Asset management, 5 forging ahead

Transcription

1 Under full sail Under full sail KBC Investor Day Prague Prague, 7 December 2006 Asset management, 5 forging ahead Stefan Duchateau CEO, KBC Asset Management

2 Contents Introduction Some basic statistics General organisation Asset management strategy T/A/SP/I/O Some results Conclusion & outlook 85

3 Wealth management in KBC AUM as of 30 Sept Belgium CEE European Private Banking Merchant Banking AUM: bn euros AUM: 9.2 bn euros AUM: 54.1 bn euros AUM: 0.6 bn euros KBC Asset Management managing bn euros 86

4 KBC AM: AUM trend Breakdown of AUM & FUM : see appendix (1) Strong organic growth : see appendix (2) 98 Some peers UNION: 147 bn (09/2006) Robeco: 137 bn Q06 AUM as of 10/2006: bn 09/2006 : bn 2Q06 3Q06 okt/06 87

5 KBC AM: general organization Product- and Management platforms Dublin Active equity Tracking error > 5% Luxembourg Bonds Brussels Research Structured products Index tilted equity Sector funds CEE Local Shanghai Coordination Details on organisation : see appendix (3) 88

6 Current base of AUM Strong volume base Belgium (Flanders) Strong growth base Belgium (Flanders), Central Eastern Europe, 89

7 Per capita net financial wealth (2003/4, in EUR) Belgium UK Netherlands Italy France EU-15 (*) Sweden Germany Austria Finland Spain Portugal Denmark Czech Rep. Hungary Croatia Poland Slovakia NE (**) Turkey Bulgaria Romania 0 Source: PFA database (UniCredit Group) Strong volume base 90

8 Allocation of customer assets in CEE 100% 90% Strong growth base 80% 70% 60% 50% 40% 30% Other Insurance (Life, Pension) Funds+direct investments Deposits 20% 10% 0% CEE AVG Eurozone USA Japan Only 23% of client money in funds/direct investments (Eurozone 1.7x, US 2.3x) CAGR : 44% - expected growth rate > 25% 91

9 Contents Introduction Some basic statistics General organisation Asset management strategy T/A/SP/I/O Some results Home Markets strategy Conclusion & outlook 92

10 KBC s asset management strategy Competition Shareholder Unique Substantial Strategy concerns the creation of a unique and valuable position, involving a different set of activities Valuable Sustainable Customers Personnel 93

11 Asset management strategy The phased roll-out of our strategy T A SP I O Targets Analysis Strategic Positioning Implementation Operational Efficiency 94

12 Clearly defined targets The 150% target: AM s target market share in a home market is the average market share in banking x 150% Financial asset growth >> Economic growth Provide a full range of products: All Weather Portfolio Right time, Right product, Right price, Right customer Provide low-risk, substantial and recurrent income 95

13 Asset management strategy The phased roll-out of our strategy T A SP I O Targets Analysis Strategic Positioning Implementation Operational Efficiency Deep understanding of the customer s fundamental needs drives our innovation process 96

14 Asset management strategy Targets Analysis Strategic Positioning Implementation Operational Efficiency Background instruments Key drivers in my industry? Macroeconomic fundamentals Risk-aversion patterns Regulatory issues Manufacturing Linking analysis to targets 97

15 Targets Analysis Strategic Positioning Implementation Operational Efficiency How to increase market share? Be the fastest mover in the fastest-moving (substantial) segment of the market Fastest mover Strategic Positioning Implementation Operational Efficiency Fastest-moving segment Targets Analysis A real life example of how analysis leads to effective product-positioning 98

16 Client typology Very def def dyn very dyn Investment horizon Downside Risk ~0. in 1996 > 35 bn EUR in

17 Global product mismatch 100% Capital Protection? 100% 90% 80% 70% 60% 50% 40% 30% 63% importance little somewhat much 90% 80% 70% 60% 50% 40% 30% 20% 10% 20% 10% Protected 0% 1 Customer needs 0% 1 Product offerings Source : Mc Kinsey & Company, 9 th Annual Investment and Wealth Management CEO conference 01/

18 Net inflows in capital-protected structures Constant proportion portfolio insurance An engine for growth Option-based portfolio insurance KBC AM Ratio open funds / CGF: ~50/50 See appendix (4) sep/ ju n / 0 6 m r t / 0 6 d e c / 0 5 sep/05 ju n / 0 5 m r t / 0 5 d e c / 0 4 sep/04 ju n / 0 4 m r t / 0 4 d e c / 0 3 sep/03 ju n / 0 3 m r t / 0 3 d e c / 0 2 sep/02 ju n / 0 2 m r t / 0 2 d e c / 0 1 sep/01 ju n / 0 1 m r t / 0 1 d e c / 0 0 sep/00 ju n / 0 0 m r t / 0 0 d e c / 9 9 sep/99 ju n / 9 9 m r t / 9 9 d e c / 9 8 sep/98 ju n / 9 8 m r t / 9 8 d e c / 9 7 sep/97 ju n / 9 7 m r t / 9 7 d e c / 9 6

19 Back to strategy Unique Substantial Valuable Sustainable 102

20 Targets Analysis Strategic Positioning Implementation Operational Efficiency Variety-based Highly interactive distribution COMMERCIAL BANKS KBC s specific approach design Access-based Needs-based performance PRIVATE BANKING INSTITUTIONAL MARKETS service 103

21 Targets Analysis Strategic Positioning Implementation Operational Efficiency High Growth Area Balanced funds with floor protection Capitalguaranteed Funds Structured products Real estate funds Special Bonds Hedge funds Special equity Low Growth Area Equity Bonds Low Fee Area Highly instrumental for product-positioning... High Fee Area 104

22 Implementation Relationship Management Participation Portfolio Committee Marketing Committee Motivational Structures Trailer fees Knowledge transfer Information Processes 548 m EUR in 2006 (15 times the level of 1996) Product Delivery Pro-active positioning Strong focus on ADVICE 105

23 Targets Analysis Strategic Positioning Implementation Operational Efficiency Attractive Products Conditions Efficient Wrapper Production Cost Knowledge Transfer Good Performance 106

24 Targets Analysis Strategic Positioning Implementation Operational Efficiency Efficient Wrapper Production Cost Knowledge Transfer Good Performance Attractive Products Innovative approach? Perception? How well can you put innovation into practice? Innovation is not about incremental change, but addresses fundamental needs 100% tuned to network Based on real demand Dedicated product development Minimal time-to-market De-commoditize Allows for innovation premium Innovation product proliferation Innovation implies out-of-the-box thinking 107

25 Targets Analysis Strategic Positioning Implementation Operational Efficiency Attractive Products Production Cost Knowledge Transfer Efficient Wrapper ICB Unit-linked Mutual funds Discret. Management Efficiency Fiscal treatment Transparency Liquidity Good Performance 108

26 Targets Analysis Strategic Positioning Implementation Operational Efficiency Attractive Products Efficient wrapper Production Cost Comparison of overall costs to the sample's distribution 2004, bp Right-sourcing Manage Complexity KBC Belgium: 5.8 Knowledge Transfer Good Performance Source: McKinsey European Asset Management Survey 2005 European average

27 Targets Analysis Strategic Positioning Implementation Operational Efficiency Attractive Products Efficient wrapper Production Cost Knowledge Transfer Good Performance Focus on attributes instead of products Make choices digestible Make complexity approachable Performance measure? Consistency? Advice? 110

28 Investment ranking over 3 years (30/9/2006) 30,00% 77% of funds under management are ranked in the first two quartiles All funds 25,00% 20,00% 17,04% 22,65% 12,87% 18,27% Normal Distribution 15,00% 12,34% 10,00% 5,00% 5,84% 3,55% 4,78% 2,28% 0,39% 0,00%

29 Performance? How good was your performance? 100 The answer should be relevant to your client base Did you also advise your clients to invest in your (past) outperformers? % 94% 60 Balanced funds provide the acid test On a 3-year basis, 92% of our balanced funds rank in the first 2 quartiles On a 1-year basis, 94% of our balanced funds rank in the first 2 quartiles % 50% 0 3 Y 1 Y 112

30 Testing our strategy Products? Unique But most of all: Our people At AM level At sales-support level At branch level 113

31 This is us 114

32 Example : ČSOB ads follow KBC AM practice and include personalised pictures of IAs

33 Testing our strategy Market share? (Growth) Unique Substantial Valuable Sustainable 116

34 117 Market share, Belgium dec/93 mrt/94 jun/94 sep/94 dec/94 mrt/95 jun/95 sep/95 dec/95 mrt/96 jun/96 sep/96 dec/96 mrt/97 jun/97 sep/97 dec/97 mrt/98 jun/98 sep/98 dec/98 mrt/99 jun/99 sep/99 dec/99 mrt/00 jun/00 sep/00 dec/00 mrt/01 jun/01 sep/01 dec/01 mrt/02 jun/02 sep/02 dec/02 mrt/03 jun/03 sep/03 dec/03 mrt/04 jun/04 sep/04 dec/04 mrt/05 jun/05 sep/05 dec/05 mrt/06 jun/06 KBC: 33.92% Source : BeAMA

35 Market share Value share? Δ market share( ) Δ = 250 m EUR recurrent annual No. 1 in Cap.-guaranteed 54% No. 1 in Equity funds No. 1 in Bond funds No. 1 in Balanced funds 118

36 Market share, CEE 30,0 25,0 20,0 15,0 Total = 9.4 bn EUR 2002Q1 2006/09 10,0 5,0 0,0 Republic Republic Czech Hungary Slovak Poland 119

37 50% more approach Czech Hungary Slovak Poland Republic Republic Effective AM market share: 2002Q1 10% 6% 5% 5% 2006/09 27% 18% 10% 4% Banking market share 18% 12% 5% 5% Target AM market share 27% 18% 8% 8% AM activities were highly instrumental in achieving (helping to achieve) overall targets setfor M&A operations (30/10/2006: Local official professional sources ) 120

38 Rolling out our strategic concept 80 Market share in capital-guaranteed funds (local markets) Cap guar Slovak R. Czech R. Hungary Belgium Poland 121

39 Testing our strategy Unique Substantial Valuable Sustainable Sales 122

40 Total sales, total: 17.3 bn EUR (10/2005: 13.4 bn) 2006 total: 13.6 bn EUR For details, see appendix (5) and (6) 123

41 Capital-protected Products 3Q 2006 Continuous Re-engineering Improved market conditions 124

42 More testing Are we creating Shareholder Value? Unique Substantial Valuable Sustainable 125

43 Revenue creation, AM activities (in m euros) Est Management income * 645 Management costs -46 Administration fees 30 Allocated to KBC Administration costs -31 distribution networks Distribution fees 286 Direct collection by KBC distribution network Other income 24 Total 908 * incl. financial results KBC AM 126

44 Testing our strategy High Potential Industrial mapping KBC AM AM Low Potential Cannot add value Can add value Natural Owner Source = McKinsey & Company: Next

45 Conclusion & outlook In , AM s earnings contribution is expected to grow at 10-15% p.a. Successful implementation of our strategy in CEE countries: Most important targets have already been reached AM offers economies of scope / scale / financial diversification and synergies vis-à-vis the Group s strategy Continued strong position in Belgium: High savings rate and general product acceptance provide further room for growth, even from a platform with high market share Operationally effective and efficient Strategy for non-home markets: China: Oct. 06 license, strategic positioning in CGF USA: EAFE, high yield equity Germany / Spain / Taiwan / Hong Kong 128

46 Appendix (1) KBC Asset Management Assets under management Breakdown Funds under management Breakdown Institutional 23% Private 24% CEE Retail 47% Real Estate Hedge Funds 0,7% 0,4% Money Market 5,3% Balanced 23,7% Capitalguaranteed Structures 33.6% Equity 13,4% Fixed Income 22,9% 129

47 Appendix (2) :KBC: an organic growth story Financial news, September 2006 Growth: 01/ /2006 Asset Manager Growth % KBC AM 342% Bridgewater Associates US 500 GMO UK 362 Union Investment GER 233 Dimensional advisors US 206 AIG Global Investment US 204 Capital Group US 197 Lord Abbett US 194 Russel Investment US 189 Eaton Vance US

48 Appendix (3) KBC, general organisation Brussels Lux Dublin London Prague Budapest Warsaw Bratislava Shanghai New York Global Products Design X Local Products Design X X X X X X X Sales Support X X X X X X X X X Administrative Functions X OS OS OS X X X X X Global Products Management X X X Local Products Management X X X X X X X X 131

49 Appendix (4)KBC, open funds relative to CGF 132

50 Appendix (5) KBC, total sales In thousands of EUR jan/05 feb/05 mrt/05 apr/05 mei/05 jun/05 jul/05 aug/05 sep/05 okt/05 nov/05 dec/05 jan/06 feb/06 mrt/06 apr/06 mei/06 jun/06 jul/06 aug/06 sep/06 okt/06 133

51 Appendix (6) KBC, capital-protected issues in bn EUR CPPI OBPI /10 134