Unicredit S.p.a. · MIL:UCG
Unicredit — Q1 2015 Earnings Presentation
50 slides from Unicredit's earnings presentation, May 12, 2015
Slide 1: UniCredit Group: 1Q15 results
UniCredit Group: 1Q15 results Rome, May 12th, 2015
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: Executive summary
Executive summary Net profit at 512m in 1q15 with 4.8% RoTE, despite new charges for Single Resolution Fund (SRF). Core bank net profit at 876m with 9.4% ROAC Earnings Group net profit 512m despite low interest rates and the first contribution to the SRF generation Return on Tangible Equity at 4
Slide 4: Agenda
Agenda Group Core Bank Non Core Annex 4 UniCredit Group - INTERNAL USE ONLY -
Slide 5: Group – Results
Group – Results Net profit at 512m with 4.8% RoTE, despite additional charges for Single Resolution Fund. Tangible equity increased by almost 2bn q/q Total assets, bn Tangible equity, bn +7.2% +8.3% +6.7% +4.1% Net profit, m 901 43.5 45.9 43.8 45.6 856 42.1 840 837 844 712 Mar-14 Jun-14 Sep-14 Dec-1
Slide 6: Group – Asset quality
Group – Asset quality Gross impaired down q/q due to the ongoing disposal of UCCMB, with coverage stable net of UCCMB. Other gross impaired reduction driven by lower inflows Gross impaired loans(1), bn Gross bad loans (sofferenze)(1), bn -0.5% +4.8% +4.9% +8.8% 83.6 84.4 83.2 45.1 49.1 49.2 52.1 51.
Slide 7: Asset quality in Italy
Asset quality in Italy Confirmed better asset quality trend vs. banking system UCI Spa ABI sample(1) Gross impaired loans Gross bad loans (sofferenze) Other gross impaired loans Base 100 at Dec-12 Base 100 at Dec-12 Base 100 at Dec-12 139 150 127 127 137 146 138 134 118 124 129 113 118 117 117 122 1
Slide 8: Group – Regulatory capital (1/3)
Group – Regulatory capital (1/3) RWA increased by 12bn q/q with credit risk up by 8bn and market risk up by 4bn, mainly due to FX RWA(1) eop, bn Divisional breakdown - RWA, bn +0.4% q/q y/y +2.8% CB Italy 83 +3.2% +5.2% 419 421 409 CB Germany 33 -1% -5.7% 399 401 44 Oper. 52 CB Austria 28 +17.6% +4.
Slide 9: Group – Regulatory capital (2/3)
Group – Regulatory capital (2/3) CET1 ratio fully loaded up to 10.35% in Mar-15, including Pioneer deal. Earnings generation and valuation reserves more than offset RWA dynamics Basel 3 - Common Equity Tier I ratio fully loaded(1): q/q evolution +15bp -20bp 10.35% incl. +13bp -8bp Pioneer deal +12bp
Slide 10: Group – Regulatory capital (3/3)
Group – Regulatory capital (3/3) TCR at 13.67% benefitting from proactive issuance of 2.5bn subordinated debt. Leverage ratio at a sound 4.5% fully loaded, among the best in Europe Tier 1 and Total Capital ratios transitional(1) Basel 3 leverage ratio(2) Total capital ratio 2014 Basel 3 2015 Basel 3
Slide 11: Group – Medium-long term funding plan
Group – Medium-long term funding plan 2015 Group Funding Plan ahead of schedule given 2.5bn issuance of Tier 2 instruments in 1q15 Funding mix, managerial data % of M/L term run offs by region(1) 10.1bn TLTRO 7.9bn TLTRO 31.4bn not included 26.6bn not included 29.2bn 24.6bn Germany 28.2bn 21% 23% 60
Slide 12: Agenda
Agenda Group Core Bank Non Core Annex 12 UniCredit Group - INTERNAL USE ONLY -
Slide 13: Core Bank – Net profit
Core Bank – Net profit Sound RoAC at 9.4% with most divisions positively contributing to a net profit of 0.9bn in 1q15, despite 90m of SRF contribution booked in 1q15 Net profit, m Divisional breakdown – 1Q15 net profit, m +2.5% RoAC(1) 1,006 854 876 CB Italy 564 27.1% CB Germany 42 6.2% CB Austria
Slide 14: Core Bank – Net operating profit
Core Bank – Net operating profit Significant hike in NOP supported by higher revenues, thorough cost control and a reduction in LLP Revenues, m +2.8% 5,481 5,531 5,685 Net operating profit, m +27.6% 1Q14 4Q14 1Q15 1,863 1,722 Costs, m 1,460 -1.8% 3,236 3,311 3,251 1Q14 4Q14 1Q15 Loan loss provisions
Slide 15: Core Bank – Total revenues (1/2)
Core Bank – Total revenues (1/2) Strong progression of revenue generation by CB Italy, CEE and CIB. AM&AG units positively growing above 20% y/y Divisional breakdown – 1Q15 revenues, m Revenues, m At const. FX q/q y/y CB Italy 2,203 +6.8% +3.3% +2.8% 5,685 CB Germany 645 +1.2% -6.9% 5,531 5,481 CB A
Slide 16: Core Bank – Total revenues (2/2)
Core Bank – Total revenues (2/2) Core revenues increased with fees from AuM more than offsetting net interest. Higher trading income due to Markets activities Net interest(1), m Net fees and commissions, m -3.4% +7.4% 3,015 3,042 2,937 1,968 1,830 1,833 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 Trading income,
Slide 17: Core Bank – Net interest
Core Bank – Net interest Net interest broadly flat in 1q15 with loan volumes and deposits re-pricing mitigating the impact of low interest rates Net interest bridge q/q (m) 3,042 -0.4% -57 -92 -11 -15 +21 2,950 +56 2,937 -78 +19 -6 Commercial dynamics: -7m 4Q14 Days and Baseline Loans volume Deposit
Slide 18: Core Bank – Customer loans
Core Bank – Customer loans Commercial lending volumes up by 9.3bn in 1q15 mainly driven by CB Italy and Poland. CEE & Poland benefitting from FX effect Divisional breakdown – Customer loans, bn Customer loans, bn At const. FX q/q y/y +2.0% CB Italy(1) 133.9 +3% +1.4% +4.0% 440.0 431.4 CB Germany (1)
Slide 19: Core Bank – Customer direct funding
Core Bank – Customer direct funding Commercial direct funding up by 5.3bn. Commercial banks and CEE & Poland are top contributors Divisional breakdown – Direct funding, bn At const. FX q/q y/y Customer direct funding(1), bn CB Italy(2) 144.1 -0.8% -2.5% CB Germany(2) 72.0 -0.2% +1.8% +4.1% +2.7% 465
Slide 20: Core Bank – New origination in commercial banks
Core Bank – New origination in commercial banks New MLT loans growing in all commercial banks with Italy supported by Corporate, Germany and Austria by households New flows o/w household mortgages o/w Corporates +62.3% +148.8% 4,448 +0.1% 2,168 CB Italy, m 2,741 758 759 872 1Q14 1Q15 1Q14 1Q15 1Q14
Slide 21: Core Bank – New loan origination in Commercial bank Italy
Core Bank – New loan origination in Commercial bank Italy MLT new flows at 4.4bn in 1q15 (+62% y/y) offsetting run offs: new flows show higher spreads despite lower rates. Total loans up to 133.9bn as of Mar-15 Net customer loans(1), bn Run off MLT: -2.7bn New Flows MLT: +4.4bn +1.9 +2.2 -1.0 +0.9 -
Slide 22: Core Bank – Fees and commissions
Core Bank – Fees and commissions Investment fees significantly increased q/q driven by investment services. Recurring investment fees approx. 60% of total Investment services fees, m +21.4% c.60% recurring fees(1) 954 837 786 Net fees and commissions, m +7.4% 1Q14 4Q14 1Q15 1,968 1,830 1,833 Financi
Slide 23: Core Bank – Total financial assets
Core Bank – Total financial assets Strong net sales for 10bn underpin TFA growth, with all time high AuM and further potential remix vs. AuM TFA, bn q/q 918 +6.2% +11 +32 296 +10.4% 864 +10 Aum 268 259 +9.0% AuC 237 363 +1.1% Depos 359 Dec-14 Net sales Performance FX effect Mar-15 effect & other 23
Slide 24: Core Bank – Total costs
Core Bank – Total costs Cost efficiency under way, with total costs further down by 1.8% q/q thanks to lower administrative expenses and depreciation Staff expenses, m +0.5% 2,047 2,047 2,057 Costs, m -1.8% 1Q14 4Q14 1Q15 3,236 3,311 3,251 Other administrative expenses(1), m -5.4% 973 1,025 970 1Q14
Slide 25: Core Bank – Key strategic pillars
Core bank – Key strategic pillars Execution is ongoing… Transform commercial bank(1) Invest in Growth business Global platforms Direct Costs, m Revenues CEE&Poland(2), m Revenues CIB incl. shadow(3), m -33 +74 +107 (-2.2%) (+5.5%) (+6.5%) 1,472 1,439 1,335 1,409 1,641 1,748 1Q14 1Q15 1Q14 1Q15 1Q14
Slide 26: Core Bank – Loan loss provisions
Core Bank – Loan loss provisions LLP down q/q, with CoR at 53bp decreasing across most divisions Divisional breakdown – 1Q15 cost of risk, bp Loan loss provisions, m q/q y/y -24.8% CB Italy 85 -16bp 0bp 759 CB Germany 12 0bp +5bp 571 523 CB Austria 23 -12bp -17bp Poland 47 -1bp -9bp CEE 120 -22bp +1
Slide 27: Core Bank – CEE performance
Core Bank – CEE performance Balanced contribution to operating performance across countries in CEE. South Eastern Europe and Central Europe gaining share within the division Turkey(1), (2) - NOP, m const. FX South Eastern Europe(2), (3) - NOP, m const. FX +26.1% +20.5% +174.7% -34.4% 135 182 145 89
Slide 28: Core Bank – UniCredit Bank Russia
Core Bank – UniCredit Bank Russia Resilient business with positive performance in 1Q15 confirms that UCG is better positioned than peers to weather a harsh environment Q/Q Q/Q Y/Y Y/Y €, m 1Q14 4Q14 1Q15 curr. FX const. FX curr. FX const. FX Revenues 195 133 166 +25.4% +35.5% -14.7% +25.9% o/w net i
Slide 29: Agenda
Agenda Group Core Bank Non Core Annex 29 UniCredit Group - INTERNAL USE ONLY -
Slide 30: Non Core – Gross customer loans
Non Core – Gross customer loans Gross loans further down by 3bn in 1Q15 (-11bn y/y) due to the ongoing UCCMB disposal and continued de-risking Gross customer loans, bn €, m 1Q14 4Q14 1Q15 Q/Q Y/Y Revenues 107 73 64 -12.4% -40.0% -11bn Costs 174 121 167 +38.2% -4.2% 83.2 -3bn LLP 315 938 409 -56.4% +
Slide 31: Non Core – Asset quality
Non Core – Asset quality Impaired loans decreased both q/q and y/y. Gross impaired loans y/y confirm downward trend, driven by continued reduction of other impaired Gross impaired loans(1), bn Gross bad loans (sofferenze)(1), bn -3.4% -3.5% 57.0 56.8 54.9 35.5 37.6 36.3 Net 26.7 26.8 26.5 Net 13.0 1
Slide 32: Concluding remarks
Concluding remarks Group net profit at 512m, with a sound performance of the Core bank and Non Core portfolio, despite additional charges related to the SRF, translating into a RoTE of 4.8% Core bank showed continued progress in earnings generation as a result of an increase in core revenues, co
Slide 33: Agenda
Agenda Group Core Bank Non Core Annex 33 UniCredit Group - INTERNAL USE ONLY -
Slide 34: New classifications of impaired loans
New classifications of impaired loans Substantially equivalent perimeter between EBA's Non Performing Exposures (NPE) and Banca d'Italia. Sub classifications have been revised Old Not impaired Impaired loans(1) NPL Past Due Doubtful Restructured (Sofferenze) Bad loans Unlikely to pay New Not impaire
Slide 35: Italy – Asset quality breakdown
Italy – Asset quality breakdown Gross impaired down also thank UCCMB deal. Other gross impaired continued downward trend Gross bad loans (Sofferenze), bn +5.6% +10.2% 36.5 36.8 39.5 38.6 33.1 Gross impaired loans, bn(1) Net -0.5% bad loans 14.0 13.0 13.4 14.6 14.7 +9.5% Dec-12 Dec-13 Mar-14 Dec-14 M
Slide 36: Italian total perimeter
Italian total perimeter(1) Italian businesses delivered a positive result in 1q15, supported by a strong operating performance more than offsetting the mild increase in NHR costs Net interest, m Fees, m -1.3% +7.2% 1,322 1,314 1,304 1,127 1,051 1,010 1Q14 4Q14 1Q15 1Q14 4Q14 1Q15 Costs, m Net profit
Slide 37: Core Bank – Non-operating items
Core Bank – Non-operating items Systemic charges include contributions to Deposit Guarantee Scheme (DGS), Single Resolution Fund and bank levies for a total of 210m. Tax rate at 31% Non-operating items bridge, m -210 -41 -1 -5 - c.90m for SRF related to FY15(1) -504 - c.55m for DGS - c.65m for other
Slide 38: Group – Leverage ratio
Group – Leverage ratio Basel 3 leverage ratio fully loaded at 4.5%, among the best in Europe. Leverage ratio trans. at 4.7%, embedding a further phase-in of 40% for 2015 Basel 3 leverage ratio fully loaded(1) Basel 3 leverage ratio(1) Fully loaded 2014 Basel 3 2015 Basel 3 Transitional 2014 Basel 3
Slide 39: Group – Asset quality
Group – Asset quality All regions confirm a sound asset quality position Italy Core Italy Non Core Germany 7.8 8.3 8.7 57.0 55.7 56.5 56.8 54.9 6.1 6.4 6.0 6.3 6.2 6.5 7.1 Gross impaired loans (bn) Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Mar-14 Jun-14 Sep-14 Dec-14 Mar-
Slide 40: Group – P&L and volumes
Group – P&L and volumes Net profit of 512m in 1q15, improving thanks to all P&L lines Euro (m) 1Q14 2Q14 3Q14 4Q14 1Q15 ∆ % vs. ∆ % vs. 4Q14 1Q14 Total Revenues 5,588 5,798 5,561 5,604 5,749 +2.6% ▲ +2.9% ▲ Operating Costs -3,410 -3,336 -3,328 -3,432 -3,418 -0.4% ▼ +0.2% ▲ Gross Operating Profit 2,1
Slide 41: Core Bank – P&L and volumes
Core Bank – P&L and volumes Confirmed positive dynamics underpinned by operating profitability and lower cost of risk Euro (m) 1Q14 2Q14 3Q14 4Q14 1Q15 ∆ % vs. ∆ % vs. 4Q14 1Q14 Total Revenues 5,481 5,686 5,476 5,531 5,685 +2.8% ▲ +3.7% ▲ Operating Costs -3,236 -3,188 -3,183 -3,311 -3,251 -1.8% ▼ +0
Slide 42: Commercial Bank Italy – P&L and volumes
Commercial Bank Italy – P&L and volumes Positive progression thanks to sound earnings generation Euro (m) 1Q14 2Q14 3Q14 4Q14 1Q15 ∆ % vs. ∆ % vs. 4Q14 1Q14 Total Revenues 2,132 2,165 2,047 2,063 2,203 +6.8% ▲ +3.3% ▲ Operating Costs -1,055 -1,009 -991 -1,055 -1,059 +0.4% ▲ +0.3% ▲ Gross Operating P
Slide 43: Commercial Bank Germany – P&L and volumes
Commercial Bank Germany – P&L and volumes Positive progression of operating profitability and cost of risk. Lower net profit after capital gain of DAB booked in 4Q14 Euro (m) 1Q14 2Q14 3Q14 4Q14 1Q15 ∆ % vs. ∆ % vs. 4Q14 1Q14 Total Revenues 692 674 637 637 645 +1.2% ▲ -6.9% ▼ Operating Costs -511 -4
Slide 44: Commercial Bank Austria – P&L and volumes
Commercial Bank Austria – P&L and volumes Management actions in place deliver cost reduction to mitigate weak top line. Cost of risk confirmed the high quality of the loan book Euro (m) 1Q14 2Q14 3Q14 4Q14 1Q15 ∆ % vs. ∆ % vs. 4Q14 1Q14 Total Revenues 394 440 376 410 301 -26.6% ▼ -23.6% ▼ Operating
Slide 45: Poland – P&L and volumes
Poland – P&L and volumes Operational excellence mitigating lower quarterly trend of revenues Euro (m) 1Q14 2Q14 3Q14 4Q14 1Q15 ∆ % vs. ∆ % vs. 4Q14 1Q14 Total Revenues 431 448 450 440 433 -2.1% ▼ +0.6% ▲ Operating Costs -200 -203 -202 -194 -190 -2.1% ▼ -4.8% ▼ Gross Operating Profit 230 245 248 246
Slide 46: CEE – P&L and volumes
CEE – P&L and volumes Geographical diversification delivered positive quarterly progression of net profit underpinned by improved operating profitability and lower cost of risk Euro (m) 1Q14 2Q14 3Q14 4Q14 1Q15 ∆ % vs. ∆ % vs. 4Q14 1Q14 Total Revenues 904 1,005 1,090 923 976 +9.1% ▲ +16.5% ▲ Operati
Slide 47: CIB – P&L and volumes
CIB – P&L and volumes Net profit affected by costs, partially mitigated by higher revenues and improved LLP Euro (m) 1Q14 2Q14 3Q14 4Q14 1Q15 ∆ % vs. ∆ % vs. 4Q14 1Q14 Total Revenues 991 905 814 1,037 1,058 +2.0% ▲ +6.7% ▲ Operating Costs -435 -410 -414 -391 -443 +13.2% ▲ +1.7% ▲ Gross Operating Pro
Slide 48: Asset Gathering (Fineco) – P&L and volumes
Asset Gathering (Fineco) – P&L and volumes Solid and sustainable results with a double digit growth q/q and y/y. Revenues up and net sales at record high level Euro (m) 1Q14 2Q14 3Q14 4Q14 1Q15 ∆ % vs. ∆ % vs. 4Q14 1Q14 Total Revenues 113 113 107 118 137 +16.1% ▲ +20.9% ▲ Operating Costs -52 -55 -51
Slide 49: Asset Management – P&L and volumes
Asset Management – P&L and volumes Net profit strongly up q/q thanks to revenues more than offsetting costs. TFA materially up with Pioneer posting highest net sales ever Euro (m) 1Q14 2Q14 3Q14 4Q14 1Q15 ∆ % vs. ∆ % vs. 4Q14 1Q14 Total Revenues 185 191 199 217 227 +4.9% ▲ +22.5% ▲ Operating Costs -
Slide 50: Non Core – P&L and volumes
Non Core – P&L and volumes Loss at 364m in 1q15, improving q/q with lower cost of risk more than offsetting lower gross operating profit Euro (m) 1Q14 2Q14 3Q14 4Q14 1Q15 ∆ % vs. ∆ % vs. 4Q14 1Q14 Total Revenues 107 112 85 73 64 -12.4% ▼ -40.0% ▼ Operating Costs -174 -148 -145 -121 -167 +38.2% ▲ -4.