UBI BANCA S.P.A. Results for 2015 (compared with 2014)
***-
Operating income of €3,370.9 million (-1.1% compared with 2014)
Net interest income of €1,631.1 million (-10.3% primarily following a change in the composition and a reduction in the size of the securities portfolio, but also a consequence of pressure on commercial volumes and spreads at system level, and of the lower contribution of the portfolio in run off).
Net fee and commission income of €1,300.1 million (+6%, primarily as a result of growth in assets under managment,+12% y/y)
1 The principal non-recurring items net of tax and non-controlling interests:
2015: profit on the partial disposal of the interest held in ICBPI, +€75.3 million; redundancy expenses pursuant to the December 2015 agreements, -€61.5 million; extraordinary contribution to the Resolution Fund, -€42.9 million; settlement of tax litigation, -€25.6 million; impairment of AFS securities, -€14 million, integration costs IW Bank-UBI Private Investment, -€5.1 million; 2014: impairment of intangible assets -€882.7 million; expenses relating to the December 2014 trade union agreement, -€76.3 million; sale of equity investments, mainly in insurance companies,+€92.5 million.
Result from finance of €208.4 million compared with €199.7 million in 2014, to which €82.2 million deriving from the partial disposal of an interest in ICBPI should be added, used to finance the voluntary redundancy plan signed in December 2015. Operating expenses, inclusive of the ordinary and extraordinary contributions to the Resolution Fund and to the Deposit Guarantee Scheme of €2,175.2 million (+3.2%). Net of non-recurring items, expenses were unchanged compared with 2014 (-0.1%), notwithstanding the inclusion of ordinary contributions to the Resolution Fund and to the Deposit Guarantee Scheme in 2015, which totalled €33.4 million.
On a like-for-like basis with respect to 2014, and that is excluding all the above contributions, costs fell further by 1.7% compared with 2014.-
As at 31st January 2016, 317 staff (out of approximately 410) had already left under the redundancy plan signed in December 2015, which gave rise to one off costs recognised in the 2015 financial year of €95 million and which, when fully phased-in, will generate savings of over €31 million per year.
-
Losses on loans of €802.6 million (95 basis points) compared to €928.6 million (108 basis points) in 2014 with a reduction of 13.6%. It is underlined that this reduction is physiological, as UBI Banca did not need to resort to significant additional provisions in 2014 in relation to the AQR.
- Consolidated Group profit of €116.8 million in 2015, compared with a loss of €725.8 million in 2014, following recognition of approximately €883 million of net impairment losses.
* * *
Bergamo, 10th February 2016 - The Management Board of Unione di Banche Italiane Spa (UBI Banca) has approved the draft separate and consolidated annual report of UBI Banca for the year ended 31st December 2015, which will be submitted for approval to the Supervisory Board on 8th March 2016.
The Management Board will submit a proposal to the Shareholders' Meeting to be held in a single call on 2nd April 2016, to distribute a dividend of €0.11 per share on the 900,316,743 shares outstanding (equal to the number of shares that constitute the share capital net of treasury shares held in portfolio).
If approved by the Shareholders' Meeting in the amount proposed, the dividend will be paid with the ex dividend date, record date and payment date on 23rd, 24th and 25th May 2016 respectively. The total dividend payout will amount to approximately €99 million, drawn on net profit.
A summary of operations in 2015
The year 2015 was one of repositioning for the UBI Group, which being the first to make the change - in compliance with the law - from a co-operative group to a joint stock company confirmed the usual transparency and clarity towards its shareholders and the market as a whole.
From an operational viewpoint, the Group's solidity enabled it to undertake actions which affected both the balance sheet and the income statement, such as for example, as part of de-risking, reducing the size of the securities portfolio in terms of both volumes and maturity, and continuing the Group's withdrawal, started some years ago, from lending sectors no longer considered core.
With regard to business, the merger was effected between IW Bank (the Group's internet bank) and UBI Private Investment (over 800 Financial advisors) for the creation of a new customer service model, and the re-organisation of UBI Leasing and Prestitalia was completed, together with the relaunching of UBI Factor, with positive results expected in 2016.
Towards the end of the year, the Group contributed to the rescue of the well-known four banks in difficulty by granting, together with two other major Italian banks, financing to the Resolution Fund (financing still outstanding for the UBI Group amounts to approximately €470 million, guaranteed by the Cassa Depositi e Prestiti), in addition to paying three years of extraordinary contributions, required of all banks in the country, amounting to €65.3 million for the UBI Group.
The progressive change in the way in which banking is done, also consequent of the development of the digital approach, led to a new trade union agreement in December 2015 to reduce staff numbers on a voluntary basis, accompanied as usual by action to increase generation turnover with a strong training component. This involved recognition of one off extraordinary expenses in 2015 of €95 million, with expected yearly savings at regime of over €31 million . At the end of January 2016, 317 staff out of approximately 410 had already left.
The year ended with a profit net of non-recurring items of €195.1 million, to show growth of 33.2% compared with 2014.
The stated profit was €116.8 million, compared with a loss of €725.8 million in 2014 following the recognition of impairment losses on intangibles.
The operating results for the Group in 2015 confirmed the good progress made by net fee and commission income (+6% y/y), driven by investment products (assets under management grew by 12% y/y), and the consolidation of the improvement in the quality of credit with less need for provisions (-13.6%). These trends were able to more than offset the trend for net interest income (- 10.3%), affected mainly by the lower contribution from the securities portfolio - in progressive reduction and re-composition - but also by strong competition on markets for new lending - conditions that are only now showing signs of stabilising - and by a lower contribution from the portfolio in run off.
Continuing control over costs succeeded in absorbing the entire impact of the ordinary annual contributions to the Resolution Fund and to the Deposit Guarantee Scheme (over €33 million), leaving recurring operating expenses largely unchanged compared with 2014 (-0.1%). These were added to by extraordinary contributions to the Resolution Fund (€65.3 million) and expenses relating to the integration of IW Bank (€7.9 million) , which temporarily raised costs for the year by 3.2% compared with 2014.
Finally with regard to tax, as part of activities to contain risks connected with contingent liabilities, including those of a tax nature, on 4th February 2016 UBI Banca reached a final settlement agreement with the tax authorities on two lines of litigation which represent most of the Group's contingent tax risk. The impact on the consolidated income statement for 2015 came to €25.6 million, after the deduction of provisions made from time to time in the accounts to cover the tax risk.
Balance sheet aggregates tended to normalise in the last part of the year, as funding from customers increased compared with September 2015 (+2.8%, concentrated in customer deposits), lending grew slightly (+0.9%), non-performing exposures (previously termed "deteriorated loans") fell in both gross and net terms (-1.6% and -1.9%) and new inflows from performing to non-performing status reduced further, supporting expectations of lower loan losses in future years.
The transformation into an Ordinary Joint-Stock Company and the right of withdrawal
As already reported, the right of withdrawal as a consequence of the transformation of UBI Banca into an ordinary joint-stock company approved by an extraordinary Shareholders' Meeting on 10th October 2015 and filed on 12th October 2015 with the Bergamo Company Registrar was validly exercised by the final deadline of 27th October 2015 on 35,409,477 UBI Banca shares (approximately 3.927% of the current subscribed and paid-up share capital of UBI Banca) for a total amount of €258,064,268.38, at the liquidation value of €7.2880 per share, as determined in accordance with article 2437-ter, paragraph 3 of the Italian Civil Code.
From 12th November 2015 until 12th January 2016, the shares subject to withdrawal were offered as an option right in accordance with Art. 2437-quater of the Italian Civil Code., at the price of
€7.2880 per share and with a ratio of one share for every 24.4259 rights held. At the end of the period applications had been received under the option and pre-emption rights to purchase 58,322 UBI Banca shares at a price per share of €7.2880 for a total of €425,050.74.
In consideration of the results of the option and pre-emption right offering, UBI Banca took steps to offer the 35,351,155 shares subject to withdrawal not taken up under option and pre-emption rights on the Mercato Telematico Azionario (electronic stock exchange) organised and managed by Borsa Italiana S.p.A. ("MTA") on the single day of 28th January 2016 at a price per share of €7.2880 (rounded up to €7.290 in compliance with the rules set by Borsa Italiana S.p.A.). On conclusion of the offering on the MTA, none of the above mentioned 35,351,155 UBI Banca shares had been purchased.
On 3rd February 2016, settlement of the sale and purchase of the 58,322 UBI Banca shares subject to the exercise of option and pre-emption rights took place on the basis of a share out of that number of shares among the withdrawing shareholders in proportion to the number of shares subject to withdrawal.
With regard to the 35,351,155 shares not purchased following the offer in option and pre-emption and the offering on the MTA procedures, the Supervisory Board had already decided that it wished, should it be the case, to exercise its right to limit the redemption of those shares on the basis of the criterion already illustrated in the Illustrative Report to the Shareholders' Meeting published on 9th September 2015, which involves a threshold below which the "fully loaded" Common Equity Tier 1 ratio ("CET1 ratio") must not fall as a consequence of the redemption of the shares subject to withdrawal. That threshold is the arithmetic average between (i) the CET1 ratio required of the UBI Group by the ECB on the basis of the latest decision taken on the matter (known as the "SREP decision"), plus 150 b.p. and (ii) the latest CET1 ratio available recorded by the ECB as at 31st December 2014 with reference to banks subject to single European supervision.
The fully loaded CET1 threshold is 11.62%, calculated as follows:
[(9.25% (November 2015 SREP decision) + 1.50%) + 12.48%]/2 = 11.62%
That threshold must be compared with a fully loaded CET1 ratio as at 31st December 2015 of 11.64%, down compared with the fully loaded CET1 ratio of 12.56% as at 30th September 2015, due primarily to the update of the credit risk parameters included in the internal rating model up to the end of the whole of 2014 and the impact of the financing and extraordinary contributions to the Resolution Fund.
The Management Board will therefore make a proposal to the Supervisory Board, which will make a decision in its meeting of 18th February 2016, having consulted with the Internal Control Committee, to redeem 1,807,217 shares, rounded up to 1,807,220 shares so as to grant equal treatment among shareholders holders of the same number of shares subject to withdrawal.
At the liquidation price of €7.288 per share, the countervalue of the 1,807,220 shares to be redeemed amounts to €13,171,019.36. This will bring the proportion of the total number of shares subject to liquidation (the sum of the 58,322 shares subject to option and pre-emption and the 1,807,220 shares to be redeemed) to 5.268% of the number of shares subject to withdrawal and to
UBI Banca – Unione di Banche Italiane Scpa issued this content on 11 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 11 February 2016 07:19:27 UTC
Original Document: http://www.ubibanca.it/contenuti/file/UBI Banca Press release FY15 results.pdf
