MEDIOBANCA BUSINESS PROFILE AND KEY PERFORMANCE INDICATORS
July 2021 Agenda
Section 1. Group
Section 2. Divisions
Wealth Management
Consumer Banking
Corporate & Investment Banking
Principal Investing/Ass. Generali
Holding Functions MEDIOBANCA TODAY: A DIVERSIFIED FINANCIAL GROUP…
MB Group Section 1
Key financial information¹
Wealth Consumer Revenues: €2.5bn TFA: €64bn Management Banking Net profit: €600m Loan book: €47bn
ROTE adj: 10% Gross NPLs/Gross Ls 4.1%
C/I ratio: 47% DPS: €02
No. of staff: 4.9k Stated payout: 0% Corporate & Principal Investment Investing CET1 phase in: 16.1% Loan/funding ratio: 85% Banking Total assets: €79bn Market cap:3 €8.7bn
Revenues GOP RWAs Loans TFAs
WM WM WM WM 10% 12% 28% 23% Affluent Consumer CIB Consumer 44% UHNWI Consumer CIB 47% 25% CIB 42% CIB 41% 23% 43% 29% Consumer 40% 28% Other AM Other Other Other 23% 15% 11% 12% 4%
1) Figures as at end-June 2020 (financial year) 3 2) In accordance with ECB guidance on Covid crisis 3) As at 17 May 2021 ...WITH AN INTEGRATED BUSINESS MODEL
MB Group Section 1
HIGH SYNERGIC BUSINESS
Capital light Wealth Corporate & Labour intensive Fee driver Fee driver Recurrent Management Inv.Banking Cyclical
REALLOCATION OPPORTUNITY DIVERSIFICATION OPPORTUNITY
EPS/DPS accretive Principal Capital intensive Revenue driver Consumer NII driver Source of capital Investing Banking Anti-cyclical
HIGH RETURN BUSINESS
4 …DELIVERING ITS ACCRETIVE VALUE CYCLE…
MB Group Section 1
STRONG POSITIONING RESPONSIBLE
SPECIALIZED DNA REPUTABLE - HIGH QUALITY Effectiveness of MB business model, > Strong brand value focused on high-margin, specialized, Standing and quality long-term growing businesses Ethical approach
STAKEHOLDER-FRIENDLY SOLID
High yield for our shareholders CAPITAL GENERATION CAPABILITY Workplace welfare for our people Possibility to invest Corporate citizenship for our community to enhance positioning
PROFITABLE GROWING ABOVE AVERAGE PERFORMANCE > UNBROKEN GROWTH High profitability and capitalization in human talent, assets and profit All business units repaying cost of with no compromise on risk profile capital
5 ...OUTPERFORMING THE INDUSTRY BY FINANCIAL & MARKET METRICS
MB Group Section 1
Mediobanca, has delivered BP 16/19 targets, outperforming the sector with solid financial results
Last 3Y performance MEDIOBANCA ITALIAN BANKS avg EUROPEAN BANKS avg
Revenues (3Y CAGR¹) +7% 0% -1%
PBT (3Y CAGR¹) +13% +6% +9% ROTE² 10% 7% 8% Cost/income ratio² 46% 62% 67%
Mediobanca market performance, including the Covid-19 period, has consistently been above both ITA and EU banks No capital increase in last 20Y and sound shareholder remuneration: €2,2bn distributed in 10Y
MB 3Y market performance vs ITA and EU banks MB 5Y market performance vs ITA and EU banks
€ 12 €12 11 11 10 10 9 9 8 8 7 7 6 6 5 5 4 MB total shareholders return: -13% 4 3 MB total shareholders return: -5% EU Banks total shareholders return: -54% EU Banks total shareholders return: -51% 3 2 ott-17 apr-18 ott-18 apr-19 ott-19 apr-20 ott-20 ott-15 ott-16 ott-17 ott-18 ott-19 ott-20 MB -24,6% EU banks -58,4% ITA banks -43,7% MB -23% EU banks -59,3% ITA banks -60,4%
6 1) 3YCAGR: June16/19 Mediobanca, Dec16/18 peers 2) June19 for Mediobanca, Dec18 peers Source for ITA and EU banks: ROTE from MB Securities, other figures from public annual report. Employees: Bank of Italy WE DELIVERED SIGNIFICANT GROWTH OVER LAST 10Y… MB Group Section 1
Disciplined growth in customer assets reflected in increase in revenues at low cost/income ratio
TFA - €bn Loans - €bn 47 46 64 3.5 47 3.0 45 46 40 35 2.5 40 2.5 40 2.0 1.5 35 17 1.6 1.0 30 10 24 0.5 7 0.0 25 June09 June20 June09 June20 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 J-17 J-18 J-19 J-20 Revenues (€bn) MB cost/income (%) Deposits AUM/AUA
…keeping asset quality¹ strong and generating sound GOP growths in any macro scenario
4.6% 4.7% 4.4% 4.2%
3.7% 230 250 1,500 168 3.2% ITA Banks 141 147 142 200 119 127 124 2.9% 150 2.6% 1,000 87 82
62 100 2.2% 52
1.9% 500 50 1.6% 1.5% Mediobanca 871 1,046 1,159 1,201 876 1,028 1,198 1,155 1,172 1,304 1,363 1,324 0
0 (247) (223) -50 0.6% 0.6% (504) (517) (424) (468) (507) (533) (419) (317) (375) 0.5% 0.5% 0.4% (736) -100 0.3% -500 0.1% 0.2% 0.2% 0.2% 0.0% 0.0% -150
-1,000 -200 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 J-17 J-18 J-19 J-20 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 J-17 J-18 J-19 J-19 GOP (€m) before LLPs LLPs (€m) CoR (bps) ITA banks: Net bad loans/Net Loans MB: Net bad loans/Net Loans
7 1) Source: ABI …BY EVOLVING BUSINESS MODEL FROM HOLDING COMPANY TO SPECIALIZED FINANCIAL GROUP…
MB Group Section 1
MEDIOBANCA business model timeline
Early ‘2000s BP 2013-16 BP 2016-19
From Holding company Simplify Position MB as a long term to Banking Group Reduce equity exposure value player
CIB international footprint started WM division set up including €1.5bn AFS equity disposed with affluent, private and AM Compass dimension doubled €0.5bn capital gains also with Linea acquisition CheBanca: from deposit gatherer Cross shareholdings solved to wealth manager, Private banking entered: Cairn, Barclays and RAM acquired Banca Esperia JV set up CIB deleveraging, focus on IB Esperia: acquired and merged CMB acquired capital-light CIB: capital optimization (AIRB) Corporate Center created Messier Maris acquisition
Compass: record results
Holding functions set up
8 …RESULTING IN AN EFFECTIVE GROUP RESHAPING… MB Group Section 1
Enlarged and diversified funding and loan book: retail: corporate now at 55%:45%
Loans by division Funding by product 47 €bn 53 55 €bn 4% 19% 12% 10% 35 30% Leasing 12% Other 14% 23% Consumer TLTRO 43% 26% 11% Residential WM Deposits 69% Mortgages Bonds 35% 52% 40% Large corporate
FY June09 FY June20 FY June09 FY June20
Enlarged and diversified revenues, with WM now at ~25% (from zero), CIB at ~25%, Consumer doubled at ~40%, PI reduced to ~13% (from 30%)
Revenues by product Fees by division Revenues by division €bn 2.5 €bn €bn 2.5 13% 8% 13% 1.6 Equity acc. 24% WM 1.6 23% PI 26% Trading 45% WM 10% CIB 30% Fees 23% 35% 2% 42% Consumer 55% 24% NII CIB 41% Consumer 44% 23% 20% FY June07 FY June20 FY June07 FY June20
9 … SOUND CAPITAL CREATION & STAKEHOLDERS REMUNERATION…
MB Group Section 1
High capital generation (last capital increase in 1998) and high profitability…
CET1 ratio % ROTE adj. %
16.1% 10 10 9 10 14.2% 9 8 14.1% 8 13.3% 7 7 11.7% 12.0% 12.1% 11.1% 11.2% 11.5% 11.1% 5 10.3% 4 4
J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 J-17 J-18 J-19 J-20 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 J-17 J-18 J-19 J-20
… has enabled MB to return more than €2bn to shareholders, while investing constantly in growth projects
€m Group staff (‘000) Cumulative ~€2.2bn 5.3 5.1 4.9 4.9 160 413 4.1 320 3.8 410 3.6 231 3.5 3.5 3.5 213 3.2 144 144 127 3.1 42
J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 J-17 J-18 J-19 J-09 J-10 J-11 J-12 J-13 J-14 J-15 J-16 J-17 J-18 J-19 J-20
Dividend Buy-back Employees FAs
10 …PAVING THE WAY FOR THE DEFINITIVE REPOSITIONING OF MEDIOBANCA AS A DISTINCTIVE AND SUSTAINABLE SPECIALIZED FINANCIAL PLAYER BP 2019-23 ROADMAP
CONSISTENCY MB continues on its growth roadmap with focus on specialized, high-margin, capital light, long-standing growing businesses with one of the lowest risk/high return profiles in Europe
TARGETING INDUSTRY-LEADING PERFORMANCE
Revenues growth: +4%¹ CAGR Earnings growth: +4%2 EPS CAGR Profitability growth: ROTE23@11% CET1 ratio progressively optimized at 13.5% throughout 2023 with a mix of cash dividend and share buyback
TO BE VALUED AS A SPECIALIZED FINANCIAL PLAYER Distinctive growth should position Mediobanca further up on the Value Map of European Financials
1) 4YCAGR 2019-2023 11 2) 4Y CAGR, including treasury shares cancellation STRATEGY EVOLUTION CAME ALONG WITH SUBSTANTIAL GOVERNANCE IMPROVEMENT… MB Group Section 1 Mediobanca shareholders’ structure1
10.7% Consultation Agreement2
Institutional investors by region
Retail & Other Mediolanum Institutional 3.3% U.S. 39% 18.3% Investors 50% S.-33 (Benetton) 2.1% U.K. 18% L. Del Vecchio 18.9% FINPRIV 1.6% Italy 14%
France 7% Belgium 5% Other <1% 3.7% Rest of Bolloré Group the world 17% 2.1%
Historical syndicated pact expired. A new consultation agreement was signed in December 2018, gathering 10.7% of capital, lasting 3Y, with no restrictions on shares The reduction of any conflict of interest risk, following the exit of the last banking shareholder, gives room to changes to the Article of Association to align with best governance practices. Restriction were introduced in 2007 to separate shareholder and management role preserving independence while minimizing potential conflict of interests arising from significant presence of other banks shareholders
12 1) Institutional investor breakdown by geography source: Nasdaq Shareholder Analysis, August 2020 …LEADING TO STEADY BOD ENHANCEMENT
MB Group Section 1 Reducing number of BoD members coupled with … … increasing independent members …
67% 22 53% 18 15 15 50% 44%
BoD BoD BoD BoD exp. BoD BoD BoD BoD exp. 2011-2014 2014-2017 2017-2019 2020-2023 2011-2014 2014-2017 2017-2019 2020-2023
… increasing gender diversity … …and increased minority representation
40% 33% 33% 13% 13% 15% 5% 6% BoD BoD BoD BoD exp. BoD BoD BoD BoD exp. 2011-2014 2014-2017 2017-2019 2020-2023 2011-2014 2014-2017 2017-2019 2020-2023
The current BoD, considered the most suitable choice for the delivery of FY 2019-23 BP targets, was renewed in 2020 AGM and formed by 15 members, 13 o/w taken from the slate proposed by the BoD (that gathered 2/3 of the votes of the AGM) and 2 members from the slate proposed by Assogestioni. BoD, enhanced every renewal, has been: right sized according to business development and regulators recommendation fostered by increasing presence of independent Directors, higher diversity and minority representation all BoD members eligible for CEO position after any restriction removal
13 Agenda
Section 1. Group
Section 2. Divisions
Wealth Management
Consumer Banking
Corporate & Investment Banking
Principal Investing/Ass. Generali
Holding Functions MEDIOBANCA WM: THE LARGEST VALUE OPTION
Wealth Management Section 2.a
The entrance of MB in WM is recent (4Y ago) and positive in terms of track record WM represents the largest value option for MB Group MB group could enjoy higher recurring revenues/ profits, deserving higher valuation for the shareholders
Italian private savings market: a clear opportunity to be exploited: large (€3.5tn), still under-penetrated, with huge potential in the Upper Affluent segment, and mid caps where there is entrepreneur-corporate identification. The winners are increasingly specialized operators with a strong advisory relation-based approach Mediobanca: distinctive positioning in both UNWHI and Upper-Affluent segment with growth strategy primarily based on scale up distribution WM strategy has changed deeply in the last four years, and now the Group is a recognized operator, fast growing and well positioned in the market Private banking: full control of Banca Esperia acquired in 2007, synergic approach with CIB launched with a competitive edge on illiquid assets. CMB strategy reviewed and management renewed Affluent: CheBanca! from funding arm to innovative multichannel operator focused on managing affluent people’s savings, with an integrated, digital and human advisory approach. The Barclays acquisition (for which MB was paid) fitted well in the new model because it was not a traditional acquisition but a cherry-picking of businesses, and represented an important step in moving CheBanca! from mass retail to affluent/wealth by importing the financial advisory business model Asset management: most succesfull operators have a model that maximizes the benefits of integrating distribution and production. MB has set up its own factory to exploit synergies and improve margins, and has entered niche AM businesses in alternative spaces to provide a valuable product offering to its clients.
15 MB REFOCUSED STRATEGY ON WM SINCE 2016
Wealth Management Section 2.a
Affluent Private Banking Asset Management
Before CheBanca! founded in 2008 as CMB: 34% stake acquired in 1989, Some undifferentiated domestic 2016 innovative player and deposits at 100% in 2004 activity in the Group gatherer Banca Esperia: founded in 2001, Alternative started: Cairn Capital No focus on AM 50% stake M&A: scouting opportunity in off- acquired shore market, especially CH
CheBanca! from deposit to asset 2017: full control of Banca Esperia Business and merger into MB gatherer MBSGR enhanced Plan Barclays acquired MB Private Banking launched, with RAM acquired 16-19 a synergic approach with CIB M&A: scouting ongoing, especially M&A: scouting domestic FA M&A: scouting specialized, in illiquid credit domestic player
Become an established player by Become a leader in HNWI and quality and sustainability, with best UHNWI with a unique Private and Maximize growth and margins in in class mix of digital/human Investment Bank model, working the group value chain Next 3Y distribution capabilities together with CIB to offer Reinforce research & product BP23 Enhance positioning and scale integrated advisory and synergies among traditional and investing in distribution and investment solutions in Private alternative AM innovation Assets/Markets
16 WE ARE NOW A WELL-REPUTED PLAYER…
Wealth Management Section 2.a
MBWM gaining positioning Achievements
Wealth management players ranking by TFA¹ (€bn, Dec19 peers, MB as at June20) Franchise empowered Customer base up 50% to over 880K,
85 Affluent: 865K, Private 15K 81 Sales force: Affluent tripled to > 900 69 people 64 59 Bankers’ reshuffle in PB with focus on UHNWI AuM growth: up 21% YoY 49 Size materially scaled TFAs doubled to over €60bn 29 28 Annual NNM >€5bn per year 20 20 19 18 15 14 13 10 10 10 Profitability boosted 5 6 4 ROAC from 9% to 16%
MBWM
Financial Advisors Specialized centred models Private Banks
17 1) MB TFAs excluding AUC. Sources for other players: data from Associazione Italiana Private Banking, companies’ web site, press. Data as at: Dec.19 for Financial Advisors centred models; June19 for Specialized Private Banks … and M&A COULD ACCELERATE WM GROWTH
Wealth Management Section 2.a M&A
2015 2016 2017 2018
Selected scope of Barclays 50% of Banca Esperia Illiquid credit fund Italian activities bought by bought out and Systematic quant. CheBanca! and merged merged into MB fund into it, causing it to double Mediobanca Private First step by MBAM in size Banking launched into alternative space Definitive shift by MBAM enhancement CheBanca! from deposit to in alternative space asset gatherer In Affluent segment
MB has followed a strategy to execute selective M&A to accelerate growth. BP 19-23 envisages acquisition especially in WM where also AG stake can be redeployed: preference for K-light businesses which are an excellent fit for Mediobanca by culture, ethics and business approach Mediobanca criteria for value creation always met
18 Agenda
Section 1. Group
Section 2. Divisions
Wealth Management
Consumer Banking
Corporate & Investment Banking
Principal Investing/Ass. Generali
Holding Functions MB CONSUMER BANKING: A SUCCESS STORY SET TO CONTINUE
Consumer Banking Section 2.b
Growth in Consumer has been strong and it is not challenged by temporary slow down due to Covid
Business founded in 1960, diversifying corporate exposure. In 2000 Compass had €1.3bn of loan book Strong development since 2003: Linea acquisition in 2008 taking Compass from a second-tier operator (ranking 8th in the domestic market) to a top 3 player. The acquisition offered an opportunity to diversify product mix (adding salary-backed products), distribution channels (adding a third-party branch network), and geographical presence (NE Italy). Since then, excellent results have been achieved in last 10Y: franchise empowered, with direct branches up to ~200, digital started revenues trebled to €1bn, loans trebled to €13bn, net profit up 10x to over €300m, ROAC up to 30% asset quality has remained strong, due to optimization of value management approach, based on superior scoring and pricing capabilities and effective recovery system platform remains efficient: cost/income ratio below 30% at all times Business plan based on organic growth in proprietary channels, ring-fencing of third-party agreements, and exploiting opportunities in digital banking. Covid impact (volume slowdown and increase in cost of risk) temporary and manageable
20 COMPASS – A PIONEER, INNOVATIVE, PROFITABLE OPERATOR…
Consumer Banking Section 2.b
DISTINCTIVE STRENGTHS POSITIONING
Compass market shares EXCELLENT ASSET QUALITY 11.7% 12.0% 11.7%
AND INDUSTRIALIZED COLLECTION 30% 10.5% 13.0%
OUTSTANDING SCORING 11.0%
25% AND PRICING CAPABILITIES Net NPLs/Loans: 2.5% 9.0% 20% 16% 7.0%
Net Bad Loans /Loans: 0.1% 5.0% 15% NPLs fully covered in 12m 10% 8% 8% 3.0% 10% 7% 1.0% 6% 5% 6% -1.0%
5%
-3.0%
0% -5.0% VALUE-DRIVEN APPROACH EFFICIENT PLATFORM 2016 2017 2018 2019 TO BUSINESS Market growth (YoY) Compass growth (YoY) Very low and stable cost/income (~30%) New production driven solely by risk-adj returns Compass market share Direct distribution growing at variable cost Margin resiliency and profitability preserved Consumer credit ranking¹ (new business, €bn, 2019) BROAD PRODUCT CAPABILITIES BROAD & INTEGRATED BEST-IN-CLASS SERVICE DISTRIBUTION NETWORK UCI 12.3 Findom. 9.4 Compass branches 5,000 €6.4bn new loans, 80% repeat business 172 Compass 3rd parties bank 6.9 branches Agos 6.0 Personal Compass / Special loans Compass Quinto Deutsche 5.9 purpouse 12,600 47% agencies 14% 89 Post offices ISP 4.3 Salary Online business UBI 3.9 guarenateed 200 Cards Cars Credem 7% 39,000 Partnerships/JVs 2.3 15% 17% Dealers Fiditalia 1.3 (car/retail) Finitalia Direct business Indirect business 1.2
21 1) Source: Assofin. New statistics do not include vehicle credit …WITH THE ABILITY TO GROW STEADILY TEMPORARY SLOWDOWN IN FY20 ONLY DUE TO COVID-19 Consumer Banking Section 2.b
Since 2007 Compass’s loan book has tripled… … as have its revenues (now > €1bn) … Loan growth halted only due to Covid outbreak €bn €m
+3x +3x 1,071 13.2 13.0 996 1,027 12.5 936 11.8 873 11.0 10.4 800 9.3 9.6 687 713 713 8.8 9.1 605 638 8.4 8.1 8.3 592 Linea 379 acquisition 322 3.7
J07 J08 J09 J10 J11 J12 J13 J14 J15 J16 J17 J18 J19 J20 J07 J08 J09 J10 J11 J12 J13 J14 J15 J16 J17 J18 J19 J20
…while careful risk approach has kept CoR under control… …with net profit up 10x: ROAC ~30% Temporary increase in FY20 due to Covid €m, bps €m, % 470 463 550 420 415 411 413 450 +10x
370 372 361 354 347 360 332 336
320 350 315 297 243 247 270 185 258 199 250
220 154 170 150 95 97 120 66 82 50 59 32 39 41 70 22 145 224 298 337 302 311 331 438 413 354 276 242 238 325
20 -50 J07 J08 J09 J10 J11 J12 J13 J14 J15 J16 J17 J18 J19 J20 J07 J08 J09 J10 J11 J12 J13 J14 J15 J16 J17 J18 J19 J20
LLPs CoR 22 OPEN TO STRATEGIC CHANGES IF THEY MAKE SENSE
Consumer Banking Section 2.b We have evaluated certain strategic options and rejected them when suboptimal
M&A? Compass has been always monitoring domestic and international markets while keeping strong discipline: Commercial agreement pursued in domestic market and preferred to asset purchase Foreign markets scouting both on developed markets and emerging ones. Exclusivity agreement achieved with BFI in Indonesia in 2018 to exploit a second high growth market. Acquisition put off due to Covid disruption on relative valuations
Merger with CheBanca!? CheBanca! is affirming as an Affluent Wealth Manager, making any option based primarily on a retail funding merger between CheBanca! and Compass a very poor strategic choice, due to Completely different customer base, with different needs, no industrial synergies, brands dilution and possibility of negative synergies due to lower positioning of Compass customers base compared with CheBanca! ones Funding mix not improved by the merger from an ALM point of view (A&L durations, cost of funding, etc.)
Stand alone strategy as a way to optimize Funding? Compass today has a well-balanced funding mix: roughly 50% is already external to MB group (ABS regularly placed on the market, ABS retained used as collateral for TLTRO); the remaining 50% (€6.4bn) is made up of intergroup loans with MB Group Treasury. Funding mix aligned with international practice Compass standalone unsecured funding would be sub-optimal due to absence of rating, lack of dedicated investor base for unsecured transactions, potential higher cost of funding and lower flexibility compared to MB
23 Agenda
Section 1. Group
Section 2. Divisions
Wealth Management
Consumer Banking
Corporate & Investment Banking
Principal Investing/Ass. Generali
Holding Functions MEDIOBANCA CIB: THE CORE BUSINESS…
Corporate & Investment Banking Section 2.c
Corporate & Investment banking is Mediobanca DNA We have reinforced leadership in Italy and materially enhanced international profile, with a client driven approach We have been able to constantly manage a challenging macro and competitive scenario
Since the foundation in 1946, Mediobanca became close to the most important Italian industrial families, supporting the growth of their businesses also through equity investments. Mediobanca worked with Italian corporates in their restructuring, privatization and internationalization processes, easing their access to capital markets. The leadership on the domestic market has been reinforced, while important diversification was achieved on international market since 2004: offices have been opened in Paris (2004), New York (2006), Madrid (2007), Frankfurt (2007) and London (2008). In 2019 Mediobanca strengthened its presence in France through the partnership with Messier Maris & Associés
In recent years MB CIB has delivered resilient revenues (~€600m) and business profitable at all times (ROAC 10-15%), which have outperformed the IB average, by: Leveraging on its distinctive positioning in client-driven business Enlarging business diversification by geography (F, S, UK), product (Capital Market Solutions, factoring , NPLs purchase and management business) and customer base (increasing focus on mid caps) Preserving excellent asset quality with enhanced capital allocation (AIRB adoption in 2018) and tightened risk appetite (reduction of large exposure and LBOs operations, improved rating profile), confirmed also in Covid era Controlling costs (cost/income ratio below 50% at all times)
In BP19/23 CIB is clearly addressed as a core business, with strategy focused on K-light businesses and enhancement of distribution and Group synergies in mid caps, private banking and recently-acquired MMA
25 … A UNIQUE INDEPENDENT PLATFORM WITH NO DIRECT PEERS
Corporate & Investment Banking Section 2.c
SOLID AND WELL DEFINED MARKET POSITIONING KPIS
Mediobanca distinctiveness Strong solution Strong brand recognition and capabilities across the full trustworthiness CIB product offering Client-driven business DISTRIBUTION PLATFORM Boutique-type approach UK, GERMANY & US Synergic with Private Banking Steady profitability with high revenue diversification (mix of capital light and intensive business) low gearing Top 3 M&A boutique excellent asset quality in France with more than 200 deals since Room for k optimization inception 1st in Italy M&A with >100 deals in last 3Y Where we are not present and don’t plan ECM to change: with 30 deals in sizeable trading books/activities last 3Y high risk appetite in debt underwriting
Top 10 in M&A in Spain with more than15 deals in last 3Y
26 A FLEXIBLE, CLIENT DRIVEN MODEL IS ‘THE RIGHT’ MODEL TO MAXIMISE RISK/RETURNS Corporate & Investment Banking Section 2.c
European Bulge Brackets M&A Fee Evolution ($m) Although bulge-brackets continue to top Mkt 3,8% share 3,5% 2,5% 2,8% 3,4% 2,0% 2,8% 1,6% league table rankings, boutiques have been gaining a higher share of advisory driven by the
1,154 1,113 following factors: 1,018 914 857 more flexible and efficient in terms of its 763 642 structure and operation 527 more personalized, independent advice bound by less regulation and supervision
Credit Suisse Barclays Capital UBS Deutsche Bank AG Boutiques/Independents have been expanding their product expertise to encompass a broad 2011 2018 range of other advisory mandates such as Boutique Advisory Firms M&A Fee Evolution ($m) restructuring advisory, capital markets advisory, and shareholder activism advisory Mkt 2,3% share 4,0% 2,3% 3,1% 0,9% 2,2% 1,5% 2,0% 0,8% 1,3% As a result, revenues are less dependent on the pure M&A cycle, with some segments, such as 1,284 restructuring, performing at their best when the 989 M&A cycle is at its weakest 687 706 721 657 445 404 284 236
Lazard Rothschild Evercore Jefferies & Co Houlihan Lokey Partners Inc
2011 2018
27 Source: Thomson Reuters MB CIB LEADING POSITIONING REINFORCED IN M&A…
Corporate & Investment Banking Section 2.c
Selected M&A Large Corp Transactions since July 2019
Ongoing Ongoing Ongoing March 2020 September 2019 Mediobanca M&A team has been involved in most industry-shaping deals of 2020 in Italy and Tower Undisclosed €400m € 6,1bn (EqV 100%) € 573m €11bn is fast growing in France thanks to MMA Public Exchange Offer launched Acquisition of 49.07% stake in by Intesa Sanpaolo on all UBI Disposal of Violetta Caprotti stake Acquisition of €570m hotel Integration of INWIT and Vodafone Banca ordinary shares in Esselunga portfolio from Värde Partners Italia Tower Offshore LNG Toscana by Snam Intesa Sole Financial Advisor Sole Global Coordinator and Financial Advisor to Financial Advisor to Increasing presence in financial sponsors & mid Bookrunner of BPER rights issue Violetta Caprotti Värde Partners Financial Advisor to INWIT Financial Advisor to Snam corporate transactions Selected M&A Mid Corp Transactions since July 2019
March 2020 November 2019 September 2019 September 2019 July 2019 Improved footprint in Europe
Undisclosed €75m Undisclosed €68m ~150m
CBG disposal to Acquisition of ABB’s solar inverter Acquisition of La Pavoni by SMEG Acquisition of Disposal of AMF to Alpha Private business by Fimer Xenon Private Equity FT System by Antares Vision Equity
Financial advisor to Fimer Financial Advisor to CBG Financial Advisor to Smeg Financial Advisor to Antares Financial Advisor to A.M.F.
Selected M&A Sponsors Transactions since July 2019
June 2020 February 2020 August 2019 September 2019 July 2019 M&A Italy FY20 – Ranking by Deal Value1
20.3 19.8 $bn, Deal Value Undisclosed Undisclosed €822m £68.4m Undisclosed Acquisition of Sorgenia by F2i Partial Tender Offer launched by 17.2 and Asterion and contribution Acquisition of a controlling stake Acquisition of Solvia Desarrollos Investindustrial on 3% of the share Clessidra acquisition of a 80% stake Inmobiliarios by Oaktree of Veronagest and San Marco in Engineering by Bain Capital capital of Aston Martin Lagonda in the share capital of L&S Light Bioenergie Financial Advisor to Sole Financial Advisor to F2i and Financial Advisor to 14.3 Financial Advisor to Bain Capital Financial Advisor to Oaktree Clessidra SGR Asterion InvestIndustrial 12.9 12.3 11.4 11.3 10.7 Selected M&A International Transactions since July 2019
June 2020 May 2020 February 2020 December 2019 December 2019
5.4
€2,4bn €515m Undisclosed €30bn €260m Disposal of 80% of Eurobank Financial Planning Services and Has announced the acquisition of Acquisition by Cellnex of a portion of Mezzanine and a portfolio of Power Generation DWS Infrastructure Sale of the Merger of Equals 1,500 telecom towers from Junior Securitization Notes of the and Supply assets from EDP Arenales CSP Solar Plant to Cubico Orange in Spain €7.5bn multi-asset NPE Sustainable Investments Securitization to doValue MB UBS GS IMI Equita KPMG BofA JPM ROTH MS Financial Advisors to Eurobank Exclusive Financial Advisors to Total Sell-side financial advisor to DWS Lead Financial Advisor to PSA Financial Advisor to Cellnex
28 Source: Refinitiv as of June 2020 – Any Italian involvement …AND IN CAPITAL MARKETS
Corporate & Investment Banking Section 2.c
ECM Italy FY20 (Bookrunner)
Mediobanca Capital Markets teams successfully 33.3% 33.3% completed several major transactions for both Italian 29.2% and international clients 25.0% Mediobanca has been awarded the “best Italian 20.8% 20.8% ECM bank of the year” prize by Global Capital for the 16.7% 16.7% fourth year in a row and was recognized as the best
Equity House for US, UK and European funds who want 8.3% 8.3% totalpriced deals
to access top Italian issuers #of dealspricedaspercentage of
MB GS BofA IMI UCG Citi JPM HSBC UBS UBI
Selected DCM Transactions since July 2019 DCM Italy FY20 (Bookrunner)
May 2020 Social Housing February 2020 January 2020 October 2019 September 2019 Bond 25.9%
Tender offer on: Inaugural Green Bond: £ 495m 6.416% callable in Feb-2022 Senior dual-tranche: € 750m € 750m 10.125% callable in Jul-2022 € 750m € 1,000m € 1,250m 7.750% callable in Dec-2022 € 1,000m 1.700% 60.5NC5.5 1.250% May 2026 1.000% Senior Unsecured Bond Senior Preferred Bond 19.8% Green Hybrid Bond Inaugural Green issue: due February 2030 0.300% October 2026 € 1,000m due July 2080 € 750m Subordinated Tier 2 Bullet Notes 18.3% 2.000% May 2031 2.124% due October 2030 Dealer Manager & Joint Joint Bookrunner Joint Bookrunner 16.2% Joint Bookrunner Joint Bookrunner Bookrunner 14.2% 13.2% since July 2019 12.2% 12.2% 11.7% Selected ECM Transactions 10.7%
Italy 2020 Italy 2020 Italy 2020 Italy 2019 Spain 2019 totalpriced deals
€ 500m € 46m € 562m € 300m € 2,500m
Rights Issue #of dealspricedaspercentage of Convertible Bond ABB ABB Rights Issue € 850m Convertible Bond Joint Bookrunner Joint Bookrunner Joint Bookrunner JGC & JBR Joint Bookrunner UCG IMI BNP SocGen MB CASA JPM BAR GS BofA
29 Source: Dealogic, Bond Radar as of June 2020 – No self deals ….DELIVERING SOUND BUSINESS RESULTS
Corporate & Investment Banking Section 2.c
Revenues resilient High ROAC, enhanced by lower K GROWTH & absorption 625 636 631 627 620 QUALITY 16% 15% 14%
14% 13%
Revenue resilient 12% 11% 10%
10% K optimization ongoing 8%
6% Asset quality excellence 4% AIRB Net NPLs/Loans: 1.7%¹ with UTPs in reduction 2%
0% Net Bad Ls /Loans: zero¹ 2016 2017 2018 2019 2020
CIB revenues client driven and …by geography (~40% non-domestic) diversified by product … Advisory DIVERSIFICATION 20% & EFFICIENCY Non- Domestic Lending domestic Client driven activity with 62% 33% 38% diversified fee income €0.6bn €0.6bn stream CapMkt 25% Cost/income: 48%
Specialty Prop Finance Trading 20% 2% 30 1) Excluding NPLs purchased by MBCS Agenda
Section 1. Group
Section 2. Divisions
Wealth Management
Consumer Banking
Corporate & Investment Banking
Principal Investing/Ass. Generali
Holding Functions PRINCIPAL INVESTING: AG LARGE BUT VALUABLE INVESTMENT
Principal Investing Section 2.d
Principal Investing is the division gathering all equity exposure From 2002 to 2017, almost all portfolio of stakes was sold (€6.2bn with €1.2bn in capital gains), reducing capital absorption and business volatility Only 13% stake in AG has been retained as AG is a strong contributor in terms of EPS/DPS/Capital.
Assicurazioni Generali REVENUES/EPS STABILIZER PROFITABLE INVESTMENT Double-digit ROAC1 13% AG stake retained as AG contribution to AG contribution to Group revenues Group net profit Phased-in 19% Profitable investment 15% Capital created through MB organic Fully loaded growth has been higher than expected 11% 11% 11% Regulation has evolved favourably: Danish 35% compromise extended until 2024 13% FY16 FY19 BP23T
Book Value (as at June 2020, € bn) CAPITAL-ACCRETIVE with significant revenue READILY AVAILABLE contribution CAPITAL-SOURCE Ass.Generali AG revenues pro-rata €m 3.2 320 304 255 264 280 NO PRESSURE Other FROM REGULATION investments (Danish Compromise extended) 0.7
FY16 FY17 FY18 FY19 FY20
1) Fully loaded, i.e. without Danish Compromise 32 EQUITY STAKES DISPOSED SINCE 2002
Principal Investing Section 2.d
Burgo Capitalia Ciments Francais Commerzbank Burgo Ferrari Delmi FIAT FIAT Finmeccanica Gemina Gemina Italmobiliare HdP Italmobiliare Pirelli Intesa BCI RCS RCS Italmobiliare Santè La Fondiaria Assicurazioni Sintonia Lucchini Telco Mediolanum Olivetti Pirelli Sai Tirrenia Navigazione
Main equity stakes Main equity stakes Main equity stakes as at June 20021 as at June 20091 as at June 20171
33 1. Excluding Assicurazioni Generali Agenda
Section 1. Group
Section 2. Divisions
Wealth Management
Consumer Banking
Corporate & Investment Banking
Principal Investing/Ass. Generali
Holding Functions HOLDING FUNCTIONS
Holding Functions Section 2.e
The significant growth of the Group in the last ten year has entailed a growth of central functions. Such central costs were part of the CIB division cost base due to the fact that historically CIB has always been in the parent company. In 2013 the “Corporate Center” (CC) was created to avoid CIB to bear costs not strictly related with its activity separating some central group costs, to include resolution costs and some non core assets whose portfolio was running-off (leasing). The creation of a CC has been also supported by the Regulators in order to facilitate a centralized monitoring of significant indicators (i.e.: liquidity) and to efficiently run the planning, direction and control of the business lines. In 2016 the CC turned to Holding Function as all the activities run at Group level (ALM/Treasury) entered the perimeter.
Corporate Centre - OLD Holding Functions - CURRENT
Leasing Other Leasing Other Intercompany Intercompany Some central costs ALM/Treasury Funding Some central costs Liquidity Central direction costs AFS/HTM portfolio
Significant differences in composition (variability in terms of activities, amount of group revenues, costs and LLPs) and size of banks’ corporate centers (low flexibility of central function costs due to scale) make direct peer comparison of Holding Functions based only on disclosed information difficult and misleading. MB Holding Functions does not include significant NPE/non-core asset management divisions, while some major Italian and foreign banks does (with significant LLPs accounted by their corporate centers).
35 HOLDING FUNCTIONS
Holding Functions Section 2.e
Today Holding Function include: centralized common corporate functions (IT, Middle and Back office, Accounting, HR), control functions (Risk Management, Group Audit Unit and Compliance), staff and senior management, Group Treasury & ALM including banking book securities and non-core activities (SelmaBPM leasing, Spafid Connect).
Centralized treasury maintains continuous markets access in order to minimize the cost of funding and ensure funds transferability within the Group (according to the Funds Transfer Pricing (FTP) model whose policy and disclosure are managed according to best international standards and whose Framework is approved and validated by ECB), manages liquidity risk ensuring full compliance to Regulatory requirements, optimizes collateral management maintaining appropriate asset encumbrance levels, controls intra-Group exposures, ensures cash flows and intraday liquidity management.
In the last 4Y FTEs have increased (from 769 in 2017 to 817) as a result of the centralization of certain common corporate functions (Compliance, AML, Accounting, HR) and the Banca Esperia merger (which added 62 FTEs). On a like-for-like basis gross FTEs have decreased
Some corporate functions costs are charged back to the business units on a pro rata basis according to FTEs time allocation (#224 FTEs or 30% of total HF staff)
Holding Function cost base, stable notwithstanding the aforementioned staff evolution, has steadily decreased in relative terms.
36