Banca Monte Dei Paschi Di Siena S.p.a. · MIL:BMPS

Banca Monte Dei Paschi Di Siena — FY2019 Earnings Presentation

43 slides from Banca Monte Dei Paschi Di Siena's earnings presentation, Feb 7, 2020

  1. Slide 1: BMPS FY2019 and 4Q19 Preliminary Results

    BMPS FY2019 and 4Q19 Preliminary Results 7 February 2020

  2. Slide 2: Agenda

    Agenda  MPS 2017-2019: a Restructuring and Relaunching Story  FY19 and 4Q19 Results  Details on 4Q19 Results  Focus on Asset Quality 2

  3. Slide 3: Highlights of FY19 Results

    Highlights of FY19 Results Pre-provision profit Cost of risk Net income EUR 934mln Cost of risk at 68bps (in line with FY18) (72bps for FY18) EUR -1,033mln BANKING INDUSTRY Net operating result Default rate: 1.4% (2.1% for FY18) impacted by write-down of recorded DTAs EUR 323mln Danger rate: 8.8% (1

  4. Slide 4: MPS 2017-2019: a deep Restructuring together with a visible Relaunching

    MPS 2017-2019: a deep Restructuring together with a visible Relaunching Targets met … Δ 16-19 YE2016 YE2017 YE2018 YE2019 Transitional CET1 ratio (%) 8.2% 14.8% 13.7% 14.7% c. +650bps ✓ Solid and less volatile capital ratios Counterbalancing capacity ✓ Sound liquidity position, also thanks to (€/bn)

  5. Slide 5: Solid capital ratios: fully-loaded CET1 at 12.7%, well above regulatory requirements

    Solid capital ratios: fully-loaded CET1 at 12.7%, well above regulatory requirements CET1 ratio (%) Buffer Total Capital ratio (%) Buffer c. 460bps c. 370bps 14.7 vs. SREP 17.4 vs. SREP 13.7 15.4 12.7 15.2 11.3 SREP 12.8 SREP 2020: 2020: 13.64% 10.14% 2018 2019 2018 2019 (pro forma figures* Transiti

  6. Slide 6: NPE stock reduced by c. EUR 34bn since 2016; Gross NPE ratio at 12.4%

    NPE stock reduced by c. EUR 34bn since 2016; Gross NPE ratio at 12.4% NPE stock evolution (€/bn) -33.8 45.8 42.9 ✓ 2021 Restructuring Plan target of 12.9% reached two years in advance 16.8 12.0 ✓ Estimated overall impact on book value from c. EUR 9bn NPE disposals*** completed 2016* 2017 2018 2019 i

  7. Slide 7: Direct and Indirect funding: retail market confidence confirmed

    Direct and Indirect funding: retail market confidence confirmed Current accounts and time deposits (€/bn) ✓ Retail market confidence completely restored: 62.0 65.6 current accounts and time deposits continue to 61.9 increase: EUR +3.6bn in 2019 51.1 ✓ Cost of deposits gap vs. the market: 15bps in No

  8. Slide 8: Lending activity: focus on retail and on creditworthy customers

    Lending activity: focus on retail and on creditworthy customers Customer loans (net of Repos and NPEs) (€/bn) Medium & long-term lending – new loans (€/bn)** 10.0 77.5 76.2 78.8 9.3 71.6 7.7 6.7 2016 2017 2018 2019 1.1 1.1 7.4 9.3 Probability of default of new lending (%) 2016 2017 2018 2019 1.25 Lo

  9. Slide 9: Network rationalisation

    Network rationalisation Evolution in total branches (#) Italian banking system -15% Unwinding of foreign network 2,032 -30% 1,745 ✓ Banca Monte Paschi Belgio: sale completed in Jun-19 1,529 ✓ Monte Paschi Banque: orderly winding-down in progress 1,422 ✓ New York, London & Hong Kong branches: unwindi

  10. Slide 10: Return to positive pre-tax income

    Return to positive pre-tax income (€/mln) FY17 FY18 FY19 2019: Net Interest Income 1,788 1,743 1,501 Net Fees 1,577 1,523 1,450  Revenues impacted by lower volumes and spread due to worsening macro and rates scenario Other revenues* 661 21 272  Ongoing strict cost control: operating costs reduced

  11. Slide 11: Sound liquidity position, ahead of future maturities

    Sound liquidity position, ahead of future maturities Counterbalancing Main All liquidity Capacity LCR NSFR liquidity indicators well EUR 24.7bn >150% >100% above requirements indicators (18.7% of total assets) Access to wholesale funding market regained Government Guaranteed Bonds (GGBs): EUR 8bn ma

  12. Slide 12: Focus on innovation and sustainability

    Focus on innovation and sustainability Solid trend of growth and profitability led by innovation and fully integrated human-digital business model  MPS’ permanent start-up lab with a dedicated team reporting directly to the CEO, established after the extraordinary outcome of the first two editions,

  13. Slide 13: Update on Commitments set by DG COMP

    Update on Commitments set by DG COMP  2021 NPE target ratio of 12.9% reached two years in De-risking advance Advertising &  As required by commitments, no State Aid aggressive pricing measures were used for advertising purposes  Full compliance with all Risk Management & Credit Policy and no aggr

  14. Slide 14: Agenda

    Agenda  MPS 2017-2019: a Restructuring and Relaunching Story  FY19 and 4Q19 Results  Details on 4Q19 Results  Focus on Asset Quality 14

  15. Slide 15: 4Q19 and FY19 P&L: highlights

    4Q19 and FY19 P&L: highlights P&L (€/mln) 1Q19 2Q19 3Q19 4Q19 FY19  Pre-provision profit for 4Q19 at EUR 269mln: Net Interest Income 409 404 355 333 1,501 Fees and commissions 359 364 356 371 1,450 ▪ NII impacted by ongoing pressure on lending (lower average volumes and asset spread), reduced contr

  16. Slide 16: Net Interest Income impacted by Restructuring Plan commitments

    Net Interest Income impacted by Restructuring Plan commitments Net interest income (€/mln) Management actions Impacts -242mln (-13.9%) 1,743 EUR -51mln lower contribution Derisking 1,501 from NPEs Unwinding of foreign EUR -15mln (sale of MP Belgio network & winding-down of MP Banque) 2018 2019 Acces

  17. Slide 17: Net Interest Income

    Net Interest Income  Net interest income down by 6% QoQ, mainly impacted by: Net Interest Income (€/mln) ▪ persisting pressure on asset margins ▪ slightly decreased average loan volumes (EUR -0.3bn in the 431 quarter), partly due to NPE disposals 409 404 355 ▪ increased cost of wholesale funding, w

  18. Slide 18: Fee and Commission Income

    Fee and Commission Income 4Q19 FY19 €/mln 3Q19 4Q19 vs. FY18 FY19 vs. Fees (€/mln) 3Q19 FY18 +3.0% Wealth Management fees: 162 164 0.9% 663 637 -3.9% WM Placement 55 53 -4.0% 225 210 -6.7% +4.3% 360 364 371 Continuing 88 89 1.3% 354 347 -1.9% 359 356 Custody 10 9 -11.5% 39 38 -3.8% Protection 9 13 4

  19. Slide 19: Financial Revenues

    Financial Revenues* Dividends/Income from investments (€/mln)  Dividends, similar income and gains (losses) on equity investments include the contribution from the joint venture with 4Q18 1Q19 2Q19 3Q19 4Q19 AXA Dividends/Income from investments 20 16 27 37 15  Trading/disposal/valuation/hedging o

  20. Slide 20: Operating Costs

    Operating Costs  Operating costs for 4Q19 increase by c. EUR 45mln QoQ, but decrease by Operating Costs (€/mln) 6.5% vs. 4Q18. Ongoing cost containment: -2.6% in FY19 vs. FY18 -6.5% ▪ Personnel expenses decrease by 0.6% QoQ and by 2.0% FY19 on FY18, 635 driven by personnel exits (mainly through the

  21. Slide 21: Cost of Risk & Coverage

    Cost of Risk & Coverage Net Loan Loss Provisions (€/mln) Cost of Risk* (bps) 267 242 72 73 68 164 57 53 112 87 FY18 1Q19 1H19 9M19 FY19 4Q18 1Q19 2Q19 3Q19 4Q19 Net impairment losses (including 257 164 88 113 246 financial assets at FVTOCI)  Loan loss provisions for the quarter at EUR 242mln, incre

  22. Slide 22: Asset Quality Migration Matrix

    Asset Quality Migration Matrix NPE Inflows from Performing* (€/bn) NPE Outflows to Performing* (€/bn) Default rate Cure rate 1.4% 10.1% vs. 2.1% FY2018 vs. 7.5% FY2018 0.5 0.6 0.2 0.2 0.1 0.1 0.3 0.3 0.3 0.3 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 Migration from UTPs/PDs to Bad Cash recove

  23. Slide 23: Non-Operating Items and Taxes

    Non-Operating Items and Taxes  Non-operating items at EUR -63mln including: Non-operating items* (€/mln) ▪ EUR -5mln for the additional contribution to the Deposit Guarantee Scheme (DGS) (annual contribution c. EUR -41mln, vs. c. -36mln estimated in 3Q19), offset by the conversion of the Carige sub

  24. Slide 24: Focus on evaluation of DTAs recorded in the balance sheet

    Focus on evaluation of DTAs recorded in the balance sheet Recent exogenous impacts on recorded DTAs In 2018: partial write-back of previously unrecognised DTAs due to increased future taxable income estimates resulting from the (€/bn) 2018 2019 cancellation of the ACE fiscal benefit (2019 Budget Law

  25. Slide 25: Customer Loans

    Customer Loans Loans to Customers (€/bn)  Customer loans down by c. EUR 1.5bn QoQ: 86.9 90.5 89.0 ▪ EUR -0.8bn decrease in current accounts and other non 16.3 15.8 15.6 commercial forms of lending 4.9 4.9 4.6 ▪ EUR -0.7bn reduction in net non-performing loans, due to disposals completed in the quar

  26. Slide 26: Direct Funding and Liquidity

    Direct Funding and Liquidity Direct Funding (€/bn)  Total direct funding up by c. EUR 2bn QoQ 90.5 92.2 94.2 7.3 8.7 8.2 ▪ EUR +0.7bn in current accounts and time deposits, of which 11.1 13.0 14.2 EUR +0.5bn in the retail segment 10.1 5.7 6.2 ▪ EUR +1.2bn for new bonds issued in the quarter (EUR 1b

  27. Slide 27: Wealth Management and Assets Under Custody

    Wealth Management and Assets Under Custody Wealth Management gross inflows* (€/bn)  Wealth Management stock up by EUR 0.7bn, mainly due to 3.0 positive market effect 2.7 2.9 2.6  FY2019 Wealth Management Wealth Management Mix (€/bn) 2.1 gross inflows +EUR 11.3bn, Mutual Funds/Sicav Individual Port

  28. Slide 28: Capital Structure

    Capital Structure (€/bn) 3Q19 4Q19 Phased-in CET1 ratio (%) TBV 9.4 8.1 14.8 14.7 +7bps -3bps -9bps Transitional 8.6 8.6 CET1 Fully loaded 7.3 7.4 CET1* RWAs 58.2 58.6 Sep-19 Pre-tax FVTOCI RWAs Dec-19 2H19 Results Reserves Fully loaded CET1* (%) 12.6 12.7 Including EUR Total Capital (%) 16.7 17.4 0

  29. Slide 29: RWAs improvement thanks to the derisking activity

    RWAs improvement thanks to the derisking activity Total RWAs (€/bn) -7bn 65.5 60.6  Strong reduction since 2016 58.4 58.6 11.5 (c. EUR -7bn) despite c. EUR 12.5 12.0 13.0 +4bn add-on for UTP and bad loan portfolios  RWAs almost stable YoY 54.0 48.1 46.4 45.6 Dec-16 Dec-17 Dec-18 Dec-19 Credit and

  30. Slide 30: Focus on Italian Govies Portfolio

    Focus on Italian Govies Portfolio*  Italian Govies portfolio reduced YoY to EUR 15.4bn (c. EUR -1.9bn Italian YoY), mainly on the FVTOCI component (c. EUR-4.1bn) due to ItalianGovies Govies Portfolio Portfolio (€/bn) (€/bn) AMORTISED COST (nominal value) AMORTISED COST (nominal value) ordinary bond

  31. Slide 31: Conclusions and 2020 Outlook

    Conclusions 2016-2019 Solid capital ratios well Strong reduction of Consolidated Return to positive net above regulatory NPE stock with commercial relaunch operating result in requirements results ahead of and direct funding 2018 & 2019 & Restructuring Plan stabilisation sound liquidity position & d

  32. Slide 32: Agenda

    Agenda  MPS 2017-2019: a Restructuring and Relaunching Story  FY19 and 4Q19 Results  Details on 4Q19 Results  Focus on Asset Quality 32

  33. Slide 33: 4Q19 P&L: Highlights

    4Q19 P&L: Highlights Change Change € mln 3Q19 4Q19 FY18 FY19 (QoQ%) (YoY%) Net Interest Income 355 333 -6.0% 1,743 1,501 -13.9% Net Fees 356 371 +4.3% 1,523 1,450 -4.8% Financial revenues* 112 156 +40.0% 61 353 n.m. Other operating income/expenses -11 2 n.m. -40 -80 n.m. Total revenues 811 863 +6.4%

  34. Slide 34: Balance Sheet

    Balance Sheet Total Assets (€/mln) Dec-18 Sep-19 Dec-19 QoQ% YoY% Customer loans 86,856 90,471 88,985 -1.6% 2.5% Loans to banks 12,504 13,652 15,722 15.2% 25.7% Financial assets 20,296 18,195 17,393 -4.4% -14.3% PPE and intangible assets 2,727 2,891 2,885 -0.2% 5.8% Other assets* 8,098 8,667 7,210 -

  35. Slide 35: Lending & Direct Funding

    Lending & Direct Funding Total Lending (€/mln) Dec-18 Sep-19 Dec-19 QoQ% YoY% Current accounts 4,941 4,946 4,626 -6.5% -6.4% Mortgages 48,217 49,089 49,046 -0.1% 1.7% Other forms of lending 15,615 16,251 15,772 -2.9% 1.0% Reverse repurchase agreements 3,395 4,418 4,434 0.4% 30.6% Loans represented b

  36. Slide 36: Focus on commercial net interest income

    Focus on commercial net interest income* 4Q18 1Q19 2Q19 3Q19 4Q19 Net interest income (€/mln, %) average average average average average average average average average average volumes rates volumes rates volumes rates volumes rates volumes rates Commercial Loans 77.2 2.32% 74.6 2.31% 74.9 2.25% 73.

  37. Slide 37: Focus on DTAs

    Focus on DTAs Current Italian fiscal regulations do not set any time limit to the use of fiscal losses against the taxable income of subsequent years. Definition Regulatory treatment 12M19 o DTAs related to write-downs of loans, goodwill and ➢ 100% included in Risk-Weighted Assets like any 1 Convert

  38. Slide 38: Focus on legal risks and provisions for diamonds claims

    Focus on legal risks and provisions for diamonds claims Legal risks at 31/12/19 Legal risks from financial information EUR 4.8bn total petitum, classified by Claims related to disclosed financial  Overall claims connected to litigations arising from the financial 31/12/19 30/09/19 disbursement risk

  39. Slide 39: Agenda

    Agenda  MPS 2017-2019: a Restructuring and Relaunching Story  FY19 and 4Q19 Results  Details on 4Q19 Results  Focus on Asset Quality 39

  40. Slide 40: Focus on Asset Quality

    Focus on Asset Quality Non-Performing Exposures - NPEs (€/mln) Gross Book Value Texas Ratio* (%) excluding interest in Net Book Value Coverage arrears on defaulted assets 9M19 FY19 9M19 FY19 9M19 FY19 95.0% Bad loans (sofferenze) 8,121 6,443 3,113 2,982 61.7% 53.7% 85.2% 85.7% Unlikely-to-Pay loans

  41. Slide 41: Restructured unlikely-to-pay loans

    Restructured unlikely-to-pay loans* Breakdown by Guarantees (€/bn) Breakdown by Vintage (€/bn) # Tickets** GBV Coverage NBV % NBV GBV < 3Y > 3Y Secured 156 0.4 33.6% 0.3 24.2% Secured 0.4 23.9% 76.1% Personal guarantees 140 0.3 55.4% 0.1 11.3% Personal guarantees 0.3 25.0% 75.0% Unsecured 399 1.6 51

  42. Slide 42: Other Unlikely-to-Pay

    Other Unlikely-to-Pay* Breakdown by Guarantees (€/bn) Breakdown by Vintage (€/bn) # Tickets** GBV Coverage NBV % NBV GBV < 3Y > 3Y Secured 8,496 1.4 21.1% 1.1 60.0% Personal guarantees 9,252 0.6 49.4% 0.3 15.2% Secured 1.4 64.4% 35.6% Unsecured 102,220 1.1 57.6% 0.5 24.8% Personal guarantees 0.6 64.

  43. Slide 43: Disclaimer

    Disclaimer THIS DOCUMENT IS BEING PROVIDED TO YOU SOLELY FOR YOUR INFORMATION. THIS DOCUMENT, WHICH WAS PREPARED BY BANCA MONTE DEI PASCHI DI SIENA S.P.A. (THE “COMPANY” AND TOGETHER WITH ITS CONSOLIDATED SUBSIDIARIES, THE “GROUP”), IS PRELIMINARY IN NATURE AND MAY BE SUBJECT TO UPDATING, REVISION A

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