Finecobank Spa · MIL:FBK
Finecobank Spa — Finecobank Banca Fine — Q1 2020 Earnings Presentation
58 slides from Finecobank Spa's earnings presentation, May 11, 2020
Slide 1: 1Q20 Results
1Q20 Results Alessandro Foti, CEO and General Manager Milan, May 11th 2020
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 Key messages Focus on product areas 3
Slide 4: Executive Summary
Executive Summary Outstanding net profit in challenging market scenario 1Q20 Net profit(1) at 92mln, +45% y/y and +29% q/q and, confirming the sustainability of a business model able to deliver consistent results in every market condition 1Q20 revenues(1) at 201mln, +27% y/y and +19% q/q and sup
Slide 5: Results
Results 1Q20 Net Profit up +45% y/y and +29% q/q, boosted by diversified revenues growth in a complex market environment. C/I ratio at 33.0%, down ~8.2 p.p. y/y confirming our strong operating leverage Net Profit, mln Revenues, mln excluding non recurring items (1) excluding non recurring items (1)
Slide 6: Net interest income (1/2)
Net interest income (1/2) Solid NII thanks to valuable and sticky sight deposits coupled with high-quality lending portfolio despite low interest rate environment Net Interest Income, mln Interest-earning assets, avg bn (1) (2) (3) (1) (2) Financial Investments Other Lending Cost of funding Financia
Slide 7: Net interest income (2/2)
Net interest income (2/2) Further improvements for a diversified asset side. Sensitivity analysis +100bps / -100bps parallel shift: +134mln NII / -121mln NII Bond Portfolio, avg bn UC bonds and Govies run-offs, eop bn (1) UC bonds Spain SSA UC Bonds Govies & SSA Covered Bonds (2) Italy Other Govies
Slide 8: Non Interest Income
Non Interest Income Fees and commissions +36% y/y and +28% q/q boosted by Brokerage. Trading Income +169% y/y and +98% q/q mainly driven by high market volatility Fees and Commissions, mln Trading Income, mln Brokerage Investing Banking Other mln excluding non recurring items (2) +168.9% +35.8% +98.
Slide 9: Focus on Brokerage
Focus on Brokerage Perfect countercyclical business delivering outstanding results in a complex market environment In 1Q20 our Brokerage recorded booming results due to skyrocketing volatility, to the in-depth reshape of our offer, and to the enlargement of the market as more Italians are now intere
Slide 10: Focus on Investing
Focus on Investing 1Q20 resilient despite difficult market conditions. AUM expected to recover as volatility calms down from its recent peak Investing Revenues, mln Main highlights Upfront fees PFA incentives(1) Increasing Investing revenues driven by lower Management fees Other income PFA incenti
Slide 11: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA Staff expenses and FTE, mln Non HR Costs(1), mln FTE # OAE Write-downs/backs & depreciation +10.9% -2.6% +1.9% 21.7 23.6 24.0 +4.0% 43.6 42.5 40.9 1Q19 4Q19 1Q20 1,121 1,187 1,199 Long Term Incentive Plans, mln 38.5 36.5 34.3 Staff ex
Slide 12: Boost in high quality lending volume
Boost in high quality lending volume 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) Eop, mln Current accounts/Overdraft (1) Cards Personal loans Mortgages 18 bps 12 bps 14 bps
Slide 13: Lending
Lending Strong lending growth with decreasing expected losses for mortgages, personal loans and lombard loans thanks to the quality of our portfolio 2020 Guidance Eop, mln +53.8% Mortgages yearly new production: +21.9% 14,505 mortgages granted since December 2016 ~ 400-500mln Average customer
Slide 14: Capital Ratios
Capital Ratios: Best in class capital position and low risk balance sheet (1) RWA, mln CET1 Ratio , % Credit Market Operational CET1 capital, mln w/o 2019 dividend -169bps payment +30.4% +116bps +120bps -0.7% 3,217 3,195 20.98 18.12 19.28 24.19 25.39 2,450 2,074 2,078 1,736 Mar.20 Dec.19 Mar.20 40 1
Slide 15: TFA evolution (Dec.14 – Mar. 20)
TFA Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 72% of total AuM TFA evolution (Dec.14 – Mar. 20), bn Cumulated performance 81.4 2.1 6.2 -7.6 75.9 Net Sales +30.7 bn (2) Market Effect -4.1 bn -4.1 69.3 5.8 1.0 67.2 6.2 60.2 6.0 55.3 5.0 -
Slide 16: TFA breakdown
TFA breakdown Successful shift towards high added value products thanks to strong productivity of the network. 1Q20 affected by negative market effect Breakdown of total TFA, bn Focus on AUM, bn Guided products as % of AuM +11.6 bn AUM since the end of 2014, o/w: Guided Products & Services +17.0bn 8
Slide 17: Net sales breakdown
Net sales breakdown Solid high quality net sales growth on the wave of structural trends thanks to our diversified business model and with a mix affected by complex environment Breakdown of total Net Sales, bn PFA Network – total Net Sales, bn 5.8 5.1 6.2 6.0 5.4 5.5 5.5 +39% 4.9 +37% 5.0 3.3 y/y y/
Slide 18: Organic growth
Organic growth Net sales organically generated confirmed as key in our strategy of growth Net Sales, bn – Organic / Recruit, % Total recruits Organic Total recruits(1) Organic 4.0 5.5 5.0 6.0 6.2 5.8 2.1 4.0 5.5 5.0 6.0 6.2 5.8 2.1 Recruitment costs 7% 5% 2% (to be amortized) 11% 11% 10% 9% 9% 18% 1
Slide 19: Quality and productivity of the network
Continuously increase of quality and productivity of the network, despite negative market effect in the first quarter of the year Total Assets per PFA TFA concentration per PFA Eop, mln PFAs with TFA >20mln are 49% (+3%y/y) +3.1% and hold 77% of TFA (+2% y/y) -7.5% +2.5% 27.8 -14 25.0 25.7 2,571 2,5
Slide 20: Clients' profile and focus on Private Banking
Clients’ profile and focus on Private Banking Total Financial Assets per client Total TFA: 75.9bn o/w Private Banking(1): 28.8bn 12.1% Average age: >500k 7.4% 0.5-1mln 11.6% 38.0% 8.2% Total clients: 49 100-500k 38.4% 1-5mln 50-100k 5-10mln Private clients: 62 46.1% <50k >10mln 38.3% TFA Private Ban
Slide 21: Agenda
Agenda Fineco Results Next steps Key messages Focus on product areas 21
Slide 22: 2020 Guidance
2020 Guidance On track to achieve our expectations for 2020 results although with a different mix Given current outlook(1), our assumptions for 2020, excluding revenues and costs related to UK business development, are: Net interest income: confirmed resilient and low risk thanks to the smooth run
Slide 23: Current environment creating conditions to enlarge growth opportunities
Current environment is creating the conditions to further enlarge our growth opportunities Benefiting from current situation with more positive than negative effects in 2020… POSITIVES Robust Net sales Booming Brokerage NEUTRAL Customers appreciate price/quality NEGATIVES NII Costs savings
Slide 24: Delivering on industrial measures
Delivering on industrial measures Focus on improving revenues mix and slowing down Balance Sheet growth for a better quality business going forward Our industrial measures Well-equipped to deal with clients’ conservative approach in challenging market environment thanks to: New generation of produ
Slide 25: Fineco Asset Management gaining commercial momentum
Delivering on industrial measures Fineco Asset Management gaining commercial momentum Strong contribution to Fineco’s AuM net sales FAM Growth potential bn bn FAM retail class penetration on: FAM retail class net sales 1.4 Fineco’s AUM Fineco’s AUM (excluding insurance) (total) 0.7 0.7 0.5 35.5 0.9
Slide 26: Agenda
Agenda Fineco Results Next steps Key messages Focus on product areas 26
Slide 27: 3 Pillars: Efficiency, Innovation and Transparency
3 Pillars: Efficiency, Innovation and Transparency The keys of our strategy, still leading our sustainable growth EFFICIENCY INNOVATION TRANSPARENCY Strong focus on IT & Operations, Anticipate new needs Fairness and Respect more flexibility, less costs simplifying customers’ life for all our stakeho
Slide 28: 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 CAGR (2014-2019) 81 + 11% 69 67 + 7% 60 1,278 1,358 55 1,200 TFA (bn) 49 1,118 281 + 13% 1,048 254 226 Clients (thd, #) 964 208 658 + 8% 197 628 Net profit (1) (mln) 155 587 544
Slide 29: Safe Balance Sheet
Safe Balance Sheet: simple, highly liquid and low risk asset side, valuable and sticky deposits Diversified investment portfolio High-value deposit base 29.5 bn Investment strategy announced during Sticky deposits: mostly ‘transactional FY17 results unchanged: UC bonds run- liquidity’ gathered w
Slide 30: Total assets: 99.5% not exposed to volatility
Total assets: 99.5% not exposed to volatility Out of 29.5, only 0.16bn of Assets valuated at fair value with very limited impacts on Equity reserve Total Assets, eop bn Gov. Bonds at fair value Covered bonds Due from banks(1) Other (2) Other Bonds at amortized costs UC Bonds Customers loans 29.5 o/w
Slide 31: Sustainability at the heart of Fineco's business model
Sustainability at the heart of Fineco’s business model Embedding ESG in our Bank’s Governance Our sustainable growth strategy is inspired by principles of the most relevant international organisations, consistent with the achievements of the 17 Sustainable Development Goals (SDGs) of the UN 2030 A
Slide 32: Agenda
Agenda Fineco Results Next steps Key messages Focus on product areas 32
Slide 33: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allow the bank to successfully face any market environment Banking, mln 37% +3.5% +2.9% 72.1 72.5 74.6 1Q19 4Q19 1Q20 Brokerage, mln 32% Investing, mln 30% 1Q20 +110.1% Management +12.4% fees +76.5% +8.4% y/y +3.7% 63.4 54.2 58.8 60.9 30.2
Slide 34: Banking
Banking Sound performance driven by strong volume growth and relentless clients’ acquisition, thanks to high quality services and best-in-class customer satisfaction Revenues Sight deposits mln Eop, bn Net Interest Trading income Fees and commissions Other +17.4% +3.5% +5.2% 22.9 25.6 26.9 +2.9% 74.
Slide 35: Brokerage
Brokerage Revamped Brokerage thanks to skyrocketing volatility combined with the review of the offer. Growing market share in Italy and continuous enlargement of product offer Revenues Executed orders mln Net Interest Trading profit mln Fees and commissions Other +99.8% +77.6% +110.1% 12.1 6.1 6.8 +
Slide 36: 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 (Net fees) Assets under Management mln eop, bn Guided Products / AUM Upfront fees PFA incentives(1) Management fees Othe
Slide 37: Annex
Annex 37
Slide 38: P&L
P&L mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 Net interest income 70.4 71.4 69.8 69.7 281.3 68.1 Net commissions 77.4 81.3 84.3 82.3 325.2 105.0 Trading profit 9.8 8.0 11.6 15.3 44.8 26.4 Other expenses/income 0.2 0.3 0.1 2.9 3.6 0.6 Total revenues 157.7 161.1 165.8 170.2 654.8 200.1 Staff expenses -21.7 -2
Slide 39: P&L net of non recurring items
P&L net of non recurring items 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 1Q20/ 1Q20/ mln ( 1) (1) Adj. (1) Adj. Adj. Adj. (1) Adj. (1) Adj. (1) 1Q19 4Q19 Net interest income 70.4 71.4 69.8 69.7 281.3 68.1 -3.2% -2.3% Net commissions 77.4 81.3 84.3 82.3 325.2 105.0 35.8% 27.7% Trading profit 10.3 12.3 11.2 13.9
Slide 40: 1Q20 P&L FinecoBank and Fineco Asset Management
1Q20 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Individual Management Consolidated Net interest income 0.0 68.1 68.1 Dividends 0.0 0.0 0.0 Net commissions 16.6 88.4 105.0 Trading profit 0.1 26.3 26.4 Other expenses/income 0.1 0.5 0.6 Total revenues 16.8 183.3 2
Slide 41: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 Margins Margins Margins Margins Margins Margins Financial Investments 57.1 19,748 58.0 20,582 55.9 21,714 56.0 22,114 227.0 21,040 54.8 22,543 Net Margin 1.17% 1.13% 1.02% 1.0
Slide 42: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010365 Euro 382.5 10-Apr-20 Euribor 1m 2.47% 2 IT0005010308 Euro 382.5 9-Jul-20 Euribor 1m 2.49% 3 IT0005010381 Euro 382.5 7-Oct-20 Euribor 1m 2.52% 4 IT0005010332 Euro 382.5 6-Jan-21 Euribor 1m 2.54% 5 IT0005
Slide 43: Details on Net Commissions
Details on Net Commissions mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 Brokerage 18.5 18.0 20.0 20.8 77.3 35.4 o/w Equity 15.6 14.7 15.9 17.0 63.2 30.0 Bond 0.9 0.9 1.4 0.7 3.9 1.0 Derivatives 2.3 2.2 2.7 2.6 9.7 4.5 Other commissions(1) -0.2 0.2 0.0 0.6 0.5 -0.2 Investing 54.2 57.6 58.3 56.1 226.2 60.8 o/w P
Slide 44: Revenues breakdown by Product Area
Revenues breakdown by Product Area mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 Net interest income 67.6 68.8 67.0 66.9 270.3 65.8 Net commissions 4.5 5.6 5.9 5.3 21.3 8.8 Trading profit -0.1 -0.1 -0.2 0.2 -0.2 -0.1 Other 0.1 0.1 0.1 0.1 0.4 0.2 Total Banking 72.1 74.3 72.7 72.5 291.7 74.6 Net interest income
Slide 45: IFRS 9 P&L impacts
IFRS 9 P&L impacts mln 1Q19 2Q19 3Q19 4Q19 1Q20 Trading Profit 0.8 -3.6 0.6 1.9 -2.3 Visa 1.2 0.7 0.2 0.4 -1.1 Voluntary Scheme -0.4 -4.3 0.4 1.4 -1.2 Loan Loss Provisions -1.0 3.1 -0.0 0.0 0.0 Profit on Investments -0.7 6.5 0.4 1.1 -0.1 Govies 0.2 -0.8 -0.1 1.1 -0.1 UC Bonds -0.8 7.3 0.5 -0.0 0.0 T
Slide 46: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.19 Jun.19 Sep.19 Dec.19 Mar.20 AUM 35,988 36,819 38,325 40,505 35,516 o/w Funds and Sicav 26,361 26,426 27,477 28,786 24,122 o/w Insurance 8,401 9,002 9,369 10,115 9,961 o/w GPM 1 26 55 93 127 o/w AuC + deposits under advisory 1,225 1,365 1,425 1,512 1,307 o/
Slide 47: Balance Sheet
Balance Sheet mln Mar.19 Jun.19 Sep.19 Dec.19 Mar.20 Due from Banks (1) 3,807 1,941 2,033 1,320 1,801 Customer Loans 3,029 3,409 3,568 3,680 3,741 Financial Assets 19,012 19,920 21,532 22,313 23,414 Tangible and Intangible Assets 243 242 247 279 280 Derivatives 29 49 72 65 76 Other Assets 259 274 30
Slide 48: Leverage Ratio Sensitivity
Leverage Ratio Sensitivity OUR PRIORITY: to slow down the growth of our Balance Sheet through the conversion of deposits into Asset under Management and through the repricing of our Banking services OUR GUIDANCE: Leverage Ratio above 3.5% considering a growth of deposits in a range between 2.5-3
Slide 49: Main Financial Ratios
Main Financial Ratios Mar.19 Jun.19 Sep.19 Dec.19 Mar.20 PFA TFA/ PFA (mln) (1) 25.0 25.6 26.6 27.8 25.7 Guided Products / TFA (2) 33% 33% 34% 35% 34% Cost / income Ratio (3) 41.3% 39.4% 37.9% 37.9% 33.0% CET 1 Ratio (4) 21.0% 17.8% 17.4% 18.1% 19.3% Adjusted RoE (5) 31.2% 34.0% 27.3% 27.5% 30.7% Le
Slide 50: High-value deposit base confirms strong resilience over time
High-value deposit base confirms strong resilience over time Sight deposits growth, Eop bn +17.4% y/y Financial Sovereign crisis Worst liquidity outflow debt crisis last 10 years CAGR: 11.3% Double-digit deposit growth throughout the last 10 years (+11.3% CAGR), with no impacts from 2008 financial
Slide 51: 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 52: Benefits from being a fully independent public company
Benefits from being a fully independent public company More liquid stock with more than doubled average volumes Increased efficiency as we now are more flexible and agile to adapt to a fast changing environment in terms of: MARKETING AND More freedom in terms of marketing strategy, tone of voice
Slide 53: Innovation key for our best-in-class Customer Experience
Delivering on industrial measures Innovation key for our best-in-class Customer Experience Improving an already best-in-class Customer Experience 97% n.1 APP BANK 4.6 CUSTOMER IN TERMS OF + 210,000 ratings (1) (2) SATISFACTION REPUTATION Continuous upgrade of our banking platform Brand new dashboard
Slide 54: Preserving our best price/quality ratio
Preserving our best price/quality ratio An update on the main outcomes from our Smart Repricing Competitive landscape (1) € Online Branch € 79 avg € 123 avg online costs branch costs Webank 0 IWBank (IWConto) 4 89 Widiba (Conto Flat) 20 ING (Conto Arancio) 24 Fineco 25 Poste Italiane (BancoPosta Pre
Slide 55: Brokerage: an effective and timely reshape of our offer
Brokerage: an effective and timely reshape of our offer In 1Q20 our Brokerage recorded booming results due to skyrocketing volatility and an in-depth reshape of our offer New options allowing customers to exploit volatility also when it is low Optimization of our systematic internalizer with new
Slide 56: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at €13.2bn, of which €8.2bn retail classes (1) FAM EVOLUTION (25 strategies) FAM Target: decumulation product to progressively invest in multi-thematic/profile funds FAM Megatrend: multi-thematic fund investing in secular trends FUNDS OF New building b
Slide 57: Patent Box
Patent Box Fineco is the first Bank finalizing the agreement in February 2020 The Patent Box is a tax relief regime for companies generating income through the use of intangible assets. We finalized the agreement with the Italian Fiscal Authority on the Patent Box for years 2015/2019 Fineco is t
Slide 58: Additional Tier 1 issuances
Additional Tier 1 First public placement successfully issued with strong demand (9x the offer) €200 mln AT1 issued in January 2018 €300 mln AT1 issued in July 2019 On July 11th, 2019 Fineco issued a €300mln perpetual AT1 in order to maintain the Leverage Ratio above 3.5% after the exit On Januar
Finecobank Banca Fine — Q1 2020 Earnings Presentation on 6ix