Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — H1 2020 Earnings Presentation
51 slides from Banco Bpm Spa's earnings presentation, Aug 6, 2020
Slide 1: H1 2020 Group Results Presentation
H1 2020 Group Results Presentation 6 August 2020
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 31/03/2020, the impact of the PPA (Purchase Price Allocation) of the business combinations of the former Banca Popolare di Milano Group and of the former Banca Popolare Italiana and Banca Italease Groups, was split and registered under the following items: “Net interest
Slide 4: Agenda
Agenda 1. Covid 19: Update on Banco BPM’s Response 4 2. Key H1 2020 Performance Highlights 11 3. Performance Details: 34 - Profitability 35 - Balance Sheet 41 - Funding and Liquidity 42 - Customer Loans and Focus on Credit Quality 46 - Capital Position 50 H1 2020 Group Results Presentation 4
Slide 5: Covid 19: Back to Normal with More Digital Business
COVID 19: BACK TO NORMAL WITH MORE DIGITAL BUSINESS 1,581 BRANCHES REGULARLY OPEN AS OF TODAY BRANCHES (vs. 1,155 in the peak the lockdown, o/w 364 open 2 days per week) FULL CAPACITY TO BE ACHIEVED IN SEPT. 2020, with the opening of the remaining 147 branches H1 2020 Y/Y DIGITAL USERS1: #1.3M
Slide 6: Covid 19: A Three-Step Approach to Credit Management Actions
COVID 19: A THREE-STEP APPROACH TO IDENTIFY THE BEST CREDIT MANAGEMENT ACTIONS PROACTIVE APPROACH ADOPTED: SUPPORT CUSTOMERS WITH THE RIGHT CUSTOMISED PROPOSITION, IMPLEMENT THE GOVERNMENT SUPPORT MEASURES AND SAFEGUARD BBPM’S CREDIT PORTFOLIO 1 Analyze Corporate/SME clients to Input: drivers ANALYT
Slide 7: Covid 19: New Lending Activity
COVID 19: NEW LENDING ACTIVITY Update on Liquidity Decree Measures New lending activity € bn +13.2% ~€2.0bn as at 30/06/2020 (up at €4.0bn as at ~84% ~16% 31/07/2020) 12.4 10.9 Ordinary business H1 2019 H1 2020 Covid-19 Measures Lending measures assisted by public guarantees as at 31/07/20 € bn 10.2
Slide 8: Covid 19: Update on Moratoria Measures
COVID 19: UPDATE ON MORATORIA MEASURES Suspended installments Total underlying loan exposure as at 31/07/20 € bn € bn 2.3 16.1 0.4 ABI Moratoria Slight increase vs. 3.2 ABI Moratoria €15.9bn as at 30/06/201 Cure Italy Decree Cure Italy Decree 1.9 12.9 Moratoria Moratoria 31/07/2020 GBV Distribution
Slide 9: Performing Loans: Focus on Sensitivity to Covid 19
PERFORMING LOANS: FOCUS ON SENSITIVITY TO COVID 19 Customer loan (GBV) breakdown as at 30/06/201 Limited exposure to selected sectors3 with “High-potential Impact” from Covid 19 Other (Public Sector, No-Profit, etc.) Secured 4.7% o/w: o/w: o/w: Households with Real Acquisition of Unsecured but 26.5%
Slide 10: Performing Loans: New ECL Assessment Driven by a More Severe Scenario
PERFORMING LOANS: NEW ECL ASSESSMENT DRIVEN BY A MORE SEVERE SCENARIO Q1 2020: Macro-scenario Q2 2020: Macro-scenario 5.6% 6.1% 4.5% 4.8% 2.7% 2.6% 1.2% 0.15% 3.5% 2.5% 1.0% 3.4% 1.0% Covid impact -6.0% on ECL -8.0% -8.2% in H1 2020: -10.0% -9.2% ~ €140m -13.1% 2020 2021 Long Term 2020 2021 2022 202
Slide 11: Agenda
Agenda 1. Covid 19: Update on Banco BPM’s Response 4 2. Key H1 2020 Performance Highlights 11 3. Performance Details: 34 - Profitability 35 - Balance Sheet 41 - Funding and Liquidity 42 - Customer Loans and Focus on Credit Quality 46 - Capital Position 50 H1 2020 Group Results Presentation 11
Slide 12: H1 2020 Net Income: €105.2M Stated and €128.4M Adjusted
H1 2020 NET INCOME: €105.2M STATED AND €128.4M ADJ.1 Resilient performance in the adverse environment: quarterly growth in pre-provision profit (excl. FV2) Based on a re- €m Q1 2020 Q2 2020 exposition of NEW RECLASSIFIED SCHEME Q1 2020 Q2 2020 ‘FV on own NII 474.1 479.5 liabilities’ (pre-tax) NII 47
Slide 13: Solid H1 2020 Performance in Covid-19 Context (1/3)
SOLID H1 2020 PERFORMANCE IN “COVID-19 CONTEXT“ (1/3) Strong recovery of Q1 2020 Q2 2020 Core Revenues in June (NII + Net Commissions) OPERATING TOT. REVENUES €954m €1,001m 315 282 PERFORMANCE 259 (excl. from Revenues the OPERATING COSTS -€635m -€614m FV on Own Liabilities) April 20 May 20 June 20 P
Slide 14: Solid H1 2020 Performance in Covid-19 Context (2/3)
SOLID H1 2020 PERFORMANCE IN “COVID-19 CONTEXT“ (2/3) 30/06/20 DELTA Y/Y DELTA Q/Q Volume growth CORE NET PERF. LOANS €95.0bn +4.1% +1.1% confirmed also in July vs. June1: CUSTOMER VOLUMES C.A. & DEPOSITS €93.1bn +8.7% +3.2% • Loans +1% • Core Funding +2% AUM €57.8bn +2.1% +7.0% 31/12/19 31/03/20 30
Slide 15: Solid H1 2020 Performance in Covid-19 Context (3/3)
SOLID H1 2020 PERFORMANCE IN “COVID-19 CONTEXT“ (3/3) Benefiting also from TLTRO III take-up UNENCUMBERED LCR NSFR Including additional ELIGIBLE SECURITIES sources of available LIQUIDITY & FUNDING liquidity, total liquid assets 193% >100% €24.2bn stand at €37.3bn CET1 RATIO TC RATIO PHASED-IN Furthe
Slide 16: Net Interest Income: Highlights
NET INTEREST INCOME: HIGHLIGHTS Net Interest Income NII: Evolution Breakdown €m €m 474.1 479.5 160.4 164.7 474.1 +0.6 +0.9 +3.9 479.5 154.4 Apr -20 May-20 Jun-20 Q1 20 Q2 20 Q1 20 Comm. NPE TLTRO Q2 20 NPE: 29.1m 29.9m banking contribution Commercial spreads Key asset spread drivers: 1.90 1.87 1.85
Slide 17: Volumes at a Glance
VOLUMES AT A GLANCE Solid commercial performance in a challenging environment € bn 30/06/19 31/12/19 31/03/20 30/06/20 % chg.Y/Y % chg. YTD % chg. Q/Q Net Performing Customer Loans 100.3 100.3 102.6 103.0 2.7% 2.7% 0.4% Resilient trend in loans of the o/w: Core Performing Customer Loans1 91.2 91.1 9
Slide 18: Sound Lending Performance of the Network
SOUND LENDING PERFORMANCE OF THE NETWORK €12.4bn New Loans in H1 2020 (Management data of the commercial network 1) € bn Customer loan growth in H1 2020 supported +13.2% 12.4 by the strong performance in new M/L-Term 10.9 lending to Enterprises and Corporate Enterprise & +22.3% New State-guarant
Slide 19: Strong and Well Diversified Bond Funding
STRONG AND WELL DIVERSIFIED BOND FUNDING Bond funding as at 30/06/2020 Nominal 16.0% Cap.-Protected Total bonds outstanding at €20.3bn amounts Certificates Covered Very manageable amount of wholesale bond maturities Bonds1 in H2 2020 (€2.4bn), considering €1.15bn already issued in 31.8% €20.3bn
Slide 20: Solid Liquidity Position: LCR at 193% & NSFR >100%
SOLID LIQUIDITY POSITION: LCR AT 193% & NSFR >100%1 Eligible Securities2 Up at >€28bn € bn as at 31 July 2020 54.5 63.4 54.0 TOTAL LIQUID ASSETS AT €37.3BN, o/w: Unencumb. Eligible 24.2 €24.2bn Unencumbered Eligible Securities securities 19.9 22.6 Encumbered with 13.2 €8.5bn of Excess ECB deposi
Slide 21: Net Fees and Commissions
NET FEES AND COMMISSIONS Y/Y trend Q/Q trend Monthly trend restored €m €m €m -8.0% -14.6% 888.2 816.9 440.6 150.8 424.8 376.4 121.5 389.9 104.1 220.2 169.8 75.7 38.8 55.3 463.4 427.0 220.4 206.6 65.3 66.2 75.1 H1 19 H1 20 Q1 20 Q2 20 April -20 May-20 June-20 Commercial Banking Fees Management & Advi
Slide 22: Financial Portfolio: Net Financial Result and Reserves/Unrealised Gains
FINANCIAL PORTFOLIO: NET FINANCIAL RESULT AND RESERVES/UNREALISED GAINS Net Financial Result €m 206.8 NFR excl. FV on • Stated NFR at -€82.7m in Q2 (against €206.8m in Q1) is Own Liabilities strongly impacted by valuation effects on own liabilities 82.7 • The change in FVO included in the stated NFR
Slide 23: Debt Securities: Increasing the Weight of the AC Portfolio
DEBT SECURITIES: INCREASING THE WEIGHT OF THE AC PORTFOLIO Evolution & Composition of Debt Securities € bn 34.2 34.5 31.2 34.5 38.3 Debt securities 31.6 30.2 32.9 o/w: €2.9m at FVTPL o/w: Italian 26.7 20.7 19.4 21.7 17.7 20.0 15.5 18.2 Govies 31/12/16 31/12/17 31/12/18 31/03/19 30/06/19 31/12/19 31/
Slide 24: Focus on Govies Portfolio
63% maturing by next year FOCUS ON GOVIES PORTFOLIO Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn € bn € bn +€2.9bn in Q2 +0.6bn in Q2 13.8 11.0 10.0 10.9 6.2 2.2 2.3 2.9 4.6 5.0 5.0 0.9 30/06/19 31/12/19 31/03/20 30/06/20 30/06/19 31/12/19 31/03/20 30/06/20 30/06/19 31/1
Slide 25: Operating Costs: Quarterly Comparison
OPERATING COSTS: QUARTERLY COMPARISON Total Operating Costs Quarterly average costs in 2017-20201 €m €m -3.3% 735.1 676.6 649.9 623.3 635.0 613.8 FY 17 FY 18 FY 19 H1 20 Q1 20 Q2 20 Avg. Q Avg. Q Avg. Q Avg. Q o/w: Staff costs o/w: Other admin. costs o/w: D&A €m -5.0% €m c.+€5m €m -0.3% Covid 19- +0
Slide 26: Strong Improvement Across Asset Quality Metrics
STRONG IMPROVEMENT ACROSS ASSET QUALITY METRICS Reduction in NPE stock and ratios, with strong coverage confirmed NPE Stock (GBV) NPE Stock (NBV) € bn 10.7 10.1 -8.0% Y/Y € bn -12.8% Y/Y 9.9 9.8 6.2 5.5 -0.4% in Q2 5.4 5.4 -0.6% in Q2 0.11 0.10 0.11 0.15 0.09 0.07 0.08 0.11 7.3 6.4 6.3 6.2 4.7 3.9 3
Slide 27: Flows & Migration Rates
FLOWS & MIGRATION RATES MIGRATION RATES 31/12/19 30/06/20 (annualised) H1 2020 shows a slight improvement in the DEFAULT RATE 1.2% 1.1% Default rate as well as a better Danger rate vs. FY (from Performing Loans1 to NPEs) 2019 NPE DANGER RATE 11.1% 8.1% The challenging macroeconomic scenario in Q
Slide 28: Cost of Risk
COST OF RISK LLPs: quarterly evolution €m 263.0 Covid 19- LLPs at €476.2m in H1 2020 include 208.4 220.5 213.2 related top-up €140m of a Covid-19-related top- 197.7 70 in generic 152.0 up in generic provisions 70 provisions1 143.2 193.0 Annualised CoR at 88 bps, with a physiological level of 62
Slide 29: Strong Branch Presence in Regions with Lower NPE Ratio
STRONG BRANCH PRESENCE IN REGIONS WITH LOWER NPE RATIO Geographic data Gross NPE ratio Regional branch market shares Peer 1 Peer 2 Peer 3 # Regions >13% 16.8% 8.9% 11.0% 1.5% 6 7 11-13% 13.9% 14.4% 4.2% 6.3% 3 9-11% 12.6% 11.7% 3.8% 7.2% 4 <9% 15.2% 10.2% 7.4% 10.4% Avg. Italy 14.7% 11.1% 6.7% 7.5%
Slide 30: Cost of Risk: Historical Trend Analysis
COST OF RISK: HISTORICAL TREND ANALYSIS Cost of Risk: evolution of key components Flow-driven LLPs / Inflows (€ m) €m 1,941 1,400 1,661 2 285 Flow-driven 1,200 293 1,000 Disposals Flow- 800 244 714 driven FY18 600 Performing/ LLPs FY19 779 400 Covid impact 215 476 200 H120 FY17 1,197 24 (Annualised)
Slide 31: Strong Capital Ratios & Buffers
STRONG CAPITAL RATIOS & BUFFERS CET 1 ratios further strengthened: Well positioned to face the tough scenario Fully Loaded Capital Ratios: evolution Phase-In Ratios % TOTAL 15.6% 16.1% 16.3% 17.9% TIER 1 13.3% 14.0% 14.4% 16.0% -26bps 13.3% 14.7 12.8 12.9 -9bps +40bps +33bps +3bps CET 1 31/12/2019 3
Slide 32: Final Remarks
FINAL REMARKS Covid-19 emergency: evolution update Reassuring level of recovery in June 2020, as a return to full commercial capacity is well under way, flanked by a strengthened use of digital and omnichannel-based banking Strong and ongoing support provided to our customer base on the back of
Slide 33: Outlook 2020
OUTLOOK 2020 NII CONFIRMED AT A STRONG LEVEL, thanks to a solid trend in commercial volumes and TOP LINE favourable funding conditions (incl. TLTRO III). The full benefit of TLTRO III is expected in H2 PERFORMANCE FEES ON TRACK TOWARDS FULL POTENTIAL, based on GDP recovery expected in H2 2020 CO
Slide 34: Agenda
Agenda 1. Covid-19: Update on Banco BPM’s Response 4 2. Key H1 2020 Performance Highlights 11 3. Performance Details: 34 - Profitability 35 - Balance Sheet 41 - Funding and Liquidity 42 - Customer Loans and Focus on Credit Quality 46 - Capital Position 50 H1 2020 Group Results Presentation 34
Slide 35: Reclassified P&L: Quarterly Evolution
RECLASSIFIED P&L: QUARTERLY EVOLUTION Reclassified income statement Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Chg. Y/Y Chg. Y/Y Chg. Q/Q Chg. Q/Q (in euro million) % % Net interest income 499,2 512,1 495,8 474,0 474,1 479,5 -32,6 -6,4% 5,4 1,1% Income (loss) from investments in associates 36,8
Slide 36: Reclassified P&L: Annual Comparison
RECLASSIFIED P&L: ANNUAL COMPARISON Reclassified income statement H1 2019 H1 2020 Chg. Y/Y Chg. Y/Y (in euro million) % Net interest income 1.011,3 953,6 -57,7 -5,7% Income (loss) from investments in associates 69,4 70,3 0,9 1,3% carried at equity Net interest, dividend and similar income 1.080,7 1.
Slide 37: Restated P&L: Annual and Quarterly Comparison
RESTATED P&L: ANNUAL AND QUARTERLY COMPARISON …with restatement of FV on own liabilities into a separate line item (post-tax) Reclassified income statement H1 2019 H1 2020 Chg. Y/Y Chg. Y/Y Q1 2020 Q2 2020 Chg. Q/Q Chg. Q/Q (in euro million) % % Net interest income 1.011,3 953,6 -57,7 -5,7% 474,1 47
Slide 38: Adjusted P&L: Annual Comparison
ADJUSTED P&L: ANNUAL COMPARISON …with restatement of FV on own liabilities into a separate line item (post-tax) Reclassified income statement H1 2019 H1 2020 Chg. Y/Y Chg. Y/Y (in euro million) adjusted adjusted % Net interest income 1.011,3 953,6 57,7 -5,7% Income (loss) from investments in associa
Slide 39: Adjusted P&L: Details on Non-Recurring Items
ADJUSTED P&L: DETAILS ON NON-RECURRING ITEMS ...with restatement of FV on own liabilities into a separate line item (post-tax) H1 2020 Reclassified income statement H1 2020 One-off Non-recurring items and adjusted (in euro million) extraordinary systemic charges Net interest income 953,6 953,6 0,0 I
Slide 40: Comprehensive Profitability
COMPREHENSIVE PROFITABILITY €m Q1 2019 Q2 2019 Q1 2020 Q2 2020 H1 2019 H1 2020 A. P&L NET INCOME 155.4 447.6 151.6 -46.4 603.0 105.2 H1 2019 Net Income includes the capital OTHER NET INCOME DIRECTLY ACCOUNTED B. 110.5 13.5 -289.7 151.1 124.0 -138.7 gains from the sale of TO EQUITY Profamily Captiv
Slide 41: Reclassified Balance Sheet as at 30/06/2020
RECLASSIFIED BALANCE SHEET AS AT 30/06/2020 Restated Chg. y/y Chg. YTD Chg. in Q2 Reclassified assets (€ m) 30/06/19 31/12/19 31/03/20 30/06/20 Value % Value % Value % Cash and cash equivalents 795 913 755 838 44 5.5% -74 -8.1% 83 11.0% Loans and advances measured at AC 112,408 115,890 116,021 121,2
Slide 42: Direct Funding
DIRECT FUNDING Solid position confirmed in core deposits, which account for 80% of the total Direct customer funding1 (without Repos) € bn +8.8% +2.7% 108.9 111.5 114.4 105.2 Capital-protected Certificates 3.2 1.7 3.0 1.8 3.1 2.0 3.3 1.8 16.1 16.6 16.4 Other 14.4 1.6 1.6 1.7 1.8 Bonds Time deposits
Slide 43: Bond Maturities: Limited and Manageable Amounts
BOND MATURITIES: LIMITED AND MANAGEABLE AMOUNTS Institutional bond maturities Retail bond maturities € bn € bn 3.75 0.50 2.41 2.43 2.50 0.71 0.45 0.77 0.14 1.70 1.21 1.25 0.11 0.01 0,03 H2 2020 FY 2021 FY 2022 H2 2020 FY 2021 FY 2022 Senior Subordinated Covered bond 1 Senior Subordinated Aggregate s
Slide 44: Indirect Customer Funding at €88.4bn
INDIRECT CUSTOMER FUNDING AT €88.4BN Assets under Management Assets under Custody1 € bn € bn +2.1% +7.0% 56.7 58.3 57.8 54.1 -6.5% 4.1 3.9 3.8 4.0 14.8 15.4 15.1 +8.6% 15.3 32.7 31.4 30.5 28.1 37.7 39.0 35.0 38.8 30/06/2019 31/12/2019 31/03/2020 30/06/2020 30/06/2019 31/12/2019 31/03/2020 30/06/2020
Slide 45: Securities Portfolio
SECURITIES PORTFOLIO € bn 30/06/19 31/12/19 31/03/20 30/06/20 Chg. y/y Chg. YTD Chg. in Q2 Debt securities 34.5 31.2 34.5 38.3 10.9% 22.6% 10.9% - o/w Total Govies 29.9 26.4 29.6 33.1 10.7% 25.2% 11.7% - o/w: Italian Govies 19.4 15.5 18.2 21.7 11.9% 39.9% 19.6% IT Govies in % on Debt Securities 56.2
Slide 46: Net Customer Loans
NET CUSTOMER LOANS Satisfactory increase in Performing Loans, with new loans granted at €12.4bn in H1 20201 Net Customer Loans2 € bn 108.4 106.5 105.8 108.0 6.2 5.5 5.4 5.4 NPE 100.3 100.3 102.6 103.0 Performing Loans 30/06/2019 31/12/2019 31/03/2020 30/06/2020 CHANGE NET PERFORMING LOANS 30/06/19 3
Slide 47: Asset Quality Details
ASSET QUALITY DETAILS GROSS EXPOSURES 30/06/2019 31/12/2019 31/03/2020 30/06/2020 Chg. y/y Chg. YTD Chg. in Q2 €/m and % Incl. Profamily Value % Value % Value % Bad Loans 3,338 3,565 3,517 3,530 192 5.8% -34 -1.0% 13 0.4% UTP 7,257 6,424 6,252 6,159 -1,098 -15.1% -265 -4.1% -93 -1.5% Past Due 105 98
Slide 48: Improving Trend in Asset Quality
IMPROVING TREND IN ASSET QUALITY NPE, gross book value: -€1.7bn in 2019 and further -€0.3bn in H1 2020 € bn 11.8 -0.6 +1.2 -2.3 10.1 +0.6 -0.9 9.8 31/12/18 Bad Loan Inflows from Cancellations, 31/12/19 Inflows from Cancellations, 30/06/20 portfolio disposals Performing Write-offs, Performing Write-o
Slide 49: UTP Loans: High Share of Restructured and Secured Positions
UTP LOANS: HIGH SHARE OF RESTRUCTURED AND SECURED POSITIONS UTP analysis Breakdown of Net UTPs € bn Unsecured € bn 31/12/19 30/6/20 % Chg. -4.1% YTD Secured Restructured 1.7 1.6 -5.9% (%) Composition 6.4 6.2 - Secured 0.9 0.9 0.0% 2.5 2.4 2.4 - Unsecured 0.8 0.7 -12.5% 3.7 1,0 (39%) (39%) Other UTP
Slide 50: Capital Position in Detail
CAPITAL POSITION IN DETAIL PHASED IN CAPITAL 30/06/19 31/12/19 31/03/20 30/06/20 POSITION (€/m and %) RWA COMPOSITION CET 1 Capital 8.972 9.586 9.449 9.585 30/06/19 31/12/19 31/03/20 30/06/20 T1 Capital 9.404 10.017 10.253 10.388 (€/bn) Total Capital 10.765 11.542 11.636 11.676 CREDI T & COUNTERPART
Slide 51: 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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