10 February 2020

2019 Preliminary Results

Milan, 10 February 2020 – The Board of Directors of Banca Generali, chaired by Giancarlo Fancel, approved the preliminary consolidated results at 31 December 2019.

Chief Executive Officer and General Manager Gian Maria Mossa stated: “2019 was the best year in our history, with results that showed strong improvements in all P&L and balance sheet items. Our customers’ returns rose as we leveraged the markets’ variable component, while maintaining our distinctive prudent approach based on volatility control. Despite the complicated context for financial markets of year-end 2018, we increased total assets by over €11 billion, further strengthening our brand and our position as a leading player within the Italian private banking sector. We accelerated the launch of exclusive investment and wealth management service solutions, which soon met with customers’ appreciation, as confirmed by the sharp growth of Assets under Advisory and the success of the new advisory approach focussing on sustainability in line with the SDGs. This further proves our financial advisors’ outstanding professionalism and the excellence of the technological platforms we provide them with. In light of these results, we look towards our three-year plan’s goals and the challenges for 2020 with increasing optimism.”

Consolidated P&L results at 31 December 2019
Net profit amounted to €272.1 million (+51%) in 2019, marking the Bank’s best-ever result. Data confirmed that execution of the three-year plan is in well on track towards the achievement of our growth objectives aiming at sustainable development and greater revenue diversification. In 2019, the result was driven by a more favourable global financial market context, but also by the sharp increase in recurring profit (€150.0 million; core net profit: +12.7%) backed by the strong and ongoing business expansion (€69 billion total assets; +20%), as well as the several product and service diversification initiatives.

In further detail:

Net banking income rose by 29% to €578.0 million, thanks to the healthy trend of net interest income and recurring fees (management, underwriting and banking fees). The result was also driven by the variable revenue components linked to financial market trends and the good performance generated for the Bank’s customers (net performance: +7.2%; performance of managed products: +11%). Net financial income was €88.2 million, up 4.9%. The result was attributable to the increase in net interest income (€74 million; +23.4%) and a sharp decline in the variable component of trading income. Net interest income benefited from both higher interest-bearing assets (€10.9 billion; +20%) and higher returns (75bps; +6bps), particularly on financial assets (82bps; +9bps) and liquidity. At the end of the year, the Bank’s treasury portfolio totalled €7.8 billion (+38% for the year), with an increasingly prudent approach as confirmed by an overall duration of 1.6 years and maturity of 3.5 years. Gross fees rose by 18.8% to €881 million. This result was partly attributable to the ongoing recovery of management fees (€646.3 million; +1.9%), negatively impacted in early 2019 by the effects of the financial crisis of late 2018 and the investors’ defensive decisions in the first half of the year that then began to shift to a less defensive approach starting from the summer months. Banking and entry fees showed an excellent performance in the period (€87 million; +27%), as a result of several initiatives aimed at expanding and diversifying investment and wealth protection services (advanced advisory, AUC portfolio trading, structured products). Performance fees also rose from €38.6 million to €147.4 million, owing to the positive net performance generated for customers in the period. Operating expenses were €221.2 million (+12.5%), mainly due to the effect of some one-off items (€9.1 million) and the consolidation of Nextam and Valeur (€6.9 million). Net of these items, core expenses showed a 4.8% organic growth, including the increase in the variable component of staff expenses associated with the Bank’s positive performance for the period. One-off costs, which are therefore not replicable in 2020, were mainly due to the acceleration of the three-year plan’s strategic projects, M&A costs and the relocation of the administrative offices. Operating efficiency indicators further improved to an excellent level, as the ratio of costs to total assets declined to 32 bps (34 bps at year-end 2018), with an adjusted cost/income ratio at 38.8% (42.3% at year-end 2018), net of non-recurring components2. Net adjustments and provisions amounted to €31.5 million in 2019, down compared to €33.1 million for the previous year, thanks to the improved risk profile of the Italian government bonds in portfolio arising from the IFRS 9-compliant application of collective basis of measurement.