Unicredit S.p.a. · MIL:UCG
Unicredit — BAML Annual Financials CEO Conference 2017
23 slides from Unicredit's conference presentation, Sep 26, 2017
Slide 1: BAML Annual Financials CEO Conference
BAML Annual Financials CEO Conference Jean Pierre Mustier, CEO of UniCredit Group London 26 September, 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 Transform 2019 update 2 Group Quarterly Highlights 3 NPE evolution in the Italian banking sector 4 UniCredit's NPE strategy 5 Conclusions 3
Slide 4: Transform 2019 achievements in 1H17 (1/2)
Transform 2019 achievements in 1H17 (1/2) 1 2 3 4 5 Transform 2019 update • Pekao disposal successfully completed, resulting in a capital benefit for CET1 ratio fully STRENGTHEN Pekao & Pioneer loaded of 72bp in 2Q17 AND OPTIMIZE disposals finalization • Additional 84bp benefit in 3Q17 from Pioneer
Slide 5: Transform 2019 achievements in 1H17 (2/2)
Transform 2019 achievements in 1H17 (2/2) 1 2 3 4 5 Transform 2019 update • Increased AuM with net sales of c.10bn in 1H17 also thanks to Amundi partnership Strategic partnership • New partnership with Apple Pay, first bank in Italy to allow its 6m cardholders to make payments via app and online wit
Slide 6: Agenda
Agenda 1 Transform 2019 update 2Group Quarterly Highlights 3 NPE evolution in the Italian banking sector 4 UniCredit's NPE strategy 5 Conclusions 6
Slide 7: Group – Net profit at 1.3bn in 2Q17 exc. negative currency effects of Pekao disposal
Group – Net profit at 1.3bn in 2Q17 exc. the negative currency effects of Pekao disposal. Stated net profit at 945m with CEE, CIB and CBK Italy top contributors to Group results 1 2 3 4 5 Group quarterly highlights Stated net profit, m Net profit divisional breakdown 2Q17, m c. 2.2bn RoAC exc. Pekao
Slide 8: 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 Group quarterly highlights Net Interest (1), m Fees & commissions proforma(4), m +6.3% -1.6% -0.7% +7.9% 3,433 Average 3,231 +3.4% 5,301 5,216 Euribor 3M +1.3% 1,444 90m 1,284 -0.33% one-off (3) 1,600 1
Slide 9: 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 Group quarterly highlights 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 1,8
Slide 10: 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 Group quarterly highlights Loan loss provisions, m CoR breakdown, bp q/q y/y -24.9% 66 -36.1% CBK Italy -5bp -4bp 1,644 -15.8% CBK Germany 16 +6bp +19bp 1,235 884 670 564 CB
Slide 11: Group – Solid CET1 ratio fully loaded at 12.80%
Group – Solid CET1 ratio fully loaded at 12.80% 1 2 3 4 5 Group quarterly highlights Fully loaded Common Equity Tier 1 ratio +35bp +2bp +28bp +7bp 12.80% (2) +72bp 11.45% -9bp DBO: +5bp 1.3bn exc. Mainly related to FX: -10bp Pekao disposal 24.8bn lower AFS: +7bp RWA Mar-17 Pekao Net profit 20% divid
Slide 12: Group exc. Non Core – Asset quality further improved in the quarter
Group exc. Non Core – Asset quality further improved in the quarter with lower NPEs and stronger coverage ratio 1 2 3 4 5 Group quarterly highlights Non performing exposures (1), bn Net flows to NPEs, m -6.2% Net flows 983 -4.5% 734 616 24.8 24.4 23.3 Inflows to NPE 1,311 1,501 1,379 Outflows to -57
Slide 13: CBK Italy – Lower NPEs in 2Q17 and gross NPE ratio down to 6.6%
CBK Italy – Lower NPEs in 2Q17 and gross NPE ratio down to 6.6% 1 2 3 4 5 Group quarterly highlights Non performing exposures (1), bn Net flows to NPEs, m +9.7% -4.7% Net flows 478 10.0 9.5 411 378 8.7 Inflows to NPEs 796 672 652 Net NPEs 4.8 4.6 4.5 Outflows to -318 -241 -293 performing 2Q16 1Q17 2
Slide 14: Agenda
Agenda 1 Transform 2019 update 2 Group Quarterly Highlights 3NPE evolution in the Italian banking sector 4 UniCredit's NPE strategy 5 Conclusions 14
Slide 15: 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 NPE evolution in Italy Gross NPE/ Loans to Customer (%) Gross Bad Loans/ Loans to Customer (%) % Bad Loans (€Bn) bn 400 360 20 Unlikely to pay (€Bn) 350 349 350 319 Past Due (€Bn) 300 261 15 250 220 197 210 175 215 195 200 167 141
Slide 16: NPE dynamics show net improvement in default rate and recovery rate
NPE dynamics show net improvement over the last three years in terms of average default rate and recovery rate 1 2 3 4 5 NPE evolution in Italy 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 3.7 2.6 Cure Rate (%)2 5.8 4.
Slide 17: 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 NPE evolution in Italy 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 Italian banks, i.e., ISP, UCG, U
Slide 18: Agenda
Agenda 1 Transform 2019 update 2 Group Quarterly Highlights 3 NPE evolution in the Italian banking sector 4UniCredit's NPE strategy 5 Conclusions 18
Slide 19: De-risking of the balance sheet key to reduce the cost of capital (1/2)
De-risking of the balance sheet key to reduce the cost of capital of the Group... (1/2) 1 2 3 4 5 UniCredit's NPE strategy Comments Group, 1H17 • At end of June 2017, Group NPE Ratio of 11.0%, Gross loans, €bn 33.8 482.2 448.4 143.9 while the lowest of Italian banks, was well above 88.0% EBA average
Slide 20: NPE operational plan with 5 key objectives (2/2)
...supported by a NPE operational plan with 5 key objectives (2/2) 1 2 3 4 5 UniCredit's NPE strategy 5 objectives of NPE operational plan NPE stock reduction Non-core recovery Implement recovery Proactive migration Optimize repossesed by 30bn until 2019 (1) up to 5% in 2019 framework management ass
Slide 21: 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 UniCredit's NPE strategy Non Core evolution, bn Actions of Non Core run down, bn target achieved -€37.2(1) by 2019 in
Slide 22: Agenda
Agenda 1 Transform 2019 update 2 Group Quarterly Highlights 3 NPE evolution in the Italian banking sector 4 UniCredit's NPE strategy 5 Conclusions 22
Slide 23: Concluding remarks
Concluding remarks Active balance sheet de-risking with Transform 2019 on track 1 2 3 4 5 Conclusions 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 O
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