Earnings call transcript: FinecoBank sees strong Q1 2025 growth, stock dips

FinecoBank Banca Fineco SpA (FBK) reported robust financial results for the first quarter of 2025, with net profit and revenue showing significant year-over-year growth. Despite these positive results, the company’s stock price experienced a slight decline of 0.99% during open market trading, closing at €17.93. The decline follows the announcement of an earnings per share (EPS) of €0.2696, with actual revenue reaching €325.3 million. According to InvestingPro data, the company trades at a P/E ratio of 16.35, suggesting a premium valuation relative to near-term earnings growth. FinecoBank has demonstrated consistent shareholder returns, having raised its dividend for three consecutive years.

Key Takeaways

• FinecoBank’s net profit increased by 11.7% year-over-year, reaching €164.2 million.
• Revenue grew by 0.7% year-over-year, totaling €329.3 million.
• The company’s stock price decreased by 0.99% following the earnings announcement.
• FinecoBank continues to dominate the ETF trading market in Italy with a 70% market share.
• The bank is preparing to enter the crypto market in early 2026.

Company Performance

FinecoBank reported a strong performance in Q1 2025, driven by increased revenues from non-financial income and a significant rise in trading profit. The bank continues to solidify its market position in Italy, particularly in the ETF trading sector, despite the slight decline in stock price post-earnings announcement.

Financial Highlights

• Revenue: €329.3 million, up 0.7% year-over-year
• Net Profit: €164.2 million, up 11.7% year-over-year
• Net Commissions: Increased by 9.2% year-over-year
• Trading Profit: Increased by 56.3% year-over-year
• Cost/Income Ratio: 26.5%

Market Reaction

Following the earnings release, FinecoBank’s stock price fell by 0.99%, trading at €17.93. This decline occurred despite the company’s strong financial performance, suggesting that investors may have had higher expectations or reacted to broader market conditions. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels. The stock has shown strong momentum, delivering a 17.08% return over the past year, while maintaining a relatively stable beta of 0.93. Get access to 6 more exclusive ProTips and comprehensive valuation metrics with InvestingPro.

Outlook & Guidance

FinecoBank projects record revenues for 2025, with expectations of continued client acquisition and a payout ratio between 70-80%. The bank is also exploring international expansion opportunities and plans to enter the crypto market in early 2026, reflecting its strategic focus on innovative financial services. Analysts maintain an optimistic outlook, with consensus targets suggesting up to 29% potential upside. The company’s revenue growth forecast for FY2025 stands at 34%, supporting its ambitious expansion plans. Dive deeper into FinecoBank’s growth potential with InvestingPro’s detailed research reports, available for 1,400+ top stocks.

Executive Commentary

CEO Alessandro Foti highlighted FinecoBank’s unique position in the market, stating, "FINECO is the only player able to offer fairness, transparency, and convenience." He also emphasized the transformative potential of ETFs, saying, "ETFs are going to reshape completely the industry."

Risks and Challenges

• Market volatility could impact trading revenues.
• Regulatory challenges in the upcoming crypto market entry.
• Potential competition from traditional banks adapting to digital trends.
• Economic conditions in Italy affecting client acquisition and investment activities.
• Operational costs anticipated to grow by approximately 6% in 2025.

Q&A

During the earnings call, analysts inquired about FinecoBank’s investment margins and potential pricing changes for brokerage services. The company confirmed stable margins and no plans to increase pricing, while highlighting potential revenue opportunities from its ETF platform.

Full transcript - FinecoBank Banca Fineco SpA (FBK) Q1 2025:

Conference Operator, Chorus Call: Good morning. This is the Chorus Call conference operator. Welcome and thank you for joining the Fineco Bank First Quarter twenty twenty five Results Conference Call. 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.

Alessandro Foti, CEO and General Manager, Fineco Bank: Good morning, everyone, and thank you for joining our first quarter twenty twenty five results conference call. Before moving in the details of the presentation, let me stress that Finneco is recording a sizable acceleration of its growth dynamics, supported by a very healthy underlying quality. Our growth is leveraging on our superior customer experience and on our fair and transparent positioning, not on short term aggressive offer. This approach is mirrored in the quality of our revenues mix, which is entirely recovering with percentage of upfront fees and no performance fees at all. Let’s now move to the first quarter results.

Net profit in the period reached €164,200,000 up by 11.7% year on year. Revenues achieved €329,300,000 as growth of nonfinancial income offset lower interest rates. Investing increased by 11.3% year on year, thanks to the volume effect and the higher control of the value chain by Finneco Asset Management, and brokerage is up by 29.7% year on year, thanks to the enlargement of our active investors and higher market volumes. Operating costs were well under control at €87,200,000 increasing by 7%, excluding costs related to the growth of the business, as we anticipated the timing of some expenses expected throughout the year. Cost income ratio was equal to 26.5%, confirming operating leverage as a key strength at the bank.

Moving to our commercial results. The underlying step up in our growth dynamics become crystal clear month by month. And for 2025, we continue to expect a higher asset under management and deposit net sales compared to 2024 despite the challenging macro context. This is underpinned by the positive tailwinds from the structural trends, and we are leveraging on this solid momentum through a more efficient marketing activity. The result of this acceleration has been clearly visible in the first four months of twenty twenty five.

First of all, in the first quarter, we acquired around 50,000 new clients, up by around 40% year on year. In April, clients are around 15,000, up by 31% year on year. Second, our net sales were €3,200,000,000 in the first quarter, up by a strong 44% year on year. In April, total net sales saw a further acceleration at around €1,250,000,000 up by a very strong 48% year on year. The mix was very positive despite the strong market volatility in the month, with solid assets under management at around €300,000,000 net sales.

Deposits were at around €150,000,000 and assets under custody at around €800,000,000 as our brokerage clients were very active on trading on the platform. As a consequence, brokerage recorded €22,500,000 estimated revenues, up more than 20% year on year. Our capital position continues to be strong and safe, with a common equity Tier one ratio at 24.1% and a leverage ratio at 5.34%. On the right hand side of the slide, you can find a summary of our 2025 guidance. Despite the market correction since the beginning of the year, our diversified business model allows for an unchanged outlook for our nonfinancial income only with a different mix.

More in detail on investing revenues, given the elevated market volatility and uncertainty, we are now sharing a sensitivity. Every €1,000,000,000 change of asset under management on May 1 generates around €4,500,000 of revenues from May 1 until year end. Regarding imports, just a clarification. So this is a rounded number that we give to the market in this way for making everything simple. But the right, the perfectly precise sensitivity is €4,700,000 of revenues every €1,000,000,000 of change.

Banking fees are expected in a slight decrease in 2025 versus 2024 due to the new regulation on instant payments. On brokerage, we confirm 2025 expected revenue strong with a continuously growing floor, thanks to the enlargement of our active investors. For 2025, we expect a record year for revenues. For 2025, we expect operating costs to grow around 6% year on year, not including a few millions of additional costs for growth initiatives, in the range between 5,000,000 and 10,000,000 mainly for marketing, Fineco’s asset management and AI. Finally, in 2025, we expect a payout ratio in a range between 7080%.

Let’s now move to Slide five. As announced, net profit in the first quarter of twenty twenty five reached €164,200,000 in a very challenging macro scenario, with an increase by 11.7% year on year. Revenues achieved €329,300,000 up by 0.7% year on year, thanks to the acceleration of nonfinancial income, which has been able to offset the decline in interest rates. Net commissions increased by a sound 9.2 year on year, thanks to the solid contribution of investing, up by 11.4% year on year and brokerage up by 12.6% year on year. Trading profit increased by 56.3% year on year, mainly thanks to the higher brokerage activity and market volumes.

Operating costs at €87,200,000 well under control and increasing by 7.7%, excluding costs strictly related to the growth of the business, mainly additional costs for Finico Asset Management to further expand its business and having a higher control of the value chain additional marketing costs to catch the strong momentum of the business business, artificial intelligence as we are launching projects to further boost our network productivity. Let’s now move to Slide six for a deep dive on the performance of investing business. Investing revenues reached €94,500,000 in the first quarter, increasing by a solid 11.3% year on year on the back of growing volumes, thanks to our best in class market positioning and of the higher efficiency of the value chain through Finneco Asset Management. The quarterly comparison is characterized by the usual seasonality on financial adviser costs related to Fear and the Nazarco that they are higher at the beginning of the year to other commissions in the fourth quarter of twenty twenty four related to operating efficiency reached throughout the year by Finink Asset Management, which are booked each year in the fourth quarter and by lower calendar days. Let me please remind you that the great quality of our investing revenues mirroring our transparent and fair approach towards clients.

As a result, our revenues are mostly driven by recurring management fees with no performance fees at all. Our set of results is particularly remarkable given the more challenging market environment for the asset management industry. Let’s now move to Slide seven. In this slide, we are representing the two main sources of growth for our investing business going forward. On one hand, Finneco Asset Management is increasing the control on 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, perfectly aligned with what clients are looking for. As a result, the contribution of Finico Asset Management of the Finico Asset Management under management half of the total stock of assets under measure, has been steadily growing, and it’s now equal to 38.2%. On the other hand, being a platform, Fineco is the best place to catch with 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 quality, efficient and fair solutions. All of this is channeling a strong demand towards advanced advisory services with an explicit fee where FINECO is by far the best positioned in Italy, as you can see down in the slide.

Let’s now move to Slide eight for a focus on brokerage. Brokerage registered a record first quarter with €69,000,000 revenues. April was another strong month with €22,500,000 revenues, driven by the increase in market volumes, building up on solid floor of higher revenues, driven by our large active investor base. Average revenues so far in 2025 are around 19% higher versus 2020, with a much more healthier underlying dynamics. This is driven by the structural increase in clients’ interest to be more active on the financial market and building up a clear bridge between the brokerage and investing world.

As such, the brokerage business represents the best sign of how fast the structural financial market is evolving as a whole as technology is driving a swift change in clients’ behaviors, thanks to the higher transparency. For this reason, we still consider the brokerage Italian market very much underpenetrated, and we see a strong opportunity to grow despite already being the market leader. Let’s now move to Slide 10 for a focus on our capital ratios. Nico confirmed once again a capital position well above requirement on the wave of a safe balance sheet. Common equity Tier one ratio at 24.1, with a quarter on quarter decrease mainly due to the CR3, leverage ratio at 5.34% and total capital ratio at 33.08 as of March 2025.

And the risk weighted assets was equal to €5,570,000,000 As the liquidity ratio, liquidity coverage ratio at 888% and net stable funding ratio at 390%, while the ratio, high quality liquid assets on deposit, is at 78%, well above the average of the industry. Going forward, we confirm that we will continue to generate capital structurally and organically, thanks to our capital light business model. Given the strong acceleration in our growth, we are taking more time to have a clear view on deposit net sales going forward as the underlying dynamics are strongly improving. If despite the strong acceleration in our growth, there will remain excess capital, we will decide on the best way to return heat back to the market. Now let’s move to Slide 16.

Let’s now focus on our 2025 guidance. Let me remind that despite the market correction since the beginning of the year, our diversified business model allows for an unchanged outlook of our nonfinancial income only within the different mix. More in detail on investing revenues, given the elevated market volatility and uncertainty, we are now sharing a sensitivity. Every €1,000,000,000 change of assets under management on May 1 generates around, and again, I’m coming back to the precise number, euros 4,700,000.0 of revenues from May 1 until year end. Banking fees are expected with a slight decrease compared to 2024 due to the new regulation on instant payments.

Brokerage revenues are expected to remain strong with a continuously growing floor, thanks to the enlargement of our active investors. For 2025, we expect record revenues. Operating costs are expected to grow at around 6% year on year, not including a few million euros of additional costs for growth initiatives, in a range between 5,000,000 and €10,000,000 mainly for marketing, finical asset management and artificial intelligence. Cost income, we expect HIT comfortably below 30%, thanks to the scalability of our platform and to the strong operating gearing we have. On the payout ratio, we expect HIT for 2025 in a range between 1780%.

On leverage ratio, our goal is to remain above 4.5%. Cost of risk was equal to five basis points, thanks to the quality of our lending portfolio, and we expect HEAT in a range between five and ten basis points. Finally, we expect robust and high quality net sales with an increasing asset under management and deposit flows and the continued strong growth expected for our client acquisition as we are in the sweet spot to keep on adding new market shares. Let’s now move to Slide 17 for a deep dive on our growth opportunities. Fineco enjoys a unique market position, positioning to capture the long term growth opportunity resulting by the huge Italian households’ wealth and the fast changing clients’ behaviors.

In the graph, you can see the strong potential for our growth given the stock of financial wealth of the Italian families. Our market share is still small, and the room for growing is huge. We are particularly positive on our future outlook as we are enjoying a clear market positioning, for which we have no competition. The most recent market trends are leading to a swift change in client investment behaviors, and Finneco is their only big player with a service model truly based on transparency, efficiency and fair pricing. Moving to Slide 18.

The step up of our growth trajectory is clearly materializing, as you can easily see on our recent client acquisition. On top of the slide, you can see the impressive acceleration of new clients, which is further building up in the first four months of 2025. This acceleration is very healthy 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 metrics of the bank by bringing more deposits and more business to our brokerage and investing solutions. The accumulated growth of high quality new clients is month by month translating into better net sales dynamics, allowing us to be particularly positive on our growth trajectory going forward.

In the box down on the left, you can see that it’s not just about quantity, but we are also seeing the strong increase in the underlying quality of our clients as the 44% increase on our total net sales can confirm. Let me also spend a word on deposits, where net sales have been overshadowed by massive use of our investment platforms by clients. In the first quarter, inflows of salarypension and net bank transfer had totaled €8,600,000,000 versus €7,300,000,000 in the same period of last year. Deposit net sales before investments in assets under management, assets under custody are equal to 2,800,000,000 up by more than 50% year on year. This is a further confirmation of the strong acceleration of our growth and allowing us to be very optimistic on deposit net sales going forward.

Finally, let me remind that we see a sizable mix shift opportunity coming from the huge stock of the orders our clients booked over the last couple of years, given that a large percentage of this has a short term maturity. This will give our financial planners an unprecedented opportunity to improve client mix into asset under management. Thank you for your time. We can now open the call to questions.

Conference Operator, Chorus Call: Thank you. This is the Chorus Call conference operator. We will now begin the question and answer The first question is from Luigi Dabellis, Equita SIM. Please go ahead.

Luigi Dabellis, Analyst, Equita SIM: Good morning. Three questions for me. The first one is on the flows. So the platform is showing significant growth in terms of volume with assets under custody reaching the 47,000,000,000. So what strategies should we expect for this amount also in terms of potential new products?

And specifically, what percentage do you believe could be converted into asset under management and or deposits over the next twelve months? The second question on the banking consolidation. So can you comment on any potential impact for the industry and Fineco in particular from the announced offer by Mediobanca on Baca Generali, particularly in the Private Banking segment? And if you are seeing already some changing in the recruitment trends? And the last question on the investing.

Margins on management fees have remained pretty resilient. What should we expect in the coming quarters? Thank

Alessandro Foti, CEO and General Manager, Fineco Bank: Thank you for your questions. Let me start by the some comments on the asset under custody because asset under custody is remaining in quite significant component of our net sales. And we think that where the case to give a little bit more color on what we can expect going forward by the asset under custody because then what is emerging that seems that the market is considering asset under custody as the poor component of the mix. So that is but this, in our opinion, is a little bit wrong for several reasons. So first of all, asset the clients buying assets under custody are clearly starting means that they are starting on using the platform.

And this is the fuel for the continuous growth of the brokerage business because also a client that is just buying IGOVI, we know by the number that there is a quite interesting percentage of them that later on is starting on interacting on the platform for buying and selling also other instruments and asset. So first point, the bigger is the asset under custody and the bigger is going to be the potential of the brokerage business. Second component, because in the what is emerging in the asset under custody is the continuously growing component represented by ETFs. So this is probably the fastest is the most relevant change that is underway in the structure of the market. Market.

And it’s a little bit ignored by the industry. So but I think that everybody is aware of what’s going on in the ETFs world. So FINEBU is emerging as that practically is the platform of reference for ETFs. Based on the latest figures provided by the Italian Stock Exchange, FINECO is the what in terms of flows, what is exchanged on the Fineco platform represents nearly 70% of what is related to the retail clients. So fewer.

Fineco is controlling nearly 70% of the ATS market in Italy. So practically, we are the market. It’s quite evident that in the next future, this is going to bring to a situation that is going to allow Fineco to start on extracting by this business not just brokerage fees but also roaming fees driven by two companies. First of all, because clearly, it’s a situation that clearly, Finneco is controlling the clients. The clients are operating thanks to our platform.

And so by definition, this means that the kind of agreement we have with the producer of ATS are expected to change going forward. And this is going to produce not just brokerage fees, but the running fees on the ATS business. Second, it’s opening the way for an extremely important development that is progressively building up of our own offer. Fini Cost Management has been the first player in Italy starting on listing its own ETFs on the market. And so this is going to start on giving us the opportunity to please to our clients our own ETFs.

And clearly, this is going to be characterized by a much better component in the much better control in the value chain. So at the end of the story, this is an incredibly exciting development that is underway. And our suggestion is to start to look into the evolution of the asset under custody as not as a poor business but as a gigantic fuel for the future profitability of the bank, but not in the next decade, but in the future that is going to be relatively close. Regarding impact from M and A for Fineco in Private Banking segment, clearly, are not making any specific comment on what’s going on because World Polish is not making comments on other listed company. What we expect in terms of the most important outcome for us is that clearly, but this is not just related to the what’s going on, on the M and A on the Private Banking segment, but also is related to the M and A in the traditional banking segment, that this means that the probability that the market is going to start really considering what’s going on in terms of changes of the structure of the market and behaviors is going to be even more remote because the industry is completely focused on trying to extract the highest possible synergies by these kind of mergers.

At the same time, there is an evident change in the levers for clients. And so we think that probably FINECO is going to remain for a quite significant period of time absolutely alone in taking advantage by these very important structural changes. On recruiting, yes, probably. As usual, when you have a big merger underway, there is a little bit of confusion on the market. But as you know, for us, recruiting never has been a key component of our growth.

So we the most part of our growth is organically driven. It’s clear that if this evolving situation is going to create opportunities, we’re going to capture them. But again, the most important opportunity is represented by the fact that the industry is going to be mostly focused on trying to get synergies and without any significant change in the prevailing business model in a period of time which the clients are changing quite significantly in their behaviors. On investing, yes, are expected to remain resilient. We expect margins being at least stable going forward.

So in the guidance we gave on investing, clearly, nothing has been changed. So we remain we didn’t change our expectations in terms of margins, respect the beginning of the year. We didn’t change our expectations in terms of volumes. So I think it’s made absolutely the same. The only point in which we try to be the most precise possible that clearly there has been by the beginning of this year a market effect in place that clearly, by definition, is affecting the investing business.

Clearly, this is an extremely volatile component. This is the reason why we are guiding the market with going forward with the sensitivity. But clearly, if we have a recovery of the market, clearly, the situation can be improving even more and so because in any case, brokerage is expected to remain pretty strong. So again, what I want to be extremely clear, we didn’t change anything in the guidance with respect to the guidance we gave in the previous conversation.

Luigi Dabellis, Analyst, Equita SIM: Thank you very much.

Conference Operator, Chorus Call: The next question is from Enrico Bolzoni, JPMorgan. Please go ahead.

Enrico Bolzoni, Analyst, JPMorgan: Morning and thanks for taking my questions. So first of all, on margins again, thank you very much for clarifying the precise number you had in mind, is SEK 4,700,000.0 sensitivity and not SEK 4,500,000.0. I’m just trying to maybe I’m reading too much into that. I’m just curious about the numbers behind this guidance. If I now take the EUR 4,700,000.0, which it’s a guidance of revenue generation over an eight month period, so starting from the May till the end of the year, and I annualize it and I calculate the margin, I actually would end up with investment fee margins slightly above 70 basis points.

And conversely, if I had done the same with the 4.5, I would have ended up with margin at around 67%. So we moved from what it looked like a lower margin going forward to actually a slight improvement now, so just above 70 bps. Quarter, you were just below that. So sorry for this detail. I just want to ask again whether this is the right way of looking at it.

And within that, up to the explicit reference to a double digit growth in investment revenues. But if I look at these 4.7% you just gave us, are you still confident that actually you can grow investment revenues by double digits this year, assuming a decent level of stability in markets? So that’s my first question. The second question is on deposit flows. In the past, you mentioned that your clients had about EUR 5,000,000,000 of bonds that were expected to mature in 2025.

And I think in the past, you mentioned that a good chunk of that was expected to mature in the first half of the year. Now we are in May and so far deposit flows have been on the net level at least have been pretty small. So does this imply that we should see a material uptick in deposit flows in May and in June as well? And then finally, thanks for the color on ETF. I mean impressive market share data.

You are clearly ahead of most of your peers when it comes to fee on top and fee only propositions and so forth, and it’s quite impressive to see this uptick in ETF. I just I was just keen to hear your thoughts on is also potentially a risk of cannibalizing some of the traditional business? And maybe perhaps can you give us some color on what proportion of the ETFs that are being bought platform are actually falling under a broader advice relationship and therefore, they do generate ongoing fees? Thank you.

Alessandro Foti, CEO and General Manager, Fineco Bank: So coming back to the yes, so regarding the so the reason why we made these small adjustments because we realized that giving because we probably made a mistake giving a random number. So we have underestimated that because the difference between 4.5%, four point seven % is so small that but clearly, we then realized that was making the difference between stable margins and slightly decreasing margins. And this probably has caused some little bit of concern, but the right number is €4,700,000 And so yes, so the numbers you put together are the right ones. And this is consistent with the guidance we gave before that we at the end of the story, we expect the margins on the investing business being at least stable. And so regarding the possibility to get still the low double digit investment, yes, clearly, the only reason why we stopped on giving such a precise guidance because there is a component that we cannot control that is the market effect.

Clearly, if we are progressively back again in a more stable environment, so will market start keeping or recovering? Yes, we think that this is achievable, yes. Regarding the €5,000,000,000 guidance expected to yes, Typically, from a seasonal point of view, to predict precisely the timing of the evolution of deposits, it’s not always so easy because it can be impacted by unexpected events like big market swings. So the example has been at the beginning of the year in January, which we had the unexpected big jump on rates that excludes a big move by clients on the platform. But from a seasonal point of view, yes, there is a tendency of building up more deposits going towards the year end.

And ETFs. So ETFs, no, we don’t see any potential risk of cannibalizing traditional assets under management. So the risk is there if you are ignoring what’s going on. Because in any case, this is a big tide that from which you cannot be you cannot ignore what’s going on. So ETFs are going to grow in any case.

So you have to decide which kind of approach you’re going to take. Or you can surf the tide, as PNAIC is doing. So we are creating a great environment for clients and new clients for using ATS. And this clearly is explaining why there is we have such an incredible market share of the TFs market in Italy. Or you can decide to try to resist and try to block, to try to insulate your clients by the ATS world, but it doesn’t work this way.

Because in any case, if, for example, you are making the life for your clients difficult in getting ATS, this is going to accelerate the process of these clients moving in the direction of a player like we are because in any case, this is a gigantic trend is underway. And in any case, ATS are becoming absolutely a key component in the advisory platforms, so the platforms in which the clients are paying an explicit fee. And FINECO is by far the dominant player in Italy because we started on offering advisory platform with clients paying an explicit fee in 2028. So clearly, for us, it’s completely different in terms of margins because we don’t care if the clients decide to have of having a portfolio made exclusive of ATS or active managed funds or something else because at the end of the story, our margins are represented by the explicit fees paid by the client. So for us, the ETFs are a gigantic opportunity.

Absolutely, it’s not. And in any case, on average, what if you put together what is the overall revenues generated by the advisory platforms, these are perfectly aligned with the average profitability of our asset under management business.

Enrico Bolzoni, Analyst, JPMorgan: Carlos, just a quick follow-up on two things. So on deposits, can you remind us what amount of BTP or bonds is expected to mature over the next two months from clients? If you can disclose that it was SEK 5,000,000,000 for the year, if you can just give us an idea how much is maturing in May and June? And on the ETFs, can you just specify what proportion of the ETF are you seeing advice relationship? So what proportion of ETF IUC are actually So

Alessandro Foti, CEO and General Manager, Fineco Bank: the percentage of ETFs that they are moving under in the asset under management platforms is 30%. And on the if you don’t mind, now more or less is 1,500,000,000 by the end of the no, excuse me. In the second quarter, ’1 point ’5 billion, yes. Okay. So €1,500,000,000

Enrico Bolzoni, Analyst, JPMorgan: in the one point five billion euros

Alessandro Foti, CEO and General Manager, Fineco Bank: Yes, yes.

Conference Operator, Chorus Call: The next question is from Domenico Santoro, HSBC. Please go ahead.

Domenico Santoro, Analyst, HSBC: Hi, good morning. A couple of questions. First of all, on the NII side, if we assume that rates, the bottom out in the second quarter around 2%, shall we expect after another drop probably in the second quarter NII as well to bottom out in a way? Or there might be other mines that might drag on over the next quarters? I can see that the lending book keeps shrinking, and this is a bit of a marginal negative on the NII evolution.

And then shall we expect NII from the third quarter to follow the evolution of deposits? I just wonder whether the second quarter, if rates then stay stable, NII will trough and then from there we start again. The other question that I have is on brokerage because, I mean, the numbers, they’re pretty impressive. And I guess the market is a little bit ignoring the fact that revenues in this division, they keep trending up. I know that it’s difficult, but it could be very useful for us to understand whether the €50,000,000 law that you were mentioning in the past, it might have become now EUR 16,000,000, EUR 19 million, 20 million, whatever, any quantitative sort of comment here, it will be extremely useful.

And then about the shareholders’ remuneration, I listened to your comments before that at a point you will make a decision depending on the way deposit behave and the way, of course, the leverage ratio will move. When this decision will take place? And how shall we expect, in a way, the potential share buyback to be shaped up? Because I thought that was quite a priority for you to please investors that are that have been very positive on your story. Thank you.

Alessandro Foti, CEO and General Manager, Fineco Bank: So let me start by the NII. So it’s based on the evolution of the implied follow rate curve And based on the expectation we have on the evolution of deposits that, as we see, we expect it to stay strong going forward and so on, it’s reasonable to expect the NII bottoming out by the year end and then by the beginning of next year, on growing again. So this is the evidence we have. So it’s regarding brokerage, yes, the numbers are really impressive. So clearly, the floor now, but if you look to our numbers, the evolution of the graph and so on is pretty heavy than the floor is probably higher than €15,000,000 And we expect that this keeping on going more and more for all the considerations we made at the beginning of our conversation, because there is a combination of there is a clear and quite impressive increase of market share by the bank.

The continuously building up of assets under custody is creating the fuel not just for the investment business but also for the brokerage business. And finally, we have to remind that the Italian market is still massively underpenetrated. Frequently, are compared to the Nordic platforms. For example, in the case of the Nordics, the market penetration, so the of the level of participation by clients direct to the market is much higher than we have in Italy. So Italy is remaining an absolutely incredible market for the brokerage.

I want to add also, we forgot to mention that we started officially the project for launching the for opening our platform to the crypto world. And so we are working on that, and we think that probably going throughout the beginning of next year, we are going to be ready with an extremely robust and structured proposal on the quicker world that is clearly emerging as a market of interest for clients. And also this clearly is going to bring additional fuel to the brokerage business going forward. Regarding the shareholders’ remuneration, clearly, we are not rushing in moving in the direction or giving back to the market excess of capital for a very simple reason. We are a growth company.

We are different by traditional banks. So we prefer to wait to be absolutely sure of the growth trajectory of the bank, particularly on deposits, before taking a decision in that direction. What we can say that as soon as possible, we are going to have a picture that is decently clear on the direction that is going to emerge that there is a clear excess of capital that we don’t need, we are going to be extremely fast in moving direction of giving back to the market. But again, FINECO is not a traditional bank. It’s a growth company.

And so we are on the fast lane of growth. The acceleration we are experiencing in terms of acquisition of clients, net sales is absolutely impressive. And so we think that it makes sense that we take our time. The

Conference Operator, Chorus Call: next question is from Giovanni Razzoli, Deutsche Bank.

Giovanni Razzoli, Analyst, Deutsche Bank: Two actually three questions on my side. One is again on the launch and the emphasis that you are putting on active ETF. If I’m not mistaken, you’ve just launched an active ETF on S and P five hundred. If you can share with us what is the pricing schedule of this product and how does this compare with the more plain vanilla ETF or also with the comparable fab products? You said during the call that you expect the outlook for investment margins to remain unchanged or even improve.

I was wondering what is the contribution of these new products. And again on ETF, I was wondering whether I mean, clearly, if I’m not mistaken, but correct me if I’m wrong, on ETF, there is a very unfavorable fiscal treatment for Italian residents. I was wondering whether you may there is a way to further incentivize, if I’m not wrong, the further penetration of this product also via fiscal optimization or whether there is still a discussion about the harmonization of this product if you are sponsoring this? And the last question is on the sensitivity that you have provided in terms of growth of the stock of AUM for, let’s say, around EUR85 million of fees on since May for €1,000,000,000 of increase in the stock of AUM. Shall I take this €1,000,000,000 grow as on the same period of time?

So if you can clarify this. And if you can provide the same sensitivity also for the deposits. Thank you.

Alessandro Foti, CEO and General Manager, Fineco Bank: So on the ATS, yes, are extremely we are incredibly bullish on what’s going on in the ETF world because differently by the most part of banks and the other players, we are observing what’s going on because being at the point of reference of the market, we are really in the position to understand what’s going on there. And what’s going on there, it’s absolutely incredible, impressive, and we expect this is having starting on having a significant impact on the industry quite soon. And regarding the so the active ATS just launched by Finnequa’s management are characterized by are, let me say, more sophisticated because they are introducing some algorithmics that they are making, for example, the NDPS more efficient and so on. But probably if you are interested, Giovanni, the best way we can arrange and but this is the same story for everybody that is attending the conference. We can arrange a little bit more specific meeting with our colleagues in Dublin that can give you a better color on what does it mean, what is the related on the active Just for spending fuel on the active ATS world, this is going to represent the other absolutely incredible revolution that is going to that is going we are going to have on the market because going forward, progressively, active ETFs are going to replace are going to take the place of the traditional fund for a very simple reason.

You’re trying to imagine the same portfolio manager with the same strategy. From the client point of view, it’s much more efficient to buy the same strategy throughout an active ETFs than a traditional mutual funds because you can trade this continuously is in terms of you can have if you are buying and selling, you can take in real time the price. Everything related to custodian administration is much less complex. So this is the new world that is coming. It’s clear, which is the point of attention.

The activity has clearly characterized by the lower margins than the traditional mutual funds. So activity has can work very well for the direct clients, and this is going to be the case, or for the clients they are interested in using advisory platforms. And so this is the reason why for us it’s absolutely key to move there. But in any case, ETFs, traditional ETFs, they are going to reshape completely the industry. Regarding the outlook on investing margins, no, we are not embedding there still any significant contribution by what we were describing at ES.

This is going to is a development story that we think that there is going to be a very interesting story that is going to bring some interesting contribution in a relatively short period of time. But we prefer to give a guidance that is not considering this yet because it’s a developing story. But for sure, ETFs are expected to starting on becoming a contributor in the investing business. Regarding the favorable fiscal treatment on the TS for Italian restaurants, but the TS, don’t have a different their fiscal treatment aligned with the fiscal treatment of the other instruments. I don’t know if I got or I’m missing something in your questions.

If you can help me in because we don’t see any difference on the fiscal treatment on ETFs. Giovanni, if I’m not sure that

Giovanni Razzoli, Analyst, Deutsche Bank: I was referring to the fact that on a pure custodian account, capital gains and capital losses of the year sometimes cannot be compensated. Is my understanding correct?

Alessandro Foti, CEO and General Manager, Fineco Bank: This is part of everything that is related to the composition of the gain and losses. This is, again, another developing story. But at the moment, ETFs are treated as but they’re not the biggest expert there, but they are treated more or less as the asset under management, they cannot be probably compensated with the asset under management. Take my words cautiously because I’m not a We can return to you with more precisely later on.

And sensitivity, yes, the sensitivity is clearly is calculated starting by the May 1. Clearly, the more we progress and the lower is going to be the sensitivity going towards the year end. And so we have but it’s not difficult to adjust the sensitivity considering the time passing. And on deposits, no, we are not calculating and communicating sensitivities on deposits because there isn’t too much still volatility in the movement of rates and so on. On the to some extent, it’s a little bit easier giving a sensitivity on the asset under management than on the deposits.

You. Denise, our CFO is suggesting to us that is suggesting to me that there is no compensation of the With the asset under management. So you cannot compensate gain and losses between ETFs and the traditional asset under management products.

Conference Operator, Chorus Call: The next question is from Gianluca Ferrari, Mediobanca. Please go ahead.

Gianluca Ferrari, Analyst, Mediobanca: Yes. Hi, good afternoon. Only two questions left for me. The first one is two days ago, one of your competitor launched a new project for targeting high net worth individuals with roughly speaking more than €10,000,000 Are you planning to have a specific service model for these kind of clients? The second one, if I recall properly, last conference call you mentioned a new private market offer in the second part of the year.

Can you remind us the timing and potentially also the margins on those products? Thank you.

Alessandro Foti, CEO and General Manager, Fineco Bank: So regarding the announcement of the launching a project with other banking clients, we don’t need to launch a specific project there because at the moment, Finnequi is offering everything that is all the most relevant solutions that are of the most interest for the private banking clients. In the case, we think that also the numbers are showing this very clearly because the segment in which we are growing the most is the private banking segment. So the client will be more than €500,000 per asset. PINECO is growing nearly four faster than the industry. And the reason is pretty simple because at the end of the story, the rich clients, what they want to get is services that are fair, transparent and efficient.

FINECO, as we were explaining, is the only one player that is able to offer all these concepts altogether. And clearly, there is other companies like assisting the clients in the generation of passenger, in the real estate, that is every that there are companies that we are offering to clients and so But we don’t need to launch any specific project for private banking clients because the positioning of Fininko is the best possible for capturing these clients because the I’m sorry if I’m a little bit repeating myself, but when we are considering these absolutely incredible trends that is emerging, that is the clients looking for fairness, transparency and convenience, the two segments that are the most interested in moving there are the young generation, but particularly the rich clients. And Fineco is by far the best positioned player for capturing this. And the timing of private market offer, we think probably, yes, in the second half of this year, we are going to be up and running with an offer there. And on the margins, sorry, but we can if you don’t mind, we can return to you later on with a precise indication of the margins of this product market

Conference Operator, Chorus Call: The next question is from Alberto Villa, Intermonte. Please go ahead.

Alberto Villa, Analyst, Intermonte: Good afternoon. A couple from my side as well. Going back to investing and ETFs and your comments during the call and your answers, you’re expecting this business really to boom in the future. So I was wondering a few years or five years down the road, how do you think this will be represented in our AUM? So maybe starting from the end of twenty twenty four, if you can give us a picture of how much of the AUM were related to passive and active ETFs?

And eventually, how do you think this will evolve in the future? And just this also to understand the evolution of the margins from the 70 basis points you’re planning right now, how that can evolve in the future given these moving parts? And secondly, on the advanced advisory stock, you now are at around EUR 34,000,000,000, 30 5 billion. How much this is impacting in terms of euro millions you are cashing in 2024? How much that was related to advanced advisory fees component?

And the final one is on provisions, if you can give us a guidance for 2025. Thank you.

Alessandro Foti, CEO and General Manager, Fineco Bank: So on the what we can expect to happen on investing related to ETFs, active and passive, the right question is not what it’s going to represent for us, but what it’s going to represent for the industry. Because what is really the market is underestimating is that this is a massive, gigantic wave that is going to change completely the structure of the industry. This is the real point. So we are not beating in our because for us, when we are looking to the ETFs world, there are two elements that for us are relevant. The first one is their presence in the advisory platforms.

And clearly, as we say that we are by far the most advanced players there. And so we expect that yes, expect it to keep on playing a bigger and bigger role there. But as we said, this is completely indifferent in terms of margin evolution. And the second one is the volume effect because clearly, as we’ve explained, we have good reasons to think that going forward, we are going to start on extracting additional revenues by the ATL stocks we have. But again, this is not something that is for everybody.

This is a privilege that we’re going to have considering the dimension of our platform because it’s clear that we are when you are 70% of the market, clearly, have a pricing power that is completely different if you are a marginal player. So the two components that we can expect to come in place going forward is, again, the ETFs playing a bigger and bigger role in the advisory platforms for the reasons we were explaining. And second, we expect a progressive contribution by this component that at the moment is accounted in the asset under custody that the market is considering not as particularly appealing, but as we discussed before. So what we our message that considering the absolutely dominant position we have, progressively, we are going to start on extracting additional revenues by this asset under cash today. And this is the reason why we are extremely but in any case, ETFs are there, are going to stay and are going to reshape in a quite significant way the industry.

Alberto Villa, Analyst, Intermonte: The If I may, Alessandro, I’m sorry to interrupt you. Just to understand the your own ATF compared to someone that buys a third party ATF on the platform, how does that change the picture for you in terms of profitability?

Alessandro Foti, CEO and General Manager, Fineco Bank: This is clearly another very important direction. But again, we are not reinventing the wheel because if we look to The U. S. Experience, for example, there is the most the first example that is coming to my mind is the evolution that has been experienced by a player like Charles Schwab in U. S.

Charles Schwab, they started clearly offering Kieft and progressively they build up their whole offer clearly and within and progressively, then a large component of the ATS used by their clients were represented by TS issued by them. So this is a third leg that is going to be built up progressively. This is the reason why Finneo Asset Management is becoming very active in issuing and listing its own ETFs. So yes, we so thank you for making this remind because so the ETFs are going to play a very important role. One, very basic because what is bought directly by the client, they are going to start progressively on producing or recurring fees and so on.

On. Second, are going these are going to represent more and more the very important components of the building blocks of our advisory solutions. Third, clearly, the dominance we have on the market there, we are going to be in the position progressively of issuing and proposing our own ETFs. And clearly, this is going to make the business even more profitable, such as clearly ETFs, they are characterized by a structural profitability that is definitely above the adjusted pure recurring fees. So yes, we think that it’s a quite significant change in the structure of the industry.

On the advanced advisory stock, how much this is impacting that what do you mean exactly, Alberto?

Alberto Villa, Analyst, Intermonte: No. I was wondering how much are you monetizing this advanced advisory services right now?

Alessandro Foti, CEO and General Manager, Fineco Bank: So you are interested in the dimension of the revenues generated by the I don’t know. I have to ask to my colleagues. We have to return later. I have lost his numbers on my Okay.

Provisions for 2025, I don’t know, Lorena, if you want to Yes.

Lorena, CFO, Fineco Bank: Thank you. Good morning to everybody. We confirm what we already said in the previous call. So for 2025, we are taking a conservative approach. And we consider in our forecast the €25,000,000 considering also potential extraordinary contribution to the funding turbine value, so deposit guarantee scheme, in case of increase of guarantee deposits.

Consider that in addition, starting from 2024, the insurance resolution fund started to ask a contribution for insurance distributors like TINECO. The contribution is equal to 0.1 per 1,000 of the technical reserves of the life insurance stock at the end of previous year. And so considering the usual provision that could be estimated around €15.17000000 euros and the potential contribution to a deposit guarantee scheme in our forecast, are considering €25,000,000

Alberto Villa, Analyst, Intermonte: Okay. Thank you very much.

Conference Operator, Chorus Call: The next question is from Cristiana Holstein, BOA. Please go ahead.

Cristiana Holstein, Analyst, Bank of America: Yes. Thank you for taking my questions. I just have three of them. Firstly, on new customers, I was just wondering where they’re generally being won from. Are they from other competitors?

Or are they generally customers who are brand new to investing in brokerage? And then what segments of products do you see the new client net sales primarily within? Secondly, on brokerage, you previously highlighted tailwinds from increased demand for offshore and particularly U. S. Trading, which is a higher margin product.

I was just wondering if you’re still seeing demand here or has this reduced with the recent volatility? And then finally, in the presentation, I can see that you flagged that you have the green light by the Italian tax authority to assess opportunities abroad. I was just wondering if you could give some more detail around time line, revenue opportunity and if there’s any change to the strategy, which I believe was to expand into Germany?

Alessandro Foti, CEO and General Manager, Fineco Bank: So regarding the new customers, they are coming nearly 100% from traditional banks. So because we Seneko is gaining market share from traditional banks. So this is the and they are coming for so there is the entrance gate, the main entrance gate represented by the banking because we have to remind that Pineco is offering an absolutely unique and incredible experience to clients on transactional banking. And also, everything related to brokerageasset under custody is emerging as a gigantic is a quite significant entrance gate for the clients because typically, the asset under management is accounting more in terms of assets than number of clients. But if we look to the number of clients, clearly, the two main entrance gates are the transactional banking and everything related to brokerage asset under custody.

Brokerage trend of clients trading with U. S. Stocks, we are is not we didn’t see any significant change related to what’s going on in the market. In the contrary, we are observing a little bit even more an uptick on the interest by clients on trading on U. S.

Stocks. And but this makes sense considering that the local market is not offering such a great opportunity for trading to our clients. So by definition, The U. S. Market is the main point is remaining the main point of interest by the clients.

Regarding the business abroad, we received the official green light by the Italian fiscal authority. And so now we are on the way for preparing a plan for starting on offering our services abroad. And we are going to keep you updated in the next future on the point. But yes, now everything is clear, the green light we got the green light, so we can progress there.

Conference Operator, Chorus Call: The next question is from Ian White, Autonomous Research. Mr. White, your line is open. Maybe you are on mute. Mr.

White, we cannot hear you. Please check your microphone, please. The next question is from Marco Nicolas, Jefferies. Please go ahead.

Alessandro Foti, CEO and General Manager, Fineco Bank0: Hello. Thanks for the presentation. So if you look at the number of customers, so you grew by more than 100,000 customers compared to last April. So April 24, ’1 hundred and ’10 thousand customer, if I’m not wrong. So is this something that can be sustained also for the future?

And what is the role of this €5,000,000 10 million euros marketing expenses in this client’s growth? Thank you.

Alessandro Foti, CEO and General Manager, Fineco Bank: So our expectations in terms of client growth that we think that we have room for further accelerating, yes? So it’s absolutely sustainable, and we see room for accelerating even more. So the marketing expenses are clearly important, but they can play a role if, on the other hand, you have the right proposal because the best way that if you want to waste your money is to spend a lot in marketing without having the right position and the right proposal. So what is absolutely what is the real reason of this accelerated growth that FINECO is offering exactly what is in the biggest demand by the market right now. I was mentioning the structural change in terms that is underway by the behaviors of clients.

So if you look to this kind of needs by the clients, there is nobody else, excluding the neo banks and neo brokers, that they’re really giving an option to the clients. So if a client in Italy is really interested in getting fair, transparent, efficient services by a decently large player, there is no other place that in which you can go than Infineco. And clearly, this coupled together with a quite effective and important marketing budget clearly is the perfect solution. This is the reason why considering we think that we want to have the flexibility to spend even more because the situation, the landscape is emerging as incredibly favorable for our growth.

Alessandro Foti, CEO and General Manager, Fineco Bank0: Okay. So let’s say, more than 110,000 customers incremental per year in 2025, which is happening already, and also 2026, ’20 ’20 ’7 in the following years?

Alessandro Foti, CEO and General Manager, Fineco Bank: Yes, yes, makes sense. Makes sense. Thank

Alessandro Foti, CEO and General Manager, Fineco Bank0: you.

Conference Operator, Chorus Call: The next question is from Ian White, Autonomous Research. Please go ahead.

Alessandro Foti, CEO and General Manager, Fineco Bank1: Hi, there. Hopefully, you can hear me this time. Three questions from my side, please. First up, just wondered to hear your thoughts around considerations around increasing prices to clients with respect to assets under custody or brokerage, something like either a custody or account fee or higher trading charges for brokerage only clients. It just seems like your brokerage offering is getting a lot of traction.

It’s very popular. Just wondered if that would lead to any considerations around pricing power. Secondly, could you just clarify for us what is the current value of ETFs within AUC? I think you said earlier that 30% of ETFs are within advisory agreements, but how much is being reported, please, under AUC in nominal terms? And just finally, you mentioned earlier potential change to agreements with ETF providers.

Could you just say a little bit more about that? I wondered if you’re referring there to retaining a greater share of management fees on third party ETFs? Or could this also consider things like lower exchange fees or transactional charges that might impact the AUC side too? Thanks very much.

Alessandro Foti, CEO and General Manager, Fineco Bank: So the so we are no, we are not considering any price increase to the clients on asset and the custody and brokerage because we think this is in any case is our proposal is extremely very well balanced because we are characterized by an absolutely decent profitability. So no, we are not considering to charge more

Alessandro Foti, CEO and General Manager, Fineco Bank0: to

Alessandro Foti, CEO and General Manager, Fineco Bank: the clients and so on. So no, on the overall amount, so on the ETFs, on the part of the assets under custody, So

Lorena, CFO, Fineco Bank: at the end of the first quarter, ’19 percent.

Alessandro Foti, CEO and General Manager, Fineco Bank: So at the end of the last quarter, the ATS were representing more or less 20% of the overall asset under custody. But what is important is the speed at which they are growing. And in any case, at the moment so regarding the agreement with ATS providers, at the moment, the most part of the ETFs on the platforms are characterized by zero commissions to clients. So there are places and arrangements with the ETFs providers on the so for compensating these zero commissions. But what we were now we are considering is the possibility to get more considering the dimension of the business, the pricing power we have.

And clearly, it is but not anything particularly strange because in the usually in the financial world, so if you are a platform, if you are controlling the clients, you are taking care of the clients, you are sustaining all the costs for running the clients and so on, it’s normal. For example, in the world of the mutual funds, it’s normal. There is an an interesting component of the management fees that they are remaining in the pocket of, let me say, the distributors, the platforms. In the Tiete’s world, this is not still the case, but it’s going to become more and more the concept clearly not just for everybody, but with the platforms that you are really representing an important component of the market. So this is what we expect to happen going forward.

Alessandro Foti, CEO and General Manager, Fineco Bank1: Understood. Thank you very much.

Conference Operator, Chorus Call: The next question is from Enrico Bolzoni, JPMorgan. Please go ahead.

Enrico Bolzoni, Analyst, JPMorgan: Follow-up on this question from my colleague. Is he actually to capture a portion of the ETF cost? Because the fact that there would be a bit like introducing a rebate on an ETF as we speak, typically don’t have any. So just can you just clarify, is that actually something allowed?

Alessandro Foti, CEO and General Manager, Fineco Bank: On the technicality, clearly, it’s a little bit too early to discuss about this. But yes, technically speaking, this is possible, yes.

Enrico Bolzoni, Analyst, JPMorgan: Thank you. And another very short follow-up. You mentioned about crypto launching a new initiative in crypto early next year. Can you just remind us, is this going to be derivatives on crypto, ETFs on crypto? Or you’re actually thinking about the actual It’s

Alessandro Foti, CEO and General Manager, Fineco Bank: going to be spot physical crypto, yes. What is because now it’s the right timing because the dimension of the market in Italy, based on our estimates and asking to my colleagues, which is the total the moment that we have now in Italy Two Point Four Million of clients, not us, but overall in Italy, there are 2,400,000 of clients that own physical crypto. And we’ve the total assets for more than €3,000,000,000 So now as we can say that is a market that is ready to be addressed. And what is very important to underline that based on because clearly, we made quite a significant study on the market and so on, what is the most desired by the client is that the possibility to interact with a platform managed by an established bank. So this is the what is important that

Enrico Bolzoni, Analyst, JPMorgan: For your interest.

Alessandro Foti, CEO and General Manager, Fineco Bank: Because we are monitoring also what the clients are doing. Many of these clients are our clients for other reasons. And so clearly, we as soon as we are going to be able to launch to be up and running, this is going to generate immediately an interesting amount of commissions.

Enrico Bolzoni, Analyst, JPMorgan: Thanks.

Alessandro Foti, CEO and General Manager, Fineco Bank: Excuse me, just because now the CFO made me a clarification because on the so coming back to the questions by Jan. So it’s so the total stock is 20%. But if we look to the net sales, the inflows, the new net inflows on assets under custody is 38%. It’s nearly 40%. So this is the reason why this is a quite impressive trend that is underway.

Conference Operator, Chorus Call: Any further questions, please press star and one on your telephone. Mr. Foti, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Alessandro Foti, CEO and General Manager, Fineco Bank: No. Thank you for attending our conference. And as usual, we are available for any additional comments, deep dive in the numbers, in the concepts that we discussed together. And so thank you again, and talk to you soon.

Conference Operator, Chorus Call: Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.

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