Finecobank Spa · MIL:FBK
Finecobank Spa — Finecobank Banca Fine — Q2 2020 Earnings Presentation
61 slides from Finecobank Spa's earnings presentation, Jul 31, 2020
Slide 1: 2Q20 Results
2Q20 Results Alessandro Foti, CEO and General Manager Milan, July 31st 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 1H20 Gross operating profit at 275 million, +40% y/y, showing the soundness of our industrial growth 1H20 Net profit(1) at 181mln, +30% y/y, confirming the sustainability of a business model able to deliver consistent result
Slide 5: Results
Results Strong Operating Profit, at 275mln in 1H20, up +40% y/y boosted by diversified revenues growth in a complex market environment. Net Profit at 181mln, up +30% y/y. C/I ratio at 32.5%, down ~6.9 p.p. y/y confirming our strong operating leverage Gross operating profit, mln Net Profit, mln exclu
Slide 6: Net interest income
Net interest income Solid NII thanks to valuable and sticky sight deposits coupled with high-quality lending portfolio despite low interest rate environment. Sensitivity analysis +100bps / -100bps parallel shift: +123mln NII / -112mln NII Net Interest Income, mln Interest-earning assets, avg bn Othe
Slide 7: Focus on our Treasury
Focus on our Treasury Industrially-driven dynamic Treasury management thanks to a quality Balance Sheet High quality Balance Sheet VALUABLE AND STICKY DEPOSITS: ‘transactional liquidity’ gathered without short-term aggressive commercial offers SAFE, ROBUST, LOW RISK: diversified and highly liqui
Slide 8: Non Interest Income
Non Interest Income Fees and commissions +32% y/y thanks to the positive contribution by all business areas and Trading Income +155% y/y thanks to structurally higher Brokerage Fees and Commissions, mln Trading Income, mln Brokerage Investing Banking Other mln excluding non recurring items (2) +32.2
Slide 9: 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 1H20 Brokerage Revenues:
Slide 10: Focus on Investing
Focus on Investing 1H20 increasing y/y thanks to volume effect and strong AUM net sales, despite negative market performance registered in the first months of the year Investing Revenues, mln Main highlights Upfront fees PFA incentives(1) +5.4% Increasing 1H20 investing revenues driven by higher M
Slide 11: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA Operating Costs, mln Staff expenses and FTE, mln FTE # +10.9% +10.9% +3.7% +3.7% 44.1 48.9 132.2 127.5 22.4 24.0 24.9 2Q19 1Q20 2Q20 1H19 1H20 +5.6% 1,144 1,199 1,202 -1.2% Non HR Costs(1), mln 66.5 65.7 62.3 OAE Write-downs/backs & d
Slide 12: Focus on 2Q20 bottom line
Focus on 2Q20 bottom line mln Repricing of banking services: Recently, we received the request by the A.G.C.M(1) 140.0 to delay to the end of the year the application of the -6.5 repricing for 2020 to a cluster of clients acquired in the -2.7 127.1 -3.7 past through an online commercial initiative
Slide 13: High quality lending volume offered 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 Personal loans Mortgages 14 bps 14 bps 12 bps +30.4%
Slide 14: 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 +67.0% Mortgages 16,697 mortgages granted since December 2016 yearly new production: +41.0% ~ 600-700mln Average customer rate: 155bps. 1H20 Yield(1) at
Slide 15: Capital Ratios
Capital Ratios: Best in class capital position and low risk balance sheet (1) RWA, mln CET1 Ratio, % Credit Market Operational CET1 capital, mln w/o 2019 dividend +9.8% payment +52bps +5.3% -7bps +24bps 3,084 3,217 3,387 17.84 18.12 18.36 24.19 24.12 1,898 2,074 2,257 25 40 27 Jun.19 Dec.19 Jun.20 D
Slide 16: TFA evolution
TFA Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 72% of total AuM TFA evolution (Dec.14 – Jun. 20), bn 81.4 4.7 -3.5 82.6 (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 17: TFA breakdown
TFA breakdown Successful shift towards high added value products thanks to strong productivity of the network. 1H20 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 +16.2 bn AUM since the end of 2014, o/w: Guid
Slide 18: 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. AUM revamped in 2Q20 Breakdown of total Net Sales, bn PFA Network – total Net Sales, bn 5.8 5.1 6.2 6.0 5.4 5.5 5.5 +42.4% 4.9 +41.0% 5.0 3.3 2
Slide 19: 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(1) Organic 4.0 5.5 5.0 6.0 6.2 5.8 4.7 4.0 5.5 5.0 6.0 6.2 5.8 4.7 Recruitment costs 7% 5% 2% 7% (to be amortized) 11% 11% 10% 9% 18% 1
Slide 20: Increase of quality and productivity of the network
Continuously increase of quality and productivity of the network, despite negative market effect in the first quarter of the year Total Assets per PFA TFA concentration per PFA Eop, mln PFAs with TFA >20mln are 54% (+10% y/y) +8.9% and hold 81% of TFA (+5% y/y) +8.4% +9.0% 27.9 +3 25.6 25.7 2,572 2,
Slide 21: Clients' profile and focus on Private Banking
Clients’ profile and focus on Private Banking Total Financial Assets per client Total TFA: 82.6bn o/w Private Banking(1): 33.0bn 11.4% Average age: >500k 7.6% 0.5-1mln 11.0% 8.3% Total clients: 49 100-500k 40.0% 1-5mln 37.6% 50-100k 5-10mln Private clients: 62 46.5% <50k 37.6% >10mln TFA Private Ban
Slide 22: Agenda
Agenda Fineco Results Next steps Key messages Focus on product areas 22
Slide 23: 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 24: Environment 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 25: Accelerating net sales dynamics in 1H20
Accelerating net sales dynamics in 1H20: robust AUM flows and increased productivity Focus on improving revenues mix and slowing down Balance Sheet growth for a better quality business going forward Total net sales, quarterly pace Total net sales, monthly pace €, bn AUM / Net sales €, bn AUM / Net s
Slide 26: Fineco Asset Management
Fineco Asset Management Strong commercial momentum with a sustainable approach 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 insurance) (total) 1.4 40.1 35.5 0.7 0.7 26.4 2
Slide 27: Fineco UK: one-stop-solution proves to work
Fineco UK: our quality one-stop-solution proves to work Strong cross-selling thanks to our quality one-stop-solution New active current o/w 83% of new active clients came from cross-selling from listed accounts OTC Small target market (143k traders)(1) but with very profitable ARPU 7% 8% We ar
Slide 28: Fineco UK: boost in clients' acquisition
Fineco UK: boost in clients’ acquisition with limited marketing expenses Promising feedback from our very first marketing campaign Boost in clients’ acquisition Increasing active Total current accounts (3x new current accounts q/q) current accounts (3) New current 7.6k accounts +55.9% 6.3k +1.7k Pur
Slide 29: Fineco UK: next steps
Fineco UK: next steps 3Q20 4Q20 1H21 +15/20 more to reach ~80% of ISA Account D2C funds coverage Branch, SIPP Account 1 trillion addressable wealth in UK(1) Target Market New inflows in D2C market: +23bln (+11% y/y) (1) Funds self-investors New clients coming from traditional banks, stockbroki
Slide 30: Agenda
Agenda Fineco Results Next steps Key messages Focus on product areas 30
Slide 31: 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 32: 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 33: 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 34: Safe Balance Sheet
Safe Balance Sheet: simple, highly liquid and low risk asset side, valuable and sticky deposits Diversified investment portfolio High-value deposit base 29.4 bn Investment strategy announced during Sticky deposits: mostly ‘transactional FY17 results unchanged: UC bonds run- liquidity’ gathered w
Slide 35: Total assets: 99.5% not exposed to volatility
Total assets: 99.5% not exposed to volatility Out of 29.4bn, 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 36: Agenda
Agenda Fineco Results Next steps Key messages Focus on product areas 36
Slide 37: 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% +4.4% +5.3% +4.9% 146.5 153.0 74.3 74.6 78.3 2Q19 1Q20 2Q20 1H19 1H20 Brokerage, mln 32% Investing, mln 29% 1H20 Management +103.4% +107.0% fees -1.2% +3.4% y/y +5
Slide 38: 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 Sight deposits mln Eop, bn Net Interest Trading income Fees and commissions Other +9.4% +4.4% -3.1% 23.8 26.9 26.1 +5.3% 153.
Slide 39: 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 Other among products… …and ge
Slide 40: 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 (Net fees) Assets under Management mln eop, bn Guided Products / AUM Upfront fees PFA incentives(1) Management fees Othe
Slide 41: Annex
Annex 41
Slide 42: P&L
P&L mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 1H19 1H20 Net interest income 70.4 71.4 69.8 69.7 281.3 68.2 70.1 141.8 138.2 Net commissions 77.4 81.3 84.3 82.3 325.2 105.0 104.8 158.6 209.7 Trading profit 9.8 8.0 11.6 15.3 44.8 26.4 30.1 17.8 56.5 Other expenses/income 0.2 0.3 0.1 2.9 3.6 0.6 0.8 0.5 1
Slide 43: P&L net of non recurring items
P&L net of non recurring items 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 1H19 1H20 mln Adj. (1) Adj. (1) 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 70.1 141.8 138.2 Net commissions 77.4 81.3 84.3 82.3 325.2 105.0 104.8 158.6 209.7 Tradi
Slide 44: 1H20 P&L FinecoBank and Fineco Asset Management
1H20 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net interest income -0.1 138.3 138.2 Dividends 0.0 14.2 0.0 Net commissions 32.4 177.4 209.7 Trading profit 0.1 56.4 56.5 Other expenses/income -0.1 1.5 1.4 Total revenues 32.3 3
Slide 45: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes Volumes mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 1H19 1H20 Margins Margins Margins Margins Margins Margins Margins & Margins & Margins Financial Investments 57.1 19,748 58.0 20,582 55.9 21,714
Slide 46: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010308 Euro 382.5 9-Jul-20 Euribor 1m 2.49% 2 IT0005010381 Euro 382.5 7-Oct-20 Euribor 1m 2.52% 3 IT0005010332 Euro 382.5 6-Jan-21 Euribor 1m 2.54% 4 IT0005010316 Euro 382.5 6-Apr-21 Euribor 1m 2.56% 5 IT00050
Slide 47: Financial Investments
Financial Investments Further improvements for a diversified asset side. Bond Portfolio, avg bn UC bonds and Govies run-offs, eop bn (1) UC bonds Spain SSA UC Bonds Govies & SSA Covered & Corporate (2) Italy Other Govies Covered & Corporate 3.1 2.7 2.6 +20.3% 2.2 2.2 2.0 +3.8% +20.9% 2.2 1.9 1.5 1.6
Slide 48: Details on Net Commissions
Details on Net Commissions mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 1H19 1H20 Brokerage 18.5 18.0 20.0 20.8 77.3 35.6 37.6 36.5 73.1 o/w Equity 15.6 14.7 15.9 17.0 63.2 30.0 31.0 30.3 61.0 Bond 0.9 0.9 1.4 0.7 3.9 1.0 3.8 1.8 4.8 Derivatives 2.3 2.2 2.7 2.6 9.7 4.5 3.7 4.5 8.2 Other commissions(1) -0.
Slide 49: Revenues breakdown by Product Area
Revenues breakdown by Product Area mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 1H19 1H20 Net interest income 67.6 68.8 67.0 66.9 270.3 65.8 67.7 136.4 133.5 Net commissions 4.5 5.6 5.9 5.3 21.3 8.8 10.3 10.0 19.1 Trading profit -0.1 -0.1 -0.2 0.2 -0.2 -0.1 -0.1 -0.2 -0.2 Other 0.1 0.1 0.1 0.1 0.4 0.2 0.3
Slide 50: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.19 Jun.19 Sep.19 Dec.19 Mar.20 Jun.20 AUM 35,988 36,819 38,325 40,505 35,516 40,083 o/w Funds and Sicav 26,361 26,426 27,477 28,786 24,122 27,657 o/w Insurance 8,401 9,002 9,369 10,115 9,961 10,676 o/w GPM 1 26 55 93 127 169 o/w AuC + deposits under advisory
Slide 51: Balance Sheet
Balance Sheet mln Mar.19 Jun.19 Sep.19 Dec.19 Mar.20 Jun.20 (1) Due from Banks 3,807 1,941 2,033 1,320 1,801 1,633 Customer Loans 3,029 3,409 3,568 3,680 3,741 4,204 Financial Assets 19,012 19,920 21,532 22,313 23,414 22,961 Tangible and Intangible Assets 243 242 247 279 280 280 Derivatives 29 49 72
Slide 52: 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 GUIDANCE: Leverage Ratio above 3.5% considering a growth of deposits in a range between 2-2.5
Slide 53: Main Financial Ratios
Main Financial Ratios Mar.19 Jun.19 Sep.19 Dec.19 Mar.20 Jun.20 PFA TFA/ PFA (mln) (1) 25.0 25.6 26.6 27.8 25.7 27.9 Guided Products / TFA (2) 33% 33% 34% 35% 34% 35% Cost / income Ratio (3) 41.3% 39.4% 37.9% 37.9% 33.0% 32.5% CET 1 Ratio (4) 21.0% 17.8% 17.4% 18.1% 19.3% 18.4% Adjusted RoE (5) 31.2
Slide 54: 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 55: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at €14.2bn, of which €8.9bn 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 56: Fineco UK vs Competitors: products and services
Fineco UK vs Competitors: products and services Coming Soon - see slide 29 56
Slide 57: Fineco UK vs Competitors: features
Fineco UK vs Competitors: features Fineco platform: usability, reliability and advanced tools 57
Slide 58: 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 (2) Equivalent
Slide 59: 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) (2) (2) (2) (1) Equivalent for each transaction – Exchage rate GBP/EUR: 1,1217 59
Slide 60: 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 € 76 avg € 127 avg Branch online costs branch costs Webank 0 IWBank (IWConto) 4 89 Widiba (Conto Flat) 20 ING (Conto Arancio) 24 Fineco 25 Poste Italiane (BancoPosta Pre
Slide 61: 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 — Q2 2020 Earnings Presentation on 6ix