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Franjo Lukovic - CEO

ZAGREBACKA BANKA. Franjo Lukovic - CEO. 2 nd UCI INVESTOR DAY. Focus on New Europe. London, December 5 th , 2002. Agenda. Why Croatia ? Bank’s Key Highlights Key projects and strategies. CROATIA: STABLE ECONOMIC GROWTH AND PERSPECTIVES.

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Franjo Lukovic - CEO

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  1. ZAGREBACKA BANKA Franjo Lukovic - CEO 2nd UCI INVESTOR DAY Focus on New Europe London, December 5th, 2002

  2. Agenda Why Croatia ? Bank’s Key Highlights Key projects and strategies

  3. CROATIA: STABLE ECONOMIC GROWTH AND PERSPECTIVES • Strong economic growth with low inflation and interest rates. Sovereign ratings by S&P at BBB-, with stable outlook. • Small market but with strong international ties greatly benefiting of international openness. • Some control of public expenditure (although not as tight as expected) resulting in lower fiscal deficit. Improvements in trade balance and expected higher levels of FDI. • Italy, Germany, Austria and Slovenia as main trading partners. • Service sector largely privatised (banking, telecom) with substantial part of the industrial sector still awaiting restructuring (oil, power supply, agriculture) Croatia Year 2001 4.4 Population, mln 4,961 Per Capita GDP, Eur 2.6 Inflation rate, % 3.2 Ref. interest rate(1), % BBB- S&P country rating • Sustained GDP growth with inflation under control. • Highest growth rates are expected in construction, trade, tourism and financial services. • FDIs likely to increase as Croatia moves closer to the EU, and once it joins CEFTA(2), becomes part of a free trade zone covering nearly all of eastern and southern Europe. 2002E 2003E 2004E 3.7 3.8 4.4 Real GDP growth, % 2.4 3.0 3.0 Inflation rate, % 2.0 2.4 2.4 Ref. interest rate, % (1) 1W ZIBOR, interbank money market rate (2) Central European Free Trade Agreement Source: NE Research Network

  4. HIGHLY COMPETITIVE BANKING SECTOR, LARGE GROWTH POTENTIALS • Bank consolidation and increased foreign ownership, improved profitability, asset quality, capitalisation and liquidity. • Croatian banking sector has one of the highest foreign ownership percentage (90,8%) in CEE • Highly concentrated industry: 47% of total banking assets concentrated at two largest banks (ZABA, PBZ) and 60% at 4 largest banks. • Rapidly growing banking, with substantial increase in 2001 thanks to Euro effect. • Large growth potentials to reach EU level in terms of banking penetration (loans and deposits ratio to GDP, currently 1/3 of EU average). Branches per mln inhabitants (Loans+Deposits)/GDP 580 203% 185 106% EU EU Croatia Croatia • Lending - fast growth in 2001 and 2002 • Retail: strong demand of housing loans • Corporate: sustained increase as a result of economic growth 2001 2002E 2003E 2004E Loans growth(1), % 23.2 19.5 12.7 11.5 Deposits growth(1), % 47.4 7.4 8.4 8.4 Rate on Loans(2), % • Deposit growth boosted by EMU currencies conversion into Euro; further increase expected due to economic recovery and increase in personal income n.a.(3) 9.0 8.2 8.2 Rate on Dep.(2), % 2.3 1.9 1.9 n.a.(3) Spread (2), % n.a.(3) 6.7 6.3 6.3 • Competition driving down margins and increasing customers expectations. (1) Nominal growth (2) End-of-period Banking System data; rates calculated on avg LC+FX indexed and FX denominated Loans and avg LC+FX Deposits (3) Not available due to change in methodology which makes old data not comparable Source: NE Research Network

  5. BOSNIA AND HERZEGOVINA - A NEW HOME MARKET FOR ZAGREBACKA BANKA • FDIs in the banking system intensified, with over 68% of banking sector in the hand of foreign investors. • Banking system restructuring continues - further restoration of confidence • Good financial results in the first half 2002 • sustained growth of corporate (+31%) and retail (+54%) loans; • ...not followed by sufficient growth of deposits; • increased profitability. • Strong growth potential - significant amount of foreign currency held by citizens outside the domestic banking system and over 50% of citizens don’t do business with banks BOSNIA AND HERZEGOVINA 2000 2001 2002E 2003E Real GDP, % yoy 4,5 2,3 2,3 4,1 Industrial production % yoy 8,0 9,0 8,0 8,0 Inflation (CPI) yoy, avg 5,6 3,3 2,3 1,8 Sources: IMF; Central bank of BiH. • Tax and structural fiscal reforms are in act • Privatisation of state-owned companies / banks • Constant decrease in foreign aid • Economy recovery is expected in later years (2004/05) - according to IMF Zagrebačka banka BH and Universal banka Sarajevo, EUR 30mln or 9% of total revenues • Strategy / focus on: • Consolidation/optimisation of existing presence • development of new products and quality of service improvement, further development of client segmentation • cost reduction • particular focus on asset quality and risk management system Market share Zagrebačka Universal banka in Federation BiH (%) banka BH Sarajevo 2000 2001 2000 2001 Assets 15,1 14,2 6,9 7,3 Deposits 17,6 17,0 8,4 8,2 Loans 11,2 12,6 9,3 9,8 Sources: Banking Agency of Federation BiH, ZABA BH, UBS

  6. Agenda Why Croatia ? Bank’s Key Highlights Key projects and strategies

  7. THE LEADING BANK IN GROWING MARKETS WITH ALMOST 9 MN INHABITANTS Croatia Zagrebacka banka Group Bosnia-Herzegovina Euro mln, consolid. figures as at Sep 30, IAS • Strongest position in traditional banking services: retail and corporate loans, savings and payment services (mkt shares Croatia: corporate loans 23%, retail loans 26%, corporate deposits 32%, retail deposits 35%; mkt shares BiH: corporate loans 21%, retail loans 25%, corporate deposits 19%, retail deposits 33%) • Broad client base and excellent distribution capacities: 214 branches, well developed direct banking channels (329 ATMs, phone banking, leading internet banking provider: 33,000 corporate and 14,000 retail clients) • Growth potential in innovative and wealth managementproducts (investment and pension funds) Total Assets 6,748 Deposits 5,348 Loans 2,989 Loans/Deposits, % 55.9 Total Revenues 316 Net Income 96 Branches 214 Employees 5,800(1) Customers 1.6 mln o/w retail 1.5 mln o/w corporate 87,000 Cost/income, % 63 ROE, % 21.5 Deposits Mkt Share, % 34 Loans Mkt Share, % 24 (1) of which 450 in non-core businesses (tourism, etc.) to be divested

  8. STRONG PERFORMANCE CONTINUED DURING 2002 Net Interest Income +3.6% (Euro mln) • Operating income and profitability increased due to continued growth of core business and strong cost control. • ROE improved for +40% yoy from 15.3% to 21.5%. • C/I Ratio improvement from 64% to 63% • Excellent commission and fee income growth (+33.4% yoy) above predicted levels. • Net interest income around last year’s performance, but above budgeted figure despite continuing decrease of Net Interest Margins. • Strong growth of loans (corporate +28%, retail +25% yoy), increase in transaction volumes (card business, loans and payment services). 150 145 Total Revenues* +14.2% 316 277 9M01 9M02 Operating Income Net Commission and Fee Income +33.4% +44.1% 71 119 54 83 9M01 9M02 Operating Costs 9M01 9M02 +1.5% Other Operating Income 9M01 9M02 197 194 +20.8% 95 78 ZABA positive year end results are expected at around +50% level yoy and will confirm our strong position. 9M01 9M02 9M01 9M02 * Including extraordinary items

  9. ASSET QUALITY IMPROVING, WITH INCREASED COVERAGE RATIOS Net NPLs and Doubtful Loans as % of Total Net Loans Coverage ratios 71.9% 71.4% 63.0% 62.4% 7.5% 5.0% 5.0% 3.4% 2001 2001 9M02 9M02 restated restated Net Doubtful Loans/ Total Net Loans Net NPLs/ Total Net Loans On Gross Doubtful Loans On Gross NPLs % ch. on Dec.’01 Dec. 2001 • Improved loan-book quality due to effective recovery actions and NPL repayments through collateral activation • Significant new loans inflow • Improvement of coverage ratios 9M 2002 (Euro mln) Net Doubtful Loans 170 163 -4.1% Net NPLs 112 103 -8.7%

  10. Agenda Why Croatia ? Bank’s Key Highlights Key projects and strategies

  11. PARTNERSHIP PROGRAMME WITH UCI LAUNCHED ON MAY 15, 2002 KEY PROJECTS UNDERGOING: • Client segmentation (corporate & retail) with divisionalisation to be completed by end 2003 • Sales force effectiveness strengthening with redeployment from back to front office • Introduction of new products and further development of product companies (funds, bancassurance, structured Term Deposits, leasing, derivatives) • Cross selling targets • Further development of e-zaba to fully exploit revenues growth potentials from liberalisation of payment services • Creation of International Desk (covering Italian and New Europe business) REVENUES • Centralised procurement and establishment of dedicated cost management structure • Progressive headcount rationalisation • Exploit Group procurement synergies • Merger of CRT Zagreb into ZABA (additional consolidation expected in the future to foster additional costs improvement) COSTS • New retailunderwriting and corporate monitoring tools • Redesign of credit functions, in charge of developing the pilot project for management systems for all UCI NE banks • Centralised market risk management RISK

  12. STRATEGIC GUIDELINES TO ENSURE FOR FUTURE GROWTH, EFFICIENCY AND PROFITABILITY What we have already accomplished South and Southeast Europe Excellent platform for the entire region BiH 3rd step What we intend to accomplish together with UniCredito Croatia 2nd step 1st step • Divisionalisation with segment based service models • Focus on affluent, small business and private • Improve penetration, share of wallet and revenues per client • Cost control and development of alternative channels • Development into clear regional leader with consolidation of Bosnian operations and further growth in the region Leadership position in almost all business segments through organic growth and acquisitions New home markets through Zagrebacka banka BH Mostar and Universal banka Sarajevo

  13. A dominant player in a small, but rapidly growing market (rapid catch up process after several years of disarray) ... • ... operating in a rapidly growing banking market with double digit volume growth although subject to some spread compression due to increased competition... • ..... with scope for relevant profitability increase, via increased commercial effectiveness, improvement of loans to deposits ratio and improvement in cost income through tight cost control • Strategy focused on significant profitability increase (revenues increase especially on retail via specialised segment based service model and cost cutting) .... • ... and on leveraging on strong market positioning to acquire dominant role in the region, where rapid growth is expected in the future (Bosnia almost 5 mln inhabitants, Serbia almost 10 mln inhabitants) to ensure steady EPS growth for the future SUMMING UP

  14. Annexes

  15. ZABA GROUP 9M2002 CONSOLIDATED INCOME STATEMENT Ch. % Sept. 02/ Sept. 01 (Euro mln, IAS) Ch. % 2001/2000 Dec. 00 Dec. 01 Sep. 01 Sept. 02 Interest margin 164 204 +24.29 145 150 +3.56 Net non interest income 248 155 -37.36 132 166 +25.96 412 359 -12.80 277 316 +14.21 Total revenues -229 -247 +7.70 -194 -197 +1.46 Operating costs (incl. dep.) -107 -118 +10.88 -85 -89 +5.35 - of which: Staff costs 183 113 -38.45 83 119 +44.14 Net operating income -27 -22 -19.44 -3 3 -208.60 Net loan loss provisions -10 -9 -10.87 -7 1 -110.02 Other provisions 0 0 0.00 0 0 0.00 Extraordinary income/loss 146 82 -43.92 73 123 +68.98 Pre-tax profit/loss -10 -17 +80.05 -19 -23 +20.98 Taxes (1) 136 65 -52.64 54 100 +85.93 Net income -4 -2 -60.87 -1 -3 +320.53 Minorities Net attributable income 128 61 -52.56 53 96 +81.15 (1) Statutory tax rate for legal entities: 20% (35% until the end of 2000)

  16. ZABA GROUP 9M2002 CONSOLIDATED BALANCE SHEET Ch. % Sept. 02/ Sept. 01 Ch. % Sept. 02/ Dec. 01 (Euro mln, IAS) Sept. 01 Dec. 01 Sept. 02 721 1,210 787 +9.20 -34.95 Cash and deposits with Central Banks 2,979 3,375 3,895 +30.75 +15.41 Loans due from and placements to: 2,184 2,268 2,989 +36.85 +31.78 - Customers 795 1,107 906 +13.97 -18.13 ASSETS - Banks 650 803 1,259 +93.67 +56.69 Trading and avail.-for-sale securities 256 263 289 +12.74 +9.68 Fixed assets 905 830 517 -42.79 -37.64 Other assets 5,511 6,482 6,748 +22.44 +4.10 TOTAL ASSETS AND LIABILITIES 4,199 5,143 5,549 +32.15 +7,91 Deposits: 4,143 5,064 5,348 +29.08 +5.61 - Due to Customers 0 0 0 0.00 0.00 - Securities in issue 56 79 201 +257.90 +155.72 - Due to Banks 0 0 0 0.00 0.00 Reserve fund for possible loan losses LIABILITIES 0 0 0 0.00 0.00 Specific reserves 788 796 579 -26.45 -27.18 Other liabilities 0 0 0 0.00 0.00 Subordinated debt 30 32 33 +9.28 +0.28 Minority interest 494 511 586 +18.68 +14.76 Shareholders’ equity

  17. BANKING SECTOR RANKINGS BY TOTAL ASSETS Assets Market Share in total assets (%) Bank Strategic owner (HRK,bln) 09/2002 09/2002 2001 2000 Zagrebacka banka UniCredito 42.4 26.0 27.7 29.1 Privredna banka Intesa BCI 30.6 18.8 18.6 18.4 Raiffeisen banka Raiffeisenbank 12.8 7.9 6.5 4.6 Splitska banka HypoVereinsbank 9.4 5.8 6.6 7.2 Hypo Alpe-Adria banka Hypo Alpe-Adria 9.3 5.7 4.3 3.4 Rijecka banka Erste bank 8.2 5.0 7.1 7.1 Erste & Steiermark. banka Erste bank 5.9 3.6 3.3 2.7 Hrvatska postanska banka State owned 5.4 3.3 1.8 1.6 Nova banka Charlemagne 5.2 3.2 2.0 - Varazdinska banka ZABA 3.7 2.2 2.4 2.6 Other banks - 30.1 18.5 19.7 22.0 Total 163.0 100% 100% 100%

  18. ZAGREBACKA BANKA GROUP STRUCTURE (CORE BUSINESS) Zagrebacka banka is a licensed bank operating in Croatia and the holding company for the Zagrebacka banka Group BANKING (ownership) Varazdinska banka, Croatia (93.8%) Zagrebacka banka BH Mostar, Bosnia-Herzegovina (79.4%) Universal banka Sarajevo, Bosnia-Herzegovina (99.6%) FINANCIAL SERVICES Prva stambena štedionica - building society (100%) ZB Invest - investment fund management (100%) ZB Brokeri - brokerage (100%) ZANE - real estate agency (100%) ASSOCIATED COMPANIES Allianz Zagreb - insurance (48%) Allianz ZB - pension fund management (49%)

  19. DIVERSIFIED GROUP WITH COMPLEMENTARY PRODUCT COMPANIES Zagrebacka banka is a universal bank operating in Croatia and the holding company of Zagrebacka banka Group Non-core investments • TOURISM EUR 32 mln/9.97% of revenues • Istraturist Umag, one of the leading hotel operators on the Adriatic coast, to be divested • BANKING EUR 280 mln/88.22% of revenues • Zagrebacka banka (69.3% of revenues, 27.8% mkt share in total assets) • Varazdinska banka (6.86% of revenues, 2.5% mkt share in total assets) • Zagrebačka banka BH Mostar, BiH (5.94% of revenues, 14,2% mkt share in total assets) • Universal banka Sarajevo, BiH (3.44% of revenues, 7.3% mkt share in total assets) • Prva stambena stedionica - building society (1.09% of revenues, 42% mkt share) • ZB Invest - investment fund management company (0.54% of revenues, 54% mkt share) • ZB Brokers - brokerage (0.43% of revenues, 26% mkt share) • ZANE - real estate services (0.59% of revenues) • INVESTMENT PROPERTY EUR 6 mln /1.82% of revenues • Centar Kaptol - commercial centre • CGP - property development • Strongest position in traditional banking services: retail and corporate loans, savings and payment services (mkt shares Croatia: corporate loans 23%, retail loans 26%, corporate deposits 32%, retail deposits 35%; mkt shares BiH: corporate loans 21%, retail loans 25%, corporate deposits 19%, retail deposits 33%). • Broad client base and excellent distribution capacities: 214 branches, well developed direct banking channels (329 ATMs, phone banking, leading internet banking provider: 33.000 corporate and 14.000 retail clients). • Excellent potential in innovative and wealth managementproducts (investment and pension funds)

  20. WELL BALANCED AND DIVERSIFIED CORPORATE LENDING PORTFOLIO Corporate Net Loan Portfolio (Bank) Structure by Industry 31/12/2001 30/09/2002

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