BPER GROUP BUSINESS PLAN

Transcription

1 BPER GROUP BUSINESS PLAN The new BPER Group: growth, value and proximity in a new Landscape" Presentation to the Financial Community Milan, March 14, 2012

2 Disclaimer This document has been prepared by Banca popolare dell Emilia Romagna solely for information purposes, and only in order to present its strategies and main financial figures. The information contained in this document has not been audited. No guarantee, express or implied, can be given as to the document s contents, nor should the completeness, correctness or accuracy of the information or opinions herein be relied upon. This is a translation into English of the original in Italian. The Italian text shall prevail over the English version. Banca popolare dell Emilia Romagna, its advisors and its representatives decline all liability (for negligence or any other cause) for any loss occasioned by the use of this document or its contents. All forecasts contained herein have been prepared on the basis of specific assumptions which could prove wrong, in which case the actual data would differ from the figures given herein. No part of this document may be regarded as forming the basis for any contract or agreement. No part of the information contained herein may for any purpose be reproduced or published, as a whole or in part, nor may such information be disseminated. Page 2

3 Agenda 1. Outlook for the Group and main results 2. Business Plan Page 3

4 History and Growth of the BPER Group More than 40 rationalization actions since the Group was founded (1992)... (Total assets 1 bn ) BPER Group foundation 35,1 36, , , , , Business Plan , Growth in the traditional core business through the acquisition of Commercial Banks Acquisition of Product Factories IT standardization Gradual turnaround of subsidiary banks Strengthening Group Governance Simplifying organizational structure IT development and "operational machine strengthening New Group structure: mergers and organizational alignment of larger banks Cost base reduction Actions for growth 1) Data as of the end of each year Page 4

5 The BPER Group today...which led to the current structure of the BPER Group Commercial Banks Product Factories IT and Back Office services BP Emilia Romagna BP Ravenna Corporate & Investment Banking Wealth Management and Insurance Other financial services BPER Services BP Aprilia CR Aquila BP Lanciano e Sulmona Meliorbanca Optima Sgr ABF Leasing BP Mezzogiorno Banca della Campania EMRO Fin. Ireland Arca Sgr Sardaleasing Banco di Sardegna Banca di Sassari Arca Vita EmilRo Factor Foreign Banks BPER Int. S.A. Presticinque Alba Leasing Presence of 9 territorial Commercial Banks The subsidiary banks operate primarily in the regions of Central/ Southern Italy Full range of products offered through the Product Factories Presence abroad Subsidiaries Associates/ Commercial partnerships Page 5

6 Projects, business rationales and main results achieved The last three years have been characterized by an intensive transformation plan... Rationale Projects in Business Plan Results 1 Know your customers and respond effectively to their needs New business model CRM methods and commercial behaviours Customer experience models and tools 15% redemption on contacts suggested by CRM 89% of Retail customers satisfied 90% of Corporate customers satisfied 2 Improve cost management Policies and tools for streamlining personnel costs Cost efficiency New processes/procedures in HR budgeting New processes/procedures to govern Group costs 3 Govern the Group by making full use of knowledge capital New Group Planning & Control processes and procedures - 30% time spent preparing monthly income statements ~60 new reports at customer/ branch/ segment/ Group level 4 Improve efficiency in loan and credit management New credit policies and processes New credit management procedures 5 Go beyond the traditional channel exploiting remote points of contact New direct channels +50% average monthly traffic on new institutional sites 6 Achieve excellence in Group Operations Streamlining branch and back office processes BPER Services evolution Centralised: 72 Back Office processes and 12 organisational processes 309 IT services 7 Simplify Group structure Special projects >160 mn of capital gains from disposal Page 6

7 Territorial growth and personnel evolution... selective branches evolution programme and personnel management Branches evolution programme (#) Personnel evolution (#) 8 new branches in provincial capitals not previously covered (Ascoli Piceno, Treviso, Bari, Florence, Bergamo, Caserta, Lecco, Macerata) 18 new branches in municipalities not previously covered 12 new branches in municipalities previously covered to strengthen market share 12, ,293 11, ,305 1, Headcount as of March 2009 New hires Leavers Headcount as of December 2011 Personnel breakdown Centre vs. Network BPER Group 1 (%) Headquarters + Local Areas Branches Branches at Dec Meliorbanca/ Meliorbanca Private branches New branches opened Closed Branches at Dec % 65.8% 29.0% 71.0% 5.2 pips 45 8 branches closed in overlapped markets 11 Meliorbanca branches closed December 2008 December 2011 XX 42 Average age in ) Includes all Group employees, excluding all Product Factories, BPER Services and BSSS Consumer Division Page 7

8 Ranking and territorial positioning Today the Group counts about 1,300 branches throughout the country... Top 10 Banking Groups in Italy, June 2011 Market share by province 3, September 2011 Ranking by total assets Number of branches 1 (#) Total assets 1 (mn ) Employees 1 (#) branches % on total North-West % 1 2 Unicredit 9,518 Intesa SP 7, , , , ,169 North-East Centre South % 7.8% 25.7% 3 MPS 2, ,892 31,239 Islands Total % 1, % 4 BP 2, ,238 19,209 5 UBI 1, ,751 19,546 6 BNL ,125 14,654 7 BPER 1, ,354 12,057 8 BPM ,030 8,438 9 Cariparma ,211 9, Carige ,374 6,013 More than 8% (16) Between 4% and 8% (10) Between 2% and 4% (13) Less than 2% (44) Not present (27) (#) Number of province 1) Total including foreign branches (for BPER the Luxembourg branch) 2) Data as of December 2011: 1,305 branches 3) The analysis includes Banco Posta Page 8

9 Our customers with 60% of deposits in the Centre-South of Italy (mainly Retail) Customers by segment (%, #,000) Share of business 1 (%) Institutional Counterparties 0.04% Retail Affluent (1) 9.7% (214) Retail SME 12.8% (283) Corporate/ Large Corporate 1.5% (34) Private 0.3% (6) ~2.2 mn customers 42.8% 52.3% 47.3% 27.2% Retail Other 6.8% (150) Retail Mass Market 68.8% (1,517) 11.0% Corporate Private Institutional Counterparties Retail- Mass Market Retail- Affluent Retail- SME 4.6% 5% 35% 7% 27% 26% Direct deposits 12% 39% 10% 20% 19% Loans Direct deposits and loans by macroregions (%) Important contribution from the South and Islands to Group overall deposits Well positioned in traditional areas: 39% of loans is concentrated in North-East Italy North-West North-East Centre South Islands 1) Client loans in BPER/ Total client loans in the system Page 9

10 3-year business results and comparison with expected ones Despite the context, the Group has maintained a good level of profitability Net interests income and other banking income (mn, %) Provisions (mn, %) 2,157 2,032 2,101 2,121-1% % Business Plan 2011 target Business Plan 2011 target Operating costs (mn, %) Net profit and ROE (mn, %) % ROE 1,254 1,250 1,243 1,265-2% 4.3% 4.7% 1 5.6% 6.5% % Business Plan 2011 target Business Plan 2011 target 1) Net value of Arca Vita capital gain Page 10

11 Agenda 1. Outlook for the Group and main results 2. Business Plan Cornerstones and actions Economic and financial targets Page 11

12 Business Plan Cornerstones and actions 1. Streamline Group Optimize geographical coverage and achieve cost savings Business Plan The new BPER Group: growth, value and proximity in a new Landscape " 2. Leverage recent investments to generate growth and efficiency NOT-ORDINARY ACTIONS ORDINARY ACTIONS Group rationalization/ integration Business governance Commercial 5. Maintain adequate liquidity New governance model Operational machine strengthening Capital and Risk Human Resources Operations 3. Strengthen capital 4. Optimize risk Page 12

13 Not-ordinary actions Guidelines and areas of intervention Areas of intervention Guidelines Group rationalization/ integration 4 mergers to simplify the organizational structure and achieve cost saving opportunities Creation of a Grande BPER as bank for the Centre and the North of Italy Simplify the Group structure Strengthen the Parent Bank's guidance and control Evolve Commercial Banks structures Empower Group's operational machine New governance model New organizational structure for the Parent Bank to strengthen its guidance, control and risk management role New Network Bank models with a greater emphasis on lending and commercial activities Operational machine strengthening BPER Services evolution by bringing in-house services currently outsourced and centralizing administrative activities currently performed at branches level Page 13

14 Group rationalization/ integration (1 of 4) Grande BPER foundation Merger of Meliorbanca with BPER and enhancement of distinctive Corporate Banking skills in the new Meliorbanca Division Merger of Carispaq with BPER and creation of the L Aquila Division Spin-off of Banca della Campania's branches in Lazio to BPER Transfer to BPER part of Banco di Sardegna's branches in the peninsula Grande BPER foundation Merger of Banca Popolare di Aprilia with BPER Merger of Banca Popolare di Lanciano and Sulmona with BPER and creation of the Lanciano e Sulmona Division Page 14

15 Group rationalization/ integration (2 of 4) Grande BPER main KPIs The mergers will lead to a structural growth of BPER Bank, not affecting the overall productivity, while assimilating BPER at the best practices in the personnel distribution between Centre and Network. Number of branches (index number, %) Personnel (index number, %) +49% +31% Today - Banca BPER Tomorrow - "Grande BPER" Today - Banca BPER Tomorrow - "Grande BPER" Volumes 1 per employee (index number, %) Personnel distribution Centre vs. Network (%) -6% Headquarter Local Areas Branches % 4.4% 21.9% 4.4% 73.1% 73.7% Today - Banca BPER Tomorrow - "Grande BPER" Today - Banca BPER Tomorrow - "Grande BPER" 1) Volumes (loans + deposits + indirect deposits) Page 15

16 Group rationalization/ integration (3 of 4) The new Group's geographical coverage Geographical coverage as-is New BPER Group s geographical coverage Organizational structure Grande BPER Parent Bank Commercial Banks From 8 to 5 Commercial Banks Geographical coverage post not-ordinary actions BPER as principal bank in the Centre-North of Italy thanks to the creation of Local Divisions Banca della Campania and Banca Popolare del Mezzogiorno to govern our business in Southern Italy Optimization of our territorial coverage in Sardinia BPER BPRA BPAP BPER + BPAP + BSAR + CRAQ BPLS BPMZ BCAM BSAR and/or BSSS BPLS + CRAQ Not present CRAQ + BSSS + BCAM Page 16

17 Group rationalization/ integration (4 of 4) The new Group structure Target Group structure BPER Group personnel breakdown Centre vs. Network 2 = Parent Bank BPER Board of Directors NOT EXHAUSTIVE Headquarters + Local Areas Branches Managing Director 29.0% 25.0% General Manager Commercial Banks Territorial Divisions/ Meliorbanca Division BPER Business Area 1 Product Factories 71.0% 75.0% Parent Bank with 4 Divisions 5 Commercial Banks As-is To-be 1) Includes Banca Popolare di Aprilia 2) Includes all Group employees, excluding all product factories, BPER Services and BSSS Consumer Division Page 17

18 New governance model (1 of 2) Grande BPER Parent Bank - governance structure Parent Bank organization chart NOT EXHAUSTIVE Board of Directors Managing Director Chief Lending Officer (CLO) Strengthening Group s guidance and control ability by: o direct reporting of the Commercial Banks and Local Divisions to the GM Commercial Division General Manager Chief Risk Officer (CRO) Chief Financial Officer (CFO) Chief Operating Officer (COO) o boosting the role of BPER s GM through the governance of the operational machine and Group Human Resources Creation of Chief Risk Officer, Chief Lending Officer and Chief Financial Officer Greater coordination of marketing and commercial activities by creating the new role of Group Commercial Manager Human resources Greater business orientation by maintaining Commercial and Lending functions within the Local Divisions/ Business Area Commercial Banks Local Divisions Business Area BPER Meliorbanca Division Product Factories Commercial Commercial Lending Lending Page 18

19 New governance model (2 of 2) Commercial Banks - organizational structure NOT EXHAUSTIVE Commercial Bank organization Chart Board of Directors General Manager Local-Managers 1 Greater business orientation through the focus of Banks on commercial and lending activities Human Resources and Administration Business Area Faster decision-making and local adoption of the Parent Bank's guidelines, also thanks to the introduction of key roles in core business areas Commercial function Lending function Local Areas 1) For all the functions that need to be replied at Commercial Bank level Page 19

20 Operational machine strengthening Empower BPER Services structures Rationale of the intervention 1 Exploit consolidated and specialized expertises to evolve Groups Operations Empower BPER Services A Strengthening the 2 Free up commercial time at branch level by centralizing administrative activities B Sardinian Hub Creation of Middle Office Structures 3 Bring in-house activities currently outsourced Page 20

21 Not-ordinary actions - personnel turnaround (#) 11,996 BPER Group personnel as-is ~ -1,200 Released personnel ~ -450 Group leavers ~ +750 Operational requirements 470 to strengthen the Group Operational Machine, of which about 50% to free up commercial time at branch level 100 to strengthen business functions 100 to strengthen Governance, Control and Staff functions 80 to support branch network expansion 11,546 BPER Group personnel to-be Personnel turnaround guidelines: Activation of legal and contractual instruments Release of resources with pension rights Opportunities and requirements for professional flexibility Geographical and/ or intergroup mobility Page 21

22 Investment portfolio rationalization Interventions and main expected results Investment portfolio rationalization Possible further simplification options CURRENT SITUATION Equity investments (#) 230 Book value (mn ) 1,003 # Investments with a high probability of being sold # Investments that could be sold, but with some difficulties # Investments involved in simplification of Group structure Leasing Further leasing sector rationalization TARGET SITUATION Equity investments (#, Δ # vs. current portfolio) Book value (mn, Δ mn vs. current portfolio) 149 (-81) 953 (~ -50 mn ) Real estate assets Valorisation of real estate assets by establishing a Group property fund Impact on capital +2 bps on Core Tier 1 Page 22

23 Ordinary actions: 5 areas, 17 tracks and 36 projects Master Plan Areas Tracks BUSINESS PLAN Commercial Capital and Risk Human resources Operations Business governance Commercial performance optimization Basel II HR development BPER Services evolution Group harmonization Business model evolution Efficient management of Group NPLs Training and communication Paperless (Green Bank) Internal control system Multi-channel strategy enhancement New Risk Adjusted logics and tools Personnel and cost management Cost reduction Other projects Sustainability and innovation strengthening Liquidity management 11 projects 7 projects 5 projects 4 projects 9 projects Page 23

24 Commercial 1) Commercial area 4 tracks and 11 projects: ~28 mn of investments 1 Major initiatives Commercial performance optimization New advanced pricing logics and tools Group s commercial offer development through: o extension of value proposition to non-banking solutions and services o rationalization of the Group's current products catalogue +1.2 pips acquisition rate at 2014 Business model evolution Implementation of the new customers service model CRM strengthening and introduction of segmentation models based on customers value Development of high value-added services Customer satisfaction improvement by adopting rules for experience and service excellence +0.8 pips retention rate at 2014 Multi-channel strategy enhancement Sustainability and innovation strengthening Implementation of the new integrated multichannel model: o new direct channels renewal o introduction of new advanced ATMs o creation of new Group Contact Center (inbound and outbound) o introduction of logic and tools for proactive commercial proposals o strengthening Marketing & Digital Communication to support acquisition Branches rationalization and new concept introduction Enhancement of existing customer base by applying lifetime value profitability models Acquisition of new customer targets Set up of the Innovation Factory to sustain Group renewal Brand, Identity and Reputation +7% mass market cross selling at 2014 ~250 FTEs to strengthen branches network 1) Total direct costs and amortization charges for the 3 years ( ) Page 24

25 1) Commercial area Branches optimization/ rationalization Branch Network as-is 2 x 1 Programme Branch Network to-be 25 new branches opening primarily on 12 provincial capitals 50 potential closures of non-performing branches, ~2 for every new branch opening New openings Peninsula rationalization Spin-off of Lazio branches from Banca della Campania to BPER Transfer to BPER of part of Banco di Sardegna and Banca di Sassari's peninsula branches Relaunch/ optimization of 15% of the actual network ~15% of non-performing branches ~30 peninsula provinces not covered Branches of Banco di Sardegna and Banca di Sassari overlaps in the Sardinian provinces 35 Sardinian banks branches in the peninsula Island Mission Branch swaps between Banco di Sardegna and Banca di Sassari Organization efficiency programme aimed at branches with high operating costs Potential closure of overlapping branches # branches % on total Openings ~2% Closures ~4% Swap/Transfer ~4% Optimization % Note: Branch plan subject to authorization by the Bank of Italy BPER + BPAP + BSAR + BPER BPRA BPAP CRAQ BPLS BPMZ BCAM BSAR and/or BSSS BPLS + CRAQ Not present CRAQ + BSSS + BCAM Page 25

26 1) Commercial area New customer Business Model New customer Business Model PROCESSES 1. PROCESSES 1 3. RELATION- SHIP PROCESSES Client 2. PRODUCTS Shift from a transactional approach to a relational approach Definition and introduction of new customer service models differentiated by type of needs Creation of branch micro-portfolios and assignment of specific commercial relationship Managers Enabling elements Enhance branch Manager centricity New branch roles Commercial behaviour best of breed boost New branch organizational models: o 4 dimensional clusters (small, medium, large, extra ) o segment differentiation New portfolio criteria based on branch size 2 PRODUCTS Identification, for each business model, of the best set of products to serve the client 3 RELATION- SHIP Definition of roles and activities required to boost client relationship Page 26

27 1) Commercial area The new multi-channel strategy in 7 pillars New commercially-oriented sites of all Group banks, in addition to the Group's new institutional site INSTITUTIONAL SITES Group institutional website 9 commercially-oriented websites New Internet Banking for Individuals and SME customers renewed and upgraded with advanced features INTERNET BANKING x2 number of features available New Mobile Banking platform MOBILE BANKING 16 features, 3 new Apps ONLINE OFFER 3 new products managed completely online Multichannel approach +40% expected increase in operations through direct channels CONTACT CENTRE ~20 dedicated specialists 15+ new inbound and outbound functionalities New Group s online offer to exploit the potential of new direct channels and enable customer acquisition BRANCH CONCEPT ADVANCED ATMs New Group Contact Centre, integrated with CRM to manage inbound and outbound contacts ~50 branches involved 100 new advanced ATMs in the next 3 years New branch concept (new layout, more automation, branch as a shop,...) New advanced ATMs to push self-service activities Page 27

28 Capital and Risk 2) Capital and Risk area 4 tracks and 7 projects: ~10 mn of investments 1 Basel II Efficient management of Group NPLs Major initiatives Activation of validation process of internal models for credit risk within the time horizon of the Plan Evolution of the calculating method for the operational risk capital requirement (TSA) Activation of a framework to manage reputational risk Industrialization and informatization of non performing loans management Analysis and implementation of potential specific initiatives / not-ordinary actions to reduce non performing loans stock Direct costs optimization related to non performing management loans (internal and external legal fees) ~80 bps CT1 adoption of credit risk and TSA internal models ~6 mn lower legal expenses New Risk Adjusted logics and tools New framework to assess consolidated and individual risk propensity Risk Adjusted metrics evolution New department/office to ensure continuous RWA optimization ~2.3 bn RWA lower absorption Liquidity management Strengthening rules and processes for Group liquidity management 1) Total direct costs and amortization charges for the 3 years ( ) Page 28

29 2) Capital and Risk area Focus on efficient management of Group NPLs Non performing loan management to be model Non performing loan amount Objectives A SMALL NON PERFOMING LOANS < 25 k B NON PERFOMING LOANS BETWEEN 25 k AND 1 mn C LARGE NON PERFOMING LOANS > 1 mn Improve management by: o improving recoveries efficacy o improving handling efficiency o reducing stock Contain external legal assistance costs Release personnel thanks to the centralization of stock management and specialization by loan type BPER Group Action Outside companies Non performing loans sale/outsourcing Bank/Division Litigation offices Group Litigation Function New Group Litigation function to coordinate local Litigation Offices activities Group banks Service Non performing loans ownership transfer to an internal vehicle company and centralization of non performing loans management at a Group service company Expected Benefits Internal structures streamline Closing times reduction % recovery increase Standardization Litigation management Group-wide standardized criteria definition Litigation management process standardization and industrialization Portfolio segmentation Employees professionals specialisation Page 29

30 Human Resources 3) Human Resources area 3 tracks and 5 projects: ~5 mn of investments 1 Major initiatives HR Development Identification and exploitation of high potential profiles Values, behaviors and competencies standardization Development of excellent competencies on high responsibility roles Personnel engagement improvement trough: o enhancement of Corporate Welfare policies by developing an employees dedicated offer o improvement in working conditions of female staff also through Work life Balance and Diversity Management policies o reinforcement of the relationship with Unions inspired by principles of fairness and respect o specific training for personnel reconversion/ requalification ~5 mn lower personnel accessory costs in three years ~1,200 employees to relocate/ re-qualify Training & Communication Development of internal communication tools in order to increase employees involvement/ alignment to corporate objectives New Group Intranet as a unique access point for all corporate information ~5% personnel gross cost synergies 2 Personnel & cost management Activation of specific program for the management of Employees turnaround Personnel management and cost control enhancement 1) Total direct costs and amortization charges for the 3 years ( ) 2) Net value without considering costs generated by employees turnaround Page 30

31 Operations 4) Operations area 3 tracks and 4 projects: ~5 mn of investments 1 Major initiatives BPER Services evolution Branch processes additional streamlining and commercial time release: o operational processes simplification o technology infrastructure upgrade o administrative activities centralization ~400 FTE commercial time release Paperless (Green Bank) Expansion of scope of activities in charge of BPER Services' Operations Division Paperless solutions development: o biometric autographed signatures recognition device introduction in branches o negotiated cheques dematerialization o Headquarters paper-intensive processes dematerialization o development of advanced knowledge management/ authentication o common processes rationalization (e.g. PEC,...) ~30 branch processes to be streamlined ~13 expense categories to be focused on specific initiatives Cost reduction Cost Reduction initiatives: o strengthening the expenditure management at Group level o Suppliers rationalization o Group-wide long-term partnerships definition o specific products prices renegotiations ~-20 mn target other administrative expenses reduction 1) Total direct costs and amortization charges for the 3 years ( ) Page 31

32 4) Operations area Focus on Cost Reduction track Consulting and professional services New selection and suppliers assessment criteria Legal consultants rationalization New criteria for the adoption of external consultants -8.0% costs in % costs in 2014 Procurement office Group-wide suppliers prices renegotiation Standardization and creation of a Group-wide catalogue for procured products and promotional materials Cost Reduction programme Facilities service Suppliers rationalization trough the definition of long-term partnerships Standardization of logos/ furnishings used among branches and definition of regulations for standard equipment -7.4% costs in % costs in 2014 Other expenses 1 Long-term contracts definition Number of suppliers rationalization Maintenance and properties rental Office space and properties rationalization, considering investments/ disposals opportunities Rental contracts market value realignment -5.7% costs in ) Includes: information and enquiries, security, transportation and counting of cash, information assets, computer services and advertising Page 32

33 Business Governance and Supervision 5) Business governance area 3 tracks and 9 projects: ~7 mn of investments 1 Major initiatives Group harmonization Group-wide documents harmonization (Knowledge Management) and IT tools improvement Centre/Network right-sizing models evolution in order to rationalize costs and branches organization Internal control system AML (Anti Money Laundering) internal control systems empowerment through detection tools introduction Remote control systems empowerment Operating limits monitoring systems empowerment Other projects Compliance development (proactive and preventive approach) Activation of a new IT platform to monitor and control Group's financial information 1) Total direct costs and amortization charges for the 3 years ( ) Page 33

34 Actions plan for Banco di Sardegna and Banca di Sassari Actions plan for Banco di Sardegna and Banca di Sassari 1 Banks streamlining and Operational Machine empowerment Interventions to rationalize the organizational structure of Banco di Sardegna and Banca di Sassari BPER Services' Sardinian Hub strengthening 2 Branches rationalization Peninsula Mission: o Partial transfer of the peninsula branches to BPER Island Mission: o branches swap between Banco di Sardegna and Banca di Sassari (apx. 10% of Sardinia branches), in order to reduce/eliminate overlaps o local areas re-definition o new branch concept introduction to enable small branches efficiency BSAR Business Plan minimum objective Net profit 2014 >50 mn 3 Operating costs - significant reduction Administrative costs containment interventions Property assets enhancement/rationalization Page 34

35 Agenda 1. Outlook for the Group and main results 2. Business Plan Cornerstones and actions Economic and financial targets Page 35

36 Forecast 2012/ 2014: economic scenario e 2013e 2014e Prometeia Confindustria O.E.C.D. Prometeia Confindustria O.E.C.D. Prometeia Change in % GDP Inflation General prod. price index Industrial production Unemployment rate Household consumption Exports of goods and services Year-end figures (%, bps) BCE interest rate m Euribor interest rate y BTPs interest rate y BTP-Bund spread 527 ~ ~ ~300 Forecast figures 1) Finance Department forecast 2) Source: Prometeia Rapporto di Previsione, January 2012; Confindustria Scenari economici, December 2011; O.E.C.D. Economic Outlook, December 2011 Page 36

37 Forecast 2014/ 2016: P&L and main KPIs ( mn, %, pips) Ordinary 2011 Not-ordinary items Total 2014e Cagr 2 (%)/ Δ (pips) e Cagr (%)/ Δ (pips) Gross margin (NII + NCI) 2,024 2,024 2, % 2, % Dividends & net profit from fin. activities % % Net interest & other banking income 2,101 2,101 2, % 2, % Net provisions % % Operating costs -1, ,243-1, % -1, % Non-operating result n.s. 0 n.s. Profit before taxes % % Net profit % % Minorities % % Net profit - Parent Bank % % Cost/income ratio % 61.4% 57.8% -4.5 pips 54.7% -3.1 pips Cost of credit 0.71% 0.71% 0.67% pips 0.50% pips ROE - Parent Bank 7.5% 6.4% 7.7% 0.2 pips 9.5% 1.8 pips ROTE - Parent Bank 8.5% 7.3% 8.5% 0.0 pips 10.4% 1.9 pips Loans 48,186 54, % 58, % Direct deposits 48,580 53, % 57, % Forecast figures 1) Operating costs/ gross margin 2) Calculated considering 2011 ordinary results base year Page 37

38 Forecast 2014: direct deposits and loans Direct deposits (mn, %) 48, ,186-1,000 Public treasuries shortfall required by Manovra Monti +4,950 Inertial growth Loans (mn, %) +5,791 CAGR 2011/ % CAGR 2011/ % ,300 BP growth 53, e 54,577 Direct deposits and loans balanced growth (not considering public treasuries shortfall due to Manovra Monti ) The 2014 expected loans/ deposits ratio is apx % compared with 99.2% at the end of 2011 Coverage of non performing and watch list loans expected to grow slightly Without considering specific actions to reduce NPL stock, the weight of non performing/ watch list loans to total loans will remain still high at the end of the 3 years 2011 Inertial growth BP growth 2014e Page 38

39 Forecast 2014: main economic figures (1 of 2) Focus on revenues and cost of credit NII + NCI (mn, %) CAGR 2011/ % +80 2,197 Good growth in NII and NCI leveraging revenue synergies expected from the Business Plan initiatives, which could almost double the inertial growth 2, Gradual release, with a negative sign, of the Fair Value Option, which had generated a significant benefit in 2011 Slight improvement in the cost of credit in Inertial growth Revenue synergies 2014e Finance (mn, %) Cost of credit (%) CAGR 2011/ % Dividends FVO Trading, plus, minus 0.71% 0.72% Δ 2011/ pips 0.71% 0.67% e e 2013e 2014e Page 39

40 Forecast 2014: main economic figures (2 of 2) Focus on costs and cost/ income Other administrative costs (mn, %) +20 CAGR 2011/ % Decrease in administrative costs despite the efforts required by the Business Plan Slight increase in payroll costs due to one-off costs and turnover incentives Improvement in cost/income ratio by 4.5 pips in the three years (expected 3.1 pips additional reduction by 2016) 2011 Inertial growth BP growth Cost synergies 2014e Payroll costs (mn, %) Cost/income ratio 1 (%) +33 CAGR 2011/ ,97% Δ 2011/ pips 62.3% 63.1% 62.1% 57.8% Inertial growth Personnel turnaround costs 1) Operating costs/gross margin 2) Data for 2011 is based on ordinary P&L Cost synergies 2014e e 2013e 2014e Page 40

41 Forecast 2014: Gross and Net synergies Breakdown by type and enabling action (mn ) Synergies in 2014 by type and enabling actions Ordinary actions Not-ordinary actions Revenue synergies Cost synergies Personnel cost synergies Total Gross synergies BP projects implementation costs Personnel turnaround costs Total Net synergies Page 41

42 Forecast 2014: Revenue and Cost synergies Breakdown by project ( mn, %, values in 2014) Revenue Gross synergies in % Impact on Net interests and other banking income Total revenue synergies Business model evolution Multi-channel strategy enhancement Development of high value-added services Advanced pricing management Enhancement of existing customer base Other +3.81% +0.93% +0.81% +0.76% +0.47% +0.38% +0.46% Cost Gross synergies in % Impact on Operating Costs Total cost synergies Personnel cost synergies Cost Reduction New Group structure Efficient management of Group NPLs Network rationalization HR Cost Management Evolution of Group Operations Paperless -6.84% -3.22% -1.46% -1.06% -0.49% -0.20% -0.16% -0.12% -0.11% Page 42

43 Investments and direct costs in the 3-year period Breakdown by year and area (mn ) Breakdown costs/ investments 1 by year and area Costs/ investments by year Costs/ investments by area e 2013e 2014e Total Not-ordinary actions Commercial Capital and Risk Human Resources Operations Business governance 1) Costs + amortization charges per year Page 43

44 Forecast 2014: Core Tier 1 Ratio Core Tier 1 Ratio evolution (%) Inertial Not-ordinary actions Ordinary actions Sub-total 2014e Basel II 2014e Common equity ratio (%) Page 44

45 Contacts for Investors and Financial Analysts Gilberto Borghi Head of Investor Relations Via San Carlo, 8/ Modena - Italy Ph [email protected] Alessandro Simonazzi Head of Planning & Control Via San Carlo, 8/ Modena - Italy Ph [email protected] Page 45