Banco Bpm Spa · MIL:BAMI
Banco Bpm Spa — Banco Bpm Societa Ord — 9M 2022 Earnings Presentation
47 slides from Banco Bpm Spa's earnings presentation, Nov 8, 2022
Slide 1: Group 9M 2022 Results Presentation
Group 9M 2022 Results Presentation 08 November 2022
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by Banco BPM ("Banco BPM"); for the purposes of this notice, "presentation" means this document, any oral presentation, any question and answer session and any written or oral material discussed following the distribution of this document. The distribut
Slide 3: Methodological Notes
Methodological Notes ▪ Starting from 1 July 2022 Banco BPM Vita & Banco BPM Assicurazioni, previously held at 19%, have been consolidated 100% line-by-line. As a consequence: ▪ with regard to the balance sheet scheme, as of 30/09/22, the items relating to the portfolios of financial assets and liabi
Slide 4: Agenda
Agenda 1 Executive Summary 5 2 Key Highlights 12 3 9M 2022 Performance Details 27 4
Slide 5: Executive Summary
Executive Summary 1
Slide 6: Banco BPM: solid equity story based on a strong delivery track record
Banco BPM: solid equity story based on a strong delivery track record, with significant further upside OUTSTANDING AHEAD OF 1 2 STRATEGIC PLAN TRAJECTORY PERFORMANCE ADJ. NET INCOME AT €652M OPERATING PERFORMANCE: 9M 2022: Best 9M Result ever achieved EXCELLENT ▪ Adj. Cost/Income at 54.2% vs. <57% 2
Slide 7: Outstanding performance with pre-tax profit +27% Y/Y and +9% Q/Q
1 Outstanding performance with pre-tax profit +27% Y/Y and +9% Q/Q (Stated) P&L Long-term trend (Adjusted data) €m Q3 2021 Q2 2022 Q3 2022 Chg. Q/Q 9M 2021 9M 2022 Chg. Y/Y Best 9M result €m Evolution of 9M Net Income ever achieved Net interest income 516 528 551 1,536 1,590 +15.5% Y/Y Net fee and c
Slide 8: 2022E: one year ahead of Strategic Plan trajectory across main indicators
2 2022E: one year ahead of Strategic Plan trajectory across main indicators Stated FY data, € bn 2022 2023 ROTE1 2021 STRATEGIC Expected PLAN TARGET STATED TOTAL REVENUES 4.51 ~4.6 ~4.3 2022 2021 Expected1 O/W NII 2.04 ~2.2 >1.9 2023 STRATEGIC 5.5% ~7% PLAN TARGET OPERATING COSTS (2.52) >(2.5) ~(2.4
Slide 9: Solid asset quality: overdelivery of 2024 Strategic Plan targets
3 Solid asset quality: overdelivery of 2024 Strategic Plan targets Gross NPE stock down by €1.1bn YTD: -17.0% Gross NPE Ratio down to 4.7% from 5.6% at YE 2021 € bn 3.9% 6.6 (EBA definition)1 6.4 ~6.0 5.9% 5.5 5.3 5.6% UTP + PD 4.8% 4.7% 4.8% UTP + PD 4.4 4.2 4.0% 3.7% 3.5 3.3 Bad Loans 3.1% 2.9% Ba
Slide 10: Ample capital buffers
4 Ample capital buffers Significant organic capital generation, becoming even more valuable in light of the massive reduction in NPEs since the merger (-82%) Evolution of capital position and NPE stock since the merger CET1 Buffer vs. Min. Req. 1 2 ~ 160bps 387bps (Fully Loaded) NPE Stock 12.4% 2 30
Slide 11: Strengthened Business Model
5 Strengthened Business Model Bancassurance business: Digitalisation & Commercial Strategy ESG integration First step in integration • 100% of former BPM Vita, rebranded • Share of remote-based transactions up at 84% • Successful issue of three “Green” bonds in Banco BPM Vita, consolidated line-by-
Slide 12: Key Highlights
Key Highlights 2
Slide 13: Steady improvement in quarterly operating performance
Steady improvement in quarterly operating performance «Core» Revenues1: +1.3% Q/Q; +3.0% Y/Y Cost / Income: -2.3 p.p. Q/Q; -1.7 p.p. Y/Y €m €m 1,039 1,056 1,070 55.9% 56.4% 54.2% Q3 21 Q2 22 Q3 22 Q3 21 Q2 22 Q3 22 Pre-Provision Income: +9.5% Q/Q; +10.1% Y/Y LLPs: -3.4% Y/Y €m €m 534 9M 2022 Avg. Q.
Slide 14: NII: strong growth in Q3 2022 driven by commercial activities
NII: strong growth in Q3 2022 driven by commercial activities Y/Y trend Quarterly trend NII Evolution Bridge €m €m €m +12 +3.6% +6.8% +55 +4.5% +2 551 1,590 528 1,536 551 -46 516 528 512 Q3 21 Q1 22 Q2 22 Q3 22 Q2 22 Comm. Bond TLTRO Other Q3 22 9M 21 9M 22 activities Portfolio Special income Intere
Slide 15: Substantial NII tailwinds to be driven by rising interest rates
Substantial NII tailwinds to be driven by rising interest rates +15% Y/Y ECB Depo Facility NII outlook: significant upside expected % €m High-quality NII components to >€2.5bn ~ more than compensate the ~€2.18bn 1.50 lower TLTRO contribution 0.75 > +200 ~ 1,039 > (100) ~1,140 -0.50 0.00 30/6/22 21/7
Slide 16: Robust commercial performance
Robust commercial performance Driven by top quality franchise, rooted in the wealthiest areas of the country Growth of “Core” Net Performing Customer Loans1 SMEs2: increased share of secured exposure on track with Strategic Plan path % share of secured positions on total loans to SMEs € bn 21-24 (St
Slide 17: Total Fees and Commissions at €1,440m, +1.0% Y/Y
Total Fees and Commissions at €1,440m, +1.0% Y/Y thanks to strong commercial banking fees Commercial Banking fees Effectiveness of our business model in a complex scenario: €m • Lending fees: +€28m Y/Y (+31%) and +€12m Q3/Q3 (+34%) +4.9% 711.8 746.7 +3.4% • Payment services fees: +€15m Y/Y (+12%) an
Slide 18: Operating costs under control
Operating costs under control, notwithstanding current energy cost inflation and consolidation of insurance business from Q3 Adjusted1 operating costs: -1.1% Y/Y Adjusted1 operating costs: -0.8% Q/Q €m €m -1.1% -1.4% Y/Y -0.8% -1.7% Q/Q 1,904 1,884 Banking business2 625 632 627 Banking business2 184
Slide 19: Cost of Risk: consistent with solid credit profile
Cost of Risk: consistent with solid credit profile, proactive loan portfolio management and strengthened coverage ratios LLPs & Cost of Risk Improving migration rates: better than expected for FY 2022 €m Y/Y trend of LLPs Cost of Risk FY 21 9M 22 2022 Plan (annualised) Assumptions -26.1% 47bps Defau
Slide 20: Prudent loan portfolio management
Prudent loan portfolio management Loans guaranteed by the State Proactive management of borrowers exposed to Performing Guaranteed at 84% energy/raw material-intensive sectors GBV (average level) Early engagement campaigns activated starting from Q2 17.9 18.3 19.0 18.6 2022 on borrowers particularly
Slide 21: Strong funding & liquidity position
Strong funding & liquidity position Successful issuance activity: €2.25bn wholesale bonds issued, • €103.3bn of C/A and Deposits (84% of total o/w: €1.55bn with Green features Direct Funding) € bn 0.75 • Solid liquidity position: €36.4bn Cash + Unencumbered Liquid Assets1 0.50 0.40 0.30 0.30 • Stron
Slide 22: Optimization and higher diversification of Debt securities portfolio
Optimization and higher diversification of Debt securities portfolio Italian Govies: reduction in the share on total Govies and mostly concentrated in AC Debt securities portfolio: accounting classification Debt securities portfolio: composition by counterparty € bn € bn 31/12/16 30/09/21 31/12/21 3
Slide 23: Debt securities portfolio: contribution to NFR and limited impact from Italian Govies
Debt securities portfolio: contribution to NFR and limited impact from Italian Govies Reserves of debt securities at FVOCI NFR Trend of FVOCI-related Post-tax €m reserves mitigated by €m 128 the contribution to NFR 46 31/03/22 30/06/22 30/09/22 of FVOCI-related 75 49 components -158 (~€40m in Q3, la
Slide 24: Robust capital position and buffers
Robust capital position and buffers Fully Loaded CET1 Ratio: evolution Stated CET12 % % 13.50 12.8 +21bps +3bps 12.9 12.4 12.05 -14bps -28bps -19bps 1 30/06/2022 Q3 performance Dividends Other (including 30/09/2022 pre Delta FVOCI Bancassurance 30/09/2022 CET1 Fully CET1 phased-in & AT1 coupons RWA
Slide 25: 9M 2022 performance in a nutshell
9M 2022 performance in a nutshell Strong operating performance ❑ ADJUSTED NET INCOME AT RECORD LEVEL: €652m (+15.5% Y/Y) ❑ GROWTH IN CORE REVENUES: UP AT €3,167m (+2.0% Y/Y) ❑ SOLID PRE-TAX PROFIT: €1,001m (vs. €788m in 9M 2021: +27.1% Y/Y) ❑ C/I RATIO DOWN TO 54.4% (55.2% in 9M 2021) ❑ COST OF RISK
Slide 26: Performance Outlook FY 2022E
Performance Outlook NII sensitivity as key catalyst driving an upward revision of the profitability trajectory … FY 2022E Total Revenues Operating Costs Pre-provision Income NEW ~€4.6bn > €2.5bn >€2.0bn PREVIOUS GUIDANCE1 >€4.4bn ~€2.5bn >€1.9bn EPS Payout CET1 FL EPS: ~45 cents NEW EPS Adj.2: >50 c
Slide 27: 9M 2022 Performance Details
9M 2022 Performance Details 3
Slide 28: Quarterly Stated P&L results
Quarterly Stated P&L results Reclassified income statement (€m) Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Chg. Q/Q Chg. Q/Q % Net interest income 496.8 522.4 516.4 506.0 511.5 527.6 551.3 23.7 4.5% Income (loss) from invest. in associates carried at equity 41.5 56.5 46.8 87.1 49.6 41.5 31.6 -9.9 -23
Slide 29: 9M 2022 income statement: stated and adjusted comparison
9M 2022 income statement: stated and adjusted comparison Chg. Y/Y 9M 21 9M 22 Chg. Y/Y Reclassified income statement (€m) 9M 21 9M 22 % adjusted adjusted % Net interest income 1,535.6 1,590.5 3.6% 1,535.6 1,590.5 3.6% Income (loss) from invest. in associates carried at equity 144.9 122.7 -15.3% 144.
Slide 30: P&L: 9M 2022 stated and adjusted comparison with one-off details
P&L: 9M 2022 stated and adjusted comparison with one-off details 9M 2022 Reclassified income statement (€m) 9M 2022 One-off Non-recurring items adjusted Net interest income 1,590.5 1,590.5 0.0 Income (loss) from invest. in associates carried at equity 122.7 122.7 0.0 Net interest, dividend and simil
Slide 31: Reclassified Balance Sheet
Reclassified Reclassified assets (€ m) 30/09/21 31/12/21 30/06/22 30/09/22 Chg. Y/Y Value % Chg. YTD Value % Chg. Q/Q Value % Balance Sheet Cash and cash equivalents 20,133 29,153 33,109 24,370 4,237 21.0% -4,783 -16.4% -8,739 -26.4% Loans and advances measured at AC 120,156 121,261 120,540 113,234
Slide 32: Direct funding from the Banking business
Direct funding from the Banking business1 Direct customer funding2 (without Repos) € bn +1.1% -2.9% 121.4 123.2 126.4 122.7 Capital-protected Certificates Other Bonds Time deposits 101.4 104.0 106.7 102.8 C/A & Sight deposits (83.5%) (84.5%) (84.5%) (83.7%) (% Share on total) 30/09/2021 31/12/2021 3
Slide 33: Bond maturities: limited and manageable amounts
Bond maturities: limited and manageable amounts Institutional bond maturities Retail bond maturities € bn €3.4bn institutional bond No Retail bond maturities in the periods: reimbursed in 9M 2022 1.9 ➢ Q4 2022 1.4 ➢ FY 2023 0.5 0.5 ➢ FY 2024 0.5 Q4 2022 FY 2023 FY 2024 Senior Pref. Subordinated Cove
Slide 34: Liability profile: Bonds outstanding and issues
Liability profile: Bonds outstanding and issues Bonds Outstanding as at 30/09/2022 Nominal amounts Senior Preferred 14.2% Senior 6.7% Non-preferred Capital-protected 22.3% Certificates €18.7bn Subordinated €3.3bn, fully included 17.7% (AT1 and T2) Covered in Own Funds Bonds1 39.1% Wholesale bonds is
Slide 35: Indirect customer funding at €87.8bn
Indirect customer funding at €87.8bn Assets under Management (AuM) Assets under Custody (AuC)1 € bn € bn -8.0% -11.1% -2.1% 63.7 65.3 -4.6% 4.1 4.1 59.9 58.6 3.7 3.8 33.7 15.1 15.5 32.9 30.7 15.7 15.6 29.3 44.4 45.8 40.5 39.2 30/09/2021 31/12/2021 30/06/2022 30/09/2022 30/09/2021 31/12/2021 30/06/20
Slide 36: Focus on Govies portfolio
Focus on Govies portfolio Italian Govies at AC Italian Govies at FVOCI Italian Govies at FVTPL € bn € bn € bn -42.6% -50.6% -96.3% -16.8% -5.5% 12.7 -90.2% 10.3 8.8 7.3 4.3 1.9 1.7 2.2 2.1 0.7 0.7 0.1 30/09/21 31/12/21 30/06/22 30/09/22 30/09/21 31/12/21 30/06/22 30/09/22 30/09/21 31/12/21 30/06/22
Slide 37: Solid liquidity position: LCR at 179% & NSFR >100%
Solid liquidity position: LCR at 179% & NSFR >100% as at 30/09/2022 Cash + Unencumbered Assets1 € bn Additional liquid assets: 44.2 45.1 ~€1.9bn HQLA lent2 Eligible Assets 3.1 2.9 36.4 6.5 8.9 7.2 Excess ECB deposits 0.6 €5.9bn average amount in 9M 2022 28.0 32.0 Depo Facilities (O/N) with ECB 23.2
Slide 38: New lending at €20.3bn in 9M 2022: +20.6% Y/Y
New lending at €20.3bn in 9M 2022: +20.6% Y/Y New lending guaranteed by the State at €4.8bn in 9M 2022 New lending1: trend and composition Management data € bn 7.0 6.6 • Strong performance of new 6.3 6.7 5.8 5.8 1.1 lending to Enterprises & Households 1.1 4.8 1.1 0.8 1.0 1.1 Corporate on a yearly ba
Slide 39: Net Customer Loans
Net Customer Loans Sound increase in Performing Loans Net Customer Loans1 € bn +0.6% Change Net Performing Customer Loans 30/09/21 31/12/21 30/06/22 30/09/22 In % y/y In % YTD In % q/q -1.3% Core customer loans 99.7 99.5 102.8 102.9 3.2% 3.4% 0.0% - Medium/Long-Term loans 77.1 77.3 79.7 80.6 4.6% 4.
Slide 40: Analysis of gross Performing loan portfolio
Analysis of gross Performing loan portfolio Performing customer loan breakdown as at 30/09/2022 Management data, GBV Breakdown by customer segments Geographical breakdown (including GACS Senior Notes) (excluding GACS Senior Notes) Other (Public Sector, No-Profit, etc.) GACS Senior Notes 75.1% 4.8% 1
Slide 41: NPE flows & migration rates
NPE flows & migration rates Inflows from Performing to NPEs Outflows from NPEs to Perf. Loans Flows from UTP to Bad Loans €m €m €m +9.8% +87.8% +18.0% 136 348 735 295 670 72 9M 2021 9M 2022 9M 2021 9M 2022 9M 2021 9M 2022 Default rate Cure rate 1.8% 4.0% Danger rate 7.9% 11.2% 0.9% 0.9% (from UTP to
Slide 42: Asset Quality details
Asset Quality details Loans to Customers at AC1 Gross exposures 30/09/2021 31/12/2021 30/06/2022 30/09/2022 Chg. y/y Chg. YTD Chg. q/q €/m and % Value % Value % Value % Bad Loans 2,148 2,190 1,996 1,997 -150 -7.0% -193 -8.8% 1 0.1% UTP 4,386 4,126 3,405 3,218 -1,168 -26.6% -908 -22.0% -187 -5.5% Pas
Slide 43: Capital position in detail
Capital position in detail1 PHASED I N CAPI TAL PHASED I N 30/09/2021 31/12/2021 30/06/2022 30/09/2022 POSI TI ON (€/m and %) RWA COMPOSI TI ON 30/09/2021 31/12/2021 30/06/2022 30/09/2022 CET 1 Capital 9,654 9,387 8,884 8,316 (€/bn) T1 Capital 10,830 10,564 10,275 9,705 CREDI T & COUNTERPARTY Total
Slide 44: Strong development of digital banking
Strong development of digital banking - Digital adoption: ongoing growth % of Remote-based transaction (of which Mobile) # Customers enrolled in Digital Identity1 Banking APP Users & 2019 74% (7%) 2019 0k customer reviews2 Q3 2022 >84% (19%) 30/09/2022 >708 k INDIVIDUAL CLIENTS 1,680k Users (+9.8% v
Slide 45: Key ESG achievements in Q3 2022
Key ESG achievements in Q3 2022 €500m Green Senior Non Preferred Bond, issued in September 2022 IMPROVEMENTS IN ESG RATINGS under the €25bn EMTN programme • First Green Bond issued from Banco BPM in a Senior Non- • Sustainalytics ESG risk rating Preferred format and second Green SNP ever in Italy im
Slide 46: Details on Insurance business consolidated starting from 1 July 2022
Details on Insurance business consolidated starting from 1 July 2022 Banco BPM Vita & Banco BPM Assicurazioni portfolio fully consolidated starting from 1 July 2022 Technical reserves & Financial liabilities P&L contribution of Bipiemme Vita & Assicurazioni1 1 from insurance business Q3 22 30/09/22
Slide 47: Contacts for Investors and Financial Analysts
Contacts for Investors and Financial Analysts Roberto Peronaglio Banco BPM +39 02 9477.2090 Registered Offices: Piazza Meda 4, I-20121 Milano, Italy Tom Lucassen +39 045 867.5537 Corporate Offices: Piazza Nogara 2, I-37121 Verona, Italy Arne Riscassi +39 02 9477.2091 Silvia Leoni +39 045 867.5613 in
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