UniCredit S.p.A. · MIL:UCG
UniCredit — Debt Investor Presentation (October 2017)
35 slides from UniCredit's debt investor presentation, Oct 4, 2017
Slide 1: UniCredit Italian Financials Debt Conference
UniCredit Italian Financials Debt Conference Mirko Bianchi, UniCredit Group CFO Milan 4th October, 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 UniCredit at a glance 2 Transform 2019 update 3 2Q17 P&L results 4 Asset quality 5 NPE evolution in the Italian banking sector 6 Capital position 7 Funding & Liquidity 8 Concluding remarks 3
Slide 4: UniCredit: a Pan European Commercial Bank with inherent competitive advantages
UniCredit: a Pan European Commercial Bank with inherent competitive advantages 1 2 3 4 5 6 7 8 UniCredit at a glance 25.5 million clients(1) Commercial Banking model delivering unique Western, Central and Eastern 79% revenues from Commercial European network to extensive Retail and Corporate client
Slide 5: Strong competitive advantage across countries and products
Strong competitive advantage across countries and products 1 2 3 4 5 6 7 8 UniCredit at a glance Strong local "Go to" bank for European "Mittelstand" Best-in-class Commercial Bank Corporates CIB product provider # clients, m(1) Rank by assets in Loans to corporates in EU zone, €bn(3) EMEA rankings(5
Slide 6: Transform 2019 update
Agenda 1 UniCredit at a glance 2 Transform 2019 update 3 2Q17 P&L results 4 Asset quality 5 NPE evolution in the Italian banking sector 6 Capital position 7 Funding & Liquidity 8 Concluding remarks 6
Slide 7: UniCredit key targets
UniCredit key targets 1 2 3 4 5 6 7 8 Transform 2019 update 2015 2Q17 1H17 2017 2019 Revenues(1) €19.9bn €4.9bn €9.7bn €20.4bn Cost/income 61.6% 58.9% 59.3% <52% Cost €12.2bn €2.9bn €5.7bn €11.7bn €10.6bn Cost of Risk 89bps 50bps 55bps 65bps 49bps Net income €1.5bn €945m €1.9bn €4.7bn RoTE(2) 4% 8.2
Slide 8: Transform 2019 execution on track, delivering tangible results (1/2)
Transform 2019 execution on track, delivering tangible results (1/2) 1 2 3 4 5 6 7 8 Transform 2019 update 5 Strategic Pillars Achieved 2019 Target Significantly strengthened capital position STRENGTHEN with a solid fully loaded CET1 ratio at 12.80% • Bold actions taken: disposals of AND OPTIMIZE
Slide 9: Transform 2019 execution on track, delivering tangible results (2/2)
Transform 2019 execution on track, delivering tangible results (2/2) 1 2 3 4 5 6 7 8 Transform 2019 update 5 Strategic Pillars Achieved 2019 Target • Transformation of operating model to a c.6,000 FTEs reduction since Dec-15, 42% of €1.7 bn net cost savings TRANSFORM sustainable lower cost structu
Slide 10: 2Q17 P&L results
Agenda 1 UniCredit at a glance 2 Transform 2019 update 3 2Q17 P&L results 4 Asset quality 5 NPE evolution in the Italian banking sector 6 Capital position 7 Funding & Liquidity 8 Concluding remarks 10
Slide 11: Group – Net profit in 2Q17 supported by strong fee generation, cost containment and risk discipline
Group – Net profit in 2Q17 supported by strong fee generation, cost containment and risk discipline 1 2 3 4 5 6 7 8 2Q17 P&L results Data in m ∆ % vs. ∆ % vs. ∆ % vs. Key drivers 2Q16 1Q17 2Q17 1Q17 2Q16 1H16 1H17 1H16 Total revenues 5,262 4,833 4,855 +0.4% -7.8% 9,937 9,688 -2.5% • Net interest in
Slide 12: Group – Resilient recurring revenues underpinned by solid NII and strong fee generation
Group – Resilient recurring revenues underpinned by solid NII and strong fee generation 1 2 3 4 5 6 7 8 2Q17 P&L results Net Interest(1), m Fees & commissions proforma(4), m +6.3% -1.6% -0.7% +7.9% 3,433 Average 3,231 5,301 5,216 Euribor 3M +3.4% 1.3% 1,284 1,444 -0.33% 2,670 2,652 1,600 1,705 1,727
Slide 13: Group – Trading income in 2Q17 above normalized level
Group – Trading income in 2Q17 above normalized level benefitting from customer driven activities. Turkey resilient and other dividends up Q/Q 1 2 3 4 5 6 7 8 2Q17 P&L results Trading income, m Dividends(2), m Client driven Other dividends and Turkey (at equity) Other trading equity investments -12.
Slide 14: Group – 4,543 FTE reduction and branch closures Y/Y supporting lower costs
Group – 4,543 FTE reduction and 398 branch closures Y/Y supporting lower costs 1 2 3 4 5 6 7 8 2Q17 P&L results Costs, m FTEs Branches(2) -3.6% -4,543 -398 -4.2% 5,958 5,744 -1,135 Q/Q -154 Q/Q -1.0% 99,831 96,423 5,507 95,288 5,263 5,109 2,982 2,886 2,858 CEE 24,236 24,177 24,224 +0.2% CEE 1,875 1,
Slide 15: Group – LLPs at 564m in 2Q17, with low cost of risk at 50bp
Group – LLPs at 564m in 2Q17, with low cost of risk at 50bp. Revised guidance of cost of risk to low 60s bp for 2017 1 2 3 4 5 6 7 8 2Q17 P&L results Main drivers Loan loss provisions, m • LLPs at 564m in 2Q17 resulting in a low cost of risk of -24.9% 50bp. Guidance of cost of risk for 2017 revised
Slide 16: Asset quality
Agenda 1 UniCredit at a glance 2 Transform 2019 update 3 2Q17 P&L results 4 Asset quality 5 NPE evolution in the Italian banking sector 6 Capital position 7 Funding & Liquidity 8 Concluding remarks 16
Slide 17: Non Core - Gross NPE breakdown by origination date
Non Core - Gross NPE breakdown by origination date 1 2 3 4 5 6 7 8 Asset quality Non Core – Gross NPEs stock by origination date as of 1Q2017, bn 16% 66% 18% 31.1 1.0 0.3 0.6 0.6 1.0 0.7 1.6 2.0 2.0 5.0 5.0 4.0 2.4 4.8 Older 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 1Q17 Total NPE
Slide 18: Clear plan of actions for the Non Core run-down
Clear plan of actions for the Non Core run-down: Our proactive disposal process is on track. In particular FINO majority stake sold in July and starting of phase 2 in 2H17 1 2 3 4 5 6 7 8 Asset quality Non Core evolution, bn Actions of Non Core run down, bn -€37.2(1) by 2019 1H17 Gross loans, €bn -€
Slide 19: Group – Asset quality further improved in the quarter with lower NPE
Group – Asset quality further improved in the quarter with lower NPE, improved NPE ratios and strengthened coverage ratios 1 2 3 4 5 6 7 8 Asset quality Non performing exposures, bn o.w. Gross bad loans, bn -43.1% -40.80% -40.2% 50.1 -29.2% 29.9 28.5 74.8 Net bad 19.3 10.0 <10.5 loans 53.0 Sep-16 Ju
Slide 20: NPE evolution in the Italian banking sector
Agenda 1 UniCredit at a glance 2 Transform 2019 update 3 2Q17 P&L results 4 Asset quality 5 NPE evolution in the Italian banking sector 6 Capital position 7 Funding & Liquidity 8 Concluding remarks 20
Slide 21: NPE stock showing first signals of decrease after 2015 peak
NPE stock showing first signals of decrease after 2015 peak 1 2 3 4 5 6 7 8 NPE evolution in the Italian banking Sector Gross NPE/ Loans to Customer (%) bn Gross Bad Loans/ Loans to Customer (%) % Bad Loans (€Bn) 400 20 Unlikely to pay (€Bn) 350 360 349 350 319 Past Due (€Bn) 300 261 15 250 220 197
Slide 22: 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 6 7 8 NPE evolution in the Italian banking Sector 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.
Slide 23: 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 6 7 8 NPE evolution in the Italian banking Sector 6.3% 5.5% 4.8% 4.5% 3.8% 4.1% 3.8% 3.2% 3.4% 2.9% 3.1% 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E Source: Bain, average of top 15 Itali
Slide 24: Capital position
Agenda 1 UniCredit at a glance 2 Transform 2019 update 3 2Q17 P&L results 4 Asset quality 5 NPE evolution in the Italian banking sector 6 Capital position 7 Funding & Liquidity 8 Concluding remarks 24
Slide 25: Group – Transitional ratios well above MDA levels
Group – Transitional ratios well above MDA levels 1 2 3 4 5 6 7 8 Capital position CET1 transitional Tier 1 transitional Total capital transitional MDA as of Jun-17 @8.77% MDA as of Jun-17 @10.27% MDA as of Jun-17 @12.27% +2.0pp +1.7pp 17.25% +1.2pp 14.31% 15.20% T2 2.95% 12.65% 12.93% AT1 1.37% 11.
Slide 26: Solid CET1 ratio FL at 12.8% up by 135bp q/q
Solid CET1 ratio FL at 12.8% up by 135bp q/q mainly thanks to Pekao disposal, earning generation and RWA dynamics. Target leverage ratio at 5.6% in 2019 1 2 3 4 5 6 7 8 Capital position CET1 capital fully loaded(1) as of Jun-17, €bn 112.7 €/bn 67.5 74.6 39.7 41.1 41.4 45.2 50.1 36.6 39.2 23.2 24.9 P
Slide 27: Funding & Liquidity
Agenda 1 UniCredit at a glance 2 Transform 2019 update 3 2Q17 P&L results 4 Asset quality 5 NPE evolution in the Italian banking sector 6 Capital position 7 Funding & Liquidity 8 Concluding remarks 27
Slide 28: Well diversified and centrally coordinated funding and liquidity profile
Well diversified and centrally coordinated funding and liquidity profile 1 2 3 4 5 6 7 8 Funding & Liquidity • UniCredit SpA is operating as the Group Holding as well as the Italian operating bank: TLAC issuer assuming Single-Point-of-Entry (SPE) Coordinated Group-wide funding and liquidity mana
Slide 29: Ample Group liquidity buffer
Ample Group liquidity buffer 1 2 3 4 5 6 7 8 Funding & Liquidity Already compliant with key 2Q17 strong liquidity buffer liquidity ratios €bn Additional eligible assets 184 available within 12 months(1) 5 LCR NSFR(2) >100% >100% Cash and Deposits 68 with Central Banks 180 Unencumbered assets (immedi
Slide 30: 2017-2019 Group Funding Plan
2017-2019 Group Funding Plan 1 2 3 4 5 6 7 8 Funding & Liquidity 2017-19 Group Funding Plan 2017-19 Strategy by Product by Country • Very conservative funding plan given the current regulatory uncertainty to mitigate €bn, to be issued over plan period any execution risk TLAC funding plan 22.9 78.7bn
Slide 31: TLAC (Pillar 1 MREL) issuance plan
TLAC (Pillar 1 MREL) issuance plan Over 17% TCR with almost €70 bn of bank capital instruments for 2019 1 2 3 4 5 6 7 8 Funding & Liquidity Funding plan based on conservative case - TLAC compliant Total 26.4bn issuance over 2019 assumed TLAC requirements(1) (Pillar 1 MREL) TLAC building blocks the P
Slide 32: 2017 Medium-Long Term Funding Plan
2017 Medium-Long Term Funding Plan 1 2 3 4 5 6 7 8 Funding & Liquidity 2017 M/L term funding plan by region TLTROII split by region 26.9bn Austria CEE Germany 7.8% 1.9% Italy 49.8% 24.6% 15.9bn Italy 39.1% Germany 28.2% 65.7% Germany 35.7% Italy Austria 3.5% 0.8% Austria CEE(1) 18.5% CEE(1) 24.4% •
Slide 33: Ratings Overview
Ratings Overview 1 2 3 4 5 6 7 8 Funding & Liquidity BBB-/Stable/A3(1) Baa1/Stable/P2(1) BBB/Stable/F2(1) SpA (bbb-)(2) (ba1)(2) (bbb)(2) “….on the right track to improve its capital “...very large capital raising coupled with a “…the planned recapitalisation, sale of non- position and asset q
Slide 34: Concluding remarks
Agenda 1 UniCredit at a glance 2 Transform 2019 update 3 2Q17 P&L results 4 Asset quality 5 NPE evolution in the Italian banking sector 6 Capital position 7 Funding & Liquidity 8 Concluding remarks 34
Slide 35: Concluding remarks
Concluding remarks 1 2 3 4 5 6 7 8 Concluding remarks Transform 2019 execution on track, delivering tangible results Revenues benefitted from strong business focus, with resilient net interest, strong fee generation and trading above normalized level Operating costs reduction confirmed thanks to Tra
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