Unicredit S.p.a. · MIL:UCG
Unicredit — Deutsche Bank Global Financial Services Conference 2017
36 slides from Unicredit's conference presentation, May 30, 2017
Slide 1: Deutsche Bank Global Financial Services Conference
Deutsche Bank Global Financial Services Conference Jean Pierre Mustier, CEO of UniCredit Group New York, May 30th, 2017
Slide 2: Disclaimer
Disclaimer This Presentation may contain written and oral “forward-looking statements”, which includes all statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a number of assumptions, expectations, p
Slide 3: Agenda
Agenda 1 Executive summary 2 Transform 2019 update 3 Group quarterly highlights 4 Asset quality 5 Capital 3
Slide 4: Net profit 907m in 1Q17, up by 40.6% Y/Y
Net profit 907m in 1Q17, up by 40.6% Y/Y thanks to resilient recurring revenues and cost excellence 1 2 3 4 5 Executive Summary Resilient recurring revenues thanks to strong business focus: net interest at 2,564m, in line with projections, and fees at 1,481m (+4.5% Y/Y) Operating costs reduced by 3%
Slide 5: Key financial figures – RoTE at 7% at Capital Markets Day perimeter in 1Q17
Key financial figures – RoTE at 7% at Capital Markets Day perimeter in 1Q17 (9.4% stated) 1 2 3 4 5 Executive Summary Group Key Figures 1Q16adj. 1Q16 adj. 4Q16 4Q16 adj. 1Q17 1Q17 Delta % Delta Q/Q Delta % Delta Y/Y adj. (1) Q/Q Y/Y Total revenues 4,674 4,327 4,833 +11.7% +3.4% Operating expenses -2
Slide 6: Transform 2019 update
1 Executive summary 2 Transform 2019 update 3 Group quarterly highlights 4 Asset quality 5 Capital 6
Slide 7: Progress Transform 2019
Progress Transform 2019 1 2 3 4 5 Transform 2019 update STRENGTHEN • Solid CET1 ratio at 11.45% fully loaded after successful 13bn capital increase, above AND OPTIMIZE 13bn rights issue 12% considering Pioneer & Pekao disposals and RWA dynamics expected in 2017 CAPITAL • Reduced gross NPE to 55.3bn,
Slide 8: Progress Transform 2019
Progress Transform 2019 1 2 3 4 5 Transform 2019 update Simplification of Italy • Simplification of commercial network fully implemented, supported by 500 transformation network agents • Enabled a network of 600 merchants to accept payments from Chinese visitors with Alipay, further potential up to
Slide 9: Group quarterly highlights
1 Executive summary 2 Transform 2019 update 3 Group quarterly highlights 4 Asset quality 5 Capital 9
Slide 10: Group – 1Q17 net profit at 907m, with CIB, CEE and CBK Italy top contributors
Group – 1Q17 net profit at 907m, with CIB, CEE and CBK Italy top contributors 1 2 3 4 5 Group quarterly highlights Stated net profit, m Net profit divisional breakdown, m RoAC 907 317 12.8% CBK Italy 406 9.3% CBK Germany 114 CBK Austria 68 9.0% -13,558 1Q16 4Q16 1Q17 CEE 336 11.5% RoTE 3.8% n.m. 9.4
Slide 11: Positive commercial dynamics, confirming 10.2bn guidance for net interest
Group – Net interest increased in 1Q17 with pricing pressure stabilizing. Positive commercial dynamics, confirming 10.2bn guidance for net interest in full year 2017 1 2 3 4 5 Group quarterly highlights Net interest(1) bridge q/q, m +4.2% 2,631 2,564 2,415 2,460 -6 +38 +83 -46 +18 +18 +41 +38 -38 +2
Slide 12: Customer rates holding up well, spreads stabilizing across divisions
Group – Customer rates holding up well in the quarter with resilient loan volumes and spreads stabilizing across divisions 1 2 3 4 5 Group quarterly highlights Avg commercial loans and rates Customer spreads(1) 1Q17 2.98% Cust. rates 2.79% 2.81% Const. FX q/q y/y -1.4% CBK Italy 2.91% -3bp -28bp 394
Slide 13: End-of-period customer loans and deposits breakdown by division
Group – End-of-period customer loans and deposits breakdown by division 1 2 3 4 5 Group quarterly highlights Customer loans (end of period), bn Customer deposits (end of period), bn q/q y/y q/q y/y CBK Italy 135.6 +0.5% -0.0% CBK Italy 132.7 -1.4% +5.8% CBK Germany 83.3 +3.2% +4.6% CBK Germany 83.8
Slide 14: Fees improved by 9.4% Q/Q benefitting from seasonality
Group – Fees improved by 9.4% Q/Q supported by investment services and financing fees, benefitting from seasonality 1 2 3 4 5 Group quarterly highlights Fees bridge in 1Q17, m – proforma(1) figures +9.4% q/q y/y 1,674 1,706 +11.5% +4.6% 1,631 -5 +28 +3 +25 1,530 +124 Investment 649 704 Non commercia
Slide 15: AUM increased Y/Y and Q/Q thanks to improved commercial dynamics
Group – AUM increased Y/Y and Q/Q thanks to improved commercial dynamics 1 2 3 4 5 Group quarterly highlights Main drivers GROUP TFAs(1) 1Q17, bn +3.9% q/q y/y +0.7% • TFAs at almost 797bn in 1Q17, up by over 30bn Y/Y thanks to higher AuM and deposits: 791.4 796.8 +5.4bn +30.2bn 766.6 i. CBK Italy u
Slide 16: Trading income and dividends
Group –Trading income benefitting from large client driven transactions. Dividends increased thanks to a strong seasonal performance of Turkey 1 2 3 4 5 Group quarterly highlights Trading income(1), m Dividends(2), m Client driven Other dividends and +75.1% equity investments Other trading -19.7% +4
Slide 17: Positive trend in cost reduction in line with Transform 2019 actions
Group – Positive trend in cost reduction in line with Transform 2019 actions 1 2 3 4 5 Group quarterly highlights Costs, m FTEs(2) Branches -3,716 -375 -3.0% -74 -1,881 -1.5% q/q 5,638 q/q 5,337 5,263 100,139 98,304 96,423 2,976 2,930(1) 2,886 CEE 1,900 CEE 24,149 24,271 1,801 1,793 24,177 -0.4% -0.
Slide 18: Lower loan loss provisions in 1Q17, confirming positive asset quality trends
Group – Lower loan loss provisions in 1Q17, confirming positive asset quality trends 1 2 3 4 5 Group quarterly highlights Main drivers Loan loss provisions, m • LLP at 670m in 1Q17 (-11.8% Y/Y), confirming 9,586(1) guidance of 65bp for cost of risk in 2017 8,100 • Strengthened coverage ratio at 56.3
Slide 19: Asset quality
1 Executive summary 2 Transform 2019 update 3 Group quarterly highlights 4 Asset quality 5 Capital 19
Slide 20: Group excl. Non Core – Improvement of inflows to NPE and migration from UTP to Bad Loans
Group excl. Non Core – Improvement of inflows to NPE and migration from UTP to Bad Loans both Q/Q and Y/Y 1 2 3 4 5 Asset quality Group excl. Non Core – net flows to NPE, m Group excl. Non Core – Unlikely-to-pay to Bad, m Net 1,505 1,392 impacted by few flows 1,119 large tickets 989 788 872 Inflows
Slide 21: Group excl. Non Core – Asset quality further improved in the quarter
Group excl. Non Core – Asset quality further improved in the quarter with lower NPE, improved NPE ratios and strengthened coverage ratios 1 2 3 4 5 Asset quality Non performing exposures, bn o.w. Gross bad loans, bn • 0.2bn disposals in 1Q17 -7.1% -5.2% • Additional 0.4bn in 2Q17, already classified
Slide 22: Non Core – run down progressing mainly thanks to maturities, recoveries and write-offs
Non Core – run down progressing mainly thanks to maturities, recoveries and write-offs 1 2 3 4 5 Asset quality Actions of Non Core run down Gross loans, bn FINO Disposal of majority stake on track 60.5 -24.1bn Repayments 0.1bn in 1Q17 -0.8bn 37.1 36.4 NPE 0.1bn in 1Q17, additional 0.5bn disposals Di
Slide 23: Non Core – NPE continued to reduce Q/Q
Non Core – NPE continued to reduce Q/Q mainly thanks to improving flows. Coverage ratio up by 80bp Q/Q to 57.2% 1 2 3 4 5 Asset quality Non performing exposures(1), bn o.w. Gross bad loans, bn -49.7% -0.5% -39.8% 37.7 51.4 • 0.1bn disposals Net bad 19.1 19.0 -1.8% in 1Q17 loans 15.1 6.9 6.7 31.5 30.
Slide 24: Italian NPE stock showing first signals of decrease after 2015 peak
Italian NPE stock showing first signals of decrease after 2015 peak 1 2 3 4 5 Asset quality Gross NPE/ Loans to Customer (%) Bn Gross Bad Loans/ Loans to Customer (%) 400 Bad Loans (€Bn) 20 Unlikely to pay (€Bn) 350 360 349 350 319 Past Due (€Bn) 300 15 261 250 197 210 220 175 215 195 200 167 141 10
Slide 25: NPE dynamics showed net improvement in the last three years
NPE dynamics showed net improvement in the last three years 1 2 3 4 5 Asset quality Mn (€) Default 5.2 3.7 2.6 Rate1 (%) Inflows to NPE 55.392 Outflows to 37.842 performing 26.478 -13.024 -10.084 -7.867 2014 2015 20163 Cure Rate (%)2 5.8 4.0 2.9 Outflows/ 23.5 26.6 29.7 inflows (%)4 (1) Default rate
Slide 26: Capital
1 Executive summary 2 Transform 2019 update 3 Group quarterly highlights 4 Asset quality 5 Capital 26
Slide 27: Group – Solid CET1 ratio FL at 11.45% after successful 13bn capital increase
Group – Solid CET1 ratio FL at 11.45% after successful 13bn capital increase, above 12% considering Pioneer & Pekao disposals and RWA dynamics expected in 2017 1 2 3 4 5 Capital Fully loaded Common Equity Tier 1 ratio 361bp 11.15% +23bp +14bp +1bp 11.45% -6bp -2bp 320bp 7.54% 41bp DBO: +1bp FX: +5bp
Slide 28: Group – RWA down in the quarter mainly thanks to regulatory effects
Group – RWA down in the quarter mainly thanks to regulatory effects on credit risk and lower market risk 1 2 3 4 5 Capital Main drivers of RWA transitional Credit RWA +0.1bn q/q RWA CMD Credit Market & operational • Thresholds: +3.4bn from the reversal of thresholds post cap hike(1) 361 Dec-16 387.1
Slide 29: Group – Transitional ratios well above MDA
Group – Transitional ratios well above MDA after successful 13bn capital increase, above 12% considering Pioneer & Pekao disposals and RWA dynamics expected in 2017 1 2 3 4 5 Capital CET1 transitional Tier 1 transitional Total capital transitional 2016 Basel 3 2017 Basel 3 2016 Basel 3 2017 Basel 3
Slide 30: Concluding remarks
Concluding remarks 1 2 3 4 5 Concluding remarks Resilient recurrent revenues thanks to strong business focus, with net interest stabilizing, strong trading profit and improved fees Operating costs reduction confirmed thanks to Transform 2019 actions Cost of risk at 60bp, confirming target for 2017 a
Slide 31: Glossary
Glossary
Slide 32: Glossary (1/5)
Glossary (1/5) Glossary Adj. Data adjusted for non recurring items related to Transform 2019 in 4Q16 and restructuring actions in 1Q16 AFS Available for Sales AuC Asset under Custody AuM Asset under Management Exposures to borrowers in a state of insolvency or in an essentially similar situation, re
Slide 33: Glossary (2/5)
Glossary (2/5) Glossary CMD Capital Markets Day Cost/income Ratio between operating expenses and total revenues CoR Cost of Risk calculated as LLP of the period analized / Average loans volume in the period analized Customer spread Rate on customer loans – Rate on customer deposits DBO Defined Benef
Slide 34: Glossary (3/5)
Glossary (3/5) Glossary Exposure to which forbearance measures have been applied, i.e. concessions towards a debtor who is facing or Forborne Loan about to face financial difficulties FTE Full time Equivalent (net of industrial) Group Corporate Corresponding to the divisional database section: "Glob
Slide 35: Glossary (4/5)
Glossary (4/5) Glossary In 2013 UniCredit ring-fenced the so-called "Non-Core" portfolio in Italy with a target to reduce clients exposure Non Core considered as not strategic; selected assets in Italy to be managed with a risk mitigation approach Non-Performing Exposures shall be classified in the
Slide 36: Glossary (5/5)
Glossary (5/5) SFT Securities financing transaction SRF Contribution to Single Resolution Fund Tangible equity Tangible equity excluding AT1 TFAs Total Financial Assets, commercial figures Unlikely To Pay: the classification in this category is the result of the judgment of the bank about the UTP un
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