Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — Q1 2020 Earnings Presentation
46 slides from Banco Bpm Spa's earnings presentation, May 7, 2020
Slide 1: Q1 2020 Group Results Presentation
Q1 2020 Group Results Presentation 7 May 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. Banco BPM’s Reaction to Covid-19 Emergency 4 2. Key Q1 2020 Performance Highlights 14 3. Performance Details: 34 - Profitability 35 - Balance Sheet 37 - Funding and Liquidity 38 - Customer Loans and Focus on Credit Quality 42 - Capital Position 45 Q1 2020 Group Results Presentation 4
Slide 5: Covid-19 Emergency: Key Focus Areas
COVID-19 EMERGENCY: KEY FOCUS AREAS The adoption of new, digital-based models of customer interaction has allowed the Group to stay close to its customer base, providing services with safety in the current phase of emergency New patterns of agile work Strengthened use of the digital have allowed the
Slide 6: Covid-19 Emergency: Strategic Approach Adopted (1/2)
COVID-19 EMERGENCY: STRATEGIC APPROACH ADOPTED (1/2) Highlights on Step 1: «Crisis Committee» Step 1: Organisational, technical, commercial and IT solutions for the continuity of regular banking «Crisis activities put in place immediately, leveraging on Smart-Working and Digital & Omnichannel Comm
Slide 7: Covid-19 Emergency: Strategic Approach Adopted (2/2)
COVID-19 EMERGENCY: STRATEGIC APPROACH ADOPTED (2/2) Highlights on Step 2: «Project Reaction» Three dedicated working groups established in March, coordinated by a Steering Committee Step 2: chaired by the CEO «Project Reaction» Flexible and project-based set-up adopted, aimed at ensuring a well
Slide 8: Business Development Outlook
BUSINESS DEVELOPMENT OUTLOOK Banco BPM is ready to tackle the phase of Relaunch and to pave the way for the “New Normal” March April May June July Phase 1 Phase 2 Phase 3 EMERGENCY RELAUNCH «NEW NORMAL» Emergency Management Provide financing to the economy Full re-activation of • Full-scale exploita
Slide 9: Material and Concrete Support to the Italian Economy
MATERIAL AND CONCRETE SUPPORT TO THE ITALIAN ECONOMY Measures activated by the Government and by Banco BPM REQUESTS RECEIVED MEASURE TARGETS Number Amount ~70,000 ~€1.8bn of MORATORIA ENTERPRISES & suspended (Cure Italy Decree and other) HOUSEHOLDS received The very vast majority instalments of th
Slide 10: Performing Customer Loan Book Analysis as at 31/03/20
PERFORMING CUSTOMER LOAN BOOK ANALYSIS AS AT 31/03/20 Customer loans breakdown by sectors: Customer loans (GBV) breakdown1 focus on sensitivity to Covid3 Other (PA, No-Profit, etc.) €101bn 5.4% 8% High potential Households impact 39% 26.8% Medium €101bn Non-Financial Corporates potential impact Fina
Slide 11: Further Support to Local Communities
FURTHER SUPPORT TO LOCAL COMMUNITIES Donations for >€3.5m (o/w: >€1m directly from Chairman, CEO, Board/Audit Members and top management) for hospitals and non- profit organisations for the fight against Covid-19 Fund raising involving colleagues, together with Banco Alimentare and Caritas, in f
Slide 12: Considerations on the Strategic Plan
CONSIDERATIONS ON THE STRATEGIC PLAN The assumptions on which the Plan’s key targets are based do not take into account the consequences of the Covid-19-related lockdown, which was introduced shortly after the Plan’s approval. It follows that key targets will have to be updated on the basis of new
Slide 13: Covid-19 Scenarios: Conservative Assessment
COVID-19 SCENARIOS: CONSERVATIVE ASSESSMENT WITH FULL RECOGNITION OF ACCOUNTING AND REGULATORY GUIDELINES ACCOUNTING AND REGULATORY CONTEXT 2. EFFECT OF PUBLIC KEY STEPS 1. GDP SIMULATION SUPPORT MEASURES IASB recommends to apply scenarios over the expected life of financial Run satellite models
Slide 14: Agenda
Agenda 1. Banco BPM’s reaction to Covid-19 emergency 4 2. Key Q1 2020 Performance Highlights 14 3. Performance Details: 34 - Profitability 35 - Balance Sheet 37 - Funding and Liquidity 38 - Customer Loans and Focus on Credit Quality 42 - Capital Position 45 Q1 2020 Group Results Presentation 14
Slide 15: Solid Q1 2020 Performance (1/2)
SOLID Q1 2020 PERFORMANCE (1/2) In line with pre-Covid 19 management expectations Q1 2020 Q4 2019 Q1 2019 PRE-TAX PROFIT €310m €121m €252m PROFITABILITY NET INCOME €152m €96m €155m 31/03/20 DELTA Y/Y Commercial Network CORE PERF. LOANS €94.0bn +4.2% (April vs. March)1: CUSTOMER VOLUMES Loans +1.1% C
Slide 16: Solid Q1 2020 Performance (2/2)
SOLID Q1 2020 PERFORMANCE (2/2) In line with pre-Covid 19 management expectations TOT. LIQUID LCR NSFR SECURITIES LIQUIDITY & FUNDING 148% >100% €30.5bn MDA BUFFERS CET 1 (with CRD V rules) PHASED-IN 14.4% +490bps CAPITAL AND BUFFERS FULLY LOADED 12.9% +307bps MDA Buffers exclude the benefit from
Slide 17: Q1 2020 Quarterly P&L Results
Q1 2020 QUARTERLY P&L RESULTS Q1 2019 Q4 2019 Q1 2020 Chg. q/q Chg. y/y Q1 2020 COMMENTS €m Restated Restated NII 499.2 474.0 474.1 0.0% -5.0% FEES & COMMISSIONS 434.5 462.2 440.6 -4.7% 1.4% Q1 2020 NFR includes valuation effect: NET FINANCIAL RESULT 72.3 207.4 206.8 -0.3% n.m. • on own liabilities
Slide 18: Net Interest Income: Highlights
NET INTEREST INCOME: HIGHLIGHTS Net Interest Income NII: Evolution Breakdown €m €m 499,2 474,0 474,1 474.0 +4.0 +0.9 474.1 -4.8 Includes -€4.7m of day effect Q1 19 Q4 19 Q1 20 NPE Q4 19 Commercial NPE Non-Commercial Q1 20 39.1 28.1 29.0 banking contribution banking contribution: and other1 1,90 1,87
Slide 19: Volumes at a Glance
VOLUMES AT A GLANCE Solid commercial performance. Indirect Funding negatively impacted by market turmoil € bn 31/03/2019 31/12/2019 31/03/2020 % chg.Y/Y % chg. Q/Q Net Performing Customer Loans 99.9 100.3 102.6 2.7% 2.3% Resilient trend confirmed also in o/w: Core Performing Customer Loans1 90.2 91.
Slide 20: Sound Lending Performance of the Network
SOUND LENDING PERFORMANCE OF THE NETWORK All-In Rates of the New M/L-Term Lending to €5.3bn New Loans in Q1 2020 Main Corporate Segments2 (Management data of the commercial network1) (Management data of the commercial network) € bn bps 216 222 210 Q1 2019 1,0 4,7 5.7 Enterprises 145 129 135 -6.9% Q1
Slide 21: Strong and Well Diversified Bond Funding
STRONG AND WELL DIVERSIFIED BOND FUNDING Bond funding as at 31/03/2020 Nominal 16.3% Cap.-Protected Total bonds outstanding at €20.5bn amounts Certificates Covered Very manageable amount of wholesale bond maturities Bonds1 in 2020 (€2.4bn), considering €1.15bn already issued in €20.5bn 30.2% Sen
Slide 22: Strong Liquidity Position: LCR at 148% & NSFR >100%
STRONG LIQUIDITY POSITION: LCR AT 148% & NSFR >100%1 Eligible Securities2 Up at >€26bn € bn as at 30 Apr. 2020 54.0 54.5 TOTAL LIQUID SECURITIES AT €30.5BN, o/w: • €22.6bn Unencumbered Eligible Securities Unencumb. Eligible 19.9 22.6 securities • €3.4bn of Excess ECB deposits (€5.4bn average in 2020
Slide 23: Q1 2020: Net Fees and Commissions
Q1 2020: NET FEES AND COMMISSIONS Net Fees and Commissions Focus on Investment Product Fees1 €m +1.4% €m -4.7% 434.5 462.2 440.6 +8.2% -0.7% 204,2 224,8 220,2 171.7 187.2 185.8 230,3 237,4 220,4 66 76 75 106 111 111 Q1 19 Q4 19 Q1 20 Q1 19 Q4 19 Q1 20 Management & Advisory Commercial Banking Fees Up
Slide 24: Growth in Investment Product Placements
GROWTH IN INVESTMENT PRODUCT PLACEMENTS Share of investment product Upfront fees Investment product placements volumes1 on Total Net Fees & Commissions € bn Upfront Profitability (%) +20.7% o/w €0.5bn in -3.9% March 2,2% 2,1% 2,1% 2,0% 2,1% 3,5 3,7 3,5 3,4 2,9 16% 17% 16% 17% 15% Q1 19 Q2 19 Q3 19 Q
Slide 25: Financial Portfolio: Net Financial Result and Reserves/Unrealised Gains
FINANCIAL PORTFOLIO: NET FINANCIAL RESULT AND RESERVES/UNREALISED GAINS Net Financial Result €m 207.4 • NFR at €206.8m in Q1 (against €207.4m in Q4 19, which 206.8 included material gains from asset disposals)1 includes valuation effects on: 72.3 - own liabilities of € 206m, or €171m (~€115m post-ta
Slide 26: Well Diversified Debt Securities Portfolio
WELL DIVERSIFIED DEBT SECURITIES PORTFOLIO Evolution & Composition of Debt Securities € bn 31.6 32.9 34.2 34.5 34.2 34.5 30.2 31.2 Debt securities o/w: €2.3m o/w: Italian 26.7 20.7 20.0 19.4 19.3 18.2 at FVTPL 17.7 15.5 Govies 31/12/16 31/12/17 31/12/18 31/03/19 30/06/19 30/09/19 31/12/19 31/03/20 8
Slide 27: Focus on Govies Portfolio
67% maturing by next year FOCUS ON GOVIES PORTFOLIO Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn +8.6% in Q1 € bn € bn +8.9% in Q1 +155.0% in Q1 10.9 10.0 10.9 6.9 2.2 2.3 4.6 5.0 0.9 31/03/19 31/12/19 31/03/20 31/03/19 31/12/19 31/03/20 31/03/19 31/12/19 31/03/20 Non-IT
Slide 28: Operating Costs: Quarterly Comparison
OPERATING COSTS: QUARTERLY COMPARISON Total Operating Costs -3.2% -3.2% 656,2 656,1 635,0 Q1 19 Q4 19 Q1 20 Cost/income ratio: 61.5% 55.0% 54.7% o/w: Staff costs o/w: Other admin. costs o/w: D&A -1.6% -7.4% -3.1% 425,9 437,0 419,0 167,0 63,3 69,3 61,4 149,8 154,6 Q1 19 Q4 19 Q1 20 Q1 19 Q4 19 Q1 20
Slide 29: 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) €m -15.5% Y/Y €m -17.6% Y/Y 11,682 10,087 6,591 5,544 9,875 5,430 95 -2.1% in Q1 78 -2.1% in Q1 98 106 73 81 7.528 6.424 6.252 4.874 3.912 3.778 4.058 1.6
Slide 30: NPE Flows and Cost of Risk: Healthy Path Confirmed
NPE FLOWS AND COST OF RISK: HEALTHY PATH CONFIRMED Net Flows to NPEs Flows from UTP to Bad Loans €m -5.3% vs. 2019 €m -17.5% vs. 2019 quarterly quarterly 216 233 220 179 260 245 188 178 average 171 average 88 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 2019 quarte
Slide 31: Improving Trend in Asset Quality Driven by Workout
IMPROVING TREND IN ASSET QUALITY DRIVEN BY WORKOUT NPE, gross book value: -€1.7bn in 2019 and further -€0.2bn in Q1 2020 € bn 11.8 -0.6 +1.2 -2.3 10.1 +0.3 -0.5 9.9 31/12/18 Bad Loan Inflows from Cancellations, 31/12/19 Inflows from Cancellations, 31/03/20 portfolio disposals Performing Write-offs,
Slide 32: Strong Capital Ratios & Buffers
STRONG CAPITAL RATIOS & BUFFERS Well positioned to face the tough scenario Fully Loaded Capital Ratios: evolution 17.8% % TOTAL 13.1% 15.6% 15.8% 16.1% 15.7% TIER 1 10.8% 13.3% 13.5% 14.0% 14,4 12.8 +20bps 13.0 +31bps -47bps 12.9 10.8 The valuation on own liabilities does CET 1 not have any impact a
Slide 33: Final Remarks
FINAL REMARKS Covid-19 emergency: Banco BPM’s reaction and outlook A flexible, project-based set-up was adopted, aimed at governing revenue, cost and balance sheet implications of the crisis (Reaction Project) The emergency has accelerated the use of digital and omnichannel-based banking: an adv
Slide 34: Agenda
Agenda 1. Banco BPM’s reaction to Covid-19 emergency 4 2. Key Q1 2020 Performance Highlights 14 3. Performance Details: 34 - Profitability 35 - Balance Sheet 37 - Funding and Liquidity 38 - Customer Loans and Focus on Credit Quality 42 - Capital Position 45 Q1 2020 Group Results Presentation 34
Slide 35: Reclassified P&L: Quarterly Evolution
RECLASSIFIED P&L: QUARTERLY EVOLUTION Chg. Chg. Chg. Chg. Reclassified income statement Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Y/Y Y/Y Q/Q Q/Q (in euro million) Restated Restated Restated Restated % % Net interest income 499.2 512.1 495.8 474.0 474.1 -25.1 -5.0% 0.2 0.0% Income (loss) from investme
Slide 36: Comprehensive Profitability Impacted by Market Turmoil
COMPREHENSIVE PROFITABILITY IMPACTED BY MARKET TURMOIL €m Q1 2019 Q4 2019 Q1 2020 A. P&L NET INCOME 155.4 95.8 151.6 B. OTHER NET INCOME DIRECTLY ACCOUNTED TO EQUITY 110.5 243.5 -289.7 Mainly due to o/w Tangible assets at Fair Value 0.0 249.7 0.0 Anima, offset at Regulatory Capital o/w Reserves of D
Slide 37: Reclassified Balance Sheet as at 31/03/2020
RECLASSIFIED BALANCE SHEET AS AT 31/03/2020 Chg. y/y Chg. in Q1 Reclassified assets (€ m) 31/03/2019 31/12/2019 31/03/2020 Value % Value % Cash and cash equivalents 804 913 755 -48 -6.0% -157 -17.2% Loans and advances measured at AC 111,592 115,890 116,021 4,429 4.0% 131 0.1% - Loans and advances to
Slide 38: Direct Funding
DIRECT FUNDING Solid funding position confirmed, with healthy growth in deposits and bonds Direct customer funding1 (without Repos) € bn +8.2% +2.4% 108.9 111.5 103.1 3.2 3.0 Capital-protected Certificates 1.8 1.7 2.1 3.7 16.1 16.6 Other 14.0 1.6 1.6 2.1 Bonds Time deposits 81.3 86.2 88.6 C/A & Sigh
Slide 39: Bond Maturities: Limited and Manageable Amounts
BOND MATURITIES: LIMITED AND MANAGEABLE AMOUNTS Institutional bond maturities Retail bond maturities € bn € bn 3.75 2.43 2.43 2.50 0.50 0.73 0.45 0.77 0.24 0.04 1.70 1.21 1.25 0.11 0.13 Apr.-Dec. 2020 2021 2022 Apr.-Dec. 2020 2021 2022 Senior Subordinated Covered bond 1 Senior Subordinated Aggregate
Slide 40: Indirect Customer Funding at €82.2bn
INDIRECT CUSTOMER FUNDING AT €82.2BN Assets under Management Assets under Custody1 € bn 57.0 58.3 € bn 54.1 4.7 3.9 3.8 32.7 31.4 14.9 15.4 28.1 15.3 37.4 39.0 35.0 31/03/2019 31/12/2019 31/03/2020 31/03/2019 31/12/2019 31/03/2020 Managed Accounts and Funds of Funds Bancassurance Funds & Sicav Tot
Slide 41: Securities Portfolio
SECURITIES PORTFOLIO € bn 31/03/19 31/12/19 31/03/20 Chg. y/y Chg. in Q1 Debt securities 34.2 31.2 34.5 1.0% 10.5% - o/w Total Govies 29.3 26.4 29.6 1.0% 12.1% - o/w: Italian Govies 20.0 15.5 18.2 -9.2% 17.0% IT Govies in % on Debt Securities 58.5% 49.7% 52.6% Equity securities, Open-end funds & Pri
Slide 42: Net Customer Loans
NET CUSTOMER LOANS Satisfactory increase in Performing Loans, with new loans granted at €5.3bn in Q1 20201 Net Customer Loans2 € bn 106.5 105.8 108.0 6.6 5.5 5.4 NPE 99.9 100.3 102.6 Performing Loans 31/03/2019 31/12/2019 31/03/2020 CHANGE PERFORMING LOANS 31/03/19 31/12/19 31/03/20 In % y/y In % q/
Slide 43: Asset Quality Details
ASSET QUALITY DETAILS GROSS EXPOSURES 31/03/2019 31/12/2019 31/03/2020 Chg. y/y Chg. in Q1 €/m and % Value % Value % Bad Loans 4,058 3,565 3,517 -541 -13.3% -47 -1.3% UTP 7,528 6,424 6,252 -1,277 -17.0% -172 -2.7% Past Due 95 98 106 11 11.4% 8 7.8% NPE 11,682 10,087 9,875 -1,807 -15.5% -212 -2.1% Pe
Slide 44: 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 31/3/20 % Chg. -2.7% YTD Secured Restructured 1.7 1.7 0.0% (%) Composition 6.4 6.3 - Secured 0.9 0.9 0.0% 2.5 2.5 2.5 - Unsecured 0.8 0.8 0.0% 3.8 1.1 (39%) (40%) Other UTP 2.2
Slide 45: Capital Position in Detail
CAPITAL POSITION IN DETAIL 31/12/19 post 31/12/19 post PHASED IN CAPITAL RWA COMPOSITION 31/03/19 31/12/19 suspension of 31/03/20 31/03/19 31/12/19 suspension of 31/03/20 POSITION (€/m and %) (€/bn) dividends dividends CET 1 Capital 8,144 9,586 9,723 9,449 CREDI T & COUNTERPARTY 55.4 57.7 57.8 56.9
Slide 46: 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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