GROUP RESULTS 1Q19
1Q19 HIGHLIGHTS Loans to to Cu Custo tomers rs showed an an excelent gro rowth of of + € 1.1 bill llion YoY (+4.6% YoY compared to +0.8% • GROWTH YoY of the Industry) • Wealth th Management volumes were up up + € 1.4 bil illio ion in in 1Q19 19 only (+4.4% vs FY18), also thanks to the market effect, with positive net inflows in february and march (+ € 90 million) • Stro trong perfo formance of of Net In Interest In Income YoY (+ (+1.3% and and +2.2% net If Ifrs rs 16 16) and and In Insura rance Income (+ (+10 10.3% ), while the lower contribution from Financial Activities affected total revenues PROFITABILITY • Mate teria ial redu ductio ion of of Oper peratin ing Cos Costs ts at at -4.5% YoY YoY (-1.0% including D&A) • Annuali lized Cos Cost of of ris isk reached his isto tori rical lows lows at at 8 bps bps, with only € 5 million of LLP in the quarter • Gro ross NPL ra rati tio at at 4.5%, with th a fu furth rther reducti tion of of th the gro ross NPL sto tock (- € 11 million in 1Q19 only, without any disposal) Net Pr Profi fit at at almost € 45 45 mill llion, - € 9.7 million vs 1Q18, solely due to the lower contribution of non- • recurrent revenues, but above 4Q18 net profit by more than € 9 million (+25.8%) CAPITAL • CET ET1 Rati tio* gre rew +50 50 bps bps and and re reached 13 13.2% (compared to 12.7% of FY18), despite the negative impact from Ifrs 16 (around -10 bps) and without including 1Q19 Net Profit • Buffer of ~520 20 bps bps vs vs 20 2019 19 SREP SREP require rement Loans to Customers are net of Repos and securities 2 * Capital ratio related to the Group’s prudential perimeter (CredemHolding level)
INCOME STATEMENT 1Q18 4Q 4Q18 1Q19 Δ vs 1Q18 18 Δ vs 4Q 4Q18 18 Compared to 1Q18, 1Q19 19 • € , million Opera rati ting In Income was affected ù Operatin Oper ing Inc ncome 309.9 290.0 29 287 287.4 -7.3% -0.9% by by a lo lower contri ributi tion fro from Financial Fi Acti Ac tivities, while Core Core Operati ting «core» Operating Income was Income (net of Fin. 274. 27 4.7 283. 28 3.5 27 271. 1.7 -1.1% -4.2% more in line Activities and • Materi rial reducti tion of of Opera rati ting Performance Fees) Costs ts (-4.5% YoY, also thanks Operating Costs -191.7 -187.5 -183.1 -4.5% -2.3% to Ifrs 16 effect), shrinking even including D&A (-1.0% YoY) Operating Costs + -20 204.2 -20 201. 1.6 -20 202.2 -1.0% +0.3% Outs tsta tanding credit quality ty, with th • D&A LLPs Ps limited to on only € 5 mil illi lion Net Operating Profit 105.7 88.4 85.2 -19.4% -3.6% in the quarter (-31.2% YoY) Loan Loan Los Loss Pro rovis isio ions -7.7 -35.1 -5.3 -31.2% -84.9% • Net Pr Profi fit at at € 44 44.9 mil illi lion (- 17.8% vs 1Q18 and +25.8% vs Net Operating Profit 98.0 53.3 79.9 -18.5% +49.9% 4Q18), solely aff ffected by by lower net of LLPs non-recurrent items and Provisions and including the € 11.8 million* -17.2 -3.8 -13. 3.7 n.s. n.s. Extraordinary items contribution to the Single Resolution Fund (SRF) 80.8 49 49.5 66.2 Pre Tax Profit -18.1% +33.7% Taxes -26 26.2 -13. 3.8 -21 21.3 -18.7% +54.3% 54. 4.6 35.7 44.9 44. Net t Pro rofit it -17.8% +25.8% 3 * gross of fiscal effect
INCOME STATEMENT: IFRS 16 IMPACT Δ 1Q19 19 Ifrs frs16 16 1Q19 19 1Q19 19 1Q18 18 € , million vs vs 1Q18 Q18 impact* impa t* (pre-Ifrs 16) 6) (Ifrs 16) 6) Net et Interest Income 120.9 123.6 +2.2% -1.1 122. 22.5 D& D&A -12.5 -13.3 +6.4% -5.8 -19. 9.1 Admin in. . Expen enses -58.5 -58.3 -0.3% +6.9 -51.4 Net et Pr Profit it 44.9 44.9 Starting from January 1, 2019 the new Ifrs 16 principle came into force, envisaging a different accounting treatment of lease agreements, with impacts on Net Interest Income, D&A, and Administrative Costs (Net Profit impact was substantially neutral). In summary: • considering the comparable figures 1Q19 vs 1Q18, Net Inte terest Income wou would ld be be up up +2.2% YoY YoY • higher D&A were offs fset by by th the decrease of of Ad Administra trati tive Costs ts, lower YoY (-0.3% 1Q19 vs 1Q18) also notwithstanding Ifrs 16 positive effect • furthermore, the RWA increase driven by higher tangible assets had affected CET1 ratio (~10 bps) 4 * Source: internal calculation based on management accounting data
CORE OPERATING INCOME CORE OPERATING INCOME (quarterly average) 275.3 271.7 280 268.3 +29% 270 257.0 260 248.8 247.7 250 234.0 240 220.7 224.4 224.4 230 220 209.9 210 200 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1Q19 • Core re* Opera rati ting In Income (net of non-recurrent components: Income from Financial Activities and Performance Fees) remained above € 270 milli lion per quart rter, despite AUM negatively affected by financial markets • From the beginning of the crisis, core revenues grew almost 30%, proving the resil ilience of of th the Gro roup bu busin iness mod model * Figures in € , million. Average quarterly core operating income was calculated considering the Tltro II interest income as follows: 5 4Q16 includes the Tltro II benefit related to 2016, the Tltro II benefit related to 2017 is evenly divided into each quarter of 2017. Each quarter of 2018 and 2019 includes the 2018-2019 Tltro II benefit evenly split
NET INTEREST INCOME (1/3) NET INTEREST INCOME: EVOLUTION +1.3% 3% (+2.2% net Ifrs 16) Po Positi tive Net In Interest In Income perfo formance, +1.3% 1Q19 19 vs vs 1Q18 18 (+2.2% net of of Ifrs rs 16 16 126.4 124.7 impact), thanks to the strong volumes 122.5 120.9 120.4 growth YoY Custo tomers rs spread showed a gro rowth th of of +4 bps bps vs vs 4Q18 18 1Q18 2Q18 3Q18 4Q18 1Q19 CUSTOMER SPREAD * EURIBOR AND BTP/BUND SPREAD 2.5 1.93 1.91 1.88 1.87 1.85 2.0 268 256 250 -0. 238 1.5 1.0 1.83 1.80 1.78 1.78 1.82 129 -0. -0.31% 0.5 -0.32% -0.32% -0.33% -0.33% 0.10 0.11 0.09 0.07 0.06 0.0 -0. 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 Spread Average loans rate Average deposit rate 3 month Euribor Spread (bps) BTP vs. Bund 10y Net Interest Income: figures in € , million 6 * Credem SpA management accounting (%)
NET INTEREST INCOME (2/3) LOANS RATE DEPOSIT RATE Discontinuity in the time 2.68 2.63 series* 2.59 2.58 2.57 0.75 0.73 0.72 2.60 0.62 0.60 - 0.71 1.93 1.91 1.88 1.87 1.85 2.10 0.60 1.60 - 0.54 1.10 0.11 0.10 0.09 0.60 0.07 0.06 - 0.10 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 Credem: average loans rate Industry: average loans rate Credem: average deposit rate Industry: average deposit rate CUSTOMER SPREAD Av Avera rage loans ra rate was slightly up vs 4Q18 (+2 1.98 1.94 1.94 bps), with deposit ra rate reaching a new 1.90 1.87 1.83 1.82 mi minimum at at 6 bps bps 1.80 - 0.16 1.78 1.78 1.80 Credem Custo tomer Spread grew +4 bps bps accordingly (not comparable with the Industry figure, which included a discontinuity in the time series related to the bond rate calculation) 1.20 1Q18 2Q18 3Q18 4Q18 1Q19 Credem: spread Industry: spread Credem SpA management accounting (%); Industry: source ABI Monthly Outlook April 2019 7 Starting from October 2018, the average deposit rate reported in «ABI Monthly Outlook» is calculated excluding the repurchased bonds from the total bonds issued; for such reason figures from 1Q19 showed a deviation from the time series
NET INTEREST INCOME (3/3) SECURITIES’ PORTFOLIO BREAKDOWN Securities’ Po Port rtfo foli lio sto tood at at € 7.4 bil illi lion, 2.7 bn 2.7 bn 2.7 bn 2.7 bn around - € 390 million vs FY18 figure, mainly due to the reduction of «core» 100% Europe bonds 90% Ita Italian govies exposure remained sta table 28% 33% 36% 35% 37% 80% at € 2.7 bi at bill llion ion 70% Avera rage matu turi rity ty went furtherly down at 7% 5% 7% 5.8 years 7% 6% 60% 50% 43% 44% 34% 40% 36% 38% AVERAGE MATURITY AND RATING 7 30% 6 100% 20% 5 23% 22% 21% 80% 20% 10% 18% 45% BBB 4 0% 60% 1Q18 1H18 9M18 2018 1Q19 3 5.8 22% A Other non-Italy Other Govies / EFSF/ EIB Other Italy Italian Govies 40% 2 Total 6,968 8,396 7,543 7,756 7,370 ( € , mln) 20% 1 33% AAA / AA of which 1.5 2.1 2.1 2.3 1.7 0 HTC ( € , bn) 0% Avg maturity Rating Distribution (years) 8 Credem SpA management accounting
NON INTEREST MARGIN Total ( € , million) 189.0 153.6 158.8 163.6 164.9 30.3 Performance Fees 6.5 7.7 14.5 5.9 43.2 45.5 Income from 45.3 43.8 43.5 Financial Activities 15.5 14.4 Banking Fees 16.2 13.9 17.1 Insurance Income 91.0 90.6 84.6 83.6 82.2 Asset Management and Brokerage Fees 1Q18 2Q18 3Q18 4Q18 1Q19 «Co Core re» NIM* 153.8 146.8 151.0 157.1 149.2 Stro trong perfo rformance of of In Insura rance In Income (+ (+10 10.3% vs vs 1Q18 18), thanks to volumes ’ expansion. Ba Banki king Fe Fees gre rew YoY YoY, too (+1.4%), despite the cost of excess liquidity in ECB (around € 1.4 million) Asset Management Fees were affected from lower average stock and from lack of positive non- recurrent components included in the 1Q18 figure, net of which Core NIM would be up +1.1% vs 1Q18 Total NIM was instead penalized by a lower Income from Financial Activities (-52% YoY) *Core NIM: net of non-recurrent items (Income from Financial Activities and Performance Fees) 9
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