BancaBanca GeneraliGenerali
2009 First Quarter Results
Giorgio Girelli, CEO Milan, May 11, 2009 Today’s Agenda
¾ 1Q09 Results
¾ Net Inflows and AUM
¾ Business Update
¾ Closing Remarks
2 Banca Generali 2009 First Quarter Results 1Q09 Results 2009: Start off on the right foot
NETNET PROFITPROFIT 1Q09 Results: Key Messages (€ m)
+€5.7m
5.0 ININ AA NUTSHELL:NUTSHELL: SOLIDSOLID GROWTHGROWTH
¾¾ StrongStrong InterestInterest marginmargin despitedespite thethe interestinterest raterate fallfall Banca Generali 5.8 Group ex Simgenia
Simgenia 0.3 ¾¾ 1Q091Q09 grossgross commissioncommission imprimprovingoving fromfrom 4Q084Q08 levelslevels Banca Generali -1.0 -0.8 Simgenia Group ex Simgenia OutOut ofof thethe -0.7 consolidationconsolidation ¾ Positive contributions arising from trading and expiry perimeterperimeter ¾ Positive contributions arising from trading and expiry 1Q08 1Q09 fromfrom 1H091H09 ofof existingexisting bonds,bonds, partlypartly counterbalancedcounterbalanced byby assetasset 2006-092006-09 QUARTERLYQUARTERLY NETNET PROFITPROFIT TRENDTREND impairmentimpairment
¾¾ PositivePositive netnet inflowsinflows withwith aa dramaticdramatic changechange inin salessales
5.8 mixmix 4.7
¾¾ GoodGood AUMAUM resilienceresilience
-0.1 -0.7 ¾¾ BancaBanca del del GottardoGottardo Italia Italia alreadyalready fullyfully integrated,integrated, 1Q09 providing a positive contribution 1Q06 1Q07 1Q08 ex Simgenia providing a positive contribution
3 Banca Generali 2009 First Quarter Results 1Q09 Results
Consolidated Profit and Loss 1Q09 Results
(€ m) 1Q 08 1Q 09 % Chg (reported) (reported) 1Q09 Results: Selected Items Net Interest Income 14.0 16.3 16.4% Commission income 63.7 57.7 -9.5% Commission expense -28.0 -24.5 -12.5% ¾ Strong banking income (+45% yoy) Net Commission 35.7 33.1 -7.1% driven by a healthy interest margin (+16% Net income (loss) from trading activities -11.8 5.5 n.m. yoy), almost stable net commissions (-7% yoy), and a positive net income from trading Dividends 0.1 0.0 n.m. and expiry of existing bonds (€5.5 million) Net Banking Income 37.9 54.9 44.8% Staff expenses -13.3 -15.9 19.5% ¾ Cost spike due Banca del Gottardo Italia integration and to one-off items. Staff costs Other general and administrative expense -15.7 -19.6 24.9% stable on a like for like basis -29.0 -35.5 22.4% ¾ Write-off on investments (€3.5 million) Depreciation and amortisation -1.1 -1.3 15.8% related primarily to a private equity stake Other net operating income (expense) 1.3 2.2 73.1% ¾Net provisions, almost in line with Net Operating Expenses -28.9 -34.6 20.0% 1Q08, incorporating a higher share for network incentivation Operating Profit 9.0 20.3 124.3% Net adjustments for impair.loans and other assets 0.1 -3.5 n.m. ¾ Net Profit at €5 million, sharply improving yoy Net provisions for liabilities and contingencies -7.9 -7.3 -7.9% Gain (loss) from disposal of equity investments 0.0 0.0 - ¾Simgenia still in red but set to exit the Profit Before Taxation 1.2 9.5 703.8% consolidation area from 1H09 Direct income taxes -1.2 -3.4 191.7% ¾EBITDA almost doubled yoy Income/(losses) after tax on assets held for sales -0.7 -1.2 65.7% ¾Tax rate affected by seasonality (IRAP) but Net Profit -0.7 5.0 n.m. set to reduce over next quarters Cost /Income Ratio 73.2% 60.7% -12.5 p.p. EBITDA 10.2 21.6 112.2% Tax rate 97.1% 35.2% -61.9 p.p.
4 Banca Generali 2009 First Quarter Results 1Q09 Results
Financial items affecting 1Q09 results
€6.8m ¾ Primarily referring to the disposal Realised gains ¾ Primarily referring to the disposal ofof bondsbonds heldheld inin thethe HFTHFT andand AFSAFS on the investment portfolio portfolioportfolio
1Q09
1Q09 Unrealised losses ¾¾ ReflectingReflecting thethe mark-to-marketmark-to-market valuationvaluation ofof thethe outstandingoutstanding HFTHFT on the investment portfolio -€1.3m bondbond portfolioportfolio
1Q09 ¾ Primarily an impairment on a private Write-off on investments ¾ Primarily an impairment on a private equityequity investmentinvestment
-€3.5m
5 Banca Generali 2009 First Quarter Results 1Q09 Results Excellent operating performance in a very tough quarter
Breakdown of Net Banking Income
(€ m)
+45%
¾¾NetNet bankingbanking impactimpact increasedincreased byby 45%45% yoyyoy to to 54.9 €54.9€54.9 millionmillion
37.9 16.3 (30%) ¾¾StrongStrong interestinterest marginmargin (+16%(+16% yoy)yoy) 14.0 (37%) ¾¾ResilientResilient NetNet CommissionsCommissions supportedsupported byby aa recoveryrecovery inin frontfront feesfees 33.1 35.7 (60%) (94%) ¾¾PositivePositive netnet investmentinvestment incomeincome drivendriven byby €6.8€6.8 millionmillion gainsgains onon bondbond tradingtrading andand expiryexpiry ofof existingexisting bond,bond, partlypartly counterbalancedcounterbalanced 6.8 1.8(5%) (12%) byby -€1.3-€1.3 millionmillion ofof unrealisedunrealised losseslosses onon thethe HFTHFT -13.5 -1.3 (-2%) bondbond portfolioportfolio (-36%)
1Q08 1Q09
Net Interest Income Net Income from trading and dividends Net Commission Unrealised/realised gains/losses
6 Banca Generali 2009 First Quarter Results 1Q09 Results A positive result in 1Q09 interest margin
3M Euribor 1Q09 vs. 4Q08 Interest Margin %
6 4,7% (Mar 31,2008) 5,4% (Oct 2008) 5 17.8 -8.4% 16.3 4
3 1,5% (Mar 31) 2
1
0
Jul-08 4Q08 Jan-08 Feb-08 Jun-08 Oct-08 Jan-09 Feb-09 1Q09 Dec-07 Apr-08 Sep-08 Nov-08 Dec-08 Mar-08 Mar-09 Aug-08 May-08 (€ m)
-1.0 +2.2 ¾ 1Q09 return on the investment portfolio still supported +1.1 ¾ 1Q09 return on the investment portfolio still supported byby thethe highhigh shareshare ofof bondsbonds withwith variablevariable yieldsyields (70%(70% ofof total)total) 16.3 14 ¾¾ TheThe recoveryrecovery ofof unrealisedunrealised losseslosses throughthrough amortisedamortised costcost accountingaccounting isis supportingsupporting thethe interestinterest marginmargin (and(and willwill continuecontinue toto dodo so)so)
1Q08 Banca del Amortised Volumes, 1Q09 Gottardo Italia Costs rates 7 Banca Generali 2009 First Quarter Results 1Q09 Results
Gross Commissions with a slight decline yoy, yet improving compared to 4Q08
Breakdown of Gross Commissions
(€ m) 1Q09 vs. 4Q08 Gross Commissions -9.5% +3% 57.7 55.9 63.7 1.4 (2%) 57.7 9.3 (15%) 2.2 (4%)
13.0 (22%)
4Q08 1Q09 44.8 (70%) 37.3 Restated ex Simgenia (65%) (€ m)
8.2 (13%) 5.2 (9%) ¾ 1Q09 commissions improved against 4Q08 results
1Q08 1Q09 Reported ex-Simgenia ¾Management fees decreased on a yoy basis due to the AUM contraction and the more conservative asset mix, but they increased compared to 4Q08 Management Fees Banking Revenues Front Fees Performance Fees ¾ Banking revenues decreased due to a fall in trading commissions
8 Banca Generali 2009 First Quarter Results 1Q09 Results
Net commissions benefited from the announced optimisation at pay-out level
1Q09 Net Commissions
(€ m) 1Q09 Pay-out
-7.1% 52.9% 44.0% 42.5%
35.7
33.1
1Q08 FY08 1Q09 (€ m)
¾The decrease in 1Q09 pay-out is already providing some evidence of the actions 1Q08 1Q09 undertaken to enhance profitability. Reported ex-Simgenia
¾ More benefits are set to materialise over next quarters as 2008 one-off components will not be replicated
9 Banca Generali 2009 First Quarter Results 1Q09 Results Costs hit by one-off items that will not be replicated over next few quarters
Operating Cost Breakdown ¾ More than half of the cost increase is related to the integration of Banca del (€ m) Gottardo +9.7%
36.8 ¾ Staff costs proved to be well under 30.1 33.5 control, as they increased by only 2.8% on a like-for-like basis 43% (15.9) 44% 46% ¾ G&A costs under pressure (+16% on a (15.4) (13.3) like-for-like basis) due to one-off projects (i.e. consultancy and IT upgrading) started at the end of 2008. These costs are one-off and their impact should be smoothed over 53% the rest of the year 52% 50% (19.6) 68%(15.7) 68%(16.9) ¾ The cost-saving actions planned in 2008
5% 5% (BSI Italia integration, organisation 4% (1.1) 4% (1.2) 4% (1.3) streamlining) are underway and are set to 1Q08 1Q08 restated 1Q09 deliver their benefits from end 2009 Reported with Banca del Gottardo, ex Simgenia ex Simgenia
Staff G&A Expenses Depreciation and amortisation 10 Banca Generali 2009 First Quarter Results 1Q09 Results Improved profitability compared to last year
AUM Profitability Cost/Income Ratio
+4 b.p. -12.8 p.p.
1.59% 73.5% 1.55% 60.7%
1.52% 1.54%
1Q08 (*) 1Q09 1Q08 (*) 1Q09
AUM profitability excluding perform. fees Performance Fees
* Restated excluding Simgenia and Corporate * Restated excluding Simgenia and Corporate
Assets, including Banca del Gottardo Italia ¾¾ TheThe increasingincreasing pushpush ofof managedmanaged productsproducts leledd toto anan improvementimprovement inin the the AUMAUM profitabilityprofitabilityAssets, including Banca del Gottardo Italia
¾¾ Cost/IncomeCost/Income ratioratio benefitedbenefited fromfrom thethe exexpansionpansion ofof thethe revenuerevenue base,base, moremore thanthan offsettingoffsetting alsoalso thethe one-offone-off costcost increaseincrease
11 Banca Generali 2009 First Quarter Results ¾ 1Q09 Results
¾ Net Inflows and AUM
¾ Business Update
¾ Closing Remarks
12 Banca Generali 2009 First Quarter Results Net Inflows and AUM Net Inflows: Banca Generali is once again one the best performers in the sector in 1Q09
20092009 NetNet Inflows:Inflows: BancaBanca G Generalienerali vs.vs. AssogestioniAssogestioni
Source Assogestioni €98.5m ¾¾ BancaBanca Generali Generali stronglystrongly outperformedoutperformed thethe ItalianItalian
€46.1m mutualmutual fundfund industryindustry (Assogestioni),(Assogestioni), thatthat lostlost €22.4m €25.0m €5.0m almostalmost €14€14 billionbillion byby endend AprilApril
Jan 09 Feb 09 Mar 09 Apr 09 Cumulated ¾¾ BancaBanca Generali Generali provedproved toto bebe oneone ofof thethe bestbest -€0.8bn playersplayers amongstamongst financialfinancial advisoradvisor networksnetworks notnot -€2.9bn -€4.9bn stemmingstemming fromfrom retailretail banksbanks -€5.1bn
BG Sel. Sicav, BG Sicav and BG SGR Total Assogestioni Net Inflows -€13.7bn
20092009 FirstFirst QuarterQuarter RankingRanking byby NetNet InflowsInflows (Assoreti)(Assoreti) 49%
501 (€ m) Source: Assoreti 14%
146 12% 11% 11% 124 9% 115 113 7% 96 5% 5% 69 2% 2% 52 51 2% Finanza Gruppo Banca CR Allianz 21 21 UGF Banca 21 & Futuro Azimut Firenze Bank 3
Banca Gruppo MPS Banca Credit Banca FinecoBank Others Apogeo UBI Banca Banca -12 Mediolanum Credem Banca Generali and Suisse Network Gruppo Banca Sara Consulting Private Inv. Nuova -44 Personale BSI Italia* Italy Investimenti Fideuram -1% -4% -89 -97 -102 -9% * Simgenia not included (85% of Simgenia sold, as announced December 19, 2008) -10% -10%
13 Banca Generali 2009 First Quarter Results Net Inflows and AUM Quality of net inflows strongly improved compared to last year
Banca Generali and BSI Italia 1Q09 Net Inflows by Product Category Net Inflows in Managed Assets*
(€ m) (€ m) 24240 08YTD 90 240 -27 09YTD 57 52 41 * Mutual Funds, Managed Portfolio and Life Insurance
Banca Generali and BSI Italia -13 -9 -2 Net Inflows in Mutual Funds -60 and Managed Portfolio -84 (€ m) Mar 09 24 Jan 09 Feb 09 Apr 09 Cumulated 08YTD 77
09YTD -750 Managed Assets Non managed Assets
¾¾ QualityQuality ofof netnet inflowsinflows dramaticallydramatically improvedimproved inin 20092009 YTDYTD cocomparedmpared toto previousprevious quartquarters,ers, asas managedmanaged assetsassets representedrepresented €240€240 millionmillion outout ofof €156€156 millmillionion ofof totaltotal inflowsinflows overover thethe periodperiod
¾¾ GrowthGrowth inin managedmanaged assetsassets waswas drivendriven primarilyprimarily byby Lux-baLux-basedsed fundsfunds ofof fundsfunds (BG(BG SelectionSelection Sicav,Sicav, BGBG Sicav)Sicav) andand byby thethe newnew insuranceinsurance productsproducts (BG(BG Valore)Valore)
¾¾ FewerFewer inflowsinflows inin administeredadministered assetsassets,, reflectingreflecting thethe company’scompany’s policypolicy notnot toto pushpush unprofitableunprofitable marketingmarketing actionsactions onon aggressiveaggressive interestinterest ratesrates (on(on currentcurrent accountsaccounts andand repo)repo) 14 Banca Generali 2009 First Quarter Results Net Inflows and AUM
Excellent results from the in-house management companies
In-house mutual funds (*) - Net Inflows
(€ m) 46.1 ¾ €98.5 million net inflows
25.0 22.4 in mutual funds/Sicav YTD of which €95.0 million 5.0 gathered by BG Selection Sicav
Jan 09 Feb 09 Mar 09 Apr 09
Source: Assogestioni; (*) BG Selection Sicav, BG Sgr, BG Sicav
In-house mutual funds (*) - AUM (€ m) 4,126
3,904 3,918 ¾ Average net fund performance at +3.2% YTD
¾ BG Selection Sicav net fund performance at +4.0% YTD
Dec 08 Mar 09 Apr 09
Source: Assogestioni; (*) BG Selection Sicav, BG sgr, BG Sicav
15 Banca Generali 2009 First Quarter Results Net Inflows and AUM
Excellent fund performance coupled with an increase in managed savings products
Banca Generali Asset Breakdown
(€ bn) Total Assets broadly stable (-1.3% qoq) despite challenging equity markets 19.0* 18.8* in 1Q09 (S&P Mib -18.42%, Stoxx50 -13.96%, S&P500 -11.7% ) 4.7 (25%) 4.7 (25%)
2.6 (14%) 66% 2.6 (14%) 67% Share of managed assets slightly
5.1 (27%) 5.2 (28%) increased to 67% (from 66%) driven by insurance assets 1.8 (9%) (28% vs. 27% 2008YE) 1.7 (9%)
4.7 (25%) 4.6 (24%)
FY08 1Q09 Overall equity exposure still limited at about 20%, proving to be a winning Life Insurance Asset Management Mutual Funds tool to protect clients’ assets and hence to attract new money Current Accounts Security Deposits
(*) excluding Simgenia, Corporate Assets and including Banca del Gottardo Italia
16 Banca Generali 2009 First Quarter Results ¾ 1Q09 Results
¾ Net Inflows and AUM
¾ Business Update
¾ Closing Remarks
17 Banca Generali 2009 First Quarter Results Business Update 1Q09 recruiting better than forecast, excellent prospects for the rest of the year
1Q09 Recruiting Results FY09 Recruiting Targets
N. FAs AUM (€m) N. FAs AUM (€m) ¾¾ GoodGood 1Q091Q09 recruitingrecruiting
15 figures,figures, wellwell aheadahead ofof planplan 50
1 5 Relationship Manager ¾¾ ManyMany relevantrelevant negotiationsnegotiations 61 150 currentlycurrently underwayunderway withwith high-profilehigh-profile professionalsprofessionals 4 10 Private Banker 117 200 ¾¾ AA peakpeak inin spontaneousspontaneous candidatures,candidatures, whichwhich 10 20 contributedcontributed toto decreasingdecreasing Financial Advisor recruitingrecruiting costscosts
193 300-500 ¾¾ ConfidentConfident toto reachreach andand possiblypossibly outpaceoutpace thethe targetstargets 15 35 setset forfor thisthis yearyear Total BG Group
AUM already brough in Potential AUM … AUM Target … AUM Target 18 Banca Generali 2009 First Quarter Results Business Update
Strong managed products YTD and good prospects for Security Deposit transfer
BG Selection Sicav Performance Deposits
Managed Products Latin America 35.53%
Eastern Europe 40.01% Lux-based FoFs Africa&Middle East 22.78% and Sicav China&India 25.92%
New Inflows North America 18.55%
Pacific 20.92%
Italy 36.11%
Europe 18.56%
Global Diversified 10.48%
Global Dynamic 14.37% Liquidity Alpha 15.75%
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%
Source: Banca Generali, 2 months performance at May 7, 2009
Security Deposits ¾ Training on the network started in March on selected by retail banks and new inflows Transfer of areas, now progressively expanded to the entire network Security Deposits ¾ Dedicated promo product offer ¾ Encouraging preliminary results
19 Banca Generali 2009 First Quarter Results Business Update
Insurance, a key driver for 1Q09 Net Inflows
Deposits
€100m
New Inflows Traditional policy linked to a new segregated fund investing 60% to 100% RiaLancio of its total assets in corporate bonds End April
New Inflows €12m JustJust started.started. Focus on annual New capital-protected Focus on annual \ premiumpremium unit-linked policy with End April 100% multibrand and ETF underlying funds
€400-500m
€278m Total New Business in Insurance Products
End April FY09E 20 Banca Generali 2009 First Quarter Results Business Update
New product launches scheduled for 2Q09
¾¾NewNew 55 FoFsFoFs entirely entirely managedmanaged byby third-partythird-party ¾¾55 investmentinvestment lines:lines: 11 equityequity AsiaAsia (Invesco),(Invesco), 11 globalglobal equityequity (Vontobel),(Vontobel), 33 flexible/totalflexible/total returnreturn (Blackrock,(Blackrock,
NEW MorganMorgan Stanley,Stanley, CreditCredit Agricole)Agricole) ¾¾55 moremore investmentinvestment lineslines toto bebe addedadded byby 2H092H09 ¾¾uniqueunique productproduct onon thethe ItalianItalian marketmarket ¾¾totaltotal investmentinvestment lineslines withinwithin thethe Lux-basedLux-based SICAVsSICAVs are are setset toto increaseincrease fromfrom 1818 toto 2828 byby endend ofof 20092009
¾¾InnovativeInnovative investmentinvestment platformplatform ¾¾100%100% MifidMifid compliant compliant ¾¾ResultResult ofof aa cooperationcooperation bebetweentween BGBG andand Morningstar,Morningstar, thethe leadingleading worldwideworldwide providerprovider ofof products/servicesproducts/services focussedfocussed onon investmentinvestment planningplanning ¾¾OfficialOfficial launchlaunch atat ththee ITIT ForumForum inin RiminiRimini
21 Banca Generali 2009 First Quarter Results ¾ 1Q09 Results
¾ Net Inflows and AUM
¾ Business Update
¾ Closing Remarks
22 Banca Generali 2009 First Quarter Results Closing Remarks
Banca Generali well equipped to face opportunities/challenges in any market conditions
A very good start of the year, confirming that the medium-long term strategy run by Banca Generali was appropriate:
¾ Defensive asset allocation coupled with network quality upgrade and strength of Generali brand led to achieve very positive inflows over the period, both in terms of volumes and quality
¾ The widest range of products (Banking Products, Life Insurance, Asset Management) coupled with Open Architecture is more and more confirming to be a “must” to be competitive and for retention/attraction of top Consultants. Banca Generali enjoys a real competitive advantage in the market
¾ Healthy P&L results even in a tough quarter like 1Q09 and solid balance allowing to effectively sustain Company’s growth
¾ Large cost efficiency programme has been definitely set up and will give benefits in the late ‘09 and ’10
¾ Excellent flexibility to raise the equity market exposure leveraging on the large existing liquidity (€3 billion) and large share of total return products (€1.7 billion)
In a nutshell, our business model is designed to deliver excellent results in any market conditions
23 Banca Generali 2009 First Quarter Results Investor Relations Team
GiulianaGiuliana PagliariPagliari InvestorInvestor RelationsRelations OfficerOfficer TelTel +39+39 0202 60766076 55485548
FedericoFederico MangiagalliMangiagalli TelTel +39+39 0202 60766076 55455545
FaxFax +39+39 0202 66826682 854854 E-mailE-mail [email protected]@bancagenerali.it
Website:Website: www.bancagenerali.comwww.bancagenerali.com
24 Banca Generali 2009 First Quarter Results Disclaimer
The manager responsible for preparing paragraph 2 of Article 154-bis of the Co press release corresponds to the document G. Fancel, CFO the company’s financial reports (Gianc Certain statements contained herein are statementsnsolidated ofLaw fu tureof Finance, expectations that theand a other forward-looking statements. results, books and accounting records. These expectations are based on management’s current views and assumptions and involve known and unknown risks and uncertainties. arlo Fancel) declares, pursuant to ccounting information contained in this The user of such information should recognize 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.
25 Banca Generali 2009 First Quarter Results