Banca Mediolanum SpA · MIL:BMED
Banca Mediolanum SpA — Mediolanum — H1 2005 Earnings Presentation
42 slides from Banca Mediolanum SpA's earnings presentation, Sep 28, 2005
Slide 1: H1 2005 Results
H1 2005 Results September 28, 2005
Slide 2: Slide 2
Slide 3: Profit Growth and Agenda
2 Profit Growth € mn +50% +29% +16% 26,0 12,3 115,1 89,1 76,8 H1 2004 H1 2004* H1 2005 IAS/IFRS effect Business performance * recalculated in compliance with IAS/IFRS reporting 3 Agenda IAS-IFRS: First-Time Adoption Group Results Highlights H1 2005 Group Results Domestic market Foreign markets H1 20
Slide 4: IAS/IFRS: First-Time Adoption
F RS S/I IA 4 IAS/IFRS: First-Time Adoption 5 IAS/IFRS First-Time Adoption Mediolanum is adopting the IAS/IFRS international accounting principles as of H1 2005 results, which are fully compliant First-time adoption is applied as at January 1, 2004 In order to present an homogeneous comparison, H1 2
Slide 5: Reconciliation of H1 2004 Net Income and Shareholders' Equity
IA S/I F RS 6 Reconciliation of H1 2004 Net Income € mn (0.8) 0.9 0.5 2.7 9.9 89.1 89.1 76.8 Local Goodwill Life financial Misc IAS/ GAAP amortisation contracts IFRS DIR/DAC Bank assets Stock options valuation expense 7 Reconciliation of Shareholders’equity as at 01.01.05 € mn 6.9 36.0 (0.04) 662.3
Slide 6: H1 2005 Group Highlights (IFRS)
o up Gr 8 H1 2005 Group Results 9 H1 2005 Group Highlights (IFRS) AuA 28.0 € bn +12% Profit before Tax 148.0 € mn +24% Net Income 115.1 € mn +29% Embedded Value 2,574 € mn +19%
Slide 7: AuA Growth and Assets under Administration
Gr o up 10 AuA Growth € bn 28.1 26.0 25.1 23.7 21.1 21.0 Domestic market Foreign markets* 17.8 30/06/05 vs. 30/06/04 = +12% 30/06/05 vs. 31/12/04 = +8% 13.0 9.5 7.2 6.1 5.3 5.5 4.7 3.1 2.6 2.0 1.3 1.6 0.6 0.9 0.1 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 H1 H1 04 05 * reclassified
Slide 8: Gross Inflows and Net Inflows
o up Gr 12 Gross Inflows € mn H1 05 H1 04 Change Gross premiums written 1,319.4 1,204.7 +10% o/w financial contracts 50.8 53.5 -5% Asset management products 1,370.7 1,506.9 -9% Managed Savings 2,690.1 2,711.6 -1% Administered Savings 175.1 58.6 +199% GROSS INFLOWS 2,865.2 2,770.2 +3% 13 Net Inflows
Slide 9: Sales Network and Income Statement
Gr o up 14 Sales Network 30/06/05 30/06/04 Change Italy: Banca Mediolanum 4,835 4,858 +0% Spain: Fibanc (Mediolanum model) 427 407 +5% Spain: Fibanc (Traditional model) 68 62 +10% Germany: B.A. Lenz 80 86 -7% Full-Time Exclusive Advisors 5,410 5,413 +0% Italy: Partner Time 823 939 -12% Spain: Fibanc
Slide 10: Income Statement in detail
o up Gr 16 Income Statement in detail € mn H1 05 H1 04 Change Net premiums written 1,262.0 1,140.4 +11% Entry fees 17.8 15.8 +13% Management fees 123.5 113.5 +9% Performance fees 58.0 38.9 +49% Bank service fees & revenues 35.4 37.0 -4% Other fees 18.4 19.3 -5% Total commission income 252.9 224.5 +1
Slide 11: H1 2005 Results: Domestic market
Do me Ma stic rke t 17 H1 2005 Results: Domestic market NB: In compliance with the IAS/IFRS accounting standards, Banca Esperia data are included in Domestic figures. A detailed presentation is provided in Banca Esperia Highlights. 18 Assets under Administration € mn 30/06/05 30/06/04 Change Life 11
Slide 12: Domestic Gross Inflows and Net Inflows
c esti m Do rket Ma 19 Gross Inflows € mn H1 05 H1 04 Change Gross premiums written 1,271.0 1,146.6 +11% Assets management products 719.5 841.1 -14% Managed Savings 1,990.5 1,987.7 +0% Securities 102.1 (104.7) +198% Cash 49.2 65.1 -24% Repurchase Agreements 11.5 (35.1) +133% Administered Savings 162
Slide 13: Domestic Income Statement and detail
Do me Ma stic rke t 21 Income Statement € mn H1 05 H1 04 Change Net premiums written 1,258.3 1,135.2 +11% Total commission income 221.1 203.1 +9% Financial margin 37.4 26.0 +44% Net income on other investments * 14.8 1.4 +962% Other revenues 14.2 10.3 +38% Total Revenues 1,545.9 1,376.0 +12% Amounts
Slide 14: Performance Factors and Profit by Segment
c esti m Do rket Ma 23 Performance Factors Strong volumes in the Life business Solid commission income Healthy financial margin Good performance in terms of cost containment 24 Profit by Segment € mn H1 05 H1 04 Change Life 87.7 64.3 +36% Asset Management 63.5 54.1 +17% Bank* 0.4 5.9 -94% Other (1.8
Slide 15: Gross Premiums Written and Recurring Policies
Do me Ma stic rke t 25 Gross Premiums Written Banca Mediolanum € mn H1 05 H1 04 Change U-L Pension plans* 52.2 44.0 +19% U-L Investment policies (Life Funds) 38.3 45.4 -16% Recurring Policies (AP) 90.4 89.4 +1% Trad/Group/Investment policies 4.2 4.9 -15% U-L policies (Alternative Funds, Life Funds)
Slide 16: Annual Premium Equivalent and Life Commission Income
c esti m Do rket Ma 27 Annual Premium Equivalent € mn H1 05 H1 04 Change Recurring Policies 52.2 66.3 -21% Discretionary increase in premiums 9.4 13.4 -30% Recurring policies 61.6 79.7 -23% Single premiums – normal loadings 60.5 63.9 -5% Single premiums – promo loadings 14.0 --- n.s. Single premiums
Slide 17: Amounts Paid, Change in Reserves and Life Surrenders
Do me Ma stic rke t 29 Amounts Paid & Change in Reserves € mn H1 05 H1 04 Change Claims & maturities 334.9 195.2 +72% Natural surrenders 229.7 147.3 +56% Surrenders from transformation 20.9 40.0 -48% Amounts Paid 585.5 382.5 +53% Change in Reserves 586.7 661.9 -11% Recovery from reinsurance (3.6) (4
Slide 18: Life Surrenders in detail and Policyholders' Assets
c esti m Do rket Ma 31 Life Surrenders in detail* expressed as a % of the reserves H1 05 H1 04 Change Traditional Invest. Pol. 4.8% 11.2% -57% o/w Natural Surrenders 3.8% 9.4% -60% U-L Invest. Policies 6.4% 6.1% +5% o/w Natural Surrenders 6.4% 6.1% +5% SURRENDERS OF INVEST. POLICIES 6.2% 7.0% -11% o
Slide 19: Life Policyholders' Assets Trend and Profit by Segment
Do me Ma stic rke t 33 Life Policyholders' Assets Trend Banca Mediolanum € bn Decline in traditional reserves sensitive to low interest rates 4.9 4.4 Guarantees relate 4.1 only to traditional 3.6 3.0 reserves: 1.8 1.9 2.3 2.6 1.4 1.6 10% of Life assets 1.1 0.6 0.8 5.2 0.5 1.2 1.7 2.2 2.6 2.7 4.5 0.0
Slide 20: Asset Management Gross Inflows and Commission Income
c esti m Do rket Ma 35 Gross Inflows Asset Management Products Banca Mediolanum € mn H1 05 H1 04 Change Equity funds 282.4 244.7 +15% Bond funds 128.7 122.1 +5% Monetary funds 195.8 253.5 -23% Total "unbundled" mutual funds 606.9 620.3 -2% '"Elite" fund of funds 18.2 32.0 -43% o/w equity 12.0 21.8 -
Slide 21: Commission Income by Location and Management Assets
Do me Ma stic rke t 37 Total Commission Income by Location as at 30.06.05 Management 43% Entry 4% Performance 1% Management 19% Performance Entry 29% 4% Italy Ireland 24% 76% 38 Asset Management Assets Banca Mediolanum € mn 30/06/05 30/06/04 Change Equity funds 7,611.9 6,545.0 +16% Bond funds 1,986.
Slide 22: Asset Management by Location and Profit by Segment
c esti m Do rket Ma 39 Asset Management by Location Banca Mediolanum as at 30.06.05 Ireland 84% Italy 16% 40 Profit by Segment € mn H1 05 H1 04 Change Life 87.7 64.3 +36% Asset Management 63.5 54.1 +17% Bank* 0.4 5.9 -94% Other (1.8) (2.1) +17% PROFIT BEFORE TAX 149.8 122.2 +23% * 2005 figure includ
Slide 23: Bank Revenues and Bank Assets
Do me Ma stic rke t 41 Bank Revenues € mn H1 05 H1 04 Change Interest Spread 28.2 25.1 +12% Securities 5.9 6.4 -8% Other service fees 13.6 22.4 -40% o/w fees from 3rd party mortgages 1.9 11.8 -84% Service Margin 19.4 28.9 -33% BANK REVENUES 47.6 54.0 -12% 42 Bank Assets Banca Mediolanum € mn 30/06/0
Slide 24: Bank Accounts, Account Holders and Costs
c esti m Do rket Ma 43 Bank Accounts & Account Holders Banca Mediolanum 30/06/05 30/06/04 Change Active bank accounts 363,100 334,000 +9% Primary account holders (unduplicated) 788,000 782,000 +1% 44 Costs € mn H1 05 H1 04 Change Amounts paid & change in reserves (1,168.6) (1,040.3) -12% Commission
Slide 25: Sales Network and Primary Account Holders
Do me Ma stic rke t 45 Sales Network 30/06/05 30/06/04 Change Licensed Financial Advisors 3,980 4,055 -2% Non-Licensed Financial Advisors 855 803 +6% Banca Mediolanum 4,835 4,858 n.s. o/w financial executives 742 777 -5% Partner Time 823 939 -12% TOTAL NETWORK 5,658 5,797 -2% 46 Primary Account Hold
Slide 26: Total Account Holders and Banca Esperia Highlights
c esti m Do rket Ma 47 Total Account Holders Banca Mediolanum 30/06/05 30/06/04 Change Life 602,700 592,800 +2% Asset Management 415,500 433,600 -4% Bank 506,700 460,000 +10% Other 63,500 64,100 -1% Total account holders 926,600 919,200 +1% 48 Banca Esperia Highlights (100%) € mn H1 05 H1 04 Change
Slide 27: H1 2005 Results: Foreign markets
Fo Ma reig rke n ts 49 H1 2005 Results: Foreign markets NB: In compliance with the IAS/IFRS accounting standards, Banca Esperia data are now included in Domestic figures. H1 2004 figures are restated accordingly. 50 Income Statement € mn H1 05 H1 04 Change Net premiums written 3.7 5.2 -29% Total com
Slide 28: Foreign Income Statement in detail and Spain Network
n reig ts Fo rke Ma 51 Income Statement in detail € mn H1 05 H1 04 Change Net premiums written 3.7 5.2 -29% Entry fees 2.4 2.0 +20% Management fees 8.9 8.7 +2% Performance fees 2.4 0.7 +234% Bank service fees & revenues 15.9 8.1 +97% Other fees 2.3 2.0 +13% Total commission income 31.8 21.5 +48% Int
Slide 29: Spain Assets under Administration and Income Statement
Fo Ma reig rke n ts 53 Spain Assets under Administration € mn 30/06/05 30/06/04 Change Life & pension funds* 249.2 175.5 +42% Asset Management** 707.4 718.9 -2% Bank 1,387.9 1,251.8 +11% Other 80.6 58.2 +38% Consolidation adjustments (255.2) (251.2) -2% SPAIN AUA 2,169.7 1,953.2 +11% *o/w Ireland-ba
Slide 30: Spain Embedded Value and Gross Inflows
n reig ts Fo rke Ma 55 Spain Embedded Value* € mn H1 05 H1 04 Value In-Force Life & Mutual Funds 23 20 New Business Life & Mutual Funds 3 4 * gross of minorities 56 Spain Gross Inflows € mn 30/06/05 30/06/04 Change Gross premiums written 45.3 53.0 -15% o/w recurring policies (AP) 3.7 2.7 +39% o/w si
Slide 31: Spain Net Inflows and B.A. Lenz Highlights
Fo Ma reig rke n ts 57 Spain Net Inflows € mn 30/06/05 30/06/04 Change Life premiums 35.3 41.0 -14% Asset management products 4.5 (24.9) +118% Managed Savings 39.7 16.1 +147% Securities 9.7 10.6 -8% Cash (11.3) (15.6) +28% Administered Savings (1.6) (5.0) +68% SPAIN NET INFLOWS 38.2 11.1 +244% 58 B.
Slide 32: Gamax Highlights
n reig ts Fo rke Ma 59 Gamax Highlights € mn 30/06/05 30/06/04 Change Net Income 2.4 0.8 +212% Assets under Administration 587.6 573.9 +2% o/w 3rd party funds 199.2 154.1 +29% Gross Inflows 42.6 56.2 -24% o/w 3rd party funds 20.3 18.0 +13% Net Inflows (23.3) (24.9) +7% o/w 3rd party funds
Slide 33: H1 2005 Results: Embedded Value Growth
Em be dd Va ed lue 60 H1 2005 Results: Embedded Value 61 Embedded Value Growth € mn 2,574 +9% 2,354 VIF +19% 2,166 Adjusted 2,029 shareholders’ equity 1,816 1,768 1,625 1,496 VIF Life 1,283 379 VIF Funds & M.A. 745 707 595 535 484 570 94 95 96 97 98 99 00 01 02 03 04 H104 H105
Slide 34: EV Economic Assumptions and Earnings
d de b ed Em lue Va 62 EV Economic Assumptions H1 05 FY 04 H1 04 Investment Return Liquidity 2.00% 2.00% 2.00% Long-term bonds 3.40% 3.85% 4.50% Equity 5.90% 6.35% 7.00% Own portfolio Segregated funds 4.00% 4.00% 4.00% Unit-linked funds 4.50% 4.85% 5.40% Mutual funds & managed accounts 4.85% 5.25% 5
Slide 35: EV Earnings Components: Experience Variances
Em be dd Va ed lue 64 Ev Earnings Components (1): Earnings on Initial EV € mn H1 05 H1 04 Change Expected return on EV - unwind 67 65 +3% Experience variances 141 75 +88% Economic assumption changes 30 --- n.s. Tax assumption changes --- (4) n.s. Acquisition in the period --- (2) n.s. Earnings on In
Slide 36: EV Earnings: Value-added New Business
d de b ed Em lue Va 66 Ev Earnings Components (2): Value-added New Business € mn H1 05 H1 04 Change Earnings on Initial EV 238 134 +78% Recurring policies 50 53 -6% Single premiums policies 18 16 +13% Single prem. pol. 'trasformation' 1 Life New Business 69 69 +0% Asset Management New Business 11 14
Slide 37: "4 Freedoms" Project
67 “4 Freedoms” Project 68 “4 Freedoms” Project Primary objective: increase the bank customers Rationale: our bank customers have 5 times the assets of our customers who are not bank account holders Introduction of Riflex Bank Account & launch of Riflex card Project supported all the way by Media Co
Slide 38: "4 Freedoms": Bank accounts opened and credit cards issued
69 “4 Freedoms”: Impact on business No. of bank accounts opened Monthly Avg. Mar-June 2005 6,770* +55% Jan-Feb 2005 4,366 +93% Jan-June 2004 3,503 * 54% are Riflex accounts 48% are opened by new customers 70 “4 Freedoms”: Impact on business No. of credit cards issued Monthly Avg. Mar-June 2005 2,869
Slide 39: "4 Freedoms": Account activation and new customers
71 “4 Freedoms”: Impact on business Activation* of bank accounts 69% within 90 days 43% within 60 days 26% between 60-90 days * defined as 12 non-automatic transactions/operation quarterly 72 “4 Freedoms”: Impact on business No. of new bank customers Monthly Avg. Mar-June 2005 6,047 +62% Jan-Feb 200
Slide 40: "4 Freedoms": Gross inflows and net advisors
73 “4 Freedoms”: Impact on business Gross Inflows € mn - Monthly Avg. Mar-June 2005 400 +42% Jan-Feb 2005 282 +25% Jan-June 2004 321 74 “4 Freedoms”: Impact on business Net increase of advisors Monthly Avg. growth Mar-June 2005 5 +123% Jan-Feb 2005 (20) +119% Jan-June 2004 (24)
Slide 41: New Products: Mediolanum Portfolio and Real Estate
75 New Products: Mediolanum Portfolio System of Funds of Funds under Irish legislation made possible by UCITS 3 9 funds in the product line 5 managed through automatic re-balancing; to maintain the original level of volatility selected by the customer 4 actively managed State-of-the art investment i
Slide 42: Disclaimer and Investor Relations Contacts
77 Disclaimer This document has been prepared by Mediolanum S.p.A. for the sole purpose of providing information and presenting the Group’s strategies. The information, opinions, valuations and forecasts it contains have not been audited by any independent body; they may be altered at any time witho