Team 23 - UniCredit 2020-2023 Strategic Plan

A CLEAR COMMITMENT TO DELIVER
€16BN OF VALUE CREATION FOR SHAREHOLDERS OVER THE 2020-2023 PLAN
2019 CAPITAL DISTRIBUTION ² INCREASED TO 40 PER CENT

EXECUTION AND DELIVERY
Transform 2019 showed UniCredit successfully executes and favours long-term sustainable outcomes

SUSTAINABLE RETURNS
UniCredit is committed to generating sustainable returns by leveraging on its extensive and growing pan European client franchise, maximising productivity through continuous cost optimisation and more efficient business processes

CAPITAL DISTRIBUTION
Thanks to proven discipline in risk management and capital allocation, UniCredit will keep a high level of capital to absorb regulatory headwinds, while maximising shareholder distribution

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TEAM 23 BASED ON FOUR PILLARS

GROW AND STRENGTHEN CLIENT FRANCHISE

• Grow the franchise by reinforcing leadership as the "go-to" bank for European SMEs, leveraging growth engines in CEE and CIB, and expanding the client base of individuals through improved distribution and service models, while enhancing customer experience
• 2023 revenues €19.3bn, +0.8 per cent CAGR 2018-2023
• Revenues based on more conservative interest rate assumptions than the market. Plan assumes 3M end of period Euribor at about ‑50bps between 2019 and 2022, rising to ‑40bps in 2023

TRANSFORM AND MAXIMISE PRODUCTIVITY

• Adopt new ways of working to continuously optimise processes, enhance customer experience and deliver further efficiency gains. Paperless retail bank to be rolled out in Italy in mid 2020, Germany and Austria in 2021 and CEE by 2023
• 2023 costs €10.2bn, -0.2 per cent CAGR 2018-2023
• €1bn of gross savings in Western Europe ³, equivalent to 12 per cent of 2018 cost base

DISCIPLINED RISK MANAGEMENT & CONTROLS

• Further strengthen monitoring and management of credit and financial risk, and targeted actions on compliance and operational risk
•  Non Core rundown by end 2021 confirmed, with Non Core NPEs below €9bn by end 2019 and below €5bn by end 2020
•  2023 cost of risk 40bps
• 2023 gross NPE ratio below 3.8 per cent

CAPITAL AND BALANCE SHEET MANAGEMENT

• Proactive capital allocation, gradual alignment of domestic sovereign bond portfolios and evolution of Group structure, including working on a project to create a subholding, incorporated in Italy and not listed, for international operations
• Capital distribution equal to 40 per cent of underlying net profit ⁴ in 2020-2022 rising to 50 per cent in 2023, a combination of cash dividends and share buybacks
• €8bn¹ capital to be returned to shareholders 2020-2023, including €2bn of share buybacks ⁵
• €8bn¹ growth in tangible equity ⁶
  
•  2019 capital distribution ² doubled from initial 20 per cent proposal ⁷ to 40 per cent of underlying net profit ⁴, including 10 per cent share buyback ⁵
• Maintain 200-250bps CET1 MDA buffer at all times ⁸
  
• SREP Pillar 2 Capital Requirement (P2R) lowered by 25bps to 175bps ⁹
  
• Unwinding of Koç Financial Services JV and disposal of an approximately 9 per cent stake in Yapi ve Kredi Bankasi A.Ş. creating flexibility for management of remaining stake

TEAM 23 TO DELIVER RESILIENT PROFITABILITY

• RoTE ¹⁰ at or above 8 per cent throughout plan
• 2023 underlying net profit ⁴ €5bn
•  EPS ¹¹ growth of about +12  per cent CAGR 2018-2023

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UNICREDIT: A PAN EUROPEAN WINNER

A simple successful pan European Commercial Bank, with a fully plugged in CIB, delivering a unique Western, Central and Eastern European network to its extensive and growing client franchise

Jean Pierre Mustier, Chief Executive Officer, UniCredit S.p.A said: "Thanks to the unwavering commitment of all UniCredit colleagues, we have successfully delivered Transform 2019, exceeding our key targets and laying a solid foundation for our 2020-23 strategic plan, Team 23. This proves that we know how to execute in any macro environment.

"As a result of our decisive actions and our relentless focus on de-risking and balance sheet strengthening, today UniCredit has a solid capital base. Based on the success of Transform 2019, we are looking to increase our 2019 capital distribution to 40 per cent, double the initial plan target, including a proposed 10 per cent share buyback.

"Team 23 is about maximising stakeholder value creation, including a renewed focus on customer satisfaction thanks to streamlined processes and innovative products, as well as increased shareholder returns. During the plan we estimate we will create a total of 16 billion of value for investors through a combination of dividends and share buybacks as well as by growing tangible equity. We will continue to draw on our competitive advantages: our unique Western, Central and Eastern European network, our position as the go-to bank for SMEs in Europe and our extensive and growing client franchise. Throughout Team 23 we will continue to capture commercial opportunities whilst keeping a tight rein on risk, execution discipline and cost control.

"Meanwhile, more than ever, sustainability forms a central part of everything we do and is fully integrated into our business and decision-making progress, as announced on 26 November.

"I am very proud of the whole UniCredit team and what we have achieved over the last three years. I am also very thankful for everyone's commitment and dedication. Together we are One Team, One UniCredit and we are committed to doing the right thing and to successfully deliver Team 23."

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Notes:

^[1]  Based on Team 23 macroeconomic assumptions.

^[2]  Proposed capital distribution based on percentage of underlying net profit and comprises 30 per cent cash dividend and 10 per cent proposed share buyback. Share buyback subject to regulatory approval and AGM authorisation. Underlying net profit based on stated net profit adjusted for non-operating items. For details see Annex.

^[3]  Commercial Banking Western Europe, CIB, Group Corporate Centre and Non Core.

^[4]  Underlying net profit based on stated net profit adjusted for non-operating items. For details see Annex.

^[5]  Proposed share buybacks subject to regulatory approval and AGM authorisation.

^[6]  9M19 to 2023.

^[7]  As communicated at 2016 Capital Markets Day. Subsequently revised to 30 per cent in 2017.

^[8]  For 2023 including estimated impact of CRD5 (article 104a) and Basel 4, FRTB and CVA fully loaded.

^[9]   Based on SREP letter received 2 December 2019.

^[10] RoTE based on underlying net profit, for details see Annex.

^[11]  EPS based on underlying net profit, for details see Annex. FY18 EPS recast according to 2023 assumptions.

CONTACTS

Media Relations

Tel. +39 02 88623569; e-mail: mediarelations@unicredit.eu.

Investor Relations

Tel. + 39 02 88621028; e-mail: investorrelations@unicredit.eu.