Group Results 9M2013 Highlights Operating Income up YoY (+3.8%) , - - PowerPoint PPT Presentation

Group Results – 9M2013

2

Highlights

Operating Income up YoY (+3.8%), even if calculated net of Trading (+3.6%), while remained weak QoQ (-1.4% net of Trading) mostly due to the typical summer seasonality Similarly, Operating Costs, because of third quarter ‘s seasonality, were down by 4.8% QoQ, while remaining up 2,1% YoY. Such figure confirms, in opposite direction compared with the trend showed by many competitors, the investment strategy implemented by Credem Group with the aim of furtherly grow volumes Net Adjustments to Loans were down QoQ, even if non considering second quarter’s non recurrent effect, due to the choice of calculating a longer time than previously expected to collect Net Impaired

• Loans. Impaired Loans’ coverage continued to grow, at the end of 3Q13 was 36.1% at the peak since

2010 Net profit grew YoY (€100.3 million; +11.2%) and QoQ (+2.4%), thank to the resilience the Operating Profit and, with regard to quarterly figures, the reduction of Net Adjustments to Loans Despite the weakness of the economic scenario, Cedem Group continued to grow its volumes (loans and direct deposits plus retail bonds went up by 0.1% and 9.5% YoY respectively) in opposite trend compared with the industry (loans and deposits went down by -3,8% e -0,5% YoY) Core Tier 1 was 10%, up compared to 9.6% posted in the previous quarter and to 9.4% at the end of 2012 ECB exposure was reduced, in early November, at €3.5 billion compared to €5 billion at the end of June

3

Income Statement

Both YoY and QoQ, Operating Income, net of trading, grew more than Operating Costs. Overall, summer’s seasonality, as usual, affected negatively revenues and allowed the reduction of Operating Costs. Net Profit for the Period was up both YoY and QoQ

Euro, Million 3Q12 2Q13 3Q13 % vs. 3Q12 % vs. 2Q13 9M12 9M13 % YoY Operating Income 244.1 244.4 234.4

• 4.0
• 4.1

710.1 737.2 3.8 Operating Income (net of trading and performance fees) 225.5 232.6 229.4 1.7

• 1.4

668.6 692.8 3.6 Operating Costs

• 147.0
• 154.5
• 147.1

0.1

• 4.8
• 449.8
• 459.4

2.1 Depreciation and Amortization

• 8.2
• 8.5
• 8.9
• 8.5

4.7

• 23.9
• 25.8

7.9 Operating Profit 88.9 81.4 78.4

• 11.8
• 3.7

236.4 252.0 6.6 Net Adjustments to Loans

• 16.4
• 28.0
• 21.4

30.5

• 23.6
• 52.8
• 69.3

31.3 Provisions for Risks and Charges

• 41.5
• 2.1
• 6.2

n.s. n.s.

• 56.5
• 9.1

n.s. Extraordinary Income/ Charges 35.8

• 1.0

0.6 n.s. n.s. 52.4

• 1.1

n.s. Profit before Tax 66.8 50.3 51.4

• 23.1

2.2 179.5 172.5

• 3.9

Income Taxes/ Minority Interest

• 42.9
• 21.7
• 22.1
• 48.5

1.8

• 89.3
• 72.2
• 19.1

Net Profit for the Period 23.9 28.6 29.3 22.6 2.4 90.2 100.3 11.2

2.19 2.02 2.11 2.09 2.03 3.43 3.31 3.39 3.35 3.28 1.25 1.29 1.29 1.26 1.24 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 3Q12 4Q12 1Q13 2Q13 3Q13

spread average loan rate average deposit rate

0.17% 0.11% 0.12% 0.11% 0.13% 428 336 294 280 259 100 200 300 400 500 0.0% 0.1% 0.2% 3Q12 4Q12 1Q13 2Q13 3Q13

Euribor 1 month Spread BTP vs. Bund (10 years)

117.8 116.6 112.6 116.7 115.7 90 100 110 120 3Q12 4Q12 1Q13 2Q13 3Q13

4

Net Interest Income (1/3)

Net Interest Income was slightly down QoQ (-0.9%) for a weaker dynamic of loans’ volumes due to seasonality reasons, as well as the reduction of customer spread back to 2012 year end levels With reference to this last component, the reduction of the BTP-Bund spread allowed a decrease in the cost of deposits that was not enough, though, to offset the reduction of the average loan rate linked to Credem Group strategy aimed at developing volumes while preserving the asset quality Net Interest Income

bps

Customers’ Spread

(Credem SpA management accounting)

Euribor and BTP/Bund spread evolution

€ Million

4.2%

• 10.0%
• 0.5%

10.3% 6.3% 9.5%

• 15.0%
• 10.0%
• 5.0%

0.0% 5.0% 10.0% 15.0% Deposits Retail Bonds Total Industry Credem

Direct Customers’ Deposits* evolution (9M13 vs. 9M12)

1.25 1.29 1.29 1.26 1.24 2.10 2.10 2.04 1.98 1.93 0.00 0.50 1.00 1.50 2.00 2.50 3Q12 4Q12 1Q13 2Q13 3Q13

Credem: Average deposit rate Industry: Average deposit rate

5 %

Net Interest Income (2/3)

Evolution of Average Deposit Rate

(Credem SpA management accounting)

At an higher level of detail, the analysis shows that for Credem Group the reduction of the average deposits’ rate was lower than the industry, even if the difference remained very favorable for Credem Reasons behind such trend are related to the evolution of Deposits and Retail Bonds: even if the total aggregate grew YoY 10% more than the industry, Deposits grew YoY only 6,1% more than the industry while, for Retail Bonds, Credem Group outperformed the industry by more than 16% YoY At a glance, the lower reduction in the cost of funding is mainly due to the stretching of the maturities of total direct customers’ deposits, while the industry is showing an opposite trend

(*) Sum of Credem Direct Deposits plus Retail Bonds Source: ABI: Monthly Outlook

76.1% 77.7% 50% 60% 70% 80% 9M12 9M13

% of loans to corporate customers in top 4 rating classes

• 3.8%

0.1%

• 4.0%
• 3.5%
• 3.0%
• 2.5%
• 2.0%
• 1.5%
• 1.0%
• 0.5%

0.0% 0.5% 9M13 vs. 9M12 Industry Credem

3.43 3.31 3.39 3.35 3.28 3.86 3.80 3.77 3.77 3.80 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 3Q12 4Q12 1Q13 2Q13 3Q13

Credem: Average loan rate Industry: Average loan rate

6 %

Net Interest Income (3/3)

Loans to Customers evolution (9M13 vs. 9M12) As for the loan rate, the different dynamic compared to the industry is due to a strategy that is mostly aimed at the development of the activities, in an environment that, over the last quarter even saw an acceleration in the reduction of volumes. Similarly, it was confirmed one of the traditional point of strengths of the group, that is a growth paired with a premium quality of assets Evolution of Average Loan Rate

(Credem SpA management accounting)

Corporate customers credit standing

(Credem SpA management accounting)

Source: ABI: Monthly Outlook

153.0 126.5 24.7 41.5 12.7 156.7 150.4 27.7 44.4 13 50 100 150 200

9M12 9M13

51.7 50.6 50.7 49.1 52.4 52.3 52 7.2 6.1 11.4 7.9 10.5 9.9 7.3 42.2 42 42.3 44.1 51.3 49.2 49.9 3.3 6.1 3.3 13.4 4 4.5 4.5 19.2 3.7 18.6 1.8 27.6 11.8 5 28.2 15 30 45 60 75 90 105 120 135 150 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 € Million

Performance Fees Trading Other Banking Fees Insurance Fees Asset Management Fees

7

Non Interest Income

123.6 108.5 126.3 144.5

Non Interest Income, in the quarter, was affected by the usual seasonality on asset management fees (those particularly related to

• rder processing with clientele). On

an YoY perspective, all aggregates were significantly up, with Net Commissions increased by almost 10%

145.8 127.7 +2,4% +18,9% +7,0% +12,1% +2,4%

Net Commissions: +9,9% YoY

118.7

Non Interest Income: quarterly evolution Non Interest Income: YoY comparison

5,993 5,740 5,544 5,519 5,604 5,651 5,200 5,400 5,600 5,800 6,000 2008 2009 2010 2011 2012 9M13 1,002 1,006 885 795 750 768 500 1,000 1,500 2008 2009 2010 2011 2012 9M13

105.5 101.1 101.4 107.0 109.2 105.1 101.5 48.6 47.6 45.6 47.7 48.6 49.4 45.6

50 100 150 200

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13

Payroll Costs

• Admin. Expenses

8

Operating Costs

Similarly to Revenue, also on Operating Costs the summer seasonality showed a significant impact, positive in this case Coherently with Group strategy, aim at increase volumes, Operating Costs showed a growth by 2% YoY

147.0 154.7 157.8 154.5 147.1 98 158 217 272 361 358 100 200 300 400 2008 2009 2010 2011 2012 9M13 148.7 154.1 449.8 459.4

Operating Costs: quarterly evolution Headcount and networks evolution

€ Million

Employees Financial Advisers Creacasa/Salary backed Loans Agents

7,484 7,667 8,114 7,551 8,296 7,967 1,941 1,935 2,001 2,039 2,042 2,002 5,534 5,845 6,282 6,248 6,241 6,151 2,577 3,323 3,324 3,411 3,370 3,150 4,000 8,000 12,000 16,000 20,000 2009 2010 2011 9M12 2012 9M13 Short-Term Loans Leasing Residential Mortgage Other Loans

4.2% 2.2%

• 1.3%
• 3.8%

7.0% 5.1% 1.2% 0.1%

• 6.0%
• 4.0%
• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 2010 2011 2012 9M13 vs. 9M12 Industry Credem

9

Loans (1/2)

17,536 18,770 19,721 19,269

Loans volumes confirmed stable YoY (+0,1%) despite the acceleration in the decrease of volumes at industry level (-3.8% YoY at Sept 2013 vs. -2.8% YoY at Jun 2013) As for a more detailed analysis on single aggregates, the decrease in Other Loans and Leasing continued as a confirmation of a recession still ongoing, while Short Term Loans proved to be resilient by remaining however up 5.5% YoY

19,249 19,949

Source: ABI: Monthly Outlook

Loans to Customers (net of repos with institutional and loans to group’s SPVs)

€ Million

Growth Rates (Loans to customers and public administration)

1.068% 1.155% 1.198% 1.225% 0.548% 0.453% 0.443% 0.439% 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4%

MS on performing loans MS on Gross NPLs

10

Loans (2/2)

Market Shares evolution is the result of what highlighted so far, with a growth in performing loans paired with a stable aggregate referred to gross NPLs Market shares on retail and corporate customers and small business (net of financial institutions)

(Credem SpA management accounting)

Source: Bankit Data

3.3% 1.5% 1.2%

• 0.5%
• 7.2%

7.0% 6.1% 9.5%

• 10.0%
• 7.5%
• 5.0%
• 2.5%

0.0% 2.5% 5.0% 7.5% 10.0% 12.5% 2010 2011 2012 9M13 vs. 9M12 Industry Credem

11

Deposits, Bonds and AUM

€, Million 2010 2011 9M12 2012 9M13 Sight/ Saving Deposits 11,604 12,005 12,207 13,066 13,463 CD & Other Deposits 1,064 493 245 256 271 Repos 62 43

• Direct

Deposits 12,730 12,541 12,452 13,322 13,734 Bonds

• Institutional
• Retail

3,521 1,643 1,878 4,817 1,721 3,096 4,355 1,299 3,056 4,149 879 3,270 4,378 1,131 3,247 Direct Dep, & Retail Bonds 14,608 15,637 15,508 16,592 16,981 Ins, Reserves 2,448 2,506 2,597 2,617 3,014 Portfolio Management 4,978 3,859 3,802 3,747 3,646 Mutual Funds 3,998 3,062 2,965 2,944 2,800 SICAVs 4,898 4,454 4,967 5,047 5,151

Other & Third parties products

3,015 3,415 3,993 4,478 5,356 AUM 16,889 14,790 15,727 16,215 16,953

Direct Deposits and Retail Bonds were up by almost €400 million compared to year end 2012 and by €1.4 billion YoY In comparison with the industry, in the 9M13, Direct Deposits and Retail Bonds volumes grew much more, such result did not affect the growth of other aggregates: Insurance Reserves +€417 million YoY and AUM +€1,2 billion YoY Growth Rates (Deposits & Bonds* from customers and public administration)

Source: ABI Monthly Outlook (*) Sum of Credem Direct Deposits plus Retail Bonds

102.06% 104.43% 105.59% 100.0% 101.0% 102.0% 103.0% 104.0% 105.0% 106.0% 2010 2011 2012 100.02% 101.21% 101.61% 100.0% 101.0% 102.0% 103.0% 104.0% 105.0% 106.0% 2010 2011 2012 1.28 1.26 1.20 1.14 1.00 1.05 1.10 1.15 1.20 1.25 1.30 2010 2011 2012 9M13 10,809 11,687 13,281 13,895 2,308 1,769 1,249 1,113

• 3,000

6,000 9,000 12,000 15,000 2010 2011 2012 3Q13

Deposits & Bonds Retail Corporate Deposits 102.65% 102.20% 100.0% 100.5% 101.0% 101.5% 102.0% 102.5% 103.0% 1H12 1H13

12

Retail Customers’ Base Evolution

Credem Group is increasing its business in a very solid way: while credit quality is still at a premium with loans’ volumes higher than the industry, deposits and bonds are increasing mostly on retail clientele that is more fragmented and less volatile. As a result, LtD Ratio is on a downward trend

+878

• 539

+614

• 136

+1.594

• 520

+3.53% +1.59% ABI** Sample CREDEM

Source: ABI

CREDEM 1H13/1H12

Clients with a Banking Account (Growth Rates)

* Net of Loans to “Cassa di Compensazione e Garanzia” and Group’s SPVs ** ABI: Italian Banking Association

Direct Deposits & Bonds breakdown by segment

(Credem SpA management accounting)

Loan to Deposit Ratio (Loans to Customers* on Deposits and Retail Bonds)

€ Million

587.6 370.3 143.5 601.1 383.2 115.7 622.1 412.6 108.6 660.1 423.9 119.7 702.1 421.1 127.0 100 200 300 400 500 600 700 800 Gross NPLs Gross Watchlist/Restructured Loans Gross Past Due € Million 9M12 2012 1Q13 1H13 9M13

13

Credit Quality

2.9

% Gr. Loans (Credem) % Gr. Loans (Industry)

6.2 4.2 1.2 1.8 0.5

• The recession still under way does not yet

allow to record substantial changes in the trend of generation of new impaired loans even if 3Q13 inflows were slightly down those that were posted in the firs half of the year

• As for the comparison with the industry, the

incidence of gross impaired loans was still very much behind, confirming the trend of the last quarters, with a growth in 3Q13 of 0.2% QoQ, compared to a growth of 0.4% QoQ posted by the industry

2.8 1.8 0.7 5.9

Quarterly Gross NPLs/Watchlist Inflows

3.1 6.5 4.5 2.0 1.0 0.5 3.3 6.9 4.8 2.1 1.1 0.6 3.5 5.0 2.1 1.1 0.6 7.5

22.0 21.8 35.7 33.8 21.6 42.1 61.3 26.4 50.4 49.3 39.2 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13

Gross Impaired Loans breakdown

Source: Bankit

98.9 102.5 103.0 96.0 97.0 98.0 99.0 100.0 101.0 102.0 103.0 104.0 2012 1Q13 1H13 9M13 Industry Credem

35 44 39 47 46 20 40 60 9M12 2012 1Q13 1H13 9M13

14

Cost of Risk

Annualized cost of risk was slightly down QoQ from 47 bps to 46 bps, also due to seasonality effects Increase in coverage of impaired loans confirmed a trend under way over the last 5 quarters and touching the peak of the last three years, while the industry is down, right after the Bank of Italy inspection that took place at the end

• f 2012

After Bankit inspection on all banks (Credem included)

Coverage of Total Impaired Loans vs Industry

(2012=base 100) 34.3% 35.0% 35.4% 35.9% 36.1% 33.5% 34.0% 34.5% 35.0% 35.5% 36.0% 36.5% 9M12 2012 1Q13 1H13 9M13

Cost of Risk (bps) Coverage of Total Impaired Loans (%)

536 1,444 315 5,000 13,588 3,468 2,834 1,997 1,131 288 315 4,500 13,734 3,247 3,014 2,040 5,000 10,000 15,000 20,000 1H13 9M13

15

Assets and Liabilities

Institutional funding Clientele Equity

Within liabilities, «exit strategy» from LTRO started (-€500 million), in connection with the return of Credem Group to issue (a covered bond) on the institutional market Assets remained fairly stable, with a slight reduction in group’s securities’ portfolio (circa €150 million) and the decrease in loans (circa €400 million)

(*) Internal figures on 9M13 data

Currently amounting to €3.5 billion

240 8 5,613 2,848 833 19,814 202 8 5,511 3,057 804 19,409 7,000 14,000 21,000

• Fin. Assets held

for trading*

• Fin. Assets at

fair value*

• Fin. Assets av.

for sale*

• Fin. Assets

(insurance companies)** Due from banks Loans to customers 1H13 9M13

Assets (€ Million) Liabilities (€ Million)

122% 223% 50% 100% 150% 200% 250% 2012 1H13 106% 110% 50% 60% 70% 80% 90% 100% 110% 120% 2012 1H13

16

Liquidity Profile

NSFR Group’s liquidity position is very smooth, with all Basel III ratios higher than thresholds set for 2018 Thank to this situation, Credem group decided to accelerate its exit from LTRO, with a further tranche of €1 billion reimbursed at the beginning of November Currently, the exposure toward ECB is €3.500 million, in comparison with €5 billion at the end of 1H13 LCR

1,413.4 1,438.1 1,457.1 1,572.2 1,621.2 1,941.0 1,880.8 1,940.0 2,276.3 2,228.8 541 547 596 941 936 500 1,000 1,500 2,000 2,500 2009 2010 2011 2012 9M13 € Million Core Tier I/ Tier I Capital Tier Total Capital Excess Capital

17

Capital Ratios

8.6% 11.3%

Credem Group is still waiting for the validation of its internal rating system in compliance with the Basel II advance approach. Meantime, capital ratios are continuously increasing by means of internal generation of resources, with a Core Tier 1 ratio that at the end of 9M13 was 10%, + 190 bps compared to the ratio at the end of 2009 Tier 1 Capital is all Core, as no hybrids are included into the aggregate

8.1% 11.1% 8.7% 11.6% 9.4% 13.6% 10.0% 13.8%

Capital Ratios evolution

18

100% 100% 100% 100%

Wealth Management Retail & Commercial Banking Other

100% 100% 99.0% 100% 50% 100% 100% 100%

A business model based on Retail & Commercial Banking

19

Free Float More than 3,000

• ther shareholders

76.9% 23.1% 75.1% 24.9%

Credemholding

Source: Internal data as at 30 September 2013

• Credem is the largest privately-
• wned bank in Italy
• The Maramotti family, well-known

entrepreneurs and owners of the leading fashion Max Mara Group, is the main shareholder of the pact that controls directly Credemholding and, indirectly, the Credem Group

• Only one member of the Maramotti

family is in the BoD; no member of the family is in the management team

Stable shareholders’ base

Shareholders’ Pact Cofimar S.r.l. 21.3% Max Mara Finance S.r.l. 8.2% Max Mara Fashion Group S.r.l. 8.1% Others 37.4%

20

Gruppo CREDEM n° filiali e quota di mercato sportelli 20 71 28 128 39 5 8 27 3 44 2 50 31 63 4 8 8 4 1 Gruppo CREDEM n° filiali e quota di mercato sportelli

20

Number of branches per region

Distribution Network

The group has a national coverage serving 19 regions and 87 provinces of Italy

2010 2011 2012 9M13 Territorial Network Branches 563 560 557 544 Corporate Centres 42 41 41 41 Credem Points 35 34 31 31 Banca Euromobiliare financial stores 18 16 14 13 FA and Agents Financial Advisers 885 795 750 753 Creacasa’s Agents 217 272 281 263 Salary backed loans Agents 80 95

21

Disclaimer and Contacts

Investor Relations Team

Daniele Morlini – Head of IR dmorlini@credem.it +39 0522582785 Paolo Pratissoli ppratissoli@credem.it +39 0522583029

The Financial Manager responsible for preparing the company’s financial reports, Mr. Paolo Tommasini, declares, pursuant to paragraph 2 of Article 154 bis of the Consolidated Law on Finance, that the accounting information contained in this presentation corresponds to the document results, books and accounting records. ***

This presentation includes certain forward looking statements, projections, objectives and estimates reflecting the current views of the management of the Company with respect to future events. Forward looking statements, projections, objectives, estimates and forecasts are generally identifiable by the use of the words “may,” “will,” “should,” “plan,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “project,” “goal” or “target” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts, including, without limitation, those regarding the Company’s future financial position and results of

• perations, strategy, plans, objectives, goals and targets and future developments in the markets where the Company participates or is seeking to
• participate. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements as a prediction
• f actual results. The Group’s ability to achieve its projected objectives or results is dependent on many factors which are outside management’s
• control. Actual results may differ materially from (and be more negative than) those projected or implied in the forward-looking statements. Such

forward-looking information involves risks and uncertainties that could significantly affect expected results and is based on certain key assumptions. All forward-looking statements included herein are based on information available to the Company as of the date hereof. The Company undertakes no

• bligation to update publicly or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may

be required by applicable law. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements.