UniCredit: a pan-European winner: 2Q19 and 1H19 Group Results

Successful execution of Transform 2019 underpins UniCredit's new 2020-2023 Strategic Plan

Very strong quarterly results benefitting from net positive exceptional items ^[1] and resilient commercial dynamics

-     2Q19 Group adjusted net profit of €1.0 bn, up 0.4 per cent Y/Y ^[2]. Stated net profit of €1.9 bn, up 81.0 per cent Y/Y

-     1H19 adjusted Group Core RoTE at 10.7 per cent, down 0.2 p.p. 1H/1H². 1H19 adjusted Group RoTE at 8.8 per cent, up 0.1 p.p. 1H/1H²

Focused execution of Transform 2019 continues to deliver tangible results

-     Net FTE and 98 per cent of branch reduction targets achieved, well ahead of plan

-     2Q19 costs at €2.5 bn, down 4.4 per cent Y/Y

-     2Q19 CoR at 60 bps

-     2Q19 Non Core gross NPEs of €15.7bn, down €5.8 bn Y/Y

Strong capital position and successful execution of mitigation actions

-     2Q19 CET1 ratio at 12.08 per cent. MDA buffer of 201 bps

-     2Q19 CET1 ratio includes +24 bps from Fineco disposal and -40 bps of regulatory headwinds as per guidance

-     2Q19 TLAC ratio 20.69 per cent ^[3]. 2Q19 buffer of 112 bps, target now at the upper end of 50-100 bps range ^[4]

-     2Q19 tangible equity up 4.0 per cent Q/Q to €50.7 bn, TBVpS up 3.9 per cent Q/Q to 22.7

Execution of four financial measures continues with tangible results to prepare for 2020-2023 business strategy

-     Remaining stake in Fineco sold in July, for an expected CET1 ratio impact of +0.3 p.p. in 3Q19

-     BTP holdings at €49 bn, down €2 bn ^[5] Q/Q. BTP sensitivity ^[6] -1.8 bps post tax, down 27 per cent since 3Q18

-     Non Core gross NPEs at €15.7 bn, down €5.8 bn Y/Y

-     Rating agencies actions: S&P has upgraded UniCredit SpA's outlook to 'stable' versus the 'negative' outlook for the Italian sovereign. Moody´s has upgraded UniCredit SpA's stand-alone and Tier 2 rating to investment grade

Outlook FY19:

-     FY19 revenue guidance lowered from €19.0 bn to €18.7 bn

-     FY19 €10.1 bn cost target confirmed

-     FY19 CoR 55 bps target confirmed including 4 bps from models

-     FY19 Non Core gross NPEs target meaningfully below €14.9 bn and closer to €10 bn

-     Adjusted ^[7] net profit €4.7 bn, RoTE >9 per cent and Core RoTE >10 per cent

-     CET1 MDA buffer by year end 2019 confirmed at the upper end of target range of 200-250 bps ^[8]

Milan, 7 August 2019: on 6 August 2019, the Board of Directors of UniCredit S.p.A. approved the 2Q19 Group's consolidated financial accounts as of June 30, 2019.

Jean Pierre Mustier, Chief Executive Officer of UniCredit S.p.A., commenting on the 2Q19 Group results said:

"We delivered another solid set of results in the first half of 2019 in what was a tough macroeconomic environment. We remain confident in the underlying fundamentals of Italy and the wider Europe. UniCredit continues to successfully finance the real economy everywhere it operates.

Our second quarter benefitted from resilient commercial dynamics and net positive exceptional items. Our adjusted net profit was 1.0 billion euro in the quarter, up 0.4 per cent whilst our stated profit was 1.9 billion euro, up 81 per cent year on year. The adjustments include both positive and negative exceptional items, as we took a number of strategic decisions, such as the disposal of Fineco and the sale of Ocean Breeze.

For the full year we confirm our targets, including Group RoTE above 9 per cent and an adjusted net profit of 4.7 billion euro, on which a 30 per cent cash dividend pay-out will apply.  We are well ahead on our Transform 2019 plan execution and have already achieved our FTE reduction target as well as 98 per cent of the branch closures. In the prevailing environment with rates expected to be lower for much longer, we adjust our FY19 revenue guidance from 19.0 billion euro to 18.7 billion euro. In terms of Non Core gross NPEs they have been cut dramatically and will be closer to 10 billion euro at the end of 2019, well below our initial Transform 2019 target.

As we enter the very final stretch of Transform 2019, I am very proud of the UniCredit team who has already achieved or exceeded many of our original plan targets. Our achievements over the past three years provide a solid foundation for our next plan. We have made good progress on the four financial measures we announced last quarter to prepare for the new business strategy which we will present at our Capital Markets Day in December.

We continue to work hard as One Team, One UniCredit to ensure UniCredit remains a true pan-European winner."

Notes:

^[1] Exclude extraordinary items related to events occurred in 2Q19 for €825 m (mainly related to the impacts from FinecoBank S.p.A. 17 per cent disposal for €1,176 m, and to Ocean Breeze Group disposal, classified as Held for Sale, for -€178 m).

^[2] Group and Group Core adjusted net profit and RoTE exclude extraordinary items related to events occurred in 1Q19 for €258 m (real estate disposal in Germany) and €825 m in 2Q19 (mainly related to the impacts from FinecoBank S.p.A. 17 per cent  disposal for €1,176 m, and to Ocean Breeze Group disposal, classified as Held for Sale, for -€178 m).

^[3] 2Q19 TLAC ratio 20.69 per cent, o/w 18.20 per cent TLAC subordination ratio and 2.5 per cent senior preferred exemption.

^[4] Assuming BTP spreads remain at 2Q19 levels.

^[5] BTP holdings refer to banking book and in 2Q19 are down 6bn Q/Q including Fineco and down 2bn Q/Q excluding Fineco.

^[6] BTP sensitivity: +10bps parallel shift of BTP asset swap spreads has a -2.5bps pre and -1.8bps post tax impact on the fully loaded CET1 ratio as at 30 June 2019.

^[7] Group and Group Core adjusted net profit and RoTE exclude extraordinary items related to events occurred in 1Q19 for €258 m (real estate disposal in Germany) and €825 m in 2Q19 (mainly related to the impacts from Fineco Bank S.p.A. 17 per cent disposal for €1,176 m, and to Ocean Breeze Group disposal, classified as Held for Sale, for ‑€178 m).

^[8] Assuming BTP spreads remain at 2Q19 levels.

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