Transcript BU Brazil Analyst & Investor meeting March 2004

Delivering growth and value
Business Unit Brazil of C&CC
Fabio Barbosa
SEVP - CEO of BU Brazil
June 14, 2004
Table of Contents
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004 / 2005
Appendices
0
2
Commitment to orthodox monetary
policy has enabled stability to return
The inflationary pressures due to the exchange rate overshooting receded significantly and
are expected to stabilize along 2004
forecast
20
4.5
18
4.0
16
3.5
3.0
12
2.5
10
2.0
8
BRL/USD (eop)
BRL / USD
14
3.05 (maintained)
IPCA 12M
6.8% (revised
from 6.0%)
1.5
6
IPCA (% , 12 months)
BRL / USD
Nov-04
Sep-04
Jul-04
May-04
Mar-04
Jan-04
Nov-03
Sep-03
Jul-03
May-03
Mar-03
Jan-03
0.0
Nov-02
0
Sep-02
0.5
Jul-02
2
May-02
1.0
Mar-02
4
Jan-02
IPCA%
Dec 04 forecast
Dec 05 forecast
BRL/USD (eop)
3.25 (maintained)
IPCA 12M
4.5% (revised
from 5.1%)
Sources: Brazilian Central Bank, IBGE, ABN AMRO
0
3
The current account is now well
under control
The current account accumulated a USD5.8 billion surplus in 12 months ended in April
(1.1% GDP). From 1999 to April 2004, the current account adjustment was equivalent to
USD31.1 billion (5.8% GDP) driven mainly by exports.
35000
30000
25000
20000
USD billion
15000
10000
5000
0
-5000
-10000
-15000
-20000
Current Account Balance
Apr-04
Mar-04
Feb-04
Jan-04
Dec-03
Nov-03
Oct-03
Sep-03
Aug-03
Jul-03
Jun-03
May-03
Apr-03
Mar-03
Feb-03
Jan-03
Dec-02
Nov-02
Oct-02
Sep-02
Aug-02
Jul-02
Jun-02
May-02
Apr-02
Mar-02
Feb-02
Jan-02
-25000
Trade Balance
Sources: Brazilian Central Bank
0
4
The surplus of the current account
allows to repay the IMF debt
In USD billion
Balance of Payments - Financing Needs
Trade Balance
Current Account
Amortization
Medium and Long Term Debt
Short Term Debt
Total external financing needs
Foreign Direct Investment
New Issuance
Sources of financing
IMF Support
Amortization
Issuance
Gross Reserves (-/+ = decrease/increase)
Net Reserves (IMF agreement)
2002
13.1
-7.7
2003
24.8
4.1
2004F
27.8
6.3
-31.1
-2.0
-40.8
16.6
18.6
35.2
11.5
-4.6
16.0
1.9
14.2
-27.2
-3.5
-26.6
10.1
23.0
33.1
4.8
-12.8
17.6
11.5
17.4
-38.7
-1.2
-33.6
12.0
26.3
38.3
-4.4
-4.4
0.0
-0.7
22.7
Sources: Brazilian Central Bank, ABN AMRO
0
5
Market volatility does not reflect
Brazil’s ability to withstand shocks
Brazil is in much better shape to deal with adverse external factors, compared to mid-90s
and early 00s
Floating FX regime
Fiscal Responsibility Law
Social Security Reform
New Payments System
Capital Markets Reform
… and currently..
FX Denominated Debt / Total Debt
41
38
35
32
%
29
26
23
20
17
Mar-04
Jan-04
Nov-03
Sep-03
Jul-03
May-03
Mar-03
Jan-03
Nov-02
Sep-02
Jul-02
May-02
Mar-02
Jan-02
14
FX Indexed Debt/Total Debt
Source: Brazilian Central Bank
0
6
The government controls a
comfortable majority in Parliament
Governing Coalition in the Senate (votes)
Governing Coalition in the House (votes)
Oct-03
Apr-04
I. Left-wing
154
148
II. Center, center-right
235
(I + II) Governing Coalition
Share in House
PT
PT share of Governing Coalition
Oct-03
Apr-04
I. Left-wing
24
18
234
II. Center, center-right
27
28
389
382
(I + II) Governing Coalition
51
46
76%
74%
Share in Senate
63%
57%
93
90
14
13
24%
24%
27%
28%
PT
PT share of Governing Coalition
Source: Santa Fé, ABN AMRO
0
7
Public support for the government
remains high
Approval ratings have fallen, but are still at respectable levels
Government’s Approval Rating (%)
Mar 03
Jun 03
Dec 03
Feb 04
Mar 04
May 04
Good/excellent
45
52
41
40
35
35
Regular
34
36
42
41
43
44
8
7
13
15
19
20
Don't know
13
6
4
4
3
2
Favorable - Unfavorable
37
44
28
25
15
15
Bad/negative
Source: CNT / Sensus, ABN AMRO
Still high
approval rating
President Lula’s Approval Rating (%)
Mar 03
Jun 03
Dec 03
Feb 04
Mar 04
May 04
Approves
79
78
70
65
60
60
Disapproves
12
13
21
24
31
32
9
9
9
11
10
8
67
65
49
41
29
28
Don't know
Favorable - Unfavorable
Source: CNT / Sensus, ABN AMRO
0
8
Restored finance and strong
government will facilitate reforms

Continuous effort to complete reforms

Revision of mortgage legal framework

New regulation to reduce number of court actions against the
financial system regarding principal and interest

New Bankruptcy Law

Judiciary reform

Public and Private Partnership regulation

Power sector framework
0
9
As a result, steady GDP growth seems
to be finally achievable
GDP started to recover in Q303 albeit at a slower pace than expected. Recovery has been
led by the manufacturing sector, responding to lower interest rates and robust external
demand
8.00%
6.00%
4.00%
2.00%
0.00%
-2.00%
-4.00%
-6.00%
%QoQ
Mar00
Jun00
Sep00
Dec00
Mar01
Jun01
Sep01
Dec01
Jun02
Sep02
Dec02
Mar03
Jun03
Sep03
Dec03
Mar04
1.40% 1.00% 0.30% 1.10% 1.00% -0.50%-0.90%-0.40% 0.70% 1.20% 0.10% -1.20%-0.90% 0.50% 1.50% 1.60%
%QoQ annualized 5.60% 4.20% 1.30% 4.30% 4.10% -2.00%-3.70%-1.50% 2.80% 4.80% 0.60% -4.70%-3.60% 2.00% 6.00% 6.60%
%QoQ
%QoQ annualized
Sources: IBGE
0
10
Expected decline in inflation will allow
further interest rate cuts
Central Bank will likely continue to gradually ease monetary policy in 2004, reducing
interest rates with caution and assessing recovery of economic activity
forecast
20
Dec 04 forecast
30
18
14.5% pa (revised
from 13.5%)
20
12
10
15
8
10
6
4
5
IPCA (%, 12months)
Selic (%, p.a.)
Nov-04
Sep-04
Jul-04
May-04
Mar-04
Jan-04
Nov-03
Sep-03
Jul-03
May-03
Mar-03
Jan-03
Nov-02
Sep-02
Jul-02
May-02
Mar-02
Jan-02
2
0
Selic%
IPCA%
14
0
Selic (eop)
25
16
IPCA 12M
6.8% (revised
from 6.0%)
Dec 05 forecast
Selic (eop)
12% pa
(maintained)
IPCA 12M
4.5% (revised
from 5.1%)
Source: Brazilian Central Bank, IBGE, ABN AMRO
0
11
Economic stability and low interest
rates will unleash the growth potential
Total Credit to Private Sector / GDP1
Declining
interest rates
will enable
significant
volume growth
in the still
underdeveloped
Brazilian
banking market;
The penetration
of total credit
shows a large
long term
growth potential
141%
144%
149%
USA
UK
NL
66%
13%
15%
Mexico
Argentina
25%
Brazil
Chile
Sources: World Bank, European Union Web site, IBGE
Credit to the Private Sector *
EOP Balance
Growth
in BRL billion
nominal
2002
365
+13%
2003
395
+8%
1Q04
408
+1.5%
Period
* does not include external financing to the private sector
Source: Brazilian Central Bank, ABN AMRO
0
12
Table of Contents
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004 / 2005
Appendices
0
13
ABN AMRO Brazil is a client led
institution

Training

Competitive market conditions


Client knowledge

Segmentation
Since the acquisition of Banco Real
we have updated our IT infrastructure
to competitive standards
Engagement in decisionmaking process
Spreading
ABN AMRO
Corporate Values
Respect
 Professionalism
 Integrity
 Teamwork

Sustainability Model
0
14
Leveraging the local, regional and
international presence to serve clients
ABN AMRO has leading positions and strong market shares in the full range of financial
services
 Retail Banking
Largest foreign institution by branches, loans and deposits
 Consumer Finance
Largest car financier in Brazil
 Commercial Banking
Maintains relationship with +2500 companies
 Insurance
7th largest insurer; 5th largest pension fund by reserves
 Wholesale Banking
Relationship with +400 largest corporation in Brazil
 Asset Management
4th largest privately owned; R$25.1 bio in AUM as of Mar 04
All data in the overview section are in Brazilian GAAP, in BRL and include all businesses of ABN AMRO Brazil - WCS and C&CC
0
15
Leveraging on business units to
grow the franchise
As of 1Q04
• 34% of individuals
current accounts were
from Payrolls
• 29% of individual
current accounts were
from Mini Branches
Retail
Payroll
Commercial and
Wholesale
3
1
Cross-selling
of financial
services, loan
and investment
products
Main banker
Higher entry
barrier
Current Accounts
Acquisition Individuals and
Suppliers (SMEs)
Mini Branch
Mini Branch
2
3
2
1
Capturing of Value
Chain opportunities
through closer
client knowledge
and Supplier
relations
Payroll Loans
0
16
The performance has been very good
notwithstanding economic difficulties
Total Assets
Total Loans
in BRL million
55,424
55,644
in BRL million
27,236
27,286
Dec-03
Mar-04
36,952
17,359
31,811
27,514
14,065
22,260
11,701
9,577
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
Mar-04
Dec-99
Net Income
1,208
336
Dec-00
Dec-01
Dec-02
in BRL million
203
Cayman Effect (positive)
1,137
Cayman Effect (negative)
91
784
649
7
420
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
57
298
349
Mar-03
Mar-04
Average inflation
in period: 8.3% pa
All data in this slide are in Brazilian GAAP, in BRL and include all businesses of ABN AMRO Brazil - WCS and C&CC
0
17
Results are underpinned by good
efficiency ratios
On a standalone basis ABN AMRO showed a significantly lower efficiency ratio in 2003
(55.7% w/o Sudameris), the integration of Sudameris impacts this ratio temporarily.
55.0%
56.0%
56.8%
55.7%
50.8%
49.5%
52.4%
56.8%
57.3%
57.6%
57.8%
55.9%
56.8%
58.1%
63.8%
65.0%
Efficiency Ratio
ABNAMRO
Fee Revenue/ Personnel Expenses
ABN AMRO
Bradesco
Dec-01
Dec-02
Itau
Dec-03
Unibanco
61.5%
70.6%
76.8%
Dec-02
Dec-03
Mar-04
Mar-04
All figures based on Brazilian GAAP as published by each institution
0
18
The franchise continues to deliver
high ROE
31.8%
31.2%
24.6%
20.8%
18.5%
19.1%
13.6%
ABN AMRO
Bradesco
Itau
1Q03
15.9%
Unibanco
1Q04
All figures based on Brazilian GAAP as published by each institution
0
19
Retail is a key growth engine of the
franchise
ABN AMRO is stronger in the southeast, the wealthiest and most populated region of
Brazil. Our strategy is to focus on this region and on the major Brazilian cities.
C&CC Revenue Breakdown
27%
Ranking Dec 03
55%
5%
12%
Retail
Consumer Finance
Commercial Banking
Other
Branch Network (includes Mini Branches)
1 Bradesco
5,167
2 Itau
3,172
3 ABN AMRO
1,947
4 Santander*
1,909
5 HSBC*
1,516
6 Unibanco
1,279
* June 2003 figures
Mini Branches: Branches in company premises
0
20
The growth of the retail loan book has
been robust and relatively cycle proof
12.0
Consolidated Credit Portfolio
(per business)
10.0
BRL billion
8.0
6.0
4.0
2.0
0.0
Dec-02
Commercial and Wholsale
Dec-03
Mar-04
Consumer Finance
Retail
Growth 1Q04/1Q03
w/ Sudameris
Retail
+97%
+31%
Consumer Finance
+5%
Stable
Commercial and Wholesale
+61%
-5%
w/o Sudameris
All data in the overview section are in Brazilian GAAP, in BRL and include all businesses of ABN AMRO Brazil - WCS and C&CC
0
21
This performance is due to above
average acquisition of wealthy clients
Market Structure - Bankarized Individuals
4%
13%
13%
83%
16%
951
24%
30%
562
62%
284
54%
100
Classic
Special
Premium
2002
SMEs
2003
Classico
Especial
Premium
Average Account Revenue
ABN AMRO Individual Clients Acquisition
(per segment)
(per segment)
Index: Average Revenue Classic Account = 100
0
22
Table of Contents
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004 / 2005
Appendices
0
23
Since the acquisition of Banco Real the
client base increased by nearly 50%
Besides the strong organic
growth, Sudameris acquisition
has accelerated the process
8.3
6.8
7.1
6.2
million clients
5.6
Dec-99
Dec-00
Dec-01
0
Dec-02
Dec-03
24
The desired critical mass has been
reached with the Sudameris deal
ABN AMRO is the 4th largest privately owned Brazilian bank by total loans and assets, and
3rd by deposits
Top Privately Owned Banks
Figures in Brazilian GAAP
Loans
Assets
Deposits
in BRL billion
in BRL billion
in BRL billion
Dec. 03
Mar 04
Dec. 033
Mar 04
Dec. 033
Mar 04
1 Bradesco
54.3
54.9
176.1
161.0
58.0
59.2
2 Itau
38.7
38.9
118.7
127.0
36.7
34.6
3 Unibanco
27.9
27.3
69.9
71.5
25.4
27.4
4 ABN AMRO
27.2
27.3
55.4
55.6
26.7
26.1
5 Santander
16.3
NA
58.9
NA
18.00
NA
All figures based on Brazilian GAAP as published by each institution
0
25
Sudameris added more scale in
wealthy retail clients and SMEs
Financial assets
are concentrated
in a small
percentage of the
population. The
wealthiest 2%
hold almost half
of net financial
assets.
Individual Clients - Mix
Jan 2004
18%
50%
Client Base
32%
Jan 2004
10%
7%
22%
15%
28%
16%
26%
51%
29%
23%
29%
27%
49%
46%
AAR
Total
21%
Sudameris
Classico
Especial
Premium
0
SMEs
26
Our retail growth strategy consists
in providing differentiated services
0
27
Our retail model is relationship driven
Sole Proprietors
PJ (up to R$20m)
PJ (up to R$100k)
Selected Payroll to all Segments
Premium
University Students
Focus:
1. Tailoring offers to needs and
potential of all segments
2. Strengthening customer
relationships
3. Managing ‘migration’ from
segment to segment over
client’s lifetime
4. Growth in Especial and PJ
5. Efficiency in Classico
6. “Aspiration” in Premium
Premium
R$4001–8000
Especial
Lower
R$1201–2000
Clássico
Lower
R$0–700
0
Van Gogh
R$8001+
Upper
R$2001-4000
Near-term growth
potential
Upper
R$701-1200
28
Relationship’s costs and revenues
have to be calibrated
Individuals Market Structure1,2
Individuals (m)
90
80
200
2%
6%
45%
40%
50
40
150
Premium
(Affluent)
100
Especial
(Mass Affluent)
50
Classico
(Low-Income)
29%
30
20
Demographic
Financial Assets (R$m)
70
60
Segment Descriptions3
53%
26%
10
0
0
Individuals
Classico
(Low-income)


Especial
(Mass
Affluent)
Unbankarized
Financial Assets
SME Market Structure
No. of
Companies (m)
% of Total

Annual
Revenue (R$m)
Premium
(Affluent)



Banking Needs
Monthly income of
R$0-1.2k
Individuals with
restricted financial
access; low potential
social mobility

Monthly income of
R$1.2-4.0k
Middle-class and
mass affluent

Monthly income of
>R$4k
High social class,
mature, and wealthy








Credit for consumption
Credit for daily expenses
Savings/transactional product
Credit for asset building
Credit for consumption
Credit for daily expenses
Savings/transactional product
Investment to generate
and maintain value
Investment for consumption
Reserve for extra spending
Health protection

SME 3
0.1
2.3%
5.0 - 20.0
SME 2
0.3
7.0%
0.5 - 5.0
Lower PJ
 Annual revenue of
 Short-term credit products
SME 1
1.5
34.9%
< 0.5
(Small
SME)
<R$0.5m
 Some use of transaction
(With at least one

Small,
informal
products (supplier payment)
employee)
companies
or
one
Similar financial needs
SME 1
0.2
4.7%
< 0.5
person
proprietorships
of Individual
(Sole Proprietorship)
Unbankarized
2.2
51.2%
< 0.5
1. Deposits + Investments - Credit Outstanding = Net Financial Assets; 2. Booz Allen & Hamilton Estimates. MfV Analysis; 3. Banco Real Segments market segment definitions differ slightly
0
29
Our service offer calibrated to our
clients needs
To
From
“In-line with market” product and service offer
Limited product range; debit card, instalment credit, and
savings account (w/ limited additions for Upper/ University)
 Direct channels with Greeters; access to staffed Call
Center for questions; and informative communication
(Low Income)


“Better than market” product and service offer
Broad range of products including
multifunction cards, check books, etc.
 Full branch and channel access served by
assistants and managers


Especial

Core product vehicles include Realmaster,
RealParcelado, and credit cards
 Full branch access served by managers
 Full channel access



“Lower than market” product and service offer
Core product vehicles include Realmaster and
RealParcelado
 Full branch access served by managers
 Full channel access






Classico
(Mass Affluent)
Premium/
Van Gogh
(Affluent)
PJ
(SME)
Proactive relationship managers with a higher manager to
client ratio and trained managers, assistants and greeters
 Proactive and frequent offer in every direct channel,
branches and direct mailing
 Delivery by ATM’s, Call Center, Internet, Banco24Horas,
checkbook and branches
 Debit cards as a foundation of the offer
“In-line with market” product and service offer
Training, developing and hiring managers observing a new,
higher manager to clients ratio
 Branch rebuilding or remodelling to deliver select number
of “Van Gogh” and “Premium” Branches
 Specialised managers with clear responsibility and
accountability; specialised Call Center support
Explicit segmentation and focus on high potential clients
(R$100k + turnover)
 Automated credit tools and proactive direct channel
availability (lower PJ)
No explicit segmentation
Package discounts by investment level
Exclusive area in branch served by managers
These changes:
1) Bring products and services in-line with customer expectations and market
2) Strengthen relationship management capabilities
0
30
Credit cards is a key product for the
mass affluent
ABN AMRO (including Sudameris) has a market share of 6.5% of the credit card
transaction volume and 4% of the cards in force, therefore has a higher than average
utilisation ratio and a solid base for growth
# of Cards
Transaction Volume
Other
15.4%
Credicard
16.1%
Other
21.9%
Credicard
19.0%
HSBC
3.6%
Bco. Brasil
12.9%
HSBC
3.7%
ABN AMRO
4.0%
ABN AMRO
6.7%
Bco. Brasil
16.9%
Santander
4.2%
Santander
5.9%
Unicard
7.9%
Itau
12.9%
Unicard
10.2%
Bradesco
13.7%
Bradesco
12.4%
Itau
12.6%
Source: ABECS, Mastercard, Visa market research
0
31
Credit cards have a significant growth
potential
...and a solid base for growth
# Credit Cards
Transaction Volume
600
BRL million
2.50
million
2.00
550
1.50
500
1.00
Jan-03
Mar-03
May-03
Jul-03
Sep-03
Nov-03
Jan-04
Mar-03
Mar-04
Jun-03
Dec-03
Mar-04
All data in the overview section are in Brazilian GAAP, in BRL and include all businesses of ABN AMRO Brazil - WCS and C&CC
0
32
Debit cards enable to generate
volumes with our retail client base
Brazil
Debit cards have grown
faster than other
electronic payment
methods, largely due to
low income
bankarization. 2003
transaction volume was
up 59%
5.8
5.5
million
ABN AMRO
Debit card business grew
63% in 2003, exceeding
the debit market growth
ratio, reducing check
processing costs
# Debit Cards
5.5
5.3
5.0
4.8
4.8
Jan-03
Mar-03
May-03
Jul-03
Sep-03
Nov-03
Jan-04
Mar-04
Source: Visane, ABN AMRO
0
33
We have created a true multi-channel
platform to best serve our clients
Direct Channels include: call center, Internet, ATMs
 Direct Channels/ Total Transactions
74% in 1Q04
(up from 50% in 1998)
 Branch Transactions/ Total Transactions
21% in 1Q04
(down from 23% in 4Q01)
 Direct Channel Availability
99% in 1Q04
(up from 97% in 4Q01)
 Internet Users
Individuals 34% in 1Q04
Corporates 79%in 1Q04
(up from 17% in 4Q01)
(up from 17% in 4Q01)
0
34
Distribution and differentiation have
become key competitive advantages
Created in 2002 by the Financial
Executives Magazine, e-finance
award is intended recognize the most
prominent financial institutions in the
implementation of infra-structure
solutions, IT and telecom applications
2003 categories:
Internet Banking, Business Platform, Outsourcing Strategy,
Branch BackOffice Solutions
2004 categories: Retail Internet Banking, New Call Center Technologies,
Mobile Mini Branch

Reliability

Transparency

Accessability
Driver of client satisfaction for mass
affluent and client profitability for low income
0
35
Our strategy and employees have
created a valuable brand
Ranking
“MOST VALUABLE BRAZILIAN BRANDS”
Source: Interbrand - Dinheiro Publication
0
36
Table of Contents
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004 / 2005
Appendices
0
37
The current performance is impacted
by the integration of Sudameris
Figures in Dutch GAAP
in BRL million
1Q2003
4Q2003*
1Q2004
1Q04/ 1Q03
1Q04/ 4Q03
Revenues
1,284
1,562
1,654
28.8%
5.9%
Expenses
(814)
(1,115)
(1,129)
38.7%
1.3%
469
447
525
11.9%
17.5%
(149)
(222)
(237)
59.1%
6.8%
Oper. Profit before Taxes
320
225
288
-10%
28%
Taxes
(88)
20
(49)
Cayman Effects
57
11
(7)
Net Profit
172
204
198
61.7%
69.5%
66.7%
Operating Profit
Provisions
Efficiency Ratio
15.1%
All data in this slide are in Dutch GAAP in BRL for C&CC Brazil
0
38
Spreads are declining but volumes
are growing
Though spreads have declined, volumes have sustained solid growth and are
expected to grow further
Assets
Relative Spreads
20,000
1.10
15,000
R$ million
1.00
0.90
10,000
0.80
Auto Loans
Mortgages
Cards
Overdrafts
Loan Products
Overdrafts
Auto Loans
0
Q4E
2005 AVG
Q3E
Q2E
2004 Q1E
Q4
Q3
Q2
2003 Q1
Q4
Q3
Q2
2002 Q1
Q4
Q3
0
Q2
Q4E
Personal Loans
2005 AVG
Q2E
Q3E
2004 Q1E
Q3
Q4
Q2
Q4
2003 Q1
Q3
Q2
2002 Q1
Q4
Q2
Q3
0.60
2001 Q1
5,000
0.70
2001 Q1
3-Quarter Moving Average, Q1 2001 = 1.00
1.20
Personal Loans
Other Products - PJ
39
The integration is going smoothly and
delivers the expected synergies
 Integration plans are
being executed by 18
Integration Fronts (8
already completed)
 Integration process is
on track with BRL120.7
mio synergies captured
as of Mar 2003
(annualised cost
reduction)
Total Synergies Captured
BRL million
 53%of annualised
cost reduction is
related to FTE
reduction and the
balance related to
other expenses
$300.0
Planned
Actual
$120.7
0
Dec-05
Sep-05
Jun-05
Mar-05
Dec-04
Sep-04
Jun-04
Mar-04
$45.0
Fev-04
Nov-03
$37.4
Jan-04
$14.1
Dec-03
$0.0
Oct-03
$83.6
40
Sudameris Acquisition & Integration

ABN AMRO acquired 94.57% of Banco Sudameris Brasil S.A. in a R$ 2.2 billion
transaction: R$ 527 million cash and balance through share exchange for ABN
AMRO Real shares (11.58%)

Estimated synergies: R$ 300 mln p.a. starting in 2005

Global integration plan designed June 2003 along with due diligence

Creation of 18 working fronts, of which 8 have fully executed, 6 depend on other
migrations (e.g. IT) and 4 are currently detailing migration.
Fronts already integrated: Audit, Asset Management, Private, Compliance,
Legal, Treasury, Insurance and Consumer Finance

Implementation started as of closing in December 2003

ABN AMRO is ahead of schedule regarding implementation, capturing synergies
both in the scope of revenues, personnel and administrative expenses
0
41
Sudameris Acquisition & Integration

In October 2003 a career orientation program was created to support personnel
reallocation

A ‘Best Practice’ approach is being followed, e.g. for FX and Trade Finance
Sudameris’ integrated operational model will be adopted

Complementary businesses will be maintained, e.g. Sudameris retail driven equity
brokerage is already fully operational under ABN AMRO

The two banks/operations shall be fully integrated by year end 2004
0
42
Client led growth will continue to
produce quality earnings
In a scenario of declining interest rates ABN AMRO has pursued to build on its loan
portfolio, expanding client relationship and capturing cross-selling opportunities
Loans / Total Assets Ratio
49.1% 49.1%
47.0%
46.4%
44.2%
40.4%
39.9%
38.2%
36.4%
35.6%
34.6%
32.6%
34.1%
30.8%
ABN AMRO
30.6%
Bradesco
Dec-01
35.5%
Itau
Dec-02
Dec-03
Unibanco
Mar-04
All figures based on Brazilian GAAP as published by each institution
0
43
Growth will be value creative as a
result of sound credit policies
The expansion of the lending business was implemented with no prejudice to asset
quality; performance of the the loan portfolio is fully within market standards.
Non-performing Loans >90 days
5.0%
4.5%
4.0%
3.5%
3.0%
2.5%
Mar-02
Jun-02
Sep-02
Dec-02
Mar-03
Market
Jun-03
Sep-03
Dec-03
Mar-04
ABN AMRO
Source: Brazilian Central Bank
0
44
Table of Contents
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004/ 2005
Appendices
0
45
The Dynamics of Sustainability
Governo
ABN AMRO has a leading role in creating and delivering sustainable value
Client
Government
Employees
Society
ABN AMRO
Labor Union
Shareholders
Media
Community
Suppliers
Environment
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46
Key Initiatives for Sustainability
Core Business Linked Initiatives
 New financing products directed to social and environmental projects
 Assessment of the social and environmental risk of ABN AMRO clients
 MicroCredit - Credit offering to population traditionally excluded by the financial sector
 Ethical Investment Fund investing in socially and environmentally responsible enterprises
Management Initiatives
 Eco-efficiency / environmental management (e.g. recycling)
 Staff Diversity initiatives
 Supply Chain

Engagement and mobilization of suppliers

Social and environmental criteria as a key factor in the choice of supply chain partners
 Bi-annual publication of Brazilian Sustainability Report
Social Initiatives
 70% of our financial donations are destined to public education and the remaining 30% to initiatives in
income generation, environment and diversity
 Wherever possible, we encourage our employees to be engaged in our social action initiatives
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Table of Contents
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004/ 2005
Appendices
0
48
Outlook 2004 / 2005
• Inflation under control
(IPCA forecast 6.8% 2004; 4.5% 2005)
Revised from 6.0% 2004; 5.1% 2005
• Pick-up of economic growth
(GDP forecast 3.7% 2004; 3.6% 2005)
• Lower foreign exchange volatility
(BRL/USD forecast 3.05 eop 2004; 3.25 eop 2005)
maintained
• Lower interest rates
(Selic forecast 14.5% eop 2004; 12.0% eop 2005)
Revised from 13.5% eop 2004; maintained for 2005
• Growing credit portfolio, offsetting lower margins and maintaining
standards of credit quality
(credit portfolio growth forecast for 2004 in the range of 20%)
0
49
Thank You
0
50
Table of Contents
Current Brazilian Business Environment
Overview of ABN AMRO Brazil
Overview C&CC Brazil
Financial Performance
Sustainability
Outlook 2004 / 2005
Appendices
0
51
Sovereign Spread
Economic Environment
Low international interest rates have pushed investors towards higher yield instruments. In
this environment Brazil sovereign spread has been driven to historically low levels, at 500700 bps over Treasuries
4.50
3000
4.00
2500
2000
3.00
1500
2.50
EMBI Brazil
BRL
3.50
1000
2.00
Sources: Brazilian Central Bank, Bloomberg
BRL / USD
0
May-04
Mar-04
Jan-04
Nov-03
Sep-03
Jul-03
May-03
Mar-03
Jan-03
Nov-02
Sep-02
Jul-02
0
May-02
1.00
Mar-02
500
Jan-02
1.50
EMBI Brazil (bps)
52
External Private Debt Rollover Rate
Economic Environment
After a sluggish performance in 2002 external private debt* rollover picked up reflecting the
renewed appetite for Brazil. The 2004 drop is a consequence of awaiting definitions with
regards to international interest rates.
133%
run-up to 2002 presidential elections
98%
89%
102%
94%
90%
81%
63%
41%
45%
57%
48%
55%
51%
52%
Mar-04
Jan-04
Nov-03
Sep-03
Jan-03
Nov-02
Sep-02
Jul-02
26%
Jul-03
29%
25%
May-03
30%
May-02
Mar-02
Jan-02
66%
43% 40%
36%
28%
74%
60%
58%
Mar-03
67%
External Private Debt* Rollover Rate
( * ) External private debt defined Bonds, Notes, Commercial Papers, Direct Loans and Commercial Credit
Sources: Brazilian Central Bank, ABN AMRO
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Business Environment
Economic Environment
% Public Debt / Exports
3.96%
3.45%
2.79%
2.74%
2.07%
1999
2000
2001
2002
2003
% Exports/ GDP
14.8%
15.7%
14.5%
13.3%
11.4%
8.9% 9.2%
8.4%
6.6% 6.1% 6.6% 6.5%
1994 1995 1996 1997 1998 1999
2000 2001 2002 2003 2004* 2005*
Source: Brazilian Central Bank, ABN AMRO
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54
Asset Management
Overview
as of Mar 2004
in BRL billion
Asset Managers
ABN AMRO
ranks 3rd among
privately owned
retail driven
asset manager
Mutual Funds
Market Share
AUM
111.2
20.8%
2 Bradesco
75.2
14.1%
3 Itaú
74.6
13.8%
4 CEF
27.1
5.0%
5 Citibank
26.6
4.9%
6 ABN AMRO
25.1
4.7%
7 HSBC
24.5
4.6%
8 Santander
23.6
4.4%
9 Unibanco
23.0
4.3%
10 BankBoston
21.9
4.2%
Other
103.0
19.2%
TOTAL
535.8
100%
1 Banco do Brasil
Source: ANBID
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55
Credit Portfolio ABN Amro and Sudameris
Overview
BRL million
Consolidated Credit Portfolio
26,287
26,337
Dec-03
Mar-04
16,560
Dec-02
Credit to the Private Sector *
ABN AMRO BRAZIL
EOP Balance
Growth
in BRL billion
nominal
2002
365
+13%
+15%
2003
395
+8%
+59%
1Q04
408
+1.5%
+0.2%
Period
Growth
Source: Brazilian Central Bank, ABN AMRO
All data in the overview section are in Brazilian GAAP, in BRL and include all businesses of ABN AMRO Brazil - WCS and C&CC
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Consumer Finance
Overview
ABN AMRO consumer finance division is Brazil’s largest car financier through its Aymoré
brand, driven by strong customer service. Main competitors are aggressively reducing
margins in order to obtain additional market share.
Car Financing Market Share
100%
15.8%
22.2%
15.8%
14.2%
17.1%
4.5%
4.4%
42.4%
Source: DETRAN
2001
18.0%
16.4%
ABN AMRO
11.2%
11.7%
8.9%
10.4%
5.3%
7.1%
38.2%
36.5%
2002
2003
0
Bradesco
Itau
Votorantim
Santander
Other
57
WEB Motors
Overview
 WebMotors has
85% share of the
views in the
internet auto
segment
 4% of internet
visits search for
information on the
auto segment
Source: IBOPERating
WebMotors Audience
Category
#
Unique users / day
Unique users / month
Page views / month
Banner views / month
70 thousand
2 million
28 million
48 million
Source: ABN AMRO
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58
Mortgage
Overview
Historically 75% of assets are acquired through the branch network. Intermediaries such
as developers and real estate brokers provide a growth platform. The Brazilian mortgage
market may benefit from the new law (currently under approval) regarding statutory lien.
Mortgage Balance
2003 Market Share
in BRL million
1,164
1,173
Itau
15%
448
451
631
Santander
6%
725
713
CEF
45%
2002
2003
ABN AMRO Real
Bradesco
15%
ABN AMRO
4%
Nossa Caixa
4%
Unibanco
3%
HSBC
2%
Bank Boston
1%
Other
5%
Mar-04
Source: ABECIP
Sudameris
All data in the overview section are in Brazilian GAAP, in BRL and include all businesses of ABN AMRO Brazil - WCS and C&CC
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59
Awards
Created in 1998 by Exame magazine
the guide to identify the best
companies in People Management
Awards
Ranked among “100 Best Workplaces” in 2002 and 2003
Ranked among “100 Best Workplaces for Women” in 2003
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Cautionary Statement regarding Forward-Looking Statements
This announcement contains forward-looking statements. Forward-looking statements are
statements that are not historical facts, including statements about our beliefs and expectations.
Any statement in this announcement that expresses or implies our intentions, beliefs,
expectations or predictions (and the assumptions underlying them) is a forward-looking
statement. These statements are based on plans, estimates and projections, as they are currently
available to the management of ABN AMRO. Forward-looking statements therefore speak only as
of the date they are made, and we take no obligation to update publicly any of them in light of
new information or future events.
Forward-looking statements involve inherent risks and uncertainties. A number of important
factors could therefore cause actual future results to differ materially from those expressed or
implied in any forward-looking statement. Such factors include, without limitation, the conditions in
the financial markets in Europe, the United States, Brazil and elsewhere from which we derive a
substantial portion of our trading revenues; potential defaults of borrowers or trading
counterparties; the implementation of our restructuring including the envisaged reduction in
headcount; the reliability of our risk management policies, procedures and methods; and other
risks referenced in our filings with the U.S. Securities and Exchange Commission. For more
information on these and other factors, please refer to our Annual Report on Form 20-F filed with
the U.S. Securities and Exchange Commission and to any subsequent reports furnished or filed
by us with the U.S. Securities and Exchange Commission.
The forward-looking statements contained in this announcement are made as of the date hereof,
and the companies assume no obligation to update any of the forward-looking statements
contained in this announcement.
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61