Slide 1: Fineco: 3Q16 Results
Fineco: 3Q16 Results Alessandro Foti, CEO and General Manager Milan, November 8th 2016
Slide 2: Disclaimer
Disclaimer This Presentation may contain written and oral “forward-looking statements”, which includes all statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a number of assumptions, expectations, p
Slide 3: Executive Summary
Executive Summary 3Q16 net profit at 44.6mln including -11mln gross related to Deposit Guarantee Scheme (DGS). Net of this, net profit at 52.0mln (+4.4% q/q), the best quarter of the year, confirming the effectiveness of a unique business model able to generate strong performance in every market con
Slide 4: Agenda
Agenda Fineco Results Focus on product areas Next steps: update 4
Slide 5: Results
Results 3Q impacted by systemic charges, net of this net profit at 52mln, best quarter of the year. 9M16 +2.8% y/y on a comparable basis, boosted by strong operating leverage Net Profit, mln excluding positive non recurring items(1) Net Profit excl. DGS -2.2% (11mln, gross(2)) -19.1% 148.8 162.4 152
Slide 6: Revenues by P&L Items
Revenues by P&L Items Resilient y/y revenue generation, despite the complex environment, mainly supported by net interest, trading income and investing fees (up to 118.6mln in 9M16) Net interest, mln Fees and Commissions, mln -0.6% +4.1% Brokerage -6.3% Investing +2.2% 189.0 178.6 186.0 Banking 177.
Slide 7: Net interest
Net interest Sustainable and high quality volume dynamics more than offset lower margins and declining interest rates Sight Deposits (mln) and net margins (bps) Term Deposits (mln) and net margins (bps) +18.3% -47.9% +3.5% 1,014 -23.5% 793 16,663 673 628 14,084 14,537 15,328 16,105 540 413 13,522 2Q
Slide 8: Net interest: focus on UniCredit bonds portfolio
Net interest: focus on UniCredit bonds portfolio 9.8% sight deposits growth to offset lower rates and bond portfolio run off Run-off UniCredit bonds portfolio (mln) and spread (bps) 2,225 1,805 1,925 1,725 1,725 1,575 700 200 2016 2017 2018 2019 2020 2021 2022 2023 Average spread 55 178 202 202 235
Slide 9: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA. Development costs down q/q mainly due to lower marketing and PFAs related costs Staff expenses, mln and FTE, # Stock granting post IPO 1013 1025 1033 Staff expenses, related to top managers and key employees +1.6% Other administrativ
Slide 10: Capital Ratios
Capital Ratios Best in class capital position and low risk balance sheet RWA, mln CET1 Ratio transitional, % Credit Market Operational +2.7p.p. +0.5p.p. -0.3% 21.39% 21.31% 22.68% 23.14% 20.43% -1.5% 1,804 1,828 1,859 1,826 1,799 Sept.15 Dec.15 Mar.16 Jun.16 Sept.16 1,044 1,066 1,071 1,090 CET1 Capi
Slide 11: TFA
TFA Relentless TFA growth thanks to a healthy expansion in net sales Guided products and services increased at 55% of total AuM TFA evolution (Dec.10-Oct.16), bn Cumulated performance, bn 58.1 -1.2 Net Sales +21 bn 55.3 3.9 0.5 Market Effect +1.9 bn 49.3 5.5 1.7 43.6 4.0 2.5 1.3 39.8 2.5 35.2 2.8 -3
Slide 12: TFA and Net sales - breakdown
TFA and Net sales - breakdown Successful shift towards high added value products resulting in 3.3bn net sales in Guided products (+20% y/y) out of 1.4bn net sales in AuM as of October Breakdown of total net sales, bn Breakdown of total TFA, bn Guided products as % of AuM 5.5 Guided 58.1 57.6 3.3bn 5
Slide 13: Personal Financial Advisors (PFA) network – Total Net sales
Personal Financial Advisors (PFA) network – Total Net sales Net sales organically generated confirmed as a key pillar in our growing strategy PFA Network – total net sales, bn Net sales, bn - Organic/New Recruit of the year AuM AuC Deposits Net Sales (Organic) Net Sales (New Recruit) 4.9 4.9 Guided
Slide 14: Agenda
Agenda Fineco Results Focus on product areas Next steps: update 14
Slide 15: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allowing the bank to successfully face any market environment Banking, mln 46% +4.0% +0.4% +2.8% 177.1 184.2 62.2 60.8 62.5 3Q15 2Q16 3Q16 9M15 9M16 Brokerage, mln 24% Investing, mln 30% Core revenues (NI excluded) -12.4% 114.7 +2.6% 97.6
Slide 16: Banking
Banking Outstanding y/y results driven by strong volume growth and new clients. 9M16 fees affected by new regulation on interchange fees(1) Revenues, mln Direct deposits eop (mln) Net interest Sight Deposits Term Deposits +4.0% Fees and commissions Trading income 184.2 Other 177.1 +14.6% 14,828 16,9
Slide 17: Brokerage
Brokerage 3Q characterized by lower volatility compared to previous quarters Revenues, mln Volatility Index - Ftse Mib Net interest Net fees Net trading Core revenues (NI excluded) -12.4% 114.7 12.8 97.6 8.4 66.1 55.3 Executed orders, mln -18.0% -11.5% 36.6 32.3 4.8 28.7 -9.5% -1.8% 2.8 2.6 20.3 18.
Slide 18: Investing
Investing 3Q management fees strongly up on the wave of a successful strategy based on cyborg advisory approach Revenues (Net Commissions), mln AuM eop (bn) Upfront fees Management fees Others +10.9% +2.6% +6.2% 26.3 25.6 25.9 27.5 115.6 118.6 24.8 6.9 7.0 +6.3% Sep.15 Dec.15 Mar.16 Jun.16 Sept.16 +
Slide 19: Agenda
Agenda Fineco Results Focus on product areas Next steps: update 19
Slide 20: Sustainability at the heart of Fineco's business model
Sustainability at the heart of Fineco’s business model 1 Acquisition leveraging on high quality services Clients 2 Cost of funding close to zero 3 Organic growth as main engine of growth (89%(1) out of total inflows) Inflows 4 Selected recruits to improve the quality and related costs well under con
Slide 21: Delivery on announced industrial discontinuity
Delivery on announced industrial discontinuity Timing Cyborg advisory Fully in place INCREASE 1 PRODUCTIVITY X-Net Launched in August Mortgages Go live in November MORE FOCUS ON Personal loans Fully in place 2 LENDING Rolling Lombard (new) January 2017 3 EXPANSION Coming soon in December UK project
Slide 22: Results at a glance and new Lombard highlights
Results at a glance and new Lombard highlights 1 2 CYBORG ADVISORY PERSONAL LOANS Guided Products eop (bn) Personal loans eop (mln) % of tot AuM Net interest income (mln) +39.4% +54.9% +12.4% +12.4% 10.7 11.8 12.1 13.3 14.9 15.3 161 183 205 132 138 Sep15 Dec15 Mar16 Jun16 Sep16 Oct16 3Q15 4Q15 1Q16
Slide 23: Annex
Annex 23 BA N K
Slide 24: P&L
P&L mln 1Q15 2Q15 3Q15 9M15 4Q15 FY15 1Q16 2Q16 3Q16 9M16 Net interest income 56.5 59.3 62.9 178.6 62.1 240.8 62.2 61.2 62.5 186.0 Net commissions 62.8 64.2 62.0 189.0 63.6 252.6 58.2 59.7 59.3 177.1 Trading profit 17.1 11.0 13.2 41.3 12.6 53.9 19.6 27.3 10.8 57.7 Other expenses/income 0.4 -3.4 1.6
Slide 25: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q15 2Q15 3Q15 1Q16 2Q16 3Q16 9M15 9M16 Margins Margins Margins Margins Margins Margins Margins Margins Sight Deposits 51.6 12,729 52.2 13,522 54.5 14,084 55.4 15,328 54.2 16,105 54.6 1
Slide 26: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0004307861 Amortizing Euro 150.0 2-Oct-17 Euribor 1m 0.51% IT0004307861 Amortizing Euro 150.0 2-Jan-18 Euribor 1m 0.51% 2 IT0005010233 Euro 382.5 30-Jan-17 Euribor 1m 1.78% 3 IT0005010241 Euro 382.5 28-Apr-17 Euri
Slide 27: Details on Net Commissions
Details on Net Commissions mln 1Q15 2Q15 3Q15 1Q16 2Q16 3Q16 9M15 9M16 Brokerage 25.0 20.8 20.3 20.3 18.5 16.6 66.1 55.3 o/w Equity 19.9 17.3 16.4 16.5 15.2 12.9 53.6 44.6 Bond 2.5 1.2 1.1 1.1 1.1 0.9 4.7 3.2 Derivatives 2.5 2.3 2.6 3.2 2.6 2.4 7.5 8.1 (1) Other commissions 0.1 0.0 0.2 -0.5 -0.5 0.4
Slide 28: Revenue breakdown by Product Area
Revenue breakdown by Product Area mln 1Q15 2Q15 3Q15 1Q16 2Q16 3Q16 9M15 9M16 Net interest income 52.8 54.8 58.0 59.7 58.9 59.9 165.6 178.5 Net commissions 1.5 2.8 3.2 0.3 0.8 1.6 7.5 2.7 Trading profit 1.9 1.3 1.1 0.9 1.1 0.9 4.2 2.9 Other -0.1 -0.1 -0.1 0.0 0.1 0.1 -0.3 0.1 Total Banking 56.1 58.8
Slide 29: Breakdown TFA
Breakdown TFA mln March 15 June 15 Sept. 15 Dec. 15 March 16 June 16 Sept 16 AUM 26,121 26,169 24,825 26,277 25,565 25,911 27,522 o/w Funds and Sicav 23,313 23,221 21,949 23,100 22,332 22,395 23,645 o/w Insurance 2,793 2,933 2,862 3,163 3,219 3,505 3,865 o/w GPM 15 15 14 14 14 12 12 AUC 13,219 12,61
Slide 30: Balance Sheet
Balance Sheet mln March 15 June 15 Sept. 15 Dec. 15 March 16 June 16 Sept 16 Due from Banks 14,070 14,583 13,966 14,649 15,404 15,299 14,442 Customer Loans 797 836 885 923 827 880 972 Financial Assets 2,270 2,244 2,241 2,250 2,629 2,933 3,592 Tangible and Intangible Assets 109 109 109 110 111 111 11
Slide 31: Main Financial Ratios
Main Financial Ratios March 15 June 15 Sept. 15 Dec. 15 March 16 June 16 Sept 16 PFA TFA/ PFA (mln) (1) 17.6 17.6 17.0 17.9 17.8 17.9 18.8 Guided Products / TFA (2) 19% 20% 20% 21% 22% 24% 26% Cost / income Ratio (3) 43.8% 44.6% 42.6% 42.7% 43.0% 43.0% 42.2% CET 1 Ratio 19.4% 20.8% 20.4% 21.4% 21.3%
Slide 32: Next steps: underlying rationale and potential (1/3)
Next steps: underlying rationale and potential (1/3) 1 INCREASE PRODUCTIVITY Cyborg-advisory and X-Net To remain on the market successfully, the increase of PFAs network productivity is mandatory for the industry to cope with expected pressure on margins Fineco can leverage on the concept of Cyborg-
Slide 33: Next steps: underlying rationale and potential (2/3)
Next steps: underlying rationale and potential (2/3) 2 LENDING Mortgages Mortgages owned by clients outside Fineco New law 119/2016 for repossession of new residential mortgage collateral (Decreto banche/ 8.4bn Patto Marciano)1 makes mortgages business more appealing reducing CoR The current interes
Slide 34: Next steps: underlying rationale and potential (3/3)
Next steps: underlying rationale and potential (3/3) 3 EXPANSION ABROAD UK project UK: large but inefficient market in terms of value proposition Focus on retail UK residents One stop shop (banking/ brokerage/ investing) leveraging on Fineco's existing platform Light cost approach and strong operati