Finecobank Banca Fine Spa

Welcome and thank you for joining the Finecobank second quarter 2026 results conference call. As a reminder, I'll participate in a release alone 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 call. All this 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 half adjusted net profit up by 8% year-on-year at around 343 million. Revenues up by around 11% year-on-year at $713 million, with all product areas contributing positively. Banking up by 8.5% thanks to higher deposit volumes. Investing up by 11% thanks to the volume effect. Brokerage up by 15% thanks to the higher stocks of assets under custody and expanding active investor base. Adjusted operating costs, well under control, at around 193 million, increasing by around 6% year-on-year, excluding the additional costs related to the growth of the business. Cost-income ratio at 27%, confirming operating leverage as a key strength of the bank. Capital position confirmed to be strong and safe, with a common APT-TR1 ratio at 23.18%. and the library duration at 5.02. Among the main events, we have signed with SEMPE, Asicura, a four-year exclusive partnership for the distribution of live insurance products. The deal improves both the quality of products and services and Finicom marginality moving to a higher level. Moving now 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 half, net sales increased by 35% year-on-year. In July, estimated net sales at 1.7 billion, around 40% higher year-on-year. with around 2.4 billion assets under management, around minus 2.3 billion deposits and around 1.7 billion assets under custody. Brokerage clients were very active buying the dips leading to very solid brokerage revenues estimated at 23 million up around 20% year-on-year. New clients continued to grow at a strong pace up 26% year-on-year in the first half. In July, new clients are estimated at around 21,000, up by around 40% a year. Now most of the guidance. Further 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 with all the mixed components contributing positively to the revenues. Combination of deposits, net sales and interest rates evolution. Slower growth of operating costs going forward compared to the CMD expectation. We are redesigning the backbone of the bank with artificial intelligence that is gradually moving into the execution phase 2015. 26. We expect all the product carriers contributing to higher revenues thanks to the acceleration of our structural growth. We expect net financial income growing thanks to the combination of positive deposit net sales and rates. Investing, a solid increase of revenues thanks to the combination of resilient net sales and mixed improvement. Brokerage, we expect another record here. Banking fees We are embedding a 5 million increase related to the marketing in additional cost for growth as clients are very responsive to our value proposition and we see a clear opportunity to further accelerate. I now hand to our CFO, Lorena Pellicciari, to start diving on results.

Thank you, Alessandro, and good morning, everybody. Let me start with slide seven. Net financial income in the first half increased by around 8% year-on-year, and that's supported by a positive volume effect

What I like is the quality of the reference system.

The system is capitalized and is disaster-free. Deeply connected.

This allows us to generate profitability across our entire client base, including small banking-only clients. On the right-hand side of the slide, you can see the solid dynamics of our liquidity, despite the significant level of clients' investments during the period. Let's now move on to slide eight. This slide provides a deeper view of the nature of our deposit base. Our liquidity is not opportunistic or rate-driven. As just said, it is transactional Thank you for joining us. with the median ticket equal to around 4,000 euros. Around 54% of asset under management is already represented by HPC solutions. Overall investing pre-tax margins calculated as total investing revenues divided by daily average asset under management volumes stood at 57 basis points in the first half. Let's now move on to slide 10 for a focus on brokerage. Brokerage confirms its role as a highly profitable and scalable pillar of our business model. In the first half, brokerage revenues increased by around 15% year-on-year, confirming a structurally higher revenue floor. This performance is supported by the continued growth in asset under custody. The growth in assets under custody is driven by two main factors. First, technology, transparency, and the increasing use of digital tools, including AI, which are reshaping client behavior and supporting higher retail engagement. Second, we continue to enhance our services offerings, which Paolo will discuss in more detail shortly. Importantly, pre-tax margins on asset under custody, calculated as total brokerage revenues divided by daily average asset under custody volumes, stood at 51 basis points in the first half. This level is not far from those achieved on asset under management, underscoring the strategic value of the asset under custody business for a platform like ours. Let's move on slide 12 related to capital ratios. Sineco once again confirms a solid capital position well above requirements reflecting the strength of our safe balance sheet and the capital-like nature of our business model. Liquidity is also extremely solid with both liquidity coverage ratio and net stable funding ratio well above regulatory requirements and among the highest levels in Europe. Overall, we continue to combine growth, profitability and a very conservative risk profile while maintaining one of the strongest capital and liquidity positions in the sector. Thank you for your attention. Now I'll hand back to Alessandro.

Thank you, Lorena. And let's move now to slide 14. Finico benefits from a unique market positioning, fully capturing its long-term growth opportunities. 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 Thank you very much. New generations are looking for efficiency, transparency and convenience, all core elements of Fineco value proposition. Third, the consolidation in the banking industry, with traditional banks not focused on customer experience. And Fineco sits exactly at the crossroads of these three big structural trends. On slide 15, we show a clear example of our distinctive positioning compared to the industry, Focusing on the investing business, Finequa is a clear outlier in the Italian market with a value proposition based on efficiency, transparency and convenience. This is reflected in the great quality of our investing revenues that are driven by recurring management fees based on fair pricing with no performance fees and negligible amount of 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 fees on top of highly expensive investment solutions, but also clearly pushing strong on upfront fees. Fineco is positioned on the other side, and moving to slide 16, you can see how all this is leading to the inflection point of our growth in next years and new clients. Total Net Sales remains the most important KPI to evaluate our growth. Finico is a unique platform and answer to a broad range of clients' financial needs, which results in a very solid profitability across all our product areas, regardless of the asset mix. Transactional liquidity contributes to our capital-like and industrially-driven business. Net Interest Income, Asset Under Management Leads to Higher Investing Growth, and Asset Under Custody, Net Sales, are key drivers for our brokerage revenues. Finally, down in the slide, we show a very remarkable result. We coupled the strong acceleration in new clients' acquisitions with a better quality on pro-capital net sales. I now hand over to our co-general manager, Paolo Di Grazia.

Thank you Alessandro and good morning everybody. On slide 22 we focus on the initiatives to fully unlock the value of our assets under custody and increase our brokerage revenues. First, the securities lending platform which has been just launched. It's a marketplace for institutional counterparties giving direct access to our high quality and fast growing stock of AUC, asset under custody. Let me remind that the quality of our asset under custody, it's a highly granular, well diversified across asset classes and geographies and retail driven, which adds significant value to the securities lending market. So importantly, around 40% of the stock is already opted in. Combined with the expected growth of AUC, the opportunity can be very relevant. Second, the auto effects, which gives clients a leaner customer experience and represent a structurally more profitable setup for the bank. Here, we're already seeing a better than expected increase in volume. And finally, our activity in extracting value from our client flows, the internalization that we have. We are positioned in Fineco to benefit from the shift of the European brokerage markets over a more quote-driven model, increasingly similar to the United States market. We are working on increasing the volume and percentage of order internalized across multiple asset classes. Also, we expand our activity as the issuer and market maker for a wide range of products. So finally, this activity is the backbone of the launch of our pan-European platform. So down in the slide, we show the strong upside potential of these three initiatives to our brokerage revenues. The contribution today is progressively Building up and we are very confident they will become increasingly important going forward. Also, we have recently extended possibility to trade on U.S. securities with the activation of the pre-market session and with the extension of the after hours. And yeah, let's now move on to slide 23 to dive on ETS. Fineco, as you know, is uniquely positioned to capture the strong client-driven shift toward ETS. For a player like Fineco, this business represents a strong growth opportunity and a new revenue engine for brokerage and investing. Mainly thanks to, one, our very efficient trading platform that is building up strong volume on the ETF side. Second, our distribution model based on advanced advisory solution with an explicit fee, where ETS are synergetic with no significant harm to the margin and profitability of the area. And on the left, you can see the slide, you can see the strong acceleration in revenues from ETS over the recent years and in the first half. The stock on our platform is quickly on the rise and now exceeds 21 billion, gains strong traction both among clients supported by personal financial advisors and among clients that are using the platform directly. To further monetize the ETS, we are acting on several levels. On brokerage, first, growing clients engagement means higher turnover and higher brokerage fees. Second, ETS are very well in demand for securities lending and are a strong opportunity and it's a strong opportunity for our internalization engine. Third, the data platform fee agreement by the beginning of the second half of 2026 And on the investing, the strong clients, interest means a big volume for our advanced advisory service, resulting in stronger revenues. Second, FinEco asset management is live with its active ETF range for passive ETFs. has a co-branded partnership with one leading issuer. Finally, EPS, Accumulation Installment Plans, are now fully available in our investing services, also through the application. So now let's quickly move to the slide 24. The plan for the deployment of our Pan-European platform is progressing as expected. We confirmed that by the year end We will launch the family and friend space with the full launch in early 2027. Moving on to the slide 25, we summarize the deployment of our artificial intelligence on our platform. So our initiatives are already starting to deliver. For example, PFA constantly using the EAI platform. So an increase, as we already said, around 20% of their commercial proposals. And let me now briefly summarize the most recent artificial intelligent initiatives. So first, we are now live with customer relationship management for our financial planners. It's a key step to increase their productivity. It is fully integrated within Echo platform and data and allows our network to better cluster clients and identify priority actions. Second, we are already live with the brokerage co-pilot that will improve the awareness and the engagement of our direct clients. And this artificial intelligence tool allows clients to screen securities, analyze portfolios on relevant news, and it's fully integrated in the execution engine of the Fineco platform. So we are here, we are already seeing, start to see the first evidence that this tool is leading clients to the order execution. So, and now thank you for your time and I'll hand it back to Alessandro.

Thank you, Paolo. And let's now move to slide 26, GALGANS, further upgraded outlook for 2026. and in 2029 plan confirming the quality of our diversified business model. The better outlook is driven by combination of better than expected net sales with all the mixed components contributing positively to revenues. Combination of deposit net sales and interest rates evolution, slower growth of operating costs going forward compared to the CMD expectations We are redesigning the backbone of the bank with artificial intelligence that is gradually moving into the execution phase. For 2026, we expect all the product areas contributing to higher revenues thanks to the acceleration of our structural growth. We expect better net financial income thanks to the combination of positive net sales and new rates environment. Investing, solid increase in revenues. thanks to combination of resilient and safe and mixed improvement, brokerage another record here thanks to higher asset under custody and active investors. Banking fees stable year on year. Operating costs, we expect a growth by around 6%, not including 15 million additional costs for growth initiatives and around 5 million for the pan-European platform setup. Compared to the previous guidance, we are embedding 5 million increase related to marketing in additional cost growth or growth as clients are very responsive to our value proposition and we see a clear opportunity to further accelerate. 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 7 basis points thanks to the quality of our lending portfolio and is expected in a range between 5 and 10 basis points. Finally, payout ratio is expected for 2036 in a range between 70 and 80%. For average ratio, our goal is to remain above 4.5%. Thank you for your attention, and we can now open the Q&A session.

The first question is from Alberto Villanueva of InterVista. Please, go ahead.

Hi, good morning. Thank you for taking my questions. The line was not stirred. Goose during the course of this past week's activity, we had the general interest of stating my question on that. Specifically on the guidance, there's a further aspect of the guidance, which is the quality of the report. I was trying to figure out what could be for the publication of the revision of the special document on Manchester's income, including both the items and then the adjustments below the method of the one-off, wondering why you present it in this way, and where the trading of the one-off Thank you very much.

Thank you for the questions, and sorry for the bad quality of the lines. And so the upgraded guidance is clearly... is moving on, is a continuous and steady upgrade that is current with the evolution we are experiencing. As we explained, the main, the most relevant KPI to look at for having an idea of the possible evolution of our revenues and also profits is the progression on the next stage because as we explained during the presentation, the net sales, whatever is the mix, is contributing in a big way to the revenues of the bank. At the same time, we have some quite evident, very clear evidence that what we are doing in terms of we're designing the backbone of the bank using technology and artificial intelligence is starting on emerging as a paying off and then so we are extremely confident that going forward we can expect an material impact on the evolution of the operational cost and so this is the reason why we also introduce an additional guidance in which we expect the The beginning of the acceleration of the growth of operational costs are happening definitely before than we presented during the planning. Finally, there is an excellent combination of evolution of deposits and interest rates because clearly the rates are evolving, they are higher at the same time despite the higher rates The deposits are emerging as extremely resilient and we expect to keep them growing. And so this means that clearly if we put all of these components, all of them together, it's clear that we have the evidence of a material improvement of the results we expect to generate throughout the plant. Regarding the 15% you are referring to the the increase of the Lorena, this was the the second quarter 2026 compared with the second quarter 2025 net interest income so clearly we cannot give such precise numbers because as you know better than me clearly there is a component that we are not controlling that is the level of rates but clearly what we are absolutely sure that the continuous growth Thank you very much. Thank you very much. Thank you Alessandro.

So you can see on slide 6 the P&L adjusted with the net profit adjusted in which we have reported a dedicated line, item lines related to non-recurring expenses, net of taxes, which are equal to 3 million. and we have a detail in the same slide on the bottom side of the slide in which we have reported the fact that this amount corresponded to 4.6 million expenses gross and is related to the termination agreement with an executive occurred in the second quarter of 2026.

Okay, thank you.

If I may follow up on another topic, which is the net initials and the stronger net initials, I mean, the Archipelago Catholic was told in the second record month in terms of the Archipelago Catholic. Is this a fragment of the investment by clients that you expect to continue also in the coming months or related to some specific reasons? The reason is related to the

The unique positioning of Fineco. Fineco is offering the only one powerful brokerage platform available on the Italian market. So if you are a client in Italy that you want to deal with a very powerful platform offered by a robust, significant and and Trustful Bank. The only place in which you can move is in Fineco. Fineco is offering a unique combination of robustness, reliability and also quality of the platform. So this is making particularly the most interesting clients interested in in dealing directly with the markets moving to Fineco. And this trend is accelerating for the reasons we explained because the disruptive impact of artificial intelligence making progressively clients more and more aware, more and more demanding in terms of quality, transparency, fairness. We are observing a very fascinating trend that is Now we are starting on accelerating and attracting directly private banking clients that are entering just for using the platform. So this clearly is a signaling and a progressive accelerating change in the structure of the market. So we expect this trend is going to continue and reinforcing.

Okay, thank you.

Hi, good morning and thank you for taking my questions.

I have three. The first one is on the partnership we've sent in. Can you provide us more columns in the case of the partnership and how much penetration we can expect over the coming years? The second one on the general pension reform, the new reform significantly opens the system with a more flexible and, I would say, In light of the incoming entry to Germany, have you already made any consideration on how to capitalize on this opportunity? And can you provide us with more follow-up on this? And it would be appreciated. And the last one on cryptos, we have seen some regulators as arrived by regulators in recent weeks. How are the discussions with the regulators progressing and what do you expect to receive the authorization? Thank you.

Yes, let me start by the partnership with SEMPE, so now clearly this partnership that is a partnership that has a four years horizon, clearly the partnership that is going to allow us to be more efficient in providing to our clients higher quality services, so and second, clearly, according with a decent development of the volumes, is going to be, is going to create and is going to generate higher margins. So, because the partnership is absolutely great because Sempe is an incredibly efficient partner, so we have been keeping working with them by many years and so, and and we are sharing with them the same value proposition because the insurance VAPR if they are provided to clients in a way that is fair, transparent and efficient are great solutions and on that side we are on the same line. In our agreement we cannot give a precise Indication of the conditions, but clearly, for sure, this is a respect to what we were doing until so far, is going to generate higher margins for the bank. On the German market, I don't know, Paolo, if you want to elaborate, because, honestly speaking, our plan on Germany is not driven by the pressure for this and that. It's nice to have, but we're not moving there for that reason.

For sure the new pension reforms are going to go in our direction, so every time we have something that goes and the direction that, you know, you have to use efficient products, you have to use, you know, funds, ETS, assets under custody, that for us it's perfect, just perfect. So, you know, as Alessandro said, we're not 100% concentrated on the pension reforms in Germany. We know that in Germany there is a huge opportunity for, you know, not just for us but for many players. We know that, you know, the majority of the assets are still in the traditional banking system, not just in Germany, but, you know, almost everywhere. And this is something that for us is just gold. So it's, yeah, that's it. Crypto. Yeah, the crypto we are processing quite well. We are in, I can say, final talks with the regulators. At the same time, we are Organizing the backbone and the infrastructure that will be, you know, the one that the platform our clients are going to use. So, you know, I'm quite confident that it's going to be live, not probably, you know, first months of 2007 or so. So, we're still talking to the regulators.

I can't hear you. Anyway, I'm trying to ask you to excuse me. So, one is a follow-up on the NIR. I understand that you haven't arrived yet on the NIR, but the solution, so can you remind us, in theory, that you have an increasing rate, and then, which is the expectation or the position of the NIR in 2027? In the assumption that you have Thank you very much. Thank you. Second question is on the management of the market. So I think that what's important is that there has been a small increase in the management of the market. I was just wondering if you have a guidance there on the management of the market. And you said you And then the last question, probably from Coles, I guess, is that I couldn't present this year, we are in 2014, so you are expecting to get change from the implementation of the YARN and then the CNP, but the guidance Here and there, it's moving because the world hasn't changed for the last six or seven years. So, I was just wondering if they improved guidance if they want to update the cost of goods as well, which is going to be more negative in the future, or how do you look at the total quality of goods computing the cost for the growing industry? Thank you.

So, sorry again for the bad quality of the line, so I'm trying to give you some more. So, let me follow up on the net interest income. So, clearly the positive expectation on the future evolution of the net interest income is a combination of the expected evolution of rates, and also the expected evolution of our base of deposits. Clearly there is, so just to give you an example, because there is a very clear correlation. During the month of July, for example, we had more or less negative deposits in the region of 300 millions of euros, that clearly this is negative for the evolution of the net interest income, but this has been driven by a significant rise of interest rates and so if you put the two components of them together the month of July for example has been definitely positive for the future of evolution of the net interest income. So we our expectation in terms of rates are clearly that we are embedding in our in when we are making the fine tuning of the plan is remaining more conservative with respect to what is what you have in the in the forward right curve, because we prefer to be cautious. Nevertheless, this is clearly showing a clear evidence that the net interest income is going to continue to progress and is going to keep on growing. And again, the main reason is the quality of the base of deposits. So the presence of such a large amount of stable deposits means that clearly also when you have a significant increase of rates the impact on your base of deposits tends to be not such as big on the other hand you are capturing an interesting chunk of the evolution of rates and so on. So this is the... So then on the questions on the management fees margins, yes... This is aligned with the previous guidance where we were guiding for a relatively stable margins management piece and going forward considering the kind of actions we are taking on the In terms of how we are guiding our network of financial planners, we are confident that progressively the mix of our asset under management series is going to progressively improve. And this clearly is boding well for at least the maintenance of stable margins, but clearly we think that we cannot rule out that there is room for some modest increase of the margins. and so this is more or less. On the guidance for cost going forward, as we were saying, we started now our activity driven by the usage of artificial intelligence and it's progressing very rapidly because I would like to remind that Fineco is a tech company, so for us it's extremely rapid and easy to put at work the dividend represented by artificial intelligence and what is emerging as a clear evidence that the room for accelerating the reduction of the growth of the operational cost going forward is clearly emerging. Clearly it's difficult to see, to give you a precise exactly phase in of this process we are extremely positive on that side and so probably going forward approaching the year end probably we are going to give an even more precise indication from a numbers point of view but clearly there and so that this is on the cost so On the NII, clearly we remain positive on the continuous growth of the NII going forward. The reason is a combination of the outcome rates and the quality of our deposits. Because clearly when you have rates going up, clearly you can expect some pressure on deposits, but the pressure we expect is clearly pretty low. because as we showed during the presentation, Finneco has the highest percentage among the European banks of stable deposits. So this means that on the vast majority of our deposits, the beta of these deposits is zero. And so this means that you have a significant positive impact generated by the rise in rates. We are using in making our... Revision of the plan, a conservative approach, because we are not using the forward right curve, but we are using a curve that is more conservative than the forward right curve. I don't know, Lorena, if you, by, so we can say by how much is more conservative.

But we can speak on average by 30 basis points.

Yes, so we are on average 30 basis points below the forward rate curve. So this is what, so this is the assumption.

Can you explain us a little bit what are the implications in terms of EPS growth? Because you have the class of EPS growth. So what are we looking at now? So can we say are we kind of thinking closer to 15%? Or where do we stand? It's an interesting question. Dan, do you have an update on the security's lending platform? How is that progressing? And what volumes do you expect to reach by the end of this year and perhaps by the end of next year? And then the question on the senior vision and senior preferred bond. Thank you.

So, Paolo, do you want to elaborate both on APS growth ambition and update and updating on securities lending battle and then, Lorena, then you will give a little bit more of color on our funding mix.

So, yeah, on the APS growth ambition, Yeah, we are very positive. Of course, we confirm what we said to the Capital Market Day that we have, you know, also new information that, you know, we are very positive. We can probably do even better. The initiatives are going very well. One of the initiatives that you mentioned, the securities lending initiative, Now we are fully operated, so now we are concentrated on one side, bringing new counterparties in the platform. And so I remind you that the new platform is a new marketplace where we can share securities with external counterparties. So the more counterparties we have, the better it is for the platform. and so on one side we keep on onboarding we will keep on onboarding a new counterparty, institutional counterparty interested on our AUC we mentioned is very valuable in terms of granularity and the fact that it's a retail AUC and on the other side we keep on pushing on having the permission from our clients to use their securities to lend to the platform to put into the platform we have a very high percentage of permission almost 40% it is a is already quite big. And on the other side, we push on the, you know, gathering assets and assets from the outside, so from new clients or existing clients. And we are, you know, we're doing a great job on this. So the more AUC we have in the platform, the better it is for the securities lending platform. So By the end of this year, we will start seeing some results and I think we can start sharing some significant numbers. But for now, we are just concentrating, keep on onboarding new counterparties and gathering as much AUC as possible in the platform.

I just want to I just wanted to give more color on the, on the, excuse me, APS or ATS?

APS.

APS growth ambitious now. So, sorry, excuse me, because I got wrong, so I confused APS with ATS, sorry, so your question was not on ATS, clearly it's much more relevant, so the APS growth ambition now. Yes, clearly now the ambition has gone up because we made two upgrading in the evolution of our outlook for 2036 and at the end of the story clearly the final landing point of the upgrading is an improved ATS growth. Yes, clearly we are not giving yet precise numbers but clearly now it's the ambition now is definitely higher currently what we are experiencing but again, honestly speaking it's not a surprise because as we are continuously repeating so if you want to have a proxy that is suggesting to you the future evolution of our revenues in the PS look to the evolution of our net sales the more we have net sales coming on board and the more we are accelerating on net sales and the more you can expect a continuous acceleration in the growth of ETS. But clearly now the outlook is clearly higher than we had when we presented the plan. So as you know in May we issued 500 million of senior preferreds

in these issuance was made because in October the issuance of 500 million of Silvio Puchar issued in October 2021 will not be anymore eligible from an MREL point of view and will be recalled Now we have on the market 1.3 million of senior preferred, but in October we will come back to an amount of 800 million. And our expectation is that this amount is fully compliant for the following year. So we will probably issue a new senior bond, a new senior preferred in 2028 for the substitution of the issuance made in 2023.

Thank you for joining our conference call and feel free to make us a call for any follow-up. Thank you again.