Unicredit S.p.a. · MIL:UCG
Unicredit — Unicredito Spa Ord New — Q2 2023 Earnings Presentation
48 slides from Unicredit's earnings presentation, Jul 26, 2023
Slide 1: UniCredit Unlocked
UniCredit Unlocked Another record-breaking set of results: best 2Q and 1H ever Milan, 26 July 2023
Slide 2: Another record-breaking set of results: best 2Q and 1H ever
Another record-breaking set of results: best 2Q and 1H ever Ten consecutive quarters of profitable growth OUR VISION QUALITY The Bank for QUALITY GROWTH 5 bps 210 bps BALANCE SHEET CAPITAL Europe’s 4.5bn ex integration + 38 % CoR 6.5bn 16.6% CET1r, Stated1 future costs Net Revenue, 1H/1H CAPITAL EFF
Slide 3: The Bank for Europe's future
The Bank for Europe’s future A new benchmark for banking A unique pan-European franchise, with 13 leading banks connecting 15m clients across Europe A WINNING STRATEGY • Clients and communities at the centre • Pan-European with leading local franchise • Group product factories and an ecosystem CONTI
Slide 4: A winning strategy: from retrenchment to profitable growth
A WINNING STRATEGY From retrenchment to profitable growth UniCredit Unlocked Leveraging Group scale and Local reach Our focus: Served by: Delivering: Supported by: Underpinned by: OUR CLIENTS AND PAN-EUROPEAN BEST-IN-CLASS DIGITAL, DATA PRINCIPLES POWERED BY ONGOING COMMUNITIES LOCAL FRANCHISE GROUP
Slide 5: Powered by ongoing transformation
POWERED BY ONGOING TRANSFORMATION Structural and cultural transformation from within Our focus: Served by: Delivering: Supported by: CLIENTS AND PAN-EUROPEAN BEST-IN-CLASS DIGITAL, DATA COMMUNITIES LOCAL FRANCHISE GROUP PRODUCTS AND OPERATIONS Revise and harmonise coverage model Set-up of Group fact
Slide 6: A transformed Bank with sustainable competitive advantages
DELIVERING QUALITY PROFITABLE GROWTH A transformed Bank with sustainable competitive advantages GROSS REVENUE 120 300 Our industrial transformation moved us from laggards to leaders and more is yet to come 110 200 COST QUALITY REVENUE STRUCTURALLY CAPITAL LEADERSHIP GROWTH LOWER COR EXCELLENCE Cost
Slide 7: A transformed Bank with sustainable competitive advantages
DELIVERING QUALITY PROFITABLE GROWTH A transformed Bank with sustainable competitive advantages COST QUALITY REVENUE STRUCTURALLY CAPITAL LEADERSHIP GROWTH LOWER COR EXCELLENCE Absolute cost reduction Quality NII Proven structurally lower CoR Deployed capital above CoE Proactively addressing rather
Slide 8: Delivering quality profitable growth: a trusted organisation
DELIVERING QUALITY PROFITABLE GROWTH Delivering quality profitable growth: a trusted organisation A trusted and reliable organisation, with a robust balance sheet BEST-IN-CLASS CAPITAL POSITION STRONG LIQUIDITY RATIOS HIGH QUALITY CREDIT PORTFOLIO TARGETED INVESTMENTS Continuously growing CET1r whil
Slide 9: 1H23 – 10th consecutive quarter of outstanding results
DELIVERING QUALITY PROFITABLE GROWTH 1H23 – 10th consecutive quarter of outstanding results 10th consecutive quarter of effectively balancing our three levers to deliver sustainable profitable quality growth, underpinning future distributions KEY METRICS 1H23 HIGHLIGHTS ACROSS OUR 3 LEVERS In millio
Slide 10: Outstanding value generation for shareholders
DELIVERING QUALITY PROFITABLE GROWTH Outstanding value generation for shareholders Continuing to improve our profitability Delivering on our commitment CONFIRMING STRONG ROTE TRAJECTORY AND PROGRESSIVE CASH DIVIDENDS AND SHARE BUYBACKS LEAPFROGGING OUR PEERS TO INCREASE PER SHARE VALUES IN THE FUTUR
Slide 11: Italy: another excellent quarter of sustained quality profitable growth
DELIVERING QUALITY PROFITABLE GROWTH Italy: another excellent quarter of sustained quality profitable growth ✓ Gross revenue: +23% ✓ NII: +66% exceeding rates improvements through strict pass-through management 5.2 ✓ Fees: −5.2% due to current account fee change (-2.6% excluding), management fees an
Slide 12: Germany: ongoing structural transformation delivers record first half
DELIVERING QUALITY PROFITABLE GROWTH Germany: ongoing structural transformation delivers record first half ✓ Gross revenue: +14% ✓ NII: +9% commercial NII +51% backed by limited pass-through, partly compensated by higher funding costs on markets positions, resulting in higher trading 2.8 ✓ Fees: +5%
Slide 13: CE: confirming high profitability with sound costs and risk profile
DELIVERING QUALITY PROFITABLE GROWTH CE: confirming high profitability with sound costs and risk profile ✓ Gross revenue: +27% ✓ NII: +39% favorable rates dynamic and active management of the interest rates 2.1 ✓ Fees: −2% transactional and financing up while investment still follow general 1.1 NET
Slide 14: EE: profitable growth driven by business intensity and efficiency gains
DELIVERING QUALITY PROFITABLE GROWTH EE: profitable growth driven by business intensity and efficiency gains ✓ Gross revenue: +31% ✓ NII: +44% positive rate dynamics and strong commercial high-quality growth in both Retail 1.2 and Corporate 0.8 NET ✓ Fees: +4% driven by Transactional and Financing f
Slide 15: Client Solutions: resilient results while scaling up model
DELIVERING QUALITY PROFITABLE GROWTH Client Solutions: resilient results while scaling up model Enhancing our product factories and capitalising on scale and scope, providing best-in-class products ADVISORY & CAPITAL MARKETS 0.3 bn +7% 1H/1H TRANSACTIONS & PAYMENTS 1.3 +12% 1H/1H bn CLIENT RISK MANA
Slide 16: Building a better future for all our stakeholders
DELIVERING QUALITY PROFITABLE GROWTH Building a better future for all our stakeholders Delivering on COMMUNITIES: Proactively • UniCredit per l’Italia: sustaining the liquidity of Italian businesses with total commitment of €10bn CULTURE: Supporting and • Heritage of tens of thousands works of art i
Slide 17: Financial highlights 2Q23
DELIVERING QUALITY PROFITABLE GROWTH Financial highlights 2Q23 S. PORRO (CFO)
Slide 18: Financial highlights 2Q23: strong revenue
FINANCIAL HIGHLIGHTS 2Q23 Strong revenue driven by net interest income and growth across all lines Excellent net interest income with robust client driven fees and trading activity Revenue, bn Revenue and LLPs quarterly evolution by item, bn 3.4 3.3 3.5 2.5 2.5 Net 11.9 2.3 Interest +2% Q/Q excludin
Slide 19: Ample liquidity, TLTRO substantially repaid
FINANCIAL HIGHLIGHTS 2Q23 Ample liquidity, TLTRO substantially repaid LOANS / DEPOSITS1 WELL BELOW 100% DEPOSIT MIX: >80% IN RETAIL AND SME CLIENTS Deposits1 - EOP • Granular, behaviourally sticky, transactional accounts 492 480 478 474 472 • >55% guaranteed3 at Group level; average retail balance4
Slide 20: Excellent net interest income and FY23 guidance increase
FINANCIAL HIGHLIGHTS 2Q23 Excellent net interest income and FY23 guidance increase Supportive rate development combined with well managed deposit pass through Net interest, bn 1H23 avg deposits Avg Euribor 3M: +73bps Q/Q, +372bps Y/Y 2Q23 avg deposits ≥13.2bn pass through: c. 23% 2Q23: 3.36%; 1Q23:
Slide 21: Fees up net of impact of current account fee reduction in Italy
FINANCIAL HIGHLIGHTS 2Q23 Fees up net of impact of current account fee reduction in Italy Good Financing and Transactional performance; Investment impacted by market trends and client appetite Fee1, bn AuM stock Change by fee categories -6% -3% 200 197 214 200 194 194 195 197 Investment Q/Q Y/Y 4.0
Slide 22: Costs continue downward trajectory despite inflation
FINANCIAL HIGHLIGHTS 2Q23 Costs continue downward trajectory despite inflation Reaping benefits of prior actions and protecting future cost base through efficiency initiatives Cost/income ratio Costs, bn Quarterly split by item 48% 39% 49% 49% 47% 43% 4.7 39% 39% 4.7 1.4bn flat -1% UniCredit footpri
Slide 23: Negligible cost of risk, low default rate leads to FY23 guidance update
FINANCIAL HIGHLIGHTS 2Q23 Negligible cost of risk, low default rate leads to FY23 guidance update 0.7% Group excl. Russia Default 1.3% 0.8% 1.5% 1.3% 1.1% 1.1% 0.8% 0.8% COST OF RISK rate (YTD) Cost of risk 56bps 5bps 114bps 0bps 7bps 46bps 8bps 2bps <25bps FY23 guidance Potential upside 14bps 5bps
Slide 24: Further reduction in NPEs, stable coverage
FINANCIAL HIGHLIGHTS 2Q23 Further reduction in NPEs, stable coverage Gross NPE ratio 3.8% 2.9% 2.9% 2.7% 2.7% 2.6% Net NPE ratio 1.9% 1.5% 1.5% 1.4% 1.4% 1.4% Total gross NPE 17.8 Gross past due 0.8 4.8 13.9 13.8 Gross bad loans 0.8 0.8 12.5 12.6 12.1 0.9 0.8 0.8 3.4 3.3 2.6 2.7 2.9 Reduction Q/Q ma
Slide 25: RWA well managed with continued efficiencies and lower credit risk
FINANCIAL HIGHLIGHTS 2Q23 RWA well managed with continued efficiencies and lower credit risk RWA walk, bn Group -7% -1% 1H/1H Q/Q o/w o/w 317 -1.1bn from securitisation +0.7bn from Market Risk 295 299 -0.6bn from Credit Risk 0.0 0.3 0.2 295 -3.5 -1.1 1H22 1H23 1Q23 Active portfolio Regulatory PD FX
Slide 26: Very strong CET1r thanks to superior organic capital generation
FINANCIAL HIGHLIGHTS 2Q23 Very strong CET1r thanks to superior organic capital generation +2.3bn Net Profit: +77bps RWA: +24bps -0.7bn Cash dividend: -25bps -0.2bn AT1 & Cashes coupon: -6bps Mainly capital reserves & others +101bps 16.64% 16.00% 16.05% -31bps 3.3bn -1bp -2bps -9bps share buy-back 1.
Slide 27: The Bank for Europe's future
FUTURE GUIDANCE AND CLOSING REMARKS The Bank for Europe’s future A. ORCEL (CEO)
Slide 28: 2023 guidance
CONTINUALLY STRIVING FOR EXCELLENCE 2023 guidance Continuous focus driving results FY23 guidance VS. PREVIOUS GUIDANCE IMPROVED … Net Revenue >21.5bn Further Improved rate scenario o/w Net Interest ≥13.2bn and pass-through assumptions o/w Cost of Risk <25bps Rates: Potential upside 20231 c.3.35% 202
Slide 29: Forward-looking management priorities
CONTINUALLY STRIVING FOR EXCELLENCE Forward-looking management priorities Working to anticipate future trends 2023 Limit NII REDUCTION Boost FEE GENERATION Target COST REDUCTION Maintain LOW COR Continue RWA EFFICIENCY 2024 Tightly managing Investments in Continue rationalising HQ Sound portfolio, C
Slide 30: Our distributions: top-tier, sustainable and balanced
CONTINUALLY STRIVING FOR EXCELLENCE Our distributions: top-tier, sustainable and balanced Top-tier and Sustainable Balanced approach ATTRACTIVE SHAREHOLDER DISTRIBUTION TO ENHANCE SHAREHOLDER VALUE Best-in-class organic capital generation and Currently skewed towards share buy back due CET1 supporti
Slide 31: Annex
Annex
Slide 32: Updated base case macro scenario
ANNEX Updated base case macro scenario EUROZONE UNICREDIT FOOTPRINT Scenarios 2023-2024 Scenarios 2023-2024 Group Group excl. Russia BASE CASE BASE CASE BASE CASE MACRO MACRO MACRO SCENARIO SCENARIO SCENARIO Inflation,% 2023 5.5 0.5 Inflation,% 2023 6.7 0.5 7.1 0.4 ◼ GDP growth, % ◼ GDP growth,
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 1H22 1H23 Revenue 5.0 4.8 4.8 5.7 5.9 6.0 9.8 11.9 Costs -2.3 -2.4 -2.4 -2.5 -2.3 -2.3 -4.7 -4.7 Gross Operating Profit 2.7 2.4 2.4 3.2 3.6 3.6 5.1 7.2 LLPs -1.3 0.0 -0.1 -0.5 -0.1 -0.0 -1.3
Slide 34: Russia exposure details
ANNEX Russia exposure details RESIDUAL2 As of Jun-23 GROSS GROSS EXTREME LOSS NET EXTREME IMPACT FROM LOSS MAX EXPOSURE ASSESSMENT1 EXTREME LOSS ASSESSMENT1 ASSESSMENT1 CET1r impact bn bn bps bn bps Participation value and associated RWA lower Q/Q due Participation -2.7 3 -2.7 3 -31 4 -2.7 3 -31 4 t
Slide 35: Balance Sheet
ANNEX Balance Sheet 2Q23 balance sheet: 844bn €bn Other Assets 39 30 Other liabilities 46 Financial liabilities & hedging liabilities Cash and cash balances 76 62 Equity and equity instruments Financial Assets at Amotised Cost 82 93 Debt securities issued Financial Assets at Fair Value 42 Repos 128
Slide 36: Deposit details
ANNEX Deposit details Deposits from customers 472bn 2Q23 avg commercial vs 1Q23 Customer deposits (Net of repos and IC - EoP) (-2% Q/Q) deposits, bn rates 2Q23 (vs 1Q23) Italy Italy 192 -1% -0.36% Germany (-12bps) By Central Europe region Eastern Europe Germany 132 -4% -1.10% Russia (-28bps) -1.65%
Slide 37: Loan details
ANNEX Loan details Loans to customers (Net of repos and IC - EoP) 423bn 2Q23 avg gross commercial performing loans, bn vs 1Q23 Gross customer performing loan rates 2Q23 (-2% Q/Q) (vs 1Q23) Italy Italy 160 -2% 4.03% Germany (+55bps) By Central Europe region Eastern Europe Germany 112 3.44% Russia -1%
Slide 38: Total Financial Assets
ANNEX Total Financial Assets Quarterly evolution, bn TFAs1 quarterly split by item, bn 15 12 10 10 197bn +1% -1% 8 8 AuM +2% 2Q23 Q/Q Y/Y Q/Q 740 726 720 742 749 760 AuM 214 200 194 194 195 197 AuC 173bn 2Q23 +6% +22% Q/Q Y/Y 151 142 138 152 163 173 AuC 384 387 396 390 390 390bn flat% +1% Deposits 3
Slide 39: Spill-over analysis confirming soundness of Group risk profile
ANNEX Spill-over analysis confirming soundness of Group risk profile A ENTERPRISES B INDIVIDUALS 432bn Group 28% 47% 4% 21% EaD1 Energy intensive sectors Other Enterprises Consumer Mortgages Corporates & SMEs belonging to energy intensive sectors, before bottom-up Corporates & SMEs not belonging to
Slide 40: 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 1Q23 Split by Region, bn Split by asset class, bn Portfolio towards clients operating
Slide 41: Group gross loans breakdown by stages
ANNEX Group gross loans breakdown by stages Stage 3 Group gross loans1 and provisions EoP, bn 2.9% 2.9% 2.7% 2.7% 2.6% o/w Gross NPE (% of gross loans) Stage 3 2Q22 3Q22 4Q22 1Q23 2Q23 475 474 467 Stage 3 14 14 465 462 Coverage 50.0% 50.4% 48.2% 48.5% 47.9% 13 13 ratio 12 Including c.5bn of Russian
Slide 42: Insurance: an example of our transformation in action
ANNEX Insurance: an example of our transformation in action A new set- up for insurance Our focus: CLIENTS AND COMMUNITIES Served by: PAN-EUROPEAN LOCAL FRANCHISE Delivering: BEST-IN-CLASS GLOBAL PRODUCTS Supported by: DIGITAL, DATA AND OPERATIONS What do our clients How do we reach our What do we o
Slide 43: End notes
End notes
Slide 44: 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 45: 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 inc
Slide 46: 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 47: Information related to this presentation (3/4)
END NOTES Information related to this presentation (3/4) Main definitions “HQLA” High-Quality Liquid Assets - assets, which can be easily and immediately converted into cash at little or no loss of value even in periods of severe idiosyncratic and market stress. These assets are unencumbered, which
Slide 48: Information related to this presentation (4/4)
END NOTES Information related to this presentation (4/4) Main definitions “RoAC” annualized ratio between (i) Net profit after AT1/Cashes minus excess capital charge (where applicable) and (ii) allocated capital, both as defined above “RoTE” means (i) Net profit after AT1/Cashes – as defined above,
Unicredito Spa Ord New — Q2 2023 Earnings Presentation on 6ix