Romania – Riding the Convergence Wave by Steven van...
Transcript of Romania – Riding the Convergence Wave by Steven van...
Capital Markets Day, September 2008 Slide 1
Romania – Riding the Convergence Wave
bySteven van Groningen
CEO Romania
Capital Markets Day, September 2008 Slide 2
6.6%
14.1%
9.3% 8.6%
4.9%
0%
5%
10%
15%
20%
2003 2004 2005 2006 2007
Inflation Increased in 2007, But Under Control
Source: Raiffeisen RESEARCH
Real GDP Growth
The GDP growth rate gained speed in Q2 on the back of acceleration of activity in all the sectors: services, industry, construction and agriculture.
Net exports had also a lower negative contribution to the GDP growth rate following the acceleration of the exports and the deceleration of imports in the last months
Real GDP Development
CPI Development, End of Period
Downward Inflation Trend Broken
Disinflation trend since 2000 broken in 2007 as the RON (Romania Leu) started to depreciate and food prices increased
Inflation should start to decline in 2nd half of 2008, but the persistence of the aggregate demand excess (fuelled by the rapid increase in wages and credit) might slow down the disinflation process
6.0%5.2%
8.5%
4.2%
7.9%
0%
2%
4%
6%
8%
10%
12%
2003 2004 2005 2006 2007
Investor Handbook Romania - Riding the Convergence Wave Page 53
Capital Markets Day, September 2008 Slide 3
Current Account Deficit Stabilized For the Moment
Source: National Institute of Statistics, Eurostat, Raiffeisen RESEARCH
Imports and Exports (% yoy) Exports, Imports and Trade Balance (Seas. Adjusted)
Foreign trade deficit and current account deficit remained almost unchanged in last quarters when expressed as % of GDP
FDI inflows amounted to € 1.6 bn in April: coverage of current account deficit by FDI inflows stood at 66.5% in January-April 2008
The risk remains that the current account deficit might increase
0%
10%
20%
30%
40%
May/04 Nov /04 May/05 Nov /05 May/06 Nov /06 May/07 Nov /07 May/08
Exports (% yoy, 3 months moving average)
Imports (% yoy, 3 months moving average)
0%
6%
12%
18%
24%
30%
36%
42%
48%
Q1/2001 Q1/2002 Q1/2003 Q1/2004 Q1/2005 Q1/2006 Q1/2007 Q1/2008
-18%
-12%
-6%
0%
6%
12%
18%
24%
30%
Trade balance (% of GDP, right hand side)Exports (% of GDP, left hand side)Imports (% of GDP, left hand side)
14.8%
Capital Markets Day, September 2008 Slide 4
Raiffeisen Bank; 6.1%
Alpha bank; 4.9%
Volksbank; 4.9%
UniCredit; 4.9%Banc Post (EFG Eurobank); 5.1%
Banca Transilvania;
5.3%
CEC; 4.0%
Others; 25.4%
BRD (SocGen); 15.0%
BCR; 24.4%
6.9%
9.5%10.5% 10.3%
10.0%
0%2%4%6%8%
10%12%
2003 2004 2005 2006 2007
Raiffeisen Number 3 in Increasingly Tough Market
Market Share of Romanian Banks in 20071 Market Share Development of Assets2
Market Share Development of Deposits2Market Share Development of Loans2
1 Based on total assets. 2 Based on local books (not including externalised assets).
7.2%
6.1%9.1% 9.3%
8.0%
0
1,000
2,000
3,000
4,000
5,000
6,000
2003 2004 2005 2006 2007
€ m
n
0%
2%
4%
6%
8%
10%
Total Assets Externalised Assets Market Share
7.1%
9.7%10.7% 10.0%
5.6%
0
1,000
2,000
3,000
4,000
2003 2004 2005 2006 2007
€ m
n
0%
2%
4%
6%
8%
10%
12%
Loans Externalised Loans Market Share Loans
Investor Handbook Romania - Riding the Convergence Wave Page 54
Capital Markets Day, September 2008 Slide 5
Strongly Customer Focused Strategy
Segments
Products
Distribution
Operations
Strategic GoalConsolidate position as one of the leading banks on the Romanian market while keeping a high profitability
Retail: expansion in all segmentsCorporate: focus on mid-market corporates for lendingTreasury and Investment Banking: tap into large potential of Romanian market
Provide universal banking products with increasing focus on moreadvanced products (asset management, insurance and investment banking)
Large network due to the expansion of last few years Strengthen alternative distribution channels: internet banking, mobile phone banking, call center and direct sales agents
Controlled end-to-end processes for increased quality and efficiencyHigh degree of centralization
Capital Markets Day, September 2008 Slide 6
Mid-Market Customers Offer Great Potential
Focus on maximising share of wallet through institutionalized customer account planning
75% of volume growth by adding depth to existing relationships
25% of volume growth by new client acquisitions (especially in real estate, construction, trading and services)
Market Share Development of Corporate Loans
Market Share Development of Corporate Deposits
Mid-market segment is becoming the main driver for revenue increase at corporate division level
Increase fee-based revenues from multinational and large local customers
7.4%
10.4%11.6% 11.8% 12.3%
0%
2%
4%
6%
8%
10%
12%
14%
2003 2004 2005 2006 2007
10.2%8.9% 9.4%
6.4%
5.3%
0
500
1,000
1,500
2,000
2,500
2003 2004 2005 2006 2007
€ m
n
0%
2%
4%
6%
8%
10%12%
14%
Loans Externalised Loans Market Share Loans
Investor Handbook Romania - Riding the Convergence Wave Page 55
Capital Markets Day, September 2008 Slide 7
Retail Customers Offer Good Risk/Return
Focus on high level of service standards
Match product expertise and financial discipline of specialist single product companies (monoliners)
Market Share Development of Retail Loans
6.4%
8.6% 9.1%7.9%
8.4%
0%
2%
4%
6%
8%
10%
12%
2003 2004 2005 2006 2007
Market Share Development of Retail Deposits
Introduction of affluent customer products
Capture future growth of the insurance sector to further increase fee based revenues
8.2%
15.1%
11.1%
5.9%
7.7%
0
400
800
1,200
1,600
2003 2004 2005 2006 2007
€ m
n
0%2%4%6%8%10%12%14%16%
Loans Externalised Loans Market Share Retail Loans
Capital Markets Day, September 2008 Slide 8
FX Lending: A Racehorse Under Control
Euro is the de facto reference rate in real estateNational bank regulations stimulate Euro lendingEuro loans seen as cheaper by clientMany believe the RON will appreciate over time
Development of Romanian RON vs Euro
Currency Structure of Retail Loans
Why does the market demand FX Lending?
Risk Mitigation Factors for FX Loans
FX lending is mainly collateralised i.e. for own home mortgages (not speculative buy-to-let) and has low loan to value ratios Mortgage loans have a long maturity and this mitigates the risk of higher repayments in the event of a devaluationRegular stress testing takes place
LCY
49%FCY
51%
3.0
3.5
4.0
Jul/0
7
Aug/07
Sep/0
7
Okt/0
7
Nov/07
Dez/07
Jän/
08
Feb/0
8
Mär/0
8
Apr/08
Mai/0
8
Jun/
08
+5%
-5%
Avg.
Investor Handbook Romania - Riding the Convergence Wave Page 56
Capital Markets Day, September 2008 Slide 9
Dynamic Branch Network Catch-Up
After completing turnaround projects in 2006 Raiffeisen kicked-off branch expansionDirect sales agents developing well, but the branch network still accounts for more than 90% of clients home bank relationship business
Network Bank Branch Expansion in Romania(1)
Urban concentration of branches is now near to the most developed EU countries4 full time employee units turn profitable in 6-7 months. Each branch costs € 100-150,000 to establishMost rural areas are not banked. The state savings bank and post office are the only banks consistently represented in rural areas
Population per Branch
0
2,000
4,000
6,000
8,000
10,000
12,000
Aus
tria
Ge
rma
nySw
itze
rland
Ne
the
rland
sBe
lgiu
mFi
nla
ndSw
ed
en
De
nma
rkIta
lySp
ain
Port
uga
lIre
land
Turk
ey
Russ
iaH
ung
ary
Cze
ch
Slo
vaki
aPo
land
Cro
atia
Serb
iaKo
sosv
oB&
HRo
ma
nia
/200
6Ro
ma
nia
/200
7
Source: McKinsey & Co., based on 2006 country data (1) Network bank only.
190 205 216
433467
266
2003 2004 2005 2006 2007 30/06/2008
Capital Markets Day, September 2008 Slide 10
Country Financials I
Revenues in € mn Total Expenses in € mn
Risk/Earnings Ratio Profit Before Tax in € mn
Cost/Income Ratio in %
ROE before tax*
* Based on NWB figures.
426
257
1-12/2007 1-6/2008
140
266
1-12/2007 1-6/2008
62.6%54.3%
0%
20%
40%
60%
80%
1-12/2007 1-6/2008
13.0%15.2%
0%
5%
10%
15%
20%
1-12/2007 1-6/2008
124
98
1-12/2007 1-6/2008
30.8%
42.8%
0%
20%
40%
60%
1-12/2007 1-6/2008
Investor Handbook Romania - Riding the Convergence Wave Page 57
Capital Markets Day, September 2008 Slide 11
31/12/2007 30/06/2008
Country Financials II
Total Assets in € mn Loans to Customers in € mn
Number of Employees Number of Branches
Deposits from Customers in € mn
Number of Customers
2,168,026 2,136,271
5,603 5,803
31/12/2007 30/06/2008
3,5324,188
31/12/2007 30/06/2008
3,538 3,407
31/12/2007 30/06/2008
5,9486,608
31/12/2007 30/06/2008
435472
31/12/2007 30/06/2008
Capital Markets Day, September 2008 Slide 12
Raiffeisen Bank S.A. Romania - Management Team
Successfully managed the turn around of the former state owned bank into Raiffeisen Bank S.A. Romania, the third largest Romanian bankVice-President of the Romanian Association of BanksHas over 22 years of experience in reputed international banks
Steven van Groningen, CEO
Under his management, Raiffeisen Bank became the “Best Bank for Corporations in Romania” (2007) Senior Member of the Romanian Banking InstituteHas over 30 years of experience working in/with top Romanian banks and companies
Marinel Burduja, First Vice-President, Corporate Banking
Runs the consumer and SME businessManages a complex mix of products (from sales finance to investments, including full range of SME financing products)Has over 10 years of experience in managerial positions in reputed banks and companies
Razvan Munteanu, Vice-President, Retail Banking
Vladimir Kalinov, Vice-President, Risks
In charge with developing risk policies and monitoring the risk activities of the BankCoordinates all activities related to Basel II implementationHas over 13 years of experience in banking lending and risk activities, all spent as member of the Raiffeisen team
Successfully manages Raiffeisen Bank’s Operations and IT DivisionHe is an expert in managing banking redesign and development processes in CEE Has over 23 years of experience in consultancy and banking
Carl Rossey, Vice-President, Operations and IT
Under his management Raiffeisen intermediated the largest IPO on the Romanian market, Transgaz SAHas over 30 years of experience in treasury and capital markets in US, Asia and CEEMember of New York Futures Exchange
James D. Stewart, Jr., Vice-President Treasury & Capital Markets
Investor Handbook Romania - Riding the Convergence Wave Page 58