Unicredit S.p.a. · MIL:UCG
Unicredit — FY2023 Earnings Presentation
50 slides from Unicredit's earnings presentation, Feb 5, 2024
Slide 1: UniCredit Unlocked
UniCredit Unlocked Our transformation journey: record-breaking results, sights set on new heights A. Orcel Milan, 05 February 2024
Slide 2: UniCredit Unlocked: our transformation journey
UniCredit Unlocked: our transformation journey Record-breaking results Sights set on new heights 2023: … CROWNING 2024: … AND CONTINUING UNICREDIT’S BEST THREE YEARS NORMALISING OUR OUR TRANSFORMATION YEAR EVER … OF SUCCESS BEST YEAR EVER … JOURNEY 12th consecutive quarter Exceeding expectations in
Slide 3: Record-breaking results
Record-breaking results 2023: UNICREDIT’S BEST YEAR EVER … … CROWNING THREE YEARS OF SUCCESS
Slide 4: Excellent 4Q crowning a year of quality profitable growth
2023: UNICREDIT’S BEST YEAR EVER … Excellent 4Q crowning a year of quality profitable growth 12th consecutive quarter of sustainable quality profitable growth, effectively balancing our three levers underpinning current and future distributions KEY METRICS FY23 HIGHLIGHTS ACROSS OUR 3 LEVERS In mill
Slide 5: Net Revenue up 26% FY/FY on robust NII, excellent CoR and resilient Fees
2023: UNICREDIT’S BEST YEAR EVER … Net Revenue up 26% FY/FY on robust NII, excellent CoR and resilient Fees NET REVENUE, GROWING NET REVENUE BASE WITH RECORD 4Q KEY HIGHLIGHTS bn bn NET INTEREST INCOME Net 5.8 5.9 5.8 5.7 Supportive rates revenue 4.8 4.7 5.2 Excellent pass-through +26.4% 3.7 man
Slide 6: Continued quality net interest income growth
2023: UNICREDIT’S BEST YEAR EVER … Continued quality net interest income growth NET INTEREST INCOME, STRONG NII IN 4Q KEY HIGHLIGHTS bn 2.1% 2.1% 2.2% STRONG YEARLY NII GROWTH 1.9% 2.0% +31% FY/FY WHILE FLAT Q/Q 1.2% 1.3% 1.3% SUPPORTED BY +31% NIM1 3.4 3.3 3.5 3.6 3.6 Favourable rate environment
Slide 7: Transformed and strong asset quality, bracketed CoR
2023: UNICREDIT’S BEST YEAR EVER … Transformed and strong asset quality, bracketed CoR LLPs, QUARTERLY EVOLUTION KEY HIGHLIGHTS bn 22 14 19 428bn high quality 3.0 Underlying 6 10 8 10 -3 robust credit portfolio3 CoR1 resulting in a relatively bps low default rate 1.9 1.6 Underlying 243 Very mean
Slide 8: Resilient fees despite macro headwinds
2023: UNICREDIT’S BEST YEAR EVER … Resilient fees despite macro headwinds FEES, RESILIENT FEE DYNAMIC IN 4Q KEY HIGHLIGHTS bn 214 INVESTING 7.5 AuM 200 197 200 stock, 194 194 195 195 In our factories, frontline, bn distribution channels and our 7.4 digital infrastructure to Y/Y +4%4 7.1 increase fee
Slide 9: Operational excellence while offsetting inflation and investing
2023: UNICREDIT’S BEST YEAR EVER … Operational excellence while offsetting inflation and investing COSTS, MAINTAINING OPERATIONAL EXCELLENCE EACH QUARTER KEY HIGHLIGHTS −13% (1.2bn) Gross bn cost reduction1 Impacted by bonus pool increase TARGETED COST −3% REDUCTION 9.76 Cost evolution, 2.3 2.4 2.4
Slide 10: Excellent capital generation continues
2023: UNICREDIT’S BEST YEAR EVER … Excellent capital generation continues NET REVENUE / RWA CET1r walk FY/FY KEY HIGHLIGHTS (%) FY23 +97bps +389bps vs FY221 even QUALITY GROWTH Our approach to risk adjusted netting for 8.6bn 15.9% quality revenue growth results distribution2 14.9% +5bps +3bps in exc
Slide 11: Quality growth as priority with our best-in-class factories
2023: UNICREDIT’S BEST YEAR EVER … Quality growth as priority with our best-in-class factories FY23 Flat bn FY/FY excl. Russia CORPORATE SOLUTIONS 4.9 −6% 9.9bn Gross Revenue ADVISORY & FINANCING Ramping up advisory and loan fees and continued discipline on financing backing resilient performance de
Slide 12: Italy: tireless execution across our three levers, leading to excellence
2023: UNICREDIT’S BEST YEAR EVER … Italy: tireless execution across our three levers, leading to excellence VISION The bank of choice in Italy delivering excellent client NET REVENUE 10.5 bn Net Revenue +19% COST 35.8 % Cost / Income −7.8p.p. CAPITAL 25.7 % RoAC2 +8.5p.p. experience and connecting I
Slide 13: Germany: outstanding results set the tone for 2024
2023: UNICREDIT’S BEST YEAR EVER … Germany: outstanding results set the tone for 2024 VISION The bank for Germany’s Corporates with a focused NET REVENUE 5.3bn Net Revenue +13% COST 44.3 % Cost / Income −5.5p.p. CAPITAL 16.1 % RoAC +5.2p.p. Retail franchise, connecting Germany to Europe ✓ Gross Reve
Slide 14: Central Europe: strong Revenue, disciplined Cost and Risk management
2023: UNICREDIT’S BEST YEAR EVER … Central Europe: strong Revenue, disciplined Cost and Risk management VISION The profitability leader in the region, connecting NET REVENUE 4.2bn Net Revenue +27% COST 38.1 % Cost / Income −8.8p.p. CAPITAL 21.0 %RoAC +6.7p.p. CE to Europe ✓ Gross Revenue: +24% ✓ Abs
Slide 15: Eastern Europe: strengthening its position as Group's growth engine
2023: UNICREDIT’S BEST YEAR EVER … Eastern Europe: strengthening its position as Group’s growth engine VISION UniCredit growth engine, connecting the region NET REVENUE 2.7bn Net Revenue +48% COST 32.9 % Cost / Income −8.0p.p. CAPITAL 36.9 % RoAC +17.7p.p. to Europe ✓ Gross Revenue: +30% ✓ Absolute
Slide 16: Record-breaking results
Record-breaking results 2023: UNICREDIT’S BEST YEAR EVER … … CROWNING THREE YEARS OF SUCCESS
Slide 17: A winning strategy … delivering for all our stakeholders
… CROWNING THREE YEARS OF SUCCESS A winning strategy … delivering for all our stakeholders From laggards to leaders EMPOWERING AND UNIFYING A common vision, a unifying culture, and a winning mentality: promoting ownership and learning from our mistakes From retrenchment … … to quality profitable gro
Slide 18: Delivering unmatched value for all our shareholders
… CROWNING THREE YEARS OF SUCCESS Delivering unmatched value for all our shareholders Leading shareholders returns despite headwinds ... … with value yet to be unlocked DELIVERING EXCELLENT FINANCIALS OUTSTANDING VALUE GENERATION >3x >2.6x >27bn FY23 vs. FY20 Our achievements represent a promise RoT
Slide 19: Sights set on new heights
Sights set on new heights 2024: NORMALISING OUR BEST YEAR EVER … … AND CONTINUING OUR TRANSFORMATION JOURNEY
Slide 20: Direction of travel
2024: NORMALISING OUR BEST YEAR EVER… Direction of travel Undiminished earnings power … … we maintain a strong financial horizon for the future NET REVENUE NET REVENUE 10bn UNDERLYING NII Face headwinds as deposit pass-through increases, lower 22.5bn c. contribution from Russia (c.-0.3bn) and to les
Slide 21: Leading shareholder value generation
2024: NORMALISING OUR BEST YEAR EVER… Leading shareholder value generation Assumptions 2024 will grant investors top level returns 2024 Net Profit TOTAL PAID DISTRIBUTION c.10 VALUE CREATION HIGHLIGHTS broadly in line bn, Calendar Year3 with FY23 6.6 c.4.3 Boosted per share value Best-in-class yield
Slide 22: Sights set on new heights
Sights set on new heights 2024: NORMALISING OUR BEST YEAR EVER … … AND CONTINUING OUR TRANSFORMATION JOURNEY
Slide 23: Unique levers to sustain profitability and distributions
… AND CONTINUING OUR TRANSFORMATION JOURNEY Unique levers to sustain profitability and distributions P&L buffers c.1.8 bn c.1.1 bn > 0.2 bn OVERLAYS INTEGRATION COSTS SYSTEMIC On a quality portfolio covered In FY23 with c.20% IRR2 CHARGES 1.5bn more than peers1 ensuring a to sustain future Reduction
Slide 24: Less dependent on interest rates than market perceives
… AND CONTINUING OUR TRANSFORMATION JOURNEY Less dependent on interest rates than market perceives Net Interest Income Fees NII EVOLUTION 3Q23 / 4Q21 EU Peers: ITA Peers: EU Peers: Fostering capital light growth, More potential to unlock Aligned in terms of interest rate growth Less interest rate se
Slide 25: Continue to elevate our Fees with best-in-class global factories
… AND CONTINUING OUR TRANSFORMATION JOURNEY Continue to elevate our Fees with best-in-class global factories Channeling investments in our product factories to boost capital-light fees CLIENT SOLUTION FEES1 7.4bn c.1.4bn o/w significant portion FEES GROWTH of fee growth locked-in2 @ RUN RATE, bn 6
Slide 26: 4Q23 and FY23 results presentation: Key messages
4Q23 and FY23 results presentation Key messages Deltas are FY/FY and Y/Y Top Tier profitability FY23 Net Profit of €8.6bn up 54% (€9.4bn1 up 61% pre integration costs), leading to a 16.6% RoTE (RoTE@13% 20.5%) up 5.8p.p. 1. 4Q23 Net Profit €1.9bn up 19% (€2.5bn1 up 37% pre integration costs), with a
Slide 27: Annex
Annex
Slide 28: Exceeding our ESG and related commitments
ANNEX Exceeding our ESG and related commitments CLIENTS SOCIAL EDUCATION ACCOUNTABILITY Advancing to c.€9bn social UniCredit Foundation ESG representation at operationalise our financing1,4 via total investments of Group Executive Committee Net Zero 2030 targets micro-credit, €20m into youth and Sus
Slide 29: Significant progress in our transformation
ANNEX Significant progress in our transformation 1. EMPOWERING AND UNIFYING THROUGH 9 Culture Road Shows with 7k colleagues involved, 100m Invested to close gender pay AA Leading by example 19bn green lending since 2022; Net OUR CULTURE MSCI improved rating including Group CEO gap and promote divers
Slide 30: Russia: resized and de-risked with discipline, at minimum cost
ANNEX Russia: resized and de-risked with discipline, at minimum cost REDUCTION OF GROUP EXPOSURE, DERISKING AT MINIMUM COST DECISIVE ACTIONS TAKEN Impact from extreme loss NON-LOCAL EXPOSURE AT PRACTICALLY ZERO assessment (bps)3 Conservatively provisioned our exposure with end-of-period -90% c. 5.5b
Slide 31: Russia exposure details
ANNEX Russia exposure details RESIDUAL2 NET EXTREME IMPACT FROM GROSS MAX GROSS EXTREME LOSS LOSS EXPOSURE ASSESSMENT1 EXTREME LOSS ASSESSMENT1 ASSESSMENT1 CET1r impact bn bn bps bn bps 3 3 4 3 4 Due to higher participation value driven by FX reserve and release of Participation -2.8 -2.8 -30 -2.8 -
Slide 32: Updated base case macro scenario
ANNEX Updated base case macro scenario EUROZONE UNICREDIT FOOTPRINT Scenarios 2024-2025-2026 Scenarios 2024-2025-2026 Group Group excl. Russia BASE CASE BASE CASE BASE CASE MACRO MACRO MACRO SCENARIO SCENARIO SCENARIO 2024 2.3 0.5 2024 3.4 0.9 2.9 0.8 Inflation,% Inflation,% ◼ GDP growth, % 2025
Slide 33: Group P&L and selected metrics
ANNEX Group P&L and selected metrics All figures in bn Unless otherwise stated 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 FY22 FY23 Revenue 5.0 4.8 4.8 5.7 5.9 6.0 6.0 6.0 20.3 23.8 o/w Net interest income 2.3 2.5 2.5 3.4 3.3 3.5 3.6 3.6 10.7 14.0 o/w Fees 2.0 1.9 1.9 1.8 2.0 1.9 1.8 1.8 7.6 7.5 Costs
Slide 34: 4Q23 other notable items
ANNEX 4Q23 other notable items 4Q23 Q/Q Y/Y Comments Net Operating Profit 3.2bn -9% +17% Integration costs -0.8bn n.m. n.m. Integration costs mainly booked in Italy, Germany and Central Europe Includes the positive impact of c.900m from DTA write-up in Italy and other effects. Income taxes 0.5bn n.m
Slide 35: Balance Sheet & liquidity profile
ANNEX Balance Sheet & liquidity profile Q/Q reduction mainly due to lower ECB account FY23 balance sheet: 785bn as outcome of balance sheet optimization €bn LIQUIDITY PROFILE Other Assets 40 23 Other liabilities Cash and cash balances 61 41 Financial liabilities LCR >140% & hedging liabilities 64 Eq
Slide 36: Deposit details
ANNEX Deposit details Deposits from customers 474bn 4Q23 avg commercial vs 3Q23 Customer deposits (Net of repos and IC - EoP) (+1% Q/Q) deposits, bn rates 4Q23 (vs 3Q23) Italy Italy 186 -0.54% Germany -1% (-9bps) By Central Europe region Eastern Europe Germany 130 -1.63% Russia +0% (-23bps) Central
Slide 37: Loan details
ANNEX Loan details Loans to customers 409bn 4Q23 avg gross commercial vs 3Q23 Gross customer performing (Net of repos and IC - EoP) (-2% Q/Q) performing loans, bn loan rates 4Q23 (vs 3Q23) Italy Italy 150 -3% 4.68% Germany (+27bps) By Central Europe region Eastern Europe Russia Germany 110 -2% 3.90%
Slide 38: Total Financial Assets
ANNEX Total Financial Assets TFAs1, bn STRONG TFAS DYNAMICS IN 4Q 15 AUM 12 10 11 gross 10 10 +5% sales 8 8 781 740 726 720 742 749 760 758 781 742 214 200 194 194 195 197 195 200 TFA evolution 151 142 138 152 163 173 171 187 quarterly 375 384 387 396 390 390 391 394 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q
Slide 39: Asset quality details
ANNEX Asset quality details TOTAL GROSS NPE FURHTER REDUCTION OF TOTAL GROSS NPE KEY HIGHLIGHTS 17.8 NPE COVERAGE RATIO -45% 13.9 13.8 Broadly stable at 47% on book, 12.5 12.6 12.1 12.0 mostly UTP and Past Due 11.7 21.2 GROSS NPE evolution by quarter, bn HIGH LEVEL OF PROVISIONS NPE coverage does no
Slide 40: Spill-over analysis confirming soundness of Group risk profile
ANNEX Spill-over analysis confirming soundness of Group risk profile A ENTERPRISES B INDIVIDUALS 419bn Group 27% 47% 5% 22% EaD1 Energy intensive sectors Other Enterprises Consumer Mortgages Corporates & SMEs belonging to energy intensive sectors, before bottom-up Corporates & SMEs not belonging to
Slide 41: Focus on Commercial Real Estate (CRE) portfolio
ANNEX Focus on Commercial Real Estate (CRE) portfolio CRE vs total loans in line or below market1 in Italy, Germany and Austria; volume stable over recent years with declining gross NPE at c.4% CRE portfolio as of 3Q23 Split by Region, bn Split by asset class, bn Portfolio towards clients operating
Slide 42: Group gross loans breakdown by stages
ANNEX Group gross loans breakdown by stages Stage 3 Group gross loans1 and provisions EoP, bn 2.7% 2.7% 2.6% 2.7% 2.7% o/w Gross NPE (% of gross loans) Stage 3 4Q22 1Q23 2Q23 3Q23 4Q23 467 465 462 Coverage Stage 3 13 13 12 447 ratio 48.2% 48.5% 47.9% 48.1% 47.2% 12 440 12 Stage 2 86 78 78 Including
Slide 43: RWA details
ANNEX RWA details RWA, bn CONTINUED RWA OPTIMISATION 330 317 320 308 299 295 -8% 290 285 308 RWA 285 evolution by quarter 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 Credit risk Operational risk Market risk Q/Q EVOLUTION DETAILS, bn Y/Y EVOLUTION DETAILS, bn o/w -0.7bn o/w -2.1bn securitizations securit
Slide 44: 4Q23 CET1r
ANNEX 4Q23 CET1r NET REVENUE / RWA CET1r WALK Q/Q (%) Net Profit: +66bps RWA: +15bps +81bps 17.19% 8.0 8.0 7.9 7.7 +14bps +1bp 15.89% -226bps 0bps Share buyback: −193bps Cash dividend1: −26bps AT1 & Cashes coupon: −6bps Social contribution: −1bp 3Q23 Organic Distribution2 Regulatory PD Other 4Q23 1Q
Slide 45: End notes
End notes
Slide 46: Disclaimer
END NOTES 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 therefore inherently unlawful (t
Slide 47: Information related to this presentation (1/4)
END NOTES Information related to this presentation (1/4) 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 due to rounding Russia incl
Slide 48: Information related to this presentation (2/4)
END NOTES Information related to this presentation (2/4) Main definitions “Allocated capital” calculated as 13.0% of RWA plus deductions “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
Slide 49: Information related to this presentation (3/4)
END NOTES Information related to this presentation (3/4) Main definitions “Gross NPEs” Loan to customers non performing exposures before deduction of provisions, comprising bad loans, unlikely to pay, and past due (including active repos, excluding debt securities and IFRS5 reclassified assets) “Gro
Slide 50: Information related to this presentation (4/4)
END NOTES Information related to this presentation (4/4) Main definitions “PD scenario” Impacts deriving from probability of default scenario, including rating dynamics “RoAC” annualized ratio between (i) Net profit after AT1/Cashes minus excess capital charge (where applicable) and (ii) allocated c