unicredito italiano group e - leader international leadership conference june 11 – 15, 2006...

UniCredito Italiano Group

E - Leader E - Leader

International Leadership International Leadership ConferenceConference

June 11 – 15, 2006

Bratislava

Anna PilkovaAnna Pilkova

2

History of the banking sector in brief and main business trends History of the banking sector in brief and main business trends

INDEXINDEX

in the banking sector todayin the banking sector today

IntroductionIntroduction

Macroeconomic context and future expectationsMacroeconomic context and future expectations

Slovak economy and banking sector Slovak economy and banking sector

UniBanka and it´s strategic changes over 15 years of existenceUniBanka and it´s strategic changes over 15 years of existence

3

The main features about SLOVAK REPUBLICThe main features about SLOVAK REPUBLIC

1993 – establisth of Slovak Republic

• inhabitants: 5 million

• neighbouring countries:

Czech Republic, Poland,

Ukraine, Hungary, Austria

2004 - joining European Union

2009 - a part of the European Monetary Union

4


INDEXINDEX






5

Sound macroeconomic conditions have been reflected in major Sound macroeconomic conditions have been reflected in major sovereign rating improvementssovereign rating improvements

Source: Rating agencies, UniBanka, UniCredit NE Division

Improvement in rating in the last 2 years

Deterioration in rating in the last 2 years

The best rating among the V4

countries given by 2 out

of 3 main rating

agencies

Moody's S&P Fitch

Poland A2/Stable BBB+/Stable BBB+/Positive

Hungary A1/Negative A-/Negative BBB+/Stable

Czech Republic A1/Positive A-/Positive A/Stable

Slovakia A2/Positive A/Stable A/Stable

Slovenia Aa3/Positive AA-/Stable AA-/Positive

Estonia A1/Positive A/Positive A/Positive

Latvia A2/Positive A-/Stable A-/Stable

Lithuania A3/Positive A/Positive A-/Positive

Bulgaria Baa3/Stable BBB/Positive BBB/Stable

Romania Ba1/Positive BBB-/Stable BBB-/Stable

Croatia Baa3/Stable BBB/Stable BBB-/Stable

Turkey Ba3/Stable BB-/Positive BB-/Positive

6

Performance of the economyPerformance of the economy: : MMacroeconomic scenario for 2004-2008acroeconomic scenario for 2004-2008

Indicator 2004 2005 2006F 2007F 2008F

Real growth in GDP (%) 5.5 6.0 6.3 5.86.3

Growth in investments (%) 5.0 13.8 13.9 3.85.8

3.8 7.2 5.1 4.43.6

2.0 0.5 1.8 1.71.5

5.9 3.7 3.5 2.02.1

15.6 13.1 12.2 12.012.1

40.0 38.6 37.0 36.036.1

4.8 3.0 3.6 3.83.8

-3.4 -8.6 -5.5 -2.8-3.6

-3.0 -2.9 -2.7 -2.7-3.0

41.6 34.5 38.4 37.537.8

Growth in consumption of households (%)

Growth in government´s consumption (%)

Inflation - Dec (%)

Unemployment rate (%)

Average exchange rate €/SKK

1M BRIBOR (average, %)

Current account (%, GDP)

Public deficit (%, GDP)

Public debt (%, GDP)

2.3 4.0 5.7 3.33.5Direct foreign investments

Source: Statistical Office of SR, NBS, Office of Social Affairs and Family, UniBanka

Key indicators for Euro adoption

Growth should remain

robust...

... mainly driven by investment activity...

Public deficit could be

higher after elections

... and gradual dissinflation.

7

Maastricht criteriaMaastricht criteria: Inflation will be the hardest nut to crack: Inflation will be the hardest nut to crack

0,0%

1,0%

2,0%

3,0%

4,0%

5,0%

6,0%

7,0%

8,0%

9,0%

10,0%

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

11.

12.

1.

2.

3.

4.

5.

6.

7.

8.

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11.

12.

1.

2.

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10.

11.

12.

1.

2.

3.

2004 2005 2006 2007 2008

NBS target HICP (y/y, 12M avg.) Maastricht*

f orecast

-7,7%

-3,7%-3,0% -2,9% -2,7% -3,0% -2,7%

-9,0%

-8,0%

-7,0%

-6,0%

-5,0%

-4,0%

-3,0%

-2,0%

-1,0%

0,0%

2002 2003 2004 2005 2006F 2007F 2008F

forecast

Maastricht criteria – 3%

•Maastricht criteria estimate UniBanka based on IMF forecast

Public finance deficit vs. Maastricht criteria

Inflation vs. Maastricht criteria Slovakia able to fulfill

Maastricht criteria despite difficulties

Slovakia should fulfill inflation criteria in H2 2007, however risk still comes from energy (oil) prices development

Based on 2006-2008 budget proposal, Slovakia should by able to fulfill both public finance criteria (deicit andd debt), even if the pension reform costs will be included

Exchange rate stability – the range is set to 32,687 – 44,223 SKK/€ - no problems expected

Interest rate stability - Slovakia safely fulfill Maastricht criteria – no problems expected also in upcoming years (Maastricht criteria at the level of 5.61% p.a. vs. Slovakia long-term interest rate at the level of 4.01% p.a. in March 2006)

Slovakia fulfills Maastricht criteria

www.hotelset.sk

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INDEXINDEX






9

Restructuring of a quarter of loans portfolio and subsequent privatisation Restructuring of a quarter of loans portfolio and subsequent privatisation lead to the present good resultslead to the present good results

Note: *at the end of 1998Source: NBS, UniBanka

1993- 2006: Evolution of the Slovak banking sector in brief

1993

Slovak republic

established

1997

29 banks present, 61% of capital in local (state)

hands

1999

Restructuring starts: 25

banks, 75% of capital in

local hands

NPL ratio: 31%

NPL ratio: 36%*

2002

Restructuring finalised: 20

banks, 14% of capital in

local hands

NPL ratio: 11%

2006

23 banks present: 4% of capital in local hands, ROE at16%,

no bank in red numbers

NPL ratio: 5%

10

Intermediation of the financial sector – a huge potential for future Intermediation of the financial sector – a huge potential for future growth in the whole regiongrowth in the whole region

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

PL HU CZ SK HR RM BG TK

120% Eurozone (2005) = 115.4

2002*

2005

Source: UniCredit New Europe Research Network and UniCredit Research and Strategy

Total Loans over GDP

Slovak banking sector with a position at the average of the

region

39%39%

11

Data as of 2004

Note: (*) As of end of 2003.

Source: UCI New Europe Research Network Database, based on National Central Banks and Eurostat

Per capita debt

143

210

300

540

663

740

852

1,217

1,587

1,603

1,939

13,286

Romania

Turkey

Bulgaria

NE(10)

Slovakia

Poland

Latvia

Czech R.

Estonia

Hungary

Croatia

Eurozone

Household Debt over Fin. Wealth

13%

21%

22%

23%

24%

27%

28%

29%

31%

36%

46%

83%

Turkey

Czech R.

Slovakia

NE(10)

Poland

Eurozone

Bulgaria

Latvia

Romania

Hungary

Croatia

Estonia

(*)

5%

6%

10%

12%

12%

13%

14%

19%

20%

24%

32%

50%

Romania

Turkey

Slovakia

NE(10)

Bulgaria

Poland

Czech Rep.

Latvia

Hungary

Estonia

Croatia

Eurozone

Household Debt over GDP

Backed by financial assets, the indebtedness of households does not Backed by financial assets, the indebtedness of households does not seem so low anymore seem so low anymore

12

Slovak banking sector in words

23 banks are present on the market, mainly with general licenses

Capital ownership structure dominated by Austria (36%) followed by Luxembourg (32%) and Czech republic (9%). Non EU countries own 4% of local banking capital

Management Boards of TOP10 banks are dominated by foreign members (54%). Share of women remains low, at 8%

Market development was characteristic by lending boom on the retail side while cash-flow improvement and strong investment activity on the corporate side

In terms of P&L impacts, the increased competition and monetary relaxing shifted the P&L structure towards a decreased role of interest income

13

Inspite of an increasing competition and 98% of the banking sector assets Inspite of an increasing competition and 98% of the banking sector assets being in foreign hands – the sector remains highly concentratedbeing in foreign hands – the sector remains highly concentrated

Note: Ranking based on balance sheet values; Source: UniBanka

2005 Ranking of the Slovak banking sector (SKK ths.)** TOP3 holding above 50% of the market

TOP 3 holding above 40% of the market

Balance sheet value

Due from clients

Due to clients

Net profitMajor foreign

owner1 VÚB 227 403 847 83 380 430 162 302 493 3 780 755 Intesa BCI2 SLSP 225 560 305 90 144 890 177 842 851 3 313 679 Erste bank3 ČSOB 185 391 306 30 093 472 59 263 645 374 773 KBC4 Tatrabanka 184 118 202 78 990 399 130 950 069 2 380 135 Reiffesien5 ING bank 105 188 876 15 058 388 38 235 703 407 736 ING6 HVB Slovakia 76 239 458 36 885 045 28 569 417 730 289 UniCredit7 UniBanka 53 623 937 26 389 178 41 011 385 381 730 UniCredit8 Dexia banka 45 787 324 24 896 455 31 256 095 233 991 Dexia9 PSS 45 698 419 34 753 061 36 675 746 653 858 Bausparkassen10 OTP banka 39 332 747 28 447 994 22 415 342 190 839 OTP11 Istrobanka 35 261 591 20 435 294 19 635 740 189 242 Bawag12 Ľudová banka 30 992 534 18 471 933 23 807 562 152 383 Volksbank13 Citibank 29 094 792 13 343 551 20 280 777 308 487 Citigroup14 Poštová banka 23 369 574 7 099 371 20 049 002 226 903 -15 Calyon 16 586 327 6 929 123 3 955 187 15 720 Calyon16 VUB Wüstenrot 9 033 236 5 320 560 7 822 010 73 031 Wüstenrot17 Commerzbank 6 466 336 2 440 139 690 609 3 736 Commerzbank18 Komerční banka 6 295 771 3 083 698 297 430 2 019 Societe Generale19 ČSOBS 6 070 486 2 094 284 5 247 580 1 191 KBC20 Privat banka 5 466 999 1 199 672 4 142 571 42 719 Meinl Bank

Top 3 players holding

70% of the market profit

14

UCI + HVB + BACA BY FAR NO. 1 IN CEUCI + HVB + BACA BY FAR NO. 1 IN CE

Dec. 2004 (1) Net Profit(€ mln)(2)

Assets(€ bln)

N. of branchesRevenues(€ mln)

Citigroup 14.8176 237n.a.

OTP(4) 18.0(3)16.9576(3)557 875(3)7861,715

Erste 33.3418 1,2451,420

SocGen 19.7408 7221,126

KBC 34.8319 1,0171,660

RZB 24.7264 8141,110

Intesa 16.4242 498826(5)

UniCredit + HVB (100% of all banks,

including Yapi)83.71,163 2,8644,982

Source: UCI-FBD Economic Research; numbers calculated using average exchange rate except for Unicredit

1. 100% of total assets and profit after tax for controlled Companies (stake > 50%) and share owned for non controlled companies; 100% of branches and employees; for details please refer to the methodological notes. 2. After tax, before minority interest. 3. Including proforma recently acquired Novabanka; 4. Including OTP’s subsidiaries. 5.Data on total revenues refer to contribution to Intesa’s consolidated results

15


INDEXINDEX






16

UniBanka is a member of UniCredit Group one of the best UniBanka is a member of UniCredit Group one of the best banking groups in Europebanking groups in Europe

ItalyGermanyAustria

CEEPolandHungaryCzech Republic SlovakiaBulgariaRomaniaCroatiaBosnia HerzegovinaSerbia Montenegro SloveniaTurkeyUkraineLithuaniaLatviaEstoniaRussia

17

Bank Profile and Strategy EvolutionBank Profile and Strategy Evolution

Established 1990 as a first private bank in Slovakia

Medium-sized bank in comparison with banking sector in

Slovakia

Commercial bank offers full range of retail (including SME)

corporate and investment banking

products and services

Main shareholders UniCredito Italiano S.p.A., Milan 77,21%

EBRD, London 19,90%

The Ministry of Agriculture

1,09%

Others 1,8%

Domestic network 10 branches and 56 sub-branches

connected

on-line reach about 80% of population

18

10 Regional branches

56 Local branches

Total Assets 53,725,903Deposits 42,832,284Loans 26,389,178Total revenues 1,909,371Net Profit 365,228

Registered capital 2,377,062

In thous. SKK, IAS consolidated data as of 31st December 2005

UniBanka, a. s.: UniBanka, a. s.: • has highly developed branch network• holds strong corporate banking position including property development financing • reinforces orientation on services in foreign trade • offers balanced portfolio of competitive products and

services for corporate clients, managers and employees

Branches 66Employees 998Deposits / Loans 1.62Capital adequacy 12.21 %

Results and branch network of UniBanka Results and branch network of UniBanka

19

Bank Profile and Strategy Evolution...Bank Profile and Strategy Evolution...Bank Life Cycle...Bank Life Cycle...

1990 –

1991 - 1996

1997 – 2000

2001 –

2006

START – UP

ENTERPRENEURIAL

GROWTH

STAGNATION-DECLINE

STRATEGIC OWERSHIP

TURNAROUND

NEW STRATEGIC

MGMT PROCESS

NEW CULTURE

MERGER

KEY CHALENGESKEY SEGMENTSIDENTIFICATION

HIGHT GROWTH BUT NOT INHARMONISED WITH OTHER PROCESSES PART.RISKSFRAGMENTED SHAREHOLDER´S STRUCTURE

SURVIVAL SHAKEOUT

REENGINEERING

GROWTH STRATEGY THROUH AQUISITION

20

PERIOD/STRATEGIC EVENTS

26.6.1990 – Establishment under the name Slovenská poľnohospodárska banka

-Idea of bank establishment came from the man who was the first CEO

l.l.1991 – Starting of Banking Activities

1992– Privatisation process has started

1993-Slovak republic was established and EBRD bought stake in the Bank

1993-1994 – Important macroeconomic change occurred(decrease of GDP, significant growth of MM prices, slow down in agrisector

1994 – changing the name –Polnobanka

MAIN SHAREHOLDERS

Slovak insurance company - SP (31,91%)

Ministry of Agric. - MP(7.2%)

Agrobanka Praha-AG (6,7%)

Other (54,19%)

SP – (31,91%)

EBRD – (20,0%)

MP – (8,65%)

AG – (3,75%)

Other –(35,69%)

STRATEGIC FOCUS

. Start-up business focusing on agribusiness sector

. Dynamic growth mainly in loan side while funding was done through financial institutions

. Personal from former State Bank Czechoslovakia and Non banking industries

.Enlargment of business segments towards newly set up start-ups, mainly shops

. Starting cooperation with EBRD through co-financing mainly food processing companies

. Hiring new staffs with „western type of education“and starting trainings in this directions


21

PERIOD/STRATEGIC EVENT

1995 – new strategy formation and implementation has started

1996 – two Italian financial groups – Unicredito,S.p.A and Finest,S.p.A. joined the bank

MAIN SHAREHOLDERS

SP - (31,91%)

EBRD – (20%)

UcI- (7,5%)

Finest – (7,5%)

MP – (8,32%)

AG – (1,78%)

Other –(22,99%)

STRATEGIC FOCUS

. From agribusiness to universal banking with providing of full range of services and products of commercial and investment banking through concepts of relationship banking and improvement of credit granting process.

The crucial segments were: Corporate,SME´s and Citizens. Within corporate special attention was done to Italian enterpreneurs


22


1997 – the first CEO left the bank

- the first signs of bank stagnation appeared

1998 – corporate governance change – instead of external Board of Director System Internal one was introduced.

BoD had two Slovak members and one British guy – EBRD repres.

MAIN SHAREHOLDERS

SP - (31,91%)

EBRD – (20%)

UcI- (7,5%)

Finest – (7,5%)

MP – (8,32%)

AG – (1,78%)

Other –(22,99%)

STRATEGIC FOCUS

. Continuing implementation of strategy defined in 1995 through changing of organizational structure as follows:a/ separating business from risk mgmt and Credit risk was a major priority,

b/ set up two business units focusing on corporate (incl. SME) and citizens.

c/ strategic customer services and products were design – focusing mainly on tailored made system


23


1999 – a few failures of commercial bank occured – Priemyselná banka, Agrobanka, Slovensko, Banka Haná – negative impact on Poľnobanka – a few runs on liquidity

2000 – May , SP decided to increase capital and subsequently sold 51% of shares to UniCredito Italiano.....

2002 – April- changing of the name – UniBanka

MAIN SHAREHOLDERS

SP (31,91%)

EBRD (20%)

UcI (7,5%)

Finest (7,5%)

MP (8,32%)

AG (1,78%)

Other (22,99%)

UCI (72,39%)

EBRD (19,9%)

MP (1,59%)

AG (0,34%)

Others (4,35%)

STRATEGIC FOCUS

. To find strategic shareholder and capital.

. Bad loan portfólio solving.

. Strict credit granting process – continuing.

. Turnoround

. New growth strategy formation and implementation


24


2005 – June – Aquisition fo HVB Bank by UniCredito Italiano Milan

2006 – Merger of local HVB bank with UniBanka

MAIN SHAREHOLDERS

UCI (77,21%)

EBRD (19,90%)

MAG (1,09%)

Others (1,8%)

STRATEGIC FOCUS

. Focus on improving position in Retail and SME´s sector

. To be the 4th largest bank in Slovakia – challenging the 3rd

one

. To be 2nd largest corporate bank


25

ITALY:N. 2 with 10% market share1

Customer Loans: 122 bn EuroCustomer Deposits: 72 bn EuroBranches: 3,137Employees: 40 000Customers: 6.3 mn

After merger with HVB group became UniCredit Group leader on After merger with HVB group became UniCredit Group leader on markets of CEE countriesmarkets of CEE countries

GERMANY:N. 2 with 5% market share1

Customer loans: 153 bn EuroCustomer Deposits: 61 bn EuroBranches: 681Employees: 26,000Customers: 4,0 mn

CENTRAL AND EASTERN EUROPE:N. 1 bank2

Countries of presence: 163

Customer Loans: 41 bn EuroCustomer Deposits: 47 bn EuroEmployees: 58,0004

Customers: 16.4 mn

AUSTRIA:N. 1 with 18% market share1

Customer Loans: 51 bn EuroCustomer Deposits: 35 bn EuroBranches: 405Employees: 12,000Clustomers: 1.8 mn

Source: Company data of year end 2004, except Hebros Bank as of 2003

1. Ranking measured in terms of total assets. For market share calculations UniCredit and HVB may apply different definitions as far as the underlying data is concerned. 2. Ranking measured in terms of total assets. Including Hebros Bank, Eksimbanka, IMB and Yapi. Banca Ion Tiriac not included. For Yapi included 50% of loans and deposits and 100% od branches and customers. For customer customer loans, customer deposits, branches, employees and customers data not included for Ukraine and Baltic Countries. 3. Included Poland, Hungary, Czech Republic, Slovakia, Bulgaria, Romania, Croatia, Bosna Herzegovina, Serbia Montenegro, Slovenia, Turkey, Ukraine, Lithuania, Latvia, Estonia and Russia. Excluding representative offices. 4. Including 100% Yapi, excluding Hebros Bank, Eksimbanka, IMB, Ukraine and Baltic Countries.

26

Market capitalisation

Group:1 60 billion EUR

Branches Group: 7,184

Assets Group: 787 billion EUR

KEY RESULTS AS TO 31.12.2005 - solid, profitable and growing company KEY RESULTS AS TO 31.12.2005 - solid, profitable and growing company

Loans and receivables

Group: 426.6 billion EUR

Direct Deposits Group: 462.2 billion EUR

Empoyees Group: 132,914

Total revenues Group: 20,791 mil EUR

1. Group (everywhere): pro forma – considering HVB as part if the UniCredit Group for all the year 2. Without considering the integration cost

Net Income2

Group: 3,308 mil EUR

In terms of market cap: 5th largest European financial group and 2nd in Euro zone

27

BANKING GROUP WITH HIGH INTERNATIONAL RATING:

ST debt T/LT debt OutlookFITCH RATINGS F1 A+ Stable Moody‘s Investor Service P-1 A1 StableStandard and Poor‘s A-1 A+ Negative

Private Banking and

AM Division

Corporate and SME

Div.

Retail Division

Central and Eastern Europe Division

Commercial Real Estate

NEW GROUP BUILT TO LEVERAGE OPPORTUNITIES IN ALL CUSTOMER SEGMENTS AND MARKETS

Multinationals/ Investment

Banking Division

unicredito italiano group e - leader international leadership conference june 11 – 15, 2006...

Documents

banking sector unibanka

maastricht criteria

years of existence unibanka

years of existence slide

inflation criteria

gdp public deficit

strategic changes

best rating