Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — FY 2023 Earnings Presentation
43 slides from Banco Bpm Spa's earnings presentation, Feb 8, 2024
Slide 1: Group FY 2023 Results Presentation
Group FY 2023 Results Presentation 08 February 2024
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 questions and answers session and any written or oral material discussed following the distribution of this document. The distrib
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 11 3 Final Remarks 24 4 FY 2023 Performance Details 27 4
Slide 5: Executive Summary
Executive Summary 1
Slide 6: FY 2023: a powerful kickstart of our Strategic Plan journey
FY 2023: a powerful kickstart of our Strategic Plan journey OUTPERFORMANCE OF OUR P&L GUIDANCE ALLOWS A SUBSTANTIAL STEP-UP IN SHAREHOLDER REMUNERATION 2023 NET INCOME: +85% Y/Y SHAREHOLDER DISTRIBUTION €m 2023 ROTE1 €m 1,264 12.4% +143% 848 >1,200 685 Y/Y ~750 (7.0% in 2022) 348 ~€100M ABOVE GUIDAN
Slide 7: Significant growth in profitability: a major step forward to Strategic Plan targets
Significant growth in profitability: a major step forward to Strategic Plan targets FY 2023 PERFORMANCE: KEY DRIVERS BETTER THAN GUIDANCE €m STRATEGIC PLAN 2023-26 ~€90m STRATEGIC PLAN €m ABOVE GUIDANCE €120M 2023-26 ABOVE GUIDANCE 5,339 ~5,250 ~€5.45bn 2,770 ~€2.75bn 4,359 PRE- ~2,650 CORE 2,144 RE
Slide 8: Well-diversified business model ready to be deployed
Well-diversified business model ready to be deployed REVENUES FROM KEY PRODUCT FACTORIES1 KEY PRODUCT FACTORIES: SIGNIFICANT FURTHER VALUE TO BE EXTRACTED €m CONFIRMED Asset STRATEGIC PLAN MAIN SHAREHOLDER of top independent Italian AM player €924m pro-forma including Mgmt. 2023-26 Vera Vita «fully
Slide 9: Steady improvement in asset quality: NPEs and LLPs at record lows
Steady improvement in asset quality: NPEs and LLPs at record lows A SUCCESSFUL TURNAROUND STORY DRIVEN WELL ON TRACK FOR 2026 BY €34.9BN DERISKING STRATEGIC PLAN TARGET 81 Cost of Risk (bps) €700m new NPE disposal target by 2026, 62 with Cost or Risk already frontloaded Gross NPE ratios 53 5.6% (mos
Slide 10: Strong capital base and sound liquidity & funding position
Strong capital base and sound liquidity & funding position CET1 RATIO: EVOLUTION MDA BUFFER @ 542 BPS SIGNIFICANT 14.2% ~14% 13.4% 12.8% CAPITAL ▪ Solid CET 1 ratio at YE 2023, above guidance, after including GENERATION the significant increase in payout (67% vs. 50% in 2022) ▪ Strong contribution f
Slide 11: Key Highlights
Key Highlights 2
Slide 12: P&L at a glance: FY 2023 Net Income almost doubled Y/Y
P&L at a glance: FY 2023 Net Income almost doubled Y/Y P&L HIGHLIGHTS Q4: QUARTERLY EVOLUTION €m +71% €m FY 22 FY 23 Chg. Y/Y Q4 22 Q3 23 Q4 23 Chg. Q/Q 724 868 Net interest income 2,314 3,289 42.1% 724 869 868 -0.1% NET INTEREST 506 Net fees and commissions 1,887 1,860 -1.4% 447 460 452 -1.8% INCOM
Slide 13: NII at €3,289m: above FY 2023 Guidance
NII at €3,289m: above FY 2023 Guidance Y/Y trend Quarterly trend €m +42.1% €m +19.8% 3,289 ~3.25bn stable 2,314 868 869 724 FY 22 FY 23 FY 23 Q4 22 Q3 23 Q4 23 Guidance Commercial spread: +147bps Y/Y and +9bps Q/Q Quarterly average, Commercial spread 4.02 4.32 4.41 2.94 3.57 in % Overall current rat
Slide 14: NII outlook: mitigating actions confirm key Strategic Plan targets
NII outlook: available mitigating actions allow to confirm key Strategic Plan targets even in a scenario of accelerated Interest Rate reduction Effect of an accelerated Potential impact Strategic Plan: main elements on 2026 gross Revenues Interest Rate reduction BEFORE MITIGATING ACTIONS -€170m NII
Slide 15: Solid franchise value: total customer funding +€11bn YTD
Solid franchise value: total customer funding +€11bn YTD Analysis of total customer funding1 € bn POSITIVE TREND IN VOLUME EFFECT1, DRIVEN BY AUC 205.4 210.3 (AUM & AUC net flows + Δ stock of Deposits & Certificates) 199.3 4.3 5.3 4.6 4.9 € bn 3.2 31.9 39.7 44.2 59.4 FY 2022 FY 2023 60.3 62.0 HIGH-V
Slide 16: Low-risk loan portfolio, highly secured, well positioned
Low-risk loan portfolio, highly secured, well positioned ANALYSIS OF “CORE” PERFORMING CUSTOMER LOANS AS AT 31/12/20231 GBV Non-Financial 58% SHARE OF SECURED EXPOSURE: Breakdown by geographic area Households Corporates 28.7% • 31% with State Guarantees 59.2% 75.2% • 27% Collateralised €97.3bn o/w:
Slide 17: Resilient trend in fees
Resilient trend in fees Commercial Banking fees Total Net Fees & Commissions -1.0% €m 1,887 1,860 +3% Y/Y adjusted for cancellation 248 251 246 of fees on extra liquidity and higher Commercial cost on synthetic securitisations 995 +0.1% 996 Q4 22 Q3 23 Q4 23 Banking fees Management, Management, Inte
Slide 18: Strict cost control: Cost/Income down at 48% in FY 23
Strict cost control: Cost/Income down at 48% in FY 23 (54% in FY 22) Staff costs Incl. €50m impact from €m 462 new Labour 405 402 401 Contract Banking business costs1 €m +1.3% 2,524 2,558 D&A 279 247 Q1 23 Q2 23 Q3 23 Q4 23 644 641 Other Administrative Expenses Other administrative expenses & D&A St
Slide 19: Prudent provisioning policy with strong NPE coverage and improving migration rates
Prudent provisioning policy with strong NPE coverage and improving migration rates Gross NPEs: -21% Y/Y and -4% Q/Q Migration rates well under control Stock €4.8bn FY 22 FY 23 Steadily €3.9bn €3.8bn <1% since LLPs & CoR UTP + PD 2.7 Default rate (from Performing to NPEs) 0.94% 0.93% 9M 2021 2.3 2.1
Slide 20: Optimization and diversification of Debt securities portfolio
Optimization and diversification of Debt securities portfolio Overall trend and accounting breakdown Composition by counterparty € bn € bn 31/12/16 31/12/22 30/09/23 31/12/23 36.7 36.5 34.9 5.1 5.8 6.1 Other 31.6 0.3 0.4 0.5 Corporate 4.7 categories 0.5 9.9 2.9 9.1 10.4 Govies 26.9 29.8 31.0 30.4 (p
Slide 21: Reserves of debt securities at FVOCI and Net Financial Result
Reserves of debt securities at FVOCI and Net Financial Result Very low sensitivity of debt securities portfolio at FVOCI confirmed Reserves of debt securities at FVOCI1 Breakdown of Net Financial Result Post-tax €m €m Total NFR -34.1 -8.4 -22.8 -13.8 31/12/22 30/09/23 31/12/23 Other NFR components 1
Slide 22: Solid liquidity & funding position, with ratios well above minimum requirements
Solid liquidity & funding position, with ratios well above minimum requirements To be gradually reduced already in 2024 Cash + Unencumbered Assets1 €bn LCR 209% 191% 187% 40.4 41.9 38.7 0.6 Cash 0.7 0.5 HQLA2 €41.0bn €33.8bn €34.1bn Depo facility with ECB 12.2 16.6 17.4 LIQUIDITY Eligible securities
Slide 23: Strong capital generation driving increase in CET1 ratio to 14.2%
Strong capital generation driving increase in CET1 ratio to 14.2% Significantly strengthened ratios and buffers +245bps -176bps +125bps -141bps +39bps +30bps +11bps 14.2 12.8 CET 1 ratio % 31/12/22 FY 2023 Dividends FVOCI Debt Synthetic Bancassurance Regulatory Other 31/12/23 2 performance & Reserve
Slide 24: Final Remarks
Final Remarks 3
Slide 25: A very strong 2023, improving shareholder remuneration and confirming 2024 guidance
A very strong 2023, allowing to improve shareholder remuneration and confirm our 2024 Net Income guidance 2023: WELL ABOVE NET INCOME GUIDANCE 2024 OUTLOOK: WITH A SIZEABLE REMUNERATION EPS GUIDANCE AND INTERIM DIVIDEND CONFIRMED €m NET INCOME DIVIDENDS: +€500M Y/Y • Increase in Pre-Provision Income
Slide 26: Banco BPM 2023-2026 – a solid success story
Banco BPM 2023-2026 – a solid success story A very strong start of a truly promising journey FY 2023 Results 2023-26 Strategic Plan targets KEY FINANCIAL above Guidance TARGETS (€bn) 2023G 2023A 2026E €bn Ca. 6 Total revenues ~5.25 5.34 ~5.4 3X Ca. 2.1 NET INCOME Operating costs ~2.6 2.57 ~2.7 2019-
Slide 27: FY 2023 Performance Details
FY 2023 Performance Details 4
Slide 28: P&L: annual comparison
RESTATED P&L: annual comparison Chg. Y/Y Reclassified income statement (€m) FY 22 FY 23 % Net interest income 2,314.4 3,289.2 42.1% Income (loss) from invest. in associates carried at equity 136.0 144.1 6.0% Net interest, dividend and similar income 2,450.4 3,433.3 40.1% Net fee and commission incom
Slide 29: P&L: quarterly comparison
P&L: quarterly comparison RESTATED Reclassified income statement (€m) Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Chg. Q/Q Chg. Q/Q % Net interest income 511.5 527.6 551.3 724.0 743.0 809.9 868.7 867.7 -1.0 -0.1% Income (loss) from invest. in associates carried at equity 42.4 15.7 39.5 38.4 36.3
Slide 30: Balance Sheet
Reclassified assets (€ m) Restated Chg. Y/Y Chg. Q/Q Balance Sheet Cash and cash equivalents 31/12/22 30/09/23 31/12/23 13,131 17,617 18,297 Value 5,167 % 39.3% Value 681 % 3.9% Loans and advances measured at AC 113,633 111,926 109,568 -4,064 -3.6% -2,357 -2.1% - Loans and advances to banks 4,178 3,
Slide 31: Focus on Govies portfolio
Focus on Govies portfolio Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn € bn € bn -4.8% +21.8% n.s. -7.2% -15.7% 9.2 9.4 8.7 +24.0% 2.5 2.1 1.7 0.1 0.1 0.02 31/12/22 30/09/23 31/12/23 31/12/22 30/09/23 31/12/23 31/12/22 30/09/23 31/12/23 Non-Italian Govies at AC Non-Itali
Slide 32: Direct funding from the Banking business
Direct funding from the Banking business Direct funding1 € bn 124.5 124.8 Capital-protected Certificates 123.4 Other Bonds 103.7 100.5 98.8 C/A, Sight & Time deposits (84.0%) (80.7%) (79.2%) (% Share on total) 31/12/2022 30/09/2023 31/12/2023 31/12/22 30/09/23 31/12/23 % chg. Y/Y % chg. Q/Q C/A & Si
Slide 33: Successful issuance activity and well diversified liability profile
Successful issuance activity and well diversified liability profile Wholesale bonds issued since 20221 • Wholesale bonds €bn issued for a total of €3.8bn in 2023 (vs. 0.75 0.75 0.75 0.75 0.75 0.75 0.75 €2.75bn in 2022), 0.40 0.50 0.50 0.50 o/w: 39% green and 0.30 0.30 0.30 13% social Jan-22 Mar-22 A
Slide 34: Bond maturities: limited and manageable amounts
Bond maturities: limited and manageable amounts Institutional bond maturities1 € bn 3.25 2.40 2.0 0.75 0.5 0.75 0.50 1.15 0.5 FY 2024 FY 2025 FY 2026 Senior Pref. Senior Non-Pref. Covered Bonds • The Group faces rather limited amounts of bond maturities in the senior space, with the bulk of maturiti
Slide 35: Indirect customer funding up at €106.2bn: +16.2% Y/Y
Indirect customer funding up at €106.2bn: +16.2%Y/Y Assets under Management (AuM) Assets under Custody (AuC)1 € bn € bn +4.4% +38.4% +2.9% +11.2% 59.4 60.3 62.0 4.2 4.4 44.2 4.0 39.7 15.5 15.7 15.7 31.9 39.9 40.4 41.9 31/12/2022 30/09/2023 31/12/2023 31/12/2022 30/09/2023 31/12/2023 Funds & Sicav Ba
Slide 36: Net Customer Loans
Net Customer Loans Net Customer Loans € bn -3.7% Change Net Performing Customer Loans 31/12/22 30/09/23 31/12/23 In % Y/Y In % Q/Q -2.4% Core customer loans 102,8 99,1 96,9 -5,7% -2,2% 109.5 108.0 105.4 - Medium/Long-Term loans 80,4 78,6 77,1 -4,1% -2,0% 2.4 2.0 - Current Accounts 8,4 7,6 7,5 -11,0%
Slide 37: 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 Low-Medium Exposure (GBV) Perf. loans rating classes Not Rated 7% risk €7.5bn 72% Construction of buildings1
Slide 38: Asset Quality details
Asset Quality details Loans to Customers at AC1 Gross exposures 31/12/2022 30/09/2023 31/12/2023 Chg. Y/Y Chg. Q/Q €/m and % Value % Value % Bad Loans 2.047 1.630 1.601 -446 -21,8% -29 -1,8% UTP 2.639 2.169 2.056 -584 -22,1% -114 -5,2% Past Due 82 91 93 11 13,7% 2 2,6% NPE 4.769 3.891 3.751 -1.018 -
Slide 39: NPE migration dynamics
NPE migration dynamics €m 978 979 Inflows from 231 260 202 286 Performing to NPEs FY 2022 FY 2023 Q1 23 Q2 23 Q3 23 Q4 23 €m 147 139 Outflows from NPEs 42 38 22 37 to Perf. Loans FY 2022 FY 2023 Q1 23 Q2 23 Q3 23 Q4 23 €m 416 Flows from UTP to Bad 271 102 84 46 38 Loans FY 2022 FY 2023 Q1 23 Q2 23 Q
Slide 40: Capital position in detail
Capital position in detail FULLY LOADED CAPI TAL 31/12/2022 31/03/2023 30/06/2023 30/09/2023 31/12/2023 POSI TI ON (€/m and %) Restated1 CET 1 Capital 7,686 8,076 8,386 8,381 9,036 T1 Capital 9,076 9,466 9,776 9,771 10,425 Total Capital 10,800 11,192 11,484 11,510 12,125 RWA 59,859 59,514 58,859 58,
Slide 41: Sustainability achievements: 2023 state-of-the-art
Sustainability achievements: 2023 state-of-the-art ENVIRONMENT SOCIAL GOVERNANCE 2022 2023 2022 2023 • >#164K hours of ESG training courses to Net Scope 1 & 2 Share of women in employees in 2023 Carbon 26.1% 29.7% emissions Market-based -54.3% managerial positions Neutral • Sustainability Committee
Slide 42: Successfully continuing our digitalization path
Successfully continuing our digitalization path DIGITAL BANKING KPI FY 2023 INITIATIVES IN DIGITAL # BRANCH AND APP-BASED TRANSACTIONS (M) ▪ Increase of products and services available for remote selling/signature Branch-based APP-based (e.g. POS; main SME lending products) 40 29 33 26 24 23 23 23 ▪
Slide 43: Contacts for Investors and Financial Analysts
Contacts for Investors and Financial Analysts Banco BPM 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 investor.relations@bancobpm.it Carmine
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