Good afternoon. This is the chorus call conference operator. Welcome, and thank you for joining the Banca Generali Preliminary 2020 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Gian Maria Mossa, CEO and General Manager of Banca Generali. Please go ahead, sir. Good afternoon, and thank you for participating at our full year results conference call. As you know, 2020 was, for several reasons, one of the most difficult years ever, with the pandemic and the economic crisis that changed significantly the clients' perception and clients' priority. In this context, the increasing need for advisory and for protection has accelerated the structural shift from the traditional distribution channel to the FA network. This new normal explains very well the very, very strong inflows of all the industry and of Banca Generali as well. We closed last year with EUR 5.9 billion of net inflows, basically driven by the quality of our financial advisor network, plus the digital enablers we provided to the bank. These numbers, plus positive performance of the portfolio, thanks to diversification, allowed us to reach new heights in terms of total assets, EUR 74.5 billion, total assets in Luxembourg, EUR 18.7 billion, a total assets under advisory fee model, EUR 6 billion. In terms of net profits, we achieved new heights at EUR 274.9 million, despite EUR 8.1 million of one-off, As you know, higher taxation. This result has been driven by basically both management and other fees and a great discipline in managing costs. Last, probably even more important, we closed last year with a very solid position in terms of capital ratios, already net of cumulative dividend for 2019 and 2020 of EUR 3.3 per share. It implies a payout ratio higher than 11% at current stock market prices. Moving on, page four, there is our usual representation of the P&L. You can see very sound operating performance, +7%, driven by net financial income +24% and total net recurring fees +7%. Operating costs grew 7%, when you consider the change of perimeter, so on a like-for-like basis, the operating cost increase is at 3%, in line with our projection. If we move below the operating profit, you can see that we have EUR 8.1 million one-off charges, in particular EUR 5.9 billion because we have increased in the actuarial valuation of the pension benefits because we decreased basically the discount rate. There is a one-off of EUR 2.2 million for higher provision to the Interbank Deposit Protection Fund for two specific situation in the banking industry. Last, of course, as we already announced, tax rate at 20.8%, that is in line with our long-term guidance and higher than 2019. Page five is a way to see the great quality of these results, because you can see the breakdown between the variable net profit and recurring net profit on like-for-like basis. Recurring net profit jumped to EUR 158.8 million, and basically driven by operating items. On the graph on the right, you can see the positive contribution of net interest income and net fees, and the negative impact of non-operating items, in particular provisions and write-downs and taxes. Now starting from page seven, we're going to go through line by line our P&L. Starting from net financial income, we closed the year at EUR 109.6 million, thanks to both trading income and net interest income. In particular, if we focus our attention of the Q4, we can see a spike in the trading income at EUR 9.9 million. We take some profits thanks to favorable market conditions, and the net interest margin at 22.5%. Now, for this year, as a consequence of a further reduction of the yields and the spread, we reduced slightly our guidance in the range of -3%, 0%. Our previous guidance was between 0% and +2%, now is between 0% and -2% to -3%. In the next two slides, there are two focus. One on the banking book and one on the lending book. Starting from page eight, we are at EUR 9 billion of financial assets in the banking portfolio. On the right of the page, you see the bond classification, 61% govi bonds, Italian govi bonds, and a well-diversified portfolio for the rest, for the 39%. So govi bonds, European govi bonds, and corporate and financials. The percentage of the portfolio held to collect and sales is at 30%. As usual, maturity duration highlights a very conservative approach with both maturity duration in line or a little bit lower compared to the same period of the last year. In terms of yield, financial assets are at 0.81%, in line with 2019. Page nine is a new representation of our secured loan portfolio. I think that it's very useful to understand how conservative is our approach also to the credit, to the lending side of the assets. You can see on the left top of the page, the increase from EUR 1.9 billion to EUR 2.2 billion. On the right, you see the breakdown and some proxy of quality. In particular, EUR 1.3 billion is lines of credit, in particular Lombard. We have mortgage for EUR 0.4 billion and personal loans, all collateralized for EUR 0.5 billion. In terms of quality, 99% is about performing loans, we have EUR 1.1 billion of NPL. Let's say that of this EUR 1.1 billion, 72% is covered with indemnity, by indemnity, an indemnity provided by an institutional investor, it comes from the deal with Banca del Gottardo almost 10 years ago. Is full covered by indemnity. The other part is over-collateralized, the 28%, is a portfolio private clients. In terms of granted loans, you see that the drawn credit are at EUR 2.2 billion. The total granted loans are at EUR 3.1 billion, the ratio between drawn loans and granted loans is at 73%. What is really important to emphasize is the collateral. Collateral assets are at EUR 4.6 billion, means twice the drawn loans. For every euro of loans, we have on average EUR 2 of collateralization. On the bottom left, we can see some information on the yield. Yield is at 1.08, slightly lower on year-on-year basis due to the strong competition in the market. This reduction in yield is more than offset by the expansion of the assets. There is the detail of cost of risk that is negligible at 0.05, and of course, this number is influenced negatively by the economic projection for this year. Net interest income comes from a very high-quality banking portfolio plus a highly secured loan portfolio with negligible cost of risk. Moving on, gross fees, page 10. Also, in this case, we achieve a new high, EUR 782.4 million, driven by both management fees and banking entry fees. If we focus on Q4, the contribution was at EUR 207 million with margins at EUR 1.16, so with a full recovery of the reduction in profitability linked to the pandemic. On the right, we can see variable fees. Fourth quarter closed at EUR 41.4 million, and the full year result is slightly lower, 2019, at EUR 141.8 million. One very positive information comes from management fees, page 11. Overall management fees at EUR 675 million, but what impressed me more is the number for the fourth quarter, EUR 178.6 million. With average assets at EUR 52 million, and management fee margin at 1.4%. Just projecting these numbers for this year, we have a single high-digit growth. I think that we can achieve also double-digit growth with this market condition. Very positive news from management fees. Also banking and entry fees supported very well the P&L. Overall contribution at EUR 106.9 million, fourth quarter at EUR 28.5 million, with banking fees close to EUR 20 million and entry fees above nine, and with a slight increase in margins at 0.16%. In terms of breakdown, on the right, I think this is pretty impressive, the acceleration of the new revenue streams at EUR 60 million, or more than 55%, in detail, 56% of the total banking entry fees. This is driven by all of three initiatives, and we are at page 13, under advisory. We gave a target for the end of 2021 of 2025, and we are confident to achieve at least EUR 30 million, so we raised the target. BG Certificates, we had a target of EUR 10 million, and we are confident to stay at or above EUR 13 million. BG Saxo, again, we are confident to stay at or above EUR 25 million. The total expected contribution of the new revenue streams has been revised upwards from around EUR 55 million-EUR 70 million with a year-on-year increase, no less than 15%. Since these three initiatives were set up during the year of the presentation of the three-year business plan, I think that this is a great example of deliver on promises. Page 14, we start with fee expenses. Let's say that the overall total fee expenses is slightly better than expected with payout ratio to the network at 47.4%, so below the range at 48.50%. Thanks to, let's say, constant ordinary payout and, say, very low cost of growth, because you know, a great part of the inflows comes from the existing sales force. Payout to third parties is slightly up to 5.8%. Basically, the payout to asset manager and the payout to brokerage is in line with expectation, is constant, and then there is a small increase in the payout to third party for the advanced advisory services. We think that this spike can be absorbed in the next quarters. Page 15 raises the detail of the operating cost. As usual, on the left, you have the total operating cost. The cost of the change of perimeter is EUR 20.6 million, COVID, EUR 1 million. The cost of sales personnel cost is EUR 14.3 million, and the core operating cost up 3% to EUR 191.3 million. It's important to focus on the fourth quarter at EUR 54.4 million, because due to the favorable market condition, we decided to accelerate in investment. Page 16, our usual representation of cost ratios. Again, here we have a best practice level. You have the total cost on total assets at 0.3%. This is a new record for us. Cost income ratio, well below 40%, even excluding the variable components of revenues. Thanks to strong numbers, I'm at page 17, we can propose to the AGM a distribution of a dividend of EUR 3.30 per share in two tranches. The first one start in the fourth quarter of this year, the second tranche in the first quarter of next year. With a dividend payout of 70% on the cumulated net profit 2019 and 2020. Of course, we will comply with the recommendation of authorities, we are pretty confident to be able to pay the first tranche as soon as October 2021. Despite this important dividend, capital position is even stronger than in the past. We have CET1 at 17.1%, TCR at 18.4%, this is also thanks to capital optimization and TSA adoption in operating risk. Let me sum up just this first part. I'm very satisfied with these numbers. First of all, for the resiliency of our net interest income. Second, for the acceleration of management and fees. Third, for the overall contribution of the new revenues, definitely well above the targets, and providing all of three good support to our margin. On top of that, there is a solid, good cost discipline. Next, page 20, the total assets. I already said EUR 74.5 billion, driven by asset management products, EUR 37.4 billion. We exceeded 50% of total assets. You can see on the bottom left of the slide, 50.2% of total assets. On the top right, you can see the acceleration on almost all the solutions. In-house funds, third-party funds, and insurance wrappers. Financial wrappers are almost stable. What is really important to see is the acceleration of the insurance wrappers, and stable assets in the traditional life insurance products. As we already announced, we are very focused on the insurance portfolio in order to rebalance the two different business in favor of wrappers solution. Banking products steadily grow over the year. Page 21, total net inflows, we already said EUR 5.9 billion. Strong performance in terms of managed product, EUR 3.2 billion, of which EUR 1.4 billion in the fourth quarter. If you focus on the graph on the right, quarterly trend, and you look at the traditional life insurance, you can see that we decided to launch a specific commercial initiative in the second quarter, when the pandemic was at the highest level, and we collect EUR 300 million. In the first, in the third, and the fourth, the inflows were negligible, while the insurance wrappers continued to increase assets. We are very close to EUR 10 billion, and this conversion is very positive also in terms of margin. Page 22, you see total net inflows by acquisition channel, 77%, highest level ever existing sales force, - 4%, the outflows. This is an example of strong resiliency and sense of belonging to the bank, with the churn rate very low. On the right, page 22, you see recruitment. We resume recruitment activity in the last part of the year. You know we have a target of 20/25 per quarter, the sum in the second half was 44, in line with expectation. Page 23, there is details on the quality of our network. We are probably the only player with a steady growth of the numbers of financial advisors, year-by-year. At the same time, a stable growth of portfolio average, that is the key driver of our sustainable growth. Size of the portfolio average is at EUR 33.2 million. This is almost 50% higher than the average of the sector. Almost 50% of our assets are managed by financial advisors with more than EUR 50 million. The quality of our financial advisor network continue to improve. Here there is our greatest focus. Page 24, there is preliminary numbers for January. Total inflows slightly lower on year-on-year basis, with definitely better quality. In particular, you can see that assets under advisory continue to accelerate, EUR 6.2 billion. Recruitment is going better than expected, with 16 new colleague in January. It means twice the number of January 2020. Just again, to sum up also this section, I think that it's really important to highlight the great performance in asset management products, the great commercial focus on the rebalancing between traditional life insurance and insurance wrappers. Last but not least, the acceleration in the recruitment activity, that you know, I think it's a great way to nurture the quality of our financial advisor networks. Last part of the presentation, page 26. There is a slide to give you the idea of our priorities in terms of business initiatives. We gather these initiatives in three main blocks. The first one is about key business drivers. It's about the core business of the bank to nurture the sustainable growth of management fees, and it's about our Luxembourg platform, our insurance platform, and ESG offer. The second block, it's about our new revenue engines, the three initiatives that we already dealt in the previous slide. The new business levers. The new business levers provide us as a way to reinforce, to strengthen our bank proposition in the medium and long term, because it needs a sort of cultural change, transformation, and it's a way to capture new growth opportunities. Lombard, to increase the diversification of the asset of the bank. Private markets, to increase the diversification of the asset of our clients. International expansion, both as a defensive move and a new engine of growth. The focus of the next slide will be only on BG Fund Management Luxembourg, because it is probably the most important engine of our revenues. At page 27, you see the key contents of the following slides. The first focus is on the overall platform. We will comment briefly total assets, total assets in retail distribution, and the fee structure with an anticipation of the change in the fee structure that will happen at the end of the first half of this year. Then a deep dive on Lux IM with three main topics. The first one, the product offer, to see why we are so confident on margins. The second on ESG offers, and the third on saving plans. Let's start from the overall assets in our Luxembourg platform, page 28. We achieved EUR 18.6 billion, and the good performance of the market this year and the constant inflows are increasing more and more these total assets. I think that it's really important to emphasize the fact that despite the focus on our Luxembourg platform, the total assets, also the total assets of third-party funds, continue steadily to grow. This is important because this is coherent with our value proposition of open architectural platform. You can see on the bottom left of the page, the constant growth also of third-party funds, now at 18.7%. It means that overall funds is 50% in-house and 50% third parties, and the in-house one are managed basically mainly by, again, third party managers. On the right, you have the total net inflows that is pretty constant over time. Page 29, it's about retail distribution. You remember at the beginning, we were very focused on wrapper solutions, so on institutional share classes. Then at the end of 2018, when we accomplished the setup of wrappers solution, we decide to focus the commercial activity on retail distribution. The acceleration in the last two years has been impressive, with total retail assets of our Luxembourg platform at EUR 8.8 billion. Despite this acceleration, there is also a constant increase on third-party fund retail distribution. Again, very coherent with our value proposition. On the right, you can see the total net inflows with the focus to the retail share classes. You can see that the Lux IM continue to grow with strong inflows, while the outflows of Selection is decelerating over time, is running off. As we already said, the worst is behind us. Again, on the bottom right of the page, let's say very constant inflows in retail third-party funds. Page 30. It's really important. We pay great attention to the recommendation of the regulator. The new recommendation of ESMA on performance fee led us to rethink of a new mechanism coherent with the new recommendation. At page 30, you see on the left the contribution of variable fees, of the performance fee over the last five years. The average was around EUR 100 million. This has represented our guidance. Every time that we discuss on performance fee, I used to give this guidance around EUR 100 million. Now, with the new mechanism, the new guidance will be lower, will be in the range of EUR 70 million-EUR 80 million. We are in the phase and we are waiting for the formal approval of CSSF, and we should receive the formal approval between April and May, and we will launch this new fee structure by the end of the first half, where basically the new mechanism will be implemented of new funds as soon as the launch of the new funds, while on the stock, starting from January 2022. At the same time, there is a sort of price optimization. There is an organic review of the fee structure, both administrative fee and management fees, based on the price sustainability of every single fund and with a careful benchmarking. The result of this review of pricing will allow us to increase the gross management fees in the range of EUR 25 million-EUR 30 million. Of this EUR 25 million-EUR 30 million, only 30% will imply also payout ratio for the network. The two effect at the end of the day will be offset. Two other consideration. You know we are running also an overall, let's say, price optimization also on other initiatives in the bank and insurance, and it's a buffer for the future. The second is that in January, performance fee, it was very strong, above EUR 60 million, and also February started very well. Page 31. We started a focus with the Lux IM. First of all, why we are so confident in terms of margins in the Lux IM. Here you have part of explanation. You can see the increasing focus on equity thematic from 29% to 32%. We continue to be very focused on ESG and thematic investment, as well as Asian market, and all these strategies have on average in higher margins. On the right end of the page, you see the numbers of fund of the fourth wave. There is a sort of a real optimization, both of the existing funds offering and the new strategies. As you can see, we can increase the numbers of equity and alternative and flexible funds, and we will reduce the focus on balance and bond funds. Then there is a new family. This is again, very important. We call it cash parking. It's a way to be more efficient and to optimize automatic switch from, let's say, cash or, let's say, currency portfolio to equity solution. We are confident that this cash parking will improve and will increase some action, some initiatives that we call, example, Twin Mix and Twin Solution. Now page 32, there is a focus on ESG. You know ESG for us is more than just products, is about commercial offers, is about digital platform, but let's say the output is in terms of products. The acceleration on assets in ESG products is pretty impressive. We are close to EUR 5 billion, of which almost 50% in in-house products. What is very impressive and what impressed me more is about the constant contribution in terms of net inflows. For the full year 2020, the total contribution was at EUR 1.1 billion. Here we have a significant competitive advantages. Page 33, the last slide of this section is about saving plans. You know we decide to enter this business. We have some competitors with important assets on these kind of initiatives. For us, was the first time. We started in the third quarter 2019. It's pretty impressive to see the acceleration on numbers. In January, only in January, we closed 2,000 contracts, so we moved from 10,000 to 12,000, and the projection of inflows in our Luxembourg platform now account for more than EUR 0.5 billion, and we are at the beginning. I'm pretty confident to see at least twice this number at the end of this year. This is important engine to a dedicated offer for our affluent client and for our, let's say, smaller portfolio of financial advisors. Even more important, it's not just only about saving plans in financial products. We've wrapped these solutions also with an insurance wrapper. We call it that this includes also the traditional protection features. For example, the completion of the plan in case of negative events, but also some joyful life events. This is something very new, innovative, that you can connect your saving plan to positive events. For example, the wedding, the university, and so forth. This is the beginning of a dedicated offers for smaller financial advisors to develop and increase profitability on our 200,000 affluent clients. To come to the conclusion, page 34. We are more than confident to achieve all the targets 2021 of our three-year business plan. If you look at the column of 2020 results, the sustainable profitability was probably the most challenging goal and target. Core net banking income closed at 67 basis points, and core operating costs are at 3%, so in line with our projection. The commercial activity is very sound, solid, and healthy. The start of the year was very good, and we are continuing the positive initiatives we launched last year. For all these reasons, despite a change of context and economic environment, we are confident to close also this year with new highs in most of the financial items. Thank you. Now I will leave the floor to Q&A session. Excuse me, this is the conference call conference operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question is from Angeliki Bairaktari with Autonomous Research. Please go ahead. Good afternoon. Thanks for taking my questions. On the change in the performance fee calculation, could you please describe the new methodology? Is it going to be effectively a comparison over 12 months? Effectively, if you can give us a little bit more details on what has changed versus the previous three months rolling or 12 months rolling sort of benchmark comparison. That would be useful for us to understand. Second question. Can you explain, out of the 5-6 basis points increase in the gross management fee margin, how much will be paid back to financial advisors, and how much will be retained by Banca Generali? One last question. Can you please explain the drivers behind the strength of the trading income this quarter, and what is your expectation for trading income going forward? Thank you. Let's start with performance fee. Since we are in the authorization process, I cannot give you all the details, but let's say that we have two different mechanisms. The first one for Lux IM is pretty in line with the current one, with the high-water mark. We'll, of course, with a longer time horizon, and the second will be on the selection on high mechanism. We'll give you full disclosure once we receive the authorization. I'm very confident both on receiving the authorization and on the estimates and projection I gave during the presentation. In terms of gross management fees, let's say that of the EUR 25 million, EUR 30 million we have in mind, only EUR 10 million will generate payout, EUR 10 million, EUR 15 million or more. I do expect maximum EUR 5 million of payout for the new, let's say, the price optimization. The third question, sorry if you can repeat because we couldn't hear properly. Yes. You reported EUR 9 million of income from financial assets, so what I call trading income this quarter. Can you explain what drove this increase quarter-over-quarter, and what are your expectations for 2021 for this line? We have just optimized our portfolio at the end of the year, so we took some profits, thanks to the market favorable condition. We do expect for this year a normalization for us. Let's say that normally at the beginning of the year, we have a target between EUR 10 million and EUR 20 million for the full year. Thank you. The next question is from Alberto Villa with Intermonte. Please go ahead. Good afternoon, Gian Maria, and congratulations for the results. I have three questions. One is related to the actual assets under advisory. I was wondering if you expect assets under advisory to continue to grow this year, and at which pace we can expect this amount to grow going forward. The second one is your outlook on the net interest margin for 2021, given the current environment for yields and given the contribution from TLTRO. If you can maybe give us a little bit of color on what you're expecting there. The third one is on brokerage. You gave guidance for 2021. I was wondering if there is more room to grow going forward, if you are satisfied with the rollout of the Saxo Bank, and if there is more to come on that front in the future. Thank you. Let's start from asset under advisory. We do expect double-digit growth also for this year of the stock. I have in mind no less than EUR 1 billion. Net interest margin, the outlook, as I said, it's in the range of 0%, -2%, - 3%. I don't know, Tommaso, if you can give more flavor to the different components of this expectation. We expect to have a higher contribution in terms of lending activity because we expect that volumes on lending will continue on growing. Of course, the yield of the investments will be lower because today the interest rates are lower. That's why we expect a small decrease in terms of net interest margin. Tiering TLTRO. Well, tiering is around EUR 700 million, and TLTRO, we expect that in the second part of 2021, we could increase the position in terms of TLTRO. If we could have an additional benefit in terms of net interest margin. Overall, the guidance that we already given is -2%, -3% versus last year. Last on the BG Saxo, I think that in the appendix you can see some numbers. The numbers in terms of turnover of the first clients on the platform are pretty impressive. We are very prudent in giving projection because we don't force any acceleration. It is a cultural change to see the opportunity to transfer also the asset under administration and to provide a better performance compared to the market. We are sure that BG Saxo will contribute in the next years, probably more than other initiatives to our P&L. Let's say that at the moment, we prefer to stay very conservative and say overall revenue is above EUR 25 million. So far we are pretty impressed by numbers, and we are planning several initiatives, of course, to accelerate the rollout. I'm not sure that the full impact will be this year and not the second half, and then a full impact next year. For sure, it will be a positive contributor for our numbers. Thank you. Okay, thank you. If I can just follow up on the dividend, you said you are pretty confident. Is there an ongoing, let's say, open discussion with the regulator already, or they are waiting, especially Bank of Italy, to understand what the ECB will eventually do in the future? Just wondering if there is any color you can give us on the, let's say, level of confidence you have? The level of confidence is very high because our perception is that the regulators want to achieve a normalization. They start already in the first half. I don't see any reason in this case to think two different scenarios. Of course, when we announce our proposal to the AGM, we share it with regulators. I'm very confident on the dividend payout this time. Okay. Thank you. The next question is from Domenico Santoro with HSBC. Please go ahead. Hi. Thank you for the presentation. Good afternoon. A couple of follow-up. First of all, on the repricing of management fees, you didn't mention the timing. Is it going to start already as we speak, as of now, or at the same time of the change in performance fees mechanism? Just I want to understand whether you might benefit from these extra revenues already this year. Thinking aloud about the new government, I just want to pick your brain about this. Everybody is, of course, welcoming Draghi. Apart from the obvious implication for the market, that can be very beneficial for your business, loss or any heirs, no, of course, any chance of a wealth tax. Can you think about any other reforms or whatever that can benefit your business apart from market stability, which is, of course, a good news? Thank you. Thank you. Repricing will start as soon as the beginning of the second half, July 1st for the administrative and management fees. For the performance fee on the stock, the new methodology will start on January 2022. For the new funds, as soon as we launch the new fund. Consider that for 85%-90% of the stock, it implies that the new performance fee mechanism will be implemented next year. You are right. There is a moment in which we can increase administrative fees and management fees without changing the performance fee mechanism. That is just about six months. On the new government, I think that the best scenario is stability. Stability means confidence, and confidence means, in normal markets, an increasing risk propensity. I think that if you have less uncertainty about the future, you can invest with less anxiety. This can be a game changer for the whole saving industry, especially for the ones who are considered the strongest in the asset management business. The second consequence, I agree with you, it could imply also some reforms on the savings and investments. Say, a better tax frame for saving products could further increase and accelerate product transformation. The first priority will be to reduce liquidity. I'm sure that Draghi knows how to achieve it. More confidence and more favorable, let's say, tax frame for investment could accelerate the shift from traditional banking products to asset management and insurance solutions. Can you give us also a guidance for cost growth for this year, please? Thank you. Yes, of course. In our three-year business plan, we have a target of 3%, 5%. I'm pretty confident to stay closer to 3% than 5%. Depends, of course, on the numbers during the year. Let's say that we are confident to stay in the range, and if it's necessary, close to the lower band. Thank you. Thank you very much. Gentlemen, there are no more questions registered at this time. Okay. Thank you for participating for our conference call, and I hope to see you soon in person. Thank you. Bye.