Group Results – 9M2013
Highlights � Operating Income up YoY (+3.8%) , even if calculated net of Trading (+3.6%), while remained weak QoQ (-1.4% net of Trading) mostly due to the typical summer seasonality � Similarly, Operating Costs , because of third quarter ‘s seasonality, were down by 4.8% QoQ , while remaining up 2,1% YoY. Such figure confirms, in opposite direction compared with the trend showed by many competitors, the investment strategy implemented by Credem Group with the aim of furtherly grow volumes � Net Adjustments to Loans were down QoQ , even if non considering second quarter’s non recurrent effect, due to the choice of calculating a longer time than previously expected to collect Net Impaired Loans. Impaired Loans’ coverage continued to grow , at the end of 3Q13 was 36.1% at the peak since 2010 � Net profit grew YoY (€100.3 million; +11.2%) and QoQ ( +2.4% ), thank to the resilience the Operating Profit and, with regard to quarterly figures, the reduction of Net Adjustments to Loans � Despite the weakness of the economic scenario, Cedem Group continued to grow its volumes (loans and direct deposits plus retail bonds went up by 0.1% and 9.5% YoY respectively) in opposite trend compared with the industry (loans and deposits went down by -3,8% e -0,5% YoY) � Core Tier 1 was 10%, up compared to 9.6% posted in the previous quarter and to 9.4% at the end of 2012 � ECB exposure was reduced, in early November, at €3.5 billion compared to €5 billion at the end of June 2
Income Statement 3Q12 2Q13 3Q13 % vs. 3Q12 % vs. 2Q13 9M12 9M13 % YoY Euro, Million -4.0 -4.1 710.1 737.2 3.8 Operating Income 244.1 244.4 234.4 Operating Income (net of trading 225.5 232.6 229.4 1.7 -1.4 668.6 692.8 3.6 and performance fees) Operating Costs -147.0 -154.5 -147.1 0.1 -4.8 -449.8 -459.4 2.1 Depreciation and Amortization -8.2 -8.5 -8.9 -8.5 4.7 -23.9 -25.8 7.9 -11.8 -3.7 236.4 252.0 6.6 Operating Profit 88.9 81.4 78.4 Net Adjustments to Loans -16.4 -28.0 -21.4 30.5 -23.6 -52.8 -69.3 31.3 Provisions for Risks and Charges -41.5 -2.1 -6.2 n.s. n.s. -56.5 -9.1 n.s. Extraordinary Income/ Charges 35.8 -1.0 0.6 n.s. n.s. 52.4 -1.1 n.s. -23.1 2.2 179.5 172.5 -3.9 Profit before Tax 66.8 50.3 51.4 Income Taxes/ Minority Interest -42.9 -21.7 -22.1 -48.5 1.8 -89.3 -72.2 -19.1 22.6 2.4 90.2 100.3 11.2 Net Profit for the Period 23.9 28.6 29.3 � Both YoY and QoQ, Operating Income, net of trading, grew more than Operating Costs . Overall, summer’s seasonality, as usual, affected negatively revenues and allowed the reduction of Operating Costs. � Net Profit for the Period was up both YoY and QoQ 3
Net Interest Income (1/3) � Net Interest Income was slightly down QoQ Net Interest Income (-0.9%) for a weaker dynamic of loans’ volumes € Million due to seasonality reasons, as well as the 120 reduction of customer spread back to 2012 year 117.8 116.7 116.6 end levels 115.7 110 112.6 � With reference to this last component, the reduction of the BTP-Bund spread allowed a decrease in the cost of deposits that was not 100 enough, though, to offset the reduction of the average loan rate linked to Credem Group 90 strategy aimed at developing volumes while 3Q12 4Q12 1Q13 2Q13 3Q13 preserving the asset quality Euribor and BTP/Bund spread evolution Customers’ Spread (Credem SpA management accounting) bps 0.2% 500 428 4.0 3.43 3.39 400 3.35 336 3.31 3.28 0.13% 3.5 0.17% 294 280 3.0 300 2.19 0.1% 2.5 2.11 2.09 2.02 2.03 0.12% 0.11% 0.11% 259 200 2.0 1.29 1.29 1.25 1.26 1.24 1.5 100 1.0 0.5 0.0% 0 0.0 3Q12 4Q12 1Q13 2Q13 3Q13 3Q12 4Q12 1Q13 2Q13 3Q13 Euribor 1 month Spread BTP vs. Bund (10 years) spread average loan rate average deposit rate 4
Net Interest Income (2/3) Direct Customers’ Deposits* evolution (9M13 vs. Evolution of Average Deposit Rate 9M12) (Credem SpA management accounting) % 15.0% 2.50 10.3% 9.5% 2.10 2.10 2.04 1.98 10.0% 1.93 6.3% 2.00 4.2% 5.0% 1.50 1.29 1.29 1.26 1.25 1.24 -0.5% 0.0% 1.00 Deposits Retail Bonds Total -5.0% 0.50 -10.0% 0.00 -10.0% -15.0% 3Q12 4Q12 1Q13 2Q13 3Q13 Credem: Average deposit rate Industry: Average deposit rate Industry Credem � At an higher level of detail, the analysis shows that for Credem Group the reduction of the average deposits’ rate was lower than the industry, even if the difference remained very favorable for Credem � Reasons behind such trend are related to the evolution of Deposits and Retail Bonds: even if the total aggregate grew YoY 10% more than the industry , Deposits grew YoY only 6,1% more than the industry while, for Retail Bonds, Credem Group outperformed the industry by more than 16% YoY � At a glance, the lower reduction in the cost of funding is mainly due to the stretching of the maturities of total direct customers’ deposits , while the industry is showing an opposite trend Source: ABI: Monthly Outlook (*) Sum of Credem Direct Deposits plus Retail Bonds 5
Net Interest Income (3/3) Loans to Customers evolution (9M13 vs. 9M12) Evolution of Average Loan Rate (Credem SpA management accounting) 0.5% 0.1% % 0.0% 4.50 3.86 3.80 3.80 9M13 vs. 9M12 3.77 3.77 4.00 -0.5% 3.43 3.39 3.35 3.31 3.28 3.50 -1.0% 3.00 -1.5% 2.50 -2.0% 2.00 -2.5% 1.50 -3.0% 1.00 -3.5% 0.50 -4.0% 0.00 -3.8% 3Q12 4Q12 1Q13 2Q13 3Q13 Industry Credem Credem: Average loan rate Industry: Average loan rate � As for the loan rate, the different dynamic Corporate customers credit standing (Credem SpA management accounting) compared to the industry is due to a strategy that is mostly aimed at the development of the 77.7% 80% 76.1% activities, in an environment that, over the last quarter even saw an acceleration in the 70% reduction of volumes. � Similarly, it was confirmed one of the traditional 60% point of strengths of the group, that is a growth paired with a premium quality of assets 50% 9M12 9M13 % of loans to corporate customers in top 4 rating classes Source: ABI: Monthly Outlook 6
Non Interest Income Non Interest Income: quarterly evolution 145.8 144.5 150 127.7 126.3 123.6 118.7 Performance Fees 135 27.6 28.2 108.5 11.8 120 18.6 4 5 1.8 19.2 4.5 Trading 4.5 € Million 13.4 105 3.7 3.3 3.3 6.1 90 Other 51.3 49.2 49.9 42.3 42.2 44.1 42 75 Banking Fees 60 10.5 9.9 11.4 7.2 7.3 6.1 7.9 45 Insurance Fees 30 51.7 52.4 52.3 52 50.6 50.7 49.1 Asset Management Fees 15 0 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 Non Interest Income: YoY comparison � Non Interest Income, in the +18,9% quarter, was affected by the usual 200 156.7 153.0 150.4 seasonality on asset management 126.5 150 fees (those particularly related to +7,0% +2,4% +12,1% 100 +2,4% order processing with clientele ). On 9M12 44.4 41.5 27.7 24.7 50 12.7 13 an YoY perspective, all aggregates 9M13 0 were significantly up, with Net Commissions increased by almost 10% Net Commissions: +9,9% YoY 7
Operating Costs Operating Costs: quarterly evolution Headcount and networks evolution € Million 5,993 6,000 449.8 459.4 Employees 5,740 5,800 5,651 200 5,604 5,544 5,519 5,600 157.8 154.1 154.7 154.5 148.7 147.0 147.1 5,400 150 48.6 48.6 47.7 49.4 5,200 47.6 45.6 45.6 2008 2009 2010 2011 2012 9M13 100 1,500 105.5 101.1 101.4 107.0 109.2 105.1 101.5 50 1,006 1,002 885 Advisers Financial 1,000 795 768 750 0 500 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 0 2008 2009 2010 2011 2012 9M13 Payroll Costs Admin. Expenses backed Loans Agents � Similarly to Revenue, also on Operating 361 358 400 Creacasa/Salary Costs the summer seasonality showed a 272 300 significant impact , positive in this case 217 158 200 � Coherently with Group strategy, aim at 98 100 increase volumes, Operating Costs showed a growth by 2% YoY 0 2008 2009 2010 2011 2012 9M13 8
Loans (1/2) Loans to Customers (net of repos with institutional and loans to group’s SPVs) € Million 19,949 19,721 19,269 19,249 18,770 17,536 20,000 3,370 3,324 3,411 3,150 3,323 16,000 2,577 6,241 6,282 6,151 6,248 5,845 5,534 12,000 2,042 2,001 2,002 1,935 1,941 2,039 8,000 4,000 8,296 8,114 7,967 7,484 7,667 7,551 0 2009 2010 2011 9M12 2012 9M13 Short-Term Loans Leasing Residential Mortgage Other Loans Growth Rates (Loans to customers and public � Loans volumes confirmed stable YoY (+0,1%) administration) despite the acceleration in the decrease of 7.0% 8.0% volumes at industry level (-3.8% YoY at Sept 5.1% 6.0% 2013 vs. -2.8% YoY at Jun 2013) 4.2% 4.0% � As for a more detailed analysis on single 2.2% 1.2% 2.0% aggregates, the decrease in Other Loans and 0.1% 0.0% Leasing continued as a confirmation of a 2010 2011 2012 9M13 vs. -2.0% recession still ongoing, while Short Term -1.3% 9M12 -4.0% Loans proved to be resilient by remaining -3.8% however up 5.5% YoY -6.0% Industry Credem Source: ABI: Monthly Outlook 9
Loans (2/2) Market shares on retail and corporate customers and small business (net of financial institutions) (Credem SpA management accounting) 1.4% 1.225% 1.198% 1.155% 1.2% 1.068% 1.0% 0.8% 0.548% 0.6% 0.453% 0.443% 0.439% 0.4% 0.2% 0.0% MS on performing loans MS on Gross NPLs � Market Shares evolution is the result of what highlighted so far, with a growth in performing loans paired with a stable aggregate referred to gross NPLs Source: Bankit Data 10
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