central europe investor relations conference 2 july 2001
DESCRIPTION
Central Europe Investor Relations Conference 2 July 2001. Herman Agneessen s Member of the EC. Central Europe. Mission Statement Acquisitions to date Guiding management concepts Financial Results Financial Objectives SWOT analysis Asset Quality Efficiency initiatives Current IPB status. - PowerPoint PPT PresentationTRANSCRIPT
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Central Europe
Mission Statement
Acquisitions to date
Guiding management concepts
Financial Results
Financial Objectives
SWOT analysis
Asset Quality
Efficiency initiatives
Current IPB status
To
pic
s
Central Europe Mission Statement
Create a second home market
In future EU member-countries
For bankinsurance activities
On a segmented basis
In KBC’s 4 activitity areas
5
Acquisitions to date
PolandKredyt BankAgropolisaWarta & Warta Vita
HungaryK&H Bank (new)K&H Life (*)Argosz
49.99%49.90%40.00%
60.00% 50%
95.40%
CurrentOwnership
213.47.2
123.2
279.42.5
23.9
Investmentin m EUR
6 % 1 % 12 % non-life 0.7% life
15%0.3 %
3 %
Market share P/BV
1.42na
3.35
1.341.23
na
(*) 30 % indirectly through K&H Bank
Czech & Slovak Rep.CSOBCSOB Pojist’ovnaPatria
82%75%
100%
1361.916.056.0
23 %0.5 %
na
2.32.344.13
non-life
(+ 30%)
Central Europe
Total investment : EUR 2,084 million
banking EUR 1,911 million
insurance EUR 173 million
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Guiding management conceptsCareful balance between autonomy and control
Branding policy : customer identification
Strong local management input
Strict central control requirements Credit/insurance risks, market risks, operational integrity Internal audit & compliance principles KBC reporting standards
Maximisation of synergies IT, payment systems, operational efficiency Bankinsurance, markets & asset management know-how “best group practices”
8
Financial results 1Q01
m EUR Y2000 1Q01
CSOB 116.1 78.7
K&H Bank 3.8 0.2
Kredyt Bank 46.8 15.5
p.m. Patria n/a 0.2
Stand alone results banks
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Financial results 1Q01- Banking
Net profit (m EUR)
Share in group profit
Return on alloc. equity
Share in alloc. equity
Cost/Income ratio
60.0
16.9%
44.4%
10.1%
59.4%
40.0
11.9%
29.0%
10.1%
59.4%
30.5
9.7%
16.6%
8.7%
59.3%
External (1)
External (2)Normalized Internal(3)
(1) external: after minorities and funding cost(2) ext. normalized: excluding 20 m EUR except. loan loss recoveries(3) internal : including FGBR and amortization of goodwill over 20 yrs
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Financial results 1Q01
m EUR Y2000 1Q01
CSOB Poijst'ovna -1.6 +1.0
K&H Life -0.2 -0.04
Argosz +0.05 +0.2
Warta -7.2 +0.03
Stand alone results insurance
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Financial results 1Q01- Insurance
Net profit (m EUR)
Share in group profit
Return on alloc. equity
Share in alloc. equity
0.9
0.2%
1.4%
4.2%
- 0.9
- 0.3%
- 1.4%
2.7%
External (1) Internal(2)
(1) external: after minorities and funding cost(2) internal : after amortization of goodwill over 20 yrs
12
Financial results 1Q01- Combined
Net profit (m EUR)
Share in group profit
Return on alloc. equity
Share in alloc. equity
60.9
17.1%
29.2%
14.3%
29.6
9.4%
11.5%
11.4%
External (1) Internal (2)
(1) external: after minorities and funding cost(2) internal : including FBGR and amortization of goodwill over 20 yrs
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Financial Objectives 2004
Stand-alone ROE : 20 %
CAD-ratio banks : 11 to 13 %
Stand-alone cost/income ratio : 55 %
Stand-alone combined ratio : 103 %
Net profit contribution to KBC Group profit : 10 %
Net ROE for KBC : 15 %
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KBC’s major strenghts in CE
Strong banking franchises at competitive cost
Strong insurance franchise in Poland, …. perhaps also in Czech Republic
Good to strong local management teams
Segmentation already introduced
Early entrant in integrated bankinsurance
Positive profit potential outlook
Eu-joining of chosen countries well underway
15
KBC’s major weaknesses in CE
Mostly inadequate IT-infrastructures
Insufficient customer orientation
Insufficient productivity & efficiency levels
Unequal risk-awareness & asset quality levels
Insufficient existing product offerings
Critical mass not available in all countries
Banks insufficiently strong in retail
16
KBC’s major opportunities in CE
Above average (western) growth outlook Country GDP as such Country GDP because of eu-joining GDP per capita Savings ratio Customer switch to higher value added products
Policy of combining local brand & local management with strong shareholder resp. know-how provider
Largely undeveloped SME / Asset Management / bankassurance markets - areas of KBC expertise
Domestic capital markets waiting to be developed
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Central European growth potential
Ample room for expansion... Total population: 65 million (Belgium: 10 million) GDP / capita: only 42% of EU average Bank products penetration: only 47% of EU average Insurance products penetration: only 42% of EU average
…and good prospects for the region: GDP growth in 2000
Czech Rep. 3.1% / Poland 4.1% / Hungary 5.2% Hungary, Poland and Czech Republic figure as top-3 transition
countries, Slovak Republic is nr. 5
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KBC’s major threats The competition has woken up ! IT-renewal is a major challenge Large-scale employee education is a must Change management must be concluded
successfully Bank-mergers in czech republic and hungary Network expansion in slovak and polish banks Implementation of integrated bankinsurance concept New IT = new processes = “rationalizing yourself away” Productivity increase requirements Ensure adequate customer orientation Need to significantly enlarge existing product-offerings Develop & control new products in an untested environment
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Current Bank Asset Quality
% watch31.12.00
% NPL31.12.00
% watch31.3.01
% NPL31.3.01
CSOB "new" 9.0% 1.7% 11.5% 2.0%
CSOB "historic" 100.0% 87.7% 95.8% 78.7%
K&H 11.0% 3.6% 5.8% 2.1%
KB corporate 11.9% 5.7% 14.8% 5.2%
KB consumers 5.0% - . 4.8% - .
KBC Bank cons. 2.9% 1.7% 2.2% 1.5%
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Efficiency initiatives - CSOB (CR only)
.
8 901
7 997 (-10.1%)
6 597 (- 25.9%)
2.2 m EUR
15.1 m EUR
CSOB + IPB staff June 2000 :
CSOB + IPB staff now :
CSOB + IPB staff Dec. 2001 :
Estimated lay-off costs :
Est. recurrent savings p.a. :
21
Efficiency initiatives - K&H Bank
K&H+AAM staff 30/08/00 : 5.174
K&H+AAM staff 31/05/01 : 4.468 (- 13.7 %)
K&H+AAM staff 31/12/01 : 3.939 (- 24.9 %)
K&H+AAM staff 31/12/02 : 3.400 (- 34.3 %)
K&H+AAM staff 31/12/03 : 3.000 (- 42.0 %)
estimated lay-off costs : 10.0 m EUR
est. recurrent savings p/a : 11.4 m EUR
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Current CSOB -IPB status
Assets to be retained : 117 m CZK Unwanted assets to be put : 48 m CZK Assets to be managed by CSOB
for account of the government : 110 m CZK Unresolved : 22 m CZK
IPB-bank subsidiaries: at book value
23
Remaining CSOB / IPB issues
IPB Pojistovna : ownership
Pension fund : ownership
37 % IT affiliate PVT : modalities
25
KBC Control over CE-subsidiaries
Formally : AGM & BoD
Strategically : Steering Cttee CE & KBC
Factually : KBC-expatriate in management board regular CEO/KBC-top consultation structured coordination
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KBC-control : structured coordination
Full-time regional KBC CE-coordinators for : Overall coordination Market activities Internal Audit Market Risk Management Retail bankinsurance Information technology
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KBC-control : structured coordination
Part-time regional KBC CE-coordinators for : Financial reporting Payment systems Specific insurance issues Credit-system integration
Ad-hoc consultancy when requested ordeemed appropriate