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EXHIBIT 99
HOUSEHOLD
AFSA
Conference for European Fixed Income Investors
November 8, 2000
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This presentation, including the accompanying slides, contains certain
forward-looking information which is subject to risk and uncertainties and
speaks only as of the date on which it is made.
This presentation, in keeping with the requirements of the U.S. Securities and
Exchange Commission's Regulation FD, has been filed with the Securities and
Exchange Commission. Please further be advised that Regulation FD prohibits
Household representatives from answering certain, specific questions during the
Q&A session.
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Agenda
- HOUSEHOLD'S PROFILE
- Major Businesses
- Preparation for Possible Economic Slowdown
- Performance Measures
- 2000 Funding Review
3
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ORGANIZATION CHART
Household International
Renaissance Credit Household Finance Corp. Household Global Funding
Services, Inc.(*)
Household Bank f.s.b. Household Bank HFC Bank plc
(Nevada), N.A.
Household Bank (SB), N.A. Household Retail Household Financial
Services, Inc. Corporation Ltd.
Household Credit
Services, Inc.
* Renaissance Credit Services, Inc. became the parent of Household Bank f.s.b.
for tax purposes related to the acquisition of Renaissance Holdings, Inc.
4
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HOUSEHOLD'S PROFILE
- Longevity: Serving consumers since 1878
- Largest independent consumer finance company in the U.S.
- Offer a broad array of consumer loan products valued by the middle class
- Leveraged technology and data driven marketing
- Experienced management team
- Robust earnings and receivables growth
- Low cost structure
- Strong presence in the United Kingdom and Canada
5
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HOUSEHOLD IS A SUBSTANTIAL PLAYER IN FINANCIAL SERVICES
<TABLE>
<S> <C> <C> <C>
LARGEST U.S. FINANCE COS.-LOAN PORTFOLIO (1) LARGEST U.S. BANKS -LOAN PORTFOLIO (2)
------------------------------------------------------------------------------------------
1) GE Capital Corp. (3) US$ 361 bln 1)Citigroup(4) US$ 441 bln
2) GM Acceptance Corp. (3) 157 2) Bank of America 401
3) Ford Motor Credit (3) 119 3) JP Morgan Chase (5) 234
4) HOUSEHOLD INTERNATIONAL 80 4) Bank One 173
5) MBNA 76 5) Wells Fargo 148
6) CIT 53 6) First Union 139
7) Conseco Finance 50 7) FleetBoston Financial 114
8) Indy Mac 23 8) SunTrust Banks 73
9) American Express 23 9) U.S. Bancorp 67
10) Capital One 22 10) KeyCorp 66
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</TABLE>
(1) Source: SNL Securities. Total net leases and loans as of 6/30/00; figure
includes loans previously securitized and managed by the lender.
(2) Source: SNL Securities. Total loans as of 6/30/00; includes balance sheet
loans only.
(3) Wholly-owned subsidiary.
(4) Pro Forma for AFS purchase announced on September 6, 2000.
(5) Pro Forma for merger with JP Morgan.
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GEOGRAPHICALLY BALANCED PRODUCT DISTRIBUTION IN THE U.S.(*)
<TABLE>
<S> <C> <C> <C>
Northeast
---------------------------
U.S. Population 12%
Consumer Finance 11%
MasterCard/Visa 16%
West
----------------------- Private Label 8%
U.S. Population 7%
Midwest
Consumer Finance 10% ------------------------
U.S. Population 24% Mid Atlantic
MasterCard/Visa 7% ---------------------------
Consumer Finance 21% U.S. Population 14%
Private Label 6%
MasterCard/Visa 25% Consumer Finance 15%
Private Label 21% MasterCard/Visa 14%
Private Label 10%
California
----------------------- Southeast
U.S. Population 12% -------------------------
U.S. Population 18%
Consumer Finance 19%
Southwest Consumer Finance 15%
MasterCard/Visa 15% ------------------------
U.S. Population 13% MasterCard/Visa 12%
Private Label 15%
Consumer Finance 9% Private Label 25%
MasterCard/Visa 11%
Private Label 15%
</TABLE>
* Represents HFC and HB managed assets
as of December 31, 1999
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COMPETITIVE ENVIRONMENT
- Landscape is less, not more, competitive
- Demise of monolines (auto and home equity)
- Integration of acquisitions by other consolidators
- Credit card companies offer fewer teaser rates
- Ability to lead with strong brands is a competitive advantage
- HFC and Beneficial are two of the best-known names in the industry
- Partners with great brands: GM, AFL-CIO, Best Buy and others
- Strong balance sheet provides opportunities
- Successful business that can be financed on balance sheet
- Spread lending rather than a gain on sale business model
- Ability to purchase select portfolios
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TECHNOLOGY IS A COMPETITIVE ADVANTAGE
- VISION system
- Pre-screened lead generation and prioritization
- Multiple product underwriting, instantaneous loan decisioning
- Multiple distribution channels and cross-selling
- Common technology platform
- Data warehouse contains over 55 million customer relationships
- Established Internet capabilities
- 39 websites in production
- Over $400 million in receivables originated on-line
- Over 3.2 million unique visitors
- Technology permeates all facets of the business
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INDUSTRY LEADER IN COST CONTROL--EFFICIENCY RATIO
[LINE GRAPH]
PERCENT
60
-------------------------------------------------------------------------------
55
-------------------------------------------------------------------------------
50.7
50
-------------------------------------------------------------------------------
45.0
45
-------------------------------------------------------------------------------
41.0
40
-------------------------------------------------------------------------------
37.6 35.5
33.6
35
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30
-------------------------------------------------------------------------------
25
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'95 '96 '97 '98 '99 YTD 2000
10
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AGENDA
- Household's Profile
- MAJOR BUSINESSES
- Preparation for Possible Economic Slowdown
- Performance Measures
- 2000 Funding Review
11
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U.S. CONSUMER FINANCE
BUSINESS OVERVIEW
- 1,419 branches in 46 states
- HFC and Beneficial branch networks provide platform for:
- Strong organic growth
- Cross sell opportunities
- Increased sales force productivity
- Sales per Account Executive up substantially
- Turnover rates very low
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U.S. MASTERCARD/VISA
BUSINESS OVERVIEW
Household
Bank
- 9th largest MasterCard/Visa issuer Union 17%
Privilege
- Launched redesigned General Motors card 29%
program March, 2000 Renaissance
8%
- State of the art marketing and credit risk
capabilities
- Union Privilege is the largest affinity card in [PIE CHART]
the industry
- Strong potential for future growth
- Acquired Renaissance Holdings in February,
2000 General
Motors
46%
- Provides ability to offer full spectrum of
credit card products $14.8 Billion
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PRIVATE LABEL CREDIT CARD
BUSINESS OVERVIEW
Furniture
- Credit cards which are only accepted 34%
at particular merchant's store or chain
of stores
Other
- Second largest 3rd party 3% PIE CHART
provider in U.S. Recreational
- 7.6 million active customers Vehicles
12%
- Over 120 merchant relationships,
including: Electronics
Discount/ 31%
Wholesale
8%
- IKEA Home Products
12%
- Gateway
- Mitsubishi Electric
$11.3 Billion
- Kawasaki Motors Corp. USA
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AUTO FINANCE
BUSINESS OVERVIEW
- A leading non-captive auto lender
- Emphasis on Millennium product (Near-prime; higher credit scores)
-Now 40% of portfolio
-Trading coupon for better risk adjusted returns
-Better and bigger market than sub-prime
- 95% of sales through new car dealerships
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INTERNATIONAL OPERATIONS
- HFC Bank plc
- Largest specialist consumer finance company in the U.K.
- Reputation for innovative marketing initiatives: Goldfish, marbles(TM)
- 3rd largest provider of private label finance
- Household Financial Corporation Limited (Canada)
- Wide distribution of home equity loans, unsecured loans and private-label
credit cards
- Network of 92 branches in all 10 provinces of Canada
- Over 100 merchant relationships
- Business model of each predicated on the U.S. model
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AGENDA
- Household's Profile
- Major Businesses
- PREPARATION FOR POSSIBLE ECONOMIC SLOWDOWN
- Performance Measures
- 2000 Funding Review
17
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PREPARATION FOR POSSIBLE ECONOMIC SLOWDOWN
- Believe a soft landing in the U.S. is most likely
- GDP 2.5 -3.0%
- Unemployment 4.2 -4.8%
- CPI 2.0 -2.5%
- Hard landing also modeled
- Modified 1990-91 severity scenario
- Consumer debt burdens higher, increased bankruptcy filings, lower
unemployment
- Real estate market is unlike 1990-91
- Expect limited number of irrationally priced real estate markets
- Household is focused on lower and more stable-priced segment
- While losses and reserves increase, internal capital generation is
expected to exceed $1 billion per year
- Expect strong margins, but slowing asset growth
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PREPARATIONS FOR A POSSIBLE ECONOMIC DOWNTURN
- Shift product mix toward real estate secured receivables
- Tighter underwriting standards
- No solicitation of renters
- Raised Beneficial branch cut-off scores
- Business model is a different approach than that of many competitors
- Risk-based pricing
- Centralized, automated underwriting decisions
- Credit risk infrastructure greatly enhanced
- Increased analytical staff 35% (440 company-wide)
- Upgraded modeling capabilities
- Early warning indicators
- Sensitivity analysis
- Enhanced ability to implement strategies faster
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DIVERSIFIED AND INCREASINGLY SECURED RECEIVABLES MIX
1997 9/30/2000
Other
Unsecured MasterCard/ Sub-prime
13% PHL Visa Credit Card
Auto 2% 16% 1%
Finance
2% Other
Real Estate Unsecured PHL
Secured 12% 4%
Private 30%
Label
13% PIE CHART Private PIE CHART
Label
12%
MasterCard/ International
Visa 11% International
29% 9%
Auto
Finance Home Equity
2% 41%
Sub-prime Auto
3%
$60.8 Billion $83.5 Billion
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SHIFT TOWARD SECURED RECEIVABLES
PERCENT OF TOTAL RECEIVABLES
[BAR GRAPH]
*29 **33 *34 **30 *38 **26 *41 **22 *46 **20
'96 '97 '98 '99 3Q'00
*Real Estate Secured **Mastercard/Visa
U.S. managed receivables
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PREPARATIONS FOR A POSSIBLE ECONOMIC DOWNTURN
- MasterCard/VISA
- Analytically driven approach to credit line management
- Refined bankruptcy prediction models
- Reduced cash advance availability
- Above average utilization rates
- Sophisticated collection techniques
- Behavioral Scoring
- Scripting
- Customer relationship, not product by product, management
- Reserves adjust according to perceived risk and expected delinquencies
- Reserves to non-performing assets 106.7% at September 30, 2000
- Success favors large sophisticated players
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FINANCE COMPANIES TEND TO OUTPERFORM BANKS
[Bar Graph]
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99
Con. Fin. Co. ROMA 1.95 1.41 2.36 2.11 2.04 1.78 1.61 1.95 1.35 1.62
Bank ROA .48 .53 .93 1.2 1.15 1.17 1.19 1.23 1.19 1.31
1. Source: FDIC
2. Source: Moody's Investor Service
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AGENDA
- Household's Profile
- Major Businesses
- Preparation for Possible Economic Slowdown
- PERFORMANCE MEASURES
- 2000 Funding Review
24
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2000 Operating Performance
NINE MONTHS ENDED 9/30/00 vs. 9/30/99
--------------------------------------------------------------------------------
Net Income ($ Millions) $1,208.0 Increased 15%
Earnings Per Share $2.52 Increased 17%
Net Interest Margin 8.13% Decreased 8bps
Return on Equity 22.6% Improved 2%
Return on Managed Assets 1.87% Declined 2bps
Efficiency Ratio 35.5% Increased 110bps
TETMA 7.33% Increased 33bps
--------------------------------------------------------------------------------
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STRONG GROWTH ENGINE -CORE RECEIVABLES(*)
[Bar Graph]
($ BILLIONS) CAGR = 12.4%
82.9
70.9
61.8 63.1
57.5
47.6
'95 '96 '97 '98 '99 3Q'00
(*)EXCLUDES LIQUIDATING COMMERCIAL AND OTHER
26
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SOLID RETURN ON MANAGED ASSETS
[Bar Graph]
Percent
1.99
1.87
1.60
1.38
1.30
0.98
'95 '96 '97 '98(*) '99 YTD 2000
(*)EXCLUDES BENEFICIAL MERGER CHARGE AND GAIN ON SALE OF BNL-CANADA
27
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RESERVES PROVIDE LOSS PROTECTION
<TABLE>
<CAPTION>
($ Millions) Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3.99(*) 3.99(*)
3,500 3.79(*) 4.0(*)
3.72(*) 3.69(*)
3.56(*) 3.58(*)
3,000 2,948(i) 2,986(i) 3.5(i)
3.12(*) 2,861(i)
2,667(i)
2,523(i) 2,548(i) 3.0(#)
2,500
2,109(i) 2.5
2,000
1,592(i) 2.0
1,500
1.24(#) 1.5
1.14(#) 1.16(#) 1.10(#) 1.13(#)
1.06(#) 1.07(#)
1.00(#)
1,000
1.0
500 0.5
0 0.0
'95 '96 '97 '98 '99 1Q'00 2Q'00 3Q'00
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(i) Reserve Levels (*) % of Managed Receivables (#) Nonperforming Receivables Coverage
-----------------------------------------------------------------------------------------
</TABLE>
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2 + DELINQUENCY RATIO BY PRODUCT
9/30/00 9/30/99
---------------------------------------------------------
Real Estate Secured 2.77% 3.46%
Auto Finance 2.19 2.26
MasterCard/Visa 3.48 3.10
Private Label 5.67 6.66
Other Unsecured 7.72 8.57
---------------------------
Total Household 4.21% 4.89%
===========================
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CONSUMER CHARGEOFF RATIO BY PRODUCT
9/30/00 9/30/99
---------------------------------------------------------
Real Estate Secured 0.41% 0.58%
Auto Finance 4.45 4.55
MasterCard/Visa 5.23 6.15
Private Label 5.28 5.60
Other Unsecured 7.00 7.06
---------------------------
Total Household 3.47% 4.09%
===========================
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IMPROVING CHARGE-OFFS
[Line Graph]
Percent
5.0
4.29
4.5 4.13
3.84
4.0
3.47
3.5
2.96
3.0
2.51
2.5
2.0
1.5
1.0
0.5
0.0
'95 '96 '97 '98 '99 3Q'00
31
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OUTSTANDING CASH EARNINGS
[Bar Chart]
CAGR
Operating Earnings = 21.9%
Cash Earnings = 20.3% 1,630.3(#)
1,327.2(#) 1,329.1(#)
$ (in billions) 1,486.4(*)
1,098.7(#)
963.3(#)
1,208.0(*)
1,156.6(*)
713.5(#)
940.3(*)
819.6(*)
603.7(*)
'95 '96 '97 '98 '99 YTD 2000
------------------------------------------------
[ ] (*) Operating Earnings [ ] (#) Cash Earnings
------------------------------------------------
32
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IMPROVING CAPITAL RATIOS (EXCLUDING FAS 115)
[Line Graph]
Percent
10.00 Equity to Managed Assets(*)
9.26(*) 9.28(*)
9.09(*) 9.07(*)
8.95(*)
8.81(*)
9.00
8.00 7.59(*)
7.23(i) 7.33(i)
7.18(*) 7.11(i)
6.92(i) 6.96(i) 6.94
7.00 6.55(*)
6.26(i) 6.20(i)
TANGIBLE EQUITY TO
6.00 5.52(i) TANGIBLE MANAGED ASSETS
(TETMA)(i)
5.00
'94 '95 '96 '97 '98 '99 1Q'00 2Q'00 3Q'00
(*) Excluding purchase of receivables from Bank One on March 31, 2000(1Q'00),
pro forma TETMA would have been 7.15%.
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EXPECTATIONS FOR FULL YEAR 2000
Earnings Per Share(*) +15%
Receivables Growth(*) 22 - 24%
Return on Equity > 20%
Return on Managed Assets (approx) 1.90%
Efficiency Ratio (approx) 35%
TETMA 7.25 - 7.50%
* Compared to year-end 1999
34
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AGENDA
- Household's Profile
- Major Businesses
- Preparation for Possible Economic Slowdown
- Performance Measures
- 2000 FUNDING REVIEW
35
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DEBT ISSUANCE THEMES
- Maintain current ratings (A2/A)
- Provide larger, more liquid underwritten transactions
- Expand and deepen investor base
- Frequent international issuance
- Build HFC credit curve in multiple currencies
- Periodic investor education/information
- Provide fairly priced transactions
- Maintain 100% backstop coverage for commercial paper
- Continued use of multiple sources of liquidity
- Extend maturities when possible
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BALANCED FUNDING MIX
($ MILLIONS)
--------------------------------------------------------------------------------
CP and Other Short-Term Borrowings $7,305 10.33%
Deposits 6,670 9.43
Domestic MTNs 17,012 24.05
Euro MTNs 5,539 7.83
Domestic Underwritten Debt 4,759 6.73
Global Underwritten Debt 11,573 16.36
Asset-Backed Securities 17,875 25.27
------- -------
Total $70,733 100.00%
======= =======
--------------------------------------------------------------------------------
At September 30, 2000 (U.S. issuers only)
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2000 SENIOR DEBT ISSUANCE BY MARKET TYPE
Foreign (Non Euro)
$.5 Billion / 3%
Public Euro Bonds
Global Bonds $1.6 Billion / 10%
$4.8 Billion / 31%
[PIE CHART]
MTNs - Non Dealer
$3.4 Billion / 22%
MTNs - Dealer
$5.3 Billion / 34%
38
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2000 SENIOR DEBT DISTRIBUTION BY REGION
United Kingdom North America
9% 58%
Switzerland [PIE CHART]
2%
Scandinavia
2% Asia
5%
Other Europe & Benelux
Middle East Germany 3%
4% 4%
Italy
Japan 5% France
4% 4%
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2000 SENIOR DEBT ISSUANCE BY MATURITY
2001
2007 - 2010
13%
18%
[PIE CHART]
2002 - 2004
2005 - 2006 38%
31%
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SUMMARY
- Household has been a responsible, leading provider of credit
products to working class consumers for over 120 years
- Strong balance sheet and internal capital generation
- Most efficient operation in the industry
- Commitment to ratings
- Solid history of sustained earnings growth
41
