Consolidated Results as at 30 June 2013 6 August 2013 Miro Fiordi CEO, Credito Valtellinese
Agenda Executive summary Credit policies and asset quality Funding, liquidity and securities portfolio Capital ratio Revenues development Cost management Net profit development 2
Consolidated Balance Sheet Data 30 June 2013-30 June 2012 (mil ) - 7.1% - 2.6% 22,397 20,803 21,737 21,176 11,377-4.5% 10,868 33,114-3.2% 32,044 Loans to customers Direct deposits Indirect deposits Total deposits 30/06/2012 30/06/2013 Balance sheet structure 30/06/2013 30/06/2012 Indirect deposits from customers / Total deposits 33.9% 34.4% Direct deposits from customers / Total liabilities 70.% 73.1% Customer loans / Direct deposits from customers 98.2% 103.0% Customer loans / Total assets 69.2% 75.4% 3
Strengthening Customer base + 2.6% + 0.4% + 0.5% + 0.8% + 0.8% 918,110 922,049 926,887 934,514 941,880 30/06/2012 30/09/2012 31/12/2012 31/03/2013 30/06/2013 Customer base growth:~ +23,800 YoY Cross selling ~ 4.3 Retention rate ~ 97% Commercial results as at 30.06.2013 Current accounts ~ + 10,300 Debt Cards ~ + 25,000 New car insurance ~ 3,300 Compass new loans ~ 34 mln Net flow AUM ~ 122 mln Bancassurance flow ~ 165 mln (*) Customer Satisfaction survey for retail segment Eurisko ABI 2013 4
Agenda Executive summary Credit policies and asset quality Funding, liquidity and securities portfolio Capital ratio Revenues development Cost management Net profit development 6
Loans to customers analysis Quarterly trend (mil ) - 7.1% + 0.1% - 1.9% - 2.5% - 3.1% 22,397 22,430 22,008 21,467 20,803 New mortgages ~ 356 mln New unsecured loans ~ 124 mln New leasing ~ 59 mln ~ +539mln new loans 30/06/2012 30/09/2012 31/12/2012 31/03/2013 30/06/2013 including 106 mil to CCG including 318 mil to CCG including 105 mil to CCG including 68 mil to CCG including 49 mil to CCG Gross loans by technical classification Mil 30/06/2012 30/06/2013 Var.% Financial leasing 1,420 1,363-4.1% Mortgages 10,446 10,304-1.4% NPLs 1,395 1,816 30.2% Current accounts 7,504 6,415-14.5% Personal loans 719 689-4.2% Other operations 3,181 2,704-15.0% Gross loans by business segment Mil 30/06/2012 30/06/2013 Var.% Consumers households 4,217 4,232 0.4 Financial companies 493 394-20.1 Foreign operators and other operators Non financial companies and personal businesses 411 420 2.2 19,544 18,245-6.6 Source: internal data 7
Loan portfolio diversification ~ 58% of loans in Lombardy Well-diversified loans, both in terms of industrial sector and individual borrower Average loan granted to real estate and construction sectors ( ATECO ) ~ 255k Loan to value ratio ~ 46% of residential mortgages Gross loan book breakdown by geography Source: internal data Average EUR 85,000 per loan CONCENTRATION - banking system comparison CREVAL GROUP Banking system * Top 0.5% borrowers 44% 56% Top 1% borrowers 54% 62% LOAN CONCENTRATION % TOTAL LOANS Top 20 exposures 5.2% Top 50 exposures 9.2% Top 100 exposures 13.7% (*) Banking system data as at 31 March 2013 8
Asset quality Credit risk ( /millions) 30/06/2013 31/12/2012 Chg% 30/06/2012 Net non-performing loans 760 615 + 23.7 637 Other net doubtful loans 1,782 1,485 + 20.0 1,289 Total net doubtful loans 2,542 2,100 1,926 Net non-performing loans / Loans to customers 3.7% 2.8% 2.8% Other net doubtful loans / Loans to customers 8.6% 6.7% 5.8% Net doubtful loans/loans to customers 12.2% 9.5% 8.6% Non-performing loan coverage 58.1% 59.7% 54.3% Doubtful loan coverage 33.3% 35.2% 31.1% Cost of credit risk * 1.19% 1.61% 0.73% (*) Calculated as the ratio between net value adjustments due to deterioration of loans and end of period loans. Total coverage considering write off on existing NPL ~ 62%* * Source: internal data Category Average aging (months) as at June 2013 Substandard 10.5 Restructured 17.7 Ratio Net non-performing loans / Loans to customers Creval Group Banking system* 3.7% 3.6% Non-performing loan coverage 58.1% 49.6% (*) Source: ABI monthly outlook, july 2013 9
Bankruptcy in Italy Bankruptcy trend in Italy per year + 32.8% + 20.3% + 7.8% + 2.4% 9,383 11,286 12,169 12,463 2009 2010 2011 2012 Bankruptcy trend in Italy first quarter Bankruptcy 2013 H1 + 60.4% Altre 23.6% 4,593 + 26.8% + 9.8% -1.2% 5,826 6,399 6,321 + 16.5% 7,365 Aosta 0.1% Trentino Alto Adige 1.2% Umbria 1.3% Marche 3.3% Lombardia 22.2% Lazio 11.2% 2009 H1 2010 H1 2011 H1 2012 H1 2013 H1 Sicilia 6.1% Veneto 8.5% Piemonte 6.7% Toscana;7.9% Emilia Romagna 7.9% Source: CRIBIS D&B 10
NPL analysis including collateral NPL - Total Coverage Ratio 44% 4% 106% 58% Cash Coverage Ratio Coverage related to NPL write-off Real estate collateral (market value) TOTAL COVERAGE RATIO Source: internal data. Collateral includes real estates and securities at market value. Real estate values represented by 1st and 2nd mortgages. Collaterals are evaluated considering lowest value between credits and guarantee amount, in case of loans fully or partly covered by guarantees Personal guarantees are excluded 11
Substandard loans analysis including collateral Substandard Loans - Total Coverage Ratio 68% 142% 59% 15% Cash Coverage Ratio Personal Guarantees Real estate collateral (market value) TOTAL COVERAGE RATIO Source: internal data. Collateral includes real estates and securities at market value. Real estate values represented by 1st and 2nd mortgages. Personal guarantees represent every other kind of collateral as bank guarantees, backing transactions and other credit commitments. Both collateral and personal guarantees are evaluated considering lowest value between credits and guarantee amount, in case of loans fully or partly covered by guarantees. 12
Doubtful loans analysis and cost of credit risk Loans Value Adjustments 1.19% 0.73% H1 2012 H1 2013 Legal entity 1.42% Credito Valtellinese 0.79% Credito Siciliano 0.62% Carifano 0.45% Mediocreval Quarterly change in non-performing loans 96,772 146,564 145,090 Quarterly change in substandard loans 99,576 133,288 32,560 32,965 19,240 40,018 30,540 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 Quarterly change in past due loans 155,157 133,310 1,399 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 Quarterly change in Doubtful loans 398,195 339,144 175,756 103,258-56,760-139,057 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2-89,544 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 13
Performing / non performing loans - new internal clusters Day of arrears 0 30 90 Max 270 Regulatory classification BONIS PAST DUE SUBSTANDARD RESTRUCTURED NPLs New internal clusters GREEN BLUE YELLOW ORANGE RED SUBSTANDARD RESTRUCTURED NPs Rating BONIS DEFAULT Monitoring Predictive Monitoring Default monitoring Cluster Households and Retail SME Branch Branch Outsourcing (Phone 1 e 2) Outsourcing (Home 1 e 2) Lending Dept. Lending Dept. Collection Dept. SME / Corporate Branch Branch Credit manager / Branch Credit Manager Credit Manager / Lending Dept. Direzione Crediti Collection Dept. 14
Agenda Executive summary Credit policies and asset quality Funding, liquidity and securities portfolio Capital ratio Revenues development Cost management Net profit development 15
Direct deposits analysis Quarterly trend ( mil) + 0.1% +1.2% - 1.1% + 2.4% - 4.8% Reduction in expensive corporate funding, in order to contribute to NII in the II quarter. 21,318 21,350 21,615 22,135 21,074 Liquidity position flat QoQ due to reduction in Loans, with a liquidity on 3 month ~ 3 bln 30/06/2012 30/09/2012 31/12/2012 31/03/2013 30/06/2013 * Direct funding net of Cassa Compensazione e Garanzia, CCG Composition - 2.6% 27% -5.8% 26% 73% - 1.4% 74% 30/06/2012 30/06/2013 Securities issued Due to customers Mil 30/06/2012 30/06/2013 Var.% Deposits 672 565-16.0% Time deposits 2,861 3,124 9.2% Repo 467 214-54.1% Current accounts 11,277 11,475 1.8% Wholesale bonds 1,860 1,377-26.0% Retail Bonds 3,913 4,035 3.1% Other 687 386-43.9% Source: internal data 16
Bonds by maturities Retail bonds 2013 H1 Wholesale bonds 2013 H1-10 mln 537 527 400 400 Maturities 2013 Issues 2013 Maturities 2013 Issues 2013 * Net private placement 2013-2014 Maturities* 1,235 817 1,116 418 2013 2014 Wholesale Retail * From August 2013 Consolidated results as at 31 March 2013 17
Liquidity position Loans to customers / Direct deposits* 104.6% 103.6% 101.3% 96.7% 98.5% LCR as at 31 March 2013: 144% NSFR as at 31 December 2012: 96% 30/06/2012 30/09/2012 31/12/2012 31/03/2013 30/06/2013 * Net CCG Short-term liquidity position - July, 31th 2013 ( /1,000) 30/07/2013 1g 2g 3g 4g 5g 2s 3s 1m 2m 3m Net balance of cumulative expiring positions Counterbalancing capacity Net balance of overall liquidity -195-238 -285-238 -696-2,072-2,356-2,680-2,958-2,968 3,661 3,636 3,636 3,646 4,026 5,394 5,650 5,975 6,089 6,117 3,465 3,398 3,351 3,408 3,330 3,321 3,294 3,294 3,131 3,150 18
Long Run Counterbalancing capacity Long run liquidity position Technical type - data in mil Amount Relative liquidity estimate Residential mortgages 700 250 Leasing 1,000 300 ABACO loans 680 250 SME Mortgages 3,000 1,200 Other 300 100 Long Run counterbalancing capacity 5,680 2,100 Short term liquidity position (3m, July) 3,150 Long run counterbalancing capacity 2,100 Potential liquidity position 5,250 ABS haircuts has been modified by ECB from 16% to 10% for the issues rated from AAA to A- ABS rated from BBB+ to BBB- has been modified from the range 26%-32% to 22% New haircut on Govies Liquidity improvement for Creval Group ~ 150 mln 19
New Securitization - Quadrivio RMBS 2013 Quadrivio RMBS 2013 Quadrivio RMBS 2013 Total portfolio ~ 1 billion Portfolio Residential mortgages loans to Consumer Families, Artisans and Producing Families Originators: Credito Valtellinese, Credito Siciliano, Carifano Total Portfolio (as of the effective transfer date): ~ 1 billion Issue of the Notes Net estimated liquidity benefit Expected issue of senior notes that will meet ECB eligibility criteria for refinancing operations. Issue expected in August 2013. ~ 500 millions Eligibility of the ABS for ECB refinancing operations expected by the end of August 2013 20
Securities portfolio Breakdown by accounting portfolio Mil 30/06/2013 30/06/2012 HTM 95.2% HFT Portfolio 94 227 AFS Portfolio 5,839 2,775 HTM Portfolio 202 474 AFS 1.5% HFT 3.3% HTM securities mainly represented by bank issues with high credit rating AFS / HFT securities represented by Italian sovereign bonds AFS reserve as at 30 June -111 mil (- 135 mil as at 31 March) AFS reserve on Govies, as at 6 th August, ~ -71 mil Exposure increase partly related to Basel 3 requirements (Liquidity Coverage Ratio) Significant economic contribution, in a context of improvement of the Country solvency Portfolio duration < 1.2, considering the interest-rate risk hedging transactions 21
Indirect deposits analysis - 4.5% Quarterly trend ( mil) + 1.8% - 3.3% - 2.3% - 0.7% 11,377 11,579 11,201 10,944 10,868 30/06/2012 30/09/2012 31/12/2012 31/03/2013 30/06/2013 Indirect deposits trend influenced by persistent financial market volatility Approximately 5,9 billion of administrated deposits represent a potential liquidity reserve for new attractive products New insurance 2013H1 161 billion New Asset Management 2013H1 122 billion - 4.5% + 3.7% 42% 46% - 10.5% 58% 54% 30/06/2012 30/06/2013 Administrated deposits AUM Composition Development of the strategic partnership with ANIMA SGR Mil 30/06/2012 30/06/2013 Var.% Funds & Sicav 1,081 1,384 28.0% Custody 6,563 5,877-10.4% AUM 2,116 2,042-3.5% Insurance 1,617 1,565-3.2% Total 11,377 10,868-4.5% 22
Agenda Executive summary Credit policies and asset quality Funding, liquidity and securities portfolio Capital ratio Revenues development Cost management Net profit development 23
Capital ratio Capital ratios evolution ~ +10 bps 11.0% 11.5% 11.1% 7.9% 8.1% 8.0% 30/06/2012 31/12/2012 30/06/2013 Tier I capital ratio Total capital ratio Quarter on quarter main changes in Core Capital: Early redempion of so called Tremont Bonds -200 mln Warrant 2014 Exercise ~ +22 mln Loss coverage with reserves ~ +21 mln Disposal of minority stake in Banca di Cividale ~ +33 mln (first tranche) Other changes ~ -1 mln TOTAL QUARTERLY CHANGE ~ -125 Quarter on quarter main changes in RWA: RWA optimization ~ -300 mln Deleveraging on Corporate exposure with low profitability ~ - 650 RWA on doubtful loans ~ +90 mln Other changes ~ -140 TOTAL QUARTERLY CHANGE ~ -1 BLN Capital Ratio 30/06/2013 31/12/2012 30/06/2012 TIER 1 (mln ) 1,477 1,617 1,661 RWA (mln ) 18,503 19,885 20,990 TIER 1 RATIO 8,0% 8.1% 7.9% TOTAL CAPITAL RATIO 11,1% 11.5% 11.0% Indicator 30/06/2013 31/12/2012 Loans Risk weighted * 82.0% 83.6% RWA / Assets 61.5% 66.5% * RWA related to credit risk / Loans to customers at the end of the period Requirements 30/06/2013 31/12/2012 Credit 92% 93% Market - - Operations 8% 7% 24
Internal rating process Target and update Devolopment of rating process Improvement in loan granting Improvement in credit monitoring system Pricing risk adjusted Capital allocation process improvement December 2012, meeeting with Bank of Italy and project kick off New rating on corporate counterparty on line from 22th april 2013 Process time line 22th april 2013 December 2013 June 2014 December 2014 New rating Corporate New Rating Retail Request to Bank of Italy for AIRB Corporate e Retail Regulatory reporting Contribution to Core Tier 1 Ratio ~ 140 bps (Basel 2) 25
Leverage ratio Tangible Assets / Tangible Equity 22.7x - 10.7% 20.3x 30.06.2012 30.06.2013 26
Capital management actions forward looking RWA OPTIMIZATION ON NEW LOANS Risk Sharing Facility, 100 mln new loan to SME guaranted by EIF (50% of exposure) Eligible guarantees (up to 80%) on loans to italian SME (~200 mln guaranted loans as of 30 th june 2013), direct to MCC or through Confidi 107 Eligible guarantees (up to 70%) on import / export finance, plafond increased from 20 to 50 mln in 2013 27
Agenda Executive summary Credit policies and asset quality Funding, liquidity and securities portfolio Capital ratio Revenues development Cost management Net profit development 28
Operating income development Mln 39 11 131-1 400 219 NII Net fees Div. & profits on inv. in associated companies Trading income Other net income Operating income - 7.5% + 1.2% - 107.7% + 146.2% + 77.4% + 0.8% Ch % 2013 H1 / 2012 H1 + 1.9% net of the guarantee fees to MEF Interest margin; 54,8% Net fee & comm.; 32,8% 88% of revenues from core business (NII + Fees) Other net income; 2,9% Div., invest &Trading; 9,5% 29
Focus on interest margin Quarterly figures /1,000-0.4% + 8.6% - 1.2% - 10.0% +3.2% 111,767 121,371 119,891 107,865 111,292 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2.13 % 2.00 % 1.95 % 1.93 % 1.82 % 1.07% 0.72% 0.38% 0.20% 0.21% Spread retail Media Euribor 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 YoY analysis /1,000-7.5% 7.729 Volume effect related to increase in doubtful loans Volume effect related to deleverage on loans in bonis Unsecured Bonds cost in first quarter 236,835 219,157 2012 H1 2013 H1-42.321-35.356 Volume Interest Rate Total Annualised effetcs 30
Focus on net fees /1,000 Net fee quarterly trend* + 2.1 % + 0.5% + 8.6% - 8.4% + 2.1% 68,793 69,136 75,080 68,758 70,235 2012 Q2 2012 Q3 2012 Q4 2013 Q1 2013 Q2 * net of fees on liabilities guaranteed by the MEF and fees reclassification due the AUM agreement with Anima Net fees breakdown* + 1.9% 51,197-0.8% 50,803 30,215 + 4.8% 31,671 24,174 + 6.3% 25,688 30,800 + 0.1% 30,831 2012 H1 2013 H1 Loans and others Current account Payment and collection services Asset management, trading and cunsulting services 31
Agenda Executive summary Credit policies and asset quality Funding, liquidity and securities portfolio Capital ratio Revenues development Cost management Net profit development 32
Operating result and cost/income development Mil 400 151 90 19 140 Operating income Personnel expenses Other admin. expenses Amortisation Net operating margin + 0.8% - 6.3% - 0.7% - 3.3% + 11.5% Chg % 2013 H1/ 2012 H1 Cost Income ratio - 340 bps Cost to asset ratio* - 9 bps Operating expenses - 4.2% /1,000 68.3% 64.9% 1.82% 1.73% 271,072 259,568 2012 H1 2013 H1 2012 H1 2013 H1 * Operating expenses /total asset 2012 H1 2013 H1 33
Cost optimization - sale of stake in Aperta Fiduciaria December 31th, 2012 28.7% 100% July 1st, 2013 Shareholders 29.6% 100% 34
Personnel expenses and administrative expenses /1,000 Personnel expenses - 6.3% Number of employees - 117 161,121 150,926 4,455 4,338 2012 H1 2013 H1 30/06/2012 30/06/2013 Front to back ratio Administrative expenses - 0.7% /1,000 72.1% 71.4% 90,394 89,728 30/06/2012 30/06/2013 2012 H1 2013 H1 source: internal data 35
Agenda Executive summary Credit policies and asset quality Funding, liquidity and securities portfolio Capital ratio Revenues development Cost management Net profit development 36
Net profit development Mln 140 124 Non recurring fiscal item in june 2012 ~ +18,5 mln 0.6 6.1 22 Net operating margin Value adjustments Provision & profit on disposals Net gains (losses) on sales of investments Income before tax + 11.5% + 45.8% - 79.4% n.a. - 42.4% 18 Tax for the year 1 Minority 165.5% - 76.3% 3 Net Income - 90.1% Chg % 2013 H1/ 2012 H1 37
Macroecoeconomic envirenment Source: ISTAT 38
Disclaimer This document has been prepared by Credito Valtellinese for information purpose only and does 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 of such securities or other financial instruments. The information, opinions, estimates and forecasts contained herein have not been independently verified. They have been obtained from, are based upon, sources that company believes to be reliable but makes no representations (either express or implied) or warranty on their completeness, timeliness or accuracy. The document may contain forward-looking statements, 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 significant risks and uncertainties, many of which are outside the company s control. There are a variety of factors that may cause actual results and performance to be materially different from the explicit or implicit contents 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. Pursuant the consolidated law on financial intermediation of 24 February 1998 (article 154-bis, paragraph 2), Simona Orietti, 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 group s documented results, financial accounts and accounting records. Presentation to institutional investors 39
Consolidated Results as at 30 June 2013 6 August 2013 Miro Fiordi CEO, Credito Valtellinese