Finecobank Spa · MIL:FBK
Finecobank Spa — Finecobank Banca Fine — Q1 2023 Earnings Presentation
57 slides from Finecobank Spa's earnings presentation, May 9, 2023
Slide 1: 1Q23 Results
1Q23 Results Alessandro Foti CEO and General Manager Milan, May 9th 2023 FINECO. SIMPLIFYING BANKING.
Slide 2: Disclaimer
Disclaimer ◼ “Pursuant to the paragraph 2 of Article 154 bis of the Consolidated Law on Financial Intermediation (Legislative Decree no. 58 of February 24, 1998), Lorena Pelliciari, in her capacity as manager responsible for the preparation of FinecoBank S.p.A. (the “Company”)’s financial reports, d
Slide 3: Agenda: Fineco Results
Agenda ✓Fineco Results ❑ Next steps ❑ Fineco international business ❑ Key messages ❑ Focus on product areas 3
Slide 4: Executive Summary
Executive Summary Successful growth story: becoming more a Platform than a Bank. Our diversified business model allows us to deliver strong results in every market condition Strong net profit and growth of the business… FY23 Guidance and going forward: strong growth confirmed ◼ 1Q23 adj. Net Profit
Slide 5: Delivering strong Net Profit in every market condition
Delivering strong Net Profit in every market condition Adj. Net Profit at 147.3mln, +19.1% y/y boosted by strong acceleration of Investing, confirming the effectiveness of our initiatives, and Net Financial Income. Strong operating leverage confirmed Net Profit, mln Revenues, mln excluding non recur
Slide 6: Revenues growth supported by all our initiatives
Revenues growth supported by all our initiatives Quality and capital light NII driven by our clients’ valuable transactional liquidity and not by lending as for other Banks. Focus on increasing Non Financial Income: becoming more a Platform than a Bank. Net Financial Income, mln Non Financial Income
Slide 7: Our priority: accelerating on Investing
Our priority: accelerating on Investing Improving margins thanks to the higher control on the Investing value chain through FAM. Quarterly comparison characterized by usual seasonality on PFA and FAM Investing revenues increasing thanks to volume effect and FAM Investing Revenues, mln Investing fees
Slide 8: Focus on FAM
Focus on FAM 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 priorities bn FAM RETAIL NET SALES ✓ Thanks to the full control of the 1.7 value chain, FAM can offer at the 1.4 same time both
Slide 9: Brokerage: higher floor as the structure of the market is changing
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 revenues: the floor has gone up in a clear way in any market environment Avg monthly revenues 2017-2019 The floor of
Slide 10: Cost efficiency and operating leverage confirmed in our DNA
Cost efficiency and operating leverage confirmed in our DNA Operating Costs, mln Staff expenses and FTE, mln FTE # The yearly increase is mainly linked to costs related to the growth 1Q23(1): +4.3% y/y 5.1% of the business, mainly related to: • FAM as it is progressively increasing the efficiency of
Slide 11: 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 4 bps 4 bps Personal loans Mortgages 3 bps +4.8% Mar.22 Dec.22 Mar.23
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 +0.7% -0.6% 19.31 20.82 21.80 4,678 4,740 4,711 3,382 3,314 3,288 Mar.22 Dec.22 Mar.23 1,256 40 1,382 45 1,382 41 903 987 1,027 Mar.22 Dec.22 Mar.23 Leverage Ra
Slide 13: TFA and Net Sales evolution
TFA and Net Sales evolution 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 AUM since the end of 2014: 112.0 112.7 107.9 106.6 Apr.23 total Net Sales: 830 mln, +126.3% 33% o/w AUM 270 mln 32%
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 Total Net Sales, bn – Organic / Recruit, % Total recruits Organic Total recruits Organic New PFAs recruited in the year PFAs recruited over t
Slide 15: 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 Client segmentation AuM AuC Deposits 0.5-1mln 107.9 106.6 112.0 8.6% 8.5% 1-5mln 1.0mln 91.7 81.4 44% 35.9% 5-10mln Level of deposits is 69.3 45% 42% 42% 47.0% >10mln gettin
Slide 16: Deep dive on our transactional liquidity
Deep dive on our transactional liquidity Our business model has fully fledged banking platform used by all our clients for their daily activities Granular and retail deposit base, very sticky thanks to the quality of our customer experience 97% Retail clients 50% Salary credited in current accounts
Slide 17: Focus on net inflows and stickiness of deposits
Focus on net inflows and stickiness of deposits Deep diving on liquidity transformation Balance of bank transfers firmly positive Breakdown of Total Net Sales Eop, bn Jan-Apr 1.1 0.2 0.9 0.7 0.2 0.8 0.3 1.6 0.7 1.0 0.8 0.3 -0.3 -0.4 -0.2 -0.6 Jan.23 Feb.23 Mar.23 Apr.23 YTD Deposits net sales per cl
Slide 18: Very strong liquidity ratios
Very strong liquidity ratios LCR NSFR LCR – 12months average 803% 377% 126% 165% FBK avg EBA FBK avg EBA Fineco as of 31.03.2023; avg EBA as of Dec.22 Fineco as of 31.03.2023; avg EBA as of Dec.22 HQLA/Deposits 63% FBK HQLA: €19.4 bn as of March 2023 Average (12 months avg) 39% 47% 50% 50% 46% 45% 4
Slide 19: Agenda: Next steps
Agenda ❑ Fineco Results ✓Next steps ❑ Fineco international business ❑ Key messages ❑ Focus on product areas 19
Slide 20: 2023 Guidance and outlook going forward
2023 Guidance and outlook going forward Our diversified business model key to successfully deal with the current volatile environment ◼ BANKING REVENUES: ➢ Net financial income (NFI: net interest income + Profit from Treasury management) ◼ OPERATING COSTS expectations: expectations(1): For FY23: gro
Slide 21: Innovation and Simplification Project
Innovation and Simplification Project Further simplifying clients’ user experience thank to easy-to-use new tools and a more efficient marketing engine. The renewed platform will be the cornerstone of our International offer BROKERAGE INVESTING BANKING ✓New Trading Pages. Coming soon: new order entr
Slide 22: Agenda: Fineco international business
Agenda ❑ Fineco Results ❑ Next steps ✓Fineco international business ❑ Key messages ❑ Focus on product areas 22
Slide 23: Fineco international business
Fineco international business Focusing our offer on a simplified digital model through a brand new, highly scalable and multilanguage platform for investments UK: business growing with Next steps Going forward: rest of EU marketing expenses on hold An increasing and better quality client base… ➢ We
Slide 24: Agenda: Key messages
Agenda ❑ Fineco Results ❑ Next steps ❑ Fineco international business ✓Key messages ❑ Focus on product areas 24
Slide 25: 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 Fineco corporate purpose: support clients in the responsible management of th
Slide 26: 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 Strategy & Goals Initiatives & KPIs ✓ FOCUS on Cyber-Security and ESG risks l
Slide 27: 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 Evaluation scale 2021 Today (0-100)
Slide 28: 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 29: 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 2022 CAGR (2014-2022) + 10% 108 107 92 69 81 60 67 1,428 1,487 + 6% TFA (bn) 49 55 1,358 1,370 1,278 1,200 461 Clients (thd, #) 964 1,048 1,118 376 + 15% 284 342 226 25
Slide 30: Agenda: Focus on product areas
Agenda ❑ Fineco Results ❑ Next steps ❑ Fineco international business ❑ Key messages ✓Focus on product areas 30
Slide 31: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allows the bank to successfully face any market environment Banking, mln 56% +35.3% +15.9% 142.6 165.3 122.1 1Q22 4Q22 1Q23 Brokerage, mln 18% Investing, mln 25% -10.9% +1.9% 1Q23 Management fees +28.9% -7.0% +1.7% y/y 59.7 53.2 73.4 80.4
Slide 32: 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 Fees and commissions Trading income Other -3.4% -4.0% 30.4 30.6 29.3 +35.3% +15.9% Mar.22 Dec.22 Mar.23 165.3 Cli
Slide 33: Brokerage
Brokerage Structurally higher revenues floor compared to pre-pandemic levels Revenues, mln Well-diversified brokerage offer Net Interest Fees and commissions Trading profit among products… …and geographies -10.9% +28.9% Funds Other markets Italy Forex / CFD 59.7 8% 9% 53.2 3.5 41.3 36% 2.9 45% 32.6
Slide 34: Investing
Investing Increasing revenues y/y thanks to volume effect and to the higher contribution by FAM, which is taking more control of the Investing value chain, supporting our margins. Very limited upfront fees, representing only ~1% of Investing fees Revenues, mln Asset under Management, eop bn FAM reta
Slide 35: Annex
Annex 35
Slide 36: P&L pro-forma
P&L pro-forma P&L pro-forma(1) mln 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 Net financial income 107.5 68.9 84.2 131.6 392.2 157.4 o/w Net Interest Income 59.3 67.6 84.3 131.6 342.8 157.4 o/w Profit from treasury management 48.1 1.3 0.0 0.0 49.4 0.0 Dividends 0.0 -0.1 0.0 -0.1 -0.3 0.0 Net commissions 118.6 11
Slide 37: P&L net of non recurring items
P&L net of non recurring items P&L pro-forma(1) net of non recurring items 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 mln Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Net financial income 107.5 68.9 84.2 131.6 392.2 157.4 o/w Net interest income 59.3 67.6 84.3 131.6 342.8 157.4 o/w Profit from treasury
Slide 38: 1Q23 P&L FinecoBank and Fineco Asset Management
1Q23 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Individual Consolidated Management Net financial income 0.0 157.4 157.4 Dividends 0.0 0.0 0.0 Net commissions 35.9 84.9 120.9 Trading profit 0.0 15.1 15.1 Other expenses/income -0.2 0.5 0.2 Total revenues 35.8 257
Slide 39: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 Margins Margins Margins Margins Margins Margins Financial Investments 36.1 24,330 42.1 24,766 57.0 24,684 89.4 24,330 224.7 24,527 105.6 23,608 Net Margin 0.60% 0.68% 0.92% 1.
Slide 40: Net financial income: focus on financial investments
Net financial income: focus on financial investments Transactional liquidity invested in a diversified portfolio Bond Portfolio (nominal value) (1) (2) € bn, eop UC bonds Italy Spain Other Govies SSA Covered & Corporate 25.2 1.0 Bond portfolio Nominal value: 25.2 bn: 8.2 ▪ o/w 56% at fixed rate, avg
Slide 41: Focus on Bond portfolio
Focus on Bond portfolio Bond portfolio run-offs, eop bn (1) Fixed rate bonds Floating and swapped bonds (1) Avg yield of fixed rate bonds, bps Avg spread vs EUR 3M of floating and swapped bonds, bps UC bonds UC Bonds avg spread vs Eur3M, bps 4.3 3.1 3.1 3.1 1.6 2.8 2.0 2.3 1.6 1.7 1.7 2.0 1.6 1.3 1.
Slide 42: New interest rates environment
New interest rates environment ➢ Below a comparison of the forward rate curve behind the guidance to the market during the 4Q22 and 1Q23 conference calls 2023 2024 as of as of as of as of 03/02/23 08/05/23 03/02/23 08/05/23 Euribor 1M AVG 3.05% 3.20% 2.92% 3.07% Euribor 3M AVG 3.19% 3.35% 2.86% 3.06
Slide 43: Net Financial Income: focus on Lending
Net Financial Income: focus on Lending Ancillary business to fulfill clients’ needs. High quality portfolio and cautious approach 2023 Guidance Eop, bn Mortgages ◼ Average customer rate: 150 bps. 1Q23 Yield(1) at 247 bps ◼ yearly new production: +1.7% ~ 150-200 mln ◼ Average Loan to Value on actual
Slide 44: Details on Net Commissions
Details on Net Commissions Net commissions by product area mln 4Q21 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 Banking 13.5 12.5 13.8 14.5 15.3 56.2 14.6 Brokerage 30.6 32.6 24.2 20.9 22.7 100.5 31.3 o/w Equity 26.2 28.1 18.3 16.1 16.5 79.0 22.8 Bond 1.2 0.6 3.0 0.9 2.7 7.2 3.9 Derivatives 2.8 3.5 2.8 2.9 2.9 12
Slide 45: Revenues breakdown by Product Area
Revenues breakdown by Product Area Revenues by product area mln 1Q22 2Q22 3Q22 4Q22 FY22 1Q23 Net financial income 104.4 66.3 81.8 129.5 382.0 154.9 o/w Net interest income 56.3 65.0 81.8 129.5 332.6 154.9 o/w Profit from Treasury Management 48.1 1.3 0.0 0.0 49.4 0.0 Net commissions 12.5 13.8 14.5 1
Slide 46: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.22 Jun.22 Sep.22 Dec.22 Mar.23 AUM 53,651 50,789 50,708 52,073 54,132 o/w Funds and Sicav 35,985 33,182 32,806 33,827 35,962 o/w Insurance 15,354 15,421 15,643 15,595 15,052 o/w GPM 326 308 303 318 331 o/w AuC + deposits under advisory 1,986 1,878 1,956 2,332
Slide 47: Increasing quality and productivity of the Network
Increasing quality and productivity of the Network Total Assets per PFA TFA concentration per PFA Eop, mln AUM AUC Deposits PFAs with TFA >20mln are 61% and hold 87% of TFA +1.6% +4.5% +81 +4.3% 93.6bn 100 97.8bn 100 2,853 2,854 2,934 2,935 32.8 33.3 31.9 > €35mln -1.8% €25-35mln 33% 34% y/y 61% 18.
Slide 48: Balance Sheet
Balance Sheet mln Mar.22 Jun.22 Sep.22 Dec.22 Mar.23 Due from Banks (1) 2,132 1,943 2,139 1,896 1,860 Customer Loans 6,088 6,311 6,318 6,446 6,312 Financial Assets 25,389 25,315 25,091 24,651 24,366 Tangible and Intangible Assets 276 274 270 273 268 Derivatives 466 949 1,390 1,425 1,300 Tax credit a
Slide 49: Safe Balance Sheet: simple, highly liquid
Safe Balance Sheet: simple, highly liquid Diversified investment portfolio 35.9 bn (1) Financial Assets Customer deposits ◼ Investment strategy based on a diversified blend of EU government bonds, Customer loans Other liabilities supranational and agencies Due from Banks (2) Equity 24.4 ◼ 99.9% not
Slide 50: 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 at the same time we can: 1) sustain our growth OUR PRIORITY 2) distribute a growing dividend per share 3) keep our Leverage Ratio com
Slide 51: A new market structure enlarging our growth opportunities
A new market structure enlarging our growth opportunities A structurally higher profitability and capital light business model, leading to higher DPS and to invest in our growth The current environment has significantly changed Acceleration of structural trends New interest rates environment (1) res
Slide 52: Delivering on our discontinuities
Delivering on our discontinuities Set of initiatives to improve our 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: ➢ targeting only AUM net sales and solutions with a
Slide 53: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell FAM EVOLUTION ✓ 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 customers who want to take advantage of bear market phase ✓ FAM Pa
Slide 54: Preserving our best price/quality ratio
Preserving our best price/quality ratio Competitive landscape(1) € Online € 99 avg € 147 avg Branch online costs branch costs Widiba (Conto Start) 20 53 Webank 24 Ing (Conto Arancio) 27 Fineco 40 HelloBank! (Hello! Money) 60 Banca Sella (Conto Start) 62 161 B.Generali (BG Deluxe BGS) 72 84 CreditAgr
Slide 55: Commitment to Net Zero emissions by 2050
Commitment to Net Zero emissions by 2050 Aware of the importance of environmental and climate matters, in 2022 the BoD approved the Net-Zero emissions plan to 2050 regarding both operational and financed emissions RESPONSIBLE FINANCE - Scope 3 emissions from internal investment portfolio 2021 2030 2
Slide 56: Funding
Funding Senior Preferred instrument AT1 instruments ➢ €500 mln Senior Preferred issued on October 14th, 2021 in order to be immediately compliant with the Fully Loaded MREL Requirement on Leverage Ratio Exposure (LRE), ➢ €200 mln perpetual AT1 issued on January 23rd, 2018: which will be binding star
Slide 57: Main Financial Ratios
Main Financial Ratios Mar.22 Jun.22 Sep.22 Dec.22 Mar.23 PFA TFA / PFA (mln) (1) 32.8 31.2 31.1 31.9 33.3 FAM retail / Fineco AUM (2) 28% 29% 29% 30% 32% Cost / income Ratio (3) 27.0% 29.3% 29.8% 29.6% 25.0% CET 1 Ratio 19.3% 19.1% 20.4% 20.8% 21.8% Adjusted RoE (4) 27.8% 26.1% 23.1% 23.8% 29.7% Lev
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