The Italian NPL market: What’s next…?! · The Italian market for Non Performing Exposures...

$: The Italian NPL market: What’s next…?! · The Italian market for Non Performing Exposures (“NPE”) over WKH \HDU DQG WKH UVW PRQWKV RI PHW H[SHFWDWLRQV LQ terms of vitality$
The Italian NPL marketWhat’s next…?!

June 2018www.pwc.com/it/npl

The Italian market for Non Performing Exposures (“NPE”) over

terms of vitality and fervor. With regard to Bad Loans, volumes

terms of NBV), has been driven mainly by a few mega deals

GACS (supported by the Italian Government guarantee on the

surpassing the level of Bad Loans in terms of NBV (€66 billion vs

in the NPE provisions within the Italian banks led by the

Over the last eighteen months, the real trendsetter of the

players.

Italian banks (e.g. the platform of MPS, Carige and Intesa

for further platform disposals, mainly driven by the future

represent the evolution of the traditional banking business

within the Italian banking system.

reshaping their operating model to progress towards a further

Italian banks in the near future.

opportunities and new potential and innovative initiatives. Thus we wonder what’s next…?!

Foreword & Content

Fedele PascuzziBusiness Recovery Services [email protected]

Pier Paolo MasenzaFinancial Services Deals [email protected]

Vito RuscignoCo-Head [email protected]

Alessandro BiondiCo-Head [email protected]

4 | The Italian NPL market - What's next...?!

Content

Macroeconomic Scenario

Italian Real Estate Market

Legal and regulatory framework update

Italian NPL Market

Italian Banks overview

Focus on UtP Italian Market

The Servicing Market

Reulatory changes

Recent market activity and outlook

Appendix

5

12

16

20

27

52

55

The terms of NPL (“Non Performing Loans”) and NPE (“Non

released by ECB – Banking Supervision*

* “Guidance to banks on non-performing loans (March 2017)” by ECB, par. 1.2, pag.6 “Scope of this Guidance”and par. 5.1, pag. 47 “Purpose and Overview”

PwC | 5

Macroeconomic Scenario

Key Message:


moderate improvements in the labour market. During the following months,

sentiment has suggested that this

growth is set to moderate slightly

terms of trading relations between the

to lose some strength due to the

During 2017, European inflation

in the labour market, the Italian

Chart 1: EU main economic drivers

Chart 2: Italian main economic drivers

Source: PwC analysis on European Economic Forecast Autumn 2017. Unemployment rate as a % of total labour force, current account balance and budget balance as a % of GDP.

Source: PwC analysis on European Economic Forecast Autumn 2017. Unemployment rate as a % of total labour force, current account balance and budget balance as a % of GDP.

GDP (%) Inflation (%) Current Account (% GDP)

Unemployment rate(% total labour force)

Budget Balance(% GDP)

2017 2018F 2019F

2.3 2.1 1.9 1.7 1.71.7 1.8 1.8 1.8

7.8 7.3 7.0

-1.2 -1.1 -0.9

GDP (%) Inflation (%) Current Account (% GDP)

Unemployment rate(% total labour force)

Budget Balance(% GDP)

2017 2018F 2019F

1.31.51.0 1.4 1.2 1.5

11.310.910.5

2.5 2.5 2.3

-2.1 -1.8-2.0

PwC | 7

Chart 3: Total investments volume trend

Table 1: Government Gross Debt Ratio per country

Source: PwC analysis on European Economic Forecast Autumn 2017.

Source: PwC analysis on European Economic Forecast Autumn 2017.

notwithstanding robust import

only marginally to growth over the next 2 years. In Italy the surplus is

In the first half of 2017, higher

The improved outlook for nominal GDP growth and low interest rate levels generate favourable

in almost all Member States (for

Government Gross Debt Ratio (% GDP)

2014 2015 2016 2017 2018F 2019FTrend

2018-2019F

Italy 131.8 131.5 132.0 132.1 130.8 130.0

EU 88.2 86.1 84.8 83.5 81.6 79.8

Spain 100.4 99.4 99.0 98.4 96.9 95.5

France 95.0 95.8 96.5 96.9 96.9 96.9 =

UK 87.4 88.2 88.3 86.6 85.3 84.2

Germany 74.6 70.9 68.1 64.8 61.2 57.9

2014 2015 2016 2017 2018F 2019F

EUItaly

3.53.0

-2.3

3.43.8

3.73.1

2.71.9

2.8 2.5

3.8

-4.0

-2.0

0.0

2.0

4.0


Italian Real Estate Market

Key Message:

for investment.

PwC | 9

Volume of Real Estate transactions in 2017

In 2017, the Italian real estate market

trend, driven mainly by sales of residential and industrial properties.

Table 2.

showed the greatest positive results,

followed by the Centre and South with

See Table 3.

During 2017, non residential asset

for a small proportion of the total,

registering the highest growth rate, Table 4.

garages, basements and parking spots)

Table 2: Italian NTN1 comparison by sector

Source: PwC publication “Real Estate Market Overview – Italy 2017”. 1. NTN is the number of standardized real estate units sold, taking into account the share of the property transferred. 2. Appurtenances comprehend properties such as basements, garages or parking spots.

Asset typeQ1

2016Q2

2016Q3

2016Q4

2016Q1

2017Q2

2017Q3

2017Q4

20172016 2017

Delta (%) 2016-2017

Residential 115,194 143,298 123,476 146,896 121,972 145,527 122,373 152,608 528,865 542,480 2.6%

2,025 2,413 2,510 3,000 2,362 2,486 2,584 2,922 9,946 10,354 4.1%

Retail 6,776 7,598 7,188 9,024 6,215 7,176 6,340 8,384 30,586 28,115 -8.1%

Industrial 2,121 2,897 2,565 3,704 2,329 2,996 2,894 3,818 11,287 12,038 6.7%

Total 126,116 156,206 135,738 162,624 132,878 158,186 134,191 167,732 580,684 592,987 2.1%

Appurtenances2 87,554 110,015 94,007 119,427 85,291 101,566 85,386 111,646 411,003 383,889 -6.6%

Other3 10,792 13,400 12,726 15,660 12,663 14,464 12,661 16,963 52,578 56,751 7.9%


Table 3: Residential NTN by geographic area

Source: PwC publication “Real Estate Market Overview – Italy 2017".

Area Region Year 2015 Year 2016 Year 2017Delta (%)

2015-2016Delta (%)

2016-2017

North

Provinces 72,648 89,901 93,060 23.7% 3.5%

No Provinces 157,819 192,015 198,394 21.7% 3.3%

Total 230,467 281,916 291,454 22.3% 3.4%

Center

Provinces 45,425 51,577 53,027 13.5% 2.8%

No Provinces 49,041 58,159 58,805 18.6% 1.1%

Total 94,466 109,736 111,832 16.2% 1.9%

South

Provinces 33,931 38,921 40,385 14.7% 3.8%

No Provinces 85,771 98,292 98,809 14.6% 0.5%

Total 119,703 137,214 139,194 14.6% 1.4%

Italy

Provinces 152,004 180,400 186,472 18.7% 3.4%

No Provinces 292,632 348,465 356,008 19.1% 2.2%

Total 444,636 528,865 542,480 18.9% 2.6%

Table 4: Non residential NTN by geographic area

Source: PwC publication “Real Estate Market Overview – Italy 2017”.

Q1 2017 Q2 2017 Q3 2017 Q4 2017 2016 2017Delta (%)

2016-2017

North 1,385 1,455 1,528 1,777 6,096 6,145 0.8%

Center 573 527 541 586 1,969 2,227 13.1%

South 404 504 515 559 1,881 1,982 5.3%

9,946 10,354 4.1%

NTN YE 2017 Retail Q1 2017 Q2 2017 Q3 2017 Q4 2017 2016 2017Delta (%)

2016-2017

North 2,843 3,400 3,081 4,052 15,003 13,376 (10.8%)

Center 1,434 1,629 1,485 2,002 6,822 6,550 (4.0%)

South 1,938 2,147 1,774 2,330 8,761 8,189 (6.5%)

30,586 28,115 (8.1%)

NTN YE 2017 Industrial

Q1 2017 Q2 2017 Q3 2017 Q4 2017 2016 2017Delta (%)

2016-2017

North 1,536 1,997 1,919 2,620 7,344 8,072 9.9%

Center 381 501 424 622 1,871 1,928 3.1%

South 412 498 550 577 2,073 2,037 (1.7%)

11,287 12,038 6.7%

PwC | 11

Chart 5: Investments in the non residential Real Estate industry – Asset type

Source: PwC publication “Real Estate Market Overview – Italy 2017”. *”Other” includes banks, public administration and sovereign funds.

Investments in the non residential Real Estate market

demand for Italian real estate. The

2017, the best year ever for Italian real

level of €10 billion in 2007.

The strong growth was driven by the

in 2016), in favor of other types of

over the same period. Industrial

obliges the investors to widen their

value added operations.

key markets for investments,

total investment volume in 2017,

have adapted their strategies to

Chart 4: Investments in the non residential Real Estate industry - Investor type

Source: PwC publication “Real Estate Market Overview – Italy 2017”.

2010 2011 2012 2013 2014 2015 2016 2017

73%

27%

74%

26%

30%

70%

22%

78%

27%

40%

73%60%83%

17%

413

4,383

1,744

5,130

5,221

8,100 9,100

11,100

Italian investors Foreign investors Total investments (€m)

30%

70%

Tourist

Mixed

Other*

Retail

Offices

Industrial

44%

35%

12%

10%

5%

22%

16%

25%

7%

7%

12%

2017

20165%

€9,100 mln

€11,100 mln


Constant waves of regulatory evolutions are putting the

players under pressure

PwC | 13

The regulatory framework is on an ongoing evolution

manner.

Calendar Provisioning (ECB Addendum) vs European Commission Proposal

the shaping of the institutions’ strategy and operating

ECB NPL Guidelines (the final addendum was published

ECB, the European Commission proposal is a Pillar 1

Guidelines on NPL Management for the Less

final version of the NPL Guidelines addressed to the

Ongoing regulatory pressures

Key potential impacts of the Addendum

Calendar Provisioning (ECB Addendum) &A

C

B

B

D

A

Increased capital / P&L charges for the banks,

amount of the loan.

Acceleration of the recovery

levels.

Increase in the number of disposal operations impairment levels as well as the level of sustainable losses.

Potential reduction in

in the number of disposal operations and

potential NPL buyers.


IFRS 9 Adoption

throughout the year as published by Bank of Italy (Bank of

Directive on credit servicers and credit purchasers

C

D

Potential impacts of the IFRS 9 First Time Adoption

•••

Key elements of the directive proposal

• Requirements for credit servicers authorization:•

•

••

• Obligation for a public register set-up

• Contractual relationship between credit servicerand creditor. Written agreement outlining:••••

• Rules for outsourcing.

• Provision of cross-border services.

• Data Templates: EBA shall develop data standards for

• Penalties.

• Supervision: At least yearly with the extend based

PwC | 15

Key Potential impacts of the IFRS 9 FTA

Capital impact* Strategic impact Business processes impact• ECB

performed by the ECB a 40bps

• Bank of Italy

institutions, while for the less

47 bps.

• Client selection: Exposures will be more vulnerable to deteriorating status migration.

• Collateral Management:

of a Stage migration.

• Duration: The probability of default of the exposures is potentially greater with the

same exposure.

• Originationa forward looking view on loan origination.

• Decision making powers.

• Pricing Risk – Adjusted models: will need to be adjusted to

• Credit monitoring

• People Managementresponsibility will fall on the retail network.


Challenger Banks value proposition Key Message:

PwC | 17

Overview

The traditional banks seem to be unsuited to revive the situation as: •

•

• the traditional banking system is unable to provide

•traditional banks.

banking system with innovative models, mostly based on

•

•

•

•

Chart 6: Some attractive aspects of challenger banks

+20% -30% +15% +2%

ROECost Income

ratioDividend Pay Out

Divident Yield

Traditional Bank

Challenger Bank


The details of the target segments where to focus the Value Proposition:

The potential return and capital absorption of the vertical segments:

Loans (“mutui in asta”)

Positioning on

(residential and

Development a targeted

to support the

Development of

lending.

Consumer Loans

Leverage on agents network to

(potential upside through digital

Small Business Lending

Leverage on digital

and network of bankers to setup

the business unit.

Over 60 Loans

Leverage on agents network

to setup the

parties providers for operating

Working Capital

Management

Challenger Bank

SME Lending

Consumer Loans Salary

Asset Management

& Digital Payments

€ 559 b IFRS9 will enhance

emerging.

+ 5000 new SMEs+9.7%+7.8% SME new investments

Low Capital Absorption if eligible for the Central Warranty Government

40% of the needed in

10 operations of the biggest independent servicing platforms closed

+ 11,6% of loans are granted by

+9.8%+8.8%

Low Capital Absorption

Source of funding alternative to traditional banks, with higher deposit rate thanks to a lower

Bancassurance services provided

PwC | 19

Key Success Factors

National Entrepreneurial initiatives – , the setup of the right

during the setup of the initiative:

•

•

•

•

•


Italian NPL Market

Key Message: NPL volumes in the Italian market

illustrate this positive trend.

PwC | 21

Asset quality

Chart 7

Chart 8 demonstrates that the net Bad Loans amount followed the same positive trend that invested the Italian

Chart 7: Gross NPE and Bad Loans trend

Chart 8: Net Bad Loans Trend

Source: PwC analysis data of ABI Monthly Outlook. Data referred to the Italian Banking system only (excluded Cassa Depositi e Prestiti).

Source: PwC analysis data of Bollettino Statistico di Banca d'Italia and ABI Monthly Outlook Data referred to the Italian Banking system only (excluded Cassa Depositi e Prestiti).

4259

78

201020092008 2011 2012 2013 2014 2015 2016 2017

107

156

33

9 5766

74

91

184200

200

109

131117

165

94

1612

13

21

18

12 14 7

2.5%

4.9%

3.5%

7.8%

4.6%

9.3%

6.3%

11.3%

7.5%

14.3%

9.8%

17.8%

11.8%

21.0%

12.9%

22.0%

13.0% 11.0%

21.1% 17.6%

324341326

283

237

194

157132

85

CAGR: +22%

CAGR: -12%

5

125

127

264

Gross NPL / Loans to Customers (%)Total NPE (€bn) Gross Bad Loans / Loans to Customers (%)

Bad Loans (€ bn) Unlikely to Pay (€ bn) Past Due (€ bn)

Net Bad Loans (€bn)

Net Bad Loans/Loans to Customers (%)

Bad Loans coverage ratio (%)201020092008 2011 2012 2013 2014 2015 2016 2017

24

3947

60

60

8084

89 87

1.4%

42.9%

34.0%39.7%

43.7%

50.3% 48.7%

2.3% 2.8% 3.5% 3.8% 5.4% 5.7% 5.6% 4.3%

54.0% 55.6% 56.5%61.0%

62 64

5.0%


• the breakdown of Gross Bad Loans shows that Lombardy and

• at the same time, these two regions

• the northern regions have a lower

to the ones in the Centre and South

•

• at the end of 2017, the “Corporate

represent the greatest share of

and followed by the "Consumer"

Chart 9a: Breakdown of Gross Bad Loans by region* (YE 2017)

Chart 9b: Breakdown of Gross Bad Loans Ratio by region* (YE 2017)

Source: PwC analysis on data of “Bollettino Statistico” of Bank of Italy. * Unique percentage for 1) Valle d’Aosta and Piemonte, 2) Abruzzo and Molise, 3) Puglia and Basilicata.

Source: PwC analysis on data of "Bollettino Statistico" of Bank of Italy. * Unique percentage for 1) Valle d’Aosta and Piemonte, 2) Abruzzo and Molise, 3) Puglia and Basilicata.

1.5%

8.9%

1.5%

9.8%

2.9%

2.5%

6.7%

1.8%5.4%

>5% - 10%

<3%

>10%

>3% - 5%

9.2%

6.0%

1.8%

11.1%

21.9%

2.0%

2.3%5.0%

6.3%

9.2%

10.5%

11.4%

9.2%

12.2%

17.1%

15.1%

10.0%

13.9%

12.0%

15.9%

16.0%

14.3%

18.0%

16.2%

16.7%

>16% -18%

<14%

>18%

>14% - 16%

PwC | 23

Chart 11: Secured Gross Bad Loans trend (% on total Bad Loans)

Source: PwC analysis on data of "Bollettino Statistico" of Bank of Italy.

Chart 10: Breakdown of Gross Bad Loans by counterparty (YE 2017)

Source: PwC analysis on data of "Bollettino Statistico" of Bank of Italy.

12%

2008 2009 2010 2011 2012 2013 2014 2015 2016

67%

11%

20%

69%

10%

20%

70%

9%

20%

70%

9%

19%

71%

8% 8% 7% 8%

18% 16% 16% 17%

73% 75% 74% 73%

Corporate & SME Small family business Consumer Other**

21%

8%

70%

2017

20%

1% 1% 1% 1% 1% 2% 2% 2% 2%1%

2008

36% 36%

38% 38%39%

42%45%

47%48% 66%

24%

8%

2%

2009 2010 2011 2012 2013 2014 2015

Corporate & SME

Counterparty

Individual

Family business

Other**

2016

50%

2017


Source: PwC analysis on data of “Bollettino Statistico” of Bank of Italy. Source: PwC analysis on data of “Bollettino Statistico” of Bank of Italy.

Chart 12

of the Italian NPL market.

On the other side, the Breakdown of Gross Bad Loans by Chart 13

Italian market is represented by exposures with a value of more than €5 million.

Chart 12: Breakdown of Gross Bad Loans by macrosector Chart 13: Breakdown of Gross Bad Loans by ticket size

3%4%

6%

12%

8%

9%

15%

12%

21%

10%

2.5mln to 5mln €

125k to 250k €

500k to 1mln € 50 to 30k €

1mln to 2.5mln €30k to 75k €

75k to 125k €

5mln to 25mln €

250k to 500k € More than 25mln €

Agriculture, forestry and fishing

Electricity, gas, steam and air-conditioning supply

Wholesale and retail trade

Information and communication

Professional, scientific and technical activities

Waste-management and remediation products

Transportation and storage

Administrative and support services

Manufacturing products

Construction

Accomodation services

Real estate

Other

3%

31%

1%1%

24%

15%

2%

5%

1%

16%2% 2%1%

PwC | 25

Focus: UtP

shows that:

•

•

and Molise, Calabria and Sardegna

Chart 14a: Breakdown of UtP by region* (YE 2017)

Chart 14b: Breakdown of UtP Ratio by region* (YE 2017)



5.6%

10.6%

7.4%

6.2%

4.2%

6.7%

6.9%

7.0%

3.9%

7.5%

8.0%

6.1%

8.3%

5.4%

5.2%

6.9%

7.6%

>7% - 9%

<5%

> 9%

>5% - 7%

2.4%

8.6%

1.2%

9.6%

2.7%

1.7%

6.2% 3.3%

0.9%

4.1%

>5% - 10%

<3%

>10%

>3% - 5%

7.6%

13.2%

27.3%

1.6%

1.7%

4.2%

3.6%


Key Message:

Chart 15).

to the previous year) (Chart 16). Moreover, this downturn is

Chart 17).

Chart 18).

Chart 15: Insolvency procedures

Chart 16: Bankruptcies by type of company

Bankruptcy

YE-2016 YE-2017

Liquidation Other procedures

-8.5%-11.3%

9.2%

-4.0%

-35.1%

-5.1%

Share capital company Partnership Others

-8.5%-11.7%

-8.2% -6.4% -6.2%

-14.4%

YE-2016 YE-2017

Source: Osservatorio su fallimenti, procedure e chiusure di imprese, Cerved.

Chart 17: Non-bankruptcy procedures

Chart 18: Liquidations by type of company

Arrangement with creditors Others

-42.3%

-29.2%-25.9%

-18.8%

YE-2016 YE-2017

Share capital company Partnership

8.5%

-11.3%

-2.0%

7.0%

YE-2016 YE-2017

PwC | 27

Italian Banks’ Overview

Key Message:2017 was a turnaround year, in terms of net

and mergers. Along with these results, the

same deleveraging attitude as well.


Recent Events

•

•

•like the struggles of Carismi, Carim and CariCesena,

previous one.

Chart 19: Net Bad Loans and Equity for the Top 10 Italian Banks

Chart 20: Gross NPE and Texas Ratio for the Top 10 Italian Banks

Souce: Financial Statements as of YE-2017. Data affected by different write-off policies.

Source: Financial Statements as of YE-2017. Data affected by different write-off policies.

12.7 11.3 10.5

4.2

119%115%104%

Gross NPE (€bn)

Texas Ratio (%)

50.352.7

23.1

45.1

105% 109%

92%

54%

88%

5.1 1.3

65%

81%

MPSISPUCG UBI BNL CariparmaBPER Pop. Sondrio CredemBanco BPM

Net Bad Loans (€billion)

Net Bad Loans Equity Ratio (%)

MPSISPUCG UBI BNL CariparmaBPER Pop. Sondrio Credem

16%

9.7

22%

72%

12.6

7.56.5

4.13.1 2.9

1.20.8

0.3

55%

41%

56% 57%

20%29%

12%

Banco BPM

PwC | 29

Chart 21: Recoveries / Gross Bad Loans for the Top 10 Italian Banks

Chart 22

Chart 23

Source: Financial Statements as of YE-2017. Data affected by different write-off policies



Recoveries (€ billion)

Recoveries / Gross Bad Loans (%)


4.6%

2.36

4.5%

3.2%1.71

0.950.68

0.460.31 0.27 0.18

0.14 0.05

6.2% 6.3%

3.5% 3.8%

6.1% 6.3% 6.1%

Banco BPM

Sales Proceeds + Losses on disposals + Recoveries (€ billion) (Sales Proceeds + Losses on disposals + Recoveries) / Gross Bad Loans (%)


11.5%

5.85

6.0%

3.3%

2.26

0.96

1.52

0.88 0.350.47

0.73 0.14 0.06

13.9%12.1%

3.9%

6.7%

24.9%

6.4% 7.1%

Banco BPM

Sales Proceeds (€ billion) Sales proceeds / (Sales Proceeds+Losses on disposals) (%)


74.0%

2.58

0.91

0.14

75.3%

91.4%

0.41 0.01 0.49

0.35

0.400.02

0.04 0.080.13

0.210.33

0.0 0.01

58.6%

96.0% 93.7%

36.7% 38.9%

0.0%

100%

Losses on disposals (€ billion)

Banco BPM

Chart 24: Top 10 Italian Banks – NPE Peer Analysis as of YE-2017

Chart 25: Top 10 Italian Banks – Bad Loans Peer Analysis as of YE-2017

Source: Financial statements as of YE-2017. Data affected by different write-off policies.

Source: Financial statements as of YE-2017. Data affected by different write-off policies.

Chart 24

10 Italian banks. As shown, the average

side, MPS shows the highest Gross

other side, Credem stands at the

vintage of the portfolio.

(Chart 25


Gross Bad Loans Ratio (%)

Average= 10.3%

Average= 61.1% B

ad L

oans

Cov

erag

e R

atio

(%)

0% 5% 10% 15% 20% 25%40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

UCG

ISP

Pop. Sondrio

MPS

BNLBPER

BPER Banco BPM

ISPCredem

Cariparma

UBI

Bubble size: Gross Bad Loans

Bubble size: Gross NPL

0 5% 10% 15% 20% 25% 30% 35% 40%

30%

35%

40%

45%

50%

55%

60%

65%

70%

Gross NPL Ratio (%)

NP

L C

over

age

Rat

io (%

)

MPS

BNL

UCG

Pop. Sondrio

Banco BPM

BPER

Average= 16.0%

Average= 49.4%

ISPCredem

Cariparma

UBI

PwC | 31

Chart 26: Top 10 Italian Banks – Unlikely to Pay Peer Analysis as of YE-2017

Chart 27: Top 10 Italian Banks – Past Due Peer Analysis as of YE-2017

Source Financial statements as of YE-2017. Data affected by different write-off policies.

Source Financial statements as of YE-2017. Data affected by different write-off policies.

Chart 26 provides a snapshot for the

0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7%0%

5%

10%

15%

20%

25%

30%

35%

40%UCG

BNL

MPS

Credem

ISP

Banco BPM

UBI

CariparmaBPER

Pop. Sondrio

Average= 17.9%

Average= 0.2%

Gross Past Due Ratio (%)

Past

Due C

ove

rage R

atio

(%

)

Bubble size: Gross Past Due

Chart 27 illustrates the Past Due

Bubble size: Gross Unlikely to Pay

Gross Unlikely to Pay Ratio (%)

Unlik

ely

to P

ay

Cove

rage R

atio

(%

)

0% 2% 4% 6% 8% 10%

13%

18%

23%

28%

33%

38%

43%

48%

UCG

BNL

MPS

ISP

UBI

Banco BPM

Pop. Sondrio

BPER

Cariparma

Credem

Average= 5.5%


Chart 28

the top 10 Italian Banks have improved

2017.

Chart 29 shows that, all the banks

Chart 28: Top Italian Banks – Bad Loans movements (YE-2016 vs YE-2017)

Chart 29: Top Italian Banks – Unlikely to Pay movements (YE-2016 vs YE-2017)



0% 5% 10% 15% 20% 25%

35%

40%

45%

50%

55%

60%

65%

70%

75%

80%

UCG

Credem

Cariparma

ISPBNLPop. Sondrio

UBI

BPER

Banco BPM

MPS

Average= 10.3%


Bad

Lo

ans

Co

vera

ge R

atio

(%

)

YE 2016 YE 2017

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%0%

15%

30%

45%UCG

BNL

UBI

ISP

CariparmaCredem

BPER

Banco BPM

Pop. Sondrio MPS

Average= 5.5 %

Gross Unlikely to Pay Ratio (%)

Unl

ikel

y to

Pay

Cov

erag

e R

atio

(%)

YE 2016 YE 2017

PwC | 33

Chart 30 illustrates the movements Chart 30: Top Italian Banks – Past Due movements (YE 2016 vs YE 2017)

Chart 31: Top Italian Banks – Relation between MarketCap/TBV and NPL Ratio


Source: Financial Statements as of YE-2017.

UCG

ISP

Banco BPM

Credem

Cariparma

UBI

BPER

MPS

BNL

Pop. Sondrio

Average= 0.2%

Average= 17.9%

Past Due Ratio (%)

Pas

t Due

Cov

erag

e R

atio

(%)

0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6% 0.7% 0.8% 0.9% 1.0% 1.1% 1.2%0%

15%

30%

YE 2016 YE 2017

0% 5% 10% 15% 20% 25%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Mkt

/ T

BV

Gross NPE ratio

CREDEM

ISP

IFIS

UCG

UBI

Pop. Sondrio

BPER

Banco BPM

Carige

Creval

MPS


Focus on UtP Italian market

Key Message:

magnitude is still huge.

PwC | 35

Our view

internal management or external management (through

ABI). ICCREA exposure as at 30/06/17.

94

17.9

11.6

53%

€bn

9.05.2

3.43.3 2.0

1.8 0.5

-10% vs. PY

19%

20.3-17% vs. PY

22%

12%

-24% vs. PY

10%

-22% vs. PY

6%4%

-15% vs. PY

2%

+1% vs. PY

4%

-17% vs. PY

2%

-11% vs. PY

0.5%

-8% vs. PY

20%

19.0

+1% vs. PY

Total UniCredit MPS UBIBanco BPM BNL BPER CredemBP SondrioCariparma OthersIntesaSanpaolo

Carige 3.1 3%

Creval 2.2 2%

ICCREA 1.2 1%

Banca IFIS 0.7 0.7%

C.R. Bolzano 0.4 0.4%

Others 10.5 11%


(merged together in Banco BPM from 1/01/2017).

UtP Coverage Ratios vs. Gross UtP Ratios

Top 10 Italian Banks featured

in 2017 vs 2016, resulting in higher

Sanpaolo, both below the average

Sanpaolo) at the end of 2017.

Chart 32: Top 10 Italian banks

1% 3% 5% 7% 9% 11% 13%10%

15%

20%

25%

30%

35%

40%

45%

50%

MPS

CREDEMCariparma

BNL

BPERUBI

UT

P C

ove

rag

e ra

tio 3

1/12

/201

7

Gross UTP ratio 31/12/2017

UCG

Banco BPM*

Pop. SondrioISP

Bubble size: Unlikely to Pay gross exposure 2017

Bubble size: Unlikely to Pay gross exposure 2016

YoY shift (FY 2016 - FY 2017)

Avg. Top 10 (30.4%)

Avg. Top 10 (5.5%)

Key Message:

PwC | 37

Inflows and outflows

Due exposures.

solutions.

Chart 33

(5%)

(13%)

(21%)

(4%) 16%

8%

9% (7%)

(13%)

(16%)

(14%) 14%

5%

15%

UtPExposure31/12/15

ToPerforming

Collected To Bad Loans Others FromPerforming

From nonNPL

OtherIn o s

UtPExposure

31/12/16

ToPerforming

Collected To Bad Loans Others FromPerforming

From OtherNPL

OtherIn o s

UtPExposure

31/12/17

(43) 33

(44)30

Out ows

Out ows

99

89

75

Rem

ain

UtP

56%Remain UtP

Rem

ain

UtP

50%Remain UtP

% ows =In/Out ow

Initial Exposure

Key Message: At the end of 2017, despite the


Our view on the available strategies for UtP

Inte

rnal

M

anagement Servicing

Loan saleInvestor’s equi

ty in

jectio

n/

underwriting o

f sen

ior

deb

t

UtPs’ adding value strategy

•

•

• • New market opportunities• Mandatory will be the transition from

• Part of the industrial management

•

• • Single names’ sale on a best offer basis

•

•

• Industrial partner to revampandestablish the underlying borrower’s

•

Key Message:

PwC | 39

Interventionarea

Adoption of short-term measures Adoption of long-term measures

Interest

• Temporary

of minor entityto be overcomewithin 24 months

• Temporarypayment ofinterest only(no capitalreimbursement)

• Excessively highinterest rates forthe debtor

•of interest rates

Instalments

•

moderate entity tobe overcome within24 months

• Temporary of

instalmentamount

• Full interestpayment

• Misalignmentbetweenrepayment planand reimbursement

of thedebtor

•amortization plan(e.g. partial, bullet,step-up)

Maturity

• Temporary

of moderate/serious entity tobe overcome within24 mo.

• “ ”for the paymentof interests andcapital

•instalments for thedebtor

• Extension of debtmaturity

Collateral

• Voluntary disposalof by thedebtor

Forbearance as a relevant measure for the proactive management of UtP

simultaneously, the sustainability of the adopted measures

Main forbearance measures(1) – Application examples

= applicable forbearance measure

(1) In addition to debt forgiveness and/or arrears capitalisation options.

In particular cases it is possible to adopt new credit facilities or debt consolidation measures

Key Message: Italian banks should improve


Servicing of UtP as a new market opportunity

Conditions to be satisfied by the Servicers for the management of UtP

% of NPE stock outsourced to specialists

New lending – Through the on going management of the existing loan contracts, servicers must secure: 1) new injection of cash (debt and/or equity) into the UtP borrowers’ capital structure, directly (e.g. challenger banks) or indirectly (through third

restructuring plans.

Management – Servicers must carry on a proactive management of the UtP borrowers on a daily basis. Essential is the relationship established with the borrowers and the knowledge of their local market.

IT Platform – Servicers must migrate the UtPs management on advanced IT platform aiming at promptly managing the relevant information about the borrowers.

Strategies – Servicers must identify the proper management strategy of the UtP borrowers through the continuous assessment of their performance, early warning indicators, KPI.

2017

Banks NPE management outsourcing

20%

>40%

10-20%UtP

5-10%UtP

2021E

2x

PwC | 41

Market transactions of UtP portfolios and single names in 2017

Key Message:

Seller Buyer € million

Chieti 2,200 (¹)

Carife

CreVal 104

CreVal Algebris Investments 245 (²)

CreVal Cerberus 105

Bain Capital Credit 750(1)

Stinger SPV Srl

CreVal 24

DeVar Claims SPV Srl n.a.

Algebris Investments

SGA

Banks' bailouts

Other transactions

(1) Mixed portfolio of UtP and Bad Loans. (2) Transaction closed in Q1 2018.


Investor’s equity injection/underwriting of senior debt

long run (industrial view).

Deal Structure Type of investor Derecognition for the bank

revamping the business throughout

performing exposures, potentially

to realise new investments. Often

underwriting the SPV notes) along with investors with different risk

Company)

through a true sale

junior notes of the SPV

through a true sale

PwC | 43

The Servicing Market

Executive Summary


Key recent dynamics

industry:

• investors entering the market. We have observed the

•

Creval, MPS, Bari, Carige and Intesa Sanpaolo deals,

•

•

Our outlook for 2018 / 2019

In our outlook for the following 12 months we see an

growth:

•

• evolution of the business and regulatory model of NPL

•

•

on the other hand by the pressure on margins that will

•

not involved in these deals.

Is carve-out the best alternative?

Creval, MPS, Bari, Carige and Intesa Sanpaolo deals, market

initiatives of Italian banking players.

improvements.

1.

2.

PwC | 45

Table 5: Main transactions in the servicing sector

2013

Italfondiario

minority stakein BCC Gestione

Cerved

AuM an

2014

Hoist Finance

from privateshareholders.

Banca Sistema

Candia & Sting from private shareh and

Cerved

and utilities

2015

Fortress Lonestar

platform with €7 bn AuM from private shareholders

Cerved

of Credito Valtellinese group

2016

Cerved + BHW Bausparkasse

partnership for the management

originated by the

Bausparkassen AG

Axactor

Sistema

Lindorff Arrow

platform

Kruk

Credit Base

doBank

Italfondiario

Dea Capital

of SPCCredit Management

2017

Kkr

Sistemia

Lindorff

Gextra, a small

doBank

Bain Capital Varde Cerved + BHW Bausparkasse

partnership extension for the management of a portfolio of loans of 1.5 €bn originated by the

Bausparkassen AG

Davidson Kempner

a mandatory tender offer

Cerved + Quaestio

platform (a.k.a.

Cerved

Popolare di Bari

Intrum/ Lindorff Credito Fondiario

Carige

H1 2018

Arrow

of Parr Credit and Europa Investimenti

IBL Banca + Europa Factor

Anacap + Pimco

majority stake in Phoenix Asset Management

Intesa + Lindorff / Intrum

for the NPL platform of Intesa Sanpaolo

Kruk Banca IFIS

approval of the regulator)


Table 6: Overview of main servicers (data at 31/12/2017) – Ranking by Revenues

highly heterogeneous organizational, industrial and operating structures. Comparing the information presented above requires a correct analysis and understanding of the competitive landscape and servicers business model. 1 Includes both owned and third parties portfolios.

4 AuM at 31/05/2018. 5 EBITDA Adjusted. 6 Debt purchasing activities are conduced via Special Purpose Vehicles.

CompanyBank of Italy

(€ million)Performing AuM

(€ billion)AuM (€ billion)11

Ebitda (€ million)Total Bad Loans1

AuM (€ billion)Other NPL AuM2

(€ billion)

doBank3 Bank 213.0 74.3 1.5 0.9 44.9 70.1

Cerved Credit Management 106 94.8 34.9 1.4 9.5 27.6

MBCredit Solutions 106 70.312 5.5 - - 28.712

Credito Fondiario Bank 41.6 6.34 1.34 1.44 42.54 n.a.

Fire 115 40.3 3.2 4.0 9.0 1.1

106/115 35.0 3.1 0.9 1.0 10.05

Guber Bank 30.9 7.9 - - n.a.

Cribis Credit Management 115 25.2 2.1 12.9 7.6 n.a.

CAF (Intrum Italy) 115 22.7 8.2 - 0.2 8.9

115 22.0 0.5 0.3 0.7 n.a.

Hoist Italia 115 21.3 6.8 - - n.a.

106 20.7 0.6 1.0 2.5 37.4 11.4

FBS 106 20.4 8.0 - - 10.1

Sistemia 115 20.3 6.5 - - 5.5

106/115 20.1 2.6 - 0.5 2.5

Parr Credit (Arrow Group) 115 17.6 0.5 0.4 - 1.0

7 115 15.0 2.1 - 0.2 4.8

115 14.6 1.7 - 1.4 5.4

115 14.4 4.0 - - 3.8

106 13.5 4.6 - - 6.4 0.5

Aquileia Capital 106/115 13.5 1.3 0.2 - n.a.

Frontis NPL 115 12.4 2.5 0.3 - 9.8

Fides 115 12.0 1.1 0.2 0.2 n.a.

106 9.2 1.0 0.3 - n.a.

AZ Holding 115 8.5 1.9 - - n.a.

CSS 115 7.5 2.2 0.4 - 0.6

Finint Revalue 115 6.9 2.8 0.6 - n.a.

115 6.4 1.0 - - 0.7

Phoenix Asset Management 115 6.0 8.9 - - 2.9

115 4.6 2.2 0.1 - n.a.

Aurora RE 115 4.2 0.2 0.7 0.2 n.a.

106 4.2 - - - 8.1 1.1

Gextra (Intrum Italy) 115 3.6 0.5 0.1 - 0.3

Certa Credita 115 2.9 0.2 - 0.1 0.59

106 2.0 1.6 - - 0.7

Bayview Italia 115 -10 3.6 - - n.a.

106 -10 - 0.8 8.4 25.6 n.a.

PwC | 47

7 Includes Credit Network Finance and Z1s.

9 EBITDA refers to 2016.

recovery strategies ("Special Servicing Oversight"). 12 Revenues and EBITDA normalized at 31/12/2017. Note: Double counting may arise when adding NPL AuM as some servicers outsource part of their portfolios to others due to capacity and/or specialization issues.

Rating

6

8

6


Table 7: Breakdown of servicers’ Total Bad Loans AuM1 (data at 31/12/2017) – Ranking by Revenues

CompanyYE 2017 (€ million)

Total Bad Loans AuM (€ billion)1

2 (%) 2 (%)

doBank3 213.0 74.3 115

Cerved Credit Management 94.8 34.9 88

MBCredit Solutions 70.37 5.5 3

Credito Fondiario 41.6 6.34 384

Fire 40.3 3.2 5

35.0 3.1 6

Guber 30.9 7.9 63

Cribis CM 25.2 2.1 18

CAF (Intrum Italy) 22.7 8.2 31

22.0 0.5 1

Hoist Italia 21.3 6.8 10

20.7 0.6 13

FBS 20.4 8.0 32

Sistemia 20.3 6.5 22

20.1 2.6 1

Parr Credit (Arrow Group) 17.6 0.5 2

5 15.0 2.1 14

14.6 1.7 13

14.4 4.0 124

13.5 4.6 310

Aquileia Capital 13.5 1.3 330

Frontis NPL 12.4 2.5 1,089

Fides 12.0 1.1 6

9.2 1.0 7

AZ Holding 8.5 1.9 7

CSS 7.5 2.2 6

Finint Revalue 6.9 2.8 11

6.4 1.0 6

Phoenix Asset Management 6.0 8.9 344

4.6 2.2 6

Aurora RE 4.2 0.2 25,620

4.2 - 5

Gextra (Intrum Italy) 3.6 0.5 7

Certa Credita 2.9 0.2 6

2.0 1.6 8

Bayview Italia - 6 3.6 59

- 6 - 10

highly heterogeneous organizational, industrial and operating structures. Comparing the information presented above requires a correct analysis and understanding of the competitive landscape and servicers business model. 1 Includes both owned and third parties portfolios. 2 Percentages are based on total NPL portfolio: breakdown for Master and Special servicing activities have not been provided.

79% 21%

51%

97%

49%

3%

99%1%

99%1%

99%1%

95%5%

95%5%

55% 45%

89%

100%

100%

100%

100%

100%

100%

100%

100%

n.a. n.a.

n.a. n.a.

11%

83%

62%

34% 66%

18%

23%

82%

77%

14% 86%

10% 90%

52% 48%

71% 29%

57%

86%

92%

43%

81% 19%

35% 65%

43% 57%

12% 88%

14%

8%

76% 24%

17%

38%

PwC | 49

Owned 2 (%) Banks2 (%) 2 (%) Others2 (%)

4 AuM at 31/05/2018. 5 Includes Credit Network Finance and Z1s.

7 Revenues normalized at 31/12/2017.

36%

63%

8%

1%

77% 23%

37% 63%

17% 83%

58%

98%

33%

99%

40% 6%

46%

43% 57%

36%

13%

21%

7%

15% 64% 20%

23% 11%58%

1%

87%

18%

38%

59%

4%

35% 6%

1% 1%

48% 52%

11%

80%

76%

64%

25% 75%

n.a. n.a. n.a. n.a.

n.a. n.a. n.a. n.a.

20%

24%

36%

27% 64% 8%

89%

1%

77% 6% 9%

17% 74%10%

58% 37%6%

18% 55%27%

35% 46%17%

30%

14%

58%13%

55% 5% 26%

100%

100%

100%

100%

100%

64%

37%

n.a. n.a. n.a. n.a.


Table 8: Geographical NPL breakdown (data at 31/12/2017) – Ranking by Revenues

In term of AuM

CompanyYE 2017 (€m)

Total Bad Loans AuM (€ billion)1 North2 Centre3 South - Islands4

doBank5 213.0 74.3

Cerved Credit Management 94.8 34.9

MBCredit Solutions 70.310 5.5

Credito Fondiario 41.6 6.36

Fire 40.3 3.2

35.0 3.1

Guber 30.9 7.9

Cribis Credit Management 25.2 2.1

CAF (Intrum Italy) 22.7 8.2

22.0 0.5

Hoist Italia 21.3 6.8

20.7 0.6

FBS 20.4 8.0

Sistemia 20.3 6.5

20.1 2.6

Parr Credit (Arrow Group) 17.6 0.5

8 15.0 2.1

14.6 1.7

14.4 4.0

13.5 4.6

Aquileia Capital 13.5 1.3

Frontis NPL 12.4 2.5

Fides 12.0 1.1

9.2 1.0

AZ Holding 8.5 1.9

CSS 7.5 2.2

Finint Revalue 6.9 2.8

6.4 1.0

Phoenix Asset Management 6.0 8.9

4.6 2.2

Aurora RE 4.2 0.2

4.2 -

Gextra (Intrum Italy) 3.6 0.5

Certa Credita 2.9 0.2

2.0 1.6

Bayview Italia -9 3.6

-9 -

highly heterogeneous organizational, industrial and operating structures. Comparing the information presented above requires a correct analysis and understanding of the competitive landscape and servicers business model. 1 Includes both owned and third parties portfolios. 2 Includes: Piemonte, Valle d’Aosta, Lombardia, Veneto, Trentino Alto Adige, Friuli Venezia Giulia, Liguria, Emilia Romagna. 3 Includes: Toscana, Umbria, Marche, Lazio.

45% 32%23%

35% 42%23%

39% 38%23%

53%7 15%33%

34% 44%22%

36% 48%16%

42% 18%40%

47% 28%25%

49% 20%31%

30% 20%50%

47% 33%19%

40% 33%27%

27% 36%38%

48% 17%35%

28% 46%26%

37% 38%25%

38% 38%24%

35% 43%21%

52% 26%22%

25% 53%22%

99%

63% 10%26%

1%

14% 72%14%

33% 33%34%

51% 32%17%

33% 25%42%

41% 43%16%

21% 21%59%

21% 43%36%

48% 6%46%

44% 25%31%

44% 34%23%

28% 55%17%

33% 36%31%

53% 19%28%

54% 27%20%

n.a. n.a. n.a.

PwC | 51

Table 9: Breakdown of servicers’ Total Bad Loans AuM1 (data at 31/12/2017) – Ranking by Revenues

Type of loan resolution - Nr of Loans

Loan Sale Loan Sale

4 Includes: Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sicilia, Sardegna.

6 AuM at 31/05/2018. 7 North includes n.a. 8 Includes Credit Network Finance and Z1s.

10 Revenues normalized at 31/12/2017.

14% 1%

1%

n.a n.a n.a

n.a n.a n.a

n.a n.a

100%

1% 99%

100%

n.a

n.a n.a n.a

n.a n.a n.a

n.a n.a n.a

n.a n.a n.a

n.a

96%

n.a n.a

n.a n.a n.a

n.a n.a n.a

n.a n.a n.a

n.a n.a n.a

85%

19% 22%58%

69% 31%

38% 62%

48% 52%

69% 31%

76% 24%

70% 30%

79% 20%

43% 11%46%

38% 35%27%

23% 11%66%

30% 47%23%

9% 91%

67%

87%13%

8%25%

50% 15%35%

50% 5%45%

63% 37%

91%

4%

9%

23% 77%

2%

2%

1%

1% 3%

10% 90%

n.a n.a

100%

94%6%

100%

2%

100%

n.a

n.a n.a n.a

n.a n.a n.a

n.a

99%

n.a n.a

100%

40% 60%

n.a n.a n.a

n.a n.a n.a

98%

6% 94%

21% 79%

98%

10%

96%

90%

13% 87%

28% 72%

50% 50%

29% 70%

30%

17% 83%

11% 40%49%

10% 10%80%

27% 25%48%

85%15%1%

35% 33%

95%

23%

5%

4% 66%

32%

75% 35%

30% 10%50%

15% 85%

3%

1%

97%

30% 70%


Recent market activity and outlook

Key Message:

manage the amount of Non Performing Loans

Italian deteriorated loans and to restore higher

PwC | 53

Compared to what has been done in previous years, Italian

looking for buyers for their deteriorated loans and managing

Moreover, the ECB Addendum to its guidelines to banks on

years from their transition to the non performing state for

Table 10: Closed NPL transactions in 2018 YTD

Date SellerVolume 2018

(€ million)Performing/Non

PerformingBuyer

2018 Q2 UniCredit S.p.A. 140 Non Performing Unsecured MBCredit Solutions S.p.A.

2018 Q2 Alba Leasing 100 Bad Loans Secured Bain Capital

2018 Q2 Banca MPS S.p.A. 24,100 Bad Loans Mixed secured/unsecured Quaestio Capital SGR S.p.A.

2018 Q2 Findomestic Banca S.p.A. 35 Non Performing Unsecured Banca IFIS S.p.A.

2018 Q2 Banca IFIS S.p.A. 40 Non Performing Unsecured Pinkerton SPV Srl

2018 Q2 Sicilcassa S.p.A. 1,700 Non Performing Secured MB Finance S.r.l.

2018 Q2 Intesa San Paolo 10,800 Non Performing Mixed secured/unsecured Intrum

2018 Q2 UniCredit S.p.A. 38 Non Performing Secured Due Securitisation SPV S.r.l.

2018 Q2 Agos Ducato S.p.A. 30 Non Performing Unsecured Hoist Finance

2018 Q2 Creval 245 Bad Loans & UtP Secured Algebris Investments

2018 Q1 55 Non Performing Secured IDea NPLs

2018 Q1 TI SPV S.r.l. 38 Non Performing Mixed secured/unsecured At NPL's S.p.A.

2018 Q1 Banca Valsabbina Scpa 15 Non Performing Mixed secured/unsecured Sole SPV S.r.l.

2018 Q1 Banca Popolare di Bari 82 Consumer Loans Consumer ViViBanca

Chart 34

5 4

19

1.5

1.2 0.1

9

64

37

Consumer Unsecured Secured Mixed Secured/Usecured Mainly Unsecured Other Total GBV

30

0.8

2012 2013 2014 2015 2016 2017 2018 YTD2.1

0.0

35.0

7.5

9.77.4

4.0 6.5

3.70.8

5.4

1.2

4.40.2

0.62.6

3.80.2

2.62.1

1.8

1.2

9.3

0.0

3.0

Source: PwC market analysis.


Table 11: Announced NPL transactions for 2018

Seller Volume (€ million) Portfolio type

UBI Banca 3,000 / 4,000 NPL securitisation Mainly secured -

Multioriginator 1,700 NPL securitisation Mainly secured Project Multioriginator

ICCREA 1,000 NPL securitisation Mainly secured -

Creval 1,600 NPL securitisation Mainly secured -

Banco Desio 1,110 NPL securitisation Mainly secured -

Credit Agricole 6,000 Bad Loans Unsecured Project Poppy

Banco BPM 5,100 NPL securitisation Mainly secured Project Exodus

Banca di Sassari 1,100 NPL securitisation Mainly secured Project Banca di Sassari

BPER 2,900 NPL securitisation Mainly secured Project BPER

Gruppo Delta 2,200 Bad loans Unsecured Project Arcade

Cariparma 435 UtP Secured Project Valery

Carige 1,400 UtP Secured Project Isabella

Carige 500 UtP Secured Project Carige

As displayed in Chart 34

San Paolo to Intrum.

PwC | 55

Bad Loans Coverage Ratio (%)

Source: Financial Statements as of YE-2017, YE-2016, YE-2015, YE-2014, YE-2013.

UCG ISP MPS Banco BPM UBI BNL BPER Cariparma Pop. Sondrio

49.0 5

3.2

53.9

51.0

34.6

39.2

38.2

21.6

21.6

26.6

24.3

11.5 13.8

13.6

0.7 0.8

0.9

0.9

Credem

37.9

29.4

19.1

28.6

34.2

33.0

14.0

0.8

YE 2013 YE 2014 YE 2015 YE 2016 YE 2017 5

.9

6.6

7.0

7.3

7.3

5.8

7

.1

8.1

8

.9

7.7

5.5

6

.5

7

.1

7

.0

7

.1

2.2

2

.6

2.7

2

.9

3.0

1.2

1

.6

1.9

2

.1

2.3

Banco BPM

18

.7 20

.82

0.4

13

.6

13

.0 15

.01

4.2

8.9

8.4 9

.71

0.4

14

.9

9.7

12

.6

7.5

6.7

7

.3

7.9

6

.2

6.5

3.4

4

.0

4.3

4

.0

4.1

2.4

2

.7

3.0

3

.2

3.1

2.5

2

.8

3.0

3

.0

2.9

1.0

1

.1

1.2

1

.2

1.2

0.5

0

.6

0.7

0

.8

0.8

0.3

0

.3

0.4

0

.3

0.3

UCG ISP MPS UBI BNL BPER Cariparma Pop. Sondrio Credem

YE 2013 YE 2014 YE 2015 YE 2016 YE 2017


YE 2013 YE 2014 YE 2015 YE 2016 YE 2017

61.8

6

2.2

6

1.0

7

3.3

6

6.2

62.5

6

2.8

6

1.8

6

0.7

6

3.1

58.8

6

5.3

63.4

6

4.8

7

7.2

41.9

4

5.9

4

2.2

67.3

5

3.8

41.6

3

8.8

3

8.6

4

5.1

4

4.8

59.1

6

2.0

6

3.3

6

4.6

5

9.7

55.0

5

6.5

5

8.2

5

7.2

59.3

55.0

5

6.5

5

7.6

5

7.9

59.5

60.9

6

1.1

6

1.9

6

3.4

6

6.1

58.2

5

8.6

6

0.8

5

9.6

6

1.1

Banco BPM




Net Bad Loans Ratio (%)

Banco BPMUCG ISP MPS UBI BNL BPER Cariparma Pop. Sondrio Credem

YE 2013 YE 2014 YE 2015 YE 2016 YE 2017

8.9

1

0.4

1

0.3

1

0.3

6

.0 9

.3

1

0.3

1

0.3

9

.6

7.8

14

.7

1

7.0

1

9.8

22

.1

2

7.0

9.0

1

1.1

11

.3

15

.8

1

1.9

6.4

7.3

7

.9

8.4

7.6

8.4

1

0.4

1

2.0

13

.0

11

.5

10

.9

1

3.3

1

4.5

1

3.9

13

.4

5.6

6.7

7.1

7.2

6

.3

4.7

6

.1

7.4

7

.6

8

.2

3.6

3

.6

3.8

3

.5

3.2

YE 2013 YE 2014 YE 2015 YE 2016 YE 2017


3

.7

4.3

4.4

3.0

2

.2

3.8

4.2

4.3

4.1

3

.1

6.8

7.1

8

.7

9.7

8

.3

5.6

6.6

7

.1

5.6

6

.0

3.9

4.7

5

.1

4

.9

4.4

3.7

4

.4

4

.9

5.1

5

.1

5.3

6

.4

6

.8

6.6

6.1

2.7

3.1

3

.2

3.2

2

.7

1.9

2

.4

3.1

3.0

3

.0

1.6

1

.5

1.5

1

.5

1.3

Banco BPM


YE 2013 YE 2014 YE 2015 YE 2016 YE 2017

8

5.5

87

.2

82

.9

77

.1

50

.3

57

.6

63

.0

63

.4

58

.4

52

.7

36

.1

4

5.3

4

6.9

4

5.8

4

5.1

11

.5

13

.6

2

6.8

30

.7

23

.1

12

.7

13

.1

13

.5

12

.5

12

.7

11

.0

12

.3

12

.9

13

.1

11

.3

10

.3

11

.0

11

.4

11

.2

10

.5

3.9

5

.0

5.2

5

.0

5.1

3.0

3

.6

4.3

4

.4

4.2

1.3

1

.3

1.4

1

.4

1.3

Banco BPM

PwC | 57


Gross NPE Ratio (%)

NPE Coverage Ratio (%)


YE 2013 YE 2014 YE 2015 YE 2016 YE 2017

4

1.1

4

2.6

40.5

28.7

2

2.0

31.1

3

3.6

3

3.3

30.0

2

6.0

2

1.0

23.1

2

4.2

2

0.3

1

4.8

6.7

7.3

1

7.8

1

2.6

1

3.1

9.3

9.5

9

.7

8.1

8

.2

6.2

6.4

6

.3

5

.8

5.4

6.4

6

.5

6.4

6

.2

5.4

2.3

3

.0

3.1

2

.9

2.8

1.8

2

.1

2.4

2

.4

2.1

0.8

0

.8

0.8

0

.8

0.7

Banco BPM


YE 2013 YE 2014 YE 2015 YE 2016 YE 2017

51.9

5

1.1

5

1.1

6

2.8

5

6.1

46.0

4

6.7

47.5

48.7

50.7

41.8

4

8.9

4

8.5

55.6

6

7.2

4

1.9

45.9

3

3.6

59.1

4

3.3

26.5

2

7.3

2

7.8

3

5.7

35.4

43.7

48.1

5

1.5

55.3

52.0

37.3

4

0.7

44.2

44.5

4

8.7

39.6

3

8.6

4

0.5

42.2

4

4.9

39.2

4

3.2

44.5

46.2

5

1.0

38.7

4

0.7

4

4.6

42.5

4

5.1

Banco BPM

YE 2013 YE 2014 YE 2015 YE 2016 YE 2017


15.6

1

6.9

16.0

1

5.6

1

0.5

1

5.4

1

7.0

1

6.6

14.8

12.0

24.5

3

1.7

34.8

3

4.5

3

7.0

9.0

11.1

21.9

25.4

19.5

13.7

1

4.6

15.2

1

4.5

1

3.0

15.9

1

8.0

19.2

1

9.0

16.8

20.3

22.6

23.3

22.1

1

9.8

10.2

12.6

13.3

12.4

1

0.8

12.0

14.2

16.3

16.1

15.1

6.3

6

.0

6.0

5

.8

5.2

Banco BPM


Net NPE Ratio (%)

Yearly Loan Loss Provision/Net Interest Margin (%)


Net Bad Loans/Equity (%)


YE 2013 YE 2014 YE 2015 YE 2016 YE 2017

8

.2

9

.1

8.5

6

.4

4.9

9

.0

9.9

9.5

8

.2

6.3

16.0

1

9.3

21.7

19.0

1

6.3

5.6

6

.6

15.8

11.4

12.1

10.5

11.1

11.5

9.9

8.9

9.7

1

0.3

1

0.4

9

.5

8

.8

6.4

8

.2

8.4

7.6

6.3

1

3.9

1

4.9

14.5

13.6

1

1.3

7.7

8

.1

9.8

9.4

8

.0

4.0

3.7

3

.4

3

.4

2.9

Banco BPM


YE 2013 YE 2014 YE 2015 YE 2016 YE 2017

114.3

3

4.6

35.0

1

15.7

20.3

68.9

41.8

2

9.8

3

5.1

3

1.9

129.4

3

66.5

8

9.3

2

23.1

2

99.8

89.9

1

64.9

5

1.3

1

85.2

6

5.8

53.9

5

1.1

4

9.2

1

04.4

44.1

54.3

5

9.5

4

9.7

41.7

4

6.1

60.6

6

2.9

5

7.5

5

2.9

4

7.7

52.9

41.5

33.1

7

0.0

6

3.9

83.0

7

8.5

7

1.8

5

2.7

4

7.3

22.9

2

1.0

2

3.5

15.8

14.9

Banco BPM


4

0.1

41

.3

4

2.0

3

4.6

16

.3

2

9.1

31

.9

3

1.3

30

.5

22

.5

1

44

.5

14

1.6

1

01

.4

16

1.3

7

2.2

56

.4

58

.3

62

.6

8

2.4

5

4.5

33

.2

4

1.1

4

3.0

4

4.4

40

.9

42

.4

4

8.6

5

2.4

56

.2

55

.6

6

1.0

6

9.9

5

9.2

5

9.9

5

7.1

21

.0

23

.9

23

.5

24

.2

1

9.6

23

.8

25

.5

2

8.7

29

.8

2

9.1

14

.4

14

.1

14

.4

14

.0

12

.0

Banco BPM

PwC | 59

Pier Paolo Masenza

Vito Ruscigno

Gianluigi Benetti

Antonio Martino

Matteo D'Alessio

Francesco Cataldi

Fedele Pascuzzi

Alessandro Biondi

Gabriele Guggiola

Emanuele Egidio

Edoardo Costa

Contacts List / Contributors


AustriaJens Roennberg

Bernhard Engel

BulgariaBojidar Neytchev

CEEPetr Smutny

Edward Macnamara

CroatiaSinisa Dusic

CyprusStelios Constantinou

Czech Republic and SlovakiaPetr Smutny

DenmarkBent Jørgensen

FranceHervé Demoy

GermanyChristopher Sur

Thomas Veith

Jörg Jünger

GreeceThanassis Panopoulos

HungaryCsaba Polacsek

IrelandAidan Walsh

ItalyPierpaolo Masenza

Fedele Pascuzzi

Vito Ruscigno

Alessandro Biondi

The NetherlandsPeter Wolterman

Wilbert van den Heuvel

Jessica Lombardo

NorwayLars Johansson

PolandPawel Dzurak

PortugalAntonio Rodrigues

SerbiaMarko Fabris

SpainJaime Bergaz

Guillermo Barquin

Pablo Martinez-Pina

Richard Garey

SwedenPer Storbacka

TurkeySerkan Tamur

Kadir Köse

UkraineOleg Tymkiv

United KingdomRichard Thompson

Robert Boulding

Ben May

Panos Mizios

Christina Zarifi

Natasha Firman

North AmericaMitchell Roschelle

Asia PacificTed Osborn

Chiara Lombardi

James Dilley

Huong Dao Thi Thien

Lee Chui Sum

Michael Fung

Masaya Koto

Latin AmericaNico Malagamba

Middle EastMatthew Wilde

Portfolio Advisory Group

PwC | 61

PwC | 63

© 2018 PricewaterhouseCoopers Advisory SpA. All rights reserved. PwC refers to PricewaterhouseCoopers Advisory SpA and may sometimes refer to the PwC network. Each

substitute for consultation with professional advisors.

www.pwc.com/it/npl

The Italian NPL market: What’s next…?! · The Italian market for Non Performing Exposures...

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Transcript of The Italian NPL market: What’s next…?! · The Italian market for Non Performing Exposures...