Slide 1: 3Q18 Results
B A N K 3Q18 Results November 2018 FINECO. THE BANK THAT SIMPLIFIES 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 Focus on product areas Key messages 3
Slide 4: Executive Summary
Executive Summary 9M18 net profit adjusted(1) at 178.8mln, strongly up y/y (+13.9% y/y(2)) confirming the sustainability of a business model able to delivery consistent results in every market condition 3Q18 net profit adjusted(1) at 53.6mln (+1.8% y/y (2)). Comparison with 2Q18 affected by the
Slide 5: Results
Results 9M18 adjusted net profit +14% y/y in a more complex environment. Well diversified revenues up +7.8% y/y and C/I ratio down ~1.2 p.p. y/y at 39% Net Profit Revenues mln mln excluding non recurring items(1) +7.8% +13.9% +3.2% Deposit Guarantee 431.1 464.8 Scheme: 177.7 -2.2% 3Q18: -14.3mln (gr
Slide 6: Net interest income (1/2)
Net interest income (1/2) Remarkable net interest income dynamic (+6.6% y/y) in a negative rate environment. Relentless increase in high-quality lending portfolio Net Interest Income Interest-earning assets mln Avg, bn Financial Investments (1) Financial Investments Lending Other (2) (2) Other 9M18
Slide 7: Net interest income (2/2)
Net interest income (2/2) A progressive increase in a more diversified asset side continues. Sensitivity analysis +100bps parallel shift: +113 mln Focus on Government Bonds UC bonds and Govies run-offs Avg, bn Eop, bn UC Bonds Govies (1) Italy Spain Other UC Bond avg spread (bps) 100% at fixed rate
Slide 8: Commissions and Trading Income
Commissions and Trading Income Fees and commissions grew +9.7% y/y with management fees up 12.6% y/y. 3Q18 brokerage affected by low market volatility Fees and Commissions Trading Income mln Brokerage Investing Banking Other mln 9M18 +9.7% Management +3.3% fees +12.6% y/y 218.7 38.3 37.1 199.4 56.5
Slide 9: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA Staff expenses and FTE Long Term Incentive Plans mln mln Staff expenses, related to top managers and key employees excluding non recurring items(1) FTE # Other administrative expenses, related to PFAs o/w FAM o/w 1.3mln +9.2% new 2018
Slide 10: 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 on commercial loans (3) Eop, mln Current accounts/Overdraft (1) Cards Reverse repos Personal loans Mortgages Other (2) 44 bps
Slide 11: Lending
Lending Boost in high quality lending volume through mortgages, personal loans and lombard loans Eop, mln 2019 Guidance +122.6% yearly new production: Mortgages 7,756 mortgages granted ~350mln +53.6% Average customer rate: 186bps. 9M18 Yield(1) at 83bps current market 795 Average Loan to V
Slide 12: Capital Ratios
Capital Ratios Best in class capital position and low risk balance sheet. Look-through implementation drove +208bps YTD benefit on CET1 ratio RWA CET1 Ratio transitional mln % CET1 capital, mln -0.28p.p. Credit Market Operational y/y +8.5% +2.3% 20.74 20.66 20.46 +0.35 -0.23 -0.61 +0.14 +0.15 2,400
Slide 13: TFA evolution (Dec.12 – Sep.18)
TFA Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 66% of total AuM TFA evolution (Dec.12 – Sep.18) bn 70.9 Cumulated performance -1.1 67.2 4.8 (1) 1.0 Net Sales +27.7 bn 60.2 6.0 Market Effect +3.3 bn -0.2 55.3 5.0 0.5 49.3 5.5 1.7 43.6 4.0
Slide 14: 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 +9.9 bn AUM since the end of 2014, o/w: +8.4% Guided products as % of AuM Guided Products & Services +13.8 bn +5% +5.5% AuM à la carte -3.9 bn y/y +
Slide 15: Net sales breakdown
Net sales breakdown Solid 2018 net sales growth on the wave of structural trends in place despite a complex environment Breakdown of total Net Sales PFA Network – total Net Sales bn bn +11% +8% 6.0 y/y 5.4 y/y 5.5 +14.5% 4.9 +11.6% 5.2 4.6 5.0 4.8 4.3 4.3 4.0 3.6 3.8 4.2 1.9 2.7 1.9 2.6 1.9 4.0 1.9
Slide 16: 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 4.8 4.0 5.5 5.0 6.0 4.8 Recruitment costs 11% 11% 10% 6% (to be amortized) 18% 19% 19% 14% 16%
Slide 17: Agenda
Agenda Fineco Results Focus on product areas Key messages 17
Slide 18: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allow the bank to successfully face any market environment Banking 48% mln +3.6% +8.8% +0.4% 204.1 222.0 72.5 74.8 75.1 3Q17 2Q18 3Q18 9M17 9M18 Brokerage 21% Investing 32% mln mln 9M18 Core revenues (NI excluded) Management -1.3% fees -17
Slide 19: 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 Sight Deposits eop Term Deposits eop +8.8% Fees and commissions Othe
Slide 20: Brokerage
Brokerage Brokerage performance coherent with low markets’ volatility in the period Revenues Executed orders mln Net Interest Trading profit mln Fees and commissions Core revenues (NI excluded) -1.3% +1.5% -17.3% 96.3 95.6 -9.9% 9.4 9.8 19.4 19.7 -28.8% -25.3% 55.3 56.5 29.9 34.0 25.3 7.1 3.4 3.2 5.
Slide 21: Investing
Investing Successful strategy based on our cyborg advisory approach drove a better asset mix and increasing fees y/y Revenues (Net Fees) Assets under Management mln eop, bn Upfront fees Management fees Others(1) +9.9% +9.9% 9M18 +1.3% Management 148.8 31.8 33.6 33.5 34.5 34.9 fees 6.4 +12.6% y/y 135
Slide 22: Agenda
Agenda Fineco Results Focus on product areas Key messages 22
Slide 23: 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 24: 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 25: 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 26: 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 27: Improve quality of services
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 Instant payments through web and usability (X-Net evolution, full mobile access to Advice and Plus also from mobile w
Slide 28: Increase PFAs productivity
Increase Continuously increase of quality and productivity 2 PFAs of the network PRODUCTIVITY Total Assets per PFA TFA concentration per PFA Eop, mln +9.4% PFAs with TFA >20mln are 44% (+12%y/y) and hold 73% of TFA (+5% y/y) 23.4 21.4 +9.1% -7 2,629 100 2,622 100 56.1bn 100 61.3bn 100 13.1 11.9 +10%
Slide 29: Cross selling and clients' profile
Increase Cross selling and clients’ profile 2 PFAs PRODUCTIVITY Net sales: new vs existing clients Total Financial Assets per client bn Net sales from existing clients Net sales from new clients >500k 100-500k 50-100k <50k 4.8 4.2 Total TFA: 70.9bn 3.6 58% Total clients: Net sales from 11.8% 67% exi
Slide 30: Fineco Asset Management in a nutshell
Increase Fineco Asset Management in a nutshell 3 OPERATIONAL EFFICIENCY Innovative and modern approach to build portfolios, thus improving the relationship with clients. CORE SERIES Maximum level of diversification and efficiency - global oriented - daily monitoring of strategies and constant dialog
Slide 31: Further opportunities
Further opportunities Clients: geographical split Over 2,700 clients (1) New clients acquired (2) 14% 18% Fineco UK 53% 63% 39% 45% non-Italian non-Italian 47% 37% UK Italian Other UK Italian Other Unique positioning in a highly fragmented market, leveraging on our one-stop solution. Among the mos
Slide 32: Annex
Annex 32
Slide 33: P&L
P&L mln 1Q17 2Q17 3Q17 4Q17 FY17 1Q18 2Q18 3Q18 9M17 9M18 Net interest income 63.0 64.3 67.4 70.1 264.8 68.9 68.7 69.9 194.7 207.6 Net commissions 64.7 65.0 69.7 70.7 270.1 71.5 74.5 72.7 199.4 218.7 Trading profit 13.7 12.3 11.1 11.1 48.2 14.5 13.1 10.7 37.1 38.3 Other expenses/income 0.5 -0.8 0.1
Slide 34: P&L net of non recurring items
P&L net of non recurring items 3Q17 9M17 3Q18 9M18 9M18/ 3Q18/ 3Q18/ mln 2Q18 Adj. (1) Adj. (1) Adj. (1) Adj. (1) 9M17 3Q17 2Q18 Net interest income 67.4 194.7 68.7 69.9 207.6 6.6% 3.7% 1.7% Net commissions 69.7 199.4 74.5 72.7 218.7 9.7% 4.3% -2.5% Trading profit 11.1 37.1 13.1 10.7 38.3 3.3% -3.6%
Slide 35: 9M18 P&L FinecoBank and Fineco Asset Management
9M18 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net interest income 0.0 207.6 207.6 Dividends 0.0 0.0 0.0 Net commissions 11.9 206.8 218.7 Trading profit 0.0 38.3 38.3 Other expenses/income 0.0 0.3 0.2 Total revenues 11.9 453.
Slide 36: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q17 2Q17 3Q17 1Q18 2Q18 3Q18 9M17 9M18 Margins Margins Margins Margins Margins Margins Margins Margins Financial Investments 55.4 17,530 55.6 17,864 57.2 18,086 56.9 18,449 57.5 18,887
Slide 37: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010357 Euro 382.5 19-Oct-18 Euribor 1m 2.24% 2 IT0005010373 Euro 382.5 18-Jan-19 Euribor 1m 2.29% 3 IT0005010613 Euro 382.5 1-Apr-19 Euribor 1m 0.38% 4 IT0005010282 Euro 382.5 15-Jul-19 Euribor 1m 2.37% 5 IT00
Slide 38: Details on Net Commissions
Details on Net Commissions mln 1Q17 2Q17 3Q17 1Q18 2Q18 3Q18 9M17 9M18 Brokerage 20.3 18.3 16.8 20.6 20.1 15.8 55.3 56.5 o/w Equity 16.7 15.2 13.5 17.5 16.4 13.1 45.4 47.0 Bond 1.0 0.9 0.7 0.8 1.2 0.6 2.7 2.7 Derivatives 2.4 2.0 1.9 2.5 2.7 2.2 6.3 7.3 Other commissions(1) 0.1 0.2 0.6 -0.1 -0.2 -0.1
Slide 39: Revenue breakdown by Product Area
Revenue breakdown by Product Area mln 1Q17 2Q17 3Q17 1Q18 2Q18 3Q18 9M17 9M18 Net interest income 62.0 63.1 65.5 67.3 68.4 68.5 190.7 204.2 Net commissions 0.6 1.9 5.7 3.4 4.7 4.5 8.2 12.6 Trading profit 1.9 1.7 1.2 1.4 1.5 2.1 4.9 4.9 Other 0.1 0.1 0.1 0.1 0.2 0.1 0.3 0.4 Total Banking 64.7 66.9 72
Slide 40: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 Jun.18 Sep.18 AUM 30,182 31,059 31,797 33,563 33,536 34,496 34,930 o/w Funds and Sicav 24,984 25,461 25,901 26,999 26,666 26,809 26,795 o/w Insurance 4,749 5,145 5,431 6,075 6,395 7,043 7,355 o/w GPM 9 9 7 7 1 1 1 o/w AuC + depo
Slide 41: Balance Sheet
Balance Sheet mln Mar.17 Jun.17 Sep.17 Dec.17 1st Jan.18 Mar.18 Jun.18 Sep.18 Due from Banks 15,462 14,827 14,293 13,878 3,036 3,488 3,224 3,398 Customer Loans 1,166 1,504 1,716 2,129 2,129 2,318 2,633 2,736 Financial Assets 3,912 4,770 5,429 5,885 16,733 17,106 17,199 17,678 Tangible and Intangible
Slide 42: Total assets: 96% not exposed to volatility
Total assets: 96% not exposed to volatility Out of 24.2bn, only 0.9bn of Assets valuated at fair value with limited impacts on Equity reserve Total Assets o/w Government bonds by geography Eop, bn Eop, bn 24.2 Financial investments 0.9 Gov. Bonds Total Gov. Bonds: 8.1bn at fair value (HTCS) 6.8 Gov.
Slide 43: High-value deposit base confirms strong resilience over time
High-value deposit base confirms strong resilience over time Sight deposits growth Eop, bn 23 +10% 20 y/y 18 15 Financial Sovereign last 10 years 13 crisis debt crisis CAGR: 11% 10 8 5 Worst liquidity outflow 3 Double-digit deposit growth throughout the last 10 years (+11% CAGR), with no impacts f
Slide 44: 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 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
Slide 46: Main Financial Ratios
Main Financial Ratios Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 Jun.18 Sep.18 PFA TFA/ PFA (mln) (1) 20.2 20.7 21.4 22.2 22.5 23.0 23.4 Guided Products / TFA (2) 28% 29% 29% 32% 31% 32% 32% Cost / income Ratio (3) 42.8% 42.8% 40.5% 39.7% 41.0% 40.0% 39.3% CET 1 Ratio 22.2% 22.1% 20.7% 20.8% 20.2% 20.7% 20.