Unicredit S.p.a. · MIL:UCG
Unicredit — FY2016 Earnings Presentation
40 slides from Unicredit's earnings presentation, Feb 9, 2017
Slide 1: UniCredit Group 4Q16 and FY16 results
UniCredit Group 4Q16 and FY16 results Milan February 09th, 2017
Slide 2: Disclaimer
Disclaimer This Presentation may contain written and oral 'forward-looking statements', which includes all statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a number of assumptions, expectations, p
Slide 3: Opening remarks
Opening remarks Decisive Decisive actions actions taken taken on on legacy legacy andand operational operational issues issues to to transform transform bank bank andand build build on on existing existing competitive competitive advantages advantages Revenues Underlying and underlying core revenues
Slide 4: Agenda
Agenda 1 Transform 2019 Update 2 Group/ Non Core 3 Concluding remarks 4 Annex 5 Financials 4
Slide 5: Execution of our five Strategic Pillars
Execution of our five Strategic Pillars 1 2 3 4 5 Transform 2019 Update STRENGTHEN AND OPTIMIZE 13bn rights issue • 13bn rights issue fully underwritten by syndicate of leading international banks, CAPITAL to be settled before March 10th • Project FINO moved into execution phase for disposal of more
Slide 6: Execution of our five Strategic Pillars (cont.)
Execution of our five Strategic Pillars (cont.) 1 2 3 4 5 Transform 2019 Update FTE reduction • Agreements with Trade Unions reached in every country, securing entire exit plan TRANSFORM OPERATING NHR cost optimization • 2,800 FTE reduction in 2016, 20% of planned exits MODEL • 28% of non HR cost sa
Slide 7: Agenda
1 Transform 2019 Update 2 Group/ Non Core 3 Concluding remarks 4 Annex 5 Financials 7
Slide 8: Group – 4Q16 and 2016 results embedding 13.2bn one-offs
Group – 4Q16 and 2016 results embedding 13.2bn one-offs related to the execution of Transform 2019 1 2 3 4 5 Group – Results Net profit, m Adjusted net profit FY16, bn Net loss -11.8 FY16 stated 1,694 Additional LLP -8.1 Integration costs -1.7 447 153 Disposal of card +0.4 processing business w/d of
Slide 9: Group – Fully loaded CET1 ratio at 11.15% post capital increase
Group – Fully loaded CET 1 ratio at 11.15% post capital increase, above 12% including Pioneer and Pekao deals. CET1 ratio transitional at 11.49% post capital increase which will close before March 10th 1 2 3 4 5 Group – Regulatory capital Fully loaded Common Equity Tier 1 ratio 10.82% -316bp 11.15%
Slide 10: Group – RWA down Q/Q
Group – RWA down Q/Q with business actions and regulation offsetting the impact of models recalibration (procyclicality, mainly in Italy) 1 2 3 4 5 Group – Regulatory capital Main drivers of RWA transitional q/q, bn 333.6 333.1 331.2 Credit Market Operational Credit RWA -3.8bn 390.9 -2.0 -0.3 -1.8 +
Slide 11: Group – Resilient gross operating profit in 2016 net of one-offs
Group – Resilient gross operating profit in 2016 net of one-offs related to Transform 2019, with lower costs mitigating revenues 1 2 3 4 5 Group– P&L New perimeter with Pioneer and Pekao classified under IFRS5 4Q16 q/q % FY16 FY16 adj / P&L, m 3Q16 4Q16 adj adj FY16 adj FY15 adj % Total Revenues 4,6
Slide 12: Group – Net interest bridge
Group - Positive loan volume, deposit repricing and lower term funding costs mitigating the impact of negative items in CBK Italy 1 2 3 4 5 Group– Net interest Net interest(1) bridge q/q, m -3.2% 2,599 -5 2,591 +32 +8 -79 +33 -59 +26 -30 2,517 Commercial dynamics: +7m -102 2,415 Average Euribor 3M -
Slide 13: Group – Fees and commission
Group - Investment and transactional fees increased in 4Q16, mitigating lower financing services (large tickets in CIB in 3Q16 and Non Core fees) 1 2 3 4 5 Group– Fees & Commission Fees and commission bridge in 4Q16, m +0.3% 1,370 1,338 1,334 1,306 +10 +11 -18 -26 -6 Investment 553 Fees paid to DoBa
Slide 14: Group – Trading and dividends
Group –Trading benefitting from positive one-offs in 2016. Dividends increased in 2016, with higher contribution from Turkey. 1 2 3 4 5 Group– P&L Dividends(1), m Trading income, m Other revenues +2.7% Turkey 822 844 +40.0% 2,080 472 465 1,485 -40.3% +55.0% -21.8% 248 -15.2% 189 118 148 349 378 478
Slide 15: Group – Headcount down by 2,800 and lower costs
Group – Headcount down by 2,800 and lower costs net of one-offs related to Transform 2019 1 2 3 4 5 Costs, m -3.1% -3.6% 3,555 -0.3% 12,266 12,453 +626 11,827 +626 3,024 2,940 2,930 4Q15 3Q16 4Q16 adj. one-offs(1) 4Q16 FY15 FY16 adj. one-offs(1) FY16 stated stated Cost 61.1% 60.7% 64.5% 61.8% 61.1%
Slide 16: Group – Staff expenses down, non HR costs affected by one-offs
Group – Staff expenses down Q/Q and Y/Y, non HR costs affected by one- offs related to Transform 2019 1 2 3 4 5 Group– Total costs Staff expenses, m Other administrative expenses(1), m Depreciation & amortization, m -8.5% +7.0% -7.0% -4.0% +13.7% 1,819 1,791 1,665 1,354 -4.5% 536 978 921 1,047 +308
Slide 17: Group – LLP at 9.6bn in 4Q16
Group – LLP at 9.6bn in 4Q16 primarily thanks to 8.1bn one-offs related to the execution of Transform 2019, including Fino 1 2 3 4 5 Group – Loan loss provisions Loan loss provisions, m 12,207 9,586 8,100 3,991 8,100 1,187 977 4Q15 3Q16 4Q16 FY15 FY16 Cost of risk(1) 107 85 132 89 91 Cov. ratio gros
Slide 18: Group – Material reduction of NPE
Group – Material reduction of NPE thanks to decisive de-risking actions, leading to the lowest level since mid 2010 1 2 3 4 5 Group – Asset quality Gross bad loans (sofferenze), bn -36.2% -Fino now classified to Held for Sale Non performing exposures(1) (NPE), bn -36.5% -1bn disposals in 4Q16 49.8 5
Slide 19: Non Core – De-risking accelerated with execution of Fino
Non Core – De-risking of Non Core accelerated with the execution of Fino 1 2 3 4 5 Non Core – Main trends Gross customer loans, bn Main drivers of run-down -26.0bn -19.0bn Fino • Fino classified to Held for Sale from Dec-16 63.4 56.4 Performing 37.4 NPE 52.0 49.7 31.5 Disposals • 1bn disposals in 4Q
Slide 20: Non Core – Significant increase of coverage ratios
Non Core – Significant increase of coverage ratios resulting from decisive actions to strengthen balance sheet 1 2 3 4 5 Non Core – Asset quality Gross bad loans (sofferenze), bn -49.9% Non performing exposures (NPE)(1), bn -49.5% 37.4 37.1 18.7 -39.4% Net 14.9 14.6 -36.6% bad loans 6.4 52.0 49.7 De
Slide 21: Agenda
Agenda 1 Transform 2019 Update 2 Group/ Non Core 3 Concluding remarks 4 Annex 5 Financials 21
Slide 22: Concluding remarks
Concluding remarks Transform 2019 up and running 1 2 3 4 5 Concluding remarks Fully underwritten capital increase already launched and to be settled before March 10th 2017 CET1 ratio fully loaded at 11.15% after the ongoing capital increase Resilient gross operating profit in 2016 excluding one-offs
Slide 23: Agenda
Agenda 1 Transform 2019 Update 2 Group/ Non Core 3 Concluding remarks 4 Annex 5 Financials 23
Slide 24: IFRS5 perimeter change due to Pioneer and Pekao
Group – Perimeter change due to Pioneer and Pekao reclassified under IFRS5. Intercompanies temporarily affect fees, until Pioneer disposal is fully effective 1 2 3 4 5 Annex - Group Actual Ante Actual Post o.w. Pioneer o.w. I/C 9M2016, bn IFRS5(1) IFRS5 DELTA & Pekao IFRS5 Revenues 17.1 14.6 -2.5 -1
Slide 25: Group – 2015-2016 One-offs
Group - 2015 - 2016 One-offs(1) 1 2 3 4 5 Annex - Group 2015 2016 Post tax Post tax Restructuring cost 1Q DTA fee +22m 1Q -0.2bn DBO Austria BTP trading gain DTA fee 2Q -78m LLP release +0.3bn Ukraine impairment 2Q DTA fee CHF conversion in Croatia Visa Europe gain 3Q -116m DTA fee 3Q - Ukraine one-
Slide 26: Transform 2019 – Additional one-offs for 1bn
Transform 2019 - Additional one-offs for 1bn, mostly capital neutral 1 2 3 4 5 Annex - Group Post-tax P&L impact, bn Drivers Capital 4Q16 Delta(1) Market Day Actual Additional loan loss provisions -8.1 -8.1 - Integration costs related to Italy, Germany and Austria -1.7 -1.7 - Net gain on card proces
Slide 27: Group – Loans down due to Non Core higher LLP
Group – Loans down due to Non Core higher LLP related to Transform 2019 and Fino classified to HfS from 4Q16 1 2 3 4 5 Group– Balance Sheet Customer loans(1), bn Divisional breakdown – Customer loans(1), bn At const. q/q y/y FX CB Italy 135.0 -1.5% +2.7% 0.0% -1.9% CB Germany 80.7 -0.1% +0.6% 426.1
Slide 28: Group – Customer deposits increase in 2016
Group – Customer deposits increase in 2016, confirming the strength of UniCredit's franchise 1 2 3 4 5 Group– Balance Sheet Customer deposits(1), bn Divisional breakdown – Customer deposits(1), bn At const. FX q/q y/y CB Italy(2) 134.8 +4.5% +10.3% +7.3% +2.5% CB Germany 86.6 -1.0% +4.9% 396.0 386.1
Slide 29: Group – Resilient operating profitability in 2016
Group – Resilient operating profitability in 2016 net of one-offs related to Transform 2019 1 2 3 4 5 Annex – P&L FY16 Adj 4Q Adj 3Q16 4Q16 4Q16 Adj Ch absq/q FY15 FY16 FY16 Adj Ch absy/y Ch % vs. Ch % q/q FY15 Adj Total Revenues 4,642 4,223 4,327 -9.0% -6.8% 18,866 18,801 18,501 -0.3% -1.9% Net Int
Slide 30: Agenda
Agenda 1 Transform 2019 Update 2 Group 3 Concluding remarks 4 Annex 5 Financials 30
Slide 31: Group – P&L and volumes
Group – P&L and volumes 1 2 3 4 5 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 ∆ % vs. ∆ % vs. FY15 FY16 ∆ % vs. 3Q16 4Q15 FY15 Total Revenues 4,854 4,817 4,471 4,724 4,674 5,262 4,642 4,223 -9.0% ▼ -10.6% ▼ 18,866 18,801 -0.3% ▼ Operating Costs -3,095 -3,089 -3,057 -3,024 -2,976 -2,9
Slide 32: Core – P&L and volumes
Core – P&L and volumes 1 2 3 4 5 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 ∆ % vs. ∆ % vs. FY15 FY16 ∆ % vs. 3Q16 4Q15 FY15 Total Revenues 4,809 4,799 4,466 4,765 4,685 5,325 4,713 4,354 -7.6% ▼ -8.6% ▼ 18,838 19,077 +1.3% ▲ Operating Costs -3,020 -3,067 -3,007 -2,995 -2,933 -2,962
Slide 33: Commercial Bank Italy – P&L and volumes
Commercial Bank Italy – P&L and volumes 1 2 3 4 5 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 ∆ % vs. ∆ % vs. FY15 FY16 ∆ % vs. 3Q16 4Q15 FY15 Total Revenues 1,966 1,994 1,857 1,851 1,934 1,992 1,835 1,676 -8.7% ▼ -9.4% ▼ 7,668 7,438 -3.0% ▼ Operating Costs -1,157 -1,166 -1,145 -1,15
Slide 34: Commercial Bank Germany – P&L and volumes
Commercial Bank Germany – P&L and volumes 1 2 3 4 5 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 ∆ % vs. ∆ % vs. FY15 FY16 ∆ % vs. 3Q16 4Q15 FY15 Total Revenues 634 694 669 655 651 604 593 613 +3.4% ▲ -6.5% ▼ 2,652 2,460 -7.3% ▼ Operating Costs -514 -503 -497 -484 -479 -479 -474 -471
Slide 35: Commercial Bank Austria – P&L and volumes
Commercial Bank Austria – P&L and volumes 1 2 3 4 5 Financials \ Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 ∆ % vs. ∆ % vs. FY15 FY16 ∆ % vs. 3Q16 4Q15 FY15 Total Revenues 422 395 397 455 377 442 408 397 -2.7% ▼ -12.7% ▼ 1,669 1,624 -2.7% ▼ Operating Costs -337 -337 -327 -332 -313 -319 -295 -3
Slide 36: CIB – P&L and volumes
CIB – P&L and volumes 1 2 3 4 5 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 ∆ % vs. ∆ % vs. FY15 FY16 ∆ % vs. 3Q16 4Q15 FY15 Total Revenues 1,120 1,060 866 928 1,080 1,129 1,068 974 -8.8% ▼ +5.0% ▲ 3,974 4,252 +7.0% ▲ Operating Costs -448 -462 -438 -424 -424 -438 -435 -426 -2.0% ▼ +0
Slide 37: CEE division – P&L and volumes
CEE division – P&L and volumes 1 2 3 4 5 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 ∆ % vs. ∆ % vs. FY15 FY16 ∆ % vs. 3Q16 4Q15 FY15 Total Revenues 975 1,044 946 1,045 941 1,168 1,055 999 -6.2% ▼ -5.3% ▼ 4,010 4,162 +6.3% ▲ Operating Costs -353 -375 -362 -402 -361 -379 -383 -371 -3.
Slide 38: Asset gathering (Fineco) – P&L and volumes
Asset gathering (Fineco) – P&L and volumes 1 2 3 4 5 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 ∆ % vs. ∆ % vs. FY15 FY16 ∆ % vs. 3Q16 4Q15 FY15 Total Revenues 136 131 140 137 140 149 132 138 +5.0% ▲ +1.1% ▲ 543 558 +2.7% ▲ Operating Costs -60 -60 -54 -59 -60 -58 -53 -55 +3.7% ▲ -6.
Slide 39: Non Core – P&L and volumes
Non Core – P&L and volumes 1 2 3 4 5 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 ∆ % vs. ∆ % vs. FY15 FY16 ∆ % vs. 3Q16 4Q15 FY15 Total Revenues 46 18 5 -42 -11 -62 -71 -132 +85.5% ▼ n.m. ▼ 28 -276 n.m. ▼ Operating Costs -75 -23 -50 -30 -42 -20 -36 -51 +41.3% ▲ +71.8% ▲ -177 -150 -15
Slide 40: Corporate Center & Other – P&L and volumes
Corporate Center & Other – P&L and volumes 1 2 3 4 5 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 ∆ % vs. ∆ % vs. FY15 FY16 ∆ % vs. 3Q16 4Q15 FY15 Total Revenues -446 -519 -409 -305 -437 -159 -378 -443 +17.1% ▼ +45.2% ▼ -1,679 -1,417 -15.6% ▲ Operating Costs -152 -165 -184 -142 -120 -