UniCredit S.p.A. · MIL:UCG
UniCredit — Mediobanca Italian CEO Conference 2017
22 slides from UniCredit's conference presentation, Jun 28, 2017
Slide 1: Mediobanca Italian CEO Conference
Mediobanca Italian CEO Conference Jean Pierre Mustier, CEO of UniCredit Group Milan, June 28th, 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: Agenda
Agenda 1 The Italian NPE environment 2 UniCredit NPE strategy - Transform 2019 3 UniCredit NPE operational plan 4 Achievements 5 Conclusions 3
Slide 4: Italian NPE stock showing first signals of decrease after 2015 peak
Italian NPE stock showing first signals of decrease after 2015 peak 1 2 3 4 5 The Italian NPE environment Gross NPE/ Loans to Customer (%) Gross Bad Loans/ Loans to Customer (%) % €bn 400 Bad Loans (€Bn) 20 Unlikely to pay (€Bn) 350 360 349 350 Past Due (€Bn) 319 300 15 261 250 197 210 220 175 215 1
Slide 5: NPE dynamics show net improvement over the last three years
NPE dynamics show net improvement over the last three years in terms of average default rate and recovery rate 1 2 3 4 5 The Italian NPE environment 2014 2015 2016 Inflows to NPE (m) 55,392 37,482 26,478 Outflows to performing (m) -13,024 -10,084 -7,867 Default Rate1 (%) 5.2 3.7 2.6 Cure Rate (%)2 5
Slide 6: Recovery rate hit bottom in 2014 and is expected to further improve
Recovery rate hit bottom in 2014 and is expected to further improve in coming three years 1 2 3 4 5 The Italian NPE environment 7 6.3% 6 5.5% 4.8% 5 4.5% 3.8% 4.1% 3.8% 4 3.2% 3.4% 2.9% 3.1% 3 2 1 0 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E Source: Bain, average of top 15 Italian ban
Slide 7: Positive coverage trend in Italy
Positive coverage trend in Italy 1 2 3 4 5 The Italian NPE environment 86.7% 89.1% Collateral coverage(1) LLP coverage 37.2% 42.1% 44.4% 51.9% 44.6% 2014 2015 2016 Bad loans coverage (% ) 58.7 58.2 63.4 UTP coverage (% ) 27.0 26.7 33.5 Past due coverage (% ) 13.9 22.1 24.5 Note : 1. Value of the gua
Slide 8: The Italian NPE market: increasing levels of disposals
The Italian NPE market: increasing levels of disposals 1 2 3 4 5 The Italian NPE environment NPE Disposals 2012/17 Disposals (€Bn) Expected 65(1) CAGR +69% ~40 18 12 5 4 7 2012 2013 2014 2015 2016 2017 8 Note 1: Disposals figures include FINO Source: Bain
Slide 9: Key Players in the Italian NPE sector
Key Players in the Italian NPE sector - Equity investors, financing providers and servicing providers 1 2 3 4 5 The Italian NPE environment Equity Investors Investors with servicing platforms / Investors that participated to NPL projects in Italy banks in Italy and Europe Apollo Arrow Algebris Anaca
Slide 10: UniCredit NPE strategy - Transform 2019
1 The Italian NPE environment 2 UniCredit NPE strategy - Transform 2019 3 UniCredit NPE operational plan 4 Achievements 5 Conclusions 10
Slide 11: De-risking of the balance sheet key to reduce the cost of capital
De-risking of the balance sheet key to reduce the cost of capital of the Group 1 2 3 4 5 UniCredit NPE strategy Transform 2019 Comments Group, 1Q17 Gross loans, €bn 36.4 486.0 449.7 141.6 • At end September 2016, Group NPE Ratio of Gross NPE ratio, % 85.0% 15.1%, while the lowest of Italian banks, w
Slide 12: UniCredit legacy mainly originated from 2005 to 2010 in Italy
UniCredit legacy mainly originated from 2005 to 2010 in Italy and addressed with the setup of the Non Core division 1 2 3 4 5 Non Core 2019 UniCredit NPE strategy Transform Italy Non Core NPE stock by origination year Gross NPE stock at 9M2016, €bn 22% 64% 14% 64% of total NPE, 1.0 0.8 0.6 0.4 49.7(
Slide 13: Non Core rundown to reach 8.1bn net exposure by 2019
Non Core rundown to reach 8.1bn net exposure by 2019, reducing gross loans by over 37bn 1 2 3 4 5 UniCredit NPE strategy Transform 2019 Non Core evolution Actions of Non Core run down Gross loans, €bn -€37.2bn Gross loans, Total -€37.2bn €bn 60.5 56.4 19.2 o/w gross NPE, 51.4 49.7 19.2 FINO • Full d
Slide 14: UniCredit NPE operational plan
Agenda 1 The Italian NPE environment 2 UniCredit NPE strategy - Transform 2019 3 UniCredit NPE operational plan 4 Achievements 5 Conclusions 14
Slide 15: NPE Operational Plan finalised to ensure reduction of NPE stock
NPE Operational Plan finalised to ensure reduction of NPE stock Key objectives 1 2 3 4 5 UniCredit NPE operational plan NPE Stock • Reduce NPE stock at Group level by 30 bn in 2019 within Transform 2019 Recovery • Accelerate reduction of NPE stock and improve recovery performance Performance Recover
Slide 16: Key Pillars of NPE Operational Plan
Key Pillars of NPE Operational Plan 1 2 3 4 5 UniCredit NPE operational plan Guidance and monitoring at Group level Organizational framework to be applied in each Legal Entity Governance Effective end-to-end process ensuring continuous interaction between Group Risk Management (Holding) and NP
Slide 17: Achievements
1 The Italian NPE environment 2 UniCredit NPE strategy - Transform 2019 3 UniCredit NPE operational plan 4 Achievements 5 Conclusions 17
Slide 18: Group – Lower NPE, improved NPE ratios and strengthened coverage ratios
Group – Lower NPE, improved NPE ratios and strengthened coverage ratios 1 2 3 4 5 Achievements Non performing exposures (1), bn o.w. Gross bad loans, bn -38.8% -2.2% -28.2% 50.8 31.8 31.1 77.1 -1.8% Net bad loans 19.9 10.9 10.4 56.3 55.3 Mar-16 Dec-16 Mar-17 Coverage ratio 60.8% 65.6% 66.6% Net NPE
Slide 19: UniCredit took a decisive step with FINO to accelerate the Non Core run down
UniCredit took a decisive step with FINO to accelerate the Non Core run down 1 2 3 4 5 Achievements Two phases approach: FINO • Phase 1: "Segregation and Market Validation" Transaction • Phase 2: "Optimization and Active Portfolio Management" Two signed framework agreements with PIMCO and Fortre
Slide 20: Non Core – De-risking on track
Non Core – De-risking on track 1 2 3 4 5 Achievements Actions of Non Core run down Gross loans, bn FINO Disposal of majority stake on track -24.1bn 60.5 -0.8bn Repayments 0.1bn in 1Q17 37.1 36.4 NPE 0.1bn in 1Q17, additional 0.5bn disposals Disposals signed in 2Q17 Perfoming 9.1 5.7 5.4 0.3bn in 1Q1
Slide 21: Conclusions
1 The Italian NPE environment 2 UniCredit NPE strategy - Transform 2019 3 UniCredit NPE operational plan 4 Achievements 5 Conclusions 21
Slide 22: Ongoing decisive actions to improve Group asset quality and de-risk balance sheet
Ongoing decisive actions to improve Group asset quality and de-risk balance sheet in order to reduce Group Cost of Capital 1 2 3 4 5 Conclusions Active • Gross NPE reduced by 28.2% Y/Y 55.3 bn in 1Q17 and NPE ratio improved from 15.5% to 11.4% in 1Q17 Balance Sheet • Higher coverage ratio at 56.3% f