Finecobank Spa · MIL:FBK
Finecobank Spa — UniCredit Italian Financials Debt Conference (November 2021)
68 slides from Finecobank Spa's conference presentation, Nov 23, 2021
Slide 1: 3Q21 Results
3Q21 Results UniCredit Italian Financials Debt Conference Lorena Pelliciari CFO Milan, November 23rd 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 overview Fineco 3Q21 Results Capital, risks and liquidity Next steps Fineco UK Focus on product areas 3
Slide 4: Introducing Fineco, a leading FinTech Bank in Europe
Introducing Fineco, a leading FinTech Bank in Europe Integrated offer of Banking, Brokerage and Investing via multi-channel approach, for sustainable growth Corporate purpose: offer customers excellent services and products through a multi-channel system at a fair price 9M21 weight on total revenues
Slide 5: Long term sustainability at the heart of Fineco business model
Long term sustainability at the heart of Fineco business model 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 TRANSPARENCY EFFICIENCY INNOVATION Fairness and respect Fintech DNA: strong focus Q
Slide 6: 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 7: 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 + 13% Clients (thd, #) 254 208 226 197 Net profit (1) (mln) 155 749
Slide 8: Safe Balance Sheet: simple, highly liquid
Safe Balance Sheet: simple, highly liquid 33.5 bn Deposit modelling reflected in Investment portfolio Financial Assets Customer deposits "core" Customer loans Customer deposits "non core" Deposit base made of transactional liquidity based on quality of services. Cost of (1) Due from Banks Other li
Slide 9: Consistently growing in our target market
Consistently growing in our target market Improving the quality of our client base Outperforming the system in Private Banking(1) growth € bn, TFA € bn, TFA Client segmentation 0.5-1mln +106.4% Italian Private FinecoBank since 2016 Banking Association (2) 8.9% 1-5mln 103.5 8.7% 5-10mln 35.6% 101.2%
Slide 10: Strategy: fast growing and capital efficient business model
Strategy: fast growing and capital efficient business model Our two discontinuities: Deleveraging the Balance Sheet and improving Investing business Deleverage to improve our quality revenues mix 1 STRONG COMMERCIAL FOCUS ON AUM: 2 ROBUST ACCELERATION IN PFAs PRODUCTIVITY through: targeting only A
Slide 11: Agenda
Agenda Fineco overview Fineco 3Q21 Results Capital, risks and liquidity Next steps Fineco UK Focus on product areas 11
Slide 12: 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: continuing with the deleveraging of the Balance Sheet: boosting Fees and Commissions to increase revenues with a
Slide 13: Facing a “new normal world”: record high 9M Net Profit
Facing a “new normal world”: record high 9M Net Profit Adj. Net Profit at 257.2mln, +4.4% y/y boosted by strong acceleration of Investing. The Bank has entered a new dimension of growth. C/I ratio at 31%, confirming our operating leverage. Net Profit, mln Revenues, mln excluding non recurring items
Slide 14: Net Financial Income flat y/y also thanks to a more 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) (2) (3) 1M Euribor NII Profit from Treasury management Other Treasury activities Other Lending (4) (5) Financial Investments Tax Credit NII Gross margins Tota
Slide 15: Boosting Fees & Commissions and Brokerage Trading Profit
Boosting Fees & Commissions and Brokerage Trading Profit 9M21 Fees and commissions +13% y/y thanks to the positive contribution by all business areas. Brokerage confirming the structurally higher floor despite lower market volatility and volumes vs 9M20 and 2Q21 Fees and commissions, mln Brokerage T
Slide 16: Our priority: accelerating on Investing
Our priority: accelerating on Investing 9M21 revenues increasing thanks to volume effect and strong acceleration in AUM net sales. Margins higher thanks to the operational efficiency given by Fineco Asset Management and a first sign of higher risk appetite by clients Investing Revenues, mln Manageme
Slide 17: Cost efficiency and operating leverage confirmed in our DNA
Cost efficiency and operating leverage confirmed in our DNA 9M21 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 9M20 strict lock-down (9M20 OAE lower vs 9M avg in the period 2010-20
Slide 18: 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 11 bps 10 bps Personal loans Mortgages 7 bps +30.0% Sep.20 Dec.20 Sep.
Slide 19: Lending: solid growth for all our products
Lending: solid growth for all our products High quality portfolio and cautious approach 2021 Guidance Eop, bn 24,001 mortgages granted since December 2016 Mortgages +38.9% yearly new production: Average customer rate: 143 bps. 9M21 Yield(1) at 48 bps ~ 900-1000 mln +38.5% Average Loan to Val
Slide 20: TFA breakdown
TFA breakdown Successful shift towards high added value products thanks to strong productivity of the network Breakdown of total TFA, bn Breakdown of total Net Sales, bn 103.6 105.5 +23.7% y/y 91.7 9.3 +23.8% 8.8 81.4 7.9 51% 51% 67.2 69.3 5.8 4.3 49% 6.2 6.4 60.2 6.0 55.3 50% 5.5 5.9 5.0 49.3 48% 2
Slide 21: 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 22: 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 61% (+12% y/y) and hold 87% of TFA (+7% y/y) +15.0% +22.8% +175 +7.8% 73.9bn 100 90.7bn 100 2,577 2,752 33.0 30.6 > €35mln 28.7 +18.2% 26% €25-35mln 32% y/y 61% 53% 18.
Slide 23: Agenda
Agenda Fineco overview Fineco 3Q21 Results Capital, risks and liquidity Next steps Fineco UK Focus on product areas 23
Slide 24: Capital Ratios
Capital Ratios Best in class capital position and low risk balance sheet RWA, mln CET1 Ratio, % Credit Market Operational CET1 capital, mln +29.4% with 2019-2020 dividend payment +3.4% 23.28 18.59 18.37 4,431 4,580 3,541 2,406 3,180 3,309 Sep.20 Jun.21 Sep.21 1,103 31 1,195 56 1,195 76 824 824 841 S
Slide 25: Solid risk management framework, embedded in Fineco's DNA
Solid risk management framework, embedded in Fineco's DNA Sustainability and a prudent risk approach remains at the heart of Fineco's model. Fineco confirms its strategic approach towards the adoption of a robust business model characterized by a low risk appetite aimed at creating sustainable profi
Slide 26: Already compliant with MREL requirements after Senior Preferred issuance
Already compliant with MREL requirements after Senior Preferred issuance Strong and high quality order book for the Senior Preferred bond, with a demand more than 4x the offer. Fineco MREL requirements, which were the lowest among the disclosed ones in the market, are met with 2 years in advance Rat
Slide 27: Leverage Ratio Sensitivity
Leverage Ratio Sensitivity Focus on deleveraging 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 di
Slide 28: 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
Slide 29: AT1 Coupon payments underpin by solid profitability
AT1 Coupon payments underpin by solid profitability New dimension of growth reinforcing our solid profitability € mln PBT Dividends AT1 Coupon before Tax 2019-2020 dividend equal to 323.2 mln 452.1 383.5 Discretionary coupon payments on AT1 capital are subject to sufficient distributable items 354
Slide 30: Excellent capitalization
Excellent capitalization Strong capital ratios, leading to a high distance to the loss absorption trigger and to CET1 Capital Requirements Distance from CET1(1) to AT1 trigger Distance to Capital Requirements % Distance to trigger AT1 trigger % CET1 T1R TCR 28.56 18.37 29.29 29.29 with 2019-2020 div
Slide 31: Rating
Rating BBB rating by S&P with Stable outlook S&P Outlook Stable Long-term Issuer Rating BBB Long-term Bank Local Issuer Rating BBB Short-term Foreign Issuer Rating A-2 Short-term Local Issuer Credit A-2 Key Considerations Credit Highlights “Fineco's digitalized business model will remain a differe
Slide 32: Agenda
Agenda Fineco overview Fineco 3Q21 Results Capital, risks and liquidity Next steps Fineco UK Focus on product areas 32
Slide 33: 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 34: 2021 Guidance and outlook going forward
2021 Guidance and outlook going forward Banking: Operating costs: Net financial income (net interest income and Profit from Treasury management): For 2021 expected to grow around 5% y/y. We expect about 5 million of additional we expect for FY21 and FY22 a net financial income to stabilize a
Slide 35: Focus on deleveraging
Focus on deleveraging Initiatives to keep under control our Balance Sheet and improve our quality revenues mix, by taking advantage from the acceleration of structural trends and thanks to our FinTech DNA INITIATIVES TO KEEP UNDER CONTROL OUR BALANCE SHEET WIDER PRODUCT RANGE TO FULLY CATCH THE WHOL
Slide 36: 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 37: 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 38: FAM: delivering on the strategic discontinuity
INVESTING FAM: delivering on the strategic discontinuity Key to sustain investing business thanks to its strong operating leverage and to a more efficient value chain FAM growth potential and new opportunities FAM 2021 priorities In 2021 FAM will focus on further 1 Strong room to increase FAM’s p
Slide 39: 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 Volatility (1) Avg volat
Slide 40: 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 41: Agenda
Agenda Fineco overview Fineco 3Q21 Results Capital, risks and liquidity Next steps Fineco UK Focus on product areas 41
Slide 42: 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 and further improving revenues mix # Current accounts keep accelerating strong pace of growth Further improving revenues mix 18k STICKINESS RATE OTC 17.5k on active clients in 9M21 10k Listed 6k M
Slide 43: 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 44: Agenda
Agenda Fineco overview Fineco 3Q21 Results Capital, risks and liquidity Next steps Fineco UK Focus on product areas 44
Slide 45: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allow the bank to successfully face any market environment Banking, mln 41% +2.4% +1.3% -3.4% 242.8 245.9 77.2 81.9 79.1 3Q20 2Q21 3Q21 9M20 9M21 Brokerage, mln 27% Investing, mln 32% 9M21 Management -10.4% +29.5% fees +25.1% -8.8% +27.6%
Slide 46: 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 +9.2% Fees and commissions Other +1.3% +2.1% 242.8 245.9 26.4 28.3 28.9 Sep.20 Jun.21 Sep.21 +2.4%
Slide 47: Brokerage
Brokerage Structurally higher revenues floor despite lower market volatility and volumes vs 9M20 and 2Q21 Revenues, mln Well-diversified brokerage offer Net Interest Fees and commissions Trading profit among products… …and geographies -8.8% -10.4% Funds Other markets Italy -7.0% 179.7 161.0 Forex /
Slide 48: 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 (2) Guided Products / AUM Upfront fees Other PFA costs 9M21 Management fees Managem
Slide 49: Annex
Annex 49
Slide 50: P&L pro-forma
P&L pro-forma(1) P&L pro-forma(1) mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 9M20 9M21 Net financial income 72.0 75.1 68.6 64.1 279.7 75.1 72.8 69.2 215.6 217.1 o/w Net Interest Income 68.2 70.1 68.6 63.9 270.7 61.8 62.5 61.8 206.9 186.1 o/w Profit from treasury management 3.8 5.0 -0.1 0.3 9.0 13.2
Slide 51: 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 9M20 9M21 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 69.2 215.6 217.1 o/w Net
Slide 52: 9M21 P&L FinecoBank and Fineco Asset Management
9M21 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net financial income -0.2 217.3 217.1 Dividends 0.0 13.7 Net commissions 65.3 259.1 324.4 Trading profit 0.0 56.2 56.2 Other expenses/income -0.1 -0.7 -0.8 Total revenues 65.1 54
Slide 53: 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 9M20 9M21 Margins Margins Margins Margins Margins Margins Margins Margins Margins Margins Financial Investments 54.8 22,543 5
Slide 54: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010225 Euro 382.5 18-Oct-21 Euribor 1m 2.60% 2 IT0005040099 Euro 100.0 24-Jan-22 Euribor 1m 1.46% 3 IT0005057994 Euro 200.0 11-Apr-22 Euribor 1m 1.43% 4 IT0005083743 Euro 300.0 28-Jan-22 Euribor 1m 1.25% 5 IT0
Slide 55: 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 3.5 +7.8% 2.8 2.5 2.5 2.4 -1.8% +7.7% 2.2 2.0 1.9 24.8 24.3 24.4
Slide 56: Details on Net Commissions
Details on Net Commissions Net commissions by product area mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 9M20 9M21 Banking 9.5 11.1 10.4 3.2 34.2 10.8 11.9 12.9 31.0 35.6 Brokerage 36.3 38.3 27.1 31.7 133.5 40.2 29.5 26.0 101.8 95.6 o/w Equity 30.0 31.0 21.7 26.5 109.2 36.1 24.6 22.5 82.7 83.3 Bond 1.
Slide 57: Revenues breakdown by Product Area
Revenues breakdown by Product Area P&L by product area mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 3Q21 9M20 9M21 Net financial income 70.5 74.8 66.9 62.8 275.0 72.6 69.8 65.9 212.1 208.2 o/w Net interest income 66.6 69.8 67.0 62.6 266.0 59.3 59.5 58.4 203.4 177.2 o/w Profit from Treasury Management 3.8
Slide 58: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 Jun.21 Sep.21 AUM 35,516 40,083 41,744 45,381 48,018 51,399 52,648 o/w Funds and Sicav 24,122 27,657 28,929 31,578 33,271 35,699 36,233 o/w Insurance 9,961 10,676 11,020 11,819 12,659 13,448 14,122 o/w GPM 127 169 185 209 238 28
Slide 59: Balance Sheet
Balance Sheet mln Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 Jun.21 Sep.21 (1) Due from Banks 1,801 1,633 1,761 2,541 1,902 2,253 2,429 Customer Loans 3,741 4,204 4,320 4,528 4,639 5,269 5,624 Financial Assets 23,414 22,961 22,988 23,957 25,398 24,648 24,446 Tangible and Intangible Assets 280 280 278 281 27
Slide 60: Main Financial Ratios
Main Financial Ratios Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 Jun.21 Sep.21 PFA TFA/ PFA (mln) (1) 25.7 27.9 28.7 30.6 31.6 32.5 33.0 Guided Products / TFA (2) 34% 35% 36% 36% 36% 38% 38% Cost / income Ratio (3) 29.9% 29.9% 30.7% 32.4% 30.4% 31.3% 31.4% CET 1 Ratio 25.4% 24.1% 23.3% 28.6% 26.5% 18.6% 18.
Slide 61: Our ESG Ratings and Indices
Our ESG Ratings and Indices ESG RATINGS ESG INDICES RECENT ESG AWARDS Fineco included in: One of the 2 banks in the world with rating Top Job 2021- “EE+” (very strong) 2022 (range from “F” to “EEE”) Top Employer Italy 2021 “A” Climate trajectory +1.53°C (range from “CCC” aligned with the Paris to “A
Slide 62: 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 63: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at €22.6bn, of which €14.3bn retail classes(1) FAM EVOLUTION (53 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 64: 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 65: Fineco UK vs competitors
Fineco UK vs competitors Products and services Platform features Usability, reliability and advanced tools Coming Soon 65
Slide 66: 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 67: Preserving our best price/quality ratio
Preserving our best price/quality ratio Competitive landscape(1) € 87 avg € 140 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 (Conto Start) 62 161 CreditAgricole (Easy
Slide 68: Fineco MREL requirement: the lowest among the disclosed ones
Fineco MREL requirement: the lowest among the disclosed ones Final MREL requirement - % RWA Final MREL requirement - % LRE Bank1 37.1 Bank2 30.8 Bank3 28.6 Bank4 27.9 Bank1 10.3 Bank5 27.7 Bank2 9.9 Bank6 27.6 Bank3 8.3 Bank7 27.4 Bank4 7.5 Bank8 27.3 Bank5 7.5 Bank9 27.1 Bank6 7.3 Bank10 27.1 Bank7
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