INVESTOR PRESENTATION FY 2019 RESULTS
AGENDA Preliminary remarks Our Vision: To Be the 2019 Financial Results No.1 Private Bank unique by Value of Net Inflows, Assets and recruiting Service, Innovation and Sustainability Business update and closing remarks Appendix: Sector trend and business profile 2
EXECUTIVE SUMMARY STRONG ASSET GROWTH, ROBUST NET PROFITS, HEALTHY DIVIDENDS Total assets at a new high of € 69bn (+20%) Strong asset expansion driven by healthy increase in net new money ( € 5.1bn, 8.9% of starting assets), strong investment performance (+7.2% on total assets, +11% on managed assets) and consolidation of Nextam & Valeur ( € 2.2bn). Assets under Advisory almost doubled to € 4.7bn (+105%), underpinned by a strong success of an integrated wealth advisory approach providing advice on both financial and non-financial wealth Net profit at € 272m (+51%) Robust reported net profit leveraging on strong asset growth, good investment performance and healthy recurring profits ( € 150 million, +12.7%) net of push on costs for new growth initiatives and M&A Dividend per share (DPS) proposal at € 1.85, in a two-steps payment postponed and subject to prior verification of a new set of conditions in light of the new recommendations issued by the ECB/Bank of Italy on 30 March and 1 April 2020 amid the exceptional market conditions caused by the outbreak of COVID-19 Execution of 2019-21 plan well on track Sound Core business supported by the success of the new in-house SICAV LUX IM and ESG offer. Insurance wrapper solutions also back in demand. Overall margin stabilization in sight after shift towards higher financial sustainability completed Revenue diversification ahead of plan while the Internationalisation process is taking shape with the launch of BG International Advisory and the completion of the acquisition of Valeur 3
2019 DIVIDEND PROPOSAL TO AGM CONFIRMED BUT PAYMENT POSTPONED On 30 March 20202, Banca Generali decided to responsibly comply with the new recommendations issued by the Supervisory Authorities in light of the exceptional market context caused by the outbreak of COVID-19 European Central Bank issued on 27 March 2020 Bank of Italy issued on 27-31 March and on 1 April 2020 Thus, Banca Generali revised its BOD 2019 Dividend proposal to AGM by postponing the date of dividend distribution subject to prior verification of a new set of conditions € 1.55 DPS payment date DPS distribution subject to (i) ECB/2020/19 New BoD 20.05.20 15.10.20 31.12.20 recommendation; 2019 Dividend (ii) compliance with supervisory € 0.30 DPS payment date (DPS) regulations and guidelines; proposal to AGM (iii) TCR> SREP minimum requirements+ buffer 20.01.21 31.03.21 15.01.21 4
RESULTS AT A GLANCE KEY TAKEAWAYS Comments (€ mln) 2018 2019 % Chg Buoyant increase in Operating Profit (+41%) Net Interest Income 60.0 74.0 23.4% NII (+23%) lifted by a sharp growth in banking Net income (loss) from trading activities and Dividends 24.1 14.2 -41.2% assets and more efficient treasury management Net Financial Income 84.1 88.2 4.9% Gross fees 741.7 881.0 18.8% Net Fees (+34%) driven by the improvement in Fee expenses -376.3 -391.2 4.0% product mix, the acceleration in new revenue Net Fees 365.3 489.8 34.1% streams and a strong investment performance Core operating costs in line with guidance Total Banking Income 449.4 578.0 28.6% (+4.8%) while total costs lifted by acceleration in Staff expenses -84.2 -97.2 15.4% key projects, first-time consolidation of Nextam Other general and administrative expense -162.5 -162.7 0.1% and Valeur and by one-off items Depreciation and amortisation -9.3 -30.0 n.m. Other net operating income (expense) 59.4 68.7 15.6% 1 Total operating costs -196.6 -221.2 12.5% Lower adjustments below the operating Cost /Income Ratio 41.7% 33.1% -8.6 p.p. line Operating Profit 252.8 356.8 41.1% More benign environment for valuation of Net adjustments for impair.loans and other assets -7.3 -5.4 -26.1% financial securities within Banking Book Net provisions for liabilities and contingencies -25.4 -24.2 -4.4% Gain (loss) on equity investments -0.4 -1.9 n.m. Reported net profit at € 272m (+51%) Profit Before Taxation 219.8 325.3 48.0% Direct income taxes -39.6 -53.2 34.2% The best year in the bank’s history Tax rate 18.0% 16.3% -1.7 p.p. Net Profit 180.1 272.1 51.1% NOTE: Reported results included first-time application of IFRS16, first-time consolidation of Nextam for five months, first-time consolidation of Valeur for three months 5
NET PROFIT TREND STEADY IMPROVEMENT IN THE RECURRING COMPONENT Net Profit: Recurring vs. Variable m/ € 272.1 203.6 204.1 122.1 180.1 161.0 155.9 5Y Growth 47 Variable 114.1 132.9 Net Profit bn/ € 80.9 107.6 181% 150.0 133.1 Recurring 90.0 Net Profit 1 bn/ € 75.0 70.7 53.3 2014 2015 2016 2017 2018 2019 Assets bn/ € 41.6 47.5 55.7 89% 36.6 69.0 57.5 1,645 FA Network # 1,841 1,715 1,936 24% 2,040 1,985 AUM/FA m/ € 22.2 24.3 25.8 33.8 52% 28.8 29.0 NOTE: 1) 2014-2019 recurring net profit including results from dividend and forex due to their recurring nature. 2019 recurring profit also excluding IFRS16 net impact of € 1.1m 6
AGENDA Preliminary remarks Our Vision: To Be the No.1 Private Bank 2019 Financial Results unique by Value of Service, Innovation Net Inflows, Assets and recruiting and Sustainability Business update and closing remarks Appendix: Sector Trend and Business profile 7
NET FINANCIAL INCOME (1/2) HIGHER NII LIFTED BY VOLUMES AND INVESTMENT YIELD Net financial income 1 m/ € 88.2 84.1 79.5 14.2 Steady improvement in NII driven by higher interest- 24.1 18.1 bearing assets ( € 10.9bn, +20%) and higher investment return on 77.5 25.0 financial assets (82 bps, 23.5 74.0 19.7 61.4 17.8 19.9 60.0 +9bps) 4.9 3.3 2.0 4.0 2.1 21.0 21.2 NII result supported also by 18.6 16.7 20.3 15.7 20.1 17.7 15.9 a more efficient treasury (0.8) (0.9) (0.9) (0.9) management as cost of (3.5) liquidity decreased from 26bps to 12bps (details on 2017 2018 2019 4Q18 1Q19 2Q19 3Q19 4Q19 next slide) NII including IFRS16 NII pre IFRS16 IFRS 16 Trading income NOTE: 1) Including € 3.5m negative impact on first time adoption of new IFRS 16 8
NET FINANCIAL INCOME (2/2) GROWING DIVERSIFICATION OF INTEREST-BEARING ASSETS Loans portfolio bn/ € Total Assets and Interest-bearing Assets bn/ € 4.2 3.9 granted loans 11.8 2.6 2.5 2 1.9 drawn loans 9.7 collateral assets 1.2 9.0 2 1.9 2018 2019 1.5 0.8 2019 NPL/Total Loans 0.06% Other assets 1.8 1.8 Loans to Banks IFRS Classification 7.8 Loans to Clients Bond Classification 5.7 5.7 (IT Govt bonds) Financial assets Interest-bearing assets 2017 2018 2019 13% HTCS 17% 18% Total Yield – 69% 0.76% 0.69% 0.75% On Interest-bearing HTC 83% assets Yield – -0.12% -0.26% -0.12% It Govt bonds EU Govt bond Loans to Banks HTC HTCS Corporate/Financial Yield – 0.70% 0.73% 0.82% Financial Assets 2019 Bond Maturity 3.5 yrs (o/w HTCS 1.3 yrs) Yield – 2019 Bond Duration 1.6 yrs (o/w HTCS 0.8 yrs) 1.18% 1.18% 1.13% Loans to Clients 9
MANAGEMENT FEES GROWING FEES WITH MARGINS WITHIN 2021 GUIDANCE Management Fees m/ € Quarterly trend m/ € 646.3 634.2 Steady recovery in management fees Management 169 163 587.0 159 Fees 156 155 linked to growth in m/ € managed assets 4Q18 1Q19 2Q19 3Q19 4Q19 Time-lag between asset growth vs. management fee Avg. Managed 47.4 46.1 45.3 growth 44.0 43.3 Assets 1 bn/ € Improving product 4Q18 1Q19 2Q19 3Q19 4Q19 2017 2018 2019 mix driven by LUX IM and insurance wrappers On AUM 1 1.47% 1.45% 1.40% Mgmt fee 1.44 1.41 1.40 1.41 1.40 Margin 1 % 4Q18 1Q19 2Q19 3Q19 4Q19 10 NOTE: Fee margins based on average assets on an annualized basis; 1) Fee margin calculation excluding Nextam and Valeur on a like-for-like basis
BANKING AND ENTRY FEES (1/2) NEW REVENUE STREAMS DRIVING GROWTH Banking and Entry Fees m/ € Breakdown by product mix 87.3 87.3 68.8 68.8 58.2 28.8 46.4 +68% 58.2 +85% 27.6 20.9 14.9 19.7 27.4 43.3 41.2 40.9 22.1 58.5 19.9 17.8 17.5 47.9 10.8 38.5 8.2 5.2 4.6 5.8 2017 2018 2019 16.6 14.7 13.2 13.9 11.7 New revenue stream 2017 2018 2019 4Q18 1Q19 2Q19 3Q19 4Q19 Transactional banking, front fees On Total Growing revenue diversification as 0.11% 0.12% 0.12% 0.12% 0.14% 0.12% 0.14% 0.16% Assets 1 new revenue streams represent 6.8% of total gross recurring revenue (vs. 4.2% in 2018 and 2.5% in 2017) Entry fees Banking fees 11 NOTE: Fee margins based on average assets on an annualized basis 1) Fee margin calculation excluding Nextam and Valeur on a like-for-like basis
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