Unicredit S.p.a. · MIL:UCG
Unicredit — Debt Investor Presentation (February 2024)
43 slides from Unicredit's debt investor presentation, Feb 5, 2024
Slide 1: UniCredit Unlocked: Fixed Income & ESG presentation
UniCredit Unlocked Our transformation journey: record-breaking results, sights set on new heights Fixed Income & ESG presentation A. Orcel Milan, 05 February 2024
Slide 2: Agenda
UniCredit - Public Agenda UniCredit at a glance Financial highlights Funding and liquidity ESG 2
Slide 3: UniCredit Unlocked: our transformation journey
UniCredit Unlocked: our transformation journey Record-breaking results Sights set on new heights 2023: … CROWNING 2024: … AND CONTINUING UNICREDIT’S BEST THREE YEARS NORMALISING OUR OUR TRANSFORMATION YEAR EVER … OF SUCCESS BEST YEAR EVER … JOURNEY 12th consecutive quarter Exceeding expectations in
Slide 4: Excellent 4Q crowning a year of quality profitable growth
UniCredit - Public UNICREDIT AT A GLANCE Excellent 4Q crowning a year of quality profitable growth 12th consecutive quarter of sustainable quality profitable growth, effectively balancing our three levers underpinning current and future distributions KEY METRICS FY23 HIGHLIGHTS ACROSS OUR 3 LEVERS I
Slide 5: Continue to elevate our Fees with best-in-class global factories
UniCredit - Public UNICREDIT AT A GLANCE Continue to elevate our Fees with best-in-class global factories Channeling investments in our product factories to boost capital-light fees CLIENT SOLUTION FEES1 7.4bn c.1.4bn o/w significant portion FEES GROWTH of fee growth locked-in2 @ RUN RATE, bn 6.0b
Slide 6: A winning strategy … delivering for all our stakeholders
UniCredit - Public UNICREDIT AT A GLANCE A winning strategy … delivering for all our stakeholders From laggards to leaders EMPOWERING AND UNIFYING A common vision, a unifying culture, and a winning mentality: promoting ownership and learning from our mistakes From retrenchment … … to quality profita
Slide 7: Direction of travel
UniCredit - Public UNICREDIT AT A GLANCE Direction of travel Undiminished earnings power … … we maintain a strong financial horizon for the future NET REVENUE NET REVENUE 10bn UNDERLYING NII Face headwinds as deposit pass-through increases, lower 22.5bn c. contribution from Russia (c.-0.3bn) and to
Slide 8: Agenda
UniCredit - Public Agenda UniCredit at a glance Financial highlights Funding and liquidity ESG 8
Slide 9: Net Revenue up 26% FY/FY on robust NII, excellent CoR and resilient Fees
UniCredit - Public FINANCIAL HIGHLIGHTS Net Revenue up 26% FY/FY on robust NII, excellent CoR and resilient Fees NET REVENUE, GROWING NET REVENUE BASE WITH RECORD 4Q KEY HIGHLIGHTS bn bn NET INTEREST INCOME Net 5.8 5.9 5.8 5.7 Supportive rates revenue 4.8 4.7 5.2 Excellent pass-through +26.4% 3.
Slide 10: Continued quality net interest income growth
UniCredit - Public FINANCIAL HIGHLIGHTS Continued quality net interest income growth NET INTEREST INCOME, STRONG NII IN 4Q KEY HIGHLIGHTS bn 2.1% 2.1% 2.2% STRONG YEARLY NII GROWTH 1.9% 2.0% +31% FY/FY WHILE FLAT Q/Q 1.2% 1.3% 1.3% SUPPORTED BY +31% NIM1 3.4 3.3 3.5 3.6 3.6 Favourable rate environ
Slide 11: Resilient fees despite macro headwinds
UniCredit - Public FINANCIAL HIGHLIGHTS Resilient fees despite macro headwinds FEES, RESILIENT FEE DYNAMIC IN 4Q KEY HIGHLIGHTS bn 214 INVESTING 7.5 AuM 200 197 200 stock, 194 194 195 195 In our factories, frontline, bn distribution channels and our 7.4 digital infrastructure to Y/Y +4%4 7.1 increas
Slide 12: Operational excellence while offsetting inflation and investing
UniCredit - Public FINANCIAL HIGHLIGHTS Operational excellence while offsetting inflation and investing COSTS, MAINTAINING OPERATIONAL EXCELLENCE EACH QUARTER KEY HIGHLIGHTS −13% (1.2bn) Gross bn cost reduction2 Impacted by bonus pool increase TARGETED COST −3% REDUCTION 9.76 Cost evolution, 2.3 2.4
Slide 13: Transformed and strong asset quality, bracketed CoR
UniCredit - Public FINANCIAL HIGHLIGHTS Transformed and strong asset quality, bracketed CoR LLPs, QUARTERLY EVOLUTION KEY HIGHLIGHTS bn 22 14 19 428bn high quality 3.0 Underlying 6 10 8 10 -3 robust credit portfolio3 CoR1 resulting in a relatively bps low default rate 1.9 1.6 Underlying 243 Very
Slide 14: Excellent capital generation continues
UniCredit - Public FINANCIAL HIGHLIGHTS Excellent capital generation continues NET REVENUE / RWA CET1r walk FY/FY, KEY HIGHLIGHTS (%) FY23 +97bps +389bps vs FY221 even QUALITY GROWTH Our approach to risk adjusted netting for 8.6bn 15.9% quality revenue growth results distribution2 14.9% +5bps +3bps
Slide 15: Agenda
UniCredit - Public Agenda UniCredit at a glance Financial highlights Funding and liquidity ESG 15
Slide 16: 2024 Group Funding Plan
UniCredit - Public FUNDING AND LIQUIDITY 2024 Group Funding Plan • UniCredit S.p.A. acts as the Group Holding as well as the Italian operating bank and is the MREL issuer under Single-Point-of-Entry (SPE) • Geographical diversification and well-established name with recognition in domestic markets p
Slide 17: 2024 MREL Funding Plan: c. 25% executed, focus on more senior instruments
UniCredit - Public FUNDING AND LIQUIDITY 2024 MREL Funding Plan: c. 25% executed, focus on more senior instruments UniCredit SpA 2024 MREL expected funding plan, €/bn Main drivers MREL Funding Plan 2024 already executed for c.25%, 2024 Issued in Expected by de-risked with issuances of Tier2 and SNP
Slide 18: Limited redemptions in the next two years allows for selective issuances
UniCredit - Public FUNDING AND LIQUIDITY Limited redemptions in the next two years allows for selective issuances Group liabilities structure breakdown1 M/L term liability structure Maturity profile up to 2026 (€bn)2 20 18 5% 18 8% 16 7 14 13 12 43% 12 10 5 5 2 33% 8 1 2 6 3 8 4 5 11% 2 2 0 1 1 1 0
Slide 19: Balance Sheet & liquidity profile
UniCredit - Public FUNDING AND LIQUIDITY Balance Sheet & liquidity profile Q/Q reduction mainly due to lower ECB account FY23 balance sheet: 785bn as outcome of balance sheet optimization €bn LIQUIDITY PROFILE Other Assets 40 23 Other liabilities Cash and cash balances 61 41 Financial liabilities LC
Slide 20: 4Q23 ample buffers over MREL requirement
UniCredit - Public FUNDING AND LIQUIDITY 4Q23 ample buffers over MREL requirement MREL1 Eligible instruments 31.28% 89.0bn Ample buffers over capital regulatory requirement Actual 660bps SP2 22.2bn CET1 ratio Tier 1 ratio Buffer Fully Loaded5 transitional SNP3 7.3bn (4Q23) (4Q23) Tier 2 8.7bn AT1 4.
Slide 21: Covered Bonds (CB) program
UniCredit - Public FUNDING AND LIQUIDITY Covered Bonds (CB) program UniCredit is a key mortage Mortgage Mortgage Public sector Mortgage Public sector Mortgage provider and a leading Covered Bond issuer in Italy, Germany Program size (Euro) 35bn 50bn 50bn 40bn 40bn 10bn Austria and Czech Republic Mat
Slide 22: Performance recognized in improved stand-alone creditworthiness
UniCredit - Public FUNDING AND LIQUIDITY Performance recognized in improved stand-alone creditworthiness BBB/Stable/A-21 Baa3/Stable/P-31 BBB/Stable/F21 Covered Bonds (Italian OBG I / OBG II)2 AA-/n.r. Aa3/Aa3 AA/n.r. Counterparty / Deposit rating3 BBB+ Baa1 BBB+ Senior Preferred/ Outlook/ Short-Ter
Slide 23: Agenda
UniCredit - Public Agenda UniCredit at a glance Financial highlights Funding and liquidity ESG 23
Slide 24: Updated ESG Targets: focus on more meaningful penetration for 2024
UniCredit - Public ESG Updated ESG Targets: focus on more meaningful penetration for 2024 • From ESG volumes to ESG penetration for a more transparent view on UCG ESG performance over total business, netting out overall market effects not related to ESG • Focus on Corporate and Financial Institution
Slide 25: Leading by example and supporting our clients' green and social transition
UniCredit - Public ESG Leading by example and supporting our clients’ green and social transition 32 Environment % Social Governance Promoting sustainable financial instruments Promoting sustainable financial instruments CEO & Top Management remuneration2 10 5.6bn 1 Own Social Bond issued 20% weight
Slide 26: Main strategic commitments to support our overall ESG stance beyond climate
UniCredit - Public ESG Main strategic commitments to support our overall ESG stance beyond climate • Oct 21: signed Net Zero Banking Alliance commitment to reduce emissions on lending portfolio NET ZERO BANKING • Jan 23: set baseline and 2030 interim targets on Oil&Gas, Power and Automotive ALLIANCE
Slide 27: Net Zero priority sectors in progress and new target on Steel sector just set
UniCredit - Public ESG Net Zero priority sectors in progress and new target on Steel sector just set UniCredit focus in 2023 Going forward in 2024 ▪ Interim emissions targets disclosure in January ▪ Disclose by April 2024 2023, to pursuit UniCredit Net Zero ambition at UCG Priority Sectors – Annual
Slide 28: New target on Steel sector set to continue our journey towards Net Zero 2050
UniCredit - Public ESG New target on Steel sector set to continue our journey towards Net Zero 2050 UniCredit Design Elements Primary Emission Sector Value chain Baseline year Baseline value1 2030 Target1 metric coverage Oil & ▪ Full value chain ▪ Financed ▪ Scope 32 ▪ 2021 ▪ 21.4 MtCO2e ▪ - 29% vs.
Slide 29: Strong environmental, social and reputational risk management and policies
● UniCredit - Public ESG Strong environmental, social and reputational risk management and policies Applicability Provisions Type of support A No coal developer customers (no increase in coal business since Sep 20) Full general and project financing1 Class with current revenues from coal <= 25% and
Slide 30: Supporting integration of ESG into UniCredit's strategy
UniCredit - Public ESG Supporting integration of ESG into UniCredit’s strategy ORGANISATION AND GOVERNANCE STRUCTURE, FOCS ON ESG ESG GOVERNANCE AND MANAGEMENT A UniCredit's Board of Directors defines the overall strategy of the bank, which incorporates the Group's ESG strategy, overseeing its imple
Slide 31: Delivering on commitment to sustainability
UniCredit - Public ESG Delivering on commitment to sustainability 4Q22 2Q23 2Q23 3Q23 4Q23 First bank in Europe to obtain the 2023 Group Remuneration Policy approved by Improved to “64” from “60” (Advanced) ESG GRESB scoring on its the Shareholders’ Meeting mainly thanks to improvement in corporate
Slide 32: ESG ratings and indices (1/2)
UniCredit - Public ESG ESG ratings and indices (1/2) ● Rating upgraded to “AA” as of July 23. UniCredit included in the Bloomberg MSCI Green Bond Index AA CCC B BB BBB A AA AAA ● Improvements in efforts to manage social risks and robust integration of ESG practices into lending Low ● ESG Risk Rating
Slide 33: ESG ratings and indices (2/2)
UniCredit - Public ESG ESG ratings and indices (2/2) ● EE+ top rating in the Italian bank sector. Example of EU excellence in sustainability EE+ F FF FFF E EE+ EEE (Very strong) ● Included in the following Standard Ethics indices: European Best in Class, European 100, European Banks, Italian, Italia
Slide 34: Annex
Annex
Slide 35: Focus on Commercial Real Estate (CRE) portfolio
UniCredit - Public ANNEX Focus on Commercial Real Estate (CRE) portfolio CRE vs total loans in line or below market1 in Italy, Germany and Austria; volume stable over recent years with declining gross NPE at c.4% CRE portfolio as of 3Q23 Split by Region, bn Split by asset class, bn Portfolio towards
Slide 36: Group gross loans breakdown by stages
UniCredit - Public ANNEX Group gross loans breakdown by stages Stage 3 Group gross loans1 and provisions EoP, bn 2.7% 2.7% 2.6% 2.7% 2.7% o/w Gross NPE (% of gross loans) Stage 3 4Q22 1Q23 2Q23 3Q23 4Q23 467 465 462 Coverage Stage 3 13 13 12 447 ratio 48.2% 48.5% 47.9% 48.1% 47.2% 12 440 12 Stage 2
Slide 37: Russia: resized and de-risked with discipline, at minimum cost
UniCredit - Public ANNEX Russia: resized and de-risked with discipline, at minimum cost REDUCTION OF GROUP EXPOSURE, DERISKING AT MINIMUM COST DECISIVE ACTIONS TAKEN Impact from extreme loss NON-LOCAL EXPOSURE AT PRACTICALLY ZERO assessment (bps)3 Conservatively provisioned our exposure with end-of-
Slide 38: End notes
End notes
Slide 39: Disclaimer
UniCredit - Public END NOTES Disclaimer This presentation may contain “forward-looking statements” which includes all statements Canada or Japan or any other jurisdiction where such an offer or solicitation would be that do not relate solely to historical or current facts and which are therefore inh
Slide 40: Information related to this presentation (1/4)
UniCredit - Public END NOTES Information related to this presentation (1/4) General notes End notes are an integral part of this presentation All data throughout the documents are in Euros Numbers throughout the presentation may not add up precisely to the totals provided in tables and text due to r
Slide 41: Information related to this presentation (2/4)
UniCredit - Public END NOTES Information related to this presentation (2/4) Main definitions “Allocated capital” calculated as 13.0% of RWA plus deductions “Clients” means those clients that made at least one transaction in the last three months “Cost of risk” based on reclassified P&L and Balance s
Slide 42: Information related to this presentation (3/4)
UniCredit - Public END NOTES Information related to this presentation (3/4) Main definitions “Gross NPEs” Loan to customers non performing exposures before deduction of provisions, comprising bad loans, unlikely to pay, and past due (including active repos, excluding debt securities and IFRS5 reclas
Slide 43: Information related to this presentation (4/4)
UniCredit - Public END NOTES Information related to this presentation (4/4) Main definitions “PD scenario” Impacts deriving from probability of default scenario, including rating dynamics “RoAC” annualized ratio between (i) Net profit after AT1/Cashes minus excess capital charge (where applicable) a
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