Transcript new europe - UniCredit

UCI Portfolio Strategy:
Focus on New Europe
Alessandro Profumo - CEO
2nd UCI INVESTOR DAY
Focus on New Europe
London, December 5th, 2002
2nd UCI INVESTOR DAY – FOCUS ON NEW EUROPE:
TODAY’S AGENDA
UCI Portfolio Strategy: Focus on New Europe
A. Profumo – UCI CEO
Strategy and Organisation of NE Division
R. Nicastro – UCI Head of New Europe Division
EU Enlargement: Implications for existing and future
EU member countries
F. Pissarides – EBRD, Senior Economist
New Europe Banks: Rising Leaders
J. Kunert – Unibanka CEO
B. Karacam – KFS CEO
New Europe Banks: Clear Leaders
F. Lukovic – ZABA CEO
L. Hampartzoumian – Bulbank CEO
M. Wisniewska – Pekao CEO
2
KEY HIGHLIGHTS
 UCI has diversified in many different businesses and geographies
according to a defined portfolio strategy in order to exploit all the
opportunities deriving from high potential segments/areas. UCI’s
organisational structure has been developed accordingly
 UCI has found a “second home market” in New Europe, with high
growth perspectives and declining risks also thanks to EU
convergence
 In 3 years we have acquired a leading position in the region, being
present in 8 countries, serving more than 7 million clients and
becoming soon leaders as for profitability and efficiency
 New Europe has increasingly contributed to UCI Group’s revenue
(and risk) diversification, showing very good results in terms of value
creation, RARORAC and ROI
 Today all the banks are managed according to the Group’s standards,
leveraging on cross-fertilisation. The management team is our Key
Success Factor
3
UCI DIVERSIFIED IN THE RIGHT BUSINESSES AND
GEOGRAPHIES AND THERE IS STILL A SIGNIFICANT
POTENTIAL TO BE EXPLOITED
= Euro 250 mln revenues
Leverage on synergies and or
acquire capabilities of best owner
COMPARISON
CRITERIA
 Value creation of
current operations
 Value creation of new
investments/options
+
Consumer Finance
UBM
VALUE
CREATION
POTENTIAL
Private Banking
Asset Management
Asset Gathering
Retail
New Europe
Do not
invest
further
and/or
free up
capital
allocate
d
Corporate
UNDERSTAND
CURRENT AND
POTENTIAL VALUE
CREATION FROM
EACH BU
-
Cannot
Can add
add value
value
Non natural owner
-
COMPARISON
CRITERIA
Push
growth
limits/
allocate
additiona
l
resources
Natural owner
RELATIVE CAPACITY TO EXTRACT VALUE
 Relative/absolute market share
 Historical track record of returns
 Synergies among businesses
+
IDENTIFY DEGREE OF NATURAL
OWNERSHIP OF EACH BU IN
ITS RELEVANT MARKET
4
THE NEW ORGANIZATIONAL STRUCTURE HAS
BEEN DESIGNED TO EXPLOIT ALL THE EXISTING
BUSINESS POTENTIAL AND TO DRIVE FUTURE
GROWTH
Consumer
Finance
Retail
UBM
Private Banking
Asset Management
Asset Gathering
New
Europe
Corporate
UCI
Corporate
division
Retail
division
Retail
Bank
Corporate
bank
Private
bank
TradingLab
UBM
Pioneer
Clarima(1)
Adalya(2)
(1)
Consumer Finance
(2)
Private &
AM division
Retail mortgages
(3)
BMC(3
New Europe
division
New Europe
Banks
Xelion
)
Locat(4)
M/l term corporate financing
(4)
Leasing
5
MAY 2004 / 2007: HOW EUROPE WILL LOOK LIKE
EU
27
Year 2001 data
New
Europe
Total
377
174
551
9,006
627
9,633
3,472
17,482
EU
(1)
Population, mln
GDP, Euro bn
Per Capita GDP, Euro 23,885
Loans, Euro bn
8,559
167
8,726
Deposits, Euro bn
9,773
288
10,061
72.6
195%
Loans + Dep. /GDP %
(1) Including Croatia and Turkey and excluding Malta and Cyprus
203%
6
NEW EUROPE IS OUR SECOND HOME MARKET…
Value creation
potential
NEW EUROPE:
2001 RARORAC: 6.3%
01-05 REVENUE GROWTH: 9.4%
High
potential
New Europe
Low
potential
Cannot
add value
Can
add value
Non-natural
owner
Natural
owner
VALUE CREATION OPPORTUNITY
 Attractive but volatile (especially in the short term)
growth, strong increasing RARORAC
 Second wave of consolidation likely to happen also
due to marginal presence of some foreign players
 EU Convergence can improve value further
BEST OWNERSHIP/SYNERGIES
 UCI has the largest position in the region ...
 ... and the best performance in terms of efficiency
and profitability
 Cross fertilization of business models and product
offering already effective
 New Europe platform can be leveraged for
specialized businesses and product factory
integration
 Long term option for cross-country integration
(e.g. IT/OPS)
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… WITH HIGH GROWTH PERSPECTIVES AND
DECLINING RISK
 Abundant growth expected:
 GDP and banking sector growth
 Plenty of economies of
scope/know-how transfer
opportunities
Higher
growth
perspectives
 Favourable tax environments
 Italian driven corporate business
 Reasonable and further declining
economic & political risk
 Already different from other
Emerging Markets areas
 Perspective entry into EU and EMU
guarantees a predetermined
convergence path
Cost of
equity
8
WE HAVE ACQUIRED AN IMPORTANT PRESENCE
IN NEW EUROPE …
Pekao - Poland
UniBanka - Slovakia
53.2% acquired in May 1999
72.4% acquired in October 2000
Warsaw
Prague
Bratislava
Zagrebacka Group
-Croatia & Bosnia
Herzegovina
UniCredit – Romania
Zagreb
82.5% acquired in May 2002
Bucarest
Sofia
82.0% acquired in March 2002
Istanbul
Bulbank - Bulgaria
85.2% acquired in October 2000
Zivnostenka
- Czech Rep.
KFS - Turkey
85.2% to be acquired in Dec 2002
50% acquired in October 2002
Minor presences: Pekao Ukraine, Pekao Tel Aviv, Koc Azerbaijan, Koc Netherlands
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… BECOMING THE LEADING BANK IN THE
REGION FOR NET PROFIT, TOTAL ASSETS AND
COST/INCOME RATIO
7 millions clients in
8 countries
Data as at Dec. 2001
Total Net Profit (mn Euro)
Pro quota
Total Assets
268
225
HVB
INTESABCI
192
ERSTE(4)
SG
22.3
456
117 146
137
126 (3)
60 97
13 69
33.7 (2)
53%
20 24.0
(3)
26 32.5
149 223
RZB
Cost / Income
Controlled (1)
UCI
KBC
bn Euro
11.1
9.4
Peers’
Average
10.5
71%
10,1
13
21.9
11.1 17.4
(1) Considering 100% of total assets / profit for controlled Companies (stake  50%) and share owned for non controlled companies
(2) Including Koç FS and Zivnostenka (3) Our preliminary estimate (4) Excluding Rijecka Banka
Source: Bankscope
10
DIVERSIFICATION OF REVENUES BY BUSINESS
AND BY GEOGRAPHY IS A KEY SUCCESS FACTOR
TO ENSURE UCI’S GROWTH AND MANAGE THE
RISK PROFILE …
UCI REVENUE COMPOSITION BY BUSINESS AREA
(Net of infra-Group dividends and of Corporate Centre & Elisions negative contribution)
9,317
10,633
7,679
13.7%
16.3%
15.4%
4.6%
4.9%
5.7%
7.9
%
0.2%
mln
mln
mln
New Europe Banking
Asset Management
Investment Banking
2.7%
4.8%
0.2%
New Initiatives
Italian Banking
78.8%
2000
73.2%
2001
71.6%
9M02
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… AND IT WILL SOON INCREASE – AT GROUP & NE
DIVISION LEVEL - THANKS TO NEW ACQUISITIONS
(KFS, UCROMANIA, ZIVNOSTENKA)
NEW EUROPE BANKING TOT. REVENUES Sept.02 – UCI’s PORTION: EURO 897(1) mln
UCROMANIA 1%
(Euro 7 mln)
KFS 16%
(Euro 144 mln)
ZIVNOSTENKA 3%
(Euro 31 mln)
UNIBANKA 2%
(Euro 22 mln)
BULBANK 6%
(Euro 49 mln)
GROUP PEKAO 51%
(Euro 457 mln)
ZAGREBACKA 21%
(Euro 187 mln)
(1) Pro-forma calculation. Pekao, Zaba, Bulbank, Unibanka, UCRomania – ItAS; KFS and Zivno IAS Sept. 2002
12
9M02 RESULTS CONFIRMED ONCE AGAIN THE
GROUP’S ABILITY TO CREATE VALUE, WITH A
GOOD CONTRIBUTION FROM NEW EUROPE …
NOPAT
Risk taken(1)
Adj NET
INCOME
CAPITAL
ABSORPTION
VALUE
CREATION
RARORAC
(a)
(Euro mln)
Value added
per unit of
risk taken
Shareholder’s
value added
(b)
(c) =(a)-COE(2)
(c)/(b)
%
MARGINAL
RARORAC
%
Group total(3)
1,367
8,874
695
10.5
13.2
Italian banking
1,326
6,189
907
19.5
19.7
Wholesale banking
253
804
121
20.1
49.6
New Europe banking
131
913
60
8.8
17.5
New Initiatives
-59
12
-62
n.s.
n.s.
(1)
(2)
(3)
Minimum regulatory capital, market risks, credit risks and operational risks
The Cost of Equity is related to the capital employed (Net equity for the Group and allocated capital for the business units)
Balance due to Corporate Center and Other companies, respectively -284 for Adjusted Net Income, 956 for Capital absorption and -331 for
Value Creation
13
…. WHERE ACQUISITIONS ARE QUICKLY
REWARDING THE INVESTMENT
(Euro mln)
UCI’S Total
Investment(1)
Banks
NE Division
(2)
Pekao
Bulbank
Unibanka
Zaba(4)
Splitska Banka
(1)
(2)
(3)
(4)
Sept. 2002
MARGINAL
RARORAC
2002 ROI
Years of full
UCI
management
11.3%
2
2,148
17.5%
1,205
9.9%
10%
3
242
43.6%
14%
2
65
34.1%
6.2%
2
614
23.2%
14%
1
19%(3)
2
59
N.a.
Calculated including acquisition price and further capital increase and deducting capital gains from sales of minority stakes and
extraordinary dividends. Total NE Division excluding Splitska Banka
Sept. 2002 data for Marginal Rarorac; Weighted Average for 2002 ROI (excluding Splitska); simple average for years of full UCI
management (including Splitska)
Excluding gross impact of Euro 34 mln from capital gain on Splitska sale (realised in 2002)
14
Figures based on current 82.47% stake finalised in 2002
THE TEAM IS OUR KEY SUCCESS FACTOR
PEKAO
UCI – NE DIVISION
R. Nicastro (Head of Division)
 PLANNING & DEVELOPMENT
M. Moi
ZABA
M. Wisniewska P. Fiorentino
(CEO)
(Dep. CEO)
F. Lukovic
(CEO)
Hampartzoumian
(CEO)
BULBANK
 RETAIL BANKING
J. Kunert
(CEO)
C. Burberi
UNIBANKA
 CORPORATE BANKING
A. Steinbichler
UCI ROMANIA
 CREDIT RISK PROCESSES
G. Vovk
KFS
 IT & ORGANISATION
F. Pusateri
ZIVNO
A. Decio
(Dep. CEO)
L. Lovaglio
(Dep. CEO)
A. Casini
(Dep. CEO)
S. Saldirak
(CEO)
B. Karacam
(CEO)
F. Ghizzoni
K. Kaya
(Dep. CEOs)
M. Minolfi
(Dep. CEO)
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