1 unicredito italiano group 1 st half 2004 results alessandro profumo - ceo london - september, 14...
TRANSCRIPT
1
UNICREDITO ITALIANO GROUP1st Half 2004 Results
Alessandro Profumo - CEO
London - September, 14th 2004
2
AGENDA
1H04 Group Highlights
Divisional Reporting
Retail Division
Corporate Division
Private & AM Division
New Europe Division
3
2Q DELIVERY CONFIRMING STRATEGIC DIRECTION
Continuous growth of lending activity, with market shares improvement in Retail and Corporate business and in Asset Management in Italy
Q/Q acceleration of Net Interest Income, supported by volume growth and pricing resilience
Net Commissions increase, even with a lower dependence from up-front
Reduction of flows of new doubtful loans and improvement in asset quality indicators
Growth of Net Income over the last two quarters
4
380
4Q03
1,026
4Q03
NET INCOME UP 25.1% Q/Q BENEFITING FROM HIGHER CONTRIBUTION OF ALL REVENUE SOURCES. Y/Y DECREASE DUE TO DECLINE IN INTEREST RATES AND SLOWDOWN IN CORPORATE DERIVATIVES
1,132 1,049
1H03 1H04
NET INCOME (Euro mln)
ROE1
1 Calculated on end of period net equity excluding profit for the period
2,550 2,280
1H03 1H04
OPERATING INCOME (Euro mln)
COST/INCOME RATIO
-7.3%
-10.6%56.2%
(+1.2 pp on Dec03)
17.5% (-0.2 pp on Dec03)
583
2Q04
+25.1%
1,210
466
1Q04
1,070
1Q04 2Q04
+13.1%
5
GOOD IMPROVEMENT IN NET INTEREST INCOME (+1.7% Q/Q EXCL. DIVIDENDS) BOTH IN ITALY (BEST QUARTER SINCE 1Q03) AND IN NEW EUROPE, THANKS TO PRICING RESILIENCE …
NET INTEREST INCOME excl. Dividends
4Q03 1Q043Q032Q031Q03
New Europe
Italy
Avg. Euribor 2.46%
2.78%
2.14% 2.09%2.16%
2Q04
2.09%
Mark-up on short term(1) UBI vs. System, %
Mark-down(2) UCB vs. System, %
(1) Mark-up = Interest rate on short term loans - Euribor 1M. EOP data(2) Mark-down = Euribor 1M - Interest rate on deposits in current accounts. EOP data
ITALY: TREND OF MARK-UP & MARK-DOWN
3,553,44
3,20
3,40
3,60
3,80
4,00
mar 03 jun 03 sep 03 dec 03 mar 04 jun 04
UBI Mark-up System Mark-up
1,63
1,42
1,20
1,40
1,60
1,80
2,00
2,20
mar 03 jun 03 sep 03 dec 03 mar 04 jun 04
UCB Mark-down System Mark-down
1,140 1,1891,1601,1931,251
886 929910925988
1,210
940
254 260250268263 270
6
% ch. on Dec03
% ch. on Mar04
… AND GOOD VOLUME GROWTH CONTRIBUTED BY ALL DIVISIONS
Jun04
TOTAL CUSTOMER LOANS1
Breakdown By Division (bn)
1 Excl. Repos
Retail Division: good performance, thanks to continued growth in households’ mortgages (+11% on Dec03) and to the pick-up of Small Business lending (+4.2% on Dec03)
Corporate Division: growing 2Q04 mainly driven by UBI, with a strong contribution of m/l term lending, up 4.8%2 on 1Q04
New Europe Division up 4.1% at unchanged FX on Dec03, positive contribution of Pekao (+7.6% on Dec03, +3.5% at unchanged FX)
+5.5
Retail +7.5
Corporate +0.3
New Europe +7.6
TOTAL GROUP +4.2
Other
52.4
63.0
12.7
131.3
3.1
+4.6
+3.1
+3.8
-3.0 +21.3
+13.4
+10.2
+4.7
+10.5
-5.2
% ch. on Jun033
2 Source: Bank of Italy Matrix 3 Incl. ANBI
7
13,8%13,7%13,0%
13,6%
11,4%11,3%
17.3%16.6%
14.7%
12.2%
11.3%
9.4%
8%
10%
12%
14%
16%
18%
mar-03 giu-03 set-03 dic-03 mar-04 giu-04
5,6%
4,9%
6,0%7,2%
6,2%6,2%
12.0%
4.6%
2.1%
13.3%
12.1%
8.0%
0%
2%
4%
6%
8%
10%
12%
14%
mar-03 giu-03 set-03 dic-03 mar-04 giu-04
UCI LOAN GROWTH IN ITALY OUTPERFORMS INDUSTRY WITH A MAJOR SHIFT TOWARDS M/L TERM CONTINUED MARKET SHARE GAINS IN 2003
Italian industry
Total Loans1, y/y % ch.
UCI2 Italian industry
Medium/Long Term Loans1, y/y % ch.
UCI 2
On M/L termloans 1
On total loans 1
UCI2 Market Share Widening of UCI positive gap vs industry on y/y total loans growth from Sep 03 (from +0.8% in Sep 03 to +6.4% in June 04)
Constant increase in UCI total loans market share (+89 bp from 9,99% in Mar03 to 10,88% in Jun04) with a focus on m/l term, improving 29 bp Jun04 vs Mar04
1Source: Bank of Italy Matrix (Total Loans net of NPLs and Repos)
2 Proforma incl. ANBI
10,88%
10,79%
10,74%
10,35%
10,26%
9,99%
11,03%
10,74%
10,80%
10,58%10,70%
10,48%
mar-03 giu-03 set-03 dic-03 mar-04 giu-04
81 Related to UniCredit Banca and UniCredit Private Banking data restated on management accounts
NET COMMISSIONS INCREASE 7.1% ON 1Q04 (+2.0% 1H04/1H03) MAINLY DRIVEN BY HIGHER COMMISSIONS FROM LOANS GRANTED & RECEIVED (+23.4% ON 1Q04)
NET COMMISSIONS
781
1Q03
798
1Q04
839
2Q03
830
3Q03
857
4Q03
Up-front1 109154 171151179
Other627 660 679 686 689
855
2Q04
112
743
Net commissions (excluding up-front) continue to growth (+7.8% on 1Q04) benefiting from:
Corporate Finance (+19.7 mln on 1Q04) activity
Foreign Trade Services (+10.4 mln on 1Q04)
Trend of Up-front fees (+3% on 1Q04) due to higher sales of Bancassurance products; confirmed strategy of reduced emphasis on structured bonds
Net commission mix further improvement (decreasing weight of up-front on total to 13.1% in 2Q04)
Commissions from Mutual Funds up 11.3% (1H04/1H03) driven by higher stock of AUM
+7.1%
1H04/1H03: +2.0%
+7.8%
Weight of Up-front on Total
19.7% 21.3% 18.2% 20.0% 13.6% 13.1%
9
(1) Plain vanilla Mutual and Hedge Funds distributed in Italy (Total AuM in Mutual and Hedge Funds in Italy, including Mutual Funds in Segregated Accounts and Unit Linked, 70.0 bn as at 30.6.2004 vs 68.7 bn as at 31.12.2003, +1.9% - Source: Assogestioni)
MUTUAL FUNDS (Italy): in a very difficult environment for Mutual Funds in Italy, UCI strongly outperformed its main competitors for net sales in the first 8 months of 2004 …
HEDGE FUNDS (Worldwide): record net sales in 1H04 (1,123 mln) coupled with a strong 2Q/1Q acceleration (699 mln in 2Q vs 424 mln in 1Q, +65%)
4.9% AUM GROWTH VS DEC.03 DRIVING A STRONG INCREASE OF MARKET SHARE IN MUTUAL FUNDS IN ITALY; EXCELLENT PERFORMANCE OF HEDGE FUND NET SALES
Focus on Sales of AM products
DEC.03
… being the only Mkt. Share net gainer among the big players
UCI
MAR.04 JUN.04
13.39% 13.49% 13.51%
UCI TOTAL AUM(bn)
Italy US, New Europe & Intl.
Mutual & Hedge Funds1
Segregated Accounts
Insurance
Dec. 03
+2.3% vs Dec. 03
Mar. 04
43.5
23.1
22.0
34.4
42.8
22.7
20.6
31.3
117.4
+10.1%
+4.8%
+7.0%
+1.6%
+1.5%
123.0
Jun. 04
42.9
22.6
22.6
35.0
123.1
+1.5%
+0.1%
+2.9%
-2.0%
-1.4%
+11.8% vs Dec. 03
+4.9% vs Dec. 03
(2) UCI’s Total Net Sales of Mutual Funds were affected in the first 8 months of 2004 by outflows mainly deriving from ex-ING PFAs who did not sign Xelion’s mandate (-696 mln)
ASSET MIX (PGAM)
Avg.2003
Equity + Hedge
Avg.1Q04 Avg.2Q04
27.3% 29.8% 30.0%
Bond + Liquidity 62.7% 60.7% 60.9%
Balanced + others 10.0% 9.5% 9.1%
UCI (Total)2
ITALIANSYSTEM
-5,264
-118
+578
UCI (ex ING)2
AUG.04
13.61%
US, New Europe & International
10
Acceleration of Corporate Derivatives (+31.7% 2Q/1Q), posting the best result in the last 4 quarters …
INCOME FROM FINANCIAL TRANSACTIONS(mln)
INCOME FROM FINANCIAL TRANSACTIONS: STRONG REDUCTION OF THE Y/Y GAP VS 2003 (FROM -33% AS OF MARCH TO -25% AS OF JUNE), MAINLY DRIVEN BY RECOVERY OF CORPORATE AND DEVELOPMENT OF INSTITUTIONAL DERIVATIVES
292
1Q04
239
4Q03
436
1Q03
268
349
2Q03
204
263
3Q03
105 97 105
Corporate Derivatives
2Q04
Institutional Derivatives 51
42
47 4563
295
139
72
… and reducing the Y/Y gap vs 2003 (-48% as of Jun.04 vs –61% as of Mar.04)
Further development of Derivatives for Institutional customers (72 mln, +14.3% 2Q/1Q) …
Lower 2Q/1Q contribution of New Europe and Parent Company
… and recovery of Derivatives for Retail customers (33 mln in 2Q vs 25 mln in 1Q, +30%)
11
OPERATING COSTS UP 2.7% 1H04/1H03. QUARTERLY TREND +6.1% IMPACTED BY OTHER ADMINISTRATIVE EXPENSES
OPERATING COSTS BREAKDOWN(Euro mln)
PERSONNEL COSTS 2Q/1Q increasing by +1.8% (+15.1 mln), but +1.0% at constant fx
DEPRECIATION 2Q/1Q +7.5% (+8 mln) mainly impacted by investments in new branches layout and increase in IT investments
OTHER ADMIN. EXPENSES 2Q/1Q +13.5% (+64.4 mln; 59.5 at constant fx) primarily linked to an increase in:
advertising (+8.6 mln of which 4.7 in New Europe)
postal tariffs (+18.7 mln) special projects in UCB (+8.4 mln) costs directly linked to increased
business and partially recovered with higher revenues (+4.7 mln i.e. indirect taxes and credit information and searches)
Personnel costs
1H03 1H04
2,846
1,639
-2.7%
+3.4%
+3.1% 1,689
981
226
Other adm. expenses
Depr. & amort.
2,923
1,014
220
2Q04
1,418
837
+6.1%
+7.5%
+13.5%
+1.8%852
475
106
1,505
539
114
1Q04
+2.7%
1 Varadinska Banka
12
NON OPERATING ITEMS IN 2Q CHARACTERISED BY HIGHER NET WRITE-DOWNS OF LOANS AND NET EXTRAORDINARY INCOME AND BY LOWER TAX RATE vs. 1Q
Operating income
Goodwill amort.
Net Income
Net write-downs of loans
Other net provisions1
Net extraord. income
Taxes
Minorities
1Q04
1,070
-71
466
2Q04
1,210
-72
583
-192
-9
-246
-27
2 100
-296
-38
-335
-47
2,280
-143
1,049
1H04
-438
-36
102
-631
-85 Tax Rate at 34.7% vs. 37.0% in 1Q04
benefiting from lower taxes in New Europe (mainly one-off in Pekao), substantially stable on 2Q03 (34.6%)
-246 mln net write-downs of loans up 54 mln vs. 1Q04 due to higher net write-downs in Corporate division +38 mln (mainly due to write-down on a specific position) and in Retail division +17 mln (mainly due to write-down of one significant position and to write-off of some other small positions)
Net write-downs of financial investments -1 mln
Provisions for risks & charges -26 mln
110 mln release of reserves previously created o/w 67 mln write-back of provisions created for fiscal purposes “tax cleared accounts”
1 Net write-downs of financial investments, provisions for risks and charges and provision to reserve for general banking risks
13
Coverage ratio 59.3% +10 bp
Provisions on performing loans 1,290 +5.2%
Coverage ratio 1.00% +1 bp
Gross Doubtful Loans 9,180 -0.4%
Coverage ratio 47.2% +80 bp
Stated cost of risk (annualised) 66 bp +2 bp3
Weight on Gross Loans 6.61% -33 bp
mln, where not specified
Gross Non Performing Loans 6,259 +2.5%
Weight on Gross Loans 4.51% -9 bp
(3) Calculated on FY03 cost of risk (76 bp) net of extraordinary provisions on Parmalat (12 bp)
1H04ch. on 2003
Jun. 04ch. on
Mar. 04
1H04 cost of risk at 66 bp, almost in line with FY03 net of extraordinary provisions on Parmalat
+5.2% increase of provision on performing loans vs Mar. 04, with coverage ratio reaching 1.00%
+2.5% increase of Gross NPLs vs Mar. 04 (mainly due to shift from Watchlist Loans) counterbalanced by a strong –6.7% reduction of Watchlist Loans (2,505 mln as of Jun.04)
Improved coverage ratios; coverage ratios adding back fiscal write-offs2 at 70.0% on NPLs (+48 bp Q/Q) and at 57.5% on Total Doubtful Loans (+130 bp Q/Q)
SIGNIFICANT Q/Q REDUCTION OF NET FLOWS OF NEW DOUBTFUL LOANS1 WITH A SLIGHT IMPROVEMENT OF MAIN ASSET QUALITY RATIOS: LOWER GROSS DOUBTFUL LOANS AND INCREASED COVERAGE RATIOS
Strong 2Q/1Q reduction of net flows of New Doubtful Loans1 (372 mln in 2Q vs 642 mln in 1Q, -42.1%) mainly driven by Corporate Division
(1) Defined as: Flow from in bonis loans to any category of doubtful loans less Flow-back from any category of doubtful loans to in bonis loans(2) Calculated adding back to total provisions the fiscal write-offs of UniCredit Banca and UniCredit Banca d’Impresa only
Increased collections of doubtful loans (386 mln in 2Q vs 379 mln in 1Q, +1.9%) thanks to effective workout procedures
14
CONFIRMED OUTSTANDING SOLVENCY RATIOS, WITH CORE TIER 1 RATIO OF 7.4%.RISK ADJUSTED PROFITABILITY STILL AT HIGH LEVELS
4,869
2,930Retail Division
Corporate Division
New Europe Division
CAPITAL ABSORPTION
82
288
VALUE CREATION
10,094Group Total(3) 462
NOPAT
226
508
1,001
RARORAC %
5.6
11.8
9.2
MARGINAL RARORAC %
8.2
12.0
13.4
mln
NOPAT(a)
Risk taken(1)
(b)
Shareholder’s value added(c) =(a)-COE(2)
Value added per unit of risk
taken(c)/(b)
From 7.0% (Dec 03)to 7.4% (1H04)
ESTIMATEDCORE TIER 1 RATIO(considering all RWA)
From 11.1% (Dec 03)to 11.5% (1H04)
ESTIMATEDTOTAL CAPITAL RATIO(considering all RWA)
From Euro 146.1 bn (Dec 03) to Euro 147.4 bn (1H 04), +0.9%
TOTAL RWA
Private & AM Division
1,197 64132 10.7
(1) Minimum regulatory capital, market risks, credit risks and operational risks (2) The Cost of Equity is related to the capital employed (Net equity for the Group and allocated capital for the business units)(3) Balance due to Corporate Center and Other companies, respectively +39 for NOPAT, 1,429 for Capital absorption and 7 for Value Creation
23.6
866 2196 4.9 26.5
15
1H04 Group Highlights
Divisional Reporting
Retail Division
Corporate Division
Private & AM Division
New Europe Division
AGENDA
16
RETAIL DIVISION: GOOD Q/Q PERFORMANCE, WITH TOTAL REVENUES UP 4.2% DRIVEN BY NET COMMISSIONS AND NET INTEREST INCOME
2Q04
Net interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. depr.)
Operating income
Net income for the Group
Cost Income ratio, %
579
479
1,058
-748
310
131
70.7
% ch. on 1Q04
+2.9
+5.7
+4.2
+4.0
+4.5
+3.3
-10 bp
1H04ch. on FY03
Cost of risk 49 bp -1 bp
Good growth of net interest income (+1.3% excl. dividends vs. 1Q04) sustained by volume growth in all segments
Spread on deposits at 1.55%, slightly up vs. 1Q04 (+1 bp)
Net non interest income growth sustained by the good performance of commissions (+7.3% vs. 1Q04), thanks to increased sales of bancassurance products and increased number of transactions of Small Business customers
Operating costs increase due to higher administrative expenses related to projects undergoing (advertising campaigns +6 mln vs. 1Q, other projects +8 mln) and higher postal costs (+13 mln vs. 1Q), while staff costs are substantially in line with 1Q04 (-0.2% Q/Q)
Almost 40,000 net new customers acquired in 2Q04
17
POSITIVE SIGNS FROM ALL KEY MARKETS WITH GROWTH TARGETS: EXCELLENT GROWTH IN STOCKS OF RESIDENTIAL MORTGAGES, CONSUMER FINANCING …
RESIDENTIAL MORTGAGESSTOCK, bn NEW FLOWS, bn Good performance in the flow of new mortgages of both
UCB (+26% y/y) and UBCasa (+30% y/y) Growth coming mainly from partnership channel, with
49% y/y increase Avg. amount of mortgage from 93,000 (2003 avg.) to
102,000 Euros (1H04 avg.), up 15.5%
CONSUMER FINANCING Growth in stock (at 2.3 bn, +7.8% vs. Dec 03) thanks to
good flows of revolving cards and personal loans Excellent results of the focus on captive customers (more
than 170,000 revolving sold in 6 months vs. 6,000 in FY03) Acceleration in flow of personal loans granted (277 mln in 2Q vs. 183 in 1Q) driven by the launch of Credit Express in May 04. Market share(3) from 9.3% in 1Q to 12.1% in 2Q
DEC03 1H04
26.229.2
+11.0%
1H03 1H04
3.44.3
+27.4%
NEW FLOWS OF PERSONAL LOANS
FY03 1H04
95 mln
155 mln
TOTAL SPENDING(4) (+170,000 revolving cards in 1H04)
2Q average spread on new mortgages(1) : UCB at 1.28%, -1 bp vs. 1Q04 UBCasa at 1.45%, slightly up vs. 1Q04 (+4 bp)
(1) Management accounts
1Q04
27.5
mkt share(2)
17.17%17.48% 17.68%
mkt share(3)
2.4%
7.3%
(2) Related to mortgages to households as of Bank of Italy definition in table TDME0070 of the monthly bulletin
(3) Calculated on ASSOFIN data, related to revolving and pay-later credit cards
VOLUMES
PRICING
VOLUMES
2Q average spread on new production(1) : revolving cards at 9.02%, -52 bp vs. 1Q04 personal loans at 5.43%, +1 bp vs. 1Q04
PRICING
(4) POS and ATM spending through revolving cards
1H03 1H04
393 mln461 mln
+17.2%
18
… AND SMALL BUSINESS LENDING, THANKS TO CONTINUED INCREASE IN CUSTOMER ACQUISITION RATE AND IN PRESENCE OF A RESILIENT SPREAD, WITH CLEAR POTENTIAL FOR FURTHER GROWTH
STOCK, bn
Growth of acquisition rate mainly driven by development regions, also thanks to the implementation of the brand new network of Developers (675 developers up and running at the end of June)
1H04DEC03
UCB AVERAGE MONTHLY ACQUISITION RATETOTAL BANK DEVELOPMENT REGIONS STRENGTHENING REGIONS
FY03 1Q04 2Q04 FY03 1Q04 2Q04 FY03 1Q04 2Q04
SHORT TERM SPREAD(1)
1H03 FY03 1H04
Good results of the recent focus on Small Business already visible in good stock growth and in a growing number of transactions sustaining the good performance of commissions
Stock growth mainly concentrated in 2Q04, +3.0% vs. 1Q04
Resilience of short term spread(1), substantially in line with FY03
(1) Management accounts, includes also maximum overdraft charges
Low usage-to-facilities ratio(2) (47% in SB vs. 52% mkt avg) due to “youth” of many customers. July best month ever in growth of new customers. Average time before taking up the cash loan is ~1,5 month after account opening. Customers arrive at full usage in ~2 years
(2) Ratio between the utilised credit line and the total credit line available for usage
12.112.6
+4.2%
8.71% 8.63% 8.40%
0.49%0.58%
0.80%
0.70%0.86%
1.28%
0.32%0.40%
0.51%+38% +49% +26%
CLEAR FURTHER POTENTIAL 37,000 new Small Business customers in 1H04 (~1% of total market)
19
GOOD CUSTOMER SATISFACTION IMPROVEMENTS IN PRIVATE AND SMALL BUSINESS SEGMENTS, CONSISTENTLY OUTPERFORMING COMPETITION IN A CONTEXT OF GROWING MARKET SHARES
PRIVATE CUSTOMERS, TRIM INDEX
2003 July 04
4751
2003 July 04
4341
UNICREDIT BANCA AVG. TOP 4 COMPETITORS
Stability of front-end relationship with customers
Improved waiting time (shorter queues) Improved advisory on investment services,
with room for further improvement
SMALL BUSINESS, TRIM INDEX
2003 July 04
42
49
2003 July 04
4135
UNICREDIT BANCA AVG. TOP 4 COMPETITORS
Dedicated service model
Improved advisory on lending products
Focus on quality of sales
Source: NFO Infratest, Customer satisfaction analyses
20
DELIVERING ON STRATEGY IN RETAIL DIVISION
INCREASED MARKET SHARES IN KEY MARKETS
INCREASED CUSTOMER SATISFACTION
START OF GROWTH OF NET INTEREST INCOME
NET COMMISSIONS LESS DEPENDING FROM UP-FRONT DRIVEN SALES
GROWTH OF CUSTOMER ACQUISITION RATES
START OF VOLUME GROWTH
21
1H04 Group Highlights
Divisional Reporting
Retail Division
Corporate Division
Private & AM Division
New Europe Division
AGENDA
22
CORPORATE DIVISION: VERY STRONG Q/Q PERFORMANCE, WITH TOTAL REVENUES UP 13.0% MAINLY DRIVEN BY NET NON INTEREST INCOME
2Q04
Net interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. depr.)
Operating income
Net income for the Group
Cost Income ratio, %
384
477
861
-258
603
308
30.0
% ch. on 1Q04
+4.3
+21.2
+13.0
+5.5
+16.6
+25.4
-214 bp
1H04ch. on FY03
Cost of risk (annualised) 78 bp +10 bp1
Growth of net interest income (+1.8% excl. dividends vs. 1Q04)
Strong net non interest income growth (+21.2%), sustained by the excellent performance of commissions (+26.0% vs 1Q04, mainly thanks to Corporate Finance and Foreign Trade Services) and the strong recovery of profits from financial transactions (+23.6% vs 1Q04, basically thanks to derivatives)
Operating costs increase totally due to higher administrative expenses (+12.7%) related to the increase volume of services provided to the customers2; staff costs perfectly in line with 1Q04 (stable at 134 mln)
Net write-downs on loans -144 +36.3
Net extraordinary income 64 n.s.
(1) Calculated on FY03 cost of risk (91 bp) net of extraordinary provisions on Parmalat (23 bp)(2) As these costs were strictly related to higher business volumes, they have often been partially recovered from the customers as fee income
1H04 cost of risk (annualised) 10 bp up vs FY03 net of extraordinary provisions on Parmalat, mainly due to high provisions on a single position; cost of risk at 64 bp net of provisions on this “single position”
Net income up 25.4% Q/Q, benefiting also from 64 mln net extraordinary income (o/w 55 mln write-back of provisions created for fiscal purposes “tax cleared accounts” by UBM)
(mln)
23
UBI CUSTOMER LOANS, bn
+3.8%
UBI AVG. TOTAL LENDING SPREAD(1)
2.32%1 2.32% 2.31%
+3.8% Q/Q Loan growth, concentrated in the core SMEs customers (Share of Wallet from 12.2% to 12.7%, +44 bp) …
Average Lending Spread substantially in line with 1Q04
(1) Management accounts; average quarterly figures, apart from 2003 (average yearly figure)
LOAN GROWTH CONCENTRATED IN THE CORE SMEs SEGMENT WHILE MAINTAINING SPREADS, …
47,64845,747 47,477
Dec. 03 Mar. 04 Jun. 04 2003 1Q04 2Q04
(mln)
Largest groups
Dec03
7,842
Mar04 Jun04
6,941 6,534
% ch. Jun04/ Mar04
-5.9%
SMEs 27,335 27,048 28,5163 +5.4%
Public Sect. & Others4 7,418 7,484 8,486 13.4%
(4) Including non-financial companies with Total Revenues lower than 1.5 mln
(5) Balance due to roundings; Source: Credit Bureau – differences with accounting figures due to different sources of data
Financial companies 4,412 3,684 3,466 -5.9%
TOTAL5 47,007 45,159 47,002 +4.1%
- Share of Wallet 12.3% 12.2% 12.7%3 +44 bp
(2) Source: BankIT Matrix data
… and a strong contribution of the LT component2 (from 19.3 bn as of Mar.04 to 20.2 bn as of Jun.04, +4.8%)
… with a significant acceleration in Lazio+Lombardy (from 9,954 mln to 10,696 mln , +7.4%) …
(3) Discount the securitisation of ~230 mln for Neafidi district bond and ~170 mln loans issued in conjunction with UniCredit Banca MedioCredito. Share of wallet at 12.9% adding back these amounts
24
CORPORATE DIVISION: NET COMMISSIONS BOOSTED BY “REVENUE MULTIPLIER”
CORPORATE DIVISION: REDUCTION OF NET FLOWS OF NEW DOUBTFUL LOANS1
Significant Q/Q reduction of net flows of new doubtful loans (-62.1%) …
… FACING LOWER DEFAULT RATES AND LEVERAGING ON THE “REVENUE MULTIPLIER”
(1) Defined as: Flow from in bonis loans to any category of doubtful loans less Flow-back from any category of doubtful loans to in bonis loans
2Q04
376.6
142.9
1Q04
-62.1%
(mln)
Of which: To Loans to be Restructured
152.0
9.4
… even netting 1Q of the exceptional flows of Loans to be Restructured (-40.6% net of Loans to be Restructured)
2Q Default Rate2 at 0.23% (vs 0.6% in 1Q)
(2) Defined as: (Flows from in bonis loans to any category of doubtful loans less Flow-back from any category of doubtful loans to in bonis loans)/ Total Gross In Bonis Loans as of 31.12.2003
2Q04
142.9
1Q04
+26.0%
139.7176.0 Higher loans, higher share of wallet, deeper
relation with the customers leading to more high value added services: +36.3 mln Net Commissions Q/Q, of which:
+10.4 mln from foreign trade services (from 26.9 mln in 1Q to 37.3 mln in 2Q)
+19.7 mln from Corporate Finance3 (from 16.1 mln in 1Q to 35.8 mln in 2Q)
(3) UBI+UBM+Banca MedioCredito
(mln)
224.6
133.5
25
SUMMING UP: DELIVERING STRATEGY IN CORPORATE DIVISION
… WHILE MAINTAINING SPREADS
LOAN GROWTH …
… LEADING TO HIGHER SHARE OF WALLET …
… AND CONCENTRATED IN CORE SMEs CUSTOMERS …
… WITH FOCUS ON LONGER MATURITIES …
FEE INCOME BOOSTED BY “REVENUE MULTIPLIER”
26
1H04 Group Highlights
Divisional Reporting
Retail Division
Corporate Division
Private & AM Division
New Europe Division
AGENDA
27
2Q04
Net interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. depr.)
Operating income
Net income for the Group
Cost Income ratio, %
23
263
286
-188
98
92
65.7
% ch. on 1Q04
-4.4
+1.2
+0.7
+1.6
-1.1
+36.9
+61 bp
Net extraordinary income 9 n.s.
(mln - % Change at Fixed FX)
Tax Rate, % 10.4
(bn)
Jun.03 restated
Mar.04
Securities in custody
Direct deposits1
AUM
6.0
22.4
118.3
5.8
23.5
129.6
146.7158.9
Jun.04
5.9
24.7
130.1
160.7
1 Including Repos
PRIVATE & AM DIVISION: INCREASED CONTRIBUTION TO THE GROUP’S NET INCOME AND CONTINUED GROWTH OF TOTAL FINANCIAL ASSETS …
+1.1% Q/Q increase of Total Financial Assets, with higher weight of hedge funds (from 1.85% as of Mar.04 to 2.26% as of Jun.04) …
+1.1%PRIVATE & AM DIVISION TOTAL FINANCIAL ASSETS
… leading to 1.2% Q/Q growth of Net non interest income, despite the very difficult environment for Asset Management in Italy
Stronger contribution to the Group’s net income (92 mln, +36.9% Q/Q)
Vs 30.1% in 1Q
Significant +12.0% growth of Net non interest income in 1H04 vs 1H03, driven by the strong +10.5% increase of Total Financial Assets (at fixed FX)
Lower taxes (from 30 mln in 1Q to 11 mln in 2Q), due to benefits of “fiscal consolidation” of PGAM and Xelion
28
2,118
… THANKS TO PIONEER AUM INCREASE COUPLED WITH POSITIVE SALES IN ALL THE BUSINESS DIVISIONS …
AUM at new record high driven by market performance and positive net sales in all the business divisions, with excellent results in the International (ex Italy) business division and in alternative investments
(mln)
AUM Dec.03
1H04 Net Sales
1H04 Mkt. Perf.2
AUM Jun.04
119,4361
3,135 124,6891H04 Net Sales
Italy 255
Net Sales breakdown:
International (ex Italy) 1,264
US 352
New Europe 247
Alternative Invest. 1,123
TOTAL PGAM 2,118
2 Including FX effect
+4.4%
+3.6% at fixed FX
1 Pro-forma including ING-Pixel, SGR New Europe and the Real Estate Fund incorporated at the end of 2003
TOTAL PGAM ex ING-Pixel3 2,715
Italy ex ING-Pixel3 852
3 Total Net Sales in Italy were affected in 1H04 by outflows mainly deriving from ex-ING/Pixel PFAs who did not sign Xelion’s mandate (-597 mln in 1H04)
Significant increase of market shares in Italy (from 13.39% as of Dec.03 to 13.51% as of Jun.04 and 13.61% as of Aug.04 – Mutual Funds, Assogestioni perimeter) and in Poland (from 30.36% as of Dec.03 to 32.25% as of Jun.04 – Investment Funds)
29
… AND THE GOOD COMMERCIAL RESULTS OF UPB AND XELION
1
1 All data related to Total Financial Assets, Financial Assets per PFA, and Net Sales relate to Xelion+ING (2003 data are pro-forma), excluding figures related to ex-ING PFA who did not agree on Xelion’s mandate – Source: Assoreti
2Q04
142.9
1Q04
+28.4%
8481,088
NET SALES, QUARTERLY TREND(mln)
39.9 bn Total Financial Assets, +2.7% Q/Q and +6.1% vs Dec.03, with higher weight of Hedge Funds (from 1.5% as of Mar.04 to 2.2% as of Jun.04)
1,088 mln net sales in 2Q04 (best quarter since inception), with strong contribution of hedge funds (219 mln, more than 20% on the total)
69.7 mln Total Financial Assets per client-manager, +1.9% Q/Q and +4.4% vs Dec03
TOTAL FIN. ASSETS, QUARTERLY TREND(bn)
Jun.04
11.0
Mar.04
+3.9%
10.4
Dec.03
10.6
Leadership for Net Sales in Italy (1,026 mln in 1H04), with a high 24.4% market share and acceleration in 2Q (539 mln in 2Q vs 487 mln in 1Q, +10.7%)
~11.0 bn Total Financial Assets (+3.9% Q/Q and +5.5 on Dec03)
Higher Financial Assets per PFA: from ~4.6 mln as of Dec.03 to ~5.1 mln as of Jun.04, +10.9%
30
1H04 Group Highlights
Divisional Reporting
Retail Division
Corporate Division
Private & AM Division
New Europe Division
AGENDA
31
2Q04 KEY HIGHLIGHTS: NET INCOME UP 11.9% Q/Q, BENEFITING FROM REVENUE GROWTH, IMPROVED COST OF RISK AND LOWER TAXES. CONFIRMED GOOD PROFITABILITY AND EFFICIENCY LEVELS
Attributable Net Income
2Q04(Euro mln)
94
Total revenues 431
Operating income 193
Cost/Income 55.2%
Cost of Risk3 24 bp
- o/w net interest income2 264
At unchanged FX1
Net write-downs of loans -30
ROE (1H04 data, y/y % ch.)
% ch. on 1Q04
+11.9
+2.1
-1.5
+1.6 pp
-4 bp
-0.9
- o/w net commissions 104 -2.1
-10.9
+1.8 pp19.1%
ITAS
2 Excluding dividends
Operating costs -238 +5.3
Confirmed positive macroeconomic environment in all NE countries
Total Revenues up 2.1% (+5.2% incl. KFS at unch. FX) on 1Q04:
Net interest income -0.9% on 1Q04: Pekao +1.0%, Bulbank +12.9% offset by negative trend in Zaba and in KFS FX (incl. KFS at unch. FX NII of the division: +2.9% on 1Q)
Net commissions -2.1% on 1Q04 (+1.3% incl. KFS at unch.FX): increase in Zaba and Bulbank, negative impact of KFS FX
Other non operating income from 13 mln in 1Q04 to 41 mln in 2Q04
Operating Costs up 5.3% on 1Q04 (+7.7% incl. KFS at unchanged FX), mainly due to higher costs in Zaba (approx. +7 mln o/w approx. 3 mln one-off4)
Further improvement of Cost of Risk (-4 bp q/q) and higher coverage of Doubtful loans (to 68.5% from 66.0% in Mar04)
Attributable Net Income up 11.9% on 1Q04 thanks to lower provision needs and taxes
Tax Rate 11.1% -14.7 pp
3 Calculated as Net Loan Loss Provisions of 2Q04 on Net customers Loans at period-end
1 Excluding for KFS (included at current FX) 4 Due to integration of Varadinska Banka in Zaba and to the merge of two Bosnian banks in a new-co
- o/w other non oper. Inc. 41 n.m.
32
3 Calculated as Net Loan Loss Provisions of 2Q04 on Net customers Loans at period-end
PEKAO RESULTS IN 2Q04: IMPROVED PROFITABILITY AND EFFICIENCY THANKS TO TURNAROUND IN NET INTEREST INCOME, GOOD COST CONTROL, LOWER PROVISIONS AND TAXES
Attributable Net Income2
2Q04(Euro mln)
45
Total revenues 235
Operating income 109
Cost/Income 53.7%
Cost of Risk3 26 bp
- o/w net interest income1 124
Net write-downs of loans -14
ROE (1H04 data, y/y % ch.)
% ch. on 1Q04
+31.5
+3.7
+6.9
-1.1 pp
-14 bp
+1.0
- o/w net commissions 54 -1.8
-32.0
+4.6 pp21.0%
ITAS
1 Excluding dividends
Operating costs -126 +1.6
Confirmed strong GDP growth (> +6% y/y in 1H04), and tightening stance of monetary policy resulting in +1.25 pp of Central Bank’s interest rate from July up to now
Total Revenues up 3.7% on 1Q, as a result of: Increasing trend in net interest income
(+1.0% on 1Q04), benefiting from slight recovery in deposit spread and stable spread on debt securities
Lower net commissions due to decreasing sale of Mutual Funds although improving its leadership position
Costs under control with improved efficiency (C/I to 53.7%)
Further reduction of provisions also thanks to better macroeconomic environment, increased coverage of doubtful loans (70.2% from 66.7% in Mar04)
Net Income for the Group up 31.5% on 1Q04 also benefiting from a one-off release of deferred tax provisions caused by the change in corporate tax rate (approx. 10 mln)
Tax Rate 4.1% -18.1 pp
At unchanged FX
Data gross of consolidation adjustment
- o/w other net oper. Inc. 42 +42.5
2 Net of consolidation adjustment
33
1 Excluding for KFS (included at current FX)
INCREASING NET CUSTOMER LOANS DRIVEN BY PEKAO.TREND IN MUTUAL FUNDS AFFECTED BY LOWER SALES IN POLAND
ITAS
% ch. on
Mar04
Jun04(Euro mln)
% ch. on
Dec03
Net Customer Loans
- o/w Pekao
Mortgages
+2.6
+2.7
+4.0
+3.2
+7.2 +12.5
12,734
5,572
1,817
- o/w Pekao LC +21.0 +35.8383
- o/w Pekao
Mutual Funds3
-1.2 -2.2
-0.1 +19.1
Deposits -0.8 -0.921,038
10,235
4,250
- o/w Pekao2 -0.2 +11.72,493
NET CUSTOMER LOANS: Good growth (+2.6% on 1Q04) driven by acceleration of Pekao in 2Q04; further increase in KFS (+9.8% on 1Q04), consolidation in Zaba (+0.7% on 1Q04)
2 PPIM
At unchanged FX1
MORTGAGES further increasing: Pekao: market share in new LC mortgages
+3.9 pp on 1Q04 (to 23.6%) Zaba: outstanding volume +5.2% on 1Q04,
leadership confirmed with 41.2% market share (+20 bp on 1Q04)
MUTUAL FUNDS: Improvement of market share: Pekao2:
+40 bp on 1Q04 (to 32.3%), Zaba: +113 bp on 1Q04 (to 44.4%)
Higher share of equity and balanced funds in Pekao2 from 47% in 1Q04 to 50% in 2Q04Assets administr.
for customers3 +0.2 +5.133,345
3 New Europe Business Area of Pioneer is included at current FX
34
Annex
35 * Net write-downs of financial investments, provisions for risks and charges,
provisions for possible loan losses and provisions to reserve for general banking risk
2Q04 & 1H04 CONSOLIDATED INCOME STATEMENT
Net extraordinary income
Net non interest income
Total revenues
Operating income
Provisions on loans
Administrative costs (incl. depr.)
Other net provisions*
Goodwill depr.
(Euro mln)
Minorities
Taxes
% ch. on 2Q03
Net interest income (incl. div.)
- of which Dividends
-0.2
-0.3
+23.0
+104.1
+5.4
-6.5
-66.3
+2.9
+46.9
-2.6
-0.3
% ch. on 1Q04 2Q04
1,388
2,715
-1,505
1,210
-246
100
-27
-72
-47
-335
1,327
117
+7.2
+9.1
+28.1
n.m.
+6.1
+13.1
n.m.
+1.4
+23.7
+13.2
+11.2
n.m. -15.2
y/y % ch. 1H04
2,683
5,203
2,923
2,280
-438
102
-36
-143
-85
-631
2,520
121
Net income -5.5583 +25.1 1,049 -7.3
-4.6
-3.6
+20.7
+47.8
+2.7
-10.6
-73.5
+5.1
+21.4
-19.3
-2.5
-14.2
36
Retail Division
Corporate Division
Priv.& AM Division
NE Division
Total Group1
Total revenues+4.2% +13.0% +0.9% +8.2% 9.1%
Operating costs
Operating income
Net write-downs of loans
Net income for the Group
C/I Ratio
+4.0% +5.5% +1.9% +11.6% +6.1%
+4.5% +16.6% -0.9% +4.3% +13.1%
+31.0% +36.3% n.m. -4.9% +28.1%
+3.3% +25.4% +37.2% +18.9% +25.1%
-0.1 pp -2.1 pp +0.6 pp +1.7 pp -1.6 pp
1 Balance due to the Parent Company, other Group companies and elisions
2 Calculated on data at end of period FX
(Euro mln - Data at end of period FX)
DIVISIONAL CONTRIBUTION TO CONSOLIDATED RESULTS IN 2Q04
1,058 861 286 443 2,715
-748 -258 -188 -244 -1,505
310 603 99 198 1,210
-73 -144 -1 -31 -246
131 308 92 98 583
70.7% 30.0% 65.7% 55.1% 55.4%
3 Including all the employees of Koc Financial Services (3,886 as at 30.06.2004)
Employees3 25,467 6,367 3,674 29,784 71,214
2Q04 RESULTS
% Change vs 1Q042
% Change vs 1Q042
% Change vs 1Q042
% Change vs 1Q042
% Change vs 1Q042
Change in pp vs 1Q042
37
-on tot. Gross doubtful loans, % 37.4% 37.6% 46.4%66.0%37.6% 37.1% 68.5% 47.2%
-on total gross NPL, % 48.5% 44.0% 81.7% 59.2%48.5% 42.0% 83.2% 59.3%
Total gross doubtful loans 3,321 2,895 2,827 9,2150.3% -0.4%
Net Doubtful Loans/Tot. Net Loans,% 3.88%4.14% 2.92% 7.97%
3,390
4.03%
2.1% -3.3%2,798
2.71%
2,837
7.03%
9,180
3.64%
% change on Mar.04
Gross Doubtful Loans/Tot. Gr. Loans,% 6.94%6.43% 4.54% 20.0%6.28% 4.19% 19.1% 6.61%
Total net doubtful loans 2,077 1,807 962 4,940-7.0% -1.8%
2,1141.8% -2.6%
1,760 895 4,850% change on Mar.04
ASSET QUALITY: DETAILS BY DIVISIONS
Coverage ratios
Retail Division
Mar. 04 Jun. 04
1 Balance due to other Group companies
(mln - Data at end of period FX)Corporate Division
NE Division Total Group 1
Gross NPL
% change on Mar.04
Gross NPL/Tot. Gr. Loans,%
Net NPL/Tot. Net Loans,%
1,966 1,8832,15
86,107
3.6% 2.5%
3.81% 2.95% 15.3% 4.60%
2.02% 1.70% 3.27% 1.96%
2,034
3.77%
2.00%
+3.5% 0.4%
1,890
2.83%
1.69%
2,236
15.0%
2.95%
6,259
4.51%
1.91%
Net NPL
% change on Mar.04
1,013 1,054 394 2,493
-4.9% 2.2%
1,047
3.4% 3.9%
1,096 375 2,549
Mar. 04 Jun. 04 Mar. 04 Jun. 04 Mar. 04 Jun. 04
38
Interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
Cost/income ratio, %
TOTAL(1)Banca d. Umbria
UniCredit Banca
Net provisions
mln
Net income for the Group(2)
UBCasa
- of which: Staff costs
- of which: Other costs
Clarima
RETAIL DIVISION: 1H04 RESULTS BREAKDOWN BY COMPANY
- o/w: Net write-down of loans
993
868
1,860
-1,333
527
233
71.7
196
-714
-619
-101
-113
51
36
87
-48
39
19
55.6
18
-25
-23
-5
-8
56
6
62
-36
26
13
58.7
16
-13
-23
-7
-7
50
12
63
-32
30
12
51.5
12
-9
-23
-14
-16
1,141
933
2,074
-1,468
606
258
70.8
258
-770
-698
-128
-145
(1) Balance due to roundings and elisions of infragroup dividends and goodwill amortisation
CR Carpi
19
11
30
-17
13
7
56.8
7
-9
-8
-2
-2
(2) Net of consolidation adjustmentS
39
CUSTOMER LOANS AND CUSTOMER DEPOSITS BREAKDOWN AND DETAILS OF SHORT TERM SPREADS
SB loans (1)
Residential mortgages (2)
Cons. creditOther loans
EOP LOANS, Euro bn
UCB AVG. MARK UP(5) (Households), %
Other deposits
Households c/accounts
Bonds
EOP DEPOSITS, Euro bn UCB AVG. MARK-DOWN(5) (Households), %
1Q042003pro-forma(3)
1Q042003
50.1
64.1
27.5
+4.6%
-0.3%21.5(4)
12.2
2.18.3
(1) Includes short term and m/l term loans(2) Includes only households mortgages(3) Including ANBI
15.4
27.2
+4.5%
+1.2%
-0.5%
-0.2%
+21.6%
+0.4%
+0.2%
48.8
26.3
12.1
2.18.3
60.2
17.7
15.3
27.2
1Q03 2Q03 3Q03 4Q03
7.18 7.18 7.337.04
1Q03 2Q03 3Q03 4Q03
2.32 2.031.78 1.72
1Q04
7.03
1Q04
1.65
UCB AVG. MARK UP(5) (Small Business), %
1Q03 2Q03 3Q03 4Q03
5.99 5.93 5.95 5.69
1Q04
5.60
(4) 1Q04 increase vs. December is due to the issue of bonds by UBCasa to fund mortgage book expansion
2Q04
2Q04
52.4
63.9
29.2
21.0(4)
12.6
2.38.3
15.4
27.6
+2.7%
+6.1%
+3.0%
+8.3%
+0.8%
-2.8%
=
+1.4%
+6.5%
2Q04
7.08
2Q04
1.65
2Q04
5.47
(5) Source: Bank of Italy matrix data
40
NET COMMISSIONS GROWTH COMING FROM INCREASED SALES OF BANCASSURANCE PRODUCTS AND HIGHER SMALL BUSINESS PAYMENT RELATED FEES. UP-FRONT FEES REPRESENTING 27.8% OF TOTAL COMMISSIONS IN 1H04, IN LINE WITH INTERNAL EXPECTATIONS
RETAIL DIVISION: NET COMMISSIONS
mln
Securities in custody
TOTAL RETAIL DIVISION
Total Commissions from Wealth Management
- Mutual funds 1
- Segregated Accounts 2
Other services
- Insurance Products 2
Breakdown by nature
1 Includes subscription and management fees from Plain Vanilla Mutual Funds2 Includes management fees related to underlying Mutual Funds
2Q04
48
324
151
56
11
125
85
Q/q% ch.
-10.5
+7.3
+1.8
-5.9
-6.9
+25.0
+8.9
1Q04
54
302
149
59
11
100
78
41
RETAIL DIVISION - DETAILS ON ASSET QUALITY
Slight increase of Gross Doubtful Loans (+2.1% Q/Q), driven by increased Gross NPLs (+3.5%) while Gross Watchlist are flat vs. previous quarter (+0.1%)
Coverage ratio 48.5% +2 bp
Jun 04
ch. on 1Q04
Provisions on performing loans 288 +3.4%
Coverage ratio 0.57% -1 bp
Gross Doubtful Loans 3,390 +2.1%
Coverage ratio 37.6% +19 bp
Weight on Gross Loans 6.28% -15 bp
mln, where not specified
Gross Non Performing Loans 2,034 +3.5%
Weight on Gross Loans 3.77% -4 bp
Cost of risk (annualised) 49 bp -1 bp
Coverage ratio on Gross Doubtful Loans slightly increased vs. 1Q04 (+19 bp)
Stability of coverage ratio on performing loans, with increase in provisions substantially reflecting good loan growth
Cost of risk in line with previous year
1H04ch. on 2003
Reduced weight of both Gross Doubtful Loans and Gross NPLs on Total Gross Loans, respectively -15 bp and -4 bp
Significant reduction Q/Q of net flows of New Doubtful Loans(1), -14%
(1) Defined as flow from in bonis loans to any category of doutbtful loans - flow from any category of doubtful loans to in bonis loans
42
CORPORATE DIVISION: 1H04 INCOME STATEMENT- BREAKDOWN BY COMPANY
Interest margin (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
TOTAL2UBI
Net provisions
(Euro mln)
Net income for the group
- of which: Staff costs
- of which: Other admin. expenses
Other companies
- o/w: Net write-downs of loans
633
298
931
667
-112
-151
-264
250
250
28.3%Cost/income Ratio
-234
-238
UBM1 LOCAT
1 Including TradingLab, merged in UBM starting from 1.7.2004
-6
445
439
323
-52
-56
-116
242
242
26.4%
7
5
97
13
110
83
-10
-15
-27
38
38
24.2%
-16
-17
27
115
142
46
-49
-45
-96
24
23
67.3%
-7
-9
751
871
1,622
1,120
-223
-267
-502
554
553
30.9%
-250
-259
2 Balance due to roundings and elisions of infragroup dividends and goodwill amortisation
43
CORPORATE DIVISION: 2Q04 AND 1H04 INCOME STATEMENT
Net interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. depr.)
Operating income
Net extraordinary income
Net income
Total net provisions
Taxes
Net income for the group
Cost Income ratio, %
(Euro mln) 2Q04/1Q04 % ch. 2Q04
861
-258
603
-207
30.0%
64
-151
308
308
384
477
1H042Q04/2Q03 % ch.
1H04/1H03 % ch.
+13.0
+5.5
+16.6
+26.0
-214 bp
n.s.
+40.7
+25.4
+25.2
+4.3
+21.2
-0.2
-3.9
+1.5
+30.9
-115 bp
n.s.
-9.7
+8.7
+7.9
-4.5
+3.5
1,622
502
1,120
-372
30.9%
65
-259
553
554
751
871
-8.5
-3.1
-10.8
-7.5
+171 bp
n.s.
+8.8
-12.2
-12.8
-0.5
-14.4
44
CORPORATE DIVISION - DETAILS ON ASSET QUALITY
Coverage ratio 42.0% -200 bp
1H04ch. on 2003
Provisions on performing loans 758 +4.6%
Coverage ratio 1.18% -1 bp
Gross Doubtful Loans 2,798 -3.3%
Coverage ratio 37.1% -47 bp
Cost of risk (annualised) 78 bp +10 bp2
Weight on Gross Loans 4.19% -35 bp
mln, where not specified
Gross Non Performing Loans 1,890 +0.4%
Weight on Gross Loans 2.83% -12 bp Drop of coverage on NPLs (-200 bp vs Mar.04)
mainly due to the high fiscal write-downs accounted in 2Q (182 mln vs 103 mln in 1Q)
+4.6% increase of provision on performing loans vs Mar. 04, also due to 21 mln provisions on the automotive sector. Coverage ratio on performing loans confirmed at an high 1.18%
1H04 cost of risk (annualised) 10 bp up vs FY03 net of extraordinary provisions on Parmalat, mainly due to high provisions on a single position; cost of risk at 64 bp net of provisions on this “single position”
Reduction of Gross Doubtful Loans (-3.3% vs Mar.04) mainly due to a significant decrease of Gross Watchlist Loans (from 622 mln as of Mar.04 to 532 mln as of Jun.04, -14.3%), given the substantial stability of Gross NPLs (+0.4% vs Mar.04)
Jun. 04ch. on
Mar. 04
(2) Calculated on FY03 cost of risk (91 bp) net of extraordinary provisions on Parmalat (23 bp)
Very strong 2Q/1Q reduction of net flows of New Doubtful Loans1 (143 mln in 2Q vs 377 mln in 1Q, -62.1%)
(1) Defined as: Flow from in bonis loans to any category of doubtful loans less Flow-back from any category of doubtful loans to in bonis loans
45
(Euro mln)
Net interest income 314
Net income for the group
Cost Income RATIO, %
114
27.9%
Net non interest income 161
Total revenues
Operating costs
Operating income
475
-133
342
Net write-downs of loans
Other net provisions
-135
-5
Of which:
96
- Trading profits 63
- Net commissions
UNICREDIT BANCA D’IMPRESA: 2Q04 AND 1H04 INCOME STATEMENT
2Q04/1Q04 % ch. 2Q04 1H042Q04/2Q03
% ch. 1H04/1H03
% ch.
-1.7
-16.6
-80 bp
+17.1
+3.9
+1.0
+5.1
+35.6
n.s.
+6.1
+38.8
+4.9
0.2
-91 bp
-8.7
-0.1
-3.3
+1.2
+3.5
-43.8
+15.4
-28.8
633
250
28.3%
298
931
-264
668
-234
-3.4
186
108
+6.2
-10.7
44 bp
-15.8
-2.0
-0.4
-2.6
+31.8
-85.2
+18.7
-43.1
46
UBM: 2Q04 AND 1H04 INCOME STATEMENT
(Euro mln)
Financial ProductsSales and Trading
Investment Banking
Total revenues
Staff costs
Other costs (incl. depr.)
Operating income
Net income
C/I Ratio
of which derivatives
249
-28
-34
188
159
24.6%
211
38
183
Net extraord. income 56
Taxes -89
2Q04/1Q04 % ch. 2Q04 1H042Q04/2Q03
% ch. 1H04/1H03
% ch.
+31.2
-3.0
+28.8
+38.8
+93
-414 bp
+20.0
+169.6
+26.2
n.s.
+65.4
-7.0
-22.5
-3.5
-4.8
+22.4
-174 bp
-23.1
+54.0
-20.6
n.s.
+76
439
-56
-60
323
242
26.4%
386
52
328
57
-143
-27.5
-23.5
-2.8
-31.4
-18.0
+415 bp
-32.3
-20.2
-32.8
n.s.
-10.5
47
-€7
-€5
-€3
-€1
€1
€3
€5
€7
Jan-04
J an-04
J an-04
J an-04
Feb-04
Feb-04
Feb-04
Mar-04
Mar-04
Mar-04
Mar-04
Apr-04
Apr-04
Apr-04
May-04
May-04
May-04
May-04
Jun-04
Jun-04
Jun-04
UBM Daily VAR(1) and P&L (Jan 04 – Jun 04)Euro mln
Daily P&L
VaR
1 Calculated using a 98-99% asymmetric double tail confidence interval
1H04 avg. daily VAR: 3.6 mln vs 3.8 mln in 1H03
UBM VAR CHANNEL
48
PRIVATE & AM DIVISION: 1H04 INCOME STATEMENT – BREAKDOWN BY COMPANY
Net interest income
Net non interest income
Total revenues
Operating costs (incl. dep.)
Operating income
Net income
Cost/Income Ratio
Total net provisions
Net income for the group
- of which: Staff costs
- of which: other admin. expenses
(Euro mln)
Net extraordinary income
TOTAL DIVISION2
49
521
570
-372
-165
-192
198
-2
164
159
65.3%
9
UPB +
Subsidiaries
44
129
173
-112
-63
-47
61
-1
40
39
64.9%
3
5
360
365
-191
-90
-95
174
-1
104
100
52.4%
7
7
26
33
-56
-7
-45
-23
0
-20
-20
n.s.
0
PGAM Group UniCredit Xelion Banca
1
7
8
-12
-5
-6
-4
-2
35
35
n.s.
48
Other Companies1
1 Mainly companies deriving from the acquisition of ING and not integrated in UniCredit Xelion Banca2 Balance due to roundings and elisions of infragroup dividends and goodwill amortisation
49
PRIVATE & AM DIVISION: 2Q04 AND 1H04 INCOME STATEMENT
Net interest income (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. depr.)
Operating income
Net extraordinary income
Net income
Total net provisions
Taxes
Net income for the Group
Cost Income ratio, %
2Q04/1Q04 % ch. 2Q04
286
-188
98
-11
65.7%
9
-
92
96
23
263
1H042Q04/2Q03 % ch.
1H04/1H03 % ch.
+0.7
+1.6
-1.1
-62.7
+61bp
n.s.
n.s.
+36.9
+39.5
-4.4
+1.2
+6.0
+5.9
+6.1
-62.7
-6 bp
n.s.
n.s.
+49.3
+61.5
-1.1
+6.7
570
-372
198
-41
65.3%
9
-2
159
164
49
521
+11.2
+9.9
+13.7
-21.3
-77 bp
-3.6
-79.6
+27.3
+35.2
+4.0
+12.0
(Euro mln - Data at fixed FX)
50
3 Including Momentum
1 Balance due to roundings
Italy
New Europe
(Euro mln)
89,095
2,577
TOTAL PIONEER
Alternative Investments3
119,436
2,449
255
247
2,118
1,123
US 21,884 352
International (ex-Italy)3 5,880 1,264
AuM as at 31.12.2003
US in USD 27,639 456
90,973
2,952
124,689
3,635
23,379
7,385
AuM as at 30.06.20041
28,417
AuM as at 31.08.20042
91,412
23,182
7,644
3,019
125,257
3,828
28,076
Net sales 1H04
PGAM GROUP: DEC03-AUG04 NET SALES AND AUM TREND
2 Provisional figures; balance due to Market Performance (including FX effect)
1,623
128
3,135
63
1,143
241
322
110
35
297
205
-66
218
-81
Net sales Jul-Aug04
Mkt. Perf. 1H04
51
Credem + Euromob.
6,553Credem + Euromob.
1 Calculated on average PFAs2 AUMs, Securities in Custody, Bancassurance and liquidity3 Ranking taking into account only the 10 major Italian players by Total Financial Assets as at 30.6.20044 BNL Investimenti recently acquired by RasBank
Source: Assoreti data as at 30.6.2004
Net Inflows:Euro 1,026 Mln,
1st in Italy
Data as at 30.6.2004 – Mln
TOTAL NET INFLOWS 2
Xelion 1,026
Mediolanum 702
Azimut 572
Banca Generali 398
282
Fineco 250
Credit Suisse 162
Rasbank + BNL Inv.ti4 125
Finanza & Futuro -132
Fideuram + SPI -452
Data as at 30.6.2004
2,175 PFAs,5th in Italy
NUMBER OF PFAs
Fideuram + SPI 4,381
Mediolanum
4,093
4,055
Banca Generali 2,366
Finanza & Futuro 1,182
Azimut
1,109
Banca 121 884
868
Tot. Fin. Assets:~11.0 bn,5th in Italy
Data as at 30.6.2004 – Mln
TOTAL FINANCIAL ASSETS
Fideuram + SPI 58,110
Mediolanum 20,425
Rasbank + BNL Inv.ti4 18,795
Finanza & Futuro 8,078
Azimut 7,674
Credit Suisse 7,020
Xelion 10,957
13,914
Fineco 6,104
Net Inflows per PFA1:3rd among Top-
Players
Data as at 30.6.2004 – Mln
NET INFLOWS PER PFA 2 & 3
Azimut 0.69
Xelion 0.47
Credit Suisse 0.51
Credem + Euromob. 0.26
0.17
Banca Generali 0.16
Finanza & Futuro 0.11
0.03
Fideuram + SPI -0.10
Fineco 0.16
EXCELLENT COMMERCIAL RESULTS FOR XELION IN 1H04: LEADERSHIP FOR TOTAL NET SALES (WITH A STRONG 24.4% MKT. SHARE) AND HIGH PRODUCTIVITY PER PFA
Rasbank + BNL Inv.ti4
Xelion 2,175
Fineco 1,576
Mediolanum
Rasbank + BNL Inv.ti4
Credem + Euromob.
Banca Generali
52
3.0%1
2.2%1
GOOD NET INCOME GROWTH IN 2Q BENEFITING FROM HIGHER REVENUES AND DECREASED COST OF RISK
(Euro mln)
Net interest income2
Net non interest income
Total revenues
Operating Costs3
Operating income
Net write-down of loans
Net extraordinary income
Net income
Other net provisions4
Taxes
4 Including provisions to reserve for general banking risk
2 Including dividends3 Including depreciation
%ch. at unchanged FX
7.9%1
41.9%1
18.2%1
22.8%1
1 Weight of the bank Total Revenues in 2Q04 on Division Total Revenues – only UCI’s portion; balance due to UniLeasing Romania and Xelion Poland
Net income for the Group
Cost/Income ratio (%)
NEW EUROPE DIVISION % ch. on 2Q03
-0.4
+2.5
+0.7
+2.1
-1.0
-4.8
n.m.
+16.9
-74.9
-61.9
+10.6
+0.8 pp
3.4%1
BREAKDOWNOF REVENUES
ITAS
2Q04
270
161
431
-238
193
-30
-7
138
-2
-16
94
55.2
% ch. on 1Q04
+1.5
+3.2
+2.1
+5.3
-1.5
-10.9
n.m.
+14.0
n.m.
-62.8
+11.9
+1.6 pp
1H04
536
317
853
-464
389
-65
-4
259
-2
-59
178
54.4
y/y % ch.
+1.1
+12.4
+5.0
+2.7
+8.1
-10.5
n.m.
+17.7
-37.2
-29.8
+16.3
-1.3 pp
53
IMPROVED ASSET QUALITY IN ALL NEW EUROPE BANKSINCREASED COVERAGE RATIOS
Net NPLs and Doubtful Loans as % of Total Net Loans
81.8
Mar04 Jun04
83.266.0 68.5
Coverage ratios
On Gross Doubtful Loans
On Gross NPLs
Net NPL/ Loans %
Jun04
Total NE -0.72.9
ch. on Mar04 (pp)
Net Doubtful/Loans %
Jun04
ch. on Mar04 (pp)
7.0-0.3
At unchanged FX
Zaba -0.41.9 4.4-0.2
Unibanka -0.73.4 6.3-0.2
Pekao -1.14.3 10.1-0.4
Bulbank 0.2 -0.11.80.0
KFS -0.72.8 5.7-0.4
Good improvement in Coverage ratios
Cost of risk1
-15 bp
(bp, annualised)
117
102
1H04FY03
1 Calculated as Net Loan Loss Provisions on Net Customer Loans at period-end, 1H04 data annualised
Zivno 0.7 -0.53.4-0.1
Decreasing Net Doubtful/Net Loans and Net NPL/Net Loans ratios in all NE banks
Total provisions on Performing Loans to 200 mln (+7.1% on Mar04) with an increase in the coverage ratio (+5 bp to 1.66%)
Decreased gross other Doubtful2 (-13.4% on Mar04) driven by Pekao
ITAS
2 Total Doubtful – NPL, of which approx. 95% are watchlist
54
Interest margin (incl. div.)
Net non interest income
Total revenues
Operating costs (incl. dep.)
Net operating income
Net income
ROE
Cost/income
TOTAL1
536
317
853
-464
389
259
19.1%
54.4%
Net provisions -67
1 Balance due to roundings and other small companies
(Euro mln)
(UCI stake)
Net income3 (UCI’s portion) 178
- of which: Staff costs -233
- of which: Other costs -168
NEW EUROPE DIVISION: 1H04 RESULTS BREAKDOWN BY BANK
- o/w: Net write-down of loans -65
UNI BANKA (77.2%)
12
10
23
-16
7
5
13.7%
68.3%
-2
4
-7
-6
-2
BULBANK (85.2%)
30
19
49
-17
32
19.9%
34.6%
-2
25
21
-7
-7
-2
Group PEKAO (53.0%)
251
210
461
-250
211
21.0%
54.3%
144
-40
79
-125
-91
-35
130
43
172
-102
70
50
16.6%
59.2%
-7
41
Group ZABA
(81.9%)
-55
-33
-11
6
6
12
-9
3
1
4.3%
75.5%
-4
-4
-2
1
-2
89
21
110
-48
62
32
23.5%
43.5%
-23
-19
-13
32
KFS2 (50.0%)
-12
2 Consolidated with proportional method (50%)
14
7
21
-19
2
+4
8.8%
88.6%
-9
-7
+0
+4
Zivno (96.5%)
+0
UniCredit Romania (99.9%)
ITAS
Banks’ data gross of consolidation adjustment
3 Net of consolidation adjustment
55
CONSOLIDATED INCOME STATEMENT: PEKAO
3 Including provisions to reserve for general banking risk
1 Including dividends2 Including depreciations
4 At unchanged FX
(Euro mln)
Net interest income1
Net non interest income
Total revenues
Operating costs2
Operating income
Net write-down of loans
Net extraordinary income
Net income
Other net provisions3
Taxes
Net income for the Group5
% ch.4 on 2Q032Q04
127
107
235
-126
109
-14
-6
80
-4
-3
45
% ch. on 1Q044
+3.0
+4.5
+3.7
+1.6
+6.9
-32.0
n.m.
+25.9
n.m.
-81.1
+31.5
-1.7
+22.1
+7.9
-0.2
+19.8
+20.7
n.m.
+41.0
n.m.
-84.3
+48.9
ITAS
Data gross of consolidation adjustment
1H04
251
210
461
-250
211
-35
-5
144
-5
-22
79
y/y % ch.4
-7.2
+18.4
+2.9
-1.1
+8.1
-31.9
n.m.
+27.1
n.m.
-51.2
+30.2
5 Net of consolidation adjustment
56
3 Including provisions to reserve for general banking risk
1 Including dividends2 Including depreciations
4 At unchanged FX
CONSOLIDATED INCOME STATEMENT: ZAGREBACKA
ITAS
(Euro mln)
Net interest income1
Net non interest income
Total revenues
Operating costs2
Operating income
Net write-down of loans
Net extraordinary income
Net income
Other net provisions3
Taxes
Net income for the Group
% ch.4 on 2Q032Q04
66
17
83
-54
28
-5
-2
20
+4
-6
16
% ch. on 1Q044
+3.3
-34.9
-7.7
+14.3
-32.7
-25.3
n.m.
-33.2
n.m.
-22.6
-33.2
-1.7
-45.4
-15.5
+2.7
-37.0
-56.6
n.m.
-28.2
n.m.
+23.8
-28.9
1H04
130
43
172
-102
70
-11
-1
50
+4
-13
41
y/y % ch.4
+6.4
-13.7
+0.5
+4.9
-5.1
+23.4
n.m.
-6.5
n.m.
+1.2
-5.9
Data gross of consolidation adjustment (excluding Net Income for the Group that is net)