Banco Sabadell. Goldman Sachs Financial Conference. Banco Sabadell. Driving Retail Profit Growth. Thursday 14 th June, 2007

Transcription

1 Banco Sabadell Goldman Sachs Financial Conference Banco Sabadell Driving Retail Profit Growth Thursday 14 th 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 rate, 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). Banco Sabadell is not nor can it be held responsible for the usage, valuations, opinions, expectations or decisions which might be adopted by third parties following the publication of this information. 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 1. Retail Banking and Real Estate Outlook 2. Commercial Retail Banking 3. SME Retail Banking 3

4 Spanish Retail Banking Market Outlook Current market environment determined by: Tougher competition across product lines despite higher rates environment Higher customer sensitivity to fees Higher customer shopping and rotation Decelerating mortgage demand BS current retail strategy is oriented towards 4 main objectives 4

5 Spanish Real Estate Outlook Properties under construction (in thousands) % % % % 760 Land: nº of transactions % -23% Evolution of housing prices (yoy) 18% 18% 17% 14% 10% Real Estate transactions (in thousands) % % Source: Spanish Ministry of Housing, Bank of Spain

6 Slight Deceleration in the Real Estate Market, but Labour market improvement % Unemployment rate Domestic demand boosted by investment in capital goods % yoy 1Q07 3.5% Household consumption 12.1% Capital goods 5.6% Construction 4.1% Real GDP Improved evolution of exports, boosted by acceleration of growth in the Eurozone Spanish exports % yoy. 2% 3% 2% 10% 5% 3% 7% 4% Investment in housing has limited weight on GDP 8% Investment in housing -1% 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 Source: INE, Bank of Spain and Bloomberg 6

7 BS Approach to Retail Banking Our current approach to retail banking is driven by: Customer size and expertise Customer and product profitability Which are managed via... Commercial Banking Individuals and Companies < 6 m* SME Retail Banking Companies > 6 m* * Annual turnover 7

8 1. Outlook in Retail Banking and Real Estate 2. Commercial Retail Banking 3. SME Retail Banking 8

9 Commercial Banking in BS 26,709 m Loans to customers 46% 32,313 m Customer funds 40% 118 m Net operating income 41% 6,581 Employees 65% 1,111 Branches 93% As of March-07 % over total BS group 9

10 Commercial Retail Banking Focus on profitability growth, driven by : 1. Expansion of customer base 2. Boost revenues via product and service innovation 3. Asset growth diversification 4. Customer funds growth 10

11 Strong Focus on Customer Base Growth Commercial Banking New Customers 1. Expand customer base 2. Boost revenues 3. Asset diversification 4. Customer funds growth 24% 50% 193, ,000 Customer expansion (1) helps fund indirect costs and (2) is a pillar to future profitability 128, E 11

12 The Contribution of all Segments is Key 2007 Customer growth breakdown 1. Expand customer base 2. Boost revenues 3. Asset diversification 4. Customer funds growth Segments Clients 07 / 06 % Private Banking 2,000 45% Personal Banking 28,000 35% Mass Market 180,000 22% SME 30,000 25% 240,000 24% 12

13 Customer Growth is Driven by a Strong Value Proposition per Segment 1. Expand customer base 2. Boost revenues 3. Asset diversification 4. Customer funds growth 1 Private Banking Personal Banking 2 50 Private Banking Managers Asset management strength Differentiated customer reporting 1,700 specialised Personal Banking Managers Wide range of products and services Sophisticated investment analytical tool 3 Mass Market 4 SME Product and service innovation Intense promotional activity CRM system 2,300 back-office personnel commercially active Specialised support units Extensive product range 532 dedicated specialised managers 13

14 Promotional Activity: Mass Market illustrative examples CHILDREN YOUTH 1. Expand customer base 2. Boost revenues 3. Asset diversification 4. Customer funds growth Canal Product Canal Product Bs Junior My first stocks BS Click OK ADULTS SENIOR NON RESIDENTS Canal Product Canal Product Canal Product BS Cuenta MÁS BS Senior Money transfers 14

15 Target: 50,000 New Customers in

16 Special Focus on Revenue Drivers 1. Expand customer base 2. Boost revenues 3. Asset Diversification 4. Customer funds growth Consumer credit and SME financing On balance deposits Brokerage Derivatives (SWAPs, CAPs ) Pension Plans TOTAL REVENUES Revenue CAGR (%) 13.3% 35.7% 14.6% 439.5% 13.5% 14.2% Revenue Contribution (%) 10% 29% 1% 3% 3% Data as of March 2007 annualised 16

17 Intense Asset Activity Mortgage Gift Loan BS Family Loan 1. Expand customer base 2. Boost revenues 3. Asset diversification 4. Customer funds growth Auto renting ICO Granted Loan Specialized Financing 17

18 Retail Banking Diversified Asset Growth 1. Expand customer base 2. Boost revenues 3. Asset diversification 4. Customer funds growth Volume CAGR (%) Volume Contribution (%) Mortgages 14.6% 67% Consumer finance and SME financing Commercial Discount 13.4% 10.4% 18% 7% Leasing, Renting, Factoring, TOTAL Data as of March 2007 annualized 14.6% 14.0% 8% 100% 18

19 Commercial Activity Generates Results 1. Expand customer base 2. Boost revenues 3. Asset diversification 4. Customer funds growth Fixed Term Deposits Volume 37% GAGR (%) Margin 12% Structured Deposits TOTAL 54% 19% 49% 35% Data as of March 2007 annualized 19

20 Intensive Commercial Activity on Customer Funds bn 1. Expand customer base 2. Boost revenues 3. Asset diversification 4. Customer funds growth 5,0 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 1,3 07 4,7 06 3,2 05 2,8 04 1,8 03 1, ,0 Ene Feb Mar Abr May Jun Jul Ago Sep Oct Nov Dic 20

21 1. Outlook in Retail Banking and Real Estate 2. Commercial Retail Banking 3. SME Retail Banking 21

22 SME Retail Banking in BS 28,197 m Loans to customers 49% 11,949 m Customer funds 15% 146 m Net operating income 51% 1,159 Employees 12% 63 Branches 5% As of March-07 % over total BS group 22

23 SME retail A Strong Franchise with Potential Recognized SME know-how 3 rd ranking Cast-Galicia 1,768 Asturias % 72% Basque Country, Navarra, Cantabria 37% 29% 2,575 42% Aragon-Rioja 1,014 68% Catalonia 6,899 45% client market share Madrid 6,107 29% 40% Levante 3,765 Andalusia 2,604 (1) Source: INFORMA database. Companies M turnover Canary Islands 32%

24 A Domestic Reference in Foreign Trade We support our clients in their international activity BS International True value proposal Presence in strategic markets Branches 3 Representative Associated offices banks 14 4 Banking Subsidiaries 2 Agreements with international trade promoters 9.4% 11.4% Import market share Export market share Specialised services 53 Specialised branches 24

25 Banco Sabadell in the Real Estate Business PROFITABILITY The business with developers contributes 24% of the gross operating income of SME Banking RAROC stands at 26.9% CLIENTS 78% of the 100 main developers in Spain are clients. Clients share of exposure: 13.9% (BoS) Market share of mortgage loans to developers 2.56% 2,48% 2.58% 2,65% TEAM Renowned team of specialised professionals 25

26 BS Stance Regarding the Real Estate Market Prudent risk policy BS mortgage book vs Spanish sector Diversified mortgage portfolio BS mortgage book by type of property BS Sector Average mortgage* Real Estate Development 15% Others 5% Loan to value 53.8% 80.0% Maturity date Indebtedness ratio 25.3% Commercial 29% Individuals 51% (85% 1st Home) Proven specialised systems (scorings and ratings) to accurately price mortgages to both individuals and developers * Euros in thousands Sector data source: European Mortgage Federation and INE. 26

27 Operating Profit Contribution by Product 20% 18% New business areas are gaining weight in the product revenue mix 13% 12% 11% 10% 6% 5% 5% 3% Working Capital Domest. Service L/T-M/T Finance Intl Service Syndic. Loans Sight Acc. Other Develop Mortg Hedging Products Fund Mgm New business Traditional business 27

28 SME Business Drivers Our SME business is primarily focused on two subjects: ROE Improvement Exploit new source of income: Commission generators with no capital and provisions requirement BS International BS Treasury BS Corporate BS Investment Intensive Growth Increase customer penetration levels Market share improvement Aggressive client acquisition in low penetration areas 28

29 SabadellAtlántico BancoHerrero Solbank Banco Urquijo ActivoBank 29