Banco BPM Strategic Plan 2020-2023 UNLOCKING OUR BUILDING A COMMON INVESTING IN OUR Potential Future People Milan, 3 March 2020
Disclaimer This presentation has been prepared by Banco BPM ("Banco BPM") and includes certain forward looking statements, projections, objectives and estimates reflecting the current views of the management of the Bank with respect to future events. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward- looking statements are generally identified by the words “expects”, “anticipates”, “believes”, “intends”, “estimates” and similar expressions. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions which could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These forward-looking statements and information were developed from scenarios based on a number of economic assumptions for a given competitive and regulatory environment. Banco BPM does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. You should not place undue reliance on forward-looking statements, which speak only as of the date of this presentation. All subsequent written and oral forward-looking statements attributable to Banco BPM or persons acting on its behalf are expressly qualified in their entirety by this disclaimer. The information contained herein has not been independently verified. No representation or warranty, express or implied, is or will be given by Banco BPM, its subsidiaries or any of their respective representative, directors, officers, employees or advisers or any other person as to the accuracy, completeness or fairness of the information contained in this presentation and no responsibility or liability whatsoever is accepted by the same for the accuracy or sufficiency thereof or for any errors, omissions or misstatements negligent or otherwise relating there to. The distribution of this presentation in other jurisdictions may be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of, and observe, these restrictions. To the fullest extent permitted by applicable law, Banco BPM and its subsidiaries disclaim any responsibility or liability for the violation of such restrictions by any person. This presentation does not constitute a public offer under any applicable legislation or an offer or invitation to subscribe for, underwrite or otherwise acquire, any securities of Banco BPM or an advice or recommendation with respect to such securities. This presentation and the information contained herein does not constitute an offer of securities in the United States or to any U.S. person (as defined in Regulation S under the U.S. Securities Act of 1933 (the "Securities Act"), as amended), Canada, Australia, Japan or any other jurisdiction where such offer is unlawful. For the purposes of this notice, "presentation" means this document, any oral presentation, any question and answer session and any written or oral material discussed following the distribution of this document. By participating to this presentation and accepting a copy of this presentation, you agree to be bound by the foregoing limitations regarding the information disclosed in this presentation. 1
Introduction and methodological premise The context… Implications for the ordinary "day-to-day" Banco BPM activities • Immediate set-up of a " Crisis Committee ", governing over emergencies to secure ordinary operations and continued support to our clients' needs • Maximum commitment to minimize impact on colleagues and their families, ensure full support to our customers and play a responsible role for the overall economic system Sudden outbreak of COVID-19 resulting in and uncertainty over 2020 macroeconomic outlook Implications for the 2020-2023 Strategic Plan • 2020-2023 Strategic Plan rooted on a pre-emergency consensus macroeconomic scenario • Development of a V-shaped scenario , with GDP shock limited to 2020. Even under this scenario, the Strategic Plan is resilient across the main actions and targets 2
Agenda 1. The foundation of Banco BPM 2020-23 Strategic Plan: built on a strong track record and based on real delivery 2. An ambitious and credible Plan, addressing all stakeholders' expectations 3. Financial forecasts 4. Conclusions 3
Banco BPM: turnaround completed, ready to unlock our full potential Third bank in Italy, Credible team, Solid financials, built on Deeply involved with 4m clients with robust delivery well-recognized areas in the core served track record of operational excellence communities • Long-standing strategic • Successfully completed , • High capitalization and • Inclusive organization with vocation as commercial well ahead of schedule , a profitability , providing a culture of people caring bank , with low risk profile complex integration "of stable foundations for and engagement , able to and solid capital position equals“ – the only merger 2020-23 Strategic Plan attract external talents in the Eurozone since the • Presence "at scale" in the advent of SSM • Unique combination of • High commitment to social richest areas of the distinctive specialized action , aimed at making a country • Strong delivery machine , banks and best-in-class tangible impact on the able to far exceed cost, business partners wider community de-risking and capital targets, without requesting additional funds to shareholders 4
Successful completion of a complex integration Integration journey De-risking 2017 – BPM S.p.A. IT migration to target system in 7 Strengthened workout activity • • months • Risk profile improvement achieved without capital 2018 – Migration of Banca Akros's IT to target system injection from shareholders • 2018 - BPM S.p.A. incorporation in holding company ~ € 20bn NPE stock reduction ( -66% vs. 2016 level) in • – ( 12 months in advance vs. original plan) the last 3 years, including ~ € 15bn Bad Loans ( ~-80% vs. 2016 Bad Loan stock) • UTP management process continuous upgrade Simplification Specialization • New Retail commercial network set-up, creating more • Corporate division set-up, integrating the delivery value in the relationship with clients chain of Corporate and Investment Banking (Banca Akros) Optimization of the service to clients , with branch • rationalization (690 closures) Strategic partnerships : Asset Management, • Bancassurance and Consumer Finance reorganization Simplified operating structure delayering to max 3 • organizational levels with revised organizational units • Product factories specialization: Private Banking under (from ~570 to ~270), enabling fast decision making Banca Aletti, CIB consolidation under Banca Akros People requalification and staff reduction (> 3,000 HC) • Launch of the digital transformation program Project "DOT": significant investments in 2018-19, over 300 colleagues involved 5
An indisputable track record of solid capital generation… Pro-forma CET1 ratio (%) MDA buffer (%) 12.8% Over the last 3 years, 13% the Group absorbed CET1 impact in excess 12% of 11% without new capital injections +2.1pp 11% 2.9% 10% >800 De-risking 1.5% 1.4% 0.8% bps Plan 9% Q4 ’16 Q1 ’17 Q2 ’17 Q3 ’17 Q4 ’17 Q1 ’18 Q2 ’18 Q3 ’18 Q4 ’18 Q1 ’19 Q2 ’19 Q3 ’19 Q4 ’19 1 Regulatory >200 Resilient capital position Improving Texas ratio Prudent MDA buffer headwinds bps • CET1 ratio in area 12.0% • Steady reduction of Texas over the last 3 years ratio since 2015 • MDA buffer significantly • Constantly improving increased with -68% since Q3 '18 Additional demonstrated capacity ~100 162% impacts to appeal to AT1 investors bps 52% 2015 2019 Actual 6 1. Pro forma including € 400m AT1 completed in January 2020
… paired with over-delivery on operating cost and asset quality targets Equivalent to 20% cost reduction 1 (over € 600m ) taking into account Operating costs Asset Quality inertial growth Operating costs ( € m) Gross NPE ratio (%) Loan loss provisions ( € m) -482 € m 24.8% 2,187 -177 -305 17.5% 3,086 2,909 2,604 1,146 9.1% 774 779 2015 2019 Target 2019 Actual 2015 3 2019 Target 4 2019 Actual 2015 2016-18 2019 2019 average Target Actual Branch network (#) 2,417 2,082 Net NPE ratio (%) NPE coverage ratio (%) 1,727 Driven by UtP/Bad Loans mix : more conservative coverage vs. plan, esp. on UtP, 15.7% 2015 2019 Target 2019 Actual financed with additional ~ € 900m provisions 11.1% Staff (HC) 45.0% 43.8% 43.3% 25,073 5.2% 22,560 21,941 24.7% 27.4% 39.1% 2015 2019 Target 2019 Actual 2 2015 2019 Target 2019 Actual 2015 3 2019 Target 2019 Actual UTP coverage (%) 1. Calculated on the combined cost base 2. Includes 251 exits related to non-recurring corporate transactions 7 3. Based on nominal values 4. Corresponding to Nominal target (incl. write-offs) of 17.9% Note: 2015 combined figures
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