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PRIVATE BANKING & ASSET MANAGEMENT DIVISION
Dario Frigerio
2
AGENDA
Market scenario
The divisional model
The new perimeter
Results
Prospects and Industrial Plan 2005-2008
Main KPIs
Unique combination of drivers
3
POSITIVE MARKET SCENARIO FOR GLOBAL INTEGRATED ASSET GATHERING AND ASSET MANAGEMENT PLAYERS
CONSISTENT HIGH RETURN ON RISK-WEIGHTED ASSETS
ABOVE NOMINAL GDP GROWTH RATES
FAVOURABLE ADVISORY-BASED TREND
4
Group Retail Bank network Third Parties
THE ESTABLISHED DIVISIONAL BUSINESS MODEL…
INTEGRATED AND EFFICIENT IN THE VALUE CHAIN, OPEN TO EXTERNAL GROWTH OPTIONS
PRIVATE & ASSET MANAGEMENT DIVISION
ASSET MANAGEMENT
Investment ProcessProduct Design
Advice Platforms Risk Management
ASSET GATHERING
5
154132
TOTAL FINANCIAL ASSETS1 GROWTH (bn) PROFITABILITYPROFIT BEFORE TAXES (Euro mn)
20032
…IS PROVING TO BE SUCCESSFUL
209
2004
173
2005
CAGR 02-05~ 17%
469
2003
355
2004 2005
596CAGR 03-05
~ 30%
Asset Management: net sales and asset qualityNet sales: € 23 bn (of which 62% from non-proprietary channels)Asset quality: key role of advisory wraps (67% of captive assets)ROA: from 51 bp to 56 bp
Asset Gathering: net sales, advisory and productivityNet sales: €14 bn – Xelion: leadership since ’03 in Italian FA’s marketSeparate Accounts: ~ 30% of total assets; 60% of total net commissionsAssets per Private Banker: UPB up 30% to € 90 mn and Xelion +160% to € 7.5 mn
RUN RATE 2007 vs. OLD 3YP: ~ 20%
EoP 2002
(1) Calculated at current exchange rates (€/$)(2) € 3.4bn out of the total increase related to the acquisition of ING
6
~ 156
~ 273*
IN THE NEW PERIMETER…
Pioneer ActivestNordinvest
Ass
et
Man
agem
ent
Capital InvestAsset Management
Ass
etG
athe
ring HVB Wealth Managem.
HVB Luxemburg PBDAB Group
BankPrivatSchoellerbank
Total Assets*(Euro bn)
Global
European
PRIVATE & AM DIVISION
UPB & SubsidiariesXelionUCI Luxemburg
* Of which € 30bn AuA, as of May 2006
MarketCoverage
7
…SCALABILITY OF BUSINESS MODEL IS KEY
GROWTH IN AUM GROWTH IN CLIENTS
Group Retail Bank network
ThirdParties
PRIVATE & ASSET MANAGEMENT DIVISION
Investment ProcessProduct Design
Advice Platforms Risk Management
GroupInvestment
BankGroup
Corporate Division
Growth in Institutional and HNW
ASSET MANAGEMENT ASSET GATHERING
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ASSET MANAGEMENT: A GLOBAL PRESENCE UNDER A GLOBALLY RECOGNIZED BRAND
€ 273 bn financial assets with over 300 investment professionals and distribution across 22 countries
Strong presence in markets representing 40% of European financial wealth (Italy, Germany, Austria, Poland)
Growing and profitable presence in the USA ($ 64 bn AUM – Operational Margin ~30%)
Expanding in global open architecture and institutional business (Non-captive AuM: 43%)
Central Investment HUBSLocal Investment HUBSDistribution Centres
New York ParisBucharestBoston
London
Sydney
Dublin
Tel Aviv
Milan
Beijing
Warsaw
Singapore
Hong KongMiami
MadridGeneva & Lugano
Luxemburg
Munich
Taiwan
Hamburg
Sofia
ZagrebPrague
Bern Budapest
Bermuda
Omaha
Buenos Aires
Vienna
Bratislava
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PRIVATE BANKING: A UNIQUE ONSHORE POSITION TO SET UP A EUROPEAN FRANCHISE
Turin
Wien
Munich
Off-shore centreOn-shore centre
PRIVATE BANKING
Above € 100 bn pure private banking assets
~ 900 relationship managers~ 200 dedicated branches spread over Europe’s wealthiest regions
Optimal off-shore support for the overall group (Switzerland, Luxembourg, S. Marino)
Data as of December 2005
10
AN AMBITIOUS PLAN…
INCREASE IN OPERATING INCOME (CAGR ’05-’08):
GROWTH IN MANAGED ASSETS (CAGR ’05-’08):
EVA (DELTA ’05-’08):
+19%
+14%
+74%
11
…BASED ON A UNIQUE COMBINATION OF 4 DRIVERS
CROSS-FERTILIZATION
SCALABILITY
GEOGRAPHICAL LEVERAGE
INNOVATION MODEL CONSISTENCY
12
GEOGRAPHICAL PRESENCE GUARANTEES CLOSER CLIENT RELATIONSHIP
GEOGRAPHICAL LEVERAGE
* Source: Company data, Istat, Eurostat, Bayerisches Landesamt für Statistik und Datenverarbeitung. Data as of year end 2004Note:Northern Italy includes: Piemonte, Valle d’Aosta, Lombardia, Trentino Alto-Adige, Veneto, Friuli Venezia-Giulia, Liguria and Emilia Romagna
LOW ORIGINATION COSTS
Extensive retail and corporate banking networks in highly wealthy regions
7000 branches in 20 countries
Combined GDP per capita in Austria, Northern Italy, Bavaria: 117% vs. EU15 average 100%*
Off-shore focus
UHNWI and Family Offices
Eastern Europe opportunities
Business diversification
Eastern Europe, with expected wealth CAGR 10% over next 3 years
Pioneer third party global network
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SCALE DRIVES OPERATIONAL LEVERAGE
SCALABILITY
Centralization ofInvestment Process and Advisory Function
Product design and marketing
Governance
IT convergence
Support functions
Strong rationalization of fundsNumber of funds to be reduced by 40%
Number of Model Portfolios to be reduced by 20%
Unified service model∼70 households (€ 100-120 mn) per Relationship Managers
Operating Expenses/Total Financial Assets: from 36bps (’05) down to 30bps (’08)
14
KNOW-HOW LEADS TO BEST PRACTICE IN CROSS-FERTILIZATION
* 2005 Data considering UPB and Xelion
CROSS-FERTILIZATION
Consistency in Proprietary Model
AuM penetration: in Italy and Austria AuM
50% of Total Assets vs. 30% in Germany
AuA profitability: in Germany and Austria
40-50 bp vs 15-20 bp in Italy
Non-Proprietary Growth Targets
Institutional (HVB Investment Banking,
Vanderbilt, Momentum) and Open
Architectures: over €20 bn
IMPROVING MARGINS
15
KNOW-HOW LEADS TO BEST PRACTICE IN INNOVATION
INNOVATION
Building scale in diversified alphaPerformance consistency and persistency
● Long Funds 30° percentile* positioning 3 and 5 years vs. peers
● 47 Pioneer Investments’ funds with 4-5 Morningstar stars
Continue to develop investment process
Leverage FoF success, acquire expertise in other strategies /asset classes
Adding Quant-based beta-enhanced products and new total-return solutions
Segmenting client base on behavioursXelion leader in advisory services: Net commissions CAGR ’05-’08 ~ 26%
DAB: profitable direct banking option ≈ Operating Income CAGR ’05-’08: ~ 18%
* Average of funds as of 31 March 2006
16
FOCUS ON PRIVATE BANKING
Source: BCG Wealth Market Sizing Database 2005, MOW, Eurostat, EIU –Economist Intelligence Unit, Banca D'Italia, BCG analyses
€ 1.6 tn Financial Assets in 2005 (1.5 tn in 2004)
∼8% financial asset growth p.a. expected by 2008
High profitability (~30 bp pre-tax margin on Assets ‘05)
Fragmented: local players still dominating without a clear continental leader
~ 8% ~ 7% ~ 8%
2005
2008
1,180
850
GermanyAustria
Italy
690
930
1,620
2,030
Total
CLIENTS WITH FINANCIAL ASSETS > 0.5 M€
FA growth CAGR ‘05-’08
PRIVATE BANKING MARKET IN GERMANY, ITALY AND AUSTRIA IS LARGE AND ATTRACTIVE
17
FOCUS ON PRIVATE BANKING IN GERMANY
In a fragmented and profitable market, wealth management division starts among the first 3 players
Total Financial Assets: € 25-30 bn
∼200 Relationship Managers
28 dedicated locations covering almost 90% of total domestic wealth
München
Ulm
Bayreuth
WürzburgSaarbrücken
Kempten
Köln
Hannover
Berlin
Hamburg
Kiel
Leipzig
Augsburg
Nürnberg
Wiesbaden
Mannheim
Stuttgart
Regensburg
Düsseldorf
Dresden
Coburg
Rosenheim
Flensburg
Baden-Baden
Frankfurt
Passau
Rottach-EgernGarmisch
Traunstein
Landshut
WeidenBamberg
Ingolstadt
Magdeburg
Neustadt/Donau
Branch New branch Remote desk
GROWTH IN MANAGED ASSETS (CAGR ’05’08): +17%
18
KPI PRIVATE & ASSET MANAGEMENT DIVISION
CAGR 05-08
PBT/Total Assets(3), bp
52ROA(2), bp
23
2005
56
30
Total Financial Assets, bn 377 ~9%
2005 2008
Operating Income, mn 855
AuM, bn 253 ~14%
Total Revenues, mn 2,116 ~10%
~19%
ASSUMPTION: Market performance(1) ~ 4%
Excellent results thanks to:
Geographical leverageScalability of the modelBusiness mixExecution expertise
(2) Net commissions excl. performance fees/Total Average Assets excl. deposits(3) Profit before tax net of extraordinary items/Total Assets
(1) Net performance on divisional Total Financial Assets (2005-2008 CAGR)
19
ANNEX
20
PRIVATE & ASSET MANAGEMENT DIVISION: 2005 P&L
Net Interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. depreciation)
Operating income
Net income
Net provisions
(mln)
Net income for the group
- of which: Staff costs
- of which: Other admin. expenses
- o/w: Net loan-loss provisions
Cost/income Ratio
2005(1)
292
1,824
2,116
855
-527
-633
-1,261
562
540
59.6%
-15
-32
Profit/loss & net write-downs on investments -10
(1) Managerial view
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