Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — FY 2021 Earnings Presentation
46 slides from Banco Bpm Spa's earnings presentation, Feb 8, 2022
Slide 1: FY 2021 Group Results Presentation
FY 2021 Group Results Presentation Guidance overdelivered - Full confidence in achieving the Strategic Plan Targets 8 February 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 ▪ Before 30/09/2020, the impact from the change in own credit risk on certificates classified as financial liabilities measured at fair value through profit or loss was accounted under the item “Net Financial Results” of the Reclassified P&L scheme. Starting from 30/09/2020, thi
Slide 4: Agenda
Agenda 1. Executive Summary 4 2. Key Highlights 11 3. FY 2021 Performance Details 25 FY 2021 Group Results Presentation 4
Slide 5: Proposed Dividend: €19 Cents
PROPOSED DIVIDEND: €19 CENTS DIVIDEND PAYOUT AT 50%: ABOVE STRATEGIC PLAN TARGETS ADJUSTED NET PROFIT: €710M, WITH A ROTE OF 6.9%1 EPS AT €38 CENTS DIVIDEND PROPOSAL FY 2021 RESULTS ABOVE GUIDANCE SAFE RISK PROFILE WITH SOUND CAPITAL DIVIDEND PAYOUT: 50% PROFITABILITY FURTHER IMPROVEMENT IN POSITION
Slide 6: 2021 Guidance: Overdelivered
€m 2021 GUIDANCE: OVERDELIVERED TOTAL REVENUES PRE-PROVISION INCOME CAPITAL +8.6% Y/Y +15.9% Y/Y CET 1 RATIO FL +17bps 4,152 4,511 ~4.4bn 1,995 1,722 ~1.9bn 13.3% 13.4% ~13% 2020 Stated 2021 Stated 2021 2020 Stated 2021 Stated 2021 2020 2021 2021 Guidance Guidance Guidance Adjusted Adjusted Adjusted
Slide 7: Overperforming Pre-Pandemic Results, Full Confidence in Achieving Plan Targets
OVERPERFORMING PRE-PANDEMIC RESULTS FULL CONFIDENCE IN ACHIEVING PLAN TARGETS €m Selected KPIs TOTAL REVENUES ~€4.6BN 4,345 4,152 4,469 ~€4.3BN € bn 2023 2024 2019 2020 2021 TARGET TARGET 2019 Adj. 2020 Adj. 2021 Adj. 2023E 2024E INVESTMENT PRODUCT 14.1 13.0 18.2 ~19.0 ~19.6 3,771 3,646 3,953 ~€3.9B
Slide 8: Strong Improvement in Asset Quality, Ahead of Targets
STRONG IMPROVEMENT IN ASSET QUALITY, AHEAD OF TARGETS… NPE STOCK DOWN BY €23.6BN SINCE THE MERGER, EoP 2021 2016 2019 2020 WITH AN ADDITIONAL €1BN DERISKING IN THE PIPELINE GBV, € bn BAD LOAN COVERAGE 60.0% 62.5% 65.2% 67.8% UTP + PD (Including Write-offs) 30.0 ~€1bn further derisking Bad Loans expe
Slide 9: Strengthened Capital & Liquidity
… COUPLED WITH STRENGTHENED CAPITAL & LIQUIDITY CET 1 RATIO: +200BPS SINCE THE MERGER 13.3% 13.4% 2 ~14.4% 11.4% 13.0%1 OUTLOOK FROM 2025: Full Basel IV net impact estimated at around -80bps, to be phased in 8 years and progressively offset by a decrease in DTA 31/12/2016 31/12/2019 31/12/2020 31/12
Slide 10: Key Drivers of the Strategic Plan: Recent Actions
KEY DRIVERS OF THE STRATEGIC PLAN: RECENT ACTIONS BANCASSURANCE SME CENTERS DIGITAL BANKING ESG ➢ 8 Workstreams activated, ➢ First 135 Focal Points ➢ New App dedicated to ➢ Banco BPM joined the supported by industrial activated SME/Business clients UNGC1 and became a advisors launched supporter of t
Slide 11: Agenda
Agenda 1. Executive Summary 4 2. Key Highlights 11 3. FY 2021 Performance Details 25 FY 2021 Group Results Presentation 11
Slide 12: FY 2021 Well Above Guidance: Adjusted Net Income €710M
FY 2021 WELL ABOVE GUIDANCE: ADJUSTED NET INCOME AT €710M (€569M STATED) 1 P&L ADJUSTED P&L STATED €m FY 2020 FY 2021 Y/Y FY 2020 FY 2021 NET INTEREST INCOME 1,983 2,042 1,983 2,042 NET FEES & COMMISSIONS 1,664 1,911 1,664 1,911 STRONG OPERATING PERFORMANCE INCOME FROM ASSOCIATES 131 190 131 232 WIT
Slide 13: Q4 2021 Adjusted Net Income at €145M
Q4 2021 ADJUSTED NET INCOME AT €145M (€97M STATED) P&L ADJUSTED1 P&L STATED €m Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2021 NET INTEREST INC!NM E 497 522 516 506 497 522 516 506 NET FEES & COM M ISSIONS 471 479 475 486 471 479 475 486 INCOM E FROM ASSOCIATES 42 57 47 45 42 57 47 8
Slide 14: Healthy Volume Growth
HEALTHY VOLUME GROWTH € bn CAGR 19-21 Chg. 20-21 «CORE» NET PERF. CUSTOMER LOANS LOANS GUARANTEED BY THE STATE1 Performing +4.5% GBV +159.1% CAGR 21-24E +3.1% +41.0% +1.1% 98.4 99.7 99.5 109.0 18.3 91.1 2.7 17.9 13.0 31/12/19 31/12/20 30/09/21 31/12/21 31/12/19 31/12/20 30/09/21 31/12/21 2024 Target
Slide 15: Net Interest Income Growth in FY 2021
NET INTEREST INCOME GROWTH IN FY 2021 Yearly trend €2,047m excl. Quarterly trend €512m excl. -5.8m one-off -5.8m one-off €m reclassification1: +3.0% reclassification1: +3.3% Y/Y -2.0% -0.9% Q/Q 2,042 1,983 496.8 522.4 516.4 506.0 ▪ NII in Q4 affected Q/Q by: • - €5.8m one-off reclassification1 • ~-
Slide 16: Fees & Commissions
FEES & COMMISSIONS: STRONGER THAN PRE-PANDEMIC LEVEL AND +15% Y/Y CAGR 19-21 Yearly trend Quarterly trend €m €m +3.2% +2.2% Y/Y 471.4 478.7 475.3 485.8 1,794 1,911 +14.9% 1,664 239.1 247.7 226.7 225.5 866.4 787.9 939.0 +19.2% 232.3 231.0 248.6 260.3 928.1 876.0 972.2 +11.0% Q1 21 Q2 21 Q3 21 Q4 21 F
Slide 17: Operating Costs: Long-Term Downward Trend Confirmed
OPERATING COSTS: LONG-TERM DOWNWARD TREND CONFIRMED CAGR 19-21 Total Operating Costs €m -1.7% Y/Y -0.9% Y/Y Normalised1 2,604 2,430 2,516 +3.5% 908 643.9 631.6 615.6 624.7 849 848 217.0 214.5 205.8 210.7 1,697 1,581 1,668 426.9 417.1 409.8 413.9 FY 19 FY 20 FY 21 Q1 21 Q2 21 Q3 21 Q4 21 Staff costs
Slide 18: Strong Reduction in Cost of Risk
STRONG REDUCTION IN COST OF RISK “CORE” LLPs CLOSE TO LONG-TERM TARGETS STATED LLPs IN LINE WITH 2021 GUIDANCE, WITH STRONG Y/Y REDUCTION €m 1,337 -33.6% MIGRATION RATES FY 19 FY 20 FY 21 251 DEFAULT RATE 887 1.2% 1.0% 1.0% (from Performing To NPEs) 194 Adjusted LLPs 1,085 DANGER RATE 693 92 11.1% 7
Slide 19: ~€1bn of Further Derisking in Pipeline in H1 2022
~ €1BN OF FURTHER DERISKING IN PIPELINE IN H1 2022: ASSET QUALITY KPIs ALREADY AHEAD OF STRATEGIC PLAN 2024 TARGETS DERISKING TARGET IN PIPELINE FOR ABOUT €1BN1 CONSOLIDATING THE «LOW NPE BANK» STATUS € bn 4.3% EBA ~3.7% EBA definition definition 5.6% ~€1bn ~4.8% 4.8% 6.4 ~€5.4bn ~€6bn 31/12/21 Furt
Slide 20: Financial Assets, Liquidity & Funding
FINANCIAL ASSETS, LIQUIDITY & FUNDING: CONSERVATIVE STRATEGY OPTIMIZATION OF DEBT SECURITY PORTFOLIO: REDUCTION OF EXPOSURE IN IT GOVIES ITALIAN GOVIES: € bn 36.8 • Down by €6.6bn in 2021 31.6 31.2 33.9 30.7 30.2 32.9 and by €6.2bn in Q4 Debt securities 26.7 • 81% concentrated in the o/w: Italian 20
Slide 21: ESG Integration: Key Achievements in Q4 2021
ESG INTEGRATION: KEY ACHIEVEMENTS IN Q4 2021 Well on track on all 7 Workstreams of the ESG Action Plan1 ➢ Banco BPM joined the UNGC and became a supporter of the TCFD in Dec. 2021 2. Key Highlights ➢ BBPM included in the MIB ESG Index in Oct. 21 and in the Bloomberg Gender-Equality Index in Jan. 22
Slide 22: Significant Capital Generation
SIGNIFICANT CAPITAL GENERATION Strengthened capital buffers, with unchanged SREP requirements for 2022 Fully Loaded CET1 Ratio: yearly evolution Strategic Plan Target % 14.4 13.3 -95bps +143bps -49bps +18bps 13.4 PHASED-IN AT 12.3 14.7% OUTLOOK FROM 2025: Full Basel IV net impact estimated at +77bps
Slide 23: Flexibility to Increase Shareholder Remuneration
FLEXIBILITY TO INCREASE SHAREHOLDER REMUNERATION WHILE PRESERVING SOUND CAPITAL BUFFERS The confirmation of positive macro and industry trends, coupled with a successful achievement of BBPM’s Strategic Plan targets, may allow to consider a significant further increase in shareholder remuneration ASS
Slide 24: Final Remarks
FINAL REMARKS DIVIDEND DISTRIBUTION ABOVE STRATEGIC PLAN TARGETS Dividend proposal of €19 cents, with a dividend payout of 50% (vs. 40% guidance) EXCELLENT PERFORMANCE ACHIEVED IN FY 2021… • Strengthening core operating profitability: Revenues up at €4.5bn, C/I at 56%. PPI up at €2.0bn • Further imp
Slide 25: Agenda
Agenda 1. Executive Summary 4 2. Key Highlights 11 3. FY 2021 Performance Details 25 FY 2021 Group Results Presentation 25
Slide 26: P&L: FY 2021 Stated and Adjusted Comparison
P&L: FY 2021 STATED AND ADJUSTED COMPARISON Chg. Y/Y FY 20 FY21 Chg. Y/Y Reclassified income statement (€m) FY 20 FY21 % adjusted adjusted % Net interest income 1,982.6 2,041.6 3.0% 1,982.6 2,041.6 3.0% Income (loss) from invest. in associates carried at equity 130.8 231.9 77.3% 130.8 189.8 45.1% Ne
Slide 27: Adjusted P&L: Details on Non-Recurring Items
ADJUSTED P&L: DETAILS ON NON-RECURRING ITEMS Reclassified income statement (€m) FY21 FY21 adjusted One-off Non-recurring items Net interest income 2,041.6 2,041.6 0.0 Income (loss) from invest. in associates carried at equity 231.9 189.8 42.1 One-off adjustment booked by a significant associate Net
Slide 28: FY 2021 Quarterly P&L Results: Stated
FY 2021 QUARTERLY P&L RESULTS: STATED Chg. Q/Q Reclassified income statement (€m) Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Chg. Q/Q % Net interest income 474.1 479.5 519.9 509.0 496.8 522.4 516.4 506.0 -10.4 -2.0% Income (loss) from invest. in associates carried at equity 22.3 48.0 36.8 23.7
Slide 29: Net Financial Result, Reserves & Unrealised Gains
NET FINANCIAL RESULT, RESERVES & UNREALISED GAINS NFR: Yearly trend NFR: Quarterly trend €m -€67.9m €m 318.6 -€37.3m 250.7 35.9 FY 20 FY 21 -1.4 Q3 21 Q4 21 Reserves of Debt Securities at FVOCI Unrealised gains on Debt Securities at AC Pre-tax, in € m Pre-tax, in € m Not included in the P&L Included
Slide 30: Reclassified Balance Sheet as at 31/12/2021
RECLASSIFIED BALANCE SHEET AS AT 31/12/2021 Chg. y/y Chg. in Q4 Reclassified assets (€ m) 31/12/20 30/09/21 31/12/21 Value % Value % Cash and cash equivalents 9,411 20,133 29,153 19,743 209.8% 9,021 44.8% Loans and advances measured at AC 119,903 120,156 121,261 1,358 1.1% 1,105 0.9% - Loans and adv
Slide 31: 2021 New Lending Above Guidance
2021 NEW LENDING ABOVE GUIDANCE €22.7BN NEW LOANS IN 2021, BETTER THAN >€21BN GUIDANCE FOR 2021 € bn TOTAL NEW LENDING1 27.4 ▪ Strong yearly performance of new lending 3.3 22.7 to Households: +26.2% (+25.6% in Q4) 4.2 6.3 ▪ Good recovery of new lending to Households 5.8 5.8 1.0 1.1 4.8 24.1 Enterpri
Slide 32: Direct Funding
DIRECT FUNDING Direct customer funding1 (without Repos) € bn +2.5% +1.5% Capital-protected Certificates 120.1 121.4 123.2 Other Bonds +€5.5bn Y/Y Time deposits 98.5 101.4 104.0 +€2.7bn in Q4 C/A & Sight deposits (82.0%) (83.5%) (84.5%) (% Share on total) 31/12/2020 30/09/2021 31/12/2021 31/12/20 30/
Slide 33: Indirect Customer Funding at €99.1bn
INDIRECT CUSTOMER FUNDING AT €99.1BN Assets under Management (AuM) Assets under Custody (AuC)1 € bn € bn +9.6% +5.5% +2.6% 59.6 63.7 65.3 +2.4% 4.1 4.1 3.9 15.1 15.5 14.9 33.7 32.0 32.9 40.8 44.4 45.8 31/12/2020 30/09/2021 31/12/2021 31/12/2020 30/09/2021 31/12/2021 Funds & Sicav Bancassurance Manag
Slide 34: Bond Maturities: Limited and Manageable Amounts
BOND MATURITIES: LIMITED AND MANAGEABLE AMOUNTS Institutional bond maturities Retail bond maturities € bn € bn 3.85 2.50 1.91 0.105 1.40 0.50 0.50 1.25 0.0 0.0 0.51 FY 2022 FY 2023 FY 2024 FY 2022 FY 2023 FY 2024 1 Senior Pref. Subordinated Covered Bonds 2 Senior Pref. Subordinated 3 Managerial data
Slide 35: Focus on Govies Portfolio
FOCUS ON GOVIES PORTFOLIO Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn -24.4% € bn -60.2% € bn -48.3% -19.1% -59.9% 13.6 12.7 10.3 -62.0% 4.3 4.3 1.4 1.9 1.7 0.7 31/12/20 30/09/21 31/12/21 31/12/20 30/09/21 31/12/21 31/12/20 30/09/21 31/12/21 Basis Point -€2.2m -€1.3m -€
Slide 36: Liability Profile: Bonds Outstanding and Issues
LIABILITY PROFILE: BONDS OUTSTANDING AND ISSUES Bonds Outstanding as at 31/12/2021 Nominal 20.3% Cap.-Protected amounts Certificates Covered Bonds1 34.0% €17.6bn 20.5% Senior Preferred €3.7bn, o/w: €0.5bn not included in Own 4.3% Senior Funds Phased-in, but 21.0% Non-preferred representing MREL- Sub
Slide 37: Solid Liquidity Position: LCR at 209% & NSFR >100%
SOLID LIQUIDITY POSITION: LCR AT 209% & NSFR >100%1 Cash + Unencumbered Assets2 Further liquid assets: € bn ~€2bn HQLA lent3 43.2 44.2 Marketable Securities (Non ECB eligible) 37.6 3.6 4.1 2.9 Depo Facilities (O/N) with ECB 8.0 19.0 28.0 €16.4bn average 6.8 amount in FY 2021 Excess ECB deposits 8.3
Slide 38: Net Customer Loans
NET CUSTOMER LOANS Satisfactory increase in Performing Loans, with new loans granted at €22.7bn in 20211 Net Customer Loans2 € bn 109.3 108.7 109.4 4.3 3.5 3.3 -24.0% Y/Y NPE 105.0 105.3 106.1 +1.0% Y/Y Performing Loans 31/12/2020 30/09/2021 31/12/2021 CHANGE Net Performing loans in NET PERFORMING L
Slide 39: Analysis of Performing Loan Portfolio
ANALYSIS OF PERFORMING LOAN PORTFOLIO Performing customer loan (GBV) Staging evolution of breakdown as at 31/12/20211 Performing Loans Other (Public Sector, GBV in € bn No-Profit, etc.) GACS Senior Notes 105.7 106.6 17% represented by State- 105.5 5.3% 2.2% guaranteed loans with 6.8% 10.8% 11.0% Fin
Slide 40: Asset Quality Details – Loans to Customers at AC
ASSET QUALITY DETAILS – LOANS TO CUSTOMERS AT AC GROSS EXPOSURES 31/12/2020 30/09/2021 31/12/2021 Chg. y/y Chg. in Q4 €/m and % Value % Value % Bad Loans 3,578 2,148 2,190 -1,388 -38.8% 43 2.0% UTP 4,946 4,386 4,126 -820 -16.6% -260 -5.9% Past Due 62 63 60 -2 -3.7% -3 -4.8% NPE 8,586 6,596 6,376 -2,
Slide 41: NPE Evolution in 2021: Another Significant Step in Derisking
NPE EVOLUTION IN 2021: ANOTHER SIGNIFICANT STEP IN DERISKING NPE STOCK DOWN BY €2.2BN IN 2021, O/W: €0.2BN IN Q4 COVERAGE: TREND DRIVEN BY LOWER SHARE OF BAD LOANS AND HIGHER GBV in € bn -25.7% SHARE OF SECURED POSITIONS AFTER PROJECT ROCKETS -3.3% Coverage ratios 31/12/20 31/03/21 ADJ. 30/09/21 31/
Slide 42: Reassuring Trend of NPE Flows & Migration Rates
REASSURING TREND OF NPE FLOWS & MIGRATION RATES Inflows from Performing to NPEs Outflows from NPEs to Perf. Loans €m €m Up at €174m including also loans at FV 1,014 110 978 224 158 904 FY 2020 FY 2021 FY 2020 FY 2021 Impact from New DoD FTA Flows from UTP to Bad Loans €m 483 462 FY 2020 FY 2021 42 3
Slide 43: Capital Position in Detail
CAPITAL POSITION IN DETAIL PHASED IN CAPITAL PHASED IN 31/12/2020 30/09/2021 31/12/2021 POSITION (€/m and %) RWA COMPOSITION 31/12/2020 30/09/2021 31/12/2021 CET 1 Capital 9,597 9,654 9,387 (€/bn) T1 Capital 10,397 10,830 10,564 CREDIT & COUNTERPARTY Total Capital 12,304 12,782 12,524 54.9 56.0 54.1
Slide 44: ESG Action Plan: Well on Track on All 7 Workstreams (1/2)
ESG ACTION PLAN: WELL ON TRACK ON ALL 7 WORKSTREAMS (1/2) ACTIVATED WORKSTREAMS KEY ACHIEVEMENTS SO FAR • Integrate ESG-oriented roles and responsibilities within all activities ➢ ESG KPIs defined and integrated into the remuneration policy for Top Management • Integrate ESG topics into ➢ Definition
Slide 45: ESG Action Plan: Well on Track on All 7 Workstreams (2/2)
ESG ACTION PLAN: WELL ON TRACK ON ALL 7 WORKSTREAMS (2/2) ACTIVATED WORKSTREAMS KEY ACHIEVEMENTS SO FAR ➢ Green Social & Sustainable Bonds Framework: first social bond issue perfected and analysis for further • Establish a dedicated issues ESG commercial ➢ Increase of the Plafond for ESG investments
Slide 46: Contacts for Investors and Financial Analysts
CONTACTS FOR INVESTORS AND FINANCIAL ANALYSTS INVESTOR RELATIONS Roberto Peronaglio +39-02-9477.2090 Tom Lucassen +39-045-867.5537 Arne Riscassi +39-02-9477.2091 Silvia Leoni +39-045-867.5613 Carmine Padulese +39-02-9477.2092 Registered Offices: Piazza Meda 4, I-20121 Milan, Italy Corporate Offices:
Banco Bpm Societa Ord — FY 2021 Earnings Presentation on 6ix