Download - 2 0 0 5 G R O U P R E S U L T S
2 0 0 5 G R O U P R E S U L T S
Milan, Borsa Italiana - 31 March 2006
2
Results at a glance
2005 Target 2004 Change
Net Income 171.0 142.7 19.8%
EPS 0.150 0.128 17.2%
EPS (ITAGAAP) 0.110 0.104 5.8%
EVA 85.0
ROE 14.6% 13.7% +0.9 p.p.
Cost/Income 66.2% 66.9% -0.7 p.p.
Cost/Income (ITAGAAP) 65.4% 65.1% 0.3 p.p.
Tier 1 ratio 5.11% 5.07% 0.03 p.p.
Total Capital ratio 9.29% 9.89% -0.6 p.p.
3
Retail
Net income 117 75 +55.0%
Equity 468 435 +7.6%
RORAC 25.0% 17.3% +7.6 pp
Cost/Income 71.1% 72.7% +1.6 pp
Corporates & Private Bkg.
Net income 34 32 +5.1%
Equity 246 223 +10.4%
RORAC 13.7% 14.4% -0.7 pp
Cost/Income 57.6% 55.1% +2.5 pp
Finance
Net income 15 15 ---
Equity 109 112 -2.6%
RORAC 13.6% 13.0% +0.6 pp
Cost/Income 35.9% 37.0% +1.1 pp
Results per Segments (Euro million)
Wealth Management
Net income 30 24 +22.7%
Equity 82 68 +22.2%
RORAC 36.0% 35.9% +0.2 pp
Cost/Income 27.2% 30.4% -3.2 pp
2005 2004 Change
2005 2004 Change
Contribution to thenet income1
58%15%
17%
7%
7%
Retail
Other (HQ)
WealthMngt.
Finance
Corporate&
Private Bkg.
1 - Net income + minorities
4
Interest Margin: +8.2%
Significant interest margin increase which confirms the recovery detected in the previous quarters
Stable average rates
Volume increases
Change2005 2004
Euro million
2005 2004Euro
millionChange
Customers 520.6 482.3 38.3 7.9%
Interest charged 606.6 566.7 39.9 7.0%
Interest paid -86.0 -84.4 -1.6 1.9%
Securities -27.7 -30.8 3.1 -10.1%
Banks 10.0 13.3 -3.3 -24.8%
NET INTEREST INCOME 502.9 464.8 38.1 8.2%
Average outstandings
(Euro mn.)
Annualized average rates
Average outstandings
(Euro mn.)
Annualized average rates
Avg. Outstandings
Rates
Interest bearing assets 17,061 4.12% 16,247 4.08% 5.0% 0.04 pp
Interest bearing liabilities 16,308 1.43% 15,444 1.42% 5.6% 0.01 pp
5
Gross Total Income: +3.2%
Commissions
stable year-on-year
in 2005 commissions have been penalised by the application of the amortized cost method
commissions pertaining to AUC and AUM benefited from volume increases.
Shareholdings have performed well
The consolidation of Findomestic with the equity method was penalised by the application of the IAS/IFRS: Euro 9 million in P&L
In 2005 the insurance activity was penalised by the fair value option and by consolidation method changes for certain accounting posts.
Euro million
2005 2004Euro
millionChange
Net commissions 327.5 329.0 -1.5 -0.5% Current accounts &
deposits 82.8 88.5 -5.7 -6.4%
AUC 10.0 9.4 0.6 6.4%
AUM 92.5 84.4 8.1 9.6%
Other 142.2 146.7 -4.5 -3.1%
Dividends & shareholdings income 67.6 59.0 8.6 14.6%of which
Findomestic 53.0 52.5 0.5 1.0%
Financial assets & liabilities 42.8 46.4 -3.6 -7.8%
Net result of the insurance activity 4.6 16.9 -12.3 -72.8%
GROSS TOTAL INCOME 945.4 916.1 29.3 3.2%
6
Operating Profit: +9.1%
Cost of credit still under control
Curbed operating costs growth (+2,2%)
Administrative expenses up 4,2% due to the:
renewal of the national labour contract
first time posting of the contributions to the parent company’s supplementary pension fund
stamp duties increases
migration of the IT systems of CR Mirandola and CR Spezia
Euro million
2005 2004Euro
millionChange
Net value adjustments -56.4 -62.2 5.8 -9.3%
Loans -53.5 -59.9 6.4 -10.7%
AFS assets -1.5 -2.3 0.8 -34.8%
Other fin. transactions -1.4 0.0 -1.4
TOTAL INCOME 889.0 853.9 35.1 4.1%
Operating costs -625.9 -612.7 -13.2 2.2%
Administrative exp. -616.1 -591.3 -24.8 4.2%
Personnel -389.4 -375.3 -14.1 3.8%
Other expenses -226.7 -216.0 -10.7 5.0%
Adj. to tangible &
intangible assets -54.6 -59.5 4.9 -8.2%
Other income 44.8 38.1 6.7 17.6%
OPERATING PROFIT 263.1 241.2 21.9 9.1%
7
Group Net Income: +19.8%
Prudent provisions for risks & charges
Other revenues have risen thanks to the income of the product companies
The tax rate decreased thanks to the fiscal benefit on the re-evaluation of fixed assets
Euro million
2005 2004Euro
millionChange
Provisions for risks & charges -17.3 -9.3 -8.0 86.0%
Other operating costs & revenues 16.7 12.4 4.3 34.7%
PRE-TAX INCOME 262.5 244.3 18.2 7.4%
Taxes -59.8 -79.6 19.8 -24.9%
Minorities -31.7 -22.0 -9.7 44.1%
GROUP NET INCOME 171.0 142.7 28.3 19.8%
8
Total Financial Assets: + 5.8%
9.28.7
5.55.1
1.01.1
2004 2005
Customer deposits
Bonds
Other + 8.7%
+ 7.6%
+ 5.8%
4.84.7
3.02.6
2.72.6
2004 2005
Mutual funds
Discr. accounts
Insurance + 6.4%
+ 15.5%
+ 0.8%
2005 2004 Change
Direct Funding 15,752.6 14,955.5 5.3%
2005 2004 Change
Indirect Funding 20,131.7 18,975.7 6.1%
TOTAL FIN. ASSETS 35,884.3 33,931.2 5.8%
9
Customer loans: + 5.1%
2005 2004Euro
millionChange
Current accounts & credit lines 6,475.0 6,308.9 166.1 2.6%
Mortgage loans 6,039.0 5,353.6 685.4 12.8%
Net NPLs 146.0 137.6 8.4 6.1%
Other loans 486.7 713.1 -226.4 -31.7%
TOTAL LOANS - Net 13,146.7 12,513.2 633.5 5.1%
2005 2004Euro
millionChange
Good increase in lending supported again this year by medium/long term loans
Stable overall quality
Rise in the total problem loans under IAS
Gross NPLs 313.0 320.1 -7.1 -2.2%Adjustments -167.0 -182.5 15.5 -8.5%
Net NPLs 146.0 137.6 8.4 6.1%
Cover ratio 53.4% 57.0%
Gross doubtful & restructured loans 243.0 260.4 -17.4 -6.7%Adjustments -35.0 -41.5 6.5 -15.7%
Net doubtful & restructured loans 208.0 218.9 -10.9 -5.0%
Cover ratio 14.4% 15.9%
NET TOTAL PROBLEM LOANS 354.0 356.5 -2.5 -0.7%
Gross loans expired > 180 days 87.0 --- --- ---Adjustments -5.0
Net loans expired > 180 days 82.0
NET TOTAL PROBLEM LOANS - IAS 436.0 356.5 79.5 22.3%
10
2005 2004 Change
Tier 1 capital 1,026.2 943.0 8.8%
Tier 2 capital 948.8 943.0 0.6%
Deductions -140 -76 84.2%
Regulatory Capital 1,835.0 1,810.0 1.4%
Risk-Weighted Assets 1,606.8 1487.6 8.0%
Tier 1 ratio 5.11% 5.07% 0.04 p.p.
Total capital ratio 9.29% 9.89% -0.60 p.p.
Capital Ratios
11
Capital Increase
Share nominal value (Euro)
Capital nominal value (Euro)
SHARE CAPITAL - Actual 1,137,127,468
Existing stock-options 158,701
SHARE CAPITAL (theoretical, after stock-options) 1,137,286,169 0.57 648,253,116.3
Amount of the share nominal value increase (from Euro 0.57 to Euro 0.60) 34,118,585.07
Free new shares (2x15) - Number 151,638,156 0.60 90,982,893.5
Amount of the free share capital increase 125,101,478.59
PAID-IN SHARE CAPITAL INCREASE 150,000,000.00
Paid-in increase - Issue price TERP - (0<discount<35%)
- simple arithmetic average official prices of the share oneach Stock Exchange trading day within 180 calendar daysprior to the day of the determination of the issue price
- the official price of the share announced on the day beforethe day of the determination of the issue price
TERP will be calculated on the basis of the lesser between:
12
Confronto 30/9 – 31/129M 2005 Var 9M 2005 PF 4Q 2005 FY
Margine d'interesse 382 -5 377 126 503
Commissioni nette e recuperi su c/c (*) 285 -22 263 64 327Dividendi e utili (perdite) delle partecipazioni 46 0 46 21 67Risultato delle attività e passività finanziarie 51 -2 49 -6 43Risultato netto della gestione assicurativa -19 22 3 2 5
Margine d'intermediazione lordo 745 -7 738 207 945
Rettifiche di valore nette su crediti e altre attività finanziarie -36 7 -29 -27 -56
Margine d'intermediazione netto 709 0 709 180 889
Spese di funzionamento: -489 0 -489 -137 -626- spese per il personale -280 0 -280 -109 -389- altre spese amministrative -170 0 -170 -57 -227- rettifiche di valore nette su attività materiali ed immateriali -39 0 -39 -16 -55- altri proventi di gestione netti (recuperi spese) 0 0 0 45 45
Risultato di gestione 220 0 220 43 263
Accantonamenti netti ai fondi per rischi ed oneri -14 0 -14 -3 -17Altri costi e ricavi dell'operatività corrente 0 0 0 17 17
Risultato operativo netto 206 0 206 57 263
Imposte sul reddito -71 0 -71 11 -60 Utile di pertinenza di terzi -14 0 -14 -18 -32
Utile netto 121 0 121 50 171
(*) Al 30 settembre 2005 la voce in questione includeva la somma tra le "Commissioni nette" (voce 60 del conto economico consolidato) e gli "Altri proventi di gestione" (voce 220 del conto economico consolidato)
BUSINESS PLAN 2006 – 2008
Milan - 31 March 2006
14
2003-2005 Results
Targets announced to the market have been attained:
– EPS: + 0.06 Euro more than objectives
– Cost / Income: at 65%
Managed an evolution phase that accomplished the:
– expansion of the Group’s perimeter and costs containment
– increased investment in consumer credit
– update of the distribution model to offer the various customer segments a more qualified service
– growth of the total financial assets and the improvement of productivity
– optimisation of the share capital allocation
– profitability performance improvement, value creation and a share price increase
Cost/Income
67.867.6
65.1
67.8
66.0
67.1
65.4
2002 2003 2004 2005
Target Actual
EPS
0.104
0.0850.088
0.110
0.076
0.0900.088
2002 2003 2004 2005
Target Actual
Data in Italian GAAP
15
Agenda
The new business plan target
Business plan actions
Expected results per business unit
16
Business Plan 2006-2008
2003-2005Commercial
segmentation2006-2008
Growth and efficiency
2003 2004 2005 2006 2007 2008
An increase in profitability, sustainable in time, made possible by an important rise in total financial assets and by a strong support for the strengthening of specialised financial services which are accessory to the traditional banking activity (consumer credit, bancassurance, pension schemes, leasing and factoring)
17
Business Plan 2006-2008
The Business Plan encompasses the company’s Vision and Mission
Vision
– A solid, competitive group strongly customer-oriented, tending towards value creation, sustainable in time, and incessantly growing in terms of organic momentum and innovation. All of which made possible thanks to the acknowledged wide network, the firm link with its business territories and the expansion towards the adjacent ones.
Mission
– Offering our customers professionalism, multiple solutions and distinct product excellence through the bank’s distribution and operations models which coherently meet customers’ own demands and feature competitive, risk-adequate pricing.
– A reference point for the local economy’s growth.
– Integrity, transparency and social responsibility accomplished by a sound and prudent business management.
18
Multi-channels
Guidelines 2006-2008
Commercial network expansion
Customer base widening
Improving the lending market share
Upkeeping the funding market share
Cost/Income ratio decrease
Value creation
Growth
Relations quality improvement
Costs control and assets value enhancement
19
2008 Targets
2005 2008
Net Income (€ mln) 171 210
ROE 14.5% 15.3%
ROE pre-tax 22.3% 27.7%
Cost/Income ratio 66.3% 60.0%
EVA (€ mln) 85 117
EPS (€) 0.150 0.155
Tier 1 ratio 5.1% 6.0%
Total Capital ratio 9.3% 9.0%
Net NPL ratio 1.39% 1.33%
I valori differiscono da quelli esposti in bilancio perchè includono BCRF Romania
20
2008 Targets
Net income growth in 2008 will be Euro 71 million over 2005
– A 6.8% average, annual, profit growth
– Strong cost containment
– Cost/Income ratio from 65% to 60%
– Credit quality upkeeping
Existence of non-recurrent elements in 2005
– Euro 32 million: lesser taxes due to fiscal effect from the appreciation of real estate
71
15
213
171
68
59
139
210
2005 Net
income
Total
income
Total
costs
Adjs. Taxes and
other
2008 Net
income
21
Economic Outlook
Italy (%) 2005 2006 2007 2008
GDP 0.1 1.0 1.4 1.3
Household exp. 0.9 0.9 1.8 1.4
Domestic demand 0.6 1.2 1.7 1.5
Corporate investments 2.1- 2.2 1.8 2.3
Export 0.3 4.0 3.1 3.5
Price index 2.0 2.2 1.8 2.3
GDP (%) 2005 2006 2007 2008
Tuscany 0.1 1.0 1.4 1.3
Umbria 0.9 0.9 1.8 1.4
Latium 0.6 1.2 1.7 1.5
Emilia R. 2.1- 2.2 1.8 2.3
Liguria 0.3 4.0 3.1 3.5
Territorio
Lending 5.3
Direct Funding 3.9
Indirect Funding 3.6
Customer Spread -
CAGR 2005-2008
Source: Prometeia Forward-looking Report - Dec. 2005
Source: IRPET Regional Forecasts - Jan. 2006
Euribor
2.40
3.25
3.003.00
2005 2006 2007 2008
22
Focus Points
Under the apparently calm surface (given by fundamentally solid statements produced in spite of the unfavourable business environment), strong currents do exist and these can influence the future stability of the sector and of the main operators:
– small enterprises’ rising debts;
– competition from non-banking protagonist in funding and in liquid cash management;
– cost-conscious families reducing the number of current banking accounts;
– smaller margins from family mortgages, business loans and consumer credit and higher, potential credit risks;
– organisation and cultural difficulties in supporting the enterprises’ transformation and development plans;
– difficulties in switching from a sales-oriented approach to a more active and flexible management approach which caters to customers’ needs and expectations.
Source: Prometeia – June 2005
23
Findomestic Banca – Development Framework
Targets:
– Upkeeping the current market penetration share on total loans to families
– Maintaining the market share in total production by controlling profitability and the risk cost (*Assofin market statistics*)
– Maintaining the Leadership of Findomestic, in terms of market share, and defending the safety distance that separates it from direct competitors (Assofin market statistics*)
Strategy:
– Protecting the distribution network and developing new markets to ensure the necessary customer base growth. To be present wherever the major transactions take place
– Increasing the growth momentum of direct credit to stimulate lending and global profitability
– Improving productivity while maintaining a quality stability through a review of the procedures and of the cost structure with an eye on competitiveness
(*) steady market composition
24
Findomestic Banca – Development Framework
Commercial Network– Re-engineering the activities of the commercial staff to improve relations with the salesmen and also to
increase the sales point penetration share. No new premises are scheduled to open
• Vehicles – Widening the product (Renting) and services range including the addition of accessory service packages
• Black goods and Furniture – This is the most important client source but also the major source of costs. Actions will focus on constructing lasting relations thanks to medium-term projects and to a greater, revolving card product penetration. Findomestic will recuperate its penetration share in smaller sales points, especially in the furniture sector
Banks and Insurance Companies – New agreements for the management of personal loans and cards on behalf of banks/ insurance
companies
New Markets and New Channels– The year 2005 was dedicated to the analysis of markets where, to this day, consumer credit is scarcely
present (travel agencies, clothes shops, medical facilities), including food, utilities and direct debit, salary-guaranteed loans and action plans and objectives have been drafted for the priority types
– For new and acquired clients, plans include a strong development of the internet channel and a commercial action for personal loans
Trademarks and Publicity– Increasing the fame of the Findomestic Banca brand. Target: 80%, just like Aura
25
Agenda
The new three-year business plan target
Business plan actions– Growth through internal progress
– Service and customer relations quality
– Costs control
– Multi-channel instruments
Expected results per business unit
26
Basic GrowthCustomer Deposits (average amounts)
14,901 14,901
320 320
1,686601
417
668
2005 2006 2007 2008 2008 E
Indirect Deposits (average amounts)
17,198 17,198
2,158658
833
667
2005 2006 2007 2008 2008 E
Customer Loans (average amounts)
12,580 12,580
1,967679
541
747
2005 2006 2007 2008 2008 E
CAGR=4.3%
CAGR=4.0%
CAGR=5.0%
EMTN
The average figures differ from those stated in the annual report because the current ones include Banca C.R. Firenze Romania and exclude credit to Centro Leasing who in the process of becoming a bank.
RWA (Findomestic included)
19,975 19,975
3,910771
1,473
1,666
2005 2006 2007 2008 2008 E
CAGR=6.1%
27
Basic Growth
Steady income growth amounting to Euro 34 million (the target was Euro 65 mill.)
– The growth of profit (Cagr = 4.4%) includes Euro 104 million deriving from the interest margin (Euro 80 million due to volumes and Euro 24 million due to rates)
– Operating expenses grow a little more than inflation (Cagr=2.8%)
34
4138
171
54
46
139
173
2005 Net
income
Total
income
Total
costs
Adjs. Taxes and
other
2008 Net
income
28
Growth – New Openings
Financing growth means responding to a human resources need of about 300 people and to total investments for about Euro 16 million.
Impacts on income consider a break-even within 3 years, therefore real effects will be registered in the years following 2008.
New Branches
-5.8
-24.2
17.8
Total income Total costs Contribution to
the net income
New Corporate
Centers
0.0
-8.4
10.7
Total income Total costs Contribution to
the net income
New Private Centers
-1.7-3.2
0.7
Total income Total costs Contribution to
the net income
29
Growth – Retail Branches
Streamlining today’s networks
– Definition of the operations areas of each single bank and of branch exchanges.
– Transfer of about 11 branches (for example, from cities with a population under 25,000)
Planned openings
– Openings, mainly in areas with the greatest attraction and synergism with the financial advisors’ network to maximise the commercial efficiency
Specialised branches
– Creation of 4 new sales centres specialised in mortgage loans
Growth = 43 more branches
Territorial attraction+ -
30
Growth - New Corporate & Private Centres
Corporate Centres
– Opening 13 new Corporate Centres, mainly for the banks controlled by BCRF, coherent with the territorial expansion of the branches (Milan, Rome, Emilia Romagna, Mantua and Verona)
– Strengthening the current Corporate Financing unit
Private Centres
– Opening 10 Private Centres, mainly for the banks controlled by BCRF, where interesting market opportunities are prospected
Growth = 23 more centres
Territorial attraction+ -
31
Bucarest
Timisoara
PitestiConstanza
Crajova
Satu Mare
RimnicuVilcea
Galati
Bacau
Brasov
Baia Mare
ClujNapoca
Oradea PietraNeamt
Iasi
Sibiu
Slatina
TirguMures
Current branches
Future branch openings in 2006-2008
Growth = 21 more
branches
Growth – International Endeavours
Banca C.R. Firenze Romania SA
– The network currently consists of 9 branches (of which 6 in Bucharest).
Expansion
– Intensifying the position in the area thanks to 30 branches
– Expanding the retail customer base in Bucharest and in the principal cities
– Supporting Italian-Romanian enterprises
– Hiring about 160 people
Target
– Steadfast growth,
profitability and
synergies with the group
BCRF Romania
2.9
-4.4
8.6
Total income Total costs Contribution to
the net income
32
Agenda
The new three-year business plan target
Business plan actions– Growth through internal progress
– Service and customer relations quality
– Costs control
– Multi-channel instruments
Expected results per business unit
33
Customer Relations
Improving the retention rate, share of wallet and cross-selling thanks:
– Implementing the same distribution, organisation and operations models throughout all the banks in the group
Target
– Cross selling
• Private from 3.8 to 3.95
• Corporate from 4.82 to 4.97
– Retention rate
• Private from 93.4% to 94.0%
• Corporate from 92%.4 to 93.0%
– Multi-channel banking from 27.6% a 27.0%
Better Client Relationship
7.4
-6.2
17.9
1.7
Total income Total costs Contribution to
the net income
34
Customer Relations
Keener client relationships
– A customer-satisfaction observatory
– Business Intelligence (Retail clients)
• Expanding CRM to improve the reporting quantity and quality in order to offer the branches an instrument to optimise customer relations and contact opportunities and commercial proposals
• Extending CRM to the other banks of the group
Review of the “credit process”
– Seizing the commercial opportunities for growth offered by Basel II through:
• pricing correlated to risk
• risk mitigation
• allocation efficiency
Service improvement
– The communications process:
• thorough revision of all customer communication modes with the determination of a document/ channel/ timing model and the establishment of communications tailored to each segment or customer profile.
• reduction of management costs
– A new pricing model:
• switch from a product pricing to a relations-based pricing
– Strengthening the trust relationship:
• helping customers in choice-making whether for financial investments, pension schemes, insurance or borrowing
35
Widening the Offer
Focusing on just a few action lines:
Mortgages and Personal Loans
Pension Schemes
Insurance
New offer
2.5
-3.6
7.8
Total income Total costs Contribution to
the net income
36
Mortgages and Personal Loans
Current status:– The market share of lending to privates is lower than the market share of funding;
– The use of indirect channels for the sales of mortgages is lower than the Assofin reference;
– The penetration percentage of personal loans and revolving cards released by the group banks is lower than that of the banking system
Actions:– Mortgages
• Opening new mortgage counters (Spazio Mutui) in the principal cities: - to act as reference points for all indirect channels (real estate agencies, credit brokers, internet customers)
- to be portfolio holders for those clients who request the specialised service in the main cities
• Developing a data-processing platform– to integrate the brokers into the order gathering process and into the Spazio Mutui for portfolio management
– Personal Loans and Aura revolving cards
• Development through the implementation of joint-marketing agreements with Findomestic for the launch of continuous sales campaigns directed at the group’s customers,
• Implementation of CartaSì revolving cards (revolving credit supplied upon request) specifically for the richest customers.
37
Pension Schemes
Current status
– At the end of 2005, the pension fund CRF Previdenza managed a portfolio of Euro 35.7 million (+150% on an annual basis)
– The pension reform is expected to be effective from 2008 (collective schemes will be liberalised)
– It is necessary to focus commercial action on
• individual underwriting
• on those worker categories that do not have their own specific close-end pension scheme
Actions
– 2006 and 2007
• Focus on sales; every sales point endowed with one expert who can generate an increase in the number of sales contracts, from an average of four contracts per year to 24 contracts per year (two per month).
• Collective schemes underwriting aimed at our corporate customers who operate in sectors not yet covered by close-end schemes: 2,000 companies in the transportation field
– 2008
• Increase the group of specialists to 30 employees with skills in the collective schemes underwriting aimed at our corporate customers of all fields of business. Beginning: in the second-half 2007 for sales closing by January 2008
38
Insurance
Current status
– Customers demand products which the bank does not yet offer
Actions
– Expansion of the “Insurance Protection” business area
• Centrovita is to develop certain types of insurance products
• Products to be sold through the group’s bank network
– Products
• Protezione Salute: health insurance coverage against surgery risk for all family members
• Protezione Domani: life insurance benefits for all causes of death (simplified sales terms with less bureaucracy)
• Mortgage Loan: insurance coverage in case of death or loss of work
• Damages Insurance: in the course of the next three years, BCRF will study the possibility of extending the insurance product range to cover damages
39
Acquisition of Customers
Analysis of the acquisition ratio:
– 2004
• Privates- a 2.4 point negative gap in comparison to the average ABI sample
• Business - a 4.8 point negative gap in comparison to the average ABI sample
– 2005
• ratios improved both for BCRF and for the whole group
Actions
– Making certain that agreements with enterprises, public entities, associations & labour unions on private customer acquisition or development are fully executed
– Intense use of direct marketing tools
– Attractive and tailored offers
– Synergies between distribution channels
New Customers
5.0
-2.6
11.0
Total income Total costs Contribution to
the net income
Net growth = 15,000 more clients
40
Managing Key Corporate Accounts
Increase in the corporate market share– exploiting the opportunities offered by Basel II
– improving the market positioning of M/L term loans
Identifying and managing “Key Corporate Accounts”
– increasing the credit line for the best-rated classes
– decreasing the credit line for the worst-rated classes
– improving the mix between profitability and risk cost
Share of Wallet granted by BCRF per rating class
Target share
Current share
Real share in 2008
0,0%
10,0%
20,0%
30,0%
40,0%
50,0%
60,0%
70,0%
80,0%
A1 A2 A3 A4 B1 B2 B3 B4 B5 B6 B7 B8 C1 C2
K ey Clients
5.5
-0.1
8.1
Total income Total costs Contribution to
the net income
41
Customer Loans (average amounts)
12,580 12,580
541
679
747
1,967
871
528
775
2,174
2005 2006 2007 2008 2008 E
Indirect Deposits (average amounts)
17,198 17,198
833
658
667
2158
392
325
356
1,073
2005 2006 2007 2008 2008 E
Total growthCustomer Deposits (average amounts)
14,901 14,901
320
250
500
1,070417
601
668
1,686
361
42
179
582
2005 2006 2007 2008 2008 E
CAGR=7.0%
CAGR=5.9%
CAGR=9.9%
EMTN
RWA (Findomestic included)
19,975 19,975
1,473
771
1,666
3,910
2,083
611
669
803
2005 2006 2007 2008 2008 E
CAGR=9.1%
42
Agenda
The new three-year business plan target
Business plan actions– Growth through internal progress
– Service and customer relations quality
– Costs control
– Multi-channel instruments
Expected results per business segment
43
ICT Optimisation
Implementation of the group’s new ICT configuration
– Governance model
– Structure and operating optimisation
– Sourcing flexibility
– Containment of processing costs
Group data-processing system
– Revision of the applications portfolio
– Unification of the services & operative applications
• Account identification
• Branch
• Customer Reports
• Reporting
• Risk
• CRM
ICT - Effi ciency
0.9
1.4
Total income Total costs Contribution to
the net income
44
Transfer of the Tax Collection Concession
Premessa
– Legislative Decree n°203 of 30 September 2005:
• From 1 October 2006 the national system which established that tax collection services were to be operated in concession shall be abolished;
Actions after 30 September 2006
– CERIT
• The company shall be transferred to other shareholders.
– SRT
• The majority of the capital shares shall be transferred (excluding activities pertaining to local taxes)
45
Transfer of the Tax Collection Concession
Human Resources
9
210 201
Actual Savings New Co
P & L impact
0.6
26.5
-30.9
Total income Total costs Contribution to
the net income
46
Group Integration
Objectives
– Strengthening the governance through the unequivocal definition of duties and responsibilities of the Parent Company and of the banks controlled by it, with particular reference to the elements of the governance, production and distribution
– Improving efficiency by simplifying the processes and by maximising from the synergies present inside the group. Actions will be undertaken in the current pockets of efficiency recovering, especially with regards to staff population in the head offices and in the distribution network
Actions
– Merger of CR Mirandola
– Integration of CR Orvieto, CR Spezia, CR Pistoia
– Evolution of the organisation model of the distribution network (branches < 8 employees) and a portfolio review
– Perfect management of the staff turnover
47
Organisation Model
CRFCRFCRFCRF
CRCCRCCRCCRCCROCROCROCROCRPCRPCRPCRP CRSCRSCRSCRS
CENTRALIZED
SERVICES
70,5%
78.7% 81.0% 76.1%
3,608 employees
614 employees 178 employees 206 employees 515 employees
Current
Target 70,2%
86.0% 86.3% 88.5%
84.5%
90.0%
Current
Target
48
Group Integration
HR - Effi ciency
8.98.9
5.2
Total income Total costs Contribution to
the net income
Turn-over
Saving
Turn-over management
233
400
167
Turn-over Savings New Hired
49
Human Resources
Human Resources
6,097
163
3811
28324
5,901
201
167
2005 Tax collection New branches Savings New products &services
IT services Wealthmanagement
Romania 2008
5,700
5,934
50
Agenda
The new three-year business plan target
Business plan actions– Growth through internal progress
– Service and customer relations quality
– Costs control
– Multi-channel instruments
Expected results per business unit
51
Multi-channels
Statistics referring to clients using multi-channel instruments show a profitability, retention and satisfaction average degree that is higher than that of the group’s total individual current account holders
Potential synergies with Findomestic customers
Strategy
1. Client-centred
The business location (branches, corporate/private centres, financial advisors & mortgage counters) govern customer relationships and have an overall vision of his operations. For the multi-channel client, the virtual channel remains the most used contact method.
2. Integration between channels
4. Focus on core business
All actions are primarily oriented towards customer service improvement and, consequently, bring to a cost-to-serve cut. Business information of interest for the client, distributed through all channels, increase contact opportunities. Clients thus perceive a higher-quality relationship.
At every stage of the contact, the bank focuses its attention on the client, regardless of the channel used. The client acquires a “customer experience” which is similar for all the different channels used.
3. Customer Service
The information available on all channels will focus on the bank’s business (finance, banking, insurance and pension plans).
Multichannel
1.2
-5.3
7.2
Total income Total costs Contribution to
the net income
52
Multi-channels
• Remains the client’s preferred channel
• Gradually diminishing in terms of transaction importance
• More integrated into other channels and capable of exploiting spontaneous requests
• Pivotal for the implementation of customer education programs
• Its service/support role to other remote channels is rising (assistance & backup)
• Synergetic for the branches’ commercial campaigns (outbound & inbound for business exploitation)
• Branches’ principal complementary channel for the low value-added operations
• Increasingly more effective for messaging offers and information to customers and for stimulating visits to branches
• Best instrument for information on clients useful to marketing
• Cross selling and co-marketing actions are made easier
• Highest penetration potential channel (greatest freedom & easy to use)
• Improves clients’ service level perception (alerts/triggering)
• Enables efficient contact with the young customer segment
• Micro-payments
• For customers who do not use computers, teller machines can potentially integrate most internet operations
• Suitable for low-value transactions involving document handling/reading
• Marketing support for commercial messaging (even personalised)
Branch Call Center Internet Mobile Banking ATM
CRM
Fully integrated into CRM To be integrated into CRM
CRM will be the joint between all bank channels. Each channel will have its own defined role.
53
Agenda
The new three-year business plan target
Business plan actions– Growth through internal progress
– Service and customer relations quality
– Costs control
– Multi-channel instruments
Expected results per business unit
54
Results - Details per Banks
13
53
171
6
1.5 1.5 2.9 7
139
71
2005 Net
income
CRF CRP CRS CRO CRC CRF
Romania
Other &
Adj.
2008 Net
income
55
Expected Results per Business Segment
EVA
42
15 19
99
32
6
83
1624
7 824
Retail P rivate & Corporate Wealth Management Finance
2004 2005 2008
Recap:Efficient growth maintaining value
creation for its customers, shareholders and employees steadfast in time