Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — Q1 2023 Earnings Presentation
43 slides from Banco Bpm Spa's earnings presentation, May 8, 2023
Slide 1: Group Q1 2023 Results Presentation
Group Q1 2023 Results Presentation 08 May 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 12 3 Final Remarks 23 4 Q1 2023 Performance Details 25 4
Slide 5: Executive Summary
Executive Summary 1
Slide 6: Excellent quarterly results leading to a higher level of ambition
Excellent quarterly results leading to a higher level of ambition OUTSTANDING PERFORMANCE ... LEADING TO AN INCREASE IN GUIDANCE2 BASED ON SOLID FUNDAMENTALS… ~0.75 Net income at €265M +49.2% Y/Y EPS >0.60 ~0.49 Robust starting point for an increased (€) ~1,140 profitability ambition >900 2023 NET ~
Slide 7: Q1 2023: top level performance across three main drivers
Q1 2023: top level performance across three main drivers NII NII + Fees CoR (annualised) Net Income PROFITABILITY: €743m €1,222m 51bps €265m Significant increase Q/Q Y/Y Q/Q Y/Y FY 22 Q1 22 Q/Q Y/Y +2.6% +45.2% +4.3% +23.2% 62bps 54bps +26.4% +49.2% CET11 MDA Buffer1 CAPITAL POSITION: 14.15% 544bps
Slide 8: Further improvement in NII guidance driven by low deposit beta
Further improvement in NII guidance driven by low deposit beta in the evolving interest rate scenario Interest rate environment Revised FY 2023 Average 3M Euribor (bps) NII Guidance: >€3bn 317 (ex >€2.7bn) 264 176 44 Based on: -54 -37 • Euribor (average FY 2023E): ~3.3% Q1 22 Q2 22 Q3 22 Q4 22 Q1 23
Slide 9: Solid outperformance: already above 2024 Strategic Plan targets
Solid outperformance: already above 2024 Strategic Plan targets TOTAL REVENUES PRE-PROVISION INCOME €m ~1,150 1,250 €m ~1,075 >520 610 ~470 2024 TARGETS ALREADY EXCEEDED Original 2023 Plan Target - Original 2024 Plan Target - Q1 2023 Original 2023 Original 2024 Q1 2023 ON A QUARTERLY Avg.Q Avg.Q Pla
Slide 10: Strong capital position, with CET1 ratio up at 14.15%
Strong capital position, with CET 1 ratio up at 14.15% CET1 Ratio: evolution % +50bps +17bps +19bps +16bps 14.15 13.34 -28bps +51bps 12.83 13.57 +58bps Danish Stated Danish Stated Compromise Compromise 31/12/2022 Q1 Dividends 1 FVOCI RWA Other 31/03/2023 Adjusted performance & Reserves dynamics Adju
Slide 11: Transformational initiatives to further enhance profitability & capital generation
Transformational initiatives to further enhance profitability & capital generation NEW PROJECT TO STRENGTHEN PAYMENT BUSINESS POS: # 140K ▪ Payment cards: # 4.4M ▪ OVERALL VALUE POTENTIAL: €2BN OF NPV #bn Var. Y/Y Issuing ~20 +15.8% ▪ Long-term exclusive distribution agreement TRANSACTION Acquiring
Slide 12: Key Highlights
Key Highlights 2
Slide 13: Q1 2023 Net Income at €265M, +49.2% Y/Y
Q1 2023 Net Income at €265M, +49.2% Y/Y P&L €m Q1 2022 Q4 2022 Q1 2023 Chg. Q/Q Chg. Y/Y Net interest income 512 724 743 2.6% 45.2% Net fees and commissions 480 447 479 7.0% -0.3% NII + Net fees and commissions 992 1,171 1,222 4.3% 23.2% Income from associates 50 35 36 Other revenues 17 20 17 Net fi
Slide 14: Q1 2023 NII at €743M: best quarterly performance ever
Q1 2023 NII at €743M: best quarterly performance ever Quarterly trend NII Evolution Bridge €m +45.2% €m +17.9% TLTRO Benefit +150 743 +2.6% in Q4 221 724 743 644 -37 630 512 80 -14 644 Q4 22 Day Q4 22 Comm. Wholesale Q1 23 Excl. TLTRO Effect Excl. Day Activities funding Q1 22 Q4 22 Q1 23 benefit eff
Slide 15: Volumes supported by strong customer base and top-quality franchise
Volumes supported by strong customer base and top-quality franchise “Core” Net Performing Customer Loans1 Safe profile of new lending to feed positively into asset quality € bn €5.2bn of new lending2 in Q1 2023: ▪ €1.3bn assisted by State guarantees 102.8 102.3 ▪ 96% concentrated in the best rating
Slide 16: Net Fees and Commissions at €479M, +7.0% Q/Q
Net Fees and Commissions at €479M,+7.0% Q/Q Management, Intermed. and Advisory fees €m -5.9% Management, Intermediation and +12.8% Advisory fees, +€25m Q/Q, mainly 239 199 225 thanks to: Total Net Fees & Commissions • Funds & Sicav (+€15m) Q1 22 Q4 22 Q1 23 • Contribution from insurance €m Product p
Slide 17: Cost/Income ratio down at 51%
Cost/Income ratio down at 51% Banking business costs1 €m 625 642 637 61 84 64 D&A 156 168 168 Other Administrative Expenses Staff Costs 408 390 405 Q1 22 Q4 22 Q1 23 Incl. Insurance business Costs: n.a. 651 640 C/I RATIO 53% 52% 51% • Q1 2023 banking business costs at €637m vs €642m in Q4 22 (-0.7%)
Slide 18: Continuous Cost of Risk reduction backed by significant Asset Quality improvement
Continuous Cost of Risk reduction backed by significant Asset Quality improvement 184 154 Cost of Risk 122 In bps 73 81 62 51 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Q1 2023 annualised 3.7% Gross NPE (EBA definition)1 21.1% ratio 10.8% 9.1% 7.5% 5.6% 4.2% 4.2% 31/12/17 31/12/18 31/12/19 31/1
Slide 19: Declining cost of risk, increased NPE coverage and low default rate
Declining cost of risk, increased NPE coverage and low default rate Gross NPEs down by €1.6bn Y/Y Migration rates under control € bn Q1 23 FY 22 LLPs 6.3 annualised 4.8 4.7 Default rate €m UTP + PD 0.94% 0.88% 4.0 (from Performing to NPEs) -9.0% 2.7 2.6 Bad Loans Cure rate 3.31% 6.10% -25.6% 2.2 2.0
Slide 20: Optimization and increasing diversification of Debt securities portfolio
Optimization and increasing diversification of Debt securities portfolio Accounting classification Composition by counterparty € bn € bn 31/12/16 31/12/22 31/03/23 34.9 36.2 5.4 Corporate 4.7 5.1 Other 31.6 0.4 0.3 categories 0.5 9.8 (pre-IFRS9) 2.9 9.1 Govies 26.9 29.8 30.8 0.9% 19.8 25.5 26.0 63.3
Slide 21: Debt securities portfolio at FVOCI: sound recovery in reserves
Debt securities portfolio at FVOCI: sound recovery in reserves and negligible capital sensitivity MANAGEABLE CAPITAL SENSITIVITY Reserves of debt securities at FVOCI NFR BPV of Total Govies at FVOCI1 Post-tax €m €m €m 31/03/22 31/12/22 31/03/23 128 46 75 1.17 49 0.18 0.25 -158 0.99 0.02 31/12/21 -9
Slide 22: Rock-solid liquidity & funding profile: LCR at 199% & NSFR at 130%
Rock-solid liquidity & funding profile: LCR at 199% & NSFR at 130%1 Total liquidity: Cash + Unencumbered Assets2 Asset encumbrance and exposure with ECB as at 31/03/23 EoP data, net of haircut €bn 38.7 40.7 • Total Encumbered Eligible Assets at €43.6bn3 Cash and Deposits with ECB 12.9 • TLTRO III no
Slide 23: Final Remarks
3 Final Remarks
Slide 24: Net income & Shareholder remuneration outlook
Net income & Shareholder remuneration outlook: confident to double net income performance 2023-2024 NEW GUIDANCE: PROFITABILITY BOOST €m ~13% ~13% ~11% ROTE 2024E: ~14%, ~11% 7.4% WITH CET1 @ 13% 5.5% ~1,360 ROTE1 ~1,140 STRONG P&L 703 MOMENTUM TO CAPITAL MANAGEMENT 569 CONTINUE BEYOND NET INCOME AC
Slide 25: Q1 2023 Performance Details
Q1 2023 Performance Details 4
Slide 26: Quarterly Stated P&L results
Quarterly Stated Reclassified income statement (€m) Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Chg. Q/Q Chg. Q/Q % Net interest income 511.5 527.6 551.3 724.0 743.0 19.0 2.6% P&L results Income (loss) from invest. in associates carried at equity Net interest, dividend and similar income 49.6 561.2 41.5 569.1 31.
Slide 27: P&L: Q1 2023 comparison of stated and adjusted with one-off details
P&L: Q1 2023 comparison of stated and adjusted with one-off details Q1 23 Reclassified income statement (€m) Q1 23 One-off Non-recurring items Adjusted Net interest income 743.0 743.0 0.0 Income (loss) from invest. in associates carried at equity 36.3 36.3 0.0 Net interest, dividend and similar inco
Slide 28: Reclassified Balance Sheet
Reclassified assets (€ m) Restated Chg. YTD 31/12/22 31/03/23 Value % Reclassified Cash and cash equivalents Loans and advances measured at AC 13,131 23,068 113,633 111,393 9,937 -2,239 75.7% -2.0% - Loans and advances to banks 4,178 3,643 -535 -12.8% Balance Sheet - Loans and advances to customers
Slide 29: Focus on Govies portfolio
Focus on Govies portfolio Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn € bn € bn -18.1% -0.6% -94.9% +1.3% 11.4 +31.9% 9.2 9.3 +92.1% 2.3 2.3 1.7 0.8 0.02 0.04 31/03/22 31/12/22 31/03/23 31/03/22 31/12/22 31/03/23 31/03/22 31/12/22 31/03/23 Non-Italian Govies at AC Non-I
Slide 30: Direct funding from the Banking business
Direct funding from the Banking business1 Direct funding2 € bn -2.3% -0.2% 126.1 123.4 123.2 Capital-protected Certificates Other Bonds 103.7 106.9 101.3 Up at €103.9bn C/A, Sight & Time deposits as at 30/04/2023 (84.7%) (84.0%) (82.2%) (% Share on total) 31/03/2022 31/12/2022 31/03/2023 31/03/22 31
Slide 31: Liability profile: Bonds outstanding and issues
Liability profile: Bonds outstanding and issues Bonds Outstanding as at 31/03/2023 Nominal amounts Senior Preferred 15.9% Senior Capital-protected 23.5% 8.1% Non-preferred Certificates €21.5bn Subordinated 15.3% (AT1 and T2) Covered Bonds1 37.2% Wholesale bonds issued since 2017 € bn € bn Focus on W
Slide 32: Bond maturities: limited and manageable amounts
Bond maturities: limited and manageable amounts Institutional bond maturities € bn 3.25 1.76 2.0 1.25 0.50 0.75 0.51 0.5 Apr.-Dec. 2023 FY 2024 FY 2025 Senior Pref. Senior non Pref. Covered Bonds • €0.15bn Covered Bonds reimbursed in Q1 2023 • €3.9bn institutional bonds reimbursed in FY 2022 Manager
Slide 33: Indirect customer funding at €95.6bn
Indirect customer funding at €95.6bn Assets under Management (AuM) Assets under Custody (AuC)1 € bn € bn -5.0% +9.9% +1.1% +11.2% 63.3 59.4 60.1 4.0 4.0 35.5 15.5 4.0 32.3 31.9 15.5 15.5 43.8 39.9 40.6 31/03/2022 31/12/2022 31/03/2023 31/03/2022 31/12/2022 31/03/2023 Funds & Sicav Bancassurance Mana
Slide 34: Net Customer Loans
Net Customer Loans Net Customer Loans1 € bn -2.8% Change Net Performing Customer Loans 31/03/22 31/12/22 31/03/23 In % Y/Y In % YTD -1.6% Core customer loans 101.3 102.8 102.3 1.0% -0.5% 107.8 - Medium/Long-Term loans 78.2 80.4 80.1 2.4% -0.4% 110.9 109.5 3.1 - Current Accounts 8.9 8.4 8.4 -5.4% 0.9
Slide 35: Analysis of gross Performing loan portfolio
Analysis of gross Performing loan portfolio Performing customer loan breakdown as at 31/03/2023 Managerial data, GBV Breakdown by customer segments Breakdown by geographic area (including GACS Senior Notes) (excluding GACS Senior Notes) Other (Public Sector, No-Profit, etc.) GACS Senior Notes 74.4%
Slide 36: Construction of buildings and RE activities
Construction of buildings and RE activities: Highly secured exposure, concentrated in low-mid risk rating classes and in the northern part of Italy € bn Performing In % on total Composition by Not Rated Low-Medium Exposure (GBV) Perf. loans rating classes 4% risk €8.0bn 70% Construction of buildings
Slide 37: 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 243 231 213 43 42 103 102 68 12 Q1 2022 Q4 2022 Q1 2023 Q1 2022 Q4 2022 Q1 2023 Q1 2022 Q4 2022 Q1 2023 4. Q1 2023 Performance Details 37
Slide 38: Asset Quality details
Asset Quality details Loans to Customers at AC1 Gross exposures 31/03/2022 31/12/2022 31/03/2023 Chg. Y/Y Chg. YTD €/m and % Value % Value % Bad Loans 2,226 2,047 2,094 -132 -5.9% 47 2.3% UTP 3,974 2,639 2,522 -1,451 -36.5% -117 -4.4% Past Due 53 82 64 11 21.5% -18 -21.8% NPE 6,252 4,769 4,680 -1,57
Slide 39: 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 Q1 23 Fees and other net operating income 0.2 Income from insurance business 9.6 Total income 9.8 Personnel expenses -0.
Slide 40: IFRS 17 impact on FY 2022 P&L
IFRS 17 impact on FY 2022 P&L Reclassified income statement (€m) IFRS 17 impacts on FY 2022 Net interest income 0.0 Income (loss) from invest. in associates carried at equity -29.6 Net interest, dividend and similar income -29.6 Net fee and commission income 0.0 Other net operating income -0.04 Net
Slide 41: Capital position in detail
Capital position in detail1 FULLY LOADED CAPI TAL FULLY LOADED 31/03/2022 31/12/2022 31/03/2023 POSI TI ON (€/m and %) RWA COMPOSI TI ON 31/03/2022 31/12/2022 31/03/2023 CET 1 Capital 8,435 7,700 8,076 (€/bn) T1 Capital 9,528 9,089 9,466 CREDI T & COUNTERPARTY Total Capital 11,969 10,871 11,192 54.9
Slide 42: ESG highlights of Q1 2023
ESG highlights of Q1 2023 • 5 priority sectors already identified: • Communication of targets within 18 months In March 2023 o oil & gas o power generation Banco BPM joined o cement the NZBA o automotive o coal SIGNIFICANT ISSUANCE ACTIVITY OF SOCIAL & GREEN BONDS: €750m Green Senior Pref. bond in J
Slide 43: 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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