A Sound and High Quality Bank: Value for Retail and SMEs

Transcription

1 A Sound and High Quality Bank: Value for Retail and SMEs Bipiemme Group Business Plan /2015 Milan, 20 th July 2011

2 Disclaimer This document has been prepared by Banca Popolare di Milano solely for information purposes and for use in presentations of the Group s strategies and financials. Neither the company, its advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document. The forward-looking information contained herein has been prepared on the basis of a number of assumptions which may prove to be incorrect and, accordingly, actual results may vary. Owing to the uncertainty of the assumptions herein we caution readers not to unduly rely on the information provided as a forecast of actual results. The ability of BPM Group to actually deliver estimated results and targets depends on a number of factors that are outside the management s control. Actual results may differ greatly from and may even be worse than those expected or forecast. Any estimates and forecasts provided are based on assumptions and will imply a degree of risk and uncertainty that could significantly affect the expected results. All forecasts, estimates and targets provided herein are based on information at BPM Group s availability on the date herein. BPM Group assumes no commitment to publicly update and revise its forecasts and estimates in the event of new information, future events or otherwise unless required by applicable Law. All subsequent forecasts and estimates - written or oral that may be deemed to have been prepared by BPM Group or anyone acting for or on behalf of BPM Group shall be fully covered by these cautionary statements. In forming your opinion you must bear in mind the above information. This document does not constitute an offer or invitation to purchase or subscribe for any shares and no part of it shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. No information herein may be reproduced or published in whole or in part, for any purpose whatsoever, or distributed to any other party. By accepting this document you agree to be bound by the foregoing limitations. Benchmarking data: are based on official figures from 31/12/2010 Companies Report Balance sheet data of Industrial plan data: are based on average monthly figures from internal Management Report *** *** This communication is not for distribution, directly or indirectly, in or into the United States (including its territories and dependencies, any State of the United States and the District of Columbia). This communication does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the Securities Act ). The securities may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons (as such term is defined in Regulation S under the Securities Act) except pursuant to an exemption from the registration requirements of the Securities Act. There will be no public offer of securities in the United States. It may be unlawful to distribute these materials in certain jurisdictions. The information contained herein is not for publication or distribution in Canada, Japan or Australia and does not constitute an offer of securities for sale in Canada, Japan or Australia. 2

3 Introduction This document describes BPM Group s /2015 Business Plan. The main actions are in line with those already planned in the Business Plan, including also the indications from Bank of Italy and: the evolution in macro economic scenario the on-going industrial actions The Plan s measures have been projected in the business actions until 2013 while the figures as at 2015 reflect the expected consolidation of results from the current and planned actions 3

4 Bipiemme Group: liquidity and bond position MATURITIES ( mln) Tremonti Bond * Wholesale Retail As at June bn of wholesale placement plus 1.7 bn of retail customer bond placement, o/w 1.5bn BPM bonds. The funding mix was in line with March 2011: 81% from retail customers and 19% from wholesale customers. Overall liquidity position positive up to three months** 7.1bn ECB eligible assets Around 5.2 bn (as at march 2011) of financial asset invested in government bonds o/w 99% Italian and 1% BEI No exposure to peripheral European countries (*) retail bond maturing from July 2011 to Dec (**) source: Bank of Italy weekly data 4

5 Agenda Sound and High Quality Bank: Value for Retail and SME s Solidità, Efficienza e Valore a fianco di Famiglie e Imprenditori 2010 Business Plan s Progress Positioning and Benchmarking Market Scenario /15 Business Plan s financial targets 5

6 BPM Plan s pillars $ Profitability and Risk Management Rationalise and optimise loans book (deleveraging and liquidity) Improve management tools and credit policies Strengthen activities on Retail and SME s Focus on the network and customers Strengthen activities on Private and SMEs Strengthen Webank and Profamily Improve efficiency Enhance IT platform Re-organise commercial network and headquarters Staff efficiency and training Capital Increase 6

7 Plan s KPI: Profitability and Risk Management Remix of loan portfolio reducing Large Corporate and Financial Institutions Loans to Large Corp+ Fin. Inst. / Total loans (%) 21% Improving the liquidity position Commercial Banks needs Interbank unsecured net position $ 12% 11% Bn Loans / Funding % 91% 93% Strengthen capital ratios (without Add-ons) Core Tier I Total Capital Ratio 7.1% 10.8% 13,2% 11.8% * 9.9% 9.8% Potential benefits from internal Basel II models and Basel III framework and asset disposal not included Including extraordinary dividends % 12.4% 9.0% 11.0% (*) The delta difference compared with the 10.4% announced last May is due to more detailed forecast of the loan portfolio and in particular the remix from Financial Institution to SME s. 7

8 Plan s KPI : Strengthen activities on Retail and SME s 20% increase in direct and indirect deposits per customer Direct and Indirect Deposits/ Customers (K ) % 20% Focus on Private Banking and SMEs Private deposits on Total Volumes (%) 21.6% 21.9% 22.7% SMEs Loans on Total Loans (%) 30% 25% 23.2% 25.3% 26.2% 20% % % Acquisition of 320,000 retail customers via multichanneling Customers Webank (online banking) ProFamily (consumer credit) 180, ,200 97, , ,

9 Plan s KPI : Improve efficiency 25% increase in Network productivity Total Volumes*/ Total Staff ( Mln) Annual average investments ( Bn) Upgrade IT systems through a focused investment programme Strict cost control % Operating Costs / Volumes 1.17% 1.05% 0.98% * Total Volumes = Indirect Funding+ Direct Funding + Customer Loans 9

10 BPM Capital Increase During BPM s EGM held on June 25 th 2011, the shareholders approved a Capital Increase for up to a maximum of 1.2 bn to be completed by autumn 2011 As a consequence, the Group s capital structure will be optimised by the end of 2011 Early conversion of the 406mln Mandatory Convertible Bond 500mln redemption of the Tremonti Bond, with a benefit on payable dividends of 42.5mln/year Exercise call on the Tier % bond issued in 2001 As a result of the actions set out in the Plan, the Bank expects the add-ons on capital requirements to be gradually removed by the end of After that, the capital exceeding the Core Tier1 target of 9% will be redeemed to shareholders. Core Tier PF 2011 E 2013 E 2015 E With Add-ons 5.8% 8.4% Without Add-ons 7.1% 10.1% 9.9%* 9.8% Without Add-ons and with redemption of excess capital 7.1% 10.1% 9.1% 9.0% (*) The delta difference compared with the 10.4% announced last May is due to more detailed forecast of the loan portfolio and in particular the remix from Financial Institution to SME s. 10

11 BPM Plan s targets CAGR % Fixed staff costs flat for the full BP period Other administrative costs down in 2015 (CAGR %) 0.2% 1.0% 4.6% 7.8% Staff Operating costs Customer volumes Total income Net income Net profit( Mln) EVA ( Mln)

12 Shareholders expected dividends Cumulated effects ( Mln) Payout % equal to 45% Payout Extraordinary dividends Cumulated effect Actions not included in the Plan Non-strategic asset disposals, to potentially lighten the capital base by 50 bps Potential benefits from internal Basel II models and Basel III framework 12

13 Agenda Sound and High Quality Bank: Value for Retail and SME s Solidità, Efficienza e Valore a fianco di Famiglie e Imprenditori 2010 Business Plan s Progress Positioning and Benchmarking Market Scenario /15 Business Plan s financial and economic targets 13

14 All strategic actions in the Business Plan have been confirmed and some have been concluded Optimise and strengthen commercial network Strengthen alternative channels Optimise organisation and ehnance IT platform New customer segmentation Optimise productivity Review product catalogue Webank Rationalise commercial network Pricing Rationalise Private Banking Investment center Optimise profitability for Corporate and SMEs More advanced services for customers Profamily Rationalise Back Office Optimise mortgage granting process Cash in/cash out and Self service Focus on core business the simplification and the focus on the core business has been completed through the dismissal of the Custodian Bank (2009), Anima SGR (2010) and Bipiemme Vita (2011), thus a capital gain of over 300 Mln 14

15 ...with effective progress: 17 completed and 24 in advanced progress out of the 80 initially planned Progress as at 06/30/2011 ON-GOING PROJECTS FOCUS ON ON-GOING PROJECTS % projects in advance TO ROLL OUT BEING ROLLED OUT BEING EXAMINED ONGOING COMPLETED 0-20% 21-40% 41-60% 60-80% % 15

16 Optimisation and strengthen commercial network New customer segmentation Review product catalogue Optimise and strengthen commercial network The preliminary phase of the project New customer segmentation, both private and companies - aimed at a greater focus on customers and on a more customised offer has been completed. In terms of the 2011 customer segmentation, operating since March, 20,000 Mass clients and 16,000 Plus clients, have been transferred respectively from Mass to Plus and from Plus to Mass The retail product catalogue has been reduced, leading to a reduction in the number of products/agreements from 1,500 to 670. Starting from October 2011, a simplified Companies and Small Business catalogue will be available and will lead to a reduction in the number of products/agreements from 114 to 13 Pricing The pricing policy regarding credit cards and current accounts has been redefined and already implemented. The extension of the project for loans and investments, advances on bills, fx, and guarantees are almost completed Investment center Optimise profitability for Corporate and SMEs The new financial advisory model based on portfolio management optimisation is up and running. All BPM branch roll-outs were completed in May Introduction of a new advisory agreement is planned for October New AUM, insurance and funding products in the second half of Specific initiatives to optimise companies and SMEs risk/return ratio have been started with benefits in terms of value creation; first positive results for companies already seen More advanced services for customers Enhance the SMEs and Corporate product offer through a commercial forex service and corporate finance, supported by a new origination and project financing department 16

17 Strengthening alternative channels Strengthen alternative channels Transformed into a bank at the end of 2009, it incorporated WeTrade at the end of 2010 Started in mid-2010 Customers about 97 k (1) Customers about 4,480 (2) Direct Funding about 1,730 mln Network 25 points of sale 560 BPM branches AUM about 76 mln Outstanding about 49.6 mln Outstanding mortgages about 120 mln Volumes delivered about 52.2 mln Figures as at December 2010 (1) In addition to 434 k B2B Figures as at December 2010 (2) In addition to 2,170 B2B 17

18 Optimise organisation and improve IT platform Optimise organisation and ehnance IT platform Productiivity optimisation Rationalisation of the commercial network The productivity optimisation project has been completed thanks to Early Retirement Plan and staff turnover (662 voluntary retirements); no impact on commercial and operational processes. Overall, BPM s commercial banks staff fell by around 500 between Network rationalisation by closing non-strategic branches (5 in 2009 and 7 in 2010) and mergers low margin branches in highly concentrated areas (11 branches merged in 2010 and 13 in 2011) Rationalisation of Private Banking The merger by incorporation of the Private Banking SIM into the Parent Company has been completed, allowing greater integration between branch network and Private Bankers and an improvement in service offer Rationalisation of Back Office About 50% of actions aimed to process outsourcing and optimisation completed, especially regarding credit and securities administration Optimise mortgage process Analysis for new mortgage process completed, aiming at operational efficiency and workload centralisation CICO* and Self Service Improvement of commercial efficiency and customer satisfaction through a new service model via the installation of CICO Systems and Self Service in the Group branches. In mid 2011 more than 380 CICO Systems and 40 Self Service were installed (*) CICO: cash-in/ cash-out 18

19 Agenda Sound and High Quality Bank: Value for Retail and SME s Solidità, Efficienza e Valore a fianco di Famiglie e Imprenditori 2010 Plan s Progress Positioning and Benchmarking Market Scenario /15 Business Plan s financial and economic targets 19

20 Profitability in line with peers and better upside from interest rates recovery Key item BPM Peers 1 (Net income + Net commissions) / Total volumes (%) 1.55% 1.39% 1.22% 1.57% 1.33% 1.25% Overall asset profitability in line with peers... dec-08 dec-09 dec-10 dec-08 dec-09 dec-10 Net commissions (Delta %) 6.30% 6.29% 6.29% -4.35% 7.38% 1.35%... with very positive trend for net commissions vs 2010 vs CAGR vs 2010 vs CAGR NII (Delta %) % % % % % %... to partially offset the net interest income trend 2009 vs vs 2009 CAGR vs vs 2009 CAGR ) UBI, Banco Popolare, Banca Popolare Emilia Romagna, Cariparma, Gruppo Popolare di Vicenza, Credito Valtellinese, Carige, Credem Source: Company reports 20

21 Productivity in line with peers... Key item BPM Peers 1 Total volumes (Direct and indirect funding, loans) by employee ( Mln) dec-08 dec-09 dec dec-08 dec-09 dec-10 Productivity in line with peers... Employee by branch despite more staff dec-08 dec-09 dec-10 dec-08 dec-09 dec-10 1) UBI, Banco Popolare, Banca Popolare Emilia Romagna, Cariparma, Gruppo Popolare di Vicenza, Credito Valtellinese, Carige, Credem Source: Company reports 21

22 Cross-selling... customer satisfaction improving... Trend in Overall Satisfaction... and cross-selling increasing RETAIL SME s dec-10 june-11 dec-10 june-11 Monthly trend, figures as at June 2011 Source: customer satisfaction monitoring by Gnresearch 22

23 Performing branches Key item BPM Peers 1 Loans by branch ( Mln) Particularly profitable branches vs peers, both regarding loans... dec-08 dec-09 dec-10 dec-08 dec-09 dec-10 Direct and indirect funding per branch ( Mln) and funding dec-08 dec-09 dec-10 dec-08 dec-09 dec-10 1) UBI, Banco Popolare, Banca Popolare Emilia Romagna, Cariparma, Gruppo Popolare di Vicenza, Credito Valtellinese, Carige, Credem 2) Figure influence by branch and company acquisitions (eg. Meliorbanca for Banca Popolare Emilia Romagna) Source: Company reports 23

24 Weight and quality of loans in line with competitors Key item BPM Peers 1 94% 92% 97% 94% 97% 97% Loans / direct funding (%) Loans-to-deposit ratio in line with competitors... dec-08 dec-09 dec-10 dec-08 dec-09 dec-10 Cost of credit (%) 62bps 101bps 69bps 75bps 85bps 71bps... cost of risk allinied... dec-08 dec-09 dec-10 dec-08 dec-09 dec % NPLs/ net loans (%) 0.60% 1.10% 1.30% 1.08% 1.78%... better credit quality dec-08 dec-09 dec-10 dec-08 dec-09 dec-10 1) UBI, Banco Popolare, Banca Popolare Emilia Romagna, Cariparma, Gruppo Popolare di Vicenza, Credito Valtellinese, Carige, Credem Source: Company reports 24

25 Market share holding up Market Share Italy Lombardy Deposits 2.16% 2.21% 2.24% 6.04% 6.28% 6.85% Increasing market share in deposits... dec-08 dec-09 dec-10 dec-08 dec-09 dec-10 Loans 1.99% 1.96% 1.98% 4.22% 4.49% 4.66%... basically stable in loans dec-08 dec-09 dec-10 dec-08 dec-09 dec-10 Source: Internal management Report built on Bank of Italy Statistic data 25

26 Costs higher than peers but recovering Key item BPM Peers 1 Staff cost 2 / Employee ( k) High average cost per employee... dec-08 dec-09 dec-10 dec-08 dec-09 dec % 1.09% 1.06% 0.97% 0.97% 0.94% Total costs 2 / Volumes (%)... with direct impact on total costs... dec-08 dec-09 dec-10 dec-08 dec-09 dec-10 1) UBI, Banco Popolare, Banca Popolare Emilia Romagna, Cariparma, Gruppo Popolare di Vicenza, Credito Valtellinese, Carige, Credem 2) Figures net of Early Retirement Plan for BPM and for peers Source: Company Reports 26

27 Agenda Sound and High Quality Bank: Value for Retail and SME s Solidità, Efficienza e Valore a fianco di Famiglie e Imprenditori 2010 Business Plan s Progress Positioning and Benchmarking Market Scenario /15 Business Plan s financial and economic targets 27

28 Less favourable scenario vs 2010 Business Plan assumptions but expected improvement in Italy s sovereign risk Business Plan Business Plan M Euribor average (BPM scenario) 2.20% 2.71% 3M Euribor average (BPM scenario) 1.24% 0.73% 1.55% 2.18% 2.86% 3.40% % 1.18% BTP 5Y spread (average) vs. SWAP Source: Prometeia BPM internal figures 28

29 Expected low economic recovery outlook... CPI 1 3.5% 2.9% 1.5% 1.7% 1.7% 2.1% 0.8% Italian macroeconomic situation in last few years particularly difficult: growth forecast still low GDP 1-1.3% 1.2% 0.9% 1.0% 1.4% 1.4% -5.2% Lombardy 2 GDP 1.9% 1.5% 1.5% 1.8% 2.2% -1.7% -6.3% Lombardy economic indicators more flexible reporting positive recovery signs 1) Source: Prometeia, forecast report April 2011; BPM figures for ) Lombardy UnionCamere, Analisys of economic situation, quarterly industry sector survey, Q

30 ... with growth in banking volumes at 4-5% per year and improvement in overall profitability... Direct funding growth rate * (system) 3.1% 3.3% 4.0% 4.1% 3.8% 4.3% 5.5% Loans growth rate (system) 4.9% 5.0% 3.9% * Total funding= Deposits + Bonds+ foreign funding Short-term Mark-up and Mark-down (system) 1.09% 1.11% Cost of credit (system) 3.3% 3.0% 3.0% 2.9% 3.0% Loans 0.97% 0.82% 0.76% 0.1% 0.6% 0.7% 1.0% 0.9% Deposits and competitors business plans focused on capital strengthening and improvement in efficiencies and profitability Source: Prometeia and internal figures BPM 30

31 Agenda Sound and High Quality Bank: Value for Retail and SME s Solidità, Efficienza e Valore a fianco di Famiglie e Imprenditori 2010 Business Plan s Progress Positioning and Benchmarking Market Scenario /15 Business Plan s financial and economic targets 31

32 BPM Plan guidelines $ Profitability and Risk Management Rationalise and optimise loans book (deleveraging and liquidity) Improve management tools and credit policies Strengthen activities on Households and SME s Focus on the network and customers Strengthen activities on Private and SMEs Strengthen Webank and Profamily Improve efficiency Enhance IT platform Re-organise commercial network and headquarters Staff efficiency and training Sound and profitable growth 32

33 Loans*: trend Significant improvement in retail (+8.0%) thanks also to Profamily growth ( 2Bn) Significant loan reduction to Large Corporate and Financial Institutions, and remix of Corporate and SME loans from real estate to other industrial sectors CAGR CAGR Bn % % Retail % % SMEs Corporate % % Large Corporate and Financial Ist %.8, % % -8.5% BPM % 31.7 Profamily % 2.0 Other commercial banks % % +82.1% +5.7% (*) Average monthly figures from internal management reports (excluding Banca Akros, BPM Vita, Anima Sgr.) Note: Large Corporate turnover > 250 mln, Corporate > 50mln < 250mln, SMEs >5 <50mln 33

34 Loans: actions (1/2) Reduce loans to Large Corporate and Financial Institutions for 2.5 bn (-40%) through commercial actions planned and being rolled out ( -0.8 bn to date) mostly on syndacated and financial loans Reduce loans to real estate companies from 8.2 bn ( 9.0 bn including guarantees and commitments) to 7.4 bn at period end by: reduction in financial positions and on loans to real estate developers introduction of a loans plafond (yearly and monthly maximum) Remix Corporate loans portfolio by: Growing on non real-estate sector, increasing share of wallet from 9% to 14% of low risk customers optimising risk/profitability ratio Enhance activity with SME s, increasing share of wallet by about 2 bn and loans to new customers for about 1 bn in the area where BPM is already present, by: introducing new products, commercial planning and monitoring increasing number of relationship managers (+35%) and refocusing business of 10 retail branches in high SME industrial areas The good trend in Retail and Small Business is continuing also supported by Profamily growth 34

35 Loans: actions (2/2) Strengthen credit policy by: improving current instruments and developing functional metrics to optimise capital and cost of credit introducing new metrics on most important processes (budget, loan granting, loan management and monitoring) Introducing an articulated credit plafond by sector, geography and customers by end 2011 Use risk adjusted pricing method by: developing tools to support the network to redefine pricing based on risk introducing pricing levels set by head office applying an incentive system based on risk/return ratio and credit diversification policy 35

36 RWA: trend RWA growth higher than loans growth, due to shift from Corporate to SME loans and less weight of real estate BPM aims to obtain the removal of the add-ons by 2013 through actions on the credit portfolio, IT system, the organisation and on the processes RWA with add-ons RWA without add-ons CAGR CAGR Bn * +4.9% % Interest income/rwa 2.7% 4.1% 4.5% NII/ RWA 2.0% 2.5% 2.6% (*) The delta difference compared with 41bn announced last May is due to more detailed forecast of the loan portfolio and in particular the remix from Financial Institution to SME s. 36

37 Direct and indirect funding*: trend Growth driven by focus on customer potential, new Webank and Private** customers Direct funding up through issuance of around 10bn bonds in the period (substituting placement of third-party bonds) Detailed funding effects BPM Group Total funding growth BPM Group Bn Private Other , CAGR % +5.8% AuM AuC CAGR % +5.8% +0.0% CAGR % +6.0% +0.6% % Direct funding % % Dec Natural growth SoW effect Acquisition effect Dec BPM % % WeBank % % Other commercial banks % % *Average monthly figures from internal management reports (excluding Banca Akros, BPM Vita, Anima Sgr.) **Private includes customer with assets > 500K 37

38 Direct and indirect funding: actions Strengthen current network without opening new branches by: starting Hub and Spoke model by end 2011 for around 250 BPM branches to improve small branches profitability time saving for commercial activity coming from on-going projects specific actions to close the gap between current results and full potential of each branch through a new commercial planning Improvement AuM and insurance product range supported by Anima Prima and Covéa Full deployment of investment centre activity (asset allocation and portfolio management) with specific products by customer segments Increase Private banking funding by: offering more private banking services to about 5,000 current customers further 40 private bankers, also through internal training Webank growth through new customers (offer and pricing) No aggressive actions planned to increase market share 38

39 Customer volumes* trend Growth in line with system, funding market share up Loans-to-deposit ratio improvement Funding remix to enhance stable funding CAGR CAGR Loans Bn , , % +4.0% , % +4.2% Direct and indirect deposits 61, , % 77, % Direct stable funding** - in % on Direct Funding % 95% 96% Loans/ Deposits 99% 91% 93% *Average monthly figures from internal management reports (excluding Banca Akros, BPM Vita, Anima Sgr.) **Customer funding excluding corporate banking 39

40 Liquidity and funding: trend Commercial banks liquidity gap and wholesale funding ( ) Commercial banks liquidity gap Outstanding wholesale funding Interbank unsecured bank position bn New issuance: bn 3.5 bn 40

41 Total income trend Strong growth in net interest income thanks to interest rates sensitivity, remix and volume growth Conservative growth in commissions and trading income Mln CAGR CAGR Net interest income 736 1,048 1, % 10.2% Non net interest income % 3.8% o/w commissions and other net income o/w profit/loss on financial activities % 3.2% % 4.1% Total income 1,431 1,876 2, % 7.8% Group customer spread 2.07% 2.92% 3.06% +0.85pp +0.99pp Net commissions/total volumes (%) Commission on P&C Bancassurance ( Mln) 0.63% 0.60% 0.59% -0.03pp -0.04pp % 18.3% 41

42 Sensitivity analysis NII sensitivity % chg. on net interest income 2.2% 2.7% Interest rate shift bp Euribor 3m (medio) + 5.0% 1.2% 0.7% 1.6% Interest rate shift bp - 4.0%

43 Investments to support strategic plans ( ) Commitment on evolution IT platform 2011 real-estate investments for 27 mln not included in the aggregates mln 18 ~ ~135 o/w 154 mln investments in IT (70% of total) in 3 years On-going investments Commercial banks strategic plans Strategic plans to develop the specialist network Total investments

44 Operating costs trend Strict control on administrative cost Change in MBO system with strong increase in variable staff cost Operating costs as at mln lower than 2012 targets indicated in the previous Plan. This strong action on cost will allow BPM to partially offset the effect on total income, mainly due to changes in market conditions Mln CAGR CAGR Staff costs % 1.5% Fixed component Comm Banks and Akros % 0.0% Fixed component WB e PF % 8.1% Variable component % 16.3% Other administrative costs % -0.7% Depreciation % 3.5% Operating costs 1,110 1,152 1, % 1.0% Operating costs/total volumes 1.17% 1.06% 0.98% -0.11pp -0.19pp Total staff 8,542 8,686 8, WB and PF Staff % variable staff costs 4.8% 7.4% 9.5% +2.6pp +4.7pp 44

45 Staff: trend Staff trend Of which 120 in the network for specific roles ,633 8, Last Early Retirement Plan tranche and other efficiencies -153 Total staff 2010 Profamily and Webank needs Other companies' needs CRAL and BdL efficiency BPM efficiency BPM turnover BPM needs Total staff

46 Operating costs: actions Banca del Territorio: merger of Banca di Legnano with CR Alessandria by Q1 2012, generating cost synergies for about 13 mln in staff and administrative costs Improve IT platform: IT cost reduction of at least 25% by the end of Not included further benefits on the bank s organisation Evaluation of the outsourcing of part of the bank s IT system. Decision to be taken by the end of 2011 Re-engineering of processes and structure Continue the on-going actions (centralised mortgage management, streamline network administration activities,...) in order obtain about 100 FTE to re-allocate to commercial activities Complete CICO system and Self Service installation (above overall new 700 units) in order to switch branch activities to automated systems (compared to 20% already carried out by new terminals) Continue on-going actions to optimise administrative costs Start specific programs to increase flexibility of the staff organisation (especially in the network) 46

47 Cost of credit trend Improve credit quality in2013 and stabilisation in 2015 Mln CAGR CAGR Total loans ( Bn) % 4.3% Profamily % 82.1% Other commercial banks % 3.3% Net adjustments and risk provisions ( Mln) % -0.4% Adjustments/Total income 17.1% 11.3% 11.5% -5.8pp -5.6pp Cost of credit(bps) 72* bps -15bps Profamily bps +60bps Other commercial banks bps -20bps * The difference vs the figure of 2010 FY reports (69bps) is due to the calculation made on average monthly loan volumes coming from internal management report. 47

48 Bipiemme Group P&L: highlights Significant total income growth, thanks to volumes, remix and increase in profitability Limited overall cost increase, with strong cost/income reduction Mln CAGR CAGR Total income 1,431 1,876 2, % 7.8% Operating costs 1,110 1,152 1, % 1.0% Operating profit % 23.3% Net adjustments and risk provisions % -0.4% Net profit % 30.0% Total income/total volumes 1.50% 1.72% 1.75% +0.22pp +0.25pp Cost of credit (bps) 72* bps -15bps Cost/Income 77.5% 61.4% 56.0% -16pp -21pp * The difference vs the figure of 2010 FY reports (69bps) is due to the calculation made on average monthly loan volumes coming from internal management report. 48

49 Capital ratios: (values without Add-ons) Significant improvement in capital ratios, with Total Capital Ratio trend driven by subordinated debt reduction Pay-out ratio at 45% and extraordinary dividend foreseen in % 12% 10% 8% 6% 7.1% 7.8% 10.8% 13.2% 11.8% 10.3% 10.2% 9.9% 9.8% Core Tier 1 Tier 1 Capital Ratio 4% Total Capital Ratio 2% 0% Including extraordinary dividends (%) Potential benefits from internal Basel II models and Basel III framework and asset disposal not included (*) The delta difference compared with the 10.4% announced last May is due to the greater forcast growth in loans and remix from Large Corporate to Retail and SMEs 49

50 Rote and EVA Rote EVA ( Mln) 9.1% % %

51 BPM Plan s targets CAGR % Fixed staff costs flat for the full BP period Other administrative costs down in 2015 (CAGR %) 0.2% 1.0% 4.6% 7.8% Staff Operating costs Customer volumes Total income Net income Net profit( Mln) EVA ( Mln)