BPVi Group - Analyst Presentation

Transcript

BPVi Group
Analyst Presentation
March 2016
February 2016
Disclaimer
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Gruppo Banca Popolare di Vicenza
1
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2
Disclaimer (cont’d)
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This Presentation is only addressed to and is only directed at: (a) in the European Economic Area, persons who are “qualified investors” within the
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Agenda
CEO perspective and key investment highlights
Pag. 5
Business strategy
Pag. 19
Operating model and HR
Pag. 51
Risk management
Pag. 60
Financial overview
Pag. 74
2018-2020 financial targets
Pag. 95
4
Agenda
Pag. 5
Business strategy
Pag. 19
Pag. 51
Risk management
Pag. 60
Financial overview
Pag. 74
Pag. 95
5
2015: the turning point
Massive clean-up,
already completed
Full de-recognition of
financed capital
Key areas of value creation
A
Dynamic credit and risk
management
B
Strong and sustainable
revenue creation
C
New management team
New business plan,
leveraging on significant
embedded valuecreation opportunities
Expected result
Optimisation of the
organisational structure
A unique, simple and
distribution-oriented
commercial bank: solid
and profitable
D
Significant strengthening of
capital ratios
6
1
Commercial, distribution-focused business model with loyal
client base and strong client acquisition capabilities…
….underpinned by a sizeable, multi-regional franchise deeply
rooted in the wealthy and growing North-East Italian regions
2
Structural turnaround ongoing supported by a significant and
articulated balance sheet “clean-up” fully reflected in 2015
results and a newly appointed management team with
recognized track record in the financial sector
3
Capital plan well on track and resulting in a solid capital
position after the IPO with a CET1 ratio >12%
4
Significant value creation potential through a new Business
Plan based on a "Simple Bank model"
7
1
Commercial, distribution-focused business model deeply rooted in the wealthy
and growing North-East Italian regions
Commercial,
distribution-focused
business model with
growing and loyal
client base
Simple distribution-oriented business model: presence of JVs and
commercial agreements on most product areas, and no relevant product
factories owned
1.4mn clients, with core client segments (Affluent, Private and Small
Business, Corporate) accounting for almost 75% of client revenues and
showing a significant growth potential in terms of share of wallet and crossselling
Historically focused on mid-corporate segment; proven customer
acquisition capabilities and loyalty (total customers growing from 1,102k in
2010 to 1,379k in 2015)
Sizeable multiregional player
deeply rooted in the
wealthy and growing
North-East Italian
regions
Top 10 player(1) in the Italian banking sector, with 579 branches and 2.0% market
share
Highly attractive distribution network, well positioned to capture expected Italian
recovery being deeply rooted in the North-East (one of the wealthiest areas in
Italy with the highest concentration of SMEs and Mid-Corporates)
Strong focus on multichannel strategy with the launch in January 2015 of the
new online banking platform, BPViGO!
(1) By total assets
Sources: Consolidated financial statements; Bank of Italy
8
1
Commercial, distribution-focused business model deeply rooted in the wealthy
and growing North-East Italian regions
Overview
Sizeable player in consolidating market (30/09/2015)
• 10th largest Italian banking group by total assets, with a 2.0%
market share by total branches and 1.4 mn clients
• Multi-regional geographical presence and high concentration in
high GDP and export-driven regions: top 3(2) regions (c. 65% of
bank's loans) represent alone nearly 50% of national exports
• Mainly active in Commercial banking through parent company
BPVi, Banca Nuova (100%) and Farbanca (71%)
• Also active in:
• Consumer finance through Prestinuova (100%), BPVi
Multicredito (100%) and a commercial partnership with
Compass (Mediobanca Group)
• Bancassurance through a commercial agreement with
Cattolica Assicurazioni (15%)
• Asset Management through a commercial agreement
with Arca (20%)
BPVi distribution network
Branches(1)
Number
North-East
o/w Veneto
o/w Friuli V.G.
North-West
o/w Lombardy
Center
o/w Tuscany
South and islands
o/w Sicily
Total Italy
297
221
57
83
75
103
75
96
78
579
(%)
51.3%
38.2%
9.8%
14.3%
13.0%
17.8%
13.0%
16.6%
13.5%
100.0%
Market shares(7)
Branches Loans
3.9%
7.3%
7.1%
1.0%
1.4%
1.7%
3.6%
1.5%
5.0%
2.0%
3.9%
7.2%
7.4%
0.8%
0.9%
1.6%
3.4%
1.4%
4.5%
1.9%
Macro indicators
GDP(8) 2016 GDP
(% contr.) growth(9)
22.6%
+1.4%
9.1%
+1.3%
2.1%
+1.3%
32.4%
+1.4%
21.6%
+1.4%
22.1%
+1.5%
6.7%
+1.4%
22.8%
+0.7%
5.4%
+0.7%
100.0%
+1.1%
Simplified Group structure
Banks
Consumer Finance
Banca Nuova
100%
Farbanca
71%
Real Estate
Prestinuova
100%
Bancassurance
Immobiliare Stampa
100%
Cattolica
Assicurazioni 15%
Others
ABC Assicura
40%
Servizi Bancari
99%
BPV Finance
International 100%
Sec Servizi
50%
NEM SGR 100%
BPVi Multicredito
100%
60%
Cattolica Life
40%
Berica Vita
40%
Companies which are part of the Group
Companies which are not part of the Group, but
contribute to the business
(1) As of 31.12.2015; (2) Top 3 regions by customer loans are Veneto, Tuscany and Lombardy; (3) Includes foreign branches; (4) Computed on Italian branches; (5) Tot. assets and branches as of 31
December 2014; (6) Tot. assets and branches as of 30 June 2015; (7) As of 30/9/2015, data for loans referred to Family and Business clients; (8) ISTAT, reference year 2014; (9) Prometeia estimates as of
January 2016 for Italian regions, as of February 2016 for Italy
9
Sources: Consolidated financial statements, Bank of Italy; ISTAT; Prometeia
2
2015 results fully addressed BPVi’s structural issues, especially in relation to
asset quality and financed capital
Asset Quality
In-depth review of the loan portfolio by new management resulted in second wave of
credit impairments (after 2014 AQR)
Strengthening of NPE coverage ratio (from 37.9%(1) to 42.4%(1))
Adoption of best-in-class classification criteria resulting in overall lower risk profile
Comprehensive
and articulated
balance sheet
“clean-up"
Financed
capital
Decrease of CET1 as a consequence of derecognition of financed capital (€ 1,139 mn),
mainly through loan impairments (€ 466 mn), provisions for risk and charges (€ 353 mn) and
prudential filter (€ 321 mn)
Additional € 136 mn of provisions for risks and charges in relation to potential risks related
to BPVi shares
Other
Impairment on AFS, focused on Luxembourgian Funds (€ 142 mn on a total amount of € 350
mn): exit strategy in progress
Goodwill and other intangibles impairment for € 335 mn, with negligible future risk of
further impairment (residual value of goodwill € 6 mn)
Newly appointed
management
team with
recognized track
record
Renewed management team (e.g. CEO/General Manager and Chief Business Officer/Senior Deputy General
Manager) with no relation to the past and a clear mandate: restructure, re-focus and re-launch the bank
13 out of 16 management team members newly appointed
Management team with in-depth knowledge of the banking sector and significant experience in the reference
industry as well as in the broader economic and financial environment
(1) Including write-offs
Source: Company data
10
2
Comprehensive balance sheet “clean-up” already performed, resulting in
best-in-class coverage levels and loan classification criteria
FY2015 income statement fully addressed the
bank's structural issues…
BPVi Group (€ mn)
FY2014
… resulting in best-in-class coverage ratios and
classification criteria
Coverage ratio evolution
FY2015
27.3%
Net interest income
511.1
503.9
Net commissions
301.3
322.4
Total revenues
1,077.4
1,052.6
Operating costs
-669.1
-754.2
408.3
298.5
-1,521.3
-1,826.9
-868.5
-1,333.4
-36.2
-171.2
Net operating income
Net impairment adjustments
o.w.: on loans and advances
o.w.: on assets available for
sale and associates
o.w.: impairment on goodwill
and other intangibles
Net provisions for risk and
charges
Gains (losses) on
disposal/revaluation of
investments(6)
Net income before income tax
Net income
-600.0
-334.6
-18.5
-513.1
-2.8
149.0
-1,134.3
-1,892.5
-758.5
-1,407.0
Additional provisions for risk and charges
to address potential claims for financed
capital (€ 353 mn) and other risks on BPVi
shares (€ 136 mn)
€ 673.2 mn excluding
non-recurring items(5)
Further strengthening
of NPE coverage ratio
(from 37.9%(3) in 4Q14
to 42.4%(3))
Impairment on AFS,
focused on
Luxembourgian Funds (€
142 mn on a total
amount of € 350 mn):
exit strategy in progress
31.1%
12,2%
3,8%
2013
NPL
37.9%
Unlikely to pay
40.6%
42.4%
37.2%
56,8%
50,1%
43,1%
51,7%
19,5%
10,5%
25,8%
12,2%
2014
2015
Past-due
n.a.
NPE
23,5%
10,1%
Peers 3Q15(1)
NPE including write-offs
Reclassification of impaired loans (€mn)
Gross flows from performing to NPE (€mn)
2,412
214
152
277
Impairment of most of
the goodwill, with
negligible future risk of
further impairment
(residual value of
goodwill € 6 mn)
35.1%
1,253
2.057
825
2014
Past due
Decay rate(2)
2014: 5.1%
2015: 10.3%
140
Unlikely to pay
2015
NPLs
Gross flows trom Unlikey to Pay to NPL (€mn)
755
481
2014
Decay rate(4)
2014: 22.7%
2015: 27.9%
2015
(1) Peers include Banco Popolare, BPM, Credito Valtellinese, BP Sondrio, Banca Popolare dell'Emilia Romagna, Veneto Banca and UBI Banca; (2) Calculated as flows of gross loans over beginning of period
performing loans; (3) Including write-offs; (4) Calculated as flows of gross loans over beginning of period unlikely to pay; (5) Among which € 59 mn BRRD costs, € 10 mn personnel costs and € 11 mn other nonrecurring costs in relation to the transformation into SpA; (6) Income statement items 250 and 270, including impairments on tangible assets recorded under item 200 of the income statement (-€ 12.9 mn in 2015,
not present in 2014) and the gross capital gain on the disposal of ICBPI recorded under item 100 of the income statement (€ 166.7 mn in 2015)
11
Sources: Company data, consolidated financial statements
Full de-recognition of “financed capital” in 2015 resulting in a potential
capital upside not included in the Business Plan
2
CET1 ratio as at 31/12/2015
Financed capital treatment
Total amount of financed capital equal to € 1,139 mn fully
Negative result mainly due to
loan loss provisions,
impairment on Lux. funds and
provisions for risks and charges
€mn
252
3.025
Of which € 466 mn loan
loss provisions and € 353
mn provisions for risk and
charges related to
financed capital
CET1
FY2014
Soft Mand.
Conversion
Future
outcome
Capital impact
Loans likely not
reimbursed
No impact on
capital
Loans
reimbursed
Capital
increase of the
same amount
Loans not
reimbursed
No impact on
capital
Treatment
Impact related to
financed capital
(€ 1,139 mn)
-1,107
-819
derecognized from CET1 capital as of December 31, 2015
Loan Loss
Provisions
(€ 466 mn)
-321
-194
2015 net Prudential Deductions
result (1)
filter
and other
1.656
Provisions for
risks and
charges
(€ 353 mn)
CET1
FY2015
CET1 (%)
10.44%
6.65%
TCR (%)
11.55%
8.13%
RWA (€mn)
28,985
24,884 (2)
Prudential
filter
(€ 321 mn)
2
alternatives
(1) Net of goodwill and other intangibles impairment impact; (2) The decrease of €4.1 bn is mainly related to credit and counterparty risk (-€3.4 bn), which is mostly due to the reduction in net customer
loans and residually to market risk (-€0.4 bn) and CVA (-€0.3 bn)
12
2
Newly appointed management team with recognized track record in the
financial sector
STEFANO DOLCETTA CAPUZZO
NAPOLEONE FRANCESCO
BARBERIO
New management
Other current roles: Chairman of Fiamm
Holding S.r.l. and CEO of Dicra Spa,
Deputy Chiarman of Confindustria
Board of Directors
39 years of experience
Previous experience:
Chairman of BoD
FRANCESCO IORIO
(S. Dolcetta)
LEONARDO SICCOLI
CEO
General Manager
(F. Iorio)
ELEONORA PEZZINO
ANNA TOSOLINI
Compliance & AML
(E. Pezzino)
Internal Audit
(N.F. Barberio)
Corporate
Development
(A. Tosolini)
Business Transf.
& Cost Management
(L. Siccoli)
General Secretariat
(M. Sommella)
Risk
Management
(A. Piazza Spessa)
Communications
(Iorio ad interim)
Legal
(M. Tagliaferri)
ALBERTO PIAZZA SPESSA
MARCO TAGLIAFERRI
Financial
reporting and
Planning
(M. Pellegrini)
IACOPO DE FRANCISCO
Commercial
(I. De Francisco)
Senior Deputy
General Manager
Human
Resources (1)
(G. Rossi)
GIOVANNI ROSSI
(1): The two divisions are today unified and will be split
Note: Years of experience refer to years of working experience in the financial sector
Operations (1)
(S. Bortolamei)
Finance
(D. Cavrioli)
Lending
(A. Beretta)
DIEGO CAVRIOLI
ALBERTO BERETTA
13
3
Capital plan well on track and resulting in a solid capital position after the
IPO with a CET1 ratio >12%
Capital plan well on track
CET1 ratio as at 31/12/2015 including capital increase
Capital plan, preliminarily presented to ECB, well on track to
10.25% SREP
target
restore solid capital base, and pave the way for
implementation of the Business Plan
> 12%
€ 250 mn T2 raised in September/October 2015 to
11.9%
comply with minimum regulatory requirements (TCR
up to 8.13% and CET1 to 6.65% in FY15)
6.7%
Disposal of stake in ICBPI resulting in a c. € 165 mn net
capital gain and disposal of the stake in SAVE resulting
in a c. € 17 mn net capital gain completed in 2015
Pre-underwriting agreement signed at standard
market terms and conditions with UniCredit for the
total amount of the capital increase of € 1.5 bn
Target CET 1 > 12% over the Business Plan period, with payout ratio of 50%
CET1
FY15
€1.5bn
Capital
increase (1)
CET1
FY15
post-cap.
increase
Peers(2)
2015
Target leverage ratio > 7.5% over the Business Plan period
(1) Pre-underwritten agreement with UniCredit Group; (2) Peers include Banco Popolare, BPM, Credito Valtellinese, BP Sondrio, Banca Popolare dell'Emilia Romagna, Veneto Banca and UBI Banca
14
Areas of potential further upside, not included in the Business Plan
Potential buffers
Description
Capital
P&L
a
Disposal of nonstrategic assets
b
Adoption of
AIRB
methodology
Reimbursement
of financed
capital
Real Estate
% stake
Arca SGR is one of the largest
independent asset managers
in Italy
€38.7 mn
19.99%
The core business of Prestinuova
consists of salary secured loans
(cessione del quinto),
particularly to public-sector
employees
€35.0 mn
100%
Farbanca is an on-line bank
specialized in banking services
to pharmacies
€43.9 mn
70.77%
NEM SGR Spa was established
in September 2004 to
promote, establish and
manage private equity funds
c
Book Value(1)
Real estate company
(Immobiliare Stampa S.c.p.a.)
Company
€2.4 mn
100%
Funds under
Management
€99.4 €mn(2)
€497 mn(3)
(1) Values in separate BPVi financial statement at 31.12.2015; (2) NAV at 31 December 2015; (3) Book value of real estate properties at Group level
100%
15
Significant value creation potential through a Business Plan based on a
"Simple Bank model"
4
1
2018 targets
2020 targets
Net profit
> € 200 mn
Net profit
> € 300 mn
ROTE
Adjusted
5.6%
ROTE
Adjusted
8.2%
Cost / Income
Ratio
< 55%
Cost / Income
Ratio
< 50%
• NPE "active management"
• Preventive management
• Review core credit processes / policies
CET1
12.0%
CET1
12.9%
• Rationalize equity investments, holdings and group legal
entities
• Real Estate optimization
LCR
> 115%
LCR
> 120%
Solidity and
resilience
• Top-Peers capital ratios, strengthened liquidity position and
prudent leverage ratio
• Financial assets portfolio with low risk profile
• Upgrade internal control system
Reshape client
service models
• Innovate service models on core customer segments
• Focus on "core" revenues, particularly on net commissions
driven by AuM growth
• Re-focus our geographic footprint and further implement
and roll-out our Hub&Spoke branch model and cash light
branches
Transform the
operating model
• HR engagement and valorization as key enabler of growth
• Obsessive cost management and structural externalization
of low value added activities
• Lean and simplified organization
2
3
4
Active Credit & Risk
Management
5
Re-qualify the
asset base
Becoming the "First Choice" Network Bank in core geographic areas, focused on
Corporates / SMEs and Family banking, delivering distinctive customer service
16
Solid and sustainable levers for the shareholders’ value creation, through a well
4
identified path
A
Dynamic credit and risk management
Completion of portfolio clean up and reclassification from UTP
to NPL in 2015, driven by a more strict assessment of asset
quality, is over
■ Alignment of the actual NPL collection rate and of the transition
of NPE back to regular to market levels
■ Long term strategic partnership with Tier I market operator(s)
on selected NPL portfolios
Improvement of commercial spread in 2015-2020 from 1.95% to
2.41% mostly driven by a progressive reduction of funding cost
(83 bps mark-down improvement)
■ New management team with strong track record in feeintensive businesses fully focused in growing commissions taking
profit from dynamic economy of the bank’s core regions
■
Credit flows (%)
~10%
~3%
~3%
2015 2018 (E) 2020 (E)
~4%
~4%
~1%
2015
D
2018 (E) 2020 (E)
Flows from
regular to
NPE
Pay-out Ratio:
3.05%
322
2015
2018 (E) 2020 (E)
401
453
2015
1.09%
2018 (E)
Average deposits spread
CET 1 ratio (%)
12.0%
3.14%
Net commission (€mn)
0.63%
12.9%
6.7%
2015
3.41%
~3%
Sound capital base with potential upside from:
■ Rationalisation / optimisation of equity investments,
holdings and group legal entities
■ Disposal of non-core assets and AIRB implementation
granting additional capital buffers
CET 1 ratio post-capital
increase
>12%
Interest rate evolution (%)
NPL recovery rates (%)
~5%
~5%
Significant strengthening of capital ratios
■
■
1.47%
Flows from
UTP to
regular
B
Strong and sustainable revenue creation
Average
peers(1): 11.9%
Enablers in place
for enhancing
value creation
2020 (E)
50%
50%
2015 2018 (E)2020 (E)
Average loans spread
C
Optimisation of the organisational structure
Closure of further 79 branches (by the end of 2016) to
improve efficiency and productivity
■ 575 headcount reduction thanks to two “redundancy funds”
■ Advanced stage negotiation with trade unions
■ Externalisation of “volume driven” activities (additional -150
FTEs)
■
Administrative operating expenses (€mn)
718
10.25%
Target SREP
2018 (E)
2020 (E)
(1) Peers include Banco Popolare, Banca Popolare dell'Emilia Romagna, BPM, BP Sondrio, Credito Valtellinese, UBI Banca and Veneto Banca
Sources: Company data and selected peers press releases and 2015 results’ presentations
2015
592
586
2018 (E)
2020 (E)
17
4 Our formula for success: sharp increase in profitability and efficiency
Cost of Risk (bps)
A
529
Net Income (€mn)
202
77
70
2018 (E)
2020 (E)
309
2015
f(x)
ROTE Adjusted (%) (1)
(1,407)
B
2015
5.6%
8.2%
2018 (E)
1,053
1,143
1,289
2015
2018 (E)
2020 (E)
CET1 and RWAs (€bn)
6.7%
2015
2020 (E)
f(x)
D
(36.2%)
2018 (E)
Operating income (€mn)
12.0%
12.9%
2020 (E)
26.8
28.2
Cost / Income (%)
C
24.9
2015
2018 (E)
RWA
2020 (E)
CET 1
71.6%
2015
(1) ROTE Adjusted calculated on Tangible Equity net of non-distributable equity reserve related to financed capital
54.4%
47.6%
2018 (E)
2020 (E)
18
Agenda
Pag. 5
Business strategy
Pag. 19
Pag. 51
Risk management
Pag. 60
Financial overview
Pag. 74
Pag. 95
19
Business strategy
Business model & competitive position
Distribution model
Client franchise
Product platform
Business strategy
20
BPVi ranks among the leading Italian banking groups
Banking
Groups
Total Assets(1) (€bn)
873.5
#1
668.2
#2
#3
170,2
Net Loans (1) (€bn)
474.1
#1
345.1
#2
#3
112,5
Direct Funds (1) (€bn)
588.2
#1
396.6
#2
#3
122,7
Total branches (1) (#)
#3
123,4
#5
78,9
#5
83,5
#4
#5
115,7
#4
83,8
#4
89,0
#5
(2)
#7
80,3
#6
62,0
(2)
#7
44,9
#6
46,2
#9
36,7
(2)
5,593
#2
#4
#6
7,055
#1
#7
2.209
1.848
1.561
868
13.6%
7.3%
6.0%
5.3%
2.9%
4.1%
60,7
#7
43,5
#8
52,0
#8
36,8
#9
49,5
#9
33,4
#8
37,0
#9
655
2.2%
#10
41,1
#10
26,1
#11
26,7
#11
614
2.0%
#11
36,1
#10
#12
35,5
#12
24,4 €25.2bn as at
December 2015
23,4
#13
29,6 €21.9bn as at #15
December 2015
#12
23,9
#13
35,5
#13
21,3
#14
23,0
#14
31,6
#14
21,3
#12
#15
28,9
#15
18,9
#15
(3)
€39.8bn as at
December 2015
#11
(3)
#6
(2)
12.9%
(3)
#8
1.245
834
350
(3)
2.8%
#579 as at
December 2015
1.1%
582
1.7%
#13
542
1.8%
24,5
#10
627
2.1%
21,6
#14
533
1.8%
Market share(4) (%)
Notes: (1) Data as of September 2015; (2) Data as of December 2014; (3) Data as of June 2015; (4) Relates only to domestic branches
Sources: Company data, Companies Statutory Financial Statements, “Banca d’Italia, Segnalazioni di vigilanza, data di riferimento
30/09/2015”
21
Current size historically triggered by both internal and external growth
654
640
628
Group Consolidation:
Strategic growth:
264
# Branches
1
Expansion in North-East
Italy through several
acquisitions (e.g. B.P di
Venezia, B.P. di Trieste,
B.P. Udinese, B.P.
prov.di Belluno, etc.)
Establishment of
Banca Popolare di
Vicenza, first bank
in Veneto region
Establishment of a new
corporate organization
with the merge of the
subsidiaries within the
Holding company
1866
1980-1999
453
• Establishment of
Prestinuova SpA
(Consumer Finance
company)
Expansion in South and
Central Italy with two
important initiatives:
• Acquisition of 61
branches from UBI
group in Bergamo
and Brescia
provinces
• Acquisition of Banca
Nuova di Palermo and
Banca del Popolo di
Trapani merged in the
new Banca Nuova
• Acquisition of Cassa di
Risparmio di Prato Cariprato
2000-2003
• Purchase of
Farbanca
• Opening of new
offices and
branches in Italy
(Milan, Rome,
Turin) and abroad
(Sao Paulo, New
York, Shanghai,
Hong Kong, New
Delhi)
Officially
recognized
among the
first 150
European
banks under
the direct ECB
regulatory
supervision
• Merge of
CariPrato within
the holding
company
• Agreement with
Cattolica
Assicurazioni
2004-2007
2010-2013
2014
22
Distribution oriented group, with 3rd party product platforms
BPVi is the 10th commercial Banking Group in Italy distributing traditional financial products and services in complementary
businesses, also through strategic partnerships and commercial agreements with specialist operators
Commercial banking
KPIs
Net loans €22,129mn
#485 branches
KPIs
KPIs
Net loans €2,842mn
#93 branches
Bancassurance
Asset
Management
(2)
Commercial bank,
focused on Sicily
Consumer Credit
On-line bank specialized in
providing banking services
to pharmacists
Monetics
Net loans €527mn
#1 branch
Private Equity
(5)
BPV Finance
International Plc
(Agreement expiring in 2020)
+ 20 commercial
agreements
(3)
(Agreement expiring in 2022) (4)
€2.1bn of stock of
Life Insurance
products(6) as at
December 2015
Proprietary
trading
€4.9bn of AUM, of
which 51% are
invested in Arca
Indivisuals, SMEs andThe BPVi Group offers its
corporates
€89mn of SBL
(PrestiNuova)
€156m of personal
loans (Compass)
#501k debit cards
#281k pre-paid cards
#160k credit cards
#51k POS
NAV of managed
funds amounting to
€99.4mn
Total assets
amounting to
€653k
services to around 1.34m clients(7) across Italy (90% Individual clients, 10% Corporates / SMEs)
Strategic assets / partnerships
Non-strategic assets
Notes: (1) Net of FVH; (2) Equity stake of 15.1% as at 31 Dec 2015; (3) Equity stake of 40% as at 31 Dec 2015; (4) assuming the prosecution of the partnership after the change of bank’s status (in Joint Stock
Company) and after the first termination date (2017) pursuant to the General Agreement of 2012; (5) Equity stake of 20.0% as at 31 Dec 2015; (6) stock of policies collected through the BPVi network; (7)
Commercial segments only, excluding employees and financial counterparties, # clients based on segmentation criteria for 2016
23
Sources: Company data
Business strategy
Distribution model
Client franchise
Product platform
Business strategy
24
Branch network deeply rooted in the wealthy North-East Italian regions,
supported by a multi-channel distribution strategy
BPVi Group branch distribution in Italy
# of branches1
(main regions)
BPVi branch network1
2
Veneto
57
75 221
3
221
Market share2
% BPVi
Branches Loans Deposits loans3
% BPVi
deposits3
GDP/capita
(€K - 2014)
% of tot.
GDP (2014)
% of tot.
exports4
7.3%
7.2%
5.0%
39.1%
35.7%
30
9%
14%
29
7%
8%
22%
27%
5%
2%
17
5
75
2
1
Tuscany
75
3.6%
3.4%
2.8%
13.3%
10.0%
Lombardy
75
1.4%
0.9%
0.5%
12.5%
7.9%
Sicily
78
5.0%
4.5%
2.7%
9.1%
8.2%
FriuliVenezia
Giulia
57
7.1%
7.4%
3.9%
8.0%
4.4%
28
2%
3%
Total
Italy
579
2.0%
1.9%
1.1%
99.5%
82.0%
27
100%
100%
25 1
1
2
14
Market
share
0%
<3%
3-5%
5-10%
35
78
Multi-channel
distribution network
35 PB offices and
13 financial shops
110 FAs
17
116 agents
Online platform
Notes: (1) As of 31/12/2015; (2) Data referred to Family and Business clients as of 30/9/2015. Source: “Banca d’Italia, Segnalazioni di vigilanza, data di riferimento 30/09/2015”; (3) As of 31/12/2015, net
of Repos. Loans and deposits are calculated based on the customer residence and refer to the sum of the data for the 3 commercial banks of the Group (residual value to 100% refer to non – resident
customers and to securities issued by the bank which are not deposited at the bank); (4) Share of total national exports (2014)
Sources: Company data, “Banca d’Italia, Segnalazioni di vigilanza, data di riferimento 30/09/2015”, ISTAT (“Conti nazionali (edizione di novembre 2015)”), ISTAT-Coeweb (“Statistiche del commercio
estero (aggiornamento di dicembre 2015)”)
25
Branch footprint
Distribution(1)
<3 FTE(2)
3-6 FTE
>6 FTE(3)
Total
# Branches
68(4)
282
229
579(4)
# Employees(5)
125
1,210
2,184
3,519
# Clients ('000)
8
451
882
1,341
Employees / branch
1.9
4.3
9.5
6.1
Clients / branch
~ 130
~ 1,600
~ 3,850
~ 2,300
% Volumes
1.6%
25.3%
73.1%
100.0%
% Revenue
1.4%
30.2%
68.4%
100.0%
Distrib
Avg
Key Data
Data as at Dec15
% Revenue
Revenue concentration
% Branches
% Revenue
100,0%
10%
35%
80,0%
20%
51%
60,0%
30%
63%
50%
81%
70%
93%
100%
100%
40,0%
20,0%
0,0%
0,0%
20,0%
40,0%
60,0%
% Branches
80,0%
100,0%
Notes: (1) Source: Company data; commercial segments only, excluding employees, financial counterparties and other non commercial segments; clients distribution based on segmentation criteria
for 2016, excluding clients non allocated in branches; revenues and volumes as of Dec 2015 pro-forma on 2016 segmentation criteria; (2) Including «spoke» branches; (3) Including Farbanca (1
branch); (4) Including 3 operational offices (without clients and FTEs) not included in average size calculations (5) Average headcount in December 2015 including Corporate and Private RMs
26
Digital offering complements the physical network
The Group has complemented its traditional distribution channels with a series of electronic channels, as an alternative to branches, via
which private customers and firms are able to make enquiries and issue instructions on their own accounts independently and at any time
In January 2015, the BPVI Group launched BPViGO!, a new access point for the Group’s private customers to the multi-channel world
■ BPViGO! Enables customers to carry out transactions without having to go into the branch, including:
Convenience
-
Transfers, endorsements, bill and TV licence fee payments, and tax payments using F24 forms
-
Consult information such as account statements, interest calculations and securities deposit account statements
-
Trading on Italian and international bond and share markets
-
Send money via MoneyGO!, with the possibility of selecting the beneficiary directly from the list of contacts stored
on the customer’s smart-phone (developed using the SIA Jiffy platform)
■ Access to BPViGO! is entirely secure as a result of the dual user identification system
Security
■ Personal memory stick, available also as software for smart-phones, generates disposable codes for confirming
operations
■ The “Text-Alert" service sends notifications for payments and operations executed on current accounts
Simplicity
■ Graphic interface has been redesigned and reorganized to make browsing experience more intuitive and allow rapid
access to a variety of different functions
■ BPViGO! is available in multi-channel format via the dedicated apps available in the main stores: App Store, Google
Play and Windows Store
Key indicators
Approx. 310,000 BPVi GO! current accounts,
around 47% of the Group’s total
Semplicità
27
Digital offering complements the physical network (cont’d)
The online banking service has been completely revised and renewed, with the introduction of technologically advanced
innovations and functions and with the objective of improving customer satisfaction
Paperless
■ Possibility for new customers to acquire products
and/or services (e.g. current accounts, top-up credit
cards, debit cards, time deposits etc.) directly online
with paperless process
■ Use of the digital signature
Cardless
■ Possibility to make withdrawals without using debit
card
■ Cash withdrawal is booked using the customer’s
smart-phone via the BPViGO! Mobile app and
receiving OTP software code
MoneyGO!
■ P2P - Possibility to send money directly from the
customer’s smart-phone by selecting the beneficiary
from the contacts
■ Function developed on SIA Jiffy platform
Contact
centre
Contact Center
■ In-house service center to provide assistance or
information by email, phone (including using the callme-back function choosing the date and the time at
which to be contacted) or via chat in real time or by
booking an appointment at the branch office
28
Business strategy
Distribution model
Client franchise
Product platform
Business strategy
29
Client base: core client segments accounting for approx. 75% of bank's clientrevenues
Client base distribution (segmentation 2016(1))
1,342
9%
1%
22,388
0%
1%
30,369
798
9%
11%
22%
17%
26%
Large corporate
22%
6%
7%
Corporate
14%
73%
22%
33%
4%
9%
4%
36%
Small Business
Private Banking
16%
Affluent
15%
16%
Mass
Deposits + AuM
(2)
+AuC (€m)
Revenues (€m)
Our
"Core"
client
segments
28%
Clients ('000)
(1)
Loans (€m)
(3)
Notes: (1). Commercial segments only, excluding employees and other financial counterparties (i.e. SPV); Current client segmentation based on the following criteria: Affluent (total customer assets
managed > €75k), Private (total customer's assets managed > €1mn), SME (Business Clients with annual revenues > €10mn), Large Corporate (Business Clients with annual revenues > €250mn)
including financial corporate (i.e. Cattolica Assicurazioni); (2). Not including BPVI shares; data as of Dec 2015 pro-forma for 2016 segmentation criteria; (3) Revenues based on internal managerial
accounting including: interests on customer loans and customer deposits, commissions from AUM and other services; data as of Dec 2015 pro-forma on 2016 segmentation criteria
30
Individual clients: huge opportunities to enhance Cross-Selling
Client base distribution (segmentation 20161)
Growth opportunities
Revenues (€) /
clients
1,214
Private
Banking
289
1%
2,562
12%
18%
Limited number of Private Bankers with not
complete geographical coverage
Lower % of AUM in asset mix3 (26% BPVi vs.
50% Market4)
Average Return on Assets less than Market Avg4
(48 bps3 vs. 68 bps)
Low commercial coverage (24% of clients
without dedicated RMs)
43%
561
Affluent
High number of clients (~35.000) with less than
75 K€ of assets (Affluent threshold) but showing
affluent behavior5
81%
132
45%
Clients ('000)
Mass
(1)
Revenues (€m)
Affluent
(2)
Mass
46% of clients with 3 products or less
Huge amount of new clients (145,000 acquired
in the last 3 years) with:
- lower X-selling index than ‘old’ clients (3.0
vs. 4.3)
- lower penetration of investment products
(Funds: 4% vs. 17%), life insurance (1% vs.
5%) and mortgages (8% vs. 18%)
Private Banking
Notes: 1. Commercial segments only, excluding employees and other financial counterparties (i.e. SPV); Current client segmentation based on the following criteria: Affluent (total customer assets
managed > €75k), Private (total customer's assets managed > €1mn), SME (Business Clients with annual revenues > €10mn), Large Corporate (Business Clients with annual revenues > €250mn) including
financial corporate (i.e. Cattolica Assicurazioni); 2. Revenues based on internal managerial accounting as of Dec 2015 including: interests on customer loans and customer deposits, commissions from
AUM and other services; 3. Including BPVI shares; 4. Market refers to AIPB Reports (“Mercato Servito dal Private Banking in Italia - dati al 30/09/2015” for asset mix; “Analisi della redditività del Private
Banking in Italia al 31/12/2014” for ROA); 5. Company data, Behavioral segmentation: average spending last 12 months > €3.500, payments for mortgages > €1.500, Net income > €8.000, total tax
payments > €20.000;
Sources: Company data, AIPB (“Mercato Servito dal Private Banking in Italia - dati al 30/09/2015” and “Analisi della redditività del Private Banking in Italia al 31/12/2014”)
31
Business clients: opportunities to increase SoW and commercial coverage
Client base distribution (segmentation 20161)
Growth opportunities
Revenues (€) /
clients
128
Large
Corporate
509
1%
7%
14%
42,275
34%
Corporate &
SME
52%
Clients ('000)
(1)
Small Business
Revenues (€m)
Corporate
Large corporate
Lower SoW on low risk clients, in particular in ST
loans (9.3% on low risk clients vs. 14.6% on high
risk clients)3
'Loose’ correlation between lending pricing and
risk level to be ‘tightened’
8.1% of revenues from ‘value added’ services
(trade & export finance, derivatives, DCM/ECM)
2,243
(2)
High potential in client’s value improvement,
even through deleveraging initiatives
Not focused commercial coverage, with
inefficient geographical extension
19,819
92%
No dedicated RMs and low effectiveness in
client relationship development
Small
Business
Low commercial coverage (45% of clients
without dedicated RMs)
7% of revenues from fee-based services
(payments, trade & export finance, leasing,
factoring, insurance products)
Notes: (1). Commercial segments only, excluding employees and other financial counterparties (i.e. SPV); Current client segmentation based on the following criteria: Affluent (total customer
assets managed > €75k), Private (total customer's assets managed > €1mn), SME (Business Clients with annual revenues > €10mn), Large Corporate (Business Clients with annual revenues >
€250mn) including financial corporate (i.e. Cattolica Assicurazioni); (2). Revenues based on internal managerial accounting as of Dec 2015 including: interests on customer loans and
customer deposits, commissions from AUM and other services; (3). Source: “Centrale rischi” at 31/12/2015
Sources: Company data, “Centrale rischi” at 31/12/2015
32
Strong and proved client acquisition capabilities with average net increase
in customer base of over 55k customer per year
Client dynamics(4)
Client acquisition
Acquisition rate (2014)
BPVi
15%
15%
11%
10%
Market
New active clients evolution (k)
14%
11%
11%
7%
64
62
28
1.379
Delta
2015
YE 2015
71
51
Individuals
Small (1)
Business
Very Small
Small (3)
(2)
Enterprise
Enterprise
1.102
Client retention
Retention rate (2014)
BPVi
Market
95%
95%
90%
Individuals
Small
(1)
Business
YE 2010
93%
93%
93%
90%
Delta
2011
Delta
2012
Delta
2013
Delta
2014
90%
Very Small
Small
(3)
Enterprise (2) Enterprise
Notes: (1). Turnover up to €1.5mn; (2). Turnover up to €2.5mn; 3. Turnover up to €5mn; 4. Including commercial segments, employees and financial counterparties
Source: Company data, “Customer Retention and Commercial performance 2014 - ABI and SDA Bocconi“
33
Business strategy
Distribution model
Client franchise
Product platform
Business strategy
34
BPVi product offering –wide panel of traditional retail products for
Individual clients
Current
accounts
■ Current accounts which meet a variety of different
consumer profiles and savings needs (e.g., Gamma
SemprePiù , Conto Corrente Feel Free current, Conto Amici,
etc.)
KPIs (Dec 2015)
Total current
accounts
■ Multi-channel banking: all accounts may be accessed
online via the BPViGO! platform
Mortgage
products
Private
customers
■ Prestinuova (fully owned subsidiary)
- Salary-backed loans (repayment spread over up to 120
monthly installments, 10 years)
■ Compass (partnership)
- Personal loans (maximum amount : €30k)
■ Own payment instruments
- Debit and pre-paid cards
Monetics
€805mn
■ Maximum Loan to Value: up to 80%
■ Indexes: Euribor 3m or ECB rates
Consumer
credit
New loans
■ Fixed / floating rate loans
#655k
Loan-to-Value(1)
New lending
(Salary-backed loans)
New lending
(Personal loans)
€89mn
Debit
#501k
Pre-paid
#281k
Credit
#160k
AUM
€4.9bn
Stock of Life Insurance
products (2)
€2.1bn
€156m
Own issue
■ Credit cards distributed in partnership with Cartasì
■ Since 2015 all new cards have been issued with the
contactless technology
56.0%
Partnership
■ Agreement in place to distribute Arca SGR products
Asset
Management
Insurance
products
■ Open architecture allowing the distribution of investment
products of over 20 asset management companies
(Blackrock, JP Morgan, Morgan Stanley, Carmignac, etc)
■ Bancassurance agreement with Cattolica since 2007
- Exclusive distribution through the BPVi network of
products of the Cattolica Group’s companies
■ Life insurance: Life, Mutual funds, Unit-linked
■ Non-life insurance: Health / Accidents/ Miscellaneous
Notes: (1) on loan book for individual private customers; (2) stock of policies collected through the BPVi network
35
BPVi product offering – full range of solutions for Corporates & Small
Businesses
KPIs (Dec 2015)
■ The “SemprePiù impresa” current account is available in three different versions according to
the number of operations executed:
-
(i) Small: monthly installment of €7, #100 transactions free of charge p.a.
-
(ii) Medium: monthly installment of €12, #300 transactions free of charge p.a.
-
(iii) Large: monthly installment of €30, unlimited transactions free of charge
■ The SemprePiù Impresa account allows the firm to select from one of the following options:
Farmers, Artisans, Retailer, small firms, freelance professionals and pharmacists
Current
accounts
Business
customers
-
Programme for Farmers – features of the programme: (i) use of a company international
debit card with no charges for 12 months; (ii) “@timeimpresalight” (access to all the main
banking online services); (iii) a full range of insurance services dedicated to businesses
-
Programme for Artisans - features of the programme: (i) “@timeimpresalight” free of charge
for one year; (ii) use of a company international debit card, with option to apply for a second
card free of charge; (iii) a full range of insurance services dedicated to businesses
-
Programme for Retailer - features of the programme: (i) POS service to manage collections
and payments via credit and debit cards; (ii) Advances on amounts collected via POS free of
charge; (iii) a full range of insurance services dedicated to businesses
Total current
accounts
#152k
■ Primarily payment/acquiring services offered to business customers
■ Through the agreement with Consorzio Triveneto, BPVi is able to offer acquiring services
featuring new functions such as:
POS
-
electronic lunch vouchers reading technology integrated into POS
POS
-
dedicated software for production of geo-referenced coupons available on POS
#51k
■ Particular attention is devoted to large-scale distribution in the form of customized advisory
services
■ In 2014 the “m-POS” was introduced for retailers which, via an app and a pin-pad card reading
device, enables the customer to authorize their own smart-phone or tablet to accept
payments made with debit or credit cards
36
BPVi product offering – full range of solutions for Corporates & Small
Businesses (cont’d)
As well as traditional products, the Group also offers its business customers a variety of distinctive services ranging from structured finance, to
services assisting SMEs, to structuring third-party securitizations
KPIs (Dec 2015)
■ BPVi is market leader in ECM/DCM for SMEs with a clear leadership position in the mini-bond
segment (33.5% market share at December 2015, in terms of issues made in 2014 – 2015 in
the €5-50m segment, specifically for SMEs)
SME platform
and minibonds
■ From April 2014 to August 2015 BPVi has originated #13 issues with a total notional value of
approximately €289.4mn and an average coupon equal to 6.15%
Commissions
€2.3mn
■ BPVi in particular supports companies in their plans to grow and assists them at the stages of
evaluating, issuing and placing mini-bonds
Corporate
finance ECM &
DCM
Business
customers
Trade Finance
/ Supporting
tools for
International.
Third-party
securitizations
Commodities
(gold and
silver)
■ BPVi executes extraordinary financial transactions, providing entrepreneurs with qualified
assistance in organizing structured debt, corporate finance and M&A transactions
■ The BPVi Group’s ordinary services are complemented with extraordinary ones, such as share
placements and stock market listings (to date the BPVi Group has assisted seven firms in the
listing process1)
■ The BPVi Group provides direct assistance via specialist operational units to firms operating on
international markets. This includes:
- Issuing and trading of import & export credit documents (letters of credit), discounts with and
without recourse, loans to international banks, international guarantees, forex trading, etc.
- Analysis and assessment of international counterparties, support in project planning,
international assistance for legal, tax and accounting issues, credit insurance, product
certification, etc. The BPVi Group has 6 representative offices
Commissions
€3.0mn
Commissions
€19.9mn
■ BPVi structures securitizations by third parties of receivables sold by third-party legal entities,
with the originator subscribing for part or all of the senior/mezzanine tranches issued
Commissions
■ BPVi as investor also takes on exposures in asset-backed securities deriving from such thirdparty securitizations (a total of €608m as at December 2015, out of which €432m reimbursed)
€1.7mn
■ BPVi is one of the leading Italian banks in commodities trading and brokerage in gold and
silver for industrial production, making sector operators specific proposals to enhance the
financial management of their companies with specific bespoke products
■ BPVi executes, inter alia, sales (sale of gold in return for payment) of credit in gold and loans
for use in gold, as well as structuring instruments to hedge gold and gold finance loans
Notes: (1) In June 2014, the BPVi Group was qualified as a Nominated Advisor (Nomad) and was authorized to assist and to work with companies
intending to apply for listing on AIM Italia (the unregulated SME stock market segment operated by Borsa Italiana)
Loans
€91.1mn
37
Sizeable player in asset management & consumer credit
Asset Management
Salary-backed loans
Top 15 companies by AUM (€bn)
Top 15 companies by stock (€mn)
Bancassurance
26.6%
1
ISP
13.6%
2
Santander
1.833
10.7%
7.6%
3
IBL
1.830
10.7%
64
4.0%
4
Prestitalia
1.669
9.8%
Banca
Fideuram
61
3.8%
5
Compass
1.650
9.7%
6
Blackrock
61
3.8%
6
BNL
7
Anima Hold.
56
3.5%
7
UCG
8
Allianz
44
2.7%
8
Findomestic
9
UBI
41
2.6%
9
DB Easy
766
4.5%
10
Mediolanum
38
2.4%
10
Fiditalia
720
4.2%
11
Amundi
35
2.2%
11
Fides
602
3.5%
12
Axa
31
1.9%
12
Agos
457
2.7%
13
Banco Pop.
29
1.8%
13
Credem
382
2.2%
14
Azimut
28
1.8%
14
PrestiNuova
15
Arca
28
1.8%
15
Creditis
1,287
80.0%
1
Generali
2
Eurizon Cap.
3
Pioneer
4
Poste It.
5
428
2.576
15.1%
Life segment
Total
219
123
products as at December 2015
equal to €1.209m(1)
8.4%
1.437
6.9%
1.184
1.043
6.1%
products as at December 2015
equal to €816m(1)
P&C segment
Total
369
182
17,093
Annual GWPs as at December
2015 equal to €27mn
2.2%
1.1%
100%
Market share(%)
Notes: (1) stock of policies collected through the BPVi network
Source: Company data, Assofin (“Osservatorio Assofin sul credito al consumo – sintesi – 3Q 2015”), Assogestioni (“Mappa trimestrale del Risparmio
Gestito - 3 ° Trimestre 2015”)
38
Business strategy
Distribution model
Client franchise
Product platform
Business strategy
39
Reshape client service model: service model innovation aims at optimizing
client "Cost to serve"
Revenues /Costs per client
Revenues
Cost to serve
«To be»
Cost to serve
«As is»
Cost increase due to
higher service levels
Cost savings
Mass
Lower Affluent
Small Business
Community banking
Upper Affluent
SMEs
Private
Corporate
Corporate &
Private Banking
40
BPVi new client service strategy
Community Banking
+
Corporate/SME & Private banking
Serving Mass, Affluent, Small Business
Serving SME, Corporate, Private Clients
Our new approach to retail, based on proximity,
service and convenience
Our "one stop" service platform for
Corporate/SMEs and entrepreneurs
Strengthened “client facing” local presence (thanks
to closures and H&S, and hiring): bigger branches,
higher presence of client RMs per branch
Enabled cross-segment client synergies / x-selling
and capabilities synergies
Extensive multichannel platform
(BPVi GO) to complete client service approach
Three dedicated sales “engines” to enhance client
profitability:
Specialized coverage (CB vs PB) and unique CB + PB
locations to foster cross-segment service model
New corporate banking client segmentation
(turnover > € 10 mn) to enhance business focus
- "SoW & Cross Selling engine"
- "Acquisition & on-boarding engine"
- "Client Management engine"
41
BPVi new distribution model
Evolution of the distribution model, from undifferentiated regional areas coordinating retail, corporate and private banking,
to commercial areas specialized by customer segments
Community
Banking
Corporate/SME &
Private banking
Large
Corporate
HUB
Spoke
International center
Regional districts
Branches (#)
Private
& Corporate
■ #2 Distinct commercial networks:
1. Community Banking : composed by 6 regional districts including
the branches (which supports all other segments of clients)
Focus on private Mass/Affluent and Small Business with
revenues ≤ €10m
2. Private & Corporate: composed by 15 Business offices focused
on private clients (total funding(1) > €1mn) & Corporate
(revenues > €10mn)
The Large Corporate segment , which includes companies
generating revenues > €250mn (and the private clients
connected to them), will be organized separately in a dedicated
and centralized structure
Client /
branch
(#k)
2.0
654
2.3
2.7
579
500
2014A
2015A
2016E
Relationship Managers (#)
Client(2) /
389
RMs
(#)
441
736
784
2014A
2015A
315
1.120
2018E
Notes: (1) direct funding, indirect funding and own shares (2) clients number based on Affluent, Private, SB and Corporate segments
Source: Company data, clients number based on commercial segments, excluding employees, financial counterparties and other non commercial
segments
42
BPVi new distribution model (cont’d)
Simplified distribution structure focused on clients and organized in
commercial areas by customer segment
Organisational model Hub & Spoke
Organisational model Private & Corporate
#6(1)
Regional
districts
Private
& Corporate
#15(1)
Large
corporate
#1
Operational
support
Full Fledge
Branch
HUB
Branch #70
#430
Private &
7
Corporate
offices
# regular branches
under Hub model
will be implemented
by the end of 2016(2)
Regular
7
Branch
Spoke
Branch
#79
Affluent RM(3)
#343
Corporate RM(3)
#96
Small Business RM(3)
#284
Private RM(3)
#80
Large Corporate RM(3)
#15
Notes: (1) Regional districts and P&C offices excluding Banca Nuova and Farbanca; (2) New Hub, Regular and Spoke branches under Hub Model as a result of a transformation of part of Full Fledge
Branches by the end of 2016; (3) Headcount expected based on new segmentation
43
BPVi new distribution model (cont’d)
Distribution model effective from 2016
Markets
Community Banking
Credit
Corporate & Private
“Estero”
Analysts / Other
Centralised functions
LARGE
CORPORATE
Regional
districts
#6
“Centro Affari
C&P”
“Ufficio Estero”
#15
Regional
Loan offices
FILIALE
Branches
• Affluent RM
• Small Business RM
• Sales Manager
Corporate
RM
Private
Banker
Dedicated Business Units to specific segments (Community vs. Corporate&Private)
Leaner distribution model (less areas, optimized span of control, new Hub&Spoke branch network model)
Full alignment between network and client segmentation
Clear separation between commercial and credit policies (for effective risk management)
Synergy potential from consolidation of Corporate RM and Private Banker functions (“Centri Affari
Corporate&Private”)
Maximization of distinctive capabilities and services (“Estero”, SME Platform)
44
Corporate and private
Community banking
New customer segmentation effective from January 2016
Mass
Total deposits1
Service Model
< €75,000
Branch
Retail
Affluent
Small
Business
Private
Banking
Small businesses
Private
Mid Corporate
€75,000 - €1mn
Affluent RM
Annual Turnover
Service Model
< €10mn
SB RM
Total deposits1
Service Model
≥ €1mn
Private Banking RM
Annual Turnover
Service Model
€10mn - €250mn
Corporate RM
> €250mn
Large Corporate RM
New segmentation
■ The main changes will
involve:
1. Increase in lower limit
for medium-sized
corporate customers to
turnover of €10m
2. Increase in lower limit
for Large corporate
customers to turnover of
€250m
3. New lower limit of
€300,000 deposits for
clients accessing Private
Banking on the basis of
behavioural rules
Corporate
Large corporate
Notes: (1) direct funding and indirect funding; segmentation of individual customers is based on the amount of deposits and on
behavioural rules (i.e. annual spending)
45
Community Banking Commercial Strategy: exploit cross-selling potential from
existing customer base and improve the effectiveness of our tested growth capability
New product
management
approach
driving client
management
evolution
"My money" products, basic banking services (cards, current accounts, time deposits, etc..), based on:
- Convenience
- On line/ self / digital process
"My life" products (investments, mortgages, consumer finance, life products) saving / lending services
based on:
- Advisory through client RMs (also "digitally enabled")
- Open platform (investments) and product partnerships
+
New CRM
and sales
management
approach
Enhanced CRM central Unit and CRM cross –channel system
Quarterly sales plan and campaign management
+
Capability
in Clients
growth
Confirmed excellent track record in client acquisition to be leveraged for further customer base growth
Focus on specific areas to increase local market share
+
New client
onboarding
approach
Dedicated "client onboarding unit"
Dedicated product offering to drive cross selling
Strengthened digital sale processes
46
Community Banking Commercial Strategy: “Client management engine” to upgrade
the way we handle client relationship management (Affluent & Small Business)
Service model pillars
Advisory
AUM stock volume
€bn
Financial planning
Affluent
Banking
5.0
Open platform products
Life Insurance
Digitally enabled RMs
Funds/Sicav
8.6
CAGR 15-20
11.4%
2,3
6.8%
6,3
13.4%
1,6
3,3
2015 (E)
2020 (E)
+
Risk based pricing
Small
Business
Banking
On-line platform
Dedicated product range (enabling
cross selling with "owner")
Fast credit underwriting process
Small Business Loans stock (GBV)
€bn
CAGR 15-20
5.8
3.6%
4.9
1.0%
Medium-Long
Term Loans
2,9
Short Term
Loans
1,9
3,1
2015 (E)
2,7
7.1%
2020 (E)
Notes: Data referring to Community Banking scope given the current segmentation in use
47
Reshape client service model: Creating a "one stop" service platform for
Corporate / SMEs & Entrepreneurs
Development of Private & Corporate Centers
Creation of a «Corporate / SME & Private Banking»
business unit
"Local integrated centers" for Corporate and Private
Bankers
Local centers of excellence providing specialized support in
trade/export finance and ECM/DCM/Advisory to clients
ILLUSTRATIVE
CB & PB Centers
Main focus on high
GDP growth regions
Specialized Corporate vs Private coverage with integrated
service teams
New product management approach
Customer base evolution
(000) management evolution
Dedicated RMs #
driving client
330
28.2
24.3
10,4
264
11,8
210
187
13,9
16,4
2015 (E)
2020 (E)
77
2015 (A)
120
2020 (E)
Corporate
Private
48
Reshape client service model: Corporate and SME platform to ensure
balanced growth and risk
Full implementation of risk adjusted pricing tools in
order to better match market fair value lending price
Commissions (ECM, Minibond, Structuring)
€mn
19,8
Enforce and further strengthen value added services
offer and delivery: ECM, Minibond, Export/Trade
Finance, PA receivables acquisition, Structured Finance
& MT lending
Corporate and
SME platform
"enhanced"
5,3
2015 (E)
- # 1 on Minibond issuing (33.5% of market share)
- Unparalleled trade-export financing expertise,
supported by direct presence in key international
markets
Commissions(1) (Trade-export )
€mn
19,9
2020 (E)
28,2
Acquisition of new corporate bankers from
competitors to strengthen geographical areas with
further potential and current limited coverage
Extension of BPVi footprint also outside "core areas"
to further develop penetration of value added
services for Corporate and SME (ECM, DCM, P.A.
receivables acquisition)
Corporate &
SME
Sale Strategy
"First choice" local bank
Lending/ SoW penetration increase on
low/medium risky clients
Focus on core segments
Pricing discipline
2015 (E)
2020 (E)
25.2
48.0
Total
€mn
Corporate Loans stock (GBV)
€bn
8.0
9.4
3,5
Medium-Long Term
Loans
3,6
4,4
5,9
Short-Term Loans
2015 (E)
2020 (E)
Notes: (1). Commissions related to all segments, not only Corporate
Source: Company data, Data referring to Corporate/SMEs & Entrepreneurs scope given the current segmentation in use
49
Reshape client service model: Corporate and SME platform to ensure
balanced growth and risk (cont’d)
Wealth management unit strengthening and Advisory service unit set-up to better match and serve
Private
Banking &
Wealth
management
platform
"reloaded"
Private Banking/ Entrepreneurs clients needs
Product offering enhancement:
- Broaden Asset Manager and Life Insurance houses open architecture framework
- Development of in-house wealth portfolio management services
Acquisition of new Private Bankers to increase geographical coverage, customer base and AUM
Evolution of Assets mix(1),
Private Banking, (€mn, %)
6.1
Rebalancing of portfolio asset mix
Private clients
&
Entrepreneurs
Sale Strategy
4.1
Increase SoW through enhanced advisory
AuM
Increase of asset productivity
AuC
Digitally enabled "advisory" bank
Deposits
55%
39%
33%
24%
28%
20%
2015 (E)
2020 (E)
Notes: (1). Excluding BPVI treasury shares
Source: Company data, Data referring to Corporate/SMEs & Entrepreneurs scope given the current segmentation in use
50
Agenda
Pag. 5
Business strategy
Pag. 19
Pag. 51
Risk management
Pag. 60
Financial overview
Pag. 74
Pag. 95
51
Overview
Highlights
Cost Savings 2015 - 2018E
Operating Model
Human Resources
Key Topics
2015 – 2018E
2015 – 2018E
(Based on normalized
data(1))
Current Operating Model overview, through brief
description of the macro functional areas and
related Legal Entities
Operating Model evolution path, describing a
Project for the rationalization of Back Office and
Procurement activities and the strengthen of
current IT outsourcer Sec Servizi
€ - 80mn
(-26%)
€ - 27mn
(-11%)
€ - 46mn
(-11%)
€ - 36mn
(-9%)
€ - 126mn
(-18%)
€ - 63mn
(-10%)
Cost saving target related to an effective action plan
Key figures of Groups’ Staff by distribution
(Headquarters vs Distribution Network), contract
type and average age
HR evolution path in terms of number of
Employees and Personnel Expenses due to the
Business Plan execution
(1) Normalized data – Not included one off extraordinary expenses, mainly due to:
ECB-BRRD-DGS one off contributions “Salva Banche” ( € 41 mn)
Advisory costs related to IPO (€ 11 mn)
Management turnarournd expenses ( € 10 mn)
Source: company data
52
New Group Operating Model
Logical structure
1/2
Main characteristics
BPVi Group
# 5,473 headcount
Group Staff
291
911
Banks’
HQs (1)
4,014
Operating
Machine (1)
Network (1)
BPVi HQs
(focus HR & Operations)
167
HR
Operations
Organization
& ICT
IT Outsourcer
Operating Machine
37
254
Servizi
Bancari
Sec Servizi
(IT-Consortium)
49.8%
XX
XX%
Org. Develop.
& Procurement
Immobiliare
Stampa
(Back Office)
99%
(Real Estate)
100%
Headcount 2015, included seconded staff
BPVi’s Shareholding
(1) Not included 257 employees related to other Legal Entities and
other Staff (i.e. maternity leave, social hours, union officers full
time)
BPVi
Corporate Center
Leading the Group’s operating model through specific organizational
functions, in particular by «Operations and HR»
Steering the Risk and Control Framework for all Legal Entities
Addressing and supervising Outsourcers
Design and implementation of innovative solutions
Sec Servizi Information Technology
Providing outsourcing services for main Core Banking Applications,
Digital Banking, Data Management and Networking
IT costs sharing among current shareholders
Self contained organizational structure ready to be involved in a
partnership project
High level of expertise in data migration from other outsourcers and
system integration of several IT platforms
Servizi Bancari Back Office
Providing full back office services since 2011, after a whole spin-off
from several Groups’ Legal Entities
Workforce efficiency achieved after an Employees optimization
program (staff from ~300 to ~250 in 2015)
Self contained organizational structure ready to be involved in a
partnership project
Immobiliare Stampa Real Estate and Logistics
Maintaining entire Real Estate assets by providing Asset, Property
and Facility Management full service
Expertise in branch interior design, branches opening, closing and
relocating, maintenance and logistics services
53
New Group Operating Model (cont’d)
Corporate Center organizational structure(1)
FY2015
Highlights
Board of Directors
HQs Organizational
Structure focused on
supporting the business
areas (Community Banking,
Corporate & Private)
President
Internal Audit
Corporate
Development
Business
Transformation
& Cost Management
General
Secretary
Risk
Management
Communications
Legal
Operations (3)
Commercial
Financial Reporting &
Planning
HR
Finance
(3)
# 1,061
Other banks/
entities
Distribution network
Other
Banks
Other L.
Entities
741
Headquarters and Distribution Network
320
Total personnel
(1) Whole Staff, included seconded employees, temporary workers, etc
(2) Internal Audit, Risk Management, Compliance & AML
(3) The two divisions are today unified and will be split
Lending
Evolution Path Guidelines
Compliance & AML
# 4,412
Parent Bank
CEO
Enhancement, already
implemented, of the
following Bank’s structures:
- Commercial (e.g. core
segments coverage)
- Lending
- Operations
- Internal Control Functions(2)
New hirings (+90) mainly
focused on Relationship
Managers, Internal Auditors
and other Internal Control
Functions
54
New Group Operating Model – Evolution path
SEC 2.0 Project
Consortium
Back Office + Procurement
Bank 2
Bank 3
2.0
Back
Office
Potential Partner
Procure
ment
IT
Delivering to
Bank 2
Project overview
Sec Servizi is developing a new strategy in order to become a
full outsourcer for the Financial Services Sector
The aim of this project is to incorporate Back Office and
Procurement activities form other Legal Entities, employees
included which will be transferred to Sec Servizi
Following this operation the BPVi Groups’ staff will be
potentially reduced up to ~ 150 employees
Bank 3
…
Goals
Economies of Scope – New SLA for high level of quality
Consortium Enlargement – New industrial partnership
and associated firms
Economies of Scale – A full range of cost savings in IT
services, new software implementation, back office
processes and HR efficiency
Value Enhancement – Opportunity to create value from
BPVi’s shareholding
55
Opex – Focus on other administrative expenses
Other administrative expenses (€ m)
Related actions
IT / Back Office, - ~ € 8mn mainly related to «Sec
2.0 Project», renegotiation of ICT contracts,
Business Process Reengineering
- € 30mn
(-2,5% CAGR)
- € 27mn
(-3,7% CAGR)
Logistics (and Real Estate), - ~ € 20mn due to:
308
- ~150 branches closure (of which 75
already closed in 2015)
53(1)
255
Normalized
data
18
61
228
225
23
23
55
53
68
68
- Legal Entities rationalization
- Branches’ rent renegotiation
- Facility Management optimization
88
88
81
81
2015A
2018E
2020E
Extraordinary opex(1)
Logistics
ECB - BRDD - DGS Ordinary
IT/BO
Others (Tax included)
(1) Non recurring expenses mainly due to ECB-BRRD-DGS one-off contributions “Salvabanche”
(~ € 41mn), and advisory costs related to IPO (~ € 11 mn)
Others, - ~ € 8mn for savings in Advisory,
Marketing Sponsorship, Corporate
Communication and closure of foreign
Representative Offices
ECB – BRRD – DGS(2) Ordinary Contributions, +
~ € 5mn
(2) BRRD - Bank Recovery and Resolution Directive; DGS – Deposit Guarantee Schemes
56
Group Human Resources – Key figures
Staff distribution - 2015
Legal Entities Headcount (#)
Headquarters vs Branch Network (%)
Banks Only
5,473
100,0%
4,412
18,2%
81,8%
BPVi’s Staff
~ 80% of
the total
707
Tot.
BPVi
(1)
Resources
Appropriate
balance between
HQs and Network
Staff
34
320
Banca Farbanca Other
Nuova
Legal
Entities
By Contract Type (%)
Market
benchmark(3)
Aligned to the
benchmark with #
of Managers less
than market
100,0%
2,2%
40,9%
1,9%
41,9%
56,8%
(2)
Tot. Resources
Headquarters
Network
By Age (%)
Market
45,8 benchmark(3)
100,0%
4,5%
27,5%
34,9%
56,3%
33,1%
Tot.
Resources
Managers
Lower
Managers
Employees
and other
(1) Total Staff included seconded staff and temporary workers, maternity leave, etc.
(2) Not included maternity leave, social hour, union officers full time, others
(3) Market Benchmark – ABI 2015 Report, data as of 2014
Tot.
Under 30
Resources
31 - 40
41 - 50
Bank's average
age (46,1) aligned
to the sector's
benchmark
Over 50
57
Group Human Resources – Evolution path
Human Resources headcount reduction (#)
5,473
575
150
~ 90
150
425
2015
- 575
resources
Redundancy Funds
(2016/2017-2020)
New Hirings
- 150
resources
Outsourcing
Two "Redundancy Funds“:
New hirings of high skilled profiles for
enhancing Bank's Core Structures and
core segments coverage
Externalization of "volume driven"
activities (e.g. Servizi Bancari)
~ 4,850
2020E including
externalization
Initiatives focused on reducing
personnel costs
2016/2017 (-425) € 65mn P&L
provisioning in 2016
2020 (-150) € 16,4mn P&L provisioning in
2019 (as stated in the business plan)
+ ~ 90
resources
Total H.R. headcount
reduction ~ - 620
+
Promotions and economic
incentives/ recognitions
58
Opex – Focus on personnel expenses
Personnel expenses (€ mn)
Normalized
data
2015A
Related actions
400*
- 38
(-3,1% CAGR)
1st Staff Redundancy Fund (-425 Employees)
Initiatives of labor cost reduction (e.g. renegotiation of manager’s
salary, working hours reduction, etc.)
-7
~ 90 new hirings
8
Groups’ legal entities rationalisation/disposal, included
«SEC 2.0 Project»
- 17
Incentives for the employees (less than 1% yearly impact)
6
Economic effect of new «CCNL» (Italian national banking labor
agreement)
12
364
2018E
2020E
- € 36mn
10 410
- 12
2nd Staff Redundancy Fund (-150 employees)
9
Economic effect of «CCNL» (Italian national banking labor
agreement) and incentives for the staff
- € 39mn
(-2,0% CAGR)
361
(1) Normalized Data: Management turnaround expenses not included
59
Agenda
Pag. 5
Business strategy
Pag. 19
Pag. 51
Risk management
Pag. 60
Financial overview
Pag. 74
Pag. 95
60
Risk management
Overview of portfolio
Details of loan book clean-up
Overview of the credit management structure and process
61
Diversified loan book with larger exposures in wealthiest regions
Gross loan book distribution by location(2) (%) – 2015
Gross loan book split (%) – 2015
By customers
Gross loans to total
retail and small
enterprises
Mortgages represent 59.4% of
30.9%
total exposure
Other
(1)
2.2%
Small
enterprises
(3)
21.2%
0.6%
8.0%
0.0%
Consumer
loans
0.5%
Other retail
loans
Large 6.8%
enterprises
8.5% (3)
Total corporate
59.5%
Medium
enterprises (3)
29.9%
Total retail
38.2%
12.5%
39.1%
1.4%
4.6%
0.9%
13.3%
Agriculture
2.1%
0.1%
0.3%
Total: €27.8bn(2)
Total corporate
59.5%
67% of gross loan
exposures are in the
north of Italy(4)
By sectors
Other
corporate Other(1)
2.2%
loans
1.0%
0.1%
6.0%
0.0%
0.6%
0.9%
Construction
9.2%
0.1%
Real estate
9.8%
0.2%
Total retail
38.2%
1.7%
Trade
10.7%
Real estate and
construction exposures
represent 12% of
performing loans
portfolio
Below 5%
Services
11.1%
Manufacturing
15.7%
9.1%
Between 5% and 10%
Between 10% and 15%
Above 15%
Total: €27.8bn(2)
(1) Other not classified exposures for c.€0.6bn
(2) Gross loan book of the banking entities, net of repos. Source: regulatory reporting
(3) Small enterprises (revenues up to €10mn); Medium enterprises (revenues up to €250mn) and Large enterprises (revenues over €250mn)
(4) Includes Aosta Valley, Piedmont, Liguria, Lombardy, Emilia-Romagna, Trentino – South Tyrol, Veneto, Friuli Venezia Giulia
62
Diversified corporate portfolio with solid collateral / provision coverage of
NPEs
Gross corporate loans split by customers and sector (%) – 2015
By customers
By sector
Small
35.6%
Large
14.2%
Agriculture Other
3.5%
1.7%
Construction
15.4%
Small Medium Large
Real estate and construction
Trade
exposures represent 31.9% of
18.0%
total gross corporate loans
(22.6% of gross performing
corporate loans)
(1)
Total: €16.5bn
Total: €16.5bn(1)
Services
18.6%
0.5%
1.7%
3.1%
5.2%
9.9%
50.4%
26.6%
21.0% 2.0%
2.6% 10.1%
8.6%
5.9%
14.5% 0.7%
9.8%
5.2%
0.0%
2013
Small Medium Large
Top 1 client
Top 5 clients
Top 10 clients
Top 20 clients
146.6%
117.5%
115.8%
92.3% 85.7%138.2%
89.5%
79.6%
27.9%
1.7%
12.1%
25.1%
13.6%
1.9%
11.5%
10.3%
19.9% 1.4%
11.7%
8.8% 14.0%
0.2%
2014
Unlikely to pay
40.2%
34.7% 23.4%
0.9%
0.5%
18.5%
17.1%
20.3%
0.1%
26.7%
17.5% 19.4%
16.6%
0.9%
2015
0%
Past due
Small Medium Large Total
154.5%
128.7%
127.8%
129.9%
138.0%
134.9%
129.6%
129.6%
94.8% 90.5%138.5%94.6%
92.9%
33.0% 38.2%
36.7% 43.5% 30.8% 40.6%
94.4%
98.8%
94.2%
Rest of clients
25.2% 30.1%
8.4%
2013
Total: €16.5bn(1)
35.3%
1.7%
0.3%
Gross corporate NPE provision and collateral(2) coverage (%)
Gross NPLs
0.9%
3.5%
6.0%
€457m(3) related to financed capital
or 2.8% of gross corporate loans
NPLs
Corporate loans concentration (%) – 2015
Gross loans
Manufacturing
26.4%
Real estate
16.5%
Medium
50.2%
Corporate loans asset quality (% of gross loans)
Total: €3.2bn
Note (1) Excludes other not classified exposures for c.€0.6bn and loans and receivables for €1.0bn
(2) Only real guarantees and working capital
(3) Includes total credit exposures to clients with financed capital
16.0%
35.3%
2014
Provisions
2015
Collateral
63
Mortgage-focused portfolio with solid collateral coverage of NPEs
Gross retail loans split by product (%) – 2015
Retail loans asset quality (% of gross loans)
Mortgages
Consumer loans
1.4%
Other retail loans
Other
retail
Mortgages
Other
retail
Total
Mortgages
Other
retail
35.0%
17.9%
2.2%
13.7% of performing
loans
Mortgages
80.7%
14.7%
11.5%
5.5%
0.4%
4.8%
12.5%
0.5%
4.8%
12.2%
0.9%
6.9%
12.4%
0.6%
5.2%
7.1%
4.4%
6.6%
5.2%
6.3%
4.0%
2013
Total: €10.6bn
26.8%
Mortgages
35.0%
Other
retail
Unlikely to pay
Mortgages
Other
retail
9.0%
6.0%
Past due
Total
Mortgages
Other
retail
155.7%
97.3%
151.0%
6.6%
1.7%
80%<LTV
<100%
8.6%
147.0%
64.4%
74.5%
LTV>100%
23.2% 22.8%
Total
174.6%
18.3%
60%<LTV
<80%
18.3%
0.7%
2015
176.9%
174.3%
40%<LTV
<60%
€425m related
to financed
capital or 4.0%
of gross retail
loans
Gross retail NPE provision and collateral(2)
coverage (%)
Mortgage portfolio LTV(1) (%) – 2015
LTV<40%
9.3%
2014
NPLs
34.8%
14.3%
0.3%
4.7%
Total
124.5%
136.6%
142.2%
17.4%
27.6%
29.9% 36.8% 31.2%
2013
2014
Provisions
71.7% 96.2%
32.4%
54.2% 40.4%
2015
Collateral
Note (1) Excludes c.€0.3bn where LTV was not determinable
(2) Only real guarantees
64
Non performing exposures provisioned / collateralised at c.135%
Loans by collateral type(1) (%) – 2015
Retail
Corporate
Guarantees
4.8%
Unsecured
20.0%
Real
guarantees
1.0%
Working capital
14.3%
Unsecured
40.2%
Real estate
40.6%
Real estate
79.1%
Total: €10.6bn
Total: €16.5bn
Group collateral(1) (€m) – 2015
Retail
Consumer
0.0%
NPE coverage (%)
Corporate
Other
2.3%
128.5%
Large
13.0%
Small
36.3%
Total: €17.6bn
Medium
50.7%
135.3%
101.0%
94.7%
27.3%
35.1%
40.6%
2013
2014
2015
101.2%
Mortgages
97.7%
136.1%
Total: €18.2bn
Provisions
Collateral
(1) Excludes other not classified exposures for c.€0.6bn and c.€1.0bn of loans and receivables
65
Risk management
66
Extensive loan book clean-up performed in 2015
Key initiatives
■ An in-depth review of the loan portfolio since June 2015 by new
management:
Flows of gross loans from performing to NPE (€mn)
Decay rate(1)
5.1%
10.3%
■ new impairment triggers have been introduced:
Main triggers
2,412
■ deterioration of internal or external rating
214
■ decrease of equity by 50% due to losses based on financial
statements
1,253
Additional triggers
152
■ reduction on collateral value
825
2,057
140
■ reduction in real estate values
277
■ reduction on revenues
2014
Past due
■ reduction of equity by 25% due to losses based on financial
statements
■ exposures older than 10 years have been written-off, unless there is
an expectation of recovery and the case is in judicial process
■ more conservative haircut on mortgage collateral introduced
■ increased provision coverage to 40.6% even though NPE stock
increased by €2.5bn
■ Review of loans exposures related to financed capital amounting to
€1,139m(4) of which €578m classified as NPE
2015
Unlikely to pay
NPLs
Loan loss provision evolution in 2015 (€mn)
Due to general economic
deterioration and more stringent
classification criteria in line with
Comprehensive Assessment
703
(3)
111
1,333
460
59
■ financed capital fully addressed from capital perspective: €1,139mn
of which €466mn as loan loss provisions, €353mn as reserves for
risks, €321mn as prudential filter
■ review of financed capital with conservative criteria and
methodology discussed and agreed with the ECB
(1) Calculated as flows of gross loans over beginning of period performing loans
(2) Relates to all credit exposure to clients with financed capital
(3) Excludes €6mn of provisions on credit commitments in relation to financed capital
(4) Includes commitment letters even if not financed
H1 2015
o/w €23mn in relation to
financed capital
Q3 2015
Provisions in
Other provisions
relation to financed
capital
FY2015
Q4 2015
67
Increased NPLs and provision coverage on the back of solid risk
management practices
Gross NPE quarterly formation dynamics(1) (€mn, %)
Loan book asset quality (%)
% of gross loans
30.9%
0.5%
3.0%
2.3%
1.8%
2.5%
1.7% 1.9%
21.2%
15.3%
2.0%
1.7%
3.2%
1.8%
1.8%
16.6%
1.6%
884
859
1.2%
8.9%
Increase QoQ mainly
driven by an in-depth
review of the loan book
and introduction of new
triggers
747
6.5%
158
623
599
15.1%
1.4%
701
11.1%
594
8.5%
485
461
83
381
Past due
50.1%
56.8%
NPL (incl. write-off)
48.7%
54.1%
59.3%
Total NPE
27.3%
35.1%
40.6%
Total NPE
(incl. write-off)
31.1%
37.9%
42.4%
Performing
0.35%
0.71%
0.73%
290
Q4-15
43.1%
Q3-15
NPL
379
Q2-15
25.8%
Q1-15
19.5%
Q4-14
12.2%
Q3-14
Unlikely to pay
Q2-14
12.2%
Q1-14
2015
10.5%
Q4-13
2014
3.8%
Q3-13
2013
Past due
Provision coverage
Unlikely to pay
2015
Q2-13
NPL
2014
409
408
Q1-13
2013
461
455
Gross flows in €m (excl. financed capital)
o/w regarding clients with financed capital
(2)
Gross inflows as % of performing loans (excl. financed capital)
Note (1) Quarterly NPE flows may differ from previous page as figures are based on the exposure to clients at the date / quarter of classification. Source: company data
(2) Includes total credit exposures to clients with financed capital. Source: company data
68
Risk management
69
Re-modelled credit risk management structure
■ Complete redesign of the credit organisation structure in line with the new community and private banking model, new credit option
approved in accordance with new distribution model and new credit rules
■ New early warning and active unlikely to pay management process (meetings and follow-ups with local areas already conducted)
■ New NPL recovery process with a new management structure and ongoing selection of NPL management partners
Organisational structure
Network Division
Community
Banking
Regional Units
Reorganisation
Loan Division
Regional Loan
Offices
■ The re-organisation is expected to
result in an increased focus on credit
management
Private and SMEs
Headquarters
Private and
Corporate
Large
Corporates
■ The new model envisages a complete
separation between the credit and
the commercial process by
delegating powers of credit granting
only to the central office of the Credit
Division as well as the local credit
offices
(incl. Credit
Committee and
Board of Directors)
■ Loan approval and risk management are separated from the distribution network
■ Lending criteria and responsibility matrix are approved by Board of Directors
■ Credit Committee (chaired by the CEO) and / or Board of Directors are responsible for decisionmaking in case of large exposures or high risk loans. Board of Directors resolutions take into
account Credit Committee’s opinion
■ Three new offices with
specialised capabilities set up
(early warning, unlikely to pay and
real estate)
■ The new credit recovery
department to focus on the
recovery of both NPLs and
unlikely to pay (pre-litigation) and
outsource the recoveries of smallsized loans to selected external
partners
■ A new specialised unit for
managing real estate exposure
and restructured exposures
70
Sound credit risk management process
1
2
Preliminary analysis
3
Credit scoring and
decision making
4
Monitoring
Recovery
Main activities
■ Counterparty
identification
■ Data gathering and
documentation
■ Data review and
analysis, including
all necessary
documents to
evaluate credit merit
■ Verification of existing
Group exposure
■ Verification of the
financial situation
■ Verification of
repayment ability
■ Guarantees
■ Real estate valuation
(for mortgages)
■ Credit scoring based on
internal rating system
■ Formal verification of
documents
■ Daily client scoring
based on the analysis of
specific deteriorisation
of client’s performance
■ Management of NPLs
both internally and
externally through
specialised external
servicer
■ Verification of
compliance with
covenants
■ Second-level monitoring
of the loan portfolio and
risk concentration limits
by RM function
■ Third-level monitoring
by Internal Audit
■ BPVi Strategic Plan includes a series of initiatives aimed at exploring further expansion and possible enhancements of the
existing indicators, including forborne exposures as well as track record of recovery of NPLs, where databases have a
relatively recent history
71
New initiatives envisaged in the business plan to strengthen credit management
Credit strategy
■ Pervasive and binding credit policies
■ Overall review of processes and systems:
Underwriting
processes
– New underwriting process (specialized by segment and "time to yes")
– "Fast Banking" for small/good product/clients
■ Dedicated "preventive" management:
"Preventive"
management
(early warning)
Active management
(unlikely to pay)
Disposals
Strategic partnership
– Early warning system to immediately identify potential risky customers
– "Pre default" management workflow with dedicated/tailored strategies
■ Strengthening of credit monitoring team and tools
■ Strengthened unlikely to pay management to maximize value from current stock introducing an "integrated active
model"
■ Introduction of a specialized approach/unit for managing real estate exposure and restructured exposures
■ Portfolio "cleaning up" through NPL disposals within business plan time horizon of €1.5bn
■ Disposals focused on positions with high coverage and no/minimal impact on profit & loss
■ Long term strategic partnership with high standing market operator for managing selected NPL portfolios
■ Focus of internal resources on high-value large positions
■ Externalisation of recoveries of small-sized loans
■ Enhanced recovery model
Enhanced recovery
model
– New portfolio strategy segmentation
– Workload optimization
– IT applicative software enhancement
– KPI/process metric
72
Improved loan monitoring and implemented recovery procedures
Early warning
■ Daily client scoring based on analysis of specific deterioration signs and classification exposures as
performing, PPD, NPE or default
■ Focuses on positions with at least 30 days overdue or classified by management as “under surveillance”
Monitoring
(3 regional units)
■ Exposures below €250,000 are managed via 7 regional units, reporting to Loans Division
Unlikely to pay
Real estate
■ Exposures above €250,000 are managed in Headquarters through a proactive and dynamic management
■ Management of real estate exposures using external appraisers to maximise sale proceeds
NPL
■ Recoveries team, including internal lawyers and admin personnel
■ NPLs <€200,000 are digitalised and prior to initiating judicial procedures are given for a 4 month period to
an external party to recover. If not recovered, positions return to internal recovery unit
■ Starting with 2016, all recoveries for retail mass clients exposures <€300,000 (87% of cases, 37% of GBV)
will be done through third parties
Unlikely to pay
(pre-litigation)
■ Recoveries preceding judicial procedures for the exposures, which are unlikely to become performing and
where ‘going concern’ is no longer possible
■ Recovery of exposures <€50,000 is done through external parties based on a servicing agreement after
exposure is 31 days overdue
Recovery
(2 regional units)
73
Agenda
Pag. 5
Business strategy
Pag. 18
Pag. 50
Risk management
Pag. 59
Financial overview
Pag. 74
Pag. 95
74
Consolidated Balance Sheet 2013 - 2015
Decrease in total assets mainly driven by balance sheet "clean up".
Balance Sheet (€mn)
Restated Balance Sheet (€mn)
1
2
2014A
2015A
Financial Assets
6,286.9
13,045.9
9,175.3
- o/w financial portfolio
4,262.9
6,558.8
5,871.9
(686.9)
- o/w derivatives
2,024.0
6,487.1
3,303.4
(3,183.7)
Cash and due from banks
5,183.2
2,447.7
2,323.7
(124.0)
30,892.7
28,110.6
25,178.1
(2,932.5)
1,764.2
608.8
126.8
(482.0)
385.0
494.9
492.7
(2.1)
Customer loans
- o/w CCG
Equity investments
Property, plant and equip. and intangible assets
3
4
14-15
(3,870.6)
1,571.0
974.2
609.2
(365.0)
- o/w goodwill
927.4
329.9
6.2
(323.6)
Tax Assets
570.5
948.5
1,456.6
508.1
- o/w DTA
525.3
867.1
1,355.0
487.9
Other
346.8
453.1
547.8
94.7
45,236.0
46,474.9
39,783.4
(6,691.5)
7,053.5
4,757.8
9,973.5
5,215.6
31,662.7
30,373.1
21,942.7
(8,430.4)
- o/w CCG
2,468.6
1,760.0
-
(1,760.0)
Other financial liabilities
2,144.3
6,481.9
3,659.6
(2,822.3)
668.2
1,072.2
1,125.4
1
Total Assets
6
Cash and due to banks
5
Direct funding
1
∆
2013A
Other
(1)
Funds for risks and charges
Equity (excl. Minority interests)
- o/w consolidated net income (loss)
Total Equity and Liabilities
Note: (1) Including Minority interests
53.3
60.3
58.3
548.1
3,647.2
3,731.5
2,534.1
(1,197.4)
489.7
(32.2)
(758.5)
(1,407.0)
(648.5)
45,236.0
46,474.9
39,783.4
(6,691.5)
■1 Compression of derivatives portfolio
included in HFT financial assets in 2015 and
Financial liabilities
■2 Decrease in customers loans mainly driven
by Loan Loss Provisions
■3 Total impairment of goodwill
4 Increase in DTA due to fiscal losses and
■
provisions for risks and charges
■5 Decrease of clients direct funding mainly
due to extraordinary events and reduction
of CCG funding
■6 Increase of interbank funding
75
Customer Loans Evolution
“Strong” reclassification from Performing to Non Performing Exposures due the analytical review of
customer loans portfolio carried out in 2015 by Management and to AQR in 2014.
Customer loans reduction is mainly driven by Loan Loss Provisions.
Customers Loans (net of CCG) (€mn)
Breakdown of Customers Loans (net of CCG)
(Consolidated Figures 2013-2015)
(Management Figures)
Net Customers Loans Breakdown by Product
(2015)
CAGR
-3.1%
-1,104
Delta
2013 – 2015
Long term loans
17,0%
Gross Customers
Loans (net of CCG)
30,689
Non Performing
Exposures
5.379
29,944
28,841
-1,849
Current Accounts
2,1%
+20.4%
+1,095
6.474
+38.4%
+2,489
16,3%
8.963
64,5%
Consumer
Finance
Other(1)
Performing
Exposures
25.310
-7.3%
-1,840
Net Customers Loans Breakdown by Segment
(2015)
23.471 -15.3%
19.878
-3,593
Community banking
8,7%
9,0%
2013A
2014A
2015A
Loan Loss
Provisions
1,561
2,442
3,789
Net Customers
Loans (net of CCG)
29,129
+2,229
27,0%
27,502
25,051
-4,078
Corporate & Private
banking
55,3%
Large Corporate &
Financials
Other(2)
Note: (1) TLRO Securities and Repo with clients ,Cash collateral, debtors/creditors, self-liquidating, bank overdraft (excl. mortgages and consumer credit);
(2) LRO securities, NPLs, funds (total), BPV Finance uses, bridge vs. management accounts
76
Direct Funding Evolution - Clients
Direct funding decreased in the last months of 2015 as a consequence of extraordinary events.
Around 50% of direct funding is current accounts and retail.
Direct Funding - Clients (net of CCG) (€mn)
Direct Funding by Product
(2015)
CAGR -13.3%
-7,251
29,194
EMTN & P.P.
2.677
Securitizations 2.808
Commercial
Funding
23.709
Breakdown of Direct Funding (net of CCG)
28,613
Delta
2014 – 2015
21,943
-6,670
Current Accounts
5,0%
9,4%
Term Deposits
Retail Bonds
14,1%
3.377
52,0%
2.880
11,8%
3.090
-287
2.052
-828
Securitizations
Other(1)
7,8%
Direct Funding by Segment
(2015)
3,4%
Community banking
22.356
16.801
-5,555
26,7%
47,7%
10,8%
2014A
Corporate & Private
banking
Large Corporate &
Financials
Institutionals
11,3%
2013A
EMTN & PP
Other(2)
2015A
Note: (1) Certified cheques, third party funds, cash collateral and other creditors positions (including pre-paid), grants received; (2) 3rd party SPV,
financial counterparties operating w/ divisone finanza and bridge vs. management accounts
77
Clients and Current Accounts Dynamics
Growth of customers and current accounts at the top level of the Italian banking system in the last years.
Slight decrease in 4Q of 2015.
The Bank has an important customers base to exploit.
Clients ('000)
+90
+7.0%
-8
-0.6%
1,289
1,351
1,387
1,379
Dec-2013
Dec-2014
Sept-2015
Dec-2015
Current Accounts ('000)
+55
+7.2%
-15
-1.8%
755
805
825
810
Dec-2013
Dec-2014
Sept-2015
Dec-2015
78
Net interbank position and Cassa Compensazione e Garanzia
Increase of net interbank position driven by the choice of financing proprietary government bonds portfolio
through ECB liquidity lines and net customer funding decrease.
Unsecured exposure is modest and in line with 2014.
Net interbank position and CCG (€mn)
Net Interbank position (€mn)
Delta
2014 – 2015
CAGR +24.5%
-2,732
Total net interbank
position and net CCG
Net interbank
position
-4,964
-3,654
-7,696
(2.503)
2013A
2014A
-5,320
2015A
Exposure vs. Central Banks
(2,916)
(1,544)
(6,543)
o/w LTRO/TLTRO
(3,300)
(1,249)
(1,849)
Repo Exposure
(738)
(594)
(851)
Other secured exposure
(374)
(340)
(675)
704
494
909
(935)
(519)
(664)
(4,259)
(2,503)
(7,823)
2015A
Debt securities and Cash Collateral
127
Net CCG
2014A
-4,043
(4.259)
(7.823)
2013A
(704)
+1,278
(1.151)
Unsecured exposure
Net Interbank position
2013A
2014A
2015A
79
Indirect Funding
Assets under Management up 39.8% in the last 2 years mainly thanks to a switch from Assets under Custody.
Indirect Funding(1)
AuC (€mn)
-17.3%
-1,572
+3.1%
+433
9,079
-360
14,117
14,910
14,550
Other financial
assets
Stocks
AuC
9.079
(767)
(8.4%)
7.507
8.312
(805)
(9.7%)
8,312
7,507
7.165
6.179
1.880
1.147
1.328
2013A
2014A
2015A
7.199
AuM and Insurance Products (€mn)
+39.8%
+2,005
AuM and
Insurance
Products
+1,560
+31.0%
6.598
+445
+6.7%
5,038
2014A
7,043
7.043
5.038
2013A
6,598
2015A
2.149
Insurance
products
2.041
AuM
2.997
2013A
2.127
4.449
4.916
2014A
2015A
Note: (1) Net of BPVi Clients' shares
80
Liquidity Evolution
Liquidity ratios affected by direct funding trend at the end of 2015. LCR above 80% and CBC about Eur 1bn at
the beginning of February.
The amount of Euro Medium Term Notes expiring in 2016 is € 86mn.
Liquidity Evolution
Net Loans / Direct
Funding
Net Loans (net of CCG)
29,129
27,502
25,051
Direct funding (net of CCG)
29,194
28,613
21,943
100%
96%
(net of CCG)
114%
2013A
2014A
2015A
2013A
2014A
2015A
LCR
n.a.
95.3%
47.5%
NSFR
n.a.
102.1%
94.2%
2013A
2014A
2015A
Unencumbered assets
3,015
3,963
510
Encumbered assets
6,893
4,578
7,843
Total
9,908
8,541
8,354
> 80%
Liquidity Ratios (%)
Counterbalancing
Capacity
(€mn)
at January 2016
€987mn
as of
9/02/2016
■ LCR raised to over 80% at the end of January thanks to several funding initiatives put in place by the Management:
■ Bridge Financing to the securitization Berica RMBS for Eur 400mn
■ Contribution of Banca Nuova and Farbanca loans to A.Ba.Co. system, and increase of parent company's contribution to the
system with a total net effect equal to Eur 240mn
■ Sale of Berica ABS 4 notes for Eur 97mn
81
Financial Portfolio Breakdown
Government bonds accounts for around 90% of financial portfolio. Average maturity is around 5.8 years,
weight on total asset lower than peers. Opportunity to increase investments to support the NII growth.
Financial Portfolio Evolution (€mn)
Government Bonds Portfolio Evolution (€mn)
CAGR +17.4%
+ 1,609
4,263
6,559
27
479
369
Other
OICR
Equity securities
+6.0%
% on total
assets
5,872
7.1%
13.2%
5.437
5.233
3.229
28
244
180
2013A
26
479
350
% on total
assets
5.683
11.7%
2014A
2015A
- Benchmark with Peer Group (1) -
13.8%
Government Bonds Maturity (€mn)
5.419
Debt securities
16.1%(2)
16.6%
Portfolio Average Maturity:
5.8 years
3.407
1.330
605
2013A
2014A
2015A
808
1.159
586
116
347
282
2017E 2018E 2019E 2020E 2021E 2023E 2024E >2024E
Note: (1) Includes BPER, BPM, Banco Popolare, Creval, UBI Banca, Veneto Banca, BP Sondrio; (2) As of 30/06/2015
82
Deferred Tax Assets and Liabilities
Important growth in DTA due to fiscal losses and provision for risk and charges related to BPVi shares.
Around 70% of DTA are convertible in tax credit. Fiscal losses recoverable without time limit.
Deferred Tax Assets & Liabilities (€mn)
2014A
2015A
DTA Law 214/2011 (64%) – Fully recoverable
Tax Losses (20%) – No expiry
DTA and DTL at P&L
Total DTA
769
1,102
o/w DTA convertible Law 214/2011
734
706
o/w Tax Losses
-
220
o/w Other DTA
35
176
DTL Other
(44)
(30)
Imbalance DTA / DTL at P&L
726
1,073
■ €706mn, equal to 64% of DTA convertible
ex Law 214/2011 satisfying the
"probability test"(1) being sure the full
recoverability
■ €220mn, equal to 20% of DTA referred to
2015 tax losses and recoverable with no
time limits
DTA and DTL at Equity
Total DTA
98
253
DTL Other
(137)
(284)
Imbalance DTA / DTL at Equity
(39)
(31)
Total DTA
867
1,355
Total DTL
(180)
(314)
Note: (1) "Probability test" performed on 2020 Business Plan
■ €176mn (€147mn net of DTL), equal to
16% referred to provisions related to legal
risks on financed capital
■ Balanced DTA and DTL at Equity
83
Funds for Risks and Charges 2013-2015
Funds for risk and charges stable in the last 3 years, excluding the amount accounted in 2015 in connection
with BPVi shares.
Funds for Risk and Charges (€mn)
+488
60
58
548
2015A
Breakdown
89%
Transactions on
BPVi capital
489
89%
■ €353mn provisions for “legal risks”
related to financed capital and
commitment letters
■ €136mn related to claims and other risks
on BPVi share capital
Others
12
Personnel expenses
9
Legal disputes
33
Post-retirement
benefits
11
13
4
1
39
40
6
5
5
2013A
2014A
2015A
2%
0%
7%
1%
84
Total Equity Evolution
Total Equity evolution affected by 2014 e 2015 net results. Total Equity around Eur 4bn after the 2016 capital
increase.
Total Equity Evolution (€mn)
+618
+252
+170
Capital Increase
1H 2016
+55
1,500
-759
-42
-1,407
3,731
3.647
2.534
2013
Capital
Group equity increase
Capital stock &
add paid-in
capital
Net result Revaluation
reserves
Other
2014
Soft
Group equity mandatory
conversion
Net result
Other
2015
Group equity
3,081
3,717
3,584
Reserves
586
609
224
Valuation
reserves
16
187
157
Treasury
Shares
(8)
(26)
(25)
3
3
1
(32)
(759)
(1,407)
Other
Net Result
85
Focus on Financed Capital
Financed Capital Evolution(1) (€mn)
Total non-eligible
capital
Funds for risks and charges (€mn)
1,001
1,139
31%
Funds for risks and
charges
36%
LLP
2%
353
1H2015
2015A
Loan Loss Provisions (€mn)
41%
Regulatory Filter
356
62%
24
466
1H2015
2015A
Regulatory Filter (€mn)
28%
622
321
1H2015
Breakdown non eligible
capital
2015A
1H2015
2015A
Exposure
LLP
Prov. for risk
and charges
Total
Coverage
Regulatory
filter
Gross Performing Exposures
508
10
272
282
55.5%
226
Gross NPE
578
456
45
501
86.6%
77
52
0
36
36
68.8%
16
1,139
466
353
819
71.9%
321(2)
Commitment letters
Total as of 31/12/2015
Note: (1) Including commitment letters (2) Total value includes €0.7mn of filter related to customers with financed capital but without
exposure as of 31/12/2015
86
Regulatory Capital Evolution
Regulatory Capital Evolution and Calculation
Regulatory Capital
Regulatory Capital Calculation (€mn)
Regulatory Capital
2013A
2014A
2015A
CET 1 /Core Tier 1
2,585
3,025
1,656
Total Capital
3,314
3,349
2,022
28,061
28,985
24,884
n.a.
7.25%
4.44%
RWA
Leverage Ratio
CET1 Ratio Evolution (%)
9,21%
10,44%
2013A
2014A
6,65%
2015A
Total Capital Ratio Evolution (%)
11,81%
11,55%
8,13%
2013A
2014A
Regulatory Capital
2014A
2015A
Total Equity
Deductions from Total Equity
o/w "Miniaucap" (1)
o/w minorities
Intangible Assets
o/w goodwill
o/w goodwill of associates
Prudential Filters
o/w Regulatory filter
o/w DTA
o/w reg. deduction for double subst. tax
CET1 before deductions
Deductions and Transitional Arrangements
Deductions and Transitional Arrangments
Transitional (Tier 1)
Total Common Equity Tier 1 - CET1
Tier 2
Deductions and Transitional
Total Tier 2
Total Own Funds
3,750
(83)
(62)
(18)
(432)
(330)
(97)
(72)
(50)
3,162
(103)
(6)
(28)
3,025
327
(3)
324
3,349
2,552
(79)
(57)
(18)
(108)
(6)
(97)
(506)
(321)
(114)
(64)
1,859
(122)
(6)
(76)
1,656
435
(68)
367
2,022
2015A
Note: (1) Capital increase in the context of previous shareholders campaigns
87
Trend of Regulatory Capital
Total Capital evolution (€mn)
Total
Capital
Ratio (%)
8.13%
11.55%
+252
+108
-1
+2
-1,107
-321
3.349
-260
2.022
Total Capital
Soft
Subordinated Valuation
as of
mandatory
bonds
reserves
31/12/14
conversion
Net result
(excl.
goodwill)
ECB filter
Deductions
Other
Total Capital
as of
31/12/15
Common Equity Tier 1 Evolution (€mn)
CET 1
Ratio (%)
6.65%
10.44%
+252
+17
-1,107
3.025
+2
-321
Credit risk: -€3,419mn
Market risk: -€437mn
CVA: -€187mn
Operating risk: +€54mn
-213
1.656
CET1 as of
31/12/14
RWA
(€mn)
28,985
Soft
mandatory
conversion
Valuation
reserves
Net result
(excl. goodwill)
ECB filter
Deductions
Other
CET1 as of
31/12/15
24,884
Delta YoY
(€mn)
-4,101
88
Consolidated Profit & Loss 2013 - 2015
2015 gross operating profit substantially in line with 2014 excluding trading profit and some non recurring
items.
Profit & Loss (€mn)
Restated P&L (€mn)
2013A
2014A
2015A
Δ
14-15 (%)
CAGR
13-15 (%)
Net interest income
528.4
511.1
503.9
(1.4%)
(2.3%)
Net commission
276.2
301.3
322.4
7.0%
8.0%
Trading profit
206.7
186.8
163.0
(12.7%)
(11.2%)
Dividends and net result from associates
20.0
29.4
47.9
63.2%
54.7%
Other op. charges/income
51.8
48.8
15.3
(68.6%)
(45.6%)
1,083.1
1,077.4
1,052.6
(2.3%)
(1.4%)
13.4%
7.5%
Total revenues
Administrative expenses:
(621.8)
(633.6)
(718.4)
- Staff expenses
(392.3)
(402.0)
(410.4)
2.1%
2.3%
- Other administrative expenses
(229.5)
(231.6)
(308.0)
33.0%
15.9%
(35.6)
(35.6)
(35.7)
0.5%
0.1%
(657.4)
(669.1)
(754.2)
12.7%
7.1%
298.5
Depreciation and amortizations
Operating expenses
Gross operating profit
425.7
(26.9%)
(16.3%)
Net impairment adjustments
(454.6)
(1,521.3)
(1,826.9)
20.1%
100.5%
- o/w LLP
(432.4)
(868.5)
(1,333.4)
53.5%
75.6%
-
(600.0)
(334.6)
n.m.
n.m.
(16.5)
(36.2)
(171.2)
n.m.
n.m.
(5.8)
(16.6)
12.2
n.m.
n.m.
(12.3)
(18.5)
(513.1)
n.m.
n.m.
7.5
(2.8)
149.0
n.m.
n.m.
n.m.
n.m.
n.m.
n.m.
- o/w Impairment of Goodwill and other Intangibles
- o/w AFS and Associates
- o/w Other
Provisions for risks and charges
Gain / (loss) on investments disposal
Profit before taxes
(33.7)
408.3
(1,134.3)
3.3
Profit attributable to minority interests
(1.7)
(0.9)
(0.8)
(12.6%)
(31.0%)
(32.2)
(758.5)
(1,407.0)
n.m.
n.m.
Net profit for the period
376.7
(1,892.5)
Income taxes
486.3
■ Slight pick up of core revenues (NII
and Net Commission) both in 2014
and 2015
■ Total revenue decreased in 2015
due to trading profit decline and non
recurring items
■ Increase in operating expenses
mainly due to acquisition of new
branches in 2014 and to new
contribution paid to national
resolution funds and deposit
guarantee scheme in 2015
■ Net impairment adjustment and
provisions mainly due to AQR and
impairment of goodwill in 2014 and
to analysis and review of capital
structure and customer loans
portfolio in 2015
89
Net Interest Income Evolution
Slight decline in net interest income totally due to reduction of securities portfolio contribution. Commercial
spread improved by 50 bps from 2013 thanks to cost of funding drop.
Commercial Spread Evolution(2)
Net Interest Income (€mn)
Average loans
spread
CAGR -2.3%
-24
528
Client margin
contribution
511
+42
379 +11.0%
Securities
portfolio
contribution(1)
150
2013A
-59
-39.3%
420
504
-4
-0.9%
416
CAGR
2013-2015
+4.8%
Commercial
spread
Average deposits
spread
3,2%
+1.4%
91
2014A
3,3%
+1.7%
+1.9%
1,8%
1,6%
1,4%
0,2%
-3
3.6%
3,3%
-23.5%
87
2015A
0,2%
Euribor 3M
(0,0%)
2013A
2014A
2015A
Note: (1) Securities portfolio assumed funded at 3M Euribor; (2) Average annual spread calculated over 3M Euribor
90
Net Commission Income Evolution
Net commission growth (2013-2015 CAGR +8%) driven by asset under management fees increase and
reduction in commission expenses.
Net Commission Income (€mn)
Focus on Asset Management Fees (€mn)
CAGR +8.3%
+11
CAGR +8.0%
+46
276
301
322
62
67
73
Asset
management fees
Other net
commission
Cost on gov.
guarantee and
securities lending
O/w placement fees on
AuM and retirement
savings
Placement fees % on
total commissions
262
(48)
260
(25)
255
(5)
2013A
2014A
2015A
34
35
34
12%
12%
10%
62
CAGR
2013-2015
+8.3%
-1.4%
-66.8%
67
73
CAGR
2013-2015
16
+16.0%
14
Insurance products
12
Commissions
on AuM
42
49
54
+13.2%
13
10
(7)
-13.9%
(5)
11
(6)
2013A
2014A
2015A
0.19%
0.21%
0.31%
2.03%
1.85%
1.82%
AuM - Existing
0.60%
0.57%
0.58%
AuM - Placement
1.88%
1.44%
1.30%
AuC %(1)
0.14%
0.11%
0.12%
Commissions
on AuC
Financial
promoters
commissions
Insurance products–
Existing
Insurance products–
Placement
Note: (1) Net of BPVI shares owned by bank's clients
+16.0%
91
Other Revenues 2013 - 2015
Net result from proprietary portfolio mainly driven by Government Bond capital gains.
Decline of net trading income in 2015 due to lower revenues from trading activities related to the hedging of
banking book.
Net result from proprietary portfolio (€ mn)
2013A
2014A
2015A
CAGR
13-15 (%)
55.7
96.3
33.9
(22.0%)
Gains (losses) on disposal or repurchase and net hedging
161.9
98.9
131.0
(10.0%)
o/w Government bonds
149.8
109.4
101.8
(17.6%)
Net change in financial assets and liabilities at fair value
(10.9)
(8.4)
(1.9)
(58.7%)
Net result from proprietary portfolio
206.7
186.8
163.0
(11.2%)
o/w Government bonds
149.8
109.4
101.8
(17.6%)
2013A
2014A
2015A
CAGR
13-15 (%)
Dividends and Profit (loss) from equity investments
20.0
29.4
47.9
54.7%
Other op. charges/income
51.8
48.8
15.3
(45.6%)
Net Trading Income
(1)
Other revenues
■ Dividends increase vs. 2014 of €18.6mn mainly driven by the disposal of stakes in Pittarosso (+€11.3mn) and Metafin
(+€10.5mn), partly offset by lower dividends from other equity investments.
■ Other operating income decrease mainly due to lower CIV and one-off effects (CIV refund, delta between what raised in 2014 in
terms of mortgaged property appraisal expenses and what refunded in 2015, interest "refund" on impaired loans, resulting from
derecognition of loans pre-2015, with current mortgage payment holiday)
Note: (1) Line Items 90 and 100 excluding in 2013 the revaluation of Bank of Italy share capital (€ 10.3mn), and in 2015 the capital gain on ICBPI
sale (€ 166.7mn)
92
Operating Expense Evolution
Operating expenses growth mainly due to: 2014 - acquisition of 16 new branches and increase of salaries
envisaged by national contract; 2015 - contributions paid to national resolution funds/deposits guarantee
scheme, leaving and retention incentive paid to personnel non recurring expenses related to bank
transformation into joint stock company and listing
Operating Expenses Breakdown (€mn)
Focus on Personnel Expenses (€mn)
(0.5%)
+2.1%
Extraordinary Costs (€81mn)
Norm. CAGR '13A-'15A: 2.4%
CAGR +7.1%
+97
657
669
Other
operating
expenses
5%
5%
35%
35%
410
10
400
2014A
2015A
Leaving &
retention
incentives
Normalized
2015A
754
5%
Depreciation
402
41%
Focus on Other Admin. Expenses (€mn)
+2.5%
+32.9%
Personnel
costs
60%
60%
Extraordinary BRRD (€41mn)
Ordinary BRRD (€18m)
Other (€11mn)
54%
308
71
232
Cost / Income
2013A
2014A
2015A
60.7%
62.1%
71.6%
2014A
2015A
238
Adjustments Normalized
2015A
93
Loans Loss Provisions and Other Net Provisions Evolution
Net impairment adjustments and provisions for risk and charges for over Eur 1.5bn in 2014 and Eur 2.3bn in 2015
Loans Loss Provisions and Other Net Provisions(1) (€mn)
467
1,540
2,340
7%
■ €159mn: of which impairment of AFS associates
totaled €171mn mainly related (€142mn) to
Luxembourgian funds (Athena and Optimum
Multistrategy funds)
159
Others(2)
Net provisions for
risks and charges
513
22%
53
From impairment on
goodwill and other
intangibles
335
18
600
■ €513mn provisions for risk and charges related to:
legal risk on financed capital and commitment
letters (€353mn)
customer claims and other risk on BPVi treasury
shares (€136mn)
14%
■ €335mn related to impairment on goodwill (down
to €6mn in 2015A) and other intangibles
1.333
22
12
Loans Loss Provisions
57%
0
868
■ €1,333mn related to loan loss provisions, of which
€460m(3) due to financed capital
432
2013A
2014A
2015A
Note: (1) Including Provisions for risks and charges, (2) Includes impairment of AFS (€-160.2mn), impairment of associates (-€11.0mn), write back
on other financial transactions (+€12.2mn), (3) excludes €6mn provisions related to credit commitment due to financed capital
94
Agenda
Pag. 5
Business strategy
Pag. 19
Pag. 51
Risk management
Pag. 60
Financial overview
Pag. 74
Pag. 95
95
BPVi’s future strategy: 2015-2020 Business Plan
2020 strategy:
Becoming the "First
Choice" Network
Bank in core
geographic areas,
focused on
Corporates / SMEs
and Family
banking, delivering
distinctive customer
service
Priorities
2018 targets
2020 targets
1
Solidity and resilience
Net profit
> € 200 mn
Net profit
> € 300 mn
2
Reshape client service models
ROTE Adjusted
5.6%
ROTE Adjusted
8.2%
3
Transform the operating model
Cost / Income
Ratio
< 55%
Cost / Income
Ratio
< 50%
4
Active Credit & Risk Management
CET1
12.0%
CET1
12.9%
5
Re-qualify the asset base
LCR
> 115%
LCR
> 120%
96
Loans and deposits evolution
Net loans(1) (€ bn)
€mn
114.2%
106.6%
25.1
28.2
2015
2018 (E)
Net loans
106.5%
30.1
CAGR
15 – 18
CAGR
15 – 20
4.0%
3.7%
CAGR
15 – 18
CAGR
15 – 20
6.4%
5.2%
CAGR
15 – 18
8.6%
1.6%
15.2%
CAGR
15 – 20
7.2%
1.5%
12.1%
■
Progressive re-balance of the
loan-to-deposit ratio, as a
result of the higher increase of
deposits (CAGR 15 – 20 (E) at
5.2%) compared to the growth
in loans (CAGR 15 – 20 (E) at
3.7%)
■
Strengthened retail funding,
thanks to the recovery of
deposits, following the re-gain
in clients’ trust post capital
increase
■
Important growth in AUM
(CAGR 15 – 20 (E) at 12.1%),
thanks to specific investments
and development activities
2020 (E)
Loan-to-deposit ratio1
Direct deposits(1) (€ bn)
21.9
26.4
28.2
2015
2018 (E)
2020 (E)
Indirect deposits(2) (€ bn)
14.6
7.5
7.0
18.6
7.9
10.8
20.6
8.1
2015
2018 (E)
2020 (E)
AuM
(1) Net of REPOs with CCG; (2) Excluding BPVi shares
12.5
AuC
97
Interest margin evolution driven by increasing volume and client spread
Interest margin evolution
€mn
669
579
504
75
CAGR
15 – 18
4.8%
9.4%
CAGR
15 – 20
5.8%
-3.1%
■
2015-2020 net lending volume
increase by € 5.0 bn (CAGR = 3.7%),
reflecting growth in core regions
3.8%
7.4%
■
Higher contribution of securities
portfolio in 2018 due to an
increased exposure on the
Government bonds portfolio, then
gradually lowered as a result of the
portfolio’s envisaged run-off
Delta
15 – 20
■
Improvement of commercial spread
in 2015-2020 from 1.95% to 2.41%
mostly due to cost of funding
reduction (mark-down improved of
83 bps vs. lower mark-up by 37 bps)
■
Institutional funding cost assumed
steady over the Business Plan
horizon at around 3%
114
87
Securities
portfolio(1), (2)
Client Margin
594
416
465
2015
2018 (E)
2020 (E)
Interest rate evolution(3)
3.41%
3.14%
Average Loans
spread
1.95%
1.47%
2.05%
2.41%
47 bps
0.63%
-83 bps
0.59%
72 bps
1.09%
Average Deposits
spread
Euribor 3M rate
3.05%
-37 bps
Commercial
spread
-0.13%
2015
0.07%
2018 (E)
2020 (E)
Source: Company data and BPVi elaboration on Prometeia data (“Aggiornamento Rapporto di Previsione” February 2016 for Euribor)
(1) Including minibond and ABS; (2) Securities portfolio assumed funded at 3M Euribor, average spreads calculated over 3M Euribor; (3) End of period rates
98
Net commission growth driven by Assets under Management and lending activity
Net commission evolution
CAGR
15 – 18
CAGR
15 – 20
453
7.6%
7.1%
49
20.4%
14.2%
128
12.7%
11.9%
31
-0.3%
2.0%
245
4.7%
4.6%
€mn
401
■
Growth in net commissions (+7.1% CAGR 15 –
20 (E)) led by the reshape of the client service
model
- Exploit the cross-selling potential from the
Community banking clients, by offering
Advisory through client RMs, open platform
(investments) and product partnerships
- Enforce and further strengthen value added
services offer and delivery for Corporate /
SME & Private banking (e.g. ECM,
Minibond, Export / Trade Finance,
Structured Finance & MT lending)
■
Significant growth in AuM and AuC net
commission (+11.9% CAGR 15 – 20 (E)), also
fostered by the re-building of wealth advisory
services for affluent and private customers
■
Growth of other commissions mainly driven by
- Distribution of third parties consumer
finance products
- Commissions related to loans volume
growth
- Expansion of the current bancassurance
products’ offering to P&C products
44
322
25
104
73
28
28
225
196
2015
2018 (E)
2020 (E)
SME Platform
AuM and AuC (1)
Consumer Finance
Financing, transaction and
other services
(1) Includes placement and management fees from AuM & AuC
99
Operating expenses evolution driven by a new business model plugged into a
leaner bank
Staff and other administrative expenses (net of amortization and depreciation)
Include the extraordinary contribution to the National
Resolution Fund (€41mn) and the extraordinary expenses
for the transformation to Joint Stock Company (€11mn)
and top management turnaround (€10mn)
€mn
718
Other Admin.
Expenses
Personnel
Expenses
592
586
228
225
410
364
361
2015
2018 (E)
2020 (E)
308
CAGR
15 – 18
CAGR
15 – 20
-6.3%
-4.0%
-9.6%
-6.1%
-3.9%
-2.5%
■
Introduction of cost management
unit at Group level
■
Operational costs reduction
thanks to branch closures, rent renegotiations, etc.
■
Sharp decrease of advisory fees
and institutional expenses (e.g.
sponsorships)
■
Benefit deriving by a significant
headcount reduction, only
partially counterbalanced by new
national labour contract
application and discretional
advancements and salaries
increase
■
One-off impact on personnel costs
for redundancy funds equal to €65
mn in 2016 and €16 mn in 2019
Cost / income ratio evolution
71.6%
54.4%
2015
2018 (E)
47.6%
2020 (E)
100
A recovered efficiency through a lighter operational structure and a sharpened
distribution model
Personnel headcount reduction
■
5,473
2015
(150)
(425)
~ 90
Redundancy Funds
(2016/2017-2020)
New
Hirings
~ 5,000
(150)
~ 4,850
2020 (E)
Outsourcing
2020 (E)
Not including
Including potential
potential outsourcing
outsourcing
■
Branches evolution
2014
2015
Target
∆
target vs. ‘15
# branches
654
579
~500
-14%
# RMs(1)
736
784
~1.120
+43%
Lean organisation
- -575 resources, due to headcount
reduction thanks to two
“redundancy funds” in 2016/2017
(-425) and in 2020 (-150)
- De-layering and rightsizing of HQ
and branch network
- Externalization of "volume
driven" activities (i.e. Servizi
Bancari) determining a potential
reduction of additional 150
resources
Sharpened distribution model
- Closure of further 79 branches (by
2016 Q2) to gain scale and
productivity
- Increased number of RMs
dedicated to clients core
segments enabling a wider and
more effective client coverage
- Further implementation and rollout of the new Hub&Spoke
branch model, which is planned
to begin in 2016 Q2 and to be
completed by the end of the year
(1) Serving the "core" segments: Affluent, Private, SB, Corporate
101
Cost of risk evolution driven by Active Credit and Risk Management…
Initiatives
Credit Strategy
■
■
Underwriting
Processes
■
"Preventive"
management
(Early Warning)
■
■
Active
management
(Unlikely to
Pay)
■
■
AIRB
Pervasive and binding credit policies
Overall review of processes and systems:
- New underwriting process (specialized
by segment and "time to yes")
- "Fast Banking" for small / good product
/ clients
Dedicated "preventive" management:
- Early warning system to immediately
individuate potential risky customer
- "Pre default" management workflow
with dedicated / tailored strategies
Strengthening of credit monitoring team
and tools
Strengthened Unlikely to Pay
management to maximize value from
current stock introducing an "integrated
active model"
Introduction of a specialized approach /
unit for managing Real Estate exposure
and Restructuring
Adoption of AIRB models during business
plan horizon (not included in P&L and
capital estimate)
(1) Calculated as percentage of GBV at the reference date; (2) Net of loans related to financed capital classified as UTP
KPI
New flows from regular to NPE (%)(1)
Delta
15 – 20
~10%
~ -7 p.p.
2015
~3%
~3%
2018 (E)
2020 (E)
Flows from "Unlikely to Pay”(2) to regular (%)(1)
~4%
Delta
15 – 20
~4%
~ 3 p.p.
~1%
2015
2018 (E)
2015
New flows from
~28%
UTP(2) to NPL (%)(1)
2020 (E)
2018
~16%
2020
Delta
~14% ~ -14 p.p.
Cost of risk (bps)
529
Delta
15 – 20
-459 bps
2015
77
70
2018 (E)
2020 (E)
102
…Coupled with structural review of NPL management approach to improve
NPL collection rate and reduce NPE weight on BS
Initiatives
KPI
Average workload (NPL positions/ resource)(1)
■
Disposal
■
Portfolio "cleaning" through NPL disposals
within business plan time horizon for €1.5
bn
Disposal focused on high covered position
with no / minimal impact on profit loss
~ 670
2015
Delta
15 – 20
200 – 250
200 – 250
2018 (E)
2020 (E)
~ -450
Collection on NPL (€mn)
~ 220
Strategic
Partnership
■
Long term strategic partnership with high
standing market operator on selected NPL
portfolios
Excellent
Recovery
Model
■
Focus of internal resources on high- value
positions
Enhanced Recovery Model:
Delta
15 – 20
~ 100
~ €120 mn
2015
■
~ 220
% of NPL(2)
2018 (E)
2015
~3%
2020 (E)
2018
~5%
2020
~5%
Delta
~2 p.p.
NPE/ Gross Loans (%)
30.9%
25.0%
- New portfolio strategy segmentation
22.7%
- Workload optimization
Delta
15 – 20
-8.3 p.p.
- IT applicative software enhancement
- KPI/ Process metrics
2015
2018 (E)
2020 (E)
(1) Parent Company figures. 2018 and 2020 estimated assuming outsourcing/disposal of exposures up to €300M, accounting for around 70% of credit files number; (2) Calculated as percentage of GBV at the
reference date
103
Asset quality evolution driven by structural review of NPE management
approach to improve NPL collection rate and reduce NPE weight on BS
Non Performing Exposure Stock Evolution
€mn
CAGR
15 – 18
CAGR
15 – 20
-3.5%
-2.9%
Taking into account the disposal of €1.0 bn of NPL (GBV) in 2017,
with an estimated impact of €50 mn on P&L and €500 mn (GBV)
in 2019 , with an estimated impact of €25 mn on P&L
1.5%
27.4%
-9.6%
18.0%
■
Sharp decrease of unlikely to pay
due to lower default rate and
higher flows to performing
■
NPE coverage increasing in 2018
and 2020 mainly due to a mix
effect, NPL coverage slightly
lower as a result of disposal of
positions with high provision
coverage
■
Alignment of the NPL recovery
rates to market levels
7,744
4,369
4,747
-12.3%
NPL stock decreasing over the
period also thanks to the disposal
of € 1.5 bn of NPE
8,963
8,065
2.8%
■
4,439
154
2015
Past due
4,712
2,999
2,680
319
353
2020 (E)
2018 (E)
Unlike to pay
NPL
2015
2018
2020
Gross NPE/Total loans
Net NPE / Net Loans
30.9%
21.1%
25.0%
15.9%
22.7%
13.9%
Coverage ratio
NPL
NPL including write-off
UTP
PD
Total NPE
NPE including write-off
56.8%
59.3%
25.8%
12.2%
40.6%
42.4%
54.3%
56.3%
29.6%
11.9%
43.4%
45.0%
55.5%
57.2%
32.0%
11.7%
45.4%
46.7%
- Long term strategic
partnership with high
standing operator on
selected NPL portfolios
- Improvement of in-house
management for high value
positions
104
2018 / 2020 Financial targets
Income statement (€mn)
2015
2018 (E)
2020 (E)
504
322
163(1)
1,053
(754)(2)
298
(1,333)(3)
(1,407)
579
401
84
1,143
(622)
522
(220)
202
669
453
85
1,289
(613)
676
(214)
309
Loans & Deposits (€bn)
2015
2018 (E)
2020 (E)
Net Loans(4)
Direct Funding(4)
Indirect Funding(5)
of which AUM
Total Funding
RWA(6)
25.1
21.9
14.6
7.0
36.5
24.9
28.2
26.4
18.6
10.8
45.1
26.8
30.1
28.2
20.6
12.5
48.8
28.2
2015
2018 (E)
2020 (E)
(36.2%)
71.6%
47.5%
6.7%
8.1%
4.4%
529
210.9%
42.4%
5.6%
54.4%
115.4%
12.0%
12.9%
7.7%
77
110.7%
45.0%
8.2%
47.6%
122.0%
12.9%
13.7%
8.5%
70
95.3%
46.7%
Net Interest Income
Net commissions
Net result of the proprietary portfolio
Net Operating Income
Net Operating Expenses
Net Profit from operating activities
Net Impairment adj. on loans and advance
Net Income
Main KPIs
Rote Adjusted(7)
Cost / Income
LCR
CET1
Capital
TCR
Leverage Ratio
Cost of Risk
Risk / Asset Quality Texas Ratio(8)
Coverage Ratio NPE(9)
Profitability
Efficiency
Liquidity
CAGR
15 – 18
4.8%
7.6%
(19.9%)
2.8%
(6.2%)
20.5%
(45.2%)
n.m.
CAGR
15 – 20
5.8%
7.1%
(12.2%)
4.1%
(4.0%)
17.8%
(30.7%)
n.m.
CAGR
15 – 18
4.0%
6.4%
8.6%
15.2%
7.3%
2.5%
CAGR
15 – 20
3.7%
5.2%
7.2%
12.1%
6.0%
2.6%
Delta
15 – 18
41.8 p.p.
(17.2 p.p.)
67.9 p.p.
5.3 p.p.
4.8 p.p.
3.3 p.p.
(452 bps)
(100.1 p.p.)
2.6 p.p.
Delta
15 – 20
44.4 p.p.
(24.0 p.p.)
74.5 p.p.
6.2 p.p.
5.6 p.p.
4.1 p.p.
(459 bps)
(115.6 p.p.)
4.3 p.p.
Key highlights
■
Net income forecasted at
€309 mn corresponding to
ROTE adjusted at 8.2% in
2020
■
Good level of efficiency (cost
/ income < 50%)
■
Normalized cost of credit at
“pre crisis” level (70bps),
increased coverage ratio
(46.7%) and NPEs volumes
reduced also thanks to NPLs
disposals
■
Strong fundamentals in
terms of capital (CET 1
>12%) and liquidity (LCR
>120%)
■
Pay-out ratio equal to 50%
from 2017 (subject to
regulatory requirements)
■
Further potential capital
benefits from AIRB
adoption, reimbursement of
financed capital, nonstrategic assets disposals,
currently not included in the
Business Plan
(1) Including €37 mn related to the disposal of Save, Agripower, 21 Investimenti, Consorzio Triveneto and Pittarosso; (2) Including the extraordinary contribution to the National Resolution Fund (€41 mn) and
extraordinary expenses for transformation into Joint Stock Company (€11 mn) and top management turnaround (€10 mn); (3) Including €460 mn related to the effect of the financed capital; (4) Net of REPOs with CCG;
(5) Excluding BPVi shares; (6) Calculated with Standardized approach; (7) ROTE Adjusted calculated on Tangible Equity net of non-distributable equity reserve related to financed capital (€304mn); (8) Texas Ratio
calculated as Net NPE / Tangible Equity (2015 = 239.8% if Tangible Equity adjusted deducting capital filter); (9) Including write-off
105
Business Plan economic and market outlook
GDP (y/y % change)
Euribor 3M
Delta
15 – 18
Delta
15 – 18
Delta
15 – 20
0.2 p.p.
0.7 p.p.
0.59%
0.32%
(1)
1.3%
1.1%
0.07%
0.6 p.p.
1.3%
0.7%
(0.11%)
(0.13%)
(0.26%)
2015
2016 (E)
2017 (E)
2015 2016 (E) 2017 (E) 2018 (E) 2019 (E) 2020 (E)
2018 (E)
Gross loans to customers (y/y % change)
CAGR
15 – 18
CAGR
15 – 20
2.6%
2.8%
2.8%
3.0%
3.0%
Direct funding (y/y % change)
3.0%
2.0%
CAGR
15 – 18
CAGR
15 – 20
1.2%
1.5%
1.9%
1.9%
1.9%
1.2%
1.1%
0.5%
0.0%
2015
2016 (E) 2017 (E) 2018 (E) 2019 (E) 2020 (E)
ST
(5.1%)
0.9%
2.5%
2.7%
2.7%
2.7%
MLT
3.6%
2.7%
3.3%
3.5%
3.5%
3.5%
2015
Current accounts 8.3%
(12.8%)
Bonds
12.8%
Term deposits
(6.7%)
2016 (E) 2017 (E) 2018 (E) 2019 (E) 2020 (E)
3.0%
(9.5%)
3.5%
1.4%
(3.7%)
4.1%
1.0%
1.2%
4.4%
1.0%
1.2%
4.4%
1.0%
1.2%
4.4%
(1) 2018 GDP figure taken from “Rapporto di Previsione” December 2015 as not showed in “Rapporto di Previsione” February 2016 | Sources: BPVi elaboration on Prometeia data (“Aggiornamento Rapporto di
Previsione” February 2016 for GDP and Euribor and “Aggiornamento Rapporto di Previsione” December 2015 for Loans and Direct Funding)
106
Contacts
Fabio Pelati
Head of Investor Relations
Via Btg. Framarin, 18 - 36100 Vicenza – Italy
Tel.: +39 0444-339159
[email protected]
www.popolarevicenza.it
107

BPVi Group - Analyst Presentation

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