Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banca Popolare di Milano — Debt Investor Presentation (October 2010)
48 slides from Banco Bpm Spa's debt investor presentation, Oct 15, 2010
Slide 1: Obbligazioni Bancarie Garantite Programme and New Issue
Bipiemme Group Obbligazioni Bancarie Garantite Programme and New Issue October 2010 This document should not be distributed in the United States or to U.S. persons as defined in Regulation S of the U.S. Securities Act of 1933, as amended. 1
Slide 2: Disclaimer
Disclaimer This document has been prepared by Banca Popolare di Milano solely for information purposes and for use in presentations of the Group’s strategies and financials. Neither the company, its advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any
Slide 3: Executive Summary
Executive Summary Banca Popolare di Milano (BPM) is delighted to present BPM Group and its Aaa/AAA (Moody’s/Fitch) rated Obbligazioni Bancarie Garantite (OBG) Programme BPM Group • BPM Group is the 8th Italian group by total assets* (€51,2 billion) with a leading position in the Northern regions of
Slide 4: Agenda
Agenda BPM Overview 5 OBG: a strong legislative framework 20 Highlights of the Italian loan market 27 BPM loans and credit procedures 34 Overview of the cover pool 38 Appendix: Servicing and Collection Policy 45 This document should not be distributed in the United States or to U.S. persons as defin
Slide 5: BPM Group business profile
BPM Group business profile • BPM Group (“BPM”) is a listed cooperative company established in Milan in 1865 Overview • #8* banking group and #4 Popolare bank in Italy in terms of total assets (€51.2bn) • Strong local franchise: 814 points of sales, of which 784 retail branches • Funding: +4.0% YoY m
Slide 6: BPM's ratings
BPM’s ratings Strength Positive rating actions • Good franchise in the wealthy region • Overcome the current economic S&P of Lombardy turmoil without materially hurting its A-/A-2 Negative • Good and stable funding base financial portfolio • Adequate financial profile 23 April 2010 Moody’s • Strengt
Slide 7: Deep penetration in Italy's wealthiest areas
Deep penetration in Italy’s wealthiest areas Retail Market branches share Region (June 10) (April 10) 8th Italian banking group Piedmont 109 4.14% Lombardy 479 7.33% Liguria 13 1,45% NORTH – WEST 601 5.89% GDP Lombardy ~ 21% Italian GDP* Veneto 9 0.25% Friuli-Venezia-G. 1 0.10% Emilia-Romagna 37 1.0
Slide 8: A stable business model
A stable business model Total income 1H10 (100% = € 779.8m) Commercial Corporate Investment Wealth Corporate Centre Banking Banking Banking Management 70% 14% 10% 5% 1% BPM BPM BPM Anima SGR SPA BPM CAPITAL I Llc Banca Di Legnano Banca Akros BPM Fund Manag. BPM Luxembourg SA Akros Alt. CR Alessandri
Slide 9: H1 2010 results: main trend
H1 2010 results: main trend • In H1 10 total customers increased by ~11,000 units vs Dec. 09 o/w around 9,500 retail, thanks also to the contribution from Webank, linked to the online banking initiatives included in the 2010-12 Business Plan Focus on • The constant and usual focus on our customers l
Slide 10: H1 2010 results: non recurrent & ongoing operations
H1 2010 results: non recurrent & ongoing operations • Solid capital position confirmed: Core Tier1 7.7%, Tier1 8.4%, Total Capital position Capital Ratio 12.3% • Sale of Custodian Bank: +€55mln gross capital gain booked in Q2 Non recurrent 2010 operations • Bancassurance: acquisition of BPM Vita (10
Slide 11: H1 2010 results: highlights
H1 2010 results: highlights € mln H1 10 H1 09 % Loans: up 4.3% YoY thanks to good trend in new mortgages (~€2bn in H1 10 vs. €1,8bn in H1 09). Loans 33,412 32,041 4.3 Market share at 1.98% in May ’10* vs 1.95% in the Funding 36,485 35,085 4.0 previous year Funding: increasing in volume YoY, mainly t
Slide 12: H1 2010 results: P&L main details (YoY analysis)
H1 2010 results: P&L main details (YoY analysis) € mln H1 09 H1 10 H1 09 figure included €39mln of overdraft fees; H1 10 Interest income 490.3 360.8 was affected by low interest rates Net fees and commissions 291.9 353.5 €49mln of third party bond placement fees in H1 10 vs €39mln in H1 09 Associate
Slide 13: BPM funding structure: a solid deposit base
BPM funding structure: a solid deposit base • BPM’s liability mix is well balanced between direct and indirect as well as retail (81%) and wholesale (19%) funding sources • BPM’ s loan to deposit Ratio shows an excellent balance versus its Italian peers Funding (€ mln) Loan to deposit ratio* (%) +4.
Slide 14: BPM international funding
BPM international funding BPM debt maturity profile Net interbank balance (€m) 2,400 1,446 2,000 1,600 1,200 506 800 400 (310) 0 2010 2011 2012 2014 2015 2016 2018 Senior Tier I Upper Tier II Lower Tier II C overed Bond June 09 Dec 09 Jun 10 • ECB eligible assets amount to approx €3bn Liquidity stra
Slide 15: Capital ratios
Capital ratios 12.0% 12.1% 12.6% 12.6% 12.3% 8.6% 8.6% 8.4% 7.7% 7.7% 7.9% 7.9% 7.7% 6.5% 6.5% June 09 Sept. 09 Dec 09 March 10 June 10 Total capital ratio Tier 1 Core Tier1 • Core Tier1 and Tier1 include €500mln of so-called Tremonti Bond, issued last December • The slight reduction in Core Tier 1
Slide 16: Operating costs
Operating costs • H1 2010 total operating cost slightly increased (+1.2% YoY). In detail: ― Staff costs -€5.5mln vs June 09 thanks to the initial positive effect of the early retirement plan (€12.9mln), partially offset by the hirings related to the Business Plan initiatives (Profamily and WeBank) a
Slide 17: Asset quality analysis
Asset quality analysis June 10 Ratio* Coverage • Net NPL ratio was 1.2%, still below the banking average (2.1% source ABI as at May10*) Tot. net doubtful loans 5.2% 26.5% • First signs of recovey in the macro economic Net NPL 1.2% 53.4% scenario were reflected on gross watchlists, Watchlist 3.1% 12.
Slide 18: Provisions and adjustments: breakdown
Provisions and adjustments: breakdown • In Q2 10 LLP and other adjustments were €33.4mln (-51% vs Q1 09) ― In H1 10 net adjustments on customer loans were €91.7mln (-56.2% YoY) which, including €8mln adjustment on a impaired position sold and booked under “profit & loss from financial transaction”,
Slide 19: Agenda
Agenda BPM Overview 5 OBG: a strong legislative framework 20 Highlights of the Italian loan market 27 BPM loans and credit procedures 34 Overview of the cover pool 38 Appendix: Servicing and Collection Policy 45 This document should not be distributed in the United States or to U.S. persons as defin
Slide 20: Italian legislative framework for OBG
Italian legislative framework for OBG Primary Legislation (2005) The OBG are direct banking debt instruments In order to allow the segregation of assets for the benefit of the Noteholders, the Italian legislator enacted the Art. 7-bis and Art. 7-ter of Law 130/99. Art. 7-bis: CRD CRD / UCITS 22.4 •
Slide 21: OBG framework
OBG framework Italian Legal Framework BPM OBG Programme Only banks complying with Bank of Italy’s Issuer Tier 1 > 7% TCR > 11% requirements strong capitalization Supervision Bank of Italy acts as regulator for the OBG issuances Asset Segregation Strong asset segregation mechanism via true sale to a
Slide 22: Bank of Italy eligibility criteria
Bank of Italy eligibility criteria The Framework provides additional comfort to investors by linking the issuance of OBG to the Issuer’s capital strengths 1- Eligible OBG Issuers • Strong capitalization is a strict pre-requisite for qualifying as an OBG issuer under the Bank of Italy rules • Issuanc
Slide 23: Strong emphasis on control and monitoring
Strong emphasis on control and monitoring The Bank of Italy has put a particular focus on the controls and risk management of OBG issuers and on the ongoing involvement of the issuer’s governing bodies: • Decisions in respect of the Programme establishment and OBG issuance need to be taken directly
Slide 24: OC and ALM matching requirements
OC and ALM matching requirements Asset Coverage • Currently minimum 22.7% O/C (81.5% Asset Percentage) Test (ACT) adjusted dynamically to protect AAA/Aaa ratings • The aggregate outstanding amount of the Cover Pool must be at least equal to the Outstanding Amount of all the OBG OC Test issued under
Slide 25: OBG programme structure
Banca Popolare di Milano Banca di Legnano Cover pool Interest rate swap (Originator/Sub- swap provider providers Servicer) Sa EURIBOR + Margin Cover Pool le Revenues EURIBOR + Margin Coupon of OBG Mo rtg ag e Lo Pu an rch s ase Pri ce BPM (Originator/ BPM Covered Bond s.r.l. Servicer) Purchase Price
Slide 26: Agenda
Agenda BPM Overview 5 OBG: a strong legislative framework 20 Highlights of the Italian loan market 27 BPM loans and credit procedures 34 Overview of the cover pool 38 Appendix: Servicing and Collection Policy 45 This document should not be distributed in the United States or to U.S. persons as defin
Slide 27: The Italian loan market
The Italian loan market Smaller than the average Italian mortgage Market recovering at good pace in 2010 market (18% of GDP vs 40% Euro Area) 350 17.4% 20% 1,200 280 294 959 300 265 264 1,000 244 15% 250 217 724 800 658 200 12.5% 10% 600 150 8.7% 8.2% 5% 6.2% 400 292 100 0% 200 50 -0.4% 0 -5% 0 Dec-
Slide 28: The Italian loan market (cont'd)
The Italian loan market (cont’d) Italy’s leverage steadily below European peers ratios Total loans/GDP Corporate loans/GDP 120% 60% 100% 50% 80% 40% 60% 40% 30% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2002 2003 2004 2005 2006 2007 2008 2009 2010 Euro Area Italy Euro Area Italy Loans for house p
Slide 29: The Italian loan market in 2009: demand and supply
The Italian loan market in 2009: demand and supply Loan breakdown supply by rate type Loan breakdown supply by channel Mixed Rate Indirect 14% C hannel Online 5% Fixed Rate Indirect 38% C hannel 26% Direct C hannel Online Direct C hannel 1% 68% Floating Rate Sorse: Osservatorio ASSOFIN Loan transact
Slide 30: The housing market in Italy
The housing market in Italy Housing price indexes (% change Q/Q) • Since the late 90’s, property units on the Italian property markets have increased constantly without any significant volatility • Since 2004 there have been some signs of deceleration in the dynamic of prices per square meter • Acco
Slide 31: The low indebtedness of Italian households
The low indebtedness of Italian households • At year end-2009, household total financial debt stood at 61% of available income, remaining far lower than in the euro area (95%) or in the UK (150%). The differences are largely attributable to loans for house purchases, representing just 33% of Italian
Slide 32: Trends in the Italian real estate in 2010
Trends in the Italian real estate in 2010 • The dynamics of the loan market is strictly bounded to the residential market developments • In 2009 the total deed of sales and purchases registered a negative trend equal to -11,3%. Even if this is still a negative result, it demonstrates some level of r
Slide 33: Agenda
Agenda BPM Overview 5 OBG: a strong legislative framework 20 Highlights of the Italian loan market 27 BPM loans and credit procedures 34 Overview of the cover pool 38 Appendix: Servicing and Collection Policy 45 This document should not be distributed in the United States or to U.S. persons as defin
Slide 34: BPM Group: loan book breakdown
BPM Group: loan book breakdown Loans breakdown by sector (€m) – as of June 2010 33,412 Financial Government 21,384 companies 1% 3% Agriculture 10% 11% Construction & Infrastructures 13% Commercial Customers loan (€m) services Retail 31% Manufacturing 25% 64% 32,041 33,412 Non financial 42% Other ser
Slide 35: Loan book concentration
Loan book concentration Concentration index and RWA (€bn) 40 25% 35 34.2 30.8 30.5 30.9 20% 30.1 30 25.7 25 22.9 15% 20 10% 15 5.7% 10 4.2% 5% 3.6% 3.2% 3.2% 5 2.2% 2.0% 1.3 1.1 1.1 1.1 0.68 0.59 0.99 0 0% Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Jun-10 Positions > 10% regulatory capital Credit ris
Slide 36: Measuring and controlling client's repayment ability
Measuring and controlling client’s repayment ability The following ratios are taken into consideration in statistical terms: • Payment / Income of both the applicant and any co-beneficiary and/or guarantor Measuring • Amount financed / value of the collateral • Other financial contracts on mortgages
Slide 37: Agenda
Agenda BPM Overview 5 OBG: a strong legislative framework 20 Highlights of the Italian loan market 27 BPM loans and credit procedures 34 Overview of the cover pool 38 Appendix: Servicing and Collection Policy 45 This document should not be distributed in the United States or to U.S. persons as defin
Slide 38: Monthly public disclosures of cover pool and test performance
Monthly public disclosures of cover pool and test performance BPM is committed to provide the utmost transparency to investors and publishes on both website and Bloomberg : • Test performance reports summarizing compliance with the programme’s tests in the previous months • Cover pool composition
Slide 39: Cover pool summary
Cover pool summary Type of loans 100% prime, first lien, residential mortgages Pool status 99% performing loans Number of loans 36,493 Total current balance €3,625,001,939 Average loan balance €99,334 WA OLTV 58.1% WA CLTV 52.5% WA seasoning (years) 2.7 WA residual life (years) 18.8 WA coupon 3.52%
Slide 40: Cover pool analysis
Cover pool analysis Breakdown by current LTV Breakdown by original LTV >=80% 0.0% >=80% 9.1% [70%;80%) 23.8% [70%;80%) 26.8% [60%;70%) 18.2% [60%;70%) 16.1% [50%;60%) 15.4% [50%;60%) 16.2% [40%;50%) 15.2% [40%;50%) 12.0% [30%;40%) 12.1% [30%;40%) 10.9% [20%;30%) 9.4% [20%;30%) 5.9% [0%;20%) 6.0% [0%
Slide 41: Cover pool analysis (cont'd)
Cover pool analysis (cont’d) Breakdown by property region Breakdown by borrower region 80% 74% 30% 25% 60% 20% 40% 15% 11% 10% 20% 11% 4% 4% 5% 3% 4% 0% 0% 0% 1% 0% 1% 0% 0% 3% 3% 0% 0% 1% 0% 0% 0% 1% 0% 0% 0% 0% 1% 0% 0% 0% 0% 0% 0% 1% 0% 0% 0% 1% 0% 0% Trentino Alto Adige Trentino Alto Adige Venet
Slide 42: Cover pool analysis (cont'd)
Cover pool analysis (cont’d) Breakdown by current interest rate type Breakdown by instalment frequency Mixed Semi- Mixed Fixed Floating Quarterly annually 0.2% 2.5% Fixed 2.4% 2.2% 17.1% Optional Floating 19.7% Optional Fixed 20.6% Floating Monthly 39.9% 95.4% Data as of 30th September 2010 This doc
Slide 43: Cover pool analysis (cont'd)
Cover pool analysis (cont’d) Breakdown by spread on floating rate (bps) Breakdown by current fixed interest rate >200 0.9% >7% 0.2% (175;200] 10.2% (6%;7%] 7.1% (150;175] 9.7% (5%;6%] 47.6% (125;150] 41.3% (4%;5%] 43.5% (100;125] 14.2% (3%;4%] 1.4% (0;100] 23.8% (0%;3%] 0.2% 0% 5% 10% 15% 20% 25% 30
Slide 44: Agenda
Agenda BPM Overview 5 OBG: a strong legislative framework 20 Highlights of the Italian loan market 27 BPM loans and credit procedures 34 Overview of the cover pool 38 Appendix: Servicing and Collection Policy 45 This document should not be distributed in the United States or to U.S. persons as defin
Slide 45: BPM management and collection policy
BPM management and collection policy • Instalments are mainly paid through clients’ bank accounts: – About 98% of total mortgages and 100% of the portfolios securitized between 2001 and 2009 pay instalments directly through debiting client’s bank accounts at BPM, the remaining pay through Direct Deb
Slide 46: The assignment of delinquent status ("incaglio")
The assignment of delinquent status (“incaglio”) • Exposure is defined as delinquent (“Posizione di Rischio Incagliata”) when the debtor is in situation of temporary and objective insolvency that, however, is considered to be settled in a fair period of time • In addition, a "Delinquent Receivable"
Slide 47: From delinquent to defaulted loan
From delinquent to defaulted loan ● The eventual switch from a delinquent to a defaulted loan is determined on the basis of negative trends or heavy and serious events capable to negatively affect customer’s solvency (such as registration of prejudicial acts, legal mortgages, impounding or distains,
Slide 48: Q&A
Q&A U.S. Road Show 17 – 21 November 2003 This document should not be distributed in the United States or to U.S. persons as defined in Regulation S of the U.S. Securities Act of 1933, as amended. 48
Banca Popolare di Milano — Debt Investor Presentation (October 2010) on 6ix