Banca Generali S.p.a. · MIL:BGN

Banca Generali — Q1 2019 Earnings Presentation

55 slides from Banca Generali's earnings presentation, 2019

  1. Slide 1: 1Q 2019 Results Investor Presentation

    1Q 2019 RESULTS INVESTOR PRESENTATION

  2. Slide 2: Agenda

    AGENDA Preliminary remarks 1Q 2019 results Net Inflows, assets and recruiting Business Update Appendix Banca Generali at a glance 2

  3. Slide 3: Executive Summary

    EXECUTIVE SUMMARY Strong business expansion  Sound asset growth (€61.1bn, +€4.7bn YoY) with managed assets at 74% of total. Pro-forma TOTAL ASSETS assets - including Valeur, Nextam - well above €63bn. Sharp acceleration in assets under advisory to €61.1bn €3bn (+76% YoY, +31% YTD). (vs. €56.4bn) 

  4. Slide 4: Preliminary Remarks: New Accounting Principle IFRS 16

    PRELIMINARY REMARKS NEW ACCOUNTING PRINCIPLE: IFRS 16 NEW ACCOUNTING PRINCIPLE IFRS 16  IFRS 16 is the new accounting standard for lease contracts1. It has become effective from January 1, 2019.  The new accounting principle has a limited negative impact on P&L (€0.4m net of tax) with re-classific

  5. Slide 5: 1Q 2019 Results at a Glance

    FY 2018 RESULTS AT A GLANCE KEY TAKEAWAYS * Comments (€ mln) 1Q 18 1Q 19 % Chg 1Q 19 % Chg Solid increase in Total Banking Income (17%) IFRS 16  Net Financial Income supported by a growing contribution from Net Interest Income 13.2 16.7 26.3% 15.9 19.9% NII (+20%) even after the negative impact fro

  6. Slide 6: Net Profit

    NET PROFIT SOLID PROFIT RECOVERY Net Profit build-up m/€ 3.5 (2.5) (3.9) 1.7 16.4 (0.1) 66.6 Recurring profits (0.5) 2.5 (3.4) 1.1 (-1.2) were stable, fast Ongoing Write-ups IFRS 15 and recovering the IFRS 16 49.0 reinvestment Temporary One-off costs on IFRS 9 Lower unfavourable 4Q18 of liquidity dr

  7. Slide 7: Agenda

    AGENDA Preliminary remarks 1Q 2019 results Net Inflows, assets and recruiting Business update Appendix Banca Generali at a glance 7

  8. Slide 8: Net Financial Income (1/2)

    NET FINANCIAL INCOME (1/2) GROWING NII DESPITE HEADWINDS FROM NEW IFRS 16 Net financial income m/€ 28.5 19.9 Solid increase in NII partly offset by 15.2 17.8 IFRS16 first time adoption (€0.85m Trading gains 4.0 charge). 2.1 Net interest income NII increase linked to higher return of 15.7 16.7 15.9 b

  9. Slide 9: Net Financial Income (2/2)

    NET FINANCIAL INCOME (2/2) SHARP YIELD IMPROVEMENT FROM REINVESTMENTS Total assets and interest-bearing assets1, bn/€ Maturity (Bond) Duration (Bond) 9.7 10.0 8.8 Other assets 0.9 3.5 3.4 1.1 1.5 2.0 1.8 Loans to banks & 1.8 1.8 1.8 1.2 other liquidity 1.7 1.0 1.4 Loans to Clients Financial assets 5

  10. Slide 10: Gross Fees (1/3): Management Fees

    GROSS FEES (1/3): MANAGEMENT FEES FULL RECOVERY COMPLETED IN MARCH Management Fees m/€ Management fees Monthly trend 52.8 52.3 Management fees and 51.6 158.1 155.5 margins steadily 155.0 50.6 recovering from 4Q 2019 lows due to financial markets’ downturn Dec.18 Jan.19 Feb.19 Mar.19 Average AuM Mont

  11. Slide 11: Gross Fees (2/3): Other Fees

    GROSS FEES (2/3): OTHER FEES GROWING CONTRIBUTION, GROWING DIVERSIFICATION Banking and Entry Fees m/€ 17.8 17.5 Entry fees from certificates were steady in the 16.6 quarter while posting a sharp acceleration in April 5.8 4.6 with €40m new issues out of total €96m in 4M19. 5.0 Other entry fees suffer

  12. Slide 12: Gross Fees (3/3): Performance Fees

    GROSS FEES (3/3): PERFORMANCE FEES POSITIVE FINANCIAL PERFORMANCE HARVESTING Performance Fees m/€ Performance 35.2 Performance fee in the Fees quarter at 8 bps on m/€ managed assets (32 bps on an annualised basis) 7.6 2.0 1Q18 4Q18 1Q19 New performance fees On calculation mechanism 0.07% 0.02% 0.32%

  13. Slide 13: Fee Expenses

    FEE EXPENSES MOVING TOTAL PAY-OUT LOWER Total Fee Expenses m/€ Pay-out to the network % 49.2% 49.0% Ordinary pay-out higher on a one-off item (50bps) related to the 96.7 36.7 37.1 indemnity mechanism 94.3 11 9 0.5 for FAs’ retirement and 12.5 11.4 on seasonality (higher 22 20 weight of social-securi

  14. Slide 14: Operating Costs (1/2)

    OPERATING COSTS (1/2) INCREASE LINKED TO ACCELERATION OF KEY PROJECTS Total operating costs m/€ Breakdown of core operating costs m/€ 53.3 IFRS 16 Accounting 50.0 49.7 Restatement 46.5 3.6 46.9 46.5 3.5 43.1 3.0 0.3 2.4 3.4 2.0 6.8 Higher depreciation 2.8 2.7 (+ €4.4m) 17.9 2.8 Sales Personnel 18.3

  15. Slide 15: Operating Costs (2/2)

    OPERATING COSTS (2/2) HIGH EFFICIENCY LEVELS CONFIRMED Operating costs/total assets Cost/Income ratio 53.4% 0.51% 53.9% 52.6% 52.3% 51.1% 46.5% 0.45% 0.42% 39.9% 42.3% 40.3% 41.0% 40.2% 0.38% 38.1% 41.7% 0.34% 0.34% 0.33% 32.4% 2013 2014 2015 2016 2017 2018 1Q19 2013 2014 2015 2016 2017 2018 1Q19 1

  16. Slide 16: Capital Position

    CAPITAL POSITION SOLID CAPITAL REAFFIRMED AFTER IFRS16 ONE-OFF CHARGE CET1 ratio TCR ratio (0.9%) 19.0% (1.0%) 18.0% 17.5% 16.6% CET1 ratio and TCR ratio incorporated a one-off charge of 80bps and 87bps, respectively linked to the first time application of the IFRS 16 Accounting principle 2018 1Q19

  17. Slide 17: Agenda

    AGENDA Preliminary remarks 1Q 2019 results Net Inflows, assets and recruiting Business update Appendix Banca Generali at a glance 17

  18. Slide 18: 1Q 2019 Total Assets

    1Q 2019 TOTAL ASSETS VOLUMES AND PRODUCT MIX Total Assets bn/€ Managed Solutions bn/€ 61.1 57.5 28.2 27.3 29.0 56.4 5.9 5.5 6.0 7.7 7.7 8.4 29.0 27.3 7.1 6.4 6.5 28.2 7.4 7.7 8.1 Managed solutions 1Q18 2018 1Q19 Traditional life policies 16.0 Insurance wrappers Financial wrappers 15.4 Banking produc

  19. Slide 19: 1Q 2019 Net Inflows

    1Q 2019 NET INFLOWS VOLUMES AND PRODUCT MIX Total net inflows by New Assets under Net inflows bn/€ acquisition channel m/€ advisory bn/€ 3.0 45% 29% 2.3 1.6 1.4 32% 1.7 0.1 0.8 0.9 0.5 75% 0.2 64% 58% 0.2 0.7 0.8 0.6 -9% -10% -4% 1Q18 4Q18 1Q19 1Q18 2018 1Q19 1Q18 4Q18 1Q19 Managed solutions New rec

  20. Slide 20: FAs Network

    FAS NETWORK STEADY QUALITY GROWTH FA Network Recruitment trend (# of Recruits) (# of Recruits) 1,985 2,001 161 1,936 153 1,841 1,715 126 1,645 1,475 102 105 94 122 81 92 20 73 75 50 59 19 31 34 39 32 9 27 10 2013 2014 2015 2016 2017 2018 1Q19 2013 2014 2015 2016 2017 2018 1Q19 73.5% 79.5% 83.0% 85.3

  21. Slide 21: April 2019 Net Inflows

    APRIL 2019 NET INFLOWS STRONG COMMERCIAL DATA Total net inflows, monthly trend m/€ Recruiting, monthly trend (# of new recruits) 1,956 195 26 621 545 1140 7 125 81 339 4M19 April 19 4M19 new recruits April 2019 Banking products Traditional life policies Managed solutions 21

  22. Slide 22: Agenda

    AGENDA Preliminary remarks 1Q 2019 results Net Inflows, assets and recruiting Business update Appendix Banca Generali at a glance 22

  23. Slide 23: BG Ambitions: 2019-21 Business Plan

    BG AMBITIONS 2019-21 BUSINESS PLAN 1 To consolidate our leading position in empowering the best Financial Advisors Empowering FAs (FAs) in the Italian market To be the Clients’ first choice for quality of 2 professionals, protection and value of service as well as state-of-the-art digital Clients’ f

  24. Slide 24: Empowering FAs

    EMPOWERING FAS KEY PROJECTS 1 1 Continuing innovation in AM solutions  LUX IM  Multi Discretionary Mandate  Illiquid Solutions 2 Implementing Advisory Fee Approach Empowering FAs  Robot for Advisory solutions  WM Approach  Vehicle for illiquid assets To consolidate our leading position in empo

  25. Slide 25: Innovation in AM Solutions: Lux-based Assets

    INNOVATION IN AM SOLUTIONS LUX-BASED ASSETS AT ALL-TIME HIGHS BG FML - LUX-based assets bn/€ 15.5 15.3 15.1 Strong BGFML performance in 15.2 14.8 1Q19 (+7.2%) further accelerating in April (+9.4% YTD) 14.1 Total BGFML1 Assets New Sicavs (LUX IM & BG 1Q18 1H18 9M18 FY8 1Q19 4M19 Alternative) growing

  26. Slide 26: Innovation in AM Solutions: LUX IM Strategies and Pricing

    INNOVATION IN AM SOLUTIONS LUX IM PRODUCT STRATEGIES AND PRICING LUX IM Asset Breakdown Pricing by Asset Class LUX IM vs. Peers1 Lux IM currently offers 51 different investment strategies, many of them MAX 3.1% 25% developed on an exclusive basis for 32% 2.2% Banca Generali. New launches in 4Q19 2.0

  27. Slide 27: Sustainability as an Alternative Approach to Clients

    INNOVATION IN AM SOLUTIONS SUSTAINABILITY AS AN ALTERNATIVE APPROACH TO CLIENTS New proposition for Clients  UN sustainable development goals (SDGs)  New commercial approach starting from Clients’ need ESG Fund Selection  Wide and growing offer: 161 ESG funds with 25 AMs  Wide range of investmen

  28. Slide 28: Advisory Fee Approach

    ADVISORY FEE APPROACH A MULTIFACETED APPROACH Advisory Services % AuA Volumes trend bn/€  A multifaceted approach, with 0.3 0.7 1.3 1.6 2.2 2.3 2.3 3.0 growing contribution from illiquid investments 3% 3% 3% 3% 13% 13% 16% 17% 31% 31% 30% 28%  Starting from 2019, pure financial 22% 22% 22% advisor

  29. Slide 29: Exploiting Assets under Custody

    EXPLOITING ASSETS UNDER CUSTODY AN OPPORTUNITY FOR GROWTH AND PROFITABILITY Assets under Custody bn/€ NEW INITIATIVES 8.6 7.6 6.9 6.4 6.2 6.2  BG Saxo partnership – the 5.8 expertise of a multi-asset trading and investment specialist with the aim of  Increasing the share of wallet of existing clie

  30. Slide 30: Clients' First Choice

    CLIENTS’ FIRST CHOICE KEY PROJECTS 1 2 Quality of the network  Accelerate on cross-fertilization and team  Steady focus on FAs’ quality 2 Wealth Management approach Clients’ first choice  Focus on protection, lending and services to enterpreneurs To be the Clients’ first choice for quality of pro

  31. Slide 31: Clients Overview

    CLIENTS OVERVIEW STEADY GROWTH IN THE PRIVATE SEGMENT N. of Clients with assets 1.62 m/€ 226.0 1.6 m/€ 222.9 >500 k/€ 24,250 10% 11% 1.5 m/€ 22,621 165.3 10,746 6% 32% 32% N. of Clients (Total Assets 25% >10 k/€) 2013 2018 1Q19 58% 57% Avg. Assets per private Client 69% Clients >500 k/€ Clients <500

  32. Slide 32: Financial Advisors Teams

    FINANCIAL ADVISORS TEAMS SUCCESSFUL ROLL-OUT OF THE TEAM MODEL HORIZONTAL TEAM VERTICAL TEAM • Sharing skills • Succession planning for FA Leader • Team members focused on specific area of ​expertise • New generation of FAs • Tailor-made services • Management and development of the entire Client bas

  33. Slide 33: Digital Onboarding

    DIGITAL ONBOARDING GROWING NUMBER OF DIGITAL TOUCHPOINTS Being disruptive in relation to the Clients  100% digital onboarding process LIVE - account opened in 15-20 minutes  Mobile Banking App LIVE - innovative customer experience and new features, amongst others: vocal interaction, Apple pay and

  34. Slide 34: International Aspiration

    INTERNATIONAL ASPIRATION KEY PROJECTS 3 1 Clients managed from Italy  Agreement with custodian banks  Advice from current network International aspiration 2 Clients managed from Switzerland  Acquisition of Valeur Fiduciaria To create a new long term growth  Selective recruiting engine by selecti

  35. Slide 35: International Aspiration: Switzerland, New Growth Engine

    INTERNATIONAL ASPIRATION SWITZERLAND, NEW GROWTH ENGINE The project aims at building a new long term growth engine, that will achieve profitability in the short term. CLIENTS MANAGED FROM ITALY Advice offered by the Italian network • BG Clients seeking for diversification of booking centers INITIATI

  36. Slide 36: Strategic Projects: M&A and Partnerships Update

    STRATEGIC PROJECTS M&A AND PARTNERSHIPS UPDATE  Closing expected by June-July 2019  High interest and positive feedbacks from local financial business community  Closing expected by June-July 2019  Roadshow scheduled in May in order to present to the FAs network the new portfolio management line

  37. Slide 37: Projections (1/2)

    PROJECTIONS (1/2) EXPECTED CURRENT PERIMETER NET INFLOWS 3.0 3.0 2.9 2.6 2.2 2.2 – 2.4 Organic net 4.2 – 4.8 3.7 - 4.3 BG inflows Saxo bn/€ 2014 2015 2016 2017 2018 2019-21 avg Recruitment (24 months) Out 3.9 Net inflows 2.7 2.1 bn/€ 1.9 2.1 1.5 – 1.9 from FA 4.2 2019-21 avg 2019-21 avg 3.0 2.7 recr

  38. Slide 38: Projections (2/2)

    PROJECTIONS (2/2) GROWTH TARGETS 2019 - 2021 3.1 - 4.4 1-3 76.0 – 80.0 13.9 - 15.7 12.6 - 14.4 57.5 Total Assets Net Inflows bn/€ Valeur1 Nextam1 2018 Current perimeter Swiss initiative Market 2021E 2019E – 2021E 38 NOTE: Not including potential M&A; 1) Consolidation of acquired Assets

  39. Slide 39: 2019-21 Business Plan Guidelines

    2019-21 BUSINESS PLAN GUIDELINES CLEAR FINANCIAL TARGETS PEOPLE & ORGANIZATION 2019-21 Targets DIGITAL MINDSET  Cumulated Net Inflows >14.5 bn/€  Total Assets 76-80 bn/€ WM APPROACH DISCONTINUITY  Core Net Banking Income1 ≥63 bps IN THE CONTINUITY  Core Operating Costs: 3%-5% CAGR2 EXCELLENCE OF

  40. Slide 40: Agenda

    AGENDA Preliminary remarks 1Q 2019 results Net Inflows, assets and recruiting Business update Appendix 1Q19 results Banca Generali at a glance 40

  41. Slide 41: New Accounting Principles IFRS15 & IFRS 16

    NEW ACCOUNTING PRINCIPLES IFRS15 & IFRS 16 DETAILS ON RECONCILIATION * Comments Delta vs. Delta vs. (€ mln) 1Q 18 1Q 19 1Q 19 1Q 19 IFRS 15 & LfL IFRS 16 First Time Adoption of IFRS 16 IFRS15 Accounting Standard (IASB) LfL IFRS15 IFRS16 Net Interest Income 13.2 16.7 16.7 15.9 -0.85 Net income (loss)

  42. Slide 42: New Revenue Streams: Assets under Advisory

    NEW REVENUE STREAMS ASSETS UNDER ADVISORY: ADVANCED ADVISORY CONTRACT BG - % AUA Benchmark Guidance: Advisory Fees2 on Total Assets % AUA on Total Assets1 m/€ 18% 12% 20-25 7-8% 5.0% 4.0% 8.9 2.5% 2.0 3.2 2017 2018 1Q19 2021E 1Q18 1Q19 2018 2021E Italian Private Italian Assoreti best market average

  43. Slide 43: New Revenue Streams: Assets under Custody

    NEW REVENUE STREAMS ASSETS UNDER CUSTODY: CERTIFICATES AND PRIVATE PLACEMENTS BG - % Certificates & private Benchmark - % Certificates Guidance: Entry fees on certificates placements stock on AUC stock on AUC & private placements m/€ ~5% 10.0 ~3.0% 7.0 2.9% 2.6% 2.5% 1.6 1.7 0.5% 2017 2018 1Q19 2021

  44. Slide 44: Other Gross Fees: Brokerage

    OTHER GROSS FEES ASSETS UNDER CUSTODY: BROKERAGE BG - Turnover Benchmark - Turnover Guidance: Brokerage fees Ratio (cash only)1 Ratio2 (cash + derivatives)1 m/€ 5.8x 20-26 1.4x 1.4x 0.9x 0.9x 11.6 3.1 3.8 2017 2018 2021E Assoreti top 3 Assoreti best player 1Q18 1Q19 2018 2021E ex best player (2018)

  45. Slide 45: Agenda

    AGENDA Preliminary remarks 1Q 2019 results Net Inflows, assets and recruiting Business update Appendix Banca Generali at a glance 45

  46. Slide 46: Banca Generali: A Growth Story

    BANCA GENERALI: A GROWTH STORY ONE OF THE FASTEST GROWING COMPANIES IN THE ASSET GATHERING BUSINESS PHASE 1 PHASE 2 New management team Multi-year strategic network repositioning New service model: implementation of WM approach and listing on the Italian and new digital mindset Stock Exchange 61.1 5

  47. Slide 47: A Transformational Journey

    A TRANSFORMATIONAL JOURNEY COMMERCIAL EXCELLENCE 2x +3.5 pp 61.1 13.9% 13.9% 55.7 57.5 13.3% 47.5 12.6% 41.6 11.6% 12.1% 36.6 10.4% 29.1 Banca Generali Market share Total Assets on Total Sector bn/€ Assets1 2013 2014 2015 2016 2017 2018 1Q19 2013 2014 2015 2016 2017 2018 1Q19 + ~11 m/€ 28.8 29.0 30.

  48. Slide 48: Quality of the Network

    QUALITY OF THE NETWORK NETWORK ORGANIZATION DRIVEN BY PORTFOLIO SIZE AND SKILLS Clusters (% of Assets) Numbers of FAs Assets per capita Advisors organized in three Wealth main networks by portfolio 34% 3031 73.8 m/€2 size and needs, with bespoke Managers Financial Advisors supports to each cluster P

  49. Slide 49: Growing Recognition in the Private Banking Space

    GROWING RECOGNITION IN THE PRIVATE BANKING SPACE KEY AWARDS CONFIRMING QUALITY AND PERSISTENCY First for FAs’ Satisfaction1 Second private bank in Italy by brand equity, according to PB Monitor2 "Best Financial Advisory network in Italy five years in a row" 2013 2014 2015 2016 2017 2018 1st in the r

  50. Slide 50: BG: The Fastest Growing Company Among Top Players

    BG: THE FASTEST GROWING COMPANY AMONG TOP PLAYERS GROWING MARKET SHARE Assoreti – Financial networks in Italy bn/€ 5Y growth 1 106.4 +27%  Assoreti sector is a highly 67.5 +43% concentrated industry: top 6 players in market share 59.9 +65% with over 90% 57.5 +98%  Market share of Assoreti In Itali

  51. Slide 51: Extensive Product Offer

    EXTENSIVE PRODUCT OFFER GREATER DIVERSIFICATION OF ASSET MIX Asset mix 1Q19 Total Assets 61.1 bn/€  Fully open architecture (Over 5,400 Traditional Life Insurance different retail funds and 50 asset managers offering Clients a wide array of choice) 1 26% In-House Funds 12%  Retail funds distributi

  52. Slide 52: Wealth Management Approach

    WEALTH MANAGEMENT APPROACH EXPANSION OF ADVISORY PERIMETER TO FINANCIAL AND NON FINANCIAL WEALTH Advanced Advisory Model (financial + non financial) Focus on Real estate  Advisory: • Strategic analysis of real estate wealth Real Financial • Valuations estate assets  Agency • Disposals and purchase

  53. Slide 53: Best in Class Proprietary Digital Tools for the FA Network

    BEST IN CLASS PROPRIETARY DIGITAL TOOLS FOR THE FA NETWORK OPEN BANKING APPROACH BG Store Wealth Advisory Portal Digital Collaboration Simplicity and completeness of the Deep-dive analysis Paperless Approach tool for FAs’ needs  The advisor digital desk with a multi-device approach  A wide range o

  54. Slide 54: Disclaimer

    DISCLAIMER The manager responsible for preparing the company’s financial reports (Tommaso Di Russo) declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law of Finance, that the accounting information contained in this presentation corresponds to the document results, books and a

  55. Slide 55: Upcoming Events and Investor Relations

    UPCOMING EVENTS JULY Investor Relations Su Mo Tu We Th Fr Sa Giuliana Pagliari 1 2 3 4 5 6 Investor Relations Manager 7 8 9 10 11 12 13 Phone +39 02 408 26548 1H 2019 results Mobile +39 331 65 30 620 14 15 16 17 18 19 20 & Investor Conference Call 21 22 23 24 25 26 27 E-mail: giuliana.pagliari@banca

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