Finecobank Spa · MIL:FBK
Finecobank Spa — Mediobanca - 5th Italian CEO Conference (June 2019)
59 slides from Finecobank Spa's conference presentation, June 2019
Slide 1: 1Q19 Results
1Q19 Results Alessandro Foti, CEO and General Manager June 2019
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: UniCredit and Fineco lay the foundations for Fineco's full independence
UniCredit and Fineco lay the foundations for Fineco’s full independence Fineco as a fully independent entity Fineco and UniCredit have approved certain actions and procedures in order to allow Fineco to operate as a fully independent entity No implications on Fineco strategy and business model:
Slide 4: Fineco and UniCredit transitional agreements – key pillars
Fineco and UniCredit transitional agreements – key pillars The transitional arrangements entered by Fineco and UniCredit cover the liquidity investment strategy, the trademark and existing intragroup services. Liquidity investment strategy No change in the investment policy previously communicated
Slide 5: Agenda
Agenda Fineco Results Key messages Developing opportunities and next step Focus on product areas 5
Slide 6: Executive Summary
Executive Summary 1Q19 adjusted net profit(1) at 62.6mln, up y/y (+6.1% y/y) confirming the sustainability of a business model able to deliver consistent results in every market condition 1Q19 growing adjusted revenues(1) (+1.8% y/y) supported by Investing area (+15.2% y/y) with management fees
Slide 7: Results
Results 1Q19 Net Profit up +6.1% y/y boosted by diversified revenues growth. C/I ratio at 41%. Q/Q comparison impacted by usual 1Q seasonality on costs and low market volatility Net Profit Revenues mln excluding non recurring items(1) Adj. RoE mln Adj. Cost/Income excluding non recurring items(1) q/
Slide 8: Net interest income (1/2)
Net interest income (1/2) Increasing NII (+2.1% y/y) thanks to valuable and sticky sight deposits coupled with high-quality lending portfolio. Increasing diversification in financial investments Net Interest Income Interest-earning assets mln (1) (3) Avg, bn Financial Investments Lending (1) (2) Fin
Slide 9: Net interest income (2/2)
Net interest income (2/2) Further improvements for a diversified asset side. Sensitivity analysis +100bps parallel shift: +113 mln Bond Portfolio UC bonds and Govies run-offs Avg, bn (2) Eop, bn UC Bonds Govies Covered Bonds UC bonds Spain ICO + SSA Italy Other Govies (1) Covered Bonds UC Bond avg s
Slide 10: Commissions and Trading Income
Commissions and Trading Income Fees and commissions grew +8.3% y/y. Sustainable growth generating recurring revenues and very limited upfront fees. Brokerage affected by low volatility in 1Q19 Fees and Commissions Trading Income mln Brokerage Investing Banking Other mln Trading Income excluding non
Slide 11: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA. Quarterly comparison affected by seasonality (mainly PFAs costs) and different marketing costs distribution Staff expenses and FTE Non HR Costs (1) mln mln Development Costs Write-downs/backs & depreciation FTE # 1,080 1,125 1,121 Ru
Slide 12: Boost in high quality lending volume offered exclusively to the existing base of clients
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) 30 bps
Slide 13: Lending
Lending Boost in high quality lending volume through mortgages, personal loans and lombard loans Eop, mln 2019 Guidance +47.8% yearly new production: Mortgages 9,306 mortgages granted since December 2016 ~350mln +6.9% Average customer rate: 184bps. 1Q19 Yield(1) at 80bps current market 859 9
Slide 14: Capital Ratios
Capital Ratios Best in class capital position and low risk balance sheet RWA CET1 Ratio mln Credit Market Operational % CET1 capital, mln +82bps +2.1% -18bps 2,400 2,450 2,376 20.15% 21.16% 20.98% Mar.18 Dec.18 Mar.19 484 503 514 1.684 1.736 1.753 Total Capital Ratio mln +65bps 22 33 19 -44bps 695 6
Slide 15: TFA evolution (Dec.13 – Mar.19)
TFA Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 68% of total AuM TFA evolution (Dec.13 – Mar.19) Cumulated performance 74.1 -4.1 69.3 1.7 3,1 Net Sales +28.4 bn 67.2 6,2 1.0 bn Market Effect +2.1 bn 60.2 6,0 55.3 5,0 -0.2 0,5 49.3 5,5 1.7
Slide 16: 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 +12.1 bn AUM since the end of 2014, o/w: +6.9% +7.4% Guided Products & Services +15.8 bn y/y AuM à la carte -3.7bn 74.1 74.5 69.3 +7.5% 67.2 60.2 33
Slide 17: PFA Network – total Net Sales
Net sales breakdown Solid high quality 1Q19 net sales growth on the wave of structural trends in place despite a complex environment. Asset mix returning into AuM with more conservative solutions Breakdown of total Net Sales PFA Network – total Net Sales bn bn 6.2 6.0 5.5 5.4 5.5 5.0 4.9 2,3 4.0 4.3
Slide 18: Net Sales – Organic / Recruit (%)
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 6.2 1.7 4.0 5.5 5.0 6.0 6.2 1.7 Recruitment costs 7% 2% (to be amortized) 11% 11% 10% 14% 12% 1
Slide 19: Agenda
Agenda Fineco Results Key messages Developing opportunities and next step Focus on product areas 19
Slide 20: 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 21: Committed to maximize Shareholders' value
Committed to maximize Shareholders’ value Strategy based on healthy growth and sustainability with a long term horizon A coherent approach in the whole strategy of growth Clients’ acquisition driven by high quality services , transparency and fair pricing Organic growth key in our strategy witho
Slide 22: Safe Balance Sheet: simple, highly liquid and low risk asset side
Safe Balance Sheet: simple, highly liquid and low risk asset side, valuable and sticky deposits Diversified investment portfolio 26.4 bn High-value deposit base Investment strategy announced during Sticky deposits: mostly ‘transactional FY17 results: UC bonds run-offs, blend of liquidity’ gather
Slide 23: Fairness and transparency core in our strategy
Fairness and transparency core in our strategy. Sustainable and highly recurring Investing revenues Structural trends to support growth Organic growth key in our strategy Total net sales, bn Total recruits At sweet spot to capture two structural CAGR Organic trends in place in Italy: +11.7% - digita
Slide 24: Brokerage: the perfect countercyclical business
Brokerage: the perfect countercyclical business Leading position in Brokerage Operating Platform Excellence: multichannel and fully integrated Well advanced in-house know-how, optimizing time-to-market and cost efficiency In-house back-office and customer care. Business continuity always guara
Slide 25: Operating Leverage
Operating Leverage A distinctive competitive advantage of Fineco IT and back office internally managed, deep internal know-how 17% FTEs in IT department, 24% in Back-Office Platform scalability Core system internally managed Internal DWH to fully leverage on Big Data Analytics and Very low I
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: Continuous innovation on usability and front-end efficiency
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: Continuously increase of quality and productivity of the network
Continuously increase of quality and productivity of the Increase 2 network PRODUCTIVITY Total Assets per PFA TFA concentration per PFA Eop, mln +11.1% PFAs with TFA >20mln are 48% (+13%y/y) and hold 76% of TFA (+6% y/y) +7.5% +9.4% 25.0 -42 22.5 23.2 2,613 2,614 2,571 58.7bn 1 64.2bn 1 > €35mln 17%
Slide 29: Cross selling and clients' profile
Increase Cross selling and clients’ profile 2 PRODUCTIVITY Net sales: new vs existing clients Total Financial Assets per client bn Net sales from existing clients >500k 100-500k 50-100k <50k Net sales from new clients 6.0 6.2 Total TFA: 74.1bn 5.0 Total clients: Net sales from 11.7% 69% 63% Avg age:
Slide 30: Fineco Asset Management in a nutshell
Increase Fineco Asset Management in a nutshell 3 OPERATIONAL AUM at €11.5bn, of which €6.5bn retail classes as of May.19 EFFICIENCY STRATEGY ACHIEVEMENTS 2019 FOCUS Innovative and modern approach to build Product efficiency portfolios, thus improving the relationship with clients. Maximum level of
Slide 31: Sustainability at the heart of Fineco's business model
Sustainability at the heart of Fineco’s business model Our sustainable growing strategy is inspired by principles and voluntary directions of the most relevant international organisations. Our initiatives are consistent with the achievements of the 17 Sustainable Development Goals (SDGs) of the UN 2
Slide 32: Agenda
Agenda Fineco Results Key messages Developing opportunities and next step Focus on product areas 32
Slide 33: Developing opportunities
Developing opportunities Clients: geographical split About 3,400 clients (1) New clients acquired (2) 15% 20% Fineco UK 42% 57% 74% 54% non-Italian 26% non-Italian 43% UK Italian Other UK Italian Other Unique positioning in a highly fragmented market, leveraging on our one-stop solution. Among the
Slide 34: Next step: New platforms to further boost productivity (1/3)
Next step: New platforms to further boost productivity of the Bank (1/3) Third evolutionary step in Fineco’s disruptive growth story Our unique competitive advantage Why disruptive? Best-in-class technology resulting from strong We are the only one player able to combine cyborg internal IT cultu
Slide 35: Next step: New platforms to further boost productivity (2/3)
Next step: New platforms to further boost productivity of the Bank (2/3) Boosting our PFAs’ efficiency and productivity through Big Data Analytics Assisted Selling Platform X-Net, Fineco’s cyborg advisory platform for our PFAs, will be further empowered with customers’ financial gaps The Bank wi
Slide 36: Next step: New platforms to further boost productivity (3/3)
Next step: New platforms to further boost productivity of the Bank (3/3) The Assisted Selling Platform - details PFA X-Net Platform Send to INVESTMENT PROPOSAL Define goal Define investment details customer Customer Platform Select goal Define investment details Ask your PFA 36
Slide 37: Agenda
Agenda Fineco Results Key messages Developing opportunities and next step Focus on product areas 37
Slide 38: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allow the bank to successfully face any market environment Banking 47% mln +4.9% -1.2% 70.8 75.2 74.2 1Q18 4Q18 1Q19 Brokerage 19% Investing 34% mln mln FY18 +15.2% Management fees -20.0% -9.1% +13.7% y/y -6.9% 59.7 54.2 37.7 47.1 32.4 30.
Slide 39: 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 Fees and commissions Other +11.
Slide 40: Brokerage
Brokerage 1Q19 Brokerage performance affected by low volatility in the period. Continuous enlargement of product offer Revenues Executed orders mln Net Interest Trading profit mln Fees and commissions -20.0% -16.9% -6.9% -2.2% 7.3 37.7 32.4 6.2 6.1 3.2 30.2 3.6 3.4 20.6 18.2 18.5 13.8 10.6 8.2 1Q18
Slide 41: Investing
Investing Successful strategy based on our cyborg advisory approach drove a better asset mix and increasing fees y/y. Very limited upfront fees representing only 2% of investing fees Revenues (Net fees) Assets under Management mln eop, bn Upfront fees Management fees Other(1) +7.3% 1Q19 +7.5% +15.2%
Slide 42: Annex
Annex 42
Slide 43: P&L
P&L mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 Net interest income 68.9 68.7 69.9 71.1 278.7 70.4 Net commissions 71.5 74.5 72.7 81.8 300.4 77.4 Trading profit 14.5 13.1 10.7 5.9 44.2 9.8 Other expenses/income 0.5 0.1 -0.4 1.7 1.9 0.2 Total revenues 155.4 156.4 153.0 160.4 625.3 157.7 Staff expenses -20.5 -2
Slide 44: P&L net of non recurring items
P&L net of non recurring items 3Q18 4Q18 FY18 1Q19 1Q19/ 1Q19/ mln 1Q18 2Q18 Adj. (1) Adj. (1) Adj. (1) Adj. (1) 1Q18 4Q18 Net interest income 68.9 68.7 69.9 71.1 278.7 70.4 2.1% -1.0% Net commissions 71.5 74.5 72.7 81.8 300.4 77.4 8.3% -5.4% Trading profit 14.5 13.1 10.7 8.9 47.3 10.2 -29.5% 14.8%
Slide 45: 1Q19 P&L FinecoBank and Fineco Asset Management
1Q19 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net interest income 0.0 70.4 70.4 Dividends 0.0 0.0 0.0 Net commissions 14.3 63.0 77.4 Trading profit 0.1 9.7 9.8 Other expenses/income 0.0 0.2 0.2 Total revenues 14.4 143.3 157.
Slide 46: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 Margins Margins Margins Margins Margins Margins Financial Investments 56.9 18,449 57.5 18,887 57.1 18,817 57.7 19,133 229.2 18,822 57.1 19,748 Net Margin 1.25% 1.22% 1.20% 1.2
Slide 47: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010613 Euro 382.5 1-Apr-19 Euribor 1m 0.38% 2 IT0005010282 Euro 382.5 15-Jul-19 Euribor 1m 2.37% 3 IT0005010399 Euro 382.5 14-Oct-19 Euribor 1m 2.40% 4 IT0005010324 Euro 382.5 13-Jan-20 Euribor 1m 2.44% 5 IT00
Slide 48: Details on Net Commissions
Details on Net Commissions mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 Brokerage 20.6 20.1 15.8 18.2 74.7 18.5 o/w Equity 17.5 16.4 13.1 14.9 61.8 15.6 Bond 0.8 1.2 0.6 0.9 3.6 0.9 Derivatives 2.5 2.7 2.2 2.9 10.2 2.3 (1) Other commissions -0.1 -0.2 -0.1 -0.5 -0.9 -0.2 Investing 47.1 49.5 52.2 58.0 206.8 54.2
Slide 49: Revenues breakdown by Product Area
Revenues breakdown by Product Area mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 Net interest income 67.3 68.4 68.5 69.7 273.8 69.6 Net commissions 3.4 4.7 4.5 5.5 18.1 4.5 Trading profit 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.1 0.2 0.1 0.0 0.4 0.1 Total Banking 70.8 73.3 73.0 75.2 292.3 74.2 Net interest income 0.0 0
Slide 50: IFRS 9 P&L impacts
IFRS 9 P&L impacts mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 Trading Profit 0.6 0.9 0.9 -3.8 -1.4 0.8 Visa 0.6 0.9 0.9 -0.7 1.6 1.2 Voluntary Scheme 0.0 0.0 0.0 -3.0 -3.0 -0.4 Loan Loss Provisions -0.4 2.4 -0.4 -0.6 1.0 -1.0 Profit on Investments 0.0 5.3 -0.9 -3.1 1.3 -0.7 Govies -0.2 -0.2 -0.1 -0.8 -1.3 0.
Slide 51: IFRS 16 impacts
IFRS 16 impacts mln 1Q18 2Q18 3Q18 4Q18 FY18 1Q19 Net interest Income -0.2 Other Administrative Expenses -3.1 -3.1 -3.1 -3.4 -12.7 Leasing Reggio Emilia offices and financial shops -2.3 -2.3 -2.3 -2.4 -9.4 Leasing Milano headquarter -0.8 -0.8 -0.8 -0.9 -3.3 Write-down/backs and depreciation -2.2 Lea
Slide 52: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.18 Jun.18 Sep.18 Dec.18 Mar.19 AUM 33,536 34,496 34,930 33,485 35,988 o/w Funds and Sicav 26,666 26,809 26,795 24,853 26,361 o/w Insurance 6,395 7,043 7,355 7,618 8,401 o/w GPM 1 1 1 1 1 o/w AuC + deposits under advisory 475 643 779 1,012 1,225 o/w in Advice
Slide 53: Balance Sheet
Balance Sheet mln Mar.18 Jun.18 Sep.18 Dec.18 1st Jan.19 Mar.19 Due from Banks 3,488 3,224 3,398 3,059 3,059 3,807 Customer Loans 2,318 2,633 2,736 2,955 2,955 3,029 Financial Assets 17,106 17,199 17,678 18,238 18,238 19,012 Tangible and Intangible Assets 112 112 112 115 180 243 Derivatives 0 3 0 8
Slide 54: Total assets: 98% not exposed to volatility
Total assets: 98% not exposed to volatility Out of 26.4bn, only 0.5bn of Assets valuated at fair value with limited impacts on Equity reserve Total Assets o/w Government bonds by geography Eop, bn Eop, bn 26.4 Financial investments 0.5 Gov. Bonds Total Gov. Bonds: 10.0bn at fair value (HTCS) 8.6 Gov
Slide 55: Main Financial Ratios
Main Financial Ratios Mar.18 Jun.18 Sep.18 Dec.18 Mar.19 PFA TFA/ PFA (mln) (1) 22.5 23.0 23.4 23.2 25.0 Guided Products / TFA (2) 31% 32% 32% 32% 33% Cost / income Ratio (3) 41.0% 40.0% 39.3% 38.9% 41.3% CET 1 Ratio 20.2% 20.7% 20.5% 21.2% 21.0% Adjusted RoE (4) 35.1% 37.0% 35.2% 35.7% 30.8% Levera
Slide 56: High-value deposit base confirms strong resilience over time
High-value deposit base confirms strong resilience over time Sight deposits growth Eop, bn 25 +11% 23 y/y 20 18 Financial last 10 years 15 Sovereign crisis 13 debt crisis CAGR: 11% 10 8 5 Worst liquidity outflow 3 Double-digit deposit growth throughout the last 10 years (+11% CAGR), with no impact
Slide 57: Headquarters acquisition - details
Headquarters acquisition - details Deal January 31st 2019: completed the headquarters acquisition in Milan from Immobiliare Stampa S.C.p.A. (controlled by Banca Popolare di Vincenza S.p.A. in compulsory winding up) Price of the deal: €62mln Rationales: favourable conditions of the deal, expect
Slide 58: Additional Tier 1
Additional Tier 1 Details Benefits Given current favorable market conditions and spread levels, Sustain a more diversified investment strategy through on 23rd January, 2018 the Bank issued a €200mln perpetual the non-renewal of UC Bonds run-offs and the progressive AT1 increase of European Govie
Slide 59: 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
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