Banca Monte Dei Paschi Di Siena S.p.a. · MIL:BMPS
Banca Monte Dei Paschi Di Siena — FY2013 Earnings Presentation
49 slides from Banca Monte Dei Paschi Di Siena's earnings presentation, Mar 12, 2014
Slide 1: 2013 GMPS Results
2013 GMPS Results Fabrizio Viola CEO Bernardo Mingrone Deputy General Manager, Head of Finance & Operations Siena, 12th March 2014
Slide 2: Contents
Contents Key messages FY13 Results - Balance sheet and P&L Final Remark Annexes page 2
Slide 3: Key messages
Key messages Core Revenues improving and above 2013 Business Plan targets (Δ +1.4%). Additional upside for 2014-2017 period coming from actions implemented in 4Q13 Core Tier 1 at 10%, CET1 2013 fully phased* at approx 9% thanks to regulatory changes and actions implemented in 4Q13. CET1 2017 pha
Slide 4: FY13 and 4Q13 results consistent with our strategy
FY13 and 4Q13 results consistent with our strategy De-risking and Switching Positive impact Deleveraging funding mix on top line De-risking of financial Decrease in higher cost Improvement in net interest portfolio funding sources and income thanks to lower cost Securities and Derivatives inte
Slide 5: Continued leadership in cost optimization
Continued leadership in cost optimization Main initiatives Total Costs (YoY % growth) Exit of 3,800 resources (of which 156 Dec-12 Dec-13 4Q13 vs 4Q12 Executives) since start of Plan (reached 48% -15.8% Operating of BP target), including disposal of Back Office Costs business unit with approx. 1,1
Slide 6: Improved risk profile
Improved risk profile Cost of credit (bps) Impaired Loans Coverage Write-off* +80bps 210 188 45.7%* 41.0% 41.8% FY12 FY13 FY12 FY13 NPL Coverage Loan loss provisions affected in 4Q13 by Write-off* impairment losses recognized on selected +90bps significant positions and full write-down of several
Slide 7: Contents
Contents Key messages FY13 Results - Balance sheet and P&L Final remarks Annexes page 7
Slide 8: Executive Summary
Executive Summary Balance Sheet: Total assets: -9% YoY (-EUR 20bn vs. Dec 12) ongoing Loans: -7.6% YoY, -EUR 4.3bn in 4Q13 deleveraging, L/D ratio*: 101.0% vs. 104.7% in Dec 12 derisking and Counterbalancing capacity: EUR 16bn, up to EUR 19.6bn at the optimization of end of February 2014 fun
Slide 9: Assets & Liabilities trend
Assets & Liabilities trend Total Assets Customer loans down in line with deleveraging plans, with €/mln Dec-12* Sep-13* Dec-13 QoQ% YoY% run-off of poor risk-return positions Customer loans 142,015 135,564 131,218 -3.2% -7.6% Loans to banks 11,225 11,439 9,914 -13.3% -11.7% Financial assets down
Slide 10: Direct funding optimization
Direct funding optimization Direct funding by Source Bond decrease (-25.7% YoY), affected by market trend and wholesale funding market €/mln Dec-12 Sep-13 Dec-13 QoQ% YoY% situation, on top of the suspension, for a good Current accounts 56,006 57,264 55,076 -3.8% -1.7% part of the year, of retail
Slide 11: Focus on AuM: accelerating momentum
Focus on AuM: accelerating momentum AuM Assets under management: increase due to +1.3% positive flows (concentrated in funds and +2.4% bancassurance) and positive market impact 45.1 For the insurance sector: Life: approx. EUR 4bn in gross placements as 44.5 at Dec-13 (up approx. EUR 0.8bn in 4
Slide 12: Lending: selected deleverage
Lending: selected deleverage Total Lending €/mln Dec-12 Sep-13 Dec-13 QoQ% YoY% Loans to customers down 7.6% YoY and Current accounts 13,099 12,060 10,962 -9.1% -16.3% 3.2% QoQ, due to slowing economic cycle and the Group’s more selective credit Mortgages 72,329 66,735 64,822 -2.9% -10.4% policies
Slide 13: Coverage ratios improving
Coverage ratios improving Impaired Loans Coverage Write-off* +80bps Impaired loans coverage up vs. Sep-13. +100bps Specifically: NPL coverage: +80bps QoQ and +90bps 45.7% YoY 41.0% 40.8% Watchlist coverage: +40bps QoQ, - 150bps YoY owing to the higher rate of 41.8% “objective”** watchlists req
Slide 14: Financial Assets
Financial Assets Securities and Derivatives Portfolio Portfolio down 7.5% YoY, mainly in the AFS Market component, as a result of ongoing optimization Value Dec-13 QoQ% YoY% activities (€mln) Portfolio decreased 2.8% QoQ: HFT 9,252 +11.9% -3.3% HFT: evolution affected by short term Italian gov
Slide 15: RWAs, Capital Ratios and AFS reserve
RWAs, Capital Ratios and AFS reserve RWAs over time Core Tier 1 ratio, including EUR 4.1bn of New -EUR 8 bn Financial Instruments, at 10% (8.9% as at Dec-12) -9.0% Ongoing optimization of RWAs (EUR 84.5bn as at +EUR 0.2 bn Dec-13; -9% YoY) mainly driven by a significant reduction in credit and c
Slide 16: 2013: 10% Core Tier 1 & 9% CET1 BIS 3 fully phased
2013: 10% Core Tier 1 & 9% CET1 BIS 3 fully phased Core Tier 1 Evolution (%) FY17 BIS3 CET1 phased-in ~ 12.4% FY13 BIS3 CET1 fully phased ~ 9%1; phase-in ~ 11.4% +3,6% ~ +1,8% ~ +11,8% ~ +0,4% ~ +12,2% 10,0% 10,0% ~ +2,0% -3,6% ~ -0,7% ~ -1,3% FY13 €3bn Pro Remaining Internal RWA 2017 20% 2017 €3bn
Slide 17: Capital levers
Capital levers CET1 ratio CET1 ratio Stability Law 2014-2017 Bank of Italy discretion 2014-2017 +45/55bps +50/100bps Deductibility of loan loss provisions for IRAP AFS reserve on EU government bonds: (regional productivity tax) purposes: the regulatory filter maintained until approval of deducti
Slide 18: P&L FY2013
P&L FY2013 Change 12M12* 12M13 1 Net Interest Income: YoY trend € mln (YoY %) impacted by : higher amounts of NFIs 1 Net Interest Income 2,829.6 2,153.4 -23.9 issued in 2013 compared to “Tremonti Bonds” (EUR 162mln); reclassification of Net Fees 1,632.8 1,657.6 +1.5 income from fast-track credit fac
Slide 19: Net Interest Income: structural quarterly increase
Net Interest Income: structural quarterly increase Net Interest Income (YoY) Up by approx. EUR 57mln QoQ due to: -23.9% Cost of funding effect: mainly from pricing 2,830 containment, remix in consumer & corporate funding and ECB rate reduction 2,153 Deleverage effect: reduction in average loan
Slide 20: …driven by lower cost of funding
…driven by lower cost of funding MPS Spread* trend (%) MPS 5Y CDS evolution** 717bps MPS Spread Euribor 3M as at (avg. lending rate – avg. deposit rate) 30 Jul-13 700 +c25bps 2.01 1.68 1.73 1.63 1.77 500 365bps 0.29 as at 0.19 0.21 0.22 0.23 31 Dec-13 4Q12 1Q13 2Q13 3Q13 4Q13 300 of which Retail Bon
Slide 21: Fee and Commission Income
Fee and Commission Income Fees YoY Fees QoQ +5.7% +1.5% +0.1% 431 1,658 417 1,633 404 405 383 € mln € mln Dec-12 * Dec-13 4Q12 * 1Q13 * 2Q13 * 3Q13 * 4Q13 Breakdown 4Q13 vs 4Q13 vs €/mln 4Q12 3Q13 4Q13 3Q13 (%) 4Q12 (%) Net fee and commission income AuM fees, o/w 122 152 149 -2.5% 21.5% up 1.5% Yo
Slide 22: Progetto Regata: the results of the pilot show a positive impact on the P&L
Progetto Regata: the results of the pilot show a positive impact on the P&L Revenue growth 2013 vs. 2012 (% yoy ) Objective of Progetto Regata: Pilot* Rest of the Bank Substantially increase Retail sales productivity, contributing significantly to growth of revenues, through: • Strengthening and o
Slide 23: Dividends, similar income and gains (losses) on equity investments
Dividends, similar income and gains (losses) on equity investments Dividends /Profit (loss) from investments YoY Dividends /Profit (loss) from investments QoQ +72.8% +77.6% 129.9 38.6 31.1 32.9 27.2 75.1 18.5 € mln € mln Dec-12 * Dec-13 4Q12 * 1Q13 * 2Q13 * 3Q13 * 4Q13 Companies Contribution Divid
Slide 24: Trading/valuation of financial assets
Trading/valuation of financial assets Trading/valuation of financial assets YoY Net profit (loss) from trading / valuation / 454.3 repurchase of financial assets/liabilities impacted in 4Q by non recurring items: closure of Santorini deal value adjustment Bankit stake disposal of Consum.it’s
Slide 25: Operating Costs (1/2)
Operating Costs (1/2) Operating Costs YoY Operating Costs QoQ -12.7% -15.8% 814 -1.5% 3,219 728 2,812 703 696 685 € mln € mln 4Q12* 1Q13 * 2Q13 * 3Q13 * 4Q13 Dec-12 * Dec-13 Operating costs Operating costs Operating costs per headcount (€/000) per branch (€/000) per sqm (€/000) 112 -6.9% 106 -0.1% 9
Slide 26: Operating Costs (2/2)
Operating Costs (2/2) Personnel expenses (€/mln) Admin expenses (€/mln) Amortization and Depreciation (€/mln) -10.4% -14.9% -22.0% 1,918 1,102 938 199 1,719 155 Dec-12* Dec-13 Dec-12 * Dec-13 Dec-12 * Dec-13 Personnel expenses (€/mln) Admin expenses (€/mln) Amortization and Depreciation (€/mln) Due
Slide 27: Cost reduction implemented across-the-board
Cost reduction implemented across-the-board Main cost saving actions (€ mln) 2012 Cost Saving 2013 Actions 158 27 New cash mgmt and document transportation model 131 -17.1% Branches and Head office processes digitalization Customer communication digitalization 68 26 New travel expenses and c
Slide 28: Provisioning
Provisioning Net loan loss provisions and Cost of Credit (bps) Cost of credit* 188 138 149 151 210 Loan loss provisions affected in 4Q13 by impairment losses recognized on selected 1,372 significant positions and full write-down of 1,210 several non-performing, aged loans (with a view to their pot
Slide 29: NPL and watchlist inflows
NPL and watchlist inflows Gross NPL and Watchlist Inflows* NPLs inflows by Type*** Data as at Dec-13 NPL Watchlist** 72.7% 549 376 272 233 252 27.3% 513 353 272 311 314 € mln 4Q12 Monthly 1Q13 Monthly 2Q13 Monthly 3Q13 Monthly 4Q13 Monthly Performing loans Impaired loans avg avg avg avg avg Inflows
Slide 30: Contents
Contents Key messages FY13 Results - Balance sheet and P&L Final remarks Annexes page 30
Slide 31: 2013 Results in line with Business Plan
2013 Results in line with Business Plan 2013 Results in line with/better … cost of credit still higher than than core activity targets ... Plan … +35.0% +2.8% flat -4.8% NII Fees Operating Costs LLP Dec-13 2013 BP Target Dec-13 2013 BP Target Capital 12.2% 10% ~9% 2013 Core Tier 1 2013 CET1 BIS3 201
Slide 32: Potential to improve our 2015-2017 P&L
Potential to improve our 2015-2017 P&L € mln 2015 2017 Impacts on: Events after 2013-2017 Net Profit ≈ 200 ≈ 900 Target Business Plan approval, which impact targets in the next few years: Chianti − − Administrative expenses Closure of Santorini – positive P&L impact Outsourcing Personnel exp
Slide 33: Focus on: Fruendo (Back Office Outsourcing)
Focus on: Fruendo (Back Office Outsourcing) With the outsourcing of Back Office in Fruendo, MPS has implemented in just 14 months, the largest banking Business Process Outsourcing deal in Europe Structural Cost Saving starting from 2014 (annual average %) Quality of Service excellence for branches
Slide 34: Capital increase update
Capital increase update Size: EUR 3 bn capital increase, for the purposes of reimbursing EUR 3bn of NFI subject to Bank of Italy authorization Expected timing: post May 12th, as per the EGM authorization of December 2013 Pre-underwriting syndicate: new pre-underwriting commitment, covering the
Slide 35: Conclusions
Conclusions 4Q13 confirmed deleveraging, funding and operating profit targets Further improved MPS risk profile ahead of asset quality review Enhanced capital position, benefiting from balance sheet deleverage and regulatory changes, with capital increase again fully underwritten Ongoing res
Slide 36: Thank you for your attention Q&A
Thank you for your attention Q&A page 36
Slide 37: Annexes
Annexes page 37
Slide 38: P&L: FY13
P&L: FY13 * Figures were restated in compliance with IAS 8 (Accounting policies, changes in accounting estimates and errors), with the retrospective application of IAS 19 "Employee benefits" and to take account of the disposal of a business unit (accounting, administrative and ancillary activities)
Slide 39: P&L: Quarterly figures
P&L: Quarterly figures * Figures were restated in compliance with IAS 8 (Accounting policies, changes in accounting estimates and errors), with the retrospective application of IAS 19 "Employee benefits" and to take account of the disposal of a business unit (accounting, administrative and ancillary
Slide 40: Best cost reduction performance in the Italian market in last 5 years
Best cost reduction performance in the Italian mkt in last 5 years Administrative expenses 2009-2013 (% yoy ) -220 (-19%) -170 1,158 (-15.4%) 1,096 1,108 1,045 938 € mln 2009 2010 2011 2012 2013 Administrative expenses 2009-2013 (% yoy ) 5% 2% 1% -2% 0% -1% -1% -3% -5% -7% -7% -10% -10% -13% -15% 20
Slide 41: Operational Excellence initiatives
Operational Excellence initiatives Realised 23 organization New model revisions, among Organization which Model • Incorporation of BAV and MPS GCB Evolution of number of employees • DAACA (Back Office) and Private Banking (2011-2017) Operating • Credits and COO efficiency • Fruendo – Back Office s
Slide 42: Bond maturities and Interbank exposure
Bond maturities and Interbank exposure Bond Maturities breakdown* 3.6 10.9 2.1 2.2 0.4 4.6 4.3 2.9 € bn 2014 2015 2016 2017 Retail Wholesale Direct Funding and Net Interbank Exposure** Interbank Exposure -14.1% Direct Funding + Net Interbank Exp. 168 163 157 43.4 Direct Funding / 37.3 Total Assets 6
Slide 43: Asset quality overview
Asset quality overview Impaired Loans (€ mln) Gross QoQ (%) YoY (%) Net QoQ (%) YoY (%) NPL 21,557 +7.9% +24.5% 8,880 +5.8% +21.7% Watchlist 9,440 +4.5% +23.6% 7,511 +3.9% +26.0% Restructured 1,906 +11.1% +17.5% 1,683 +14.0% +20.4% Past Due 3,135 -1.2% +7.2% 2,918 -1.5% +6.6% Total 36,038 +6.3% +22.
Slide 44: Impaired loans: composition
Impaired loans: composition NPL Watchlist* Restructured Past due 10.5% Retail 13.8% 0.3% 13.8% 19.1% 25.5% 21.9% Small Business 60.7% 67.5% 99.7% 69.1% Corporate Corporate and Small Business breakdown Real Estate 25.7% 38.8% 30.7% 42.5% Construction 17.9% 22.2% 13.8% 21.0% RE related 7.8% 16.6% 16.9
Slide 45: Update on non-core transactions (1/2)
Update on non-core transactions (1/2) Transaction Impacts Chianti Capital requirement: 35 bps based on RE valuation* due to the reduction in Common Consolidation of Perimetro Gestione Proprietà Equity Tier I and increase in RWAs Immobiliari S.c.p.A. and Casaforte S.r.l. and, Net profit: approx +
Slide 46: Update on non-core transaction (2/2)
Update on non-core transaction (2/2) Transaction Impacts SIA P&L impact: positive for approx. EUR Disposal of the 5.8% stake in SIA to 37mln, to be posted after the completed Fondo Strategico Italiano, F2i SGR disposal of the shareholding and Orizzonte SGR SORIN Capital gain of approx. EUR 19mln
Slide 47: P&L FY2013 proforma excluding effects of Bankit valuation
P&L FY2013 proforma excluding effects of Bankit valuation 12M13 12M13 excluding effects including effects € mln of Bankit valuation of Bankit valuation Net Interest Income 2,153.4 2,153.4 On the P&L: Net Fees 1,657.6 1,657.6 Including the effects from the updated 1 Basic income 3,810.9 3,810.9 v
Slide 48: Disclaimers
Disclaimers This document has been prepared by Banca Monte dei Paschi di Siena S.p.A. solely for information purposes and for use in presentations of the its Group’s strategies and financials. The information contained herein has not been independently verified. No representation or warranty, expres
Slide 49: fe DEI PASCHI
fe DEI PASCHI I SIENA ==” BANCA DAL 1472 www.mps.it
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