Finecobank Spa · MIL:FBK
Finecobank Spa — Finecobank Banca Fine — Q4 2022 Earnings Presentation
54 slides from Finecobank Spa's earnings presentation, Feb 7, 2023
Slide 1: 4Q22 Results
4Q22 Results Alessandro Foti CEO and General Manager Milan, February 7th 2023 FINECO. SIMPLIFYING BANKING.
Slide 2: Disclaimer
Disclaimer ◼ “Pursuant to the paragraph 2 of Article 154 bis of the Consolidated Law on Financial Intermediation (Legislative Decree no. 58 of February 24, 1998), Lorena Pelliciari, in her capacity as manager responsible for the preparation of FinecoBank S.p.A. (the “Company”)’s financial reports, d
Slide 3: Agenda: Fineco Results
Agenda ✓Fineco Results ❑ Next steps ❑ Fineco international business ❑ Key messages ❑ Focus on product areas 3
Slide 4: Executive Summary
Executive Summary Successful growth story: becoming more a Platform than a Bank. Our diversified business model allows us to deliver strong results in every market condition Strong net profit and growth of the business… 2023 Guidance and going forward: strong growth expected ◼ FY22 adj. Net Profit a
Slide 5: Delivering strong Net Profit in every market condition
Delivering strong Net Profit in every market condition Adj. Net Profit at 428.8mln, +22.8% y/y boosted by strong acceleration of Investing, confirming the effectiveness of our initiatives, and Net Financial Income. Strong operating leverage confirmed Net Profit, mln Revenues, mln excluding non recur
Slide 6: Revenues growth supported by all our initiatives
Revenues growth supported by all our initiatives Quality and capital light NII driven by our clients’ valuable transactional liquidity and not driven by lending as for other Banks. Boosting Non Financial Income, thus becoming more a Platform than a Bank. Net Financial Income, mln Non Financial Incom
Slide 7: Our priority: accelerating on Investing
Our priority: accelerating on Investing Management fees in FY22 +13.5% y/y, 4Q22 dynamics affected by market performance Investing revenues increasing thanks to volume effect and FAM Investing Revenues, mln +11.8% 308.1 275.6 -2.0% +2.3% mln 4Q21 3Q22 4Q22 FY21 FY22 82.1 78.6 80.4 Investing 82.1 78.
Slide 8: Cost efficiency and operating leverage confirmed in our DNA
Cost efficiency and operating leverage confirmed in our DNA Operating Costs, mln Staff expenses and FTE, mln FTE # The yearly increase is mainly linked to costs related to the growth FY22(1): +5.1% y/y of the business, mainly related to: FY22 FAM costs 5.0% up by 2.1mln y/y • FAM as it is progressiv
Slide 9: 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 4 bps 4 bps Personal loans Mortgages 2 bps +9.0% Dec.21 Sep.22 Dec.22
Slide 10: Capital Ratios
Capital Ratios Best in class capital position and low risk balance sheet RWA, mln CET1 Ratio, % Credit Market Operational CET1 capital, mln +2.7% +1.6% 18.80 20.39 20.82 4,618 4,664 4,740 3,315 3,350 3,314 Dec.21 Sep.22 Dec.22 1,256 47 1,256 58 1,382 45 868 951 987 Dec.21 Sep.22 Dec.22 Leverage Rati
Slide 11: TFA and Net Sales evolution
TFA and Net Sales evolution Successful shift towards high added value products thanks to strong productivity of the network Breakdown of total TFA, bn Breakdown of total Net Sales, bn AUM since the end of 2014: 107.9 106.6 110.3 -3.7% 31% Jan.23 total Net Sales: 746 mln, +126.9% 30% 10.7 o/w AUM 701
Slide 12: 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 Total Net Sales, bn – Organic / Recruit, % Total recruits Organic Total recruits Organic New PFAs recruited in the year PFAs recruited over t
Slide 13: 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 Client segmentation AuM AuC Deposits 0.5-1mln 107.9 106.6 8.4% 91.7 8.6% 1-5mln 1.0mln 81.4 36.3% 5-10mln 69.3 45% 42% 42% 46.8% >10mln 41% 16% 37% 37% 35% 37% 39% 37% 54% 1
Slide 14: Agenda: Next steps
Agenda ❑ Fineco Results ✓Next steps ❑ Fineco international business ❑ Key messages ❑ Focus on product areas 14
Slide 15: A new market structure enlarging our growth opportunities
A new market structure enlarging our growth opportunities A structurally higher profitability and capital light business model, leading to higher DPS and to invest in our growth The current environment has significantly changed Acceleration of structural trends New interest rates environment (1) res
Slide 16: 2023 Guidance and outlook going forward
2023 Guidance and outlook going forward Our diversified business model key to successfully deal with the current volatile environment ◼ BANKING REVENUES: ➢ Net financial income (NFI: net interest income + Profit from Treasury management) ◼ OPERATING COSTS expectations: expectations(1): For FY23: gro
Slide 17: FAM: delivering on the strategic discontinuity
INVESTING FAM: delivering on the strategic discontinuity Key to sustain AUM margins thanks to its strong operating leverage and to a more efficient value chain FAM progressively taking control of the value chain… FY23 FAM priorities bn FAM NET SALES ✓ Thanks to the full control of the FAM RETAIL: FA
Slide 18: 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 revenues: the floor has gone up in a clear way in any market environment Avg monthly revenues 2017-2019 Th
Slide 19: Innovation and Simplification Project
Innovation and Simplification Project Further simplifying clients’ user experience thank to easy-to-use new tools and a more efficient marketing engine. The renewed platform will be the cornerstone of our International offer BROKERAGE INVESTING BANKING ✓New Trading Pages ✓New Trading Platform Fineco
Slide 20: Agenda: Fineco international business
Agenda ❑ Fineco Results ❑ Next steps ✓Fineco international business ❑ Key messages ❑ Focus on product areas 20
Slide 21: Fineco international business
Fineco international business Focusing our offer on a simplified digital model through a brand new, highly scalable and multilanguage platform for investments UK: business growing with Next steps Going forward: rest of EU marketing expenses on hold An increasing and better quality client base… ➢ We
Slide 22: Agenda: Key messages
Agenda ❑ Fineco Results ❑ Next steps ❑ Fineco international business ✓Key messages ❑ Focus on product areas 22
Slide 23: 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 Fineco corporate purpose: support clients in the responsible management of th
Slide 24: 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 Strategy & Goals Initiatives & KPIs ✓ FOCUS on Cyber-Security and ESG risks l
Slide 25: 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 ESG AWARDS Evaluation scale 2021 2022 (0-100)
Slide 26: Fineco as a profitable FinTech Bank: ICT a key business driver
Fineco as a profitable FinTech Bank: ICT a key business driver Leveraging on a deep-rooted internal know-how to expand platform scalability and operating gearing 1 2 3 4 SIMPLICITY OMNICHANNEL BIG-DATA TIME TO MARKET & CUSTOMIZATION Client front-ends are built IT provides a seamless user Data manage
Slide 27: 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 2021 2022 CAGR (2014-2022) + 10% 108 107 92 69 81 60 67 1,428 1,487 + 6% TFA (bn) 49 55 1,358 1,370 1,278 1,200 461 Clients (thd, #) 964 1,048 1,118 376 + 15% 284 342 226 25
Slide 28: Safe Balance Sheet: simple, highly liquid
Safe Balance Sheet: simple, highly liquid Diversified investment portfolio 36.3 bn Financial Assets Customer deposits ◼ Investment strategy announced during FY17 results unchanged: UC bonds run- offs, blend of European, supranational and agencies, government bonds diversified Customer loans Other li
Slide 29: Agenda: Focus on product areas
Agenda ❑ Fineco Results ❑ Next steps ❑ Fineco international business ❑ Key messages ✓Focus on product areas 29
Slide 30: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allows the bank to successfully face any market environment Banking, mln 48% +94.8% +42.3% +43.6% 450.7 316.8 73.2 99.3 142.6 4Q21 3Q22 4Q22 FY21 FY22 Brokerage, mln 20% Investing, mln 33% FY22 Management fees -11.0% +11.8% -22.0% -2.0% +1
Slide 31: 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 Fees and commissions Trading income Other +3.6% +42.3% -0.3% +94.8% 450.7 29.5 30.7 30.6 +43.6% 316.8 142.6 Dec.2
Slide 32: Brokerage
Brokerage Structurally higher revenues floor compared to pre-pandemic levels Revenues, mln Well-diversified brokerage offer Net Interest Fees and commissions Trading profit -11.0% among products… …and geographies 213.9 Funds Other markets 16.4 190.4 Italy -22.0% 11.7 Forex / CFD 8% -1.7% 126.2 100.5
Slide 33: Investing
Investing Increasing revenues y/y thanks to volume effect and to the higher contribution by FAM, which is taking more control of the Investing value chain, supporting our margins. Very limited upfront fees, representing only ~2% of Investing fees Revenues, mln Asset under Management, eop bn Upfront
Slide 34: Annex
Annex 34
Slide 35: P&L pro-forma
P&L pro-forma P&L pro-forma(1) mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 4Q22 FY22 Net financial income 75.1 72.8 69.2 62.9 280.0 107.5 68.9 84.2 131.6 392.2 o/w Net Interest Income 61.8 62.5 61.8 61.8 247.9 59.3 67.6 84.3 131.6 342.8 o/w Profit from treasury management 13.2 10.3 7.4 1.1 32.1 48.1
Slide 36: P&L net of non recurring items
P&L net of non recurring items P&L pro-forma(1) net of non recurring items 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 4Q22 FY22 mln Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Net financial income 75.1 72.8 69.2 62.9 280.0 107.5 68.9 84.2 131.6 392.2 o/w Ne
Slide 37: FY22 P&L FinecoBank and Fineco Asset Management
FY22 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net financial income -0.2 392.4 392.2 Dividends 0.0 96.9 -0.3 Net commissions 139.0 326.6 465.6 Trading profit -0.2 90.1 89.9 Other expenses/income -0.9 1.2 0.2 Total revenues 13
Slide 38: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 4Q22 FY22 Margins Margins Margins Margins Margins Margins Margins Margins Margins Margins Financial Investments 43.9 24,416 4
Slide 39: Net financial income: focus on financial investments
Net financial income: focus on financial investments Transactional liquidity invested in a diversified portfolio Bond Portfolio (1) (2) € bn, eop UC bonds Italy Spain Other Govies SSA Covered & Corporate +5.7% -1.6% (3) 26.3 25.9 Bond portfolio Nominal value: 25.6 bn: 24.5 2.4 1.7 ▪ o/w 56% at fixed
Slide 40: Focus on Bond portfolio
Focus on Bond portfolio Bond portfolio run-offs, eop bn (1) Fixed rate bonds Floating and swapped bonds (1) Avg yield of fixed rate bonds, bps Avg spread vs EUR 3M of floating and swapped bonds, bps UC bonds UC Bonds avg spread vs Eur3M, bps 4.3 3.1 2.8 3.1 2.8 1.6 2.0 2.0 2.3 1.6 1.7 1.8 1.6 0.9 2.
Slide 41: New interest rates environment
New interest rates environment ➢ In the recent months the market experienced a significant structural change due to interest rates move and the inflationary environment ➢ Below a comparison of the forward rate curve behind the guidance to the market during the 3Q22 and 4Q22 conference calls 2023 202
Slide 42: Net Financial Income: focus on Lending
Net Financial Income: focus on Lending Ancillary business to fulfill clients’ needs. High quality portfolio and cautious approach 2023 Guidance Eop, bn Mortgages ◼ Average customer rate: 149 bps. FY22 Yield(1) at 97 bps ◼ yearly new production: +5.6% ~ 150-200 mln ◼ Average Loan to Value on residual
Slide 43: Details on Net Commissions
Details on Net Commissions Net commissions by product area mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 4Q22 FY22 Banking 10.7 11.7 12.7 13.5 48.6 12.5 13.8 14.5 15.3 56.2 Brokerage 40.2 29.5 26.0 30.6 126.2 32.6 24.2 20.9 22.7 100.5 o/w Equity 36.1 24.6 22.5 26.2 109.5 28.1 18.3 16.1 16.5 79.0 Bond
Slide 44: Revenues breakdown by Product Area
Revenues breakdown by Product Area Revenues by product area mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 4Q22 FY22 Net financial income 71.9 69.2 65.2 58.9 265.2 104.4 66.3 81.8 129.5 382.0 o/w Net interest income 58.7 58.9 57.7 57.7 233.1 56.3 65.0 81.8 129.5 332.6 o/w Profit from Treasury Managemen
Slide 45: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.21 Jun.21 Sep.21 Dec.21 Mar.22 Jun.22 Sep.22 Dec.22 AUM 48,018 51,399 52,648 55,450 53,651 50,789 50,708 52,073 o/w Funds and Sicav 33,271 35,699 36,233 38,053 35,985 33,182 32,806 33,827 o/w Insurance 12,659 13,448 14,122 14,963 15,354 15,421 15,643 15,595 o
Slide 46: Increasing quality and productivity of the Network
Increasing quality and productivity of the Network Total Assets per PFA TFA concentration per PFA Eop, mln AUM AUC Deposits PFAs with TFA >20mln are 59% and hold 86% of TFA -5.8% -1.5% +128 +2.8% 94.6bn 100 93.2bn 100 2,790 2,918 33.9 31.1 31.9 > €35mln -10.1% €25-35mln 34% 31% y/y 59% 19.7 €20-25ml
Slide 47: Balance Sheet
Balance Sheet mln Mar.21 Jun.21 Sep.21 Dec.21 Mar.22 Jun.22 Sep.22 Dec.22 Due from Banks (1) 1,902 2,253 2,429 1,844 2,132 1,943 2,139 1,896 Customer Loans 4,639 5,269 5,624 6,002 6,088 6,311 6,318 6,446 Financial Assets 25,398 24,648 24,446 24,581 25,389 25,315 25,091 24,651 Tangible and Intangible
Slide 48: Leverage Ratio Sensitivity
Leverage Ratio Sensitivity Focus on our Balance Sheet to keep under control the growth of deposits and improve our quality revenues mix. Thanks to our new initiatives at the same time we can: 1) sustain our growth OUR PRIORITY 2) distribute a growing dividend per share 3) keep our Leverage Ratio com
Slide 49: Delivering on our discontinuities
Delivering on our discontinuities Set of initiatives to improve our revenues mix, taking advantage from the acceleration of structural trends and our FinTech DNA INITIATIVES TO KEEP UNDER CONTROL OUR BALANCE SHEET 1 STRONG COMMERCIAL FOCUS ON AUM: ➢ targeting only AUM net sales and solutions with a
Slide 50: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell FAM EVOLUTION ✓ 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 customers who want to take advantage of bear market phase ✓ FAM Pa
Slide 51: Preserving our best price/quality ratio
Preserving our best price/quality ratio Competitive landscape(1) € Online € 91 avg € 140 avg Branch online costs branch costs Widiba (Conto Start) 20 53 Webank 24 Fineco 27 Ing (Conto Arancio) 27 HelloBank! (Hello! Money) 58 Banca Sella (Conto Start) 62 161 B.Generali (BG Deluxe) 72 84 CreditAgricol
Slide 52: Commitment to Net Zero emissions by 2050
Commitment to Net Zero emissions by 2050 Aware of the importance of environmental and climate matters, in August this year the BoD approved the Net-Zero emissions plan to 2050 regarding both operational and financed emissions RESPONSIBLE FINANCE - Scope 3 emissions from internal investment portfolio
Slide 53: Fixed Income
Fixed Income Senior Preferred instrument AT1 instruments ➢ On October 14th, 2021, Fineco successfully issued 500mln Senior Preferred in ➢ €200 mln perpetual AT1 issued on January 23rd, 2018: order to be immediately compliant with the Fully Loaded MREL Requirement on • Coupon fixed at 4.82% for the i
Slide 54: Main Financial Ratios
Main Financial Ratios Mar.21 Jun.21 Sep.21 Dec.21 Mar.22 Jun.22 Sep.22 Dec.22 PFA TFA / PFA (mln) (1) 31.6 32.5 33.0 33.9 32.8 31.2 31.1 31.9 FAM retail / Fineco AUM (2) 24% 26% 26% 27% 28% 29% 29% 30% Cost / income Ratio (3) 30.4% 31.3% 31.4% 32.2% 27.0% 29.3% 29.8% 29.6% CET 1 Ratio 26.5% 18.6% 18
Finecobank Banca Fine — Q4 2022 Earnings Presentation on 6ix