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

Banca Monte Dei Paschi Di Siena — Q2 2019 Earnings Presentation

38 slides from Banca Monte Dei Paschi Di Siena's earnings presentation, Aug 1, 2019

  1. Slide 1: BMPS 2Q19 Results

    BMPS 2Q19 Results 1 August 2019

  2. Slide 2: Key takeaways

    Key takeaways Acceleration of NPE reduction created conditions to reach targets two years in advance, with no further expected economic impact Resilient revenues despite MPS downsizing and macro/interest rate uncertainties All capital ratios above SREP requirements also on a fully loaded basis Ongoi

  3. Slide 3: Highlights of 2Q19 Results

    Highlights of 2Q19 Results Pre-provision profit Cost of risk Net income EUR 169mln Cost of risk at 57bps EUR 65mln EUR 218mln excluding EUR -49mln Impacted by the release of provisions following the Including non-recurring contribution to costs for the unwinding of servicing unwinding ofBANKING INDU

  4. Slide 4: Resilient revenues thanks to continued focus on commercial activities

    Resilient revenues thanks to continued focus on commercial activities Resilient revenues Downward pressures … … offset by:  MPS downsizing: branches ✓ Increasing network productivity thanks to the Quarterly evolution of revenues and PPP (€/mln) Revenues PPP -4.3% and headcount new distribution mode

  5. Slide 5: Potential acceleration of NPE deleveraging

    Potential acceleration of NPE deleveraging Including NPE evolution in 1H19 (€/bn) further EUR 2.0bn NPE disposals 16.8 -0.5 -0.4 15.9 Expected -1.2 -0.4 -0.4 Gross NPE 13.9 ratio at 12.7% UTPs Bad loans NPE stock Gross NPEs Deconsolidated UTP Gross NPEs UTP Disposed leasing Bad loans Gross NPEs at 3

  6. Slide 6: NPE deleveraging: results achieved vs Restructuring Plan target

    NPE deleveraging: results achieved vs Restructuring Plan target  EUR 8.9bn NPE disposals/reductions completed by FY2019: 2018 1H19 2H19 2020 - 2021 Total ✓ well above the original Disposals/reductions envisioned by 8.1 Restructuring Plan target for 2021 Restructuring Plan (€/bn) (including 4.1 2.0

  7. Slide 7: Capital position above SREP also on a fully loaded basis

    Capital position above SREP also on a fully loaded basis Transitional CET1 CET1 ratio (%) Total Capital ratio (%) Transitional TC Fully-loaded CET1* Fully-loaded TC* Buffer of Buffer of c. 250bps c. 400bps 16.0 vs. SREP 13.3 14.0 vs. SREP 14.7 11.9 13.9 11.2 12.6 13.5 10.0 31/03/19 30/06/19 SREP 201

  8. Slide 8: Agenda

    Agenda  2Q19 Results  Details on 2Q19 Results  Focus on Asset Quality 8

  9. Slide 9: 2Q19 Results

    2Q19 Results  Pre-provision profit at EUR 169mln (EUR 218mln excluding the EUR 49mln Juliet servicing agreement P&L (€/mln) 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 unwinding costs), with: Net Interest Income 421 449 442 431 409 404 ▪ NII impacted by pressure on rates, mitigated by increased average commercia

  10. Slide 10: Net Interest Income

    Net Interest Income Net Interest Income (€/mln)  Net interest income slightly down vs. 1Q19, mainly impacted by -9.9% pressure on asset margins (partially mitigated by increased average 449 442 431 commercial loans, +0.4% QoQ) and by growing average commercial funding volumes (+1.8% QoQ), with cost

  11. Slide 11: Fee and Commission Income

    Fee and Commission Income 2Q19 1H19 Fees (€/mln) €/mln 1Q19 2Q19 vs. 1Q19 1H18 1H19 vs. 1H18 -9.8% Wealth Management fees: 155 156 0. 9% 359 311 -13. 3% 403 WM Placement 49 52 5.6% 138 101 -26.5% +1.4% 360 359 364 Continuing 85 85 0.2% 177 170 -4.0% 353 Custody 10 9 -17.9% 22 19 -11.6% Protection 10

  12. Slide 12: Financial Revenues

    Financial Revenues* Dividends/Income from Investments (€/mln)  Dividends, similar income and gains (losses) on equity investments are up from 1Q19, mainly thanks to the increased contribution of the joint venture with AXA and to the Bank of 27 Italy dividend (c. EUR 9mln) 21 20 16 16 2Q18 3Q18 4Q18

  13. Slide 13: Operating Costs

    Operating Costs One-off related to  Operating costs increase by +1.4% QoQ and decrease 0.7% YoY* Operating Costs (€/mln) impairment on properties -0.7% ▪ Personnel expenses decrease 3.0% QoQ, thanks to the effects of the latest Solidarity Fund headcount reduction (650 exits on April 635 1st + 100 f

  14. Slide 14: Non-Operating Items and Taxes

    Non-Operating Items and Taxes Non-operating Items* (€/mln)  Non-operating items at EUR -47mln including: ▪ EUR -27mln for the extraordinary contribution to the National Resolution Fund (c. EUR -20mln) and impairment on the -62 -47 Voluntary Scheme Carige intervention (c. EUR -7mln) -86 -92 ▪ EUR -1

  15. Slide 15: Asset Quality Migration Matrix

    Asset Quality Migration Matrix NPE Inflows from Performing* (€/bn) NPE Outflows to Performing* (€/bn) Default rate Cure rate 1.3% 6.6% vs. 2.1% vs. 7.5% in FY2018 in FY2018 0.6 0.2 0.2 0.2 0.2 0.3 0.4 0.1 0.3 0.3 2Q18 3Q18 4Q18 1Q19 2Q19 2Q18 3Q18 4Q18 1Q19 2Q19 Migration from UTPs/PDs to Bad Cash r

  16. Slide 16: Cost of Risk & Coverage

    Cost of Risk & Coverage Net Loan Loss Provisions (€/mln) Cost of Risk* (bps) 267 72 73 164 56 57 55 108 116 57bps 87 excluding the impact of macro forecasts 1H18 9M18 FY18 1Q19 1H19 2Q18 3Q18 4Q18 1Q19 2Q19 Net impairment losses (including 109 121 257 164 88 financial assets at  Loan loss provision

  17. Slide 17: Loan book quality continues to improve

    Loan book quality continues to improve  Loan book quality is constantly improving:  shrinking relative weight of stage 2 and stage 3 loans  significant progress recorded both in downward movements from stage 1 to stage 2 (from 5.7% to 3.8%) and in upward movements from stage 2 to stage 1 (from 17

  18. Slide 18: Customer Loans

    Customer Loans Loans to Customers (€/bn) EUR -0.7bn MP Belgio 87.0 86.9 89.4 87.5 16.3 15.8  Customer loans down by c. EUR 1.9bn QoQ: 18.1 15.6 5.5 4.9 5.0 4.7 ▪ EUR +0.4bn increase in mortgages ▪ EUR -0.8bn decrease in current accounts and other forms 48.3 48.2 48.9 49.3 of lending, mainly impacte

  19. Slide 19: Direct Funding and Liquidity

    Direct Funding and Liquidity Direct Funding (€/bn)  Total direct funding decreases by c. EUR 0.5bn vs. 1Q19 EUR -0.9bn MP Belgio (EUR 0.5bn increase net of MP Belgio disposal effect): 96.8 7.4 90.5 92.7 8.7 92.2 8.7 ▪ EUR +0.7bn increase in funding from commercial customers, of 7.3 12.4 11.1 12.0 1

  20. Slide 20: Wealth Management and Assets Under Custody

    Wealth Management and Assets Under Custody Wealth Management gross inflows* (€/bn) 3.3  Wealth Management stock up 2.6 2.7 by EUR 0.2bn mainly due to Wealth Management Mix (€/bn) 2.2 2.0 positive market effect Mutual Funds/Sicav (EUR +0.4bn) Individual Portfolios Under Mgmt Life Insurance Policies

  21. Slide 21: Capital Structure

    Capital Structure (€/bn) 1Q19 2Q19 Phased-in CET1 ratio (%) TBV 8.9 9.2 14.0 13.3 +0.2 +0.1 +0.1 +0.3 Transitional 8.0 8.2 CET1 Fully loaded 6.7 7.0 CET1* RWAs 59.9 58.5 Proforma Mar-19 1H19 Results Fresh indemnity FVTOCI RWAs Jun-19 fully loaded expiration Reserves ratios **(%) Fully loaded CET1* (

  22. Slide 22: RWA dynamic confirms improvement & derisking activity

    RWA dynamic confirms improvement & derisking activity Total RWAs (€/bn) YoY c. EUR -5.8bn QoQ c. EUR -1.3bn RWA quarterly reduction for 64.3 63.2 c. EUR 1.3bn 58.4 59.9 58.5 13.2 12.6 mainly due to EUR -1bn 12.0 12.8 12.3 credit risk, partly for the deconsolidation of MP Belgio (c. EUR -0.6bn) 51.1

  23. Slide 23: Focus on Italian Govies Portfolio

    Focus on Italian Govies Portfolio* Italian Govies Portfolio (€/bn) Total portfolio decreases QoQ mainly in the FVTPL Amortised cost (nominal value) component: FVTPL (net of short positions) FVTOCI  FVTPL (trading) portfolio decreases to EUR 4.0bn 20.6 (c. EUR -1.8bn QoQ), due to the cyclical nature

  24. Slide 24: Key events

    Key events ✓ On 21 May subsidiary Perimetro Gestione Proprietà Immobiliari S.p.A. was merged into BMPS and, on 12 June, the Casaforte securitisation notes were reimbursed, thus allowing a more flexible management of the Bank’s real-estate assets ✓ On 14 June BMPS finalised the sale of Banca Monte Pa

  25. Slide 25: Agenda

    Agenda  2Q19 Results  Details on 2Q19 Results  Focus on Asset Quality 25

  26. Slide 26: 2Q19 P&L: Highlights

    2Q19 P&L: Highlights Change Change € mln 1Q19 2Q19 1H18 1H19 (QoQ%) (YoY%) Net Interest Income 409 404 -1.1% 870 813 -6.5% Net Fees 359 364 +1.4% 810 723 -10.7% Financial revenues* 43 42 -3.1% 42 85 n.m. Other operating income/expenses -8 -63 n.m. -13 -71 n.m. Total revenues 803 747 -7.0% 1,709 1,54

  27. Slide 27: Balance Sheet

    Balance Sheet Total Assets (€/mln) Jun-18 Mar-19 Jun-19 QoQ% YoY% Customer loans 87,010 89,376 87,484 -2.1% 0.5% Loans to banks 8,636 11,097 12,474 12.4% 44.4% Financial assets 29,257 20,569 19,892 -3.3% -32.0% PPE and intangible assets 2,790 2,978 2,921 -1.9% 4.7% Other assets* 8,029 8,103 8,767 8.

  28. Slide 28: Lending & Direct Funding

    Lending & Direct Funding Total Lending (€/mln) Jun-18 Dec-18 Mar-19 Jun-19 QoQ% YoY% Current accounts 5,474 4,941 4,997 4,710 -5.7% -13.9% Mortgages 48,347 48,217 48,878 49,328 0.9% 2.0% Other forms of lending 18,117 15,615 16,310 15,828 -3.0% -12.6% Reverse repurchase agreements 2,244 3,395 4,033 3

  29. Slide 29: Focus on Commercial Net Interest Income

    Focus on Commercial Net Interest Income* 2Q18 3Q18 4Q18 1Q19 2Q19 Net interest income (€/mln) average average average average average average average average average average volume rate volume rate volume rate volume rate volume rate Commercial Loans 78.7 2.42% 77.9 2.33% 77.2 2.32% 74.6 2.31% 74.9

  30. Slide 30: Funding strategy implementation: Institutional bonds and TLTROs

    Funding strategy implementation: Institutional bonds and TLTROs 2019-2021 Expected/planned  2019-2021 Institutional Bond and TLTRO maturities: 1H19 - actual ▪ 2019: c. EUR 0.75bn senior unsecured  Matured Institutional bonds : ▪ 2020: c. EUR 8bn GGBs* + EUR 16.5bn TLTROs ✓ EUR 0.75bn senior unsecu

  31. Slide 31: Focus on DTAs

    Focus on DTAs Current Italian fiscal regulations do not set any time limit to the use of fiscal losses against the taxable income of subsequent years. Definition Regulatory treatment 1H19 o DTAs related to write-downs of loans, goodwill ➢ 100% included in Risk-Weighted 1 Convertible DTAs and other i

  32. Slide 32: Focus on legal risks and provisions for diamonds claims

    Focus on legal risks from financial information and on provisions for diamonds claims Legal risks from financial information  As at 30 June 2019, overall claims connected to litigations arising from the financial information disclosed by the Bank to the market in the period between 2008 and 2015 ar

  33. Slide 33: Agenda

    Agenda  2Q19 Results  Details on 2Q19 Results  Focus on Asset Quality 33

  34. Slide 34: Focus on Loan Loss Provisions: 1H19 main components

    Focus on Loan Loss Provisions: 1H19 main components 1Q19 2Q19 1H19 Full coverage on small-ticket portfolios -21 -21 Updated macroeconomic scenario -37 -37 Unwinding of Juliet agreement 457 457 Revised NPE strategy -248 -248 Specialised lending rating attribution 34 34 Changed threshold for analytica

  35. Slide 35: Focus on Asset Quality

    Focus on Asset Quality Non-Performing Exposures - NPEs (€/mln) Gross Book Value Texas Ratio* (%) excluding interest in Net Book Value Coverage arrears on defaulted assets 1Q19 1H19 1Q19 1H19 1Q19 1H19 95.0% 92.7% 89.8% Bad loans (sofferenze) 8,385 8,307 3,234 3,169 61.4% 61.9% Unlikely-to-Pay loans

  36. Slide 36: 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 193 0.6 41.1% 0.4 21.4% Secured 0.6 18.4% 81.6% Personal guarantees 158 0.4 56.0% 0.2 10.1% Personal guarantees 0.4 26.2% 73.8% Unsecured 480 2.5 51.3

  37. Slide 37: Other Unlikely-to-Pay

    Other Unlikely-to-Pay* Breakdown by Guarantees (€/bn) Breakdown by Vintage (€/bn) # Tickets GBV Coverage NBV % NBV GBV < 3Y > 3Y Secured 8,463 1.9 27.2% 1.4 61.5% Secured 1.9 63.3% 36.7% Personal guarantees 9,877 0.7 50.5% 0.3 14.2% Personal guarantees 0.7 69.9% 30.1% Unsecured 96,771 1.3 57.9% 0.6

  38. Slide 38: Disclaimer

    Disclaimer THIS DOCUMENT IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION. THIS DOCUMENT, WHICH WAS 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, REVISION A

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