Banca Generali S.p.a. · MIL:BGN
Banca Generali — FY 2020 Earnings Presentation
54 slides from Banca Generali's earnings presentation, Apr 20, 2021
Slide 1: FY 2020 Results and Business Review
FY 2020 RESULTS AND BUSINESS REVIEW 20 APRIL 2021
Slide 2: Agenda
AGENDA Preliminary remarks Our Vision: To Be the 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 2
Slide 3: 2020 Results: Executive Summary
2020 RESULTS: EXECUTIVE SUMMARY STRONG DELIVERY IN THE ‘NEW NORMAL’ - FINANCIAL RESULTS Strong commercial result exploiting growing demand for experienced advisory Total assets at €74.5bn (+8%) and LUX Assets at €18.7bn (+10%) Advanced advisory (AuA) at €6bn (+27%) confirming a solid pace of gro
Slide 4: Results at a Glance
RESULTS AT A GLANCE KEY TAKEAWAYS Comments (€ mil) 12M 19 12M 20 % Chg Sound operating performance (+7%) Net Interest Income 74.0 89.6 21.1% Net income (loss) from trading activities and Dividends 14.2 19.9 40.7% Net Financial Income (+24%) was driven by an increase Net Financial Income 88.2 109.6
Slide 5: Net Profit Breakdown
NET PROFIT BREAKDOWN STRONG OPERATING TREND MORE THAN OFFSET BY HIGHER TAXATION AND NON-OPERATING ONE-OFFS Net profit breakdown m/€ Build-up of recurring net profit m/€ Operating items Non-operating items 272.1 274.9 +29.5 (19.3) (4.4) (7.2) 17.4 158.8 116.1 148.6 (12.1) 123.5 16.5 148.6 158.8 2019
Slide 6: Agenda
AGENDA Preliminary remarks Our Vision: To Be the No.1 Private Bank 2020 Financial Results unique by Value of Service, Innovation Net Inflows, Assets and recruiting and Sustainability Business update and closing remarks Appendix 6
Slide 7: Net Financial Income (1/3)
NET FINANCIAL INCOME (1/3) SOLID NII SUPPORTED BY HIGHER VOLUMES, STICKY INVESTMENT YIELD, GROWING LENDING Net financial income m/€ 109.6 Trading income NII 88.2 19.9 NII increased driven by 84.1 higher interest-bearing 14.2 assets (€12.2bn, +12%) in 24.1 both financial assets (€9.0bn, +15%) and len
Slide 8: Net Financial Income (2/3)
NET FINANCIAL INCOME (2/3) HIGH QUALITY BANKING PORTFOLIO Total Assets and Interest-bearing Assets bn/€ Bond Classification IFRS Classification 13.2 15% HTCS 11.8 30% 1.0 HTC; 24% 69% 9.7 1.2 61% 1% 2.2 1.9 2 1.5 Other assets 1.8 It Govt bonds EU Govt bond HTC HTS & others HTCS Corporate/Financial L
Slide 9: Net Financial Income (3/3)
NET FINANCIAL INCOME (3/3) HIGHLY SECURED LOAN PORTFOLIO WITH NEGLIGIBLE COST OF RISK Total Assets and Interest-bearing Assets bn/€ 2020 Credit Book bn/€ Lending Quality % 1.1 Non performing 13.2 0.5 loans (NPL) 11.8 includes: bad loans, 1.0 1.3 unlikely to pay and 9.7 1.2 0.4 past due loans 2.2 9
Slide 10: Gross Fees (1/3)
GROSS FEES (1/3) GROWING RECURRING COMPONENT DRIVEN BY BOTH MANAGED ASSETS AND OTHER FEES Gross recurring fees m/€ Variable fees m/€ 782.4 733.6 Management fees Other (banking and entry) fees 193.2 207.1 147.4 141.8 196.8 195.5 186.5 51.1 53.4 27.2 41.4 19.8 2019 2020 4Q 19 1Q 20 2Q 20 3Q 20 4Q 20 2
Slide 11: Management Fees (2/3)
MANAGEMENT FEES (2/3) SIZEABLE SPIKE IN MANAGEMENT FEE MARGIN DRIVEN BY PRODUCT MIX Management Fees m/€ Quarterly trend m/€ 675.4 646.3 178.6 634.2 169.4 170.5 Steady recovery in 165.8 Management 160.6 management fees Fees since March lows m/€ driven by increased 4Q19 1Q20 2Q20 3Q20 4Q20 push on man
Slide 12: Banking and Entry Fees (3/3)
BANKING AND ENTRY FEES (3/3) NEW REVENUE STREAMS STEADILY TRENDING HIGHER Banking and Entry Fees m/€ Breakdown by product mix Entry fees Banking fees 106.9 106.9 87.3 87.3 32.4 68.8 68.8 +30% 60.1 +68% 28.8 46.3 27.6 20.9 29.7 41.2 41.0 46.8 74.6 27.4 25.9 28.5 58.5 22.8 47.9 10.8 11.3 7.3 9.2 4.7 2
Slide 13: Focus on New Revenue Streams
FOCUS ON NEW REVENUE STREAMS NEW REVENUE STREAMS ALREADY EXCEEDED 2021 TARGETS New revenue streams m/€ >=30 24.9 20-25 16.9 8.9 2018 2019 2020 2021 Target 2021 Target Total expected (New) 2.3 4.7 6.0 contribution of new Assets under advisory (AuA) bn/€ revenue streams revised upwards 13.9 14.4 >=1
Slide 14: Fee Expenses
FEE EXPENSES PAY-OUT RATIO REMAINS STABLE AND BELOW TARGETS Total Fee Expenses m/€ Pay-out to the network % 416.1 391.2 47.7% 47.8% 47.4% The decrease in the 376.3 pay-out to the network 45.5 40.5 is linked primarily to 40.9 35.7 36.0 36.0 89.1 lower one-offs 83.2 84.5 0.5 12.0 11.3 11.4 2018 2019 2
Slide 15: Operating Costs (1/2)
OPERATING COSTS (1/2) SOLID COST CONTROL DESPITE SOME SPIKE IN 4Q DUE TO BUSINESS ACCELERATION Total operating costs1 m/€ Breakdown of core operating costs1 m/€ Core operating costs increased by 3% on a 227.2 +3% 212.9 reported basis. 20.6 191.3 12.0 185.7 189.1 1.0 14.3 31.0 13.8 15.3 29.3 Spike in
Slide 16: Operating Costs (2/2)
OPERATING COSTS (2/2) COST RATIOS REMAIN AT BEST PRACTICE LEVEL Operating costs/Total assets1 Cost/Income ratio1 0.51% 53.4% 53.9% 52.6% 52.3% 51.1% 0.45% 44.3% 0.40% 42.3% 41.0% 38.9% 40.3% 38.8% 37.8% 0.37% 36.2% 40.0% 0.33% 0.33% 31.5% 0.31% 0.30% 30.9% 2013 2014 2015 2016 2017 2018 2019 2020 201
Slide 17: 2019-20 Dividend Proposal to AGM
2019-20 DIVIDEND PROPOSAL TO AGM COMMITMENT TO RESUMING DIVIDEND PLAN AS SOON AS ALLOWED BY REGULATORS In 2020 Banca Generali decided to responsibly comply with the recommendations issued by the Banking Authorities and refrained 2nd dividend from paying any dividend. 70.5% Dividend €3.3 DPS €0.60 DP
Slide 18: Capital Position
CAPITAL POSITION STRONG CAPITAL POSITION INCLUDING DIVIDEND DISTRIBUTION CET1 ratio TCR ratio Reported capital ratios are 2.3% 18.4% 2.5% 16.1% calculated net of the 2019-2020 14.6% 17.1% cumulative dividend proposal of €3.3 dividend per share (€386 million) to be presented at next AGM 2019 2020 201
Slide 19: Agenda
AGENDA Preliminary remarks Our Vision: To Be the 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 19
Slide 20: Total Assets at New Highs with Improved Mix
TOTAL ASSETS AT NEW HIGHS WITH IMPROVED MIX MANAGED SOLUTIONS STEADY GROWTH DRIVEN BY FA QUALITY AND DIGITAL ENABLERS Total Assets bn/€ Managed Solutions bn/€ 74.5 37.4 69.0 34.0 Managed solutions at 8.8 50.2% of total assets: 57.5 27.3 7.2 In-House funds driven by 37.4 5.5 Third-party funds 9.7 1
Slide 21: Strong Net Inflows
STRONG NET INFLOWS GROWING DEMAND FOR ADVICE, DIVERSIFIED OFFER, BRAND REPUTATION Total Net Inflows bn/€ Quarterly trend bn/€ Better product mix: managed solutions 5.9 (funds/SICAVs and wrappers) at 54% of 2020 5.1 total net inflows vs. 36% in 5.0 2019 1.3 1.8 1.5 3.2 1.7 1.9 0.3 0.9 1.3 1.4 Net inf
Slide 22: Net Inflows Driven by Existing FAs
NET INFLOWS DRIVEN BY EXISTING FAS LOWER RECRUITING DUE TO THE PANDEMIC OFFSET BY HIGHER ORGANIC GROWTH Total net inflows by acquisition Recruitment trend channel, bn€ (# of Recruits) 5.0 5.1 5.9 105 Organic growth at 77% of total inflows 86 Short-term slowdown with contribution from 29% 27% linked
Slide 23: Best FAs Network in Terms of Quality
BEST FAS NETWORK IN TERMS OF QUALITY FAS NETWORK LEADING PEERS IN TERMS OF PORTFOLIO SIZE Size of FA portfolio (BG vs. Financial Advisor Network, # FAs FA Network, by # and portfolio (ptf) size2 sector3) m/€ Assets/FA 2,087 73.3 2,087 2,040 1,985 +47% 35.1 1,936 18% +38% 1,841 1,715 1,645 48% 25.5 1
Slide 24: 1Q 2021 Commercial Results
1Q 2021 COMMERCIAL RESULTS SOLID TREND Total net inflows m/€ Managed solutions, m/€ Assets under Advisory bn/€ 1,661 1,282 6.5 1,494 6.0 253 722 4.9 1282 1354 253 180 605 159 380 -113 212 -226 -118 Jan. 20 Dec. 20 1Q 21 1Q 20 1Q 21 1Q 20 1Q 21 Managed products Funds/Sicavs Traditional insurance poli
Slide 25: Agenda
AGENDA Preliminary remarks Our Vision: To Be the 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 25
Slide 26: 2021 Business Priorities
2021 BUSINESS PRIORITIES KEY BUSINESS DRIVERS NEW REVENUE STREAMS NEW BUSINESS LEVERS The core business of the bank to Three new revenue engines, New business levers to reinforce nurture the sustainable growth of launched during the Investor Day in bank proposition in medium-long management fees. 20
Slide 27: Overview on LUX Assets
OVERVIEW ON LUX ASSETS A KEY CONTENTS 1 Asset Growth – Steady growth over last 5 years 2 Retail distribution - Boost to growth and margins 3 Fee structure – Price optimization and performance fee mechanism 4 Product offer - Among first movers in key investment themes 5 Focus on ESG offer – Fully int
Slide 28: BGFML – Asset Growth
BGFML – ASSET GROWTH 1 GROWTH AND REBALANCING Total Assets by SICAV bn/€ Total Net Inflows by SICAV bn/€ Launch of new in-house Launch of new in-house Sicav (previously BG Sicav) Sicav (previously BG Sicav) 18.7 16.9 0.3 15.0 0.3 14.1 5.0 BG SICAV 3.2 3.3 0.2 2.2 12.4 0.2 6.0 (27%) 0.1 1.1 11.8 (35%
Slide 29: BGFML – Retail Distribution
BGFML – RETAIL DISTRIBUTION 2 RETAIL SICAV TAKING THE LEAD OF NET INFLOWS Assets by retail fund classes, bn/€ Total Net Inflows by retail fund classes bn/€ 2019 – focus on Retail 2019 – focus on Retail 8.8 1.2 1.4 0.2 0.2 6.5 7.2 6.1 6.2 0.2 3.0 0.8 2.1 1.9 0.4 5.5 3.4 -1.1 -0.5 -0.4 -0.6 -0.9 6.1 5
Slide 30: BGFML – Fee Structure
3 BGFML – FEE STRUCTURE REPRICING ACTIONS Impact of new performance 2016-2020 Variable fees m/€ fees mechanism m/€ Gross management fees m/€ New mechanism for performance fee Organic review of the fee structure calculation presented to CSSF for (both admin. and management fees approval 1 based on pr
Slide 31: LUX IM – Product Offer
LUX IM – PRODUCT OFFER 4 A SUCCESSFUL AND TIMELY INVESTMENT PROPOSITION Asset breakdown by asset class bn/€ No. of funds - Projected review 2019 2020 2020 2021E LUX IM Assets LUX IM Assets €10.6bn €13.3bn 32 2% Equity thematic 20 21 29% Equity DM 42% 32% 15 16 38% 13 Multi assets Bond 9 6 5 Liquidit
Slide 32: LUX IM – Focus on ESG Offer
LUX IM – FOCUS ON ESG OFFER 5 ESG - THE WINNING DRIVER OF LUX IM Asset in ESG products, bn/€ Net inflows in ESG products, bn/€ ESG offer – ESG offer – Launched on Feb. Launched on Feb. 2019 Fast growing - ESG strategies 2019 4.9 representing 18% of LUX IM total assets (vs. 11% in 2019) When focusing
Slide 33: LUX IM – Focus on Savings Plans (PAC)
LUX IM – FOCUS ON SAVINGS PLANS (PAC) 6 INCREASED FOCUS ON AFFLUENT CLIENTS Expected net inflows in LUX IM via Savings Plans bn/€ 12,508 10,590 8,236 522 15000 500 6,924 452 4,951 12000 400 361 PAC promising start - New 317 savings plans linked to LUX 9000 300 2,356 240 IM (PAC) already >12,000 200
Slide 34: Closing Remarks
CLOSING REMARKS ON TRACK TO FINANCIAL TARGETS Objective KPIs 2021 Targets 2020 Results Score Cumulated Net Inflows >14.5 bn/€ 5.9 bn/€ Asset growth Total Assets 76-80 bn/€ 74.5 bn/€ Core Net Banking Income1 ≥63 bps 67 bps Sustainable profitability Core Operating Costs2: 3%- 5% CAGR 3% Dividend pay-o
Slide 35: Agenda
AGENDA Preliminary remarks Our Vision: To Be the 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 Business priorities Key numbers Corporate sustainability 35
Slide 36: 2021 Business Priorities
2021 BUSINESS PRIORITIES Details in the next slides KEY BUSINESS DRIVERS NEW REVENUE STREAMS NEW BUSINESS LEVERS BG FUND A D ADVANCED ADVISORY G LOMBARD LENDING MANAGEMENT LUX B ESG E BROKERAGE H PRIVATE MARKETS STRUCTURED INTERNATIONAL C INSURANCE F PRODUCTS & PRIMARY I EXPANSION MARKET 36
Slide 37: Key Business Drivers - ESG (1/2)
B KEY BUSINESS DRIVERS - ESG (1/2) DISTINCTIVE APPROACH TO ESG DELIVERING ABOVE EXPECTATION Net inflows in ESG ESG products on managed Key pillar of a successful approach products, bn/€ assets UN SDGs Fund selection and ranking 13.0% 2.0 1.5 1.2 7.2% 1.0 ESG dedicated platform ESG reporting 0.8 0.5
Slide 38: Key Business Drivers - ESG (2/2)
B KEY BUSINESS DRIVERS - ESG (2/2) ESG PRODUCT RANGE Universe Portfolio management Five portfolio management lines within the discretionary portfolio management service with a specific view to sustainability topics, Wide and growing offer: ~ 230 ESG funds with 35 AMs some of which supported by susta
Slide 39: Key Business Drivers - Insurance
C KEY BUSINESS DRIVERS - INSURANCE INSURANCE OFFER TURNING TOWARDS WRAPPER SOLUTIONS Traditional vs. insurance wrappers, bn/€ Insurance products Client Target 0.4 0.3 Key insurance tool for the entire 0.3 Client base, providing different 0.2 • Hybrid solution combining on average 30-40% level of per
Slide 40: New Revenue Streams
D-E-F NEW REVENUE STREAMS GROWING BUSINESS DIVERSIFICATION IN FULL SWINGS Advanced advisory (AuA) by mix, bn/€ Structured products BG SAXO - 2020 Turnover ratio1 9.39 6.0 0.7 4.7 0.6 2.3 Best private bank for 0.94 1.9 structured products Banca Generali BG SAXO Trading Mix 2.9 2.2 Securities Currenci
Slide 41: New Business Levers - Lombard Lending
G NEW BUSINESS LEVERS - LOMBARD LENDING ACCELERATION LEVERAGING ON SECURED LOANS Trend in drawn loans, bn/€ 2020 new drawn loans, m/€ Lombard loans (retail), bn/€ 2.2 264 2.4 175 • New Personal loans (Lombard) 1.8 highly collateralized, supported by pledge 1.3 1.9 0.9 • New Corporate loans issued in
Slide 42: New Business Levers - Private Markets
H NEW BUSINESS LEVERS - PRIVATE MARKETS BG4REAL STARTED INVESTMENTS BG’s way to Private markets Products Client target Clients’ AUM thresholds for access to the product: • FIA – for Clients with AUM> €500K • ELTIF - for Clients with AUM > €250K Net inflows YTD: €70m Minimum investment size requested
Slide 43: New Business Levers - International Expansion
I NEW BUSINESS LEVERS - INTERNATIONAL EXPANSION TEMPORARY SLOWDOWN DUE TO THE PANDEMIC, YET GROWTH OPPORTUNITIES ARE INTACT Three drivers Assets, bn/€ Increased need to obtain a Swiss 1.3 banking licence in order to capitalise 1.2 on the opportunities offered by the context BGIA is the key tool to b
Slide 44: Digital Strategy
DIGITAL STRATEGY ENHANCED DIGITAL TOOLS FOR CLIENTS & FAS Wealth advisory portal (BGPA) with a comprehensive view on financial and non-financial wealth (real-estate, corporate, succession planning, family protection, art advisory) IT solution dedicated to AuC investments with the aim of supporti
Slide 45: Agenda
AGENDA Preliminary remarks Our Vision: To Be the 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 Business priorities Key numbers Corporate sustainability 45
Slide 46: Enhancing Revenue and Growth Sustainability
ENHANCING REVENUE AND GROWTH SUSTAINABILITY RECURRING NET PROFIT MORE THAN DOUBLED IN THE LAST FIVE YEARS Net Profit: Recurring vs. Variable m/€ 272.1 274.9 Enhanced focus on revenue and growth 203.6 204.1 sustainability bearing 123.5 116.1 180.1 fruits, as 161.0 155.9 recurring net profit 47 more t
Slide 47: Best FA Quality in the Industry
BEST FA QUALITY IN THE INDUSTRY CONSTANT GROWTH IN FA PORTFOLIO Average FA portfolio (Asset per Financial Advisor) m/€ 1 40.0.0 Best Player ex BG Assoreti Banca Generali 35.1 35.0.0 32.8 29.0 30.6 30.0.0 28.8 25.8 27.8 24.3 24.3 25.0.0 23.2 23.9 22.2 19.7 22.0 20.0.0 18.0 20.7 21.5 15.9 16.1 15.9 16
Slide 48: Client Base
CLIENT BASE GROWING PRIVATE POSITIONING WITH NEW CLIENTS AND HIGHER SHARE OF WALLET Clients’ breakdown by No. of Clients with assets >500 k/€1, # 2020 Net Inflows by cluster of Clients, bn/€ cluster1, #, bn/€ 5.9 244.1 73.1 29K 13% (-10%) 11% 26K 23K 34% 67% 50% 45% 48 55% 42% 25% 47% 8% No. of clie
Slide 49: Agenda
AGENDA Preliminary remarks Our Vision: To Be the 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 Business priorities Key numbers Corporate sustainability 49
Slide 50: Sustainability Is Fully Embedded in Our Strategy
SUSTAINABILITY IS FULLY EMBEDDED IN OUR STRATEGY KEY DATA TRENDS ESG Growth Gender Diversity Employee Training Financials1 ESG on Managed Assets, % Diversity: Women Training hours, thousands Global Value Added, €m Managers & Executives, % 13.0% 35% 48 49 34% 34% 33% 39 7.2% 986 1056 749 730 2.2% 2.7
Slide 51: ESG Rating and Relevant Initiatives
ESG RATING AND RELEVANT INITIATIVES SUSTAINABILITY CREDENTIALS 28.8 Medium Risk Rating agencies Corporate Governance: 1 Industry Rating: BBB Environment: 2 Social: 1 Company Reporting Rate: 95% Focus of detecting areas for Full Investment Grade improvement within ESG strategy Sustainability Rating
Slide 52: Shareholder Participation & Voting
SHAREHOLDER PARTICIPATION & VOTING 2020 ANNUAL GENERAL MEETING 2020 AGM Shareholder Participation Rates 2020 AGM Vote Results 79.2% 57.4% Average 2019 Financial Statements 99.8% 0.2% 72.2% 71.4% 59.7% 55.9% 53.6% 52.1% 49.7% 2019 Remuneration Report 92.4% 7.6% 44.9% 35.6% 2020 Remuneration Policy 90
Slide 53: 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 54: 2021 Upcoming Events and Investor Relations Contacts
2021 UPCOMING EVENTS APRIL Annual General Meeting Investor Relations Su Mo Tu We Th Fr Sa 1 2 3 1st Call Contacts 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Giuliana Pagliari Investor Relations Manager 18 19 20 21 22 23 24 Phone +39 02 408 26548 25 26 27 28 29 30 Mobile +39 331 65 30 620 E-mail: giuliana.p