Banca Generali 1H12 Results and Business Update Milan, 25 July 2012
Today’s Agenda � 1H 2012 Results � Net I nflows, AUM and Recruiting � Business Update � Closing Remarks 2 Banca Generali 1H 2012 Results and Business Update
1H 2012 Results Banca Generali 1H12 net profit soars to €67m (+ 80% yoy), the highest level in the bank’s history Net Profit (YoY) Positive business momentum despite challenging markets (€ m) 67.3 � 1H12 Net I nflows at €1,044 m (9.0% of AUM, annualized 1 ), equal to 83% of FY 2011 net inflows, of which + 80% � €643 m in managed assets, €401 m in 37.4 administered assets � Total assets at €24.6 bn (+ 6% YTD, + 4% yoy) Strong set of economic results 1H11 1H12 � Revenues + 42% , with positive contribution from all business lines Quarterly Net Profit � Cost/ income ratio at its lows of 39.6% , thanks to a tight cost discipline (€ m) 28.1 � Excellent AUM profitability level at 1.91% , + 33 bps yoy + 62% Solid capital position confirmed 17.4 � Solid excess capital position, despite spread widening in the period 2Q11 2Q12 � Total capital ratio at 14.3% and Tier 1 Capital at 12.5% (vs. 12.8% and 11.1% respectively at 2011YE) 1 as percentage of the assets at the start of the year 3 Banca Generali 1H 2012 Results and Business Update
1H 2012 Results Consolidated 1H 2012 Profit and Loss Account: main highlights (€ m) 6M11 6M12 % Chg 6M11 6M12 % Chg (reported) (reported) (excl. GI L) (excl. GI L) � Higher I nterest income � Higher I nterest income thanks to LTRO, higher thanks to LTRO, higher Net I nterest I ncom e 2 1 .5 5 1 .3 1 3 8 .5 % 2 1 .5 5 1 .3 1 3 8 .6 % investment yield, higher investment yield, higher Commission income 179.1 194.1 8.4% 164.3 180.0 9.6% deposits deposits Commission expense -80.8 -77.7 -3.8% -69.4 -67.1 -3.4% � Net commissions (+ 19% � Net commissions (+ 19% Net Com m ission 9 8 .3 1 1 6 .4 1 8 .4 % 9 4 .8 1 1 2 .9 1 9 .0 % yoy) driven by higher assets yoy) driven by higher assets Net income (loss) from trading activities -51.9 8.8 -117.0% -51.8 8.8 -117.0% and by the positive fund and by the positive fund Dividends 57.7 0.7 -98.8% 57.7 0.7 -98.8% performance performance Net income (loss) from trading activities and Dividends 5.8 9.5 63.2% 5.8 9.5 62.5% � Trading income benefitting Net Banking I ncom e 1 2 5 .6 1 7 7 .1 4 1 .0 % 1 2 2 .2 1 7 3 .7 4 2 .1 % � Trading income benefitting from trading opportunities on from trading opportunities on Staff expenses -33.3 -34.9 4.8% -32.4 -33.9 4.7% the Italian bond market the Italian bond market Other general and administrative expense -41.4 -44.3 7.1% -41.1 -44.0 7.1% Depreciation and amortisation -1.9 -2.3 19.8% -1.9 -2.2 20.1% � Excellent cost control � Excellent cost control (2.1% yoy), following a (2.1% yoy), following a Other net operating income (expense) 5.8 9.2 58.4% 5.8 9.1 58.2% severe cost discipline severe cost discipline Total costs -70.8 -72.3 2.2% -69.6 -71.0 2.1% Cost / Income Ratio -54.8% -39.6% 15,2 p.p. -55.4% -39.6% 15,8 p.p. � Provisions reflect the strong � Provisions reflect the strong Operating Profit 5 4 .9 1 0 4 .8 9 1 .1 % 5 2 .6 1 0 2 .6 9 5 .1 % trend in net inflows and faster trend in net inflows and faster Net adjustments for impair. loans and other assets -1.7 -3.7 122.5% -1.7 -3.7 122.5% achievement of FY recruiting achievement of FY recruiting target Net provisions for liabilities and contingencies -9.9 -14.3 44.7% -10.0 -14.3 42.7% target Profit Before Taxation 4 3 .3 8 6 .8 1 0 0 .5 % 4 0 .9 8 4 .6 1 0 6 .9 % � Net profit + 80% yoy � Net profit + 80% yoy Direct income taxes -4.6 -17.8 287.9% -4.4 -17.6 303.9% despite a significantly higher despite a significantly higher Tax rate 10.6% 20.6% 10 p.p. 10.7% 20.9% 10,2 p.p. tax-rate (20.9% vs. 10.7% in tax-rate (20.9% vs. 10.7% in 1H11) I ncome/ (losses) after tax on assets held for sale 0.9 0.3 -63.9% 0.9 0.3 -63.9% 1H11) Minorities interest -2.2 -2.0 -8.2% 0.0 0.0 0.0% Net Profit 3 7 .4 6 7 .3 7 9 .8 % 3 7 .4 6 7 .3 7 9 .8 % The figures reported in this document are IFRS 5 compliant. Figures “ex-GIL” (LfL) do not incorporate the contribution of Generali Investment Luxembourg (“GIL”) merged with BG Investment Lux on 9 Sept. 2009 4 Banca Generali 1H 2012 Results and Business Update
1H 2012 Results Positive results spread throughout the board, driving total revenues up 42% yoy Net Banking I ncome (LfL) (€ m) Strong increase in interest income (+ 139% yoy) 173.7 + 42% thanks to the contribution of LTRO, higher investment yield 51.3 On the banking portfolio, higher deposits (30% ) 122.2 21.5 Positive increase in net commissions (18% ) (+ 19% yoy), thanks to solid growth in business 112.9 (65% ) activity, positive funds’ performance and stable pay-out 94.8 (78% ) Trading income further up (+ 63% yoy) , 9.5 ( 5% ) exploiting trading opportunities on the 5.8 (4% ) Italian bond market 1H11 1H12 Net Commissions Net Interest Income Trading and dividends 5 Banca Generali 1H 2012 Results and Business Update
1H 2012 Results I nterest income: ordinary business growth and significant contribution from LTRO Net I nterest I ncome (LfL) � LTRO delivers a LTRO assets’ expiry broadly stable 1.1 contribution (€ bn) 51.3 until 2014 Time deposits, 0.3 0.2 � LTRO LTRO assets have 18.9 + 139% fully-matched … (€ m) 4Q12 4Q14 1Q15 maturities 21.5 32.4 Ordinary Buoyant contribution from ordinary business (+ 51% business + 51% yoy) driven by: � Higher investment yield on the banking portfolio 21.5 (from 2.0% to 3.4%) � Higher (lombard) lending activity 1H11 1H12 � Higher deposits (from €1.6bn to €2.0bn) The banking book has a defensive profile with short duration (1.5) and short maturity (2.5) 6 Banca Generali 1H 2012 Results and Business Update
1H 2012 Results Positive gross commissions (+ 9.6% yoy), despite unfavourable financial markets Breakdown of Gross Commissions (LfL, YoY) Quarterly Gross Commissions (LfL) Higher entry fees due to higher life inflows (€ m) 180.0 + 9% 6.5 6.0 + 9.6% 31.9 (18% ) 164.3 1Q12 2Q12 5.1 (3% ) 12.5 (7% ) 13.3 (8% ) Stable quarterly management fees n.m. 122.7 61.5 61.2 129.4 (68% ) (79% ) 1Q12 2Q12 16.4 (10% ) 12.9 (7% ) Poor 2Q financial markets took their toll 1H11 1H12 on trading fees 7.1 -18% 5.8 Banking Revenues Management Fees Performance Fees Front Fees 1Q12 2Q12 7 Banca Generali 1H 2012 Results and Business Update
1H 2012 Results Short-term development in management fees derives from long-term growth strategy … the move towards I n the short-term a few bps lost Trend in management fees defensive products due to poor reflects… financial market trend BUT (€ m) Short-term (yoy) Average funds/ FoF/ portfolio management … Clients satisfied with -5% the bank and with their Financial 129.4 (€ bn) -8% 122.7 9.8 Advisors, which means 9.1 longer-term relationships and more trust in the FA financial advice… 1H11 1H12 … More satisfied networks, Since the start of the financial crisis reflecting the financial results 122.7 of their clients’ assets, and hence 1H11 1H12 + 42% more productive, as the positive 86.6 net inflows trend is confirmed -19.0% DJ EuroStoxx 50 1H08 1H12 -29.2% FTSE MI B I taly I n the longer term, + 3.5% Shanghai Composite growth potential enhanced + 128% Spread BTP/ Bund - 10Y 8 Banca Generali 1H 2012 Results and Business Update
1H 2012 Results Net commissions surge by 19% yoy, even if pay-out level remains in line with year’s level Pay-out trend excl. perf. fees (LfL) Net Commissions (LfL) 47.0% 45.3% (€ m) 43.6% 112.9 + 19% 1H11 1Q12 1H12 94.8 Pay-out ratio trend (ex-perf. fees) 47.2% 45.3% 45.7% 45.1% 1H12 1H11 44.5% 43.6% 1H07 1H08 1H09 1H10 1H11 1H12 Average Pay-out of €45.2% 9 Banca Generali 1H 2012 Results and Business Update
1H 2012 Results Cost/ income ratio at its lows of 39.6% thanks to a tight cost discipline Operating costs, net of stamp duty (LfL) Cost/ I ncome ratio 71.0 (€ m) + 2.1% 80% 74.7% 69.6 4.8 70% 62.3% 56.5% 60% 55.8% 50% 53.3% 40% 39.6% 30% 2007 2008 2009 2010 2011 1H12 1H11 1H12 Split of operating costs (LfL) Depreciation & other G&A costs operating income Staff Costs 44.0 + 7.1% 41.1 33.9 8.3 Stamp duty 32.4 4.8 (6.9) + 4.7% + 76% (3.9) -1.6% 35.7 36.3 2.2 1.9 Stamp duty (4.6) (7.9) 1H11 1H11 1H12 1H12 recovered 2 (1.2) (1.2) Staff costs incorporate higher 1H11 1H12 G&A down 1.6% net of stamp duties variable incentives 10 Banca Generali 1H 2012 Results and Business Update
1H 2012 Results Gross profitability at 1.91% , a top level for the bank Average Monthly Underlying Assets AUM Profitability (LfL) Funds & Portfolio management assets + 33 bps Poor financial markets trend, 1.91% company’s guidance for more 9.8 9.1 defensive investment products 0.26% 1.58% 1H11 1H12 0.04% 1.65% 1.47% I nsurance assets + 11 bps guided shift towards defensive 1.54% 7.8 products 7.0 0.27% 1H11 1H12 1H11 1H12 Administered assets Recurring commissions & Performance Fees interest margin Strong growth of new 7.5 6.9 customers 1H11 1H12 11 Banca Generali 1H 2012 Results and Business Update
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