Slide 1: 3Q19 Results
3Q19 Results Alessandro Foti, CEO and General Manager January 2020
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,
Slide 3: Fineco - a fully independent public company
Fineco - a fully independent public company Strategy and Business model Fineco exit from the UniCredit Group has no implications on its strategy and business model: Fineco enjoyed limited synergies with UniCredit and, as a fully independent company, continues to focus on maximizing shareholders’ val
Slide 4: Benefits from being a fully independent public company
Benefits from being a fully independent public company More liquid stock with more than doubled average volumes Increased efficiency as we now are more flexible and agile to adapt to a fast changing environment in terms of: MARKETING AND More freedom in terms of marketing strategy, tone of voice
Slide 5: Agenda
Agenda Fineco Results Next steps and developing opportunities Key messages Focus on product areas 5
Slide 6: Executive Summary
Executive Summary Net Profit (1): Best 9M ever Net profit(1) above 198mln, +11% y/y confirming the sustainability of a business model able to deliver consistent results in every market condition Growing revenues(1) at 489mln, +5% y/y supported by all business areas: Investing, +14% y/y, with man
Slide 7: Results
Results Best 9M ever, with 198mln adj. Net Profit, +10.8% y/y, boosted by diversified revenues growth. C/I ratio at 37.9%, down ~1.4 p.p. y/y confirming our strong operating leverage Net Profit, mln Revenues, mln excluding non recurring items (1) excluding non recurring items(1) Adj. RoE (2) Adj. Co
Slide 8: Net interest income (1/2)
Net interest income (1/2) Solid NII, +1.9% y/y thanks to valuable and sticky sight deposits coupled with high-quality lending portfolio. Increasing diversification in financial investments Net Interest Income, mln Interest-earning assets, avg bn (1) (2) (3) (1) (2) Financial Investments Other Lendin
Slide 9: Net interest income (2/2)
Net interest income (2/2) Further improvements for a diversified asset side. Sensitivity analysis +100bps / -100bps parallel shift: +125mln NII / -114mln NII Bond Portfolio, avg bn UC bonds and Govies run-offs, eop bn UC bonds Spain Supranational & Agencies UC Bonds Govies Covered Bonds (1) Italy Ot
Slide 10: Commissions and Trading Income
Commissions and Trading Income Fees and commissions grew +11.1% y/y. Sustainable growth generating recurring revenues, with Management fees up +12.1% y/y. Revamped Brokerage Fees and Commissions, mln Trading Income, mln Brokerage Investing Banking Other mln excluding non recurring items (1) o/w Brok
Slide 11: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA. 3Q19 affected by seasonality and different distribution of marketing costs among quarters Staff expenses and FTE, mln Non HR Costs (2), mln FTE # excluding non recurring items (1) (3) Development Costs Write-downs/backs & depreciatio
Slide 12: Boost in high quality lending volume
Boost in high quality lending volume offered exclusively to the existing base of clients, leveraging on our internal Big Data analytics Commercial Loans portfolio, eop mln Cost of Risk on commercial loans (2) Current accounts/Overdraft (1) Cards Personal loans Mortgages 28 bps 24 bps +24.7% 15 bps +
Slide 13: Mortgages, personal loans and lombard lending
Lending Boost in high quality lending volume through mortgages, personal loans and lombard loans Eop, mln 2019 Guidance +29.6% Mortgages 10,875 mortgages granted since December 2016 yearly new production: +20.0% ~330-380mln Average customer rate: 179bps. 9M19 Yield(1) at 80bps 795 859 1,030
Slide 14: Capital Ratios
(1) Capital Ratios Best in class capital position and low risk balance sheet (2) RWA, mln CET1 Ratio, % Credit Market Operational CET1 capital, mln +38.5% -309bps +6.6% -47bps 3,084 3,287 20.46 2,374 17.84 17.37 1,898 1,972 1,677 25 42 669 28 1,161 1,273 Sept.18 Jun.19 Sept.19 Sept.18 Jun.19 Sept.19
Slide 15: TFA
TFA Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 71% of total AuM TFA evolution (Dec.13 – Dec. 19), bn 81.4 Cumulated performance 6.2 Net Sales +32.5 bn 67.2 6.2 -4.1 69.3 5.8 Market Effect +5.3 bn 1.0 60.2 6.0 55.3 5.0 -0.2 49.3 5.5 0.5 1
Slide 16: TFA breakdown
TFA breakdown Successful shift towards high added value products thanks to strong productivity of the network Breakdown of total TFA, bn Focus on AUM, bn +17.4% +16.6 bn AUM since the end of 2014, o/w: Guided products as % of AuM +13.3% y/y Guided Products & Services +20.3 bn 81.4 AuM à la carte -3.
Slide 17: Net sales breakdown
Net sales breakdown Solid high quality 9M19 net sales growth on the wave of structural trends in place despite a complex environment. Asset mix returning into AuM with more conservative solutions Breakdown of total Net Sales, bn PFA Network – total Net Sales, bn Guided Products +28.7% y/y 5.8 6.2 5.
Slide 18: Organic growth
Organic growth Net sales organically generated confirmed as key in our strategy of growth Net Sales, bn – Organic / Recruit, % New recruits of the year Organic Total recruits(1) Organic 4.0 5.5 5.0 6.0 6.2 4.3 4.0 5.5 5.0 6.0 6.2 4.3 Recruitment costs 10% 7% 4% (to be amortized) 11% 11% 14% 15% 11%
Slide 19: Continuously increase of quality and productivity of the network
Continuously increase of quality and productivity of the network Total Assets per PFA TFA concentration per PFA Eop, mln PFAs with TFA >20mln are 51% (+16%y/y) +13.8% and hold 79% of TFA (+8% y/y) +3.8% +11.3% 26.6 -58 25.6 23.4 2,624 2,622 2,564 61.3bn 1 68.2bn 1 > €35mln 18% 23% 14.8 12.4% 14.2 y/
Slide 20: Clients’ profile and focus on Private Banking
Clients’ profile and focus on Private Banking Total Financial Assets per client Total TFA: 78.6bn o/w Private Banking(1): 31.9bn 11.2% Average age: >500k 7.4% 0.5-1mln 10.7% 8.4% Total clients: 49 100-500k 40.6% 1-5mln 37.6% 50-100k 5-10mln Private clients: 62 <50k 46.7% >10mln 37.5% TFA Private Ban
Slide 21: Agenda
Agenda Fineco Results Next steps and developing opportunities Key messages Focus on product areas 21
Slide 22: What’s next – It’s not just about Net Interest Income
What’s next – It’s not just about Net Interest Income A resilient, low risk Net Interest Income Given current outlook(1), our assumptions for 2020 are: Run-off of our bond portfolio is smooth and gentle as it has been built in a very conservative way, with no major cliffs Positive effect coming
Slide 23: Accelerating the conversion rate of customers’ deposits towards AuM
Accelerating the conversion rate of customers’ deposits towards AuM 1 Assisted Selling platform to further boost productivity for the Bank and PFAs New products with fully digital subscription will be offered through our Assisted Selling platform: Decumulation products (FAM Target): for customers
Slide 24: Fineco Asset Management gaining commercial momentum
1 Accelerating the conversion rate of customers’ deposits towards AuM Fineco Asset Management gaining commercial momentum FAM contribution to Fineco’s AuM Net Sales FAM retail class October 2019 Net Sales: bn 2.4 359mln 1.9 1.4 50% September and October 2019 best months 0.7 45% ever in terms of
Slide 25: Smart repricing preserving our best price/quality ratio
2 Smart repricing preserving our best price/quality ratio Improving an already best-in-class Customer Experience Continuous upgrade of our banking platform 97% n.1 Brand new dashboard for credit and debit cards, which will also BANK be fully digitalized, and upgrade of mobile payment services CUSTOM
Slide 26: Brokerage: an effective and timely reshape of our offer
Brokerage: an effective and timely reshape of our offer In 1H19 our Brokerage business suffered effects coming from the persistently low market volatility and the introduction of ESMA regulation in place starting from July 2018. The business has been completely reshaped. New options allowing custo
Slide 27: Developing opportunities
Developing opportunities Fineco UK Almost 6,000 clients (1) Unique positioning in a highly fragmented market, leveraging on our one-stop solution. Among the most competitive players on Multicurrency account, securities and CFDs 32% 68% 53% non-Italian Investing platform under implementation with
Slide 28: Agenda
Agenda Fineco Results Next steps and developing opportunities Key messages Focus on product areas 28
Slide 29: 3 Pillars: Efficiency, Innovation and Transparency
3 Pillars: Efficiency, Innovation and Transparency The keys of our strategy, still leading our sustainable growth EFFICIENCY INNOVATION TRANSPARENCY Strong focus on IT & Operations, Anticipate new needs Fairness and Respect more flexibility, less costs simplifying customers’ life for all our stakeho
Slide 30: Sustainability as main pillar of growth
Sustainability as main pillar of growth CUSTOMER SATISFACTION at 97%(1), of which 63% “Apostles” clients(2) vs 42% of banking system NO short-term aggressive COMMERCIAL OFFERS No.1 Bank in terms of REPUTATION(3) and ZERO REMUNERATION on current accounts Low UPFRONT FEES representing only 2% of Inves
Slide 31: Committed to maximize Shareholders’ value
Committed to maximize Shareholders’ value Strategy based on healthy growth and sustainability with a long term horizon A coherent approach in the whole strategy of growth Clients’ acquisition driven by high quality services , transparency and fair pricing Organic growth key in our strategy witho
Slide 32: Safe Balance Sheet: simple, highly liquid and low risk
Safe Balance Sheet: simple, highly liquid and low risk asset side, valuable and sticky deposits Diversified investment portfolio High-value deposit base 27.8 bn Sticky deposits: mostly ‘transactional Investment strategy announced during liquidity’ gathered without aggressive FY17 results: UC bon
Slide 33: Total assets: 99% not exposed to volatility
Total assets: 99% not exposed to volatility Out of 27.8bn, only 0.3bn of Assets valuated at fair value with limited impacts on Equity reserve Total Assets, eop bn Gov. Bonds at fair value Covered bonds Due from banks(1) Other(2) Other Bonds at amortized costs UC bonds Customer loans 27.8 25.8 0.3 o/
Slide 34: Operating Leverage
Operating Leverage A distinctive competitive advantage of Fineco IT and back office internally managed, deep internal know-how 17% FTEs in IT department, 24% in Back-Office Platform scalability Core system internally managed Internal DWH to fully leverage on Big Data Analytics and Very low I
Slide 35: Sustainability at the heart of Fineco’s business model
Sustainability at the heart of Fineco’s business model Embedding ESG in our Bank’s Governance Our sustainable growth strategy is inspired by principles of the most relevant international organisations, consistent with the achievements of the 17 Sustainable Development Goals (SDGs) of the UN 2030 Age
Slide 36: Agenda
Agenda Fineco Results Next steps and developing opportunities Key messages Focus on product areas 36
Slide 37: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allow the bank to successfully face any market environment Banking, mln 45% +2.8% +1.6% -2.2% 213.2 219.2 71.6 74.4 72.7 3Q18 2Q19 3Q19 9M18 9M19 Brokerage, mln 20% Investing, mln 35% 9M19 -3.4% Management +27.7% fees 100.1 +11.6% +12.1% y
Slide 38: Banking
Banking Sound performance driven by strong volume growth and relentless clients’ acquisition, thanks to high quality services and best-in-class customer satisfaction Revenues Sight deposits mln Eop, bn Net Interest Trading income Fees and commissions Other +2.8% +16.5% 219.2 +5.3% +1.6% 21.5 23.8 25
Slide 39: Brokerage
Brokerage Revamped Brokerage thanks to review of the offer. Growing market share in Italy and continuous enlargement of product offer Revenues Executed orders mln Net Interest Trading profit mln Fees and commissions +23.7% -3.4% -6.1% +11.8% 100.1 19.7 18.5 96.7 9.4 5.3 5.9 6.6 10.6 +27.7% 3Q18 2Q19
Slide 40: Investing
Investing Successful strategy based on our cyborg advisory approach drove a better asset mix and increasing fees y/y. Very limited upfront fees representing only 2% of investing fees Revenues (Net fees) Assets under Management mln eop, bn Upfront fees Management fees Other(1) +9.7% +4.1% 9M19 Manage
Slide 41: Annex
Annex 41
Slide 42: P&L
P&L mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 9M18 9M19 Net interest income 68.9 68.7 69.9 71.1 278.7 70.4 71.4 69.8 207.6 211.6 Net commissions 71.5 74.5 72.7 81.8 300.4 77.4 81.3 84.3 218.7 242.9 Trading profit 14.5 13.1 10.7 5.9 44.2 9.8 8.0 11.6 38.3 29.4 Other expenses/income 0.5 0.1 -0.4 1.7
Slide 43: P&L net of non recurring items
P&L net of non recurring items 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 9M18 9M19 mln 1Q18 2Q18 ( 1) (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. Adj. Adj. (1) Adj. (1) Net interest income 68.9 68.7 69.9 71.1 278.7 70.4 71.4 69.8 207.6 211.6 Net commissions 71.5 74.5 72.7 81.8 300.4 77.4 81.3 84.3 218.7 242.9
Slide 44: 9M19 P&L FinecoBank and Fineco Asset Management
9M19 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net interest income -0.1 211.7 211.6 Dividends 0.0 13.1 0.0 Net commissions 46.1 196.8 242.9 Trading profit 0.1 29.3 29.4 Other expenses/income 0.0 0.7 0.7 Total revenues 46.1 45
Slide 45: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 9M18 9M19 Margins Margins Margins Margins Margins Margins Margins Margins Margins Margins Financial Investments 56.9 18,449 5
Slide 46: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010399 Euro 382.5 14-Oct-19 Euribor 1m 2.40% 2 IT0005010324 Euro 382.5 13-Jan-20 Euribor 1m 2.44% 3 IT0005010365 Euro 382.5 10-Apr-20 Euribor 1m 2.47% 4 IT0005010308 Euro 382.5 9-Jul-20 Euribor 1m 2.49% 5 IT00
Slide 47: Details on Net Commissions
Details on Net Commissions mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 9M18 9M19 Brokerage 20.6 20.1 15.8 18.2 74.7 18.5 18.0 20.0 56.5 56.5 o/w Equity 17.5 16.4 13.1 14.9 61.8 15.6 14.7 15.9 47.0 46.2 Bond 0.8 1.2 0.6 0.9 3.6 0.9 0.9 1.4 2.7 3.2 Derivatives 2.5 2.7 2.2 2.9 10.2 2.3 2.2 2.7 7.3 7.2
Slide 48: Revenues breakdown by Product Area
Revenues breakdown by Product Area mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 9M18 9M19 Net interest income 66.1 67.1 67.0 68.0 268.1 67.6 68.8 67.0 200.1 203.4 Net commissions 3.4 4.7 4.5 5.5 18.1 4.5 5.6 5.9 12.6 15.9 Trading profit 0.0 0.1 0.1 0.0 0.2 -0.1 -0.1 -0.2 0.2 -0.3 Other 0.1 0.2 0.1 0.
Slide 49: IFRS 9 P&L impacts
IFRS 9 P&L impacts mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 9M18 9M19 Trading Profit 0.6 0.9 0.9 -3.8 -1.4 0.8 -3.6 0.6 2.3 -2.2 Visa 0.6 0.9 0.9 -0.7 1.6 1.2 0.7 0.2 2.3 2.2 Voluntary Scheme 0.0 0.0 0.0 -3.0 -3.0 -0.4 -4.3 0.4 0.0 -4.4 Loan Loss Provisions -0.4 2.4 -0.4 -0.6 1.0 -1.0 3.1 -0.0 1.
Slide 50: IFRS 16 impacts
IFRS 16 impacts mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 9M18 9M19 Net interest Income -0.2 -0.2 -0.2 -0.7 Other Administrative Expenses -3.1 -3.1 -3.1 -3.4 -12.7 -9.3 Leasing Reggio Emilia offices and financial shops -2.3 -2.3 -2.3 -2.4 -9.4 -7.0 Leasing Milano headquarter -0.8 -0.8 -0.8 -0.9 -3
Slide 51: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.18 Jun.18 Sep.18 Dec.18 Mar.19 Jun.19 Sep.19 AUM 33,536 34,496 34,930 33,485 35,988 36,819 38,325 o/w Funds and Sicav 26,666 26,809 26,795 24,853 26,361 26,426 27,477 o/w Insurance 6,395 7,043 7,355 7,618 8,401 9,002 9,369 o/w GPM 1 1 1 1 1 26 55 o/w AuC + de
Slide 52: Balance Sheet
Balance Sheet mln Mar.18 Jun.18 Sep.18 Dec.18 1st Jan.19 Mar.19 Jun.19 Sep.19 Due from Banks (1) 3,488 3,224 3,398 3,059 3,059 3,807 1,941 2,033 Customer Loans 2,318 2,633 2,736 2,955 2,955 3,029 3,409 3,568 Financial Assets 17,106 17,199 17,678 18,238 18,238 19,012 19,920 21,532 Tangible and Intang
Slide 53: Main Financial Ratios
Main Financial Ratios Mar.18 Jun.18 Sep.18 Dec.18 Mar.19 Jun.19 Sep.19 PFA TFA/ PFA (mln) (1) 22.5 23.0 23.4 23.2 25.0 25.6 26.6 Guided Products / TFA (2) 31% 32% 32% 32% 33% 33% 34% Cost / income Ratio (3) 41.0% 40.0% 39.3% 38.9% 41.3% 39.4% 37.9% CET 1 Ratio 20.2% 20.7% 20.5% 21.2% 21.0% 17.8% 17.
Slide 54: High-value deposit base confirms strong resilience over time
High-value deposit base confirms strong resilience over time Sight deposits growth, Eop bn +16.6% 28 y/y 25 23 20 Financial 18 Sovereign crisis 15 debt crisis last 10 years 13 10 CAGR: 10.7% 8 5 Worst liquidity outflow 3 1-Jun-13 1-Jun-14 1-Jun-15 1-Jun-16 1-Jun-09 1-Jun-10 1-Jun-11 1-Jun-12 1-Mar-0
Slide 55: Headquarters acquisition - details
Headquarters acquisition - details Deal January 31st 2019: completed the headquarters acquisition in Milan from Immobiliare Stampa S.C.p.A. (controlled by Banca Popolare di Vincenza S.p.A. in compulsory winding up) Price of the deal: €62mln Rationales: favourable conditions of the deal, expect
Slide 56: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at €13.0bn, of which €7.7bn retail classes FAM EVOLUTION (16 strategies) FAM Target: new decumulation product to progressively invest in multi-thematic/profile funds FUNDS OF FAM Megatrend: new multi-thematic fund investing in secular trends FUNDS New
Slide 57: Cooperative Compliance Scheme
Cooperative Compliance Scheme: FinecoBank admitted in the Cooperative Compliance Scheme with the Revenue Agency In July 2017, FinecoBank has been admitted to the Cooperative Compliance Scheme(1), which allows the Bank to take part to a register of taxpayers (published on the Revenue Agency’s officia
Slide 58: Additional Tier 1 issuances
Additional Tier 1 First public placement successfully issued with strong demand (9x the offer) €200 mln AT1 issued in January 2018 €300 mln AT1 issued in July 2019 On July 11th, 2019 Fineco issued a €300mln perpetual AT1 in order to maintain the Leverage Ratio above 3.5% after the exit On Januar