Banca Generali S.p.a. · MIL:BGN
Banca Generali — FY2018 Earnings Presentation
34 slides from Banca Generali's earnings presentation, Feb 7, 2019
Slide 1: FY 2018 Results
FY 2018 RESULTS 7 FEBRUARY 2019
Slide 2: Agenda
AGENDA Preliminary remarks FY 2018 results Net Inflows, assets and recruiting Closing remarks Appendix 2
Slide 3: Executive Summary
EXECUTIVE SUMMARY Solid Commercial results amid financial market volatility NET INFLOWS Solid assets (€57.5bn) and inflows (€5.0bn) amid exceptional financial markets’ volatility €5.0bn throughout the year and mostly in the 4Q (vs. €6.9bn) Pro-forma assets close to €60bn, including €2.3bn from r
Slide 4: Preliminary Remarks: New Cost of Growth Accounting
PRELIMINARY REMARKS NEW COST OF GROWTH ACCOUNTING NEW ACCOUNTING RULE FOR THE COST OF GROWTH Rationale Impact New accounting rule on fee expenses paid to existing FAs for growth, exploiting the enhanced 2018 2018 Chg. flexibility introduced by the IFRS 15 €m OLD NEW abs. FEE EXPENSES -396.5 -376.3
Slide 5: FY2018 Results at a Glance
FY2018 RESULTS AT A GLANCE KEY TAKEAWAYS * Comments (€ m) 12M 17 12M 18 % Chg 12M 18 % Chg Resilient Total Banking Income amid financial Old new markets pressure Net Interest Income 61.4 60.0 60.0 -2.4% Higher Net Financial Income (+6%) with NII in line with Net income (loss) from trading activiti
Slide 6: Net Profit
NET PROFIT SIGNIFICANT INCREASE IN RECURRING PROFITS (+48%, +33% LIKE-FOR-LIKE) Net Profit build-up m/€ 204.1 (70.4) Recurring profits at 51.3 €128m, +48% (+33% (8.8) 1.4 (9.5) 13.6 180.1 4.6 166.5 like-for-like), the highest 117.6 -3.2 level ever (1.4) 51.8 51.8 Variable profits (€51.8m, -56%) more
Slide 7: Agenda
AGENDA Preliminary remarks FY 2018 results Net Inflows, assets and recruiting Closing remarks Appendix 7
Slide 8: Net Financial Margin (1/2)
NET FINANCIAL MARGIN (1/2) NET INTEREST INCOME Net financial income m/€ 93.4 79.5 84.1 34.7 24.1 18.1 Trading gains 4Q 18 NII impacted by Net interest income the higher amount of 28.5 assets (liquidity) due to 58.7 61.4 60.0 18.3 20.2 17.7 17.8 volatile financial market 15.2 conditions 4.0 5.4 1.5 2
Slide 9: Net Financial Margin (2/2)
NET FINANCIAL MARGIN (2/2) LIQUIDITY POSITION ALMOST DOUBLED Total assets and interest-bearing assets1 (year-end) bn/€ 9.7 2019 Targets 9.0 8.4 1.5 ≤€ 1 bn Other assets 0.8 0.8 Temporary increase in liquidity (€1.5bn, +90%) 1.8 1.8 ≥€ 2 bn Loans to banks & 1.7 partly due to treasury operations and M
Slide 10: Gross Fees (1/3): Management Fees
GROSS FEES (1/3): MANAGEMENT FEES SOLID MARGINS AMID FINANCIAL MARKET TURBOLENCE Focus 4Q18 m/€ 160.8 (1.3) (4.0) 155.5 634.2 587.1 492.3 3Q18 Mix/volumes Mkt 4Q18 performance Management Fees 156.5 158.1 159.8 160.8 155.5 m/€ 4Q18 management fees hit by extraordinary negative financial markets condi
Slide 11: Gross Fees (2/3): Performance Fees
GROSS FEES (2/3): PERFORMANCE FEES AMONGST THE LOWEST LEVEL IN THE LAST 10 YEARS 115.1 New performance fee 67.2 mechanism based on 12-month rolling high-watermark 38.6 32.3 represented 34% of Performance 2018 total amount Fees 14.9 14.0 m/€ 7.6 2.0 2016 2017 2018 4Q17 1Q18 2Q18 3Q18 4Q18 On 0.29% 0.
Slide 12: Gross Fees (3/3): Other Fees
GROSS FEES (3/3): OTHER FEES ONGOING SOLID GROWTH New revenue streams (certificates and asset under 68.8 advisory) growing fast at €17 58.2 million in 2018 (vs. €4m in 20.9 2017) and already accounting 45.3 for 25% of total other fees (vs. 19.7 7% in 2017) 16.5 Banking and New revenue streams Entry
Slide 13: Fee Expenses
FEE EXPENSES KEY DRIVER FOR BUSINESS FLEXIBILITY Pay-out to the network % Total Fee Expenses m/€ 53.1% 53.8% 47.7% 390 Pay-out ratio to FAs 376 36.2 35.0 43 35.7 Net decrease linked 319 41 primarily to a lower cost of 34 16.9 18.8 12.0 growth (-4.0 p.p. like-for- 121 84 2016 2017 2018 like) related
Slide 14: Core Net Banking Income
CORE NET BANKING INCOME GROWING TREND 386.7 316.8 276.9 Core Net banking Income margin at 0.64% on a like-for- like basis 113.6 91.2 89.0 93.0 Core Net Banking 79.5 Income m/€ 2016 2017 2018 4Q17 1Q18 2Q18 3Q18 4Q18 Core Net Banking Income 0.63% 0.61% 0.67% 0.58% 0.65% 0.62% 0.64% 0.78% on avg Asset
Slide 15: Operating Costs
OPERATING COSTS OPERATING COSTS IN LINE WITH GUIDANCE Total operating costs m/€ Breakdown of core operating costs m/€ 187.9 196.6 70.5 67.9 13.8 16.8 2017 2018 Sales Personnel Non-sales personnel Expenses 182.8 171.1 Core operating costs 1 103.2 112.3 9.3 One-off costs for 8.1 4.7 7.5 €7.1m for: 1)
Slide 16: Dividend Proposal to AGM
DIVIDEND PROPOSAL TO AGM Dividend Per Share (DPS) € Dividend Pay-Out % Dividend Yield 6.2% 80.0% 80.6% 1.20 1.25 1.25 78.0% 0.98 1.07 4.6% 0.95 4.2% 4.3% 4.1% 70.0% 71.0% 3.9% 68.0% 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 (1) AGM scheduled for 18 Apr
Slide 17: Capital Position
CAPITAL POSITION SOLID CAPITAL AND HIGH LIQUIDITY POSITION REAFFIRMED CET1 ratio TCR ratio Excess Capital m/€ (1.0%) 20.2% (1.2%) 19.0% 18.5% 17.5% 314 (3) 311 Solid capital ratios both on a YTD and QoQ basis (m/€) despite market volatility 2017 2018 2017 2018 2017 2018 Leverage ratio at 5.0% well a
Slide 18: Agenda
AGENDA Preliminary remarks FY 2018 results Net Inflows, assets and recruiting Closing remarks Appendix 18
Slide 19: Total Assets
TOTAL ASSETS VOLUMES AND PRODUCT MIX Total Assets bn/€ Managed Solutions bn/€ 57.5 28.0 27.3 55.7 6.2 5.5 47.5 7.4 7.7 7.1 6.4 41.6 27.3 28.0 7.3 7.7 36.6 21.5 2017 2018 29.1 18.9 16.0 In-House funds 11.6 Third-party funds 15.4 Managed solutions 14.9 Financial wrappers 14.5 11.5 12.9 Insurance wrapp
Slide 20: Total Net Inflows
TOTAL NET INFLOWS SOLID VOLUMES, HIGHER SHARE OF ORGANIC CONTRIBUTION Total Net Inflows bn/€ Managed Solutions bn/€ 6.9 5.8 5.7 2.1 5.0 4.6 4.0 2.3 1.7 2.5 5.8 1.7 0.9 2.3 1.6 1.0 2.9 0.5 -0.1 2.8 -0.2 -0.1 Managed solutions 1.5 20 1.5 Traditional life policies 2.8 1.2 0.2 In-house funds 1.3 1.4 1.7
Slide 21: Advisory Network
ADVISORY NETWORK STEADY QUALITY GROWTH FA Network Recruitment trend (# of Recruits) (# of Recruits) 1,936 1,985 161 1,841 153 1,715 1,645 126 1,475 102 94 105 122 81 92 21 73 75 50 59 31 34 39 32 27 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 73.5% 79.5% 83.0% 85.3% 88.5% 88.7% % of
Slide 22: January Net Inflows
JANUARY NET INFLOWS POSITIVE START TO THE YEAR Total net inflows, monthly trend Advisory, monthly new assets Recruiting trend, monthly trend m/€ trend m/€ (# of new recruits) 430 418 69 180 146 11 9 40 385 75 232 -24 2018 monthly January 2019 2018 monthly January 2019 2018 monthly January 2019 avera
Slide 23: Agenda
AGENDA Preliminary remarks FY 2018 results Net Inflows, assets and recruiting Closing remarks Appendix 23
Slide 24: 2019-21 Business Plan Guidelines
2019-21 BUSINESS PLAN GUIDELINES CLEAR STRATEGIC AMBITIONS PEOPLE & ORGANIZATION Foster culture of talent, sustainability and diversity & inclusion DIGITAL MINDSET Strengthen open banking approach and state-of-the-art customer digital experience Diversify revenue mix amid higher quality and ra
Slide 25: Sustainability for Banca Generali
SUSTAINABILITY FOR BANCA GENERALI EMBEDDING SUSTAINABILITY IN THE BANK CULTURE Review of Banca Generali’s VISION: “To be the No. 1 private bank by value of service, innovation and sustainability”. The bank is focussed indeed on implementing and monitoring sustainability KPIs within all business fu
Slide 26: Sustainability for Banca Generali
SUSTAINABILITY FOR BANCA GENERALI EXPORTING SUSTAINABILITY TO CLIENTS NEW COMMERCIAL APPROACH ESG Fund Selection Wide and growing offer: 161 ESG funds with 25 AMs Wide range of investment strategies (Best in Class, Best effort, Engagement, thematic Investing) ESG Portfolio Fund due-diligence a
Slide 27: 2019-21 Business Plan Guidelines: Clear Financial Targets
2019-21 BUSINESS PLAN GUIDELINES CLEAR FINANCIAL TARGETS PEOPLE & ORGANIZATION 2019-21 Targets DIGITAL MINDSET Cumulated Net Inflows >14.5 bn/€ Total Assets 76-80 bn/€ WM APPROACH DISCONTINUITY Core Net Banking Income1 ≥63 bps IN THE CONTINUITY Core Operating Costs: 3%-5% CAGR2 EXCELLENCE OF
Slide 28: Agenda
AGENDA Preliminary remarks FY 2018 results Net Inflows, assets and recruiting Business update Appendix 28
Slide 29: Net Financial Margin: Overview of the Banking Book
NET FINANCIAL MARGIN OVERVIEW OF THE BANKING BOOK Maturity Duration Italian Government bond portfolio maturities by IFRS9 classification m/€ HTC HTCS 3.7 3.5 1.7 2.0 2017 2018 2017 2018 1242 1033 Classification (IT Govt bond) 31 662 590 687 1132 621 63 2017 2018 131 15 316 347 1002 0% 0% 530 575 624
Slide 30: New Revenue Streams: Assets Under Advisory
NEW REVENUE STREAMS ASSETS UNDER ADVISORY: ADVANCED ADVISORY CONTRACT BG - % AUA Benchmark Guidance: Advisory Fees2 on Total Assets % AUA on Total Assets1 m/€ 18% 12% 20-25 7-8% 4.0% 2.5% 8.9 2.3 2017 2018 2021E Italian Private Italian Assoreti best 2017 2018 2021E market average player (2017) (2017
Slide 31: New Revenue Streams: Certificates and Private Placements
NEW REVENUE STREAMS ASSETS UNDER CUSTODY: CERTIFICATES AND PRIVATE PLACEMENTS BG - % Certificates & private Benchmark - % Certificates Guidance: Entry fees on certificates placements stock on AUC stock on AUC & private placements m/€ >10% 10.0 7.0 2.9% ~2.5% 2.5% 1.4 0.5% 2017 2018 2021E Italian Pri
Slide 32: Other Gross Fees: Brokerage
OTHER GROSS FEES ASSETS UNDER CUSTODY: BROKERAGE BG - Turnover Benchmark - Turnover Guidance: Brokerage fees Ratio (cash only)1 Ratio (cash only)2 (cash + derivatives)1 m/€ 5.8x 20-26 1.4x 1.4x 0.9x 0.9x 11.2 11.6 2017 2018 2021E Assoreti top 3 Assoreti best player 2017 2018 2021E ex best player (20
Slide 33: Disclaimer
DISCLAIMER The manager responsible for preparing the company’s financial reports (Tommaso Di Russo) declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law of Finance, that the accounting information contained in this presentation corresponds to the document results, books and a
Slide 34: Contacts
CONTACTS Investor Relations Investor App Giuliana Pagliari Investor Relations Manager Phone +39 02 6076 5548 Mobile +39 331 65 30 620 E-mail: giuliana.pagliari@bancagenerali.it E-mail: investor.relations@bancagenerali.it Corporate Website www.bancagenerali.com 34