Investor Presentation 2007 Results Cars Alliance 2005-1 Most Innovative Asset Backed Deal Cars...
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Investor Presentation
2007 Results
Cars Alliance 2005-1Most Innovative
Asset Backed Deal
Cars Alliance 2002-1Consumer Finance
Deal of the Year
Cars Alliance 2002-1Best Securitization
of 2002
RCI Banque/ Renault3rd Best Corporate Issuer in 2007
2
Disclaimer
This presentation is not, and is not intended to be, an offer to sell any security or the solicitation of an offer to purchase any security.
The following presentation has been prepared to provide information about RCI Banque; Information have been obtained from sources believed to be reliable. None warrant its completeness or accuracy.
This presentation may contain forward-looking statements, in particular statements regarding our plans, strategies, prospects and expectations regarding our business. You should be aware that these statements and any other forward-looking statements, in this presentation, only reflect our expectation and are not guarantees of performance near and in the future.
These statements involve risks, uncertainties and assumptions about events or conditions and is indented only to illustrate hypothetical results under those assumptions. Actual events or conditions are unlikely to be consistent with, and may differ materially from, those assumed. In addition not all relevant events or conditions may have been considered in developing such assumptions. Accordingly, actual results will vary and the variations may be material. Prospective investors should understand such assumption and evaluate whether they are appropriate for their purposes.
4
A Car Finance activity with no direct or indirect links with
subprime activity
No activity in the US.
Cost of risk under control, resulting from stable origination, underwriting and collection processes.
93 % of assets in 10 western European countries (mainly France, Germany, UK, Spain and Italy).
No off-balance sheet exposure to any credit risk.
A prime auto loans portfolio and a sound liquidity position
A strong liquidity position
3,1 Bn€ liquidity reserve at 2007 end: + M€ 5 361 Committed back-up lines.
+ M€ 592 Cash.+ M€ 1 825 ECB eligible collateral. - M€ 4 701 CD/ECP outstanding.
Funding of assets with longer dated liabilities.
No drawing on back-up lines.
ABS programs with long WAL, no repayments due in 2008 and a potential increase in ECB eligible outstanding (retained ABS notes) in case of portfolio growth.
5
Customer financing (1.8 to 2 years WAL)
• Pricing is based on “cost + margin” approach to achieve ROE target• Increased credit margins are compensated by the drop in absolute level of interest
rates.
• The banking environment has allowed for significant price increases in the last six months, without significant impact on new business.
Floor plan financing
• Dealer financing is generally indexed on Euribor 3 months.
• Short term cost of funds have remained stable (over Euribor) even if margins over EONIA have widened.
No impact of the liquidity crisis on profitability
6
16,0
17,9 17,7 17,7
14,5
17,2
4,65,5
5,0 4,95,5 5,3
10,3 9,79,1
10,6 10,509,5
dec- 02 dec- 03 dec- 04
I FRS
dec- 05
I FRS
dec- 06
I FRS
dec- 07
I FRS
Customer outstanding Floor plan outstanding New financing
373
457
491
460
295
442
189
316
256 266 311 305
15,7% 15,1%
13,6%
17,5%
15,5%
15,1%
2002 2003 2004 I FRS 2005 I FRS 2006 I FRS 2007 I FRS
Results before tax Results af ter tax ROE (without NRE)
2007 Results and ROE in line with 2006 …
Despite difficult automotive environment, RCI Banque maintains its customer outstanding.
ROE in line with 2006 and RCI Banque target
€Bn €M
7
484493
447463
351
294
171193
204 207 216 224267 260 244
-2
10-21
221
-3
36
-27 -16 -24
-100
0
100
200
300
400
500
600
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
I FRS
2005
I FRS
2006
I FRS
2007
I FRSIncome before taxes (without NRE) Non recurring elements (NRE)
MEUR
10,40%11,40%
12,70%11,70%
15,10%
10,80%10,30%
12,20%12,30%
12%
13,60%
15,70%
17,50%
15,50%15,10%
5%
7%
9%
11%
13%
15%
17%
19%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
IFRS
2005
IFRS
2006
IFRS
2007
IFRS
ROE
In%
… and historical performance. RCI Banque has shown very little volatility in result and profitability
over the last 15 years
8
22402305
22502222
1640
1934
8,08% 8,06%
9,14% 9,16%
13,60%
15,69%
17,45%
15,1%
8,12%
7,99%
6,98%6,96%
9,21%9,53%
8,85%8,25%
15,10%15,50%
2002 2003 2004 IFRS 2005 IFRS 2006 IFRS 2007 IFRS
Regulatory Net Worth Tier One
Ratio Cooke ROE on tier 1
In M€ 8% Tier 1 target drives dividend policy.
Basel 2: as of 01.01.08 RCI Banque has been authorized to use its advanced internal models for its 3 activities in 4 countries (representing 70% of the credit risk)
8 % Tier 1 target
10
French Bank under supervision of French « Commission Bancaire».
2 mains targets : • ROE ,• Integration in the marketing of
Renault/Nissan Alliance’s brands.
3 Main markets :• Retail,• Corporate,• Dealer.
93 % of assets in 10 western European countries.
Origination of credits only through car dealership.
« Stand alone » rating (one notch above Renault):
• Moody’s: C/A3/P2,• S&P: A-/A2,• FitchRatings: B/C A-/F2.
100% owned by Renault, RCI Banque is an autonomous Business Unit specialized in car financing and related services
11
UK
ARGENTINA
BRAZIL ALGERIA
POLAND
HUNGARY
MORROCOCOLOMBIA
RUSSIA
GERMANY
NETHERLANDS
SPAIN
AUSTRIA
SWITZERLAND
PORTUGAL
BELGIUM
ITALY
CROATIA / SLOVENIA
FRANCE
CZECH REP. / SLOVAKIA
ROMANIA
RENAULT sas
AUTOMOTIVEDIVISION
RCI Banque within the Renault Group
Renault +Nissan Activity
Renault Group Activity (Renault / Dacia / Samsung)
RCI Banque has a direct contribution to Renault’s consolidated operating margin.
100% 100%INTERNATIONALEUROPE
RCI Banque finances sales of Renault brands worldwide and Nissan mainly in Europe
SOUTH KOREA UKRAINE
SCANDINAVIA
12
Synergies between the captives and the carmaker
Captive FinanceCar Manufacturer
Proposes competitive
financial services
Proposes competitive
offer of vehicles
•Trusted brand
•Access to dealer channel
•Exclusive marketing programs
•Supports vehicle sales (faster turnover rate)•Customers buy more options•Higher customer satisfaction and loyalty•Dealer and International expansion•Profits and dividends (RENAULT)
13
Retail activity accounts for 50 % of the outstanding
Maintenance contracts Roadside assistance Extended warranties Replacement vehicles Insurance (credit, damage…) Fuel cards
Inventories (new cars, second hand cars, spare parts)
Standard loans: cash facilities medium term
loans, overdrafts
Financial lease with a buy-back given by the dealer
Operational lease w with the residual
value risk retained mainly by the Renault Group or dealers
Fleet Management (services and
management without financing)
Retail financing
Leasing
Balloon financing packages
Revolving cards
Personal loans
Debit/credit card
DEALER FINANCING
CORPORATE FINANCING
RETAIL FINANCING
SERVICES
Retail 54%
Dealers 24%
Corporates 22%
14
An international development in relationship with Renault…
SOUTH AMERICA• Argentina
• Brazil• Mexico
•Colombia
100% Subsidiaries Commercial Agreement JV Minority stake
CENTRAL EUROPE•Poland
• Czech Rep.• Slovakia•Croatia
• Hungary•Slovenia
EUROMED• Morocco•Algeria
• Romania• Russia•Ukraine
ASIA - AFRICA• South Korea
Germany19%
France34%
UK9% Italy
8%
others14%
Spain16%
Outstanding distribution
NORTHERN EUROPE•Denmark•Sweden•Finland•Norway
Outstanding outside the 10 historical European countries increased from 114 MEUR in 2000 to 1620 MEUR in 2007
15
SECOND PHASE
INITIAL PHASE
FEASIBILITY
OPPORTUNITIESMarkets for Renault and Nissan exceeding 15 000 vehicles / year
Under exclusive RCI Banque
responsibility
Usually commercial agreement with local bank
JV, JV+ or 100% RCI Banque according to feasibility study
Ste
ps
of
inte
rnat
ion
al d
eve
lop
men
t
Funding can be partially or totally centralized if the country transfer and convertibility risk rating is A- or better.
Provisioning of country risk exposure (total provision : 26MEUR at 2007 end, ie +8M vs 2006)
… but under RCI Banque control
16
Stability of the gross financial margin and results before tax, as % of average outstanding
Despite interest rates rise, the gross financial margin has been maintained.
Cost of risk is kept inside target (0.5%-0.7%)
the repurchase of 50% in previous UK JV has a non recurring negative impact on operating costs in 2007
*NRE: non recurring elements **In M€
In % of average outstandings
2002 20032004IFRS
2005IFRS
2006IFRS
2007 IFRS
Gross financial margin
Services and others products
Intermediation fees
4,22%
1,30%
-1,07%
4,48%
1,12%
-1,24%
4,41%
1,12%
-1,09%
4,52%
0,98%
-1,13%
4.46%
1.13%
-1.18%
4.38%
1.30%
-1.18%
Net banking Income 4.45% 4.36% 4,44% 4,38% 4,41% 4.50%
Cost of risk (customer and dealers)
Operating expenses
-0,78%
-1,95%
-0,68%
-1,91%
-0,54%
-1,76%
-0,72%
-1,63%
-0,59%
-1,68%
-0,64%
-1,78%
Results before tax 1,61% 1,87 2,04% 2.00% 2,12% 2,01%
Results before tax
(with NRE) In M€295 373 442 457 491 460
17
(0,59%)
(0,40%)
5,41
(0,65%)
17,73
2006IFRS
2007IFRS
2005IFRS
2004IFRS
20032002
(0,64%)(0,72%)(0,54%)(0,68%)(0,78%)Customer and Dealer cost of risk
17,3917,6016,4914,8013,70Customer average receivable(billion euros)
(0,63%)
4,59
(0,83%)
(0,51%)(0,18%)(0,47%)(0,39%)Dealer cost of risk
(0,69%)(0,86%)(0,57%)(0,78%)Customer cost of risk
5,475,305,235,10Dealer average receivable(billion euros)
Cost of Customer and Dealer Risk
18
67,88%
61,96%
59,77%61,44%
57,85%
63,43%
65,50%
69,87%71,57%
68,74%
3,31% 3,39%2,92% 3,41% 3,38% 3,58% 3,78% 3,20% 3,21%3,29%
50,00%
55,00%
60,00%
65,00%
70,00%
75,00%
1999 2000 2001 2002 2003 2004 2004IFRS
2005IFRS
2006IFRS
2007IFRS
Stable non performing loans ratio, and a conservative provisioning policy
3.39%3.29%3.20%3,78%3,58%3,38%3,41%2,92%
68.74%69.87%63.43%57,85%61,44%59,77%61,96%67,88%
2007 IFRS2006 IFRS2005 IFRS
200420032002200120001999
Non performing loans / Gross loans
Loan loss reserves / Non performing loans
3.31%
71.57%
20
While maintaining permanent liquidity reserve coming from:
• Assets being funded with longer dated liabilities
• Committed lines (undrawn)
• ECB eligible securities
• Cash invested in short term bank deposits only
A cautious financial policy
Aiming to protect the commercial margin
• No exposure (direct or indirect) to any subprime assets, no activity in the US.
• Market risk kept at low level
• 25 % Risk division ratio applying to all banks prevents RCI Banque from lending more than 25 % of its equity to a single name (including Renault and Nissan). Limit mostly used by dealership
• Diversified sources of funding
• Centralized funding only in « single A » rated countries
21
Assets are funded with longer dated liabilities.
A recognized know how in ABS.
Sufficient potential portfolios to be securitized in order to deal with a major liquidity stress scenario (no access to unsecured funding during 12 months).
Access to ECB liquidity in case ABS market dries out
A conservative liquidity risk management
Liquidity Position of RCI Banque as of DECEMBER 31st 2007 (in M€)
assets
liabilities + back up lines+ assets eligible to ECB
liabilities
22
Liquidity Reserve remains high
Available Liquidity made of : bilateral committed lines :
– allocated by 35 international banks from 12 countries.– No covenant: no negative pledge, ownership, pari passu, cross default, material adverse change, rating triggers.
Asset Backed Notes eligible to ECB tenders.
Cash.
Liquidity Reserve = Available Liquidity – CD/CP Outstanding
344670
8551 387 1 825 1642
350
381
715440
592 625
-3 750-3 036
-3 703 -3 776-4 701 -4710
53405 3615 3785 3104 9684 658
-5 000
-3 000
-1 000
1 000
3 000
5 000
7 000
9 000
2003 2004 2005 2006 2007 February 2008
2 8971 602 3 077
2 983 3 1773 429
Committed credit lines
CD/ CPECB eligible securities
Cash and minimum reserves Liquidity reserves
5 352 6 019 6 880 7 205 7 778 7 607
Ava
ilable liq
uid
ityC
D/C
P
344670
8551 387 1 825 1642
350
381
715440
592 625
-3 750-3 036
-3 703 -3 776-4 701 -4710
53405 3615 3785 3104 9684 658
-5 000
-3 000
-1 000
1 000
3 000
5 000
7 000
9 000
2003 2004 2005 2006 2007 February 2008
2 8971 602 3 077
2 983 3 1773 429
Committed credit lines
CD/ CPECB eligible securities
Cash and minimum reserves Liquidity reserves
5 352 6 019 6 880 7 205 7 778 7 607
Ava
ilable liq
uid
ityC
D/C
P
2 8971 602 3 077
2 983 3 1773 429
Committed credit lines
CD/ CPECB eligible securities
Cash and minimum reserves Liquidity reserves
5 352 6 019 6 880 7 205 7 778 7 607
Ava
ilable liq
uid
ityC
D/C
P
Committed credit linesCommitted credit lines
CD/ CPCD/ CPECB eligible securitiesECB eligible securities
Cash and minimum reservesCash and minimum reserves Liquidity reservesLiquidity reserves
5 352 6 019 6 880 7 205 7 778 7 607
Ava
ilable liq
uid
ityC
D/C
P
23
Limited market risks
Interest rate risk:Low sensitivity exposure, daily control at group level (RCI global sensitivity exposure was 1.23 M€ for a 100 bps on December 31st 2007).
Foreign exchange risk: Low foreign exchange exposure due to funding in local currency (FX exposure on 31/12/07: 2,3 M€)
Counterparty risk:
99% of exposure (mainly on derivatives) with counterparties rated « single A » or above.
DAILY INTEREST RATES RISKS SENSITIVITY (January 2007-2008)
-15 000 000 -14 000 000 -13 000 000 -12 000 000 -11 000 000 -10 000 000 -9 000 000 -8 000 000 -7 000 000 -6 000 000 -5 000 000 -4 000 000 -3 000 000 -2 000 000 -1 000 000
01 000 0002 000 0003 000 0004 000 0005 000 0006 000 0007 000 0008 000 0009 000 000
10 000 00011 000 00012 000 00013 000 00014 000 00015 000 000
Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08
24
Securitization is used both for funding and increasing asset liquidity.
Assets Portfolio(no cherry picking
all receivable meeting eligibility critera are
sold)
Sale of receivables
Purchase price
SPV
Assets
Issuer
Underwriting
(only through dealership)
Market
Private Placement *Monthly re-issue to match portfolio fluctuation
* Generaly kept by RCI Banque as ECB collateral
Medium Term Senior NotesAAA
Medium Term Subordinated Notes
A
Short Term revolving NotesAAA
Short Term Subordinated Notes
A
Credit enhancement RCI Banque
ABS fully consolidated, first losses are kept by RCI Banque.
25
1680
7023
1409
4576
4225
743
2702
9091
3533
4701
3721
752
2002 2003 2004 2005 2006 2007
Equity Long term (Bonds, MTN,SSD)Public ABS (on B/S) Commercial PaperBanks Renault group
A balanced funding profile split between different sources and maturities.
Stand alone funding (without any Renault support) 4 ABS programs have been launched since 2002 leading to an increase of long term liabilities.
M€
51% 64%74%
70% 70% 66%
2002 2003 2004 2005 2006 2007
Long Term
Short Term
%
26
A balanced geographical funding diversification
6%
8%
23%
8%
5%
7%
34%35%
14%
5%
2%
5% 5%4%
25%
5%
10%
41%
27%
3%
27%
France Germany+Austria UK+I reland Benelux Spain+Portugal I taly Others
2005 2006 2007
2005: 5 636 M€ (wam: 3.4 years) 2006: 5 103 M€ (wam: 3.3 years) 2007: 3 679M€ (wam: 2.8 years)
Borrowings with initial maturity of one year and above
27
2008 funding plan
2008 expected asset growth:
400 to 800 M€ (2 to 4%)
relative cost will be key to final program
REDEMPTIONNEW
ISSUESNET
EMTN -3300 2500 -800
LT BANK BORROWINGS
-250 650 +400
ABS 0 1000 +1000
TOTAL -3550 +4150 +600
28
Standard & Poor’s, Moody's and Fitch carried out an individual analysis of RCI Banque and assigned a better rating than Renault’s.
A better long term rating mainly due to:• strong financial results.• banking status.• autonomous management.
Stable outlook on all RCI Banque’s ratings
RCI Banque Renault Nissan
CTCT LTLT FSFS LTLT LTLT
S&P’s A2 A- BBB + BBB+
Moody’s P2 A3 C Baa1 A3
Fitch F2 A- B/C BBB + A-
R&I A1 A A A
A stand alone rating, notched up from Renault’s
29
RCI Banque’s credit main strengths
Mono-activity business model with no diversification. “We do not expect any departure from this prudent and primarily profit-
oriented strategy”; S&P analysis 27/07/2007.
Strong stability in results. “RCI Banque’s overall margins are high and reflect its car financing activities” Moody’s analysis 20/11/2007.
No exposure on US economy, no exposure on subprime.A cost of risk kept inside target.
Strong liquidity profile resulting from cautious financial policy “Moody’s views RCI Banque’s liquidity as strong and sufficient to withstand a period of stress without significantly affecting the bank’s activities ” Moody’s analysis 20/11/2007.
31
Consumer loyalty
Customer loyalty rate of new vehicles renewals
Loyalty to Renault’s brandof new vehicles renewalsCASH
payment
55 %
RCI Banque
Financing
63 %
RCI loyalty inducing product Financing
78 %
+ 20 points
Sce : CCX 2004 G5
58 %
32
Renewal acceleration
2 cycles (14 years) :
• 50 % increase of renewal rate with RCI Financing.
• 100% increase of renewal rate with loyalty inducing products Financing.
Cash
RCI Loyalty inducing product
RCI Standard credit
Sce : average vehicle holding depending on payment method - Renewals VN CCX 2004 G5
33
Commercial Activity
Passenger car & Light Commercial Vehicle market *
Renault Group brands
MARKET SHARE
(%)
NISSAN MARKET
SHARE (%)
RCI Banque PENETRATION
RATE (%)
NUMBER OF NEW
VEHICLE CONTRACTS
processed
NEW FINANCING (€M)
Excluding cards and PL
NET loans OUTSTANDING
at YEAR-END (M€)
OF WHICH
DEALERS (€M)
2007 9.5% 2.0% 33.0% 747 115 8 418 21 623 5 127 Western Europe
2006 9.9% 2.2% 34.0% 829 556 9 077 21 935 5 013
2007 4.7% 1.4% 38.6% 125 583 1 455 4 442 869 of which Germany
2006 4.7% 1.6% 40.1% 154 504 1 690 4 795 887
2007 10.5% 2.9% 46.2% 132 169 1 657 3 738 690 of which Spain
2006 10.8% 3.2% 45.9% 140 929 1 735 3 802 741
2007 24.8% 1.7% 32.0% 279 438 3 283 8 009 2 135 of which France
2006 26.3% 1.7% 32.1% 287 829 3 380 7 807 1 984
2007 5.4% 3.0% 22.7% 74 120 734 2 062 418 of which UK
2006 6.0% 3.2% 29.1% 108 041 868 1 776 362
2007 5.3% 1.8% 35.3% 71 338 735 1 757 365 of which Italy
2006 5.6% 1.9% 32.7% 68 117 718 1 962 395
2007 3.1% 0.5% 29.4% 28 081 278 521 176 Brazil
2006 2.8% 0.3% 38.3% 27 502 241 371 100
2007 9.3% 0.2% 26.6% 31 916 387 334 0 South Korea
2006 10.0% 0.1% 12.7% 15 360 183 141 -
2007 15.3% 1.1% 29.4% 91 222 355 765 241 Rest of world**
2006 16.3% 0.4% 29.2% 73 618 235 536 137
2007 9.2% 1.6% 32.1% 898 334 9 438 23 243 5 544 Total RCI
2006 9.7% 1,8% 32,4% 946 036 9 737 22 983 5 250
*Figures refer to the passenger car and light utility vehicle markets.
**Rest of world: Poland, Czech Republic, Slovakia, Slovenia (consolidated in 2007), Hungary, Romania and Argentina.
34
No cost of risk evolution noticed during the last months
Public management report of RCI Banque ABS show no deterioration of the Delinquency
and loss Ratio of 2 majors credit portfolio since the crisis started.
Portfolio: Italian Customer Loans.
Full reporting available on http://www.securitisation-services.com (access can be asked on the web site).
Defaulted Receivable means mainly a receivable in respect of which at a given date, the amount as principal or interest in respect of such Receivable by the relevant Borrower is higher than 6 times the relevant instalment.
Recovery means any amount received by the Servicer in connection with any Defaulted Receivable.
35
Portfolio: French Customer Loans
Full reporting available on http://www.eurotitrisation.fr (access can be asked to the Management Company)
Defaulted Receivable means mainly an Instalment remains unpaid by the Borrower for at least 90 calendar days.
Recovery means any amount received by the Servicer in connection with any Defaulted Receivable.
No cost of risk evolution noticed during the last months
0,00%
0,50%
1,00%
1,50%
2,00%
2,50%
Annualized Delinquency Ratio (5)
0,00%0,50%1,00%1,50%2,00%2,50%3,00%3,50%4,00%4,50%
03/2
003
05/2
003
07/2
003
09/2
003
11/2
003
01/2
004
03/2
004
05/2
004
07/2
004
09/2
004
11/2
004
01/2
005
03/2
005
05/2
005
07/2
005
09/2
005
11/2
005
01/2
006
03/2
006
05/2
006
07/2
006
09/2
006
11/2
006
01/2
007
03/2
007
05/2
007
07/2
007
09/2
007
11/2
007
01/2
008
Annualized Default Rate (2) Annualized Recovery Rate (3)Gross Loss Ratio (annualized) (4)
36
RCI BanqueFinance Division - API MLV 4514 avenue du Pavé Neuf - 93168 Noisy le Grand Cedex – France
CFO : Antoine ROUSSELINPhone: 33 1 49 32 80 21 - Fax: 33 1 49 32 86 15
Group treasurer : Jean Marc SAUGIERPhone: 33 1 49 32 87 99 - Fax: 33 1 49 32 87 83 - [email protected]
Dealing Room :Nicolas DUC 33 1 48 15 75 04 - [email protected] Paul LABATE 33 1 48 15 75 04 - Jean-paul.Labate @rcibanque.comChristian DESCH 33 1 48 15 75 02 - [email protected] Nicolas CHAILLAN 33 1 48 15 75 03 - [email protected]
Banks & Communication : Michèle BELHASSEN 33 1 49 32 82 59 - [email protected] Alain MEYER 33 1 49 32 69 07 - [email protected] Thomas HUART 33 1 49 32 68 73 - [email protected]
Reuters : RCIDIAC
CONTACTS