Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- FinecoBank SpA (STU:ZS3, Financial) reported a net profit of EUR490 million for the first nine months of 2024, marking a 7.9% increase year-on-year.
- Revenues increased by 7.3% year-on-year to EUR984.1 million, supported by growth across all product areas.
- The bank's cost-income ratio was maintained at a low 24.3%, highlighting strong operating leverage.
- FinecoBank SpA (STU:ZS3) achieved a significant increase in new client acquisition, up by 26.5% compared to 2023, with October marking the best month since the bank's inception.
- The bank's capital position remains robust with a common equity Tier 1 ratio of 27.3% and a leverage ratio of 5.25%.
Negative Points
- Operating costs increased by 6.7% year-on-year, driven by expenses related to business growth, including Fineco Asset Management and marketing.
- Banking fees are expected to remain stable in 2024 but may see a slight decrease in 2025 due to new regulations on instant payments.
- The bank is delaying decisions on excess capital distribution due to anticipated higher-than-expected deposit growth.
- Investment margins are under pressure due to a shift in client interest towards short-term fixed income solutions.
- The bank faces a competitive environment with aggressive recruitment strategies from other players, potentially impacting its financial planner base.
Q & A Highlights
Q: Can you provide more details on the dynamics of new customer growth and their interaction with the platform? How quickly do they become active and profitable for the group?
A: The client acquisition is highly efficient, with costs per client structurally below EUR100. Even clients with median deposits of EUR4,500 become profitable within a year. We are also seeing significant growth in private banking clients, up 40% year-on-year, who become profitable within three to six months. The strong client acquisition is also boosting interaction with our brokerage platform, contributing to robust brokerage results. Overall, the more clients we onboard, the higher the expected profitability of the bank.
Q: Your guidance seems conservative despite growing customer assets and inflows. Is this due to caution around net interest income (NII) for 2025?
A: The guidance is not conservative. We expect double-digit growth in investing revenues without market effects. While declining interest rates may reduce financial income from existing deposits, we anticipate a positive impact from an increasing deposit base. The bond portfolio is growing, and we expect a progressive rise in the portfolio, aligning with deposit growth.
Q: What does the delay in the decision on excess capital distribution mean for 2025? Will you provide more details in February or later in 2025?
A: The delay is due to expected stronger deposit growth. We aim to balance deposit growth with a potential share buyback. The decision will be made in 2025, as we need more evidence of deposit growth before submitting a plan to the ECB.
Q: Can you explain the recent trends in brokerage and the potential for future growth?
A: Brokerage revenues are driven by a growing base of active investors. Despite a challenging market environment, we see a structural increase in client interest. The brokerage-only accounts and new platform initiatives are expanding our client base. We expect continued growth in brokerage revenues, supported by a larger client base and favorable market conditions.
Q: How do you plan to address the insurance business and improve margins?
A: We are working on solutions to place the insurance business appropriately with decent margins. Our strategy involves launching new products focused on credit risk and combining fixed income with equity. We aim to improve efficiency and margins in our insurance offerings.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
