STRATEGIC EGIC GUIDELIN DELINES ES FY 2019-23 23 MEDIOBA BANCA NCA DISTINCTI INCTIVE VE AND SUSTAINA AINABLE BLE SPECIAL CIALIZ IZED ED FINANC NANCIAL IAL 12 November 2019
AGENDA NDA Section 1. Group ambitions Section 2. Divisional ambitions 2.1 Wealth Management 2.2 Consumer Banking 2.3 Corporate & Investment Banking 2.4 Principal Investing 2.5 Holding Functions Section 3. Closing remarks Annex Macro scenario Glossary
MEDIOBANCA ANCA A A STORY RY OF CONSI SISTENC STENCY Y Group ambitions Section 1 Along with its reshaping trajectory Mediobanca Group has become a diversified financial player with a valuable and distinctive profile in the European financial sector due to the effectiveness and sustainability of its accretive value cycle Further material growth will be delivered in the next 4Y in revenues, earnings, capital, profitability and stakeholders’ remuneration turning the current macro scenario into an opportunity Distinctive and qualitative growth should position Mediobanca further up on the Value Map of European Financials 3
MEDIOBANCA: A DIVERSIFIED FINANCIAL GROUP… Group ambitions Section 1 Key financial information¹ Wealth Consumer Revenues: € 2.5bn TFA: € 61bn Management Banking Net profit: € 823m Loan book: € 44bn ROTE adj: 10% Gross NPLs/Gross Ls 3.9% C/I ratio: 46% DPS: € 0.47 No. of staff: 4.8k Stated payout: 50% Corporate & Principal Investment CET1 phase in : 14.1% Loan/funding ratio: 86% Investing Banking Total assets: € 78bn Market cap: 2 € 9.0bn Revenues TFAs GOP Loans RWAs WM WM WM 9% WM 10% 26% 22% Affluent UHNWI Consumer CIB Consumer CIB 41% 40% CIB Consumer 27% 43% 43% 35% CIB Consumer 25% 40% 40% 30% AM Other Other Other Other 19% 20% 13% 4% 13% 1) Figures as at end-June 2019 (financial year) 4 2) As at November 2019
...WITH AN INTEGRATED BUSINESS MODEL… Group ambitions Section 1 HIGH SYNERGIC BUSINESS Capital light Labour intensive Corporate & Wealth Fee driver Fee driver Management Inv.Banking Recurrent Cyclical REALLOCATION OPPORTUNITY DIVERSIFICATION OPPORTUNITY EPS/DPS accretive Capital intensive Principal Consumer Revenue driver NII driver Investing Banking Source of capital Anti-cyclical HIGH RETURN BUSINESS 5
… ABLE TO GROW AND DELIVER … Group ambitions Section 1 In last 3 years we have significantly enlarged and reshaped the Group … Business positioning enhanced, Growth in revenues (up 7%¹), Growth in revenue-generating assets : investing in people profit (EPS adj. up 13%¹), TFAs up 25%¹, AUM up 31%,¹ (headcount up 6%¹) loans up 9%,¹ funding up 3%¹ and dividend (DPS up 20%¹) and distribution incl. through M&A Operational gearing & asset quality Growth in capital generation Growth in profitability preserved distinctive Banking² and Group ROTE @10% € 1.1bn dividend distributed (up 3pp in 3Y) cost/income ratio @46%, gross NPE/Ls <4% doubled vs previous 3Y … delivering our 3YBP19 targets Capital creation and shareholders’ GOP growth beat target Profitability above target remuneration higher than expected ( € bn, 3YCAGR) ROTE (%) +11% +16% 50% Payout 18% 10% 40% 40% 9% 50% 17% 16% 7% 40% 15% 1.1 1.0 14% CET1 14% 30% 13% 0.7 12% 12% 13% 20% 11% 10% 10% 9% 8% 0% FY16 FY19 BP19T FY16 FY19 BP19T FY16 FY19 BP19T 1) 3Y CAGR 2016-19 6 2) Banking business defined as Group activities excluding Ass.Generali contribution
…OUTPERFORMING THE SECTOR BY FINANCIAL RESULTS AND MARKET PERFORMANCE… Group ambitions Section 1 Last 3Y performance MEDIOBANCA ITALIAN BANKS avg EUROPEAN BANKS avg Revenues (3Y CAGR¹) +7% 0% -1% Net interest income / fees (3Y CAGR¹) +5% / +11% 0% / +1% -3% / +2% PBT (3Y CAGR¹) +13% +6% +9% Net loans (3Y CAGR¹) +9% +3% 0% Employees (3Y CAGR¹) +6% -3% -1% ROTE² 10% 7% 8% Cost/income ratio² 46% 62% 67% Gross NPL ratio² 3.9% 7.7% 3.0% € 12 Mediobanca = +60% 11 10 9 8 ITA Banks = +10% 7 6 5 EU Banks = -8% 4 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 Jul-18 Nov-18 Mar-19 Jul-19 Nov-19 MB 60,4% EU banks -8,2% ITA banks 9,7% 1) 3YCAGR: June16/19 Mediobanca, Dec16/18 peers 7 2) June19 for Mediobanca, Dec18 peers Source for ITA and EU banks: ROTE from MB Securities, other figures from public annual report. Employees: Bank of Italy
…DUE TO DISTINCTIVE DNA, CULTURE, POSITIONING… Group ambitions Section 1 Stable Board and Responsible business Specialization and Strong positioning management in the last approach Innovation in business whose 15Y growth is driven by long-term trends Private-Investment Bank Indepth knowledge of Strong brand value of choice for Italian business environment Leading investment bank in Reputable, trusted, high- entrepreneurs Southern Europe Long-term approach to quality player Innovative, long-standing business One of top 3 operators in Talent-driven profitable consumer bank Italian Consumer Banking Strong risk management as organization Unique human-digital part of DNA Distinctive player in WM bank for affluent customers High capital generation, Limited exposure to ITA Governance Comprehensive ESG high asset quality macro and adverse progressively evolving approach content regulation Low exposure to Italian Free float at 100%, CSR involving the whole spread and govies CET1@14% institutional investors at 75% organization Last capital increase in 1998 Low NII sensitivity Board quality steadily Remuneration policy fully Unrivalled asset quality to interest rates and GDP improved/improving in aligned with stakeholders’ number, mix of interests Low operational gearing Solid loan book/TFAs growth competences, over the whole cycle independence 8
…AND EFFECTIVENESS OF ITS ACCRETIVE VALUE CYCLE Group ambitions Section 1 STRONG G POSI SITION IONING RESPO PONSIB SIBLE LE > REPUTABLE - HIGH QUALITY SPECIALIZED FINANCE DNA Strong brand value Effectiveness of MB business model, focused on high-margin, specialized, Standing and quality long-term growing businesses Ethical approach STAKE KEHOL OLDE DER-FRIE IENDLY DLY SOLID High yield for our shareholders CAPITAL GENERATION CAPABILITY Workplace welfare for our people Possibility to invest to enhance positioning Corporate citizenship for our community PROFITABLE LE GROWIN WING > ABOVE AVERAGE PERFORMANCE UNBROKEN GROWTH High profitability and capitalization in human talent, assets and profit with no compromise on risk profile All business units repaying capital 9
KEY Y TRENDS NDS AHEAD EAD ADVERSE RSE MACRO, O, DISRUP RUPTIV IVE E TECHN HNOL OLOGY OGY, , STRIC ICTER ER REGULA GULATION, ION, RISE OF ESG Group ambitions Section 1 SCENARIO DEVELOPMENTS REQUIREMENTS TO BE SUCCESSFULLY COMPETITIVE Strong positioning in selected core businesses/countries Negative interest rates for longer ADVERSE High cost efficiency/strong risk selection capability MACRO Low GDP growth Transform distribution : more digital, driven by DISRUPTIVE Changing consumer behavior specialized sales force in all segments, mobility key TECHNOLOGY Large-scale use of Advance Data and Artificial Fintech to gain market share IMPACT Intelligence High capital buffer/asset quality contents Capital requirement to increase STRICTER REGULATION Fair and transparent product pricing / Low conduct risk Consumer protection to grow Sustainability as a new valuation metric for equities SRI has grown/will grow significantly ESG driver for economic growth and new investment Talent retention and product development RISE OF ESG Governance standard to be Sustainable business model for all the stakeholders as a improved long-term value proposition 10
MEDIOBANCA ANCA: : SET TO O TURN N A CHALLENG ALLENGIN ING SCENARI NARIO INTO O OPPORTUNIT RTUNITIES IES Group ambitions Section 1 Italian WM market worth € 4tr, largely MBWM un-managed (65%) will become a market leader with high growth rates & sustainability Specialized operator gaining share Corporate and Financial Sponsors MBCIB MACRO activity will stay high in Europe will grow its market share in Europe OPPORTUNITIES Boutique-type organization to continue in M&A and CapMkt taking market share Consumer Banking MBCB under-penetrated in Italy. will leverage its strong positioning Changed consumer behavior requiring to become a front runner once again new products and distribution Profound restructuring in Mediobanca will focus on growth SECTOR universal/commercial banking due to organically and OPPORTUNITIES unprecedented margin squeeze through M&A 11
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