Banca Monte Dei Paschi Di Siena S.p.a. · MIL:BMPS
Banca Monte Dei Paschi Di Siena — Q1 2015 Earnings Presentation
40 slides from Banca Monte Dei Paschi Di Siena's earnings presentation, May 11, 2015
Slide 1: 1Q2015 GMPS Results - Business Plan update
1Q2015 GMPS Results Business Plan update Fabrizio Viola CEO & General Manager Bernardo Mingrone Deputy General Manager, Head of Finance & Operations 11th May 2015
Slide 2: Executive Summary
Executive Summary Net profit for the period (EUR 72.6mln) and Pre-provision profit at EUR 614mln, up 63.7% QoQ 1Q15 Results NII slightly up (+0.2%) vs. 4Q14 and strong performance from Highlights fees (+9.3% QoQ), driven by WM component (+26.5% QoQ) Commercial Loans stable QoQ, following stron
Slide 3: 1Q15 Results
1Q15 Results page 3
Slide 4: 1Q15 Results
1Q15 Results 1Q15 Results - Key messages 1Q15 Results - Balance sheet 1Q15 Results - P&L page 4
Slide 5: Ongoing positive trend in the core banking business
Ongoing positive trend in the core banking business Increase in Net Interest Income (€/mln) Net Fees (€/mln) placements Deleverage of and growth assets offset by from cost of funding insurance reduction and 640 641 638 reimbursement WM Fees of NFIs +4.4% +17.7% 443 198 611 405 424 168 of which 541 6
Slide 6: Funding optimization, with increase in commercial components
Funding optimization, with increase in commercial components Retail and Corporate Loans* (€/bn) Direct Funding (€/bn) Strong increase in Time Stabilization of Deposits Corporate lending 111,0 flat +5.3bn 131,5 102,0 101,6 128,9 126,2 Mar-14 Dec-14 Mar-15 Mar-14 Dec-14 Mar-15 Loan/Deposit ratio (%) N
Slide 7: New approach to NPE management in a more stringent environment
New approach to NPE management in a more stringent environment AQR driven provisions and reclassifications: Non Perfoming Exposure coverage (%) updated methodologies and parameters applied from the end of 2014 for classification and evaluation of credit exposures Credit Department reorganizati
Slide 8: Capital ratios and capital increase
Capital ratios and capital increase CET 1 ratio 12,0% SREP Requirement: 10,9% 10,2% 10.2% transitional Always compliant with SREP threshold during Plan period Mar-15 transitional Mar-15 fully loaded 2018E pro-forma* pro-forma** The roadmap of capital increase Size: EUR 3.0bn right issue, fully und
Slide 9: 1Q15 Results
1Q15 Results 1Q15 Results - Key messages 1Q15 Results - Balance sheet 1Q15 Results - P&L page 9
Slide 10: Assets & Liabilities trends
Assets & Liabilities trends Total Assets €/mln Mar-14 Dec-14 Mar-15 QoQ% YoY% Customer loans 132,677 119,676 123,139 2.9% -7.2% Deleveraging is slowing Loans to banks 10,204 7,723 7,856 1.7% -23.0% thanks to improving macro- Financial assets 43,500 39,776 41,236 3.7% -5.2% economic conditions PPE
Slide 11: Lending and Funding
Lending and Funding Total Lending Commercial Customer loans stable QoQ, with Retail lending (-1.1% QoQ) impacted by the planned run-off of €/mln Mar-14 Dec-14 Mar-15 QoQ% YoY% Consum.it and slight improvement in Corporate lending (+0.5% QoQ). Total loans up 2.9% QoQ due to increase in Current acco
Slide 12: Asset Quality
Asset Quality Net Non Performing Exposures (NPE)* Net Inflow of Gross NPE Application of new post AQR Sale of NPLs portfolio (€ mln) Net QoQ (%) YoY (%) 3.9 credit policies and triggers 3,3 0,4 Doubtful loans 8,718 +3.2 -6.6 (sofferenze) Unlikely to Pay 12,238 +5.1 +90.1 1,5 1.4 1,3 NP past due / ov
Slide 13: Financial assets: focus on Italian Govies portfolio
Financial assets: focus on Italian Govies portfolio Italian Government Bonds: EUR 25bn* Securities and Derivatives Portfolio at EUR 33.8bn in Mar-15, increased 1.6% QoQ, mainly in Breakdown by IAS category Breakdown by maturity HFT component (+EUR 2bn) driven by MPS Capital Services Nominal Valu
Slide 14: RWAs and Capital ratios
RWAs and Capital ratios RWAs over time (€/bn) RWAs stable (+EUR 140mln QoQ) due to offsetting effects related to +0.2% the increase in credit/counterparty and market risks and the reduction in 76,2 76,4 RWA’s due to capital deductions below CET1 threshold Main drivers of CET1 evolution: Positi
Slide 15: 1Q15 Results
1Q15 Results 1Q15 Results - Key messages 1Q15 Results - Balance sheet 1Q15 Results - P&L page 15
Slide 16: 1Q2015 P&L
1Q2015 P&L Change Change 1Q14 4Q14 1Q15 € mln (QoQ %) (YoY %) Net Income at EUR Net Interest Income 445.8 610.9 611.9 +0.2 +37.3 72.6mln thanks to strong Pre Provision Net Fees 445.2 405.2 443.0 +9.3 -0.5 Profit growth (+63.7% Other revenues 67.6 93.2 212.3 n.m. n.m. QoQ, at EUR 614mln), leading t
Slide 17: Net Interest Income
Net Interest Income Net Interest Income (€/mln) +37.3% Net Interest Income increased +0.2% 37.3% YoY thanks to improving funding/lending spread (approx. +30 611 612 581 bps), as well as reimbursement in 526 3Q14 of EUR 3bn NFIs 446 Quarterly evolution mainly driven by: Ongoing cost of funding
Slide 18: Fees, Dividends and Trading Income
Fees, Dividends and Trading Income Fees (€/mln) Dividends /Profit from investments (€/mln) -0.5% Mainly AXA-MPS +9.3% contribution 445 443 426 421 39 405 33 26 24 24 1Q14 2Q14 3Q14 4Q14 1Q15 1Q14 2Q14 3Q14 4Q14 1Q15 Trading/valuation of financial assets (€/mln) Net fees and commissions up 9.3% QoQ
Slide 19: Operating Costs
Operating Costs Operating Costs (€/mln) Personnel expenses decreased -1.1% 2.6% QoQ mainly due to headcount -11.1% reduction, which more than offset increased expenses associated with 734 661 671 689 653 the National Collective Labour Agreement Other Admin Expenses down 18.4% QoQ in connection t
Slide 20: Provisions and Cost of Risk
Provisions and Cost of Risk Net loan loss provisions (€/mln) Of which EUR Net loan loss provisions down by Of which EUR 1.2bn 4.8bn around EUR 90mln vs. the previous related to quarter normalized and slightly below related to 5.357 AQR driven AQR (CFR 1Q14 provisions component) Cost of credit of
Slide 21: Business Plan update
Business Plan update page 21
Slide 22: Restructuring Plan: main results achieved
Restructuring Plan: main results achieved Downsizing/Derisking Efficiency improvement Total assets down EUR 50bn from Network rationalization Dec-11 to Dec-14 Operating costs: reduced by ≈EUR Closure of domestic branches 750mln (-21.3%) since Dec-11** AFS sovereign bonds from EUR ahead of the Plan (
Slide 23: Rationale for the updated Business Plan targets
Rationale for the updated Business Plan targets Supervisory Review Evaluation Process (SREP) completed: 10.2% CET1 transitional threshold set as minimum “SREP target” Asset Quality Review: review of the entire credit portfolio with impacts fully reflected in 2014 results; introduction of new cri
Slide 24: Key targets 2018
Key targets 2018 Revenues (%) +4.8 Growth Net fees and commission (%) +7.3 (CAGR 14-18) Operating expenses (%) -2.2 Pre Provision Profit (%) +15 2015 guidelines: Efficiency Cost / income (%) ~ 49 PPP: EUR 1.6– 1.8bn Net result positive Cost of credit (bps) 106 Risk Balance Loans / deposits* (%
Slide 25: Main drivers of the updated guidance
Main drivers of the updated guidance 1 Further • Structural review of distribution and business model increase in commercial • Dedicated service model for high potential growth companies productivity • Lending management and credit policies process review 2 completed Improvement of asset • Strong tr
Slide 26: Continued structural optimization of distribution and business model
Continued structural optimization of distribution 1 and business model Closure of further 350 branches Optimisation by 2018 Expected ~EUR EUR 35mln of EUR 140mln of 23mln run rate one-off costs of local ~1,800 branches in 2018 cost savings per investments related to branch (2015-2018) footprint
Slide 27: Other initiatives
Dedicated service model for high potential growth 1 companies Seize opportunities linked to increased customer demand and business competitiveness Goals Improve the profitability through the establishment of a dedicated commercial team to maximize cross-selling Dedicated Dedicated branches foc
Slide 28: Key performance indicators
1 Key performance indicators Lending & Total Funding Operating Costs/ Volumes/ Lending & Total Funding Volumes Total FTE Increase in €/000 €/mln +23% client facing FTEs 78 -13% 15,9 12,9 Reduction 67 achieved in a low growth Cost/Income environment (%) 2014 2018E 2014 2018E -16pp 65,1% 49,4% Retail
Slide 29: Actions taken to enhance the management of problem loans: dedicated unit
2 Actions taken to enhance the management of problem loans: dedicated unit The need to deal with a potentially problematic situation before the loan actually becomes Unlikely to pay has resulted in a reorganization of the Debt Collection Area Reinforcement in DEBT COLLECTION terms of collection DI
Slide 30: Actions taken to enhance the management of problem loans
2 Actions taken to enhance the management of problem loans Outsourcing the management of small-ticket positions # of impaired ticket per FTE o Completed outsourcing of 100,000 NPEs, ~350 Focus on representing approximately 80% of the total higher positions ~100 value o Selected segments and substa
Slide 31: Key performance indicators
2 Key performance indicators Cost of risk Decay Rate* Driven by bps % the recovery in macro-economic conditions and cure rate Driven by -3.2 initiatives new regulatory 4,7 pp 654 framework and models 1,5 106 2014 2018E 2014 2018E Structural measures under discussion by the government could have Mant
Slide 32: Net interest income
Net interest income Net Interest Income evolution 2014-2018 (€/mln) +18% +455 +299 +63 2.549 2.163 Sensitivity to -431 interest rates of EUR 300mln* for a parallel shift of rate for 100bps 2014 NFIs Volume Cost of Rate 2018 reimbursement effect funding effect effect 2014 2018 NII/Total assets: NII/T
Slide 33: Net fees and commissions
Net fees and commissions Closed the gap vs peers: “Fees/Lending and Total Funding Volumes” at 0.60% Net fees and commissions evolution 2014-2018 (€/mln) (from 0.48% in 2014) in line with the market +33% 128 2.251 133 293 1.698 2014 Products Credit Services 2018 (WM, Bancassurance and (Credit facilit
Slide 34: Operating Costs
Operating Costs Operating costs evolution 2014-2018 (€/mln) -9% 2014 GMPS’ «Operating 2.755 costs/Total assets» at 1.5% vs 1.8% avg. Italian banks -121 2.517 -111 -7 +EUR 34mln vs. normalized 2014 2014 Staff Cost Other Admin Amortization 2018 Expenses Staff costs: further reductions planned relyin
Slide 35: Breakdown of the Pre Provision Profit growth
Breakdown of the Pre Provision Profit growth Pre Provision Profit evolution (€/mln) +75% +238 2.583 +553 -71 +386 1.477 2014 Operating 2018 NII Fees Other costs contribution contribution reduction page 35
Slide 36: Capital
Capital 2018 CET1 Common Equity Tier 1 evolution 2014-2018 (Transitional; €/mln) Fully loaded 12.0% +220pbs -45pbs +35pbs -50pbs -115pbs +285pbs 12.0% 8.7% 2014 Capital Capital IRB shortfall AFS Reserve Credit RWA Phase in and 2018 increase, NFI Generation to expected on Alexandria other effects rei
Slide 37: Final remarks
Final remarks page 37
Slide 38: Final remarks
Final remarks Return to profitability thanks to operational performance and normalization of cost of credit Strong capital base with additional EUR 3bn right issue and no reliance on State Aid Strong commitment to reduce the high level of NPEs as a driver to achieve higher levels of profitabil
Slide 39: Disclaimers
Disclaimers This document has been prepared by Banca Monte dei Paschi di Siena S.p.A. (the “Company” and together with its consolidated subsidiaries, the “Group”) solely for information purposes to present the Group’s strategies and financials. The information contained herein has not been independe
Slide 40: ‘fe DEI PASCHI
‘fe DEI PASCHI ! DISIENA BANCA DAL 1472 www.mps.it
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