Banca Generali S.p.a. · MIL:BGN
Banca Generali — 1H 2020 Earnings Presentation
35 slides from Banca Generali's earnings presentation, Jul 29, 2020
Slide 1: Investor Presentation 1H 2020 Results
INVESTOR PRESENTATION 1H 2020 RESULTS
Slide 2: Agenda
AGENDA Preliminary remarks Our Vision: To Be the 1H 2020 Financial Results No.1 Private Bank unique by Value of Net Inflows, Assets and recruiting Service, Innovation and Sustainability Business update and closing remarks Appendix: Sector trend and business profile 2
Slide 3: 1H 2020 Results: Executive Summary
1H 2020 RESULTS: EXECUTIVE SUMMARY SOUND BUSINESS TREND Total assets at €68.9bn Sizeable recovery in 2Q20 assets driven by inflows and performance. Accelerated reinvestment of record liquidity piled during the pandemic (€700m cash reduction in 2Q from current accounts). Managed and insurance produ
Slide 4: Results at a Glance
RESULTS AT A GLANCE KEY TAKEAWAYS Comments (€ mil) 1H 19 1H 20 % Chg Steady increase in all revenue lines (+11%) Net Interest Income 33.6 42.4 26.3% Net Financial Income (+28%) driven by higher assets and Net income (loss) from trading activities and Dividends 6.0 8.4 38.9% more efficient treasury
Slide 5: Net Profit Breakdown
NET PROFIT BREAKDOWN SOLID OPERATING TREND OFFSET BY HIGHER NON-OPERATING ADJUSTMENTS Net profit breakdown m/€ Build-up of recurring net profit m/€ Operating items Non-operating items 132.8 131.9 +16.1 (14.6) 10.1 (3.2) (8.3) 69.9 64.4 62.0 (6.3) 68.4 9.2 o/w: • €4.0 m charge linked to the review of
Slide 6: Agenda
AGENDA Preliminary remarks Our Vision: To Be the No.1 Private Bank 1H 2020 Financial Results unique by Value of Service, Innovation Net Inflows, Assets and recruiting and Sustainability Business update and closing remarks Appendix: Sector Trend and Business profile 6
Slide 7: Net Financial Income
NET FINANCIAL INCOME DOUBLE-DIGIT GROWTH CONFIRMED Net financial income m/€ Total Assets and Interest-bearing Assets bn/€ 12.5 12.3 10.9 50.8 1.0 1.0 39.6 8.4 1.3 1.9 2.0 2 1.8 6.0 Other assets 26.6 24.2 Loans to Banks Trading 19.9 8.6 19.7 4.4 8.4 income Loans to Clients 6.9 42.4 4.0 4.0 2.0 Financ
Slide 8: Gross Fees (1/3)
GROSS FEES (1/3) POSITIVE TREND AND RESILIENCE CONFIRMED Gross recurring fees m/€ Variable fees m/€ 382.0 Steady growth in 353.7 recurring fees (+8% 55.6 39.9 YoY) at interim level with the material contribution of banking and entry 195.5 186.5 fees (+39% YoY) 172.8 180.9 29.7 25.9 326.3 17.8 22.1 3
Slide 9: Gross Fees: Management Fees (2/3)
GROSS FEES: MANAGEMENT FEES (2/3) 2Q MARGIN HIT BY MORE CONSERVATIVE ASSET ALLOCATION Quarterly trend m/€ Management fees, monthly trend m/€ 313.8 326.3 54.3 54.7 Management 155.0 158.8 165.7 160.6 51.1 51.5 Fees m/€ 1H19 1H20 1Q19 2Q19 1Q20 2Q20 Mar. Apr. May June Management fees steadily Avg. Mana
Slide 10: Gross Fees (3/3): Other Fees
GROSS FEES (3/3): OTHER FEES GROWING CONTRIBUTION, GROWING DIVERSIFICATION Banking and Entry Fees m/€ New revenue streams m/€ 55.6 Sizeable increase 55.6 in new revenue 18.5 streams (+63%), 39.9 39.9 representing 60% 29.7 +63% 33.5 of total banking 12.8 25.9 and entry fees 22.1 20.6 11.2 17.7 7.2 37
Slide 11: Fee Expenses
FEE EXPENSES PAY-OUT RATIO MOVING DOWN Total Fee Expenses m/€ Pay-out to the network % 48.8% 47.4% Lower pay-out to the network linked to product 203.8 36.5 191.4 36.2 mix and recruiting trend in 22.7 the period 19.0 0.5 11.8 11.2 42.9 Fee expenses to Third 41.6 1H19 1H20 parties Fee expenses to FA
Slide 12: Operating Costs (1/2)
OPERATING COSTS (1/2) LIMITED INCREASE IN CORE COST BASE Total operating costs m/€ Breakdown of core operating costs m/€ Core operating costs were up 2.5% excluding sales 100.9 113.4 personnel, change in 1.1 9.5 95.0 perimeter and cost for 0.9 92.6 7.1 8.0 Covid-19 13.8 14.7 3.5 4.0 57.1 56.3 48.3 4
Slide 13: Operating Costs (2/2)
OPERATING COSTS (2/2) OVERALL BEST IN CLASS COST RATIOS Operating costs/Total assets Cost/Income ratio 0.51% 53.4% 53.9% 52.6% 52.3% 51.1% 46.5% 0.45% 0.42% 39.9% 42.3% 40.3% 41.0% 0.38% 38.1% 38.8% 38.1% 41.7% 0.34% 0.33% 0.33% 32.3% 32.4% 0.32% 2013 2014 2015 2016 2017 2018 2019 1H20 2013 2014 201
Slide 14: Capital Position
CAPITAL POSITION SOUND CAPITAL POSITION CET1 ratio TCR ratio On 27 and 28 July 2020 respectively, ECB and Bank of Italy 5.0% 20.7% 5.0% 19.3% issued new recommendations 15.7% requesting that no dividends be paid 16.1% (0.4%) 14.7% (0.4%) 14.3% out until 1 January 2021 The BoD acknowledged the ECB/Ba
Slide 15: Agenda
AGENDA Preliminary remarks Our Vision: To Be the 1H 2020 Financial Results No.1 Private Bank unique by Value of Net Inflows, Assets and recruiting Service, Innovation and Sustainability Business update and closing remarks Appendix: Sector trend and business profile 15
Slide 16: Total Assets (1/2)
TOTAL ASSETS (1/2) STRONG REBOUND IN MANAGED PRODUCTS Total Assets bn/€ Managed Solutions bn/€ 69.0 34.0 33.4 68.9 29.6 62.9 7.2 7.6 In-House funds 6.3 9.7 9.4 Third-party funds 8.5 34.0 33.4 6.5 8.4 7.7 29.6 Financial wrappers 8.3 8.7 8.7 Managed solutions Insurance wrappers Traditional life polici
Slide 17: Assets Under Advisory (AuA)
ASSETS UNDER ADVISORY (AUA) ON A STEADY GROWTH TRAJECTORY Assets under Advanced Advisory (AuA) Active FAs2 as % of total assets1 68.9 +38 pts Advanced 16.2% 59% 62% Advisory 5.1 (AuA) 39% 24% Base 7.6% 2017 2018 2019 1H20 63.9 7.1% Advisory 4.1% AuA Breakdown by service (%) 2.4% 14% 2017 2018 2019 1
Slide 18: BG Fund Management Lux (BG FML) Assets
BG FUND MANAGEMENT LUX (BG FML) ASSETS SIZEABLE ASSET REBOUND IN 2Q20 BG FML - Total Assets bn/€ BG FML - Assets by SICAV bn/€ 16.9 16.7 15.6 14.7 16.9 16.7 15.6 0.3 14.7 9.7 9.1 0.3 Institutional fund 9.3 8.2 0.3 classes 0.3 6.0 5.0 Retail fund classes 6.3 7.2 6.5 7.6 6.6 4.7 1H19 2019 1Q20 1H20 10
Slide 19: Total Net Inflows
TOTAL NET INFLOWS SHIFT TOWARDS MANAGED SOLUTIONS Total Net Inflows bn/€ Focus on managed solutions bn/€ 2.8 2.8 1.2 0.4 1.2 0.8 0.7 1.5 0.4 1.4 1.4 0.2 0.3 1.3 0.1 0.4 0.2 0.3 0.5 0.3 0.1 1.6 0.9 0.4 1.4 1.3 0.2 0.8 0.8 -0.1 0.3 -0.3 0.1 -0.1 1H19 1H20 1H19 1H20 1Q19 2Q19 1Q20 2Q20 Insurance wrappe
Slide 20: Total Net Inflows
TOTAL NET INFLOWS RECORD HIGH CONTRIBUTION FROM EXISTING FAS Recruitment trend (# of new recruits) Net inflows mix by acquisition channel (%) 43 31% 26% 27% From retail and 19 28 Private Banks New recruits 21 FA Out From other FA network 18 Existing network 79% 80% 75% 15 24 10 6 -2% -6% -10% 1H19 1
Slide 21: Agenda
AGENDA Preliminary remarks Our Vision: To Be the 1H 2020 Financial Results No.1 Private Bank unique by Value of Net Inflows, Assets and recruiting Service, Innovation and Sustainability Business update and closing remarks Appendix: Sector trend and business profile 21
Slide 22: 2020 Key Business Initiatives
2020 KEY BUSINESS INITIATIVES KEY BUSINESS DRIVERS AND NEW LEVERS 3 Key business drivers: key products to support revenue growth and profitability 3 New Business levers: new initiatives launched with the 3Y Business Plan with the aim to further diversify the revenue mix 3 New revenue streams:
Slide 23: 2020 Key Business Driver: Focus on Sustainability
2020 KEY BUSINESS DRIVER: FOCUS ON SUSTAINABILITY A DISTINCTIVE COMMERCIAL APPROACH BEARING FRUITS Quarterly ESG assets FAs with >20% in ESG products 2.0% 3.8% 4.2% 7.2% 7.7% 9.2% 3.1 2.4 2.3 2.0 15% 1.1 0.9 2Q 2020 1Q19 2Q19 3Q19 FY19 1Q20 2Q20 Almost 90% of these Financial Advisors use the ESG Too
Slide 24: New Business Levers: Focus on Lending
NEW BUSINESS LEVERS: FOCUS ON LENDING LOAN VOLUMES PICKING UP Loan portfolio m/€ Lombard loan trend m/€ 2,844 2,588 2,582 2,639 2,668 1,187 2,523 1,071 1,929 1,981 1,992 2,026 968 1,885 1,922 858 826 793 752.1 693 702.6 620.1 559.9 481.2 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 Gr
Slide 25: New Revenue Streams: Focus on BG Saxo
NEW REVENUE STREAMS: FOCUS ON BG SAXO VOLUMES PICKING UP 2018 2019 2020 2H 1H 2H 1H 2H WAVE I (B2C BG) Pilot Roll-out Project’s WAVE II (B2B2C) key waves Pilot Roll-out WAVE III (B2C External) Roll-out • Launch of ‘BG • Launch of ‘BG • Trading order • Completion of current Key Business • IT integrat
Slide 26: 2019-21 Business Plan Guidelines
2019-21 BUSINESS PLAN GUIDELINES FINANCIAL TARGETS CONFIRMED POST COVID-19 2019-21 Targets I Empowering FAs Cumulated Net Inflows >14.5 bn/€ Total Assets 76-80 bn/€ II Core Net Banking Income1 ≥63 bps Clients’ first choice Core Operating Costs: 3%- 5% CAGR2 III Dividend : * 70%-80% pay-out
Slide 27: Agenda
AGENDA Preliminary remarks Our Vision: 1H 2020 Financial Results To Be the No.1 Private Bank Net Inflows, Assets and recruiting unique by Value of Service, Innovation and Business update and closing remarks Sustainability Appendix: Sector trend and business profile 27
Slide 28: Net Financial Income: Focus on Financial Assets
NET FINANCIAL INCOME FOCUS ON FINANCIAL ASSETS Financial Assets by IFRS classification bn/€ Maturity (Bonds) Duration (Bonds) 3.4 3.7 1.7 1.5 8.4 7.8 0.1 1.3 0.8 6.9 0.1 0.9 0.5 0.1 2.4 2.8 Total HTCS Total HTCS Total HTCS Total HTCS 2.4 1H19 1H20 1H19 1H20 Bond breakdown by 5.9 Bond Classification
Slide 29: 2020 New Revenue Streams
2020 NEW REVENUE STREAMS MATERIAL CONTRIBUTION TO BUSINESS Advanced Advisory, Structured products, Brokerage fees, Review of the offer of model portfolios New closed-end Alternative Funds Turnover-rate already at 1.2x (vs. 0.9 at based on 4 lines (strategy, flexibility, (FIA) for WII/Professio
Slide 30: Banca Generali vs. Sector Trend (1/2)
BANCA GENERALI VS. SECTOR TREND (1/2) OUTPACING AN HEALTHY SECTOR TREND FA sector1: Total Assets bn/€ Banca Generali: Total Assets bn/€ 588.5 66.8 518.5 513.9 57.5 471.1 55.7 47.5 +24.9% +40.5% 2016 2017 2018 2019 2016 2017 2018 2019 FA sector1: Total No. of FAs # Banca Generali: No. of FAs # 22856
Slide 31: Banca Generali vs. Sector Trend (2/2)
BANCA GENERALI VS. SECTOR TREND (2/2) BANCA GENERALI STANDS OUT VS. SECTOR AVERAGE FA sector1: Total Assets/FA m/€ Banca Generali: Total Asset/FA m/€ 26.7 32.8 23.1 23 22.6 28.8 29.0 +€7.0m 20.6 19.4 19.4 +€5.4m 17.2 25.8 2016 2017 2018 2019 2016 2017 2018 2019 Sector with ISPB Sector w/out ISPB FA
Slide 32: Advisor Network
ADVISOR NETWORK STEADY QUALITY GROWTH Financial Advisor Network, # FAs FA Network, by portfolio size and skills 2,040 2,060 Clusters (% of Assets) No. of FAs Assets per FA 1,985 1,936 1,841 1,715 1,645 Wealth 35% 3251 79.6 m/€2 Financial Advisors Managers 1,475 32 Private Bankers 52% 1,2301 29.1 m/€
Slide 33: Growing Client Base
GROWING CLIENT BASE FOCUS ON PRIVATE CLIENTS Clients’ breakdown by cluster1, #, bn/€ Trend in No. of Clients by cluster1 237.7 66.9 BG Assets No. of clients Client cluster 5Y increase2 HNW and Private As of 1H20 11% clients strongly higher in the last 5 years HNWI (+77% and +54%, 33% (>€5m) 21% +7
Slide 34: 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 a
Slide 35: 2020 Upcoming Events
2020 UPCOMING EVENTS NOVEMBER Investor Relations Contacts Su Mo Tu We Th Fr Sa Giuliana Pagliari 1 2 3 4 5 6 7 9M 2020 Results Investor Relations Manager Conference Call Phone +39 02 408 26548 8 9 10 11 12 13 14 Mobile +39 331 65 30 620 15 16 17 18 19 20 21 E-mail: giuliana.pagliari@bancagenerali.it