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FinecoBank
Investor Presentation • Feb 11, 2020
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Investor Presentation
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FY19 Results
Alessandro Foti, CEO and General Manager
Milan, February 11th 2019
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, projections and provisional data concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the control of FinecoBank S.p.A. (the "Company"). There are a variety of factors that may cause actual results and performance to be materially different from the explicit or implicit contents of any forward-looking statements and thus, such forward-looking statements are not a reliable indicator of future performance. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. The information and opinions contained in this Presentation are provided as at the date hereof and are subject to change without notice. Neither this Presentation nor any part of it nor the fact of its distribution may form the basis of, or be relied on or in connection with, any contract or investment decision.
- The information, statements and opinions contained in this Presentation are for information purposes only and do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to purchase or subscribe for securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. None of the securities referred to herein have been, or will be, registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state or other jurisdiction of the United States or in Australia, Canada or Japan or any other jurisdiction where such an offer or solicitation would be unlawful (the "Other Countries"), and there will be no public offer of any such securities in the United States. This Presentation does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or the Other Countries.
- Pursuant the consolidated law on financial intermediation of 24 February 1998 (article 154-bis, paragraph 2) Lorena Pelliciari, in her capacity as manager responsible for the preparation of the Company's financial reports declares that the accounting information contained in this Presentation reflects FinecoBank's documented results, financial accounts and accounting records.
- Neither the Company nor any of its representatives, directors or employees accept any liability whatsoever in connection with this Presentation or any of its contents or in relation to any loss arising from its use or from any reliance placed upon it.
Agenda
Fineco Results
Next steps and developing opportunities
Key messages
Focus on product areas
Executive Summary
Double digit net profit growth
- 2019 Net profit at 288.4mln, +20% y/y. This result benefits from the fiscal benefit coming from the Patent box (estimated at around 22mln). Adj. Net profit(1) at 268.8mln, +10% y/y confirming the sustainability of a business model able to deliver consistent results in every market condition
- Growing revenues(1) at 658mln, +5% y/y supported by all business areas: Investing, +10% y/y, with management fees up +12% y/y, and Banking area (+2% y/y) thanks to high quality volume growth in deposits and lending. Revamped Brokerage (+15% 2H19/1H19) thanks to an in-depth review of our product offer after the change in the market structure due to lower volatility and increased regulation
- Operating Costs well under control at -250mln, +2% y/y. C/I ratio at 37.9%, -0.9 p.p. y/y, confirming operating leverage as a key strength of the Bank
Strong and safe capital position
CET1 ratio at 18.12% and TCR at 33.67%, with a proposal of 32.0 €/cents dividend per share (+5.6% y/y)
Robust commercial activity
- 2019 Net sales at 5.8bn, TFA at 81.4bn with penetration of Guided products on Assets under Management at 71%
- Fineco Asset Management recorded its best quarter in terms of retail total net sales
Delivering on our industrial measures
- Banking: initiatives to further improving our client base and slowing down the growth of our Balance Sheet
- Investing: further push to move customers' liquidity in Asset under Management, leveraging on product innovation, FAM and the new platform
- Brokerage: revamped results after a completely redesigned product offer
Results
Adj. Net Profit at 268.8mln, +10.0% y/y, boosted by diversified revenues growth. C/I ratio at 37.9%, down ~0.9 p.p. y/y confirming our strong operating leverage
5 (1) FY19 non recurring items: Voluntary Scheme: -3.0mln gross, -2.0mln net (1Q19: -0.4mln gross, -0.3mln net; 2Q19: -4.3mln gross, -2.9mln net; 3Q19: +0.4mln gross, +0.3mln net; 4Q19: +1.4mln gross, +0.9mln net); Patent Box estimate: 21.6mln in 4Q19. FY18 non recurring items: Voluntary Scheme: -3.0mln gross, -2.0mln net in 4Q19; Staff expenses -1.6mln gross, -1.1mln net in 3Q19; Integration costs release: -0.1mln gross, -
0.1mln net. (2) Adj. Cost/Income and Adj. RoE calculated net of non recurring items
Net interest income (1/2)
Solid NII, +0.9% y/y thanks to valuable and sticky sight deposits coupled with high-quality lending portfolio. Increasing diversification in financial investments
(1) Financial investments include interest income coming from the reinvestments of deposits (both sight and term) in: Government bonds, UC bonds, Covered bonds, Supranational and Agencies and other financial investments (repos and immediate available liquidity)
(2) Other net interest income includes Security Lending, Leverage and other (mainly marketing costs). Other interest-earning assets include Security Lending and Leverage. See page 46 for details
(3) Lending: only interest income 6
(4) Gross margins: interest income related to financial investments, lending, leverage, security lending on interest-earning assets
Net interest income (2/2)
Further improvements for a diversified asset side.
Sensitivity analysis +100bps / -100bps parallel shift: +129mln NII / -119mln NII
(1) Sovereign Supranational & Agencies
(2) Other includes: 0.6bn France, 0.6bn Ireland, 0.4bn Austria, 0.4bn Belgium, 0.3bn Germany, 0.3bn USA, 0.1bn Portugal, 0.1bn Poland in avg FY19 (3) Calculated on nominal value as of Dec.31st, 2019
Commissions and Trading Income
Fees and commissions grew +8.2% y/y. Sustainable growth generating recurring revenues, with Management fees up +11.7% y/y. Revamped Brokerage
(1) Mainly PFAs annual bonus
8 (2) Adj. Trading Income excluding non recurring items: Voluntary Scheme: -3.0mln gross, -2.0mln net (1Q19: -0.4mln gross, -0.3mln net; 2Q19: -4.3mln gross, -2.9mln net; 3Q19: +0.4mln gross, +0.3mln net; 4Q19: +1.4mln gross, +0.9mln net)
Costs Cost efficiency and operating leverage confirmed in our DNA
(1) Non recurring items: severance (staff expenses) -1.6mln gross in 3Q18
9
(2) Following IFRS16, leasing costs previously accounted in other administrative expenses are now booked in write-down/backs and depreciation. For more details on IFRS16 please refer to slide 51
Staff expenses and FTE, mln Long Term Incentive Plans, mln
Patent Box Fineco is the first Bank finalizing the agreement
- We have finalized the agreement with the Italian Fiscal Authority on the Patent Box for years 2015/2019
- Fineco is the first Bank to sign the agreement, which relates to both intellectual properties (our platform internally created and developed) and trademark
- Fiscal benefit for the 5 years is estimated at around 22mln (recorded in our 2019 Financial Statement), of which around 5 million related to trademark. The estimated benefit is not going to be distributed.
- For 2019, the fiscal benefit related to intellectual properties was estimated in a range between € 3.5 and 4 mln.
- The Bank will apply in order to renew the fiscal benefit on intellectual properties for the next 5 years. The renewal of the trademark is excluded due to regulation.
- The Patent Box is a tax relief regime for companies generating income through the use of intangible assets. The fiscal benefit for 2015 is determined by excluding from the taxable income the 30% of the income attributable to the use of intangible assets; for 2016 the percentage is equal to 40% and for the remaining years it is equal to 50%.
Boost in high quality lending volume offered exclusively to the existing base of clients, leveraging on our internal Big Data analytics
Cost of Risk on commercial loans (2)
- Decreasing Cost of Risk thanks to the constant improvement in the quality of the credit which is mainly secured and low risk
- We confirm our strategy aims to build a safe lending portfolio, offering these products exclusively to our very well known base of clients, leveraging on a deep internal IT culture, powerful data warehouse system and Big Data analytics
- More details on the quality of our portfolio in the following slide, with a deep dive on the main products offered
(1) Current accounts/overdraft Include Lombard loans
(2) New methodology for calculating Cost of Risk to have a better representation of the ratio: commercial LLP of the last 12 months on average last 12 months commercial Loans instead of annualized LLP
Lending
Boost in high quality lending volume through mortgages, personal loans and lombard loans
| Eop, mln | 2020 Guidance | ||
|---|---|---|---|
| s e g a g t r o M |
+35.0% +12.5% 1.2 1.0 0.9 Dec.18 Sep.19 Dec.19 |
12,193 mortgages granted since December 2016 Yield(1) Average customer rate: 168bps. FY19 at 76bps Average Loan to Value 53% and average maturity 19 yrs Low expected loss (~23 bps) |
yearly new production: ~350-500mln Expected yield: ~ 70-80 bps |
| al s n n o a s o r e L P |
+5.4% +1.7% 455 463 439 Dec.18 Sep.19 Dec.19 |
Average ticket €9.100 and average maturity 4.5 years FY19 Yield at 405bps Efficient and real time process, instant approval platform for eligible clients' requests thanks to a deep knowledge of clients. Low expected loss (~53 bps) |
yearly new production: ~200-250mln (~20mln net) Expected yield: ~ 380-410 bps |
| d r s a n b a m o L o L |
Other lombard Credit lombard +27.0% +7.7% 1.3 1.2 1.0 0.2 0.2 0.2 1.1 1.0 0.8 Dec.18 Set.19 Dec.19 |
Lombard(2) o/w Credit : Attractive pricing: retail clients 100bps and private Eur(3) clients 75bps (on 3M ) Differentiated margins according to the riskiness of the pledged assets Very low expected loss (~10 bps) |
o/w Credit Lombard(2): Expected growth: ~300-400mln per year Expected yield: ~75-85bps |
(1) Yield on mortgages net of amortized and hedging costs
(2) Credit Lombard allows to change pledged assets without closing and re-opening the credit line, allowing more flexibility and efficiency
with floor at zero 12
Capital Ratios (1)
Best in class capital position and low risk balance sheet
(1) Data as of December 2018 were determined on individual basis
(2) "Starting from 31 December 2019, FinecoBank applied the Standardised Method for determining the regulatory requirement related to operational risk, replacing the Advanced Measurement Method ("AMA") adopted previously."
TFA
Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 71% of total AuM
TFA breakdown
Successful shift towards high added value products thanks to strong productivity of the network
Plus services
(1) "Best in class" are a selection of advisory products and services based on: cost optimization, quality, sustainability and risk
(2) Other includes: Core Funds, PIR and Core Pension, GP Private, FAM Evolution stand-alone
Net sales breakdown
Solid high quality FY19 net sales growth on the wave of structural trends in place despite a complex environment. Asset mix returning into AuM with more conservative solutions
16 AuC and Deposits under advisory have been reclassified within AuM in order to have a better representation of the advisory nature of Advice and
Organic growth
Net sales organically generated confirmed as key in our strategy of growth
of PFAs recruited in the period
Continuously increase of quality and productivity of the network
Clients' profile and focus on Private Banking
Fineco Results
Next steps and developing opportunities
Key messages
Focus on product areas
2020 Guidance
Given current outlook(1) , our assumptions for 2020, excluding revenues and costs related to UK business development, are:
- Net interest income: resilient and low risk thanks to the smooth run-off of our bond portfolio, positive effect from volumes (~2-2.5bn expected growth of deposits per year) and lending book (~1bn new production per year), benefit from ECB's tiering, no change in our investment policy with no increase in Fineco risk profile and a more dynamic management of our Treasury
- Investing: fees increasing low double digit with margins flat
- Brokerage: increasing by ~+15% y/y
- Banking: banking fees expected to increase by 10-20 mln
- Costs: around 5% yearly growth, slightly above the trend registered in the period between 2014 and 2018, due to temporary overlapping of costs following the internalization of some activities after the exit from UniCredit Group, extraordinary AGM for the Governance, increased number of Board members. Cost/Income continuously declining in the long run
- CET1: floor 17%
- Leverage Ratio: above 3.5%
- Cost of Risk: in the range between 10 and 15 basis points
- Net sales: robust, high quality net sales with a better asset mix
Focus for a better quality business going forward
Our goal is to structurally improve the quality of our net sales and client base to:
Increase, better quality recurring revenues: greater contribution from fees and trading profit from all business areas and a lower exposure to NII
Keep Balance sheet growth under control
This is possible thanks to the industrial measures we are undertaking
Strong focus in the conversion of customers' deposits towards AuM
Repositioning the brand to increase the quality of our client base and further accelerate the growth of high-end customers 2
1
Accelerating the conversion rate of customers' deposits towards AuM Assisted Selling platform to further boost productivity for the Bank and PFAs
New products with fully digital subscription will be offered through our Assisted Selling platform:
- Decumulation products (FAM Target): for customers who want to progressively invest in multi-thematic/profile funds
- Insurance capital guarantee product: remunerated solution with a more flexible exitwindow vs a traditional insurance product, suitable for customers with short-term horizon
- New multi-thematic funds (FAM Megatrends) to catch secular trends
- Pension funds will be offered directly to customers in the coming months
- Coming soon new FAM solutions for volatile market: protection funds and income strategies
Fineco will take more directly the driving seat in helping PFAs to develop their customers more efficiently by further extracting value from Big Data Analytics:
- X-Net: continuous improvements of our PFAs' cyborg advisory platform, that will be further enhanced with tailor-made solutions to solve customers' financial gaps
- Co-Working: it will enable our PFAs to share customers (and related fees) with other colleagues and manage more actively a higher number of customers
- Fineco X.0: to further improve the effectiveness of our commercial strategy leveraging on our one single database, allowing the Bank to better target customers with direct campaigns and to fully exploit the growth potential of low-touch clients.
1
NEW GENERATION OF PRODUCTS
NEW SOFTWARE DEVELOPMENT
Delivering on industrial measures:
Strong acceleration in the conversion of customers' deposits into AUM
Focus on quality to improve revenues mix and slow down the growth of our Balance Sheet
1
Delivering on industrial measures:
Fineco Asset Management gaining commercial momentum
FAM Growth potential
FAM total assets as of Dec31st, 2019 were equal to 13.8 bn, of which 8.4 bn retail
- FAM retail class 2019 Net Sales: 1.7bn
- FAM Evolution is the best seller product cluster, with net sales structurally towards retail classes
- Increasing penetration in Fineco's AuM net sales thanks to FAM ability to create modern and innovative multimanager solutions
- Room to increase FAM's penetration on Fineco Asset under Management stock enhancing the Bank's open architecture platform
- Coming soon new solutions suitable for volatile market: FAM will deliver new protection funds and income strategies
1
Delivering on industrial measures Innovation key for our best-in-class Customer Experience
- Brand new dashboard for credit and debit cards, which will also be fully digitalized Payments:
- upgrade of mobile payment services
- Fineco Pay peer-to-peer: to send and receive money with no need of IBAN code (both on website and on app)
- Renewal of our banking homepage both on the website and on APP with real-time debit/credit data
- Simplification of our onboarding process via mobile by sending the PIN codes by real-time
Further enlargement of our multicurrency basket (CZK, DKK, HKD, HUF, NOK, NZD, PLN, SGD), which will be active 24/7
€
(1) Source: Kantar Tri*M Index, December 2019 (2) Source: Reputation Institute, December 2019
Preserving our best price/quality ratio Where we stand after the Smart Repricing
Reasons behind our Smart Repricing
Cost/revenue imbalance of the current account service due to:
- further reduction in interest rates which are estimated to remain negative for longer than originally expected
- increased contribution for systemic charges
Other evidences
- Improve the asset mix and further slow down the growth of our Balance Sheet
- Rebalance our revenues mix
An overview on clients reaction
- 2020 expected current accounts closures due to repricing: 50-60k
- Clients closing their current accounts were low value and with few TFAs
- Going forward we expect a lower number of new clients but with higher quality
€ 121 avg branch costs € 76 avg online costs ING (Conto Arancio) HelloBank! (Hello! Money) 25 184 Fineco 138 Poste Italiane (BancoPosta Premium) 30 B.Generali (BG Deluxe) 47 152 Credit Agricole (Smart) 56 205 110 CheBanca (Yellow) 60 BPER (Ondemand) 73 B.Mps (Mio Plus) 58 98 Banca Sella (Websella) 59 74 0 161 Banco BPM (YouWelcome NEW) 81 24 BNL (X-Smart) 122 129 Deutsche Bank (Smart New) UBI Banca (Qubì) 146 Webank 141 UniCredit (MyGenius Silver) 173 B.Mediolanum 190 IWBank (IWConto) 93 142 89 252 91 0 Widiba (Conto PLUS) 4 20 Intesa SanPaolo (Xme) Online Branch
Competitive landscape (1)
27 (1) Most convenient current accounts. Source: Figures based on publicly available costs for families with average online operations of the main Italian banks (ICC – Indicatore Complessivo dei Costi). The figures relates to the costs of current accounts reported in brackets.
€
Delivering on industrial measures Improving quality of our clients
Outperforming in Private Banking growth
(1) AIPB (Associazione Italiana Private Banking) figures as of Sept19
(2) "Modelli Misti" include the following players: Allianz Financial Advisors, Banca Euromobiliare, Banca Generali PB, Banca Mediolanum, Banca Patrimoni Sella, CheBanca!, Deutsche Bank, Fideuram ISPB, Fineco
2
Brokerage: an effective and timely reshape of our offer
In 1H19 our Brokerage business suffered effects coming from the persistently low market volatility and the introduction of ESMA regulation in place starting from July 2018. The business has been completely reshaped.
| No.1 Brokerage Platform, multichannel Well-diversified and fully integrated among products… …and geographies Well advanced in-house know-how, optimizing time-to market and cost efficiency Funds In-house back-office and customer care. Business Forex / CFD continuity always guaranteed Italy 6% 26% Order internalization supporting Brokerage 11% Derivatives 15% performance: equity, bonds and forex 61% 12% 65% 3% |
New options allowing customers to exploit volatility also when it is low Optimization of our systematic internalizer with new products Repricing of our Forex and 24h brokerage platform Coming soon: Asian markets, CFD on cryptocurrencies, further enlargement of our multicurrency basket, in depth review of our professional platform |
4Q19 Brokerage best quarter since 2Q18 2019 revenues fully recovered and are flat y/y (+15% 2H19 vs 1H19 and +19% 2H19 vs 2H18) |
|---|---|---|
| with low risk light traders Equity |
Robust risk management, mostly intra-day positions |
Other markets US Bonds |
Fineco UK
- Unique positioning in a highly fragmented market, leveraging on our one-stop solution platform
- Outstanding Multicurrency offer, also used for trading
- Investing platform constantly updated, with M&G Investments and Columbia Threadneedle already live. We also launched Fineco Asset Management funds, giving access to sub-adviced funds of 8 different asset managers through FAM Series
- Annual cost of the investing platform: 25 bps
- Branch: We notified UK Regulators our intention to open a commercial branch in UK. This has no requirements of capital and no costs attached. It will allow us to offer ISA, SIPP and Faster Payments
- In the coming weeks we will start our marketing campaign. The first move will leverage on our best-in-class brokerage offer
- We will give more details on our UK plans by the end of 1Q20
Fineco Results
Next steps and developing opportunities
Focus on product areas
3 Pillars: Efficiency, Innovation and Transparency The keys of our strategy, still leading our sustainable growth
Strong focus on IT & Operations, more flexibility, less costs
EFFICIENCY INNOVATION TRANSPARENCY Anticipate new needs simplifying customers' life
We built everything from scratch
Freedom: Freedom to start over «from scratch», build a new bank, the best you can imagine Proprietary back-end: In-house development and automated processes allow an efficient cost structure and fast time to market Excellent offer: Unique customer user experience, top quality in all services
We were true pioneers
Fineco anticipated a main market trend: digitalization Moving customer's focus from proximity to service and quality
We believe in a "Quality" One Stop Solution
Providing all services in a single account is a distinctive feature but it's not enough. Gaining a competitive edge requires high quality on each single service and product
Healthy and sustainable growth with a long term horizon
TFA (bn) Revenues (2) (mln) Cost/ Income (2) (%) + p.p. Clients (thd, #) Costs (mln) 49 55 964 1,048 1,118 1,200 451 544 544 587 + + 212 233 226 233 47 43 42 40 60 67 Net profit (1) (mln) 155 197 208 226 + 39 244 628 1,278 69 254 81 1,358 281 658 250 38 + 11% 3% 7%13%8% -9 2014 2015 2016 2017 2018 2019 CAGR (2014-2019)
Highly scalable operating platform…
…with a diversified revenues mix leading consistent results in every market conditions
Safe Balance Sheet: simple, highly liquid and low risk asset side, valuable and sticky deposits
Total assets: 99% not exposed to volatility
Out of 28.0bn, only 0.3bn of Assets valuated at fair value with limited impacts on Equity reserve
(1) Due from banks includes 0.8bn cash and 0.3 bn compulsory reserves deposited at Bank of Italy as of Dec. 2019
- (2) Other refers to tangible and intangible assets, derivatives and other assets
- (3) 14.7bn equal to 13.9bn nominal value, o/w Italy 5.0 bn nominal value
(4) Other : US, Austria, Belgium, Germany, Poland, Portugal, United Kingdom; Covered Bonds
Sustainability at the heart of Fineco's business model
Embedding ESG in our Bank's Governance
Our sustainable growth strategy is inspired by principles of the most relevant international organisations, consistent with the achievements of the 17 Sustainable Development Goals (SDGs) of the UN 2030 Agenda.
Materiality Matrix defined, to determine the relevant topics for Fineco and its Stakeholders on which Fineco has based its first Non Financial Statement
Our Standard Ethics Rating(1) at "EE" was confirmed in 2019, a grade given to sustainable companies with low reputational risk profile and strong prospects for long-term growth. In 2019 Standard Ethics also assigned us an ESG Award
MSCI has upgraded FinecoBank's rating at "A" from "BBB"
Continuously updating our ESG offer
- Around 40% of funds with a rating Morningstar equal to "high", "above average" and "average"
- FAM Megatrends launched in July 2019
ESG model portfolios launched within our Advice Platform
Green mortgages for the purchase of real estate with energy rating between A and B
Green and Social Bonds are included in our covered bonds portfolio
(1) Standard Ethics is an independent agency which assigns Solicited Sustainability Ratings to companies and sovereign issuers. Fineco is included in the Standard Ethics Italian Banks Index© and in the Standard Ethics Italian Index, among the major environmental, social and governance performance indices and benchmarks.
The Standard Ethics Rating is an assessment of sustainability and governance based on the principles and voluntary directions of the United Nations, the Organization for Economic Cooperation and Development (OECD) and the European Union.
Agenda
Fineco Results
Next steps and developing opportunities
Key messages
Focus on product areas
Revenues by Product Area
Well diversified stream of revenues allow the bank to successfully face any market environment
FY9 weight on total revenues for each product area
Managerial Data. Revenues attributable to single each product area, generated by products / services offered to customers according to the link between products and product area. Banking includes revenues generated by direct deposits and credit products. Investing includes revenues generated by asset under management products; Brokerage includes revenues from trading activity.
2018 Revenues recasted for trading profit related to Multicurrency (moved from Banking to Brokerage).
Banking
Sound performance driven by strong volume growth and relentless clients' acquisition, thanks to high quality services and best-in-class customer satisfaction
Managerial Data
2018 Revenues recasted for trading profit related to Multicurrency (moved from Banking to Brokerage).
Brokerage
Revamped Brokerage thanks to review of the offer. Growing market share in Italy and continuous enlargement of product offer
- FY19 affected by low volatility. We are further diversifying our offer and continuously enlarging our products offer to wellbalance the effect coming from new ESMA regulation, in place since July 2018
- Structural improvement thanks to larger base of clients/higher market share and the enlargement of the products offer
- Continuously increasing market share (i.e. market share on equity traded volumes in Italy at 27.0% in Dec.19(2) , +2.3p.p. vs Dec.18) confirming Fineco as leader in brokerage
Managerial Data
2018 Revenues recasted for trading profit related to Multicurrency (moved from Banking to Brokerage).
(1) Volatility calculated as avg weekly volatility of BUND, BTP, SP, EUROSTOXX, MINIDAX, DAX, FIB, MINIFIB, NASDAQ, DOW weighted on volumes related to futures traded by our clients (2) Assosim 40
Investing
Successful strategy based on our cyborg advisory approach drove a better asset mix and increasing fees y/y. Very limited upfront fees representing only 2% of investing fees
%
33.5 36.0 36.8 38.3 40.5
Dec.18 Mar.19 Jun.19 Sep.19 Dec.19
Managerial Data
41
AuC and Deposits under advisory have been reclassified within AuM in order to have a better representation of the advisory nature of Advice and Plus services
(1) Mainly PFAs annual bonus and new 2018-2020 LTI to PFAs starting from 1Q18
Annex
| mln | 1Q18 | 2Q18 | 3Q18 | 4Q18 | FY18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | FY19 |
|---|---|---|---|---|---|---|---|---|---|---|
| Net interest income | 68.9 | 68.7 | 69.9 | 71.1 | 278.7 | 70.4 | 71.4 | 69.8 | 69.7 | 281.3 |
| Net commissions | 71.5 | 74.5 | 72.7 | 81.8 | 300.4 | 77.4 | 81.3 | 84.3 | 82.3 | 325.2 |
| Trading profit | 14.5 | 13.1 | 10.7 | 5.9 | 44.3 | 9.8 | 8.0 | 11.6 | 15.3 | 44.8 |
| Other expenses/income | 0.5 | 0.1 | -0.4 | 1.7 | 1.9 | 0.2 | 0.3 | 0.1 | 2.9 | 3.6 |
| Total revenues | 155.4 | 156.4 | 153.0 | 160.4 | 625.3 | 157.7 | 161.1 | 165.8 | 170.2 | 654.8 |
| Staff expenses | -20.5 | -21.0 | -23.2 | -21.9 | -86.6 | -21.7 | -22.4 | -22.5 | -23.6 | -90.2 |
| Other admin.exp. net of recoveries | -40.8 | -37.5 | -34.1 | -36.3 | -148.7 | -38.5 | -34.4 | -29.4 | -34.3 | -136.6 |
| D&A | -2.3 | -2.5 | -2.5 | -3.1 | -10.4 | -5.1 | -5.4 | -5.8 | -6.6 | -22.9 |
| Operating expenses | -63.6 | -61.0 | -59.7 | -61.4 | -245.8 | -65.3 | -62.3 | -57.6 | -64.4 | -249.6 |
| Gross operating profit | 91.8 | 95.4 | 93.3 | 99.1 | 379.5 | 92.5 | 98.8 | 108.2 | 105.8 | 405.2 |
| Provisions | -1.8 | -1.9 | -15.9 | -1.8 | -21.4 | -1.0 | -2.9 | -19.8 | -3.5 | -27.2 |
| LLP | -1.3 | 0.2 | -0.9 | -2.3 | -4.4 | -1.3 | 1.1 | -1.2 | -0.6 | -2.0 |
| Integration costs | 0.0 | 0.0 | 0.0 | -0.1 | -0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Profit from investments | 0.0 | 5.2 | -0.9 | -3.2 | 1.1 | -0.7 | 6.5 | 0.4 | 1.1 | 7.4 |
| Profit before taxes | 88.7 | 98.8 | 75.6 | 91.7 | 354.8 | 89.5 | 103.5 | 87.6 | 102.8 | 383.5 |
| Income taxes | -29.7 | -32.6 | -23.0 | -28.2 | -113.5 | -27.3 | -31.7 | -26.6 | -9.6 | -95.1 |
| Net profit for the period | 59.0 | 66.2 | 52.6 | 63.5 | 241.2 | 62.3 | 71.8 | 61.0 | 93.2 | 288.4 |
| Net profit adjusted (1) | 59.0 | 66.2 | 53.6 | 65.6 | 244.4 | 62.6 | 74.7 | 60.8 | 70.7 | 268.8 |
| Non recurring items (mln, gross) | 1Q18 | 2Q18 | 3Q18 | 4Q18 | FY18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | FY19 |
|---|---|---|---|---|---|---|---|---|---|---|
| (2) Extraord systemic charges (Trading Profit) |
0.0 | 0.0 | 0.0 | -3.0 | -3.0 | -0.4 | -4.3 | 0.4 | 1.4 | -3.0 |
| Integration costs | 0.0 | 0.0 | 0.0 | -0.1 | -0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Severance | 0.0 | 0.0 | -1.6 | 0.0 | -1.6 | 0.0 | 0.0 | 0.0 | ||
| Patent Box | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 21.6 | 21.6 | |
| Total | 0.0 | 0.0 | -1.6 | -3.1 | -4.8 | -0.4 | -4.3 | 0.4 | 23.0 | 18.6 |
P&L net of non recurring items
| 3Q18 | 4Q18 | FY18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | FY19 | |||
|---|---|---|---|---|---|---|---|---|---|---|
| mln | 1Q18 | 2Q18 | Adj. (1) | Adj. (1) | Adj. (1) | Adj. (1) | Adj. (1) | Adj. (1) | Adj. (1) | Adj. (1) |
| Net interest income | 68.9 | 68.7 | 69.9 | 71.1 | 278.7 | 70.4 | 71.4 | 69.8 | 69.7 | 281.3 |
| Net commissions | 71.5 | 74.5 | 72.7 | 81.8 | 300.4 | 77.4 | 81.3 | 84.3 | 82.3 | 325.2 |
| Trading profit | 14.5 | 13.1 | 10.7 | 8.9 | 47.3 | 10.3 | 12.3 | 11.2 | 13.9 | 47.7 |
| Other expenses/income | 0.5 | 0.1 | -0.4 | 1.7 | 1.9 | 0.2 | 0.3 | 0.1 | 2.9 | 3.6 |
| Total revenues | 155.4 | 156.4 | 153.0 | 163.5 | 628.3 | 158.2 | 165.4 | 165.4 | 168.8 | 657.8 |
| Staff expenses | -20.5 | -21.0 | -21.6 | -21.9 | -85.0 | -21.7 | -22.4 | -22.5 | -23.6 | -90.2 |
| Other admin.expenses | -40.8 | -37.5 | -34.1 | -36.3 | -148.7 | -38.5 | -34.4 | -29.4 | -34.3 | -136.6 |
| D&A | -2.3 | -2.5 | -2.5 | -3.1 | -10.4 | -5.1 | -5.4 | -5.8 | -6.6 | -22.9 |
| Operating expenses | -63.6 | -61.0 | -58.1 | -61.4 | -244.1 | -65.3 | -62.3 | -57.6 | -64.4 | -249.6 |
| Gross operating profit | 91.8 | 95.4 | 94.9 | 102.1 | 384.2 | 92.9 | 103.1 | 107.8 | 104.4 | 408.2 |
| Provisions | -1.8 | -1.9 | -15.9 | -1.8 | -21.4 | -1.0 | -2.9 | -19.8 | -3.5 | -27.2 |
| LLP | -1.3 | 0.2 | -0.9 | -2.3 | -4.4 | -1.3 | 1.1 | -1.2 | -0.6 | -2.0 |
| Profit from investments | 0.0 | 5.2 | -0.9 | -3.2 | 1.1 | -0.7 | 6.5 | 0.4 | 1.1 | 7.4 |
| Profit before taxes | 88.7 | 98.8 | 77.2 | 94.8 | 359.5 | 90.0 | 107.8 | 87.2 | 101.4 | 386.4 |
| Income taxes | -29.7 | -32.6 | -23.5 | -29.2 | -115.1 | -27.4 | -33.1 | -26.4 | -30.7 | -117.7 |
| Net profit adjusted (1) | 59.0 | 66.2 | 53.6 | 65.6 | 244.4 | 62.6 | 74.7 | 60.8 | 70.7 | 268.8 |
FY19 P&L FinecoBank and Fineco Asset Management
| mln | Fineco Asset Management |
FinecoBank Individual |
FinecoBank Consolidated |
|---|---|---|---|
| Net interest income | -0.1 | 281.4 | 281.3 |
| Dividends | 0.0 | 48.3 | 0.0 |
| Net commissions | 62.5 | 262.7 | 325.2 |
| Trading profit | 0.2 | 44.6 | 44.8 |
| Other expenses/income | 2.7 | 1.0 | 3.6 |
| Total revenues | 65.2 | 638.0 | 654.8 |
| Staff expenses | -4.1 | -86.1 | -90.2 |
| Other admin.exp. net of recoveries | -2.9 | -133.8 | -136.6 |
| D&A | -0.2 | -22.6 | -22.9 |
| Operating expenses | -7.2 | -242.5 | -249.6 |
| Gross operating profit | 58.1 | 395.5 | 405.2 |
| Provisions | 0.0 | -27.2 | -27.2 |
| LLP | 0.0 | -2.0 | -2.0 |
| Profit on Investments | 0.0 | 7.4 | 7.4 |
| Profit before taxes | 58.1 | 373.7 | 383.5 |
| Income taxes | -7.3 | -87.8 | -95.1 |
| Net profit for the period | 50.8 | 285.9 | 288.4 |
Details on Net Interest Income
| mln | 1Q18 | Volumes & Margins |
2Q18 | Volumes & Margins |
3Q18 | Volumes & Margins |
4Q18 | Volumes & Margins |
1Q19 | Volumes & Margins |
2Q19 | Volumes & Margins |
3Q19 | Volumes & Margins |
4Q19 | Volumes & Margins |
FY18 | Volumes & Margins |
FY19 | Volumes & Margins |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Investments | 56.9 | 18,449 | 57.5 | 18,887 | 57.1 | 18,817 | 57.7 | 19,133 | 57.1 | 19,748 | 58.0 | 20,582 | 55.9 | 21,714 | 56.0 | 22,114 | 229.2 | 18,822 | 227.0 | 21,040 |
| Net Margin | 1.25% | 1.22% | 1.20% | 1.20% | 1.17% | 1.13% | 1.02% | 1.01% | 1.22% | 1.08% | ||||||||||
| Gross margin | 58.6 | 1.29% | 59.8 | 1.27% | 59.3 | 1.25% | 60.1 | 1.25% | 59.7 | 1.23% | 60.4 | 1.18% | 58.5 | 1.07% | 57.7 | 1.04% | 237.8 | 1.26% | 236.3 | 1.12% |
| Security Lending | 0.2 | 804 | 0.2 | 726 | 0.2 | 753 | 0.4 | 743 | 0.6 | 836 | 0.4 | 386 | 0.0 | 0 | 0.3 | 307 | 1.1 | 756 | 1.4 | 382 |
| Net Margin | 0.11% | 0.10% | 0.12% | 0.24% | 0.32% | 0.44% | 0.00% | 0.44% | 0.14% | 0.37% | ||||||||||
| Leverage - Long | 2.7 | 182 | 2.7 | 181 | 3.0 | 196 | 3.0 | 150 | 2.7 | 129 | 3.2 | 153 | 3.3 | 157 | 3.3 | 154 | 11.5 | 178 | 12.4 | 148 |
| Net Margin | 6.06% | 6.03% | 6.11% | 7.95% | 8.45% | 8.35% | 8.38% | 8.38% | 6.47% | 8.39% | ||||||||||
| Lending | 9.2 | 1,854 | 9.5 | 2,080 | 9.9 | 2,316 | 10.3 | 2,472 | 10.5 | 2,611 | 10.8 | 2,754 | 11.1 | 2,912 | 10.9 | 3,050 | 38.8 | 2,180 | 43.3 | 2,832 |
| Net Margin | 2.01% | 1.84% | 1.69% | 1.65% | 1.62% | 1.58% | 1.51% | 1.42% | 1.78% | 1.53% | ||||||||||
| o/w Current accounts | 2.4 | 684 | 2.6 | 788 | 2.8 | 891 | 3.0 | 970 | 2.9 | 1,040 | 3.2 | 1,112 | 3.2 | 1,169 | 3.4 | 1,241 | 10.8 | 833 | 12.7 | 1,141 |
| Net Margin | 1.43% | 1.33% | 1.23% | 1.21% | 1.14% | 1.14% | 1.10% | 1.07% | 1.29% | 1.11% | ||||||||||
| o/w Cards | 1.2 | 240 | 1.2 | 232 | 1.2 | 252 | 1.2 | 251 | 1.2 | 245 | 1.2 | 252 | 1.2 | 282 | 1.2 | 265 | 4.8 | 244 | 4.9 | 261 |
| Net Margin | 2.00% | 2.05% | 1.93% | 1.97% | 2.00% | 1.92% | 1.74% | 1.87% | 1.99% | 1.88% | ||||||||||
| o/w Personal loans | 4.3 | 370 | 4.4 | 394 | 4.4 | 411 | 4.5 | 427 | 4.6 | 441 | 4.6 | 448 | 4.6 | 457 | 4.5 | 459 | 17.6 | 400 | 18.3 | 451 |
| Net Margin | 4.67% | 4.45% | 4.29% | 4.18% | 4.20% | 4.09% | 3.98% | 3.92% | 4.39% | 4.05% | ||||||||||
| o/w Mortgages | 1.3 | 560 | 1.4 | 666 | 1.4 | 763 | 1.6 | 824 | 1.8 | 886 | 1.9 | 942 | 2.0 | 1,005 | 1.8 | 1,084 | 5.7 | 703 | 7.4 | 979 |
| Net Margin | 0.96% | 0.81% | 0.75% | 0.75% | 0.80% | 0.82% | 0.79% | 0.64% | 0.81% | 0.76% | ||||||||||
| (1) Other |
-0.1 | -1.2 | -0.3 | -0.3 | -0.5 | -1.0 | -0.4 | -0.8 | -1.9 | -2.8 | ||||||||||
| Total | 68.9 | 68.7 | 69.9 | 71.1 | 70.4 | 71.4 | 69.8 | 69.7 | 278.7 | 281.3 | ||||||||||
| Gross Margin Cost of Deposits |
1.33% -0.03% |
1.31% -0.04% |
1.29% -0.04% |
1.29% -0.04% |
1.26% -0.05% |
1.25% -0.04% |
1.17% -0.04% |
1.11% -0.03% |
1.30% -0.04% |
1.20% -0.04% |
Volumes and margins: average of the period Net margin calculated on real interest income and expenses 2019 quarterly figures have been reclassified due to a managerial recast
(1) Other includes mainly marketing costs
UniCredit bonds underwritten
| ISIN | Currency | Amount (€ m) | Maturity | Indexation | Spread |
|---|---|---|---|---|---|
| 1 IT0005010324 |
Euro | 382.5 | 13-Jan-20 | Euribor 1m | 2.44% |
| 2 IT0005010365 |
Euro | 382.5 | 10-Apr-20 | Euribor 1m | 2.47% |
| 3 IT0005010308 |
Euro | 382.5 | 9-Jul-20 | Euribor 1m | 2.49% |
| 4 IT0005010381 |
Euro | 382.5 | 7-Oct-20 | Euribor 1m | 2.52% |
| 5 IT0005010332 |
Euro | 382.5 | 6-Jan-21 | Euribor 1m | 2.54% |
| 6 IT0005010316 |
Euro | 382.5 | 6-Apr-21 | Euribor 1m | 2.56% |
| 7 IT0005010340 |
Euro | 382.5 | 5-Jul-21 | Euribor 1m | 2.58% |
| 8 IT0005010225 |
Euro | 382.5 | 18-Oct-21 | Euribor 1m | 2.60% |
| 9 IT0005040099 |
Euro | 100.0 | 24-Jan-22 | Euribor 1m | 1.46% |
| 10 IT0005057994 |
Euro | 200.0 | 11-Apr-22 | Euribor 1m | 1.43% |
| 11 IT0005083743 |
Euro | 300.0 | 28-Jan-22 | Euribor 1m | 1.25% |
| 12 IT0005106189 |
Euro | 230.0 | 20-Apr-20 | Euribor 1m | 0.90% |
| 13 IT0005114688 |
Euro | 180.0 | 19-May-22 | Euribor 1m | 1.19% |
| 14 IT0005120347 |
Euro | 700.0 | 27-Jun-22 | Euribor 1m | 1.58% |
| 15 IT0005144065 |
Euro | 450.0 | 14-Nov-22 | Euribor 3m | 1.40% |
| 16 IT0005144073 |
Euro | 350.0 | 15-Nov-21 | Euribor 3m | 1.29% |
| 17 IT0005158412 |
Euro | 250.0 | 23-Dec-22 | Euribor 3m | 1.47% |
| 18 IT0005163180 |
Euro | 600.0 | 11-Feb-23 | Euribor 3m | 1.97% |
| 19 IT0005175135 |
Euro | 100.0 | 24-Mar-23 | Euribor 3m | 1.58% |
| 20 IT0005217606 |
Euro | 350.0 | 11-Oct-23 | Euribor 3m | 1.65% |
| 21 IT0005241317 |
Euro | 622.5 | 2-Feb-24 | Euribor 3m | 1.52% |
| Total | Euro | 7,492.5 | Euribor 1m | 1.94% |
Details on Net Commissions
| mln | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | FY18 | FY19 |
|---|---|---|---|---|---|---|---|---|---|---|
| Brokerage | 20.6 | 20.1 | 15.8 | 18.2 | 18.5 | 18.0 | 20.0 | 20.8 | 74.7 | 77.3 |
| o/w | ||||||||||
| Equity | 17.5 | 16.4 | 13.1 | 14.9 | 15.6 | 14.7 | 15.9 | 17.0 | 61.8 | 63.2 |
| Bond | 0.8 | 1.2 | 0.6 | 0.9 | 0.9 | 0.9 | 1.4 | 0.7 | 3.6 | 3.9 |
| Derivatives | 2.5 | 2.7 | 2.2 | 2.9 | 2.3 | 2.2 | 2.7 | 2.6 | 10.2 | 9.7 |
| Other commissions(1) | -0.1 | -0.2 | -0.1 | -0.5 | -0.2 | 0.2 | 0.0 | 0.6 | -0.9 | 0.5 |
| Investing | 47.1 | 49.5 | 52.2 | 58.0 | 54.2 | 57.6 | 58.3 | 56.1 | 206.8 | 226.2 |
| o/w | ||||||||||
| Placement fees | 2.5 | 2.4 | 1.4 | 1.4 | 1.1 | 1.3 | 1.1 | 1.8 | 7.8 | 5.4 |
| Management fees | 50.2 | 53.9 | 54.9 | 57.0 | 57.1 | 59.7 | 61.5 | 63.0 | 216.0 | 241.3 |
| to PFA's: incentives | -4.8 | -5.8 | -3.1 | -0.4 | -3.0 | -4.3 | -3.6 | -8.0 | -14.1 | -18.9 |
| to PFA's: LTI | -0.9 | -1.1 | -1.0 | 0.0 | -1.0 | 0.8 | -0.7 | -0.7 | -2.9 | -1.6 |
| Banking | 3.4 | 4.7 | 4.5 | 5.5 | 4.5 | 5.6 | 5.9 | 5.3 | 18.1 | 21.3 |
| Other | 0.3 | 0.3 | 0.2 | 0.2 | 0.1 | 0.1 | 0.1 | 0.1 | 0.9 | 0.4 |
| Total | 71.5 | 74.5 | 72.7 | 81.8 | 77.4 | 81.3 | 84.3 | 82.3 | 300.4 | 325.2 |
(1) Other commissions include security lending and other PFA commissions related to AuC
Revenues breakdown by Product Area
| mln | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | FY18 | FY19 |
|---|---|---|---|---|---|---|---|---|---|---|
| Net interest income | 66.1 | 67.1 | 67.0 | 68.0 | 67.6 | 68.8 | 67.0 | 66.9 | 268.1 | 270.3 |
| Net commissions | 3.4 | 4.7 | 4.5 | 5.5 | 4.5 | 5.6 | 5.9 | 5.3 | 18.1 | 21.3 |
| Trading profit | 0.0 | 0.1 | 0.1 | 0.0 | -0.1 | -0.1 | -0.2 | 0.2 | 0.2 | -0.2 |
| Other | 0.1 | 0.2 | 0.1 | 0.0 | 0.1 | 0.1 | 0.1 | 0.1 | 0.4 | 0.4 |
| Total Banking | 69.6 | 72.0 | 71.6 | 73.4 | 72.1 | 74.3 | 72.7 | 72.5 | 286.7 | 291.7 |
| Net interest income | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net commissions | 47.1 | 49.5 | 52.2 | 58.0 | 54.2 | 57.6 | 58.3 | 56.1 | 206.8 | 226.2 |
| Trading profit | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Other | 0.0 | 0.0 | 0.0 | 1.7 | 0.0 | 0.0 | 0.0 | 2.7 | 1.7 | 2.7 |
| Total Investing | 47.1 | 49.5 | 52.2 | 59.7 | 54.2 | 57.6 | 58.3 | 58.8 | 208.5 | 228.9 |
| Net interest income | 3.0 | 3.0 | 3.3 | 3.6 | 3.4 | 3.7 | 3.4 | 3.4 | 13.0 | 14.0 |
| Net commissions | 20.6 | 20.1 | 15.8 | 18.2 | 18.5 | 18.0 | 20.0 | 20.8 | 74.7 | 77.3 |
| Trading profit | 13.8 | 12.2 | 8.2 | 10.6 | 8.2 | 9.9 | 11.5 | 11.7 | 44.8 | 41.3 |
| Other | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Total Brokerage | 37.5 | 35.3 | 27.3 | 32.4 | 30.2 | 31.6 | 34.9 | 35.9 | 132.5 | 132.6 |
Managerial Data
Please note that, starting from December 31st, 2019, "Trading profit" also includes dividends and similar revenues on equity investments held at fair value in the item "Dividend income and similar revenue", previously included in the item "Dividends and other income from equity investments" in the reclassified income statement. 2018 figures were also reclassified.
IFRS 9 P&L impacts
| mln | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | FY18 | FY19 |
|---|---|---|---|---|---|---|---|---|---|---|
| Trading Profit | 0.6 | 0.9 | 0.9 | -3.8 | 0.8 | -3.6 | 0.6 | 1.9 | -1.4 | -0.4 |
| Visa | 0.6 | 0.9 | 0.9 | -0.7 | 1.2 | 0.7 | 0.2 | 0.4 | 1.6 | 2.6 |
| Voluntary Scheme | 0.0 | 0.0 | 0.0 | -3.0 | -0.4 | -4.3 | 0.4 | 1.4 | -3.0 | -3.0 |
| Loan Loss Provisions | -0.4 | 2.4 | -0.4 | -0.6 | -1.0 | 3.1 | -0.0 | 0.0 | 1.0 | 2.1 |
| Profit on Investments | 0.0 | 5.3 | -0.9 | -3.1 | -0.7 | 6.5 | 0.4 | 1.1 | 1.3 | 7.4 |
| Govies | -0.2 | -0.2 | -0.1 | -0.8 | 0.2 | -0.8 | -0.1 | 1.1 | -1.3 | 0.4 |
| UC Bonds | 0.2 | 5.5 | -0.8 | -2.3 | -0.8 | 7.3 | 0.5 | -0.0 | 2.6 | 7.0 |
| Total impacts from IFRS 9 | 0.2 | 8.6 | -0.4 | -7.5 | -0.9 | 5.9 | 1.1 | 3.0 | 0.8 | 9.2 |
Accounting standard IFRS 9, starting from January 1 st , 2018, introduced a new impairment accounting model for credit exposures and resulted in an extension of the Bank's scope of recognition.
In detail, P&L IFRS 9 impacted:
- Trading Profit: impacts from VISA and Voluntary Scheme valuation
- Loan Loss Provisions: impacts from deposits with UniCredit
- Profit on Investments: valuation on UniCredit Bonds and Government Bonds
IFRS 16 impacts
| mln | 1Q18 | 2Q18 | 3Q18 | 4Q18 | 1Q19 | 2Q19 | 3Q19 | 4Q19 | FY18 | FY19 |
|---|---|---|---|---|---|---|---|---|---|---|
| Net interest Income | -0.2 | -0.2 | -0.2 | -0.3 | -1.0 | |||||
| Other Administrative Expenses | -3.3 | -3.2 | -3.3 | -3.5 | -13.3 | |||||
| (1) Leasing Reggio Emilia offices and financial shops |
-2.5 | -2.5 | -2.5 | -2.6 | -10.0 | |||||
| Leasing Milano headquarter | -0.8 | -0.8 | -0.8 | -0.9 | -3.3 | |||||
| Write-down/backs and depreciation | -2.2 | -2.3 | -2.3 | -2.6 | -9.5 | |||||
| Leasing Reggio Emilia offices and financial shops | -2.2 | -2.3 | -2.3 | -2.6 | -9.5 |
Accounting standard IFRS 16, starting from January 1st, 2019, replaced the previous set of international accounting principles and interpretations on leasing and in particular IAS17, so comparison with 2018 is not significant.
In detail, P&L IFRS 16 impacted:
- Net Interest Income: the application of the new accounting standard envisages an impact on NII of -1.0mln following the discounting of the liabilities linked to leasing
- Write-down/backs and depreciation: rents previously accounted in Other Administrative Expenses, following the application of the new accounting standards are now booked in Write-down/backs and Depreciation
Breakdown Total Financial Assets
| mln | Mar.18 | Jun.18 | Sep.18 | Dec.18 | Mar.19 | Jun.19 | Sep.19 | Dec.19 |
|---|---|---|---|---|---|---|---|---|
| AUM | 33,536 | 34,496 | 34,930 | 33,485 | 35,988 | 36,819 | 38,325 | 40,505 |
| o/w Funds and Sicav | 26,666 | 26,809 | 26,795 | 24,853 | 26,361 | 26,426 | 27,477 | 28,786 |
| o/w Insurance | 6,395 | 7,043 | 7,355 | 7,618 | 8,401 | 9,002 | 9,369 | 10,115 |
| o/w GPM | 1 | 1 | 1 | 1 | 1 | 26 | 55 | 93 |
| o/w AuC + deposits under advisory | 475 | 643 | 779 | 1,012 | 1,225 | 1,365 | 1,425 | 1,512 |
| o/w in Advice | 475 | 477 | 494 | 535 | 572 | 600 | 603 | 598 |
| o/w in Plus | 0 | 166 | 285 | 477 | 653 | 765 | 822 | 914 |
| AUC | 13,890 | 14,366 | 14,395 | 13,779 | 15,187 | 15,229 | 15,158 | 15,324 |
| o/w Equity | 8,573 | 8,736 | 8,846 | 8,007 | 9,137 | 9,207 | 9,573 | 9,841 |
| o/w Bond | 5,298 | 5,613 | 5,534 | 5,759 | 6,037 | 6,011 | 5,575 | 5,448 |
| o/w Other | 20 | 18 | 15 | 13 | 13 | 12 | 11 | 35 |
| Direct Deposits | 20,624 | 20,968 | 21,536 | 22,069 | 22,941 | 23,844 | 25,099 | 25,590 |
| o/w Sight | 20,616 | 20,962 | 21,532 | 22,066 | 22,938 | 23,842 | 25,098 | 25,588 |
| o/w Term | 7 | 6 | 4 | 3 | 2 | 2 | 2 | 1 |
| Total | 68,050 | 69,830 | 70,861 | 69,333 | 74,116 | 75,892 | 78,583 | 81,419 |
| o/w Guided Products & Services | 21,425 | 22,199 | 22,879 | 22,370 | 24,301 | 25,354 | 26,697 | 28,788 |
| o/w TFA Private Banking | 26,109 | 26,992 | 27,474 | 25,830 | 29,041 | 29,970 | 31,891 | 33,437 |
AuC and Deposits under advisory have been reclassified within AuM in order to have a better representation of the advisory nature of Advice and Plus services
Balance Sheet
| mln | Mar.18 | Jun.18 | Sep.18 | Dec.18 | 1st Jan.19 | Mar.19 | Jun.19 | Sep.19 | Dec.19 |
|---|---|---|---|---|---|---|---|---|---|
| Due from Banks (1) |
3,488 | 3,224 | 3,398 | 3,059 | 3,059 | 3,807 | 1,941 | 2,033 | 1,320 |
| Customer Loans | 2,318 | 2,633 | 2,736 | 2,955 | 2,955 | 3,029 | 3,409 | 3,568 | 3,680 |
| Financial Assets | 17,106 | 17,199 | 17,678 | 18,238 | 18,238 | 19,012 | 19,920 | 21,532 | 22,313 |
| Tangible and Intangible Assets | 112 | 112 | 112 | 115 | 180 | 243 | 242 | 247 | 279 |
| Derivatives | 0 | 3 | 0 | 8 | 8 | 29 | 49 | 72 | 65 |
| Other Assets | 211 | 254 | 259 | 357 | 357 | 259 | 274 | 308 | 366 |
| Total Assets | 23,235 | 23,425 | 24,183 | 24,733 | 24,797 | 26,380 | 25,835 | 27,760 | 28,023 |
| Customer Deposits | 20,916 | 21,197 | 21,827 | 22,273 | 22,333 | 23,311 | 24,140 | 25,429 | 25,920 |
| Due to Banks | 960 | 908 | 1,000 | 1,010 | 1,014 | 1,605 | 207 | 188 | 155 |
| Derivatives | 0 | 2 | 0 | 8 | 8 | 32 | 84 | 156 | 95 |
| Funds and other Liabilities | 367 | 445 | 452 | 466 | 466 | 393 | 477 | 698 | 471 |
| Equity | 992 | 874 | 904 | 976 | 976 | 1,040 | 928 | 1,289 | 1,382 |
| Total Liabilities and Equity | 23,235 | 23,425 | 24,183 | 24,733 | 24,797 | 26,380 | 25,835 | 27,760 | 28,023 |
IFRS16: the Bank decided to not disclose comparative data from previous periods, as allowed by new accounting standards.
No effect was recorded in net equity on the date of first application. This is because for the purposes of FTA, the financial liabilities for leasing were valued and recorded at the current value of the residual future payments on the transition date, and the corresponding assets consisting of the right of use were valued at the amount of the financial liability plus the advanced leasing payments recorded in the financial situation immediately prior to the date of initial application (31st December, 2018).
(1) Due from banks includes: 1.2bn cash deposited at Bank of Italy as of June 2019, 1.2bn cash and 0.2 bn compulsory reserves deposited at Bank of Italy as of Sept. 2019, and 0.8bn cash and 0.3 bn compulsory reserves deposited at Bank of Italy as of Dec. 2019
Main Financial Ratios
| Mar.18 | Jun.18 | Sep.18 | Dec.18 | Mar.19 | Jun.19 | Sep.19 | Dec.19 | |
|---|---|---|---|---|---|---|---|---|
| PFA TFA/ PFA (mln) (1) | 22.5 | 23.0 | 23.4 | 23.2 | 25.0 | 25.6 | 26.6 | 27.8 |
| Guided Products / TFA (2) | 31% | 32% | 32% | 32% | 33% | 33% | 34% | 35% |
| Cost / income Ratio (3) | 41.0% | 40.0% | 39.3% | 38.9% | 41.3% | 39.4% | 37.9% | 37.9% |
| CET 1 Ratio | 20.2% | 20.7% | 20.5% | 21.2% | 21.0% | 17.8% | 17.4% | 18.1% |
| Adjusted RoE (4) | 35.1% | 37.0% | 35.2% | 35.7% | 30.8% | 33.6% | 27.0% | 27.1% |
| Leverage Ratio (5) | 7.15% | 6.51% | 6.00% | 5.55% | 5.11% | 2.89% | 3.85% | 3.85% |
(1) PFA TFA/PFA: calculated as end of period Total Financial Assets related to the network divided by number of PFAs eop
(2) Calcuated as Guided Products eop divided by Total Financial Assets eop
(3) C/I ratio net of non recurring items (see page 43) calculated as Operating Costs divided by Revenues net of non recurring items
(4) RoE: Net Profit, net of non recurring items (see page 43) divided by the average book shareholders' equity for the period (excluding dividends expected to be distributed and the revaluation reserves)
(5) Leverage ratios until Mar.19 are calculated on Individual basis, according to the EC Delegated Act 2015/62 regarding the exclusion of intra-group
High-value deposit base confirms strong resilience over time
- Double-digit deposit growth throughout the last 10 years (+10.4% CAGR), with no impacts from 2008 financial crisis and 2011 sovereign debt crisis
- Strong resilience during periods of stress/crisis: 912mln worst liquidity outflow on April 10th , 2012
- High-value deposit base: most of our deposits is transactional liquidity. Customer rate: zero; cost of funding: 4bps
- 83% of total sight deposits: core liquidity(1) in a stressed scenario according to clients' behavioral model
- Structural trends in place in Italy combined with best in class banking platform and high-quality services will continue to support our deposit growth
Fineco - a fully independent public company
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 maximizing shareholders' value via healthy, sustainable and organic growth
Transitional Arrangements with UniCredit Group
Fineco and UniCredit have agreed to enter into certain transitional arrangements to ensure full continuity and an orderly and smooth transition from a regulatory, liquidity and operational standpoint
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Benefits from being a fully independent public company
More liquid stock with more than doubled average volumes
Increased efficiency as we now are more flexible and agile to adapt to a fast changing environment in terms of:
Headquarters acquisition - details
Deal
- January 31st 2019: completed the headquarters acquisition in Milan from Immobiliare Stampa S.C.p.A. (controlled by Banca Popolare di Vincenza S.p.A. in compulsory winding up)
- Price of the deal: €62mln
- Rationales: favourable conditions of the deal, expected running cost savings and limited additional impacts on capital ratios, given the introduction of new IFRS 16 accounting standard (leasing) in place since January 2019
Capital ratios impacts
- With the new IFRS 16, leasing value impacts RWA and capital ratios
- Additional expected impact (building acquisition versus recognition of leasing value): -34bps on CET1 ratio, absolutely manageable considering our rock-solid capital position
Fineco Asset Management in a nutshell
AUM at €14.2bn, of which €8.6bn retail classes (1)
Quality improvement and time to market for customers and distribution needs
Several efficiencies leveraging on a vertically integrated business model combined with the strong operating efficiency which is in Fineco's DNA
Better risk management thanks to the look-through on daily basis on funds' underlying assets
Win-win solution: lower price for clients, higher margins
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 official website) operating in full transparency with the Italian tax Authorities. This is a fundamental milestone for our Bank
Until now, only few companies have been admitted in Italy, of which among Banks: Fineco, UniCredit, Intesa and BPER
Key requirements to be admitted:
- subjective and objective requirements (resident legal entities with specific sizing thresholds)
- effective system in place for identifying, measuring, managing and controlling tax risk in line with the "essential" requirements of the Tax Control Framework envisaged by law, Revenue Agency ordinances and by the OECD documents published on the subject
Several advantages:
- closer relationship of trust and cooperation with the Revenue Agency
- Increase of the level of certainty on significant tax issues under conditions of full transparency
- agreed and preventive risk assessment of situations likely to generate tax risks
- fast track ruling
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 January 23rd , 2018 the Bank issued a €200mln perpetual AT1
- Coupon fixed at 4.82% for the initial 5.5 years
- Private placement, fully subscribed by UniCredit SpA
- Semi-annual coupon
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Coupon (net of taxes) will impact directly Equity reserves
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On July 11th , 2019 Fineco issued a €300mln perpetual AT1 in order to maintain the Leverage Ratio above 3.5% after the exit from the UniCredit Group
- Coupon fixed at 5.875% (initial guidance at 6.5%) for the initial 5.5 years
- Public placement, with strong demand (9x, €2.7bn), listed in Euronext Dublin
- Semi-annual coupon
- Coupon (net of taxes) will impact directly Equity reserves
- The instrument was assigned a BB- rating by S&P
Italian AT1 yield at first call date
