Unicredit S.p.a. · MIL:UCG
Unicredit — Investor Day (December 2019)
33 slides from Unicredit's investor day presentation, Dec 3, 2019
Slide 1: Capital Markets Day 2019
Capital Markets Day 2019 M. Bianchi London, 3 December 2019
Slide 2: Confirmed track record of execution and delivery of targets
UniCredit Group - Strictly Confidential Confirmed track record of execution and delivery of targets Key messages Transform 2019 showed that: we execute, we are transparent, we do the right thing for all stakeholders and we favour long-term sustainable outcomes over short-term solutions. We are commi
Slide 3: Focused execution resulted in key Transform 2019 targets being exceeded
UniCredit Group - Strictly Confidential Focused execution resulted in key Transform 2019 targets being exceeded Transform 2019 Significant de-risking Strengthened capital position Gross NPE, bn Non Core Core SREP Pillar 2 -49.1bn 250 1752 requirement, bps 77.8 +2.2p.p. vs. initial CMD16 target 12.6
Slide 4: Team 23 based on four pillars
UniCredit Group - Strictly Confidential Team 23 based on four pillars Team 23 Grow and Transform and Disciplined risk Capital and strengthen client maximise management & balance sheet franchise productivity controls management 4
Slide 5: Team 23 - Pragmatic macro assumptions, more conservative than market expectation
Team 23 - Pragmatic macro assumptions, more conservative than market UniCredit Group - Strictly Confidential expectation Macro assumptions Interest rates and yield environment Sensitivities EoP, % Euribor 3M -0.2 -0.4 -0.4 -0.4 -0.5 -0.5 Two sensitivities2 to capture uncertainty in 2019 2020E 2023E
Slide 6: Team 23 key targets
UniCredit Group - Strictly Confidential Team 23 key targets Key targets 2018 2019 2020 2023 RoTE1, % 8 >9 8 >8 Costs, bn 10.3 10.1 10.2 10.2 Gross NPE ratio, % 7.7 <5.5 5.0 <3.8 Tangible equity, EoP bn 47.7 51.62 53 60 CET1 MDA buffer3, bps between 200 and 250 Underlying net profit4, bn 3.0 4.7 4.3
Slide 7: Team 23 - A clear commitment to deliver whatever the environment
UniCredit Group - Strictly Confidential Team 23 - A clear commitment to deliver whatever the environment Team 23 Resilient underlying net profit, adjusted for non-operating items1, the basis for increasing capital distribution Capital distribution of 40% for FY19-FY22, and 50% in FY23, a combination
Slide 8: Revenues resilient in a negative rates environment
UniCredit Group - Strictly Confidential Revenues resilient in a negative rates environment Revenues Revenues1 2023 revenues by geography bn CAGR: +0.8% Western Europe2 Trend Trend 19.3 18.5 18.2 bn 9% CAGR 18-23 15.0 +0.5% 34% \ CEE 57% bn CAGR 18-23 2018 2020 2023 4.3 +2.0% Net Interest Fees & Comm
Slide 9: Continuous cost optimisation, 1bn gross savings in Western Europe
UniCredit Group - Strictly Confidential Continuous cost optimisation, 1bn gross savings in Western Europe Costs Costs 2023 costs by geography bn HR Costs Non HR Costs Western Europe3 Positive operating leverage1 18-23: bn CAGR: -0.2% CAGR 18-23 +5.2 p.p. 1bn gross savings -0.6% 10.3 Trend 10.2 Trend
Slide 10: Increased investments in process optimisation
UniCredit Group - Strictly Confidential Increased investments in process optimisation IT Investments IT investments Total ("run&change") IT cash out1 cumulative, bn 6.0 6.5 9.4 avg. yearly, bn 2.0 2.2 >2.3 +17% 900 IT cash out "change" (avg. yearly), m 860 770 Revenues/Growth Infrastructure/Cybersec
Slide 11: Conservative underlying cost of risk
UniCredit Group - Strictly Confidential Conservative underlying cost of risk Cost of risk Cost of risk Costs of risk by geography bps Regulatory headwinds1 Underlying Non Core2 Underlying Core Western Europe3 bps 58 41 33 34 5 14 5 46 27 27 40 12 2018 2020 2023 \ CEE bps 73 74 33 34 70 1 1 72 73 201
Slide 12: Capital distribution based on resilient underlying net profit
UniCredit Group - Strictly Confidential Capital distribution based on resilient underlying net profit Underlying net profit Relevant for CET1 and tangible book value trajectory Stated net profit Affected by non-operating items Sale of non-strategic assets2 Adjustments for non-operating items1
Slide 13: 16bn shareholder value creation, 8bn capital distribution and 8bn tangible equity increase
16bn shareholder value creation, 8bn1 capital UniCredit Group - Strictly Confidential distribution and 8bn1 tangible equity increase Profitability & RoTE Underlying net profit Tangible equity bn CAGR: c.+10% EoP, bn CAGR: c.+5% 8bn1 increase 5 60 4.3 47.7 53 3.0 CAGR CAGR 2018 2020 2023 18-23: 2018
Slide 14: Full Non Core rundown by 2021 confirmed, below 5bn at end 2020
UniCredit Group - Strictly Confidential Full Non Core rundown by 2021 confirmed, below 5bn at end 2020 Non Core Non Core evolution Non Core rundown actions (2020 – 2021) Gross loans, bn NPE stock, bn 11.2 <-9 <9 Disposals -5 <5 0 Write-offs -2 9M19 20191 2020 2021 Net loans, bn 3.8 <2.5 <1.5 - Back
Slide 15: End of 2023 Group gross NPEs below 20bn, down almost 60bn since end of 2015
End of 2023 Group gross NPEsUniCredit below 20bn, down almost 60bn since end of Group - Strictly Confidential 2015 Group asset quality Non Performing Exposure Successful de-risking Non Core Core Gross NPE ratio1 16.0% Transform 2019 de-risking significantly better than target: FY19 guidance Includ
Slide 16: Underlying Expected Loss confirming disciplined origination
UniCredit Group - Strictly Confidential Underlying Expected Loss confirming disciplined origination Expected Loss Expected Loss on stock Comments bps Regulatory headwinds1 Underlying Core 66 Strong credit quality with underlying 58 Expected Loss on stock stable at 41bps 38 17 25 throughout the pla
Slide 17: Evolution of Group structure with new Italian subholding
UniCredit Group - Strictly Confidential Evolution of Group structure with new Italian subholding Capital and balance sheet management New subholding structure UC SpA to remain as operating holding Shareholders Project of subholding incorporated in Italy, and not listed UC SpA Subholding to opt
Slide 18: TLAC/MREL funding plan with sound buffers over requirements
UniCredit Group - Strictly Confidential TLAC/MREL funding plan with sound buffers over requirements TLAC/MREL funding plan Unicredit SpA 2020-2023 TLAC/MREL funding plan MREL buffer Funding 20-23 Target FY23 bn o/w funding 2020 target at upper cumulative MREL Target 25.3-25.8% end of 50- 100bps rang
Slide 19: Transform 2019 regulatory headwinds in line with CMD 2017 projections
UniCredit Group - Strictly Confidential Transform 2019 regulatory headwinds in line with CMD 2017 projections Regulatory headwinds 1/2 Regulatory headwinds fully loaded CET1 ratio impact evolution to 2019 % CMD17 Actual Regulation, models and -0.8 -0.7 procyclicality IFRS9 higher FTA partially mitig
Slide 20: Capital generation absorbs regulatory headwinds and allows 8bn capital distribution
Capital generation absorbs regulatory headwinds and allows 8bn1 capital UniCredit Group - Strictly Confidential distribution Regulatory headwinds 2/2 Regulatory headwinds2 CET1 MDA buffer impact, % Cumulative Cumulative 4Q19 2020 2021 2022 2023 impact 2024-27 impact 2020-23 includes c.-0.8 for Basel
Slide 21: Team 23 - 16bn shareholder value creation, average DPS almost doubled
UniCredit Group - Strictly Confidential Team 23 - 16bn1 shareholder value creation, average DPS almost doubled Capital position and return Capital distribution2, cumulative Tangible equity and tangible book value per share bn Buyback Cash Tangible equity, EoP bn c.2.5x +8bn1 CAGR 9M19-2023: 8 60 53
Slide 22: Resilient underlying net profit and Group capital distribution whatever the environment
Resilient underlying net profitUniCredit andGroupcapital distribution whatever the - Strictly Confidential environment Sensitivities ∆ "Draghi": maintaining ∆ "Lagarde": interest rate 2023 the current policy policy normalisation Underlying net profit, bn 5 -0.5 +0.3 RoTE1, % >8 -0.6p.p. +0.4p.p. Cum
Slide 23: Team 23 key targets
UniCredit Group - Strictly Confidential Team 23 key targets Key targets 2018 2019 2020 2023 RoTE1, % 8 >9 8 >8 Costs, bn 10.3 10.1 10.2 10.2 CoR, bps 58 552 46 40 Gross NPE, bn 38.2 28.83 <25 <20 Gross NPE ratio, % 7.7 <5.5 5.0 <3.8 Tangible equity, EoP bn 47.7 51.63 53 60 8bn increase4 CET1r MDA bu
Slide 24: Team 23: a clear commitment to deliver
UniCredit Group - Strictly Confidential Team 23: a clear commitment to deliver Conclusion Proven ability to execute as confirmed by Transform 2019 success 16bn value creation, 8bn capital distribution and 8bn tangible equity increase1 "Do the right thing!" 24 1. Based on Team 23 economic assumptions
Slide 25: Annex
UniCredit Group - Strictly Confidential Annex Annex 25
Slide 26: Team 23 sensitivities key assumptions
UniCredit Group - Strictly Confidential Team 23 sensitivities key assumptions Sensitivities Interest rates and yield environment Growth EoP, % Real GDP growth y/y and average, % 1.2 1.3 1.0 1.1 -0.1 Western Europe2 0.7 Euribor 3M -0.2 0.5 0.5 0.6 0.5 -0.4 -0.4 -0.4 0.3 -0.5 -0.5 -0.5 -0.5 -0.5 2019
Slide 27: Material non-operating items basis for underlying net profit adjustment
UniCredit Group - Strictly Confidential Material non-operating items basis for underlying net profit adjustment Non-operating items Net P&L CET1, Net P&L CET1, 4Q19 2020 and beyond impact, bn % impact, bn % Unwinding of Yapi joint venture1 -0.4 -0.1 Yapi deconsolidation3 -3.1 +0.7 Integration costs
Slide 28: Non Core main financials
UniCredit Group - Strictly Confidential Non Core main financials Non Core main financials Main financials m 9M19 2020 2021 2022 Revenues -12 -16 -19 0 Costs -135 -134 -89 0 LLPs -444 <-30 <-20 0 Net loss -582 <-130 <-80 0 FTEs EoP 319 225 0 0 RWA EoP, bn 13.6 8.5 0 0 28
Slide 29: Capital generation absorbs regulatory headwinds and allows 8bn capital distribution
Capital generation absorbs regulatory headwinds and allows 8bn1 capital UniCredit Group - Strictly Confidential distribution Regulatory headwinds 1/2 Regulatory headwinds2 Cumulative impact Cumulative impact 4Q19 2020 2021 2022 2023 2024-2027 CET1 MDA buffer impact, % 2020-23 Regulation, models & pr
Slide 30: Regulatory headwinds overview
UniCredit Group - Strictly Confidential Regulatory headwinds overview Regulatory headwinds 2/2 Regulation, models & Mainly driven by ordinary Internal model maintenance (including re-development, re-calibration and roll-out), other procyclicality impacts coming from regulation (e.g. new SME factor)
Slide 31: New Definition of Default impact overview
UniCredit Group - Strictly Confidential New Definition of Default impact overview New definition of default Input Model Parameter Impact on KPIs PD3 Worsening of Probability of Default (PD), due to higher flows LGD3 More stringent criteria for to default (i.e. PD and UTP) default detection1 triggeri
Slide 32: RWA up mainly due to regulatory headwinds
UniCredit Group - Strictly Confidential RWA up mainly due to regulatory headwinds RWA RWA evolution 9M19 to 2023 bn <415 <-15 c.+30 388 <+40 c.-30 mainly driven by assumed full deconsolidation of Yapi 9M19 Business evolution1 Securitisation and other Other Regulatory Headwinds 2023 1. Credit RWA onl
Slide 33: Disclaimer
UniCredit Group - Strictly Confidential 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