Slide 1: Fineco: 3Q17 Results
Fineco: 3Q17 Results Alessandro Foti, CEO and General Manager Milan, November 7th 2017
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: Agenda
Agenda Fineco Results Focus on product areas Key messages and Initiatives monitoring 3
Slide 4: Executive Summary
Executive Summary 3Q17 gross operating profit strongly up (+20.7% y/y, +17.8% q/q), 9M17 at 256.2mln (+9.3% y/y net of non recurring items(1)) confirming our sustainable growing path 9M17 net profit at 151.0mln (+7.8% y/y net of non recurring items(1)), 3Q17 at 46.8mln (+18.1% y/y, +0.2% q/q net
Slide 5: Results
Results Strong growth in Operating profit both q/q and y/y. Net profit affected by systemic charges, but up +7.8% y/y net of voluntary scheme one-off Gross Operating Profit mln excluding non recurring items(1) +20.7% +9.3% +17.8% 249.7 256.2 78.4 80.4 94.7 234.3 3Q16 2Q17 3Q17 9M16 9M17 Adj. Cost /
Slide 6: Revenues and Operating Costs
Revenues and Operating Costs Operating leverage constantly delivered thanks to a relentless revenue growth and operating costs well under control Revenues Operating Costs mln mln +7.6% y/y excluding non recurring items(1) net of Govies sale (2) +12.5% +6.3% +0.3% +5.3% 420.7 430.9 2.1% -11.4% 171.1
Slide 7: Net interest income (1/2)
Net interest income (1/2) Remarkable net interest income dynamics in a negative rate environment. The announced focus on high quality lending is starting to pay-off Net Interest Income Interest-earning assets mln Avg, bn (1) (2) (3) Financial Investments Lending Financial Investments Lending Other (
Slide 8: Net interest income (2/2)
Net interest income (2/2) More diversification and further opportunities coming from the maneuvering on current accounts. Sensitivity analysis +100bps parallel shift: +132 mln Focus on Government Bonds Avg, bn VOLUMES mln NII CONTRIBUTION Italy +51.8% +72.4% Spain Other(1) +20.2% Residual maturity:
Slide 9: Sustainability analysis
Sustainability analysis Sight deposits growth to offset lower rates and bond portfolio run-off UC bonds run-offs and spread 7Y Spread UniCredit vs Govies mln 1,722 1,802 1,572 533 2017 2018 2019 2020 Average spread (bps) 159 202 202 235 228 Minimum sight deposits growth to maintain interest income f
Slide 10: Commissions and Trading Income
Commissions and Trading Income Sound and diversified stream of revenues thanks to our one-stop-solution model. Management fees strongly up +14.5% y/y Fees and Commissions Trading Income mln mln Brokerage Investing Banking Other excluding non recurring items(1) +12.6% 9M17 -0.6% y/y Management 199.4
Slide 11: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA Staff expenses and FTE Stock Granting post IPO mln mln FTE # Staff expenses, related to top managers and key employees 1,033 1,067 1,069 Other administrative expenses, related to PFAs +2.2% 7.5 +2.9% 2.0 5.0 +0.3% 1.0 57.1 58.7 2.0 1.
Slide 12: Capital Ratios
Capital Ratios Best in class capital position and low risk balance sheet. RWA CET1 Ratio transitional mln % -2.4p.p. Credit Market Operational -1.4p.p. +21.6% +4.8% 23.14% 22.94% 22.24% 22.14% 20.74% 2,188 2,087 1,910 1,958 1,799 Sept.16 Dec.16 Mar.17 Jun.17 Sept.17 1,354 1,309 1,075 1,136 1,186 CET
Slide 13: TFA evolution (Dec.11 – Sept.17)
TFA Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 61% of total AuM TFA evolution (Dec.11 – Sept.17) bn 65.4 Cumulated performance 1.0 60.2 4.2 Net Sales +23.5 bn -0.2 55.3 5.0 Market Effect +6.8 bn 0.5 49.3 5.5 1.7 43.6 4.0 1.3 39.8 2.5 2.5
Slide 14: TFA breakdown
TFA breakdown Successful shift towards high added value products Breakdown of total TFA Focus on AUM bn bn Guided products as % of AuM 65.4 66.3 +8.4 bn AUM since the end of 2014, o/w: 63.6 Guided Products & Services +11.4bn 60.2 AuM à la carte -3.0 bn 57.6 55.3 55.6 49.3 48% +8.4 bn 48% 48% 48% 31.
Slide 15: Net sales breakdown
Net sales breakdown Net sales highlights the continuous improvement in the asset mix thanks to the increasing productivity of the network Breakdown of total Net Sales PFA Network – total Net Sales bn bn 5.5 +19.1% 4.9 +25.3% 5.0 y/y y/y +16.4% 4.7 +22.0% 4.3 4.3 4.0 4.2 3.6 2.7 1.8 3.8 2.6 3.6 1.8 3
Slide 16: Organic growth
Organic growth Net sales organically generated confirmed as key in our strategy of growth Net Sales – Organic / Recruit (%) bn bn (1) New recruits of the year Organic Total recruits Organic 4.0 5.5 5.0 3.6 4.2 4.0 5.5 5.0 3.6 4.2 Recruitment costs (to be amortized) 11% 11% 11% 7% 13% 18% 19% 19% 21%
Slide 17: Agenda
Agenda Fineco Results Focus on product areas Key messages and Initiatives monitoring 17
Slide 18: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allow the bank to successfully face any market environment Banking 47% mln +9.7% +15.2% 202.1 +8.9% 184.2 62.5 66.1 72.0 3Q16 2Q17 3Q17 9M16 9M17 Brokerage 22% Investing 31% mln mln 9M17 Core revenues (NI excluded) Management -2.6% fees +1
Slide 19: Banking
Banking Sound performance driven by strong volume growth and customer acquisition thanks to high quality services and customer satisfaction Revenues Direct deposits mln Eop, mln Net Interest Trading income Sight Deposits eop Term Deposits eop Fees and commissions Other +9.7% +15.8% 202.1 +2.8% 184.2
Slide 20: Brokerage
Brokerage Outstanding brokerage results despite the lowest volatility since 2013 confirming the strong potential of this business Revenues Revenues vs volatility(1) mln Net Interest Trading profit Fees and commissions Core revenues (NI excluded) -2.6% 97.6 96.3 8.4 9.4 +1.3% -7.6% 55.3 55.3 28.7 31.
Slide 21: Investing
Investing Successful strategy on cyborg advisory approach drove a better asset mix and increasing fees Revenues (Net Fees) Assets under Management mln eop, bn Upfront fees Management fees Others(1) +13.9% +2.4% 9M17 Management +14.2% 31.3 fees 27.5 28.6 29.7 30.6 +14.5% y/y 135.4 8.3 118.6 7.0 Sep.1
Slide 22: Agenda
Agenda Fineco Results Focus on product areas Key messages and Initiatives monitoring 22
Slide 23: 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 24: 9M17 key messages
9M17 key messages Healthy growth and sustainability at the heart of Fineco’s business model Clients’ acquisition leveraging on high quality services. Cost of funding close to zero Organic growth as main engine of growth. Selected recruits to improve the quality and related costs well under contr
Slide 25: 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 Overall Lending portfolio Cost of Risk (2) Eop, mln Current accounts/Overdraft Cards Reverse repos Personal loans Mortgages Other (1) -20 bps 50 bps +76.5% 43 bps 3
Slide 26: Initiatives monitoring - Banking Area
Initiatives monitoring - Banking Area Boost in high quality lending volume offered exclusively to the existing base of clients, leveraging on our internal Big Data analytics Mortgages Personal loans Lombard loans Eop, mln Eop, mln Eop, mln Other lombard Credit lombard +382.9% +58.9% +69.3% +38.8% +5
Slide 27: Initiatives monitoring - Investing Area
Initiatives monitoring - Investing Area Increase network’s productivity and Private Banking Guided Products Average PFAs’ portfolio Net Sales Mix Eop, bn Eop, mln AUM AuC+ Deposits +28.4% +13.9% +4.3% +3.3% 31% 17.5 18.4 19.2 18.8 19.6 20.2 20.7 21.4 60% 14.9 16.1 69% 40% Sep.16 Dec.16 Mar.17 Jun.17
Slide 28: Fineco Asset Management - FAM (1/3)
Fineco Asset Management - FAM (1/3) Process update The project is on track as expected (go live by the end of 2Q 2018): Implementation phase started, all internal approvals have been collected and company’s registration obtained Authorization process with Central Bank of Ireland started. Formal
Slide 29: Fineco Asset Management - FAM (2/3)
Fineco Asset Management - FAM (2/3) Focus on products and services RETAIL CLASS INSTITUTIONAL CLASS FAM Single Funds FAM Single Funds Description: sub-adviced single funds, Description: sub-adviced single funds, with best brands and best portfolio managers with best brands and best portfolio manager
Slide 30: Fineco Asset Management - FAM (3/3)
Fineco Asset Management - FAM (3/3) Implementation process and potential upside T3 T2 BUILDING BLOCKS T1 SINGLE FUNDS (Retail class) SINGLE FUNDS & (Retail class) T0 BUILDING BLOCKS CORE SERIES (Institutional Class) Migration (~7bn) Potential Upside: relevant and recurring improvement in the profita
Slide 31: 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 32: Annex
Annex 32
Slide 33: P&L
P&L mln 1Q16 2Q16 3Q16 4Q16 FY16 1Q17 2Q17 3Q17 9M16 9M17 Net interest income 62.2 61.2 62.5 63.4 249.4 62.9 64.3 67.4 186.0 194.6 Net commissions 58.2 59.7 59.3 65.8 242.9 64.7 65.0 69.7 177.1 199.4 Trading profit 19.6 27.3 10.8 11.3 69.1 13.7 12.3 11.1 57.7 37.1 Other expenses/income 0.1 0.7 -0.8
Slide 34: P&L net of non recurring items
P&L net of non recurring items 9M16 3Q17 9M17 9M17/ 3Q17/ 3Q17/ mln 3Q16 2Q17 Adj. (1) Adj. (1) Adj. (1) 9M16 3Q16 2Q17 Net interest income 62.5 186.0 64.3 67.4 194.6 4.6% 7.7% 4.8% Net commissions 59.3 177.1 65.0 69.7 199.4 12.6% 17.6% 7.2% Trading profit 10.8 42.4 12.3 11.1 37.1 -12.4% 3.2% -9.4%
Slide 35: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q16 2Q16 3Q16 1Q17 2Q17 3Q17 9M16 9M17 Margins Margins Margins Margins Margins Margins Margins Margins Sight Deposits 55.4 15,328 54.2 16,105 54.6 16,663 55.4 18,193 55.6 18,824 57.2 1
Slide 36: 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 IT0005010258 Euro 382.5 27-Jul-17 Euribor 1m 1.94% 3 IT0005010738 Euro 382.5 25-Oct-17 Euri
Slide 37: Details on Net Commissions
Details on Net Commissions mln 1Q16 2Q16 3Q16 1Q17 2Q17 3Q17 9M16 9M17 Brokerage 20.3 18.5 16.6 20.3 18.3 16.8 55.3 55.3 o/w Equity 16.5 15.2 12.9 16.7 15.2 13.5 44.6 45.4 Bond 1.1 1.1 0.9 1.0 0.9 0.7 3.2 2.7 Derivatives 3.2 2.6 2.4 2.4 2.0 1.9 8.1 6.3 (1) Other commissions -0.5 -0.5 0.4 0.1 0.2 0.6
Slide 38: Revenue breakdown by Product Area
Revenue breakdown by Product Area mln 1Q16 2Q16 3Q16 1Q17 2Q17 3Q17 9M16 9M17 Net interest income 59.7 58.9 59.9 61.9 63.0 65.5 178.5 190.4 Net commissions 0.3 0.8 1.6 0.6 1.9 5.7 2.7 8.2 Trading profit 0.9 1.1 0.9 1.3 1.0 0.8 2.9 3.1 Other 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.3 Total Banking 61.0 60.8 62.
Slide 39: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.16 Jun.16 Sep.16 Dec.16 Mar.17 Jun.17 Sep.17 AUM 25,565 25,911 27,522 28,608 29,742 30,614 31,339 o/w Funds and Sicav 22,332 22,395 23,645 24,258 24,984 25,461 25,901 o/w Insurance 3,219 3,505 3,865 4,339 4,749 5,145 5,431 o/w GPM 14 12 12 11 9 9 7 AUC 12,889
Slide 40: Balance Sheet
Balance Sheet mln Mar.16 Jun.16 Sep.16 Dec.16 Mar.17 Jun.17 Sep.17 Due from Banks 15,404 15,299 14,442 15,736 15,462 14,827 14,293 Customer Loans 827 880 972 1,017 1,166 1,504 1,716 Financial Assets 2,629 2,933 3,592 3,764 3,912 4,770 5,429 Tangible and Intangible Assets 111 111 112 112 112 113 113
Slide 41: Main Financial Ratios
Main Financial Ratios Mar.16 Jun.16 Sep.16 Dec.16 Mar.17 Jun.17 Sep.17 PFA TFA/ PFA (mln) (1) 17.8 17.9 18.8 19.6 20.2 20.7 21.4 Guided Products / TFA (2) 22% 24% 26% 27% 28% 29% 29% Cost / income Ratio (3) 43.0% 43.0% 42.2% 41.6% 42.8% 42.9% 40.5% CET 1 Ratio 21.3% 22.7% 23.1% 22.9% 22.2% 22.1% 20.
Slide 42: Highly scalable operating platform
Highly scalable operating platform Platform excellence and cost discipline providing strong operating leverage Costs vs Growth 2013 2014 2015 2016 2013-2016 CAGR 60 +11% 55 49 TFA (€ bn) 44 1118 +8% 1048 964 Clients (thd) 898 559 +14% 544 451 Revenues (€ mn) 373 233 226 +6% Operating costs (€ mn) 21