Unicredit S.p.a. · MIL:UCG
Unicredit — Q3 2016 Earnings Presentation
40 slides from Unicredit's earnings presentation, Nov 10, 2016
Slide 1: UniCredit Group 3Q16 results
UniCredit Group 3Q16 results Milan, November 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: Opening remarks
Opening remarks Positive dynamics of operating performance in 9M16 CET1 ratio at 10.82%, supported by Fineco & Pekao July's ABBs related to the new strategy and a one-off RWA reduction Gradual improvement of asset quality Non Core de-risking supported by NPL disposals In-depth strategic review to be
Slide 4: Agenda
Agenda 1 Group 2 Core Bank 3 Non Core 4 Concluding remarks 5 Annex 6 Financials 4
Slide 5: Group – Net profit at 447m in 3Q16, ROTE at 4.2%
Group – Net profit at 447m in 3Q16, ROTE at 4.2%. Net profit at 1.8bn in 9M16 1 2 3 4 5 6 Group – Results Net profit, m Net profit 3Q16 by division, m Adjustments to CB Italy 256 2Q16 results(1) 1,768 CB Germany 67 1,541 CB Austria 72 Poland 48 916 CEE 420 229 507 447 CIB 366 687 AG (Fineco) 25 3Q15
Slide 6: Group – Resilient commercial loans and growing deposits
Group – Resilient commercial loans and growing deposits confirm the strength of UniCredit's franchise 1 2 3 4 5 6 Group – Balance sheet Commercial loans, bn Commercial deposits, bn Total RWA / total assets, % +0.6% +7.0% -1.1pp -0.2% +2.0% -0.1pp 433.9 440.0 438.9 396.6 404.4 45.8 44.8 44.7 377.9 37
Slide 7: Group – Regulatory fully loaded CET1 ratio at 10.82%
Group – Regulatory fully loaded CET 1 ratio at 10.82%, supported by Fineco & Pekao ABBs in July and a one-off RWA reduction 1 2 3 4 5 6 Group – Regulatory capital Fully loaded Common Equity Tier 1 ratio +23bp +6bp -4bp +4bp 10.82% +20bp 10.33% 10.07% Sep-15(1) Jun-16 July ABBs 10% RWA AFS DBO Other
Slide 8: Group – RWA reduction due to lower credit and one-off
Group – RWA reduction due to lower credit and positive one-off in market risk 1 2 3 4 5 6 Group – Regulatory capital Main drivers of impact 340.2 337.6 333.1 q/q, bn Credit Market Operational Credit RWA -4.5bn -8.4bn 399.3 -1.8 Sep-15 Jun-16 Sep-16 -1.4 -0.4 -4.8 -0.6 22.1 -4.2 17.0 18.2 q/q, bn -0.
Slide 9: Group – Continued reduction of gross impaired loans
Group - Continued reduction of gross impaired loans 1 2 3 4 5 6 Group – Asset quality Gross impaired loans(1), bn Gross bad loans (sofferenze)(1), bn 1.3bn NPL -4.9% +1.4% disposals in 9M16 80.7 0.0% in Italy, ow.0.7bn 77.1 76.8 in 3Q16 50.6 51.3 51.3 Net imp. 39.6 36.7 36.4 Net Sep-15 Jun-16 Sep-16
Slide 10: Agenda
Agenda 1 Group 2 Core Bank 3 Non Core 4 Concluding remarks 5 Annex 6 Financials 10
Slide 11: Core Bank – Net profit at 0.9bn in 3Q16, RoAC at 10.4%
Core Bank – Net profit at 0.9bn in 3Q16, RoAC at 10.4%. Positive progression of operating performance y/y 1 2 3 4 5 6 Core Bank – P&L Ch. % Ch. % Ch. % P&L, m 3Q15 2Q16 3Q16 Q/Q Y/Y 9M15 9M16 Y/Y Revenues 5,330 6,205 5,529 -10.9% +3.7% 16,756 17,224 +2.8% Net interest 2,930 2,963 2,900 -2.1% -1.0% 8
Slide 12: Core Bank – Positive progression of revenues y/y
Core Bank – Positive progression of revenues y/y with trading income offsetting slowdown of core revenues (net interest and fees) 1 2 3 4 5 6 Core Bank – P&L Net interest(1), m Net fees and commissions, m -1.1% -1.7% -1.0% -0.7% 8,864 8,766 5,862 -2.1% 5,763 -3.7% 2,930 2,963 2,900 1,886 1,943 1,873
Slide 13: Core Bank – Net interest down q/q
Core Bank - Net interest down q/q with lower cost of funding and higher loan volumes mitigating the impact of lower rates on assets 1 2 3 4 5 6 Core Bank – Net interest Net interest bridge q/q, m -2.1% 2,963 2,900 +7 +28 -5 -104 +39 +46 -73 Average Euribor 3M Commercial dynamics: +4m -0.30% (-4bp q/
Slide 14: Core Bank – Fees affected by challenging market conditions
Core Bank – Fees affected by challenging market conditions and subdued activity in 3Q16 1 2 3 4 5 6 Core Bank – Fees & Commission Net fees and commissions, m Investment services fees, m Recurring fees (c.70% of tot. in 3Q16)(1) -0.7% -8.4% 2,634 2,617 829 895 820 -1.7% 5,862 5,763 3Q15 2Q16 3Q16 9M1
Slide 15: Core Bank – Positive costs dynamics q/q
Core Bank – Positive costs dynamics q/q supported by decreasing FTE and branches 1 2 3 4 5 6 Core Bank – Total costs Costs, m Staff expenses, m -4.0% -3.4% -2.9% 6,183 5,976 2,034 2,011 1,953 -2.8% 9,881 3Q15 2Q16 3Q16 9M15 9M16 9,600 -3.2% -2.7% Other administrative expenses(1), m 3,265 3,247 3,159
Slide 16: Core Bank – LLP at 462m in 3Q16, cost of risk 41bp
Core Bank – LLP at 462m in 3Q16, cost of risk at 41bp. Impaired loans coverage ratio at 50.7% 1 2 3 4 5 6 Core Bank – Loan loss provisions Loan loss provisions, m Divisional breakdown – 3Q16 CoR, bp q/q y/y -19.1% CB Italy 69 +0bp -5bp 1,716 1,388 -15.3% CB Germany 10 +14bp +21bp -10.0% 545 513 462
Slide 17: Agenda
Agenda 1 Group 2 Core Bank 3 Non Core 4 Concluding remarks 5 Annex 6 Financials 17
Slide 18: Non Core – Gross loans continued reduction by 1.4bn q/q
Non Core – Gross loans continued reduction by 1.4bn q/q. LLP at 546m, broadly flat q/q considering 100m LLP single name release in 2Q16 1 2 3 4 5 6 Non Core – Main trends Gross customer loans, bn Main drivers of run-down -8.9bn • 0.7bn disposals in 3Q16, additional 0.9bn Disposals closed in October
Slide 19: Agenda
Agenda 1 Group 2 Core Bank 3 Non Core 4 Concluding remarks 5 Annex 6 Financials 19
Slide 20: Concluding remarks
Concluding remarks 1 2 3 4 5 6 Concluding remarks 20
Slide 21: Agenda
Agenda 1 Group 2 Core Bank 3 Non Core 4 Concluding remarks 5 Annex 6 Financials 21
Slide 22: Group - Non operating items affecting quarterly performance
Group - Non operating items affecting quarterly performance due to systemic charges and income tax 1 2 3 4 5 6 Annex – Group Non operating items Non-operating items bridge, m 1,219 -216 -77 -48 -7 -328 ow c.122m DGS ow c.30m DTA fee in Italy ow c.64m levies in Austria, CEE&Poland +9 -103 -4 447 Tax
Slide 23: Core Bank – Resilient net interest Y/Y
Core Bank – Resilient net interest Y/Y with higher loan volumes and lower cost of funding mitigating the negative impact of lower loans customer rates and higher deposits volumes 1 2 3 4 5 6 Annex – Net interest Core Bank Net interest bridge y/y, m -0.6% Euribor 3M 2,930 2,918 -37 +140 -5 2,900 -12
Slide 24: Core Bank – Customer loans confirmed upward trend y/y
Core Bank – Customer loans confirmed upward trend y/y while down q/q due to market counterparts, with stable commercial lending volumes 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) 136.9 -0.8% +3.0% +3.4% -1
Slide 25: Italy – Gross impaired loans continued reduction
Italy – Gross impaired loans continued reduction with unlikely-to-pay down by over 12% y/y. Coverage ratio at 51.8% on impaired loans 1 2 3 4 5 6 Annex – Asset quality Italy Gross impaired loans(1), bn Gross bad loans (Sofferenze), bn +4.2% o.w. c.0.7bn -0.3% NPL sales in 3Q16 39.7 41.5 41.3 -2.9% N
Slide 26: Non Core – gross impaired loans down
Non Core – gross impaired loans down with both lower bad loans and unlikely-to-pay 1 2 3 4 5 6 Annex – Non Core Asset quality Gross impaired loans(1), bn Gross bad loans (sofferenze)(1), bn -5.3% +1.2% -1.5% -0.9% 52.5 50.4 49.7 36.6 37.4 37.1 Net Net impaired bad loans 25.3 23.7 23.1 14.7 15.0 14.6
Slide 27: UCI SpA – Composition of the NPE loan portfolio and guarantees
UCI SpA – Composition of the NPE loan portfolio and guarantees 1 2 3 4 5 6 Annex – Collateral in SpA Gross NPE loans, bn – June-16 Secured bad loans, bn – June-16 17.2 54.1 Coverage ratio above 140% of gross bad loans including cash coverage and 25.3 13.9 collateral after haircut with full fair 69.4
Slide 28: Agenda
Agenda 1 Group 2 Core Bank 3 Non Core 4 Concluding remarks 5 Annex 6 Financials 28
Slide 29: Group – P&L and volumes
Group – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 ∆ % vs. ∆ % vs. 9M15 9M16 ∆ % vs. 2Q16 3Q15 9M15 Total Revenues 5,749 5,735 5,332 5,589 5,476 6,139 5,455 -11.1% ▼ +2.3% ▲ 16,816 17,071 +1.5% ▲ Operating Costs -3,418 -3,435 -3,383 -3,382 -3,291 -3,289 -3,228
Slide 30: Core – P&L and volumes
Core – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 ∆ % vs. ∆ % vs. 9M15 9M16 ∆ % vs. 2Q16 3Q15 9M15 Total Revenues 5,706 5,720 5,330 5,634 5,490 6,205 5,529 -10.9% ▼ +3.7% ▲ 16,756 17,224 +2.8% ▲ Operating Costs -3,273 -3,343 -3,265 -3,287 -3,194 -3,247 -3,159
Slide 31: 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 2Q16 3Q16 ∆ % vs. ∆ % vs. 9M15 9M16 ∆ % vs. 2Q16 3Q15 9M15 Total Revenues 1,963 1,991 1,853 1,846 1,932 1,990 1,833 -7.9% ▼ -1.1% ▼ 5,806 5,754 -0.9% ▼ Operating Costs -1,070 -1,078 -1,055 -1,066 -1,099
Slide 32: 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 2Q16 3Q16 ∆ % vs. ∆ % vs. 9M15 9M16 ∆ % vs. 2Q16 3Q15 9M15 Total Revenues 636 696 671 657 652 605 594 -1.8% ▼ -11.5% ▼ 2,002 1,850 -7.6% ▼ Operating Costs -514 -503 -497 -484 -479 -479 -474 -1.1% ▼ -4.
Slide 33: 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 2Q16 3Q16 ∆ % vs. ∆ % vs. 9M15 9M16 ∆ % vs. 2Q16 3Q15 9M15 Total Revenues 368 404 373 429 355 421 391 -7.3% ▼ +4.6% ▲ 1,146 1,167 +1.8% ▲ Operating Costs -337 -337 -327 -332 -313 -319 -295 -7.6% ▼ -9
Slide 34: CIB – P&L and volumes
CIB – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 ∆ % vs. ∆ % vs. 9M15 9M16 ∆ % vs. 2Q16 3Q15 9M15 Total Revenues 1,096 1,035 836 908 1,061 1,111 1,050 -5.5% ▼ +25.7% ▲ 2,966 3,223 +8.7% ▲ Operating Costs -447 -461 -437 -422 -421 -436 -434 -0.5% ▼ -0.8% ▼ -1,34
Slide 35: Poland – P&L and volumes
Poland – P&L and volumes 1 2 3 4 5 6 Financials Euro (m) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 ∆ % vs. ∆ % vs. 9M15 9M16 ∆ % vs. 2Q16 3Q15 9M15 Total Revenues 433 435 405 419 383 462 406 -12.8% ▼ +3.6% ▲ 1,273 1,251 +3.0% ▼ Operating Costs -190 -201 -194 -188 -187 -187 -184 -2.4% ▼ -1.9% ▼ -586 -558 -0
Slide 36: 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 2Q16 3Q16 ∆ % vs. ∆ % vs. 9M15 9M16 ∆ % vs. 2Q16 3Q15 9M15 Total Revenues 911 985 923 1,018 912 1,137 1,023 -11.0% ▼ +11.8% ▲ 2,818 3,072 +13.0% ▲ Operating Costs -353 -375 -362 -402 -361 -379 -383 +0.3% ▲ +6.2%
Slide 37: 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 2Q16 3Q16 ∆ % vs. ∆ % vs. 9M15 9M16 ∆ % vs. 2Q16 3Q15 9M15 Total Revenues 227 228 223 241 208 215 208 -3.4% ▼ -6.9% ▼ 678 631 -7.0% ▼ Operating Costs -138 -150 -137 -184 -135 -124 -109 -11.7% ▼ -20.3% ▼ -424
Slide 38: 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 2Q16 3Q16 ∆ % vs. ∆ % vs. 9M15 9M16 ∆ % vs. 2Q16 3Q15 9M15 Total Revenues 137 131 140 137 140 149 132 -11.4% ▼ -5.7% ▼ 407 421 +3.3% ▲ Operating Costs -60 -60 -54 -59 -60 -58 -53 -7.2% ▼ -1.3% ▼ -174
Slide 39: 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 2Q16 3Q16 ∆ % vs. ∆ % vs. 9M15 9M16 ∆ % vs. 2Q16 3Q15 9M15 Total Revenues 43 15 2 -45 -14 -66 -74 +12.7% ▼ n.m. ▼ 60 -153 n.m. ▼ Operating Costs -145 -92 -118 -96 -97 -42 -69 +64.9% ▲ -41.6% ▼ -355 -207 -41.5% ▼ Gros
Slide 40: 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 2Q16 3Q16 ∆ % vs. ∆ % vs. 9M15 9M16 ∆ % vs. 2Q16 3Q15 9M15 Total Revenues -63 -184 -94 -22 -153 116 -107 n.m. ▼ +14.1% ▼ -341 -145 -57.6% ▲ Operating Costs -165 -179 -202 -150 -139 -149 -133 -10.8% ▼