Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — H1 2021 Earnings Presentation
47 slides from Banco Bpm Spa's earnings presentation, Aug 5, 2021
Slide 1: H1 2021 Group Results Presentation
H1 2021 Group Results Presentation 5 August 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. H1 2021 Performance Details 26 H1 2021 Group Results Presentation 4
Slide 5: H1 2021 at a Glance: Outstanding Results and New Potential Upside
H1 2021 AT A GLANCE: OUTSTANDING RESULTS AND NEW POTENTIAL UPSIDE FROM A REINFORCED BUSINESS MODEL FINANCIAL RESULTS ACHIEVED IN H1 2021 AGREEMENTS FINALISED IN OPERATING ASSET QUALITY CAPITAL POSITION H1 2021, ENABLING FUTURE PERFORMANCE BUSINESS MODEL EVOLUTION Strong results confirming Further im
Slide 6: Profitability Growth Supported by Sound Revenue Dynamics
PROFITABILITY GROWTH SUPPORTED BY SOUND REVENUE DYNAMICS CORE REVENUES TOTAL REVENUES €m 915 938 938 968 1,001 €m 856 441 376 418 429 471 479 1,143 1,053 1,128 1,196 954 1,001 474 480 520 509 497 522 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 NII Net Fees & Commission Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 PR
Slide 7: Volume Growth, Further Derisking and Solid Capital
VOLUME GROWTH, FURTHER DERISKING AND SOLID CAPITAL «CORE» NET PERF. CUSTOMER LOANS C/A & CUSTOMER DEPOSITS ASSETS UNDER MANAGEMENT € bn € bn € bn +9.6% +18.7% +7.9% +2.6% +0.6% +2.4% 61.3 62.9 98.4 99.2 99.8 101.7 104.2 58.3 59.6 100.0 91.1 87.8 31/12/19 31/12/20 31/03/21 30/06/21 Net 31/12/19 31/12
Slide 8: Expanding Digital Banking into a New Service Model
EXPANDING DIGITAL BANKING INTO A NEW SERVICE MODEL DIGITAL CHANNEL ADOPTION: H1 2021 KEY NUMBERS… Individual Customers Remote Transactions1 # APP-based transactions APP-based transaction TRANSACTIONS 85% 10.2m 24% 16% on total transactions vs. 76% in H1 2019 vs. 4.2m in H1 2019, + 145% vs. 9% in H1
Slide 9: Continuous ESG Improvement Reflected Also in Ratings
CONTINUOUS ESG IMPROVEMENT REFLECTED ALSO IN RATINGS FIRST ESG BOND SUCCESSFULLY ISSUED (JULY 2021) IMPROVED ESG RATINGS GREEN, SOCIAL AND SUSTAINABILITY BOND FRAMEWORK: Scale Worst Best Aligned with the ICMA Principles 2021 Positive Second Party Opinion released by ISS June 2021: F E- E E+ EE-
Slide 10: New Strategic Plan by Q3 2021 Results Presentation
STRONG POTENTIAL TO SUSTAIN AMBITIOUS PROFITABILITY: NEW STRATEGIC PLAN BY Q3 2021 RESULTS PRESENTATION SOLID H1 2021 RESULTS THANKS TO BANCO BPM’S EFFECTIVE RESPONSE TO THE COVID-19 CRISIS H1 2021 RESULTS COUPLED WITH A CLEARER MACRO SCENARIO ALLOW TO ANNOUNCE NEW PLAN BY Q3 2021 RESULTS €m MAI
Slide 11: Agenda
Agenda 1. Summary 4 2. Key Achievement Highlights 11 3. H1 2021 Performance Details 26 H1 2021 Group Results Presentation 11
Slide 12: Key P&L Highlights – Stated
KEY P&L HIGHLIGHTS – STATED Net Income at €361m in H1 2021: €100m in Q1 and €261m in Q2 P&L STATED P&L STATED €m Q1 2021 Q2 2021 Q/Q H1 2020 H1 2021 H/H NET INTEREST INCOM E 497 522 5.1% 954 1,019 6.9% NET FEES & COM M ISSIONS 471 479 1.5% 817 950 16.3% NFR 100 117 16.9% 83 216 159.1% OTHER REVENUES
Slide 13: Key P&L Highlights – Adjusted
KEY P&L HIGHLIGHTS – ADJUSTED1 Strong Revenue growth driving PPI to €1,035m in H1 2021: +13.1% Q/Q and +45.9% H/H P&L ADJUSTED P&L ADJUSTED NII at €522M in Q2 21 (+5.1% Q/Q) €m Q1 2021 Q2 2021 Q/Q H1 2020 H1 2021 H/H and at €1,019M in H1 21 (+6.9% H/H) NET INTEREST INCOM E 497 522 5.1% 954 1,019 6
Slide 14: Net Interest Income Growth in H1 2021
NET INTEREST INCOME GROWTH IN H1 2021 Half-yearly trend Quarterly trend NII Evolution Bridge €m +6.9% €m €m +24.1 +1.4 522.4 1,019.2 +5.1% +3.2 953.6 496.8 496.8 522.4 -3.1 Including negative impact from reinvestment of TLTRO III extra liquidity Q1 21 Q2 21 Q1 21 Comm. NPE TLTRO Non Q2 21 H1 20 H1 2
Slide 15: New Lending: Still Fostered by State-Guaranteed Measures
NEW LENDING: STILL FOSTERED BY STATE-GUARANTEED MEASURES €12.1BN NEW LOANS IN H1 20211, O/W €4.7BN VIRTUOUS SUBSTITUTION EFFECT ON ASSET SPREAD COVID-19 MEASURES GUARANTEED BY THE STATE OF M/LT LOANS CONFIRMED IN H1 2021 € bn 12.2 12.1 Net gain High share of +9bps +9bps Households 1.3 2.2 Covid-19 M
Slide 16: Covid Moratoria: 70% Reduction with Very Low Default Rate
COVID MORATORIA: 70% REDUCTION WITH VERY LOW DEFAULT RATE STRONG RESILIENCE OF THE MORATORIA PORTFOLIO: • Outstanding Moratoria down to €4.8bn: - representing a very limited portion of gross customer loans (4.3%) - concentrated in the best rating classes (74%), with Composition Mid-High of loans + H
Slide 17: Net Fees and Commissions: Q2 2021 Outperforming Strong Q1
NET FEES AND COMMISSIONS: Q2 2021 OUTPERFORMING STRONG Q1 2021 RESULTS Half-yearly trend Quarterly trend Q2 monthly trend €m +16.3% €m €m +27.2% 950.1 816.9 +1.5% 389.9 486.8 471.4 478.7 167.4 376.4 155.7 155.5 169.8 239.1 247.7 82.2 80.5 85.1 427.0 463.3 206.6 232.3 231.0 73.6 75.0 82.4 H1 2020 H1
Slide 18: Operating Costs: Positive Quarterly Trend
OPERATING COSTS: POSITIVE QUARTERLY TREND Total Operating Costs €m -2.2% -2.7% +2.1% -1.9% 1,305 1,249 1,276 648.9 643.9 631.6 Including €14.4m Covid-related 843.9 817.0 844.0 savings 418.0 426.9 417.1 461.2 431.7 431.5 230.9 217.0 214.5 H1 19 H1 20 H1 21 Q2 19 Q1 21 Q2 21 Other Staff costs Other St
Slide 19: Strong Liquidity & Funding Position
STRONG LIQUIDITY & FUNDING POSITION COUPLED WITH ACTIVE MANAGEMENT OF DEBT SECURITIES PORTFOLIO UNENCUMBERED LCR1 NSFR1 ELIGIBLE SECURITIES TLTRO III Last take up: €10.0bn at the end 216% >100% €16.5bn €37.5bn of March 2021 LIQUIDITY & € bn First Social BONDS Successful 0.75 0.50 bond issued FUNDING
Slide 20: Focus on Govies Portfolio
FOCUS ON GOVIES PORTFOLIO Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn -4.0% € bn +26.2% € bn -44.8% -3.5% -1.1%% 13.8 13.6 13.7 13.2 +18.5% 5.0 4.3 6.4 6.3 2.9 1.4 1.6 1.4 30/06/20 31/12/20 31/03/21 30/06/21 30/06/20 31/12/20 31/03/21 30/06/21 30/06/20 31/12/20 31/03/21
Slide 21: NPE Evolution: Another Significant Step in Derisking
NPE EVOLUTION: ANOTHER SIGNIFICANT STEP IN DERISKING NPE STOCK: COVERAGE: DOWN BY €23BN SINCE THE MERGER WITH BAD LOANS DOWN BY >€16BN TREND DRIVEN BY LOWER SHARE OF BAD LOANS AND HIGHER SHARE OF SECURED POSITIONS AFTER PROJECT ROCKETS GBV in € bn 30.0 -28.2% Coverage ratios 31/03/21 0.2 indicated i
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% 5.2% 21.1% (EBA definition)2 Gross 14.7% 12.1% 10.8% 6.5% 9.1% 8.7% 5.0% 5.2% 7.5% 3.9% 7.5% 3.9% 6.2% 3.4% Net 31/12/16 1 31/12/17 31/12/18 31/12/19 30/06/20 31/12/20 31/03/21 30/06/21 TEXAS RATIO3 160
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 17.2 16.8 17.5 18.8 TIER1 14.3 14.3 14.5 15.8 13.3 +37bps 14.1 12.7 -17bps -10bps +10bps 12.9 CET1 31/12/2020 31/03/2021 Q2 2021 Dividends1& Regulatory RWA/A
Slide 24: Final Remarks: Excellent H1 2021 – Well Geared for Future
FINAL REMARKS: EXCELLENT H1 2021 – WELL GEARED FOR FUTURE STRONG OPERATING PERFORMANCE Solid growth in volumes and in Core Revenues, coupled with tight cost control, drive the strengthening of the Group’s profitability: Pre-Provision income: +48.2% Y/Y and +16.6% Q/Q Stated H1 2021 net income at €36
Slide 25: FY 2021 Outlook
FY 2021 OUTLOOK TOTAL REVENUES OPERATING COSTS PRE-PROVISION PROFIT ~€4.4BN ~€2.5BN ~€1.9BN COST OF RISK EPS & PAYOUT CAPITAL In line with H1 2021 EPS: 35 cents CET1 FL: ~13% maintaining a very prudent Dividend payout: ~40% MDA Buffer FL: >350BPS provisioning approach 2. Key Achievement Highlights 2
Slide 26: Agenda
Agenda 1. Summary 4 2. Key Achievement Highlights 11 3. H1 2021 Performance Details: 26 - Profitability 27 - Balance Sheet 31 - Funding and Liquidity 32 - Customer Loans and Focus on Credit Quality 38 - Capital Position 45 - ESG 46 H1 2021 Group Results Presentation 26
Slide 27: H1 2021 Quarterly P&L Results
H1 2021 QUARTERLY P&L RESULTS Chg. Chg. Reclassified income statement (€m) Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q/Q Q/Q % Net interest income 474.1 479.5 519.9 509.0 496.8 522.4 25.5 5.1% Income (loss) from invest. in associates carried at equity 22.3 48.0 36.8 23.7 41.5 56.5 15.0 36.1% Net interest,
Slide 28: P&L: H1 2021 Stated and Adjusted Comparison
P&L: H1 2021 STATED AND ADJUSTED COMPARISON Chg. H/H H1 20 H1 21 Chg. H/H Reclassified income statement (€m) H1 20 H1 21 % adjusted adjusted % Net interest income 953.6 1,019.2 6.9% 953.6 1,019.2 6.9% Income (loss) from invest. in associates carried at equity 70.3 98.1 39.5% 70.3 98.1 39.5% Net inte
Slide 29: Adjusted P&L: Details on Non-Recurring Items
ADJUSTED P&L: DETAILS ON NON-RECURRING ITEMS H1 21 Reclassified income statement (€m) H1 21 adjusted One-off Non-recurring items Net interest income 1,019.2 1,019.2 0.0 Income (loss) from invest. in associates carried at equity 98.1 98.1 0.0 Net interest, dividend and similar income 1,117.3 1,117.3
Slide 30: Financial Portfolio: Net Financial Result and Reserves
FINANCIAL PORTFOLIO: NET FINANCIAL RESULT AND RESERVES & UNREALISED GAINS Net Financial Result (excl. FV on Own Liabilities) €m +159.1% +159.1% H/H with strong results from trading, FV activities 216.3 +16.9% and capital gains on securities +16.9% Q/Q driven by the positive evaluation of equity
Slide 31: Reclassified Balance Sheet as at 30/06/2021
RECLASSIFIED BALANCE SHEET AS AT 30/06/2021 Chg. y/y Chg. YTD Chg. in Q2 Reclassified assets (€ m) 30/06/20 31/12/20 31/03/21 30/06/21 Value % Value % Value % Cash and cash equivalents 838 8,858 10,727 20,718 19,880 n.m. 11,860 133.9% 9,991 93.1% Loans and advances measured at AC 121,213 120,456 127
Slide 32: Direct Funding
DIRECT FUNDING Solid position confirmed in Core funding Direct customer funding1 (without Repos) € bn +7.1% +2.0% Capital-protected Certificates 120.1 120.3 122.6 114.4 Other Bonds 103.0 91.4 98.5 100.4 Time deposits +€11.6bn Y/Y C/A & Sight deposits (79.9%) (82.0%) (83.4%) (84.0%) (% Share on total
Slide 33: Indirect Customer Funding at €96.5bn
INDIRECT CUSTOMER FUNDING AT €96.5BN Assets under Management (AuM) Assets under Custody (AuC)1 € bn € bn +8.8% +9.8% +5.6% 62.9 +4.9% 57.8 59.6 61.3 3.9 4.1 4.1 4.0 15.0 14.9 14.9 15.1 30.5 32.0 32.9 33.5 38.8 40.8 42.3 43.8 30/06/2020 31/12/2020 31/03/2021 30/06/2021 30/06/2020 31/12/2020 31/03/202
Slide 34: Bonds Outstanding: Well Diversified Portfolio
BONDS OUTSTANDING: WELL DIVERSIFIED PORTFOLIO Bonds Outstanding as at 30/06/2021 Nominal 20.0% Cap.-Protected Successful issuance activity in 2020/July 2021 (€3.2bn in total) amounts Certificates o/w: €1.95 subordinated; €750m SNP and the first Social Bond Covered (SP) for €500m, issued within the
Slide 35: Bond Maturities: Limited and Manageable Amounts
BOND MATURITIES: LIMITED AND MANAGEABLE AMOUNTS Institutional bond maturities Retail bond maturities € bn 3.75 € bn €1.78bn already reimbursed 2.50 in H1 20211 1.91 0.65 1.40 0.50 0.45 1.25 0.00 0.00 0.20 0.51 July - Dec. 2021 FY 2022 FY 2023 July - Dec. 2021 FY 2022 FY 2023 Senior Pref. Covered Bon
Slide 36: Securities: Significant Weight of the AC Portfolio
SECURITIES: SIGNIFICANT WEIGHT OF THE AC PORTFOLIO € bn 30/06/20 31/12/20 31/03/21 30/06/21 Chg. y/y Chg. YTD Chg. in Q2 Debt securities 38.3 33.9 38.7 39.7 3.7% 17.3% 2.5% Equity securities, Open-end funds & Private equity 1.6 2.4 2.7 3.0 91.5% 25.4% 9.9% TOTAL SECURITIES 39.9 36.3 41.5 42.7 7.2% 1
Slide 37: Solid Liquidity Position: LCR at 216% & NSFR >100%
SOLID LIQUIDITY POSITION: LCR AT 216% & NSFR >100%1 Eligible Assets2 Up at €17.6bn € bn as at end-July 2021 63.4 65.5 65.0 Unencumbered 58.2 15.7 16.5 ADDITIONAL UNENCUMBERED LIQUID ASSETS Encumbered with Repos & other 24.2 19.9 12.3 11.0 Excess ECB deposits: €5.9bn avg. in Q1, €6.1bn avg. in Q2 O
Slide 38: Net Customer Loans
NET CUSTOMER LOANS Satisfactory increase in Performing Loans, with new loans granted at €12.1bn in H1 20211 Net Customer Loans2 € bn 108.4 109.3 110.1 109.4 5.4 4.3 4.3 3.7 -31.2% Y/Y NPE 103.0 105.0 105.9 105.7 +2.6% Y/Y Performing Loans 30/06/2020 31/12/2020 31/03/2021 30/06/2021 CHANGE NET PERFOR
Slide 39: Analysis of Performing Loan Portfolio
ANALYSIS OF PERFORMING LOAN PORTFOLIO Performing customer loan (GBV) Staging evolution of breakdown as at 30/06/20211 Performing Loans Other (Public Sector, GBV in € bn GACS Senior Notes No-Profit, etc.) 103.4 105.5 106.3 106.1 2.3% 14% represented by State- 4.3% 6.6% 6.8% 9.1% 10.7% guaranteed loan
Slide 40: Covid-19: Lending Measures Assisted by State Guarantees
COVID-19: LENDING MEASURES ASSISTED BY STATE GUARANTEES Lending measures assisted by public guarantees at €16.9bn as at 30/06/2021 € bn High customer propensity for new 1.7 State-guaranteed lending 16.2 16.9 0.1 15.2 13.9 2.0 3.3 1.6 1.9 Lending measures assisted by 3.7 public guarantees: System dat
Slide 41: Asset Quality Details – Loans to Customers at AC
ASSET QUALITY DETAILS – LOANS TO CUSTOMERS AT AC GROSS EXPOSURES 30/06/2020 31/12/2020 31/03/2021 30/06/2021 Chg. y/y Chg. YTD Chg. in Q2 €/m and % Value % Value % Value % Bad Loans 3,530 3,578 3,575 2,123 -1,407 -39.9% -1,455 -40.7% -1,452 -40.6% UTP 6,159 4,946 4,958 4,825 -1,334 -21.7% -121 -2.4%
Slide 42: NPE Flows
NPE FLOWS Inflows from Performing to NPEs Outflows from NPEs to Perf. Loans €m €m Up at €35m 332 including also 308 257 loans at FV 261 224 153 110 81 43 55 44 222 19 21 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Impact from New DoD FTA Flows from UTP to Bad Loans €m T
Slide 43: Gross NPEs Down by €23bn vs. YE 2016
GROSS NPEs DOWN BY €23BN VS. YE 2016 NPE REDUCTION SINCE THE BEGINNING OF THE MERGER NPEs (GBV€ bn) 30.0 Down by 18.2bn vs. YE 2016, o/w: • Inflows from Performing: +€3.0bn2 • Cancellations, Write-offs, Recoveries, Cure & Other3: -€6.6bn • Disposals: -€14.6bn o/w: €0.1bn in January 2021 due to FTA i
Slide 44: UTP Loans: High Share of Restructured & Secured Positions
UTP LOANS: HIGH SHARE OF RESTRUCTURED & SECURED POSITIONS UTP analysis Breakdown of Net UTPs € bn -2.4% YTD Unsecured € bn 31/12/20 30/06/21 % Chg. Secured 4.9 4.8 Forborne 1.8 1.8 2.2% (%) Composition - Secured 1.3 1.4 4.1% 2.1 1.9 0.5 0.4 -11.7% - Unsecured (42%) (40%) 2.2 2.7 0.7 Other UTP 1.0 0.
Slide 45: Capital Position in Detail
CAPITAL POSITION IN DETAIL PHASED IN CAPITAL 31/12/2020 31/03/2021 30/06/2021 RWA COMPOSITION POSITION (€/m and %) 31/12/2020 31/03/2021 30/06/2021 (€/bn) CET 1 Capital 9,597 9,388 9,676 T1 Capital 10,397 10,565 10,853 CREDI T & COUNTERPARTY 54.9 57.7 58.0 Total Capital 12,304 12,275 12,921 RI SK RW
Slide 46: ESG Action Plan: Full Integration into Business Model
ESG ACTION PLAN: FULL INTEGRATION INTO BUSINESS MODEL ESG ACTION PLAN 2023: 7 WORKSTREAMS ACTIVATED 32 projects 15 units 50 dedicated people 1 • Integrate ESG-oriented roles and responsibilities within all activities Governance • Integrate ESG topics into corporate policies • Incentive scheme streng
Slide 47: 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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