abn amro reports pro-forma 2005 results under the new structure hugh scott-barrett chief financial...
TRANSCRIPT
ABN AMRO reports pro-forma 2005 results under the new structureHugh Scott-BarrettChief Financial Officer, Member of the Managing Board
London, 7 April 2006
2
Pro-forma 2005 results under the new structure
7 February 2005: strategic focus on mid-market presented
14 October 2005: new organisational structure announced
31 January 2006: full-year results 2005
Today: pro-forma 2005 results under new structure
26 April 2005: Q1 2006 results released under new structure
3
Consumer Commercial
Mass Retail
MNCs
Mid-Market/FIs
PC /Mass Affluent
TopPrivateClients
Small Business
Strategic focus on mid-market segments
Product innovation
Feeder channel Provider of scale
‘SWEET SPOT’
4
Global Markets
Europe North
America Latin
AmericaAsia Private
ClientsGlobal Clients
NL
Asset Management
Group Functions
Services
Transaction Banking
Consumer Client Segment
Commercial Client Segment
Local Products
Local Products
Local Products
Local Products
Local Products
Local Products
M&A ECM
New Group structure reflects strategic focus on mid-market clients
Our new group structure Key Elements of the Strategy
Advantaged
model:
Using local
client
engagement
while
delivering
additional
value by
leveraging
our global
capabilities
in products /
services
Growth in Our Customer ‘Sweet Spot’
– Where we are advantaged and most profitableConsumer: PC/Mass Affluent ClientsCommercial: SMEs, Mid-large corporates & FIs
Client-led strategy based on local engagement
– Geographic distribution model
Value driven through working as ‘One Bank’
– World-class products
– International network capabilities
– Spreading of successful formulas
– High quality and more efficient services
through…
and…
5
Unbundling WCS will deliver continued performance improvement
Opening up former WCS to the Group
will result in greater leverage of
wholesale banking products across a
wider set of clients
The unbundling will contribute to a
sustainable improvement in the
efficiency ratio
Arm’s length interaction between Global
Markets and the Client Units will
increase the transparency of each
product’s economics
Global Markets
Europe North
America Latin
AmericaAsia Private
ClientsGlobal Clients
NL
Asset Management
Group Functions
Services
Transaction Banking
Consumer Client Segment
Commercial Client Segment
Local Products
Local Products
Local Products
Local Products
Local Products
Local Products
M&A ECM
External reporting under the new Group structure
7
Quarterly financial reporting on all Client BUs, Asset Management and Group Functions
ABN AMRO will publish financial
accounting information on:
BU NL (incl. Bouwfonds
mortgages)
BU Europe (incl. BAPV)
BU North America
BU Latin America
BU Asia
BU Private Clients
BU Global Clients
BU Asset Management
BU Private Equity
Bouwfonds non-mortgages*
Group Functions, incl. Services
Global Markets
Europe North America
Latin America
Asia PC Global Clients
NL
Asset Management
Group Functions
Services
Transaction Banking
Consumer Client Segment
Commercial Client Segment
* Bouwfonds non-mortgage will be divested, and until that time shown separately
8
Major changes in the new structure
The major changes in the new structure are:
The mortgage related activities of Bouwfonds will be part of BU NL
Banca Antonveneta will be part of BU Europe. We will also report Banca Antonveneta
separately which will make it possible to track progress against commitments
WCS has been unbundled in three parts:
1. Global Clients
2. Commercial Clients spread over the 5 regional client BUs
3. Global Markets
– BU Global Markets will be reported in the regional client BUs or BU Global Clients
– Proprietary trading and futures income of Global Markets will be reported in Group Functions
– Commercial Clients have been transferred to and will be reported in the regional client BUs
9
ABN AMRO will also report on Global Markets and the segments to track progress against commitments
ABN AMRO will provide
financial information on BU
Global Markets on a quarterly
basis which will make it possible
to track progress against
commitments*
ABN AMRO will provide
financial information on the
segments on an bi-annual basis
ABN AMRO will provide
financial information on
Transaction Banking on an
annual basis
Europe NorthAmerica
LatinAmerica
Asia PC GlobalClients
NL
Global Markets
Asset Management
Transaction Banking
Consumer Client Segment
Commercial Client Segment
Group Functions
Services
* Full P/L with half year and full year results and efficiency ratio with first quarter and third quarter results
Pro-forma 2005 results
11
Regions
(EUR mln) NL* Europe NA LA Asia
Global Clients
Private Clients
Asset Mngt
Private Equity
BF** GF/GS
Total Bank
Operating income 4,629 1,109 3,897 3,064 1,235 2,348 1,297 712 381 505 650 19,827
Operating expenses 3,282 1,208 2,594 1,848 914 1,765 915 501 129 287 74 13,517
Operating result 1,348 (99) 1,303 1,216 321 583 382 211 252 218 576 6,310
Provisioning 286 (35) (87) 348 27 (50) 16 0 34 13 96 648
Net operating profit 739 (104) 1,086 603 204 553 279 171 263 136 513 4,443
Efficiency ratio 70.9% 108.9% 66.6% 60.3% 74.0% 75.2% 70.6% 70.4% 33.9% 56.8% 68.2%
RWA (EUR bln) 65.8 28.1 74.2 18.7 11.9 26.2 9.4 0.8 2.7 12.9 7.1 257.9
Breakdown of 2005 results under the new structure
All figures are excluding consolidation effect of private equity holdings*NL is incl. Bouwfonds mortgage** BF is Bouwfonds non-mortgage
12
Regions
(EUR mln) Global Clients NL Europe NA LA Asia
Group Functions
Former
WCS
Total operating income 2,279 582 1,073 421 88 630 268 5,341
Operating expenses 1,764 513 1,164 364 118 606 170 4,699
Operating result 515 69 (91) 57 (30) 24 98 642
Provisioning (50) (5) (37) (108) (15) (27) 1 (241)
Net operating profit 485 52 (96) 216 (41) 8 82 705
Efficiency ratio 77.4% 88.1% 108.5% 86.5% 134.1% 96.2% 63.4% 88.0%
Risk-weighted assets (bln) 25.8 5.1 27.7 7.5 4.0 8.0 (1.1) 77.0
Breakdown of 2005 profit and loss account of former WCS activities
13
Breakdown of RWAs under the former and new structure
Risk weighted assets under the former structure (2005, EUR 257.9 bln)*
Risk weighted Assets under the new structure (2005, EUR 257.9 bln)*
All figures are excl. consolidation effects of controlled Private Equity holdings*Excl. significant disclosed one-off items used for normalisation as specified in FY 05 results press release on page 4 (see also appendix this presentation)** BU NL is incl. Bouwfonds mortgage; Other incl. Group Functions, Services and Bouwfonds non-mortgage
NL18%
NA26%
BR6%NGM
3%
AM0%
GF3%
PE1%
PC3%
WCS30%
BF10%
NL**26%
NA28%LA
7%
Europe11%
Global Clients10%
PC4%PE
1%
Other**8%
AM0%
Asia5%
2005 Pro-forma results per BU
15
Former structure Former Structure New structure
(EUR mln) BU NL
WCS NL*
Bouwfonds mortgages
Other
BU NL
Total operating income 3,684 582 366 (3) 4,629
Operating expenses 2,675 513 94 0 3,282
Operating result 1,009 69 272 (2) 1,348
Provisioning 277 (5) 13 1 286
Net operating profit 509 52 179 (1) 739
Efficiency ratio 72.6% 88.1% 25.7% 70.9%
Risk-weighted assets (in bln) 47.3 5.1 13.0 0.4 65.8
BU Netherlands (BU NL)
BU NL includes the following businesses from the former structure: BU NL (C&CC), WCS NL (excl. Global Clients), mortgage related activities of Bouwfonds and other
*Excl. Global Clients
16
Former Structure New structure
(EUR mln) WCS Europe* Other Europe Europe**
Total operating income 1,073 36 1,109 1,066
Operating expenses 1,164 44 1,208 1,208
Operating result (91) (8) (99) (142)
Provisioning (37) 2 (35) (35)
Net operating profit (96) (8) (104) (143)
Efficiency ratio 108.5% 108.9% 113.3%
Risk-weighted assets (in bln) 27.7 0.4 28.1
BU Europe
BU Europe includes the following businesses from the former structure: WCS Europe (excluding Global Clients) and other (former NGM Europe)
The reported results of the BU Europe reflect the fact that a significant part of the WCS business has been transferred to the BU Europe and that this part was a high efficiency ratio business. Management of the BU Europe, in cooperation with the management teams of Global Markets, Transaction Banking and Services will focus on improving the financial performance of the business in 2006. Further details on initiatives planned to improve infrastructural efficiency, including any investments associated with those initiatives, will be given with the first quarter results
*Excl. Global Clients** Adjusted for gain on sale of Bishopsgate (EUR 43 mln gross and EUR 39 mln net)
17
Former structure Former Structure New structure
(EUR mln) BU NA WCS NA* Other BU NA
Total operating income 3,483 421 (7) 3,897
Operating expenses 2,236 364 (6) 2,594
Operating result 1,247 57 (1) 1,303
Provisioning 21 (108) 0 (87)
Net operating profit 871 216 0 1,086
Efficiency ratio 64.2% 86.5% 66.6%
Risk-weighted assets (in bln) 66.7 7.5 0.0 74.2
BU North America (BU NA)
BU NA includes the following businesses from the former structure: BU NA (C&CC), WCS NA (excl. Global Clients) and other
*Excl. Global Clients
18
Former structure Former structure New structure New structure
(EUR mln) BU BR WCS LA* BU LA BU LA**
Total operating income 2,975 88 3,064 2,835
Operating expenses 1,730 118 1,848 1,848
Operating result 1,245 (30) 1,216 987
Provisioning 363 (15) 348 348
Net operating profit 644 (41) 603 407
Efficiency ratio 58.2% 134.1% 60.3% 65.2%
Risk-weighted assets (in bln) 14.8 4.0 18.7
BU Latin America (BU LA)
BU LA includes the following businesses from the former structure: BU Brazil (C&CC) and WCS LA (excl. Global Clients)
*Excl. Global Clients** Adjusted for sale of Real Seguros (EUR 229 mln gross and EUR 196 mln net)
19
Former structure New structure
(EUR mln) WCS Asia* Other Asia
Total operating income 630 605 1,235
Operating expenses 606 308 914
Operating result 24 297 321
Provisioning (27) 54 27
Net operating profit 8 196 204
Efficiency ratio 96.2% 50.9% 74.0%
Risk-weighted assets (in bln) 8.0 3.9 11.9
BU Asia
BU Asia includes the following businesses from the former structure: WCS Asia (excl. Global Clients) and other (former NGM Asia)
*Excl. Global Clients
20
Former structure New structure
(EUR mln) WCS GC* KEB** Global Clients
Total operating income 2,279 69 2,348
Operating expenses 1,764 1 1,765
Operating result 515 68 583
Provisioning (50) 0 (50)
Net operating profit 485 68 553
Efficiency ratio 77.4% 75.2%
Risk-weighted assets (in bln) 25.8 0.3 26.2
BU Global Clients (BU GC)
As of 1 January 2006 our shareholding in Korean Exchange Bank (KEB) has been transferred from the BU Private Equity to the BU Global Clients. In the pro-forma 2005 results we have already included KEB in the BU Global Clients
On 14 December 2005, we set capital constraint and minimum return targets for Global Clients: RWAs on average less than 10% of Group total by end 2006 and beyond, with a return above our 10.5% assumed cost of equity
*WCS Global Clients**Under former structure reported under BU Private Equity
21
BU Private Clients (BU PC)
Former structure Former structure New structure New structure
(EUR mln) BU PC Other BU PC BU PC*
Total operating income 1,225 72 1,297 1,259
Operating expenses 891 24 915 870
Operating result 334 48 382 389
Provisioning 6 10 16 16
Net operating profit 255 24 279 271
Efficiency ratio 72.7% 33.3% 70.6% 69.1%
Risk-weighted assets (in bln) 7.3 2.1 9.4
* Adjusted for gain (EUR 38 mln gross and net) on the sale of Nachenius Tjeenk and a charge (EUR 45 mln operating expenses and EUR 30 mln net profit) related to the merger of Banque Neuflize and OBC in France
22
BU Private Equity (BU PE)
Former structure Former structure New structure
(EUR mln) BU PE KEB BU PE
Total operating income 450 69 381
Operating expenses 130 1 129
Operating result 320 68 252
Provisioning 34 0 34
Net operating profit 331 68 263
Efficiency ratio 28.9% 33.9%
Risk-weighted assets (in bln) 3.0 0.3 2.7
As of 1 January 2006 our shareholding in Korean Exchange Bank (KEB) has been transferred from the BU Private Equity to the BU Global Clients. In the pro-forma results we have already included KEB in the BU Global Clients
23
Former structure Former structure New structure New structure
(EUR mln) GF WCS* Other GF GF***
Total operating income 379 268 3 650 736
Operating expenses (95) 170 (1) 74 343
Operating result 474 98 4 576 392
Provisioning 95 1 0 96 96
Net operating profit 429 82 3 513 313
Risk-weighted assets (in bln) 8.6 (1.1) (0.4) 7.1
Group Functions, incl Group Services (GF)
Group Functions includes the following businesses from the former structure: Group Functions and non-client related WCS activities (proprietary trading and futures)
Group Functions includes the stakes in Banca Antonveneta*, Capitalia, and K&H Bank
*Non-client related WCS activities (proprietary trading and futures)*** Adjusted for provisioning for balance sheet adjustment (EUR 86 mln operating income and EUR 60 mln net operating profit), release healthcare benefit provision (EUR 392 mln operating expenses and EUR 268 mln net operating profit), holiday provision (EUR 56 mln operating expenses and EUR 40 mln net operating profit), US regulatory fine (EUR 67 mln operating expenses and net operating profit) and release of tax provisions (EUR 100 mln)
As of the first quarter results, Banca Antonveneta will be reported under BU Europe
24
Former structure New Structure New Structure
(EUR mln) WCS Global Markets Other*
Total operating income 5,341 3,294 2,047
Operating expenses 4,699 2,994 1,705
Operating result 642 301 341
Provisioning (241) (15) (226)
Net operating profit 705 301 403
Efficiency ratio 88.0% 90.9% 83.3%
BU Global Markets
On 14 December 2005, we set the following targets for Global Markets: improved efficiency ratio for Global Markets activities – improving at least 5 percentage points in 2006, and below 80% by end 2008
*Other includes Transaction Banking, Lending and M&A/ECM
Appendices
26
Appendices: table of contents
Breakdown of 2005 results under the former and new structure
Breakdown of pro-forma 2005 results per quarter
Significant disclosed one-off items
Breakdown of 2005 results under the former and new structure
28
Breakdown of operating income under the former and new structure
Operating income under the former structure (2005, EUR 19,603 mln)*
All figures are excl. consolidation effects of controlled Private Equity holdings*Excl. significant disclosed one-off items used for normalisation as specified in FY 05 press release on page 4 (see also appendix of this presentation)** BU NL is incl. Bouwfonds mortgage; Other is incl. Bouwfonds non-mortgage
Operating income under the new structure (2005, EUR 19,603 mln)*
NL19%
NA18%
BR14%
BF4%
WCS27%
PC6%
PE2%
GF2%
AM4%
NGM4%
NL**25%
NA20%
LA14%
Asia6%
AM4%
Other**6%
PE2%
PC6%
Global Clients12%
Europe5%
29
Breakdown of operating expenses under the former and new structure
Operating expenses under the former structure (2005, EUR 13,786 mln)*
Operating expenses under the new structure (2005, EUR 13,786 mln)*
All figures are excl. consolidation effects of controlled Private Equity holdings*Excl. significant disclosed one-off items used for normalisation as specified in FY 05 press release on page 4 (see also appendix of this presentation)** BU NL is incl. Bouwfonds mortgage; Other is incl. Bouwfonds non-mortgage
NL19%
NA16%
BR13%NGM*
3%
AM4%
GF1%PE
1%
PC6%
WCS34%
BF3%
NL**23%
NA18%
LA13%
Europe9%
Global Clients
13%
PC7%
PE1%
Other**5%
AM4%
Asia7%
30
Breakdown of operating result under the former and new structure
Operating result under the former structure (2005, EUR 5,817 mln)*
Operating result under the new structure (2005, EUR 5,817 mln)*
All figures are excl. consolidation effects of controlled Private Equity holdings*Excl. significant disclosed one-off items used for normalisation as specified in FY 05 press release on page 4 (see also appendix of this presentation)** BU NL is incl. Bouwfonds mortgage; Other is incl. Bouwfonds non-mortgage and the negative result of BU Europe
NL17%
NA22%
BR17%
BF8%
WCS10%
PC5%
PE6%
GF5%
AM4%
NGM6%
NL**23%
LA17%
NA22%
Asia6%
AM4%
Other**8%
PE4%
PC6%
Global Clients
10%
31
Breakdown of net operating result under the former and new structure
Net operating profit under the former structure (2005, EUR 3,969 mln)*
All figures are excl. consolidation effects of controlled Private Equity holdings*Excl. significant disclosed one-off items used for normalisation as specified in FY 05 press release on page 4 (see also appendix of this presentation)** BU NL is incl. Bouwfonds mortgage; Other is incl. Bouwfonds non-mortgage and the negative results of BU Europe
Net operating profit under the new structure (2005, EUR 3,969 mln)*
NL13%
NA23%
BR11%NGM
5%
AM4%
GF6%
PE8%
PC5%
WCS17%
BF8%
NA27%
NL**18%
LA10%
Global Clients14%
PC6%
PE7%
Other**9%AM
4%
Asia5%
Breakdown of pro-forma 2005 results per quarter
33
Regions
(EUR mln) NL* Europe NA LA Asia
Global Clients
Private Clients
Asset Mngt
Private Equity
BF** GF/GS
Total Bank
Operating income 1,135 226 887 543 259 505 303 157 123 125 188 4,451
Operating expenses 788 240 587 357 199 444 206 114 17 66 77 3,096
Operating result 347 (14) 300 187 60 60 96 43 106 59 111 1,356
Provisioning 69 (5) (40) 63 4 (5) (1) 0 2 0 12 99
Net operating profit 191 (18) 253 75 25 59 70 31 110 39 86 921
Efficiency ratio 69.4% 106.2% 66.2% 65.7% 76.8% 87.9% 68.0% 72.6% 13.8% 52.8% 69.6%
Breakdown of first quarter 2005 results under the new structure
All figures are excluding consolidation effect of private equity holdings*NL is incl. Bouwfonds mortgage** BF is Bouwfonds non-mortgage
34
Regions
(EUR mln) NL* Europe NA LA Asia
Global Clients
Private Clients
Asset Mngt
Private Equity
BF** GF/GS
Total Bank
Operating income 1,125 334 878 672 298 555 312 182 98 118 259 4,830
Operating expenses 844 319 612 428 240 399 215 124 32 74 118 3,406
Operating result 281 15 266 244 57 156 97 58 66 44 141 1,425
Provisioning 67 (17) 15 75 (4) (38) 3 0 0 (1) (37) 63
Net operating profit 153 28 218 56 36 153 67 50 78 31 124 993
Efficiency ratio 75.0% 95.5% 69.7% 63.7% 80.5% 71.9% 68.9% 68.1% 32.7% 62.7% 70.5%
Breakdown of second quarter 2005 results under the new structure
All figures are excluding consolidation effect of private equity holdings*NL is incl. Bouwfonds mortgage** BF is Bouwfonds non-mortgage
35
Regions
(EUR mln) NL* Europe NA LA Asia
Global Clients
Private Clients
Asset Mngt
Private Equity
BF** GF/GS
Total Bank
Operating income 1,237 247 1,024 989 352 544 341 186 49 123 215 5,308
Operating expenses 830 322 590 477 216 476 264 122 41 69 80 3,488
Operating result 407 (75) 434 511 136 68 77 64 8 54 135 1,820
Provisioning 72 26 (46) 86 9 (14) 13 0 16 7 31 199
Net operating profit 235 (93) 341 331 115 58 57 54 (5) 28 88 1,208
Efficiency ratio 67.1% 130.4% 57.6% 48.2% 61.4% 87.5% 77.4% 65.6% 83.7% 56.1% 65.7%
Breakdown of third quarter 2005 results under the new structure
All figures are excluding consolidation effect of private equity holdings*NL is incl. Bouwfonds mortgage** BF is Bouwfonds non-mortgage
36
Regions
(EUR mln) NL* Europe NA LA Asia
Global Clients
Private Clients
Asset Mngt
Private Equity
BF** GF/GS
Total Bank
Operating income 1,132 301 1,107 860 326 745 342 187 112 138 (12) 5,238
Operating expenses 819 326 805 586 259 446 229 141 39 78 (201) 3,527
Operating result 313 (25) 302 274 68 298 113 46 73 60 189 1,711
Provisioning 78 (38) (15) 124 18 7 1 0 16 6 90 288
Net operating profit 160 (21) 274 142 29 282 84 37 82 38 214 1,322
Efficiency ratio 72.3% 108.3% 72.7% 68.1% 79.4% 59.9% 67.0% 75.4% 34.8% 56.5% 67.3%
Breakdown of fourth quarter 2005 results under the new structure
All figures are excluding consolidation effect of private equity holdings*NL is incl. Bouwfonds mortgage** BF is Bouwfonds non-mortgage
Overview of significant one-off items as specified in FY 2005 results press release
38
Overview of significant one-off items as specified in FY 05 results press release*
*As the reported 2005 numbers are impacted by various incidental items, and therefore not a fair reflection of the underlying trends, we have adjusted the 2005 figures for significant disclosed one-off items (any item greater than EUR 35 mln in net operating profit terms). These items were specified in Full Year 2005 results press release on page 4 (published on 31 January 2006)