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

EBRD Annual Meeting Retail banking on the move: the latest trends and developments in CEE. Andrea Moneta, Managing Board Member, BA-CA Martin Mayr, Market Research, BA-CA London, 21 May 2006. Agenda. Part 1: The Group in CEE (A. Moneta) The leading banking network in CEE

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

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  1. EBRD Annual Meeting Retail banking on the move: the latest trends and developments in CEE Andrea Moneta, Managing Board Member, BA-CA Martin Mayr, Market Research, BA-CA London, 21 May 2006

  2. Agenda • 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

  3. UniCredit is a Truly European Bank … • 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 • 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 data 1 Consolidated 2005 pro forma for UniCredit Group including HVB Group stand alone 12 months results, integration effects and other one-off costs 2 Ranking as at 16 March 2006 - Source: Datastream

  4. Lithuania No. 8 Latvia No. 10 Estonia No. 6 Russia No. 8 €385mn 2 €358mn 1 €74mn 1 €4.7bn 30 Poland No. 1 €31.7bn 1,281 Czech Rep.No. 4 Ukraine €7.4bn 66 €259mn 8 SlovakiaNo. 4 €3.4bn 93 Romania No. 3 €3.1bn 128 Hungary No. 7 €4.1bn 54 BulgariaNo. 1 €3.5bn 322 SloveniaNo. 7 €1.9bn 13 Croatia No. 1 Turkey No. 3 BosniaNo. 1 SerbiaNo. 5 €21bn 574 €1.5bn 172 €529m 42 €8.9bn 145 MacedoniaRep.Office … with the by far most extensive CEE banking network... Ranking, total assets and number of offices of BA-CA and UniCreditin CEE as of 31 December 2005 CEE region1 • €92.7bn total assets • 2,932 offices • 60,722 employees • ~17million customers 1 including - Banca Tiriac (Romania) - NBB (Bosnia/Rep.Srpska)- Yapi Kredi (Turkey)excluding- HVB Splitska banka (Croatia)

  5. … where it operates as the undisputed leader. Central & Eastern Europe – Top Financial Groups (2004) Revenues (Euro m) Total Assets (Euro bn) Branches (no.) 4,982 83.7 2,864 34.8 1,715 1,245 1,5361 1,017 33.3 39.71 1,660 875 24.7 1,420 1,6591 814 19.7 1,126 722 18.0 1,110 498 16.4 826 237 14.8 N.A. 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. Source: Internal data - as at end of 2004 1 Including on a pro-forma basis the recently acquired Banca Comerciala Romana

  6. CEE markets offer a huge potential... 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 population about 440 m populationabout 160 m

  7. ...especially in retail banking: CEE revenue potential REVENUE POOLS 2004 IN EURO MILLION 3% 9% 4% 26% 22% 17% 9% 8% 3% 22 100% 11% 60 60 12 453 65 5 312 225 19 Investment Banking 1,024 1,315 70 960 277 714 415 Corporate Banking 2,122 38% 2,618 960 123 397 395 479 287 1,727 3,503 753 51% Retail Banking 4,873 3,563 4,457 417 319 2,768 1,746 1,308 126 662 414 127 400 299 0% Serbia Ukraine Bosnia Poland Austria Croatia Romania Turkey Russia Bulgaria Hungary Slovakia Slovenia Czech R. Note(s): Percentages on top of chart reflect share of country in total CEE revenue pools Source(s): National banks; Economic Research Department BA-CA; BCG analysis

  8. Household loans and deposits have grown strongly in recent years... Increase since 2000: household loans +62%, household deposits +26% p.a. compared to 5% in the euro area

  9. ...and the outlook for the retail sector remains positive Household deposits and loans (2000 and 2007 in EUR per capita) Euro area PL HU CZ SK HR BG RO RU CEE 2005 7000 +7% +17% +12% +11% +17% +30% +29% +44% +20% +4.4% cagr cagr cagr cagr cagr cagr cagr cagr cagr cagr* 6000 Deposits 2000Loans 2000 2.198 5000 3.019 13.600 Deposits 2007 Loans 2007 loans 4000 2.004 3000 1.408 406 14.100 1.208 deposits 4.331 2000 887 710 3.446 210 478 683 617 240 2.542 2.503 2.175 1000 453 1.761 1.539 1.417 1.410 1.329 1.255 127 1.082 1.056 36 5 631 9 524 237 182 0 122 Source: BA-CA Economics Department, UCG New Europe Research Network * 2000 to 2005

  10. Agenda • 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 • BA-CA loan barometer • Part 3: A strong force in retail banking (A. Moneta) • The name of the game is innovation

  11. Market research: design of the studies • 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)

  12. Banking penetration of retail clients at end 2005% of the population aged 15+ who have a business relation with a bank average new EU markets2005: 78% average candidates& west Balkans 2005: 52% 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)

  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. Penetration with banking products/services% of population aged 15+ who use this service/product by end 2005 BG BiH CRO CZ H PL RO SCG SK SLO A D 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 *) 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 BG BiH CRO CZ H PL RO SCG SK SLO A D 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 loans excl. 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. ...any type of account ...any type of deposits (excl. account) ...any type of loan (excl. account overdraft) Trends in use of banking services/products % of population aged 15+ who have ... note: figures do not represent volumes 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)

  17. Planned investments Basis: Total Q: In which of the following items do you or our family plan to invest in the next 12 months? CEE BG BiH CZ HU RO SCG SK SLO Holiday trip, sport activities 30 15 30 472010 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 71023 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 4825 31 475218 13 13 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 Basis: plan to invest in the following item Q: How do you plan to finance these items? % 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

  19. CZ HU SLO CZ HU SLO HU RO BG RO SK BG SCG HU SCG BiH RO SCG BiH BG CZ HU SLO CZ HU SK RO SCG BG CZ HU SCG SLO CZ SK Planned financing Basis: plan to invest in the following item Q: How do you plan to finance these items? Health Holidays, sports 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)

  20. CZ SK SLO CZ SK HU RO BG RO SCG BiH SCG BG SLO RO SCG BG RO SCG BG CZ SLO HU SLO HU CZ CZ SK SLO Planned financing Q: How do you plan to finance these items? Basis: plan to invest in the following item Large household appliances Cars 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)

  21. Summary and outlook • 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.

  22. Agenda • 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

  23. The name of the game is innovation • 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 marketExample: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

  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

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