Finecobank Banca Fine Spa

there will be an opportunity to ask questions. Should anyone need assistance during the conference, call them a signal and 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 Bank. Please go ahead, sir.

Good morning, everyone, and thank you for joining our results conference call. First quarter net profit stable here on here at 162 million, despite the higher tax rate by two percentage points. Revenues up by around 4% here on here at 343 million, with all product areas contributing positively. Banking up by around 2% with higher deposits volumes, more than offsetting the lower interest rates. Investing up by 8% thanks to the volume effect. Brokerage up by around 5% thanks to the higher stock of assets under custody and the expanding active investor base. Operating costs were under control at around 95 million, increasing by around 5.2% year-on-year, excluding the additional costs related to the growth of the business. Cost income ratio was equal to 27.7, confirming operating leverage as a key strength of the bank. Our capital position confirmed to be strong and safe with a common equity tier one ratio at 23.34% and leverage ratio at 5.14. Moving to our commercial performance, we are experiencing a material step up in our growth. This is driven by our unique positioning, capturing long-term structural trends, and by our execution on several initiatives. The impact of this acceleration is clearly visible in our numbers. In the first quarter, net sales increased by 44% year-on-year. In April, net sales at 1.3 billion. plus 6% year-on-year with around 600 million deposits, around 320 million assets under management, and around 320 million assets under custody. Brokerage revenues estimated at a solid 22 million. New clients continued to grow at a strong pace, up by 18% year-on-year in the first quarter. In April, new clients were equivalent to 17,500 up by 16% here on here. Now coming to the guidance, upgraded outlook for our 2026 and 2029 plan confirming the quality of our diversified business model. The better outlook is driven by a combination of better than expected net sales and clients growth, very strong brokerage expected to grow farther, highest interest rates environment. No change on investing guidance 2026. We expect all the product areas contributing to higher revenues thanks to the acceleration of our structural growth. We expect net financial income rising thanks to deposit deposits, net sales, and the new rates environment. Investing is solid here, only here increase in asset under management net sales. Brokerage, we expect another record here. Banking fees, stable here on here. Cost, we expect the growth by around 6%, not including around 10 million additional costs for growth initiatives and around 5 million for the pan-European platform set up. Let's now move to slide seven and start to dive on the quarter results. Net financial income is up 1%, both quarter on quarter and here on here, led by the positive volume effect on deposits and by the higher reinvestment yield of our bonds running off. This performance is particularly remarkable when considering that the quarter-on-quarter comparison is affected by fewer calendar days, lower rates versus first quarter 2025. Let me reiterate the quality of our net interest income. It is capital-light and industrially driven by our clients' sticky transactional liquidity. Deposits come to our platform for the quality of our services, not because of aggressive commercial campaign on short-term rates. This translates into a cost of funding close to zero. As a result, even a small banking-only client is profitable. Down on the right, you can see the very strong dynamics of our deposit net sales in the first quarter. Deposits grew by 32% year-on-year before clients' investments. Those dynamics were even stronger in April with around 700 million deposits net sales. Let's now move on slide eight. Investing revenues increased by around 8% year-on-year, driven by the growing volumes. The quarterly comparison is characterized by the usual seasonality. PFA costs related to FEA and the NASARCO that are higher at the beginning of the year. Other commissions in the fourth quarter of 2025 due to operating efficiency achieved by FinEco Asset Management, which are booked for accounting reasons in the fourth quarter and fewer calendar days. On the right, you can see the drivers of our investing revenues growth, mainly the higher year-on-year asset under management volumes, where 53% is represented by explicit fees solutions. On the other end, let's move on to slide 9 for a focus on brokerage. Let's move to brokerage. One main pillar of our business model, a business that is growing strong, highly profitable with a high operational gearing and with a clear market leadership. The two charts on the slide highlight the long-term correlation between brokerage revenues and the stock of asset under custody. The brokerage business represents the best sign of how fast the structure of the financial market is evolving. Technology is driving a quick change in clients' behaviors. thanks to the demand for higher transparency led by AI. For this reason, we can see that the brokerage Italian market significantly still under-penetrated and we see a strong opportunity to grow. Finally, we are rolling out new initiatives to further unlock the potential from our asset under custody, which we will detail later. Now let's focus on slide 11 on our capital ratios. Finneco confirmed once again capital position well above requirements on the wave of a safe balance sheet. Common equity tier one ratio at 23.3 and the leverage ratio at 5.14. We risk weighted assets at 6.3 billion. Total capital ratio at 39.27. Liquidity coverage ratio over 950%. And net stable funding ratio over 400%. High quality liquid assets on deposits at around 80%. Let's now move to slide 13. Fineco benefits from a unique marketing positioning, fully capturing its long-term growth opportunity. On the left, we show our market share on the addressable financial wealth, which is still very small. On the right, we summarize the key structural trends that are reshaping the financial services industry and reinforcing our strategic positioning. First, AI disruption, which is driving for higher transparency in financial services and higher productivity. Fineco is already well-positioned thanks to its market positioning and state-of-the-art platform. Second, the massive generational wealth transfer, New generations are looking for efficiency, transparency, and convenience, all core elements of Fineco's value proposition. Third, the consolidation in the banking industry with traditional banks not focused on the customer experience. Fineco sits exactly at the crossroads of these three big structural trends. Moving now to slide 14, We show a clear example of our distinctive positioning compared to the industry, focusing on the investing business. Finneco is a clear outlier in the Italian market with a value proposition based on efficiency, transparency, and convenience. This is reflected in a great quality of our investing revenues. Our revenues are mostly driven by recurring management fees based on a fair pricing with no performance fees and the negligible component represented by upfront fees. This is marking a clear difference in the long term sustainability of our investing revenues compared to the system. As you can see on the right, Other players are not just applying performance piece on the top of a highly expensive investment solution, but also clearly pushing stronger on upfront fees. Fineco clearly sits on the other side and moving to slide 15, you can see how all this is leading to the inflection point of our growth. Our most recent numbers are clearly showing a material step up in the magnitude of our growth in net sales and new clients. Let me reiterate that total net sales remain the most important KPI to evaluate our growth. On each component of the mix contributes positively to our revenues and net profit. Asset under management leads to higher investing growth. Assets under custody, net sales are a key driver for our brokerage revenues. And transactional liquidity, which is gathered with a cost of funding close to zero, contribute to our capital light and industrially driven net interest income. Let's now move to slide 20, guidance. Upgraded outlook for 2026 and 2029 plan confirming the quality of our diversified business model. The better outlook is driven by combination of better than expected net sales and clients growth, very strong brokerage expected to further growth, higher interest rates environment. no change on investing guidance 2026 on investing we expect all product areas contributing to higher revenues thanks to the acceleration of our structural growth we expect better net financial income thanks to positive deposit net sales and the new rates environment investing solid here on here increase in asset under management net sales brokerage another record here thanks to higher assets under custody and active investor base Banking fees, stable year on year. Operating costs, we expect growth by around 6%, not including around 10 million additional costs for growth initiatives, and around 5 million for the pan-European platform setup. Cost income, we expect it comfortably below 30%, thanks to the scalability of our platform and strong operating gearing. The cost of risk was equal to nine basis points, thanks to the quality of our lending portfolio. It is expected in a range between five and 10 basis points. Finally, payout ratio is expected for 2026 in a range between 70 and 80%. On leverage ratio, our goal is to remain above 4.5. We'll now handle to our Deputy General Manager Paolo Di Grazia. Thank you.

Thank you, Alessandro, and good morning, everybody. On slide 21, we focus on the initiatives to fully unlock the value of our assets under custody and increase our brokerage revenues. The securities lending, first the securities lending platform, which we plan to launch by the end of this June and will be a marketplace for institutional counterparties, giving direct access to our high-quality and fast-growing stock of assets under custody. Let me remind you of the quality of our AUC assets under custody, highly granular, well diversified across classes and geographies and retail-driven, which adds significant value in the securities lending market. Importantly, more than 40% of the stock is already opted in, combined with the expected growth of AUC, the opportunity can be very relevant. Second initiatives, the AutoFX, which is now live on all our client base. And the AutoFX gives clients a linear customer experience with no exposure to Forex risk. At the same time, it presents a structurally more profitable setup for the entire bank, improving both revenue, revenues generation and client satisfaction. Finally, our activity as a systematic internalizer and market maker. So we are positioning Fineco to benefit from the shift of European brokerage market toward the more quote driven model, increasingly similar to the United States. In the future, we expect growing volume to be internalized across multiple asset classes and also we will expand our activity as issuer and market maker for a wide range of products. Finally, this activity is a backbone of the launch of our future pan-European platform. Down in the slide, we show the strong upside potential of these three growing initiatives to our brokerage revenues. Their contribution today is progressively building up and we are very confident that will become increasingly important going forward in the future. So let's now move to slide 22 to dive on ETS. Fineco is uniquely positioned to capture the strong client-driven shift toward ETS. For a player like Fineco, the business represents a strong growth opportunity and a new revenue engine for brokerage both and investing. Thanks to two main pillars. The first, our very efficient trading platform that is building up strong in volumes on the ETF side. And second, our distribution model based on advanced advisory solution with an explicit fee where ETFs are synergetic with no significant harm to margin and profitability of the bank. As a consequence, on the left side, you can see the strong acceleration in revenues from ETFs over the recent years. The stock on our platform is quickly on the rise and is now close to 18 billions, gaining strong traction both among clients supported by financial planner and among direct clients. To further monetize ETFs, we are acting on several levers. both on brokerage and on the investing side. On the brokerage side, first, growing clients engagement means higher turnover and higher brokerage fees. Second, ETF are very well in demand for securities lending and it's a strong opportunity for our internalization engine. And finally, The platform fee agreement with a selection of ETFs issuers will be in place by the end of this half, adding a further recurring revenue streams. On the investing side, we see the strong client's interest means a big volume for our advanced advisory services, resulting in stronger revenues. Second, FAM, FinEco Asset Management, is live with its active ETF range. And for plain vanilla, ETFs is entering in a co-branding partnership with one of the leading issuer. And finally, ETFs accumulation installment plans are now fully available on our investing services. Let's quickly move to the slide 23. The plan for the deployment for our pan-European platform are progressing as expected. We confirm that by year end, we will launch our first friends and family base, which will follow the full launch on early 2027. Finally, moving on to slide 24, we summarize the deployment of our artificial intelligence across our proprietary platforms. As a reminder, our AI driven initiatives are already starting to deliver results. As an example, personal financial advisor constantly using the AI platform. So an increase close to 20% of their commercial proposals. And finally, let me now briefly summarize the most recent artificial intelligence initiatives. First, we are live with the customer relationship management for our financial planners. A key step to increase their productivity is fully integrated with Fineco platform and data and allows our network to better clusters client and identify priority actions. And second, we are in the friends and family phase also with the brokerage co-pilot that will improve the awareness and the engagement of our direct clients. The AI tool allows clients to screen securities, analyze portfolios on relevant news and is fully integrated in the execution engine. So thank you for your time and we can now open the call to questions.