Unicredit S.p.a. · MIL:UCG
Unicredit — Investor Day (November 2011)
42 slides from Unicredit's investor day presentation, Nov 14, 2011
Slide 1: UniCredit Strategic Plan
UniCredit Strategic Plan Milan, 14 November 2011
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,
Slide 3: Agenda
Agenda UniCredit: who we want to be Strategic Plan I Balance-Sheet structure II Simplification & Cost Management III Business refocusing IV Italy Turnaround 3
Slide 4: UniCredit vision 2015
UniCredit vision 2015 A rock solid European commercial bank Strengthened core client franchises with a unique geographical spread, focused on diversified Western European countries and high growth CEE economies Strong balance sheet A sound capital base, further reinforced liquidity buffer, continued
Slide 5: 2013 - 2015 Strategic Plan – objectives
2013 - 2015 Strategic Plan – objectives Basel 3 Common Equity Tier 1 (CET1) full impact above 9% already in 2012 and 10% by 2015 - proposed 7.5 bn Rights Issue secures a solid foundation ROTE about 12% by end of plan based on sustainable recurring returns Focused RWA management, run-off portfolio of
Slide 6: UniCredit
UniCredit A unique positioning in mature Western European markets and fast growing CEE economies Austria (AAA rating) Sep 11 RWA breakdown Rank & Market Share #1 with c. 16% Austria Loans (bn) 63.5 Deposits (bn) 47.5 7 FTE (#) 7,908 Italy 37 Germany 25 % Germany (AAA rating) Rank & Market Share #3 w
Slide 7: 2013 - 2015 Strategic Plan – Discontinuities
2013 - 2015 Strategic Plan – Discontinuities SIMPLIFICATION BALANCE SHEET BUSINESS ITALY & COST STRUCTURE REFOCUSING TURNAROUND MANAGEMENT Capital Central Functions strengthening streamlining New service model CIB: business Funding&Liquidity: Operations: reshaping rebalancing enhancing Improving ass
Slide 8: Agenda
Agenda UniCredit: who we want to be Strategic Plan I Balance-Sheet structure II Simplification & Cost Management III Business refocusing IV Italy Turnaround 8
Slide 9: Plan based on realistic macroeconomic assumptions
Plan based on realistic macroeconomic assumptions A volatile economic environment... …assumptions based on realistic scenario Min 2006-2011 2011-12 Max 2006-2011 2013-15 7.3 4.1 5.3 3.7 3.3 2.1 0.6 2.0 1.6 1.3 1.3 0.8 -4.2 0.2 -5.7 -5.2 EU GDP CEE GDP IT GDP 3m Euribor EU GDP CEE GDP IT GDP 3m Eurib
Slide 10: UniCredit key targets
UniCredit key targets ROTE in line with cost of capital and CET1 above 10% in 2015 2010 2013 2015 Net profit (bn) 1.3 3.8 6.5 ROTE 3.6% 7.9% ~12% CET1 8.6% 9.4%(1) >10%(1) Cost of risk 123 90 75 Implied Pay-out 42% 44% 39% COMMON EQUITY ABOVE 10% TARGET (1) BIS3 based on available information and as
Slide 11: The Strategic Plan
The Strategic Plan Four main pillars for sustainable profitability BALANCE SHEET Funding& I Capital Risk STRUCTURE Liquidity SIMPLIFICATION AND II Central functions Operations Network COST MANAGEMENT BUSINESS III Selective focus on CEE CIB reshaping REFOCUSING ITALY IV TURNAROUND 11
Slide 12: UniCredit built on strong foundations
UniCredit built on strong foundations I BALANCE SHEET Total Assets, bn Main goodwill additions, bn 10.4 7.2 1,022 1,046 929 787 823 929 265 84 147 1995 1998 2004 2005 2006 2007 2008 2009 2010 Domestic Leading Pan-European De-leveraging corporate commercial bank universal bank de-risking bank with CE
Slide 13: 9.8 bn impairment of intangibles and other non-cash items
9.8 bn impairment of intangibles and other non-cash items I BALANCE SHEET 3Q11 Impairment of intangibles and other non-cash items 0.5 9.8 0.7 8.6 Review based on new macro-economic scenario and regulatory framework has led the 65% group to take an impairment of due to new goodwill of -8.6 bn macro s
Slide 14: New regulatory and macroeconomic environment structurally changing the sector
New regulatory and macroeconomic environment structurally changing the sector I BALANCE SHEET Issue What has changed Increased economic uncertainty / Market volatility Macro Sovereign crisis / effects of fiscal consolidation / Potential policy reaction (levies,…) environment Low interest-rate enviro
Slide 15: 7.5 bn fully underwritten Rights Issue
7.5 bn fully underwritten Rights Issue I CAPITAL Offering 7.5 bn Rights Issue structure Issuance of new ordinary shares with pre-emptive rights to current shareholders Also saving shareholders will also be entitled to subscribe new ordinary shares Pricing Final terms of Rights Issue to be agreed at
Slide 16: Capital structure
Capital structure Basel 3 and EBA compliant by 2012 with further potential upside actions not included I CAPITAL Including 3.0 bn +0.3% +1.42% of CASHES -0.51% >10% +0.50% +0.06% -0.85% 9.12% 8.74% 9.1% -0.31% BIS 3 requirements (full impact) Sep11 BIS2.5 BIS3 7.5bn Organic 2012 2015 8.74% actual Ri
Slide 17: Capital efficiency
Capital efficiency 48 bn of RWA ring-fenced and run-off (35 bn by 2015) I CAPITAL RWA bn, EoP Run-off portfolio, RWA bn 48 48 Other CIB 3 445 13 Leasing 5 Non strategic 11% After 2015 assets CIB Markets 19 By 2015 35 Core assets 89% CIB F&A 21 Jun 11 Disciplined approach to non strategic assets: not
Slide 18: Well matched balance sheet
Well matched balance sheet Improving L/D ratio I FUNDING&LIQUIDITY Ratios Loans to customers Debts in Issues Dep. from customers 2015 evolution 2010 2013 2015 L/D ratio 1.38 L/D ratio 1.27 L/D ratio 1.19 Loan to Direct Loan to Direct Loan to Direct 0.95 0.92 0.89 Funding ratio (1) Funding ratio (1)
Slide 19: Very well diversified funding platform by geography and type
Very well diversified funding platform by geography and type I FUNDING&LIQUIDITY Liquidity management and funding access based on four liquidity centers Group wide Liquidity Policy ensures strong ITALY (35% on Total assets) GERMANY(40% on Total assets) liquidity profile Points of access: Points of a
Slide 20: Strong commercial bank supports funding (1/2)
Strong commercial bank supports funding (1/2) I FUNDING&LIQUIDITY GERMANY Long experience Covered Bonds outstanding of 32.9 bn Mortgage: 25.5 bn Covered bond issuance capacity(2) Rating(1): Aa1, n/a, AAA Public sector: 7.4 bn Rating(1): Aaa, AAA, AAA AUSTRIA Current focus on public sector Covered Bo
Slide 21: Strong commercial bank supports funding (2/2)
Strong commercial bank supports funding (2/2) I FUNDING&LIQUIDITY Network bonds Jun 11, % of TFA Retail ML/T funding as % of Total ML/T funding 25.3% 78.0% 18.7% 66.1% 68.4% 16.7% 17.0% 17.7% 58.5% 51.3% 52.6% 11.6% 39.1% 44.5% 9.4% 8.1% UCG Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 UCG Peer
Slide 22: Risk Management
Risk Management Improving cost of risk I RISK Group cost of risk (bps) CoR trend by region (2010-15) 123 108 Italy 90 75 Germany Austria CEE & Poland 2010 2011(1) 2013 2015 Cost of risk to drop New origination policy fully in place with new MBO incentives based on risk metrics: [i.e. (Revenues – Exp
Slide 23: Asset quality to improve
Asset quality to improve New origination criteria, active portfolio management and business discontinuity I RISK New Network origination policy and Origination commercial monitoring system in place e.g. (Revenues – EL) / RWA Western Europe performing portfolio(1) New dedicated projects launched to b
Slide 24: The Strategic Plan
The Strategic Plan Four main pillars for sustainable profitability BALANCE SHEET Funding& I Capital Risk STRUCTURE Liquidity SIMPLIFICATION AND II Central functions Operations Network COST MANAGEMENT BUSINESS III Selective focus on CEE CIB reshaping REFOCUSING ITALY IV TURNAROUND 24
Slide 25: Simplification and Cost Management
Simplification and Cost Management Around 1.5 bn savings by 2015 SIMPLIFICATION & II COST MANAGEMENT Group savings of around 1.5 bn by 2015 with Western Europe costs down Focus on simplification of processes in central functions and network re-design Strong rationalization of cost base, particularly
Slide 26: Central functions
Central functions Significant cost savings and simplification SIMPLIFICATION & II COST MANAGEMENT Central functions streamline Headquarters rationalization Significant streamlining of support Rationalization of space through functions to reduce complexity reduction of corporate center buildings (-22
Slide 27: Operations
Operations Efficiencies to drive cost savings SIMPLIFICATION & II COST MANAGEMENT Global Banking Services rationalization Procurement’s spend optimization over 3 years Consolidation of Banking Services Redesign of procurement process Factories into a single company and demand management saving 440 m
Slide 28: Network
Network A clear change in service model SIMPLIFICATION & II COST MANAGEMENT New branch model (Hub & Spoke) Optimization of branch footprint Fewer branches - opitmized formats (full service branches from 87% to 26% of total) 100% of Hubs & Spokes Rationalizing real estate usage -165k sqm (-14% of cur
Slide 29: The Strategic Plan
The Strategic Plan Four main pillars for sustainable profitability BALANCE SHEET Funding& I Capital Risk STRUCTURE Liquidity SIMPLIFICATION AND II Central functions Operations Network COST MANAGEMENT BUSINESS III Selective focus on CEE CIB reshaping REFOCUSING ITALY IV TURNAROUND 29
Slide 30: CEE
CEE Keep leadership through a focused country approach BUSINESS III REFOCUSING Focus on highly attractive countries Focus maintained on highly attractive countries where UniCredit enjoys a strong footprint and is well positioned in a risk / return matrix (i.e. Poland, Turkey, Russia and Czech Republ
Slide 31: CEE
CEE Profitability and liquidity to define the strategy for each country BUSINESS III REFOCUSING 2015 30% Expansion Mapping our subsidiaries: POL strategy profitability (RARORAC) and + 20% liquidity (Loans / Local Funding) RUS RARORAC 15% 10% CZK 5% TRK 0% -5% -10% 1.9 1.6 1.5 1.4 1.3 1.2 1.1 1.0 0.9
Slide 32: CEE
CEE A more focused approach going forward BUSINESS III REFOCUSING Loan-to-local funding ratio (deposits + securities issued by local banks) CEE POLAND 1.10 1.09 1.07 0.82 0.87 0.88 2010 2013 2015 Low commercial funding gap Stronger Funding Governance Significant reduction in commercial Stronger fund
Slide 33: CIB
CIB Reallocate resources to core client franchises to improve profitability BUSINESS III REFOCUSING Three core client offers: Corporate Banking and Transaction Services Structured Finance, Capital Markets and Investment Products Access to Western, Central and Eastern Europe Strategic initiatives Rei
Slide 34: CIB
CIB Capital focused on profitable franchise BUSINESS III REFOCUSING RWA(1), bn +25 -35 185 176 +4 170 2010 2011 Basel 2.5/3 Attrition in New business, 2015 net of run-off on top of attrition Basel 2.5 portfolio & off-load Strong reduction in Group RWA weighting and strong increase in client-franchis
Slide 35: The Strategic Plan
The Strategic Plan Four main pillars for sustainable profitability BALANCE SHEET Funding& I Capital Risk STRUCTURE Liquidity SIMPLIFICATION AND II Central functions Operations Network COST MANAGEMENT BUSINESS III Selective focus on CEE CIB reshaping REFOCUSING ITALY IV TURNAROUND 35
Slide 36: Italian commercial business turnaround
Italian commercial business turnaround Strengthening our customers base: deposits IV ITALY TURNAROUND Customer deposits, bn Fineco TFA / client, ‘000 +15% +25% 153 49 54 143 43 134 2010 2013 2015 2010 2013 2015 Leverage on corporate, SME and SB customer base, increasing 360° relationships with entre
Slide 37: Italian commercial business turnaround
Italian commercial business turnaround Room to increase efficiency IV ITALY TURNAROUND Costs Network re-design 6,054 5,674 5,631 Re-definition of Network (Hub & Spoke) Proximity to customers 2010 2013 2015 High commercial efficiency decreasing costs Streamline of support functions & operations FTE(1
Slide 38: Italian commercial business turnaround
Italian commercial business turnaround Improving cost of risk IV ITALY TURNAROUND Cost of risk, bp 168 104 83 Loans origination targeting best rating classes, supported by 2010 2013 2015 governance and new KPIs Process improvement: more stringent rules Improving origination EAD, Dec10-Sep11 Recognit
Slide 39: Concluding remarks
Concluding remarks To be a rock solid European commercial bank STRONG CAPITAL AND LIQUIDITY STRUCTURE CONSERVATIVE RISK PROFILE LEAN AND EFFICIENT STRUCTURE STABLE, SUSTAINABLE LEVEL OF PROFITABILITY 39
Slide 40: ANNEX
ANNEX YPasIUN %
Slide 41: UniCredit key targets
UniCredit key targets Conservative assumptions in mature markets, growth in CEE CAGR 10-13 CAGR 10-15 2010 2013 2015 Group WE CEE Group WE CEE Revenues, bn 26.1 27.6 31.2 1.9% 0.1% 7.2% 3.7% 1.6% 9.1% Op. costs(1), bn 15.3 15.3 15.8 -0.3% -1.5% 4.1% 0.5% -0.8% 5.1% Cost of risk(2), bp 123 90 75 -33
Slide 42: UniCredit Strategic Plan
UniCredit Strategic Plan Milan, 14 November 2011