Fixed Income Presentation Milan 16 November, 2017 Disclaimer This - - PowerPoint PPT Presentation
Fixed Income Presentation Milan 16 November, 2017 Disclaimer This - - PowerPoint PPT Presentation
Fixed Income Presentation Milan 16 November, 2017 Disclaimer This Presentation may contain written and oral forward - looking statements, which includes all statements that do not relate so lely to historical or current facts and which are
2
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, projections and provisional data concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the control of UniCredit S.p.A. (the “Company”). There are a variety of factors that may cause actual results and performance to be materially different from the explicit or implicit contents of any forward-looking statements and thus, such forward-looking statements are not a reliable indicator of future performance. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. The information and
- pinions contained in this Presentation are provided as at the date hereof and are subject to change without notice. Neither this Presentation nor any part of it nor the
fact of its distribution may form the basis of, or be relied on or in connection with, any contract or investment decision. The information, statements and opinions contained in this Presentation are for information purposes only and do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to purchase or subscribe for securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. None of the securities referred to herein have been, or will be, registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state or other jurisdiction of the United States or in Australia, Canada or Japan or any other jurisdiction where such an offer or solicitation would be unlawful (the “Other Countries”), and there will be no public offer of any such securities in the United States. This Presentation does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or the Other Countries. Pursuant the consolidated law on financial intermediation of 24 February 1998 (article 154-bis, paragraph 2) Francesco Giordano, in his capacity as manager responsible for the preparation of the Company’s financial reports declares that the accounting information contained in this Presentation reflects the UniCredit Group’s documented results, financial accounts and accounting records. This Presentation has been prepared on a voluntary basis since the financial disclosure additional to the half-year and annual ones is no longer compulsory pursuant to law 25/2016 in application of Directive 2013/50/EU, in order to grant continuity with the previous quarterly presentations. The UniCredit Group is therefore not bound to prepare similar presentations in the future, unless where provided by law. Neither the Company nor any member of the UniCredit Group nor any of its or their respective representatives, directors or employees accept any liability whatsoever in connection with this Presentation or any of its contents or in relation to any loss arising from its use or from any reliance placed upon it.
Transform 2019 update Asset quality Capital position Funding & Liquidity
4 5 6
3Q17 P&L results
3 2 1
UniCredit at a glance
7 Concluding remarks
Agenda
3
Adjusted net profit(1) at 838m up 87% Y/Y thanks to tangible results of Transform 2019 and underlying Group-wide business momentum
- 1. Adjusted net profit excluding the net impact from Pioneer (+2.1bn 3Q17) disposal and a one-off charge booked in Non Core (-80m in 3Q17) related to FINO. All costs and charges pertaining to the FINO
transaction have been accounted for, including a one-off charge of 80m booked in Non Core in 3Q17 as included in the disclosure on 24 October 2017 of 3Q preliminary results 2. Calculated as difference between number of clients at beginning and end of period
1 2 3 4 5 6 7
Strong commercial dynamics thanks to network revamp. YTD: Number of clients increased by 423,000(2) and 52bn of new loan production. 9M17 vs. 9M16: AuM up 15.3bn (+7.8%) and fees up 261m (+5.5%) Operating model transformation ahead of plan, with 59% of planned branch closures and 51% of FTE reductions already achieved. FY17 total costs expected to be marginally lower than the 11.7bn target 3Q17 CoR at a low 53 bps. FY17 CoR estimated to be between 55 and 60bps. Expected Loss of the stock and new origination at 38bps and 34bps respectively, both down 1bp Q/Q, supported by strict risk discipline 3Q17 fully loaded CET1 ratio at a high 13.81%, thanks to Pioneer disposal and earnings generation
UniCredit at a glance
4
UniCredit at a glance
UniCredit: a simple successful Pan European Commercial Bank with inherent competitive advantages and CIB fully plugged-in
5
Commercial Banking model delivering unique Western, Central and Eastern European network to extensive Retail and Corporate client franchise "One Bank" business model replicated across full network, driving synergies and streamlined operations CIB plugged into Commercial Banking, enabling cross-selling and synergies across business lines and countries Low risk profile business model benefiting from diversification and a more stable macro/regulatory environment 25 million clients(1) 80% revenues from Commercial Banking(2) Commercial Banks with leadership position(3) in 13 out of 14 countries(4) €2.1bn joint CIB-Commercial Banking revenues(5) 93% revenues in EU 54% outside Italy
1 2 3 4 5 6 7
- 1. Data as of 9M2017, includes 100% clients in Turkey 2. CBK Italy, CBK Germany, CBK Austria, CEE 3. Data as of 9M2017 or latest available, ranking between #1 and #5 of market share in terms of
total assets according to local accounting standard 4 Italy, Germany, Austria, Czech Republic, Slovakia, Hungary, Slovenia, Croatia, Bosnia and Herz., Serbia, Russia, Romania, Bulgaria, Turkey 5. Data as
- f 9M2017 includes revenues on GTB, ECM, DCM, M&A, Markets products from Commercial Banking clients and structured financing products from Corporate clients
Note: Revenues data as of 9M2017 Sources: for total assets, central bank statistics, if available, or local company reports
Strong competitive advantage across countries and products
Strong local Commercial Bank Best-in-class CIB product provider
Rank by assets in Europe(2) 2 3 1 Germany Austria CEE 1 Italy # clients, m(1) 1.6 1.7 7.6 13.6 Revenues by geography(4) EMEA rankings(5) EMEA Bonds in Euro by # of transactions(5) 1 1 Syndicated Loans in Austria(5) 1 Syndicated Loans in Italy(5) 1 Syndicated Loans in Germany(5)
- 1. Data as of 3Q17, includes 100% clients on Turkey 2. Data as of 9M17, for Austria domestic assets as of end of 2015 on local GAAP (source OeNB), for Germany data as of FY16, only private banks; for CEE
compared to Erste, KBC, Intesa Sanpaolo, OTP, RBI, Société Générale (data as of 9M17) 3. Data as of 9M17; peers includes: BNP Paribas, Deutsche Bank, Intesa Sanpaolo, Santander, Société Générale
- 4. Data as of 9M17 based on Regional view 5. Dealogic, as of 4 October 2017 6. Source: EuroMoney Trade Finance Survey 2017 7. Source: EuroMoney Cash Management Survey 8. Source: EuroMoney
Cash Management
"Go to" bank for European "Mittelstand" Corporates
Loans to corporates in EU zone, €bn(3)
Awards
1 2 3 4 5 6 7 UniCredit at a glance 20% 24% 9% 46% Italy CEE Austria Germany
6
Peer 3 Peer 2 UniCredit Peer 1 Peer 5 Peer 4 Five-Star Cash Manager in Western Europe and CEE in 2017(8) Best Trade Finance Provider in Western Europe and CEE in 2017(6) Best Bank in Cash Management in 11 countries(7)
Agenda
UniCredit at a glance
1 2 Transform 2019 update
7
Asset quality Capital position Funding & Liquidity
4 5 6
3Q17 P&L results
3 7 Concluding remarks
UniCredit key targets
2015 Revenues(1) €20.4bn CET1 FL ratio 10.4% >12.5% Group Bad Loan Coverage 60.6% >63% Cost of Risk 89bps 49bps Cost €12.2bn €10.6bn RWA €361bn €404bn Group UTP Coverage 34.2% >38% Group NPE Coverage 50.8% >54% Non Core Net NPE €24.8bn €8.1bn Non Core NPE Coverage 52.4% >57% Net income €4.7bn €1.5bn Cost/income <52% 61.6%
- 1. Revenues 2015-2019 CAGR at 0.6% 2. RoTE adjusted excluding the net impact from the Pekao (-310m FX reserve in 2Q17) and Pioneer (+2.1bn in 3Q17) disposals and a one-off charge booked in Non
Core (-80m in 3Q17) related to FINO. All costs and charges pertaining to the FINO transaction have been accounted for, including a one-off charge of 80m booked in Non Core in 3Q17 as included in the disclosure on 24 October 2017 of 3Q preliminary results. RoTE calculated at CMD perimeter, considering also the capital increase and Pekao & Pioneer disposals as at 1 January 2017 3. Assuming foreseeable dividends calculated as at 30 September 2017 equals to 20% payout ratio on normalised earnings excluding the net impact of Bank Pekao and Pioneer disposals Note: All 2015 figures restated assuming new Group perimeter; Transform 2019 plan assumes a cash dividend with 20% payout
Group Gross NPE Stock €44.3bn €77.8bn Group Net NPE Stock €20.2bn €38.3bn 1 2 3 4 5 6 7 RoTE(2) 4% >9% Transform 2019 update €19.9bn
8
2019 2017 3Q17 >12.0% 13.81%(3) >65% 66.2% 55 to 60bps 53bps €11.7bn €389bn €350bn >38% 44.0% >54% 56.5% €11.4bn €12.4bn >56% 57.1% €51.3bn €22.3bn 6.8% 60.5% €2.8bn €2.8bn €4.6bn 9M17 54bps 7.8% 57.9% €8.6bn €4.7bn €14.8bn
STRENGTHEN AND OPTIMIZE CAPITAL IMPROVE ASSET QUALITY
- Bold actions taken: disposals of Pioneer,
Pekao and 30% of Fineco
- €13bn rights issue successfully executed
- Decisive actions to address Italian legacy
issues
- Strengthened coverage ratio
- Further tightened risk discipline
All decisive actions announced at the Capital Markets Day successfully completed Pioneer disposal closed in 3Q17, with +84bps positive impact on fully loaded CET1 ratio Fully loaded CET1 ratio at 13.81% at end of 3Q17 S&P upgraded UniCredit SpA to 'BBB' stable
- utlook (from 'BBB-' stable) supported by the
successful execution of Transform 2019 FINO Phase 1 successfully closed in July, Phase 2 progressing well, expecting to sell down below 20% by year end Disposals of 2.4bn(1) NPE portfolios in 9M17 Gross NPE ratio down by 34bps to 10.6% in 3Q17, while the coverage ratio remains solid at 56.5% CET1 ratio >12.5% NPE Coverage >54% Net NPE ratio 4% Cost of Risk 49bps
1 2 3 4 5 6 7 Transform 2019 update
Transform 2019 achievements (1/2)
9
5 Strategic Pillars 2019 Target Achieved
- 1. Of which 1.2bn in Non Core
Achieved 5 Strategic Pillars
TRANSFORM OPERATING MODEL
- Transformation of operating model to a
sustainable lower cost structure
- Improve customer focus, services & products
- €1.6 bn IT investments(1) to support business
transformation 557 branch closures since Dec-15 in Western Europe, 59% of 944 target FTEs down 7,232 since Dec-15, 51% of 14,000
- target. FTEs down 1,223 Q/Q
€1.7 bn net cost savings by 2019 C/I ratio <52% MAXIMIZE COMMERCIAL BANK VALUE
- Leverage on CIB leadership
- Increase CEE client penetration
- Enhance cross-selling across business lines
and countries €856 bn TFA Additional €363 m joint CIB- Commercial Banking revenues(5) Ranking #1 in “Syndicated Loans” in Italy, Germany and Austria, #2 in “Syndicated Loans in CEE” and #1 in “EMEA All Covered Bonds in Euro”(2) Number of remote sales(3) increased in Italy by 40% Y/Y reaching 18.6% of total sales(4) in 3Q17 Number of online and mobile users in CEE increased to 39.7% and 28.3% in 3Q17 Further progress in E2E process/product redesign ADOPT LEAN BUT STEERING CENTER
- Effective steering Group Corporate Center
- KPIs to drive performance and accountability
- Leaner support functions and transparent cost
allocation Weight of Group Corporate Center on total costs from 5.1% to 2.9% by 2019 Since Dec-15 FTEs down 8.8% (-1,534 FTEs). Trend confirmed in 3Q17 Weight of Group Corporate Centre on total costs at 3.9% in 3Q17 (2015 actual: 5.1%, 2019 target: 2.9%) down 30bps Q/Q
- 1. Excluding €0.7 bn investments to fulfill regulatory demand in 2017-19 2. Source: Dealogic, as at 30 September 2017. Syndicated Loans: Italy, Germany and Austria by number of deals and deal value,
CEE by deal value; EMEA All Covered Bonds in Euro by number of deals 3. Transactions concluded through ATM, online, mobile or Contact Centre 4. Percentage of remote sales calculated on total bank products that have a direct selling process 5. Includes revenues on GTB, ECM, DCM, M&A, Markets products from Commercial Banking clients and structured financing products from Corporate clients
944 branch reduction in Western Europe
1 2 3 4 5 6 7 Transform 2019 update
10
Transform 2019 achievements (2/2)
2019 Target
Agenda
UniCredit at a glance
1
Transform 2019 update
2 3
3Q17 P&L results
11
Asset quality Capital position Funding & Liquidity
4 5 6 7 Concluding remarks
3Q17 P&L results
Data in m Total revenues 4,835 5,076 4,646
- 8.5%
- 3.9%
15,190 14,776
- 2.7%
- /w Net interest
2,591 2,652 2,500
- 5.7%
- 3.5%
7,893 7,716
- 2.2%
- /w Fees
1,527 1,730 1,592
- 7.9%
+4.2% 4,763 5,025 +5.5%
- /w Trading
478 462 381
- 17.6%
- 20.3%
1,675 1,434
- 14.4%
Operating costs
- 2,940
- 2,858
- 2,813
- 1.6%
- 4.3%
- 8,898
- 8,557
- 3.8%
Gross operating profit 1,896 2,218 1,833
- 17.4%
- 3.3%
6,292 6,220
- 1.2%
Loan loss provisions
- 977
- 564
- 598
+6.0%
- 38.8%
- 2,621
- 1,833
- 30.1%
Net operating profit 919 1,654 1,235
- 25.3%
+34.4% 3,672 4,387 +19.5% Other charges & provisions
- 247
- 135
- 273
n.m. +10.5%
- 1,105
- 871
- 21.2%
- /w Systemic charges
- 173
- 19
- 149
n.m.
- 13.5%
- 788
- 603
- 23.5%
Profit before taxes 638 1,338 926
- 30.8%
+45.2% 2,181 3,318 +52.1% Income taxes
- 277
- 143
- 181
+27.0%
- 34.5%
- 630
- 543
- 13.8%
Net profit from discontinued operations 190
- 133
2,126 n.m. n.m. 564 2,155 n.m. Net profit 447 945 2,820 n.m. n.m. 1,768 4,672 n.m. Adjusted net profit(2) 447 1,255 838
- 33.3%
+87.4% 1,739 3,000 +72.5% 9M16 9M17 ∆ % vs. 9M16 2Q17 3Q17 ∆ % vs. 3Q16 ∆ % vs. 2Q17 3Q16
- 1. Please consider that across the document, all 2016 and 2017 figures were restated for the consolidation effects arising from the intercompany fees relating to Bank Pekao and Pioneer, which until 2Q17
were classified as held for sale, in accordance to IFRS5 principle 2. Adjusted net profit excluding the net impact from the Pekao (-310m FX reserve 2Q17) and Pioneer (+2.1bn 3Q17) disposals and a one-off charge booked in Non Core (-80m in 3Q17) related to FINO. All costs and charges pertaining to the FINO transaction have been accounted for, including a one-off charge of 80m booked in Non Core in 3Q17 as included in the disclosure on 24 October 2017 of 3Q preliminary results
Key drivers(1)
1 2 3 4 5 6 7
Group – Adjusted net profit up 87% Y/Y thanks to strong underlying commercial performance, down 33% Q/Q impacted by seasonality
- Net interest in 3Q17 decreased 5.7% Q/Q or 2.4% excluding one-
- ff in CBK Germany in 2Q17 (+90m). Down 3.5% Y/Y mainly due
to continued spread compression
- Fees increased 4.2% Y/Y thanks to investment and transactional
- fees. Q/Q down 7.9% due to seasonality
- Costs down 1.6% Q/Q thanks to lower HR costs (-2.3% Q/Q) and
Non HR costs (-0.4% Q/Q). FY17 total costs expected to be marginally lower than the 11.7bn target
- Low level of LLP at 598m in 3Q17 leading to 53bps CoR, FY17
CoR estimated to be between 55 and 60bps
- Systemic charges increased 130m Q/Q mainly due to Deposit
Guarantee Scheme and Voluntary Scheme in Italy
- Net profit from discontinued operations includes Pioneer disposal
(+2.1bn)
12
Group – Lower recurring revenues Q/Q affected by low interest rate environment and seasonality of fees in 3Q17
3Q17 P&L results
Fees & commissions, m Net Interest, m
1,540 1,653 638 1,852 2,083 559 548 531 1,288 1,372 396 450 428 732 569 +4.3%
- 7.9%
+5.5%
9M17 5,025 9M16 4,763 3Q17 1,592 2Q17 3Q16 1,527 1,730
- 3Q17 NII positive contribution from deposits rate and term
funding partially offsetting effects from lower rates and average loan volumes. FY17 guidance confirmed at 10.2bn
- 3Q17 fees up 4.2% Y/Y supported by investment and transactional
- fees. Seasonally lower contribution Q/Q of investment and
financing fees
Investment fees Financing fees Transactional fees Net interest margin
1.30% 1.42% 1.35%
1 2 3 4 5 6 7 7,716 7,893 2,500 2,652 2,591
- 3.5%
- 5.7%
- 2.2%
9M17 9M16 3Q17 2Q17 3Q16
13
- 0.33%
(flat Q/Q)
Average Euribor 3M
3Q17 P&L results
Dividends(1), m Trading income, m
179 386 652 202 353 382
- 17.6%
- 20.3%
- 14.4%
9M17 1,434 1,048 9M16 1,675 1,023 3Q17 381 2Q17 462 110 3Q16 478 97
321 262 87 97 80 375 256 86 102 85
- 25.5%
9M17 518 9M16 696 3Q17 165 2Q17 183 3Q16 189
- 12.8%
- 10.0%
- 1. Figures include dividends and equity investments. Turkey contribution at equity based on divisional view 2. Client driven trading includes value adjustments equal to +8m in 3Q17: credit value adjustments of -
5m, funding value adjustment of +10m and fair value adjustment of +2m 3. 3Q17 non-recurring capital gains pre tax: +87m in CIB and +39m in CBK Germany
Turkey (at equity) Other dividends and equity investments
1 2 3 4 5 6 7
Group – Trading income down 17.6% Q/Q in an unfavourable sector-wide environment
Client driven Other trading
- Lower client(2) activity by 43% Q/Q due to unfavourable sector-
wide environment
- Other trading income excluding non-recurring capital gains(3) in
3Q17 down by 51.8% Q/Q
- Turkey's contribution flat Q/Q mainly due to FX movement (at
constant FX, +4.1% Q/Q)
- Other dividends down to 80m due to lower contribution from
insurance and other participations
669m exc. Visa Europe
14
3Q17 P&L results
C/I
Costs, m
- 4.3%
- 1.6%
- 3.8%
9M17 8,557 9M16 8,898 3Q17 2,813 2Q17 2,858 3Q16 2,940
- Execution of Transform 2019
progressing well: 51% of FTE reduction target achieved 59% of branch closures reached
- FTE down 5,117 Y/Y
- Branches in Western Europe
further down 377 Y/Y
- C/I down to 58% in 9M17
- FY17 total costs expected to
be marginally lower than the 11.7bn target, despite seasonal increase in HR and Non HR costs in 4Q17
- FY19 10.6bn total costs target
confirmed
1 2 3 4 5 6 7
Group – Costs 1.6% lower Q/Q and 4.3% Y/Y, ahead of plan on better FTE and branch reduction
FTEs
- 1,223
- 5,117
WE CEE 3Q17 94,066 69,932 24,134 2Q17 95,288 71,035 24,254 3Q16 99,183 74,693 24,490
Q/Q
- 0.5%
- 1.6%
Branches(1)
- 134
- 515
WE CEE 3Q17 4,975 3,252 1,723 2Q17 5,109 3,345 1,764 3Q16 5,490 3,629 1,861
Q/Q
- 2.8%
Main drivers
- 2.3%
60.8% 56.3% 60.5% 58.6% 57.9% 15
- 1. Branch figures consistent with CMD perimeter
3Q17 P&L results
Loan loss provisions, m
Cost of risk
- Cov. ratio
gross NPE
Main drivers(1)
1 2 3 4 5 6 7
Gross NPE ratio
- LLPs on a low level at 598m, with CoR at 53bps in 3Q17
and at 54bps at 9M17
- Gross NPE ratio down 34bps to 10.6% with solid coverage
ratio at 56.5%
- CoR across divisions in 3Q17:
- i. CBK Italy down to 61bps
- ii. 0bps in CBK Germany below normalised level, driven
by write-backs
- iii. 12bps in CBK Austria after 1H17 net write-backs
- iv. In CEE 106bps (+53bps Q/Q, +5bps Y/Y), back at
normalised levels, after write-backs in 2Q17
- v. CIB's CoR at normalised levels of 20bps
Group – Low CoR of 53bps in 3Q17. FY17 CoR expected to be between 55 and 60bps
598 564 977
- 30.1%
- 38.8%
+6.0% 9M17 1,833 9M16 2,621 3Q17 2Q17 3Q16
- 1. Starting from 31 December 2016 the credit exposures belonging to the so-called “FINO Portfolio” were recognised in the item “Non-current assets and disposal groups classified as held for sale”. Following
the “FINO portfolio” disposal occurred in July 2017 and the application of the IAS 39 principle, the credit exposures related to such a portfolio have been derecognised for accounting purposes from the balance sheet assets. Group asset quality ratios calculated, on a pro forma basis, including the underlying credit positions of the whole FINO portfolio as at 30 September 2017 are the following: gross NPE ratio of 13.5% (13.9%in 2Q17); net NPE ratio of 5.3% (5.5% in 2Q17); NPE coverage ratio of 64.3% (64.0%in 2Q17); gross bad loans ratio of 9.1% (9.3% in 2Q17); net bad loans ratio of 2.6% (2.6% in 2Q17); bad loans coverage ratio of 74.4% (74.4% in 2Q17)
+85bps +50bps +53bps 52.2% 56.3% 56.5% 15.2% 11.0% 10.6% +77bps +54bps
16
Agenda
Transform 2019 update 3Q17 P&L results
3 2
UniCredit at a glance
1 4
Asset quality
17
Capital position Funding & Liquidity
5 6 7 Concluding remarks
Asset quality
Non Core – Run down progressing
Actions of Non Core run down(1), bn
1 2 3 4 5 6 7 1 2 3 4 5 6 7
18
- 1. Starting from 31 December 2016 the credit exposures belonging to the so-called “FINO Portfolio” were recognised in the item “Non-current assets and disposal groups classified as held for sale”. Following
the “FINO portfolio” disposal occurred in July 2017 and the application of the IAS 39 principle, the credit exposures related to such a portfolio have been derecognised for accounting purposes from the balance sheet assets. Managerial figures 2 o/w €1.0bn in 2Q17 and €0.3bn in 3Q17 3. o/w €0.1bn in 1Q17 and €0.1bn in 3Q17 4. o/w €0.1bn in 1Q17, €0.9bn in 2Q17 and €0.2bn in 3Q17. In 4Q16 additional €1.0bn 5. o/w €0.3bn in 1Q17, €0.3bn in 2Q17 and €0.3bn in 3Q17 6. o/w €0.2bn in 1Q17, €0.3bn in 2Q17 and €0.5bn in 3Q17 Gross loans
Mainly driven by mortgages and Corporate Active portfolio management and cost optimization Mainly driven by Corporate, Small business, Real estate and Mortgages "Back" to Core Write-offs Repayments Recoveries Disposals Cash recoveries on workout and on UTP (to 5% recovery in 2019) 2.2bn since October 2016 FINO Phase 1 successfully closed in July, Phase 2 portfolio expected to be sold down below 20% by year end FINO
- €2.5
- €1.6
- €4.8
- €5.5
- €37.2
- €5.0
- €17.7
by 2019
- €1.3(2)
- €0.2(3)
- €1.0(6)
- €0.9(5)
9M17
- €1.2(4)
executed
Non Core evolution, bn
22.3 8.1 2019 9M17 15.8 9M2016 Adj 56.4 19.2 Gross loans Net loans 68.2% >57% NPE coverage ratio Bad loans cov ratio 77.1% >63% UTP coverage ratio 42.8% >38%
- /w gross NPE
49.7 19.2
- €37.2
32.5 57.1% 64.2% 45.1% 28.8 (incl. one-off LLP)
Group – Asset quality further improved in the quarter with lower NPE, improved NPE ratios and strengthened coverage ratios
Asset quality 15.1% 8.4%
Non performing exposures, bn
24.2 20.2 Coverage ratio Gross NPE ratio 52.2% >54%
- .w. Gross bad loans, bn
- .w. Gross unlikely to pay, bn
Coverage ratio Net bad loans 7.9% 4.0% Net NPE ratio 10.6% 56.5% 5.0% 61.4% >63% 66.2% Net NPE 1 2 3 4 5 6 7 1 2 3 4 5 6 7
- 40.80%
- 31.5%
2019
44.3
20.2 Sep-17
51.3
22.3 Sep-16
74.8
35.8
- 43.1%
- 41.3%
2019
28.5
<10.5 Sep-17
29.4
9.9 Sep-16
50.1
19.3
Coverage ratio 34.0% >38% 44.0%
19
- 37.8%
- 9.7%
2019
14.1
<8.7 Sep-17
20.5
11.5 Sep-16
22.7
15.0
Net UTP
Agenda
Transform 2019 update Asset quality
4
3Q17 P&L results
3 2
UniCredit at a glance
1 5 Capital position
20
Funding & Liquidity
6 7 Concluding remarks
Capital position
Transitional CET1 ratio Transitional Tier 1 ratio Transitional total capital ratio
€61 bn €64 bn €50 bn €54 bn €46 bn €49 bn
Group – Transitional ratios well above MDA levels
MDA as of Sep-17 @10.28% MDA as of Sep-17 @8.78% MDA as of Sep-17 @12.28% CET1 11.71% AT1 0.94%
1 2 3 4 5 6 7 1 2 3 4 5 6 7
+1.0pp Sep-17 13.94% Jun-17 12.93% CET1 11.71% AT1 0.94% 14.31% 15.32% +1.0pp Sep-17 Jun-17 18.19% +0.9pp Sep-17 17.25% Jun-17 CET1 13.94% AT1 1.38% CET1 13.94% AT1 1.38% T2 2.87%
Absolute amount for transitional CET1 capital, Tier1 capital and total capital
21
Solid FL CET1 ratio at 13.81% up by 101bp Q/Q mainly thanks to Pioneer disposal, earnings generation and RWA dynamics. Target leverage ratio at 5.6% in 2019
- 1. CET1 FL calculated as FL CET1 Ratio * RWA 2. Total capital FL where available 3. Leverage ratio FL where available
Note: Peers: BBVA, BNP, Commerzbank, CASA, DB, HSBC, ISP, ING Bank, Nordea, SAN, SG
Capital position
22
1 2 3 4 5 6 7 1 2 3 4 5 6 7
Fully loaded Basel 3 Leverage ratio (3) as of Sep-17, % Fully loaded CET1 capital(1) as of Sep-17, €bn
Peer2 Peer3 Peer4 Peer7 Peer5 Peer6 Peer1 109.8 74.9 67.2 49.1 48.4 41.3 40.9 Peer11 39.9 39.0 Peer10 35.2 Peer8 24.6 Peer9 23.8 UCG
Total assets €/bn Total capital(2)
29.5 31.4 52.6 51.3 56.2 56.3 62.1 63.7 65.4 89.5 93.3 186.4 490 615 1,559 785 862 691 1,339 827 1,521 1,468 2,159 2,138
6.70 6.10 5.70 5.60 5.42 5.00 4.90 4.70 4.50 4.40 4.28 4.10 3.78 Peer11 Peer10 Peer9 UCG 2019 UCG Peer8 Peer7 Peer6 Peer5 Peer4 Peer3 Peer2 Peer1 Peers Avg. 4.92%
Agenda
Transform 2019 update Capital position
5
3Q17 P&L results
3 2
UniCredit at a glance
1
Asset quality
4 6
Funding & Liquidity
7 Concluding remarks
23
Well diversified and centrally coordinated funding and liquidity profile
- 1. Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Russia, Slovakia, Slovenia, Serbia and Turkey
Local funding and self-sufficiency principle is part of overall Group funding plan while leveraging on local knowledge (well established issuance platform in Germany e.g. Covered Bond/Pfandbriefe)
CEE Banks (11 CEE countries(1)) Western Europe
- UniCredit SpA is operating as the Group Holding as well as the Italian
- perating bank:
TLAC issuer assuming Single-Point-of-Entry (SPE) Coordinated Group-wide funding and liquidity management to optimize market access and funding costs Diversified by geography and funding sources
1 2 3 4 5 6 7 1 2 3 4 5 6 7 Funding & Liquidity
24
74 10 110
Strong and disciplined Liquidity Management
3Q17 strong liquidity buffer Compliant with key liquidity ratios
- €185 bn liquid assets immediately
available, well above 100% of wholesale funding maturing in 1 year
- UniCredit S.p.A. LCR and NSFR >100%
Additional eligible assets available within 12 months(1) Cash and Deposits with Central Banks Unencumbered assets (immediately available)
195 185
€bn
LCR NSFR >100% >100%
- 1. Unencumbered assets are represented by all the assets immediately available to be used with Central Banks. Additional eligible assets (available within 12 months) consist of all the other
assets eligible within 1 year time
1 2 3 4 5 6 7 1 2 3 4 5 6 7
25
Funding & Liquidity
2017-2019 Group Funding Plan
22.9 3.5(2) 14.1 20.0 8.2 10.1 78.7
TLAC funding plan
(ex. AT1)
Supranational Total funding plan €bn, to be issued over plan period Covered Other wholesale M/L term AT1 Other senior bonds
2017-19 Group Funding Plan
Italy CEE(1) Germany Austria
33.6% 4.0% 19.6% 42.8% 78.7bn
2017-19 Strategy
- Very conservative funding plan given the
current regulatory uncertainty to mitigate any execution risk
- Group ML Term funding plan envisages
cumulated bond issuances of c. €79 bn with a carefully selected array of debt and capital instruments
- The funding plan has been put in place to
ensure that TLAC and MREL requirements are respected over the next three years
- The set-up of a $30 bn 144a / RegS Global
MTN combined Program will allow the bank to further diversify its funding sources and tap investors globally
- 50% of planned AT1 issuances already
executed
by Product by Country
- 1. Including Turkey at 100% 2. €3.5 bn AT1 planned of which €500 m AT1 already executed in December 2016
1 2 3 4 5 6 7 1 2 3 4 5 6 7 Funding & Liquidity 26.4
26
2017 Medium-Long Term Funding Plan (1/2)
2017 M/L Term Funding Plan by region
- 1. Including Turkey at 100% 2. As of 3rd of November 2017
TLTROII split by region
1 2 3 4 5 6 7 1 2 3 4 5 6 7 Funding & Liquidity
27
18.5% 3.5% 28.2% 49.8% Italy Germany Austria 26.9bn
2017 (Planned)
CEE(1) Italy Germany Austria
2017 (Realized)(2)
CEE(1) CEE
1.9%
Austria
7.8%
Germany
24.6%
Italy
65.7%
- Taking also advantage of the last additional
TLTROII take-up of c. €24.4 bn during the recent auction in Mar-17, the Group is leveraging on €51.2 bn of TLTROII
As of end of October, c. 73% or c. €19.7 bn of the 2017 Group Funding Plan is executed
19.7bn 0.6% 29.3% 37.2% 32.9%
2017 Medium-Long Term Funding Plan (2/2)
1 2 3 4 5 6 7 1 2 3 4 5 6 7 Funding & Liquidity
28
- As of end of October, UniCredit issued c. €19.7 bn of bond instruments, which represent c. 73% of the overall 2017
funding plan. These are the latest landmark issuances: – $1.25 bn 5Y 3.750% and $0.75 bn 10Y 4.625% Senior Unsecured Dual-tranche – €1.25 bn PerpNC6 6.625% Additional Tier 1 – $1.0 bn Tier 2 Subordinated 15NC10 5.861% Notes
- Senior Non-Preferred legislation has been included in the draft version of the Stability Law and it is expected to be
approved by year end. The Funding Plan will be updated on December 12th during the Capital Market Day event
Funding & Liquidity
Ratings Overview
SpA BBB/Stable/A2(1) (bbb)(2) Baa1/Stable/P2(1) (ba1)(2) BBB/Stable/F2(1) (bbb)(2)
UC SpA upgraded: “…capital strengthening contributed to our upgrade. UniCredit will be able to achieve its business plan target to reduce the gross NPE stock" “...very large capital raising coupled with a reduction in problem loans and increased provisioning coverage places the bank in a better position to meet the challenges of an adverse operating environment in Italy...” “…the planned recapitalisation, sale of non- performing loans and cost-cutting measures, if achieved, are all positive for creditors”
Issuance Ratings Issuance Ratings Issuance Ratings UC SpA T2 AT1 OBGI (Ital CB)(5) OBGII (Ital CB)(6) BB+ nr A+ nr UC SpA T2 AT1 OBGI (Ital CB)(5) OBGII (Ital CB)(6) Ba1 nr Aa2 Aa2 UC SpA T2 AT1 OBGI (Ital CB)(5) OBGII (Ital CB)(6) BBB- B+ AA nr Italy BBB/Stable/A2(1) Baa2/Negative/P2(1) BBB/Stable/F2(1) BBB+/Develop(3)/A2(1) (bbb+)(2) A2(4)/Stable/P1(1) (baa2)(2) BBB+/Negative/F2(1) (bbb+)(2) BBB/Positive/A2(1) (bbb)(2) Baa1/Stable/P2(1) (baa3)(2) BBB+/Negative/F2(1) (bbb+)(2)
- 1. Order: Long-Term Senior Unsecured Debt Rating / Outlook or Watch-Review / Short-Term Rating / Stable = Stable Outlook 2. Stand-Alone Rating 3. Outlook "developing" due to (i) uncertainties around
resolution process and (ii) related questions about sustainability of ALAC (Additional Loss-Absorbing Capacity) buffer 4. Deposit rating shown, while Senior Debt at 'Baa2/Stable/P1' 5. Soft Bullet 6. Conditional Pass Through
1 2 3 4 5 6 7 1 2 3 4 5 6 7
29
Agenda
Transform 2019 update Capital position
5
3Q17 P&L results
3 2
UniCredit at a glance
1
Asset quality
4
Funding & Liquidity
6 7 Concluding remarks
30
- 1. Adjusted RoTE excluding the net impact from the Pekao (-310m FX reserve 2Q17) and Pioneer (+2.1bn 3Q17) disposals and a one-off charge booked in Non Core (-80m in 3Q17) related to FINO. All
costs and charges pertaining to the FINO transaction have been accounted for, including a one-off charge of 80m booked in Non Core in 3Q17 as included in the disclosure on 24 October 2017 of 3Q preliminary results. RoTE calculated at CMD perimeter, considering also the capital increase and Pekao & Pioneer disposals as at 1 January 2017
Underlying financial performance is strong. Adjusted RoTE(1) reached 7.8% in 9M17, on track to meet the 9% target for FY19 FY17 NII target of 10.2bn is confirmed. NII is expected to remain stable in 1H18 while increasing in 2H18, thanks to the combined effect of higher volumes and stabilising customer rates Transform 2019 is ahead of plan and delivering tangible results. We expect total costs to be marginally lower than the FY17 11.7bn target. FY19 10.6bn cost target is confirmed Continued de-risking in 3Q17 with gross NPE ratio down to 10.6% and low CoR of 53bps. FY17 CoR estimated to be between 55 and 60bps. FY19 CoR target of 49bps is confirmed High CET1 ratio at 13.81%. Expected negative CET1 ratio impact of model changes and procyclicality in 4Q17 of 30 to 40bps and of IFRS9 first time adoption on 1 January 2018 of 38 to 42bps
Concluding remarks – Transform 2019 delivering tangible results
Concluding remarks 1 2 3 4 5 6 7
31