Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — H1 2023 Earnings Presentation
46 slides from Banco Bpm Spa's earnings presentation, Aug 2, 2023
Slide 1: Group H1 2023 Results Presentation
Group H1 2023 Results Presentation 02 August 2023
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 ▪ The balance sheet and income statement layouts contained in this news release have been reclassified along management criteria in order to provide an indication on the Group’s overall performance based on more easily understandable aggregate operating and financial data. These
Slide 4: Agenda
Agenda 1 Executive Summary 5 2 Key Highlights 11 3 Final Remarks 24 4 H1 2023 Performance Details 27 4
Slide 5: Executive Summary
Executive Summary 1
Slide 6: Strong overdelivery & business model enhancement
Strong overdelivery & business model enhancement OUTSTANDING RESULTS HIGH-VALUE BASED ON SOLID FUNDAMENTALS TRANSFORMATIONAL INITIATIVES BEST P&L PERFORMANCE & SOUND AGREEMENT FOR PAYMENTS ROBUST CAPITAL GENERATION BALANCE SHEET BUSINESS SIGNED IN JULY NEW Net income Gross NPE ratio • Total consider
Slide 7: Top-level quarterly results leading to a new guidance
Top-level quarterly results leading to a new guidance RECORD QUARTERLY PROFITABILITY… Total +21% Y/Y Cost/ -10 p.p. Y/Y LLPs -21% Y/Y Pre-tax +106% Y/Y Income +6% Q/Q Income -3 p.p. Q/Q -12% Q/Q income +14% Q/Q €m €m €m 1,250 1,327 57.8% 474 541 1,094 51.2% 47.8% 153 137 121 263 Q2 22 Q1 23 Q2 23 Q2
Slide 8: Transformational initiatives 1/3: Strengthened ownership strategy
Transformational initiatives: 1/3 Strengthened «ownership» strategy for key high-value added businesses BANCO BPM’S BUSINESS FOOTPRINT STRATEGIC RATIONALE: Enhancing value and Full ownership Key strategic participations and JVs revenue contribution Long-term commercial agreement recently renewed 1.
Slide 9: Transformational initiatives 2/3: Second largest Payments player in Italy
Transformational initiatives: 2/3 Creation of the second largest player in the Payments business in Italy A €2BN NPV DEAL BASED ON THREE STRATEGIC PILLARS… … ESTABLISHING A TOP PLAYER IN THE PAYMENT ARENA 1 €m >10% market share H1 2023 PRESERVATION ~140 Net Commissions ~9m payment cards OF P&L +10.1
Slide 10: Transformational initiatives 3/3: New Bancassurance organizational model
Transformational initiatives: 3/3 Set up of the new Bancassurance organizational model TRANSACTION DETAILS PLANNED ORGANIZATIONAL STRUCTURE STRATEGIC RATIONALE CALL ON 65% OF VERA VITA AND 1. Single Insurance Group, with unified VERA ASSICURAZIONI EXERCISED governance and oversight by BBPM IN MAY 20
Slide 11: Key Highlights
Key Highlights 2
Slide 12: Outstanding P&L performance: H1 2023 Net Income at €624m
Outstanding P&L performance: H1 2023 Net Income at €624m (+77.9% Y/Y) P&L HIGHLIGHTS New profitability trajectory €m Q1 23 Q2 23 Chg. Q/Q H1 22 H1 23 Chg. Y/Y NII + Net Fees (restated) Net interest income 743 810 9.0% 1,039 1,553 49.4% 2,501 1,771 1,969 2,006 Net fees and commissions 479 470 -1.9% 9
Slide 13: NII growth trend confirmed with further guidance improvement
NII growth trend confirmed with further guidance improvement Half-yearly trend Quarterly trend €m €m Revised NII Guidance +49.4% +53.5% 1,553 for FY 2023: ~€3.25bn +9.0% 1,039 743 810 (from >€3bn1) 528 Based on: H1 22 H1 23 Q2 22 Q1 23 Q2 23 • No further hikes in ECB rates vs. current level Commerci
Slide 14: Solid franchise value: customer loans
Solid franchise value: customer loans Share of “Green” new lending to Corporate and Enterprises at 55.8% Resilient stock of customer loans, with an increased share of secured exposure € bn “CORE” NET PERFORMING CUSTOMER LOANS1 SHARE OF SECURED POSITIONS ON TOTAL PERFORMING LOANS TO HOUSEHOLDS AND NO
Slide 15: Solid franchise value: customer funding
Solid franchise value: customer funding Customer funding1 up by €6.7bn YTD (+€4.3bn in Q2) € bn +3.3% TOTAL CUSTOMER FUNDING driven by strong net flows and +2.1% market performance: 199.3 201.7 206.0 ▪ AUC +€7.3bn YTD, (+€3.7bn in Q2) 4.3 4.8 5.0 ▪ AUM +1.1bn YTD (+€0.4bn in Q2) 31.9 35.5 39.2 59.4
Slide 16: Net Fees at €948m in H1 2023
Net Fees at €948m in H1 2023, mainly supported by Commercial Banking Half-yearly trend Quarterly trend €m -1.9% €m -3.5% 967 948 -1.9% Commercial Banking 487 479 470 490 +1.8% Fees 499 249 -3.6% 254 245 Management, 477 -5.8% 450 Intermediation and 238 225 flat 225 Advisory fees H1 22 H1 23 Q2 22 Q1
Slide 17: Strict cost control: Cost/Income down at 47.8% in Q2 23
Strict cost control: Cost/Income down at 47.8% in Q2 23 (57.8% in Q2 22) Banking business costs1 €m 1,257 1,266 -0.5% D&A 125 129 D&A -1.4% 318 330 632 637 629 Other Administrative 64 64 65 Expenses Other Administrative 163 168 162 813 807 Expenses Staff Costs 405 405 402 Staff Costs H1 22 H1 23 Q2
Slide 18: Continuous asset quality improvement supporting lower Cost of Risk
Continuous asset quality improvement supporting the reduction of the Cost of Risk Gross NPE ratio: -20.3 p.p. since the merger 24.1% 21.1% 3.3% (EBA definition)1 10.8% 9.1% 7.5% 5.6% 4.2% 3.8% 31/12/2016 31/12/17 31/12/18 31/12/19 31/12/20 31/12/21 31/12/22 30/06/23 1.7% (EBA definition)1 Net NPE ra
Slide 19: Prudent provisioning policy with strong NPE coverage
Prudent provisioning policy with strong NPE coverage and low default rate Gross NPEs down by €1.3bn Y/Y Migration rates under control € bn 5.5 FY 22 H1 23 4.8 4.7 annualised LLPs 4.2 Default rate 0.94% 0.93% UTP + PD 3.5 2.7 2.6 (from Performing to NPEs) €m 2.4 Bad Loans 2.0 2.1 Cure rate 3.31% 5.78
Slide 20: Optimization and diversification of Debt securities portfolio
Optimization and increased diversification of Debt securities portfolio Overall trend and accounting breakdown Composition by counterparty € bn € bn 31/12/16 30/06/22 31/12/22 31/03/23 30/06/23 34.9 36.2 36.1 33.2 Corporate 4.7 4.7 5.1 5.4 5.5 Other 31.6 0.3 0.4 0.4 categories 0.5 1.1 2.9 9.1 9.8 9.
Slide 21: Reserves of debt securities at FVOCI and Net Financial Result
Reserves of debt securities at FVOCI and Net Financial Result Very low sensitivity of debt securities portfolio at FVOCI confirmed Reserves of debt securities at FVOCI Breakdown of Net Financial Result Post-tax €m €m Total • Better results from option 30/06/22 31/12/22 NFR +48.9 -34.1 -8.4 hedging o
Slide 22: Rock-solid liquidity & funding position
Rock-solid liquidity & funding position: LCR at 179% and NSFR1 at >130% LIQUIDITY Managerial data Total liquidity: Net Exposure with ECB3 31/03/23 30/06/23 €bn Cash + Unencumbered Assets2 22.0 26.7 21.0 17.7 LCR 199% 179% EoP data, net of haircut 44.5 Depo facility 38.7 40.7 with ECB 0.5 • Limited i
Slide 23: Strong capital generation, CET 1 ratio up at 14.8%
Strong capital generation, with CET 1 ratio up at 14.8%1 Evolution of CET1 Ratio stated up at 14.2% % +140bps +68bps +22bps +4bps +10bps 14.2 14.8 12.8 13.6 Ca.+60bps -36bps Danish Compromise 31/12/2022 31/03/23 Q2 2023 Dividends 2 Balance Sheet FVOCI Debt Other 30/06/2023 30/06/2023 Stated Stated p
Slide 24: Final Remarks
3 Final Remarks
Slide 25: H1 2023 performance in a nutshell
H1 2023 performance in a nutshell Outstanding results… PROFITABILITY: OVERDELIVERING ON THE NEW TRAJECTORY SOLID BALANCE SHEET: ADDITIONAL DERISKING AND STRONG LIQUIDITY & FUNDING CAPITAL: MATERIAL GENERATION CAPACITY … leading to a further upgrade in P&L guidance 3. Final Remarks 25
Slide 26: Profitability Outlook
Profitability Outlook FURTHER INCREASE IN 2023 P&L GUIDANCE EPS ROTE1 2024 EPS GUIDANCE AT ~€90 CENTS (+12.5% Y/Y) ~13% New with CET1 ≥€80 stated @ 13% New ~12% cents ROOM FOR UPWARD REVISION ~€75 IN THE NEXT STRATEGIC PLAN Previous ~11% cents ATTRACTIVE DIVIDEND YIELD ~9% in 2023 and ~10% in 20242,
Slide 27: H1 2023 Performance Details
H1 2023 Performance Details 4
Slide 28: Quarterly Stated P&L results
Quarterly Stated Reclassified income statement (€m) Q1 22 Q2 22 Q3 22 Q4 22 (restated) (restated) (restated) (restated) Q1 23 Q2 23 Chg. Q/Q Chg. Q/Q % Net interest income 511.5 527.6 551.3 724.0 743.0 809.9 67.0 9.0% P&L results Income (loss) from invest. in associates carried at equity Net interes
Slide 29: P&L: H1 2023 stated and adjusted comparison
P&L: H1 2023 stated and adjusted comparison 1H 22 Chg. Y/Y 1H 22 1H 23 Chg. Y/Y Reclassified income statement (€m) 1H 23 (restated) % adjusted adjusted % Net interest income 1,039.1 1,552.9 49.4% 1,039.1 1,552.9 49.4% Income (loss) from invest. in associates carried at equity 58.2 60.6 4.2% 58.2 60.
Slide 30: P&L: stated and adjusted with one-off details
P&L: H1 2023 comparison of stated and adjusted with one-off details 1H 23 Reclassified income statement (€m) 1H 23 One-off Non-recurring items Adjusted Net interest income 1,552.9 1,552.9 0.0 Income (loss) from invest. in associates carried at equity 60.6 60.6 0.0 Net interest, dividend and similar
Slide 31: Reclassified Balance Sheet
Reclassified assets (€ m) Restated Chg. YTD Chg. Q/Q 31/12/22 31/03/23 30/06/23 Value % Value % Reclassified Cash and cash equivalents Loans and advances measured at AC 13,131 23,068 21,845 113,633 111,393 112,014 8,714 66.4% -1,619 -1.4% -1,223 620 -5.3% 0.6% - Loans and advances to banks 4,178 3,6
Slide 32: Focus on Govies portfolio
Focus on Govies portfolio Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn € bn € bn +3.6% +7.7% -92.0% -2.2% +5.1% 8.8 9.2 9.3 9.1 +44.2% 2.2 1.7 2.3 2.4 0.7 0.02 0.04 0.1 30/06/22 31/12/22 31/03/23 30/06/23 30/06/22 31/12/22 31/03/23 30/06/23 30/06/22 31/12/22 31/03/23 30/
Slide 33: Direct funding from the Banking business
Direct funding from the Banking business Direct funding1 € bn -1.3% +1.0% +1.2% Capital-protected Certificates 126.4 123.4 123.2 124.7 Other Bonds 107.4 103.7 101.3 101.3 C/A, Sight & Time deposits (85.0%) (84.0%) (82.2%) (81.3%) (% Share on total) 30/06/2022 31/12/2022 31/03/2023 30/06/2023 30/06/2
Slide 34: Indirect customer funding up at €99.6bn
Indirect customer funding up at €99.6bn: +9.1%YTD Assets under Management (AuM) Assets under Custody (AuC)1 € bn € bn +1.0% +27.7% +1.8% +22.7% +0.6% +10.4% 59.9 59.4 60.1 60.5 3.7 4.0 4.0 4.1 35.5 39.2 15.7 15.5 15.5 15.4 30.7 31.9 40.5 39.9 40.6 41.0 30/06/2022 31/12/2022 31/03/2023 30/06/2023 30/
Slide 35: Successful issuance activity and diversified liability profile
Successful issuance activity and well diversified liability profile Wholesale bonds issued since 2022 at €5.0bn €bn 0.75 0.75 0.75 0.75 • Wholesale bonds issued for a total of €2.25bn 0.40 0.50 0.50 0.30 0.30 in H1 2023, mainly «green» (€1.5bn), with a well diversified seniority Jan-22 Mar-22 Apr-22
Slide 36: Bond maturities: limited and manageable amounts
Bond maturities: limited and manageable amounts Institutional bond maturities € bn 3.25 2.0 0.50 0.50 0.75 0.5 H2 2023 FY 2024 FY 2025 Senior Pref. Senior Non-Pref. Covered Bonds Following the reimbursement in H1 2023 of institutional bonds for a total of €1.4bn (of which: €0.9bn Covered Bonds and €
Slide 37: Net Customer Loans
Net Customer Loans Net Customer Loans € bn -2.4% Change +0.4% Net Performing Customer Loans 30/06/22 31/12/22 31/03/23 30/06/23 In % Y/Y In % YTD In % Q/Q Core customer loans 102.8 102.8 102.3 100.9 -1.9% -1.8% -1.4% 110.8 109.5 108.2 - Medium/Long-Term loans 79.7 80.4 80.1 79.3 -0.4% -1.4% -1.0% 10
Slide 38: Analysis of Customer loan portfolio
Analysis of Customer loan portfolio Performing customer loan breakdown as at 30/06/2023 Managerial data, Breakdown by geographic area GBV Other (Public Sector, (excluding GACS Senior Notes) No-Profit, etc.) GACS Senior 3.9% Notes Financials 1 1.5% Breakdown by 72.8% 10.0% customer segments €106.5bn
Slide 39: NPE migration dynamics
NPE migration dynamics Inflows from Performing to NPEs Outflows from NPEs to Perf. Loans Flows from UTP to Bad Loans €m €m €m 271 260 55 213 231 43 42 38 192 103 102 84 Q1 2022 Q2 2022 Q1 2023 Q2 2023 Q1 2022 Q2 2022 Q1 2023 Q2 2023 Q1 2022 Q2 2022 Q1 2023 Q2 2023 4. H1 2023 Performance Details 39
Slide 40: Asset Quality details
Asset Quality details Loans to Customers at AC1 Gross exposures 30/06/2022 31/12/2022 31/03/2023 30/06/2023 Chg. Y/Y Chg. YTD Chg. Q/Q €/m and % Value % Value % Value % Bad Loans 1,996 2,047 2,094 1,868 -127 -6.4% -179 -8.7% -226 -10.8% UTP 3,405 2,639 2,522 2,280 -1,125 -33.0% -360 -13.6% -242 -9.6
Slide 41: Details on Insurance business
Details on Insurance business Banco BPM Vita & Banco BPM Assicurazioni portfolio fully consolidated starting from 1 July 20221 P&L contribution 1 of Banco BPM Vita & Assicurazioni H1 23 Income from insurance business 24.6 Total income 24.6 Personnel expenses -1.3 Other administrative expenses -7.1 A
Slide 42: IFRS 17 impacts on FY 2022 P&L
IFRS 17 impacts on FY 2022 P&L IFRS 17 Reclassified income statement (€m) impacts Q4 2022 Q3 2022 Q2 2022 Q1 2022 on FY 2022 Income (loss) from invest. in associates carried at equity -21.5 3.6 7.9 -25.7 -7.2 Net interest, dividend and similar income -21.5 3.6 7.9 -25.7 -7.2 Net fee and commission i
Slide 43: Capital position in detail
Capital position in detail1 FULLY LOADED CAPI TAL 31/12/2022 FULLY LOADED 30/06/2022 30/06/2023 31/12/2022 POSI TI ON (€/m and %) Restated RWA COMPOSI TI ON 30/06/2022 30/06/2023 Restated CET 1 Capital 8,053 7,686 8,386 (€/bn) T1 Capital 9,443 9,076 9,776 CREDI T & COUNTERPARTY Total Capital 11,717
Slide 44: Further progress in new digital-driven distribution model
Further progress in new digital-driven distribution model Main digital-enabled achievements # Branch and APP-based transactions (m) % Remote-based transaction Weight on total transactions 83% 84% 85% 90% 40 74% Branch 29 24 23 23 APP 16 10 11 26% 7% 17% 16% 16% 20% 15% 21% FY 2019 FY 2021 FY 2022 H1
Slide 45: ESG integration update: Key results & selected KPIs
ESG integration update: Key results & selected KPIs 2022 H1 2023 OTHER KEY ACHIEVEMENTS % of Green new lending to corporate and enterprise segments1 55.6% 55.8% In March 2023 Banco Green residential mortgages (new lending) €620m €178m BPM joined the NZBA Green & Social Bonds issued €2.05bn2 €1.5bn B
Slide 46: Contacts for Investors and Financial Analysts
Contacts for Investors and Financial Analysts Roberto Peronaglio Banco BPM +39 02 9477.2090 Registered Offices: Piazza Meda 4, I-20121 Milano, Italy Tom Lucassen +39 045 867.5537 Corporate Offices: Piazza Nogara 2, I-37121 Verona, Italy Arne Riscassi +39 02 9477.2091 Silvia Leoni +39 045 867.5613 in
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