Hansabank Kristina Siimar Chief Financial Officer 2 OVERVIEW AND - PowerPoint PPT Presentation

Hansabank Kristina Siimar Chief Financial Officer

2 OVERVIEW AND STRATEGIES Hansabank in the Baltics Hansa in the Baltics Customers 1,100,000 Incl. Internet 388,000 Customers 3,750,000 Branches 95 Incl. Internet 647,000 ATMs 505 Branches 309 Cards 800,000 Employees 2,404 ATMs 969 Cards 1,630,000 Employees 6,164 Customers 320,000 Incl. Internet 139,000 Customers 2,330,000 Branches 59 Incl. Internet 120,000 ATMs 197 Branches 155 Cards 330,000 ATMs 267 Employees 1,217 Cards 500,000 Employees 2,541 www.hansagroup.com

3 OVERVIEW OF THE REGION Ratings Moody’s Fitch S&P Estonia A1 A- A- Latvia A2 BBB BBB Lithuania Baa1 BBB- BBB Hansabank senior debt A2 A- www.hansagroup.com

4 OVERVIEW OF THE REGION Macro highlights GDP Infl.* CA/GDP 01 02F 03F 01 02F 03F 01 02F 03F Estonia 5.0 5.5 5.5 5.4 5.0 2.5 -6.2 -9.0 -9.5 Latvia 7.7 4.0 5.5 1.6 2.0 3.0 -9.7 -9.5 -9.0 Lithuania 5.9 5.0 5.5 1.0 1.0 2.5 -4.8 -5.5 -5.0 *as GDP deflator www.hansagroup.com

5 OVERVIEW OF THE REGION Market size Deposits Loans* GDP per cap. (eur) (EUR bln) Estonia 2.8 2.8 6.1 4,960 Latvia 4.6 3.1 8.4 3,700 3.1 2.2 13.9 4,250 Lithuania Baltics 10.5 8.1 28.4 Total population (mil) 7.4 * Including leasing www.hansagroup.com

6 OVERVIEW AND STRATEGIES Baltic market share, June 2002 Deposits Loans Hansa- Hansa- bank bank Others Group Group Others 35% 33% 32% 43% SEB SEB Group Group 32% 25% Total Baltic market, 30.06.02, EUR in millions Deposits 10,800 Loans 8,500 www.hansagroup.com

7 OVERVIEW AND STRATEGIES Business philosophy Who is our customer? • A universal bank in the Baltic countries • Primary focus on medium-sized companies and affluent private customers What are our value propositions to the customers? • Key sustainable competitive advantage is the combination of easy access, knowledge of our customer and the best quality of service • One-stop-shop strategy How can we do this efficiently? • Best electronic channels, branches as advisory units • CRM tools enable to offer our customers the most suitable solutions • Common IT system • Knowledge management within the Group and with Swedbank www.hansagroup.com

8 OVERVIEW AND STRATEGIES Medium-term financial targets • Double the operating profit in 4 years • ROE at least 25% • Cost-income ratio below 50% • Net risk cost* below 0.8% *net risk cost = (loan write-offs – recoveries) / average loan portfolio www.hansagroup.com

9 FINANCIAL REVIEW www.hansagroup.com

10 FINANCIAL REVIEW Operating profit and net profit Operating profit Net profit 50 38.2 40 36.6 EUR in millions 29.4 28.6 27.4 27.6 26.8 30 26.1 24.9 22.4 20 10 0 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 2.5% 2.0% 2.1% 2.2% 3.1% ROAA 24.7% 19.2% 20.1% 21.2% 27.5% ROAE www.hansagroup.com

11 FINANCIAL REVIEW Revenues and expenses Revenues 100 +11% EUR in millions 80 Net Interest Margin 60 5.5% 40 5.0% 20 4.5% 0 Q3 01 Q3 02 4.0% 100 Operating expenses 3.5% EUR in millions 75 3.0% -3% Q1 Q2 Q3 Q4 Q1 Q2 Q3 01 01 01 01 02 02 02 50 25 0 Q3 01 Q3 02 www.hansagroup.com

12 FINANCIAL REVIEW Efficiency Cost*-income ratio Operating expenses* to assets 5% 65% 4% 60% 3% 55% 2% 50% 45% 1% 0% 40% 2001 Q1 02 Q2 02 Q3 02 2001 Q1 02 Q2 02 Q3 02 Hansabank Nordic CEE * Excluding goodwill amortisation, before provisions Source: financial reports www.hansagroup.com

13 FINANCIAL REVIEW Loan and deposit growth by regions Distribution of Loans by Region Distribution of Deposits by Region annual. annual. 30.09.02 30.09.02 growth* growth* (EUR in millions) (EUR in millions) Estonia 1,678 26% Estonia 1,615 15% Latvia 679 35% Latvia 732 21% Lithuania 637 25% Lithuania 1,008 5% Other 50 Gross lending 3,044 30% Total deposits 3,355 15% * Local currency growth www.hansagroup.com

14 FINANCIAL REVIEW Asset quality, 30.09.02 Net Risk Cost 10 9 H-LTB 8 Q3 Q2 (EUR in millions) EUR in millions 7 Overdues* 40 42 6 14 15 Non-performing loans (NPL)** 5 NPL / total loans 0.5% 0.5% 4 NPL coverage ratio 3.4 3.1 3 Net risk cost*** 0.0% 0.1% 2 * Overdue more than 30 days 1 ** Overdue more than 60 days 0 ***(write-offs – recoveries) / average portfolio Q4 01 Q1 02 Q2 02 Q3 02 Write-offs Recoveries www.hansagroup.com

15 GROWTH OPPORTUNITIES www.hansagroup.com

16 GROWTH OPPORTUNITIES Acquisition history • June 1996 – Deutsche Lettische bank (current Hansabanka) • July 1998 – Estonian Savings Bank (merged with Hansabank) • April 2000 – Ventspils UBB (merged with Hansabanka) • May 2001 – Lithuanian Savings Bank (merged with Hansabankas) • Second largest bank in Lithuania, largest retail bank • Deposits 1,012 mio EUR (09.2002) • Loans 400 mio EUR (09.2002) www.hansagroup.com

17 GROWTH OPPORTUNITIES Hansa-LTB restructuring (June 01 – September 02) Restructuring completed: • Number of branches decreased by 60% to 155, all branches on-line • Number of employees decreased by 30% to 2,372 • Number of cards increased by 400% to 500,000 • Over 30 days overdues have decreased from 10% to 0.1% • Loan growth in 9m 2002: 188 million LTL (22% annual growth rate) • incl . mortgages: 123 million LTL (118% annual growth rate) www.hansagroup.com

18 GROWTH OPPORTUNITIES Pension reform in Estonia • I and III pillars already existing • II pillar started in July 2002 • Compulsory to new entrants to the job market • Material effect on the Group’s results in 5 years Targets for 2002: • 60% market share in II pillar assets • 50,000 Hansa Pension Fund clients Actual result (Oct 02): • 53% market share in assets • 104,600 clients www.hansagroup.com

19 GROWTH OPPORTUNITIES Credit penetration Mortgages to GDP Assets to GDP 250% 60% 55% 230% 50% 200% 40% 40% 150% 30% 100% 76% 72% 72% 20% 12% 50% 32% 6% 10% 4% 3% 0% 0% Est Lat Lit Eastern Euro Est Lat Lit Pol SWE EU Europe www.hansagroup.com

20 GROWTH OPPORTUNITIES Increase in household consumption III Savings products Asset management Pension II Credit products Mortgages I Basic products Consumer credit Transfers Cards Internet bank 450 400 90 350 in thousands 300 Issued by Hansabank Group 250 200 315 > 320 EUR per member 150 > 160 EUR per member 100 110 50 50 45 0 Households Mortgages Credit cards Savings www.hansagroup.com

21 GROWTH OPPORTUNITIES Hansa Leasing Russia • Location of the Baltic countries has historically created business contacts with Russia, 70% of the cargo flow through the Baltic ports is of Russian origin • Russian economic outlook is positive - WTO membership, good relations with the US and EU, market economy status • Existing good contacts with Russian clients, good experience in financing Russian transit business in the Baltics • Focus on financing the sectors, that are directly supporting Russian export - railway and ports • Only asset based-financing, main focus is on big ticket leases to selected Russian companies from transport sector • Portfolio is limited to 5% of the Group’s total credit portfolio www.hansagroup.com

22 PRIORITIES FOR 2003 • To increase the loan portfolio in Latvia and Lithuania To develop a group-wide knowledge sharing framework • • To fully implement Pan-Baltic product development www.hansagroup.com