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.

Thank you, Paolo. Let's now focus on our asset under custody. a component of our business that is sometimes undervalued by the market, but that 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. As you know, around 90% of our growth is organically driven. As a consequence, new clients tend to show and asset allocation more skewed towards asset under custody, and the job of our financial advisors is to improve their mix into asset under measure. For brokerage, the expansion of asset under custody and the growing base of active investors are key factors leading to a structurally higher floor in our revenues, which we expect to grow as we roll out our new initiatives. on stock lending, auto tax, ETFs, and systematic internalizers. Finally, in the fast-growing ETF space, we are exploring new revenues opportunities, which we expand moving into slide 24. Finneco is uniquely positioned to capture the strong client-driven shift towards more efficient investment solutions, such as ETFs. The stock is quickly on the rise and now exceed 15 billion. And ETFs now accounting for half of the asset under custody next year. Thanks to our focus on transparency, efficiency, and convenience, we are the only player capable of fully recognizing and monetize this structural trend with no harm on our profitability. First of all, the growing interest on ETFs is generating a positive volume effect for our investing business. Thanks to our advanced advisory wrappers made of ETFs, we can move in the investing world clients that are not interested in traditional mutual funds. Thus, we have no cannibalization risk on the existing fund business. At the same time, our leadership in ETFs retail flows makes us a main gateway for issuers into the Italian retail market. While we currently manage full costs to end our clients with our recurring fees from ETFs, talks are underway with our partners to find a fair balance. Finally, Finicost management is going to play a big role in the ETFs world. Our Irish firm already launched its first active ETFs and more are going to be introduced. Thank you for your time. We can now open the call to questions.

Thank you. This is the Coruscant Conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. To remove yourself from the question queue, please press star and 2. We can be asked to use handsets when asking questions. Anyone who has a question may press star and one at this time. The first question is from Marco Nicolai of Jefferies. Please go ahead.

Yeah, good morning. First question is on the brokerage number for October. So almost 32 million in a month. It's a record number. Just wanted to know if there is some, so what's the impact from the BTP Valore issuance? And if you can comment on the underlying trend X, the BTP Valore revenues. Then another question on the crypto front. I think you didn't mention it in the various projects in the presentation. You mentioned AI and other projects, but not crypto. Just wanted to know if you had any updates there on the talks with Bank of Italy. One of your peers got recently the MICA license from Cyprus in the past days. I don't know. My perception is that there could be other geographies that are quicker than Italy granting these licenses. And if that could slow down your projects here and the growth you could have in brokerage coming from the crypto market. And then another question on the payout, you mentioned 70% to 80% for 2025. I guess your leverage ratio will be well above your minimum targets for 2025. And if that's the case, shall we consider 80% for 2025? Or you think there are other moving parts in the leverage ratio that could negatively affect it? So these are my questions. Thank you.

Thank you. Let me start by commenting on the October brokerage numbers. The impact from the BTP value has been more or less in the region of 5 million. So this means that many cases is remaining there. So excluding the contribution of the BTP valore, the numbers are 26 million revenues in the month of October. That is quite significantly above the average of the revenues generated in the previous month. And this clearly is perfectly correct with the underlying trends that we are commenting by some time. So there is a continuous, quite significant growth to the base of clients. Lelys continues adding new active investors to the platform. Second, the continuous building up of assets under custody is clearly contributing in that direction because clients are not trading, are trading stocks, are trading bonds, and they are trading ETFs as well. And so we remain extremely positive on the future evolution of brokerage, exactly for the reasons we recommended during the presentations. So structural changes underway and continuously growing quite significant to the important growth in terms of number of clients and FinEQ emerging as the clear winning platform here in Italy. On crypto, I leave the floor to Paolo for giving the latest update on what's going on there.

So the crypto is still a project. We're still in talks with the regulator. We have no news for now from the last call that we had. We are very aware that we have plenty of competitors that are getting the MICA license. Unfortunately, in Italy, There is nobody yet, I guess, that has a MICA license, but we keep on talking and explaining our view to the regulators, and we hope we will come with a solution in the next few months.

On the payout, clearly what we want to make very clear that Fineco is a growth story. is a unique growth story because the uniqueness is represented by the fact that we are combining together an incredibly powerful growth together with quite generous payments of dividends. But we are not a dividend stock. So clearly our goal is not to give the market the highest possible dividends. So our main goal is to keep on accelerating as much as we can in direction of growth at the same time remaining in a very compelling story from a dividend point of view. So clearly we will see. So now we are at the year end. We are going to take the final decision, which is going to be the final dividend payout. But this is the only comment. Again, my opinion, the most important takeaway is that Again, Fineco is a quite unique case in the financial industry. Strong growth and at the same time, very generous dividends.

Thank you.

The next question is from Luigi Debellis of Equita. Please go ahead.

Hi, good morning. I have three questions. The first one, so in the recent months, Fineco has seen an acceleration in new clients' growth. What has changed to drive this momentum and do you expect this trend to continue at the same speed in terms of client acquisition? And can you comment also on the quality profile of these newly acquired clients and also the acceleration that we are seeing in the net bank transfer that you mentioned in the slide number seven that is above plus 20%. The second question on the asset under custody, so huge amount reaching $52 billion. You mentioned the revenues on asset under custody expected to grow. Can you elaborate on this, on the speed of this acceleration expected? And the last question on the Germany project. So could you provide an update on the initiatives? What are the current development and expected timelines for the rollout? Thank you. Yes.

Regarding the acceleration of new clients, what is driving this growth is clearly our structural tailwinds because as we are explaining continuously that Fineco is the only one large established significant bank in Italy that is really offering efficiency, transparency, and convenience. And this And this kind of demand is rapidly growing, driven by the completely different technological landscape, which everything is much easier to make comparison. Everything is the information spreading out incredibly rapidly. And then there is the quite significantly accelerating process of generational passage. So Fineco is the So now there is the X generation that is mostly entering in the game. And this generation is characterized by significantly different habits and behaviors by the previous generations. Where, again, sorry if I'm repeating myself, the request for efficiency, transparency, and convenience is emerging as a clear need. And Fineco is the only one player that is fully satisfied. For this reason, we think that clearly the strong growth is going to continue, probably is going to keep on accelerating even more going forward because all these tailwinds are going to keep on gaining strength and momentum. And the acceleration of the net bank transfer is an immediate consequence of this And this also is giving to me the opportunity to answer to the other questions on the quality of the new clients. The quality is remaining extremely high and robust. We are not observing any kind of dilution in the quality of clients we are taking on board. And this clearly is mainly driven by the approach, by the business model of the bank. Very important, Finneco is not... attracting clients because it's taking shortcuts. We are not putting in place aggressive short-term initiatives for taking on board new clients. So we are not, for example, overpaying clients with high rates on deposits. By the way, in this moment, there are plenty of banks that are making continuously very high offer on rates. And so the results that the clients that are opening an account in Fineco, they are opening an account just exclusively because they are interested in using our platforms, our services. And this really is very positive in terms of quality of clients and is incredibly positive for the evolution of the revenue generation. It is going to every single additional client we are heading to the platform, is to some extent contributing in increasing the revenues of the bank. And on the speed of growth on brokerage revenues, as we are saying, so the more clients we are taking on board, the more assets under custody we are keeping on building up, and the more you can expect that the floor of the business is continuously going up. We are driving on the concept of floor, because we are interested in seeing how brokerage is performing without considering the theoretically short-term impact caused by volatility. By the way, until so far, the volatility this year has not been particularly relevant. There has been a level of volatility that has been, let me say, average. So this is clear there. And so, yes, brokerage is going to remain on the fast lane of growth. timeline and what's going on on the Germany rollout? Again, I'm leaving the floor to Paolo to give a little bit more flavor.

Yes, we have the plan. We finalized all the information we needed and we still need some internal approval, but we have the idea of rolling out by the end of 2026 in the friends and family mode. So this is pretty much the time horizon we have.

Thank you very much.

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

Hi, good morning. Thanks for taking my questions. So I have a few, mainly on brokerage, given the very strong printing. So you mentioned about the possibility of monetizing IUC in different ways. One of your European competitors recently announced the decision to offer securities lending on IUC, and they were quite specific. So they disclosed that they think they'd be able to generate about 20 business point margin on the IUC that are eligible for securities lending. So I wanted to ask you, first of all, where do you stand in that process? I think it's something in the past you mentioned you wanted to pursue yourself. Second question, what proportion of your IUC is eligible? And thirdly, if you can confirm that 20 basis points might be a reasonable number to expect in terms of revenue that you could generate out of that. So that's my first question. And then my second question, I was looking at your IUM flows. So on the quarter, you had over $900 million. You also disclosed that a good chunk of that, so roughly $600 million, came from advanced advisory solutions, which, you know, it's positive. But could you please disclose what was the margin on average on these $600 million of IOM that actually related to IUC assets? That would be helpful for us to understand whether, indeed, there is no margin dilution from this type of contract. Thank you.

Okay, thank you.

So, regarding on the, let me start by brokerage. Possibilities to monetize assets under custody. Yes, as we explained during the presentation, we have quite very interesting additional evolution there in terms of increasing the margins generated by assets under custody. Let me remind that one is for sure represented by the stock lending. The bank is in the process of deploying an extremely structured platform for taking advantage by the stock lending and so on. On the margin, clearly at 20 basis points, we think that overall is a conservative number, so it probably can be can be even more. And on the proportion of asset under custody eligible, this is a moving picture because exactly one of the rationale behind the platform is going to expand as much as we can the eligible amount of asset under custody we have and so on. But clearly, another clearly direction is the as we were mentioning, is represented by the out-of-facts and so on. Then I will leave to Paolo if you want to make some technical comments on the out-of-facts.

Yeah, we have a growing number of orders that are going to the American, the United States market, NASDAQ and NYSE. So there is a lot of flows going there, and of course there is a Big revenues are touched because our clients, they have euros on their accounts and they trade on USD. So the OuterFacts is a new service that allows the client to be much more... It's a faster mode of executing an order. So the exchange is made automatically by the platform. And this is something that is giving us... a simpler order for the client, so it's easier for the client to place the order, and for us there is a slightly higher margin compared to the fact that before the client had to change every time the effects and the auto-effects is better for the client, but also better for us.

Then we have exactly what we are continuously now is the other announcement in terms of revenues presented by ETFs. So what's going on there? We think that we will, we confirm that by year end we are going to finalize the first arrangement that you get by the ETFs with the recurring fees. Overall at the European level, the industry, is moving exactly in that direction. So the largest issues are progressively moving direction to close arrangements with the largest European players in terms of control of retail flows on ETFs. And Fineco is going to be one of them. And so this, again, this is confirming the importance to play big, to be really the reference platform reference platform there. On the asset under management flows, so on the margin, so we are not making any specific distinction. So for us, the margins on the, so for us it's indifferent if the client are putting in the advisory platforms actively managed funds, CTS, assets under custody, because what the clients are paying is an advisory fee that is totally different, is totally not correlated with, is independent by what is put in the portfolio. So theoretically, the clients can ask of having a portfolio that is made exclusively by a set under custody, and for us, the margins, are going to be exactly the same if the client is having a portfolio represented by 100% by actively managed funds. So this is exactly it. It's something that is the great advantage that Finneco has. Finneco is extremely advanced in making clients pay an advisory fee and so being completely detached by the inducement-based model. And so, again, this is going to be another big trend that is emerging.

Thank you. If I may, just a very quick follow-up. Very helpful when you commented that the 20 bps is perhaps low. I think that the idea behind the 20 bps is that a portion of the revenues will be shared with clients. So the underlying return could be actually indeed higher than 20 bps. Is this what you are also thinking of? So 20 bps, could it be a number that you internalize, so net what you pay to clients from securities lending? Or you think it could be generally an even bigger number?

So it's clear when we are showing the margins, we are considering that we have to pay the clients because this is clearly by law. And so clearly that there is, again, so we can confirm that we think that also including what we have to pay to clients, probably this 20 basis points margin is on the conservative side.

Thank you. Very clear.

Thanks. The next question is from Hugo Cruz of KBW. Please go ahead.

Thank you for the time. I just had a question around your comment on brokerage revenues and how that converts into P&L, particularly trading profit. Because when I look at conferences, it has trading flat, flattish going forward. So that doesn't seem to make sense to me in light of your comments that brokerage revenue should continue to go up. So if you could give a bit more color on how the brokerage revenues and trading profit, you know, how it converts into trading profit.

Thank you. First of all, let me remind you that for us, trading profit is not something that is driven by the bank taking some kind of risk. It's a kind of free of risk market making. So we were mentioning among the components that we expect are going to keep on contributing in making the brokerage revenues growing, also the systematic internalization of orders of clients. So we expect that the more we are going to keep on building up volumes and business, and as well we expect also the opportunity offered by the systematic internalization of all this is going to keep on growing as well. We are not surprised by the fact that the market tends to be a little bit always a step behind what's going on in brokerage because as we said during the presentation probably everything that is in the region of asset under custody in brokerage has been probably the a little bit the most misunderstood component of our business. Because clearly, as we are seeing, typically until the recent past, the big growth in asset under custody has been not very well welcomed by the market. But the asset under custody clearly is the fuel for brokerage. going forward and for the asset management as well. So we think that brokerage is by definition on the fast lane of growth on the future. But exactly for a combination of structural reasons. Big growth of clients and a significant shift in the client's behaviors and the increasing level of participation of clients and the growing interest by clients for solutions like representative ETFs. What is important to remind that when we are talking about brokerage, clients are trading on everything on the platforms. They are trading on stocks, they are trading on ETFs, but they are trading on bonds as well. And so this is the reason why brokerage is going to keep on doing very well.

The next question is from Christian Holstein of Bank of America. Please go ahead.

Good morning. Thank you for taking my questions. My first one is on the CMD next year. So I know you flagged that you'll be announcing 2026 guidance. But just because there has been a CMD before, I was just wondering what else we can expect. Are you looking to also give a multi-year target, for example? Secondly, you previously highlighted the introduction of private markets in September. I didn't hear any update on this, so I was just wondering if you could let us know how that's been going and how the interest has been from clients so far. And then thirdly, on investing management fee margin. So this has seemed to be relatively stable more recently. I know you also flagged the benefits from ETP on investing and obviously VAM is higher margin. As the uptake here improves, we should hopefully expect the margin to strengthen. But I was just wondering what your expectations are here. Thank you.

So what you can expect by the capital market day on the next March 2026. On capital market day, we are going to give a much broader much more important and relevant details regarding what you can expect in terms of our strategy, evolution, also the rationale behind entering more in-depth also in the initiatives, what we can expect that we are going to deliver to the market, and yes, finally, we are going to give to the market something that is going to help you in better modeling on the longer term the projections of the bank. Yes. We think that this is the right moment because, as we are saying, the bank is definitely entering in a significantly different, it's moving throughout an irrelevant inflection point because this is exactly what's going on in the market. And so we think that it's the right moment to share with the market more details regarding the extremely exciting future that we see ahead for this bank. Private market, the placement is going to start within the next few days. So probably, let me say, by the next week, the product is going to be launched. And it's going to be up and running. And we will see. We can see that we remain quite positive because there is an evident demand by clients. And so, yes, in the next few days, this is going to be deployed. And commenting on investment management in markets, as you know, we don't like to – to drive the market on the fee margins because clearly for us what is important is the direct, is the evolution of revenues because revenues is a combination of volumes and margins and this is much more important because this tends to clearly to tends to better represent the evolution of the market. It's a matter of fact that Fineco is by definition in a much better position than the industry in order also of having more stable margins because we are definitely less under pressure, but for two main reasons. The first one, that Fineco is historically positioned on the lower side in terms of commissions we are charging to clients. And so, by definition, this is making us less exposed to the building up pressure on margins. Second, that the journey in terms of increasing penetration of the Finneco asset under management solution is still underway. And this is different by time. other participants of the industry that now has been where the percentage represented by their whole internal product has been, everything has been almost done. And this, in any case, with Fineco remaining and the only one large and truly open platform because this continuously growing percentage of Fineco's products It's not driven by the fact that we are expected to close down the platform. The platform is going to remain an open platform. It's driven by the fact that Finneco State Management is incredibly great in delivering continuously extremely innovative solutions and incredibly fast on bringing this to the market and so being able to remain always a step ahead of the market.

Great, thank you.

The next question is from Gianluca Ferrari of Mediobanca. Please go ahead.

Yes, hi, good afternoon. Three for me, please. First, on the AI project that Paolo described, can you share with us some KPIs of the business case here? So how much you invested in this project and if you calculated the IRR you expect from the project itself? Second question is on the 22 billion bonds. How much is expiring in 2026? And if you can remind us what is the conversion rate you expect to have on those bonds. The final one is on your lending and particularly on the fact that the stock has remained flat at 5.1 billion in the context of declining interest rates. So I was wondering if your clients have any appetite for a bit of re-leverage considering your very strong capital ratios and lower interest rates. Thank you.

So on the AI project, first of all, let me make a few comments there. So Finneco is in a great position in order to leverage on AI. because thanks to the kind of bank we are, that Finic is a tech company. So with AI, what is the most important element is not exactly how much you spend, but how much you are able to transform what you are investing in something that makes sense. So in the AI project, what is really important So because everybody, theoretically, there is no, is a commodity. The AI agents are commodities. And so the real difference is made by your capability of leveraging on a high-quality, easily accessible base of data, because if you don't have that, artificial intelligence is not going to work. And second, that you have to be in the position to train your system, your products, and so on. And again, we're back again to the point. So Fineco is being a tech company because Fineco is not just using technology, but is in control of the most part of the technologies we are using. So this means that, for example, our data warehousing system has been by many years a key strength of the bank. So for us, it's extremely easy to extract high-quality, easily accessible data. This make what you need in terms of investments much less than, for example, is requested by someone that sits on a much more complex infrastructure. So, for example, if you are mostly leveraging on outsourced platforms, or you sit on different layers of software and so on. Clearly, this is going to be to extract easily accessible and high-quality data is going to be really very difficult and incredibly expensive. The same way for the training the programs. So the more you are in control of your processes, the more you are in control of your platforms, and the easier it's going to be to go throughout the training process. You don't need to have, for example, external system integrator taking care of you for training the progress. And so this means that, again, everything is going to be much better in terms of results and much, much less expensive. And so, honestly speaking, our AI projects are what we expect to best considering what you expect to get by this project. Honestly speaking, this is the is a completely meaningless point because we expect quite an important increase in the productivity of the network. We expect a significant improvement in the process of the bank. But on top of that, what we expect to spend is going to be a real fraction of the positive impact caused by this investment.

And on the increased productivity, any quantitative indication?

I think that, so let me say, so also assuming, let me say, staying on the conservative side and assuming, I don't know, a 10% increase in productivity, this is going to be a huge number. So, but...

Paolo can give you a little bit more of a call on this point. Yeah, on the KPI, we are really in uncharted water because, you know, there are some studies in the U.S. that they're saying that the productivity of a financial panel can improve up to 20%. And I think it's something that can be reasonable, in my opinion. But again, we are in uncharted water. So for now, we're just focused on deploying the service, on improving the service, on hiring the people inside the bank that are part of the AI team that is growing. As usual, we focus and we put effort on having our own resources, our own people that develop the technology. I think we're doing a great job and we're very happy with the the fact that we are very fast in developing new tools and delivering to the, for now, to the financial panel, to our financial panel platform.

Thank you. On the expiring bonds, next year, 4.2 billion. In terms of reinvestment, so what we can expect in terms of transformation, for example, in in asset and demand solution. This clearly depends on the market condition. So as much as we stay in an environment with short-term rate low and the yield curve keeping or remaining positively shaped, if not even steeper, and this clearly is going to bode well for a continuously increasing transformation rate. But again, it's It's difficult to give you a precise number right now, but we can say that the conversion rate is mostly driven by the combination of short-term rates staying low and the yield curve remaining. The steeper here is the yield curve and the batteries for the transformation process.

Thank you.

On lending, yes, the stock is flat, but we are observing some interesting transformation because, again, we confirm that we don't have any particular appetite for the residential mortgage business that we consider by far the lowest profitable product that a bank can have on a shelf. For these reasons, we don't have any appetite for residential. We are providing residential mortgages just to our interesting clients, and so we expect that the overall stock there is going to keep on declining. At the same time, there is a quite significant growing interest by clients for the Lombard loans. Sure. Lombard loans are expected to keep on building up. We have in the pipeline a very interesting future development there that we think are going to keep on making clients even more interested in using our Lombard loan solutions.

Thank you very much.

The next question is from Ian White of Autonomous Research. Please go ahead.

Hi there. Thanks for taking my questions. Just a few from my side as well, please. Firstly, just going back to the net management fee margin, it is about flat year over year by my calculations at 69 bps. Can you just help us to understand the moving parts there? I'm looking at the details, insurance products have declined, equity markets are higher, FAM penetration is higher. So are you able just to complete that bridge for me? Why aren't we seeing more margin accretion there year over year, please? That's question one. Secondly, on slide 23, you mentioned that the advisor network is focused on improving client mix from AUC into AUM. Can you just talk us through a little bit of what those efforts actually look like in practice? I'm wondering if it mostly requires convincing a client to switch from being an execution-only customer to an advised customer, and also if you can share any figures there to help us better understand the flow of client assets from AUC into AUM, please. That's question two. And just lastly, you mentioned in your prepared remarks the systematic internalizer as a forward-looking driver of growth in brokerage. Can I just clarify, is something likely to change there in the coming months that would increase revenue capture? Are there certain products where you might begin internalizing that you're not currently, for example? That's my third question. Thank you.

Let me start by the net fee margins. So the net fee margins, they remain relatively stable, and so exactly for the reasons we were describing. So the bank is... in a more comfortable position, respect the industry, because it's been always characterized by not overcharging clients with very high commissions. And so by definition, we are definitely less vulnerable than the industry on the building up pressure margins. And second, the driver are mostly, so yes, insurance is lower, and equity markets are not growing particularly big, so still we are not seeing any significant growth in terms of appetite by clients for the equity market, and for sure, investment management is continually growing and is contributing on the margins. because we have a better control of the value chain and this despite the mix of the products both by the clients is remaining on the cautious side mostly represented by fixed income solutions in any case the better control of the value chain is contributing but again we are not particularly for us the main focus on the evolution of the revenues because it's clear that overall we are living in in an environment. So the huge difference between, for example, the brokerage world and the investing world, that generally speaking, the investing world as a industry is by definition is expected to keep on facing pressure on margins. This is not the case, for example, for the brokerage business, so that where the pressure on margin is going to be much, much lower. On the other hand, the more you are becoming sophisticated in managing the flows, the infrastructures, and the more you are going to have room for increasing your margins. And this is exactly the case when we are talking about the systematic internalizer. Yes, Europe is progressively moving more and more in the direction of being more similar to the U.S. market, where And growing a component, a large component of the profitability is represented by the management of flows. And this is exactly what's going on in Europe as well. So Europe has been lagging behind in a big way, but now the situation is changing. The example is Germany. Germany is a market in which the percentage represented by the management of flows is is quite high there. And yes, clearly, it is a business, it is a volume business. The more you are keeping on growing in terms of size, the more you are keeping on having assets on the platform, the more you are going to have high-quality clients using your platform, and the more, let me say, instead of using systematic internalizing, the management of flows is going to become an important driver in increasing the margins on the brokerage business. And as we are saying, we have plenty of initiatives on the pipeline that exactly are moving in that direction and that are going to deploy in the coming months. internalizing something that now you don't. No, internalizing more that we are doing now, because we are practically internalizing everything, ranging from stocks, ETFs. ETFs is emerging as a growing and important component in terms of internalization of flows and so on. The direction is not internalizing something that now We don't know, but internalizing more, more and more, because clearly this is because we are going to become more sophisticated. The growth on the volumes are going to help.

Yes, this is a big trend.

The next question is from Alberto Villa of Intermontesim. Please go ahead.

Thank you. Two very quick questions from my side. One is back on the new clients acquisition, impressive trend there. I was wondering how much they are contributing to the net sales in the first nine months of 2025, the new clients you got in the last 12 months. And I was wondering what the average assets you get from a new client after 12 months, if that is already comparable to the average customer you have in-house or there is any, let's say... timing from the acquisition of the client to getting this moving the asset to Fineco. And the second question is on the advisory stock that has grown now to above 37 billion. I understood that you have the same margin whatever is the underlying assets the client has. I was wondering what has been the contribution in terms of revenues in the first nine months of the year from the advanced advisory assets. Thank you.

In terms of what is the contribution of the new client acquisition, more or less we can say that in terms of new total financial assets, 65% of is brought by the new clients. So this 65% is driven by the new client acquisition. And the remaining part is the continuously growing share of wallet on the existing clients. Yes, this is the split. After 12 months, so clearly we have to make a distinction because there is a kind of polarization the clients who are acquiring it, because one is that we have the relatively young clients that are growing big, and the other company that is growing big is represented by the rich clients, private banking clients. These are the two segments in which we are growing the most, because these, by definition, are the two segments that are the most sensible to the concept of getting delivered Efficiency, transparency, and convenience. And typically, so yes, after 12 months, we can say that a large part of the assets of the clients are transferred into the bank. But still, we have a significant room for growing on our existing base of clients because we are making estimates. in order to understand which is the potential represented by clients that they are theoretically perceived as small clients on the platform. And then putting together the amount of information we have, because having all clients using the transactional banking platforms, we know everything of the clients. So where they're living, how much they're making in terms of salary, the amount of taxes they're paying, where they're spending, how much they're spending. And so at the moment, our so-called still small clients, they have an upside of the bank, an average potential of another 50 billions of euros, more or less. I'm not saying that we're going to get all of that, but clearly, the more the trends The new trends are building up in terms of strength, and also we're going to be able to get even more share of wallets by our clients. The advanced advisory stock, no, we are not giving the split of these revenues.

Okay, thank you.

The next question is from Elena Perini of Intesa San Paolo. Please go ahead.

Yes, thank you. I've got only one left question. It is to ask you if you have already made some calculations about the potential impact of the Italian budget law for next year. Thank you.

Not yet because everything is still so unclear that it's Probably, yes. We are making sometimes some simulation, taking, considering the rumors that they are on the market, but honestly speaking, it's a little bit, I think that the risk is to enter, is a waste of time, because I think it's still underway, but honestly speaking, we are completely not concerned by this, because we For us, what is important is the structural trajectory of the bank. So this can be, okay, fine. It's part of the game, but it's not going to change anything. So we are not only speaking particularly, neither concerned, but particularly interested in what's going on there.

Okay, thank you.

As a reminder, if you wish to register for a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Mr. Foti, there are no more questions registered at this time.

Thank you to everybody for the extremely interesting questions we got. As usual, we are... We are absolutely at your disposal for entering in additional follow-up. And so thank you again for taking the time to participate to our financial results conference call.