Unicredit S.p.a. · MIL:UCG
Unicredit — Debt Investor Presentation (July 2023)
44 slides from Unicredit's debt investor presentation, Jul 26, 2023
Slide 1: UniCredit Unlocked: Fixed Income presentation
UniCredit Unlocked Another record-breaking set of results: best 2Q and 1H ever Fixed Income presentation Milan, 26 July 2023
Slide 2: Agenda
Agenda Executive summary UniCredit at a glance Financial highlights Funding and liquidity ESG 2
Slide 3: Another record-breaking set of results: best 2Q and 1H ever
Another record-breaking set of results: best 2Q and 1H ever Ten consecutive quarters of profitable growth OUR VISION QUALITY The Bank for QUALITY GROWTH 5 bps 210 bps BALANCE SHEET CAPITAL Europe’s 4.5bn ex integration + 38 % CoR 6.5bn 16.6% CET1r, Stated1 future costs Net Revenue, 1H/1H CAPITAL EFF
Slide 4: The Bank for Europe's future
The Bank for Europe’s future A new benchmark for banking A unique pan-European franchise, with 13 leading banks connecting 15m clients across Europe A WINNING STRATEGY • Clients and communities at the centre • Pan-European with leading local franchise • Group product factories and an ecosystem CONTI
Slide 5: Agenda
Agenda Executive summary UniCredit at a glance Financial highlights Funding and liquidity ESG 5
Slide 6: UniCredit Unlocked
UNICREDIT AT A GLANCE From retrenchment to profitable growth UniCredit Unlocked Leveraging Group scale and Local reach Our focus: Served by: Delivering: Supported by: Underpinned by: OUR CLIENTS AND PAN-EUROPEAN BEST-IN-CLASS DIGITAL, DATA PRINCIPLES POWERED BY ONGOING COMMUNITIES LOCAL FRANCHISE GR
Slide 7: Structural and cultural transformation from within
UNICREDIT AT A GLANCE Structural and cultural transformation from within Our focus: Served by: Delivering: Supported by: CLIENTS AND PAN-EUROPEAN BEST-IN-CLASS DIGITAL, DATA COMMUNITIES LOCAL FRANCHISE GROUP PRODUCTS AND OPERATIONS Revise and harmonise coverage model Set-up of Group factories Take b
Slide 8: 1H23 – 10th consecutive quarter of outstanding results
UNICREDIT AT A GLANCE 1H23 – 10th consecutive quarter of outstanding results 10th consecutive quarter of effectively balancing our three levers to deliver sustainable profitable quality growth, underpinning future distributions KEY METRICS 1H23 HIGHLIGHTS ACROSS OUR 3 LEVERS In million Net Revenue 2
Slide 9: 2023 guidance
UNICREDIT AT A GLANCE 2023 guidance Continuous focus driving results FY23 guidance VS. PREVIOUS GUIDANCE IMPROVED … Net Revenue >21.5bn Further Improved rate scenario o/w Net Interest ≥13.2bn and pass-through assumptions o/w Cost of Risk <25bps Rates: Potential upside 20231 c.3.35% 20241 c.3.30% Tot
Slide 10: Agenda
Agenda Executive summary UniCredit at a glance Financial highlights Funding and liquidity ESG 10
Slide 11: Strong revenue driven by net interest income and growth across all lines
FINANCIAL HIGHLIGHTS 2Q23 Strong revenue driven by net interest income and growth across all lines Excellent net interest income with robust client driven fees and trading activity Revenue, bn Revenue and LLPs quarterly evolution by item, bn 3.4 3.3 3.5 2.5 2.5 Net 11.9 2.3 Interest +2% Q/Q excludin
Slide 12: Ample liquidity, TLTRO substantially repaid
FINANCIAL HIGHLIGHTS 2Q23 Ample liquidity, TLTRO substantially repaid LOANS / DEPOSITS1 WELL BELOW 100% DEPOSIT MIX: >80% IN RETAIL AND SME CLIENTS Deposits1 - EOP • Granular, behaviourally sticky, transactional accounts 492 480 478 474 472 • >55% guaranteed3 at Group level; average retail balance4
Slide 13: Balance Sheet
FINANCIAL HIGHLIGHTS 2Q23 Balance Sheet 2Q23 balance sheet: 844bn €bn Other Assets 39 30 Other liabilities 46 Financial liabilities & hedging liabilities Cash and cash balances 76 62 Equity and equity instruments Financial Assets at Amotised Cost 82 93 Debt securities issued Financial Assets at Fair
Slide 14: Excellent net interest income and FY23 guidance increase
FINANCIAL HIGHLIGHTS 2Q23 Excellent net interest income and FY23 guidance increase Supportive rate development combined with well managed deposit pass through Net interest, bn 1H23 avg deposits Avg Euribor 3M: +73bps Q/Q, +372bps Y/Y 2Q23 avg deposits ≥13.2bn pass through: c. 23% 2Q23: 3.36%; 1Q23:
Slide 15: Fees up net of impact of current account fee reduction in Italy
FINANCIAL HIGHLIGHTS 2Q23 Fees up net of impact of current account fee reduction in Italy Good Financing and Transactional performance; Investment impacted by market trends and client appetite Fee1, bn AuM stock Change by fee categories -6% -3% 200 197 214 200 194 194 195 197 Investment Q/Q Y/Y 4.0
Slide 16: Costs continue downward trajectory despite inflation
FINANCIAL HIGHLIGHTS 2Q23 Costs continue downward trajectory despite inflation Reaping benefits of prior actions and protecting future cost base through efficiency initiatives Cost/income ratio Costs, bn Quarterly split by item 48% 39% 49% 49% 47% 43% 4.7 39% 39% 4.7 1.4bn flat -1% UniCredit footpri
Slide 17: Negligible cost of risk, low default rate leads to FY23 guidance update
FINANCIAL HIGHLIGHTS 2Q23 Negligible cost of risk, low default rate leads to FY23 guidance update 0.7% Group excl. Russia Default 1.3% 0.8% 1.5% 1.3% 1.1% 1.1% 0.8% 0.8% COST OF RISK rate (YTD) Cost of risk 56bps 5bps 114bps 0bps 7bps 46bps 8bps 2bps <25bps FY23 guidance Potential upside 14bps 5bps
Slide 18: Further reduction in NPEs, stable coverage
FINANCIAL HIGHLIGHTS 2Q23 Further reduction in NPEs, stable coverage Gross NPE ratio 3.8% 2.9% 2.9% 2.7% 2.7% 2.6% Net NPE ratio 1.9% 1.5% 1.5% 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 0.9 0.8 0.8 3.4 3.3 2.6 2.7 2.9 Reduction Q/Q ma
Slide 19: Focus on Commercial Real Estate (CRE) portfolio
FINANCIAL HIGHLIGHTS 2Q23 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 1Q23 Split by Region, bn Split by asset class, bn Portfolio toward
Slide 20: Very strong CET1r thanks to superior organic capital generation
FINANCIAL HIGHLIGHTS 2Q23 Very strong CET1r thanks to superior organic capital generation +2.3bn Net Profit: +77bps RWA: +24bps -0.7bn Cash dividend: -25bps -0.2bn AT1 & Cashes coupon: -6bps Mainly capital reserves & others +101bps 16.64% 16.00% 16.05% -31bps 3.3bn -1bp -2bps -9bps share buy-back 1.
Slide 21: Russia exposure details
FINANCIAL HIGHLIGHTS 2Q23 Russia exposure details RESIDUAL2 As of Jun-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 and associated RWA lower Q/Q due Participation -2.7 3 -2.7 3
Slide 22: Agenda
Agenda Executive summary UniCredit at a glance Financial highlights Funding and liquidity ESG 22
Slide 23: 2023 Group Funding Plan
FUNDING AND LIQUIDITY 2023 Group Funding Plan • UniCredit S.p.A. acts as the Group Holding as well as the Italian operating bank and is the TLAC/MREL issuer under Single-Point-of-Entry (SPE) • Geographical diversification and well-established name with recognition in domestic markets provides fundin
Slide 24: 2023 TLAC/MREL Funding Plan: limited volumes on more senior instruments
FUNDING AND LIQUIDITY 2023 TLAC/MREL Funding Plan: limited volumes on more senior instruments UniCredit SpA 2023 TLAC/MREL expected funding plan, €/bn Main drivers MREL Funding Plan 2023 in line with historical trend 2023 Issued in Expected by Funding Plan 20233 YE23 Volumes skewed towards more seni
Slide 25: 2Q23 ample buffers over TLAC and MREL requirements
FUNDING AND LIQUIDITY 2Q23 ample buffers over TLAC and MREL requirements TLAC MREL Eligible instruments 27.58% 31.53% 92.9bn Ample buffers over capital regulatory requirement Actual 569bps 691bps SP2 21.9bn CET1 ratio Fully Tier 1 ratio Buffer Loaded Stated transitional SNP3 7.4bn (2Q23) (2Q23) Tier
Slide 26: Well balanced Group maturity profile
FUNDING AND LIQUIDITY Well balanced Group maturity profile Group liabilities structure breakdown1 M/L term liability structure Maturity profile up to 2026 (€bn)2 20.0 5% 18.3 18.0 7% 16.0 7.2 14.0 12.4 12.8 44% 12.0 10.0 4.6 5.1 1.8 8.0 33% 1.4 1.7 6.0 5.6 3.0 8.2 2.2 4.0 0.6 5.0 2.0 2.3 2.8 0.1 11%
Slide 27: Covered Bonds (CB) program
FUNDING AND LIQUIDITY Covered Bonds (CB) program UniCredit is a key mortage Mortgage Mortgage Public sector Mortgage Public sector Mortgage provider and a leading Covered Bond issuer in Italy, Germany Program size (Euro) 35bn 50bn 50bn 40bn 40bn 7bn Austria and Czech Republic Maturity soft-bullet so
Slide 28: Strong capitalization and risk profile are supportive in current environment
FUNDING AND LIQUIDITY Strong capitalization and risk profile are supportive in current environment BBB/Stable/A-21 Baa3/Negative/P-31 BBB/Stable/F21 Covered Bonds (Italian OBG I / OBG II)2 AA-/n.r. Aa3/Aa3 AA/n.r. Counterparty / Deposit rating3 BBB+ Baa1 BBB+ Senior Preferred/ Outlook/ Short-Term BB
Slide 29: Agenda
Agenda Executive summary UniCredit at a glance Financial highlights Funding and liquidity ESG 29
Slide 30: ESG Principles and 2022-2024 Targets
ESG ESG Principles and 2022-2024 Targets • We will hold ourselves to the highest possible standards so that we do the right thing by our clients and society • We are totally committed to supporting our clients in a just and fair transition • We will reflect & respect the views of our stakeholders in
Slide 31: Leading by example and supporting our clients' green and social transition
ESG Leading by example and supporting our clients’ green and social transition 32 Environment % Social Governance Promoting sustainable financial instruments Promoting sustainable financial instruments CEO & Top Management remuneration1 8 4.8bn 1 Own Social Bond issued in Sep 21 for 155m 20% weight
Slide 32: Main strategic commitments to support our overall ESG stance beyond climate
ESG Main strategic commitments to support our overall ESG stance beyond climate • Oct 21: signed Net Zero Banking Alliance commitment to reduce emissions on lending portfolio Net Zero Banking • Jan 23: set targets to 2030 interim targets on most carbon intensive sectors (see targets in next slide) A
Slide 33: UniCredit set Net Zero Group targets on the three prioritized sectors
ESG UniCredit set Net Zero Group targets on the three prioritized sectors UniCredit design elements Primary Emission Portfolio in scope Sector Value chain Main rationale 1 2021 Baseline2 2030 Target2 metric coverage (drawn exposure, €bn) ▪ Full value ▪ Financed ▪ Scope 33 ▪ Comprehensive value ▪ 7.8
Slide 34: Strong environmental, social and reputational risk management and policies
ESG Strong environmental, social and reputational risk management and policies Applicability Provisions Type pf support A No coal developer customers (no increase in coal business since Sep 20) Full general and project financing1 Class with current revenues from coal <= 25% and phase out plan by 202
Slide 35: Supporting integration of ESG into UniCredit's strategy
ESG Supporting integration of ESG into UniCredit’s strategy ORGANISATION AND GOVERNANCE STRUCTURE, FOCS ON ESG ESG GOVERNANCE AND MANAGEMENT A UniCredit's Board of Directors defines the overall strategy of the bank, which incorporates the Group's ESG strategy, overseeing its implementation over time
Slide 36: Delivering on commitment to sustainability
ESG Delivering on commitment to sustainability 2Q22 3Q22 4Q22 1Q23 2Q23 First bank in Europe to obtain the 2023 Group Remuneration Policy ESG GRESB scoring on its approved by the Shareholders’ Meeting corporate real estate portfolio As signatory bank of the Principle for Responsible Equileap 2023 To
Slide 37: ESG ratings and indices (1/2)
ESG ESG ratings and indices (1/2) ● Robust integration of ESG practices in lending A CCC B BB BBB A AA AAA ● Included in the Bloomberg MSCI Green Bond Index Low ● ESG Risk Rating improved at “16.90” from “18.3” Severe High Med Low Neg (16.9) 100 - 40 40 - 30 30 - 20 20 - 10 10 - 0 ● Low exposure to
Slide 38: ESG ratings and indices (2/2)
ESG ESG ratings and indices (2/2) ● Top rated Italian bank, with an EE+ rating. Example of EU excellence in sustainability EE+ F FF FFF E EE+ EEE (Very strong) ● Included in the following Standard Ethics indices: European Best in Class, European 100, European Banks, Italian, Italian Banks ● First ba
Slide 39: End notes
End notes 39
Slide 40: 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 41: 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 inc
Slide 42: 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 43: 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 44: 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,