Finecobank Spa · MIL:FBK
Finecobank Spa — Finecobank Banca Fine — Q1 2021 Earnings Presentation
62 slides from Finecobank Spa's earnings presentation, May 11, 2021
Slide 1: 1Q21 Results
1Q21 Results Alessandro Foti CEO and General Manager Milan, May 11th 2021 FINECO. SIMPLIFYING BANKING.
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 Fineco UK Key messages Focus on product areas 3
Slide 4: Executive Summary
Executive Summary 1Q21 a turning point in our growth story: becoming more a Platform than a Bank The Bank has entered a new dimension of growth driven by structural trends. Among the main consequences: acceleration of the deleveraging of the Balance Sheet: boosting Fees and Commissions to increase
Slide 5: Record high 1Q Net Profit in a new normal world
Record high 1Q Net Profit in a “new normal world” Adj. Net Profit at 95mln, +21% q/q boosted by strong acceleration of Investing and consistently high Brokerage revenues. The Bank has entered a new dimension of growth. C/I ratio at 34%, confirming our operating leverage. Net Profit, mln Revenues, ml
Slide 6: Deleveraging the Balance Sheet generating profits from Treasury management
Our activity of deleveraging the Balance Sheet is generating also profits from Treasury management… Net financial Income increasing y/y thanks to a more dynamic Treasury activity combined with high-quality lending Net Financial Income, mln Interest-earning assets, avg bn (1) NII Profit from Treasury
Slide 7: Boosting Fees & Commissions and Brokerage Trading Profit
…and boosting Fees & Commissions and Brokerage Trading Profit Fees and commissions +13% y/y and +23% q/q thanks to the positive contribution by all business areas. Trading Income +1% y/y and +27% q/q thanks to structurally higher Brokerage Fees and commissions, mln Brokerage Trading Income (1), mln
Slide 8: Our priority: accelerating on Investing
Our priority: accelerating on Investing 1Q21 revenues increasing thanks to volume effect and strong acceleration in AUM net sales. Margins slightly higher thanks to the operational efficiency given by Fineco Asset Management and a first sign of higher risk appetite by clients Investing Revenues, mln
Slide 9: Cost efficiency and operating leverage confirmed in our DNA
Cost efficiency and operating leverage confirmed in our DNA 1Q21 characterized by costs directly related to the strong acceleration of growth of the business experienced in the “new normal world”. The yearly comparison affected by 1Q20 strict lock-down (1Q Non HR costs were the lowest of the last 10
Slide 10: 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 Personal loans Mortgages 14 bps 10 bps 9 bps +20.9% Mar.20 Dec.20 Mar.
Slide 11: Lending: solid growth for all our products
Lending: solid growth for all our products High quality portfolio and cautious approach 2021 Guidance Eop, bn Mortgages 18,972 mortgages granted since December 2016 +24.1% yearly new production: Average customer rate: 150 bps. 1Q21 Yield(1) at 47 bps ~ 700-800 mln +4.9% Average Loan to Value
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 +112bps +31.7% Note: Note: ~215mln q/q for -205bps ~-150bps q/q for +10.4% temporary increase of temporary increase of RWA related to Treasury RWA related to Tr
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, bn 97.1 98.6 +24.1bn AUM since the end of 2014, o/w: 91.7 Guided Products & Services +26.8bn AuM à la carte -2.7bn +5.8% 81.4 48.0 69.3 49% 50% 45.4
Slide 14: Net sales breakdown
Net sales breakdown High quality net sales growth with a better mix, on the wave of structural trends thanks to our diversified business model Breakdown of total Net Sales, bn PFA Network – total Net Sales, bn 9.3 8.0 5.8 4.3 6.0 6.2 +38.5% 5.1 +47.9% 5.5 y/y 5.4 5.5 4.3 y/y 5.0 +56.4% 4.9 2.3 3.3 4
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 59% (+20% y/y) and hold 86% of TFA (+11% y/y) +22.6% +28.3% +118 +3.3% 65.8bn 100 84.4bn 100 2,557 2,675 30.6 31.6 > €35mln 25.7 21% +29.3% €25-35mln 30% y/y 59% 47% 17
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 TFA per client AuM AuC Deposits 97.1 91.7 0.5-1mln 81.4 8.6% 1-5mln 69.3 43% 8.5% 1.0mln 42% 36.3% 5-10mln 41% 37% >10mln 46.7% 16% 37% 37% 36% 39% 11% 10% 10% 28% 56% 12%
Slide 18: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 18
Slide 19: Current environment is further enlarging our growth opportunities
Current environment is further enlarging our growth opportunities Current situation is accelerating the structural trends reshaping our society… DISRUPTION IN DEMAND FOR ADVICE DIGITALIZATION TRADITIONAL BANKS Increasing participation in Traditional banks not ready financial markets by Italians is S
Slide 20: 2021 Guidance and outlook going forward
2021 Guidance and outlook going forward Given current outlook(1), our assumptions for 2021 are: Banking: Net financial income (net interest income and Profit from Treasury management): we expect for FY21 a net financial income flat y/y. Going forward we expect Net financial income to stabilize t
Slide 21: Focus on quality growth leveraging on our FinTech DNA
Focus on quality growth leveraging on our FinTech DNA Initiatives to deleverage our Balance Sheet and improve our quality revenues mix, by taking advantage from the acceleration of structural trends STRONG COMMERCIAL FOCUS ON AUM: 1 targeting only AUM net sales and solutions with a strong RISK MAN
Slide 22: Banking: our features
BANKING Banking: our features OUR FEATURES High quality balance sheet No change in our low-risk strategy DIVERSIFIED AND LOW RISK INVESTMENT PORTFOLIO: run-off of UniCredit bonds invested in a blend of diversified govies, covered SAFE, ROBUST, LOW RISK AND HIGHLY LIQUID bonds, supranational and
Slide 23: Banking: Further combining Treasury and Business to boost growth
BANKING Banking: Further combining Treasury and Business to boost growth INDUSTRIAL ACTIONS TO MANAGE LIQUIDITY MORE DYNAMIC TREASURY MANAGEMENT: NEW PLATFORM TO DISTRIBUTE THIRD PARTIES SAVINGS yield enhancement strategies (unsecured lending, collateral ACCOUNTS leveraging on our FinTech DNA swit
Slide 24: Acceleration of Investing expected going forward
INVESTING Acceleration of Investing expected going forward Investing revenues expected to keep on growing mainly driven by volumes effect and resilient / slightly higher margins y/y. Strategic discontinuity in FAM to take more control of the value chain, improving operational efficiency We expect in
Slide 25: FAM: record net sales in April confirming its growth potential
INVESTING FAM: record net sales in April confirming its growth potential Key to sustain AUM margins thanks to its strong operating leverage and to a more efficient value chain FAM growth potential and new opportunities FAM 2021 priorities Strong room to increase FAM’s penetration on Fineco’s funds
Slide 26: 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 brokerage revenues: the floor has gone up in a clear way regardless of volatility 35 0.70 30 0.60 Volatili
Slide 27: Brokerage: enlargement of client base and increased market share
BROKERAGE Brokerage: enlargement of client base and increased market share Client base growth mainly driven by “Active investors” starting to use brokerage platform and “sleeping” clients back on the market. New clients are coming from traditional banks Brokerage clients evolution New brokerage clie
Slide 28: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 28
Slide 29: Fineco UK: our quality one-stop-solution proves to work
Fineco UK: our quality one-stop-solution proves to work Strong acceleration in our customer acquisition. Already profitable excluding marketing expenses in March 2021 # Current accounts keep accelerating strong pace of growth Further improving revenues mix 15k STICKINESS RATE First target: OTC 14k o
Slide 30: Fineco UK: Investing in the spotlight
Fineco UK: Investing in the spotlight ISA accounts offer, already 680+ subscriptions in just 2 months New ISA promo launched to attract clients from traditional banks 684 subscriptions in March and April – almost 20 new accounts per day Further enlargement of our fund offer New section for f
Slide 31: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 31
Slide 32: 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 Our corporate purpose: to offer clients a quality and multichannel one-stop-s
Slide 33: Long term sustainability at the heart of Fineco business model (2/3)
Long term sustainability at the heart of Fineco business model (2/3) 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 We have an ESG-friendly model by being sustainable since inception MARKET F
Slide 34: Long term sustainability at the heart of Fineco business model (3/3)
Long term sustainability at the heart of Fineco business model (3/3) 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 ESG RATINGS ESG INDICES AWARDS One of the 2 banks Fineco included in: Top Emp
Slide 35: Fineco as a profitable Fintech Bank
Fineco as a profitable Fintech Bank Leveraging on a deep-rooted internal know-how to expand platform scalability and operating gearing Senior management experienced in IT A PROPRIETARY, No external consultants nor system integrator INTEGRATED BACK-END 17% FTEs in IT Department 23% FTEs in Back-Offic
Slide 36: 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 CAGR (2014-2020) 92 + 11% 69 81 67 55 60 1,370 + 6% TFA (bn) 49 1,278 1,358 1,200 1,048 1,118 964 284 342 + 14% Clients (thd, #) 254 208 226 197 Net profit (1) (mln) 155 658
Slide 37: Safe Balance Sheet: simple, highly liquid
Safe Balance Sheet: simple, highly liquid Diversified investment portfolio 32.6 bn Investment strategy announced during FY17 results unchanged: UC bonds run-offs, blend of government bonds diversified across countries, covered bonds, supranational and agencies 99.6% not exposed to volatility: HT
Slide 38: Total assets: 99.6% not exposed to volatility in the Balance Sheet
Total assets: 99.6% not exposed to volatility in the Balance Sheet Out of 32.6bn, only 0.14bn 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 39: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 39
Slide 40: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allow the bank to successfully face any market environment Banking, mln 39% +6.3% +28.2% 79.2 84.1 65.6 1Q20 4Q20 1Q21 Brokerage, mln 30% Investing, mln 32% +2.1% +13.8% 1Q21 Management +25.8% +6.0% fees +17.3% y/y 63.6 65.0 60.9 65.4 69.4
Slide 41: 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 +6.5% Fees and commissions Other +6.3% +2.4% 26.9 28.0 28.7 28.1 +28.2% 84.1 79.2 Mar.20 Dec.20 Ma
Slide 42: Brokerage
Brokerage Strong Brokerage thanks to market growing in size, increasing market share in Italy and continuous enlargement of product offer Revenues, mln Well-diversified brokerage offer Net Interest Fees and commissions Trading profit among products… …and geographies +2.1% Funds Other markets Forex /
Slide 43: Investing
Investing Increasing revenues y/y thanks to a successful strategy based on our cyborg advisory approach. Very limited upfront fees, representing only ~3% of Investing fees Revenues, mln Asset under Management, eop bn Upfront fees PFA incentives(1) Guided Products / AUM Management fees Other income +
Slide 44: Annex
Annex 44
Slide 45: P&L
P&L P&L pro-forma P&L mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 Net financial income 72.0 75.1 68.6 64.1 279.7 75.1 o/w Net Interest Income 68.2 70.1 68.6 63.9 270.7 61.8 Net interest income 68.2 70.1 68.6 63.9 270.7 61.8 o/w Profit from treasury management 3.8 5.0 -0.1 0.3
Slide 46: P&L net of non recurring items
P&L net of non recurring items P&L pro-forma net of non recurring items P&L net of non recurring items 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 mln mln Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Net financial income
Slide 47: 1Q21 P&L FinecoBank and Fineco Asset Management
1Q21 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net interest income 0.0 61.9 61.8 Dividends 0.0 0.0 Net commissions 19.1 99.6 118.7 Trading profit 0.0 37.1 37.1 Other expenses/income 0.0 0.6 0.5 Total revenues 19.0 199.2 218.2
Slide 48: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 Margins Margins Margins Margins Margins Margins Financial Investments 54.8 22,543 56.3 22,676 53.0 22,491 49.0 23,334 213.1 22,761 44.6 24,417 Net Margin 0.98% 1.00% 0.94% 0.8
Slide 49: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010316 Euro 382.5 6-Apr-21 Euribor 1m 2.56% 2 IT0005010340 Euro 382.5 5-Jul-21 Euribor 1m 2.58% 3 IT0005010225 Euro 382.5 18-Oct-21 Euribor 1m 2.60% 4 IT0005040099 Euro 100.0 24-Jan-22 Euribor 1m 1.46% 5 IT000
Slide 50: Financial Investments
Financial Investments Further improvements for a diversified asset side Bond Portfolio, avg bn Bond portfolio run-offs, eop bn UC bonds Spain SSA (1) UC Bonds Govies & SSA Covered & Corporate (2) Italy Other Govies Covered & Corporate 3.1 2.9 2.9 2.8 +7.6% 2.5 2.2 +4.8% 1.5 2.0 2.2 1.5 1.6 1.5 23.9
Slide 51: Details on Net Commissions
Details on Net Commissions mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 Banking 8.8 10.3 9.7 2.2 31.0 10.0 Brokerage 35.6 37.6 26.5 30.7 130.4 39.4 o/w Equity 30.0 31.0 21.7 26.5 109.2 36.1 Bond 1.0 3.8 2.2 1.9 9.0 0.8 Derivatives 4.5 3.7 2.6 2.7 13.5 2.9 Other commissions(1) 0.0 -0.9 0.1 -0.4 -1.3 -0.4 Invest
Slide 52: Revenues breakdown by Product Area
Revenues breakdown by Product Area P&L by Product Area Recasted P&L by Product Area (old) mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 mln 1Q20 2Q20 3Q20 4Q20 FY20 Net financial income 70.5 74.8 66.9 62.8 275.0 72.6 o/w Net interest income 66.6 69.8 67.0 62.6 266.0 59.3 Net Interest Income 65.8 67.7 64.5 60.1
Slide 53: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 AUM 35,516 40,083 41,744 45,381 48,018 o/w Funds and Sicav 24,122 27,657 28,929 31,578 33,271 o/w Insurance 9,961 10,676 11,020 11,819 12,659 o/w GPM 127 169 185 209 238 o/w AuC + deposits under advisory 1,307 1,580 1,610 1,776
Slide 54: Balance Sheet
Balance Sheet mln Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 Due from Banks 1,801 1,633 1,761 2,541 1,902 Customer Loans 3,741 4,204 4,320 4,528 4,639 Financial Assets 23,414 22,961 22,988 23,957 25,398 Tangible and Intangible Assets 280 280 278 281 277 Derivatives 76 76 76 74 84 Other Assets 207 259 298 37
Slide 55: Main Financial Ratios
Main Financial Ratios Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 PFA TFA/ PFA (mln) (1) 25.7 27.9 28.7 30.6 31.6 Guided Products / TFA (2) 34% 35% 36% 36% 36% Cost / income Ratio (3) 33.0% 32.5% 33.1% 34.7% 33.8% CET 1 Ratio 25.4% 24.1% 23.3% 28.6% 26.5% Adjusted RoE (4) 26.5% 26.0% 23.4% 21.2% 22.2% Levera
Slide 56: Fineco - a fully independent public company starting from May 2019
Fineco - a fully independent public company starting from May 2019 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 maxim
Slide 57: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at €18.6bn, of which €12.1bn retail classes(1) FAM EVOLUTION (46 strategies) FAM Megatrend: multi-thematic fund investing in secular trends New building blocks both vertical and based on risk profile FUNDS OF FUNDS FAM Target: decumulation products for
Slide 58: Brokerage: extracting value from the vertical integration
Brokerage: extracting value from the vertical integration After the successful integration of our asset management business through FAM, we are now applying the same strategy with the launch of Leveraged Certificates thanks to our strong operating leverage and to the consistently increasing volumes
Slide 59: Fineco UK vs competitors
Fineco UK vs competitors Products and services Platform features Usability, reliability and advanced tools Coming Soon 59
Slide 60: Fineco UK: Premium service without premium price
Fineco UK: Premium service without premium price Disruptive pricing 100% sustainable thanks to our strong operating leverage OTC: zero commission, no added spreads Platform fees: the most competitive Stock broking: flat fees Multicurrency: best spreads, no commissions (1) (1) (1) (1) Coming Soon Tra
Slide 61: Preserving our best price/quality ratio
Preserving our best price/quality ratio Competitive landscape(1) € 84 avg € 135 avg € Online online costs branch costs Branch IWBank (IWConto) 4 89 Widiba (Conto Start) 20 53 ING (Conto Arancio) 24 Webank 24 Fineco 25 HelloBank! (Hello! Money) 58 Banca Sella (Websella) 62 161 CreditAgricole (Easy) 6
Slide 62: Additional Tier 1
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 On January 23rd, 2018 the Bank issued a €200mln perpet
Finecobank Banca Fine — Q1 2021 Earnings Presentation on 6ix