Banca Generali S.p.a. · MIL:BGN
Banca Generali — 9M 2020 Earnings Presentation
36 slides from Banca Generali's earnings presentation, Nov 5, 2020
Slide 1: 9M 2020 Results
9M 2020 RESULTS 5 NOVEMBER 2020
Slide 2: Agenda
AGENDA Preliminary remarks Our Mission: To be the 9M 2020 Results No.1 Private Bank unique Net Inflows, Assets and Recruitment by Value of Service, Innovation and Business update Sustainability Appendix
Slide 3: 9M 2020 Results: Executive Summary
9M 2020 RESULTS: EXECUTIVE SUMMARY HEALTHY AND SUSTAINABLE DELIVERY Total assets at €70.4bn (+7% YoY), Net inflows at €4.1bn (+8% YoY) Solid assets driven by net inflows, stable financial market conditions and diversified offer. Pure managed solutions (€34.5bn, +10%) above pre-crisis level, unders
Slide 4: Results at a Glance
RESULTS AT A GLANCE KEY TAKEAWAYS Comments (€ mil) 9M 19 9M 20 % Chg Sound increase in Total Banking Income (+10%) Net Interest Income 53.9 67.1 24.5% Net Financial Income (+22%) with a strong NII (+25%) Net income (loss) from trading activities and Dividends 9.3 10.1 8.2% for higher volumes and r
Slide 5: Net Profit Breakdown
NET PROFIT BREAKDOWN POSITIVE OPERATING TREND OFFSET BY HIGHER TAXATION Net profit breakdown m/€ Build-up of recurring net profit m/€ Operating items Non-operating items +23.4 (15.4) 196.0 195.8 (3.8) (2.5) (12.9) 116.1 108.1 13.7 79.7 13.5 87.9 108.1 116.1 9M 19 9M 20 9M 19 NII Net fees Opex Net Ta
Slide 6: Agenda
AGENDA Preliminary remarks Our Mission: To Be the 9M 2020 Results No.1 Private Bank unique Net inflows, Assets and Recruitment by Value of Service, Innovation Business update and Sustainability Appendix
Slide 7: Net Financial Income
NET FINANCIAL INCOME NET INTEREST INCOME MOVING HIGHER Net financial income m/€ Interest-bearing Assets bn/€ NII increased both 77.1 12.8 YoY and QoQ 11.8 63.2 Trading income driven by higher 10.1 1.3 2 NII 1.2 assets, sticky 9.3 2.1 1.9 investment return Other assets Loans to Banks and €1.3m contri
Slide 8: Gross Fees (1/3)
GROSS FEES (1/3) POSITIVE CONTRIBUTION FROM ALL REVENUE LINES Gross recurring fees m/€ Variable fees m/€ 575.2 536.8 Sound increase in recurring fees (+7% YoY, +4% QoQ) driven by higher managed assets and more revenue streams 183.1 195.5 186.5 193.2 96.3 100.4 53.4 3Q gross recurring 25.5 19.8 27.2
Slide 9: Gross Fees: Management Fees (2/3)
GROSS FEES: MANAGEMENT FEES (2/3) ACCELERATION AT QUARTERLY LEVEL Quarterly trend m/€ 477.0 496.8 Quarterly management fees Management 163.2 165.7 160.6 170.5 above pre-crisis level in Fees absolute terms (+6% QoQ) m/€ 9M 19 9M 20 3Q19 1Q20 2Q20 3Q20 boosted by higher volumes and improving margins A
Slide 10: Gross Fees (3/3): Other Fees
GROSS FEES (3/3): OTHER FEES GROWING CONTRIBUTION AND DIVERSIFICATION Banking and Entry Fees m/€ New revenue streams m/€ Sound increase in banking and entry 78.4 fees (+31% YoY). 78.4 3Q reflecting 59.8 23.2 seasonality, yet 59.8 higher YoY 18.0 +43% 45.6 29.7 31.9 New revenue 25.9 22.8 55.2 19.9 st
Slide 11: Focus on New Revenue Streams
FOCUS ON NEW REVENUE STREAMS GROWTH TREND ABOVE PLAN ACROSS THE BOARD New revenue streams m/€ 20-25 18.3 16.9 Strong delivery reflecting growing 11.8 demand for advisory on both financial and non-financial wealth AuA/Total assets at 7.8% with target 9M19 2019 9M20 2021E revised upwards to 8-10%
Slide 12: Fee Expenses
FEE EXPENSES TOTAL PAY-OUT RATIO IMPROVING FURTHER Total Fee Expenses m/€ Pay-out to the network % 48.2% 47.2% Pay-out to the network 305.4 decreased thanks to 287.9 33.8 lower one-off and 29.2 36.2 35.9 change in asset mix and 65.0 0.5 lower cost of growth 61.9 11.5 11.3 Fee expenses to 9M 19 9M 20
Slide 13: Operating Costs (1/2)
OPERATING COSTS (1/2) TIGHT CONTROL ON CORE OPERATING COSTS Total operating costs1 m/€ Breakdown of core operating costs2 m/€ Starting from 9M20, compulsory contributions to banking funds (DSGD, +2% BRRD directives) were 134.2 136.8 148.4 163.9 classified in a dedicated 22.1 heading below operating
Slide 14: Operating Costs (2/2)
OPERATING COSTS (2/2) OVERALL BEST IN CLASS COST RATIOS Operating costs/Total assets Cost/Income ratio 0.51% 53.4% 53.9% 52.6% 52.3% 51.1% 0.45% 44.3% 0.40% 42.3% 41.0% 38.9% 40.3% 38.8% 37.5% 0.37% 36.2% 40.0% 0.33% 0.33% 0.31% 0.31% 30.9% 31.4% 2013 2014 2015 2016 2017 2018 2019 9M20 2013 2014 201
Slide 15: Capital Position
CAPITAL POSITION STRONG CAPITAL POSITION IN ANY DIVIDEND SCENARIO CET1 ratio TCR ratio Pro-forma 9M 2020 Capital ratios assuming: 5.2% 21.7% 5.2% 20.4% • Distribution of the 2nd tranche 15.7% 0.8% 16.5% 2019 dividend – as already 14.3% 0.9% 15.2% approved by the AGM - in 2021 pending new ECB/Bankit
Slide 16: Agenda
AGENDA Preliminary remarks Our Mission: To Be the 9M 2020 Results No.1 Private Bank unique Net Inflows, Assets and Recruitment by Value of Service, Business update Innovation and Sustainability Appendix
Slide 17: Total Assets
TOTAL ASSETS TOTAL ASSETS ABOVE PRE-CRISIS LEVEL Total Assets bn/€ Managed Solutions bn/€ 70.4 34.5 69.0 34.0 66.1 31.4 Managed 7.2 7.9 solutions at 7.1 In-House funds 49% of total 9.7 9.8 8.8 assets leaving Third-party funds 34.0 34.5 significant upside 31.4 7.2 8.4 7.8 Financial wrappers from curr
Slide 18: BG Fund Management Lux
BG FUND MANAGEMENT LUX STEADY ASSET GROWTH BG FML - Assets by SICAV bn/€ BG FML - Total Assets, bn/€ 16.9 17.2 16.9 17.2 16.0 Lux IM growth continues 16.0 Institutional fund at a fast pace 0.3 9.3 9.7 9.3 0.3 classes representing 70% of total 0.3 4.9 Lux-based in-house Retail fund 6.0 classes 6.7 7.
Slide 19: Total Net Inflows
TOTAL NET INFLOWS HIGHER VOLUMES AND BETTER PRODUCT MIX Total Net Inflows bn/€ Focus on managed solutions bn/€ 1.8 4.1 Net inflows 3.8 ahead of 9M 2019 levels both 0.9 0.9 0.9 1.8 by volumes and 0.9 mix. 0.7 1.0 0.3 3Q flows +30% 0.2 1.5 0.1 YoY 1.3 1.3 0.3 0.3 0.5 1.0 0.2 1.9 2.0 0.6 0.5 0.9 Net in
Slide 20: Net Inflows by Channel
NET INFLOWS BY CHANNEL NET INFLOWS DRIVEN BY EXISTING FA NETWORK Recruitment trend (# of Recruits) Total net inflows by acquisition channel 105 Total net inflows in 86 the nine months 27% driven by existing FAs 29% 29% 53% amid the pandemic and 73 reduction in recruiting 42 59 52 26 Recruiting resta
Slide 21: October Net Inflows
OCTOBER NET INFLOWS STRONG MONTHLY DATA AND SOLID MIX OVERALL Monthly net inflows m/€ Managed solutions bn/€ Total Net Inflows bn/€ 613 4.7 of which: 170 LUX IM: €102m Insurance wrappers: €90m 367 2.0 4.1 1.2 284 458 119 -15 -36 10M 19 10M 20 10M 19 10M 20 Oct. 19 Oct. 20 Managed products Traditiona
Slide 22: Agenda
AGENDA Preliminary remarks Our Mission: 9M 2020 Results To Be the No.1 Private Bank unique Net inflows, Assets and Recruitment by Value of Service, Business update Innovation and Sustainability Appendix
Slide 23: Recipe for Tough Times
RECIPE FOR TOUGH TIMES QUALITY OF THE NETWORK ALWAYS COMES FIRST REPLY - a well-known listed management consultant firm – recently conducted an FA industry study that analyses data from 2008 to the present. Results show that Banca Generali tops the ranks in terms of network growth and quality, which
Slide 24: Growth Coming with Quality at Banca Generali
GROWTH COMING WITH QUALITY AT BANCA GENERALI AVG. FA PORTFOLIO TRIPLED (AND 50% HIGHER THAN SECTOR AVERAGE) Banca Generali No. of Fas (#) Assets (bn/€) Assets/FA (m/€) +26% 2,060 32.6 x3.5 67.1 +21.0 BG’s growth outpacing 1,635 19 11.6 sector peers by key metrics: 2008 1H20 2008 1H20 2008 1H20 Top 5
Slide 25: Well-Balanced Quality of FAs Across Different Vintages
WELL-BALANCED QUALITY OF FAS ACROSS DIFFERENT ‘VINTAGES’ EXISTING FAS SET THE TARGET FOR NEW RECRUITS Asset breakdown Portfolio build-up by cluster (m/€) by cluster of FAs 34.0 Portfolio growth is 1,903 65.4 building up over time Cluster 1 reflecting client and FA ≤ 2013 37% 38% asset acquisitions 2
Slide 26: FA Retention at Record-High Levels
FA RETENTION AT RECORD-HIGH LEVELS STEADY DECREASE IN THE NUMBER OF EXITS ACROSS FAS Trend in FA exit (#, m/€) Breakdown of FA OUT in 9M20 by cause 81 72 Competition 68 Other 63 56 58 49 32% 29% 31 39% 3.4 5.4 3.7 7.0 4.3 7.0 4.2 7.2 Network optimization 2013 2014 2015 2016 2017 2018 2019 9M20 FA OU
Slide 27: First 9M Inflows: Contribution by FAs' Vintage
FIRST 9M INFLOWS: CONTRIBUTION BY FAS ‘VINTAGE’ HIGH PRODUCTIVITY ACROSS DIFFERENT FA CLUSTERS Build-up of 9M 2020 net inflows by FAs’ vintages All FAs’ vintages show similar trends 4.1 in terms of clients’ profile: • 50% net inflows come from private 0.6 clients (assets €500k to €5m) 0.6 0.6 • 39%
Slide 28: First 9M Inflows: Client Cluster Contribution
FIRST 9M INFLOWS: CLIENT CLUSTER CONTRIBUTION GROWING SHARE OF WALLET FROM EXISTING CLIENTS Build-up of 9M 2020 net inflows by client cluster 4.1 39% of total growth coming from (0.2) expansion of the share of wallet from 0.6 existing clients. This figure is net of exits (4%), reflecting pruning of
Slide 29: Agenda
AGENDA Preliminary remarks Our Mission: 9M 2020 Results To Be the No.1 Private Bank Net inflows, Assets and Recruitment by Value of Service, Business update Innovation and Sustainability Appendix
Slide 30: Net Financial Income: Focus on Financial Assets
NET FINANCIAL INCOME FOCUS ON FINANCIAL ASSETS Financial Assets by IFRS classification bn/€ Maturity (Bonds) Duration (Bonds) 3.7 3.2 1.6 1.5 8.5 7.9 7.8 0.0 1.1 0.7 0.9 0.5 0.1 0.1 2.4 Total HTCS Total HTCS Total HTCS Total HTCS 3.2 2.8 9M 19 9M 20 9M 19 9M 20 Bond breakdown by Bond Classification
Slide 31: Focus on Lending
FOCUS ON LENDING LOAN VOLUMES PICKING UP Loan portfolio m/€ Lombard loan trend m/€ 1.2 1.2 3.0 1.1 2.7 2.8 2.5 2.6 2.6 2.6 1.0 0.9 2.1 0.9 1.9 1.9 1.9 2.0 2.0 2.0 0.8 0.8 0.8 0.7 0.7 0.6 0.6 0.5 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 Granted loans Drawn loans Granted l
Slide 32: Advisor Network
ADVISOR NETWORK STEADY QUALITY GROWTH Financial Advisor Network, # FAs FA Network, by portfolio size and skills 2,040 2,086 Clusters (% of Assets) No. of FAs Assets per FA 1,985 1,936 1,841 1,715 Wealth 1,645 Managers 35% 3301 82.2 m/€2 Financial Advisors 1,475 (>€50m) Private 32 Bankers 52% 1,2361
Slide 33: Client Base
CLIENT BASE GROWING PRIVATE POSITIONING Clients’ breakdown by cluster1, #, bn/€ No. of Clients with assets >500 k/€1, # 26397 27110 240.2 69.0 21951 22621 11% 18633 16073 33% 13939 66% 10746 33 56% 26% 8% 2013 2014 2015 2016 2017 2018 2019 9M20 No. of clients Assets (clients (w. Assets > €10K assets
Slide 34: 2020 Key Business Drivers
2020 KEY BUSINESS DRIVERS SIGNIFICANT OPPORTUNITIES WITHIN MANAGED SOLUTIONS Diversification and sustainability 18.8% Worldwide 12.6% 14.2% economic 4.4% 5.2% 6.8% disruption Opportunity for further expanding position given still limited penetration on total assets (11%) 9M 19 2019 9M 20 New i
Slide 35: 2020 Key Business Drivers: Protection
2020 KEY BUSINESS DRIVERS DEPLOYING TOOLS TO DELIVER PROTECTION TO CLIENTS’ WEALTH Protection Enhanced need 33.4% 34.4% 34.9% for wealth 12.5% 12.6% 12.7% protection driven by the pandemic Heightened clients’ interest for insurance solutions (insurance covers, succession, pension needs, tax opti
Slide 36: 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