2007. vladimir cupic. banking and leasing in serbia. cee-wirtschaftsforum 2007. forum velden

18
Velden forum | 19.9.2007. | 1 Vladimir Cupic Vorstand/Member of the Board, Hypo Alpe Adria- Bank a.d. Beograd, Serbien/Serbia Bankenmarkt und Leasing in Serbien/Banking and Leasing in Serbia

Upload: forum-velden

Post on 25-Jan-2015

674 views

Category:

Business


1 download

DESCRIPTION

 

TRANSCRIPT

Page 1: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 1

Vladimir CupicVorstand/Member of the Board, Hypo Alpe Adria-Bank

a.d. Beograd,Serbien/Serbia Bankenmarkt und Leasing in Serbien/Banking

and Leasing in Serbia

Page 2: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 2

Banking and Leasing in Serbia

Velden, September 19th 2007

Vladimir Čupić,

Chairman of the Executive Board, Hypo Alpe-Adria-Bank a.d. Beograd,

Serbia

Page 3: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 3

Contents

Part I

Macroeconomic overview

Overview

Part II

Banking sector overview

Sector overview and comparison, M&A

Aggregate balance sheet structure

Aggregate income statement

Market composition, Management, Products

Summary

GDP and growth

Balance of payment and FDI

Credit boom

Inflation and exchange rate

Policy

Fiscal and monetary policy in the coming years

Part III

Leasing

Page 4: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 4

Part I

Macroeconomic overview

Page 5: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 5

Macroeconomic overview I – GDP and growthMacroeconomic overview I – GDP and growth

GDP pc in EUR 2006

EU 27 23.400

Euro area 26.600

Austria 31.100

Slovenia 14.800

Czech Republic 11.100

Hungary 8.900

Croatia 7.700

Romania 4.500

Bulgaria 3.300

Serbia 3.060

Macedonia, F.Y.R. 2.400

2004 2005 2006e Q1 2007f

GDP per capita EUR 2.651 2.837 3.061 3.398

GDP growth (%) 8,4 6,2 5,7 8,8

GDP mil. EUR 19.723 21.108 22.776 25.281

Population mil. 7,44 7,44 7,44 7,44

•High GDP growth continues for 4 years

•Increasing consumption and investments, and lately also warm winter driving GDP growth

•Consumption growing due to increase in wages and credit boom

•Yet, it will take quite some time to reach the level of advanced CEE countries in terms of GDP per capita

•In terms of average wage Serbia is also lagging significantly comparing to neighboring advanced economies

•Services are growing faster than industry, mainly trade (30% in Q1 2007 comparing to Q1 2006)

•Industry grew for 4.7% in 2006 and 4.8% Q1 2007 (highest in traffic, metals, food and beverages, construction, furniture)

•Agriculture had a weak growth of 1,6% in 2006 and is expected to have very bad year due to heavy drought

Average wage, June 2007

645

818

340

0

100

200

300

400

500

600

700

800

900

Croatia Slovenia Serbia

EU

R

Page 6: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 6

Macroeconomic overview II – Balance of Payment and FDIMacroeconomic overview II – Balance of Payment and FDI

Foreign debt

11.378

15.638 15.74012.439

53,2

58,061,8 59,8

-

5.000

10.000

15.000

20.000

2004 2005 2006 H1 2007estimate

mil.

EU

R

485052545658606264

% o

f G

DP

Foreign debt in mil. EURForeign debt in % of GDP

Trade deficit

42,1 39,3 40,6 43,3

1915,220,7 21,611,1

17,6

11,68,6

01020304050

2004 2005 2006 Q1 2007

% o

f G

DP

0

5

10

15

20

% o

f G

DP

Import Export Current account deficit

•Exports are growing more than 30% (annualized) for the last several quarters, but they are still far below imports, causing very high current account deficit

•Investments and foreign markets penetration of the privatized companies, are accelerating exports (main products are iron and steel, colored metals, fruits, vegetables, and cereals)

•Strengthening of domestic and foreign demand is causing surge in imports of intermediary and capital goods (investment cycle starting), alongside with the consumer goods

•Remittances from abroad and privatization income were large enough to cover the widening trade deficit

•Up to 2007, banks’ and companies’ foreign debt were growing in similar percentages, but due to NBS restrictive measures, banks’ debt is now decreasing

•Banks now comprise 23% and companies 38% of overall foreign debt

FDI

7731.248

4.077

617

0

1.000

2.000

3.000

4.000

5.000

2004 2005 2006 Q1 2007

mil.

EU

R

•Foreign debt has risen sharply during last two years

•Public foreign debt comprise more than 75% of overall foreign debt prior to 2004, but now less than 40%

•FDI in Q1 2007 are much larger than in Q1 2006 (164 mil. EUR) but it will be very hard to repeat last year total of more than 4 billion EUR, which came as a result of several large privatizations

Page 7: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 7

Macroeconomic overview III – Credit boomMacroeconomic overview III – Credit boom

Import growth of consumer goods

16,2

1,76

29,1

22,1

11,2

19,323,3

45,245,9

0

10

20

30

40

50

Q1-06 Q2-06 Q3-06 Q4-06 Q1-07

% y

ea

r-o

n-y

ea

r g

row

th

Durable Non-durable

•Aggregate loan demand in Serbia is very high

•Driving factors of high loan demand are very low average salary of 340 euro and 15 years of wear-and-tear of home appliances, cars, clothes and other durable and non-durable goods

•Demand for long-term loans, especially housing loans is very high due to constant supply deficit of residential buildings lasting for several decades

•In Belgrade, the demand for flats and houses is approximately 10 times higher than the supply

•Surge in housing lending led to a significant increase in construction output (growth of 35%) and cement production (growth of 94% in Q1 2007 comparing to Q1 2006)

•Import of durable and non-durable consumer goods grows rapidly

•High foreign trade deficit concerned NBS, which imposed series of restrictive measures

•Measures aim at slowing short-term consumer lending and reducing banks borrowing abroad

•Short-term consumer lending measures are indirect, NBS requires all loans for which monthly installment exceed 20% of monthly income to be 100% provided for

•Latest measure in this area is direct limitation of total retail loans to 200% of equity (will be 150% by 2007 year-end)

Construction growth (%)

-12,8

4,3 6,2 6,0

25,7

6,62,7

8,8

35

-20

-10

0

10

20

30

40

Q1-05

Q2-05

Q3-05

Q4-05

Q1-06

Q2-06

Q3-06

Q4-06

Q1-07%

ye

ar-

on

-ye

ar

gro

wth

Page 8: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 8

Macroeconomic overview IV – Inflation and exchange rateMacroeconomic overview IV – Inflation and exchange rate

Inflation rate

13,7

17,7

6,36,6

4

6

8

10

12

14

16

18

20

2004 2005 2006 Aug-07

%

•2006 was a year of very low inflation rate comparing to previous 2 years

•Such deceleration of prices was achieved by very restrictive monetary policy (high repo rate and obligatory reserve)

•Price of restrictive monetary policy came in the form of record trade deficit due to dinar appreciation

•But in the second quarter 2007, this trend reversed due to supply shocks, mainly from agriculture

•Inflation quickly picked up, endangering the targeted 4-8%, but analysts still find the target defendable

•After many years of depreciation, second half of 2006 saw dinar appreciating. From June to December it appreciated 8.8%. This came as a result of very high repo rate, but also large inflow of fx from privatizations

•During the first quarter of 2007 dinar depreciated 3% but again appreciated back to December level

•For the time being NBS is not intervening in the fx market, so the changes in the exchange rate can be regarded as freely floating

Monthly average exchange rate

74

76

78

80

82

84

86

88

jun.

06

sep.

06

okt.0

6

nov.0

6

dec.0

6

jan.

07

feb.

07

mar

.07

apr.0

7

maj.

07

jun.

07

RS

D/E

UR

Page 9: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 9

Macroeconomic overview V – PolicyMacroeconomic overview V – Policy

Lending rollercoaster

- 1.000 2.000 3.000 4.000 5.000

6.000 7.000 8.000 9.000

10.000

Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07

Rec

eiva

ble

in n

il. E

UR

-

5,0

10,0

15,0

20,0

25,0

NB

S r

epo

rat

e in

%

Retail & corporate receivables NBS notes & repo transactions

Average NBS repo rate Poly. (Retail & corporate receivables)

Poly. (NBS notes & repo transactions)

•M2 money supply aggregate accelerated as agg. receivables from non-public sector continue to grow (2,5-fold increase in corporate and 11-fold increase in retail receivables since 2002)

•Monetary policy was far less restrictive in Q1 2007 than in 2006

•As NBS decreased repo rates, repo transactions decreased from 900 mil. EUR in Q4 2006 to only 200 mil. EUR by the end of Q1 2007

•Mini credit boom followed in 2007, financed mostly from domestic savings

•NBS measures to slowdown foreign borrowing was fruitful (45% obligatory reserve), as banks decreased aggregate foreign liabilities

•Very expansive fiscal policy coupled with very restrictive monetary policy during 2006 maintained internal balance (inflation of 6,6%) but spilled to very large external imbalance (record foreign trade deficit)

•Public revenue surged during the first 5 months of 2007, with growth rate of 23% in real terms, which is a result of substantial growth of demand

•Public expenditure, grew but in more modest terms, some 10% in real terms, due to technical governments budgetary limitation which kept expenditure on previous year level

•Consolidated budget deficit for 2007 will reach 0,5% of GDP

Public revenue and expenditure

3.539

4.949

3.428

4.268

0

1.000

2.000

3.000

4.000

5.000

6.000

Jan-May 2006 Jan-May 2007

mil.

EU

R

Consolidated public revenue Consolidated public expenditure

Page 10: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 10

Fiscal and monetary policy in the coming yearsFiscal and monetary policy in the coming years

•Ministry of finance committed, in its’ Budget memorandum, to significantly reduce public spending in 2008-2010 period

•In the expenditure structure, the plan is to increase the share of investments in human and physical capital

•Structural reforms are also given importance

•Ministry of finance projections say that current account deficit will remain above 10% of GDP during next 5 years, so maintaining high FDI inflow (projected at 2 billion EUR per year) is crucial

•Among structural reforms following are outlined:

•Privatization

•Regulatory framework for privatization of infrastructure and communal companies

•Improvement of investment climate including efforts to minimize corruption

•Construction and agricultural lend privatization

•NBS will continue the gradual lowering of base inflation with target 2-4% in 2010. It will also try, as a secondary target to assist the Government in maintaining external balance and accelerating growth

•Reference interest rate (2 week repo) will be main monetary instrument, and development of money market will be pursued

•Obligatory reserve and supervisory regulations will be used when other measures fail to provide required effects

•FX market will float with only necessary intervention to prevent large daily volatility, but the fundamental trends will not be disrupted

•Additional attention will be given to the strengthening of risk management, as well as supervision of insurance companies, pension funds and leasing companies

•Probably the most important thing, independence of the NBS and it’s Governor will be enhanced

Public debt and budget surplus

010

203040

5060

2004 2005 2006 2007* 2008* 2009* 2010*

% o

f G

DP

-1-0,5

00,51

1,52

% o

f G

DP

Public debt in % of GDP

Consolidated surplus/deficit in % of GDP

Page 11: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 11

Part II

Banking sector overview

Page 12: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 12

Sector overview and comparison, M&ASector overview and comparison, M&A

Growth of Aggregate Total Assets

6%

20%

60%

42%

3%

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2000 2001 2002 2003 2004 2005 2006

in m

ill.E

UR

0%

10%

20%

30%

40%

50%

60%

70%

Total Assets Growth

2002 2003 2004 2005 2006 H1 2007

Total Assets 5.147 5.297 6.338 8.972 14.800 17.400

TA/GDP 34% 32% 36% 43% 60% 67%

ROA -8,70% -0,30% -1% 6,50% 1,70% 2,09%

ROE -34,50% -1,20% -4,80% 1,20% 9,67% 11,17%

Serbian banking sector is quickly growing

Still there is room for further growth:In terms of higher Total assets/GDP ratio (35% in 2001, 60% in 2006)And higher Total assets per capita (currently less than 2.000 EUR per capita)

Development and growth of the banking sector, in terms of total assets, profitability and products

Decrease in the number of banks, from >100 to 36 (2001-2007)

Changes in the ownership structure, from 0 to 60% foreign-owned (2001-2007)Bank Purchasing price Buyer P/BJubanka 152.000 Alpha bank 1,83Novosadska banka 73.200 Erste bank 3,48Kontinental banka 49.500 NLB 2,51Niska banka 14.210 OTP bank 0,86Zepterbanka 32.000 OTP bank 2,55Kulska banka 118.600 OTP bank 2,60Delta banka 333.000 Banca Intesa 3,07Panonska banka 122.000 Sanpaolo IMI 3,42Atlas banka 19.500 Pireus bank 3,46Meridijan banka 34.000 Credi Agricole 0,76Eksim banka 43.000 HVB (Unicredit) 4,02Centrobanka 20.000 Laiki bank 2,38Nacionalna stedionica 41.000 EFG Eurobank 4,86Nova banka 22.500 Findomestic bank 1,82Vojvodjanska banka 385.000 National bank of Greece 4,02A banka 96.500 KBC 4,50TOTAL 1.556.010

Merged into Merged into OTP banka SrbijaOTP banka Srbija

Merger Merger announcedannounced

•EBRD´s pre-privatization 25% equity investment in the biggest state-owned banks Komercijalna and Čačanska banka

•Other global and regional players: Societe Generale, Raiffeisen, Hypo Alpe-Adria, Volksbank, ProCredit

Page 13: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 13

Aggregate balance sheet structureAggregate balance sheet structure

Strong growth of retail lending

599

799

272

28,7%

38,4%35,9%

0100200300400500600700800900

Dec-05 Dec-06 Jun-07

In m

il.

EU

R

0,0%5,0%10,0%15,0%20,0%25,0%30,0%35,0%40,0%45,0%

% o

f re

tail r

ec

eiv

ab

les

Volumeofhousingloans

ShareofRetailreceivables

Changes in aggregate liabilities and equity structure

3.895 3.630

4.443 6.118

3.7254.380

2.7383.297

0

5.000

10.000

15.000

20.000

Dec-06 Jun-07

in M

ill. E

UR

Equity

Savings

Otherliabilities

Foreignliabilities

Changes in aggregate asset structure

2,28 2,985,15 5,36

7,379,07

048

121620

Dec-06 Jun-07

In b

ill.

EU

R Receivables

Depositswith NBS

Other items

•Agg. balance sheet grew 17,5% in H1/07 (14,8 to 17,4 billion EUR)

•Due to restrictive measures Deposits with NBS (incl. repo transaction) comprise large percent of the balance sheet (35% Dec/06 and 31% June/07)

•Receivables grew from 50% (Dec/06) to 52% (June/07), due to a reduction of repo interest rates during 2007

•Stable dinar fx rate trend led to a reduction in net long fx position from 28% to 19% during 9 months

•Retail loans reached 2,5 billion EUR (Dec/06) and 3,2 billion EUR (June/07), where housing loans account for 50% of this increase and will continue to be the main driver

•Corporate lending decreased in relative terms from 65% to 59% during last 18 months (but cross-border increased, which shows demand still exists)

•Bad debts are volatile due to changes in regulations (23% in 2005, 33% in 2006 and 29% in 2007). NBS wants to hold-back the agg. demand by increasing loan-loss reserves

•Savings are becoming very important source of funds, comprising more than 25% of the aggregate liabilities and equity (31% of agg. Liabilities)

•Foreign debt has decreased during last 6 months for 7%, while savings increased 18% and equity increased 20%

•Yet, dinar deposits comprise only 36,2% of total deposit, which shows lack of trust in dinar fx rate by the domestic entities

•Average capital adequacy ratio is 25% (significantly higher than required 12%)

•Foreign debt of companies (cross-border) continue to grow, even though NBS managed to curtail the growth of banks’ foreign debt

•Savings and cross-border, along with capital increase will continue to be the main source of financing in the near future

Long-term foreign debt

687 1.2602.9291.361

1.895

5.8284.333

2.895 2.704

381-

2.000

4.000

6.000

8.000

Dec-03 Dec-04 Dec-05 Dec-06 Jun-07

in m

il.

EU

R

Companies Banks

Page 14: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 14

Aggregate income statementAggregate income statement

ROE (%)

6,46 8,24 9,6714,68

11,17

-5,37 -3,96-10,00

0,00

10,00

20,00

Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07

Profit

87,4

-43,4

196,6165,9

-100,0

-50,0

0,0

50,0

100,0

150,0

200,0

250,0

2005 H1-2006 2006 H1-2007

in m

il.

EU

R

•Aggregate profit was very volatile in 2006

•Losses during the 2nd and 3rd quarter 2006 resulted from loan defaults, dinar appreciation and portfolio cleaning-up by the privatized banks

•Net interest income is the main driver of the profitability, while Net FX income is loosing it’s importance as dinar becomes more stable

•Net interest margin is almost constant, around 7%

•Cost-Income ratio is fluctuating between 75% and 85%

•Short-term average interest rate is 16,5%, long-term is 10,1%, while weighted average for all maturities is 15,9%.

•Housing loans are subject of strong competition and policy measures, which resulted in average interest rates of 6,8%Net FX income/Net Interest income

(%)

47,09

33,4428,79

12,5521,85

15,36

-

10,00

20,00

30,00

40,00

50,00

2004 H1-2005

2005 H1-2006

2006 H1-2007

Page 15: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 15

Market Composition, Management, ProductsMarket Composition, Management, Products

Total assets

Market share

Change during last 6 months

Hypo Alpe-Adria-Bank a.d. Beograd2.007 11,5% up 2 placesBanca Intesa a.d. Beograd 1.727 9,9% no changeRaiffeisen banka a.d. Beograd 1.665 9,6% down 2 placesKomercijalna banka a.d. Beograd1.398 8,0% no changeAIK banka a.d. Niš 1.140 6,5% up 5 placesTOTAL 7.937 46%

Market leaders as of 30th of June 2007

•Top 5 players comprise 46% of the market

•In 2007, Hypo Alpe-Adria-Bank became the market leader with 11,5%

•First half of 2007 witnessed significant market penetration of predominantly domestic-owned AIK banka

•Raiffeisen lost it’s position after several years of being a market leader

•Unicredit, decreased it’s share from 8,10% to 5,34% in one year

•Komercijalna banka, state-owned bank had it’s capital increase by EBRD, and is expected to become very competitive in the coming years

•In terms of productivity Hypo Alpe-Adria-Bank is one of the leaders in the market

•But in terms of profitability it is lagging behind it’s competitors due to soaring interest expenses

•Considering the structure of Income statements, it is noticeable that banks are beginning to specialize. While growth of net interest income is dominant in HAAB and Banca Intesa, Fee income is growing much faster in Raiffeisen and Komercijalna

Productivity and Profitability of the Market Leaders

726441

758

1.245993

2.0054,713,94

4,75

3,82 4,07

2,28

-

500

1.000

1.500

2.000

2.500

Intesa

Komercijalna

Societe

UniCredit

Raiffeise

nHAAB

tsd

. EU

R

0

1

2

3

4

5

%

Average Assets per employee Net Interest Margin/Average Total Assets

•Risk Management (specialized departments) and Corporate governance (Four-eyes principle, Separation of duties) is in the focus of new Law on banks

•Transparency and minority shareholders rights strengthened

•Binding requirement to monitor and manage all types of risk

•Capital adequacy (12%) requirements and loan loss provision are above standard international level

•Large loan losses which several banks suffered in 2006 prove that this approach is necessary in a transitional economy with fragile economy

•Number of new products offered and their diversity is growing quickly

•Number of issued debit credit cards has grown from 0 to 2,5 million in 5 years. Besides Visa and MasterCard, domestic DINA card hold significant market share (32% of debit and 35% of credit card market)

•E-banking, investment banking and private wealth management are offered but it will take some time until these products become regularly used

Page 16: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 16

SummarySummary•Banking sector proves to be viable and flexible by adopting to the ever changing macroeconomic and supervisory environment

•High obligatory reserve, NBS repo transactions and loan loss requirements are fueling dynamic and significant structural changes

•In the early transitional years focus on pure credit growth, but due to high obligatory reserve and repo rate, repo transaction grew from 197 million to 1,8 billion EUR in just one year

•After the latest shift in monetary policy during 2007 and decrease in repo rate, the share of repo transaction decreased from 15,8% to less than 8,5% of the aggregate balance sheet

•Classic lending revived again in 2007

•This time lending is not financed from foreign borrowings but from domestic savings and capital increases

•Income statement was also reshaped, so that net fx income is no longer a major item, but income from credit instruments and other products gained much more attention

•Monetary authorities have created a sound and effective banking system, albeit with drastic measures

•We can conclude that the banking system is becoming more efficient in providing various services and that competition is strengthening continuously

•The number of 36 banks seems to be more than enough for the market of this size, and we can expect that future growth of the banking sector will be through the organic growth rather than entry of new players, and we might even see some of the important regional players ceasing their operations in Serbia

•The competition will increase further by the development of pension and investment funds, life insurance and stock exchange investments

•Economic growth, macroeconomic and political stability are necessary for stronger development of banking

•Than we can expect to see a new credit-boom, absolute increase in profits and lower margins and better overall service

Page 17: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 17

Part II

Leasing overview

Page 18: 2007. Vladimir Cupic. Banking and Leasing in Serbia. CEE-Wirtschaftsforum 2007. Forum Velden

Velden forum | 19.9.2007. | 18

Leasing overviewLeasing overview

2006 Market share %

Hypo Alpe-Adria-Leasing

29%

Raiffeisen Leasing

20%

S-Leasing13%

NLB Leasing8%

Porsche Leasing

6%

UniCredit Leasing

6%

VB Leasing6%

Others12%

•Major source of funds are foreign borrowing extended by holding banks and companies

•Foreign liabilities account for 84% of total liabilities and equity

•NBS became concerned about high level of foreign liabilities and imposed 10% of reserve for new borrowings from abroad, which was raised to 20% in April this year

•There is still plenty of room for further market growth, having in mind that in similar markets Total Assets/GDP is far greater (5,4% in Bulgaria and 3,2% in Serbia)

•Financial Leasing is present since 2002

•15 companies operating, only 1 domestic

•Hypo Alpe-Adria-Leasing is market leader with Total assets of 254 million EUR

•Entire market is “only” 856 million EUR, and grew 30% in 2006%

•Overall ROE in 2006 reached 11%

•Number of contracts outstanding is 52 thousand and average debt is 17 thousand EUR

•Car (35%) and freights vehicles (29%) purchase are the most common contracts

Leasing market comparison - Serbia and Croatia

52,2

22,516,8

49,2

15

57

0,0

10,0

20,0

30,0

40,0

50,0

60,0

Serbia Croatia

Number of contracts(000)

Size of contract tsd.EUR

Market participants