Overview MPS & Funding Presentation 10 April 2014
Agenda MPS Overview 2013 Results: highlights Covered Bond MPS Covered Bond MPS Covered Bond Programme at a glance MPS Current Cover Pool Description Annexes 2
MPS is the third largest Italian banking group Total Assets * ( € bn) Monte dei Paschi di Siena is one of the 845.8 626.3 main banks in Italy. It is the flagship of the 199.1 MPS Group, the third Italian largest 126.0 124.2 61.8 49.4 banking group UCI ISP MPS BAPO UBI BPER BPM Direct Funding * ( € bn) 571.7 397.7 130.0 92.6 90.0 46.8 36.8 UCI ISP MPS UBI BAPO BPER BPM Customer Loans * ( € bn) 503.1 344.0 131.2 88.4 86.1 46.5 33.3 UCI ISP MPS UBI BAPO BPER BPM *Data as at 31 Dec-13. Source FY2013 Company Reports 3
MPS Group Overview MPS Branches * With some 28,400 employees and 2,340 branches , the Montepaschi Group offers, to approx. 5.5 million Trentino A.A. 4 Val d’Aosta Friuli V.G. customers, a wide range of financial services and 59 5 Lombardia products to private individuals and corporations 316 Veneto 289 Piemonte 53 #Branches: Emilia R. 165 c. 2,334 Liguria Business breakdown 31 Marche Toscana 77 469 Umbria 57 Revenues: #Clients: Abruzzo Sardegna 51 € 4.0 bn 5.5 mln Molise 17 Lazio 14 200 98.7% Puglia 68.8% Campania 143 134 1.3% Basilicata 12 31.2% Calabria Retail&Private Banking Corporate Banking 58 Market share ** (%) Sicilia 180 7.4 7.2 North 23.9% 5.9 36.6% Center South & Islands 39.5% Branches Direct Funding Total Loans *Data as at 31 Dec 2013 **Source: Bank of Italy, Matrice di vigilanza. Direct Funding market share is calculated on deposits (excluding those associated with securitisations), repurchase agreements (excluding 4 central counterparties) and bonds (net of buybacks).Total loans net of repo with institutional counterparties
Shareholder structure 04 April 2014 * 31 December 2011 2.9% 40.6% 4.1% 9.6% 4.0% 5.7% 2.7% 2.5% 79.6% 2.5% 45.8% Fondazione MPS J.P. Morgan AXA Fondazione MPS ** Blackrock JP Morgan Chase Caltagirone UNICOOP Firenze Free Float AXA S.A. Other and Free Float On 18 July 2013 , the extraordinary Shareholders' Meeting resolved the removal of the share ownership ceiling of 4% *Source: Consob ** It should be noted that the percentage indicated includes the 6.5% shareholding of the Monte dei Paschi di Siena Foundation which will be transferred to the companies Fintech Advisory Inc. and BTG 5 Pactual Europe LLP pursuant to the disposal agreement signed on 31 March 2014, the effectiveness of which is currently subject to the condition precedent of concluding the authorization procedure initiated with the MEF and Bank of Italy.
Main companies of the Group & strategic alliances Main companies of the Group Strategic JVs and distribution agreements Consumer credit company. It Specialised in developing an issues special-purpose loans, offer of integrated leasing and personal loans including fifth-of- factoring packages for salary backed loans, credit cards businesses, artisans and (option and revolving) professionals Aims to satisfy the needs of Provides customers with solutions to individuals and legal entities wishing financial and credit issues, focusing to have their assets managed with the its business on medium-long term utmost confidentiality. It may take on credit facilities, special purpose the custody of goods in its capacity as loans, corporate finance, capital a trustee and act as a protector in markets and structured finance trusts Its business includes the custody and Centre for the management (ordinary and development and extraordinary), of real estate by reason of management of ICT and which it may also purchase, sell, telecommunication exchange and lease properties; activities systems are carried out primarily for the companies of the Group Group banks supporting business trade and investments by Italian companies abroad. 6
MPS organisation chart BoD Internal Audit Area CEO/GM F.Viola Major Risks CEO/GM Legal & Corporate OnLine Bank Management Secretariat Affairs Area Area Staff HR, Organisation Risk Retail Banking Corporate & Deputy General Mgmt Deputy General Mgmt & Communications Management & Network Investment Banking Credit Finance & Operations Division Division Division Division Sales & Distribution Network COO Division CFO Division 7
Ratings Summary Last rating action Last rating action Last rating action Last rating action 8
Agenda MPS Overview 2013 Results: highlights Covered Bond MPS Covered Bond MPS Covered Bond Programme at a glance MPS Current Cover Pool Description Annexes 9
Key messages Improved basic income vs. 3Q13 with NII up 11.2% , mainly thanks P&L: to cost of funding reduction, and improving fees core business Acceleration in cost cutting: Operating costs -12.7% YoY; -15.8% results in line 4Q13 vs. 4Q12 with BP; bottom LLP (210bps) impacted by increasing impaired loan inflows and rise in line impacted by coverage, in view of the forthcoming AQR several non Net Profit (loss) at – EUR 1,439mln , affected by several non recurring items recurring components Total assets: -9% YoY (-EUR 20bn vs. Dec 12) Balance Sheet: ongoing Loans: -7.6% YoY , -EUR 4.3bn in 4Q13 deleveraging, L/D ratio * : 101.0% vs. 104.7% in Dec 12 derisking and Counterbalancing capacity: EUR 16bn, up to EUR 19.6bn at the optimization of end of February 2014 funding mix Financial Assets: -11.3% YoY , -EUR 2.7bn in 4Q13 Partial shift from direct funding (-4.2% YoY) to AuM (+1.3% YoY) continues In line with B3 Liquidity targets: NSFR >100 and LCR >100 *Customer loans/Customer deposits and securities issued (retail and wholesale) 10
FY13 and 4Q13 results consistent with our strategy Positive impact De-risking and Switching on top line Deleveraging funding mix Decrease in higher cost Improvement in net interest De-risking of financial funding sources and income thanks to lower cost portfolio interbanking exposure of funding Securities and Derivatives Bonds * ( € bn) Interb. Exposure ( € bn) Portfolio Net Interest Income +11.2% -11.5% -7.4% QoQ -2.8% QoQ QoQ 563 QoQ 487 507 46 42 40.5 36.6 35.5 39 30 31 27 € bn € mln Jun-13 Sep-13 Dec-13 Jun-13 Sep-13 Dec-13 Jun-13 Sep-13 Dec-13 2Q13 3Q13 4Q13 YoY growth in fees and Increase in AUM Deleveraging commissions Bancassurance Gross Loan/Deposit ** ratio (%) AuM Stock ( € bn) Fees and commissions Flows ( € bn) AUM Fees +21.5% 4Q13 vs 4Q12 +5.7% -150bps 4Q13 vs 4Q12 QoQ +2.4% +20% QoQ YoY 404 405 383 104.7 102.5 101.0 4.0 44.0 3.3 42.8 45.1 € mln Dec-12 Sep-13 Dec-13 Jun-13 Sep-13 Dec-13 Dec-12 Dec-13 4Q12 3Q13 4Q13 *Retail and wholesale **Customer Loans / Deposits from customers and securities issued (retail and wholesale) 11
Continued leadership in cost optimization Main initiatives Total Costs (YoY % growth) Exit of 3,800 resources (of which 156 Dec-12 Dec-13 4Q13 vs 4Q12 Executives) since start of Plan (reached 48% -15.8% Operating of BP target), including disposal of Back Office Costs business unit with approx. 1,100 resources Closure of 400 branches (73% of BP target) -3.7% Renegotiation of vendor agreements with improved service levels and average savings of 17% in 2013 -12.7% MPS vs EU Banks:Total Costs * (YoY % growth) 7.6 5.2 3.8 0.6 -0.5 -0.5 -1.2 -0.7 -1.5 -2.5 -3.0 -3.3 -3.9 -10.6 -10.8 -12.7 MPS B2 B3 B4 B5 B6 B7 B8 B9 B10 B11 B12 B13 B14 B15 B16 * Source: company financial reports as at Dec-13. Peers analysed (banks reported 2013 results so far): Banco Popular, BCP Millennium, Santander, BBVA, Nordea, ING (Banking), Commerzbank, Danske Bank, 12 Credit Agricole, RBS, BNP Paribas, Credit Suisse, Barclays, DB
Improved risk profile Cost of credit (bps) Impaired Loans Coverage Write-off* +80bps 210 188 45.7% * 41.0% 41.8% FY12 FY13 FY12 FY13 NPL Coverage Loan loss provisions affected in 4Q13 by Write-off * impairment losses recognized on selected +90bps significant positions and full write-down of several 63.2% * 57.9% non-performing, aged loans (with a view to their potential disposal), as well as stricter valuation criteria and classification processes 58.8% Further increase in provisioning, with NPLs Coverage at 63.2% * (including write-offs) FY12 FY13 * Figures from operational data management system (Risk Management) 13
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