Banca Generali S.p.a. · MIL:BGN

Banca Generali — H1 2019 Earnings Presentation

55 slides from Banca Generali's earnings presentation, 2019

  1. Slide 1: Investor Presentation 1H 2019 Results

    INVESTOR PRESENTATION 1H 2019 RESULTS

  2. Slide 2: Agenda

    AGENDA Strategy and business update Our Mission: Being the Commercial trend No.1 Private Bank 1H 2019 results by Value of Service, Appendix: Financials Innovation and Sustainability Appendix: Sector Trend

  3. Slide 3: Banca Generali: A Growth Story

    BANCA GENERALI: A GROWTH STORY ONE OF THE FASTEST GROWING COMPANIES IN THE ASSET GATHERING BUSINESS PHASE 1 PHASE 2 New management team Multi-year strategic network repositioning New service model: implementation of and listing on the Italian WM approach and new digital mindset Stock Exchange 62.9 5

  4. Slide 4: Banca Generali: A Leading Player in Italian Private Banking

    BANCA GENERALI: A GROWTH STORY A LEADING PLAYER IN THE ITALIAN PRIVATE BANKING SPACE Ranking in the private banking in Italy PB ranking by banking 2015 2018 group1 Intesa San Paolo 153.2 Assets Unicredit 142.1 40 €bn 3° su 10 Banca Generali UBI Banca 40.0 37.8 BNL BNP Paribas 35.4 UBS 30.0 8° su 10

  5. Slide 5: Quality of the Network

    QUALITY OF THE NETWORK NETWORK ORGANIZATION DRIVEN BY PORTFOLIO SIZE AND SKILLS Clusters (% of Assets) Numbers of FAs Assets per capita Advisors organized in three Wealth main networks by portfolio 34% 3071 76.7 m/€2 size and needs, with bespoke Managers Financial Advisors supports to each cluster P

  6. Slide 6: Best FAs Quality in the Industry

    BEST FAS QUALITY IN THE INDUSTRY CONSTANT GROWTH IN FAS PORTFOLIO Average FAs portfolio (Asset per Financial Advisor) m/€ Best Player ex BG Assoreti (ex BG, ISPB) Banca Generali 31.1 29.0 28.8 25.8 24.3 22.2 1 24.3 25.0 19.7 23.2 22.0 16.6 18.0 1 15.9 16.1 15.9 20.7 15.6 15.8 18.3 18.5 18.7 20.2 14.

  7. Slide 7: Clients Overview

    CLIENTS OVERVIEW STEADY GROWTH IN THE PRIVATE SEGMENT N. of Clients by cluster (‘000) Total Assets by cluster of Clients No. of Clients with assets (Total Assets >10 k/€) €/bn (Total Assets >10 k/€) >€500K/€ 62.7 57.3 1.6 m/€ 1.6 m/€ 222.9 228.3 25.008 10% 11% 65% 22.621 63% 165.3 6% 32% 32% 28.8 1.

  8. Slide 8: Extensive Product Offer

    EXTENSIVE PRODUCT OFFER WELL-DIVERSIFIED PRODUCT MIX Asset mix 1H19 Total Assets 62.9 bn/€  Fully open architecture (Over 5,400 Traditional Life Insurance different retail funds and 50 asset managers offering Clients a wide array of choice) 1 27% In-House Funds 13%  Retail funds distribution accou

  9. Slide 9: Wealth Management Approach

    WEALTH MANAGEMENT APPROACH EXPANSION OF ADVISORY PERIMETER TO FINANCIAL AND NON FINANCIAL WEALTH Advanced Advisory Model (financial + non financial) Focus on Real estate  Advisory: Real Financial • Strategic analysis of real estate assets estate wealth • Valuations  Agency • Disposals and purchase

  10. Slide 10: BG Ambitions: 2019-21 Business Plan

    BG AMBITIONS 2019-21 BUSINESS PLAN I To consolidate our leading position in empowering the best Financial Advisors Empowering FAs (FAs) in the Italian market To be the Clients’ first choice for quality of II professionals, protection and value of service as well as state-of-the-art digital Clients’

  11. Slide 11: Empowering FAs

    EMPOWERING FAS KEY PROJECTS 1 I Ongoing innovation in AM solutions (AUM)  LUX IM  Multi Discretionary Mandate  Illiquid Solutions 2 Implementing Advisory Fee Approach (AUA) Empowering FAs  Robot for Advisory solutions  WM Approach  Vehicle for illiquid assets To consolidate our leading positio

  12. Slide 12: Assets Under Management (AUM)

    ASSETS UNDER MANAGEMENT (AUM) INNOVATION AND PROFITABILITY Overview of LUX-based1 assets bn/€ Recent managed product launches (AuM2) BGFML BGFML IN-HOUSE FUNDS • I wave (March 2018) & II wave (October 2018) Total assets by by investment • III wave due September 2019 fund classes strategies • Recurri

  13. Slide 13: Assets Under Advisory (AUA)

    ASSETS UNDER ADVISORY (AUA) GROWTH AHEAD OF PLAN Assets under Advisory (AuA) breakdown by cluster of New services and tools for each advisory modules service bn/€ PURE FINANCIAL: traditional financial advisory approach on 5.5-6.0 fund/securities supported by new tools: • robo-4-advisory platform thr

  14. Slide 14: Assets Under Custody (AUC)

    ASSETS UNDER CUSTODY (AUC) NEW TOOLS TO SPEED UP GROWTH Gross Inflows from existing FAs of stocks and bonds New product offer and tools for assets under custody from other banks1 bn/€ 0.5 BG CERTIFICATES hub + 55% • €205m new issues in 1H19, of which €139m public offering and 0.3 €61m private certif

  15. Slide 15: Clients' First Choice

    CLIENTS’ FIRST CHOICE KEY PROJECTS II 1 Value of service  Comprehensive wealth management approach (financial + non-financial assets)  Innovative approach to ESG Clients’ first choice 2 Digital Onboarding  Digital touchpoints To be the Clients’ first choice for  Strengthen open banking approach

  16. Slide 16: Innovation in AM Solutions

    INNOVATION IN AM SOLUTIONS SUSTAINABILITY AS AN ALTERNATIVE APPROACH TO CLIENTS New proposition for Clients  UN sustainable development goals (SDGs)  New commercial approach starting from Clients’ need ESG Fund Selection  Wide and growing offer: 161 ESG funds with 25 AMs  Wide range of investmen

  17. Slide 17: Digital Strategy I

    DIGITAL STRATEGY I ENHANCE DIRECT CONNECTION WITH CLIENTS MOBILE BANKING APP BG SAXO - TRADING PLATFORM  Premium Digital touchpoints & digital collaboration - enhanced client experience  100% digital onboarding process - account opened in 20 minutes  New Mobile Banking App - innovative MOBILE PAY

  18. Slide 18: Digital Strategy II

    DIGITAL STRATEGY II INNOVATION TO SUPPORT THE FINANCIAL ADVISOR Wealth Advisory Portal Robo 4 Advisor BG Store Digital Collaboration Deep-dive Analysis: Support FA Daily Activity: Simplicity and Completeness: Paperless Approach: BGPA takes an integrated Technology solution to Complement The advisor

  19. Slide 19: International Aspiration

    INTERNATIONAL ASPIRATION KEY PROJECTS III 1 Clients managed from Italy  Agreement with custodian banks  Advice from current network International aspiration 2 Clients managed from Switzerland  Acquisition of Valeur Fiduciaria To create a new long term growth  Selective recruiting engine by selec

  20. Slide 20: International Aspiration: Switzerland, New Growth Engine

    INTERNATIONAL ASPIRATION SWITZERLAND, NEW GROWTH ENGINE Total Assets from Swiss operations bn/€  Acquisition of Valeur Fiduciaria, a Swiss Boutique (private banking and investment services) 5.0-7.0  Deal closing expected by 3Q 2019 pending Authorisation from Bankit and ISVASS 3.1- 4.4  High inter

  21. Slide 21: 2019-21 Business Plan Guidelines

    2019-21 BUSINESS PLAN GUIDELINES CLEAR FINANCIAL TARGETS 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  Dividend: 70%-80% pay-out ratio III DPS (1.25€) se

  22. Slide 22: Agenda

    AGENDA Strategy and business update Our Mission: Being the Commercial trend No.1 Private Bank 1H 2019 results by Value of Service, Appendix: Financials Innovation and Sustainability Appendix: Sector Trend

  23. Slide 23: Total Assets

    TOTAL ASSETS HIGHER VOLUMES AND PRODUCT MIX Total Assets bn/€ Managed Solutions bn/€ 62.9 28.8 27.3 29.6 58.1 57.5 5.9 5.5 6.3 8.0 7.7 8.5 7.1 6.4 6.5 29.6 28.8 27.3 7.8 7.7 8.3 Managed solutions 1H18 2018 1H19 Traditional life policies Insurance wrappers Financial wrappers 16.2 Third-party funds In

  24. Slide 24: Net Inflows

    NET INFLOWS ONGOING STRONG VOLUMES, PRODUCT MIX TRENDING BETTER Total Net inflows bn/€ LUX IM (in-house retail offer, net Net inflows in AuC solutions inflows) bn/€ bn/€ 3.1 2.8 1.0 0.7 0.7 0.4 1.4 0.2 0.8 0.3 0.2 0.7 0.3 0.7 0.3 0.2 0.8 0.9 0.2 0.1 1H18 1H19 1H18 1H19 1H18 1H19 Managed solutions Tr

  25. Slide 25: Recruiting

    RECRUITING SOFTER RECRUITING OFFSET BY HIGHER ORGANIC GROWTH Recruitment trend (# of Recruits) Total net inflows by acquisition channel m/€ 161 153 126 105 27% 102 94 53% 53% 122 61% 81 92 65 75 73 New recruits 50 18 43 Existing network 75% 19 58% 58% 59 FA Out 44% 39 47 31 27 34 32 24 -5% -2% 2013

  26. Slide 26: FA Network

    FA NETWORK SUPERIOR FA QUALITY FURTHER ENHANCED FA Network breakdown by cluster of portfolio FA Network (# of FAs) (as of 30.06.2019) 1,936 1,985 2,022 1,841 2,022 62.9 1,645 1,715 1,475 15% 44% 26 53% 2013 2014 2015 2016 2017 2018 1H19 47% FA Portfolio vs. sector (Average Assets/FA) 32% 28.8 29.0 3

  27. Slide 27: Agenda

    AGENDA Strategy and business update Our Mission: Being the Commercial trend No.1 Private Bank 1H 2019 results by Value of Service, Appendix: Financials Innovation and Sustainability Appendix: Sector Trend

  28. Slide 28: Executive Summary

    EXECUTIVE SUMMARY Record assets expansion  Total assets reached new highs at €62.9bn (+€4.8bn YoY, +€5.4bn YTD) with Lux-based assets TOTAL ASSETS (BG FML) hitting €15.6bn (+11% YTD). On a pro-forma basis1, total assets reached €65bn. Assets under advisory (AuA) almost doubled to €4.0bn (+75% YoY,

  29. Slide 29: Results at a Glance

    RESULTS AT A GLANCE KEY TAKEAWAYS Comments (€ mln) 1H 18 1H 19 % Chg 1H 19 % Chg Solid increase in Total Banking Income (22%) LfL IFRS 15 / IFRS 16  Net Financial Income supported by higher NII (+20% reported, Net Interest Income 28.1 35.3 25.8% 33.6 19.7% +26% on a like-for-like basis) almost offs

  30. Slide 30: Net Profit Build-up

    NET PROFIT BUILD-UP BEST OF BOTH WORLDS Net Profit build-up m/€ 10.1 (7.2) 3.8 (5.6) 5.5 (1.1) 0.7 132.8 (6.5) 33.7 (6.1) (6.3) 126.3 Lower Higher Asset Acceleration of IFRS 15 and Enhanced write-down tax on expansion, IFRS 16 92.6 return on key projects and growing banking book delivery on and some

  31. Slide 31: Net Financial Income

    NET FINANCIAL INCOME UPWARDS TREND CONFIRMED Net financial income m/€ Interest-bearing Assets bn/€ 48.6 10.9 39.6 9.5 2 1.3 20.6 6.0 1.1 28.5 1.8 Other assets 1.8 Trading income 19.9 19.7 20.2 Loans to Banks IFRS 16 15.2 4.0 2.0 Loans to Clients 35.3 5.4 6.9 NII pre IFRS16 28.1 33.6 6.0 Financial as

  32. Slide 32: Gross Fees (1/3): Management Fees

    GROSS FEES (1/3): MANAGEMENT FEES MANAGEMENT FEES STEADILY RECOVERING Management Fees m/€ Management fees steadily 317.9 313.8 recovering in values as margin trend reflects a more defensive product mix on clients’ higher risk aversion 158.1 159.8 155.0 158.8 Results are in line management fee margin

  33. Slide 33: Gross Fees (2/3): Other Fees

    GROSS FEES (2/3): OTHER FEES GROWING CONTRIBUTION, GROWING DIVERSIFICATION Banking and Entry Fees m/€ Entry fees growing fast 39.9 (+11% YoY, +77% QoQ) on 36.1 higher placement of structured products and 12.8 certificates 11.5 Entry fees 22.1 16.6 19.5 17.8 Banking fees 8.2 6.5 4.6 Banking fees also

  34. Slide 34: Gross Fees (3/3): Performance Fees

    GROSS FEES (3/3): PERFORMANCE FEES POSITIVE FINANCIAL PERFORMANCE Performance Fees m/€ 70.8 Performance fee in the semester at 16bps of managed 35.2 35.6 assets (31 bps on an 22.6 annualised basis) 14.9 7.6 New performance fees 1H 18 1H 19 1Q18 2Q18 1Q 19 2Q 19 calculation mechanism applying to 56%

  35. Slide 35: Fee Expenses

    FEE EXPENSES TOTAL PAY-OUT MOVING FURTHER DOWN Total Fee Expenses m/€ Pay-out to the network % 51.0% 48.8% Pay-out to the network 201.9 36.0 36.4 down 2.3 ppts on lower 191.4 cost of growth thanks to 21.3 0.6 19.0 15.0 higher organic 11.8 53.2 41.6 contribution and positive Fee expenses to 1H18 1H19

  36. Slide 36: Operating Costs (1/2)

    OPERATING COSTS (1/2) GROWTH, STRATEGIC PUSH AND ACCELERATION OF KEY PROJECTS Total operating costs m/€ Breakdown of core operating costs m/€ Operating costs inflated by €1.9m one-off items (office 86.6 93.8 moving, M&As, IFRS16). 100.9 13.8 Net of one-offs, costs would 93.6 4.2 7.1 3.8 3.6 have bee

  37. Slide 37: Operating Costs (2/2)

    OPERATING COSTS (2/2) HIGH EFFICIENCY LEVELS CONFIRMED Operating costs/Total assets Cost/Income ratio 53.4% 0.51% 53.9% 52.6% 52.3% 51.1% 46.5% 0.45% 0.42% 39.9% 42.3% 40.3% 41.0% 40.1% 0.38% 38.1% 41.7% 0.34% 0.34% 0.32% 32.0% 2013 2014 2015 2016 2017 2018 1H19 2013 2014 2015 2016 2017 2018 1H19 1

  38. Slide 38: Capital Position

    CAPITAL POSITION SOLID CAPITAL REAFFIRMED ALSO ON CONSERVATIVE BASIS CET1 ratio TCR ratio 17.5% (1.8%) Solid capital ratios confirmed on 16.5% 19.0% (1.9%) 17.9% more conservative assumptions, i.e. 15.7% 17.1% 100% of interim profit set aside for dividend policy (€1.25 per share1 floor) Capital rati

  39. Slide 39: Agenda

    AGENDA Strategy and business update Our Mission: Being the Commercial trend No.1 Private Bank 1H 2019 results by Value of Service, Appendix: Financials Innovation and Sustainability Appendix: Sector Trend

  40. Slide 40: New Accounting Principles IFRS15 & IFRS 16

    NEW ACCOUNTING PRINCIPLES IFRS15 & IFRS 16 DETAILS ON RECONCILIATION * Comments Delta vs. Delta vs. (€ mln) 1Q 18 1Q 19 1Q 19 1Q 19 IFRS 15 & LfL IFRS 16 First Time Adoption of IFRS 16 IFRS15 Accounting Standard (IASB) LfL IFRS15 IFRS16 Net Interest Income 13.2 16.7 16.7 15.9 -0.85 Net income (loss)

  41. Slide 41: New Revenue Streams: Advanced Advisory Contract

    NEW REVENUE STREAMS ASSETS UNDER ADVISORY: ADVANCED ADVISORY CONTRACT BG - % AUA Benchmark Guidance: Advisory Fees2 on Total Assets % AUA on Total Assets1 m/€ 18% 12% 20-25 7-8% 6.5% 4.0% 8.9 2.5% 7.3 2.0 2017 2018 1H19 2021E 1H18 1H19 2018 2021E Italian Private Italian Assoreti best market average

  42. Slide 42: New Revenue Streams: Certificates and Private Placements

    NEW REVENUE STREAMS ASSETS UNDER CUSTODY: CERTIFICATES AND PRIVATE PLACEMENTS BG - % Certificates & private Benchmark - % Certificates Guidance: Entry fees on certificates placements stock on AUC stock on AUC & private placements m/€ ~5% 10.0 ~3.0% 7.0 5.9 3.5% 2.5% 3.8 2.2% 0.5% 2017 2018 1H19 2021

  43. Slide 43: Other Gross Fees: Brokerage

    OTHER GROSS FEES ASSETS UNDER CUSTODY: BROKERAGE BG - Turnover Benchmark - Turnover Guidance: Brokerage fees Ratio (cash only)1 Ratio2 (cash + derivatives)1 m/€ 5.8x 20-26 1.4x 0.9x 0.9x 11.6 1.4x 6.5 7.3 2017 2018 2021E 1H18 1H19 2018 2021E Assoreti top 3 Assoreti best player ex best player (2018)

  44. Slide 44: Net Inflows Projections

    NET INFLOWS PROJECTIONS EXPECTED CURRENT PERIMETER NET INFLOWS 3.0 3.0 2.9 2.6 2.2 2.2 – 2.4 Organic net 4.2 – 4.8 3.7 - 4.3 BG inflows Saxo bn/€ 2014 2015 2016 2017 2018 2019-21 avg Recruitment (24 months) Out 3.9 Net inflows 2.7 2.1 bn/€ 1.9 2.1 1.5 – 1.9 from FA 4.2 2019-21 avg 2019-21 avg 3.0 2.

  45. Slide 45: Asset Projections

    ASSET PROJECTIONS GROWTH TARGETS 2019 - 2021 3.1 - 4.4 1-3 76.0 – 80.0 13.9 - 15.7 12.6 - 14.4 57.5 Total Assets Net Inflows bn/€ Valeur1 Nextam1 2018 Current perimeter Swiss initiative Market 2021E 2019E – 2021E 45 NOTE: Not including potential M&A; 1) Consolidation of acquired Assets

  46. Slide 46: Agenda

    AGENDA Strategy and business update Our Mission: Being the Commercial trend No.1 Private Bank 1H 2019 results by Value of Service, Appendix: Financials Innovation and Sustainability Appendix: Sector Trend

  47. Slide 47: Snapshot on Italian Household Wealth

    SNAPSHOT ON ITALIAN HOUSEHOLD WEALTH A WEALTHY COUNTRY Italian Household Wealth Italian Total Net Household Wealth (€ trillion, 2008-18E) 12.0  Total Italian household wealth at €9.8 trillion1 9.4 9.5 9.5 9.5 9.7 9.7 9.7 9.7 9.6 9.8 with real-estate assets representing 59% of 10.0 total and financi

  48. Slide 48: Snapshot on Italian Household Wealth: Financial Assets

    SNAPSHOT ON ITALIAN HOUSEHOLD WEALTH HOUSEHOLD FINANCIAL ASSETS Italian Household Wealth Financial Assets: Managed vs. Non-managed (2008-2017, €tr) 4.0 4.4 2008-17 Managed asset 3.8 CAGR (Mutual funds + 0.9 1.1 1.5 +1.7%  Steady growth of managed assets (mutual Life Reserves) +5.8% funds and insura

  49. Slide 49: Snapshot on Italian Total Wealth

    SNAPSHOT ON ITALIAN TOTAL WEALTH FINANCIAL WEALTH PROJECTIONS Italian Household Wealth Italian Household: disposable income & Household Italian Household Financial Assets (€bn, 2016-21E) consumption (YoY change,%) and saving rate on disposable income (%) 4,218 4,374 4,210 4,528 8.3 8.2 7.6 7.3 1.1%

  50. Slide 50: FA Sector: Size and Market Share

    FA SECTOR SIZE AND MARKET SHARE MORE THAN DOUBLED FA SECTOR (ASSORETI) Total Assets (€bn) 584 519 514  12.2% of Italian Household financial wealth 471 434 106 managed by the FA sector 101 99 93 89  Market share doubled in the last 10 years 418 478 378 415 203 220 236 231 257 279 315 345  Business

  51. Slide 51: Banca Generali Market Share

    BANCA GENERALI MARKET SHARE GROWING SHARE IN THE SPACE Banca Generali’s share Banca Generali’s share of Italian household financial wealth of the Italian FA sector (Assoreti) 1.37% 1.27% 1.13% 13.9% 13.3% 0.90% 1.00% 12.6% 0.69% 0.73% 12.1% 0.65% 11.6% 10.4% 10.1% 10.2% 2011 2012 2013 2014 2015 2016

  52. Slide 52: FA Sector: Transition Towards Greater Quality

    FA SECTOR TRANSITION TOWARDS GREATER QUALITY ACCOMPLISHED FA SECTOR (ASSORETI) 23.1 23.0 20.6 AVERAGE INDUSTRY PORTFOLIO 19.2 3.7 3.6  In the aftermath of the Global 3.4 Financial Crisis, the Italian 3.4 3x Financial Advisory industry 15.8 17.2 19.4 19.4 entered a restructuring phase 14.5 with the

  53. Slide 53: Italian Private Banking

    ITALIAN PRIVATE BANKING SIZE AND CLUSTER OF CLIENTS Private household financial wealth - AIPB (clients with assets >€500k) (€bn) Private Banking assets on total Household financial assets1 1,080 1,079 25% 985 1,017 1,029 955 882 904 859 859 75% Clients with assets > €500K Clients with assets < €500K

  54. Slide 54: 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

  55. Slide 55: Upcoming Events / Investor Relations

    UPCOMING EVENTS OCTOBER Investor Relations Su Mo Tu We Th Fr Sa 1 2 3 4 5 Giuliana Pagliari Investor Relations Manager 6 7 8 9 10 11 12 Phone +39 02 408 26548 9M 2019 results Mobile +39 331 65 30 620 13 14 15 16 17 18 19 & Investor Conference Call 20 21 22 23 24 25 26 E-mail: giuliana.pagliari@banca

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