Finecobank Banca Fine Spa

Good morning. This is the Chorus Call Conference Operator. Welcome and thank you for joining the Fineco Bank 4Q2025 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 telephones. At this time, I would like to turn the conference over to Mr. Alessandro Forti, CEO and General Manager of Fineco Bank.

Thank you. Good morning, everyone, and thank you for joining our fourth quarter 2025 results conference call. In 2025, net profit was flat, zero near, at $647 million, and revenues at around $1. 1,317 million, supported by our non-financial income. Investing up by around 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 around 18% year-on-year, thanks to the enlargement of our active investors and stock of assets under custody. Operating costs were under control at around 356 million, increasing by around 6% year-on-year by excluding costs related to the growth of the business. Cost-income ratio was equal to 27.1%, 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 and more efficient marketing. The results of this acceleration has been clearly visible in our most recent numbers. First of all, recorded our third record here in a row for new clients at around 100% 94,000 new clients up by 27% year-on-year. In January, new clients were 22,000, hitting the best month on record, up more than 70% year-on-year. Second, our net sales recorded a new hike at 13.4 billion in the year, up by a strong 33% year-on-year. In January, total net sales saw a further continuation of this trend at around 1.1 billion, up by 21% year-on-year. The mix was, as usual, characterized by the monthly seasonality for asset under management, with around 260 million net sales, up by 16% year-on-year. Asset under custody at 1.1 billion, and deposits at around minus 2%. 207 million, as our brokerage clients were actively on the platform given market volatility, thus resulting in solid brokerage revenues estimated at around 22 million, up by 7% year-on-year. Our capital position confirmed to be strong and safe, with a common equity tier 1 ratio at 23.3%, and a leverage ratio at 5.07%. We are very pleased to propose to the next Annual General Meeting a dividend per share of 69 euro cents, increasing by 7% year-on-year. On our 2026 guidance, this year we expect all the business areas to contribute to the revenues growth, thanks to the acceleration of structural growth underlying our business. We expect a further acceleration in both total net sales and new clients, another record here for brokerage revenues, a cost income comfortably below 30%. More details will be provided during the capital market day on March the 4th, 2026, together with the multi-year plan 2026-2029. Let's now move to slide five. Before moving in the details of the presentation, let me stress that month after month, Fineco is recording a continuous acceleration of its growth dynamics, supported by very sound 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 ancillary business, and it's driven by our clients' valuable and sticky transactional liquidity. Let me remind that deposits are joining our platform for the quality of our banking services and not due to aggressive commercial campaigns on short-term rates. That's why our deposits are so valuable and our cost of funding is close to zero. Our investing revenues are recording a sound and future-proof expansion as they are already aligned with clients' rising demand 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 step up in the floor of the business, thanks to the capability of our platform to structurally head a higher number of active investors, leading to structurally higher stock of assets under custody. This is driven by an increase in clients' interest to be more active on the financial market and is building a bridge between the brokerage and the investing, which we are the only platform able to scope given our marketing position. The net financial income was up 3.1% quarter-on-quarter, led by our valuable positive deposit net sales and the higher reinvestment yield of our bonds running off. Let me quickly remind you the quality of our net interest income, which is capitalized and driven by our clients' 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 income. Let's now move to slide eight. Investing revenues increased by around 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 Finnecos management. Let me remind you the great cost 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 now move to slide nine, In this slide, we are representing the two main sources of growth for our investing business going forward. On one end, Finnecoset 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 FinEco asset under management out of the total stock of asset under management has been steadily growing, and it's now equal to 39.3%. On the other hand, being a platform, FinEco is the best place to catch the latest trends in terms of clients' investment behaviors. There is a clear change underway in the structure of the market with clients increasingly looking for efficiency transparent and convenient solutions. All of this is channeling a strong demand towards advanced advisory services with an explicit fee, where FinEQ is by far the best positioned in Italy, as you can see down in the slide. Let's now move on to slide 10 for a focus on brokerage. Brokerage has registered a record here with around 256 million revenues driven by our larger active investor base, and growing stock of assets under custody. Generally, Farder builds on this with 22 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 securities lending, out effects, ETFs, and systematic internalizing. Average revenues in the year are around 10% higher versus 2020, which much healthier underlying dynamics. This is driven by the structural increase in clients' interest to be more active in the financial market and building on 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 and swift change in clients' behaviors thanks to higher transparency. For this reason, we can see that the brokerage Italian market is still very under-penetrated and we see a strong opportunity to grow despite already being the market leader. Let's now move to slide 12 for a focus on our capital ratios. Cineco confirmed once again a capital position well above requirements. On the wave of safe balance shift, common equity tier one ratio up 23.3%, and the leverage ratio at a very sound 5.07%, while risk-weighted assets were equal to 6.2 billion, total capital ratio at 31.37%. As for liquidity ratios, coverage ratios is over 950%, a net stable funding ratio over 400%, while the ratio high-quality liquid assets and deposits is at 80%. Going forward, we confirm that we will continue to generate capital structurally and organically, thanks to our capitalized 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, as the underlying dynamics are strongly improving. If, despite the strong acceleration of our growth, there will remain excess capital, we will decide on the best way to return heat back to the market. Let's now move to slide 18. Fineco enjoys a unique market positioning to catch the long-term growth opportunity resulting by the huge Italian household's wealth. and the fast-changing client behaviors. The graph that we are now representing, our market share on the addressable market, on the stock of financial wealth of Italian households. As you can see, 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. Finic is the only big player with a service model based on efficiency, transparency, and convenience. Moving now to slide 19, the step up of our growth trajectory is clearly materializing, as you can easily see in our recent client acquisitions. On top of the slide, you can see the impressive acceleration of new clients, which in 2005 recorded the third record here in a row, and saw a record month in January just before the launch of our most recent marketing campaign. This acceleration is very sound because it's based on the quality of our offer and not on aggressive marketing campaign with short-term rates 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 client satisfaction of 96% and on our net promoter score, way above the industry average. Let's now move to slide 22. 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 in excess. As you know, around 90% of our growth is organically driven. As a consequence, new clients tend to show an asset allocation more skewed towards asset under custody, and the job of our financial advisor is to improve the mix into asset under management. For brokerage, Expansion of asset undercast and the growing base of active investors are key factors leading to a structurally higher flow in our revenues, which we expect to grow as we roll out our new initiatives on securities lending, out-effects, ETFs, and systematic internalizing. Finally, the fast-growing ETF space, we are exploring new revenues opportunity, which we expand moving on to slide 23. 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 exceeds $16 million, with ETFs accounting for half of the assets under custody in that phase. Thanks to our focus on efficiency, transparency, 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 in 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 make us the main gateway for issues in the Italian retail market. While we are currently managing all costs to handle clients without recurring fees, we carry revenue from NTS, talks along the way with our partners to find a fair balance. Finally, Finnecos Management is going to play a big role in DTF's world. Our Irish firm already launched activities and more are going to be introduced. Thank you for your time. We can now open the call to questions.

This is the Chorus Call Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. To remove yourself from the question queue, please press star and two. We kindly ask to use handsets while asking questions. Anyone who has a question, they press star and 1 at this time. The first question comes from Enrico Bolzoni with JP Morgan. Please go ahead.

Good morning. Thanks for taking my questions. I wanted to start with private banking, if possible. You're clearly growing very nicely. I noticed, however, that the average asset per private banking client is at €1 million, which is roughly the same level it was one year ago, even if clearly 2025 was a period of very strong market rally. So in a way, I would have expected maybe a growth in the average asset balance per private banking client. Can you please maybe explain a bit the dynamics there? There's a bit of dilution, maybe new private banking clients that are coming in. that are a bit less wealthy of setting the growth in assets of the others or anything else that would be helpful. And also related to private banking, would you be able to give us an indication of how much of the growth is coming from recruiting? So the new advisor you are bringing in, how many of them are particularly strong in the private banking segment? And then if I may go on the other end of the spectrum, so can you just give us an update on the Trading Only platform, how many clients you have, and perhaps if you can attribute the very strong growth in customer this month to this feature, to this offering. Thank you.

So let me start by the private banking, however, just for clients. But this is clearly, it's perfectly current. with the distribution of the Italian wealth. Because Italy is characterized by a significantly high median wealth. So this means that the most part of the wealth is extremely, is much more broadly distributed than we respect what we have in other regions. And so this is absolutely consistent with that. So there is no dilution. It's absolutely there. So this is the main reason. And so we don't expect any significant change in the short term in terms of average assets by clients exactly driven by this, because this is the Jewish of the private banking businesses in an area of probably between half a million up to, let me say, five, ten millions, but clearly this is bringing to an average portfolio for clients that is this. And as probably is very well known, our growth is mostly driven, is mostly organically driven. So for us, recruiting is playing a small role because during 2035, recruiting in terms of gathering your new assets has accounted for not more than 10% overall. And this is absolutely current with our long-term strategy. So our strategy is to keep on getting clients, getting more clients that are interested in our services instead of buying clients throughout recruiting. We think that is important. is a much more healthy approach. And so this is going to continue. On the trading-only clients, the growth is extremely, is keeping on accelerating, is extremely robust. I don't know if Paolo wants to make a few comments on this point.

Yeah, the local Johnny account is a very great product. So we have a A large amount of clients are entering, and so it gives us a good contribution to the revenues of the brokerage. We don't give usually the number of brokerage-only accounts, but it's a very strong inflow of new clients.

Thank you. Sorry, if I might go back one second to the private banking aspect. In terms of the recruiting, because recruiting is going quite nicely, it's growing nicely, 88, I think, advisor experience over this year. Do you see any change in the quality of advisors that are coming to Fineco? I appreciate that you don't pay them to join. They join because they like the proposition. I was just keen to know if you see maybe more private banking advisor that are joining Fineco or if the mix remains roughly the same.

So in terms of which are the new financial planners joining Fineco, we have two clusters. There is a cluster, so the cluster for which we have preferences. Number one is regarding the senior financial planner. He is represented by experienced financial planners, but characterized by an evident and significant room for keeping on increasing their productivity. So we are not interested in taking on board financial planners that are not giving any interesting future evolution in terms of growing productivity. Because again, we don't need to recruit the financial planners just for sustaining the net sales because the net sales are building up incredibly strongly thanks to the positioning of the bank. And so clearly the reason. the senior pressure planners has to be clearly senior pressure planners that they are truly interested in the business model of Fineco. And so this means that they are really interested, that they are interested in keeping on their business for still many years to come and also have the ambition to grow. So this is the drive. If there is a large, big financial planner that is only interested in getting an upfront premium and we are not interested in hiring that kind of financial planner. The second cluster is represented by the young people that we are onboarding in the bank. We are preparing for the future activity. This is an investment initially because before an And a young person becomes productive, takes usually four or five years, but is paying off because the new generation of financial planners that we brought in the bank in the past years is now performing incredibly well. Also because these younger people are incredibly perfectly aligned with the values of the bank that again characterized by efficiency, transparency, and convenience.

Thank you.

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

Yes, thank you for taking my questions. The first question is about your leverage ratio because, yes, it is well above the 3% requirement, but it is slightly down versus previous periods. So I would like you to elaborate a bit more on it. And then I have another question about your direct deposit outflow in January. Probably it is linked to negative month seasonality, which is quite common at the beginning of the year. But I would like just you to confirm it. And if you can say something about that. your expectations for direct deposits trend this year. And finally, a question on systemic charges. Would you expect an increase in systemic charges probably relating to some specific case within the banking sector? Thank you.

Yes, thank you. On the level of duration, clearly this has been... has gone slightly down because driven by the increase of deposits because the increase of deposits by the rent has been very strong and so this is the reason why we are maintaining the same wording on the evolution of our capital position because on one end we are expected to keep on generating additional organic capital because thanks to this incredibly capitalized business model. At the same time, clearly, the bank is more and more entering a new dimension of growth. We are more and more moving throughout, let me say, very positive and chartered workers, thanks to the positioning. And so clearly, we prefer to keep on waiting in order to look at how it's going to evolve the growth that we expect as we We were reiterating during the guidance we expect to keep on accelerating. And so we prefer to take our time. So this is our thoughts on that. So it's regarding the deposits, half of us in general, this is absolutely perfectly aligned with the seasonality of the mass, because just consider that in the During the month of January, you have all the expenses made by the clients through the credit cards during the month of December. It is a month of expenditures are clearly charged on January. It is even better respect, for example, last year, because last year the seasonality has been higher. definitely stronger than this year. So we are not absolutely surprised by this. It's perfectly aligned with that. And our expectation for deposits during the full year is clearly they are going to keep on growing. This is going to be clearly driven by the continuous client acquisitions, because as we explained during the presentation, the clients that are entering the bank are clients that are not attracted throughout the aggressive campaign and short-term proposal, are clients that are truly interested in using the platform. So this means that every single additional client we are heading to the platform, also a small client, is contributing and increasing the transactional liquidity of the bank. So the liquidity that is there for functional reasons. And so for this reason, deposits are going to keep on growing throughout the 2026, clearly, according with the usual seasonality that characterizes. And clearly, you can have also temporary effect caused by the activity of clients on the brokerage platforms. So it is not clear. But overall, the trend is up. On the systemic charges, I'm leaving the floor to Lorena, our CFO, for a little bit more .

Thank you, Alessandro. Good morning to everybody. So on 2026, our expectation regarding the systemic charges, we are estimating a contribution around in the region of 10, 15 million. Because we have to consider possible additional contribution in case of the increase of guaranteed protective deposits or in the event of bank failure. We have to take into consideration that based on the most recent news flow regarding one small Italian bank under special administration, we have to take a prudent approach on that.

Thank you. Just as a follow-up on this, we expect this to occur only in 2026 or to go on in the next years too. Thank you.

We have to expect the final decision elaborated by the Fondo Interbancario Tutela Depositi, but we expect a distribution along five years.

the resolution of the contribution in five years. Okay, thank you.

Thank you. The next question is from Luigi De Bellis with Equita. Please go ahead.

Hi, good morning. Just one question for me. AI that is rapidly reshaping operating models across the financial sector. From your point of view, what do you see as the most material opportunities AI will create for models like Fineco in terms of productivity, client engagement, advisory and risk management, and what are the key risks you are monitoring and how do you expect the AI to reshape the competitive scenario in Italian web management and brokerage over the next three, five years. Thank you.

AI is going to be an absolutely game changer in what's going on in our industry. Fineco, as we explained, is by far the best position as a player for exploiting the huge advantage by artificial intelligence for a very simple reason, because I don't want to spend too much time, because this is going to be a section that is going to be extremely very well invested, treated during the capital market day, because this is a very important chapter. And Pat Fineco is, because in AI world, what is key are two components. One, you have to be able to get easily access to a high-quality base of data. Second, you have to be in the position to really build up your agents in order to create something that makes sense. And clearly, this is much, much easier and less and less expensive for an organization that is a tech company in full control of the technology. It's a different story, for example, if you are relying on outsourced services or your processes are managed by external system integrators. But we are asking you to be a little bit patient, because on the AI space, we are going to bring something, a very interesting presentation during the Capital Market Day.

Thank you, Alessandro. Thank you. As a reminder, if you wish to register for a question, please press star and one on your telephone. Mr. Forti, there are no further questions registered at this time. Back to you for any closing remarks.

Thank you, everybody, for attending to our financial presentation. So, as usual, if you have some more interest or you want to deep dive in some numbers and concepts, please call us anytime for a follow-up. Thank you again and see you on March the 4th for the Capital Market Day. Thank you again.