Mediobanca BoD - Financial statements for twelve months ended 30 June 2019 approved

Growth and sustainability: Mediobanca’s DNA

Mediobanca among the top European banks for growth in revenues, profitability, shareholder remuneration and market performance

2016-19 business plan: strategy and goals achieved
CSR  approach enhanced

Despite the pronounced deterioration in the operating scenario which affected much of the financial year, Mediobanca delivered its best 12M results for the past decade, by revenues (€2.5bn, up 4%), GOP (€1.1bn, up 8%), and net profit (adj. €860, up 8%), with rising indicators in terms of profitability (ROTE 10.2%), capitalization (CET1 ratio 14.1% ) and shareholder remuneration (payout ratio 50%)

Revenues: up 4% to €2.5bn, driven by strong commercial activity
Net interest income: up 3% to €1.4bn, due to growth in loans (up 8%, to €44bn) and reduction in the cost of funding (from 90 bps to 80 bps)
Fees slowed temporarily (down 2%, to €611m) despite growth in TFAs (up 6%, to €68bn) and Net New Money (up 5%, to €5bn) due to low capital market deal volumes and lack of risk appetite from investors; results do not yet reflect the major distribution enhancement efforts in WM (sales force now more than 900 professionals, up 18%) and CIB (partnership with MMA)
Asset quality improving further, cost of risk declining (from 62 bps to 52 bps):
Gross NPLs down 8%, to €1.8bn; 3.9% of total loans (4.6%)
GOP up 8%, to over €1.1bn
Adj. net profit³ up 8% to €860m, adj. EPS up 8% to €0.97
Net profit down 5%, to €823m, due to absence of extraordinary gains (€98m last year)
Profitability higher: adj. ROTE  10.2% vs 9.5% in 2018, with CET1 ratio stable at 14.1%
Payout ratio 50% (vs 48%), proposed dividend of €0.47 per share (stable)
Share buyback scheme increased to 4.3% of share capital

2016-19 business plan objectives now fully achieved
on the back of our distinctive business model  and financial solidity, factors which allow the Mediobanca Group to focus on growth and place us in the privileged position of being able to strengthen distribution, organically and via acquisitions

Significant targets achieved in 3Y:

AUM up 31% (3Y CAGR) to €39bn, loans up 9% (3Y CAGR) to €44bn
Revenues up 7% (3Y CAGR)
Fees up 11% (3Y CAGR), 60% now generated by capital-light activities (wealth management and advisory)
Net interest income up 5% (3Y CAGR), despite negative interest-rate scenario
GOP up 16% (3Y CAGR) to €1.1bn, significantly higher than plan objective (3Y CAGR: up 10%, to €1bn) due to positive trend in cost of risk and maintaining operating efficiency
ROTE 10%, achieved despite absence of gains on disposals
High capital generation (beating plan objective by some 230 bps) reflected in higher capitalization ratios (CET1 14.1%, vs 12.1% at 30/6/16) and higher shareholder remuneration (payout ratio up from 38% to 50%, vs 40% in 2016-19 plan and additional buyback scheme)
CSR approach strengthened, with approval of directive on responsible investing, consolidated non-financial statement, and higher representation in market indexes

All divisions improved in positioning and profitability
WM now visible by brand, scale and contribution to Group figures
Record results in Consumer Banking, CIB leader in Southern Europe

WM: significant increase in operating scale (AUM: 3Y CAGR +31%, revenues: 3Y CAGR +18%, GOP: 3Y CAGR +27%), brand perception and distribution (franchise trebled to 900 professionals) – ROAC up from 9% to 16%
Consumer Banking: record results (revenues of over €1bn, 3Y CAGR +6%; GOP €0.5bn, 3Y CAGR +27%) achieved with value-driven approach and as a result of direct network enhancement – ROAC up from 17% to 30%
CIB: client coverage enhanced and geographical distribution expanded (France now third core market); excellent asset quality maintained, capital absorption reduced – ROAC up from 10% to 15%
PI: portfolio stable, ROAC 15% despite lack of gains on disposals
HF: liquidity and funding indicators maintained at comfortable levels; central costs reducing in relative terms following centralization/optimization of Group functions