13 Corporate Banking - Raiffeisen Bank...

Capital Markets Day, September 2008 Slide 1

Corporate Banking - Building on Strong Client Relationships

byPeter Lennkh

Board Member RI Group


Corporate Business Development


Stable Backbone of RI’s Profitability

Total € 607 mn

Profit before Tax Contribution (1-6/2007)

Corporate Customers53%

€ 321 mn

€ 63 mn

Retail Customers37%

€ 223 mn

Treasury, Participations and

Other10%

Total € 843 mn

Profit before Tax Contribution (1-6/2008)

€ 484 mn

€ 71mn

Retail Customers34%

€ 288 mn

Treasury, Participations and

Other9%

Corporate Customers57%

RI Group consolidated results.Based on IFRS aggregated business segments.


28.4%30.2%31.7%

26.9%29.4%

2004 2005 2006 2007 1-6/2008

484

229

337

467

669

2004 2005 2006 2007 1-6/2008

6.4

9.411.6

16.0

2004 2005 2006 2007

8.8

12.7

16.6

23.7

2004 2005 2006 2007

Corporate Clients – Strong Contribution to Results

Profit Before Tax (€ mn) RoE Before Tax

Average Volumes Corporate Lending (€ bn) Average Volumes Corporate Deposits (€ bn)

CAGR: +36%CAGR: +39%

CAGR: +43%

RI Group consolidated results.Based on IFRS aggregated business segments.


Corporate Client Portfolio Well Balanced

+23%

+26%

RI Network banks only; no other subsidiaries included.

Segment Definitions:Large Corporates: companies with annual sales higher than €15-20 mnMid Market: companies with annual sales between € 5 mn and € 15-20 mn

Increasing penetration into the Mid Market segment

Still low base in Mid Market, hence, high growth potential in this segment

Number of Customers

20,100

27,000

24,700

34,000

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Large Corporates Mid Market

2007 2008


Corporate Credit Underwriting


Credit Underwriting Principles

Focus on customer relationship, domestic market deals, cross-selling and risk/return

Defined credit policy for each market

Concentration limits for unsecured exposure by Group of Connected Clients (GCC); levels depending on customer rating and GCC size

Target portfolios for each market by industry, collateral, FX risk, tenor, etc.

Special attention to customers exposed to high FX risk (stress testing)

Prudent approach to collateral: conservative valuation, cross-checked by internal experts; internal haircuts depending on the type of collateral


Diversified Corporate Portfolio

Total € 37 bn On- and Off-Balance Sheet Exposure Total 15,504 Borrowers

RI Network banks; no other subsidiaries included.Only Large Corporate and Mid Market clients.

Credit Risk Exposure by Region as of 30 June 2008

Number of Borrowers by Region as of 30 June 2008

CE48%

CIS30%

SEE22%

CE51%

CIS18%

SEE31%


Portfolio Granularity Improving

Development of Average Exposure per Borrower


0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

1Q 2007 2Q 2007 3Q 2007 4Q 2007 1Q 2008 2Q 2008

€m

n

0.0060%

0.0062%

0.0064%

0.0066%

0.0068%

0.0070%

0.0072%

0.0074%

0.0076%

0.0078%

0.0080%

On- and Off-Balance Sheet Exposure per Borrower (left scale)

Exposure per Borrower as % of total Portfolio (right scale)


Balanced Industry Mix

Corporate Exposure by Industry as of 30 June 2008


Materials8%

Consumer Cyclical10%

Energy1% Utilities

3%

Real Estate17%

Others8%

Financial4%

Consumer Non-Cyclical14%

Construction8%Trading

20%

Industrials7%


< 1 year52%

1 - 3 years20%

3 - 5 years11%

> 5 years17%

Prudent Maturity Profile

Corporate Exposure by Tenor Bands as of 30 June 2008



High and Well Diversified Collateralization

Corporate Exposure by Collateral Type as of 30 June 2008

RI Network banks; no other subsidiaries included.Only Large Corporate and Mid Market clients.Based on weighted collateral value (i.e. value after haircuts)

Cash3%

Guarantees9%Inventory & Receivables

17%

Unsecured37%

Equipment6%

Real Estate28%


Commercial Real Estate Underwriting

No speculative projects, but focus on:

Solid Equity – min. 20-30%

Level of pre-leases/pre-sales – 15-100%

Tight structure, prudent collaterals, stringent control throughout the project life-time

Prime locations, established developers, reputable tenants

Balanced mix of Retail, Office, Industrial and Residential projects

Projects not only in capitals but also in smaller cities

Real Estate Exposure by Region as of 30 June 2008


Total € 6.4 bn

CE56%

SEE15%

CIS29%


Strengthen the Corporate Business as RI’s Backbone


Strengthen the Corporate Backbone via…..

ENHANCED CRM* TOOLENHANCED CRM* TOOL

LEASING & FACTORINGLEASING & FACTORING

CORPORATE TREASURY SALESCORPORATE TREASURY SALES

INTERNATIONAL DESKSINTERNATIONAL DESKS

CORPORATE INVESTMENT BANKINGCORPORATE INVESTMENT BANKING

CORPORATE CASH MANAGEMENTCORPORATE CASH MANAGEMENT

FORMULA UNOFORMULA UNO M I D

M A

R K E T F O C

U S

M I D

M A

R K E T F O C

U S

*CRM – Customer Relationship Management Tool

Details presented in the Appendix


Appendix


Formula 1 Project Performance Improvement

Preparing before the race: prioritize efforts and resources on most attractive opportunities

Developing and coordinating the team: improving tools and skills

Monitoring performanceIntroducing flexible, performance-driven compensation

1 2

34

test - test - test5


Formula 1 Approach is Based on 4 Key Elements

Propagate best practices in corporate banking across RI network by adapting F1 modulesdesigned in one pilot country to the specifics of each country

Ensure commercial successdespite a business environmentthat is becoming ever morechallenging

Clients are getting more

sophisticated

Increasing competition from

both local and international

banks with strong skills and

balance sheets

Increasing retretion of

employees

Project‘s objectives

ContinuousImprovement

1 2

3 Performance monitoring

Right focus on resultsensured due to economic-profit KPIs, leading to alignment of bank profitability

Account plan ensuringcontinuous tracking of activity

Sales coordination model

Needs-/solution-orientedaccount planning

Cooperation acrosssales, product experts, and other functions

Planning and market sizing

Fact-based forecast formarket size and growth

Basis for prioritizing focussectors

Objective measure forsetting target

Performance-drivencompensation

Motivating incentives linked to maximizing value for entirebank and reaching stretchedtargets (based on )

Large differentiation betweentop and bottom performers

4

Formula 1 consists of our inter-connected modules

1


One of the Leading Leasing Providers in CEE

Continuing growth course in the first half of 2008

New business volume of € 1.6 bn – 30% up, compared to the first half of 2007; total assets reached € 5.5 bn

CE region with strongest contribution of 59% into the new business volumes growth; SEE and CIS regions contribute with 29% and 12% respectively

Net interest income up by 29% to € 61.4 mn

Purely organic growth resulting in coverage of 17 countries with top three market position in nine countries

Leasing Assets (€ mn)

9491,449

1,7352,230

3,060

4,610

5,500

0

1,000

2,000

3,000

4,000

5,000

6,000

2002 2003 2004 2005 2006 2007 30/06/2008


New business lines being developed with higher level of sophistication:

Renewable Energy – main focus on wind parks in new EU-member countries; not only plain vanilla leasing but end-to-end project development, operation and management

Business jets

Leasing Portfolio Composition

Low risk profile with standard assets dominating:

Leasing Portfolio as of 30 June 2008

Equipment; 17%

Vehicles; 69%

Real Estate; 14%


Factoring

2007 – factoring services offered in 8 countries:No. 1 position in one marketTOP 3 position in 3 other markets3 start-up operations in SEE

2008 – 3 new start-ups in CIS

High growth of factoring market, especially in the countries where we are starting

Factoring is:excellent mid market and SME penetration instrumentperfect for corporate cross-sellinga product with very good risk/return profile


Corporate Investment Banking (CIB)

Domestic Capital MarketsDomestic Capital Markets

Domestic Corporate FinanceDomestic Corporate Finance

Specialized FinanceSpecialized Finance

Product Group Description

Origination, execution, and placement (if applicable) of corporate finance deals, i.e.

Equity capital markets (ECM)Debt capital markets (DCM)

Origination, execution, and placement (if applicable) of specialized lending deals, including Project finance, Acquisition finance, Pre-IPO finance

Structuring, sales, and trading of cash and derivative financial products, i.e.

FXFixed income (FI)Equity

RI focuses on domestic CIB activities in the Mid Market Segment to be able to fulfill the clients‘needs across their whole life cycle (e.g. privatization efforts of former state owned mid-sizedcompanies.)


Leveraging the Network – Foster X-Border Business

INTERNATIONAL DESKS

Single point of entry for international clientsand intragroup clients


Bank Cooperation – RI as Gateway to CEE

13 Corporate Banking - Raiffeisen Bank...

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