HELSINKI, Finland, Dec. 17, 2002 (PRIMEZONE) -- Following a successful year marked by the II pillar pension project in Estonia, improvement of profitability in Latvia and the completion of LTB integration in Lithuania, Hansabank (Other OTC:HNSBF) updates its corporate strategy, setting the priorities for 2003.
Who is our customer? Hansabank primarily focuses on medium-sized companies and private individuals with above the average purchasing power; however, as a universal bank, we serve all customer groups. Our home market is the Baltics, but we also serve niche segments in Russia.
What are our value propositions to the customer? In customer relations, we value long-term partnerships. We believe that in an increasingly competitive environment the key competitive advantage we have and are able to sustain is the combination of easy access to financial services, knowledge of our customers, reliability of our technology and readiness of employees to create solutions for customers. We believe in the "one-stop-shop" strategy: all financial services from one place.
How can we do this efficiently?
1. By customer relationship management The importance of proactive customer relationship management has become vital for success. In a situation where the intensive use of remote channels by our customers leads to fewer customer contacts, we must dedicate extra effort in maximizing the value of the customer data at our disposal. The desired outcome is a holistic picture of our customer in every interaction, which allows us to offer the most suitable financial solutions. 2. By making use of excellent crediting know-how and skills Excellent credit skills help us understand clients' needs and with best know-how we can maintain a better asset quality than the market in general. At the current stage of market development the main growth engine for us is the growth of credit portfolio. 3. By efficient technology Centralized IT development and management complemented with Pan Baltic product development enables us to operate more efficiently in all the three countries. 4. By efficient distribution Via a wide ATM network, excellent Internet, telephone and mobile bank we offer to our customers convenient and easy access to financial services and our branch offices function as advisory and sales centres. To find solutions for financial matters of our large customer base we offer them a selection of simple and easy-to-use standardized services. GROUP PRIORITIES FOR 2003 1. To increase the loan portfolio in Latvia and Lithuania Our biggest growth opportunity is in Latvia and Lithuania -- total lending to GDP ratio is 16 per cent in Lithuania, 37 per cent in Latvia and 46 per cent in Estonia. The biggest value driver is SME lending and mortgages, we also see potential in consumer finance. 2. To develop a group-wide knowledge sharing framework Our home markets are in different stages of development, but we believe that harmonization and integration of the Baltic financial markets continues. We have a unique opportunity to make use of the development gap between the three countries learn from experience or adopt solutions that have proved to be successful in other business units. 3. To implement fully Pan-Baltic product development We have a similar technological solution in all the countries, which makes us more efficient. Product development must also be centralized in order to keep IT systems similar and use development resources efficiently.
FINANCIAL OBJECTIVES (medium-term)
The Baltic countries are set to join the European Union (EU). Interest margins have already decreased considerably to reflect the improved risk profile and approaching EU accession. We believe this trend to continue, although at a slower pace. Hansabank Group has decided to revise its medium-term financial targets to reflect the on-going convergence to the European economic area.
1. Double the operating profit in 4 years The Group's primary financial target will remain to double the operating profit (before taxes) every 4 years. 2. Cost-income ratio below 50% In an environment of increasing competition and lower margins, internal efficiency is of increasing importance. Hence, the Group will focus on containing cost growth and will aim to reduce the cost-income ratio below 50%. Hansabank's cost-income ratio was raised over 50% by the acquisition of the Lithuanian Savings Bank in 2001. Excluding the effect of the said acquisition, Hansabank has always been able to keep the cost-income ratio below 50%. 3. Net risk cost below 0.6% The recent sovereign rating upgrades of all three countries by Moody's Investors Service reflect the improving risk environment in our region. Hansabank shares this view and has made its net risk cost target more aggressive by lowering it from 0.8% to 0.6% (as an average over a business cycle). 4. ROE at least 20% Thanks to high profitability and excellent credit quality, Hansabank Group continues to have a solid capital base. This has allowed the Group to formalise its dividend policy, targeting a 30% payout ratio. Nevertheless, the Group will remain strongly capitalised, which has a negative effect on our return on equity. To take into account the Group's high capitalisation, the Board has decided to lower the mid-term ROE target from 25% to 20%.
Our strong market position in each of the three Baltic countries affords us confidence for the future. We continue to expand organically but are also open to attractive acquisition opportunities. We remain a growth-seeking organisation, backed by high level of expertise and strong capital base.