Banca Generali — Investor Presentation 2021

Nov 4, 2021

Informazione Regolamentata n. 0856-58-2021		Data/Ora Ricezione 04 Novembre 2021 13:00:40	Euronext Milan
Societa'	:	BANCA GENERALI
Identificativo Informazione Regolamentata	:	153691
Nome utilizzatore	:	BCAGENERALIN03 - Pastore
Tipologia	:	1.2
Data/Ora Ricezione	:	04 Novembre 2021 13:00:40
Data/Ora Inizio Diffusione presunta	:	04 Novembre 2021 13:00:41
Oggetto	:	Banca Generali 9M 21 Investor Presentation
Testo del comunicato

Vedi allegato.

9M 2021 RESULTS

4 NOVEMBER 2021

Our Mission: To be the No.1 Private Bank unique by Value of Service, Innovation and Sustainability

	Preliminary remarks
	9M 2021 Results
	Net Inflows, Assets and Recruitment
	Business update
	Appendix

9M 2021 RESULTS: EXECUTIVE SUMMARY NEW HIGHS IN TERMS OF QUALITY AND SUSTAINABILITY

Sound business momentum - exploiting structural sector tailwinds for managed savings

• Total Assets at €82.1bn (+17% YoY) with positive trend for wrapper solutions and in-house fund business (+€5.1bn YoY, +€3.2bn YTD)
• Net inflows totaled €5.5bn (+34%) as managed solutions doubled to €3.7bn (+106%)
• Growing FAs network by size (2,154 FAs, +3% YoY) and quality (Assets/FA at €38.1m, +14%)

Record high net profit - reflecting diversified fee based revenues and operating leverage

• 9M net profit at €270.9m (+38%) with a strong 3Q21 net profit at €80.8m (+27%) despite seasonality
• 9M recurring component at €132m (+18%) driven by buoyant recurring fees and tight cost discipline
• Strong contribution from recurring fee based revenues driven by higher assets, expanded offer and pricing transition

Sound Capital position – well ahead capital requirements stated by the Authorities (SREP, MREL)

• CET 1 ratio at 15.2%, TCR at 16.4% and leverage ratio at 4.4% with implied dividend assumptions above €1.25 DPS floor
• Capital ratios confirmed above SREP requirements of 7.75% at CET1 ratio level and 11.84%% at TCR ratio level
• No incremental capital requirements requested under MREL regulation, thus reflecting benefits of a capital-light business model

RESULTS AT A GLANCE KEY TAKEAWAYS

4

m/€	9M 20	9M 21	Chg %
Net Interest Income	67 .1	65 2	-2 8%
(loss) from trading and Dividends Net income activities	10 .1	24 .7	n.m.
Financial Net Income	77 1	89 9	16 5%
fees Gross recurring	575.2	688 .4	19 .7%
Fee expenses	-305 .4	-361 9	.5% 18
fees Net recurring	269.8	326.4	20.9%
Variable fees	100 .4	196 6	95 9%
Total Net Fees	370 3	523 0	41 3%
Total Banking Income	447 4	612 9	37 0%
Staff expenses	-76 .5	-80 0	4.7%
Other general and administrative expense	-67 0	-70 8	5.6%
and Depreciation amortisation	-23 .5	-25 8	9 9%
(expense) Other operating income net	3 0	5.5	83 9%
Total operating costs	-163.9	-171.1	4.4%
/Income Cost Ratio	.4% 31	.7% 23	-7.7 p.p.
Operating Profit	283 5	441 8	55 9%
adjustments for loans and other Net impair assets	-2 3	-4.3	84 8%
provisions for liabilities and contingencies Net	-18 9	-106 .1	n.m.
Contributions banking funds to	-11.1	-14.5	30 2%
(loss) from disposal of Gain equity investments	-0 .1	-0 2	39 .4%
Profit Before Taxation	251 0	316 7	26 2%
Direct income taxes	-55.2	-45.9	-16 9%
Tax rate	0% 22	14.5%	-7.5 p.p.
Profit Net	195 8	270 9	4% 38

Comments

Healthy total banking Income (+37%)

• Net Financial Income (+17%) boosted by trading income while NII proved flattish (-3%)
• Net Recurring Fees (+21%) benefitted from higher assets in managed solutions and higher profitability
• Record variable fees thanks to positive clients' performance and higher asset size

Strong operating profit (+56%)

• Operating costs (+4.4%) in line with guidance despite the sharp increase in assets
• Cost/Income ratio (net of performance fees) decreased to record low levels of 34% (from 40%)

Non operating charges (+38% excl. 2Q 21 one off provision¹ )

Higher non-operating charges primarily linked to FA loyalty plan and higher contributions to banking funds

Record high net profit (+38%)

Adj. tax-rate at 21.4% net of 2Q one-offs (tax alignment on goodwill/intangibles and extraordinary provision)

RECURRING NET PROFIT (1/2) WELL ON TRACK TO DOUBLE DIGIT GROWTH

Net Profit: Recurring vs. Variable m/€

Recurring net profit Variable net profit

RECURRING NET PROFIT (2/2) SUSTAINABLE OPERATING TREND GATHERS PACE

Build up of recurring net profit m/€

Strong increase in recurring net fees (+€56.6m) driven by increased exposure to in house solutions (LUX IM , insurance and financial wrappers)

Cost discipline (-€7.6m) as reflected in record low C/I ratios

Non-operating charges (-€18.1), mainly for contribution to banking funds and FAs' loyalty plan linked to the robust commercial results

AGENDA

Our Mission: To Be the No.1 Private Bank unique by Value of Service, Innovation and Sustainability

Preliminary remarks

9M 2021 Results

Net inflows, Assets and Recruitment

Business update

Appendix

NET FINANCIAL INCOME (1/2) PREPARING FOR THE LAUNCH OF A PORTFOLIO OF ALTERNATIVE INVESTMENTS

Interest bearing Assets bn/€

8

Temporary increase in liquidity in 3Q21 pending the set up of a Portfolio of Alternative Investments.

The launch of the new Portfolio implied the disposal of selected fixed income securities with high RWA absorption

The new portfolio will include €380 million referring to the senior notes of the NHS securitisations¹ that Banca Generali purchased from clients (settlement on 7 October 2021)

The size of the new portfolio will reach up to maximum €550 million (i.e. 4% of total Interest bearing assets).

The portfolio will be managed by a sector specialist and it will include additional strategies (infrastructure, SMID loans)

The impact on capital ratios is negligible

NET FINANCIAL INCOME (2/2) HIGH QUARTERLY RESULT DRIVEN BY THE TRADING COMPONENT

Net financial income m/€

The rebalancing of the portfolio had two main impacts:

• 1. the trading income benefitted from the disposal of the fixed income securities with realised capital gains for €11m in 3Q21 (out of total €13.3m)
• 1. The NII posted a small reduction linked to the lower investment yield of the investment portfolio and higher liquidity in the period

Current low duration of the investment portfolio (1.3 years) and high share of floating rate bonds (53% of total) represent an opportunity in case of interest rate increase

GROSS FEES (1/3) STRONG REVENUE BOOSTED BY FAVORABLE MARKET CONDITIONS

GROSS FEES (2/3): MANAGEMENT FEES ACCELERATION AT QUARTERLY LEVEL ON BETTER ASSET MIX AND PRICING TRANSITION

Quarterly trend m/€

Strong 9M management fees (+18% YoY) boosted by higher volumes and improving margins

Growing 3Q management fee margin from last years lows (+7bps YoY, +4% QoQ) thanks to improved asset mix and pricing transition

GROSS FEES (3/3): OTHER FEES GROWING CONTRIBUTION ACROSS THE BOARD

New Revenue Streams m/€

New revenue streams well on track to €70 million target for the year

Transactional banking and entry fees (+33%) boosted by strong entry fees and institutional brokerage

New revenue streams Transactional banking, front fees

FEE EXPENSES TOTAL PAYOUT RATIO IMPROVING FURTHER

Payout to the network decreased thanks to lower cost of growth

Payout to AMs was broadly stable while payout to others reported a temporary spike driven by an acceleration in advisory fees for Robo4AD. The spike is expected to be reabsorbed in the coming quarters

OPERATING COSTS (1/2) FULLY IN LINE WITH GUIDANCE DESPITE PUSH ON IT INVESTMENTS

Total operating costs m/€ Breakdown of core operating costs m/€

Others (perimeter inclusion/one-offs/covid donations)

Sales personnel

Core operating costs

G&A (net of stamp duties)

Staff costs Depreciation Operating costs provide evidence of the scalability of the business model

3Q 'others' operating costs posted a spike on costs for the development of the Swiss banking licence.

OPERATING COSTS (2/2) OPERATING LEVERAGE REMAINS SUPPORTIVE

Operating costs/Total assets¹ Cost/Income ratio1,2

Reported Cost/Income Adjusted Cost/Income ²

SOUND CAPITAL RATIOS AFTER ACCOUNTING FOR INVESTMENT DIVERSIFICATION AND DIVIDENDS

9M21 capital ratios based on

2021 dividend provision¹ temporary set in the higher side of the earnings' payout range foreseen by the in-force dividend policy. Capital ratios are also net of 2019/20 dividends whose payment dates² are set in November 2021 (€2.7 p,s.) and February 2022 (€0.60 p.s.)

Given its capital-light business model, 2022 MREL requirements proved in line with the SREP requirements (7.75% CET1 ratio and 11.84% TCR ratio) by the Bank of Italy.

AGENDA

Our Mission: To Be the No.1 Private Bank unique by Value of Service, Innovation and Sustainability

Preliminary remarks

9M 2021 Results

Net Inflows, Assets and Recruitment

Business update

Appendix

TOTAL ASSETS NEW HIGHS WITH A HIGHER QUALITY MIX

Managed Solutions bn/€

Banking products bn/€

Managed solutions growing strongly driven by LUX IM (+40% YoY,

+21% YTD)

Traditional life products undergoing a gradual rebalancing in favor of insurance wrappers

Banking Assets boosted by new clients' acquisition and more compelling offer of advisory services for Assets under Custody (AuC)

BG FUND MANAGEMENT LUX (BG FML) LUX IM GROWTH DRIVEN BY INNOVATIVE STRATEGIES

BG Selection BG Alternative

BG FML – Net inflows in retail fund classes m/€

Total net inflows in retail fund classes (BG FML)

Total net inflows in LUX IM retail fund classes

LUX IM added €3.3bn assets in the last 12 months and now stands at 76% of total LUX based assets (+6 ppts)

3Q net inflows in LUX IM benefitted from the roll out of new investment lines at the end of July 2021 (i.e. more focus on equity and alternative/flexible strategies, strengthening of ESG offer)

TOTAL NET INFLOWS (1/2) HIGHER VOLUMES AND BETTER PRODUCT MIX

NET INFLOWS BY ACQUISITION CHANNEL WELL BALANCED GROWTH ACROSS EXISTING FAS AND NEW RECRUITS

Recruitment trend (# of Recruits)

From Retail and Private Banks From other FA Networks

Net Inflows driven by existing FAs (76% of total net inflows), yet with a growing contribution from recruiting

Revamping recruiting activity from last year's lows. No. of new recruits almost doubled (+21 new professionals in 3Q)

OCTOBER 2021 COMMERCIAL UPDATE SOLID NET INFLOWS, WITH TEMPORARY SPIKE IN LIQUIDITY

AuC

Total net inflows bn/€

Current accounts

Funds/Sicavs

• Financial wrappers
• Insurance wrappers

Assets under Advisory bn/€

AGENDA

Our Mission: To Be the No.1 Private Bank unique by Value of Service, Innovation and Sustainability

Preliminary remarks
---------------------	--

9M 2021 Results

Net inflows, Assets and Recruitment

Business update

Appendix

PLAN APPROACHING COMPLETION(1/3) EXCEEDING GROWTH TARGETS BY VOLUMES (AND QUALITY)

Total assets above target with a better mix: +€15bn in managed solutions alone (60% of total increase)

Net Inflows already well above target with a larger than expected contribution from existing FAs (74% vs. 58% target)

APPROACHING THE END OF THE PLAN (2/3) CLEAR PATH TOWARDS SUSTAINABLE HIGHER RESULTS

Income above guidance thanks to better product mix, diversification and pricing transition

Core Operating costs in line with guidance even after inclusion of M&A activities within 'core' perimeter (originally excluded)

Core Cost coverage increased from 2.16x in 2018 to 2.59x in 9M21 thanks to scalability of the business model

APPROACHING THE END OF THE PLAN (3/3) COMMITMENT TO DIVIDEND POLICY IN LINE WITH TARGET AND TRACK RECORD

SAVE THE DATE

FEBRUARY 2022

Details to follow

AGENDA

NHS SECURITISATIONS UPDATE ON PURCHASE AND ACCOUNTING

PURCHASE OFFER	In September, Banca Generali launched an offer to its clients to purchase all senior notes of the outstanding securitisations of health receivables (NHS) for a total of €478m. The purchase was successfully completed with a subscription rate close to 100% of total clients and outstanding positions. All clients received a sum not lower than the sum invested, net of repayments and coupons received
VALUATION	The book value of the securitization will be €380 million on the back of the provision for €80m taken in 2Q 2021 and the average 96% repurchase price. The €380 million represents a valuation of 79% of the outstanding senior notes.
BACKGROUND	This decision to buy-back the securitization has been taken in the light of: 1) Some critical issues that emerged in the procedures for the recovery of healthcare receivables, also related to the long pandemic situation; 2) 2) An in-depth analysis of the portfolio of receivables carried out with the support of a sector specialist, which identified a fair value and quality lower than the one expected
OBJECTIVE	Although Banca Generali only acted as a Placement Agent, it has nevertheless decided to take on this commitment to protect its clients' investment, leveraging on its capital strength and solid financial results. The investments of Banca Generali's clients will thus be fully protected.

INTEREST-BEARING ASSETS INCREASING DIVERSIFICATION OF FINANCIAL ASSETS

Variable rate bonds 53%, Fixed rate bonds & zero coupon 47%

NON-RECURRING ITEMS TWO POSITIVES, ONE NEGATIVE

BG FML – FEE STRUCTURE REPRICING ACTIONS

NOTE: 1) New performance fee mechanism will apply from 1 January 2022 on the existing stock of assets and from the launch date for the new ones; 2) Margins are on a LfL basis (ex- Nextam & Valeur); 3) Changes to management fee and other fees will apply from the approval from CSSF to both new fund launches and to the existing stock of assets; 4) Barring any major market downturn 32

PRICING REVIEW - FINAL STAGE NEW PERFORMANCE FEES CALCULATION MECHANISM

• Mechanism: High Water Mark equivalent to the maximum NAV reached by the fund. It allows performance fees to be withdrawn only upon reaching a new High Water Mark
• Reference period: from inception

• Crystallization: daily

• Mechanism: High on High: Performance fees can only be charged if the NAV of the calculation day exceeds the NAV of the previous withdrawal day

• Reference period: 5 years
• Crystallization: yearly (with daily accrual)

NEW REVENUE STREAMS GROWING DELIVERY ACROSS ALL PRODUCT LINES

Assets under advisory (AuA) bn/€

RETAIL BROKERAGE

Trading volumes bn/€

12.3

+33%

16.4

18.3

+33%

24.3

4.0 4.4

6.7 8.6

≥ 30

9M20 9M21 3Q20 3Q21 2021E

9M20 9M21 3Q20 3Q21 2021E

1.4

9M20 9M20 3Q20 9M21 2021E

6.6

≥ 13

Advanced Advisory fees (+33%) growing steadily on higher volumes (+33%) and

stable gross margin (49bps)

Retail Brokerage revenues (+13%) posted a steady improvement in volumes and trading mix (more equities and foreign markets) despite seasonality

Structured products (+33%) well above guidance in view of growing liquidity

Notional new issues m/€

STRUCTURED PRODUCTS

KEY BUSINESS DRIVERS - LUX IM NEW TOOLS SUPPORTING LUX IM GROWTH

Switch Plans: Net Inflows in Funds m/€

Strong delivery of new tools linked to LUX IM:

PAC (Savings plans): more than doubled by number since the start of the year. Decent size (€42K) and length (five years) on average

TWIN MIX (Switch plans): solid growth of assets invested in low volatility funds to be switched into higher volatility subfunds within LUX IM offer

KEY BUSINESS DRIVERS - ESG NET INFLOWS IN ESG ASSETS AT ONE BILLION EURO

LUX IM Others

KEY BUSINESS DRIVERS - INSURANCE GRADUAL SHIFT TOWARDS INSURANCE WRAPPERS

Insurance wrappers

Total Insurance assets

Insurance products

• Hybrid solution combining on average 30-40% of LOB1 with single funds/securities and ETF

• Private insurance with flexible booking and AM centers and dedicated lines for HNWI

• New saving plans with insurance waivers linked to tailor-made clients' objectives

Growing focus on wrapper solutions in light of current ultra low rate environment

Diversified insurance solutions for different client needs, all combining high level of personalization

• BG Stile Libero bespoke insurance wrappers with distinctive waivers leveraging on Assicurazioni Generali's expertise
• LUX Protection Life insurance solutions for HNWI for wealth and succession planning
• BG Progetti di Vita Savings plans with insurance covers linked to life

FINANCIAL ADVISOR NETWORK STEADY GROWTH BY SIZE AND QUALITY

2013 2014 2015 2016 2017 2018 2019 2020 9M20 9M21

Headline FA retention at 97.7% - Core FA retention at 99.3%

Financial Advisor Network, No. of FAs FA Network, by portfolio size and skills

Clusters	(% of Assets)	No. of FAs	Assets per FA m/€ 2
Wealth Managers (PTF>€50m)	35%	3491	91.6
Private Bankers (PTF€15-50m)	53%	1,3271	34.2
Financial Planners (PTF <€15m)	5%	3331	13.8
Relationship Managers	7%	721	78.8

117 FA Teams (11% of total assets) - Avg. Portfolio: €79.0m assets per Team

BEST FA QUALITY IN THE INDUSTRY STEADY VALUE GROWTH

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.