Post on 03-Jan-2016
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P.1
Restructuring of leasing portfolios, Restructuring of leasing portfolios, keeping up with customer andkeeping up with customer and
shareholder demandsshareholder demands
C1
EUROLEASE FORUM MILAN
PATRICK GOUIN
GLOBAL HEAD STRATEGY & BUSINESS OPTIMIZATION
PATRICK GOUIN
GLOBAL HEAD STRATEGY & BUSINESS OPTIMIZATION
P.2
Why ?Why ?
Customer Value vs Shareholder Value Customer Value vs Shareholder Value
Think Added ValueThink Added Value
Portfolio segmentation : Business segmentsPortfolio segmentation : Business segments
Economical Return Value and Strategic ValueEconomical Return Value and Strategic Value
Restructuring Portfolios : the optimization matrixRestructuring Portfolios : the optimization matrix
AGENDA AGENDA
P.3
Why ?Why ?
Customer Value vs Shareholder Value Customer Value vs Shareholder Value
Think Added ValueThink Added Value
Portfolio segmentation : Business segmentsPortfolio segmentation : Business segments
Economical Return Value and Strategic ValueEconomical Return Value and Strategic Value
Restructuring Portfolios : the optimization matrixRestructuring Portfolios : the optimization matrix
AGENDA AGENDA
P.4
A DECADE OF TRANSFORMATIONA DECADE OF TRANSFORMATION
P.4
208222
249
281
304 299
204213
223
100
200
300
2003 2004 2005 2006 2007 2008 2009 2010 2011
NBV (b€)
-31.8%
208222
249
281
304 299
204213
223
100
200
300
2003 2004 2005 2006 2007 2008 2009 2010 2011
NBV (b€)
Volumes driven
Money over money
Scarce liquidity
Tightened credit
NBV (b€) 2000 - 2007 2008 - 2012
Sustaining profitability
Serving the customer
The need to innovate
A common ground among stakeholders ……A common ground among stakeholders ……
Strategies for profit are in place
There is real client focus, truly plugged into customer needs
innovation must include operating, business and distribution models
……. However, it is less clear that……. However, it is less clear that
Distressed PortfoliosDistressed Portfolios
P.5
Why ?Why ?
Customer Value vs Shareholder Value Customer Value vs Shareholder Value
Think Added ValueThink Added Value
Portfolio segmentation : Business segmentsPortfolio segmentation : Business segments
Economical Return Value and Strategic ValueEconomical Return Value and Strategic Value
Restructuring Portfolios : the optimization matrixRestructuring Portfolios : the optimization matrix
AGENDA AGENDA
P.6
THE BIG GAP ?THE BIG GAP ?
The The
‘Big ‘Big Gap?’Gap?’
High quality products
Good service
Low (“competitive”) price
Secured supply
Good relationships
Customers interestsCustomers interests
High ROE, High Margins, low low costs
Increased cash flows
Earning per share, dividends
Embedded value, goodwill
Market control
Shareholders InterestsShareholders Interests
LONG TERMLONG TERM SHORT TERMSHORT TERM
P.7
BRIDGE THE GAP : SHAREHOLDER VALUE = CUSTOMER SATISFATIONBRIDGE THE GAP : SHAREHOLDER VALUE = CUSTOMER SATISFATION
The relationship between customer satisfaction
and shareholder value
Matzler & Stahl , 2000
The relationship between customer satisfaction
and shareholder value
Matzler & Stahl , 2000
Customer
Satisfaction
Customer
Satisfaction
Cross - sellingCross - selling
RepurchaseRepurchase
First level resultsFirst level results
Lower Price
sensitivity
Lower Price
sensitivity
Positive
Word to Mouth
Positive
Word to Mouth
Second level resultsSecond level results
Lower customers
acquisition costs
Lower customers
acquisition costs
Lower Customer
Relationship costs
Lower Customer
Relationship costs
Sable customer
base
Sable customer
base
Higher PricesHigher Prices
Higher SalesHigher Sales
Faster Market
penetration
Faster Market
penetration
Positive
reputation
Positive
reputation
Acceleration of
Cash Flows
Acceleration of
Cash Flows
Increased Profits
& Cash Flows
Increased Profits
& Cash Flows
Sustainability ofROE & Cash Flows
Sustainability ofROE & Cash Flows
Drivers of
Shareholder Value
Drivers of
Shareholder Value
Higher embedded
Value
Higher embedded
Value
Shareholder
Value
Shareholder
Value
P.8
CUSTOMER SATISFACTION = CUSTOMER VALUECUSTOMER SATISFACTION = CUSTOMER VALUE
CUSTOMER CUSTOMER
SATISFACTION SATISFACTION
CUSTOMER CUSTOMER
SATISFACTION SATISFACTION ====
BENEFITSBENEFITS BENEFITSBENEFITS
PRICE PRICE PRICE PRICE
CUSTOMER
SATISFACTION
CUSTOMER
SATISFACTION
CUSTOMER VALUE = SHAREHOLDER VALUE = ADDED VALUE SERVICES CUSTOMER VALUE = SHAREHOLDER VALUE = ADDED VALUE SERVICES CUSTOMER VALUE = SHAREHOLDER VALUE = ADDED VALUE SERVICES CUSTOMER VALUE = SHAREHOLDER VALUE = ADDED VALUE SERVICES
BENEFITS BENEFITS ORORPRICE PRICE
COMMODITIES
LOWER COSTS
LOWER INVESMENTS
COMMODITIES
LOWER COSTS
LOWER INVESMENTS
LOW PRODUCT DIFFERENTIATION
LOW BARRIERS TO ENTRY
LOW INCREMENTAL VALUE
LOW PRODUCT DIFFERENTIATION
LOW BARRIERS TO ENTRY
LOW INCREMENTAL VALUE
QUID LT SHAREHOLDER VALUE ?QUID LT SHAREHOLDER VALUE ?
COMMODITIES
HIGHER COSTS
HIGHER INVESMENTS
COMMODITIES
HIGHER COSTS
HIGHER INVESMENTS
ADDED VALUE DIFFERENTIATION
HIGH BARRIERS TO ENTRY
INCREASED EMBEDDED VALUE
ADDED VALUE DIFFERENTIATION
HIGH BARRIERS TO ENTRY
INCREASED EMBEDDED VALUE
HIGH EMBEDDED VALUE
LT SUSTAINABILITY
HIGH EMBEDDED VALUE
LT SUSTAINABILITY
P.9
Why ?Why ?
Customer Value vs Shareholder ValueCustomer Value vs Shareholder Value
Think Added ValueThink Added Value
Portfolio segmentation : Business segmentsPortfolio segmentation : Business segments
Economical Return Value and Strategic ValueEconomical Return Value and Strategic Value
Restructuring Portfolios : the optimization matrixRestructuring Portfolios : the optimization matrix
AGENDA AGENDA
P.10P.10
ADDED VALUEADDED VALUE
Added Value : The extra features of an item of interest (product, service, …)
that go beyond the standard expectations and provide something “more”
Added Value : The extra features of an item of interest (product, service, …)
that go beyond the standard expectations and provide something “more”
+
-
+
-
ADDED VALUEADDED VALUE
INCOMEINCOME
EMBEDDED VALUE EMBEDDED VALUE
SHAREHOLDER VALUE SHAREHOLDER VALUE
CUSTOMER VALUE CUSTOMER VALUE
| P.11
MONEY OVER MONEY AND SALES COMMISSIONS ARE NOT ADDED VALUE
Full Service
Insurance
Branded Documentation
On Line services
Sales Support
Promotion & Marketing
Education
CRM / Pipeline managt
Specialist underwriting
Structuring
Reporting / Portf. managt
Asset Management
………
Traditional Loan
Operating Lease
Financial Lease
EEXXTTRRAA
IINNCCOOMMEE
P.11
THINK ADDED VALUE
CUSTOMER & SHAREHOLDER SATISFACTION CUSTOMER & SHAREHOLDER SATISFACTION
GGOOOODDWWIILLLL
SSAATTIISSFFAACCTTIIOONN
BBAARRRRIIEERRSS
CCUUSSTTOOMMEERR
VVAALLUUEE
SSHHAARREEHHOOLLDDEERR
VVAALLUUEE
| P.12
PP
RR
OO
FF
II
TT
Cost of eggs
ADDED VALUE = INNOVATION ADDED VALUE = INNOVATION
THINK GASTRONOMY
Cost of eggs + ingredients
Selling Price
2 €
7 €
12 €
22 €
16 €
53 €
84 €
P.12
SSAATTIISSFFAACCTTIIOONN
P.13
Why such a question ?Why such a question ?
Customer Value vs Shareholder ValueCustomer Value vs Shareholder Value
Think Added ValueThink Added Value
Portfolio segmentation : Business segmentsPortfolio segmentation : Business segments
Economical Return Value and Strategic ValueEconomical Return Value and Strategic Value
Restructuring Portfolios : the optimization matrixRestructuring Portfolios : the optimization matrix
AGENDA AGENDA
P.14P.14
THINK BUSINESS SEGMENTBUSINESS SEGMENT
PORTFOLIO SEGMENTATIONPORTFOLIO SEGMENTATION
Assed Value Proposition
Financial products
Specific structures
Added Value services
Financial products
Specific structures
Added Value services
Business Sector
Industry sectors
Asset types
Industry sectors
Asset types
DistributionChannel(s)
Direct
Bank
Vendors
Dealers
…..
Direct
Bank
Vendors
Dealers
…..
Loan x AGRI x DEALERLoan x AGRI x DEALER
SW Lease x IT x MANUF SW Lease x IT x MANUF
FL x REAL ESTATE x DIRFL x REAL ESTATE x DIR
OL x CONSTR x DIRECTOL x CONSTR x DIRECT
FMV L x CAR x DEALER FMV L x CAR x DEALER
Full S x TRUCK x DEALERFull S x TRUCK x DEALER
FMV L x IND x BANKFMV L x IND x BANK
……………………
BUSINESS SEGMENTS
P.15
Why such a question ?Why such a question ?
Customer Value vs Shareholder ValueCustomer Value vs Shareholder Value
Think Added ValueThink Added Value
Portfolio segmentation : Business segmentsPortfolio segmentation : Business segments
Business segments economical Return Value and Strategic ValueBusiness segments economical Return Value and Strategic Value
Restructuring Portfolios : the optimization matrixRestructuring Portfolios : the optimization matrix
AGENDA AGENDA
P.16P.16
STRATEGIC AND ECONOMICAL VALUE STRATEGIC AND ECONOMICAL VALUE
+
-
+
-
STRATEGIC VALUESTRATEGIC VALUE
ECONOMIC VALUE ECONOMIC VALUE
LONG TERMLONG TERM
SUSTAINABILITYSUSTAINABILITY
| P.17Eurolease Forum, Milano May 26th-17th
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 VALUESTRATEGIC VALUE
P.17
P.18
ECONOMIC VALUEECONOMIC 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
P.19
BUSINESS SEGMENT PROFITABILITYBUSINESS SEGMENT PROFITABILITY
PPRROOFFIITT
RROOEE
PORTFOLIO VALUESPORTFOLIO VALUESPORTFOLIO VALUESPORTFOLIO VALUES
P.20
Why such a question ?Why such a question ?
Customer Value vs Shareholder ValueCustomer Value vs Shareholder Value
Think Added ValueThink Added Value
Portfolio segmentation : Business segmentsPortfolio segmentation : Business segments
Economical Return Value and Strategic ValueEconomical Return Value and Strategic Value
Restructuring Portfolios : the optimization matrixRestructuring Portfolios : the optimization matrix
AGENDA AGENDA
|
2121
Managing the rubicube ?Managing the rubicube ?
BANK
BROK
SME
MCV
OL
RO
E
LOA
N
RVs
IVP
NEED TO TO MAKE CHOICES
FOCUS FOCUS FOCUS FOCUS FOCUS FOCUS FOCUS
REFOCUS ?REFOCUS ?
?
X Financial products : 5
X Structures : 5
X Clients profiles : 8
X Origination channels : 5
Industry segments : 10
Business Business
Segments !!Segments !!Business Business
Segments !!Segments !!
= 10 000= 10 000
P.21
|
PORTFOLIO OPTIMIZATION MATRIXPORTFOLIO OPTIMIZATION MATRIX
Strategichow to optimize
ROE ?
how to develop / capitalize?
New opportunities ?
Less
Strategic Close or sell ?Cash cow
or dispose ?
Less Profitable Profitable
+
-
+
-
STRATEGIC VALUESTRATEGIC VALUE
ECONOMIC ECONOMIC
VALUE VALUE
LONG TERMLONG TERM
SUSTAINABILITYSUSTAINABILITY
|
PORTFOLIO OPTIMIZATION MATRIXPORTFOLIO OPTIMIZATION MATRIX
Strategic
Less
Strategic
Less Profitable Profitable
+
-
+
-
STRATEGIC VALUESTRATEGIC VALUE
ECONOMIC ECONOMIC
VALUE VALUE
LONG TERMLONG TERM
SUSTAINABILITYSUSTAINABILITY
BS 1
BS2 BS 3
BS4 BS 4
BS 5
|
24
Take away … Take away … to avoid having to restructure portfolios to avoid having to restructure portfolios … … ….too often….too often
Think added valueThink added value
Customer satisfaction makes shareholders benefits
Customer satisfaction makes shareholders benefits
Put customer & shareholder value in Corporate objective
Put customer & shareholder value in Corporate objective
FOCUS , SELECT, ADD VALUE, …
Customers are strategic assets
Customers are strategic assets
Proactive strategic thinking
Proactive strategic thinking
Think Long Term Think Long Term