luca majocchi uci group deputy ceo goldman sachs european financials conference 2002 venice, june 10...
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Luca MajocchiUCI Group Deputy CEO
Goldman Sachs European Financials Conference 2002
Venice, June 10th-12st 2002
IS GROWING IN RETAIL FINANCIAL SERVICES A SINGLE PATH
STRATEGY ?
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Growth opportunities of the European retail business “gameboard”
UCI’s portfolio strategy for retail growth
Conclusions
Agenda
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PERFORMANCE FORECAST OF EUROPEAN BANKS SEES A SLOWDOWN OF RETAIL EARNINGS GROWTH RATE
Performance forecast for European financial playersPercent
REVENUE Y/Y GROWTH (2002 on 2001)
7.7
5.7
8.8
7.6
13.8
9.7
19.3
12.2
Supra-regionals
Retail
Investment services
Wholesale
Source: UBS Warburg
GROSS OPERATING PROFIT Y/Y GROWTH (2002 on 2001)
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WHILE RETAIL GROWTH AT EUROPEAN LEVEL MIGHT BE AN ISSUE, SIGNIFICANT DIFFERENCES EXIST BY COUNTRY
Growth of retail revenue pool by countryCumulated growth 2000-2005, Percent
France Germany Italy UK SpainAverage
Core Europe
New Europe
25%
31%
37% 39%42%
35%
58%
765
795
585 950510
Revenues/Inhabitants (Euro, 2000)
UCI Presence
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Germany
France
Spain
Italy
UK
IN CORE EUROPE SIZE OF RETAIL REVENUE POOL APPEARS TO BE RELATED TO COUNTRY-SPECIFIC STAGE OF INDUSTRY EVOLUTION
Financial industry concentration and revenue pool by country
4.00
2.75
30 75
Size of revenue pool (20 Euro bn)
TOP 5 PLAYERS MARKET SHARE BY ASSETS (Percent)
FIN
AN
CIA
L S
ER
VIC
ES
R
EV
EN
UE/G
DP
(P
erc
en
t)
POTENTIAL
IN BETWEEN
MATURE
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IN ITALY, DUE TO WIDESPREAD USE OF FEDERAL MODELS, LEADING PLAYERS ARE FEWER (AND SMALLER) THAN WHAT CONSOLIDATED FIGURES SHOW
IntesaBCI Group
Sanpaolo IMI Group (incl. Cardine)
UCI Group
B. di Roma Group (incl. Bipop)
Montepaschi Group
B. Pop. Verona e Novara Group
Antonveneta Group
Banca Lombarda Group
BNL Group
B. Pop. Lodi Group
11.1
10.4
10.1
7.4
6.2
3.9
3.4
2.6
2.5
2.1
UCI Banca*
IntesaBCI SpA
Sanpaolo IMI SpA
Banca di Roma SpA
Banca MPS SpA
Banca Antoniana Pop. Veneta Scrl
Banco di Napoli SpA
BNL SpA
Banco di Sicilia SpA
Banca Pop. di Novara Scrl
UCI
IntesaBCI
Sanpaolo IMI
B. di Roma
MPS
Antonveneta
Sanpaolo IMI
BNL
B. di Roma
BP Verona e Novara
GROUPBranches
mkt share, %
BANK GROUPBranches
mkt share, %
9.7
7.9
4.7
4.1
3.3
3.1
2.5
2.4
2.0
1.8
* Sum of the current 7 banks of UCI Group to be merged July 1st 2002
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RE
CF (ex UK & Ger)
CB
AGAM
OTHER THAN BY COUNTRY, GROWTH AND PROFITABILITY PATTERNS VARY SIGNIFICANTLY ACROSS RETAIL BUSINESS SEGMENTS
Financial services attractiveness in core Europe
CF
14%
2%
-8% 46%RARORAC 2000
REV
EN
UE G
RO
WTH
2001-2
005
= 20 bn revenues
RE= Retail banking (individuals) - Growth and profitability driven by affluent and private asset gathering
AG= Asset Gathering - Single most profitable and growing industry in Europe
CF= Consumer Finance - Heterogeneous growth and spreads between countries
CB= Corporate banking (SMEs) - Attractive growth but negative Rarorac due to lending
AM= Asset management - Strong growth and high Rarorac
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Growth opportunities of the European retail business “gameboard”
UCI’s portfolio strategy for retail growth
Conclusions
Agenda
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UNICREDIT STRATEGY IS TO DEVELOP RETAIL TOP LINE BY GROWING MARKET SHARE ALONG FOUR KEY COMPLEMENTARY DIRECTIONS
UCI GROWTH STRATEGY
Grow top line while keeping leading edge efficiency
Upside in Italian domestic market
Enter new, highly attractive markets
Increase penetration of existing customer base
Improve market coverage by selective branch network expansion/acquisitions
Strengthen leading market positions in new “domestic” markets (Central Europe)
Enter core European countries selectively addressing retail segments
Continue external/ organic growth to strengthen market share
Consolidate position in new Europe and build presence in core Europe
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IN ITALY, ORGANIC GROWTH OPPORTUNITIES EXIST BY BOTH DEVELOPING THE EXISTING CUSTOMER BASE AND GETTING NEW CLIENTS THROUGH NEW SPECIALISED BRANCHES
Equal to 16 bn of incremental assets
Current Average
2004 Targets
Share of wallet increase
Mass affluent & Private Banking
44%
53%
Branch network expansion
UCI market share in Italy, %
>25,000
GDP per capita (Euro)
<20,000
20,000<GDP<25,000
621
32
30
25
24
197
4 12
21
9
6
5
20
96
2
4
3
+9 pp
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ORGANIC GROWTH WILL BE SYSTEMATICALLY COMPARED WITH EXTERNAL GROWTH OPPORTUNITIES
Organic vs. external growth benchmarkingNPV Index per branch
Bank A
47
71
85
119
169
Bank B Bank C Bank D Bank E Bank F
ILLUSTRATIVE
199
Maximum
Minimum
MAKE(Open Branch)
To be decided
BUY(Acquire bank)
Target Bank
Branch opening return range
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36.0
Croatia
4.4
22.9
3.57
0.7
Romania
22.4
41.1
4.35
IN NEW EUROPE AREA, CONSOLIDATION AND CROSS THE BORDER SYNERGIES WILL FOLLOW LAST THREE YEARS OF FRANCHISE BUILDING
Poland
16.4
23.3
3.5
BulgariaSlovakia
UCI position in New Europe (2001)Deposits market share, percent
Inhabitants, mln
GDP, Euro bn
38.6 7.95.4
201.9 15.222.4
GDP CAGR2000-2004, %
2.52
4.20
3.82
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RETAIL & SMES
ASSET GATHERING
CONSUMER FINANCE
CORPORATE BANKING
ASSET MANAGEMENT
UK GER F I SP
"Hot" ”Warm"Retail strategic mapPercent
IN CORE EUROPE, COUNTRY AND PRODUCT DIFFERENCES LEAD TO A STRATEGIC MAP OF RETAIL OPPORTUNITIES
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CROSS THE BORDER AND DOMESTIC TRANSACTIONS WILL BE ABLE TO LEVERAGE TRANSFER OF RETAIL SKILLS THAT UCI ALREADY DEMONSTRATED IN ITALY ...
Performance improvement of UCI Italian Banks1998-2001
UCI saving banks*
95.6%
23.3%
GROSS OPERATING INCOME GROWTH
Italian industry average
UCI saving banks*
38.3%
16.1%
INCOME GROWTH
Italian industry average
UCI saving banks*
0.4%
11.4%
OPERATING COST GROWTH
Italian industry average
* Banca CRT, Cariverona, Cassamarca
Transfer of retail skills (customer segmentation, product innovation, sales management, service models)
Cost control and synergies through centralised operations (IT, back offices, logistics)
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2001/2000 % GROWTH
Pekao
65NET INCOME
-29
Best perf. Pekao
Banking System
Pekao
20
46
NET COMMISSIONS
17
Best perf.BH
BankingSystem
Pekao
7 7
NET INTEREST INCOME
-6Best perf.
Pekao
BankingSystem
Pekao
-4 -4
OVERHEADS COSTS
18
Best perf.Pekao
BankingSystem
65
Bank Pekao performance compared with Polish banking system2000-2001
... AND IN NEW EUROPE
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Growth opportunities of the European retail business “gameboard”
UCI’s portfolio strategy for retail growth
Conclusions
Agenda
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IN SUMMARY .....
The European market is very complex, with different growth perspectives depending on country and business, and UCI strategy is to selectively focus on businesses and countries with the highest potential
Growth will leverage superior retail skills developed in the highly competitive Italian market and our track record is there
Growth will be pursued consistently exploiting all levers of organic and external growth