Slide 1: 1Q18 Results
1Q18 Results Alessandro Foti, CEO and General Manager Milan, May 8th 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 1Q18 net profit at 59mln, strongly up y/y (+14.1%) confirming the sustainability of a business model able to delivery consistent results in every market condition. Quarterly comparison (-4.3%(1)) affected by the usual seasonality on costs Sound and well diversified revenue grow
Slide 5: Results
Results 1Q18 net profit up 14.1% y/y boosted by strong and well diversified revenue growth. C/I ratio down -1.8pp y/y, q/q comparison impacted by usual 1Q seasonality on costs Net Profit Gross Operating Profit mln mln excluding non recurring items(1) +13.0% +14.1% -5.6% -4.3% 81.2 97.3 91.8 51.7 63.
Slide 6: Net interest income (1/2)
Net interest income (1/2) Remarkable net interest income dynamic (+9.4% y/y) in a negative rate environment. Relentless increase in the lending activity contribution Net Interest Income Interest-earning assets mln Avg, bn (1) (2) Financial Investments Lending Financial Investments (3) +9.8% Other Co
Slide 7: Net interest income (2/2)
Net interest income (2/2) New investment policy with higher diversification confirmed. Sensitivity analysis +100bps parallel shift: +119 mln Focus on Government Bonds UC bonds run-offs and spread Avg, bn bn Italy Spain(2) Other (3) Average spread (bps) +67.0% 2.2 Residual maturity: 1.8 1.9 +12.0% 1.
Slide 8: Commissions and Trading Income
Commissions and Trading Income Sound and diversified stream of revenues delivers sustainable growth in any market condition. Management fees up 10.7% y/y Fees and Commissions Trading Income mln mln +6.0% Brokerage Investing Banking Other +31.0% +10.5% 13.7 14.5 +1.1% 11.1 70.7 71.5 64.7 18.0 20.5 20
Slide 9: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA. Quarterly comparison affected by seasonality (mainly PFAs related costs) Staff expenses and FTE Long Term Incentive Plans mln mln FTE # +6.9% Staff expenses, related to top managers and key employees Other administrative expenses, re
Slide 10: Capital Ratios
Capital Ratios Best in class capital position and low risk balance sheet. Look-through implementation in progress RWA CET1 Ratio transitional mln CET1 capital, mln Credit Market Operational -2.1p.p. +22.6% -0.6p.p. +2.8% 2,400 22.24% 22.14% 20.74% 20.77% 20.15% 2,335 2,188 2,087 Mar.17 Jun.17 Sept.1
Slide 11: TFA evolution (Dec.12 – Mar.18)
TFA Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 65% of total AuM TFA evolution (Dec.12 – Mar.18) bn 67.2 1.7 68.1 -0.8 Cumulated performance 1.0 6.0 Net Sales +24.6 bn 60.2 -0.2 Market Effect +3.6 bn 55.3 5.0 0.5 5.5 49.3 1.7 43.6 4.0 1.3
Slide 12: TFA breakdown
TFA breakdown Successful shift towards high added value products. Market performance impacted AuM in 1Q18 Breakdown of total TFA Focus on AUM bn bn +9.5 bn AUM since the end of 2014, o/w: Guided products as % of AuM +9.4% Guided Products & Services +12.9bn AuM à la carte -3.5 bn +1.3% +11.2% 68.1 69
Slide 13: PFA Network – total Net Sales
Net sales breakdown Solid Net sales growth in 2018. In April wait-and-see mood by clients and PFAs for the launch of new Plus service and Core Multiramo Target to offset market volatility 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 3.6 2.7 1.8 3.9 2.6
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 1.7 4.0 5.5 5.0 6.0 1.7 Recruitment costs 3% (to be amortized) 11% 11% 10% 14% 18% 19% 19% 17%
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 46% mln +11.5% -1.0% 64.7 72.9 72.1 1Q17 4Q17 1Q18 Brokerage 23% Investing 31% mln mln Core revenues (NI excluded) 1Q18 +3.8% +8.7% Management fees +23.1% -1.7% +10.7% y/y
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 +11.1% +3.4% +11.5
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) +3.8% +1.5% +23.1% +14.5% 34.6 36.2 30.4 2.8 3.2 7.2 6.4 7.3 3.7 20.3 18.0 20.5 11.5 8.8 12.4 1Q17 4Q
Slide 19: Investing
Investing Successful strategy on cyborg advisory approach drove a better asset mix and increasing fees y/y. Market performance impacted AuM in 1Q18 Revenues (Net Fees) Assets under Management mln eop, bn Upfront fees Management fees Others(1) +11.2% -0.1% 1Q18 Management 29.7 30.6 31.3 33.1 33.1 fee
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 (3) Eop, mln Current accounts/Overdraft (1) Cards Reverse repos +2 bps Personal loans Mortgages Other (2) -12 bps 36 bps +98.
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 +740.2% 5,800 mortgages granted yearly new production: Mortgages Average customer rate: 188bps. 1Q18 Yield(1) at 96bps ~500mln +20.1% 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 AUM AuC+ Deposits +22.6% +11.4% +0.9% +1.2% 1.8 1.7 1.4 21.2 21.4 20.7 21.4 22.2 22.5 0.7 17.5 18.4 19.2 20.2 1.4 0.8 (44%) (61%) (80%
Slide 27: Fineco Asset Management - FAM Process update
Fineco Asset Management - FAM Process update Anticipation of project delivery: expected go live ahead of expectations Both licence and passporting processes completed: formal approval by Central Bank of Ireland expected in the coming weeks Core series migration expected ahead of schedule Forma
Slide 28: Continuous innovation: new products and services (1/2)
Continuous innovation: new products and services (1/2) Our cyborg advisory model …and a lot of advantages … at zero cost for the bank.. evolves.. for clients Plus is a new integrated advisory In-house development leveraging on Advanced financial education tool to drive platform, launched at the end
Slide 29: Continuous innovation: new products and services (2/2)
Continuous innovation: new products and services (2/2) In mid April, Guided products have been enriched with a new multi-line policy, which combines safety from traditional insurance policy with the investment opportunity coming from market volatility This solution is particularly suitable in pe
Slide 30: Further opportunities
Further opportunities # new clients: over 1,800: (51% Italian and 49% non-Italian, o/w 36% native British) Unique positioning in a highly fragmented market, leveraging on our one-stop solution. Among the most competitive players on securities and CFDs Fineco UK In 1Q18 dedicated marketing acti
Slide 31: Annex
Annex 31
Slide 32: P&L
P&L mln 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 Net interest income 63.0 64.3 67.4 70.1 264.8 68.9 Net commissions 64.7 65.0 69.7 70.7 270.1 71.5 Trading profit 13.7 12.3 11.1 11.1 48.2 14.5 Other expenses/income 0.5 -0.8 0.1 3.9 3.8 0.5 Total revenues 141.9 140.9 148.3 155.8 586.9 155.4 Staff expenses -19.2
Slide 33: P&L net of non recurring items
P&L net of non recurring items 3Q17 4Q17 FY17 mln 1Q17 2Q17 1Q18 Adj. Adj. Adj. (1) Net interest income 63.0 64.3 67.4 70.1 264.8 68.9 Net commissions 64.7 65.0 69.7 70.7 270.1 71.5 Trading profit 13.7 12.3 11.1 11.1 48.2 14.5 Other expenses/income 0.5 -0.8 0.1 3.9 3.8 0.5 Total revenues 141.9 140.9
Slide 34: P&L and Balance Sheet: impacts from IFRS9
P&L and Balance Sheet: impacts from IFRS9 FY17 FY17 Dec.17 mln delta mln Reclassification (1) FTA 1st Jan.18 (stated) (recasted) (stated) Net interest income 264.6 264.8 0.20 Due from Banks 13,878 -10,839 -3 3,036 Net commissions 270.1 270.1 0.00 Customer Loans 2,129 0 -1 2,129 Trading profit 48.2 4
Slide 35: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 Margins Margins Margins Margins Margins Margins Financial Investments 55.3 17,530 55.5 17,864 57.2 18,086 58.2 18,127 226.3 17,902 56.9 18,449 Net Margin 1.28% 1.25% 1.26% 1.2
Slide 36: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010274 Euro 382.5 23-Apr-18 Euribor 1m 2.14% 2 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 IT0
Slide 37: Details on Net Commissions
Details on Net Commissions mln 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 Brokerage 20.3 18.3 16.8 18.0 73.3 20.5 o/w Equity 16.7 15.2 13.5 15.2 60.6 17.5 Bond 1.0 0.9 0.7 0.9 3.6 0.8 Derivatives 2.4 2.0 1.9 1.9 8.2 2.5 Other commissions(1) 0.1 0.2 0.6 0.0 0.9 -0.3 Investing 43.7 44.6 47.1 48.3 183.7 47.5 o/w Pl
Slide 38: Revenue breakdown by Product Area
Revenue breakdown by Product Area mln 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 Net interest income 62.0 63.1 65.5 67.3 258.0 67.5 Net commissions 0.6 1.9 5.7 4.2 12.4 3.2 Trading profit 1.9 1.7 1.2 1.3 6.2 1.4 Other 0.1 0.1 0.1 0.0 0.3 0.1 Total Banking 64.7 66.9 72.5 72.9 277.0 72.1 Net interest income 0.0 0.
Slide 39: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 AUM 29,742 30,614 31,339 33,080 33,062 o/w Funds and Sicav 24,984 25,461 25,901 26,999 26,666 o/w Insurance 4,749 5,145 5,431 6,075 6,395 o/w GPM 9 9 7 7 1 AUC 13,895 13,870 14,341 14,164 14,365 o/w Equity 7,969 8,110 8,531 8,71
Slide 40: Balance Sheet
Balance Sheet mln Mar.17 Jun.17 Sep.17 Dec.17 1st Jan.18 Mar.18 Due from Banks 15,462 14,827 14,293 13,878 3,036 3,488 Customer Loans 1,166 1,504 1,716 2,129 2,129 2,318 Financial Assets 3,912 4,770 5,429 5,885 16,733 17,106 Tangible and Intangible Assets 112 113 113 113 113 112 Derivatives 12 15 16
Slide 41: Main Financial Ratios
Main Financial Ratios Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 PFA TFA/ PFA (mln) (1) 20.2 20.7 21.4 22.2 22.5 Guided Products / TFA (2) 28% 29% 29% 32% 31% Cost / income Ratio (3) 42.8% 42.8% 40.5% 39.7% 41.0% CET 1 Ratio 22.2% 22.1% 20.7% 20.8% 20.2% Adjusted RoE (4) 39.5% 39.3% 39.0% 40.3% 35.1% Levera
Slide 42: 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 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