Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — H1 2022 Earnings Presentation
43 slides from Banco Bpm Spa's earnings presentation, Aug 3, 2022
Slide 1: H1 2022 Group Results Presentation
H1 2022 Group Results Presentation 03 August 2022
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Banco BPM ("Banco BPM"); for the purposes of this notice, "presentation" means this document, any oral presentation, any question and answer session and any written or oral material discussed following the distribution of this document. The distribut
Slide 3: Methodological Notes
Methodological Notes ▪ With regard to the reclassified statement of financial position, please note that some comparative balances have been reclassified compared to what had been originally published, in order to reflect the changes in layout and preparation criteria introduced by update 7 of Circu
Slide 4: Agenda
Agenda 1 Executive Summary 5 2 Key Highlights 11 3 H1 2022 Performance Details 24 4
Slide 5: Executive Summary
Executive Summary 1
Slide 6: Excellent achievements in a difficult operating environment
Excellent achievements in a difficult operating environment… Adjusted Net Income at record level in H1 2022 Sound volume growth, with further improvement in Asset Quality Ample Capital buffers ROBUST ONGOING SUPPORT TO FURTHER IMPROVEMENT SOUND CAPITAL & PROFITABILITY ITALIAN REAL ECONOMY IN ASSET Q
Slide 7: Well positioned to benefit from strong potential NII boost
… well positioned to benefit from strong potential NII boost to face the uncertain scenario Solid and safe business profile… …geared to benefit significantly from interest rate hikes 30/06/2019 30/06/2021 30/06/2022 INTEREST RATE (EURIBOR 3M) ▪ PROFITABILITY (pre-pandemic) H1 2022 Evolution3 Forward
Slide 8: Solid quarterly progression confirms Strategic Plan trajectory
Solid quarterly progression confirms Strategic Plan trajectory Additional benefit from new interest rate scenario NOT embedded in Strategic Plan assumptions «Core» Revenues1 Operating costs €m +0.9% €m +0.5% Plan trajectory Plan trajectory +1.4% +1.2% 1,046 1,041 1,056 ~1,020 ~1,100 629 632 625 ~610
Slide 9: Asset Quality KPIs: Already ahead of the 2024 Strategic Plan Target
Asset Quality KPIs: Already ahead of the 2024 Strategic Plan Target Further increase in derisking target over the Plan horizon NPE stock down by €1.6bn Y/Y: -22.3% Gross NPE Ratio down to 4.8%: -1.4p.p. Y/Y GBV, € bn 3.6% 7.1 (EBA definition)1 6.4 6.3 5.5 ~6.0 6.2% 5.6% 5.5% UTP + PD 4.8% 4.8% UTP +
Slide 10: Bancassurance: update on business model evolution
Bancassurance: update on business model evolution Strategic Plan – base case: Strategic Plan – optionalities: Internalization of the Insurance business New partnerships • Following the authorization from IVASS, Banco BPM • Non-binding offers on Insurance JVs completed the acquisition from Covea of 8
Slide 11: Key Highlights
Key Highlights 2
Slide 12: H1 results at record level: Adj. Net Income at €497m
H1 results at record level: Adj. Net Income at €497m P&L (+30.1% Y/Y) €m Q1 2022 Q2 2022 Chg. Q/Q H1 2021 H1 2022 Chg. H/H Net interest income 512 528 1,019 1,039 Net fee and commission 480 487 950 967 Income from associates 50 41 98 91 Core revenues 1,041 1,056 1.4% 2,067 2,097 1.4% Net financial r
Slide 13: Net interest income
Net interest income Half-yearly trend Quarterly trend Strong tailwinds arising from NII sensitivity €m +2.0% €m ▪ Δ NII ANNUALISED as of 30/06/20221 1,019.2 1,039.1 Parallel End-July 2022: ECB raised depo facility rate from -0.5% to 0% shift +3.1% €m 527.6 o/w: ~€100m 511.5 +50 bps 220 set to be rea
Slide 14: Fees & Commissions
Fees & Commissions Half-yearly trend Quarterly trend Solid performance €m +1.8% €m in Net Fees & Commissions 950.1 966.9 +1.4% 486.8 -2.0% 477.1 ▪ Supporting trend in new lending 480.1 486.8 and payment-related services 239.0 -0.3% 238.2 confirming the effectiveness of our 463.3 +5.7% 489.7 business
Slide 15: Operating costs
Operating costs Half-yearly trend -2.6% H/H Quarterly trend (excl. Covid-related savings in H1 2021) €m -1.5% €m Other 1,275.5 1,256.7 Other +1.2% +2.8% 624.7 632.1 Staff Costs 431.5 443.5 216.8 226.7 +4.6% Staff Including €14.4m -3.7% Covid-related 844.0 813.2 Costs 407.9 405.3 -0.6% savings in Q2
Slide 16: Cost of Risk reduction consistent with solid credit profile
Cost of Risk reduction consistent with solid credit profile LLPs Cost of Risk (bps) €m 55bps (35bps «Core») -35.7% 255.5 +0.9% H1 22 annualised 472.6 217.1 151.1 152.6 81 303.7 54 55 48 Q1 21 Q2 21 Q1 22 Q2 22 FY 2021 Q1 2022 Q2 2022 FY 2024 H1 21 H1 22 Includes €80.4m for the frontloading annualise
Slide 17: NPE evolution in H1 2022
NPE evolution in H1 2022 Another significant step ahead in derisking: NPE stock down to €5.5bn NPE Stock down by €1.6bn Y/Y, o/w: €0.9bn in H1 2022 Coverage ratios GBV in € bn -22.3% Strong coverage ratios confirmed, even after Argo transaction PD 7.1 -12.3% 6.4 6.3 0.11 5.5 Coverage ratios indicate
Slide 18: Optimization and higher diversification of Debt securities portfolio
Optimization and higher diversification of Debt securities portfolio Italian Govies: reduction in the share on total Govies and mostly concentrated in AC Debt securities portfolio: accounting classification Debt securities portfolio: composition by counterparty € bn 31/12/16 30/06/21 31/12/21 31/03/
Slide 19: Debt securities portfolio: sound contribution to NFR and low impact from Italian Govies
Debt securities portfolio: sound contribution to NFR and low impact from Italian Govies Reserves of debt securities at FVOCI NFR Trend of FVOCI-related €m reserves mitigated by Post-tax €m sound contribution to 46 128 Includes NFR of FVOCI-related 31/03/22 30/06/22 negative impact 49 from Nexi: comp
Slide 20: Strong liquidity and funding position
Strong liquidity and funding position Main Liquidity & Funding indicators at a glance LCR >190% 209% 206% 208% • NSFR >100%, in line with the Strategic Plan >180% >165% 2021-2024 target • Liquidity1 at €45.1bn 31/12/16 31/12/19 31/12/20 31/12/21 31/03/22 30/06/22 Successful issuance activity: €1.75b
Slide 21: Robust capital position and buffers, notwithstanding FVOCI impact
Robust capital position and buffers, notwithstanding FVOCI impact Fully Loaded CET1 Ratio: evolution Impact to be progressively absorbed by 2024 thanks % to “pull-to-par” effect2 +36bps 14.0 3 12.9 13.1 -21bps ~1bp 13.3 -54bps 12.8 30/06/2021 31/03/2022 Q2 performance Dividends 1 Other (including 30
Slide 22: Final remarks
Final remarks Strong operating performance ❑ ADJUSTED NET INCOME AT RECORD LEVEL: €497m in H1 2022 ❑ GROWTH IN CORE REVENUES: €2,097m +1.4% H/H ❑ SOLID PRE-TAX PROFIT: €688m +30.8% H/H ❑ C/I RATIO DOWN TO 54.5% in H1 2022 (54.9% in H1 2021) Excellent results in H1 2022 in a ❑ LLPs DOWN TO €304m in H
Slide 23: FY 2022 Outlook
FY 2022 Outlook In the current scenario, NII sensitivity is the catalyst to support revenues and to create room to offset a potential deterioration in macroeconomic conditions Total Revenues Operating Costs Pre-Provision Profit >€4.4bn ~€2.5bn >€1.9bn Cost of Risk EPS & Payout Capital 55/60 bps EPS:
Slide 24: H1 2022 Performance Details
H1 2022 Performance Details 3
Slide 25: Quarterly P&L results
Quarterly P&L results Reclassified income statement (€m) Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Chg. Q/Q Chg. Q/Q % Net interest income 496.8 522.4 516.4 506.0 511.5 527.6 16.0 3.1% Income (loss) from invest. in associates carried at equity 41.5 56.5 46.8 87.1 49.6 41.5 -8.2 -16.5% Net interest, divide
Slide 26: H1 2022 stated and adjusted comparison
H1 2022 stated and adjusted comparison Chg. H/H H1 21 H1 22 Chg. H/H Reclassified income statement (€m) H1 21 H1 22 % adjusted adjusted % Net interest income 1,019.2 1,039.1 2.0% 1,019.2 1,039.1 2.0% Income (loss) from invest. in associates carried at equity 98.1 91.1 -7.1% 98.1 91.1 -7.1% Net inter
Slide 27: P&L: H1 2022 stated and adjusted comparison with one-off details
P&L: H1 2022 stated and adjusted comparison with one-off details H1 2022 Reclassified income statement (€m) H1 2022 One-off Non-recurring items adjusted Net interest income 1,039.1 1,039.1 0.0 Income (loss) from invest. in associates carried at equity 91.1 91.1 0.0 Net interest, dividend and similar
Slide 28: Reclassified Balance Sheet as at 30/06/2022
Reclassified Balance Sheet as at 30/06/2022 Chg. y/y Chg. YTD Chg. q/q Reclassified assets (€ m) 30/06/21 31/12/21 31/03/22 30/06/22 Value % Value % Value % Cash and cash equivalents 21,258 29,153 32,077 33,109 11,852 55.8% 3,956 13.6% 1,033 3.2% Loans and advances measured at AC 117,409 121,261 119
Slide 29: New lending at €13.7bn in H1 2022: +13.5% Y/Y
New lending at €13.7bn in H1 2022: +13.5% Y/Y New lending at €7.0bn in Q2 2022, +4.8% Q/Q New lending1: trend and composition Management data • New lending to Households € bn 7.0 + 0.5% Q/Q and +1.4% Y/Y 6.3 6.7 5.8 5.8 1.1 • Strong performance of new Households 1.1 4.8 1.1 1.0 1.1 lending to Enterp
Slide 30: Direct funding
Direct funding Direct customer funding1 (without Repos) € bn +3.1% +0.2% 122.6 123.2 126.1 126.4 Capital-protected Certificates Other Bonds 106.0 106.7 104.0 Time deposits 103.0 C/A & Sight deposits (84.0%) (84.5%) (84.0%) (84.5%) (% Share on total) 30/06/2021 31/12/2021 31/03/2022 30/06/2022 30/06/
Slide 31: Bond maturities: limited and manageable amounts
Bond maturities: limited and manageable amounts Institutional bond maturities Retail bond maturities € bn € bn €2.36bn reimbursed in H1 2022 1.91 1.50 1.40 0.50 0.50 0.51 0.0 0.0 H2 2022 FY 2023 FY 2024 H2 2022 FY 2023 FY 2024 Senior Pref. Subordinated Covered Bonds 1 Senior Pref. Subordinated 2 Man
Slide 32: Liability profile: Bonds outstanding and issues
Liability profile: Bonds outstanding and issues Bonds Outstanding as at 30/06/2022 Nominal amounts Senior Preferred 12.8% Senior Cap.-Protected 4.1% Non-preferred 20.5% Certificates €18.4bn Subordinated 23.3% €4.3bn, o/w: €0.5bn not (AT1 and T2) included in Own Funds Covered Bonds1 39.3% Wholesale b
Slide 33: Indirect customer funding at €90.5bn
Indirect customer funding at €90.5bn Assets under Management (AuM) Assets under Custody (AuC)1 € bn € bn -4.9% -8.6% -5.4% 62.9 65.3 63.3 4.1 59.9 -5.0% 4.1 4.0 3.7 15.5 33.5 33.7 32.3 15.0 15.5 15.7 30.7 43.8 45.8 43.8 40.5 30/06/2021 31/12/2021 31/03/2022 30/06/2022 30/06/2021 31/12/2021 31/03/202
Slide 34: Focus on Govies portfolio
Focus on Govies portfolio Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn € bn € bn -33.7% -64.7% -55.4% -22.7% -3.1% 13.2 -8.5% 10.3 11.4 8.8 6.3 1.6 1.7 2.3 2.2 0.7 0.8 0.7 30/06/21 31/12/21 31/03/22 30/06/22 30/06/21 31/12/21 31/03/22 30/06/22 30/06/21 31/12/21 31/03/22
Slide 35: Solid liquidity position: LCR at 208% & NSFR >100%
Solid liquidity position: LCR at 208% & NSFR >100% as at 30/06/2022 Cash + Unencumbered Assets1 € bn Further liquid assets: 44.0 45.1 ~€2.3bn HQLA lent2 44.2 Eligible Assets 3.1 2.9 3.9 €6.2bn average 5.1 6.5 8.9 amount in H1 2022 Excess ECB deposits 31.0 32.0 €30.2bn average Depo Facilities (O/N) w
Slide 36: Net Customer Loans
Net Customer Loans Satisfactory increase in Performing Loans Net Customer Loans1 € bn +1.3% Change Net Performing Customer Loans 30/06/21 31/12/21 31/03/22 30/06/22 In % y/y In % YTD In % q/q -0.1% Core customer loans 99.8 99.5 101.3 102.8 3.0% 3.4% 1.5% 109,4 109.4 110.9 110.8 - Medium/Long-Term lo
Slide 37: Analysis of Performing loan portfolio
Analysis of Performing loan portfolio Performing customer loan breakdown as at 30/06/2022 Staging evolution of Performing Loans Management GBV in € bn Other (Public Sector, 108.4 data, GBV 106.1 106.6 108.2 No-Profit, etc.) GACS Senior Notes 5.0% 10.7% 11.0% 10.7% 10.4% 2.0% Financials 1 8.3% €108.4
Slide 38: Asset Quality details
Asset Quality details Loans to Customers at AC1 Gross exposures 30/06/2021 31/12/2021 31/03/2022 30/06/2022 Chg. y/y Chg. YTD Chg. q/q €/m and % Value % Value % Value % Bad Loans 2,123 2,190 2,226 1,996 -127 -6.0% -195 -8.9% -230 -10.3% UTP 4,825 4,126 3,974 3,405 -1,420 -29.4% -721 -17.5% -569 -14.
Slide 39: NPE flows
NPE flows Positive migration trends confirmed Inflows from Performing to NPEs Outflows from NPEs to Perf. Loans Flows from UTP to Bad Loans €m €m €m -13.0% +148.0% +41.0% 556 484 98 295 110 209 39 446 H1 2021 H1 2022 H1 2021 H1 2022 H1 2021 H1 2022 Impact from New DoD FTA 3. H1 2022 Performance Deta
Slide 40: Capital position in detail
Capital position in detail PHASED I N CAPI TAL PHASED I N 30/06/2021 31/12/2021 31/03/2022 30/06/2022 POSI TI ON (€/m and %) RWA COMPOSI TI ON 30/06/2021 31/12/2021 31/03/2022 30/06/2022 CET 1 Capital 9,676 9,387 9,011 8,884 (€/bn) T1 Capital 10,853 10,564 10,104 10,275 Total Capital 12,921 12,524 1
Slide 41: Strong development of digital banking
Strong development of digital banking Digital adoption: ongoing growth % of Remote-based transaction (of which Mobile) # Customers enrolled in Digital Identity1 Banking APP Users & 2019 74% (7%) 2019 - customer Q4 2021 83% (17%) 31/12/2021 386 K reviews2 Q1 2022 84% (19%) 31/03/2022 521 K INDIVIDUAL
Slide 42: ESG integration: Key results & selected KPIs
ESG integration: Key results & selected KPIs KEY ACHIEVEMENTS OF THE BUSINESS KPI ESG ACTION PLAN Green New Lending in H1 20221 €4.6bn • First Climate Stress Test exercise coordinated by the ECB successfully completed in 2022: Bonds issued under the ESG bond framework (stock as at 30/06/22) €1.25bn
Slide 43: Contacts for Investors and Financial Analysts
Contacts for Investors and Financial Analysts Roberto Peronaglio Banco BPM +39 02 9477.2090 Registered Offices: Piazza Meda 4, I-20121 Milano, Italy Tom Lucassen +39 045 867.5537 Corporate Offices: Piazza Nogara 2, I-37121 Verona, Italy Arne Riscassi +39 02 9477.2091 Silvia Leoni +39 045 867.5613 in
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