Building a Tier I European Player
in Consumer Financing
Raffaele Cicala – General Manager
London, October 10th 2007
AGENDA
Who we are
• Our presence in Italy
• Main challenges in the Italian Market
Our ambition
• Building a Tier I European Player in CF
• What we have done over the last 12 months
• Playbook 2008
2
AGENDA
Who we are
• Our presence in Italy
• Main challenges in the Italian Market
Our ambition
• Building a Tier I European Player in CF
• What we have done over the last 12 months
• Playbook 2008
3
UNICREDIT CONSUMER FINANCING(1): PRESENT POSITION IN ITALY
• 4.6 bn total outstanding loans, mostly on personal loans and revolving cards to
captive customers
• New flows: UCFin growing 20% y/y, outpacing market and main competitors
31,028
LoS(2)
Credit cards
POS
Automotive
+17% y/y
1,973
4,444
2,893
11,715
3,124
+2% y/y
2,649
+11% y/y
12
699
88
893
834
562
160
24
138
634
922
Personal
loans
10,005
Market
Personal loans
Source: UCFin interim report and Assofin data as of 1st Half 2007
(1)
1,949
864
1,230
661
Player # 1
Player # 2
Automotive
POS
4
(2)
Credit cards
Loans on salary
UniCredit Consumer Financing (UCFin) is the new corporate name that UniCredit Clarima Banca will start using in February 2008. Even if
the current corporate name is still UniCredit Clarima Banca, in this presentation the new branding is used for simplification purposes
UCFin
LoS
+20% y/y
MAIN CHALLENGES AND OPPORTUNITIES IN ITALY
Build positions in
 Car financing
 LoS
 … to address relevant market segments
 … to increase cross-selling opportunities
Complete integration of Capitalia business into UCFin…
 … to enlarge captive customer base
 … to exploit clear customer penetration opportunity
Personal loans penetration *
Revolving cards penetration *
9.0%
13.6%
6.1%
UCB
4.7%
CAP
UCB
5
* On Mass Market + Affluent customers
CAP
AGENDA
Who we are
• Our presence in Italy
• Main challenges in the Italian Market
Our ambition
• Building a Tier I European Player in CF
• What we have done over the last 12 months
• Playbook 2008
6
BUILDING A TIER I EUROPEAN PLAYER IN CONSUMER FINANCING:
UniCredit current position in Consumer Financing
Tier II
Tier I
Cetelem Sofinco
SCF
(BNPP)
(CA) (Santander) SoGen
Outstanding loans
(Bn €)
~47(1)
~30
~31
~15
~13
Countries of presence
25(2)
10
~11
9
16
Mln customers
~51
~37
~13
~8
~6
7
(1)
UCI
Including Cofinoga
(2) Of which 17 in Europe
BUILDING A TIER I EUROPEAN PLAYER IN CONSUMER FINANCING:
The ambition
… to a Tier 1 European player in the next 5
years setting up foreign branches or
subsidiaries
From a purely domestic player…
Foreign branches
• Germany
• …
• …
8
Subsidiaries
• Bulgaria
• …
• …
BUILDING A TIER I EUROPEAN PLAYER IN CONSUMER FINANCING:
Our strategy
• Leverage existing assets in countries where the Group has a strong retail base
 Consolidate business from retail banks
 Increase specialization to enhance risk management and Customer Value Management
on ~40 mln customers (1)
 > 9,000(1) branches to create in-branch corners
• Selectively develop alternative channels to accelerate new clients acquisition (global
partnerships, third party networks, direct channels)
• Develop POS financing especially in faster growing CEE with weaker UCI retail positions
9
(1)
Including Capitalia and ATF Bank (Kazakhstan)
BUILDING A TIER I EUROPEAN PLAYER IN CONSUMER FINANCING:
Our products & markets focus
2
Revolving Cards
2009E stock, Euro bln
• Add on across
markets/channels
Revolving
cards
POS and
Automotive
financing
180
3%
119
88
14%
16%
32
3%
40%
41%
21 12 9
5%
14%
20%
25%
33% 20%
36%
3 POS/Automotive
50%
• Selectively
by market
Personal
loans
70%
56%
1 Personal loans
57% 53%
50%
60%
34%
• Core Business
• Focus on captive
Germany
Italy
Russia
Austria
Ukraine
Poland Romania
10
Source: UCFin, Eurofinas, ING, NBP, National Banks, BCG Analysis
WHAT WE HAVE DONE OVER THE LAST 12 MONTHS
• Strong boost of Italian operations
• Developed new countries
• Developed global platform, competencies and organization
• “Clarima” Rebranding
…while boosting economic and financial results
11
WHAT WE HAVE DONE OVER THE LAST 12 MONTHS:
Strong boost of Italian operations
Organization
• Focus of organization, as reference platform

Processes
• Enhancement of risk management supported by new
tools (for decision, monitoring, collection)
• Creation of larger collection factory
• Improved existing IT platform to support new
processes (credit, CRM, commercial)
• Cost reduction by improving processes efficiency




Products
• Launched 5 new products (Top, First, SB auto
financing, auto insurance, new insurance cards)

• Optimized CVM on captive client base


Captive
Channel
• Created 226 specialised corners within UCB branches
12
WHAT WE HAVE DONE OVER THE LAST 12 MONTHS:
UCFin Italy focus of organization
CHAIRMAN
Board of Directors
GENERAL MANAGER
Direct Marketing & CVM
• Staff Credit-Dep Cont Bud & R
• Underwriting
• Credit Policies, Monitoring &
Tools
• Credit data Quality & Fraud Risk
• Workout
Legal & Corporate Affairs
Credit
Human Resources
Operations
Planning, Administration
and Risk Management
Business Captive
Business Non Captive
•
•
•
•
Co-branding
Third Party Networks
Regional Areas
Key Account Automotive
BoD 10-9- 2007:
NEW ORG CHART
13
Loans on Salary
WHAT WE HAVE DONE OVER THE LAST 12 MONTHS:
New countries developed
• GERMANY:
 Set up of UCFin German Branch, in March 2007, revolving cards (new product for HVB)
launched in the captive channel
 Full roll out of revolving cards in all HVB branches after pilot successful
 Personal loans in captive channel under development
• BULGARIA:
 NewCo, co-owned by UCFin and Bulbank, set up in 2006, 2% market share in PoS
financing
 Developed and successfully tested CF Corner in 5 Bulbank branches with full UCFin
advertising and processes allowing over 50% new client acquisition. Accelerated plan
for opening up to 100 corners under development (Gold, Bronze, Silver)
• OTHER EUROPEAN MARKETS:
 Assessment of market potential and business model in core UCI markets
 Targeted launch of 2-3 markets set for 2008-2009
 Personal loans and POS/Automotive financing as first products to be introduced,
revolving cards to follow
14
WHAT WE HAVE DONE OVER THE LAST 12 MONTHS:
Creation of a global platform
• CREDIT RISK
 Processes and tools re-designed for global expansion
• GLOBAL IT
 Set up of a dedicated team within UGIS to serve UCFin needs
• CAPABILITIES BUILD UP
 Major recruiting effort undergoing, with addition of global talents from Group and
external specialists
 Strengthening of skills in Operations, HR, CRM, CRO and CFO family in progress
 Business Development team strengthened
15
WHAT WE HAVE DONE OVER THE LAST 12 MONTHS:
Global organization structure and governance
Board
Governance
Corporate Center
GM
• Corporate center, reporting to GM, with
responsibility to steer, coordinate and control
operations
Management
Committee
 2 “competence lines” and
Risk
Management
Finance
 3 “core platforms”
 3 geographical areas
Business
Development
IT/OP.
Italian Market
• Management system based on
HR
CRM
GAP
• Germany
• Poland
• Austria
CEE
• Bulgaria
• Romania
•……..
16
WHAT WE HAVE DONE OVER THE LAST 12 MONTHS:
Company rebranding (1/2)
Today
Tomorrow (QI 2008)
Italy
Germany
Bulgaria
17
WHAT WE HAVE DONE OVER THE LAST 12 MONTHS:
Company rebranding (2/2)
WHY UNICREDIT CONSUMER FINANCING (UCFin)
• From a (customer) rational standpoint: clarifies the nature of the business (financing)
• From a (customer) emotional standpoint: it implies support to realize customers’ projects
• Clearly part of UniCredit Group, of which it shares the values
• Can be used in all geographical markets and achieve faster visibility and customer recognition
• Red vs. orange logo: take on UniCredit Group colour and be more distinctive
18
STRONG BOOST OF ECONOMIC PERFORMANCE OF ITALIAN OPERATIONS
HAS ALLOWED TO FINANCE INTERNATIONAL DEVELOPMENT SO FAR
1H06
1H07
y/y ch.
4.0 bn
4.6 bn
+13.9%
122 mln
145 mln
+18.9%
38.6%
36.4%
-220 bp
Risk provisions
-63 mln
-48 mln
-23.8%
Pre-tax profit
12 mln
44 mln
+269%
EVA
-10 mln
+9 mln
n.m.
Outstanding volumes
Total Revenues
Cost / Income
19
PLAYBOOK 2008
Driver
Initiative


2-3 new markets
1 new business line (Automotive Large Dealer)
Expansion of shops/corners
Capitalia business integration






Central underwriting and collection process
Revised collection strategies
New credit monitoring board
New CVM process and optimization tool
MIS set-up
Customer satisfaction org. & processes
New

growth
initiatives 
Build up
capab.
Country

Corporate 
/ Org.

enhanc. 


Completion of global CF org. enhancement
Governance, scope of Joint Ventures
Value sharing rules with banks
Bank SLA framework
Standardized 3Y plan cycle
Corporate rebranding
20
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