ALPHA BANK: AGENDA 2010 REVISITED. Capital Markets Day. Bucharest, April 20, Retail Banking. G. Aronis, Executive General Manager

Transcription

1 ALPHA BANK: AGENDA 2010 REVISITED Retail Banking G. Aronis, Executive General Manager Capital Markets Day Bucharest, April 20, 2007

2 Strategic Emphasis on Retail Banking Rationalize product offering Apply sales oriented approach Leverage on branch network: competitive advantage Streamline multi-channel banking Improve risk management Centralize credit approval Further enhance customer service quality 2

3 Action Plan is Already Paying Off in Household Lending Mortgages & Consumer Credit Balances ( billion) % CAGR Consumer Credit Mortgages 3

4 Which is Further Evidenced by a Very Strong Q1 in 2007 (yoy growth) ( million) % % % 208 Q Q Q Q Consumer Credit (yoy growth) ( million) % % % 385 Q Q Q Q Mortgages 4

5 Setting the Stage for Meeting the 2010 Targets CAGR 20% - 22% ( billion) Consumer Credit ( billion) 8.4 CAGR 17% - 19% Mortgages 5

6 Mortgages: Rapid Growth From 9.5% market share in 2001 to almost 15% in 2006 Outstandings and Growth (yoy) - Greece - Main points Market Market growth peaked at the end of 2005 and has been declining since (spreads bps)(*) % % % Aggressive competition from smaller players attempts to shift market balance Competition focused on mortgage refinancing ( billion) 36.3% % Customer preference shifts to fixed rates Dec Mar Jun Sep Dec (*) Quarter ending in month indicated Alpha Bank Maintained market share in the face of fierce competition 24.0% Market Shares (2006) Avoided excessive margin reduction despite market trend 14.7% 13.8% Capitalized on its strong corporate image of Reliability 9.5% 7.4% 7.1% Started to exploit systematically its advantage of a large under-penetrated customer base Alpha Bank National Eurobank Emporiki Piraeus Agricultural 6

7 Mortgages: The Way Forward Sales & Market Share Growth Regular offering of innovative products Emphasis in maintaining existing portfolio Continuous advertising Cross-selling through promotional offers, direct marketing Staff performance evaluation & incentives Further growth of direct sales (i.e. sales agreements with developers, brokers, etc) Efficiency Business Process Re-engineering Full centralization of credit approval & operations Review of collections operations Simplification of branch operations to increase productivity 7

8 Consumer Loans Market Overview Highly competitive environment Emphasis on balance transfer programs New entries Alpha Bank Outstanding Balances have doubled in the last two years ( 2.2 vs 1.1 billion) Focus on improving / transforming the business Personal Loans ( million) Consumer Loans Disbursements Market leading customer propositions (All in One - Effie award) 400 Multi channel lender (Branch Network - Direct mail SMS Gate Telemarketing ) Q1/03 Q2/03 Q3/03 Q4/03 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07(est) Auto Loans Development through diversification of our strategic business model in order to focus and approach quantity and quality loan volumes among middle size auto dealers Expansion with full installation of Bank s sales representatives all over Greece (starting with large cities) 8

9 Consumer Loans Key Initiatives Consumer Loans Business Results Maintain a profitable growth model Retain and grow our market share Maintain low rates in delinquencies flows and arrears level NII ( mn) Average Balance ( mn) change % 1,360 1, % Spread (bps) Growing in the most profitable segment Outstanding Balance Origination Auto Loans 11% Auto Loans 14% Auto Loans 15% Personal Loans 72% Retail Factoring - Other 17% Personal Loans 75% Retail Factoring - Other 11% Personal Loans 76% Retail Factoring - Other 9%

10 Consumer Credit Risk: Quality is Top Priority Flow Rates Credit Cards (Probability to default 4 months forward) Ten scorecards for credit applications of new customers 2.0% Internal rating system, based on behavioral data Probability 1.5% 1.0% Application fraud detection tool Overall acceptance rate at 63% in line with prudent credit policy 0.5% Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Credit strategies for each type of distribution channel risk (Instant credit, Auto loans, Branches, Merchants) 2.0% Flow Rates Consumer Loans (Probability to default 4 months forward) Delinquencies on a declining trend (flow rates charts) Probability 1.5% 1.0% 0.5% Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 10

11 Cards: A Comprehensive Portfolio for All Market Segments Sole Issuer & Acquirer of all three major international brands (Visa, MasterCard, American Express) Co-Branded Cards Tim Premium Market Carrefour Store Cards Kalogirou Gold- Silver Nutrimetics Amway Debit Products Mass Market Entry Level 11

12 Cards: Fast Growing Business Issuing Market Share 20% (Billed Business and CIF) Growth focus on credit through carefully designed portfolio mix Business growth outpacing the market (9.4% in balances vs. market 3.2%) The largest Visa Issuer in the country Sole American Express issuer Acquiring Market Share 28% 9.1% growth in 2006 while maintaining premium in commissions over competition One of the largest merchant networks (110,000 merchants 45,000 POS) Sole acquirer of American Express products EMV rollout on-going Credit Cards In Force by Brand 1 million cards (year end 2006) Acquiring Business by Brand 1.75 billion in 2006 AM EX 37% AMEX 22% VISA 49% MASTERCARD 14% VISA 62% MASTERCARD 16% 12

13 Cards: Fast Growing Business High Profitable Sector Continuous increase in revenues and balances High retainable spreads (900 bps) Card Business Income Key Actions Innovative Product Development Value proposition reinforcement with latest technology chip based loyalty schemes Customer Segmentation niche segments ( million) % change Increase penetration though cross selling Total Income -NII % 11.5% Accelerate sales through more efficient use of alternative channels - Commissions % Average Card Balance % Gross Revenue Margin 13.9% 14.6% 13

14 The BonuS Loyalty / Reward Scheme Instant rewards Points collection One scheme for all Technologically innovative Focussed on customer insight Customer Loyalty Merchant Loyalty Card Loyalty Scheme Partners Other Participating Merchants Leading Private Retail Bank Leading Mobile Phone Operator Leading Fuel Retailer Leading Grocery Retailer Leading Greek Airline Leading Car Rental Agency 14

15 The BonuS Loyalty / Reward Scheme BonuS achieves a win-win-win situation between all participants Merchants 6 Partners, 100+ Retailers Generate higher turnover Acquire new customers Higher business profile Better customer knowledge Customers 360,000 customers/cards to date Instant rewards Relevant promotions Convenience & Simplicity Alpha Bank Amex, Visa, MasterCard Increased credit card volumes, spend & activation Reduced attrition Strengthening the Acquiring business Greater value to merchants 15

16 The Business Market in Greece Approximately businesses operating in the Greek market SBL targets a large group of professionals such as doctors, dentists etc., who are not included in the 880,000 businesses Greek Companies Allocation (by Turnover) Greek Companies Allocation (by Legal Status) 14% 1% 5% 11% 85% 84% < Sole Proprietors SA & LTD Partnerships & Joint Ventures 16

17 Small Business Lending Key Drivers For Success Customer Segmentation Establishment of Small Business Financing Division, targeting: Small Businesses (turnover up to 2.5 million or credit limits of up to 1 million) and Self-Employed Professionals Advertising Launch of a new Advertising Campaign focused on SBL Targeted Promotional Activities (direct marketing) Targets and performance evaluation for key products New Product Development Growing use of alternative channels Emphasis on third party salesforce Collaboration with the Credit Guarantee Fund of Small & Very Small Enterprises Centralization of operations Standardized process Effective credit administration support Small business advisors in Branches Specialised department to handle financing for pleasure boats 534 2,928 Small Business Loans (credit limits < 1 million) Outstanding and Growth ,473 3,562 3,726 3,801 3,926 2,904 2,908 2,901 2, ,017 Dec Mar June 2006 Sept Dec New loan facilities to businesses with turnover up to 1 million Spreads (quarter ending in month indicated) 17

18 Deposit & Investment Products: Dynamic & Innovative Approach Deposit Products Asset Management Offer an array of privileges and potentials Full complement of competitive deposit accounts with high cross selling potential - Alpha Youth Line: Build loyalty to future active customers (children & young people) and increase cross selling potentials to guardians (bps) % % % % - Alpha Payroll: Dynamic launch of new competitive product to increase deposit market share. Develop new long standing relationships and Cross selling potential - E-Savings: Drive digital innovation capitalizing on Alpha s predominant Web Banking position Investment Products Develop Integrated Investment Solutions for Customers Profiles Deliver wealth management solutions to satisfy the increasing risk appetite of retail investors Pioneer unique investment products to domestic market - Alternative Investments - Mutual Funds with preservation of capital product range - Emerging Market Mutual Funds Offer Bundled/Life Event propositions Further increase market share and average management fees ( million) F Market Share in Non-Money Market Mutual Funds Gross Revenue Margin (quarter ending in month indicated) 3,350 2,309 Alpha Private Bank 4,566 3,100 5,356 3, ,168 1, Dec. 04 Dec. 05 Dec. 06 Discretionary Advisory Prime Brokerage 20% CAGR 18

19 From Deposits to Investments Customer Assets Stable funding base Successful placement of Alpha Bank bonds with retail Still high liquidity preference despite low returns Gradual shift to higher margin investment products Financial planning advisory services for mass affluent customers (> 60,000) Investment Balances Liquidity Transaction Balances 37.3 bn % (3.2%) 31.7% 8.1% 41.2 bn Dec Dec CAGR % - 14% 5.1 Private Banking and Institutional Money Mutual Funds Time Deposits plus Alpha Bank Bonds Savings and Sight Deposits (Domestic) Deposits (abroad) 19

20 A New Banking Experience Targets the Mass Affluent segment Market size* : 20 bln HNW (300+)** Mass Affluent Market No. Clients* : 200,000 ALPHAPrime Goal 20% of market size Presence in approx. 120 Branches 140 Investment Advisors Levels of Wealth Mass Affluent Retail (60-300)** (0-60)** ** amounts in thousands Approach Offering & Infrastructure Present Status & Future Deployment The establishment of long term relationships with clients Specialized personnel in selected branches (Investment Advisors) Excellence in customer experience (Convenience & Flexibility) Specialized area in the Branch hosting the Service Specially designed Investment Offering with products targeting the specific market aiming at higher profitability Specially designed Banking Offering enriched with preferential terms Use of the Private Banking infrastructure (Sales Approach, Back Office, IT, MIS- Client Profitability, Specialized Intranet Applications) Use of a specialized call center Continuous training of Investment Advisors 30 Branches already operational aiming at a total of 70 Branches operational by the end of 2007 Full deployment by mid 2008 *source: ALPHA PRIVATE BANK estimates 20

21 Bancassurance: Significant Growth Opportunities Sale of Insurance subsidiary to AXA Long term (20 years) cooperation agreement in Bancassurance Agreement covers both Greek and SE Europe operations Benefit form the support and expertise of one of the major international insurance companies Redesign of products processes personnel training Substantial margin for increase in insurance cross selling ratio for Consumer Credit, Mortgages and SME loans Substantial margin for increase in Pensions Savings Target to achieve 30 million in insurance fees by 2010 (Bank and Asset Management) ( million) Insurance Fees & Commissions CAGR ~50% > Target

22 Retail Branch Network (Greece): Types, Size & Distribution Branches per Area Athens and suburbs Salonica Other areas Total Key Points Ideal Country size Strong urban concentration GIS optimized (next slide) BRANCH STRUCTURE: A modular approach SMALL ENTERPRICES (selected branches) INDIVIDUALS Prime Banking (selected branches) Non - Teller Branches are currently under consideration TRANSACTIONS 22

23 Retail Branch Network (Greece): Planning BRANCHES & STAFF DISTRIBUTION ANNUAL GOALS Geographical Information Systems & Methodology Competition data Product specific data Demographic data Economic data 23

24 Retail Branch Network (Greece): Annual Targets & Evaluation ANNUAL TARGETS are set for: Deposits (per category) Loans (per category) Mortgages Credit cards Prime & Private Banking Bonds & Mutual Funds Insurance (per category) Bancassurance Small Enterprises attracted Per product methodology GIS optimized Goals are reevaluated if necessary Performance is monthly monitored Products are weighted according to their importance Specific product campaigns are launched during the year if necessary Branch Evaluation is currently based on annual goals achievement APPLICABLE within 2007 A more detailed evaluation to be based on: Impairments Spreads Quality of Service (complains, internal audit reports, etc.) 24

25 ALPHA BANK: AGENDA 2010 REVISITED Capital Markets Day Bucharest, April 20, 2007