestricted financialaccess; low potentialsocial mobility
Monthly income ofR$1.2-4.0k
Middle-class andmass affluent
Monthly income of>R$4k
High social class,mature, and wealthy
Annual revenue of<R$0.5m
Small, informalcompanies or one-person proprietorships
Segment Descriptions3
53%
40%
6%2%
0
10
20
30
40
50
60
70
80
90
Individuals
Individuals Market Structure1,2
Individuals (m)
26%
29%
45%
0
50
100
150
200
Financial Assets
Premium(Affluent)
Especial(Mass Affluent)
Classico(Low-Income)
Unbankarized
Financial Assets (R$m)
SME Market Structure
SME 3
SME 2
SME 1(With at least oneemployee)
SME 1(Sole Proprietorship)
Unbankarized
No. ofCompanies (m)
0.1
0.3
1.5
0.2
2.2
% of Total
2.3%
7.0%
34.9%
4.7%
51.2%
AnnualRevenue (R$m)
5.0 - 20.0
0.5 - 5.0
< 0.5
< 0.5
< 0.51. Deposits + Investments - Credit Outstanding = Net Financial Assets; 2. Booz Allen & Hamilton Estimates. MfV Analysis; 3. Banco Real Segments - market segment definitions differ slightly
0 30
Our service offer calibrated to our clients needs
Classico(Low Income)
Especial(Mass Affluent)
Premium/Van Gogh(Affluent)
PJ(SME)
To
“In-line with market” product and service offer Limited product range; debit card, instalment credit, and
savings account (w/ limited additions for Upper/ University) Direct channels with Greeters; access to staffed Call
Center for questions; and informative communication
Proactive relationship managers with a higher manager toclient ratio and trained managers, assistants and greeters
Proactive and frequent offer in every direct channel,branches and direct mailing
Delivery by ATM’s, Call Center, Internet, Banco24Horas,checkbook and branches
Debit cards as a foundation of the offer
“In-line with market” product and service offer Training, developing and hiring managers observing a new,
higher manager to clients ratio Branch rebuilding or remodelling to deliver select number
of “Van Gogh” and “Premium” Branches Specialised managers with clear responsibility and
accountability; specialised Call Center support
Explicit segmentation and focus on high potential clients(R$100k + turnover)
Automated credit tools and proactive direct channelavailability (lower PJ)
“Better than market” product and service offer Broad range of products including
multifunction cards, check books, etc. Full branch and channel access served by
assistants and managers
Core product vehicles include Realmaster,RealParcelado, and credit cards
Full branch access served by managers Full channel access
“Lower than market” product and service offer Core product vehicles include Realmaster and
RealParcelado Full branch access served by managers Full channel access
No explicit segmentation Package discounts by investment level Exclusive area in branch served by managers
From
These changes: 1) Bring products and services in-line with customer expectations and market2) Strengthen relationship management capabilities
0 31
Credit cards is a key product for the mass affluentABN AMRO (including Sudameris) has a market share of 6.5% of the credit card transaction volume and 4% of the cards in force, therefore has a higher than average utilisation ratio and a solid base for growth
# of Cards Transaction Volume
Source: ABECS, Mastercard, Visa market research
Itau12.6%Bradesco
13.7%
Unicard7.9%
Santander4.2%
HSBC3.6%
Other15.4%
Credicard19.0%
Bco. Brasil16.9%
ABN AMRO6.7%
Credicard16.1%
Bco. Brasil12.9%
Itau12.9%
Bradesco12.4%
Unicard10.2%
Santander5.9%
ABN AMRO4.0%
HSBC3.7%
Other21.9%
0 32
Credit cards have a significant growth potential
1.00
1.50
2.00
2.50
Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04
500
550
600
Mar-03 Jun-03 Dec-03 Mar-04
Transaction Volume# Credit Cards
BR
L m
illio
n
...and a solid base for growth
All data in the overview section are in Brazilian GAAP, in BRL and include all businesses of ABN AMRO Brazil - WCS and C&CC
mill
ion
0 33
Debit cards enable to generate volumes with our retail client base
4.8
5.5
4.8
5.0
5.3
5.5
5.8
Jan-03 Mar-03 May-03 Jul-03 Sep-03 Nov-03 Jan-04 Mar-04
# Debit Cards
BrazilDebit cards have grown faster than other electronic payment methods, largely due to low income bankarization. 2003 transaction volume was up 59%
ABN AMRODebit card business grew 63% in 2003, exceeding the debit market growth ratio, reducing check processing costs
Source: Visane, ABN AMRO
mill
ion
0 34
We have created a true multi-channel platform to best serve our clients
Direct Channels include: call center, Internet, ATMs
Direct Channels/ Total Transactions74% in 1Q04 (up from 50% in 1998)
Branch Transactions/ Total Transactions21% in 1Q04 (down from 23% in 4Q01)
Direct Channel Availability99% in 1Q04 (up from 97% in 4Q01)
Internet UsersIndividuals 34% in 1Q04 (up from 17% in 4Q01) Corporates 79%in 1Q04 (up from 17% in 4Q01)
0 35
Distribution and differentiation have become key competitive advantages
Created in 2002 by the Financial Executives Magazine, e-finance award is intended recognize the most prominent financial institutions in the implementation of infra-structure
solutions, IT and telecom applications
2003 categories:2003 categories: Internet Banking, Business Platform, Outsourcing Strategy, Internet Banking, Business Platform, Outsourcing Strategy, Branch BackOffice SolutionsBranch BackOffice Solutions
2004 categories: Retail Internet Banking, New Call Center Technologies, 2004 categories: Retail Internet Banking, New Call Center Technologies, Mobile Mini BranchMobile Mini Branch
Reliability
Transparency
Accessability
Driver of client satisfaction for mass affluent and client profitability for low income
0 36
Our strategy and employees have created a valuable brand
Ranking “MOST VALUABLE BRAZILIAN BRANDS”Ranking “MOST VALUABLE BRAZILIAN BRANDS”
Source: Interbrand - Dinheiro Publication
0 37
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004 / 2005
Appendices
Table of Contents
0 38
The current performance is impacted by the integration of Sudameris
All data in this slide are in Dutch GAAP in BRL for C&CC Brazil
Figures in Dutch GAAP
in BRL million 1Q2003 4Q2003*
Revenues 1,284 1,562
Expenses (814) (1,115)
Operating Profit 469 447
Provisions (149) (222)
Oper. Profit before Taxes 320 225
5.9%
17.5%
6.8%
28%
Taxes (88) 20
Cayman Effects 57 11
Efficiency Ratio 61.7% 69.5%
1Q04/ 4Q031Q2004
1,654
(1,129)
525
(237)
288
(49)
(7)
66.7%
28.8%
38.7%
11.9%
59.1%
-10%
1Q04/ 1Q03
1.3%
Net Profit 172 204 198 15.1%
0 39
Spreads are declining but volumes are growing
Relative Spreads
0.60
0.70
0.80
0.90
1.00
1.10
1.20
2001
Q1
Q2
Q3
Q4
2002
Q1
Q2
Q3
Q4
2003
Q1
Q2
Q3
Q4
2004
Q1E
Q2E
Q3E
Q4E
2005
AV
G
3-Q
ua
rte
r M
ov
ing
Av
era
ge
, Q
1 2
00
1 =
1.0
0
Personal Loans Auto Loans Mortgages
Cards Overdrafts Loan Products
Assets
0
5,000
10,000
15,000
20,000
2001
Q1
Q2
Q3
Q4
2002
Q1
Q2
Q3
Q4
2003
Q1
Q2
Q3
Q4
2004
Q1E
Q2E
Q3E
Q4E
2005
AV
G
R$
mil
lio
n
Overdrafts Personal Loans
Auto Loans Other Products - PJ
Though spreads have declined, volumes have sustained solid growth and are expected to grow further
0 40
The integration is going smoothly and delivers the expected synergies
$0.0 $14.1$37.4 $45.0
$83.6$120.7
$300.0
Oct
-03
No
v-0
3
De
c-0
3
Jan
-04
Fe
v-0
4
Ma
r-0
4
Jun
-04
Se
p-0
4
De
c-0
4
Ma
r-0
5
Jun
-05
Se
p-0
5
De
c-0
5
Total Synergies CapturedBRL million
Integration plans are being executed by 18 Integration Fronts (8 already completed)
Integration process is on track with BRL120.7 mio synergies captured as of Mar 2003 (annualised cost reduction)
53%of annualised cost reduction is related to FTE reduction and the balance related to other expenses
Actual
Planned
0 41
Sudameris Acquisition & Integration
ABN AMRO acquired 94.57% of Banco Sudameris Brasil S.A. in a R$ 2.2 billion
transaction: R$ 527 million cash and balance through share exchange for ABN
AMRO Real shares (11.58%)
Estimated synergies: R$ 300 mln p.a. starting in 2005
Global integration plan designed June 2003 along with due diligence
Creation of 18 working fronts, of which 8 have fully executed, 6 depend on other
migrations (e.g. IT) and 4 are currently detailing migration.
Fronts already integrated: Audit, Asset Management, Private, Compliance,
Legal, Treasury, Insurance and Consumer Finance
Implementation started as of closing in December 2003
ABN AMRO is ahead of schedule regarding implementation, capturing synergies
both in the scope of revenues, personnel and administrative expenses
0 42
Sudameris Acquisition & Integration
In October 2003 a career orientation program was created to support personnel
reallocation
A ‘Best Practice’ approach is being followed, e.g. for FX and Trade Finance
Sudameris’ integrated operational model will be adopted
Complementary businesses will be maintained, e.g. Sudameris retail driven equity
brokerage is already fully operational under ABN AMRO
The two banks/operations shall be fully integrated by year end 2004
0 43
Loans / Total Assets Ratio
In a scenario of declining interest rates ABN AMRO has pursued to build on its loan portfolio, expanding client relationship and capturing cross-selling opportunities
Client led growth will continue to produce quality earnings
44.2%
40.4%
36.4%
46.4%
39.9%
34.1%35.5%
47.0%
35.6%34.6%
30.8%
32.6%
49.1%
38.2%
30.6%
49.1%
ABN AMRO Bradesco Itau Unibanco
Dec-01 Dec-02 Dec-03 Mar-04
All figures based on Brazilian GAAP as published by each institution
0 44
Non-performing Loans >90 days
The expansion of the lending business was implemented with no prejudice to asset quality; performance of the the loan portfolio is fully within market standards.
Growth will be value creative as a result of sound credit policies
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04
Market ABN AMRO
Source: Brazilian Central Bank
0 45
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004/ 2005
Appendices
Table of Contents
0 46
The Dynamics of SustainabilityGoverno
EmployeesClient
Government
MediaCommunity Suppliers
Environment
Shareholders
ABN AMRO
Labor Union
Society
ABN AMRO has a leading role in creating and delivering sustainable value
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Key Initiatives for Sustainability
Core Business Linked Initiatives New financing products directed to social and environmental projects
Assessment of the social and environmental risk of ABN AMRO clients
MicroCredit - Credit offering to population traditionally excluded by the financial sector Ethical Investment Fund investing in socially and environmentally responsible enterprises
Management Initiatives Eco-efficiency / environmental management (e.g. recycling)
Staff Diversity initiatives
Supply Chain
Engagement and mobilization of suppliers
Social and environmental criteria as a key factor in the choice of supply chain partners
Bi-annual publication of Brazilian Sustainability Report
Social Initiatives 70% of our financial donations are destined to public education and the remaining 30% to initiatives in
income generation, environment and diversity
Wherever possible, we encourage our employees to be engaged in our social action initiatives
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Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004/ 2005
Appendices
Table of Contents
0 49
Outlook 2004 / 2005• Inflation under control
(IPCA forecast 6.8% 2004; 4.5% 2005)Revised from 6.0% 2004; 5.1% 2005
• Pick-up of economic growth(GDP forecast 3.7% 2004; 3.6% 2005)
• Lower foreign exchange volatility(BRL/USD forecast 3.05 eop 2004; 3.25 eop 2005)maintained
• Lower interest rates(Selic forecast 14.5% eop 2004; 12.0% eop 2005)Revised from 13.5% eop 2004; maintained for 2005
• Growing credit portfolio, offsetting lower margins and maintaining standards of credit quality (credit portfolio growth forecast for 2004 in the range of 20%)
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Thank You
0 51
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004 / 2005
Appendices
Table of Contents
0 52
Sovereign Spread
Economic Environment
Sources: Brazilian Central Bank, Bloomberg
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
Jan-
02
Mar
-02
May
-02
Jul-0
2
Sep
-02
Nov
-02
Jan-
03
Mar
-03
May
-03
Jul-0
3
Sep
-03
Nov
-03
Jan-
04
Mar
-04
May
-04
0
500
1000
1500
2000
2500
3000
BRL / USD EMBI Brazil (bps)
BR
L
EM
BI B
razil
Low international interest rates have pushed investors towards higher yield instruments. In this environment Brazil sovereign spread has been driven to historically low levels, at 500- 700 bps over Treasuries
0 53
External Private Debt Rollover RateEconomic Environment
Sources: Brazilian Central Bank, ABN AMRO
66%
51%
74%
102%
133%
90%
55%
52%
29% 26%
57%
94%
81%
89%
98%
60%
40%
25%
48%
43%
45%41%
30%
36%
58%
63%
28%
67%
Jan-0
2
Mar-
02
May-0
2
Jul-02
Sep-0
2
Nov-0
2
Jan-0
3
Mar-
03
May-0
3
Jul-03
Sep-0
3
Nov-0
3
Jan-0
4
Mar-
04
External Private Debt* Rollover Rate
( * ) External private debt defined Bonds, Notes, Commercial Papers, Direct Loans and Commercial Credit
run-up to 2002 presidential elections
After a sluggish performance in 2002 external private debt* rollover picked up reflecting the renewed appetite for Brazil. The 2004 drop is a consequence of awaiting definitions with regards to international interest rates.
0 54
3.96%3.45%
2.79% 2.74%
2.07%
1999 2000 2001 2002 2003
% Public Debt / Exports
Business Environment
Economic Environment
Source: Brazilian Central Bank, ABN AMRO
8.4%
6.6% 6.1% 6.6% 6.5%
8.9% 9.2%
11.4%
13.3%14.8%
15.7%14.5%
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004* 2005*
% Exports/ GDP
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Source: ANBID
Asset ManagementOverview
Mutual FundsAUM
Market Share
1 Banco do Brasil 111.2
2 Bradesco 75.2
3 Itaú 74.6
4 CEF 27.1
5 Citibank 26.6
6 ABN AMRO 25.1
7 HSBC 24.5
8 Santander 23.6
9 Unibanco
10 BankBoston
23.0
21.9
20.8%
13.8%
14.1%
5.0%
4.9%
4.7%
4.2%
4.4%
4.6%
4.3%
ABN AMRO ranks 3rd among privately owned retail driven asset manager
as of Mar 2004
Other 103.0 19.2%
TOTAL 535.8 100%
Asset Managers in BRL billion
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Credit Portfolio ABN Amro and SudamerisOverview
BR
L m
illio
n
Consolidated Credit Portfolio
All data in the overview section are in Brazilian GAAP, in BRL and include all businesses of ABN AMRO Brazil - WCS and C&CC
Source: Brazilian Central Bank, ABN AMRO
2002
2003
1Q04
365
395
408
Credit to the Private Sector *
+13%
+8%
+1.5%
PeriodEOP Balance
in BRL billion
Growth
nominal
+15%
+59%
+0.2%
Growth
ABN AMRO BRAZIL
16,560
26,287 26,337
Dec-02 Dec-03 Mar-04
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ABN AMRO consumer finance division is Brazil’s largest car financier through its Aymoré brand, driven by strong customer service. Main competitors are aggressively reducing margins in order to obtain additional market share.
Car Financing Market Share
Source: DETRAN
Consumer FinanceOverview
42.4% 38.2% 36.5%
11.2% 11.7%
14.2%16.4%
15.8%22.2% 18.0%
7.1%5.3%4.4%
10.4%8.9%4.5%
17.1%
15.8%
2001 2002 2003
ABN AMRO
Bradesco
Itau
Votorantim
Santander
Other
100%
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WEB MotorsOverview
WebMotors has 85% share of the views in the internet auto segment
4% of internet visits search for information on the auto segment
WebMotors Audience
Category #
Unique users / day 70 thousand
Unique users / month 2 million
Page views / month 28 million
Banner views / month 48 millionSource: IBOPERating
Source: ABN AMRO
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MortgageOverview
Source: ABECIP
2003 Market Share
631713 725
451 448
2002 2003 Mar-04
ABN AMRO Real Sudameris
in BRL million
Mortgage Balance
Historically 75% of assets are acquired through the branch network. Intermediaries such as developers and real estate brokers provide a growth platform. The Brazilian mortgage market may benefit from the new law (currently under approval) regarding statutory lien.
1,164 1,173
All data in the overview section are in Brazilian GAAP, in BRL and include all businesses of ABN AMRO Brazil - WCS and C&CC
CEF45%
Itau15%
Bradesco15%
Santander6%
Nossa Caixa4%
Bank Boston1%Other
5%
HSBC2%
Unibanco3%
ABN AMRO4%
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Awards
Awards
Ranked among “100 Best Workplaces” in 2002 and 2003Ranked among “100 Best Workplaces” in 2002 and 2003
Ranked among “100 Best Workplaces for Women” in 2003Ranked among “100 Best Workplaces for Women” in 2003
Created in 1998 by Exame magazine the guide to identify the best
companies in People Management
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Cautionary Statement regarding Forward-Looking Statements
This announcement contains forward-looking statements. Forward-looking statements arestatements that are not historical facts, including statements about our beliefs and expectations.Any statement in this announcement that expresses or implies our intentions, beliefs,expectations or predictions (and the assumptions underlying them) is a forward-lookingstatement. These statements are based on plans, estimates and projections, as they are currentlyavailable to the management of ABN AMRO. Forward-looking statements therefore speak only asof the date they are made, and we take no obligation to update publicly any of them in light ofnew information or future events.
Forward-looking statements involve inherent risks and uncertainties. A number of importantfactors could therefore cause actual future results to differ materially from those expressed orimplied in any forward-looking statement. Such factors include, without limitation, the conditions inthe financial markets in Europe, the United States, Brazil and elsewhere from which we derive asubstantial portion of our trading revenues; potential defaults of borrowers or tradingcounterparties; the implementation of our restructuring including the envisaged reduction inheadcount; the reliability of our risk management policies, procedures and methods; and otherrisks referenced in our filings with the U.S. Securities and Exchange Commission. For moreinformation on these and other factors, please refer to our Annual Report on Form 20-F filed withthe U.S. Securities and Exchange Commission and to any subsequent reports furnished or filedby us with the U.S. Securities and Exchange Commission.
The forward-looking statements contained in this announcement are made as of the date hereof,and the companies assume no obligation to update any of the forward-looking statementscontained in this announcement.