Description
Strengthened core client franchises with a unique geographical spread, focused on diversified Western European countries and high growth CEE economies.
UniCredit Strategic Plan
Milan, 14 November 2011
2
Disclaimer
? This Presentation may contain written and oral “forward-looking statements”, which includes all statements that do not relate
solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a
number of assumptions, expectations, projections and provisional data concerning future events and are subject to a
number of uncertainties and other factors, many of which are outside the control of UniCredit S.p.A. (the “Company”).
There are a variety of factors that may cause actual results and performance to be materially different from the explicit or
implicit contents of any forward-looking statements and thus, such forward-looking statements are not a reliable indicator
of future performance. The Company undertakes no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as may be required by applicable law.
The information and opinions contained in this Presentation are provided as at the date hereof and are subject to change
without notice. Neither this Presentation nor any part of it nor the fact of its distribution may form the basis of, or be relied
on or in connection with, any contract or investment decision.
? The information, statements and opinions contained in this Presentation are for information purposes only and do not
constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to purchase or subscribe
for securities or financial instruments or any advice or recommendation with respect to such securities or other financial
instruments. None of the securities referred to herein have been, or will be, registered under the U.S. Securities Act of 1933,
as amended, or the securities laws of any state or other jurisdiction of the United States or in Australia, Canada or Japan or
any other jurisdiction where such an offer or solicitation would be unlawful (the “Other Countries”), and there will be no
public offer of any such securities in the United States. This Presentation does not constitute or form a part of any offer or
solicitation to purchase or subscribe for securities in the United States or the Other Countries.
? Pursuant the consolidated law on financial intermediation of 24 February 1998 (article 154-bis, paragraph 2) Marina Natale,
in her capacity as manager responsible for the preparation of the Company’s financial reports declares that the accounting
information contained in this Presentation reflects the UniCredit Group’s documented results, financial accounts and
accounting records.
? Neither the Company nor any member of the UniCredit Group nor any of its or their respective representatives, directors or
employees accept any liability whatsoever in connection with this Presentation or any of its contents or in relation to any loss
arising from its use or from any reliance placed upon it.
3
Agenda
Business refocusing
Simplification & Cost Management
UniCredit: who we want to be
Strategic Plan
I
Balance-Sheet structure
Italy Turnaround
II
III
IV
4
UniCredit vision 2015
A rock solid European commercial bank
Strengthened core client franchises with a unique geographical spread, focused
on diversified Western European countries and high growth CEE economies
Strong balance sheet
A sound capital base, further reinforced liquidity buffer, continued access to diversified
funding sources
Operational efficiency
A leaner customer centric operational structure benefiting from increased efficiencies,
stringent cost management and simplified support and HQ functions
Commercial banking activities core
A comprehensive product portfolio and added value services throughout the franchises,
underpinned by increased cross selling
Sustainable returns
A robust business model with a low risk framework delivering sustainable profits and
a return on equity above cost of capital
5
2013 - 2015 Strategic Plan – objectives
Basel 3 Common Equity Tier 1 (CET1) full impact above 9% already in 2012 and
10% by 2015 - proposed 7.5 bn Rights Issue secures a solid foundation
ROTE about 12% by end of plan based on sustainable recurring returns
Focused RWA management, run-off portfolio of 48 bn of performing assets
Basel 3 compliance for balance sheet and liquidity risk indicators by 2015
Well matched structure with net inter-bank position positive by 2015 lowering
dependence on wholesale markets
Cost of risk to drop by 48bps to 75bps by 2015
Cost base reduction by almost 10%, targeting Cost / Income at ~50%
6
UniCredit
A unique positioning in mature Western European markets
and fast growing CEE economies
Sep 11 RWA breakdown
Other
CEE
Poland
Germany
Austria
Italy
37
7
25
5
18
7
Germany (AAA rating)
Rank & Market Share #3 with c. 3%
Loans (bn) 136.4
Deposits (bn) 105.2
FTE (#) 19,552
Italy (A rating)
Rank & Market Share #2 with c. 13%
Loans (bn) 279.7
Deposits (bn) 161.4
FTE (#) 61,694
Rank & Market Share #1 with c. 7%
Loans (bn) 88.4
Deposits (bn) 79.5
FTE (#) 71,399
Austria (AAA rating)
Rank & Market Share #1 with c. 16%
Loans (bn) 63.5
Deposits (bn) 47.5
FTE (#) 7,908
Data as of September 2011, Market share calculated on Loans (as of June 2011)
UNIQUE EUROPEAN FRANCHISE
“MAIN” BANK FOR 20M FAMILIES AND 2M BUSINESSES
%
CEE Countries & Poland
%
Other
CEE
Poland
Germany
Austria
Italy
33
27
12
6
14
8
Sep 11 Deposits breakdown
2013 - 2015 Strategic Plan – Discontinuities
BALANCE SHEET
STRUCTURE
SIMPLIFICATION
& COST
MANAGEMENT
BUSINESS
REFOCUSING
ITALY
TURNAROUND
Capital
strengthening
Funding&Liquidity:
rebalancing
of L/D ratio
Risk: conservative
risk-taking
framework
Central Functions
streamlining
Operations:
enhancing
structural
efficiency
Networks’
redesign
CIB: business
reshaping
CEE: focused
growth
New service
model
Improving asset
quality
Greater
efficiency
7
8
Agenda
Business refocusing
Simplification & Cost Management
Strategic Plan
I
Balance-Sheet structure
Italy Turnaround
II
III
IV
UniCredit: who we want to be
9
Plan based on realistic macroeconomic assumptions
A volatile economic environment... …assumptions based on realistic scenario
NO GROWTH IN ITALY, LOW GROWTH IN EU, HIGH GROWTH IN CEE
3m Euribor IT GDP CEE GDP EU GDP
Max 2006-2011
Min 2006-2011
3m Euribor CEE GDP EU GDP IT GDP
2013-15
2011-12
-4.2
3.3
7.3
-5.7
2.1
-5.2
0.6
5.3
1.3
1.6
3.7
4.1
0.2
0.8
1.3
2.0
10
UniCredit key targets
ROTE in line with cost of capital and CET1 above 10% in 2015
(1) BIS3 based on available information and assuming full implementation of proposed Rights Issue
2010 2013 2015
ROTE 3.6% 7.9% ~12%
Net profit
(bn)
1.3 6.5 3.8
Implied
Pay-out
42% 44% 39%
CET1 8.6% 9.4%
(1)
>10%
(1)
COMMON EQUITY ABOVE 10% TARGET
Cost
of risk
123 90 75
IV
III
II
11
The Strategic Plan
Four main pillars for sustainable profitability
SIMPLIFICATION AND
COST MANAGEMENT
Central functions Network Operations
BUSINESS
REFOCUSING
CIB reshaping Selective focus on CEE
ITALY
TURNAROUND
BALANCE SHEET
STRUCTURE
Capital Risk
Funding&
Liquidity
I
12
UniCredit built on strong foundations
TAKING ACTION TO STRENGTHEN THE GROUP
84
147
929
265
787 823
929
1998 1995 2010 2009 2008 2007 2006 2005 2004
Domestic
corporate
bank
Leading
commercial bank
with CEE exposure
Pan-European
universal bank
De-leveraging
de-risking
Total Assets, bn
Main goodwill additions, bn
7.2
10.4
Accelerated expansion in Europe
(HVB, BA-CA) and in Italy (Capitalia)
Full divisionalisation of mature market
operations
Merger among 7 Italian banks
Start of international acquisitions
Capital strengthening
De-leveraging
Merger of the Italian
subsidiaries (ONE4C)
1,046 1,022
BALANCE SHEET I
13
9.8 bn impairment of intangibles and other non-cash items
3Q11 Impairment of intangibles and other non-cash items
35%
65%
due to new
macro scenario
due to new
regulatory framework
Total
Impairments
Goodwill
Impairment
Impairment of
Trademarks
(1)
Impairment of
Participations
Review based on new
macro-economic scenario and
regulatory framework has led the
group to take an impairment of
goodwill of -8.6 bn
Trademarks: HVB, Bank Austria,
BdR, BdS, USB
Valuation of strategic investments
with an implied goodwill, have also
been revised downwards
8.6
0.7
0.5
9.8
(1) Net of relevant deferred tax liabilities
NO IMPACT ON REGULATORY CAPITAL OR LIQUIDITY POSITION
BALANCE SHEET I
14
New regulatory and macroeconomic environment
structurally changing the sector
Issue What has changed
Macro
environment
Increased economic uncertainty / Market volatility
Sovereign crisis / effects of fiscal consolidation / Potential policy reaction (levies,…)
Low interest-rate environment
De-leveraging of mature / over-leveraged economies
Liquidity
Upcoming regulation on stricter maturity matching
Challenging access to capital markets / higher cost of funding
Capital
Higher Regulatory Capital requirements
Early adoption expected from Markets / EU
Further pressure on ratings due to current macro environment and sovereign crisis
EBA stress test and deadline define new stringent targets
BALANCE SHEET I
15
7.5 bn fully underwritten Rights Issue
CAPITAL I
Offering
structure
Pricing
Underwriting
Provisional
timing of the
offering
7.5 bn Rights Issue
Issuance of new ordinary shares with pre-emptive rights to current shareholders
Also saving shareholders will also be entitled to subscribe new ordinary shares
Final terms of Rights Issue to be agreed at time of launch depending on market conditions
Rights Issue fully underwritten, subject to standard terms and conditions
BOD APPROVES FULL
STRATEGIC PLAN AND
CAPITAL PACKAGE (14 Nov)
CAPITAL PACKAGE
PROPOSED TO EGM
(15 Dec)
LAUNCH EXPECTED
IN 1Q 2012
NOVEMBER DECEMBER JANUARY FEBRUARY MARCH
16
Capital structure
Basel 3 and EBA compliant by 2012 with further potential
upside actions not included
CAPITAL I
8.49%
8.74%
+0.50% +0.06%
-0.31%
Jun11
actual
9.12%
Cashes Accrued
dividend
release
Org. capital
dynamic
Sep11
actual
Including 3.0 bn
of CASHES
BIS 3 requirements
(full impact)
8.74% 9.1%
>10%
+1.42%
-0.51%
-0.85%
BIS2.5 BIS3 7.5bn
Rights
Issue
Organic
dynamic
2012 2015 Sep11
actual
EBA
requirements
8.74%
9.3%
+1.52%
-0.51%
-0.51%
Sep11
actual
BIS2.5 Other
EBA
changes
Sep11
EBA post
Rights Issue
Both capital bridges assume no dividend payment in 2011, partial recognition (2.4 bn) of CASHES into Common Equity
Tier 1 and 7.5 bn capital increase
Further actions not included in the above:
Additional non-core assets run-off beyond what already ring-fenced (see next page)
Non-core assets and investments rationalization / disposals
-
-
+0.3%
7.5bn
Rights
Issue
BIS3 based on available information
The EBA exercise has been updated with September figures based on internal estimation. The official outcome will be published by EBA by the end of November
and could differ from internal estimates
Calculations assume full implementation of proposed Rights Issue. Rights Issue effect different between BIS 3 and EBA because of different RWA amount
17
Capital efficiency
48 bn of RWA ring-fenced and run-off (35 bn by 2015)
RWA bn, EoP
Core assets
Non strategic
assets
Jun 11
445
89%
11%
CAPITAL I
Run-off portfolio, RWA bn
21
48
Other CIB
Leasing
CIB Markets
CIB F&A
3
By 2015
After 2015
48
35
13 5
19
Disciplined approach to non strategic assets: not consistent with strict Risk / Reward criteria, to be Run-off
in order to
Reduce capital and liquidity absorption
Preserve capital / liquidity allocated to the core franchise
Investments to meet strict risk / reward criteria
Downsize / Run-off portfolios, thus reducing risks
18
Well matched balance sheet
Improving L/D ratio
FUNDING&LIQUIDITY I
Ratios
2010
L/D ratio 1.38
Loan to Direct
Funding ratio
(1)
0.95
2013
L/D ratio 1.27
Loan to Direct
Funding ratio
(1)
0.92
2015
L/D ratio 1.19
Loan to Direct
Funding ratio
(1)
0.89
Balance sheet structure will be further improved thanks to:
Higher deposits than assets growth with a positive impact on the L/D ratio
The key targets to be achieved by 2015 are:
Positive net inter-bank position further lowering dependency on wholesale market access
Basel 3 compliance with balance sheet and liquidity risk indicators (NSFR and LCR)
Balance sheet strategy designed to support strong Group ratings
(1) Direct Funding includes Deposits form Customers and Debts in issues
Debts in Issues
Dep. from customers
Loans to customers
2015 evolution
19
Very well diversified funding platform by geography and type
FUNDING&LIQUIDITY I
Liquidity management and funding access based on
four liquidity centers
ITALY(35% on Total assets)
Points of access:
- Milan
- London
- New York
- Dublin
Points of access:
- Wien
- CEE Countries
GERMANY(40% on Total assets)
Points of access:
- Munich
- London
- New York
- Luxembourg
- Hong Kong
- Tokyo
POLAND(4% on Total assets)
Points of access:
- Warsaw
Group wide Liquidity Policy ensures strong
liquidity profile
Active liquidity management in place
since 2007 via conservative Group
liquidity policy:
Short-term funding: no reliance on unsecured wholesale market, keeping a well diversified funding base via
wholesale deposits, CDs, CPs in all main markets and currencies, mostly via Italy and Germany Liquidity Centers
Medium-long term funding: no dependence on public senior wholesale markets, thanks to strong focus on
Covered and Network Bonds
Key Strategic Plan milestones in funding
AUSTRIA(21% on Total assets)
NO SENIOR UNSECURED PUBLIC ISSUANCE IN ITALY IS EMBEDDED IN THE PLAN
Liquidity self-sufficiency within
Liquidity Centers
Geographical specialization,
in order to exploit local expertise
(i.e. covered bonds in Germany)
Optimized market access and
funding costs
20
Strong commercial bank supports funding (1/2)
FUNDING&LIQUIDITY I
GERMANY
Long experience
Covered Bonds outstanding of 32.9 bn
Mortgage: 25.5 bn
Rating
(1)
: Aa1, n/a, AAA
Public sector: 7.4 bn
Rating
(1)
: Aaa, AAA, AAA
AUSTRIA
Current focus on public sector
Covered Bonds outstanding of 7.0 bn
Public sector: 4.7 bn
Rating
(1)
: Aaa, n/a, n/a
Mortgage: 2.3 bn
ITALY
Focus on high quality residential
Covered Bonds outstanding of 10.2 bn
Mortgage: 10.2 bn
Rating
(1)
: Aaa, AAA, AAA
Data as of 30 Sep 2011
Total
CB issues
outstanding
Cumulative
new issue
capacity
2012-15
TOTAL
2015
Current
unecumb.
capacity
ABS/CB
Retained
(3)
47
6
78 11
31 14
Covered bond issuance capacity
(2)
Significant additional Covered Bond issuance capacity remains with about 31 bn by 2015
Out of the total capacity, ~20 bn derives from further exploiting existing assets and 11 bn is based
on 4-year prudent commercial growth
(1) All ratings are referred to the following agencies: Moody’s, S&P, Fitch
(2) All figures are weighted for envisaged over-collateralization. Assumption of netting bond and portfolio maturities
(3) CB retained equal to approx. 3 bn
THE GROUP IS BENEFITING FROM ITS HIGH QUALITY COVERED BOND PLATFORMS
21
FUNDING&LIQUIDITY I
(1) For UniCredit Italy the total Customer Financial Assets include only Private Banking and Family and SME Divisions
Italian Peers: Intesa Sanpaolo, MPS, UBi, Banco Popolare, Carige, BPM, BPER
Peer 1
8.1%
UCG
Italy
(1)
9.4%
11.6%
17.0%
17.7%
16.7%
18.7%
25.3%
Network bonds Jun 11, % of TFA Retail ML/T funding as % of Total ML/T funding
39.1%
UCG
Italy
44.5%
51.3%
58.5%
66.1%
52.6%
68.4%
78.0%
Limited penetration of UniCredit bonds amongst Group network clients. Within F&SME,
Asset Gathering and Private Banking all countries show UniCredit bonds below 10% of customers’ TFA
UniCredit relies less on network bonds than peers allowing for considerable additional capacity
giving it a significant unexploited advantage
LEVERAGE HIGH NETWORK BOND POTENTIAL TO REDUCE
RELIANCE ON VOLATILE WHOLESALE MARKETS
Strong commercial bank supports funding (2/2)
Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7
Italian Peers
Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7
Italian Peers
22
Cost of risk to drop
Risk Management
Improving cost of risk
RISK I
Group cost of risk (bps) CoR trend by region (2010-15)
75
90
108
123
2015 2013 2010
Italy
Germany
Austria
CEE & Poland
2011
(1)
(1) 9M annualized
New origination policy fully in place with new MBO incentives based on risk metrics:
[i.e. (Revenues – Expected loss) / RWA]
Active portfolio management both on performing loans and on impaired loans
Discontinuity in some business areas
Asset quality to improve
New origination criteria, active portfolio management
and business discontinuity
Origination
New Network origination policy and
commercial monitoring system in place
e.g. (Revenues – EL) / RWA
RISK I
Active
portfolio
management
New dedicated projects launched to better
manage performing portfolio with higher
PD and past due loans
Strengthening restructuring unit
Work-out reorganization aimed at
re-engineering processes to shorten
work-out time
Business
discontinuity
Exit from / decrease of:
Non strategic segments
Non satisfactory risk / return
(i.e. RE developers)
Best Rating
classes
(2)
16.1%
Avg growth
-0.2%
(1) Advanced model portfolio: excluding CEE and Poland that adopt AIRB model only in part. Based on EAD/EAD Equivalent
(2) Rating classes A-D3
Western Europe performing portfolio
(1)
Growth rate Sep 11 vs. Dec 10
23
IV
I
III
II
The Strategic Plan
Four main pillars for sustainable profitability
BALANCE SHEET
STRUCTURE
Capital Risk
Funding&
Liquidity
BUSINESS
REFOCUSING
CIB reshaping Selective focus on CEE
ITALY
TURNAROUND
SIMPLIFICATION AND
COST MANAGEMENT
Central functions Network
24
Operations
Simplification and Cost Management
Around 1.5 bn savings by 2015
(1) Excluding Bank levies
(2) Average of country-specific inflation rates, weighted by nominal GDP
Group savings of around 1.5 bn by 2015 with Western Europe costs down
Focus on simplification of processes in central functions and network re-design
Strong rationalization of cost base, particularly in central functions
All projects already launched and being implemented
Severance amounting to around 560 mln
Cost trend
(1)
(CAGR 10-15 ) FTE reduction (Sep 11-15) Cost base reduction (2015, mln)
CEE
5.1%
WE
-0.8%
Group
0.5%
CEE WE
~7,290
Group
~1,135
~6,150
-4% -8% +2%
% of total FTE as of Sep 11
-9.4% -9.3% -9.7%
% of 2010 total costs
SIMPLIFICATION &
COST MANAGEMENT
II
25
2.6% 1.9% 5.3%
Inflation
(2)
NON HR
~590
HR
~855
Group
~1,445
Within WE, Italy -12%
Central functions
Significant cost savings and simplification
26
SIMPLIFICATION &
COST MANAGEMENT
II
Central functions streamline Headquarters rationalization
Significant streamlining of support
functions to reduce complexity
(-22% FTE central functions)
Impact primarily on UniCredit
Western Europe HQ
Rationalization of space through
reduction of corporate center buildings
and adoption of new work-place
policies (tot. 292k sqm)
Total Sep11 - 2015 2008-Sep11
Square meters reduction
Savings 2010 - 2015
Central Functions
FTE ~-2,800 HR ~-285 mln Non-HR ~-50 mln
Cost base reduction (2015, mln)
390,000
292,000 682,000
Operations
Efficiencies to drive cost savings
27
SIMPLIFICATION &
COST MANAGEMENT
II
Global Banking Services rationalization Procurement’s spend optimization over 3 years
Consolidation of Banking Services
Factories into a single company
Convergence towards
a single IT platform both
for commercial banking in Western
Europe and Markets. By 2012 70%
of commercial banking revenues will
be managed on the same platform
(EuroSig)
Optimization of operations leveraging
on local expertise and scale
Total savings ~190 mln
p.a. by 2015
Redesign of procurement process
and demand management saving
440 mln
Culture change – adopt new
attitude towards cost savings
Best cost country sourcing: leverage
on UniCredit international presence
Savings 2010 - 2015 Cost base reduction (2015, mln)
FTE ~-1,410 HR ~-140 mln Non-HR ~-490 mln
Operations
Network
A clear change in service model
28
SIMPLIFICATION &
COST MANAGEMENT
II
New branch model (Hub & Spoke)
Optimization of branch footprint
(full service branches from 87% to 26% of total)
Rationalizing real estate usage -165k sqm
(-14% of current space)
Further upgrade of Multi Channel Services
(1)
Savings 2010 - 2015 Cost base reduction (2015, mln)
Network
FTE ~-5,350 HR ~-430 mln Non-HR ~-50 mln
Fewer branches - opitmized formats
Hub: Larger branches
to be dedicated to
full-fledged advisory and
cash transactional centers
Spoke: Smaller branches
to provide “Proximity
and convenience”
(Cash Light or Cash Less)
~13%
~60%
~14%
Full-fledged/Hubs
2015
Cash Less
Cash Light
2011
~3,700 ~3,500
(1) On top of Italy’s largest 3500 strong cash-deposit ATMs network
100% of Hubs & Spokes
~26%
~87%
IV
I
II
The Strategic Plan
Four main pillars for sustainable profitability
BALANCE SHEET
STRUCTURE
Capital Risk
Funding&
Liquidity
ITALY
TURNAROUND
SIMPLIFICATION AND
COST MANAGEMENT
Central functions Network Operations
29
III
BUSINESS
REFOCUSING
CIB reshaping Selective focus on CEE
CEE
Keep leadership through a focused country approach
30
BUSINESS
REFOCUSING
III
Focus on highly attractive countries
Focus maintained on highly attractive countries where UniCredit enjoys a strong footprint
and is well positioned in a risk / return matrix (i.e. Poland, Turkey, Russia and Czech Republic)
Key strategic initiatives
Optimization of investments, fewer and more focused to maximize value of CEE operations:
CEE cost optimization program with focus on operational, IT, Real Estate and purchasing
efficiencies
New sales channels development including internet and mobile banking and the creation
of a Call Center. CRM Implementation as a backbone of customer relationship strategy and
commercial efficiency
Streamlined branch openings with network expansion strategy limited to highly attractive
countries
Simplification of geographical footprint
Intra-group rationalization (Hubs, combination etc.) to simplify further and generate
cost savings opportunities
CEE
Profitability and liquidity to define the strategy for each country
31
BUSINESS
REFOCUSING
III
Strongly diversified country approach
Expansion strategy: large, highly attractive countries (i.e. for profitability and liquidity). UCG strongly positioned,
with potential for further growth – Poland, Turkey, Russia and Czech Republic
Core countries:
Expansion on hold: countries with market appeal but challenging environment in the short-term
Balanced growth, focus on efficiency: countries with low growth and challenging environment
Minimize risks / portfolio run-offs: countries with high level of vulnerability, poor competitive positioning for UCG
Mapping our subsidiaries:
profitability (RARORAC) and
liquidity (Loans / Local Funding)
0.8 1.3 1.2 1.1 1.0 1.9 1.6 1.5 1.4
-10%
-5%
0%
5%
10%
15%
POL
CZK
RUS
TRK
0.9
20%
30%
Bubble size: RWA end of Period
LOANS / LOCAL FUNDING
R
A
R
O
R
A
C
Expansion
strategy
+
-
RARORAC is the ratio between EVA (Economic Value Added) and allocated / absorbed capital and represents the value created per each unit of risk taken
2015
CEE
A more focused approach going forward
32
BUSINESS
REFOCUSING
III
Loan-to-local funding ratio (deposits + securities issued by local banks)
2015 2013 2010
POLAND
CEE
Low commercial funding gap
Significant reduction in commercial
funding gap supported by increasing
reliance on securities issued by countries
in CEE directly
Most significant reduction expected in
more unbalanced countries with higher
funding gap
Stronger Funding Governance
Stronger funding management aimed at
balancing each country’s self sufficiency
with low cost of funding
Coordinated group wide liquidity
management already in place to optimize
funding cost and market access
1.10
0.82
1.09
0.87
1.07
0.88
CIB
Reallocate resources to core client
franchises to improve profitability
33
BUSINESS
REFOCUSING
III
Three core client offers:
Corporate Banking and Transaction Services
Structured Finance, Capital Markets and Investment Products
Access to Western, Central and Eastern Europe
Strategic initiatives
Reinforce client franchise, credit distribution capabilities and strategic dialogue with clients
(senior bankers, shared goals, credit value chain, capital structure advisory)
New KPIs implemented at origination to increase Risk Adjusted Capital Efficiency
[RACE: (Rev-EL) / RWA > 2.5%-3%] and Cross-Selling Efficiency (CSE: non loan related revenues
/ total revenues > 50%)
Front load cost reductions via rightsizing of business (-8% in HR costs in 2012) and exit of some
subscale activities (creation of strategic alliance in equity brokerage and research)
RWA reduction via ring-fencing of non core activities in a run-off portfolio (43 bn) and proactive
management of balance sheet
CIB
Capital focused on profitable franchise
34
BUSINESS
REFOCUSING
III
RWA
(1)
, bn
2010
185
+25 -35
+ 4
Basel 2.5/3 2015 2011
net of
Basel 2.5
176
Attrition in
run-off
portfolio
New business,
on top of attrition
& off-load
Strong reduction in Group RWA weighting and strong increase in client-franchise RWA (from 55% to 65% of CIB)
x%
Other
CEE
Markets
CIB
(3)
F&SME
28
Markets
F&SME
Other
CIB
(3)
CEE
32
13
17
10
%
28
26 11
25
10
%
2010 RWA mix
(2)
2015 RWA mix
(1) Numbers without Poland
(2) 2010 Pro-forma includes BIS 2.5/3
(3) Clients with turnover exceeding 50 mln
170
IV
I
III
II
The Strategic Plan
Four main pillars for sustainable profitability
BALANCE SHEET
STRUCTURE
Capital Risk
Funding&
Liquidity
BUSINESS
REFOCUSING
CIB reshaping Selective focus on CEE
ITALY
TURNAROUND
SIMPLIFICATION AND
COST MANAGEMENT
Central functions Network
35
Operations
Italian commercial business turnaround
Strengthening our customers base: deposits
36
ITALY TURNAROUND IV IV
Customer deposits, bn
2015
153
2013
143
2010
134
Italian Commercial Business is defined as the Italian perimeter excluding Corporate Center governance, Asset Management, GBS factories and a few minor legal
entities not representing Italian operating business
Fineco TFA / client, ‘000
2015
54
2013
49
2010
43
Leverage on corporate, SME and SB customer base, increasing 360° relationships with
entrepreneurs:
High commercial flexibility on loan pricing, linked to cross selling and deposits
Client advisory capabilities (e.g. asset protection)
Fineco as a growth engine exploiting excellent positioning, focused marketing campaigns
and superior customer satisfaction
+15% +25%
Italian commercial business turnaround
Room to increase efficiency
37
ITALY TURNAROUND IV
Costs
Network re-design
Re-definition of Network (Hub & Spoke)
Proximity to customers
High commercial efficiency decreasing costs
Streamline of support functions & operations
2015
5,631
2010 2013
6,054
5,674
2010
44,050
45,300
2015
38,850
41,350
2,500
2013
2,700
1,250
Costs CAGR 2010-15: -1.4%
FTE 2010-2015: ca -6,500
FTE Sep 2011-2015: ca -5,200, representing
12% of current FTEs
Italian Commercial Business is defined as the Italian perimeter excluding Corporate Center governance, Asset Management, GBS factories and a few minor legal
entities not representing Italian operating business
(1) Rounded numbers
Sep
2011
FTE
(1)
Italian commercial business turnaround
Improving cost of risk
38
ITALY TURNAROUND IV
Improving origination
Loans origination targeting best
rating classes, supported by
governance and new KPIs
Process improvement:
more stringent rules
Recognition and collection
set to accelerate
Best Rating
classes
(1)
30.2%
Avg
growth
5.9%
EAD, Dec10-Sep11
(Growth rate by Rating)
Cost of risk, bp
2015
83
2013
104
2010
168
Italian Commercial Business is defined as the Italian perimeter excluding Corporate Center governance, Asset Management, GBS factories and a few minor legal
entities not representing Italian operating business
(1) Rating classes A-D3
Concluding remarks
39
To be a rock solid European
commercial bank
STRONG CAPITAL AND LIQUIDITY STRUCTURE
CONSERVATIVE RISK PROFILE
LEAN AND EFFICIENT STRUCTURE
STABLE, SUSTAINABLE LEVEL OF PROFITABILITY
ANNEX
41
UniCredit key targets
Conservative assumptions in mature markets, growth in CEE
(1) Excluding Bank levies
(2) Delta is reported instead of CAGR
2010 2013 2015 Group WE CEE Group WE CEE
CAGR 10-13 CAGR 10-15
Op. costs
(1)
,
bn
15.3 15.3 15.8 -0.3% -1.5% 4.1% -0.8% 5.1% 0.5%
(Rev-LLP) /
RWA
(2)
4.2% 4.7% 5.3% 0.4% 0.5% 0.2% 1.1% 0.5% 1.1%
Cost of risk
(2)
,
bp
123 90 75 -33 -27 -74 -42 -96 -48
Revenues,
bn
26.1 31.2 27.6 1.9% 7.2% 0.1% 9.1% 1.6% 3.7%
UniCredit Strategic Plan
Milan, 14 November 2011
doc_435255829.pdf
Strengthened core client franchises with a unique geographical spread, focused on diversified Western European countries and high growth CEE economies.
UniCredit Strategic Plan
Milan, 14 November 2011
2
Disclaimer
? This Presentation may contain written and oral “forward-looking statements”, which includes all statements that do not relate
solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a
number of assumptions, expectations, projections and provisional data concerning future events and are subject to a
number of uncertainties and other factors, many of which are outside the control of UniCredit S.p.A. (the “Company”).
There are a variety of factors that may cause actual results and performance to be materially different from the explicit or
implicit contents of any forward-looking statements and thus, such forward-looking statements are not a reliable indicator
of future performance. The Company undertakes no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as may be required by applicable law.
The information and opinions contained in this Presentation are provided as at the date hereof and are subject to change
without notice. Neither this Presentation nor any part of it nor the fact of its distribution may form the basis of, or be relied
on or in connection with, any contract or investment decision.
? The information, statements and opinions contained in this Presentation are for information purposes only and do not
constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to purchase or subscribe
for securities or financial instruments or any advice or recommendation with respect to such securities or other financial
instruments. None of the securities referred to herein have been, or will be, registered under the U.S. Securities Act of 1933,
as amended, or the securities laws of any state or other jurisdiction of the United States or in Australia, Canada or Japan or
any other jurisdiction where such an offer or solicitation would be unlawful (the “Other Countries”), and there will be no
public offer of any such securities in the United States. This Presentation does not constitute or form a part of any offer or
solicitation to purchase or subscribe for securities in the United States or the Other Countries.
? Pursuant the consolidated law on financial intermediation of 24 February 1998 (article 154-bis, paragraph 2) Marina Natale,
in her capacity as manager responsible for the preparation of the Company’s financial reports declares that the accounting
information contained in this Presentation reflects the UniCredit Group’s documented results, financial accounts and
accounting records.
? Neither the Company nor any member of the UniCredit Group nor any of its or their respective representatives, directors or
employees accept any liability whatsoever in connection with this Presentation or any of its contents or in relation to any loss
arising from its use or from any reliance placed upon it.
3
Agenda
Business refocusing
Simplification & Cost Management
UniCredit: who we want to be
Strategic Plan
I
Balance-Sheet structure
Italy Turnaround
II
III
IV
4
UniCredit vision 2015
A rock solid European commercial bank
Strengthened core client franchises with a unique geographical spread, focused
on diversified Western European countries and high growth CEE economies
Strong balance sheet
A sound capital base, further reinforced liquidity buffer, continued access to diversified
funding sources
Operational efficiency
A leaner customer centric operational structure benefiting from increased efficiencies,
stringent cost management and simplified support and HQ functions
Commercial banking activities core
A comprehensive product portfolio and added value services throughout the franchises,
underpinned by increased cross selling
Sustainable returns
A robust business model with a low risk framework delivering sustainable profits and
a return on equity above cost of capital
5
2013 - 2015 Strategic Plan – objectives
Basel 3 Common Equity Tier 1 (CET1) full impact above 9% already in 2012 and
10% by 2015 - proposed 7.5 bn Rights Issue secures a solid foundation
ROTE about 12% by end of plan based on sustainable recurring returns
Focused RWA management, run-off portfolio of 48 bn of performing assets
Basel 3 compliance for balance sheet and liquidity risk indicators by 2015
Well matched structure with net inter-bank position positive by 2015 lowering
dependence on wholesale markets
Cost of risk to drop by 48bps to 75bps by 2015
Cost base reduction by almost 10%, targeting Cost / Income at ~50%
6
UniCredit
A unique positioning in mature Western European markets
and fast growing CEE economies
Sep 11 RWA breakdown
Other
CEE
Poland
Germany
Austria
Italy
37
7
25
5
18
7
Germany (AAA rating)
Rank & Market Share #3 with c. 3%
Loans (bn) 136.4
Deposits (bn) 105.2
FTE (#) 19,552
Italy (A rating)
Rank & Market Share #2 with c. 13%
Loans (bn) 279.7
Deposits (bn) 161.4
FTE (#) 61,694
Rank & Market Share #1 with c. 7%
Loans (bn) 88.4
Deposits (bn) 79.5
FTE (#) 71,399
Austria (AAA rating)
Rank & Market Share #1 with c. 16%
Loans (bn) 63.5
Deposits (bn) 47.5
FTE (#) 7,908
Data as of September 2011, Market share calculated on Loans (as of June 2011)
UNIQUE EUROPEAN FRANCHISE
“MAIN” BANK FOR 20M FAMILIES AND 2M BUSINESSES
%
CEE Countries & Poland
%
Other
CEE
Poland
Germany
Austria
Italy
33
27
12
6
14
8
Sep 11 Deposits breakdown
2013 - 2015 Strategic Plan – Discontinuities
BALANCE SHEET
STRUCTURE
SIMPLIFICATION
& COST
MANAGEMENT
BUSINESS
REFOCUSING
ITALY
TURNAROUND
Capital
strengthening
Funding&Liquidity:
rebalancing
of L/D ratio
Risk: conservative
risk-taking
framework
Central Functions
streamlining
Operations:
enhancing
structural
efficiency
Networks’
redesign
CIB: business
reshaping
CEE: focused
growth
New service
model
Improving asset
quality
Greater
efficiency
7
8
Agenda
Business refocusing
Simplification & Cost Management
Strategic Plan
I
Balance-Sheet structure
Italy Turnaround
II
III
IV
UniCredit: who we want to be
9
Plan based on realistic macroeconomic assumptions
A volatile economic environment... …assumptions based on realistic scenario
NO GROWTH IN ITALY, LOW GROWTH IN EU, HIGH GROWTH IN CEE
3m Euribor IT GDP CEE GDP EU GDP
Max 2006-2011
Min 2006-2011
3m Euribor CEE GDP EU GDP IT GDP
2013-15
2011-12
-4.2
3.3
7.3
-5.7
2.1
-5.2
0.6
5.3
1.3
1.6
3.7
4.1
0.2
0.8
1.3
2.0
10
UniCredit key targets
ROTE in line with cost of capital and CET1 above 10% in 2015
(1) BIS3 based on available information and assuming full implementation of proposed Rights Issue
2010 2013 2015
ROTE 3.6% 7.9% ~12%
Net profit
(bn)
1.3 6.5 3.8
Implied
Pay-out
42% 44% 39%
CET1 8.6% 9.4%
(1)
>10%
(1)
COMMON EQUITY ABOVE 10% TARGET
Cost
of risk
123 90 75
IV
III
II
11
The Strategic Plan
Four main pillars for sustainable profitability
SIMPLIFICATION AND
COST MANAGEMENT
Central functions Network Operations
BUSINESS
REFOCUSING
CIB reshaping Selective focus on CEE
ITALY
TURNAROUND
BALANCE SHEET
STRUCTURE
Capital Risk
Funding&
Liquidity
I
12
UniCredit built on strong foundations
TAKING ACTION TO STRENGTHEN THE GROUP
84
147
929
265
787 823
929
1998 1995 2010 2009 2008 2007 2006 2005 2004
Domestic
corporate
bank
Leading
commercial bank
with CEE exposure
Pan-European
universal bank
De-leveraging
de-risking
Total Assets, bn
Main goodwill additions, bn
7.2
10.4
Accelerated expansion in Europe
(HVB, BA-CA) and in Italy (Capitalia)
Full divisionalisation of mature market
operations
Merger among 7 Italian banks
Start of international acquisitions
Capital strengthening
De-leveraging
Merger of the Italian
subsidiaries (ONE4C)
1,046 1,022
BALANCE SHEET I
13
9.8 bn impairment of intangibles and other non-cash items
3Q11 Impairment of intangibles and other non-cash items
35%
65%
due to new
macro scenario
due to new
regulatory framework
Total
Impairments
Goodwill
Impairment
Impairment of
Trademarks
(1)
Impairment of
Participations
Review based on new
macro-economic scenario and
regulatory framework has led the
group to take an impairment of
goodwill of -8.6 bn
Trademarks: HVB, Bank Austria,
BdR, BdS, USB
Valuation of strategic investments
with an implied goodwill, have also
been revised downwards
8.6
0.7
0.5
9.8
(1) Net of relevant deferred tax liabilities
NO IMPACT ON REGULATORY CAPITAL OR LIQUIDITY POSITION
BALANCE SHEET I
14
New regulatory and macroeconomic environment
structurally changing the sector
Issue What has changed
Macro
environment
Increased economic uncertainty / Market volatility
Sovereign crisis / effects of fiscal consolidation / Potential policy reaction (levies,…)
Low interest-rate environment
De-leveraging of mature / over-leveraged economies
Liquidity
Upcoming regulation on stricter maturity matching
Challenging access to capital markets / higher cost of funding
Capital
Higher Regulatory Capital requirements
Early adoption expected from Markets / EU
Further pressure on ratings due to current macro environment and sovereign crisis
EBA stress test and deadline define new stringent targets
BALANCE SHEET I
15
7.5 bn fully underwritten Rights Issue
CAPITAL I
Offering
structure
Pricing
Underwriting
Provisional
timing of the
offering
7.5 bn Rights Issue
Issuance of new ordinary shares with pre-emptive rights to current shareholders
Also saving shareholders will also be entitled to subscribe new ordinary shares
Final terms of Rights Issue to be agreed at time of launch depending on market conditions
Rights Issue fully underwritten, subject to standard terms and conditions
BOD APPROVES FULL
STRATEGIC PLAN AND
CAPITAL PACKAGE (14 Nov)
CAPITAL PACKAGE
PROPOSED TO EGM
(15 Dec)
LAUNCH EXPECTED
IN 1Q 2012
NOVEMBER DECEMBER JANUARY FEBRUARY MARCH
16
Capital structure
Basel 3 and EBA compliant by 2012 with further potential
upside actions not included
CAPITAL I
8.49%
8.74%
+0.50% +0.06%
-0.31%
Jun11
actual
9.12%
Cashes Accrued
dividend
release
Org. capital
dynamic
Sep11
actual
Including 3.0 bn
of CASHES
BIS 3 requirements
(full impact)
8.74% 9.1%
>10%
+1.42%
-0.51%
-0.85%
BIS2.5 BIS3 7.5bn
Rights
Issue
Organic
dynamic
2012 2015 Sep11
actual
EBA
requirements
8.74%
9.3%
+1.52%
-0.51%
-0.51%
Sep11
actual
BIS2.5 Other
EBA
changes
Sep11
EBA post
Rights Issue
Both capital bridges assume no dividend payment in 2011, partial recognition (2.4 bn) of CASHES into Common Equity
Tier 1 and 7.5 bn capital increase
Further actions not included in the above:
Additional non-core assets run-off beyond what already ring-fenced (see next page)
Non-core assets and investments rationalization / disposals
-
-
+0.3%
7.5bn
Rights
Issue
BIS3 based on available information
The EBA exercise has been updated with September figures based on internal estimation. The official outcome will be published by EBA by the end of November
and could differ from internal estimates
Calculations assume full implementation of proposed Rights Issue. Rights Issue effect different between BIS 3 and EBA because of different RWA amount
17
Capital efficiency
48 bn of RWA ring-fenced and run-off (35 bn by 2015)
RWA bn, EoP
Core assets
Non strategic
assets
Jun 11
445
89%
11%
CAPITAL I
Run-off portfolio, RWA bn
21
48
Other CIB
Leasing
CIB Markets
CIB F&A
3
By 2015
After 2015
48
35
13 5
19
Disciplined approach to non strategic assets: not consistent with strict Risk / Reward criteria, to be Run-off
in order to
Reduce capital and liquidity absorption
Preserve capital / liquidity allocated to the core franchise
Investments to meet strict risk / reward criteria
Downsize / Run-off portfolios, thus reducing risks
18
Well matched balance sheet
Improving L/D ratio
FUNDING&LIQUIDITY I
Ratios
2010
L/D ratio 1.38
Loan to Direct
Funding ratio
(1)
0.95
2013
L/D ratio 1.27
Loan to Direct
Funding ratio
(1)
0.92
2015
L/D ratio 1.19
Loan to Direct
Funding ratio
(1)
0.89
Balance sheet structure will be further improved thanks to:
Higher deposits than assets growth with a positive impact on the L/D ratio
The key targets to be achieved by 2015 are:
Positive net inter-bank position further lowering dependency on wholesale market access
Basel 3 compliance with balance sheet and liquidity risk indicators (NSFR and LCR)
Balance sheet strategy designed to support strong Group ratings
(1) Direct Funding includes Deposits form Customers and Debts in issues
Debts in Issues
Dep. from customers
Loans to customers
2015 evolution
19
Very well diversified funding platform by geography and type
FUNDING&LIQUIDITY I
Liquidity management and funding access based on
four liquidity centers
ITALY(35% on Total assets)
Points of access:
- Milan
- London
- New York
- Dublin
Points of access:
- Wien
- CEE Countries
GERMANY(40% on Total assets)
Points of access:
- Munich
- London
- New York
- Luxembourg
- Hong Kong
- Tokyo
POLAND(4% on Total assets)
Points of access:
- Warsaw
Group wide Liquidity Policy ensures strong
liquidity profile
Active liquidity management in place
since 2007 via conservative Group
liquidity policy:
Short-term funding: no reliance on unsecured wholesale market, keeping a well diversified funding base via
wholesale deposits, CDs, CPs in all main markets and currencies, mostly via Italy and Germany Liquidity Centers
Medium-long term funding: no dependence on public senior wholesale markets, thanks to strong focus on
Covered and Network Bonds
Key Strategic Plan milestones in funding
AUSTRIA(21% on Total assets)
NO SENIOR UNSECURED PUBLIC ISSUANCE IN ITALY IS EMBEDDED IN THE PLAN
Liquidity self-sufficiency within
Liquidity Centers
Geographical specialization,
in order to exploit local expertise
(i.e. covered bonds in Germany)
Optimized market access and
funding costs
20
Strong commercial bank supports funding (1/2)
FUNDING&LIQUIDITY I
GERMANY
Long experience
Covered Bonds outstanding of 32.9 bn
Mortgage: 25.5 bn
Rating
(1)
: Aa1, n/a, AAA
Public sector: 7.4 bn
Rating
(1)
: Aaa, AAA, AAA
AUSTRIA
Current focus on public sector
Covered Bonds outstanding of 7.0 bn
Public sector: 4.7 bn
Rating
(1)
: Aaa, n/a, n/a
Mortgage: 2.3 bn
ITALY
Focus on high quality residential
Covered Bonds outstanding of 10.2 bn
Mortgage: 10.2 bn
Rating
(1)
: Aaa, AAA, AAA
Data as of 30 Sep 2011
Total
CB issues
outstanding
Cumulative
new issue
capacity
2012-15
TOTAL
2015
Current
unecumb.
capacity
ABS/CB
Retained
(3)
47
6
78 11
31 14
Covered bond issuance capacity
(2)
Significant additional Covered Bond issuance capacity remains with about 31 bn by 2015
Out of the total capacity, ~20 bn derives from further exploiting existing assets and 11 bn is based
on 4-year prudent commercial growth
(1) All ratings are referred to the following agencies: Moody’s, S&P, Fitch
(2) All figures are weighted for envisaged over-collateralization. Assumption of netting bond and portfolio maturities
(3) CB retained equal to approx. 3 bn
THE GROUP IS BENEFITING FROM ITS HIGH QUALITY COVERED BOND PLATFORMS
21
FUNDING&LIQUIDITY I
(1) For UniCredit Italy the total Customer Financial Assets include only Private Banking and Family and SME Divisions
Italian Peers: Intesa Sanpaolo, MPS, UBi, Banco Popolare, Carige, BPM, BPER
Peer 1
8.1%
UCG
Italy
(1)
9.4%
11.6%
17.0%
17.7%
16.7%
18.7%
25.3%
Network bonds Jun 11, % of TFA Retail ML/T funding as % of Total ML/T funding
39.1%
UCG
Italy
44.5%
51.3%
58.5%
66.1%
52.6%
68.4%
78.0%
Limited penetration of UniCredit bonds amongst Group network clients. Within F&SME,
Asset Gathering and Private Banking all countries show UniCredit bonds below 10% of customers’ TFA
UniCredit relies less on network bonds than peers allowing for considerable additional capacity
giving it a significant unexploited advantage
LEVERAGE HIGH NETWORK BOND POTENTIAL TO REDUCE
RELIANCE ON VOLATILE WHOLESALE MARKETS
Strong commercial bank supports funding (2/2)
Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7
Italian Peers
Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7
Italian Peers
22
Cost of risk to drop
Risk Management
Improving cost of risk
RISK I
Group cost of risk (bps) CoR trend by region (2010-15)
75
90
108
123
2015 2013 2010
Italy
Germany
Austria
CEE & Poland
2011
(1)
(1) 9M annualized
New origination policy fully in place with new MBO incentives based on risk metrics:
[i.e. (Revenues – Expected loss) / RWA]
Active portfolio management both on performing loans and on impaired loans
Discontinuity in some business areas
Asset quality to improve
New origination criteria, active portfolio management
and business discontinuity
Origination
New Network origination policy and
commercial monitoring system in place
e.g. (Revenues – EL) / RWA
RISK I
Active
portfolio
management
New dedicated projects launched to better
manage performing portfolio with higher
PD and past due loans
Strengthening restructuring unit
Work-out reorganization aimed at
re-engineering processes to shorten
work-out time
Business
discontinuity
Exit from / decrease of:
Non strategic segments
Non satisfactory risk / return
(i.e. RE developers)
Best Rating
classes
(2)
16.1%
Avg growth
-0.2%
(1) Advanced model portfolio: excluding CEE and Poland that adopt AIRB model only in part. Based on EAD/EAD Equivalent
(2) Rating classes A-D3
Western Europe performing portfolio
(1)
Growth rate Sep 11 vs. Dec 10
23
IV
I
III
II
The Strategic Plan
Four main pillars for sustainable profitability
BALANCE SHEET
STRUCTURE
Capital Risk
Funding&
Liquidity
BUSINESS
REFOCUSING
CIB reshaping Selective focus on CEE
ITALY
TURNAROUND
SIMPLIFICATION AND
COST MANAGEMENT
Central functions Network
24
Operations
Simplification and Cost Management
Around 1.5 bn savings by 2015
(1) Excluding Bank levies
(2) Average of country-specific inflation rates, weighted by nominal GDP
Group savings of around 1.5 bn by 2015 with Western Europe costs down
Focus on simplification of processes in central functions and network re-design
Strong rationalization of cost base, particularly in central functions
All projects already launched and being implemented
Severance amounting to around 560 mln
Cost trend
(1)
(CAGR 10-15 ) FTE reduction (Sep 11-15) Cost base reduction (2015, mln)
CEE
5.1%
WE
-0.8%
Group
0.5%
CEE WE
~7,290
Group
~1,135
~6,150
-4% -8% +2%
% of total FTE as of Sep 11
-9.4% -9.3% -9.7%
% of 2010 total costs
SIMPLIFICATION &
COST MANAGEMENT
II
25
2.6% 1.9% 5.3%
Inflation
(2)
NON HR
~590
HR
~855
Group
~1,445
Within WE, Italy -12%
Central functions
Significant cost savings and simplification
26
SIMPLIFICATION &
COST MANAGEMENT
II
Central functions streamline Headquarters rationalization
Significant streamlining of support
functions to reduce complexity
(-22% FTE central functions)
Impact primarily on UniCredit
Western Europe HQ
Rationalization of space through
reduction of corporate center buildings
and adoption of new work-place
policies (tot. 292k sqm)
Total Sep11 - 2015 2008-Sep11
Square meters reduction
Savings 2010 - 2015
Central Functions
FTE ~-2,800 HR ~-285 mln Non-HR ~-50 mln
Cost base reduction (2015, mln)
390,000
292,000 682,000
Operations
Efficiencies to drive cost savings
27
SIMPLIFICATION &
COST MANAGEMENT
II
Global Banking Services rationalization Procurement’s spend optimization over 3 years
Consolidation of Banking Services
Factories into a single company
Convergence towards
a single IT platform both
for commercial banking in Western
Europe and Markets. By 2012 70%
of commercial banking revenues will
be managed on the same platform
(EuroSig)
Optimization of operations leveraging
on local expertise and scale
Total savings ~190 mln
p.a. by 2015
Redesign of procurement process
and demand management saving
440 mln
Culture change – adopt new
attitude towards cost savings
Best cost country sourcing: leverage
on UniCredit international presence
Savings 2010 - 2015 Cost base reduction (2015, mln)
FTE ~-1,410 HR ~-140 mln Non-HR ~-490 mln
Operations
Network
A clear change in service model
28
SIMPLIFICATION &
COST MANAGEMENT
II
New branch model (Hub & Spoke)
Optimization of branch footprint
(full service branches from 87% to 26% of total)
Rationalizing real estate usage -165k sqm
(-14% of current space)
Further upgrade of Multi Channel Services
(1)
Savings 2010 - 2015 Cost base reduction (2015, mln)
Network
FTE ~-5,350 HR ~-430 mln Non-HR ~-50 mln
Fewer branches - opitmized formats
Hub: Larger branches
to be dedicated to
full-fledged advisory and
cash transactional centers
Spoke: Smaller branches
to provide “Proximity
and convenience”
(Cash Light or Cash Less)
~13%
~60%
~14%
Full-fledged/Hubs
2015
Cash Less
Cash Light
2011
~3,700 ~3,500
(1) On top of Italy’s largest 3500 strong cash-deposit ATMs network
100% of Hubs & Spokes
~26%
~87%
IV
I
II
The Strategic Plan
Four main pillars for sustainable profitability
BALANCE SHEET
STRUCTURE
Capital Risk
Funding&
Liquidity
ITALY
TURNAROUND
SIMPLIFICATION AND
COST MANAGEMENT
Central functions Network Operations
29
III
BUSINESS
REFOCUSING
CIB reshaping Selective focus on CEE
CEE
Keep leadership through a focused country approach
30
BUSINESS
REFOCUSING
III
Focus on highly attractive countries
Focus maintained on highly attractive countries where UniCredit enjoys a strong footprint
and is well positioned in a risk / return matrix (i.e. Poland, Turkey, Russia and Czech Republic)
Key strategic initiatives
Optimization of investments, fewer and more focused to maximize value of CEE operations:
CEE cost optimization program with focus on operational, IT, Real Estate and purchasing
efficiencies
New sales channels development including internet and mobile banking and the creation
of a Call Center. CRM Implementation as a backbone of customer relationship strategy and
commercial efficiency
Streamlined branch openings with network expansion strategy limited to highly attractive
countries
Simplification of geographical footprint
Intra-group rationalization (Hubs, combination etc.) to simplify further and generate
cost savings opportunities
CEE
Profitability and liquidity to define the strategy for each country
31
BUSINESS
REFOCUSING
III
Strongly diversified country approach
Expansion strategy: large, highly attractive countries (i.e. for profitability and liquidity). UCG strongly positioned,
with potential for further growth – Poland, Turkey, Russia and Czech Republic
Core countries:
Expansion on hold: countries with market appeal but challenging environment in the short-term
Balanced growth, focus on efficiency: countries with low growth and challenging environment
Minimize risks / portfolio run-offs: countries with high level of vulnerability, poor competitive positioning for UCG
Mapping our subsidiaries:
profitability (RARORAC) and
liquidity (Loans / Local Funding)
0.8 1.3 1.2 1.1 1.0 1.9 1.6 1.5 1.4
-10%
-5%
0%
5%
10%
15%
POL
CZK
RUS
TRK
0.9
20%
30%
Bubble size: RWA end of Period
LOANS / LOCAL FUNDING
R
A
R
O
R
A
C
Expansion
strategy
+
-
RARORAC is the ratio between EVA (Economic Value Added) and allocated / absorbed capital and represents the value created per each unit of risk taken
2015
CEE
A more focused approach going forward
32
BUSINESS
REFOCUSING
III
Loan-to-local funding ratio (deposits + securities issued by local banks)
2015 2013 2010
POLAND
CEE
Low commercial funding gap
Significant reduction in commercial
funding gap supported by increasing
reliance on securities issued by countries
in CEE directly
Most significant reduction expected in
more unbalanced countries with higher
funding gap
Stronger Funding Governance
Stronger funding management aimed at
balancing each country’s self sufficiency
with low cost of funding
Coordinated group wide liquidity
management already in place to optimize
funding cost and market access
1.10
0.82
1.09
0.87
1.07
0.88
CIB
Reallocate resources to core client
franchises to improve profitability
33
BUSINESS
REFOCUSING
III
Three core client offers:
Corporate Banking and Transaction Services
Structured Finance, Capital Markets and Investment Products
Access to Western, Central and Eastern Europe
Strategic initiatives
Reinforce client franchise, credit distribution capabilities and strategic dialogue with clients
(senior bankers, shared goals, credit value chain, capital structure advisory)
New KPIs implemented at origination to increase Risk Adjusted Capital Efficiency
[RACE: (Rev-EL) / RWA > 2.5%-3%] and Cross-Selling Efficiency (CSE: non loan related revenues
/ total revenues > 50%)
Front load cost reductions via rightsizing of business (-8% in HR costs in 2012) and exit of some
subscale activities (creation of strategic alliance in equity brokerage and research)
RWA reduction via ring-fencing of non core activities in a run-off portfolio (43 bn) and proactive
management of balance sheet
CIB
Capital focused on profitable franchise
34
BUSINESS
REFOCUSING
III
RWA
(1)
, bn
2010
185
+25 -35
+ 4
Basel 2.5/3 2015 2011
net of
Basel 2.5
176
Attrition in
run-off
portfolio
New business,
on top of attrition
& off-load
Strong reduction in Group RWA weighting and strong increase in client-franchise RWA (from 55% to 65% of CIB)
x%
Other
CEE
Markets
CIB
(3)
F&SME
28
Markets
F&SME
Other
CIB
(3)
CEE
32
13
17
10
%
28
26 11
25
10
%
2010 RWA mix
(2)
2015 RWA mix
(1) Numbers without Poland
(2) 2010 Pro-forma includes BIS 2.5/3
(3) Clients with turnover exceeding 50 mln
170
IV
I
III
II
The Strategic Plan
Four main pillars for sustainable profitability
BALANCE SHEET
STRUCTURE
Capital Risk
Funding&
Liquidity
BUSINESS
REFOCUSING
CIB reshaping Selective focus on CEE
ITALY
TURNAROUND
SIMPLIFICATION AND
COST MANAGEMENT
Central functions Network
35
Operations
Italian commercial business turnaround
Strengthening our customers base: deposits
36
ITALY TURNAROUND IV IV
Customer deposits, bn
2015
153
2013
143
2010
134
Italian Commercial Business is defined as the Italian perimeter excluding Corporate Center governance, Asset Management, GBS factories and a few minor legal
entities not representing Italian operating business
Fineco TFA / client, ‘000
2015
54
2013
49
2010
43
Leverage on corporate, SME and SB customer base, increasing 360° relationships with
entrepreneurs:
High commercial flexibility on loan pricing, linked to cross selling and deposits
Client advisory capabilities (e.g. asset protection)
Fineco as a growth engine exploiting excellent positioning, focused marketing campaigns
and superior customer satisfaction
+15% +25%
Italian commercial business turnaround
Room to increase efficiency
37
ITALY TURNAROUND IV
Costs
Network re-design
Re-definition of Network (Hub & Spoke)
Proximity to customers
High commercial efficiency decreasing costs
Streamline of support functions & operations
2015
5,631
2010 2013
6,054
5,674
2010
44,050
45,300
2015
38,850
41,350
2,500
2013
2,700
1,250
Costs CAGR 2010-15: -1.4%
FTE 2010-2015: ca -6,500
FTE Sep 2011-2015: ca -5,200, representing
12% of current FTEs
Italian Commercial Business is defined as the Italian perimeter excluding Corporate Center governance, Asset Management, GBS factories and a few minor legal
entities not representing Italian operating business
(1) Rounded numbers
Sep
2011
FTE
(1)
Italian commercial business turnaround
Improving cost of risk
38
ITALY TURNAROUND IV
Improving origination
Loans origination targeting best
rating classes, supported by
governance and new KPIs
Process improvement:
more stringent rules
Recognition and collection
set to accelerate
Best Rating
classes
(1)
30.2%
Avg
growth
5.9%
EAD, Dec10-Sep11
(Growth rate by Rating)
Cost of risk, bp
2015
83
2013
104
2010
168
Italian Commercial Business is defined as the Italian perimeter excluding Corporate Center governance, Asset Management, GBS factories and a few minor legal
entities not representing Italian operating business
(1) Rating classes A-D3
Concluding remarks
39
To be a rock solid European
commercial bank
STRONG CAPITAL AND LIQUIDITY STRUCTURE
CONSERVATIVE RISK PROFILE
LEAN AND EFFICIENT STRUCTURE
STABLE, SUSTAINABLE LEVEL OF PROFITABILITY
ANNEX
41
UniCredit key targets
Conservative assumptions in mature markets, growth in CEE
(1) Excluding Bank levies
(2) Delta is reported instead of CAGR
2010 2013 2015 Group WE CEE Group WE CEE
CAGR 10-13 CAGR 10-15
Op. costs
(1)
,
bn
15.3 15.3 15.8 -0.3% -1.5% 4.1% -0.8% 5.1% 0.5%
(Rev-LLP) /
RWA
(2)
4.2% 4.7% 5.3% 0.4% 0.5% 0.2% 1.1% 0.5% 1.1%
Cost of risk
(2)
,
bp
123 90 75 -33 -27 -74 -42 -96 -48
Revenues,
bn
26.1 31.2 27.6 1.9% 7.2% 0.1% 9.1% 1.6% 3.7%
UniCredit Strategic Plan
Milan, 14 November 2011
doc_435255829.pdf