Finecobank Spa · MIL:FBK
Finecobank Spa — Finecobank Banca Fine — Q1 2022 Earnings Presentation
60 slides from Finecobank Spa's earnings presentation, May 10, 2022
Slide 1: 1Q22 Results
1Q22 Results Alessandro Foti CEO and General Manager Milan, May 10th 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
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 3
Slide 4: 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 5: Executive Summary
Executive Summary Successful growth story: becoming more a Platform than a Bank, with the 3 product areas of our business model firing at once Delivering strong net profit in every market condition Strong capital position 1Q22 adj. Net Profit at 124 mln, +30.5% y/y(1), confirming the CET1 ratio
Slide 6: Delivering strong Net Profit in every market condition
Delivering strong Net Profit in every market condition Adj. Net Profit at 123.6mln, +30.5% y/y boosted by strong acceleration of Investing, confirming the effectiveness of our initiatives, and by robust Net Financial Income. Strong operating leverage confirmed Net Profit, mln Revenues, mln excluding
Slide 7: Revenues growth supported by all our initiatives
Revenues growth supported by all our initiatives Boosting Non Financial Income, thus becoming more a Platform than a Bank. More dynamic Treasury management sustaining Net Financial Income Net Financial Income, mln Non Financial Income, mln NII Profit from Treasury management 1M Euribor 3M Euribor (3
Slide 8: Our priority: accelerating on Investing
Our priority: accelerating on Investing 1Q22 revenues increasing y/y thanks to volume effect and strong acceleration in AUM net sales. Improving margins thanks to the higher control on the Investing value chain through FAM and higher risk appetite by clients. Quarterly comparison characterized by us
Slide 9: 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: 1Q22(1): +4.8% y/y 8.1% • FAM as it is progressively increasing the efficiency of
Slide 10: 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 Personal loans Mortgages 9 bps 4 bps 3 bps +33.5% Mar.21 Dec.21 Mar.22
Slide 11: Capital Ratios
Capital Ratios Best in class capital position and low risk balance sheet RWA, mln CET1 Ratio, % Credit Market Operational CET1 capital, mln +11.2% before 2019-2020 dividend payment +1.3% 26.51 18.80 19.31 4,208 4,618 4,678 2,952 3,315 3,382 Mar.21 Dec.21 Mar.22 1,195 62 1,256 47 1,256 40 1,116 868 9
Slide 12: TFA breakdown
TFA breakdown Successful shift towards high added value products thanks to strong productivity of the network Breakdown of total TFA, bn Focus on AUM, bn 107.9 106.8 +29.7bn AUM since the end of 2014, o/w: Guided Products & Services +32.5bn 91.7 AuM à la carte -2.8bn 81.4 55.5 51% 50% 53.7 67.2 69.3
Slide 13: Net sales breakdown
Net sales breakdown High quality net sales growth, on the wave of structural trends thanks to our diversified business model Breakdown of total Net Sales, bn PFA Network – total Net Sales, bn +14.7% +23.6% 10.7 9.9 9.3 8.0 5.8 4.3 7.3 6.0 6.2 5.1 7.2 5.5 5.4 5.5 4.3 5.0 4.9 2.3 3.3 4.3 4.0 3.6 2.3 3
Slide 14: 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 15: 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 60% (+2% y/y) and hold 88% of TFA (+3% y/y) +3.9% +10.8% +179 -3.3% 84.4bn 100 93.6bn 100 2,675 2,853 2,854 33.9 32.8 31.6 > €35mln +4.8% 30% 33% €25-35mln y/y 60% 17.8
Slide 16: Clients' profile and focus on Private Banking
Clients’ profile and focus on Private Banking Improving the quality of our client base Avg TFA per Private client(1) € bn, TFA Client segmentation AuM AuC Deposits 0.5-1mln 107.9 106.8 8.9% 91.7 1-5mln 1.0mln 8.5% 81.4 35.7% 5-10mln 69.3 45% 44% 42% 46.9% >10mln 41% 16% 37% 37% 35% 36% 39% 37% Avera
Slide 17: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 17
Slide 18: 2022 Guidance and outlook going forward
2022 Guidance and outlook going forward BANKING REVENUES: OPERATING COSTS: Net financial income (net interest income and Profit from Treasury management) For FY22: expected to grow around 5% y/y, not including ~7 million of additional For FY22: expected in a range between 300-310 mln with the
Slide 19: Delivering on our discontinuities
Delivering on our discontinuities Set of initiatives to improve our revenues mix, taking advantage from the acceleration of structural trends and our FinTech DNA INITIATIVES TO KEEP UNDER CONTROL OUR BALANCE SHEET 1 STRONG COMMERCIAL FOCUS ON AUM: targeting only AUM net sales and solutions with a
Slide 20: FAM: delivering on the strategic discontinuity
INVESTING 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 FAM RETAIL: FAM FUNDS UNDERLYING (1): Thanks to
Slide 21: Brokerage: higher floor as the structure of the market is changing
BROKERAGE 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 brokerage revenues: the floor has gone up in a clear way regardless of volatility Volatility (1) Avg volat
Slide 22: Brokerage: enlargement of client base and increased market share
BROKERAGE Brokerage: enlargement of client base and increased market share Client base growth mainly driven by “Active investors” starting to use brokerage platform and “sleeping” clients back on the market. New clients are coming from traditional banks BROKERAGE CLIENTS EVOLUTION Active investors P
Slide 23: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 23
Slide 24: Fineco UK gaining traction
Fineco UK gaining traction Strong acceleration in our quality customer acquisition translating in improving revenues dynamics An increasing and better quality client base… …translating in improving revenues metrics €, mln Targeting quality clients with the right offer Higher brokerage revenues… # cu
Slide 25: Fineco UK: Investing in the spotlight
Fineco UK: Investing in the spotlight ISA accounts offer, already ~2,000 subscriptions. Next step: improving our user experience The new phase: building up our Investing offer and improving user experience Step 1: Step 2: Widening our offer Improving user experience Already 21 Asset managers in ou
Slide 26: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 26
Slide 27: Long term sustainability at the heart of Fineco business model (1/3)
Long term sustainability at the heart of Fineco business model (1/3) 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 Our corporate purpose: to offer clients a quality and one-stop-solution with
Slide 28: Long term sustainability at the heart of Fineco business model (2/3)
Long term sustainability at the heart of Fineco business model (2/3) 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 Sustainable since inception GOVERNANCE STRATEGY & GOALS INITIATIVES & KPIs MA
Slide 29: Long term sustainability at the heart of Fineco business model (3/3)
Long term sustainability at the heart of Fineco business model (3/3) 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 2020 Today Fineco inclu
Slide 30: 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 31: 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 32: Safe Balance Sheet: simple, highly liquid
Safe Balance Sheet: simple, highly liquid Diversified investment portfolio 35.4 bn Financial Assets Customer deposits Investment strategy announced during FY17 results unchanged: UC bonds run- Customer loans Other liabilities offs, blend of government bonds diversified across countries, covered bo
Slide 33: Total assets: 99.9% not exposed to volatility in the Balance Sheet
Total assets: 99.9% not exposed to volatility in the Balance Sheet Out of 35.4bn, only 0.03bn of assets at fair value with very limited impacts on Equity reserve Total Assets, eop bn (2) Gov. Bonds at fair value UC Bonds Other (1) Other Bonds at amortized costs Due from banks Covered bonds and finan
Slide 34: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 34
Slide 35: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allow the bank to successfully face any market environment Banking, mln 48% +45.3% +65.6% 123.4 84.9 74.5 1Q21 4Q21 1Q22 Brokerage, mln 23% Investing, mln 29% -9.1% +28.4% 1Q22 Management +12.8% -10.5% fees +28.5% y/y 65.7 59.7 82.1 73.4 5
Slide 36: 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 +5.8% Fees and commissions Other +2.9% +45.3% 28.7 29.5 30.4 +65.6% 123.4 Mar.21 Dec.21 Mar.22 Cli
Slide 37: Brokerage
Brokerage Structurally higher revenues floor compared to pre-pandemic levels Revenues, mln Well-diversified brokerage offer Net Interest Fees and commissions Trading profit -9.1% among products… …and geographies Funds Other markets +12.8% Italy Forex / CFD 65.7 7% 9% 52.9 59.7 41% 38% 3.5 3.5 4.4 28
Slide 38: Investing
Investing Increasing revenues y/y thanks to a successful strategy based on our cyborg advisory approach. Very limited upfront fees, representing only ~2% of Investing fees Revenues, mln Asset under Management, eop bn Guided Products / AUM Upfront fees Other PFA costs Management fees Other commission
Slide 39: Annex
Annex 39
Slide 40: P&L pro-forma
P&L pro-forma P&L pro-forma(1) mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 Net financial income 75.1 72.8 69.2 62.9 280.0 107.5 o/w Net Interest Income 61.8 62.5 61.8 61.8 247.9 59.3 o/w Profit from treasury management 13.2 10.3 7.4 1.1 32.1 48.1 Net commissions 108.1 106.3 110.1 126.4 450.8 118.6 Trading pro
Slide 41: 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 mln 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 o/w Net interest income 61.8 62.5 61.8 61.8 247.9 59.3 o/w Profit from treasury 13.2
Slide 42: 1Q22 P&L FinecoBank and Fineco Asset Management
1Q22 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net financial income -0.1 107.5 107.5 Dividends 0.0 0.0 0.0 Net commissions 32.6 86.0 118.6 Trading profit 0.0 29.0 29.0 Other expenses/income -0.1 0.5 0.4 Total revenues 32.4 22
Slide 43: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 Margins Margins Margins Margins Margins Margins Financial Investments 44.6 24,416 43.2 23,977 41.3 23,824 39.8 23,564 168.8 23,945 37.1 23,834 Net Margin 0.74% 0.72% 0.69% 0.6
Slide 44: 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 in the forward rate curve as of beginning of January, February and May 2022 2022 2023 2024 as of as of as of a
Slide 45: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005057994 Euro 200.0 11-Apr-22 Euribor 1m 1.43% 2 IT0005114688 Euro 180.0 19-May-22 Euribor 1m 1.19% 3 IT0005120347 Euro 700.0 27-Jun-22 Euribor 1m 1.58% 4 IT0005144065 Euro 450.0 14-Nov-22 Euribor 3m 1.40% 5 IT0
Slide 46: Financial Investments
Financial Investments Further improvements for a diversified asset side Bond Portfolio, avg bn Bond portfolio run-offs, eop bn UC bonds Spain SSA (1) UC Bonds Govies & SSA Covered & Corporate (2) Italy Other Govies Covered & Corporate 4.2 +1.9% -0.7% 2.9 2.7 2.5 2.5 2.5 24.0 24.6 24.4 2.0 4.1 4.1 3.
Slide 47: Mortgages
Lending: high quality portfolio and cautious approach 2022 Guidance Eop, bn 26,663 mortgages granted since December 2016 Mortgages yearly new production: +46.1% Average customer rate: 142 bps. 1Q22 Yield(1) at 60 bps ~ 300-350 mln +3.1% Average Loan to Value on actual portfolio ~51%, average
Slide 48: Details on Net Commissions
Details on Net Commissions Net commissions by product area mln 4Q20 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 Banking 3.2 10.8 11.9 12.9 13.6 49.2 12.9 Brokerage 31.7 40.2 29.5 26.0 30.6 126.2 32.6 o/w Equity 26.5 36.1 24.6 22.5 26.2 109.5 28.1 Bond 1.9 0.8 2.3 0.4 1.2 4.6 0.6 Derivatives 2.7 2.9 2.2 2.3 2.8 10
Slide 49: Revenues breakdown by Product Area
Revenues breakdown by Product Area P&L by product area mln 1Q21 2Q21 3Q21 4Q21 FY21 1Q22 Net financial income 72.6 69.8 65.9 60.0 268.2 105.3 o/w Net interest income 59.3 59.5 58.4 58.9 236.1 57.2 o/w Profit from Treasury Management 13.2 10.3 7.4 1.1 32.1 48.1 Net commissions 10.8 11.9 12.9 13.6 49.
Slide 50: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.21 Jun.21 Sep.21 Dec.21 Mar.22 AUM 48,018 51,399 52,648 55,450 53,651 o/w Funds and Sicav 33,271 35,699 36,233 38,053 35,985 o/w Insurance 12,659 13,448 14,122 14,963 15,354 o/w GPM 238 282 294 330 326 o/w AuC + deposits under advisory 1,850 1,970 1,998 2,105
Slide 51: Balance Sheet
Balance Sheet mln Mar.21 Jun.21 Sep.21 Dec.21 Mar.22 Due from Banks(1) 1,902 2,253 2,429 1,844 2,132 Customer Loans 4,639 5,269 5,624 6,002 6,088 Financial Assets 25,398 24,648 24,446 24,581 25,389 Tangible and Intangible Assets 277 281 279 279 276 Derivatives 84 85 92 126 466 Tax credit acquired 9
Slide 52: 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, which are not yet at full speed, at the same time we can: 1) sustain our growth OUR PRIORITY 2) distribute a growing dividend per sh
Slide 53: Recap on our Industrial initiatives
Recap on our Industrial initiatives Banking: combining Treasury and Business to boost growth MORE DYNAMIC TREASURY MANAGEMENT: SMART REPRICING ON CURRENT ACCOUNTS IN 2020 AND NEW PRICING IN 2021 ON NEW CURRENT ACCOUNTS: given the acceleration of flight to quality yield enhancement strategies (unse
Slide 54: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at € 25.5bn, of which € 15.2bn 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 55: Brokerage: extracting value from the vertical integration
Brokerage: extracting value from the vertical integration After the successful integration of our asset management business through FAM, we are now applying the same strategy with the launch of Leveraged Certificates thanks to our strong operating leverage and to the consistently increasing volumes
Slide 56: Fineco UK vs competitors
Fineco UK vs competitors Products and services Platform features Usability, reliability and advanced tools Coming Soon 56
Slide 57: Fineco UK: Premium service without premium price
Fineco UK: Premium service without premium price Disruptive pricing 100% sustainable thanks to our strong operating leverage OTC: zero commission, no added spreads Platform fees: the most competitive Stock broking: flat fees (1) (1) (1) (1) Multicurrency: best spreads, no commissions Transaction fee
Slide 58: Preserving our best price/quality ratio
Preserving our best price/quality ratio Competitive landscape(1) € 92 avg € 146 avg € Online online costs branch costs Branch Widiba (Conto Start) 20 53 ING (Conto Arancio) 24 Webank 24 Fineco 27 HelloBank! (Hello! Money) 58 CreditAgricole (Easy) 59 119 Banca Sella (Conto Start) 62 161 B.Generali (B
Slide 59: Fixed Income
Fixed Income Senior Preferred instrument AT1 instruments €200 mln perpetual AT1 issued on January 23rd, 2018: On October 14th, 2021, Fineco successfully issued 500mln Senior Preferred in • Coupon fixed at 4.82% for the initial 5.5 years order to be immediately compliant with the Fully Loaded MRE
Slide 60: Main Financial Ratios
Main Financial Ratios Mar.21 Jun.21 Sep.21 Dec.21 Mar.22 PFA TFA/ PFA (mln) (1) 31.6 32.5 33.0 33.9 32.8 Guided Products / TFA (2) 36% 38% 38% 39% 38% Cost / income Ratio (3) 30.4% 31.3% 31.4% 32.2% 27.0% CET 1 Ratio 26.5% 18.6% 18.4% 18.8% 19.3% Adjusted RoE (4) 22.2% 23.3% 21.5% 22.0% 30.4% Levera
Finecobank Banca Fine — Q1 2022 Earnings Presentation on 6ix