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Banca Generali9 Months 2012 results and business update
Milan, 6 November 2012
2Banca Generali 2012 Nine Month Results
Today’s Agenda
Net Inflows, AUM and Recruiting
9M 2012 Results
Closing Remarks
4Q12 Business Update
3Banca Generali 2012 Nine Month Results
Strong set of 9M results reflecting a solid underlying business trend
9M 2012 Results
(€ m)
51.2
97.5
9M11 9M12
+91%
Net Profit (LfL)
(€ m)
13.8
30.2
3Q11 3Q12
+120%
Quarterly Net Profit (LfL)
Positive asset growth momentum
Excellent trend in net inflows, with a buoyant mix:total net inflows at €1,463m YTD at end October
o/w €1,240m in managed assets (+134% YoY)
Sustained assets growth at €25.5 bn (+10% YTD)
Solid capital position reinforced
Excess capital at €112 (+26% YTD) Total capital ratio at 13.7% and T1 Capital ratio at 12.1%(vs. 12.8% and 11.1% respectively at 2011YE)
Outstanding set of results
Strong revenues €251m +44% (+27% ex-LTRO),driven by net commissions and net interest margin
Tight cost control (+3.4%) driving cost/income downto best practice level
Higher gross margin (AUM profitability) at 1.88%,+31 bps
4Banca Generali 2012 Nine Month Results
Consolidated 9M12 Profit and Loss Account: main takeaways
9M 2011 Results
Interest margin strongly benefitted from the volumes expansion and from the higher investment yield on the bond portfolio
Net commissions (+19% YoY) boosted by a positive fund performance and by solid management fees
Operating costs well under control (+3.4%), with G&A flat net of stamp duty
Total provisions remain significantly ahead of last year due to the higher net inflows and recruiting prospects
Net profit almost doubled YoY (+91% YoY)
The figures reported in this document are IFRS 5 compliant - Figures “excl. GIL” (LfL) do not incorporate the contribution of Generali Investment Luxembourg (“GIL”) merged with BG Investment Lux on 9 Sept. 2009
(€ m) 9M11 9M12 % Chg 9M11 9M12 % Chg
(reported) (reported) (excl. GIL) (excl. GIL)
Net Interest Income 33.3 80.4 141.3% 33.3 80.4 141.4%
Commission income 258.9 288.6 11.5% 240.4 267.1 11.1%
Commission expense -117.9 -121.5 3.1% -104.4 -105.2 0.8%
Net Commission 141.0 167.1 18.5% 136.0 161.9 19.1%
Net income (loss) from trading activities -75.2 8.4 -111.1% -75.2 8.4 -111.1%
Dividends 80.5 0.7 -99.1% 80.5 0.7 -99.1%
Net income (loss) from trading activities and Dividends 5.3 9.1 72.0% 5.3 9.1 71.2%
Net Banking Income 179.6 256.5 42.9% 174.6 251.3 44.0%
Staff expenses -49.6 -52.1 4.8% -48.2 -50.6 4.8%
Other general and administrative expense -62.3 -68.7 10.3% -62.0 -68.3 10.2%
Depreciation and amortisation -3.1 -3.4 10.9% -3.0 -3.4 11.2%
Other net operating income (expense) 7.9 13.3 69.5% 7.9 13.3 69.2%
Total costs -107.2 -110.9 3.4% -105.3 -108.9 3.4%
Cost /Income Ratio -58.0% -41.9% 16,1 p.p. -58.6% -42.0% 16,6 p.p.
Operating Profit 72.4 145.7 101.3% 69.2 142.5 105.8%
Net adjustments for impair.loans and other assets -2.3 -2.2 -5.1% -2.3 -2.2 -5.1%
Net provisions for liabilities and contingencies -11.8 -15.3 30.2% -11.9 -15.3 28.7%
Profit Before Taxation 58.3 128.1 119.9% 55.0 124.9 127.2%
Direct income taxes -5.4 -28.0 416.2% -5.1 -27.7 442.7%
Tax rate 9.3% 21.9% 12,6 p.p. 9.3% 22.2% 12,9 p.p.
Income/(losses) after tax on assets held for sales 1.3 0.3 -75.8% 1.3 0.3 -75.8%
Minorities interest -3.0 -2.9 -1.9% 0.0 0.0 -25.0%
Net Profit 51.2 97.5 90.5% 51.2 97.5 90.5%
5Banca Generali 2012 Nine Month Results
Net CommissionsNet Interest Income (NII)
Trading and dividends
Total Revenues (LfL)
Strong growth in total revenues even excluding LTRO contribution
(€ m)
174.6
136.0(78%)
251.3
80.4(32%)
161.9(64%)
9M11 9M12
5.3 (3%) 9.1 (4%)
33.3(19%)
+44%
9M 2012 Results
(€ m)
174.6
222.2
9M11 9M12
+27%
Total Revenues ex-LTRO (LfL)
A well-balanced contribution from all business lines
NII at €80m, +141% YoY (+45% ex-LTRO)
net commissions at €162m, +19% YoY
trading income at €9m,+71% YoY
Strong revenue growth even ex-LTRO contribution
LTRO assets’ expiry
0.2
1.1
4Q14 1Q15
(€ bn)
LTRO-assets have been invested in Italian government bonds with fully-matched maturities
6Banca Generali 2012 Nine Month Results
Net interest income benefits from organic business growth and favourable investment conditions
(€ m)
9M11 9M12
80.4
Net Interest Income (LfL)
33.3
48.2
32.2
Ordinarybusiness
33.3
+45%
+141%
Time deposits,LTRO
9M 2012 Results
2012 YTD lending at €250m, backed by €350m assets
The overall banking book maintains a defensive
profile in terms of duration (1.3) and maturity (2.0)
Total banking book at €4.4bn with a 3.3% yield(vs. 2.1% at 9M11)
2012 YTD lending activity
New loans issued at 9M 2012
Related guarantees
(€ m)
7Banca Generali 2012 Nine Month Results
Management FeesFront Fees
Banking Revenues
Performance Fees
Gross commissions boosted by fund performance, while management fees are back to the 2011 pre-crisis level
9M11 9M12
240.4
191.0(79%)
20.6 (9%)
23.2 (10%)
42.9(16%)
185.6(70%)
18.9 (7%)
267.1
5.6 (2%)
19.7 (7%)
+11.0%(€ m)
Breakdown of Gross Commissions (LfL, YoY)
9M 2012 Results
Quarterly Management Fees (LfL)
2Q12
61.5
3Q11
61.5
3Q12
62.8+2%
Positive rebound of management fees both QoQ and YoY,
reflecting the increase in the underlying AUM due to:
- positive net inflows in managed assets
- positive fund performance, in particular for in-house products such as BG Sicav (+6.8%) and BG Selection (+6.5%)
8Banca Generali 2012 Nine Month Results
Net Commissions (LfL)
Net commissions increase by 19%, with stable pay-out policy
9M11 9M12
136.0
161.9
Pay-out ratio excl. perf. fees (LfL)
+19%
(€ m)
9M 2012 Results
9M10 9M12
46.0%46.9%
9M11
44.5%
Net Inflows
Stable pay-out policy, with annual swings linked to
net inflows and recruiting trend
9M10 9M12
8911.362
9M11
755
No. of new Recruits
9M10 9M12
32
40
9M11
34
9Banca Generali 2012 Nine Month Results
Increase in operating expenses in line with inflation
Operating expenses, net of stamp duty (LfL)
(€ m)
9M 2012 Results
4.8105.3
108.9
+3.4%
9M11 9M12
(4.9)
9M11 9M12
(10.0)+102%
48.2
9M11 9M12
50.6+4.8%
… that is fully recovered from clients and classified under
depreciation & other operating
income
Staff expenses incorporate a
conservative projection for variable
compensation
Split of operating expenses (LfL)
62.0
9M11 9M12
68.3+10.2%13.36.8
55.2 55.00%
G&A expenses fully unchanged, net of stamp duty
charge…
Stamp duty
(12.7)(6.5)(1.4)
(0.6)
recoveredstamp duty
3.0 3.4Cost base well under control (+3.4%)vs. sharp increase in revenues (+44%), thus
proving strict cost discipline
10Banca Generali 2012 Nine Month Results
AUM profitability Cost/Income ratio
9M10 9M11
1.65%1.57%
ROE
Profitability ratios provide evidence of company’s positive business trend
1.88%
9M12
9M 2012 Results
9M10 9M11
54.3%
58.6%
42.0%
9M12 2010 2011
41.8%38.9%
45.8%
9M12
Recurring commissions & interest marginPerformance FeesPerformance Fees Recurring commissions & interest marginPerformance FeesPerformance Fees
1.65%1.54%
1.50%
0.23%
0.03%0.15%
Like for Like figures (LfL)
11Banca Generali 2012 Nine Month Results
Net equity anddividends paid
Excess Capital Tier 1 Capital Ratio
2010 2011
262.4281.2
2010 2011
89.6 89.1
(€ m) (€ m)
11.0%
2010
11.1%
2011
Total Capital Ratio
13.3%
2010
12.8%
2011
Solid capital position confirmed
12.1%
9M12
13.7%
9M12
112
9M129M12
345.1
… Total dividends paid
€49.9m €61.3m
€61.4m
9M 2012 Results
12Banca Generali 2012 Nine Month Results
Today’s Agenda
Net Inflows, AUM and Recruiting
9M 2011 Results
Closing Remarks
4Q12 Business Update
13Banca Generali 2012 Nine Month Results
Strong net inflows, already above the result of full year 2012
Net Inflows, AUM and Recruiting
9M11 9M12
755
1,362
(€ m)
436
143 167
108293
-23
-165
174
1Q12 2Q12 3Q12
1Q12 2Q12 3Q12
1Q12 2Q12 3Q12
Net inflows
from insuranceproducts in 1Q …
… towards managed products from 2Qonwards
Banking products Work as a collectorfor new money
Insurance
Sicav/portfolio mgmt
Banking & Custody
Banca Generali 9M12 net inflows split by product category
9M12 Net Inflows
2011
+80%
1,260
14Banca Generali 2012 Nine Month Results
Banca Generali is significantly outpacing market growth and gaining market share
Net Inflows, AUM and Recruiting
Banca Generali’s Net Inflows
Sector Net Inflows
Jan-Sept 2011 Jan-Sept 2012
755
1,362
Jan-Sept 2011 Jan-Sept 2012
7.8
8.3
(€ m)
(€ bn) 6.4%
+80%
Ranking by net inflows
Ranking by FA’s productivity
1,980
Mediolanum FinecoB.ca
Generali
Allianz BankB.ca
Fideuram Azimut
Finanza &Futuro
MediolanumFineco
B.caGenerali Allianz Bank
B.caFideuram
AzimutFinanza &
Futuro
1,474 1,4551,362
1,063799
597
935.5
625.3571.4
472.1453.5
397.5299.6
(€ /000)
Source: Assoreti, figures at Sept. 2012
Source: Assoreti, figures at Sept. 2012
15Banca Generali 2012 Nine Month Results
In October clear move towards long term investment solutions
(€ m)
2012 Monthly Net Inflows by Product Mix
Net Inflows, AUM and Recruiting
88
243
10453
80 75115 119 107
256
157
-83
3490
139
64 5
-24 -4
-155
-200
-150
-100
-50
0
50
100
150
200
250
300
Jan Feb Mar Apr May June July Aug Sept Oct
Managed Products Administered Products
256
Tot. NetInflows 160 138 143 219 139 120 95 103 101 245
16Banca Generali 2012 Nine Month Results
Net inflows and fund performance lifted assets to €25.5 bn (+10% YTD)
5.5 (24%)
Funds/SICAV
Life Insurance
Current Accounts
Securities
9M12
Asset Breakdown
2011
(€ bn)
3.1 (12%)
8.2 (32%)
2.1 (8%)
25.5
6.4 (25%)
23.3
5.5 (24%)
2.8 (12%)
7.3 (31%)
1.8 (8%)
Portfolio Management
5.9 (25%)
5.8 (23%)
+10%
Net Inflows, AUM and Recruiting
A positive trend throughout all product lines:
Fund/Sicav +10% YoY
Portfolio Management +8% YoY
Life +11% YoY
69% of total assets are managed assets
BG SelectionManaged by third-party AM
71%
22%
7%BG Selectionmanaged in-house
BG Sicav
Breakdown of Lux-based assets by product
17Banca Generali 2012 Nine Month Results
Total BG Group
AUM already brought in Potential AUM AUM
Banca Generali hired 40 new
professionals in 9M 2012, with
an average portfolio of €15m
The average size of the FA’s
portfolios increased by 16% YoY
to €17.5 m
The avg. FA’s portfolio of BGPB is
€32.9m (+11% YoY, +9% YTD)
The avg. FA’s portfolio of BG
is €13.2m (+17% YoY, +11% YTD)
N. FAs AUM (€m)
209
387
596
9M12 Recruiting Results
8
32
40
N° of FA
11.913.2+11%
9M12
30.232.9+9%
9M12
9M12
15.817.5
+11%
AUM/FA
11.3
29.7
15.1
FY119M11
+11%
+17%
+16%
€m
Net Inflows, AUM and recruiting
The recruiting policy remained focussed on high standing professionals
€m
FY119M11
FY119M11
18Banca Generali 2012 Nine Month Results
Today’s Agenda
Net Inflows, AUM and recruiting
9M 2011 Results
Closing Remarks
4Q 12 Business Update
19Banca Generali 2012 Nine Month Results
Cautiously increasing risk exposure into clients’ portfolios
4Q12 business update
… it is time to cautiously enhance risk profile in clients’ portfolio with
selected products
Past cautious stance justified but …
60
70
80
90
100
110
120
Dec
-10
Jan-
11
Feb-
11
Mar
-11
Apr-1
1
May
-11
Jun-
11
Jul-1
1
Aug-
11
Sep-
11
Oct
-11
Nov
-11
Dec
-11
Jan-
12
Feb-
12
Mar
-12
Apr-1
2
May
-12
Jun-
12
Jul-1
2
Aug-
12
Sep-
12
MS World Index
MS World Emerging Markets Index
102
86
100
Source: Bloomberg, MSWO and MSEF normalised as of Dec. 31, 2010
20Banca Generali 2012 Nine Month Results
Product overview
BG Selection offer is constantly reviewed to comprise the best asset manager
Multi-manager Funds of Funds Single-manager Funds of Funds
EmergingSpecialist
Regional
Global
EuroLiquidity
Money Market
Absolute Return
Multi-Strategy
Equity
Funds Global Dynamic
T-Cube
Africa & Middle East
China & India
Eastern Europe
Latin America
FixedIncome
Next-11
Multistrategy
Third-PartyAsset Managers
sub-funds new launches
Short strategies
21Banca Generali 2012 Nine Month Results
2012 Business Update
BG Target remains a core offer for private clients
Capital protection component provided by stripped BTPs
+
Equity exposure provided by BG Selection sub-funds
8 investment opportunities:
- 5 lines on Emerging Markets (Next 11, China&India, Africa & ME, East
Europe, Latin America)
- 3 lines focussed on Growth themes (Alfa, Multi Emerging Markets, Multiglobal
Plus)
5
3
had > € 900 m assets at the end of September
2012 Net Inflows: €100m2012 YTD performance: +15%
BTP 01/11/2021
40,000
50,000
60,000
70,000
80,000
90,000
100,000
21/0
5/20
07
21/1
1/20
07
21/0
5/20
08
21/1
1/20
08
21/0
5/20
09
21/1
1/20
09
21/0
5/20
10
21/1
1/20
10
21/0
5/20
11
21/1
1/20
11
21/0
5/20
12
21/1
1/20
12
21/0
5/20
13
21/1
1/20
13
21/0
5/20
14
21/1
1/20
14
21/0
5/20
15
21/1
1/20
15
21/0
5/20
16
21/1
1/20
16
21/0
5/20
17
21/1
1/20
17
21/0
5/20
18
21/1
1/20
18
21/0
5/20
19
21/1
1/20
19
21/0
5/20
20
21/1
1/20
20
21/0
5/20
21
BTPS 01/11/2021implied yield at 4.5%BTPS price trend excl.-volatility
22Banca Generali 2012 Nine Month Results
4Q12 business update
Ample room for increasing share of managed assets as financial markets stabilise
Managed &Insurance
Assests
Administered
Assets
25.5
Total BG Assets
According to our Advisory model,as long as market volatility decreasesthe share of administered assets
should be reviewed and better allocatedto avoid investment inefficiencies
Need to partly switch administered assets towards more efficient investment solutions:
Best asset managers available
Innovative and tailor-made FoFWide choice of sub-funds availableZero cost of switchingSingle form contract
Protected capital
Option to capitalise return anytimeFocus on LT growth investment themesWide choice of product expiry
23Banca Generali 2012 Nine Month Results
Deposit account and repos expiring in 4Q12
15
8070
50
Over €200m of liquidity products set to expire by 2012 year-end
An opportunity to switch assets towards managed products to
exploit ongoing investment opportunities
4Q12 business update
Actions aimed at cautiously increasing risk exposure into clients’ portfolios
Sept Oct Nov Dec
24Banca Generali 2012 Nine Month Results
Today’s Agenda
Net Inflows, AUM and recruiting
9M 2011 Results
Closing Remarks
4Q12 Business Update
25Banca Generali 2012 Nine Month Results
Our key pillars to build on strength
Closing Remarks
Priority on preserving clients’ investments
Quality of thedistribution networks
Cost disciplineSolid capital position
Sustainability of results
26Banca Generali 2012 Nine Month Results
Disclaimer
The manager responsible for preparing the company’s financial reports (Giancarlo Fancel) declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law of Finance, that the accounting information contained in this press release corresponds to the document results, books and accounting records.
G. Fancel, CFO
Certain statements contained herein are statements of future expectations and other forward-looking statements.
These expectations are based on management’s current views and assumptions and involve known and unknown risks and uncertainties.
The user of such information should recognise that actual results, performance or events may differ materially from such expectations because they relate to future events and circumstances which are beyond our control including, among other things, general economic and sector conditions.
Neither Banca Generali S.p.A. nor any of its affiliates, directors, officers employees or agents owe any duty of care towards any user of the information provided herein nor any obligation to update any forward-looking information contained in this document.