Slide 1: 2Q18 Results
2Q18 Results Alessandro Foti, CEO and General Manager Milan, July 31st 2018
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 Focus on product areas Key messages and Initiatives monitoring 3
Slide 4: Executive Summary
Executive Summary 1H18 net profit at 125.2mln, strongly up y/y (+20.1%) confirming the sustainability of a business model able to delivery consistent results in every market condition. 2Q18 net profit at 66.2mln (+12.3% q/q, +25.9% y/y) 1H18 growing revenues (+10.3% y/y) with a positive contri
Slide 5: Results
Results 1H18 net profit above 125mln, +20% y/y boosted by a strong and well diversified revenue growth. C/I ratio at 40%, down ~3 p.p. y/y Net Profit Gross Operating Profit mln mln RoE Cost / Income +25.9% +18.7% +20.1% +15.8% +12.3% +4.0% 161.6 187.2 104.3 125.2 80.4 91.8 95.4 52.6 59.0 66.2 2Q17 1
Slide 6: Net interest income (1/2)
Net interest income (1/2) Remarkable net interest income dynamic (+8.1% y/y) in a negative rate environment. Relentless increase in the lending activity contribution Net Interest Income Interest-earning assets mln Avg, bn Financial Investments (1) + 11.1% y/y Financial Investments Lending Other (2)
Slide 7: Net interest income (2/2)
Net interest income (2/2) New investment policy with higher diversification confirmed. Sensitivity analysis +100bps parallel shift: +115 mln Focus on Government Bonds UC bonds and Govies run-offs Avg, bn Eop, bn UC Bonds Govies (1) (2) Italy Spain Other UC Bond avg spread (bps) 100% at fixed rate Re
Slide 8: Commissions and Trading Income
Commissions and Trading Income Double digit growth in fees and commissions with Management fees up 12.2% y/y. Sound performance of brokerage, both fees and trading income Fees and Commissions Trading Income mln Brokerage Investing Banking Other mln 1H18 +12.5% Management fees +12.2% y/y 146.0 +6.3%
Slide 9: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA Staff expenses and FTE Long Term Incentive Plans mln mln Staff expenses, related to top managers and key employees FTE # o/w FAM Other administrative expenses, related to PFAs +6.4% 1H18: o/w 0.9mln +6.6% new 2018- 0.7mln +2.1% 2020 L
Slide 10: Capital Ratios
Capital Ratios Best in class capital position and low risk balance sheet. Look-through implementation drove +194bps benefit on CET1 ratio RWA CET1 Ratio transitional mln % CET1 capital, mln -1.5p.p. Credit Market Operational y/y +11.2% +0.5p.p. -3.3% 22.14 20.66 20.15 2,400 +1.00 -0.45 -0.83 -1.25 +
Slide 11: TFA evolution (Dec.12 – Jun.18)
TFA Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 64% of total AuM TFA evolution (Dec.12 – Jun.18) bn Cumulated performance 69.8 67.2 3.6 -1.0 (1) 1.0 Net Sales +26.6 bn 60.2 6.0 Market Effect +3.4 bn -0.2 55.3 5.0 0.5 49.3 5.5 1.7 43.6 4.0
Slide 12: TFA breakdown
TFA breakdown Successful shift towards high added value products thanks to strong productivity of the network Breakdown of total TFA Focus on AUM bn bn +10.6 bn AUM since the end of 2014, o/w: Guided products as % of AuM +9.7% Guided Products & Services +13.7 bn AuM à la carte -3.1 bn +2.6% +11.1% 6
Slide 13: Net sales breakdown
Net sales breakdown Solid Net sales growth in 2018 on the wave of structural trends in place: increasing digitalization and request of advisory services by clients Breakdown of total Net Sales PFA Network – total Net Sales bn bn 6.0 5.4 5.5 4.9 5.0 4.3 4.0 +24.3% 3.6 +22.4% 2.7 1.9 4.0 2.6 3.6 1.9 4
Slide 14: Organic growth
Organic growth Net sales organically generated confirmed as key in our strategy of growth Net Sales – Organic / Recruit (%) bn bn New recruits of the year Organic Total recruits (1) Organic 4.0 5.5 5.0 6.0 3.6 4.0 5.5 5.0 6.0 3.6 Recruitment costs 10% 4% (to be amortized) 11% 11% 14% 15% 18% 19% 19%
Slide 15: Agenda
Agenda Fineco Results Focus on product areas Key messages and Initiatives monitoring 15
Slide 16: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allow the bank to successfully face any market environment Banking 47% mln +11.9% +11.7% +3.7% 131.6 146.9 66.9 72.1 74.8 2Q17 1Q18 2Q18 1H17 1H18 Brokerage 22% Investing 31% mln mln 1H18 Core revenues (NI excluded) Management fees +7.3% +
Slide 17: Banking
Banking Sound performance driven by strong volume growth and relentless customer acquisition, thanks to high quality services and customer satisfaction Revenues Direct deposits mln Eop, mln Net Interest Trading income Sight Deposits eop Term Deposits eop Fees and commissions Other +11.7% 146.9 +9.6%
Slide 18: Brokerage
Brokerage Outstanding brokerage results confirming the strong potential of this business Revenues Executed orders mln Net Interest Trading profit mln Fees and commissions Core revenues (NI excluded) +5.7% +7.3% +12.0% +6.4% 66.4 70.3 -7.0% 6.0 6.4 -3.0% 14.4 13.5 31.9 36.3 34.0 40.7 38.5 7.3 7.1 3.2
Slide 19: Investing
Investing Successful strategy on cyborg advisory approach drove a better asset mix and increasing fees y/y Revenues (Net Fees) Assets under Management mln eop, bn Upfront fees Management fees Others(1) +11.1% +9.4% 1H18 +2.9% Management fees 96.6 31.1 31.8 33.6 33.5 34.5 +12.2% y/y 5.0 88.3 6.0 +10.
Slide 20: Agenda
Agenda Fineco Results Focus on product areas Key messages and Initiatives monitoring 20
Slide 21: 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 22: Key messages
Key messages Healthy growth and sustainability at the heart of Fineco’s business model Clients’ acquisition leveraging on high quality services. Cost of funding close to zero Organic growth as main engine of growth. Selected recruits to improve the quality and related costs well under control
Slide 23: Operating Leverage
Operating Leverage A distinctive competitive advantage of Fineco IT and back office internally managed, deep internal know-how 18% FTEs in IT department, 25% in Back-Office Platform scalability Core system internally managed Internal DWH to fully leverage on Big Data Analytics and Very low C
Slide 24: 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 Overall Lending portfolio Cost of Risk on commercial loans (3) Eop, mln Current accounts/Overdraft (1) Cards Reverse repos Personal loans Mortgages Other (2) 45 bps
Slide 25: Initiatives monitoring - Banking Area
Initiatives monitoring - Banking Area Boost in high quality lending volume through mortgages, personal loans and lombard loans Eop, mln Guidance +180.9% 6,885 mortgages granted Mortgages Average customer rate: 187bps. 1H18 Yield(1) at 88bps yearly new production: +39.7% ~400mln Average Loan
Slide 26: Initiatives monitoring - Investing Area
Initiatives monitoring - Investing Area Increase network’s productivity and Private Banking Guided Products Average PFAs’ portfolio Net Sales Mix Eop, bn Eop, mln bn +11.4% AUM AuC+ Deposits 3.6 +20.7% +2.5% 2.9 +3.6% 1.6 (44%) 21.4 22.2 22.5 23.0 1.9 1.8 21.2 21.4 22.2 20.7 1.7 18.4 19.2 1.5 0.8 (6
Slide 27: Fineco Asset Management (1/2)
Fineco Asset Management (1/2) Core Series: 6.7bn Sub-adviced funds New Core Series (6.55bn Retail + 0.14bn Institutional) First 31 prospectus, under approval First 9 Funds of funds will be Innovative and modern approach by Central Bank of Ireland, will be released by year end to build portfoli
Slide 28: Fineco Asset Management (2/2)
Fineco Asset Management (2/2) FAM will be able to generate several efficiencies leveraging on a vertically integrated business model combined with the strong operating efficiency which is in Fineco’s DNA Win-win solution for the clients and the Bank: lower TER for clients, higher margins For t
Slide 29: Further opportunities
Further opportunities Clients: geographical split Over 2,100 clients New clients acquired (1) Fineco UK 15% 21% 37% 52% 65% non-Italian 44% non-Italian 48% 35% UK Italian Other UK Italian Other Unique positioning in a highly fragmented market, leveraging on our one-stop solution. Among the most co
Slide 30: Annex
Annex 30
Slide 31: P&L
P&L mln 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 2Q18 1H17 1H18 Net interest income 63.0 64.3 67.4 70.1 264.8 68.9 68.7 127.3 137.6 Net commissions 64.7 65.0 69.7 70.7 270.1 71.5 74.5 129.7 146.0 Trading profit 13.7 12.3 11.1 11.1 48.2 14.5 13.1 26.0 27.6 Other expenses/income 0.5 -0.8 0.1 3.9 3.8 0.5 0.1 -0.2
Slide 32: 2Q18 Gross Operating Profit – Net profit: walk
2Q18 Gross Operating Profit – Net profit: walk mln +18.7% +25.9% y/y y/y 95.4 -1.9 0.2 5.2 -32.6 66.2 2Q18 GOP Risk and Loan Loss Profit on Taxes 2Q18 Charges Provisions Investments Net Profit Following the introduction of IFRS 9, new specific models which draw on the PD, LGD and EAD criteria, as we
Slide 33: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 2Q18 1H17 1H18 Margins Margins Margins Margins Margins Margins Margins Margins Margins Financial Investments 55.4 17,530 55.6 17,864 57.2 18,086
Slide 34: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010290 Euro 382.5 23-Jul-18 Euribor 1m 2.19% 3 IT0005010357 Euro 382.5 19-Oct-18 Euribor 1m 2.24% 4 IT0005010373 Euro 382.5 18-Jan-19 Euribor 1m 2.29% 5 IT0005010613 Euro 382.5 1-Apr-19 Euribor 1m 0.38% 6 IT00
Slide 35: Details on Net Commissions
Details on Net Commissions mln 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 2Q18 1H17 1H18 Brokerage 20.3 18.3 16.8 18.0 73.3 20.6 20.1 38.5 40.7 o/w Equity 16.7 15.2 13.5 15.2 60.6 17.5 16.4 31.9 33.9 Bond 1.0 0.9 0.7 0.9 3.6 0.8 1.2 1.9 2.0 Derivatives 2.4 2.0 1.9 1.9 8.2 2.5 2.7 4.4 5.1 Other commissions(1) 0.1
Slide 36: Revenue breakdown by Product Area
Revenue breakdown by Product Area mln 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 2Q18 1H17 1H18 Net interest income 62.0 63.1 65.5 67.3 258.0 67.3 68.4 125.2 135.7 Net commissions 0.6 1.9 5.7 4.2 12.4 3.4 4.7 2.6 8.1 Trading profit 1.9 1.7 1.2 1.3 6.2 1.4 1.5 3.6 2.8 Other 0.1 0.1 0.1 0.0 0.3 0.1 0.2 0.2 0.3 Tot
Slide 37: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 Jun.18 AUM 30,182 31,059 31,797 33,563 33,536 34,496 o/w Funds and Sicav 24,984 25,461 25,901 26,999 26,666 26,809 o/w Insurance 4,749 5,145 5,431 6,075 6,395 7,043 o/w GPM 9 9 7 7 1 1 o/w AuC + deposits under advisory 440 444 4
Slide 38: Balance Sheet
Balance Sheet mln Mar.17 Jun.17 Sep.17 Dec.17 1st Jan.18 Mar.18 Jun.18 Due from Banks 15,462 14,827 14,293 13,878 3,036 3,488 3,224 Customer Loans 1,166 1,504 1,716 2,129 2,129 2,318 2,633 Financial Assets 3,912 4,770 5,429 5,885 16,733 17,106 17,199 Tangible and Intangible Assets 112 113 113 113 11
Slide 39: Total assets: 95% not exposed to volatility
Total assets: 95% not exposed to volatility Out of 23.4bn, only 1bn of Assets valuated at fair value with limited impacts on Equity reserve Total Assets o/w Government bonds Eop, bn Eop, bn at fair value through other comprehensive income (HTCS) 23.4 Fair value at amortised cost (HTC) Gov. Bonds at
Slide 40: High-value deposit base confirms strong resilience over time
High-value deposit base confirms strong resilience over time Sight deposits growth Eop, bn 23 +10% 20 y/y 18 15 Financial Sovereign last 10 years 13 crisis debt crisis CAGR: 10% 10 8 5 Worst liquidity outflow 3 Double-digit deposit growth throughout the last 10 years (+10% CAGR), with no impacts f
Slide 41: Additional Tier 1
Additional Tier 1 Details Benefits Given current favorable market conditions and spread levels, on 23rd January, 2018 the Bank issued a €200mln perpetual Sustain a more diversified investment strategy through AT1 the non-renewal of UC Bonds run-offs and the progressive increase of European Govie
Slide 42: Main Financial Ratios
Main Financial Ratios Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 Jun.18 PFA TFA/ PFA (mln) (1) 20.2 20.7 21.4 22.2 22.5 23.0 Guided Products / TFA (2) 28% 29% 29% 32% 31% 32% Cost / income Ratio (3) 42.8% 42.8% 40.5% 39.7% 41.0% 40.0% CET 1 Ratio 22.2% 22.1% 20.7% 20.8% 20.2% 20.7% Adjusted RoE (4) 39.5% 39
Slide 43: Fineco Asset Management - FAM (1/2)
Fineco Asset Management - FAM (1/2) FAM products and expected efficiencies Products Destination 1 NEW FAM FUNDS OF FUNDS: BUILDING BLOCKS insurance wrappers (Core (Institutional class) Unit, Advice Unit, etc.) Efficiency on margins BUILDING BLOCKS à la carte or in portfolio Savings coming from Cor
Slide 44: Fineco Asset Management - FAM (2/2)
Fineco Asset Management - FAM (2/2) Potential Upside: relevant and recurring improvement in our profitability GROUP MARGINS UPSIDE (bps) VOLUMES Pre-tax After-tax Day 0 2H18 2019/2020 ~+13 ~7bn CORE SERIES Existing ~+20 Core Series ~4bn ~+40 ~20% transformation SINGLE FUNDS (Institutional class) of
Slide 45: Cooperative Compliance Scheme
Cooperative Compliance Scheme: FinecoBank admitted in the Cooperative Compliance Scheme with the Revenue Agency In July 2017, FinecoBank has been admitted to the Cooperative Compliance Scheme(1), which allows the Bank to take part to a register of taxpayers (published on the Revenue Agency’s officia