Finecobank Spa · MIL:FBK
Finecobank Spa — Finecobank Banca Fine — Q3 2020 Earnings Presentation
65 slides from Finecobank Spa's earnings presentation, Nov 9, 2020
Slide 1: 3Q20 Results
3Q20 Results Alessandro Foti, CEO and General Manager Milan, November 9th 2020
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 Key messages Focus on product areas 3
Slide 4: Executive Summary
Executive Summary Outstanding net profit in challenging market scenario 9M20 Gross operating profit(1) at 397mln, +31% y/y, showing the soundness of our industrial growth. In particular, 3Q20 at 123mln, +14% y/y 9M20 Net profit(1) at 246mln, +23% y/y, confirming the sustainability of a business
Slide 5: Results (1/2)
Results (1/2) Strong Operating Profit, at 397mln in 9M20 and 123mln in the quarter, +14% y/y boosted by diversified revenues growth in a complex market environment. Net Profit at 246mln, +23% y/y despite higher systemic charges. C/I ratio at 33%, down -4.8 p.p. y/y confirming our strong operating le
Slide 6: Results (2/2)
Results (2/2) Revenues at 594.2mln, +21.5% y/y supported by all product areas. Operating costs at 196.7mln, +3.8% excluding marketing costs in UK Revenues, mln Operating Costs, mln excluding non recurring items (1) 9M20 Operating Costs +21.5% excl. UK marketing costs: 592.7 -192.1mln (+3.8% y/y)(2)
Slide 7: Net interest income
Net interest income Solid NII thanks to valuable and sticky sight deposits coupled with high-quality lending portfolio and a more dynamic treasury activity despite low interest rate environment. Sensitivity analysis +100bps / -100bps parallel shift: +116mln NII / -101mln NII Net Interest Income, mln
Slide 8: Managing liquidity in a more dynamic way to sustain NII
Managing liquidity in a more dynamic way to sustain NII Our high quality balance sheet allow us to undertake industrial actions to manage current interest rate environment while maintaining our low-risk investment policy No change in our low-risk High quality balance sheet investment policy DIVERS
Slide 9: Non Interest Income
Non Interest Income Fees and commissions +27% y/y thanks to the positive contribution by all business areas and Trading Income +131% y/y thanks to structurally higher Brokerage Fees and Commissions, mln Trading Income, mln Brokerage Investing Banking Other mln excluding non recurring items (1) +26.6
Slide 10: Brokerage proved itself as a perfect counter-cyclical business
Brokerage proved itself as a perfect counter-cyclical business The structure of the market is changing: increased interest in financial markets and big jump into a more digitalized society Structural growth in brokerage revenues: the floor has gone up in a clear way mln € 30 25 9M20 Brokerage Revenu
Slide 11: Brokerage: focus on enlargement of client base and increasing market share
Brokerage: focus on enlargement of client base and increasing market share Clients’ 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 New brokerage cl
Slide 12: Focus on Investing
Focus on Investing 9M20 increasing y/y thanks to volume effect and strong AUM net sales. Margins supported by operational efficiency given by Fineco Asset Management Investing Revenues, mln Average AuM on daily basis, bn Upfront fees PFA incentives ManFee Margins, bps Management fees Other income +5
Slide 13: Focus on Investing: going forward
Focus on Investing: going forward Investing revenues expected to keep on growing mainly driven by volumes effect and resilient margins, sustained by further boost in FAM operational efficiency We expect increasing revenues with resilient margins, despite clients remaining cautious and conservative,
Slide 14: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA. Non HR costs flat excluding marketing in UK Operating Costs, mln Staff expenses and FTE, mln FTE # +9.6% +10.4% 9M20 Operating Costs +6.2% excl. UK marketing costs: -1.0% 66.6 73.5 -192.1mln (+3.8% y/y)(1) 196.7 185.2 22.5 24.9 24.6
Slide 15: Focus on 3Q20 bottom line
Focus on 3Q20 bottom line mln Provisions for risks and charges 122.4 -28.0 90.4 -2.3 -1.7 0.1 -0.2 65.2 GOP Estimated Provisions Other R&C LLP Profit on PBT Net Profit 3Q20 Systemic on repricing Investments Charges Systemic charges: contribution to DGS for -20.9mln (estimate) and additional contri
Slide 16: High quality lending volume, offered exclusively to existing clients
High quality lending volume, 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) Eop, mln Current accounts/Overdraft (1) Cards 14 bps Personal loans Mortgages 12 bps 11 bps +29.3%
Slide 17: Mortgages and personal loans
Lending: solid growth for all our lending products thanks to the quality of our portfolio and to our cautious approach 2020 Guidance Eop, mln +61.7% Mortgages 17,261 mortgages granted since December 2016 yearly new production: +43.7% ~ 600-700mln Average customer rate: 154bps. 9M20 Yield(1) at
Slide 18: Capital Ratios
Capital Ratios: Best in class capital position and low risk balance sheet RWA, mln CET1 Ratio, % Credit Market Operational CET1 capital, mln +10.1% -90bps +4.5% -83bps 3,217 3,387 3,541 24.19 24.12 23.28 2,074 2,257 2,406 Dec.19 Jun.20 Sep.20 40 27 31 pro-forma 1,103 1,103 1,103 Dec.19 Jun.20 Sep.20
Slide 19: TFA evolution (Dec.14 – Sep.20)
TFA Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 73% of total AuM TFA evolution (Dec.14 – Sep. 20), bn -2.8 85.0 81.4 6.4 (2) 6.2 67.2 6.2 -4.1 69.3 5.8 1.0 60.2 6.0 -0.2 55.3 5.0 0.5 49.3 5.5 TFA Net Market TFA Net Market TFA Net Market T
Slide 20: TFA breakdown
TFA breakdown Successful shift towards high added value products thanks to strong productivity of the network. 9M20 affected by negative market effect in the first months of the year Breakdown of total TFA, bn Focus on AUM, bn Guided products as % of AuM +17.9bn AUM since the end of 2014, o/w: 85.0
Slide 21: Net sales breakdown
Net sales breakdown Solid high quality net sales growth on the wave of structural trends thanks to our diversified business model and with an improving mix Breakdown of total Net Sales, bn PFA Network – total Net Sales, bn +49.7% +46.7% y/y y/y +46.1% +44.2% 7.1 6.2 5.8 5.1 6.2 6.4 5.4 5.5 5.5 6.0 5
Slide 22: Organic growth
Organic growth Net sales organically generated confirmed as key in our strategy of growth Net Sales, bn – Organic / Recruit, % Total recruits Organic Total recruits Organic PFAs recruited over the PFAs recruited over the last 12 months (avg) last 24 months (avg) Recruitment costs (to be amortized) 4
Slide 23: Continuously increase of quality and productivity of the network
Continuously increase of quality and productivity of the network Total Assets per PFA TFA concentration per PFA Eop, mln PFAs with TFA >20mln are 55% (+6% y/y) +7.8% and hold 81% of TFA (+3% y/y) +2.7% +8.3% 28.7 +13 27.9 26.6 2,564 2,577 68.2bn 100 73.9bn 100 > €35mln 23% +8.6% 26% 15.4 16.0 14.8 y
Slide 24: Clients' profile and focus on Private Banking
Clients’ profile and focus on Private Banking Total Financial Assets per client Avg TFA per Private client (1) Total TFA: 85.0bn AuM AuC Deposits o/w Private Banking(1): 34.4bn 7.6% 0.9mln 11.1% 0.5-1mln >500k 8.3% 10.9% 40.5% 1-5mln 100-500k 37.3% 17% 5-10mln 50-100k 46.8% 37.5% >10mln 56% <50k 27%
Slide 25: Agenda
Agenda Fineco Results Next steps Key messages Focus on product areas 25
Slide 26: 2020 Guidance
2020 Guidance Given current outlook(1), our assumptions for 2020, excluding revenues and costs related to UK business development, are: Net interest income: confirmed resilient and low risk thanks to the smooth run-off of our bond portfolio, positive effect from volumes (~2.0-2.5bn expected growth
Slide 27: 2021 Guidance
2021 Guidance: strong results expected also going forward Given current outlook(1), our assumptions for 2021 are: Net interest income: confirmed resilient and low risk. We are containing the effect of the worsening interest rates environment thanks to the smooth run-off of our bond portfolio, posi
Slide 28: Current environment is creating conditions to enlarge growth opportunities
Current environment is creating the conditions to further enlarge 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
Slide 29: Accelerating net sales dynamics: robust AUM flows and productivity
Accelerating net sales dynamics: robust AUM flows and increased productivity Focus on improving revenues mix and slowing down Balance Sheet growth for a better quality business going forward Acceleration in direction of AUM Industrial measures €, bn AUM +35.6% 2.6 +99.3% The strong acceleration in T
Slide 30: FAM: strong commercial momentum with a sustainable approach
FAM: strong commercial momentum with a sustainable approach Key to sustain AUM margins thanks to its strong operating leverage Strong contribution to Fineco’s AuM net sales FAM Growth potential bn bn FAM retail class penetration on: FAM retail class net sales Fineco’s AUM Fineco’s AUM 1.8 (excluding
Slide 31: Fineco UK: our quality one-stop-solution proves to work
Fineco UK: our quality one-stop-solution proves to work Effective marketing campaign increases the number of active clients (1) Increasing active current accounts Total current accounts +54.5% 8.9k 7.6k Mar/Sep.19 Mar/Sep.20 Jun.20 Sep.20 First target: 30-35k good clients Active current accounts on
Slide 32: Fineco UK: next steps
Fineco UK: next steps Our UK funds offer counts now on 8 Asset Managers 4Q20 1Q21 2021 ISA Account +15/20 more to reach ~80% of D2C funds coverage Branch, SIPP Account 32
Slide 33: Agenda
Agenda Fineco Results Next steps Key messages Focus on product areas 33
Slide 34: Sustainability at the heart of Fineco's business model (1/2)
Sustainability at the heart of Fineco’s business model (1/2) We are a looking-forward organization playing in the long-run and able to generate a positive impact for all our stakeholders and the overall society Our sustainable strategy lays on 2 different levels: a macro level and a micro level 1 MA
Slide 35: Sustainability at the heart of Fineco's business model (2/2)
Sustainability at the heart of Fineco’s business model (2/2) We are a looking-forward organization playing in the long-run and able to generate a positive impact for all our stakeholders and the overall society Our sustainable strategy lays on 2 different levels: a macro level and a micro level 2 MI
Slide 36: 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 No external consultants nor system integrator A PROPRIETARY, 18% FTEs in IT Department INTEGRATED BACK-END 24% FTEs in Back-Offic
Slide 37: 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 CAGR (2014-2019) 81 + 11% 69 67 + 7% 60 1,278 1,358 55 1,200 TFA (bn) 49 1,118 281 + 13% 1,048 254 226 Clients (thd, #) 964 208 658 + 8% 197 628 Net profit (1) (mln) 155 587 544
Slide 38: 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 High-value deposit base 29.7 bn Investment strategy announced during Sticky deposits: mostly ‘transactional FY17 results unchanged: UC bonds run- liquidity’ gathered w
Slide 39: Total assets: 99.5% not exposed to volatility
Total assets: 99.5% not exposed to volatility Out of 29.7bn, only 0.15bn of Assets valuated 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 financial corpora
Slide 40: Agenda
Agenda Fineco Results Next steps Key messages Focus on product areas 40
Slide 41: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allow the bank to successfully face any market environment Banking, mln 38% +3.5% +1.6% 226.8 219.2 -5.7% 72.7 78.3 73.9 3Q19 2Q20 3Q20 9M19 9M20 Brokerage, mln 30% Investing, mln 30% 9M20 Management +83.8% fees +42.6% +6.3% +3.7% y/y +5.7
Slide 42: 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 Deposits mln Eop, bn Net Interest Trading income Fees and commissions Other +5.3% +1.4% +3.5% 25.1 26.1 26.4 +1.6% 226.8 -5.7
Slide 43: Brokerage
Brokerage Revamped Brokerage thanks to skyrocketing volatility combined with the review of the offer. Growing market share in Italy and continuous enlargement of product offer Revenues Well-diversified brokerage offer mln Net Interest Trading profit Fees and commissions among products… …and geograph
Slide 44: 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 Assets under Management mln eop, bn Guided Products / AUM Upfront fees PFA incentives(1) Management fees Other income +
Slide 45: Annex
Annex 45
Slide 46: P&L
P&L mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 9M19 9M20 Net interest income 70.4 71.4 69.8 69.7 281.3 68.2 70.1 68.6 211.6 206.9 Net commissions 77.4 81.3 84.3 82.3 325.2 105.0 104.8 97.9 242.9 307.6 Trading profit 9.8 8.0 11.6 15.3 44.8 26.4 30.1 20.2 29.4 76.7 Other expenses/income 0.2 0.3 0.1 2
Slide 47: P&L net of non recurring items
P&L net of non recurring items 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 9M19 9M20 mln ( 1) (1) Adj. (1) Adj. Adj. Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Net interest income 70.4 71.4 69.8 69.7 281.3 68.2 70.1 68.6 211.6 206.9 Net commissions 77.4 81.3 84.3 82.3 325.2 105.0 104
Slide 48: 9M20 P&L FinecoBank and Fineco Asset Management
9M20 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net interest income -0.2 207.1 206.9 Dividends 0.0 14.2 0.0 Net commissions 49.7 257.9 307.6 Trading profit 0.1 76.6 76.7 Other expenses/income 0.1 1.6 1.6 Total revenues 49.7 55
Slide 49: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes Volumes mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 9M19 9M20 Margins Margins Margins Margins Margins Margins Margins Margins & Margins & Margins Financial Investments 57.1 19,748 5
Slide 50: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010381 Euro 382.5 7-Oct-20 Euribor 1m 2.52% 2 IT0005010332 Euro 382.5 6-Jan-21 Euribor 1m 2.54% 3 IT0005010316 Euro 382.5 6-Apr-21 Euribor 1m 2.56% 4 IT0005010340 Euro 382.5 5-Jul-21 Euribor 1m 2.58% 5 IT00050
Slide 51: Financial Investments
Financial Investments Further improvements for a diversified asset side. Bond Portfolio, avg bn Bond portfolio run-offs, eop bn (1) UC bonds Spain SSA UC Bonds Govies & SSA Covered & Corporate (2) Italy Other Govies Covered & Corporate 3.0 3.1 2.7 +9.4% 2.4 2.3 +16.8% 2.0 -2.2% 1.9 2.2 1.5 1.6 23.1
Slide 52: Details on Net Commissions
Details on Net Commissions mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 9M19 9M20 Banking 4.5 5.6 5.9 5.3 21.3 8.8 10.3 9.7 15.9 28.8 Brokerage 18.5 18.0 20.0 20.8 77.3 35.6 37.6 26.5 56.5 99.7 o/w Equity 15.6 14.7 15.9 17.0 63.2 30.0 31.0 21.7 46.2 82.7 Bond 0.9 0.9 1.4 0.7 3.9 1.0 3.8 2.2 3.2 7.0 D
Slide 53: Revenues breakdown by Product Area
Revenues breakdown by Product Area mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 9M19 9M20 Net interest income 67.6 68.8 67.0 66.9 270.3 65.8 67.7 64.5 203.4 198.0 Net commissions 4.5 5.6 5.9 5.3 21.3 8.8 10.3 9.7 15.9 28.8 Trading profit -0.1 -0.1 -0.2 0.2 -0.2 -0.1 -0.1 0.0 -0.3 -0.2 Other 0.1 0.1 0
Slide 54: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.19 Jun.19 Sep.19 Dec.19 Mar.20 Jun.20 Sep.20 AUM 35,988 36,819 38,325 40,505 35,516 40,083 41,744 o/w Funds and Sicav 26,361 26,426 27,477 28,786 24,122 27,657 28,929 o/w Insurance 8,401 9,002 9,369 10,115 9,961 10,676 11,020 o/w GPM 1 26 55 93 127 169 185 o/
Slide 55: Balance Sheet
Balance Sheet mln Mar.19 Jun.19 Sep.19 Dec.19 Mar.20 Jun.20 Sep.20 (1) Due from Banks 3,807 1,941 2,033 1,320 1,801 1,633 1,761 Customer Loans 3,029 3,409 3,568 3,680 3,741 4,204 4,320 Financial Assets 19,012 19,920 21,532 22,313 23,414 22,961 22,988 Tangible and Intangible Assets 243 242 247 279 28
Slide 56: Leverage Ratio Sensitivity
Leverage Ratio Sensitivity OUR PRIORITY: to slow down the growth of our Balance Sheet through the conversion of deposits into Asset under Management and through the repricing of our Banking services OUR 2020 GUIDANCE: Leverage Ratio comfortably above 3.5% considering 2-2.5bn growth of deposits S
Slide 57: Main Financial Ratios
Main Financial Ratios Mar.19 Jun.19 Sep.19 Dec.19 Mar.20 Jun.20 Sep.20 PFA TFA/ PFA (mln) (1) 25.0 25.6 26.6 27.8 25.7 27.9 28.7 Guided Products / TFA (2) 33% 33% 34% 35% 34% 35% 36% Cost / income Ratio (3) 41.3% 39.4% 37.9% 37.9% 33.0% 32.5% 33.1% pro-forma CET 1 Ratio (4) 21.0% 17.8% 17.4% 24.2% 2
Slide 58: 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 59: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at €14.9bn, of which €9.6bn retail classes (1) FAM EVOLUTION (30 strategies) FAM Target: decumulation product to progressively invest in multi-thematic/profile funds FAM Megatrend: multi-thematic fund investing in secular trends FUNDS OF New building b
Slide 60: Fineco UK vs Competitors: products and services
Fineco UK vs Competitors: products and services Coming Soon - see slide 32 60
Slide 61: Fineco UK vs Competitors: features
Fineco UK vs Competitors: features Fineco platform: usability, reliability and advanced tools 61
Slide 62: Fineco UK: Premium service without premium price (1/2)
Fineco UK: Premium service without premium price (1/2) 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 Transaction fees (1) (1) (1) (1) (1) Plus Custody fees 62
Slide 63: Fineco UK: Premium service without premium price (2/2)
Fineco UK: Premium service without premium price (2/2) Disruptive pricing 100% sustainable thanks to our strong operating leverage Multicurrency: best spreads, no commissions (1) Equivalent for each transaction – Exchage rate GBP/EUR: 1,1217 63
Slide 64: Preserving our best price/quality ratio
Preserving our best price/quality ratio An update on the main outcomes from our Smart Repricing Competitive landscape (1) € Online € 86 avg € 150 avg Branch online costs branch costs IWBank (IWConto) 4 89 Widiba (Conto Flat) 20 ING (Conto Arancio) 24 Webank 24 Fineco 25 B.Generali (BG Deluxe) 47 59
Slide 65: 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
Finecobank Banca Fine — Q3 2020 Earnings Presentation on 6ix