Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — FY 2022 Earnings Presentation
49 slides from Banco Bpm Spa's earnings presentation, Feb 7, 2023
Slide 1: Group FY 2022 Results Presentation
Group FY 2022 Results Presentation 07 February 2023
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Banco BPM ("Banco BPM"); for the purposes of this notice, "presentation" means this document, any oral presentation, any question and answer session and any written or oral material discussed following the distribution of this document. The distribut
Slide 3: Methodological Notes
Methodological Notes ▪ Starting from 1 July 2022 Banco BPM Vita & Banco BPM Assicurazioni, previously held at 19%, have been consolidated 100% line-by-line. As a consequence: ▪ with regard to the balance sheet scheme, as of 31/12/22, the items relating to the portfolios of financial assets and liabi
Slide 4: Agenda
Agenda 1 Executive Summary 5 2 Key Highlights 14 3 FY 2022 Performance Details 27 4
Slide 5: Executive Summary
Executive Summary 1
Slide 6: Solid delivery track record confirmed, beating the 2022 guidance
Solid delivery track record confirmed, beating the 2022 guidance 2022: STRONG Y/Y IMPROVEMENT IN ALL KEY FIGURES 2022: ACTUAL RESULTS BEYOND GUIDANCE BEST FY RESULT EVER ACHIEVED € 886m +25% Y/Y ACTUAL GUIDANCE ADJ. NET INCOME: €m €bn €m NET INCOME 7.4% TOTAL REVENUES 4,706 ~4.6 5.5% ROTE1 O/W NII 2
Slide 7: On the road towards excellence…
On the road towards excellence… Q4 2022: a new accelerated trajectory 2021-Q3 2022: steady improvement NII + Net Commissions € bn +14% Q/Q 4.2 ~3.9 ~4.1 2017-2019: restructuring NII + Net Commissions 1.17 €m 988 992 1,014 1,025 Starting point: YE 2016 Q4 22 FY 22 2023 2024 SP Target SP Target ❑ Gros
Slide 8: …laying the foundations for a strengthened business model
…laying the foundations for a strengthened business model New Bancassurance set-up Digital-based customer service model • 100% of former BPM Vita, rebranded Banco BPM Steady Growth in Remote & APP-based exceeding Branch-based transactions Vita, consolidated line-by-line starting from Q3 Omnichannel
Slide 9: Excellent performance, with Net Income +93.1% Q/Q and +23.5% Y/Y
Excellent performance, with Net Income +93.1% Q/Q and +23.5% Y/Y P&L Long-term trend (Adjusted data) Q3 2022 €m Q4 2021 Q4 2022 Chg. Q/Q FY 2021 FY 2022 Chg. Y/Y Restated Net interest income 506 551 724 31.3% 2,042 2,314 13.4% Evolution of ROTE Net fees and commissions 486 473 447 1,911 1,887 9.3% N
Slide 10: Strong rate sensitivity to support further growth in NII guidance
Strong rate sensitivity to support further growth in NII guidance ECB Depo Facility (%) Average 3M Euribor (bps) Avg. FY 2022: 35bps 2.50 2.00 In the new 1.50 231 176 interest rate 0.75 44 environment… 0.00 -54 -37 -0.50 Q1 22 Q2 22 Q3 22 Q4 22 Avg. Jan 30/6/22 21/7/22 21/9/22 27/10/22 15/12/22 2/2/
Slide 11: Supporting our clients while maintaining a high-quality lending portfolio
Supporting our clients while maintaining a high-quality lending portfolio Top quality franchise, rooted in the wealthiest areas of the country Customer Loans concentrated in the Growth in “Core” Net Performing Customer Loans1 wealthiest areas of the country € bn Geographical breakdown +3.3% 102.8 75
Slide 12: Gross NPE ratio down to 4.2% from 5.6%
Gross NPE ratio down to 4.2% from 5.6%: already ahead of 2024 Strategic Plan target Gross NPE stock down by €1.6bn Y/Y: -25.2% Gross NPE Ratio down to 4.2% from 5.6% at YE 2021 € bn 3.8% 6.4 ~6.0 (EBA definition)1 5.3 4.8 5.6% UTP + PD 4.7% 4.2% 4.8% 4.2 UTP + PD 3.3 2.7 3.7% 2.9% 2.4% Bad Loans Bad
Slide 13: Solid capital position, coupled with impressive derisking track record
Solid capital position, coupled with impressive derisking track record Significant organic capital generation, even more valuable given the ~€33bn derisking performed CET1 Ratio FL1 CET1 Buffer vs. Min. Req. FL1 Texas Ratio3 +190bps ~ +300bps -140 p.p. 13.3% 464bps 160.3% 11.4% ~160bps 20.3% 2 31/12
Slide 14: Key Highlights
Key Highlights 2
Slide 15: NII: strong growth in Q4 2022 supported by commercial spread
NII: strong growth in Q4 2022 supported by commercial spread Y/Y trend Quarterly trend Includes €80m of NII Evolution Bridge benefits from the €m €m previous TLTRO regime €m +13.4% +62 +43.1% until 22 Nov. 2022 +33 724 +144 2,314 +31.3% -66 2,042 724 551 551 506 Q3 22 Comm. Bond TLTRO Other Q4 22 FY
Slide 16: Net Fees and Commissions at €1.9bn, sustained by commercial banking
Net Fees and Commissions at €1.9bn, sustained by commercial banking Commercial Banking fees €m +2.3% 9M Avg. Q: €249m • Solid Y/Y trend: +2.3% • Fees on lending +€21m (+15%), • Payment services +€14m (+9%) 995 • Credit cards +€10m (+18%) 972 241 249 257 248 … more than offsetting higher costs on syn
Slide 17: Operating costs under control
Operating costs under control Y/Y increase in energy costs and other inflation dynamics compensated by decrease in staff costs Banking business costs1 €m Y/Y trend Quarterly trend 2,516 2,524 632 642 247 279 625 625 D&A in Q4 D&A 601 644 61 64 70 84 include a €12m 156 163 158 168 component not Other
Slide 18: Declining trend in Cost of Risk with strengthened coverage ratios
Declining trend in Cost of Risk with strengthened coverage ratios LLPs & Cost of Risk: Y/Y trend Comforting migration rates €m LLPs Cost of Risk FY 21 FY 22 -23.1% 55bps 52bps Default rate 0.98% 0.94% «Core»1 (from Performing to NPEs) «Core»1 887 Danger rate 682 81bps 9.3% 10.1% 62bps (from UTP to B
Slide 19: Asset Quality drivers: active management of a highly guaranteed loan portfolio
Asset Quality drivers: active management of a highly guaranteed loan portfolio Customer loans: increased share of secured exposure, Engagement campaigns: positive results mainly in the SME segment % share of secured positions on total loans (Stock of Performing, GBV) Early engagement campaigns activ
Slide 20: Strong funding & liquidity position
Strong funding & liquidity position Successful issuance activity: €2.75bn wholesale bonds issued, • €103.7bn of C/A and Deposits (84% of o/w: €2.05bn with Green features total Direct Funding) € bn #1 Green bond issuer among Italian banks in 2022 • TLTRO III down to €26.7bn, after an 0.75 anticipated
Slide 21: Optimization and higher diversification of Debt securities portfolio
Optimization and higher diversification of Debt securities portfolio Italian Govies: reduction in the share on total Govies and mostly concentrated in AC Debt securities portfolio: accounting classification Debt securities portfolio: composition by counterparty € bn € bn 31/12/16 31/12/21 30/09/22 3
Slide 22: Debt securities portfolio at FVOCI: contribution to NFR
Debt securities portfolio at FVOCI: contribution to NFR and limited impact from Italian Govies Reserves of debt securities at FVOCI NFR • Yearly trend of FVOCI Post-tax €m reserves mitigated by FY 2022: €243m €m the contribution to NFR of FVOCI-related 46 31/03/22 30/06/22 30/09/22 31/12/22 128 comp
Slide 23: Capital position: strengthened ratios and buffers
Capital position: strengthened ratios and buffers Fully Loaded CET1 Ratio: evolution % 13.0 +33bps 13.3 12.4 +36bps -20bps +22bps +7bps +51bps +34bps 12.05 Danish 12.5 12.8 Danish CET 1 Compromise2 CET 1 CET 1 Compromise2 stated stated stated 30/09/2022 Q4 Dividends 1 Balance Other 31/12/2022 Remova
Slide 24: FY 2022 in a nutshell: ahead of Strategic Plan and beating 2022 guidance
FY 2022 in a nutshell: ahead of Strategic Plan and beating 2022 guidance Operating performance: solid delivery ❑ NET INCOME AT RECORD LEVEL:. €886m Adj. (+24.8% Y/Y), €703m Stated (+23.5%) ❑ ACCELERATED TRAJECTORY IN NII & NET COMMISSIONS (UP AT €4,202m): +6.3% Y/Y, +14.3% Q/Q ❑ INCREASE IN PRE-PROV
Slide 25: Performance Outlook 2023: key drivers
Performance Outlook 2023: key drivers MAIN AREAS OF POTENTIAL UPSIDE • Net Commissions broadly in line • >€2.7bn in FY 2023E: +17% Y/Y Net Other with FY 2022 (avg. Euribor at ~2.5%) Interest Revenue • Prudent assumptions for NFR Income Upside potential: Items • Contribution from bancassurance Furthe
Slide 26: Confident to increase profitability also beyond 2023
Confident to increase profitability also beyond 2023 EPS TRACK RECORD AND 2023 GUIDANCE LONG-TERM OUTLOOK: new pace of growth supported by current macro scenario Increased guidance KEY DRIVERS: >€60 (vs. ~ €49 cents 2023 Strategic Plan) cents • Strong NII • CoR normalization • Full bancassurance dep
Slide 27: FY 2022 Performance Details
FY 2022 Performance Details 3
Slide 28: Quarterly Stated P&L results
Quarterly Stated P&L results Q3 2022 Reclassified income statement (€m) Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q4 22 Chg. Q/Q Chg. Q/Q % Restated Net interest income 496.8 522.4 516.4 506.0 511.5 527.6 551.3 724.0 172.6 31.3% Income (loss) from invest. in associates carried at equity 41.5 56.5 46.8 87.
Slide 29: FY 2022 income statement: stated and adjusted comparison
FY 2022 income statement: stated and adjusted comparison Chg. Y/Y FY 21 FY 22 Chg. Y/Y Reclassified income statement (€m) FY 21 FY 22 % adjusted adjusted % Net interest income 2,041.6 2,314.4 13.4% 2,041.6 2,314.4 13.4% Income (loss) from invest. in associates carried at equity 231.9 157.5 -32.1% 18
Slide 30: P&L: FY 2022 stated and adjusted comparison with one-off details
P&L: FY 2022 stated and adjusted comparison with one-off details FY 2022 Reclassified income statement (€m) FY 2022 One-off Non-recurring items adjusted Net interest income 2,314.4 2,314.4 0.0 Income (loss) from invest. in associates carried at equity 157.5 157.5 0.0 Net interest, dividend and simil
Slide 31: Reclassified Balance Sheet
Reclassified Reclassified assets (€ m) Restated Chg. Y/Y Chg. Q/Q 31/12/21 30/06/22 30/09/22 31/12/22 Value % Value % Cash and cash equivalents 29,153 33,109 24,370 13,131 -16,023 -55.0% -11,239 -46.1% Balance Sheet Loans and advances measured at AC - Loans and advances to banks 121,261 120,540 113,
Slide 32: Direct funding from the Banking business
Direct funding from the Banking business1 Direct funding2 (without Repos) € bn +0.2% +0.6% 123.2 122.7 123.4 Capital-protected Certificates Other Bonds 104.0 102.8 103.4 Time deposits C/A & Sight deposits (84.5%) (84.5%) (83.7%) (83.8%) (% Share on total) 31/12/2021 30/09/2022 31/12/2022 31/12/21 30
Slide 33: Bond maturities: limited and manageable amounts
Bond maturities: limited and manageable amounts Institutional bond maturities € bn 3.25 1.91 2.0 1.4 0.50 0.75 0.5 0.5 FY 2023 FY 2024 FY 2025 Senior Pref. Senior non Pref. Covered Bonds • €3.9bn institutional bonds reimbursed in FY 2022 Managerial data based on nominal amounts. Excluding calls. No
Slide 34: Liability profile: Bonds outstanding and issues
Liability profile: Bonds outstanding and issues Bonds Outstanding as at 31/12/2022 Nominal amounts Senior Preferred 14.0% Senior 9.2% Non-preferred Capital-protected 23.9% Certificates €19.1bn Subordinated 17.3% (AT1 and T2) Covered Bonds1 35.7% €750m Green Senior Pref. bond issued in Wholesale bond
Slide 35: Indirect customer funding at €91.3bn
Indirect customer funding at €91.3bn Assets under Management (AuM) Assets under Custody (AuC)1 € bn € bn -9.1% -5.3% +1.4% 65.3 +9.1% 4.1 58.6 59.4 3.8 4.0 33.7 15.5 31.9 15.6 15.5 29.3 45.8 39.2 39.9 31/12/2021 30/09/2022 31/12/2022 31/12/2021 30/09/2022 31/12/2022 Funds & Sicav Bancassurance Manag
Slide 36: Focus on Govies portfolio
Focus on Govies portfolio Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn € bn € bn -10.9% +1.3% -97.1% +25.6% -17.7% 10.3 9.2 -70.6% 7.3 1.7 2.1 1.7 0.7 0.1 0.02 31/12/21 30/09/22 31/12/22 31/12/21 30/09/22 31/12/22 31/12/21 30/09/22 31/12/22 Non-Italian Govies at AC Non-I
Slide 37: Solid liquidity position: LCR at 191% & NSFR >100%
Solid liquidity position: LCR at 191% & NSFR >100% as at 31/12/2022 Cash + Unencumbered Assets1 € bn 45.1 44.2 Eligible Assets 2.9 37.9 3.1 6.5 36.4 8.9 7.2 Excess ECB deposits 0.6 20.9 €4.5bn average 28.0 32.0 Depo Facilities (O/N) with ECB 23.2 0.2 amount in FY 2022 12.0 €29.5bn average Marketable
Slide 38: New lending at €26.5bn in 2022: +17.1% Y/Y
New lending at €26.5bn in 2022: +17.1% Y/Y New lending guaranteed by the State at €5.9bn in 2022 New lending1: trend and composition Management data € bn 7.0 6.6 6.3 6.7 6.2 5.8 5.8 1.1 Households 1.1 4.8 1.1 0.8 0.8 1.0 1.1 0.9 Corporate, Enterprise, 5.1 5.6 5.9 5.8 5.5 4.7 3.9 4.7 Small Business s
Slide 39: Net Customer Loans
Net Customer Loans Sound increase in Performing Loans Net Customer Loans1 € bn Change +0.1% Net Performing Customer Loans 31/12/21 30/09/22 31/12/22 In % Y/Y In % Q/Q +0.1% Core customer loans 99.5 102.9 102.8 3.3% -0.1% - Medium/Long-Term loans 77.3 80.6 80.4 4.1% -0.2% 109.4 109.4 109.5 - Current
Slide 40: Analysis of gross Performing loan portfolio
Analysis of gross Performing loan portfolio Performing customer loan breakdown as at 31/12/2022 Stage classification of Performing Loans: evolution Management GBV in € bn data, GBV Breakdown by customer segments 106.6 108.4 107.1 107.5 (including GACS Senior Notes) 11.2 13.0 10.9 Stage 2 11.7 Stage
Slide 41: NPE migration dynamics
NPE migration dynamics Inflows from Performing to NPEs Outflows from NPEs to Perf. Loans Flows from UTP to Bad Loans €m €m €m -3.6% -6.8% -10.0% 158 462 1,014 978 147 416 FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022 Default rate Cure rate 2.9% 3.3% Danger rate 9.3% 10.1% 0.98% 0.94% (from UTP to
Slide 42: Asset Quality details
Asset Quality details Loans to Customers at AC1 Gross exposures 31/12/2021 30/06/2022 30/09/2022 31/12/2022 Chg. Y/Y Chg. Q/Q €/m and % Value % Value % Bad Loans 2,190 1,996 1,997 2,047 -143 -6.5% 50 2.5% UTP 4,126 3,405 3,218 2,639 -1,487 -36.0% -578 -18.0% Past Due 60 84 78 82 22 37.6% 4 5.2% NPE
Slide 43: Details on Insurance business consolidated starting from 1 July 2022
Details on Insurance business consolidated starting from 1 July 2022 Banco BPM Vita & Banco BPM Assicurazioni portfolio fully consolidated starting from 1 July 2022 Technical reserves & Financial liabilities P&L contribution of Banco BPM Vita & Assicurazioni1 1 from insurance business H2 22 31/12/22
Slide 44: Capital position in detail
Capital position in detail1 PHASED I N CAPI TAL PHASED I N 31/12/2021 30/09/2022 31/12/2022 POSI TI ON (€/m and %) RWA COMPOSI TI ON 31/12/2021 30/09/2022 31/12/2022 CET 1 Capital 9,387 8,316 8,618 (€/bn) T1 Capital 10,564 9,705 10,008 CREDI T & COUNTERPARTY Total Capital 12,524 11,496 11,789 54.1 5
Slide 45: Further progress in new digital-driven distribution model
Further progress in new digital-driven distribution model Main digital-enabled achievements # Branch and APP-based transactions (m) % Remote-based transaction Weight on total transactions +180% -42% 40 84% 90% 83% 74% Branch 29 24 23 23 APP 10 26% 7% 17% 16% 16% 20% FY 2019 FY 2021 FY 2022 FY 2019 F
Slide 46: ESG integration update: Key results & selected KPIs
ESG integration update: Key results & selected KPIs 2021 2022 Green & Social Bonds issued €0.5bn €2.05bn 1 Share of ESG corporate bonds in the proprietary 14.3% 24.2% BUSINESS portfolio 2022 ESG commercial data ESG bond issues assisted by Banca Akros €8.0bn €8.1bn €10.3bn Net Scope 1&2 emissions (ma
Slide 47: Key 2022 achievements of the ESG Action Plan (1/2)
Key 2022 achievements of the ESG Action Plan (1/2) ➢ Maintenance of the ISO Environmental, Energy and Occupational Health and Safety certifications ➢ Compensation Project (Tanzania Project, REED + certified – Zimbabwe Project REED + certified – India Project) → compensating ~8,000 t. of CO2 eq. ➢ Ge
Slide 48: Key 2022 achievements of the ESG Action Plan (2/2)
Key 2022 achievements of the ESG Action Plan (2/2) ➢ Completion of the climate and ➢ New products: “Obiettivo Sostenibilità” and “SACE Green” to support ESG transition of environmental risk scoring for the Materiality Corporate & SMEs, with dedicated training for Corporate salesforce on “Obiettivo A
Slide 49: Contacts for Investors and Financial Analysts
Contacts for Investors and Financial Analysts Roberto Peronaglio Banco BPM +39 02 9477.2090 Registered Offices: Piazza Meda 4, I-20121 Milano, Italy Tom Lucassen +39 045 867.5537 Corporate Offices: Piazza Nogara 2, I-37121 Verona, Italy Arne Riscassi +39 02 9477.2091 Silvia Leoni +39 045 867.5613 in
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