BoD Mediobanca - Interim financial statements for six months ended 31/12/18 approved

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Interim financial statements
for six months ended 31/12/18 approved

Mediobanca confirms distinctive business model, achieving its best half-year results ever
by revenues and profitability, despite market uncertainty and macro deterioration
Focus on specialized, highly profitable activities where growth is driven by long-term trends
Revenues up 9%, GOP up 16%; ROTE 11%
All divisions show solid, double-digit ROAC:
Consumer Banking at 32%, Principal Investing at 17%,
Wealth Management and Corporate & Investment Banking at 16% 
Regulation: substantial benefits expected to derive in 2019

Results for the six months include:

  • Growth in Total Financial Assets (“TFAs”, up 11 % YoY to €65bn), with net new money of €3.4bn in the six months (€1.5bn of which in Q2)
  • Growth in loans (up 8% YoY and up 2% QoQ, to €43bn)
  • Growth in funding volumes (up 7% YoY and up 2% QoQ, to €51bn), with the average funding cost declining (down 10 bps in the six months and down 5 bps in Q2, to 80 bps), due to diversification of funding sources and strength of the Mediobanca brand
  • Growth in revenues (up 9% YoY, a €1,277m) in all components, in particular as follows:
    • Net interest income up 4% YoY and up 4% QoQ, following a solid performance in terms of both assets and margins, in consumer credit and by the Holding Functions division in particular;
    • Fee income up 7% YoY, driven by WM and CIB; CIB in particular delivered a 16% increase in fees for Q2, on the back of a sound performance in corporate finance activities;
  • Growth in GOP to €606m, up 16% YoY), on a low cost of risk of 52 bps (NPLs/loans ratios decreasing: gross 4.3%, net 1.9%);
  • Net profit of €451m and ROTE 11% despite absence of one-off gains
  • Capital, funding and liquidity confirmed at high and sustainable levels:
    • CET1: 13.9%[2]   including approx. 40 bps deduction due to buyback (all upfront)
    • LCR[3]  :185%,NSFR [4] :  107%
    • MREL liabilities: 42% of RWAs (as measured at 30/6/18)
  • Good news from regulation:
    • SREP: CET1 confirmed at 8.25% for 2019
    • Extension to Danish Compromise[5]   for Assicurazioni Generali stake until 2024 (thus avoiding 120 bps deduction from CET1 due to take effect from 2019)
    • CheBanca! mortgage AIRB model validation obtained, with a saving of €1.4bn in RWAs equivalent to an additional 40 bps in CET1 [6] 

[1]  Including €1.4bn reduction in RWAs due to validation of AIRB models for mortgage lending, effective as from 2019.
[2]  Calculated including Danish Compromise and excluding IFRS 9 effect of approx. 20 bps.
[3] 12M average calculated at end-December 2018.
[4]  Point-in-time reading as at 31 December 2018.
[5] “Danish Compromise” refers to the possibility for Mediobanca to weight its shareholding in insurer Assicurazioni Generali rather than deduct it from capital, under Article 471 of the CRR and in compliance with the concentration limits in force. Under CRR II, which is currently at the approval stage, the Danish Compromise has been extended until end-2024; without this extension, the estimated deduction from capital would be 120 bps.
[6]  Authorization subject to certain activities being completed by end-March 2019