Finecobank Banca Fine Spa

Good morning. This is the Coral School Conference Operator. Welcome and thank you for joining the Fineco Third 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, 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 morning, everyone, and thank you for joining our third quarter 2025 results conference call. In the first nine months of 2025, net profits at $480.5 million and revenues at $969.6 million. supported by our non-financial income. Investing up by 10% 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 16.5% year-on-year, thanks to the enlargement of our active investors. Importantly, if we zoom on our quarterly dynamics, net profit and revenues were back to the sequential quarter-on-quarter growth. Our net financial income has already bottomed out and fully absorbed the decreasing interest rates and was up around 2% versus the second quarter on the back of positive deposit net saves and positive reinvestment yield. Operating costs were under control at $259.9 million, increasing by around 6% year-on-year by excluding costs related to the growth of the business. Cost-income ratio was equal to 26.8%, 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. This is underpinned by the positive tailwinds from structural trends and we are leveraging on this solid momentum through a more efficient marketing. The results of this acceleration has been clearly visible in the first nine months of 2025. First of all, we had around 145,000 new clients, up by 33% here and here. In October, new clients are around 19,000, the second best month on record, up more than 25% year-on-year. Second, our net sales were $9.4 billion in the nine months, up by a strong 36% year-on-year. In October, estimated total net sales saw a further continuation of this trend at around $1.3 billion, up by more than 30% year-on-year. The mix was very positive with asset under management at around 0.5 billion net sales, up by more than 20% year-on-year, deposits at around minus 0.1 billion, and asset undercasts at around 0.9 billion, leading to the best month ever for brokerage revenues at around 31.5 million. Our capital position confirmed to be strong and safe with a common equity TR1 ratio at 23.9% and leverage ratio at 5.11%. On the right-hand side of the slide, you can find the summary of our guidance. Our outlook for 2025 has improved thanks to the acceleration of the structural growth and our business model. More in details, our net financial income bottomed earlier than expected in the second quarter, thanks to the positive deposits, net sales, and reinvestment yields. On investing, we are experiencing the solid year-on-year increase of our asset under management net sales, currently with a lower interest rate. On brokerage revenues for 2025, we expect a record here, thanks to the continuously growing floor driven by the higher asset under custody, and enlargement of our active investors. October revenues are just the latest evidence of the higher floor of the business. Banking fees are expected in a slight decrease in 2025 versus 2024 due to new regulation on instant payments. On operating costs, we expect a growth 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 and financial management and AI. Finally, in 2025, we expect a payout ratio in a range between 70% and 80%. On 2026, we expect all the business areas to contribute positively in terms of growth to our revenues growth. Net interest income expected to grow year-on-year on the back of positive deposits, net sales, and reinvestment yields. On investing, we expect a solid growth on our asset under management net sales. Banking fees expected to grow on the back of a higher number of clients. Brokers' revenue expected to grow thanks to the increase of the asset under custody and active investors. On 2026 guidance, more details will be provided during the next year capital market day on March the 4th. Let's now move to slide five. Before moving into the details of the presentation, let me stress that month after month, Finneco is recording a continuous acceleration of its growth dynamics supported by very healthy underlying quality. As you know, our business model relies on a diversified and quality revenue stream, allowing the bank to deal with any market environment. On the banking revenues, our net financial income is a capital-like one, with lending being only an auxiliary business, and it's driven by our clients' valuable and sticky transactional liquidity. Let me stress that deposits are joining our platform for the quality of our banking services and not due to aggressive commercial campaign on short-term rates. That's why our deposits are so valuable and our cost of funding is practically close to zero. Our investing revenues are recording an healthy and future-proof expansion, as they are already aligned with clients' rising demands for transparency, efficiency, and convenience. This approach is mirrored in the quality of our revenues mix, which is almost entirely recurring with a very low percentage of upfront fees and no performance fees at all. Finally, our brokerage is clearly experiencing a further step up in the floor of the business, thanks to the capability of our platform to head a structurally higher number of active investors, leading to a structurally higher stock of assets under custody. This is driven by the structural increase in client interest to be more active on the financial market, and this is building a bridge between the brokerage and investing world, which we are the only one able to scoop given our market position. Let's now move to slide seven and start commenting on the most recent trends. Net financial income fully absorbed the decreasing market rate thanks to the organic growth and our valuable deposit base. This net financial income was up by 1.9% quarter-on-quarter, led by the positive deposit net sales and the higher reinvestment yield of our bonds running off. This despite the still declining average Let me quickly remind you the quality of our net interest income, which is capitalized and driven by our clients' valuable and sticky transactional liquidity. That's why our deposits are so valuable and will be the driver going forward for the growth of our net financial needs. Let's now move on to slide eight. Investing revenues reached 295.6 million in the first nine months of 2025, increasing by a solid 10% 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 financial asset management. Let me remind you 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 very low upfront and no performance fees at all. Let's move on to slide nine. 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 Finneco Asset Management asset under management out of the total stock of asset under management has been steadily growing and is now equal to 39%. On the other hand, 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 transparent, efficient, and convenient solutions. All of this is channeling a strong demand towards advanced advisory services and with an explicit fee, where Finneco is by far the best position in Italy, as you can see down in the slide. Let's now move to slide 10 for a focus on brokerage. Brokerage registered a very strong first nine months with 187 million revenues, driven by our larger active investor base and growing stock of assets under custody. October further built on this, delivering a record mark with 31.5 million estimated revenues. Let me stress that the revenues of our assets under custody are expected to grow as we roll out our new initiatives on stock lending, auto forex, ETFs, and systematic internalization. Average revenues in the nine months are around 7.3% higher versus 2020 with much healthier underlying dynamics. This is driven by the structure increasing client's interest to be more active on the financial markets and building a clear bridge between the brokerage and investing world. The brokerage business represents the best sign of how fast the structure of financial market is evolving as technology is driving a swift change in client's behaviors thanks to higher transparency. For this reason, we consider the brokerage Italian market very under-penetrated, and we see a strong opportunity to grow despite already being the market leader. And again, October numbers are a clear sign of this opportunity. Let's now move on to slide 12 for a focus on our scatter ratio. Fineco confirmed once again its capital position well above requirements on the wave of safe balance sheet. Common equity tier 1 ratio at 23.93% and leverage ratio at a very sound 5.11%, while risk-weighted assets were equal to 5.81 billion. Total capital ratio at 32.53%. As for the liquidity ratios, Liquidity coverage ratios is over 900%, and net stable funding ratio is over 400%, while the ratio high-quality liquid assets on deposits is at 80%, 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 deposit net sales going forward, and the underlying dynamics are strongly pulling. If, despite the strong acceleration in our growth, there will remain excess capital, we will decide on the best way to return heat back to the market. Now let's move to slide 18. Let's now focus on our guidance. Our outlook for 2025 has improved thanks to the acceleration of the structural trends behind our business. More in details, our net financial income bottomed earlier than expected thanks to the positive deposit net sales and reinvestment yields. On investing, we are experiencing the solid year-on-year increase of our asset under management net sales currently with lower interest rates. Brokerage revenues are expected to remain strong with a continuously growing floor, thanks to the higher asset under custody and the enlargement of our active investor base. For 2035, we expect record revenues, with October numbers being just the latest evidence of the higher floor. Banking fees are expected with a slight decrease compared to 2034, due to the new regulation on instant payments. For 2036, we expect all the business hires to contribute positively to our revenues growth. The net interest income is expected to grow here on here on the back of deposit net sales and reinvestment yields. On investing, we expect solid growth of our assets under management net sales. Banking fees are expected to grow on the back of higher clients. Brokerage revenues expected to grow thanks to the higher assets under custody and the enlargement of active investors. On 2026 guidance, more details will be provided during the next year's capital market day on March the 4th. On operating costs, for 2025, we expect 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 million. mainly for marketing, finance cost management, and AI initiatives. Cost income, we expect to hit comfortably below 30% in 2025, thanks to the scalability of our platform and the strong operating gear we have. On the payout ratio, we expect for 2025 to range between 70% and 80%. On leverage ratio, our goal is to remain above 4.5%. Customer risk was equal to seven basis points, thanks to the quality of our lending portfolio. And for 2025, we expect a hit in a range between five and ten basis points. Finally, we expect a robust and high-quality net sales and the continued strong growth expected for our client acquisitions, as we are in the sweet spot to keep on adding new market shares. Let's now move on to slide number two. for a deep dive on our growth opportunities. Gineco enjoys a unique market positioning to catch the long-term growth opportunity resulting by the huge Italian households' wealth and the fast-changing clients' behaviors. In the graph, you can see the stock potential of 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 positioning. As a matter of fact, Fineco is the only big player with a service model truly based on transparency, efficiency, and convenience. Moving now to slide 20, 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 nine months of 2025. This acceleration is very healthy because it's based on the quality of our offer and not on aggressive marketing campaigns with 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 brokerage and investing. This value is recognized by our clients as shown by our customer satisfaction of 19.4% and our net promoter score way above the industry average. Let's now move to slide 21. The cumulative growth on high-quality new clients is translating into better net sales dynamics shown by the 36th increase of our total net sales here on earth. Let me share that the mix of our net sales mirrors our positioning as the reference platform for all clients' financial needs. With asset under management is driven by client interest for transparent, efficient, and convenient investment solutions. Our banking platform is attracting valuable transaction liquidity. Finally, asset under custody are clearly signs of the increasing clients' engagement on our brokerage platform, thus contributing to our revenue generation. On top of this, we see a sizable mixed shift opportunity coming from the huge stock of Godis of our clients, both over the last couple of years. Let me now hand it to Paolo, Deputy General Manager and Head of Global Business, to comment

Thank you, Alessandro, and good morning, everybody. As you know, the financial industry is quickly heading into an inflection point, and it's going to be heavily reshaped by technology. Thanks to our deep internal know-how and data control, Fineco is the only real player able to take massive advantage from it and to further accelerate our growth journey. This will be reached with our usual cost-effective approach. We are planning to launch an efficient and pervasive AI implementation in two directions. First, focusing on productivity of our network of personal financial advisors, and second, paying attention to the cost efficiency of the bank by reshaping 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. This is 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 under-management. Our very first initiatives are already live and widely used by our network. Our financial planners have in their hands a powerful AI assistant, which is going to be a game changer for wealth management. In the slide, you can see the main features of the AI assistant, among which is worth underline one, the portfolio builder. a powerful tool to immediately create quality portfolio fed with FinEco financial logic and optimize on client goals. And the portfolio builder is also a content creator, a communication tool, able to create professional and customizable reports, proposals, portfolio reviews, and brochures, automatically generating narratives, contents to support the financial planners. It's also a powerful marketing tool, allowing for comparison of existing portfolio of prospect clients. The AI system is also a search tool, a faster info search process for internal memo and communication. The next wave of AI implementation will focus on CRM for our financial advisors, 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. Finally, we are working to bring an AI-powered search tool also to our brokerage client, our final clients, allowing for an even easier experience to our state-of-the-art platform. I will hand it back to Alessandro to move on slide 23.