Spanish Retail Banking

Transcription

1 Spanish Retail Banking Banco Sabadell Morgan Stanley 30th June

2 DISCLAIMER Banco Sabadell cautions that this presentation may contain forward looking statements with respect to the business, financial condition, results of operations, strategy, plans and objectives of the Banco Sabadell Group. While these forward looking statements represent our judgement and future expectations concerning the development of our business, a certain number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, (1) general market, macroeconomic, governmental, political and regulatory trends, (2) movements in local and international securities markets, currency exchange rates, and interest rates, (3) competitive pressures, (4) technical developments, (5) changes in the financial position or credit worthiness of our customers, obligors and counterparts. These risk factors could adversely affect our business and financial performance published in our past and future filings and reports, including those with the Spanish Securities and Exchange Commission (Comisión Nacional del Mercado de Valores). Financial information by business areas is presented according to GAAP as well as internal Banco Sabadell group s criteria as a result of which each division reflects the true nature of its business. These criteria do not follow any particular regulation and can include forecasts and subjective valuations which could represent substantial differences should another methodology be applied. The distribution of this presentation in certain jurisdictions may be restricted by law. Recipients of this presentation should inform themselves about and observe such restrictions. These slides do not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe to any securities nor shall they or any one of them form the basis of or be relied on in connection with any contract or commitment whatsoever. 2

3 BS HIGHLIGHTS 4th largest banking group in Spain A Universal Banking Model: medium/long term growth based on client relationship Focus on the wealthiest regions of Spain. Top player in SME and personal banking Banco Sabadell has successfully combined organic growth with M&A; Banco Sabadell acquired Solbank and Banco de Asturias in 1996, Banco Herrero in 2001 and Banco Atlantico in 2004 Best of class capital structure with excellent asset quality 3

4 SPANISH ECONOMIC CYCLE: ENJOYING THE RIDE Spain vs Europe - GDP Annual Growth, (in %) Superior economic growth has guaranteed banking business performance Source: Eurostat Spain Eurozone Spain vs Europe - GDP per Capita, Eurozone +55% Spain s catch-up process with EU is nearly complete... US Dollars Spain +71%... but no signs of a slow down yet Source: FMI Spain Eurozone 4

5 STRUCTURAL PROFITABILITY IS SUSTAINABLE NIM: The traditional source of income... has halved Spain - Net Interest Margin Evolution, (in %) 4,0% 3,5% 3,0% 2,5% 2,0% 1,5% Source: Bank of Spain Interest rate pressure Intensified competition Financial sophistication Regulatory changes Need to adapt management strategy: - New sources of income - Improvements in efficiency - Active capital management 5

6 GROWTH DRIVERS CRM TOOLS AND PROCESSES PROFITABILITY DELIVERY VALUE-BASED MANAGEMENT 6

7 CRM TOOLS AND PROCESSES BUSINESS INTELLIGENCE MARKETING AUTOMATION Defining, designing and implementing tools which provide a better Client Management System for our Front-Office INTERACTION WITH CLIENTS SALES FORCE AUTOMATION 7

8 BUSINESS INTELLIGENCE INFORMATION SYSTEM CORPORATE DATE BASE EXTERNAL DATA RISK MGMT COMMERCIAL Propensity Purchase Matrix (Probability) Deposits Pension Funds Credit Segments Plans Cards DATAMART Via Complex Algorythms Product marking Product and client Value % 15% 10% 7% 19% 29% 5% 22% 14% 3% 12% 9% 32% 9% 13% 12% VALUE VALUE DISTRIBUTION (%) A B C D PRODUCTS CLIENT DISTRIBUTION (%) 8

9 MARKETING AUTOMATION MULTICHANEL ACTIVITY GROWTH DATAMART COMERCIAL COMMERCIAL CAMPAIGN MANAGER ACTION 1 ACTION 2 ACTION 3 ACTION 4 MAIL CONTACT CENTER SALES FORCE TASK FORCE AUTOMATION OF: EVENTS (newborn, 18 years) MATURITIES RENEWALS SELECTION BASE AUTOMATIC THRESHOLD CONTROL 9

10 CLIENT INTERACTION AND PRODUCT BENCHMARK Focus on product advisory to clients and intensified cross-selling Client Segment: Urban Affluent Customers 0% 20% 40% 60% 80% 100% Mortgage Credit Line Revolving Card Consumer Credit % ownership (average) Potential ownership Pension Plan Money Market Asset Mgmt BS Shares Saving Plans Time Deposits Fixed-Income Fund Debit Card Credit Card SolRed Card Direct Debit Payroll VISA Shopping Home Insurance Linked Life Insurance Life Insurance 10

11 PRODUCT SALES AUTOMATION Correct positioning of the commercial network Analysis of business/product portfolio potential Adequate schedules of commercial salesforce Results reporting Salesforce supervision 11

12 VALUE-BASED COMMERCIAL MANAGEMENT (I) Calculate and implement value requires: 1. Knowing value contribution to client by product type 2. A powerful client segmentation 3. Define the optimal product and pricing mix for each customer segment 4. Solid risk management systems and policies Which allows: 1. Identifying business opportunities by geographic area 2. A more efficient client segmentation and focus 3. Adequate product focus 4. Adequate product packaging 5. Optimisation of price and risk management 12

13 VALUE-BASED COMMERCIAL MANAGEMENT (II) Allows (1): Identifying opportunities and developing geographically differentiated growth strategies V.Potential Share of wallet V.Life Cycle Potential Current Margin Value Capital A Capital B Rest prov.b City A1 Rest prov.a CCAA level D1 Rest CCAA s 13

14 VALUE-BASED COMMERCIAL MANAGEMENT (III) Allows (2): Focus on value consistent with commercial segmentation % Value Example: Client Distribution (% Clients / % Embedded Value) 120% 100% 80% 60% 40% 20% 0% Client Value > 2,000 Client Value > 250 Client Value > 50 Value - 50 a 50 Negative Client Value (<- 50) A B C D E 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% % of Clients Current Segmentation A B C D 3.0% 35% 2% 2% 0.5% 0.0% 1% 0.0% 1.0% 12% 2.4% 15% 2.3% 10% 1.0% 5% 1.8% 7% 0.3% 1% Value Segmentation E 0.5% -1.1% 14

15 VALUE-BASED COMMERCIAL MANAGEMENT (IV) Allows (3): Selection of products with higher medium term value added x15 Multiple of future value relative to current margins x10 x 5 0 Pensions Brokerage FIM Insurance Deposits M. Market 15

16 VALUE-BASED COMMERCIAL MANAGEMENT (V) Allows (4): Product Packaging Design Example: Multioption Mortgage Change in Value Future Mortgage Value Future Product Pack Value Basic Offer (4 prod.) Basic Offer + 1 prod. Basic Offer + 2 prod. Basic Offer + 4 prod 16

17 VALUE-BASED COMMERCIAL MANAGEMENT (VI) Allows (5): Optimising risk and pricing management - based on value contribution. 100 Risk Threshold Current Value ($) Risk Threshold Test Fails: Operation denied regardless of potential future value contribution Denied Accepted Average Value Scoring level Output -40 Risk Threshold Test Passed: Operation denied due to no value contribution The current value of the loan book can be incremented 17

18 VALUE-BASED COMMERCIAL MANAGEMENT (VII)... Other value-based levers Value-based management of market segments allows refinement of customer segmentation Risk management decision optimisation: delegation vs centralisation Salesforce economic and commercial targets aligned with value creation Internal benchmarking to optimise client value Client management support tools 18

19 VALUE-BASED COMMERCIAL MANAGEMENT (VIII) Target: Increased Value An unmistakably clear policy / line of action across management levels All in all, our policy represents the focus of the entire group on the same target 19

20 CUSTOMER PROFITABILITY Current interest rate environment clearly adds pressure to net interest margins but Spanish banking customer profitability level has not peaked: Clients can be leveraged further (i.e AuM, consumer credit) Loan book structure helps (floors) Cross-selling potential is still high (7 products vs 4) 20

21 CONCLUSION Economic cycle still strong (absolute and relative to EU) Sabadell s approach to business is value-based with a conservative risk profile (lower growth) A powerful IT platform and good knowledge of the target customer base are critical to improving customer profitability Adequate product design is key to cross-selling Value-based targets must involve all levels of management 21