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
 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
UniCredit is a Truly European Bank …
 Banking operations in
20 core countries

Thinking globally and
operating on multilocal 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
 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
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
3
… with the by far most extensive CEE banking network...
Ranking, total assets and number of offices of BA-CA and UniCredit in CEE as of 31 December 2005
Poland
No. 1
€31.7bn
1,281
Lithuania
No. 8
€385mn
2
Latvia
No. 10
€358mn
1
Estonia
No. 6
€74mn
1
CEE region1
€4.7bn
30
 €92.7bn total assets
Czech Rep.
No. 4
€7.4bn
66
Ukraine
€259mn
8
Slovakia
No. 4
€3.4bn
93
Romania
No. 3
€3.1bn
128
Hungary
No. 7
€4.1bn
54
Slovenia
No. 7
€1.9bn
13
Russia
No. 8
 2,932 offices
 60,722 employees
 ~17million customers
Bulgaria
No. 1
€3.5bn
322
1
Croatia
No. 1
€8.9bn
145
Bosnia
No. 1
€1.5bn
172
Macedonia
Rep.Office
Serbia
No. 5
€529m
42
4
Turkey
No. 3
€21bn
574
including
- Banca Tiriac (Romania)
- NBB (Bosnia/Rep.Srpska)
- Yapi Kredi (Turkey)
excluding
- HVB Splitska banka (Croatia)
… where it operates as the undisputed leader.
Central & Eastern Europe – Top Financial Groups (2004)
Revenues (Euro m)
Total Assets (Euro bn)
4,982
83.7
34.8
1,715
1,660
Branches (no.)
33.3
1,420 1,6591
19.7
1,110
18.0
16.4
N.A.
1,5361
1,017
875
1,245
39.71
24.7
1,126
826
2,864
814
722
498
237
14.8
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
5
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
population
about 440 m
•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 160 m
6
...especially in retail banking: CEE revenue potential
REVENUE POOLS 2004 IN EURO MILLION
26%
100%
Investment
Banking
1,024
1,315
22%
453
17%
960
9%
312
3%
9%
4%
8% 3%
22
65 60 12 60
225
70 19
5
11%
277
Corporate
Banking
714
2,122
2,618
960
1,727
3,503
415
397 123
395 479
287
753
38%
51%
Retail
Banking
4,873
3,563
4,457
2,768
1,746 1,308
417 319
126
662
414
127
400
299
0%
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
7
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
2.500
2.000
Household loans in CEE
Household deposits in CEE
(Dec. 2000=100, local currency)
(Dec. 2000=100, local currency)
NMS (PL,CZ,HU,SK,SL)
SEE(RO,BG,HR,SCG,BiH)
Euro area
Russia
Region total
600
Russia
90% cagr
500
SEE
77% cagr
NMS (PL,CZ,HU,SK,SL)
SEE(RO,BG,HR,SCG,BiH)
Euro area
Russia
Region total
Russia
42% cagr
SEE
36% cagr
400
1.500
1.000
300
Total
62% cagr
200
500
0
100
NMS
25% cagr
Euro area
5% cagr
Total
26% cagr
NMS
6% cagr
Euro area
5% cagr
0
2001 2002 2003 2004 2005 2006
2001 2002 2003 2004 2005 2006
8
...and the outlook for the retail sector remains positive
Household deposits and loans
(2000 and 2007 in EUR per capita)
PL
7000
HU
+7%
cagr
CZ
+17%
cagr
SK
+12%
cagr
HR
+11%
cagr
BG
+17%
cagr
RO
+30%
cagr
RU
+29%
cagr
Euro
area
2005
CEE
+44%
cagr
+20%
cagr
+4.4%
cagr*
6000
Deposits 2000
Loans 2000
2.198
5000
3.019
13.600
loans
Deposits 2007
Loans 2007
4000
2.004
3000
1.408
406
14.100
deposits
1.208
4.331
2000
240
1000
1.761
1.329
0
710
210
478
1.255
887
3.446
683
2.542 2.503
617
2.175
1.539
453
1.410
36
237
1.056
5
182
1.082
631
Source: BA-CA Economics Department, UCG New Europe Research Network
9
9
122
127
1.417
524
* 2000 to 2005
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
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)
11
Banking penetration of retail clients at end 2005
% of the population aged 15+ who have a business relation with a bank
120
2001
100
98 99
2004
2005
average new
EU markets
2005: 78%
83
81
84
97 98 97 98
81
80
average
candidates
& west Balkans
2005: 52%
83
80
62
68
65
64
62
57
60
51
50
40
51
37
34
37
33
19
20
0
SLO
CZ
SK
H
PL
RO
BG CRO SCG BiH
UA
RU
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)
12
A
D
Size of population and number of bank clients
BG BiH CRO CZ
Population aged
15yrs+ (in m)
Have bank
relationship
6.7
3.1
3.7
8.2
H
8.5
PL
RO SCG SK SLO
29.9 17.9 6.7
4.2
1.7
37% 37% 83% 81% 65% 62% 50% 64% 81% 99%
A
D
6.7
64.7
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
13
Penetration with banking products/services
% of population aged 15+ who use this service/product by end 2005
BG
Banked population
BiH CRO CZ
H
PL
RO SCG
SK
SLO
A
D
37
37
83
81
65
62
50
64
81
99
98
98
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
Any account
*) 27% of adult Bulgarians have an account (current account or debit card account)
N/A
**) 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)
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 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)
15
Trends in use of banking services/products
note: figures do not represent volumes in €
% of population aged 15+ who have ...
100
2001
80
60
40
20
2003
2005
...any type of account
78
68
64
63
60
56
48
27
48
39
33
24
81
35
89
63
52
38
16
0
BG
BiH
CRO
80
2001
60
2003
CZ
62
2005
H
PL
RO
SCG
...any type of deposits (excl. account)
SK
SLO
67
56
56
64
46
38
40
26
12
20
8
20
23
16
23
16
10
5
9
9
0
BG
BiH
CRO
25
20
15
10
5
22
2001
2003
2005
CZ
H
PL
RO
12
11
3
7
5
SK
SLO
...any type of loan (excl. account overdraft)
9
5
20
22
16
15
7
SCG
12
9
7
3
3
7
3
0
BG
BiH
CRO
CZ
H
PL
RO
SCG
SK
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)
16
SLO
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
47
20
10
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
7
10
23
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
48
25
31
47
52
18
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)
17
Way of financing
Basis: plan to invest in the following item
Q: How do you plan to finance these items?
Mainly by savings
•Holiday trip, sport activities
•Health (operations, teeth corrections, ...)
•Education (own, of children, ...)
•Family events (weddings, big birthday parties, ...)
% savings
% loans
78
75
76
78
7
9
10
7
By savings or loans
•Furniture
58
•Larger household appliances (fridge, dish washer, ...) 54 32
•Larger electronical items (PC, TV set, ...)
55
•Plastic operation
32
48
33
34
40
54
Mainly by loans
•Car
18
Planned financing
Basis: plan to invest in the following item
Q: How do you plan to finance these items?
Holidays, sports
100
80
78
80
60
60
40
40
19
20
7
Health
100
75
18
20
2
0
9
3
0
savings
gift
loan
CZ
HU
SLO
RO
SK
BG
SCG
BiH
RO
SCG
BiH
BG
CZ
HU
SLO
CZ
HU
SK
DK/NA
savings
gift
loan
CZ
HU
SLO
HU
RO
BG
SCG
HU
RO
SCG
BG
CZ
HU
SCG
SLO
CZ
SK
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)
19
DK/NA
Planned financing
Q: How do you plan to finance these items?
Basis: plan to invest in the following item
Large household appliances
Cars
100
100
80
80
60
55
60
33
40
40
40
17
20
54
13
20
2
0
6
0
savings
gift
loan
DK/NA
savings
gift
loan
CZ
SK
SLO
BG
RO
SCG
BiH
CZ
SK
HU
RO
SCG
BG
SLO
RO
SCG
BG
CZ
SLO
CZ
SK
SLO
RO
SCG
BG
HU
SLO
HU
CZ
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
DK/NA
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.
21
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
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 market
Example: 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
23
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
24