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Industry Report
E Q U I T Y
R E S E A R C H :
E U R O P E
Banks
January 2005
Europe
Simon Samuels
+44-20-7986-4188
simon.samuels@citigroup.com
London The View from the Top
Yann Goffinet* Medium-Term Growth for European Banking
+44-20-7986-3953
yann.goffinet@citigroup.com ➤ We present a top-down estimate of medium-term
London
revenue growth prospects for 20 banking systems
across Europe, based on economic growth, banking
European Banking Team
penetration and pricing structures
Albert Coll
Ronit Ghose
➤ Across Europe we forecast revenue growth of 4.7%
Azzurra Guelfi*
Yann Goffinet* pa over the next five years, driven by nominal GDP
Simon Nellis
Tom Rayner
growth of 4.4% pa, balance sheet growth of 5.6%
Philip Richards pa and a gentle 10bp margin erosion
Fred Rizzo*
Riccardo Rovere ➤ In general we find our ‘top-down’ forecasts are
Simon Samuels
Jeremy Sigee more conservative than our ‘bottom-up’ forecasts,
Kiri Vijayarajah with the exception of CEE
➤ By country, the conclusions include:
*US Investors please contact one
of the other analysts listed ➤ Germany has higher banking penetration than
the UK
➤ Spain is forecast to grow faster than Italy
➤ Nordics are not all the same, with Sweden/
Norway growing much faster than
Denmark/Finland
➤ Greece is forecast to grow faster than the Czech
Republic
➤ Germany/Netherlands forecast to grow slowest
Smith Barney is a division of Citigroup Global Markets Inc. (the "Firm"), which does and seeks to do business with companies covered in its
research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this
report. Investors should consider this report as only a single factor in making their investment decision.
The View from the Top – January 2005
Table of Contents
Investment Summary 3
The View from the Top.......................................................................................................................... 6
Pan European Overview ........................................................................................................................ 15
Detailed Country Analysis ..................................................................................................................... 21
COUNTRY ANALYSIS 33
Austria.................................................................................................................................................... 34
Belgium.................................................................................................................................................. 36
Czech Republic ...................................................................................................................................... 38
Denmark ................................................................................................................................................ 40
Finland ................................................................................................................................................... 42
France .................................................................................................................................................... 44
Germany ................................................................................................................................................ 46
Greece .................................................................................................................................................... 48
Hungary ................................................................................................................................................. 50
Ireland .................................................................................................................................................... 52
Italy........................................................................................................................................................ 54
Netherlands ............................................................................................................................................ 56
Norway .................................................................................................................................................. 58
Poland .................................................................................................................................................... 60
Portugal.................................................................................................................................................. 62
Spain ...................................................................................................................................................... 64
Sweden................................................................................................................................................... 66
Switzerland ............................................................................................................................................ 68
Turkey.................................................................................................................................................... 70
UK.......................................................................................................................................................... 72
2
The View from the Top – January 2005
The dominant investment theme in the European bank sector last year
Investment Summary
was Emerging Europe, driven by the perception that banks in those
countries offer better medium-term revenue growth prospects. But
what exactly is realistic revenue growth for a banking system — not
just in Emerging Europe but across the whole of Europe? This report
tries to address that question by modelling, from a top-down
perspective, medium-term revenue growth for banks across 20
European countries.
The age-old question
The question of medium-term revenue growth in the bank sector is one that we are
often asked. This report is our attempt to address that issue. To do so we have taken
a wholly top-down view of the growth prospects for each of 20 banking systems
across Europe. Our approach starts by projecting medium-term economic growth.
We then measure the penetration of the banking system in each country by
comparing balance sheet assets and liabilities to GDP. Next we compare pricing and
margin dynamics within each country and model those over time. Finally, we use all
of these inputs to produce medium-term revenue forecasts, which can then be
benchmarked against GDP. As is clear from this approach, the resulting revenue
projections may well differ from our bottom-up approach.
Pan European overview
Across Europe we estimate that banking assets and liabilities currently represent
234% of GDP, up from 162% in 1990. In aggregate we see only limited scope for
this to grow much further, although Emerging Europe is an obvious exception where
penetration is just 75%. Revenue margins (revenues as a percentage of balance
sheet) have declined from 3.1% in 1990 to 2.7% currently, and we anticipate only
gentle further revenue erosion from these levels. Our central forecast is for
medium-term revenue growth of 4.7% per annum across Europe. This would be
barely half the nominal growth rate over the 1990-2003 period (8.4% pa) and a more
significant slowdown from the level enjoyed in the 1980s (15.5% pa). However, it
would represent a small increase from the growth rate of the past three years (3.9%
pa). At this pace, banking revenues as a percentage of GDP would remain steady at
their current levels of 5.9%, up sharply from 3.3% in 1980 and 4.6% in 1990. As
Figure 1 shows, revenue growth is projected to vary widely across Europe.
Figure 1. Banking System Revenue Growth, 2004-08E
12%
11%
10%
9%
Annual Average Revenue Growth
8%
7%
6%
5%
4%
3%
2%
1%
0%
Austria
Germany
Denmark
EUROPE x CEE
UK
Turkey
Hungary
Norway
Italy
Switzerland
Netherlands
Portugal
Poland
Greece
Sweden
Spain
Ireland
France
Belgium
Czech Republic
Finland
3
The View from the Top – January 2005
4
The View from the Top – January 2005
Investment Summary
Having established top-down forecasts, we have then compared these to our bottom-
up forecasts for the relevant country. In general we find that our country analysts are
more optimistic than our top-down approach suggests, typically by 1%-2% revenue
growth rates. This might be a sign that bottom-up forecasts are too high, and in
particular we would identify Germany as a country where medium-term revenue
expectations may prove ambitious. By contrast, our bottom-up forecasts are
generally more pessimistic in CEE than the top-down approach might suggest.
Valuing growth
In 2004 the only banks that meaningfully outperformed the market were those
offering superior top-line revenue growth, specifically CEE and Greece. The
purpose of this report is not to draw meaningful valuation conclusions, but it is
nevertheless interesting to note that generally the faster-growing countries are the
ones more highly rated today. Comparing our top-down revenue growth forecasts
with current valuations, our analysis suggests:
➤ Sweden, France, UK, Ireland and Norway look relatively cheap considering
the medium-term growth prospects.
➤ The countries that look relatively expensive are Germany, Spain and Austria.
➤ Using this broad-brush approach, the countries that look relatively fairly valued
are Denmark, Switzerland, Turkey, Netherlands, Italy, Czech Republic,
Greece and Poland.
5
The View from the Top – January 2005
6
The View from the Top – January 2005
➤ Economic Growth — this is clearly very important for all banking revenues,
and over a long period of time we would expect a strong correlation between
banking system revenue growth and economic growth. A large part of banking
revenues are directly linked to economic activity, including balance sheet growth
(lending and deposits) and other money transmission related activities. While for
Europe’s banks a meaningful part of their revenue base is also financial market
dependent, even here over the long run financial markets move in line with
economic growth. Indeed, looking at each year since 1980, revenue growth for
the European bank sector has on average been 1.1x the GDP growth in that year.
Figure 2 highlights the strong correlation between economic growth and banking
system revenue growth over the past quarter century.
Figure 2. European Banks Sector Revenue Growth and Economic Growth, 1980-2008E
12%
11%
1981
1983
10%
1982
Europe (ex CEE) nominal GDP Growth
9% 1989 1988
1984 1987 1985
1990
8%
7% 1999 2000
1997
1994
1986
6%
1991
5% 1995
2008E
2006E 2007E 1996
2002 2004E 2005E 1998 1993
4%
2001
2003
3% 1992
2%
-8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 22% 24% 26%
Europe (ex CEE) bank sector revenue growth
7
The View from the Top – January 2005
➤ Outputs — the final part of our analysis is to compare revenue forecasts (that we
have calculated from the above) with GDP forecasts for the relevant country.
Specifically, what do our forecasts imply for bank sector revenues as a
percentage of GDP? Also, how does our revenue growth forecast over the next
few years compare with our GDP growth forecast over the same time period?
How does that compare to history?
The results
The exercise described above has been carried out on both a country-by-country
level and also for Europe as a whole. The next chapter summarises the results across
Europe, while the following chapter (and Appendix) shows the detailed analysis on a
country level. Figure 3 summarises the results by country and in aggregate and the
comments on this are included in the Investment Summary at the start of this report.
8
The View from the Top – January 2005
Big 5 Countries
France Average 4.1% Average 261% Average 4.5% Stable 2.06% 2.05% -1bp Average 4.7%
Germany Low 2.9% Average 273% Low 3.6% Stable 1.95% 1.95% 0bp Low 3.4%
Italy Average 3.9% Low 159% Average 5.3% Small decline 1.93% 1.86% -7bp Average 4.9%
Spain High 5.1% Low 179% High 6.8% Medium decline 3.20% 3.00% -20bp High 5.4%
UK High 5.0% Low 176% Average 6.2% Medium decline 2.93% 2.75% -18bp Average 4.6%
Smaller Countries
Austria High 5.0% Average 267% Average 5.8% Small decline 2.37% 2.29% -8bp Average 5.0%
Belgium Average 4.1% High 333% Low 4.1% Small decline 1.87% 1.82% -5bp Low 3.2%
Ireland High 6.8% High 366% High 6.8% Medium decline 2.15% 2.01% -14bp Average 5.2%
Netherlands Low 2.8% High 405% Low 2.8% Small decline 2.57% 2.49% -8bp Low 1.9%
Portugal Average 4.0% Average 226% Average 5.4% Medium decline 2.50% 2.38% -12bp Low 3.9%
Switzerland Low 3.0% High 512% Low 3.4% Stable 2.80% 2.80% 0bp Low 3.5%
Nordic Countries
Denmark Average 4.4% Low 147% Average 4.9% Medium decline 2.90% 2.70% -20bp Low 3.3%
Finland Average 4.1% Low 114% Average 5.8% Medium decline 3.03% 2.85% -18bp Average 4.6%
Norway High 4.9% Low 97% High 7.0% Medium decline 3.05% 2.93% -12bp High 6.0%
Sweden Average 4.6% Low 117% High 6.4% Small decline 2.67% 2.59% -8bp High 5.5%
CEE/Greece
Czech Republic High 6.6% Low 116% High 11.2% Large decline 3.85% 3.45% -40bp High 8.4%
Greece High 6.0% Low 113% High 10.4% Medium decline 4.00% 3.85% -15bp High 9.5%
Hungary High 8.8% Low 68% High 13.7% Large decline 4.92% 4.35% -57bp High 10.3%
Poland High 7.8% Low 57% High 13.0% Large decline 5.70% 5.05% -65bp High 9.8%
Turkey High 13.4% Low 59% High 16.9% Large decline 9.00% 7.00% -200bp High 11.6%
9
The View from the Top – January 2005
Outputs
How do our revenue projections compare with economic growth expectations over
the period? Figure 4 shows that currently we estimate that the European bank sector
generates revenues equivalent to 5.9% of GDP. We would make the following
observations:
➤ As with other banking measures, revenues as a percentage of GDP vary widely
across Europe. Perhaps surprisingly, banking revenues are a very similar
percentage of GDP in each of France, Germany, Spain and UK, although as
shown in Figure 4 each country gets there via distinctly different routes.
➤ Italy has the lowest level of banking revenues compared to GDP, reflecting its
low penetration and low margins.
➤ Generally, smaller countries have a higher revenue base, partly reflecting the
often international element to their domestic banking systems.
➤ All of the emerging European countries have a lower proportion of revenues to
GDP than the European average, clearly underpinning their superior revenue
growth expectations.
➤ The result of our gearing and margin forecasts is that banking revenues as a
proportion of GDP are set to rise in some Western European countries (notably
Germany and Sweden) along with all of CEE (except Turkey), but to decline in
UK/Ireland and Belgium/Netherlands.
Figure 4. Revenues Compared with GDP by Country
REVENUE FORECAST REVENUE GROWTH
Revenues as % GDP Multiple of GDP growth
Smaller Countries
Austria 6.38% 6.34% Small decline 1.4x 1.0x Decline
Belgium 6.23% 6.06% Decline 1.4x 0.8x Decline
Ireland 7.87% 7.36% Decline 1.4x 0.8x Decline
Netherlands 10.41% 10.08% Decline 2.2x 0.7x Decline
Portugal 5.73% 5.74% Stable 1.0x 1.0x Stable
Switzerland 14.34% 14.59% Rise nm nm —
Nordic Countries
Denmark 4.26% 4.08% Decline 0.4x 0.7x Acceleration
Finland 3.51% 3.53% Stable -0.2x 1.1x Turnaround
Norway 3.02% 3.14% Rise 0.2x 1.2x Turnaround
Sweden 3.18% 3.29% Rise 1.4x 1.2x Small decline
CEE/Greece
Czech Republic 3.85% 4.14% Rise 2.1x 1.3x Decline
Greece 4.72% 5.31% Rise 1.4x 1.6x Stable
Hungary 4.13% 4.22% Rise -0.7x 1.2x Turnaround
Poland 3.42% 3.64% Rise 0.7x 1.3x Acceleration
Turkey 5.49% 4.83% Decline 1.0x 0.8x Stable
10
The View from the Top – January 2005
12%
11% Top down
10% Bottom up
9%
Medium Term Revenue Growth
8%
7%
6%
5%
4%
3%
2%
1%
0%
Poland
Sweden
Austria
France
Switzerland
Denmark
Netherlands
Turkey
Hungary
Greece
Germany
Spain
Ireland
UK
Norway
Italy
Czech Republic
Note on chart: Bank guide - Austria (Bank Austria, Erste); France (BNP Paribas, SocGen); Germany (Commerzbank, Deutsche Postbank and HVB);
Greece (Alpha Bank, EFG and NBG); Ireland (AIB and Bank of Ireland); Italy (BNL, BP Verona Novara, Banca Intesa, Monte dei Paschi, Sanpaolo
IMI, Unicredito); Netherlands (ABN AMRO); Spain (Banco Popular, Banco Sabadell, Bankinter, Banesto); Denmark (Danske); Sweden (Swedbank,
SEB, SHB); UK (All. & Leicester, Barclays, B&B, HBOS, Lloyds TSB, Northern Rock, RBS); Norway (DnB NOR); Switzerland (CS, Julius Baer, UBS);
Poland (Pekao, BPH, BZWBK); Czech (Komercni); Hungary (OTP); Turkey (Isbank, Akbank, Yapi Kredi).
Source: Smith Barney estimates.
11
The View from the Top – January 2005
-2%
-3%
Bottom up more
-4%
optimistic
-5%
Greece
Switzerland
Sweden
France
Norway
Denmark
Poland
Germany
Italy
Ireland
Czech Republic
UK
Spain
Austria
Netherlands
Turkey
Hungary
Note on chart: Bank guide - Austria (Bank Austria, Erste); France (BNP Paribas, SocGen); Germany (Commerzbank, Deutsche Postbank and HVB);
Greece (Alpha Bank, EFG and NBG); Ireland (AIB and Bank of Ireland); Italy (BNL, BP Verona Novara, Banca Intesa, Monte dei Paschi, Sanpaolo
IMI, Unicredito); Netherlands (ABN AMRO); Spain (Banco Popular, Banco Sabadell, Bankinter, Banesto); Denmark (Danske); Sweden (Swedbank,
SEB, SHB); UK (All. & Leicester, Barclays, B&B, HBOS, Lloyds TSB, Northern Rock, RBS); Norway (DnB NOR); Switzerland (CS, Julius Baer, UBS);
Poland (Pekao, BPH, BZWBK); Czech (Komercni); Hungary (OTP); Turkey (Isbank, Akbank, Yapi Kredi).
Source: Smith Barney estimates.
12
The View from the Top – January 2005
Valuing growth
The final part of our analysis is to briefly consider whether the revenue differentials
that we project from a top-down perspective are reflected in share price ratings. It is
worth noting that drawing out meaningful investment conclusions is not the intention
of this report. Nevertheless, it is useful to briefly consider the growth/valuation
comparison. As with the top-down/bottom-up revenue comparison discussed above,
this analysis is again distorted by having domestic listed banks with non-domestic
business. Hence we have followed the same approach as that in Figure 7, and
focused only on those banks with a dominant domestic business.
Figure 7 shows medium-term (top-down) revenue growth and 2005E cash P/E
ratings. There does indeed seem to be some correlation, with the faster growing
countries typically trading on higher P/E multiples. More specifically:
➤ Considering the medium-term growth prospects, the countries that look relatively
cheap are Sweden, France, UK, Ireland and Norway.
➤ The countries that look relatively expensive are Germany, Spain and Austria.
➤ Using a broad-brush approach, the countries that looked relatively fairly valued
are Denmark, Switzerland, Turkey, Netherlands, Italy, Czech Republic,
Greece and Poland.
Figure 7. Medium-Term Revenue Growth (Top Down) and Valuation
15.0x
Germany
2005 PE (cash basis) for Domestic banks in each country
Spain
14.0x Greece
Austria
Poland
12.0x Turkey
Denmark
Switzerland
11.0x
Italy
Sweden
10.0x Ireland
France
Netherlands Norway Hungary
UK
9.0x
1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12%
(Top down) Medium Term Revenue Growth
In practice there are many other considerations in looking at valuation. Most obvious
is the issue of risk, which is significantly higher in some of the CEE countries.
Nevertheless, we do believe this is a useful exercise for thinking about the valuation
attributable to banking markets displaying vastly divergent revenue expectations.
13
The View from the Top – January 2005
14
The View from the Top – January 2005
This section of our report shows the European aggregated highlights of our more
detailed country-by-country analysis. The next section of this report shows those
detailed country trends. Our analysis covers 20 European countries. These are:
➤ The ‘Big 5’ — France, Germany, Italy, Spain and the UK
➤ Smaller Western European Countries — Austria, Belgium, Ireland,
Netherlands, Portugal and Switzerland
➤ Nordic Countries — Denmark, Finland, Norway and Sweden
➤ Emerging Europe — Czech Republic, Greece, Hungary, Poland and Turkey
Using economic growth, gearing and pricing assumptions across each one of these 20
countries, we have forecast revenue growth on a country-by-country basis, and the
details of these forecasts can be found in the following section. For the European
bank sector as a whole, our forecasts suggest average revenue growth of 4.7% per
annum over the 2004-08 period. This would represent almost a halving from the
nominal growth rate over the period 1990-2003 (8.4% per annum) and a more
significant slowdown from the growth rate enjoyed by the sector in the 1980s
(15.5% per annum). However, this would represent a small increase from the growth
rate of the past three years (3.9%).
15
The View from the Top – January 2005
How is this forecast revenue growth of 4.7% per annum calculated? Using the
outline described earlier, it is a function of the interplay between economic growth,
balance sheet penetration and pricing evolution.
Economic growth
Over the 2004-08 period our economists forecast nominal GDP growth averaging
4.4% across the 20 countries included in this review. This is down from average
nominal growth of 5.2% over the 1990-2003 period and down sharply from the
1980s average of 8.9%.
11.0%
10.5%
10.0%
European Countries (x CEE) nominal GDP growth
9.5%
9.0%
8.5%
8.0%
7.5%
7.0%
6.5%
6.0%
Average 5.2%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004E
2005E
2006E
2007E
2008E
16
The View from the Top – January 2005
Gearing
A crucial feature of the evolution in the European bank sector over the past decade
has been the ever-larger role of the banking system in most European countries. For
the 15 Western European countries that we follow we estimate that banking assets
and liabilities have risen from 162% of GDP in 1990 to 234% currently, and for the
‘Big 5’ countries they have risen from 145% to 210% over the same period.
Interestingly, for the emerging European countries this ratio has increased much
more modestly, from 68% in 1995 to 75% currently. The aggregate of our country-
by-country forecasts (see details in next section) shows this ratio rising modestly for
the 15 Western European countries (from 234% currently to 243% by 2008), but
more rapidly within the CEE countries and Greece (from 75% to 90% by 2008).
250%
230%
210%
European Banks Balance Sheet as % GDP
190%
Europe (x CEE)
170%
Big 5 Countries
150%
CEE countries
130%
110%
90%
70%
50%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004E
2005E
2006E
2007E
2008E
Note: OECD data not available for 2001 and 2002
Sources: OECD and Smith Barney estimates.
Bringing together the economic forecasts outlined in Figure 9 with the gearing dynamic
shown in Figure 10, Figure 11 shows our forecast for balance sheet growth over the next
few years. The aggregate of the 20 countries analysed shows balance sheet growth of
5.6% per annum 2004-08. This is down from the 1990-2003 period (9%) and down more
sharply from the average growth rate of the 1980s (13.9% per annum).
17
The View from the Top – January 2005
18%
17%
16%
15%
Pricing
Having considered economic growth and gearing, the final part of our analysis is
pricing. Once again, we have analysed pricing on a detailed country-by-country
basis, and in modelling likely pricing scenarios we have considered both the current
pricing structure and, crucially, the factors that might change this (eg competition,
barriers to entry, the role of not-for-profit participants etc). Since 1990 banking
revenues as a percentage of balance sheet assets and liabilities have declined from
3.12% to 2.73% (a 12% decline), with net interest income declining from 2.20% to
1.53% (–30%) and non-interest income rising from 0.91% to 1.21% (+32%). The
aggregate of our country forecasts suggests these trends will broadly continue, with
total income margins eroding modestly (to 2.52%, down a further 8%) driven by a
decline in net interest income (down to 1.43%) and a modest decline in non-interest
income (down to 1.15%).
3.8%
3.6%
European Banks (x CEE) revenues as % Balance Sheet
3.4%
3.2%
3.0%
2.8%
2.6%
2.4%
2.2% Total Income
2.0%
1.8% Net interest income
1.6%
Non interest income
1.4%
1.2%
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004E
2005E
2006E
2007E
2008E
18
The View from the Top – January 2005
The outputs
So, we forecast revenue growth across the whole of Europe averaging 4.7% per
annum over the next five years. But what does that imply in terms of banking
revenues relative to GDP? Since 1980, we estimate that European banking revenues
have risen from 3.3% of GDP (in 1980) to 4.6% (in 1990) to 5.9% (currently). Our
detailed country-by-country analysis suggests that this will now stabilise at just under
6% of GDP (see Figure 13), although there will clearly be significant swings on an
individual country basis (see next section).
6.50%
6.25%
6.00%
European Banks (x CEE) revenues as % GDP
5.75%
5.50%
5.25%
5.00%
4.75%
4.50%
4.25%
4.00%
3.75%
3.50%
3.25%
3.00%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004E
2005E
2006E
2007E
2008E
Sources: OECD and Smith Barney estimates.
Finally, it is worth looking at how our forecasts for revenue growth compare to GDP
growth, and to put it into a historical context. Figure 14 shows revenue growth as a
multiple of GDP over the past 23 years across Europe. While there has been clear
volatility over the period, on average revenue growth for the European bank sector
has been 1.1x GDP growth since 1981. Put another way, revenue growth for the
European bank sector has averaged around 10% more than GDP growth each year,
which again serves to underline the fact that the starting point for forecasting revenue
growth for banks is to look at economic growth. The aggregate of our country
forecasts suggests revenue growth broadly matching GDP growth over the next few
years, although again this will vary considerably by country (see next chapter).
19
The View from the Top – January 2005
Figure 14. European Banks Revenue Growth as Multiple of GDP Growth, 1980-2008E
2.6x
20
The View from the Top – January 2005
Having looked at the Pan European results in the previous chapter, this chapter
focuses on the country-by-country forecasts that make up this aggregated data. The
approach is as outlined in the previous chapter; we consider GDP growth (in nominal
terms), the penetration of the banking system and, finally, pricing within the banking
system. As a reasonableness check we then examine the outputs (in terms of revenue
forecasts) and compare them to GDP.
Revenue growth
Figure 15 shows historical revenue growth for each of the 20 countries that we have
analysed. Across Europe revenue growth has averaged 8.4% per annum over the period
since 1990, with (unsurprisingly) the fastest revenue growth in the CEE countries
(excluding the Czech Republic), Greece and Ireland. Of Europe’s major countries, the
slowest revenue growth has been in France (averaging just 4.5% per annum)
Figure 15. Banking System Revenue Growth, 1990-20011
165% 87%
30%
28%
26%
24%
22%
Annual Average Balance Sheet Growth
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
Portugal
Austria
Netherlands
France
Turkey
Ireland
UK
Poland
Spain
Sweden
Finland
Switzerland
Denmark
Hungary
Greece
Italy
Germany
Norway
Belgium
EUROPE x CEE
Czech Republic
1
1990 onwards for all countries except Ireland (1996), Poland and Turkey (1994) and Czech Republic and Hungary (1995). Note: OECD data not
available for 2001 and 2002
Source: OECD and Smith Barney analysis.
21
The View from the Top – January 2005
Our forecasts for revenue growth by country are shown in Figure 16. As noted in the
previous chapter, for Europe as a whole we forecast revenue growth of 4.7% per
annum over the 2004-08 period. Within this, the countries forecast to grow revenues
at the fastest pace are CEE and Greece (ranging from 8% per annum in the Czech
Republic to almost 12% per annum in Turkey). At the other extreme, we project
revenue growth in the Netherlands will be the weakest of any European country (just
below 2% per annum) and among the major countries the weakest will be in
Germany (3.4% per annum). The reasons vary, and we will explore this in more
detail later. Other results of note include the wider-than-expected divergence in the
Nordic countries (Norway and Sweden among Europe’s faster growers, Denmark
one of the slowest). Finally, note that despite Italy growing faster than Spain over the
1990-2003 period, for 2004-08 we forecast a reversal with Spanish banking revenues
(+5.4% per annum) growing faster than Italian (+4.9% per annum).
12%
11%
10%
9%
Annual Average Revenue Growth
8%
7%
6%
5%
4%
3%
2%
1%
0%
Switzerland
EUROPE x CEE
Poland
Sweden
Spain
Finland
Belgium
Austria
Portugal
Netherlands
Turkey
Hungary
Czech Republic
Norway
Italy
Germany
UK
Ireland
Greece
France
Denmark
Economic growth
As noted earlier, perhaps the key ‘input’ into revenue growth for any banking system
is economic growth. Historically there has been a very close relationship between
revenue growth and economic growth (see Figure 2 earlier). Figures 17 and 18 show
historical and forecast nominal GDP growth for the 20 countries that we have
included in our analysis. Again, the trend is perhaps not a surprise — with CEE,
Greece and Ireland forecast to grow fastest. Figure 18 also shows why there are good
reasons for Spanish banking revenues to be forecast to grow faster than Italian
revenues; our economists forecast average nominal GDP growth in Spain over the
2004-08 period of 5.1% compared with just 3.9% in Italy. Through compounding,
even these reasonably small differences in growth will make a meaningful difference
over time (in the case of Spain and Italy, by 2008 this will result in Spanish GDP
over 7% higher than Italian GDP relative to the start period). Furthermore, if banking
revenues are typically a geared multiple of GDP (historically around 1.1x, see Figure
4 earlier) then the difference will become more magnified over time.
22
The View from the Top – January 2005
Portugal
Austria
Netherlands
France
Turkey
Ireland
Poland
Spain
UK
Sweden
Denmark
Finland
Switzerland
Hungary
Greece
Norway
Italy
Germany
Belgium
EUROPE x CEE
Czech Republic
1
1990 onwards for all countries except Greece (1996), Ireland (1999), Poland and Hungary (1996) and Czech Republic (1995)
Source: OECD and Smith Barney analysis.
11%
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
Portugal
Austria
France
Netherlands
Turkey
Poland
Ireland
Spain
UK
Sweden
Denmark
Finland
Switzerland
Hungary
Greece
Norway
Italy
Germany
Belgium
EUROPE x CEE
Czech Republic
23
The View from the Top – January 2005
Gearing
As discussed earlier, we believe that the more accurate measure of gearing (or
leverage) of an economy is not the narrowly defined loans as a percentage of GDP
measure but instead the more widely defined balance sheet assets/liabilities, expressed
as a percentage of GDP. Figure 19 shows current gearing levels for each of 20
countries across Europe. As might be expected for a continent as diverse as Europe,
gearing varies considerably. At one extreme, gearing (as defined) in Switzerland is
over 500%, clearly reflecting that country’s position as a net recipient of overseas
banking activities. At the other extreme, gearing in Poland is just 57%, and more
generally is much lower for the CEE countries and Greece. Perhaps more surprisingly,
on this wider measure gearing levels in Spain, UK and Italy are very similar. Whereas
in the UK the well documented loans to GDP measure suggests a higher degree of
penetration, in fact the UK banks typically have a bias towards lending activities and
are poor at gathering liabilities, especially those of longer duration. Thus the
‘penetration’ of the banking system in the UK is not as high as gearing levels (as
recorded from the borrower’s perspective). By contrast, in Italy banks have already
achieved a large role in the economy (as measured by assets/liabilities to GDP) despite
gearing (from the borrowers perspective) remaining low.
Figure 19. Balance Sheet Assets/Liabilities as Percentage of GDP, Latest
560%
520%
480%
440%
400%
360%
320%
280%
240%
200%
160%
120%
80%
40%
0%
Austria
Italy
Switzerland
UK
Ireland
Spain
Belgium
Norway
EUROPE x CEE
Sweden
Denmark
Finland
Greece
Netherlands
Germany
Hungary
Turkey
Portugal
France
Poland
Czech Republic
In terms of forecasting, Figures 20 and 21 show our expectations for banking sector
assets/liabilities relative to GDP over the next five years. In no country do we
forecast a reduction in gearing, although in two countries (Netherlands and Belgium)
we forecast no increase. As expected, we forecast the largest increase in gearing in
those countries where current levels are lowest (CEE).
24
The View from the Top – January 2005
Austria
Italy
Switzerland
UK
Ireland
Spain
Belgium
Norway
EUROPE x CEE
Sweden
Denmark
Greece
Finland
Netherlands
Germany
Hungary
Turkey
Portugal
France
Poland
Czech Republic
Source: Smith Barney estimates.
26%
24%
22%
20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
UK
Norway
Belgium
Hungary
Greece
Sweden
EUROPE x CEE
Spain
Italy
Germany
Denmark
Poland
Austria
Finland
Ireland
Portugal
Turkey
Switzerland
France
Netherlands
Czech Republic
Using the gearing forecasts included in Figure 20, combined with our economic
growth forecasts, we are able to forecast balance sheet growth on an individual
country basis. Historically — as shown in Figure 22 — balance sheet expansion has
averaged 9% per annum since 1990. The slowest growing countries over this period
are the Nordics (Finland and Denmark) along with France/Belgium.
25
The View from the Top – January 2005
UK
Norway
Belgium
Hungary
Greece
Spain
EUROPE x CEE
Sweden
Germany
Denmark
Italy
Ireland
Turkey
Poland
Portugal
Netherlands
Switzerland
Austria
France
Finland
Czech Republic
1
1990 onwards for all countries except Ireland (1996), Hungary (1995) and Poland/Czech Republic (1994)
Source: OECD and Smith Barney analysis.
In terms of future balance sheet growth, Figure 23 shows our forecast by country.
For Europe as a whole we forecast asset/deposit growth averaging 5.6% per annum,
ahead of GDP growth of 4.4% per annum over the same period. The combination of
already high gearing and — crucially — sluggish GDP growth means that we
forecast the slowest pace of asset/liability formation in the Netherlands (+2.8% per
annum), but among major countries we are similarly reasonably cautious on
(Germany +3.6% per annum) and France (+4.5% per annum). At the other extreme,
balance sheet growth is forecast to be double digits for all four CEE counties plus
Greece, which in each case continues the recent trend.
18%
17%
16%
15%
14%
13%
Annual Balance Sheet Growth
12%
11%
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
Austria
Italy
UK
Switzerland
Spain
Ireland
Norway
Belgium
Sweden
Greece
Finland
EUROPE x CEE
Denmark
Turkey
Hungary
Germany
Netherlands
Portugal
Poland
France
Czech Republic
26
The View from the Top – January 2005
Pricing
As discussed in the previous chapter, the next important stage of our analysis is to
consider pricing trends. Here we have analysed banking system revenues into two
categories — net interest income and non-interest income. Net interest income will
obviously be balance sheet led. However, the focus on the balance sheet means that
important sources of revenues are not necessarily captured. Recording non-interest
income overcomes this limitation since it will include income from non balance sheet
areas (for example, mutual funds). Naturally, a proportion of non-interest income
will be directly or indirectly linked to balance sheet activity.
The composition of the revenue base for European banks is very varied. Figure 24
shows revenues as a percentage of balance sheet assets in 2004 for all 20 countries.
Figure 24. Banking System Revenues as Percentage of Balance Sheet Assets/Liabilities, 2004
9.5%
9.0% Other Income
8.5%
8.0% Net Interest Income
7.5%
7.0%
6.5%
As % Balance Sheet
6.0%
5.5%
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0% Portugal
Poland
Spain
Austria
Denmark
Switzerland
Sweden
Netherlands
France
Turkey
Hungary
Greece
Germany
Finland
UK
EUROPE x CEE
Ireland
Norway
Italy
Belgium
Czech Republic
On average, revenues represent 2.7% of the asset/liability base, split 1.5% net
interest income and 1.2% non-interest income. However, the variations are
significant. In France, for example, net interest income is just 0.8% of the
asset/liability base, whereas in Spain it is three times as large. Once we start
including Europe’s emerging markets, the differences become greater.
Forecasting the likely interplay of pricing and revenue generation for each banking
market is a key part of our revenue forecasting process. Accordingly, it is worth
briefly considering the basis on which we have made estimates:
➤ Mean reversion — whilst our analysis is not wholly shaped by a presumption of
simple mean reversion, we do recognise that this can be an important element. Thus,
for example, we have net interest income margins declining more sharply in the
‘fatter’ margin countries (eg Spain) than in ‘thinner’ margin countries (eg France).
27
The View from the Top – January 2005
➤ Market structure — this will also be important. For example, whilst overall
revenue margins are already low in Germany, our broadly sceptical view of the
scope for reform in the domestic banking market means that we do not forecast
margins to widen. By contrast, although margins are wide in Greece (over twice
the German level), the highly concentrated, highly protected nature of the market
means that we do not anticipate severe margin decline.
➤ There is of course a ‘maturing’ factored into our CEE revenue forecasts. In a
country like Hungary, the competitive market and a changed interest rate
environment means that we believe it unrealistic for revenue margins to remain
almost double the European average on a sustained basis.
➤ Finally, our forecasts across Europe are biased towards expecting margins to
compress. In part this is simply a continuation of the trends of the past few years.
However, at its heart are other factors — such as technology, growing customer
awareness, the pressures from surplus capital, historically low inflation and interest
rates — that we believe will serve to add downward pressure to margins.
Figure 25 shows the result of this analysis by looking at our forecast shape of the
sector in 2008. With the exception of Germany and Switzerland, we forecast revenue
compression for all banking markets, with the largest compression in the fatter
margin developing countries.
Figure 25. Banking System Revenues as Percentage of Balance Sheet Assets/Liabilities, 2008E
7.5%
7.0% Other Income
6.5%
6.0% Net Interest Income
5.5%
As % Balance Sheet
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
Portugal
Poland
Spain
Austria
Switzerland
Denmark
Sweden
Netherlands
France
Turkey
Hungary
Greece
Germany
UK
Finland
EUROPE x CEE
Ireland
Norway
Italy
Belgium
Czech Republic
Figure 26 shows the forecast revenue margin change (from 2004 to 2008)
28
The View from the Top – January 2005
Greece
Switzerland
France
Sweden
Poland
Norway
Denmark
Germany
Italy
Portugal
Ireland
Finland
Czech Republic
Belgium
UK
Spain
Netherlands
Hungary
Turkey
Austria
EUROPE x CEE
Source: Smith Barney estimates.
Outputs
As shown in Figure 16 earlier, we forecast revenue growth for the European bank
sector of 4.7% per annum over the next five years. However, it is important that we
also test this forecast for overall reasonableness. Given the very strong correlation
between economic growth and revenue growth (see Figure 2 earlier) the obvious
cross check is to compare our revenue forecast with economic forecasts. Figure 27
shows — for 2004 — revenues as a percentage of GDP for each of the 20 countries
included in our analysis. For Europe as a whole we estimate banking system
revenues currently represent 5.9% of GDP. Generally, we would expect revenues
compared to GDP to be higher in smaller countries, where the banking system often
generates revenues independently of the local economy. Two banking systems —
Switzerland and Netherlands — are much higher than the rest of Europe. In the case
of Switzerland, this is not a surprise. The Swiss banking market generates revenues
from global private banking and capital market activity, and its revenues are only
weakly influenced by the local Swiss economy. Netherlands too benefits from being
headquarters to several global companies. For Europe’s ‘Big 3’ — France, Germany
and UK — the revenue ‘take’ relative to GDP is almost identical at just over 5%.
29
The View from the Top – January 2005
UK
Norway
EUROPE x CEE
Germany
Denmark
Hungary
Sweden
Italy
Belgium
Ireland
Spain
Switzerland
Netherlands
Austria
Greece
Finland
Poland
Portugal
Turkey
France
Czech Republic
Source: OECD and Smith Barney estimates
Using our revenue forecasts discussed earlier and our own economist’s forecasts for
GDP growth, Figure 28 shows projected revenues to GDP for 2008. For Europe
overall revenues are forecast to remain stable at 5.9% of GDP, although our forecasts
do imply some significant changes. Among Europe’s ‘Big 5’ countries the projection
is broadly intuitive; in the UK our forecasts are for banking revenues to decline
modestly as a percentage of GDP. By contrast, we forecast a rise in revenues in
Germany and a smaller rise in France. Among Europe’s emerging banking markets,
we project a decline in Turkey (reflecting pricing pressure, as discussed earlier) but a
rise in Hungary, Poland, the Czech Republic and Greece.
Figure 28. Banking System Revenues as Percentage of GDP, 2008E
16%
15%
14%
13%
12%
11%
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
UK
Norway
EUROPE x CEE
Hungary
Sweden
Germany
Denmark
Italy
Belgium
Ireland
Spain
Switzerland
Netherlands
Austria
France
Greece
Portugal
Turkey
Poland
Finland
Czech Republic
30
The View from the Top – January 2005
Austria
Italy
Switzerland
UK
Spain
Ireland
Norway
Belgium
Sweden
Greece
Finland
EUROPE x CEE
Denmark
Germany
Hungary
Netherlands
Turkey
Portugal
Poland
France
Czech Republic
Finally, we show how our revenue growth forecasts compare to GDP growth over
the period. Figure 30 shows revenue growth as a multiple of GDP growth over the
period from 1990. For Europe overall revenue growth has averaged 1.1x GDP
growth over the period.
2.4x
2.2x
2.0x
Revenue Growth as multiple of GDP Growth
1.8x
1.6x
1.4x
1.2x
1.0x
0.8x
0.6x
0.4x
0.2x
0.0x
-0.2x
-0.4x
-0.6x
-0.8x
-1.0x
Belgium
Sweden
EUROPE x CEE
Spain
Finland
Austria
Portugal
Poland
Netherlands
Czech Republic
Germany
Turkey
Italy
Norway
Hungary
UK
Ireland
Greece
France
Denmark
1
1990 onwards for all countries except Greece, Hungary and Poland (1996), Ireland (1999), Czech Republic (1995) and Turkey (1994)
Source: OECD and Smith Barney analysis.
Using our revenue projections and economic forecasts, Figure 31 shows how our
forecasts compare to GDP over the next few years. For Europe as a whole we
forecast a ‘multiple’ of 1.04x (compared to the 1.1x 1990-2001 average).
31
The View from the Top – January 2005
Austria
Italy
UK
Spain
Ireland
Norway
Belgium
Sweden
Greece
Finland
EUROPE x CEE
Denmark
Germany
Hungary
Netherlands
Turkey
Portugal
Poland
France
Czech Republic
The next section of this report includes all of the data used for these country forecasts.
32
The View from the Top – January 2005
COUNTRY
ANALYSIS
33
The View from the Top – January 2005
Austria
➤ Medium-term revenue growth forecast at 5.0% pa, down from 6.5%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 5.8% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
€m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs €m % GDP in Revenues
€m
1980 - - - - - - - - - - -
1981 - - - - - - - - - - -
1982 - - - - - - - - - - -
1983 - - - - - - - - - - -
1984 - - - - - - - - - - -
1985 - - - - - - - - - - -
1986 - - - - - - - - - - -
1987 - - 248478 - - 1.71% 0.42% 2.13% 5300 - -
1988 122616 - 262882 5.8% 214% 1.74% 0.48% 2.22% 5843 4.77% 10.2%
1989 131048 6.9% 278399 5.9% 212% 1.71% 0.66% 2.36% 6583 5.02% 12.7%
1990 142056 8.4% 293633 5.5% 207% 1.76% 0.79% 2.54% 7469 5.26% 13.5%
1991 151048 6.3% 310763 5.8% 206% 1.79% 0.85% 2.63% 8179 5.41% 9.5%
1992 158636 5.0% 329968 6.2% 208% 1.80% 0.90% 2.70% 8925 5.63% 9.1%
1993 163656 3.2% 350768 6.3% 214% 1.89% 0.73% 2.63% 9219 5.63% 3.3%
1994 175360 7.2% 369086 5.2% 210% 1.85% 0.75% 2.60% 9585 5.47% 4.0%
1995 177844 1.4% 390883 5.9% 220% 1.67% 1.09% 2.76% 10777 6.06% 12.4%
1996 184532 3.8% 411649 5.3% 223% 1.61% 1.12% 2.73% 11253 6.10% 4.4%
1997 191304 3.7% 434372 5.5% 227% 1.49% 1.13% 2.62% 11382 5.95% 1.2%
1998 197352 3.2% 478799 10.2% 243% 1.32% 1.19% 2.51% 12023 6.09% 5.6%
1999 205760 4.3% 523315 9.3% 254% 1.19% 1.15% 2.33% 12215 5.94% 1.6%
2000 216148 5.0% 562224 7.4% 260% 1.18% 1.19% 2.37% 13350 6.18% 9.3%
2001 218676 1.2% 583434 3.8% 267% 1.19% 1.19% 2.38% 13887 6.35% 4.0%
2002 225288 3.0% 601075 3.0% 267% 1.19% 1.19% 2.38% 14307 6.35% 3.0%
2003 231064 2.6% 616485 2.6% 267% 1.19% 1.19% 2.38% 14674 6.35% 2.6%
2004E 242617 5.0% 652640 5.9% 269% 1.18% 1.19% 2.37% 15468 6.38% 5.4%
2005E 254748 5.0% 690367 5.8% 271% 1.17% 1.18% 2.35% 16224 6.37% 4.9%
2006E 267485 5.0% 730235 5.8% 273% 1.16% 1.17% 2.33% 17014 6.36% 4.9%
2007E 280860 5.0% 772364 5.8% 275% 1.15% 1.16% 2.31% 17842 6.35% 4.9%
2008E 294903 5.0% 816881 5.8% 277% 1.14% 1.15% 2.29% 18707 6.34% 4.8%
34
The View from the Top – January 2005
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
2.25%
2.00%
1.75%
1.50%
1.25%
1.00%
0.75%
0.50%
0.25%
0.00%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004E
2005E
2006E
2007E
2008E
Source: OECD and Smith Barney estimates.
260%
240%
220%
200%
180%
160%
140%
120%
100%
80%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
35
The View from the Top – January 2005
Belgium
➤ Medium-term revenue growth forecast at 3.2% pa, down from 5.6%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 4.1% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
€m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs €m % GDP in Revenues
€m
1980 88612 - - - - - - - - - -
1981 95436 7.7% 197396 - 207% 1.73% 0.27% 2.00% 3940 4.13%
1982 102368 7.3% 223780 13.4% 219% 1.71% 0.34% 2.05% 4592 4.49% 16.5%
1983 109988 7.4% 258829 15.7% 235% 1.56% 0.37% 1.93% 4994 4.54% 8.8%
1984 117276 6.6% 296093 14.4% 252% 1.62% 0.30% 1.92% 5697 4.86% 14.1%
1985 124572 6.2% 318353 7.5% 256% 1.66% 0.38% 2.04% 6479 5.20% 13.7%
1986 128348 3.0% 338616 6.4% 264% 1.74% 0.42% 2.16% 7329 5.71% 13.1%
1987 136120 6.1% 366199 8.1% 269% 1.62% 0.44% 2.06% 7534 5.53% 2.8%
1988 146512 7.6% 404496 10.5% 276% 1.53% 0.49% 2.02% 8178 5.58% 8.5%
1989 158556 8.2% 436417 7.9% 275% 1.51% 0.44% 1.96% 8540 5.39% 4.4%
1990 166712 5.1% 463437 6.2% 278% 1.45% 0.33% 1.78% 8240 4.94% -3.5%
1991 175096 5.0% 475030 2.5% 271% 1.46% 0.38% 1.84% 8758 5.00% 6.3%
1992 179544 2.5% 506828 6.7% 282% 1.47% 0.40% 1.87% 9480 5.28% 8.2%
1993 189488 5.5% 562942 11.1% 297% 1.32% 0.53% 1.85% 10426 5.50% 10.0%
1994 200044 5.6% 579436 2.9% 290% 1.27% 0.45% 1.73% 9997 5.00% -4.1%
1995 203288 1.6% 616088 6.3% 303% 1.23% 0.51% 1.74% 10722 5.27% 7.3%
1996 209596 3.1% 670857 8.9% 320% 1.21% 0.54% 1.75% 11722 5.59% 9.3%
1997 221292 5.6% 723981 7.9% 327% 1.10% 0.65% 1.75% 12670 5.73% 8.1%
1998 226372 2.3% 727537 0.5% 321% 1.15% 0.73% 1.88% 13666 6.04% 7.9%
1999 241976 6.9% 770767 5.9% 319% 1.10% 0.68% 1.78% 13746 5.68% 0.6%
2000 252756 4.5% 778063 0.9% 308% 1.05% 1.07% 2.13% 16547 6.55% 20.4%
2001 253824 0.4% 846329 8.8% 333% 0.97% 0.92% 1.90% 16045 6.32% -3.0%
2002 262092 3.3% 873897 3.3% 333% 0.97% 0.92% 1.90% 16568 6.32% 3.3%
2003 270796 3.3% 902919 3.3% 333% 0.97% 0.92% 1.90% 17118 6.32% 3.3%
2004E 282982 4.5% 942329 4.4% 333% 0.95% 0.92% 1.87% 17622 6.23% 2.9%
2005E 293735 3.8% 978138 3.8% 333% 0.94% 0.92% 1.86% 18193 6.19% 3.2%
2006E 304603 3.7% 1014329 3.7% 333% 0.92% 0.92% 1.84% 18664 6.13% 2.6%
2007E 317701 4.3% 1057945 4.3% 333% 0.91% 0.92% 1.83% 19360 6.09% 3.7%
2008E 330727 4.1% 1101321 4.1% 333% 0.90% 0.92% 1.82% 20044 6.06% 3.5%
36
The View from the Top – January 2005
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
2.25%
As % Balance Sheet Assets and Liabilities
2.00%
1.75%
1.50%
1.25%
1.00%
0.75%
290%
270%
250%
230%
210%
190%
170%
150%
130%
110%
Belgium Banking
90%
70% European Average (exc CEE)
50%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
37
The View from the Top – January 2005
Czech Republic
➤ Medium-term revenue growth forecast at 8.4% pa, down from 11.3%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 11.2% pa over next five years
➤ Banking revenues as percentage of GDP forecast to rise from 3.81% to
4.14% over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
CZK bn Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs CZK bn % GDP in Revenues
CZK bn
1980 - - - - - - - - - - -
1981 - - - - - - - - - - -
1982 - - - - - - - - - - -
1983 - - - - - - - - - - -
1984 - - - - - - - - - - -
1985 - - - - - - - - - - -
1986 - - - - - - - - - - -
1987 - - - - - - - - - - -
1988 - - - - - - - - - - -
1989 - - - - - - - - - - -
1990 - - - - - - - - - - -
1991 - - - - - - - - - - -
1992 - - - - - - - - - - -
1993 - - 1276 - - - - - - - -
1994 1255 - 1539 20.6% 123% 4.08% 7.29% 11.38% 143 11.38% -
1995 1527 21.7% 1903 23.7% 125% 3.12% 7.60% 10.73% 164 10.73% 14.7%
1996 1724 12.9% 2033 6.8% 122% 2.45% 8.85% 11.30% 195 11.30% 19.0%
1997 1855 7.6% 2335 14.9% 126% 2.51% 12.84% 15.35% 285 15.35% 46.1%
1998 1988 7.2% 2441 4.5% 123% 2.96% 12.01% 14.97% 298 14.97% 4.6%
1999 2078 4.5% 2534 3.8% 122% 2.47% 13.02% 15.49% 322 15.49% 8.1%
2000 2198 5.8% 2722 7.4% 124% 2.07% 22.12% 24.20% 532 24.20% 65.2%
2001 2382 8.4% 2783 2.2% 116% 1.79% 2.98%1 4.77% 114 4.77% -78.7%
2002 2446 2.7% 2515 -9.6% 103% 2.19% 1.90% 4.09% 103 4.21% -9.4%
2003 2601 6.3% 2529 0.6% 97% 2.15% 1.77% 3.92% 99 3.81% -3.8%
2004E 2803 7.8% 2803 10.9% 100% 2.10% 1.75% 3.85% 108 3.85% 9.0%
2005E 3000 7.0% 3150 12.4% 105% 2.05% 1.70% 3.75% 118 3.94% 9.4%
2006E 3189 6.3% 3508 11.4% 110% 2.00% 1.65% 3.65% 128 4.02% 8.4%
2007E 3380 6.0% 3887 10.8% 115% 1.95% 1.60% 3.55% 138 4.08% 7.8%
2008E 3583 6.0% 4299 10.6% 120% 1.90% 1.55% 3.45% 148 4.14% 7.5%
38
The View from the Top – January 2005
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
230%
220%
210%
200%
190%
180%
170%
160%
150%
140%
130%
120%
110%
100%
90%
80%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
39
The View from the Top – January 2005
Denmark
➤ Medium-term revenue growth forecast at 3.3% pa, down from 7.1%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 4.9% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
DKr m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs DKr m % GDP in Revenues
DKr m
1980 381632 - 288116 - 75% 3.40% 1.67% 5.07% 14607 3.83% -
1981 425944 11.6% 326373 13.3% 77% 3.39% 1.65% 5.04% 16444 3.86% 12.6%
1982 482880 13.4% 362803 11.2% 75% 3.51% 2.14% 5.64% 20471 4.24% 24.5%
1983 532128 10.2% 483026 33.1% 91% 2.77% 5.08% 7.86% 37945 7.13% 85.4%
1984 580964 9.2% 586639 21.5% 101% 2.59% 0.47% 3.06% 17965 3.09% -52.7%
1985 640712 10.3% 765560 30.5% 119% 2.41% 3.30% 5.71% 43720 6.82% 143.4%
1986 675240 5.4% 821598 7.3% 122% 2.50% -0.45% 2.05% 16877 2.50% -61.4%
1987 718808 6.5% 870395 5.9% 121% 2.64% 0.48% 3.12% 27199 3.78% 61.2%
1988 769716 7.1% 972881 11.8% 126% 2.47% 1.42% 3.89% 37857 4.92% 39.2%
1989 804020 4.5% 1060126 9.0% 132% 2.43% 0.68% 3.11% 32946 4.10% -13.0%
1990 832856 3.6% 1121588 5.8% 135% 2.53% 0.36% 2.89% 32361 3.89% -1.8%
1991 868364 4.3% 1009785 -10.0% 116% 3.41% 0.57% 3.97% 40131 4.62% 24.0%
1992 901008 3.8% 936971 -7.2% 104% 3.68% -0.43% 3.25% 30478 3.38% -24.1%
1993 913892 1.4% 1041798 11.2% 114% 3.56% 0.91% 4.46% 46503 5.09% 52.6%
1994 990612 8.4% 945718 -9.2% 95% 4.02% -0.58% 3.45% 32615 3.29% -29.9%
1995 1022768 3.2% 1016791 7.5% 99% 2.89% 1.41% 4.29% 43628 4.27% 33.8%
1996 1077908 5.4% 1163879 14.5% 108% 2.45% 1.16% 3.60% 41950 3.89% -3.8%
1997 1133036 5.1% 1288570 10.7% 114% 2.18% 1.01% 3.19% 41169 3.63% -1.9%
1998 1165776 2.9% 1457013 13.1% 125% 1.96% 1.12% 3.09% 44991 3.86% 9.3%
1999 1238812 6.3% 1574779 8.1% 127% 1.87% 1.14% 3.01% 47333 3.82% 5.2%
2000 1309820 5.7% 1745377 10.8% 133% 1.79% 1.42% 3.21% 56004 4.28% 18.3%
2001 1342020 2.5% 1979421 13.4% 147% 1.77% 1.15% 2.92% 57812 4.31% 3.2%
2002 1371192 2.2% 2022448 2.2% 147% 1.77% 1.15% 2.92% 59069 4.31% 2.2%
2003 1420564 3.6% 2095270 3.6% 147% 1.77% 1.15% 2.92% 61196 4.31% 3.6%
2004E 1473125 3.7% 2165494 3.4% 147% 1.75% 1.15% 2.90% 62799 4.26% 2.6%
2005E 1534996 4.2% 2271794 4.9% 148% 1.70% 1.15% 2.85% 64746 4.22% 3.1%
2006E 1610211 4.9% 2399214 5.6% 149% 1.65% 1.15% 2.80% 67178 4.17% 3.8%
2007E 1685891 4.7% 2528836 5.4% 150% 1.60% 1.15% 2.75% 69543 4.13% 3.5%
2008E 1761756 4.5% 2660251 5.2% 151% 1.55% 1.15% 2.70% 71827 4.08% 3.3%
40
The View from the Top – January 2005
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
210%
200%
190%
180%
170%
160%
150%
140%
130%
120%
110%
100%
90% European Average (exc CEE)
80%
Danish Banking
70%
60%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
41
The View from the Top – January 2005
Finland
➤ Medium-term revenue growth forecast at 4.6% pa, down from 7.4%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 5.8% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
€m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs €m % GDP in Revenues
€m
1980 34004 - - - - - - - - - -
1981 38592 13.5% 25062 - 65% 2.74% 1.70% 4.43% 1111 2.88% -
1982 43564 12.9% 30554 21.9% 70% 2.59% 1.68% 4.27% 1305 3.00% 17.4%
1983 48208 10.7% 36647 19.9% 76% 2.32% 1.61% 3.93% 1441 2.99% 10.4%
1984 54004 12.0% 45214 23.4% 84% 2.19% 1.67% 3.86% 1745 3.23% 21.1%
1985 57968 7.3% 52485 16.1% 91% 2.25% 1.87% 4.12% 2164 3.73% 24.0%
1986 62556 7.9% 64247 22.4% 103% 1.89% 1.73% 3.62% 2325 3.72% 7.4%
1987 68736 9.9% 76101 18.4% 111% 2.00% 1.77% 3.77% 2868 4.17% 23.4%
1988 78080 13.6% 98216 29.1% 126% 1.83% 2.07% 3.91% 3837 4.91% 33.8%
1989 85480 9.5% 114780 16.9% 134% 1.71% 1.61% 3.32% 3809 4.46% -0.7%
1990 87112 1.9% 123450 7.6% 142% 1.88% 1.60% 3.48% 4294 4.93% 12.7%
1991 82788 -5.0% 129571 5.0% 157% 1.59% 1.72% 3.31% 4283 5.17% -0.3%
1992 82484 -0.4% 127931 -1.3% 155% 1.21% 1.79% 3.00% 3833 4.65% -10.5%
1993 84232 2.1% 126829 -0.9% 151% 1.65% 2.28% 3.93% 4985 5.92% 30.1%
1994 90860 7.9% 114500 -9.7% 126% 1.72% 1.52% 3.24% 3715 4.09% -25.5%
1995 96872 6.6% 108440 -5.3% 112% 1.83% 1.39% 3.22% 3495 3.61% -5.9%
1996 100656 3.9% 105764 -2.5% 105% 1.75% 1.71% 3.46% 3664 3.64% 4.8%
1997 111492 10.8% 113136 7.0% 101% 1.72% 1.44% 3.16% 3571 3.20% -2.5%
1998 118256 6.1% 113403 0.2% 96% 1.86% 1.92% 3.78% 4292 3.63% 20.2%
1999 122156 3.3% 125380 10.6% 103% 1.67% 1.35% 3.02% 3780 3.09% -11.9%
2000 133404 9.2% 137809 9.9% 103% 1.82% 1.39% 3.21% 4424 3.32% 17.0%
2001 136112 2.0% 155432 12.8% 114% 1.63% 2.92% 4.56% 7083 5.20% 60.1%
2002 141780 4.2% 161905 4.2% 114% 1.63% 1.39% 3.02% 4887 3.45% -31.0%
2003 144212 1.7% 164682 1.7% 114% 1.63% 1.39% 3.02% 4971 3.45% 1.7%
2004E 150702 4.5% 174814 6.2% 116% 1.63% 1.40% 3.03% 5297 3.51% 6.6%
2005E 156428 3.8% 184585 5.6% 118% 1.61% 1.37% 2.98% 5501 3.52% 3.8%
2006E 162216 3.7% 194659 5.5% 120% 1.59% 1.35% 2.94% 5723 3.53% 4.0%
2007E 169191 4.3% 206413 6.0% 122% 1.57% 1.33% 2.90% 5986 3.54% 4.6%
2008E 176128 4.1% 218399 5.8% 124% 1.55% 1.30% 2.85% 6224 3.53% 4.0%
42
The View from the Top – January 2005
4.00%
3.75%
3.50%
3.25%
3.00%
2.75%
2.50%
2.25%
2.00%
1.75%
1.50%
1.25%
1.00%
0.75%
0.50%
0.25%
0.00%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004E
2005E
2006E
2007E
2008E
Source: OECD and Smith Barney estimates.
210%
200%
190%
180%
170%
160%
150%
140%
130%
120%
110%
100%
90%
80% European Average (exc CEE)
70%
60% Finnish Banking
50%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
43
The View from the Top – January 2005
France
➤ Medium-term revenue growth forecast at 4.7% pa, unchanged from
the 4.7% average over the previous decade
➤ Banking assets/liabilities forecast to rise 4.5% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
€m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs €m % GDP in Revenues
€m
1980 455896 - - - - - - - - - -
1981 523384 14.8% - - - - - - - - -
1982 583628 11.5% - - - - - - - - -
1983 648824 11.2% - - - - - - - - -
1984 692864 6.8% - - - - - - - - -
1985 749316 8.1% - - - - - - - - -
1986 798184 6.5% - - - - - - - - -
1987 849052 6.4% - - - - - - - - -
1988 912824 7.5% 1901865 - 208% 1.88% 0.45% 2.33% 44319 4.86% -
1989 985128 7.9% 2116765 11.3% 215% 1.74% 0.44% 2.18% 46125 4.68% 4.1%
1990 1019904 3.5% 2297364 8.5% 225% 1.66% 0.48% 2.14% 49174 4.82% 6.6%
1991 1068436 4.8% 2363196 2.9% 221% 1.68% 0.59% 2.27% 53606 5.02% 9.0%
1992 1086240 1.7% 2482028 5.0% 228% 1.54% 0.80% 2.34% 58156 5.35% 8.5%
1993 1110472 2.2% 2540458 2.4% 229% 1.40% 0.99% 2.39% 60698 5.47% 4.4%
1994 1164904 4.9% 2579544 1.5% 221% 1.34% 0.81% 2.15% 55585 4.77% -8.4%
1995 1190356 2.2% 2707432 5.0% 227% 1.23% 1.03% 2.25% 60970 5.12% 9.7%
1996 1217692 2.3% 2862769 5.7% 235% 1.08% 0.96% 2.04% 58528 4.81% -4.0%
1997 1276880 4.9% 3078479 7.5% 241% 0.93% 1.05% 1.98% 61032 4.78% 4.3%
1998 1319768 3.4% 3120870 1.4% 236% 0.85% 1.22% 2.07% 64460 4.88% 5.6%
1999 1381108 4.6% 3470583 11.2% 251% 0.86% 1.08% 1.94% 67179 4.86% 4.2%
2000 1448696 4.9% 3512854 1.2% 242% 0.82% 1.28% 2.10% 73703 5.09% 9.7%
2001 1486292 2.6% 3875577 10.3% 261% 0.75% 1.28% 2.03% 78712 5.30% 6.8%
2002 1541476 3.7% 4019472 3.7% 261% 0.75% 1.28% 2.03% 81634 5.30% 3.7%
2003 1578472 2.4% 4115941 2.4% 261% 0.75% 1.28% 2.03% 83594 5.30% 2.4%
2004E 1652660 4.7% 4329970 5.2% 262% 0.81% 1.25% 2.06% 89197 5.40% 6.7%
2005E 1718767 4.0% 4520356 4.4% 263% 0.80% 1.25% 2.05% 92667 5.39% 3.9%
2006E 1785798 3.9% 4714508 4.3% 264% 0.80% 1.25% 2.05% 96647 5.41% 4.3%
2007E 1859016 4.1% 4926393 4.5% 265% 0.80% 1.25% 2.05% 100991 5.43% 4.5%
2008E 1931518 3.9% 5137838 4.3% 266% 0.80% 1.25% 2.05% 105326 5.45% 4.3%
44
The View from the Top – January 2005
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
2.00%
1.75%
1.50%
1.25%
1.00%
0.75%
0.50%
0.25%
0.00%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
240%
230%
220%
210%
200%
190%
180%
170%
160%
150%
140%
130%
120%
110% French Banking
100% European Average (exc CEE)
90%
80%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
45
The View from the Top – January 2005
Germany
➤ Medium-term revenue growth forecast at 3.4% pa, down from 7.9%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 3.6% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
€m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs €m % GDP in Revenues
€m
1980 772160 - 947229 - 123% 1.91% 0.49% 2.41% 22790 2.95% -
1981 816560 5.8% 1018456 7.5% 125% 2.11% 0.50% 2.61% 26577 3.25% -
1982 838640 2.7% 1082259 6.3% 129% 2.37% 0.52% 2.89% 31239 3.72% 17.5%
1983 892600 6.4% 1154212 6.6% 129% 2.52% 0.50% 3.02% 34856 3.90% 11.6%
1984 938640 5.2% 1241075 7.5% 132% 2.35% 0.52% 2.86% 35552 3.79% 2.0%
1985 983440 4.8% 1334125 7.5% 136% 2.29% 0.59% 2.89% 38526 3.92% 8.4%
1986 1036760 5.4% 1453716 9.0% 140% 2.26% 0.57% 2.84% 41253 3.98% 7.1%
1987 1071880 3.4% 1544791 6.3% 144% 2.13% 0.53% 2.66% 41114 3.84% -0.3%
1988 1128320 5.3% 1660536 7.5% 147% 2.04% 0.48% 2.51% 41754 3.70% 1.6%
1989 1197480 6.1% 1784789 7.5% 149% 1.92% 0.66% 2.57% 45922 3.83% 10.0%
1990 1324840 10.6% 1974247 10.6% 149% 1.84% 0.67% 2.52% 49732 3.75% 8.3%
1991 1554960 17.4% 2148287 8.8% 138% 1.93% 0.61% 2.55% 54751 3.52% 10.1%
1992 1629720 4.8% 2337971 8.8% 143% 1.97% 0.62% 2.59% 60535 3.71% 10.6%
1993 1676160 2.8% 2787155 19.2% 166% 1.97% 0.61% 2.58% 71976 4.29% 18.9%
1994 1767680 5.5% 2971458 6.6% 168% 2.09% 0.50% 2.59% 76891 4.35% 6.8%
1995 1811480 2.5% 3262032 9.8% 180% 1.89% 0.50% 2.39% 77912 4.30% 1.3%
1996 1854920 2.4% 3621676 11.0% 195% 1.79% 0.48% 2.26% 81992 4.42% 5.2%
1997 1899320 2.4% 4043735 11.7% 213% 1.64% 0.51% 2.14% 86659 4.56% 5.7%
1998 1932360 1.7% 4465868 10.4% 231% 1.50% 0.83% 2.32% 103690 5.37% 19.7%
1999 2000520 3.5% 4933318 10.5% 247% 1.43% 0.60% 2.03% 100119 5.00% -3.4%
2000 2037000 1.8% 5425461 10.0% 266% 1.29% 0.72% 2.02% 109384 5.37% 9.3%
2001 2089920 2.6% 5714581 5.3% 273% 1.27% 0.70% 1.97% 112483 5.38% 2.8%
2002 2120080 1.4% 5797049 1.4% 273% 1.27% 0.70% 1.97% 114106 5.38% 1.4%
2003 2144920 1.2% 5864970 1.2% 273% 1.27% 0.70% 1.97% 115443 5.38% 1.2%
2004E 2207123 2.9% 6069587 3.5% 275% 1.25% 0.70% 1.95% 118357 5.36% 2.5%
2005E 2266715 2.7% 6278801 3.4% 277% 1.24% 0.71% 1.95% 122437 5.40% 3.4%
2006E 2334716 3.0% 6513859 3.7% 279% 1.23% 0.72% 1.95% 127020 5.44% 3.7%
2007E 2402423 2.9% 6750809 3.6% 281% 1.22% 0.73% 1.95% 131641 5.48% 3.6%
2008E 2472093 2.9% 6996025 3.6% 283% 1.21% 0.74% 1.95% 136422 5.52% 3.6%
46
The View from the Top – January 2005
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
2.25%
2.00%
1.75%
1.50%
1.25%
1.00%
0.75%
0.50%
0.25%
0.00%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
260%
250%
240%
230%
220%
210%
200%
190%
180%
170%
160%
150%
140%
130%
120%
110% German Banking
100%
European Average (exc CEE)
90%
80%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
47
The View from the Top – January 2005
Greece
➤ Medium-term revenue growth forecast at 9.5% pa, down from 22.8%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 10.4% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
€m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs €m % GDP in Revenues
€m
1980 - - - - - - - - - - -
1981 - - - - - - - - - - -
1982 - - - - - - - - - - -
1983 - - - - - - - - - - -
1984 - - - - - - - - - - -
1985 - - - - - - - - - - -
1986 - - - - - - - - - - -
1987 - - - - - - - - - - -
1988 - - - - - - - - - - -
1989 - - 21553 - - 1.15% 1.70% 2.85% 614 - -
1990 - - 24948 15.8% - 1.52% 1.92% 3.44% 857 - 39.6%
1991 - - 29641 18.8% - 2.02% 2.32% 4.34% 1286 - 50.1%
1992 - - 35553 19.9% - 1.47% 2.02% 3.50% 1243 - -3.3%
1993 - - 41455 16.6% - 1.46% 2.03% 3.48% 1444 - 16.2%
1994 - - 44991 8.5% - 1.31% 2.74% 4.05% 1822 - 26.2%
1995 84760 - 50064 11.3% 59% 1.97% 2.02% 3.99% 1998 2.36% 9.7%
1996 91236 7.6% 58299 16.4% 64% 1.86% 2.08% 3.95% 2300 2.52% 15.1%
1997 100520 10.2% 69562 19.3% 69% 2.07% 2.03% 4.10% 2851 2.84% 24.0%
1998 109940 9.4% 82846 19.1% 75% 2.34% 1.85% 4.19% 3471 3.16% 21.7%
1999 115280 4.9% 103641 25.1% 90% 2.43% 3.36% 5.79% 6001 5.21% 72.9%
2000 125840 9.2% 138610 33.7% 110% 2.48% 1.99% 4.46% 6186 4.92% 3.1%
2001 134860 7.2% 151817 9.5% 113% 2.56% 1.44% 4.00% 6080 4.51% -1.7%
2002 144900 7.4% 163119 7.4% 113% 2.56% 1.44% 4.00% 6533 4.51% 7.4%
2003 157348 8.6% 177133 8.6% 113% 2.56% 1.44% 4.00% 7094 4.51% 8.6%
2004E 166789 6.0% 196811 11.1% 118% 2.55% 1.45% 4.00% 7872 4.72% 11.0%
2005E 176796 6.0% 217459 10.5% 123% 2.53% 1.40% 3.93% 8546 4.83% 8.6%
2006E 187404 6.0% 239877 10.3% 128% 2.52% 1.35% 3.87% 9283 4.95% 8.6%
2007E 198648 6.0% 264202 10.1% 133% 2.51% 1.35% 3.86% 10198 5.13% 9.9%
2008E 210567 6.0% 290583 10.0% 138% 2.50% 1.35% 3.85% 11187 5.31% 9.7%
48
The View from the Top – January 2005
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
5.00%
4.50%
4.00%
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
210%
200%
190%
180%
170%
160%
150%
140%
130%
120%
110%
100%
90%
80% European Average (exc CEE)
70%
60% Greek Banking
50%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
49
The View from the Top – January 2005
Hungary
➤ Medium-term revenue growth forecast at 10.3% pa
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
Ft, bn Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs Ft, bn % GDP in Revenues
Ft, bn
1980 - - - - - - - - - - -
1981 - - - - - - - - - - -
1982 - - - - - - - - - - -
1983 - - - - - - - - - - -
1984 - - - - - - - - - - -
1985 - - - - - - - - - - -
1986 - - - - - - - - - - -
1987 - - - - - - - - - - -
1988 - - - - - - - - - - -
1989 - - - - - - - - - - -
1990 - - - - - - - - - - -
1991 - - - - - - - - - - -
1992 - - - - - - - - - - -
1993 - - - - - - - - - - -
1994 - - 3072 - - - - - 186 - -
1995 6109 - 3693 20.2% 60% 5.40% 2.65% 8.05% 273 8.05% 47.0%
1996 7628 24.9% 4488 21.5% 59% 4.40% 1.36% 5.76% 256 5.76% -6.2%
1997 8541 12.0% 5577 24.3% 65% 3.99% 0.23% 4.22% 230 4.22% -10.0%
1998 10087 18.1% 6571 17.8% 65% 4.32% -4.01% 0.31% 20 0.31% -91.5%
1999 11394 13.0% 7373 12.2% 65% 3.88% 0.36% 4.24% 303 4.24% 1445.4%
2000 13092 14.9% 8965 21.6% 68% 3.97% 1.13% 5.09% 398 5.09% 31.7%
2001 14850 13.4% 10152 13.2% 68% 4.36% 0.70% 5.06% 421 5.06% 5.5%
2002 16740 12.7% 11597 14.2% 69% 4.36% 0.70% 5.06% 587 3.51% 39.6%
2003 18574 11.0% 14464 24.7% 78% 4.36% 0.70% 5.06% 732 3.94% 24.7%
2004E 20431 10.0% 17162 18.7% 84% 4.20% 0.72% 4.92% 844 4.13% 15.3%
2005E 22209 8.7% 19322 12.6% 87% 4.00% 0.75% 4.75% 918 4.13% 8.7%
2006E 24141 8.7% 21727 12.4% 90% 3.80% 0.77% 4.57% 993 4.11% 8.2%
2007E 26121 8.2% 24292 11.8% 93% 3.60% 0.80% 4.40% 1069 4.09% 7.6%
2008E 28263 8.2% 27415 12.9% 97% 3.50% 0.85% 4.35% 1193 4.22% 11.6%
50
The View from the Top – January 2005
210%
190%
170%
150%
130%
110%
90%
70%
50%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
51
The View from the Top – January 2005
Ireland
➤ Medium-term revenue growth forecast at 5.2% pa
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
€m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs €m % GDP in Revenues
€m
1980 - - - - - - - - - - -
1981 - - - - - - - - - - -
1982 - - - - - - - - - - -
1983 - - - - - - - - - - -
1984 - - - - - - - - - - -
1985 - - - - - - - - - - -
1986 - - - - - - - - - - -
1987 - - - - - - - - - - -
1988 - - - - - - - - - - -
1989 - - - - - - - - - - -
1990 - - - - - - - - - - -
1991 - - - - - - - - - - -
1992 - - - - - - - - - - -
1993 - - - - - - - - - - -
1994 - - - - - - - - - - -
1995 - - 79809 - - 2.69% 1.14% 3.83% 3055 - -
1996 - - 94580 18.5% - 2.33% 1.10% 3.43% 3249 - 6.3%
1997 - - 155383 64.3% - 1.75% 0.90% 2.65% 4119 - 26.8%
1998 78952 - 191793 23.4% 243% 1.70% 1.00% 2.70% 5177 6.56% 25.7%
1999 95000 20.3% 317822 65.7% 335% 1.47% 0.87% 2.34% 7436 7.83% 43.6%
2000 108840 14.6% 370173 16.5% 340% 1.47% 0.93% 2.40% 8869 8.15% 19.3%
2001 117752 8.2% 430618 16.3% 366% 1.42% 0.74% 2.16% 9309 7.91% 5.0%
2002 133780 13.6% 489232 13.6% 366% 1.42% 0.74% 2.16% 10576 7.91% 13.6%
2003 140576 5.1% 514085 5.1% 366% 1.42% 0.74% 2.16% 11114 7.91% 5.1%
2004E 150065 6.8% 549237 6.8% 366% 1.40% 0.75% 2.15% 11809 7.87% 6.3%
2005E 160194 6.8% 586311 6.7% 366% 1.38% 0.74% 2.12% 12430 7.76% 5.3%
2006E 171007 6.8% 625887 6.7% 366% 1.35% 0.73% 2.08% 13018 7.61% 4.7%
2007E 182550 6.8% 668134 6.7% 366% 1.33% 0.72% 2.05% 13697 7.50% 5.2%
2008E 194873 6.8% 713233 6.7% 366% 1.30% 0.71% 2.01% 14336 7.36% 4.7%
52
The View from the Top – January 2005
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
340%
320%
300%
280%
260%
240%
220%
200%
180%
160%
140%
120%
100%
80%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
53
The View from the Top – January 2005
Italy
➤ Medium-term revenue growth forecast at 4.9% pa, down from 13.4%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 5.3% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
€m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs €m % GDP in Revenues
€m
1980 212620 - - - - - - - - - -
1981 254184 19.5% - - - - - - - - -
1982 294964 16.0% - - - - - - - - -
1983 351424 19.1% - - - - - - - - -
1984 385700 9.8% 488206 - 127% 0.97% 0.38% 1.35% 6613 1.71% -
1985 437272 13.4% 548688 12.4% 125% 1.05% 0.42% 1.47% 8045 1.84% 21.7%
1986 479420 9.6% 596691 8.7% 124% 1.12% 0.47% 1.59% 9486 1.98% 17.9%
1987 527828 10.1% 632312 6.0% 120% 0.97% 0.45% 1.42% 8990 1.70% -5.2%
1988 586500 11.1% 695691 10.0% 119% 0.96% 0.43% 1.38% 9628 1.64% 7.1%
1989 643492 9.7% 814186 17.0% 127% 0.81% 0.39% 1.20% 9779 1.52% 1.6%
1990 695380 8.1% 921376 13.2% 132% 0.88% 0.38% 1.25% 11532 1.66% 17.9%
1991 766616 10.2% 1052352 14.2% 137% 0.83% 0.36% 1.19% 12570 1.64% 9.0%
1992 781772 2.0% 1221533 16.1% 156% 0.61% 0.40% 1.01% 12303 1.57% -2.1%
1993 820380 4.9% 1311469 7.4% 160% 1.01% 0.39% 1.41% 18456 2.25% 50.0%
1994 874696 6.6% 1342942 2.4% 154% 0.74% 0.41% 1.15% 15494 1.77% -16.0%
1995 949000 8.5% 1384117 3.1% 146% 0.69% 0.37% 1.05% 14577 1.54% -5.9%
1996 988960 4.2% 1458642 5.4% 147% 0.84% 0.40% 1.24% 18053 1.83% 23.8%
1997 1047268 5.9% 1557958 6.8% 149% 0.92% 0.51% 1.43% 22280 2.13% 23.4%
1998 1080476 3.2% 1607776 3.2% 149% 1.22% 0.74% 1.96% 31527 2.92% 41.5%
1999 1130252 4.6% 1718063 6.9% 152% 1.25% 0.84% 2.09% 35874 3.17% 13.8%
2000 1181196 4.5% 1895767 10.3% 160% 1.26% 0.93% 2.19% 41508 3.51% 15.7%
2001 1230456 4.2% 1956176 3.2% 159% 1.06% 0.84% 1.90% 37157 3.02% -10.5%
2002 1277720 3.8% 2031316 3.8% 159% 1.06% 0.84% 1.90% 38584 3.02% 3.8%
2003 1313732 2.8% 2088568 2.8% 159% 1.06% 0.84% 1.90% 39672 3.02% 2.8%
2004E 1359713 3.5% 2202734 5.5% 162% 1.10% 0.83% 1.93% 42513 3.13% 7.2%
2005E 1414101 4.0% 2319126 5.3% 164% 1.09% 0.82% 1.91% 44295 3.13% 4.2%
2006E 1470665 4.0% 2441304 5.3% 166% 1.08% 0.81% 1.89% 46141 3.14% 4.2%
2007E 1529492 4.0% 2569546 5.3% 168% 1.07% 0.80% 1.87% 48051 3.14% 4.1%
2008E 1590671 4.0% 2704141 5.2% 170% 1.06% 0.80% 1.86% 50297 3.16% 4.7%
54
The View from the Top – January 2005
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
1.75%
1.50%
1.25%
1.00%
0.75%
0.50%
0.25%
0.00%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
230%
220%
210%
200%
190%
180%
170%
160%
150%
140%
130%
120%
110%
100%
90%
80%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
55
The View from the Top – January 2005
Netherlands
➤ Medium-term revenue growth forecast at 1.9% pa, down from 12.7%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 2.8% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
€m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs €m % GDP in Revenues
€m
1980 164688 - 168187 - 102% 2.12% 0.74% 2.86% 4806 2.92% -
1981 173116 5.1% 191453 13.8% 111% 2.05% 0.71% 2.76% 5283 3.05% 9.9%
1982 175024 1.1% 199433 4.2% 114% 2.20% 0.67% 2.87% 5727 3.27% 8.4%
1983 185292 5.9% 209568 5.1% 113% 2.34% 0.72% 3.06% 6423 3.47% 12.2%
1984 193168 4.3% 226504 8.1% 117% 2.15% 0.70% 2.85% 6449 3.34% 0.4%
1985 203860 5.5% 234373 3.5% 115% 2.17% 0.75% 2.91% 6825 3.35% 5.8%
1986 203120 -0.4% 270891 15.6% 133% 2.26% 0.71% 2.97% 8039 3.96% 17.8%
1987 212708 4.7% 280230 3.4% 132% 2.51% 0.83% 3.34% 9351 4.40% 16.3%
1988 220648 3.7% 313124 11.7% 142% 2.40% 0.85% 3.25% 10171 4.61% 8.8%
1989 234164 6.1% 402697 28.6% 172% 1.95% 0.82% 2.77% 11143 4.76% 9.6%
1990 250888 7.1% 509364 26.5% 203% 1.63% 0.65% 2.28% 11601 4.62% 4.1%
1991 261956 4.4% 529861 4.0% 202% 1.74% 0.73% 2.48% 13115 5.01% 13.0%
1992 268428 2.5% 569737 7.5% 212% 1.77% 0.73% 2.50% 14225 5.30% 8.5%
1993 275700 2.7% 618914 8.6% 224% 1.75% 0.89% 2.64% 16314 5.92% 14.7%
1994 292732 6.2% 627135 1.3% 214% 1.89% 0.76% 2.65% 16631 5.68% 1.9%
1995 307592 5.1% 682055 8.8% 222% 1.80% 0.90% 2.70% 18386 5.98% 10.6%
1996 321256 4.4% 781411 14.6% 243% 1.76% 0.99% 2.75% 21451 6.68% 16.7%
1997 343540 6.9% 984656 26.0% 287% 1.63% 1.07% 2.69% 26518 7.72% 23.6%
1998 360108 4.8% 1213708 23.3% 337% 1.57% 1.05% 2.62% 31806 8.83% 19.9%
1999 384176 6.7% 1372306 13.1% 357% 1.60% 1.19% 2.79% 38276 9.96% 20.3%
2000 412604 7.4% 1621182 18.1% 393% 1.44% 1.28% 2.72% 44156 10.70% 15.4%
2001 434708 5.4% 1761912 8.7% 405% 1.41% 1.18% 2.59% 45657 10.50% 3.4%
2002 450448 3.6% 1825708 3.6% 405% 1.41% 1.18% 2.59% 47310 10.50% 3.6%
2003 458440 1.8% 1858100 1.8% 405% 1.41% 1.18% 2.59% 48149 10.50% 1.8%
2004E 468526 2.2% 1897529 2.1% 405% 1.39% 1.18% 2.57% 48766 10.41% 1.3%
2005E 479770 2.4% 1943070 2.4% 405% 1.37% 1.18% 2.55% 49548 10.33% 1.6%
2006E 493204 2.8% 1997476 2.8% 405% 1.35% 1.18% 2.53% 50536 10.25% 2.0%
2007E 509480 3.3% 2063392 3.3% 405% 1.33% 1.18% 2.51% 51791 10.17% 2.5%
2008E 525783 3.2% 2129421 3.2% 405% 1.31% 1.18% 2.49% 53023 10.08% 2.4%
56
The View from the Top – January 2005
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
3.00%
2.75%
2.50%
2.25%
2.00%
1.75%
1.50%
1.25%
1.00%
0.75%
0.50%
0.25%
0.00%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
380%
360%
340%
320%
300%
280%
260%
240%
220%
200%
180%
160%
140% Dutch Banking
120%
100% European Average (exc CEE)
80%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
57
The View from the Top – January 2005
Norway
➤ Medium-term revenue growth forecast at 6% pa, up from 4.2%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 7% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
NRk, m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs NRk, m % GDP in Revenues
NRk, m
1980 330492 - 160953 - 49% 3.37% 0.76% 4.13% 6650 2.01% -
1981 370096 12.0% 188514 17.1% 51% 3.63% 0.87% 4.50% 8483 2.29% 27.6%
1982 414744 12.1% 217571 15.4% 52% 3.72% 0.92% 4.64% 10100 2.44% 19.1%
1983 455572 9.8% 249114 14.5% 55% 3.96% 0.96% 4.92% 12258 2.69% 21.4%
1984 513336 12.7% 312875 25.6% 61% 3.49% 1.11% 4.60% 14387 2.80% 17.4%
1985 573107 11.6% 382361 22.2% 67% 3.11% 1.19% 4.30% 16453 2.87% 14.4%
1986 591844 3.3% 490294 28.2% 83% 3.01% 1.18% 4.20% 20585 3.48% 25.1%
1987 633959 7.1% 590672 20.5% 93% 3.00% 0.63% 3.63% 21434 3.38% 4.1%
1988 647037 2.1% 583033 -1.3% 90% 3.20% 1.08% 4.28% 24953 3.86% 16.4%
1989 701801 8.5% 604707 3.7% 86% 3.50% 1.23% 4.73% 28591 4.07% 14.6%
1990 776705 10.7% 614645 1.6% 79% 3.29% 0.84% 4.13% 25370 3.27% -11.3%
1991 773712 -0.4% 578080 -5.9% 75% 3.32% 0.62% 3.94% 22786 2.95% -10.2%
1992 796166 2.9% 610710 5.6% 77% 3.39% 0.91% 4.30% 26288 3.30% 15.4%
1993 852751 7.1% 586431 -4.0% 69% 3.90% 1.50% 5.39% 31623 3.71% 20.3%
1994 902526 5.8% 695179 18.5% 77% 3.39% 0.79% 4.19% 29115 3.23% -7.9%
1995 951752 5.5% 708356 1.9% 74% 3.17% 1.12% 4.29% 30404 3.19% 4.4%
1996 1064603 11.9% 843219 19.0% 79% 2.72% 0.96% 3.68% 30998 2.91% 2.0%
1997 1143758 7.4% 952103 12.9% 83% 2.42% 0.94% 3.36% 31975 2.80% 3.2%
1998 1148596 0.4% 1056538 11.0% 92% 2.40% 0.75% 3.15% 33306 2.90% 4.2%
1999 1331924 16.0% 1175187 11.2% 88% 2.30% 0.80% 3.11% 36520 2.74% 9.6%
2000 1539028 15.5% 1334522 13.6% 87% 2.26% 0.91% 3.17% 42306 2.75% 15.8%
2001 1498721 -2.6% 1451435 8.8% 97% 2.28% 0.80% 3.07% 44600 2.98% 5.4%
2002 1550446 3.5% 1501528 3.5% 97% 2.28% 0.80% 3.07% 46139 2.98% 3.5%
2003 1594220 2.8% 1543921 2.8% 97% 2.28% 0.80% 3.07% 47442 2.98% 2.8%
2004E 1656394 3.9% 1639830 6.2% 99% 2.25% 0.80% 3.05% 50015 3.02% 5.4%
2005E 1744183 5.3% 1761625 7.4% 101% 2.22% 0.80% 3.02% 53201 3.05% 6.4%
2006E 1833136 5.1% 1888130 7.2% 103% 2.19% 0.80% 2.99% 56455 3.08% 6.1%
2007E 1924793 5.0% 2021033 7.0% 105% 2.16% 0.80% 2.96% 59823 3.11% 6.0%
2008E 2021033 5.0% 2162505 7.0% 107% 2.13% 0.80% 2.93% 63361 3.14% 5.9%
58
The View from the Top – January 2005
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
4.50%
4.25%
4.00%
3.75%
3.50%
3.25%
3.00%
2.75%
2.50%
2.25%
2.00%
1.75%
1.50%
1.25%
1.00%
0.75%
0.50%
0.25%
0.00%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
210%
200%
190%
180%
170%
160%
150%
140%
130%
120%
110%
100%
90%
80%
70% European Average (exc CEE)
60%
50% Norwegian Banking
40%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
59
The View from the Top – January 2005
Poland
➤ Medium-term revenue growth forecast at 9.8% pa, down from 23.6%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 13% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
Zl, m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs Zl, m % GDP in Revenues
Zl, m
1980 - - - - - - - - - - -
1981 - - - - - - - - - - -
1982 - - - - - - - - - - -
1983 - - - - - - - - - - -
1984 - - - - - - - - - - -
1985 - - - - - - - - - - -
1986 - - - - - - - - - - -
1987 - - - - - - - - - - -
1988 - - - - - - - - - - -
1989 - - - - - - - - - - -
1990 - - - - - - - - - - -
1991 - - - - - - - - - - -
1992 - - - - - - - - - - -
1993 - - 83001 - - - - - 5578 - -
1994 - - 109676 - - - - - 6805 - 22.0%
1995 339228 - 149342 36.2% 44% 5.12% 1.65% 6.77% 10111 2.98% 48.6%
1996 387827 14.3% 188098 26.0% 44% 5.49% 1.73% 7.22% 13581 3.50% 34.3%
1997 472350 21.8% 236415 25.7% 45% 5.00% 1.93% 6.93% 16378 3.47% 20.6%
1998 553560 17.2% 305035 29.0% 51% 4.29% 1.89% 6.18% 18849 3.41% 15.1%
1999 615115 11.1% 348033 14.1% 51% 3.95% 2.44% 6.40% 22269 3.62% 18.1%
2000 684982 11.4% 410445 17.9% 55% 4.13% 2.55% 6.69% 27440 4.01% 23.2%
2001 749575 9.4% 448201 9.2% 57% 3.43% 3.10% 6.53% 29259 3.90% 6.6%
2002 775825 3.5% 443122 -1.1% 57% 3.58% 3.01% 6.59% 29202 3.76% -0.2%
2003 814969 5.0% 463552 4.6% 57% 3.21% 2.61% 5.82% 26979 3.31% -7.6%
2004E 888316 9.0% 532990 15.0% 60% 3.15% 2.55% 5.70% 30380 3.42% 12.6%
2005E 968265 9.0% 610007 14.5% 63% 3.05% 2.45% 5.50% 33550 3.47% 10.4%
2006E 1036043 7.0% 683789 12.1% 66% 2.95% 2.35% 5.30% 36241 3.50% 8.0%
2007E 1108566 7.0% 764911 11.9% 69% 2.90% 2.25% 5.15% 39393 3.55% 8.7%
2008E 1186166 7.0% 854039 11.7% 72% 2.85% 2.20% 5.05% 43129 3.64% 9.5%
60
The View from the Top – January 2005
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
210%
190%
170%
150%
130%
110%
90%
70%
50%
30%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
61
The View from the Top – January 2005
Portugal
➤ Medium-term revenue growth forecast at 3.9% pa, down from 10.5%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 5.4% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
€m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs €m % GDP in Revenues
€m
1980 - - 8258 - - 2.41% 0.90% 3.31% 273 - -
1981 - - 10662 29.1% - 2.33% 1.02% 3.35% 357 - 30.8%
1982 - - 14205 33.2% - 2.16% 1.09% 3.25% 462 - 29.4%
1983 - - 17643 24.2% - 1.67% 1.28% 2.95% 520 - 12.6%
1984 - - 22252 26.1% - 1.67% 1.08% 2.75% 612 - 17.7%
1985 - - 27199 22.2% - 2.16% 0.68% 2.84% 773 - 26.3%
1986 27071 - 31523 15.9% 116% 2.57% 0.57% 3.14% 989 3.65% 27.9%
1987 31596 16.7% 36806 16.8% 116% 3.16% 0.71% 3.87% 1424 4.51% 44.0%
1988 37502 18.7% 43592 18.4% 116% 3.37% 0.73% 4.11% 1791 4.78% 25.8%
1989 44223 17.9% 51380 17.9% 116% 3.80% 0.74% 4.54% 2334 5.28% 30.3%
1990 53126 20.1% 58680 14.2% 110% 4.65% 1.08% 5.73% 3365 6.33% 44.2%
1991 60233 13.4% 74584 27.1% 124% 4.44% 1.04% 5.48% 4084 6.78% 21.4%
1992 65598 8.9% 95661 28.3% 146% 3.63% 0.98% 4.61% 4413 6.73% 8.1%
1993 69856 6.5% 123281 28.9% 176% 2.84% 0.90% 3.74% 4615 6.61% 4.6%
1994 75937 8.7% 139617 13.3% 184% 2.46% 0.70% 3.15% 4403 5.80% -4.6%
1995 82818 9.1% 154996 11.0% 187% 2.21% 0.70% 2.90% 4499 5.43% 2.2%
1996 88362 6.7% 161217 4.0% 182% 2.12% 0.96% 3.08% 4959 5.61% 10.2%
1997 95471 8.0% 189624 17.6% 199% 2.06% 0.96% 3.03% 5737 6.01% 15.7%
1998 104319 9.3% 212599 12.1% 204% 1.99% 1.06% 3.05% 6478 6.21% 12.9%
1999 110013 5.5% 242223 13.9% 220% 1.90% 0.84% 2.73% 6624 6.02% 2.3%
2000 118176 7.4% 262267 8.3% 222% 1.79% 0.89% 2.68% 7031 5.95% 6.1%
2001 126173 6.8% 284663 8.5% 226% 1.79% 0.76% 2.56% 7275 5.77% 3.5%
2002 129275 2.5% 291661 2.5% 226% 1.79% 0.76% 2.56% 7454 5.77% 2.5%
2003 131582 1.8% 296867 1.8% 226% 1.79% 0.76% 2.56% 7587 5.77% 1.8%
2004E 136188 3.5% 311870 5.1% 229% 1.75% 0.75% 2.50% 7797 5.73% 2.8%
2005E 141227 3.7% 327646 5.1% 232% 1.72% 0.75% 2.47% 8093 5.73% 3.8%
2006E 147582 4.5% 346818 5.9% 235% 1.69% 0.75% 2.44% 8462 5.73% 4.6%
2007E 153780 4.2% 365997 5.5% 238% 1.66% 0.75% 2.41% 8821 5.74% 4.2%
2008E 160239 4.2% 386176 5.5% 241% 1.63% 0.75% 2.38% 9191 5.74% 4.2%
62
The View from the Top – January 2005
30%
25%
20%
15%
10%
5%
0%
-5%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
230%
220%
210%
200%
190%
180%
170%
160%
150%
140%
130%
120%
110%
European Average (exc CEE)
100%
90% Portuguese Banking
80%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
63
The View from the Top – January 2005
Spain
➤ Medium-term revenue growth forecast at 5.4% pa, down from 6.9%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 6.8% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
€m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs €m % GDP in Revenues
€m
1980 99440 - 106248 - 107% 3.91% 0.68% 4.59% 4879 4.91% -
1981 112476 13.1% 129821 22.2% 115% 3.94% 0.64% 4.58% 5949 5.29% 21.9%
1982 129676 15.3% 155097 19.5% 120% 3.84% 0.71% 4.55% 7059 5.44% 18.7%
1983 146384 12.9% 181512 17.0% 124% 4.01% 0.67% 4.68% 8497 5.80% 20.4%
1984 164024 12.1% 216989 19.5% 132% 3.81% 0.62% 4.44% 9625 5.87% 13.3%
1985 183632 12.0% 241622 11.4% 132% 3.73% 0.69% 4.42% 10670 5.81% 10.9%
1986 208584 13.6% 264617 9.5% 127% 3.87% 0.72% 4.59% 12155 5.83% 13.9%
1987 237296 13.8% 295028 11.5% 124% 3.97% 0.85% 4.82% 14219 5.99% 17.0%
1988 259064 9.2% 330274 11.9% 127% 3.97% 0.95% 4.93% 16272 6.28% 14.4%
1989 289676 11.8% 381603 15.5% 132% 3.80% 0.81% 4.61% 17591 6.07% 8.1%
1990 330196 14.0% 421532 10.5% 128% 3.76% 0.84% 4.60% 19387 5.87% 10.2%
1991 356196 7.9% 474009 12.4% 133% 3.72% 0.87% 4.60% 21794 6.12% 12.4%
1992 371228 4.2% 522340 10.2% 141% 3.46% 0.88% 4.35% 22698 6.11% 4.1%
1993 392068 5.6% 621131 18.9% 158% 3.03% 1.05% 4.08% 25368 6.47% 11.8%
1994 415268 5.9% 665272 7.1% 160% 2.96% 0.81% 3.77% 25094 6.04% -1.1%
1995 446876 7.6% 722544 8.6% 162% 2.65% 0.80% 3.45% 24915 5.58% -0.7%
1996 473540 6.0% 758933 5.0% 160% 2.55% 0.92% 3.47% 26332 5.56% 5.7%
1997 508684 7.4% 811086 6.9% 159% 2.44% 1.01% 3.45% 27955 5.50% 6.2%
1998 540112 6.2% 872387 7.6% 162% 2.32% 1.09% 3.41% 29763 5.51% 6.5%
1999 582456 7.8% 961746 10.2% 165% 2.12% 0.99% 3.11% 29898 5.13% 0.5%
2000 624732 7.3% 1077589 12.0% 172% 2.06% 1.15% 3.20% 34534 5.53% 15.5%
2001 668100 6.9% 1195821 11.0% 226% 2.32% 0.89% 3.21% 38427 5.75% 11.3%
2002 714944 7.0% 1233194 3.1% 172% 2.32% 0.89% 3.21% 39628 5.54% 3.1%
2003 763012 6.7% 1316106 6.7% 172% 2.32% 0.89% 3.21% 42292 5.54% 6.7%
2004E 805741 5.6% 1410046 7.1% 175% 2.30% 0.90% 3.20% 45121 5.60% 6.7%
2005E 846833 5.1% 1507364 6.9% 178% 2.25% 0.90% 3.15% 47482 5.61% 5.2%
2006E 890869 5.2% 1612473 7.0% 181% 2.20% 0.90% 3.10% 49987 5.61% 5.3%
2007E 933630 4.8% 1717880 6.5% 184% 2.15% 0.90% 3.05% 52395 5.61% 4.8%
2008E 978445 4.8% 1829692 6.5% 187% 2.10% 0.90% 3.00% 54891 5.61% 4.8%
64
The View from the Top – January 2005
4.25%
4.00% Non Interest Income
3.75%
3.50%
3.25%
3.00%
2.75%
2.50%
2.25%
2.00%
1.75%
1.50%
1.25%
1.00%
0.75%
0.50%
0.25%
0.00%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004E
2005E
2006E
2007E
2008E
Source: OECD and Smith Barney estimates.
230%
220%
210%
200%
190%
180%
170%
160%
150%
140%
130%
120%
110% European Average (exc CEE)
100%
Spanish Banking
90%
80%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
65
The View from the Top – January 2005
Sweden
➤ Medium-term revenue growth forecast at 5.5% pa, down from 10.7%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 6.4% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
SKr, m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs SKr, m % GDP in Revenues
SKr, m
1980 601936 - 297107 - 49% 1.93% 0.79% 2.72% 8085 3.83% -
1981 645680 7.3% 367196 23.6% 57% 1.95% 0.80% 2.75% 10092 3.86% 24.8%
1982 718340 11.3% 421581 14.8% 59% 1.87% 0.84% 2.72% 11450 4.24% 13.5%
1983 823028 14.6% 476784 13.1% 58% 2.21% 0.89% 3.10% 14789 7.13% 29.2%
1984 906808 10.2% 527734 10.7% 58% 2.13% 0.92% 3.05% 16121 3.09% 9.0%
1985 963848 6.3% 540311 2.4% 56% 2.03% 1.09% 3.12% 16833 6.82% 4.4%
1986 1058112 9.8% 594707 10.1% 56% 2.54% 1.38% 3.93% 23345 2.50% 38.7%
1987 1162016 9.8% 666193 12.0% 57% 2.47% 0.97% 3.44% 22944 3.78% -1.7%
1988 1276700 9.9% 835005 25.3% 65% 2.32% 0.94% 3.26% 27195 2.13% 18.5%
1989 1415940 10.9% 1020321 22.2% 72% 2.10% 0.84% 2.94% 29968 2.12% 10.2%
1990 1514916 7.0% 1264632 23.9% 83% 1.98% 0.70% 2.68% 33955 2.24% 13.3%
1991 1587760 4.8% 1207745 -4.5% 76% 2.18% 0.73% 2.91% 35135 2.21% 3.5%
1992 1583564 -0.3% 1153554 -4.5% 73% 2.29% 1.53% 3.83% 44133 2.79% 25.6%
1993 1639528 3.5% 1353830 17.4% 83% 2.78% 3.23% 6.01% 81375 4.96% 84.4%
1994 1764588 7.6% 1344615 -0.7% 76% 2.64% 1.53% 4.17% 56015 3.17% -31.2%
1995 1884312 6.8% 1459359 8.5% 77% 2.63% 1.46% 4.09% 59629 3.16% 6.5%
1996 1895188 0.6% 1730382 18.6% 91% 2.02% 1.52% 3.54% 61184 3.23% 2.6%
1997 2024396 6.8% 1986996 14.8% 98% 1.57% 1.43% 3.00% 59631 2.95% -2.5%
1998 2103960 3.9% 2188569 10.1% 104% 1.26% 1.83% 3.09% 67705 3.22% 13.5%
1999 2240580 6.5% 2232877 2.0% 100% 1.24% 1.55% 2.79% 62211 2.78% -8.1%
2000 2332560 4.1% 2592668 16.1% 111% 1.08% 1.57% 2.64% 68576 2.94% 10.2%
2001 2412928 3.4% 2811832 8.5% 117% 1.14% 1.56% 2.70% 76022 3.15% 10.9%
2002 2482584 2.9% 2893003 2.9% 117% 1.14% 1.56% 2.70% 78217 3.15% 2.9%
2003 2587696 4.2% 3015493 4.2% 117% 1.14% 1.56% 2.70% 81528 3.15% 4.2%
2004E 2691204 4.0% 3202533 6.2% 119% 1.13% 1.54% 2.67% 85508 3.18% 4.9%
2005E 2817690 4.7% 3409405 6.5% 121% 1.12% 1.53% 2.65% 90349 3.21% 5.7%
2006E 2955757 4.9% 3635581 6.6% 123% 1.11% 1.52% 2.63% 95616 3.23% 5.8%
2007E 3091722 4.6% 3864653 6.3% 125% 1.10% 1.51% 2.61% 100867 3.26% 5.5%
2008E 3233941 4.6% 4107105 6.3% 127% 1.09% 1.50% 2.59% 106374 3.29% 5.5%
66
The View from the Top – January 2005
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
4.50%
4.00%
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
210%
200%
190%
180%
170%
160%
150%
140%
130%
120%
110%
100%
90%
80%
70%
60% European Average (exc CEE)
50%
Swedish Banking
40%
30%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
67
The View from the Top – January 2005
Switzerland
➤ Medium-term revenue growth forecast at 3.5% pa, down from 7.6%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 3.4% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
SFr, m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs SFr, m % GDP in Revenues
SFr, m
1980 191937 - 466299 - 243% 1.16% 1.07% 2.24% 10432 5.44% -
1981 208120 8.4% 533276 14.4% 256% 1.17% 1.07% 2.24% 11939 5.74% 14.4%
1982 214592 3.1% 580069 8.8% 270% 1.32% 1.05% 2.37% 13747 6.41% 15.1%
1983 226201 5.4% 626037 7.9% 277% 1.29% 1.12% 2.41% 15099 6.68% 9.8%
1984 239316 5.8% 689106 10.1% 288% 1.31% 1.09% 2.40% 16544 6.91% 9.6%
1985 254138 6.2% 738140 7.1% 290% 1.35% 1.22% 2.57% 18981 7.47% 14.7%
1986 264042 3.9% 805082 9.1% 305% 1.32% 1.28% 2.60% 20894 7.91% 10.1%
1987 274043 3.8% 856484 6.4% 313% 1.26% 1.33% 2.59% 22170 8.09% 6.1%
1988 292242 6.6% 915812 6.9% 313% 1.34% 1.19% 2.53% 23173 7.93% 4.5%
1989 318090 8.8% 978346 6.8% 308% 1.36% 1.40% 2.76% 26985 8.48% 16.5%
1990 343093 7.9% 1032779 5.6% 301% 1.33% 1.26% 2.59% 26736 7.79% -0.9%
1991 354320 3.3% 1073321 3.9% 303% 1.53% 1.56% 3.09% 33173 9.36% 24.1%
1992 358214 1.1% 1112213 3.6% 310% 1.62% 1.56% 3.17% 35310 9.86% 6.4%
1993 369290 3.1% 1177805 5.9% 319% 1.80% 1.72% 3.52% 41495 11.24% 17.5%
1994 378020 2.4% 1182782 0.4% 313% 1.41% 1.65% 3.06% 36174 9.57% -12.8%
1995 377791 -0.1% 1300735 10.0% 344% 1.27% 1.66% 2.93% 38115 10.09% 5.4%
1996 379024 0.3% 1467458 12.8% 387% 1.18% 1.75% 2.93% 42952 11.33% 12.7%
1997 391762 3.4% 1746814 19.0% 446% 1.13% 1.72% 2.85% 49765 12.70% 15.9%
1998 395736 1.0% 2017643 15.5% 510% 1.08% 1.59% 2.66% 53747 13.58% 8.0%
1999 412235 4.2% 2206867 9.4% 535% 1.03% 1.71% 2.74% 60535 14.68% 12.6%
2000 426217 3.4% 2087613 -5.4% 490% 1.21% 2.04% 3.25% 67749 15.90% 11.9%
2001 428483 0.5% 2193032 5.0% 512% 1.14% 1.63% 2.78% 60909 14.22% -10.1%
2002 437259 2.0% 2237947 2.0% 512% 1.14% 1.63% 2.78% 62156 14.22% 2.0%
2003 445193 1.8% 2278554 1.8% 512% 1.14% 1.63% 2.78% 63284 14.22% 1.8%
2004E 457658 2.8% 2343210 2.8% 512% 1.15% 1.65% 2.80% 65610 14.34% 3.7%
2005E 472761 3.3% 2420536 3.3% 512% 1.15% 1.65% 2.80% 67775 14.34% 3.3%
2006E 487889 3.2% 2497993 3.2% 512% 1.15% 1.65% 2.80% 69944 14.34% 3.2%
2007E 502526 3.0% 2618160 4.8% 521% 1.15% 1.65% 2.80% 73308 14.59% 4.8%
2008E 516094 2.7% 2688851 2.7% 521% 1.15% 1.65% 2.80% 75288 14.59% 2.7%
68
The View from the Top – January 2005
3.00%
2.75%
2.50%
2.25%
2.00%
1.75%
1.50%
1.25%
1.00%
0.75%
0.50%
0.25%
0.00%
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004E
2005E
2006E
2007E
2008E
Source: OECD and Smith Barney estimates.
460%
440%
420%
400%
380%
360%
340%
320%
300%
280%
260%
240%
220%
200%
180%
160% Swiss Banking
140%
120% European Average (exc CEE)
100%
80%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
69
The View from the Top – January 2005
Turkey
➤ Medium-term revenue growth forecast at 11.6% pa
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
Lira, trn Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs Lira, trn % GDP in Revenues
Lira, trn
1980 - - - - - - - - - - -
1981 - - - - - - - - - - -
1982 - - - - - - - - - - -
1983 - - 6 - - - - - 0 - -
1984 - - 9 53.9% - - - - 0 - -
1985 - - 15 64.6% - - - - 0 - -
1986 - - 23 56.5% - - - - 1 - -
1987 91 - 38 64.4% 42% 3.45% 3.01% 6.46% 2 2.48% -
1988 149 64.1% 62 61.0% 41% 3.93% 2.92% 6.86% 4 2.75% -
1989 275 84.5% 97 57.1% 35% 2.31% 2.37% 4.68% 6 2.13% -
1990 464 68.9% 153 57.8% 33% 5.77% 1.21% 6.98% 11 2.46% -
1991 769 65.8% 270 76.9% 35% 6.79% 1.54% 8.33% 19 2.52% -
1992 1340 74.2% 510 89.1% 38% 5.85% 2.15% 8.01% 37 2.75% -
1993 2431 81.4% 974 90.7% 40% 3.06% 2.93% 5.99% 71 2.94% -
1994 5097 109.7% 1854 90.5% 36% 5.09% 1.06% 6.15% 124 2.44% 74.1%
1995 9213 80.7% 3803 105.1% 41% 5.60% -0.51% 5.09% 268 2.91% 116.0%
1996 19011 106.4% 8405 121.0% 44% 4.69% -0.29% 4.39% 572 3.01% 113.4%
1997 37002 94.6% 18336 118.2% 50% 4.66% -0.76% 3.89% 1453 3.93% 153.8%
1998 78283 111.6% 35088 91.4% 45% 4.98% -1.44% 3.54% 3347 4.28% 130.4%
1999 125971 60.9% 68683 95.7% 55% 3.74% 0.17% 3.91% 5525 4.39% 65.0%
2000 179500 42.5% 99453 44.8% 55% 6.71% -0.96% 5.76% 5135 2.86% -7.1%
2001 276000 53.8% 163788 64.7% 59% 8.94% -0.07% 8.87% 7519 2.72% 46.4%
2002 359170 30.1% 213144 30.1% 59% 8.94% -0.07% 8.87% 18908 5.26% 151.5%
2003 440084 22.5% 261161 22.5% 59% 8.94% -0.07% 8.87% 23168 5.26% 22.5%
2004E 512918 16.6% 312880 19.8% 61% 8.50% 0.50% 9.00% 28159 5.49% 21.5%
2005E 587035 14.5% 369832 18.2% 63% 8.00% 0.50% 8.50% 31436 5.36% 11.6%
2006E 657479 12.0% 427361 15.6% 65% 7.50% 0.50% 8.00% 34189 5.20% 8.8%
2007E 736376 12.0% 493372 15.4% 67% 7.00% 0.50% 7.50% 37003 5.03% 8.2%
2008E 824741 12.0% 569071 15.3% 69% 6.50% 0.50% 7.00% 39835 4.83% 7.7%
70
The View from the Top – January 2005
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Source: OECD and Smith Barney estimates.
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
-1.00%
-2.00%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
200%
180%
160%
140%
120%
100%
80%
60%
40%
20%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
71
The View from the Top – January 2005
UK
➤ Medium-term revenue growth forecast at 4.6% pa, down from 7.3%
average over the previous decade
➤ Banking assets/liabilities forecast to rise 5% pa over next five years
Nominal Nominal Banking Growth in Banking Net Int Inc Other Inc Total Inc Banking Banking
GDP GDP Assets/ Assets/ Assts/Liabs % Banking % Banking % Banking Revenues Revenues Change
£m Growth Liabilities Liabilities % GDP Assts/Liabs Assts/Liabs Assts/Liabs £m % GDP in Revenues
£m
1980 240592 - - - - - - - - - -
1981 262600 9.1% - - - - - - - - -
1982 286204 9.0% - - - - - - - - -
1983 313280 9.5% - - - - - - - - -
1984 334104 6.6% 302616 - 91% 2.87% 1.59% 4.46% 13501 4.04% -
1985 365908 9.5% 301850 -0.3% 82% 3.11% 1.64% 4.75% 14348 3.92% 6.3%
1986 393372 7.5% 334630 10.9% 85% 3.01% 1.72% 4.73% 15827 4.02% 10.3%
1987 436196 10.9% 370042 10.6% 85% 3.04% 1.81% 4.85% 17938 4.11% 13.3%
1988 489984 12.3% 421261 13.8% 86% 3.06% 1.73% 4.79% 20177 4.12% 12.5%
1989 530356 8.2% 468017 11.1% 88% 3.07% 1.85% 4.91% 23001 4.34% 14.0%
1990 565224 6.6% 515419 10.1% 91% 2.88% 1.82% 4.69% 24196 4.28% 5.2%
1991 597244 5.7% 532351 3.3% 89% 2.91% 1.96% 4.88% 25959 4.35% 7.3%
1992 616112 3.2% 646854 21.5% 105% 2.39% 1.74% 4.13% 26721 4.34% 2.9%
1993 657680 6.7% 690127 6.7% 105% 2.37% 1.90% 4.27% 29485 4.48% 10.3%
1994 696544 5.9% 721892 4.6% 104% 2.30% 1.72% 4.02% 29032 4.17% -1.5%
1995 733388 5.3% 806168 11.7% 110% 2.20% 1.64% 3.85% 31001 4.23% 6.8%
1996 776336 5.9% 1015053 25.9% 131% 2.07% 1.33% 3.39% 34455 4.44% 11.1%
1997 828064 6.7% 1145343 12.8% 138% 1.99% 1.24% 3.23% 36998 4.47% 7.4%
1998 876416 5.8% 1199062 4.7% 137% 2.01% 1.30% 3.31% 39713 4.53% 7.3%
1999 921896 5.2% 1298921 8.3% 141% 1.97% 1.32% 3.29% 42774 4.64% 7.7%
2000 961828 4.3% 1629540 25.5% 169% 1.66% 1.26% 2.92% 47640 4.95% 11.4%
2001 1012956 5.3% 1780968 9.3% 176% 1.68% 1.30% 2.97% 52938 5.23% 11.1%
2002 1063368 5.0% 1869602 5.0% 176% 1.68% 1.30% 2.97% 55573 5.23% 5.0%
2003 1125968 5.9% 1979664 5.9% 176% 1.68% 1.30% 2.97% 58844 5.23% 5.9%
2004E 1182266 5.0% 2104434 6.3% 178% 1.65% 1.28% 2.93% 61660 5.22% 4.8%
2005E 1246109 5.4% 2242996 6.6% 180% 1.62% 1.26% 2.88% 64598 5.18% 4.8%
2006E 1313399 5.4% 2390386 6.6% 182% 1.59% 1.24% 2.83% 67648 5.15% 4.7%
2007E 1379069 5.0% 2537486 6.2% 184% 1.56% 1.22% 2.78% 70542 5.12% 4.3%
2008E 1438369 4.3% 2675365 5.4% 186% 1.53% 1.22% 2.75% 73573 5.12% 4.3%
72
The View from the Top – January 2005
220%
210%
200%
190%
180%
170%
160%
150%
140%
130%
120%
110% European Average (exc CEE)
100%
90% UK Banking
80%
2004E
2005E
2006E
2007E
2008E
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
73
The View from the Top – January 2005
Notes
74
ANALYST CERTIFICATION Appendix A-1
We, Simon Samuels and Yann Goffinet, hereby certify that all of the views expressed in this research report accurately reflect our
personal views about any and all of the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be
directly or indirectly related to the specific recommendation(s) or view(s) in this report.
IMPORTANT DISCLOSURES
Analysts' compensation is determined based upon activities and services intended to benefit the investor clients of Citigroup Global
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profitability, which includes revenues from, among other business units, the Private Client Division, Institutional Equities, and Investment
Banking.
Smith Barney Equity Research Ratings Distribution
Data current as of 31 December 2004 Buy Hold Sell
Smith Barney Global Fundamental Equity Research Coverage (2598) 39% 42% 18%
% of companies in each rating category that are investment banking clients 56% 55% 44%
Guide to Fundamental Research Investment Ratings:
Smith Barney's stock recommendations include a risk rating and an investment rating.
Risk ratings, which take into account both price volatility and fundamental criteria, are: Low [L], Medium [M], High [H], and Speculative
[S].
Investment ratings are a function of Smith Barney's expectation of total return (forecast price appreciation and dividend yield within the
next 12 months) and risk rating.
For securities in developed markets (US, UK, Europe, Japan, and Australia/New Zealand), investment ratings are: Buy [1] (expected total
return of 10% or more for Low-Risk stocks, 15% or more for Medium-Risk stocks, 20% or more for High-Risk stocks, and 35% or more for
Speculative stocks); Hold [2] (0%-10% for Low-Risk stocks, 0%-15% for Medium-Risk stocks, 0%-20% for High-Risk stocks, and 0%-35%
for Speculative stocks); and Sell [3] (negative total return).
For securities in emerging markets (Asia Pacific, Emerging Europe/Middle East/Africa, and Latin America), investment ratings are: Buy
[1] (expected total return of 15% or more for Low-Risk stocks, 20% or more for Medium-Risk stocks, 30% or more for High-Risk stocks,
and 40% or more for Speculative stocks); Hold [2] (5%-15% for Low-Risk stocks, 10%-20% for Medium-Risk stocks, 15%-30% for
High-Risk stocks, and 20%-40% for Speculative stocks); and Sell [3] (5% or less for Low-Risk stocks, 10% or less for Medium-Risk
stocks, 15% or less for High-Risk stocks, and 20% or less for Speculative stocks).
Investment ratings are determined by the ranges described above at the time of initiation of coverage, a change in risk rating, or a
change in target price. At other times, the expected total returns may fall outside of these ranges because of price movement and/or
volatility. Such interim deviations from specified ranges will be permitted but will become subject to review by Research Management.
Your decision to buy or sell a security should be based upon your personal investment objectives and should be made only after
evaluating the stock's expected performance and risk.
75
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76