Finecobank Spa · MIL:FBK
Finecobank Spa — Finecobank Banca Fine — Q4 2021 Earnings Presentation
61 slides from Finecobank Spa's earnings presentation, Feb 9, 2022
Slide 1: 4Q21 Results
4Q21 Results Alessandro Foti CEO and General Manager Milan, February 9th 2022 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 Successful 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: growth of the Balance Sheet comfortably under control thanks to new initiatives: boosting Fees to increase revenu
Slide 5: Record high FY21 Net Profit in a new normal world
Record high FY21 Net Profit in a “new normal world” Adj. Net Profit at 349.2mln, +7.6% y/y boosted by strong acceleration of Investing, confirming that the Bank is in a new dimension of growth. Strong operating leverage with C/I ratio at 32% Net Profit, mln Revenues, mln excluding non recurring item
Slide 6: Net Financial Income flat y/y thanks to dynamic Treasury management
Net Financial Income flat y/y also thanks to a more dynamic Treasury management Net Financial Income, mln Interest-earning assets, avg bn (1) (3) 1M Euribor NII Profit from Treasury management Other Treasury activities Other Lending (4) (5) (2) NII Gross margins Total yield Financial Investments Tax
Slide 7: Becoming more a Platform: boosting our Non Financial Income
Becoming more a Platform: boosting our Non Financial Income 2021 Fees and commissions +18.8% y/y thanks to the contribution by all business areas. Brokerage confirming the structurally higher floor despite lower market volatility and volumes in 2021 vs 2020 Improving our revenues mix towards Non Fin
Slide 8: Our priority: accelerating on Investing
Our priority: accelerating on Investing 2021 revenues increasing thanks to volume effect and strong acceleration in AUM net sales. Margins improving thanks to the higher control on the Investing value chain through Fineco Asset Management and higher risk appetite by clients Investing Revenues, mln M
Slide 9: Cost efficiency and operating leverage confirmed in our DNA
Cost efficiency and operating leverage confirmed in our DNA FY21 characterized by costs directly related to the strong acceleration of growth of the business experienced in the “new normal world” Operating Costs, mln Staff expenses and FTE, mln FTE # 2021(1): +6.5% y/y The yearly increase is mainly
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 10 bps Personal loans Mortgages 7 bps 4 bps +35.1% Dec.20 Sep.21 Dec.2
Slide 11: Capital Ratios
Capital Ratios Best in class capital position and low risk balance sheet RWA, mln CET1 Ratio, % Credit Market Operational CET1 capital, mln +21.1% before 2019-2020 dividend payment +0.8% 28.56 18.37 18.80 Assuming 2021 4,580 4,618 dividend proposal of 3,812 €0.39 per share 2,573 3,309 3,315 Dec.20 S
Slide 12: 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 107.9 105.9 +31.5bn AUM since the end of 2014, o/w: Guided Products & Services +33.8bn 91.7 AuM à la carte -2.2bn +22.2% 81.4 55.5 51% 51% 53.9 67
Slide 13: 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 +14.7% +23.6% 10.7 9.9 9.3 8.0 5.8 4.3 7.3 6.0 6.2 5.1 7.2 5.5 5.4 5.5 4.3 5.0 4.9 2.3 3.3
Slide 14: 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 15: 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 62% (+7.2% y/y) and hold 88% of TFA (+5% y/y) +11.0% +18.8% +184 +2.9% 79.6bn 100 94.6bn 100 2,601 2,606 2,790 33.0 33.9 30.6 > €35mln +14.2% 29% 34% €25-35mln y/y 62%
Slide 16: 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 AuM AuC Deposits Client segmentation 0.5-1mln 107.9 9.0% 91.7 1-5mln 1.0mln 8.8% 81.4 35.3% 5-10mln 69.3 45% 42% >10mln 41% 46.9% 15% 37% 37% 35% 39% 37% 10% Average age: 28
Slide 17: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 17
Slide 18: 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 19: 2022 Guidance and outlook going forward
2022 Guidance and outlook going forward Banking: Operating costs: Net financial income (net interest income and Profit from Treasury management): For 2022 expected to grow around 5% y/y, not including around 7 million of we expect for FY22 a net financial income at least stable compared to t
Slide 20: Delivering on our discontinuities: Balance Sheet growth under control
Delivering on our discontinuities: Balance Sheet growth under control Our set of initiatives to improve the 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: 2 ROBUST ACC
Slide 21: 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 22: Discontinuity on our Investing business
INVESTING Discontinuity on our Investing business Expected acceleration of revenues and margins thanks to higher AUM volumes and to the strategic discontinuity in FAM to take more control of the value chain, improving operational efficiency STRONG VOLUME EFFECT FAM OPERATIONAL EFFICIENCY INCREASIN
Slide 23: 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… FAM 2022 priorities bn 1 FAM retail net sales 2 FAM institutional net sales In 2022 F
Slide 24: 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 Volatility (1) Avg vo
Slide 25: 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 Active investors P
Slide 26: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 26
Slide 27: Fineco UK gaining traction
Fineco UK gaining traction Strong acceleration in our quality customer acquisition translating in improving revenues dynamics An increasing and better quality client base… …translating in improving revenues metrics €, mln Targeting quality clients with the right offer Higher brokerage revenues… # cu
Slide 28: Fineco UK: Investing in the spotlight
Fineco UK: Investing in the spotlight ISA accounts offer, already 1,300+ subscriptions. Next step: improving our user experience The new phase: building up our Investing offer and improving user experience Step 1: Step 2: Widening our offer Improving user experience Already 21 Asset managers in ou
Slide 29: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 29
Slide 30: 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 one-stop-solution with
Slide 31: 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 Sustainable since inception GOVERNANCE STRATEGY & GOALS INITIATIVES & KPIs MA
Slide 32: 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 RECENT ESG AWARDS Eval. scale 2020 2021 Fineco includ
Slide 33: 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 34: 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 35: Safe Balance Sheet: simple, highly liquid
Safe Balance Sheet: simple, highly liquid Diversified investment portfolio 33.9 bn Financial Assets Customer deposits Investment strategy announced during FY17 results unchanged: UC bonds run- Customer loans Other liabilities offs, blend of government bonds diversified across countries, covered bo
Slide 36: 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 33.9bn, only 0.04bn 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 37: Agenda
Agenda Fineco Results Next steps Fineco UK 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 40% +11.8% +3.5% -5.7% 309.5 320.4 66.7 79.1 74.5 4Q20 3Q21 4Q21 FY20 FY21 Brokerage, mln 27% Investing, mln 34% FY21 +42.4% Management +0.6% fees +29.8% -7.9% +15.0%
Slide 39: 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 +5.3% Fees and commissions Other +2.2% +3.5% 28.0 28.9 29.5 +11.8% 320.4 -5.7% 309.5 Dec.20 Sep.21
Slide 40: Brokerage
Brokerage Structurally higher revenues floor despite lower market volatility and volumes vs FY20 and 3Q21 Revenues, mln Well-diversified brokerage offer Net Interest Fees and commissions Trading profit Executed orders among products… …and geographies -7.9% +0.6% Funds Other markets 232.4 Forex / CFD
Slide 41: 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 Guided Products / AUM Upfront fees Other PFA costs FY21 Management fees Management
Slide 42: Annex
Annex 42
Slide 43: P&L pro-forma
P&L pro-forma P&L pro-forma(1) mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 4Q21 FY21 Net financial income 72.0 75.1 68.6 64.1 279.7 75.1 72.8 69.2 62.9 280.0 o/w Net Interest Income 68.2 70.1 68.6 63.9 270.7 61.8 62.5 61.8 61.8 247.9 o/w Profit from treasury management 3.8 5.0 -0.1 0.3 9.0 13.2 10.3
Slide 44: P&L net of non recurring items
P&L net of non recurring items P&L pro-forma(1) net of non recurring items 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 4Q21 FY21 mln Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Net financial income 72.0 75.1 68.6 64.1 279.7 75.1 72.8 69.2 62.9 280.0 o/w Net
Slide 45: 2021 P&L FinecoBank and Fineco Asset Management
2021 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net financial income -0.3 280.4 280.0 Dividends 0.0 61.5 0.0 Net commissions 98.2 352.6 450.8 Trading profit 0.0 74.3 74.3 Other expenses/income -0.3 -0.9 -1.3 Total revenues 97.
Slide 46: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 4Q21 FY21 Margins Margins Margins Margins Margins Margins Margins Margins Margins Margins Financial Investments 54.8 22,543 5
Slide 47: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005040099 Euro 100.0 24-Jan-22 Euribor 1m 1.46% 2 IT0005057994 Euro 200.0 11-Apr-22 Euribor 1m 1.43% 3 IT0005083743 Euro 300.0 28-Jan-22 Euribor 1m 1.25% 4 IT0005114688 Euro 180.0 19-May-22 Euribor 1m 1.19% 5 IT0
Slide 48: 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 3.6 +7.8% 3.1 2.8 +1.1% +7.7% 2.5 2.5 2.4 2.2 24.6 24.4 2.0 24.3
Slide 49: Lending: high quality portfolio and cautious approach
Lending: high quality portfolio and cautious approach 2022 Guidance Eop, bn 25,614 mortgages granted since December 2016 Mortgages +48.6% yearly new production: Average customer rate: 142 bps. FY21 Yield(1) at 50 bps ~ 300-400 mln +7.3% Average Loan to Value on actual portfolio ~51%, average
Slide 50: Details on Net Commissions
Details on Net Commissions Net commissions by product area mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 4Q21 FY21 Banking 9.5 11.1 10.4 3.2 34.2 10.8 11.9 12.9 13.6 49.2 Brokerage 36.3 38.3 27.1 31.7 133.5 40.2 29.5 26.0 30.6 126.2 o/w Equity 30.0 31.0 21.7 26.5 109.2 36.1 24.6 22.5 26.2 109.5 Bond 1
Slide 51: Revenues breakdown by Product Area
Revenues breakdown by Product Area P&L by product area mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 4Q21 FY21 Net financial income 70.5 74.8 66.9 62.8 275.0 72.6 69.8 65.9 60.0 268.2 o/w Net interest income 66.6 69.8 67.0 62.6 266.0 59.3 59.5 58.4 58.9 236.1 o/w Profit from Treasury Management 3.8 5.
Slide 52: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 Jun.21 Sep.21 Dec.21 AUM 35,516 40,083 41,744 45,381 48,018 51,399 52,648 55,450 o/w Funds and Sicav 24,122 27,657 28,929 31,578 33,271 35,699 36,233 38,053 o/w Insurance 9,961 10,676 11,020 11,819 12,659 13,448 14,122 14,963 o/
Slide 53: Balance Sheet
Balance Sheet mln Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 Jun.21 Sep.21 Dec.21 (1) Due from Banks 1,801 1,633 1,761 2,541 1,902 2,253 2,429 1,844 Customer Loans 3,741 4,204 4,320 4,528 4,639 5,269 5,624 6,002 Financial Assets 23,414 22,961 22,988 23,957 25,398 24,648 24,446 24,581 Tangible and Intangible
Slide 54: 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, which are not yet at full speed, at the same time we can: 1) sustain our growth OUR PRIORITY 2) distribute a growing dividend per sh
Slide 55: Main Financial Ratios
Main Financial Ratios Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 Jun.21 Sep.21 Dec.21 PFA TFA/ PFA (mln) (1) 25.7 27.9 28.7 30.6 31.6 32.5 33.0 33.9 Guided Products / TFA (2) 34% 35% 36% 36% 36% 38% 38% 39% Cost / income Ratio (3) 29.9% 29.9% 30.7% 32.4% 30.4% 31.3% 31.4% 32.2% CET 1 Ratio 25.4% 24.1% 23.3%
Slide 56: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at €24.9bn, of which €15.0bn retail classes(1) FAM EVOLUTION (57 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 57: 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 58: Fineco UK vs competitors
Fineco UK vs competitors Products and services Platform features Usability, reliability and advanced tools Coming Soon 58
Slide 59: 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 (1) (1) (1) (1) Multicurrency: best spreads, no commissions Transaction fee
Slide 60: Preserving our best price/quality ratio
Preserving our best price/quality ratio Competitive landscape(1) € 87 avg € 141 avg € Online online costs branch costs Branch IWBank (IWConto) 4 89 Widiba (Conto Start) 20 53 ING (Conto Arancio) 24 Webank 24 Fineco 27 HelloBank! (Hello! Money) 58 Banca Sella (Conto Start) 62 161 CreditAgricole (Easy
Slide 61: Fixed Income
Fixed Income Senior Preferred instrument AT1 instruments €200 mln perpetual AT1 issued on January 23rd, 2018: On October 14th, 2021, Fineco successfully issued 500mln Senior Preferred in • Coupon fixed at 4.82% for the initial 5.5 years order to be immediately compliant with the Fully Loaded MRE
Finecobank Banca Fine — Q4 2021 Earnings Presentation on 6ix