An introduction to the UBI Banca Group March 2015
Disclaimer 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 31 st December 2014 unless otherwise stated. Page 1
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 Page 2
Background Unione di Banche Italiane Scpa ( UBI Banca ) was formed following the merger of the BPU Banca and Banca Lombarda e Piemontese Groups (1st April 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. Birth of the Banca Mutua Popolare della Città e Provincia di Bergamo, subsequently renamed Banca Popolare di Bergamo (BPB) 1869 1883 Birth of the Credito Agrario Bresciano (CAB) Page 3 Birth of the Società per la Stagionatura e l Assaggio delle Sete ed Affini subsequently renamed Banca Popolare Commercio e Industria (BPCI) 1888 1888 Birth of the Banca San Paolo di Brescia (BSPB) Merger of BPB and Credito Varesino (BPB-CV) 1992 1963 BSPB acquires Banca di Valle Camonica (BVC) Acquisition of Banca Popolare di Ancona (BPA) by BPB-CV. Birth of the BPB-CV Group 1996 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 Acquisition of Banca Carime by BPCI 2001 Birth of the BPU Banca Group from the integration of BPB-CV and BPCI 2003 2000 Acquisition of Banca Regionale Europea * by Banca Lombarda. The Group takes the name of 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 1st April 2007 Birth of UBI Banca following the merger of the BPU Banca Group and the Banca Lombarda e Piemontese Group
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. The said principles are equally applied to listed and nonlisted popular banks 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) 48.9 35.3 Market Capitalisation as at (EUR bln) 5th March 2015 Source: Il Sole 24ore Italian Financial Newspaper Dated 6th March 2015 * *As at 19th May 2014 (ex dividend date), total shareholders (voting and non voting) number 152,000 Page 4 #3 6.3 4.9 3.7 3.5 2.8
UBI Banca and its Peers No. of branches as at 31 st December 2014 Total assets as at 31 st December 2014 ( bln) 7,616 5,867 844 2,226 1,878 # 5 1,676 1,274 706 646 183 123 # 5 122 61 48 471 Customer loans as at 31 st December 2014 ( bln) 561 Total direct funding as at 31 st December 2014 ( bln) 339 120 # 4 86 80 360 126 # 4 93 87 44 32 46 37 Page 5 Source: Press releases.
UBI Banca s profile in a snapshot: predominant retail business, solid capital base and low risk profile Strong competitive positioning 1 st Italian 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 Solid Capital and Balance Sheet Position 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 Good asset quality compared to the Italian banking system Cost of credit of 108 bps of total loans 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 Page 6 Figures as at 31 st December 2014 unless otherwise stated * Data referred to banking perimeter only.
The Group Structure 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...) 8 DOMESTIC NETWORK BANKS MAIN PRODUCT COMPANIES 351 branches 100.00% 288 branches 100.00% ASSET MANAGEMENT UBI Pramerica (partnership with Prudential US) Northern Italy Central Italy 196 branches 208+3* branches 66 branches 208 branches 83.76% (1) 74.76% (2) 82.96% (3) 99.53% FACTORING LEASING UBI Factor UBI Leasing LIFE BANCASSURANCE Lombarda Vita (partnership with Cattolica) Aviva Vita Spa Aviva Assicurazioni Vita Spa ON LINE TRADING IW Bank ** Southern Italy 216 branches 99.99% ** 21 branches 713 financial advisors 100.00% Page 7 Information updated as at 19 January 2015 *indicates branches outside Italy **Merger announced to be completed in 1H2015
Presence in Italy Introduction to the UBI Banca Group: Predominant Retail Business and Strong Northern Italian Franchise 1 169 38 762 1 27 43 9 Approx. 3.7 million clients, mainly retail 1,560 branches, of which 762 in Lombardy (which generates over 20% of Italian GDP) 1 7 80 18 17 106 6 78 94 19 84 Market share in terms of branches above 20% in some of the richest Provinces such as Bergamo, Brescia and Varese 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 Cuneo 23.4 18.4 16.0 National market share of 5.4% in terms of branches 1,560 branches in Italy + 6 branches abroad As at 19 January 2015 * Market shares calculated as at 30th June 2014. Page 8
Agenda UBI Banca International Network International Network Presence in the world Page 9
International Network COMMERCIAL BANKS FOREIGN BRANCHES SUBSIDIARIES FOREIGN BRANCHES REPRESENTATIVE OFFICES MENTON, NICE AND ANTIBES (Banca Regionale Europea) KRAKOW (UBI Factor) MOSCOW SAO PAULO SHANGHAI (Zhong Ou Asset Management Company) MUMBAI SHANGHAI HONG KONG VIENNA (Business Consultant) Head office in Luxembourg FOREIGN BANKS NEW YORK (Opening 2015) DUBAI (Opening 2015) SUBSIDIARIES BRANCHES UBI TRUSTEE SA (Luxembourg) LUXEMBOURG MADRID MUNICH Page 10
Presence in the world 2015 opening of Rep Offices in New York and Dubai Munich UBI Banca International Branch Krakow UBI Factor Branch Vienna Business Consultant Luxembourg UBI Banca International UBI Trustee SA Antibes, Menton, Nice Banca Regionale Europea Branches Moscow Representative Office Shanghai Representative Office Shanghai Zhong Ou Asset Management Company Co. Ltd* Madrid UBI Banca International Branch São Paulo Representative Office Mumbai Representative Office Hong Kong Representative Office Page 11 * 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 31 st 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).
Agenda Contacts UBI Banca Correspondent Banking Representative Offices Contacts Page 12
UBI Banca Sergio Passoni Head of Global Transaction and Operations Isabella Moavero - Head of Correspondent Banking and Representative Offices Correspondent Banking - correspondent.banking@ubibanca.it Alistair Newell Relationship Manager alistair.robert.newell@ubibanca.it Indian Subcontinent, China & Far East, Oceania Ernst Rolf Hartmann Relationship Manager ernst.rolf.hartmann@ubibanca.it North America, Central America, South America, Caribbean, Israel Lorenzo Tassini Relationship Manager lorenzo.tassini@ubibanca.it Turkey, Middle East, Africa Marco Camozzi Relationship Manager marco.camozzi@ubibanca.it Global Players Responsible for relationships with multiregional banking groups & Special Projects Riccardo Rossi van Lamsweerde Relationship Manager riccardo.rossi.van.lamsweerde@ubibanca.it Europe & CIS Countries Page 13
Representative Offices Contacts HONG KONG MUMBAI SHANGHAI 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 Ms Rajeshree Balsari mumbai@ubibanca.com 92 Mittal Chambers, 9 th Floor, Nariman Point, 400 021 Mumbai - India Tel. +91 22 22023601 Fax +91 22 22023603 Ms Lu Bo office@ubibanca.sh.cn The Center Suite 3304 989, Changle Road 200031 Shanghai China Tel +86 21 61675333 Fax +86 21 61675582 MOSCOW Mr Ferdinando Pelazzo moscow@ubibanca.com 10, Nikolskaya str., 4 th floor, Business Centre Nikolskaya Plaza 109012 Moscow - Russia Tel. +7 495 725 4466 Fax +7 495 725 4465 SAO PAULO Mr Isidoro Guerrerio saopaulo@ubibanca.com Al. Ministro Rocha Azevedo, 456 Ed. Jaù - 4 And.Cj.402 CEP 01410-000 São Paulo - Brazil Tel. +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 14
Agenda Annex Foreign Banks Product Companies Group Results Group BIC codes Page 15
Foreign Banks 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 Page 16 Data as at 31.12.2014
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 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 17 Data as at 31.12.2014, unless otherwise stated
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) PROPOSED DIVIDEND PER SHARE ( ) 0,05 0,06 0,08 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 Page 18 FY12 FY13 FY14 Cash dividend always paid through the crisis
UBI Banca Main Consolidated figures: Balance Sheet Main balance sheet figures Figures in billions of euro Dec 13 Dec 14 COMPREHENSIVE ASSESSMENT RESULTS 26 TH Oct 14 UBI Italy SSM* Loans to customers 88.4 85.6 CET 1 as at 1 st Jan 2014 12.25% 10.17% 11.77% Direct funding 92.6 93.2 AQR adjusted CET 1 11.82% 9.47% 11.35% of which: Direct Funding from Ordinary Customers (current accounts + retail bonds) of which: Direct Funding from Institutional Customers Net Interbank exposure (not included in Direct Funding mainly LTRO) 74.7 74.0 17.9 19.3 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 CET 1 after adverse scenario Capital excess after AQR and adverse stress test 8.20% + 1.7 bln/ 6.14% 8.37% CAPITAL RATIOS AS AT 31 st Dec 14 The Group s solid capital strength is confirmed: Common Equity Tier 1 ratio phased in as at 31 st December 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%, fully loaded of 5.42% of which: AUC 32.1 32.5 Page 19 Page 20
UBI Banca Main Consolidated figures: P&L & Outlook 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 Impairment on tangible and intangible assets (net of tax and non-controlling interests) Charges for exit incentives (net of tax and non-controlling interests) OUTLOOK 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 315 233 (25.9%) 213 44 83 (72.7%) (17.3%) (38) (883) n.s. (38) (883) n.s. n.s. The downwards trend for other administrative expenses is forecast to continue (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. 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 Profit for the period NET OF NON-RECURRING ITEMS 100 147 46.2% 26 45-29 n.s. n.s. Page 20 Page 20
Group BIC codes BEPOIT21 BCABIT21 BREUITM1 BLOPIT22 POCIITM1 BPAMIT31 CARMIT31 BVCAIT21 BLPIIT21 CABILULL UBIBESMM BEPODEMM Madrid Branch Munich Branch BIC ACTIVE BIC NON ACTIVE Page 21