Ey banking barometer march 2012 belgium

Banking Barometer EuropeMarch 2012Survey results: Belgium

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 2 Ernst & Young Bankenbarometer

About the studyMake-up of the survey sampleType of bank Total assetsMajor banks 25% EUR 40 billion + 2%Private bank/regional bank 31% EUR 21 – 40 billion 10%Foreign bank 14% EUR 11 - 20 billion 14%Public credit institution 6% EUR 2 - 10 billion 23%Cooperative bank 8% Less than EUR 2 billion 51%Federal state bank, development bank 0% RespondentsSpecialist bank 16% CFO 60% Management board member 8% COO 6% CRO 2% Head Office / Strategy 8% Other department heads 16% Page 3 Ernst & Young Bankenbarometer

Business Outlook

Belgian banks more confident than other Europeanbanks are.„ How do you rate the current general performance of your bank?‖ Belgium Europe %age respondents answering Very good 38 46 Fairly good Fairly poor 48 Very poor 56 6 5 0 1 Page 5 Ernst & Young Banking Barometer

Dutch and Polish banks are the most content„ How do you rate the current general performance of your bank?― Austria 2 10 58 30 Germany 2 8 67 23 Spain 2 8 42 48 Belgium 6 48 46 Nordics 6 48 46 Europe 1 5 56 38 Italy 4 74 24 France 2 2 70 26 UK 2 2 60 36 Netherlands 2 40 58 Poland 48 52 %age respondents answering very poor fairly poor fairly good very good Page 6 Ernst & Young Banking Barometer

Belgian bankers are less optimistic about the future„ How do you expect your bank’s position to change in the next six months?" Austria 26 68 6 Germany 16 69 15 Spain 2 10 53 35 France 10 74 16 Belgium 10 70 20 Europe 10 67 23 UK 8 68 24 Nordics 6 76 18 Italy 6 76 18Netherlands 4 64 32 Poland 2 48 50 %age respondents answering weaken slightly weaken significantly strengthen slightly strengthen significantly Page 7 Ernst & Young Banking Barometer

Belgian banks are particularly optimistic aboutDeposits.„How do you rate the outlook for your bank in the following segments?" Belgium Europe 31 46 17 6 Corporate & Investment 39 44 13 4 51 41 8 Deposits 41 47 9 3 42 47 11 Retail Banking 41 49 9 1 30 52 18 Transaction banking 35 50 13 2 27 57 14 3 Private Wealth Management 33 51 13 3 25 47 22 6 Securities Trading 27 43 22 8 %age respondents answering Good Fairly good Fairly poor Poor Page 8 Ernst & Young Banking Barometer

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?― Belgium Europe -20 28 Private mortgages -22 33 Corporate loans -26 34 Private loans Credit cards -15 38 -25 23 Corporate loans Private loans -22 41 -18 52 Deposits Deposits -17 43 -16 37 Credit cards Private mortgages -23 36 Percentage respondents answering Fall Rise Page 9 Ernst & Young Banking Barometer

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 thenext six months (1 very important, 10 not very important)?― Preparing for Basel III 60 57 Risk management 45 58 Cutting Costs 41 49 Minimizing non-essential expenditure 35 49 Streamlining processes 31 41 IFRS 26 27 Restructuring business operations 24 25 New foreign markets 22 18 Developing/introducing new products 22 35 Disposing assets 22 18 Belgium Establishing new business segments 16 22 Europe New remuneration system 12 21 Reducing number of products 8 13 Off shoring 8 13 Percentages with score 1 to 3 Page 10 Ernst & Young Banking Barometer

Employment Page 11 Ernst & Young Banking Barometer

Belgian banks expect slight headcount growth„In the next six months do you expect the headcount of your bank to change?― Belgium Europe 0 3 24 Percentage respondents answering 22 Strong increase slight increase 58 Unchanged 58 slight decrease Strong decrease 18 15 0 2 Page 12 Ernst & Young Banking Barometer

France and UK face the strongest headcount growth„In the next six months do you expect the headcount of your bank to change?― France 38 56 6 United Kingdom 36 52 12 Netherlands 31 50 19 Nordics 27 55 18 Austria 26 58 16 Switzerland 25 63 13 Belgium 24 58 18 Poland 23 61 16 Italy 20 72 8 Spain 14 54 32 Germany 12 65 23 Percentage respondents answering increase unchanged shrink Page 13 Ernst & Young Banking Barometer

Belgian banks likely to see strong gain in Sales andRetail employees.„In which departments is headcount changing?― Belgium Europe -14 40 Sales -24 28 -17 32 Retail -15 24 -16 24 Product / Business line -27 18 -16 22 Technology -11 37 -20 20 IT -17 38 -18 20 Marketing -22 31 -29 14 Operations -26 36 -15 13 Finance / tax -16 26 -25 8 HR -22 27 -25 6 Other -27 13 %age repsondents answering Shrinking Rising Page 14 Ernst & Young Banking Barometer

Economic Environment & Financial Markets Page 15 Ernst & Young Banking Barometer

Financial markets: Belgian banks’ outlook in linewith the rest of Europe„How do you expect the performance of the financial markets to change over the next sixmonths?― Belgium Europe 0 2 Percentage respondents answering 31 33 Improve significantly Improve slightly Unchanged 43 37 Worsen slightly Worsen significantly 26 26 0 2 Page 16 Ernst & Young Banking Barometer

Financial markets: Belgian bank expectations are marginally positive.„How do you expect the performance of the financial markets to change over the next six months?― Net balance statistic“ France 22 54 32 Spain 18 44 26 Nordics 33 43 10 UK 16 41 17 Italy 24 36 16 Netherlands 19 31 12 Belgium 27 31 4 Austria 44 30 -14 Germany 24 28 4 Poland 49 16 -33 Percentage respondents answering Worsen Strengthen Page 17 Ernst & Young Banking Barometer

Belgian banks face sharper insolvency risk.„Looking across sectors, how do you rate the risk of default― Belgium Europe -4 51 Construction -9 46-11 50 Services -9 38 0 50 Automotive -8 37 -5 49 Commodities -10 26 -9 43 Transport -10 37 -4 41 Corporate real estate -10 38 -2 40 Infrastructure -11 26-11 39 Utilities -10 22 -4 37 Mechanical engineering -7 29 -2 36 Technology Media Telecom -10 29 -9 36 SME -12 31 -8 35 Shipping -8 28 -8 33 Chemicals and Pharma -9 32 -7 31 Retail -8 35 Percentage respondents answering weaken strengthen Page 18 Ernst & Young Banking Barometer

Lending policies are likely to become morerestrictive„ How do you expect the corporate lending policies of banks in your country to change in thenext six months across each of the following sectors?― Belgium Europe -40 12 Construction -39 13 -39 9 Corporate Real Estate -41 12 -37 7 Services -34 10 -37 17 Retail -26 11 -34 9 Commodities -32 11 -33 9 Infrastructure -27 12 -33 11 Technology, Media, Telecom -27 13 -30 9 Automotive -27 10 -29 18 Transport -34 12 -27 4 Chemicals & Pharma -32 8 -24 17 Shipping -30 11 -24 9 Mechanical engineering -24 8 -23 12 SME -39 13 -22 9 Utilities -35 10 Percentage respondents answering More restrictive Less restrictive Page 19 Ernst & Young Banking Barometer

Belgian bank have a pessimistic view of the economy.„ Whats your outlook for the business environment over the next six months? Belgium Europe 24 Percentage respondents answering 27 improve 36 unchanged 43 40 worsen 30 Page 20 Ernst & Young Banking Barometer

Belgian banks somewhat pessimistic about theeconomy„ Whats your outlook for the business environment over the next six months?‖ Austria 52 24 24 Nordics 42 32 26 Belgium 37 39 24 Europe 33 39 26 France 32 34 34 Italy 32 36 32 Germany 30 33 37 Spain 30 24 46 Netherlands 29 48 23 Poland 23 65 12 UK 16 60 25 Percentage respondents answering negative neutral positive Page 21 Ernst & Young Banking Barometer

European debt crisis Page 22 Ernst & Young Banking Barometer

Sovereign debt defaults will have negative impacton the banking sector„ Do you think that any defaults by sovereign debtors will have a negative impact on the bankingsector as a whole?― Belgium Europe 30 Percentage respondents answering 42 Yes, substantial Yes, minor 42 No 38 28 20 Page 23 Ernst & Young Banking Barometer

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“ Austria 64 28 8 56 Spain 56 24 20 36 Germany 55 31 14 41 Italy 44 34 22 22 Poland 42 48 10 32 UK 33 41 26 7Netherlands 32 38 30 2 Belgium 30 42 28 2 Nordics 29 42 29 0 France 28 54 18 10 yes, substantial Yes, minor No In percentages Page 24 Ernst & Young Banking Barometer

Multiple sovereign defaults would have fatal effectson lending ability Belgian banks„ What affect would multiple sovereign defaults have on your business model / serviceprovisions?― 64 Reduce ability to lend 61 13 Seek state funding 20 19 Apply to central banks to maintain liquidity 27 9 Force the closure of certain areas of business 17 Belgium 4 Temporarily suspend deposit withdrawals 7 Europe 4 Force you to sell parts of your business 8 In percentages; multiple answers possible Page 25 Ernst & Young Banking Barometer

Regulation and Consolidation Page 26 Ernst & Young Banking Barometer

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? Austria 44 38 18 Poland 42 39 19 Nordics 35 44 21 Belgium 30 36 34 Spain 24 47 29 Netherlands 21 54 25 Germany 20 35 45 Italy 18 41 41 France 12 44 44 UK 4 56 40 Europe 25 43 32Percentage respondents answering Major rationing Some pricing impact and change in market focus Little impact Page 27 Ernst & Young Banking Barometer

Belgian banks expect Basel III will cost clients more, butshould stabilise the system„How will the implementation of Basel III affect…?― Belgium Europe 68 28 4 Credit costs (for clients) 67 27 6 60 31 9 Stability of the financial system 52 37 1121 62 17 Attractiveness of local market 24 62 14 37 14 49 Bank Profitability 25 30 4522 32 46 Risk appetite of banks 18 30 52 34 22 44 Lending volumes, provision of credit 19 37 44 Percentage respondents answering Strengthen No impact Weaken Page 28 Ernst & Young Banking Barometer

Banking consolidation in Belgium is more likelymedium – long term.„Do you expect there to be significant consolidation in your local market? ― Belgium Europe 18 13 Percentage respondents answering Yes, in the short term (within the next 12 43 months) 50 Yes, in the medium to long term No 39 37 Page 29 Ernst & Young Banking Barometer

Short term consolidation in Belgium not likely„Do you expect there to be significant consolidation in your local market? ― Spain 31 51 18 Nordics 21 46 33 Austria 14 72 14 Netherlands 14 39 47 Belgium 14 37 49 France 12 43 45 UK 10 42 48 Poland 6 37 57 Italy 4 62 34 Germany 74 26 Percentage respondents answering Yes, in the short term (within the next 12 months) Yes, in the medium to long term No Page 30 Ernst & Young Banking Barometer

ContactEMEIA Financial ServicesPhilippe Desombere | Partner | EMEIA Financial ServicesDirect: +32 2 774 95 01 |philippe.desombere@be.ey.comJean-Francois Hubin | Partner | EMEIA Financial ServicesDirect: +32 2 774 92 66 |jean-francois.hubin@be.ey.comMedia relationsChristophe BallegeerDirect: +32 2 774 90 07 | Mobile: +32 475 98 33 10christophe.ballegeer@be.ey.com Page 31 Ernst & Young Banking Barometer

Ernst & YoungAssurance | Tax | Transactions | AdvisoryAbout Ernst & YoungErnst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 152,000 people are united by our shared values and anunwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity.Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.For more information about our organization, please visit www.ey.com.About Ernst & Young’s Banking & Capital Markets CenterIn today’s globally competitive and highly regulated environment, managing risk effectively while satisfying an array of divergent stakeholders is a key goal of banksand securities firms. Ernst & Youngs Global Banking & Capital Markets Center brings together a worldwide team of professionals to help you achieve your potential— a team with deep technical experience in providing assurance, tax, transaction and advisory services. The Center works to anticipate market trends, identify theimplications and develop points of view on relevant sector issues. Ultimately it enables us to help you meet your goals and compete more effectively. It’s how Ernst& Young makes a difference.© 2012 EYGM Limited.All Rights Reserved.

Ey banking barometer march 2012 belgium

by Ernst & Young Belgium on Mar 21, 2012

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