Finecobank Spa · MIL:FBK
Finecobank Spa — Debt Investor Presentation (November 2022)
57 slides from Finecobank Spa's debt investor presentation, November 2022
Slide 1: 3Q22 Results
3Q22 Results UniCredit Italian Financials Debt Conference Lorena Pelliciari CFO Milan, November 2022 FINECO. SIMPLIFYING 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: Fineco overview
Agenda ✓Fineco overview ❑ Fineco 3Q22 Results ❑ Capital, risks and liquidity ❑ Next steps ❑ Fineco International business ❑ Focus on product areas 3
Slide 4: Introducing Fineco, a leading FinTech Bank in Europe
Introducing Fineco, a leading FinTech Bank in Europe Integrated offer of Banking, Brokerage and Investing via multi-channel approach, for sustainable growth Corporate purpose: offer customers excellent services and products through a multi-channel system at a fair price 9M22 weight on total revenues
Slide 5: 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 6: Long term sustainability at the heart of Fineco business model
Long term sustainability at the heart of Fineco business model 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 TRANSPARENCY EFFICIENCY INNOVATION Our 3 pillars Fairness and respect Fintech DNA:
Slide 7: 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 8: 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 CAGR (2014-2021) + 12% 92 108 69 81 TFA (bn) 67 + 6% 49 55 60 1,370 1,428 1,278 1,358 1,200 Clients (thd, #) 964 1,048 1,118 376 + 14% 284 342 226 254 Net profit (1) (m
Slide 9: Safe Balance Sheet: simple, highly liquid
Safe Balance Sheet: simple, highly liquid 36.5 bn Deposit modelling reflected in Investment portfolio Financial Assets Customer deposits "core" Customer loans Customer deposits "non core" ◼ Deposit base made of transactional liquidity based on quality of services. Cost of (1) Due from Banks Other li
Slide 10: Consistently growing in our target market
Consistently growing in our target market Improving the quality of our client base Outperforming the system in Private Banking(1) growth € bn, TFA € bn, TFA Excluding change of perimeter (i.e. due to market performance, M&A) Client segmentation 0.5-1mln (2) +117.6% Italian Private FinecoBank Banking
Slide 11: Agenda: Fineco 3Q22 Results
Agenda ❑ Fineco overview ✓Fineco 3Q22 Results ❑ Capital, risks and liquidity ❑ Next steps ❑ Fineco International Business ❑ Focus on product areas 11
Slide 12: 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 Delivering strong net profit in every market condition Strong capital position ◼ 9M22 adj. Net Profit at 303 mln, +17.7% y/y(1
Slide 13: Delivering strong Net Profit in every market condition
Delivering strong Net Profit in every market condition Adj. Net Profit at 302.7mln, +17.7% 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 14: 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 15: 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, avg UC bonds Italy Spain Other Govies SSA Covered & Corporate +8.0% 0.0% +5.3% 26.3 26.3 25.7 Bond portfolio Nominal value 30th September 2022 equal to 25.9bn
Slide 16: Net financial income: Focus on Bond portfolio run-offs
Net financial income: Focus on Bond portfolio run-offs 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 3.0 2.8 3.0 2.7 2.0 2.2
Slide 17: Our priority: accelerating on Investing
Our priority: accelerating on Investing 9M22 revenues increasing 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. Management fees in the quarter affected by negative market performance Investing Reve
Slide 18: FAM: delivering on the strategic discontinuity
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… FY22 FAM priorities bn FAM NET SALES ✓ Thanks to the full control of the FAM RETAIL: FAM FUNDS UN
Slide 19: Brokerage: higher floor as the structure of the market is changing
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 The floor of
Slide 20: 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 The yearly increase is mainly linked to costs related to the growth FTE # of the business, mainly related to: 9M22(1): +4.8% y/y 9M22 FAM costs • FAM as it is progressively increasing the eff
Slide 21: 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 7 bps Personal loans Mortgages 2 bps 2 bps +16.2% Sep.21 Jun.22 Sep.22
Slide 22: TFA breakdown
TFA breakdown 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 107.9 102.9 +14.7% 91.7 10.7 81.4 51% 9.3 -4.9% 49% 67.2 69.3 49% 7.9 60.2 7.5 55.3 50% 5.8 4.3 7.3 49.3 48% 6.0 6.2 50% 5.5 2.5 4
Slide 23: 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 Net Sales, bn – Organic / Recruit, % Total recruits Organic Total recruits Organic New PFAs recruited in the year PFAs recruited over the las
Slide 24: Increasing quality and productivity of the Network
Increasing quality and productivity of the Network Total Assets per PFA TFA concentration per PFA Eop, mln PFAs with TFA >20mln are 58% and hold 85% of TFA -5.7% -0.6% +148 -0.4% 90.7bn 100 90.1bn 100 2,752 2,900 33.0 31.2 31.1 > €35mln -8.5% 32% 30% €25-35mln y/y 58% €20-25mln 63% 61% 85% 18.9 17.4
Slide 25: Agenda: Capital, risks and liquidity
Agenda ❑ Fineco overview ❑ Fineco 3Q22 Results ✓Capital, risks and liquidity ❑ Next steps ❑ Fineco International Business ❑ Focus on product areas 25
Slide 26: Capital ratios
Capital ratios Capital position well above requirements Current Sept.21 Jun.22 Sept.22 (€/mln) Sept.21 Jun.22 Sept.22 Requirements CET1 Ratio 18.37% 19.14% 20.39% 8.12% CET1 Capital 841 929 951 CAPITAL Total Capital Ratio 29.29% 29.45% 31.11% 12.50% Tier1 Capital 1,341 1,429 1,451 Leverage Ratio(1)
Slide 27: Solid risk management framework, embedded in Fineco's DNA
Solid risk management framework, embedded in Fineco's DNA Sustainability and prudent risk-taking remain at the heart of Fineco's model. The institution’s strategic approach is oriented towards a robust business model characterized by a low-risk appetite to create sustainable profits and returns on t
Slide 28: 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 29: 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 30: AT1 Coupon payments underpin by solid profitability
AT1 Coupon payments underpin by solid profitability New dimension of growth reinforcing our solid profitability € mln PBT Dividends AT1 Coupon before Tax 494.4 ➢ Discretionary coupon payments on AT1 capital are subject to sufficient distributable items ➢ As of 31st December 2021, Fineco distributabl
Slide 31: Excellent capitalization
Excellent capitalization Strong capital ratios, leading to a high distance to the loss absorption trigger and to CET1 Capital Requirements Distance from CET1 to AT1 trigger Distance to Capital Requirements % Distance to trigger AT1 trigger % CET1 T1R TCR 20.39 31.11 31.11 20.39 18.80 12.504 0.004 10
Slide 32: Rating
Rating BBB rating by S&P with Neutral outlook S&P Outlook Neutral Long-term Issuer Rating BBB Long-term Bank Local Issuer Rating BBB Short-term Foreign Issuer Rating A-2 Short-term Local Issuer Credit A-2 S&P Global Ratings, 29 July 2022 32
Slide 33: Agenda: Next steps
Agenda ❑ Fineco overview ❑ Fineco 3Q22 Results ❑ Capital, risks and liquidity ✓Next steps ❑ Fineco International Business ❑ Focus on product areas 33
Slide 34: 2022 Guidance and outlook going forward
2022 Guidance and outlook going forward FY22 Revenues y/y growth strongly improved vs previous guidance, with a different mix thanks to the diversified business model in the current volatile environment ◼ BANKING REVENUES: ◼ OPERATING COSTS expectations: ➢ Net financial income (NFI: net interest inc
Slide 35: 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 COMING SOON Brokerage-only Account ✓New Trading
Slide 36: Agenda: Fineco International Business
Agenda ❑ Fineco overview ❑ Fineco 3Q22 Results ❑ Capital, risks and liquidity ❑ Next steps ✓Fineco International Business ❑ Focus on product areas 36
Slide 37: Fineco international business: getting ready for the deployment
Fineco international business: getting ready for the deployment Focusing our offer on a simplified digital model through a brand new, highly scalable and multilanguage platform for investments UK: gaining traction thanks to Germany: coming soon Going forward: rest of EU word of mouth An increasing a
Slide 38: Agenda: Focus on product areas
Agenda ❑ Fineco overview ❑ Fineco 3Q22 Results ❑ Capital, risks and liquidity ❑ Next steps ❑ Fineco International Business ✓Focus on product areas 38
Slide 39: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allows the bank to successfully face any market environment Banking, mln 45% +26.8% +26.3% +15.2% 310.7 245.9 79.1 87.0 100.2 3Q21 2Q22 3Q22 9M21 9M22 Brokerage, mln 22% Investing, mln 33% 9M22 -8.5% Management fees +10.2% +17.6% -7.4% +18
Slide 40: 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 Trading income +6.2% Fees and commissions Other +26.3% +0.5% 310.7 28.9 30.5 30.7 +26.8% Sep.21 Jun.22 Sep.22 +15
Slide 41: Brokerage
Brokerage Structurally higher revenues floor compared to pre-pandemic levels Revenues, mln Well-diversified brokerage offer Net Interest Fees and commissions Trading profit -7.4% among products… …and geographies 161.0 Funds Other markets 149.1 Italy -8.5% 12.0 9.3 Forex / CFD -11.2% 8% 95.6 77.8 10%
Slide 42: 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 43: Annex
Annex 43
Slide 44: P&L pro-forma
P&L pro-forma P&L pro-forma(1) mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 9M21 9M22 Net financial income 75.1 72.8 69.2 62.9 280.0 107.5 68.9 84.2 217.1 260.6 o/w Net Interest Income 61.8 62.5 61.8 61.8 247.9 59.3 67.6 84.3 186.1 211.2 o/w Profit from treasury management 13.2 10.3 7.4 1.1 32.1 48.1
Slide 45: 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 9M21 9M22 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 84.2 217.1 260.6 o/w Ne
Slide 46: 9M22 P&L FinecoBank and Fineco Asset Management
9M22 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net financial income -0.3 260.9 260.6 Dividends 0.0 23.0 -0.2 Net commissions 100.1 246.5 346.6 Trading profit -0.2 76.2 76.1 Other expenses/income -0.3 1.0 0.6 Total revenues 99
Slide 47: 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 9M21 9M22 Margins Margins Margins Margins Margins Margins Margins Margins Margins Margins Financial Investments 44.6 24,416 4
Slide 48: 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 at the beginning of 2022 and the ones used for the assumptions behind the guidance t
Slide 49: Net Financial Income: focus on Lending
Net Financial Income: focus on Lending Ancillary business to fulfill clients’ needs. High quality portfolio and cautious approach 2022 Guidance Eop, bn ◼ 27,893 mortgages granted since December 2016 Mortgages ◼ yearly new production: +13.5% ◼ Average customer rate: 147 bps. 9M22 Yield(1) at 73 bps ~
Slide 50: Revenues breakdown by Product Area
Revenues breakdown by Product Area Revenues by product area mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 2Q22 3Q22 9M21 9M22 Net financial income 72.6 69.8 65.9 60.0 268.2 105.3 66.3 82.4 208.2 254.0 o/w Net interest income 59.3 59.5 58.4 58.9 236.1 57.2 65.0 82.4 177.2 204.6 o/w Profit from Treasury Managemen
Slide 51: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.21 Jun.21 Sep.21 Dec.21 Mar.22 Jun.22 Sep.22 AUM 48,018 51,399 52,648 55,450 53,651 50,789 50,708 o/w Funds and Sicav 33,271 35,699 36,233 38,053 35,985 33,182 32,806 o/w Insurance 12,659 13,448 14,122 14,963 15,354 15,421 15,643 o/w GPM 238 282 294 330 326 3
Slide 52: Balance Sheet
Balance Sheet mln Mar.21 Jun.21 Sep.21 Dec.21 Mar.22 Jun.22 Sep.22 Due from Banks (1) 1,902 2,253 2,429 1,844 2,132 1,943 2,139 Customer Loans 4,639 5,269 5,624 6,002 6,088 6,311 6,318 Financial Assets 25,398 24,648 24,446 24,581 25,389 25,315 25,091 Tangible and Intangible Assets 277 281 279 279 27
Slide 53: Main Financial Ratios
Main Financial Ratios Mar.21 Jun.21 Sep.21 Dec.21 Mar.22 Jun.22 Sep.22 PFA TFA / PFA (mln) (1) 31.6 32.5 33.0 33.9 32.8 31.2 31.1 FAM retail / Fineco AUM (2) 24% 26% 26% 27% 28% 29% 29% Cost / income Ratio (3) 30.4% 31.3% 31.4% 32.2% 27.0% 29.3% 29.8% CET 1 Ratio 26.5% 18.6% 18.4% 18.8% 19.3% 19.1%
Slide 54: Long term sustainability at the heart of Fineco business model
Long term sustainability at the heart of Fineco business model 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 Eval. scale 2021 Today Fineco included
Slide 55: 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 56: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at € 24.5bn, of which € 14.8bn retail classes(1). Over 400 ISIN launched since inception 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:
Slide 57: Preserving our best price/quality ratio
Preserving our best price/quality ratio Competitive landscape(1) € Online € 95 avg € 143 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) 78 84 CreditAgricol
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