Banca Popolare di Vicenza Company profile Latest update September 2015
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BPVi Group BPVi turnaround Financial Results Capital ratios evolution Funding Breakdown Contacts
BPVi at a glance Highlights 1 8th largest Italian banking group * BPVi was established in 1866. The Bank offers retail and corporate banking services to 1.3 mln customers. BPVi is market leader in customers acquisition (on average +62 K per year 2010-2014) and shows a consolidated loyalty and a strong long term relationship with its clients 2 Commercial bank BPVi is a commercial bank, active in 16 Italian Regions, representing 96% of Italian GDP. It has a strong regional footprint in some of wealthiest Regions of North East of Italy (above all in Veneto and Friuli VG with a market share above 7%). BPVi has a strong presence in the central Regions (Tuscany and Lazio) and in Sicily as well 3 Traditional banking business BPVi has a traditional banking business model. 37% of the loan book is represented by lending to households and 56% is represented by lending to corporates (mainly SMEs). From a liquidity perspective, 87% of its funding is realized through branches 4 Very active in capital markets BPVi is a very active player in capital markets both on secured and unsecured space. In the secured space, with its securitization Programme under the Berica brand (since early 2000 BPVi acted as originator in 14 RMBS, 2 SME ABS and 1 consumer ABS transactions). In Senior unsecured space BPVi was able to complete several transactions both on public and private side (*) Excluding Banks belonging to foreign groups Source: BPVi 4
BPVi Group s business areas as of 30 June 2015 Total assets: 41,139 mln (BPVi 93%) Banks Product Factories & Investment Co. Banca Nuova S.p.A. 100% Farbanca S.p.A. 70.76% Prestinuova S.p.A. 100% BPV Finance International ppc 99.99% Proprietary Trading BPVi Multicredito Ag. in Attività Finanz. S.p.A. 100% Servizi Bancari S.c.p.A. 99% Sec Servizi S.c.p.A 49.81% Services Immobiliare Stampa S.c.p.A 100% Monforte 19 S.r.l 100% Cattolica Assicurazioni 15.07% ABC Assicura S.p.A. 40% Bankassurance 60% Cattolica Life Ltd 40% Berica Vita S.p.A. 40% Corporate & Investment Banking NEM SGR S.p.A. 100% Fondo NEM Imprese II Fondo NEM Imprese Indust. Opport. Fund Companies which are part of the Group Companies which are not part of the Group, but contribute to the business Source: BPVi Funds which are part of the Group 5
BPVi Group s market positioning as of 30 June 2015 (*) 10 largest banking groups in terms of branches 10 largest banking groups in terms of total assets 1 2 3 4 Unicredit Intesa San Paolo Monte dei Paschi di Siena Banco Popolare BRANCHES (#) 7,121 5,608 2,213 1,852 1 2 3 4 Unicredit Intesa San Paolo Monte dei Paschi di Siena Banco Popolare TOTAL ASSETS ( /mln) 875,126 668,399 177,705 125,021 5 Ubi Banca 1,563 5 UBI Banca 119,454 6 Banca Pop. Emilia Romagna 1,273 6 Banca Pop. Emilia Romagna 60,925 7 Banca Popolare di Milano 654 7 Banca Popolare di Milano 49,308 8 Gruppo BPVi 653 8 Gruppo BPVi 41,139 9 Carige 627 9 Veneto Gruppo Banca BPVi (**) 32,397 45,235 10 Veneto Banca (**) 552 10 Carige 30,804 (*) Excluding Banks belonging to foreign groups (**) Excluding BIM and IPIBI Source: BPVi 6
Distribution network in Italy as of 30 June 2015 Geographical distribution BPVi Group distribution network June 2015 5 6 92 19 2 273 70 BPVi Banca Nuova Farbanca Multicredito 559 93 93 2 1 1 28 1 Branches BPVi Group 653 703 Points of sales 2 2 Financial Points 14 Private Banking Offices 36 Area Points of sales North East 51% North West 15% Center 18% South 16% 92 15 Points of sales 703 Financial Promoters 116 Financial Agents 175 Source: BPVi 7
BPVi s market share as of 30 June 2015 Market share by branches Market share by performing loans 1.66% 1.94% 2.01% 2.13% 2.14% 1.95% 2.00% 1.96% 1.96% 1.84% Dec. 2010 Dec. 2012 Dec. 2013 Dec. 2014 March 2015 Dec. 2010 Dec. 2012 Dec. 2013 Dec. 2014 March 2015 1.18% Market share by direct funding 1.39% 1.32% 1.30% 1.25% Dec. 2010 Dec. 2012 Dec. 2013 Dec. 2014 March 2015 Source: BPVi BPVi is the 8th largest Italian banking group - in terms of branches with a market share in Italy equal to 2.14%; the aforementioned market share by branches increased by 0.48 p.p compared to December 2010 and by 0.13 p.p. compared to year end 2013. Market share by performing loans increased by 0.12 p.p compared to December 2010 and it is almost in line with year end 2014 Market share by direct funding increased by 0.07 p.p. compared to December 2010 and, compared to year end 2014, shows a 0.05 p.p. reduction 8
BPVi ratings Latest rating actions The following table shows the current ratings assigned to Banca Popolare di Vicenza by Fitch and DBRS: Rating Agency Long Term Short Term Outlook Last assessment Fitch Ratings BB B Rating Watch Negative 15 July 2015 DBRS BB R-4 (Stable) Negative 2 September 2015 On 15 July 2015, Fitch Ratings as part of its annual revision of the ratings of Italian medium-sized banks, has placed BPVi s 'BB' Long-term Issuer Default Rating on Rating Watch Negative. Fitch has also affirmed BPV's Short-term rating at 'B. The Rating Watch Negative reflects Fitch's expectation that BPVi is likely to report significant losses that will require additional capital, potentially for a material amount and to be raised in a fairly short timeframe. On 2 September 2015 DBRS has lowered its ratings on Banca Popolare di Vicenza. The ratings include a Senior Long- Term Debt and Deposit Rating of BB and a Short-Term Debt and Deposit Rating of R-4 (Stable trend). The downgrade follows publication of BPVI s 1H15 results which revealed a meaningful deterioration in the Bank s capital position; the Negative trend on the Bank s Senior Long-Term Debt & Deposit Rating takes into account the risk related to complete the capital plan. Further progress on Bank s restructuring, IPO and capital position could contribute to a more supportive view of the rating by DBRS over the medium term. Source: BPVi 9
BPVi Group BPVi turnaround Financial Results Capital ratios evolution Funding Breakdown Contacts
BPVi turnaround Actions and timeline Management Balance Sheet Capital Company June 2015 on going June Dec. 2015 renewed top management a second wave of credit impairments due to further strengthening of NPE Coverage Ratio and anticipation of new triggers introduction impairments on AFS and provisions for risk and charges impairments on goodwill application of prudential filters to CET1 as a consequence of recognition of non eligible Capital Sept. 2015 April 2016 April 2016 New Lower Tier 2 Issuance (up to 200 mln) New capital increase to comply with regulatory requirements and sustain industrial plan transformation into Joint Stock Company (i.e. Italian S.p.A. ) listing on Italian Stock Exchange new governance Source: BPVi 11
Focus Management turnaround on going Anna Tosolini Francesco Iorio Former General Manager in UBI Banca 20 years of experience Former Head of Special Projects in BPER Previous experience in Meliorbanca and BNP Paribas 20 years of experience COMPLIANCE & AML DPT. Ferrante G. Compliance & AML Officer CORPORATE DEVELOPMENT DEPARTMENT Tosolini A. GENERAL SECRETATIAT DPT. Sommella M. General Secretary GROUP IDENTITY & COMMUNICATION DPT. ( ) CEO & GENERAL MANAGER (Iorio F.) INTERNAL AUDIT DEPARTMENT Bozeglav M. BUSINESS TRANSFORMATION & COST MANAGEMENT DPT. Siccoli L. RISK MANAGEMENT DPT. Piazza Spessa A. Risk Manager LEGAL AFFAIRS DPT. Papacchini A. Leonardo Siccoli Former Deputy General Manager in CentroBanca (CIB UBI Group) 25 years of experience Alberto Piazza Spessa Former Head of Risk Management in UBI Banca 18 years of experience FINANCIAL REPORTING & PLANNING DIVISION Pellegrini M. Financial Reporting Manager COMMERCIAL BANKING DIVISION De Francisco I. Senior Deputy GM OPERATIONS & HR DIVISION Cauduro A. Deputy GM FINANCE DIVISION Cavrioli D.P. LENDING DIVISION Beretta A. Iacopo De Francisco Former Chief Commercial Officer in BPM (since 2012) Former Deputy GM, Head of Retail Banking in CREDEM 18 years of experience Diego Paolo Cavrioli Former Head of Finance Division in UBI Banca 30 years of experience Alberto Beretta Former Head of Credit Underwriting Unit in BPM (since 2013) 30 years of experience Source: BPVi 12
BPVi Group BPVi turnaround Financial Results Capital ratios evolution Funding Breakdown Contacts
Statement of Financial Position as of 30 June 2015 - Highlights Net customers loans ( /mln) Direct funding ( /mln, excluding repo CC&G) 29,985 30,713 30,893 28,111-4.7 % 26,779 25,960 28,069 29,194 28,613-5.6% 27,017 Dec 2011 Dec 2012 Dec 2013 Dec 2014 June 2015 Dec 2011 Dec 2012 Dec 2013 Dec 2014 June 2015 Asset under custody Asset under mgm 16,727 4,320 Indirect deposits ( /mln) 17,589 4,349 +2.2% excluding BPVi shares depreciation 19,051-3,6% 20,520 19,779 5,038 6,598 +12.4% 7,417 Loan to Deposit ratios 99.8% 97.6% 98.2% 96.1% 96.9% 92.6% 12,407 13,240 14,013 13,922-11.2% 12,362 Dec 2011 Dec 2012 Dec 2013 Dec 2014 June 2015 Dec 2013 Dec 2014 June 2015 loans to deposits ratio loans to deposits ratio (excl.repo via CC&G-LSE Group) Source: BPVi 14
Income Statement as of 30 June 2015 - Highlights Income Statement Eur K BPVi Group ( /K) 1H 2015 1H 2014 Abs. chg. vs 2014 % chg. Vv 2014 Net interest income 257,474 259,975-2,501-1.0% o.w. securities portfolio contrib. (managerial data) 31,621 40,006-8,385-21.0% Dividends and profit from invest. carried at equity 31,384 18,888 +12,496 +66.2% Net fee and commission income 170,142 147,040 +23,102 +15.7% Net profit for property portfolio 100,449 111,452-11,003-9.9% Other operating income -143 27,973-28,116-100.5% Net Operating Income 559,306 565,328-6,022-1.1% Administrative Costs -322,144-313,784-8,360 +2.7% o.w.: staff expenses -207,268-200,155-7,113 +3.6% o.w.: other administrative expenses -114,876-113,629-1,247 +1.1% Depreciation -17,730-18,009 +279-1.5% Net Operating Costs -339,874-331,793-8,081 +2.4% Net Profit from operating activities 219,432 233,535-14,103-6.0% Net impairment adjustments -1,089,131-187,020-902,111 n.s. - o.w. on loans and advances -703,035-157,442-545,593 n.s. - o.w. on assets available for sale -119,319-27,369-91,950 n.s. - o.w. Impairment on goodwill -268,792 0-268,792 n.s. Net provisions for risk and charges -380,097-7,325-372,772 n.s. Net income before taxes -1,250,246 39,208-1,289,454 n.s. Further strengthening of NPE Coverage Ratio (from 35.1% in last quarter 2014 to 39.6%) Impairment on AFS led to a minimization of negative reserves Impairment of most of the goodwill, with negligible future risk of further devaluation (residual value of goodwill Eur 61 mln) Additional provisions for risk and charges to address potential claims for financed capital Net income -1,052,923 22,038-1,074,961 n.s. Cost to income I level 74.1% 73.1% +1.0 p.p. Cost to income 60.8% 58.7% +2.1 p.p. Cost of Risk 5.25% 1.05% +4.2 p.p. 15
Credit quality as of 30 June 2015 - Highlights NPL 2013 Eur mln +187 +3.5% 5,379 5,566 2,756 +6.3% 2,928 +371 +6.7% +3.8% 5,937 3,039 2014 2015 +343 +5.8% +4.1% +194 +3.1% 6,280 6,474 3,163 +7.5% 3,402 +346 +5.4% +4.3% 6,820 3,546 +795 +11.7% +16.0% 7,615 4,112 Year End 2014 +1,095 +20.4% +646 +23.4% Change 1 Half 2015 +1,141 +17.6% +711 +20.9% Unlikely to pay 2,119 +7.6% 2,279 PastDue % on total loans +3.4% +51.3% 2,356 2,413 +10.7% 2,704 2,994 3,345 505-29.0% 358 542 704 368-23.8% -43.8% 280 157 dec'13 mar'14 jun'14 sep'14 dec'14 mar'15 jun'15 NPE 16.6% 17.9% 18.7% 20.5% 21.2% 22.1% 25.4% NPL 8.5% 9.4% 9.6% 10.3% 11.1% 11.5% 13.7% Unlikely to pay 6.5% 7.3% 7.4% 7.9% 8.9% 9.7% 11.2% PastDue 1.6% 1.2% 1.7% 2.3% 1.2% 0.9% 0.5% +2.4% +29.8% +12.1% -47.7% +11.7% +585 +27.6% -137-27.1% +4.6 p.p. +2.6 p.p. +2.4 p.p. -0.4 p.p. +641 +23.7% -210-57.2% +4.2p.p. +2.6p.p. +2.3p.p. -0.7 p.p. 16
Coverage as of 30 June 2015 - Highlights 2013 2014 2015 Δ 31 Dec. 2014 Net of write-offs 35.1% 35.1% 39.6% 27.3% 27.9% 27.8% 27.6% AQR Impact +4.5 p.p. dec'13 mar'14 jun'14 sep'14 dec'14 mar'15 jun'15 PastDue 3.8% 3.8% 3.9% 3.9% 10.5% 11.1% 11.6% Unlikely to pay 12.2% 11.8% 12.9% 13.1% 19.5% 19.5% 19.8% NPL (excl. write-offs) 43.1% 43.4% 43.7% 43.9% 50.1% 50.2% 56.8% NPL (incl. write-offs) 48.7% 48.6% 48.7% 48.6% 54.1% 54.0% 59.6% NPE (incl. write-offs) 31.1% 31.6% 31.3% 30.8% 37.9% 37.8% 41.8% +1.1p.p. +0.2 p.p. +6.6 p.p. +5.5 p.p. +3.9 p.p. 17
BPVi Group BPVi turnaround Financial Results Capital ratios evolution Funding Breakdown Contacts
Capital plan Regulatory capital plan 3,293 1,783 up to 1,500 ~3,200 Potential upgrade related to AIRB validation and reimbursement of loans linked to capital not considered CET1 Dec. 2014 CET1 June 2015 Capital Increase CET1 Pro-forma* RWA 29,048 26,172 > 26,000 CET1 11.34% 6.81% > 12% TCR 12.49% 7.63% > 13% Actions Timing Lower Tier II Issuance up to 200 /mln Sept. 2015 In progress ICPBI disinvesture net profit 150 /mln Dec. 2015 Plan *post capital increase Capital Increase 1,500 /mln Spring 2016 Plan 19
BPVi Group BPVi turnaround Financial Results Capital ratios evolution Funding Breakdown Contacts
Direct funding breakdown as of 30 June 2015 Direct funding by segment ( /mln) 30,373-2,727-8.9% 1,762-1,133-64.3% 3,376-333 -9.8% 27,646 629 3,043 Direct funding decreased by 2,727 /mln (compared to year end 2014) due to a consistent reduction of Repo Transaction and funding with wholesale clients (due to a strong repricing action aimed to reduce cost of funding and optimize LCR) Thanks to the sound liquidity position, Institutional funding decreased by 9.8% (in line with 2015 Funding Plan targets) 25,237-1,263-5.0% 23,974 Direct Funding (4) with Retail/Network Clients decreased by 1,263 /mln (-5%) Funding from Clients (1) Institutional Funding (2) Other (3) 31 Dec. 2014 30 June 2015 (1) Bank accounts, Deposits (restricted and unrestricted), Deposit Certificates, Retail Bonds (excl. EMTN and Private Placement) and Other Bonds (2) EMTN and Private Placement (3) Repo transactions via CC&G (LSE Group) and Other Debts (4) Direct Funding includes 2.5 /bln of Securitization placed in the market Source: BPVi 21
First half 2015 Group s Funding Plan Main achievements in capital markets ( /mln) 1200 1000 800 600 Eur 2.4 bln secondary market selldown 46 Berica PMI 5 yrs Public deal 3 yrs public deal 125 Berica ABS 3 ABS/RMBS EMTN 5 yrs Public deal Berica ABS 4 400 200-500 400 300 661 846 307 227 392 980 693 169 150 201 834 100 98 150 267 729 Oct. 2012 Nov. 2012 Jan. 2013 Apr. 2013 May. 2013 Jul. 2013 Aug. 2013 Oct. 2013 Nov. 2013 Dec. 2013 Jan. 2014 Mar. 2014 Apr. 2014 Jun. 2014 Jul. 2014 Aug. 2014 Sep. 2014 Jan. 2015 750 Mar. 2015 July 2015 BPVi has been very active in the last years in EMTN/senior unsecured space: 750 /mln of a public 5 year senior bond under EMTN Programme in March 2015 973.8 /mln of senior bonds under EMTN Programme (mainly based on reverse inquiries) issued in 2014 Primary market deals in RMBS space: Adriano (Private Placement) 267 /mln in January 2015 Berica ABS4 729 /mln in July 2015 (fully retained) Source: BPVi 22
Liquidity risk management perspective Liquidity risk metrics BPVi implemented the liquidity risk measurement framework required by EU Regulation 575/2013 CRR and Directive 2013/36/EU CRD IV. The Risk Management Department, reporting to the Board of Directors, is in charge of monitoring the short term liquidity risk, which encompasses the intraday liquidity risk, the operational maturity ladder and the LCR, and the structural liquidity risk, that includes funding composition, structural balance sheet risk and the NSFR. In the course of 2015, regulatory LCR has highlighted values on average equal to 100%, well above the minimum regulatory level of 60% which, following the approval of the Delegated Act, must be reached by 1 October 2015. BPVi monitors the Basel 3 NSFR (considering that the CRR standards haven t prescribed the rules for the computation of a structural liquidity indicator) on a monthly basis: during 2015, the indicator was well above the minimum threshold set in Basel 3 phase-in. BPVi belongs to the panel of banks monitored on a weekly basis by SSM-ECB. From a liquidity perspective, in the course of the current year, the 1 and 3 months net liquidity cumulated position, on average, have highlighted values respectively above 8% and 5% in terms of total asset. Source: BPVi 23
ECB collateral breakdown 39.18% 51.05% ECB collateral by asset type 11.56% 1.01% 17.12% 10.68% 7.93% 2.42% 5.14% 2.21% 76.74% 73.17% 1.79% As of June 2015 (compared with year end 2014), Net (of haircut) ECB collateral market value decreased by 20% The available credit line to access ECB main refinancing operations decreased, since December 2014, by 36% (around 1 /bln) 31 Dec. 2013 31 Dec. 2014 30 June 2015 Central Government Credit Claims (eligible loans) Financials & Others Retained securitization & other RMBS/ABS Senior bond issued with Gov. Guarantee ECB exposure represented by TLTRO is around 1.85 /bln As of August 2015 collateral available is around 3.15 /bln ECB Collateral Pool: 31 Dec. 2013 as % of Total 31 Dec. 2014 as % of Total 30 June 2015 as % of Total Collateral used 3.36 69.47% 1.75 38.16% 1.85 50.41% Collateral (credit line) available 1.48 30.53% 2.83 61.84% 1.82 49.59% Net ECB market value 4.84 100.00% 4.58 100.00% 3.67 100.00% Source: BPVi 24
BPVi Group BPVi turnaround Financial Results Capital ratios evolution Funding Breakdown Contacts
Contacts Senior unsecured bond/emtn Direct line: +39 02 62481260 e-mail: emtn@popvi.it Structured Finance/ABS Direct line: +39 02 62481260 e-mail: abs@popvi.it 26
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