UNICREDIT GROUP PROFILE
Presentation for Students of Katolicki Uniwersytet Lubelski, Faculty of Economics, April the 19th, 2007.
Lecture by Mr. Paolo Iannone, Member of the Management Board of Pekao S.A. Bank, responsible for Retail Baking Division UNICREDIT GROUP PROFILE
2 AGENDA
UNICREDIT GROUP IN THE WORLD
First Truly European Bank
Key factors of worldwide success
POLAND MARKETS DIVISION
New Pekao – undisputed leader in Poland
Key factors of region-wide success
SUMMARY
3 UniCredit is the First Truly European Bank
MAIN STRUCTURAL FIGURES 1
Employees 2: ~ 142,000
Customers: 35 mn
Branches 3: over 7,200
Deposits and debt securities in issue: € 495 bn
Loans: € 449 bn
Banking operations in 20 countries
Global player in Asset Management: € 246 bn AuM (with coverage in 5 continents) 14 th bank world-wide in terms of Market Capitalization 4 4 (1) Data as at 31December 2006 (2) “Full time equivalent” and KFS considered al 100% (3) KFS considered at 100% (4) Data as at 31 December 2006 UniCredit has systematically opted for breakthroughs, which have assured excellent economic and financial results
1993 1998 1999 20002003 2005
Domestic Privati- Federal 1 Market zation Group S3
Central Eastern Europe (CEE) CEE
Asset Management
First truly European bank
PROFITABILITY - EPS (€)2 CAPITALIZATION (€ bn ) EFFICIENCY – Cost/Income (%)
65 0.53 85.5 69.0 0.26 56,5 23.1
0.02 2.5
1994 1999 Dec. '06 1994 1999 Dec. '06 1994 1999 Dec. ‘06 5 (1) Project that led to the creation of three specialized banks by customer segment in Italy: UniCredit Banca in the retail segment, UniCredit Banca d’Impresa in the corporate one and UniCredit Private Banking in the private one (2) Earning per share … firmly set in the top ranks of the Eurozone banking industry …
Market Capitalisation 1 Total Assets 2 Total Revenues 2
SCH 83.6 BNP Paribas 1,440 Crédit Agr. 29.1
UniCredit 74.2 Crédit Agr 1,261 Deutsche B 28.3
IntesaSP 72.6 ING 1,226 BNP Paribas 27.9
BNP Paribas 72.3 Deutsche B. 1,126 UniCredit 23.4
ING 70.1 ABN Amro 987 ABN Amro 22.7
BBVA 65.3 SocGen 957 SCH 22.6
ABN Amro 61.3 SCH 834 SocGen 22.4
3 SocGen 59.0 UniCredit 823 IntesaSP 18.5
3 ING 4 14.2 Deutsche B. 52.6 IntesaSP 577
412 BBVA Crédit Agr. 47.9 BBVA 13.7
6 Source: individual companies’ (1) Figures in € bn as at 31 Dec.2006 financial statements, Bankscope and (2) Figures in € bn as at 31 Dec. 2006 Financial Times database (3) Figures of Banca Intesa and SanPaolo-IMI are pro-forma (4) Banking Division only … with a clear international profile confirmed by shareholder structure and by employees distribution …
UniCredit shareholder structure UniCredit employees distribution 2
10.3% Retail
Munich Re 4.82% Fondazione CRT 4.74% Fondazione Cariverona 4.74% Others 27.8% “Core” Carimonte Holding 4.30% Allianz Group 3.03% 19.7% Italy Others 1 6.17% 25.1%
Austria 8.6% United States 20.4%
10.7% 18.0% United Kingdom 10.9% 61.9% Institutional Turkey 17.9% Germany Germany 10.4%
Italy 5.1% Poland France 4.4%
Others 10.7% Source: Internal data as at 31 December 2006 (2) For employees nationality 7 Source: Consob, DF King and JP Morgan - data as at 11 January 2006 (1) Other core sheraholders (with a stake under 2%) are: Aviva Group (1.69%), AVZ Stiftung (1.63%), Cassamarca Foundation (1.52%) and Land Bayern (1.34%) … as well as by a well diversified revenue structure
2006 Consolidated Total Revenues – € 23,464 bn
By business lines 1 By geographies 2
Poland Markets Other 10% 9% Retail 34% Italy CEE Austria 36% 12% 12%
CEE MIB 12% 14%
Private Corporate Poland Germany & AM 10% 21% 9% 21%
Commercial banking still the bulk of Group’s operations are strongly focused on our business international markets
8 (1) The pie chart is on total group revenues (2) The pie chart is on total group revenues excluding Global Banking Services, Corporate Centre and consolidation adjustments AGENDA
UNICREDIT GROUP IN THE WORLD
First Truly European Bank
Key factors of worldwide success
POLAND MARKETS DIVISION
New Pekao – undisputed leader in Poland
Key factors of region-wide success
SUMMARY
9 Group competitive advantage is based on a strong presence in one of the wealthiest European areas …
Germany HVB in Bavaria Population of 82.6 mn (21.4% of EU15) HVB: no. 1 with 394 branches 21.9% of EU15 GDP (57% of total HVB Exports to Italy and Austria: 12.3% of German branches) Total
Austria Bank Austria in Austria Population of 8.2 mn (2.1% of EU15) Munich Bank Austria: no.1 with 2.4% of EU15 GDP some 401 branches and Vienna Exports to Germany and Italy: 39.8% of 18% market share Total
Italy Milan UniCredit in Northern Italy 1
Population of 58.5 mn (15.2% of EU15) UCI: 2,281 branches (73% of 13.8% of EU15 GDP total UniCredit Exports to Austria and Germany: 15.5% Italian branches) of Total
Trading Exchange Per capita GDP 2 138% 132% Aggregate exports and imports of 131% 129% Germany plus Austria and of Italy EU27 vs. CEE account for 14% of total 100%
Northern BavariaAustria Combined Italy 10 Source: Eurostat. Data as at 2005 year-end (1) Northern Italy includes: Piemonte, Valle d’Aosta, Lombardia, Trentino Alto-Adige, Veneto, Friuli Venezia-Giulia, Liguria and Emilia Romagna (2) 2004 year-end data built on the latest available information (CE Inforegio Report as at 19 February 2007) … as well as in the fastest growing markets …
UniCredit market share in CEE countries 1
24.4% 23.4% 21.2% 20.7%
11.9% 11.7% 10.5% 7.0% 6.4% 5.7% 5.6% 2.6% 1.7% 0.8% CroatiaBosniaPoland 2 Bulgaria Turkey 3 Slovakia Czech. Romania Slovenia HungarySerbia Baltics Russia Ukraine Rep.
Average GDP growth 4 2007-09
7.8% 6.1% 6.3% 6.0% 6.2% 6.3% 5.5% 5.9% 5.5% 4.2% 4.6% 4.4% 4.3% 3.3% UE12 1.9%
CroatiaBosniaPoland Bulgaria Turkey Slovakia Czech. Romania Slovenia HungarySerbia Baltics Russia Ukraine Rep. (1) End of 2005 11 (2) Including 200 branches still to be sold, according to the deal signed with the Polish Treasury Ministry (3) Including 100% of Yapi Kredi assets and branches (4) Source: Central Banks, National Statistical Offices, UniCredit New Europe Research Network, UniCredit Research & Strategy and Thomson Financial Datastream … where it operates as the undisputed leader
Central & Eastern Europe – Top Financial Groups
Total Assets (Euro bn) Revenues (Euro mn) Branches (no.)
100 1 4,379 1 2,956
39.4 2 48.7 3 1,744 2 2,406 3 2,633
42.7 1,898 2,026 4 1,668
40.7 42.3 4 1,928 1,286
26.9 30.1 5 1,545 1,561 8 1,237
20.1 6 22.1 7 1,435 1,551 5 1,027
19.0 19.1 8 1,083 6 1,212 7 1,000
UniCredit Group has a particularly strong competitive advantage in CEE as demonstrated by its size in terms of revenues, total assets and active branches compared with other competitors
12 (1) Including proforma and acquisitions in 2006 (2) Including proforma Erste Serbia (3) Including Source: UniCredit New Europe Research Network – As at end of 2005 proforma BCR (4) Including proforma Impexbank and Bank Aval fully consolidated since Oct. 2005 (5) Note: 100% of total assets and revenues for controlled companies (stake>50%) Including proforma Splistka Banka (6) Including proforma KMB and Intesa Beograd (7) Including and share owned for non controlled companies – 100% of branches (excluding proforma Ukrsotsbank and UPI Banka (8) Including proforma Niska Banka and Zepter Banka representative offices) The adoption of a business model based on specialization is also a key element …
GROWTH & Increasing knowledge of customer needs EXCELLENCE IN CUSTOMER SERVICE Tailoring service models THROUGH Developing full management focus and accountability DIVISIONALIZATION SPECIALIZATION
MULTI-LOCAL Maintaining the main existing local legal AS KEY SUCCESS entities (i.e. HVB and BA-CA) APPROACH AND (Retail, Corporate and Leveraging on highly recognized brands Private) Adapting to each market's specifics DIFFERENTIATION FACTOR TO BUILD GLOBAL Economies of scale COMPETITIVE BUSINESSES Centers of excellence in selected (Investment Banking, product areas that can be leveraged at ADVANTAGE IN Asset Management & pan-European level Global Product Lines 1) Global reach for Asset Management THE EUROPEAN MARKET GLOBAL BANKING Achieving superior quality in shared SERVICES DIVISION services AS GROUP Ensuring cost efficiency EXECUTION Centralizing and ensuring proper IT FACILITATOR governance and support services 13 (1) E.g. leasing … enhanced by a consistent organizational approach …
Markets & Poland Global Corporate Private B. & Investment CEE Banking Retail Markets Division Division AM Division Banking Division Services Division Division Division 1
The adoption of a divisional model aims to better answering to the needs of different market segments giving full responsibility to each Division for the definition of strategies, objectives and operational guidelines
14
(1) Including global service factories, such as back office, credit collection and recovery, ICT services, procurement and purchasing, property management, exc. … and by a strong set of values
Our set of values is based on … to transform … for all our integrity as condition of profit into value … stakeholders sustainability …
Fairness For UniCredit Colleagues the pursuit of profit is a positive value Transparency because it assures Strong continuity and Customers and Respect independence, suppliers set of building - via integrity – values our reputation vis-à-vis all Trust stakeholders Investors Integrity assures Freedom sustainability, which makes it possible to transform profit into value Local Reciprocity Communities
15 AGENDA
UNICREDIT GROUP IN THE WORLD
First Truly European Bank
Key factors of worldwide success
POLAND MARKETS DIVISION
New Pekao – undisputed leader in Poland
Key factors of region-wide success
SUMMARY
16 After a deep economic transformation Poland is ready to face competition of other European Countries
The largest market in the CE Europe The 6th largest economy in the European Union: Human resources are the main advantage of the Polish economy The highest percentage of population with University Degree One of the youngest populations in Europe However a risk of economic emigration is high (estimated from 600 K up to 2 mn of people)
The main macroeconomic figures: 2005 (forecast for 2006) GDP – 1.000 bn PLN, +3,4%(+5,2%) GDP per capita - 25,3 K PLN Population – 38,2 mn Unemployment – 17,6% (15,1%)
Comparison with other economies of the CEE Region: GDP change dynamics in ‘89-’05: Inflation Poland – 148% Poland – 2,1% Czech Rep. And Slovakia – 121% Hungary – 3,6% Latvia and Lithuania – 98% Russia – 11.3% Russia – 88% Ukraine – 13,5%
17 Bank Pekao SA serves already three generations of Poles…
…established in March 1929 (78 years of continuous activity)
…enforced by 3 other Banks in 1996 (Grupa Bankowa Pekao S.A.)
…privatised in 1998 (IPO on WSE in June 1998)
…merged in one bank (Bank Pekao SA) in January 1 st 1999
…long-term investment of Unicredito and Allianz in August 3 rd 1999
18 …in this time always improving its financial achievements
2006 2005 Change 1999
Net profit (PLN mln) 1 790 1 535 +16.6% 172
ROE (%) 21.1% 19.2% 1.9 p.p. 4.38%
Total assets (PLN mln) 67 703 61 972 +9.2% 172
Equity (PLN mln) 8 876 8 408 +5,9% 3 910
Savings 51 744 1 45 848 +10.6% 44 959
Loans 31 778 2 28 224 +12,6% 26 678
…Bank Pekao is already a giant on the Polish banking market!
19 1) additionally also PLN mln 23 263 of mutual funds 2) including for instance: PLN mln 2 338 of consumer loans and PLN mln 5 475 of mortgage loans Now Bank Pekao SA enters into the integration process with Bank BPH SA – the third biggest Polish bank
The Integration preparative process has been concluded
The Spin-Off Plan has been approved Creation of New by Supervisory Pekao, the clear leader in the Polish Boards of both banking landscape Banks and signed by Management Boards of both Banks
Legal and BPH to remain an operational merger independent entity process in line with as a strong action plan platform for growth
20 The New Pekao will become undisputed leader in the key banking areas
Savings 1 PLN mld Lending products 2 PLN mld Branches
New Pekao 99.8 New Pekao 65.8 PKO BP 1,248
PKO BP 89.3 PKO BP 56.6 New Pekao 1,067
ING 43.7 BRE Bank 23.6 BZ WBK 384
BZ WBK 36.5 BZ WBK 16.7 Millennium 360
Citibank 28.2 Citibank 16.1 Kredyt Bank 353
21
(1) Deposits and Mutual Founds (2) Nominal value (3) With no sold Mutual Found Legg Masson (4) Credits, loans and other accounts receivable Data as for April the 3rd, 2006 April the 3rd, 2006 The New Pekao will extend its Network even more on the territory of the whole Poland
Geographic presence
Number of branches/ Number of Branches partner outlets 83 45
67 38 65 Current Pekao outlets 782 274 117 35 Outlets from BPH 285 100 93 Partner outlets from BPH 420 85 49 30 151 Total 1487 101 154
Thanks to its 2651* ATMs, New Pekao will represent the biggest ATM region-wide network
22
* Including 796 ATMs of Euronet Network AGENDA
UNICREDIT GROUP IN THE WORLD
First Truly European Bank
Key factors of worldwide success
POLAND MARKETS DIVISION
New Pekao – undisputed leader in Poland
Key factors of region-wide success
SUMMARY
23 The New Pekao will make its regional leading position in terms of values creation even stronger
Market capitalization 1 Net profit, 3 Q 2006
EUR mld EUR mln
New Pekao 2 14,7 New Pekao 3 569
Raiffeisen International 12,4 OTP 550
PKO BP 11,0 Raiffeisen International 539
OTP 7,6 PKO BP 338
Komercni Banka 4,4 Komercni Banka 232
BRD 3,8 BRD 134
24
(1) Market capitalization as on the 14.11.2006 (2) Estimations based on Shares Assignment Proportion 3.3 (3) Estimations The New Pekao is facing some very ambitious challenges
To go in the position of an undisputed leader in terms of stabile incomes growths and profitability as well as creation of a new clear example in the CEE
Retail Banking SME/VIP/Broker services Corporate banking A leading bank offering Undisputed leader of the The best recognizable to Polish families the market thanks to a full Bank for companies, highest quality service, offer of lending products, fulfilling all the needs of taking advantage of the advisor service model its Clients (360° offer), best practices of Pekao and modern methods of with key account (i.e. Mutual founds) and credit scoring managers supported by of BPH (i.e. experience dedicated product in new Customer managers acquirement)
Risk management Perfection in risk management within the credit portfolio quality and ability to give fast answers to the market requirements
25 The very first advantages resulting from the integration are already visible for Customers
Fee of charge access to the largest ATM network Extending in Poland (2855 ATM) The network of free ATMs
Access to a large offer of Pioneer Mutual Founds for BPH Pioneer Mutual customers Founds in BPH
Extending the offer addressed to the segment of small New lending products and middles business entities – self-repaying loan and credit card
26 AGENDA
UNICREDIT GROUP IN THE WORLD
First Truly European Bank
Key factors of worldwide success
POLAND MARKETS DIVISION
New Pekao – undisputed leader
Key factors of Region-wide success
SUMMARY
27 Unicredit Group is one of the most aggressive/active players on Banking market in Europe
UNICREDIT GROUP – always looking for innovations
Breakthroughs strategy
Clear international profile (shareholders and employees)
Diversified revenues structure
Presence in the most dynamic geographical areas
Specialisation (divisionalisation)
Strong set of values
28 Pekao is already a leader and will enhance its strong position on Polish and CEE banking market
New Pekao – undisputable leader
Undisputable leader in terms of scale and efficiency
Regional leader in terms of capitalization and profitability
Excellent service quality
Network of 1067 Branches and 2 651 ATMs
Using the best practices of both organizations
Attractive Employer for the best Employees
29 THANK YOU FOR ATTENTION!
30