Unicredit S.p.a. · MIL:UCG
Unicredit — Debt Investor Presentation (July 2024)
43 slides from Unicredit's debt investor presentation, Jul 24, 2024
Slide 1: UniCredit Unlocked
UniCredit Unlocked Record quarter and first half results; profitable growth and superior distribution trajectory continue Fixed Income & ESG presentation Milan, 24 July 2024 UniCredit – Confidential
Slide 2: Agenda
Agenda UniCredit at a glance Financial highlights Funding, liquidity and securitisation ESG 2
Slide 3: Setting the benchmark for European banking
● UniCredit - Public Setting the benchmark for European banking Record quarter and first half results; profitable growth and superior distribution trajectory continue RECORD BLUE CHIP SAME STRATEGY, QUALITY GROWTH, GUIDANCE FURTHER RESULTS BANK NEW FOCUS RESILIENT BASE IMPROVED Delivering record
Slide 4: 14 consecutive quarters of profitable growth, record quarter and 1H
● UniCredit - Public 14 consecutive quarters of profitable growth, record quarter and 1H In million 2Q24 Y/Y 1H24 1H/1H 1H KEY HIGHLIGHTS ACROSS OUR LEVERS Net Revenue 6,313 +6.0% 12,581 +6.7% o/w NII o/w LLPs 3,565 -15 +1.9% +25.2% 7,143 -118 +5.1% +7.7% NET REVENUE QUALITY GROWTH +6.7 % Net Revenu
Slide 5: Maintaining advantage through Risk, Operational and Capital excellence
● UniCredit - Public Maintaining advantage through Risk, Operational and Capital excellence An approach difficult to replicate, ensuring long-term sustainability A QUALITY-DRIVEN APPROACH UNIQUE, BEST-IN-CLASS LINES OF DEFENCE ● Quality focus: a decade of de-risking and vigilant origination resultin
Slide 6: Vodeno-Aion: enhancing our technology and a platform to enter new markets
● UniCredit - Public Vodeno-Aion: enhancing our technology and a platform to enter new markets Bringing in-house a new proprietary technology and a fintech to enter new client segments and markets What Vodeno-Aion Brings Us ACQUISITION OF NEXT GENERATION COST-EFFECTIVE ENHANCE IN-HOUSE CORE BANKING
Slide 7: Confident to deliver on 2024 guidance and 2025-26 ambitions
● UniCredit - Public Confident to deliver on 2024 guidance and 2025-26 ambitions 2024 GUIDANCE 2025-26 FINANCIAL AMBITION Net revenue >23bn c. 10bn calendar year 1 Sustainable EPS, DPS Cost of Risk <20bps distributions Growth Strong growth (c.3.1bn interim, o/w Costs <9.5bn c.1.4bn cash dividend2 an
Slide 8: Agenda
Agenda UniCredit at a glance Financial highlights Funding, liquidity and securitisation ESG 8
Slide 9: Net Revenue
● UniCredit - Public Net Revenue Up on growing Fees, resilient NII and solid Trading NET REVENUE, bn Growing net revenue base with record 2Q, bn CONSISTENT EARNINGS GROWTH ... +6.7% 8.0% 8.9% 9.1% 5.9% Earnings continue to grow Net revenue / RWA (+6.7% 1H/1H, +6.0% Y/Y) 6.0 6.3 6.3 12.6 4.8 ... IN A
Slide 10: Net Interest Income
● UniCredit - Public Net Interest Income Resilient and highly profitable on its own merit NET INTEREST INCOME, bn RESILIENCE & QUALITY DISCIPLINE 2.1% 2.1% 2.1% Solid, stable NII (−0.4% Q/Q) despite +5.1% NIM1 1.3% 3.5 3.6 3.6 rates down Relentless quality focus in last 3 years NII evolution, 2.
Slide 11: Asset Quality and Cost of Risk
● UniCredit - Public Asset Quality and Cost of Risk Structurally lower cost of risk protected by strong coverage LLPs, m STRUCTURALLY LOWER TODAY 10 Strong and well covered asset quality, 0 1 1 118 CoR, bps with overlays stock remaining high to 110 103 protect the future LLPs, m CoR at 5bps in 1
Slide 12: Fees
● UniCredit - Public Fees Continued strong momentum across all main categories FEES, bn CONTINUED STRONG MOMENTUM Strong fees from increased client appetite and broader Fees growing +6.6% 1H/1H (+8.6% +8.6% excl. CAFR in Italy product offering excl. CAFR and securitization costs) and securitization
Slide 13: Costs and operational efficiency
● UniCredit - Public Costs and operational efficiency Continued discipline led to significant decline in spite of inflation and investments COSTS, bn CONFIRMING EXCELLENCE Superior Operational Excellence • Continuing cost reduction − 1.2% Non-HR costs: -3.3% 1H/1H 2.36 −1.7% Y/Y (-1.2% 1H/1H, -1.7%
Slide 14: RWAs and Capital efficiency
● UniCredit - Public RWAs and Capital efficiency Excellent organic capital generation continues CET1 ratio % QUALITY GROWTH 119bps Share buyback1: -57bps Cash dividend2: -38bps • Unique capital generation capability +55bps (3.3bn) AT1 & Cashes: -6bps due to focus on above CoE risk- -9bps due to FX l
Slide 15: Agenda
● UniCredit - Public Agenda UniCredit at a glance Financial highlights Funding, liquidity and securitisations ESG 15
Slide 16: Group Funding Plan well advanced. Lower secured funding expected
● UniCredit - Public Group Funding Plan well advanced. Lower secured funding expected • UniCredit S.p.A. acts as the Group Holding as well as the Italian operating bank and is the MREL issuer under Single-Point-of-Entry (SPE) • Geographical footprint and well-established name with recognition in dom
Slide 17: MREL Funding Plan at c.75%. Strong capital position limiting needs
● UniCredit - Public MREL Funding Plan at c.75%. Strong capital position limiting needs UniCredit SpA 2024 MREL expected funding plan, €/bn Main drivers Funding Plan Issued Expected Overall MREL Funding Plan 2024 executed for 2024 in 20243 by YE24 c.75%, with public issuances of 1bn Tier2, 3bn SNP a
Slide 18: Balanced profile with contained upcoming redemptions
● UniCredit - Public Balanced profile with contained upcoming redemptions Group liabilities structure breakdown1 M/L term liability structure Maturity profile up to 2027, €bn2 18 17 4% AT1 UC SPA 8% 7 12 7 T2 UC SPA 41% 5 2 1 SENIOR UNSECURED UC SPA3 37% 1 6 4 8 UNSECURED OTHER SUBS 1 5 10% 1 2 1 CO
Slide 19: Balance sheet and liquidity profile
● UniCredit - Public Balance sheet and liquidity profile (€bn) Assets 2Q24 Liabilities LIQUIDITY Other Assets 40 Balance 24 Other liabilities PROFILE Sheet 39 Financial liabilities & hedging liabilities LCR >140% Cash and cash balances 50 799 62 Equity and equity instruments NSFR1 >125% Financial As
Slide 20: Ample buffers over MREL requirements
● UniCredit - Public Ample buffers over MREL requirements MREL1 MREL Subordinated1 Eligible instruments Ample buffers over capital Actual 32.5% regulatory requirement Buffer 519bps 2Q24 24.4% 90.1bn 486bps SP2 22.5bn CET1 ratio Tier 1 ratio SNP3 Fully Loaded5 transitional 9.7bn 27.3% Tier 2 AT1 8.8b
Slide 21: Covered Bonds (CB) program
● UniCredit - Public Covered Bonds (CB) program ITALY GERMANY AUSTRIA CZECH REPUBLIC UniCredit is a key Mortgage Mortgage Public Sector Mortgage Public Sector Mortgage mortgage provider and a leading Program size (Euro) 35bn 50bn 50bn 40bn 40bn 10bn Covered Bond Maturity (soft-bullet) ✓ ✓ 6 ✓ 6 ✓ 6
Slide 22: ARTS program to be expanded
● UniCredit - Public ARTS program to be expanded ARTS: a single program for Securitisations cross assets and regions In 2024, plan is to strengthen 4Q21-2023 2024 the ARTS program by executing transactions on already ITALY • Residential Mortgages Already securitized • Large Corporate segments throug
Slide 23: Performance recognized in improved stand-alone creditworthiness
● UniCredit - Public Performance Performance recognized recognized in in improved improved stand-alone stand-alone creditworthiness creditworthiness BBB / Stable / A-21 Baa3 / Stable / P-31 BBB / Stable / F21 Covered Bonds (Italian OBG I / OBG II)2 AA- / n.r. UniCredit’s stand-alone rating Aa3 / Aa3
Slide 24: Agenda
● UniCredit - Public Agenda UniCredit at a glance Financial highlights Funding, liquidity and securitisations ESG 24
Slide 25: Updated ESG Targets: focus on more meaningful penetration for 2024
● UniCredit - Public Updated ESG Targets: focus on more meaningful penetration for 2024 From ESG volumes … ESG Lending1 Slightly below on 13% … to ESG penetration environmental lending with 22.2bn, while outperforming on social lending with 11.1bn 15% Focus on ESG share over total since Jan 2022 bus
Slide 26: Leading by example and supporting our clients' green and social transition
● UniCredit - Public Leading by example and supporting our clients’ green and social transition Environment Social Governance Promoting sustainable financial instruments Promoting sustainable financial instruments CEO & Top Management remuneration2 11 c. 6.5bn 1 own Social Bond (155m, Sep21) Communi
Slide 27: Main strategic commitments supporting our ESG stance beyond climate
● UniCredit - Public Main strategic commitments supporting our ESG stance beyond climate • Oct 21: signed Net Zero Banking • Achieve gender equity at all organisational levels and • Signed the Finance for Biodiversity Pledge Alliance commitment to reduce promote a more diverse, inclusive and sustain
Slide 28: New 2030 Net Zero targets set on Shipping and Commercial Real Estate
● UniCredit - Public New 2030 Net Zero targets set on Shipping and Commercial Real Estate UniCredit Design Elements Baseline Progress Target Sector Value chain Primary metric1 Emission coverage Year Measure Value2 2022 vs 2021 By 20302 NEW Shipping Shipping Operators3 Physical intensity Scope 1, 3 –
Slide 29: Strong environmental, social and reputational risk management and policies
● UniCredit - Public Strong environmental, social and reputational risk management and policies Client applicability Group Reputational Risk Management Global Policy3 OIL & GAS A B C COAL A B C Other sector policies Defence/Armaments Current revenues from >25% & Increase in coal business Mining sect
Slide 30: Supporting the integration of ESG into UniCredit's strategy
● UniCredit - Public Supporting the integration of ESG into UniCredit’s strategy Organisational and Chair governance structure, Board of Directors Audit Committee focus on ESG Defines the overall strategy of the bank, including the components Group’s ESG strategy, and overseeing its implementation G
Slide 31: Delivering on commitment to sustainability
● UniCredit - Public Delivering on commitment to sustainability 2Q23 3Q23 4Q23 1Q24 2Q24 ‘UniCredit for CEE’ initiative Improved to “64” from “60” (Advanced) Best Bank for Sustainability launched with over 2.6bn mainly thanks to improvement in in Central and Eastern As signatory bank of the Principl
Slide 32: ESG ratings and indices: our efforts recognised thanks to improvements
● UniCredit - Public ESG ratings and indices: our efforts recognised thanks to improvements CCC B BB BBB A AA AAA ● Rating upgraded to “AA” as of July 23. Included in the Bloomberg MSCI Green Bond Index ● Improvements in efforts to manage social risks and robust integration of ESG practices into len
Slide 33: Annex
● UniCredit - Public Annex 33
Slide 34: Orderly accelerated solvent wind-down of our Russian activities
● UniCredit - Public Orderly accelerated solvent wind-down of our Russian activities Russia contribution to Group steadily decreasing: drag to growth and profitability but minimum losses Cross-border exposure, bn Net Local Loans1, bn Existing 2025 Plan targets: CONTINUING A CLEAR outsized orderly re
Slide 35: Deposit details
● UniCredit - Public Deposit details Deposits from customers (Net of repos and IC - EoP) 464bn (-0.5% Q/Q) 2Q24 avg commercial deposits, bn vs 1Q24 Gross customer deposits rates 2Q24 (vs 1Q24) Italy Italy 181 -0.2% -0.59% Germany By (-2bps) Central Europe region Eastern Europe Germany 130 -0.5% -1.8
Slide 36: Loan details
● UniCredit - Public Loan details Loans to customers (Net of repos and IC - 407bn (-0.3% Q/Q) 2Q24 avg gross commercial performing loans, bn vs 1Q24 Gross customer performing loan rates 2Q24 EoP) (vs 1Q24) Italy Italy 144 -1.5% 4.83% Germany By (-1bp) Central Europe region Eastern Europe Germany 110
Slide 37: Group gross loans breakdown by stages
● UniCredit - Public Group gross loans breakdown by stages (% of gross loans) o/w Gross NPE GROUP GROSS LOANS1 AND PROVISIONS EOP, bn Stage 3 2.6% 2.7% 2.7% 2.7% 2.6% 462 Stage 3 12 447 445 444 47.9% 48.1% 47.2% 45.5% 47.2% 440 12 12 12 Increase also related to a State 12 guaranteed single name repa
Slide 38: End notes
● UniCredit - Public End notes 38
Slide 39: Disclaimer
● UniCredit - Public Disclaimer This presentation may contain “forward-looking statements” which includes all offer or solicitation would be unlawful (the “Other Countries”), and there will be no statements that do not relate solely to historical or current facts and which are therefore public offer
Slide 40: General notes related to this presentation
● UniCredit - Public General notes related to this presentation 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 includes th
Slide 41: Main definitions
● UniCredit - Public Main definitions Allocated Capital Calculated as 13.0% of RWA plus deductions CAFR Current Account Fee Reduction in Italy Clients 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 (i) LLPs
Slide 42: Main definitions
● UniCredit - Public Main definitions HQLA 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 High-Quality Liquid Assets stress. These assets are unencumbered, which means free of legal, regulatory, contract
Slide 43: Main definitions
● UniCredit - Public Main definitions PD scenario Impacts deriving from probability of default scenario, including rating dynamics RoAC Annualized ratio between (i) Net profit after AT1/Cashes minus excess capital charge (where applicable) and (ii) average allocated capital, both as defined above Ro