Unicredit S.p.a. · MIL:UCG
Unicredit — FY2022 Earnings Presentation
51 slides from Unicredit's earnings presentation, Jan 31, 2023
Slide 1: UniCredit Unlocked: 4Q22 & FY22 Group Results
UniCredit Unlocked RECORD 4Q AND BEST YEAR IN OVER A DECADE: TRANSFORMED AND POSITIONED TO WIN 4Q22 & FY22 Group Results Milan, 31 January 2023
Slide 2: Transformed and positioned to win
Transformed and positioned to win A RECORD YEAR, WELL AHEAD OF UNICREDIT UNLOCKED AND PROTECTING THE FUTURE OUTSTANDING RESULTS … … NOTWITHSTANDING RECORD 4Q AND BEST FULL YEAR RESULTS + 13% NET REVENUE, VS FY21 − 2% COST, VS FY21 + 279bps ORGANIC CAPITAL GENERATION €1.2bn (NET OF TAX) HEADWINDS & A
Slide 3: Transformed and positioned to win
Transformed and positioned to win A RECORD YEAR, WELL AHEAD OF UNICREDIT UNLOCKED AND PROTECTING THE FUTURE 202 1- A structurally improved bank, 202 delivering alpha 2 A stepped up run-rate across our three levers, with further upside 2021-22 TRANSFORMED All supporting growing distributions while fu
Slide 4: Transformed and positioned to win
Transformed and positioned to win A RECORD YEAR, WELL AHEAD OF UNICREDIT UNLOCKED AND PROTECTING THE FUTURE 2021-22 A STRUCTURALLY IMPROVED BANK DELIVERING OUTSTANDING ALPHA-DRIVEN RESULTS ALL BUSINESSES DELIVERING ACROSS ALL KEY LEVERS TRANSFORMED • Clear vision and strategy: • Record 4Q: eighth co
Slide 5: A unifying vision
UniCredit - Strictly Confidential A unifying vision regained pride NEW CLIENT PROPOSITION Win. Increased net profit VISION Unified The Right Way. Sustainability Together. The Bank capital-light shared purpose EMPOWERED RoTE >10% for Europe’s Best-in-class products and advice common objective future
Slide 6: A strategy to deliver more predictable and higher rated earnings
UniCredit - Strictly Confidential A strategy to deliver more predictable and higher rated earnings CENTERED ON OUR CLIENTS, PURPOSE AND PROFITABILITY Sustainable profitable growth delivering a positive impact. STRATEGY STRATEGIC PARTNERS EMPOWERED ORGANISATION CONNECTING CLIENTS ACROSS EUROPE 13 ban
Slide 7: Selected highlights of our industrial transformation
UniCredit - Strictly Confidential Selected highlights of our industrial transformation SIMPLIFYING THE DELAYERING THE ORGANISATION EMPOWERING PEOPLE STREAMLINING PROCESSES PEOPLE & ORGANISATION ORGANISATION From 5 siloed business divisions to 4 coverage regions −28 structures, % moving closer to cli
Slide 8: Exceeding our ESG and related commitments
UniCredit - Strictly Confidential Exceeding our ESG and related commitments CLIENTS see Annex for details INNOVATION ACCOUNTABILITY DIVERSITY & INCLUSION • Released Net Zero 2030 targets • Only bank in the • ESG representation • Group Executive Committee: on first three priority sectors CEO Alliance
Slide 9: Delivering quality growth, operational and capital excellence
UniCredit - Strictly Confidential Delivering quality growth, operational and capital excellence NEW RUN-RATE OF GROSS REVENUE GROWTH1 … … DRIVING OPERATIONAL EXCELLENCE COMPELLING POSITIVE JAWS EFFECT Y/Y 110 GROSS REVENUE 105 − 4% + 9% 100 Operating leverage FY22 improved by 95 Avg. ‘12-’22 16 p.p.
Slide 10: Top tier sustainable profitability, accelerating vs. peers
UniCredit - Strictly Confidential Top tier sustainable profitability, accelerating vs. peers MOVING AT AN ACCELERATED PACE VS. PEERS ACROSS ALL LEVERS1 FY22 ROTE WELL AHEAD OF UNICREDIT UNLOCKED DESPITE OVERLAYS AND RUSSIA’S ABSORPTION All figures in % 12.3 +89bps 10.7 3rd9M2
Slide 11: Record 4Q underpinning UniCredit's best year
UniCredit - Strictly Confidential Record 4Q underpinning UniCredit’s best year 2022 RESULTS 3 LEVERS LARGELY UNDER MANAGEMENT CONTROL, GIVING CONFIDENCE IN OUR STRATEGY 4Q22 Group FY22 Group In million Y/Y excl. Russia FY/FY excl. Russia Net Revenue 5,191 +44% 4,735 18,448 +13% 18,072 o/w Fees1 1,83
Slide 12: Strengthened lines of defence and absorbed one-offs
UniCredit - Strictly Confidential Strengthened lines of defence and absorbed one-offs RECORD NET PROFIT ACHIEVED NOTWITHSTANDING HEADWINDS AND ACTIONS TAKEN TO SECURE THE FUTURE 1.2bn 6.5bn NET OF TAX 5.6bn 0.5bn 0.2bn 5.2bn Incremental overlays and provisions to pre-empt Negative Russia P&L effect
Slide 13: Consistent performance surpassing targets across all levers
UniCredit - Strictly Confidential Consistent performance surpassing targets across all levers 2022 OUTPERFORMED 18.4 NET REVENUE 15.8 16 + 17% DESPITE RUSSIA EXPOSURE AND PROACTIVELY BUILDING SIZEABLE FORWARD-LOOKING PRUDENTIAL MEASURES ROTE1, % 12.3 RoTE@13% COSTS 10.4 16 9.6 − 8% Cet1r 10.7 343 RW
Slide 14: Delivering exceptional per-share value creation
UniCredit - Strictly Confidential Delivering exceptional per-share value creation ABSOLUTE GROWTH ENHANCED BY SHARE BUY-BACKS BOOSTING EPS1,4 EXCEPTIONAL SHAREHOLDER VALUE CREATION 5.2 NET PROFIT 1, (bn) 2.8 3.5 + 85% 2.50 > 50 of market capitalisation5 distributed back % to shareholders since begin
Slide 15: A challenging year, mitigated by alpha actions
UniCredit - Strictly Confidential A challenging year, mitigated by alpha actions β MARKET FACTORS α MANAGEMENT ACTIONS ACHIEVEMENTS HIGHEST STRONG RATE • Pass through optimisation via proactive balance-sheet management INCREASE • Decisive actions and strict discipline aimed to improve asset quali
Slide 16: Outsized capital generation funding distribution and higher CET1r
UniCredit - Strictly Confidential Outsized capital generation funding distribution and higher CET1r UNICREDIT UNLOCKED 2022 CET1r WALK PRUDENT % DISTRIBUTION 0.7 1.7 1.7 + 78bps CET1r vs. FY21 16.6 14.1 14.9 14.9 100% DISTRIBUTION / NET PROFIT FY21 CET1r Net Profit1 RWA and other CET1r Shareholder F
Slide 17: Client Solutions: recurring and scalable capital-light generation
UniCredit - Strictly Confidential Client Solutions: recurring and scalable capital-light generation CONTINUING STRONG AND DURABLE PERFORMANCE CONFIRMING SUCCESS OF THE BUSINESS MODEL Manufacturing quality products due to scale thanks to centralised factories serving local coverage with full potentia
Slide 18: Italy: Strong alpha returns achieved while protecting the future
UniCredit - Strictly Confidential Italy: Strong alpha returns achieved while protecting the future 8.7bn 43.5% 17.1% Net Cost Cost Capital Revenue Income RoAC + 18.1% − 3.8pp − 1.3% + 151bps Cost / Income Absolute cost base Organic Capital Generation2 FY data, all deltas FY/FY Strong NII (+15%) supp
Slide 19: Germany: transformed into a profitable capital generating bank
UniCredit - Strictly Confidential Germany: transformed into a profitable capital generating bank 4.7bn 49.9% 11% Net Cost Cost Capital Revenue Income RoAC C. + 7.3% − 10.0pp − 5.7% 52bps + Cost / Income Absolute cost base Organic Capital Generation2 FY data, all deltas FY/FY Strong NII (+2.8%) drive
Slide 20: CE: profitable franchise with Austria industrially transforming
UniCredit - Strictly Confidential CE: profitable franchise with Austria industrially transforming 3.3bn 46.3% 14.7% Net Cost Cost Capital Revenue Income RoAC + 22.3% − 8.7pp − 2.9% + 43bps Cost / Income Absolute cost base Organic Capital Generation1 FY data, all deltas FY/FY Strong Revenue supported
Slide 21: EE: continued momentum proving resiliency of the franchise
UniCredit - Strictly Confidential EE: continued momentum proving resiliency of the franchise 1.8bn 41.0% 19.3% Net Cost Cost Capital Revenue Income RoAC 9.0pp +16.2% + − 1.6pp + 6.7% + 23bps Loan growth Cost / Income Absolute cost base Organic Capital Generation2 FY data, all deltas FY/FY Solid NII
Slide 22: Russia: resized, refocused and rationalised at minimum cost
UniCredit - Strictly Confidential Russia: resized, refocused and rationalised at minimum cost Local LOCAL BUSINESS RESIZED OPTIMISED OPERATIONS LIMITED REMAINING IMPACT EVEN IN UNLIKELY CASE ... Liquid OF EXTREME LOSS RESIZED, Net Local loans¹ REFOCUSED AND OPTIMISED Guarantees¹ -34% -39% − 4.1bn ..
Slide 23: Financial highlights 4Q22 and FY22
Transformed and positioned to win A RECORD YEAR, WELL AHEAD OF UNICREDIT UNLOCKED AND PROTECTING THE FUTURE 2021-22 Financial highlights TRANSFORMED 4Q22 and FY22 S. PORRO (CFO) 2023-24 2021-2022 WINNING 23
Slide 24: Revenue growth driven by rate environment and strong commercial activities
Group excl. Russia unless otherwise specified UniCredit - Strictly Confidential Revenue growth driven by rate environment and strong commercial activities Net interest income and elevated client trading activity Y/Y more than offsetting impact of market volatility on AuM fees and lower dividends Inc
Slide 25: Net interest income benefitting from client rate dynamics and TLTRO
Group excl. Russia unless otherwise specified UniCredit - Strictly Confidential Net interest income benefitting from client rate dynamics and TLTRO Avg Euribor 3M: +129bps Q/Q, +235bps Y/Y Full Year, bn Quarterly evolution, bn Q/Q delta details, m 4Q22: +1.78bps 3Q22: +0.49bps 405 4Q21: -0.57bps +16
Slide 26: Net interest income: FY23 further upside with conservative assumptions
UniCredit - Strictly Confidential Net interest income: FY23 further upside with conservative assumptions End-of-Period ECB Deposit ASSUMPTION ON PROJECTIONS 2.00% 2.50% If 3.00% Instead Facility Rate “DFR” starting at end of 1Q23 starting at end of 1Q23 (assumptions) Increase in deposit beta1 from t
Slide 27: Resilient outcome in a challenging year thanks to diversified fee mix
Group excl. Russia unless otherwise specified UniCredit - Strictly Confidential Resilient outcome in a challenging year thanks to diversified fee mix Full Year, bn Quarterly evolution, bn Split by fee categories in the quarter 219 0.6bn +4% -10% 213 214 213 +1% 207 199 194 194 Investment FY/FY 6.8bn
Slide 28: Continued strong delivery on costs discipline despite major inflation impact
Group excl. Russia unless otherwise specified UniCredit - Strictly Confidential Continued strong delivery on costs discipline despite major inflation impact Full Year Quarterly evolution Quarterly split by item 55% 56% 56% 56% 4Q22 net of one-off inflation 49% 52% 51% 52% -3% Y/Y net of one-off 48%
Slide 29: Low cost of risk reflecting solid credit portfolio and building substantial overlays
Group excl. Russia unless otherwise specified UniCredit - Strictly Confidential Low cost of risk reflecting solid credit portfolio and building substantial overlays Increased overlays in 4Q22 for geo-political risks to mitigate potential future impact # Group including Russia 1.1% Default rate 1.2%
Slide 30: Further reduction of NPE and improvement of mix
Group excl. Russia unless otherwise specified UniCredit - Strictly Confidential Further reduction of NPE and improvement of mix 3.7% 2.7% Gross NPE ratio 4.8% 4.7% 4.6% 3.7% 3.6% 2.8% 2.8% 2.6% Net NPE ratio 2.1% 2.1% 2.1% 1.8% 1.8% 1.7% 1.5% 1.4% 1.4% 1.4% Total gross NPE 21.8 21.0 20.2 Gross past
Slide 31: 4Q22 notable items
Group excl. Russia unless otherwise specified UniCredit - Strictly Confidential 4Q22 notable items # Group including Russia Group excl. Russia 4Q22 Q/Q Y/Y Net Operating Profit 2.3bn +20% n.m. Integration costs -0.3bn - -79% Integration costs booked in Italy and Germany -0.2bn Largely due to positiv
Slide 32: RWA efficiency showing management focus on profitability and return on capital
UniCredit - Strictly Confidential RWA efficiency showing management focus on profitability and return on capital RWA walk, bn -4% Group Q/Q -4% FY/FY EBA guidelines implementation: +4bn Procyclicality: -1bn (mainly PD scenario) 322 Russia 12 308 320 +3 308 16 Russia 17 -1 -6 16 -8 Group 310 excl. Ru
Slide 33: FY22 capital significantly improved allowing much higher distributions
UniCredit - Strictly Confidential FY22 capital significantly improved allowing much higher distributions FY22 CET1r well above FY21 even netting for 5.25bn distribution1 and Russia residual “extreme loss” assessment2 +5.8bn Net Profit: +181bps RWA: +90bps -10bps Participation FY22 Group excluding Ru
Slide 34: Transformed and positioned to win
Transformed and positioned to win A RECORD YEAR, WELL AHEAD OF UNICREDIT UNLOCKED AND PROTECTING THE FUTURE MAINTAINING MOMENTUM TO DELIVER OUR VISION, STRATEGY AND INDUSTRIAL PLAN 2023-24 COMMERCIAL FRANCHISE OPERATING MODEL INVESTING IN OUR FUTURE WINNING CONTINUING TO STENGTHEN OUR CORE FOCUS FUN
Slide 35: New predictable run-rate with secured cost of risk
UniCredit - Strictly Confidential New predictable run-rate with secured cost of risk PREDICTABLE PROFITABILITY 29% 456bn 1.2x UniCredit Unlocked target CoR absorption Sustainable increase in GOP Strong, high quality and capacity with overlays built on highly + vs. historical average levels robust cr
Slide 36: Positioned to deliver on our commitments
UniCredit - Strictly Confidential Positioned to deliver on our commitments FY23 GUIDANCE1 STRUCTURALLY IMPROVED PROFITABILITY TO DELIVER Net revenue > 18.5bn UNDER ANY SCENARIO STRONG PORTFOLIO AND Net interest > 11.3bn PRUDENT OVERLAYS TO BE DEPLOYED OR RELEASED IN THE COMING TWO YEARS Costs 9.7bn
Slide 37: Annex
Transformed and positioned to win A RECORD YEAR, WELL AHEAD OF UNICREDIT UNLOCKED AND PROTECTING THE FUTURE 2021-22 TRANSFORMED Annex 2023-24 2021-2022 WINNING 37
Slide 38: Net Zero: a milestone in our journey to a more sustainable UniCredit
UniCredit - Strictly Confidential Net Zero: a milestone in our journey to a more sustainable UniCredit JOINED NET ZERO …TARGETS ON LENDING PORTFOLIO SET ON MOST RELEVANT SECTORS1 FOR UCG BANKING ALLIANCE IN OCT 21… Sectors Metric and Scope Portfolio in scope2 2021 baseline3 2030 target3 (Drawn expos
Slide 39: Updated mild recession base case macro scenario
UniCredit - Strictly Confidential Updated mild recession base case macro scenario EUROZONE UNICREDIT FOOTPRINT (Group including Russia) Scenarios 2022-2024 Scenarios 2022-2024 MILD FY23 Group Excluding Russia: MILD RECESSION • Inflation: 7.2% RECESSION • GDP growth: 0.0% 2022 8.5 3.1 2022 10.0 1.0
Slide 40: Group P&L and selected metrics
UniCredit - Strictly Confidential Group P&L and selected metrics Group incl. Russia Group excl. Russia All figures in bn Unless otherwise stated 4Q21 1Q22 2Q22 3Q22 4Q22 FY21 FY22 4Q22 FY21 FY22 Revenue 4.4 5.0 4.8 4.8 5.7 17.9 20.3 5.4 17.3 19.1 Costs -2.5 -2.3 -2.4 -2.4 -2.5 -9.8 -9.6 -2.4 -9.5 -9
Slide 41: CET1r quarterly evolution
UniCredit - Strictly Confidential CET1r quarterly evolution +1.6bn Net Profit: +50bps RWA: +68bps −25bps Participation -0.5bn Cash dividend: -16bps +7bps Cross-border exposures -0.2bn AT1&Cashes coupons: -7bps +117bps 16.00% 15.41% -23bps -15bps -2bps -18bps 14.91% -108bps 4Q22 Group excluding Russi
Slide 42: Russia exposure details
UniCredit - Strictly Confidential Russia exposure details CAPITAL EQUIVALENT OF RESIDUAL2 IMPACT RUSSIA MAX EXPOSURE EXTREME LOSS ASSESSMENT1 FY22 P&L AND EQUITY FROM EXTREME LOSS IMPACTS ASSESSMENT1 8th March End of April 31st 31st Taken 31st Exposure, bn Press as per 1Q22 market of December of Dec
Slide 43: Loan and deposit volumes
UniCredit - Strictly Confidential Loan and deposit volumes 4Q22 avg gross commercial vs 3Q22 Gross customer performing 4Q22 avg commercial vs 3Q22 Customer deposits performing loans, bn loan rates 4Q22 deposits, bn rates 4Q22 (vs 3Q22) (vs 3Q22) Italy 166 -1% 2.69% 195 -1% -0.13% (+69bps) (-11bps) G
Slide 44: Total Financial Assets
Group excl. Russia unless otherwise specified UniCredit - Strictly Confidential Total Financial Assets Quarterly evolution, bn TFAs quarterly split by item, bn 16 15 14 13 13 10 194bn flat -12% 8 8 AuM +3% 4Q22 Q/Q Y/Y Q/Q 724 734 754 736 721 715 739 153bn +10% -5% 708 AuC 4Q22 Q/Q Y/Y 1Q21 2Q21 3Q2
Slide 45: Spill-over analysis confirming soundness of Group risk profile
Group excl. Russia unless otherwise specified UniCredit - Strictly Confidential Spill-over analysis confirming soundness of Group risk profile A ENTERPRISES B INDIVIDUALS 446bn Group 29% 47% 4% 21% EaD1 Energy intensive sectors Other Enterprises Consumer Mortgages Corporates & SMEs belonging to ener
Slide 46: Group gross loans breakdown by stages
UniCredit - Strictly Confidential Group gross loans breakdown by stages Stage 3 Group gross loans1 and provisions EoP, bn 3.7% 3.8% o/w Gross NPE (% of gross loans) 2.9% 2.9% 2.7% Stage 3 4Q21 1Q22 2Q22 3Q22 4Q22 471 475 474 468 463 14 14 Coverage 53.6% 52.4% 50.0% 50.4% 48.2% 18 13 ratio Stage 3 17
Slide 47: End notes
UniCredit - Strictly Confidential End notes
Slide 48: Disclaimer
UniCredit - Strictly Confidential Disclaimer This presentation may contain “forward-looking statements” which includes all statements Canada or Japan or any other jurisdiction where such an offer or solicitation would be that do not relate solely to historical or current facts and which are therefor
Slide 49: Information related to this presentation (1/3)
UniCredit - Strictly Confidential Information related to this presentation (1/3) General notes End notes are an integral part of this presentation. All data throughout the documents are in Euros Numbers throughout the presentation may not add up precisely to the totals provided in tables and text du
Slide 50: Information related to this presentation (2/3)
UniCredit - Strictly Confidential Information related to this presentation (2/3) Main definitions “Clients” means those clients that made at least one transaction in the last three months “Cost of risk” based on reclassified P&L and Balance sheet, calculated as (i) LLPs of the period (annualised in
Slide 51: Information related to this presentation (3/3)
UniCredit - Strictly Confidential Information related to this presentation (3/3) Main definitions “Net NPE Ratio” Net non performing exposures over net loans to customers (including active repos, excluding debt securities and IFRS5 reclassified assets) “Net profit” means Stated net profit adjusted f