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Banca Generali Earnings Release 2023
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Earnings Release
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| Informazione Regolamentata n. 0856-40-2023 |
Data/Ora Inizio Diffusione 27 Luglio 2023 12:47:23 |
Euronext Milan | |
|---|---|---|---|
| Societa' | : | BANCA GENERALI | |
| Identificativo Informazione Regolamentata |
: | 179630 | |
| Nome utilizzatore | : | BCAGENERALIN04 - Zazzaro | |
| Tipologia | : | 1.2 | |
| Data/Ora Ricezione | : | 27 Luglio 2023 12:47:11 | |
| Data/Ora Inizio Diffusione |
: | 27 Luglio 2023 12:47:23 | |
| Oggetto | : | Banca Generali – PR 1H Results 2023 | |
| Testo del comunicato |
Vedi allegato.
PRESS RELEASE
Results at 30 June 2023
Banca Generali's growth accelerates
- Net profit: €175.1 million (+33%)
- Recurring net profit1 : €166.1 million (+54%)
- Net interest income: €151.5 million (+192%)
- Net recurring fees: stable at €478.7 million
- 'Core' operating costs: €114.5 million (+6%)
Record total assets driven by net inflows increase
- Total assets: €88.2 billion (+9% YoY)
- Assets under Advanced Advisory: €8.5 billion (+26%)
- H1 2023 net inflows: €3.3 billion (+7%)
Strong solidity and liquidity
- CET1 ratio at 17.3% and TCR at 18.5%
- LCR at 344% and NSFR at 223%
CONTACTS:
www.bancagenerali.com
Media Relations Michele Seghizzi Tel. +39 02 408 26683
Investor Relations Giuliana Pagliari Tel: +39 02 408 26548
Milan, 27 July 2023 - The Board of Directors of Banca Generali approved the consolidated results at 30 June 2023.
Chief Executive Officer and General Manager Gian Maria Mossa stated: "This was the Bank's best first half ever in terms of customers' total assets, net inflows gathered by the existing network and recurring profit. We are particularly satisfied with our professionals' great work in assisting households, as reflected in our H1 net inflows. Fee-based products and services, such as fee-based advanced advisory and financial wrappers, continued to prove to be excellent solutions able to attract growing interest among high-standing clients. AUC portfolio solutions also performed well, focussing on maturities within one year to seize the opportunities offered by rising short-term interest rates, as confirmed by the acceleration of specific primary market solutions such as structured products and certificates. Considering our solid net inflows and of the acceleration of the main revenue items in the second quarter of the year, we have reached the halfway mark in our three-
1 Profit net of performance fees, non-recurring trading income and other one-off items.
year Plan with strength and optimism. We are in line with or above the ambitious targets we had set ourselves, confirming our ability to overperform the market of reference and create value for all of our stakeholders."
P&L RESULTS AT 30 JUNE 2023
H1 2023 closed with consolidated net profit at €175.1 million, up 33% compared to €131.3 million for the same period of the previous year. This result was driven by the Bank's ongoing business expansion, its revenue diversification and tight cost discipline in a context of persistent inflation and interest rate normalisation.
Profit quality was clearly confirmed by the performance of the recurring component, which grew to €166.1 million (+54% YoY) accounting for 95% of the profit for the period and reaching an alltime high.
In further detail:
Net banking income rose by 24.7% to €392.2 million, driven by the sharp increase in net financial income (€161.3 million; +138.9%). Net recurring fees amounted to €223.3 million (-3.5%) and variable fees stood at €7.6 million (-51.1% compared to H1 2022), impacted by the market conditions.
In particular, net interest income nearly tripled to €151.5 million (+192.1% YoY) fuelled by the increase in assets' yields which reflected interest rate trends. Assets' yields benefited from a financial portfolio characterised by bonds with a short duration (1.2 years) and a high percentage of variable-rate securities (52% of the total) that allowed to swiftly adjust the portfolio's yields to the interest rates' growth in the recent quarters. Interest-bearing assets amounted to €14.3 billion, mainly including a securities portfolio of €11.0 billion and a portfolio of highly securitised customer loans of €2.4 billion. Exposure to mortgage loans was very limited, amounting to €312 million (13% of the loan portfolio and 2% of the interest-bearing assets).
Gross recurring fees amounted to €478.7 million, in line with the same period of the previous year. In detail, gross management fees totalled €400.7 million compared to €413.3 million for the previous year. The change was due to the performance of average total managed assets, which were impacted by the financial crisis of the reference period. Overall, the slight decline in gross fees was offset by the sharp increase in banking and entry fees, which grew by 19.4% to €78.0 million, confirming the validity of the revenue diversification initiatives that the Bank has long implemented and that have been supported by the clients' interest for AUC solutions following the interest rate dynamics.
CONTACTS:
www.bancagenerali.com
Media Relations Michele Seghizzi Tel. +39 02 408 26683
Investor Relations Giuliana Pagliari Tel: +39 02 408 26548
Operating costs amounted to €127.3 million (+6.1% YoY), including €2.2 million one-off charges, reflecting the Bank's operational efficiency. Despite the inflationary pressures, the item proved under control and in line with the Plan's targets thanks to a tight cost discipline. 'Core' operating costs amounted to €114.5 million (+5.9% YoY), of which €3.1 million generated by the launch of BG Suisse as part of the international expansion project.
The ratio of operating costs to total assets fell to 29 bps (31 bps at the end of 2022), whereas the cost/income ratio, adjusted for non-recurring items, such as variable fees, declined further to 32.5% (40.8% at 2022 year-end and 33.2% in Q1 2023).
Provisions, contributions to banking funds and net adjustments totalled €25.2 million in the first half of the year compared to €22.2 million for the previous year (+13.8%). The change was due to the lower contribution from the alignment of discount rates used to measure actuarial provisions, which in the previous year had contributed a positive €10.7 million for the half-year period compared to the current €4.6 million.
The tax rate for the period rose to 27.0% compared to 23.8% for the same period of the previous year, due to the lower contribution of the foreign entities to the Group's result attributable to the decline in variable fees.
CAPITAL RATIOS AT 30 JUNE 2023
At 30 June 2023, Banca Generali's CET1 ratio rose to 17.3% and TCR to 18.5%, far above the minimum required by SREP – Supervisory Review and Evaluation Process (i.e., CET1 at 8.0% and TCR at 12.3%). Capital ratios were calculated assuming an expected 81% payout of earnings generated, in line with the guidelines defined in the Dividend Policy upon launching the 2022-2024 three-year Strategic Plan.
The Bank's leverage ratio stood at 5.0%, well above the 3% minimum requirement.
The Bank's liquidity ratios remained high: LCR (Liquidity Coverage Ratio) was 344% (338% at the end of 2022) and NSFR (Net Stable Funding Ratio) was 223% (203% at the end of 2022).
P&L RESULTS FOR Q2 2023
Q2 2023 net profit grew by 46% to €92.0 million on an annual basis. This quality result was driven by the recurring component, which rose by 62.8% to €89.1 million.
Net banking income improved by 29.5% to €199.0 million, fuelled by the increase in net interest income (€80.5 million; +174.7%). Gross recurring fees reversed their trend growing to €240.6 million (+2.8%), because of the partial recovery of financial markets and the improvement of financial markets in the period.
CONTACTS:
www.bancagenerali.com
Media Relations Michele Seghizzi Tel. +39 02 408 26683
Investor Relations Giuliana Pagliari Tel: +39 02 408 26548
Operating costs totalled €63.6 million compared to €60.0 million for Q2 2022. 'Core' operating costs amounted to €57.0 million (+5.8% YoY), including €1.5 million development costs of BG Suisse.
Operating result reached €135.4 million, up 45% compared to Q2 2023, testifying to the strong reactive capacity of the business model.
Profit before taxation grew by 48.9% to €125.3 million, after recognising provisions, contribution to banking funds and net adjustments for €10.2 million compared to €9.6 million in the previous year.
COMMERCIAL RESULTS
Banca Generali's H1 total assets were €88.2 billion, up 9.1% compared to the same period of the previous year and 6.2% YTD, thanks to the extensive commercial activity of Banca Generali's network in a more favourable financial market context than the previous year, albeit still marked by severe volatility.
At 30 June, total assets hit a new all-time high in the Bank's business expansion process.
Managed solutions (funds/Sicavs and financial and insurance wrappers) grew by 4.7% to €42.0 billion YTD. This figure benefited in particular from the contribution of highly bespoke and diversified financial wrappers (+12.9% YoY; +7.4% YTD) and in-house funds (+5.7% YoY; +5.4% YTD). Among managed products, assets invested in ESG solutions continued to grow, reaching €14.1 billion at the end of the period, compared to €12.9 billion at the end of 2022 and accounting for 33.7% of the total.
Assets under Custody rose to €21.4 billion (+71.1% YoY; +37.6% YTD) fostered by the market context. This growth was supported by the strong acceleration of advisory on securities and bond portfolios through Advanced Advisory services. Assets under Advisory grew by over €1.0 billion in the period to €8.5 billion at the end of June (+26.1% YoY; +14.5% YTD), accounting for 9.6% of total assets.
Traditional life insurance products, which were penalised by the higher attractiveness of other investment instruments in a context of rising interest rates, amounted to €14.5 billion (-9.1% YoY; - 5.8% YTD).
With specific reference to the management company, BGFML's assets grew by 5.5% to €19.6 billion YTD (+5.3% YoY).
H1 net inflows proved very solid with €3.3 billion (+7.3% compared to the previous year), of which 87% gathered by the existing network2 . This result further confirmed the Financial Advisors' quality and proactivity in seizing the opportunities offered by market recovery after a challenging 2022, in a context of affluent and private households' increasing demand for wealth management advisory services.
CONTACTS:
www.bancagenerali.com
Media Relations Michele Seghizzi Tel. +39 02 408 26683
Investor Relations Giuliana Pagliari Tel: +39 02 408 26548
In terms of products, AUC solutions were high in demand (€4.9 billion YTD), in addition to a renewed interest for managed solutions able to grasp financial markets' opportunities (€629 million YTD). With regard to insurance products, net inflows were modest, yet still positive for insurance wrappers, while net inflows were negative for traditional life insurance policies.
Net inflows from Assets under Advisory performed particularly well, totalling €861 million YTD, thus more than fivefold the amount reported for the same period of the previous year.
BUSINESS OUTLOOK
Banca Generali confirms the financial targets defined in the 2022-2024 three-year Plan, disclosed to the market at the Investor Day 2022:
- Consistent Growth: cumulated net inflows estimated in the range between €18.0 billion and €22.0 billion for the 2022-2024 three-year period;
- Profitable Growth: generating a compound annual growth rate (CAGR) of recurring profit equal to 10-15% over the 2021-2024 three-year period;
- Remunerative Growth: distributing cumulated DPS of €7.5-€8.5 in the 2022-2025 period (cash view).
* * *
PRESENTATION TO THE FINANCIAL COMMUNITY
The half-yearly results will be presented to the financial community during a conference call scheduled today, 27 July 2023 at 14:00 CET.
It will be possible to follow the event by dialling the following telephone numbers:
from Italy and other non-specified countries: +39 02 3621 3011; from the United Kingdom +44 121 281 8003; from the USA +1 718 705 8794 (toll-free +1 855 265 6959)
* * *
Annexes:
-
- Banca Generali Consolidated Profit and Loss Statement at 30 June 2023
-
- Banca Generali Consolidated Profit and Loss Statement for the Second Quarter of 2023
-
- Banca Generali Reclassified Consolidated Balance Sheet at 30 June 2023
-
- Total Assets at 30 June 2023
CONTACTS:
www.bancagenerali.com
Media Relations Michele Seghizzi Tel. +39 02 408 26683
Investor Relations Giuliana Pagliari Tel: +39 02 408 26548
The Manager responsible for preparing the company's financial reports (Tommaso Di Russo) declares, pursuant to Paragraph 2 of Art. 154-bis of the Italian Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the documentary results, books and accounting records. Tommaso Di Russo (CFO of Banca Generali)
* * *
1) BANCA GENERALI – CONSOLIDATED PROFIT AND LOSS STATEMENT AT 30 JUNE 2023
m/€ 6M 2022 6M 2023 % Chg Net Interest Income 51.8 151.5 n.m. Net income (loss) from trading activities and Dividends 15.7 9.8 -37.3% Net Financial Income 67.5 161.3 n.m. Gross recurring fees 478.6 478.7 0.0% Fee expenses -247.2 -255.5 3.3% Net recurring fees 231.4 223.3 -3.5% Variable fees 15.6 7.6 -51.1% Total Net Fees 246.9 230.9 -6.5% Total Banking Income 314.4 392.2 24.7% Staff expenses -57.4 -59.9 4.4% Other general and administrative expense -52.7 -54.8 3.9% Depreciation and amortisation -17.6 -19.2 9.1% Other net operating income (expense) 7.8 6.6 -15.4% Total operating costs -119.9 -127.3 6.1% Operating Profit 194.5 264.9 36.2% Net adjustments for impair.loans and other assets -4.9 -0.6 -88.5% Net provisions for liabilities and contingencies -11.4 -18.7 64.7% Contributions to banking funds -5.9 -5.8 -0.6% Gain (loss) from disposal of equity investments -0.1 -0.1 62.5% Profit Before Taxation 172.4 239.7 29.6% Direct income taxes -41.1 -64.7 57.3% Net Profit 131.3 175.1 33.3% Cost/income ratio 38.1% 32.5% -5.7 p.p. EBITDA 212.2 284.1 33.9% Tax rate 23.8% 27.0% 3.2 p.p.
CONTACTS:
www.bancagenerali.com
Media Relations Michele Seghizzi Tel. +39 02 408 26683
Investor Relations Giuliana Pagliari Tel: +39 02 408 26548
2) BANCA GENERALI – CONSOLIDATED PROFIT AND LOSS STATEMENT FOR THE SECOND QUARTER OF 2023
| m/€ | 2Q 2022 | 2Q 2023 | % Chg |
|---|---|---|---|
| Net Interest Income | 29.3 | 80.5 | n.m. |
| Net income (loss) from trading activities and Dividends | 11.0 | 5.9 | -46.9% |
| Net Financial Income | 40.3 | 86.4 | n.m. |
| Gross recurring fees | 234.0 | 240.6 | 2.8% |
| Fee expenses | -122.6 | -130.6 | 6.6% |
| Net recurring fees | 111.4 | 110.0 | -1.3% |
| Variable fees | 1.9 | 2.6 | 37.7% |
| Total Net Fees | 113.3 | 112.6 | -0.6% |
| Total Banking Income | 153.7 | 199.0 | 29.5% |
| Staff expenses | -28.6 | -30.2 | 5.4% |
| Other general and administrative expense | -29.3 | -28.7 | -2.0% |
| Depreciation and amortisation | -8.9 | -9.8 | 10.0% |
| Other net operating income (expense) | 6.9 | 5.1 | -25.7% |
| Total operating costs | -60.0 | -63.6 | 6.1% |
| Operating Profit | 93.7 | 135.4 | 44.5% |
| Net adjustments for impair.loans and other assets | -2.8 | -1.7 | -38.5% |
| Net provisions for liabilities and contingencies | -6.4 | -8.5 | 33.3% |
| Contributions to banking funds | 0.0 | 0.2 | n.m. |
| Gain (loss) from disposal of equity investments | -0.4 | -0.1 | -78.8% |
| Profit Before Taxation | 84.1 | 125.3 | 48.9% |
| Direct income taxes | -21.1 | -33.3 | 57.7% |
| Extraordinary Tax agreement | 0.0 | 0.0 | n.m. |
| Net Profit | 63.0 | 92.0 | 46.0% |
| Cost/income ratio | 39.0% | 32.0% | -7.0 p.p. |
| EBITDA | 102.6 | 145.2 | 41.5% |
| Tax rate | 25.1% | 26.6% | 1.5 p.p. |
CONTACTS:
www.bancagenerali.com
Media Relations Michele Seghizzi Tel. +39 02 408 26683
Investor Relations Giuliana Pagliari Tel: +39 02 408 26548
3) BANCA GENERALI – RECLASSIFIED CONSOLIDATED BALANCE SHEET AT 30 JUNE 2023
| m/€ | ||||
|---|---|---|---|---|
| Assets | 31/12/2022 | 30/06/2023 | Change | % Change |
| Financial assets at fair value through P&L (FVPL) | 507.3 | 507.2 | -0.2 | 0.0% |
| Financial assets at fair value through other comprehensive income (FVOCI) | 1,120.1 | 958.9 | -161.2 | -14.4% |
| Financial assets at amortised cost | 14,478.6 | 13,057.6 | -1,421.0 | -9.8% |
| a) Loans to banks | 3,284.1 | 2,463.2 | -820.9 | -25.0% |
| b) Loans to customers | 11,194.5 | 10,594.4 | -600.1 | -5.4% |
| Hedging derivatives | 286.8 | 232.9 | -53.9 | -18.8% |
| Equity investments | 3.1 | 2.9 | -0.2 | -5.3% |
| Property equipment and intangible assets | 295.3 | 289.5 | -5.8 | -2.0% |
| Tax receivables | 72.3 | 91.4 | 19.2 | 26.5% |
| Other assets | 503.4 | 536.6 | 33.2 | 6.6% |
| Total Assets | 17,266.8 | 15,677.0 | -1,589.9 | -9.2% |
| Liabilities and Shareholders' Equity | 31/12/2022 | 30/06/2023 | Change | % Change |
|---|---|---|---|---|
| Financial liabilities at amortised cost | 15,504.0 | 13,784.0 | -1,720.0 | -11.1% |
| a) Due to banks | 544.531 | 526.6 | -17.9 | -3.3% |
| b) Direct inflows | 14,959.4 | 13,257.3 | -1,702.1 | -11.4% |
| Financial liabilities held for trading | 123.6 | 107.8 | -15.8 | -12.8% |
| Tax payables | 44.6 | 33.6 | -11.0 | -24.6% |
| Other liabilities | 281.2 | 439.3 | 158.1 | 56.2% |
| Special purpose provisions | 244.921 | 249.6 | 4.7 | 1.9% |
| Valuation reserves | -9.972 | -6.4 | 3.5 | -35.4% |
| Capital instruments | 50.0 | 50.0 | 0.0 | 0.0% |
| Reserves | 724.5 | 746.9 | 22.3 | 3.1% |
| Additional paid-in capital | 53.767 | 52.8 | -1.0 | -1.8% |
| Share capital | 116.852 | 116.9 | 0.0 | 0.0% |
| Treasury shares (-) | -80.1 | -72.7 | 7.4 | -9.2% |
| Shareholders' equity attributable to minority interest | 0.442 | 0.4 | -0.1 | -14.7% |
| Net income (loss) for the period | 213.034 | 175.1 | -38.0 | -17.8% |
| Total Liabilities and Shareholders' Equity | 17,266.8 | 15,677.0 | -1,589.9 | -9.2% |
CONTACTS:
www.bancagenerali.com
Media Relations Michele Seghizzi Tel. +39 02 408 26683
Investor Relations Giuliana Pagliari Tel: +39 02 408 26548
4) TOTAL ASSETS AT 30 JUNE 20233
| m/€ | Dec 2022 | Jun 2023 | Abs. Chg | Chg. |
|---|---|---|---|---|
| Mutual Funds and SICAVs of which - In House Funds of which - Third party Funds |
20,628 9,147 11,481 |
21,485 9,639 11,846 |
857 492 365 |
4.2% 5.4% 3.2% |
| Financial Wrappers | 9,364 | 10,053 | 689 | 7.4% |
| Insurance Wrappers | 10,130 | 10,451 | 321 | 3.2% |
| Managed Solutions | 40,121 | 41,988 | 1,867 | 4.7% |
| Traditional life Insurance policies | 15,340 | 14,450 | -889 | -5.8% |
| Managed solutions and life insurance | 55,461 | 56,439 | 978 | 1.8% |
| Assets Under Custody | 15,546 | 21,399 | 5,853 | 37.6% |
| Deposits | 12,051 | 10,409 | -1,643 | -13.6% |
| AuC products and current accounts | 27,598 | 31,808 | 4,210 | 15.3% |
| Total Assets | 83,059 | 88,247 | 5,188 | 6.2% |
| 3 Fee generating assets |
58,880 | 60,888 | 2,008 | 3.4% |
Assets Under Management (YoY)
| m/€ | Jun 2022 | Jun 2023 | Abs. Chg | Chg. |
|---|---|---|---|---|
| Mutual Funds and SICAVs of which - In House Funds of which - Third party Funds |
20,640 9,118 11,523 |
21,485 9,639 11,846 |
845 521 323 |
4.1% 5.7% 2.8% |
| Financial Wrappers | 8,907 | 10,053 | 1,146 | 12.9% |
| Insurance Wrappers | 10,296 | 10,451 | 155 | 1.5% |
| Managed Solutions | 39,843 | 41,988 | 2,145 | 5.4% |
| Traditional life Insurance policies | 15,905 | 14,450 | -1,454 | -9.1% |
| Managed solutions and life insurance | 55,748 | 56,439 | 691 | 1.2% |
| Assets Under Custody | 12,508 | 21,399 | 8,891 | 71.1% |
| Deposits | 12,662 | 10,409 | -2,253 | -17.8% |
| AuC products and current accounts | 25,170 | 31,808 | 6,638 | 26.4% |
| Total Assets | 80,918 | 88,247 | 7,329 | 9.1% |
| 3 Fee generating assets |
58,465 | 60,888 | 2,423 | 4.1% |
CONTACTS:
www.bancagenerali.com
Media Relations Michele Seghizzi Tel. +39 02 408 26683
Investor Relations Giuliana Pagliari Tel: +39 02 408 26548
3 Managed solutions and life insurance + Advanced Advisory on AUC.