Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — 9M 2020 Earnings Presentation
45 slides from Banco Bpm Spa's earnings presentation, Nov 5, 2020
Slide 1: 9M 2020 Group Results Presentation
9M 2020 Group Results Presentation 5 November 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 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. Highlights: Key Achievements & Action Focus 4 2. 9M 2020 Performance Details: 22 - Profitability 23 - Balance Sheet 28 - Funding and Liquidity 29 - Customer Loans and Focus on Credit Quality 37 - Capital Position 43 9M 2020 Group Results Presentation 4
Slide 5: 9M 2020 Performance: Resilience and Recovery
9M 2020 PERFORMANCE: RESILIENCE AND RECOVERY STRONG OPERATING RESULTS Rebound in «core» revenues (+9.5% q/q) Further reduction in costs (-5.2% q/q) Healthy build-up in Pre-Provision Income (€1.27bn in 9M; +6.4% y/y and +44.9% q/q) SIGNIFICANT ACHIEVEMENTS ADOPTION OF NEW DERISKING STRATEGY IN A DIFF
Slide 6: Covid-19: Experience of Recent Months Enabling to Face the New Emergency
COVID-19: EXPERIENCE OF RECENT MONTHS ENABLING TO FACE THE NEW EMERGENCY In order to ensure continuity of core banking activities during the first phase of the lockdown, BBPM has implemented Technical and Operational solutions to face the new emergency minimising its impact and preserving commercial
Slide 7: Strong Rebound of Commercial Activities
STRONG REBOUND OF COMMERCIAL ACTIVITIES Well prepared to face the second wave 9M 2020 Y/Y MOBILE TRANSACTIONS2 #11m +61.8% BOOST IN DIGITAL BANKING TO SUPPORT COMMERCIAL ACTIVITY APP USERS #736k +35.3% IN CHALLENGING ENVIRONMENT DIGITAL Share of digital transactions - Households ONLINE TRANSACTIONS
Slide 8: Covid-19: Key Measures at a Glance
COVID-19: KEY MEASURES AT A GLANCE Lending measures assisted by public guarantees Up at €13.0bn end-October, at €12.0bn as at 30/09/20 o/w €8.6bn already provided € bn 12.0 1.4 0.2 10.6 9.5 1.2 4.9 Includes: 4.7 In progress 7.5 €3.5bn already approved Funds already €1.4bn under approval provided
Slide 9: Covid-19: Measures Fostering Portfolio Quality & Safety
COVID-19: MEASURES FOSTERING PORTFOLIO QUALITY & SAFETY Moratoria Measures: Lending measures assisted by System data1 public guarantees: System data1 BBPM share BBPM share Lower share of moratoria and higher customer 5% 11% >€300 >€105 propensity for new State-guaranteed lending bn BBPM branch bn
Slide 10: Covid-19: Proactive Credit Management
COVID-19: PROACTIVE CREDIT MANAGEMENT NEW AND TAILOR-MADE CREDIT MONITORING & MANAGEMENT PROCESS STRATEGY FOR LOANS UNDER MORATORIA: Specific additional monitoring programs, fed by clusters based on economic sectors and Key Risk Indicators Tailor made campaigns: first results • Targeted action plan
Slide 11: Sound New Lending Performance
SOUND NEW LENDING PERFORMANCE €20.3bn new Loans in 9M 20201, o/w €7.1bn Covid-19 measures guaranteed by the State € bn New lending: Monthly trend +26.6% Enterprise & Corporate Households 20.3 Ordinary business 3.2 16.0 35% 2.6 Covid-19 Measures 2.1 1.5 2.0 1.7 2.1 65% 1.5 1.3 0.2 0.1 0.2 0.3 0.3 0.4
Slide 12: P&L at a Glance
P&L AT A GLANCE Resilient performance in a challenging environment SOUND QUARTERLY GROWTH OF NII Q1 2020 Q2 2020 Q3 2020 q/q 9M 2020 SOLID RECOVERY IN FEES AND COMMISSIONS VS. Q2 NET INTEREST INCOME €474m €480m €520m +8.4% €1,474m STRONG NFR IN Q3, MAINLY THANKS TO THE REVALUATION OF THE SIA S
Slide 13: Capital Position: Strong CET1 Ratios
CAPITAL POSITION: STRONG CET1 RATIOS Ratios and buffers further strengthened: well positioned to face the tough scenario1 % CET 1 Ratios: evolution Related to CET1 14.6 14.9 14.7 15.4 Operational and Phased-in Market Risks +23bps +56bps 14.1 -50bps 13.6 13.3 12.8 CET1 Fully Loaded 31/12/2019 30/06/2
Slide 14: New Accelerated Derisking Strategy
NEW ACCELERATED DERISKING STRATEGY Portfolio disposals up to €1.2bn under way reaffirming Banco BPM’s solid derisking UTP ‘Project ‘Django’: BAD LOANS ‘Project ‘Titan’: Two portfolio disposals already GBV ~€1bn GBV ~€0.2bn at an advanced stage: - Project ‘Django’: UTP • #149 positions portfolio sa
Slide 15: Strong Reduction in NPE: Well Ahead of Internal Targets
STRONG REDUCTION IN NPE: WELL AHEAD OF INTERNAL TARGETS Improvement in asset quality to continue through further derisking NPE Stock (GBV) € bn 10.47 10.09 9.84 9.79 PD 0.13 0.10 0.15 0.10 ~8.6 -18% Y/Y 6.95 6.42 0.1 -12% in Q3 UTP 6.16 6.08 ~ 5.1 Bad Loans 3.39 3.56 3.53 3.61 ~ 3.4 30/09/19 31/12/1
Slide 16: Safe Trend Across Asset Quality Metrics & Provisions
SAFE TREND ACROSS ASSET QUALITY METRICS & PROVISIONS MIGRATION RATES 31/12/19 30/06/20 30/09/20 COVERAGE 31/12/19 30/06/20 30/09/20 64.1% (annualised) (annualised) incl. write-offs DEFAULT RATE 1.2% 1.1% 1.0% BAD LOANS 56.2% 56.1% 57.6% (from Performing Post Django and Titan Loans to NPEs) UTP 39.1%
Slide 17: Solid Balance Sheet Position Confirmed
SOLID BALANCE SHEET POSITION CONFIRMED 30/09/20 DELTA Y/Y DELTA Q/Q Volume growth CORE NET PERF. LOANS €96.5bn +4.9% +1.6% confirmed also CUSTOMER in Oct. vs. Sept.1: C.A. & DEPOSITS €96.5bn +10.8% +3.7% • Loans +0.6% VOLUMES • Core Funding +3% AUM €58.0bn +0.7% +0.3% UNENCUMBERED LCR NSFR Successfu
Slide 18: Net Interest Income: Highlights
NET INTEREST INCOME: HIGHLIGHTS Net Interest Income NII: Evolution Breakdown €m €m +8.4% +47.4 519.9 519.9 479.5 +3.9 474.1 479.5 -7.0 -4.0 Including -€15m from TLTRO III extra liquidity reinvestment Q1 20 Q2 20 Q3 20 NPE contribution: 29.1m 29.9m 25.9m Q2 20 Comm. NPE TLTRO Non Q3 20 banking contri
Slide 19: Net Fees: Robust Quarterly Rebound
NET FEES: ROBUST QUARTERLY REBOUND Q/Q trend Q3 monthly trend €m €m +11.0% 440.6 417.7 376.4 143.7 142.9 131.1 220.2 169.8 197.3 66.8 63.4 67.0 220.4 206.6 220.3 76.9 67.6 75.8 Q1 20 Q2 20 Q3 20 July -20 Aug-20 Sept-20 Commercial Banking Fees Management & Advisory Net fees and commissions come in
Slide 20: Operating Costs: Quarterly Comparison
OPERATING COSTS: QUARTERLY COMPARISON Total Operating Costs Quarterly average recurring costs in 2017-20203 €m -8.4% €m 735.1 Includes benefit -5.2% 676.6 649.9 619.8 from lower variable 635.0 613.8 1 remuneration 581.5 2 FY 17 FY 18 FY 19 9M 20 Q1 20 Q2 20 Q3 20 Avg. Q Avg. Q Avg. Q Avg. Q o/w: Sta
Slide 21: Final Remarks & 2020 Outlook
FINAL REMARKS & 2020 OUTLOOK 9M 2020 Performance: Net income at €263m Strong Pre-Provision Income: at €1.27bn, with solid quarterly progression New derisking strategy aimed at ensuring a further improvement in asset quality: Gross NPE ratio Adj. down at 7.7% Solid capital position & wide capit
Slide 22: Agenda
Agenda 1. Highlights: Key Achievements & Action Focus 4 2. 9M 2020 Performance Details: 22 - Profitability 23 - Balance Sheet 28 - Funding and Liquidity 29 - Customer Loans and Focus on Credit Quality 37 - Capital Position 43 9M 2020 Group Results Presentation 22
Slide 23: 9M 2020 Quarterly P&L Results
9M 2020 QUARTERLY P&L RESULTS €m P&L STATED Q1 2020 Q2 2020 Q3 2020 Chg. q/q €m P&L ADJUSTED1 Q1 2020 Q2 2020 Q3 2020 Chg. q/q NII 474.1 479.5 519.9 8.4% NII 474.1 479.5 519.9 8.4% FEES & COMMISSIONS 440.6 376.4 417.7 11.0% FEES & COMMISSIONS 440.6 376.4 417.7 11.0% NET FINANCIAL RESULT 0.8 82.7 157
Slide 24: P&L: Annual and Quarterly Comparison
P&L: ANNUAL AND QUARTERLY COMPARISON Reclassified income statement 9M 2019 9M 2020 Chg. Y/Y Chg. Y/Y Q1 2020 Q2 2020 Q3 2020 Chg. Q/Q Chg. Q/Q (in euro million) % % Net interest income 1,507.1 1,473.5 -33.6 -2.2% 474.1 479.5 519.9 40.4 8.4% Income (loss) from investments in associates 97.3 107.1 9.7
Slide 25: Adjusted P&L: Details on Non-Recurring Items
ADJUSTED P&L: DETAILS ON NON-RECURRING ITEMS 9M 2020 Reclassified income statement 9M 2020 One-off Non-recurring items and adjusted (in euro million) extraordinary systemic charges Net interest income 1,473.5 1,473.5 0.0 Income (loss) from investments in associates 107.1 107.1 0.0 carried at equity
Slide 26: Adjusted P&L: Annual Comparison
ADJUSTED P&L: ANNUAL COMPARISON 9M 2019 9M 2020 Reclassified income statement adjusted adjusted Chg. Y/Y Chg. Y/Y (in euro million) % Net interest income 1,507.1 1,473.5 -33.6 -2.2% Income (loss) from investments in associates 97.3 107.1 9.7 10.0% carried at equity Net interest, dividend and similar
Slide 27: Comprehensive Profitability
COMPREHENSIVE PROFITABILITY €m Q1 2019 Q2 2019 Q3 2019 Q1 2020 Q2 2020 Q3 2020 9M 2019 9M 2020 A. P&L NET INCOME 155.4 447.6 98.2 151.6 -46.4 157.3 701.2 262.5 OTHER NET INCOME DIRECTLY ACCOUNTED B. 110.5 13.5 159.2 -289.7 151.1 76.7 283.2 -61.9 TO EQUITY o/w Reserves of Debt Securities at 91.5 64.3
Slide 28: Reclassified Balance Sheet as at 30/09/2020
RECLASSIFIED BALANCE SHEET AS AT 30/09/2020 Chg. y/y Chg. YTD Chg. in Q3 Reclassified assets (€ m) 30/09/2019 31/12/19 30/06/20 30/09/20 Value % Value % Value % Cash and cash equivalents 808 913 838 806 -2 -0.2% -107 -11.7% -32 -3.8% Loans and advances measured at AC 114,967 115,890 121,213 125,680
Slide 29: Direct Funding
DIRECT FUNDING Solid position confirmed in Core funding, with a strong further increase in core deposits Direct customer funding1 (without Repos) € bn +10.3% +7.8% 108.9 114.4 117.4 Capital-protected Certificates 106.5 3.1 3.3 3.1 3.2 1.8 1.7 1.8 15.9 Other 14.4 1.9 16.1 16.4 1.7 1.6 1.8 1.6 Bonds T
Slide 30: Bonds Outstanding: Well Diversified Portfolio
BONDS OUTSTANDING: WELL DIVERSIFIED PORTFOLIO Bonds Outstanding as at 30/09/2020 Nominal 17.3% Cap.-Protected Total bonds outstanding at €19.9bn amounts Certificates Covered Successful issuance activity in 2020, 68% of FY 2020 Wholesale Bonds1 bond maturities: AT1 in Jan. (€400m), Senior Non-Pre
Slide 31: Bond Maturities: Limited and Manageable Amounts
BOND MATURITIES: LIMITED AND MANAGEABLE AMOUNTS Institutional bond maturities Retail bond maturities € bn 3.75 € bn 0.50 2.43 2.50 0.45 1.41 0.50 0.77 0.12 0.71 1.21 1.25 0.11 0.01 0.70 0.01 Q4 2020 FY 2021 FY 2022 Q4 2020 FY 2021 FY 2022 Senior Pref. Subordinated 1 Covered Bonds 2 Senior Pref. Subo
Slide 32: Securities: Increased Weight of the AC Portfolio
SECURITIES: INCREASED WEIGHT OF THE AC PORTFOLIO € bn 30/09/19 31/12/19 30/06/20 30/09/20 Chg. y/y Chg. YTD Chg. in Q3 Debt securities 34.2 31.2 38.3 39.9 16.5% 27.7% 4.2% Equity securities, Open-end funds & Private equity 2.2 2.5 1.6 1.9 -14.5% -26.2% 19.5% TOTAL SECURITIES 36.4 33.8 39.9 41.8 14.6
Slide 33: Focus on Govies Portfolio
48% maturing by next year FOCUS ON GOVIES PORTFOLIO Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn € bn € bn +7.0% in Q3 +24.3% in Q3 +0.4% in Q3 13.8 14.8 10.9 10.0 5.9 6.2 3.0 4.6 5.0 2.5 2.9 0.9 30/09/19 31/12/19 30/06/20 30/09/20 30/09/19 31/12/19 30/06/20 30/09/20 30/
Slide 34: Financial Portfolio: Net Financial Result and Reserves/Unrealised Gains
FINANCIAL PORTFOLIO: NET FINANCIAL RESULT AND RESERVES/UNREALISED GAINS Net Financial Result (excl. FV on Own Liabilities1) €m 157.3 NFR at €157.3m in Q3 (against €82.7m in Q2 and €0.8m 82.7 in Q1), strongly impacted by the positive valuation effect on the SIA stake (+€147m) 0.8 Q1 20 Q2 20 Q3 20
Slide 35: Solid Liquidity Position: LCR at 198% & NSFR >100%
SOLID LIQUIDITY POSITION: LCR AT 198% & NSFR >100%1 Eligible Assets2 Up at €25.8bn € bn as at 31 Oct. 2020 63.4 64.0 Unencumbered 54.0 OTHER UNENCUMBERED LIQUID ASSETS Encumbered with Repos & other 22.1 24.2 Other encumbered with ECB 19.9 ~€5.4bn average Excess ECB deposits in 9M 20 13.2 15.3 €2
Slide 36: Indirect Customer Funding at €88.4bn
INDIRECT CUSTOMER FUNDING AT €88.4BN Assets under Management Assets under Custody1 € bn +0.7% € bn +0.3% 57.6 58.3 57.8 58.0 4.0 3.9 4.0 4.0 -3.7% 15.2 15.4 15.1 14.8 -0.5% 31.5 31.4 30.5 30.4 38.5 39.0 38.8 39.2 30/09/2019 31/12/2019 30/06/2020 30/09/2020 30/09/2019 31/12/2019 30/06/2020 30/09/2020
Slide 37: Analysis of Performing Loan Portfolio
ANALYSIS OF PERFORMING LOAN PORTFOLIO Customer loan (GBV) breakdown as at 30/09/20201 Staging evolution: Other (Public Sector, GACS Senior Notes No-Profit, etc.) 2.2% Performing Loans in 9M 2020 4.9% GBV in € bn Households 100.6 103.4 104.1 26.1% €104.1bn 5.9% 6.6% 6.6% Non-Financial Financials Corp
Slide 38: Net Customer Loans
NET CUSTOMER LOANS Satisfactory increase in Performing Loans, with new loans granted at €20.3bn in 9M 20201 Net Customer Loans2 € bn 107,0 105.8 108.4 108.7 6.0 5.5 5.4 5.1 -8.2% YTD NPE 101.1 100.3 103.0 103.6 +3.3% YTD Performing Loans 30/09/2019 31/12/2019 30/06/2020 30/09/2020 CHANGE NET PERFORM
Slide 39: Asset Quality Details
ASSET QUALITY DETAILS GROSS EXPOSURES 30/09/2019 31/12/2019 30/06/2020 30/09/2020 Chg. y/y Chg. YTD Chg. in Q3 €/m and % Incl. Profamily Value % Value % Value % Bad Loans 3,395 3,565 3,530 3,615 220 6.5% 50 1.4% 84 2.4% UTP 6,949 6,424 6,159 6,076 -872 -12.6% -347 -5.4% -82 -1.3% Past Due 131 98 150
Slide 40: NPE Flows
NPE FLOWS Inflows to NPEs Outflows to Perf. Loans Flows from UTP to Bad Loans ‘Default’ ‘Cure’ ‘Danger’ €m €m €m 934 722 676 308 265 372 261 153 179 178 81 43 55 111 83 9M 19 9M 20 Q1 Q2 Q3 9M 19 9M 20 Q1 Q2 Q3 9M 19 9M 20 Q1 Q2 Q3 20 20 20 20 20 20 20 20 20 9M 2020 shows an improvement in inflows
Slide 41: Improving Trend in Asset Quality
IMPROVING TREND IN ASSET QUALITY Gross NPEs: -€20.2bn vs. YE 2016, o/w: -€1.7bn in 2019 and an additional -€0.3bn in 9M 2020 € bn 30.0 Down to ~€8.6bn post Django & Titan disposals 11.8 -0.6 +1.2 -2.3 10.1 +0.7 -1.0 9.8 31/12/16 31/12/18 Bad Loan Inflows from Cancellations, 31/12/19 Inflows from Can
Slide 42: UTP Loans: High Share of Restructured & Secured Positions
UTP LOANS: HIGH SHARE OF RESTRUCTURED & SECURED POSITIONS UTP analysis Breakdown of Net UTPs € bn Down to ~€5.1bn Unsecured € bn post Django 31/12/19 30/09/20 % Chg. -5.4% YTD Secured disposal (%) Composition Restructured 1.7 1.6 -5.8% 6.4 6.1 - Secured 0.9 1.0 8.9% 2.5 2.3 2.6 - Unsecured 0.8 0.6 -
Slide 43: Capital Position: Strong Ratios & Buffers
CAPITAL POSITION: STRONG RATIOS & BUFFERS Further strengthening in ratios and buffers: well positioned to face the tough scenario Fully Loaded Capital Ratios: evolution Phase-In Ratios % TOTAL 15.6% 16.1% 16.3% 17.8% 17.1% 19.3% 18.6% TIER 1 13.3% 14.0% 14.4% 15.2% 14.6% 16.7% 16.1% 15.4 14.9 13.3 +
Slide 44: Capital Position in Detail
CAPITAL POSITION IN DETAIL PHASED IN CAPITAL 31/12/19 31/03/20 30/06/20 30/09/20 POSITION (€/m and %) RWA COMPOSITION 31/12/19 31/03/20 30/06/20 30/09/20 CET 1 Capital 9,586 9,449 9,585 9,785 (€/bn) T1 Capital 10,017 10,253 10,388 10,589 Total Capital 11,542 11,636 11,676 12,253 CREDI T & COUNTERPAR
Slide 45: 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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