Finecobank Banca Fine Spa

Good afternoon. This is the Coral School Conference operator. Welcome and thank you for joining the Fineco Bank second quarter 2024 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Alessandro Foti, CEO and General Manager of Fineco. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining our second quarter 2024 results conference call. Net profit in the third half of 2024 is $320.3 million, up by 9.8% year-on-year, excluding systemic charges due to a different seasonality compared to 2023. Revenues at $658.3 million, increasing by 9.6% year-on-year, and supported by all our product areas. Net financial income is increasing by 10.7% year-on-year, investing up by 11.9% year-on-year, thanks to the volume effect and the higher control of the value chain by Finneco Asset Management. And the brokerage is up by 13% year-on-year, thanks to the enlargement of our active investors. Operating costs were under control at $160.3 million, increasing by 6.7% year-on-year by excluding costs related to the growth of the business. Cost-income ratio was equal to 24.4%, confirming operating leverage as a key strength of the bank. In the first half, Finicol confirmed once again outstanding commercial performance thanks to our organic growth strategy. First of all, we recorded a strong acceleration in our new clients' acquisition, increasing by 22.5% year-on-year, with a further increase on 2023 record here. On this, Let me highlight that we are not just growing fast on the overall numbers of new clients, but we are coupling this with an improvement of the underlying quality. Second, very solid net sales at 5 billion. Our capital position confirmed to be strong and safe with a common equity TR1 ratio at 25.8%. and the leverage ratio at 5.35%. On the right-hand side of the slide, you can find a summary of our 2024 guidance with the outlook that has improved even more, and we are expecting another record here for our net profit. More in detail on revenues, we expect them at the record level with an improvement of the mix in favor of commissions, thanks to investing revenues. expected to increase low double digits versus 2023, with a natural market assumption going forward. Banking fees expected stable versus 2023. Brokerage, we confirmed for 2024, expected revenues stronger with a floor higher versus pre-COVID period. On operating costs, we expect 6% growth year-on-year in 2024, not including additional costs mainly for financial management and marketing expenses. We expect our cost of risk in a range between 5 and 10 basis points in 2024. And finally, we expect in 2024 a growing CT1 and leverage ratio year-on-year. Let's now move on to slide 5. As announced, net profit in the first half of the year stood at 320.3 million, increasing by 9% year-on-year, excluding systemic charges due to the different seasonality compared to 2023. Revenues at 658.3 million, up by 9.6% year-on-year, as we have been able to catch the strong acceleration of the structural trends in place. The growth of our net financial income, increasing by 10.7% year-on-year, is supported by our high-quality and capital-light net interest income. Net commission increased by a sound 6.2%, driven by the solid contribution of the investing, up by 12% year-on-year, and brokerage business up by 11.4%. Trading profit increased by 25.4% year-on-year, mainly thanks to higher brokerage activity. Operating costs at 160.3 million, well under control, increasing by 6.7% year-on-year, excluding costs strictly related to the growth of the business. Mainly, additional costs for Finneco Estate Management to further expand its business and having a higher control of the value chain. additional marketing costs to further improve our growth and catch the strong momentum of the business. Let's now move on to slide six for a deep dive on the performance of the investing business. Investing revenues reached 174.7 million in the first half of 2024, increasing by a solid 11.9% year-on-year. On the back, both growing volumes thanks to our best-in-class market positioning and of the higher efficiency of the value chain through financial management. Let me please remind you the great quality of our investing revenues, mirroring our transparent and fair approach towards clients. As a result, our revenues are mostly driven by recurring management fees with no performance fees at all. Let me underline that this set of results is particularly remarkable, given the more challenging marketing environment for the asset management industry. Also, the bank is going ahead with its plan to deeply reshape its products and services offer to better fit with the new context. This will give more fuel to our growth engine in the month ahead and will allow us to keep on adding new market shares. Let's move on to slide seven for a focus on our asset management company and our advanced advisory services. In this slide, we are representing the two main sources of growth for our investing business going forward. On one end, as you know, Finneco Asset Management is progressively delivering in increasing the control of the investing value chain. Its contribution to the group net sales has been consistent over the cycle thanks to its incredible time to market in delivering new investment solutions perfectly aligned with what clients are looking for. As a result, the contribution of Finico Asset Management out of the total stock of assets under management has been steadily growing and is now equal to 35.4%. On the other end, being a platform, Fineco is the best place to catch the latest trends in terms of clients' investment behaviors. There is a clear change underway in the structure of the market, with clients increasingly looking for quality, efficiency, and fair solutions. All of this is channeling a strong demand towards advanced advisory services with an explicit fee, where Fineco is by far the best position As you can see down in the slide. Thanks to our operating efficiency, we are fully catching this powerful trend in a way that is keeping our margins pretty much stable, allowing us to be very positive on the sustainability and the quality of our growth going forward. Let's now move on to slide eight for a focus on brokerage. Brokerage, once again, registered excellent results. confirming a structural increase in clients' interest to be more active on the financial market, and building up a clear bridge between the brokerage and investing world. In the first half, revenues were equal to $111.6 million, resulting in a monthly average around 65% higher compared to the monthly average revenues in the period 2017-2019. thus confirming a structurally higher floor. Let me remind you that the growth of the brokerage business is driven by the contribution of three structural components. First, the continuous process of deep reshape of our brokerage business. Second, the widening of our client base using the platform, with active investors growing significantly in absolute terms. On this, let me add that in the last few months, we are experiencing a further enlargement of our active investors, which are growing much wider also compared to the post-pandemic period. Third, we are continuously increasing our retail market share. Let's now move on to slide 9 to further deep dive on the potential of our brokerage business given the most recent developments. Let me spend a few words on the most recent trends in our brokerage business. As you can see in the graph on the top of the slide on the left, our base of active clients has recently seen a substantial increase, around 20% higher compared to 2023, and with a 40% step up compared to the level recorded during the pandemic. The drivers of such an increase are all structural, namely we are delivering on a a number of new initiatives like the new brokerage-only account and the new platform Fineco X. The new market structure is confirming the bridge between brokerage and investing. The most recent increase in the rate environment has resulted in a renewed interest in Govis, with Fineco emerging as the platform of choice for clients. In the graph down in the slide, we are showing that executed orders has been increasing this year compared to 2023 and is back at the pandemic levels, despite the poor market environment for brokerage overall in the year. Let's now move on to slide 11 for the focus on our capital ratios. Sineco confirmed once again a capital position well above requirement on the wave of safe balance sheet. Common equity tier 1 ratio at 25.78%, and leverage ratio at the very sound 5.35%, while risk-weighted assets were equal to 4.78 billion. Total capital ratio at 36.24 as of June 2024. As for the liquidity ratios, liquidity coverage ratio is at 882%, And the net stable funding ratio is at 369%, while the ratio of high-quality liquid assets from deposits is at 73%, well above the average of the industry. Going forward, we confirm that we will continue to generate capital structurally and organically, thanks to our capital-light business model. Texas Capital, we are going to generate will be partly used to further invest in our organic growth opportunities, while for the remaining part, which in any case will be the most relevant one, by the end of the year, we're going to define the amount and the terms for the distribution to the market. Let's now move to slide 13 for a focus on the acceleration of our commercial dynamics. Let me spend a few words on the strong acceleration on our new client acquisition. which is even more remarkable considering the context and bodes extremely well for our future growth. As you can see from the graph, from the top of the slide, your clients here to date were 22.5% higher, outgrowing 2023 records here. These outstanding results have been achieved keeping our marketing strategy unchanged and translates in a high-quality and sticky client base. key to grow in a healthy business in a long-term horizon. Let me highlight that we are not just growing fast on the overall number, but we are coupling this with an improvement of the underlying quality of new clients. As an example, private banking clients are growing by an impressive 30% year-on-year. Down in the slide, you can see the usual highlight of the improved efficiency of our marketing engines. thanks to our innovative, brand-new organ process. On top of this, we are now leveraging on AI and data-driven marketing, which are allowing the bank to connect with prospect clients in a more personalized and efficient way, leading to a further acceleration in our client acquisition. Let's now move to slide 17 for a deep dive in our transactional city. The granularity and thickness of our deposit base is confirmed quarter by quarter. Our clients have an average ticket of around 17,000 euros and a median ticket of 4,500 euros. On top of this, differently from other players mostly focused on brokerage and investing, our successful one-stop solution relies on a fully-fledged banking platform with around 50% of our clients crediting salary and pension with us. Down in the slide, we show our usual breakdown of the deposit net sales and where we once again saw an increase in the net new liquidity before investment. As you can see, up to the end of June, the bank collected $9.2 billion of liquidity coming from salary and pensions and $6.3 billion from net bank transfers. After the expenses in cash, bills, and taxes, deposits were up by 4.1 billion. Once taking into account investments in asset under management and asset under custody, the final result is minus 0.9 billion of deposits net sales. On the graph on the right, we can see the trend in terms of liquidity flows per cluster of clients. Clients with total financial assets up to 100,000 euros increase the amount of liquidity in the bank, and this is mainly transactional. On the other hand, the cash sorting process has been more than 100% driven by wealthier clients, which in the past accumulated excess liquidity waiting to be invested. For private banking clients, the liquidity as a percentage of the total financial assets is at 10% as of June, at the lowest level since 2015, suggesting that they are approaching the floor. Finally, please note that new clients acquired in the year also brought positive liquidity. Let's now move on to slide 19 for a process on our guidance. 2034 guidance, the outlook has been improved even more and we are expecting another record here for our net profit. Revenues are expected to be at the record level with an improvement of the mix in favor of commissions. thanks to investing revenues for which we expect a low double-digit growth versus 2023 with a natural market effect assumption going forward. Banking fees are expected as stable compared to 2023. Brokerage revenues are expected to remain strong with a floor in relative terms with respect to the market contest that is definitely higher than in the pre-COVID period. Competiting costs are expected to grow at around 6% year-on-year not including additional costs mainly for P&A cost management and marketing expenses. Cost income, we expect it comfortably below 30%, thanks to the scalability of our platform and to the strong operating gearing we have. On capital ratios, we expect a growing CT1 ratio and leverage ratio year-on-year, currently with a combination of both a strong acceleration in the growth of the bank and the distribution of general dividends. On leverage ratio, our goal is to remain above 4.5%. We expect a higher dividend per share for 2024. Cost of risk was equal to 5 basis points, thanks to the quality of our lending portfolio, and we expect it in a range between 5 and 10 basis points. Finally, we expect robust and high-quality net sales, keeping our priority in the direction of asset under management, and the continued strong growth expected for our client acquisition, as we are in the sweet spot to keep on adding new market shares. Thank you for your time, and now we can open the call to your questions.

Thank you. This is the Corusco Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 under touchstone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Azzurra Guelphi City Group. Please go ahead.

Hi, good morning, good afternoon. A couple of questions for me. One is on the outlook. What has driven this improved outlook? And if you can give us a little bit more color on what you mean by record net profit. And also looking at various moving parts, especially the investing revenue, doesn't look very different from the previous guidelines. The second question is a little bit more broad and strategic. I'm just asking you, Fineco has been part of a large group in the past and then has been listed as an independent company for the recent years. And what do you think are the main differences between the two and how do you see the group in the medium term, also in light of what we have seen on the press last week? Thank you.

Regarding the improvement of the outlook, the reason behind is because the EOR is clearly emerging by the numbers. All the three engines of the bank are doing pretty well because we have definitely the financial income is doing quite well thanks to the combination of a rate that are remaining and a higher rate for a longer period of time respect what the market was expected at the beginning. Second, there is we have the clear evidence of the continuous progressive slowing down of the cash sorting process. And so this clearly is going to bring and going forward particularly towards the year end and positive evolution of the base of deposits. Then on the investing side, The business is gaining steam, and this is happening despite rates are still quite high, and so this means that this is building extremely well for the future. And finally, brokerage is doing extremely well. So it's keeping on building up, and during our call, we explained also the rationale behind. So if we put everything together, everything is moving. is not so usual to have all the three engines of the bank working at the same time in the right direction. So this is the case. And so we expect record profit. This means that we definitely expect to make a net result that is going to be definitely higher than we had last year. And Fineco has been for... long period of time part of large groups which is the main difference being a public company the main difference and being a public company that the real difference is mostly in the in the favor of the stakeholders at the back because the public company is the the best position as a kind of company for servicing in the best way the interest of all the stakeholders. Because the shareholders, the clients, and the people working in the organization. For a very simple reason, because a public company is forced to do everything it's doing exactly in the direction of being positive for the market. There is no risk that you have to put in place strategies or activities that are in the interest of, let me say, a controlling shareholder. So this is the main. At the same time, it's clear that you have to accept the, so there is, for example, a big difference that the stock is extremely liquid. And in the most part of the case, this is very positive. because a very liquid stock is making the potential shareholders more interested in investing in our stock. Sometimes the liquidity of the stock is exposing us to more volatility on the market because Fineco is part of the many different kinds of basket and so you have to accept a little bit more of volatility sometimes. Overall, being a public company is mostly in the interest of the shareholders and the other stakeholders. How do we see the company in the future? We think that Fineco is on the fast lane for keeping on accelerating in growing market share. It's going to be Going forward in the next few years, it's going to be a much bigger company than we are now. The structural trends on which we are seated are gaining steam, and we have in front of us a world that is evolving in a direction that is our direction.

The next question is from Domenico Santoro, HSBC. Please go ahead.

Hello. Hi. Good afternoon. One question on the NII and one question on fees slash margins. I see that the contribution from financial investment has gone up quarter on quarter. If my understanding is correct, you have increased the fixed rate component increase the duration a little bit also or your book so my question is how shall we look at the mix viable against fixed rate going forward if you have a target and how much you can continue in a way to protect your NII from falling rates The other question is on page 7. Thanks for giving us the stock of IOM under advisory. Can you let us understand how margins on this stock under advisory compare with the remaining part of the stock, so with the part which is not under advisory? I'm not sure you can give us a an average margin or just some qualitative comments. I wonder if moving more and more clients under advisory will not protect you only from regulation, but going forward, this could be also margin accretive in a way. Thank you very much.

Regarding the evolution of the net interest income, probably, I don't know if... I'm leaving the floor to our CFO that can give you much more precise details on this. So, Lorena, please, if you want.

Thank you, Alessandro. Good afternoon, everybody. So, in the first quarter, in the second quarter, we had an increase in the financial income that was higher quarter-on-quarter, plus 2%. due to the higher volumes of liquidity that we invested in financial investments and in ECB. This is resulting from the issuance of 500 million of 81 in March, that was partially by 168 million repurchase under the tender offer on 300 million of nominal 81 amount issued in 2019. Consider that also at the beginning of June, we replaced an 81 issued in 2018, we call And so this means that going forward, the volume related to 81 are going to decrease. As we have already recorded, the 200 million in June, that is the private placement. And at the beginning of December, we will call back the remaining part of the 300 million euros of the private placement. still on the market after the tender offer we got in March. Regarding the component variable and fixed rate, we increased a little bit the component of fixed rate. We are now at 63%. the duration and the maturity has decreased because we are investing in European bonds with a maturity up to three years.

So regarding the assets under management under advisory, so a preliminary consideration. So as we were explaining, We are observing structural changes into the market. So recently there has been a quite important debate in Europe regarding the possibility to introduce a ban on the inducement. And at the end of the story, the ban has not been introduced. But what is going to change that is changing the structure of the market? Probably the biggest changes are not going to be driven by the regulators, but are going to be changed by the change in terms of the areas by client. Now it's emerging absolutely evident that particularly the upper end of the market is becoming more and more interested in getting solutions characterized by fairness, transparency, efficiency, and this is the trend. Fineco, differently by the large part of the industry, is exactly in that kind of direction. So we are not going against the wind, but we are sailing with the favor of the wind. And this, you are completely right, is extremely positive going forward, because it means that we are going to be definitely, our business is going to be definitely characterized by a much stronger sustainability. Also, our margins are going to emerge as much more resilient. respect other kind of practices. And in this case, what is remarkable, that this is happening without any real significant impact on our margins. Because if you look to our flows, the main components of our flows are, on one hand, a big growth of the asset under management on the advisory platform, and at the same time, a continuous decrease of the insurance products. And the insurance products, by the way, are the products with the lowest margins. So if you put everything together, you put together this big growth of the advisory platform, of the advisory solutions, the decline of the insurance factor, also taking into account and still a higher appetite for fixed income solutions. This is not particularly positive for the margins, but overall the mix is emerging as extremely stable at the level of margins. But if you are the patient also, and going a little bit back in the past, you can see that FinEco is emerging as the as one of the organizations with the most stable margins, rising margins, in the industry that is continuously experiencing declining margins. But the reason is pretty simple. Finneco is positioned in a way that is exactly current with the new emerging trends. And this sometimes is not the case for other players. And we think that this is going to be an opportunity and definitely a very important change in the market.

Thank you.

The next question is from Enrico Bolzoni, JP Morgan. Please go ahead.

Hi, good afternoon, and thanks for taking my questions. The first question is, again, on investing. So I noticed that there was a very small decline in the investment margins quarter on quarter. I suspect this results from three forces. On one end, you have health flows from insurance, which I appreciate is low margin, going into FAM, which is high margin. But at the same time, you're experiencing quite a lot of flows that within the advice on top service are going in asset under custody, which I understand to be margin dilutive. So considering that these flows have been quite substantial over the last couple of months, I just wanted to understand from you what sort of margin should we expect going forward? Is it correct to model some sort of flattish stability margin, investment margin over the next few quarters? Do you still think that because of the outflows from insurance and the influx into FAM, we should expect positive growth in margins for the residual of the year, but also looking at next year, for example? So that's my first question. The second question is, It's, again, partially related to that. So I appreciate that ETF classifies as asset under custody within an advice on top solution. So how concerned are you that the growing demand for ETF products in the industry might somehow cannibalize the FAM products. So the expense of FAM, you might just end up having more clients asking for ETFs. And then finally, I wanted to ask, can you provide a breakdown of how much revenues the new brokerage-only platform contributed in the second quarter of the year, and what sort of growth do you expect going forward? Thanks.

So starting by the first question, you are right. So the evolution of margins are driven by mostly three components. One is the growth of the advisory solutions with a large part of which the asset and the customers are playing an important role. Second, the continuous outflows from the insurance products. Now, really, there are more than three ratios. Third, there is the continuous progress made by FinEcoset management. And fourth, we have also the mix that is remaining mostly focused on fixed income solutions. If we put everything together, so assuming that there is anything particularly significant happening, I think that the most correct way to look at it is a kind of stability in margins that, as we were underlying before, it's an absolutely remarkable achievement in a context in which the name of the game is pressure on margins. And regarding the possible concern of the, so it's a matter of fact that there is a booming trend as represented by the appetite by the market for ETFs. This is a structural trend that is exploding all over the world. And now definitely we are not concerned by possible cannibalization of Finnecoset management products. Because the position of Finnecoset management, I would like to clarify the point, is Finnecoset management is not competing against the ETFs. Finnecoset management, the strength of Finnecoset management is the capability to, first of all, continuously interacting with financial planners and clients and understanding the emerging needs by them, and then being incredibly fast in bringing to the market what their clients are looking for. So if you look throughout what Finneas & Co. is offering, Finneas & Co. is offering investment solutions that are not available on the market. And this is the reason of their success. I thought that if they were competing directly against ATFs, this would be not a great strategy. Finicolson is bringing exactly what the market is not offering and what the clients are looking for. And regarding the I don't have in front of me the precise numbers of the revenues generated by the the only brokerage platform, and we can give you these numbers later on. For us, it's important to underline that the brokerage is growing big because there is an absolutely evident change in the structure of the market. We were referring to a continuous overlapping between investing and brokers. This is exactly what's going on. The huge advantage that Finneco has is that being at the same time an asset gatherer in the platform, we can observe what's going on and we can take advantage by this. So this is the reason why we are remaining extremely positive on the future evolution of brokerage.

The next question is from Elena Perini in Tiso San Paolo.

Please go ahead.

Yes, good afternoon. Actually, I've got two questions left. The first one is about the trends in net-in-net inflows. You talked about the slowing down of the cash sorting process, so I was wondering if you can share with us what you observed in July, if the liquidity is improving and if the progress that we saw in the assets under management in the past months is going to be confirmed soon. The second question is about the brokerage. So you clearly told about the fact that the trends are better than sometimes ago. So I was wondering if a level of revenues, an annual level of revenues of at least 200 million could be considered as a floor going forward. Thank you.

Regarding some anticipation on the July inflows, clearly we are still a couple of days missing our activity, but we can say that for sure the net sales have been stronger, because clearly every time you have to compare this with the... We have to take into account the seasonality of the period, but... If you look to that, so the net sales, they are stronger. Second, also the asset under management is confirming the progress because the numbers are going to be much stronger than we experienced during the July of last year. And also on the liquidity side, there are absolutely positive signals despite that July is a month characterized by quite relevant tax payments. But yes, and brokerage as well has been, we can say that has been a strong month. So if we put everything together, July is going to be an absolutely positive month for the bank. And the brokerage, so regarding the other question, it's always extremely important difficult to fix a precise floor on the revenues of the brokerage because, as you know, the brokerage can be affected by short-term, temporary situations like I'm referring to the volatility, the volumes, and so on. And what we can see is that the floor is going up. but giving you a precise number, so we think that it's not serious. But if you look to the evolution of our numbers, the growth of the floor is pretty evident, and there are no reasons that this floor cannot keep on growing, exactly because this growth is driven by structural reasons and trends.

Okay, thank you.

The next question is from Giovanni Razzoli, Deutsche Bank. Please go ahead.

Good afternoon. Two questions on my side. The first one is on the commercial performance of some products, which in the second quarter was still high. contributing 77% to gross inflows, but it was remarkably down quarter on quarter. I was wondering whether this reflects the deliberate change of product mix, the new offer, or what is behind this trend, in your opinion. The second quarter is on the guidance of investing fees, the low double-digit growth, which also here implies a quite remarkable acceleration in the second half, taking into account the seasonality of the third quarter so i was wondering whether you do expect an acceleration for example in the contribution from new products from upfront fees for what is behind this implied acceleration thank you so regarding the the performance of pharma this is absolutely current with the the more we have the the best in business gaining steam

it's normal that FAME is returning in terms of percentage to a, let me say, to a normalized level. So in the past, we had a period of time characterized by extremely difficult times for the investing business overall for the industry, and Finacosted Management was the only one able to bring to clients something real as fast as the interest of clients. Now we are entering in a more positive environment for the investing business. So this means that the investing business is going to keep on gaining steam. And it's absolutely normal that we are going to have higher volumes on the investing business. And we have a little bit lower percentage represented by Finnecos management. But that is going to maintain the lion's share So this is absolutely aligned with the progressive normalization of the market. On the guidance on investing fees, clearly from a mathematical point of view, this does not imply any particularly strange or great acceleration in the Second half is going to be, the assumptions we have behind are absolutely reasonable. And from the upfront, we are not expecting any significant, because as we underlined during our presentation, we are remaining, our business model is remaining a business model mostly characterized by recurring fees and we don't expect any significant change going forward.

Thank you. The next question is from Marco Nicolai Jeffries. Please go ahead.

Hi, everyone. Thanks for taking my question. I was wondering if you can give us an updated view on the deposit flows into the second half of the year. And once the cash sorting effect is over, I'm not sure if it's going to be this year or next year, but when that's over, what's the capability of the bank in terms of attracting deposit flows? And do you think that capability has changed compared to the pre-COVID world, let's say, that was characterized by lower rates? Yes. compared to what rates are expected to be in the coming years. So this is the first question. The second question is on OPEX. These quarters, they came in a little bit higher than expected. I was wondering what's going on there, if you can give us an update on the marketing costs and how much you want to spend on this front in the second half and in general over the next years. Do you think Fineco needs more marketing expenses to keep up with revenue growth compared to what you spent in the previous years. Thank you.

Regarding the cash sorting, the cash sorting is evidently and clearly decelerating because indeed it's happening in a context characterized by rates that are remaining high. And the reason as we we explained also in the past, is driven by technical reasons because the clients that have contributed for more than 100% of the cash sorting, they are reaching their floor. So they are at a level in terms of percentage of liquidity below which is really difficult that they can go. So this is the reason. Then going forward, If the market is right in expecting a progressive decline of rates, it's not difficult to expect not just an additional slowing down the cash sorting process, but a reverse. And so the bank is going to return to a match to the normal condition. So the normal conditions are characterized by the bank is characterized by an increase of attracting a new liquidity that is pretty high. Because if you look throughout our presentation, you can see that we are continuously increasing the liquidity entering in the bank through the credit of salary and pensions. The bank transfer by the other banks is keeping on accelerating. And this is driven by the continuously growth of the market shares, the acquisition of new clients. And so, yes, structurally, as much as we have the investment process by clients returning to a normal level, yes, the bank is going to start on generating a trend of growing deposits. So to say exactly at which level, it depends also by the level of rates, but we think that there is going to be something that is... So in the past, we had an... So because if you look at the past, you have to exclude the final stage in which we had the negative rates in which there has been a clearly overflow of liquidity. But if you go back a little bit in the past, in a period of time which rates there were not exactly negative but not particularly high, In my opinion, you can have an idea of the path that you can expect in terms of growth of deposits. But yes, we think that unless the market is massively wrong in terms of what is expected in terms of rates, so the market is right, yes, we expect that the growth of deposits resuming going forward. And on the OPEX a bit higher, Yes, but we are talking about a really small amount. So we think that we can feel that OPEX are going to be aligned with the guidance going throughout the year-end. And regarding the marketing, our approach is extremely simple. So every time that there is the opportunity to invest efficiently and effectively in marketing, we are going to do that. Because Fineco is a growth story, and every time that there is an opportunity, we're going to capture these opportunities. So this is more or less it. Also in the past, we have been behaving this way. So clearly, if there are not the right market conditions, we're not going to spend. So we are going to be extremely... tactical by this point of view. So this is a period of time that is favorable for investing in marketing because the markets are quiet, everything is relaxed, and so it makes sense to invest in marketing.

Thank you.

The next question is from Luigi Dabelli's Equita. Please go ahead.

Hi, good afternoon. Two questions for me. The first one is on FAM. We are looking that FAM penetration is continuing to increase. So how do you see the penetration and volume for FAM evolving over the next six to 12 months? And in the medium term, what is the target achievable in your view? And the second question on recruitment, can you provide us an update on your recruitment activity and competition that you are observing on the market now? Thank you.

Regarding the farm penetration, we are repeating it. Fineco is going to remain an open platform. We are not going in the direction of closing down the platform because for a very simple reason, if you want to cultivate your ambition to grow big, particularly in the upper end of the market, you have to keep on running an open architecture. So this is going to be the case. At the same time, farm... We expect FAM that is going to remain extremely successful in bringing to the market absolutely up-to-date and perfectly perfect solutions. And so we think that going forward on the medium run, probably within the next four or five years, to have FAM reaching... penetration of our asset under management in the region of 50% can make sense. We think that it's probably an extremely balanced approach because on one hand this is going to bring an absolutely great contribution in terms of control of the value chain, but at the same time it's going to make Finneco an absolutely winning player in capturing, for example, the upper end of the market, leveraging on an open platform. On recruitment, we have not changed our strategy. So for us, recruiting is not, the main rationale is not for accelerating on the net sales because we don't need to do that because our growth is remaining mostly driven by is organically driven. For us, recruiting is important for keeping on improving the quality of the network and is important for guaranteeing a future to our company, avoiding, for example, the hedging of the network. And third, also, with our goal is to increase the productivity of the network. And for these reasons, the The most part of the new financial planners are joining the bank, as represented by people moving from traditional banks. So there are bankers deciding to become agents. And then we have the young people. We are hiring and preparing for their future. Sinequa has the lowest average age among the network of financial planners. And we think that the aging of the industry is one of the biggest challenge that there is on the table. And as usual, we are not taking part to the frenzy, to the game of overpaying financial planners in order to get them on board. Because what we are observing that we have some some players that they are going back to these old practices. But we are not interested in competing on that arena because the past has showed very clearly that the strategy is based on being aggressive and overpaying financial planners for making them joining you is not boding well for the future developments because it's going to attract financial planners with the wrong motivations, usually characterized by a low level of productivity, and so this is not the right strategy. Thank you.

As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Adele Palama, UPS. Please go ahead.

Yes, hi. I have a question on Basel IV, if you can give a guidance on the impact that you're expecting for next year. Then if you can give us an update on the NII sensitivity to 100 basis point change rates. And then if you can tell us the contribution from the sales of certificates. Thanks.

On the Basel IV, for us, In fact, we cannot consider this as significant considering the incredibly high level of CT1 ratio. So it's not a material issue for a bank like we are. So therefore, it's a point of attention for traditional banks, not for us. And the sensitivity has not changed. I'm looking to... Yes, it's remaining in the region of 120 million, sir. and the contribution to net baseball certificate is, for the moment, pretty small.

Once again, if you would like to ask a question, please press star and 1 on your telephone. For any further questions, please press star and 1 on your telephone. The next question is a follow-up from Enrico Bolzoni, JP Morgan.

Please go ahead. Mr. Bolzoni, your line is open. Maybe you are on mute.

Can you hear me now?

Yes. Thanks. Go ahead.

Thanks. Sorry, just a quick follow-up. Given that you're expanding also in brokerage only with the new platform, does this change at all your view in terms of international expansion? In other terms, have you considered maybe expanding in other geographies also inorganically now that you offer, you know, brokerage-only services, which tends to appeal a broader audience internationally as well?

It is not... We are... We are studying and planning a possible expansion abroad. Clearly, the brokerage platform is going to be, in the case we decide to proceed in that direction, the brokerage platform is going to be one of the cornerstones of the strategy. And we are not planning everything that, in the case we decide to move The direction at the moment is just purely organically driven.

We are not planning anything that is not organic.

The next question is from Elena Perini in Tiso San Paolo. Please go ahead.

Yes, thank you for taking my question. Well, you were talking about your strong capital position. So the last conference call you told us that by year end you would like to communicate the technicalities to give back to shareholders part of the excess capital. I was wondering if there are many progresses in this respect or you talked about potential higher dividend or share buyback if you have made any choices about the final outcome. Thank you.

We don't have any brand new brand-new news to bring on this point. And between higher dividends or share buyback, we think that the preference is more in the direction of the share buyback than increasing total mortgages.

Okay, thank you.

Once again, if you would like to ask a question, please press star and 1 on your telephone. Mr. Foti, there are no more questions registered at this time.

I turn the conference back to you for any closing remarks.

Thank you very much for your very interesting questions. As usual, we are available for answering your further questions and deep diving and some other questions. in the numbers and the concept. So thank you again and talk to you soon.