Finecobank Spa · MIL:FBK
Finecobank Spa — Finecobank Banca Fine — Q3 2022 Earnings Presentation
56 slides from Finecobank Spa's earnings presentation, Nov 8, 2022
Slide 1: 3Q22 Results
3Q22 Results Alessandro Foti CEO and General Manager Milan, November 8th 2022 FINECO. SIMPLIFYING BANKING.
Slide 2: Disclaimer
Disclaimer ◼ “Pursuant to the paragraph 2 of Article 154 bis of the Consolidated Law on Financial Intermediation (Legislative Decree no. 58 of February 24, 1998), Lorena Pelliciari, in her capacity as manager responsible for the preparation of FinecoBank S.p.A. (the “Company”)’s financial reports, d
Slide 3: Agenda: Fineco Results
Agenda ✓Fineco Results ❑ Next steps ❑ Fineco international business ❑ Key messages ❑ Focus on product areas 3
Slide 4: A new market structure enlarging our growth opportunities
A new market structure enlarging our growth opportunities A structurally higher profitability and capital light business model, leading to higher DPS and to invest in our growth The current environment has significantly changed Acceleration of structural trends New interest rates environment (1) res
Slide 5: Executive Summary
Executive Summary Successful growth story: becoming more a Platform than a Bank. Our diversified business model allows us to deliver strong results in every market condition Delivering strong net profit in every market condition Strong capital position ◼ 9M22 adj. Net Profit at 303 mln, +17.7% y/y(1
Slide 6: Delivering strong Net Profit in every market condition
Delivering strong Net Profit in every market condition Adj. Net Profit at 302.7mln, +17.7% y/y boosted by strong acceleration of Investing, confirming the effectiveness of our initiatives, and Net Financial Income. Strong operating leverage confirmed Net Profit, mln Revenues, mln excluding non recur
Slide 7: Revenues growth supported by all our initiatives
Revenues growth supported by all our initiatives Quality and capital light NII driven by our clients’ valuable transactional liquidity and not driven by lending as for other Banks. Boosting Non Financial Income, thus becoming more a Platform than a Bank. Net Financial Income, mln Non Financial Incom
Slide 8: Net financial income: focus on financial investments
Net financial income: focus on financial investments Transactional liquidity invested in a diversified portfolio Bond Portfolio (1) (2) € bn, avg UC bonds Italy Spain Other Govies SSA Covered & Corporate +8.0% 0.0% +5.3% 26.3 26.3 25.7 Bond portfolio Nominal value 30th September 2022 equal to 25.9bn
Slide 9: Our priority: accelerating on Investing
Our priority: accelerating on Investing 9M22 revenues increasing y/y thanks to volume effect and to the higher contribution by FAM, which is taking more control of the Investing value chain, supporting our margins. Management fees in the quarter affected by negative market performance Investing Reve
Slide 10: Cost efficiency and operating leverage confirmed in our DNA
Cost efficiency and operating leverage confirmed in our DNA Operating Costs, mln Staff expenses and FTE, mln The yearly increase is mainly linked to costs related to the growth FTE # of the business, mainly related to: 9M22(1): +4.8% y/y 9M22 FAM costs • FAM as it is progressively increasing the eff
Slide 11: High quality lending
High quality lending 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 7 bps Personal loans Mortgages 2 bps 2 bps +16.2% Sep.21 Jun.22 Sep.22
Slide 12: Capital Ratios
Capital Ratios Best in class capital position and low risk balance sheet RWA, mln CET1 Ratio, % Credit Market Operational CET1 capital, mln +1.8% -3.9% 18.37 19.14 20.39 4,580 4,851 4,664 3,309 3,546 3,350 Sep.21 Jun.22 Sep.22 1,195 76 1,256 49 1,256 58 841 929 951 Sep.21 Jun.22 Sep.22 Leverage Rati
Slide 13: 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 and FAM, bn 107.9 55.5 102.9 AUM since the end of 2014: 50.7 91.7 +112.0% 45.4 81.4 40.5 51% 49% 67.2 69.3 49% 33.6 33.5 73% 60.2 71% 55.3 50% 29.0 49
Slide 14: Net sales breakdown
Net sales breakdown High quality net sales growth, on the wave of structural trends thanks to our diversified business model Breakdown of total Net Sales, bn PFA Network – total Net Sales, bn +14.7% +23.6% 10.7 9.9 9.3 -4.9% -11.8% 8.0 7.9 7.4 7.5 5.8 4.3 7.3 6.5 6.0 6.2 5.1 7.2 5.5 2.5 5.4 5.5 4.3
Slide 15: Net sales organically driven key in our strategy of growth
Net sales organically driven key in our strategy of growth The structure of recruiting is changing: more interest in the quality of the business model by PFAs Net Sales, bn – Organic / Recruit, % Total recruits Organic Total recruits Organic New PFAs recruited in the year PFAs recruited over the las
Slide 16: Increasing quality and productivity of the Network
Increasing quality and productivity of the Network Total Assets per PFA TFA concentration per PFA Eop, mln PFAs with TFA >20mln are 58% and hold 85% of TFA -5.7% -0.6% +148 -0.4% 90.7bn 100 90.1bn 100 2,752 2,900 33.0 31.2 31.1 > €35mln -8.5% 32% 30% €25-35mln y/y 58% €20-25mln 63% 61% 85% 18.9 17.4
Slide 17: Clients' profile and focus on Private Banking
Clients’ profile and focus on Private Banking Improving the quality of our client base Avg TFA per Private client(1) € bn, TFA Client segmentation AuM AuC Deposits 0.5-1mln 107.9 102.9 8.7% 91.7 1-5mln 1.0mln 8.5% 81.4 36.5% 5-10mln 69.3 45% 42% 42% 46.4% >10mln 41% 17% 37% 37% 35% 37% 39% 37% 55% 1
Slide 18: Agenda: Next steps
Agenda ❑ Fineco Results ✓Next steps ❑ Fineco international business ❑ Key messages ❑ Focus on product areas 18
Slide 19: 2022 Guidance and outlook going forward
2022 Guidance and outlook going forward FY22 Revenues y/y growth strongly improved vs previous guidance, with a different mix thanks to the diversified business model in the current volatile environment ◼ BANKING REVENUES: ◼ OPERATING COSTS expectations: ➢ Net financial income (NFI: net interest inc
Slide 20: FAM: delivering on the strategic discontinuity
INVESTING FAM: delivering on the strategic discontinuity Key to sustain AUM margins thanks to its strong operating leverage and to a more efficient value chain FAM progressively taking control of the value chain… FY22 FAM priorities bn FAM NET SALES ✓ Thanks to the full control of the FAM RETAIL: FA
Slide 21: Brokerage: higher floor as the structure of the market is changing
BROKERAGE Brokerage: higher floor as the structure of the market is changing Increased interest in financial markets by clients and big jump into a more digitalized society Structural growth in revenues: the floor has gone up in a clear way in any market environment Avg monthly revenues 2017-2019 Th
Slide 22: Innovation and Simplification Project
Innovation and Simplification Project Further simplifying clients’ user experience thank to easy-to-use new tools and a more efficient marketing engine. The renewed platform will be the cornerstone of our International offer BROKERAGE INVESTING BANKING COMING SOON Brokerage-only Account ✓New Trading
Slide 23: Agenda: Fineco international business
Agenda ❑ Fineco Results ❑ Next steps ✓Fineco international business ❑ Key messages ❑ Focus on product areas 23
Slide 24: Fineco international business: getting ready for the deployment
Fineco international business: getting ready for the deployment Focusing our offer on a simplified digital model through a brand new, highly scalable and multilanguage platform for investments UK: gaining traction thanks to Germany: coming soon Going forward: rest of EU word of mouth An increasing a
Slide 25: Agenda: Key messages
Agenda ❑ Fineco Results ❑ Next steps ❑ Fineco international business ✓Key messages ❑ Focus on product areas 25
Slide 26: Long term sustainability at the heart of Fineco business model (1/3)
Long term sustainability at the heart of Fineco business model (1/3) We are a looking-forward organization playing for the long-run and able to generate a positive impact for all our stakeholders and the society as a whole Fineco corporate purpose: support clients in the responsible management of th
Slide 27: Long term sustainability at the heart of Fineco business model (1/2)
Long term sustainability at the heart of Fineco business model (1/2) We are a looking-forward organization playing for the long-run and able to generate a positive impact for all our stakeholders and the society as a whole Strategy & Goals Initiatives & KPIs ✓ FOCUS on Cyber-Security and ESG risks l
Slide 28: Long term sustainability at the heart of Fineco business model (2/2)
Long term sustainability at the heart of Fineco business model (2/2) We are a looking-forward organization playing for the long-run and able to generate a positive impact for all our stakeholders and the society as a whole ESG RATINGS ESG INDICES(*) RECENT ESG AWARDS Eval. scale 2021 Today Fineco in
Slide 29: Fineco as a profitable FinTech Bank: ICT a key business driver
Fineco as a profitable FinTech Bank: ICT a key business driver Leveraging on a deep-rooted internal know-how to expand platform scalability and operating gearing 1 2 3 4 SIMPLICITY OMNICHANNEL BIG-DATA TIME TO MARKET & CUSTOMIZATION Client front-ends are built IT provides a seamless user Data manage
Slide 30: Healthy and sustainable growth with a long term horizon
Healthy and sustainable growth with a long term horizon Highly scalable operating platform… 2014 2015 2016 2017 2018 2019 2020 2021 CAGR (2014-2021) + 12% 92 108 69 81 TFA (bn) 67 + 6% 49 55 60 1,370 1,428 1,278 1,358 1,200 Clients (thd, #) 964 1,048 1,118 376 + 14% 284 342 226 254 Net profit (1) (m
Slide 31: Safe Balance Sheet: simple, highly liquid
Safe Balance Sheet: simple, highly liquid Diversified investment portfolio 36.6 bn Financial Assets Customer deposits ◼ Investment strategy announced during FY17 results unchanged: UC bonds run- offs, blend of government bonds diversified across countries, covered bonds, Customer loans Other liabili
Slide 32: Total assets: 99.9% not exposed to volatility in the Balance Sheet
Total assets: 99.9% not exposed to volatility in the Balance Sheet Out of 36.6bn, only 0.03bn of assets at fair value with very limited impacts on Equity reserve Total Assets, eop bn (2) Gov. Bonds at fair value UC Bonds Other (1) Other Bonds at amortized costs Due from banks Covered bonds and finan
Slide 33: Agenda: Focus on product areas
Agenda ❑ Fineco Results ❑ Next steps ❑ Fineco international business ❑ Key messages ✓Focus on product areas 33
Slide 34: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allows the bank to successfully face any market environment Banking, mln 45% +26.8% +26.3% +15.2% 310.7 245.9 79.1 87.0 100.2 3Q21 2Q22 3Q22 9M21 9M22 Brokerage, mln 22% Investing, mln 33% 9M22 -8.5% Management fees +10.2% +17.6% -7.4% +18
Slide 35: Banking
Banking Sound performance and relentless clients’ acquisition, thanks to high quality services and best-in-class customer satisfaction Revenues, mln Deposits, eop bn Net Financial Income Trading income +6.2% Fees and commissions Other +26.3% +0.5% 310.7 28.9 30.5 30.7 +26.8% Sep.21 Jun.22 Sep.22 +15
Slide 36: Brokerage
Brokerage Structurally higher revenues floor compared to pre-pandemic levels Revenues, mln Well-diversified brokerage offer Net Interest Fees and commissions Trading profit -7.4% among products… …and geographies 161.0 Funds Other markets 149.1 Italy -8.5% 12.0 9.3 Forex / CFD -11.2% 8% 95.6 77.8 10%
Slide 37: Investing
Investing Increasing revenues y/y thanks to volume effect and to the higher contribution by FAM, which is taking more control of the Investing value chain, supporting our margins. Very limited upfront fees, representing only ~2% of Investing fees Revenues, mln Asset under Management, eop bn Upfront
Slide 38: Annex
Annex 38
Slide 39: P&L pro-forma
P&L pro-forma P&L pro-forma(1) mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 9M21 9M22 Net financial income 75.1 72.8 69.2 62.9 280.0 107.5 68.9 84.2 217.1 260.6 o/w Net Interest Income 61.8 62.5 61.8 61.8 247.9 59.3 67.6 84.3 186.1 211.2 o/w Profit from treasury management 13.2 10.3 7.4 1.1 32.1 48.1
Slide 40: P&L net of non recurring items
P&L net of non recurring items P&L pro-forma(1) net of non recurring items 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 9M21 9M22 mln Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Net financial income 75.1 72.8 69.2 62.9 280.0 107.5 68.9 84.2 217.1 260.6 o/w Ne
Slide 41: 9M22 P&L FinecoBank and Fineco Asset Management
9M22 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net financial income -0.3 260.9 260.6 Dividends 0.0 23.0 -0.2 Net commissions 100.1 246.5 346.6 Trading profit -0.2 76.2 76.1 Other expenses/income -0.3 1.0 0.6 Total revenues 99
Slide 42: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 9M21 9M22 Margins Margins Margins Margins Margins Margins Margins Margins Margins Margins Financial Investments 44.6 24,416 4
Slide 43: New interest rates environment
New interest rates environment ➢ In the recent months the market experienced a significant structural change due to interest rates move and the inflationary environment ➢ Below a comparison of the forward rate curve at the beginning of 2022 and the ones used for the assumptions behind the guidance t
Slide 44: Focus on Bond portfolio
Focus on Bond portfolio Bond portfolio run-offs, eop bn (1) Fixed rate bonds Floating and swapped bonds (1) Avg yield of fixed rate bonds, bps Avg spread vs EUR 3M of floating and swapped bonds, bps UC bonds UC Bonds avg spread vs Eur3M, bps 4.3 3.0 2.8 3.0 2.7 2.0 2.2 2.0 1.7 1.6 1.7 1.8 1.5 1.0 2.
Slide 45: Net Financial Income: focus on Lending
Net Financial Income: focus on Lending Ancillary business to fulfill clients’ needs. High quality portfolio and cautious approach 2022 Guidance Eop, bn ◼ 27,893 mortgages granted since December 2016 Mortgages ◼ yearly new production: +13.5% ◼ Average customer rate: 147 bps. 9M22 Yield(1) at 73 bps ~
Slide 46: Details on Net Commissions
Details on Net Commissions Net commissions by product area mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 9M21 9M22 Banking 10.8 11.9 12.9 13.6 49.2 12.9 14.1 14.8 35.6 41.8 Brokerage 40.2 29.5 26.0 30.6 126.2 32.6 24.2 20.9 95.6 77.8 o/w Equity 36.1 24.6 22.5 26.2 109.5 28.1 18.3 16.1 83.3 62.5 Bond 0
Slide 47: Revenues breakdown by Product Area
Revenues breakdown by Product Area Revenues by product area mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 9M21 9M22 Net financial income 72.6 69.8 65.9 60.0 268.2 105.3 66.3 82.4 208.2 254.0 o/w Net interest income 59.3 59.5 58.4 58.9 236.1 57.2 65.0 82.4 177.2 204.6 o/w Profit from Treasury Managemen
Slide 48: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.21 Jun.21 Sep.21 Dec.21 Mar.22 Jun.22 Sep.22 AUM 48,018 51,399 52,648 55,450 53,651 50,789 50,708 o/w Funds and Sicav 33,271 35,699 36,233 38,053 35,985 33,182 32,806 o/w Insurance 12,659 13,448 14,122 14,963 15,354 15,421 15,643 o/w GPM 238 282 294 330 326 3
Slide 49: Balance Sheet
Balance Sheet mln Mar.21 Jun.21 Sep.21 Dec.21 Mar.22 Jun.22 Sep.22 Due from Banks (1) 1,902 2,253 2,429 1,844 2,132 1,943 2,139 Customer Loans 4,639 5,269 5,624 6,002 6,088 6,311 6,318 Financial Assets 25,398 24,648 24,446 24,581 25,389 25,315 25,091 Tangible and Intangible Assets 277 281 279 279 27
Slide 50: Leverage Ratio Sensitivity
Leverage Ratio Sensitivity Focus on our Balance Sheet to keep under control the growth of deposits and improve our quality revenues mix. Thanks to our new initiatives at the same time we can: 1) sustain our growth OUR PRIORITY 2) distribute a growing dividend per share 3) keep our Leverage Ratio com
Slide 51: Delivering on our discontinuities
Delivering on our discontinuities Set of initiatives to improve our revenues mix, taking advantage from the acceleration of structural trends and our FinTech DNA INITIATIVES TO KEEP UNDER CONTROL OUR BALANCE SHEET 1 STRONG COMMERCIAL FOCUS ON AUM: ➢ targeting only AUM net sales and solutions with a
Slide 52: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at € 24.5bn, of which € 14.8bn retail classes(1). Over 400 ISIN launched since inception FAM EVOLUTION ✓ FAM Megatrend: multi-thematic fund investing in secular trends ✓ New building blocks both vertical and based on risk profile FUNDS OF FUNDS ✓ FAM Target:
Slide 53: Preserving our best price/quality ratio
Preserving our best price/quality ratio Competitive landscape(1) € Online € 95 avg € 143 avg Branch online costs branch costs Widiba (Conto Start) 20 53 Webank 24 Fineco 27 Ing (Conto Arancio) 27 HelloBank! (Hello! Money) 58 Banca Sella (Conto Start) 62 161 B.Generali (BG Deluxe) 78 84 CreditAgricol
Slide 54: Commitment to Net Zero emissions by 2050
Commitment to Net Zero emissions by 2050 Aware of the importance of environmental and climate matters, in August this year the BoD approved the Net-Zero emissions plan to 2050 regarding both operational and financed emissions RESPONSIBLE FINANCE - Scope 3 emissions from internal investment portfolio
Slide 55: Fixed Income
Fixed Income Senior Preferred instrument AT1 instruments ➢ On October 14th, 2021, Fineco successfully issued 500mln Senior Preferred in ➢ €200 mln perpetual AT1 issued on January 23rd, 2018: order to be immediately compliant with the Fully Loaded MREL Requirement on • Coupon fixed at 4.82% for the i
Slide 56: Main Financial Ratios
Main Financial Ratios Mar.21 Jun.21 Sep.21 Dec.21 Mar.22 Jun.22 Sep.22 PFA TFA / PFA (mln) (1) 31.6 32.5 33.0 33.9 32.8 31.2 31.1 FAM retail / Fineco AUM (2) 24% 26% 26% 27% 28% 29% 29% Cost / income Ratio (3) 30.4% 31.3% 31.4% 32.2% 27.0% 29.3% 29.8% CET 1 Ratio 26.5% 18.6% 18.4% 18.8% 19.3% 19.1%
Finecobank Banca Fine — Q3 2022 Earnings Presentation on 6ix