Mediobanca - Banca Di Credito Finanziario S.p.a. · MIL:MB
Mediobanca - Banca Di Credito Finanziario — Mediobanca — Investor Day (June 2013)
117 slides from Mediobanca - Banca Di Credito Finanziario's investor day presentation, Jun 21, 2013
Slide 1: Mediobanca Group Strategic guidelines update
Mediobanca Group Strategic guidelines update Milan, 21 June 2013
Slide 2: Agenda
Agenda I. Growth and profitability in the “new normal” Alberto Nagel, Mediobanca Group CEO II. CIB: moving toward the right mix of capital and geographies Saverio Vinci, Mediobanca Group GM III. Compass: leveraging on a unique franchise Gian Luca Sichel, Compass CEO IV. CheBanca!: set up to be the l
Slide 3: Growth and profitability in the “new normal”
Growth and profitability in the “new normal” Alberto Nagel, Mediobanca Group CEO
Slide 4: Growth and profitability in the “new normal”
Growth and profitability in the “new normal” 1. Successful execution of our key strategic priorities 2. New systemic challenges in banking 3. Group strategic guidelines 4. Targets
Slide 5: Successful execution of our key strategic priorities
Successful execution of our key strategic priorities Strong growth and diversification of banking business achieved ... Best-in-class efficiency, ... leveraging asset quality and exclusively capitalization on own capital From holding company to banking business ... and investing in ... and remunerat
Slide 6: Banking revenues doubled and more diversified
Banking revenues doubled and more diversified Group revenues (€m) Banking revenues (€m) 1,600 1,600 1,160 870 Consumer CAGR +13% Banking revenues CAGR +8% 870 CIB CAGR +4% June June June June June June June June June June June June June June June June June June 05 06 07 08 09 10 11 12 13* 05 06 07 0
Slide 7: Loans and funds enlarged and more retail
Loans and funds enlarged and more retail Funding (€bn) Loan book (€bn) June June June June June June June June March June June June June June June June June March 05 06 07 08 09 10 11 12 13 05 06 07 08 09 10 11 12 13 MB bonds to institutionals MB bonds to retail Corporate Leasing Consumer Retail dep
Slide 8: MB not affected by last 5Y restructuring wave across the industry
MB not affected by last 5Y restructuring wave across the industry Right issues/cap increase by banks (€bn) Banking industry staff trends Italian listed banks 36 /ooo 2008 2012 Var% MB last capital increase in 1998 Mediobanca 3 3 +15% 12 Italy- large banks 272 243 -11% 7 8 5 4 US- large banks 1,504 1
Slide 9: MB efficiency well above EU banks despite business strengthening
MB efficiency well above EU banks despite business strengthening MB cost/income trend and comparison (%) 68 CIB non-domestic CheBanca! operations set up set up 46 42 42 41 40 Empower 33 banking business 35 22 21 21 21 20 Human Compass 17 resources leadership strengthened established June 08 June 09
Slide 10: Mediobanca asset quality well above Italian average
Mediobanca asset quality well above Italian average Net bad loans/Core Tier1: MB vs Italian banks Net bad loans/Loans: MB vs Italian banks 117% 108% 102% 8.7% 98% 97% 8.3% 6.9% 6.2% 5.7% 61% 3.3% 2.8% 2.3% 2.4% 2.4% 15% 15% 1.8% 13% 14% 14% 7% 1.0% June 08 June 09 June 10 June 11 June 12 March 13 Ju
Slide 11: Mediobanca capitalization among best in class in EU
Mediobanca capitalization among best in class in EU Mediobanca CT1 ratio trend CT1 comparison among EU banks (Dec.12) 19% 16% 15% 17% 12% 12% 15% 11% 11% 12% 10% 10% 13% 11% 9% 7% 5% J05 J06 J07 J08 J09 J10 J11 J12 D12 ISP Bankia CS Danske POP SG BPM DB RBS MPS UBI UBS Mediobanca BNP Commerz. Barcla
Slide 12: High single-digit normalized profitability
High single-digit normalized profitability Mediobanca ROE trend ROTE adj 2012² (%) 16% 17 14% 15 14 12% 11 10% 13 10 12 12 9 8% 10 7 6 9 6% 6 6 4% 1 2% 0% J05 J06 J07 J08 J09 J10 J11 J12 J13³ ISP KBC Credem BBVA Lloyds CS SG Santander SEB HSBC ING DB Mediobanca BNP Erste Barclays ROE adj¹ ROE High
Slide 13: Growth and profitability in the “new normal”
Growth and profitability in the “new normal” 1. Successful execution of our key strategic priorities 2. New systemic challenges in banking 3. Group strategic guidelines 4. Targets
Slide 14: New systemic challenges ...
New systemic challenges ... Basel 3 adoption from 2014 Large number Increasing local regulatory requirements (“Balkanization/ring-fencing”) of new regulations being introduced OTC derivatives reform Remuneration directive Limit to principal risk-taking Lower profitability for certain bus
Slide 15: ...also in Italy
...also in Italy High indebted country Country Lower GDP growth peculiarities Healthy private sector Uncertain political landscape Corporate Retail Low corporate activity, already rebounded in other Traditional retail distribution platform obsolete and countries expensive: branches on sa
Slide 16: Mediobanca market concerns
Mediobanca market concerns Business model High equity complexity exposure Capital adequacy Italy weakness Basel 3 impact 16
Slide 17: Growth and profitability in the “new normal”
Growth and profitability in the “new normal” 1. Successful execution of our key strategic priorities 2. New systemic challenges in banking 3. Group strategic guidelines 4. Targets
Slide 18: MB vision: medium-term strategic pillars
MB vision: medium-term strategic pillars 1 Simplify business model and reduce equity exposure Confirm capital strength in B3 scenario, more 2 disciplined use of capital 3 Invest in fee-generating/capital-light businesses 4 Substantially increase non-domestic revenues 5 Materially improve growth and
Slide 19: Reduce equity exposure by €2bn
Reduce equity exposure by €2bn Absorbs too much capital Concentration vs insurance sector and Italy too high Equity exposure drawbacks Adds volatility to Group results Adds discount to valuation € 0.4bn € 1.5bn Recover full asset clean-up equity stake disposals availability of shares All s
Slide 20: Generali stake still contributing materially to MB EPS and CT1
Generali stake still contributing materially to MB EPS and CT1 AG contribution to MB net profit (€m) MB CT1 trend (€bn) 950 June 05 5.1 MB CT1 Ass.Generali 5,10 +1.5 530 Core banking 6,50 +4.0 business 370 Dividends 7,50 - 2.5 120 Impairments -1.0 one-offs Avg 06-08 Avg 09-13 March 13 6.5 Net profit
Slide 21: Basel 3 CT1 steadily in 11-12% range in BP horizon
Basel 3 CT1 steadily in 11-12% range in BP horizon Impact of full deduction of Ass.Generali stake from MB CT1 Concerns over MB capital Possible additional capital drains due to high equity exposure trends/levels Impact of Basel 3 on banking RWAs CRDIV adoption €2bn equity RWAs for AG stake exp
Slide 22: RWAs from equity to banking business growth
RWAs from equity to banking business growth Group RWAs¹ trend (€bn) CT1 11.5-12% Basel 3 CT1: 11-12% 7 60 -3.5 +3.5 58 -2 Lower -2 equity IRB Advanced RWAs Banking models 53 exposure CRD IV impact² optimization business validation³ growth 56,5 Of which Of which Of which €49 banking €49 banking €51 b
Slide 23: Balanced and sustainable A&L mix
Balanced and sustainable A&L mix Loans Back to lending growth, both in corporate and retail Corporate: exploit untapped customer base, sector Loans CAGR 5% trends, different business approach Consumer: focus on high net margin loans LLPs/Ls = 150bps Strict risk assessment Funding Bond and
Slide 24: Invest in fee-generating/capital-light businesses
Invest in fee-generating/capital-light businesses IB: push on advisory and capital markets/asset brokerage CIB/WM PB: organic growth and top up both off- and onshore MB Alternative Asset Management (“MAAM”) to be set up and developed Consumer finance: develop fee-based products (e.g. Compass
Slide 25: Developing Mediobanca Alternative Asset Management (“MAAM”)
Developing Mediobanca Alternative Asset Management (“MAAM”) Capturing industry trends: requirement by investors for “institutional” asset management businesses delivering high yields WHY? MB to provide an “institutional roof” to good management teams looking to increase AuM in current products a
Slide 26: Growth and profitability in the “new normal”
Growth and profitability in the “new normal” 1. Successful execution of our key strategic priorities 2. New systemic challenges in banking 3. Group strategic guidelines 4. Targets
Slide 27: Boost growth and returns. All businesses profitable
Boost growth and returns. All businesses profitable Revenues, K absorption, ROAC by business ROAC Consumer lending CIB PB-MAAM K absorption Equity Retail banking Note: Current 5Y Projection - Ball dimension indicates revenue size - K absorbed = 8% RWAs - Ass.Generali not included 27
Slide 28: Mediobanca Group 2016 targets
Mediobanca Group 2016 targets ¿ FY16 banking revenues: €2.1bn, CAGR +10% Resume growth and ¿ Cost of risk = 150bps profitability ¿ ROE = 10%-11% ¿ NSFR > 100% ¿ Reduce equity exposure by €2bn Capital ¿ More capital to banking Redeploy at strong levels ¿ More disciplined use of capital ¿ B3 CT1¹ = 11
Slide 29: CIB: moving toward the right mix of capital & geographies
CIB: moving toward the right mix of capital & geographies Saverio Vinci, Mediobanca Group GM
Slide 30: Moving toward the right mix of capital & geographies
Moving toward the right mix of capital & geographies 1. Our strengths 2. Positioning as a specialized operator 3. Group strategic guidelines 4. Targets
Slide 31: Mediobanca CIB: our strengths
Mediobanca CIB: our strengths Recognized brand Strong culture and corporate identity Business model already compliant Customer-driven, with new integrated approach regulations MB CIB client-aligned corporate business Diversified revenues Strong balance sheet Predominantly NII Low leverage and fee Ef
Slide 32: Strong positioning in Italy ...
Strong positioning in Italy ... M&A positioning ECM positioning Ranking by total deals Ranking by number Ranking by total deals Ranking by number value of deals value of deals 2001 - 2013 2001 - 2013 Mkt Mkt Mkt Bank (€ bn) Bank Deals Bank (€ bn) Mkt share Bank Deals share share share 1 MB 320 38% M
Slide 33: … leveraged since 2004 on a European scale
… leveraged since 2004 on a European scale Mediobanca footprint Total cross borders deals in EU (2008-12, €bn) 64 London Frankfurt Paris Madrid 26 26 Milan 16 16 15 15 9 Istanbul 7 4 F-UK G-UK F-IT SP-UK IT-SP F-G F-S G-S IT-UK G-IT Mediobanca has branches in markets crucial for Italian-cross bord
Slide 34: MB CIB: 85% customer-driven business ...
MB CIB: 85% customer-driven business ... Operators by IB revenues size (€m) and reliance on trading (%) 100% Trading % on JPM IB revenue GS 90% UBS 80% MCQUARIE CS 70% INVESTEC 60% DB SG BOFA 50% 40% JEFFERIES BNP 30% 20% MEDIOBANCA 10% ROTHSCHILD Revenues GREENHILL size 0% EVERCORE LAZARD -10% 200
Slide 35: ... run with an efficient cost structure ...
... run with an efficient cost structure ... Operators by IB revenues size (€m) and cost/income ratio (%) Cost/income ratio 100% JEFFERIES 90% MS GS UBS EVERCORE LAZARD 80% 70% CS GREENHILL INVESTEC MCQUARIE 60% 50% DB SG BAR 40% MEDIOBANCA BNP 30% 20% 10% Revenues size 0% -10% 200 400 600 800 1.000
Slide 36: ... a strong balance sheet ...
... a strong balance sheet ... Low leverage Low risk profile CT1/Assets = 10% Treasury: 2/3 in bonds, ow 90% IG RWAs/Assets = 85% Conservative ALM: Var 30m Strong credit quality Strong capital Net NPLs/loans=0 CT1 = €6.5bn, ratio 12% Net bad Ls/Ls=1.7%, coverage 43% TC = €8.2bn, rati
Slide 37: … and a tailor-made diversified product offering
… and a tailor-made diversified product offering INVESTMENT BANKING LENDING & STRUCTURED FINANCE PRIVATE BANKING Corporate finance Corporate lending CMB Debt advisory/restructuring Leverage finance Banca Esperia ECM/DCM Structured finance CMS Equity: solutions, finance, derivatives
Slide 38: Moving toward the right mix of capital & geographies
Moving toward the right mix of capital & geographies 1. Our strengths 2. Positioning as a specialized operator 3. Group strategic guidelines 4. Targets
Slide 39: MB positioned as a specialized operator ...
MB positioned as a specialized operator ... Global players Agency players Specialized operators Full scale/global business Run mainly on execution Strong IB identity/culture Complex solutions to clients, model for their universal bank Product specialized market makers, capital and captive
Slide 40: … to actively compete in a tougher “new normal”
… to actively compete in a tougher “new normal” Global IB ROE trend 17% Regulation Management 14% impact action 12%-14% 12% -1% 2% 1% -2/3% 2% 8% -1% Revenue reform 2004-2006 2009-2010 2011 2012 Strategic 2014-2016 Solvency & Structural Structural response cost work growth Liquidity OTC reform Reg
Slide 41: Moving toward the right mix of capital & geographies
Moving toward the right mix of capital & geographies 1. Our strengths 2. Positioning as a specialized operator 3. Group strategic guidelines 4. Targets
Slide 42: Boost size and reshuffling revenues mix through main strategic convictions
Boost size and reshuffling revenues mix through 5 main strategic convictions 1 Exploit an untapped corporate base 2 Empower geographic footprint 3 Complete product offering 4 Leverage on IB industry secular trends 5 Keep focus on balance sheet quality and strength 42
Slide 43: Exploit an untapped corporate customer base
Exploit an untapped corporate customer base Europe is the 2° biggest IB revenue pool in the world! MB core segment, strong expertise and track record in Italian environment Capture ongoing trend of macro - sector consolidation in Europe and among EU- Large Asia and EU-growing economies (Latam,
Slide 44: Empower MB geographical footprint
Empower MB geographical footprint Core Europe New geographies Mature but large market in which Mediobanca Entering high growth markets, meeting still has a sub-optimal market share customers’ needs, covering 3 fast-developing economies: Turkey, Mexico, China Reinforce continental European bran
Slide 45: Leverage on IB industry secular trends
Leverage on IB industry secular trends Banking disintermediation, low-yield environment and sovereign debt Needs of crisis have enhanced the role of institutional investors, looking for yields institutional investors MB to intermediate these needs by further exploiting CapMkts platform, setting
Slide 46: Private banking
Private banking State of progress Actions Capital-light business, generating recurrent fees Consolidate market share in domestic market and profits and existing offshore presence through: Contribution to Group revenue pool still too hiring high profile bankers small but material at profit le
Slide 47: Moving toward the right mix of capital & geographies
Moving toward the right mix of capital & geographies 1. Our strengths 2. Positioning as a specialized operator 3. Group strategic guidelines 4. Targets
Slide 48: CIB targets: balanced business model to deliver growth and return
CIB targets: balanced business model to deliver growth and return B3 compliant business model to deliver growth and returns on low cost/risk basis on sustainable (domestic)/increasing FY16 revenues: €1bn, CAGR +10% (international) market shares 85% from client business 45% non-domestic Enhanci
Slide 49: Group Retail Strategy
Group Retail Strategy Gian Luca Sichel, CEO Compass and CheBanca!
Slide 50: The Italian retail banking arena
The Italian retail banking arena SCENARIO PLAYERS CUSTOMERS Regulatory pressure Crowded arena (800+ brands) Increasing disaffection towards though recent M&As banks and bankers Domestic decline/stagnation on GDP and customer/enterprise “Overbanked” populations Declining trust in personal
Slide 51: Getting in with a distinctive and value driven positioning
Getting in with a distinctive and value driven positioning Customer distribution vs asset s (%, €, aged 18+) Divisional Retail Banks 45% 40% 35% 2.4m 30% current customers 25% 0.5m current customers 20% 15% Asset Management 10% Private Banking 5% 0% Without bank Low mass Mass Low affluent Top afflue
Slide 52: Compass: Leveraging on a unique franchise
Compass Leveraging on a unique franchise 52
Slide 53: Agenda
Agenda ◢ Business model and key success factors ◢ Strategic guidelines ◢ Closing remarks 53
Slide 54: Current business model has been shaped with "Linea" M&A
Current business model has been shaped with "Linea" M&A Acquisition Merge 2006 2007 2008 2009 2010 2011 2012 2013 Compass stand-alone New Compass Integration ◢ 100% of production via ◢ IT migration 1◢ Goals proprietary branches ◢ Incorporation Growing in size ◢ High risk / high return portfolio ◢ Cr
Slide 55: We delivered continuous business growth in these five years …
We delivered continuous business growth in these five years … Compass Market Share on Yearly New Volumes M&A Phase 11.4% 9.8% 10.0% 8.3% 7.3% 6.6% 4.2% 2007 2008 2009 2010 2011 2012 1Q2013 COMPASS Rank 5th 4th 3rd 2nd 1st Agos-Ducato Market Share 15,6% 16,1% 15,1% 12,3% 11,2% Source: Assofin Quarter
Slide 56: … with a good profitability over the cycle
… whit a good profitability over the cycle ROAC (%*) 14% 14% 10% 7% 4% 2008/09 2009/10 2010/11 2011/12 2012/13* *Allocated K = 8% RWAs; 9m annualised 56
Slide 57: Growth and profitability delivered on the back of five strengths
Growth and profitability delivered on the back of five strengths 1 Effective distributive model 5 2 People Statistics driven championing Compass business Leading and Specialized Operator 3 4 Value driven Industrialized decisions collection process 57
Slide 58: Effective distributive model ...
Effective distributive model ... IT platform Credit policy Distributive channels CRM Distributive channels Personal Loans Credit Cards Compass Partnership/ JV Salary Loans Point of sale Loans proprietary network ~ 60 co-branded 18% credit cards 33% Insurance 158 branches Linea Compass contribution B
Slide 59: … based on a strong proprietary branch network …
… based on a strong proprietary branch network … Compass Branch Network ◢ 158 branches covering all of Italy: • 54 in northern Italy 1 0 branches • 46 in central Italy 23 3 1-3 branches 9 10 4-8 branches • 58 in southern Italy 4 9 >9 branches 13 4 ◢ Branch locations are constantly monitored and eval
Slide 60: … and Compass’s ability "to deal" with key partners …
… and Compass’s ability "to deal" with key partners … 1 2 3 4 Channels Distribution & Insurance Banks Agents Automotive network ◢ 50 banks partnered ◢ 30 distribution ◢ 30 distribution ◢ 12 distribution Key numbers ◢ +5,000 bank branches agreements agreements agreements ◢ +14,000 Poste ◢ 25,000 reta
Slide 61: … allowing Compass to obtain distribution power equivalent to 5,000 bank branches
… allowing Compass to obtain distribution power equivalent to 5,000 bank branches Top 10 banks by number of branches (*) 5,056 5,051 4,279 2,688 1,923 1,766 1,296 912 886 775 677 ISP Compass UCI MPS POP UBI BPER BNL CARIPARMA BPM CARIGE (*) Source: Bank of Italy. Only domestic branches are considere
Slide 62: Business is driven by an in-depth statistical approach …
Business is driven by an in-depth statistical approach … Direct Underwriting Collection marketing score strategy ◢ Short-term redemption ◢ 30 acceptance scorecards ◢ Collection strategy with differentiated cut-off scorecards based on: ◢ Customer-life-time cross- triggers selling • expected collectio
Slide 63: …and a highly industrialized collection process …
…and a highly industrialized collection process … Phone DBT Instalment Phone Collection Door-to-door Door-to-door Phone Door-to-door Door-to-door Long-term due date Collection Door-to-door Collection Collection Collection Collection Collection recovery and sale Collection T0 +8 +30 +60 +90 +120 +150
Slide 64: … and efficient NPL management process allows for a clean book
… and efficient NPL management process allows for a clean book NPL massive NPL progressive sale sale Efficiency through massive benchmarks, Efficiency through detailed information about the single debtor scores and statistical segmentation (salary status, financial profile, properties, guarantors) ◢
Slide 65: The ultimate decision is “value-right price” (not “volume”) driven
The ultimate decision is “value-right price” (not “volume”) driven Value progression ¹(%) ◢ Risk due to its implicit volatility managed 4.9 5.0 5.1 with conservative approach in the value 4.6 equation 4.1 4.2 3.9 3.4 ◢ Pricing decisions based on target value ◢ Minimum value required per product/chan
Slide 66: Last but not least, capable of championing in people management
Last but not least, capable of championing in people management ◢1 Strong investments aimed at training professionals coupled with providing them with credible career paths (here facts matter!) ◢2 A large basin of internal talent complemented by few specific external hires (know-how gap filling appr
Slide 67: Agenda
Agenda ◢ Business model and key success factors ◢ Key highlights of 2013-16 Business Plan Core Business New Projects ◢ Closing remarks 67
Slide 68: The consumer finance market has been declining for years
The consumer finance market has been declining for 5 years and slight recovery is expected in 2014 Consumption and Consumer Credit Consumer Credit Y-on-Y variations (%) Volumes and Y-on-Y variations (€bn, %) 10 9,5 30,0% 60 5 20,0% 1 1,4 1,5 50 -0,3 0,1 9,5% 0 -0,8 10,0% -1,6 -2,2 -2,2 40 -3,4 -2,7
Slide 69: Strategic Plan Guidelines
Strategic Plan Guidelines Scenario Consumer Credit Market Regulatory Market Economic cycle is weak and market Declining for 5 years, expected slight Increased pressure and stricter volatility expected to persist recovery as of 2014 distribution boundaries expected 1 Launch new products to diversify
Slide 70: Current product breakdown will be maintained …
Current product breakdown will be maintained … Key Drivers €2.6bn €5.0bn €5.8bn ◢ Personal loans have gained and will keep the “half-total” position as they account for largest 1% risk adjusted return (RAR). 6% 6% 7% ◢ Credit cards have more than tripled in weight 20% 21% due to their increased cont
Slide 71: … and core business profitability optimized by key levers
… and core business profitability optimized by 5 key levers ◢ Strict focus on NPLs (improved early collection, new incentives schemes for collectors, tighter control) ◢ More indepth use of behavioural indicators to anticipate defaults Portfolio ◢ Continuous scorecard ◢ Zero budgeting Management impr
Slide 72: Agenda
Agenda ◢ Business model and key success factors ◢ Key highlights of 2013-16 Business Plan Core Business New Projects ◢ Closing remarks 72
Slide 73: Business paradigm change: from “transaction based” to “relationship based”
Business paradigm change: from current “transaction based” to “relationship based” ◢ A dominant market position will be granted to those who can Compass’s vision occupy this strategic crossroads … ◢ "… become the preferred ◢ ... players from different sectors (telecoms, large retailers, partner for
Slide 74: Compass Pay: targeting a huge market potential …
Compass Pay: targeting a huge market potential … 8 million customers are unbanked (16% of the adult population compared to a Scenario European average of 7%) 6 million customers have less than €10,000 of assets and are under-banked Italian population (%, millions) Italian customer segmentation (%, m
Slide 75: … seeking financial inclusion at low cost, with embedded lending opportunities
… seeking financial inclusion at low cost, with embedded lending opportunities and on-line functionalities Mobile Payment Paying Account E-Wallet Debt Card On-line Lending Pre-paid Card Money Transfer Card "instant issuing" 75
Slide 76: Agenda
Agenda ◢ Business model and key success factors ◢ Key highlights of 2013-16 Business Plan ◢ Closing remarks 76
Slide 77: To conclude, we have set challenging targets in terms of profitability and sustainable growth
To conclude, we have set challenging targets in terms of profitability and sustainable growth, which will be met thanks to our recognized assets … 1 Strong brand recognition 2 Large client base with absolute levels of satisfaction 3 Widespread network distribution with unique expertise 4 Outstanding
Slide 78: … while the new model reduces corporate risk at 360° …
… while the new model reduces corporate risk at 360° … Long-term value drivers 1 ◢ Reinforce our core business … by “ring-fencing” our customers Occupying the crossroads ◢ Address new customers’ needs starting from “unbanked" = targets Owning the relationship 2 ◢ Reduce credit risk due to wider beha
Slide 79: … all this at a limited execution risk!
… all this at a limited execution risk! ◢ Building blocks based on existing database and operating systems ◢ Sales strategy starting from owned customers Strong leverage on existing ◢ Adapting current lending know-how and workflows to the new customers’ interfaces platforms ◢ Exploiting cards and co
Slide 80: Compass: Leveraging on a unique franchise
Compass Leveraging on a unique franchise 80
Slide 81: Set to be the leading digital omni-channel bank
Set to be the leading digital omni-channel bank
Slide 82: Agenda
AGENDA Business model and key success factors Key highlights of 2013-16 Business Plan Closing remarks 82
Slide 83: Back in 2008… launching another “me too” bank would have been madness
BACK IN 2008… LAUNCHING ANOTHER “ME TOO” BANK WOULD HAVE BEEN MADNESS … 800 brands (<10 genuinely online) % of% Families withwith of Families account account 100 100 77 78 77 82 78 82 34,000+ branches 80 80 60 60 33 million bank accounts 40 40 19 19 19 16 19 16 20 20 92%+ families with at least 1 ac
Slide 84: … We needed a breakthrough positioning (Blue Ocean)
Fasi del ciclo di vita di CheBanca! – Avvio Multicanale … WE NEEDED A BREAKTHROUGH POSITIONING (BLUE OCEAN) Area Traditional Bank CheBanca! Standard & transparent yet PRICING Negotiated & not transparent competitive Branch-centric Customer-centric SERVICE Digitally evolved Other channels
Slide 85: Did it work? Yes! €12bn deposits
DID IT WORK? YES! AuM (€bn) Clients Direct funding No. of clients (K) €12bn deposits with more than 500,000 clients! 14.000 600 505 519 12.000 500 342 430 10.000 400 8.000 213 300 6.000 11.8 12.2 9.6 10.0 200 4.000 6.2 2.000 100 6 0 0 0 2008 2009 2010 2011 2012 March 2013 85
Slide 86: 1. Thanks to a real multichannel proposition…
1. THANKS TO A REAL MULTYCHANNEL PROPOSITION… 2012 product sales split by channel 2% 4% 10% 7% 8% 10% 9% 8% 6% 15% 9% 9% 4% 5% 25% 79% 78% 81% 81% 50% Che Banca! Western Europe Southern Europe Central Europe Eastern Europe As of April 2013 Branch Internet Customer Center Other Source: Multichannel B
Slide 87: 2. An innovative branch concept and staff quality
2. AN INNOVATIVE BRANCH CONCEPT AND STAFF QUALITY 87
Slide 88: 3. A growing usage of remote channel over time
3. A GROWING USAGE OF REMOTE CHANNEL OVER TIME Channels usage over time 11% 11% 33% 31% 31% 35% Only33% Web 18% 18% 35% 47% 47% Direct Channel 21% 21% 22% 22% 20% 20% 50% 50% 22% 22% Multi Channel 32% 32% 36% 36% 30% 30% 21% 21% Only Branches 21% 21% 15% 10% 14% 14% 12% 12% 15% 10% First year (openi
Slide 89: 4. Our clients are: “smart”
4. OUR CLIENTS ARE: “SMART” Web, new devices and social networks CB! CLIENTS NATIONAL AVERAGE 93 Browse on Internet 73 59 Smartphone / Tablet owner 31 54 On social network 37 Said Yes (%) Source: MPS Marketing Research - March 2013 89
Slide 90: … Affluent …
… AFFLUENT … Client distribution (%) Deposit distribution (%) Average Deposit/Client (€K) Above €150K 5% 5% 37 €30 to 150K 28% 30% 38% 54% Above €150K +76% 21 Up to €30K 67% 65% 52% 39% €30 to 150K 10% Up to €30K 7% CheBanca! Avg. Italian banks CheBanca! Avg. Italian banks CheBanca! Avg. Italian ban
Slide 91: …Highly satisfied with us and with strong cross-selling potential
…HIGHLY SATISFIED WITH US AND WITH STRONG CROSS-SELLING POTENTIAL Higher satisfaction… …results in increasing cross-selling Feb2013: launching new WEB Current Account (zero cost on-line): great success among existing customer (45% of sales) and new ones (sales volume >X3!) Digital Signature from Avg
Slide 92: Agenda
AGENDA Business model and key success factors Key highlights of 2013-16 Business Plan Closing remarks 92
Slide 93: Mission: to be the leading digitally omni-channel Italian bank
MISSION: TO BE THE LEADING DIGITALLY OMNI-CHANNEL ITALIAN BANK FIVE STRATEGIC PILLARS 1 Leverage on Retail industry new trends 2 Growing digital omni-channel banking customers 3 Complete products and services offering 4 Increase efficiency 5 Exploiting group synergies STRONG OPTIONS VALUE FOR MEDIOB
Slide 94: Technology is changing the way we live…
1 TECHNOLOGY IS CHANGING THE WAY WE LIVE… In Italy… 60% of families have 45mln people have 25mln people connect 3 mln people connect a PC a cell phone via smartphone via tablet Source: KPMG based on Nielsen and Audiweb data 94
Slide 95: …and the way we do banking
1 …AND THE WAY WE DO BANKING Online banking usage Percentage1, 2011 or latest available 100 “Self-first” Norway I Netherlands 90 Finland Sweden Denmark 80 Italy still lagging 3 -5 yrs behind, while 70 Luxembourg CheBanca!... “Multi- channel” Canada 60 Belgium 7 -10 yrs II United States France German
Slide 96: CheBanca! is well ahead in the digital banking revolution …
1 CHEBANCA! IS WELL AHEAD IN THE DIGITAL BANKING REVOLUTION … Sales split by channel: Branch Direct channels* European Retail banking Benchmark CheBanca! Today Tomorrow (2015E) 38% 49% 51% 53% 84% 77% 62% 51% 49% 47% 16% 23% Current Deposit Current Deposit Current Deposit Account Account Account A
Slide 97: …Ready to be the first mover in virtual banking
1 …READY TO BE THE FIRST MOVER IN VIRTUAL BANKING MISSION Ease, accessibility and transparency Today… …Tomorrow Advanced digital and Main bank, share of wallet, responsive CRM affluent targeting Know your clients Physical vs Virtual relationship Building TRUST beyond physical walls Omni-channel: any
Slide 98: We are well positioned to attract new banking customers …
2 WE ARE WELL POSITIONED TO ATTRACT NEW BANKING CUSTOMERS … Key driving factors when choosing to switch bank Quality of service Fees Interest rates Ease of use Quality of Advice Accessibility / convenience ATM locations Branch / Bank locations Product availability Personal relationship Brand image /
Slide 99: … to fish in the blue ocean!
2 … TO FISH IN THE BLUE OCEAN! CheBanca! scores much higher results on key driving factors when choosing to switch bank 5.0 CHEBANCA! MAIN ITALIAN RETAIL BANKS 4.5 4.0 3.5 3.0 FEES ALWAYS TRY TO EASY TO PRODUCTS QUALIFIED OFFER SUITABLE EASE OF USE ALWAYS A STEP FORWARD BRAND IMAGE REPUTATION DO BET
Slide 100: Building a truly customer-centric model …
2 BUILDING A TRULY CUSTOMER-CENTRIC MODEL … Re-design business processes and technology for the new “consum’attore” Enhance customer Offer the best product for Allow real omni-channel experience each customer where mobility is key Each customer is unique “The Campaign Cube” Project “ Mobile”: leader
Slide 101: … to increase number of current account clients
2 … TO INCREASE NUMBER OF CURRENT ACCOUNT CLIENTS Current accounts stock and cross-selling ratio (# thousands, percentage) Cross-selling ratio 1.3x 1.7x 300 +150% 120 Current Account stock FY 2013 FY 2016 101
Slide 102: … while increasing our share of wallet ...
3 … WHILE INCREASING OUR SHARE OF WALLET ... Until now, the crisis has forced customers to look In a "back-to-normal" scenario the amount invested for safe returns, thus favoring term deposits in TD will be limited to excess liquidity The amount invested in TD represented more Therefore the
Slide 103: … via the completion of product/service offering
3 … VIA THE COMPLETION OF PRODUCT/SERVICE OFFERING Objective 1: Objective 2: “Increase new customers and “Increase share of wallet of our / or new AuM” customers” Products Products Web current account Investment products NEW!! Term deposit Mediobanca and third party Hook: Push: Mortgage bonds f
Slide 104: Focus: launch of asset management
3 FOCUS: LAUNCH OF ASSET MANAGEMENT WHO? WHAT? HOW? Guidelines Asset management selection Leverage existing affluent Open- and satisfied customer architec- + Partner 1 Partner 2 Inhouse ture base to build an open platform for investment products Light advisory model focused on simple investment pro
Slide 105: Assets evolution
3 Assets evolution €bn 12 0 10 Deposits Current Focus on “current 1 Account account” growth 11 9 Term deposit 4 2 Managed funds AUM Developing a managed fund offering 1 2 Other 0 1 FY 13 FY 16 105
Slide 106: … we will maximize efficiency
4 … WE WILL MAXIMIZE EFFICIENCY Exploiting scale economies Fixed cost per product in stock Guidelines -30 100 Refocus of sales force 70 Strong focus on efficiency and processes optimization across FY 13 (BASE) FY 16 the whole bank: exploiting scale And improving efficiency economies Variable c
Slide 107: Exploiting group synergies to boost revenues and gain efficiency
5 EXPLOITING GROUP SYNERGIES TO BOOST REVENUES AND GAIN EFFICIENCY Area of synergy Leveraging existing capabilities in the Group: Revenues Personal loans & Cards Investments CRM & x-sell Already working together: Sell new personal loans Distributors & partners Improve credit cards ap
Slide 108: Agenda
AGENDA Business model and key success factors Key highlights of 2013-16 Business Plan Closing remarks 108
Slide 109: CheBanca!: a straight and scalable source of value for the Group
CHEBANCA!: A STRAIGHT AND SCALABLE SOURCE OF VALUE FOR THE GROUP 1. CheBanca! represented a radical new departure in the way retail banking is perceived and managed in Italy 2. The trajectory started in 2008 was the right one … • creating a new brand and market positioning • attracting new clients a
Slide 110: Consumer & Retail: increasing size and depth of the retail franchise
Consumer & Retail: increasing size and depth of the retail franchise Compass Loans up to €11bn, CAGR +4% Develop asset-light business Preserve efficiency and asset quality FY16 revenues: €1bn, CAGR +7% ROAC = 13-14% ROAC16 = 10-11% CheBanca! Lowering cost of funding Grow and remix to
Slide 111: Closing remarks
Closing remarks Alberto Nagel, Mediobanca Group CEO
Slide 112: Main steps envisaged in the plan
Main steps envisaged in the plan Reduce equity exposure and optimize use of capital Develop non-domestic CIB revenues Invest in human talent and technology innovation to grow fee-generating/capital-light businesses Maintain strong focus on risks and asset quality 112
Slide 113: Main goals to be achieved
Main goals to be achieved Simpler, more valuable banking group … … focused on 3 specialized profitable businesses (CIB, Retail, WM) … … generating growing, cost/risk efficient, diversified revenue pool … … able to deliver sustainable profitability over the cycle 113
Slide 114: Mediobanca 2016 main targets
Mediobanca 2016 main targets Banking revenues: €2.1bn, CAGR +10% Mediobanca Cost of risk = 150bps Group ROE = 10-11% B3 CT1¹ = 11-12%, payout 40% NSFR > 100% CIB & PB Consumer & Retail MAAM² Revenues up to 15% Revenues €1bn, CAGR +10% Revenues €1bn, CAGR +7% of Group banking ROAC = 12-13% ROAC = 10-
Slide 115: Mediobanca Group Strategic guidelines update
Mediobanca Group Strategic guidelines update Milan, 21 June 2013
Slide 116: Disclaimer
Disclaimer This presentation contains certain forward-looking statements, estimates and targets with respect to the operating results, financial condition and business of the Mediobanca Banking Group. Such statements and information, although based upon Mediobanca’s best knowledge at present, are ce
Slide 117: Investor contacts
Investor contacts Mediobanca Group Investor Relations Piazzetta Cuccia 1, 20121 Milan, Italy Jessica Spina: (0039) 02-8829.860 Luisa Demaria: (0039) 02-8829.647 Email: investor.relations@mediobanca.it http://www.mediobanca.it 117