Slide 1: 4Q20 Results
4Q20 Results Alessandro Foti, CEO and General Manager Milan, March 2021
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: Executive Summary
Executive Summary Outstanding net profit in challenging market scenario 2020 Net profit(1) at 325mln, +19% y/y, confirming the soundness and sustainability of a business model able to deliver consistent results in every market condition and to accelerate growth in the current situation 2020 Reve
Slide 5: Results
Results Adj. Net Profit at 325mln, +19% y/y boosted by diversified revenues growth. C/I ratio at 35%, down -3.2 p.p. y/y confirming our strong operating leverage Net Profit, mln Revenues, mln excluding non recurring items (1) excluding non recurring items (1) Adj. Cost/Income (2) Adj. RoE (2) +17.9%
Slide 6: Net interest income
Net interest income NII resilient thanks to a more dynamic treasury activity combined with high-quality lending. Impact from lower interest rate environment offset by the contribution from the initiative on smart repricing on current accounts. Sensitivity analysis +100bps / -100bps parallel shift: +
Slide 7: Non Interest Income
Non Interest Income Fees and commissions +24% y/y thanks to the positive contribution by all business areas and Trading Income +104% y/y thanks to structurally higher Brokerage Fees and Commissions, mln Trading Income, mln Brokerage Investing Banking Other mln excluding non recurring items (1) +24.3
Slide 8: Focus on Investing
Focus on Investing 2020 increasing y/y thanks to volume effect and strong AUM net sales. Margins stable, thanks to the operational efficiency given by Fineco Asset Management Investing Revenues, mln Average AuM on daily basis, bn Upfront fees PFA incentives Management Fee Margins, bps Management fee
Slide 9: Cost efficiency and operating leverage confirmed in our DNA
Cost efficiency and operating leverage confirmed in our DNA. Non HR costs flattish, excluding marketing expenses to catch the positive momentum for growth. 4Q20 characterized by usual seasonality Operating Costs, mln Staff expenses and FTE, mln FTE # The higher concentration of costs in 4Q20 is rela
Slide 10: Focus on 4Q20 bottom line
Focus on 4Q20 bottom line mln Provisions for risks and charges 108.7 112.2 2.1 6.3 -2.9 0.2 -2.3 78.2 GOP Systemic Release of Other R&C LLP Profit on PBT Net Profit 4Q20 Charges provisions Investments on repricing Systemic charges: Release of +2.1mln related to the contribution to DGS: final contr
Slide 11: High quality lending volume, offered exclusively to existing clients
High quality lending volume, 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) Eop, mln Current accounts/Overdraft (1) Cards 12 bps 11 bps Personal loans Mortgages 10 bps +22.8%
Slide 12: Mortgages
Lending: solid growth for all our lending products thanks to the quality of our portfolio and to our cautious approach 2021 Guidance Eop, mln +44.2% Mortgages 17,860 mortgages granted since December 2016 yearly new production: +0.3% ~ 700-800 mln Average customer rate: 153bps. FY20 Yield(1) at
Slide 13: Capital Ratios
Capital Ratios: Best in class capital position and low risk balance sheet RWA,1 mln CET1 Ratio, % Credit Market Operational CET1 capital, mln +437bps +18.5% +528bps +7.7% 3,541 3,812 24.19 23.28 28.56 3,217 2,074 2,406 2,573 Dec.19 Sep.20 Dec.20 40 31 45 restated 1,103 1,103 1,195 Dec.19 Sep.20 Dec.
Slide 14: 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 +21.5bn AUM since the end of 2014, o/w: 95.0 Guided Products & Services +24.9bn 91.7 AuM à la carte -3.4bn 81.4 +12.0% 69.3 50% 67.2 49% 47.1 45.4
Slide 15: Net sales breakdown
Net sales breakdown Solid high quality net sales growth on the wave of structural trends thanks to our diversified business model and with an improving mix Breakdown of total Net Sales, bn PFA Network – total Net Sales, bn +58.9% +55.9% 9.3 8.0 5.8 4.3 5.1 6.2 5.4 5.5 4.3 6.0 4.9 5.5 5.0 4.3 2.3 3.3
Slide 16: Organic growth
Organic growth Net sales organically generated confirmed as key in our strategy of growth Net Sales, bn – Organic / Recruit, % Total recruits Organic Total recruits Organic PFAs recruited over the PFAs recruited over the last 12 months (avg) last 24 months (avg) Recruitment costs (to be amortized) 4
Slide 17: Continuously increase of quality and productivity of the network
Continuously increase of quality and productivity of the network Total Assets per PFA TFA concentration per PFA Eop, mln PFAs with TFA >20mln are 58% (+7% y/y) +9.9% and hold 84% of TFA (+4% y/y) +6.6% +12.7% 30.6 +65 27.8 28.7 2,541 2,601 2,606 70.7bn 100 79.6bn 100 > €35mln +9.4% 25% 29% 17.2 15.7
Slide 18: Clients' profile and focus on Private Banking
Clients’ profile and focus on Private Banking Total Financial Assets per client Avg TFA per Private client (1) Total TFA: 91.7bn AuM AuC Deposits o/w Private Banking(1): 38.6bn 8.2% 0.9mln 10.5% 0.5-1mln >500k 10.4% 8.3% 42.1% 36.5% 1-5mln 17% 100-500k 5-10mln 50-100k 47.0% 37.0% >10mln 57% <50k 27%
Slide 19: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 19
Slide 20: Current environment is creating conditions to enlarge growth opportunities
Current environment is creating the conditions to further enlarge our growth opportunities Current situation is accelerating the structural trends reshaping our society… DISRUPTION IN DEMAND FOR ADVICE DIGITALIZATION TRADITIONAL BANKS Increasing participation in Traditional banks not ready financial
Slide 21: 2021 Guidance
2021 Guidance Given current outlook(1), our assumptions for 2021 are: Net interest income: confirmed resilient and low risk. We are containing the effect of the worsening interest rates environment thanks to the smooth run-off of our bond portfolio, and lending book, benefit from ECB’s tiering and
Slide 22: Our main priority: focus on quality growth
Our main priority: focus on quality growth, more selective on clients’ liquidity New initiatives to take advantage from the acceleration of flight-to-quality 1 STRONG COMMERCIAL FOCUS ON AUM: targeting only AUM net sales and solutions with a strong RISK MANAGEMENT. FAM already best-positioned thanks
Slide 23: Banking: actively managing liquidity thanks to our FinTech DNA
BANKING Banking: actively managing liquidity thanks to our FinTech DNA Further combining Treasury and Business to boost our growth FEATURES INDUSTRIAL ACTIONS MORE DYNAMIC TREASURY MANAGEMENT: High quality balance sheet yield enhancement strategies (unsecured lending, SAFE, ROBUST, LOW RISK AND
Slide 24: Investing going forward
INVESTING Investing going forward Investing revenues expected to keep on growing mainly driven by volumes effect and resilient margins, sustained by further boost in FAM operational efficiency We expect increasing revenues with resilient margins, despite clients remaining cautious and conservative,
Slide 25: Investing: FAM growth potential
INVESTING Investing: FAM growth potential Key to sustain AUM margins thanks to its strong operating leverage FAM growth potential and new opportunities FAM 2021 priorities Strong room to increase FAM’s penetration on Fineco’s funds stock: FAM strongly positioned in terms of RISK MANAGEMENT thank
Slide 26: Brokerage proved itself as a perfect counter-cyclical business
Brokerage proved itself as a perfect counter-cyclical business BROKERAGE 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 mln € 30 202
Slide 27: Brokerage: extracting value from the vertical integration
BROKERAGE 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 increasin
Slide 28: Brokerage: enlargement of client base and increased market share
Brokerage: enlargement of client base and increased market share BROKERAGE 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 New brokerage clients Brokerage clients evolut
Slide 29: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 29
Slide 30: Fineco UK: our quality one-stop-solution proves to work
Fineco UK: our quality one-stop-solution proves to work More effective in our customer acquisition, focusing on the quality of our UK clients Total current accounts keep strong pace of growth Improved revenues mix: Operating breakeven(2) within 1Q21 10.1k 10.9k STICKINESS RATE on active clients in 2
Slide 31: Fineco UK: next steps
Fineco UK: next steps Getting closer to launch the Investing offer Further enlargement of our fund offer ISA are now live in “Family&Friends” with >200 early access requests in a two weeks time of coming soon campaign New section for funds in our APP 2020 1Q21 2021 ISA Account APP: new section
Slide 32: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 32
Slide 33: Long term sustainability at the heart of Fineco's business model (1/3)
Long term sustainability at the heart of Fineco’s 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 multichannel one-stop
Slide 34: Long term sustainability at the heart of Fineco's business model (2/3)
Long term sustainability at the heart of Fineco’s 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 overall society We have an ESG-friendly model by being sustainable since inception MARKET FR
Slide 35: Long term sustainability at the heart of Fineco's business model (3/3)
Long term sustainability at the heart of Fineco’s business model (3/3) We are a forward-looking organization playing for the long-run and able to generate a positive impact for all our stakeholders and the overall society ESG RATING “A” confirmed in 2020: ESG Risk Rating at 18.7 Upgraded to “EE+” Fi
Slide 36: Fineco as a profitable Fintech Bank
Fineco as a profitable Fintech Bank Leveraging on a deep-rooted internal know-how to expand platform scalability and operating gearing Senior management experienced in IT No external consultants nor system integrator A PROPRIETARY, 18% FTEs in IT Department INTEGRATED BACK-END 24% FTEs in Back-Offic
Slide 37: 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 CAGR (2014-2020) 92 + 11% 81 69 67 1,370 + 6% 60 1,358 1,278 55 TFA (bn) 49 1,200 342 + 14% 1,118 284 1,048 254 Clients (thd, #) 964 226 776 208 658 + 9% 197 628 Net profit
Slide 38: Safe Balance Sheet: simple, highly liquid
Safe Balance Sheet: simple, highly liquid 31.8 bn Diversified investment portfolio Investment strategy announced during FY17 results unchanged: UC bonds run-offs, blend of government bonds diversified across countries, covered bonds, supranational and agencies 99.6% not exposed to volatility: HT
Slide 39: Total assets: 99.6% not exposed to volatility
Total assets: 99.6% not exposed to volatility in the Balance Sheet Out of 31.8bn, only 0.14bn of Assets valuated 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
Slide 40: Agenda
Agenda Fineco Results Next steps Fineco UK Key messages Focus on product areas 40
Slide 41: Revenues by Product Area
Revenues by Product Area Well diversified stream of revenues allow the bank to successfully face any market environment Banking, mln 37% -0.8% -13.6% 291.7 289.5 -15.2% 72.5 73.9 62.7 4Q19 3Q20 4Q20 FY19 FY20 Brokerage, mln 30% Investing, mln 32% FY20 Management +72.9% fees +43.7% +11.3% +4.6% y/y +
Slide 42: 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 Deposits mln Eop, bn Net Interest Trading income Fees and commissions Other +9.5% -13.6% 4Q20: -0.8% +6.0% -3.8% q/q excludin
Slide 43: Brokerage
Brokerage Revamped Brokerage thanks to skyrocketing volatility combined with the review of the offer. Growing market share in Italy and continuous enlargement of product offer Revenues Well-diversified brokerage offer mln Net Interest Trading profit Fees and commissions among products… …and geograph
Slide 44: Investing
Investing Increasing revenues y/y thanks to a successful strategy based on our cyborg advisory approach. Very limited upfront fees, representing only ~3% of investing fees Revenues Assets under Management mln eop, bn Guided Products / AUM Upfront fees PFA incentives(1) Management fees Other income +
Slide 45: Annex
Annex 45
Slide 46: P&L
P&L mln 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 4Q20 FY20 Net interest income 70.4 71.4 69.8 69.7 281.3 68.2 70.1 68.6 63.9 270.7 Net commissions 77.4 81.3 84.3 82.3 325.2 105.0 104.8 97.9 96.7 404.3 Trading profit 9.8 8.0 11.6 15.3 44.8 26.4 30.1 20.2 19.1 95.8 Other expenses/income 0.2 0.3 0.1 2.9
Slide 47: P&L net of non recurring items
P&L net of non recurring items 1Q19 2Q19 3Q19 4Q19 FY19 1Q20 2Q20 3Q20 4Q20 FY20 mln (1) (1) Adj. (1) Adj. Adj. Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Adj. (1) Net interest income 70.4 71.4 69.8 69.7 281.3 68.2 70.1 68.6 63.9 270.7 Net commissions 77.4 81.3 84.3 82.3 325.2 105.0 104.8
Slide 48: 2020 P&L FinecoBank and Fineco Asset Management
2020 P&L FinecoBank and Fineco Asset Management Fineco Asset FinecoBank FinecoBank mln Management Individual Consolidated Net interest income -0.2 271.0 270.7 Dividends 0.0 52.1 0.0 Net commissions 67.7 336.5 404.3 Trading profit 0.1 95.7 95.8 Other expenses/income 1.6 2.1 3.6 Total revenues 69.1 75
Slide 49: Details on Net Interest Income
Details on Net Interest Income Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & Volumes & mln 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 FY19 FY20 Margins Margins Margins Margins Margins Margins Margins Margins Margins Margins Financial Investments 57.1 19,748 5
Slide 50: UniCredit bonds underwritten
UniCredit bonds underwritten ISIN Currency Amount (€ m) Maturity Indexation Spread 1 IT0005010332 Euro 382.5 6-Jan-21 Euribor 1m 2.54% 2 IT0005010316 Euro 382.5 6-Apr-21 Euribor 1m 2.56% 3 IT0005010340 Euro 382.5 5-Jul-21 Euribor 1m 2.58% 4 IT0005010225 Euro 382.5 18-Oct-21 Euribor 1m 2.60% 5 IT0005
Slide 51: Financial Investments
Financial Investments Further improvements for a diversified asset side. Bond Portfolio, avg bn Bond portfolio run-offs, eop bn (1) UC bonds Spain SSA UC Bonds Govies & SSA Covered & Corporate (2) Italy Other Govies Covered & Corporate 3.2 3.1 2.8 +5.8% 2.5 2.5 +1.1% +13.8% 1.9 2.0 2.2 1.7 1.6 1.5 1
Slide 52: Details on Net Commissions
Details on Net Commissions mln 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 FY19 FY20 Banking 4.5 5.6 5.9 5.3 8.8 10.3 9.7 2.2 21.3 31.0 Brokerage 18.5 18.0 20.0 20.8 35.6 37.6 26.5 30.7 77.3 130.4 o/w Equity 15.6 14.7 15.9 17.0 30.0 31.0 21.7 26.5 63.2 109.2 Bond 0.9 0.9 1.4 0.7 1.0 3.8 2.2 1.9 3.9 9.0
Slide 53: Revenues breakdown by Product Area
Revenues breakdown by Product Area mln 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 FY19 FY20 Net interest income 67.6 68.8 67.0 66.9 65.8 67.7 64.5 60.1 270.3 258.1 Net commissions 4.5 5.6 5.9 5.3 8.8 10.3 9.7 2.2 21.3 31.0 Trading profit -0.1 -0.1 -0.2 0.2 -0.1 -0.1 0.0 0.1 -0.2 -0.1 Other 0.1 0.1 0.1
Slide 54: Breakdown Total Financial Assets
Breakdown Total Financial Assets mln Mar.19 Jun.19 Sep.19 Dec.19 Mar.20 Jun.20 Sep.20 Dec.20 AUM 35,988 36,819 38,325 40,505 35,516 40,083 41,744 45,381 o/w Funds and Sicav 26,361 26,426 27,477 28,786 24,122 27,657 28,929 31,578 o/w Insurance 8,401 9,002 9,369 10,115 9,961 10,676 11,020 11,819 o/w G
Slide 55: Balance Sheet
Balance Sheet mln Mar.19 Jun.19 Sep.19 Dec.19 Mar.20 Jun.20 Sep.20 Dec.20 (1) Due from Banks 3,807 1,941 2,033 1,320 1,801 1,633 1,761 2,541 Customer Loans 3,029 3,409 3,568 3,680 3,741 4,204 4,320 4,528 Financial Assets 19,012 19,920 21,532 22,313 23,414 22,961 22,988 23,957 Tangible and Intangible
Slide 56: Main Financial Ratios
Main Financial Ratios Mar.19 Jun.19 Sep.19 Dec.19 Mar.20 Jun.20 Sep.20 Dec.20 PFA TFA/ PFA (mln) (1) 25.0 25.6 26.6 27.8 25.7 27.9 28.7 30.6 Guided Products / TFA (2) 33% 33% 34% 35% 34% 35% 36% 36% Cost / income Ratio (3) 41.3% 39.4% 37.9% 37.9% 33.0% 32.5% 33.1% 34.7% restated CET 1 Ratio (4) 21.0
Slide 57: Fineco - a fully independent public company starting from May 2019
Fineco - a fully independent public company starting from May 2019 Strategy and Business model Fineco exit from the UniCredit Group has no implications on its strategy and business model: Fineco enjoyed limited synergies with UniCredit and, as a fully independent company, continues to focus on maxim
Slide 58: Fineco Asset Management in a nutshell
Fineco Asset Management in a nutshell AUM at €16.5bn, of which €10.8bn retail classes(1) FAM EVOLUTION (30 strategies) FAM Target: decumulation product to progressively invest in multi-thematic/profile funds FAM Megatrend: multi-thematic fund investing in secular trends FUNDS OF New building b
Slide 59: Fineco UK vs Competitors
Fineco UK vs Competitors Products and services Platform features Usability, reliability and advanced tools Coming Soon 59
Slide 60: 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 Multicurrency: best spreads, no commissions (1) (1) (1) (1) (1) Plus Custod
Slide 61: Preserving our best price/quality ratio
Preserving our best price/quality ratio An update on the main outcomes from our Smart Repricing Competitive landscape (1) € Online € 88 avg € 133 avg Branch online costs branch costs IWBank (IWConto) 4 89 Widiba (Conto Flat) 20 49 ING (Conto Arancio) 24 Webank 24 Fineco 25 HelloBank! (Hello! Money)
Slide 62: Additional Tier 1
Additional Tier 1 First public placement successfully issued with strong demand (9x the offer) €200 mln AT1 issued in January 2018 €300 mln AT1 issued in July 2019 On July 11th, 2019 Fineco issued a €300mln perpetual AT1 in order to maintain the Leverage Ratio above 3.5% after the exit On Januar