Slide 1: FY17 Results
FY17 Results Alessandro Foti, CEO and General Manager February 2018
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, p
Slide 3: Agenda
Agenda Fineco Results Focus on product areas Key messages and Initiatives monitoring 3
Slide 4: Executive Summary
Executive Summary FY17 net profit net of non recurring items(1) at 218.5mln, strongly up (+8.9% y/y), 4Q17 at 61.6mln(1) (+17.0% q/q and +11.9% y/y net of non recurring items) confirming sustainable growing path Relentless and sound revenue growth boosted by net interest income and fees and commissi
Slide 5: Results: FY17 Net Profit, best year ever
Results FY17 Net Profit, best year ever despite Deposit Guarantee Scheme contribution. Decreasing Cost / Income thanks to our strong Operating Leverage Net Profit Gross Operating Profit mln mln excluding non recurring items(1) excluding non recurring items(1) +11.4% 353.4 332.7 +8.9% 211.8 214.1 +17
Slide 6: Results: Operating leverage constantly delivered
Results Operating leverage constantly delivered thanks to a relentless revenue growth and operating costs well under control Revenues Operating Costs mln excluding non recurring items(1) mln +12.6% +7.9% +5.9% +3.0% +5.1% 559.1 586.7 +9.4% 226.4 233.2 138.4 148.2 155.8 543.8 55.3 53.5 58.6 4Q16 3Q17
Slide 7: Net interest income (1/2)
Net interest income (1/2) Remarkable net interest income dynamics in a negative rate environment. The announced focus on high quality lending is starting to pay-off Net Interest Income Interest-earning assets mln Avg, bn (1) (2) +6.1% (3) Financial Investments Lending Financial Investments Lending O
Slide 8: Net interest income (2/2)
Net interest income (2/2) More diversification and further opportunities coming from the maneuvering on current accounts. Sensitivity analysis +100bps parallel shift: +119 mln Investment Policy Given current interest environment, the Bank decided to further diversify its investment portfolio, throug
Slide 9: Commissions and Trading Income
Commissions and Trading Income Sound and diversified stream of revenues thanks to our one-stop-solution model. Management fees strongly up +14.7% y/y Fees and Commissions Trading Income mln mln Brokerage Banking excluding non recurring items(1) Investing Other +11.2% FY17 270.1 -0.9% y/y Management
Slide 10: Costs
Costs Cost efficiency and operating leverage confirmed in our DNA Staff expenses and FTE Stock Granting post IPO mln mln FTE # Staff expenses, related to top managers and key employees 1,052 1,069 1,082 Other administrative expenses, related to PFAs +23.9% 9.6 +7.6% 2.7 6.5 +4.2% 1.4 73.7 79.3 2.1 1
Slide 11: Capital Ratios
Capital Ratios Strong capital base and 28.5 cents dividend distribution equal to 81% dividend pay- out RWA CET1 Ratio transitional(1) mln % Credit Market Operational -2.2p.p. 0.0p.p. +22.3% +6.7% 22.94% 22.24% 22.14% 20.74% 20.77% 2,335 2,188 2,087 1,910 1,958 Dec.16 Mar.17 Jun.17 Sept.17 Dec.17 1,3
Slide 12: Additional Tier 1
Additional Tier 1 Details Benefits Given current favorable market conditions and spread levels, on 23rd January, 2018 the Bank issued a €200mln perpetual Sustain a more diversified investment strategy through AT1 the non-renewal of UC Bonds run-offs and the progressive increase of European Govies Co
Slide 13: TFA
TFA Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 64% of total AuM TFA evolution (Dec.11 – Dec.17) bn 67.2 Cumulated performance 1.0 Net Sales +25.3 bn 60.2 6.0 Market Effect +6.9 bn 55.3 5.0 -0.2 0.5 49.3 5.5 1.7 43.6 4.0 1.3 39.8 2.5 2.5
Slide 14: TFA breakdown
TFA breakdown Successful shift towards high added value products Breakdown of total TFA Focus on AUM bn bn 67.2 68.1 +9.4 bn AUM since the end of 2014, o/w: Guided products as % of AuM 65.4 Guided Products & Services +12.7bn 60.2 AuM à la carte -3.3 bn 55.3 +9.4 bn 49.3 49% 49% 31.3 33.1 33.5 48% 26
Slide 15: Net sales breakdown
Net sales breakdown Net sales highlights the continuous improvement in the asset mix thanks to the increasing productivity of the network Breakdown of total Net Sales PFA Network – total Net Sales bn bn +18% +25% y/y y/y 6.0 5.4 5.5 4.9 5.0 4.3 4.0 3.6 2.7 1.8 2.6 3.9 3.9 1.8 +31% +23% o/w 0.3 Guide
Slide 16: Organic growth
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 4.0 5.5 5.0 6.0 Recruitment costs (to be amortized) 11% 11% 10% 14% 18% 19% 19% stock 24mln 26%
Slide 17: Agenda
Agenda Fineco Results Focus on product areas Key messages and Initiatives monitoring 17
Slide 18: 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 +11.1% +12.3% 276.8 249.1 +0.5% 64.9 72.4 72.8 4Q16 3Q17 4Q17 FY16 FY17 Brokerage 22% Investing 31% mln mln FY17 Core revenues (NI excluded) Management -4.4% fees +
Slide 19: Banking
Banking Sound performance driven by strong volume growth and customer acquisition thanks to high quality services and customer satisfaction Revenues Direct deposits mln Eop, mln Net Interest Trading income +11.1% Sight Deposits eop Term Deposits eop Fees and commissions Other +7.7% 276.8 +1.4% 249.1
Slide 20: Brokerage
Brokerage Outstanding brokerage results despite the lowest volatility since 2013 confirming the strong potential of this business Revenues Executed orders mln mln Net Interest Trading profit -7.0% -7.2% Fees and commissions Core revenues (NI excluded) +8.6% 27.8 25.8 -4.4% 6.9 5.9 6.4 130.1 126.8 11
Slide 21: Investing
Investing Successful strategy on cyborg advisory approach drove a better asset mix and increasing fees Revenues (Net Fees) Assets under Management mln eop, bn Upfront fees Management fees Others(1) +15.6% +5.6% +12.9% FY17 31.3 33.1 28.6 29.7 30.6 Management fees 183.7 +14.7% y/y 11.5 162.7 9.9 Dec.
Slide 22: Agenda
Agenda Fineco Results Focus on product areas Key messages and Initiatives monitoring 22
Slide 23: 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 24: FY17 key messages
FY17 key messages Healthy growth and sustainability at the heart of Fineco’s business model Clients’ acquisition leveraging on high quality services. Cost of funding close to zero Organic growth as main engine of growth. Selected recruits to improve the quality and related costs well under control H
Slide 25: Boost in high quality lending volume
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 (2) Eop, mln Current accounts/Overdraft Cards Reverse repos Personal loans Mortgages Other (1) -10 bps +9.5% 43 bps 30 bps 33
Slide 26: Initiatives monitoring - Banking Area
Initiatives monitoring - Banking Area Boost in high quality lending volume through mortgages, personal loans and lombard loans Mortgages Personal loans Lombard loans Eop, mln Eop, mln Eop, mln Other lombard Credit lombard +44.9% +44.1% +8.5% +116.3% 517 +37.2% 357 326 354 282 310 257 246 629 459 291
Slide 27: Initiatives monitoring - Investing Area
Initiatives monitoring - Investing Area Increase network’s productivity and Private Banking Guided Products Average PFAs’ portfolio Net Sales Mix Eop, bn Eop, mln AUM AuC+ Deposits CAGR CAGR +10.7% +35.5% +13.5% +31.6% 35% 66% 19.6 22.2 21.2 16.4 17.9 16.1 8.5 11.8 65% 34% 2014 2015 2016 2017 2014 2
Slide 28: Fineco Asset Management - FAM (1/3)
Fineco Asset Management - FAM (1/3) Process update The project is on track (go live by the end of 1H 2018): Authorization process with Central Bank of Ireland ongoing. Formal submission on Dec. 5th (expected closing in max. 6 months) Bilateral Tax ruling (Advance Price Agreement): pre-filing phase c
Slide 29: Fineco Asset Management - FAM (2/3)
Fineco Asset Management - FAM (2/3) FAM products and expected efficiencies Products Destination 1 NEW FAM FUNDS OF FUNDS: BUILDING BLOCKS insurance wrappers (Core (Institutional class) Unit, Advice Unit, etc.) Efficiency on margins BUILDING BLOCKS à la carte or in portfolio Savings coming from Core
Slide 30: Fineco Asset Management - FAM (3/3)
Fineco Asset Management - FAM (3/3) Potential Upside: relevant and recurring improvement in our profitability GROUP MARGINS UPSIDE (bps) VOLUMES Pre-tax After-tax Day 0 2H18 2019/2020 ~+13 ~7bn CORE SERIES Existing ~+20 Core Series ~4bn ~+40 ~20% transformation SINGLE FUNDS (Institutional class) of
Slide 31: 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
Slide 32: Further opportunities
Further opportunities # new clients: almost 1,500 (55% Italian UK residents, 45% non-Italian UK residents) Fineco UK Product offer: Trading, multicurrencies account, debit cards Among the most competitive players in the market on securities and CFDs Star Plus is an evolution of the current Stars pro
Slide 33: Annex
Annex 33 BA N K
Slide 34: P&L
P&L mln 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 FY16 FY17 Net interest income 62.2 61.2 62.5 63.4 62.9 64.3 67.4 70.0 249.4 264.6 Net commissions 58.2 59.7 59.3 65.8 64.7 65.0 69.7 70.7 242.9 270.1 Trading profit 19.6 27.3 10.8 11.3 13.7 12.3 11.1 11.1 69.1 48.2 Other expenses/income 0.1 0.7 -0.8 -2
Slide 35: P&L net of non recurring items
P&L net of non recurring items 2Q16 4Q16 3Q17 4Q17 FY16 FY17 FY17/ 4Q17/ 4Q17/ mln 1Q16 3Q16 1Q17 2Q17 Adj. Adj. Adj. Adj. Adj. (1) Adj. (1) FY16 4Q16 3Q17 Net interest income 62.2 61.2 62.5 63.4 62.9 64.3 67.4 70.0 249.4 264.6 6.1% 10.4% 4.0% Net commissions 58.2 59.7 59.3 65.8 64.7 65.0 69.7 70.7
Slide 36: Gross Operating Profit – Net profit: walk
Gross Operating Profit – Net profit: walk mln 353.4 +8.9% +11.9% -19.0 -5.2 0.4 y/y y/y -13.4 -102.1 214.1 218.5 o/w DGS: 4.4 o/w FITD: -10.6mln -11.5mln o/w PEX: 61.6 +3.9mln FY17 Provisions LLP Integration Profit on Income Net Profit One- FY17 Adj. 4Q17 GOP costs investments taxes off Adj. Net Pro
Slide 37: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 FY16 FY17 Margins Margins Margins Margins Margins Margins Margins Margins Margins Margins Sight Deposits 55.4 15,328 54.2 16,
Slide 38: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0004307861 Amortizing Euro 150.0 2-Jan-18 Euribor 1m 0.51% 2 IT0005010266 Euro 382.5 24-Jan-18 Euribor 1m 2.08% 3 IT0005010274 Euro 382.5 23-Apr-18 Euribor 1m 2.14% 4 IT0005010290 Euro 382.5 23-Jul-18 Euribor 1m 2
Slide 39: Details on Net Commissions
Details on Net Commissions mln 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 FY16 FY17 Brokerage 20.3 18.5 16.6 19.5 20.3 18.3 16.8 18.0 74.9 73.3 o/w Equity 16.5 15.2 12.9 16.0 16.7 15.2 13.5 15.2 60.6 60.6 Bond 1.1 1.1 0.9 1.2 1.0 0.9 0.7 0.9 4.4 3.6 Derivatives 3.2 2.6 2.4 2.4 2.4 2.0 1.9 1.9 10.6 8.2
Slide 40: Revenue breakdown by Product Area
Revenue breakdown by Product Area mln 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 FY16 FY17 Net interest income 59.7 58.9 59.9 61.3 62.0 63.1 65.5 67.3 239.8 257.8 Net commissions 0.3 0.8 1.6 2.0 0.6 1.9 5.7 4.2 4.7 12.4 Trading profit 0.9 1.1 0.9 1.5 1.9 1.7 1.2 1.3 4.4 6.2 Other 0.0 0.1 0.1 0.1 0.1 0.
Slide 41: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.16 Jun.16 Sep.16 Dec.16 Mar.17 Jun.17 Sep.17 Dec.17 AUM 25,565 25,911 27,522 28,608 29,742 30,614 31,339 33,080 o/w Funds and Sicav 22,332 22,395 23,645 24,258 24,984 25,461 25,901 26,999 o/w Insurance 3,219 3,505 3,865 4,339 4,749 5,145 5,431 6,075 o/w GPM 1
Slide 42: Balance Sheet
Balance Sheet mln Mar.16 Jun.16 Sep.16 Dec.16 Mar.17 Jun.17 Sep.17 Dec.17 Due from Banks 15,404 15,299 14,442 15,736 15,462 14,827 14,293 13,878 Customer Loans 827 880 972 1,017 1,166 1,504 1,716 2,129 Financial Assets 2,629 2,933 3,592 3,764 3,912 4,770 5,429 5,885 Tangible and Intangible Assets 11
Slide 43: Main Financial Ratios
Main Financial Ratios Mar.16 Jun.16 Sep.16 Dec.16 Mar.17 Jun.17 Sep.17 Dec.17 PFA TFA/ PFA (mln) (1) 17.8 17.9 18.8 19.6 20.2 20.7 21.4 22.2 Guided Products / TFA (2) 22% 24% 26% 27% 28% 29% 29% 32% Cost / income Ratio (3) 43.0% 43.0% 42.2% 41.6% 42.8% 42.9% 40.5% 39.8% CET 1 Ratio 21.3% 22.7% 23.1%