banking study unicredit group july2009
TRANSCRIPT
BANKING IN CEE:CHALLENGING TIMES BUT RECOVERY ON THE HORIZON
UniCredit Group CEE Strategic Analysis
August 2009
2
EXECUTIVE SUMMARY
! Prospects start to materialize for a recovery of world growth. When confirmed, this will boostrecovery in CEE 2010 will show a positive regional growth, below potential however
! Strong regional differentiation is confirmed, with Central Europe better prepared to catch theinternational recovery. The performance of different banks in the same market can widely differ.
! Markets are out of a “liquiditycrisis mood” – credit quality and risk appetite today’s keyconstraints for CEE banking.
! Medium term: “CEE convergence story” holds, but the banking model has to be rebalanced! Financial penetration will continue. The pace of growth will moderate, with availability of funding
(domestic or external) the main driver. Changing competition allows for leaner structure of costs
! Cost of risk to stays high in 2009 and 2010, representing a constraint for banking profitability
! The changing competitive environment means also opportunities! All CEE players have been affected by the crisis – access to funding, credit quality and
business/network diversification the determinants of future success
! New entrants might take opportunities, while unfocused players might exit the market
! No big changes expected for the top committed international players
! Winners – new entrants or consolidated players, with a good risk appetite for CEE, able toleverage on strong funding position (both through a strong domestic network or throughinternational channels) and with sound risk
! Policy implications from the crisis:! IMF securing firm commitment from international banks active in the region
! Funding remains an issue but is not the key obstacle for lending growth – transferring the risk themain channel to unlock the credit market. Policy actions should be directed towards such target
3
AGENDA
How the CEE banking landscape has changed in theshort term
Banking through the crisis
International players winners and losers
Policy actions
4Note: (1) CEE17: Poland, Hungary, Czech R., Slovakia, Slovenia, Lithuania, Latvia, Estonia, Romania, Bulgaria, Croatia, BosniaH, Serbia,Turkey, Ukraine, Russia and KazakhstanSource: UniCredit Group CEE Strategic Analysis, CEE Research
SIGNS OF RECOVERY IN US AND WESTERN EUROPE PROVIDE A BOOSTTO CEE STILL 2010 IMPLIES GROWTH BELOW POTENTIAL ANDCOUNTRIES CONFIRM TO BE VERY DIFFERENT
7
5
2
1
3
6
8
2005 2006 2007 2008 2009 2010 2011
Real GDP % yoy growth
CEE17(1)
EMU12
USA
Avg CEE 2000’08
3.51.15.5CEE17(1)
5.13.02.3Kazakstan
3.30.87.4Russia
3.60.512.5Ukraine
4.53.25.2Turkey
1.30.74.8Serbia
0.81.03.0BosniaH.
1.70.24.9Croatia
2.50.55.2Romania
2.53.06.0Bulgaria
6.51.912.5Lithuania
7.23.915.0Latvia
6.02.112.8Estonia
2.30.64.2Slovenia
3.51.65.4Slovakia
3.50.73.2Czech Rep.
2.51.96.4Hungary
3.11.91.4Poland
201120102009Real GDP growth (%)
5
OUT OF A “LIQUIDITYCRISIS MOOD”, BUT FUNDING AVAILABILITY ANDCOSTS REMAIN A CONSTRAINT FOR CEE BANKING
0
50
100
150
200
250
300
350
400
450
2005 2006 2007 2008 2009F0%
5%
10%
15%
20%
25%
Volumes (l.s.)% on total liab. (r.s.)
Country Risk Premium5Y CDS (USD, bp)
CEE external liabilities(1)
! External liabilities for CEEbanking sector close to !450 bn(almost 30% due to Russia) …
! … representing some 21% oftotal liabilities of CEE banks
! Out of the crisis mood, but cost offunding for CEE countriesremains high
! CDS for CEE countries halvedsince midMarch to around 300bp(x1.8 vs Aug 2008) on average
(1) CEE17Source: UniCredit Group CEE Strategic Analysis
0
250
500
750
1,000
Poland
Hungary
CzechRep.
Slovakia
Latvia
Romania
Bulgaria
Croatia
Turkey
Ukraine
Russia
Kazakhstan
Dec 08 July 29, 2009
3,274 1,507
! bn
6Notes: (1) Romania and Turkey as of April 2009; (2) Nominal growth rates are corrected for the exchange rate changes weighted by the relevance ofFX in loans' volumes in the previous period. This allows to have an idea of growth of loans and deposit which is independent from the pure effect ofdepreciation of the currency. Source: UniCredit Group CEE Strategic Analysis
BANKS ARE REBALANCING THE LOANS/DEPOSITS GAP
Total banking system deposits(1), (2)(May 09 vs Dec 08 % change FX adj)
6.6
2.60.50.82.1
1.2
5.1
1.21.7
3.60.1
3.10.30.5
1.2
3.0
2.1
8.8
CEE Total
PolandHungaryCzech R.SlovakiaSlovenia
EstoniaLatvia
Lithuania
BulgariaRomaniaCroatia
BosniaH.Serbia
TurkeyUkraineRussia
Kazakhstan
114
108138
7183
142
195241
187
126125129123142
80223
126171
CEE Total
PolandHungaryCzech R.SlovakiaSlovenia
EstoniaLatvia
Lithuania
BulgariaRomaniaCroatia
BosniaH.Serbia
TurkeyUkraineRussia
Kazakhstan
Dec08 May09
Loantodeposits ratio (1)(banking system level, %)
4.8
2.87.5
5.711.4
0.8
0.7
0.70.1
3.51.3
4.2
1.78.9
1.83.6
3.2
1.0
CEE Total
PolandHungaryCzech R.SlovakiaSlovenia
EstoniaLatvia
Lithuania
BulgariaRomaniaCroatia
BosniaH.Serbia
TurkeyUkraineRussia
Kazakhstan
Total banking system Loans(1),(2)(May 09 vs Dec 08 % change FX adj)
7
0%
3%
6%
9%
2004 2005 2006 2007 2008
CEE LatAm Asia
(1) Incl. loans classified under substandard, doubtful and loss categories; in Ukraine, data refer to problem credits (overdue and doubtful); in Kazakhstan, data refer todoubtful loans under category 2,4,5 and bad loans; LatAm: Argentina, Bolivia, Brazil, Chile, Colombia, Paraguay, Peru, Uruguay, Venezuela; Asia: Indonesia, Korea,Malaysia, Philippines, Singapore, Thailand; (2) CEE aggregate including Kazakhstan and Serbia since 2006; (3) April 2009Source: UniCredit Group CEE Strategic Analysis, local CBs, IMF
Impaired Loans Ratio (Total Banking System, % of Gross Loans)(1),(2)
DETERIORATION IN CREDIT QUALITY IS TODAY’S CHALLENGE
Baltics
26.0%
15.2%
4.9%
4.5%
n.a.
3.3%
n.a.
17.8%
n.a.
4.0%
4.1%
n.a.
5.7%
May09
1527bp16.2%10.8%7.5%Kazakhstan
250bp13.9%12.7%8.9%Russia(3)262bp3.7%2.3%Ukraine
106bp4.1%3.5%3.0%Turkey
Broader Europe
n.a.2.4%0.7%Latvia
137bp2.7%1.9%1.4%Estonia
32bp5.1%4.8%4.8%Croatia
439bp16.6%13.4%10.8%Romania(3).2bp3.2%3.2%2.8%Bulgaria
SEE
78bp3.5%3.2%2.9%Slovakia
81bp3.7%3.3%3.0%Czech R.
99bp5.3%4.3%4.1%Hungary
148bp5.0%4.2%4.1%Poland
Central Europe
YTDMar09Dec08Sep08
Due to differences in national accounting and supervisory regimes, NPL data are not fully comparable across regions/countries
8
AGENDA
How the CEE banking landscape has changed in the shortterm
Banking through the crisis
International players – winners and losers
Policy actions
9
THE LONG TERM POTENTIAL OF THE CEE REGION IS INTACT
Real income convergence in CEE (1)
(1) CEE incl. new EU member states, Croatia and Turkey; calculation based on GDP per capita expressed in dollar termsSource: UniCredit Group CEE Strategic Analysis, IMF, ECB
0
200
400
600
800
5,000 15,000 25,000 35,000 45,000
Financial deepening process(% of GDP and PPS in dollar terms)
GDP per capita
Totalbankingassets
Western Europe
CEE
The story of economic and income convergence towards the standards ofWestern countries, as well as the potential related to the banking sector
penetration gap, continue to hold
0%10%20%30%40%50%60%70%80%90%100%
Euroarea
CzechR.
SlovakR.
Estonia
Hungary
Lithuania
Latvia
Poland
Croatia
Russia
Turkey
Rom
ania
Bulgaria
Belarus
Kazakh.
Serbia
Ukraine
BosniaH.
GDP per capita (PPP) % of Eurozone
10
KEY COMPETITIVE ADVANTAGES
Dependency on externalfunding
More moderate“convergence”
Change in demand – simplerproducts / services
Risk appetite and cost of risk
Substantial change in thecompetitive framework
!More balanced banking model; lending tied to funding strategies! Strong advantage for banks with a widespread networkand/or strong and motivated foreign owner
! Retail network crucial for deposit gathering! Lending growth to restart from corporate! In retail, a structural gap holds for mortgage, while consumercredit already at international standards
The crisis opening the way to leaner structures and deflating“bubbles” in staff and network costs
Quality of existing loan portfolio key in determining whetherbanks will be forced to concentrate on risk control or mightstart leveraging on new opportunities
! Stronger state role
! New entrants profiting from others’ risk aversion
! Systemic banks with long term approach might benefit,provided adequate risk appetite
KEY CONSTRAINTS
CEE BANKING THE MEDIUMTERM SCENARIO IMPLIES NEWCONSTRAINTS AND NEW COMPETITIVE ADVANTAGES
11
FINANCIAL PENETRATION MODERATING BUT CONTINUING; CREDITEXPANSION MORE TIED TO DEPOSITS’ GROWTH
Loan growth more tied to deposits expansion(Loans / deposits ratio, %)(1)
20%
30%
40%
50%
60%
70%
80%
2005 2007 2009 2011 2013 2015
Loans/GDP Deposits/GDP
Banking penetration to moderate(CEE Loans and Deposits, % on GDP)(1)
50%
70%
90%
110%
130%
2005 2007 2009 2011 2013 2015
(1) CEE17; Source: UniCredit Group CEE Strategic Analysis
130%EMU: 127%EMU: 107%
12
RECOVERY GROUNDED ON SOUND BASIS: CORPORATE FINANCING TORESTART FIRST, MORTGAGE MARKET FAR FROM SATURATED
RETAIL BUSINESS! The households sector facing the crisis – less demand forconsumption and credit
! The mortgage market is far from saturated, while consumercredit penetration is already relatively high in aninternational comparison
! Households debt to restart, but with a lower pace of growthand mostly oriented towards secured lending
CORPORATE BUSINESS! CEE will remain the “manufacturing arm” of Old Europe,and further offshoring of Western manufacturing activitytowards the East is visible
! Lending towards SME and corporation is resuming earlierthan retail lending – Potential is still present: room tosubstitute for corporations’ selffinancing
Source: UniCredit CEE Strategic Analysis
6%
38%
CEE EMU12
7% 7%
CEE EMU12
Mortgages % GDP(1)
Consumer Financing % GDP(1)
Corporate loans % GDP(2)
(1) CEE: Bulgaria, Croatia, Czech, Hungary, Poland, Romania, Russia, Slovakia, Turkey; (2) CEE17
24%
52%
9%
6%
CEE EMU12
Leasing &Factoring
13
0
5
10
15
20
25
30
35
40
2006 2008 2009 2010 2011 2015
2009 MARKS A CORRECTION IN TERMS OF REVENUES GENERATION;2010 REMAINS SUBDUED, WITH FULL RECOVERY FROM 2011
0,0
0,5
1,0
1,5
2,0
2,5
3,0
2006 2008 2009 2010 2011 2015
! bn
18%
02468101214161820
2006 2008 2009 2010 2011 2015
! bn
! bn
Central Europe SEE
Baltics
Note: CE (Central Europe) includes Poland, Czech Republic, Hungary, Slovakia and Slovenia; SEE (South Eastern Europe) includesRomania, Bulgaria, Croatia, Serbia, Bosnia; Broader Europe includes Turkey, Russia, Ukraine and Kazakhstan;
Source: UniCredit Group CEE Strategic Analysis
..%Revenues CAGR(2006’08; 2008’11; 2011’15)
Net other noninterest income
Net interest income
0.5%
24%1.3%
0
20
40
60
80
100
120
140
2006 2008 2009 2010 2011 2015
Broader Europe! bn
7.2% 15%
16%
15%7%
27%
1.3%
16%
14
A STRUCTURAL CHANGE IN THE COST STRUCTURE
Costtoincome ratio (%)
Source: UniCredit Group CEE Strategic Analysis
40
45
50
55
60
2005 2008 2011 2014
CE SEEBaltics Broader Europe
Number of branches (ths)
! Cost savings programmescoming into the spotlight
! Branch expansion planshalted by almost all bankinggroups operating in the region
+0.3%
+5.2%
+1.7%
+13.5%
+24.4%
2%
11.8
14.7
56.2
11.7
14.0
59.7
10.1
9.6
31.0
CE
SEE
BroaderEurope
200520082011
15
IMPAIRED LOANS TO PEAK IN 2010, BUT COST OF RISK ALREADYCONVERGING
Impaired loans ratio(1)
(% of gross loans)
0%
5%
10%
15%
20%
25%
2005 2007 2009 2011 2013 2015
CE Baltics
SEE Broader Europe
Cost of risk(%, Provisions(2) / avg loans)
0%
2%
4%
6%
8%
2005 2007 2009 2011 2013 2015
CE Baltics
SEE Broader Europe
(1) Substandard, doubtful and loss on average gross loans; in Ukraine, data refer to problem credits (overdue and doubtful); inKazakhstan, data refer to doubtful loans under category 2,4,5 and bad loans; (2) Generic + Specific
Source: UniCredit Group CEE Strategic Analysis
16
Source: UniCredit Group CEE Strategic Analysis
Size of banking profitsof each period
Return on Assets
1.5%
1.0%
0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0% Central Europe RussiaSEE UA and KZTurkey Baltics
avg 2007'08 avg 2010'112009
Russia TK
TK
TK
CE
CE
Russia
Russia
SEE
SEE
BalticsUA and KZ
CE
avg 2011'15
Baltics
UA and KZCE
TK
Baltics
BANKING PROFITABILITY SUBDUED IN THE SHORT TERM – AS COST OFRISK IS THE MAIN CAUSE, SINGLE PLAYERS CAN PERFORM QUITEDIFFERENTLY FROM THE MARKET
17
AGENDA
How the CEE banking landscape has changed in theshort term
Banking through the crisis
International players– winners and losers
Policy actions
18
Total Assets(1)EUR bn
Net Profit(2)EUR mn
Number ofBranches
Countries ofpresence(3)
OTP
KBC
Raiffeisen
Erste
UniCredit
IntesaSP
121.6 2,577
1,569
4,005
3,231
2,099
1,940
2,609
1,781
1,573
19
16
7
12
16
11
9
SocGen 1,201
112%
..% Contribution of CEE in Group Net Profit (After tax, after minority interests)
Notes: (1) 100% of total assets, and profit after tax (before minority interests) for controlled companies (stake > 50%) and pro rata for non controlled companies (stake < 50%). (2) After tax,before minority interest. (3) Including direct and indirect presence in the 25 CEE countries, excluding representative offices. (4) KBC Group recorded a loss in 2008. (5) SocGen includingProFin Bank in Ukraine.Source: UniCredit Group CEE Strategic Analysis
1,078
958
(4)
53%
2051%
157%
41%
5%
n.s.
CEE, % share inGroup Assets
85.4
79.3
71.6
65.9
42.5
35.2
309
186
12
54
39
20
6
7
100
(5)
UNICREDIT GROUP IS THE LARGEST PLAYER IN CEE, WELL DIVERSIFIED,WITH 12% OF GROUP ASSETS IN THE REGION
DATA AS OF2008
19
ALL INTERNATIONAL PLAYERS ACTIVE IN CEE AFFECTED BY THECRISIS
32.5 30.8
25.8
6.5 4.8 4.2 3.6
75.9
68.8
46.1
15.3
34.1
16.0
9.8
UCG ISP SOC GEN ERSTE KBC RAFFEISEN OTP
July 29, 2009
31/12/2007
2,500
1,000
500
2,000
3,500
UCG RI Erste KBC SoGen ISP OTP
Share Price (August 2008=100)
Market Capitalization (in bn Euro) Group Profits in 2008 (after tax, after minorities, mn !)
Profits in CEE
Profits at Group level
0
20
40
60
80
100
Aug08 Sep08 Oct08 Nov08 Dec08 Jan09 Feb09 Mar09 Apr09 May09 Jun09
UCG Raiffeisen
Erste KBC
Soc. Gen OTP
Intesa San Paolo
20
9.2
8.9
7.2
9.4
10.3
7.2
11.0
3.6
3.8
4.7
4.8
5.7
5.9
6.0
6.5
7.9
11.4
8.9
10.6
11.0
SocGen
KBC
Raiffeisen
EFG
Piraeus
UCG
Erste
NBG
IntesaSP
OTP
Equity/ Assets
Tier 1
MOST OF THE INTERNATIONAL BANKS ACTIVE IN CEE APPLYING FORSTATE SUPPORT
1 SocGen: including EUR 1.7bn tier 1 increase and 2nd issue planned (before August 2009) of 1.7bn Tier 1, excluding floor impact; Erste: including EUR 2.7bn tier 1 increase; KBC: includingEUR 3.5bn + EUR 2bn of non voting core capital securities; Piraeus Bank: including EUR 370mln preferred shares to Greek State, NBG: including EUR 350mln preferred shares; Eurobank:including 950mn preference shares to Greek State; UCG: including EUR 3bn capital increase, but excluding EUR 4bn of government capital instruments; Intesa SP: excluding EUR 4bn“Tremonti Bonds”; Raiffeisen: including EUR 1.75bn core capital to Republic of Austria and EUR 500 mn participation capital to other shareholders; OTP excluding EUR 20mn capital injectionfrom EBRD. Source: UniCredit Group Strategy and Business Development, CEE Strategic Analysis
" KBC issued !3.5 bn core capital securities to theBelgian state + !2 bn nondilutive core capital to theFlemish Regional Government
" SocGen issued !1.7 bn of deeply subordinated notesto the French government. Further !1.7 bn of preferredshares or debt is planned to be issued
" Erste Group will raise participation capital up to !2.7bn and agreed to issue as well !6 bn of Austriangovernment’ s guaranteed bonds
" Raiffeisen Group will issue participation capital up to!1.75 bn, in the form of core capital to the Austriangovernment. RZB issued as well !1.5 bn of Austriangovernment’ s guaranteed bonds
" UniCredit is negotiating the terms related to theissuance of government capital instruments for up to!4 bn, to be subscribed by the Austrian and Italiangovernment
" Intesa SanPaolo will issue !4 bn of subordinated debtinstruments to be subscribed by the Italian government
" NBG, Piraeus Bank and Eurobank EFG increasedcapital by issuing preference shares to the Greek state
Major CEE banking groups applying forgovernment aid
Capital ratios, %Mar. 2009(1)
21
50
100
150
200
250
50 100 150
Group
CDS(5Y,July2009)
CDS (weighted avg of country CDS(1), 5Y, July 2009)
MARKETS PRICEIN CEE RISK, APPRECIATING DIVERSIFICATION
Size of the bubble:
total assets at
Group level (bn !)
(1) weighted for total assets of the player in each market and relevance of CEE in total Group assets; CDS have been updated as of July 29th
UniCredit
KBC
Erste
RZB
Intesa SP
SocGen
CDS of CEE major players and of theircountries of presence (Credit Default Swaps 5Y,Group and weighted avg of CEE countries)
CDS Evolution of CEE major player(Credit Default Swaps, 5Y)
0
100
200
300
400
500
Apr08 Jun08 Aug08 Oct08 Dec08 Feb09 Apr09 Jun09
UCG Raiffeisen
Soc Gen Erste
KBC ISP
22
! THREATS
State influence to increase
New entrants might considerthe market, taking advantage oflower prices and untouched longterm potential
! THREATS
State influence to increase
New entrants might considerthe market, taking advantage oflower prices and untouched longterm potential
Bankingenvironment
CEEPlayers
! STRENGHTS
Incumbents with:
(1) strong presence in themarket, (2) long termcommitment and (3) adequaterisk appetite might turn out to beclear winners
! STRENGHTS
Incumbents with:
(1) strong presence in themarket, (2) long termcommitment and (3) adequaterisk appetite might turn out to beclear winners
!WEAKNESSES
Credit quality problems erodingprofitability
Incumbents might be forced toretreat as dealing with strict riskcontrolFunding constraint
!WEAKNESSES
Credit quality problems erodingprofitability
Incumbents might be forced toretreat as dealing with strict riskcontrolFunding constraint
WINNERS AND LOSERS TIMES OF CHANGE BRING STRONGOPPORTUNITIES FOR THOSE ABLE TO CATCH THEM
! OPPORTUNITIES
Long term growth potentialunchanged
Weaker competitive pressuresin the local market, with somecompetitors strongly constrainedby their strategies
! OPPORTUNITIES
Long term growth potentialunchanged
Weaker competitive pressuresin the local market, with somecompetitors strongly constrainedby their strategies
23
AGENDA
How the CEE banking landscape has changed in theshort term
Banking through the crisis
International players– winners and losers
Policy actions
24
THE INTERNATIONAL COMMITMENT (FROM IMF AND OTHER IFI) IS HIGH –INTERNATIONAL BANKS ACTIVE IN THE REGION PLAY THEIR PART TOO
1 2Intensity ofthesupport(1)
International supportIMF Plans 2008’09, USD
(1) Intensity of IMF support: 1) lower than 5% of GDP; 2) higher than 5% but lower than 10%; 3) higher than 10% of GDP; For Polandsupport is under the short term facility program. Source: IMF, UniCredit CEE Strategic Analysis,
Ukraine 16.5 bn
Poland20.5 bn
Belarus2.5 bn
Latvia2.4 bn
Romania26 bn
SRB4 bn
Hungary15.7 bn
3
Turkey>30 bnpossible
BH1.6 bn
!Strong commitment of all IFI to support the region
! IMF asking international banks active in the regionto formally sign bilateral agreements with thelocal Central Banks to:
! keep their global crossborder exposure tospecific countries constant
! to participate in Central Bank stress testingexercises and commit to high capital ratios forthe subsidiaries even under stress scenarios
!Commitments have been requested andsigned for Serbia, Romania, Hungary andBosniaH., and clearly prove internationalbanks long term interest in the market
25
TO FACE THE CRISIS IN CEE, NOT ONLY FUNDING BUT CREDITGUARANTEE SCHEMES OR OTHER RISK SHARING MECHANISMS
! Funding remains a constraint, but not the key one for banksin CEE
! With credit quality and in general risk being the mainconcerns, banks are hindered in new business development
! Risk sharing mechanism and credit risk guarantee schemesimportant tools to unlock lending
26
ANNEX – TOP PLAYERS BY COUNTRY
27
(1) Hungary, Estonia and Romania including foreignbranches; Slovenia: 3 savings banks included; Estonia:foreign branches included (Sep 2008); Croatia: savingsbanks excluded; excluding banks under liquidation inUkraine; Euro Area 2007
(2) Estonia and Lithuania 2007; Croatia: June 2008; Ukraineincluding divisions; Euro Area 2007
CEE BANKING SYSTEM – MORE THAN ! 2,000 BN MARKET IN TERMS OFTOTAL ASSETS, STILL WITH A FINANCIAL PENETRATION GAP ANDSTRONG ROLE OF INTERNATIONAL PLAYERS
(3) Population aged 15+ having a business relationship with a bank
(4) Branches of foreign banks excluded in Poland, while included inHungary (OTP assumed as majority foreign capital); market shares inEstonia, Latvia and Lithuania based on top 10 banks (representing99%, 88% and 99% of total banking system assets, respectively);Turkey: 17% if JVs are not included; data for Russia refer to Top 50Russian Banks; Euro Area data refer to EU15 (2007)
(5) Including Slovenia for EMU area (2007); in Hungary, OTPmortgage bank not included
Central EuropePoland 649 386 54% 67% 46% 263 86 155 51 145 47Hungary 48 166 80% 89% 57% 129 129 69 69 49 49Czech R. 37 191 82% 97% 62% 157 115 72 53 95 70Slovakia 23 233 85% 96% 74% 66 97 32 47 40 60Slovenia 24 335 99% 30% 59% 49 132 32 85 20 55BalticsEstonia 15 199 NA 97% 95% 22 138 16 100 8 50Latvia 27 109 NA 61% 68% 33 141 21 91 9 37Lithuania 84 203 NA 88% 82% 27 82 21 64 11 32SEEBulgaria 30 368 50% 84% 57% 37 108 25 74 20 60Romania 42 306 55% 88% 54% 85 67 51 41 41 32Croatia 33 275 89% 91% 76% 49 106 34 72 28 60Bosnia 30 240 55% 91% 75% 11 86 7 59 6 49Serbia 34 333 75% 75% 46% 21 70 13 41 10 33Broader EuropeTurkey 50 123 71% 31% 62% 330 74 164 37 201 45Ukraine 184 509 83% 52% 34% 89 102 67 77 33 38Russia 1108 175 89% 11% 48% 676 67 392 39 306 31Kazakhstan 37 162 NA 15% 75% 73 79 47 51 27 29CEE17 2,455 242 74% 47% 55% 2,118 73 1,218 42 1,050 36Euro Area 6,101 578 99% 28% 44% 31,631 346 11,649 127 9,832 107
Total assetsBanks(no.)(1)
Branches(mn
inhabit.)(2) % of GDPTOP 5(5) ! bn % of
GDP! bn ! bn
Bankingpenetration
(3)
Total gross loans Total deposits
Foreign
banks(4)
% of
GDP
Market share
DATA AS OF 2008
Source: CEE Strategic Analysis, Bank Austria Market Research and ECB
28
Total Assets 2008 (! bn), market share and ownership
0
0.5
1
1.5
2
2.5
Raiffeisen Bank UniCredit Group HypoAlpeAdriaMostar
HypoAlpeAdriaBanja Luka
NLB RazvojnaBanka Banja
Luka
Intesa SanPaoloBanka
VolksbankSarajevo
NLB TuzlanskaBanka Tuzla
Nova BankaBanja Luka
20.4%19.1%*
11.6%9.1%
6.1% 4.8% 4.1% 3.8%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(UniCreditGroup)
Source: CEE Strategic Analysis
(RaiffeisenInternational)
(BayerischeLandesbank)
(NLB/KBC) (IntesaSanPaolo)
(NLB/KBC) (foreignprivatecapital)
3.4%
(VolksbankInternational)
TOP BANKS IN BOSNIA AND HERZEGOVINA
* Including UniCredit Bank Mostar & UniCredit Bank Banja Luka
** including HypoAlpeAdria Banja Luka
(BayerischeLandesbank)
20.7%**
9.8%***
*** including NLB Tuzlanska Banka
29
Total Assets (! bn), market share and ownership
0
1
2
3
4
5
6
UniCreditBulbank
DSK Bank UnitedBulgarian Bank
RaiffeisenBank
Eurobank EFG FirstInvestmentBank
Piraeus Bank SG Express Alpha Bank,Sofia Branch
CorporateCommercial
Bank
15.8%
12.5%11.1%
9.9%
7.8%
6.1% 6.0%
3.6% 3.1%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(UniCreditGroup)
(OTPGroup)
(RaiffeisenInternational)
(NationalBank ofGreece)
(majorityprivatecapital)
(EurobankEFG)
(PiraeusGroup)
(AlphaGroupGreece)
(SociétéGénéraleGroup)
3.0%
(majoritylocal privatecapital)
TOP BANKS IN BULGARIA
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
30
Total Assets (! bn), market share and ownership
0
2
4
6
8
10
12
14
ZagrebackaBanka
Privredna BankaZagreb
ERSTE &Steiermärkische
Bank
RaiffeisenbankAustria
Hypo AlpeAdriaBank
SociétéGénérale
Splitska Banka
HrvatskaPostanskaBanka
OTP BankaHrvatska
Volksbank PodravskaBanka
24.3%*
18.2%**
12.1%11.2%*
9.9%***7.3%
3.9%*3.4%
2.0%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(UniCreditGroup)
(IntesaSanPaolo)
(RaiffeisenInternational)
(ERSTEGroup)
(SociétéGénéraleGroup)
(BayerischeLandesbank)
(State) (OTPGroup)
(majorityforeign
ownership)
0.7%
(VolksbankInternational)
TOP BANKS IN CROATIA
* Including mortgage bank
** including mortgage bank & Medimurska Banka
*** pro forma including Slavonska BankaSource: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
31
0
5
10
15
20
25
30
Ceskasporitelna
CSOB KomercniBanka
UniCredit Bank Raiffeisenbank ING Bank CitibankEurope Branch
GE MoneyBank
Commerzbank Volksbank
Total Assets (! bn), market share and ownership
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
TOP BANKS IN CZECH REPUBLIC
18.0% 17.5%
15.1%
6.9%
4.5%3.2% 2.6%* 2.4%
1.2%2.2%
(KBCGroup)
(ERSTEGroup)
(UniCreditGroup)
(ING Group)(RaiffeisenInternational)
(GE Capital) (Commerzbank)
(VolksbankInternational)
(CitiGroup)(SociétéGénéraleGroup)
* Data as of 3Q 2008
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
32
Total Assets (! bn), market share and ownership
0
2
4
6
8
10
12
Swedbank SEB Bank Sampo Pank(Branch)
Nordea Pank(Branch)
EestiKrediidipank
Dnb Nord(Branch)
TallinnaÄripank
Marfin Bank(Branch)
UniCredit BankEstonianBranch
ParexPank(Branch)
48.9%
21.1%
11.9% 11.2%
1.6% 1.2% 1.0% 0.8% 0.8%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(Swedbank) (SEBGroup)
(NordeaGroup)
(DanskeBank Group)
(UniCreditGroup)
(LatvianBusinessBank)
(ParexGroup)
(majoritylocal privatecapital)
0.5%
(MarfinPopular
Bank Group)
TOP BANKS IN ESTONIA
(DNB NordGroup)
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
33
0
5
10
15
20
25
30
OTP (incl.MortgageBank)
K&H CIB MKB RaiffeisenBank
ERSTE UniCredit Bank(incl. Mortgage
Bank)
Budapest Bank FHB Bank (incl.MortgageBank)
Citibank
Total Assets (! bn), market share and ownership
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(InternationalCapital/ (state)Golden Share)
(KBCGroup)
(IntesaSanPaolo)
(BayerischeLandesbank)
(ERSTEGroup)
(RaiffeisenInternational)
(UniCreditGroup)
(GECapital)
(CitiGroup)(no majorityshareholder)
TOP BANKS IN HUNGARY
24.5%
10.3% 9.9% 8.8% 8.6% 8.5%
6.2%
3.0% 2.8% 2.6%
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
34
Total Assets (! bn), market share and ownership
0
2
4
6
8
10
12
14
16
18
20
BTABank KazkommertsBank
Halyk SavingsBank
Alliance Bank ATF Bank BankCenterCredit
Nurbank Temirbank Eurasian Bank Kaspi Bank
24.5%
19.6%
13.6%
8.7% 8.3% 7.9%
2.5% 2.4% 2.3%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(State) (local privatecapital)
(localprivatecapital)
(KookminBank,Korea)
(UniCreditGroup)
(CaspianGroup, NL)
(State)
2.1%
(localprivatecapital)
TOP BANKS IN KAZAKHSTAN
(localprivatecapital)
(State)
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
35
Total Assets (! bn), market share and ownership
0
1
2
3
4
5
6
7
8
Swedbank Parex banka* SEB Banka Nordea BankFinland Latvia
Branch
DnB NORDBanka
Rietumu Banka Aizkrauklesbanka
Mortgage Bank UniCreditBank**
LatvijasKrajbanka
22.7%
13.5% 13.0%
10.0%8.4%
4.9% 4.3% 4.1% 3.4%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(Swedbank) (State/EBRD)
(DnB NordBank)
(SEB Group) (majorityprivatecapital)
(NordeaGroup)
(UniCreditGroup)
(State)
3.0%
(Snoras BankLithuania)
TOP BANKS IN LATVIA
(localprivatecapital)
* data as of 3Q 08
** Including branches in Estonia and Lithuania
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
36
Total Assets (! bn), market share and ownership
0
1
2
3
4
5
6
7
8
SEB Bank Hansabankas DnB Nord Bank Nordea BankLithuaniabranch
Danske bankLithuaniasubsidiary
Bank Snoras Ukio Bankas ParexBankas Siauliu Bankas UniCredit BankLithuaniabranch
28.8%
22.2%
14.6%
9.6%6.9% 6.3%
4.7%2.4% 2.3%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(SEBGroup)
(Swedbank) (majoritylocal privatecapital)
(DnB NordBank)
(DanskeGroup)
(NordeaGroup)
(UniCreditGroup)
(EBRD)
1.2%
(ParexGroup)
TOP BANKS IN LITHUANIA
(majoritylocal privatecapital)
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
37
Total Assets (! bn), market share and ownership
0
0.2
0.4
0.6
0.8
1
1.2
CKB Prva banka Crne Gore HypoAlpeAdria Bank NLB MontenegrobankaPodgorica
Podgoricka Banka
34.3%
14.8% 14.6% 14.2%
6.7%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(OTPGroup) (Bayerische
Landesbank)
(SociétéGénérale Group)(NLB/KBC)
TOP BANKS IN MONTENEGRO
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
38
0
5
10
15
20
25
30
35
PKO BP Bank Pekao BRE Bank ING BSK BZWBK Bank Millenium Citibank Kredyt Bank BGK RaiffeisenBank
Total Assets (! bn), market share and ownership
Market share in terms of total assets (accordingto IFRS, consolidated figures)
(UniCreditGroup)(State) (Commerz
bank)(INGGroup) (CitiGroup)(AIB Ltd) (Banco
ComercialPortugues)
(KBCGroup) (State)
TOP BANKS IN POLAND
(RaiffeisenInternational)
12.9% 12.7%
7.9%
6.7%5.6%
4.5% 4.1% 3.7%3.3% 2.8%
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
39
Total Assets (! bn), market share and ownership
0
2
4
6
8
10
12
14
16
18
BancaComercialaRomana
BancaRomanaPentru
Dezvoltare
Volksbank RaiffeisenBank
Alpha Bank UniCredit TiriacBank
BancaTransilvania
Bancpost CEC ING BankBranch
20.4%
15.7%
6.8% 6.0% 5.6% 5.5% 5.4% 4.8% 4.3%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(ERSTEGroup)
(SociétéGénéraleGroup)
(majoritylocal privatecapital)
(RaiffeisenInternational)
(AlphaBankGroup)
(EurobankEFG)
(UniCreditGroup)
(VolksbankInternational)
(ING Group)
3.5%
(State)
TOP BANKS IN ROMANIA
Source: CEE Strategic Analysis
Total Assets* 2008 (! bn), market share and ownership
* Total does not include Creditcoop
40
Total Assets (! bn), market share and ownership
0
20
40
60
80
100
120
140
160
180
Sberbank VTB Group Gazprombank RosselkhozBank
Bank ofMoscow
Alfabank UniCredit Bank Raiffeisenbank Rosbank Uralsib
23.8%
12.1%
6.3%
2.9% 2.7% 2.4% 2.1% 2.0% 1.7%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(State) (RaiffeisenInternational)
(Moscow CityGovernment)
(Gazprom State)
(AlfaGroup)
(State) (UniCreditGroup)
1.5%
TOP BANKS IN RUSSIA
(State) (SociétéGénéraleGroup)
(localprivatecapital)
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
41
Total Assets (! bn), market share and ownership
0
0.5
1
1.5
2
2.5
3
Banca IntesaBeograd
KomercijalnaBanka Beograd
RaiffeisenBank Beograd
Eurobank EFG Hypo Alpe Adria BankaBeograd
Unicredit Bank VojvodjanskaBanka
AIK Banka Nis SociétéGénérale
Banka Srbija
ProCredit BankBeograd
14.1%
9.6% 9.1%
7.0% 6.4%
5.0% 4.9% 4.7%4.0%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(IntesaSanPaolo)
(RaiffeisenInternational)
(BayerischeLandesbank)
(State) (ATEbankGroupGreece)
(EurobankEFG)
(UniCreditGroup)
(ProCredit,Frankfurt)
(SociétéGénéraleGroup)
3.6%
(NationalBank ofGreece)
TOP BANKS IN SERBIA
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
42
0
2
4
6
8
10
12
14
SlovenskaSporitelna
VUB Tatra Banka CSOB UniCredit Bank Dexia Banka Prva StavebnaSporitelna
ING Bank OTP Bank Volksbank
Total Assets (! bn), market share and ownership
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(ERSTEGroup)
(IntesaSanPaolo)
(KBCGroup)
(RaiffeisenInternational)
(INGGroup)
(UniCreditGroup)
(DexiaGroup)
(Bausparkassen)
(OTPGroup)
(VolksbankInternational)
TOP BANKS IN SLOVAKIA
* Including Istrobanka
19.7%
17.3% 16.7%
10.6%7.4%
3.1% 2.9% 2.6%4.3%
2.4%
12.5%*
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
43
0
2
4
6
8
10
12
14
16
NovaLjubljanskabanka
Nova kreditnabanka Maribor
Abanka Vipa UniCredit Bank SKB banka Banka Koper Banka Celje Hypo AlpeAdria Bank
SID banka d.d. Gorenjskabanka Kranj
Total Assets (! bn), market share and ownership
30.2%
9.6%8.0%
6.1% 5.5% 5.3% 5.1% 4.8% 4.4%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(State, KBCGroup 30.6%)
(State) (NovaLjubljanskabanka 41%)
(majority localprivate capital)
(IntesaSanPaolo)
(SociétéGénéraleGroup)
(UniCreditGroup)
(BayerischeLandesbank)
(State)
3.8%
(majoritylocal privatecapital)
TOP BANKS IN SLOVENIA
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
44
Total Assets (! bn), market share and ownership
0
10
20
30
40
50
60
Ziraat Isbank Garanti Akbank Yapi Kredi Vakifbank Halkbank Finansbank Denizbank ING
14.8%13.8%
12.6% 12.1%
9.0%
7.4% 7.2%
3.8%2.7%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(State) (Is BankPensionFund)
(DogusGroup & GEGroup)
(SabanciGroup &CitiGroup)
(State)(UniCreditGroup)
(DexiaGroup)
(NationalBank ofGreece)
2.3%
(ING Group)
TOP BANKS IN TURKEY
(State)
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
45
Total Assets (! bn), market share and ownership
0
1
2
3
4
5
6
7
8
PrivatBank RaiffeisenBank Aval
UniCreditGroup*
OschadBank Ukrsibbank Ukreximbank OTP Bank Alfa Bank Nadra Bank VTB Bank
8.7%
7.1%6.5%
6.2% 6.0%5.2%
3.6% 3.5% 3.3%
Market share in terms of total assets (accordingto local accounting standard, unconsolidatedfigures)
(localprivatecapital)
(RaiffeisenInternational)
(UniCreditGroup)
(BNP ParibasGroup)
(VTBGroup)(State) (OTP
Group)(State)
3.1%
(Alfa Group)
TOP BANKS IN UKRAINE
* Ukrsotsbank and UniCredit Bank Ukraine
(localprivatecapital)
Source: CEE Strategic Analysis
Total Assets 2008 (! bn), market share and ownership
46
METHODOLOGY AND CONTACTS
METHODOLOGY
# In the ranking of international players, the CEE region includes the mentioned 17 CEE countries plus Albania, Azerbaijan, Belarus, Georgia, Kyrgyzstan, Macedonia,
Moldova, Montenegro, Tajikistan and Uzbekistan.
# The analysis covers the following European Banking Groups: UniCredit Group, Erste, KBC, Raiffeisen, Société Générale, IntesaSanPaolo, OTP
# Data are according to IAS/IFRS (when not available, LAS are used), proforma 12M including deals closed as of May 2009. Data refer to consolidated
audited results (apart from a few exceptions where unconsolidated and/or unaudited data are used)
# The comparison among top banks at the individual country level (in terms of total assets) is based on local accounting standards, unconsolidated. The comparison
among top banks at the individual country level is based upon different standards across countries (IFRS/local standard, consolidated/unconsolidated), according to
the availability of data.
# Closing date: July 2009
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UniCredit Group, CEE Strategic Analysis
Debora Revoltella – Head
Carmelina Carluzzo, Matteo Ferrazzi, Anna Kolesnichenko,Fabio Mucci, Lisa Perrin, Bernhard Sinhuber, Gerd Stiglitz