Medio dioban banca ca a a long-term term valu alue e play ayer er Strategi egic c update 2 201 016/ 6/19 19 16 November 2016
Agen enda 1. Leveraging on our strengths 2. Strategic ambitions 3. Divisional action plan 4. Group targets Annexes
Lever veragin aging g on our strengths ngths Leveraging on our strengths Section 1 Mediobanca has emerged stronger after the crisis in terms of resiliency, reputation and solidity outperforming many EU banks by profitability and market performance due to our SPECIFIC STRENGTHS 1 3 Ability to adapt business model Distinctive DNA and culture 2 4 Sound business positioning Ability to grow while reshaping 3
Dist stin inctive tive DNA and culture ure 1 Leveraging on our strengths Section 1 We are a business built on people, using a client-centred approach to build trust WHAT MAKE US DIFFERENT Strong Reputation Specialization and Innovation built in 70 years of ethical business approach Reference IB for Italian corporates Strong brand value Most profitable consumer bank First human-digital bank No conduct risk issues Stable Board and management team in last 10 years Indepth knowledge of business environment Possibility to launch and develop innovative mid-/long-term initiatives Boutique-Type Organization Strong Risks and Costs Control Lean structure Unrivalled asset quality Low operational gearing Attractive to talent Faster decision-taking Material capital generation 4
Sound und busi sine ness ss posi sitio tioni ning ng 2 Leveraging on our strengths Section 1 CORPORATE & INVESTING BANKING CONSUMER BANKING “Mediobanca: the leading Italian investment bank, “Compass: top Italian consumer credit operator” established role in Southern EU” Client driven, highly specialized business Distribution and scoring built in 50 years Cost-efficient, strong credit risk assessment, Cost-efficient, strong credit risk assessment, 45% revenues from outside Italy pricing margin driven Cyclical business Countercyclical business RETAIL BANKING PRINCIPAL INVESTING “CheBanca!: operating at digital - technological frontier” “13% stake in Ass.Generali ” Entrepreneurial project built from scratch Revenues, EPS, DPS stabilizer Cost-tax free investment Set to become the AUM growth engine for the Group, Potential source of capital technology champion fee generator WHERE MEDIOBANCA IS NOT PRESENT CIB: large FICC business to be heavily restructured, problematic sectors such as ITA small business, shipping, real estate development RETAIL: large and oversized traditional retail branches network, legacy IT/CRM system 5
Abilit bility y to ada dapt t busi sine ness ss model 3 Leveraging on our strengths Section 1 In 2003 we embarked on a period of profound change, transforming Mediobanca from an equity holding company to a group of highly specialized banking businesses We focused on a business model that offers greater returns for a lower capital outlay, while retaining our prudent approach to risk management Group revenues breakdown ( € bn) Banking revenues breakdown (June16) 2.0 Corporate 1.6 38% 1.8 1.6 Retail 1.2 62% € 1.8bn 0.9 June05 June13 June16 Banking revenues Equity investments Retail includes mortgages and consumer banking – Corporate includes wholesale, private banking and leasing 6
Banking Ba nking revenue nues s doubled bled and diversified ified with effecti ctive ve corporate/ rporate/ret retail ail mix Leveraging on our strengths Section 1 Group revenues by product and division ( € m, %) 2,050 260 1,630 130 Corporate Fees 65% Retail 190 € 0.5bn 35% 450 1,160 410 1,210 290 1,030 150 240 Corporate Retail 480 22% 78% NII € 1.2bn June05 June13 June16 NII Fees Trading Equity acc. Retail includes mortgages and consumer banking – Corporate includes wholesale, private banking and leasing 7
Loans ans and funds s doubled bled and also reshaped aped Leveraging on our strengths Section 1 2016 2005 LOAN BOOK Corporate Retail contribution Corporate € 18bn € 35bn 78% 51% from 22% to 49% FUNDING Institutional € 46bn Institutional Retail contribution 45% € 25bn 57% from 43% to 55% Loans: Retail includes mortgages and consumer banking – Corporate includes wholesale, private banking and leasing 8 Funding: Retail includes MB bonds to retail, CheBanca! and PB deposits – Corporate includes MB bonds to institutional, ECB, banks
Last t 3Y busi sines ness s plan Simplify mplify, , exit t equity ty Leveraging on our strengths Section 1 Our 2014-2016 business plan gave further impetus to the disposal of equity investments and the development of banking activities OBJECTIVES Create a Focus on three specialized, Deliver simpler, more valuable, growing and diversified sustainable profitability profitable business model banking businesses over the cycle ACTIONS Invest in fee-generating/ Resume growth Reduce capital-light at the same level of risk equity exposure banking businesses Assure K strength 9
Ability bility to grow and be profitab itable 4 while le reshapi ping ng Leveraging on our strengths Section 1 In last 3Y € 1.5bn disposals, with € 0.5bn capital gains Reduce equity exposure Remove low earnings visibility linked to AFS equity valuation AG 3pp sale commenced then postponed, for market reasons GOP risk adj. doubled in 3Y (from € 370m to € 736m) € 1.7bn cumulated net profit created, ROTE>7% Resume growth at the same level of risk Approx. € 600m in dividends distributed Assure K strength Outstanding asset quality preserved (Texas 16%, NPL/Ls 2.9%) CET1 ratio >12%, Leverage ratio 10% Material investments in human resources and technology Invest in fee-generating/ IB empowered in both domestic and international operations capital-light CheBanca! started its new mission of wealth manager banking businesses AUM size doubled equally through organic growth and M&A 10
gener nerate ate grow owth th by leveragin aging g on strong ong KPIs Leveraging on our strengths Section 1 Growing banking revenues Growing net profit Growing profitability 43% C/I ratio 44% € bn € m ROTE 605 7% 1.8 465 6% 1.6 June14 June16 June14 June 16 June14 June16 Superior asset quality Superior asset quality Strong capital ratios NPLs/Loans Texas ratio Leverage 10% 54% 52% 47% 9% 115% Coverage CET1 12% 10.5% 11% 37% 16% 3.4% 2.9% MB EU banks ITA banks MB EU banks ITA banks June14 June16 11
MB outperformed most EU banks by profitability… Leveraging on our strengths Section 1 Italy France Spain 13 13 13 12 12 12 ROE % 11 11 11 10 10 10 10 10 10 9 9 9 8 8 8 7 7 7 6 6 6 5 5 5 4 4 4 3 3 3 2 2 2 1 1 1 - 0 0 -1 Mediobanca ISP PMI UCG BPE UBI BP MPS Natixis Générale Agricole -1 Bankinter Bankia Sabadell Caixa Paribas Société Credit BNP -2 -2 -3 -3 -4 -4 -5 -5 -6 -6 -7 -7 -8 -8 UK Germany Switzerland US 13 13 13 12 12 12 12 11 11 11 11 10 10 10 10 10 10 10 10 9 9 9 9 8 8 8 8 7 7 7 7 6 6 6 6 5 5 5 5 4 4 4 4 3 3 3 3 2 2 2 2 1 1 1 1 0 0 0 0 -1 Commerz. Deutsche Julius Credit Wells Goldman Lloyds Banking HSBC Barclays UBS Suisse Fargo JPM Baer -2 Sachs -3 Expected ROE16, source Bloomberg 12
10 11 Last 3Y Mediobanca market performance vs ITA and EU banks Leveraging on our strengths 13 2 3 4 5 6 7 8 9 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 MB 67.3% Feb-14 Mar-14 Apr-14 …and market performance… May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 EU Banks 5.2% Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 ITA Banks 3.6% Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Section 1 MB Oct-16 Nov-16
…without capital increases and while distributing dividen idends ds Leveraging on our strengths Section 1 Right issues/cap. increases by banks ( € bn) Banking industry staff trends (/000) 48 Italian listed banks 2008 2014 Chg.% Mediobanca 3 4 +17% MB last capital increase in 1998 Italy- large banks 272 216 -21% 11 10 8 US- large banks 1,504 1,315 -13% 7 4 4 4 0 Europe- large banks 2,903 2,430 -16% 2008 2009 2010 2011 2012 2013 2014 2015 Total 436 UK 893 698 -22% 382 European/US banks France 654 669 2% 208 Spain 343 326 -5% 153 117 97 44 Germany 234 185 -21% 37 27 23 24 16 18 13 13 11 11 6 Benelux 320 143 -55% 2008 2009 2010 2011 2012 2013 2014 IH15 Total Europe US Since 2008 Italian banks have raised € 48bn of new capital, EU and US banks € 436bn and € 382bn respectively MB has returned € 1.4bn in dividends to shareholders deriving solely from internal K generation , maintaining solid capital ratios Staffing levels in banking industry have shrunk considerably since 2008 while MB has increased by 17% 14 Source: MBRES
Agen enda 1. Leveraging on our strengths 2. Strategic ambitions 3. Divisional action plan 4. Group targets Annexes
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