Banca Monte Dei Paschi Di Siena S.p.a. · MIL:BMPS

Banca Monte Dei Paschi Di Siena — FY2017 Earnings Presentation

42 slides from Banca Monte Dei Paschi Di Siena's earnings presentation, Feb 9, 2018

  1. Slide 1: FY2017 and 4Q17 GMPS Preliminary Results

    FY2017 and 4Q17 GMPS Preliminary Results 9 February 2018

  2. Slide 2: Agenda

    Agenda  Executive Summary  4Q17 Results  Annexes  Details on 4Q17 Results  Commercial Strategy  Details on NPE Stock 2

  3. Slide 3: Highlights of 4Q17 Results

    Highlights of 4Q17 Results o Net loss for the quarter at EUR 502mln, which includes the recovery cost of EUR 170mln for the servicing agreement with Cerved/Quaestio, provisions for risks and charges for EUR 166mln and EUR 95mln provisions, related to events incurred in 2017, on tickets identified in

  4. Slide 4: Overview of 4Q17 and FY17 Results

    Overview of 4Q17 and FY17 Results Change Change P&L (€ /mln) 3Q17 4Q17 FY16 FY17 (QoQ%) (YoY%) 3Q17 Net Interest Income 470 415 -11.9% revenues 2,021 1,788 -11.5% include the Fees and commissions 356 363 2.1% impacts of 1,839 1,577 -14.3% burden- Total revenues 1,370 802 -41.4% sharing for 4,282 4,0

  5. Slide 5: Restructuring Plan Update (1/3)

    Restructuring Plan Update (1/3) In line with 2017: Focus on Capital Strengthening and Recovery of Direct Funding Restructuring Plan o Fully-loaded CET1 14.2% (14.5% in Sep-17) Capital strengthening* o TBV* EUR 10.1bn (10.6bn in Sep-17) o EUR 750mln subordinated Tier 2 Bonds issued in January 2018, w

  6. Slide 6: Restructuring Plan Update (2/3)

    Restructuring Plan Update (2/3) In line with 2017: Focus on Capital Strengthening and Recovery of Direct Funding Restructuring Plan o Current accounts and time deposits up by EUR 11bn since Dec-16: 2019 target for direct funding increase already reached Recovery of o Reimbursement of EUR 3bn GGBs in

  7. Slide 7: Restructuring Plan Update (3/3)

    Restructuring Plan Update (3/3) 2018: Revamping Commercial Activity Planned initiatives Strategic objectives o Focus on retail mortgages through product simplification and attractive terms: BMPS has proved to have a low default rate in this market  New retail mortgages from c. EUR o Emphasis on adv

  8. Slide 8: Agenda

    Agenda  Executive Summary  4Q17 Results  Annexes  Details on 4Q17 Results  Commercial Strategy  Details on NPE Stock 8

  9. Slide 9: Direct Funding and Liquidity

    Direct Funding and Liquidity Direct Funding (€/bn) 104.6  Current accounts and time deposits up by approx. EUR 11bn 103.0 97.8 from 2016 year-end; almost stable QoQ, despite cost of funding 4.5 9.5 8.8 reduction 23.7 18.5 18.5 25.3 12.9 8.6  Direct funding QoQ evolution :  EUR +0.9bn in current a

  10. Slide 10: Customer Loans

    Customer Loans Loans to Customers (€/bn)  Evolution of customer loans (EUR -4.6bn QoQ): 106.7 20.5 91.0 86.5  EUR -2.6bn QoQ in non-commercial components, 6.3 18.9 17.9 mainly repos (compared to a EUR 4.3bn funding repos 6.0 49.5 5.8 reduction) 47.7 8.9 46.9  EUR -2.1bn in current accounts, mortg

  11. Slide 11: Net Interest Income

    Net Interest Income Net Interest Income (€/mln)  Net interest income almost flat vs. 3Q17, net of the one-off effects -11.9% of the conversion of subordinated bonds, with cost of funding 503 470 457 446 reduction offset by the decrease in lending volumes and rates 415  Interest from NPE portfolio

  12. Slide 12: Fees and Commissions Income

    Fees and Commissions Income 4Q17 vs. 4Q17 vs. €/mln 4Q16 3Q17 4Q17 Fees (€/mln) 4Q16 3Q17 Merchant Acquiring Business Wealth Management fees, o/w 164 169 177 7. 6% 4. 4% 437 426 431 +2.1% WM Placement 63 70 72 14.4% 3.0% 23 22 23 356 363 Continuing 77 83 86 11.7% 3.8% Bond Placement 14 8 12 -17.4% 4

  13. Slide 13: Dividends and Trading Income

    Dividends and Trading Income Dividends/Income from Investments  Dividends, similar income and gains (losses) on equity (€/mln) investments equal c. EUR 32mln in 4Q17, up from 3Q17 due to the contribution by AXA, positively impacted by one-off items 32 26 22 21 11 4Q16 1Q17 2Q17 3Q17 4Q17  Trading/

  14. Slide 14: Operating Costs

    Operating Costs  Total operating costs up 3.9% QoQ, with:  Personnel expenses almost flat QoQ, with cost savings related to the Operating Costs (€/mln) 1,200 exits in November 2017 mainly offset by salary increases fixed by 692 collective labour agreements. Further benefits from the 1,800 2017 +3.

  15. Slide 15: Non-Operating Items and Taxes

    Non-Operating Items and Taxes Non-operating Items (€/mln)  Non-operating items (EUR -209mln) include: 484  EUR -166mln for provisions for risks and charges, mainly related to legal risks  EUR -35mln extraordinary costs mainly related to the bad loans platform disposal and the servicing -131 -131

  16. Slide 16: Focus on Asset Quality (1/3)

    Focus on Asset Quality (1/3) Net Loan Loss Provisions (€/mln) Cost of Risk* (bps) Extraordinary component** Extraordinary component** 4,289 Including c. EUR +124mln 554 526 585 write-back 2,445 related to 419 of which: 75 bps securitisation related to the NPE inflows 120 from 308 552 175 177 147 119

  17. Slide 17: Focus on Asset Quality (2/3)

    Focus on Asset Quality (2/3) Delta Gross NPE Stock (€/bn)  Gross NPE stock at EUR 45bn, almost stable QoQ  Inflows* from performing loans at EUR 0.8bn 0.2 0.2 0.1  Outflows* to performing loans at EUR 0.1bn  Bad loans recovered for EUR 0.3bn* (EUR 0.9bn in 2017 vs. EUR 0.7bn in 2016)  UTP reduc

  18. Slide 18: Focus on Asset Quality (3/3)

    Focus on Asset Quality (3/3) NPE Inflows from Performing* NPE Outflows to Performing* (€/bn) (€/bn) Default rate Cure rate 2.5% 5.1% 0.7 0.8 0.4 0.6 0.2 0.4 0.3 0.1 0.1 0.1 4Q16 1Q17 2Q17 3Q17 4Q17 4Q16 1Q17 2Q17 3Q17 4Q17 Migration from UTPs/PDs to Bad Recovery of Bad Loans* (€/mln) Loans* (€/bn) D

  19. Slide 19: Pro-Forma Asset Quality Key Metrics

    Pro-Forma Asset Quality Key Metrics Gross NPEs (€/bn) Gross NPE Mix (%) 45.8 45.1 1% 2% 3% 0.5bn 0.5bn 0.5bn 26% 55% 63% 20.9 11.6bn 11.5bn 11.5bn 18.3 73% 42% Legend for 2017 data: 33.0bn 8.9bn 6.3bn 34% FY17 FY17 FY17 (A) = stated Dec-16 Dec-17 Dec-17 Dec-17 (A) (B) (C) (A) (B) (C) Gross Total Gro

  20. Slide 20: Capital Structure

    Capital Structure 4Q17 results o CET1 QoQ reduction (-39bps), mainly due to the Phased-in CET1 Ratio (%) result of the period, partially offset by RWA 15.2% Phased-in CET1 decrease 14.8% ratio as at 1/1/18 at 14.2% o RWAs decrease by EUR -2.7bn, mainly due to including IFRS9 FTA and phase-in rules**

  21. Slide 21: Capital: expected impacts from regulatory headwinds (1/2)

    Capital: expected impacts from regulatory headwinds (1/2) Description of requirements Estimated impacts o Max. EUR 6bn increase of RWAs on NPEs, assuming RWAs on o RWAs on defaulted assets (LGD on defaulted assets completion of securitisation by June 2018 and defaulted assets calculated on a downtur

  22. Slide 22: Capital: expected impacts from regulatory headwinds (2/2)

    Capital: expected impacts from regulatory headwinds (2/2) Description of requirements Estimated impacts o Streamline and define homogeneous criteria to identify o Impacts to be defined depending on the definition of New default default date, unlikeliness-to-pay category and return to the thresholds

  23. Slide 23: Agenda

    Agenda  Executive Summary  4Q17 Results  Annexes  Details on 4Q17 Results  Commercial Strategy  Details on NPE Stock 23

  24. Slide 24: 4Q17 and FY17 P&L: Highlights

    4Q17 and FY17 P&L: Highlights Change Change € mln 3Q17 4Q17 FY16 FY17 (QoQ%) (YoY%) Net Interest Income 470 415 -11.9% 2,021 1,788 -11.5% Net Fees 356 363 2.1% 1,839 1,577 -14.3% Other revenues 544 25 -95.5% 421 661 57.0% Total revenues 1,370 802 -41.4% 4,282 4,026 -6.0% Operating Costs -626 -651 3.

  25. Slide 25: Balance Sheet

    Balance Sheet Total Assets (€/mln) Dec-16 Sep-17 Dec-17 QoQ% YoY% Customer loans 106,693 91,041 86,456 -5.0% -19.0% Loans to banks 8,936 12,897 9,966 -22.7% 11.5% Financial assets 25,929 25,403 24,168 -4.9% -6.8% PPE and intangible assets 2,943 2,834 2,854 0.7% -3.0% Other assets* 8,677 12,924 15,70

  26. Slide 26: Lending & Direct Funding

    Lending & Direct Funding Total Lending (€/mln) Dec -16 Sep-17 Dec -17 QoQ% YoY% Current accounts 6,313 6,033 5,758 -4.6% -8.8% Mortgages 49,533 47,682 46,868 -1.7% -5.4% Other forms of lending 20,542 18,907 17,903 -5.3% -12.8% Reverse repurchase agreements 8,855 7,064 4,525 -35.9% -48.9% Loans repre

  27. Slide 27: Wealth Management (WM) and Asset Under Custody (AuC)

    Wealth Management (WM) and Asset Under Custody (AuC) Indirect Funding (€/bn) WM Mix (€/bn) WM AuC Individual Portfolios Under Mgmt 98.2bn 98.2bn 95.8bn Life Insurance Policies Mutual Funds/Sicav 41.0 40.4 37.2 57.2bn 57.8bn 58.6bn 6.6 6.1 5.9 23.5 23.8 24.2 57.2 57.8 58.6 27.0 27.9 28.5 Dec-16 Sep-1

  28. Slide 28: Financial Assets: Focus on Italian Govies Portfolio

    Financial Assets: Focus on Italian Govies Portfolio Italian Government Bonds: Financial Assets (€/mln) c. EUR 17.6bn* (Market Value) Breakdown by IAS category Credit spread sensitivity: (1bp change) c. EUR -5.6mln before tax Dec-17 QoQ% YoY% HFT 8,718 -13.7% -5.9% AFS HFT AFS 15,450 1.0% -7.3% 76.1%

  29. Slide 29: Non-Performing Exposures

    Non-Performing Exposures Non Performing Exposures - NPEs* (€/mln) Net Net NPE Gross Coverage Gross NPE QoQ (%) YoY (%) Ratio** QoQ (%) YoY (%) Ratio *** Dec-17 Dec-17 (%) (%) (%) Bad loans (sofferenze) 7,532 3.6% -27.3% 8.3% 32,967 3.5% 12.0% 77.2% 27.0% Unlikely-to-Pay loans 6,880 -5.5% -24.4% 7.6%

  30. Slide 30: Agenda

    Agenda  Executive Summary  4Q17 Results  Annexes  Details on 4Q17 Results  Commercial Strategy  Details on NPE Stock 30

  31. Slide 31: Retail: Focus on Mortgages and Innovation

    Retail: Focus on Mortgages and Innovation Managerial Actions o Focus on retail mortgages with simplification of product catalogue and new attractive terms (reflecting BMPS’ decreasing cost of funding). BMPS has proved to have a low default rate in this market Strategic objectives and preliminary res

  32. Slide 32: Corporate: Focus on Lending and Cost of Funding Reduction

    Corporate: Focus on Lending and Cost of Funding Reduction Managerial Actions o Increased lending towards selected profitable, export-oriented and innovative corporates with whom the Bank has a long-term relationship (customer loans to Strategic objectives and preliminary results grow from EUR 7bn in

  33. Slide 33: Wealth Management: Focus on Advisory

    Wealth Management: Focus on Advisory Managerial Actions o Focus on advisory services: implementation of a comprehensive service approach for High Net Worth (HNW) customers, integrating evaluation and risk Strategic objectives and preliminary results Focus on assessment of financial and non-financial

  34. Slide 34: Agenda

    Agenda  Executive Summary  4Q17 Results  Annexes  Details on 4Q17 Results  Commercial Strategy  Details on NPE Stock 34

  35. Slide 35: NPL Disposal plan – Bad loans portfolio at December 2016

    NPL Disposal plan – Bad loans portfolio at 31 December 2016 Overview of the overall Portfolio at 31 December 2016 (Gross Book Value, €/bn) To be sold during Sold to Siena 2018 NPL 2018 2.6 29.4 0.1 0.7 26.1 1.3 24.8 0.2 24.6** 31/12/2016 MPS Group Leasing Unsecured Exclusions Valentine Additonal Val

  36. Slide 36: Securitisation structure

    Securitisation structure SPV Capital structure December 2017 By June 2018 MPS will hold 5% of all Notes Senior A1 Market EUR 2.7bn Investors Bad loans 100% Portfolio EUR 4.5bn Senior A2 EUMarket Quaestio EUR 0.4bn 100% R Investors 0.4bn Mezzanine 95% 1 EUR 0.8bn 5% Junior EUR 0.6bn 100% 36

  37. Slide 37: Securitisation – Progress

    Securitisation – Progress Securitisation - Activities progressing in line with the expected timeline • Binding commitment from Atlante II to acquire Junior and Mezzanine Notes at a price of 21% of GBV • Appointment of Arrangers and Rating Agencies Done • Appointment of Master Servicer and Special Se

  38. Slide 38: Strategy on remaining NPEs - Target deleverage UTPs

    Strategy on remaining NPEs - Target deleverage UTPs EUR 1.7bn UTP reduction 2017-2019 Target UTP Deleverage (€/bn) 2.0 4.5 o Reduction of EUR 1.7bn already completed in 2017, with 2017 actual deleverage Yearly target deleverage limited P&L costs (9.5% of total GBV, 1% of GBV net of OSI Restructuring

  39. Slide 39: Restructured Unlikely-to-Pay Loans

    Restructured Unlikely-to-Pay Loans Breakdown by Guarantees (€/bn) Breakdown by Vintage (€/bn) Tickets* # GBV Coverage NBV % NBV GBV < 3Y > 3Y Secured 317 1.7 37.9% 1.1 36.5% Secured 1.7 77.9% 22.1% Personal guarantees 225 0.6 50.1% 0.3 9.9% Personal guarantees 0.6 96.0% 4.0% Unsecured 648 2.9 46.6%

  40. Slide 40: Other Unlikely-to-Pay Loans

    Other Unlikely-to-Pay Loans Breakdown by Guarantees (€/bn) Breakdown by Vintage (€/bn) Tickets* # GBV Coverage NBV % NBV GBV < 3Y > 3Y Secured 11,241 3.0 27.3% 2.2 55.2% Secured 3.0 93.4% 6.6% Personal guarantees 10,978 1.0 46.5% 0.5 13.2% Personal guarantees 1.0 88.0% 12.0% Unsecured 88,153 2.4 47.

  41. Slide 41: First 100 NPEs at 31.12.2017

    First 100 NPEs at 31.12.2017 78% of the first 100 NPEs* are customers shared with other banks** % GBV on #tickets GBV (€/mln) NBV (€/mln) Coverage (%) Total NPEs*** Top 100 100 4,905 1,944 60.4% 11.0% of which Bad Loans 41 2,038 421 79.3% 4.6% of which Unlikely to Pay Loans 59 2,867 1,522 46.9% 6.4%

  42. Slide 42: Disclaimer

    Disclaimer THIS DOCUMENT IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION. THIS DOCUMENT, WHICH HAS BEEN PREPARED BY BANCA MONTE DEI PASCHI DI SIENA S.P.A. (THE “COMPANY” AND TOGETHER WITH ITS CONSOLIDATED SUBSIDIARIES, THE “GROUP”), IS PRELIMINARY IN NATURE AND MAY BE SUBJECT TO UPDATING, REVIS

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