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Introduction & Market Context
Banca Generali (BIT:BGN) presented its first quarter 2025 results on May 9, showing resilience in its core business despite challenging market conditions. The Italian private bank’s shares closed at €56.2, up 1.6% on the day of the presentation, reflecting positive investor sentiment toward the company’s growing recurring business and solid asset base.
The results come amid a voluntary exchange offer from Mediobanca (OTC:MDIBY), which the company acknowledged in its presentation, noting that it has appointed legal and financial advisors and established an internal risk and control committee to evaluate the proposal.
Executive Summary
Banca Generali reported a recurring net profit of €87.0 million for Q1 2025, representing a 6% year-over-year increase, while reported net profit declined 10% to €110.3 million. The divergence highlights the bank’s success in growing its stable, recurring business lines despite volatility in variable income streams.
As shown in the following summary of quarterly performance:
Total (EPA:TTEF) client assets reached €103.9 billion, up 7% from the previous year, supported by €1.5 billion in net inflows during the quarter and an additional €0.6 billion in April. The bank maintained strong operational efficiency despite expanding its cost base to support growth.
Detailed Financial Analysis
The bank’s net profit performance shows a clear distinction between growing recurring business and more volatile variable components:
Net Financial Income (NFI) grew 5% year-over-year to €88.0 million, supported by stable Net Interest Income (NII) of €79.3 million and higher trading gains of €8.6 million. The bank’s ability to maintain NII levels despite decreasing market rates was attributed to higher deposit volumes offsetting yield pressures.
Total gross fees increased modestly by 1% to €313.0 million, but this figure masks a significant shift in composition. Gross recurring fees grew 9% to €278.6 million, driven by higher assets under management, while variable fees declined to €34.4 million, reflecting a more conservative investment profile among clients.
Operating costs totaled €82.6 million, with core operating costs of €67.1 million representing an 8.5% increase year-over-year. This growth tracks the expansion in assets, with the bank maintaining best-in-class efficiency ratios. The cost-to-income ratio remains competitive despite the investments in growth.
A comprehensive overview of the bank’s financial performance shows the balance between growth areas and challenges:
Balance Sheet & Asset Growth
Banca Generali’s balance sheet showed solid growth, with total deposits increasing 11% year-over-year to €14.5 billion, 88% of which came from client deposits. The average cost of funding decreased by 22 basis points to 0.93%, supporting margins despite the lower interest rate environment.
Interest-bearing assets grew 11% to €15.3 billion, with financial assets representing 77% of the total. The bank maintained a defensive and well-diversified profile, with loans to clients remaining stable at 15% of total assets and described as "well-collateralized."
Capital ratios, while impacted by Basel IV implementation and the Intermonte acquisition, remained well above regulatory requirements. The CET1 ratio and Total Capital Ratio stayed comfortably above the 2025 SREP requirements of 8.5% and 13.0%, respectively.
Total assets continued their growth trajectory, reaching €103.9 billion, a 7% increase year-over-year. This growth was achieved despite market volatility, supported by the bank’s defensive investment profile with only 25% invested in equities.
Strategic Positioning
Banca Generali’s strategic focus on managed solutions is evident in its asset composition. Assets under Management (AUM) products reached €62.9 billion, up 6% year-over-year. Notably, wrapper solutions grew 11% to €24.3 billion, now representing more than 50% of total managed solutions.
The bank’s in-house funds also showed strong growth, increasing 9% year-over-year to €11.7 billion and representing 24.4% of managed solutions. This trend reflects the bank’s strategic emphasis on proprietary products with higher margins.
Net inflows remained solid at €1.5 billion for the quarter, with an improving mix toward Assets under Investment (AUI), indicating clients’ gradual return to investment products despite maintaining a defensive stance.
Forward-Looking Statements
Banca Generali positioned itself as aspiring to be the "No. 1 private bank, unique by ’value of service,’ ’innovation,’ and ’sustainability’" in its strategic objectives. The bank’s focus on growing recurring revenue streams and managed solutions appears to be yielding results despite market volatility.
The pending voluntary exchange offer from Mediobanca represents a significant development for the bank’s future. Management noted that the CEO has been empowered by the Board of Directors to handle the process, with appropriate governance structures in place to evaluate the offer.
The bank’s defensive investment strategy and growing managed solutions business appear well-positioned to navigate the current market environment, with the recurring profit growth demonstrating resilience even as variable income streams face pressure.
Full presentation:
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