the ubi banca group consolidated results as at 30 th · note:“value” customers, e.g.: retail...
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The UBI Banca Group Consolidated Results as at 30th September 2015
11th November 2015
Disclaimer
This document has been prepared by Unione di Banche Italiane Spa ("UBI") for informational purposes only and for use in the presentation ofNovember 2015. It is not permitted to publish, transmit or otherwise reproduce this document, in whole or in part, in any format, to any thirdparty without the express written consent of UBI and it is not permitted to alter, manipulate, obscure or take out of context any information setout in the documentout in the document.
The information, opinions, estimates and forecasts contained herein have not been independently verified and are subject to change withoutnotice. They have been obtained from, or are based upon, sources we believe to be reliable but UBI makes no representation (eitherexpressed or implied) or warranty on their completeness, timeliness or accuracy. Nothing contained in this document or expressed during thepresentation constitutes financial legal tax or other advice nor should any investment or any other decision be solely based on thispresentation constitutes financial, legal, tax or other advice, nor should any investment or any other decision be solely based on thisdocument.This document does not constitute a solicitation, offer, invitation or recommendation to purchase, subscribe or sell for any investmentinstruments, to effect any transaction, or to conclude any legal act of any kind whatsoever.This document contains statements that are forward-looking: such statements are based upon the current beliefs and expectations of UBI andare subject to significant risks and uncertainties These risks and uncertainties many of which are outside the control of UBI could cause theare subject to significant risks and uncertainties. These risks and uncertainties, many of which are outside the control of UBI, could cause theresults 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 negligenceor otherwise) for any loss or damage howsoever arising from any use of this document or its contents or otherwise arising in connection withthe 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 documenteither 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 annual reportsThe disclosure relating to shareholdings of top management is available in the annual reports.
Methodology
The “notes on the reclassified financial statements” contained in the periodic financial reports of the Group may be consulted for a fullercomprehension of the rules followed in preparing the reclassified financial statements.
2
Executive Summary
Balance sheet indicators confirm high quality in terms of capital, liquidity and leverage
9M15 Net Profit at 162 mln/€, up by +8.1% vs. 9M14, notwithstanding the estimated contribution tothe Single Resolution Fund and to the Deposit Guarantee Scheme (21 mln/€ net)
Core profitability (NII + Fees & Commissions - LLPs - Operating costs) up by +20.8% 9M15/9M14Core profitability (NII Fees & Commissions LLPs Operating costs) up by 20.8% 9M15/9M14
Right of withdrawal exercised by 1,103 shareholders for a total of 35,409,477 shares.Second phase of the procedure: offer of the shares coming from the exercise of the withdrawalright to the other shareholders: from 12 November 2015 to 12 January 2016g t to t e ot e s a e o de s o o e be 0 5 to Ja ua y 0 6
3
Strength of capital ratios confirmed, CET1 phased in at 13%
9.5%CET 1 PHASED IN 9.5%CET 1 FULLY LOADED
+6 bps vs June 1512.94% 13.00% and
+350 bps vs 9.5% (Feb ‘15 SREP CET1 requirement)
+23 bps vs June 1512.33% 12.56%
• No profit included, either related to 3Q15 and for
June '15 Sept '15
• 3Q15 profit not included
June '15 Sept '15
related to 3Q15 and for future years
Camille Lemercier@exanebnpparibas comTOTAL CAPITAL PHASED IN 9 5%Basel 3 LEVERAGE [email protected] CAPITAL PHASED IN
-31 bps vs June 1515.62% 15.31% and
9.5%Basel 3 LEVERAGE RATIO
6.14% 6.22%6 04%and
+431 bps vs 11% (Feb ‘15 SREP TC requirement)
5.88%6.04%
June‘15 June
‘15
Sept‘15 Sept
‘15• 3Q15 profit not included
June '15 Sept '15Phased in Fully loaded
4As usual, in 4Q14, the Group will update the credit risk parameters included in internal rating model to fully include 2014
See annex 2
Best in class portfolio, strong de-risking leading to lower deterioration
9.5%PERFORMING LOAN PORTFOLIO RISK PROFILE
High risk 4.8% vs 5.5% in Dec ’14
Unrated 5.7% vs 5.8% in Dec ’14vs 5 7% in Dec ’13
MARCH‘15
MARCH‘15 Low Risk 73.7%
vs 5.5% in Dec 14vs 6.4% in Dec ’13vs 8.4% in Dec ’12
vs 5.7% in Dec 13vs 5.7% in Dec ’12
Medium Risk 15.8% vs 71% in Dec ’14
vs 67.2% in Dec ’13vs 58.3% in Dec ’12
vs 17.7% in Dec ’14vs 20.7% in Dec ’13vs 27.6% in Dec ’12
September 2015 vs previous years
Perimeter: Network Banks + UBI Banca (IRB perimeter)
9.5%TOTAL PORTFOLIO CONCENTRATION OF RISK 9.5%GEOGRAPHICAL DISTRIBUTION
as at June ‘15 9.5%THE LOWEST RATIO OF TOTAL GROSS DETERIORATED LOANS/TOTAL GROSS LOANS
Lombardy Last available figuresCustomers or Groups 31.12.2007 30.09.2015
Largest 10 5.0% 2.9% Largest 20 7.7% 4.8% Largest 30 9.6% 6.1% Largest 40 11 0% 7 2%
67.3%
6.4% 5.6%
4.2% 2.8%
2.7% 2.4% 2 3%
LombardyPiedmontLatiumMarchesLiguriaCampaniaEmilia RomagnaA li
73.7%
24.8% 23.2%17.1% 17.0% 15.8% 15.5%
Last available figures
Largest 40 11.0% 7.2% Largest 50 12.1% 8.1%
Largest customers or groups as a percentage of total loans and guarantees
2.3% 1.9% 1.8%
0.7% 0.7%
1.2%
ApuliaCalabriaVenetoUmbriaAbruzzoOther*
* Other: includes the market shares of Basilicata Friuli Venezia
Bank A Bank B Bank C Bank D Bank E UBI Banca
Peer Group: (ISP BP BPM as at 30/09) (BPER UCG as at
5
Other: includes the market shares of Basilicata, Friuli Venezia Giulia, Molise, Tuscany, Valle d’Aosta and Trentino Alto Adige
Peer Group: (ISP, BP, BPM as at 30/09), (BPER, UCG as at 30/6)
Lending Market Share unvaried YoYLong term lending stable notwithstanding competitive pressureLong term lending stable notwithstanding competitive pressureDecrease in short term lending, also net of CCG
TOTAL GROSS LOANS:STABLE MARKET SHARE* LENDING COMPOSITION (bln/€)
85.6 84.6 85.3Total Lending 83.8
7 0 6 6 6R ff ( i l ML )
of which
5.68% 5.67% 5.67%23.3 22.1 23.2 21.77.0 6.7 6.6 6.4Run-off (mainly ML term)
Active - Short term
Active - Medium/Long term
Sept'14 June'15 Sept'1555.3 55.8 55.5 55.7Active - Medium/Long term
* Net of Bad Loans, referred to households,corporate and financial companies It does not
Dec '14 Mar '15 June '15 Sept '15
Of which CCG: 1 bln/€ in Dec ’14, 0.8 bln/€ in Mar ‘15, 1.1 bln/€ in June ‘15 and 0.7 bln/€ in Sept ‘15corporate and financial companies. It does not
include loans to CCGSource: Bank of Italy
p
See annex 6
6Management data
Network Banks confirm improvement in medium/long term lending originationsoriginations
NEW ORIGINATIONS IN MEDIUM/LONG TERM LENDING - NETWORK BANKS
9M14 vs 9M13 9M15 vs 9M14
MEDIUM/LONG TERM LENDING
121 1%
9M14 vs 9M13 9M15 vs 9M14
of which TLTRO
8.1bln/€ taken in Dec ’14/Mar ’15/Sept ‘15
54 8%
121.1% As at 31 Oct ’15:• Financing requests received: 7.7 bln/€• Loans either granted or disbursed: 4.7 bln/€
24.9% 32.0%16.8% 15.6%
54.8%
30.0% 24.0%
Total Corporate Retail - Private Retail - Small business
7
Dynamics of customers in the UBI Group (detail of “value” customers”)
January – September 2015
Total number of new
customers 162,600 om
ers
Total number of customers
lost 145,700 Note: “Value” customers, e.g.: Retail customers with a Mediuml t l ith lth
~79,300 (48.8%) ~ 68,200
(46.8%)
Valu
ecu
sto long term loan or with wealth >
25,000 euro or with three products ofwhich one is a current account Private banking customers withwealth > 100,000 euro (for newcustomers wealth as at Sept ‘15 for
mer
sV customers wealth as at Sept 15, for
lost customers wealth as at Dec‘14) ....
~ 11,100(65.8%)
Tot net new customers
+16,800
valu
ecu
sto
~ 83,300 (51.2%)
~ 77,500 (53.2 %)
New Customers Lost Net flows
( %)
Non
v
~ 5,700 (34.2%)
New Customers
Customers Lost Net flows
8
Strong improvement in new Medium to Long Term new lending origination in 9M15 leads to a replacement rate of 119% in Network Banks and of 71%in 9M15, leads to a replacement rate of 119% in Network Banks, and of 71% in Product Companies, significantly higher than in previous periods
FOCUS ON MEDIUM / LONG TERM LENDING* (74% of total lending)
New origination
Reimbursement=
41.1 bln/€(39.9 bln/€ in Dec ’14)
NETWORK BANKS**
119%
in 9M15
vs. 96% in 9M14101% i FY14
71%
e bu se e t
New origination=57 4 bl /€
TOTAL MLT STOCK**
10 3 bl /€
PRODUCT COMPANIES in 9M15
vs. 48% in 9M14
101% in FY14
71%
Reimbursement=57.4 bln/€
(57.5 bln/€ in Dec ’14)
10.3 bln/€(10.9 bln/€ in Dec ’14)
vs. 48% in 9M1454% in FY14
The portfolio in run off accounts for a decrease in lending of0.6 bln/€ in 9M15
6.0 bln/€(6.6 bln/€ in Dec ’14)
RUN-OFF PORTFOLIO
9NOTE: Numerator includes new disbursements, denominator includes reimbursements and exits to non performing.
* Management accounts, excluding Bad Loans and IAS effect** Excludes UBI Banca Private Investment (merged with IW Bank in May 2015)
The Group’s solid liquidity position (NSFR and LCR >1, loan to deposit ratio 94 2% eligible assets 26bln€) allows optimal management and flexibility of94.2%, eligible assets 26bln€) allows optimal management and flexibility of funding mix
IAS amounts in b ln€ Dec '14 June '15 Sept '15 % change vs.Dec '14
DIRECT FUNDING FROM ORDINARY 74 0 71 7 70 9 4 1%CUSTOMERS 74.0 71.7 70.9 -4.1%
Current accounts and deposits 44.3 44.7 44.1 -0.4%Term deposits, other payables and repos 1.8 1.6 1.5 -13.2%Securities in issue:
N t k b k + UBI 23 6 21 7 21 6 8 4%
• Ordinary customers partiallyshifting to more profitableinvestment products within theGroup, with consequent growth in
Network banks + UBI 23.6 21.7 21.6 -8.4%Extra-captive customers* 3.3 3.2 3.2 -2.7%Other (mainly customer CDs) 1.0 0.5 0.4 -55.6%
DIRECT FUNDING FROM INSTITUTIONAL 19 3 22 6 18 1 5 9%
AUM stocks
• Group liquidity position isconfirmed solid
CUSTOMERS 19.3 22.6 18.1 -5.9%
Covered Bonds 9.8 9.7 9.8 -0.9%EMTN 3.1 3.1 3.1 0.2%CD and ECP 0.8 0.7 0.1 -83.4%R ith CCG 5 5 9 1 5 1 7 7%
• In October 2015 a New Long 7Year Covered Bond issuance for750 mln/€ (coupon at 1.00 %equivalent to a spread of 36Repos with CCG 5.5 9.1 5.1 -7.7%
TOTAL DIRECT FUNDING 93.2 94.3 89.0 -4.5%
equivalent to a spread of 36basis points above theinterpolated mid swap rate (7yand 3 months))
See annex 3
10* Bonds placed on third party banks networks
AuM +11% and Bancassurance products +13.7% vs Sept ’14, drive +10.6% increase in securities related commissionsincrease in securities related commissions
Indirect Funding Evolution
• Positive impact on commissionincome from securities, movingto 523 mln/€ in 9M15 from 473in 9M14
bln/€ Sept '14 Dec '14 June '15 Sept '15 % change vs Sept '14
% change vs June '15
AuM 30.0 30.7 34.0 33.3 11.0% -2.1%
• UBI Pramerica SGR AUMcomposition: room forimprovement in the mix
Bancassurance 12.2 12.6 13.8 13.9 13.7% 1.2%AuC 33.9 32.5 31.3 31.9 -5.8% 2.0%
Total Indirect Funding 76.1 75.9 79.1 79.2 4.0% 0.1%
Sept ‘15
10% 4%
49%11%Market effect Sept’15 vs June’ 15 on Total indirect funding: -1.7 bln/€(of which AuM: -1.4 bln/€)
Bond Balanced Equity Flexible Cash
26%( )
11
Progressive recomposition and downsizing of Italian Govies Portfolio:-3.6 bln€ vs Dec 20143.6 bln€ vs Dec 2014
Dec '14 June '15 Sept '15*
SIZE OF TOTAL ITALIAN GOVIES PORTFOLIO
in bln/€20.5
IAS value
19.2 18.1Nominal value
21.9 18.2 15.6IAS value Nominal value IAS value Nominal value
As at 30 Sept ‘15,modified rate durationof whole Italian Govies
COMPOSITION OF ITALIAN
17.5 16.1 14.6
of whole Italian GoviesPortfolio: 1.23Average Maturity:5.74YOngoing de-risking ofthe portfolio to reach an
GOVIES PORTFOLIOin bln/€ 3.6
0.8 3.5
0.8 3.5
0.1
the portfolio to reach anaverage maturity of5.22Y at year end
AFS HTM HFT
AFS RESERVE AS AT 30/09/2015:
193 l /€193 mln/€
12* Nominal value at Sept ’14: 18.8 bln/€
Confirmed sound liquidity position framework
Loan to Deposit ratio = 94.2% NSFR and LCR > 1
Total eligible assets at 25 8 bln/€ 59% of current accounts and deposits...Total eligible assets at 25.8 bln/€, 59% of current accounts and depositsEligible Assets
25.8 bln/€(net of haircut,
as at 28thOctober 2015))
Composition (%) Usage (bln/€)
10%
13% Pledged to ECB*
8 169%8%
10%
Italian GoviesUnencumbered
CCG Repos3.1
8.1
Italian GoviesRetained securitisationsRetained covered bondsOther (ABACO)
14.6
13* TLTRO for 8.1 bln/€ expiring Sept 2018
In 9M15, net profit at 162 €/mln (+8.1% YoY)
A
MAIN INCOME STATEMENT ITEMSFigures in € mln 9M14 9M15 % change
9M15 vs 9M14 3Q14 2Q15 3Q15 % change3Q15 vs 3Q14
% change3Q15 vs 2Q15
Net interest income 1,376 1,246 (9.5%) 468 417 399 (14.8%) (4.3%) Net commission income 908 970 6.8% 299 328 300 0.7% (8.4%) Net result from finance 151 139 (7.7%) 14 53 28 100.8% (47.6%)
B( ) ( )
Profits of equity-accounted investees 29 23 (19.6%) 8 13 4 (56.1%) (73.3%) Other income items 102 93 (8.6%) 42 32 31 (24.9%) (2.4%)
Operating income 2,558 2,467 (3.5%) 822 843 758 (7.7%) (10.1%)
Staff costs (977) (973) (0.4%) (329) (320) (318) (3.3%) (0.6%) Other administrative expenses (458) (455) (0.8%) (147) (165) (142) (3.7%) (14.2%) Net impairment losses on property, equipment and investment property and intangible assets (128) (115) (10.2%) (42) (39) (37) (13.0%) (5.9%)
Operating expenses (1,563) (1,542) (1.3%) (518) (524) (497) (4.2%) (5.3%) Net operating income 995 925 (7.0%) 303 319 262 (13.8%) (17.9%)
C
Net operating income 995 925 (7.0%) 303 319 262 (13.8%) (17.9%)
Net impairment losses on loans (626) (558) (10.9%) (197) (199) (169) (14.5%) (15.3%) Net impairment losses on other financial assets and liabilities (2) (6) n.s. (0) (2) (3) n.s. 28.2% Net provisions for risks and charges (4) (48) n.s. (1) (25) (19) n.s. (24.9%) Profits (losses) from disposal of equity investments (0) 0 n.s. 0 0 0 n.s. n.s.
C C
Pre-tax profit from continuing operations 362 314 (13.4%) 105 93 72 (31.7%) (22.9%)
Taxes on income for the period from continuing operations (187) (128) (31.8%) (52) (37) (29) (45.1%) (22.9%) Profits for the period attributable to non-controlling interests (25) (23) (9.3%) (9) (7) (6) (40.1%) (25.2%)
Charges for exit incentives (net of tax and non-controlling interests) (1) n.s
N t
( g )
Profit for the period 150 162 8.1% 44 49 38 (14.0%) (22.6%)
Profit for the period NET OF NON-RECURRING ITEMS 175 176 0.3% 45 54 40 (10.3%) (26.2%)
C
B
ANotes: Net result from finance includes ~89 mln/€ from AFS disposals - Govies and other - in 9M15 (vs. ~109 mln/€ in 9M14)Profits from equity-accounted investees, include:
- 9.7 mln/€ from Zhong Ou in 9M15 (vs. 1.6mln/€ in 9M14) thanks to strong growth in AuM reaching 21.5 bln€ at end Sept’ 15- 9.8 mln/€ from Lombarda Vita in 9M15 (vs. 5.7 mln/€ in 9M14)- 2.1 mln/€ from Aviva Vita in 9M15 (10.1 mln/€ in 9M14)
Net provisions for risk and charges include the estimated annual contribution to the Single Resolution Fund for 22 8 mln/€ (accounted in 2Q15)
14PPA allocated line by line
C Net provisions for risk and charges include the estimated annual contribution to the Single Resolution Fund for 22.8 mln/€ (accounted in 2Q15) and to the Deposit Guarantee Scheme for 11.3 mln/€ (accounted in 3Q15)
NII mainly impacted by reduction/recomposition of the financial portfolio(also following expiry of high yield securities in 4Q14) customer margin
See annex 7
(also following expiry of high yield securities in 4Q14), customer marginpressure (mainly on short-term), decreasing volumes (short term) andportfolio in run-off
Quarterly evolution9M evolution
(€ mln)Net Interest Income 1,376 1,246 468 417 399
Reduction/recomposition of
100 73 68
290 219
NII from Financial Assets & Interbank Exposure
-71
Reduction/recomposition ofthe financial portfolio: expiryof 4.9 bln€ high yieldsecurities in 4Q14, reductionof the portfolio in 9M15, etc...
368 344
331 1,086 1,027
NII from Business with Customers
-61
Main Drivers1. M/L term portfolio in run-off:
approx. -23 mln€ y/y2. Short term: strong decrease
in short term volumes and
3Q14 2Q15 3Q159M14 9M15
price war
15
Net Commission Income at 970 mln/€: +6.8% YoY. 3Q15 vs 2Q15 trend affected by usual seasonality and lower placement of3Q15 vs 2Q15 trend affected by usual seasonality and lower placement of indirect funding products
Quarterly evolution9M evolution
See annex 8
908970+6.8%
299 328 300
(€ mln) (€ mln)
Net commission income
473 523151 179 151+10.6%
299 300Securities Management, Trading & Advisory Services*
from:Volumes YoY:+11% AuM+ 13.7% Bancassurance
435 446
9M14 9M15
148 149 149
3Q14 2Q15 3Q15
+2.5%Banking Services Commissions
€ mln 3Q14 2Q15 3Q159M14 9M15 3Q14 2Q15 3Q15
Upfront fees*** 31 40 27
% on total commissions 10.3% 12.3% 8.9%12.4% 12.3%
9M14 9M15
113 119
Lower placement of indirect funding products**(1.5 €/bln in 3Q15 vs 2.1 €/bln in 2Q15)
i l d t b k
16* Includes FX negotiations.** State Guaranty Bonds: first reimbursement 3 bln/€ value 7th March ’14 and remaining 3 bln/€ value 7th August ’14*** Funds&sicav, insurance products, other third party products
mainly due to summer break
Lowest quarterly level of operating costs since 2007
% change % change % change9M15 vs 9M14 3Q15 vs 3Q14 3Q15 vs 2Q15
3Q159M159M14mln/€ 3Q14 2Q15
Staff costs 977 973 -0.4% 329 320 318 -3.3% -0.6%
Other Adm. Expenses excludingIW Bank-UBI PI integration costs 458 447 -2.5% 147 159 141 -4.0% -11.2%
IW Bank-UBI PI integration costs* - 8 n.s. - 6 0 n.s. n.s.
D&A (including PPA**) 128 115 -10.2% 42 39 37 -13.0% -5.9%
Total operating costs 1,563 1,542 -1.3% 518 524 497 -4.2% -5.3%
Total operating costs excl. IW B k UBI PI i t ti t 1,563 1,534 -1.8% 518 518 496 -4.3% -4.2%
9M15 vs 9M14
St bl l ti f t ff t l b f h d t (
Bank-UBI PI integration costs 1,563 1,534 1.8% 518 518 496 4.3% 4.2%
Stable evolution of staff costs: lower average number of headcount (onaverage -726 resources corresponding to -29 mln€) compensating increase inwages and lower recourse to reduction of working hours
Relevant savings in Other Administrative Expenses thanks to ongoing costcontrol in all areas of activity
Depreciation and amortisation down also following lower PPA (-5 mln€). High level of investments related to development projects (regulatory and
business) confirmed (129 mln€ in 2015, up 11 mln€ compared to 2014)
17* Costs related to the integration between IW Bank and UBI Banca Private Investment effective 25 May 2015** PPA effect amounted to 14.8 mln/€ in 9M14 and to 9.9 mln/€ in 9M15
Increased coverage compared to Dec 2014 (stable vs June ‘15) See annex 4
COVERAGE Dec '14 June '15 Sept'15
9.5%TOTAL COVERAGE
116.8% 144.5%p
Performing loans 0.63% 0.58% 0.56%
Total deteriorated loans 27.1% 27.8% 27.7%including write-offs 37.1% 37.6% 37.3%
27.7%
TOTAL COVERAGE
of which Bad Loans (Sofferenze) 38.6% 38.7% 38.7%
including write-offs 53.4% 53.0% 53.0%Unlikely to pay 16.7% 17.1% 17.1%
GROSS DETERIORATED LOAN STOCKS(€ mln)
Coverage unvaried
Fair ValueReal Estate Collateral*
CashCoverage
Past due loans 4.4% 5.4% 5.1%
8,589
10,958 12,674 13,049 13,368 13,651
notwithstanding disposal of 131 mln/€ (of which 31 in 3Q15) of bad loans, provisioned 66%+2.1%
Dec '11 Dec '12 Dec '13 Dec '14 June '15 Sept'15
NET DETERIORATED LOAN STOCKS(€ mln)
8,105 9,312 9,508 9,651 9,872
+2.3%
6,280
Dec '11 Dec '12 Dec '13 Dec '14 June '15 Sept'15
Note: the increase in 2012 vs 2011 deteriorated loans also reflects change in posting criteria for past due (from 180 to 90 days)*Source: FY14 Financial Report, table A.3.2, Notes to the accounts 18
New inflows from performing to deteriorated loans significantly lower in 3Q15 vs 3Q14 (overall -37.9% vs Sept ‘13)3Q15 vs 3Q14 (overall 37.9% vs Sept 13)
INFLOWS FROM PERFORMING TO DETERIORATED LOANS (NPE) (€/mln)
TOTAL DETERIORATED LOANS (NPE) BAD LOANS(“Sofferenze”)
UNLIKELY TO PAY PAST DUE
3,064
1 923 1 903
-37.9%( Sofferenze )
652 3
1,043.3
1,155.3
772.11,923 1,903
9M13 9M14 9M15
-1%
S S
115.887.5
652.3
Sept '14 Sept '15 Sept '14 Sept '15 Sept '14 Sept '15
1,260 1,275 663-5.3%
=Potentially the non performing forborne exposures, for whichthe cure period (12 months) expires and which show overall
LLPs are significantly lower than in 9M141H14 1H15 3Q14 3Q15
1,260 1,275
628
p ( ) pa situation of regularity, may represent a return flow toperforming status estimated at approximately €200 millionper quarter (net of bad and restructured forborne exposures)
LLPs (€/mln)
LLPs are significantly lower than in 9M14
-10.9%
LLPs (€/mln) - quarterly
199230
197199-4.2% -13.7% -14.5%
1H14 1H15 3Q14 3Q15
626 558
9M14 9M15
199 197 190 199169
1Q 2Q 3Q1Q14 1Q15 2Q14 2Q15 3Q14 3Q15
19
9M14 9M15 1Q 2Q 3Q1Q14 1Q15 2Q14 2Q15 3Q14 3Q15
Outlook
The overall trend for operating income is forecast to be higher than in the third quarter althoughwith differing contributions from the individual components:
the pressure on net interest income may continue, although to a lesser extent than in the thirdquarter, in a background of limited growth in loans and strong competition on spreads atsystem level and following the continuation of the strategy to re position the proprietarysystem level and following the continuation of the strategy to re-position the proprietarysecurities portfolio;
net fee and commission income should benefit from the usual positive seasonal factorsnormally experienced in the last quarter of the year;
a favourable environment for containing sovereign risk could allow better results to beachieved for trading and hedging activity than in the previous quartersachieved for trading and hedging activity than in the previous quarters.
Actions undertaken in 2015 allow to confirm the objective of containing operating expenses inline with those for 2014, notwithstanding the additional costs related to the contribution to theEuropean Resolution Fund and the Deposit Guarantee Scheme, estimated at over €30 million forthe current year.
Improvements in the macroeconomic environment confirmed by the leading indicators should Improvements in the macroeconomic environment, confirmed by the leading indicators, shouldallow loan losses to be contained at a level lower than in 2014.
20
Annexes
21
Main Reclassified Balance Sheet ItemsAnnex 1
Financial assets (AFS, HFT, FV, HTM) 22,617 23,746 21,870 19,595 -13.4% -10.4%
30.06.2015 % annual change
% quarterly change30.09.2015MAIN ASSETS ITEMS
Figures in mill ions of euro30.09.2014 31.12.2014
Loans to customers 84,947 85,644 85,340 83,834 -1.3% -1.8%
Property, equipment and investment property 1,741 1,729 1,756 1,744 0.1% -0.7%
Intangible assets 2,883 1,777 1,760 1,752 -39.2% -0.5%
of which: goodwill* 2,512 1,465 1,465 1,465 -41.7% 0.0%
Tax assets 2,567 2,992 2,753 2,727 6.2% -0.9%
Other assets 778 931 1,435 960 23.5% -33.1%
Total assets 120,539 121,787 119,454 115,689 -4.0% -3.2%
30.06.2015 % quarterly change
% annual change30.09.201530.09.2014 31.12.2014MAIN LIABILITIES AND EQUITY ITEMS
Figures in mill ions of euro
Net interbank position** 12,259 9,952 5,858 7,239 -40.9% 23.6%
Due to customers 45,582 51,617 55,331 50,760 11.4% -8.3%
Securities issued 42,272 41,590 38,996 38,262 -9.5% -1.9%
Tax liabilities 732 630 441 511 -30.2% 15.9%
Net worth attributable to the Parent 10,651 10,530 9,762 9,911 -6.9% 1.5%
Non-controlling interests 831 555 549 532 -36.0% -3.1%
Profit for the period 150 (726) 124 162 8.1% 30.2%
Total liabilities and equity 120,539 121,787 119,454 115,689 -4.0% -3.2%
22* Goodwill impairment in 2014** Including € 8.1 bln TLTRO
Annex 2
Capital Ratios (Phased in, Basel 3) as at Sept ‘15: Common Equity Tier 1 Ratio at 13%, Total Capital Ratio at 15.31%Common Equity Tier 1 Ratio at 13%, Total Capital Ratio at 15.31%
mln/€ June '15 Sept '15
Risk weighted assets 59 526 3 58 129 1
mln/€ June '15 Sept '15Common Equity Tier 1 Capital (before filters and transitional provisions) 8,163.1 8,319.1
Risk weighted assets 59,526.3 58,129.1
Total prudential requirements
Credit risk 4,362.8 4,290.9CVA (Credit Value Adjustment) risk 14.6 14.3
( )
Transitional provisions (minority interest) 191.9 180.3Transitional provisions (AFS Reserves) -96.0 -97.1Common Equity Tier 1 Capital filters -3.2 -2.6Italian Govies filters -14.1 -168.7
( j )Market risk 84.1 44.5Operational risk 300.6 300.6
Common Equity Tier 1 (after filters) 8,241.7 8,231.0
Common Equity Tier 1 regulatory adjustments: negative elements for deduction excess of expected losses over impairment losses
-536.1 -673.1
Common Equity Tier 1 Capital (CET1) 7,705.6 7,557.9
Additional Tier 1 before deductions 39.2 38.4Additional Tier 1 regulatory adjustments: negative elements for deduction excess of expected losses over impairment losses
-39.2 -38.4 CET 1 PHASED IN TOTAL CAPITAL PHASED IN
TOTAL CAPITAL PHASED INdeduction excess of expected losses over impairment losses
Additional Tier 1 - -
Tier 1 Capital 7,705.6 7,557.912.94% 13.00%
15.62% 15.31%
PHASED IN PHASED IN
Tier 2 instruments grandfathering - -
Tier 2 Capital after transitional provisions 1,813.2 1,623.0Tier 2 capital regulatory adjustments -221.0 -279.5
of which: negative elements for deduction excess of expected 246 5 304 9
g plosses over impairment losses
-246.5 -304.9
Tier 2 Capital 1,592.2 1,343.5
TOTAL OWN FUNDS 9,297.8 8,901.4
June '15 Sept '15 June '15 Sept '15
3Q15 profit not included
23
Q p
Bond maturities well planned and distributed over time. New Covered Bond issuance in October 2015
Annex 3
issuance in October 2015
RETAIL BONDS: Maturity Profile (Nominal amounts in € bln, net of bond repurchases)
Decreasing spreads vs 6M Euribor
RETAIL BONDS: NEW ISSUANCES
9.52
4 26 4 47
Decreasing spreads vs. 6M Euribor(bps)
2015 Maturities150 126
9550
2.60 3.73 4.26 4.47
4Q15 2016 2017 2018 2019 and
2Q 3Q1QRetail
Bonds1.62 2.00 1.07
50
FY12 FY13 FY14 9M15
following
INSTITUTIONAL BONDS: Maturity Profile (Nominal amounts in € bln)
EMTN COVERED BONDS*• Bond maturities well planned and
distributed over time
Including CB issue for750 mln/€ in Oct ‘15
0.531.80
1.05 1.055.36
2015 Maturities
2Q
distributed over time
• In October 2015 a New Long 7 YearCovered Bond issuance for 750mln/€ (coupon at 1.00 % equivalentt d f 36 b i i t b 3Q1Q
0.970.10
0.800.15
1.000.05
4Q15 2016 2017 2018 2019 2020 and following
0.03EMTN
Covered Bond - 0.03
- -
to a spread of 36 basis points abovethe interpolated mid swap rate (7yand 3 months))
-
3Q
-
24* Inclusive of original 0.5 bln/€ of private placement with BEI expiring within 2022. Further 0.7 bln/€ retained issue not included (Oct ‘15)
following
Asset Quality details0 90 t
Annex 4
Days of arrears
0 90
PERFORMING LOANS PAST-DUE LOANS UNLIKELY TO PAY BAD LOANS(“Sofferenze”)
t
PERFORMING FORBORNE NON PERFORMING FORBORNE
Figures in mln€
June '15 Sept '15 June '15 Sept '15 June '15 Sept '15
Gross exposure Net exposure Coverage
FORBORNE
Performing loans 76,127 74,376 75,689 73,963 0.58% 0.56% of which forborne 2,342 2,263 2,307 2,229 1.51% 1.50%
Non performing exposures 13,368 13,651 9,651 9,872 27.80% 27.69% of which forborne 2,483 2,734 2,104 2,318 15.25% 15.21%
- Bad loans ("Sofferenze" ) 6,829 6,920 4,187 4,244 38.68% 38.67%
- “Unlikely to pay” loans 6,150 6,324 5,096 5,241 17.13% 17.13% - Former impaired loans 5,223 5,394 4,349 4,475 16.74% 17.05% - Former restructured loans 927 930 747 766 19.37% 17.61%
- Past due loans 389 407 368 387 5.39% 5.07%
Total loan book 89,495 88,027 85,340 83,834 4.64% 4.76% f hi h f b 4 825 4 997 4 411 4 547 8 58% 9 00%of which: forborne 4,825 4,997 4,411 4,547 8.58% 9.00%
% Incidence on total loans... ...in gross terms, Sept ‘15 ...in net terms, Sept ‘15
Performing
Past due loans, 0.4%
Unlikely to pay loans, 6.3%
Bad loans, 5.1%
Performing
Past due loans, 0.4%
Unlikely to pay loans, 7.2%
Bad loans, 7.9%
Performing loans, 88.2%
Performing loans, 84.5%
25
Other key elements to assess the Group loan portfolioAnnex 5
September 2015
Loan To Value* (Network banks + UBI):
Performing loans:
Retail: 46.2% (45.6% in Dec ’14)
Corporate: 38.6% (39.8% in Dec ‘14)
Unlikely to pay and Past due loans: Unlikely to pay and Past due loans:
Retail: 55.7% (55.6% in Dec ’14)
Corporate: 47.4% (49.4% in Dec ‘14)
% of secured (real estate + personal guarantees) positions as at Dec ’14(table A.3.2 of the notes to the accounts):
Total: 77.5%
Performing: 77.2% Total non performing exposure: 80.0%(over 66% assisted by real estate**)(over 66% assisted by real estate**)
26* Arithmetic mean, to allow comparison with Bank of Italy data** Management data
Lending Portfolio: +0.9% vs Dec’14 in the core perimeter Annex 6
Dec '14 June '15
Private Customers 21.0 21.1 21.1 0.6% -0.2%
% change vsDec '14 June '15 Sept '15€ b ln, end date
Private Customers 21.0 21.1 21.1
Small business 13.4 13.4 13.2 -2.0% -1.5%
UBI Banca (former Banca 24/7)* 5.4 5.0 4.9 -9.0% -3.4%
IW Bank PI 0.9 0.8 0.8 -6.5% -2.7%
Prestitalia 1 9 1 7 1 5 20 2% 7 7%
RETAIL
Prestitalia 1.9 1.7 1.5 -20.2% -7.7%
Total Retail 42.5 42.0 41.4 -2.5% -1.4%
Core corporate 14.2 14.5 14.3 0.9% -1.1% Stable “core” lending in Network banks at 58 bln/€
Large corporate 8.1 8.5 8.6 5.9% 0.7%
UBI Banca (former Centrobanca) 4.9 4.7 4.7 -3.2% 1.2%
Total Corporate 27.2 27.6 27.6 1.6% -0.2%
CORPORATE
banks at 58 bln/€(+0.9% vs Dec ’14)
0.8 0.8 0.8 7.3% 4.4%
15.2 14.9 14.0 -8.1% -6.2%
of which: UBI Leasing 6 9 6 8 6 7 3 5% 1 2%
PRIVATE
OTHER**
of which: UBI Leasing 6.9 6.8 6.7 -3.5% -1.2%
UBI Factor 2.0 2.1 1.9 -7.9% -10.0%
UBI Banca including CCG 1.6 1.7 1.2 -24.6% -28.7%
Small business: turnover up to €15 mlnCore Corporate: turnover from €15 to €250 mln
85.6 85.3 83.8 -2.1% -1.8%TOTAL NET LENDING BOOK
* Following the merger of Banca 24/7 in UBI Banca, effective July 2012, UBI Banca is managing the remaining stock of non captive mortgages and personaland special purpose loans. Prestitalia is managing all “salary backed loan” operations, both stocks and new lending
** Minor companies, UBI Banca financial transactions, IAS adjustments, loans not segmented to commercial portfolios and intercompany eliminations
pLarge Corporate: turnover > €250 mln
27
Net Interest Income – Consolidated Customer Spread DetailsAnnex 7
CUSTOMER SPREADS
in bps on avg. STOCK* 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15
1M Euribor 23 23 7 1 0 -5 -9
Mark up vs 1M Euribor 278 278 286 281 275 268 259Short term 361 348 347 335 323 308 293Medium long term 253 257 268 266 261 258 251Medium-long term 253 257 268 266 261 258 251
Mark down vs 1M Euribor -98 -95 -99 -96 -89 -86 -85
Sight deposits -8 -7 -19 -20 -16 -18 -19Term deposits -191 -163 -130 -125 -112 -89 -94Term deposits 191 163 130 125 112 89 94Retail bonds -146 -146 -148 -142 -136 -129 -124Institutional bonds -186 -183 -191 -189 -186 -187 -187
UBI Group - Customer spread 180 183 187 185 186 182 174UBI Group Customer spread 180 183 187 185 186 182 174
of whichUBI Network Banks cust. spread 196 198 204 203 201 196 190
28* Average period data referred to the whole consolidated Group (Network banks+ Product companies + UBI)
Net Commission Income details Annex 8
Net Commission Income (€ mln) 9M14 9M15 9M15 / 9M14(%) 3Q14 2Q15 3Q15 3Q15 / 3Q14
(%)3Q15 / 2Q15
(%)
MANAGEMENT, TRADING & ADVISORY SERVICES* 473 523 10.6% 151 179 151 0.3% -15.6%SERVICES
of which:
Portfolio management 191 232 21.5% 67 80 75 11.2% -6.1%
Placement of securities 134 156 16.0% 41 53 35 -14.2% -34.7%
Thi d t i di t ib ti 127 130 2 8% 40 45 39 2 2% 14 4%Third party services distribution 127 130 2.8% 40 45 39 -2.2% -14.4%
BANKING RELATED COMMISSIONS 435 446 2.5% 148 149 149 1.0% 0.4%
of which:
G t (b ki ti it ) 19 35 81 2% 8 11 10 21 3% 7 4%Guarantees (banking activity) 19 35 81.2% 8 11 10 21.3% -7.4%of which for State guaranteed bonds (18) - n.s. (3) - - n.s. n.s.
Collection and payment services 87 82 -5.6% 28 29 27 -3.5% -7.0%
Services for factoring transactions 14 12 -16.6% 4 4 4 -15.1% -7.9%
Current accounts management 150 143 -4.1% 52 48 49 -4.2% 2.9%
Other services 164 173 5.2% 56 57 59 6.2% 4.0%
TOTAL 908 970 6.8% 299 328 300 0.7% -8.4%
29* Includes FX negotiations
Transformation into Joint Stock Company. Right of withdrawal procedure Annex 9
Filing of the transformation
l ti ith th
Offer in option of the shares subject to
If the shares of the withdrawing shareholders are not purchased, either in
whole or in part by the other Authorisation from the
2 4 68
resolution with the Company Registrar
withdrawal to the other shareholders
whole or in part, by the other shareholders, the shares will be offered
on regulated markets Bank of Italy to reduce the
own funds of the bank
10 Oct2015
Within 27October
2015
From 12 November
2015Within 90
days12 Oct2015
To 12 January
2016
Shareholders’ Meeting
Supervisory Board resolution also settinglimit to redemption of the shares
13 5
7 9Meeting approves
transformationof UBI Banca
into Joint Stock
Deadline for withdrawalShares are unavailable to the
shareholder once the withdrawal
Deadline for exercisingthe option right
Redemption of the shares subject to withdrawal within limits defined and removal of the constraint of
unavailability on the shares subject to withdrawal which have not been
limit to redemption of the sharessubject to withdrawal according the
formula defined in due time. Authorisation request to Bank of Italy to
consequently reduce the own funds of the b kCompany right is exercised to withdrawal which have not been
reimbursedCompletion of the procedure for the
payment of the shares subject to withdrawal may last a maximum period of
bank
relative shares for the entire period.
six months from the date of communication of the withdrawal, with the
consequent unavailability of the relative shares for the entire period.
30