Unicredit S.p.a. · MIL:UCG
Unicredit — Investor Presentation (December 2016)
30 slides from Unicredit's investor presentation, Dec 13, 2016
Slide 1: One Bank, One UniCredit CFO presentation
One Bank, One UniCredit CFO presentation M. Bianchi London, 13th December 2016
Slide 2: Disclaimer
Disclaimer This communication and the information contained herein does not contain or constitute an offer of securities for sale, or solicitation of an offer to purchase securities, in the United States, Australia, Canada or Japan or any other jurisdiction where such an offer or solicitation would
Slide 3: One Bank, One UniCredit: The five pillars
One Bank, One UniCredit The five pillars ONE BANK ONE 5 STRATEGIC PILLARS STRENGTHEN AND IMPROVE TRANSFORM MAXIMIZE ADOPT LEAN OPTIMIZE CAPITAL ASSET OPERATING MODEL COMMERCIAL BANK BUT STEERING QUALITY VALUE CENTER 2
Slide 4: Key highlights
Key highlights Conservative plan assumptions reflecting macro and regulatory environment Simple commercial banking model supporting stable revenues (0.6% CAGR 2015-2019) Acceleration of cost efficiency plan delivering €1.7bn net annual recurring cost savings as of 2019 €12.2bn one-offs in 4Q2016 whi
Slide 5: Conservative assumptions
Conservative assumptions Macro Growth in line with consensus "Lower for longer" rates and yield environment Real GDP growth y/y and average, % Bps, EoP Euribor 3M 1.6 Eurozone 1.3 1.3 1.3 1.4 -5 1.0 -13 -20 -24 -35 -35 UCG estimates1 Consensus2 UCG estimates1 Consensus2 2.9 2.8 Mid Swap 10Y 2.2 2.2
Slide 6: Pragmatic targets with low execution risk
Pragmatic targets with low execution risk Key objectives 2019 key targets Stable revenues • Revenue evolution reflecting prudent macro assumptions 0.6% revenues CAGR 2015-2019 €1.7bn net annual recurring cost Accelerated • Additional ca. 6,500 staff reduction for a total of ca. 14,000 by 2019 saving
Slide 7: Restating historical figures for disposals and discontinued operations
Restating historical figures for disposals and discontinued operations Restatement 2015 9M2016 Stated Disposals Restated1 Stated Disposals Restated1 P&L (€bn) Revenues 22.4 -2.5 19.9 17.1 -1.9 15.2 Costs 13.6 -1.4 12.2 9.8 -0.9 8.9 Net income 1.7 -0.2 1.5 1.8 -0.4 1.4 Other CET1r (%) 10.4 - - 10.8 +
Slide 8: Conservative revenue evolution
Conservative revenue evolution P&L - Revenues Revenues evolution Revenues split by division2 €bn CAGR '15-19: +0.6% 20.4 CIB 19.4% 18.5% 19.9 0.1 -0.0 0.5 CEE 19.5% 21.6% \ CBK Western 61.1% 59.9% Europe 2015 NII F&C Trading 2019 2015 2019 income/other Loans1 418 CAGR +2.8% 467 Joint CIB-CBK revenue
Slide 9: NII slight decrease due to conservative rate assumptions
NII slight decrease due to conservative rate assumptions P&L – NII NII evolution 2015-2019 − Main components NII 2019 − Contribution by division €bn % CAGR '15-19: -0.2% CIB 18.7% CBK Italy 0.5 -0.5 and Fineco 35.7% 10.9 -0.0 10.9 CEE 23.3% CBK CBK Austria Germany 7.1% 13.3% • Commercial lending vol
Slide 10: Fee growth mainly from asset gathering
Fee growth mainly from asset gathering P&L – Fees TFA growth… Group fee composition €bn CAGR '15-19: +2.5% €bn CAGR '15-19: +2.0% 7.0 856 6.5 776 2015 2019 …supported by increased potential in Italy 2015 2019 AuM/TFA (2015, %) 42% [33]% Investment services 33% [32%] 30% Financing services Transactio
Slide 11: Additional cost reduction
Additional cost reduction P&L – Cost Cost evolution CAGR, €bn €1.7bn annual recurring net cost savings of which €900m additional vs. previous plan 77% of net cost savings achieved by 12.2 2018 10.6 HR costs -1.1 7.5 -0.6 HR costs 6.4 Non-HR Non-HR costs costs 4.8 4.2 2015 HR savings Non-HR savings 2
Slide 12: HR savings mainly focused on Western Europe
HR savings mainly focused on Western Europe P&L – HR Sizeable reduction in HR costs thanks to FTE reduction and moderate wage increase FTE reduction by activity Delta FTE 2015-2019, % HR costs, €bn -1.1 -12% +0.4 -1.5 -19% 7.5 Business1 Support and Ops 6.4 FTE reduction by geography Delta FTE 2015-2
Slide 13: Non Core net exposure foreseen to be at €8.1bn in 2019
Non Core net exposure foreseen to be at €8.1bn in 2019, as a combination of one-offs and decisive actions Risk – Group Actions to run down gross loans Non Core evolution • €8.1 bn expected one-off LLP1 in 4Q2016, -37.2 One-off actions of which €7.2bn de-risking of Non Core portfolio, €900m on Group
Slide 14: Risk discipline resulting in lower future Group level CoR
Risk discipline resulting in lower future Group level CoR Risk – Ratios Net NPE Net UTP Net Bad loans CoR evolution 8.6% 254 Net ratio 6.2% bps 4.4% 4.0% 3.8% 3.0% 2.9% 1.7% 2.1% Group 9M2016 equal 89 to 77bps 49 74.5% >63% Coverage ratio 63.0% 60.6% 50.8% >54% 40.8% >38% 34.2% 2015 9M2016 2019 adju
Slide 15: Focus on 4Q2016 one-offs amounting to -€12.2bn
Focus on 4Q2016 one-offs amounting to -€12.2bn One-offs Post-tax P&L Drivers impact, €bn Expected one-off loan loss provisions1 -8.1 Integration costs mainly related to Italy and Germany -1.7 Net gain on card processing activities +0.4 Write-down on Group participations and other general provisions
Slide 16: Capital actions including disposals and capital increase
Capital actions including disposals and capital increase amounting to over 500bps of CET1 ratio Capital Actions Actions Focus on €13bn capital increase Actions Impact1 (bps) Closing • Issue of new ordinary shares with pre-emptive rights to current shareholders Fineco / Pekao Offering 10% ABBs 20bps
Slide 17: Future capital evolution factoring in conservative assumptions
Future capital evolution factoring in conservative assumptions Capital Walk CET1 ratio evolution Drivers % • Solid organic capital generation 3.5 -3.0 despite conservative plan 14% • Total RWA up €42.1bn, 3.4% 2.1 -1.5 CAGR, driven by lending volume 12.5% -0.7 >12.5% growth, regulation, model and 1.
Slide 18: RWA evolution supporting commercial volume growth
RWA evolution supporting commercial volume growth Capital – RWA RWA evolution Drivers €bn • Expected recalibration and +42.1bn / +3.4% CAGR model roll-out impacts mitigated by already identified 30.1 4.1 -1.2 404.0 business actions 31.5 -22.5 • Organic business growth 361.9 exceeding €30bn of RWA, d
Slide 19: All fully loaded MDA requirements fulfilled from 2017
All fully loaded MDA requirements fulfilled from 2017 Capital – Requirements CET1 requirements T1 requirements2 Total Capital requirements Pillar 2 Guidance MDA MDA 10.50% 12% level 14% level (P2G) Pillar 2 Guidance 10.25% 12.25% MDA level (P2G) 8.75% 3.50% 3.50% Regulatory 3.50% Regulatory Regulato
Slide 20: Clear funding strategy
Clear funding strategy Efficiency Liquidity Group ample liquidity buffer and diversified funding strategy 9M2016 strong liquidity buffer Already compliant with key liquidity ratios1 Funding plan €bn €bn, issued over plan period LCR NSFR TLAC 192 funding plan (ex. AT1) 22.9 Additional eligible assets
Slide 21: TLAC/MREL issuance plan
TLAC/MREL issuance plan TLAC Funding plan based on conservative case - TLAC compliant 2019 assumed TLAC requirements1 (Pillar 1 MREL) TLAC building blocks Total issuance over the Plan TLAC ratio + buffers >23.0% 19.50%2 Old Senior outst. TLAC eligible Not part of the 1.0% G-SIFI issuance plan 1.4% 2
Slide 22: Enhanced accountability, transparency and capital allocation
Enhanced accountability, transparency and capital allocation Efficiency Enhancing accountability via cost reallocation… …and leaner Group structure S.p.A. CBK Italy S.p.A. Actions Transfer of CEE perimeter from Bank Austria to UniCredit S.p.A. CBK completed Germany CEE CEE CBK Group Austria Corporat
Slide 23: Lean but steering Center
Lean but steering Center Efficiency Lower weight of Group Corporate Center …with clear KPIs and support functions… Reduction of weight of Group Corporate Center on GOP Value creation ROAC Weight of Group Corporate Center on total GOP, % CET1 ratio fully loaded +14.3 p.p. New business EL -2.6% Risk &
Slide 24: Solid recurring profitability
Solid recurring profitability Profitability RoTE evolution Drivers <-0.5% >9% • Asset quality improving with CoR decreasing to 1% 2% 49bps thanks to de-risking actions, including additional €8.1bn LLP3 in 2016, and tightened 2% risk discipline. Non Core net exposure down to €8.1bn in 2019 4% • €1.7b
Slide 25: Solid profitability across the Group
Solid profitability across the Group, with leaner Group Corporate Center and lower Non Core impact RoAC 2019, % RWA as % of total 2019 RWA delta 2015-2019, €bn CBK Italy 15.7 22.4 +13.7 CBK Germany 7.1 9.1 +2.8 CBK Austria 13.3 6.1 -0.5 CEE1 12.3 26.8 +17.8 CIB 11.0 21.8 +17.5 Non Core Net NPE expos
Slide 26: Group - key financial targets
Group - key financial targets 2015 9M2016 adjusted 2017 2019 Revenues 2015-2019 CAGR +0.6% Cost/income 61.6% <52% Cost €12.2bn €11.7bn €10.6bn Cost of Risk1 89bps 254bps1 65bps 49bps Net income €1.5bn €4.7bn RoTE 4% >9% CET1 ratio 10.4%2 10.8%2 12.0% >12.5% RWA €361bn €362bn3 €389bn €404bn Group NPE
Slide 27: Annex
Annex
Slide 28: Divisional key financial targets
Divisional key financial targets CBK ITA CBK GER CBK AT CEE CIB Non Core GCC1 2015 2019 2015 2019 2015 2019 2015 2019 2015 2019 2015 2019 2015 2019 Revenues (€bn) 7.7 7.6 2.7 2.4 1.7 1.6 4.0 4.4 4.0 3.8 0.0 (0.2) (0.7) 0.1 Costs (€bn) (4.6) (4.0) (2.0) (1.7) (1.3) (1.0) (1.5) (1.6) (1.8) (1.6) (0.2)
Slide 29: Non Core - key financial targets
Non Core - key financial targets 2015 9M2016 adjusted 2017 2019 P&L, €bn Revenues 0.0 -0.1 -0.3 -0.2 Gross Operating Profit -0.1 -0.3 -0.4 -0.3 Loan Loss Provision -1.7 -8.8 -0.7 -0.3 Net income -1.3 -9.2 -0.8 -0.5 Others, €bn Gross Loans 63.4 56.4 19.2 Net Loans 35.8 22.31 8.1 Non Core NPE Coverage
Slide 30: Additional disclosure to market
Additional disclosure to market KPIs Set of KPIs Details by Frequency Bank of Italy classes: Gross loans by UTP, Bad Loans and Past due Quarterly base Asset quality Division (from Q12017) Forborne: Gross loans Loan dynamic evolution: Gross loans by Flow to NPE, Back to bonis, recoveries and write-of