unicredito italiano group 1 st quarter 2003 results alessandro profumo - ceo
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UNICREDITO ITALIANO GROUP 1 st Quarter 2003 Results Alessandro Profumo - CEO. May, 14 th 2003. DISCLAIMER. - PowerPoint PPT PresentationTRANSCRIPT
UNICREDITO ITALIANO GROUP1st Quarter 2003 Results
Alessandro Profumo - CEO
May, 14th 2003
2
DISCLAIMER
Starting from 1 January 2003, UCI operates in Italy through three new born segment banks (UniCredit Banca, UniCredit Banca d’Impresa, UniCredit Private Banking) resulting from the merger and the following spin-off of the former 7 regional banks
Given the lack of 2002 quarterly accounting data comparable to 1Q03 for the three new segment banks and in order to facilitate the comprehension of y/y and q/q trends for the Italian banking activity, we provide a comparison between 2002 and 2003 on the aggregated results of the three new segment banks (former 7 regional banks pro-forma in 2002)
We provide a 2002 pro-forma for the aggregate three banks in order to consider the changes in perimeter and pricing due to S3 project implementation (reorganisation of the Group’s Real Estate properties and rationalisation of some companies)
Accordingly, the divisional structure of the Group has been changed with the creation of a Retail Division, a Corporate Division and a Private & AM Division
3
NEW DIVISIONAL STRUCTURE
New Europe Banks
New Europe division
Private & AM division
Pioneer
Xelion
Corporate division
UBM
BMC(3)
Locat(4)
Clarima(1)
Adalya(2)
TradingLab
Retail division
(1) Consumer Finance (2) Retail mortgages (3) M/l term corporate financing (4) Leasing
4
AGENDA
1Q03 Group Highlights
Divisional Reporting
Retail Division
Corporate Division
Private & AM Division
New Europe Division
Conclusions
5
POSITIVE TREND IN TOTAL REVENUES AND GOOD COST CONTROL, AFTER THE START UP OF THE NEW 3 SEGMENT BANKS AND DESPITE THE STILL NOT FAVOURABLE ECONOMIC SCENARIO
At unchanged FX(1)
TOTAL REVENUES (Euro mln)
OPERATING EXPENSES (Euro mln)
COST/INCOME RATIO %
4Q02 1Q03
2,507 2,656
1Q02
2,675
4Q02 1Q03
1,464 1,399
1Q02
1,373
FY02 1Q03
54.5 52.7
1Q02
51.3
-178 bp+134 bp
+7.8%+5.9%
-0.7% +1.7%
-3.1%-4.4%
+1.9% +4.2%
(1) Calculated on the FX of all the currencies of New Europe countries where UCI is present with fully consolidated banks.
6
At unchanged FX(1)
OPERATING INCOME (Euro mln)
GOOD NET INCOME GROWTH (+5.5% on 1Q02, +14.4% on Avg02)HIGH PROFITABILITY LEVELS RECONFIRMED (ROE AT 18.3% IN 1Q03, +1.1 pp on FY02)
ROE (2) %
17.2 18.318.4
+1.1 pp-0.1 pp
FY02 1Q031Q02
NET INCOME (Euro mln)
352515488
4Q02 1Q031Q02
(2) Calculated on end of period net equity excluding profit for the period and dividends related to FY02
1,0431,2571,302
4Q02 1Q031Q02
+23.2%+20.5%
-3.5% -0.9%
+47.4%+46.2%
+5.5% +7.6%
(1) Calculated on the FX of all the currencies of New Europe countries where UCI is present with fully consolidated banks.
7
WITH THE NEW DIVISIONAL STRUCTURE WE CONFIRM A WELL DIVERSIFIED BUSINESS PORTFOLIO
(Euro mln)
45.8%
7.9%
14.1%
100%
32.2%
(1) Parent Company, USI, UPA, Audit, other companies and elisions
210
374
1,219
2,6562,658
Retail Division
Private & AM
Division
New Europe Division
Corp. Centre and elisions(1)
Group Total
Total pre-Corp. Centre
-2
855
Corporate Division
Weight of the division on Total pre Corporate Centre
REVENUE COMPOSITION BY DIVISION
8
TOTAL DEPOSITS NEARLY STABLE ON DEC02 (-0.9%) LINKED TO A SHIFT INTO INDIRECT DEPOSITS (+1.7% ON DEC02)
-0.9%
-3.3%
DIRECT DEPOSITS: BREAKDOWN BY DIVISION** (bn)
TOTAL DEPOSITS*
(bn)
Dec02 1Q03
339.9
Dec02 1Q03
108.8112.5
Retail
New Europe
Corporate
55.7
21.2
20.4
55.0
19.6
21.9
-7.2%
-1.3%
Other
Direct deposits mainly hit by funding policy (bonds: -1.9% on Dec02) and by the FX impact (Zloty: -9%, $: -3.7% on Dec02) with outflows into indirect funds
Indirect deposits up 1.7% on Dec02 due to an increase in administered (+4.1%) and a slight decrease in managed funds (-0.8%). This last trend is determined by a negative impact both of market performance (MSCI: -5.6% on Dec02) and FX, nearly completely counterbalanced by positive inflows
Direct
Indirect
-19.4%
211.6 215.3
-5.2%
+1.7%
128.3 121.6
336.9
15.2 12.3
*Incl. Repos ** Excl. Repos
Retail Division down 1.3% on Dec02 with a different customer deposit mix: Stable C/A Negative trend of bonds and CDs
Corporate Division down 19.4% also hit by seasonal corporate fiscal payments concentrated in the beginning of the year
New Europe Division down 7.2% on Dec02 impacted by FX (-1% at unchanged FX)+7.2%
9
CUSTOMER LOANS DOWN 1.3% ON DEC02
TOTAL CUSTOMER LOANS*BREAKDOWN BY DIVISION
* Excl. Repos
Retail Division: substantial stability (+0.5% on Dec02) with a shift towards medium/long term loans
Corporate Division down 2.7% on Dec02 due to rationalisation of credit lines and a reduction of higher risk exposures
New Europe Division down 2.9% on Dec02 hit by Zloty devaluation (+3.4% at unchanged FX)
bn
-1.3%
Dec02 1Q03
110.6112.1
Retail
New Europe
Corporate
41.4
11.82.9
41.6
11.53.1
-2.9%
+0.5%
Other
-2.7%56.0 54.5
+6.3%
10
GOOD RESULTS IN 1Q03 COMPARED BOTH WITH 1Q02 AND 4Q02, HELPED BY THE INCREASED SPREAD IN ITALY AND THE IMPROVEMENT OF THE PARENT COMPANY MORE THAN COMPENSATING WEAKER RESULTS IN NEW EUROPE
NET INTEREST INCOME(Euro mln) 1Q03
y/y % Ch.
% Ch. on 4Q02
Corporate Centre & elisions -14 -68.6 -64.3
TOTAL GROUP 1,258 -3.9 +1.5
1,258 -0.6At constant FX +3.7
New Europe Banking 256 -22.3 -15.4
256 -10.4At constant FX -7.5
Aggr. 3 Banks 898 -0.9 +4.0
- UCI Banca (Retail Division)
- UCI Banca d’Impresa (Corporate Division)
- UCI Private Banking (PB & AM Division)
588
294
15
Other Group companies 118 +0.6 +6.1
Dividends & oth. income from equity inv.1 6 n.m. n.m.
1 Respectively 28 mln in 1Q02 and 49 mln in 4Q02
11
GOOD RESILIENCE OF NET COMMISSIONS (-1.4% YoY, -0.4% QoQ AT UNCHANGED FX)
1Q03YoY % Ch.
% Ch. on 4Q02
PGAM Group (PB & AM Division) 115 -11.0% +3.1%
TOTAL GROUP 787 -2.7% -1.5%
787 -1.4%At constant FX -0.4%
New Europe Banking 86 -5.4% -10.4%
86 +8.0%At constant FX -3.0%
Aggr. 3 Banks 448 -4.9% -0.2%
- UCI Banca (Retail Division)
- UCI Banca d’Impresa (Corporate Division)
- UCI Private Banking (PB & AM Division)
330
74
44
Oth. Group companies, Corp. Centre & El. 107 +15.8% -15.2%
NET COMMISSIONS
(Euro mln)
Breakdown by company/division
UBM (Corporate Division) 31 +21.3% +88.1%
12
GOOD IMPROVEMENT (+5.7%) OF COMMISSIONS FROM WEALTH MANAGEMENT VS 4Q02 …
NET COMMISSIONS
(Euro mln) 1Q03YoY % Ch.
% Ch. on 4Q02
Securities in custody 75 +10.3% -11.8%
TOTAL GROUP 787 -2.7% -1.5%
Total Commissions from Wealth Management
410 -7.2% +5.7%
- Mutual funds 1
- Segregated Accounts 2
269 -12.7% +0.7%
32 -56.2% -20.0%
Other services 302 +1.0% -7.6%
- Insurance Products 2 109 +78.7% +34.6%
(1) Includes subscription and management fees from Plain Vanilla Mutual Funds and management fees from Mutual Funds in Segregated Accounts and in Unit Linked
(2) Management fees related to Mutual Funds underlying Segregated Accounts and Unit Linked not included (see note 1)
Breakdown by nature
13
… DRIVEN BY STRONG SALES OF INSURANCE PRODUCTS IN ITALY AND MUTUAL FUNDS ABROAD, OFFSETTING THE SLIGHT DECREASE OF TOTAL AUMs ON DEC. 2002 AND THE LESS FAVOURABLE ASSET MIX
(1) Plain vanilla Mutual Funds distributed in Italy (Total AuM in Mutual Funds in Italy, including Mutual Funds in Segregated Accounts and Unit Linked, Euro 61.0 bn as at 31.3.2003 vs Euro 62.6 bn as at 31.12.2002, -2.5% - Source: Assogestioni)
UCI TOTAL AuM(Euro bn)
Mutual Funds(1)
Segregated Accounts
Insurance
Negative impact of market and US$ devaluation on Total AUMs and Asset Mix…
… counterbalanced by excellent commercial results
Italy USA, New Europe & Intl.
PGAM AuM: Evolution by Asset Class
Equities
Balanced
Hedge
Bonds
Money Market 12.9%
28.0%
13.3%
45.4%
0.4%
4Q02 Avg.1Q02 Avg. 1Q03 Avg.
16.5%
30.9%
15.0%
36.4%
1.2%
18.9%
38.3%
13.4%
27.8%
1.6%
ITALY
USA, NEW EUROPE & INT.
Bancassurance
1Q03 Total New Premiums written: Euro 1,766 mln (+73.6% YoY, +68.8% on 4Q02), of which around 700 mln in Capital Guaranteed UNISTAR (+3.1% YoY, +52% on 4Q02).
Mutual Funds
1Q03 Gross Sales 27.5% up YoY and +14.9% on 4Q02 (13.3 bn vs 10.4 bn in 1Q02 and 11.6 bn in 4Q02)
Net Sales in USA sticking on 2002 momentum: 962 mln, +15.6% on 1Q02 at unchanged FX
Positive Net Sales in the International Division - ex Italy (Euro 226 mln) and strong trend in New Europe (Euro 284 mln, +302%)
Confirmed leadership in the segment: 18.9% mkt share in bancassurance (17.6% in 2002); 14.9% mkt share on total market (11.7% in 2002)
Euro 183 mln Recurring Premiums written (+237% YoY and +310% on 4Q02)
31.12.’0231.3.’02
37.6
26.0
15.3
23.5
102.4
45.4
28.1
13.5
28.5
115.5
-17.2%
-7.5%
+13.3%
-17.5%
-11.3%
-1.0% vs 31.12.’02
31.03.’03
36.4
25.3
16.4
23.7
101.8
-3.2%
-2.6%
+7.3%
+0.1%
-0.6%
14
BRILLIANT RESULT (+20% Y/Y) FROM FINANCIAL TRANSACTIONS DRIVEN BY THE CORPORATE DIVISION
INCOME FROM FINANCIAL TRANSACTIONS
(Euro mln)
1Q03YoY % Ch.
% Ch. on 4Q02
UBM (Corporate Division) 234 37.4 n.m. (1)
TOTAL GROUP 433 19.9 99.5433 22.0At constant FX 104.2
New Europe Banking 30 -48.4 -50.630 -42.7At constant FX -45.9
Aggr. 3 Banks 97 9.5 140.5
- UCI Banca (Retail Division)
- UCI Banca d’Impresa (Corporate Division)
- UCI Private Banking (PB &AM Division)
-3
102
-2
TradingLab (Retail Division) 62 -0.8 n.m. (2)
Corporate Centre & elisions 10 -148.6 -60.2
Other Group companies 1 -47.5 -72.1
1 Amount in Euro in 4Q02: 72 mln2 Amount in Euro in 4Q02: 17 mln
15
OPERATING COSTS UNDER CONTROL (+1.9% Y/Y)
1Q03YoY % Ch.
% Ch. on 4Q02
TOTAL GROUP 1,399 1.9 -4.4
1,399 4.2At constant FX -3.1
Aggr. 3 Banks 830 0.9 -5.5- UCI Banca (Retail Division) 665- UCI Banca d’Impresa (Corporate Division) 128- UCI Private Banking (PB & AM Division) 37
OPERATING COSTS BREAKDOWN
(Euro mln)
By
Co
mp
an
y /
Div
isio
n (
1)
PGAM Group (PB & AM Division) 84 -5.1 -1.1
UBM (Corporate Division) 47 19.7 2.1
Depreciation 107 4.9 -31.4
Other Costs 481 2.6 -2.0
Staff Costs 811 1.1 -0.7
By
Nat
ure
New Europe Banking 211 -14.7 -18.4211 -2.5At constant FX -11.7
1 Balance of total costs by company/division due to Corporate Centre, elisions and other Group companies
16
Euro 164 mln Specific provisions (of which write-downs for Euro 298 mln and write-backs for Euro 134 mln), down 11.8% vs. 1Q02 (-7.5% at constant FX) mainly due to lower net write-downs of KFS and UBM
Disposal of Investments (Polcard) for Euro 15 mln
Net Write-downs of Financial Investments Euro 15 mln, mainly due to Commerzbank
Provisions for risks & charges Euro 40 mln
NON OPERATING ITEMS CHARACTERISED BY A CONSERVATIVE PROVISIONING POLICY AND A LOW EXTRAORDINARY INCOME
(Euro mln)
Operating income
Goodwill amort.
Net loan loss prov.
Other net prov1
Net extr. income
Taxes Minorities
1,257 -66-164
-55 +20 -437
-40515
Net Income
Tax Rate at 44.3%
1 Net write-downs of financial investments, Provisions for risks and charges, Provision to Reserve for General Banking risks
17
DECREASING NET NPLS AND TOTAL DOUBTFUL LOANS IN ABSOLUTE TERMS; SLIGHT DETERIORATION OF NET NPLs AND NET DOUBTFUL LOANS ON TOTAL NET LOANS RATIOS MAINLY DUE LOWER TOTAL LOANS
Total Net Doub. Loans
Net NPLs
4,259 -0.8%
-0.2%2,150
Dec 02 % Ch. (Euro mln)
4,227
2,145
Mar 03 Conservative provisioning policies in Italy, particularly
in Corporate Banking, with increased coverage ratios either for Retail Banking (from 37.7% to 37.9% on Total Doubtful) or for Corporate Banking (from 40.6% to 41.7%)
Net NPLs and Doubtful Loans as % of Total Net Loans
3.71%
31.3.’03
3.77%
1.87% 1.91%
60.7%60.3%
48.2% 48.1%
Coverage ratios
Net Doubtful Loans/ Total Net Loans
Net NPLs/ Total Net Loans
On Gross Doubtful Loans
On Gross NPLs
31.12.’02 31.3.’0331.12.’02
Other Net Doubtful Loans 2,109 -1.3%2,082 4.0% reduction of Gross and Net NPLs in New
Europe as a result of the improved macroeconomic scenario and efficient workout policies
Calculated on Loans at 31.12.2002
3.68%
1.87%
18
DIVISIONAL CONTRIBUTION TO GROUP NET INCOME
44.7(1)64.4(1)
238.6(1)
515
673.0
Retail Division(2)
New Europe
Division(5)
Corp. Centre & elisions(6)
Group total
Total pre-Corp. Centre
& elisions
-158.0(1)
GOODWILL AND HOLDING CHARGES:
- 69 goodwill depr.- 120 holding loss (net of
dividends), of which 24 negative interest income
(Euro mln)
+7.7%325.3(1)
Corporate Division(3)
Private & AM
Division(4)
(1) Net of infragroup dividends. Goodwill depreciation is fully charged to Corp. Centre(2) UniCredit Banca, Banca dell’Umbria, CRCarpi, TradingLab, TredingLab Inc., Clarima, Adalya, UniCredit Fondi, Pioneer Inv. Man. Luxemboug, Rolo Pioneer Luxembourg, UniCredit
Capital Italia, Vivacity, Grofofactor, Creditras Previdenza(3) UniCredit Banca d’Impresa, UBM, Locat, Locat Rent, Locat Zagreb, BMC, Unicredito Gestione Crediti, UniRiscossioni, UCI Factoring, i-Faber, Quercia Funding, S+R Investimenti,
Sviluppo Nord Ovest, Ventura Finance, UCI Internal Serivces, Broker Credit, UniCredit ServiceLab, Euro Capital Structures
(4) UniCredit Private Banking, Pioneer Global Asset Management Spa, Xelion, Bac Marino, Bac Fiduciaria, Banque Monegasque, Cordusio Fiduciaria, FRT SIM, UniCredit Suisse, Rolo Pioneer SGRpA(5) Group Pekao, Bulbank, Unibanka, Group Zagrebacka, UniCredit Romania, KFS(6) Parent Company, USI, UPA, other financial companies and elisions
From 7.21% (Dec 02)to 7.13% (1Q03)
CORE TIER 1 RATIO(considering all RWA)
From 11.89% (Dec 02)to 11.10% (1Q03)
TOTAL CAPITAL RATIO(considering all RWA)
19
TOTAL GROUP
PRIVATE & AM RETAIL CORPORATE
Net provisions 21927155
Balance due to roundings
(Euro mln)
39
NEW EUROPE
Interest income (incl. div.) 628 376 18 1,264253 -11
Net non interest income 1,392192478592 121 9
Total revenues 2,6562108551,219 374 -2
Operating costs (incl. dep.) 1,399149232738 211 69
Net operating income 1,25761622481 163 -70
Net income 55546242 328 98 -158
Cost/income ratio 52.7%71.0%27.2%60.6% 56.4% n.m.
52
Net Income for the Group 51545239 325 64 -158
CORPORATE CENTRE & ELISION
DIVISIONAL CONTRIBUTION TO GROUP P&L
Capital Absorption 9,4374864,4252,866 1,043 617
20
AGENDA
1Q03 Group Highlights
Divisional Reporting
Retail Division
Corporate Division
Private & AM Division
New Europe Division
Conclusions
21
RETAIL DIVISION: BREAKDOWN OF REVENUES BY COMPANY AND INCOME STATEMENT OF THE DIVISION
1Q03
Net interest income (incl. div.) 627
Net non interest income 592
Total revenues 1,219
Administrative costs (incl. depr.) 738
Operating income 481
Net write-down of loans 46
Net extraordinary income -4
Net income 242
Other net provisions 9
Taxes 180
Net income for the Group 239
1 Pre Corporate Centre and Elisions2 Asset Management Distribution companies: UniCredit Fondi, Pioneer Inv.
Management, Rolo Pioneer Lux. e UniCredit Capital Italia
45.8% of Group
Revenues1
1,219
RETAIL DIVISION TOTAL REVENUES (Euro mln)
4.6%
87.6%
0.1%
0.2%
2.3%SGR 2
1.7%Other
companiesCost Income ratio, % 60.6
3.5%
22
UNICREDIT BANCA 1Q03 RESULTS CHARACTERISEDBY GOOD PERFORMANCE IN TERMS OF SALES ACTIVITIESAND TIGHT COST CONTROL
1Q03
Net interest income (incl. div.) 588
Net non interest income 480
Total revenues 1,068
Administrative costs (incl. depr.) 665
Operating income 403
Net write-down of loans 41
Net extraordinary income -5
Other net provisions 8
Taxes 152
Net income for the Group 197
Change in deposits mix vs Dec 02, resulting from stability in current accounts and decrease in bonds, CDs and savings accounts
Substantial stability of loans vs Dec 02, resulting from lower short term and increased m/l term loans, driven by residential mortgages
Good improvement in mark-up (5.96%, +32bp on Jan03) more than offsetting the decrease in mark-down (1.93%, -23bp on Jan03), with short term spread up 9bp
Good sales of third party bonds (1.6bn, in line with the excellent results of 4Q02 pro-forma) and bancassurance products (1.4 bn single premiums, +74% on 4Q and 167 mln recurring premiums, + 271% on 4Q)
Good reduction of employees (-382, from 24,681 at Dec 02 to 24,299 at end of March), with incentivisation costs lower than budgeted
Cost Income ratio, % 62.3
Net write-downs on loans resulting from 74 write-downs and 33 write-backs (of which 14 effective collections)
(Euro mln)
23
AGENDA
1Q2003 Group Highlights
Divisional Reporting
Retail Division
Corporate Division
Private & AM Division
New Europe Division
Conclusions
24
CORPORATE DIVISION: BREAKDOWN OF REVENUES BY COMPANY AND INCOME STATEMENT OF THE DIVISION
(Euro mln)
1 Pre Corporate Centre and Elisions
CORPORATE DIVISION TOTAL REVENUES
855
33.0%
55.2%
5.2%
2.3%
4.2%Other Companies
32.2 % of Group
Revenues 1
1Q03
Net interest income (incl. div.) 376
Net non interest income 478
Total revenues 855
Administrative costs (incl. depr.) 232
Operating income 622
Net write-down of loans 55
Net extraordinary income 4
Net income 328
Other net provisions 15
Taxes 228
Net income for the Group 325
Cost Income ratio, % 27.2
25
UNICREDIT BANCA D’IMPRESA 1Q03 RESULTS SHOW EXCELLENT EFFICIENCY THANKS TO GOOD REVENUES
(Euro mln) 1Q03
Net interest income 294
Net non interest income 178
Total revenues 472
Administrative costs 128
Operating income 344
Net write-downs of loans 47
Net extraordinary income 1
Net income 165
Other net provisions 15
Taxes 118
Net income for the Group 165
Cost Income RATIO, % 27.1
Loans to customers at 39,333 mln in line with end of 2002 (-0.4%), but showing a consistent improvement of the pricing (mark up at 2.69, +49 bps vs Dec. 02). Short term component weights around 60%
Deposits (excl. Repos) at 7,597 mln with mark down at 1.24 (-35 bps vs Dec. 02)
Commissions at 74 mln mainly deriving from current accounts and foreign transaction services
Very good result of trading profits totalling 102 mln deriving almost all from derivatives products
Net write-downs of loans deriving from 68 mln of write offs and 21 mln of write backs (o.w. 15 mln from collections)
26
AGENDA
1Q03 Group Highlights
Divisional Reporting
Retail Division
Corporate Division
Private & AM Division
New Europe Division
Conclusions
27
PRIVATE BANKING & ASSET MANAGEMENT DIVISION: BREAKDOWN OF REVENUES BY COMPANY AND INCOME STATEMENT OF THE DIVISION
7.9% of the Group1 Total
Revenues
210.2
PRIVATE BANKING & AM DIVISIONTOTAL REVENUES(Euro mln)
58.1%
28.8%
8.5%Other 2
4.6%
1Q03
Net interest income (incl. div.) 18.0
Net non interest income 192.2
Total revenues 210.2
Administrative costs (incl. depr.) 149.3
Operating income 60.9
Net write-down of loans 1.0
Net extraordinary income 4.9
Net income 46.1
Other net provisions 1.2
Taxes 17.5
Net income for the Group 44.7
Cost Income ratio, % 71.0
(1) Pre Corporate Centre & Elisions(2) BAC S. Marino, BAC S. Marino Fiduciaria, UPAM, Cordusio Fiduciaria, FRT Sim, UniCredit Suisse Bank,
Banque Monegasque de Gestion.
28
UNICREDIT PRIVATE BANKING: THE START-UP OF THE BIGGEST ITALIAN PRIVATE BANK
Total Direct + Indirect Deposits slightly decreasing on Dec 2002 (Euro 36.4 bn as at 31.03 vs Euro 36.6 as at 31.12), mainly due to the negative impact of market performance on AUMs (-Euro 243 mln), not completely offset by the increase of direct deposits
Around 95,200 customers as at end of March, with 376 net acquisition of clients in 3 months
1Q03
Net interest income (incl. div.) 15.1
Net non interest income 45.4
Total revenues 60.6
Administrative costs (incl. depr.) 37.3
Operating income 23.3
Taxes 10.1
Net income for the Group 12.0
Cost Income ratio, % 61.5
Net commissions at Euro 44.0 mln, of which: Euro 30.4 mln from Asset Management1
Euro 13.1 mln from Securities in Custody1
of which:- Net commissions 44.0
of which:
- Staff costs
- Administrative expenses
22.3
15.0
(1) Management accounts
153 branches and 557 Private Bankers as at end of March (53.8% of total staff)
Euro 12.0 mln contribution to Net income for the Group (UCI PB stand alone); Euro 16.6 mln including subsidiaries2
(2) BAC S. Marino, BAC S. Marino Fiduciaria, UPAM, Cordusio Fiduciaria, FRT Sim, UniCredit Suisse Bank, Banque Monegasque de Gestion.
29
AGENDA
1Q03 Group Highlights
Divisional Reporting
Retail Division
Corporate Division
Private & AM Division
New Europe Division
Conclusions
30
NEW EUROPE DIVISION: BREAKDOWN OF REVENUES BY BANKS AND INCOME STATEMENT OF THE DIVISION
(Euro mln) 1Q03
Net interest income3 253
Net non interest income 121
Total revenues 374
Administrative costs4 211
Operating income 163
Net write-down of loans 41
Net extraordinary income 16
Net income 98
Other net provisions5 2
Taxes 42
y/y % ch.6
-10.9
-15.9
-12.6
-2.5
-22.9
-18.8
n.m.
-9.3
n.m.
-21.1
-7.7
5 Including provisions to reserve for general banking risk
3 Including dividends4 Including depreciations
6 At unchanged FX
374
6.9%2
51.1%2
13.7%2
3.3%2
1.4%2
23.5%2
1 Pre Corporate Centre and Elisions2 Weight of the bank Total Revenues on Division Total Revenues – only UCI’s portion
% ch. on 4Q026
-8.0
-31.1
-17.0
-11.7
-23.0
-58.7
n.m.
+55.6
n.m.
+20.8
Net income for the Group 64 +64.5
Cost/Income ratio (%) 56.4 53.0850.27
14.1% of Group
Revenues1
NEW EUROPE DIVISIONTOTAL REVENUES(Euro mln)
7 in 1Q02 8 in 4Q02
31
DIVISIONAL KEY HIGHLIGHTS
Divisional results negatively affected by the still not favourable macroeconomic environment and FX impact in Poland (Zloty devaluation -18.8% y/y, -9.0% on Dec02)
Volumes
Net customer loans (+4.9% y/y, +3.4% on 4Q02 at unchanged FX) hit by decreased lending in Pekao more than counterbalanced by the other banks
Direct deposits (-2.4% y/y, -1.0% on 4Q02 at unchanged FX) with a higher weight of securities (from 0.8% in 1Q02 to 2.1% in 1Q03) mainly driven by increased bonds in Pekao in order to exploit fiscal benefits
Assets under Management: 2.3 bn in 1Q03, +33% y/y, +8.1% on 4Q02
Increased net income of the division in the last quarter to 64 mln in 1Q03 (-7.7% y/y, + 64.5% on 4Q02 at unchanged FX) supported by an overall good cost control and a lower impact of Pekao’s provisioning
Zivnostenska Banka
A successful acquisition of the 10th Czech Republic Bank ranked on total assets (close last February)
Special projects
Development of new IT systems Divisionalisation and focus on attractive segments to sustain growing revenue
generation Credit process redesign to reduce risk Development of one single Pan European platform for Credit Card business
32
ASSET QUALITY IN NEW EUROPE NEGATIVELY IMPACTED BY ECONOMIC SCENARIO IN POLAND, IMPROVEMENT IN ALL OTHER COUNTRIES
Net Doubtful Loans
Net NPLs and Doubtful Loans as % of Total Net Loans
80.3
2002 1Q03
80.3
63.5 62.5
Coverage ratios
On Gross Doubtful Loans
On Gross NPLs
Net NPLs
999 +7.7
+3.1396
Dec 02 % ch. (Euro mln)
1,076
408
Net Doubtful/Loans ratio up 0.4% on Dec02 impacted by a not favourable macroeconomic environment in Pekao nearly counterbalanced by an improvement in all other NE banks (Zaba -0.5pp, KFS –0.5 pp, Bulbank -0.7pp, Unibanka -0.4pp on Dec02)
Stable coverage ratio on gross NPLs loans, slight decrease on gross Doubtful due to a different mix (lower weight of NPLs)
1Q03
Net NPL/ Loans %
1Q03
Total NE +0.43.5
ch. on Dec02 (pp)
Net Doubtful/Loans %
1Q03
ch. on Dec02 (pp)
9.3-0.0
Net Loans +3.411,178 11,553
At unchanged FX
At unchanged FX
Zaba -0.52.5 4.9-0.4
Unibanka -0.44.1 4.9-0.2
Pekao +1.04.1 12.3+0.3
Bulbank 0.2 -0.72.5-0.1
KFS -0.54.0 8.6-0.7
Stable net NPLs/Net Loans ratio
33
AGENDA
1Q03 Group Highlights
Divisional Reporting
Retail Division
Corporate Division
Private & AM Division
New Europe Division
Conclusions
34
SUMMING UP
Net income growth (+5.5% on 1Q02, +14.4% on Avg02), despite a still not favourable economic environment
High profitability (ROE at 18.3% in 1Q03) and efficiency (Cost/Income ratio at 52.7% in 1Q03) levels reconfirmed
Good start up of the new three segment banks in the 1Q03
Good revenue generation supported by a well diversified business portfolio
35
Annex
36
Net extraordinary income
Net interest income (incl. div.)
Net non interest income
Total revenues
Operating income
Net write-down of loans
Y/Y % ch.
Administrative costs (incl. depr.)
Net income +5.5
-5.5
+4.0
-0.7
-11.8
n.m.
+1.9
-3.5
Other net provisions* n.m.
Goodwill depr. -4.3
1Q03
1,264
1,392
2,656
1,399
1,257
164
20
515
55
66
(Euro mln)
Minorities -45.240
Taxes -2.0437
(*) Including provisions to reserve for general banking risk
+46.2
-1.9
+14.3
+5.9
-50.3
n.m.
-4.4
+20.5
n.m.
+11.9
+33.3
n.m.
% ch. on 4Q02
1Q03 CONSOLIDATED INCOME STATEMENT
37
DIVISIONAL CONTRIBUTION TO THE GROUP OPERATING INCOME
(Euro mln)
36.2%
4.6%
12.3%
100%
46.9%
(1) Parent Company, USI, UPA, Audit, other companies and elisions
61163
481
1,2571,327
Retail Division
Private & AM
Division
New Europe Division
Corp. Centre and elisions(1)
Group Total
Total pre-Corp. Centre
-70
622
Corporate Division
Weight of the division on Total pre Corporate Centre
OPERATING INCOME: COMPOSITION BY DIVISION
38
ASSET QUALITY: DETAILS BY DIVISIONS
Coverage ratios
-on total gross NPL, %
-on tot. Gross doubtful loans, %
Total gross doubtful loans
Retail Banking
Dec. 02 Mar. 03
Gross NPL
% change on Dec. ‘01
Gross NPL/Tot. Gr. Loans,%
Net NPL/Tot. Net Loans,%
1,608 1,5832,15
95,466
-4.0% -1.2%
3.77% 2.66% 15.6% 4,57%
1.99% 1.49% 3.57% 1,87%
2,585 2,360 2,964 8,225
-3.1% -1.0%
48.8% 45.5% 80.3% 60.7%
37.7% 40.6% 48.2%
(1) Balance due to other Group companies (mainly Parent Company)
Net Doubtful Loans/Tot. Net Loans,% 3,71%3.89% 2,42% 9.09%
63.5%
(Euro mln)
1,614
3.77%
1.99%
2,608
48.6%
37.9%
3.89%
+0.4%
+0.9%
+1.3%
-0.1%
1,604
2.82%
1.57%
2,357
45.8%
41.7%
2,48%
2,072
15.4%
3.53%
2,873
80.3%
9.31%
62.5%
5,402
4,62%
1,91%
8,140
60.3%
48.1%
3,77%
% change on Dec. ‘01
Corporate Banking
NE Banking Total Group 1
Dec. 02 Mar. 03 Dec. 02 Mar. 03 Dec. 02 Mar. 03
Gross Doubtful Loans/Tot. Gr. Loans,% 6,87%6.07% 3.97% 21.4%6.08% 4,14% 21.4% 6,96%
39
Interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
Cost/income ratio, %
TOTAL (2)Other banks (1)
UniCredit Banca
Net provisions
(2) Balance due to roundings
(Euro mln)
Net income for the Group
TradingLab
- of which: Staff costs
- of which: Other costs
Other companies
RETAIL DIVISION: RESULTS BREAKDOWN BY BANK
- o/w: Net write-down of loans
588
480
1,068
665
403
197
62.3
197
361
304
41
49
36
21
57
33
24
11
58.1
9
18
15
3
3
-8
63
55
17
38
23
31.3
23
6
11
-
-
11
28
39
23
16
11
n.m.
11
5
18
2
3
628
592
1,219
738
481
242
60.6
239
390
348
46
55
(1) CR Carpi, Banca dell’Umbria
40
IMPROVED COVERAGE RATIO ON GROSS DOUBTFULLOANS THANKS TO CONSERVATIVE PROVISIONING POLICY,DESPITE THE SLIGHT INCREASE IN TOTAL DOUBTFUL LOANS
Total Net Doub. Loans
Net NPLs
1,378 +0.6
+0.7717
Dec 02 % Ch. (Euro mln)
1,386
722
Mar 03
Conservative provisioning policy, with increased coverage ratio on Gross Doubtful Loans (from 39.5% to 39.7%)
Increase in total provisions (+1.3% on Dec02) more than offsetting the 0.9% increase of Gross Doubtful Loans, leading to 0.6% increase in Net Doubtful Loans
Increased coverage on performing loans (from 52 bp as at Dec02 to 60 bp)
Net NPLs and Doubtful Loans as % of Total Net Loans
3.71%
31.3.’03
3.73%
1.93% 1.94%
50.2% 50.0%39.5% 39.7%
Coverage ratios
Net Doubtful Loans/ Total Net Loans
Net NPLs/ Total Net Loans
On Gross Doubtful Loans
On Gross NPLs
31.12.’02 31.3.’0331.12.’02
Other Net Doubtful Loans 661 +0.5664
3.73%
1.94%
Calculated on Loans at Dec 2002
41
BREAKDOWN OF DEPOSITS AND LOANS
1Q03
Current Accounts 32.0
Savings Accounts 4.6
DEPOSITS 53.2
Repos 2.7
VOLUMES(Euro bn)
CDs & other time deposits 1.8
Bonds 12.0
Source: Bank of Italy Matrix data
1Q03
Current Accounts 1.9
Mortgages 18.6
LOANS to private customers
Personal loans 2.0
Other loans 0.4
Current Accounts 7.5
Mortgages 24.8
LOANS 36.4
Personal loans 2.1
Other loans 2.0
22.9
Current Accounts 5.1
Mortgages 5.0
LOANS to small business1
Personal loans 0.1
Other loans 1.4
11.6
1 Defined following Bank of Italy Matrix definitions, as sum of Imprese produttive, Quasi società non finanziarie con meno di 20 addetti and Famiglie produttrici
42
TRADINGLAB PROFIT & LOSS
1Q03
Net interest income (incl. div.) -7.6
Net non interest income 63.1
Total revenues 55.5
Administrative costs (incl. depr.) 17.4
Operating income 38.1
Net extraordinary income -
Taxes 15.3
Net income for the Group 22.7
y/y% ch.
+0.7
+1.3
+1.4
-6.2
+5.3
-
-0.3
+8.7
Cost Income ratio, % 31.3 -253 bp
(Euro mln) Good increase in Structured
bonds origination (+121% y/y and +47% vs 4Q02), with a slight reduction in the average spread
Lower turnover on Covered Warrants (-62% y/y and -12% vs 4Q02), with increased market share vs. 4Q (38.6% from 35.2%)
Non captive revenues representing 63.8% of the total, from 59.3% in 2002
Decrease in administrative costs mainly driven by the decrease in advertising expenses
43(1) Balance due to roundings
CORPORATE DIVISION: RESULTS BREAKDOWN BY BANK
Interest margin (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
TOTAL (2)LocatUnicredit
Banca d’Impresa
UBM
Net provisions
(Euro mln)
(UCI stake)
Net income (UCI’s portion)
- of which: Staff costs
- of which: Other costs
Other companies
(1)
- o/w: Net write-down of loans
(100%)(100%) (88%)
294
178
472
344
58
70
128
165
165
27.1%Cost/income
15
62
16
266
282
236
15
32
47
142
142
16.6%
52
-7
45
14
8
6
31
4
4
16
14
30.2%
14
41
56
43
20
24
11
4
-3
5
4
76.8%
376
478
855
232
130
102
622
71
15
328
325
27.2%
44
UNICREDIT BANCA D’ IMPRESA: BREAKDOWN OF DEPOSITS AND LOANS
VOLUMES(Euro bn)
Source: Bank of Italy Matrix data1 Turnover > Euro 250 mln2 Euro 250 mln >Turnover > Euro 2.5-3.5 mln
1Q03
Current Accounts 7.4
Savings Accounts 0.2
DEPOSITS 7.9
Repos 0.3
Current Accounts 11.2
Other short term loans 13.1
LOANS 39.3
Mortgages 7.8
Other m/l term loans 7.2
1Q03
Public Bodies 1.6
Large Corporate1 4.5
LOANS by class of customer 39.3
SMEs2 33.2
1Q03
45
ASSET QUALITY RATIOS SHOWING A SLIGHT DETERIORATION OF NPLs AS A CONSEQUENCE OF THE MACROECONOMIC ENVIRONMENT
Total Net Doub. Loans
Net NPLs
868.6 -2.5
5.1431.2
Dec 02% Ch.on Dec02 (Euro mln)
846.9
453.2
1Q03
Conservative provisioning policy leads to an increased coverage ratio on gross doubtful loans (from 34.6% as at Dec. 02 to 36.0% in 1Q03)
Despite a decrease in Gross Doubtful Loans (-0.3% from Dec. 02 to March 03) we have increased the total provisions by 4.0%, driving down total Net Doubtful Loans by 2.5%
Net NPLs and Doubtful Loans as % of Total Net Loans
2.12%
1Q03
2.12%
1.05% 1.13%
40.1% 39.5%34.6% 36.0%
Coverage ratios
Net Doubtful Loans/ Total Net Loans
Net NPLs/ Total Net Loans
On Gross Doubtful Loans
On Gross NPLs
Dec 02 1Q03Dec 02
Other Net Doubtful Loans 437.4 -10.0393.7
Net NPLs and net watchlist represent respectively 53.5% and 29.4% of the total net doubtful loans
Calculated on Loans at Dec 2002
2.07%
1.11%
46
EXCELLENT RESULTS OF UBM WITH TOTAL REVENUES, OPERATING INCOME AND NET INCOME INCREASING RESPECTIVELY BY 31%, 33% AND 40% Y/Y
* Of which Euro 166 mln from sales (51.2% captive and 48.8% non-captive) and Euro 21 mln from trading
Revenues increase (30.7% y/y) driven by the good performance of the derivative business and the investment and corporate banking activities (the closing of the deal “Autostrade” generated approx. 21 mln)
Excellent efficiency, with Cost / Income at 16.6% despite an increase in operating costs (+19.7% y/y) mainly due to a rise in staff costs (e.g.: + 93 employees vs 1Q02) and depreciation (+28.6% y/y).
1Q03(Euro mln) y/y% ch.
CorporateLab (Corporate Derivatives)
Investment & Corporate Banking
Sales & Trading (incl. Institutional Deriv.)
Total revenues 282 30.7
Staff costs 32 33.1
Other costs (incl. depr.) 15 -2.7
Operating income 236 33.2
Net income 142 40.2
C/I Ratio 16.6% -153 bp
187*
40
55
+36
+160
-12
47
UBM Daily VAR(1) and P&L (Jan 2002 – April 2003)Euro mln
Daily P&L
VaR
(1) Figure are calculated with a 98-99% asymmetric double tail confidence interval.
(€8)
(€6)
(€4)
(€2)
€ 0
€ 2
€ 4
€ 6
€ 8
02/0
1/20
02
02/0
2/20
02
02/0
3/20
02
02/0
4/20
02
02/0
5/20
02
02/0
6/20
02
02/0
7/20
02
02/0
8/20
02
02/0
9/20
02
02/1
0/20
02
02/1
1/20
02
02/1
2/20
02
02/0
1/20
03
02/0
2/20
03
02/0
3/20
03
02/0
4/20
03
Slight widening of the VAR channel starting from January 2003 mainly due to an increase in interest rates derivatives volumes
Still conservative policy in risk measurement
1Q03 avg. daily VAR at Euro 3.5 mln vs 4.2 in 1Q02 and vs 3.0 in 4Q02
UBM VAR CHANNEL
48
Interest margin (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
Cost/Income
Tax Rate
TOTAL 1PGAM Group
Unicredit Private
Banking
Net provisions
(1) Balance due to roundings
(Euro mln)
Net income (UCI’s portion)
Xelion
- of which: Staff costs
- of which: Other costs
Other companies
PRIVATE & AM DIVISION: 1Q03 INCOME STATEMENT BREAKDOWN BY COMPANY
- o/w: Net write-down of loans
18
192
210
149
76
65
61
2
1
46
45
71.0%
27.6%
15
45
60
37
22
15
23
1
1
12
12
61.5%
45.7%
-4
126
122
84
46
34
38
0
0
37
37
68.8%
12.4%
1
9
10
18
2
12
-8
0
0
-8
-8
n.m.
n.a.
6
12
18
10
6
4
8
1
0
5
4
55.6%
n.a.
49
VERY GOOD NET SALES FOR PIONEER IN 1Q03, WITH STRONG RESULTS IN ALTERNATIVE INVESTMENTS. EXCELLENT RESULTS IN APRIL: NET SALES AROUND 50% OF TOTAL 1Q03
(2) Including Momentum.
(1) Balance due to market and FX effects
(3) Data already included in the other divisions
Italy
New Europe
(Euro mln)
80,759
1,522
TOTAL PGAM
- Captive 65,699
Alternative Investments 3
103,688
1,517
1Q03Net Sales
632
284
268
2,104
107
79,944
1,674
64,471
103,019
1,614
April 2003Net Sales
146
82
-40
1,032
63
2003AuMs as of
30.04 1
81,106
USA 17,665 962 17,651 537 18,772
International (ex-Italy) 2 3,741 226 3,750 267 4,065
1,822
65,368
105,765
1,681
Positive contribution of all the Business Divisions either in 1Q02 or in April
1Q03 Net sales +17% y/y, driven by USA (+15.6% y/y at unchanged FX), Italy (+459% y/y) and New Europe (+302.2% y/y)
2003AuMs as of
31.03 1
2002AuMs as of
31.12
- Non captive 15,060 364 15,473 186 15,738
50
Interest margin (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
ROE
Cost/income
TOTAL (1)UNI BANKA (76.3%)
Group PEKAO (53.2%)
BULBANK (85.2%)
144 12 8 253
121
374
211
163
98
17.4%
56.4%
3
11
7
4
2
17.7%
67.2%
8
20
8
12
16.5%
38.8%
91
236
129
106
16.8%
54.9%
58
Net provisions 392-241
(1) Balance due to roundings
(Euro mln)
(UCI stake)
10
Net income (UCI’s portion) 64131 9
53
18
71
42
28
25
20.4%
60.3%
-4
19
Group ZABA
(81.9%)
- of which: Staff costs 1073466 25
- of which: Other costs 763347 12
NEW EUROPE DIVISION: RESULTS BREAKDOWN BY BANK
- o/w: Net write-down of loans 412-241 -2
2
2
4
3
1
0
n.m.
73.6%
1
1
1
0
UniCredit Romania (99.8%)
1
35
-1
34
22
12
3
12.8%
63.9%
8
10
1
3(2)
KFS (50.0%)
0
(2) Consolidation with proportional method (50%)
51
1Q03 CONSOLIDATED INCOME STATEMENT: PEKAO
3 Including provisions to reserve for general banking risk
1 Including dividends2 Including depreciations
4 At unchanged FX
(Euro mln)1Q03
Net interest income1 144
Net non interest income 91
Total revenues 236
Administrative costs2 129
Operating income 106
Net write-down of loans 41
Net extraordinary income 16
Net income 58
Other net provisions3 0
Taxes 23
y/y % ch.4
Net income for the Group 31
% ch. on
4Q024
-20.7
+6.2
-12.1
1.7
-24.5
+8.0
n.m.
-12.6
n.m.
-38.5
-11.3
-11.0
-27.8
-18.4
0.2
-33.4
-45.4
n.m.
+25.3
n.m.
-14.7
+22.9
52
3 Including provisions to reserve for general banking risk
1 Including dividends2 Including depreciations
4 At unchanged FX
(Euro mln)1Q03
Net interest income1
Net non interest income
Total revenues
Administrative costs2
Operating income
Net write-down of loans
Net extraordinary income
Net income
Other net provisions3
Taxes
y/y % ch.4
Net income for the Group
% ch. on
4Q024
+26.353
-61.918
-20.571
-5.542
-36.028
n.m.-2
n.m.0
-25.425
n.m.-2
-5.88
-27.519
-4.9
-49.4
-22.3
-36.7
+18.4
n.m.
n.m.
n.m.
n.m.
n.m.
n.m.
1Q03 CONSOLIDATED INCOME STATEMENT: ZAGREBACKA