Download New Europe Division

UNICREDITO ITALIANO GROUP
“Growth through Specialisation,
Quality and Innovation”
Alessandro Profumo - CEO
Merrill Lynch Banking &
Insurance Conference
London - October, 8th 2003
AGENDA
Group Highlights
Divisional overview
Retail Division
Corporate Division
Private & Asset Management Division
New Europe Division
2
READY TO GROW
 In the last three years financial institutions faced a tough macroeconomic
scenario, characterised by modest GDP growth rates, strong contraction of
interest rates, low returns and higher volatility in the financial markets
 Thanks to its diversified portfolio of businesses, product innovation
capabilities and commercial effectiveness, UCI was able to continue to grow
and generate value
 UCI forecasts only a moderate recovery of the economic cycle starting from
2004 and has assumed a conservative scenario for its 2003-2006 strategic
plan
 Leveraging on its client-focused organisational model, UCI will grow and
create value for shareholders through the implementation of its clearly
defined segment-tailored strategies even in a low growth macroeconomic
environment …
 … being ready to exploit the opportunities arising from an improved scenario
3
UCI ORGANISATIONAL MODEL: CUSTOMER DRIVEN DIVISIONALISATION…
Weight on 1H03 Group
revenues pre Corporate
Centre and elisions
45.7%
Retail division
30.9%
8.3%
15.1%
Corporate
division
Private & AM
division
New Europe
division
Pekao
Clarima(1)
UBM
Pioneer
Zagrebacka
Bulbank
UniCredit Banca
per la casa(2)
BMC(3)
TradingLab
Locat(4)
Xelion
KFS
UniBanka
UC Romania
Employees(5) (Jun 2003) 70,356
o/w Italy
o/w New Europe(5)
(1)
Consumer Finance
(3) M/l term corporate financing
(5) KFS at 100%
40,228
30,128
(2)
Retail mortgages
(4) Leasing
Branches(5) (Jun 2003) 4,598
o/w Italy
o/w New Europe(5)
4
3,248
1,350
Zivnostenska
… LEADING TO SUSTAINED EPS GROWTH, SOUND EFFICIENCY RATIOS
AND HIGH PROFITABILITY, WITH SIGNIFICANT VALUE CREATION FOR
SHAREHOLDERS …
2002
Revenue growth (mln)
Retail Division
10,284
4,728
CAGR
02-06
8.6
Cost/Income, %
8.0
Core Tier 1 ratio, %
Corporate Division
2,734
2006
54.6
50
7.2
6.8-7.2
17.2
21
9.9
ROE, %
Private & AM Division
1,072
10.2
New Europe Division
1,830
8.8
Op. Income growth (mln)
4,670
11.5
0.29
14.0
EPS
2002
PAY-OUT RATIO FROM 55.2%
IN 2002 TO AN AVERAGE 65%
IN THE 2003-2006
TIMEFRAME
5
... THROUGH TAILORED STRATEGIES FOR DIFFERENT CUSTOMER
SEGMENTS AND GEOGRAPHIES
High importance
Low importance
Revenue growth
Existing
customers
New
customers
Efficiency
Risk mgmt
Intra-group
synergies
Retail business
Pioneer
UBI
Corporate business
UCB
UPB
Private Banking business
UBM
UBI
New Europe
Pioneer
UBM
TradingLab
6
AGENDA
Group Highlights
Divisional overview
Retail Division
Corporate Division
Private & Asset Management Division
New Europe Division
7
GROWTH FROM BOTH EXISTING AND NEW CUSTOMERS ON THE TOP OF
MARKET TREND, WITH PARTICULAR FOCUS ON HIGH GROWTH/HIGH
VALUE BUSINESSES, LEVERAGING ON SPECIALISATION
More business with
existing customers
New business from new
customers
THROUGH
 Focus on high growth/high value businesses; in particular:
KEY GROWTH DRIVERS FOR THE MARKET:

Decreasing households’ savings rates (from 15.8% in 2003E
to 15.3% in 2006E) coupled with higher consumptions leading
to a 8.1% 2003-2006 CAGR in total households’ loans1

Alignment to Eurozone averages of weight of retail
mortgages and consumer credit on GDP in Italy:
 Weight of retail mortgages on GDP in Italy: 12.2% in
2002 vs. 34.7% in Eurozone2
 Weight of consumer credit on GDP in Italy: 2.7% in
2002 vs. 8.2% in Eurozone2
 Retail mortgages
 Consumer credit
 Quality approach to Small Business thanks to specialisation
8
1
Source: Bank of Italy. Data including only consumer households
2
Source: Bank of Italy and ECB; data calculated taking into account consumer credit granted only by banks (financial
enterprises not included)
RESIDENTIAL MORTGAGES: A DEDICATED BANK TO GROW FASTER
THAN MARKET
Residential mortgages:
Market growth in Italy (CAGR)1
18.8%
~10%
1998-02
2002-06E
UCI Banca+UBCasa (stand alone)
Key figures
 ~21 bn residential mortgages as at
30.6.2003 (+6.4% on year-end 2002)
 ~2.9 bn flow of new residential
mortgages in 1H03 (1.3 bn in 1Q
and 1.6 bn in 2Q, +23% QoQ)
UCI Banca+UBCasa (stand alone):
Market share evolution2
2002
2006
~12%
> 15%
+ 25%
LEVERAGING ON:
UB CASA: a dedicated and integrated (production + distribution) “mortgage centre”
with a target of ~70,000 new customers for the division by 2006
OUTSTANDING FOR:
 Product innovation, as a response to more sophisticated and rapidly changing customer needs
 Processing of mortgage workflows: 3 days on average for response, 20 days on average for
granting
 Credit scoring systems
 Multichannel distribution: captive UCI Banca network, proprietary dedicated branches, mortgage
brokers, real estate agent networks (Tecnocasa, FIAIP), PFAs networks, non-captive banking and
financial intermediaries
9
1
2
Source: Bank of Italy for 1998-2002 data; internal estimates for 2002-2006 CAGR
Calculated on total M/L term consumer households’ loans – Source: Internal estimates on Bank of Italy data
ACQUISITION1 OF ABBEY NATIONAL-ITALY: A SUCCESSFUL INITIATIVE TO
BECOME LEADER AMONG THE SPECIALISED PLAYERS IN THE
DOMESTIC MARKET, PERFECTLY FITTING WITH THE STRATEGIC PLAN
UBCasa + ABNI
ABNI Key Highlights
 N° of customers:
 Wider product range
48,000
 Mortgage portfolio2:
3.9 bn
 Market Share3 in 2002:
3.2%
 Market Share3 Jan-Aug03e:
4.0%
 Good asset quality thanks to an efficient inhouse-made scoring system: combined
analysis of real estate properties value and
cash-flow capability of the borrower
 Strong multichannel sales approach:
 14 branches located in the main Italian
cities
 60 Financial Advisors
 Many distribution agreements with
banks, real estate brokers, PFAs
networks and other financial
intermediaries
 Enhanced distribution capabilities
through:
 proprietary branches in keycities
 dedicated alternative channels
 Acceleration of growth, becoming:
 Leader among specialised
players in Italy
 4th in the overall domestic
market for flows of new
mortgages granted in 2003, with
~5.5% market share
UCI Banca + UBCasa + ABNI
 ~15% market share in Italy for total
outstanding residential mortgages,
starting point for additional growth
10
Acquisition expected to be completed before year-end and subject to approval by the relevant authorities
2 As at 31 August 2003
3 Calculated on flow of new mortgages granted in the periods
1
STRONG CONTRIBUTION OF CONSUMER LENDING TO THE DIVISION’S
GROWTH …
Consumer lending:
Market growth in Italy (CAGR)1
Clarima + UCI Banca: Key figures
 ~3.8 bn consumer loans as at
30.6.2003 (+10% vs year-end 2002),
of which:
 ~2 bn pure consumer credit
 ~1.8 bn non-finalised short-term
consumer loans
15-20%
13.5%
1995-02
 ~136,000 clients for Clarima as at
30.6.2003
2002-06E
Clarima + UCI Banca:
Market share evolution
2002
~7.5%
> 9%
2006
+ 20%
LEVERAGING ON:
3 MAIN DISTRIBUTION CHANNELS
PARTNERSHIPS AND
DIRECT MARKETING
UCI Banca
SPECIALISED
FINANCIAL SHOPS
Key goals:
Key goals:
Key goals:

~800,000 net acquisitions of
customers from 2003 to 2006

Revolving cards / Total cards
ratio higher than 50% (ratio
higher than 60% as at 30.6.2003)



Clarima as the “consumer credit
specialist” of the Group
Full commercial integration with
UCI Banca
Maximisation of UCI Banca
customers potential as for credit
cards and personal loans
(~31,500 Clarima cards out of 1.1
mln Total cards as at 30.6.2003)

Exploitation of a dedicated
and alternative distribution
channel traditionally strong
in Italy

Focus on “credit at point of
sale”
11
1
Source: internal calculations on Bank of Italy, Assofin and Eurofinas data for 1995-2002 CAGR; internal estimates for 20022006 CAGR
… THANKS TO TAILORED STRATEGIES FOR EACH
DISTRIBUTION CHANNEL; FIRST POSITIVE EVIDENCE IN 1H03
RESULTS
STRATEGIC GUIDELINES
 New selected partners strong for
distribution capability, customer base
and brand
PARTNERSHIPS
AND DIRECT
MARKETING
1H03 COMMERCIAL RESULTS

23 strong partnerships as at 30.6.2003

~45,000 net new clients (from 91,000
as at 31.12.2002 to 136,000 as at
30.6.2003, +49%), of which ~70% from
non-captive channels

~Euro 1,200 average outstanding
loans per customer1 as at 30.06.2003

Revolving credit cards/Total
outstanding credit cards around 50%,
vs 7% as total market average
 Conversion of UCI Banca “optional”
cards into revolving cards

21,735 outstanding finalised loans as
at 30.6.2003 vs 12,250 as at 31.12.2003
 Increased share of wallet of UCI
Banca clients (from 18% in 2002 to
31% in 2006) for personal loans

~2.7 mln transactions with credit
cards in 1H03 vs 1 mln in the whole
2002, accounting for more than Euro 134
mln vs Euro 88 mln in the whole 2002
(+53%)

Significant investments (~2 mln) to
strengthen credit scoring systems in
1H03
 Low acquisition costs per client
thanks to high integration of
product/model with the partner
 Share of “revolving clients” on total
direct channel new clients >80%
 Leverage on cross-selling
 Increase of penetration of Clarima
cards on UCI Banca customer base
UNICREDIT
BANCA
SPECIALISED
FINANCIAL
SHOPS
 Opening of 9 shops in selected high
potential cities in January 2004
 Other 15-20 openings starting from
2005
12
1
Calculated on active customers as at 30.6.2003
SPECIALISED HIGH QUALITY APPROACH TO SMALL BUSINESS IN
ORDER TO INCREASE CUSTOMER PENETRATION AND EXPAND THE
CLIENT BASE
Small Business lending: UCI Banca
Key figures
Small Business lending: UCI Banca
Market share evolution1
 ~13 bn loans as at 30.6.2003 (+1.0% on
2002
year-end 2002)
2006
 ~550,000 clients
< 7%
> 8%
+ 20%
THANKS TO:
 Launch new segment-focused
Imprendo packages
 Strengthening of specialised
branches
 Leverage state of the art credit skills to:
 grow penetration on existing
customers through specific and
targeted credit campaigns (i.e.:
Utilizza di Più)
 expand the client base – Target:
+230,000 customers by year end 2006
Leveraging on specialisation to grow penetration:
An EXAMPLE – 1st “Utilizza di Più” Campaign2
Target
 ~ 103,000 customers involved
(minimum Credit line 5,000
Euro)
 Good credit quality (top three –
out of five – performing loan
classes)
1,4 bn
+15%
1,2 bn
Campaign
 Call centre & account rep contact
 Packaged pricing offer linked to
new credit product
 Four months time frame starting
01.02.03
13
Calculated on loans to sole proprietorships with up to 5 employees (=“Famiglie produttrici”), as a good proxy of the whole SB segment
2 A second campaign on other 62,000 clients, started at 28.8.2003 to last until year end, has shown in the first month a 9.6% increase of the
outstanding loans (from 821 mln to 900 mln)
1
Results
Outstanding Outstanding
at 31.01.03 at 31.05.03
AGENDA
Group Highlights
Divisional overview
Retail Division
Corporate Division
Private & Asset Management Division
New Europe Division
14
GROWTH IN SME’S MARKET THROUGH SPECIALISED APPROACH
AND BETTER PENETRATION OF EXISTING CUSTOMER BASE
through the development of
a full range of high-value
added products in order to
become the main financial
partner for integrated
lending and services

Increase the share of wallet
of selected existing
customers and

acquisition of new customers
in selected areas

Low risk profile, full implementation of Basel II guidelines

Strong cooperation between UBI and UBM in order to offer high value
added product and services
15
UBI’S CORE CUSTOMER BASE REPRESENTS OVER 76%
OF THE BANKING SYSTEM’S TOTAL OUTSTANDING LOANS
WITH ROOM FOR FURTHER GROWHT IN LENDING
COVERAGE …
High degree of client coverage
Ch. in
Client
Lending Lending
coverage coverage1 coverage1
UBI
Core
Clients
Total
Market
56,067
117,321
47.8%
76.2%
+60
 In historical areas3
the lending coverage
increases to around
90%
10,248
34,688
29.5%
66.8%
+40
5,702
15,821
36.0%
57.5%
-190
 Room for further
growth in coverage
remains in some rich
areas, such as
Lombardy, and in
some provinces in
the North East
(Jun03/
Dec02, bp)
Jun03
Total
…except in Lombardy…
Lombardy
…except in the South2
Southern Italy
 The total amount of
loans of UBI
customers, either
with UBI or with other
banks, represents
76% of total loans
16
Source: UBI calculations on internal data and Credit Bureau data
1 Lending coverage refers to the amount of total outstanding loans of UBI
customers (both towards UBI and other banks) relative to the total stock of
outstanding loans on the corporate market.
2
3
Abruzzo, Basilicata, Calabria, Campania, Molise, Apulia, Sicily, Umbria
Emilia-Romagna, Friuli-Venezia Giulia,
Piedmont, Trentino-Alto Adige, Aosta
Valley, Veneto
… AND IN REVENUE STREAM GENERATED BY THE NON
“TOP 10%” UBI’S CORE CUSTOMERS
Revenues concentration
1H03
Number of
clients
54.5%
63.9%
I Quartile
14,017
76.4%
81.6%
II Quartile
14,017
16.8%
12.8%
III Quartile
14,017
6.2%
4.1%
IV Quartile
14,016
0.6%
1.6%
Total
56,067
100%
100%
17
Source: UBI calculations on internal data
The top 10% of UBI
core customers
generates:
 over 60% of total
outstanding loans
 over 50% of UBI’s
total revenues
 over 50% of
commission
margins (net of
derivatives)

The top 10% is fairly
well distributed among
large, medium and
small enterprises
Outstanding
loans (%)
Total
revenues (%)
5,607
I Decile

FIRST HINTS OF IMPROVEMENT IN LENDING MARKET
SHARE IN 1H03
LOANS
UBI % ch. System % ch.
Jun03/Mar03 Jun03/Mar03
Dic02
Mar03
Jun03
Largest 42 groups
4,990
6,077
6,545
+7.7
+4.3
Other corporates1
7,450
6,477
7,532
+16.3
+2.7
SMEs
21,489
20,802
22,203
+6.7
+1.0
Public sector and others2
5,174
4,130
4,754
+15.1
+3.8
Total
39,103
37,486
41,034
+9.5
+2.6
(Euro mln)
 Loans to SMEs growing slightly faster than the system: system’s data show an
increase of 1% (Jun03/Mar03) against +6.7% of UBI loans to SMEs
 Largest 42 groups: increase mainly due to the “Autostrade”and Fidis deals
 Share of wallet: 10.6% in 1H03 (from 10.2% in Dec02) in line with our 3 years plan
target of 13% and long term target of 15%
Source: Credit Bureau
1 With turnover > 50 mln
2 Mainly financial companies and public entities as defined by Bank of Italy
18
ORGANISATIONAL MODEL AND PRODUCT INNOVATION AS KEY
SUCCESSFUL FACTORS FOR CORPORATE DERIVATIVES BUSINESS
GROWTH, THAT CAN BE EXPLOITED IN THE OTHER BUSINESS LINES
Corporate derivatives
total revenues
(Euro mln)
% ch.
1H03
on 1H02
UBM
281
+27.7
UBI
189
+28.8
474
+29.3
GROUP TOTAL
 KEY FACTORS FOR A SUSTAINABLE
REVENUE STREAM:
 Market leadership with a substantial
market share
 Entry barrier: internal flexible risk
management tool able to cater future
customer needs
 Mastery in risk management recognised
by S&P assigning to UBM the same long
term credit rating of the group (AA-)
887
Relationship
managers
Efficient integration between
product specialists and
relationship managers
 Margin per unit notional not expected to
be under further pressure; product
innovation will boost margins again
Product
specialists
Corporate finance
14
Derivatives
64
Foreign services
22
 Strict quality control in sales to favour
recurrent custom
 Target customers in 3 years plan
represents approx. 55% of group’s
potential customers base (20,000 vs.
36,000)
19
AGENDA
Group Highlights
Divisional overview
Retail Division
Corporate Division
Private & Asset Management Division
New Europe Division
20
GROWTH THANKS TO FIRST-CLASS PRODUCTS AND SERVICES,
LEVERAGING ON STRONG INTEGRATION BETWEEN PRODUCTION AND
DISTRIBUTION
Growth from existing
customers
Growth from new
customers
THANKS TO:
 Portfolio optimisation and
increased share of wallet
with existing customers
 Acquisition of new
customers leveraging on a
widespread presence in
attractive areas and on
distinctive competitive
advantages
 Independence of advice
 Quality of service
 Easiness and proximity to
the client
 World-class performance
thanks to active management
 Wide offer with High-Alfa
products
 Support fron/to UCI’s
networks in Italy and new
partnerships with third
parties
 Strong distribution
capabilities in US and in the
“International” business units
21
WIDESPREAD NETWORK, CONCENTRATED IN THE MOST
ATTRACTIVE ITALIAN “PROVINCES”, AND DISTINCTIVE
COMPETITIVE ADVANTAGES AS KEY GROWTH DRIVERS
% Private Banking
Financial Assets
Milano (96.6%)
35%
UCI PB COMPETITIVE
ADVANTAGES

VS Local domestic
players:
(82.8%)
Roma (82.2%)
Genova
Bologna (44.8%)
Torino (34.5%)
Napoli
40%
25%
Firenze
Treviso
20%
Brescia
15%
Bari
10%
R.Emilia
Perugia
Pavia
5%
0%
Udine Vicenza
Ancona Palermo
Cuneo
Parma
Ferrara
Savona
Lecco
Cremona
Biella
Como
Trento
Mantova
Alessandria
Novara
Salerno
0.0%
0.5%
1.0%
Bergamo
Padova
Venezia
1.5%

Higher service quality

Wider offer of products/
services

Superior skills

Synergies with other
Group companies

Dedicated business model
Top 6 prov.
Verona
Competition
30%
Attractiveness
Foreign or Specialised Players in the provinces
(% on 29 players taken into account)
Distribution of the first 36 Italian “provinces” by potential for
private banking and presence of specialised competitors
40%
Modena
30 prov.

VS National domestic
players:
Varese

2.0%
2.5%
3.0%
3.5%
20%
Potential PB Financial Assets (%)

Focused strategy
VS Foreign players:
Other prov.

Wide-spread presence allacross the country

Deeper knowledge/
understanding of the
clients
Source: UniCredit Private Banking Marketing calculations on MagStat data
UniCredit PB is present in 59 (out of 103) “provinces”,
representing 88% Total Private Banking Financial Assets in Italy
22
1H03 RESULTS FULLY CONSISTENT WITH THE PLAN
TARGETS; ING PROVIDING ADDITIONAL SALES CAPACITY
AND PERFECTLY FITTING WITH THE COMPANY STRATEGY
Net Sales
+77%
(Euro mln)
1,008
 Net sales 77% up YoY, ranking Xelion 1st in Italy for Total Net Sales
~1,300
ING
570
in 1H03 (around 15% market share) and 2nd for Net sales per PFA2
 Improving QoQ trend (Euro 521 mln in 2Q vs Euro 487 mln in 1Q),
with increasing weight of AM products3 (83.2% in 2Q vs 67.8% in
1Q)
ING ADDS:
1H02
Pro-forma1
1H03
1H03
Pro-forma with ING
Fin. Assets per PFA (Euro mln)
PFAs
3.7
2.7
1,833
~4.1
~2,360
1,610
ING
-223
31.12.2002
Pro-forma1
30.6.2003
Total Fin. Assets
(Euro mln)
4,883
5,988
 Streamlining of the Network:
 Exit of “marginal” PFAs (Euro 1.36 mln Average Tot. Financial
Assets of lost PFAs)
 Recruitment of 125 new PFAs, generating on average Euro
2.9 mln net sales in 1H03
ING ADDS:
30.6.2003
Pro-forma with ING
+23%
 Important additional sales capacity (~Euro 300 mln in 1H03)
~9,600
ING
 750 PFAs, reinforcing Xelion’s 5th position among Italian PFAs networks
 Total Financial Assets 23% up vs 31.12.2002
 Weight of AM products3 from 70.5% as at end of March to 71.1% as
at end of June (+68 bp)
ING ADDS:
 ~Euro 3.6 bn Financial Assets (of which more than 90% in AM
31.12.2002
Pro-forma1
(1)
(2)
(3)
30.6.2003
30.6.2003
Pro-forma with ING
products3), making Xelion the 5th asset gatherer in Italy by Fin. Assets
23
Pro-forma including data of “former Xelion”, UniCredit Banca and OnBanca
Among top-players for Total AUMs as at 30.6.2003; 5th taking into account all the Italian players
AM Products: Mutual Funds + Sicav + Segregated Accounts + Insurance products
STRONG NET SALES, TOP-CLASS PERFORMANCES
AND FOCUS ON HIGH VALUE ALTERNATIVE INVESTMENTS:
THREE MILESTONES TO MEET THE PLAN TARGETS
5,064
+35.4
US
2,538
1,839
22,042
+24.8
US in USD
2,819
2,741
24.085
+30.0
906
-16
2,413
+58.4
6,767
4,415
114,870
+10.8
470
77
2,064
+36.1
New Europe
TOTAL PIONEER
Alternative Investments2
Russell
ING Baring
327
BNP Paribas
996
International (ex-Italy)1
10
9
8
7
6
5
4
3
2
1
0
Credit Agricole
+5.7
AXA
Credit Suisse
85,351
Templeton
2,265
(Number of funds of different categories with top 10
rankings by Asset Manager)
Dexia
2,327
Italy
Standard and Poor's Fund Rankings 2002 –
Funds sold in Europe
Pictet
Vontobel
% Ch. of
AuMs on
31.12.2002
Fidelity
Total AuMs
as of
31.08.2003
Merrill Lynch
2003 Perf.
effect
(Jan-Aug)
JP Morgan
PIONEER
UBS
(Euro mln)
2003 Net
Sales
(Jan-Aug)
 ~11% AUMs growth in the first 8 months of 2003, in line with the plan target (+12% 2003-2006 CAGR)
 Excellent +36.1% growth of Hedge Funds vs Dec. 2002, with increased weight on Total AUMs (1.8% vs
1.5% as at Dec. 2002) in line with the plan growth path (3.6% as at year end 2006)
 Acquisition from Oak Ridge Investments of 2 growth funds totalling around USD 24 mln and with high
Morningstar ratings3, in order to complete the product range adding 2 quality growth funds to Pioneer’s
strong reputation in value funds
24
Momentum
2 Data already included in the other business areas
3 Oak Ridge Large Cap Equity Fund (5 stars from Morningstar) and Oak Ridge Small Cap Equity Fund (4 stars from Morningstar)
1 Including
AGENDA
Group Highlights
Divisional overview
Retail Division
Corporate Division
Private & Asset Management Division
New Europe Division
25
GROWTH LEVERAGING ON THE OPPORTUNITY OF AN
UNDERPENETRATED BANKING SYSTEM AND ON UCI’S EXPERIENCE
 Positive gap of New Europe in terms of GDP growth, compared to EU market, both in the
recent past and in the forthcoming period
 Different strategic focus with:
CLEAR LEADER BANKS1: profitability growth and consolidation of existing position
 Focus on most profitable (golden) customer base: Private, Affluent and Small
Business through offer of new value added products (i.e. AUM) to existing clients and
new customer acquisition
 Selective approach for Large Corporate (except Bulgaria); cost control and crossselling for mass market; no significant customer base increase is expected
RISING LEADER BANKS2: quick and healthy market share growth
 Aggressive new customer acquisition campaigns for both Retail and Corporate through
enlargement of golden customer base with final goal of being in the “top 5” of the market
 Improvement in risk management and efficiency
 Development of a common advanced product shelf, creation of joint factories and
implementation of tailored segment service models supported by homogeneous IT
systems and applications
 Future growth driven mainly by organic growth (with some potential acquisitions)
1
Pekao, Zaba and Bulbank
2 UniBanka, KFS, UCR and Zivno
26
UCI IS PRESENT IN MAJOR NE COUNTRIES WITH SIGNIFICANT
SCOPE FOR GROWTH IN A STILL UNDERDEVELOPED RETAIL
MARKET
Weight of country’s
GDP on Total NE area
GDP in 2002 (%)
BANKING PENETRATION in 2002
(Loans+Deposits)/GDP
Share loans retail
over total loans
Cards per ths
inhabitants2
1,280
52%
224%
29%
349
66%
EU
New
Europe1
Breakdown of retail
financial assets
Life
Insuran.
29%
Pension
Funds
14%
Mutual
Funds
14%
Retail
Bank
Deposits
43%
EU3
1
3
4%
4%
5%
87%
New
Europe4
EU
New
Europe1
EU
Non Interest
Income/Total
revenues in 1H03
 Mortgages and
consumer credit
expected to be the
key retail products
(%)
45.0
 Lower weight of
Asset
Management,
expected to
partially substitute
deposits
34.8
UCI’s
UCI’s
3 Italian NE banks
Banks
Poland, Croatia, Hungary, Estonia, Slovenia, Czech Rep. Turkey,
Latvia, Bulgaria, Romania, Slovakia, Lithuania
New
Europe1
27
2001 data considering France, Germany, Italy, Spain and UK as proxy for EU
2
28.3
Turkey
27.4
Czech Rep.
10.5
Hungary
10.0
Romania
6.8
Slovakia
3.6
Croatia
3.4
Slovenia
3.3
Bulgaria
2.4
Baltics5
4.3
NE GDP (bn)
702
 Leading position of UCI
in Poland, main country
in NE area for GDP
 GDP growth in NE
+4.6% (cagr 03-06)
2001 figures
Countries with UCI’s presence
5 Lithuania, Latvia, Estonia
4
Poland
STRENGTHENED SYNERGIES WITH INVESTMENT AND
INSURANCE PRODUCT PROVIDERS IN NEW EUROPE
Mission
To extend financial
product offer in order
to guarantee portfolio
diversification
To introduce product
innovation in order to
meet customer needs
in term of security and
yield
To complete financial
products offer with a
segmented insurance
offer with a particular
focus on Life
insurance
Activities
PIONEER
TLAB - UBM
 Distribution or advisory
agreements in place or under
discussion (UCR and KOC)
with NE Banks and group
local Asset Managers
 Launch of structured TD
(capital and minimum yield
guaranteed) in Pekao,
Unibanka and Zaba and
negotiations in progress in
the other Banks (Bulbank
and Koc)
 Pre-joint venture agreement in
Poland (with Pioneer asset
manager) and distribution
BANCASSURANCE agreements for life and non life
products in place (Unibanka,
Bulbank, Zaba, Koc) or under
discussion in the other Banks
28
 Pioneer market
leader in Poland
with around 25%
market share
 Bulbank first bank
to distribute
foreign mutual
funds in Bulgaria
 Innovative product
launched with
strong success in
different forms
(also linked to
Pioneer funds)
 Pekao best life
insurance seller in
Poland thanks to
the Unit linked
products
SUCCESSFUL ACHIEVEMENT IN THE FIRST HALF 2003 WITH HIGH
GROWTH IN AUM AND DECREASED COST OF RISK
BP target
VOLUMES (at unchanged FX)
Gross Loans (Euro bn)
Assets under Management1
Deposits (Euro bn)
(Euro bn)
14.8%
+2.4%
13.8
14.1
Dec02 1H03
CAGR
8.7%
-0.5%
21.1
 Higher Gross
Loans on
Deposits ratio to
67.2% in 1H03
(from 58.4% in
2002) well on
track to achieve
2006 target
(72.7%)
21.0
Dec02 1H03 CAGR
02-06
02-06
COST OF RISK AND EFFICIENCY
DECREASING COST OF RISK:
Net Provisions/Net Loans (bp)
1882
44.0%
+34.4%
1.5
2.0
Dec02 1H03
CAGR
02-06
2006 REVENUE TARGETS
Employees3
(cagr 02-06)
31,006 30,128
28,188
158
TOTAL
REVENUES: +8.8%
119
2002
1
1H03
2006
New Europe business area of Pioneer
2 Excluding the impact of 2002 extraordinary provisions
3 KFS 100%
2002
1H03
29
2006
Retail
Corporate
11.3%
17.7%