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.

Let's now focus on asset under custody. A component of our business that is sometimes undervalued by the market, but is the real cornerstone of our fee-driven growth. This is true for investing, as asset under custody remains the main source fueling our asset under management nexus. As you know, around 90% of our growth is organically driven. As a consequence, new clients tend to show an asset allocation more oriented towards asset under custody, and the job of our financial advisor is to improve that mix into asset under management. For brokerage, expansion of asset under custody and the growing base of active investors are key factors leading to a structurally higher floor in our revenues. Finally, in the fast-growing ETF space, we are actively exploring new revenues opportunities, which we expand moving into slide 22. ENIC is uniquely positioned to capture the strong time-driven shift towards more efficient investment solutions, such as ETFs. As you can see, the stock of ETFs is now in excess of $13 billion, ETS now accounting for almost half of the asset under custody in XS. Thanks to our focus on transparency, efficiency, and fair pricing, we are the only player capable of fully recognizing and monetizing this structural trend with no harm on our profitability. First of all, the growing interest in ETS is generating a positive volume effect for our investing business. Thanks to our advanced advisory wrappers, we can move in the investing world clients that are not interested in traditional mutual funds. Thus, we've no cannibalization risk on the existing fund business. At the same time, our leadership in ETF retail flows make us the main gateway for issues into the Italian retail market. While we currently manage all costs to enter clients without recurring revenues from ETFs, talks are underway with our partners to find a fair balance. Finally, Finicoste management is going to play a big role in the ETFs world. Our Harish firm already launched its very first active ETF and more are going to be introduced. Thank you for your time. We can now open the call to questions.

This is the Car School conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch-tone telephone. To remove yourself from the question queue, please press star and 2. We kindly ask you to use handsets when asking questions. Anyone who has a question may press star and 1 at this time. The first question is from Luigi de Bellis of Equita. Please go ahead, sir.

Hi, good morning. I have three questions. The first one is on the ETF. So can you provide us an update on your strategy? In particular, where do you stand in terms of ongoing negotiation with ETF issuers? How has the client appetite evolved in the recent months? And what is the current pipeline of FAM in terms of new active ETFs? The second question is on the NII and margins on management fees, so what we can expect for the coming quarters, in particular on margins, also considering the pipeline of new products bought in private market and ETFs. And the last question on the crypto tokenization. So can you give us an update also on your crypto strategy? We have seen some U.S. players recently announce new product launches for European investors, including also U.S. stock and ETF tokens in Europe. So how is Finneco position in this space and what opportunities and risks do you see from this trend? Thank you.

Thank you. So, first of all, let me start by the update on the strategy on ETFs. As we explained during the presentation, we are advancing in the process of making the ETFs world characterized by recurring revenues. And we expect this is going to be finalized by the beginning of next year. And so, again, so ETFs is going to become progressively more and more a business that is generating recurring fees. So much more similar in terms of concept to the asset under management. The client appetite by the client is remaining robust and strong, as is demonstrated by the fact that half of the net sales on the asset under custody is represented by TTS. This for sure is absolutely a gigantic trend. and what is making the position of Fineco unique that considering the combination of an extremely very powerful, very well-working platform together with the extremely advanced positioning we have in the advisory solutions in which clients are paying an advisory fees is making Fineco the perfect place, the natural landing spot for everybody that is interested in being engaged with the ETFs were. The pipeline of pharma on ETFs is keeping on building up and so we expect that progressively Finacost is going to start playing an important role in this space. But again, this is not, I'm going back to look into the example of what has been the journey of, for example, Charles Schwab in the U.S. that they've started offering ETFs. their clients, and progressing their behavior to propose to their clients, not just the ETFs provided by someone else, but the external counterparts, but also the LTS. Regarding the NII, we expect the NII bottoming and reaching the bottom within the year-end, and starting by next year, the NII is expected to keep on growing again, and this is going to be extremely healthy in terms of direction. It's not going to be driven by, for example, edging activities on the portfolio, so the bank is not taking any risk and view. We're going to keep on maintaining an extremely conservative approach with continuously lowering the duration and decreasing the interest rate sensitivity. The growth of the net interest income is going to be driven by clearly there is a continuous process of building up of in terms of growth net sales. So in case the net interest income is expected to keep on going again starting by the end of the year. And trends on margin considering ETS and private markets. At the moment, we are not factoring yet in the margins what we can expect to get by the private markets. because clearly we prefer to remain cautious, but we are quite optimistic on the evolution on this side. The product is going to be launched at the beginning of the fall, and we think that considering the way it's been structured, the extremely modern and innovative solution we're bringing to clients, we expect an positive welcome, positive acceptance by the client, and so this clearly is going to be a progressively interesting contribution to the margins. ETFs, as we discussed several times in the past, are not really a trend on the margins because the ETFs are mostly used by the financial planners and into the advisory wrappers and on which the clients are paying an explicit fees and overall the margins are not significantly different by the overall margins we have on the asset and the major business. So the ETFs are playing a role of being a creative in terms of revenues because they are helping in building up volumes are helping us in making our way in market shares. And it is not a point of attention on the possible pressure on margins. Considering that Fineco as a starting point, respect the industry that is much more sustainable because Fineco has been only characterized by not overcharging clients and so on. But overall, at the moment, we know remain conservative, our margins are expected to remain stable. On the crypto and tokenization and the strategy and so on, I give the floor to Paolo in order to give a little bit more of color on what's going on there, our plans, what we can expect to happen.

Yes, basically on crypto we are currently discussing with regulators to have the permission to start offering cryptos on our platform. We see a lot of interest among our clients, but in general, in the country, there is a raising interest in cryptos, and so it's a piece of the offering that we're trying to put in the platform, but we don't know yet when exactly, because before we had to clear everything with the regulators. And again, we're in talks in these days with the Italian regulators. We know very well that there are other banks that, for example, from Germany that are offering cryptos also in Italy. And we know and we see our clients also using this platform to basically trade or have exposure mainly in Bitcoin and Ethereum. In this platform, that's why we see this as a great opportunity for us the moment we are going to be able to to offer the service to our clients. On the tokenization topic, it's a huge topic. We know for sure that this is the future. So tokenization, in our view, every asset is going to be tokenized. The fact, the important point is that to get a real advantage for the client, to have tokenized assets, we need to have tokenization very spread around in the system. So not only Fineco offering tokenization assets, but also other counterparties and maybe the financial market. And so for sure, one of the first big advantages that we can have even before the spreading of the tokenization technologies, the fact that we can be much more effective in managing costs related to, for example, post-trade activity, custody, and so on. So it's one main project that we have in our R&D projects. We don't see the tokenization, you know, far away, years far away. It's pretty much closed. And so while we are also positive on the opportunities that we can extract from the tokenization of the assets, not only ETS, of course.

Thank you very much.

The next question is from Alberto Villa of Intramonte. Please go ahead, sir.

Good morning, and thanks for taking my questions. I was wondering if you can provide us with a figure for the advanced advisory revenues for the first half of 2025. And I've seen advisory fee assets sales still quite positive but declining year over year. I was wondering if that's due to the fact that the penetration is starting to increase. How is the outlook in your view for the net sales under advisory fee going forward? And the second question is on the scenario for recruitment. Maybe if you can provide us with an update on the outlook for the industry and for Fineco in terms of how it's going and if there is any pressure you see on the market on that side. Thank you very much.

On the advanced advisory revenues in the first half, the growth is clearly continuing. So we expect that this is going to be the case. So the main driver on the asset under management is going to remain driven by the advanced advisory platforms and also the building up of the usage of ATS inside that, and together with the extremely successful solutions provided by Finnecoset management that is incredibly consistent in capturing the emerging needs for the clients and transforming these into solutions that are not available yet on the market. So the outlook for the next phase is remaining extremely strong. We see the outlook keeping on accelerating, going forward, thanks to the positioning and the positive macro environment characterized by short-term rates that are low and the health code that is positively shaped. On the recruitment, there is no change, particularly significant change on the horizon. The situation is remaining pretty much unchanged. and a part of the industry that is characterized by an approach in which very aggressive, in which clearly the model is based on overpaying financial planners for convincing them in joining. And clearly this is translated in then overcharging clients or going to alter let me say, a little bit questionable market practices in order to maintain a decent payback period on the market. Clearly, this is not our model. Never has been our model because always we consider this approach in which the growth is mostly driven by aggressive recruiting as not sustainable. And now, considering what's going on in terms of change of behaviors by clients changing the structure of the market, this is even less sustainable. So our recruiting is continuously focused on taking on board people that they are really convinced that the future of this industry is going to be a future which you have to go hand to hand with the evolution of the market, which fairness, transparency, and convenience are going to be key in the client and the client choice. And so we are absolutely progressing very well. Clearly we are not interested in chasing at any cost the recruiting of financial planners. We are clearly extremely interested in keeping on hiring and preparing young financial planners for the future job because the One of the main challenges for the industry is the aging of the financial planners. And clearly for the market, it's extremely easy to understand which kind of strategy is managed by the different companies. Because the higher the average age of your financial planners, the more it means that you are relying on aggressive hiring of old financial planners. and the younger is the average age of your financial planners, it means that clearly you are looking to the future. So this more or less is the scenario.

Okay, thanks. Sorry if I come back on the advanced advisory fees you cashed in in the first half. Do you have any Euro million number to share with us on that?

No, we are not sharing these numbers.

Okay, thank you.

Next question is from Christiana Holstein from Bank of America. Please go ahead.

Good morning. Thank you for taking my questions. I have three of them. So firstly, on the opportunity within AI, I know you flagged that it will improve revenue growth through productivity benefits. I was just wondering how we should think about these revenue and cost benefits going forward. And then also, will there be further investment required in the near term, as it seems as though only 0.6 million of the 5 to 10 million growth guidance has been spent on it so far? My second question was on the launch of the private market solution. I was just wondering if you could provide a bit more detail in terms of expectations here, in terms of revenue opportunity, margin, client uptake, etc. Do you think this will also make a material difference in the acceleration of the uptake in BAM products as well? And then just any further comment on acceleration in new clients? It seems like this growth has been extremely strong and continues to be very strong. But yes, how much do you think of this is driven by the heightened marketing spend and how sustainable is this? Thank you.

Thank you for your questions. First of all, thank you for raising the point on the opportunity represented by the AI. So really, as we started on sharing with the market, we are preparing a plan, a new plan that is going to be presented to the market by the beginning of next year throughout an investor day, extremely very well structured. And clearly in this new plan, clearly we have some cornerstones that are going to be on which we are building the plan. So the first one clearly is represented by giving a sizable evidence of the incredible gigantic and macro opportunity that is building up in our favor as a tailwind. because clearly as we do the presentation we explained that how still small is our market share and so during this presentation we are going to give some more evident numbers represented by this quite significant macro opportunity we have. Another cornerstone is going to be represented exactly by the the evolution of the way the bank is working driven by technology, AI. So in this, regarding AI, we have two different directions. One is what has been mentioned and described by Paolo is related to increase progressively, increasing the productivity of the network. So increasing the productivity of the network in very simple words means increasing the amount of net sales And we think that there is an absolutely incredible opportunity, because clearly the way for making this business growing is not keeping on pushing and pushing in the direction of recruiting and overpaying financial planners, but is to start on putting technology at work. the productivity of financial planners is really huge. Also, few tenths percentage points of increase of the productivity can represent an absolutely incredible numbers. Without mentioning the incredible improvement of the quality of what the financial planners are going to do. So, practically, more and more our financial planners are going to have more and more time to spend cultivating the relationship with our clients and putting even more focus on the marketing activity. And clearly this is going to be quite significantly positive for the evolution of our revenues, particularly on the investing side. Then there is another cornerstone related to AI, clearly. This is going to be on, let me say, is internal. the efficiency, so cost. So Finneco is in a unique position because when we are talking about AI, the real point is, theoretically AI is a commodity. Everybody can get access to AI. The real point is, but then you are really able to use AI successfully. It depends on your capability on getting access to high quality and easily manageable base of data, and clearly this is strictly related to the technological infrastructure you have. FinEQO is among the financial institutions in Europe, probably one of the best positioned for really putting at work AI. So this means that we are going to go throughout an incredibly detailed and quite significant reshaping of all the internal processes of the bank. And this is going to generate progressively more efficiency, but also to restart progressively the journey in keeping the cost-income ratio moving down. So what is opening in terms of opportunity AI for companies able to use that efficiently, it's absolutely incredible. And so we expect, and this is going to be embedded in the planning, which we are going to give to the market extremely detailed and precise indications. So we expect that AI is going to contribute in increasing what is usually called by the market the JOS, so the progressive divergence between the revenues and costs. This is very important in order to predict also the expected return on equity of the bank. And then there is another cornerstone that is not related to AI. All the initiatives that we are putting in place that are progressing are going to start generating additional revenues on the, for example, on the asset under custody side. As we explained, asset under custody is a gigantic opportunity for all the reasons we've described, but there are some quite evident, immediate evident relations behind. There is everything related to the ATS world. The ATS world, I want to repeat, are going to become more and more progressively a business generating recurring revenues, and thanks to the combination of the better arrangements with the issues, and the progressive better control of the value chain throughout the FinEQ asset management. And then the other, there are other evolution, like for example, just as an example, we are just at the beginning of the process of putting at work our potential on the stock line inside that is gaining, considering the significant dimension of the asset under custody is very important. Paolo was describing, what the crypto world. So we are absolutely confident that at the end of the conversation, we are going to find the right way for offering to clients the crypto. And there is a demand for sure by the clients. And there is a clear preference by clients in having this throughout and a trustful and established bank instead of using external platforms. So again, thank you. And so these are the – and so just making – so we expect results of an accelerating generation of revenues and even better control of cost and possibly driving the cost down going forward. And at the same time, significant improvements in terms of the contribution components of the business, like asset under asset that, again, is wrongly considered with lack of values by the most part of the market. On the private market, we think that Progressive is going to become an interesting source of additional revenues with absolutely very interesting margins. and it's going to become something that's decently material going forward, particularly throughout next years. On the acceleration of new clients, yes, we think that the acceleration is driven by the, as we say, by the perfect positioning of Finneco. The client's behaviors are clearly changing. Clients are more and more looking for efficiency, transparency, and convenience. This is driven by the combination of the an evolving technological landscape, the generational change in which Finneco is the perfect landing spot for the new generation inheriting the wealth, and higher market spending, clearly, is absolutely the right decision because when everything is favorable, this is the right moment in which you have to spend. So if you are a bank that is not correctly positioned, You have not exactly the right offer for what the clients are looking for. And you are accelerating the marketing expenditure. This is just a pure waste of money. It's exactly the opposite situation we have. Fineco is exactly at the crossroad of the fastest emerging trends. And so this is the right moment for spending more. And so we remain absolutely confident of the continuation and the further acceleration of that in terms of client acquisition.

Thank you.

The next question is from Angeliki Sairassari from GPMorgan. Please go ahead.

Good morning, and thank you for taking my questions. Just two from me, please. First of all, just a clarification with regards to the investing guidance that you gave. You do mention in the slide that for every $1 billion change of AUM, you expect to generate around $2.9 million of management fees from August 1st until year-end. And I think in the first quarter you had, for every $1 billion of change in AUM, you expect around $4.5 million from May 1st. So I just wanted to understand, is it just a prorated calculation? Has your guidance changed at all in terms of the investing revenues, or you have prorated for fewer months?

You are absolutely right. It's just a matter of the prorata. So clearly the guidance has not been changed at all. So the change is clearly the more we approach the year-end and the lower is the impact generated by an addition of one billion, by a move of one billion of asset under measure, more or less. So it's just a recasting of the prorata impact caused by the time passing.

Thank you very much for this. And then on the private markets product that you intend to launch through FAM, have you identified already some private markets asset managers that you intend to partner with to source those co-investment and GP secondaries opportunities?

Yes. So the name is not Yes, this is the partner we choose.

Thank you very much. The next question is from Hugo Cruz from KPW. Please go ahead.

Hi, thank you for the time. Just wanted to ask on ETFs, slide 22, very interesting. I was wondering what percentage of ETFs in both the AUC net sales and AUM, are from Fineco Asset Management. And now there's the profitability of your internal ETFs compared to the other ETFs that you offer. And finally, on the investor day, will it also address the potential market entry into Germany and potentially other countries as well? Thank you.

On the ETFs, the person is represented by the Finnecos management product is still pretty small because it's just at the beginning. Clearly, the more we are going to be able to have our clients buying the Finnecos managed ETFs, the more clearly we are going to take advantage by the control of the value chain because in the ETFs world, clearly, the profitability is not such as bad. So it's... And clearly, by definition, what you can expect on the ETS world is, on one end, the traditional ETS progressively are going to be characterized by generating recurring revenues throughout the arrangements that are underway with the issues. And as we said, we are confident that by year-end, we are going to start on enjoying the first positive outcome driven by these arrangements. And on the other side, clearly, the more we are going to be able to put in the portfolio of our clients, yes, clearly, by definition, clearly, the profitability is going to be at least double because we have not to share anything with you. Someone else saw it. And yes, the investor day is going to be and is going to treat as well our plans for moving abroad. Yes, we are going to give more flavor, more color on that.

Thank you very much.

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For any further questions, please press star and one on your telephone. Mr. Focchi, there are no more questions registered at this time.

Thank you very much for attending our conference. Thank you for your extremely important, interesting questions, as usual. If you need to make some more deep dive in our numbers, concepts and so on, please feel free to make us a call anytime. So thank you again and talk to you soon.