Finecobank Spa · MIL:FBK
Finecobank Spa — Finecobank Banca Fine — Q2 2021 Earnings Presentation
62 slides from Finecobank Spa's earnings presentation, Aug 3, 2021
Slide 1: 2Q21 Results
2Q21 Results Alessandro Foti CEO and General Manager Milan, August 3rd 2021 FINECO. SIMPLIFYING BANKING.
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 Fineco UK Key messages Focus on product areas 3
Slide 4: Executive Summary
Executive Summary Successful growth story: becoming more a Platform than a Bank The Bank has entered a new dimension of growth driven by structural trends. Among the main consequences: continuing with the deleveraging of the Balance Sheet: boosting Fees and Commissions to increase revenues with a
Slide 5: 2Q21 Recast for a better representation of Investing
2Q21 Recast for a better representation of Investing In order to give a better representation of Investing net commissions, in line with prevailing market practice, we have recasted into Net commissions (Investing): 1• Other expenses/income (0.6mln in 1H21), represented by cost efficiencies achieved
Slide 6: Facing a new normal world: record high 1H Net Profit
Facing a “new normal world”: record high 1H Net Profit Adj. Net Profit at 184.6mln, +2% y/y boosted by strong acceleration of Investing. The Bank has entered a new dimension of growth. C/I ratio at 31%, confirming our operating leverage. Net Profit, mln Revenues (1), mln excluding non recurring item
Slide 7: Deleveraging generating profits from Treasury management
Our activity of deleveraging the Balance Sheet is generating also profits from Treasury management… Net financial Income stable y/y thanks to a more dynamic Treasury activity Net Financial Income, mln Interest-earning assets, avg bn (1) (2) (3) NII Profit from Treasury management Other Treasury acti
Slide 8: Boosting Fees & Commissions and Brokerage Trading Profit
…and boosting Fees & Commissions and Brokerage Trading Profit 1H Fees and commissions +10% y/y thanks to the positive contribution by all business areas. Brokerage confirming the structurally higher floor despite lower market volatility and volumes vs 1H20 and 1Q21 Fees and commissions (1), mln Brok
Slide 9: Our priority: accelerating on Investing
Our priority: accelerating on Investing 1H21 revenues increasing thanks to volume effect and strong acceleration in AUM net sales. Margins slightly higher thanks to the operational efficiency given by Fineco Asset Management and a first sign of higher risk appetite by clients Investing Revenues, mln
Slide 10: Cost efficiency and operating leverage confirmed in our DNA
Cost efficiency and operating leverage confirmed in our DNA 1H21 characterized by costs directly related to the strong acceleration of growth of the business experienced in the “new normal world”. The yearly comparison affected by 1H20 strict lock-down (1H20 non HR lower vs avg 1H in the period 2010
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 Personal loans Mortgages 14 bps 10 bps 7 bps +23.6% Jun.20 Dec.20 Jun.
Slide 12: Lending: solid growth for all our products
Lending: solid growth for all our products High quality portfolio and cautious approach 2021 Guidance Eop, bn Mortgages 21,978 mortgages granted since December 2016 +27.6% yearly new production: Average customer rate: 144 bps. 1H21 Yield(1) at 46 bps ~ 700-800 mln +24.8% Average Loan to Valu
Slide 13: Capital Ratios
Capital Ratios Best in class capital position and low risk balance sheet RWA, mln CET1 Ratio, % Credit Market Operational CET1 capital, mln with 2019-2020 +30.8% dividend payment Note: CET1:(1)-7.93p.p. q/q, +5.3% 24.12 26.51 o/w -7.68p.p. due to 18.59 2019-2020 dividend 4,208 4,431 3,387 CET1capita
Slide 14: TFA breakdown
TFA breakdown Successful shift towards high added value products thanks to strong productivity of the network Breakdown of total TFA, bn Focus on AUM, bn 101.4 +27.5bn AUM since the end of 2014, o/w: 91.7 Guided Products & Services +30.0bn AuM à la carte -2.5bn +13.3% 81.4 51.4 69.3 51% 67.2 49% 45.
Slide 15: Net sales breakdown
Net sales breakdown High quality net sales growth with a better mix, on the wave of structural trends thanks to our diversified business model Breakdown of total Net Sales, bn PFA Network – total Net Sales, bn July estimated July estimated net sales: net sales: 9.3 ~0.9bn, ~0.8bn, o/w ~0.5bn o/w ~ 0
Slide 16: 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 Net Sales, bn – Organic / Recruit, % Total recruits Organic Total recruits Organic New PFAs recruited in the year PFAs recruited over the las
Slide 17: Increasing quality and productivity of the Network
Increasing quality and productivity of the Network Total Assets per PFA TFA concentration per PFA Eop, mln PFAs with TFA >20mln are 60% (+12% y/y) and hold 87% of TFA (+7% y/y) +16.5% +23.9% +162 +6.4% 71.7bn 100 88.8bn 100 2,569 2,731 32.5 30.6 > €35mln 27.9 24% +20.7% €25-35mln 32% y/y 60% 51% 17.
Slide 18: 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 AuM AuC Deposits TFA per client 0.5-1mln 101.4 8.9% 91.7 1-5mln 1.0mln 81.4 8.5% 35.8% 5-10mln 69.3 44% 42% >10mln 41% 46.8% 37% 15% 37% 37% 36% 39% 10% Average age: 29% 57
Slide 19: Next steps
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 19
Slide 20: Current environment is further enlarging our growth opportunities
Current environment is further enlarging our growth opportunities Current situation is accelerating the structural trends reshaping our society… DISRUPTION IN DEMAND FOR ADVICE DIGITALIZATION TRADITIONAL BANKS Increasing participation in Traditional banks not ready financial markets by Italians is S
Slide 21: 2021 Guidance and outlook going forward
2021 Guidance and outlook going forward Banking: Operating costs: Net financial income (net interest income and Profit from Treasury management): we For 2021 expected to grow in a range between 4.5-5% y/y. Please note that expect for FY21 and FY22 a net financial income to stabilize at the l
Slide 22: Focus on deleveraging
Focus on deleveraging Initiatives to deleverage our Balance Sheet and improve our quality revenues mix, by taking advantage from the acceleration of structural trends and thanks to our FinTech DNA WIDER PRODUCT RANGE TO FULLY CATCH THE WHOLE 3 SPECTRUM OF CLIENTS’ NEEDS ALSO THANKS TO FAM 1 STRONG C
Slide 23: Banking: Further combining Treasury and Business to boost growth
BANKING Banking: Further combining Treasury and Business to boost growth INDUSTRIAL ACTIONS TO MANAGE LIQUIDITY MORE DYNAMIC TREASURY MANAGEMENT: NEW PLATFORM TO DISTRIBUTE THIRD PARTIES SAVINGS yield enhancement strategies (unsecured lending, collateral ACCOUNTS leveraging on our FinTech DNA swit
Slide 24: Discontinuity on our Investing business
INVESTING Discontinuity on our Investing business Expected acceleration of revenues and margins thanks to higher AUM volumes and to the strategic discontinuity in FAM to take more control of the value chain, improving operational efficiency STRONG VOLUME EFFECT FAM OPERATIONAL EFFICIENCY INCREASIN
Slide 25: FAM: retail net sales in 1H21 exceeded the whole FY20
INVESTING FAM: retail net sales in 1H21 exceeded the whole FY20 Key to sustain AUM margins thanks to its strong operating leverage and to a more efficient value chain FAM growth potential and new opportunities FAM 2021 priorities Strong room to increase FAM’s penetration on Fineco’s funds stock:
Slide 26: Brokerage: higher floor as the structure of the market is changing
BROKERAGE 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 brokerage revenues: the floor has gone up in a clear way regardless of volatility Volatility (1) Avg volat
Slide 27: Brokerage: enlargement of client base and increased market share
BROKERAGE Brokerage: enlargement of client base and increased market share Client base growth mainly driven by “Active investors” starting to use brokerage platform and “sleeping” clients back on the market. New clients are coming from traditional banks Brokerage clients evolution Active investors A
Slide 28: Fineco UK
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 28
Slide 29: Fineco UK: our quality one-stop-solution proves to work
Fineco UK: our quality one-stop-solution proves to work Strong acceleration in our customer acquisition # Current accounts keep accelerating strong pace of growth Further improving revenues mix 17k STICKINESS RATE OTC 16k on active clients in 2020 10k Listed 6k 40% 3k Multicurrency ~90% 37% Dec.18 D
Slide 30: Fineco UK: Investing in the spotlight
Fineco UK: Investing in the spotlight ISA accounts offer, already 1,000+ subscriptions. Next step: improving our user experience The new phase: building up our Investing offer and improving user experience Step 1: Step 2: Widening our offer Improving user experience Already 21 Asset managers in ou
Slide 31: Key messages
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 31
Slide 32: 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 Our corporate purpose: to offer clients a quality and one-stop-solution with
Slide 33: 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 Sustainable since inception MARKET FRIENDLY CORPORATE GOVERANCE: Up to 3
Slide 34: 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 AWARDS One of the 2 banks in the Fineco includ
Slide 35: Fineco as a profitable Fintech Bank
Fineco as a profitable Fintech Bank Leveraging on a deep-rooted internal know-how to expand platform scalability and operating gearing Senior management experienced in IT A PROPRIETARY, No external consultants nor system integrator INTEGRATED BACK-END 18% FTEs in IT Department 24% FTEs in Back-Offic
Slide 36: 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 CAGR (2014-2020) 92 + 11% 69 81 67 55 60 1,370 + 6% TFA (bn) 49 1,278 1,358 1,200 1,048 1,118 964 284 342 + 13% Clients (thd, #) 254 208 226 197 Net profit (1) (mln) 155 749
Slide 37: Safe Balance Sheet: simple, highly liquid
Safe Balance Sheet: simple, highly liquid Diversified investment portfolio 32.9 bn Financial Assets Customer deposits Investment strategy announced during FY17 results unchanged: UC bonds run-offs, Customer loans Other liabilities blend of government bonds diversified across countries, covered bon
Slide 38: Total assets: 99.6% not exposed to volatility in the Balance Sheet
Total assets: 99.6% not exposed to volatility in the Balance Sheet Out of 32.9bn, only 0.1bn of assets at fair value with very limited impacts on Equity reserve Total Assets, eop bn (2) Gov. Bonds at fair value UC Bonds Other (1) Other Bonds at amortized costs Due from banks Covered bonds and financ
Slide 39: Focus on product areas
Agenda Fineco Results Next steps Fineco UK Key messages 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, mln 41% -4.4% +0.7% -3.6% 165.6 166.8 85.7 84.9 81.9 2Q20 1Q21 2Q21 1H20 1H21 Brokerage, mln 29% Investing, mln 30% 1H21 -24.0% +32.1% Management -11.0% fees +22.7% -24.9%
Slide 41: 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 Trading income +8.4% Fees and commissions Other +0.7% -1.4% 165.6 166.8 26.1 28.7 28.3 Jun.20 Mar.21 Jun.21 -4.4%
Slide 42: Brokerage
Brokerage Structurally higher revenues floor despite lower market volatility and volumes vs 1H20 and 1Q21 Revenues, mln Well-diversified brokerage offer Net Interest Fees and commissions Trading profit -24.0% among products… …and geographies -11.0% Funds Other markets -24.9% Italy 129.4 115.1 Forex
Slide 43: 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, mln Asset under Management, eop bn (2) Guided Products / AUM Upfront fees Other PFA costs 1H21 Management fees +28.2%
Slide 44: Annex
Annex 44
Slide 45: P&L pro-forma
P&L pro-forma(1) New P&L pro-forma(1) (recasted) P&L pro-forma(1) non recasted (old) mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 1H20 1H21 mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 1H20 1H21 Net financial income 72.0 75.1 68.6 64.1 279.7 75.1 72.8 147.0 147.9 Net financial income 72.0 75.1 68.6 64.1 279.7 7
Slide 46: P&L net of non recurring items
P&L net of non recurring items New P&L pro-forma(1) recasted net of non recurring items 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 1H20 1H21 mln ( ) ( ) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. 1 Adj. 1 Net financial income 72.0 75.1 68.6 64.1 279.7 75.1 72.8 147.0 147.9 o/w Net i
Slide 47: 1H21 P&L FinecoBank and Fineco Asset Management
1H21 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net interest income -0.1 148.0 147.9 Dividends 0.0 13.7 Net commissions 40.9 173.5 214.3 Trading profit 0.0 40.6 40.6 Other expenses/income 0.0 0.7 0.6 Total revenues 40.8 376.4
Slide 48: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes Volumes mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 1H20 1H21 Margins Margins Margins Margins Margins Margins Margins & Margins & Margins Financial Investments 54.8 22,543 56.3 22,676 53.0 22,491
Slide 49: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010340 Euro 382.5 5-Jul-21 Euribor 1m 2.58% 2 IT0005010225 Euro 382.5 18-Oct-21 Euribor 1m 2.60% 3 IT0005040099 Euro 100.0 24-Jan-22 Euribor 1m 1.46% 4 IT0005057994 Euro 200.0 11-Apr-22 Euribor 1m 1.43% 5 IT00
Slide 50: Financial Investments
Financial Investments Further improvements for a diversified asset side Bond Portfolio, avg bn Bond portfolio run-offs, eop bn UC bonds Spain SSA (1) UC Bonds Govies & SSA Covered & Corporate (2) Italy Other Govies Covered & Corporate 3.2 3.0 +7.4% 2.6 2.5 2.4 +3.6% +7.5% 2.2 2.0 24.8 24.3 1.7 1.6 2
Slide 51: Details on Net Commissions
Details on Net Commissions New Net commissions by product area Recasted Net commissions by product area (Old) mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 1H20 1H21 mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 1H20 1H21 Banking 9.5 11.1 10.4 3.2 34.2 10.8 11.9 20.6 22.7 Banking 8.8 10.3 9.7 2.2 31.0 10.0 11.0 1
Slide 52: Revenues breakdown by Product Area
Revenues breakdown by Product Area P&L by product area Recasted mln 1Q20 2Q20 3Q20 4Q20 FY20 1Q21 2Q21 1H20 1H21 Net financial income 70.5 74.8 66.9 62.8 275.0 72.6 69.8 145.3 142.3 o/w Net interest income 66.6 69.8 67.0 62.6 266.0 59.3 59.5 136.4 118.8 o/w Profit from Treasury Management 3.8 5.0 -0
Slide 53: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 Jun.21 AUM 35,516 40,083 41,744 45,381 48,018 51,399 o/w Funds and Sicav 24,122 27,657 28,929 31,578 33,271 35,699 o/w Insurance 9,961 10,676 11,020 11,819 12,659 13,448 o/w GPM 127 169 185 209 238 282 o/w AuC + deposits under a
Slide 54: Balance Sheet
Balance Sheet mln Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 Jun.21 (1) Due from Banks 1,801 1,633 1,761 2,541 1,902 2,253 Customer Loans 3,741 4,204 4,320 4,528 4,639 5,269 Financial Assets 23,414 22,961 22,988 23,957 25,398 24,648 Tangible and Intangible Assets 280 280 278 281 277 281 Derivatives 76 76 76
Slide 55: Main Financial Ratios
Main Financial Ratios Mar.20 Jun.20 Sep.20 Dec.20 Mar.21 Jun.21 PFA TFA/ PFA (mln) (1) 25.7 27.9 28.7 30.6 31.6 32.5 Guided Products / TFA (2) 34% 35% 36% 36% 36% 38% Cost / income Ratio (3) 29.9% 29.9% 30.7% 32.4% 30.4% 31.3% CET 1 Ratio 25.4% 24.1% 23.3% 28.6% 26.5% 18.6% Adjusted RoE (4) 26.5% 26
Slide 56: 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 57: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at €20.3bn, of which €13.2bn retail classes(1) FAM EVOLUTION (46 strategies) 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
Slide 58: Brokerage: extracting value from the vertical integration
Brokerage: extracting value from the vertical integration After the successful integration of our asset management business through FAM, we are now applying the same strategy with the launch of Leveraged Certificates thanks to our strong operating leverage and to the consistently increasing volumes
Slide 59: Fineco UK vs competitors
Fineco UK vs competitors Products and services Platform features Usability, reliability and advanced tools Coming Soon 59
Slide 60: Fineco UK: Premium service without premium price
Fineco UK: Premium service without premium price Disruptive pricing 100% sustainable thanks to our strong operating leverage OTC: zero commission, no added spreads Platform fees: the most competitive Stock broking: flat fees (1) (1) (1) (1) Multicurrency: best spreads, no commissions Transaction fee
Slide 61: Preserving our best price/quality ratio
Preserving our best price/quality ratio Competitive landscape(1) € 85 avg € 137 avg € Online online costs branch costs Branch IWBank (IWConto) 4 89 Widiba (Conto Start) 20 53 ING (Conto Arancio) 24 Webank 24 Fineco 25 HelloBank! (Hello! Money) 58 Banca Sella (Conto Start) 62 161 CreditAgricole (Easy
Slide 62: Additional Tier 1
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 On January 23rd, 2018 the Bank issued a €200mln perpet
Finecobank Banca Fine — Q2 2021 Earnings Presentation on 6ix