Juan Asúa. General Manager Banking in Spain. Anticipating the new environment

Transcription

1

2 Juan Asúa General Manager Banking in Spain Anticipating the new environment

3 Index Excellent positioning: Customers and Products New environment, New opportunities Strategic Drivers: Innovation and Transformation Conclusions 3

4 Our excellent positioning is the result of foresight and discipline in implementing STRATEGIC PLANS Customers Products Transformation Innovation POSITIONING EARNINGS 4

5 Implementation of strategic plans has reflected in fast earnings growth... Net Interest Income (YoY ) 14.4% 9.3% 5.0% Operating Profit (YoY) 11.5% 14.3% 20.6% 2005/ /05 9M07/ / /05 9M07/06 ROE 30.3% 30.5% 37.0% Cost/income ratio 42.8% 41.2% 37.5% M M07... the result of strategic anticipation 5

6 ... anticipation by leveraging on Buoyant business activity Higher cross-selling Good price management Cost control Asset quality Selective and diversified Value-added products While gaining market share Compatible with growth projects Based on RAROC 6

7 1 Vigorous business activity, selective and diversified... Business Volume m Breakdown of Ordinary Revenues 9M % +14.2% % Trading Other Income 5,4% Insurance 3,8% 6,9% Fee income 25,5% 1 Deposits 17,3% 2 Consumer 6,9% 3 Mortgages 9,5% M07 8,6% 16,1% 4 Small Businesses CBB Progressive adjustment of growth levers Ordinary Revenues 9M07 4,943m 7

8 1 Buoyant business activity 1 Time Deposits Accelerating: 9M07/06 39% APR Retail Time Deposits: market share (banks and saving banks) Time Deposits: average spread 8.35% 6.89% 7.48% 0.68% 0.70% 0.57% Dec 05 Dec 06 Sept 07 9M05 9M06 9M07 Innovative products: Extra Deposit, Multideposit, Triple 7, Double 5.5, etc. Improving spreads 8

9 1 Buoyant business activity 2 Consumer Finance Strategic growth lever Consumer Finance: market share 12.43% 14.05% 14.32% Consumer Finance: average spread 4.64% 4.80% Dec 05 Dec 06 Aug M06 9M07 1 Sept. data not availabe New products: PIDE, Crédito Fácil, etc, account for > 50% of total production 9

10 1 Buoyant business activity 3 Mortgage Business Selective commercial policy Individuals Market share bp Developers Market share bp % 11.23% 7.13% 5.41% 2004 Aug.07 Primary residence: 95%(1) NPL Ratio: 0.39% Average LTV: 53.3% Hipoteca Universal, Hipoteca Fácil, Hipoteca Bienestar, Cuota Segura 2004 Jun.07 Primary residence: 95% NPL Ratio: 0.08% The top 100 customers account for 30.5% of the portfolio Selective commercial policy: controlled growth and low risk * Sept. 07 data not available (1) Home mortgage loans 10

11 1 Buoyant business activity 4 CBB Increasing leadership Penetration of SME segment Business Volume (APR) Operating Profit (APR) 38% 32% 11.5% 15.9% 13.1% 21.7% BBVA 2 nd 9M06 9M07 9M06 9M07 Excellent business growth with NPLs at low levels leading to outstanding results 11

12 2 Cross-selling: Top supplier of high added-value products -ings Confirming Factoring Leasing Mkt Sh. % st 1 st 1 st Derivatives Distribution growth APR 9M07/06 348% 254% 52% Earnings Operations No. of customers Leader for third year running in derivative rankings 1 Insurance Term Life: mkt share 16.9% ASSUR- ANCE Mortgage - Life Mortgage- Household 45% 70% Consumer - Life 73% 1 st 1 Risk España Magazine 12

13 3 Good price management... Customer spread (%) BBVA networks Net Interest Income / Average Total Assets (%) BBVA networks Peers 2,95 3,03 3, ,56 2,61 2,69 2, Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07... outperforming our competitors 13

14 4 Cost control... Revenues and Expenses BBVA (base 100) Cost growth: BBVA v Peers (%) Revenues Expenses BBVA Peers NEW NETWORK MODEL Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 05/04 06/05 9M07/9M06 Costs are decreasing in real terms 14

15 4 1) Blue-Net Project (2006) FROM:... with more efficient structures: TO: Retail SMEs Retail SMEs 7 7 COMPREHENSIVE BUSINESS UNITS PURE COMMERCIAL UNITS Intermediate structure expenses 15% 2) Network expansion plan finalised: +160 branches (+4.4%) Total Spanish System Jun % 11.73% 250 bp Average break-even in 15 months % branches % business ΔTotal expenses Networks in Spain: + 0.1% 15

16 NPL ratio (%) BBVA Sector Asset quality Loan-loss provisions ( m) 3,600 16% Specific Provisions Generic Provisions M07 Sector Aug 07 Management of credit risk competitive advantage 84% Sep 07 Coverage Ratio 9M07 RAROC 263%... constantly focused on effective recovery process 16 16

17 Customer-centric business model... New Customers % 701 Cross-sell ratio M06 Individuals (Thousands) Recall Level 9M07 Dec 05 Sep 07 Products per customer Service Quality / Satisfaction BBVA Spain Complaint ratio (banks) 2 nd 3 rd 41.4% 37.1% 28.9% Individuals Peer 3 Peer 2 Peer 3 Peer 4 Peer 1 * Source: Bank of Spain... focused on strategic segments 17 17

18 Index Excellent positioning: Customers and Products New environment, New opportunities Strategic Drivers: Innovation and Transformation Conclusions 18

19 Spain is still growing faster than the EMU average although the economic scenario has changed... GDP Growth (%) Spain EMU Forecast of gross household formation 618, ,317 Residents Immigrants Non residents Employment growth (%) Spain EMU Estimated net job creation ,000 19

20 ... we are well-placed to capitalise on opportunities in the new situation by... Building on our strengths LIQUIDITY SOLVENCY Re-pricing of assets Increased customer acquisition / share of wallet Strong focus in onbalance sheet deposits Goal: increase market share of activity and revenues 20

21 Index Excellent positioning: Customers and Products New environment, New opportunities Strategic Drivers: Innovation and Transformation Conclusions 21

22 Strategic Drivers CUSTOMER DIFFERENTIATION TECHNOLOGY Innovation Transformation NEW ORGANISATION - February BANKING IN SPAIN INNOVATION and BUSINESS DEVELOPMENT NETWORKS TRANSFORMATION and PRODUCTIVITY Generating sustainable competitive advantages 22

23 Banking in Spain BANKING IN SPAIN INNOVATION AND BUSINESS DEVELOPMENT NETWORKS TRANSFORMATION & PRODUCTIVITY CHANNELS NEW BUSINESS MODELS 5 1 MASS MARKET AFFLUENT SMALL BUSINESSES CBB YOUNG PEOPLE IMMIGRANTS SENIORS... MASS MARKET AFFLUENT SMALL BUSINESSES CBB PERSONALISED SERVICE MARKETING PRODUCTIVITY OPERATIONAL EFFICIENCY CUSTOMER SERVICING Making innovative solutions accessible to all customer segments 23

24 1 CHANNELS NEW BUSINESS MODELS MASS MARKET YOUNG PEOPLE IMMIGRANTS SENIORS... AFFLUENT SMALL BUSINESSES CBB Mass Market: from Marketing Intelligence to Customer Insight AMBITION Getting a better knowledge not only of needs but behaviors OPPORTUNITY Marketing tailored to customer s profile Phase I: Model Start-up campaigns micro-segments customer contacts Phase II: Model extension Transactions Mass customers Marginal customers Risk of defection New customers, etc Operating margin High-Value Customers Value Customers GOALS +100,000 customers retained / year products per customer 24

25 1 CHANNELS NEW BUSINESS MODELS MASS MARKET YOUNG PEOPLE IMMIGRANTS SENIORS... AFFLUENT SMALL BUSINESSES CBB Mass Market: segments YOUNG PEOPLE SEGMENT IMMIGRANTS The Blue Program DUAL RESPONSE: Dinero Express - BBVA Youth segment acquisition New members of Blue BBVA x , ,000 Total Active Customers (by no.) 421, % 660,000 Jan-Sep 06 Jan-Sep 07 Dec 05 Sep 07 % mortgage production via Blue BBVA 22% 32% Money Transfers Mkt. share (Banks & Saving Banks) 10,6% 21,5% Dec 06 Sep 07 Dec 05 Jun 07 GOALS 1 million young customers acquisition GOALS 500,000 immigrant customers acquisition 25

26 YOUNG PEOPLE IMMIGRANTS SENIORS 2... Affluent Segment: advisory and CHANNELS NEW BUSINESS MODELS MASS MARKET: AFFLUENT SMALL BUSINESSES CBB specialised customer service AMBITION To spread our Private Banking Model levering in our branch network OPPORTUNITY in the last 5 years the Affluent Market has grown by 200,000 people Only 20% of the segment receives especialized coverage BBVA s brand is well-placed New Distribution Model Excellent Growth CUSTOMERS (JAN 06 SEP 07) + 27 % ADVISORY GOALS AND INCENTIVES SALES FORCE RELATIONSHIP MODEL MATRIX STRUCTURE Growth engines Plan COMMUNICATION VALUE PROPOSITION 1st bank ranked 1 MARKET SHARE 20% 1 IFRS

27 3 CHANNELS NEW BUSINESS MODELS MASS MARKET: YOUNG PEOPLE IMMIGRANTS SENIORS... AFFLUENT SMALL BUSINESSES CBB Small Businesses Segment: high returns, penetration and bundling AMBITION Achieving a clear leadership in the segment (like in CBB) Excellent Positioning 1.- First or second provider in every sub-segment 2.- Strong growth (OCT 06 07): Ordinary Revenues: + 16% Derivatives Coverage: > 400% OPPORTUNITY 1.- Differential growth segment for the next few years 2.- BBVA growth potential 38% 19% Levers Focus on transactional banking services POS Number 1st ranked Global Solutions or bundling Small businesses/ Small retailers BBVAnet Office 1st bank ranked 2 Professionals Self-employed people High value products and risk approach Small Businesses Nominal Market Share 2 AQmetrix 2007 SME S Customized derivatives and insurances Small Businesses PIDE 27

28 4 CHANNEL S NEW BUSINESS MODELS MASS MARKET YOUNG PEOPLE IMMIGRANTS SENIORS... AFFLUENT SMALL BUSINESSES CBB CBB Segment: to broaden leadership AMBITION To broaden the leadership and extend the franchise towards investment banking, advisory and non-financial services 1 2 Levers RISK MANAGEMENT GEOGRAPHICAL COVERAGE THE FRANCHISE Nominal mkt share 1st provider s mkt. share SME s 1 38% 1 13% 3 CROSS-SELLING: PRODUCT SPECIALISTS ON THE GROUND Excellent performance Mid-caps 1 72% 1 28% Products per customer 5,54 Large Companies 1 93% 1 53% 5,26 Institutions 1 53% 1 12% Dec 06 Sep 07 28

29 5 CHANNELS NEW BUSINESS MODELS MASS MARKET YOUTH SEGMENT IMMIGRANTS SENIORS... AFFLUENT SMALL BUSINESSES CBB... expanding the relationship beyond financial needs AMBITION Maximise the customer relationship 3 SMES 1 2 INDIVIDUALS Services: leisure, household, health, vehicles, shopping, etc. FROM: TO: On-line help: accounting, services INFORMATION Recording deposits and payments Sequential account entries RECOMMENDATION Cash Management Customer s financial planning and recommendations Franchises. Pioneer platform for Human Resources services Mobility solutions (mobile devices) Expert guidance + customized finance GOAL: Operating Profit up 10% in

30 Banking in Spain BANKING IN SPAIN RESOURCES EMPLOYED IN THE BRANCH NETWORK TRANSFORMATION AND PRODUCTIVITY COMMERCIAL STAFF 65% SERVICING 35% 50% Sales 50% Operations COMMERCIAL STAFF 75% SERVICING 25% 70% Sales 30% Operations COMMERCIAL PRODUCTIVITY OPERATIONAL EFFICIENCY CUSTOMER SERVICING We are developing new ways of doing things 30 30

31 1 COMMERCIAL PRODUCTIVITY OPERATIONAL OPERATIONAL EFFICIENCY EFFICIENCY CUSTOMER CUSTOMER SERVICING SERVICING Commercial Productivity 1 Simplifying sales operations 2 Processes reengineering / new software applications New tools / infrastructure AVERAGE PROCESSING TIME Δ 33% 1. Guidance Advisory Automation Affluent and Mass Affluent 1 2 Proprietary Tool 3 3. Follow-up INCREASE IN CORE REVENUES Customer served + 35% 2. Solutions Customer advised 3 Sales Force 1 Remuneration aligned to performance % of staff with higher education Specialised sales force 4 Improvements in productivity *No. of products sold per manager per month pp % % e 31

32 2 COMMERCIAL COMMERCIAL PRODUCTIVITY PRODUCTIVITY OPERATIONAL EFFICIENCY CUSTOMER CUSTOMER SERVICING SERVICING Operational efficiency Traditional Model Centralisation Outsourcing Up to February 2006 November Localized Partially delocalized Delocalized Vertical Across Outsourcing No specialisation Specialised New functionalities 51% cost reduction Reduced operational risk Improved service quality Potential generator of new revenues 32

33 3 COMMERCIAL COMMERCIAL PRODUCTIVITY PRODUCTIVITY OPERATIONAL OPERATIONAL EFFICIENCY EFFICIENCY CUSTOMER SERVICING Servicing 1 2 Migration 4,500 new ATMs 2007 Transactions (*) % 75% Providing all servicing transactions (including pay-in) Full deployment: % Automation Cash withdrawals (67.5% of Servicing) % % Servicing Automatic channels Deposits and cash payments (24% of Servicing) 6.5% 50% 3 Branch 1 Optimization 4 Tellers devoted to servicing FROM Various lowcomplexity branches TO Retail banking centre Δ 30% 2 1 Non automatic servicing 33 33

34 Contents Excellent positioning: Customers and Products New environment, New opportunities Strategic Drivers: Innovation and Transformation Conclusions 34

35 Banking in Spain : Key Drivers 1 Solid Growth of Earnings 2 Liquidity and Solvency 3 Innovation 4 5 Transformation New Distribution Models 6 High Credit Quality 35

36 ... which provide a platform for attaining the following goals Clients and business targets by million new young customers 500,000 new immigrant customers 10% increase in operating profit coming from non-financial products and services Net attributable profit : >15% CAGR 36

37