Capital Markets Day, September 2008 Slide 1
Corporate Banking - Building on Strong Client Relationships
byPeter Lennkh
Board Member RI Group
Capital Markets Day, September 2008 Slide 2
Corporate Business Development
Capital Markets Day, September 2008 Slide 3
Stable Backbone of RI’s Profitability
Total € 607 mn
Profit before Tax Contribution (1-6/2007)
Corporate Customers53%
€ 321 mn
€ 63 mn
Retail Customers37%
€ 223 mn
Treasury, Participations and
Other10%
Total € 843 mn
Profit before Tax Contribution (1-6/2008)
€ 484 mn
€ 71mn
Retail Customers34%
€ 288 mn
Treasury, Participations and
Other9%
Corporate Customers57%
RI Group consolidated results.Based on IFRS aggregated business segments.
Capital Markets Day, September 2008 Slide 4
28.4%30.2%31.7%
26.9%29.4%
2004 2005 2006 2007 1-6/2008
484
229
337
467
669
2004 2005 2006 2007 1-6/2008
6.4
9.411.6
16.0
2004 2005 2006 2007
8.8
12.7
16.6
23.7
2004 2005 2006 2007
Corporate Clients – Strong Contribution to Results
Profit Before Tax (€ mn) RoE Before Tax
Average Volumes Corporate Lending (€ bn) Average Volumes Corporate Deposits (€ bn)
CAGR: +36%CAGR: +39%
CAGR: +43%
RI Group consolidated results.Based on IFRS aggregated business segments.
Capital Markets Day, September 2008 Slide 5
Corporate Client Portfolio Well Balanced
+23%
+26%
RI Network banks only; no other subsidiaries included.
Segment Definitions:Large Corporates: companies with annual sales higher than €15-20 mnMid Market: companies with annual sales between € 5 mn and € 15-20 mn
Increasing penetration into the Mid Market segment
Still low base in Mid Market, hence, high growth potential in this segment
Number of Customers
20,100
27,000
24,700
34,000
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
Large Corporates Mid Market
2007 2008
Capital Markets Day, September 2008 Slide 6
Corporate Credit Underwriting
Capital Markets Day, September 2008 Slide 7
Credit Underwriting Principles
Focus on customer relationship, domestic market deals, cross-selling and risk/return
Defined credit policy for each market
Concentration limits for unsecured exposure by Group of Connected Clients (GCC); levels depending on customer rating and GCC size
Target portfolios for each market by industry, collateral, FX risk, tenor, etc.
Special attention to customers exposed to high FX risk (stress testing)
Prudent approach to collateral: conservative valuation, cross-checked by internal experts; internal haircuts depending on the type of collateral
Capital Markets Day, September 2008 Slide 8
Diversified Corporate Portfolio
Total € 37 bn On- and Off-Balance Sheet Exposure Total 15,504 Borrowers
RI Network banks; no other subsidiaries included.Only Large Corporate and Mid Market clients.
Credit Risk Exposure by Region as of 30 June 2008
Number of Borrowers by Region as of 30 June 2008
CE48%
CIS30%
SEE22%
CE51%
CIS18%
SEE31%
Capital Markets Day, September 2008 Slide 9
Portfolio Granularity Improving
Development of Average Exposure per Borrower
RI Network banks; no other subsidiaries included.Only Large Corporate and Mid Market clients.
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
1Q 2007 2Q 2007 3Q 2007 4Q 2007 1Q 2008 2Q 2008
€m
n
0.0060%
0.0062%
0.0064%
0.0066%
0.0068%
0.0070%
0.0072%
0.0074%
0.0076%
0.0078%
0.0080%
On- and Off-Balance Sheet Exposure per Borrower (left scale)
Exposure per Borrower as % of total Portfolio (right scale)
Capital Markets Day, September 2008 Slide 10
Balanced Industry Mix
Corporate Exposure by Industry as of 30 June 2008
RI Network banks; no other subsidiaries included.Only Large Corporate and Mid Market clients.
Materials8%
Consumer Cyclical10%
Energy1% Utilities
3%
Real Estate17%
Others8%
Financial4%
Consumer Non-Cyclical14%
Construction8%Trading
20%
Industrials7%
Capital Markets Day, September 2008 Slide 11
< 1 year52%
1 - 3 years20%
3 - 5 years11%
> 5 years17%
Prudent Maturity Profile
Corporate Exposure by Tenor Bands as of 30 June 2008
RI Network banks; no other subsidiaries included.Only Large Corporate and Mid Market clients.
Capital Markets Day, September 2008 Slide 12
High and Well Diversified Collateralization
Corporate Exposure by Collateral Type as of 30 June 2008
RI Network banks; no other subsidiaries included.Only Large Corporate and Mid Market clients.Based on weighted collateral value (i.e. value after haircuts)
Cash3%
Guarantees9%Inventory & Receivables
17%
Unsecured37%
Equipment6%
Real Estate28%
Capital Markets Day, September 2008 Slide 13
Commercial Real Estate Underwriting
No speculative projects, but focus on:
Solid Equity – min. 20-30%
Level of pre-leases/pre-sales – 15-100%
Tight structure, prudent collaterals, stringent control throughout the project life-time
Prime locations, established developers, reputable tenants
Balanced mix of Retail, Office, Industrial and Residential projects
Projects not only in capitals but also in smaller cities
Real Estate Exposure by Region as of 30 June 2008
RI Network banks; no other subsidiaries included.Only Large Corporate and Mid Market clients.
Total € 6.4 bn
CE56%
SEE15%
CIS29%
Capital Markets Day, September 2008 Slide 14
Strengthen the Corporate Business as RI’s Backbone
Capital Markets Day, September 2008 Slide 15
Strengthen the Corporate Backbone via…..
ENHANCED CRM* TOOLENHANCED CRM* TOOL
LEASING & FACTORINGLEASING & FACTORING
CORPORATE TREASURY SALESCORPORATE TREASURY SALES
INTERNATIONAL DESKSINTERNATIONAL DESKS
CORPORATE INVESTMENT BANKINGCORPORATE INVESTMENT BANKING
CORPORATE CASH MANAGEMENTCORPORATE CASH MANAGEMENT
FORMULA UNOFORMULA UNO M I D
M A
R K E T F O C
U S
M I D
M A
R K E T F O C
U S
*CRM – Customer Relationship Management Tool
Details presented in the Appendix
Capital Markets Day, September 2008 Slide 16
Appendix
Capital Markets Day, September 2008 Slide 17
Formula 1 Project Performance Improvement
Preparing before the race: prioritize efforts and resources on most attractive opportunities
Developing and coordinating the team: improving tools and skills
Monitoring performanceIntroducing flexible, performance-driven compensation
1 2
34
test - test - test5
Capital Markets Day, September 2008 Slide 18
Formula 1 Approach is Based on 4 Key Elements
Propagate best practices in corporate banking across RI network by adapting F1 modulesdesigned in one pilot country to the specifics of each country
Ensure commercial successdespite a business environmentthat is becoming ever morechallenging
Clients are getting more
sophisticated
Increasing competition from
both local and international
banks with strong skills and
balance sheets
Increasing retretion of
employees
Project‘s objectives
ContinuousImprovement
1 2
3 Performance monitoring
Right focus on resultsensured due to economic-profit KPIs, leading to alignment of bank profitability
Account plan ensuringcontinuous tracking of activity
Sales coordination model
Needs-/solution-orientedaccount planning
Cooperation acrosssales, product experts, and other functions
Planning and market sizing
Fact-based forecast formarket size and growth
Basis for prioritizing focussectors
Objective measure forsetting target
Performance-drivencompensation
Motivating incentives linked to maximizing value for entirebank and reaching stretchedtargets (based on )
Large differentiation betweentop and bottom performers
4
Formula 1 consists of our inter-connected modules
1
Capital Markets Day, September 2008 Slide 19
One of the Leading Leasing Providers in CEE
Continuing growth course in the first half of 2008
New business volume of € 1.6 bn – 30% up, compared to the first half of 2007; total assets reached € 5.5 bn
CE region with strongest contribution of 59% into the new business volumes growth; SEE and CIS regions contribute with 29% and 12% respectively
Net interest income up by 29% to € 61.4 mn
Purely organic growth resulting in coverage of 17 countries with top three market position in nine countries
Leasing Assets (€ mn)
9491,449
1,7352,230
3,060
4,610
5,500
0
1,000
2,000
3,000
4,000
5,000
6,000
2002 2003 2004 2005 2006 2007 30/06/2008
Capital Markets Day, September 2008 Slide 20
New business lines being developed with higher level of sophistication:
Renewable Energy – main focus on wind parks in new EU-member countries; not only plain vanilla leasing but end-to-end project development, operation and management
Business jets
Leasing Portfolio Composition
Low risk profile with standard assets dominating:
Leasing Portfolio as of 30 June 2008
Equipment; 17%
Vehicles; 69%
Real Estate; 14%
Capital Markets Day, September 2008 Slide 21
Factoring
2007 – factoring services offered in 8 countries:No. 1 position in one marketTOP 3 position in 3 other markets3 start-up operations in SEE
2008 – 3 new start-ups in CIS
High growth of factoring market, especially in the countries where we are starting
Factoring is:excellent mid market and SME penetration instrumentperfect for corporate cross-sellinga product with very good risk/return profile
Capital Markets Day, September 2008 Slide 22
Corporate Investment Banking (CIB)
Domestic Capital MarketsDomestic Capital Markets
Domestic Corporate FinanceDomestic Corporate Finance
Specialized FinanceSpecialized Finance
Product Group Description
Origination, execution, and placement (if applicable) of corporate finance deals, i.e.
Equity capital markets (ECM)Debt capital markets (DCM)
Origination, execution, and placement (if applicable) of specialized lending deals, including Project finance, Acquisition finance, Pre-IPO finance
Structuring, sales, and trading of cash and derivative financial products, i.e.
FXFixed income (FI)Equity
RI focuses on domestic CIB activities in the Mid Market Segment to be able to fulfill the clients‘needs across their whole life cycle (e.g. privatization efforts of former state owned mid-sizedcompanies.)
Capital Markets Day, September 2008 Slide 23
Leveraging the Network – Foster X-Border Business
INTERNATIONAL DESKS
Single point of entry for international clientsand intragroup clients
Capital Markets Day, September 2008 Slide 24
Bank Cooperation – RI as Gateway to CEE