Banca Generali — Investor Presentation 2020

May 14, 2020

Informazione Regolamentata n. 0856-29-2020		Data/Ora Ricezione 14 Maggio 2020 12:50:48	MTA
Societa'	:	BANCA GENERALI
Identificativo Informazione Regolamentata	:	132391
Nome utilizzatore	:	BCAGENERALIN03 - Pastore
Tipologia	:	1.2
Data/Ora Ricezione	:	14 Maggio 2020 12:50:48
Data/Ora Inizio Diffusione presunta	:	14 Maggio 2020 12:50:49
Oggetto	:		Banca Generali 1Q20 Investor Presentation
Testo del comunicato

Vedi allegato.

1Q 2020 RESULTS

14 MAY 2020

Preliminary remarks

1Q 2020 results

Net Inflows, assets and recruiting

Business Update

Appendix

BANCA GENERALI & COVID-19 THREE MAIN LINES OF ACTION

Health and safety of all our Employees, Financial Advisors, Clients and their families

• 90% of employees working from home and ensuring 100% of business continuity

• Ongoing health information delivered with Covid-19 newsletter and video messages from CEO/HR
• Dedicated health protection phone line and medical assistance available for all employees, strict health measure in place in any building/ branch

Focus on core business: protecting the wealth of our clients

• Business continuity focused on proactive client engagement leveraging on digital tools (digital collaboration, home & mobile banking) and enhanced contact center operations
• On going communication on markets, investment services and products
• New product initiatives to manage growing liquidity in a more efficient way for both clients and bank

Actions to support Italy, its local Communities and its Healthcare System

• €100m in financing for SME leveraging on Generali as anchor investor within its 'Extraordinary International Fund for Covid-19'
• New €140m healthcare receivable securitization program to provide liquidity to companies in the health care sector
• €1m donation from Banca Generali and its employees to the Italian healthcare and Red Cross

1Q 2020 RESULTS: EXECUTIVE SUMMARY SOLID TREND IN SPITE OF COVID-19

Total assets at €65.2bn

• Total assets on a rollercoaster in 1Q20: from multi-year financial markets' highs at mid-February to a multi-year lows in March. Back on a recovery path in April (€67.0bn). Overall, sound reaction from clients and no sell-off of managed products. Also, assets under advisory proved resilient at €4.6bn despite market pressure.
• Positive net inflows at €1.5bn in 1Q20 in a context of market crash, lockdown and social distancing measure throughout Italy. Net inflows further boosted by €408m in April to €1.9bn. Sound increase in key managed products such as LUX IM (+€0.8bn) and insurance wrappers (+€0.23bn) thanks to ongoing product innovation and new launches

Net profit at €79.1m (+19%)

• Solid operating trend in key recurring revenue lines: management fees (+7% YoY) and new revenue streams from advisory, structured products, brokerage and sound trend in core operating costs (+3.7%)
• Positive contribution from variable fees partially offset by higher adjustments and provisions reflecting primarily the different market conditions at the end of the period

Sound Capital position incorporating dividends distribution in line with guidance

• Solid Capital position with TCR reported at 15.5% and CET1 ratio at 14.1%, both well above the requirement set by Bank of Italy on 1 April 2020 on the aftermath of Covid-19
• Capital ratios incorporated a 100% deduction of 1Q 2020 net profit in line with the guidelines provided by the 2019-21 Strategic Plan. Capital ratios also incorporated a 100% deduction of the 2019 dividend that has been indeed approved by the AGM of the 23 April

RESULTS AT A GLANCE KEY TAKEAWAYS

(€ mil)	3M 19	3M 20	% Chg
Net Interest Income	15.9	20.2	27.5%
Net income (loss) from trading activities and Dividends	4.0	4.0	-0.4%
Net Financial Income	19.9	24.2	21.9%
Gross recurring fees	172.8	195.5	13.2%
Fee expenses	-94.3	-104.4	10.7%
Net recurring fees	78.5	91.1	16.1%
Variable fees	35.2	53.4	51.7%
Total Net Fees	113.7	144.5	27.1%
Total Banking Income	133.6	168.8	26.3%
Staff expenses	-21.8	-25.7	17.8%
Other general and administrative expense	-21.9	-24.5	12.0%
Depreciation and amortisation	-6.8	-7.7	13.9%
Other net operating income (expense) 1	0.4	0.7	87.8%
Total operating costs	-50.0	-57.1	14.2%
Cost /Income Ratio	32.4%	29.3%	-3.1 p.p.
Operating Profit	83.5	111.6	33.6%
Net adjustments for impair.loans and other assets	4.0	-1.1	n.m.
Net provisions for liabilities and contingencies	-6.1	-8.2	34.5%
Gain (loss) from disposal of equity investments	-0.1	0.0	-38.0%
Profit Before Taxation	81.4	102.3	25.7%
Direct income taxes	-14.7	-23.2	57.7%
Net Profit	66.6	79.1	18.7%

Comments

Sound increase in total banking income (+26%)

• Net Financial Income (+22%) lifted by higher banking assets and more efficient treasury management
• Net Recurring Fees (+16%) driven by resilient management fees, higher new revenue streams and lower pay-out ratio

Headline operating costs inflated by change in perimeter ¹

• Core operating costs (+3.7%) included a push on IT strategic product, the launch of 'BG Training & Innovation Hub' and the most relevant key marketing initiatives to the start of the year
• Covid-19 related costs almost entirely linked to donations (€1.8m expected by year-end)

Conservative approach below the operating line

Net adjustments related to changes in credit risk of European govt. bonds and higher provisions for future risks and charges. Both items linked to the impact of Covid-19 on the broader economic outlook

Net profit at €79.1m (+18.7%)

NET PROFIT BREAKDOWN RECURRING NET PROFIT DRIVEN BY A SOLID OPERATING TREND

Recurring net profit

6

Preliminary remarks

1Q 2020 results

Net Inflows, assets and recruiting

Business update

Appendix

NET FINANCIAL INCOME SOLID NII TREND

Total Assets and Interest-bearing Assets bn/€

GROSS FEES POSITIVE TREND AND RESILIENCE CONFIRMED

MANAGEMENT FEES SOLID MANAGEMENT FEE DESPITE THE HIT

Quarterly trend m/€

1Q20 management fees higher than last year (+7% YoY) thanks to asset expansion and limited quarterly erosion (-2% QoQ ) after financial markets' collapse in March

Management fee margin at 1.37% on like-for-like basis. The difference in QoQ margin is related primarily (2bps) to the calculation of portfolio management fees that are tied to the final quarterly assets instead of the average (hence, more hit by the crash of the markets in March).

BANKING AND ENTRY FEES GROWING FEE DIVERSIFICATION

Banking and Entry Fees m/€

Breakdown by product/service mix m/€

FEE EXPENSES PAY-OUT RATIO MOVING DOWN

Total Fee Expenses m/€ Pay-out to the network %

Cost of growth One-off item Ordinary pay-out

Ordinary pay-out: decrease reflecting the different asset mix in the period and lower recruiting activity

Pay-out to third-party: slight increase linked to a €0.5m one-off item and seasonality

OPERATING COSTS (1/2) OPERATING COSTS DRIVEN BY ASSET EXPANSION AND PERIMETER INCLUSIONS

Staff costs

SG&A (net of stamp duties)

• Breakdown of core operating costs m/€
• 1Q20 operating costs included firsttime consolidation of Nextam & Valeur, including €1.2m one-offs costs for the ongoing integration
• Core operating costs (+3.7%) comprised all major planned marketing events as they took place ahead of Covid-19, including the launch of 'BG Training and Innovation Hub'. SG&A also included more costs for IT and product innovation
• No major additional costs related to Covid-19 (estimated cost at €1.8m at year-end, of which €1m donation)

Sales personnel

Core operating costs

OPERATING COSTS (2/2) EFFICIENCY CONFIRMED DESPITE TEMPORARY SPIKE

0.51% 0.45% 0.42% 0.38% 0.34% 0.34% 0.32% 0.35% 2013 2014 2015 2016 2017 2018 2019 1Q20

Operating costs/Total assets Cost/Income ratio

Reported Cost/Income Adjusted Cost/Income¹

CAPITAL POSITION SOLID CAPITAL REAFFIRMED WITH FULL CAPITAL RETENTION FOR DIVIDENDS

• 1Q 2020 net profit was fully retained in compliance with the dividend policy approved by the 2019-21 Business Plan
• The 2019 dividends fully reduced own funds following confirmation of the dividend proposal to AGM
• Capital absorption was mainly linked to the reduction in HTCS reserves resulting from higher sovereign risks amid fears for Covid-19
• Liquidity ratios and leverage well above requirements.

Preliminary remarks

1Q 2020 results

Net Inflows, assets and recruiting

Business update

Appendix

TOTAL ASSETS VOLUMES AND PRODUCT MIX

Total Assets bn/€

Managed Solutions bn/€

Banking products bn/€

TOTAL NET INFLOWS SOLID TREND AMID LOCKDOWN MEASURES

• Solid net inflows driven by flight to quality and search for asset protection
• Positive product mix within managed assets as LUX IM and insurance wrappers were well in demand
• Net Inflows in LUX IM driven by saving plans, switch plans and ESG investment lines

TOTAL NET INFLOWS RECORD HIGH CONTRIBUTION FROM EXISTING FAS

^{14 10 6} 31 9 15 1Q18 1Q19 1Q20 From retail and Private Banks From other FA network ^{21 19} 45 Recruitment trend (# of Recruits)

APRIL 2020 COMMERCIAL UPDATE SOLID NET INFLOWS, REBOUND IN ASSETS AND MIX

Managed solutions

• Traditional life policies
• Banking products

Preliminary remarks

1Q 2020 results

Net Inflows, assets and recruiting

Business update

Appendix

2020 KEY BUSINESS INITIATIVES KEY BUSINESS DRIVERS AND NEW LEVERS

3 Key business drivers: well on track with timely new issues to reflect investment

• 3 New Business levers: ready but on hold amid Covid-19 with selected new initiatives linked to 'State guarantee schemes' linked to Covid-19
• 3 New revenue streams: advisory and structured products already at targets and BG SAXO on track

2020 KEY BUSINESS DRIVERS EXPLOITING GROWTH POTENTIAL OF LUX IM

• LUX IM is strengthening its success within managed products thanks to its wide range of investment lines and ongoing launch of innovative strategies
• Growth is also supported by new investment programs to grow equity exposure:
  • TWIN MIX (scheduled switch from cash to equity): growth boosted by a cash initiatives in April
  • PAC Savings plan boosted by a product review in November 2019

Quarterly net inflows in LUX IM retail fund classes, bn/€

Scheduled switch plans m/€

Saving plans, m/€

2020 KEY BUSINESS DRIVERS LEVERAGING ON DISTINCTIVE COMMERCIAL APPROACH FOR ESG

• Strong boost to ESG assets provided by the launch of a tailor-made digital platform and dedicated ESG commercial approach linked to UN's SDG in 1Q 2019
• Ongoing product innovation dedicated to ESG investment strategies within LUX IM (i.e. new long/short with industrial advisory from a specialist private equity firm)

Share of ESG assets on total managed assets %

2020 KEY BUSINESS DRIVERS WRAPPER SOLUTIONS AND PRIVATE INSURANCE

• Steady growth in insurance solutions with a bias towards insurance wrappers (BG Stile Libero 50 Plus) and the newly launched private insurance (LUX Protection Life)
• Launch of a limited campaign of traditional life product (BG Custody 2020) to managed the spike in liquidity from new clients during the peak of financial market volatility in March amid Covid-19

INSURANCE SOLUTIONS

2020 NEW BUSINESS LEVERS LAUNCH OF NEW BUSINESS LEVERS POSTPONED TO GIVE WAY TO INITIATIVES FOR COVID-19

• New dedicated initiatives within business levers are ready but their launch is on hold amid the outbreak of the pandemic Covid-19
• Priority to lending initiatives with the State guarantee Fund and financing schemes to support SMEs/Healthcare sector

NEW BUSINESS LEVERS

Lending

• Leverage on 'State Guarantee Fund' within the State program for Covid-19 to boost lending offer to SMEs
• Launch of new 'Lombard Plus' for professional investors

Private markets

• New €100m financing for SMEs within the framework of Generali 'Extraordinary International Fund' for Covid-19
• New €140 receivable securitisation program for healthcare companies
• Launch of two new closed-end Alternative Funds (FIA and ELTIF) postponed due to Covid-19

International

• Launch of BG International Advisory with following services:
  • Advice on investments of equities, bonds and ETFs (soon also funds)
  • Integrated representation on BGPA of the assets held by Cornér bank
  • Trading services
• Extensive training activities on the FAs Network with regulatory/fiscal focus
• Extending offer to legal entities

2020 NEW REVENUE STREAMS MATERIAL CONTRIBUTION TO BUSINESS

• Material contribution to business diversification and financial results from all initiatives
• Advanced advisory and structured products have already achieved their 2021 goals while BG SAXO is rapidly accelerating

FOCUS ON OPERATIONS DURING LOCKDOWN MARCH AND APRIL BUSINESS ACTIVITY

• 9 out of 10 FAs completed operations digitally
• 10 out of 10 FAs completed their training programs digitally

Clients

• 2 out of 3 Clients completed operations digitally
• 1 out of 3 Clients completed operations paperless with registered phone calls, mail authorizations

FAs Operations

Assets transferred (# operations)

IN	5,977 (same as in Mar./Apr. 2019)
OUT	860 (-11% vs. Mar./Apr. 2019)

Total No. of operations in funds/SICAVs

IN	39,689 (+2% vs. Mar./Apr.2019)
OUT	26,101 (-25% vs. Mar./Apr. 2019)
Switches	13,287 (+41% vs. Mar./Apr. 2019)

Preliminary remarks

1Q 2020 results

Net Inflows, assets and recruiting

Business update

Appendix

NET FINANCIAL INCOME (2/2) FOCUS ON FINANCIAL ASSETS

Financial Assets by IFRS classification bn/€

Bond Classification

Bond breakdown by maturity

3-5 yrs > 5 yrs

ASSETS UNDER ADVISORY (AUA) AIMING HIGH

BG FUND MANAGEMENT LUX (BG FML) ASSETS POSITIVE ASSET REBOUND IN APRIL

5.9 7.2 6.5 7.2 9.2 9.7 8.2 9.0 1Q19 2019 1Q20 Apr-20 Institutional fund classes Retail fund classes 15.1 14.7 16.9 BG FML - Retail fund classes bn/€ 16.2

ADVISORY NETWORK (1/2) STEADY QUALITY GROWTH

FA Network, # FAs FA Network, by portfolio size and skills

ADVISORY NETWORK (2/2) BEST-IN-CLASS PORTFOLIO AND STILL GROWING

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 accounting records. T. Di Russo, CFO

Certain statements contained herein are statements of future expectations and other forward-looking statements.

These expectations are based on management's current views and assumptions and involve known and unknown risks and uncertainties.

The user of such information should recognize that actual results, performance or events may differ materially from such expectations because they relate to future events and circumstances which are beyond our control including, among other things, general economic and sector conditions.

Neither Banca Generali S.p.A. nor any of its affiliates, directors, officers employees or agents owe any duty of care towards any user of the information provided herein nor any obligation to update any forward-looking information contained in this document.

2020 UPCOMING EVENTS

JULY
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5	6	7	8	9	10	11
12	13	14	15	16	17	18
19	20	21	22	23	24	25
26	27	28	29	30	31

1H 2020 Results Conference Call

Su Mo Tu W e Th Fr Sa 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 NOVEMBER

9M 2020 Results Conference Call

Investor Relations Contacts

Giuliana Pagliari Investor Relations Manager Phone +39 02 408 26548 Mobile +39 331 65 30 620

E-mail: giuliana.pagliari@bancagenerali.it E-mail: investor.relations@bancagenerali.it

Corporate Website www.bancagenerali.com

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