UNICREDITO ITALIANO GROUP “Growth through Specialisation, Quality and Innovation” Alessandro Profumo - CEO Merrill Lynch Banking & Insurance Conference London - October, 8 th 2003
Dec 26, 2015
UNICREDITO ITALIANO GROUP“Growth through Specialisation, Quality and Innovation”
Alessandro Profumo - CEO
Merrill Lynch Banking & Insurance ConferenceLondon - October, 8th 2003
2
AGENDA
Group Highlights
Divisional overview
Private & Asset Management Division
New Europe Division
Corporate Division
Retail Division
3
READY TO GROW
In the last three years financial institutions faced a tough macroeconomic scenario, characterised by modest GDP growth rates, strong contraction of interest rates, low returns and higher volatility in the financial markets
Thanks to its diversified portfolio of businesses, product innovation capabilities and commercial effectiveness, UCI was able to continue to grow and generate value
UCI forecasts only a moderate recovery of the economic cycle starting from 2004 and has assumed a conservative scenario for its 2003-2006 strategic plan
Leveraging on its client-focused organisational model, UCI will grow and create value for shareholders through the implementation of its clearly defined segment-tailored strategies even in a low growth macroeconomic environment …
… being ready to exploit the opportunities arising from an improved scenario
4
8.3%
UCI ORGANISATIONAL MODEL: CUSTOMER DRIVEN DIVISIONALISATION…
(1) Consumer Finance (2) Retail mortgages (3) M/l term corporate financing (4) Leasing
Pekao
New Europe division
Private & AM division
Pioneer
Xelion
Corporate division
UBM
BMC(3)
Locat(4)
Clarima(1)
TradingLab
Retail division
Zagrebacka
KFS
Bulbank
UniBanka
UC Romania
Zivnostenska
45.7% 30.9% 15.1%
Weight on 1H03 Group revenues pre Corporate Centre and elisions
Employees(5) (Jun 2003)o/w Italyo/w New Europe(5)
70,35640,22830,128
Branches(5) (Jun 2003)o/w Italyo/w New Europe(5)
4,5983,2481,350
(5) KFS at 100%
UniCredit Banca per la casa(2)
5
PAY-OUT RATIO FROM 55.2% IN 2002 TO AN AVERAGE
65% IN THE 2003-2006 TIMEFRAME
2002 2006
… LEADING TO SUSTAINED EPS GROWTH, SOUND EFFICIENCY RATIOS AND HIGH PROFITABILITY, WITH SIGNIFICANT VALUE CREATION FOR SHAREHOLDERS …
2002
Revenue growth (mln) 10,284 8.6
Cost/Income, % 54.6 50
Core Tier 1 ratio, % 7.2 6.8-7.2
ROE, % 17.2 21
CAGR 02-06
Op. Income growth (mln)
4,670 11.5
EPS 0.29 14.0
Retail Division 4,728 8.0
Corporate Division 2,734 9.9
Private & AM Division 1,072 10.2
New Europe Division 1,830 8.8
6
Existing customers
New customers
Efficiency Risk mgmtIntra-group synergies
PioneerUBI
UCBUPB
UBMUBI
PioneerUBMTradingLab
Revenue growth
... THROUGH TAILORED STRATEGIES FOR DIFFERENT CUSTOMER SEGMENTS AND GEOGRAPHIES
High importance
Low importance
Corporate business
Private Banking business
New Europe
Retail business
7
AGENDA
Group Highlights
Divisional overview
Private & Asset Management Division
New Europe Division
Corporate Division
Retail Division
8
Retail mortgages
GROWTH FROM BOTH EXISTING AND NEW CUSTOMERS ON THE TOP OF MARKET TREND, WITH PARTICULAR FOCUS ON HIGH GROWTH/HIGH VALUE BUSINESSES, LEVERAGING ON SPECIALISATION
More business with existing customers
Focus on high growth/high value businesses; in particular:
New business from new customers
THROUGH
Quality approach to Small Business thanks to specialisation
Consumer credit
KEY GROWTH DRIVERS FOR THE MARKET: Decreasing households’ savings rates (from 15.8% in 2003E
to 15.3% in 2006E) coupled with higher consumptions leading to a 8.1% 2003-2006 CAGR in total households’ loans1
Alignment to Eurozone averages of weight of retail mortgages and consumer credit on GDP in Italy:
Weight of retail mortgages on GDP in Italy: 12.2% in 2002 vs. 34.7% in Eurozone2
Weight of consumer credit on GDP in Italy: 2.7% in 2002 vs. 8.2% in Eurozone2
2 Source: Bank of Italy and ECB; data calculated taking into account consumer credit granted only by banks (financial enterprises not included)
1 Source: Bank of Italy. Data including only consumer households
9
RESIDENTIAL MORTGAGES: A DEDICATED BANK TO GROW FASTER THAN MARKET
Residential mortgages:Market growth in Italy (CAGR)1
UCI Banca+UBCasa (stand alone): Market share evolution2
2002
2006
~12%
> 15%
+ 25%2002-06E
18.8%
1998-02
LEVERAGING ON:
UB CASA: a dedicated and integrated (production + distribution) “mortgage centre” with a target of ~70,000 new customers for the division by 2006
OUTSTANDING FOR: Product innovation, as a response to more sophisticated and rapidly changing customer needs Processing of mortgage workflows: 3 days on average for response, 20 days on average for
granting Credit scoring systems Multichannel distribution: captive UCI Banca network, proprietary dedicated branches, mortgage
brokers, real estate agent networks (Tecnocasa, FIAIP), PFAs networks, non-captive banking and financial intermediaries
1 Source: Bank of Italy for 1998-2002 data; internal estimates for 2002-2006 CAGR
~10%
UCI Banca+UBCasa (stand alone) Key figures
~21 bn residential mortgages as at 30.6.2003 (+6.4% on year-end 2002)
2 Calculated on total M/L term consumer households’ loans – Source: Internal estimates on Bank of Italy data
~2.9 bn flow of new residential mortgages in 1H03 (1.3 bn in 1Q and 1.6 bn in 2Q, +23% QoQ)
10
ACQUISITION1 OF ABBEY NATIONAL-ITALY: A SUCCESSFUL INITIATIVE TO BECOME LEADER AMONG THE SPECIALISED PLAYERS IN THE DOMESTIC MARKET, PERFECTLY FITTING WITH THE STRATEGIC PLAN
N° of customers: 48,000
Mortgage portfolio2: 3.9 bn
Market Share3 in 2002: 3.2%
Market Share3 Jan-Aug03e: 4.0%
Good asset quality thanks to an efficient in-house-made scoring system: combined analysis of real estate properties value and cash-flow capability of the borrower
Strong multichannel sales approach: 14 branches located in the main Italian
cities 60 Financial Advisors Many distribution agreements with
banks, real estate brokers, PFAs networks and other financial intermediaries
ABNI Key Highlights
2 As at 31 August 2003
1 Acquisition expected to be completed before year-end and subject to approval by the relevant authorities
Wider product range
Enhanced distribution capabilities through:
proprietary branches in key-cities
dedicated alternative channels
Acceleration of growth, becoming: Leader among specialised
players in Italy 4th in the overall domestic
market for flows of new mortgages granted in 2003, with ~5.5% market share
UBCasa + ABNI
3 Calculated on flow of new mortgages granted in the periods
UCI Banca + UBCasa + ABNI
~15% market share in Italy for total outstanding residential mortgages, starting point for additional growth
11
STRONG CONTRIBUTION OF CONSUMER LENDING TO THE DIVISION’S GROWTH …
1 Source: internal calculations on Bank of Italy, Assofin and Eurofinas data for 1995-2002 CAGR; internal estimates for 2002-2006 CAGR
3 MAIN DISTRIBUTION CHANNELSPARTNERSHIPS AND DIRECT MARKETING UCI Banca SPECIALISED
FINANCIAL SHOPS
Key goals:Key goals: Key goals: ~800,000 net acquisitions of
customers from 2003 to 2006
Revolving cards / Total cards ratio higher than 50% (ratio higher than 60% as at 30.6.2003)
Clarima as the “consumer credit specialist” of the Group
Full commercial integration with UCI Banca
Maximisation of UCI Banca customers potential as for credit cards and personal loans (~31,500 Clarima cards out of 1.1 mln Total cards as at 30.6.2003)
Exploitation of a dedicated and alternative distribution channel traditionally strong in Italy
Consumer lending:Market growth in Italy (CAGR)1
Clarima + UCI Banca:Market share evolution
2002
2006
~7.5%
> 9%
+ 20%2002-06E
13.5%
1995-02
LEVERAGING ON:
15-20%
Clarima + UCI Banca: Key figures ~3.8 bn consumer loans as at
30.6.2003 (+10% vs year-end 2002), of which:
~2 bn pure consumer credit ~1.8 bn non-finalised short-term
consumer loans
Focus on “credit at point of sale”
~136,000 clients for Clarima as at 30.6.2003
12
… THANKS TO TAILORED STRATEGIES FOR EACH DISTRIBUTION CHANNEL; FIRST POSITIVE EVIDENCE IN 1H03 RESULTS
STRATEGIC GUIDELINES1H03 COMMERCIAL RESULTS
~45,000 net new clients (from 91,000 as at 31.12.2002 to 136,000 as at 30.6.2003, +49%), of which ~70% from non-captive channels
PARTNERSHIPS AND DIRECT MARKETING
UNICREDIT BANCA
SPECIALISED FINANCIAL SHOPS
New selected partners strong for distribution capability, customer base and brand
Low acquisition costs per client thanks to high integration of product/model with the partner
Share of “revolving clients” on total direct channel new clients >80%
Leverage on cross-selling
Increase of penetration of Clarima cards on UCI Banca customer base
Conversion of UCI Banca “optional” cards into revolving cards
Increased share of wallet of UCI Banca clients (from 18% in 2002 to 31% in 2006) for personal loans
Opening of 9 shops in selected high potential cities in January 2004
Other 15-20 openings starting from 2005
Revolving credit cards/Total outstanding credit cards around 50%, vs 7% as total market average
21,735 outstanding finalised loans as at 30.6.2003 vs 12,250 as at 31.12.2003
~2.7 mln transactions with credit cards in 1H03 vs 1 mln in the whole 2002, accounting for more than Euro 134 mln vs Euro 88 mln in the whole 2002 (+53%)
23 strong partnerships as at 30.6.2003
Significant investments (~2 mln) to strengthen credit scoring systems in 1H03
~Euro 1,200 average outstanding loans per customer1 as at 30.06.2003
1 Calculated on active customers as at 30.6.2003
13
SPECIALISED HIGH QUALITY APPROACH TO SMALL BUSINESS IN ORDER TO INCREASE CUSTOMER PENETRATION AND EXPAND THE CLIENT BASE
Small Business lending: UCI BancaMarket share evolution1
2002
2006
< 7%
> 8%
+ 20%
THANKS TO:
Small Business lending: UCI BancaKey figures
~13 bn loans as at 30.6.2003 (+1.0% on year-end 2002)
~550,000 clients
Launch new segment-focused Imprendo packages
Strengthening of specialised branches
Leverage state of the art credit skills to: grow penetration on existing
customers through specific and targeted credit campaigns (i.e.: Utilizza di Più)
expand the client base – Target: +230,000 customers by year end 2006
~ 103,000 customers involved (minimum Credit line 5,000 Euro)
Good credit quality (top three – out of five – performing loan classes)
Results
Outstanding at 31.01.03
Outstanding at 31.05.03
Target
Campaign Call centre & account rep contact Packaged pricing offer linked to
new credit product Four months time frame starting
01.02.03
1,2 bn
1,4 bn +15%
Leveraging on specialisation to grow penetration: An EXAMPLE – 1st “Utilizza di Più” Campaign2
1 Calculated on loans to sole proprietorships with up to 5 employees (=“Famiglie produttrici”), as a good proxy of the whole SB segment2 A second campaign on other 62,000 clients, started at 28.8.2003 to last until year end, has shown in the first month a 9.6% increase of the
outstanding loans (from 821 mln to 900 mln)
14
AGENDA
Group Highlights
Divisional overview
Private & Asset Management Division
New Europe Division
Corporate Division
Retail Division
15
Strong cooperation between UBI and UBM in order to offer high value
added product and services
Low risk profile, full implementation of Basel II guidelines
Increase the share of wallet of selected existing customers and
acquisition of new customers in selected areas
through the development of a full range of high-value added products in order to become the main financial partner for integrated lending and services
GROWTH IN SME’S MARKET THROUGH SPECIALISED APPROACH AND BETTER PENETRATION OF EXISTING CUSTOMER BASE
16
The total amount of loans of UBI customers, either with UBI or with other banks, represents 76% of total loans
In historical areas3 the lending coverage increases to around 90%
Room for further growth in coverage remains in some rich areas, such as Lombardy, and in some provinces in the North East
UBICore
Clients
TotalMarket
Client coverage
Lending coverage1
Lombardy
Southern Italy
10,248
5,702
…except in Lombardy…
…except in the South2
34,688 29.5%
Total 56,067 117,321 47.8% 76.2%
66.8%
15,821 36.0% 57.5%
1 Lending coverage refers to the amount of total outstanding loans of UBI customers (both towards UBI and other banks) relative to the total stock of outstanding loans on the corporate market.
Source: UBI calculations on internal data and Credit Bureau data
High degree of client coverage
UBI’S CORE CUSTOMER BASE REPRESENTS OVER 76% OF THE BANKING SYSTEM’S TOTAL OUTSTANDING LOANS WITH ROOM FOR FURTHER GROWHT IN LENDING COVERAGE …
Ch. in Lending
coverage1 (Jun03/
Dec02, bp)
+60
+40
-190
2 Abruzzo, Basilicata, Calabria, Campania, Molise, Apulia, Sicily, Umbria3 Emilia-Romagna, Friuli-Venezia Giulia,
Piedmont, Trentino-Alto Adige, Aosta Valley, Veneto
Jun03
17
The top 10% of UBI core customers generates:over 60% of total
outstanding loansover 50% of UBI’s
total revenues over 50% of
commission margins (net of derivatives)
The top 10% is fairly well distributed among large, medium and small enterprises
I Decile 54.5%
Total revenues (%)
Outstanding loans (%)
63.9%
Number of clients
5,607
II Quartile
I Quartile
III Quartile
Total
IV Quartile
76.4%
16.8%
6.2%
0.6%
100%
81.6%
12.8%
4.1%
1.6%
100%
14,017
56,067
14,017
14,016
14,017
Source: UBI calculations on internal data
Revenues concentration
… AND IN REVENUE STREAM GENERATED BY THE NON “TOP 10%” UBI’S CORE CUSTOMERS
1H03
18
FIRST HINTS OF IMPROVEMENT IN LENDING MARKET SHARE IN 1H03
Source: Credit Bureau1 With turnover > 50 mln
(Euro mln)
Largest 42 groups
SMEs
Public sector and others2
Total
Mar03
6,077
6,477
20,802
4,130
37,486
Dic02
4,990
21,489
5,174
39,103
7,450
Jun03
6,545
7,532
22,203
4,754
41,034
UBI % ch. Jun03/Mar03
+7.7
+16.3
+6.7
+15.1
+9.5
Other corporates1
LOANS
Loans to SMEs growing slightly faster than the system: system’s data show an increase of 1% (Jun03/Mar03) against +6.7% of UBI loans to SMEs
Largest 42 groups: increase mainly due to the “Autostrade”and Fidis deals
Share of wallet: 10.6% in 1H03 (from 10.2% in Dec02) in line with our 3 years plan target of 13% and long term target of 15%
2 Mainly financial companies and public entities as defined by Bank of Italy
System % ch. Jun03/Mar03
+4.3
+2.7
+1.0
+3.8
+2.6
19
887
Rel
atio
nsh
ip
ma
na
ger
s
Corporate derivatives total revenues
(Euro mln)
UBI
UBM
% ch.on 1H02
1H03
189
281
+28.8
GROUP TOTAL 474 +29.3
+27.7
Corporate finance 14
Derivatives 64
Foreign services 22
Product specialists
KEY FACTORS FOR A SUSTAINABLE REVENUE STREAM:
Market leadership with a substantial market share
Entry barrier: internal flexible risk management tool able to cater future customer needs
Mastery in risk management recognised by S&P assigning to UBM the same long term credit rating of the group (AA-)
Margin per unit notional not expected to be under further pressure; product innovation will boost margins again
Strict quality control in sales to favour recurrent custom
Target customers in 3 years plan represents approx. 55% of group’s potential customers base (20,000 vs. 36,000)
ORGANISATIONAL MODEL AND PRODUCT INNOVATION AS KEY SUCCESSFUL FACTORS FOR CORPORATE DERIVATIVES BUSINESS GROWTH, THAT CAN BE EXPLOITED IN THE OTHER BUSINESS LINES
Efficient integration between product specialists and relationship managers
20
AGENDA
Group Highlights
Divisional overview
Private & Asset Management Division
New Europe Division
Corporate Division
Retail Division
21
GROWTH THANKS TO FIRST-CLASS PRODUCTS AND SERVICES, LEVERAGING ON STRONG INTEGRATION BETWEEN PRODUCTION AND DISTRIBUTION
Growth from existing customers
Growth from new customers
THANKS TO:
Portfolio optimisation and increased share of wallet with existing customers
Acquisition of new customers leveraging on a widespread presence in attractive areas and on distinctive competitive advantages
Independence of advice
Quality of service
Easiness and proximity to the client
Wide offer with High-Alfa products
Strong distribution capabilities in US and in the “International” business units
Support fron/to UCI’s networks in Italy and new partnerships with third parties
World-class performance thanks to active management
22
WIDESPREAD NETWORK, CONCENTRATED IN THE MOSTATTRACTIVE ITALIAN “PROVINCES”, AND DISTINCTIVE COMPETITIVE ADVANTAGES AS KEY GROWTH DRIVERS
Distribution of the first 36 Italian “provinces” by potential for private banking and presence of specialised competitors
UniCredit PB is present in 59 (out of 103) “provinces”, representing 88% Total Private Banking Financial Assets in Italy
UCI PB COMPETITIVE ADVANTAGES
Focused strategy
Wide-spread presence all-across the country
Deeper knowledge/ understanding of the clients
Wider offer of products/ services
Higher service quality
Superior skills Synergies with other
Group companies Dedicated business model
Source: UniCredit Private Banking Marketing calculations on MagStat data
20%
40%
40%Top 6 prov.
30 prov.
Other prov.
% Private Banking Financial Assets
Attr
activ
enes
s
Com
petit
ion
Ancona
FerraraSavona
MantovaAlessandria
Biella
Lecco
Salerno
Trento
Parma
VicenzaPavia
Palermo
Perugia
Varese
Modena
Firenze VeronaTreviso
Napoli
Genova
Como
Brescia
BergamoBariPadova
Cuneo
Venezia
0%
5%
10%
15%
20%
25%
30%
35%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
Potential PB Financial Assets (%)
Fore
ign
orS
peci
alis
ed P
laye
rsin
the
prov
ince
s(%
on
29pl
ayer
s ta
ken
into
acco
unt)
Udine
Cremona
R.Emilia
Novara
Milano (96.6%)
Roma (82.8%)
Torino (34.5%)
Bologna (44.8%)
20%
40%
40%Top 6 prov.
30 prov.
Other prov.
% Private Banking Financial Assets
Attr
activ
enes
s
Com
petit
ion
Ancona
FerraraSavona
MantovaAlessandria
Biella
Lecco
Salerno
Trento
Parma
VicenzaPavia
Palermo
Perugia
Varese
Modena
Firenze VeronaTreviso
Napoli
Genova
Como
Brescia
BergamoBariPadova
Cuneo
Venezia
0%
5%
10%
15%
20%
25%
30%
35%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
Potential PB Financial Assets (%)
Fore
ign
orS
peci
alis
ed P
laye
rsin
the
prov
ince
s(%
on
29pl
ayer
s ta
ken
into
acco
unt)
Udine
Cremona
R.Emilia
Novara
Milano (96.6%)
Roma (82.2%)
Torino (34.5%)
Bologna (44.8%)
Source: UniCredit Private Banking Marketing calculations on MagStat data
20%
40%
40%Top 6 prov.
30 prov.
Other prov.
% Private Banking Financial Assets
Attr
activ
enes
s
Com
petit
ion
Ancona
FerraraSavona
MantovaAlessandria
Biella
Lecco
Salerno
Trento
Parma
VicenzaPavia
Palermo
Perugia
Varese
Modena
Firenze VeronaTreviso
Napoli
Genova
Como
Brescia
BergamoBariPadova
Cuneo
Venezia
0%
5%
10%
15%
20%
25%
30%
35%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
Potential PB Financial Assets (%)
Fore
ign
orS
peci
alis
ed P
laye
rsin
the
prov
ince
s(%
on
29pl
ayer
s ta
ken
into
acco
unt)
Udine
Cremona
R.Emilia
Novara
Milano (96.6%)
Roma (82.8%)
Torino (34.5%)
Bologna (44.8%)
20%
40%
40%Top 6 prov.
30 prov.
Other prov.
% Private Banking Financial Assets
Attr
activ
enes
s
Com
petit
ion
Ancona
FerraraSavona
MantovaAlessandria
Biella
Lecco
Salerno
Trento
Parma
VicenzaPavia
Palermo
Perugia
Varese
Modena
Firenze VeronaTreviso
Napoli
Genova
Como
Brescia
BergamoBariPadova
Cuneo
Venezia
0%
5%
10%
15%
20%
25%
30%
35%
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%
Potential PB Financial Assets (%)
Fore
ign
orS
peci
alis
ed P
laye
rsin
the
prov
ince
s(%
on
29pl
ayer
s ta
ken
into
acco
unt)
Udine
Cremona
R.Emilia
Novara
Milano (96.6%)
Roma (82.2%)
Torino (34.5%)
Bologna (44.8%)
VS Foreign players:
VS National domestic players:
VS Local domestic players:
23
1H03 RESULTS FULLY CONSISTENT WITH THE PLAN TARGETS; ING PROVIDING ADDITIONAL SALES CAPACITY AND PERFECTLY FITTING WITH THE COMPANY STRATEGY
(1) Pro-forma including data of “former Xelion”, UniCredit Banca and OnBanca(2) Among top-players for Total AUMs as at 30.6.2003; 5th taking into account all the Italian players(3) AM Products: Mutual Funds + Sicav + Segregated Accounts + Insurance products
Total Fin. Assets
31.12.2002Pro-forma1
30.6.2003
4,883 5,988
+23%~9,600
30.6.2003 Pro-forma with ING
ING
(Euro mln) Total Financial Assets 23% up vs 31.12.2002
Weight of AM products3 from 70.5% as at end of March to 71.1% as at end of June (+68 bp)
ING ADDS: ~Euro 3.6 bn Financial Assets (of which more than 90% in AM
products3), making Xelion the 5th asset gatherer in Italy by Fin. Assets
PFAs
31.12.2002Pro-forma1
30.6.2003
1,833 1,610
-223
~2,360
30.6.2003 Pro-forma with ING
ING
Streamlining of the Network:
750 PFAs, reinforcing Xelion’s 5th position among Italian PFAs networks
ING ADDS:
Exit of “marginal” PFAs (Euro 1.36 mln Average Tot. Financial Assets of lost PFAs)
Recruitment of 125 new PFAs, generating on average Euro 2.9 mln net sales in 1H03
Net Sales
1H02Pro-forma1
1H03
5701,008
+77%
1H03Pro-forma with ING
ING~1,300
(Euro mln)
Net sales 77% up YoY, ranking Xelion 1st in Italy for Total Net Sales in 1H03 (around 15% market share) and 2nd for Net sales per PFA2
Improving QoQ trend (Euro 521 mln in 2Q vs Euro 487 mln in 1Q), with increasing weight of AM products3 (83.2% in 2Q vs 67.8% in 1Q)
ING ADDS:
Important additional sales capacity (~Euro 300 mln in 1H03)
Fin. Assets per PFA (Euro mln)
2.7 3.7~4.1
24
STRONG NET SALES, TOP-CLASS PERFORMANCESAND FOCUS ON HIGH VALUE ALTERNATIVE INVESTMENTS: THREE MILESTONES TO MEET THE PLAN TARGETS
1 Including Momentum2 Data already included in the other business areas3 Oak Ridge Large Cap Equity Fund (5 stars from Morningstar) and Oak Ridge Small Cap Equity Fund (4 stars from Morningstar)
(Euro mln)
Alternative Investments2 470
2003 Net Sales
(Jan-Aug)
2,064
Total AuMs as of
31.08.2003
Italy 2,327 85,351 +5.7
TOTAL PIONEER 6,767 114,870 +10.8
+36.1
International (ex-Italy)1 996 5,064 +35.4
% Ch. of AuMs on
31.12.2002
906 2,413 +58.4New Europe
US
US in USD
2,538
2,819
22,042
24.085
+24.8
+30.0
Standard and Poor's Fund Rankings 2002 – Funds sold in Europe
(Number of funds of different categories with top 10 rankings by Asset Manager)
0123456789
10
JP M
org
an
PIO
NE
ER
UB
S
Fid
elit
y
Mer
rill
Lyn
ch
Dex
ia
Pic
tet
Vo
nto
bel
Tem
ple
ton
AX
A
Cre
dit
Su
isse
Cre
dit
Ag
rico
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BN
P P
arib
as
Ru
ssel
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ING
Bar
ing
Excellent +36.1% growth of Hedge Funds vs Dec. 2002, with increased weight on Total AUMs (1.8% vs 1.5% as at Dec. 2002) in line with the plan growth path (3.6% as at year end 2006)
Acquisition from Oak Ridge Investments of 2 growth funds totalling around USD 24 mln and with high Morningstar ratings3, in order to complete the product range adding 2 quality growth funds to Pioneer’s strong reputation in value funds
~11% AUMs growth in the first 8 months of 2003, in line with the plan target (+12% 2003-2006 CAGR)
77
2003 Perf. effect
(Jan-Aug)
2,265
4,415
327
-16
1,839
2,741
25
AGENDA
Group Highlights
Divisional overview
Private & Asset Management Division
New Europe Division
Corporate Division
Retail Division
26
GROWTH LEVERAGING ON THE OPPORTUNITY OF AN UNDERPENETRATED BANKING SYSTEM AND ON UCI’S EXPERIENCE
CLEAR LEADER BANKS1: profitability growth and consolidation of existing position
RISING LEADER BANKS2: quick and healthy market share growth
Focus on most profitable (golden) customer base: Private, Affluent and Small Business through offer of new value added products (i.e. AUM) to existing clients and new customer acquisition
Selective approach for Large Corporate (except Bulgaria); cost control and cross-selling for mass market; no significant customer base increase is expected
Aggressive new customer acquisition campaigns for both Retail and Corporate through enlargement of golden customer base with final goal of being in the “top 5” of the market
Development of a common advanced product shelf, creation of joint factories and implementation of tailored segment service models supported by homogeneous IT systems and applications
Future growth driven mainly by organic growth (with some potential acquisitions)
Positive gap of New Europe in terms of GDP growth, compared to EU market, both in the recent past and in the forthcoming period
Different strategic focus with:
1 Pekao, Zaba and Bulbank2 UniBanka, KFS, UCR and Zivno
Improvement in risk management and efficiency
27
UCI IS PRESENT IN MAJOR NE COUNTRIES WITH SIGNIFICANT SCOPE FOR GROWTH IN A STILL UNDERDEVELOPED RETAIL MARKET
Weight of country’s GDP on Total NE area
GDP in 2002 (%)
27.4Turkey
10.0Hungary
10.5Czech Rep.
3.6Slovakia
3.3Slovenia
3.4Croatia
28.3Poland
Leading position of UCI in Poland, main country in NE area for GDP
GDP growth in NE +4.6% (cagr 03-06)
1 Poland, Croatia, Hungary, Estonia, Slovenia, Czech Rep. Turkey, Latvia, Bulgaria, Romania, Slovakia, Lithuania
2 2001 figures
Share loans retail over total loans
(Loans+Deposits)/GDP Cards per ths inhabitants2
66%
224%
NewEurope1EU
52%
EU NewEurope1
29%
1,280
EUNew
Europe1
349
BANKING PENETRATION in 2002
Mortgages and consumer credit expected to be the key retail products
Lower weight of Asset Management, expected to partially substitute deposits
45.0
UCI’s 3 Italian Banks
UCI’s NE banks
34.8
Non Interest Income/Total revenues in 1H03 (%)
Life Insuran.
Pension Funds
Mutual Funds
Retail Bank Deposits 43%
14%
14%
29%
EU3
87%
5%4%
4%
New Europe4
Breakdown of retail financial assets
3 2001 data considering France, Germany, Italy, Spain and UK as proxy for EU
4 Countries with UCI’s presence
2.4Bulgaria
Romania 6.8
4.3Baltics5
702NE GDP (bn)
5 Lithuania, Latvia, Estonia
28
To extend financial product offer in order to guarantee portfolio diversification
To introduce product innovation in order to meet customer needs in term of security and yield
To complete financial products offer with a segmented insurance offer with a particular focus on Life insurance
STRENGTHENED SYNERGIES WITH INVESTMENT AND INSURANCE PRODUCT PROVIDERS IN NEW EUROPE
Mission Activities
Pioneer market leader in Poland with around 25% market share
Bulbank first bank to distribute foreign mutual funds in Bulgaria
Distribution or advisory agreements in place or under discussion (UCR and KOC) with NE Banks and group local Asset Managers
TLAB - UBM
Launch of structured TD (capital and minimum yield guaranteed) in Pekao, Unibanka and Zaba and negotiations in progress in the other Banks (Bulbank and Koc)
Innovative product launched with strong success in different forms (also linked to Pioneer funds)
PIONEER
BANCASSURANCE Pekao best life
insurance seller in Poland thanks to the Unit linked products
Pre-joint venture agreement in Poland (with Pioneer asset manager) and distribution agreements for life and non life products in place (Unibanka, Bulbank, Zaba, Koc) or under discussion in the other Banks
29
44.0%
SUCCESSFUL ACHIEVEMENT IN THE FIRST HALF 2003 WITH HIGH GROWTH IN AUM AND DECREASED COST OF RISK
VOLUMES (at unchanged FX)
Assets under Management1 (Euro bn)
1 New Europe business area of Pioneer
Dec02 1H03
2.01.5
+34.4%
BP target
Higher Gross Loans on Deposits ratio to 67.2% in 1H03 (from 58.4% in 2002) well on track to achieve 2006 target (72.7%)
3 KFS 100%
2 Excluding the impact of 2002 extraordinary provisions
1882
158
DECREASING COST OF RISK:Net Provisions/Net Loans (bp)
Employees3
28,18831,006 30,128
119
2002 1H03 2006
COST OF RISK AND EFFICIENCY
2002 1H03 2006
14.8%
Gross Loans (Euro bn)
Dec02 1H03
14.113.8
+2.4%
CAGR 02-06
8.7%
Deposits (Euro bn)
Dec02 1H03
21.021.1
-0.5%
CAGR 02-06
CAGR 02-06
2006 REVENUE TARGETS
TOTAL REVENUES: +8.8%
(cagr 02-06)
Corporate
17.7%
Retail
11.3%