Banca Generali S.p.a. · MIL:BGN
Banca Generali — Q3 2021 Earnings Presentation
40 slides from Banca Generali's earnings presentation, Nov 4, 2021
Slide 1: 9M 2021 Results
9M 2021 RESULTS 4 NOVEMBER 2021
Slide 2: Agenda
AGENDA Preliminary remarks Our Mission: To be the 9M 2021 Results No.1 Private Bank unique Net Inflows, Assets and Recruitment by Value of Service, Innovation and Business update Sustainability Appendix
Slide 3: 9M 2021 Results: Executive Summary
9M 2021 RESULTS: EXECUTIVE SUMMARY NEW HIGHS IN TERMS OF QUALITY AND SUSTAINABILITY Sound business momentum - exploiting structural sector tailwinds for managed savings Total Assets at €82.1bn (+17% YoY) with positive trend for wrapper solutions and in-house fund business (+€5.1bn YoY, +€3.2bn YTD
Slide 4: Results at a Glance
RESULTS AT A GLANCE KEY TAKEAWAYS Comments m/€ 9M 20 9M 21 % Chg Healthy total banking Income (+37%) Net Interest Income 67.1 65.2 -2.8% Net Financial Income (+17%) boosted by trading Net income (loss) from trading activities and Dividends 10.1 24.7 n.m. income while NII proved flattish (-3%) Net
Slide 5: Recurring Net Profit (1/2)
RECURRING NET PROFIT (1/2) WELL ON TRACK TO DOUBLE DIGIT GROWTH Net Profit: Recurring vs. Variable m/€ 270.9 272.1 274.9 9M 2021 already at 2019 and 2020 full year 195.8 203.6 204.1 123.5 121.1 level even after large 138.9 180.1 one-off provisions in 2Q 161.0 155.9 83.6 47 114.1 132.9 9M recurring p
Slide 6: Recurring Net Profit (2/2)
RECURRING NET PROFIT (2/2) SUSTAINABLE OPERATING TREND GATHERS PACE Build up of recurring net profit m/€ Operating items Non operating items Strong increase in recurring net fees +46.3 (26.5) (+€56.6m) driven by increased (18.1) exposure to in house solutions (7.6) (LUX IM , insurance and financial
Slide 7: Agenda
AGENDA Preliminary remarks Our Mission: To Be the 9M 2021 Results No.1 Private Bank unique Net inflows, Assets and Recruitment by Value of Service, Innovation and Business update Sustainability Appendix
Slide 8: Net Financial Income (1/2)
NET FINANCIAL INCOME (1/2) PREPARING FOR THE LAUNCH OF A PORTFOLIO OF ALTERNATIVE INVESTMENTS Interest bearing Assets bn/€ Temporary increase in liquidity in 3Q21 pending the 15.7 15.6 set up of a Portfolio of Alternative Investments. 12.8 1.6 2 1.9 Other assets The launch of the new Portfolio impli
Slide 9: Net Financial Income (2/2)
NET FINANCIAL INCOME (2/2) HIGH QUARTERLY RESULT DRIVEN BY THE TRADING COMPONENT Net financial income m/€ 89.9 The rebalancing of the portfolio had two 77.1 main impacts: 24.7 Trading income NII 10.1 1. the trading income benefitted from the disposal of the fixed income securities with realised capi
Slide 10: Gross Fees (1/3)
GROSS FEES (1/3) STRONG REVENUE BOOSTED BY FAVORABLE MARKET CONDITIONS Gross recurring fees m/€ Variable fees m/€ +20% Strong increase in 688.4 9M /3Q recurring 101.5 fees (+20%, +24% 575.2 YoY, respectively) 78.4 driven by higher quality mix, 196.6 diversification and pricing transition 586.9 221.1
Slide 11: Gross Fees (2/3): Management Fees
GROSS FEES (2/3): MANAGEMENT FEES ACCELERATION AT QUARTERLY LEVEL ON BETTER ASSET MIX AND PRICING TRANSITION Quarterly trend m/€ 496.8 586.9 Management 170.5 187.4 193.1 206.4 Strong 9M management fees Fees (+18% YoY) boosted by higher m/€ 9M 20 9M 21 3Q20 1Q21 2Q21 3Q21 volumes and improving margin
Slide 12: Gross Fees (3/3): Other Fees
GROSS FEES (3/3): OTHER FEES GROWING CONTRIBUTION ACROSS THE BOARD Banking and Entry Fees m/€ New Revenue Streams m/€ +29% 101.5 New revenue 101.5 streams well on 78.4 30.8 +44% 78.4 track to €70 million target for the year +26% 57.7 23.2 45.6 33.7 35.0 32.8 Transactional 70.7 22.8 banking and 55.2
Slide 13: Fee Expenses
FEE EXPENSES TOTAL PAYOUT RATIO IMPROVING FURTHER Total Fee Expenses m/€ Payout to the network % 47.2% 46.6% 361.9 Payout to the network decreased 305.4 41.1 35.9 35.9 thanks to lower cost of 33.8 74.0 growth Fee expenses to 11.3 10.7 65.0 Third-parties 9M 20 9M 21 Fee expenses to FA - Cost of growt
Slide 14: Operating Costs (1/2)
OPERATING COSTS (1/2) FULLY IN LINE WITH GUIDANCE DESPITE PUSH ON IT INVESTMENTS Total operating costs m/€ Breakdown of core operating costs m/€ +4.4% +4.6% 171.1 Operating 163.9 153.4 costs provide 2.9 146.6 3.3 14.8 evidence of 14.0 25.2 22.8 the scalability of the business 62.5 65.2 model 54.6 56
Slide 15: Operating Costs (2/2)
OPERATING COSTS (2/2) OPERATING LEVERAGE REMAINS SUPPORTIVE Operating costs/Total assets1 Cost/Income ratio1,2 0.51% 0.45% 0.40% 0.37% 52.6% 53.4% 51.1% 53.9% 52.3% 0.33% 0.33% 0.31% 0.30% 44.3% 42.3% 0.28% 40.3% 41.0% 38.9% 39.6% 40.2% 36.2% 34.4% 40.0% 30.9% 31.5% 23.7% 2013 2014 2015 2016 2017 20
Slide 16: Sound Capital Ratios
SOUND CAPITAL RATIOS AFTER ACCOUNTING FOR INVESTMENT DIVERSIFICATION AND DIVIDENDS CET1 ratio TCR ratio 18.4% 9M21 capital ratios based on 17.1% 16.5% 16.4% 2021 dividend provision1 temporary 15.2% 15.2% set in the higher side of the earnings’ payout range foreseen by the in-force dividend policy. C
Slide 17: Agenda
AGENDA Preliminary remarks Our Mission: To Be the 9M 2021 Results No.1 Private Bank unique Net Inflows, Assets and Recruitment by Value of Service, Business update Innovation and Sustainability Appendix
Slide 18: Total Assets
TOTAL ASSETS NEW HIGHS WITH A HIGHER QUALITY MIX Total Assets bn/€ Managed Solutions bn/€ +22% +17% Managed solutions 42.1 82.1 37.4 growing strongly driven 34.5 9.8 by LUX IM (+40% YoY, 74.5 In House funds 8.8 70.4 7.9 +21% YTD) Third party funds 12.6 9.8 10.8 42.1 Financial wrappers 8.9 37.4 7.8 8
Slide 19: BG Fund Management Lux (BG FML)
BG FUND MANAGEMENT LUX (BG FML) LUX IM GROWTH DRIVEN BY INNOVATIVE STRATEGIES BG FML - Assets by SICAV bn/€ BG FML – Net inflows in retail fund classes m/€ LUX IM added €3.3bn 20.2 assets in the last 12 18.7 503 17.2 0.3 months and now stands at 0.3 76% of total LUX based 0.3 4.6 393 382 assets (+6
Slide 20: Total Net Inflows (1/2)
TOTAL NET INFLOWS (1/2) HIGHER VOLUMES AND BETTER PRODUCT MIX Total Net Inflows bn/€ Focus on Managed Solutions bn/€ 3.7 5.5 +102% Strong uptick in +34% 0.9 net inflows with a strong delivery 4.1 in 3Q both by 3.7 1.2 volumes and 1.8 product mix 1.8 0.9 1.2 0.6 0.2 1.7 0.3 1.3 0.6 0.3 0.4 2.3 0.6 1.
Slide 21: Net Inflows by Acquisition Channel
NET INFLOWS BY ACQUISITION CHANNEL WELL BALANCED GROWTH ACROSS EXISTING FAS AND NEW RECRUITS Net inflows by acquisition channel, bn/€ Recruitment trend (# of Recruits) 5.5 Net Inflows driven by 96 existing FAs (76% of 4.1 1.8 3.8 total net inflows), yet with 75 a growing contribution 1.1 1.2 51 from
Slide 22: October 2021 Commercial Update
OCTOBER 2021 COMMERCIAL UPDATE SOLID NET INFLOWS, WITH TEMPORARY SPIKE IN LIQUIDITY Total net inflows bn/€ Managed solutions bn/€ Assets under Advisory bn/€ 6.0 4.0 7.0 4.7 4.0 2.3 6.0 2.0 2.0 0.2 5.4 0.5 0.5 1.3 1.5 0.6 2.0 0.6 0.1 0.2 0.3 0.3 1.2 1.0 0.2 0.6 0.6 0.1 0.4 0.2 -0.3 0.1 0.1 -0.5 Jan.
Slide 23: Agenda
AGENDA Preliminary remarks Our Mission: 9M 2021 Results To Be the No.1 Private Bank unique Net inflows, Assets and Recruitment by Value of Service, Business update Innovation and Sustainability Appendix
Slide 24: Plan Approaching Completion (1/3)
PLAN APPROACHING COMPLETION(1/3) EXCEEDING GROWTH TARGETS BY VOLUMES (AND QUALITY) Objective #1 Total Assets bn/€ Cumulated Net Inflows 2019-21 bn/€ By acquisition channel 82.1 76-80 ≈18.0 16.5 >14.5 Total assets above target with a better mix: 57.5 42.1 +€15bn in managed 58% 75% solutions alone (60
Slide 25: Approaching the End of the Plan (2/3)
APPROACHING THE END OF THE PLAN (2/3) CLEAR PATH TOWARDS SUSTAINABLE HIGHER RESULTS Objective #2 Core Net Banking Income bps Core Operating Result m/€ Core Net Banking 67 Income above >63 2.59x guidance thanks to 464.6 better product mix, 424.2 406.9 2.28x 397.1 diversification and pricing transitio
Slide 26: Approaching the End of the Plan (3/3)
APPROACHING THE END OF THE PLAN (3/3) COMMITMENT TO DIVIDEND POLICY IN LINE WITH TARGET AND TRACK RECORD Objective #3 Dividend Per Share 3.30 2019/20 cumulated DPS of €3.3 with payment dates in 1.20 1.07 1.25 1.25 November 2021 (€2.7) 0.90 0.95 0.98 0.45 0.55 0.55 and February 2022 0.10 0.18 0.06 (€
Slide 27: Save the Date: New 2022-24 Business Plan
NEW 2022-24 BUSINESS PLAN SAVE THE DATE SAVE THE DATE FEBRUARY 2022 Details to follow CLIENTS Clients FINANCIAL ADVISORS FA network Service VALUE Model PROPOSITION Fintech FINTECH ESG Sustainability 27
Slide 28: Agenda
AGENDA Preliminary remarks Our Mission: 9M 2020 Results To Be the No.1 Private Bank Net inflows, Assets and Recruitment by Value of Service, Business update Innovation and Sustainability Appendix
Slide 29: NHS Securitisations
NHS SECURITISATIONS UPDATE ON PURCHASE AND ACCOUNTING In September, Banca Generali launched an offer to its clients to purchase all senior notes of the outstanding securitisations of health receivables (NHS) for a total of €478m. The purchase was successfully completed with a subscription rate close
Slide 30: Interest-Bearing Assets
INTEREST-BEARING ASSETS INCREASING DIVERSIFICATION OF FINANCIAL ASSETS Total Assets bn/€ Collateral assets bn/€ Granted loans bn/€ 4.9 15.6 3.4 3.1 4.6 1.9 2 2020 9M21 2020 9M21 2.3 Drawn loans/ Collateral assets/ 73% 71% 203% 206% Granted loans Drawn loans 10.3 Bond Portfolio Maturity Duration Clas
Slide 31: Non-Recurring Items
NON-RECURRING ITEMS TWO POSITIVES, ONE NEGATIVE Build-up of Non-recurring items m/€ 1 +55.2 • Record Performance fees harvesting leveraging on favorable financial market conditions and positive performance to clients 1 (+3.7%, net of fees). New performance fee structure approved 1 0.4 by CSSF (slide
Slide 32: BG FML – Fee Structure
BG FML – FEE STRUCTURE REPRICING ACTIONS Impact of new performance 2016-2020 Variable fees m/€ fees mechanism m/€ Gross management fees m/€ New mechanism for performance fee Organic review of the fee structure calculation presented to CSSF for (both admin. and management fees approval 1 based on pri
Slide 33: Pricing Review - Final Stage
PRICING REVIEW - FINAL STAGE NEW PERFORMANCE FEES CALCULATION MECHANISM — Mechanism: High Water Mark equivalent to the maximum NAV reached by the fund. It allows performance fees to be withdrawn only upon reaching a new High 1 HWM Water Mark — Reference period: from inception — Crystallization: dail
Slide 34: New Revenue Streams
NEW REVENUE STREAMS GROWING DELIVERY ACROSS ALL PRODUCT LINES Assets under advisory (AuA) bn/€ +33% ≥ 30 24.3 Advanced Advisory fees ADVANCED ADVISORY 6.5 6.8 6.9 18.3 5.4 6.0 (+33%) growing steadily on 6.7 8.6 higher volumes (+33%) and stable gross margin (49bps) 9M20 9M21 3Q20 3Q21 2021E 3Q 4Q 1Q
Slide 35: Key Business Drivers - LUX IM
KEY BUSINESS DRIVERS - LUX IM NEW TOOLS SUPPORTING LUX IM GROWTH Savings Plans: Net inflows in LUX IM m/€ Switch Plans: Net Inflows in Funds m/€ 1300 1249 Strong delivery of new tools 33000 1200 1000 953 22000 linked to LUX IM: 30000 1100 900 27000 1000 800 17000 PAC (Savings plans): more 24000 900
Slide 36: Key Business Drivers - ESG
KEY BUSINESS DRIVERS - ESG NET INFLOWS IN ESG ASSETS AT ONE BILLION EURO Cumulative Net inflows in ESG products since inception bn/€ Assets in ESG products bn/€ ESG as % of Managed Solutions 14.3% 6.0 14.3% 3.0 5.9 13.6% 2.7 5.4 2.5 13.0% 4.9 2.0 1.4 1.3 3.8 1.4 1.2 11.0% 1.2 3.1 0.9 1.0 2.3 ESG ass
Slide 37: Key Business Drivers - Insurance
KEY BUSINESS DRIVERS - INSURANCE GRADUAL SHIFT TOWARDS INSURANCE WRAPPERS Insurance assets bn/€ Insurance products Growing focus on wrapper solutions in light of current ultra low rate environment 26.0 27.0 • Hybrid solution combining on average 30-40% 25.5 of LOB1 with single funds/securities and E
Slide 38: Financial Advisor Network
FINANCIAL ADVISOR NETWORK STEADY GROWTH BY SIZE AND QUALITY Financial Advisor Network, No. of FAs FA Network, by portfolio size and skills (% of Assets) No. of FAs Assets per FA Clusters m/€ 2 2,154 2,087 2,086 2,040 1,985 1,936 Wealth 1,841 Managers 35% 3491 91.6 Financial Advisors 1,715 (PTF>€50m)
Slide 39: Best FA Quality in the Industry
BEST FA QUALITY IN THE INDUSTRY STEADY VALUE GROWTH Average FA portfolio (Asset per Financial Advisor) m/€ 37.1 37.6 1 Best Player ex BG Assoreti Banca Generali 35.1 32.8 32.5 30.6 28.8 29.0 27.8 25.8 24.3 25.4 24.3 23.9 22.2 23.2 22.0 21.5 19.7 20.7 18.0 18.3 18.5 18.4 15.9 16.1 15.7 15.8 16.8 16.4
Slide 40: 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