Unicredit S.p.a. · MIL:UCG
Unicredit — Q1 2016 Earnings Presentation
47 slides from Unicredit's earnings presentation, May 10, 2016
Slide 1: UniCredit Group 1Q16 results
UniCredit Group 1Q16 results Milan, May 10th 2016
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: Group net profit at 406m in 1Q16, fully loaded CET1 ratio at 10.85%
Group net profit at 406m in 1Q16, fully loaded CET1 ratio at 10.85% Operating • Group net profit 406m in 1Q16, including 239m post tax restructuring charges Performance • Core Bank net profit 1Q16 increased to c.1bn (excl. restructuring charges), 10.6% RoAC • Higher operating profitability due to re
Slide 4: Agenda
Agenda 1 Group 2 Core Bank 3 Non Core 4 Strategic Plan update & Conclusions 5 Annex 6 Financials 4
Slide 5: Group - Net profit at 406m in 1Q16 including one-offs
Group - Net profit at 406m in 1Q16 including one-offs in CB Austria and Italy. Adjusted net profit at 645m 1 2 3 4 5 6 Group - Results Net profit, m Net profit 1Q16 by division, m RoAC(3) Including -32m CB Italy 354 restr. charges(1) 16.8% CB Germany 108 11.5% -20.8% Including -207m CB Austria -224
Slide 6: Group - Sound balance sheet and liquidity position
Group - Sound balance sheet and liquidity position thanks to strength of the commercial franchise. Growing deposits offer potential for conversion into AuM 1 2 3 4 5 6 Group – Balance sheet Commercial loans, bn Commercial deposits, bn -0.5% +0.4% +9.6% +1.5% 436.9 433.2 434.9 360.2 389.1 394.8 Mar-1
Slide 7: Group – Stable fully loaded CET1 ratio at 10.85%
Group – Stable fully loaded CET 1 ratio at 10.85% 1 2 3 4 5 6 Group – Regulatory capital Fully loaded Common Equity Tier 1 ratio(1) +75bp +14bp 10.94% +10bp -6bp +4bp -13bp -4bp 10.80% 10.85% 10.10% Mar-15 Dec-15 2015 actual Dec-15 1Q16 earnings 1Q16 divid. FX (RWA RWA AFS & Other Mar-16 ex. scrip d
Slide 8: Group – Slight increase in RWA mainly driven by loan growth
Group – Slight increase in RWA mainly driven by loan growth in CB Italy & Germany 1 2 3 4 5 6 Group – Regulatory capital -26.3bn q/q, bn 420.6 +3.8bn Operational +4.8 -1.0 Credit +0.1 -1.0 -0.2 -0.7 Market 394.4 43.9 +4.3 40.7 -0.4 +0.5 390.6 +0.8 o.w. Market risk +0.2bn o.w. Operational risk -0.4bn
Slide 9: Group - Continued improvement of asset quality
Group - Continued improvement of AQ with net outflows and lower gross impaired loans. Coverage on gross impaired loans up to 51.7%. Net impaired loan ratio at 7.9% (-60bp y/y) 1 2 3 4 5 6 Group – Asset quality Gross impaired loans(1), bn Gross bad loans (sofferenze)(1), bn -5.1% +1.2% -0.9% +1.8% 83
Slide 10: Agenda
Agenda 1 Group 2 Core Bank 3 Non Core 4 Strategic Plan update & Conclusions 5 Annex 6 Financials 10
Slide 11: Core Bank - Net profit at 735m in 1Q16
Core Bank - Net profit at 735m in 1Q16, 973m adjusted for restructuring charges, with return on allocated capital of 10.6% 1 2 3 4 5 6 Core Bank – P&L Cost/Income, % Ch. % Ch. % P&L, m 1Q15 4Q15 1Q16 Q/Q Y/Y -0.3pp 57.2 58.5 58.1 Revenues 5,706 5,634 5,490 -2.6% -3.8% Net interest 2,942 3,065 2,903
Slide 12: Core Bank – Resilient revenues in 1Q16
Core Bank – Resilient revenues in 1Q16, with higher trading and investment fees offsetting pressure on net interest 1 2 3 4 5 6 Core Bank – P&L Net interest(1), m Net fees and commissions, m -1.3% -1.8% -5.3% +0.6% 2,942 3,065 2,903 1,983 1,935 1,946 1Q15 4Q15 1Q16 1Q15 4Q15 1Q16 Dividends and other
Slide 13: Core Bank - Net interest broadly flat q/q
Core Bank - Net interest broadly flat q/q excl. days, FX effect and 4Q15 one offs. Positive higher commercial dynamics thanks to reduced weight of term funding, repricing on deposits and higher loan volumes 1 2 3 4 5 6 Core Bank – Net interest Net interest bridge q/q, m 3,065 -0.4% -96 Average -55 2
Slide 14: Core Bank – New loan origination in CB Italy up q/q
Core Bank – New loan origination in CB Italy up q/q in both household mortgages and mid corporates with improving riskiness of portfolio 1 2 3 4 5 6 Core Bank – New loan origination UCI SpA new loans by CB Italy new loan origination, bn Probability of Default(1) 4.4 16% High 5% 4% 3.8 Small Business
Slide 15: Core Bank – Strong growth in investment fees
Core Bank – Strong growth in investment fees increasing 7.1% q/q. Financing fees down due to lower volumes and Transaction fees impacted by regulation & Forex 1 2 3 4 5 6 Core Bank – Fees & Commission Net fees and commissions, m Investment services fees, m -1.8% -1.1% Recurring fees +0.6% +7.1% (c.6
Slide 16: Core Bank – CB Italy growth in commissions q/q
Core Bank – CB Italy growth in commissions q/q driven by investment fees (+30.8% q/q, +7.5% y/y) despite slowdown in volumes 1 2 3 4 5 6 Core Bank – Fees & Commissions CB Italy Fees & Commissions, m Comments Investment Services • Significant increase in Investment fees driven by: +1.2% Financing Ser
Slide 17: Core Bank – Positive costs dynamics
Core Bank – Positive costs dynamics as a result of lower FTE and continued reduction of administrative expenses 1 2 3 4 5 6 Core Bank – Total costs Costs, m Staff expenses, m -2.1% -2.2% -0.9% -3.1% 2,057 2,032 2,013 3,264 3,293 3,191 1Q15 4Q15 1Q16 Other administrative expenses(1), m -4.2% -6.85% 1
Slide 18: Core Bank – LLP at 413m in 1Q16
Core Bank – LLP at 413m in 1Q16, cost of risk at 37bp benefitting from an exceptionally low level in CB Germany & Austria, CIB & Poland and a marked reduction across all other divisions 1 2 3 4 5 6 Core Bank – Loan loss provisions Loan loss provisions, m Divisional breakdown – 1Q16 CoR, bp q/q y/y -
Slide 19: Core Bank – CIB results benefit from strong customer franchise
Core Bank – CIB results benefit from a strong customer franchise enabling capital efficient revenues growth and cross divisional synergies 1 2 3 4 5 6 Core Bank – CIB RoAC Comments CIB 21.2% Group • Strong quarterly profitability sustained by commercial intensity and 16.8% favorable market condition
Slide 20: Core Bank – CEE strong performance continues
Core Bank – CEE strong performance continues to support Group results reaping the benefits of our geographical diversification 1 2 3 4 5 6 Core Bank – CEE Net Profit, m Comments +60.6% y/y at Const. FX • CEE countries confirmed growth engine within the Group with a low 177 285 +94% cost/income • Ope
Slide 21: Agenda
Agenda 1 Group 2 Core Bank 3 Non Core 4 Strategic Plan update & Conclusions 5 Annex 6 Financials 21
Slide 22: Non Core – Reduction of gross loans via focused de-risking
Non Core – Reduction of gross loans via focused de-risking, risk profile improvement and increased collections 1 2 3 4 5 6 Non Core – Main trends Gross customer loans, bn Main drivers of run-down • 0.1bn disposals in 1Q16 and further 0.4bn NPL Disposals sold in April -10.8bn -2.8bn 71.5 Back to • 1.
Slide 23: Non Core – gross impaired loans down
Non Core – gross impaired loans down with net outflows coupled with lower other impaired and increased coverage ratio at 52.5% 1 2 3 4 5 6 Non Core – Asset quality Gross impaired loans(1), bn Gross bad loans (sofferenze)(1), bn +4.1% -5.8% +1.1% -1.0% 36.3 37.4 37.8 54.7 52.0 51.5 Net Net 26.3 24.8
Slide 24: Agenda
Agenda 1 Group 2 Core Bank 3 Non Core 4 Strategic Plan update & Conclusions 5 Annex 6 Financials 24
Slide 25: Focus on execution delivering cost reduction, capital efficiency and growth
Focus on execution delivering cost reduction, capital efficiency and growth in investment fees in a challenging market environment 1 2 3 4 5 6 Strategic Plan – Update Strategic Plan Delivering on Strategic Plan in 1Q16 • Market shares in deposits (+0.3pp in Italy) and loans up in our core markets Le
Slide 26: Increased delivery of digital solutions with strengthened leadership in mobile banking
Increased delivery of digital solutions with strengthened leadership in mobile banking 1 2 3 4 5 6 Strategic Plan – Update on digital strategy Accelerate the digital transformation Main KPIs • New mobile offer for retail clients: mobile PFM1 and account # of online banking active users, m Delivery m
Slide 27: Concluding remarks
Concluding remarks 1 2 3 4 5 6 • Strong franchise and diversified geographical footprint delivering solid operating performance in a difficult environment with resilient revenues and improving costs and LLP • Positive contribution of all divisions to Group results, with significant growth in CB Ital
Slide 28: Agenda
Agenda 1 Group 2 Core Bank 3 Non Core 4 Strategic Plan update & Conclusions 5 Annex 6 Financials 28
Slide 29: Group - Non operating items affecting quarterly performance
Group - Non operating items affecting quarterly performance due to systemic charges and integration costs 1 2 3 4 5 6 Annex – Group Non operating items Non-operating items bridge, m 1,430 -390 -27 -260 -17 -246 ow c.248m SRF: 95m SRF in IT, 71m in Ger, 35m in AT and 47m in CEE o.w. c.200m for net ad
Slide 30: Core Bank – Resilient net interest y/y
Core Bank – Resilient net interest y/y with higher loan volumes and lower cost of funding offsetting negative impact of lower customer rates on loans 1 2 3 4 5 6 Annex – Net interest Core Bank Net interest bridge y/y, m -1.3% Euribor 3M 2,942 +111 -49 -54 2,903 +190 -81 -340 +184 -0.19% Commercial d
Slide 31: Core Bank – Customer loans confirmed upward trend
Core Bank – Customer loans confirmed upward trend in 1Q16 with commercial lending volumes up by 4.3bn driven by CB Italy, CIB and CEE 1 2 3 4 5 6 Annex – Balance Sheet Core Bank Customer loans, bn Divisional breakdown – Customer loans, bn At const. FX q/q y/y CB Italy(1) 135.5 +3.2% +1.9% +2.2% -0.0
Slide 32: Confirmed better asset quality trend vs banking system
Confirmed better asset quality trend vs banking system, with net inflows to impaired halved y/y 1 2 3 4 5 6 Annex – Asset quality Italy Other gross impaired loans Gross bad loans (sofferenze) Base 100 at Dec-12 Base 100 at Dec-12 UCI Spa(1) 137 138 141 138 UCI Spa(1) 169 137 135 164 165 ABI sample(1
Slide 33: Italy – Gross impaired continued reduction
Italy – Gross impaired continued reduction with other impaired loans down by over 20% y/y. Coverage ratio increasing above 51% on impaired 1 2 3 4 5 6 Annex – Asset quality Italy Gross impaired loans, bn Gross bad loans (Sofferenze), bn +7.9% +2.2% 38.6 40.7 41.6 -3.2% Net -0.7% bad loans 14.7 16.1
Slide 34: UCI SpA – Composition of the impaired loan portfolio and guarantees
UCI SpA – Composition of the impaired loan portfolio and guarantees 1 2 3 4 5 6 Annex – Asset quality UCI SpA collateral Gross impaired loans, bn – Dec-15 Secured bad loans, bn – Dec-15 Coverage ratio above 140% of gross 24.5 13.4 bad loans including cash coverage 18.9 55.4 and collateral after hair
Slide 35: Agenda
Agenda 1 Group 2 Core Bank 3 Non Core 4 Strategic Plan update & Conclusions 5 Annex 6 Financials 35
Slide 36: Group – P&L and volumes
Group – P&L and volumes Net profit at 406m in 1Q16 with resilient operating performance 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 ∆ % vs. ∆ % vs. 4Q15 1Q15 Total Revenues 5,749 5,735 5,332 5,589 5,476 -2.0% ▼ -4.7% ▼ Operating Costs -3,418 -3,435 -3,383 -3,382 -3,291 -2.7% ▼ -3.7% ▼ G
Slide 37: Core – P&L and volumes
Core – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 ∆ % vs. ∆ % vs. 4Q15 1Q15 Total Revenues 5,706 5,720 5,330 5,634 5,490 -2.6% ▼ -3.8% ▼ Operating Costs -3,264 -3,331 -3,258 -3,293 -3,191 -3.1% ▼ -2.2% ▼ Gross Operating Profit 2,442 2,389 2,072 2,340 2,299 -1.8% ▼ -5.9%
Slide 38: Commercial Bank Italy – P&L and volumes
Commercial Bank Italy – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 ∆ % vs. ∆ % vs. 4Q15 1Q15 Total Revenues 1,963 1,992 1,854 1,847 1,932 +4.6% ▲ -1.6% ▼ Operating Costs -1,055 -1,061 -1,043 -1,063 -1,092 +2.7% ▲ +3.5% ▲ Gross Operating Profit 908 931 811 784 840 +7.2%
Slide 39: Commercial Bank Germany – P&L and volumes
Commercial Bank Germany – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 ∆ % vs. ∆ % vs. 4Q15 1Q15 Total Revenues 633 693 668 654 652 -0.4% ▼ +3.0% ▲ Operating Costs -514 -503 -497 -484 -478 -1.0% ▼ -6.9% ▼ Gross Operating Profit 119 190 171 171 173 +1.3% ▲ +45.7% ▲ LLP -24
Slide 40: Commercial Bank Austria – P&L and volumes
Commercial Bank Austria – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 ∆ % vs. ∆ % vs. 4Q15 1Q15 Total Revenues 369 404 373 429 355 -17.2% ▼ -3.7% ▼ Operating Costs -336 -337 -327 -333 -313 -6.2% ▼ -7.0% ▼ Gross Operating Profit 32 67 47 96 42 -55.7% ▼ +30.8% ▲ LLP -27 31
Slide 41: CIB – P&L and volumes
CIB – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 ∆ % vs. ∆ % vs. 4Q15 1Q15 Total Revenues 1,099 1,040 839 911 1,061 +16.5% ▲ -3.4% ▼ Operating Costs -450 -463 -439 -422 -424 +0.4% ▲ -5.8% ▼ Gross Operating Profit 649 577 399 489 638 +30.5% ▲ -1.8% ▼ LLP -17 -95 78 19 -5
Slide 42: Poland – P&L and volumes
Poland – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 ∆ % vs. ∆ % vs. 4Q15 1Q15 Total Revenues 433 435 405 419 383 -6.3% ▼ -7.6% ▼ Operating Costs -190 -201 -194 -188 -187 +1.7% ▼ +2.3% ▼ Gross Operating Profit 242 234 211 231 196 -12.8% ▼ -15.4% ▼ LLP -33 -32 -30 -29 5 n
Slide 43: CEE division – P&L and volumes
CEE division – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 ∆ % vs. ∆ % vs. 4Q15 1Q15 Total Revenues 910 985 923 1,018 912 -8.4% ▼ +4.0% ▲ Operating Costs -352 -374 -361 -403 -361 -8.6% ▼ +4.4% ▲ Gross Operating Profit 558 611 561 616 551 -8.3% ▼ +3.8% ▼ LLP -175 -220 -35
Slide 44: Asset management – P&L and volumes
Asset management – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 ∆ % vs. ∆ % vs. 4Q15 1Q15 Total Revenues 227 228 223 241 208 -13.8% ▼ -8.4% ▼ Operating Costs -138 -150 -137 -184 -135 -26.8% ▼ -2.2% ▼ Gross Operating Profit 89 78 86 57 73 +28.3% ▲ -18.1% ▼ LLP 0 0 0 0 0 n.
Slide 45: Asset gathering (Fineco) – P&L and volumes
Asset gathering (Fineco) – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 ∆ % vs. ∆ % vs. 4Q15 1Q15 Total Revenues 137 131 140 137 140 +2.4% ▲ +2.5% ▲ Operating Costs -60 -60 -54 -59 -60 +2.1% ▲ +0.7% ▲ Gross Operating Profit 77 71 86 78 80 +2.7% ▲ +4.0% ▲ LLP -2 -1 -1 -3 -
Slide 46: Non Core – P&L and volumes
Non Core – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 ∆ % vs. ∆ % vs. 4Q15 1Q15 Total Revenues 43 15 2 -45 -14 n.m. ▲ n.m. ▼ Operating Costs -154 -104 -125 -89 -99 +11.7% ▲ -35.5% ▼ Gross Operating Profit -111 -89 -123 -134 -113 -15.5% ▲ +1.9% ▲ LLP -405 -317 -460 -491
Slide 47: Corporate Center & Other – P&L and volumes
Corporate Center & Other – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 ∆ % vs. ∆ % vs. 4Q15 1Q15 Total Revenues -64 -188 -95 -23 -153 n.m. ▼ n.m. ▼ Operating Costs -168 -183 -205 -158 -141 n.m. ▼ n.m. ▼ Gross Operating Profit -233 -371 -300 -180 -295 n.m. ▼ n.m. ▼ LLP 0