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1Q18 Group Results, best first Quarter since 2007

UNICREDIT: A PAN EUROPEAN WINNER

 

CONTINUED DISCIPLINED EXECUTION OF TRANSFORM 2019 DRIVES TANGIBLE IMPROVEMENTS

 

NON CORE RUNDOWN ACCELERATED TO 2021

 

 

1Q18 Group results, best first quarter since 2007

Core Bank solid performance with 1Q18 Group Core RoTE (1) at 10.4 per cent, up 1.1 p.p. Y/Y. 1Q18 Group Core gross NPE ratio improving, down 0.9 p.p. Y/Y to 4.7 per cent


Group 1Q18 net profit at €1.1 bn, up 22.6 per cent Y/Y. Underlying financial performance is strong with net operating profit at €1.9 bn, up 25.5 per cent Y/Y. 1Q18 RoTE at 8.9 per cent, up 1.8 p.p. Y/Y. FY19 RoTE target above 9 per cent confirmed


Resilient 1Q18 Group NII at €2.6 bn (-0.4 per cent Q/Q), in line with guidance. Positive sustained commercial dynamics, fees up 2.8 per cent Y/Y driven by investment fees (+2.3 per cent Y/Y) and transactional fees (+9.3 per cent Y/Y)


1Q18 costs at €2.74 bn, down 2.0 per cent Q/Q and 5.2 per cent Y/Y. Cost/Income ratio at 53.5 per cent, down 2.5 p.p. Y/Y


1Q18 CoR at 45 bps. FY18 CoR target of 68 bps confirmed


Non Core rundown accelerated to 2021 from 2025. In 1Q18 €1.8 bn write-offs in Non Core. FY18 Group gross NPE disposal target of €4 bn, of which €2 bn in Non Core


Group gross NPE ratio down to 9.5 per cent with gross NPEs down €10.6 bn Y/Y and €3.8 bn Q/Q


IFRS9 FTA impact (2) of 104 bps including accelerated Non Core rundown through NPE sales and write-offs


1Q18 Fully loaded CET1 ratio at 13.06 per cent. Fully loaded CET1 ratio for year end 2018 between 12.3 per cent and 12.6 per cent


Impact of models, procyclicality and EBA guidelines anticipation confirmed, the majority of which is expected in 2H18





[1] RoTE: Return on Tangible Equity (annualised net profit divided by average tangible equity).

[2] IFRS9 first time adoption (FTA) impact on 1 January 2018 of -104bps on fully loaded CET 1 ratio, equivalent to around -€3.76 bn (gross of tax effect) deriving from LLP effect, write offs, classification and measurement. For further details please refer to footnote n.32.


UniCredit Group 
1Q18 Highlights3 Resilient revenues at €5.1 bn (-0.7 per cent Y/Y, +4.2 per cent Q/Q) mainly supported by fees, up 2.8 per cent Y/Y to €1.7 bn (+4.0 per cent Q/Q). Resilient NII (-0.4 per cent Q/Q) at €2.6 bn, in line with idance
Operating expenses at €2.74 bn (-5.2 per cent Y/Y, -2.0 per cent Q/Q) mainly thanks to lower hr costs (-6.9 per cent Y/Y, -3.9 per cent Q/Q) with FTEs down 6,058 Y/Y and 1,587 Q/Q. C/I ratio at 53.5 per cent (-2.5 p.p. Y/Y, -3.4 p.p. Q/Q)
LLPs down 35.2 per cent Y/Y to €496 m, leading to a seasonally low CoR of 45 bps
Net operating profit at €1.9 bn, up 25.5 per cent Y/Y and 47.2 per cent Q/Q 
Net profit at €1.1 bn and RoTE at 8.9 per cent
CEE, Commercial Banking Italy and CIB main contributors to net profit
Group Core Bank net operating profit at €2.1 bn, up 15.3 per cent Y/Y thanks to stable revenues and cost control. RoTE up 1.1 p.p. Y/Y to 10.4 per cent
Capital Fully loaded CET1 ratio at 13.06 per cent in 1Q18, including 104 bps of IFRS9 FTA impact
Strong capital position allowing the Group to accelerate Non Core rundown. higher IFRS9 FTA impact on non performing residential mortgages
Dividend payout of 20 per cent in 2018 and 30 per cent in 2019 confirmed
Fully loaded leverage ratio at 5.35 per cent in 1Q18
Asset Quality Group gross NPE4 ratio down 2.1 p.p. Y/Y to 9.5 per cent in 1Q18, with a coverage ratio of 60.3 per cent 
Group Core gross NPE ratio down 0.9 p.p. Y/Y to 4.7 per cent in 1Q18, with a coverage ratio of 57.9 per cent
Non Core gross NPE down €6.9 bn Y/Y to €23.6 bn in 1Q18, with a coverage ratio of 62.4 per cent
Transform 2019 Update Year end 2018 fully loaded CET1 ratio between 12.3 per cent and 12.6 per cent. 2019 fully loaded CET1 ratio target confirmed above 12.5 per cent
FINO transaction successfully closed in January 2018
Further decisive action with accelerated full rundown of Non Core by the end of 2021, brought forward from 2025. €1.8 bn of write-offs in Non Core in 1Q18 
FY18 Group gross NPE disposal target of €4 bn, of which €2 bn in Non Core
Improved 2019 Gross NPE target of €37.9 bn for Group, of which €14.9 bn in Non Core, Further down by €2.3 bn
Operating model transformation ahead of schedule, with 78 per cent of planned branch closures and 75 per cent of FTE reduction target achieved
Strategic commercial initiatives ongoing and E2E process redesign in progress 
UniCredit only bank in Italy to offer all three mobile payments services: Apple Pay, Alipay and Samsung Pay, the latter successfully launched in 1Q18, further strengthening the Group's mobile payments offering 
New corporate governance implemented in line with best in class European peers

[3] Starting from 1 January 2018, IFRS9 accounting standard was adopted, envisaging a new framework for provisioning computation based on expected loss rather than on incurred loss. Please refer to "Basis of preparation" for further details on this topic.

[4] NPEs: Non Performing Exposures. The perimeter of Non Performing Loans is equivalent to the perimeter of EBA non performing exposures. NPEs are broken down in bad exposures, unlikely-to-pay and past due.

Milan, 10 May 2018: on 9 May 2018, the Board of Directors of UniCredit S.p.A. approved the Group's 1Q18 consolidated financial accounts as at March 31, 2018.

Jean Pierre Mustier, Chief Executive Officer of UniCredit S.p.A., commenting on the 1Q18 Group results:

 

"UniCredit's 2018 first quarter results, the best first quarter in more than a decade, were driven by a continued strong commercial dynamic throughout the Group, underpinned by a renewed and successful customer focus which has translated into almost half a million of gross new clients.

 

Our Core Bank turned in a solid performance with a net profit of 1.2 billion Euro and a RoTE of 10.4 per cent, up 1.1 percentage points year on year. The Core Bank gross NPE ratio is now 4.7 per cent, improving 0.9 percentage points year on year. Thanks to our strong capital position, we have taken further decisive action to accelerate the rundown of the Non-Core portfolio to 2021. This will be done through a combination of disposals and write offs.

 

At the start of its second year, Transform 2019 is ahead of schedule and yielding tangible results, such as 78 per cent of the agreed branch closures and 75 per cent of FTE reductions already having been achieved, with costs decreasing as planned.

 

Our first quarter fully loaded CET1 ratio stands 13.06 per cent, with a year-end target range of between 12.3 and 12.6 per cent.

 

All Transform 2019 targets are confirmed and we are continuing our disciplined execution of the plan with all team members working together to make UniCredit a true pan-European winner."