2
AGENDA
Poland macroeconomic and banking sector scenario
The creation of New Pekao
New Pekao strategic initiatives
Strategy for Ukraine
Closing remarks
3Source: UniCredit-NE Research Network(1) CEE 16 aggregate includes PL, HU, CZ, SK, SI, EE, LV,LIT, HR, BG, RO, TK, RU, Serbia, BiH
and UA
BIGGEST NEW EU MEMBER WITH STRONG ECONOMIC GROWTH DRIVEN BY INVESTMENTS AND CONSUMPTION
GDP per capitaEUR ths
Investment growth (29% Y/Y)FDI standing for 4.4% of GDP in 2006EU funds earmarked for Poland in 2007-2013 reaching 67 EUR bn
Personal consumptionRapidly decreasing unemployment rate (from 18.2% in 05.2005 to 13.0% in 05.2007)Dynamically growing wages (10% increase in 2007 expected)
EURO 2012 triggering further acceleration in investment
... driven by:
Poland
Eurozone
Strong GDP growth
5.4
4.7
2.1
1.42003-06
2007F-09F
GDP avg. growth%
New EU MembersPoland
GDP per capita below EU average
Good risk profile:A-/Stable by S&P;
A2/Stable by Moody’s
Biggest New EU Member
Population
7.15.2
27.7
PolandEU 15 CEE 16(1)
62% 38%
4
LOW BANKING PENETRATION DRIVING FUTURE GROWTH – RETAIL TO DELIVER MOST OPPORTUNITIES
+x% CAGR ’06-’09Note: Data provided by CEE Division Macroeconomic Department
Banking penetration
EurozonePoland
Retail banking
Corporate banking
+22%
SAVINGSLOANS
Total volume EUR bn
Total volume EUR bn
11%
Mutual FundsDeposits
Total volume EUR bn
Total volume EUR bn
DEPOSITSLOANS
+12%
Strong growth of asset managementIncreasing demand forconsumer and mortgageloansBoost in SME lendingHigh demand for e-bankingsolutions
Further development of cash management and FX transactionsIncreasing role of capital market in corporate financing (eg. Syndicated loans)
2006 figures
90
49
2006 2009
2541
66
123
2006
82
2009
91
4533
2006 2009
5137
20092006
97
6838
AuM/GDPMortgage/GDP
4134
96119
Deposits/GDP
Loans/GDP
+11%
5
AGENDA
Poland macroeconomic and banking sector scenario
The creation of New Pekao
New Pekao strategic initiatives
Strategy for Ukraine
Closing remarks
6
BPH SPIN-OFF STRONGLY CONTRIBUTING TO THE NEW PEKAO
SPIN-OFF ASSETS TO BE MERGED WITH PEKAO
Corporate business with customers
Corporate
TreasuryOnly limited ALM and Treasury functions to maximize synergies generation
IT and Operations supportOperational systems and staff selected across divisions to ensure functioning of both new Pekao and new BPH without any disruption to customersLimited cost of restructuring required after the merge
PROCESS RUN BY ESTABLISHED MANAGEMENT TEAM
Retail285 retail branches, with employees and customersNo need to close overlapping branches after the deal~350 partner agencies
Part of BPH to be merged with Pekao
7
INTEGRATION ON TRACK, WITH SUCCESSFUL ACHIEVEMENTS
Management structure and senior team defined combining key talents
Refined business model leveraging best practices
Enhanced IT platform beyond combined service levels
Strong business focus maintained: very limited customer and employee churn
After spin-off announcement(2)
0.41%
Before spin-off announcement(1)
0.48%
After spin-off announcement(2)
0.73%0.76%
Before spin-off announcement(1)
(1) Monthly average of period April 2005 – March 2006(2) Monthly average of period April 2006 – March 2007
ACHIEVEMENTS SO FAR
Legal integration/spin-off of BPH 285:Operational integration:
~30 days after regulatory approval
Up to 6 months after the legal integration
RETAINED TALENTS
Turnover of employees of both banks %
RETAINED CLIENTS
Churn of customer accounts%
8
NEW PEKAO WILL BECOME TOP BANK IN POLAND
Source: Companies Annual Report
(1) Deposits + Mutual funds managed by entities in Group(2) Nominal value: Net loans
30.7New Pekao
23.9PKO BP
13.4ING BSK
10.8BZ WBK
6.4Citibank
16.4New Pekao
15.5PKO BP
6.2BRE Bank
4.8BZ WBK
4.1Bank Millennium
1,239PKO BP
1,067New Pekao SA
384BZ WBK
379Bank Millennium
359Kredyt Bank
NOTE: December 2006
Customer funds(1)
EUR blnLoans(2)
EUR bln# of Branches
9
AGENDA
Poland macroeconomic and banking sector scenario
The creation of New Pekao
New Pekao strategic initiatives
Strategy for Ukraine
Closing remarks
10
LEVERAGING COMPLEMENTARY BEST PRACTICES…
Customer retention and cross selling capabilities
Leadership in Asset Management
Effective cost and risk management
Leading commercial network
STRENGTHS of PEKAO
Customer acquisition capabilities
Leadership in fee based services for Corporate customers
Advanced MIS and sales management tools
STRENGTHS of BPH
11
Driving both, customer acquisition and cross-selling, based on innovative products/services in most attractive segments:
Retail family by focusing on mortgages & consumer loansAffluent by enhancing the advisory proposition & investment products SMEs by further improving service and loans processesCorporate by combining financing and transactional capabilities
Best practice in cost management
IT platform enhancement supporting offer enrichment
Leveraging strongest distribution reach with multi-channel approach: Offering nationwide physical network (branches and ATMs)Further developing multi-channel platform
…ACCELERATING NEW PEKAO FOR GROWTH
STRATEGIC INITIATIVES
12
RETAIL FAMILY: FOCUS ON MORTGAGES AND CONSUMER LOANS LEVERAGING UCI’S PRODUCT FACTORIES
Results so far (Old Pekao) Key actions, products & services
Mortgage sales volume, EUR mn
681
204
2003 2006
CAGR 2006-09:
+26%
Expected market growth
MORTGAGES
Consumer loans sales volume, EUR mn
2003 2006
CAGR 2006-09:
+19%
CONSUMER LOANS
539
60
Mortgage as acquisition tool
Product enhancement to exploit market shift towards zloty; no FX mortgages
Strengthening of largest mortgage advisors network and 3rd party channels
Next generation process improvement
Capture cross-selling potential combining best from both banksTap non-captive customers through customized products and intense marketingEnrichment of tailored insurance as attractive packages
13
Results so far (Old Pekao) Key actions, products & servicesExpected market growth
RETAIL AFFLUENT/SME: ENHANCE THE ADVISORY PROPOSITION & INVESTMENT PRODUCTS; FURTHER IMPROVE SME SERVICES AND LOANS
CAGR 2006-09:
+23%
AUMMutual funds stock, EUR bn
6.1
2.6
20062003
Further diversification of product range (e.g. international funds or alternative assets)
Enhancement of asset allocation tools reducing advisor portfolios
Stepping up cross-sell with particular focus on BPH
Enlargement of customer base through ~50 dedicated hunters New dedicated e-platform, allowing easy remote bankingShortened and simplified credit process Strengthening joint service model for affluent business owners
CAGR 2006-09:
+13%
SME loans volume, EUR mn
478426
20062003
SMEs LOANS
14
Results so far (Old Pekao) Key actions, products & servicesExpected market growth
CORPORATE: COMBINE FINANCING AND TRANSACTIONAL CAPABILITIES
6.84.7
(1) Source: Global Revenue and Value Pool
CAGR 2006-09:
+11%
LOANSLoans volume, EUR bn
20062003
CAGR 2006-09(1):
+13%
No of customers, ths
20062003
TRANSACTIONAL SERVICES
Service model with single point of entry and multilevel relationship
Best product offering based on both banks best practices (e.g. Multioption line)
Advanced functionalities of supporting systems and tools (e.g. MIS with profitability by product/ customer)
Leverage BPH expertise in transactional products (liquidity management and x-border pooling)
Implementation of advanced CRM system to ensure successful cross selling of value added products
Enhanced internet based trade finance and transactions products
7.810.4
15
STRONG NATIONWIDE PRESENCE – ROOM FOR FURTHER EXPANSION IN SELECTED REGIONS
(1) Including only Banking Branches
N° of branches
Geographic presence: 1,067(1) branches and the biggest network of 2,716(2) ATMs
N°1 in branch market share
32
26
35
66
50
7120
1981
108
26
7788
222
57
89
N°2 in branch market share
N°3 in branch market share
N°4 in branch market share
(2) Including Euronet ATMs
16
IT PLATFORM ENHANCEMENT SUPPORTING OFFER ENRICHMENT
Integration of the brokerage system allowing for the introduction of security products sales in branches and via internet platform
Introduction of an enhanced automatic scoring system for SMEs allowing for strengthened and simplified credit decisions
Introduction of integrated performance management tool allowing for deep profitability overview: by product, customer, portfolio
Key initiatives
17
Bottom-up synergies: 60 EUR mn in 2009
AS % OF COST SYNERGIES
Communication, IT and Businessmaintenance
Increased centralization of back-office functionsFurther automation and redesign of processes (e.g. standardization of ATMs network management)
29%
External services
Economies of scale in purchasing, capturing volume discountsElimination of projects duplication(e.g. integration of the call centers solutions)
33%
Real estate,security, travel
Centralization of facilities management functionsFloor space optimization
27%
Fixed assets Divestiture of underutilized assets(e.g. reducing the car fleet) 11%
MAIN INITIATIVESKEY SAVINGS AREAS
BEST PRACTICE IN COST MANAGEMENT
18
AGENDA
Poland macroeconomic and banking sector scenario
The creation of New Pekao
New Pekao strategic initiatives
Strategy for Ukraine
Closing remarks
19
UKRAINE – HUGE, FAST GROWING AND UNDERSERVED MARKET
Low labor cost, attracting foreign investments
Low penetrationvs. EU and Poland, with significant room for growth in all products
Manageable riskreflected in ratings S&P BB-, Moody’s B1
With strong GDP growth…%
Huge market2006
GDP per capitaThs EUR
1.85.2
27.7
EU 15 CEE(1) Ukraine
Very promising outlook
Source: UniCredit-NE Research Network(1) Data as of December 31, 2006
47
389381
CEE 16(1) UkraineEU 15
Population Mln
… and banking low market penetration(1)
%
Ukraine
Eurozone1.4
5.7
7.9
2.12007F-09F(avg)
2003-06(avg)
3446
96119
Deposits/GDP
Loans/GDP
Ukraine
Eurozone
20
STRATEGY FOR UKRAINE: MERGER OF GREENFIELD START-UP AND HVB FOLLOWING AN AMBITIOUS DEVELOPMENT PLAN
MERGER FOR GROWTH STARTING IN 2007
Top 15 Ukrainian bank setting the basis for future ambitious growth
New Bank
Total assets: EUR mln 169
Total loans: EUR mln 52
Number of clients: 16,700
Number of branches: 24
Total assets: EUR mln 454
Total loans: EUR mln 344
Number of clients: 946 (2)
Number of branches: 6
UniCredit Bank – a greenfield retail bank (1) HVB Ukraine – a corporate bank (1)
(1) Data as of end of April 2007(2) Only Corporate Clients
21
THE RETAIL GREENFIELD VENTURE
Kyiv
Odesa
DnipropetrovskDonetsk
Kharkiv
MariupolMykolaiv
Lutsk
Implementation of Greenfield Retail operationswith currently 24 branches
Full operational platform created from scratch
Integrated IT platform
Designed processes and established central back office, including call center
Standardized branch model designed to international standard
Core team recruited
Management team, almost entirely Ukrainian
Over 440 staff hired and trained
UniCredit Bank brand successfully launched
Merger with HVB Ukraine in its final stage
Key Achievements to date
22
UKRAINIAN BANK STRATEGY
RETAIL BUSINESS CORPORATE BUSINESS
Open 160 branches in two years reaching country-wide presence till 2008
Leverage UniCredit Group know-how and expertise in Retail
Develop a wide range of lending products, leveraging credit cards(including gold/platinum cards)
Increase product sales: current accounts with ATM debit cards, savings plans and term deposits (both local and foreign currency)
Ensure selective growth in mid-cap market
Leverage international network of the Group
Develop best practice transactional services and trade finance products
23
AGENDA
Poland macroeconomic and banking sector scenario
The creation of New Pekao
New Pekao strategic initiatives
Strategy for Ukraine
Closing remarks
24
LEVERAGING ON PEKAO’S SUCCESSFUL TRACK RECORD ...
ROE (%) C/I (%) EPS (EUR)
13.1
2003
21.1
2006
56.7
2003
50.3
2006
2.8
1.4
2003 2006
+26%
Market capitalizationEUR bn
4.7
2003
6.0
2004
7.6
2005
9.8
2006
11.1
1Q’07
+27%
+x% CAGR ’03-’06
25
... ACCELERATING GROWTH COMBINING BEST PRACTICES AND EXPLOITING HEALTHY ENVIRONMENT
Attractive macroeconomic perspectives with solid country risk profile
Expansion in Ukraine as second home market
Ready for integration: ambitious management team, waiting for regulatory approval
Aspirational growth initiatives combining joint strengths in attractive segments:Retail family by focusing on mortgages & consumer loansAffluent by enhancing the advisory proposition and investment productsSMEs by further improving service and loans processesCorporate by combining financing and transactional capabilities