Unicredit S.p.a. · MIL:UCG
Unicredit — Unicredito Spa Ord New — Q1 2023 Earnings Presentation
52 slides from Unicredit's earnings presentation, May 3, 2023
Slide 1: UniCredit Unlocked
UniCredit Unlocked Relentless transformation: 9th consecutive quarter of profitable growth and best 1Q ever Milan, 3 May 2023
Slide 2: 9th consecutive quarter of profitable growth and best 1Q ever
9th consecutive quarter of profitable growth and best 1Q ever UNICREDIT UNLOCKED RELEASING OUR FULL POTENTIAL SUSTAINABLE Consistently outstanding financial results via an optimal balance of our three levers COMPETITIVE Rooted in a clear vision and strategy: “phase two” of industrial transformation
Slide 3: Strong franchise consistently delivering quality profitable growth
Strong franchise consistently delivering quality profitable growth A NEW BENCHMARK FOR BANKING SUPERIOR 39.2 CAPITAL POSITION 8 16.1% CET1r, % 9th CONSECUTIVE QUARTER + 57 % bps CoR Cost / Income Stated1 STRUCTURALLY OPERATIONAL OF Y/Y GROWTH Net Revenue, Y/Y EXCELLENCE LOW COST OF RISK 7.7 Solid cr
Slide 4: Sustainable competitive advantage
Sustainable Our Value Proposition competitive advantage INSPIRED BY The Bank for Europe’s future CLEAR VISION A new benchmark for banking, delivering for all our stakeholders Win. The Right Way. UniCredit Unlocked Together. GUIDED BY A client-centric strategy fully tailored to the bank’s inherent st
Slide 5: Guided by a winning strategy
SUSTAINABLE COMPETITIVE ADVANTAGE Guided by a winning strategy INHERENT STRENGTHS AMBITION CLIENTS AT 15m clients, c.75%1 Retail and SMEs, Grow client base; improve penetration STRATEGY THE CENTRE a unique gateway to Europe by broadening range of services UniCredit PEOPLE & c.75k people in 13 leadin
Slide 6: Enabled by an industrial transformation plan
SUSTAINABLE COMPETITIVE ADVANTAGE Enabled by an industrial transformation plan PHASE I 2021 & BEYOND PHASE II 2023 & BEYOND PLAN Reinforce the commercial machine Optimise the operating machine Our industrial transformation PEOPLE & ORGANISATION Unify people around a clear vision and strategy, unleas
Slide 7: Significant progress in our transformation
SUSTAINABLE COMPETITIVE ADVANTAGE Significant progress in our transformation I EMPOWER AND REVITALISE BUSINESSES II SIMPLIFY AND DELAYER THE ORGANISATION AND PROCESSES PEOPLE & ORGANISATION 30h Training hours provided pro capita per employee 65% Delegations with increased thresholds within a clear f
Slide 8: Resilient and growing financial results
Resilient and growing financial results Our franchise aims to deliver alpha in its financial results in any Our continuing industrial transformation delivering higher value to stakeholders COST TARGETED, SUPERIOR OPERATIONAL EXCELLENCE Non-business cost reduction while boosting investments: positive
Slide 9: 1Q23 – 9th consecutive quarter of outstanding results
RESILIENT AND GROWING FINANCIAL RESULTS 1Q23 – 9th consecutive quarter of outstanding results α 3 LEVERS BALANCED IN AN OPTIMAL WAY TO DELIVER OUR RESULTS 1Q23 KEY METRICS In million 1Q23 Y/Y Q/Q Net Revenue 5,837 +57% +13% COST CAPITAL o/w NII 3,298 +44% −3% 34% of Revenue o/w Fees 1,996 −2% 11% TA
Slide 10: Exceptional shareholder value creation continues
RESILIENT AND GROWING FINANCIAL RESULTS Exceptional shareholder value creation continues ROTE (%)1 EPS (€)2 ACCRUED DPS (€) RoTE 20.4 +186% 1Q23/1Q21 1.06 +95% RoTE@13%CET1r +61% 0.37 16.8 0.26 0.73 0.19 RoTE@13%CET1r FY23 Guidance 0.69 0.12 14.1 c.15.0 13.7 Excl. TBVPS3 (€, EoP) 1Q22 0.37 Russia +2
Slide 11: Client Solutions: strong performance with full potential still to come
RESILIENT AND GROWING FINANCIAL RESULTS Client Solutions: strong performance with full potential still to come OUR 2 PRODUCT FACTORIES 1Q23 bn Q/Q Y/Y Enhance our product factories CORPORATE SOLUTIONS 1.7 +5% +3% and capitalise on scale and ADVISORY & CAPITAL MARKETS 0.2 +41% +7% scope, providing be
Slide 12: Italy: transformation continues to power outstanding results
RESILIENT AND GROWING FINANCIAL RESULTS Italy: transformation continues to power outstanding results SUPPORTING OUR COMMUNITIES NET REVENUE 2.6 bn Net revenue (+13%) COST 36.1 % Cost / Income (−8.0p.p.) 1.3 bn +29% Investments to best serve our clients and communities 55 branches already refurbished
Slide 13: Germany: another record quarter with transformation still ongoing
RESILIENT AND GROWING FINANCIAL RESULTS Germany: another record quarter with transformation still ongoing SUPPORTING OUR COMMUNITIES NET REVENUE 1.5 bn Net revenue (+13%) COST 40.4 % Cost / Income (−6.9p.p.) 0.7 bn +65% Social Impact Banking Extended Lending to medical services for underserviced reg
Slide 14: CE: a new improved run rate with Austria still transforming
RESILIENT AND GROWING FINANCIAL RESULTS CE: a new improved run rate with Austria still transforming SUPPORTING OUR COMMUNITIES NET REVENUE 1.0 bn Net revenue (+23%) COST 39.8 % Cost / Income (−11.2p.p.) 0.4 bn +72% Green Mortgage Covered Bond Successfully issue of second Green Mortgage Covered Bond
Slide 15: EE: continuing to deliver record profitability quarter after quarter
RESILIENT AND GROWING FINANCIAL RESULTS EE: continuing to deliver record profitability quarter after quarter SUPPORTING OUR COMMUNITIES NET REVENUE 0.6 bn Net revenue (+39%) COST 34.6 % Cost / Income (−8.4p.p.) 0.4 bn +64% Empowering entrepreneurship Social impact banking initiatives in Bulgaria, Cr
Slide 16: Russia: resized and de-risked at minimum cost
RESILIENT AND GROWING FINANCIAL RESULTS Russia: resized and de-risked at minimum cost DECISIVE ACTIONS TAKEN A RESIZED AND REFOCUSED PRESENCE • Conservatively provisioned our LOCAL BUSINESS RESIZED (Y/Y) PROGRESSIVE AND ORDERLY REDUCED exposure with €0.9bn in 2022 IMPACT FROM EXTREME LOSS ASSESSMENT
Slide 17: Robust balance sheet
Robust CAPITAL ASSET QUALITY LIQUIDITY balance sheet CET1 Liquidity buffers Sustainable and CET1 CoR Liquidity VISIBLE proactive approach OUTCOME buffers High quality High quality, resilient INVISIBLE High quality capital and diversified stock portfolio SUSTAINABLE deposit base ORGANIC Best-in-class
Slide 18: Strongest capital position: both stock and flow
ROBUST BALANCE SHEET Strongest capital position: both stock and flow CET1 Outstanding capital position HIGH QUALITY BEST-IN-CLASS ORGANIC DISTRIBUTIONS WHILE LONG-TERM CAPITAL CAPITAL STOCK CAPITAL GENERATION STILL INCREASING CAPITAL APPROACH Highest CET1r and lowest A new sustainable approach Self
Slide 19: Solid credit portfolio and high coverage means structurally lower CoR
ROBUST BALANCE SHEET Solid credit portfolio and high coverage means structurally lower CoR CET1 Structurally lower CoR HIGH QUALITY LOW & HIGHER SOUND COVERAGE & HIGH OVERLAYS TO STRONG DISCIPLINE CREDIT PORTFOLIO QUALITY NPE PROACTIVE STAGING ABSORB SHOCKS ON NEW BUSINESS Strong credit portfolio Lo
Slide 20: Strong liquidity position to weather unexpected stress
ROBUST BALANCE SHEET Strong liquidity position to weather unexpected stress CET1 Robust liquidity profile allowing for us to better manage pass-through, balancing the interests of our clients with current and future profitability STABLE & DIVERSIFIED STRONG LIQUIDITY PRUDENT ALM SIGNIFICANT EXCESS D
Slide 21: Financial highlights 1Q23
Financial highlights 1Q23 S. PORRO (CFO) 21
Slide 22: Revenue momentum thanks to diversified franchise
FINANCIAL HIGHLIGHTS 1Q23 Revenue momentum thanks to diversified franchise Client driven fee generation, elevated trading activity and increased NII, net of TLTRO contribution Revenue, bn Revenue and LLPs quarterly evolution by item, bn +12% Q/Q excluding TLTRO+Tiering+ELF 3.4 3.3 +4% 2.3 2.5 2.5 Ne
Slide 23: Robust liquidity and significant benefit from deposit profile
FINANCIAL HIGHLIGHTS 1Q23 Robust liquidity and significant benefit from deposit profile STRONG BALANCE SHEET, LIQUIDITY PROFILE AND DEPOSITS A SOURCE OF BENEFICIAL FUNDING COMFORTABLE FUNDING POSITION FOR 2023 Loans / Deposits at 90%, well below pre-2020 levels Deposits2 - EOP 492 488 DEPOSIT MIX: >
Slide 24: Net interest income increased 10% Q/Q net of 4Q22 TLTRO contribution
FINANCIAL HIGHLIGHTS 1Q23 Net interest income increased 10% Q/Q net of 4Q22 TLTRO positive contribution Well managed deposit pass-through combined with supportive rates development Quarterly evolution, bn Avg Euribor 3M: +86bps Q/Q, +316bps Y/Y 1Q23: +2.64% ; 4Q22: +1.78%; 1Q22: -0.53% -3% +10% Q/Q
Slide 25: Improved FY23 net interest income guidance and related assumptions
FINANCIAL HIGHLIGHTS 1Q23 Improved FY23 net interest income guidance and related assumptions End-of-Period ECB Deposit ASSUMPTIONS ON PROJECTIONS Facility Rate “DFR” (assumptions) Decrease in avg FY23 deposit beta1 from c.40% to c.30% 2.50% 3.50% A with year-end exit run-rate of c.40% Starting Start
Slide 26: Sustained fee generation on client activity despite lower market driven AuM
FINANCIAL HIGHLIGHTS 1Q23 Sustained fee generation on client activity despite lower market driven AuM Quarterly evolution, bn Split by fee1 categories in the quarter 0.7bn +13% -8% 214 200 194 194 195 Investment AuM stock 1Q23 Q/Q Y/Y +11% 2.0 1.9 1.9 Q/Q 2.0 Financing 0.5bn +24% 1Q23 Q/Q -4% Y/Y 1.
Slide 27: Cost base continues to reflect benefits of ongoing transformation
FINANCIAL HIGHLIGHTS 1Q23 Cost base continues to reflect benefits of ongoing transformation Quarterly evolution, bn Quarterly split by item 49% 49% -4% net of one-off inflation 47% relief booked in 4Q22 43% 39% -6% HR Cost 1.4bn 1Q23 -9% Q/Q -2% Y/Y Q/Q 2.3 2.4 2.4 2.5 2.3 Non HR Cost 0.9bn 1Q23 fla
Slide 28: Limited cost of risk in 1Q23 thanks to resilient credit portfolio quality
FINANCIAL HIGHLIGHTS 1Q23 Limited cost of risk in 1Q23 thanks to resilient credit portfolio quality Default rate 1.5% 1.3% 1.1% 1.1% 0.8% (YTD) Cost of risk 5bps 114bps 0bps 7bps 46bps 8bps Group excl. Russia 1bps net of 1.3 overlays increase 1Q23 LLPs breakdown 2022 affected by 1.2bn LLPs prudently
Slide 29: Gross and net NPE remain stable
FINANCIAL HIGHLIGHTS 1Q23 Gross and net NPE remain stable Gross NPE ratio 3.8% 2.9% 2.9% 2.7% 2.7% Net NPE ratio 1.9% 1.5% 1.5% 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 0.9 0.8 3.4 3.3 2.6 2.7 12.2 9.8 9.7 Gross UTP 9.1 9.1 1Q22 2Q22 3Q22 4Q22
Slide 30: RWA reduction on continued efficiencies and lower market and credit risk
FINANCIAL HIGHLIGHTS 1Q23 RWA reduction on continued efficiencies and lower market and credit risk No material regulatory impacts in the quarter and not expected through end-2024 RWA walk, bn Group -3% Q/Q o/w -3bn from Market Risk 308 -2bn from Credit Risk -2 -1 -1 299 -1 -5 4Q22 Active portfolio R
Slide 31: Superior CET1r despite absorbing impacts of FY22 share buy-back
FINANCIAL HIGHLIGHTS 1Q23 Superior CET1r despite absorbing impacts of FY22 share buy-back +2.1bn Net Profit: +67bps o/w -0.7bn Cash dividend: -23bps RWA: +44bps +11bps Intangibles +9bps capital reserves & others 16.00% +111bps +4bps +3bps +20bps 16.05% -23bps -108bps 4Q22 3.3bn Organic Distribution1
Slide 32: An Unlocked UniCredit
FUTURE GUIDANCE AND CLOSING REMARKS An Unlocked UniCredit A. ORCEL (CEO)
Slide 33: 2023 guidance revised upwards supporting future expectations
α AN UNLOCKED UNICREDIT 2023 guidance revised upwards supporting future expectations CONTINOUS FOCUS DRIVING RESULTS FY23 GUIDANCE VS. PREVIOUS GUIDANCE Progressing ahead of plan Net Revenue >20.3bn on our ongoing industrial transformation o/w Net Interest >12.6bn o/w Cost of Risk 30-35bps Overachie
Slide 34: Securing value over the long term
AN UNLOCKED UNICREDIT Securing value over the long term A NEW FLOOR FOR THE FUTURE BEST INVESTMENT CASE ALPHA-DRIVEN TRANSFORMATION SETTING A NEW PROFITABILITY FLOOR WITH FURTHER POTENTIAL TO INCREASE SUSTAINABLE GENERATION OF TOP TIER PROFITABILITY AND DISTRIBUTION PROFITABLE RISK-ADJUSTED ENGINE B
Slide 35: Forward-looking management priorities
AN UNLOCKED UNICREDIT Forward-looking management priorities 2023 WORKING TO ANTICIPATE FUTURE TRENDS Relentlessly focused on generating alpha benefitting from phase II of 2024 UniCredit Unlocked while crystalising the net value from the macro Offset future NII drag on Net Income from potentially low
Slide 36: Annex
Annex 36
Slide 37: Exceeding our ESG and related commitments
ANNEX Exceeding our ESG and related commitments CLIENTS INNOVATION ACCOUNTABILITY DIVERSITY & INCLUSION • Advancing to operationalize our Net • Only bank in the • ESG representation • Group Executive Committee: Zero 2030 targets CEO Alliance for Europe at Group Executive - 50% female action tank for
Slide 38: 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 6.8 -0.2 7.2 0.4 ◼ GDP growth, % ◼ GDP growth,
Slide 39: 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 Revenue 5.0 4.8 4.8 5.7 5.9 Costs -2.3 -2.4 -2.4 -2.5 -2.3 Gross Operating Profit 2.7 2.4 2.4 3.2 3.6 LLPs -1.3 0.0 -0.1 -0.5 -0.1 Net Operating Profit 1.4 2.4 2.4 2.7 3.5 Systemic Charges -0.7 -0
Slide 40: Balance Sheet
ANNEX Balance Sheet 1Q23 balance sheet: 895bn 480bn deposits from customer €bn (Net of repos and IC - EoP) By region Other Assets 40 26 Other liabilities 46 Financial liabilities & hedging liabilities Financial Assets at Amotised Cost 81 64 Equity and equity instruments Financial Assets at Fair Valu
Slide 41: Russia exposure details
ANNEX Russia exposure details RESIDUAL2 GROSS NET EXTREME GROSS EXTREME LOSS IMPACT FROM LOSS MAX EXPOSURE ASSESSMENT1 EXTREME LOSS ASSESSMENT1 ASSESSMENT1 CET1r impact bn bn bps bn bps Lower impact from lower participation value driven by Participation -2.9 3 -2.9 3 -28 4 -2.9 3 -28 4 Ruble depreci
Slide 42: Loan and deposit volumes
ANNEX Loan and deposit volumes 1Q23 avg gross commercial vs 4Q22 Gross customer performing 1Q23 avg commercial vs 4Q22 Customer deposits performing loans, bn loan rates 1Q23 deposits, bn rates 1Q23 (vs 4Q22) (vs 4Q22) Italy 164 -1% 3.48% 194 -1% -0.25% (+78bps) (-12bps) Germany 113 +0% 3.08% 137 -5%
Slide 43: Total Financial Assets
ANNEX Total Financial Assets Quarterly evolution, bn TFAs quarterly split by item, bn 15 12 10 8 195bn +1% -9% 8 AuM +1% 1Q23 Q/Q Y/Y Q/Q 740 742 749 726 720 AuC 163bn 1Q23 +8% +8% Q/Q Y/Y 1Q22 2Q22 3Q22 4Q22 1Q23 Deposits 390bn 1Q23 -1% +4% Q/Q Y/Y +1% Y/Y TFAs Stock AuM Gross sales 43
Slide 44: Spill-over analysis confirming soundness of Group risk profile
ANNEX Spill-over analysis confirming soundness of Group risk profile A ENTERPRISES B INDIVIDUALS 436bn 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 45: 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 FY22 Split by Region, bn Split by asset class, bn Portfolio towards clients operating
Slide 46: Group gross loans breakdown by stages
ANNEX Group gross loans breakdown by stages Stage 3 Group gross loans1 and provisions EoP, bn 3.8% o/w Gross NPE (% of gross loans) 2.9% 2.9% 2.7% 2.7% Stage 3 1Q22 2Q22 3Q22 4Q22 1Q23 471 475 474 467 465 Coverage Stage 3 18 14 14 13 ratio 52.4% 50.0% 50.4% 48.2% 48.5% 13 103 102 86 78 Stage 2 98 St
Slide 47: End notes
End notes 47
Slide 48: Disclaimer
END NOTES 1Q23 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 unlawf
Slide 49: 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 50: 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 51: 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 52: 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 ca pital, both as defined above “RoTE” means (i) Net profit after AT1/Cashes – as defined above,
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