Slide 1: FY19 Results
FY19 Results Alessandro Foti, CEO and General Manager Milan, February 11th 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: Agenda
Agenda Fineco Results Next steps and developing opportunities Key messages Focus on product areas 3
Slide 4: Executive Summary
Executive Summary Double digit net profit growth 2019 Net profit at 288.4mln, +20% y/y. This result benefits from the fiscal benefit coming from the Patent box (estimated at around 22mln). Adj. Net profit(1) at 268.8mln, +10% y/y confirming the sustainability of a business model able to deliver co
Slide 5: Results
Results Adj. Net Profit at 268.8mln, +10.0% y/y, boosted by diversified revenues growth. C/I ratio at 37.9%, down ~0.9 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. Cost/Income (2)
Slide 6: Net interest income (1/2)
Net interest income (1/2) Solid NII, +0.9% 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) Financial Investments Other Lending Cost o
Slide 7: Net interest income (2/2)
Net interest income (2/2) Further improvements for a diversified asset side. Sensitivity analysis +100bps / -100bps parallel shift: +129mln NII / -119mln NII Bond Portfolio, avg bn UC bonds and Govies run-offs, eop bn (1) UC bonds Spain SSA UC Bonds Govies & SSA Covered Bonds (2) Italy Other Govies
Slide 8: Commissions and Trading Income
Commissions and Trading Income Fees and commissions grew +8.2% y/y. Sustainable growth generating recurring revenues, with Management fees up +11.7% y/y. Revamped Brokerage Fees and Commissions, mln Trading Income, mln Brokerage Investing Banking Other mln excluding non recurring items (2) o/w Broke
Slide 9: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA Staff expenses and FTE, mln Long Term Incentive Plans, mln FTE # excluding non recurring items (1) Staff expenses, related to top managers and key employees Other administrative expenses, related to PFAs o/w 1.7mln +7.5% new 2018- +6.
Slide 10: Patent Box
Patent Box Fineco is the first Bank finalizing the agreement We have finalized the agreement with the Italian Fiscal Authority on the Patent Box for years 2015/2019 Fineco is the first Bank to sign the agreement, which relates to both intellectual properties (our platform internally created and
Slide 11: Boost in high quality lending volume offered exclusively to the existing base of clients
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 24 bps 15 bps 12 bps +23.9% +
Slide 12: Lending: Mortgages
Lending Boost in high quality lending volume through mortgages, personal loans and lombard loans Eop, mln 2020 Guidance +35.0% Mortgages 12,193 mortgages granted since December 2016 yearly new production: +12.5% ~350-500mln Average customer rate: 168bps. FY19 Yield(1) at 76bps 1.0 1.2 Averag
Slide 13: Capital Ratios
(1) Capital Ratios Best in class capital position and low risk balance sheet (2) RWA, mln CET1 Ratio(3) , % Credit Market Operational CET1 capital, mln +35.4% -304bps -2.1% +4.3% 3,287 3,217 21.16 2,376 17.37 18.12 1,972 2,074 1,753 42 40 604 19 1,273 1,103 Dec.18 Sept.19 Dec.19 Dec.18 Sept.19 Dec.1
Slide 14: TFA evolution (Dec.13 – Dec.19)
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 -4.1 69.3 5.8 67.2 6.2 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 15: 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 Guided products as % of AuM +17.4% +16.6 bn AUM since the end of 2014, o/w: Guided Products & Services +20.3 bn 81.9 AuM à la carte -3.7bn 81.4 +2
Slide 16: Net sales breakdown
Net sales breakdown Solid high quality FY19 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 -6.1% Products -6.1% +35.5% 5.
Slide 17: 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 5.8 4.0 5.5 5.0 6.0 6.2 5.8 Recruitment costs 10% 7% 5% 9% (to be amortized) 11% 11% 14% 15% 1
Slide 18: 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 54% (+23%y/y) +19.7% and hold 81% of TFA (+11% y/y) +4.6% +18.0% 27.8 -37 26.6 2,578 2,541 59.9bn 1 70.7bn 1 23.2 > €35mln 18% +22.9% 25% 14.8 15.7 y/y €2
Slide 19: Clients’ profile and focus on Private Banking
Clients’ profile and focus on Private Banking Total Financial Assets per client Total TFA: 81.4bn o/w Private Banking(1): 33.4bn 11.0% Average age: >500k 7.4% 0.5-1mln 10.5% 8.1% Total clients: 49 100-500k 41.1% 1-5mln 37.3% 50-100k 5-10mln Private clients: 62 47.3% <50k 37.3% >10mln TFA Private Ban
Slide 20: Agenda
Agenda Fineco Results Next steps and developing opportunities Key messages Focus on product areas 20
Slide 21: 2020 Guidance
2020 Guidance Given current outlook(1), our assumptions for 2020, excluding revenues and costs related to UK business development, are: Net interest income: resilient and low risk thanks to the smooth run-off of our bond portfolio, positive effect from volumes (~2-2.5bn expected growth of deposits
Slide 22: Focus for a better quality business going forward
Focus for a better quality business going forward Our goal is to structurally improve the quality of our net sales and client base to: Increase, better quality recurring revenues: greater contribution from fees and trading profit from all business areas and a lower exposure to NII Keep Balance s
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: Strong acceleration in the conversion of customers’ deposits into AUM
1 Delivering on industrial measures: Strong acceleration in the conversion of customers’ deposits into AUM Better quality net sales Improving mix of TFA bn AUM AUC Deposits bn AUM AUC Deposits 1.0 69.3 81.4 81.9 49% 1.5 0.3 1.7 1.6 48.3% 49.7% 49.9% 40% 45% 91% 67% 9% 124% 51% 56% 50% 33% -1% -17% 1
Slide 25: Fineco Asset Management gaining commercial momentum
1 Delivering on industrial measures: Fineco Asset Management gaining commercial momentum FAM contribution to Fineco’s AuM Net Sales bn FAM retail class 2019 Net Sales: 1.7bn 3.3 1.9 52% FAM Evolution is the best seller product 1.4 cluster, with net sales structurally towards retail 45% 0.7 class
Slide 26: Innovation key for our best-in-class Customer Experience
2 Delivering on industrial measures Innovation key for our best-in-class Customer Experience Improving an already best-in-class Customer Experience 97% n.1 APP BANK 4.6 CUSTOMER IN TERMS OF + 210,000 ratings (1) (2) SATISFACTION REPUTATION Continuous upgrade of our banking platform Brand new dashboa
Slide 27: Preserving our best price/quality ratio
2 Preserving our best price/quality ratio Where we stand after the Smart Repricing Reasons behind our Smart Competitive landscape (1) Repricing Cost/revenue imbalance of the current account € Online Branch € 76 avg € 121 avg service due to: online costs branch costs further reduction in interest r
Slide 28: Improving quality of our clients
2 Delivering on industrial measures Improving quality of our clients Total Financial Assets per client Figures as of Dec.19 Total TFA: 81.4bn o/w Private Banking: 33.4bn 11.0% Average age: >500k 7.4% 0.5-1mln 10.5% 8.1% Total clients: 49 100-500k 41.1% 1-5mln 37.3% 50-100k 5-10mln Private clients: 6
Slide 29: 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 30: Fineco UK
Fineco UK UK Italian Other Almost 6,500 clients (1) New clients acquired (2) 21% 31% 54% 69% 82% non-Italian 18% 60% non-Italian 15% Unique positioning in a highly fragmented market, leveraging on our one-stop solution platform Outstanding Multicurrency offer, also used for trading Investing p
Slide 31: Agenda
Agenda Fineco Results Next steps and developing opportunities Key messages Focus on product areas 31
Slide 32: 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 33: 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 CAGR (2014-2019) 81 + 11% 69 67 + 7% 60 1,278 1,358 55 1,200 TFA (bn) 49 1,118 281 + 13% 1,048 254 226 Clients (thd, #) 964 208 658 + 8% 197 628 Net profit (1) (mln) 155 587 544
Slide 34: 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 28.0 bn Sticky deposits: mostly ‘transactional Investment strategy announced during liquidity’ gathered without aggressive FY17 results: UC bon
Slide 35: Total assets: 99% not exposed to volatility
Total assets: 99% not exposed to volatility Out of 28.0bn, 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 28.0 0.3 o/w Ita
Slide 36: 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 37: Agenda
Agenda Fineco Results Next steps and developing opportunities Key messages Focus on product areas 37
Slide 38: 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% +1.8% -1.2% 286.7 291.7 -0.3% 73.4 72.7 72.5 4Q18 3Q19 4Q19 FY18 FY19 Brokerage, mln 20% Investing, mln 35% FY19 +0.1% Management fees +11.0% +9.8% 132.5 132.6 -1.
Slide 39: 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 +1.8% +16.0% 291.7 +2.0% -1.2% 22.1 25.1 25
Slide 40: 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 +10.0% +0.1% -2.2% +4.3% 2H19 vs 1H19: +14.7% 132.5 132.6 25.9 25.3 2H19 vs 2H18: +1
Slide 41: 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) +21.0% +5.7% FY19 Manag
Slide 42: Annex
Annex 42
Slide 43: P&L
P&L mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 4Q19 FY19 Net interest income 68.9 68.7 69.9 71.1 278.7 70.4 71.4 69.8 69.7 281.3 Net commissions 71.5 74.5 72.7 81.8 300.4 77.4 81.3 84.3 82.3 325.2 Trading profit 14.5 13.1 10.7 5.9 44.3 9.8 8.0 11.6 15.3 44.8 Other expenses/income 0.5 0.1 -0.4 1.7 1
Slide 44: P&L net of non recurring items
P&L net of non recurring items 3Q18 4Q18 FY18 1Q19 2Q19 3Q19 4Q19 FY19 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 69.7 281.3 Net commissions 71.5 74.5 72.7 81.8 300.4 77.4 81.3 84.3 82.3 325.2 Tra
Slide 45: FY19 P&L FinecoBank and Fineco Asset Management
FY19 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net interest income -0.1 281.4 281.3 Dividends 0.0 48.3 0.0 Net commissions 62.5 262.7 325.2 Trading profit 0.2 44.6 44.8 Other expenses/income 2.7 1.0 3.6 Total revenues 65.2 63
Slide 46: 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 1Q19 2Q19 3Q19 4Q19 FY18 FY19 Margins Margins Margins Margins Margins Margins Margins Margins Margins Margins Financial Investments 56.9 18,449 5
Slide 47: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010324 Euro 382.5 13-Jan-20 Euribor 1m 2.44% 2 IT0005010365 Euro 382.5 10-Apr-20 Euribor 1m 2.47% 3 IT0005010308 Euro 382.5 9-Jul-20 Euribor 1m 2.49% 4 IT0005010381 Euro 382.5 7-Oct-20 Euribor 1m 2.52% 5 IT000
Slide 48: Details on Net Commissions
Details on Net Commissions mln 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 FY18 FY19 Brokerage 20.6 20.1 15.8 18.2 18.5 18.0 20.0 20.8 74.7 77.3 o/w Equity 17.5 16.4 13.1 14.9 15.6 14.7 15.9 17.0 61.8 63.2 Bond 0.8 1.2 0.6 0.9 0.9 0.9 1.4 0.7 3.6 3.9 Derivatives 2.5 2.7 2.2 2.9 2.3 2.2 2.7 2.6 10.2 9.7
Slide 49: Revenues breakdown by Product Area
Revenues breakdown by Product Area mln 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 FY18 FY19 Net interest income 66.1 67.1 67.0 68.0 67.6 68.8 67.0 66.9 268.1 270.3 Net commissions 3.4 4.7 4.5 5.5 4.5 5.6 5.9 5.3 18.1 21.3 Trading profit 0.0 0.1 0.1 0.0 -0.1 -0.1 -0.2 0.2 0.2 -0.2 Other 0.1 0.2 0.1 0.0
Slide 50: IFRS 9 P&L impacts
IFRS 9 P&L impacts mln 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 FY18 FY19 Trading Profit 0.6 0.9 0.9 -3.8 0.8 -3.6 0.6 1.9 -1.4 -0.4 Visa 0.6 0.9 0.9 -0.7 1.2 0.7 0.2 0.4 1.6 2.6 Voluntary Scheme 0.0 0.0 0.0 -3.0 -0.4 -4.3 0.4 1.4 -3.0 -3.0 Loan Loss Provisions -0.4 2.4 -0.4 -0.6 -1.0 3.1 -0.0 0.0 1.
Slide 51: IFRS 16 impacts
IFRS 16 impacts mln 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 FY18 FY19 Net interest Income -0.2 -0.2 -0.2 -0.3 -1.0 Other Administrative Expenses -3.3 -3.2 -3.3 -3.5 -13.3 (1) Leasing Reggio Emilia offices and financial shops -2.5 -2.5 -2.5 -2.6 -10.0 Leasing Milano headquarter -0.8 -0.8 -0.8 -0.9 -3
Slide 52: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.18 Jun.18 Sep.18 Dec.18 Mar.19 Jun.19 Sep.19 Dec.19 AUM 33,536 34,496 34,930 33,485 35,988 36,819 38,325 40,505 o/w Funds and Sicav 26,666 26,809 26,795 24,853 26,361 26,426 27,477 28,786 o/w Insurance 6,395 7,043 7,355 7,618 8,401 9,002 9,369 10,115 o/w GPM
Slide 53: Balance Sheet
Balance Sheet mln Mar.18 Jun.18 Sep.18 Dec.18 1st Jan.19 Mar.19 Jun.19 Sep.19 Dec.19 Due from Banks (1) 3,488 3,224 3,398 3,059 3,059 3,807 1,941 2,033 1,320 Customer Loans 2,318 2,633 2,736 2,955 2,955 3,029 3,409 3,568 3,680 Financial Assets 17,106 17,199 17,678 18,238 18,238 19,012 19,920 21,532
Slide 54: Main Financial Ratios
Main Financial Ratios Mar.18 Jun.18 Sep.18 Dec.18 Mar.19 Jun.19 Sep.19 Dec.19 PFA TFA/ PFA (mln) (1) 22.5 23.0 23.4 23.2 25.0 25.6 26.6 27.8 Guided Products / TFA (2) 31% 32% 32% 32% 33% 33% 34% 35% Cost / income Ratio (3) 41.0% 40.0% 39.3% 38.9% 41.3% 39.4% 37.9% 37.9% CET 1 Ratio 20.2% 20.7% 20.5%
Slide 55: High-value deposit base confirms strong resilience over time
High-value deposit base confirms strong resilience over time Sight deposits growth, Eop bn +16.0% 28 25 y/y 23 20 18 Financial Sovereign 15 crisis debt crisis last 10 years 13 10 CAGR: 10.4% 8 5 Worst liquidity outflow 3 1-Jul-07 1-Jul-08 1-Jul-09 1-Jul-10 1-Jul-11 1-Jul-12 1-Jul-13 1-Jul-14 1-Jul-1
Slide 56: 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 57: 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 58: 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 59: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at €14.2bn, of which €8.6bn retail classes (1) FAM EVOLUTION (22 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
Slide 60: 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 61: 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