Survey of 500 banks across Europe, including 50 from Belgium

1. Banking Barometer Europe
March 2012
Survey results: Belgium

2. 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

3. About the study
Make-up of the survey sample
Type of bank Total assets
Major 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% Respondents
Specialist 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

4. Business Outlook

5. Belgian banks more confident than other European
banks 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

6. 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

7. 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 18
Netherlands 4 64 32
Poland 2 48 50
%age respondents answering weaken slightly weaken significantly strengthen slightly strengthen significantly
Page 7 Ernst & Young Banking Barometer

8. Belgian banks are particularly optimistic about
Deposits.
„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

9. 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

10. 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)?―
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

11. Employment
Page 11 Ernst & Young Banking Barometer

12. 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

13. 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

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

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

16. 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?―
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

17. 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

18. 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

19. 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?―
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

20. Belgian bank have a pessimistic view of the economy.
„ What's 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

21. Belgian banks somewhat pessimistic about the
economy
„ What's 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

22. European debt crisis
Page 22 Ernst & Young Banking Barometer

23. 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?―
Belgium Europe
30 Percentage respondents answering
42
Yes, substantial
Yes, minor
42
No 38
28 20
Page 23 Ernst & Young Banking Barometer

24. 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 7
Netherlands 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

25. 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?―
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

26. Regulation and Consolidation
Page 26 Ernst & Young Banking Barometer

27. 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 32
Percentage respondents answering Major rationing Some pricing impact and change in market focus Little impact
Page 27 Ernst & Young Banking Barometer

28. Belgian banks expect Basel III will cost clients more, but
should 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 11
21 62 17 Attractiveness of local market 24 62 14
37 14 49 Bank Profitability 25 30 45
22 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

29. Banking consolidation in Belgium is more likely
medium – 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

30. 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

31. Contact
EMEIA Financial Services
Philippe Desombere | Partner | EMEIA Financial Services
Direct: +32 2 774 95 01 |
philippe.desombere@be.ey.com
Jean-Francois Hubin | Partner | EMEIA Financial Services
Direct: +32 2 774 92 66 |
jean-francois.hubin@be.ey.com
Media relations
Christophe Ballegeer
Direct: +32 2 774 90 07 | Mobile: +32 475 98 33 10
christophe.ballegeer@be.ey.com
Page 31 Ernst & Young Banking Barometer

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