Annual report 2010 - Dexia.com

StrategyManagement reportConsolidatedfinancial statementsAdditional information Annual financial statements• the deployment of a new distribution model based onthe “open branch” concept which enables the specialistservice of a branch to be improved thanks to state-of-the-arttechnology;• a new commercial approach adapted to the specific needs ofcustomers and relying on specialised account management;• development of a “direct sales” approach (web and callservice offer);• the repositioning of the Dexia brand with a particular focuson transparency, both with regards to product and commercialrelationship, together with a refined customer segmentation.This investment plan is expected to generate EUR 250 millionin additional income by 2014.In Luxembourg, Dexia is the third largest market operatorboth for individual customers and for professionals, with astrong positioning with affluent customers. Thanks to itscommercial stamina the Group has recovered the trust of itscustomers and posts since the first half of 2010 net positivedeposit collection figures for both local and internationalbusiness.Dexia’s ambition for RCB Luxembourg by 2014 is:• to increase market share as the main banker for Luxembourgindividual customers to 15%;• to consolidate the bank’s positioning among the Top 3 inLuxembourg in the professionals segment;• to foster up-selling and increase the average size of themost affluent customers’ assets thanks to a service offertailored to their needs;• to reinforce the expertise in private banking and by doingso establish the position of the Group as a benchmark forinternational private banking.Efforts will be ongoing to reduce the cost base in Belgiumand in Luxembourg.The implementation of this strategy for RCB Belgium andLuxembourg should be reflected by the following financialtargets:• a pre-tax income of approximately EUR 600 million in 2014(against EUR 400 million in 2009);• a reduction of the cost-income ratio from 74% to around66% between 2009 and 2014.Retail and Commercial Banking in TurkeyOver the last ten years, DenizBank has constantly outperformedthe market both in terms of asset growth and interms of profitability, pulling itself from the 81 st to 9 th rank bytotal of balance sheet whilst posting a ROE of 20% in 2009.Benefiting from a solid economic environment which offersa significant growth potential, particularly in Retail andCommercial banking, DenizBank’s ambition is to become theprincipal alternative to the major banks whilst retaining itsprofitable growth model.Relying on a very flexible operating model, a state-of-the-artIT infrastructure, a culture of efficiency and cost control aswell as cautious risk management, DenizBank will acceleratethe pace at which it opens branches, to reach 800 branchesby 2014. The contribution from retail banking to the activitymix will increase, and DenizBank will keep a specific focus onattractive niches, such as agriculture, as well as the collectionof deposits. DenizBank will also strengthen its position as acommercial bank which, in line with its model, will feed theother business lines.In 2014, although still not having reached its full potential,this strategy should enable DenizBank:• to have a base of some 6 million customers, of which2 million new customers;• to see its market share in the number of branches rise from5% to 7% between 2010 and 2014 with a specific focus onlarge towns and rural areas;• to raise the proportion of deposits on its balance sheettotal to reach approximately 70% in 2014.Its development ambitions should be reflected by the followingfinancial targets going forward to 2014:• a pre-tax income of approximately TRY 1.2 billion (EUR 600million);• a cost-income ratio of approximately 51%;• a ROE of approximately 14%.Public and Wholesale Banking (PWB)Within the context of the transformation plan implementedfrom the end of 2008, the Public and Wholesale Bankingbusiness line has refocused on its historical markets in Franceand in Belgium. The aim of this refocusing was to align thevolume of loans granted to customers to the business line’sfunding capacity, and to make profitability a priority.This redefinition is reflected in a drastic reduction of thevolumes of new commitments, which have been divided byfive between 2007 and 2010-2011, as well as in a significantreduction of the cost base over the same period.Within the limits of its geographical refocusing and subjectto the observance of strict profitability standards, the PWBbusiness line certainly has its place within the Dexia Group,where it should represent about 18% of total income by2014. Its refinancing will principally be through the issue ofcovered bonds as well as deposits collected by the businessline.For 2014, Dexia has four main ambitions for PWB.• In public banking France: to be a selective, profitableand acknowledged specialist, with a base of some 2,500strategic customers, and a widened range of products(thanks, in particular, to developments in insurance, assetmanagement, deposits…). This target is substantiated by thesituation already prevailing in 2010, with annual productiondivided by 2.5 between 2008 and 2010, when, at the sametime, commercial margins rose by more than 50%. Regardingstructured loans, Dexia has proactively adopted a process ofclarification and transparency of commercial rules towards itscustomers.• In public banking Belgium: Dexia, which benefits fromthe best scores in terms of customer recognition, intends toconfirm its position as the leader on the basis of a modeloffering a complete range of products and a high-performancenetwork.• In corporate banking Belgium: the aim is to focus onmedium-sized corporates (turnover or balance sheet ≥ EUR 10million and < EUR 1 billion), whilst maintaining an opportunistpresence with large corporates (turnover or balance sheet≥ EUR 1 billion).• In project finance: to consolidate the franchise Dexia hasin the sectors of public-private partnerships, transport, energyand the environment.In 2014, PWB financial targets are as follows:• an income of approximately EUR 1.2 billion;• a cost-income ratio of approximately 42%;• a pre-tax income of approximately EUR 600 million.18 Dexia Annual report 2010