Unicredit S.p.a. · MIL:UCG
Unicredit — Debt Investor Presentation (August 2014)
35 slides from Unicredit's debt investor presentation, August 2014
Slide 1: UniCredit Group: 2Q14 Results Presentation to Fixed Income Investors
UniCredit Group: 2Q14 Results Presentation to Fixed Income Investors August 2014
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: Executive Summary
Executive Summary UniCredit: a solid investment proposition with a reinforced Balance Sheet and strengthening profitability A well diversified pan-European group with a leading market franchise in Italy, Germany, Austria and Central Eastern Europe Strong capital base with a Basel 3 Fully Loaded CET1
Slide 4: UniCredit at a glance
UniCredit at a glance A clear international profile based on a strong European identity UniCredit Highlights Shareholders’ Structure(1) Strong local roots in almost 20 countries Retail, Miscellaneous and Unidentified Investors Around 130,000 employees 24.3% About 7,800 branches More than 31 mn custo
Slide 5: A new strategic agenda
A new strategic agenda UCG journey towards sustainable profitability 2008-2010 2010-2013 2013-2018 PREVIOUS PLAN: NEW PLAN: FACING THE CRISIS STRENGTHENING ACCELERATING THE JOURNEY TOWARDS FUNDAMENTALS SUSTAINABLE PROFITABILITY AMBITION Capital shortage Balance sheet 13 restructuring UCG Cost of equ
Slide 6: Financial targets
Financial targets The Group overall will benefit from a very solid balance sheet strategy GROUP AVERAGE DIVIDEND PAYOUT RATIO OF 40% (1)Excluding effects related to relevant buy-backs, restructuring costs, goodwill and PPA impairments, Ukraine evaluation under IFRS5, gain on Bank of Italy stake, cha
Slide 7: Executive Summary – Financial Results 2Q14
Executive Summary – Financial Results 2Q14 Strong group net profit 1H14 at 1.3 bn ex. Banca d'Italia tax charge Solid CET1 ratio at 10.4% fully loaded. Group asset quality further improving Group net profit 2Q14 at 403 m leading to 1H14 net profit of 1.1 bn. Adjusted for revised tax charge on the va
Slide 8: Agenda
Agenda Group Core Bank Non Core Annex 8 UniCredit Group - INTERNAL USE ONLY -
Slide 9: Group - Results
Group - Results Net profit up by 64.4% in the first six months of 2014 Significant strengthening of tangible equity also due to 0.9 bn AT1 Total assets, bn Tangible equity, bn -3.6% -5.6% -0.3% +3.4% 870 865 828 842 839 46.1 46.2 43.5 41.4 42.1 Net profit(1), m +64.4% Jun. ’13 Sept. ’13 Dec. ’13 Mar
Slide 10: Group - Asset Quality
Group - Asset Quality 2Q14 confirmed the positive trend in stock evolution of previous quarters Sound coverage ratio of impaired loans at over 51% (over 61% on NPLs) Gross impaired loans (bn) NPLs (bn) -0.1% +0.6% 82.1 82.5 82.4 46.8 49.2 49.6 Jun. 13 Mar. 14 Jun. 14 Coverage Jun. 13 Mar. 14 Jun. 14
Slide 11: Group – Regulatory capital (1/2)
Group – Regulatory capital (1/2) RWA below 400 bn mainly as a result of regulatory changes to Market and Operational RWA calculation as well as diversification-related benefits Divisional breakdown - RWA, bn RWA(1), eop (bn) q/q y/y -3.0% 74 -0.5% -3% CB Italy -4.8% 423 CB Germany 33 -7.1% -11.5% 41
Slide 12: Group – Regulatory capital (2/2)
Group – Regulatory capital (2/2) Material strengthening of CET1 fully loaded, already at 10.4% Outstanding Basel 3 leverage ratio at 4.7% Basel 3 - Common Equity Tier I ratio: q/q evolution (basis points) +46bp 10.83% +18bp -4bp -11bp 0.25% +42bp +10bp 10.37% 0.25% 9.47% +9bp 10.12% 10.58% March 14
Slide 13: Medium-Long Term Funding Plan
Medium-Long Term Funding Plan Over 53% of the funding plan already realized UniCredit repaid 17 out of 26 bn LTRO, of which 10 bn in 2Q14 Funding Mix % of m/l term run-offs by Region(1) 30.4 bn 31.5 bn 16.7 bn 31.9 17% Germany 27.4 27.7 27% 27% Austria 10% 20% 22% 12% 10% 8% 60% 7% Italy 49% 53% 8%
Slide 14: UniCredit has continuous wholesale market access
UniCredit has continuous wholesale market access Stong debt capital market franchise confirmed Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul 7Y 3mE + 98 bps Sen MS + 170 bps (1,250) 3Y MS + 410 bps MS + 135 bps Sen (1.250) 12nc7 5Y 10Y MS + 95 bps MS + 225 bps T2 Sen MS + 158 bps OBG MS + 98 bps 3
Slide 15: Very strong liquidity position
Very strong liquidity position 1-year liquidity buffer exceeds 12m wholesale funding Liquidity buffer (12 months) as of June 2014 (bn) (1) 149 Liquid assets immediately Additional eligible assets available amount to 120 bn 29 available within 12 months net of haircut and are well Cash and Deposits a
Slide 16: Agenda
Agenda Group Core Bank Non Core Annex 16 UniCredit Group - INTERNAL USE ONLY -
Slide 17: Core Bank - Net profit 1 bn also in 2Q14
Core Bank - Net profit 1 bn also in 2Q14, mainly driven by Commercial Bank Italy, CEE and CIB All divisions profitable again in 2Q14 Net profit(1), m Divisional breakdown – 2Q14 net profit, m RoAC(2) +7.1% CB Italy 574 33% 2,005 1,871 +1.1% CB Germany 104 14.4% -2.6% 1,016 CB Austria 56 9.7% 978 989
Slide 18: Core Bank - Net operating profit breakdown
Core Bank - Net operating profit breakdown NOP boosted by higher revenues and strict cost control offsetting LLP's seasonal dynamics Revenues(1), m +0.1% -0.7% +2.9% 11,209 11,131 5,639 5,486 5,645 Net operating profit(1), m 2Q13 1Q14 2Q14 1H13 1H14 +2.8% Costs, m 3,304 3,397 +6.4% -2.7% +9.1% -2.3%
Slide 19: Core Bank - Total revenues
Core Bank - Total revenues High quality revenue mix with NI and fees strongly improving, confirming the trend. Turkey rebounded on the back of a strong operating performance Net interest, m Net fees and commissions, m +4.7% +4.9% +5.9% 5,889 6,165 +8.5% 3,543 3,717 +3.3% +3.3% 2,959 3,032 3,133 1,74
Slide 20: Core Bank - Net interest
Core Bank - Net interest Re-pricing fully offset subdued dynamics of customer lending Term funding and deposits rate positively contributed to net interest growth q/q Net interest bridge q/q (m) +3.3% 3,133 +33 +29 -5 -3 +29 3,032 +35 -17 1Q14 FX and Loans volume Deposits volume Loans Deposits Term
Slide 21: Core Bank - Customer Loans
Core Bank - Customer Loans Customer Loans held up well in the commercial divisions (increase in CEE & Poland). Q/Q reduction mainly related to Institutional and Market Counterparts Divisional breakdown – Customer loans, bn Customer loans, bn q/q y/y -4.6% CB Italy 130.9 -0.7% -2.1% -1.5% 449.1 447.0
Slide 22: Core Bank – Direct Funding
Core Bank – Direct Funding Direct funding slightly down due to retail bonds tender offer in Italy, whereas growing in CEE and Poland Divisional breakdown – Direct funding, bn q/q y/y Customer direct funding (1), bn CB Italy 144.0 -2.6% -4.4% +1.2% CB Germany 70.6 -0.1% +2.1% -0.3% 451.3 451.8 450.1
Slide 23: Core Bank – New origination in Italy
Core Bank – New origination in Italy Sizeable acceleration in new production of household mortgages and corporate MLT loans. UCG is redeploying capital and funding in new healthy business Household mortgages new flows, m Personal loans new flows, m +146.2% +3.8% +140.6% 1,647 1,181 1,226 +0.3% 755 8
Slide 24: Core Bank – Loan loss provisions
Core Bank – Loan loss provisions LLP increased due to quarter seasonality while lower y/y and vs. 1H13 Sound cost of risk at 56 bps Divisional breakdown – 2Q14 Cost of Risk, bps Loan loss provisions, m q/q y/y CB Italy 90 +5bp +22bp -1.4% 1,143 1,126 CB Germany 2 -5bp n.m. -1.4% CB Austria 4 -37bp -
Slide 25: Core Bank – CEE & Poland Outlook
Core Bank – CEE & Poland Outlook Positive quarterly performance of CEE & Poland Region reaffirming its role as key contributor to Group results Revenues 2Q14 %1H14 Net Profit(1) Political headwinds given dispute with Ukraine and impact of potential sanctions Russia 235 m 27% Resilient operating perf
Slide 26: Agenda
Agenda Group Core Bank Non Core Annex 26 UniCredit Group - INTERNAL USE ONLY -
Slide 27: Non Core – Gross customer loans
Non Core – Gross customer loans Gross exposure further down by 2.6 bn in 2Q14 also thanks to the sale of distressed assets Leasing non core, bn Special Network(1), bn -9.0% -7.8% Gross customer loans, bn 11.0 65.6 10.7 64.4 -1.3% -1.5% 62.9 10.3 61.2 -9.5% 10.2 60.5 10.0 (-8.5 bn) 89.6 Jun. 13 Sept.
Slide 28: Non Core – Results
Non Core – Results In the first 6 months of 2014 LLP halved compared to the same period last year, despite a seasonal increase q/q Revenues, m Costs, m -68.9% +7.1% +19.6% 421 319 297 -81.3% -15.0% 206 172 -58.4% 146 122 131 92 38 2Q13 1Q14 2Q14 1H13 1H14 2Q13 1Q14 2Q14 1H13 1H14 LLP, m Net loss, m
Slide 29: Concluding Remarks – Financial Results 2Q14
Concluding Remarks – Financial Results 2Q14 1H14 Confirmed UCG's capability to create value on a sustainable basis with a high quality revenue mix and tight cost discipline Core Bank's solid results fuelled by strengthening profitability in Italy and resilience in CEE&Poland Region, highlighting the
Slide 30: Agenda
Agenda Group Core Bank Non Core Annex 30 UniCredit Group - INTERNAL USE ONLY -
Slide 31: Ratings Overview
Ratings Overview UniCredit's diversification makes the ratings more resilient Issuer Ratings(1) Recent actions and key individual rating drivers Italy BBB/Neg/A2 UC SpA affirmed on the 24th March as S&P believes that the impact of the full- year-2013 results on the capital position is manageable and
Slide 32: Group - Leverage Ratio
Group - Leverage Ratio A solid 4.7% fully loaded leverage ratio Leverage Ratio, composition Fully loaded Transitional Tier 1 Capital 41.2 45.0 Leverage Ratio 4.7% 5.1% Total Exposure 880 880 Fully loaded total exposure, composition +107.6 -7.5 879.9 838.7 -5.4 -58.9 -71.8 +39.1 +26.1 728.7 +12.0 Bal
Slide 33: Group – P&L and Volumes
Group – P&L and Volumes Another solid quarter towards the achievement of the Strategic Plan Euro (mln) 1Q14 2Q13 1H13 Total Revenues 5,785 6,099 5,662 5,770 5,579 5,733 2.8% -6.0% 11,884 11,312 -4.8% Operating Costs -3,576 -3,484 -3,447 -3,746 -3,511 -3,416 -2.7% -2.0% -7,060 -6,926 -1.9% Gross Oper
Slide 34: Core Bank – P&L and Volumes
Core Bank – P&L and Volumes Net Profit broadly stable at ca.1 bn on the back of a sound operating profitability and improved cost of risk y/y Euro (mln) 1Q14 2Q13 1H13 Total Revenues 5,570 5,893 5,526 5,629 5,486 5,695 3.8% -3.4% 11,463 11,181 -2.5% Operating Costs -3,401 -3,362 -3,302 -3,593 -3,338
Slide 35: Non Core – P&L and Volumes
Non Core – P&L and Volumes 2Q14 loss 370 million due to higher LLP q/q, but less than half y/y Euro (mln) 1Q14 2Q13 1H13 Total Revenues 215 206 137 141 92 38 -58.4% -81.3% 421 131 -68.9% Operating Costs -175 -122 -145 -153 -172 -146 -15.0% 19.6% -297 -319 7.1% Gross Operating Profit 40 83 -8 -12 -80