Finecobank Banca Fine Spa

Good afternoon. This is the Car School Conference Operator. Welcome and thank you for joining the Finico Bank's second quarter 2025 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, you may signal an operator by pressing star and zero on the telephone. At this time, I would like to turn the conference over to Mr. Alessandro Forti, CEO and General Manager of Fineco Bank. Please go ahead, sir.

Good morning, everyone, and thank you for joining our second quarter 2025 results conference call. Before moving in the details of the presentation, let me stress that Fineco is recording a sizable acceleration of its growth dynamics, supported by very healthy underlying quality. Our growth is leveraging on our superior customer experience, and on our fair and transparent position, not on short-term aggressive offer. This approach is mirrored in the quality of our revenues mix, which is entirely recurring with a very low percentage of upfront fees and no performance fees at all. Later in the presentation, we will also share our industrial action to further accelerate our net sales and improve our mix through AI-powered network of financial advisors. Let's now move to the second quarter results. Net profit in the first half of 2025 is 317.8 million, almost flat year-on-year. Revenues at 644.4 million, supported by our non-financial income. Investing up by 9.8% year-on-year. thanks to the volume effect and the higher control of the value chain by FinEco Asset Management. And brokerage is up by 15% year-on-year, thanks to the enlargement of our active investors and higher market volumes. Operating costs, well under control at 173.1 million, increasing by 5.9% year-on-year by excluding costs related to the growth of the business. Cost income ratio was equal to 26.9%, confirming operating leverage as a key strength of the bank. Moving to our commercial results, the underlying step up in our growth dynamics gets crystal clear month by month. And for 2025, we expect a higher asset under management and deposits, net sales, compared to 2024. This is underpinned by the positive tailwinds from the structural trends, and we are leveraging on this solid momentum through more efficient marketing activity. The result of this acceleration has been clearly visible in the first six months of 2025. First of all, we had around 100,000 new clients, up by 36% year-on-year. In July, New clients are around 50,000, up more than 20% year on year. Second, our net sales were 6.6 billion in the first half, up by a strong 32% year on year. In July, we are estimating total net sales for a further acceleration at around 1.1 billion, up by 45% year on year. The mix was very positive with asset under management at around 0.4 billion net sales, up by around 35% here and there. Deposits were at around 0.3 billion and asset under custody at around 0.4 billion. Brokerage recorded 19 million estimated revenues. Our capital position confirmed to be strong and safe with a common equity TR1 ratio at 23.5% and the leverage ratio at 5.2%. On the right-hand side of the slide, you can find a summary of our 2025 guidance, more in detail on investing revenues, every $1 billion change of asset under management on August 1st, generates around 2.9 million of management fees from August 1st until year end. Banking fees are expected in a slight increase in 2025 versus 2024 due to new regulation on instant payments. On brokerage, we confirmed 2025 expected revenue stronger with a continuously growing floor thanks to the enlargement of our active investors. For 2025, we expect a record year for revenues. For 2025, we expect operating costs to grow around 6% year-on-year, not including few millions of additional costs for growth initiatives in a range between 5 and 10 millions, mainly for marketing, financial asset management, and AI. Finally, in 2035, we expect a payout ratio in a range between 70% and 80%. Let's now move to the slide five. As you can see in the P&L in the slide, we are now sharing a new P&L representation with the non-financial income being the sum of net commissions line and the trading profit line. This is aimed to better show the industrial nature of our trading profit, almost entirely represented by client-driven brokerage revenues. As announced, net profit in the first half of the year stood at $316.8 million, almost flat year-on-year. Revenues at $644.4 million, supported by 12% acceleration of the non-financial income, led by the solid contribution of the investing and brokerage business. This almost upset the decline in interest rates. Operating costs at 173.1 million, well under control and increasing by 5.9% year-on-year, excluding costs strictly related to the growth of the business, mainly additional costs for Finnecoset management to further expand its business and have a higher control of the value chain, additional marketing costs to further improve our growth and catch the strong momentum of the business. Artificial intelligence, as we are launching a project to further boost our network productivity. Let's now move on to slide six. Investing revenues reached 191.9 million in the first half of 2025, increasing by a solid 9.8 year-on-year, on the back both of growing volumes, thanks to our best-in-class market positioning, and of the higher efficiency of the value chain through finite cost of management. Let me please remind you that the great quality of our investing revenues mirroring our transparent and fair approach towards clients. Our revenues are mostly driven by recurring management fees with a very low upfront and no performance fees at all. Quarterly management fees dynamics are temporarily affected by lower average asset under management due to the negative market performance in March slash April 2025. So this set of results is particularly remarkable given the more challenging market environment for the asset management industry. Let's move on to slide seven. In this slide, we are representing the two main sources of growth for our investing business going forward. On one hand, Finic Asset Management is progressively 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 aligned with clients' needs. The contribution of Finic Asset Under Management out of the total stock of asset under management has been steadily growing, and it's now equal to 38.7%. On the other end, being a platform, Finneco is the best place to catch the latest trends in terms of client investment behaviors. There is a clear change underway in the structure of the market, with clients increasingly looking for quality, efficient, and fair solutions. All of this is channeling strong demands towards advanced advisory services with no explicit fee, with an explicit fee, where Fineco is by far the best positioned in Italy, as you can see down in the slide. Let's now move on to slide eight for a focus on brokerage. Brokerage registered a very strong first half with 128.4 million revenues driven by our larger active investor base, July was another solid month with 19 million estimated revenues. Average revenues so far in 2035 are around 10.5% higher versus 2020, with much more healthier underlying dynamics. This is driven by the structural increase in clients' interest to be more active in the financial markets, and building up a clear bridge between the brokerage and the investing world. The brokerage business represents the best sign of how fast the structure of the financial market is evolving, as technology is driving a swift change in price behaviors thanks to higher transparency. For this reason, we can see that the brokerage Italian market is still very underpenetrated, and we see a strong opportunity to grow despite already being the market leader. Let's now move to the slide 10 for the focus on our capital ratios. Finneco confirmed once again capital positions and labor requirements on the wave of safe balancing. Common equity tier 1 ratio at 23.5 and leverage ratio is at a very sound 5.2%, while risk-weighted assets were equal to 5.81 billion, total capital ratios at 32.07%. As for the liquidity ratios, liquidity coverage ratio is over 900%, and net stable funding ratio is over 400%, while the ratio high-quality liquid assets from deposits is up 79%, 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. Given the strong acceleration in our growth, we are taking more time to have a clear view on deposits net sales going forward. The underlying dynamics are strongly improving. If, despite the strong acceleration in our growth, there will remain excess capital, we will decide on the best way to return it back to the market. Let's now move to slide 16. Let's now focus on our 2025 forecast. On investing revenues, every $1 billion change of asset under management on August 1st generates around $2.9 million of management fees from August 1st until year-end. Banking fees are expected with a slight increase compared to 2024 due to new regulation on instant payments. Brokerage revenues are expected to remain strong with a continuously growing floor. thanks to the enlargement of our active investors. For 2035, we expect record revenues. Operating costs are expected to grow at around 6% year-on-year, not including a few millions of additional costs for growth initiatives in a range between 5 and 10 millions, mainly for marketing, Finneco asset management, and AI. Cost income, we expect to hit comfortably below 30%, thanks to the scalability of our platform. and to the strong operating gearing we have. On the payout ratio, we expect a hit for 2025 in a range between 70% and 80%. On leverage ratio, our goal is to stay above 4.5% leverage. Cost of risk was equal to six basis points, thanks to the quality of our lending portfolio, and we expect a hit in a range between five and ten basis points. Finally, we expect robust and high-quality net sales with increasing asset under management and deposits close, and the continued strong growth expected for our client acquisition, as we are in the sweet spot to keep on adding new market shares. Let's now move to slide 17 for a deep dive on our growth opportunities. NICO enjoys a unique market positioning to catch the long-term growth opportunity resulting by the huge household's wealth and the fast-changing clients' behaviors. In the graph, you can see the strong potential for our growth, given the stock of financial wealth of the Italian families. Our market share is still small, and the room to grow is huge. We are very positive on our future outlook, as we have no competition on our market position. As a matter of fact, Finneco is the only big player with a service model truly based on transparency efficiency, and fair pricing. Moving on slide 18, the step up of our growth trajectory is clearly materializing, as you can easily see in our recent client acquisition. On top of the slide, you can see the impressive acceleration of new clients, which is further building up in the first half of 2025. This acceleration is very healthy because it's based on the quality of our offer and not on and aggressive marketing campaign with a short-term rate remuneration. As a result, all our new clients are improving the matrix of the bank by bringing more deposits or more business for our brokerage and investing solution. These values is recognized by our clients as shown by our customer satisfaction of 94% on our net promoter score, way above the industry average as you can see down in the slide. Let's now move on to slide 19. The cumulative growth of high-quality new clients is translating into better net sales dynamics shown by the 32% increase of our total net sales year-on-year. The same applies to our deposit growth, which before the investment is up 34% year-on-year. Let me remind that we see a sizable increase mixed-sheet opportunity coming from the huge stock of Govis our clients bought over the last couple of years, given that a large percentage of this has a short-term maturity. This will give our financial planners an unprecedented opportunity to improve clients' mix into assets under management. In this regard, the bank is continuing to enlarge the offer of investment solutions. As an example, in September, a new and innovative private market solution by Finicoste Management will be launched. Let me now hand it to Paolo Di Grazia, Deputy General Manager and Head of Global Business to comment on slide 20. Please, Paolo.

Paolo Di Grazia Thank you, Alessandro, and good morning, everybody. As you know, the financial industry is quickly heading into an inflection point and is going to be heavily reshaped by technology. Thanks to our deep internal know-how and data control, Fineco is the only real player to be able to take massive advantage from it and to further accelerate our growth journey. This will be reached with our usual cost-effective approach. Of course, we are planning to launch the launch of an efficient and pervasive AI implementation in two directions. focusing on the productivity of our network of personal financial advisors, and second, paying attention to the cost efficiency of the bank by reshaping completely the internal processes. While on the latter, we will update the market in the next month, we have already started to re-engineer our financial advisor platform with the integration of an AI assistant. We will be It will be a key enabler to boost our network productivity and deliver a better quality service to clients and ultimately improving our revenues growth via stronger net sales and asset management. Let me stress that this is not a book of dreams, but it's already a reality. Our very first initiatives are already live, used by more than 2,500 personal financial advisors with more than 1,000 unique weekly logins. And by the way, we have never seen in the past an adoption like this for a new application like this. Our financial planners have now in their hands a powerful AI assistant, which is going to be a game changer for wealth management. Below in the slide, you can see the main features of the AI assistant, among which is worth underlining The Portfolio Builder, which is a powerful tool to immediately create quality portfolio fed with Fineco financial logic and optimized on client goals. The Portfolio Builder is also a content creator and a communication tool able to create professional and customizable reports, proposals, portfolio reviews, brochure, automatically generating narratives, and to support the financial planet. It's also a powerful marketing tool allowing for comparison of existing portfolio of prospect clients. It's also a search tool, a faster info search process for internal memo and communication. So the next wave of artificial intelligence implementation will focus on CRM for our financial advisors. and will be fully integrated with client data. It will empower our financial advisors to manage their agenda more efficiently, enabling a structured approach to client engagement and cross-selling. By streamlining customer management and unlocking new commercial opportunities, this will represent a further step in enhancing productivity across our network and driving for an even stronger growth. And I will hand it back to Alessandro to move on to slide 21. Thank you, Paolo.