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.