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An introduction to the UBI Banca Group March 2016
This document has been prepared by Unione di Banche Italiane Spa (“UBI”) for informational purposes only. It is not permitted to publish, transmit or otherwise reproduce this document, in whole or in part, in any format, to any third party without the express written consent of UBI and it is not permitted to alter, manipulate, obscure or take out of context any information set out in the document. The information, opinions, estimates and forecasts contained herein have not been independently verified and are subject to change without notice. They have been obtained from, or are based upon, sources we believe to be reliable but UBI makes no representation (either expressed or implied) or warranty on their completeness, timeliness or accuracy. Nothing contained in this document or expressed during the presentation constitutes financial, legal, tax or other advice, nor should any investment or any other decision be solely based on this document. This document does not constitute a
solicitation, offer, invitation or recommendation to purchase, subscribe or sell for any investment instruments, to effect any transaction, or to conclude any legal act of any kind whatsoever. This document may contain statements that are forward-looking: such statements are based upon the current beliefs and expectations of UBI and are subject to significant risks and uncertainties. These risks and uncertainties, many of which are outside the control of UBI, could cause the results of UBI to differ materially from those set forth in such forward looking statements. Under no circumstances will UBI or its affiliates, representatives, directors, officers and employees have any liability whatsoever (in negligence or otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise arising in connection with the document or the above mentioned presentation. For further information about the UBI
Group, please refer to publicly available information, including Annual, Quarterly and Interim Reports. By receiving this document you agree to be bound by the foregoing limitations. Please be informed that some of the managers of UBI involved in the drawing up and in the presentation of data contained in this document either participated in a stock option plan and were therefore assigned stock of the company or possess stock of the bank otherwise acquired. The disclosure relating to shareholdings of top management is available in the half year and the annual reports. Methodology All data are as at 31st December 2015 unless otherwise stated.
Disclaimer
Page 2
Agenda
The UBI Banca Group Background UBI Banca and its Peers UBI Banca’s profile in a snapshot UBI Banca’s consolidated results as at 31st December 2015 The Group Structure Presence in Italy
The UBI Banca International Network
Contacts
Annexes
Page 3
Background
1888 Birth of the “Banca San Paolo di Brescia” (BSPB)
1883 Birth of the “Credito Agrario Bresciano” (CAB)
1963 BSPB acquires “Banca di Valle Camonica” (BVC)
1998 Merger of CAB and BSPB with the creation of “Banca Lombarda” as parent company and contribution of branch network of CAB and BSPB to “Banco di Brescia”0
2000 Acquisition of “Banca Regionale Europea”* by Banca Lombarda. The Group takes the name of “Banca Lombarda e Piemontese Group”
Birth of the “Banca Mutua Popolare della Città e Provincia di Bergamo” , subsequently renamed “Banca Popolare di Bergamo” (BPB) 1869
Birth of the “Società per la Stagionatura e l’Assaggio delle Sete ed Affini” subsequently renamed “Banca Popolare Commercio e Industria” (BPCI) 1888
Merger of BPB and “Credito Varesino” (BPB-CV) 1992
Acquisition of “Banca Popolare di Ancona” (BPA) by BPB-CV. Birth of the BPB-CV Group 1996
Acquisition of “Banca Carime” by BPCI 2001
Birth of the “BPU Banca Group” from the integration of BPB-CV and BPCI 2003
1st April 2007 Birth of
“UBI Banca” following the merger of the
BPU Banca Group and the
Banca Lombarda e Piemontese
Group
* Banca Regionale Europea was created in 1994 following the merger between “Cassa di Risparmio di Cuneo” and “Banca del Monte di Lombardia” Page 4
12 Oct 2015: UBI becomes a Joint Stock Company
1992 CAB acquires “Banco di San Giorgio” (BSG)
Unione di Banche Italiane Spa (“UBI Banca”) was formed following the merger of the skills and experience of the BPU Banca and Banca Lombarda e Piemontese Groups (1st April 2007)
The history of UBI Banca is marked by a succession of mergers which have led banks with strong roots in local communities to the significant reality of today
Background Since 4th November 2014 UBI Banca is under the ECB’s Single Supervisory Mechanism.
UBI Banca is a joint stock company as from the 12th of October 2015. The transformation from co-operative was approved by a
general meeting of the shareholders on 10th October 2015, after a recent Law dated March 2015 established that cooperative banks with total assets above 8€ bln must transform into Joint Stock Companies.
UBI Banca is listed on the Milan Stock Exchange and included , among others, in the FTSE/MIB and in the FTSE4Good indexes.
UBI Banca’s governance model is based on a “dualistic” system. Under this dualistic governance system, the shareholders
appoint a Supervisory Board (strategy and supervision); the Supervisory Board, in turn, appoints a Management Board (day-by-day management of the bank)
Page 5
* Total shareholders (voting and non voting) number around 155,000
Market Capitalisation* as at 14th March 2016 (EUR bln) Source: “Il Sole 24ore” – Italian Financial Newspaper – Dated 15th March 2016
45.1
24.1
1.8 2.5
3.3
# 3
3.7 3.0
UBI Banca and its Peers
Page 6 Source: Press releases and periodic reports
82
844
676
61
169 121
50
Total assets as at 31st December 2015 (€ bln)
6,934 5,386
1,560 1,216
655
2,143
1,813
No. of branches as at 31st December 2015
Customer loans as at 31st December 2015 (€ bln)
471
350
78 44 34
111
85
584
372
47
119 92
38
Total direct funding as at 31st December 2015 (€ bln)
# 5
# 4
# 5
# 4
117
Page 7
UBI Banca’s profile in a snapshot: predominant retail business, solid capital base and low risk profile
Figures as at 31st December 2015 unless otherwise stated * Data referred to banking perimeter only.
Strong competitive positioning
Solid Capital and Balance
Sheet Position
Good Asset Quality
Low Risk Profile
Focus on traditional banking activities: Customer loans/total assets at 72.2%
Funding mainly from own customer base (approx. 80%); limited recourse to institutional markets
Financial assets/total assets: approx. 17%. Italian Govies represent 15.6% of total assets
3rd Italian commercial banking Group by market capitalization
EUR 84.6 bn customer lending and EUR 91.5 bn direct funding (loan/deposit ratio: 92.4%) As at 31 December 2015, 81% of loans to customers were granted in Northern Italy, 10.8% in Central
Italy and 8.2% in Southern Italy, while 73% of customer deposits came from Northern Italy, 12.6% from Central Italy and 14.4% from Southern Italy
Capital ratios as at 31 December 2015: CET 1 ratio phased in: 12.08% vs. 9.25% SREP requirement disclosed in Nov ‘15
CET 1 ratio fully loaded under Basel 3 rules: 11.62% Leverage ratio under Basel 3 (tier one capital / (on- and off-balance-sheet assets)) is at 6% phased in,
5.81% fully loaded
Sound Liquidity position: the Group already complies with the Net stable Funding Ratio and Liquidity Coverage Ratio as per Basel 3 requirements
Good asset quality compared to the Italian banking system
Annualised cost of credit of 95 bps of total loans vs. 108 bps in FY2014
Page 8
PROFITABILTY NET OF NON-
RECURRING ITEMS
FY15 profit net of non-recurring items: +33.2% YoY
195.1 mln/€ in FY15 vs. 146.5 mln/€ in FY14
DIVIDEND PER SHARE
Proposal subject to General Meeting Approval to correspond a dividend of 11 cent per share (+37.5% YoY)
MAIN EVIDENCES
Key items 2015 ∆ 2015 vs 2014 ∆ 4Q15 vs 3Q15
Loans to customers 84.6 bln/€ -1.1 bln/€ or -1.2% +0.8 bln/€ or +0.9%
Direct funding from ordinary customers 72.5 bln/€ -1.4 bln/€ or -1.9% +1.6 bln/€ or +2.3%
AuM and Bancassurance 48.6 bln/€ +5.2 bln/€ or +12% +1.3 bln/€ or +2.8%
Stock of gross NPEs 13.4 bln/€ +0.4 bln/€ or +3% -0.2 bln/€ or -1.6%
Stock of net NPEs 9.7 bln/€ +0.2 bln/€ or +1.9% -0.2 bln/€ or -1.9%
Inflows from performing to NPEs 2.4 bln/€ -0.2 bln/€ or -7.5% -15.1% vs 3Q15 and-24.8% vs 4Q14
Page 9
UBI Banca has the lowest level of gross non-performing loans among the major Italian banks
24.1% 23.3%
16.5% 16.3% 15.4% 15.1%
BP BPER ISP BPM UCG UBI Banca
As at 31 Dec 2015
RATIO OF TOTAL GROSS DETERIORATED LOANS/TOTAL GROSS LOANS
Page 10
The UBI Banca Group: consolidated results as at 31st December 2015
PPA allocated line by line
OUTLOOK
• The quarterly performance of net interest income in 2016 is forecast to grow compared with the minimum recorded in the last quarter of 2015
• Net fee and commission income is forecast to benefit again in 2016 from the re-composition process of total funding in favour of assets under management and from the gradual recovery in lending to customers
• In the context of a start to the year characterised by greater volatility on markets, profit-taking on positive fair value reserves relating to the securities portfolio should make it possible to offset the forecast lower contribution from trading and hedging activity compared with 2015
• The continuous optimisation of other administrative expenses and the recent trade union agreement should make it possible to maintain operating expenses in line with those for 2015, notwithstanding the increase in costs relating to the contribution to the European Resolution Fund and the Deposit Guarantee Scheme
• The particularly prudent approach to the performing portfolio and the reduction in progress of new inflows to non performing status should make it possible to reduce loan losses in the coming year, also gross of any extraordinary components resulting from a possible acceleration of the process to dispose of bad loans
FY15 profit net of non-recurring items: +33.2% YoY 195.1 mln/€ in FY15 vs. 146.5 mln/€ in FY14
MAIN INCOME STATEMENT ITEMSFigures in € mln FY14 FY15 % change
FY15 vs FY14
Net interest income 1,818 1,631 (10.3%) Net commission income 1,227 1,300 6.0% Net result from finance 200 291 45.6% Profits of equity-accounted investees 37 35 (4.7%) Other income items 128 114 (11.1%)
Operating income 3,410 3,371 (1.1%)
Staff costs (1,302) (1,295) (0.5%) Other administrative expenses (635) (727) 14.5% Net impairment losses on property, equipment and investment property and intangible assets (171) (153) (10.7%)
Operating expenses (2,108) (2,175) 3.2% Net operating income 1,301 1,196 (8.1%)
Net impairment losses on loans (929) (803) (13.6%) Net impairment losses on other financial assets and liabilities (9) (17) 95.0% Net provisions for risks and charges (9) (3) (67.2%) Profits (losses) from disposal of equity investments 94 0 (99.5%)
Pre-tax profit from continuing operations 449 374 (16.8%)
Taxes on income for the period from continuing operations (187) (161) (13.8%) Profits for the period attributable to non-controlling interests (29) (30) 2.9%
Impairment on tangible and intangible assets(net of tax and non-controlling interests)
(883) (3)
Charges for exit incentives (net of tax and non-controlling interests)
(76) (63) (17.8%)
Profit (loss) for the period (726) 117 n.s.
Profit for the period NET OF NON-RECURRING ITEMS 147 195 33.2%
A
B
• Net interest income decreased primarily following a change in the composition and a reduction in the size of the securities portfolio (AFS Italian Govies).
• Operating expenses are inclusive of the ordinary (€ 33.4 mln) and extraordinary contributions (€ 65.3 mln) to the Resolution Fund and to the Deposit Guarantee Scheme. On a like-for-like basis with respect to 2014, and that is excluding all the above contributions, costs fell further by 1.7% compared with 2014.
A
B
The Group Structure
Page 11
NETWORK BANKS MAIN PRODUCT COMPANIES
288 branches
196 branches
65 branches
21 branches, ~ 824 financial advisors
100.00%
74.78% (2)
100.00%
98.63%
1) moreover, 16.24% of capital held by Fondazione Banca del Monte di Lombardia 2) further 24.90% of Banca Regionale Europea capital held by Fondazione Cassa di Risparmio di Cuneo and the rest by minority shareholders
UBI BANCA provides management, co-ordination, control and supply of centralized services to the network banks (single IT System, centralised risk management, centralised finance and treasury, commercial
coordination, credit coordination, logistics, purchasing, on line banking, etc...)
Northern Italy
Southern Italy
208 branches
216 branches
99.58%
99.99%
Central Italy
349 branches 100.00%
207+3* branches
83.76% (1)
Information updated as at 31st December 2015, unless otherwise stated * indicates branches outside Italy **Merger between IW Bank and UBI Private Investment completed on 25 May 2015
11
**
ASSET MANAGEMENT UBI Pramerica (partnership with Prudential US)
FACTORING UBI Factor
LEASING UBI Leasing
LIFE BANCASSURANCE Lombarda Vita (partnership with Cattolica) Aviva Vita Spa Aviva Assicurazioni Vita Spa
Page 12
Presence in Italy
1
169 37
757
1
27
9
43
7
1
84
94 78
6
19
17
80
106
18
Introduction to the UBI Banca Group: Predominant Retail Business and Strong Northern Italian Franchise
BranchesLoan to
CustomersCurrent accounts
and depos i ts
55.0% 6.0% 6.4% 4.9%
21.6% 12.9% 9.5% 8.4%7.6% 6.9% 5.6% 4.7%2.8% 4.4% 7.1% 3.7%22.0% 3.3% 2.7% 2.3%
11.5% 4.1% 3.0% 2.5%2.5% 7.4% 9.0% 6.3%23.0% 7.1% 5.3% 5.8%
6.1% 5.3% 4.4% 3.8%4.4% 7.3% 4.8% 5.9%
100.0% 5.1% 5.3% 4.2%
* Source: Istat (GDP in terms of value added). 2014 data.** Market shares as at 30th September 2015.
Apulia
UBI Banca Market Share**Contribution to GDP*
ITALY
Southern Italy
Central Italy
Northern Italyamong which:
among which:
among which:
LombardyPiedmont
Liguria
LatiumMarches
Campania
• 1,554 branches in Italy + 6 branches abroad (as at 31st December 2015)
• National market share of 5.1% in terms of branches (as at 30th September 2015)
• 2nd player by branches in Lombardy (which generates 21.6% of Italian GDP) • 17,718 employees • Approx. 3.6 million clients, mainly retail
Agenda
UBI Banca International Network International Network
Presence in the world
Page 13
International Network
Page 14
MENTON, NICE AND ANTIBES (Banca Regionale Europea)
KRAKOW (UBI Factor)
SHANGHAI (Zhong Ou Asset
Management Company)
UBI TRUSTEE SA (Luxembourg)
LUXEMBOURG MADRID MUNICH
MOSCOW
MUMBAI
HONG KONG
SAO PAULO
SHANGHAI
VIENNA (Business Consultant)
SUBSIDIARIES FOREIGN BRANCHES
COMMERCIAL BANKS FOREIGN BRANCHES
SUBSIDIARIES BRANCHES
REPRESENTATIVE OFFICES
FOREIGN BANKS Head office in Luxembourg
NEW YORK (from January 2016)
DUBAI (from August 2015)
CASABLANCA (from February 2016)
Presence in the world
Luxembourg • UBI Banca International
• UBI Trustee SA • UBI Management Co SA
Page 15
Munich UBI Banca International
Branch
Krakow UBI Factor Branch Vienna
Business Consultant
Moscow Representative Office
Mumbai Representative Office
Hong Kong Representative Office
São Paulo Representative Office
Madrid UBI Banca International
Branch
Antibes, Menton, Nice Banca Regionale Europea
Branches
Shanghai Representative Office
Shanghai Zhong Ou Asset Management Company Co. Ltd*
* Joint-venture in which UBI Banca holds 35% of the total share.
Casablanca Representative Office from
February 2016
Dubai Representative Office from
August 2015
New York Representative Office from
January 2016
Agenda
Contacts UBI Banca Correspondent Banking
Representative Offices Contacts
Page 16
UBI Banca
Page 17
Correspondent Banking - [email protected]
Sergio Passoni Head of Global Transaction and Operations
Isabella Moavero - Head of Correspondent Banking and Representative Offices
• Indian Subcontinent, China & Far East, Oceania Alistair Newell
Relationship Manager [email protected]
• North America, Central America, South America, Caribbean, Israel
Ernst Rolf Hartmann Relationship Manager
• Turkey, Middle East, Africa, Europe & CIS Countries Lorenzo Tassini
Relationship Manager [email protected]
• Global Players – Responsible for relationships with multi-regional banking groups & Special Projects
Marco Camozzi Relationship Manager
• Europe & CIS Countries
Maria Lagonigro [email protected]
Elena Voronova
Representative Offices Contacts
MUMBAI
Mr Andrea Croci [email protected] Tel. +852 2878 7393 Fax +852 2878 7932
HONG KONG
Ms Rajeshree Balsari [email protected] Tel. +91 22 22023601 Fax +91 22 22023603
SHANGHAI
Ms Lu Bo [email protected] Tel +86 21 61675333 Fax +86 21 61675582
MOSCOW
Mr Ferdinando Pelazzo [email protected] Tel. +7 495 725 4466 Fax +7 495 725 4465
SAO PAULO
Mr Isidoro Guerrerio [email protected] Tel. +55 11 3063 0454 Fax +55 11 3063 3785
VIENNA (Business Consult.)
Ms Annick Stockert [email protected] Tel. +43 1 514 37 26 Fax +43 1 514 37 60
Page 18
DUBAI (from Aug 2015)
Mr Luigi Landoni [email protected] Tel +971 4 3277289 Fax +971 4 3277290
NEW YORK (from Jan 2016)
Mr Andrea De Benedittis [email protected] Tel +1 646 871 7600 Fax +1 646 205 4006
Mr Abdelkrim Sbihi [email protected] Tel +212 669 58 81 76
CASABLANCA (from Feb 2016)
Agenda
Annex Other main Group Companies Group BIC codes
Page 19
Other main Group Companies
Page 20 Data as at 31.12.2015 unless otherwise stated
Asset Management – Joint Venture with Prudential US
● UBI Pramerica develops, manages, markets and distributes a wide range of financial products and services dedicated to private customers and institutions. It has been awarded various international prizes.
● 42.5 bln EUR in Assets Under Management
● UBI Leasing offers its clients financing for asset acquisition such as: instrumental leasing, real estate leasing, car leasing, aero naval leasing as well as specific insurance and accessory services.
● 6.6 bln EUR in net Loans to Customers
● UBI Factor offers highly specialized factoring services to companies and public administrations. The company is based in Milan with a capillary structure across the national territory and is present also in Poland with its Krakow subsidiary. Since 1984 UBI Factor is part of the Factors Chain International network which allows it to retain a presence in more than 75 countries and with more than 270 foreign partners.
● 8.4 bln EUR Turnover; 2.2 bln EUR net Loans to Customers
Recent merger between IW Bank (market leader in online trading in Italy with a strategy based on three fundamental objectives: continuous product/service innovation, constant development of technological platforms, professional support for the customer) and UBI Private Investment, the network of financial agents of the UBI Group
● Assets Under Management: 5,5 bln EUR
● Direct Funding: 2,8 bln EUR
Group BIC codes
Page 21
BEPOIT21
BCABIT21
BREUITM1
POCIITM1
BPAMIT31
CARMIT31
BVCAIT21
BLPIIT21
UBIBESMM
BEPODEMM
BLOPIT22
CABILULL Madrid Branch
Munich Branch
BIC ACTIVE BIC NON ACTIVE