1 / 23

Andre Bergen, Deputy Group CEO

Andre Bergen, Deputy Group CEO. Strategy update and mid-term value drivers. Overview. KBC, 5 year after take-off : Merger synergies in Belgium Expansion in Central Europe Going forward : Drivers of future profit growth Mid-term financial objectives Conclusions.

cody-duffy
Download Presentation

Andre Bergen, Deputy Group CEO

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Andre Bergen, Deputy Group CEO Strategy update and mid-term value drivers

  2. Overview • KBC, 5 year after take-off : • Merger synergies in Belgium • Expansion in Central Europe • Going forward : • Drivers of future profit growth • Mid-term financial objectives • Conclusions

  3. KBC, 5 year after take-off We clearly benefited from the synergies of the merger in Belgium Revenue synergies : the bancassurance model bearing fruit In m EUR Gross premium income for life and non-life

  4. KBC, 5 year after take-off We clearly benefited from the synergies of the merger in Belgium Cost synergies accelerated as of end 2001 FTE KBC NV, Belgium

  5. KBC, 5 year after take-off Highlights, Belgium : • Additional revenue generation from cross-selling of insurance products, mostly to private individuals • Stable to increasing market shares in banking (post-merger emphasis on customer retention) • Since 2001, cost synergies thanks to integrated IT infrastructure and reduction of branches(target of -1 650 FTEs, currently 78% realized)

  6. KBC, 5 year after take-off We've put ourselves on the map in Central Europe Poland:banking: no 6insurance (L/NL): no 10 / 2 Czech Republic:banking: no 1insurance (L/NL): no 4 / 5 Slovakia:banking: no 4insurance (L/NL): no 7 / 7 Hungary:banking: no 2insurance (L/NL): no 14 / 6 Slovenia:banking: no 1insurance (L): start-up Market positions for banking and insurance

  7. KBC, 5 year after take-off We've put ourselves on the map in Central Europe CE: share in group profit and share in allocated capital (excl. group items)

  8. KBC, 5 year after take-off Highlights, Central Europe • We developped solid customer franchises in the 5 ‘main’ countries (worth 1/3 of our market cap) • We introduced gradually the bancassurance modelin each of the countries • We built high-performance IT systems, which arealmost completed in the main companies • Earnings accelerated (although 2002 was an adverse year in Poland)

  9. KBC, 5 year after take-off We gradually adapted the group risk profile 5.4 6.3 6.2 6.7 6.6 bn EUR 100% 90% 80% 70% Corporate and markets 60% Central Europe 50% Retail (Belgium) 40% 30% 20% 10% 0% 1998 1999 2000 2001 2002 Allocated capital (excl. goodwill) : share per area of activity

  10. KBC, 5 year after take-off Financial track record 1998-2002 7 000 6 000 5 000 Gross revenues 4 000 Operating result 3 000 Net profit 2 000 1 000 0 1998 1999 2000 2001 2002

  11. KBC, 5 year after take-off Financial highlights : • Robust revenue growth 1998-2002 : 13% p.a. • However : • slowdown in cost efficiency • Since 2001, impact of the adverse economic and financial climate (cost of risk, value impairments) As a balance : earnings up 6% p.a. • Sustained rise in DPS, even in difficult market situations (up 8% p.a.)

  12. Going forward, earnings drivers The right question : Going forward, investors rightly ask usabout the catalysts for future growth

  13. Going forward, earnings drivers The clear answer is : from a mid-term perspective, the best way to secure the highest level of shareholder valueisto intensify the current strategic approach (strategy horizon : 2003-05)

  14. Going forward, earnings drivers Independent, how should we allocate our resources to earn the highest return? • Strengthen current market presences? • Develop new markets in (Central- or) Eastern-Europe? • Develop new markets in Western-Europe? • Develop new markets elsewhere? To our analysis, building on our current market presences is the option with the highest yield potential. In this regard, we feel confident that the current allocation of capital and management resources is the right way forward.

  15. Going forward, earnings drivers Main assets for revenue enhancement : • In Belgium : • Developing the untapped cross-selling potential of insurance products (primarily for SMEs and non-life) Market share banking Market share insurance Non-life: 8%Non-linked life:- individual: 12% - group: 4% Unit-linked life: - individual: 21% - group: 2% 11% 22% Market situation as of Dec 31, 2002

  16. Going forward, earnings drivers Main assets for revenue enhancement : • In Central Europe : • Deepening product penetration of banking and asset management products (cards, mortgages, funds, etc.) • Leveraging the bancassurance business model (increased sales of insurance products) • If acquisition opportunities arise, e.g. meeting the 10% market share objective in Hungary (insurance)and Poland (banking)

  17. Going forward, earnings drivers Milestones in productivity enhancement and cost control : • In Belgium (mainly in banking) : • Completing the bank merger > By 2004, downsizing will equal 12 % of the 2001 headcount • Optimizing the branch network concept (clustering) • Rolling out efficiency-improvment programs (back offices)

  18. Going forward, earnings drivers Milestones in productivity enhancement and cost control : • In Belgium (cont’d): • Intensively marketing e-bancassurance Active subscribers to KBC's internet and PC banking facilities (Belgium)

  19. Going forward, earnings drivers Milestones in productivity enhancement and cost control : • In Central Europe: • Reorganizing business processes (front-end automation at advanced stage) • Cross border cost-sharing projects (payments systems, IT procurement, etc.) > By 2005, we expect 2002 headcount could be reduced by 10-15 %

  20. Going forward, earnings drivers Milestones in productivity enhancement and cost control : • In general : • Enhancing portfolio quality and controlling cost of risks Loss ratio non-life (*) Loss ratio credit portfolio Poland * excl. reinsurance

  21. Mid-term financial objectives Achieved2001 Achieved2002 Minimumtargets 2005 Targets unchanged, although ambitious and highly sensitive to the uncertain economic environment

  22. Mid-term financial objectives Minimum return 2005 Share incapital 2002 Achievedreturn 2002 Return on allocated capital

  23. Conclusion Course set for the mid-term future : > In order to enable our shareholders to benefit from solid EPS growth and a robust ROE level : • Concentrating (even more) on the bancassurance potential in Belgium and Central Europe • Heading for lower level of expenses and cost of risks

More Related