FinecoBank Banca Fineco S.p.A. (FBK) Earnings Call Transcript & Summary

This is the Chorus Call conference operator. Welcome and thank you for joining the FinecoBank Second Quarter 2026 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Alessandro Foti, CEO and General Manager of FinecoBank. 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 EUR 343 million, revenues up by around 11% year-on-year at EUR 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 EUR 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 equity Tier 1 ratio at 23.18% and a leverage ratio at 5.02%. Among the main events, we have signed with CNP Assicura, a 4-year exclusive partnership for the distribution of life insurance products. The deal improves both the quality of products and services and Fineco marginality moving to her. 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 EUR 1.7 billion, around 40% higher year-on-year with around EUR 0.4 billion assets under management, around minus EUR 0.3 billion deposits and around EUR 1.7 billion assets under custody. Brokerage clients were very active buying the dips, leading to very solid brokerage revenues estimated at EUR 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% year-on-year. Now move to 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 mix components contributing positively to the revenues, combination of deposits, net sales and interest rate 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 2026. We expect all the product hires 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 mix improvement. Brokerage, we expect another record year. Banking fees stable year-on-year. Cost, we expect a growth by around 6%, not including around EUR 50 million additional costs for growth initiatives and around EUR 5 million for pan-European platform setup. Compared to the previous guidance, we are embedding a EUR 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 Pelliciari, to start diving on results.

Thank you, Alessandro, and good morning, everybody. Let me start with Slide 7. Net financial income in the first half increased by around 8% year-on-year and [Audio Gap] supported by a positive volume effect [Audio Gap] Highlight is the quality [Audio Gap] of revenue is capital-light and [Audio Gap]. 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 client investments during the period. Let's now move on to Slide 8. The 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, granular and deeply connected to the daily use of our banking platform. Clients use Fineco for their everyday financial needs, and this creates a highly stable deposit base. On the right-hand side, we provide benchmarking based on Pillar 3 disclosures. Fineco enjoys the highest level of stable deposits with the median ticket equal to around EUR 4,000. This combination of granular [Audio Gap]. On to Slide 9 related to investing. Investing revenues increased [Audio Gap] driven by growing volumes. The growth of assets under management remains consistent with the client demand [Audio Gap]. 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 position in the sector. Thank you for your attention. Now I'll hand back to Alessandro.

Thank you, Loren. And let's move now to Slide 14. Fineco 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 that are reshaping the financial services industry and reinforcing our strategic positioning. First, AI disruption, which is driving for higher transparency in financial services and higher productivity. Fineco is already well positioned, thanks to its market positioning and state-of-the-art platform. Second, the massive generation of wealth transfer, 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 3 big structural plans. On Slide 15, we show a clear example of our distinctive positioning compared to the industry, focusing on the investing business. Fineco 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 [Audio Gap]

[Audio Gap] And higher brokerage fees. Second, ETFs 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 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 ETF, has a co-branded partnership with one leading issuer. Finally, ETF accumulation installment plans are now fully available in our investing services also through the application. So let's -- now let's quickly move to the Slide 24. The plan for the deployment of our pan-European platform is progressing as expected. We confirm that by the year end, we will launch the family and friends phase with a full launch in early [Audio Gap]. Moving on 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 AI platform. So an increase, as we already said, around 20% of their commercial proposals. And let me now briefly summarize the most recent artificial intelligence initiatives. So first, we are now live with customer relationship management for our financial planners, is a key step to increase their productivity. It is fully integrated with Fineco platform and data and allows our network to better cluster clients and identify priority actions. Second, we have already -- we are already live with the brokerage copilot 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. And now thank you for your time, and I'll hand it back to you.

Thank you, Paolo. And let's now move to Slide 26, guidance. further upgraded outlook for 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 mix components contributing positively to revenues, combination of deposits, 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 rate environment. Investing, solid increase in revenues, thanks to a combination of resilient net sales and mix improvement. Brokerage, another record year, thanks to higher assets under custody and active investors. Banking fees, stable year-on-year. Operating costs, we expect a growth by around 6%, not including EUR 15 million additional costs for growth initiatives and around EUR 5 million for the pan-European platform setup. Compared to the previous guidance, we are embedding a EUR 5 million increase related to marketing in additional cost growth for 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 is expected in a range between 5 and 10 basis points. Finally, payout ratio is expected for 2026 in a range between 70% and 80%. On leverage ratio, our goal is to remain above 4.5%. Thank you for your attention, and we can now open the Q&A session.

[Operator Instructions] The first question is from [indiscernible].

[indiscernible] Specifically on the guidance, you have further upgraded the guidance, which is qualitative before. I was trying to figure out what could be the implication of the revision, especially on net interest income, including all the items and then the adjustment method of the one-off wondering why you present the number in this way and where the of the one-off is included in which line item of the P&L...

Thank you for the questions and sorry for the bad quality of the line. So -- and so the upgraded guidance is clearly is moving on. There is a continued sensitivity 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 net sales because as we explained during the presentation, we -- 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 redesigning the backbone of the bank using technology and artificial intelligence is starting or emerging as paying off. And so we are extremely confident that going forward, we can expect a material impact on the evolution of the operational cost. And so this is the reason why we also introduced an additional guidance in which we expect the beginning of the deceleration of the growth of the operational cost happening definitely before than we presented during the plan. Finally, then there is an excellent combination of evolution of deposits and interest rates because clearly, if the rates are evolving, they are higher. At the same time, despite the higher rates, deposits are emerging extremely resilient, and we expect keeping on growing. And so this means that clearly, it's -- if we put all of these components all done together, it's clearly that we have the evidence that of a material improvement of the results we expect to generate throughout the plan. On regarding the 15%, you are referring to the increase of the -- Lorena, this was the...

The second quarter 2026 compared to we have the second quarter 2025 net interest income. Net interest....

Yes, net interest income. So clearly, we cannot give such a 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 of the net interest income is going to continue. And this is clearly -- is mostly driven by the quality of our deposits because I would like to remind that the quality of our deposits means that our -- the beta of our stable deposits is practically 0. So this is making -- think working incredibly well. On the operating cost, as explained, answering to the updated guidance. So again, we are extremely confident that the growth of the operational cost going forward is going to keep on going down and more rapidly than we were expecting in the -- we were expecting when we presented the plan. For the adjustments of net profit, I'll leave the floor to Lorena.

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 nonrecurring expenses, net of taxes, which are equal to EUR 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 EUR 4.6 million expenses gross and is related to the termination agreement with an executive occurred in the second quarter of 2026 connected to the reorganization of the bank.

Okay. If I may follow up on another topic, which is the net inflows and the stronger assets under custody was probably the second record month in terms of assets under custody. Is this a trend of investments by clients that you expect to continue also in the coming months or related to some specific reasons?

The reason is related to 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 platforms offered by robust, significant 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 the -- particularly the most interesting clients interested in dealing directly with the markets moving to Fineco. So -- and this trend is accelerating for the reasons we explained because the disruptive impact of artificial intelligence is 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 signaling and progressively accelerating change in the structure of the market. So we expect this trend is going to continue and reinforcing.

The next question is from [indiscernible]

The first one is on the partnership with [indiscernible]. Can you provide us more color on the details of the partnership and how much margin accretion we can expect over the coming years? The second one on the German pension reform, the new reform significantly opens the system with a more flexible and, I would say, market-friendly approach. In light of the upcoming entry into Germany, have you already made any consideration on how to capitalize on this opportunity? And can you provide us with more color on this thoughts would be appreciated. And the last one on cryptos. We have seen some operators authorized by regulators in recent weeks. How are the discussions with the regulator progressing? And when do you expect to receive the authorization?

Yes. Let me start by the partnership with CNP. So now clearly, this partnership that is a partnership that has a 4 years horizon, clearly, is a 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 -- is going to generate higher margins. So because the partnership is absolutely great because CNP is an incredibly efficient partner. So we have been keeping on working with them by many years. And so -- and we are sharing with them the same value proposition because the insurance 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. We -- in our agreement, we cannot give a precise indication of the conditions. And so -- but clearly, it's -- for sure, this is respect 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. So because -- honest speaking, what we are -- our plan on Germany is not driven by the pension reform. This is a nice to have, but it's not -- we are 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 in the direction that you have to use efficient products, you have to use funds, ETFs, assets under custody that for us, it's perfect, just perfect. So 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 -- not just for us, but for many players. We know that the majority of the assets are still in the traditional banking system, not just in Germany, but almost everywhere. And this is something that for us is just gold. So it's -- yes, that's it.

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