Banca Mediolanum Spa · MIL:BMED
Banca Mediolanum Spa — FY2003 Earnings Presentation
42 slides from Banca Mediolanum Spa's earnings presentation, 2004
Slide 1: FY 2003 Reclassified Results
FY 2003 Reclassified Results
Slide 2: Slide 2
Slide 3: Alessandra Lanzone and Ennio Doris
2 Alessandra Lanzone Head of Investor Relations 3 Ennio Doris Chief Executive Officer
Slide 4: Net Inflows into Mutual Funds and Equity Mutual Funds
Net Inflows into Mutual Funds* 4 € mn 600 6000 400 4000 200 2000 0 0 Jan 00 July 00 Jan 01 July 01 Jan 02 July 02 Jan 03 July 03 Jan 04 -200 -2000 -400 -4000 -600 -6000 Mediolanum Total Italian Industry -800 -8000 -1000 -10000 * Including Managed Accounts & Unit-linked policies Source: Assogestioni
Slide 5: Net Profit Trend and Agenda
Net Profit Trend 6 € mn FY01 FY02 FY03 180 164 160 Performance Factors 140 129 9 120 121 Reduction in the loss 120 103 of New Ventures 100 82 80 Very strong results 60 40 20 9 coming from Core Business 0 -20 -17 -40 -39 -35 Consolidated Goodwill Core Business Amortisation New Ventures & Interest pai
Slide 6: Group Consolidated Net Profit
Consolidated 8 FY 2003 Reclassified Results Group Consolidated Net Profit 9 € mn FY03 FY02 Change Total revenues 2,576.4 2,517.5 +2.3% Total costs (2,437.3) (2,416.9) +0.8% Net investment income 24.0 6.7 +258.8% Profit before Tax & E.I. 163.1 107.3 +52.0% Extraordinary items (12.3) 1.7 n.s. Profit b
Slide 7: Net Profit in Detail; Assets under Administration
Consolidated Net Profit in Detail 10 € mn FY03 FY02 Change Net Premiums written 2,125.0 2,135.5 -0.5% Commission income 281.3 241.6 +16.4% Bank revenues 150.3 120.5 +24.7% Other revenues/commissions 19.9 19.9 -0.2% Total Revenues 2,576.4 2,517.5 +2.3% Net change in reserves (1,923.0) (1,911.9) +0.6%
Slide 8: AUA Trend and Net Inflows
Consolidated AUA Trend 12 € bn 23.5 20.9 21.0 17.8 13.0 9.5 7.2 6.1 5.3 5.5 4.7 3.1 2.6 1.6 2.0 0.9 1.3 0.1 0.6 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 Core Business New Ventures Net Inflows 13 € mn FY03 FY02 Change Life policies 1,481.2 1,139.9 +29.9% Mutual funds & managed account
Slide 9: Sales Network
Consolidated Sales Network 14 31/12/03 31/12/02 Change Italy: Banca Mediolanum 5,002 5,015 -0.3% Spain: Fibanc (Mediolanum model) 375 259 +44.8% Spain: Fibanc (Traditional model) 76 98 -22.4% Germany: B.A. Lenz 96 36 +166.7% Full Time Exclusive advisor 5,549 5,408 +2.6% Italy: Partner Time 1,063 1,4
Slide 10: Core Business
Core Business 15 Edoardo Lombardi Chief Operating Officer 16 FY 2003 Reclassified Results Core Business
Slide 11: Net Profit and Performance Factors
Core Business Net Profit 17 € mn FY03 FY02 Change Total revenues 2,456.4 2,444.3 +0.5% Profit before Tax & E.I. 197.2 150.0 +31.5% Extraordinary items (8.6) 1.4 n.s. Profit before Tax 188.6 151.4 +24.6% Tax (24.1) (30.7) -21.4% NET PROFIT 164.4 120.7 +36.2% Net Profit Performance Factors 18 9 Strong
Slide 12: Assets under Administration; Life Reserves
Core Business Assets under Administration 19 € mn 31/12/03 31/12/02 Change Life reserves 8,447.0 6,796.3 +24.3% Mutual funds & managed accounts 10,007.5 8,411.9 +19.0% Institutional assets 163.3 491.0 -66.7% Consolidation adjustments (3,732.5) (3,090.3) +20.8% Managed Savings Assets 14,885.3 12,608.
Slide 13: Mutual Funds & M.A. Assets
Core Business Mutual Funds & M.A. Assets 21 € mn 31/12/03 31/12/02 Change Equity funds 5,976.9 4,788.4 +24.8% Bond funds 1,803.2 1,864.5 -3.3% Monetary funds 773.3 518.5 +49.1% Total “unbundled” mutual funds 8,553.4 7,171.4 +19.3% "Elite" fund of funds 69.8 0.0 n.s. o/w equity 39.5 0.0 n.s. "Mix" ac
Slide 14: Bank Deposits and Net Inflows
Core Business Bank Deposits 23 € mn FY03 FY02 Change Cash under deposit 2,537.2 2,871.7 -11.6% Securities under deposit 1,935.7 2,002.7 -3.3% Repurchase agreements 180.8 203.7 -11.2% Subordinated loans 10.3 16.5 -37.6% BANK DEPOSITS 4,664.0 5,094.6 -8.5% Net Inflows 24 € mn FY03 FY02 Change Mutual f
Slide 15: Total Revenues; Gross Premiums Written
Core Business Total Revenues 25 € mn FY03 FY02 Change Premium income 2,062.8 2,123.0 -2.8% Re-insurance ceded (7.7) (10.0) -23.3% Commission income 258.8 217.1 +19.2% Bank revenues 124.7 95.4 +30.7% Other commission & revenues 17.8 18.8 -5.3% TOTAL REVENUES 2,456.4 2,444.3 +0.5% Gross Premiums Writt
Slide 16: Adjusted Premium Income; Gross Inflows into Mutual Funds
Core Business Adjusted Premium Income 27 € mn FY03 FY02 Change Recurring policies 107.4 130.5 -17.7% Single premium policies x 1/10 117.5 128.3 -8.4% NEW BUSINESS APE* 224.9 258.8 -13.1% *annual premium equivalent Gross Inflows into Mutual 28 Funds & Managed Accounts € mn FY03 FY02 Change Equity fun
Slide 17: Bank Accounts and Primary Account Holders
Core Business Bank Accounts & Account 29 Holders € mn 31/12/03 31/12/02 Change Active bank accounts 333,000 339,000 -1.8% Primary account holders (unduplicated) 778,200 761,000 +2.3% Primary Account Holders 30 31/12/03 31/12/02 Change Life 581,800 547,800 +6.2% Mutual funds & managed accounts 287,50
Slide 18: Total Account Holders; Sales Network
Core Business Total Account Holders 31 31/12/03 31/12/02 Change Life 581,800 547,800 +6.2% Mutual funds & managed accounts 440,000 436,000 +0.9% Bank 457,300 465,400 -1.7% Other 65,900 70,000 -5.9% Total Account Holders 917,700 905,000 +1.4% Sales Network 32 31/12/03 31/12/02 Change Licensed Financi
Slide 19: Sales Network Trend; Profit by Business Line
Core Business Sales Network Trend 33 1,743 901 950 2,163 1,205 992 1,069 613 770 4,114 3,842 4,052 3,018 2,200 2,513 1,915 1,828 1,885 1995 1996 1997 1998 1999 2000 2001 2002 2003 Licensed Non-licensed Profit by Business Line 34 € mn FY03 FY02 Change Life insurance 92.4 74.5 +24.1% Mutual funds 58.9
Slide 20: Net Investment Income; Life Reserves Trend
Core Business Net Investment Income 35 € mn FY03 FY02 Change Investment income - Life 60.2 74.1 -18.8% Adjustments to financial investments 0.9 (13.7) n.s. Adjusted investment income - Life 61.0 60.4 +1.1% Policyholders' interest (40.3) (56.8) -29.0% Net Investment Income - Life 20.7 3.6 +475.8% Net
Slide 21: Profit by Business Line; Commission Income
Core Business Profit by Business Line 37 € mn FY03 FY02 Change Life insurance 92.4 74.5 +24.1% Mutual funds 58.9 46.0 +28.1% Bank business 44.6 17.9 +149.4% Other operations 1.2 11.6 -89.6% PROFIT BEFORE TAX & E.I. 197.2 150.0 +31.5% Commission Income 38 € mn FY03 FY02 Change Entry fees 31.5 30.5 +3
Slide 22: Commission Income by Location
Core Business Commission Income by Location 39 as at 31/12/2003 Management 47% Entry 6% Performance 4% Management 8% Entry 6% Performance 29% Italy Ireland 18% 82% Profit by Business Line 40 € mn FY03 FY02 Change Life insurance 92.4 74.5 +24.1% Mutual funds 58.9 46.0 +28.1% Bank business 44.6 17.9 +
Slide 23: Bank Revenues; Benefits Paid & Changes in Reserves
Core Business Bank Revenues 41 € mn FY03 FY02 Change Interest Spread 54.9 26.7 +105.6% Securities 17.1 13.6 +25.7% Service fees: managed accounts 22.3 26.5 -15.8% Other services 30.4 28.6 +6.1% Service Margin 69.8 68.7 +1.5% BANK REVENUES 124.7 95.4 +30.7% Benefits Paid & Changes in 42 Reserves € mn
Slide 24: Surrenders
Core Business Surrenders* 43 € mn FY03 FY02 Change Surrenders from Transformation 133.3 452.9 -70.6% Natural Surrenders* 168.6 236.1 -28.6% % of reserves 3.8% 5.2% TOTAL SURRENDERS 301.9 689.0 -56.2% *excluding index-linked & group policies Surrenders of Investment Policies 44 € mn FY03 FY02 Change
Slide 25: Surrenders of Pension Plans; Costs
Core Business Surrenders of Pension Plans 45 € mn FY03 FY02 Change Surrenders of Traditional pension plans 134.9 305.5 -55.8% % of reserves 13.5% 25.1% o/w Natural Surrenders 23.6 66.4 -64.5% % of reserves 2.2% 5.0% Surrenders of Unit-linked pension plans 32.3 30.1 +7.3% % of Reserves 1.3% 1.4% SURR
Slide 26: New Ventures Net Profit
New Ventures 47 FY 2003 Reclassified Results New Ventures Net Profit 48 € mn FY03 FY02 Change Spain 0.0 (1.1) n.s. Germany (9.7) (5.7) +70.2% Banca Esperia 1.0 (3.5) n.s. Mediolanum Private & Others (0.9) (1.1) -18.2% NET PROFIT/LOSS (9.6) (11.4) -15.0%
Slide 27: Net Consolidated Effect; Banca Esperia Highlights
New Ventures Net Consolidated Effect 49 € mn FY03 FY02 Change Net profit/loss (9.6) (11.4) -15.0% Goodwill amortisation (20.1) (20.1) -0.2% Interest paid on investments (5.3) (7.1) -24.7% NET CONSOLIDATED EFFECT (35.1) (38.6) -9.1% Banca Esperia Highlights 50 (100%) € mn FY03 FY02 Change Net profit/
Slide 28: Spain Net Profit and Net Effect
New Ventures Spain Net Profit 51 € mn FY03 FY02 Change Total revenues 115.0 60.8 +89.1% Total costs* (56.6) (48.3) +17.2% Net changes in reserves (61.8) (21.3) +189.9% Capital gain/loss 5.3 8.3 -35.9% Profit before Tax & E.I. 1.9 (0.6) n.s. Extraordinary items (2.2) (0.5) +346.4% Profit before Tax (
Slide 29: Spain Embedded Value and Network
New Ventures Spain Embedded Value* 53 € mn FY03 FY02 In-Force Value 16 n.a. New Life & Mutual Funds Business 7 n.a. * gross of minorities Spain Network 54 31/12/03 31/12/02 Change Financial Advisors (Mediolanum model) 375 259 +44.8% Commercial Agents & Employees (Traditional model) 76 98 -22.4% Part
Slide 30: Spain Gross and Net Inflows
New Ventures Spain Gross Inflows 55 € mn FY03 FY02 Change Gross Premiums written 85.4 38.4 +122.4% Mutual funds & managed accounts 406.2 257.1 +58.0% Managed Savings 491.6 295.5 +66.4% Securities 75.0 46.9 +59.9% Cash (28.4) 7.6 n.s. Administered Savings 46.6 54.5 -14.5% SPAIN GROSS INFLOWS 538.2 35
Slide 31: Spain AUA; Gamax Net Profit
New Ventures Spain Assets under 57 Administration € mn 31/12/03 31/12/02 Change Life & pension funds* 136.0 74.6 +82.4% Mutual funds** 812.7 719.7 +12.9% Bank deposits 1,276.1 1,134.3 +12.5% Institutional Assets 0.0 44.6 n.s. Consolidation adjustments (283.0) (184.7) +53.2% SPAIN AUA 1,941.9 1,788.3
Slide 32: B.A. Lenz Highlights
New Ventures B.A. Lenz Highlights 59 € mn FY03 FY02 Change Net profit/loss (9.3) (3.6) +158.3% Net inflows 74.9 0.6 n.s. Primary Account Holders 4,480 n.a. n.s. Financial advisors 96 36 +166.7%
Slide 33: Embedded Value Growth
Embedded Value 60 FY 2003 Reclassified Results Embedded Value Embedded Value Growth 61 Post-acquisition Effect* € mn 2,029* Value of in-force business +12% 1,768* 1,816* Adjusted shareholders +18% +3% 1,263 equity 1,496* VIF Life +17% 1,283 339 +72% VIF Funds & M.A. 707 745 595 +19% +5% 484 535 +11%
Slide 34: Embedded Value Growth; EV Economic Assumptions
Embedded Value Embedded Value Growth 62 Pre-acquisition Effect* € mn 2,166* +10% Value of in-force business 1,972* 1,917* +3% +21% Adjusted shareholders 1,588* 1,263 equity VIF Life +24% 1,283 339 +72% VIF Funds & M.A. 707 745 595 +19% +5% 484 535 +11% +11% 564 94 95 96 97 98 99 00 01 02 03 *before
Slide 35: Embedded Value Earnings; EV Earnings Components
Embedded Value Embedded Value Earnings 64 FY03 FY02 Change Change over period 194.0 55.0 n.s. Dividends paid 72.0 72.0 --- Goodwill amortisation - New Ventures 19.0 20.0 --- EV Earnings Pre-Acquisition Effect 285.0 147.0 +93.9% (before excluding residual NV goodwill) Goodwill Increase over the perio
Slide 36: EV Earnings: Experience Variances; Value-added New Business
Embedded Value EV Earnings: 66 Experience Variances € mn FY03 FY02 Investment return variance on NAV (9) (255) Mutual fund pricing variance 0 57 Transfer price variance on Asset Mgmt IRL 0 (68) Asset mix variance 18 (6) Performance fees variance 53 29 Persistency/paid-up variance (22) 10 Bank net pr
Slide 37: Growth Factors: Consolidated Trends (1)
68 FY 2003 Reclassified Results Growth Factors Consolidated Trends (1): 69 1999-2003 2003 1999 Change AUM (euro mn) 23,514 12,967 +81.3% Primary Account Holders 843,401 469,000 +79.8% Current accounts 407,460 144,053 +182.9% Financial Advisors* 5,630 3,718 +51.4% *excluding Partner Time & Gamax
Slide 38: Consolidated Trends (2); The Next Five Years
Consolidated Trends (2): 70 1999-2003 € mn 2003 1999 Change Net Profit 129 88 +47.0% Net inflows into managed savings 2,417 1,174 +105.9% Embedded Value 2,029 1,283 +58.1% Growth Factors 71 The Next Five Years 9 International expansion 9 Growth in number of advisors in Italy 9 Increase in number of
Slide 39: International Expansion: Spain, B.A. Lenz & Gamax
Growth Factors 72 International Expansion - Spain 9 Spain expansion undertaken in 2000 9 Launch of operations in November 2001 9 Start-up phase already passed 9 Net profit should cover goodwill in 2006 Growth Factors 73 International Expansion – B.A. Lenz & Gamax 9 German expansion undertaken in 200
Slide 40: International Expansion; Banca Esperia
Growth Factors 74 International Expansion – The Future Next Objective: 9 to export our business model abroad to France or Poland, possibly by 2005 Growth Factors 75 Expansion - Banca Esperia 9 Banca Esperia’s contribution to Group profits significant in 2003 9 Important source of future profits
Slide 41: Growth of Network and Customer Base in Italy
Growth Factors 76 Growth of Network in Italy 9 Continuation of ‘Jedi’ recruitment project concentrates & coordinates efforts on given territories ‘Turnover Rate Reduction Plan’ 9 supporting promising young advisors during current difficult selling environment Growth Factors 77 Growth of Customer Bas
Slide 42: Increase in Productivity
Growth Factors 78 Increase in Productivity Increase in AUA a determining factor 9 Increase positive net inflows from customer base development 9 Positive market effect: M.F. & M.A. assets almost 70% equity 9 Technology will increase assets without increasing manpower