Retail Banking

Despite the challenging market conditions, Retail Banking showed positive development in all key business areas in 2008. The number of customers, the volume of assets and net earnings from commission all increased. Following successful implementation of the new service and branch concept in 2007, in the year following there was further success in creating synergies and expanding the product range accordingly. One area of focus for the business was the development of a product management system; another was central sales management of all retail segments. Retail Banking installed product management units in all subsidiaries in the year under review. This action, together with increased training for all employees, was a significant contributing factor to the 28 % increase in asset volume. This is all the more impressive given that the effects of the financial crisis began to be clearly felt in South Eastern Europe in particular from the third quarter onwards and consumers’ confidence in the financial sector was clearly shaken. But even in this difficult situation Hypo Group Alpe Adria remained a preferred partner for private customers as well as for small and medium sized businesses, not least because of its longstanding presence in the markets, its proximity to its customers and the customised bundled products which it had developed for the different country markets and customer segments. Retail Banking reacted to the challenging economic conditions with many product campaigns and events, and with increased marketing, so that existing and potential customers were informed about new developments in a timely fashion.

A significant element of the restructuring of Retail Banking in the year under review was the introduction of private banking units in the SEE markets. With this move, Hypo Group Alpe Adria was able to accommodate the high growth rates in this segment and also to improve service and product quality.

A group card bonus programme was developed and introduced in both Bosnia and Herzegovina and in Serbia in 2008. It is planned to extend this service to Croatia and Slovenia in 2009. The number of customer acquisitions increased as a result and with it, net commission bookings. As a result of targeted cross-selling efforts, Hypo Group Alpe Adria also increased the number of salary accounts held.

In order to ensure that the retail business continues to develop successfully, the cornerstones of the Retail Strategy for 2008–2012 were defined in the year. The main elements are increased emphasis on cross-selling activities with the Corporate and Leasing segments as well as an expansion of the product range, with an emphasis on products which generate commission. The business area also intends to make greater use of the branch network, which, in line with the overall strategy of the Bank, is set to grow in existing markets; and also of alternative sales channels such as mobile sales, the internet and call centre solutions.

The retail business plans to increase the number of customers in 2009 and to develop customised products more quickly, so that it can react promptly to developments in capital markets and thus to customer requirements. The focus of product development is therefore likely to be capital guarantee products.

Emphasis will also be placed on the definition and initial roll-out of a programme for customer satisfaction, loyalty and profitability (“Hypo advantage”) in 2009. This will cover defined packaged offers and should, through cross-selling, lead to a stronger customer tie-in.

Private Banking

As a result of the difficult economic situation in the year under review, the staff of the Private Banking section faced very demanding conditions. Nevertheless the section showed positive growth overall. The integration of Private Banking into the Retail Banking division in the 2008 financial year had the accompanying effect of significantly increasing customer potential and, indeed, of increasing the number of customers by 50 %. All the operational Private Banking units in existence at the time underwent this integration: as a result, the teams in Austria, Slovenia, Croatia and Serbia are all operating uniformly and independently within the Retail Banking division.

The Private Banking section has also been responsible for the product management of the investment products for all Retail segments (affluent, mass) since the beginning of 2008. This also covers the sales and marketing, training and introduction of fund-based products. As the first step in a Group-wide image campaign, an image folder was developed and has been made available in all the respective local languages.

Due to the situation in the capital markets the products most in demand in the wide-ranging portfolio of fund-based products were those which have a capital guarantee. But equally funds in combination with savings deposits were very popular. Overall, there was a clear trend towards conservative and guaranteed capital investments as a result of the poor performance of the international capital markets.

The launch of Private Banking units in Bosnia and Herzegovina and in Montenegro is planned for 2009, in order to give customers there local and optimal service. Further reduction of product development times is also important to us, so that in future appropriate products and services, tailored to the market situation in the respective countries, can be offered more swiftly to our customers.

Additional, tailored product offerings are also to be developed for existing SME, Corporate and leasing customers, thereby expanding the existing attractive product range.