Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — Q1 2022 Earnings Presentation
42 slides from Banco Bpm Spa's earnings presentation, May 5, 2022
Slide 1: Q1 2022 Group Results Presentation
Q1 2022 Group Results Presentation 05 May 2022
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 ▪ With regard to the reclassified statement of financial position, please note that some comparative balances have been reclassified compared to what had been originally published, in order to reflect the changes in layout and preparation criteria introduced by update 7 of Circu
Slide 4: Agenda
Agenda 1 Executive Summary 5 2 Key Highlights 13 3 Q1 2022 Performance Details 23 4
Slide 5: Executive Summary
Executive Summary 1
Slide 6: Profitability at record level, with the highest quarterly profit since the merger
Profitability at record level, with the highest quarterly Profit from continuing operations since the merger1 Improving risk profile, coupled with sound capital position Excellent results achieved in a challenging environment Robust Healthy growth Further improvement Sound Profitability in volumes i
Slide 7: Key P&L items: Net income at €178m and PPI at €561m
Key P&L items: Net income at €178m and PPI at €561m, boosted by strong growth in revenues and the lowest LLPs ever Total Revenues Operating Costs Pre-provision Income €m €m +16.0% +5.2% -3.0% +9.1% Flat +21.5% 1,128 1,087 1,186 561 644 625 625 484 462 Q1 21 Q4 21 Q1 22 Q1 21 Q4 21 Q1 22 o/w: Core C/
Slide 8: Solid commercial performance, in line with the Strategic Plan trajectory
Solid commercial performance, in line with the Strategic Plan trajectory New Lending1 AUM Placements1 2021 quarterly average: 2021 quarterly average: €5.7bn €4.5bn 5.8 5.8 6.7 >6.5 ~4.9 5.4 4.5 4.0 Q1 21 Q4 21 Q1 22 2024 Target Q1 21 Q4 21 Q1 22 2024 Target Quarterly Quarterly Average Average Core N
Slide 9: Further progress in new digital-driven distribution model
Further progress in new digital-driven distribution model Digital adoption KPI Q1 2022 key initiatives and figures SME Smart Lending 82% 84% 73% 77% Strong growth in • Launch of Fully Digital Customer Journey 28% 29% remote-based 33% for SME «smart» loans 34% business: First PILOT initiative targeti
Slide 10: Asset Quality KPIs: Already overperforming the Strategic Plan Target for 2024
Asset Quality KPIs: Already overperforming the Strategic Plan Target for 2024 Derisking target for a total of >€1bn in H1 2022 confirmed NPE stock down by €3.1bn, to €5.6bn: -35.8% Y/Y Project Argo GBV, € bn 8.7 Disposal of ~€0.7bn of NPE (GBV) for a total of >400 positions: 6.4 6.3 ~6.0 5.6 • 50% B
Slide 11: Strong liquidity and funding position
Strong liquidity and funding position Main Liquidity & Funding indicators at a glance LCR >190% 209% 206% >180% >165% • NSFR >100%, in line with the Strategic Plan 2021-2024 target • Liquidity1 at €44.0bn 31/12/16 31/12/19 31/12/20 31/12/21 31/03/22 Bond issuance activities in the period January-Apr
Slide 12: Bancassurance business model evolution
Bancassurance business model evolution Acceleration in a key pillar of our Strategic Plan 2021-2024 Strategic Plan – base case: Strategic Plan – optionalities: Internalization of the Insurance business New partnerships • Acquisition of 100% of the existing • Multiple expressions of interest Bancassu
Slide 13: Key Highlights
Key Highlights 2
Slide 14: Q1 2022: excellent results achieved in a complex environment
Q1 2022: excellent results achieved in a complex environment P&L €m Q1 2021 Q4 2021 Q1 2022 Chg. Q/Q Chg. Y/Y Net interest income 497 506 512 +0.4% Q/Q Adj. Pre-provision income at €561m excl. €42.1m one-off Net fee and commission 471 486 480 (+22% Q/Q and +16% Y/Y) driven by: in the Income from Inc
Slide 15: Net interest income: solid performance in Q1 2022
Net interest income: solid performance in Q1 2022 Net interest income €m +3.0% • NII strong in Q1 22, considering the negative day effect in Q1 22 (ca. -€11m) and -€5.8m one-off in Q4 211 +1.1% 496.8 506.0 511.5 • Solid perfomance Q/Q driven by following dynamics: • positive contribution from Commer
Slide 16: Fees & Commissions: sound yearly progression despite a worsening macro
Fees & Commissions: sound yearly progression despite a worsening macro Fees & Commissions trend Q1 2022 monthly trend €m -1.2% Y/Y €m 471.4 485.8 480.1 176.7 +1.8% 157.4 146.0 225.5 79.4 83.6 239.1 +6.0% 239.0 -0.1% 75.9 78.0 70.1 93.0 232.3 260.3 -7.4% 241.1 +3.8% Jan - 22 Feb - 22 Mar -22 Q1 21 Q4
Slide 17: Operating costs: long-term downward trend confirmed
Operating costs: long-term downward trend confirmed Total Operating Costs Y/Y €m 624.7 624.7 643.9 -3.0% 217.0 210.7 216.8 Other -0.1% Staff Costs 426.9 413.9 407.9 -4.5% Q1 21 Q4 21 Q1 22 C/I 57.1% 57.5% 52.7% Headcount Evolution Retail Network Streamlining # Down by 1,303 vs 31/12/20, mainly in re
Slide 18: Cost of Risk reduction consistent with solid credit profile
Cost of Risk reduction consistent with solid credit profile LLPs Cost of Risk (bps) Migration rates €m Q1 22 2024 -30.4% Core at FY 19 FY 20 FY 21 (annualised) Target 55bps1 -29.4% Default rate 1.2% 1.0% 1.0% 0.8% 1.0% 217.1 214.0 81 (from Performing To NPEs) 151.1 54 48 Danger rate 11.1% 7.5% 9.3%
Slide 19: NPE evolution in Q1 2022
NPE evolution in Q1 2022 Another significant step ahead in derisking: NPE stock down to €5.6bn post Argo transaction NPE Stock down by €3.1bn Y/Y, o/w: ~€800m in Q1 2022 Coverage ratios • Strong coverage ratios in all NPE categories, especially GBV in € bn considering the weight of the secured compo
Slide 20: Optimization of Debt securities portfolio
Optimization of Debt securities portfolio Reduction in the share of Italian Govies & increase of the AC component Debt securities portfolio € bn 32.9 33.9 34.5 Other Colonna1 31.6 30.2 31.2 30.7 ITALIAN GOVIES: categories 0.5 2.4 2.1 1.1 2.9 2.3 2.1 1.1 (pre-IFRS9) 10.4 11.8 • Representing 48.9% of
Slide 21: Solid capital position
Solid capital position Robust capital buffers, with unchanged SREP requirements for 2022 Fully Loaded CET1 Ratio: evolution Fully Loaded Capital Position 14.0% % % Phased-in 31/03/2021 31/12/2021 31/03/2022 12.7 13.4 +32bps -18bps -11bps -31bps 13.1 TIER 1 ratio 14.3 15.1 15.3 2 TC ratio 16.8 18.2 1
Slide 22: Final remarks and 2022 Outlook
Final remarks and 2022 Outlook FURTHER STRENGTHENING IN THE GROUP’S PROFITABILITY • Net profit at €178m in Q1 2022 (vs. €100m in Q1 2021) • Healthy growth in Revenues: +5.2% Y/Y and +9.1% Q/Q - Positive outlook backed by strong NII sensitivity to interest rate hikes • Solid pre-provision operating p
Slide 23: Q1 2022 Performance Details
Q1 2022 Performance Details 3
Slide 24: Quarterly P&L results
Quarterly P&L results Reclassified income statement (€m) Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Chg. Q/Q Chg. Q/Q % Net interest income 496.8 522.4 516.4 506.0 511.5 5.5 1.1% Income (loss) from invest. in associates carried at equity 41.5 56.5 46.8 87.1 49.6 -37.4 -43.0% Net interest, dividend and similar in
Slide 25: P&L: Q1 2022 stated and adjusted comparison
P&L: Q1 2022 stated and adjusted comparison Q1 2022 Reclassified income statement (€m) Q1 2022 One-off Non-recurring items adjusted Net interest income 511.5 511.5 0.0 Income (loss) from invest. in associates carried at equity 49.6 49.6 0.0 Net interest, dividend and similar income 561.2 561.2 0.0 N
Slide 26: Net financial result, reserves & unrealised gains
Net financial result, reserves & unrealised gains NFR trend €m 128 100 -1 Q1 21 Q4 21 Q1 22 Reserves of debt securities at FVOCI Unrealised gains on debt securities at AC Pre-tax, in € m Pre-tax, in € m Not included Included in the P&L neither in the 89 68 results, but P&L results, -236 included in
Slide 27: Reclassified Balance Sheet as at 31/03/2022
Reclassified Balance Reclassified assets (€ m) 31/03/21 31/12/21 31/03/22 Chg. y/y Value % Chg. q/q Value % Cash and cash equivalents 11,362 29,153 32,077 20,715 182.3% 2,923 10.0% Sheet as at 31/03/2022 Loans and advances measured at AC - Loans and advances to banks 126,756 121,261 119,218 16,610 1
Slide 28: New lending at €6.7bn in Q1 2022
New lending at €6.7bn in Q1 2022 +15.7% Y/Y and + 14.9% Q/Q New lending1: trend and composition Management data € bn • New lending to Households substantially 6.3 6.7 5.8 5.8 stable on a quarterly basis and +6.5% Y/Y 1.1 4.8 1.1 1.0 1.1 • Strong performance of new lending to Households 0.9 5.6 Enter
Slide 29: Direct funding
Direct funding Direct customer funding1 (without Repos) € bn +4.8% +2.4% 120.3 123.2 126.1 Capital-protected Certificates Other Bonds 100.4 104.0 106.0 +€5.6bn Y/Y Time deposits +€2.0bn in Q1 C/A & Sight deposits (83.4%) (84.5%) (84.0%) (% Share on total) 31/03/2021 31/12/2021 31/03/2022 31/03/21 31
Slide 30: Bond maturities: limited and manageable amounts
Bond maturities: limited and manageable amounts Institutional bond maturities Retail bond maturities € bn € bn €1.86bn reimbursed in Q1 2022 2.00 1.91 1.50 1.40 0.50 0.50 0.50 0.51 0.0 0.0 Apr. - Dec. 2022 FY 2023 FY 2024 Apr. - Dec. 2022 FY 2023 FY 2024 Senior Pref. Subordinated Covered Bonds 1 Sen
Slide 31: Liability profile: Bonds outstanding and issues
Figures as at 31/03/2022 do Liability profile: Bonds outstanding and issues not include the €300m AT1 issued in April 2022 Bonds Outstanding as at 31/03/2022 Nominal amounts Senior Preferred 15.4% Senior Cap.-Protected 4.0% Non-preferred 19.9% Certificates Subordinated €18.5bn 21.6% €4.0bn, o/w: €0.
Slide 32: Indirect customer funding at €95.6bn
Indirect customer funding at €95.6bn Assets under Management (AuM) Assets under Custody (AuC)1 € bn € bn +3.2% -1.9% -3.2% 65.3 63.3 -4.2% 61.3 4.1 4.1 4.0 33.7 15.5 15.5 32.9 32.3 14.9 42.3 45.8 43.8 31/03/2021 31/12/2021 31/03/2022 31/03/2021 31/12/2021 31/03/2022 Funds & Sicav Bancassurance Manag
Slide 33: Focus on Govies portfolio
Focus on Govies portfolio Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn € bn € bn -17.2% -63.9% -42.2% +10.3% +34.5% 13.7 11.4 +9.6% 10.3 6.4 1.4 1.7 2.3 0.7 0.8 31/03/21 31/12/21 31/03/22 31/03/21 31/12/21 31/03/22 31/03/21 31/12/21 31/03/22 Non-Italian Govies at AC Non-
Slide 34: Solid liquidity position: LCR at 206% & NSFR >100%
Solid liquidity position: LCR at 206% & NSFR >100% as at 31/03/2022 Cash + Unencumbered Assets1 € bn Further liquid assets: ~€2.3bn HQLA lent2 44.2 44.0 Eligible Assets 37.6 3.1 3.9 8.9 5.1 €6.2bn average amount in Q1 2022 Excess ECB deposits 19.9 31.0 €28.9bn average Depo Facilities (O/N) with ECB
Slide 35: Net Customer Loans
Net Customer Loans Satisfactory increase in Performing Loans Net Customer Loans1 € bn Change +0.7% Net Performing Customer Loans 31/03/21 31/12/21 31/03/22 In % y/y In % q/q Core customer loans 99.2 99.5 101.3 2.1% 1.9% +1.4% - Mortgages 75.4 77.3 78.2 3.7% 1.2% 110.1 109.4 110.9 - Current Accounts
Slide 36: Analysis of Performing loan portfolio
Analysis of Performing loan portfolio Performing customer loan breakdown as at 31/03/2022 Staging evolution of Performing Loans Management GBV in € bn Other (Public Sector, 108.2 data, GBV 106.3 106.6 No-Profit, etc.) GACS Senior Notes 9.1% 11.0% 10.7% 5.8% 2.0% Financials 1 8.9% €108.2bn 31/03/21 3
Slide 37: Asset Quality details
Asset Quality details Gross exposures 31/03/2021 31/12/2021 31/03/2022 Chg. y/y Chg. q/q Loans to Customers at AC €/m and % Value % Value % Bad Loans 3,575 2,190 2,226 -1,349 -37.7% 35 1.6% UTP 4,958 4,126 3,974 -984 -19.8% -152 -3.7% Past Due 146 60 53 -93 -63.7% -7 -11.4% NPE 8,678 6,376 6,252 -2,
Slide 38: NPE flows
NPE flows Positive migration trends confirmed Inflows from Performing to NPEs Outflows from NPEs to Perf. Loans Flows from UTP to Bad Loans €m €m €m -36.0% +126.7% +1.3% 332 43 102 103 213 110 19 222 -4.3% Q1 2021 Q1 2022 Q1 2021 Q1 2022 Q1 2021 Q1 2022 Impact from New DoD FTA 3. Q1 2022 Performance
Slide 39: Capital position in detail
Capital position in detail PHASED I N CAPI TAL PHASED I N 31/03/2021 31/12/2021 31/03/2022 POSI TI ON (€/m and %) RWA COMPOSI TI ON 31/03/2021 31/12/2021 31/03/2022 CET 1 Capital 9,388 9,387 9,011 (€/bn) T1 Capital 10,565 10,564 10,104 CREDI T & COUNTERPARTY Total Capital 12,275 12,524 12,545 57.7 5
Slide 40: Strong development of digital banking
Strong development of digital banking Digital adoption: ongoing growth Banking APP Users & % of Remote-based transaction (of which Mobile) # Customers enrolled in Digital Identity customer reviews1 Q1 2021 82% (16%) Q1 2021 28,851 Q4 2021 83% (17%) Q4 2021 386,234 INDIVIDUAL CLIENTS Q1 2022 84% (19%
Slide 41: Key recent steps in our Sustainable strategy path
Key recent steps in our Sustainable strategy path €750m Green Covered Bonds, issued in March 2022 CDP score assigned for 2021: A- under the €10bn Public CB programme (BPM Covered Bond 2) (vs. B assigned for 2020) • The first Green Covered Bond issuance in Italy in 2022 and the second ever for an Ita
Slide 42: 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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