European Bank Barometer

34
European Bank Barometer Weaker confidence and continued internal focus makes for a poor 2013 outlook Autumn 2012

description

Ernst & Young’s European Banking Barometer is a bi-annual study to determine the views of senior bankers across the major banking markets in Europe. The research focuses on the current macro-economic environment and how it will impact their organization and the banking industry as a whole over the next six months.

Transcript of European Bank Barometer

Page 1: European Bank Barometer

European Bank Barometer

Weaker confidence and continued internal

focus makes for a poor 2013 outlook

Autumn 2012

Page 2: European Bank Barometer

About the study

Ernst & Young’s European Banking Barometer is a bi-annual study to determine the views of senior

bankers across the major banking markets in Europe. The research focuses on the current macro-

economic environment and how it will impact their organization and the banking industry as a whole over

the next six months.

The Autumn / Winter 2012 Barometer consists of 269 interviews with senior bankers across 11 markets

in Europe – Austria, Belgium, France, Germany, Italy, the Netherlands, the Nordics, Poland, Spain,

Switzerland and the UK.

The fieldwork, consisting of telephone interviews and online questionnaires, was conducted throughout

Autumn 2012 by two external research agencies on Ernst & Young’s behalf. The aim was to interview

senior bankers at a range of institutions representing at least 50% of the market, defined as assets

owned.

Interviews were not conducted with subsidiaries of member / group banks, and a range of bank types

were interviewed in each market to ensure a fair reflection of the industry in each country.

The results are presented in an aggregate format and shown in percentages. Please note that where

charts do not add up to 100%, it is because participants either chose not to answer the question or

selected ‘Don’t know’ or ‘Not applicable’ as their answer. Where possible we've compared answers

against those given in Spring 2012 but some questions have changed or are new.

We would like to thank all the research participants for their contribution to the study.

Page 2 European Bank Barometer Survey results: Belgium

Page 3: European Bank Barometer

European Overview

Further cost cutting measures, restricted lending and consolidation pressures will define an even more cautious

banking industry in the next six months.

Cost cutting to bite in first half of 2013 with more job losses as crisis refuses to fade

► Cost cutting is now second only to compulsory regulation and risk management in European banks’ priority list.

► Cutting costs, streamlining processes and minimizing non-essential spend are all now in the top five priorities of banks

for the next six months.

► Forty-five percent of European banks expect headcount to decrease in the next six months as they struggle to control

costs in the low-growth environment.

► Banks in the Netherlands and the UK will be worst affected with 70% and 64% of banks respectively expecting to

decrease their headcount.

► Banks in the Nordics are more optimistic but even in this region 22% are expecting to reduce headcount.

► Most cuts will be in head office functions with 58% of banks expecting cuts in this area.

► The biggest cuts are expected from the universal and corporate / investment banking sectors, where over half of

respondents expect to make headcount reductions.

Growing concerns about the European economy and sovereign debt crisis dominate the industry

► There are rising concerns about the impact of the Eurozone debt crisis in the next six months.

► Banks in Spain, France, Switzerland and Italy are most worried. Banks in the Netherlands and Belgium are the least

worried.

► Macro-economic worries continue to dominate the European banking industry with banks split on whether their

economy will remain the same (40%) or worsen (42%).

► The outlook is worse now then when we launched the Spring 2012 edition of the European Banking Barometer.

Page 3 European Bank Barometer Survey results: Belgium

Page 4: European Bank Barometer

European Overview

Actions in 2013 will result in fewer banks, many of them much smaller, as they struggle with current business

models and the capital intensive environment

► The industry will be reshaped through consolidation, asset sales and joint ventures, with 47% of banks expecting to

see significant consolidation happening in their markets within the next three years.

► Almost all Swiss respondents and 78% of Spanish respondents anticipate consolidation, but just 1 in 10 in the UK,

and none in Belgium do.

► Industry consolidation is most anticipated in wealth management and private banking. Specialist banks are least likely

to see consolidation.

► Some 30% of banks surveyed intend to sell assets in the next six months, with Spanish and UK banks likely to be the

most active.

Banks are placing renewed emphasis on increasing cash reserves and deleveraging

► Pressure to build capital buffers means that banks are pushing to increase the size of their cash reserves through a

mix of actions.

► Fifty-six percent plan to introduce more incentives to boost customer deposits, heightening the war for deposits in

some markets.

► Fifty-three percent are aiming to reduce the size of their balance sheet.

Credit remains tight across Europe and banks are increasingly nervous about the impact of non-performing

loans on their books, which is having a knock-on effect on their lending policies

► Eighty-five percent of banks expect provisions to remain at their current level or increase in the short-term.

► Worst hit are Poland, Spain and Italy where 67%, 56% and 54% of respondents respectively expect to increase

provisions. Best performing are the Nordics where only 23% expect an increase in provisions, closely followed by 30%

in Austria and 32% in the UK.

Page 4 European Bank Barometer Survey results: Belgium

Page 5: European Bank Barometer

European Bank Barometer Survey results: Belgium Page 5

Economic environment & financial markets

Page 6: European Bank Barometer

Belgian banks less confident than European average

Percentage of respondents answering Spring 2012: What’s your outlook for the business environment over the

next six months?

Autumn 2012 Spring 2012

Page 6 European Bank Barometer Survey results: Belgium

4 3

36 24

36

43

24 28

2

0

20

40

60

80

100

Belgium Europe

Very negative Slightly negative

Neutral Slightly positive

Very positive

How do you expect the general economic outlook in your country to change over the next six months?

Comments:

• Compared to Spring 2012 Belgian banks have become less confident

Page 7: European Bank Barometer

European banks show indications of a fall in optimism regarding the economic outlook over the next six months

Percentage of respondents answering

Autumn 2012 Spring 2012

41

4

11

6

26

11

38

4

37

19

20

27

59

30

17

48

47

36

48

11

39

67

80

32

37

59

78

26

42

26

48

52

41

33

0 20 40 60 80 100

UK

Switzerland

Spain

Poland

Nordics

Netherlands

Italy

Germany

France

Europe

Belgium

Austria

Improve Remain at today’s levels Worsen

51

13

38

18

25

31

34

29

28

30

24

24

43

63

28

63

44

42

42

49

40

43

36

41

6

25

34

18

31

27

24

22

32

27

40

35

0 20 40 60 80 100

UK

Switzerland

Spain

Poland

Nordics

Netherlands

Italy

Germany

France

Europe

Belgium

Austria

Positive Neutral Negative

Spring 2012: What’s your outlook for the business environment over the

next six months?

Page 7 European Bank Barometer Survey results: Belgium

How do you expect the general economic outlook in your country to change over the next six months?

Comments:

• Compared to Spring 2012 Belgian banks have become less optimistic in Autumn 2012. None of the Belgian

banks expects the economy to improve in the next six months.

• UK is most optimistic with 41% foreseeing an improvement, closely followed by Italy and France. Poland is

the most pessimistic country: 78% worsening.

Page 8: European Bank Barometer

European Bank Barometer Survey results: Belgium Page 8

European debt crisis

Page 9: European Bank Barometer

Belgian banks expect a decreased impact of the sovereign debt crisis over the next six months

28 20

42

38

30 42

0

20

40

60

80

100

Belgium Europe

No impact Yes, a minor impact Yes, a substantial impact

Autumn 2012 Spring 2012

33

3

50

17

17

45

26

9

0

20

40

60

80

100

Belgium Europe

Significantly decreased impact Slightly decreased impact

About the same Slightly increased impact

Significantly increased impact

Page 9 European Bank Barometer Survey results: Belgium

What level of impact do you think the Eurozone sovereign debt crisis will have on the banking sector in your country over the next six months, in comparison to the previous six months?

Comments:

• Compared to the Europe, Belgian banks are much more optimistic. 20% of the European banks expect a

decreased impact against 83% of the Belgian banks.

• In Europe 35% of the banks expect an increased impact of the sovereign debt crisis over the next six months

Page 10: European Bank Barometer

Although there is a slight improvement in the sentiment at a European level, there are some notable exceptions

Autumn 2012 Spring 2012

36

41

67

17

17

15

44

32

44

35

20

55

37

11

72

70

60

31

52

41

45

17

50

9

22

22

11

13

25

26

16

15

20

83

30

0 20 40 60 80 100

UK

Switzerland

Spain

Poland

Nordics

Netherlands

Italy

Germany

France

Europe

Belgium

Austria

Increased About the same Decreased

33

63

56

42

29

32

44

55

28

42

30

64

41

25

24

48

42

38

34

31

54

38

42

28

27

13

20

10

29

30

22

14

18

20

28

8

0 20 40 60 80 100

UK

Switzerland

Spain

Poland

Nordics

Netherlands

Italy

Germany

France

Europe

Belgium

Austria

Yes, a substantial impact Yes, a minor impact No impact

Page 10 European Bank Barometer Survey results: Belgium

What level of impact do you think the Eurozone sovereign debt crisis will have on the banking sector in your country over the next six months, in comparison to the previous six months? (cont’d)

Comments:

• Belgium is the most optimistic country with 83% of the banks foreseeing a decreased impact of the sovereign

debt crisis. Spain is by far the most pessimistic country with 67% of the banks foreseeing an increased impact.

• Besides Belgium, in Autumn 2012 the Netherlands is the only country with more banks expecting an decreased

impact than an increased impact (25% decreased vs 15% increased)

Page 11: European Bank Barometer

European Bank Barometer Survey results: Belgium Page 11

Business outlook and focus areas

Page 12: European Bank Barometer

Belgian banks less confident than in Spring 2012

3

50

21

39

50 32

5

0

20

40

60

80

100

Belgium Europe

Weaken significantly Weaken slightly

Stay the same Strengthen slightly

Strengthen significantly

0,2 10 10

70 67

20 23

0

20

40

60

80

100

Belgium Europe

Very poorly Fairly poorly Fairly well Very well

Autumn 2012 Spring 2012

Page 12 European Bank Barometer Survey results: Belgium

How do you expect your bank’s overall performance to change over the next six months?

Comments:

• Confidence levels of Belgian banks decreased sharply. In Spring 2012 10% of the banks expected that their

performance would weaken over the next six months, against 50% in Autumn 2012.

• Compared to European levels Belgian banks became much less confident in Autumn 2012, while in Spring 2012

the outlook of Belgian banks was almost identical to the European levels

Page 13: European Bank Barometer

Major changes in sentiment were evident across Europe

Autumn 2012 Spring 2012

4

7

6

9

13

2

4

5

59

31

30

18

36

25

38

23

26

32

50

44

32

50

41

29

55

45

38

35

41

39

33

9

15

22

41

15

10

33

26

21

50

22

6

15

6

4

3

0 20 40 60 80 100

UK

Switzerland

Spain

Poland

Nordics

Netherlands

Italy

Germany

France

Europe

Belgium

Austria

Strengthen significantly Strengthen slightly Stay the same Weaken slightly Weaken significantly

24

13

35

50

18

32

18

14

16

23

20

6

68

63

53

48

76

64

76

69

74

67

70

68

8

25

10

2

6

4

6

16

10

10

10

26

2

0,2

0 20 40 60 80 100

UK

Switzerland

Spain

Poland

Nordics

Netherlands

Italy

Germany

France

Europe

Belgium

Austria

Very well Fairly well Fairly poorly Very poorly

Page 13 European Bank Barometer Survey results: Belgium

How do you expect your bank’s overall performance to change over the next six months? (cont’d)

Comments:

• The UK is most optimistic with 59% saying the performance will strengthen.

• Polish and Dutch banks changed from the most positive outlook in Spring 2012 to the countries with the slightest

positivity in Autumn 2012.

Page 14: European Bank Barometer

Banks are reacting to continued economic uncertainty by increasing loan loss provisions...

Over the next six months, what do you expect your bank’s total provisions against loan losses to

do?

European Banking Barometer – Autumn / Winter 2012 Page 14

Autumn 2012

2

12

41

35

9

Decrease significantly Decrease slightly Remain at current levels Increase slightly Increase significantly

19

17

9

10

18

6

7

9

10

32

44

37

50

14

20

36

40

33

35

67

20

45

52

37

28

59

45

33

42

37

41

33

40

23

4

7

14

20

13

8

19

12

30

6

5

5

4

4

2

UK

Switzerland

Spain

Poland

Nordics

Netherlands

Italy

Germany

France

Europe

Belgium

Austria

Comments: • The economic uncertainty is reflected in 44% of banks expecting loan loss provisions (LLPs) to increase

over the next 6 month and a further 41% expecting them to remain at their current (elevated) levels. While LLPs remain high it is unlikely that banks will seek to increase lending significantly, constraining revenue growth and potentially perpetuating the economic malaise.

Page 15: European Bank Barometer

And tightening lending policies

How do you expect the corporate lending policies of banks in your country to change in each of

the following sectors over the next six months?

European Banking Barometer – Autumn / Winter 2012 Page 15

12

24

25

26

26

27

30

31

32

33

33

35

38

39

41

10

8

13

11

8

10

11

13

10

12

12

11

10

13

12

Other

Chemicals and pharmaceuticals

Craft

Commodities

Mechanical engineering

Utilities

Shipping

Tech., media and telecomms

Automotive

Infrastructure

Transport

Retail

Services

Construction

Real estate

More restrictive Less restrictive

15

20

20

21

22

24

26

27

31

33

35

40

27

25

19

17

22

19

26

16

20

13

24

22

Healthcare

Information technology

Commercial and professional services

Media and telecommunications

Manufacturing and industrials (incl. chemicals, eng.)

Energy, mining and minerals

SMEs

Retail and consumer products

Financial services

Transport (incl. automotive and shipping)

Commercial real estate

Construction

Comments: • The outlook for lending across a number of industries will weaken in 1H2013, with construction and

commercial real estate (CRE) looking particularly pessimistic. In addition to the relatively poor health of these sectors, this also reflects the higher risk-weightings attached to CRE.

Autumn 2012 Spring 2012

Page 16: European Bank Barometer

13

18

18

20

23

23

23

25

30

40

48

50

28

38

15

30

15

30

25

30

15

10

18

13

Healthcare

SMEs

Commercial services**

Manufacturing**

Media and telecomms

Information technology

Commercial real estate

Construction

Retail**

Financial services

Energy and mining**

Transport**

Austria

Germany

Belgium

Italy

France

Netherlands

Construction and property will feel the greatest lending policy tightening in 1H2013 How do you expect the corporate lending policies of banks in your country to change in each of

the following sectors over the next six months?*

European Banking Barometer – Autumn / Winter 2012 Page 16

22

22

25

25

28

28

28

31

31

34

38

50

22

13

25

22

13

25

25

19

28

19

22

22

SMEs

Retail**

Information technology

Commercial services**

Transport**

Healthcare

Energy and mining**

Manufacturing**

Financial services

Media and telecomms

Commercial real estate

Construction

5

11

11

16

16

16

21

26

26

32

42

47

32

37

47

11

32

26

26

37

5

21

16

16

Information technology

Media and telecomms

Healthcare

Transport**

Retail**

Manufacturing**

Commercial real estate

SMEs

Energy and mining**

Commercial services**

Financial services

Construction

10

10

10

10

20

20

20

30

40

40

30

30

20

30

20

20

30

40

20

30

10

20

Information technology

Commercial real estate

Retail**

Media and telecomms

Financial services

Commercial services**

SMEs

Healthcare

Energy and mining

Construction

Transport**

Manufacturing*

33

33

33

33

67

67

33

33

Media and telecomms

Healthcare

Financial services

Energy and mining**

Construction

Commercial real estate

Transport**

SMEs

Retail**

Manufacturing**

Information technology

Commercial services**

8

15

15

31

31

38

38

38

46

46

54

69

23

15

8

15

15

8

15

23

23

15

Energy and mining**

Manufacturing**

Healthcare

SMEs

Information technology

Retail**

Media and telecomms

Commercial services**

Transport**

Financial services

Construction

Commercial real estate

* Numbers are percentage of respondents answering.

** Manufacturing includes industries, chemicals and engineering; Transport includes automotive and shipping, Retail includes consumer products, Energy and mining includes metails and commercial services includes professional services.

Where totals do not add up to 100%, remaining respondents answered ‘Remain unchanged' or ‘Don't know'. Where no data is shown all respondents answered ‘Remain unchanged' or ‘Don't know’.

More restrictive Less restrictive

Page 17: European Bank Barometer

Nordics

Switzerland

Poland

UK

Spain

Construction and property will feel the greatest lending policy tightening in 1H2013 How do you expect the corporate lending policies of banks in your country to change in each of

the following sectors over the next six months?*

European Banking Barometer – Autumn / Winter 2012 Page 17

7

14

14

21

21

29

29

29

50

50

7

14

14

29

21

7

14

21

7

14

7

Healthcare

Energy and mining**

Manufacturing**

SMEs

Commercial services**

Retail**

Media and telecomms

Transport**

Information technology

Financial services

Construction

Commercial real estate

6

6

6

12

18

24

29

35

35

35

35

41

41

24

47

6

29

24

35

18

29

12

29

12

Healthcare

Energy and mining**

Commercial services**

Media and telecomms

Financial services

Construction

SMEs

Transport**

Manufacturing**

Information technology

Commercial real estate

Retail**

6

6

13

13

13

13

13

13

31

31

38

31

44

50

6

38

19

38

25

25

38

25

13

Commercial services**

Manufacturing**

Information technology

Transport**

Retail*

Media and telecomms

Healthcare

Financial services

Energy and mining

SMEs

Commercial real estate

Construction

24

24

24

29

35

35

41

41

41

53

53

59

18

29

6

6

29

18

24

18

12

24

35

35

Manufacturing**

Information technology

Healthcare

Media and telecomms

Financial services

Energy and mining**

Transport**

SMEs

Commercial services**

Retail*

Commercial real estate

Construction

10

10

15

15

20

25

25

30

30

30

40

40

10

25

20

25

15

20

5

10

25

5

25

Media and telecomms

Healthcare

Information technology

Energy and mining**

Commercial services**

Manufacturing**

Financial services

Transport**

Retail**

Construction

SMEs

Commercial real estate

More restrictive Less restrictive

* Numbers are percentage of respondents answering.

** Manufacturing includes industries, chemicals and engineering; Transport includes automotive and shipping, Retail includes consumer products, Energy and mining includes metails and commercial services includes professional services.

Where totals do not add up to 100%, remaining respondents answered ‘Remain unchanged' or ‘Don't know'. Where no data is shown all respondents answered ‘Remain unchanged' or ‘Don't know’.

Page 18: European Bank Barometer

Autumn 2012

As well as shrinking their balance sheets, banks are focused on making them stronger and more stable

How likely are the banks in your market to be engaged in the following activities over the next 6

months?

European Banking Barometer – Autumn / Winter 2012 Page 18

4

7

9

7

10

10

10

17

23

28

28

26

27

34

43

39

39

43

43

47

45

39

32

33

29

13

12

14

14

13

12

10

5

9

7

5

4

4

3

2

Lending to customers

Selling assets in markets outside Europe

Selling assets outside the home market

Accessing central bank funding programs

Seeking funding from wholesale capital markets

Reducing loan to deposit ratios

Reducing the size of the balance sheet

Introducing / increasing incentives to increase customer deposits

Significantly more Slightly more About the same Slightly less Signficantly less

Comments:

• As banks prepare for Basel III implementation there continues to be a heightened focus on stable deposits and delivering the balance sheet. However, increased competition is likely to push up the cost of these deposits and, given the depressed economy, asset sales may not deliver the required returns.

Page 19: European Bank Barometer

Austria

Germany

Belgium

Italy

France

Netherlands

Simplifying and strengthening the balance sheet will continue to be a priority across Europe

How likely are the banks in your market to be engaged in the following activities over the next 6

months?*

European Banking Barometer – Autumn / Winter 2012 Page 19

* Numbers are percentage of respondents answering.

10

30

20

40

20

20

30

50

60

70

40

60

70

70

10

30

10

30

20

10

10

10

60

10

10

Lending to customers

Selling assets outside Europe

Selling assets outside home market

Accessing central bank funding programs

Seeking funding from wholesale capital markets

Reducing loan to deposit ratios

Reducing the balance sheet

Incentives to increase customer deposits

33

17

17

17

17

33

50

33

17

17

50

17

33

33

17

33

67

83

67

17

17

17

50

33

17

11

11

19

4

26

11

11

11

19

30

30

41

15

56

56

41

30

37

41

37

44

22

26

37

41

19

7

11

11

7

4

11

4

4

7

4

4

4

5

5

5

10

15

15

5

50

40

25

50

20

40

50

30

40

40

55

35

50

35

40

55

5

10

15

5

15

10

10

10

5

3

3

10

10

23

8

3

23

21

28

33

33

23

41

46

26

33

44

33

44

44

38

28

44

31

18

10

13

8

10

18

8

13

8

13

3

3

5

Significantly more Slightly more About the same Slightly less Significantly less

8

4

2

6

2

4

12

21

30

26

21

18

12

27

40

46

48

55

60

43

50

50

34

23

14

13

11

22

26

13

10

6

2

6

10

10

6

4

4

Lending to customers

Selling assets outside Europe

Selling assets outside home market

Accessing central bank funding programs

Seeking funding from wholesale capital markets

Reducing loan to deposit ratios

Reducing the balance sheet

Incentives to increase customer deposits

Page 20: European Bank Barometer

9

14

14

9

9

18

5

23

27

36

32

32

14

36

36

36

45

36

32

45

68

45

41

32

14

14

23

14

5

14

9

5

5

5

Significantly more Slightly more About the same Slightly less Significantly less

14

12

4

4

7

11

4

37

23

27

11

19

33

37

42

44

23

19

63

62

33

41

35

11

23

31

19

4

22

7

15

7

18

12

4

12

4

4

4

Lending to customers

Selling assets outside Europe

Selling assets outside home market

Accessing central bank funding programs

Seeking funding from wholesale capital markets

Reducing loan to deposit ratios

Reducing the balance sheet

Incentives to increase customer deposits

Nordics

Switzerland

Poland

UK

Spain

Simplifying and strengthening the balance sheet will continue to be a priority across Europe

How likely are the banks in your market to be engaged in the following activities over the next 6

months?*

European Banking Barometer – Autumn / Winter 2012 Page 20

* Numbers are percentage of respondents answering.

7

15

15

22

11

15

15

15

30

48

59

41

41

41

44

41

37

30

22

30

33

11

19

30

26

4

4

4

11

26

22

11

4

4

4

7

4

6

6

17

22

6

39

11

6

11

22

28

39

61

39

11

56

56

50

44

11

11

22

56

11

11

11

11

22

22

17

28

22

11

6

4

4

4

4

22

26

9

22

39

26

22

22

48

57

70

61

39

61

52

43

22

13

17

9

22

9

13

13

22

9

9

9

Lending to customers

Selling assets outside Europe

Selling assets outside home market

Accessing central bank funding programs

Seeking funding from wholesale capital markets

Reducing loan to deposit ratios

Reducing the balance sheet

Incentives to increase customer deposits

Page 21: European Bank Barometer

European banks expect most of Deposits and Retail Banking

Percentage of respondents answering

Europe – Autumn 2012 Europe – Spring 2012

Page 21 European Bank Barometer Survey results: Belgium

3

4

5

9

5

5

13

3

5

15

20

22

37

27

7

35

20

29

44

41

41

32

36

5

35

40

42

16

22

16

12

16

2

11

18

15

9

5

6

3

5

3

1

7

2

13

9

9

7

11

78

5

11

7

0 20 40 60 80 100

Transaction advisory (e.g., M&A)

Securities trading

Securities services

Retail banking

Private wealth management/AM

Other

Deposit business

Debt and equity issuance

Corporate banking

Very good Fairly good

Neither good nor poor Fairly poor

Very poor Does not apply

26

20

37

28

22

39

34

37

34

44

41

36

44

38

9

17

8

10

11

8

11

1

6

1

2

2

3

3

27

23

11

19

29

7

15

0 20 40 60 80 100

Transaction advisory (e.g., M&A)

Securities trading

Retail banking

Private wealth management/AM

Other

Deposit business

Corporate banking

Good Fairly good Fairly poor Poor Does not apply

Please note, that chart may not add up to 100% due to the respondents not answering the respondent selecting ‘Don’t know’ or ‘Not applicable’

How do you rate the outlook for your bank over the next six months in each of the following business lines?

Comments:

• In Autumn as well as Spring 2012 the outlook for Deposit Business and Retail Banking is most positive.

• Overall the outlook for all business lines in Autumn 2012 is considered less optimistic than it was in Spring

2012

Page 22: European Bank Barometer

Banks will be net sellers of assets in 1H2013

Which, if any, of the following is your bank likely to consider over the next six months in relation

to the countries in which it operates?*

European Banking Barometer – Autumn / Winter 2012 Page 22

Autumn 2012

* Numbers are percentage of respondents answering (respondents could select more than one option).

Please note, chart may not add up to 100% due to respondents selecting ‘Don’t know’ or ‘Not applicable’.

34

29

18

30

None of these Partnerships or joint ventures Buy assets Sell assets

55

19

52

17

22

30

38

18

33

30

17

30

18

11

19

11

17

15

10

12

56

18

33

10

41

19

37

33

17

50

33

18

26

29

50

10

23

52

7

39

43

15

28

52

22

34

70

UK

Switzerland

Spain

Poland

Nordics

Netherlands

Italy

Germany

France

Europe

Belgium

Austria

Comments:

• Banks will continue to de-leverage during 1H2013 as they sell assets to reduce risk and build capital ahead of Basel III implementation. In some geographies, the selling of assets has also been prompted by competition regulation (e.g., UK) and attempts to stabilize the banking sector (e.g., Spain).

Page 23: European Bank Barometer

European Bank Barometer Survey results: Belgium Page 23

Employment

Page 24: European Bank Barometer

European Bank Barometer Survey results: Belgium Page 24

Half of Belgian banks expect headcount decrease over next six months

18

50

58

33

24 17

0%

20%

40%

60%

80%

100%

Spring 2012 Autumn 2012

2 8 15

37

58

34

22 18

3 3

0%

20%

40%

60%

80%

100%

Spring 2012 Autumn 2012

Belgium Europe

Decrease significantly Decrease slightly Stay the same Increase slightly Increase significantly

Percentage of respondents answering

Over the next six months, do you expect the headcount of your bank to … ?

Comments:

• Compared to Spring 2012 more Belgian banks expect to see their headcount decrease. From 18% in

Spring to 50% in Autumn 2012.

• Compared to the European average Belgian banks in Autumn 2012 have become much less positive

about headcount developments than they were in Spring.

Page 25: European Bank Barometer

Most European banks expect headcount decrease

Percentage of respondents answering

Autumn 2012 Spring 2012

9

26

26

11

30

15

33

18

19

21

17

27

37

37

33

48

15

23

40

41

34

33

44

64

37

37

56

22

70

44

42

41

45

50

56

0 20 40 60 80 100

UK

Switzerland

Spain

Poland

Nordics

Netherlands

Italy

Germany

France

Europe

Belgium

Austria

36

25

14

23

27

31

20

12

38

25

24

26

52

63

54

61

55

50

72

65

56

58

58

58

12

13

32

16

18

19

8

22

6

17

18

16

0 20 40 60 80 100

UK

Switzerland

Spain

Poland

Nordics

Netherlands

Italy

Germany

France

Europe

Belgium

Austria

Page 25 European Bank Barometer Survey results: Belgium

Increase Stay the same Decrease

Over the next six months, do you expect the headcount of your bank to … ? (cont’d)

Comments:

• Only the Nordics expect headcount growth during the second half of 2012. In the first half of 2012, 9 out of

11 countries expected headcount growth.

• The Netherlands and UK see headcount shrinking considerably (70% and 64%).

• In Autumn 2012 in all European countries, more banks expect headcount decrease than in Spring 2012.

Page 26: European Bank Barometer

Autumn 2012 Spring 2012

Head office and administrative functions will face the biggest cutbacks

Which areas of the business do you expect headcount to be most impacted?*

European Banking Barometer – Autumn / Winter 2012 Page 26

12

12

14

14

15

15

16

16

17

19

21

12

31

15

17

9

22

19

12

20

IT

Finance / tax

Sales

Product / business unit

Technology

Other

Retail

Marketing

HR

Operations

Decrease Increase

* Numbers are percentage of respondents answering that headcount would either increase or decrease.

11

54

20

27

11

13

58

39

30

20

19

10

Head office functions / admin

Retail and business banking

Investment banking

Private wealth management / AM

Corporate banking

Other

Comments: • Retail banking is likely to see an increase in staff numbers over the coming months, in line with bankers’

expectations of increased demand for retail products. Investment banking divisions and head office functions will be most impacted as banks are forced to reshape business and operating models.

Page 27: European Bank Barometer

European Banking Barometer – Autumn / Winter 2012 Page 27

Business priorities and product line expectations

Page 28: European Bank Barometer

Belgian banks don’t expect consolidation over the next six months

Autumn 2012 Spring 2012

100

49

4

47

0

20

40

60

80

100

Belgium Europe

No Don’t know Yes

49 37

37 50

14 13

0

20

40

60

80

100

Belgium Europe

No

Yes, in the medium to long term

Yes, in the short term (within the next 12 months)

Page 28 European Bank Barometer Survey results: Belgium

Percentage of respondents answering

Do you expect there to be significant consolidation of the banking sector in your country?

Comments:

• Contrary to Belgium, the European banks are evenly spread. Half of the banks expect consolidation and

the other half doesn’t expect consolidation over the next six months.

Page 29: European Bank Barometer

Expectations in Europe in relation to likely consolidation vary considerably by country

Autumn 2012 Spring 2012

9

96

78

44

48

25

41

34

48

47

70

5

6

15

8

11

4

86

4

22

50

52

60

51

66

41

49

100

30

0 20 40 60 80 100

UK

Switzerland

Spain

Poland

Nordics

Netherlands

Italy

Germany

France

Europe

Belgium

Austria

Yes Don’t know No

10

13

31

6

21

14

4

12

13

14

14

42

50

51

37

46

39

62

74

43

50

37

71

48

38

18

57

33

47

34

27

45

37

49

14

0 20 40 60 80 100

UK

Switzerland

Spain

Poland

Nordics

Netherlands

Italy

Germany

France

Europe

Belgium

Austria

Yes, in the short term Yes, in the medium to long term No

Page 29 European Bank Barometer Survey results: Belgium

Percentage of respondents answering

Do you expect there to be significant consolidation of the banking sector in your country? (cont’d)

Comments:

• Expectations in Europe vary considerably; Belgium and UK expect (almost) no consolidation (0% and 9%

respectively), while 96% of the Swiss banks expects banking consolidation

Page 30: European Bank Barometer

12

13

13

17

17

18

24

24

26

27

50

52

53

57

65

0 20 40 60 80 100

Reducing the number of products

Off-shoring

New foreign markets/internationalisation

Establishing new business segments

Disposing of assets or businesses

Acquiring new assets or businesses

New remunterations systems

Current changes in financial reporting/IFRSs

Developing/introducing new products

Restructuring business operations

Streamlining processes

Cutting costs

Minimising all non-essential expenditure

Preparing for Basel III

Risk management

Belgian banks focus on cutting costs and risk management over the next six months

Percentages with score 1 to 3

Belgium Europe

17

17

17

17

33

33

33

33

50

50

67

83

83

0 20 40 60 80 100

Reducing the number of products

Disposing of assets or businesses

Off-shoring

New foreign markets/internationalisation

Establishing new business segments

Acquiring new assets or businesses

Streamlining processes

Restructuring business operations

New remuneration systems

Current changes in financial reporting/IFRSs

Preparing for Basel III

Minimising all non-essential expenditure

Developing/introducing new products

Risk management

Cutting costs

Page 30 European Bank Barometer Survey results: Belgium

How important are the following activities likely to be for your bank over the next six months?

Comments:

• Belgian banks focus more or less on the same activities as the European banks. Biggest difference is the much

bigger focus on developing new products: 67% of the Belgian banks focuses on this activity against 26% of the

European banks

Page 31: European Bank Barometer

7

11

12

14

15

19

20

20

22

23

26

41

44

56

58

Restructuring business operations

Reducing the number of products

Current changes in financial reporting / IFRSs

Disposing of assets or businesses

Acquiring new assets or businesses

Establishing new business segments

Off-shoring

New foreign markets / internationalization

New remuneration systems

Developing / introducing new products

Streamlining processes

Cutting costs

Minimizing all non-essential expenditure

Risk management

Preparing for Basel III

Across Europe, the growth agenda continues to be overshadowed by a focus on risk, region and cost

How important are the following activities likely to be for you bank over the next six months?

European Banking Barometer – Autumn / Winter 2012 Page 31

Austria

Germany

Belgium

Italy

France

Netherlands

21

24

26

28

30

34

37

44

47

51

55

56

59

59

74

Reducing the number of products

Acquiring new assets or businesses

Current changes in financial reporting / IFRSs

Disposing of assets or businesses

Off-shoring

New foreign markets / internationalization

Establishing new business segments

Developing / introducing new products

Restructuring business operations

New remuneration systems

Preparing for Basel III

Streamlining processes

Minimizing all non-essential expenditure

Cutting costs

Risk management

17

17

17

17

33

33

33

33

50

50

67

83

83

Reducing the number of products

Disposing of assets or businesses

Off-shoring

New foreign markets / internationalization

Establishing new business segments

Acquiring new assets or businesses

Streamlining processes

Restructuring business operations

New remuneration systems

Current changes in financial reporting / IFRSs

Preparing for Basel III

Minimizing all non-essential expenditure

Developing / introducing new products

Risk management

Cutting costs

10

10

10

10

10

10

20

40

50

70

70

80

90

Reducing the number of products

New foreign markets / internationalization

Off-shoring

New remuneration systems

Establishing new business segments

Disposing of assets or businesses

Restructuring business operations

Acquiring new assets or businesses

Developing / introducing new products

Cutting costs

Current changes in financial reporting / IFRSs

Risk management

Minimizing all non-essential expenditure

Streamlining processes

Preparing for Basel III

5

16

20

20

21

22

30

30

42

45

45

50

50

50

75

Off-shoring

Reducing the number of products

New foreign markets / internationalization

Establishing new business segments

Disposing of assets or businesses

Developing / introducing new products

New remuneration systems

Acquiring new assets or businesses

Restructuring business operations

Streamlining processes

Current changes in financial reporting / IFRSs

Preparing for Basel III

Minimizing all non-essential expenditure

Cutting costs

Risk management

* Percentages with scores 8 to 10.

2

2

6

10

10

14

16

16

18

21

56

56

64

65

72

Off-shoring

New foreign markets / internationalization

Establishing new business segments

Reducing the number of products

New remunterations systems

Disposing of assets or businesses

Developing / introducing new products

Acquiring new assets or businesses

Restructuring business operations

Current changes in financial reporting / IFRSs

Minimizing all non-essential expenditure

Cutting costs

Streamlining processes

Preparing for Basel III

Risk management

Page 32: European Bank Barometer

Nordics

Switzerland

Poland

UK

Spain

Across Europe, the growth agenda continues to be overshadowed by a focus on risk, region and cost

How important are the following activities likely to be for you bank over the next six months?*

European Banking Barometer – Autumn / Winter 2012 Page 32

10

10

14

14

15

19

19

24

30

39

39

48

55

55

59

New foreign markets / internationalization

Establishing new business segments

Reducing the number of products

Developing / introducing new products

Acquiring new assets or businesses

New remuneration systems

Current changes in financial reporting / IFRSs

Off-shoring

Disposing of assets or businesses

Restructuring business operations

Preparing for Basel III

Streamlining processes

Minimizing all non-essential expenditure

Cutting costs

Risk management

4

4

4

7

11

11

18

18

19

19

52

53

56

60

60

Reducing the number of products

Off-shoring

Current changes in financial reporting / IFRSs

Disposing of assets or businesses

Establishing new business segments

Developing / introducing new products

New remuneration systems

Acquiring new assets or businesses

New foreign markets / internationalization

Restructuring business operations

Cutting costs

Risk management

Streamlining processes

Preparing for Basel III

Minimizing all non-essential expenditure

15

19

19

22

23

30

31

33

37

37

44

46

70

70

77

New foreign markets / internationalization

Streamlining processes

Reducing the number of products

Acquiring new assets or businesses

Off-shoring

Establishing new business segments

Current changes in financial reporting / IFRSs

New remuneration systems

Restructuring business operations

Disposing of assets or businesses

Developing / introducing new products

Preparing for Basel III

Minimizing all non-essential expenditure

Cutting costs

Risk management

0

6

6

6

6

6

11

18

22

23

28

50

51

56

66

New foreign markets / internationalization

Reducing the number of products

Off-shoring

Establishing new business segments

Disposing of assets or businesses

Acquiring new assets or businesses

Minimizing all non-essential expenditure

Restructuring business operations

New remuneration systems

Developing / introducing new products

Current changes in financial reporting / IFRSs

Preparing for Basel III

Streamlining processes

Cutting costs

Risk management

0

4

9

9

13

17

17

17

26

30

39

44

56

61

61

Disposing of assets or businesses

New foreign markets / internationalization

Off-shoring

New remunterations systems

Reducing the number of products

Establishing new business segments

Restructuring business operations

Acquiring new assets or businesses

Current changes in financial reporting / IFRSs

Developing / introducing new products

Risk management

Minimizing all non-essential expenditure

Cutting costs

Streamlining processes

Preparing for Basel III

* Percentages with score 8 to 10.

Page 33: European Bank Barometer

How do you rate the outlook for your bank over the next six months in each of the following

business lines?*

* Numbers are percentage of respondents answering.

Autumn 2012 responses are based on a five-point scale and spring 2012 responses are based on a four-point scale.

Please note, chart may not add up to 100% due to respondents selecting ‘Don’t know’ or ‘Not applicable’.

Autumn 2012 Spring 2012

The outlook across all business lines is significantly weaker going into 1H2013

European Banking Barometer – Autumn / Winter 2012 Page 33

26

20

37

28

22

39

34

37

34

44

41

36

44

38

9

17

8

10

11

8

11

1

6

1

2

2

3

3

Transaction advisory (e.g., M&A)

Securities trading

Retail banking

Private wealth management / AM

Other

Deposit business

Corporate banking

Good Fairly good Fairly poor Poor

Comments: Uncertainty continues to dampen investment banking activity as companies delay major investments and organic expansion. Reflecting this, banks expect deposits to increase, which will at least help those with funding challenges. Investment banks expect tougher conditions in the first half of 2013. Securities grew rapidly to become the principal contributor to investment banking revenues by 2008, but the volatility of returns through the crisis have led a number of banks to shift their focus to steadier business lines. The outlook for transaction advisory was also poor, as companies would rather consolidate or grow organically than expand through acquisition.

3

4

5

9

5

13

3

5

14

20

22

37

27

35

20

31

43

40

41

32

36

35

40

45

16

22

16

12

16

11

18

16

9

5

6

3

5

1

7

2

Transaction advisory (e.g., M&A)

Securities trading

Securities services

Retail banking

Private wealth management / AM

Deposit business

Debt and equity issuance

Corporate banking

Very good Fairly good Neither good nor poor Fairly poor Very poor

Page 34: European Bank Barometer

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Page 34 European Bank Barometer Survey results: Belgium