1Q15 Results
Disclaimer
Note: due to rounding off, the sum of some separate figures may differ from their respective aggregate amounts; the percentage variation is calculated from data not rounded off.
This document has been prepared by Banca Carige SpA solely for information purposes and for use in presentations of the Group’s financials.
The information contained herein has not been independently verified.
The company and its representatives shall have no liability whatsoever for any loss howsoever arising from any use of this document or its contents.
The forward-looking information contained herein has been prepared on the basis of assumptions which may prove to be incorrect. Therefore, results presented herein may vary.
All of the above factors should be considered by readers in forming their own opinions.
The distribution of this presentation in certain jurisdictions may be restricted by law or regulations in force. Recipients of this presentation should therefore inform themselves about and observe such restrictions.
This document does not constitute an offer or invitation to purchase or subscribe for any securities and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever.
The information contained herein may not be reproduced, published or distributed, in whole or in part, for any purpose whatsoever. *****
The Manager responsible for preparing the financial reports of Banca CARIGE S.p.A, Mr. Luca Caviglia, declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this presentation corresponds to the underlying documentary evidence and accounting records.
It is noted that as early as from 2014, the Bank has classified the assets, liabilities and profit & loss items of the Insurance Companies, Banca Cesare Ponti and Creditis according to the provisions of IFRS 5 (Non-current Assets Held for sale and Discontinued Operations), restating its comparative profit and loss balances. With regard to balance-sheet data, although the afore-mentioned standard does not call for a restatement of comparative data, this presentation contains some restated comparative data, in addition to the historical figures reported in the accounting tables, in order to allow for a a like-for-like comparison.
1Q2015: start of second year of turnaround
Capital increase approved: Rights Issue EUR 850 mln
+ Minorities 1Q15 2Q15 23/04/2015 03/03/2015 approval 2015-19 Business Plan
Closure of 15 branches out of 45 (as per BP)
Cost Excellence Programme: EUR 2.5 mln savings (already formalised)
IT Unit cost optimisation
Binding offer for Creditis and for Banca Ponti
Closing
30/04/2015
ROLLOUTOFBUSINESS PLAN
2015: SECOND PHASE OF TURNAROUND
Back-office efficiency improvement
New organisational and governance model New Management Team
Early repayment of LTRO & Participation in T-LTRO programme Trade Union Agreement
Re-opening of bond issuance programme EUR 800 m Capital Increase
Signing of Insurance Companies Disposal
Comprehensive Assessment Results and Capital Plan
2014: FIRST PHASE OF TURNAROUND
2014-2018 Business Plan
2014
Branch network rationalisation (36 branches closed)
Securing the Group
Risk profile reduction
New shareholding structure
46.63% 9.99% Shareholders' agreement 6.00% Market 37.38% Fond 2.00% Malacalza Investimenti 10.50% BPCA 9.99% UBS 4.72% The Summer Trust 2.05% Market 70.74% TODAYBROAD AND DIVERSIFIED SHAREHOLDER BASE END 2013
CONCENTRATED SHAREHOLDER BASE
Fondazione Carige held over 46% of the Group’s share capital
The market - excluding the stakes held by BPCE and by a Syndicate of shareholders - owned less than 40%
The ‘Malacalza Investimenti’ Company entered the shareholder base with a 10.5% stake
Fondazione Carige is down to ~2% of the Group’s share capital
97.7 72.5 77.3 1Q14 4Q14 1Q15 20.9 21.5 19.2 18.4 40.1 39.9 31/12/2014 31/03/2015
Indirect funding Retail Direct Funding
Highlights
EUR mln EUR bn
LOANS TO CUSTOMERS
NET INTEREST INCOME -0.4% +0.4% +6.5% 22.0 22.1 31/12/2014 31/03/2015 Loans to customers stable. Over EUR
600 mln loans approved as of today Remix of deposits from customers Net interest income on the rise EUR bn TOTAL FUNDING FROM CUSTOMERS
COST OF CREDIT bps 27 43 66 140 35 1Q14 2Q14 3Q14 4Q14 1Q15 Cost of credit normalisation, in line with the Business Plan
0.3 2.4 1.8 4.9 4.9 4.4 +18.6% -14.2% 5.3 7.3 6.2 31/03/2014 riesposto 31/12/2014 31/03/2015 Short-term M/L-term DIRECT FUNDING € bn RETAIL INSTITUTIONAL o.w.:
Direct funding
19.9 19.5 19.2 18.4 5.2 5.3 7.3 6.2 14.3 14.0 14.6 14.4 -0.6% -6.8% 25.1 24.8 26.4 24.6 31/03/2014 31/03/2014 restated 31/12/2014 31/03/2015 RETAIL INSTITUTIONALo.w. core funding
13.4 13.7 13.5 6.1 5.4 4.9 -5.8% -4.0% 19.5 19.2 18.4 31/12/2013 restated 30/09/2014 restated 31/12/2014 Short-term M/L-term
Direct funding held firm Y/Y (-0.6% to EUR 24.6 bn), although down 6.8% in Q1, mainly on account of a decrease in the institutional component (-14.2% to EUR 6.2 bn)
The «core» components (current accounts and savings deposits) amounted to EUR 14,4 bn and were up 3% Y/Y
The retail component (-5.8% Y/Y) was weighed down by the Group’s reduced bond issuance programmes over the period, with a preference for higher-priced indirect funding sources
Institutional funding was down in 1Q15, primarily on the back of a reduction in sell-buy back REPOs (from EUR 2.4 bn to EUR 1.8 bn) and a EUR 500 mln covered bond issuance coming to maturity at the end of March
Indirect funding
INDIRECT FUNDING € bn BANCASSURANCE PRODUCTS MUTUAL FUNDS 10.8 9.6 10.2 10.8 12.4 11.5 10.7 10.7 +2.0% +2.8% 23.2 21.1 20.9 21.5 31/03/2014 31/03/2014 restated 31/12/2014 31/03/2015Assets under custody Assets under management
4.8 5.3 5.7 +18.9% +8.0% 31/03/2014 restated 31/12/2014 31/3/2015
▪ Good Q/Q growth in indirect funding (+2.8%) to EUR 21.5 bn, driven by the significant increase in Assets under Management (+EUR 0.6 bn, +6.1%), against substantial stability in Assets under Custody (-0.3%)
▪ Asset management shows a sustained growth in mutual funds (+EUR 0.4 bn, +8% with the asset mix gradually shifting to flexible funds) and insurance products (+4.1% to EUR 4.7 bn), the placements of which amounted to EUR 267.4 mln in 1Q15 (EUR 639.9 mln in 2014)
4.4 4.5 4.7 +6.8% +4.1% 31/03/2014 restated 31/12/2014 31/03/2015
Lending
€ bn
o.w.:
GROSS LOANS
CUSTOMER LOANS INSTITUTIONAL(1)
(1) Includes interest-bearing postal bonds, REPOs with financial companies and other loans
-6.1% -6.2% 27.2 26.4 26.5 24.8 31/03/2014 31/03/2014 restated 31/12/2014 31/03/2015 4.4 3.9 4.0 16.1 15.1 15.0 2.7 3.1 3.2 -4.7% +0.4% 23.2 22.0 22.1 31/12/2013 restated 30/09/2014 restated 31/12/2014 Short-term M/L-term Bad loans
2.8 3.9 2.2 0.5 0.5 0.5 -16.2% -39.4% 3.2 4.4 2.7 31/03/2014 restated 31/12/2014 31/03/2015 Short-term M/L-term
▪ The decrease in lending in the first quarter (-6.2%) was connected with the drop in the institutional component (-39.4% to EUR 2.7 bn) arising from a EUR 1.6 bn decrease in ‘buy back/sell’ REPOs
▪ Customer loans (retail and corporate) grew by 0.4% to EUR 22.1 bn in Q1, with the downward trend (-4.7% Y/Y) being reversed
▪ New momentum in loans to the corporate segment, particularly in areas outside the Ligurian region with a focus on the manufacturing sector
6.1 2.8 2.8 31/12/2013 restated 31/12/2014 31/03/2015 Italian government bond 90.3% Bonds 1.6% Shares and funds 0.8% Other Italian government backed securities 7.2%
Banking Group securities portfolio
BREAKDOWN BY TYPE
AVERAGE TERM TO MATURITY ITALIAN GOVERNMENT BONDS
years
BANKING GROUP SECURITIES PORTFOLIO € bn
-54.4%
The Banking Group securities portfolio has halved compared to 31/12/2013 (from EUR 6.1 bn to EUR 2.8 bn, excluding BoI stake), and is stable on end-2014 levels
The average term to maturity of the government bond portfolio is stable on end-2014 levels, and is significantly lower than it was as at 31/12/2013 As was the case at end 2014, the gross AFS reserve
of the Banking Group as at 31/03/2015 continues to be close to zero (EUR 6.4 mln)
3.0
1.9 1.9
31/12/2013 restated
Liquidity
€ bn LTRO ELIGIBLE SECURITIES € mln BOND MATURITIES € mln TLTRO 2,899 3,823 1,995 2,364 697 548 563 560 1,130 1,131 1,131 10,698 5,501 3,689 4,055 30/03/2014 31/12/2014 31/03/2015 05/05/2015 Unencumbered assets REPOs and other TLTRO LTRO7.0 5.0 0.7 1.1 2.0 5.0 0.0 0.4 LTRO Initial amount Repayment 30/06/2014 Repayment 30/09/2014 LTRO full repayment 24/09/2014 I tranche TLTRO 17/12/2014 II tranche TLTRO Total TLTRO 1,005 439 908 1,279 106 423 620 510 1,180 1,251 1,111 2,042 1,528 3,039 2015 2016 2017 >2017
Retail Institutional Covered bond
Adequate liquidity profile with EUR 2 bn worth of unencumbered assets as at 31/03/2015 and EUR 2.4 bn as at 05/05/2015
Temporary decrease of the LCR (estimated at 97%) partly on account of the delay in the closing of the Insurance Companies’ disposal. Closing included, the ratio would be 106%
The NSFR is estimated at 105%
Both the above-mentioned ratios will further improve, following the capital increase
-20.9% 97.7
77.3
31/03/2014 31/03/2015
NET INTEREST INCOME € mln
Net Interest Income
CUSTOMER SPREAD(1)97.7 89.1 94.2
72.5 77.3
1Q14 2Q14 3Q14 4Q14 1Q15
(1) Average customer spread referring only to funding/lending via the distribution network
▪ Net Interest Income up to EUR 77.3 mln (+6.5% from 4Q14), driven by a lower cost of funding and in line with Business Plan forecasts
▪ The 20.9% decrease with respect to 1Q14 is generated by the decrease in funding/lending volumes (impact EUR 9.9 mln) and by the interest rate effect (EUR 10.5 mln)
▪ The lower interest rate component is attributable to a different mix/average maturity of the securities’ portfolio compared to 1Q14, coupled with a considerable migration of exposures to bad loan status in the course of last year
3.47% 3.46% 3.40% 3.35% 3.30% 1.57% 1.58% 1.53% 1.47% 1.37% 1.89% 1.87% 1.87% 1.87% 1.94% 1Q14 2Q14 3Q14 4Q14 1Q15
Interest Income Interest Expense Spread
48.4 8.8 0.6 -4.1 -90.3% 49.0 4.7 31/03/2014 31/03/2015 FVO
NET FEES AND COMMISSIONS
Non-interest income
€ mln
FINANCE(1) € mln
(1) Dividends, net profit (loss) from trading, gains/losses from valuation
+6.0 + 23.0 + 5.6 -1.8 +6.4 14.6 13.9 17.1 18.9 28.3 26.7 -0.8% 60.0 59.5 31/03/2014 31/03/2015 Current accounts
Asset management, brokerage and other Commercial activities and other
Gross AFS Reserves(2)
Banking Group 60.0 62.0 59.8 63.4 59.5 1Q14 2Q14 3Q14 4Q14 1Q15 49.0 22.6 34.6 7.4 4.7 1Q14 2Q14 3Q14 4Q14 1Q15
▪ In 1Q15, net fees and commissions were substantially stable with respect to 1Q14 (-0.8% to EUR 59.5 mln)
▪ In particular, AuM fees and commissions increased (+15.9% to EUR 11.6 mln) while expense recoveries on current accounts were down 8.4% to EUR 28.7 mln
▪ Fees and Commissions do not include those related to bancassurance products (+14.4% to EUR 5.8 mln) of the Insurance Companies under disposal
▪ The decrease with respect to 4Q14 (-6,1%) was driven partly by seasonality and partly by the implementation of
aggressive commercial policies
impacting on expense recoveries on c/a and payment services
▪ Income from financial activities totalled EUR 4.7 mln, lower than in the previous quarters (which had benefitted from the positive effects arising from the divestment of the securities portfolio)
OPERATING COSTS € mln
Operating costs
PERSONNEL COSTS OVERHEAD COSTS o.w.: AMORTISATION(1) 146.7 150.6 186.9 129.3 136.9 1Q14 2Q14 3Q14 4Q14 1Q15 91.3 94.9 139.7 85.6 84.9 1Q14 2Q14 3Q14 4Q14 1Q15 64.2 63.2 58.7 63.3 62.6 1Q14 2Q14 3Q14 4Q14 1Q15 12.4 14.5 11.1 11.4 13.2 1Q14 2Q14 3Q14 4Q14 1Q15 146.7 136.9 -6.7% 31/03/2014 31/03/2015▪ Operating costs were down significantly (-6.7% Y/Y to EUR 136.9 mln)
▪ Cost reduction is driven by the structural decrease in personnel expenses, totalling EUR 84.9 mln in Q1 (-7.0% Y/Y)
▪ The gap between 1Q15 and 4Q14 derives mainly from recognition of net reversals on provisions for risks and charges totalling EUR 3.1 mln (in 4Q14), and of impairments on immovable properties for EUR 1.5 mln (in 1Q15) subsequent to the closure of branches
LOSS PROVISIONS ON CASH LOANS
Loan Loss Provisions
COST OF CREDIT(1) € mln bps 65.2 77.2 +18.3% 31/03/2014 31/03/2015 65.2 99.6 150.5 330.2 77.2 1Q14 2Q14 3Q14 4Q14 1Q15 27 43 66 140 35 1Q14 2Q14 3Q14 4Q14 1Q15(1) Calculated as provisions on loans to customers and net loans to customers
▪ Loan loss provisions amount to EUR 77.2 mln, combined with a stabilising cost of credit (35 bps in the quarter), in line with the Business Plan forecasts
▪ Clear-cut slowdown in migration to bad loan status (+EUR 83 mln); part of NPL portfolio “secured” with work-out agreements signed for about EUR 500 mln worth of exposures previously classified as “substandard”
EUR 71.7 mln including signature loans
Loans Gross % Loan
losses Net % Coverage
Coverage including write-offs Bad loans 3,170.3 12.8% 1,858.3 1,312.0 6.0% 58.6% 61.3% Unlikely to pay 3,440.8 13.9% 803.3 2,637.5 12.0% 23.3% 23.3% Past Due 173.4 0.7% 26.2 147.2 0.7% 15.1% 15.1% Non-performing loans 6,784.5 27.3% 2,687.9 4,096.7 18.7% 39.6% 41.5% Performing loans 18,039.3 72.7% 184.5 17,854.8 81.3% 1.0% 1.0% Total loans to customers 24,823.8 100.0% 2,872.3 21,951.5 100.0% 11.6% 12.3% 31/03/2015
Credit quality
(1) The coverage ratio for NPLs is essentially unaltered with respect to the end of 2014 and ranks among the highest for regional banks
The coverage of performing loans - still at 1% - remains on high levels (1.2% net of REPOs with Cassa Compensazione e
Garanzia - central counterparty
clearing house)
Net of REPOs 1.2%
52.8% Coverage Avg. Regional peers
as at 31/12/2014(2)
37.4% 0.6%
Loans Gross % Loan
losses Net % Coverage Bad loans 3,087.3 11.7% 1,805.2 1,282.1 5.4% 58.5% Unlikely to pay 3,226.1 12.2% 759.9 2,466.2 10.4% 23.6% Past Due 169.0 0.6% 23.8 145.2 0.6% 14.1% Non-performing loans 6,482.5 24.5% 2,588.9 3,893.6 16.4% 39.9% Performing loans 19,992.7 75.5% 206.7 19,786.0 83.6% 1.0% Total loans to customers 26,475.2 100.0% 2,795.6 23,679.6 100.0% 10.6% 31/12/2014
Loans Gross % Loan
losses Net % Coverage Bad loans 2,735.4 10.0% 1,548.4 1,187.1 4.8% 56.6% Unlikely to pay 2,724.3 10.0% 529.6 2,194.7 8.8% 19.4% Past Due 159.8 0.6% 22.7 137.1 0.5% 14.2% Non-performing loans 5,619.6 20.6% 2,100.7 3,518.9 14.1% 37.4% Performing loans 21,622.4 79.4% 200.9 21,421.5 85.9% 0.9% Total loans to customers 27,242.0 100.0% 2,301.6 24,940.5 100.0% 8.4% 31/03/2014
NET PROFIT (LOSS) € mln
▪ The loss for 1Q15 is reflective of the intense effort of risk profile mitigation conducted in 2014 which particularly penalised the net interest income and profit from trading. The next months will benefit from the expected re-launch of the core business - already reflected in the funding/lending volumes of the quarter - and from finalisation of the asset disposals underway
▪ The 1Q15 result is also affected by recognition under IFRS 5 of the value of the Insurance Companies under disposal, for an overall amount of -EUR 18.5 mln (of which EUR 12.0 mln pertaining to the AFS reserve)
▪ Upon closing of the Insurance Companies’ disposal, the P&L account will benefit from realisation of the correlated AFS reserves (at their value on the closing date) included in the net consolidated equity, and amounting to EUR 80.5 mln as at the end of March
Net profit (loss)
17.0
-31.9
-14.8 1Q14 Result
Profits from divestment of
AFS ptf P.F 1Q14 Result -45.3 -26.8 18.5 1Q15 Result Valuation effect of Insurance Group
Capital ratios
€ bn
CET1 RATIO PHASED IN
BASEL3 RWAs 8.4% 12.3% -0.2% -0.3% +0.5% +3.9%
31/12/2014 1Q2015 loss Change in RWA 31/03/2015 including disposal of insurance companies 850 mln capital increase 31/3/2015 p.f. 8.4% 21.2 19.0 19.5 0.1 0.0 0.1 1.9 1.5 1.5 23.2 20.5 21.1 Operating risk Market risk Credit risk
Contacts
Investor Relations Department Roberta Famà, Manager
+39 010 579 4877
Fixed Income, Equity Coverage & Ratings Massimo Turla
+39 010 579 4220
[email protected] Benchmarking & Analysis
