Unicredit S.p.a. · MIL:UCG
Unicredit — Q3 2023 Earnings Presentation
55 slides from Unicredit's earnings presentation, Oct 24, 2023
Slide 1: UniCredit Unlocked
UniCredit Unlocked Continuing to deliver quality profitable growth while investing for the future Milan, 24 October 2023
Slide 2: The Bank for Europe's future
The Bank for Europe’s future A new benchmark for banking leveraging our unique pan-European model A VISION OF BANKING EXCELLENCE … We build everything around our Clients, offering them value-added Group products and a unique gateway to Europe We empower and trust our People to create value for our c
Slide 3: 3Q23: delivering quality profitable growth, investing for the future
3Q23: delivering quality profitable growth, investing for the future A further milestone towards becoming the Bank for Europe’s future We continue to We continue to We have only deliver … re-invest … just started … 3Q23: YET ANOTHER STRONG QUARTER PROPELLED BY INVESTMENTS TO SECURE A RUN-RATE THAT F
Slide 4: 3Q23: Yet another strong quarter of quality profitable growth
WE CONTINUE TO DELIVER … 3Q23: Yet another strong quarter of quality profitable growth
Slide 5: Another quarter of quality profitable growth
WE CONTINUE TO DELIVER … Another quarter of quality profitable growth 11th consecutive quarter of effectively balancing our three levers to deliver sustainable quality profitable growth, underpinning current and future distributions KEY METRICS 9M23 HIGHLIGHTS ACROSS OUR 3 LEVERS In million Net Reve
Slide 6: Local excellence powered by our pan-European franchise
WE CONTINUE TO DELIVER … Local excellence powered by our pan-European franchise Benefitting from outstanding performance in each region Connecting European clients ITALY GERMANY CENTRAL EUROPE EASTERN EUROPE PROFIT BEFORE TAX 4.3bn 2.0bn 1.8bn 1.3bn 9M/9M + 44% + 42% 68% + +78% NET REVENUE 7.8bn +23
Slide 7: Quality growth as priority with our best-in-class factories
WE CONTINUE TO DELIVER … Quality growth as priority with our best-in-class factories 7.6 REVENUE, Enhancing our product factories and capitalising on scale and scope, to deliver best-in-class products bn −1% 9M/9M (excl. Russia +2%) CORPORATE PAYMENTS INDIVIDUAL Group Trade & Group Funds & Brokerage
Slide 8: We are setting an unparalleled standard across all key metrics
WE CONTINUE TO DELIVER … We are setting an unparalleled standard across all key metrics Generating positive jaws Accelerating from laggards … GROSS REVENUE to best-in-class across all our levers2 120 300 QUALITY REVENUE GROWTH PROFITABILITY 110 200 # 1 Net Revenue growth #2 Net Profit growth signifi
Slide 9: Robust balance sheet through our sustainable and proactive approach
WE CONTINUE TO DELIVER … Robust balance sheet through our sustainable and proactive approach A trusted and reliable organisation, with a robust balance sheet BEST-IN-CLASS CAPITAL POSITION STRONG LIQUIDITY RATIOS HIGH QUALITY CREDIT PORTFOLIO Continuously growing CET1r while distributing Better liqu
Slide 10: We continue delivering outstanding shareholder value generation
WE CONTINUE TO DELIVER … We continue delivering outstanding shareholder value generation CONTINUING TO IMPROVE OUR PROFITABILITY IMPROVING ON A PER SHARE BASIS DELIVERING ON OUR COMMITMENT Confirming strong rote trajectory and Progressive cash dividends and share buybacks Attractive and consistent l
Slide 11: Revenues up +24% Y/Y on robust net interest income and trading
WE CONTINUE TO DELIVER … Revenues up +24% Y/Y on robust net interest income and trading REVENUE, bn EVOLUTION BY ITEM, bn 9M/9M Y/Y Q/Q 3.4 3.5 3.6 Net + 22% + 24% Flat 2.3 2.5 2.5 3.3 Interest +27%1 +25%1 17.9 5.9 6.0 6.0 5.7 2.0 2.0 1.9 1.9 1.8 1.9 14.6 5.0 4.8 4.8 1.8 Fees 0.7 0.6 0.6 0.6 0.4 0.5
Slide 12: Continued quality net interest income growth
WE CONTINUE TO DELIVER … Continued quality net interest income growth Avg Euribor 3M: +41bps Q/Q, +329bps Y/Y NET INTEREST, bn 3Q23: 3.78%; 2Q23: 3.36%; 3Q22: 0.49% >13.7bn 9M/9M Y/Y Q/Q FY23 guidance update MAIN DRIVERS + 43% + 45% + 3% ASSUMPTIONS SENSITIVITY Avg deposits Avg deposits +52%3 pass t
Slide 13: Resilient fees year-to-date despite macro headwinds
WE CONTINUE TO DELIVER … Resilient fees year-to-date despite macro headwinds 214 AuM 194 195 200 194 194 195 197 195 STOCK FEE1, 9M/9M Y/Y Q/Q bn − 3% − 5% − 7% Stable2 -1%3 CHANGE BY FEE CATEGORIES 2.0 2.0 5.8 5.7 1.9 1.9 1.9 1.8 1.8 Q/Q Y/Y 0.8 0.7 -5% +4% 0.7 0.6 0.7 0.6 0.6 INVESTMENT 0.5 0.4 0.
Slide 14: Operational excellence absorbing investing and offsetting inflation
WE CONTINUE TO DELIVER … Operational excellence absorbing investing and offsetting inflation 48% 49% 49% COST / 39% 47% ACHIEVING COST EXCELLENCE VIA 43% INCOME 39% 39% 39% TARGETED COST REDUCTIONS RATIO WHILE RE-INVESTING FOR GROWTH COSTS, 9M/9M Y/Y Q/Q bn − 1% UniCredit footprint − 2% Flat 110 Pee
Slide 15: Transformed and strong asset quality
WE CONTINUE TO DELIVER … Transformed and strong asset quality 31bps Group excl. Russia Expected loss on stock slightly down at 38bps. Future CoR further protected by stable overlays at 1.75bn, Last 11 quarters prove a structurally lower and Expected loss on new business at 26bps i.e. c.40bps and 48%
Slide 16: Excellent capital generation continues
WE CONTINUE TO DELIVER … Excellent capital generation continues MDA BUFFER 689bps 1 746bps 2 +2.3bn Net Profit: +79bps RWA: +35bps -0.8bn Cash dividend: -27bps Mainly capital -0.1bn AT1 & Cashes coupon: -2bps +113bps reserves & others +1bps 17.19% 16.64% 16.33% 3.3bn 16.00% -29bps -13bps -17bps shar
Slide 17: Propelled by investments to secure and boost profitability tomorrow
WE CONTINUE TO RE-INVEST … Propelled by investments to secure and boost profitability tomorrow
Slide 18: Continuing to invest to ensure future success
CONTINUING TO INVEST TO ENSURE FUTURE SUCCESS Laid the foundations to sustain our leadership position 11 consecutive quarters of quality growth have positioned us as profitability leaders today … achieved in parallel with significant investments to secure and propel profitability tomorrow While rein
Slide 19: Investment in products to further boost fees when rates normalise
CONTINUING TO INVEST TO ENSURE FUTURE SUCCESS Investment in products to further boost fees when rates normalise € ADDITIONAL YEARLY FEE € BASE AT RUN-RATE Growth supported by increased funds offering that € € ASSET MANAGEMENT retains higher share of value chain leveraging on products developed by in
Slide 20: Asset Management: Group scale, local reach and partners
CONTINUING TO INVEST TO ENSURE FUTURE SUCCESS Asset Management: Group scale, local reach and partners AN INSPIRING VISION A CLEAR STRATEGY DELIVERING ON THE PLAN Advising clients to 1 Comprehensive product coverage Developed internal AM capabilities, achieve their Re-building strong in-house Asset M
Slide 21: Insurance: a core product
CONTINUING TO INVEST TO ENSURE FUTURE SUCCESS Insurance: a core product AN INSPIRING VISION A CLEAR STRATEGY DELIVERING ON THE PLAN Insurance as a core product seamlessly integrated in our 1 Simple model Life: internalisation planned for 2025 focusing on unit-linked Non-Life: continue to simplify pa
Slide 22: Payments: unlocking the full potential
CONTINUING TO INVEST TO ENSURE FUTURE SUCCESS Payments: unlocking the full potential AN INSPIRING VISION A CLEAR STRATEGY DELIVERING ON THE PLAN Every European client’s first choice for payments 1 Global product excellence Develop end-to-end products and value-added services tailored to meet the div
Slide 23: Corporates: upgrading our solutions
CONTINUING TO INVEST TO ENSURE FUTURE SUCCESS Corporates: upgrading our solutions AN INSPIRING VISION A CLEAR STRATEGY DELIVERING ON THE PLAN Empowering corporates to progress 1 Leverage local coverage and our Group-wide Scale and Scope advantage Manufacturing centrally, optimized coverage to encoun
Slide 24: Alpha Bank and UniCredit: a long-term partnership
CONTINUING TO INVEST TO ENSURE FUTURE SUCCESS Alpha Bank and UniCredit: a long-term partnership Strategic long-term partnership Fully in line with our guiding M&A principles and underscoring quality of in Greece with Alpha Bank our factories, boosting the ability to grow quality revenue through 3rd
Slide 25: Investing in our People to create value for our Clients
CONTINUING TO INVEST TO ENSURE FUTURE SUCCESS Investing in our People to create value for our Clients € € Investing and empowering our people and franchise 1 € SERVICE MODEL € € −30% vs - 24% in ‘22 >1,000 since 2021 physical branches refurbished Unified Structures, delayering the Segmentation organ
Slide 26: Buddybank R-Evolution: a complementary way to live UniCredit
CONTINUING TO INVEST TO ENSURE FUTURE SUCCESS Buddybank R-Evolution: a complementary way to live UniCredit € Buddybank Since 2018 € € Buddy R-Evolution: € unmatched flexibility across all channels Live 1Q24 € INTEGRATED • Mobile Concierge via chat available 24/7 • Remote branch and personal advisors
Slide 27: Digital: embarking on the next level of our transformation plan
CONTINUING TO INVEST TO ENSURE FUTURE SUCCESS Digital: embarking on the next level of our transformation plan € PHASE II 2023 and BEYOND € € First pillar Second pillar Third pillar € € PHASE I 2021 to TODAY INFRASTRUCTURE DATA & AI PEOPLE & TALENT & ARCHITECTURE KEY ACHIEVEMENTS Transition to a mode
Slide 28: Exceeding our ESG and related commitments
CONTINUING TO INVEST TO ENSURE FUTURE SUCCESS Exceeding our ESG and related commitments € CLIENTS SOCIAL EDUCATION ACCOUNTABILITY € Advancing to €7.8bn social UniCredit Foundation ESG representation at operationalise our financing1,4 via total investments of Group Executive Committee € Net Zero 2030
Slide 29: A run-rate that few can match
WE HAVE ONLY JUST STARTED … A run-rate that few can match
Slide 30: Quality profitable growth and investments defining a sustainable run-rate
SUSTAINABLE PROFITABILITY Quality profitable growth and investments defining a sustainable run-rate Quality profitable Strong earnings and distribution progression, while investing more growth positioning than our peers to secure future profitability us as leaders FY212 FY22 FY23E NET PROFIT COMPARA
Slide 31: Updated Guidance and Confident Outlook
SUSTAINABLE PROFITABILITY Updated Guidance and Confident Outlook FY23 guidance FY24 guidance Net Revenue >22.2bn NII Potential reduction from increased pass through affecting NII for the whole sector, particularly Italy, and lower expected contribution from Russia o/w Net Interest >13.7bn Replicatin
Slide 32: Annex
Annex
Slide 33: Italy 9M: quarter by quarter delivering a sustainable growth
DELIVERING QUALITY PROFITABLE GROWTH Italy 9M: quarter by quarter delivering a sustainable growth ✓ Gross revenue: +25% ✓ NII: +67% thanks to a favorable interest rate environment combined with pass through active management and Loans spread stabilizing notwithstanding market pressure 7.8 ✓ Fees: −6
Slide 34: Germany: self-funded client-centric transformation
DELIVERING QUALITY PROFITABLE GROWTH Germany: self-funded client-centric transformation ✓ Gross revenue: +14% ✓ NII: +9% Commercial NII +45% backed by limited pass-through, partly compensated by higher funding costs on markets positions, resulting in higher trading 2.0 bn NET REVENUE 4.1 bn Net reve
Slide 35: CE: High Capital return boosted by Revenues and controlled costs
DELIVERING QUALITY PROFITABLE GROWTH CE: High Capital return boosted by Revenues and controlled costs ✓ Gross revenue: +31% ✓ NII: +44% positive dynamics reflecting the active management of pricing of assets and liabilities 3.2 ✓ Fees: −3% as the positive trend of transactional and financing fees do
Slide 36: EE: Strong top line growth and record profitability
DELIVERING QUALITY PROFITABLE GROWTH EE: Strong top line growth and record profitability, driven by all countries ✓ Gross revenue: +33% ✓ NII: +50% positive rate dynamics with solid commercial growth 1.9 ✓ Fees: +2% driven by Transactional and Financing fees with franchise less exposed to 1.3 NET in
Slide 37: Updated base case macro scenario
ANNEX Updated base case macro scenario EUROZONE UNICREDIT FOOTPRINT Scenarios 2023-2024-2025 Scenarios 2023-2024-2025 Group Group excl. Russia BASE CASE BASE CASE BASE CASE MACRO MACRO MACRO SCENARIO SCENARIO SCENARIO 2023 5.6 0.5 2023 6.8 0.4 7.0 0.0 Inflation,% Inflation,% ◼ GDP growth, % 2024
Slide 38: Group P&L and selected metrics
ANNEX Group P&L and selected metrics All figures in bn Unless otherwise stated 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 9M22 9M23 Revenue 5.0 4.8 4.8 5.7 5.9 6.0 6.0 14.6 17.9 o/w Net interest income 2.3 2.5 2.5 3.4 3.3 3.5 3.6 7.3 10.4 o/w Fees 2.0 1.9 1.9 1.8 2.0 1.9 1.8 5.8 5.7 Costs -2.3 -2.4 -2.4 -2.
Slide 39: Russia exposure details
ANNEX Russia exposure details RESIDUAL2 As of Sep-23 GROSS GROSS EXTREME LOSS NET EXTREME IMPACT FROM LOSS MAX EXPOSURE ASSESSMENT1 EXTREME LOSS ASSESSMENT1 ASSESSMENT1 CET1r impact bn bn bps bn bps Participation value lower Q/Q due to Ruble depreciation Participation -2.5 3 -2.5 3 -14 4 -2.53 -14 4
Slide 40: Balance Sheet
ANNEX Balance Sheet 3Q23 balance sheet: 826bn €bn Other Assets 39 23 Other liabilities 40 Financial liabilities & hedging liabilities Financial Assets at Amortised Cost 84 63 Equity and equity instruments Cash and cash balances 87 93 Debt securities issued 41 Repos Financial Assets at Fair Value 124
Slide 41: Liquidity profile
ANNEX Liquidity profile LOANS / DEPOSITS1 WELL BELOW 100% DEPOSIT MIX: >80% IN RETAIL AND SME CLIENTS • Granular, behaviourally sticky, transactional accounts Deposits1 - EOP 492 480 472 466 467 469 • >55% guaranteed3 at Group level; average retail balance4 <20k/€ (c.70% guaranteed3) Corporates2 212
Slide 42: Deposit details
ANNEX Deposit details Deposits from customers 469bn 3Q23 avg commercial vs 2Q23 Customer deposits (Net of repos and IC - EoP) (-1% Q/Q) deposits, bn rates 3Q23 (vs 2Q23) Italy Italy 188 -2% -0.45% Germany (-8bps) By Central Europe region Eastern Europe -1.40% Russia Germany 130 -2% (-29bps) Central
Slide 43: Loan details
ANNEX Loan details Loans to customers (Net of repos and IC - EoP) 416bn 3Q23 avg gross commercial performing loans, bn vs 2Q23 Gross customer performing loan rates 3Q23 (-2% Q/Q) (vs 2Q23) Italy Italy 155 4.41% Germany -3% (+39bps) By Central Europe region Eastern Europe 3.71% Russia Germany 112 -0%
Slide 44: Total Financial Assets
ANNEX Total Financial Assets Quarterly evolution, bn TFAs1 quarterly split by item, bn 15 12 10 10 10 195bn -1% +1% 8 8 AuM stable 3Q23 Q/Q Y/Y Q/Q 740 726 720 742 749 760 758 AuM 214 200 194 194 195 197 195 AuC 171bn 3Q23 -1% +24% Q/Q Y/Y 151 142 138 152 163 173 171 AuC 384 387 396 390 390 391 391b
Slide 45: Asset quality details
ANNEX Asset quality details Gross NPE ratio 3.8% 2.9% 2.9% 2.7% 2.7% 2.6% 2.7% Net NPE ratio 1.9% 1.5% 1.5% 1.4% 1.4% 1.4% 1.4% Total gross NPE 17.8 Gross past due 0.8 4.8 13.9 13.8 Gross bad loans 0.8 0.8 12.5 12.6 12.1 12.0 0.9 0.8 0.8 0.8 3.4 3.3 2.6 2.7 2.9 2.9 Reduction Q/Q mainly 12.2 9.8 9.7
Slide 46: Spill-over analysis confirming soundness of Group risk profile
ANNEX Spill-over analysis confirming soundness of Group risk profile A ENTERPRISES B INDIVIDUALS 426bn Group 28% 47% 4% 21% EaD1 Energy intensive sectors Other Enterprises Consumer Mortgages Corporates & SMEs belonging to energy intensive sectors, before bottom-up Corporates & SMEs not belonging to
Slide 47: Focus on Commercial Real Estate (CRE) portfolio
ANNEX Focus on Commercial Real Estate (CRE) portfolio CRE vs total loans in line or below market1 in Italy, Germany and Austria; volume stable over recent years with declining gross NPE at c.4% CRE portfolio as of 2Q23 Split by Region, bn Split by asset class, bn Portfolio towards clients operating
Slide 48: Group gross loans breakdown by stages
ANNEX Group gross loans breakdown by stages Stage 3 Group gross loans1 and provisions EoP, bn 2.9% 2.7% 2.7% 2.6% 2.7% o/w Gross NPE (% of gross loans) Stage 3 3Q22 4Q22 1Q23 2Q23 3Q23 474 467 14 465 462 Coverage 50.4% 48.2% 48.5% 47.9% 48.1% Stage 3 ratio 13 13 12 448 12 Stage 2 102 86 78 78 Includ
Slide 49: RWA details
ANNEX RWA details RWA walk, bn Group -9% -2% 9M/9M Q/Q o/w o/w 320 -0.4bn from securitisation -2.9bn from Credit Risk 290 295 +1.4 -0.3bn from Market Risk -2.2 -0.1 -0.5 290 -3.2 9M22 9M23 2Q23 Active portfolio Regulatory PD FX effects Business 3Q23 management impacts (Probability dynamics of Defaul
Slide 50: End notes
End notes
Slide 51: Disclaimer
END NOTES Disclaimer This presentation may contain “forward-looking statements” which includes all statements Canada or Japan or any other jurisdiction where such an offer or solicitation would be that do not relate solely to historical or current facts and which are therefore inherently unlawful (t
Slide 52: Information related to this presentation (1/4)
END NOTES Information related to this presentation (1/4) General notes End notes are an integral part of this presentation All data throughout the documents are in Euros Numbers throughout the presentation may not add up precisely to the totals provided in tables and text due to rounding Russia incl
Slide 53: Information related to this presentation (2/4)
END NOTES Information related to this presentation (2/4) Main definitions “Allocated capital” calculated as 13.0% of RWA plus deductions “Clients” means those clients that made at least one transaction in the last three months “Cost of risk” based on reclassified P&L and Balance sheet, calculated as
Slide 54: Information related to this presentation (3/4)
END NOTES Information related to this presentation (3/4) Main definitions “HQLA” High-Quality Liquid Assets - assets, which can be easily and immediately converted into cash at little or no loss of value even in periods of severe idiosyncratic and market stress. These assets are unencumbered, which
Slide 55: Information related to this presentation (4/4)
END NOTES Information related to this presentation (4/4) Main definitions “RoAC” annualized ratio between (i) Net profit after AT1/Cashes minus excess capital charge (where applicable) and (ii) allocated capital, both as defined above “RoTE” means (i) Net profit after AT1/Cashes – as defined above,