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Restructuring of leasing portfolios, keeping up with customer and shareholder demands

Restructuring of leasing portfolios, keeping up with customer and shareholder demands. C1. EUROLEASE FORUM MILAN. PATRICK GOUIN GLOBAL HEAD STRATEGY & BUSINESS OPTIMIZATION. AGENDA. Why ? Customer Value vs Shareholder Value Think Added Value Portfolio segmentation : Business segments

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Restructuring of leasing portfolios, keeping up with customer and shareholder demands

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  1. Restructuring of leasing portfolios, keeping up with customer andshareholder demands C1 EUROLEASE FORUM MILAN PATRICK GOUIN GLOBAL HEAD STRATEGY & BUSINESS OPTIMIZATION

  2. AGENDA • Why ? • Customer Value vs Shareholder Value • Think Added Value • Portfolio segmentation : Business segments • Economical Return Value and Strategic Value • Restructuring Portfolios : the optimization matrix

  3. AGENDA • Why ? • Customer Value vs Shareholder Value • Think Added Value • Portfolio segmentation : Business segments • Economical Return Value and Strategic Value • Restructuring Portfolios : the optimization matrix

  4. NBV (b€) 2008 - 2012 NBV (b€) 2000 - 2007 -31.8% NBV (b€) • Scarce liquidity • Tightened credit • Volumes driven • Money over money ……. However, it is less clear that A common ground among stakeholders …… • Sustaining profitability • Serving the customer • The need to innovate • Strategies for profit are in place • There is real client focus, truly plugged into customer needs • innovation must include operating, business and distribution models A DECADE OF TRANSFORMATION Distressed Portfolios P.4

  5. AGENDA • Why ? • Customer Value vs Shareholder Value • Think Added Value • Portfolio segmentation : Business segments • Economical Return Value and Strategic Value • Restructuring Portfolios : the optimization matrix

  6. Customers interests Shareholders Interests • High quality products • Good service • Low (“competitive”) price • Secured supply • Good relationships • High ROE, High Margins, low low costs • Increased cash flows • Earning per share, dividends • Embedded value, goodwill • Market control THE BIG GAP ? The ‘Big Gap?’ LONG TERM SHORT TERM

  7. Second level results Lower customers acquisition costs Drivers of Shareholder Value First level results Repurchase Lower Customer Relationship costs Acceleration of Cash Flows Sable customer base Increased Profits & Cash Flows Cross - selling Higher Prices Shareholder Value Lower Price sensitivity Sustainability of ROE & Cash Flows Higher Sales Positive Word to Mouth Faster Market penetration Higher embedded Value Positive reputation BRIDGE THE GAP : SHAREHOLDER VALUE = CUSTOMER SATISFATION Customer Satisfaction The relationship between customer satisfaction and shareholder value Matzler & Stahl , 2000

  8. BENEFITS CUSTOMER SATISFACTION COMMODITIES LOWER COSTS LOWER INVESMENTS COMMODITIES HIGHER COSTS HIGHER INVESMENTS = PRICE OR BENEFITS PRICE ADDED VALUE DIFFERENTIATION HIGH BARRIERS TO ENTRY INCREASED EMBEDDED VALUE LOW PRODUCT DIFFERENTIATION LOW BARRIERS TO ENTRY LOW INCREMENTAL VALUE CUSTOMER SATISFACTION HIGH EMBEDDED VALUE LT SUSTAINABILITY QUID LT SHAREHOLDER VALUE ? CUSTOMER SATISFACTION = CUSTOMER VALUE CUSTOMER VALUE = SHAREHOLDER VALUE = ADDED VALUE SERVICES

  9. AGENDA • Why ? • Customer Value vs Shareholder Value • Think Added Value • Portfolio segmentation : Business segments • Economical Return Value and Strategic Value • Restructuring Portfolios : the optimization matrix

  10. ADDED VALUE Added Value : The extra features of an item of interest (product, service, …) that go beyond the standard expectations and provide something “more” CUSTOMER VALUE ADDED VALUE SHAREHOLDER VALUE + - INCOME - + EMBEDDED VALUE P.10

  11. Operating Lease Financial Lease Traditional Loan ……… CUSTOMER & SHAREHOLDER SATISFACTION THINK ADDED VALUE Asset Management Structuring Reporting / Portf. managt Specialist underwriting CRM / Pipeline managt Sales Support E X T R A I N C O M E G O O D W I L L S H A R E H O L D E R V A L U E S A T I S F A C T I O N B A R R I E R S C U S T O M E R V A L U E Promotion & Marketing Education On Line services Branded Documentation Insurance Full Service MONEY OVER MONEY AND SALES COMMISSIONS ARE NOT ADDED VALUE P.11

  12. 84 € 53 € 22 € Selling Price 16 € 12 € 7 € Cost of eggs + ingredients 2 € ADDED VALUE = INNOVATION THINK GASTRONOMY P R O F I T S A T I S F A C T I O N Cost of eggs P.12

  13. AGENDA • Why such a question ? • Customer Value vs Shareholder Value • Think Added Value • Portfolio segmentation : Business segments • Economical Return Value and Strategic Value • Restructuring Portfolios : the optimization matrix

  14. PORTFOLIO SEGMENTATION BUSINESS SEGMENTS Loan x AGRI x DEALER Assed Value Proposition Financial products Specific structures Added Value services SW Lease x IT x MANUF OL x CONSTR x DIRECT Business Sector Industry sectors Asset types FL x REAL ESTATE x DIR • FMV L x CAR x DEALER Distribution Channel(s) Full S x TRUCK x DEALER Direct Bank Vendors Dealers ….. FMV L x IND x BANK ………… THINK BUSINESS SEGMENT P.14

  15. AGENDA • Why such a question ? • Customer Value vs Shareholder Value • Think Added Value • Portfolio segmentation : Business segments • Business segments economical Return Value and Strategic Value • Restructuring Portfolios : the optimization matrix

  16. STRATEGIC AND ECONOMICAL VALUE LONG TERM SUSTAINABILITY STRATEGIC VALUE + - ECONOMIC VALUE - + P.16

  17. STRATEGIC VALUE CORE NON CORE ? 4 KEY QUESTIONS FOR EACH BUSINESS SEGMENT 1. Aligned to asset and customer targets of the company ? 2. Long term sustainable business : solid market position ? 3. Level of added value services delivered and barriers to entry ? 4. Controllable risk (proved) ? WEIGHTING ACCORDING TO PRIORITIES STRATEGIC VALUE Eurolease Forum, Milano May 26th-17th P.17

  18. ECONOMIC VALUE CONSISTENT PROFITABILITY OVER 3 YEARS P&L BY BUSINESS SEGMENT PROFIT AND COST STRUCTURE DRIVEN BY CHANNEL KEY RATIOS INTEREST INCOME OTHER INCOME OPEX COR NET RESULT ROE

  19. BUSINESS SEGMENT PROFITABILITY P R O F I T R O E PORTFOLIO VALUES

  20. AGENDA • Why such a question ? • Customer Value vs Shareholder Value • Think Added Value • Portfolio segmentation : Business segments • Economical Return Value and Strategic Value • Restructuring Portfolios : the optimization matrix

  21. OL IVP Industry segments : 10 RVs SME X Financial products : 5 MCV X Structures : 5 BROK LOAN X Clients profiles : 8 ROE X Origination channels : 5 BANK = 10 000 Business Segments !! REFOCUS ? Managing the rubicube ? ? NEED TO TO MAKE CHOICES FOCUS FOCUS FOCUS FOCUS FOCUS FOCUS FOCUS P.21 21 21

  22. PORTFOLIO OPTIMIZATION MATRIX LONG TERM SUSTAINABILITY STRATEGIC VALUE + - ECONOMIC VALUE - +

  23. PORTFOLIO OPTIMIZATION MATRIX LONG TERM SUSTAINABILITY STRATEGIC VALUE BS 3 BS2 BS 5 + BS 1 BS4 BS 4 - ECONOMIC VALUE - +

  24. Take away … to avoid having to restructure portfolios … ….too often Put customer & shareholder value in Corporate objective Customers are strategic assets Customer satisfaction makes shareholders benefits Think added value Proactive strategic thinking Think Long Term FOCUS , SELECT, ADD VALUE, … 24

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