Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Investor Day (December 2023)
62 slides from Banco Bpm Spa's investor day presentation, Dec 12, 2023
Slide 1: Banco BPM 2023-26: A Solid Success Story
Banco BPM 2023-26: A Solid Success Story Strongly committed team, ready to deliver Superior Shareholder Value Sustainable Banking, proudly supporting the Italian Economy 12 December 2023
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Banco BPM ("Banco BPM") and includes certain forward looking statements, projections, objectives and estimates reflecting the current views of the management of the Bank with respect to future events. Forward-looking statements are statements that ar
Slide 3: Agenda
Banco BPM 2023-26: a Solid Success Story AGENDA Page Distinctive Strengths & Performance Track Record 5 2023-26 Strategic Plan Financials 13 Performance Acceleration Program 27 Closing Remarks 56 Appendix 58 3
Slide 4: Strategic plan at a glance
STRATEGIC PLAN AT A GLANCE Accelerated profitability & sustainable value creation ~€6bn €4bn >€1.5bn ~13.5% ~14% Cumulative Net Total Shareholder Net Income RoTE CET1 Income 2023-26 remuneration 2023-26 2026 2026 2026 The seven pillars of our Acceleration Program 1 Broaden leadership in 2 Reinforce
Slide 5: Distinctive Strengths & Performance Track Record
Distinctive Strengths & Performance Track Record
Slide 6: A plan based on solid foundations
A plan based on solid foundations HIGH VALUE FRANCHISE PROVEN PROFITABILITY TRACK RECORD & EFFECTIVE BUSINESS MODEL & BALANCE SHEET SOLIDITY ❑ Optimal geographic footprint ❑ Solid and sustainable pace of growth Market share by Customer loans in 12.8% 78.1% branches in Lombardy1 Northern Italy & >2
Slide 7: Optimal geographic presence: at the core of the Italian economy
Optimal geographic presence: at the core of the Italian economy STRONG FRANCHISE BBPM TERRITORIAL FOOTPRINT Leadership in Italy's richest regions Clients: 3.8 million Market share by branches1 Lombardy Veneto Piedmont # Retail Branches: 1,358 12.8% 7.9% 9.7% 7% National Market Share (9.3% in the Nor
Slide 8: Specialized banks & product factories: strategic growth engines
Specialized banks & product factories: strategic growth engines SPECIALIZED BANKS #1 in fixed income, top Italian broker, market INVESTMENT BANKING maker and issuer of structured products Ability to provide Full ownership a full range of banking PRIVATE BANKING & WEALTH One of the primary private ba
Slide 9: A successful 7-year journey increasing profitability and solidity
A successful 7-year journey increasing profitability and solidity 2017 – 2019 2020 – 2021 2022 – 2023 TRANSFORMATIONAL RESTRUCTURING BUSINESS MODEL AND CAPITAL PROFITABILITY AND VALUE CREATION • FORMER BANKS’ IT, ORGANISATIONAL AND PROFILE CONSOLIDATION • STRATEGIC AMBITIONS’ ENHANCEMENT COMMERCIAL
Slide 10: Previous Plan targets for 2024 over-achieved 1 year in advance
Previous Plan targets for 2024 over-achieved 1 year in advance TOTAL REVENUES NET INCOME ROTE1 €m Previous Plan €m Previous Plan Previous Plan 4.7 ~5.25 ~12% 4.5 ~4.3 ~4.6 >1,200 ~1,050 >9% ~740 7.0% ~7% 569 685 5.5% FY 2021 FY 2022 FY 2023 FY 2023 FY 2024 FY 2021 FY 2022 FY 2023 FY 2023 FY 2024 FY
Slide 11: Continuing our path of Digital & Sustainability integration
Successfully continuing our path of Digital & Sustainability integration DIGITAL BANKING SUSTAINABILITY BUSINESS OWN ENVIRONMENTAL IMPACT # BRANCH AND APP-BASED TRANSACTIONS (M) NZBA joined in Q1 23 → 5 priority Net Scope 1 & 2 emissions Market-based -54% Branch-based APP-based sectors identified2 i
Slide 12: Best share price performance since merger, yet still room for growth
Best share price performance since merger, yet still room for growth TOP 30 EU BANKS – SHARE PRICE PERFORMANCE P/E2: SIGNIFICANT GAP VS. LONG-TERM AVERAGE JAN 2017 / NOV 20231 3 30 BBPM average 9.7x Peers’ average 8.6x 5.9x Spot (November 30th) Notes: 1. Share price performance over the period 01.01
Slide 13: 2023-26 Strategic Plan Financials
2023-26 Strategic Plan Financials
Slide 14: Main underlying macro-economic assumptions
Main underlying macro-economic assumptions GDP REAL GROWTH CONSUMER PRICE INDEX SHORT-TERM RATES (YOY %) (YOY %) (YEARLY AVERAGE) Avg. ‘23-’25: 4% today1 0.7% (-0.2 p.p. vs. Eurostat) EMU EMU Notes: 1. Rate as of 08.12.2023 Sources: Eurostat (2019-2022); Prometeia (2023-2026). 14
Slide 15: Key opportunities from current market conditions
Key opportunities from current market conditions CURRENT NII LEVEL ACHIEVED ALSO IN ENHANCED CREDIT STANDARDS SYSTEMIC CHARGES PHASING-OUT LOWER INTEREST RATE CONTEXT PREVENTING MAJOR DETERIORATION Top Italian Banks by assets1 • Today’s point of departure is stronger than Top Italian Banks by assets
Slide 16: Raised P&L ambitions leading to top-level shareholder remuneration
Raised P&L ambitions leading to top-level shareholder remuneration Previous Plan: 2024 Targets New Plan: 2026 Targets ~€4.6bn ~53% 48bps ~€5.4bn <50% ~45bps Total Cost Cost of Total Cost Cost of €4BN Income Revenues Income Risk Revenues Risk SHAREHOLDER REMUNERATION 4.8% ~€1.05bn ~3.0% >€1.5bn ~13.5
Slide 17: Volumes: back to loan growth, acceleration on indirect funding
Volumes: back to loan growth, acceleration on indirect funding CAGR 9M 2023-26 CORE NET PERF. CUSTOMER LOANS C/A & CUSTOMER DEPOSITS INDIRECT FUNDING € bn € bn € bn +1% ~0% +6% 103.7 100.5 ~100 >120 102.8 99.1 ~102 0.3 100.0 0.3 >9 91.3 39.7 ~50 AUC 31.9 103.4 100.1 >90 AUM 59.4 60.3 >70 YE 2022 30/
Slide 18: P&L: targets to build further on our current growth trajectory
P&L: targets to build further on our current growth trajectory TOTAL REVENUES NET INCOME € bn € bn >1.5 4.7 ~5.25 ~5.4 >1.2 4.5 0.7 0.6 2021 2022 2023E 2026 2021 2022 2023G 2026 O/w Key Product Factories ROTE2 5.5% 7.0% ~12% ~13.5% ~€0.8bn1 ~€1.18bn1 Bancass. Life Bancass. P&C PayCo 2023E 2026 COST
Slide 19: NII and Cost headwinds over-compensated by Fees and Associates
NII and Cost headwinds over-compensated by Fees and Associates PRE-PROVISION INCOME 2023E-2026, €bn Lower contribution from NII: Increasing funding costs partially offset by active ALM strategies (replicating portfolio) Increase in Net Fees & Commissions: Core Revenues Strengthening commercial effec
Slide 20: NII and Net Commissions: main evolution drivers
NII and Net Commissions: main evolution drivers COMPENSATING NII REDUCTION… … WITH HIGHER NET COMMISSIONS 2023G-2026, €bn 2023E-2026, €bn ~3.25 -0.1 -0.25 +0.15 ~3.05 +0.2 -0.1 >2.1 >1.8 +0.2 2023E WM and Lending- Synthetic 2026 other key related, IB, cash Sec. & phase- product management out of fac
Slide 21: Income from Life Insurance and Associates: main drivers
Income from Life Insurance and Associates: main drivers INCOME FROM CONSOLIDATED (LIFE) INSURANCE INCOME FROM ASSOCIATES Contribution to Revenues Bancass. Life Contribution to Revenues 2023E-2026, €bn 2023E-2026, €bn ~+0.07 ~0.15 ~0.18 >0.12 ~+0.03 ~0.05 2023E 2026 • More volumes for higher share of
Slide 22: Costs: further efficiencies to offset inflation and increase in investments
Costs: further efficiencies to offset inflation and increase in investments COST EVOLUTION DETAILS 2023E-2026, €bn ~2.6 +0.16 -0.07 -0.09 +0.08 ~2.7 o/w: €50m 2023 impact from renewal of National Labour Contract 2023E Inflation and impact Network Lean operating Impact of Acceleration 2026 from new N
Slide 23: IT investment boost led by tech upgrade and digital innovation
IT investment boost led by tech upgrade and digital innovation IT INVESTMENTS KEY INVESTMENT AREAS Cum. 2024-26 vs. Cum. 2021-23, €m Digital tools for RMs (e.g., WM advisory platform) +20% Omnichannel solutions for customer management Supporting ESG strategy Advanced Analytics into credit processes
Slide 24: Distinctive track record in Asset Quality & Cost of Risk
Distinctive track record in Asset Quality & Cost of Risk IMPROVEMENT OF CREDIT RISK PROFILE CONFIRMED COST OF RISK 268 HISTORICAL PERFORMANCE in bps DRIVERS: • Enhanced loan portfolio GROSS NPE RATIO 24.1% quality (EoP data) • Proactive credit management 81 • Material de-risking 62 performed 47 ~45
Slide 25: Capital position not affected by increased shareholder remuneration
Capital position not affected by increased shareholder remuneration CET1 RATIO EXPECTED EVOLUTION CET1 ratio Fully Loaded ~+800bps ~-580bps ~-100bps ~14.3% -35bps +5bps ~14% ~-130bps ~+40bps ~-25bps ~-5bps ~14% CET1 >13% throughout the Plan 2 1 CET1 Buffer: CET1 Buffer3: ~470 - 500 ~490 bps bps LIQU
Slide 26: Strong P&L enabling to boost shareholder remuneration
Strong P&L enabling to boost shareholder remuneration €bn DIVIDENDS IN 2024 3X SIZEABLE 2023-26 REMUNERATION NET INCOME • >50% current market cap 1 €bn • ~40% TBV (9M 2023) ~€1.3bn o/w ~€0.75bn dividends on 5X 2023 results SHAREHOLDER OUTLOOK REMUNERATION Interim dividend to be introduced in • 2024
Slide 27: Performance Acceleration Program
Performance Acceleration Program
Slide 28: The seven pillars of our Performance Acceleration Plan
The seven pillars of our Performance Acceleration Plan 1 2 3 4 5 6 7 Broaden Capture value Empower People Enhance tech leadership in SMEs Reinforce Wealth from P&C Benefit from further Further consolidate a and Communities, innovation, lean & Corporate, Management & Insurance omnichannel “future-pro
Slide 29: Further developing the integration of our Sustainability strategy
Further developing the integration of our Sustainability strategy SUSTAINABILITY AMBITIONS EMBEDDED IN THE PLAN • Supporting our clients in their transition path through advisory and commercial offering, paving the way for a Net Zero Strategy >€10bn CARBON NEUTRAL BY 2024 E • Strengthening the manag
Slide 30: SME & Corporate: a strong platform for further growth
1. Broaden leadership in SMEs & Corporate SME & Corporate: a strong platform for further growth Broaden Reinforce Wealth Capture value from Benefit from further Enhance tech Further consolidate a Empower People and leadership in SMEs & Management & Life P&C Insurance omnichannel innovation, lean “fu
Slide 31: Solid growth by 2026 to be mostly driven by Fees & Commissions
1. Broaden leadership in SMEs & Corporate Solid growth by 2026 to be mostly driven by Fees & Commissions Corporate & Investment Banking SMEs €bn, EoP €bn, EoP Loans to customers1 New lending2 New lending2 ’24-’26: ’24-’26: ~€11.3bn ~€8.3bn €m €m Core 3 revenues CAGR CAGR 2023E - 26 2023E - 26 + 5.0%
Slide 32: Corporate & Investment Banking: a tailor-made service model
1. Broaden leadership in SMEs & Corporate CIB SME Corporate & Investment Banking: a tailor-made service model A ROBUST MODEL WITH GROWTH POTENTIAL THREE MAIN PRIORITIES OF ACTION ADVANCED CUSTOMER BBPM distinctive identity in the mid- OFFER SCALE UP BROADEN LEADERSHIP SERVICE MODEL corporate market…
Slide 33: SMEs: differentiated approach based on Digital and 360° Advisory
1. Broaden leadership in SMEs & Corporate CIB SME SMEs: differentiated approach based on Digital and 360° Advisory STRATEGIC PRIORITIES AMBITION 2023-2026 % SB clients with App +€100 • New digital solutions: new App and % RMs’ effort on commercial Remote Banking enabling a best-in- class experience
Slide 34: ESG Factory for corporates and SMEs: supporting sustainable transition
1. Broaden leadership in SMEs & Corporate CIB SME ESG Factory for corporates and SMEs: supporting sustainable transition Corporate and Enterprises journey for sustainable transition 1 2 3 ESG training: increase skills and ESG advisory: identification ESG offering: support for operating awareness on
Slide 35: Wealth Mgmt: building on recent progress to further exploit our potential
2. Reinforce Wealth Management & Life Insurance Wealth Mgmt: building on recent progress to further exploit our potential Broaden Reinforce Wealth Capture value from Benefit from further Enhance tech Further consolidate a Empower People and leadership in SMEs & Management & Life P&C Insurance omnich
Slide 36: AuM growth and life insurance factory support ~€215m revenue upside
2. Reinforce Wealth Management & Life Insurance AuM growth and life insurance factory support ~€215m revenue upside TARGET ~ +€215M OF REVENUES: HOW TO REACH IT Supported by decrease in interest rates, focus is to convert into AuM 1 ~40% of AuC gathered since ’21 Delta revenues 23-26 from Wealth Man
Slide 37: Affluent: four key priorities to enable AuM growth
2. Reinforce Wealth Management & Life Insurance Affluent: four key priorities to enable AuM growth AFFLUENT SEGMENT KEY FIGURES KEY INITIATIVES PRIORITIES AND OBJECTIVES IMPROVED PENETRATION TO • Differentiated proposition for Upper LOWER END OF CLIENTS Affluent share of AuM on Total BBPM Group & Lo
Slide 38: Private: three key priorities to enable Banca Aletti further growth
2. Reinforce Wealth Management & Life Insurance Private: three key priorities to enable Banca Aletti further growth PRIVATE SEGMENT KEY FIGURES BANCA ALETTI KEY INITIATIVES PRIORITIES AND OBJECTIVES • Group Cross segment synergies POLARIZATION OF GROWTH ON INTERNAL ACTIONS empowerment and extension
Slide 39: ~+€95m revenues from deals in P&C Insurance and Payments
3. Capture value from P&C Insurance and Payments’ deals ~+€95m revenues from deals in P&C Insurance and Payments Broaden Reinforce Wealth Capture value from Benefit from further Enhance tech Further consolidate a Empower People and leadership in SMEs & Management & Life P&C Insurance omnichannel inn
Slide 40: Expected growth in Payments mainly driven by market dynamics
3. Capture value from P&C Insurance and Payments’ deals Expected growth in Payments mainly driven by market dynamics EXPECTED PAYMENTS FEES GROWTH BY DRIVER INITIATIVES DETAILS Delta fees 2023-26 from Payments Product penetration Cross-sell / Up-sell initiatives initiatives Avg. GDP + Inflation ~3%
Slide 41: P&C proposition to leverage on best-in class partnership with CAA
3. Capture value from P&C Insurance and Payments’ deals P&C proposition to leverage on best-in class partnership with CAA EXPECTED GROWTH OF P&C FEES BY DRIVER INITIATIVES DETAILS 1. Commercial focus is delivering early results Daily Average premiums for Standalone Delta fees 2023-26 from Bancassura
Slide 42: Fostering clients' proximity with empowered omnichannel approach
4. Benefit from further omnichannel reinforcement Fostering clients’ proximity with empowered omnichannel approach Broaden Reinforce Wealth Capture value from Benefit from further Enhance tech Further consolidate a Empower People and leadership in SMEs & Management & Life P&C Insurance omnichannel i
Slide 43: Leading edge ambition on current omnichannel initiatives
4. Benefit from further omnichannel reinforcement Leading edge ambition on current omnichannel initiatives ~ € 7 0 m expected cost saving Omnichannel 1 Digital client activation program 2 3 Network transformation 2.0 advisory transformation • Extension of self / digital product offering • Extension
Slide 44: Acceleration of customer acquisition to sustain deposit volumes
4. Benefit from further omnichannel reinforcement Acceleration of customer acquisition to sustain deposit volumes ROOM TO IMPROVE ACQUISITION MAIN PRIORITIES TO REVAMP ACQUISITION RATE 4 RATE (ALSO LEVERAGING WEBANK) AND DEFEND CURRENT LEVEL OF DEPOSITS Acquisition rate RETAIL ACQUISITION PROGRAM UP
Slide 45: IT platform: a new journey based on four key priorities
5. Enhance tech innovation, lean banking, Cybersecurity IT platform: a new journey based on four key priorities Broaden Reinforce Wealth Capture value from Benefit from further Enhance tech Further consolidate a Empower People and leadership in SMEs & Management & Life P&C Insurance omnichannel inno
Slide 46: Higher IT investments with an improved mix towards transformation
5. Enhance tech innovation, lean banking, Cybersecurity Higher IT investments with an improved “mix” towards transformation Investing more and better while becoming Aiming to enable mid- benefits: +20% IT €600m ~€500m term faster, more efficient, secure & resilient investments 2021-23 2024-26 SHIFT
Slide 47: AI @ Scale to transform our way of doing business
5. Enhance tech innovation, lean banking, Cybersecurity AI @ Scale to transform our way of doing business Pushing innovation throughout the Group leveraging on Advanced Analytics, Machine Learning & Generative AI with a Group value-driven strategy Higher commercial Improved Better productivity effic
Slide 48: Operations efficiency, cost control, lean banking, greener footprint
5. Enhance tech innovation, lean banking, Cybersecurity Operations efficiency, cost control, lean banking, greener footprint KEY INITIATIVES BENEFITS • Vendor & contract optimization 15% ICT • Technical improvements e.g., consumption reductions, outdated hardware decommission, … Cash out savings vs.
Slide 49: Distinctive track-record and future-ready credit-machine
6. Further consolidate a “future-proof” balance sheet Distinctive track-record and future-ready “credit-machine” Broaden Reinforce Wealth Capture value from Benefit from further Enhance tech Further consolidate a Empower People and leadership in SMEs & Management & Life P&C Insurance omnichannel inn
Slide 50: Increasing effort and performance on pre-default and prevention
6. Further consolidate a “future-proof” balance sheet Increasing effort and performance on pre-default and prevention END-TO-END STRENGTHENING IN CREDIT LIFECYCLE MANAGEMENT AMBITIONS Improved recovery performance and Reinforcement of credit granting, default prevention Gross NPE ratio extra workout
Slide 51: Optimization of funding strategy and securities portfolio
6. Further consolidate a “future-proof” balance sheet Optimization of funding strategy and securities portfolio STARTING POINT AND STRATEGIC PRIORITIES ESG FOCUS • Leadership among Italian Banks ECB funding Investment Grade issuer status as issuer of Green, Social & Sustainable Bonds (1st green issu
Slide 52: A comprehensive plan to empower our People
7. Empower People and Communities A comprehensive plan to empower our People Broaden Reinforce Wealth Capture value from Benefit from further Enhance tech Further consolidate a Empower People and leadership in SMEs & Management & Life P&C Insurance omnichannel innovation, lean “future-proof” Communi
Slide 53: Academy to enhance skills, commitment for better work-life balance
7. Empower People and Communities Academy to enhance skills, commitment for better work-life balance Previous Plan 2023-2026 Plan Sessions of Training for inclusion & professional growth of young people virtual classes NEW in the Company TRAINING Management training programs aimed at spreading a ACA
Slide 54: Promoting generational turnover and talent management
7. Empower People and Communities Promoting generational turnover and talent management 2023-2026 Plan Personalized paths Generational Professional Women talent for young hires with Young talents change retraining program empowerment high potential • Around 800 new • 12 months of training • 30% role
Slide 55: Keeping up our commitment to support Communities
7. Empower People and Communities Keeping up our commitment to support Communities Project Horizon Schools, students and Financial education and Contributions and Volunteering initiatives Social lending community initiatives ESG engagement donations • Renewal of BBPM project • Investments in • Invol
Slide 56: Closing Remarks
Closing Remarks
Slide 57: Cumulatively ~€6bn of Net Income and €4bn of remuneration
Cumulatively ~€6bn of Net Income and €4bn of remuneration EPS GUIDANCE >0.8€ FY 2023 «Core» Revenues1 2022 2023G 2026 ~0.9€ FY 20243 Total Revenues (€bn) 4.7 ~5.25 ~5.4 CONFIRMED o/w NII (€bn) 2.3 ~3.25 ~3.05 • €4bn total o/w “Core” Non-interest income (€bn) 2.0 ~2.0 ~2.4 shareholder Non-interest in
Slide 58: Appendix
Appendix
Slide 59: Key financial targets of the Strategic Plan 2023-26
Key financial targets of the Strategic Plan 2023-26 €bn 2022 2023G 2026 Total revenues 4.7 ~5.25 ~5.4 o/w NII 2.3 ~3.25 ~3.05 Profit o/w “Core” Non-interest income1 2.0 ~2.0 ~2.4 & Loss Operating costs -2.5 ~2.6 ~2.7 Pre-Provision Income 2.1 ~2.65 ~2.75 Net income 0.7 >1.2 >1.5 Cost / Income ratio 5
Slide 60: Detailed ESG Highlights of the Strategic Plan 2023-26
Detailed ESG Highlights of the Strategic Plan 2023-26 BUSINESS OWN ENVIRONMENTAL IMPACT Scope 1 & 2 To improve to Green & Low Transition risk new lending to >€10bn <480K in 2026 (-20% vs. 2022) Corporate & Enterprises1 Avg. p.y. 2024-261 consumptions (Gigajoule) ~440K in 2030 Net emissions Scope Car
Slide 61: ESG Action Plan: further strengthening our Sustainability Governance
ESG Action Plan: further strengthening our Sustainability Governance ESG ACTION PLAN Structure & Governance of the ESG Action Plan Details: ESCALATION AT BOARD LEVEL: • Launched in Q3 2023, to be fully developed in the Plan period ESG COMMITTEE ESG Action Plan proposals and projects are overseen als
Slide 62: 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