Intesa Sanpaolo S.p.A. · MIL:ISP
Intesa Sanpaolo — Q1 2003 Earnings Presentation
40 slides from Intesa Sanpaolo's earnings presentation, May 13, 2003
Slide 1: 2003 First Quarter Results
2003 First Quarter Results May 13th, 2003
Slide 2: Overall Quarterly Performance
Overall Quarterly Performance ü Operating Results h Operating Margin up 37% QoQ and 17% YoY net of forex effect h Ordinary Income up 4% YoY net of forex effect h Cost/Income from 69% (FY02) to 63% h Net Income at €313m ü Improvement in Risk Profile h Further reduction in International Large Corporat
Slide 3: Operating Results
1. Operating Results 2. Improvement in Risk Profile 3. 2003 Outlook 2
Slide 4: Quarterly Analysis
Quarterly Analysis Total Income Operating Costs (€ m) (€ m) 2,700 1,800 2,600 1,700 2,500 2,400 1,600 2,300 2,200 1,500 1Q02 2Q02 3Q02 4Q02 1Q03 1Q02 2Q02 3Q02 4Q02 1Q03 Operating Margin Net Income (€ m) (€ m) 1,000 500 400 900 300 800 200 100 700 0 600 -100 1Q02 2Q02 3Q02 4Q02 1Q03 -200 500 -300 1Q
Slide 5: 1st Quarter Results: Sizeable Increase in Operating Margin
1st Quarter Results: Sizeable Increase in Operating Margin 1Q02 1Q03 D% % YoY (€ m) Pro- Pro-forma Official Restated(1) Net Interest Income 1,496 1,377 (8.0) (4.2) Dividends & Eq. Profits 31 45 45.2 45.2 Net Commissions 855 804 (6.0) (3.8) Other Non-Interest Income 211 288 36.5 46.9 Total Income 2,5
Slide 6: Quarterly Analysis: Sizeable Increase in Operating Margin
Quarterly Analysis: Sizeable Increase in Operating Margin 1Q02 2Q02 3Q02 4Q02 1Q03 D% % 1Q/4Q (€ m) Pro- Pro-forma Net Interest Income 1,496 1,397 1,416 1,434 1,377 (4.0) Dividends & Eq. Profits 31 115 14 32 45 40.6 +5.5% Net Commissions 855 846 799 820 804 (2.0) +5.5% excluding excluding4Q02 4Q02 c
Slide 7: Balance Sheet: Further Decrease in Interbank Exposure
Balance Sheet: Further Decrease in Interbank Exposure 31.12.02 31.03.03 D% % (€ m) Pro- Pro-forma Total Assets 280,570 282,036 0.5 Customer Loans 168,259 165,201 (1.8) Net Interbank Funds 14,718 11,393 (22.6) Customer Direct Deposits 181,272 181,356 0.0 +1.1% +1.1% Customer Indirect Funds 299,460 29
Slide 8: Well Diversified Source of Revenues
Well Diversified Source of Revenues 1Q03 Total Income Breakdown 1Q03 Total Income Breakdown by Business Area by Item Non-Inte il rest Inco Reta 43% me 66% Other Net P/L on Operating Financial Italian Banks Dividends & Income Product Transactions 14% Equity Profits 4% Companies 7% 2% 7% Net Commissio
Slide 9: Net Interest Income: Good Results in Funding on the Domestic Market
Net Interest Income: Good Results in Funding on the Domestic Market(1) D% % 1Q03 vs. 1Q02 Customer Deposits D% % 1Q03 vs. 1Q02 Customer Loans +14.3% +9.7% BBefore ef ore Securitization Securitization +9.4% Af ter Securitization After Securitization +6.5% +6.5% +1.3% Short Term Long Term Total -0.2 D
Slide 10: Strong Growth in Non-Interest Income
Strong Growth in Non-Interest Income 1Q02 2Q02 3Q02 4Q02 1Q03 D% % 1Q/1Q D% % 1Q/4Q (€ m) Pro- Pro-forma Official Restated(1) Net Commissions 855 846 799 820 804 (6.0) (3.8) (2.0) +19.2% P/L on Financial Transact. 94 129 (30) (4) 194 106.4 118.0 n.m. +19.2% excluding excluding 4Q02 4Q02capital capit
Slide 11: Positive Commercial Signs from 1Q03
Positive Commercial Signs from 1Q03 Mutual Funds (Net Subscriptions) Structured Bonds (€ m) (€ m) 1,700 1,000 500 0 -500 1Q02 2Q02 3Q02 4Q02 1Q03 -1,000 150 -1,500 -2,000 FY2002 1Q03 Bancassurance (New Premia) ØNet inflow of €1.3bn in Mutual Funds (€ m) 1,200 (€1.5bn as of 30.04.03) 1,100 1,000 Ø€1.
Slide 12: Further Significant Cost Reduction: Cost/Income Ratio from 69% to 63%
Further Significant Cost Reduction: Cost/Income Ratio from 69% to 63% 1Q02 2Q02 3Q02 4Q02 1Q03 D% % 1Q/1Q D% % 1Q/4Q (€ m) Pro- Pro-forma Official Restated(1) Personnel Costs 987 949 841 903 895 (9.3) (6.6) (0.9) Other Administrative Costs 620 561 554 648 536 (13.5) (9.6) (17.3) Depreciation 166 141
Slide 13: Total Net Provisions: Loan Losses Provisions in line with Full Year Forecasts
Total Net Provisions: Loan Losses Provisions in line with Full Year Forecasts 1Q02 2Q02 3Q02 4Q02 1Q03 D% % 1Q/1Q D% % 1Q/4Q (€ m) Pro- Pro-forma Official Restated(1) Net Prov. for Risks & Charges 62 216 17 58 38 (38.7) (33.3) (34.5) Net Prov. for Loan Losses 196 837 307 1,041 284 44.9 53.5 (72.7) E
Slide 14: Strong Improvement in Net Loan Provisions/Operating Margin Ratio
Strong Improvement in Net Loan Provisions/Operating Margin Ratio Ratios 2001 2002 31.03.03 2005 Pro- Pro-forma Pro- Pro-forma Net Loan Provisions/Op. Margin 76% 77% 31% 18% Net Loan Provisions/Loans 1.3% 1.4% 0.17% (1) 0.6% Net NPLs/Loans 3.0% 3.2% 3.2% 2.0% NPLs Coverage 59% 62% 63% 67% Ø 1Q Loan L
Slide 15: Decrease in NPLs & Substandard Loans
Decrease in NPLs & Substandard Loans Gross NPLs (Sofferenze) Sofferenze) Gross Substandard (Incagli (Incagli)) (€ m) (€ m) 14,239 -0.7% 14,136 5,669 -4.9% 5,390 31.12.02 31.03.03 31.12.02 31.03.03 Net NPLs (Sofferenze) Sofferenze) Net Substandard (Incagli (Incagli)) (€ m) (€ m) -1.3% 4,264 -1.1% 4,2
Slide 16: Divisional Analysis
Divisional Analysis Italian Foreign Central Retail(1) Product Corporate Total Retail Banks Co’s Banks Functions /Other Total Income (€ m) 1,119 354 179 432 369 61 2,514 Operating Margin (€ m) 300 149 100 289 136 (52) 921 Cost/Income (%) 73.2 57.8 44.3 33.0 63.1 n.m. 63.3 RWA (€ bn) 55.3 20.6 25.5 63
Slide 17: Divisional Analysis: Retail Division
Divisional Analysis: Retail Division D% 1Q02 1Q03 (€ m) 1Q03/1Q02 Total Income 1,123 1,119 (0.3) Operating Costs (891) (820) (8.0) Operating Margin 232 300 29.0 Net Provisions (89) (70) (21.3) Ordinary Income 143 229 60.6 Cost/Income 79.3% 73.2% Pretax ROE (1) 14.8% 25.4% EVA® (€ m) 6 70 Includes In
Slide 18: Divisional Analysis: Italian Banks
Divisional Analysis: Italian Banks D% 1Q02 1Q03 (€ m) 1Q03/1Q02 Total Income 339 354 4.6 Operating Costs (217) (205) (5.8) Operating Margin 121 149 23.3 Net Provisions (14) (20) 48.2 Ordinary Income 107 129 20.1 Cost/Income 64.2% 57.8% Pretax ROE (1) 36.8% 42.4% EVA® (€ m) 20 39 Figures may not add
Slide 19: Italian Banks: Cariparma, a Benchmark in Retail Banking
Italian Banks: Cariparma, a Benchmark in Retail Banking 31.03.02 31.03.03 D% % (€ m) Total Income 154 163 5.4 Operating Costs (85) (79) (7.0) Operating Margin 70 84 20.5 Ordinary Income 64 73 14.1 Net Income 33 42 28.9 Customer Deposits 10,535 10,605 0.7 Customer Loans 8,525 8,814 3.4 Ø Cost / Incom
Slide 20: Divisional Analysis: Product Companies
Divisional Analysis: Product Companies D% 1Q02 1Q03 (€ m) 1Q03/1Q02 Total Income 152 179 17.3 Operating Costs (80) (79) (0.7) Operating Margin 73 100 37.2 Net Provisions (27) (42) 53.4 Ordinary Income 45 58 27.5 Cost/Income 52.4% 44.3% Pretax ROE (1) 13.1% 15.3% EVA® (€ m) (5) 5 Includes Tax Collect
Slide 21: Divisional Analysis: Corporate Division
Divisional Analysis: Corporate Division D% 1Q02 1Q03 (€ m) 1Q03/1Q02 Total Income 392 432 10.2 Operating Costs (156) (143) (8.8) Operating Margin 235 289 22.8 Net Provisions (26) (21) (17.8) Ordinary Income 210 268 27.8 Cost/Income 39.9% 33.0% Pretax ROE (1) 16.7% 28.4% EVA® (€ m) 1 67 Figures may n
Slide 22: Divisional Analysis: Foreign Banks
Divisional Analysis: Foreign Banks D% D% 1Q02 1Q03 1Q03/1Q02 1Q03/1Q02 (€ m) Restated(1) Total Income 483 369 (23.6) (5.6) Operating Costs (306) (233) (23.8) (4.3) Operating Margin 177 136 (23.3) (7.6) Net Provisions (2) (55) (97) 78.4 n.m. Ordinary Income 120 36 (70.0) (66.3) Cost/Income 63.3% 63.1
Slide 23: Sudameris Highlights
Sudameris Highlights(1) of which Sudameris Brasil Sudameris Group(2) Sudameris Peru (€ m) 1Q02 1Q02 1Q03 1Q03 1Q02 1Q02 1Q03 1Q03 1Q02 1Q02 1Q03 1Q03 Total Income 177 115 119 68 68 43 Operating Costs (117) (66) (83) (63) (52) (38) Operating Margin 60 48 36 5 17 5 Ordinary Income 30 30 8 (44) (2) (5)
Slide 24: Eastern Europe Highlights
Eastern Europe Highlights CIB PBZ VUB (Hungary) (Croatia) (Slovakia) (€ m) 1Q02 1Q02 1Q03 1Q03 1Q02 1Q02 1Q03 1Q03 1Q02 1Q02 1Q03 1Q03 Total Income 39 44 76 66 48 50 Operating Costs (23) (24) (37) (36) (27) (28) Operating Margin 16 20 40 29 21 23 Ordinary Income 14 16 39 23 28 17 Net Income 11 13 30
Slide 25: Improvement in Risk Profile
1. Operating Results 2. Improvement in Risk Profile 3. 2003 Outlook 24
Slide 26: Reduction in Large Corporate Loans (RWA)
Reduction in Large Corporate Loans (RWA) 31.12.0 31.12.01 1 30.06.0 30.06.02 2 31.12.02 31.03.03 (€ bn) Italian Large Corporate RWA 19.7 16.8 15.3 15.4 Foreign Large Corporate RWA 33.7 31.1 23.2 19.0 Total Large Corporate RWA 53.4 47.9 38.5 34.4 RWA Change in the period (5.5) (9.4) (4.1) RWA Cumulat
Slide 27: Further Reduction in Credit Derivatives Exposure
Further Reduction in Credit Derivatives Exposure D 31.03.03 30.06 30.06.02 31.12.02 31.03.03 vs. 30.06.02 vs. 31.12.02 (€ bn) Super Senior Open Positions 3.6 1.8 1.9 (47.2)% 5.6% Other Open Positions 8.1 3.8 3.2 (60.5)% (15.8)% - of which Banking Book 7.0 3.0 2.4 (65.7)% (20.0)% Partially Hedged Sup
Slide 28: Disengagement from LatAm
Disengagement from LatAm Argentina Ø Merger of Sudameris Argentina with Banco Patagonia (Intesa will hold a stake below 20%) Ø €150m injection of new funds in 1Q03. New development plan to re-launch Sudameris Peru leveraged on h Stronger focus on retail segment through a branch network Peru properly
Slide 29: Disposal of Sudameris Brasil
Disposal of Sudameris Brasil Ø Accepted a binding offer from Banco ABN Amro Real for the purchase of 94.57% of Sudameris Brasil Ø According to the offer Banca Intesa · is due to receive BRL 527m (€158.1m(1)) in cash and BRL 1,766m (€529.8m(1)) in shares of Banco ABN AMRO Real. The price represents a
Slide 30: Strengthening of Capital Base
Strengthening of Capital Base Ratios 2005 31.12.01 31.12.02 31.03.03 Target Core Tier 1 5.3% 5.9% 6.0% 7.7% Tier 1 6.0% 6.8% 6.8% 8.6% Total Capital 9.3% 11.1% 11.2% 11.0% Ø Further improvement of Core Tier1 Ratio of 30b.p. expected from Sudameris Brasil disposal BP = Business Plan 29
Slide 31: 2003 Outlook
1. Operating Results 2. Improvement in Risk Profile 3. 2003 Outlook 30
Slide 32: 2003 Outlook
2003 Outlook Ø First quarter results in line with expectations Ø We are focusing on value creation by employing all possible levers (revenue growth, cost reduction, asset quality improvement & optimisation of capital allocation. Massive training already put into action) in all the segments of our we
Slide 33: Appendix
Appendix [x] Bancaintesa G)
Slide 34: Leverage on Retail Leading Market Position in Italy
Leverage on Retail Leading Market Position in Italy Ranking (1) 1 Branches 10.5% (2) 1 Loans 13.6% 27% in Lombardy (2) 1 Deposits 14.2% (1) 1 Factoring 25.0% 1 Pension Funds(1) 28.2% 2 Mutual Funds (3) 18.4% (2) 3 Leasing 6.7% 3,251 3,251 branches branches and and (4) 99 million clients million clie
Slide 35: Strong Presence in the Richest Italian Regions
Strong Presence in the Richest Italian Regions Branches(1) Deposits(2) Leadership in North- North-West North- North-West the richest 14% 22% Italian regions (>40% of GDP) North- North-East North- North-East 10% 11% Leadership in Lombardy: Branches: 16% Deposits: 27% Centre Centre Islands Islands 9%
Slide 36: Wealth Management
Wealth Management Mutual Funds Asset Mix(1) Indirect Funds Composition (€ bn) 299.5 299.5 290.6 290.6 Intesa 81.5% 88.7 87.7 Industry 68.6% 16.6 17.3 18.5 18.5 Mutual Funds 31.4% Life Insurance 175.7 167.0 18.5% Managed Portfolio Asset under Custody Equity/Flexible/ Bond/Monetary Funds 31.12.02 31.0
Slide 37: Put Warrant & Treasury Shares Mark to Market
Put Warrant & Treasury Shares Mark to Market Put Warrant / Treasury Shares Mark to Market (€ m) 183 138 6 (99) (437) (659) (1,157) (1,595) 2001 1Q 02 2Q 02 3Q 02 4Q 02 2002 2001-02 1Q 03 Cumulated Cumulated Cumulated Note: Treasury shares Carrying Value as of 31.03.03: €2.068; 319,214,748 treasury s
Slide 38: Well Diversified Domestic Loan Portfolio
Well Diversified Domestic Loan Portfolio Breakdown by Sector Breakdown by Geographical Area Of which: -Other Services for sale: 16% -Commerce, salvage & repairs: 10% -Construct. & Public Works: 7% -Agricultural & Industry machinery: 3% Family run Other North -Textile: 3% Households businesses North
Slide 39: Reduction in Large International Corporate
Reduction in Large International Corporate Intl. Large Corporate Exposure Overview 31.12.01 31.12.02 31.03.03 31.12.01 31.12.02 31.03.03 RWA €34bn €23bn €19bn Allocated Capital(1) €2.0bn €1.4bn €1.1bn 31.03. 03 Loans Breakdown(2) by Country Industry Rating Ø Europe 63% Ø Industrials 32% Ø Upper Inv.
Slide 40: Decrease in Net Interbank Borrowing
Decrease in Net Interbank Borrowing Net Interbank Borrowing (€ bn) - 70 % 37 28 15 11 Dec-01 Jun-02 Dec-02 Mar-03 Ø Reduction in Net Interbank Borrowing reached thanks to a decrease in loans and in securities portfolio and to a more effective ALM policy 39