Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — Q1 2021 Earnings Presentation
48 slides from Banco Bpm Spa's earnings presentation, May 6, 2021
Slide 1: Q1 2021 Group Results Presentation
Q1 2021 Group Results Presentation 6 May 2021
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 Before 30/09/2020, the impact from the change in own credit risk on certificates classified as financial liabilities measured at fair value through profit or loss was accounted under the item “Net Financial Results” of the Reclassified P&L scheme. Starting from 30/09/2020, thi
Slide 4: Agenda
Agenda 1. Summary 4 2. Key Achievement Highlights 11 3. Q1 2021 Performance Details 25 Q1 2021 Group Results Presentation 4
Slide 5: Excellent Q1 Performance: Well Geared for the Future
EXCELLENT Q1 PERFORMANCE: WELL GEARED FOR THE FUTURE VOLUMES: solid growth confirmed - Core Net Performing Loans: €99.2bn (+5.6% Y/Y) NET INCOME - CA & Deposits: €101.7bn (+12.8% Y/Y) AT €100M STRONG OPERATING - AuM: €61.3bn (+13.3% Y/Y) PERFORMANCE ADJUSTED1 NET INCOME CORE REVENUES: €968m (+5.
Slide 6: Q1 2021 Profitability: Pre-Tax Profit at €259m (+150% Y/Y)
Q1 2021 PROFITABILITY: PRE-TAX PROFIT AT €259M (+150% Y/Y) NET INTEREST INCOME NET COMMISSIONS TOTAL REVENUES €m €m +4.8% y/y €m +7.0% y/y +18.1% y/y -0.2% net of -2.4% q/q day effect +7.1% q/q +9.8% q/q 1,053 1,128 474 509 497 441 471 954 429 Q1 20 Q4 20 Q1 21 Q1 20 Q4 20 Q1 21 Q1 20 Q4 20 Q1 21 PR
Slide 7: Volume Growth, Further Derisking and Solid Capital
VOLUME GROWTH, FURTHER DERISKING AND SOLID CAPITAL «CORE» NET PERF. CUSTOMER LOANS CA & CUSTOMER DEPOSITS ASSETS UNDER MANAGEMENT € bn € bn € bn +5.6% y/y +12.8% y/y +13.3% y/y +0.9% q/q +1.8% q/q +2.9% q/q 94.0 98.4 99.2 90.2 100.0 101.7 54.1 59.6 61.3 31/03/20 31/12/20 31/03/21 31/03/20 31/12/20 3
Slide 8: New NPE Strategy & Project Rockets
NEW NPE STRATEGY & PROJECT ROCKETS • Boost previous NPE portfolio disposal plan from ~€ 0.9bn originally targeted in Q4 20 to a total of NEW NPE ~€1.65bn (including small ticket transactions), frontloading in Q1 21 the estimated additional provisions STRATEGY • Accelerate execution in Q2 2021 with P
Slide 9: Digital Banking in Constant Evolution
DIGITAL BANKING IN CONSTANT EVOLUTION GROUP DIGITAL TRANSFORMATION JOURNEY MAIN ONGOING INITIATIVES DIGITAL ADOPTION: KPI1 STRATEGIC AMBITIONS1 AT EU LEVEL Share of Active Digital Users2 NEW DIGITAL CUSTOMER >65% EXPERIENCE (CX) 49% New Digital CX deployed both on App and 44% Internet Banking for In
Slide 10: ESG Strategic Roadmap: Full Integration of Sustainability in the Business Model
ESG STRATEGIC ROADMAP: FULL INTEGRATION OF SUSTAINABILITY IN THE BUSINESS MODEL ESG ACTION PLAN: ACTIVATED 7 WORKSTREAMS MAIN TARGETS ALREADY SET2 DEVELOPMENT OF ESG LENDING ISSUANCE OF GREEN AND SOCIAL BONDS WITHIN NEW 1 • Integrate ESG-oriented roles and responsibilities within all GREEN BOND
Slide 11: Agenda
Agenda 1. Summary 4 2. Key Achievement Highlights 11 3. Q1 2021 Performance Details 25 Q1 2021 Group Results Presentation 11
Slide 12: Key P&L Highlights: Performance
KEY P&L HIGHLIGHTS: PERFORMANCE €m Q1 2020 Q4 2020 Q1 2021 Q/Q Y/Y “CORE” REVENUES (NII + Net Fees & Commissions) NET INTEREST INCOM E 968 474 509 497 938 915 +5.9 Y/Y NET FEES & COM M ISSIONS 441 429 471 +3.2% Q/Q NFR 1 78 100 1Q 20 4Q 20 1Q 21 OTHER REVENUES 39 36 60 TOT. REVENUES 954 1,053 1,128
Slide 13: Q1 2021 Operating Performance: Above Pre-Pandemic Level
Q1 2021 OPERATING PERFORMANCE: ABOVE PRE-PANDEMIC LEVEL NET INTEREST INCOME NET FEES & COMMISSIONS €m €m +1.5m +22.8m Pre-Covid Pre-Covid 495.3 495.6 496.8 448.6 416.0 471.4 FY 2019 FY 2020 Q1 2021 FY 2019 FY 2020 Q1 2021 Avg. Q Avg. Q Avg. Q Avg. Q PRE-PROVISION INCOME INVESTMENT PRODUCT PLACEMENTS
Slide 14: Resilient NII Performance in Q1 2021
RESILIENT NII PERFORMANCE IN Q1 2021 NII Evolution Bridge €m 509.0 +4.8% Y/Y +1.1 +2.6 496.8 474.1 -11.1 -4.8 -2.4% Q/Q Including TLTRO III extra liquidity reinvestment Q1 20 Q4 20 Day Commercial TLTRO Non Q1 21 NPE effect banking Interest Commercial 29.1 26.1 Income banking1 26.4 contribution Comme
Slide 15: New Lending: Still Fostered by State-Guaranteed Measures
NEW LENDING: STILL FOSTERED BY STATE-GUARANTEED MEASURES €5.8BN NEW LOANS IN Q1 20211, O/W €2.7BN VIRTUOUS SUBSTITUTION EFFECT ON ASSET SPREAD COVID-19 MEASURES GUARANTEED BY THE STATE OF MLT LOANS IMPROVED IN Q1 2021 € bn +7.0% Positive gap High share of Covid-19 Measures +9bps +20bps in Q1 2021 ne
Slide 16: Covid-19 Moratoria: 30% Reduction & Default Rate at 0.9%
COVID-19 MORATORIA: 30% REDUCTION & DEFAULT RATE AT 0.9% OUTSTANDING MORATORIA Composition AS AT of loans 31/03/2021 under 1: Moratoria by rating classes MARGINAL DEFAULT RATE OF • Down by 30% vs. the amount originally approved EXPIRED POSITIONS • Represent a limited portion of total gross customer
Slide 17: Net Fees and Commissions: Strong Trend Driven by Management & Advisory Fees
NET FEES AND COMMISSIONS: STRONG TREND MAINLY DRIVEN BY MANAGEMENT & ADVISORY FEES Quarterly trend Q1 2021 monthly trend €m €m +9.8% Q/Q Y/Y 172.5 151.6 147.3 440.6 429.2 471.4 +19.2% +8.6% 72.5 87.5 220.2 200.6 239.1 79.1 79.1 68.1 85.0 220.4 228.6 232.3 +1.6% +5.4% Jan - 21 Feb-21 Mar-21 Q1 20 Q4
Slide 18: Operating Costs: Quarterly Comparison
OPERATING COSTS: QUARTERLY COMPARISON Total Operating Costs HEADCOUNT €m # +1.4% 635.0 643.9 21,884 599.8 21,663 21,598 Already agreed 1,607 voluntary exits in 2021/2022, starting from June 21 (1st exit date) 31/03/20 31/12/20 31/03/21 Q1 20 Q4 20 Q1 21 o/w: Staff costs o/w: Other admin. costs o/w:
Slide 19: Liquidity & Funding and Debt Securities Portfolio
LIQUIDITY & FUNDING AND DEBT SECURITIES PORTFOLIO UNENCUMBERED LCR1 NSFR1 ELIGIBLE SECURITIES TLTRO III €10.0bn take up at the end of March 2021 209% >100% €16bn €37.5bn LIQUIDITY & BONDS € bn 0.75 0.50 0.40 FUNDING OUTSTANDING Successful 0.35 0.40 issuance activity Jan-20 Feb-20 Sep-20 Dec-20 Jan-2
Slide 20: Focus on Govies Portfolio
FOCUS ON GOVIES PORTFOLIO Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn +26.4% € bn +26.1% € bn -39.2% +0.7% 48.5% 13.6 13.7 -2.0% 10.9 6.4 5.0 4.3 2.3 1.4 1.4 31/03/20 31/12/20 31/03/21 31/03/20 31/12/20 31/03/21 31/03/20 31/12/20 31/03/21 Duration1 3.9 2.3 1.9 2.3 1.4 2
Slide 21: NPE Evolution and Coverage: Positive Trend Confirmed
NPE EVOLUTION AND COVERAGE: POSITIVE TREND CONFIRMED NPE Stock (GBV) € bn 9.9 8.6 8.7 0.11 7.2 0.06 0.15 Adj. NPE % Chg. PD 6.25 0.15 4.95 4.96 -27.3% Y/Y UTP 4.96 Bad Loans 3.52 3.57 -16.4% in Q1 3.58 2.07 31/03/20 31/12/20 31/03/21 31/03/21 Adj. post Project Rockets MIGRATION RATES COVERAGE 31/12/
Slide 22: NPE Ratios and Cost of Risk
NPE RATIOS AND COST OF RISK MATERIAL AND ONGOING IMPROVEMENT IN NPE RATIOS SINCE THE MERGER 24.1% ~5.3% 21.1% (EBA definition)5 Gross 14.7% 12.1% 10.8% 6.5% 9.1% 8.8% 5.0% 5.2% 7.5% 3.9% 7.5% 3.9% 6.3% Net 01/01/17 1 31/12/17 31/12/18 31/12/19 31/03/20 31/12/20 31/03/21 31/03/21 Adj. post Project TE
Slide 23: Capital Adequacy: Solid Position and Buffers
CAPITAL ADEQUACY: SOLID POSITION AND BUFFERS Ratios well above minimum requirements % Evolution of Fully Loaded Capital Ratios Phased-In TOTAL 16.1% 17.2% 16.8% 18.0% TIER1 14.0% 14.3% 14.3% 15.5% 12.9 13.3 -85bps +28bps -19bps +19bps 12.7 13.7 CET1 31/03/2020 31/12/2020 Regulatory Q1 2021 FVOCI Ord
Slide 24: Final Remarks: Excellent Q1 21 – Well Geared for the Future
FINAL REMARKS: EXCELLENT Q1 21 – WELL GEARED FOR THE FUTURE STRONG OPERATING PERFORMANCE Solid volume growth: Core Net Perf. Loans (+5.6% Y/Y), CA & Deposits (+12.8% Y/Y), AuM (+13.3% Y/Y) Growth in «Core» revenues: +5.9% Y/Y and +3.2% Q/Q Further increase in Pre-Provision income: +51.4% Y/Y and +6.
Slide 25: Agenda
Agenda 1. Summary 4 2. Key Achievement Highlights 11 3. Q1 2021 Performance Details: 25 - Profitability 26 - Balance Sheet 30 - Funding and Liquidity 31 - Customer Loans and Focus on Credit Quality 37 - Capital Position 44 - Digital Banking & ESG 45 Q1 2021 Group Results Presentation 25
Slide 26: Q1 2021 Quarterly P&L Results
Q1 2021 QUARTERLY P&L RESULTS Reclassified income statement (€m) Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Net interest income 474.1 479.5 519.9 509.0 496.8 Income (loss) from invest. in associates carried at equity 22.3 48.0 36.8 23.7 41.5 Net interest, dividend and similar income 496.4 527.5 556.7 532.7 538.4
Slide 27: Adjusted P&L: Details on Non-Recurring Items
ADJUSTED P&L: DETAILS ON NON-RECURRING ITEMS Q1 21 Reclassified income statement (€m) Q1 21 One-off Non-recurring items Adjusted Net interest income 496.8 496.8 0.0 Income (loss) from invest. in associates carried at equity 41.5 41.5 0.0 Net interest, dividend and similar income 538.4 538.4 0.0 Net
Slide 28: Revenue Growth in Q1 2021
REVENUE GROWTH IN Q1 2021 Core Revenues Q/Q Y/Y €m +3.2% +5.9% 914.7 937.6 968.2 938.2 885.9 +9.8% +7.0% 440.6 417.7 429.2 471.4 xx% Net Fees and 376.4 Commissions NII -2.4% +4.8% 474.1 479.5 519.9 509.0 496.8 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Total 954.4 1,001.5 1,143.3 1,052.5 1,127.7 Revenues 3. Q1 2
Slide 29: Financial Portfolio: Net Financial Result and Reserves/Unrealised Gains
FINANCIAL PORTFOLIO: NET FINANCIAL RESULT AND RESERVES/UNREALISED GAINS Net Financial Result (excl. FV on Own Liabilities1) €m 99.7 NFR at €99.7m (+28.1% Q/Q) which includes capital 77.8 gains on securities (~€60m) and ~€36m from trading 0.8 activities Q1 20 Q4 20 Q1 21 Reserves of Debt Securities
Slide 30: Reclassified Balance Sheet as at 31/03/2021
RECLASSIFIED BALANCE SHEET AS AT 31/03/2021 Chg. y/y Chg. in Q1 Reclassified assets (€ m) 31/03/20 31/12/20 31/03/21 Value % Value % Cash and cash equiv alents 755 8,858 10,727 9,972 n.m. 1,869 21.1% Loans and advances measured at AC 116,021 120,456 127,390 11,369 9.8% 6,935 5.8% - Loans and advance
Slide 31: Direct Funding
DIRECT FUNDING Solid position confirmed in Core funding Direct customer funding1 (without Repos) € bn +7.9% +0.1% Capital-protected Certificates 111.5 120.1 120.3 Other Bonds Time deposits 98.5 100.4 +€11.8bn Y/Y 88.6 C/A & Sight deposits (82.0%) (83.4%) (79.5%) (%) Share on total 31/03/2020 31/12/2
Slide 32: Bonds Outstanding: Well Diversified Portfolio
BONDS OUTSTANDING: WELL DIVERSIFIED PORTFOLIO Bonds Outstanding as at 31/03/2021 Nominal 20.3% Cap.-Protected Successful issuance activity in 2020/Q1 2021: AT1 in Jan. 20 amounts Certificates (€400m) and Jan. 21 (€400m), Senior Non-Preferred in Feb. 20 Covered Bonds1 (€750m) and T2 in Sep. and Dec
Slide 33: Bond Maturities: Limited and Manageable Amounts
BOND MATURITIES: LIMITED AND MANAGEABLE AMOUNTS Institutional bond maturities Retail bond maturities € bn 3.75 € bn €1.45bn already reimbursed in Q1 20213 2.50 1.91 0.98 0.50 1.40 0.45 1.25 0.01 0.00 0.32 0.51 0.21 Apr.- Dec. 2021 FY 2022 FY 2023 Apr.- Dec. 2021 FY 2022 FY 2023 1 Senior Pref. Subord
Slide 34: Securities: Significant Weight of the AC Portfolio
SECURITIES: SIGNIFICANT WEIGHT OF THE AC PORTFOLIO € bn 31/03/20 31/12/20 31/03/21 Chg. y/y Chg. in Q1 Debt securities 34.5 33.9 38.7 12.1% 14.4% Equity securities, Open-end funds & Priv ate equity 1.7 2.4 2.7 61.5% 14.1% TOTAL SECURITIES 36.2 36.3 41.5 14.4% 14.3% Focus on Debt Securities: Evolutio
Slide 35: Solid Liquidity Position: LCR at 209% & NSFR >100%
SOLID LIQUIDITY POSITION: LCR AT 209% & NSFR >100%1 Eligible Assets2 € bn Up at ~€19bn as at 3 May 2021 65.5 Unencumbered 58.2 54.5 15.7 Encumbered with Repos & other ADDITIONAL UNENCUMBERED LIQUID ASSETS 19.9 Other encumbered with ECB 22.6 12.3 €13.2bn Excess ECB deposits (€5.9bn avg. in Q1) 10.4
Slide 36: Indirect Customer Funding at €94.2bn
INDIRECT CUSTOMER FUNDING AT €94.2BN Assets under Management (AuM) Assets under Custody (AuC)1 € bn € bn +13.3% +17.0% +2.9% 54.1 59.6 61.3 +2.9% 3.9 4.1 3.8 14.9 14.9 15.3 32.0 32.9 28.1 35.0 40.8 42.3 31/03/2020 31/12/2020 31/03/2021 31/03/2020 31/12/2020 31/03/2021 Funds & Sicav Bancassurance Man
Slide 37: Net Customer Loans
NET CUSTOMER LOANS Satisfactory increase in Performing Loans, with new loans granted at €5.8bn in Q1 20211 Net Customer Loans2 € bn 108.0 109.3 110.1 5.4 4.3 4.3 -21.2% Y/Y NPE 102.6 105.0 105.9 +3.2% Y/Y Performing Loans 31/03/2020 31/12/2020 31/03/2021 CHANGE NET PERFORMING LOANS 31/03/20 31/12/20
Slide 38: Analysis of Performing Loan Portfolio
ANALYSIS OF PERFORMING LOAN PORTFOLIO Staging evolution of Customer loan (GBV) breakdown as at 31/03/20211 Performing Loans Other (Public Sector, GBV in € bn GACS Senior Notes No-Profit, etc.) 2.1% ~12% represented by State- 103.0 105.5 106.3 4.6% guaranteed loans 5.5% 6.8% 9.1% Financials (average
Slide 39: Covid-19: Lending Measures Assisted by State Guarantees
COVID-19: LENDING MEASURES ASSISTED BY STATE GUARANTEES Lending measures assisted by public guarantees High customer propensity for new at €16.2bn as at 31/03/21 State-guaranteed lending € bn Lending measures assisted by 1.6 13.9 16.2 public guarantees: System data1 0.1 14.6 3.3 1.5 3.7 3.2 BBPM sha
Slide 40: Asset Quality Details – Loans to Customers at AC
ASSET QUALITY DETAILS – LOANS TO CUSTOMERS AT AC GROSS EXPOSURES 31/03/2020 31/12/2020 31/03/2021 Chg. y/y Chg. in Q1 €/m and % Value % Value % Bad Loans 3,517 3,578 3,575 58 1.6% -4 -0.1% UTP 6,252 4,946 4,958 -1,294 -20.7% 12 0.2% Past Due 106 62 146 40 37.5% 84 135.3% NPE 9,875 8,586 8,678 -1,197
Slide 41: NPE Flows
NPE FLOWS Inflows from Performing to NPEs Outflows from NPEs to Perf. Loans Flows from UTP to Bad Loans €m €m €m Up at €35m 308 332 including also 261 257 153 110 loans at FV 178 81 111 110 102 222 43 55 44 83 -14.8% y/y 19 -13.5% q/q Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q1 20
Slide 42: Gross NPEs Down by €21.3bn vs. YE 2016
GROSS NPEs DOWN BY €21.3BN VS. YE 2016 NPE reduction up at -€22.8bn vs. YE 2016, taking also the Project Rockets into account (to be perfected in Q2 2021) NPEs (GBV€ bn) 30.0 +0.1bn in January 2021 due to impact from New DoD FTA +1.2 -2.3 11.8 -0.6 +1.0 -1.4 10.1 -1.1 8.6 +0.3 -0.2 8.7 -1.5 7.2 31/1
Slide 43: UTP Loans: High Share of Restructured & Secured Positions
UTP LOANS: HIGH SHARE OF RESTRUCTURED & SECURED POSITIONS UTP analysis Breakdown of Net UTPs € bn +0.2% Y/Y Unsecured € bn 31/12/20 31/03/21 % Chg. Secured 4.9 5.0 Forborne 1.8 1.9 4.6% (%) Composition - Secured 1.3 1.4 3.9% 2.1 2.1 - Unsecured 0.5 0.5 -2.4% 2.1 (42%) (41%) 2.8 0.8 Other UTP 1.0 1.0
Slide 44: Capital Position in Detail
CAPITAL POSITION IN DETAIL PHASED IN CAPITAL 31/03/2020 31/12/2020 31/03/2021 RWA COMPOSITION POSITION (€/m and %) 31/03/2020 31/12/2020 31/03/2021 (€/bn) CET 1 Capital 9,449 9,597 9,400 T1 Capital 10,253 10,397 10,576 CREDIT & COUNTERPARTY 56.9 54.9 57.7 Total Capital 11,636 12,304 12,286 RISK of w
Slide 45: Digital Transformation Journey: Key Focus Areas
DIGITAL TRANSFORMATION JOURNEY: KEY FOCUS AREAS • The Digital Omnichannel Transformation in BBPM is under full execution with: - €84m IT investments already made in 2020, o/w €33m in Digital - An increase in investments planned over the next years: IT Investments - 50% dedicated to the Omnichannel D
Slide 46: Developing ESG Products and Sustaining Customers & Local Communities
DEVELOPING ESG PRODUCTS AND SUSTAINING CUSTOMERS & LOCAL COMMUNITIES CUSTOMERS LOCAL COMMUNITIES PLAFOND FOR SUSTAINABLE INVESTMENTS: CONTRIBUTION FOR SOCIAL INITIATIVES: SUSTAINABLE FINANCE € 5.0bn 67% RESEARCH, HEALTH, SOLIDARITY AND > € 6m FEMALE ENTERPRISES SOCIAL (VS. 42% IN 2019) in 2020
Slide 47: Attention to People and Environment
ATTENTION TO PEOPLE AND ENVIRONMENT HUMAN RESOURCES ENVIRONMENT HIGH SHARE OF PERMANENT CONTRACTS TOTAL DIRECT & 99% 2019 2020 (SHARE ON TOTAL EMPLOYESS) INDIRECT ENERGY 732k 652k -11% CONSUPTION BALANCED FEMALE REPRESENTATION (SHARE ON TOTAL EMPLOYESS) 45% SCOPE 1 & 2 (GJ) TOTAL DIRECT & 2019 2020
Slide 48: Contacts for Investors and Financial Analysts
CONTACTS FOR INVESTORS AND FINANCIAL ANALYSTS INVESTOR RELATIONS Roberto Peronaglio +39-02-9477.2090 Tom Lucassen +39-045-867.5537 Arne Riscassi +39-02-9477.2091 Silvia Leoni +39-045-867.5613 Carmine Padulese +39-02-9477.2092 Registered Offices: Piazza Meda 4, I-20121 Milan, Italy Corporate Offices:
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