Banca Generali: a successful business model 9M 2016 results and - PowerPoint PPT Presentation

Banca Generali: a successful business model 9M 2016 results and business overview 8 November 2016

Agenda 9M 2016 results Net inflows and recruiting Assets, clients, FAs Closing remarks 2 Investor presentation – 9M2016 results and business overview

9M results at a glance NNM AND ASSETS AT ALL TIME HIGH LEVELS € 1,170m (Vs. € 780m, +50% yoy) • Strong 3Q net inflows , 94% of which in managed products with a growing share represented by ‘ wrapper ’ solutions € 4,087m • Best-ever 9M net inflows (+36% yoy ). Growth well above (Vs. € 3,016m, +36% yoy) sector average thanks to the new wealth advisory approach, cutting-edge investment solutions and best-in-class professionals € 45.3bn • 9M assets at record-high levels of € 45.3bn, up by 9% YTD reflecting (Vs. € 41.6, +9% YTD) strong business expansion and asset persistency SOLID PROFITS IN A CHALLENGING ENVIRONMENT € 51.3m • 3Q net profit up by 97% to € 51.3m driven by a recovery of (vs. € 26.0m, +97% yoy) market-related revenues coupled with a sound trend in management fees € 118.6m • Solid 9M net profit at € 118.6m driven by growing assets and resilient margins offsetting tough financial markets and (vs. € 166.1m, -29% yoy) a temporary spike in operating costs 3 Investor presentation – 9M2016 results and business overview

9M & 3Q 2016 results * (€ m) 9M 15 9M 16 % Chg 3Q 15 3Q 16 % Chg Preliminary remarks Net Interest Income 51.3 44.3 -13.7% 15.4 14.7 -4.5% Total 9M revenues came out Gross fees 491.3 446.4 -9.1% 128.2 161.9 26.3% at € 323m (-12%) yet they are Fee expenses -202.0 -198.7 -1.6% -72.9 -67.1 -8.0% growing to € 270m (+1.2%) Net Fees 289.3 247.7 -14.4% 55.3 94.8 71.4% when stripping out Net income (loss) from trading activities 25.1 29.0 15.2% 0.0 10.9 n.s. performance fees Dividends 1.2 1.6 41.7% 0.0 0.2 452.4% Net income (loss) from trading activities and Dividends 26.3 30.6 16.4% 0.0 11.1 n.s. Total 9M operating costs Total Banking Income 366.9 322.6 -12.1% 70.8 120.6 70.4% posted a spike (+13%) due to Staff expenses -59.7 -64.7 8.2% -20.8 -21.2 1.9% € 9.3m of non-recurring items Other general and administrative expense -94.3 -98.4 4.3% -31.1 -34.4 10.6% related to the contribution to Depreciation and amortisation -3.4 -3.5 4.4% -1.2 -1.2 5.3% bank funds, the hiring of RMs Other net operating income (expense) 34.7 28.0 -19.5% 12.2 7.9 -35.3% and additional extraordinary Total costs -122.7 -138.6 13.0% -40.8 -48.9 19.8% items Cost /Income Ratio 32.5% 41.9% 9.4 p.p. 56.0% 39.5% -16.5 p.p. Operating Profit 244.3 184.0 -24.7% 29.9 71.7 139.4% Net adjustments for impair.loans and other assets -5.8 -0.8 -86.5% -2.5 0.8 -134.1% 9M provisions proving higher Net provisions for liabilities and contingencies -37.4 -41.7 11.4% 4.3 -13.3 -409.3% as bonus payments to the Profit Before Taxation 201.0 141.5 -29.6% 31.7 59.3 86.8% network move from an Direct income taxes -34.9 -22.8 -34.5% -5.7 -8.0 39.4% interim to an annual base Tax rate 17.3% 16.2% -1.1 p.p. 18.1% 13.5% -4.6 p.p. Net Profit 166.1 118.6 -28.6% 26.0 51.3 97.3% 4 Investor presentation – 9M2016 results and business overview

Total revenue breakdown 9M revenue breakdown ( € 322.6m) 362.3 340.5 100.3 52.7 51.3 50.5 44.3 30.6 31.4 26.3 -202.0 -198.7 9M15 (left column) – 9M16 (right column ) ( € m) Net Interest Income Trading & dividend Management fees Other fees and Performance fees Fee expenses trading commissions Management Financial income (NII + Other fees, trading commissions Fee-expenses proved fees were trading income) was and performance fees reflect stable in absolute value driven by higher as bonus schemes are supported by higher deposits persisting volatile financial assets and still accounted as and some profit taking on market conditions over the stable asset banking book to reduce risk provisions at the 9M16 period profitability exposure 5 Investor presentation – 9M2016 results and business overview

Stable Core NII in absolute value Net Interest Income Quarterly trend 3.1 0.5 • Stable core NII on a quarterly basis benefiting from higher banking assets 17.1 15.7 15.4 15.1 14.9 14.4 14.2 ( € 6.9bn, +31%) almost entirely offsetting lower investment return ( € m) • Financial asset portfolio at € 4.9bn is 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 retaining a defensive bias: 99% Core NII LTRO/TLTRO invested in bonds (o/w 87% in govt and 60% floating) with a 1.9 yrs Quarterly volumes duration and 4.3 yrs time to maturity Quarterly trend 6.9 7.2 • Lending exposure amounts to € 1.7bn 6.5 0.7 0.3 with an average rate of 1.24%. 5.6 5.4 5.3 1.1 1.7 1.7 5.0 0.3 0.6 0.3 NPL/total loans remains at negligible 0.4 1.7 1.7 1.7 1.7 1.6 levels 4.9 4.8 3.7 3.6 3.3 3.1 3.0 ( € bn) 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Financial assets Loans Others 6 Investor presentation – 9M2016 results and business overview

Management fees further accelerating 125.2 120.4 118.6 116.9 116.7 116.1 107.6 93.9 97.4 86.2 Management 75.5 78.9 81.8 + € 8.3m (+7.1%) fees reflect assets growth and stable margins ( € m) 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 44.8 43.2 41.7 40.8 39.8 39.8 38.3 Total average 35.1 32.3 30.9 29.7 28.8 27.8 assets further up + € 5bn (+12.6%) on higher inflows ( € bn) 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 0.30 0.29 0.29 0.28 0.28 0.28 0.28 Stable 0.27 0.27 0.27 0.27 0.27 0.27 management fee margins (%) 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 7 Investor presentation – 9M2016 results and business overview

Other fees and trading commissions Entry fees reflect poor financial 11.6 10.5 10.3 9.5 9.5 markets and the 7.6 7.4 6.0 5.7 lack of placement 4.4 3.9 3.6 3.6 of structured ( € m) products 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 9.8 9.5 Banking fees 8.9 8.4 8.5 8.0 7.5 proving stable while 7.1 6.8 6.8 6.6 6.2 6.1 trading commissions were weaker on lower ( € m) level of customers’ activity 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 72.0 0.76 Variable fees 0.25 0.26 0.24 0.28 0.23 0.22 0.18 confirmed as 0.17 0.07 26.9 27.0 24.8 0.10 27.3 20.5 0.01 0.01 16.2 15.7 linked to financial 13.1 7.6 5.0 markets 0.9 0.9 ( € m) 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 (% of average assets, annualised) 8 Investor presentation – 9M2016 results and business overview

One-off items driving costs temporarily higher Operating costs breakdown 66.2 ( € 138.6m) 59.6 1.6 51.7 49.3 9M15 (left column) 1.5 9M16 (right column ) 13.0 10.5 2.0 4.2 3.4 3.5 ( € m) 0 4.2 Non-sales Sales personnel BRRD and FITD G&A (+11%, +8.4% Depreciation personnel costs costs (+24%, +4.8% funds (differently ex one-offs) (+5%, +1.8% ex one- ex one-offs) accounted in 9M15) offs) Operating costs at € 1.6m related to non € 129.3m (+5.3%) excl. € 1.5m for a one- € 2.0m for variable € 2.0m € 1.6m € 1.5m € 4.2m € 4.2m accounted as recurring items off payment of the compensation for € 9.3m for one-off items costs instead of linked to the group Long-term- the recruiting of provisions like in reorganization and incentive plan high-profile 9M15 to other non-core (LTIP) private bankers Cost guidance of +4% by activities 2016 YE reaffirmed 9 Investor presentation – 9M2016 results and business overview

Capital solidity further enhanced CET1 ratio Total Capital ratio (transitional) (transitional) 16.9% 1.0% 15.9% 1.0% 15.3% 14.3% SREP 10.6% SREP 7% 2015 9M 2016 2015 9M 2016 Leverage Excess Capital (transitional) (transitional) 246 33 213 (0.7%) 6.3% 5.6% ECB 3% ( € m) 2015 9M 2016 2015 9M 2016 10 Investor presentation – 9M2016 results and business overview

9M 2016 results Net inflows and recruiting Assets, clients, FAs Business update & closing remarks 11 Investor presentation – 9M2016 results and business overview

Net inflows at record high levels Net Inflows Trend 4,087 3,016 38% 2,437 39% 1,846 40% 1,362 50% 754 62% 34% 61% 60% 31% 50% 66% 69% ( € m) 9M11 9M12 9M13 9M14 9M15 9M16 Exiting FA network Recruiting Banca Generali’s share of Assoreti total net inflows (1) 20.4% 15.5% 14.6% 13.6% 13.4% 11.8% (1) (1) 2011 2012 2013 2014 2015 9M16 (1) Excl. ISPB on a like for like basis 12 Investor presentation – 9M2016 results and business overview

Net Inflows: Banca Generali vs. sector 4.1 3.0 Banca 1.5 1.4 1.2 1.1 1.1 +36% Generali 0.8 ( € bn) +36% +27% +50% 1Q 2Q 3Q 9M 20.6 20.0 Assoreti 7.7 7.7 7.5 6.6 -3% 5.7 5.4 +3% -14% ( € bn) (ex-ISPB) +6% 1Q 2Q 3Q 9M 15.1 14.7 Top 5 -3% 5.5 5.6 5.5 4.8 4.1 4.2 (ex-BG) +3% ( € bn) +2% -13% 1Q 2Q 3Q 9M 2015 2016 Source: Company data, Assoreti (Italian Association of Financial Advisors ’ networks), Top5: Banca Fideuram (ex -ISPB), Banca Mediolanum, Finecobank, Allianz Bank, Azimut 13 Investor presentation – 9M2016 results and business overview