An introduction
to the UBI Banca Group
March 2015
This document has been prepared by Unione di Banche Italiane Scpa (“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 2014 unless otherwise stated.
Disclaimer
Agenda
The UBI Banca Group
Background
UBI Banca and its Peers
UBI Banca’s profile in a snapshot
The Group Structure
Presence in Italy
The UBI Banca International Network
Contacts
Annexes
Background
Unione di Banche Italiane Scpa (“UBI Banca”) was formed following the merger of the BPU Banca and Banca
Lombarda e Piemontese Groups (1
stApril 2007)
The history of UBI Banca is marked by a succession of mergers which have led banks with strong roots in local
communities to become the significant reality that exists today and employs approximately 18,000 people.
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”
Background
UBI Banca is a cooperative bank (“
società cooperativa
”). Its capital is represented by ordinary shares .
Shareholders are divided between
unregistered
shareholders (who have a right to share in dividends,
options, etc. but have no voting rights) and
registered
shareholders (who have both the right (i) to share
in dividends, options, etc., and (ii) to vote at general meetings). To become a registered shareholder, one
must own and hold at least 250 shares and apply to the management board. Each registered shareholder
has only one vote.
UBI Banca is the only bank of the Group which is listed on the Milan Stock Exchange and included in the
FTSE/MIB index.
No one may hold shares amounting to more than 1% of the share capital (with the exception of collective
investment companies)
As at December 2014, voting shareholders number nearly 79,237*
UBI Banca’s governance model is based on a “dualistic” system. Under this dualistic governance system,
the registered shareholders appoints a
Supervisory Board
(strategy and supervision); the Supervisory
Board, in turn, appoints a
Management Board
(day-by-day management of the bank)
The said principles are equally applied
to listed and non-listed popular banks
Page 4
* *As at 19th May 2014 (ex dividend date), total shareholders (voting and non voting) number 152,000
Market Capitalisation as at 5
thMarch 2015
(EUR bln)
Source: “Il Sole 24ore” – Italian Financial Newspaper – Dated 6th March 2015
48.9
35.3
3.5
3.7
2.8
4.9
# 3
6.3
UBI Banca and its Peers
Page 5 Source: Press releases.
87 844 646 61 183 123 48 Total assets as at 31st December 2014 (€ bln)
7,616 5,867 1,676 1,274 706 2,226 1,878
No. of branches as at 31st December 2014
Customer loans as at 31st December 2014 (€ bln)
471 339 80 44 32 120 86 561 360 46 126 93 37 Total direct funding as at 31st December 2014 (€ bln)
# 5
# 4
# 5
# 4
Page 6
UBI
Banca’s
profile in a snapshot: predominant retail business, solid capital
base and low risk profile
Figures as at 31st December 2014 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
70.3%
Funding mainly from own customer base (over 80%)
; limited recourse to institutional markets
Financial assets/total assets: 19%. Italian Govies represent approx.18% of total assets
1
stItalian cooperative banking Group by market capitalization
EUR
85.6 bn customer lending
and EUR
93.2 bn direct funding
(loan/deposit ratio: 91.9%)
As at 31 December 2014
, 81.5% of loans to customers were granted in Northern Italy
, 10.2% in
Central Italy and 8.3% in Southern Italy,
while 72.5% of customer deposits came from Northern Italy
,
12.6% from Central Italy and 14.9% from Southern Italy
Capital ratios
as at 31 December 2014:
CET 1 ratio (phased in): 12.33%; CET 1 ratio (fully loaded)
under Basel 3 rules: 11.5%
Leverage ratio under Basel 3
(tier one capital / (on- and off-balance-sheet assets))
is
at 5.78% phased
in, 5.42% fully loaded
Sound Liquidity position:
the Group already complies with the Net stable Funding Ratio and
Liquidity Coverage Ratio as per Basel 3 requirements
(also net of LTRO/TLTRO)
Good asset quality
compared to the Italian banking system
The Group Structure
Page 7
8 DOMESTIC NETWORK BANKS
MAIN PRODUCT COMPANIES
288 branches 196 branches 66 branches 21 branches 713 financial advisors 100.00% 74.76% (2) 100.00% 82.96% (3)
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 99.53% 99.99%Central
Italy
351 branches 100.00% 208+3* branches 83.76% (1)Information updated as at 19 January 2015 *indicates branches outside Italy
**Merger announced to be completed in 1H2015
**
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 8
Presence in Italy
1,560
branches in Italy + 6 branches abroad
As at 19 January 2015
* Market shares calculated as at 30th June 2014 .
1 169 38 762 1 27 9 43 7 1 84 94 78 6 19 17 80 106 18
Approx. 3.7 million clients, mainly retail
1,560 branches, of which 762 in Lombardy
(which
generates over 20% of Italian GDP)
Market share in terms of branches above 20% in
some of the richest Provinces
such as Bergamo,
Brescia and Varese
National market share of 5.4%
in terms of branches
Introduction to the UBI Banca Group:
Predominant Retail Business and Strong Northern Italian Franchise
Market Shares*
% Branches
Current accounts
& deposits Loans
Bergamo 22.3 28.7 40.2
Brescia 22.5 27.1 35.0
Varese 23.7 27.8 21.0
Agenda
UBI Banca International Network
International Network
Presence in the world
International Network
Page 10
MENTON, NICE AND ANTIBES
(Banca Regionale Europea) (UBI Factor) KRAKOW
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 (Opening 2015)
DUBAI (Opening 2015)
Presence in the world
Luxembourg
• UBI Banca International • UBI Trustee SA
Page 11
Munich
UBI Banca International Branch
Krakow
UBI Factor Branch Vienna
Business Consultant Moscow RepresentativeOffice 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
ShanghaiZhong Ou Asset Management Company Co. Ltd*
* Joint-venture in which UBI Banca holds 35% of the total share. (Other partners: Guodu Securities Co. Ltd. holds 30% of the total share, Beijing Baijun Investment Co., Ltd holds 30% of the total share and WinnerKey Investment Co. Ltd holds 5% of the total share). At 31st December 2013, the ex Lombarda China Fund Management Co., actives in the management of retail
funds and of IPO, handled an AUM of 14.5 billions of Rmb (about 1.7 billions of euro).
2015 opening of Rep Offices in New York and Dubai
Agenda
Contacts
UBI Banca Correspondent Banking
Representative Offices Contacts
UBI Banca
Page 13
Correspondent Banking -
correspondent.banking@ubibanca.it
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
alistair.robert.newell@ubibanca.it
• North America, Central America, South America,
Caribbean, Israel
Ernst Rolf Hartmann
Relationship Manager
ernst.rolf.hartmann@ubibanca.it
• Turkey, Middle East, Africa
Lorenzo Tassini
Relationship Manager
lorenzo.tassini@ubibanca.it
• Global Players – Responsible for relationships with
multi-regional banking groups & Special Projects
Marco Camozzi
Relationship Manager
marco.camozzi@ubibanca.it
• Europe & CIS Countries
Riccardo Rossi van Lamsweerde
Relationship Manager
Representative Offices Contacts
HONG KONG
Mr Andrea Croci
hongkong@ubihk.com Suite 2911, Tower Two,Times Square 1, Matheson St. - Causeway Bay Hong Kong - S.A.R. Tel. +852 2878 7393
Fax +852 2878 7932
MUMBAI
Ms Rajeshree Balsari
mumbai@ubibanca.com 92 Mittal Chambers, 9th Floor, Nariman Point, 400 021 Mumbai - India Tel. +91 22 22023601 Fax +91 22 22023603SHANGHAI
Ms Lu Bo
office@ubibanca.sh.cn The Center Suite 3304 989, Changle Road 200031 Shanghai – China Tel +86 21 61675333 Fax +86 21 61675582MOSCOW
Mr Ferdinando Pelazzo
moscow@ubibanca.com 10, Nikolskaya str., 4th floor,Business Centre “Nikolskaya Plaza” 109012 Moscow - Russia Tel. +7 495 725 4466 Fax +7 495 725 4465
SAO PAULO
SAO PAULO
Mr Isidoro Guerrerio
saopaulo@ubibanca.com Al. Ministro Rocha Azevedo, 456 Ed. Jaù - 4° And.Cj.402 CEP 01410-000 São Paulo - BrazilTel. +55 11 3063 0454 Fax +55 11 3063 3785
VIENNA (Business Consultant)
Ms Annick Stockert
annick.stockert@esterni.ubibanca.it Seilerstätte 16/11 1010 Vienna Austria Tel. +43 1 514 37 26 Fax +43 1 514 37 60 Page 14Agenda
Annex
Foreign Banks
Product Companies
Group Results
Group BIC codes
Foreign Banks
Page 16
Qualified and specific services offered to Corporate customers: establishment of international companies
trustee operations and corporate financing
payment services
corporate and syndicated loans
issuance of bonds and international guarantees
cash pooling
factoring
Services offered to Private customers:
wealth management and investment advisory;
heritage and personal wealth planning with tailor made financial engineering solutions;
investment Funds and Sicav;
financial and asset planning with tailored engineering solutions;
term deposits in all major currencies,;
trading and safekeeping of securities on all the major stock and bond markets;
spot and forward foreign exchange transactions;
services for the establishment of Trust Companies through UBI Trustee SA based in Luxembourg.
Leasing
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.
6.9 bln EUR in net Loans to Customers
Product Companies
Factoring
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.
7.7 bln EUR Turnover; 2 bln EUR net Loans to Customers
Page 17 Data as at 31.12.2014, 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.
35.4 bln EUR in Assets Under Management Online Trading
IW Bank is a 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. Assets under management of EUR 569.7 mln.
Page 18
FY14 Results: improving core profitability and cost control confirmed
Growth in core revenues and operating income in 2014 compared with 2013
Consolidated profit net of non-recurring items of 146.5 mln/€, up 46.2% compared with 100.2 mln/€ in 2013
Consolidated results (stated)
Operating income of 3,409.6 mln/€ (-0.8% YoY)
Net interest income of 1,818.4 mln/€ (+3.9% YoY)
Net fee and commission income of 1,226.6 mln/€ (+3.3% YoY) Finance result of 199.7 mln/€ (324.6 mln/€ in 2013)
Constantly lower operating expenses down to 2,108.2 mln/€ (-1.6%) - 6th consecutive year of reduced costs
Net operating income of 1,301.4 mln/€ (+0.5%)
Annualised loan loss rate of 108 bps or 929 mln/€ inclusive of the results of the AQR (107 bps or 943 mln/€ in 2013)
New inflows from performing loans to deteriorated status down significantly by 36.2% vs 2013
Profit on continuing operations before tax of €449.1 mln/€ (+57.4%)
A consolidated loss for the Group of 725.8 mln/€ compared with a profit of 250.8 mln/€ in 2013, following approximately 883 mln/€ of net impairment losses on goodwill and intangible assets (no impact on real profitability, +32bps of CET1 following booking of deferred taxes in income statement on fiscally recognised goodwill, lower PPA (-6 mln/€) starting from 2015)
Approximately 80% of the redundancies planned under the Framework Agreement signed with trade unions on 26th Nov ‘14 (a total of 500 workers) were complete as at 31st Jan ‘15
Loans at 85.6 bln/€, up 0.8% compared with Sept ‘14 – Positive trend confirmed in Jan ‘15
Direct funding at 93.2 bln/€, up 6.1% compared with Sept ‘14
0,05
0,06
0,08
FY12 FY13 FY14
PROPOSED DIVIDEND PER SHARE PROPOSED DIVIDEND PER SHARE
(€)
UBI Banca Main Consolidated figures: Balance Sheet
Page 20
Main balance sheet
figures
Figures in billions of euro
Dec ‘13
Dec ‘14
Loans to customers
88.4
85.6
Direct funding
92.6
93.2
of which: Direct Funding from Ordinary Customers (current accounts + retail bonds)
74.7 74.0
of which: Direct Funding from
Institutional Customers 17.9 19.3
Net Interbank exposure
(not included in Direct Funding – mainly LTRO)
10.9
10.0
Total assets
124.2
121.8
Loans to customers / total
assets
71.2%
70.3%
Indirect funding (AuM + AuC)
71.7
75.9
of which: AUM 39.6 43.3 of which: AUC 32.1 32.5 Page 19 CET 1 as at 1stJan 2014 AQR adjusted CET 1 CET 1 after adverse scenario Capital excess after AQR
and adverse stress test
11.77% 11.35% 8.37% 12.25% 11.82% 8.20% + 1.7 bln/€ SSM* UBI 10.17% 9.47% 6.14% Italy
COMPREHENSIVE ASSESSMENT RESULTS 26 Oct 14
COMPREHENSIVE ASSESSMENT RESULTS 26
THOct 14
CAPITAL RATIOS AS AT 31 Dec 14
CAPITAL RATIOS AS AT 31
stDec 14
The
Group’s
solid capital strength is confirmed:
Common Equity Tier 1 ratio
“phased
in”
as at 31
stDecember 2014:
12.33%
following update of risk
parameters (13% as at 30/09/2014)
Pro forma Common Equity Tier 1 ratio
“fully
loaded”
estimate of
11.5%
(12% as at 30/09/2014)
Basel 3 leverage ratio:
“phased
in”
at
5.78%
,
UBI Banca Main Consolidated figures: P&L & Outlook
Page 20 Page 20
MAIN INCOME STATEMENT ITEMS
Figures in € mln FY13 FY14 % change 4Q13 3Q14 4Q14
% change 4Q14 vs 4Q13
% change 4Q14 vs 3Q14
Net interest income 1,751 1,818 3.9% 459 468 442 (3.8%) (5.5%)
Net commission income 1,187 1,227 3.3% 299 299 318 6.5% 6.7%
Net result from finance 325 200 (38.5%) 156 14 49 (68.5%) 254.7%
Other income items 175 165 (5.6%) 37 42 42 15.9% 2.1%
Operating income 3,437 3,410 (0.8%) 951 822 852 (10.4%) 3.7%
Staff costs (1,302) (1,302) 0.0% (327) (329) (325) (0.7%) (1.1%)
Other administrative expenses (660) (635) (3.8%) (166) (147) (177) 6.5% 20.2%
Net impairment losses on property, equipment and investment property
and intangible assets (180) (171) (4.9%) (45) (42) (44) (3.2%) 2.9%
Operating expenses (2,142) (2,108) (1.6%) (538) (518) (546) 1.3% 5.3%
Net operating income 1,295 1,301 0.5% 413 303 306 (25.7%) 1.0%
Net impairment losses on loans (943) (929) (1.5%) (366) (197) (302) (17.4%) 53.5%
Net impairment losses on other financial assets and liabilities (48) (9) (81.8%) (25) (0) (6) (74.7%) n.s.
Net provisions for risks and charges (12) (9) (26.7%) 2 (1) (5) n.s. n.s.
Profits (losses) from disposal of equity investments (7) 94 n.s. (8) 0 94 n.s. n.s.
Pre-tax profit from continuing operations 285 449 57.4% 15 105 87 460.8% (17.3%)
Taxes on income for the period from continuing operations 55 (187) n.s. 205 (52) 1 n.s. n.s.
Profits for the period attributable to non-controlling interests (26) (29) 11.7% (8) (9) (4) (47.5%) (56.7%)
Profit/loss for the period attributable to the shareholders of the Parent before charges for exit incentives and impairments on tangible and intangible assets
315 233 (25.9%) 213 44 83 (72.7%) (17.3%)
Impairment on tangible and intangible assets
(net of tax and non-controlling interests) (38) (883) n.s. (38) (883) n.s. n.s.
Charges for exit incentives
(net of tax and non-controlling interests) (26) (76) n.s. (26) (76) 193.7% n.s.
Profit for the period 251 -726 n.s. 149 44 (876) n.s. n.s.
Profit for the period NET OF NON-RECURRING ITEMS 100 147 46.2% 26 45 -29 n.s. n.s.
In 2015 net interest income will be affected by a lower contribution from the securities portfolio, mainly as a result of positions that matured in the held-to-maturity portfolio in the last months of 2014. A recovery in volumes of business with customers should make it possible to increase net interest income from business with customers, even in the presence of strong competition on pricing, and help offset the lower contribution forecast from the securities portfolio
Net fee and commission income should benefit from positive trends expected for assets under management and insurance and possible growth in fees and commissions associated with lending
A further decrease in sovereign debt risk could allow positive results to be achieved for trading and hedging activity again in 2015
The recent trade union agreement will help compensate for the automatic increases in staff costs, the overall performance of which will in any case depend on the final outcome of the renewal of the national trade union contract
The downwards trend for other administrative expenses is forecast to continue
The slowdown in the pace of new defaulted loans recorded in 2014 is expected to continue in 2015 and could favour an improvement in loan losses compared with 2014
OUTLOOK
OUTLOOK
Group BIC codes
Page 21 BEPOIT21 BCABIT21 BREUITM1 POCIITM1 BPAMIT31 CARMIT31 BVCAIT21 BLPIIT21 UBIBESMM BEPODEMM BLOPIT22CABILULL Madrid Branch
Munich Branch