Transcript Itaú Unibanco Holding SA 5

Itaú Unibanco Holding S.A.
Itaú Unibanco Holding S.A.
FELABAN
CEO Round Table
November 15th 2009
1
Agenda
Itaú Unibanco Holding S.A.
• Perspectives for Latin American Economies
• Banking Markets in Latin America
• Itaú Unibanco's Merger Case
• Itaú Unibanco’s Highlights
2
In recent years, LatAm has been more integrated to the
global economy and has shown higher GDP growth rate
than world´s average
Historical GDP Growth (%yoy)
8
%
Higher integration to global
economy and elevated
international reserves
LatAm’s volatility mostly related to debt
crises
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Itaú Unibanco Holding S.A.
2nd oil crisis
4
2
0
World
(LatAm x World)
CAGR LatAM
Advanced Economies
1980 to 1999
10%
2,5%
Source: IMF
*GDP Growth for 2009/2010 is an IMF estimative
2010
2008
Subprime
crisis
2006
2004
2002
Argentinean
default
2000
1996
1994
1992
1990
1988
1986
1984
1982
1980
-4
Correlation
Asian
crisis
Mexican
crisis
1998
Brazilian
default
-2
Latin America
2000 - 2008
89%
3,8%
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World Growth Forecast - Selected Countries
320
Itaú Unibanco Holding S.A.
GDP (with seasonal adjustment; 1Q/99=100)
260
200
Q1-99
160
Q1-01
Q1-03
Q1-05
Q1-07
Q1-09
Q1-11
China
Brazil
150
Latin America
140
WORLD
130
USA
Euro Area
120
Japan
110
100
Q1-99
Q1-01
Q1-03
Q1-05
Q1-07
Q1-09
Q1-11
4
Latin American Capital Markets have presented
good levels of transparency and disclosure
Itaú Unibanco Holding S.A.
Percentage of LatAm Countries Implementing Reforms
Latin American
countries have
shown important
regulatory
advances during
the last 20
years…
94
88
31
64
63
56
25
100
91
92
62
33
27
15
0
Supervisory
Agency
Creation
Establishment
Custody
Trading Systems Clearing
of Insider
Arrangements
and
Trading Laws
Settlement
Processes
before 1990
by 1995
by 2002
...providing more confidence in the local banking system
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Agenda
Itaú Unibanco Holding S.A.
• Perspectives for Latin American Economies
• Banking Markets in Latin America
• Itaú Unibanco's Merger Case
• Itaú Unibanco’s Highlights
6
Latin American Banks were well poised to
navigate the storm
The system is well capitalized …
… and enjoys high returns
Basel index: Regulatory capital to risk-weighted assets, %, 20081
16.0
15.5
15.3
COL
12.6
12.5
GER
USA
COL
UK
GER
… with low exposure to low quality
mortgage securities
% of GDP, 2006
73.0
50.0
17.0
USA
1 As
SPA
CHI
IND
ROE1
ROA1
5.7
0.6
4.8
0.7
… and with low leverage ratios
Mortgage penetration
6.0
6.2
0.4
RUS
3.0
2.5
BRA
COL
of 1T 2008, except Brazil (Nov 2008), UK (Dec 2007) and Germany (Dec 2006)
Source:IMF – Financial Stability Report Oct. 2008; Bacen; McKinsey Global Banking Pools
Loss in Market Value in
last 12 months
RUS
7.5
0.3
USA
BRA
21.1
2.9
UK
MEX
23.5
2.5
MEX
12.8
25.7
2.7
BRA
13.3
Itaú Unibanco Holding S.A.
Total Assets / Common Equity
0%
-
10
20
30
40
50
60
70
-20%
-40%
-60%
-80%
-100%
Source: Bloomberg - in red, selected Latin American banks
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Latin America presents some structural
opportunities for banking
Itaú Unibanco Holding S.A.
Structural trend towards increasing household income
• in the last 10 years, almost 90 million people had overcome poverty line in Latin
America, which means a greater potential market
Increase access to banking services in Latin America
• on average only 36% of the families have access to banking services
• main barrier: costs of banking services
Increase domestic credit to private sector (% of GDP)
• LatAm average = 38,4% vs Advanced Economies average = 175%
• Focus on loans with “real” collaterals linked to the nature of each productive chain
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Itaú Unibanco Holding S.A.
Opportunities for Banking in Latin America
The positive results experienced in the past few years offer great opportunities:
More than 90 million people had overcome poverty line in Latin America
Number of people that had overcome the poverty line in Latin
America from 1999 to 2007 (million)
Total
Venezuela
Uruguay
Peru
Mexico
Ecuador
Colombia
Chile
Brazil
Bolivia
Argentina
-5
5
15
25
35
45
Source: Wold Bank - Finance for All? Policies and Pitfalls in Expanding Access
55
65
75
85
95
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Opportunities for Banking in Latin America
Access to banking services families with a bank account
Number of Branches per
100.000 in habitants
% of families Average Potential
Chile
Panama
Brazil
Uruguay
Colombia
Ecuador
Bolívia
Paraguay
Costa Rica
Argentina
Venezuela
Peru
Mexico
60
46
43
42
41
35
30
30
29
28
28
26
25
Finland
Germany
France
USA
99
97
96
91
36
60
96
Itaú Unibanco Holding S.A.
Number
Average
Brazil
14,59
Panama
12,87
Argentina 10,01
Costa Rica 9,59
Chile
9,39
Ecuador
9,30
Colombia
8,74
Mexico
7,63
Uruguay
6,39
Venezuela
4,41
Peru
4,17
Bolivia
1,53
8,22
Germany
France
USA
Finland
35,64
Source: Wold Bank - Finance for All? Policies and Pitfalls in Expanding Access
49,41
43,23
30,86
19,06
Potential
27,42
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Itaú Unibanco Holding S.A.
Opportunities for Banking in Latin America
Domestic credit to private sector (% of GDP)
Despite the high growth in recent years, LatAm countries still have
a low credit GDP ratio.
%
200
150
LatAm Countries
100
50
0
USA
Ireland
Japan Netherlands
UK
Spain
South
Africa
China
Australia
South
Korea
France
Belgium
Chile
Brazil*
Colombia
Turkey
Russia Indonesia
Mexico
Peru
Source: Domestic credit to private sector (% of GDP). World Development Indicators 2008, World Bank, except Brasil* - source:
Brazilian Central Bank aug/08.
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Banking Markets
Market Consolidation in Latin America
Itaú Unibanco Holding S.A.
Top 5 Banks - % of Financial System Assets (jun/09)
90,8%
77,40%
78,0%
73,0%
63,7%
50,7%
50,4%
ARG
BRA
CHI
COL
Source: Total Assets: Monthly Financial Report – Felaban (jun/09);
Top 5 Banks: Américaeconomía Intelligence
MEX
PER
VEN
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Agenda
Itaú Unibanco Holding S.A.
• Perspectives for Latin American Economies
• Banking Markets in Latin America
• Itaú Unibanco's Merger Case
• Itaú Unibanco’s Highlights
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Itaú Unibanco's Merger Case
Itaú Unibanco Holding S.A.
The most important issue on the integration of two big
banks is not operational, it is cultural.
A good cultural fit is crucial for success ,not only
among the business leaders of the two companies, but
also among employees.
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Employees: Optimism and commitment to
the merger
Itaú Unibanco Holding S.A.
Employees believe that the merger will be positive and are committed to the process
% which agree entirely/ agree
The merger will create opportunities for my professional
development
86%
92%
87%
Employees are committed to implement the merger
89%
84%
Employees feel they are part of the same team
76%
Employees are receptive in accepting the best ideas of the two
banks
88%
92%
93%
People are receptive in building a new culture
94%
Source: OHI 2009 Survey, (n = 3.854), interview, focus groups; team’s analysis
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Employees: A better bank for all
Itaú Unibanco Holding S.A.
Employees believe that the integration will be positive for them and for the bank...
% which agrees entirely / agrees
Will the merger result in a better bank for all?
Will the merger create better opportunities for my
development?
90
84
... and show their confidence in this future merger
% which agrees entirely / agrees
Do I intend to work here for a long time to come?
Do I believe that management will only cut staff as a last
resort?
89
80
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Source: OHI 2009 Survey, (n = 4,985), GPTW survey, interviews, mini-sessions, focus groups team’s analysis
We have reviewed all HR’s macro processes
Itaú Unibanco Holding S.A.
Concepts
1
Principles
▪ Process of establishing bold goals for 2009 aligned to
Goals
the entire organization
▪ Minimize signs of
hierarchy
2
Evaluation
▪ Strengthen
▪ Evaluation of the officers for the 2008 cycle and for
2009, ensuring homogeneous treatment
meritocracy
▪ Simplify processes
3
Structure
▪ Provide an
environment for
performance
4
Compensation
▪ Focus on
development of
people
5
Benefits
▪ Adjustments made to the organizational structure,
adapting the reality the of the two banks and making
the structure a more responsive one
▪ Definition of compensation models focused on
meritocracy, performance and transparency of the
process
▪ Equalization of the benefits, minimizing exaggerated
signs of hierarchy and unifying policy
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Our Culture has focus on…
Itaú Unibanco Holding S.A.
Meritocracy
Performance (results and growth)
Reward linked to performance, not to
hierarchy
People with attention to the development
of the leaderships
Ethics and transparency
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Highlights: Merger of Itaú Unibanco
Itaú Unibanco Holding S.A.
Enhancing the importance and integration of the teams
Focus on increased penetration in most profitable products and channels
Simplicity: rationalization of processes and products
Cost Reduction / Efficiencies
Risk Control and Governance
Since the beginning of the integration process, the bank has
always been aware of the importance of organizational
environment and the talent retention issues.
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Integration – Concluded Steps
Itaú Unibanco Holding S.A.
• Definition of organizational structure up to middle management ;
• Integration of Corporate, Investment Bank, Broker, Asset Management,
Vehicles, Private Bank and Treasury segments;
• New contracts of Insurance, Pension Plans, Vehicle Financing and Mortgage
– in an unique Itaú Unibanco platform;
• ATMs integration after only 3 months;
• Employees’ external e-mails addresses: @itau-unibanco.com.br;
• Convergence of communication and visual identity for both banks customers;
• Physical change to the final site location (average of 500 employees per week);
• Pilot project of branches integration – started in August 2009;
Expectation of 90% integrated by Dec/10
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Agenda
Itaú Unibanco Holding S.A.
• Perspectives for Latin American Economies
• Banking Markets in Latin America
• Itaú Unibanco's Merger Case
• Itaú Unibanco’s Highlights
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Itaú Unibanco Holding S.A.
Highlights
Values in US$ Billion
3rd Q/09
2nd Q/09
Market
Share*
Ranking
344,4
335,4
22,1%
#1
Individual Loans
55,3
54,3
27,0%
#1
Businesses Loans
82,7
82,1
21,4%
#1
7,2
6,6
Total Deposits
157,2
155,1
23,2%
#1
Asset Under Management
174,5
171,3
27,5
26,6
33,4
18,2
36,3%
#1
3,9
2,6
ROE – annualized (%)
18,9%
22,3%
Efficiency Ratio (%)
41,1%
42,7%
Solvency Ratio (BIS Ratio %)
16,3%
16,5%
Total Assets
Directed Loans
Stockholders Equity
Credit Card Revenue
(accumulated)
Net Income (accumulated)
Brazil
*Refers to the 2nd Q/09 because some banks had not presented their 3rdQ/09 balance sheet and income statement at the moment
this report was finished.
BRL/USD: 1,7781 (Sep/09)
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Highlights
Itaú Unibanco Holding S.A.
3rd Q/09
Employees (individuals)
102,754
Branches* (units)
4,911
ATMs (units)
30,374
Daily served clients and non-clients (million)
2.5**
Credit cards: daily approved transactions (million)
2.9***
* Including CBSs (Customer Site Branches)
** June 2009
*** August 2009
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Itaú Unibanco´s Presence in Latin America
Market Share
Assets
Itaú Unibanco Holding S.A.
Ranking
Paraguay
jun/09
14,1%
Argentina
mar/09
1,2%
Chile
jun/09
3,1%
Uruguay (*)
jun/09
13,7%
3º
16º
• Branches: 206
• Employees: 4.851
9º
• Clients: 1,019 million
• Assets: US$ 9,7 billions
2º
• Net Income: US$ 189 millions
(*) Bank
June/09: ARP$/R$ 1.95 | CLP$/R$ 272 | PYG$/R$ 2.572 | UYP$/R$ 12.05 | R$/US$ 1.9516
Pro Forma Assets as of June 30,2009 and Net Income as of 1H09 multiplied by 2.
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Evolution of Activities Abroad - Latin America
Pro Forma
Total Assets (US$ million)
2005
2006
2007
8,515
9,718
Total Revenue (US$ million)
2006
2007
2009
750
301
2008
921
2009
945
Net Income (US$ million)
2005
367
45
2006
443
83
117
2007
*
2008
672
2007
6,592
2009
2005
559
2006
5,663
2008
Stockholders’ Equity (US$ million)
2005
3,619
615
680*
Itaú Unibanco Holding S.A.
2008
2009
(*) For comparison purposes, the value of 1H09 was multiplied by 2.
All historical values converted into US$ of June 2009. (1.0 US$ - R$ 1.9516)
June/2009: ARP$/R$ 1.95 | CLP$/R$ 272 | PYG$/R$ 2.572 | UYP$/R$ 12.05 | R$/US$ 1.9516
*
152
*
189*
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Highlights
Itaú Unibanco Holding S.A.
Ranking - Market Capitalization
Top 20 Banks – Market Cap
US$ Million
Company
Ranking
11/09/2009
rk
11/02/2009
rk 12/31/2008
D% Week
D% Year
1
IND & COMM BK -A
265.095
1
258.643
1
173.873
2,5%
52,5%
2
CHINA CONST BA-H
210.247
2
204.129
2
128.266
3,0%
63,9%
3
HSBC HLDGS PLC
201.429
3
196.528
4
116.799
2,5%
72,5%
4
JPMORGAN CHASE
174.410
4
167.449
3
117.681
4,2%
48,2%
5
BANK OF CHINA-H
155.170
5
152.155
6
98.190
2,0%
58,0%
6
BANCO SANTANDER
141.693
6
134.664
7
76.159
5,2%
86,0%
7
BANK OF AMERICA
136.436
8
126.573
8
70.648
7,8%
93,1%
8
WELLS FARGO & CO
132.674
7
128.983
5
111.840
2,9%
18,6%
9
ITAU UNIBANCO
102.343
12
89.453
10
48.036
14,4%
113,1%
100.769
9
92.934
17
38.482
8,4%
161,9%
10
BNP PARIBAS
11
CITIGROUP INC
95.800
10
91.227
18
36.566
5,0%
162,0%
12
GOLDMAN SACHS GP*
93.287
11
89.675
16
40.111
4,0%
132,6%
13
COMMONW BK AUSTR
78.571
14
70.321
27
29.960
11,7%
162,3%
14
ROYAL BANK OF CA
75.759
13
71.988
14
41.460
5,2%
82,7%
15
WESTPAC BANKING
71.868
15
67.758
20
34.442
6,1%
108,7%
16
BBVA
69.852
16
67.671
11
45.810
3,2%
52,5%
17
CREDIT SUISS-REG
68.921
17
64.668
24
30.592
6,6%
125,3%
18
BARCLAYS PLC
65.405
19
61.618
40
18.718
6,1%
249,4%
19
BRADESCO
65.388
21
60.814
26
30.177
7,5%
116,7%
20
MITSUBISHI UFJ F
63.413
18
63.058
9
70.308
0,6%
-9,8%
(*) Market Capitalization based on the total number of Itau Unibanco’s shares multiplied by the value of ITUB4
Source: Bloomberg
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