andrea moneta, managing board member, ba-ca martin mayr, market research, ba-ca

Andrea Moneta, Managing Board Member, BA-CA Martin Mayr, Market Research, BA-CA

London, 21 May 2006

EBRD Annual MeetingRetail banking on the move:

the latest trends and developments in CEE

Part 1: The Group in CEE (A. Moneta) The leading banking network in CEE Retail banking is the growth driver in CEE business

Part 2: Market research – the latest trends and developments (M. Mayr) Banking penetration Usage of products and services Summary and outlook

Part 3: A strong force in retail banking (A. Moneta) The name of the game is innovation

Agenda

3

UniCredit is a Truly European Bank …

Thinking globally and operating on multi-local basis

Creating sustainable long-term value

Exploiting complementary nature of Group's best practices

Developing the best of local cultures and brands already recognized and established

Note: 2005 data1 Consolidated 2005 pro forma for UniCredit Group including HVB Group stand alone 12 months results, integration effects and other one-off costs2 Ranking as at 16 March 2006 - Source: Datastream

Banking operations in 20 core countries

28 million customers 7,184 branches 148,000 employees Net profit: € 3.4 bn1

Total assets: € 782 bn Deposits and debt

certificates: € 462 bn Loans: € 427 bn Global player in asset

management: approx. € 272 bn AuM with coverage in 20 countries in 5 continents

25th European company in terms of capitalization2

4

… with the by far most extensive CEE banking network...

CEE region1

€92.7bn total assets

2,932 offices

60,722 employees

~17million customers

Ranking, total assets and number of offices of BA-CA and UniCredit in CEE as of 31 December 2005

1 including - Banca Tiriac (Romania) - NBB (Bosnia/Rep.Srpska)- Yapi Kredi (Turkey)excluding- HVB Splitska banka (Croatia)

€8.9bn145

€1.5bn172

€529m42

€21bn574

€74mn1

€31.7bn1,281

PolandNo. 1

MacedoniaRep.Office

EstoniaNo. 6

€358mn1

€4.7bn30

€259mn8

€3.5bn322

LatviaNo. 10

RussiaNo. 8

Ukraine

BulgariaNo. 1

SerbiaNo. 5

€3.1bn128

Romania No. 3

€385mn2

LithuaniaNo. 8

CroatiaNo. 1

€3.4bn93

SlovakiaNo. 4

€1.9bn13

€4.1bn54

HungaryNo. 7

€7.4bn66

Czech Rep.No. 4

BosniaNo. 1

SloveniaNo. 7

TurkeyNo. 3

5

UniCredit Group has a particularly strong competitive advantage in CEE. Its size – in terms of revenues, total assets and branches – is more than double that of the second player.

4,982

14.8

18.0

33.3

24.7

34.8

83.7

19.7

2,864

1,715

1,420

1,126

1,660

1,110

826

N.A.

16.4

237

722

1,017

875

1,245

814

498

Revenues (Euro m) Total Assets (Euro bn) Branches (no.)

1,6591

39.71

1,5361

Source: Internal data - as at end of 2004 1 Including on a pro-forma basis the recently acquired Banca Comerciala Romana

… where it operates as the undisputed leader.

Central & Eastern Europe – Top Financial Groups (2004)

6

CEE markets offer a huge potential...

population

about 440 m

populationabout 160 m

Inhabitants 2005•Armenia 3

•Azerbaijan 8.3

•Bosnia 3.8

•Bulgaria 7.8

•Croatia 4.4

•Cyprus 0.8

•Czech Rep. 10.2

•Estonia 1.4

•Georgia 4.7

•Greece 10.6

•Hungary 10.1

•Kazakhstan 15.1

•Latvia 2.3

•Lithuania 3.5

•Macedonia 2

•Moldavia 4.5

•Poland 38.2

•Romania 21.7

•Russia 143.6

•Serbia 10.6

•Slovakia 5.4

•Slovenia 2

•Turkey 69.6

•Ukraine 47.6

•Belarus 9.9

7

...especially in retail banking: CEE revenue potentialREVENUE POOLS 2004 IN EURO MILLION

Aust

ria

RetailBanking

CorporateBanking

4,873

2,618

InvestmentBanking

1,024

Turk

ey

4,457

2,122

453

22%100%

0%

Note(s): Percentages on top of chart reflect share of country in total CEE revenue poolsSource(s): National banks; Economic Research Department BA-CA; BCG analysis

Rus

sia

3,563

3,503

1,315

26%

Pola

nd

2,768

1,727

960

17%

Hun

gary

1,746

714

312

9%

Cze

ch R

.

1,308

960

225

8%

Cro

atia

662

395

65

3%

Rom

ania

400

753

60

4%

Ukr

aine

417

479

12

Slov

akia

414

415

70

9%

126

123

319

277

127

287

299

397

2260

19

38%

51%

11%5

Slov

enia

Serb

iaBo

snia

Bulg

aria

3%

8

Household loans and deposits have grown strongly in recent years...

Household loans in CEE(Dec. 2000=100, local currency)

0

500

1.000

1.500

2.000

2.500

2001 2002 2003 2004 2005 2006

NMS (PL,CZ,HU,SK,SL)SEE(RO,BG,HR,SCG,BiH)Euro areaRussiaRegion total

Euro area5% cagr

NMS25% cagr

Russia90% cagr

SEE77% cagr

Total62% cagr

Household deposits in CEE(Dec. 2000=100, local currency)

0

100

200

300

400

500

600

2001 2002 2003 2004 2005 2006

NMS (PL,CZ,HU,SK,SL)SEE(RO,BG,HR,SCG,BiH)Euro areaRussiaRegion total

Euro area5% cagr

NMS6% cagr

Russia42% cagr

SEE36% cagr

Total26% cagr

Increase since 2000: household loans +62%, household deposits +26% p.a. compared to 5% in the euro area

9

Household deposits and loans(2000 and 2007 in EUR per capita)

1.3291.761

1.255

2.542 2.503

4.331

1.539

2.175

1.410

3.446

237

1.056

182631

122

1.082

524

1.417

478

1.208

240

2.004

406

2.198

210

1.408

710

3.019

683 617

127

887

9536

453

0

1000

2000

3000

4000

5000

6000

7000PL HU CZ SK HR BG RO RU CEE

Deposits 2000Loans 2000

Deposits 2007 Loans 2007

Source: BA-CA Economics Department, UCG New Europe Research Network

Euro area2005

14.100deposits

13.600loans

+7%cagr

+44%cagr

+12%cagr

+17%cagr

+29%cagr

+30%cagr

+17%cagr

+11%cagr

+20%cagr

+4.4%cagr*

* 2000 to 2005

...and the outlook for the retail sector remains positive


Part 2: Market research The latest trends and developments (M. Mayr)

Banking penetration Usage of products and services

BA-CA loan barometer


Agenda

11

Study 1: Basic Tracking Retail Banking Markets

Universe: adult population aged 15 years and older Methodology: personal face-to-face interviews Samples: 5000 interviews/country Fieldwork time: January 2005 – November 2005 Agencies: Fessel&GfK (CZ, SK, CRO, BG, RO, UA, RU), RmPLUS (SLO, BiH, SCG), TNS

MODUS (HU) and SMG_KRC (PL)

Study 2: “ Loan Barometer“ - initiated by BA-CA

Universe: adult population aged 15 years and older Samples: 1000 interviews/country Methodology:personal face-to-face interviews Fieldwork time: January 2006 Agencies: Fessel&GfK (CZ, SK, BG, RO), RmPLUS (SLO, BiH, SCG), TNS MODUS (HU)

Market research: design of the studies

12

98

83 84

62

57

34

19

80

51

33

97 9799

81 81

6562

50

37

83

64

37

68

51

98 98

0

20

40

60

80

100

120

SLO CZ SK H PL RO BG CRO SCG BiH UA RU A D

2001 2004 2005

Banking penetration of retail clients at end 2005% of the population aged 15+ who have a business relation with a bank

Source: BA-CA Market Research, Fessel&GfK (A, CZ, SK, RO, BG, CRO, UA, RU), RmPlus (SLO, SCG, BiH), TNS MODUS (HU); SMG_KRC (PL)

average new EU markets2005: 78%

average candidates

& west Balkans2005: 52%

13

Size of population and number of bank clients

BG BiH CRO CZ H PL RO SCG SK SLO A D

Population aged 15yrs+ (in m) 6.7 3.1 3.7 8.2 8.5 29.9 17.9 6.7 4.2 1.7 6.7 64.7

Have bank relationship 37% 37% 83% 81% 65% 62% 50% 64% 81% 99% 98% 98%

Banked in m 2.5 1.1 3.1 6.6 5.5 18.5 8.9 4.3 3.4 1.7 6.6 63.4

Not banked in m 4.2 1.9 0.6 1.6 3.0 11.4 8.9 2.4 0.8 0.0 0.1 1.3

14


Banked population 37 37 83 81 65 62 50 64 81 99 98 98

Any account 27*) 33 79 68 56 48 35 60 63 89 93 97

Current account 27 28 78 67 55 46 20**) 53 62 86 93 97

Bank card 26 15 66 64 44 40 28 27 49 86 78 82

E/I-Banking 0 0 5 8 2 6 0 1 6 9 24 17

Phonebanking 0 0 2 5 3 2 0 1 2 4 4 5

Account overdraft 0 3 46 10 6 8 1 15 7 51 N/A N/A

Penetration with banking products/services % of population aged 15+ who use this service/product by end 2005

*) 27% of adult Bulgarians have an account (current account or debit card account) **) RO: 15% use “card accounts“

Source: BA-CA Market Research, HypoVereinsbank, Fessel&GfK (A, CZ, SK, RO, BG, CRO, UA, RU), RmPlus (SLO, SCG, BiH), TNS MODUS (HU); SMG_KRC (PL)

15

Penetration with banking products/services% of population aged 15+ who use this service/product by end 2005


Banked population 37 37 83 81 65 62 50 64 81 99 98 98

Any deposits 12 5 26 56 16 23 10 9 56 46 85 78

Sight deposits(savings book) 8 4 20 17 4 3 4 6 37 22 69 70

Time deposits 2 1 9 6 5 7 8 2 10 15

Securities 0 0 1 3 0 2 2 0 4 4 14 24

Any loansexcl. overdraft 7 7 22 9 12 15 16 9 7 22 20 24

Consumer loan 6 6 21 8 8 14 15 9 3 21 9 12

Mortgages 1 0 2 1 1 1 1 0 2 1 11 14

Source: BA-CA Market Research, HypoVereinsbank, Fessel&GfK (A, CZ, SK, RO, BG, CRO, UA, RU), RmPlus (SLO, SCG, BiH), TNS MODUS (HU); SMG_KRC (PL)

16

Trends in use of banking services/products

% of population aged 15+ who have ... note: figures do not represent volumes in €

24

63 64

4839

16

3852

81

27 33

7868

5648

35

60 63

89

0

20

40

60

80

100

BG BiH CRO CZ H PL RO SCG SK SLO

2001 2003 2005 ...any type of account

8

38

62

20 2316

9

67 64

125

26

56

1623

10 9

5646

0

20

40

60

80


2001 2003 2005...any type of deposits (excl. account)

35

11

57

12

3 3 3

20

7 7

22

912

15 16

97

22

0

5

10

15

20

25


2001 2003 2005...any type of loan (excl. account overdraft)


17

Planned investments

CEE BG BiH CZ HU RO SCG SK SLO

Holiday trip, sport activities 30 15 30 47 20 10 23 27 66

Education (own, of children, ...) 18 17 20 17 8 15 21 25 21

Larger household appliances(fridge, dish washer, ...) 17 10 21 17 8 13 25 20 26

Health (operations, teeth corrections, ...) 17 16 28 10 7 16 18 20 19

Larger electronical items(PC, TV set, ...) 15 11 19 13 7 10 23 14 22

Family events (weddings, big birthday parties, ...) 14 5 16 15 9 13 15 16 25

Furniture 14 8 15 13 2 9 18 18 23

Car 10 4 14 7 4 9 16 10 13

Plastic operation 1 0 2 1 0 1 1 1 0

Don’t know / No answer 32 48 25 31 47 52 18 13 13

Q: In which of the following items do you or our family plan to invest in the next 12 months? Basis: Total

in %

Source: BA-CA Market Research, Fessel&GfK (A, CZ, SK, RO, BG, CRO, UA, RU), RmPlus (SLO, SCG, BiH), TNS MODUS (HU), SMG_KRC (PL)

18

Way of financing

% savings % loans

Mainly by savings

•Holiday trip, sport activities 78 7

•Health (operations, teeth corrections, ...) 75 9

•Education (own, of children, ...) 76 10

•Family events (weddings, big birthday parties, ...) 78 7

By savings or loans

•Furniture 58 32

•Larger household appliances (fridge, dish washer, ...) 54 32

•Larger electronical items (PC, TV set, ...) 55 33

•Plastic operation 48 34

Mainly by loans

•Car 40 54

Q: How do you plan to finance these items? Basis: plan to invest in the following item

19

75

189 3

0

20

40

60

80

100

savings gift loan DK/NA

Planned financing Q: How do you plan to finance these items? Basis: plan to invest in the following item


78

197 2

0

20

40

60

80

100


Health

CZHUSLO

ROSCGBiHBG

ROSKBG

CZHUSLO

SCGBiH

CZHUSK

CZHUSLOHU

ROSCGBG

ROBG

CZHUSCGSLO

SCGHU

CZSK

Holidays, sports

20

Planned financing Q: How do you plan to finance these items? Basis: plan to invest in the following item


55

17

33

20

20

40

60

80

100


CZSKSLO

ROSCGBG

BGRO

CZSLO

SCGBiH

CZSKSLO

Large household appliances

40

13

54

6

0

20

40

60

80

100


CZSKHU

ROSCGBG

RO

HUSLO

SCGBGSLO

HUCZ

Cars

21

Gaps in banking penetration between countries in the CEE region still exist, but are becoming smaller.

Usage of consumer loans as well as demand for credits is significantly increasing.

The strongest need for loans to finance consumer goods was reported in Romania, Serbia and Montenegro, Bosnia and Herzegovina, and Bulgaria, while Czechs, Slovenes and Slovaks are more likely to use own savings.

“Saving discipline“ has become weaker; tendency to satisfy own needs is growing.

Summary and outlook


Part 2: Market research – the latest trends and developments (M. Mayr) Banking penetration Usage of products and services Summary and outlook


Agenda

23

CEE is a huge market with high potential. With a clear strategy, every CEE country offers excellent opportunities for further growth in retail business.

The CEE region has big advantages compared to the “old” EU markets:It’s a new and “learning” market - CEE does not repeat the mistakes international banks made in their “old” home markets. Development processes are much faster.

UniCredit Group’s approach:

1) Innovation: Quick reaction to trends in the banking market Example: Introduce more diversified savings products (asset management, etc.).

2) New ways of distribution: Mobile Sales Force and Cooperation Channel to enlarge the sales capacity leveraging on new network structure Examples:

– Retail loans in Romania (almost 40% of the monthly new retail loan business comes from this channel)

– Mortgages in Bulgaria (around 25% of the new mortgage business is based on this channel)

3) Factory centralisation: getting benefits from economies of scale and sharing best practice in production process

– Example: Card Centre in Prague currently servicing the Czech Republic, Slovakia and Hungary

The name of the game is innovation

24

Customer satisfaction is the winning strategy

Customer acquisition is the game all banks play, but:

Customer satisfaction is the winning strategy.

We emphasise tailored service models for our customers and leverage the strengths and

the knowledge of the Group’s network:

Wide and innovative product offering, proven by our leading positions - e.g.:Number 1 in mutual funds (Poland), Number 1 in mortgage loans (Croatia), Number 1 in credit cards (Turkey), Number 1 in custody (Slovenia)

Service models with dedicated divisions

Physical proximity to our clients and 24 hour availability through state-of-the-art IT services and call centres

Special focus on recruitment and staff development

andrea moneta, managing board member, ba-ca martin mayr, market research, ba-ca

Documents

cee retail banking

cee region1

cee markets

cee businesspart

extensive cee banking

total cee revenue poolssources

unicredit group

leading banking network