BANCA GENERALI INVESTOR PRESENTATION SEPTEMBER 2018
Preliminary remarks 3 1H 2018 results 8 Net Inflows, assets and recruiting 21 Business update 25 Deep dive on sector 29 Deep dive on strategy 37
EXECUTIVE SUMMARY Solid business trend NET NET INFL INFLOWS WS € 3.1bn 3.1bn Commercial trend exceeding expectations: net inflows at € 3.1bn. Growing relative (-17% 17% yoy) contribution from existing FAs Total assets at € 58.1bn (+11%), with managed assets at 76% and stable asset mix. TOTAL A AL ASS SSET ETS Assets under Advisory already at € 2.2bn of total (vs. € 0.3m at 1H 2017) € 58.1bn 58.1bn Solid network expansion : Total FA at 1,980 (+4%YoY) with recruiting activity on track (+11% +11% yoy) with year-end target Resilient net profit REP REP . NET . NET PR PROFIT OFIT Net profit at € 92.6m (recurring profit € 58.1m, +65%, variable profit € 34.5m, -53%) € 92.6m 92.6m (-14%) 14%) pointing for an enhanced revenue sustainability Tight cost management (+0.4%), with cost ratios at best practice level AD ADJ. . NET NET Capital ratios well above SREP requirements with CET1 ratio and TCR at 18.2% and PR PROFIT OFIT 19.8% after final FTA adoption of IFRS9 and IFRS15 € 58.1m 58.1m (+65%) +65%) 3
1H 2018 RESULTS: KEY TAKEAWAYS * TOTAL BANKING INCOME (€ m) 1H 2017 1H 2018 % Chg (reported -5%, adjusted +28%) Net Interest Income 31.6 28.1 -11.1% Net income (loss) from trading activities and Dividends 9.4 20.6 119.3% Net financial income up 19% on de-risking. Net Financial Income 41.0 48.6 18.7% Pick up in 2Q18 NII Gross fees 382.8 376.6 -1.6% Fee expenses -188.5 -201.9 7.1% Gross fees almost unchanged (-1.6%) on Net Fees 194.4 174.7 -10.1% strong recurring fees (+15%) offsetting the Total Banking Income 235.3 223.4 -5.1% sharp drop in performance fees (-70%) Staff expenses -43.9 -42.3 -3.5% Other general and administrative expense -69.6 -74.2 6.7% Depreciation and amortisation -3.8 -4.2 9.7% OPERATING COSTS +0.4% Other net operating income (expense) 24.0 27.1 12.8% Total operating costs -93.2 -93.6 0.4% Cost ratios at best practice level Cost /Income Ratio 38.0% 40.0% 2 p.p. Operating Profit 142.1 129.8 -8.7% PROVISIONS and WRITE-OFFS Net adjustments for impair.loans and other assets -3.2 -3.6 14.0% Net provisions for liabilities and contingencies -10.8 -10.6 -2.1% In line with 1H 2017 Gain (loss) from disposal of equity investments -0.1 -0.1 83.1% Profit Before Taxation 128.0 115.4 -9.9% HIGHER TAX-RATE on revenue mix Direct income taxes -19.9 -22.8 14.5% Tax rate 15.6% 19.8% 4.2 p.p. Net Profit 108.1 92.6 -14.4% 4
NET PROFIT SIGNIFICANT INCREASE IN RECURRING PROFITS NET PROFIT DEVELOPMENT 108.1 (40.2 40.2) (2.9) (0.3) 0.3) 92.6 (0.4) 0.4) 31.8 31.8 1.7 (4.6) No relevant Cost discipline write-off position 34.5 .5 (3.5 .5) Higher tax-rate 73.0 .0 Unfavourable YoY Resilient business comparison partially mix also supported offset by higher Decrease linked to by flexible trend in trading gains on de- high cash position fee expenses risking strategy 58.1 .1 throughout 4Q17 and 1Q18 on portfolio de-risking 35.1 .1 ( € m) 1H 2017 Variable revenues NII Recurring fees Opex Provisions & write- Tax 1H 2018 (performance fees downs & trading) Variable profits Recurring profits 5
ADJUSTED NET PROFIT STEADY INCREASE ADJ. INTERIM ADJ. QUARTERLY NET NET PROFIT PROFIT MOVING AVERAGE 1 30 Adj. Net profit 27.8 +65% 58.1 steadily improving 28 (+65% YoY at 26 26.2 interim level) 22.1 24 +47% 35.1 22 21.2 Adj. net profit 18.9 20 17.8 quarterly moving 18 16.8 average up by 47% 17.0 16 15.3 in the last year 14 ( € m) ( € m) 12 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 1H 2017 2018 1 - calculated on a four-quarters period 6
Preliminary remarks 3 1H 2018 results 8 Net Inflows, assets and recruiting 21 Business update 25 Deep dive on sector 29 Deep dive on strategy 37
REVENUES: NET FINANCIAL INCOME PICK-UP IN NII IN 2Q18 NET FINANCIAL INCOME NET INTEREST INCOME (NII) Higher Net financial income 48.6 (+19% YoY) on successful de- 41.0 +13% risking strategy that boosted 20.6 9.4 trading gains and increased 15.8 15.7 (m/ € ) 15.5 14.9 (m/ € ) liquidity in 1Q 2018 14.3 31.6 28.1 13.2 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 1H 2017 1H 2018 Ongoing recovery in NII NII Trading income supported by the increase in interest-bearing assets and the rise in yields started in 2Q18 INTEREST-BEARING ASSETS INTEREST MARGIN 8.9 8.4 8.3 Interest-bearing assets at 121 120 118 1.1 0.6 0.9 € 8.9bn, +7% YTD on higher 1.8 1.7 1.8 73 70 68 banking book ( € 6bn +5% YTD) (bn/ € ) (bps/ € ) driven by higher deposits thanks 6.0 6.0 5.7 to client acquisition 1H 2017 2017 1H 2018 1H 2017 2017 1H 2018 Banking book Loans Banks Investment portfolio lending portfolio 8
FOCUS ON BANKING BOOK BANKING BOOK BOND PORTFOLIO BOND PORTFOLIO MATURITY DURATION BY SECTOR BY COUPON 8% 3.7 3.5 3.5 2.3 2.0 1.7 37% 1.3 1.3 63% 92% 2017 1H18 2017 1H18 Duration Maturity Fixed rate Floating rate Duration HTCS/AFS Maturity HTCS/AFS IT Govt Corp. Financial BOND PORTFOLIO BY MATURITY 1.243 924 887 754 681 613 (m/ € ) 489 369 2018 2019 2020 2021 2022 2023 2024 >2025 9
REVENUES: NET FEE INCOME FEE BREAKDOWN GROSS FEES Recurring fees (management, entry & +14% NET FEE INCOME -70% +25% banking) up by 15% 317.9 280.0 gross, +26% net 74.0 36.1 28.9 22.6 194.4 Solid management 174.7 fees (+14%) driven by 22.6 74.0 higher assets and Management fees Entry & banking fees Performance fees stable margins 152.1 FEES EXPENSES Entry & banking fees 120.4 +26% (+25%) driven by new -20.6 -21.3 revenue streams -53.3 -57.5 -110.4 -127.3 ( € m) +3% Lower cost of growth -7% 1H17 1H18 +15% reflecting the different Performance fees net inflows mix in the Net recurring fees Fee expenses to FAs - Fee expenses to FAs - Fee expenses to Third quarter ordinary extraordinary Parties 1H17 1H18 10
PAY-OUT TO FA S FLEXIBLE BUSINESS MODEL PAY-OUT TO FAs PAY-OUT Lower pay-out ratio to TO THIRD-PARTIES FAs (-3.3 p.p.) at 54.3% interim level linked to 53.1% 51.0% lower cost of growth (lower recruitment, more 16.2 18.6 defensive product mix) 15.1 6.7% 6.3% 6.0% Ordinary pay-out to FAs staying within the 2.6 2.1 2.5 36% threshold 36.8 35.7 35.9 Lower pay-out to third- 4.2 4.1 3.5 (%) (%) parties (-0.7 p.p.) following an in-depth 1H16 1H17 1H18 1H16 1H17 1H18 review of existing agreements with third- Ordinary pay-out Pay-out to AM Others party AMs Cost of growth 11
REVENUES: MANAGEMENT FEES & MARGIN QUARTERLY TREND (M/ € ) MANAGEMENT 159.8 156.5 158.1 150.6 144.7 116.7 135.3 130.0 125.2 120.4 116.1 116.9 118.6 FEES 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 TOTAL AVG. 56.3 56.9 54.8 (bn/ € ) 52.9 51.2 49.0 MANAGED 46.2 44.8 43.2 40.8 39.8 39.8 41.7 ASSETS 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 MANAGEMENT FEE 0.30 0.29 0.29 0.29 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 0.28 MARGIN 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 12
REVENUES: OTHER FEES QUARTERLY TREND (M/ € ) 10.3 FRONT 7.6 6.5 5.8 5.5 5.0 4.7 4.6 4.4 3.9 3.7 3.6 3.6 FEES 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 BANKING 13.0 11.6 11.6 (M/ € ) 9.9 9.5 9.2 8.8 8.2 7.5 6.2 7.1 6.8 6.1 FEES 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 PERFORMANCE (M/ € ) 42.8 32.3 27.0 31.1 27.3 0.9 26.9 24.8 0.9 14.5 14.9 FEES 8.8 7.6 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 13
BREAKDOWN OF ANNUALISED GROSS FEE-MARGIN STABLE FEE MARGINS MANAGEMENT FEES ENTRY FEES Flat management fee margin (112 bps) in line with targets 1.16 1.13 1.12 1.12 1.12 1.11 1.07 0.11 0.11 Higher entry fee 0.08 margin (+2bps qoq) 0.05 0.04 0.04 0.03 thanks to new product (%) (%) launches (certificates) 2013 2014 2015 2016 2017 1Q18 2Q18 2013 2014 2015 2016 2017 1Q18 2Q18 Higher banking fee margin (+1bps qoq) PERFORMANCE FEES BANKING FEES thanks to the new advanced advisory 0.32 contract (BGPA) 0.12 0.22 0.10 0.09 0.18 0.08 0.08 0.16 0.07 0.07 0.15 Performance fee 0.11 0.05 margin well below 5Y (%) (%) average of 21 bps 2013 2014 2015 2016 2017 1Q18 2Q18 2013 2014 2015 2016 2017 1Q18 2Q18 Fee margin based on average assets on an annualised basis 14
OPERATING COSTS BREAKDOWN COST DISCIPLINE CONFIRMED Limited cost increase COST BREAKDOWN OPERATING COSTS (+0.4%) on tight cost control 43.7 43.3 93.6 Contribution to bank 93.2 35.3 rescue funds (BRRD & 33.6 FITD) more than -0.9% doubled on € 1m extraordinary +5% +0.4% contribution Lower sales personnel -32% costs on lower RMs 10.3 (M/ € ) +111% recruiting packages +10% 7.0 4.2 3.8 3.8 Lower G&A in absolute 1.8 value even including higher business activity Non-sales Sales personnel BRRD & FITD Depreciation General and further push on IT 1H 17 1H 18 personnel costs costs funds expenses (net of projects stamp duties) 1H17 1H18 15
Recommend
More recommend
