Ey banking barometer march 2012 belgium

Banking Barometer Europe

March 2012

Survey results: Belgium

Page 2 Ernst & Young Bankenbarometer

About the study

► Telephone survey conducted by an independent market research institute

(Valid Research, Bielefeld) in January 2012

► Survey of 500 banks across Europe, including 50 from Belgium

► "Ernst & Young Bank Barometer" will be published every six months

Page 3 Ernst & Young Bankenbarometer

About the study

Type of bank

Major banks 25%

Private bank/regional bank 31%

Foreign bank 14%

Public credit institution 6%

Cooperative bank 8%

Federal state bank, development bank 0%

Specialist bank 16%

Make-up of the survey sample

Total assets

EUR 40 billion + 2%

EUR 21 – 40 billion 10%

EUR 11 - 20 billion 14%

EUR 2 - 10 billion 23%

Less than EUR 2 billion 51%

Respondents

CFO 60%

Management board member 8%

COO 6%

CRO 2%

Head Office / Strategy 8%

Other department heads 16%

Business Outlook

Page 5 Ernst & Young Banking Barometer

Belgian banks more confident than other European banks are.

„ How do you rate the current general performance of your bank?‖

Belgium

Europe

1 5

56

38

0 6

48

46 Very good

Fairly good

Fairly poor

Very poor

%age respondents answering


Dutch and Polish banks are the most content

„ How do you rate the current general performance of your bank?―


2

2

2

1

2

2

2

2

2

4

5

6

6

8

8

10

48

40

60

70

74

56

48

48

42

67

58

52

58

36

26

24

38

46

46

48

23

30

Poland

Netherlands

UK

France

Italy

Europe

Nordics

Belgium

Spain

Germany

Austria

very poor fairly poor fairly good very good


Belgian bankers are less optimistic about the future

„ How do you expect your bank’s position to change in the next six months?"

2

2

4

6

6

8

10

10

10

10

16

26

48

64

76

76

68

67

70

74

53

69

68

50

32

18

18

24

23

20

16

35

15

6

Poland

Netherlands

Italy

Nordics

UK

Europe

Belgium

France

Spain

Germany

Austria

weaken slightly weaken significantly strengthen slightly strengthen significantly %age respondents answering


Belgian banks are particularly optimistic about Deposits.

Good Fairly good Fairly poor Poor

„How do you rate the outlook for your bank in the following segments?"

Transaction banking

Retail Banking

Corporate & Investment

Securities Trading

Private Wealth Management

Deposits

39

41

41

35

33

27

44

47

49

50

51

43

13

9

9

13

13

22

4

3

1

2

3

8

Europe

31

51

42

30

27

25

46

41

47

52

57

47

17

8

11

18

14

22

6

3

6

Belgium



Belgian banks expect very strong deposit growth, but declining corporate loans

„How do you expect demand for the following products to change over the next six months?―

Credit cards

Deposits

Corporate loans

Private loans

Private mortgages

Europe

Rise Fall

-16

-18

-25

-26

-20

37

52

23

34

28

Belgium

Percentage respondents answering

-23

-17

-22

-15

-22

36

43

41

38

33

Credit cards

Deposits

Corporate loans

Private loans

Private mortgages


Basel III is the biggest priority for Belgian banks

„ How high do you expect the focus of your bank to be on the following activities during the

next six months (1 very important, 10 not very important)?―

13

13

21

22

18

35

18

25

27

41

49

49

58

57

8

8

12

16

22

22

22

24

26

31

35

41

45

60

Off shoring

Reducing number of products

New remuneration system

Establishing new business segments

Disposing assets

Developing/introducing new products

New foreign markets

Restructuring business operations

IFRS

Streamlining processes

Minimizing non-essential expenditure

Cutting Costs

Risk management

Preparing for Basel III

Belgium

Europe

Percentages with score 1 to 3


Employment


Belgian banks expect slight headcount growth

„In the next six months do you expect the headcount of your bank to change?―

0

18

58

24

0

Strong increase

slight increase

Unchanged

slight decrease

Strong decrease

2

15

58

22

3

Europe

Belgium



France and UK face the strongest headcount growth

„In the next six months do you expect the headcount of your bank to change?―

12

14

20

23

24

25

26

27

31

36

38

65

54

72

61

58

63

58

55

50

52

56

23

32

8

16

18

13

16

18

19

12

6

Germany

Spain

Italy

Poland

Switzerland

Austria

Nordics

Netherlands

United Kingdom

France

increase unchanged shrink

Belgium



-27

-22

-16

-26

-22

-17

-11

-27

-15

-24

13

27

26

36

31

38

37

18

24

28

Belgian banks likely to see strong gain in Sales and Retail employees.

„In which departments is headcount changing?―

Europe

Rising Shrinking %age repsondents answering

Technology

Product / Business line

Retail

Sales

IT

Marketing

Operations

Finance / tax

-25

-25

-15

-29

-18

-20

-16

-16

-17

-14

6

8

13

14

20

20

22

24

32

40

Belgium

HR

Other


Economic Environment & Financial Markets


2

26

37

33

2

Financial markets: Belgian banks’ outlook in line with the rest of Europe

„How do you expect the performance of the financial markets to change over the next six

months?―

Europe

0

26

43

31

0

Improve significantly

Improve slightly

Unchanged

Worsen slightly

Worsen significantly

Belgium



49

24

44

27

19

24

16

33

18

22

16

28

30

31

31

36

41

43

44

54

Worsen Strengthen

Financial markets: Belgian bank expectations are marginally positive.

Net balance

statistic“

32

26

10

17

16

12

4

-14

4

-33

France

Spain

Nordics

Italy

UK

Netherlands

Belgium

Austria

Germany

Poland

„How do you expect the performance of the financial markets to change over the next six months?―



-8

-9

-8

-12

-10

-7

-10

-11

-10

-10

-10

-8

-9

-9

35

32

28

31

29

29

22

26

38

37

26

37

38

46

Belgian banks face sharper insolvency risk.

„Looking across sectors, how do you rate the risk of default―

Retail

Chemicals and Pharma

Shipping

SME

Technology Media Telecom

Mechanical engineering

Utilities

Infrastructure

Corporate real estate

Transport

Services

Automotive

Commodities

Construction

Europe

strengthen weaken

-7

-8

-8

-9

-2

-4

-11

-2

-4

-9

-5

0

-11

-4

31

33

35

36

36

37

39

40

41

43

49

50

50

51

Belgium



-35

-39

-24

-30

-32

-34

-27

-27

-27

-32

-26

-34

-41

-39

10

13

8

11

8

12

10

13

12

11

11

10

12

13

Lending policies are likely to become more restrictive

„ How do you expect the corporate lending policies of banks in your country to change in the

next six months across each of the following sectors?―

Construction

Corporate Real Estate

Services

Retail

Commodities

Infrastructure

Technology, Media, Telecom

Automotive

Transport

Chemicals & Pharma

SME

Shipping

Mechanical engineering

Utilities

Europe

Less restrictive More restrictive

-22

-23

-24

-24

-27

-29

-30

-33

-33

-34

-37

-37

-39

-40

9

12

9

17

4

18

9

11

9

9

17

7

9

12

Belgium



Belgian bank have a pessimistic view of the economy.

„ What's your outlook for the business environment over the next six months?

30

43

27

Europe

40

36

24

Belgium

improve

worsen

unchanged



Belgian banks somewhat pessimistic about the economy

„ What's your outlook for the business environment over the next six months?‖


16

23

29

30

30

32

32

33

37

42

52

60

65

48

24

33

36

34

39

39

32

24

25

12

23

46

37

32

34

26

24

26

24

UK

Poland

Netherlands

Spain

Germany

Italy

France

Europe

Belgium

Nordics

Austria

negative neutral positive


European debt crisis


38

42

Sovereign debt defaults will have negative impact on the banking sector

„ Do you think that any defaults by sovereign debtors will have a negative impact on the banking

sector as a whole?―

Europe

20

Yes, substantial

No

Yes, minor

28

42

30

Belgium



28

29

30

32

33

42

44

55

56

64

54

42

42

38

41

48

34

31

24

28

18

29

28

30

26

10

22

14

20

8

France

Nordics

Netherlands

UK

Poland

Italy

Germany

Spain

Austria

yes, substantial Yes, minor No

Belgium

Belgian banks have marginal concern about the sovereign debt crisis. „ Do you think that any defaults by sovereign debtors will have a negative impact on the

banking sector as a whole?―

Net balance

statistic“

56

36

41

22

32

7

2

2

0

10

In percentages


Multiple sovereign defaults would have fatal effects on lending ability Belgian banks

„ What affect would multiple sovereign defaults have on your business model / service

provisions?―

In percentages; multiple answers possible

64

13

19

9

4

4

61

20

27

17

7

8

Reduce ability to lend

Seek state funding

Apply to central banks to maintain liquidity

Force the closure of certain areas of business

Temporarily suspend deposit withdrawals

Force you to sell parts of your business

Belgium

Europe


Regulation and Consolidation


25

4

12

18

20

21

24

30

35

42

44

43

56

44

41

35

54

47

36

44

39

38

32

40

44

41

45

25

29

34

21

19

18

Europe

UK

France

Italy

Germany

Netherlands

Spain

Nordics

Poland

Austria

Major rationing Some pricing impact and change in market focus Little impact

Belgium

Regulation will lead to reduced lending

Will capital and liquidity constraints as a result of stress tests or new regulation result in a

reduction in credit provision to the real economy?



Belgian banks expect Basel III will cost clients more, but should stabilise the system

„How will the implementation of Basel III affect…?―

Bank Profitability

Attractiveness of local market

Credit costs (for clients)

Lending volumes, provision of credit

Risk appetite of banks

Stability of the financial system

Europe

67

52

24

25

18

19

27

37

62

30

30

37

6

11

14

45

52

44

Strengthen No impact Weaken

68

60

21

37

22

34

28

31

62

14

32

22

4

9

17

49

46

44

Belgium



Banking consolidation in Belgium is more likely medium – long term.

„Do you expect there to be significant consolidation in your local market? ―

37

50

13

Belgium

Yes, in the short term (within the next 12

months)

Yes, in the medium to long term

No

39

43

18

Europe



4

6

10

12

14

14

14

21

31

74

62

37

42

43

37

39

72

46

51

26

34

57

48

45

49

47

14

33

18

Germany

Italy

Poland

UK

France

Netherlands

Austria

Nordics

Spain

Yes, in the short term (within the next 12 months) Yes, in the medium to long term No

Belgium

Short term consolidation in Belgium not likely

„Do you expect there to be significant consolidation in your local market? ―



Contact

EMEIA Financial Services

Philippe Desombere | Partner | EMEIA Financial Services

Direct: +32 2 774 95 01 |

[email protected]

Jean-Francois Hubin | Partner | EMEIA Financial Services

Direct: +32 2 774 92 66 |

[email protected]

Media relations

Christophe Ballegeer

Direct: +32 2 774 90 07 | Mobile: +32 475 98 33 10

[email protected]

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Ey banking barometer march 2012 belgium