Slide 1: 2Q19 Results
2Q19 Results Alessandro Foti, CEO and General Manager September 2019
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: Fineco - a fully independent public company
Fineco - a fully independent public company Strategy and Business model Following the deconsolidation from the UniCredit Group on May 10th, 2019 Fineco is now an independent public company Fineco exit from the UniCredit Group has no implications on its strategy and business model: Fineco had enj
Slide 4: Transitional Arrangements with UniCredit Group
Transitional Arrangements with UniCredit Group Liquidity Investment Strategy No change in the investment policy previously communicated to the market, envisaging an increasing diversification of financial investments as the existing stock of UniCredit bonds, currently at around €8 bn(1), progressi
Slide 5: 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 6: Agenda
Agenda Fineco Results Key messages Developing opportunities and next step Focus on product areas 6
Slide 7: Executive Summary
Executive Summary 1H19 adjusted net profit(1) at 137.3mln, best semester ever, up y/y (+9.7% y/y) confirming the sustainability of a business model able to deliver consistent results in every market condition 1H19 growing adjusted revenues(1) (+3.8% y/y) supported by Investing area (+15.8% y/y)
Slide 8: Results
Results 1H19 adj. Net Profit above 137mln, best semester ever, +9.7% y/y boosted by diversified revenues growth and C/I ratio at 39%, down ~0.6p.p. y/y Net Profit Revenues mln excluding non recurring items(1) Adj. RoE (2) mln Adj. Cost/Income (2) excluding non recurring items(1) +3.8% +5.7% +9.7% 31
Slide 9: Net interest income (1/2)
Net interest income (1/2) Increasing NII (+3.0% y/y) thanks to valuable and sticky sight deposits coupled with high-quality lending portfolio. Increasing diversification in financial investments Net Interest Income Interest-earning assets mln (1) (3) Avg, bn Financial Investments Lending (1) (2) Fin
Slide 10: Net interest income (2/2)
Net interest income (2/2) Further improvements for a diversified asset side. Sensitivity analysis +100bps / -100bps parallel shift: +119mln NII / -108mln NII Bond Portfolio UC bonds and Govies run-offs Avg, bn UC bonds Other Govies(1) Eop, bn UC Bonds Govies Covered Bonds Italy Supranational and Age
Slide 11: Commissions and Trading Income
Commissions and Trading Income Fees and commissions grew +8.7% y/y. Sustainable growth generating recurring revenues, with Management fees up +12.2% y/y and very limited upfront fees Fees and Commissions Trading Income mln Brokerage Investing Banking Other mln Trading Income excluding non recurring
Slide 12: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA Staff expenses and FTE Non HR Costs (1) mln mln Development Costs Write-downs/backs & depreciation(2) FTE # Running Costs +7.1% +6.3% +0.4% +3.7% 41.5 44.1 83.1 83.4 21.0 21.7 22.4 -0.6% 2Q18 1Q19 2Q19 1H18 1H19 39.1 43.6 1,095 1,121
Slide 13: 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 Cost of Risk on commercial loans(3) Eop, mln Current accounts/Overdraft (1) Cards Personal loans Mortgages 39 bps +28.2% 18 bps 14 bps +7
Slide 14: Lending: Mortgages
Lending Boost in high quality lending volume through mortgages, personal loans and lombard loans Eop, mln 2019 Guidance +35.4% Mortgages 10,172 mortgages granted since December 2016 yearly new production: +6.6% ~300-350mln Average customer rate: 183bps. 1H19 Yield(1) at 81bps 723 918 979 Ave
Slide 15: Capital Ratios
(1) Capital Ratios Best in class capital position and low risk balance sheet (2) RWA CET1 Ratio mln Credit Market Operational % CET1 capital, mln +32.9% -282bps +25.9% -314bps 3,084 20.66 20.98 2,320 2,450 17.84 1,898 1,627 1,736 25 669 24 682 33 1,161 Jun.18 Mar.19 Jun.19 Jun.18 Mar.19 Jun.19 479 5
Slide 16: 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
Slide 17: TFA evolution (Dec.13 – June 19)
TFA Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 69% of total AuM TFA evolution (Dec.13 – June 19) Cumulated performance 75.9 3.2 Net Sales +30 bn -4.1 69.3 3.3 67.2 6.2 bn Market Effect +2.2 bn 1.0 60.2 6.0 55.3 5.0 -0.2 49.3 5.5 0.5 1.7
Slide 18: 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 +12.9 bn AUM since the end of 2014, o/w: Guided products as % of AuM +9.5% Guided Products & Services +16.9 bn AuM à la carte -3.9 bn 75.9 77.6 69.3
Slide 19: PFA Network – total Net Sales
Net sales breakdown Solid high quality 1H19 net sales growth on the wave of structural trends in place despite a complex environment. Asset mix returning into AuM with more conservative solutions Breakdown of total Net Sales PFA Network – total Net Sales bn bn 6.2 6.0 5.5 Guided Products 5.4 5.5 5.0
Slide 20: Organic growth: Net Sales – Organic / Recruit
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 6.2 3.3 4.0 5.5 5.0 6.0 6.2 3.3 Recruitment costs 7% 3% (to be amortized) 11% 11% 10% 14% 10% 1
Slide 21: Agenda
Agenda Fineco Results Key messages Developing opportunities and next step Focus on product areas 21
Slide 22: 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 23: Sustainability as main pillar of growth
Sustainability as main pillar of growth CUSTOMER SATISFACTION at 97%(1), of which 63% “Apostles” clients(2) vs 42% of banking system NO short-term aggressive COMMERCIAL OFFERS No.1 Bank in terms of REPUTATION(3) and ZERO REMUNERATION on current accounts Low UPFRONT FEES representing only 2% of Inves
Slide 24: Committed to maximize Shareholders' value
Committed to maximize Shareholders’ value Strategy based on healthy growth and sustainability with a long term horizon A coherent approach in the whole strategy of growth Clients’ acquisition driven by high quality services , transparency and fair pricing Organic growth key in our strategy witho
Slide 25: Safe Balance Sheet: simple, highly liquid and low risk
Safe Balance Sheet: simple, highly liquid and low risk asset side, valuable and sticky deposits Diversified investment portfolio 25.8 bn High-value deposit base Investment strategy announced during Sticky deposits: mostly ‘transactional FY17 results: UC bonds run-offs, blend of liquidity’ gather
Slide 26: Total assets: 99% not exposed to volatility
Total assets: 99% not exposed to volatility Out of 25.8bn, only 0.3bn of Assets valuated at fair value with limited impacts on Equity reserve Total Assets Eop, bn Gov. Bonds at fair value (HTCS) Covered bonds Due from banks(1) Other(2) Other Bonds at amortized costs UC bonds Customer loans 26.4 25.8
Slide 27: Operating Leverage
Operating Leverage A distinctive competitive advantage of Fineco IT and back office internally managed, deep internal know-how 17% FTEs in IT department, 24% in Back-Office Platform scalability Core system internally managed Internal DWH to fully leverage on Big Data Analytics and Very low I
Slide 28: Dealing with pressure on margins in a pro-active way
Dealing with pressure on margins in a pro-active way Improve Continuous innovation leveraging on our best-in-class internal IT culture and 1 QUALITY OF Big Data Analytics to be recognized by clients as a premium brand. SERVICES (Cyborg-advisory approach, X-Net platform, Plus advisory etc). Strong op
Slide 29: Continuous innovation on usability and front-end efficiency
Improve Continuous innovation on usability and front-end efficiency 1 QUALITY OF to deliver distinctive products and services SERVICES INVESTING BANKING Advanced reporting to improve usability (X-Net evolution, full Instant payments through web and access to Advice and Plus also from mobile mobile w
Slide 30: Continuously increase of quality and productivity of the network
Continuously increase of quality and productivity of the Increase 2 network PRODUCTIVITY Total Assets per PFA TFA concentration per PFA Eop, mln +11.3% PFAs with TFA >20mln are 49% (+13%y/y) and hold 77% of TFA (+6% y/y) +2.6% +9.0% 25.6 -55 25.0 23.0 2,621 2,623 2,566 2,572 60.3bn 1 65.8bn 1 > €35m
Slide 31: Cross selling and clients' profile
Increase Cross selling and clients’ profile 2 PRODUCTIVITY Net sales: new vs existing clients Total Financial Assets per client bn Net sales from existing clients >500k 100-500k 50-100k <50k Net sales from new clients 6.0 6.2 Total TFA: 75.9bn 5.0 Total clients: 63% 11.6% 69% Avg age: 76% 11.0% 37.9
Slide 32: Fineco Asset Management in a nutshell
Increase Fineco Asset Management in a nutshell 3 OPERATIONAL AUM at €11.9bn, of which €6.8bn retail classes EFFICIENCY FAM EVOLUTION (16 strategies) FAM Target: new decumulation product to progressively invest in multi- thematic/profile funds FUNDS OF FAM Megatrend: new multi-thematic fund inves
Slide 33: 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 Age
Slide 34: Agenda
Agenda Fineco Results Key messages Developing opportunities and next step Focus on product areas 34
Slide 35: Developing opportunities
Developing opportunities Clients: geographical split About 4,500 clients (1) New clients acquired (2) 16% 20% Fineco UK 48% 64% 83% non-Italian 17% 63% non-Italian 36% UK Italian Other UK Italian Other Unique positioning in a highly fragmented market, leveraging on our one-stop solution. Among the
Slide 36: Next step: New platforms to further boost productivity (1/3)
Next step: New platforms to further boost productivity of the Bank (1/3) Third evolutionary step in Fineco’s disruptive growth story Our unique competitive advantage Why disruptive? Best-in-class technology resulting from strong We are the only one player able to combine cyborg internal IT cultu
Slide 37: Next step: New platforms to further boost productivity (2/3)
Next step: New platforms to further boost productivity of the Bank (2/3) Boosting our PFAs’ efficiency and productivity through Big Data Analytics Assisted Selling Platform X-Net, Fineco’s cyborg advisory platform for our PFAs, will be further empowered with customers’ financial gaps The Bank wi
Slide 38: Next step: New platforms to further boost productivity (3/3)
Next step: New platforms to further boost productivity of the Bank (3/3) The Assisted Selling Platform - details PFA X-Net Platform Send to INVESTMENT PROPOSAL Define goal Define investment details customer Customer Platform Select goal Define investment details Ask your PFA 38
Slide 39: Agenda
Agenda Fineco Results Key messages Developing opportunities and next step Focus on product areas 39
Slide 40: 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 +3.2% +3.4% +3.1% 141.6 146.5 72.0 72.1 74.3 2Q18 1Q19 2Q19 1H18 1H19 Brokerage 19% Investing 35% mln mln 1H19 -10.5% -15.1% Management +16.4% fees 72.8 +12.2% y/y
Slide 41: 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 Direct deposits mln Eop, mln Net Interest Trading income +3.4% Sight Deposits eop Term Deposits eop Fees and commissions Othe
Slide 42: Brokerage
Brokerage 1H19 Brokerage performance affected by low volatility in the period. Growing market share in Italy and continuous enlargement of product offer Revenues Executed orders mln Net Interest Trading profit mln Fees and commissions -15.1% -17.1% -10.5% 72.8 14.4 -17.3% 6.1 61.8 11.9 +4.6% 7.2 -3.
Slide 43: Investing
Investing Successful strategy based on our cyborg advisory approach drove a better asset mix and increasing fees y/y. Very limited upfront fees representing only 2% of investing fees Revenues (Net fees) Assets under Management mln eop, bn Upfront fees Management fees Other(1) +6.7% +2.3% 1H19 Manage
Slide 44: Annex
Annex 44
Slide 45: P&L
P&L mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 1H18 1H19 Net interest income 68.9 68.7 69.9 71.1 278.7 70.4 71.4 137.7 141.8 Net commissions 71.5 74.5 72.7 81.8 300.4 77.4 81.3 146.0 158.6 Trading profit 14.5 13.1 10.7 5.9 44.2 9.8 8.0 27.6 17.8 Other expenses/income 0.5 0.1 -0.4 1.7 1.9 0.2 0.3 0.6 0.5
Slide 46: P&L net of non recurring items
P&L net of non recurring items 3Q18 4Q18 FY18 1Q19 2Q19 1H19 mln 1Q18 2Q18 1H18 ( ) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. 1 Net interest income 68.9 68.7 69.9 71.1 278.7 70.4 71.4 137.6 141.8 Net commissions 71.5 74.5 72.7 81.8 300.4 77.4 81.3 146.0 158.6 Trading profit 14.5 13.1 10.7 8.
Slide 47: 1H19 P&L FinecoBank and Fineco Asset Management
1H19 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net interest income 0.0 141.8 141.8 Dividends 0.0 13.1 0.0 Net commissions 29.8 128.8 158.6 Trading profit 0.0 17.8 17.8 Other expenses/income 0.0 0.6 0.5 Total revenues 29.9 302
Slide 48: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 1H18 1H19 Margins Margins Margins Margins Margins Margins Margins Margins Margins Financial Investments 56.9 18,449 57.5 18,887 57.1 18,817
Slide 49: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010282 Euro 382.5 15-Jul-19 Euribor 1m 2.37% 2 IT0005010399 Euro 382.5 14-Oct-19 Euribor 1m 2.40% 3 IT0005010324 Euro 382.5 13-Jan-20 Euribor 1m 2.44% 4 IT0005010365 Euro 382.5 10-Apr-20 Euribor 1m 2.47% 5 IT0
Slide 50: Details on Net Commissions
Details on Net Commissions mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 1H18 1H19 Brokerage 20.6 20.1 15.8 18.2 74.7 18.5 18.0 40.7 36.5 o/w Equity 17.5 16.4 13.1 14.9 61.8 15.6 14.7 33.9 30.3 Bond 0.8 1.2 0.6 0.9 3.6 0.9 0.9 2.0 1.8 Derivatives 2.5 2.7 2.2 2.9 10.2 2.3 2.2 5.1 4.5 Other commissions(1) -0
Slide 51: Revenues breakdown by Product Area
Revenues breakdown by Product Area mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 1H18 1H19 Net interest income 66.1 67.1 67.0 68.0 268.1 67.6 68.8 133.1 136.4 Net commissions 3.4 4.7 4.5 5.5 18.1 4.5 5.6 8.1 10.0 Trading profit 0.0 0.1 0.1 0.0 0.2 -0.1 -0.1 0.1 -0.2 Other 0.1 0.2 0.1 0.0 0.4 0.1 0.1 0.3 0.
Slide 52: IFRS 9 P&L impacts
IFRS 9 P&L impacts mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 1H18 1H19 Trading Profit 0.6 0.9 0.9 -3.8 -1.4 0.8 -3.6 1.5 -2.8 Visa 0.6 0.9 0.9 -0.7 1.6 1.2 0.7 1.5 1.9 Voluntary Scheme 0.0 0.0 0.0 -3.0 -3.0 -0.4 -4.3 0.0 -4.8 Loan Loss Provisions -0.4 2.4 -0.4 -0.6 1.0 -1.0 3.1 2.0 2.1 Profit on Invest
Slide 53: IFRS 16 impacts
IFRS 16 impacts mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 2Q19 1H18 1H19 Net interest Income -0.2 -0.2 -0.4 Other Administrative Expenses -3.1 -3.1 -3.1 -3.4 -12.7 -6.2 Leasing Reggio Emilia offices and financial shops -2.3 -2.3 -2.3 -2.4 -9.4 -4.7 Leasing Milano headquarter -0.8 -0.8 -0.8 -0.9 -3.3 -1.6 Wr
Slide 54: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.18 Jun.18 Sep.18 Dec.18 Mar.19 Jun.19 AUM 33,536 34,496 34,930 33,485 35,988 36,819 o/w Funds and Sicav 26,666 26,809 26,795 24,853 26,361 26,426 o/w Insurance 6,395 7,043 7,355 7,618 8,401 9,002 o/w GPM 1 1 1 1 1 26 o/w AuC + deposits under advisory 475 643
Slide 55: Balance Sheet
Balance Sheet mln Mar.18 Jun.18 Sep.18 Dec.18 1st Jan.19 Mar.19 Jun.19 Due from Banks (1) 3,488 3,224 3,398 3,059 3,059 3,807 1,941 Customer Loans 2,318 2,633 2,736 2,955 2,955 3,029 3,409 Financial Assets 17,106 17,199 17,678 18,238 18,238 19,012 19,920 Tangible and Intangible Assets 112 112 112 11
Slide 56: CET1 Ratio evolution
CET1 Ratio evolution CET1 Ratio transitional % -282 bps y/y 20.98 20.66 -314 bps q/q Other Credit RWA -3.40 includes other non- recurring items (1) 17.84 -0.01 -0.42 +0.57 +0.07 -0.62 +0.68 17.84 Jun.18 Mar.19 Operational Credit Other FAM Market Retained Other Jun.19 RWA RWA Credit Consolidation RWA
Slide 57: Main Financial Ratios
Main Financial Ratios Mar.18 Jun.18 Sep.18 Dec.18 Mar.19 Jun.19 PFA TFA/ PFA (mln) (1) 22.5 23.0 23.4 23.2 25.0 25.6 Guided Products / TFA (2) 31% 32% 32% 32% 33% 33% Cost / income Ratio (3) 41.0% 40.0% 39.3% 38.9% 41.3% 39.4% CET 1 Ratio 20.2% 20.7% 20.5% 21.2% 21.0% 17.8% Adjusted RoE (4) 35.1% 37
Slide 58: High-value deposit base confirms strong resilience over time
High-value deposit base confirms strong resilience over time Sight deposits growth Eop, bn +14% 25 y/y 23 20 18 Financial last 10 years Sovereign 15 crisis debt crisis CAGR: 11% 13 10 8 5 Worst liquidity outflow 3 Double-digit deposit growth throughout the last 10 years (+11% CAGR), with no impact
Slide 59: Headquarters acquisition - details
Headquarters acquisition - details Deal January 31st 2019: completed the headquarters acquisition in Milan from Immobiliare Stampa S.C.p.A. (controlled by Banca Popolare di Vincenza S.p.A. in compulsory winding up) Price of the deal: €62mln Rationales: favourable conditions of the deal, expect
Slide 60: 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
Slide 61: Fairness and transparency core in our strategy
Fairness and transparency core in our strategy. Sustainable and highly recurring Investing revenues Structural trends to support growth Organic growth key in our strategy Total net sales, bn Total recruits At sweet spot to capture two structural CAGR Organic trends in place in Italy: +11.7% - digita
Slide 62: Brokerage: the perfect countercyclical business
Brokerage: the perfect countercyclical business Leading position in Brokerage Operating Platform Excellence: multichannel and fully integrated Well advanced in-house know-how, optimizing time-to-market and cost efficiency In-house back-office and customer care. Business continuity always guara